Annual Comprehensive Financial Report, 2011-12

County of San Luis Obispo, California Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2012 Prepared under the direction of Gere W. Sibbach, CPA, Auditor-Controller COUNTY OF SAN LUIS OBISPO COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS SECTION PAGE INTRODUCTORY SECTION Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 11 Board of Supervisors and Principal County Officials 12 Organization Chart 13 FINANCIAL SECTION Independent Auditor’s Report .................................................................................................. 17 Management’s Discussion and Analysis (Required Supplementary Information) .......................... 21 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Assets ...................................................................................................... 39 Statement of Activities ........................................................................................................ 40 Fund Financial Statements: Governmental Funds: Balance Sheet ................................................................................................................ 45 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets .................................................................... 46 Statement of Revenues, Expenditures, and Changes in Fund Balances ............................... 47 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ................................... 48 Proprietary Funds: Statement of Net Assets .................................................................................................. 49 Statement of Revenues, Expenses, and Changes in Net Assets .......................................... 50 Statement of Cash Flows ................................................................................................. 51 Fiduciary Funds: Statement of Fiduciary Net Assets ................................................................................... 52 Statement of Changes in Net Assets – Investment Trust Funds ......................................... 53 Notes to the Basic Financial Statements ............................................................. 57 i TABLE OF CONTENTS (continued) SECTION PAGE Required Supplementary Information Description ......................................................................................................................... 95 Schedule of Funding Progress – Defined Benefit Plan Schedule of Funding Progress ........................................................................................... 96 Schedule of Funding Progress – OPEB Plan ........................................................................... 96 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget to Actual Comparison – General Fund ..................................................................... 97 Notes to Required Supplementary Information ..................................................................... 99 Other Supplementary Information Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Nonmajor Governmental Fund Descriptions ...................................................................... 105 Combining Balance Sheet ................................................................................................ 107 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............. 108 Debt Service Funds: Combining Balance Sheet ........................................................................................ 109 Combining Statement of Revenues Expenditures, and Changes in Fund Balances ...................................................................................................... 110 Special Revenue Funds: Combining Balance Sheet ........................................................................................ 111 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...................................................................................................... 114 Special Revenue Funds – Special Districts: Combining Balance Sheet ........................................................................................ 117 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...................................................................................................... 118 Major and Nonmajor Budgetary Comparison Schedules: Capital Projects Fund ...................................................................................................... 121 Public Facilities Corporation ............................................................................................. 122 Pension Obligation Bonds ................................................................................................ 123 California Health Care Indigent Program Special Revenue Fund ......................................... 124 Community Development Special Revenue Fund ............................................................... 125 County Medical Services Program (CMSP) Special Revenue Fund ....................................... 126 Driving Under the Influence Programs Special Revenue Fund ............................................ 127 Emergency Medical Services Special Revenue Fund ........................................................... 128 Fish and Game Special Revenue Fund .............................................................................. 129 Road Impact Fees Special Revenue Fund ......................................................................... 130 Library Special Revenue Fund .......................................................................................... 131 ii TABLE OF CONTENTS (continued) SECTION PAGE Other Supplementary Information (continued) Combining and Individual Fund Statements and Schedules (continued): Major and Nonmajor Budgetary Comparison Schedules (continued): Parks Special Revenue Fund ........................................................................................... 132 Public Facilities Fees Special Revenue Fund ..................................................................... 133 Roads Special Revenue Fund .......................................................................................... 134 Wildlife Grazing Special Revenue Fund ............................................................................ 135 Flood Control Districts Special Revenue Funds ................................................................. 136 Lighting Control Districts Special Revenue Funds .............................................................. 137 County Service Area Districts Special Revenue Funds ....................................................... 138 Nonmajor Enterprise Funds: Nonmajor Enterprise Fund Descriptions ........................................................................... 141 Combining Statement of Net Assets ................................................................................ 142 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets ................ 143 Combining Statement of Cash Flows ............................................................................... 144 Internal Service Funds: Internal Service Fund Descriptions .................................................................................. 149 Combining Statement of Net Assets ................................................................................ 150 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets ................ 151 Combining Statement of Cash Flows ............................................................................... 152 Internal Service Funds – Insurance Funds Combining Statement of Net Assets ........................................................................ 153 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets ................................................................................................................. 154 Combining Statement of Cash Flows ........................................................................... 155 Fiduciary Funds: Fiduciary Fund Descriptions ............................................................................................ 159 Agency Funds: Combining Statement of Fiduciary Net Assets .......................................................... 160 Combining Statement of Changes in Assets and Liabilities ........................................ 161 Investment Trust Funds: Combining Statement of Fiduciary Net Assets .......................................................... 162 Combining Statement of Changes in Fiduciary Net Assets ......................................... 163 General Fund – Detailed Budgetary Comparison Schedules: Detail Schedule of Expenditures – Budget to Actual Comparison – General Fund ................ 165 iii TABLE OF CONTENTS (continued) SECTION PAGE STATISTICAL SECTION (unaudited) Statistical Section Table of Contents ......................................................................................... 177 Net Assets by Component ....................................................................................................... 179 Changes in Net Assets ............................................................................................................. 180 Fund Balances, Governmental Funds ........................................................................................ 182 Changes in Fund Balances, Governmental Funds ....................................................................... 183 Assessed Valuation ................................................................................................................. 184 Direct and Overlapping Property Tax Rates ............................................................................... 185 Principal Property Taxpayers ................................................................................................... 186 Property Tax Levies and Collections ......................................................................................... 187 Special Assessments Billings and Collections ............................................................................. 188 Ratios of Total Debt Outstanding ............................................................................................. 189 Legal Debt Margin Information ................................................................................................ 190 Demographic and Economic Statistics ...................................................................................... 191 Principal Employers ................................................................................................................. 192 Full Time Equivalent County Government Employees by Function .............................................. 193 Operating Indicators by Function ............................................................................................. 194 Capital Assets Statistics by Function ......................................................................................... 195 iv __________________________________________________________________ INTRODUCTORY SECTION __________________________________________________________________ 1 2 County of San Luis Obispo GERE W. SIBBACH, CPA Office of the Auditor-Controller JAMES P. ERB, CPA, Assistunt 1055 Monterey Street Room D220 LYDIA CORR, CPA,Depaty San Luis Obispo, California 93408 JAMES HAMILTON, CPA, Deputy (805) 781-s040 FAX (805) 781-1220 Email: auditor@co.slo.ca.us December 28,2012 Honorable Board of Supervisors County of San Luis Obispo 1055 Monterey Street, Suite D430 San Luis Obispo, California 93408 Your Honorable Board: The Comprehensive Annual Financial Repoft (CAFR) of the County of San Luis Obispo for the fiscal year ended June 30,20t2, is hereby submitted as mandated by Sections 25250 and 25253 of the Government Code of the State of California. These statutes require that the County publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed ceftified public accountants. This report consists of management's representations concerning the finances of the County of San Luis Obispo. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this repoft. To provide a reasonable basis for making these representations, management of the County of San Luis Obispo has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the County of San Luis Obispo's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the County of San Luis Obispo's comprehensive framework of internal controls has been designed to provide a reasonable rather than an absolute assurance that the flnancial statements will be free from material misstatement. As management, we asseft that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The County of San Luis Obispo's financial statements have been audited by Gallina LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide a reasonable assurance that the financial statements of the County of San Luis Obispo for the fiscal year ended June 30, 20L2, are free of any material misstatement, The independent audit involved examining, on a test basis, evidence suppofting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor 3 concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the County of San Luis Obispo's flnancial statements for the fiscal year ended June 30,2012, are fairly presented and in conformity with GAAP. The independent auditor's repoft is presented as the first component of the financial section of this repoft. The independent audit of the financial statements of the County of San Luis Obispo (County) was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to repoft not only on the fair presentation of the flnancial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These repofts are available in the County of San Luis Obispo's separately issued Single Audit Repoft. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A it. and should be read in conjunction with The County of San Luis Obispo's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The County of San Luis Obispo, incorporated in 1850, is located on the central coast of the State of California, midway between Los Angeles and San Francisco. The County of San Luis Obispo currently occupies a land area of 3,326 square miles and serves a population of 273,231 residents. Approximately 44o/o of the population resides in the unincorporated area. The seven cities of the County are Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach and San Luis Obispo. A five-member County Board of Superuisors is the legislative authority and governance for the County. Each supervisor is elected to a four-year term in nonpartisan districts. The terms are staggered with two superuisors being elected then three supervisors being elected in alternating election years. The Board is responsible among other things, for establishing ordinances, adopting the budget, appointing committees, and hiring the County Administrator and non-elected department heads. The County Administrator is responsible for carrying out the policies and ordinances of the Board and for overseeing the day-to-day operations of the County. The County has six elected department heads responsible for the offices of the County Clerk-Recorder, Assessor, Treasurer-Tax Collector-Public Administrator, Auditor-Controller, District Attorney, and Sheriff-Coroner. The County of San Luis Obispo provides a full range of seruices, including public safety and flre protection; construction and maintenance of highways, streets, and other infrastructure; health and social programs that promote the well-being of the community; and recreational activities and cultural events. 4 The annual budget serves as the foundation for the County of San Luis Obispo's financial planning and control. The County Budget Act, as presented in California Government Code section 29000 and 30200, provides the general provisions and requirements for preparing and approving the County budget. All County departments are required to submit budget requests to the County Administrator on or before June 10th of each year. The budgets are then reviewed by the County Administrator, and compiled into a proposed budget with a County Administrator's recommendation. Public hearings are set in the month of June, with the Board of Supervisors adopting the final budget before the staft of the next fiscal year. The proposed budget is prepared by fund, function (e.9., public safety), and depaftment or division (e.9., Sheriff). During the year, department heads may make transfers of appropriations within a division with the approval of the County Administrator and Auditor-Controller. Transfers of appropriations between departments or increases in the budget from new revenue sources, reserues and/or contingencies require Board of Superuisors approval. Monthly estimates for both revenues and expenditures are used to assist departments with budgetary control, and quafterly repofts are submitted by each department to the County Administrator and the Board on the status of their budgets. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented as paft of the required supplementary information immediately following the notes to the financial statements. For other governmental funds with appropriated annual budgets, this comparison is presented in the governmental fund subsection of the statements. Factors Affecting Financia! Condition The information presented in the flnancial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the County of San Luis Obispo operates. Employment: o Uneffiployment in the County as of October 30, 2012 was 7.3o/o, which is lower than the state Unemployment Rates* rate of L0.to/o and slightly lower than the 14.0% national average (7.5o/o). Last year at this 12.0% time unemployment in the County was 9.6%. ou 10.0% ! 8,0% o og ..iNational The State of California has a major presence in Io 6.0% {-California this area with California Men's Colony, 4.0% *d*.san Luis0bispo Atascadero State Hospital, CalTrans, and 2.0o/o California Polytechnic State University, making \n o\o o\r o o\o o\o o\il d i\H N\ the State the largest employer in the County. oooooooi idiildddH The reduction of the State workforce rSourc€: US Bureau of Labor Statistics previously had an impact on the County's 5 unemployment rate. However, with an optimistic recovery in the economy and some of the cost saving measures implemented by the State unemployment statewide is showing improvements. Income: o Family average income of 935,155, as repofted to the Franchise Tax Board, Median lncome* increased by just under 1%o from 2009 to 2010 (most recent data) for the s37,303 535,50.1 residents of the County of San Luis 535,303 Obispo. s3s,503 I s:s,ror . I The San Luis Obispo 2010 average s:+,:or family income of $35,155 was 534,100 s33,503 approximately 3.60/o higher than the 533,cor State average. San Luis Obispo County s32,s03 ranked 20th out of 58 counties when 2005 2407 2008 2009 2010 'Swrcr Crllfordr Fmchb. hx Bsd comparing annual income, in 2009 we were ranked 23rd. Retail Sales: o Retail sales for the County of San Sales Tax - Unincorporerted* Luis Obispo as a whole increased by 5.00/o from 2009 to 2010 according s8,000,000 to the State Board of Equalization. 56.ooo,ooo e o The unincorporated area of the € o s4,ooo,ooo County of San Luis Obispo, for the s2,000,000 I Sales Tax second year in a row, realized a in significant increase sales tax 3= revenue. From June 2011 to June flx 2012 sales tax revenue increased by rSourcc: County'r Entarprlil Flnrnclal 5y5t.m L9.560/o. Real Estate: People's desire to live in the area kept the median home price at $365,000 as of October 2012. This is an increase of 11.45o/o from the same period in the prior year. Increase of the median home price demonstrates that the local real estate market may have reached its low and is stafting to rebound. Local economists are optimistic but remain guarded implying a real estate recovery will be slow, but we are seeing signs of improvement. Discretionary propefi tax revenue indicators clearly illustrate a slowly recovering local economy. Discretionary revenue receipts were $149 million, an increase of 2o/o oYer the prior year. 6 . The total tax levy of secured propefi of $447,6t0,414 for flscal year 20L2-2013 is an increase of L.3o/o from the previous year. o Property Transfer Tax is related to the value and number of real estate transactions during the year. The unincorporated area of the County saw an increase of close to 31% during 20LI-2012. When this is compared to the prior fiscal years of decreases it implies that housing sales may be stabilizing. However, Propefi Transfer Tax is still close to 50o/o lower than it was in 2005. o The propefi tax delinquency rate was the lowest it has been since 200512006 and has now decreased for 3 years in a row indicating that foreclosures are slowing down, and family income is remaining stable. o Building permits issued remained stable from 2011 to 20L2, but are still hovering around the lowest number of permits issued in the last 10 years. However, the valuation of the permits issued increased by 6000/o over the last flscal year due to the building of two solar farms and the rebuilding of an oilfield. Tourism: o Transient occupancy tax increased in 2012 by t.7o/o in the unincorporated area. The pristine coastline, small town atmospheres, sweeping vineyards, excellent restaurants, and friendly attitudes of the local residents make San Luis Obispo County a desired tourist destination. o to Tra nsie nt Occupa ncy Ta x* Tourists San Luis Obispo County recognize the community's commitment 57,000,000 1-- to environmental eftorts, the latest being JI -'* 56,5uu,uou the Plastic Bag Ban. Shoppers must carry their own bags or purchase paper bags 55,000,000 from the local vendors for 10 cents a bag. $5,500,000 It was argued that plastic bags create 55,oou.o0u serious litter and landfill problems as well as cause damage to local wildlife. iScurce: County's Enterprile Financial Syttrn Long-term financial planning: o The 20t2-20L3 fiscal year budget was developed to address major changes in the overall financial status of the County. The 2007 to 2010 downturn in the housing market continues to have a signiflcant impact on the County's main discretionary revenue source, propefi taxes. This factor, along with increases in employee pension costs produced another lean budget year. The final 2012- 2013 budget authorized a $490.9 million spending level, which is an increase over the $443.2 million budget from the 20tt-20L2 FY. The general fund included $403.0 million appropriated to finance the current year's expenditures including contingencies, with $B million placed in general reserves and 910.3 million earmarked for designations. The 2012-20t3 FY budget anticipates that 7 the 2013-2014 FY will continue to be relatively flat. Accepting this outlook, hiring reseruations are still in place so only positions that are critical to public health, public safety or essential for key operations will be filled. . Each year a S-year Capital Improvement Program (CIP) is compiled. The CIP is a plan for short range and long-range capital acquisition and development. It also includes plans to improve or rehabilitate County-owned roads and facilities. The plan provides the mechanism for estimating capital requirements; setting priorities; monitoring and evaluating the progress of capital projects; and informing the public of projected capital improvements and unfunded needs. While the CIP covers a flve-year planning period, it is updated each year to reflect ongoing changes as new projects are added, existing projects modified, and completed projects deleted from the plan document. The five-year CIP does not appropriate funds; rather it serves as a budgeting tool, identifying those Capital Project appropriations to be made through the adoption of the County's annual budget. The 2012-2013 FY capital budget included only one new project. Total 20L2-20L3 appropriations for Capital Projects are approximately $28.8 million. Many of the existing projects will be completed over multiple years. Relevant Financial Policies: . Balanced Budget: The County Administrative Officer shall present a balanced budget for all County operating funds on an annual basis. . Budget Cuts: County depaftments have been able to absorb the decreases in revenue through budget cuts without having to create furlough days or implement staff layoffs of permanent full-time positions. Staff has been allowed to take Voluntary Time Off which results in a salary savings to their respective depaftments. o Budget Priorities: For the FY 20t2-2013 Budget the Board of Supervisors established budget priorities of a) Meet legal mandates; b) Meet debt seruice requirements; c) Provide public safety. o Use of "One-Time" Funds: One-time revenue shall be dedicated for use for one- time expenditures. Annual budgets will not be increased to the point that ongoing operating costs become overly reliant upon ryclical or unreliable one- time revenues. . Adopt a Formal Debt Policy: A comprehensive Debt Management Policy was developed by the Auditor-Controller and approved by the Debt Advisory Committee. It was adopted by the Board of Supervisors on December L4,20L0. o Cost Recovery through Fees: Utilize fees to recover costs where reasonable and after all cost savings options have been explored, o Scrutinized Hiring: Hiring restrictions are still in place so only positions that are critical to public health, public safety or essential for key operations will be filled. 8 The Sheriff's Depaftment has added new positions due to the AB 109 public safety realignment. AB 109 has transferred a number of inmates from state prisons back to local jails. o Pension Cost: The County has implemented a Tier II retirement plan for new employees for most of the employee bargaining units. The Tier II plan will reduce future employee retirement beneflts and limit the County's future pension obligation. All new pension cost increases will be shared equally between the County and employees. In addition, Governor Brown implemented a Public Employee Pension Reform Act which takes effect on January L, 2013. The County plans to establish a Tier III retirement plan and comply with or exceed the requirements of the pension reform legislation. Major Initiatives: o Los Osos Sewer Project: This project is underway and is being led by the County's Public Works Depaftment. This high profile project has changed leadership numerous times and been debated for a number of years. Indecision and disagreement have led to multiple delays and increased project costs. This project is a requirement of the State to protect the local ground water tables which risk infusion from the numerous residential septic systems in the community of Los Osos. . Women's Jail Expansion Project: Partially due to AB 109 public safety realignment, the County has decided to re-staft the Woment jail expansion project. The Sheriff's Depaftment is currently housing approximately 75 women in a facility that was designed for 43 female inmates. The expansion project should take approximately 3 years and when completed will house up to 198 inmates. Pandemic Response: The Health Agency's annual distribution of flu vaccinations prepares emergency responders to effectively handle pandemic threats. Anti-Gang Coordinating Commission: The Commission is coordinated through the efforts of the District Attorney, Sheriff-Coroner, and Chief Probation Officer. Due to their work, gang related cases have significantly decreased in the past three years. Greenhouse Gas Reduction: The County designed and implemented alternative work schedules to reduce the County's greenhouse gas footprint by decreasing the number of employee vehicle miles driven to and from work. Automation Enhancements: The County installed a new case management system linking together the public protection agencies of Sheriff-Coroner, District Attorney, Probation, and the local courts. The County also implemented a new case management system for the Health Agency divisions of Mental Health, Drug and Alcohol Seruices, and Public Health. These projects are still ongoing. 9 . Property Tax System: The County's mainframe Property Tax system is undergoing a platform change to a more usable and flexible server platform. This restructuring will reduce annual information technology maintenance cost and is part of the County's master plan of moving off of the mainframe. Awards and Acknowledgments Awards: o The Government Finance Officers Association (GFOA) awarded a Ceftificate of Achievement for Excellence in Financial Repofting to the County of San Luis Obispo for its comprehensive annual financial repoft (CAFR) for the fiscal year ended June 30, 20Lt. This was the twenty-sixth consecutive year that the County has received this prestigious award. In order to be awarded a Ceftiflcate of Achievement, the County published an easily readable and efficiently organized Comprehensive Annual Financial Repoft (CAFR). This repoft satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Ceftificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another ceftificate. Acknowledgements: o The preparation of the Comprehensive Annual Financial Report would not have been possible without the efficient and dedicated services of the entire staff of the Auditor-Controller's Office. We would like to acknowledge the special effofts of our Enterprise Financial System Operations Division and our independent auditors, Gallina LLP, for their assistance in the repoft preparation. We would also like to express our appreciation to all County depaftments who assisted in this process and to the Board of Superuisors for its leadership responsibility and unfailing support to ensure the continued general fiscal health and integrity of the County. Respectful Iy submitted, 2% 4 Gere W. Sibbach, CPA Dan Buckshi Auditor-Controller County Administrative Officer 10 11 COUNTY OF SAN LUIS OBISPO LIST OF ELECTED AND APPOINTED OFFICIALS JUNE 30, 2012 Elected Officials Board of Supervisors District #1 .............................................................................................. Frank R. Mecham District #2 ................................................................................................ Bruce S. Gibson District #3 ......................................................................................................... Adam Hill District #4 Vice-Chairperson .......................................................................... Paul Teixeira District #5 Chairperson ........................................................................ James R. Patterson Other Elected Officials Assessor ........................................................................................... Tom J. Bordonaro Jr. Auditor-Controller .................................................................................... Gere W. Sibbach Clerk-Recorder ........................................................................................ Julie L. Rodewald District Attorney......................................................................................... Gerald T. Shea Sheriff-Coroner ............................................................................................ Ian Parkinson Treasurer/Tax Collector/Public Administrator .............................................. Frank L. Freitas Appointed Officials Agricultural Commissioner ....................................................................... Marty Settevendemie Chief Probation Officer .......................................................................................... James Salio Child Support Services Director ................................................................................. Phil Lowe County Administrator ............................................................................................... Jim Grant County Counsel ................................................................................................ Warren Jensen County Fire ......................................................................................................... Robert Lewin Behavioral Health Administrator ........................................................................... Karen Baylor General Services Agency Director .......................................................................... Janette Pell Farm Advisor ................................................................................................... Richard Enfield Health Agency Director .......................................................................................... Jeff Hamm Human Resources Director ....................................................................... Tami Douglas-Schatz Library Director ........................................................................................... Brian A. Reynolds Planning .............................................................................................................. Jason Giffen Public Health Officer ..................................................................................... Penny Borenstein Public Works Director ......................................................................................... Paavo Ogren Social Services Director .......................................................................................... Lee Collins Veteran’s Service Director ............................................................................... Dana Cummings 12 Citizens of San Luis Obispo County Special Districts Governed Boards, Commissions and ---------------- Board of Supervisors* ------------------ by the Board of Supervisors Committees County Administrator Health & Land Public Community Fiscal & Internal Human Based Protection Services Administrative Support Services Ag Child Support Auditor- County Health Agency Library Commissioner Services Public Health Controller* Counsel Mental Health Drug & Alcohol Planning & District Animal Services Treasurer-Tax Human Farm Advisor Building Attorney* Medical Services Collector* Resources General General Services Sheriff- Public Works Social Services Services Assessor* (Fleet, Coroner* (Airports. Information Golf , Parks Technology) & Rec) Clerk- Probation Veterans' Recorder* Services Administrative Cal Fire** Office Emergency Services * Elected Officials **Contract 13 14 __________________________________________________________________ FINANCIAL SECTION __________________________________________________________________ 15 16 INDEPENDENT AUDITOR’S REPORT The Honorable Board of Supervisors County of San Luis Obispo, California We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County of San Luis Obispo, California (County), as of and for the year ended June 30, 2012, which collectively comprise the County’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the San Luis Obispo County Pension Trust Fund, and the First 5 San Luis Obispo County, a discretely presented component unit. Those financial statements were audited by other auditors whose reports thereon have been furnished to us. Our opinion, insofar as it relates to the amounts included in the San Luis Obispo County Pension Trust Fund, and the First 5 San Luis Obispo County is based solely on the report of the other auditors. 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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit, and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County of San Luis Obispo, California, as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America. 925 Highland Pointe Drive, Suite 450, Roseville, CA 95678-5418 17 tel: 916.784.7800 fax: 916.784.7850 www.gallina.com The Honorable Board of Supervisors County of San Luis Obispo, California In accordance with Government Auditing Standards, we have also issued a report dated December 27, 2012 on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and the other required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was made for the purpose of forming opinions on the financial statements that collectively comprise the County of San Luis Obispo’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical section 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 and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The 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. The introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion or provide any assurance on it. Roseville, California December 27, 2012 18 __________________________________________________________________ MANAGEMENT’S DISCUSSION AND ANALYSIS __________________________________________________________________ 19 20 COUNTY OF SAN LUIS OBISPO MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2012 As management of the County of San Luis Obispo, (the County), we offer readers the County’s financial statements, this narrative overview, and analysis of the financial activities of the County for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with the transmittal letter at the front of this report and the County’s financial statements, which begin on page 39. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL HIGHLIGHTS (in thousands) The assets of the County exceeded its liabilities at the close of the most recent fiscal year by $1,583,698 (net assets). Of this amount $298,535 (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors, $31,477 is restricted for specific purposes (restricted net assets), and $1,253,686 is invested in capital assets, net of related debt. (Table A) The County’s net assets increased by $39,914 during the current fiscal year. The increase in restricted and unrestricted net assets represents the degree to which increases in ongoing revenues exceeded increases in ongoing expenditures. The increase in capital assets net of related debt represents capital acquisitions during the year reduced by depreciation and increased by retirement of long-term debt. (Table B) As of June 30, 2012 the County’s governmental activities reported combined ending net assets of $1,396,816, an increase of $40,794 in comparison with the prior year. Approximately 20% of the combined fund balances, or $265,454 is available for spending at the County’s discretion for current and future needs (unrestricted net assets). (Table A) Business-type activities posted net program income of $2,555 before general revenues, contributions and transfers from other funds, a decrease of $1,332 when compared to net program income of $3,887 in the prior year. Significant differences from the prior year include increased water sales in the Nacimiento Water Contract fund of $4,899 and a one-time charge of $6,288 in the Los Osos Wastewater fund related to the assumption of State loans from the Los Osos CSD. At the end of the fiscal year, spendable fund balance of the general fund was $177,853 or 52% of total general fund expenditures. The County issued new Assessment bonds of $15,364 to the USDA to finance costs of the Los Osos Wastewater project, repaying Bond Anticipation notes of $8,677 issued in the prior year. Additional bonds will be issued as future project expenditures occur. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the County’s basic financial statements. The County’s basic financial statements include four components: 1) government-wide financial statements, 2) fund financial statements, 3) notes to the financial statements, and 4) required supplementary information. This report also contains other supplementary information in addition to the basic financial statements. 21 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Government-wide financial statements The Government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the County’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The Statement of Activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the 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 (e.g., uncollected taxes and earned but unused employee vacation balances). Both of the government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their cost through user fees and charges (business-type activities). The governmental activities of the County include public protection, public ways and facilities, health and sanitation, public assistance, education, recreational and cultural services and general government. The main business-type activities of the County include the airport, golf courses, flood control districts, the Nacimiento water project and county services areas. Blended component units are included in our basic financial statements and consist of legally separate entities for which the County is financially accountable and that have substantially the same board as the County or provide services entirely to the County. They include county service areas, transit districts, flood control districts, waterworks districts, lighting maintenance districts, and the San Luis Obispo County Public Facilities Corporation and San Luis Obispo County Financing Authority. The County discretely presents the First 5 San Luis Obispo County component unit. The mission of First 5 is to allocate funds from the California Children and Families Trust Fund and advocate for quality programs and services, supporting children prenatal to age 5, to ensure that every child is healthy and ready to learn in school. First 5 does not meet the requirements for blending, and therefore its financial activities are presented separately from the County. The government-wide financial statements can be found on pages 39 to 41 of this report. 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 County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on the balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. 22 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Both the governmental fund balance sheet and the governmental fund statements of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains twenty-five individual governmental funds organized according to their type: general, special revenue, debt service, and capital projects. Information is presented separately in the governmental funds’ balance sheet and in the governmental funds’ statement of revenues, expenditures, and changes in fund balances for the general fund and the capital projects fund, which are considered to be major funds. Data from the remaining twenty-three governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements found in the other supplementary information section of this report. A budgetary comparison statement has been provided for the general fund and any major special revenue funds to demonstrate compliance with the budget and can be located in the required supplementary section of the report. Individual budgetary data for each of the non-major governmental funds is provided in the other supplementary information section of this report. The basic governmental fund financial statements can be found on pages 45 to 48 of this report. Proprietary funds – The County maintains two different types of proprietary funds, enterprise and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for the airport, golf course, transit districts, flood control districts, waterworks districts and county service areas. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County’s various functions. The County uses internal service funds to account for its reprographic services, vehicle operations and maintenance, public works services, Other Post Employment Benefits, and self-insurance programs. Because these services predominately benefit governmental rather than business-type functions, they have been included within governmental activities in the governmental-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The Airport, Nacimiento Water Contract, State Water Project, Lopez Flood Control, and Los Osos Wastewater funds are considered to be major funds of the County and are presented separately in the proprietary fund financial statements. All other enterprise funds have been combined into a single column for presentation. The eight internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service and enterprise funds is provided in the form of combining statements found in the other supplementary section of this report. The basic proprietary fund financial statements can be found on pages 49 to 51 of this report. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 52 to 53 of this report. Notes to the Basic 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. The notes to the basic financial statements can be found on pages 55 to 91 of this report. Required Supplementary Information – The statements are followed by a section of required supplementary information (RSI) that further explains and supports the information in the financial statements. The required supplementary information can be found on pages 93 to 99 of this report. 23 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Other Supplementary Information – In addition to the basic financial statements, accompanying notes, and required supplementary information, this report also presents certain other supplementary information concerning the County’s general fund and special revenue funds budgetary schedules and combining and individual fund statements. Combining and individual fund statements and schedules – The combining and individual fund statements and schedules referred to earlier provide information for non-major governmental funds, enterprise, internal service funds, and fiduciary funds and are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 103 to 118 and 139 to 163 of this report. Budgetary comparison schedules – Budgetary comparison schedules for major funds (other than the General Fund which is presented with the individual General Fund statements). The budgetary comparison schedules for the Capital Projects, Pension Obligation Bond, Public Financing Corporation and non-major Special Revenue funds can be found on pages 119 to 138 of this report. Detail Budgetary schedules demonstrating legal level of compliance with budgetary control for the General Fund are presented with the individual General Fund statements on pages 167 to 173 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS In accordance with changes in governmental accounting standards, the County applied Governmental Accounting Standards Board (GASB) Statement No. 34 to these financial statements. As stated earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the County, assets exceeded liabilities $1,583,698. Table A Statement of Net Assets June 30, 2012 (in thousands) 2011- June 30, 2012 June 30, 2011 2012 Total Total Govern- Business- Primary Govern- Business- Primary Total mental Type Govern- mental Type Govern- % Activities Activities ment Activities Activities ment Chg Assets: Current assets $ 353,819 $ 169,017 $ 522,836 $ 346,969 $ 177,609 $ 524,578 (0.3%) Other long-term assets 139,500 16,134 155,634 136,763 20,307 157,070 (0.9%) Capital assets 1,125,153 415,313 1,540,466 1,111,182 405,853 1,517,035 1.5% Total assets 1,618,472 600,464 2,218,936 1,594,914 603,769 2,198,683 0.9% Liabilities: Long-term liabilities 170,518 275,774 446,292 174,047 259,970 434,017 2.8% Other liabilities 51,138 137,808 188,946 67,685 153,197 220,882 (14.5%) Internal balances - - - (2,840) 2,840 - - Total liabilities 221,656 413,582 635,238 238,892 416,007 654,899 (3.0%) Net assets: Invested in capital assets, net related debt 1,099,885 153,801 1,253,686 1,084,978 149,097 1,234,075 1.6% Restricted 31,477 - 31,477 36,258 - 36,258 (13.2%) Unrestricted 265,454 33,081 298,535 234,786 38,665 273,451 9.2% Total net assets $ 1,396,816 $ 186,882 $ 1,583,698 $ 1,356,022 $ 187,762 $ 1,543,784 2.6% 24 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Analysis of Net Assets Approximately 19%, or $298,535 of the County’s net assets represents unrestricted net assets, which may be used to meet the County’s ongoing obligations to citizens and creditors. The most significant portion of the County’s net assets, $1,253,686 or 79%, reflects its investment in capital assets net of accumulated depreciation (e.g. land and easements, structures and improvements, infrastructure, and equipment), less any outstanding related debt used to acquire those assets. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The remaining balance of the County’s net assets of $31,477, or 2%, represents resources that are subject to external restrictions on how they may be used. At the end of the current fiscal year, the County reported positive balances in all three categories of net assets, both for the County as a whole, as well as for its separate governmental activities and business-type activities. Net assets for governmental activities increased $40,794 and net assets for business activities decreased $880 resulting in an overall increase of $39,914 in the County’s total net assets. Invested in capital assets, net related debt for business type activities increased $4,704. This increase is due to a contribution of land made by the Los Osos CSD to the Los Osos Wastewater fund in the amount of $2,470 having no related debt, as well as reductions to capital related debt from scheduled debt service principal payments. Invested in capital assets, net related debt for governmental activities increased $14,907. The majority of the increase is associated with construction in progress for several large infrastructure projects having no related debt, and the retirement of capital related long-term debt. There was an increase of $25,084 in unrestricted net assets reported in connection with the Total Primary Government. This category represents net assets of the County that are not subject to constraints imposed by creditors, grantors, contributors, laws or regulations. This amount may be used to meet the County’s general obligations. The increase was due to excess general revenues over net program revenues and a decrease in amounts restricted for commitments to creditors. 25 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The following table indicates the changes in net assets for governmental and business-type activities: Table B Statement of Activities For the Year Ended June 30, 2012 (in thousands) June 30, 2012 June 30, 2011 2011- 2012 Govern- Business- Total Govern- Business- Total Total mental Type Primary mental Type Primary % Activities Activities Government Activities Activities Government Chg Revenues: Program revenues: Charges for services $ 53,171 $ 37,789 $ 90,960 $ 61,966 $ 32,218 $ 94,184 (3.4%) Operating grants and contributions 188,526 468 188,994 183,502 1,335 184,837 2.2% Capital grants and contributions 14,020 9,329 23,349 7,771 11,719 19,490 19.8% General revenues: Property taxes 140,288 3,799 144,087 139,214 3,841 143,055 0.7% Other taxes 16,330 28 16,358 14,393 28 14,421 13.4% Interest and investment income 1,202 0 1,202 986 965 1,951 (38.4%) Grants not restricted to specific programs 3,978 755 4,733 3,520 - 3,520 34.5% Other revenues - 31 30 172 447 619 (95.2%) Total revenues 417,514 52,199 469,713 411,524 50,553 462,077 1.7% Expenses: General government 35,231 - 35,231 35,344 - 35,344 (0.3%) Public protection 136,219 - 136,219 132,413 - 132,413 2.9% Public ways and facilities 27,120 - 27,120 27,365 - 27,365 (0.9%) Health sanitation 65,799 - 65,799 66,657 - 66,657 (1.3%) Public assistance 96,435 - 96,435 98,841 - 98,841 (2.4%) Education 10,000 - 10,000 10,057 - 10,057 (0.6%) Recreational and cultural services 7,344 - 7,344 7,363 - 7,363 (0.3%) Interest on Long-term debt 6,620 - 6,620 6,787 - 6,787 (2.5%) Airport - 5,422 5,422 - 7,732 7,732 (29.9%) Golf - 2,863 2,863 - 2,690 2,690 6.4% State water contract - 6,761 6,761 - 6,705 6,705 0.8% Nacimiento Water Contract - 11,901 11,901 - 11,844 11,844 0.5% Lopez dam - 5,752 5,752 - 6,499 6,499 (11.5%) General Flood Control - 1,816 1,816 - 928 928 95.7% Transit - 8 8 - 1,105 1,105 (99.3%) County Service Areas - 3,836 3,836 - 3,877 3,877 (1.1%) Los Osos Wastewater - 6,672 6,672 - 5 5 133,340% Total expenses 384,768 45,031 429,799 384,827 41,385 426,212 0.8% Excess/(deficiency) before transfers 32,746 7,168 39,914 26,697 9,168 35,865 11.3% Transfers 8,048 (8,048) - 150 (150) - 0.0% Change in net assets 40,794 (880) 39,914 26,847 9,018 35,865 11.3% Net assets at beginning of year 1,356,022 187,762 1,543,784 1,329,175 178,744 1,507,919 2.4 Net assets at end of year $ 1,396,816 $ 186,882 $ 1,583,698 $ 1,356,022 $ 187,762 $ 1,543,784 2.6% 26 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Analysis of Governmental and Business-type Activities Governmental Activities Governmental activities increased San Luis Obispo County’s net assets by $40,794 compared to an increase of $26,847 in the prior year. Factors contributing to the increase are as follows: Total revenues from Governmental Activities grew slightly (1.7%) with a net increase of $5.9 million from the prior year. Program Revenues saw increases in both Capital and Operating Grants and Contributions and a decrease in Fines Fees and Charges for Services. The Capital Grants and Contributions category rose primarily due to increased Statewide Transportation Improvement Program (STIP) funding in the Public Ways and Facilities function related to the Willow Road Interchange project. The San Simeon Creek Bridges and Price Canyon Road Bridge widening projects also contributed to the increase in this revenue category. Operating Grants and Contributions also saw increases in the Public Protection function in part due to new State funding from the passage of AB 109, commonly known as 2011 Public Safety Realignment, which realigned responsibility for incarcerating certain offenders from the State to counties with funding provided by the State. This increased funding is partially offset by reductions in Public Protection Fines Fees and Charges for Services revenue, reflecting court protection services now being funded through realignment that were previously accounted for in the Fines Fees and Charges for Services category. The Operating Grants and Contributions Public Ways and Facilities function also increased, due to nearly $2 million additional State Highway Users Tax (gas tax) compared to the prior year. These Program Revenue increases were partially offset by an $8.7 million decline in Charges for Services compared to the prior year, primarily due to the prior year receipt of a single $7.6 million Road Impact Fee, as well as the shift in accounting for court security revenue to the Operating Grants and Contributions category from Fines Fees and Charges for Services in connection with AB 109-2011 Public Safety Realignment. General Revenues of Governmental Activities (comprised by Taxes, Grants not restricted to specific programs, Interest, Other Revenues and Transfers) were consistent with the prior year with the exception of Transfers. Transfers from Business-type to Governmental activities increased by nearly $8 million due to a one-time transfer of reserves from the Nacimiento Water Contract fund (Nacimiento Water Contract Business-Type activity) to the SLO Flood Control & Water Conservation District (Governmental Activities, Public Ways and Facilities function). Total expenses from Governmental Activities remained virtually flat with a $59 thousand decrease from the prior year. Within Governmental Activities, the Public Protection function increased slightly (2.9%) driven by additional Sheriff-Coroner expense related to the 2011 Realignment program, as well as County Fire increases due in part to increased staffing during solar plant construction projects taking place in California Valley. Public Assistance functional expenses decreased slightly (2.4%) partly due to a reduction in Foster Care placement services as a result of efforts to limit placements through an ongoing emphasis on preventative social services, as well as reduced CalWORKS caseloads which remain historically high but appear to have peaked in FY2010-11 following the economic downturn. As evidenced by flat year-over-year expenditures, the County has remained committed to a seven-year plan enacted in FY 2007-08 to navigate through national and local fiscal challenges and address a consequential structural budget gap. The plan includes a combination of short-term measures and expenditure reductions, with expenditure reductions addressing a larger share of the gap as the plan progresses. Expenditure measures have included reducing department budgets, maintaining a partial hiring freeze, and progressing labor negotiations including pension cost sharing, a reduced benefit pension plan (Tier 2) for new employees, and an updated approach to setting salaries by using a broader labor market for equitable compensation comparisons. As a result, the budget gap has been reduced from a peak of $30 million in FY 2009-10 to $11.4 million in the FY 2011-12, and is down to $2 million for FY 2012-13. Business-type Activities Business-type Activities decreased San Luis Obispo County’s net assets by $.9 million compared to an increase of $9 million in the previous year. Revenues exceeded expenses by $7.2 million but a transfer to Governmental Activities resulted in the net reduction to net assets. Key elements of current year activity are as follows: 27 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Total revenue increased $1.6 million from the preceding year. The largest increases occurred in Fees, Fines and Charges for Services ($5.5 million) due to growth in the Nacimiento Water Contract activity as water sales increased to $13.9 million in FY 2011-12 from $8 million in FY 2010-11. Revenues in this category remained flat compared to the prior fiscal year for the other Business-Type activities. Operating Grants and Contributions decreased by $.8 million primarily to the elimination of Transit related grants in connection with the transfer of SLOCAT operations outside of the primary government, from the Transit Enterprise fund to the SLO Regional Transit Authority (SLORTA). Capital Grants and Contributions dropped $2.4 million from the prior year primarily due to the completion of a FAA-funded aircraft parking ramp in FY 2010-11 and the conclusion of the related revenue. Also contributing to the decrease was the completion of water tank replacements in County Service Area 23 during FY 2010-11 and the conclusion of the related USDA funding. Capital Grants and Contributions remained flat compared to the prior year for other Business-type activities. General Revenues for Business-type activities were consistent with the prior year with the exception of a one-time transfer of reserves from the Nacimiento Water Contract fund to the SLO Flood Control & Water Conservation District reported under Governmental Activites. Expenses for Business-type Activities increased $3.6 million over the prior year. Within Business-type activities, the Airport reported decrease of $2.3 million over the prior year due to a one-time prior year charge related to the write off of costs from a cancelled terminal expansion project; with the exception of that charge Airport expenses were flat year-over-year. Transit activity expenses were virtually eliminated due to the transfer of SLOCAT operations outside of the primary government to SLORTA. Lastly, the Los Osos Wastewater activity increased significantly over the prior year due to a one-time charge of $6,288 related to the assumption of State loans from the Los Osos CSD. FUND FINANCIAL STATEMENT ANALYSIS FINANCIAL ANALYSIS OF COUNTY'S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the County’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, total fund balance less the nonspendable portion may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Nonspendable fund balance, $3,566, represents amounts that are not spendable in form, or are legally or contractually required to be maintained intact, and includes (1) inventories of $96 (2) prepaid items of $321 and (3) long term receivables of $3,149. Restricted fund balance, $26,470, represents amounts that are subject to externally enforceable legal restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation. This balance includes amounts restricted for (1) Tax Loss Reserves of $6,682 (2) Public Protection of $7, (3) Public Ways and Facilities of $17,243, and (4) Debt Service of $2,538. As of the end of the current fiscal year, the County’s governmental funds reported combined ending fund balance of $262,351, an increase of 10%, or $23,827 in comparison with the prior year. Approximately 89% of the total fund balance, or $232,315, is available to meet the County’s current and future needs. Total fund balance consists of the following components (see footnote 11 for additional detail): Committed fund balance, $130,024, represents amounts with constraints imposed by the Board of Supervisors for specified purposes. Significant components of this balance include commitments for (1) Public Protection - $17,727, (2) Public Ways and Facilities - $9,600, (3) Automation Projects – $11,550, (4) Building Replacement $12,512, (5) Tax Reduction Reserve - $15,549, and (6) Capital Projects – $22,675. 28 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Unassigned fund balance, $102,291, consists of the excess of total fund balance over the other components (nonspendable + restricted + committed + assigned) for the County’s General Fund. None of the other governmental funds had an unassigned balance. General Fund The general fund is the chief operating fund of the County. As of the end of the current fiscal year, spendable fund balance of the general fund was $177,853 while total fund balance reached $181,029. As a measure of the general fund’s liquidity, it is useful to compare both total fund balance and spendable fund balance to total fund expenditures of $338,853. Spendable fund balance represents 52% of the total fund expenditures, while total fund balance represents 53% of the same amount, a 6% increase from the prior year. During the current fiscal year, the fund balance of general fund increased by $20,462. The following provides an explanation for the change in fund balance. Total revenues exceeded total expenditures by $38,357. General fund revenues ended the year with an increase of $7 million over the prior year. Total expenditures decreased $5.4 million. Revenue was up in all categories except Fines, Forfeits and Penalties and Charges for Current Services when compared to the previous year’s totals. The largest dollar increases occurred in Taxes ($5.6 million) and Aid from Governmental Agencies ($4.8 million). Fines, Forfeits and Penalties decreased $1.1 million and Charges for Current Services decreased $4.8 million. Growth in Taxes came from Prior Year Secured Property Taxes of $1.6 million over the prior year continuing an upward trend started in FY 2010-11 triggered by fewer Prop 8 reductions. Also contributing to the increase was Sales and Use Taxes, up $1.2 million over FY 2010-11. Increases were also experienced in Transient Occupancy tax for the second year in a row. The growth in Aid from Governmental Agencies was largely driven by increased realignment revenue across many functions related to AB-109. There were decreases in this category as well, due to a slowdown in ARRA funding drops in assistance programs such as CalWORKS and Foster Care. The drop in Fines, Forfeits and Penalties compared to the prior year was largely due to the receipt of a $1.9 million settlement in FY 2011 causing a spike in that year. The growth Aid from Governmental Agencies brought a corresponding decrease in Charges for Current Services as AB-109 funding shifted between those categories. Total expenditures in General Fund decreased $5.5 million from the prior year. Expenditures were down or flat for all functions except for Public Protection which experienced a $2.5 million increase over the prior year. This increase was driven by additional Sheriff-Coroner expense related to the 2011 Realignment program, as well as County Fire staffing associated with California Valley solar plant construction project. General Government functional expenditures decreased $4.4 million (8.9%) due to higher prior year capital outlays related to the purchase property in Atascadero for a North County One Stop Shop that year. Also decreasing was Public Assistance expenditures, down $3.2 million (3.5%), due to reduced assistance program caseloads. Capital Projects The Capital Projects Fund handles construction projects for the County’s governmental funds. The fund had a total fund balance of $22.7 million. Capital outlay expenditures exceeded revenues by $4.5 million and transfers in exceeded transfers out by $4.1 million. The net of these two factors resulted in a $0.4 million decrease in fund balance for the current year. Funding for specific projects comes from use of designations, public facilities fees, issuance of long-term debt, and aid from other government agencies. The general fund was not used as a financing source for new capital projects in the current year. Significant current year activities of the Capital Projects Fund are discussed in the Capital Assets section under Governmental Activities. Governmental Fund Revenues Revenues for governmental funds combined totaled $438,167 in the current fiscal year, which represents an increase of approximately 2.0% or $8,458 from the prior fiscal year revenues of $429,709. 29 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The following table presents the amount of revenues from various sources as well as increases or decreases from the prior year are displayed. Table C Revenues Classified by Source Governmental Funds Fund Financial Statements For the Year Ended June 30, 2012 (in thousands) 2011-2012 2010-2011 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Revenues by Source: Taxes $ 160,920 36.7% $ 155,419 36.2% $ 5,501 3.5% Licenses, Permits, Franchises 7,863 1.8% 7,413 1.7% 450 6.1% Fines, Forfeits, and Penalties 6,750 1.6% 7,993 1.9% (1,243) (15.6%) Revenues from Use of Money and Property 2,273 0.5% 1,242 0.3% 1,031 83.0% Aid from Governmental Agencies 206,372 47.1% 194,625 45.3% 11,747 6.0% Charges for Current Services 45,538 10.4% 56,486 13.1% (10,948) (19.4%) Other Revenues 8,451 1.9% 6,531 1.5% 1,920 29.4% Total $ 438,167 100% $ 429,709 100% $ 8,458 2.0% The following provides an explanation of revenues by source that changed significantly over the prior year in the governmental funds. Fines, Forfeits, and Penalties decreased $1,243 or 15.6%. The most significant factor was from a spike in FY 2011 due to the receipt of a $1.9 million judgment that year related to a major infrastructure project. In addition, the County experienced a continuing trend of modest declines in revenue from traffic school fees and alcohol related fines. Aid from Governmental Agencies increased $11,747 or 6.0%. Within Governmental Aid, State Aid increased $5.3 million and Federal Aid increased $6.4 million. The primary contributor to State Aid increases was the enactment of AB-109 with large increases in realignment revenue. Increases were also seen in State Highway Users Tax and State Nuclear Planning assistance, while State Medi- Cal and CalWorks aid decreased from the prior year. Federal Aid growth was driven by significant increases in Statewide Transportation Improvement Program (STIP) funding, as well as more modest increases in health programs and HUD’s CDBG program. Federal Revenue did experience decreases in funding from ARRA programs. Charges for Current Services decreased $10,948 or 19.4%. The largest factor contributing to the decrease was the absence of a single a one-time $7.6 million developer receipt that was received in FY 2011, contributing to a drop in Road Impact Fees from $8.2 to $2.6 million year-over-year. Also contributing to the decline was the shift of funding from Charges for Current Services to the Aid from Governmental Agencies category, in connection with AB-109 and the reimbursement of court security services provided by the Sheriff. 30 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The following table presents the amount of expenditures by function as well as increases or decreases from the prior year. Table D Expenditures By Function Including Capital Outlay Governmental Funds Fund Financial Statements For the Year Ended June 30, 2012 (in thousands) 2011-2012 2010-2011 Increase/(Decrease) Amount Percent Amount Percent Amount Percent of Total of Total of Change Expenditures by Function: General Government $ 45,850 10.8% $ 50,321 11.9% $ (4,471) (8.9%) Public Protection 138,579 32.7% 135,636 32.0% 2,943 2.2% Public Ways and Facilities 40,338 9.5% 37,261 8.8% 3,077 8.3% Health and Sanitation 67,830 16.0% 68,472 16.2% (642) (0.9%) Public Assistance 97,185 23.0% 100,202 23.6% (3,017) (3.0%) Education 9,973 2.4% 10,191 2.4% (218) (2.1%) Recreational and Cultural Services 6,998 1.7% 7,187 1.7% (189) (2.6%) Principal payments 4,435 1.0% 4,595 1.1% (160) (3.5%) Interest on Long-Term Debt 6,289 1.5% 6,464 1.5% (175) (2.7%) Capital outlay 5,540 1.3% 3,399 .8% 2,141 63.0% Total $ 423,017 100% $ 423,728 100% $ (711) (0.2%) The following provides an explanation of the expenditures by function that changed significantly over the prior year. General Government Expenditures decreased $4,471 or 8.9%. The majority of the decrease increase is attributable to high FY 2010-11 General Fund Capital Outlay related to the purchase of property that year for satellite offices for the Clerk-Recorder, Assessor, and Planning Departments to serve residents in the north county. Public Ways and Facilities expenditures increased $3,077 or 8.3%. The fluctuation is attributable primarily to increased construction and maintenance activity in the Roads Fund. Significant Projects during the current fiscal year include Willow Road Interchange project in Nipomo and he San Simeon Creek Bridges and Price Canyon Road Bridge widening projects. Public Assistance expenditures decreased $3,017 or 3.0% due to a general drop in assistance programs such foster care placement and CalWORKS. Proprietary Funds The County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The following table shows actual revenues, expenses, and results of operations for the 2011-2012 fiscal year. 31 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table E Statement of Revenues, Expenses and Results of Operations Proprietary Funds Fund Financial Statements For the Year Ended June 30, 2012 (in thousands) Major Nonmajor Funds Funds Total Nacimiento State Lopez Other Water Water Flood Los Osos Enterprise Total Airport Contract Project Control Wastewater Funds Enterprise Operating revenues $ 3,719 $ 13,893 $ 6,609 $ 6,440 $ - $ 7,128 $ 37,789 Operating expenses 5,273 2,680 6,783 4,472 39 8,107 27,354 Operating income (loss) (1,554) 11,213 (174) 1,968 (39) (979) 10,435 Non- operating revenues (expenses), net 162 (7,512) 1,261 (130) (6,574) (154) (12,947) Net income (loss) before contributions and transfers (1,392) 3,701 1,087 1,838 (6,613) (1,133) (2,512) Contributions and transfers, net 445 (8,778) - - 9,127 616 1,410 Change in net assets $ (947) $ (5,077) $ 1,087 $ 1,838 $ 2,514 $ (517) $ (1,102) All the enterprise funds are expected to continue to meet all ongoing cost of operations and in the long term be able to maintain sufficient reserves. The Airport Fund reported an operating loss of $1,554 and a decrease in net assets of $947. The loss was less than anticipated in the FY 2011-12 budget due to control of expenditures despite a 4% decrease in passenger enplanements compared to the prior year. The Nacimiento Water Contract Fund realized operating income of $11,213, a 50% increase over the prior year, and a decrease in net assets of $5,077. The increase in operating revenue came as the pipeline had its first full year of water delivery operations. The decrease in net assets was due to a one-time $8.8 million transfer of reserves to the SLO Flood Control & Water Conservation District that became available for general district needs once the pipeline became fully operational. Current year non-operating revenue and expenses included $9.2 million in interest expense and $1.1 million in property tax revenue. The Los Osos Wastewater Fund reported an operating loss of $39 and a non operating loss of $6,574. The non operating loss is primarily due to a one-time charge of $6.3 million related to the assumption of State loans from the Los Osos CSD in connection with the County taking responsibility for construction of the wastewater treatment facility. 32 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) GENERAL FUND BUDGETARY HIGHLIGHTS The original budget for expenditures and transfers out increased by $29.9 million, or 8%, during the course of the year contributing towards the final amended budget. This increase was funded in part by increases in budgeted revenues of $19.3 million and the use of reserves and designations for the balance. Unanticipated revenues totaling $15.6 million in State and Federal Aid, $4.6 million in Other Revenue, $.6 million in Fines, Forfeitures, and Penalties financed the budget augmentations and also offset an unanticipated decrease of $1.8 million in Charges for Current Services. The largest budget augmentations occurred in the functional areas of General Government ($6.9 million), Public Protection ($9.7 million), and Health and Sanitation ($3.7 million). The majority of the increase for General Government is attributable to $4.7 million in maintenance project budgets that were carried forward from FY 2011 to FY 2012. Other significant budget increases included a $1.7 million appropriation to fund a building replacement designation using proceeds from the sale of California Valley land parcels, a $0.5 million increase to fund a financial reporting project, a $0.4 million appropriation for a Sherriff evidence room remodel. Several additional budget supplements took place in the Health and Sanitation and Public Protection functions related to responsibilities placed on the County with AB-109. At the close of the current fiscal year, actual General Fund expenditures were 87% of budget, while General Fund revenues were realized at 99% of budget. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At June 30, 2012, the County had $1,540,469 invested in a broad range of capital assets, including land, buildings, systems improvements, machinery and equipment, park facilities, golf courses, airport facilities, roads, bridges, dams, and water and sewer lines (see Table F below). This amount represents a net decrease (including additions and deductions) of $23,433 or 1.5% from last year. Table F Capital Assets June 30, 2012 (in thousands) Govern- Govern- Business Business Total Total mental mental Type Type Capital Capital Activities Activities Activities Activities Assets Assets Total June 30, June 30, June 30, June 30, June 30, June 30, Percent 2011 $ 2012 2011 2012 2011 $ 2012 Change Land $ 791,590 791,410 $ 29,745 $ 32,485 $ 821,335 823,892 0.3% Water Rights - - 40,962 42,551 40,962 42,551 3.9% Other Property Non Depreciable - - 1,968 1,968 1,968 1,968 - Construction-in- progress 47,147 66,710 14,165 19,302 61,312 86,012 40.3% Structures & Improvements 172,891 173,518 167,954 167,843 340,845 341,361 0.2% Equipment 69,686 72,371 2,735 3,106 72,421 75,477 4.2% Other Property Depreciable 340 340 554 554 894 894 - Infrastructure Depreciable 278,525 285,141 184,377 189,974 462,902 475,115 2.6% Subtotal 1,360,179 1,389,490 442,460 457,783 1,802,639 1,847,273 2.5% Less Accumulated Depreciation (248,997) (264,336) (36,606) (42,470) (285,603) (306,806) 7.4% Total $ 1,111,182 $ 1,125,154 $ 405,854 $ 415,313 $ 1,517,036 $ 1,540,467 1.5% 33 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Major additions and future commitments in capital assets – Governmental activities County Roads completed a $4.6 million project to replace two bridges near Cambria on San Simeon Creek Road. The bridges were structurally deficient and qualified for Federal Highway Administration funding. Other infrastructure projects completed during FY 2012 include an Asphalt Concrete Overlay on Pomeroy and Willow Roads in Nipomo ($1.6 million), the Salinas Dam Booster Pump Station Upgrade Project ($1.4 million), and a Water Storage Tank Replacement in Santa Margarita ($1.5 million). Future projects include a Women’s Jail, expansion of the Juvenile Hall, and development of a new site for the Cambria Library. These projects are contingent on the availability of additional funding sources including community donations and State grant funds. Major additions and future commitments in capital assets – Business-type activities The Airport completed the New Terminal Aircraft Parking Ramp project. This $6.5 million FAA designed project was necessary to meet safety and security needs in addition to creating capacity for future growth. Funding for the project was provided by an FAA grant and Passenger Facilities Charges. Plans are being developed for a new 47,000 square foot terminal for the San Luis Obispo Airport. This modern facility will enable the Airport to provide a higher level of service and comfort for passengers. The preliminary cost estimate to construct the new terminal is $22 million. Airport staff anticipates construction will begin in FY 2014/2015 provided sufficient funding can be arranged. Work continued on a $173 million wastewater project for the community of Los Osos. The project is designed to address groundwater contamination issues caused by years of seepage from septic systems and is scheduled for completion in early 2015. Costs to date through July 2012 totaled $22.8million. In FY 2013, the County implemented a water conservation program with the goal of reducing indoor consumption to 50 gallons per person per day in accordance with the project’s Coastal Development Permit. More detailed information about the County's capital assets is presented in Notes 4 and 5 in the financial statements. Debt Administration At the end of the current fiscal year, the County of San Luis Obispo had total notes and bonds payable of $428,487. In July 2003, the county issued Pension Obligation Bonds to refund the Unfunded Actuarial Accrued Liability due to the Pension Trust. In 2009, the County issued the 2009 Series A Term Bonds to refund and defease the 2003 Series B Auction Rate Bonds. The balance remaining on the County’s Pension Obligation Bonds at the end of FY 2011/2012 is $119,429. Pension Obligation Bonds debt service payments are funded by County payroll benefits. The remainder of the County’s debt consists of: $46,852 in certificates of participation, which are repaid from a variety of revenues; $35,884 in State loans and $199,641 in revenue bonds which are repaid with water service revenue. General Obligation Bonds totaling $11,317 are backed by the full faith and credit of the County. Additionally, the County is liable for $2,662 of special assessment debt in the event of default by the property owner subject to the assessment. 34 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table G Outstanding Debt June 30, 2012 (in thousands) Govern- Govern- Business Business mental mental Type Type Activities Activities Activities Activities Total Total Total June 30, June 30, June 30, June 30, June 30, June 30, Percent 2011 2012 2011 2012 2011 2012 Change Certificates of participation $ 28,713 $ 27,792 $ 19,897 $ 19,060 $ 48,610 $ 46,852 (3.8%) Pension Obligation Bonds 122,689 119,429 - - 122,689 119,429 (2.7%) State notes - - 31,024 35,884 31,024 35,884 13.5% Revenue bonds - - 202,815 199,641 202,815 199,641 (1.6%) General obligation bonds - - 11,888 11,317 11,888 11,317 (5.0%) Bond Anticipation Notes - - 8,677 - 8,677 - -% Assessment Bonds - - - 15,364 - 15,364 100% $ 151,402 $ 147,221 $ 274,301 $ 281,266 $ 425,703 $ 428,487 0.6% The increase over last year for the County’s notes and bonds payable was $2,784, or 0.6%. This increase is the net of new debt issuances and scheduled debt payments. During FY 2011/2012, the County issued $15,354 in Assessment Bonds and $6,289 in State Notes to help finance construction of the Los Osos Wastewater Project. Debt service payments will be funded by amounts levied against property owners and water service revenue. Bond Anticipation Notes totaling $8,677 were repaid with Assessment Bonds issued by the USDA. The County’s received a credit rating of “AA+” from Standard & Poor’s and an “AA” rating from Fitch on its most recent debt issuance in 2012. Moody’s assigned an Aa3 rating. State statutes limit the amount of general obligation debt a governmental entity may issue to 1.25% of its net assessed valuation. The current debt limitation for the County is $516,755. Additional information on the County’s long-term debt can be found in Note 10 to the financial statements. Other liabilities include compensated absences ($26), landfill post-closure costs ($4.1), and self-insurance ($19.3). More detailed information about the County’s long-term liabilities is presented in Note 10 to the financial statements. 35 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES For the fifth straight year, the County is forced to tackle budgeting challenges created by flat or decreasing revenues. Fiscal year 2013 represents year five of a seven year budget balancing plan that began in fiscal year 2009. The plan is designed to gradually close a structural budget gap through the use of short-term solutions initially, with increasing reliance on expenditure reductions that maintain a high level of service to the public, achieving structural balance by the end of year seven. The plan has been successful to date, with the budget gap reduced to $2 million for FY 2012-13, considerably less than the $6M gap originally forecasted for FY 2012-13 in the plan. Faced with an $2 million budget gap in the General Fund’s Status Quo budget, the County used a combination of short-term solutions and expenditure reductions to bridge the gap. The FY 2013 budget used short-term solutions to bridge 15% of the gap and ongoing expenditure reductions to cover the remaining 85%. The County’s unemployment rate dropped to 7.3% in November 2012 (preliminary), lower than the state rate of 9.6% and slightly below the national rate of 7.4%. Economic indicators show some signs of local economic improvement from the recent economic downturn Local housing market indicators rose. Home sales grew 3.2 % year-over-year to 291 homes sold (data as of September 2012). Also as of September 2012, the median price for all homes grew 18.1%, to $385,000 from $326,000 in September 2011. The number of building permits issued were up slightly (1%) but remain around the lowest number issued in the last 10 years Property transfer taxes for unincorporated areas came in 31% higher than the preceding year reflecting an increase in the value and number of real estate transactions County assessed property tax valuations decreased slightly from $42,037,910 to $41,340,431, a decline of 1.7%. Transit Occupancy tax (bed tax) collections continued an upward trend in FY 2012, increasing 1.7% over FY 2011, however the increase was smaller than the 13.6% experienced FY 2011 over FY 2010. The Board of Supervisors adopted the 2012-2013 budget in June 2012, with a $57.2 million fund balance in the general fund, of which $31.8 million was appropriated to finance the current year’s expenditures including contingencies, $8 million was placed in general reserves, and $5.7 million was earmarked for designations. The total General Fund budget for 2011-2012 is $398 million, a 4% increase from the previous year. The County budget also includes community-wide results and indicators as well as department goals and performance measures that gauge how departments are meeting the needs of the community. REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the County's finances and to show the County's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the County Auditor-Controller, San Luis Obispo County Government Center, Room D220, San Luis Obispo, California 93408. This report is also available online at www.slocounty.ca.gov. 36 BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS __________________________________________________________________ 37 38 COUNTY OF SAN LUIS OBISPO Statement of Net Assets June 30, 2012 (in thousands) Primary Government Governmental Business-Type Component Unit ASSETS Activities Activities Total First 5 Current Assets: Cash and cash equivalents $ 300,252 $ 49,991 $ 350,243 $ 8,116 Accounts receivable, net 19 1,838 1 ,857 -- Property taxes receivable 21,747 -- 21,747 -- Other receivables 969 119,745 1 20,714 -- Due from other governments 27,086 27 27,113 331 Deposits with others -- 171 1 71 4 Internal balances 2,821 (2,821) - - -- Inventories 576 -- 576 -- Prepaid items 321 33 3 54 3 Loans receivable 28 33 6 1 -- Total Current Assets 353,819 169,017 5 22,836 8,454 Noncurrent Assets: Restricted cash with fiscal agent 2,538 13,251 1 5,789 -- Net pension asset 133,214 -- 133,214 -- Prepaid bond issuance costs 1,918 2,883 4 ,801 -- OPEB asset 1,830 -- 1,830 -- Capital Assets: Nondepreciable 858,120 96,306 954,426 -- Depreciable, net 267,033 319,007 5 86,040 -- Total Noncurrent Assets 1,264,653 431,447 1,696,100 -- Total Assets 1,618,472 600,464 2,218,936 8,454 LIABILITIES Current Liabilities: Salaries and benefits payable 4,693 47 4,740 -- Accounts payable 10,451 8,103 18,554 405 Deposits from others 2,509 3,127 5 ,636 25 Unearned revenue 5,277 117,142 1 22,419 -- Accrued interest 1,877 3,600 5 ,477 -- Other current liabilities 567 -- 567 -- Bonds and notes payable 4,770 5,620 10,390 -- Compensated absences 17,132 169 17,301 -- Landfill closure/postclosure costs 342 -- 342 -- Self insurance payable 3,520 -- 3,520 -- Total Current Liabilities 51,138 137,808 1 88,946 430 Long Term Liabilities: Bonds and notes payable 142,451 275,646 4 18,097 -- Compensated absences 8,596 128 8,724 -- Landfill closure/postclosure costs 3,736 -- 3,736 -- Self insurance payable 15,735 -- 15,735 -- Total Long-term Liabilities 170,518 275,774 4 46,292 -- Total Liabilities 221,656 413,582 6 35,238 430 NET ASSETS Invested in capital assets, net of related debt 1,099,885 153,801 1,253,686 -- Restricted for: General government 797 -- 797 -- Public protection 3,229 -- 3,229 -- Health and sanitation 88 -- 88 -- Public assistance 4 -- 4 -- Public ways and facilities 17,265 -- 17,265 -- Recreation and culture 292 -- 292 -- Education 136 -- 136 -- Debt service 9,666 -- 9,666 -- Unrestricted 265,454 33,081 298,535 8,024 Total Net Assets $ 1,396,816 $ 186,882 $ 1,583,698 $ 8,024 The accompanying notes are an integral part of these financial statements. 39 COUNTY OF SAN LUIS OBISPO Statement of Activities For the Year Ended June 30, 2012 (in thousands) Program Revenues Fees, Fines, Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental Activities: General government $ 35,231 $ 17,545 $ 628 $ 843 Public protection 136,219 15,679 45,646 -- Public ways and facilities 27,120 5,069 11,813 12,930 Health and sanitation 65,799 6,014 44,741 -- Public assistance 96,435 2,366 85,505 -- Education 10,000 2,545 175 -- Recreation and cultural services 7,344 3,952 18 247 Interest on long-term debt 6 ,620 - - - - -- Total Governmental Activities 384,768 53,170 188,526 14,020 Business-Type Activities: Airport 5,422 3,719 372 138 Golf 2,863 2,690 5 -- State Water Contract 6,761 6,609 10 -- Nacimiento Water Contract 11,901 13,893 28 -- Lopez Dam 5,752 6,440 15 -- General Flood Control 1,816 1,252 -- -- Transit 8 -- -- -- County Service Areas 3,836 3,186 3 64 Los Osos Wastewater 6 ,672 - - 3 5 9,127 Total Business-Type Activities: 45,031 37,789 468 9,329 Total primary government $ 429,799 $ 90,959 $ 188,994 $ 23,349 Component Unit First Five San Luis Obispo $ 1,584 $ -- $ 1,950 $ -- General Revenues: Taxes: Property taxes Sales and use taxes Transient occupancy taxes Transfer tax Other taxes Grants not restricted to specific programs Interest earnings not restricted to specific programs Other revenues Transfers Extraordinary item - Transfer from State of California per AB99 Total General Revenues, Transfers and Extraordinary Item Change in Net Assets Net assets - beginning of year Net assets - end of year The accompanying notes are an integral part of these financial statements. 40 Net (Expense) Revenue and Changes in Net Assets Component Primary Government Unit Governmental Business-Type First 5 Activities Activities Total San Luis Obispo $ (16,215) $ -- $ (16,215) (74,894) -- (74,894) 2,692 -- 2,692 (15,044) -- (15,044) (8,564) -- ( 8,564) (7,280) -- ( 7,280) (3,127) -- ( 3,127) (6,620) -- ( 6,620) ( 129,052) -- (129,052) -- (1,193) ( 1,193) -- ( 168) (168) -- ( 142) (142) -- 2,020 2,020 -- 703 703 -- ( 564) (564) -- (8) (8) -- ( 583) (583) -- 2,490 2,490 -- 2,555 2,555 ( 129,052) 2,555 (126,497) -- -- -- $ 366 140,288 3,799 144,087 - - 7,370 -- 7,370 -- 6,642 -- 6,642 -- 1,864 -- 1,864 -- 454 2 8 482 -- 3,978 -- 3,978 -- 1,202 755 1,957 37 -- 31 31 2 8,048 (8,048) -- -- -- -- -- 3,771 169,846 (3,435) 166,411 3,810 40,794 ( 880) 39,914 4,176 1,356,022 187,762 1,543,784 3,848 $ 1 ,396,816 $ 186,882 $ 1,583,698 $ 8 ,024 The accompanying notes are an integral part of these financial statements. 41 42 __________________________________________________________________ BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS __________________________________________________________________ 43 44 COUNTY OF SAN LUIS OBISPO Balance Sheet Governmental Funds June 30, 2012 (in thousands) Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Assets Cash and cash equivalents $ 1 75,637 $ 2 3,146 $ 56,831 $ 255,614 Restricted cash with fiscal agent - - -- 2,538 2 ,538 Accounts receivable, net 3 -- -- 3 Accrued property taxes receivable 2 1,747 - - -- 21,747 Other receivables 9 53 - - 16 969 Due from other governments 2 2,848 4 31 3,807 27,086 Inventories 9 6 - - -- 96 Prepaid items 3 09 - - 12 321 Loans receivable - - -- 28 2 8 Advances to other funds 2 ,771 - - 350 3,121 Other assets - - -- 4,770 4 ,770 Total Assets $ 2 24,364 $ 2 3,577 $ 68,352 $ 316,293 Liabilities and Fund Balance Liabilities: Salaries and benefits payable $ 4 ,061 $ - - $ 217 $ 4,278 Accounts payable 7 ,996 2 90 1,379 9 ,665 Deposits from others 1 ,253 - - 688 1,941 Unearned revenue 4 ,517 6 06 154 5,277 Deferred revenue 2 4,941 6 54 25,001 Other current liabilities 5 67 - - 4,770 5 ,337 Advances from other funds - - -- 2,443 2 ,443 Total Liabilities 4 3,335 9 02 9,705 53,942 Fund Balances: Nonspendable 3 ,176 - - 390 3,566 Restricted 6 ,682 - - 19,788 26,470 Committed 6 8,880 2 2,675 38,469 130,024 Unassigned 1 02,291 - - -- 102,291 Total Fund Balances 1 81,029 2 2,675 58,647 262,351 Total Liabilities and Fund Balances $ 224,364 $ 2 3,577 $ 68,352 $ 316,293 The accompanying notes are an integral part of these financial statements. 45 COUNTY OF SAN LUIS OBISPO Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets - Governmental Activities June 30, 2012 (in thousands) Fund Balance - total governmental funds (page 45) $ 2 62,351 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. 1 ,115,119 Accrued property tax and grant revenues are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 25,001 The pension assets resulting from contributions in excess of the annual required contribution are not financial resources and, therefore, are not reported in the funds. 133,214 The other post employment benefit (OPEB) asset is not available to pay for current-period expenditures and, therefore, is deferred in the funds. 1,830 Cost of issuance on pension obligation bonds recognized as current expenditures in the governmental funds are deferred in the statement of net assets. 1,918 Internal service funds are used by the County to charge the cost of vehicle fleet management, centralized reprographic services, comprehensive public works services, and operations of the County's workers' compensation, protected self-insurance, unemployment, and dental insurance programs to individual funds. The assets and liabilities are included in governmental activities in the statement of net assets. 31,731 Adjustments for Internal Service Funds are necessary to "close" those funds by charging additional amount to participating business-type activities to completely cover the Internal Service Funds' cost for the year. 2,143 Interest on long-term debt is recognized as it accrues, regardless of when it is due. ( 1,877) Long-term liabilities, including bonds and notes payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds as follows: Certificates of participation (119,429) Bonds and notes payable (27,792) Compensated absences (23,315) Landfill closure/postclosure costs ( 4,078) Net assets of governmental activities (page 39) $ 1,396,816 The accompanying notes are an integral part of these financial statements. 46 COUNTY OF SAN LUIS OBISPO Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2012 (in thousands) Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Revenues: Taxes $ 150,797 $ -- $ 10,123 $ 160,920 Licenses, permits, and franchises 7,863 -- -- 7,863 Fines, forfeits and penalties 5,458 469 823 6,750 Revenue from use of money and property 1,792 112 369 2,273 Aid from governmental agencies 1 73,670 241 32,461 2 06,372 Charges for current services 31,837 223 13,478 45,538 Other revenues 5,793 -- 2,658 8,451 Total revenues 3 77,210 1,045 59,912 4 38,167 Expenditures: Current: General government 45,850 -- -- 45,850 Public protection 1 35,982 -- 2,597 1 38,579 Public ways and facilities 1,975 -- 38,363 40,338 Health and sanitation 63,380 -- 4,450 67,830 Public assistance 91,235 -- 5,950 97,185 Education 431 -- 9,542 9,973 Recreation and cultural services -- -- 6,998 6,998 Debt service: Principal payments -- -- 4,435 4,435 Interest and fiscal charges -- -- 6,289 6,289 Capital outlay -- 5,540 -- 5,540 Total expenditures 3 38,853 5,540 78,624 4 23,017 Excess (Deficiency) of Revenues Over (Under) Expenditures 38,357 (4,495) (18,712) 15,150 Other Financing Sources (Uses): Transfers in 1,283 4,163 30,369 35,815 Transfers out (19,178) ( 95) (7,865) (27,138) Total Other Financing Sources (Uses) (17,895) 4,068 22,504 8,677 Net Change in Fund Balances 20,462 (427) 3,792 23,827 Fund Balances - Beginning 1 60,567 23,102 54,855 2 38,524 Fund Balances - Ending $ 181,029 $ 22,675 $ 58,647 $ 262,351 The accompanying notes are an integral part of these financial statements. 47 COUNTY OF SAN LUIS OBISPO Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities - Governmental Activities For the Year Ended June 30, 2012 (in thousands) Net Change in fund balance - total governmental funds (page 47) $ 23,827 Amounts reported for governmental activities in the statement of activities are different because: Property tax and intergovernmental revenue in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (4,150) Governmental funds report capital outlay as expenditures. These expenditures have no effect on net assets. Capital outlay expenditures that have no effect on net assets are reported in the following functional categories: Capital outlay $ 5,560 General government 1,167 Public protection 1,675 Public ways 21,528 Health and sanitation 433 Public assistance 5 7 Education 9 Recreation and cultural services 1 2 30,441 In the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense. (16,651) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net assets. (221) Bond proceeds are reported as financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds, but reduces the liability in the statement of net assets. Debt principal payments 4,185 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds as follows: Change in compensated absences (429) Change in accrued interest payable 51 Change in landfill closure/postclosure costs (722) Change in OPEB (165) Amortization of bond discounts and issuance costs (132) Amortization of prepaid pension contributions 3,242 Internal service funds are used by the County to charge the cost of vehicle fleet management, centralized reprographic services, comprehensive public works services, and operations of the County's workers' compensation, protected self-insurance, unemployment, and dental insurance programs to individual funds. The net revenue or expenditure effect of internal service funds is reported with governmental activities. 1,740 Adjustment necessary to close internal service funds activities. This is the current year excess of revenues over expenses allocable to business-type activities (222) Change in net assets of governmental activities (page 41) $ 40,794 The accompanying notes are an integral part of these financial statements. 48 COUNTY OF SAN LUIS OBISPO Statement of Fund Net Assets Proprietary Funds June 30, 2012 (in thousands) Governmental Business-type Activities - Enterprise Funds Activities Nacimiento Nonmajor Total Internal Water State Water Lopez Los Osos Enterprise Enterprise Service Airport Contract Project Flood Control Wastewater Funds Funds Funds Assets Current Assets: Cash and investments $ 1 ,938 $ 16,417 $ 11,105 $ 8 ,793 $ 6,298 $ 5 ,440 $ 49,991 $ 4 4,638 Accounts receivable, net - - - - 1,648 - - -- 190 1,838 1 6 Other receivables - - - - -- - - 119,745 - - 119,745 - - Due from other governments 2 3 - - -- - - -- 4 27 - - Deposits with others - - 148 - - - - 10 1 3 171 - - Inventories - - - - -- - - -- -- -- 4 80 Prepaid items 5 - - -- 2 8 -- -- 33 - - Loans receivable - - - - -- - - -- 33 33 - - Total Current Assets 1 ,966 1 6,565 12,753 8 ,821 126,053 5 ,680 171,838 4 5,134 Noncurrent assets: Advances to other funds - - - - -- - - -- 763 763 - - Restricted cash with fiscal agent - - 13,251 - - - - -- -- 13,251 - - Prepaid bond issuance costs - - 2,122 - - 5 10 251 - - 2,883 - - Capital assets: Nondepreciable: Land 2 3,224 3 ,110 - - 2,096 2,470 1 ,585 32,485 - - Construction in progress 5 22 2 78 - - 6 83 16,014 1 ,805 19,302 - - Water rights - - - - 42,551 - - -- -- 42,551 - - Other property - - - - -- 1,968 - - -- 1,968 - - Depreciable: Infrastructure, net 8 31 159,293 1 22 2 5,612 - - 384 186,242 - - Structures and improvements, net 5 9,117 9 ,921 7,185 3 6,285 - - 18,606 131,114 1 93 Equipment, net 7 69 - - 11 3 7 -- 332 1,149 9 ,841 Other propery, net - - - - -- - - -- 502 502 - - Total Noncurrent Assets 8 4,463 187,975 49,869 6 7,191 18,735 23,977 432,210 1 0,034 Total Assets 8 6,429 204,540 62,622 7 6,012 144,788 2 9,657 604,048 5 5,168 Liabilities: Current Liabilities: Salaries and benefits payable 2 6 - - -- - - -- 21 47 4 15 Accounts payable 4 0 2,298 4,854 3 4 727 150 8,103 7 86 Interest payable 4 1 3,222 - - 6 9 164 104 3,600 - - Self insurance payable - - - - -- - - -- -- -- 3,520 Deposits from others 3 6 3 9 2,848 6 3 -- 141 3,127 5 68 Unearned revenue 6 5 2,756 1,699 1 ,928 110,656 3 8 117,142 - - Accrued vacation and sick leave - current 8 5 - - -- - - -- 84 169 1 ,569 Notes and bond payable - current 2 51 3,090 - - 1,814 1 0 455 5,620 - - Total Current Liabilities 5 44 11,405 9,401 3 ,908 111,557 9 93 137,808 6 ,858 Noncurrent Liabilities: Self insurance payable - - - - -- - - -- -- -- 15,735 Advances from other funds 8 39 - - -- - - -- 602 1,441 - - Accrued vacation and sick leave 70 - - -- - - -- 58 128 8 44 Notes and bonds payable 3 ,407 196,523 - - 44,841 21,642 9 ,233 275,646 - - Total Noncurrent Liabilities 4 ,316 196,523 - - 44,841 21,642 9 ,893 277,215 1 6,579 Total Liabilities 4 ,860 207,928 9 ,401 4 8,749 133,199 1 0,886 415,023 2 3,437 Net Assets Invested in capital assets, net of related debt 8 0,805 (13,760) 49,869 2 0,026 3,120 13,741 153,801 1 0,034 Unrestricted 7 64 10,372 3,352 7 ,237 8,469 5 ,030 35,224 2 1,697 Total Net Assets $ 8 1,569 $ ( 3,388) $ 53,221 $ 2 7,263 $ 11,589 $ 18,771 189,025 $ 3 1,731 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (page 41) (2,143) Net assets of business-type activities $ 1 86,882 The accompanying notes are an integral part of these financial statements. 49 COUNTY OF SAN LUIS OBISPO Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets For the Year Ended June 30, 2012 (in thousands) Governmental Business-type Activities - Enterprise Funds Activities Nacimiento Nonmajor Total Internal Water State Water Lopez Los Osos Enterprise Enterprise Service Airport Contract Project Flood Control Wastewater Funds Funds Funds Operating Revenues: Charges for current services $ 3,719 $ 13,893 $ 6,609 $ 6,440 $ -- $ 7,128 $ 37,789 $ 43,446 Total Operating Revenues 3,719 1 3,893 6,609 6,440 -- 7,128 37,789 43,446 Operating Expenses: Salaries and benefits 1,331 -- -- -- -- 1,171 2,502 20,968 Services and supplies 1,731 559 6,548 3,154 39 6,002 18,033 13,074 Other charges 23 3 -- 2 -- -- 28 -- Insurance benefit payments -- -- -- -- -- -- -- 5,251 Depreciation 2,143 2,122 200 1,288 -- 800 6,553 1,810 Countywide cost allocation 45 (4) 35 28 -- 134 238 534 Total Operating Expenses 5,273 2,680 6,783 4,472 39 8,107 27,354 41,637 Operating Income (Loss) ( 1,554) 1 1,213 (174) 1,968 (39) (979) 10,435 1,809 Nonoperating Revenues (Expenses): Property taxes 3 1,114 1,154 1,128 39 389 3,827 -- Interest income 5 612 53 39 19 27 755 203 Interest expense (177) (9,282) ( 13) (1,301) (379) (432) (11,584) -- Aid from governmental agencies 3 72 28 10 15 35 8 468 333 Other nonoperating revenue (expenses) (41) 16 57 (11) (6,288) (146) (6,413) 153 Total Nonoperating Revenues (Expenses) 1 62 (7,512) 1,261 (130) (6,574) (154) (12,947) 689 Income (Loss) Before Contributions and Transfers ( 1,392) 3,701 1,087 1,838 (6,613) (1,133) (2,512) 2,498 Capital contributions 1 38 -- -- -- 9,127 64 9,329 -- Transfers in 3 52 -- -- -- -- 596 948 -- Transfers out (45) (8,778) -- -- -- (44) (8,867) ( 758) Changes in net assets (947) (5,077) 1,087 1,838 2,514 (517) (1,102) 1,740 Net Assets - Beginning 82,516 1,689 5 2,134 25,425 9,075 19,288 29,991 Net Assets - Ending $ 8 1,569 $ (3,388) $ 53,221 $ 27,263 $ 11,589 $ 18,771 $ 31,731 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 222 Change in net assets of business-type activities (page 41) $ (880) The accompanying notes are an integral part of these financial statements. 50 COUNTY OF SAN LUIS OBISPO Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2012 (in thousands) Governmental Business-type Activities - Enterprise Funds Activities Nacimiento Nonmajor Total Internal Water State Water Lopez Los Osos Enterprise Enterprise Service Airport Contract Project Flood Control Wastewater Funds Funds Funds Cash Flows from Operating Activities: Receipts from customers and third parties $ 3 ,753 $ 13,887 $ 7 ,049 $ 7 ,604 $ - - $ 7,030 $ 39,323 $ - - Receipts from interfund billings - - -- - - - - -- -- -- 4 8,482 Payments for goods and services ( 1,820) ( 2,214) ( 6,486) (3,161) ( 147) (6,181) (20,009) ( 18,227) Payments to employees for service ( 1,359) - - - - - - -- (1,210) (2,569) ( 21,791) Payments for insurance benefits - - -- - - - - -- -- -- ( 4,654) Payments for premiums - - -- - - - - -- -- -- ( 1,823) Net Cash Provided (Used) by Operating Activities 5 74 11,673 5 63 4,443 (147) (361) 16,745 1 ,987 Cash Flows from Noncapital Financing Activities: Property tax proceeds 3 1,114 1 ,154 1 ,128 3 9 389 3,827 - - Grants and subsidies from other gov't agencies 4 01 2 8 222 1 5 35 113 814 3 33 Contributions and payments to other agencies - - -- - - - - -- (738) (738) - - Advances from other funds 2 73 - - - - - - -- -- 273 - - Advances to other funds - - -- - - - - -- (81) ( 81) - - Transfers from other funds 3 52 - - - - - - -- 596 948 - - Transfers to other funds ( 45) (8,778) - - - - -- (44) (8,867) ( 757) Net Cash Provided (Used) by Noncapital and Related Financing Activities 9 84 (7,636) 1 ,376 1 ,143 7 4 235 (3,824) ( 424) Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets ( 922) (4,063) ( 1,643) ( 414) (4,158) (146) (11,346) ( 2,435) Proceeds from issuance of long-term debt - - -- - - - - 15,364 - - 15,364 - - Bond issuance costs for capital related financing - - -- - - - - -- -- -- - - Proceeds from sale of capital assets - - -- - - (10) - - -- (10) 3 15 Proceeds from capital grants 1 38 - - - - - - -- 64 202 - - Special assessment proceeds - - -- - - - - 1,295 - - 1,295 - - Principal paid on capital debt ( 240) (2,955) - - (2,108) (8,677) (423) (14,403) - - Interest paid on capital debt ( 361) (9,728) ( 13) (1,331) ( 220) (431) (12,084) - - Net Cash Provided (Used) by Capital and Related Financing Activities ( 1,385) (16,746) ( 1,656) (3,863) 3,604 (936) (20,982) ( 2,120) Cash Flows from Investing Activities: Interest received 5 877 5 3 3 9 19 27 1,020 2 03 Net Cash Provided (Used) by Investing Activities 5 877 5 3 3 9 19 27 1,020 2 03 Net Increase (Decrease) in Cash and Cash Equivalents 1 78 (11,832) 3 36 1,762 3,550 (1,035) (7,041) ( 354) Cash and Cash Equivalents - Beginning of Year 1 ,760 4 1,500 1 0,769 7 ,031 2,748 6,475 70,283 4 4,992 Cash and Cash Equivalents - End of Year $ 1 ,938 $ 29,668 $ 1 1,105 $ 8 ,793 $ 6,298 $ 5,440 $ 63,242 $ 4 4,638 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ ( 1,554) $ 1 1,213 $ ( 174) $ 1,968 $ ( 39) $ (979) $ 10,435 $ 1 ,809 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense 2,143 2,122 200 1,288 -- 800 6,553 1,810 Change in Assets and Liabilities: Receivables, net -- 6 995 -- -- (7) 994 10 Prepaids and other assets -- -- -- -- -- - - -- -- Inventory -- -- -- -- -- - - -- 11 Accounts payable 22 (1,654) 97 24 (108) (43) (1,662) (305) Salaries and benefits payable -- -- -- -- -- (48) (48) (731) Deferred revenue 33 (14) (555) 1,163 -- - - 627 -- Accrued vacation and sick leave -- -- -- -- -- (84) (84) (44) Self-insurance liability -- -- -- -- -- - - -- (518) Other accrued liabilities (70) -- -- -- -- - - (70) (55) Total Adjustments 2,128 460 737 2,475 (108) 618 6,310 178 Net Cash Provided (Used) by Operating Activities $ 574 $ 11,673 $ 563 $ 4,443 $ (147) $ (361) $ 16,745 $ 1,987 Noncash Investing, Capital, and Financing Activities: Contributions of capital assets $ 35 $ -- $ -- $ - - $ 2,470 $ -- $ 2,505 $ 39 Change in special assessment receivable $ -- $ -- $ -- $ - - $ 119,745 $ -- $ 119,745 $ -- Debt and accrued interest assumed from CSD $ -- $ -- $ -- $ - - $ (6,414) $ -- $ (6,414) $ 39 Unamortized issuance costs and discounts/premiums $ -- $ (140) $ -- $ (79) $ -- $ -- $ (219) $ 39 The accompanying notes are an integral part of these financial statements. 51 COUNTY OF SAN LUIS OBISPO Statement of Fiduciary Net Assets Agency and Investment Trust Funds June 30, 2012 (in thousands) San Luis Obispo Pension Trust Fund December 31, 2011 (in thousands) Investment San Luis Obispo Agency Trust County Funds Fund Pension Trust 06/30/12 06/30/12 12/31/2011 Assets Cash and cash equivalents $ 41,955 $ 185,097 $ 30,286 Notes receivable -- - - 786 Contributions receivable -- - - 1,067 Accrued interest receivable -- - - 1,601 Accounts receivable -- - - 3 Securities sold -- - - 10,929 Prepaid benefits -- - - 165 Investments pension trust: Bonds and notes, at fair value -- - - 205,462 International fixed income -- - - 76,577 Collateralized mortgage obligations, at fair value -- - - 12,330 Domestic equities -- - - 293,629 International equities -- - - 183,911 Alternative investments -- - - 54,515 Real estate, at fair value -- - - 66,708 Capital assets-net of accumulated depreciation -- - - 1,222 Total Assets 41,955 185,097 939,191 Liabilities Agency obligations 41,955 - - -- Securities purchased -- - - 31,934 Accrued liabilities -- - - 907 Total Liabilities 41,955 - - 32,841 Net Assets Assets held in trust for pool participants -- 185,097 -- Assets held in trust for pension benefits -- - - 906,350 Total Net Assets $ - - $ 185,097 $ 9 06,350 The accompanying notes are an integral part of these financial statements. 52 COUNTY OF SAN LUIS OBISPO Statement of Changes in Fiduciary Net Assets Investment Trust Funds For the Year Ended June 30, 2012 (in thousands) San Luis Obispo Pension Trust Fund For the Year Ended December 31, 2011 (in thousands) Investment San Luis Obispo Trust County Fund Pension Trust 06/30/12 12/31/11 Additions Contributions: Employer contributions $ 744,534 $ 30,436 Member contributions -- 25,262 Total Contributions 744,534 55,698 Investment Earnings: Realized gains and losses -- 6,493 Interest 985 7,719 Dividends -- 12,280 Real estate management trust income -- (71) Rental Real Estate: Real estate operating income (expense) -- 1,489 Investment expenses -- (3,797) Total Investment Earnings 985 24,113 Total Additions 745,519 79,811 Deductions Benefits: Monthly benefit payments -- 50,415 Termination refunds -- 1,659 Death benefits -- 430 Total benefits -- 52,504 Administrative expenses -- 1,910 Total Administrative Expenses -- 1,910 Distributions from investment pool 798,366 -- Total deductions 798,366 54,414 Change in Net Assets (52,847) 25,397 Net Assets - Beginning 237,944 880,953 Net Assets - Ending $ 1 85,097 $ 9 06,350 The accompanying notes are an integral part of these financial statements. 53 54 __________________________________________________________________ NOTES TO THE BASIC FINANCIAL STATEMENTS __________________________________________________________________ 55 56 COUNTY OF SAN LUIS OBISPO NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2012 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. FINANCIAL REPORTING ENTITY The County of San Luis Obispo (the County) was established by an act of the Legislature on February 18, 1850 as one of California’s original 27 Counties. The County is a political subdivision of the State of California and may exercise the powers specified by the Constitution and laws of the State. The County exercises its powers through an elected five member Board of Supervisors. The County provides various services on a countywide basis including public protection, public ways and facilities, health and sanitation, public assistance, education, recreational and cultural services. The County reporting entity includes all significant organizations, departments, and agencies over which the County is considered financially accountable. The component units discussed below are included in the County’s reporting entity because of the significance of their operational and financial relationships with the County. The accompanying financial statements present the financial position of the County and those County-related entities that meet the criteria for component units established by the Governmental Accounting Standards Board (GASB) Statement 14. Blended Component Units These component units are so intertwined with the County that they are, in substance, the same as the County and, therefore, are blended and reported as if they were part of the County. Each of the following entities’ governing bodies are substantively the same as the governing body of the County, are fiscally accountable to the County, and have a significant relationship with the County, and therefore are included in its government-wide, governmental fund and proprietary fund financial statements: San Luis Obispo County Area Transit District – The District provides Dial-A-Ride, taxi subsidies, trolley and other modes of public transportation in a specified area within the County of San Luis Obispo. County Service Areas – County Service Areas have been established for the purpose of providing specific services to distinct geographical areas within the County. These services include drainage and sewer collections facilities maintenance, street lighting energy charges, centralized septic services, wastewater disposal and treatment, and fire and emergency medical services in various unincorporated areas of the county. Flood Control and Water Conservation Districts – Flood control and water conservation districts have been established for the purpose of providing specific flood and conservation services to distinct geographical areas within the county. These services include weather and hydrological data collections services, delivery, water treatment, and water distribution services, and the construction of the Lopez Dam Seismic Remediation project. San Luis Obispo County Financing Authority – The Authority was created to assist in the financing, construction, and equipping of public facilities for one or both of the Authority’s members. San Luis Obispo County Public Facilities Corporation – The PFC is a nonprofit public benefit corporation organized to assist public agencies within the County of San Luis Obispo with the acquisition and construction of various public facilities. Separate financial statements or additional financial information for each of the component units may be obtained from the Auditor-Controller at 1055 Monterey, Room D220, San Luis Obispo, CA 93408. Also included in the accompanying financial statements as investment trust funds are the assets of numerous self-governed schools, special districts, and regional boards and authorities for which the County Treasurer acts as custodian of those assets. The financial reporting for these governmental entities, which are independent of the County, is limited to the total amount of cash and investments and the related fiduciary responsibility of the County for disbursement of these assets. Activities of these entities are administered by separate boards and are independent of the County Board of Supervisors. The County Auditor-Controller makes disbursements upon the 57 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) request of the entity’s officers. The County Board of Supervisors has no effective authority to govern, manage, approve budgets, assume financial accountability, establish revenue limits, nor to appropriate surplus funds available in these entities. Seven cities and numerous self-governed special districts provide services to the residents of the county. The operations of these entities have been excluded from the basic financial statements as each entity conducts its own day-to-day operations and answers to its own governing board. Discretely Presented Component Unit First 5 San Luis Obispo County – First 5 was created in 1998 with the passage of Proposition 10, the California Children and Families First Act. First 5’s mission is to allocate funds from the California Children and Families Trust Fund and advocate for quality programs and services, supporting children prenatal to age 5, to ensure that every child is healthy and ready to learn in school. First 5 is governed by a nine-member commission that includes public officials and community leaders from the fields of early childhood education, health care, and family support. The County can influence the day-to-day operations and financial decisions of First 5 as the County Board of Supervisors appoints all commission members. First 5 is reported as a discretely presented component unit because its governing body is not the substantively the same as the County’s governing body, and it does not provide services entirely or exclusively to the County. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-wide Financial Statements The Government-wide financial statements consist of the statement of net assets and the statement of activities that report information about the County and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. The statements distinguish between governmental and business-type activities of the County. Governmental activities generally are financed through taxes, intergovernmental revenues and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for good or services. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the County and for each function of the County’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Internal activities and indirect expenses are consolidated in the statement of activities. Examples of expenses that have been eliminated include the allocation of indirect costs under the County-wide Cost Allocation Plan and internal payments for services provided between departments. Amounts reported as program revenues include 1) fees, fines and charges to customers or applicants for goods or services offered by the programs, 2) operating grants and contributions that are restricted to meeting the operational requirements of a particular program, and 3) capital grants and contributions restricted to particular programs. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operation. The principal operating revenues of the County enterprise funds (Airport, Nacimiento Water Contract, State Water Project, Lopez Flood Control Project, Los Osos Wastewater, and nonmajor enterprise) and of the government’s internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Fund Financial Statements The fund financial statements report detailed information about the County’s funds, including fiduciary funds and blended component units. Separate statements are provided for each fund category – Governmental, Proprietary, and Fiduciary even though the latter are excluded from the Government-wide financial statements. The emphasis of the Governmental and Proprietary Fund financial statements is on major individual funds. Each major fund is presented in a separate column. Nonmajor funds are aggregated and presented in a single 58 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) column. The internal service funds are presented in a single column on the face of the proprietary fund statements. The County reports the following Major Governmental Funds: The General Fund is the County’s primary operating fund. The General Fund is used to account for all revenues and expenditures necessary to carry out the basic governmental activities of the County that are not accounted for through other funds. For the County, the General Fund includes such activities as public protection, public ways and facilities, health and sanitation, public assistance, education, and recreational and cultural services. The Capital Projects Fund is used to account for the financial resources restricted for the acquisition or construction of specific projects, or items other than those financed by proprietary funds. The County reports the following Major Proprietary Funds: The Airport Fund accounts for the maintenance, operations, and development of the County owned commercial service airports in San Luis Obispo and Oceano. The Nacimiento Water Contract Fund accounts for the activities and delivery of water associated with the Nacimiento water supply reservoir and the contract with Monterey County. The State Water Contract Fund accounts for revenues, expenses and net assets relating to the countywide taxpayers’ obligations associated with the State Water Project, which provides for the delivery of state water into the County. The Lopez Dam Flood Control Fund accounts for the maintenance, water treatment and water distribution services of the Lopez Dam Flood Control Zone 3, which provides water to south San Luis Obispo County, and the activities of the Lopez Dam Seismic Remediation Project. The Los Osos Wastewater Fund accounts for the construction, operation and maintenance of the wastewater treatment plant serving the community of Los Osos. Additionally, the County reports on Internal Service Funds. Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the County or to other governments on a cost-reimbursement basis. Internal Service Funds account for the activities of equipment maintenance services, centralized printing services, and self-insurance programs such as workers’ compensation, long-term disability, employee benefits, and personal injury and property damage. The County reports the following Fiduciary Funds: The Pension Trust Fund accumulates contributions from the County, its employees, and earnings from the fund’s investments. Disbursements are made from the fund for retirement, disability and death benefits (based on a defined benefit formula) and administrative expenses. This fund includes all assets of the San Luis Obispo County Pension Trust as of December 31, 2011. The Investment Trust Funds account for the assets of legally separate entities that deposit cash with the County Treasurer. These entities include school and community college districts, other special districts governed by local boards, regional boards and authorities and pass through funds for tax collections for cities. These funds represent the assets, primarily cash and investments, and the related liability of the County to disburse these monies on demand. The County reports on 97 different Investment Trust Funds. The Agency Funds account for the resources held by the County in a custodial capacity on behalf of other agencies. The County reports on 134 different Agency Funds. These include accounts for temporary holding of funds for the tax assessment areas created under the 1915 Improvement Act, temporary clearing funds, and other temporary holding funds not classified in other agency categories. 59 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The Government-wide, Proprietary, and Fiduciary Fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, except that Agency Fund financial statements have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Nonexchange transactions, in which the County gives (or receives) value without directly receiving (or giving) equal value in exchange, include property, sales, and transient occupancy taxes, grants, entitlements, and donations. On an accrual basis, revenues from property taxes are recognized in the fiscal year for which the taxes are levied. Revenues from sales and occupancy taxes are recognized when the underlying transactions take place. Revenues from grants and similar items are recognized as soon as all eligibility requirements imposed by the provider have been satisfied. Governmental Fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized as soon as they become both measurable and available. The County considers all revenues in governmental funds to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers property tax revenues to be available if they are collected within 60 days of the end of the current fiscal period. All other revenues are considered to be available if they are collected within 120 days of the end of the current fiscal period. It is the County’s policy to submit reimbursement and claim requests for federal and state grant revenues within 30 days of the end of the program cycle, and payments are generally received within 90 days. Property taxes, franchise taxes, licenses, and interest are considered to be susceptible to accrual. Expenditures generally are recorded when the related liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recognized as expenditures only to the extent that payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The County has elected not to follow subsequent private-sector guidance. The County eliminates the effect of interfund activity from the Government-wide financial statements by consolidating internal activities and indirect expenses in the statement of activities. When both restricted and unrestricted resources are available for use, it is the County’s policy to use restricted resources first, and then unrestricted resources as they are needed. D. ASSETS, LIABILITIES, AND FUND EQUITY Deposits and Investments As required by Government Code Section 27130, a treasury oversight committee serves the County. The committee consists of a representative appointed by the Board of Supervisors, the Auditor-Controller, Superintendent of Schools, a representative from the County's school districts and community college, and one member from the public at large. The committee meets annually and is subject to the California open meeting statutes. Cash balances of substantially all funds are pooled and invested by the County Treasurer for the purpose of increasing earnings through investment activities. State statutes authorize the County to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds, repurchase agreements, and the State Treasurer’s Investment Pool. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and External Investment Pools, investments held by the County Treasurer are stated at fair value at June 30, 2012. The fair value of pooled investments is determined annually and is based on current market prices. 60 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County pool is not registered with the Securities and Exchange Commission as an investment company and does not issue separate investment reports. The County has not provided or obtained any legally binding guarantees to support the value of the shares. Participants may withdraw up to the amortized cost of their respective shares as displayed on the combined balance sheet. The share of the Treasurer's pool related to involuntary participants is 99.9 percent. Cash and Cash Equivalents The County’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. All short-term cash surpluses are maintained in the County Treasury cash and investments pool, the earnings from which are allocated quarterly to each fund based on average daily cash balances. Receivables and Payables All trade and property tax receivables are shown net of an allowance for uncollectible accounts. No uncollectible allowance is recorded for enterprise special district receivables, which are primarily for water service billings. These receivables are written off in the year they become uncollectible. Property Tax The County is responsible for the assessment, collection, and apportionment of property taxes for all taxing jurisdictions within the County, including school, cities, and special districts. Property taxes, for which the lien date is January 1, are payable in two equal installments, November 1 and February 1, and become delinquent on December 10 and April 10, respectively. Property taxes receivable are recognized when levied. Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent on August 31. The County is permitted by Article XIII-A of the State of California Constitution (known as Proposition 13) to levy a maximum tax of $1.00 per $100.00 of full cash value. The bills are payable in equal installments, November 1st and February 1st and become delinquent on December 10th and April 10th, respectively. Property taxes are accounted for in the Unapportioned Property Tax and Interest Fund, an Agency Fund, until apportionment and disbursement to the taxing jurisdictions. Property tax receivables are recognized when the taxes are levied. Beginning in fiscal year 1993/1994, the County of San Luis Obispo adopted the "Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds" provided for in Revenue and Taxation Code Sections 4701-4717, which is commonly known as the "Teeter Plan". The Teeter Plan has no impact on tax rates or collection procedures. It merely changes the way the collections of delinquent taxes and penalties are distributed among the taxing agencies. Those agencies participating in the Teeter Plan receive 100% of the secured property taxes billed each year without regard to delinquencies. The General Fund covers the delinquent amount to all agencies and, in return, receives the delinquent taxes, penalties and interest when collected. As a result of the Teeter Plan, secured property taxes receivable are recorded in the General Fund only, and there is no allowance for uncollectible amounts. Penalties and interest are deposited into the Tax Loss Reserve Fund. Once the Tax Loss Reserve Fund balance exceeds 25% of the secured delinquent roll, the excess may be credited to the General Fund. The Teeter Plan was amended beginning fiscal year 2001/2002 by removing unitary tax payments (including PG&E), so that all agencies in the County will share in any delinquency that may occur. Unsecured property is not part of the Teeter Plan. Unsecured property taxes receivable are accrued to taxing agencies, net of the uncollectible amount which is estimated based on prior year collections. Interfund Transactions Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by nonspendable fund balance in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. 61 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Inventories and Prepaid Items Inventories held by the General Fund, Public Works, Reprographics and the Garage Internal Service Funds are carried at cost (first-in, first-out). The Internal Service Funds’ inventories are controlled by perpetual inventory systems, and are adjusted as appropriate to reflect year-end physical inventory counts. Governmental Funds (other than the General Fund) record inventory as expenditures when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the Government-wide and Fund financial statements. Capital Assets Capital assets, which include land, structures and improvements, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activity columns in the Government-wide financial statements. Capital assets are defined as assets with an initial individual cost greater than the capitalization threshold for the specified type of asset and an estimated useful life beyond a single fiscal period. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. General infrastructure assets acquired prior to July 1, 1980, are reported at estimated historical cost using deflated replacement costs. Normal maintenance and repairs are not capitalized, but are charged to operations when incurred. Betterments or major improvements, which significantly increase values, change capacities, or extend useful lives, are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations. Capital outlays are recorded as expenditures in the General, Special Revenue, and Capital Projects Funds and as capital assets in the Government-wide financial statements to the extent the County’s capitalization thresholds are met. Interest incurred, during construction phase, on financing capital assets of business-type activities is reflected in the capitalized value of the asset constructed net of interest earned on the invested proceeds over the same period. Amortization of assets acquired under capital leases is included in depreciation and amortization. Facilities and improvements, infrastructure, and machinery and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the estimated useful lives. The capitalization thresholds and estimated useful lives of specific asset types are as follows: Asset Type Capitalization Threshold Estimated Useful Life Land No threshold --------------- Infrastructure $100,000 20 to 100 years Structures & Improvements $25,000 15 to 50 years Equipment $5,000 2 to 15 years Capital Lease By asset type Lease term or useful life Compensated Absences The County’s policy is to permit employees to accumulate earned but unused vacation and sick leave benefits. Each year-end, a liability is accrued for the balance of unpaid compensatory time off, sick leave, and vacation earned. Accumulated benefits will be liquidated in future years as employees elect to use them. In the normal course of business, all payments of these accumulated benefits will be funded from appropriations in the year in which they are to be paid; therefore the total liability is recorded as long-term. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee designations and retirements. Long-term Obligations In the Government-wide financial statements, and in proprietary funds in the fund financial statements, long- term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well 62 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the fund financial statements, governmental funds report fund balance in classifications based primarily on the extent to which the County is bound to honor the constraints on the specific purposes for which amounts in the funds can be spent. The fund balance classifications used are nonspendable, restricted, committed, assigned and unassigned (see Note 11 for a description of these categories). In circumstances when an expenditure is made for a purpose for which amounts are available from multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. E. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. DETAIL NOTES ON ALL FUNDS 2. CASH AND CASH EQUIVALENTS Cash in Treasury Investments made by the Treasurer are regulated by the California Government Code and by the County's Investment Policy (IP). The objectives of the policy in order of priority are safety and preservation of capital, liquidity sufficient to meet scheduled cashflow needs, and then yield, subject to safety and liquidity, while maintaining compliance with federal, state, and local laws and regulations. The San Luis Obispo County Investment Pool is rated by Fitch Ratings, one of the Nationally Recognized Statistical Rating Organizations. Fitch has consistently rated the County Pool with their highest rating since FY 1994/95. The County Pool’s “AAA” rating reflects the “pool’s lowest vulnerability to losses as a result of defaults in its portfolio and is based on the actual and prospective average credit quality of the pool’s investments.” The County Pool’s “V1” volatility rating reflects the pool’s low market risk and capacity to return stable principal value to meet anticipated cash flow requirements, even in adverse interest rate environments. Effective February 10, 2010, Fitch eliminated the V1+ rating from its Fund Volatility Rating scale and revised its highest rating to V1. On March 18, 2010, the County Pool’s volatility rating was revised from “V1+” to “V1,” to reflect the new highest rating. On March 17, 2011 and March 14, 2012, Fitch confirmed the County Pool’s “AAA/V1” rating. The County Treasury Oversight Committee (CTOC) was created by the Board of Supervisors' Resolution and is formed by five members. The CTOC monitors and reviews quarterly, the management of public funds maintained in the investment pool in accordance with the California Government Code. The CTOC and the Board of Supervisors review and approve the IP annually. The County Treasurer prepares and submits a comprehensive investment report to the members of the CTOC and the investment pool participants every quarter. The report covers the type of investments in the pool, maturity dates, par value, actual costs and fair value. California Government Code directs the CTOC to cause an annual IP compliance audit. A list of providers for the annual compliance audit is specified in the Board Resolution which created the CTOC. These providers are: County Auditor in conjunction with or in addition to work directed by California Government Code; independent certified public accountants (CPAs) selected to review the County’s Comprehensive Annual Financial Report; and independent CPAs as deemed appropriate. The County Auditor-Controller's Office has been selected 63 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) to perform an Annual Investment Program Compliance Audit since the inception of the CTOC. The result of this audit has been presented to the Board of Supervisors on a yearly basis. Under parameters established by the California Government Code, the County may purchase: obligations issued by the United States Treasury; obligations, participations, or other instruments of or issued by a federal agency or a United States government-sponsored enterprise; obligations of state and local agencies of this state and any of the other 49 states; bankers’ acceptances; commercial paper; negotiable certificates of deposit; repurchase agreements; medium-term corporate notes; as well as other investments established by the California Government Code. The California Government Code prohibits investments in derivatives which include inverse floaters, range notes, or mortgage-derived, interest strips and any security that could result in zero interest accrual if held to maturity. While securities lending and reverse repurchase agreements are considered permitted investments per California Government Code, the County IP prohibits these types of investments. The County maintains a combined pool with cash and investments which provide cash flow for the funding needs of the County and local agencies required by law to keep funds in the Treasury. The combined pool’s investments have a carrying value that uses the amortized cost method and includes accrued interest. This pool, which is available to all funds, has deposits and investments with a weighted- average maturity of less than one year. Interest is apportioned to the separate funds based on the individual fund's average daily balance. Investments were authorized by the California Government Code and the County Treasurer's IP: Securities were held in a customer-segregated safekeeping account during the fiscal year. Repurchase agreements were collateralized 102% with government and agency securities in accordance with multi-party agreements on file with the Treasurer. A Cash Statement and Asset List is requested monthly from the appropriate institutions and verified against records maintained in the Treasury. Governmental Accounting Standards Board (GASB) Statement No. 31 requires governmental external investment pools to report certain investments at fair value in the financial statements and report the change in the fair value of investments in the year in which the change occurred. In compliance with these requirements, the fair value of the County's combined pool is determined annually and is based on current market prices received from the securities custodian, and the California State Local Agency Investment Fund (LAIF), except for instruments which are carried at amortized cost plus accrued interest. The County Treasury has provided a fair value dollar factor of 1.001828095402 in the Quarterly Report of Investments as of June 30, 2012, which can be used for financial reporting by the pool participants. The fair value of the investments is the pool participant’s amount invested balance multiplied by the fair value dollar factor. The County’s combined pool has invested in LAIF. This fund is not registered with the Securities and Exchange Commission as an investment company, but is required to invest according to California State Code. Market valuation is conducted quarterly. LAIF provided a fair value dollar factor of 1.001219643 for its portfolio as of June 30, 2012. The fair value of the investments in LAIF is the pool participant’s amount invested balance multiplied by the fair value dollar factor. As of June 30, 2012, 3.47% of the LAIF pool includes structured notes and asset-backed securities. The Local Investment Advisory Board, which consists of five members as designated by statute, provides oversight for LAIF. As of June 30, 2012, the County’s combined pool includes funds deposited in collateralized Public Investment Money Market Accounts (PIMMAs), Certificates of Deposit placed through the Certificate of Deposit Account Registry Service (CDARS), and a Federally Insured Cash Account (FICA). PIMMAs are interest-bearing active bank accounts and by California Government Code (GC) §53631 et seq., are considered depository accounts, not investments. PIMMAs are fully liquid and collateralized by eligible securities per GC 53651 et seq. Deposits placed through CDARS as authorized by California GC §53635.8, are distributed into individual Certificates of Deposit (CD) of less than $250,000 each that are fully FDIC insured, and placed through a network participating bank that uses the CD Account Registry Service, a private entity that assists in the placement of the individual CDs. FICA is similar to CDARS where a single large deposit is placed into individual deposits of less than $250,000 with network banks. As a result, full FDIC insurance is maintained. Unlike CDARS, FICAs are not term deposits, and the full balance is available at any time on demand. Even though PIMMAs and FICAs are not investments by code, they are included in the County’s combined pool and are treated internally as investments for tracking, management, and reporting purposes. The table below identifies the investment types that are authorized for the County by the California Government Code. The County’s combined pool is further restricted by both the County IP and the Treasurer’s written 64 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) policies and procedures to reduce exposure to investment risks. As of June 30, 2012, the table represents the County’s IP or where more restrictive, the Treasurer’s written policies and procedures, that address interest risk, credit risk, and concentration of credit risk. Maximum Percentage Maximum Investment Authorized Investment Type Maximum Maturity of Portfolio in One Issuer Bonds issued by a Local Agency Requires written approval of 1 year 5% County Treasurer for each investment. U.S. Treasury Notes 3 years 100% N/A U.S. Treasury Bonds 3 years 100% N/A U.S. Treasury Bills Maximum issued 100% N/A Cash Management Bills Maximum issued 100% N/A Registered State Warrants Authorized by County 1 year 10% Treasurer beginning 7/14/09 Treasury Notes or Bonds of this state Not authorized in FY 2011-12 Registered Treasury Notes or Bonds of any of the Not authorized in FY 2011-12 other 49 United States Bonds, Notes, Warrants, other evidences of No more than 10% of issuer indebtedness of any local agency within this state debt and assets. Requires 1 year 5% written approval of County Treasurer for each investment. U.S. Government Agencies: Federal National Mortgage Assoc. Not authorized in FY 2011-12 Federal Home Loan Mortgage Corp. Not authorized in FY 2011-12 Federal Home Loan Bank 3 years 20% N/A Farm Credit Bank 3 years 20% N/A Bankers’ Acceptances-Domestic 30 days 10% 4% Bankers’ Acceptances-Foreign Not authorized in FY 2011-12 Commercial Paper 30 days 10% 2% Collateralized Certificates of Deposit 1 year 15% 5% Negotiable Certificates of Deposit Not authorized in FY 2011-12 CDARS 1 year 15% 1% Tri-Party Repurchase Agreements 30 days 15% of all repos N/A Bi-Party Repurchase Agreements Not authorized in FY 2011-12 Reverse Repurchase Agreements Not authorized in the County’s IP Securities Lending Agreements Not authorized in the County’s IP Medium-Term Notes Not authorized in FY 2011-12 Money Market Mutual Funds Not authorized in FY 2011-12 Pledged Funds held by a trustee or fiscal agent Per specific statutory provisions or in accordance with the ordinance, resolution, indenture, or agreement of a local agency providing for the issuance. Notes, Bonds, or other obligations that are at all Not authorized in FY 2011-12 times secured by a valid first priority security interest Mortgage Pass-Through Securities Not authorized in FY 2011-12 Local Agency Investment Fund N/A 15% N/A 65 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Interest Rate Risk In accordance with its investment policy, the County manages its exposure to declines in fair values by structuring the portfolio so that securities mature to meet cash flow requirements for ongoing operations and thereby avoiding the need to sell securities on the open market prior to maturity. Custodial Credit Risk The County minimizes this type of credit risk by pre-qualifying the custodial financial institution, and requiring the custodian to hold securities in the County Treasurer's name. Credit Risk The County minimizes its exposure to credit risk by pre-qualifying the financial institutions limiting investments to the safest types of securities, diversifying the portfolio, and setting limits per issuer. Concentration of Credit Risk At June 30, 2012, the County did not have investments in commercial paper, corporate bonds, medium term notes, or money market mutual funds. Investments in obligations of the U.S. government, U.S. government agencies or government-sponsored enterprises are exempt from limitations set by GASB. The following is a summary of the credit quality distribution and concentration of credit risk by investment type as a percentage of the County's Investment Pool's fair value at June 30, 2012. Investment Type S&P Moody's % of Portfolio* U.S Treasuries AA+ Aaa 54.52% U.S. Government Agencies AA+ Aaa 2.59% CDARS Not Rated Not Rated 21.42% Local Agency Investment Fund Not Rated Not Rated 21.47% Total 100% *Bank Deposit accounts such as PIMMAs and FICA are tracked, managed, and reported as part of the County’s combined pool and are included in portfolio percentage limit calculations. CDARS and LAIF are both at 9% of the County’ combined pool inclusive of the PIMMAs and FICA and therefore are within the limits authorized in the Treasurer’s Investment Policy. GASB Statement No. 40 requires that investments in single issuers exceeding 5% of the County’s pooled investments be disclosed as concentrations of credit risk. As of the year ended June 30, 2012 no investments exceed the 5% disclosure threshold. 66 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) At June 30, 2012, the County had the following investments and interest-bearing deposits (in thousands): Weighted Average Maturity Interest Maturity Carrying Fair Instrument Dates Rate % Years Amount Value Par Value CDARS 11/01/12- 0.449% 0.55 50,000 50,000 50,000 5/09/13 U.S. Treasuries 7/31/12- 0.469%- 0.89 126,307 127,265 126,000 4/15/14 1.659% U.S. Government Agencies 12/27/13 1.057% 1.49 5,984 6,048 6,000 Local Agency Fund On Demand - 50,044 50,105 50,000 Total Investments in County Treasury 0.55 $232,335 $223,418 $232,000 Deposits in Financial Institutions 359,754 359,754 359,754 Cash on Hand 78 78 78 Total Cash held in Treasury 592,167 593,250 591,832 Deposits in Transit 1,513 1,513 1,513 Outstanding Warrants (10,163) (10,163) (10,163) Total 583,517 584,600 583,182 Imprest Cash 395 395 395 Non-pool Cash Deposits 1,499 1,499 1,499 Other Cash Deposits 1,894 1,894 1,894 Total cash and cash equivalents $ 585,411 $ 586,494 $ 585,076 Carrying Fair Restricted Cash with Fiscal Agent Amount Value Par Value U.S. Government & Federal Agencies $ 15,789 $ 15,789 $ 15,789 Total 15,789 15,789 15,789 Total restricted and unrestricted cash and cash equivalents $ 601,200 $ 602,283 $ 600,865 Carrying Total Cash and Investments Summary Amount Total Governmental Activities $ 302,790 Total Business-type Activities 63,242 Total Fiduciary Funds 227,052 Total Component Unit 8,116 Total Cash and Investments $ 601,200 67 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The following represents a condensed statement of net assets and changes in net assets for the Treasurer's investment pool as of June 30, 2012 (in thousands): Carrying Amount Fair Value Statement of Net Assets: Net assets held for pool participants $ 585,411 $ 586,494 Equity of internal pool participants $ 400,314 $ 401,397 Equity of external pool participants (voluntary and involuntary) 185,097 185,097 Total Equity $ 585,411 $ 586,494 Statement of Changes in Net Assets: Revenue $ 3,758 $ 3,758 Investment Costs (903) (903) Net Deposits (37,166) (37,166) Change in fair value - (840) Net change in pool (34,311) (35,151) Net Assets at July 1, 2011 619,722 621,645 Net Assets at June 30, 2012 $ 585,411 $ 586,494 Restricted Cash with Fiscal Agent Cash and investments at June 30, 2012 that are restricted by legal or contractual requirements are comprised of the following (in thousands): Various Governmental Funds Amount Required lease reserves for long term debt $ 13,706 Restricted interest on lease reserves 2,083 Total Restricted Cash $ 15,789 Cash Deposits outside of the Treasury Pool At fiscal year end, the carrying amount of the County's other cash deposits was $1,405,350 and the combined financial institutions' balance was $1,499,234. The difference of $93,885 between the County's deposit balance and the financial institutions' balance results from transactions in transit, and outstanding warrants and bond coupons. The entire bank balance of $1,499,234 was covered by federal depository insurance or by collateral held by County's agent in the County's name. 68 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 3. RECEIVABLES Accounts receivable at year end of the County’s major individual funds and nonmajor and Internal Service Funds in the aggregate, including the applicable allowance for uncollectible accounts are as follows (in thousands): Governmental Governmental Activities Business Type Activities Activities State Nacimiento Nonmajor Internal Service Water Water Enterprise Funds General Fund Project Contract Funds Accounts Receivable $ 3 $ 1,648 $ 1,506 $ 190 $ 16 Allowance for Doubtful Accounts - - (1,506) - - Net Accounts Receivable $ 3 $ 1,648 $ - $ 190 $ 16 4. CAPITAL ASSETS A summary of changes in capital assets for the year ended June 30, 2012, is as follows (in thousands): Balance Transfers & Balance Governmental Activities July 1, 2011 Additions Retirements Adjustments June 30, 2012 Capital assets, not being depreciated: Land $ 791,590 $ 16 $ (296) $ 100 $ 791,410 Construction in progress 47,147 26,094 (236) (6,295) 66,710 Total capital assets, not being depreciated 838,737 26,110 (532) (6,195) 858,120 Capital assets, being depreciated: Structures and improvements 172,891 161 (332) 798 173,518 Equipment 69,686 4,759 (3,219) 1,145 72,371 Infrastructure 278,525 2,082 - 4,534 285,141 Other property 340 - - - 340 Total capital assets, being depreciated 521,442 7,002 (3,551) 6,477 531,370 Less accumulated depreciation for: Structures and improvements (62,476) (4,143) 301 (153) (66,471) Equipment (38,134) (5,311) 2,974 - (40,471) Infrastructure (148,379) (9,005) - - (157,384) Other property (8) (3) - - (11) Total accumulated depreciation (248,997) (18,462) 3,275 (153) (264,337) Total capital assets being depreciated, net 272,445 (11,460) (276) 6,324 267,033 Governmental activities capital assets, net $1,111,182 $ 14,650 $ (808) $ 129 $ 1,125,153 69 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Balance Transfers & Balance Business-type Activities July 1, 2011 Additions Retirements Adjustments June 30, 2012 Capital assets, not being depreciated: Land $ 29,745 $ 2,823 $ - $ (83) $ 32,485 Construction in progress 14,165 7,865 (85) (2,643) 19,302 Water Rights 40,962 1,589 - - 42,551 Other Property 1,968 - - - 1,968 Total capital assets, not being depreciated 86,840 12,277 (85) (2,726) 96,306 Capital assets, being depreciated: Infrastructure 184,377 3,525 - 2,072 189,974 Structures and improvements 167,954 151 (600) 338 167,843 Equipment 2,735 349 (12) 34 3,106 Other Property 554 - - - 554 Total capital assets, being depreciated 355,620 4,025 (612) 2,444 361,477 Less accumulated depreciation for: Infrastructure (954) (2,780) - - (3,734) Structures and improvements (33,791) (3,612) 522 153 (36,728) Equipment (1,811) (157) 12 - (1,956) Other Property (50) (2) - - (52) Total accumulated depreciation (36,606) (6,551) 534 153 (42,470) Total capital assets being depreciated, net 319,014 (2,526) (78) 2,597 319,007 Business-type activities capital assets, net $ 405,854 $ 9,751 $ (163) $ (129) $ 415,313 Depreciation expense Depreciation expense was charged to functions as follows (in thousands): Governmental Activities Amount General Government $ 4,168 Public Protection 2,453 Public Ways and Facilities 8,883 Health and Sanitation 133 Public Assistance 258 Education 195 Recreational and Cultural Services 560 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 1,810 Total Depreciation Expense-Governmental Activities $ 18,460 Business-type Activities Amount Airport $ 2,143 Nacimiento 2,122 State Water Project 200 Lopez Flood Control 1,288 Nonmajor Enterprise 800 Total Depreciation Expense-Business-type Activities $ 6,553 70 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 5. CONSTRUCTION IN PROGRESS AND RELATED COMMITMENTS Construction in Progress accounts reflect the amount within governmental and business-type funds for construction projects which are not yet complete. The following is a schedule of major projects included in Construction in Progress as of June 30, 2012 (in thousands): Governmental Activities Expended to Committed Project June 30, 2012 Funds Sheriff Women’s Jail Expansion $ 2,118 $ 1,804 Behavioral Health Electronic Health - 428 Record System Creston Fire Station 3,770 - Roads Infrastructure 57,773 15,286 North County Public Service Center 64 3,202 SLO Probation Juvenile Hall Expansion 615 1,149 Business-Type Activities Expended to Committed Project June 30, 2012 Funds SLO Airport Facilities Infrastructure $ 522 $ 1,253 Los Osos Wastewater Project 14,635 11,212 6. LEASES County as Lessor The County's General Fund and Enterprise Funds receive revenue from various properties leased to others under agreements classified as operating leases in accordance with Financial Accounting Standards Board (FASB) Statement 13. The leases cover periods ranging generally from 1 to 40 years. The General Fund leases portions of the former County General Hospital and North County healthcare facilities. The original cost of these facilities was $10,787. As of June 30, 2012 they had a carrying value of $8,797 net of accumulated depreciation of $1,990. The Airport leases portions of airport land to various operators. The cost and carrying value of the original Airport land area is $2,011. The following is a schedule of minimum future rentals to be received under these non-cancelable operating leases at June 30, 2012 (in thousands): Year Ending June 30 General Fund Airport 2013 $ 541 $ 286 2014 541 285 2015 449 285 2016 401 261 2017 393 254 Later Years 2,067 7,032 Total $ 4,392 $ 8,403 71 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Minimum future rentals do not include contingent rentals, which are received as stipulated in the lease contracts. These contingent rental payments are based on the monthly revenues of the concessionaire operating on the premises. Contingent rentals amounted to $1,780,734 for the fiscal year ended June 30, 2012. County as Lessee Operating Leases: The County has commitments under long-term real property operating lease agreements for facilities used in operations. These leases do not meet any of the four criteria for capitalization set by FASB 13. The County is the lessee under operating leases for real property used to house certain County functions. In addition to real property leases, the County has also entered into operating leases for equipment, of which most are data processing and office equipment leases. Management expects that in the normal course of business, leases that expire will be renewed or replaced by other leases. Commitments under the operating lease agreements for equipment, as described above, are not material. Rental payments for fiscal year ended June 30, 2012 totaled $2,879,808. The following rental costs represent future minimum payments under leases that have remaining non-cancelable terms in excess of one year as of June 30, 2012 for the next five years and for each five-year period thereafter (in thousands): Year Ending Minimum Lease Payments June 30 2013 $ 1,958 2014 1,828 2015 1,667 2016 1,549 2017 1,394 2018-2022 4,547 2023-2027 1,464 2028-2032 1,274 Total $ 15,681 7. RISK MANAGEMENT The County is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The County has self-insurance programs for liability, workers' compensation, unemployment insurance and dental coverage. There were five liability and one workers’ compensation claim settlements that have exceeded insurance coverage during the past three fiscal years. Insurance coverage for liability and workers' compensation above the County's self-insured retention (SIR) is provided through the California State Association of Counties (CSAC) Excess Insurance Authority. The County is a member of CSAC Excess Insurance Authority, a joint powers authority whose purpose is to develop and fund programs of excess insurance for its member counties. The authority is solvent. Self-insurance and authority limits are as follows: Type of Coverage Self-Insurance Authority Liability $ 250,000 per occurrence $ 25,000,000 Workers' Compensation $ 250,000 per occurrence Statutory Unemployment $ 699,412 maximum ----- Dental None–Funded by Employees ----- Annual actuarial valuations are obtained for the Workers' Compensation and the General Liability Funds. These valuations provide the basis for premiums charged to insured departments. The County's SIR amounts are paid directly, without the use of purchased annuity contracts. Financial information on CSAC Excess Insurance Authority is available on request from the Office of Risk Management, County of San Luis Obispo. 72 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The estimated claims liability for the Protected Self Insurance Fund and Workers' Compensation Self Insurance Fund have been recorded at a discounted 85% confidence level. Changes in the balances of claims liabilities for the self funded insurance program including: the Protected Self Insurance Fund, Worker’s Compensation Fund, Unemployment Insurance Fund, and Dental Insurance Fund for fiscal years 2010-2011 and 2011-2012, were as follows (in thousands): Beginning of the fiscal year Current year claims, Balance at fiscal liability changes & estimates Claim payments year end 2010-11 $ 22,587 $ 2,975 $ 5,789 $ 19,773 2011-12 $ 19,773 $ 4,065 $ 4,583 $ 19,255 8. INTERFUND RECEIVABLES AND PAYABLES The composition of interfund balances at June 30, 2012 was (in thousands): Advances to/from other funds: Receivable Fund Payable Fund Amount Nonmajor Governmental Funds Nonmajor Enterprise Funds 763 General Fund 1,680 2,443 Nonmajor Enterprise Funds General Fund 252 Nonmajor Governmental Funds 350 602 Airport General Fund 839 Total $ 3,884 Advances from Nonmajor Enterprise Funds to Nonmajor Governmental Funds of $763 represents reserve funds of the Golf Enterprise fund held by the Public Financing Corporation Debt Service Fund ($549) and the obligation of the Parks Special Revenue Fund to the Lopez Park Enterprise fund for future debt service ($214). Advances from the General Fund to Nonmajor Governmental Funds of $1,680 represent internal loans issued to the County Service Areas Special Districts Special Revenue Fund ($306), the Flood Control Districts ($44) and the Library Special Revenue Fund ($1,330). Advances from the General Fund to Nonmajor Enterprise Funds of $252 represent internal loans issued to County Service Area 18 ($172) and County Service Area 7 ($80). Advances from Nonmajor Governmental Funds of $350 represent internal loans issued to the County Service Areas Enterprise Fund from the County Service Areas Special Districts Special Revenue Fund The Airport owes the General Fund $839 for an internal loan for various projects. 73 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 9. TRANSFERS A reconciliation of transfers is detailed below (in thousands): Transfer From Transfer To Amount General Fund Nonmajor Governmental Funds $ 17,931 Capital Projects Fund 895 Airport 352 19,178 Nonmajor Governmental Funds General Fund 1,148 Capital Projects Fund 3,268 Nonmajor Governmental Funds 2,899 Nonmajor Enterprise Funds 550 7,865 Airport Nonmajor Governmental Funds 43 General Fund 2 45 Capital Projects Fund General Fund 95 Nacimiento Water Contract Nonmajor Governmental Funds 8,778 Nonmajor Enterprise Funds General Fund 2 Nonmajor Governmental Funds 42 44 Internal Service Funds General Fund 36 Nonmajor Governmental Funds 676 Nonmajor Enterprise Funds 46 758 Total Transfers $ 36,763 General Fund transfers to Nonmajor Governmental Funds included contributions to the following Special Revenue Funds: Roads ($5,828), Library ($516), Community Development ($310), County Medical Services Program ($1,784) and Parks ($3,278). The General Fund also transferred $6,215 to the Pension Obligation Bond Debt Service Fund to finance debt service payments, $895 to the Capital Projects Fund and $352 to the Airport. Nonmajor Governmental Fund transfers include contributions of Public Facilities Fees revenue from the Public Facilities Fees Special Revenue Fund to the General Fund ($498), the Capital Projects Fund ($3,268), Parks ($8) and the Library Fund ($142) to fund capital and maintenance projects. The Parks Special Revenue Fund made transfers to the General Fund to fund maintenance projects ($186), and transferred funds to the Pension Obligation Bond Debt Service Fund ($99) and the Lopez Park Enterprise Fund ($6) for debt service. The Roads Fund transferred $4 to Flood Control Zone 18 for maintenance projects and $12 to the General Fund for the Oceano Revitalization Plan. The Road Impact Fee Special Revenue Fund transferred Impact Fees of $449 to the 74 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) General Fund for certificate of participation payments and $1,639 to the Roads Fund for capital and maintenance projects. The Library Fund ($172), The County Medical Services Program Fund ($29) and the Driving Under the Influence Fund ($27) made transfers to the Pension Obligation Bond Debt Service Fund to finance debt service payments. Other Nonmajor Governmental Fund transfers include transfers from the California Health Care Indigent Program to the County Medical Services Program ($779) to combine the funds; a transfer of $3 to the General Fund for interest payments and transfers between various County Service Areas ($544). The Airport Enterprise fund transferred $43 to the Pension Obligation Bond fund for debt service and $2 to the General Fund for interest on internal loans. The Capital Projects Fund transferred $95 to the General Fund primarily for waste management projects. The Nacimiento Water Contract Fund transferred $8,778 to the Flood Control Zone for various projects. Transfers from Nonmajor Enterprise funds included transfers from the Golf Enterprise Fund for debt service to the Pension Obligation Bond Debt Service Fund ($33), as well as transfers from County Service Area Enterprise Fund to the General Fund ($2) for interest on internal loans; and transfers between various County Services Areas ($9). The Fleet Internal Service Fund transferred $36 to the General Fund for fixed assets sales, and the Worker’s Compensation Internal Service Fund transferred $46 to the Golf Enterprise Fund for a modular office. Internal Service Fund transfers to nonmajor governmental funds represent contributions to the Pension Obligation Bond Debt Service Fund for debt service by the Public Works ($632), Reprographics ($6), and Garage ($38) funds. 75 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 10. BONDED INDEBTEDNESS AND LONG TERM DEBT Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2012 (in thousands) is as follows: Beginning Ending Balance Balance Due within Governmental Activities July 1, 2011 Additions Reductions June 30, 2012 one year Bonds and notes payable: Certificates of participation $ 28,820 $ - $ 925 $ 27,895 $ 965 Unamortized discount on COP (107) - (4) (103) - Pension Obligation Bonds 122,689 - 3,260 119,429 3,805 Total Bonds and notes payable 151,402 - 4,181 147,221 4,770 Other liabilities: Compensated absences 25,342 15,613 15,227 25,728 17,132 Landfill post-closure costs 3,356 1,029 307 4,078 342 Self insurance 19,773 4,065 4,583 19,255 3,520 Total other liabilities 48,471 20,707 20,117 49,061 20,994 Total Governmental Activities $ 199,873 $ 20,707 $ 24,298 $ 196,282 $ 25,764 Business-Type Activities Bonds and notes payable: Certificates of participation $ 19,897 $ - $ 837 $ 19,060 $ 673 State notes 31,024 6,288 1,428 35,884 1,485 Revenue bonds 196,444 - 2,961 193,483 3,097 Unamortized premium on Revenue Bonds 6,371 - 213 6,158 - General obligation bonds 10,760 - 515 10,245 355 Unamortized premium on General obligation bonds 1,128 - 56 1,072 - Bond Anticipation Notes 8,677 - 8,677 - - Assessment bonds - 15,364 - 15,364 10 5,620 Total bonds and notes payable 274,301 21,652 14,687 281,266 Other liabilities: Compensated absences 276 159 138 297 169 Total other liabilities 276 159 138 297 169 Total Business-Type Activities $ 274,577 $ 21,811 $ 14,825 $ 281,563 $ 5,789 76 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Annual debt service requirements for governmental activities as of June 30, 2012 are summarized as follows: Governmental Activities Certificates of Participation Pension Obligation Bonds Year Ended June 30, Principal Interest Principal Interest 2013 $ 965 $ 1,281 $ 3,805 $ 4,499 2014 1,000 1,243 4,390 4,335 2015 1,040 1,202 5,030 4,140 2016 1,090 1,155 5,715 3,911 2017 1,140 1,102 6,460 3,644 2018-2022 6,580 4,626 64,186 28,821 2023-2027 8,350 2,853 17,588 40,067 2028-2032 4,050 1,208 12,255 39,485 2033-2037 3,250 523 - - 2038-2042 430 20 - - Total $ 27,895 $ 15,213 $ 119,429 $ 128,902 Business-Type Activities Certificates of Participation State Notes Revenue Bonds Year Ended Principal Interest Principal Interest Principal Interest June 30, 2013 $ 673 $ 896 $ 1,485 $ 837 $ 3,097 $ 9,602 2014 694 875 1,523 799 3,217 9,472 2015 720 849 1,569 753 3,357 9,337 2016 750 818 1,774 834 3,503 9,191 2017 786 784 1,827 782 3,665 9,026 2018-2022 4,505 3,329 9,821 3,078 21,370 42,062 2023-2027 5,796 2,040 8,922 1,678 27,580 35,842 2028-2032 4,102 609 5,839 609 35,585 27,814 2033-2037 230 202 1,152 280 45,970 17,443 2038-2042 285 146 1,272 160 46,139 4,578 2043-2047 355 76 700 33 - - 2048-2052 164 7 - - - - Total $ 19,060 $ 10,631 $ 35,884 $ 9,843 $ 193,483 $ 174,367 Business-Type Activities (continued) General Obligation Bonds Assessment Bonds Year Ended June 30, Principal Interest Principal Interest 2013 $ 355 $ 483 $ 10 $ 327 2014 360 474 1,208 406 2015 375 461 1,244 372 2016 395 445 1,271 337 2017 410 429 1,307 302 2018-2022 2,320 1,858 7,111 942 2023-2027 2,995 1,186 3,213 92 2028-2032 3,035 314 - - Total $ 10,245 $ 5,650 $ 15,364 $ 2,778 77 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Long-term liabilities at June 30, 2012 consisted of the following: Original Date of Semi Annual Issue Outstanding Issue Maturity Interest Rates Installments Amount at 6/30/2012 Governmental Activities Certificates of Participation 2002 Series A 12/17/2002 2028 3.0% - 5.0% $1,484 - $1,489 $21,690 $16,400 Partially used to finance a portion of the new government center. Debt service is provided by semi-annual payments funded by general County revenues. 2007 Series A 2/8/2007 2037 4% - 4.25% $304 - $308 5,090 4,695 Used to finance the construction of the Paso Robles Courthouse building. Debt service is provided by court fines specifically designated and restricted for new construction or major renovation of court facilities. 2008 Series A 1/23/2008 2038 4% - 4.625% $440 - $451 7,325 6,800 Used to finance improvements to the Vineyard Drive Interchange. Debt service is provided by development fees. Pension Obligation Bonds Used to refund the Unfunded Actuarial Accrued Liability (UAAL) due to the Pension Trust as of July 2, 2003 as determined by an outside actuary. Debt service payments are expected to be funded by County payroll benefits. 2003 Series A Standard Bonds 7/2/2003 2018 1.68% - 4.54% $2,164 - $7,594 47,995 32,665 2003 Series C Capital Appreciation Bonds 7/2/2003 2031 5.27% - 5.73% zero - $15,000 44,199 44,199 2009 Series A Term Bonds 8/19/2009 2019 7.45% $3,171 42,565 42,565 $168,864 $147,324 Original Date of Semi Annual Issue Outstanding Issue Maturity Interest Rates Installments Amount at 6/30/2012 Business-Type Activities Certificates of Participation 2002 Series A 12/17/2002 2028 3.0% - 5.0% $545 - $550 $8,005 $6,050 Partially used to establish an escrow to defease the 1995 A COP, which was used to finance the Dairy Creek Golf Course. Debt service is provided by semi-annual lease payments from the Dairy Creek Golf Course. USDA 2009 4/30/2009 2049 4.375% $6 - $86 1,631 1,590 Used to finance a water system improvement project in County Service Area 23. Debt service is provided by water sales revenues. 2011 Refunding – Lopez Dam Remediation 5/12/2011 2030 2.0% - 5.5% $928 - $934 11,990 11,420 Used to refund the 2000 A COP issue. The original COP was used to improve and retrofit the Lopez Dam. Debt service is provided by semi-annual lease payments made by the Flood Control District for the use of the retrofitted facilities. $21,626 $19,060 78 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Date Original of Semi Annual Issue Outstanding Issue Maturity Interest Rates Installments Amount at 6/30/2012 Business-Type Activities (continued) State Notes The County has borrowed from the State of California Department of Water Resources and the California Department of Transportation to finance the construction of water systems in unincorporated areas and to construct hangars at the San Luis Obispo airport. State loans are repaid with water service revenue and hangar rental revenue. Cayucos Water Treatment Facility 1998 2023 3.0315% $174 $3,011 $1,613 Santa Margarita Water System 1999 2018 3.41% $36 513 192 Lopez Recreation Area 2004 2024 2.5132% $21 325 214 Lopez Water Treatment Plant Upgrade 2006 2028 2.60% $1,672 25,945 23,918 Airport Hangars 2006 2025 4.6124% $334 4,734 2,829 Airport Hangars 2007 2025 4.6557% $86 1,000 829 Los Osos Waste Water Project 2012 2044 2.0% $1,431 6,289 6,289 $41,817 $35,884 Revenue Bonds 1976 Water Bond-County Service Area 16 4/1/1976 2016 5.00% $7 - $9 $135 $28 Used to improve the Shandon Water System. Debt service is provided primarily by water sales revenues. 2007 Nacimiento Pipeline $7,658 - Project Series A 9/26/2007 2040 3.75% - 5.0% $10,048 157,845 155,415 2007 Nacimiento Pipeline 5.196% - Project Series B 9/26/2007 2040 5.571% $2,132 - $2,646 38,565 38,040 Used to build the Nacimiento Water Delivery Project. Debt service is provided by water sales revenues of participating cities and districts payable under water delivery contracts. $196,545 $193,483 General Obligation Bonds 2011 Refunding – Lopez Dam Remediation 5/12/2011 2030 2.0% - 5.5% $833 - $840 $10,760 $10,245 Used to refund the 2000 A GO issue. The original GO Bonds were used to improve and retrofit the Lopez Dam. Debt service is provided by applicable property taxes. Variable based Bond Anticipation Notes 6/15/2011 2012 on LIBOR $13,757 $13,648 $- Interim funding for the Los Osos Waste Water Project. Repaid with the Assessment Bonds Issued by the USDA. Assessment Bonds 2012 2025 2.75% $1,609 - $1,613 $15,364 $15,364 Issued to the USDA to finance the construction of the Los Osos Waste Water Project. Debt service will be provided by amounts levied against property owners who benefit from the project. 79 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Public Facilities Corporation The San Luis Obispo County Public Facilities Corporation (PFC) was incorporated on 9/7/1994. The PFC is a nonprofit public benefit corporation organized to assist public agencies within the County of San Luis Obispo with the acquisition and construction of various public facilities. Financing Authority The San Luis Obispo County Financing Authority was formed on 8/22/2000 as a joint exercise of powers authority between the County and the Flood Control District, which administers Lopez Dam. The Authority was created to assist in the financing, construction, and equipping of public facilities for one or both of the members. Description of Long-Term Lease Arrangements The County formed the Public Facilities Corporation and the Financing Authority for the purpose of issuing debt. On behalf of the County, these two entities issued all currently outstanding certificates of participation and the Lopez Dam remediation general obligation bond. Therefore, the County makes semi-annual lease payments in lieu of debt service to these entities from a variety of sources including State and Federal revenues, penalty assessments, golf course fees, water contract payments, and property taxes. For lease payment details, see above schedules for specific type of debt. Description of Special Assessment Bonds Special assessment debt has been issued to provide funds for the construction of streets, utility and water delivery systems. These bonds will be repaid from amounts levied against the property owners benefited by this construction. The County acts in an agent capacity for the assessment districts. In the event that a deficiency exists because of unpaid or delinquent special assessments at the time a debt service payment is due, the County must provide resources to cover the deficiency until other resources, for example, foreclosure proceeds, are received. Special assessment principal outstanding at June 30, 2012 totals $2,662 with interest rates from 3.5% to 6.85%. Accrued Vacation and Sick Leave Pay and Compensatory Time Off County employees have accumulated unpaid vested benefits for compensatory time off, sick leave and vacation earned of $26,025 at June 30, 2012. The accumulated benefits will be liquidated in future years as employees elect to use them. In the normal course of business, all payments of these accumulated benefits will be funded from appropriations in the year in which they are to be paid. Legal debt margin State statutes limit the amount of general obligation debt a governmental entity may issue to 1.25% of its net assessed valuation. The current debt limitation for the County is $516,755 with a margin of $505,510. Rebatable Arbitrage Earnings The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service. During the current year, the County performed calculations of excess investment earnings and at June 30, 2012 had an arbitrage liability of $803. Subsequent Event On July 17, 2012, all the outstanding principal and interest due on the Certificates of Participation 2002 Series A were paid. Funding was provided by the issuance of the SLO County Financing Authority Lease Revenue Refunding Bonds 2012 Series A. 80 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 11. NET ASSETS/FUND BALANCES The government-wide and business-type activities financial statements utilize a net assets presentation. Net assets are categorized as invested in capital assets (net of related debt), restricted and unrestricted. Investment in Capital Assets, Net of Related Debt – This category groups all capital assets, including infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category. Net assets invested in capital assets, net of related debt at June 30, 2012 are as follows (in thousands): Amount Governmental activities $ 1,099,885 Business-type activities 153,801 Total $ 1,253,686 Restricted Net Assets – This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Included in total restricted net assets at June 30, 2012 are net assets restricted by enabling legislation of $17,243. Restricted net assets at June 30, 2012 for governmental activities are as follows (in thousands): Amount RESTRICTED FOR: General Government Commitments for Board of Supervisors related professional services $ 5 Commitments for Administrative Office related professional services 30 Commitments for Information Technology related equipment and professional services 35 Commitments for Human Resources related professional services 2 Commitments for Auditor-Controller related professional services 22 Commitments for Clerk-Recorder related equipment 3 Commitments for County Counsel related professional services 148 Commitments for building maintenance projects 8 Commitments for architectural services related professional services 2 Commitments for capital projects 97 Claims, contracts and other restrictions 445 Public Protection Commitments for Flood Control related engineering services 1,075 Commitments for Emergency Services related professional services 12 Commitments for Planning related professional services 352 Commitments for Waste Management related professional services 32 Commitments for Sheriff-Coroner related equipment and professional services 27 Commitments for Probation related professional services 142 Commitments for fire protection equipment 175 Commitments for capital projects 1,414 Health and Sanitation Commitments for Public Health related professional services 16 Commitments for capital projects 72 Public Assistance Commitments for Social Services related supplies 4 Public Ways and Facilities Commitments for Public Works related professional services 22 Road maintenance and construction 8,237 Public facilities fees restricted for public facilities 9,006 81 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Education Commitments for capital projects 136 Recreation and Culture Commitments for capital projects 262 Commitments for parks open space project 19 Claims, contracts and other restrictions 11 Debt Service 9,666 Total Restricted Net Assets $ 31,477 Unrestricted Net Assets – This category represents net assets of the County, not restricted for any project or other purpose. Unrestricted net assets at June 30, 2012 are as follows (in thousands): Amount Governmental activities $ 265,454 Business-type activities 33,081 Total $ 298,535 In the fund financial statements, governmental funds report fund balance in classifications based primarily on the extent to which the County is bound to honor the constraints imposed on the use of resources reported in the funds. In circumstances when an expenditure is made for a purpose for which amounts are available from multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. As prescribed by GASB statement 54, the following classifications are used to identify the components of fund balance: Nonspendable Fund Balance – includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: inventories, prepaid amounts, and long-term notes receivable. Restricted Fund Balance – includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of the resource provider. Committed Fund Balance – includes amounts that can only be used for the specific purposes determined by formal action of the County’s highest level of decision-making authority. As prescribed by the State of California County Budget Act, fund balance commitments are established, modified or rescinded by four-fifths vote of the Board of Supervisors at regular or special meetings. The general reserve, however, is only established, cancelled, increased or decreased at the time of adopting the budget except in cases of legally declared emergency. Assigned Fund Balance – comprises amounts intended to be used by the County for specific purposes that are neither restricted nor committed. The County Board of Supervisors does not delegate the authority to assign fund balance amounts for specific purposes. Unassigned Fund Balance – is the residual classification for the General Fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. In circumstances when an expenditure is made for a purpose for which amounts are available from multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. 82 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Fund balances for all the major and Nonmajor governmental funds as of June 30, 2012 are distributed as follows: Capital Nonmajor General Fund Projects Fund Gov’tl Funds Total Nonspendable: Inventories $ 96 $ - $ - $ 96 Prepaid Items 309 - 12 321 Loans receivables - - 28 28 Advances to other funds 2,771 - 350 3,121 Subtotal 3,176 - 390 3,566 Restricted for: Tax loss reserves 6,682 - - 6,682 Public ways and facilities - - 17,243 17,243 Public protection - - 7 7 Debt Service - - 2,538 2,538 Subtotal 6,682 - 19,788 26,470 Committed to: General government 9,625 - - 9,625 Public protection 1,957 - 15,770 17,727 Public assistance 56 - 1,543 1,599 Public ways and facilities 130 - 9,470 9,600 Health and sanitation 16 - 66 82 Education - - 2,099 2,099 Recreation - - 2,393 2,393 General reserve 8,000 - - 8,000 Fire equipment 991 - - 991 Internal financing 4,187 - - 4,187 Solar plant mitigation 487 - - 487 Automation projects 11,550 - - 11,550 Building replacement 12,512 - - 12,512 Organizational development 2,009 - - 2,009 Tax reduction reserve 15,549 - - 15,549 Lease financing 1,811 - - 1,811 Capital Projects - 22,675 - 22,675 Debt service - - 7,128 7,128 Subtotal 68,880 22,675 38,469 130,024 Unassigned 102,291 - - 102,291 Total $ 181,029 $ 22,675 $ 58,647 $ 262,351 12. LAPSING ENCUMBRANCES The County allows some encumbrances to lapse at year-end and then automatically reappropriates them as part of the subsequent year’s budget. 83 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The following is a summary of lapsing encumbrances at June 30, 2012 to be reappropriated during the next fiscal year (in thousands): Total Encumbrances Function General Government $ 1,080 Health & Sanitation 1,381 Public Protection 1,768 Public Assistance 517 Public Ways and Facilities 12,587 Education 6 Recreation 353 Total Lapsing Encumbrances $ 17,692 13. OTHER COMMITMENTS In 1965, the County began payments in accordance with a contract with the State of California for a water supply from the State Water Project. Estimated future principal payments for the State Water Contract will total $30,012,525 over the next 23 years. The estimated amounts vary by year. For example, the principal amount due in 2012 is $794,414 while $1,998,852 is due in 2035. In 1992 the County entered Water Supply Contracts, of like terms, with various sub-contractors which presently provide resources to cover approximately 85% of the capital costs. 14. CONTINGENT LIABILITIES The County is subject to various lawsuits, inverse condemnation cases, personnel actions, disputes over tax assessments, and other actions incidental to the ordinary course of County operations. In the opinion of the County Counsel, the total potential claims against the County not covered by insurance resulting from litigation would not materially affect the financial statements of the County at June 30, 2012. 15. DEFERRED REVENUE Deferred revenue on the governmental fund balance sheet represents amounts that are deferred because they have been received as of year end, but not yet earned. Governmental Funds also defer amounts in connection with receivables that are not considered to be available to liquidate balances of the current period. Broad categories of deferred revenues are as follows at June 30, 2012 (in thousands): 84 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Governmental funds: General Capital Nonmajor Fund Projects Gov’tl Funds Roads developer contributions $ - $ - $ 147 Parks endowment - - 7 Governmental aid advanced for capital projects - 606 - Other deferred revenues 4,517 - - Total Unearned 4,517 606 154 Teeter Tax Revenues 18,764 - - Accrued revenues collected after availability period 6,177 6 54 Total Unavailable 24,941 6 54 Total Deferred Revenue $ 29,458 $ 612 $ 208 16. OTHER REVENUES Other revenues are generally one-time payments or items not related to program activities. Broad categories of other revenues are as follows at June 30, 2012 (in thousands): Governmental funds: Nonmajor Gov't General Fund Funds Reimbursements $ 901 $ 266 Surplus sales, publications & rebates 1,925 - Nuisance abatement 33 - Returned check fees and card fees 11 - Seminar, conferences and workshop fees 123 - Contributions non-governmental 142 1,076 Grants non-governmental 229 55 Tobacco settlement 1,701 695 Other settlements 329 - Other miscellaneous revenues 399 566 Total Governmental Funds $ 5,793 $ 2,658 85 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Business-type funds: Nacimiento State Nonmajor Internal Water Water Enterprise Service Airport Contract Contract Funds Funds Other Reimbursements $ - $ 3 $ 55 $ 1 $ 49 Returned check fees and card fees 6 - - - - Settlements, damages, insurance - - - - 1,038 Surplus sales and rebates - - - - 93 Contributed Capital - - - - - Misc. non-operating sources 23 13 5 9 13 Total Business-type funds $ 29 $ 16 $ 60 $ 10 $ 1,193 17. DEFINED BENEFIT PENSION PLAN Plan Description The County of San Luis Obispo (the “County”) contributes to the San Luis Obispo County Employees Retirement Plan (the “Plan”), which is an independent single-employer, contributory defined benefit pension plan for employees of the County of San Luis Obispo, employees of the Superior Court in San Luis Obispo County, employees of the San Luis Obispo Local Agency Formation Commission, employees of the San Luis Obispo Air Pollution Control District and employees of the San Luis Obispo County Pension Trust. The Plan exists, operates and is constituted under the authority of Section 53215 of Section 17 of Article XVI of the California Constitution and the Government Code Article 1.5 (Pension Trusts), of Chapter 2 (Officers and Employees), of Part 1 (Powers and Duties Common to Cities, Counties and Other Agencies), of Division 2 (Cities, Counties and Other Agencies), of Title 5 (Local Agencies) of the California Government Code. Pursuant to the foregoing California Government Code provisions, the County of San Luis Obispo Board of Supervisors established the San Luis Obispo County Pension Trust (the “Trust”) by the adoption of Chapter 2.56 of the San Luis Obispo County Code. Following the adoption of Chapter 2.56 of the County Code, the Board of Supervisors adopted the By-Laws of the Pension Trust. The San Luis Obispo County Employees Retirement Plan is part of those By-Laws. The County of San Luis Obispo Board of Supervisors may amend the Plan’s provisions. Participation in the Plan is mandatory for all regular employees. The Trust and the Plan are both administered by the San Luis Obispo County Pension Trust Board of Trustees (the “Trustees”). Separate stand-alone financial statements were issued for the Plan and are available at the County of San Luis Obispo Auditor-Controller's office. Benefit Provisions Plan, participants, upon attaining the normal retirement age of 55 for Safety employees and Probation Officers and 60 for Miscellaneous employees, are entitled to annual retirement benefits as defined in the Plan document. The applicable retirement formula, minimum retirement age, compensation base, post retirement cost of living adjustment, cost of living adjustment carry over, and final compensation maximum may differ depending upon the Plan provisions in effect at the member’s date of hire, the member’s classification, and the member’s bargaining unit. The Plan permits early retirement for all employees at age 50 with 5 or more years of service credit. Participants receive their accumulated plan benefits as a life annuity payable monthly upon retirement. In the event of total and permanent disability, participants, upon satisfaction of membership service requirements 86 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) and other applicable provisions of the Plan, receive disability benefits as defined in the Plan document. The Plan provides for an Annual Cost of Living Adjustment (COLA) based on the Consumer Price Index. The Plan also provides death benefits. Summary of Significant Accounting Policies Basis of Accounting – The Plan’s consolidated financial statements include the accounts of the Plan and its wholly owned subsidiary, Fiduciary Properties Incorporated, and are prepared on the accrual basis of accounting. Contributions from the County and the County’s employees are recognized as revenue when due, pursuant to formal commitments, as well as statutory or contractual requirements. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Investment income is recognized as earned by the Plan. Investments in corporate notes, bonds, collateralized mortgage obligations, alternative investments, equities, futures, real estate investment funds, equity real estate holdings, and other short-term cash investments are reported at fair value. Securities traded on a national exchange are valued at the last reported sales price or at year-end closing prices as quoted by an independent securities valuation company. Investments that do not have an established market are reported at estimated fair value. The Plan uses the calendar year for financial reporting purposes. The County’s contributions to the Plan are recognized when due. The County’s contributions are due at the end of each pay period. The Plan has elected to present the financial statements in accordance with Statement No. 25 of the Governmental Accounting Standards Board (GASB). There are no investments in loans or investments in leases with parties related to the pension plan. Concentrations – As of December 31, 2011, the Plan held no investments of a single issuer comprising 5% or more of net assets. Funding Policy – The Trustees establish and may amend the funding policy. Participants were required to contribute to the Plan for the 2011 calendar year at rates ranging from 4.89% to 23.98% of includable compensation as defined in the Plan document, depending upon the collective bargaining agreement under which the participant is covered. Such contributions, together with the County’s appropriations, are currently invested in corporate notes, bonds, collateralized mortgage obligations, alternative investments, equities, futures, real estate investment funds, equity real estate holdings, and other short-term cash investments. The participants’ accumulated contributions may be withdrawn at any time should the participant leave the employment of the County prior to retirement. The Trustees established the pension plan contribution rate requirement with the advice of their retained actuary. There were no legal or contractual maximum contribution rates in effect during 2011. Periodic employer contributions to the Plan were determined on an actuarial basis using the Entry Age Normal cost method. This method is one of the actuarial methods authorized under GASB 27. In 2003 the County issued a Pension Obligation Bond. The Entry Age Normal cost method permitted the selection of either a 30-year or 40-year amortization period for such bonds. The Trustees chose a closed amortization period of 30-years. As a result of the issuance of the Pension Obligation Bond by the County, the scheduled increases in required contributions previously adopted by the Board of Trustees were rescinded and, based upon the advice of the plan actuary, the rates charged to the County were established at a range of 15.09% to 27.78% of payroll. Specific appropriation rates were adopted for each benefit group at various times during 2011 as negotiations for changes to the Retirement Allowance formula were concluded and implemented. Total contributions and appropriations to the Plan in 2011 amounted to $55,698,302. Of this total, $30,435,940 were regular Employer appropriations. Employee contributions amounted to $25,262,362. The Employee contributions include Employee Additional Voluntary Contributions of $90,345 and County Additional for Employee Contributions of $15,097. The contributed amounts were actuarially determined as described above and were based on an actuarial valuation report as of December 31, 2010. 87 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Annual Pension Cost and Net Pension Asset The County's annual pension cost and prepaid pension asset, computed in accordance with GASB 27, Accounting for Pensions by State and Local Governmental Employers, for the year ended June 30, 2012, (based on an actuarial valuation report as of December 31, 2011) were as follows (in thousands): Amount Annual Required Contribution (ARC) $ 30,052 Interest on beginning net pension asset (9,423) Adjustment to the ARC 6,566 Annual Pension Cost (APC) 27,195 Employer contributions made 30,437 Increase (decrease) in net pension asset 3,242 Net pension asset / (obligation), beginning of year 129,972 Net pension asset / (obligation), end of year $ 133,214 The annual pension cost and net pension asset were based on an actuarial valuation report as of December 31, 2011. The actuarial values of assets were determined on a market related blend basis, with each years’ gains and losses smoothed over a five year period for all years except 2008. The loss in 2008 was smoothed over a ten year period. The net assets held in trust for pension benefits are allocated among various reserves. For the year ended December 31, 2011, these reserves were generally credited with interest at the rate of 7.25%. In addition, any additional employee or employer contributions, as well as interest credited to these additional contributions, earned interest at the rate of 2.80%. Any interest or dividends earned in excess of the amount required to be credited to the various reserves is accumulated in the contingency reserve account. Three-Year Trend Information Year Ended Annual Pension Percentage of APC Net Pension June 30 Cost (APC) Contribution Contributed Asset 2010* $28,538 $31,427 110% $125,155 2011* $27,331 $32,148 118% $129,972 2012* $27,195 $30,436 112% $133,214 *Based on an actuarial valuation report as of January 1 88 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Funded Status The Plan’s funded status based upon the most recent actuarial valuation performed by Gabriel, Roeder Smith and Company dated January 1, 2012 is as follows: Schedule of Funding Progress (Funding Actuarial Unfunded Excess) Accrued AAL UAAL as a Actuarial Actuarial Liability (UAAL) Annual Percentage Valuation Value of (AAL) Funding Covered of Covered Funded Date Assets Entry Age Excess) Payroll Payroll Ratio Jan 1 (a) (b) (b-a) (a/b) (c) (b-a)/c 2012 $1,057,922 $1,378,549 $320,627 76.7% $161,055 199.1% Disclosure of Information about Actuarial Methods and Assumptions The Schedule of Funding Progress included as Required Supplementary Information immediately following the Notes to the Financial Statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits over time. Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation and on the pattern of cost sharing between the employers and plan members to that point. The projection of benefits for financial reporting does not explicitly incorporate the potential effect of legal or contractual funding limitations on the pattern of cost sharing between the employer and the future plan members to that point in time. Actuarial calculations reflect a long-term perspective. Actuarial methods and assumptions used include techniques to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as results are compared to past expectations and new estimates are made about the future. Latest Actuarial Valuation Methods and Assumptions Contributions were made in accordance with actuarially determined requirements. A variety of significant actuarial assumptions are used to determine the contributions required. These assumptions are summarized below: Valuation Date: December 31, 2011 (January 1, 2012) Actuarial Cost Method Entry Age Normal Amortization Method 30 years declining, Closed Method Remaining Amortization Period 28 years Asset Valuation Method Market Related Blend, Five-year smoothing for all years except 2008, which was smoothed over 10 years Actuarial Assumptions: Investment Rate of Return 7.25% effective annual interest rate Inflation Rate Assumption 2.75% per year Base Annual Rate of Compensation Increase 3.25% (including inflation) Payroll Growth Rate 3.75% per year Cost-of-Living Adjustments 2.75% Amortization of Unfunded Actuarial Liabilities is done as a level percent of payroll over 28 years (30 years was used in the previous valuation) for funding computation. The Schedule of Funding progress included as Required Supplementary Information following the Notes to the Financial Statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits over time. 89 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 18. LANDFILL POSTCLOSURE CARE COSTS The Los Osos Landfill is a closed facility under the responsibility of the County. State and federal laws and regulations require the County of San Luis Obispo to perform various maintenance and monitoring activities at the site. By agreement with the land owner, the County assumed responsibility for all closure and postclosure costs when the facility stopped accepting waste. As of this date, the landfill closure is complete and only postclosure costs remain. The remaining estimated liability for landfill postclosure cost as of June 30, 2012 is $4,077,874 (in 2012 dollars). Of this $3,075,252 is for the Maintenance Cost and $1,002,622 is the Corrective Action Cost. The cost estimates were provided by a licensed professional geologist in the Post Closure Maintenance Plan dated May 8, 2012 and the Engineers Estimate of Corrective Action for a Foreseeable Release dated March 23, 2011. Both reports are required to be updated every five years. However, the actual cost of postclosure care may be higher (or lower) due to inflation, changes in technology, or changes in landfill laws and regulations. Therefore, the cost estimate will be reviewed and adjusted as needed for changes in these factors. 19. POST EMPLOYMENT HEALTHCARE BENEFITS Plan Description and Benefits The County administers a single-employer defined postemployment benefit (OPEB) plan. Employees retiring from the County with at least 50 years of age and 5 years of service may continue to purchase healthcare coverage, if they select one of the plans offered under the County’s contract with the state’s California Public Employee Retirement System (CalPERS.) The County assists eligible retirees by paying a portion of their premiums for medical care. In April 2010 the County established an irrevocable trust with the California Employer’s Retiree Benefit Trust (CERBT) to prefund the future cost of retiree health insurance benefits. The CERBT’s administrator, CalPERS, issues a publicly available financial report consisting of financial statements and required supplementary information for the CERBT in aggregate. The report may be obtained by writing to CalPERS, Lincoln Plaza North, 400 Q Street, Sacramento, CA 95811. CalPERS does not provide a separate, audited GAAP-basis postemployment benefit plan report for the County’s discrete information. Funding Policy The CalPERS contract requires that the County contribute certain minimum amounts for each retiree’s health insurance. If the County selected another provider for health insurance coverage these minimum amounts might not apply. However, the County has been using CalPERS for medical coverage since 1990, and currently has not expressed intent to change providers. The amounts the County actually contributes depend on bargaining unit and for calendar year 2011 ranged from $108 to $139 per month. The subsidy is adjusted annually to reflect changes in the medical component of the Consumer Price Index. Annual OPEB Cost and Net OPEB Asset The County’s annual Other Post Employment Benefits (OPEB) cost is equal to the (a) annual required contribution (ARC) less (b) one year’s interest on the beginning balance of the net OPEB asset plus/minus (c) any adjustment to the ARC. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost of each year and any unfunded actuarial liabilities (or funding excess) amortized over a thirty year open period. The ARC of $1,439 for the fiscal year ended June 30, 2012 includes the normal cost for current active employees of $705 and a component for amortization of the total unfunded actuarial accrued liability (UAAL) of $734. The following table shows the components of the Net OPEB Asset as of June 30, 2012: Annual required contribution (ARC) $1,439 Interest on prior year net OPEB asset (152) Adjustment to ARC 576 Annual OPEB Cost 1,863 Contributions made 1,698 Increase (decrease) in net OPEB obligation 165 Net OPEB obligation (asset) – beginning of year (1,995) Net OPEB obligation (asset) – end of year ($1,830) 90 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the Net OPEB Obligation (Asset) for the fiscal year ended 2012 and the two preceding years are as follows: Fiscal Annual Percent of Net OPEB Year OPEB OPEB Cost Obligation Ended Cost Contributions Contributed (Asset) 2010 $2,098 $7,364 351% ($1,893) 2011 $1,645 $1,747 106% ($1,995) 2012 $1,863 $1,698 91% ($1,830) Funded Status and Funding Progress The funded status of the OPEB plan as of June 30, 2012 (based on the County’s June 30, 2012 actuarial valuation) is as follows: Actuarially accrued liability $21,185 Actuarial value of plan assets (8,775) Unfunded actuarially accrued liability $12,410 Funded ratio (actuarial value of plan assets/AAL) 41.42% Covered payroll (active plan members) $152,893 UAAL as a percentage of covered payroll 8.12% Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the County’s June 30, 2012 actuarial valuation the Entry Age Normal, Level Percent of Pay actuarial cost method was used. The actuarial assumptions included a 7.61% investment rate of return, an inflation rate of 3.25% per year, and assumed future medical inflation of 5% graded down to 4% beginning 2014. The OPEB plan’s unfunded actuarial liability is being amortized by level percent of payroll contributions over 28 years. The Schedule of Funding progress included as Required Supplementary Information following the Notes to the Financial Statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits over time. 20. SPECIAL ITEM First 5 of San Luis Obispo County, a discretely presented component unit of the County, reported an extraordinary item regarding California Assembly Bill 99 (AB99). On March 24, 2011 AB99 was enacted. AB99 required the transfer of $950 million from the combined balances of all the county Children and Families Trust Funds to the State of California Children and Families Health and Human Services Fund. Since First 5 San Luis Obispo County anticipated that a $3,770,689 transfer would be required by June 30, 2012, a due-to other governmental agency accrual liability was recorded at June 30, 2011. During the current fiscal year, several county Commissions were successful in filing a lawsuit against the State of California claiming that AB99 was unconstitutional. This determination resulted in a reversal to the prior year due-to liability adjustment. 91 92 __________________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION __________________________________________________________________ 93 94 REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information includes financial information and disclosures that are required by the GASB but are not considered a part of the basic financial statements. Such information includes: Schedule of Funding Progress – Defined Benefit Retirement Plan Schedule of Funding Progress – Other Post Employment Benefits Plan (OPEB) Budgetary Comparison Schedule – General Fund Notes to required supplementary information 95 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION SAN LUIS OBISPO COUNTY PENSION TRUST SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2012 (in thousands) (Funding Excess) Actuarial Unfunded AAL as a Actuarial Actuarial Accrued (Funding Annual Percentage of Valuation Value of Liability (AAL) Excess) Funded Covered Covered Jan 1 Assets (a) Entry Age (b) AAL (b-a) Ratio (a/b) Payroll (c) Payroll ((b-a)/c) 2010 $937,279* $1,216,153 $278,874 77.1% $160,444 173.8% 2011 $1,000,169 $1,282,058 $281,889 78.0% $161,783 174.2% 2012 $1,057,922 $1,378,549 $320,627 76.7% $161,055 199.1% *Amount restated Separate stand-alone financial statements were issued for the Pension Plan and are available at the County of San Luis Obispo Auditor-Controller’s office located at the County Government Center Room D220, San Luis Obispo, CA 93408. OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2012 (in thousands) Actuarial Unfunded UAAL as a Actuarial Actuarial Accrued AAL Annual Percentage of Valuation Value of Liability (AAL) (UAAL) Funded Covered Covered Dec 31 Assets (a) Entry Age (b) (b-a) Ratio (a/b) Payroll (c) Payroll ((b-a)/c) 2007 $0 $28,517 $28,517 0% $154,252 18.5% 2009 $6,324 $19,718 $13,394 32.1% $154,282 8.9% 2011* $8,775 $21,185 $12,410 41.42% $152,893 8.1% * Valuation Date 6/30/2011 Source: Gabriel Roeder Smith & Company “San Luis Obispo County Retiree Health Care Plan Actuarial Valuation Report”. The 2009 actuarial value of assets represent fiscal year 2009/10 CERBT contributions of $6.3 million. 96 COUNTY OF SAN LUIS OBISPO Required Supplementary Information General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 135,258 $ 135,550 $ 150,796 $ 15,246 Licenses, permits, and franchises 7,833 7,833 7,863 30 Fines, forfeits, and penalties 4,179 4,842 5,060 218 Use of money and property 621 621 766 145 Aid from other governmental agencies 172,305 187,882 173,670 (14,212) Charges for services 34,853 33,066 30,930 (2,136) Other revenue 3,600 8,178 5,793 (2,385) Total Revenues 358,649 377,972 374,878 (3,094) Expenditures: Current: General government 44,324 51,178 41,973 9,205 Public protection 137,465 147,211 135,982 11,229 Public ways and facilities 2,224 4,681 1,975 2,706 Health and sanitation 66,569 70,235 63,380 6,855 Public assistance 96,764 98,580 91,235 7,345 Education 468 468 431 37 Contingencies 14,558 13,718 -- 13,718 Total Expenditures 362,372 386,071 334,976 51,095 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,723) (8,099) 39,902 48,001 Other Financing Sources (Uses): Transfers in 2,097 2,401 (10,964) (13,365) Transfers (out) (20,951) (27,111) (16,559) 10,552 Total Other Financing Sources (Uses) (18,854) (24,710) (27,523) (2,813) Net change in fund balances (22,577) (32,809) 12,379 45,188 Fund balances, beginning 123,102 123,102 123,102 -- Fund balances, ending $ 100,525 $ 90,293 $ 135,481 $ 45,188 Continued 97 COUNTY OF SAN LUIS OBISPO Required Supplementary Information General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Explanation of Differences between Budgetary Outflows and GAAP Expenditures: Actual amounts (budgetary basis) "Total Revenues" from the Budgetary Comparison Schedule $ 374,878 Revenues for funds not meeting the special revenue fund defininition which are presented with the General Fund for financial reporting purposes 2,332 Total Revenues as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 377,210 Uses/outflows of resources Actual amounts (budgetary basis) "Total Expenditures" from the Budgetary Comparison Schedule $ 334,976 Expenditures for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 3,877 Total Expenditures as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 338,853 Other financing sources/(uses) of resources Actual amounts (budgetary basis) "Total Other Financing Sources (Uses)" from the Budgetary Comparison Schedule $ (27,523) Other financing sources (uses) for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 9,628 Total Other Financing Sources (Uses) as reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ (17,895) 98 COUNTY OF SAN LUIS OBISPO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2012 1. BUDGETARY BASIS OF ACCOUNTING A. BUDGETARY ACCOUNTING In accordance with the provisions of Sections 29000 through 29144 inclusive of the California Government Code and other statutory provisions, commonly known as the County Budget Act, the County prepares and legally adopts a final budget on or before August 30th for each fiscal year. The County operation, commencing July 1st, is governed by the proposed budget, adopted by the Board of Supervisors, in June of the prior year unless the final budget is adopted before June 30. After the budget is approved, the appropriations can be added to, subtracted from, or changed only by Board resolution. All such changes must be within the revenues and reserves estimated as available in the final budget or within revised revenue estimates as approved by the Board. During the fiscal year ended June 30, 2011, the Board of Supervisors approved all necessary supplemental appropriations. Generally, the effects of the supplemental appropriations are to increase the budget for cost of living adjustments and new programs and grants financed by other governmental agencies. An operating budget is adopted each fiscal year for Governmental Funds on a basis consistent with generally accepted accounting principles. Additionally, encumbrance accounting is utilized to assure effective budgetary control. Encumbrances outstanding at year end represent the estimated amount of the expenditures ultimately to result if the unperformed contracts in process at year end are completed or purchase commitments satisfied. Such year end encumbrances are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year and included in the subsequent year's budget. Unencumbered appropriations lapse at year end. All Governmental, Enterprise, and Internal Service Funds that are under the control of the Board of Supervisors, have legally adopted annual budgets except for the Public Facilities Corporation debt service fund. Although the Enterprise and Internal Service Funds have adopted budgets, there is no appropriation of expenditures and these budgets only serve as spending plans for the year. The legal level of budgetary control (the level on which expenditures may not legally exceed appropriations) is at the department/budget unit and object level except for capital assets, which are controlled at the sub-object level. Object levels of expenditures are as follows: salaries and benefits, services and supplies, other charges, capital assets, and contingencies. Sub-object levels of expenditures for capital assets are land, structures and improvements, and equipment. BUDGETARY EXPENDITURES IN EXCESS OF APPROPRIATION During the current fiscal year, no governmental funds had excess expenditures over the related appropriations at the legal level of budgetary control. 99 100 __________________________________________________________________ OTHER SUPPLEMENTARY INFORMATION __________________________________________________________________ 101 102 __________________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS __________________________________________________________________ 103 104 NONMAJOR GOVERNMENTAL FUNDS DEBT SERVICE FUNDS: Debt service funds are used to account for the accumulation of resources for and the payment of general long-term debt principal and interest. San Luis Obispo County Public Facilities Corporation (PFC) The PFC is a non-profit public benefit corporation organized to assist public agencies within the County of San Luis Obispo with the acquisition and construction of various public facilities. Pension Obligation Bonds The Pension Obligation Bonds debt service fund is used to account for the accumulation of monies for payment of taxable pension obligation bonds. These bonds were issued to fund the County’s unfunded actuarial accrued liability (UAAL). SPECIAL REVENUE FUNDS: Special revenue funds are used to account for revenues that are restricted by law or administrative actions to expenditures for specified purpose. Nonmajor special revenue funds used by the County are listed below: California Health Care Indigent Program Accounts for revenues received from the State of California used to provide health care for the indigent population of the County. Community Development Program Accounts for pass through grants from Housing and Urban Development (HUD) entitlements to be distributed to the County and other local agencies. County Medical Services Program (CMSP) Accounts for resources used to provide for the County Medical Services program which provides medical care for indigents pursuant to the County’s obligation under Welfare and Institution Code Section 17000 et seq. Emergency Medical Services Accounts for payments to physicians, hospitals, and other providers of emergency medical care from revenues imposed and collected by the courts. Driving Under the Influence Programs Accounts for resources collected from persons convicted of driving under the influence to provide education and rehabilitation programs. Fish & Game Accounts for funds generated by fines levied as a result of Fish and Game violations. Road Impact Fees Accounts for resources collected from developers to add, maintain, and improve roads in specific areas where the fees were allocated. 105 NONMAJOR GOVERNMENTAL FUNDS (Continued) Library Accounts for resources used to provide library services throughout the county. Parks Accounts for resources used to provide parks and recreational services countywide. Public Facilities Fees Accounts for resources collected from the building permit process to build public facilities such as fire and law enforcement stations, library and general government structures. Roads Accounts for resources used to maintain the county road system. Wildlife & Grazing Accounts for resources used to provide for range improvements and the control of predators. SPECIAL REVENUE SPECIAL DISTRICT FUNDS: Flood Control Districts Accounts for resources used to provide control and conservation of flood and storm waters, which are mutually exclusive of Enterprise Flood Control District funds. Lighting Districts Accounts for resources used to provide street lighting in unincorporated areas of the county. County Service Areas Accounts for resources used to provide for water and sewer services which are mutually exclusive of Enterprise Fund County Service Areas. 106 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012 (in thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds ASSETS Cash and cash equivalents $ 7,661 $ 49,170 $ 56,831 Other receivables 16 - - 16 Restricted cash with fiscal agent 2,538 - - 2,538 Due from other governments -- 3,807 3,807 Prepaid expenses -- 12 12 Loans receivable -- 28 28 Advances to other funds -- 350 350 Other assets 4,770 - - 4,770 Total Assets $ 1 4,985 $ 53,367 $ 6 8,352 LIABILITIES AND FUND BALANCES Liabilities: Salaries and benefits payable $ -- $ 217 $ 217 Accounts payable -- 1,379 1,379 Deposits from others -- 688 688 Unearned revenue -- 154 154 Deferred revenue -- 54 54 Other current liabilities 4,770 - - 4,770 Advances from other funds 549 1,894 2,443 Total Liabilities 5,319 4 ,386 9,705 Fund Balances: Nonspendable -- 390 390 Restricted 2,538 17,250 19,788 Committed 7,128 31,341 38,469 Total Fund Balances 9,666 48,981 58,647 Total Liabilities and Fund Balances $ 14,985 $ 53,367 $ 6 8,352 107 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2012 (in thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds Revenues: Taxes $ -- $ 10,123 $ 10,123 Fines, forfeits and penalties -- 823 823 Use of money and property 67 302 369 Aid from other governmental agencies -- 32,461 32,461 Charges for current services 2,788 10,690 13,478 Other revenues 491 2,167 2,658 Total revenues 3,346 56,566 59,912 Expenditures: Current: Public protection -- 2,597 2,597 Public ways and facilities -- 38,363 38,363 Health and sanitation -- 4,450 4,450 Public assistance -- 5,950 5,950 Education -- 9,542 9,542 Recreation and cultural services -- 6,998 6,998 Debt service: Principal payments 4,435 -- 4,435 Interest and fiscal charges 6,289 -- 6,289 Total expenditures 10,724 67,900 78,624 Excess (deficiency) of revenues over (under) expenditures (7,378) (11,334) (18,712) Other financing sources (uses): Transfers in 7,292 23,077 30,369 Transfers out -- (7,865) (7,865) Total other financing sources and (uses) 7,292 15,212 22,504 Net changes in fund balances (86) 3,878 3,792 Fund balances - beginning 9,752 45,103 54,855 Fund balances - ending $ 9,666 $ 48,981 $ 58,647 108 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2012 (in thousands) Total Debt Service Debt Service Nonmajor Public Facilities Pension Obligation Debt Service Corporation Bonds Funds ASSETS Cash and cash equivalents $ 903 $ 6,758 $ 7,661 Other receivables 16 - - 16 Restricted cash with fiscal agent 2,523 1 5 2,538 Other assets 965 3,805 4,770 Total Assets $ 4 ,407 $ 1 0,578 $ 14,985 LIABILITIES AND FUND BALANCES Liabilities: Other current liabilities 965 3,805 4,770 Advances from other funds 549 - - 549 Total Liabilities 1,514 3,805 5,319 Fund Balances: Restricted 2,523 1 5 2,538 Committed 370 6,758 7,128 Total Fund Balances 2,893 6 ,773 9,666 Total Liabilities and Fund Balances $ 4,407 $ 1 0,578 $ 14,985 109 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Funds For the Year Ended June 30, 2012 (in thousands) Total Debt Service Debt Service Nonmajor Public Facilities Pension Obligation Debt Service Corporation Bonds Funds Revenues: Use of money and property $ 50 $ 1 7 $ 67 Charges for current services 2,788 -- 2,788 Other revenues -- 491 491 Total revenues 2,838 508 3,346 Expenditures: Debt service: Principal payments 1,175 3,260 4,435 Interest and fiscal charges 1,618 4,671 6,289 Total expenditures 2,793 7,931 10,724 Excess (deficiency) of revenues over (under) expenditures 45 (7,423) (7,378) Other financing sources (uses): Transfers in -- 7,292 7,292 Total other financing sources and (uses) -- 7,292 7,292 Net changes in fund balances 45 (131) (86) Fund balances - beginning 2,848 6,904 9,752 Fund balances - ending $ 2,893 $ 6,773 $ 9,666 110 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2012 (in thousands) CA Health Community Emergency Driving Under the Indigent Prog Development CMSP Med Services Influence Pgms ASSETS Cash and cash equivalents $ -- $ 201 $ 1,064 $ 3 59 $ 722 Due from other governments -- -- -- 2 25 -- Prepaids -- -- -- - - 1 Loans receivable -- -- -- - - -- Advances to other funds -- -- -- - - -- Total Assets $ -- $ 201 $ 1,064 $ 5 84 $ 723 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable -- 63 86 - - 6 Salaries and benefits payable -- -- 19 - - 18 Deposits from others -- 73 -- - - -- Unearned revenue -- -- -- - - -- Deferred revenue -- -- -- - - -- Advances from other funds -- -- -- - - -- Total Liabilities -- 136 105 - - 24 Fund Balances: Nonspendable -- -- -- - - 1 Restricted -- -- -- - - -- Committed -- 65 959 5 84 698 Total Fund Balances -- 65 959 5 84 699 Total Liabilities and Fund Balances $ -- $ 201 $ 1,064 $ 5 84 $ 723 continued 111 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds (continued) June 30, 2012 (in thousands) Road Impact Public Facilities Fish and Game Fees Library Parks Fees ASSETS Cash and cash equivalents $ 177 $ 8,237 $ 2,869 $ 2,921 $ 9,016 Due from other governments -- -- -- -- -- Prepaids -- -- 10 - - -- Loans receivable -- -- -- -- -- Advances to other funds -- -- -- -- -- Total Assets $ 177 $ 8,237 $ 2,879 $ 2,921 $ 9,016 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 2 -- 29 76 -- Salaries and benefits payable -- -- 108 7 2 -- Deposits from others -- -- -- 160 10 Unearned revenue -- -- -- 7 -- Deferred revenue -- -- -- -- -- Advances from other funds -- -- 1,330 2 14 -- Total Liabilities 2 -- 1,467 5 29 10 Fund Balances: Nonspendable -- -- 10 - - -- Restricted -- 8,237 -- -- 9,006 Committed 175 -- 1,402 2 ,392 -- Total Fund Balances 175 8,237 1,412 2 ,392 9,006 Total Liabilities and Fund Balances $ 177 $ 8,237 $ 2,879 $ 2,921 $ 9,016 continued 112 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds (continued) June 30, 2012 (in thousands) Total Nonmajor Wildlife Special Special Revenue Roads Grazing Districts Funds ASSETS Cash and cash equivalents $ 6,834 $ 12 $ 16,758 $ 49,170 Due from other governments 3,582 -- - - 3,807 Prepaids 1 -- - - 12 Loans receivable -- -- 2 8 28 Advances to other funds -- -- 350 350 Total Assets $ 10,417 $ 12 $ 17,136 $ 53,367 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 937 -- 180 1,379 Salaries and benefits payable -- -- - - 217 Deposits from others 444 -- 1 688 Unearned revenue 147 -- - - 154 Deferred revenue 54 -- - - 54 Advances from other funds -- -- 350 1,894 Total Liabilities 1,582 -- 531 4,386 Fund Balances: Nonspendable 1 -- 378 390 Restricted -- 7 - - 17,250 Committed 8,834 5 16,227 31,341 Total Fund Balances 8,835 12 16,605 48,981 Total Liabilities and Fund Balances $ 10,417 $ 12 $ 17,136 $ 53,367 113 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2012 (in thousands) CA Health Community Emergency Driving Under the Indigent Prog Development CMSP Med Services Influence Pgms Revenues: Taxes $ -- $ -- $ -- $ - - $ -- Fines, forfeits and penalties -- -- -- 8 00 -- Use of money and property -- 1 4 1 3 Aid from other governmental agencies -- 4,119 2,667 - - -- Charges for current services -- 50 16 - - 1,473 Other revenues -- -- 735 - - -- Total revenues -- 4,170 3,422 801 1,476 Expenditures: Current: Public protection -- -- -- - - -- Public ways and facilities -- -- -- - - -- Health and sanitation -- 4,450 -- - - -- Public assistance -- -- 5,158 7 92 -- Education -- -- -- - - 1,354 Recreation and cultural services -- -- -- - - -- Total expenditures -- 4,450 5,158 792 1,354 Excess (deficiency) of revenues over (under) expenditures -- (280) (1,736) 9 122 Other financing sources (uses): Transfers in -- 310 2,564 - - -- Transfers out (779) -- (29) - - (27) Total other financing sources (uses) (779) 310 2,535 -- (27) Net changes in fund balances (779) 30 799 9 95 Fund Balances - beginning 779 35 160 5 75 604 Fund Balances - ending $ -- $ 65 $ 959 $ 5 84 $ 699 continued 114 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds (continued) For the Year Ended June 30, 2012 (in thousands) Public Fish and Road Impact Facilities Game Fees Library Parks Fees Revenues: Taxes $ -- $ -- $ 6,746 $ -- $ -- Fines, forfeits and penalties 23 -- -- - - -- Use of money and property -- 44 9 118 52 Aid from other governmental agencies -- -- 169 174 -- Charges for current services -- 2,644 356 3,935 1,241 Other revenues -- -- 775 7 6 -- Total revenues 23 2,688 8,055 4,303 1,293 Expenditures: Current: Public protection 12 -- -- - - -- Public ways and facilities -- 237 -- -- -- Health and sanitation -- -- -- -- -- Public assistance -- -- -- -- -- Education -- -- 8,188 - - -- Recreation and cultural services -- -- -- 6,998 -- Total expenditures 12 237 8,188 6,998 -- Excess (deficiency) of revenues over (under) expenditures 11 2,451 (133) (2,695) 1,293 Other financing sources (uses): Transfers in -- -- 658 3,287 -- Transfers out -- (2,086) (172) ( 291) (3,918) Total other financing sources (uses) -- (2,086) 486 2,996 (3,918) Net changes in fund balances 11 365 353 301 (2,625) Fund Balances - beginning 164 7,872 1,059 2 ,091 11,631 Fund Balances - ending $ 175 $ 8,237 $ 1,412 $ 2,392 $ 9,006 continued 115 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds (continued) For the Year Ended June 30, 2012 (in thousands) Total Nonmajor Wildlife Special Special Revenue Roads Grazing Districts Funds Revenues: Taxes $ 1,443 $ -- $ 1,934 $ 10,123 Fines, forfeits and penalties -- -- -- 823 Use of money and property 29 -- 41 302 Aid from other governmental agencies 25,261 6 65 32,461 Charges for current services 479 -- 496 10,690 Other revenues 580 -- 1 2,167 Total revenues 27,792 6 2,537 56,566 Expenditures: Current: Public protection -- -- 2,585 2,597 Public ways and facilities 37,826 -- 300 38,363 Health and sanitation -- -- -- 4,450 Public assistance -- -- -- 5,950 Education -- -- -- 9,542 Recreation and cultural services -- -- -- 6,998 Total expenditures 37,826 -- 2,885 67,900 Excess (deficiency) of revenues over (under) expenditures (10,034) 6 (348) (11,334) Other financing sources (uses): Transfers in 7,468 -- 8,790 23,077 Transfers out (17) -- ( 546) (7,865) Total other financing sources (uses) 7,451 -- 8,244 15,212 Net changes in fund balances (2,583) 6 7,896 3,878 Fund Balances - beginning 11,418 6 8,709 45,103 Fund Balances - ending $ 8,835 $ 12 $ 16,605 $ 48,981 116 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds - Special Districts June 30, 2012 (in thousands) Flood Control Lighting County Districts Districts Service Areas Total ASSETS Cash and cash equivalents $ 15,235 $ 468 $ 1 ,055 $ 16,758 Loans receivable -- 3 2 5 28 Advances to other funds -- -- 3 50 350 Total Assets $ 1 5,235 $ 4 71 $ 1 ,430 $ 1 7,136 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 65 -- 1 15 180 Deposits from others 1 -- - - 1 Advances from other funds 44 -- 3 06 350 Total Liabilities 110 -- 4 21 531 Fund Balances: Nonspendable -- 3 3 75 378 Committed 15,125 468 6 34 16,227 Total Fund Balances 15,125 471 1 ,009 16,605 Total Liabilities and Fund Balances $ 1 5,235 $ 4 71 $ 1 ,430 $ 1 7,136 117 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds - Special Districts For the Year Ended June 30, 2012 (in thousands) Flood Control Lighting County Districts Districts Service Areas Total Revenues: Taxes $ 1,519 $ 31 $ 3 84 $ 1,934 Use of money and property 32 2 7 41 Aid from other governmental agencies 63 -- 2 65 Charges for current services 490 2 4 496 Other revenue 1 -- -- 1 Total revenues 2,105 35 397 2,537 Expenditures: Current: Public protection 2,548 37 -- 2,585 Public ways and facilities -- -- 300 300 Total expenditures 2,548 37 300 2,885 Excess (deficiency) of revenues over (under) expenditures (443) (2) 97 (348) Other financing sources (uses): Transfers in 8,781 -- 9 8,790 Transfers out (1) -- (545) (546) Total other financing sources (uses) 8,780 -- (536) 8,244 Net changes in fund balances 8,337 (2) (439) 7,896 Fund Balances - beginning 6,788 473 1,448 8,709 Fund Balances - ending $ 15,125 $ 471 $ 1,009 $ 16,605 118 __________________________________________________________________ BUDGETARY COMPARISON SCHEDULES CAPITAL PROJECTS FUND PUBLIC FINANCING CORPORATION PENSION OBLIGATION BOND FUND NONMAJOR GOVERNMENTAL FUNDS __________________________________________________________________ 119 120 COUNTY OF SAN LUIS OBISPO Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeits, and penalties $ -- $ 181 $ 4 69 $ 288 Revenue from use of money and property -- -- 112 112 Aid from other governmental agencies -- 2,564 241 (2,323) Charges for services -- 390 223 (167) Total Revenues -- 3,135 1,045 (2,090) Expenditures: Capital Outlay 294 20,904 5,540 15,364 Total Expenditures 294 20,904 5,540 15,364 Excess (Deficiency) of Revenues Over (Under) Expenditures (294) (17,769) (4,495) 13,274 Other Financing Sources (Uses): Transfers in 384 8,686 4,163 (4,523) Transfers out (65) (125) (95) 30 Total Other Financing Sources (Uses) 319 8,561 4,068 (4,493) Net change in fund balances 25 (9,208) (427) 8,781 Fund balances, beginning 23,102 23,102 23,102 -- Fund balances, ending $ 23,127 $ 13,894 $ 22,675 $ 8,781 121 COUNTY OF SAN LUIS OBISPO Public Facilities Corporation Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Revenue from use of money and property $ -- $ -- $ 50 $ 50 Charges for current services -- -- 2,788 2,788 Total Revenues -- -- 2,838 2,838 Expenditures: Debt Service: Principal -- -- 1,175 (1,175) Interest and fiscal charges -- -- 1,618 (1,618) Total Expenditures -- -- 2,793 (2,793) Net change in fund balances -- -- 45 45 Fund balances, beginning 2,848 2,848 2,848 -- Fund balances, ending $ 2,848 $ 2,848 $ 2,893 $ 45 122 COUNTY OF SAN LUIS OBISPO Pension Obligation Bonds Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Revenue from use of money and property $ 12 $ 12 $ 1 7 $ 5 Other revenue 8,062 8,062 491 (7,571) Total Revenues 8,074 8,074 508 (7,566) Expenditures: Debt Service: Principal payments 4,023 4,023 3,260 763 Interest and fiscal charges 3,970 3,970 4,671 (701) Total Expenditures 7,993 7,993 7,931 62 Excess (Deficiency) of Revenues Over (Under) Expenditures 81 81 (7,423) (7,504) Other Financing Sources (Uses): Transfers in -- -- 7,292 7,292 Total Other Financing Sources (Uses) -- -- 7,292 7,292 Net change in fund balances 81 81 (131) (212) Fund balances, beginning 6,904 6,904 6,904 -- Fund balances, ending $ 6,985 $ 6,985 $ 6,773 $ (212) 123 COUNTY OF SAN LUIS OBISPO California Health Care Indigent Program Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Other Financing Sources (Uses): Transfers out -- (779) (779) -- Total Other Financing Sources (Uses) -- (779) (779) -- Net change in fund balances -- (779) (779) -- Fund balances, beginning 779 779 779 -- Fund balances, ending $ 779 $ -- $ - - $ -- 124 COUNTY OF SAN LUIS OBISPO Community Development Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ -- $ -- $ 1 $ 1 Aid from other governmental agencies 4,158 10,119 4,119 (6,000) Other revenue -- 50 50 -- Total Revenues 4,158 10,169 4,170 (5,999) Expenditures: Current: Health and sanitation Other charges 4,468 10,479 4,450 6,029 Total Expenditures 4,468 10,479 4,450 6,029 Excess (Deficiency) of Revenues Over (Under) Expenditures (310) (310) (280) 30 Other Financing Sources (Uses): Transfers in 310 310 310 -- Total Other Financing Sources (Uses) 310 310 310 -- Net change in fund balances -- -- 30 30 Fund balances, beginning 35 35 35 -- Fund balances, ending $ 35 $ 35 $ 65 $ 30 125 COUNTY OF SAN LUIS OBISPO County Medical Services Program (CMSP) Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 4 $ 4 $ 4 $ -- Aid from governmental agencies 2,640 2,640 2,667 27 Charges for current services 16 16 16 -- Other revenues 699 739 735 (4) Total Revenues 3,359 3,399 3,422 23 Expenditures: Current: Public assistance Salaries wages benefits 976 946 917 29 Services and supplies 4,198 5,221 4,241 980 Total Expenditures 5,174 6,167 5,158 1,009 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,815) (2,768) (1,736) 1,032 Other Financing Sources (Uses): Transfers in 1,727 2,607 2,564 (43) Transfers out -- -- (29) (29) Total Other Financing Sources (Uses) 1,727 2,607 2,535 (72) Net change in fund balances (88) (161) 799 960 Fund balances, beginning 160 160 160 -- Fund balances, ending $ 72 $ (1) $ 959 $ 960 126 COUNTY OF SAN LUIS OBISPO Driving Under the Influence Programs Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 4 $ 4 $ 3 $ (1) Charges for current services 1,409 1,409 1,473 64 Total Revenues 1,413 1,413 1,476 63 Expenditures: Current: Education Salaries wages benefits 1,007 972 912 60 Service and supplies 417 452 442 10 Contingencies 50 50 -- 50 Total Expenditures 1,474 1,474 1,354 120 Excess (Deficiency) of Revenues Over (Under) Expenditures (61) (61) 122 (57) Other Financing Sources (Uses): Transfers out -- -- (27) (27) Total Other Financing Sources (Uses) -- -- (27) (27) Net change in fund balances (61) (61) 95 156 Fund balances, beginning 604 604 604 -- Fund balances, ending $ 543 $ 543 $ 699 $ 156 127 COUNTY OF SAN LUIS OBISPO Emergency Medical Services Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeits, and penalties $ 820 $ 820 $ 800 $ (20) Use of money and property -- -- 1 1 Total Revenues 820 820 801 (19) Expenditures: Current: Public assistance Services and supplies 820 1,166 792 374 Total Expenditures 820 1,166 792 374 Net change in fund balances -- (346) 9 355 Fund balances, beginning 575 575 575 -- Fund balances, ending $ 575 $ 229 $ 584 $ 355 128 COUNTY OF SAN LUIS OBISPO Fish and Game Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeits, and penalties $ 20 $ 20 $ 23 $ 3 Total Revenues 20 20 23 3 Expenditures: Current: Public protection Services and supplies 28 28 12 16 Total Expenditures 28 28 12 16 Net change in fund balances (8) (8) 11 19 Fund balances, beginning 164 164 164 -- Fund balances, ending $ 156 $ 156 $ 175 $ 19 129 COUNTY OF SAN LUIS OBISPO Road Impact Fees Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 25 $ 25 $ 4 4 $ 19 Charges for current services 2,410 2,410 2,644 234 Total Revenues 2,435 2,435 2,688 253 Expenditures: Current: Public ways and facilities Other charges -- 237 237 -- Total Expenditures -- 237 237 -- Excess (Deficiency) of Revenues Over (Under) Expenditures 2,435 2,198 2,451 253 Other Financing Sources (Uses): Transfers out (944) (4,978) (2,086) 2,892 Total Other Financing Sources (Uses) (944) (4,978) (2,086) 2,892 Net change in fund balances 1,491 (2,780) 365 3,145 Fund balances, beginning 7,872 7,872 7,872 -- Fund balances, ending $ 9,363 $ 5,092 $ 8,237 $ 3,145 130 COUNTY OF SAN LUIS OBISPO Library Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 6,748 $ 6,748 $ 6 ,746 $ (2) Use of money and property 6 6 9 3 Aid from other governmental agencies 187 227 169 (58) Charges for services 301 301 356 55 Other revenue 15 174 775 601 Total Revenues 7,257 7,456 8,055 599 Expenditures: Current: Education Salaries and benefits 5,856 5,856 5,453 403 Other charges 2,633 3,316 2,735 581 Total Expenditures 8,489 9,172 8,188 984 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,232) (1,716) (133) 1,583 Other Financing Sources (Uses): Transfers in 516 658 658 -- Transfers out -- -- (172) (172) Total Other Financing Sources (Uses) 516 658 486 (172) Net change in fund balances (716) (1,058) 353 1,411 Fund balances, beginning 1,059 1,059 1,059 -- Fund balances, ending $ 343 $ 1 $ 1 ,412 $ 1,411 131 COUNTY OF SAN LUIS OBISPO Parks Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Licenses, permits and franchises $ 50 $ 50 $ -- $ (50) Use of money and property 94 94 118 24 Aid from other governmental agencies 5 27 174 147 Charges for services 3,903 3,881 3,935 54 Other revenue 139 179 76 (103) Total Revenues 4,191 4,231 4,303 72 Expenditures: Current: Recreational and cultural services Salaries wages benefits 3,894 3,886 3,579 307 Other charges 3,267 3,925 3,419 506 Contingencies 397 397 -- 397 Total Expenditures 7,558 8,208 6,998 1,210 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,367) (3,977) (2,695) 1,282 Other Financing Sources (Uses): Transfers in 3,278 3,618 3,287 (331) Transfers out (21) (32) (291) (259) Total Other Financing Sources (Uses) 3,257 3,586 2,996 (590) Net change in fund balances (110) (391) 301 692 Fund balances, beginning 2,091 2,091 2,091 -- Fund balances, ending $ 1,981 $ 1,700 $ 2 ,392 $ 692 132 COUNTY OF SAN LUIS OBISPO Public Facilities Fees Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ -- $ -- $ 52 $ 52 Charges for current services 1,020 1,020 1,241 221 Total Revenues 1,020 1,020 1,293 273 Other Financing Sources (Uses): Transfers out (500) (7,772) (3,918) 3,854 Total Other Financing Sources (Uses) (500) (7,772) (3,918) 3,854 Net change in fund balances 520 (6,752) (2,625) 4,127 Fund balances, beginning 11,631 11,631 11,631 -- Fund balances, ending $ 12,151 $ 4,879 $ 9,006 $ 4 ,127 133 COUNTY OF SAN LUIS OBISPO Roads Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 1,450 $ 1,450 $ 1,443 $ (7) Use of money and property 60 60 29 (31) Aid from other governmental agencies 13,677 37,609 25,261 (12,348) Charges for services 392 691 479 (212) Other revenue -- 763 580 (183) Total Revenues 15,579 40,573 27,792 (12,781) Expenditures: Current: Public ways and facilities Other charges 21,398 62,699 37,826 24,873 Total Expenditures 21,398 62,699 37,826 24,873 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,819) (22,126) (10,034) 12,092 Other Financing Sources (Uses): Transfers in 6,319 14,138 7,468 (6,670) Transfers out (4) (17) (17) -- Total Other Financing Sources (Uses) 6,315 14,121 7,451 (6,670) Net change in fund balances 496 (8,005) (2,583) 5,422 Fund balances, beginning 11,418 11,418 11,418 -- Fund balances, ending $ 11,914 $ 3,413 $ 8,835 $ 5,422 134 COUNTY OF SAN LUIS OBISPO Wildlife Grazing Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Aid from governmental agencies 4 4 6 2 Total Revenues 4 4 6 2 Expenditures: Current: Public protection Services and supplies 4 4 -- 4 Total Expenditures 4 4 -- 4 Net change in fund balances -- -- 6 6 Fund balances, beginning 6 6 6 -- Fund balances, ending $ 6 $ 6 $ 12 $ 6 135 COUNTY OF SAN LUIS OBISPO Flood Control Districts Special Revenue Funds Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 1,528 $ 1,528 $ 1 ,519 $ (9) Use of money and property 16 16 32 16 Aid from other governmental agencies 13 13 63 50 Charges for services 418 418 490 72 Other revenue 17 17 1 (16) Total Revenues 1,992 1,992 2,105 113 Expenditures: Current: Public protection Services and supplies 2,355 4,836 2,548 2,288 Total Expenditures 2,355 4,836 2,548 2,288 Excess (Deficiency) of Revenues Over (Under) Expenditures (363) (2,844) (443) 2,401 Other Financing Sources (Uses): Transfers in 9,214 9,214 8,781 (433) Transfers out (225) (225) (1) 224 Total Other Financing Sources (Uses) 8,989 8,989 8,780 (209) Net change in fund balances 8,626 6,145 8,337 2,192 Fund balances, beginning 6,788 6,788 6,788 -- Fund balances, ending $ 15,414 $ 12,933 $ 15,125 $ 2,192 136 COUNTY OF SAN LUIS OBISPO Lighting Control Districts Special Revenue Funds Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 33 $ 33 $ 31 $ (2) Use of money and property 2 2 2 -- Charges for services -- -- 2 2 Total Revenues 35 35 35 -- Expenditures: Current: Public protection Services and supplies 107 107 37 70 Total Expenditures 107 107 37 70 Net change in fund balances (72) (72) (2) 70 Fund balances, beginning 473 473 473 -- Fund balances, ending $ 401 $ 401 $ 471 $ 70 137 COUNTY OF SAN LUIS OBISPO County Service Area Districts Special Revenue Funds Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2012 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 376 $ 376 $ 384 $ 8 Use of money and property 6 6 7 1 Aid from other governmental agencies 2 2 2 -- Charges for services 21 21 4 (17) Total Revenues 405 405 397 (8) Expenditures: Current: Public ways and facilities Services and supplies 243 370 300 70 Total Expenditures 243 370 300 70 Excess (Deficiency) of Revenues Over (Under) Expenditures 162 35 97 62 Other Financing Sources (Uses): Transfers in 1,141 1,141 9 (1,132) Transfers out (706) (706) (545) 161 Total Other Financing Sources (Uses) 435 435 (536) (971) Net change in fund balances 597 470 (439) (909) Fund balances, beginning 1,448 1,448 1,448 -- Fund balances, ending $ 2,045 $ 1,918 $ 1,009 $ (909) 138 __________________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR ENTERPRISE FUNDS __________________________________________________________________ 139 140 NONMAJOR ENTERPRISE FUNDS ENTERPRISE FUNDS: Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is to have the costs of providing goods or services to the general public on a continuing basis be financed primarily through user charges; or where the County has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Transit District Accounts for resources used to provide transit services to various areas of the county. General Flood Control Zone Accounts for resources used to provide control and conservation of flood and storm waters, which are mutually exclusive of Special Revenue Funds. Golf Accounts for the operations and maintenance of County-owned golf courses located in Atascadero, Morro Bay, and San Luis Obispo. Lopez Park Accounts for the accumulation of resources for the repayment of State loans related to the Lopez Lake recreational area. County Service Areas Accounts for resources used to provide for a variety of services such as street lighting, drainage, sewer and road maintenance, which are mutually exclusive of the Special Revenue Funds County Service Areas. 141 COUNTY OF SAN LUIS OBISPO Combining Statement of Net Assets Nonmajor Enterprise Funds June 30, 2012 (in thousands) General Flood County Transit Control Zone Golf Lopez Park Service Areas Total ASSETS Current Assets: Cash and cash equivalents $ -- $ 1,261 $ 837 $ 22 $ 3,320 $ 5,440 Accounts receivable, net -- -- 14 -- 176 190 Due from other governments -- -- -- -- 4 4 Loans receivable -- -- -- -- 3 3 33 Deposits with others -- -- -- -- 1 3 13 Total Current Assets -- 1,261 851 22 3,546 5,680 Noncurrent assets: Advances to other funds -- -- 549 214 - - 763 Capital Assets Nondepreciable: Land -- -- 1,333 - - 252 1,585 Construction in progress -- -- 70 -- 1,735 1,805 Depreciable: Infrastructure, net -- -- -- -- 384 384 Structures & improvements, net -- -- 9,924 - - 8,682 18,606 Equipment, net -- -- 164 -- 168 332 Other property, net -- -- -- -- 502 502 Total Noncurrent Assets -- -- 12,040 214 11,723 23,977 Total Assets -- 1,261 12,891 236 15,269 29,657 LIABILITIES Current Liabilities: Accounts payable -- 82 32 -- 3 6 150 Salaries and benefits payable -- -- 21 -- - - 21 Deposits from others -- -- -- -- 141 141 Accrued interest -- -- 74 -- 3 0 104 Deferred revenue -- -- -- -- 3 8 38 Accrued vacation and sick leave - current -- -- 84 -- - - 84 Notes and bonds payable - current -- -- 260 16 1 79 455 Total Current Liabilities -- 82 471 16 4 24 993 Noncurrent Liabilities: Advances from other funds -- -- -- -- 602 602 Accrued vacation and sick leave - noncurrent -- -- 58 -- - - 58 Notes and bonds payable - noncurrent -- -- 5,790 199 3,244 9,233 Total Noncurrent Liabilities -- -- 5,848 199 3,846 9,893 Total Liabilities -- 82 6,319 215 4,270 10,886 NET ASSETS Invested in capital assets, net of related debt -- -- 5,441 - - 8,300 13,741 Unrestricted -- 1,179 1,131 21 2,699 5,030 Total Net Assets $ -- $ 1,179 $ 6,572 $ 21 $ 10,999 $ 18,771 142 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended June 30, 2012 (in thousands) General Flood County Transit Control Zone Golf Lopez Park Service Areas Total Operating Revenues: Charges for current services $ -- $ 1,252 $ 2,690 $ -- $ 3,186 $ 7,128 Total operating revenues -- 1,252 2,690 -- 3,186 7,128 Operating expenses: Salaries and benefits -- -- 1,171 -- -- 1,171 Services and supplies 132 1,810 785 -- 3,275 6,002 Depreciation 5 -- 379 -- 416 800 Countywide cost allocation -- 6 91 -- 3 7 134 Total operating expenses 137 1,816 2,426 -- 3,728 8,107 Operating income (loss) ( 137) (564) 264 -- (542) (979) Nonoperating revenues (expenses): Property taxes -- -- -- -- 389 389 Interest income -- 8 4 -- 1 5 27 Interest expense -- -- (296) (8) (128) (432) Aid from governmental agencies -- -- 5 -- 3 8 Other nonoperating revenue (expense) -- -- (156) -- 1 0 (146) Total nonoperating revenues (expenses) -- 8 (443) (8) 289 (154) Income (loss) before contributions and transfers ( 137) (556) (179) (8) (253) (1,133) Capital contributions -- -- -- -- 6 4 64 Transfers in -- -- 46 6 544 596 Transfers out -- -- (33) -- (11) (44) Change in net assets ( 137) (556) (166) (2) 344 (517) Net assets - beginning 137 1,735 6,738 23 1 0,655 19,288 Net assets - ending $ -- $ 1,179 $ 6,572 $ 21 $ 10,999 $ 18,771 143 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2012 (in thousands) General Flood Transit Control Zone Golf Lopez Park Cash Flows from Operating Activities: Receipts from customers $ -- $ 1,252 $ 2,705 $ -- Payments to employees for service -- -- ( 1,210) -- Payments for goods and services (132) (1,751) ( 881) -- Net Cash Provided (Used) by Operating Activities (132) (499) 614 -- Cash Flows from Noncapital Financing Activities: Property tax proceeds -- -- -- -- Grants and subsidies from other gov't agencies -- -- -- -- Contributions and payments to other agencies (582) -- ( 156) -- Advances to other funds -- -- 5 -- Transfers from other funds -- -- 46 6 Transfers to other funds -- -- ( 33) -- Net Cash Provided (Used) by Noncapital and Related Financing Activities (582) -- ( 138) 6 Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets -- -- ( 45) -- Proceeds from capital grants -- -- -- -- Principal paid on capital debt -- -- ( 250) -- Interest paid on capital debt -- -- ( 296) (6) Net Cash Provided (Used) by Capital and Related Financing Activities -- -- ( 591) (6) Cash Flows from Investing Activities: Interest received -- 8 4 -- Net Cash Provided (Used) by Investing Activities -- 8 4 -- Net Increase (Decrease) in Cash and Cash Equivalents (714) (491) ( 111) -- Cash and Cash Equivalents - Beginning of Year 714 1,752 9 48 22 Cash and Cash Equivalents - End of Year $ -- $ 1,261 $ 837 $ 22 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ (137) $ (564) $ 264 $ -- Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense 5 -- 379 -- Change in Assets and Liabilities: Receivables, net -- -- 17 -- Accounts payable -- 65 (5) -- Salaries and benefits payable -- -- (48) -- Accrued vacation and sick leave -- -- 7 -- Total Adjustments 5 65 350 -- Net Cash Provided (Used) by Operating Activities: $ (132) $ (499) $ 614 $ -- Noncash Investing, Capital, and Financing Activities: Contributions of capital assets to governmental fund $ (130) $ -- $ -- $ -- 144 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2012 (in thousands) County Service Areas Total Cash Flows from Operating Activities: Receipts from customers $ 3 ,073 $ 7,030 Payments to employees - - (1,210) Payments for goods and services ( 3,417) (6,181) Net Cash Provided (Used) by Operating Activities ( 344) (361) Cash Flows from Noncapital Financing Activities: Property tax proceeds 3 89 389 Grants and subsidies from other gov't agencies 1 13 113 Contributions and payments to other agencies - - (738) Advances to other funds ( 86) (81) Transfers from other funds 5 44 596 Transfers to other funds ( 11) (44) Net Cash Provided (Used) by Noncapital and Related Financing Activities 9 49 235 Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets ( 101) (146) Proceeds from capital grants 6 4 64 Principal paid on capital debt ( 173) (423) Interest paid on capital debt ( 129) (431) Net Cash Provided (Used) by Capital and Related Financing Activities ( 339) (936) Cash Flows from Investing Activities: Interest received 1 5 27 Net Cash Provided (Used) by Investing Activities 1 5 27 Net Increase (Decrease) in Cash and Cash Equivalents 2 81 (1,035) Cash and Cash Equivalents - Beginning of Year 3 ,039 6,475 Cash and Cash Equivalents - End of Year $ 3 ,320 $ 5,440 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ ( 542) $ (979) Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense 416 800 Change in Assets and Liabilities: Receivables, net ( 24) (7) Accounts payable (103) (43) Salaries and benefits payable -- (48) Accrued vacation and sick leave ( 91) (84) Total Adjustments 198 618 Net Cash Provided (Used) by Operating Activities: $ (344) $ (361) Noncash Investing, Capital, and Financing Activities: Contributions of capital assets to governmental fund $ -- $ (130) 145 146 __________________________________________________________________ COMBINING FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS __________________________________________________________________ 147 148 INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS: Internal Service Funds are used to account for the financing of goods and services provided by one department to other departments on a cost-reimbursement basis. Internal Service Funds used at the County are listed below: Reprographics Accounts for resources used to provide centralized reprographic services to various County departments and other governmental agencies. Garage Accounts for resources used to provide a vehicle fleet of cars, trucks, and police vehicles for use by various County departments at the lowest possible maintenance and operating costs. Public Works Accounts for resources used to provide comprehensive engineering services in the form of manpower, equipment and contractual services and supplies to all departments, agencies, and private citizens as requested or required by state law or local ordinance. Insurance Funds Account for the operations of the County’s Workers’ Compensation, Protected Self-Insurance, Unemployment, Dental Insurance, and Other Post-Employment Benefits (OPEB) programs. 149 COUNTY OF SAN LUIS OBISPO Combining Statement of Net Assets Internal Service Funds June 30, 2012 (in thousands) Combined Public Insurance Reprographics Garage Works (5 funds) Total ASSETS Current Assets: Cash and cash equivalents $ 1 15 $ 3,389 $ 14,214 $ 2 6,920 $ 4 4,638 Accounts receivable - - -- 1 6 - - 16 Inventory 2 15 4 63 - - 480 Total Current Assets 1 17 3,404 14,693 26,920 4 5,134 Noncurrent assets: Capital Assets: Structures & improvements, net - - 124 6 9 - - 193 Equipment, net 1 4 3,817 6 ,010 - - 9,841 Total Noncurrent Assets 1 4 3,941 6 ,079 - - 10,034 Total Assets 1 31 7,345 20,772 26,920 5 5,168 LIABILITIES Current Liabilities: Accounts payable 8 167 1 33 4 78 786 Salaries and benefits payable 3 23 3 89 - - 415 Self insurance liability - - -- - - 3,520 3,520 Deposits from others - - -- 5 68 - - 568 Accrued vacation and sick leave - current 1 5 66 1,488 - - 1,569 Total Current Liabilities 2 6 256 2 ,578 3 ,998 6,858 Noncurrent Liabilities: Self insurance liability - - -- - - 15,735 1 5,735 Accrued vacation and sick leave 1 0 39 7 95 - - 844 Total Noncurrent Liabilities 1 0 39 7 95 15,735 1 6,579 Total Liabilities 3 6 295 3 ,373 19,733 2 3,437 NET ASSETS Invested in capital assets 14 3,941 6,079 - - 10,034 Unrestricted 8 1 3,109 1 1,320 7 ,187 21,697 Total Net Assets $ 9 5 $ 7,050 $ 1 7,399 $ 7 ,187 $ 31,731 150 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2012 (in thousands) Combined Public Insurance Reprographics Garage Works (5 funds) Total Operating Revenues: Charges for current services $ 481 $ 5,565 $ 28,692 $ 8,708 $ 43,446 Total Operating Revenues 4 81 5,565 28,692 8,708 43,446 Operating Expenses: Salaries and benefits 1 82 1,209 19,577 -- 20,968 Services and supplies 2 94 2,679 6,461 3,640 13,074 Insurance benefit payments -- -- -- 5,251 5,251 Depreciation 4 1,152 6 54 -- 1,810 Countywide cost allocation -- 1 29 42 363 534 Total Operating Expenses 4 80 5,169 26,734 9,254 41,637 Operating Income (Loss) 1 3 96 1,958 (546) 1,809 Nonoperating Revenues (Expenses): Interest income -- 14 56 133 203 Aid from governmental agencies -- -- -- 333 333 Other revenue (expense) (40) 1 42 51 -- 153 Total Nonoperating Revenues (Expenses) (40) 1 56 1 07 466 689 Income (Loss) Before Capital Contributions and Transfers (39) 5 52 2,065 ( 80) 2,498 Transfers out (6) (74) (632) ( 46) ( 758) Change in Net Assets (45) 4 78 1,433 (126) 1,740 Net assets - beginning 1 40 6,572 15,966 7,313 29,991 Net assets - ending $ 95 $ 7,050 $ 17,399 $ 7,187 $ 31,731 151 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2012 (in thousands) Combined Public Insurance Reprographics Garage Works (5 funds) Total Cash Flows from Operating Activities: Receipts from interfund billings $ 4 84 $ 5,565 $ 33,725 $ 8 ,708 $ 4 8,482 Payments for goods and services ( 297) (2,827) (11,759) ( 3,344) (18,227) Payments to employees for service ( 192) (1,239) (20,360) - - (21,791) Payments for insurance benefits - - -- -- (4,654) ( 4,654) Payments for premiums - - -- -- (1,823) ( 1,823) Net Cash Provided (Used) by Operating Activities ( 5) 1,499 1,606 ( 1,113) 1 ,987 Cash Flows from Noncapital Financing Activities: Grants and subsidies from other gov't agencies - - -- -- 333 3 33 Transfers from other funds - - -- -- - - - - Transfers to other funds ( 6) (74) (631) ( 46) (757) Net Cash Provided (Used) by Noncapital and Related Financing Activities ( 6) (74) (631) 2 87 (424) Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets - - (1,489) ( 946) - - (2,435) Proceeds from sale of capital assets 8 286 2 1 - - 315 Net Cash Provided (Used) by Capital and Related Financing Activities 8 (1,203) ( 925) - - (2,120) Cash Flows from Investing Activities: Interest received - - 14 56 133 2 03 Net Cash Provided (Used) by Investing Activities - - 14 56 133 2 03 Net Increase (Decrease) in Cash and Cash Equivalents ( 3) 236 106 ( 693) (354) Cash and Cash Equivalents - Beginning of Year 1 18 3,153 14,108 2 7,613 4 4,992 Cash and Cash Equivalents - End of Year $ 1 15 $ 3,389 $ 14,214 $ 2 6,920 $ 4 4,638 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ 1 $ 396 $ 1,958 $ ( 546) $ 1,809 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense 4 1,152 654 -- 1,810 Change in Assets and Liabilities: Receivables, net 3 -- 7 -- 10 Inventory -- (1) 12 -- 11 Accounts payable (3) (19) (234) (49) (305) Salaries and benefits payable (6) (39) (686) -- (731) Accrued vacation and sick leave (4) 10 ( 50) -- (44) Self-insurance liability -- -- -- ( 518) (518) Other accrued liabilities -- -- ( 55) -- (55) Total Adjustments (6) 1,103 (352) ( 567) 1 78 Net Cash Provided (Used) by Operating Activities: $ (5) $ 1,499 $ 1 ,606 $ (1,113) $ 1,987 152 COUNTY OF SAN LUIS OBISPO Combining Statement of Net Assets Internal Service Funds - Insurance June 30, 2012 (in thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total ASSETS Current Assets: Cash and cash equivalents $ 1 8,099 $ 7,712 $ 699 $ 345 $ 6 5 $ 26,920 Total Current Assets 1 8,099 7,712 699 345 6 5 26,920 LIABILITIES Current Liabilities: Accounts payable 3 86 61 -- 31 - - 478 Self insurance payable 2 ,418 1,102 -- -- -- 3,520 Total Current Liabilities 2 ,804 1,163 -- 31 - - 3,998 Noncurrent Liabilities: Self insurance liability 1 3,279 2,456 -- -- -- 15,735 Total Noncurrent Liabilities 1 3,279 2,456 -- -- -- 15,735 Total Liabilities 1 6,083 3,619 -- 31 - - 19,733 Net Assets Unrestricted 2 ,016 4,093 699 314 6 5 7,187 Total Net Assets $ 2 ,016 $ 4,093 $ 699 $ 314 $ 6 5 $ 7,187 153 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Net Assets Internal Service Funds - Insurance For the Year Ended June 30, 2012 (in thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Operating Revenues: Charges for current services $ 2,314 $ 3,219 $ 185 $ 1 ,532 $ 1 ,458 $ 8,708 Total Operating Revenues 2,314 3,219 185 1,532 1,458 8,708 Operating Expenses: Services and supplies 2,532 9 16 1 7 147 28 3,640 Insurance benefit payments 1,689 1 93 304 1,367 1,698 5,251 Countywide cost allocation 1 56 2 07 -- -- -- 363 Total Operating Expenses 4,377 1,316 321 1,514 1,726 9,254 Operating Income (Loss) (2,063) 1,903 (136) 18 ( 268) (546) Nonoperating Revenues (Expenses): Interest income 90 37 4 2 -- 133 Aid from governmental agencies -- -- -- -- 333 333 Total Nonoperating Revenues (Expenses) 90 37 4 2 333 466 Income (Loss) Before Transfers (1,973) 1,940 (132) 20 65 (80) Transfers out (46) -- -- -- -- (46) Change in net assets (2,019) 1,940 (132) 20 65 (126) Net assets - beginning 4,035 2,153 831 294 -- 7,313 Net assets - ending $ 2,016 $ 4,093 $ 699 $ 314 $ 65 $ 7,187 154 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Internal Service Funds - Insurance For the Year Ended June 30, 2012 (in thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Cash Flows from Operating Activities: Receipts from interfund billings $ 2 ,314 $ 3,219 $ 1 85 $ 1,532 $ 1,458 $ 8,708 Payments for goods and services ( 2,029) (1,122) ( 17) (147) ( 29) (3,344) Payments for insurance benefits ( 1,394) ( 828) ( 304) (1,401) ( 727) (4,654) Payments for premiums ( 659) (194) - - -- (970) (1,823) Net Cash Provided (Used) by Operating Activities ( 1,768) 1 ,075 ( 136) (16) (268) (1,113) Cash Flows from Noncapital Financing Activities: Transfers to other funds ( 46) -- - - -- -- (46) Grants and subsidies from other gov't agencies - - -- - - -- 333 333 Net Cash Provided (Used) by Noncapital and Related Financing Activities ( 46) -- - - -- 333 287 Cash Flows from Investing Activities: Interest received 9 0 37 4 2 -- 133 Net Cash Provided (Used) by Investing Activities 9 0 37 4 2 -- 133 Net Increase (Decrease) in Cash and Cash Equivalents ( 1,724) 1 ,112 ( 132) (14) 6 5 (693) Cash and Cash Equivalents - Beginning of Year 1 9,823 6,600 8 31 359 - - 27,613 Cash and Cash Equivalents - End of Year $ 1 8,099 $ 7,712 $ 6 99 $ 345 $ 6 5 $ 26,920 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) ( 2,063) 1 ,903 ( 136) 18 (268) (546) Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Change in Assets and Liabilities: Accounts payable 8 (23) -- ( 34) -- (49) Self-insurance liability 287 (805) -- -- -- (518) Total Adjustments 295 (828) -- ( 34) -- (567) Net Cash Provided (Used) by Operating Activities: $ (1,768) $ 1,075 $ (136) $ (16) $ (268) $ (1,113) 155 156 __________________________________________________________________ COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS __________________________________________________________________ 157 158 FIDUCIARY FUNDS AGENCY FUNDS: These funds account for assets held by the County as an agent for various local governments. The County has the following types of Agency Funds: 1915 Act Accounts for temporary holding of funds for tax assessment areas created under the 1915 Improvement Act. Clearing Funds Serve as a temporary holding fund for subsequent disposition to an outside agency or taxing authority. Other Funds Account for temporary holding of funds that are not specifically classified in other agency categories. INVESTMENT TRUST FUNDS These funds are used by the County to account for the assets of legally separate entities who deposit cash with the County Treasurer. These include school and community college districts, other special districts governed by local boards, regional boards and authorities, courts and pass through funds for tax collections for cities. These funds represent the assets, primarily cash and investments, and the related liability of the County to disburse these monies on demand. The County combines Investment Trust Funds into four reporting types because of their similar nature: School Districts (40 funds), Special Districts (32 funds), Courts (6 funds), and Other Local Boards (19 funds). 159 COUNTY OF SAN LUIS OBISPO Combining Statement of Fiduciary Net Assets Agency Funds June 30, 2012 (in thousands) 1915 Act Other Clearing Funds Service Funds Agency Funds (87 Funds) (17 Funds) (30 Funds) Total ASSETS Cash and cash equivalents $ 17,094 $ 2,164 $ 22,697 $ 41,955 Total Assets 17,094 2,164 2 2,697 41,955 LIABILITIES Assets held as agency for others 17,094 2,164 2 2,697 41,955 Total Liabilities $ 1 7,094 $ 2 ,164 $ 22,697 $ 41,955 160 COUNTY OF SAN LUIS OBISPO Combining Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2012 (in thousands) July 1, 2011 Additions Deductions June 30, 2012 Clearing and Revolving Funds (87 funds) Assets: Cash and cash equivalents 3,707 $ 925,155 $ 911,768 $ 17,094 Total Assets 3,707 925,155 911,768 17,094 Liabilities: Assets held as agency for others 3,707 925,155 911,768 17,094 Total Liabilities $ 3 ,707 $ 925,155 $ 9 11,768 $ 1 7,094 1915 Act Service Funds (17 funds) Assets: Cash and cash equivalents $ 2,143 $ 5,631 $ 5 ,610 $ 2,164 Total Assets 2,143 5,631 5 ,610 2,164 Liabilities: Assets held as agency for others 2,143 5,631 5 ,610 2,164 Total Liabilities $ 2 ,143 $ 5,631 $ 5,610 $ 2 ,164 Other Agency Funds (30 funds) Assets: Cash and cash equivalents $ 23,993 $ 199,938 $ 201,234 $ 22,697 Total Assets 23,993 199,938 201,234 22,697 Liabilities: Assets held as agency for others 23,993 199,938 201,234 22,697 Total Liabilities $ 2 3,993 $ 199,938 $ 2 01,234 $ 2 2,697 Total All Agency Funds Assets: Cash and cash equivalents $ 29,843 $ 1,130,724 $ 1,118,612 $ 41,955 Total Assets 29,843 1,130,724 1,118,612 41,955 Liabilities: Assets held as agency for others 29,843 1,130,724 1,118,612 41,955 Total Liabilities $ 2 9,843 $ 1,130,724 $ 1,118,612 $ 4 1,955 161 COUNTY OF SAN LUIS OBISPO Combining Statement of Fiduciary Net Assets Investment Trust Funds June 30, 2012 (in thousands) School Special Other Districts Districts Courts Local Boards (40 Funds) (32 Funds) (6 Funds) (19 Funds) Total ASSETS Cash and cash equivalents $ 149,253 $ 1 0,542 $ 2 ,240 $ 2 3,062 $ 185,097 Total Assets 1 49,253 1 0,542 2 ,240 2 3,062 185,097 NET ASSETS Assets held in trust for pool participants 149,253 1 0,542 2 ,240 2 3,062 185,097 Total Net Assets $ 1 49,253 $ 1 0,542 $ 2 ,240 $ 2 3,062 $ 185,097 162 COUNTY OF SAN LUIS OBISPO Combining Statement of Changes in Fiduciary Net Assets Investment Trust Funds For the Year Ended June 30, 2012 (in thousands) School Special Other Districts Districts Courts Local Boards (40 Funds) (32 Funds) (6 Funds) (19 Funds) Total Additions Contributions to pooled investments $ 677,723 $ 7,156 $ 21,759 $ 3 7,896 $ 744,534 Interest 870 49 -- 6 6 985 Total Additions 678,593 7,205 21,759 3 7,962 745,519 Deductions Distributions from investment pool 740,417 7,163 21,073 2 9,713 798,366 Total Deductions 740,417 7,163 21,073 2 9,713 798,366 Change in Net Assets (61,824) 42 686 8 ,249 (52,847) Net Assets - Beginning 211,077 10,500 1,554 1 4,813 237,944 Net Assets - Ending $ 1 49,253 $ 10,542 $ 2 ,240 $ 2 3,062 $ 185,097 163 164 __________________________________________________________________ GENERAL FUND DETAIL BUDGETARY COMPARISON SCHEDULES __________________________________________________________________ 165 166 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2012 Original Adjusted Variance with Description Budget Budget Actual Final Budget General Government - Expenditures Legislative and Administrative Administrative Office: Salaries wages benefits $ 1,613 $ 1,613 $ 1,415 $ 198 Services and supplies 203 228 148 80 Expenditure transfers and reimbursements (85) (85) (85) -- Total 1,731 1,756 1,478 278 Board of Supervisors: Salaries wages benefits 1,438 1,438 1,358 80 Services and supplies 254 259 215 44 Expenditure transfers and reimbursements (36) (36) (36) -- Total 1,656 1,661 1,537 124 Clerk/Recorder: Salaries wages benefits 2,006 2,006 1,933 73 Services and supplies 1,017 1,052 876 176 Capital outlay 160 160 19 141 Total 3,183 3,218 2,828 390 Total Legislative and Administrative 6,570 6,635 5,843 792 Finance Assessor: Salaries wages benefits 7,774 7,774 7,051 723 Services and supplies 726 901 707 194 Capital outlay 8 8 8 -- Expenditure transfers and reimbursements -- -- (1) 1 Total 8,508 8,683 7,765 918 Auditor-Controller: Salaries wages benefits 4,417 4,417 4,095 322 Services and supplies 198 461 224 237 Capital outlay -- 579 404 175 Expenditure transfers and reimbursements (9) (9) (18) 9 Total 4,606 5,448 4,705 743 Treasurer-Tax Collector-Public Administrator: Salaries wages benefits 2,619 2,619 2,440 179 Services and supplies 274 300 288 12 Capital outlay -- 80 75 5 Expenditure transfers and reimbursements -- -- (1) 1 Total 2,893 2,999 2,802 197 Total Finance 16,007 17,130 15,272 1,858 Counsel County Counsel: Salaries wages benefits 3,276 3,188 3,079 109 Services and supplies 190 723 463 260 Expenditure transfers and reimbursements -- -- (3) 3 Total Counsel 3,466 3,911 3,539 372 continued 167 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2012 Original Adjusted Variance with Description Budget Budget Actual Final Budget General Government - Expenditures (continued) Personnel Personnel: Salaries wages benefits $ 1,828 $ 1,828 $ 1,707 $ 121 Services and supplies 512 598 336 262 Total Personnel 2,340 2,426 2,043 383 Property Management General Services: Salaries wages benefits 8,188 8,067 7,478 589 Services and supplies 4,339 4,455 4,431 24 Other charges 91 91 76 15 Capital outlay 9 78 13 65 Expenditure transfers and reimbursement (2,045) (2,045) (2,063) 18 Total 10,582 10,646 9,935 711 Maintenance Projects: Services and supplies 1,713 6,767 2,661 4 ,106 Expenditure transfers and reimbursement (257) (470) (313) (157) Total 1,456 6,297 2,348 3 ,949 Total Property Management 12,038 16,943 12,283 4,660 Other General Information Technology: Salaries wages benefits 9,842 9,842 9,194 648 Services and supplies 3,248 3,317 3,149 168 Capital outlay 82 184 146 38 Expenditure transfers and reimbursement (2,748) (2,748) (2,766) 18 Total 10,424 10,595 9,723 872 Risk Management: Salaries wages benefits 782 782 682 100 Services and supplies 873 873 796 77 Expenditure transfers and reimbursement (68) (68) (68) -- Total 1,587 1,587 1,410 177 Non-Department Financing Uses: Other charges -- -- 9 (9) Expenditure transfers and reimbursement (10,035) (10,035) (10,084) 49 Total (10,035) (10,035) (10,075) 40 Contributions to Other Agencies: Services and supplies 1,927 1,986 1,935 51 Total 1,927 1,986 1,935 51 Total Other General 3,903 4,133 2,993 1,140 Total General Government 44,324 51,178 41,973 9,205 continued 168 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2012 Original Adjusted Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures Judicial Court Operations Fund: Services and supplies $ 1 55 $ 1 55 $ 1 26 $ 29 Other charges 2,336 2,336 2,284 52 Total 2,491 2,491 2,410 81 District Attorney: Salaries wages benefits 13,113 13,178 12,218 960 Services and supplies 1,404 1,404 1,246 158 Expenditure transfers and reimbursement (251) (251) (245) (6) Total 14,266 14,331 13,219 1 ,112 Family Support: Salaries wages benefits 3,692 3,705 3,588 117 Services and supplies 1,074 1,061 1,032 29 Total 4,766 4,766 4,620 146 Grand Jury: Salaries wages benefits 39 39 37 2 Services and supplies 99 99 83 16 Total 138 138 120 18 Public Defender: Services and supplies 5,436 5,975 5,931 44 Total 5,436 5,975 5,931 44 Total Judicial 27,097 27,701 26,300 1 ,401 Police Protection Sheriff-Coroner: Salaries wages benefits 47,998 48,185 47,049 1 ,136 Services and supplies 7,784 9,580 9,187 393 Other charges -- 614 371 243 Capital outlay -- 1,701 597 1 ,104 Expenditure transfers and reimbursement (191) (191) (178) (13) Total Police Protection 55,591 59,889 57,026 2 ,863 Detention and Correction Probation Department: Salaries wages benefits 14,457 14,645 13,251 1 ,394 Services and supplies 3,634 3,817 3,313 504 Other charges -- 75 63 12 Capital outlay -- 108 -- 108 Expenditure transfers and reimbursement (251) (281) (282) 1 Total Detention and Correction 17,840 18,364 16,345 2 ,019 Fire Protection County Fire: Services and supplies 1 5,641 16,535 15,519 1 ,016 Capital outlay 55 565 404 161 Other charges -- 7 4 3 Total Fire Protection 15,696 17,107 15,927 1 ,180 continued 169 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2012 Original Adjusted Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures (continued) Protective Inspection Agricultural Commissioner: Salaries wages benefits $ 4,725 $ 4,705 $ 4,224 $ 481 Services and supplies 694 715 696 19 Total Protective Inspection 5,419 5,420 4,920 500 Other Protection Animal Services: Salaries wages benefits 1,499 1,488 1,387 101 Services and supplies 882 900 882 18 Capital outlay 26 27 27 -- Total 2,407 2,415 2,296 119 Emergency Services: Salaries wages benefits 747 747 644 103 Services and supplies 419 669 529 140 Other charges 415 415 187 228 Capital outlay -- 296 197 99 Expenditure transfers and reimbursement -- -- (28) 28 Total 1,581 2,127 1,529 598 Planning Department: Salaries wages benefits 9,893 9,714 9,335 379 Services and supplies 1,201 3,609 1,473 2 ,136 Other charges 19 32 32 -- Capital outlay 11 -- -- -- Expenditure transfers and reimbursement (6) (3) (2) (1) Total 11,118 13,352 10,838 2 ,514 Waste Management: Services and supplies 716 788 753 35 Capital outlay -- 48 48 -- Total 716 836 801 35 Total Other Protection 15,822 18,730 15,464 3 ,266 Total Public Protection 137,465 147,211 135,982 11,229 Public Ways and Facilities - Expenditures Public Works: Services and supplies 2,224 2,701 1,975 726 Capital outlay -- 1,980 -- 1 ,980 Total 2,224 4,681 1,975 2,706 Total Public Ways and facilities 2,224 4,681 1,975 2 ,706 continued 170 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2012 Original Adjusted Variance with Description Budget Budget Actual Final Budget Health and Sanitation - Expenditures Health Public Health: Salaries wages benefits 16,184 16,184 15,154 1 ,030 Services and supplies 4,699 4,944 4,852 92 Other charges 1,410 2,210 921 1 ,289 Capital outlay -- 96 25 71 Expenditure transfers and reimbursement (1,127) (1,127) (863) (264) Total 21,166 22,307 20,089 2 ,218 Behavioral Health: Salaries wages benefits 23,259 23,419 21,903 1 ,516 Services and supplies 2 3,811 26,137 23,067 3 ,070 Other charges 38 77 -- 77 Expenditure transfers and reimbursement (1,705) (1,705) (1,679) (26) Total 45,403 47,928 43,291 4 ,637 Total Health 66,569 70,235 63,380 6 ,855 Total Health and Sanitation 66,569 70,235 63,380 6 ,855 continued 171 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2012 Original Adjusted Variance with Description Budget Budget Actual Final Budget Public Assistance - Expenditures Administration Department of Social Services: Salaries wages benefits $ 37,060 $ 36,541 $ 33,821 $ 2,720 Services and supplies 1 4,952 15,483 15,177 306 Other charges 6,554 7,854 6,862 992 Capital outlay 73 60 57 3 Expenditure transfers and reimbursement (88) (88) (76) (12) Total Administration 5 8,551 59,850 55,841 4 ,009 Aid Programs Aid Foster Care Non-Fed: Services and supplies 44 44 9 35 Other charges 18,078 18,078 17,414 664 Total 18,122 18,122 17,423 699 Calworks Assistance: Other charges 14,545 14,545 12,279 2 ,266 Total 14,545 14,545 12,279 2 ,266 Total Aid Programs 32,667 32,667 29,702 2 ,965 Medical Services Medical Assistance Program: Services and supplies 2,200 2,540 2,540 -- Total Medical Services 2,200 2,540 2,540 -- General Relief General Relief: Other charges 1,173 1,173 957 216 Total General Relief 1,173 1,173 957 216 Veterans Service Veterans Service: Salaries wages benefits 361 309 300 9 Services and supplies 38 89 37 52 Total Veterans Service 399 398 337 61 Other Assistance Law Enforcement Med Care: Salaries wages benefits 1,590 1,571 1,530 41 Services and supplies 683 880 822 58 Expenditure transfers and reimbursement (499) (499) (494) (5) Total Other Assistance 1,774 1,952 1,858 94 Total Public Assistance 96,764 98,580 91,235 7 ,345 continued 172 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2012 Original Adjusted Variance with Description Budget Budget Actual Final Budget Education - Expenditures Agricultural Education Farm Advisor: Salaries wages benefits $ 3 67 $ 3 58 $ 3 27 $ 31 Services and supplies 101 101 95 6 Capital outlay -- 9 9 -- Total Agricultural Education 468 468 431 37 Total Education 468 468 431 37 Total General Fund - Expenditures 347,814 372,353 334,976 37,377 (Before Contingencies) Contingencies Appropriation for Contingencies Contingencies - General Fund: Appropriation for contingency 14,558 13,718 -- 13,718 Total 14,558 13,718 -- 13,718 Total Appropriation for Contingency 14,558 13,718 -- 13,718 Total Contingency 14,558 13,718 -- 13,718 Total General Fund Expenditures $ 362,372 $ 386,071 $ 334,976 $ 51,095 Explanation of Differences between Budgetary Outflows and GAAP Expenditures Uses/outflows of resources Actual amounts (budgetary basis) from the Budget to Actual Comparison Schedule $ 334,976 Differences - budget to GAAP: Expenditures by funds no longer meeting the special revenue fund classification which are presented with the General Fund for financial reporting purposes 3,877 Total expenditures as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 338,853 173 174 __________________________________________________________________ STATISTICAL SECTION __________________________________________________________________ 175 176 COUNTY OF SAN LUIS OBISPO Statistical Section This part of the County of San Luis Obispo’s comprehensive annual financial report presents detailed information as a context for understanding this year’s financial statements, note disclosures, and required supplementary information. Page Financial Trends Information These schedules contain trend information that may assist the reader in assessing the County’s current financial performance by placing it in historical perspective .......................................... 179 Revenue Capacity Information These schedules contain information that may assist the reader in assessing the viability of the County’s two most significant local revenue sources; property taxes and sales taxes ................. 184 Debt Capacity Information These schedules present information that may assist the reader in analyzing the affordability of the County’s current levels of outstanding debt and the County’s ability to issue additional debt in the future .......................................................................................................................... 189 Demographic & Economic Information These schedules offer economic and demographic indicators that are commonly used for financial analysis and that can enhance a reader’s understanding of the County’s present and ongoing financial status ......................................................................................................... 191 Operating Information These schedules contain service and infrastructure indicators about how the information in the County’s financial statements relates to the services the County provides and the activities it performs ............................................................................................................................... 194 177 178 County of San Luis Obispo Net Assets by Component Last Ten Fiscal Years (in thousands) (UNAUDITED) Fiscal Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Governmental Activities Invested in Capital Assets, net of related debt $ 9 51,989 $ 956,773 $ 981,543 $ 996,381 $ 1,012,458 $ 1,047,361 $ 1,063,955 $ 1,071,844 $ 1,084,978 $ 1,099,885 Restricted 66,890 66,474 48,141 40,178 50,061 52,566 41,188 36,385 36,258 31,477 Unrestricted 116,055 109,032 130,632 169,766 190,107 173,396 192,271 206,786 234,786 265,454 Total governmental activities net assets $ 1,134,934 $ 1,132,279 $ 1,160,316 $ 1,206,325 $ 1,252,626 $ 1,273,323 $ 1,297,414 $ 1,315,015 $ 1,356,022 $ 1,396,816 Business-type activities Invested in Capital Assets, net of related debt $ 1 01,138 $ 109,785 $ 114,785 $ 122,534 $ 146,021 $ 155,907 $ 167,188 $ 160,627 $ 149,097 $ 153,801 Restricted - - - - - - - - - - Unrestricted 21,586 17,146 12,867 19,178 16,511 16,202 12,266 18,117 38,665 33,081 Total business net assets $ 1 22,724 $ 126,931 $ 127,652 $ 141,712 $ 162,532 $ 172,109 $ 179,454 $ 178,744 $ 187,762 $ 186,882 Total Primary Government Invested in Capital Assets, net of related debt $ 1,053,127 $ 1,066,558 $ 1,096,328 $ 1,118,915 $ 1,158,479 $ 1,203,268 $ 1,231,143 $ 1,232,471 $ 1,234,075 $ 1,253,686 Restricted 66,890 66,474 48,141 40,178 50,061 52,566 41,188 36,385 36,258 31,477 Unrestricted 137,641 126,178 143,499 188,944 206,618 189,598 204,537 224,903 273,451 298,535 Total primary government net assets $ 1,257,658 $ 1,259,210 $ 1,287,968 $ 1,348,037 $ 1,415,158 $ 1,445,432 $ 1,476,868 $ 1,493,759 $ 1,543,784 $ 1,583,698 Notes: Source - Statement of Net Assets 179 County of San Luis Obispo Changes in Net Assets Last Ten Fiscal Years (in thousands) (UNAUDITED) Fiscal Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Expenses Governmental Activities General government $ 31,990 $ 34,862 $ 29,565 $ 39,872 $ 50,819 $ 46,971 $ 41,658 $ 36,561 $ 35,344 $ 35,231 Public protection 9 8,816 104,594 106,402 100,234 120,165 1 35,987 136,755 134,768 132,413 136,219 Public ways and facilities 2 3,328 23,147 23,647 32,858 22,256 24,503 2 4,713 24,927 27,365 27,120 Health and sanitation 4 8,961 50,240 52,540 53,113 55,173 66,382 6 6,542 68,199 66,657 65,799 Public assistance 7 8,524 82,461 83,209 84,451 84,045 93,472 9 7,803 96,645 98,841 96,435 Education 7,323 7,969 7,459 7,786 8,626 9,966 10,967 10,390 10,057 10,000 Recreation and cultural services 5,003 5,762 4,238 4,244 6,106 6,024 7,561 8,708 7,363 7,344 Interest on long term debt 2,797 4,379 4,173 7,184 5,163 5,771 5,433 6,356 6,787 6,620 Total Governmental Activities Expenses 296,742 313,414 311,233 329,742 352,353 3 89,076 391,432 386,554 384,827 384,768 Business-type Activities Expenses Airport 3,046 3,116 3,628 3,703 4,021 7,809 4,559 5,204 7,732 5,422 Golf 1,613 3,132 2,905 2,867 3,301 3,033 3,249 2,974 2,690 2,863 Hospital 2 8,170 17,987 2,149 - - - - - - - State Water contract 5,384 5,045 5,451 5,102 4,792 5,179 5,661 5,630 6,705 6,761 Naciemento Water contract 484 456 497 580 559 20,021 1 0,144 10,613 11,844 11,901 Lopez Dam 3,790 3,449 5,418 5,237 5,807 7,945 6,189 5,813 6,499 5,752 General Flood Control Zone 506 718 526 726 681 689 712 831 928 1,816 Transit 632 841 933 745 714 1,071 987 1,143 1,105 8 County Service Areas 2,613 4,583 2,692 2,907 3,465 3,419 3,434 3,744 3,877 3,836 Los Osos Wastewater - - - - - - - - 5 6,672 Total Business-type Activities Expenses 4 6,238 39,327 24,199 21,867 23,340 49,166 3 4,935 35,952 41,385 45,031 Total Primary Government Expenses $ 342,980 $ 352,741 $ 335,432 $ 351,609 $ 375,693 $ 438,242 $ 426,367 $ 422,506 $ 426,212 $ 429,799 Program Revenues Governmental Activities Fees, Fines, Charges for Services General government $ 23,236 $ 25,112 $ 29,911 $ 22,293 $ 18,743 $ 13,299 $ 17,729 $ 12,878 $ 13,971 $ 17,545 Public protection 7,139 7,012 7,642 11,776 21,061 20,380 2 3,285 21,072 20,843 15,679 Public ways and facilities 6,179 6,767 6,607 9,730 7,236 7,580 4,190 3,234 11,549 5,069 Health and sanitation 8,754 6,766 8,555 8,831 6,505 6,583 6,863 7,026 7,453 6,014 Public assistance 2,455 2,279 2,680 2,438 2,798 2,864 2,784 925 2,399 2,366 Education 1,567 1,515 1,853 1,460 1,759 1,891 1,922 2,304 2,037 2,545 Recreation and cultural services 3,189 2,598 1,110 1,370 1,246 2,183 3,931 3,822 3,714 3,952 Operating Grants and Contributions General Government 1,604 3,616 2,404 1,442 1,454 446 751 377 1,120 628 Public Protection 3 0,141 33,188 33,888 39,054 41,429 40,924 3 8,080 4 0,034 3 7,244 45,646 Public ways and facilities 8,927 8,364 9,099 11,459 8,712 8,975 10,406 10,679 9,446 11,813 Health and sanitation 3 6,907 38,518 37,474 39,611 44,135 46,267 4 9,149 5 7,784 4 8,567 44,741 Public assistance 6 3,543 67,088 67,559 73,863 75,391 79,190 8 3,175 81,525 86,479 85,505 Education 541 420 250 250 299 262 260 259 289 175 Recreation and cultural services 53 - 1,029 158 167 185 178 177 357 18 Capital Grants and Contributions General government - - 311 - 291 264 384 449 279 843 Public protection 150 1,054 935 208 1,799 319 82 - - - Public ways and facilities 2,959 6,028 4,091 6,253 6,008 15,130 5,966 10,259 7,411 12,930 Health and sanitation - - 177 - - 3 4 - - - - Public assistance - - 80 - - - - - - - Recreation and cultural services - 682 403 805 171 979 423 173 81 247 Total Governmental Activities 197,344 211,007 216,058 231,001 239,204 2 47,755 249,558 252,977 253,239 255,716 Source: Statement of Activities (continued) 180 County of San Luis Obispo Changes in Net Assets Last Ten Fiscal Years (in thousands) (UNAUDITED) Fiscal Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Business-type Activities Fees, Fines, Charges for Services Airport 2,913 4,846 4,206 3,864 3,919 4,585 3,734 3,541 3,888 3,719 Golf 2,823 2,928 2,719 2,895 3,016 3,058 2,879 2,653 2,590 2,690 Hospital 1 5,824 6,993 - - - - - - - - State Water Contract 5,845 5,084 5,506 5,098 4,458 5,309 5,767 6,513 6,453 6,609 Nacimiento Water Contract 44 36 31 5,509 6,893 3,018 284 355 7,968 13,893 Lopez Dam 4,106 3,006 4,383 4,717 5,987 6,453 5,494 6,164 6,359 6,440 General Flood Control Zone 492 557 550 562 575 600 637 661 1,870 1,252 Transit 56 74 74 57 52 5 5 63 - - - County Service Areas 2,240 3,812 2,323 2,604 2,860 2,869 2,658 2,784 3,090 3,186 Operating Grants and Contributions Airport 175 391 1 1 279 281 820 144 182 180 372 Golf - - 75 - - - - - - 5 Hospital - - - - - - - - - - State Water Contract 8 8 8 8 8 8 8 8 10 10 Nacimiento Water Contract 16 17 20 23 25 2 8 31 31 30 28 Lopez Dam 112 10 1 4 - - - 15 15 15 15 Transit 633 887 950 1,190 - - - 1,172 1,097 - General Flood Control Zone - - - 543 624 962 - - - County Service Areas 3 3 3 222 155 2 4 4 3 3 Los Osos Wastewater 35 Capital Grants and Contributions Airport 2,493 1,002 3,188 3,792 9,509 19,201 6,750 4,310 2,074 138 County Service Areas - 124 - - - 165 275 339 288 64 Los Osos Wastewater 9,357 9,127 Total Business-type Activities Revenues 3 7,783 29,778 24,061 30,820 38,281 46,795 2 9,705 28,732 45,272 47,586 Total Primary Government Revenues $ 235,127 $ 240,785 $ 240,119 $ 261,821 $ 277,485 $ 294,550 $ 279,263 $ 281,709 $ 298,511 $ 303,302 Net (Expense)/Revenues Governmental Activities $ (99,398) $ (102,407) $ (95,175) $ (98,741) $ (113,149) $ (141,321) $ (141,874) $ (133,577) $ (131,588) $ ( 129,052) Business-Type Activities (8,455) (9,549) (138) 8,953 14,941 (2,371) (5,230) (7,220) 3,887 2,555 Total Primary Government net expense $ (107,853) $ (111,956) $ (95,313) $ (89,788) $ (98,208) $ (143,692) $ (147,104) $ (140,797) $ (127,701) $ ( 126,497) General Revenue and Other Changes in Net Assets Governmental Activities Property Taxes $ 70,022 $ 75,559 $ 98,025 $ 114,076 $ 128,867 $ 133,292 $ 141,195 $ 132,723 $ 139,214 $ 140,288 Other Taxes 1 2,739 15,422 14,333 15,823 15,798 15,881 1 4,389 13,358 14,393 16,330 Interest and investment income 5,026 3,221 4,420 7,176 11,025 9,790 4,646 1,690 986 1,202 Unrestricted Grants 1 9,839 15,681 4,609 9,559 4,079 4,019 4,890 3,972 3,520 3,978 Other revenues - 83 331 - - - - - 172 - Transfers (7,718) (10,214) 1,494 (1,884) (319) ( 964) 845 (565) 150 8,048 Total Governmental Actives 9 9,908 99,752 123,212 144,750 159,450 1 62,018 165,965 151,178 158,435 169,846 Business-type Activities Property Taxes 2,823 3,073 1,765 2,051 3,359 3,402 3,678 3,654 3,841 3,799 Other Taxes 4 - - - - - 27 28 28 28 Interest and investment income 872 318 406 1,085 1,897 7,290 6,190 1,900 965 755 Other revenues 16 151 182 8 6 304 292 572 363 447 31 Transfers 7,718 10,214 (1,494) 1,884 319 964 (845) 565 (150) (8,048) Total Business-type Activities 1 1,433 13,756 859 5,106 5,879 11,948 9,622 6,510 5,131 (3,435) Total Primary Government $ 111,341 $ 113,508 $ 124,071 $ 149,856 $ 165,329 $ 173,966 $ 175,587 $ 157,688 $ 163,566 $ 166,411 Change in Net Assets Governmental Activities $ 510 $ (2,655) $ 28,037 $ 46,009 $ 46,301 $ 20,697 $ 24,091 $ 17,601 $ 26,847 $ 40,794 Business-Type Activities 2,978 4,207 721 14,059 20,820 9,577 4,392 (710) 9,018 (880) Total Primary Government $ 3 ,488 $ 1,552 $ 28,758 $ 60,068 $ 67,121 $ 3 0,274 $ 28,483 $ 16,891 $ 35,865 $ 39,914 181 County of San Luis Obispo Fund Balances, Governmental Funds Last Ten Fiscal Years (in thousands) (UNAUDITED) Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 General Fund Reserved $ 21,772 $ 19,194 $ 18,255 $ 5,246 $ 2,538 $ 31,853 $ 40,561 $ 49,543 Unreserved 70,147 59,105 76,200 99,343 102,030 64,886 63,626 66,559 Total General Fund $ 91,919 $ 78,299 $ 94,455 $ 104,589 $ 1 04,568 $ 96,739 $ 104,187 $ 1 16,102 All Other Governmental Funds Reserved $ 64,454 $ 73,309 $ 41,727 $ 9,039 $ 30,278 $ 50,422 $ 42,697 $ 39,243 Unreserved, reported in: Special Revenue Funds 38,779 32,263 42,828 80,293 70,630 60,384 51,703 55,513 Capital Project Funds 17,117 13,793 19,877 27,245 31,638 21,233 23,248 20,859 Debt Service Funds - - - - - - - - Total all other Governmental Funds $ 1 20,350 $ 119,365 $ 1 04,432 $ 1 16,577 $ 1 32,546 $ 1 32,039 $ 1 17,648 $ 1 15,615 2011 2012 General Fund Nonspendable $ 3,333 $ 3,176 Restricted 7,113 6,682 Committed 62,380 68,880 Assigned - - Unassigned 87,741 102,291 Total General Fund $ 1 60,567 $ 181,029 All Other Governmental Funds Nonspendable $ 352 $ 390 Restricted 22,065 19,788 Committed 55,446 61,144 Assigned 94 - Unassigned - - Total all other Governmental Funds $ 77,957 $ 81,322 Note: In 2011, the County began implementation of GASB Statement 54, which changed the classifications of the fund balance. Fund balance information in years prior to 2011 is presented according to the previous guidelines. Source: Balance Sheet - Governmental Funds 182 County of San Luis Obispo Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (in thousands) (UNAUDITED) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Revenues Taxes $ 8 3,404 $ 9 0,553 $ 112,565 $ 128,586 $ 141,934 $ 144,596 $ 154,155 $ 153,910 $ 155,419 $ 1 60,920 Licenses, permits, and franchises 8 ,700 8 ,674 13,637 10,744 9 ,404 9,117 8,006 6,906 7,413 7,863 Fines, forfeits, and penalties 5 ,988 7 ,901 6 ,105 3,544 6,262 6,224 6,973 6,078 7,993 6,750 Revenues from use of money and property 4 ,839 2 ,973 4 ,063 6,637 9,789 8,452 4,122 1,644 1,242 2,273 Aid from governmental agencies 1 64,625 1 72,425 1 60,452 1 82,750 1 84,142 1 96,994 1 88,794 1 99,771 1 94,625 2 06,372 Charges for current services 4 8,957 5 4,300 54,769 55,547 55,083 50,592 54,208 47,065 56,486 45,538 Other revenues 4 ,319 4 ,608 4 ,712 7,146 6,750 3,122 6,856 5,358 6,531 8,451 Total revenues 320,832 341,434 356,303 394,954 413,364 419,097 423,114 420,732 429,709 438,167 Expenditures Current: General government 3 9,896 4 9,491 49,074 53,691 55,375 51,733 51,461 45,162 50,321 45,850 Public protection 9 5,815 1 01,203 1 07,355 116,791 126,043 134,058 140,746 136,857 135,636 138,579 Public ways and facilities 2 0,741 2 9,718 24,096 25,749 38,981 44,814 42,139 31,093 37,261 40,338 Health and sanitation 4 7,822 4 9,542 52,894 55,464 57,590 66,180 67,267 68,442 68,472 67,830 Public assistance 7 7,449 8 1,616 82,673 87,020 87,182 92,682 98,170 96,248 100,202 97,185 Education 6 ,972 7 ,606 7 ,802 7,891 8,755 9,698 11,016 13,020 10,191 9,973 Recreational and cultural services 4 ,853 5 ,645 5 ,092 4,159 8,005 9,911 8,654 8,313 7,187 6,998 Debt service: Principal payments 1 ,305 1 ,815 1 ,895 4,970 6,560 2,601 3,264 3,790 4,595 4,435 Interest and fiscal charges 2 ,959 5 ,105 6 ,226 5,774 6,401 5,593 5,181 5,954 6,464 6,289 Debt issuance costs - 2,173 - - - - - 550 - - Capital outlay 1 5,147 1 4,490 18,673 9 ,551 10,241 13,333 2 ,849 1,965 3,399 5,540 Total expenditures 312,959 348,404 355,780 371,060 405,133 430,603 430,747 411,394 423,728 423,017 Excess (deficiency) of revenues over expenditures 7,873 (6,970) 523 23,894 8 ,231 (11,506) (7,633) 9 ,338 5,981 15,150 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Other Financing Sources Proceeds of long term debt 2 1,982 1 37,194 - - 5,090 7,325 - - - - Payment to San Luis Pension Trust - (135,000) - - - - - - - - Refunding bonds issued - - - - - - - 42,565 - - Payment to refunded escrow agent - - - - - - - (42,000) - - Discount on certificates of participation issued - - - - - (119) - - - - Transfers in 3 6,960 2 9,420 19,792 31,910 42,996 42,324 43,523 33,044 34,421 35,815 Transfers out ( 46,454) ( 39,248) ( 19,093) ( 33,525) ( 42,817) ( 42,751) ( 42,833) ( 33,065) ( 33,595) ( 27,138) Total other financing sources and uses 1 2,488 ( 7,634) 6 99 (1,615) 5 ,269 6,779 6 90 5 44 8 26 8,677 Net change in fund balances $ 2 0,361 $ ( 14,604) $ 1,222 $ 22,279 $ 13,500 $ ( 4,727) $ (6,943) $ 9,882 $ 6,807 $ 23,827 Debt Service as a percentage of non-capital 1.47% 2.19% 2.55% 3.12% 3.50% 2.13% 2.13% 2.51% 2.80% 2.73% expenditures Source: Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 183 County of San Luis Obispo Assessed Valuation* Last Ten Fiscal Years (in thousands) (UNAUDITED) Percentage Increase Fiscal Net Assessed from Prior Year Secured Unsecured Exemptions Valuations Year Tax Rate 2003 2 5,044,192 874,639 (632,857) 25,285,975 8.7% 1.0023 2004 2 7,134,968 859,295 (658,326) 27,335,938 8.1% 1.0023 2005 2 9,677,821 836,182 (627,898) 29,886,105 9.3% 1.0023 2006 3 2,984,334 933,185 (701,193) 33,216,326 11.1% 1.0022 2007 3 6,890,449 1,000,873 (781,070) 37,110,252 11.7% 1.0021 2008 4 0,252,987 1,035,443 (835,356) 40,453,074 9.0% 1.0020 2009 4 2,348,044 1,132,435 (891,949) 42,588,530 5.3% 1.0020 2010 4 2,185,284 1,148,662 (914,309) 42,419,637 -0.4% 1.0020 2011 4 1,846,720 1,118,384 (927,194) 42,037,910 -0.9% 1.0029 2012 4 1,223,923 1,081,597 (965,089) 41,340,431 -1.7% 1.0030 Source: County Property Tax Information Booklet 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -2.0% -4.0% tnecreP Total Net Assessed Value Increase from Prior Year Percentage Increase from Prior Year for Fiscal Year Ended June 30 *Due to Article XIIIA,added to the California Constitution by Proposition 13 in 1978, the County does not track the estimated actual value of all county properties. Proposition 13 fixed the base for valuation of real property at the full cash value which appeared on the Assessor's 1975‐76 assessment roll. Thereafter, full cash value can be increased to reflect: (1) annual inflation up to two percent; (2) current market value at time of ownership change; and (3) market value for new construction. As a result, similar properties can have substantially different assessed values based on the date of purchase. 184 County of San Luis Obispo Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (per $100 of assessed values) (UNAUDITED) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 County Direct Rates General 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 State Water Project 0 .00230 0 .00230 0 .00223 0 .00222 0 .00221 0 .00220 0 .00220 0 .00220 0 .00290 0.00300 Total Direct Rate 1.00230 1.00230 1.00223 1.00222 1.00221 1.00220 1.00220 1.00220 1.00290 1.00300 Cities, Schools, and Special Districts Combined Rates Arroyo Grande 0 .0329 0.0403 0.0593 0.0423 0.0392 0.0422 0.0464 0.0464 0.0470 0.0477 Atascadero 0 .0975 0.0975 0.0975 0.0975 0.0975 0.0975 0.0975 0.0975 0.0975 0.0442 Grover Beach 0 .0329 0.0273 0.0463 0.0313 0.0295 0.0333 0.0382 0.0382 0.0389 0.0396 Morro Bay 0 .0081 0.0082 0.0081 0.0231 0.0231 0.0492 0.0492 0.0492 0.0499 0.0501 Paso Robles 0 .1775 0.1775 0.1775 0.1082 0.0952 0.0997 0.0948 0.0988 0.0389 0.0816 Pismo Beach 0 .0329 0.0273 0.0463 0.0335 0.0295 0.0333 0.0382 0.0382 0.0389 0.0396 San Luis Obispo - - - - - - - - - - Note: Rates shown represent the most common rates encountered for the tax rate areas within these cities. Source: County Property Tax Information Booklet 185 County of San Luis Obispo Principal Property Taxpayers Current Year and Ten Years Ago (in Thousands) (UNAUDITED) Fiscal Year 2012 Fiscal Year 2003 Percentage of Percentage of Assessed Total County Assessed Total County Taxpayer Industry Value Rank Assessed Value Value Rank Assessed Value Pacific Gas & Electric Co. Utility 2,543,033 1 6.15% $ 2 ,163,485 1 7.88% TOSCO Corp Petroleum & Gas 138,970 2 0.34% 176,951 2 0.64% Plains Exploration & Prod Co Petroleum & Gas 91,305 3 0.22% - - Beringer Wine Estates Company Winery 89,882 4 0.22% 58,283 5 0.21% Pacfic Bell Telephone Communications 81,038 5 0.20% - - CSHV Mustang Village LLC Apartments 75,358 6 0.18% - - Southern California Gas Co Utility 63,738 7 0.15% 48,942 6 0.18% Martin Hotel Mgmt Co LLC Hotel 61,074 8 0.15% - - Sierra Vista Hospital Hospital 56,615 9 0.14% 45,450 7 0.17% Twin Cities Com Hospital Hospital 53,788 10 0.13% - - Duke Energy Morro Bay, LLC Utility - - - 110,431 3 0.40% SBC California Utility - - - 92,297 4 0.34% Charter Communications Communications - - - 42,564 8 0.16% ESJ Centers LLC ETAL Real Estate - - - 37,070 9 0.14% Vons Companies Grocery Store - - - 32,432 10 0.12% Total $ 3,254,802 7.89% $ 2,807,905 10.24% Total County Assessed Value $ 41,340,431 $ 25,285,975 Source: County Property Tax System 186 County of San Luis Obispo Property Tax Levies and Collections Last Ten Fiscal Years (in thousands) (UNAUDITED) Collected within the Total Levy Fiscal Year of the Levy Fiscal for the Collected % of Collections in Delinquent % of Year Fiscal Year Amount Original Levy Subsequent Years* Amount Levy Delinquent 2003 243,985 240,502 98.57% N/A 3,483 1.43% 2004 265,009 261,422 98.65% N/A 3,587 1.35% 2005 290,692 286,937 98.71% N/A 3,755 1.29% 2006 324,547 319,214 98.36% N/A 5,333 1.64% 2007 362,429 354,117 97.71% N/A 8,312 2.29% 2008 394,779 380,943 96.50% N/A 13,836 3.50% 2009 416,262 400,120 96.12% N/A 16,142 3.88% 2010 412,698 398,951 96.67% N/A 13,747 3.33% 2011 408,623 397,830 97.36% N/A 10,793 2.64% 2012 403,472 396,238 98.21% N/A 7,234 1.79% Note: Amounts do not include Tax collections for Bonds or Special Assessments Source: County Property Tax Booklet 187 County of San Luis Obispo Special Assessment Billings and Collections (UNAUDITED) Special Special Year ended Assessment Assessment June 30, Billings Collected 2011 - 3,177 2012 3,664 3,836 Note: The billings and collections shown are for those Special Assessment Bonds for which the County has established redemption funds for the purpose of facilitating bond payment in the case of delinquent accounts. 2011 was the first year of special assessment billings and collections Source: County Property Tax System 188 County of San Luis Obispo Ratios of Total Debt Outstanding Last Ten Fiscal Years (in thousands) (UNAUDITED) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Governmental Activities Certificates of Participation $27,601 $26,487 $25,323 $23,107 $27,125 $33,319 $31,920 $30,420 $28,820 $27,895 Less deferred amounts: For issuance discounts: - - - - - (119) (115) (111) (107) (103) Pension Obligation Bonds - 137,194 137,194 135,199 130,504 129,034 127,169 125,444 122,689 119,429 Total bonds and notes payable $27,601 $163,681 $162,517 $158,306 $157,629 $162,234 $158,974 $155,753 $151,402 $147,221 Less resources restricted for principal repayment (2,464) (5,241) (6,888) (10,018) (13,505) (15,297) (10,929) (10,665) (9,752) (9,666) Net total bonds and notes payable $25,137 $158,440 $155,629 $148,288 $144,124 $146,937 $148,045 $145,088 $141,650 $137,555 Business Type Certificates of Participation 23,539 23,068 22,577 22,069 21,535 20,985 20,848 20,657 19,897 19,060 Pension Obligation Bonds State Note 3,003 3,211 3,077 15,126 26,144 31,824 32,283 32,418 31,024 35,884 Revenue Bonds 705 71 66 61 56 196,461 196,456 196,450 196,444 193,483 Add deferred amounts: For issuance premiums: - - - - - 6,371 6,371 6,371 6,371 6,158 General Obligation Bonds 12,980 12,750 12,510 12,260 12,000 11,730 11,450 11,155 10,760 10,245 Add deferred amounts: For issuance premiums: - - - - - - - - 1,128 1,072 Bond Anticipation Notes - - - - - - - - 8,677 - Assessment Bonds - - - - - - - - - 15,364 Total bonds and notes payable 40,227 39,100 38,230 49,516 59,735 267,371 267,408 267,051 274,301 281,266 Net total bonds and notes payable $40,227 $39,100 $38,230 $49,516 $59,735 $267,371 $267,408 $267,051 $274,301 $281,266 Total Outstanding Debt less restricted resources $65,364 $197,540 $193,859 $197,804 $203,859 $414,308 $415,453 $412,139 $415,951 $418,821 Percentage of Personal Income 0.88% 2.48% 2.30% N/A N/A N/A N/A N/A N/A N/A Percentage of Assessed Value of Taxable Property* 0.28% 0.74% 0.66% 0.60% 0.55% 1.02% 0.98% 0.97% 0.99% 1.01% Net outstanding debt Per Capita $264.64 $785.36 $769.95 $789.47 $ 769.57 $ 1,538.25 $ 1,536.27 $ 1 ,508.39 $ 1 ,535.07 $ 1,542.72 Note: 1. See the Demographic Statistics Schedule for detail information on personal income and population. 2. Source - Notes to the Financial Statements, Note 10 * Due to Article XIII-A, added to the California Consititution by Proposition 13 in 1978, the County does not track the estimated actual value of all county properties; therefore, the ratio of net outstanding debt to the estimated actual value of taxable property is unable to be determined; however, the ratio of net outstanding debt to the assessed value of taxable property is determinable and presented in the table. 189 County of San Luis Obispo Legal Debt Margin Information Last Ten Fiscal Years (in thousands) (UNAUDITED) Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Assessed Value of Property (a) (b) $ 25,285,975 $ 27,335,938 $ 29,886,105 $ 33,216,326 $ 37,110,252 $ 40,453,074 $ 42,588,529 $ 42,419,637 $ 42,037,909 $ 41,340,430 Debt Limit, 1.25% of Assessed Value 316,075 341,699 373,576 415,204 463,878 505,663 532,357 530,245 525,474 516,755 Amount of Debt Applicable to Limit General Obligation Bonds (c) 12,980 12,750 12,510 12,260 12,000 11,730 11,450 11,155 11,888 11,317 Less: Resources Restricted to Paying Principal - - - - - - - - - - Total Debt Applicable 1 2,980 12,750 12,510 12,260 12,000 11,730 11,450 11,155 11,888 11,317 Legal Debt Margin $ 3 03,095 $ 328,949 $ 361,066 $ 402,944 $ 451,878 $ 493,933 $ 520,907 $ 519,090 $ 513,586 $ 505,438 Total Debt Applicable as a Percentage of the Debt Limit 4.11% 3.73% 3.35% 2.95% 2.59% 2.32% 2.15% 2.10% 2.26% 2.19% Source: (a) Property Assessed Value BOE report (years 2000-2008) (b) Countywide Assessed Values & Exemptions 2009 and ongoing years (c) Footnote 10 Bonded Indebtedness and Long-Term Debt Assessed value calculation (in thousands) Locally Assessed-Secured San Luis Obispo Countywide $38,377,562 Pipeline Right-of-Way (Unitary) 5 ,906 Aircraft 5 5,648 Total Local Assessed 38,439,116 State Assessed Local Utility 69,733 Unitary 2,831,582 Total State Assessed 2,901,315 Combined Assessed Values Sub-Total Combined Assessed Values 41,284,783 Aircraft 55,648 Total Combined Assessed Values $41,340,431 190 County of San Luis Obispo Demographic and Economic Statistics Last Ten Fiscal Years (UNAUDITED) Personal Income Unemployment Calendar Population (in thousands) Per Capita Income Median Age School Enrollment Rate Year (1,a,c) (2,a,d) (2,a,d) (4,c) (3,b,e) (2,a) 2003 256,300 7,693,662* 30,248* 39.10 45,578 3.5 2004 258,200 8,334,258 * 32,524* 38.20 45,539 3.4 2005 260,727 8,727,001* 33,855* 39.40 45,268 4.2 2006 263,242 9,488,605 36,544 39.20 44,537 4.1 2007 264,900 9,977,057 38,144 37.30 44,610 4.6 2008 269,337 10,709,753 40,204 37.30 44,441 5.7 2009 270,429 10,237,494 38,179 39.30 44,874 9.0 2010 273,231 10,532,649 38,994 39.40 44,351 10.0 2011 270,966 N/A N/A 40.30 44,104 9.9 2012 271,483 N/A N/A N/A 43,022 8.5 Sources: 1. State Department of Finance 2. Employment Development Department, Research Division, Los Angeles 3. San Luis Obispo County Schools & Cuesta College 4. U.S. Census Bureau Notes: N/A = not available * = restated a. Data for Calendar Years b. Data includes kindergarten through grade 12 and Cuesta College c. These figures are projections based on the 2000 census d. Prior years were revised per the US Department of Commerce e. Data for School Year ending in the stated calendar year. 191 County of San Luis Obispo Principal Employers Current Year and Ten Years Ago (UNAUDITED) 2012 2003 Number of Percentage of Total Number of Percentage of Total Employer Employees Rank County Employment Employees Rank County Employment County of San Luis Obispo 2,601 1 2.01% 2,630 1 2.02% Cal Poly State University, SLO 2,426 2 1.87% 2,570 2 1.97% Atascadero State Hospital 2,200 3 1.70% 2,006 3 1.54% California Men's Colony 1,768 4 1.36% 1,660 4 1.27% Pacific Gas and Electric Company 1,719 5 1.33% 1,540 5 1.18% Tenet Healthcare 1,409 6 1.09% 0 - Lucia Mar Unified School District 1,100 7 0.85% 1,015 7 0.78% King Ventures 850 8 0.66% Paso Robles Public Schools 831 9 0.64% 918 8 0.70% San Luis Coastal Unified School District 828 10 0.64% 820 10 0.63% Cal Poly Foundation - - - 1,261 6 0.97% Sierra Vista Regional Medical Center - - - 850 9 0.65% Total Employment Labor Force 129,700 130,500 Source: 1. SLO Chamber of Commerence 2. State of California Employment Development Department 192 County of San Luis Obispo Full Time Equivalent County Government Employees by Function Last Ten Fiscal Years (UNAUDITED) Full Time Equivalent Employees per Fiscal Year Function/Program 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 General Government 465.25 481.25 480.25 479.75 482.00 495.50 485.25 451.00 442.75 437.50 Public Protection 857.00 862.50 850.50 856.00 885.25 891.75 879.50 799.75 783.25 808.25 Public Ways and Facilities 191.50 194.50 184.00 185.00 185.25 191.25 199.25 202.25 194.25 193.75 Health and Sanitation 531.00 507.25 419.25 413.25 394.50 423.75 421.00 424.75 424.00 430.50 Public Assistance 464.50 464.50 439.00 438.75 443.75 453.25 437.25 426.75 424.75 425.75 Education 73.00 74.00 73.00 74.00 84.00 87.50 87.50 78.50 78.50 77.50 Recreation and Cultural Services 53.00 55.50 56.50 55.00 59.00 58.00 58.00 56.00 56.00 52.00 Total 2,635.25 2,639.50 2,502.50 2,501.75 2,533.75 2,601.00 2,567.75 2,439.00 2,403.50 2,425.25 Source: County Budget Report Notes: Position allocation figures are calculated at the time of budget preparation for the following year. Figures include limited-term but do not include part-time or contract positions. 193 County of San Luis Obispo Operating Indicators by Function Last Ten Fiscal Years (UNAUDITED) Fiscal Year Function / Department 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Recreation and Cultural Services Parks Day Use Passes 71,874 64,679 53,906 62,951 66,899 65,895 47,156 47,011 51,519 57,135 Annual Passes 1,822 1,478 1,436 1,496 1,416 1,598 3,547 2,220 1,992 2,357 Daily Boat Launches 28,951 26,552 21,085 22,481 19,737 14,085 16,864 15,802 15,602 16,133 Annual Boat Passes 960 842 795 804 793 847 752 627 618 633 Public Protection Planning and Building Total Permits Issued 3,618 3,856 3,747 3,548 2,897 2,634 2,261 2,067 2,073 2,086 Number of New Affordable Housing 0 141 267 184 63 218 105 82 80 39 Sheriff Jail bookings (a) 14,182 15,016 14,240 14,927 18,718 18,321 14,158 13,025 12,682 12,966 Average daily population (a) 433 460 506 534 553 567 540 551 558 679 Health and Sanitation Mental Health Total number of patient days in State Hospitals 410 571 986 522 447 603 365 364 n/a n/a Day Treatment Days provided to youth in out-of-county group home facilities n/a n/a n/a n/a n/a 2,067 2,692 2,212 2,937 1,501 Public Health Number of Children enrolled in the Healthy Families Program 3,833 3,824 4,331 4,436 4,752 5,098 5,450 5,709 n/a n/a Percentage of the State allocated caseload enrolled in the Women, Infants & Children(WIC) Program n/a n/a n/a n/a n/a 100 98 97 100 99 Percentage of live born infants whose mothers received prenatal care in the first trimester. n/a n/a n/a n/a 82.7 76.0 7 8.0 78.0 78.5 81.7 Public Assistance Social Services Rate per 1,000 children entering out-of- home care for the first time (State Rate is 2.8) 3.8 3.3 2.9 3.8 2.9 n/a n/a n/a n/a n/a Percentage of child abuse/neglect referrals where a response is required within 10 days that were timely n/a n/a n/a n/a 77.1 69.8 88.7 94.1 96.8 97.3 Education Library Annual number of items circulated per capita 7.2 7.1 5.8 6.0 7.0 7.5 9.2 9.4 10.0 10.1 Annual Expenditure per capita for total Library budget $ 2 4.30 $ 24.03 $ 27.37 $ 28.34 $ 31.07 $ 33.75 $ 38.43 $ 35.35 $ 35.35 $ 3 5.25 Public Ways and Facilities Roads Pavement Condition Rating for all county roads (70 = "good") 64 64 58 70 69 65 62 65 60 58 Airport Airport Takeoffs and Landings (a) 119,613 115,066 101,849 n/a 92,096 96,172 95,419 88,161 80,556 80,158 Passenger Enplanements 152,607 154,726 173,370 182,177 177,176 182,285 132,748 125,152 139,909 134,244 Note: (a) Data collected per calendar year Source: County Budget Performance Indicators 194 County of San Luis Obispo Capital Asset Statistics by Function Last Ten Fiscal Years (UNAUDITED) Fiscal Year Function/Program 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Recreation and Cultural Services County golf courses 3 3 3 3 3 3 3 3 3 3 Park acreage 11,946 11,946 12,026 12,056 12,056 13,402 13,422 13,422 13,572 13,424 Public Protection Correction facility capacities (a) 689 689 693 693 684 693 693 693 689 637 Public Ways and Facilities Miles of county roads 1,312 1,315 1,317 1,321 1,321 1,334 1,336 1,329 1,332 1,333 Airport Number of runways 2 2 2 2 2 2 2 2 2 2 Note: Majority of County assets are in buildings and equipment, which are under the Functional area of General Government (a) Amount is all holdings actual totals, including Main Jail, Women's Jail, West Housing, West Dorm, Honor Farm, and Weekender Barracks Source: County management 195