Annual Comprehensive Financial Report, 2013-14

County of San Luis Obispo, California Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2014 Prepared under the direction of James P. Erb, CPA, Auditor-Controller-Treasurer-Tax Collector COUNTY OF SAN LUIS OBISPO COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2014 TABLE OF CONTENTS SECTION PAGE INTRODUCTORY SECTION Letter of Transmittal 3 Certificate of Achievement for Excellence in Financial Reporting 12 Board of Supervisors and Principal County Officials 13 Organizational Chart 14 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 Position .................................................................................................... 41 Statement of Activities ........................................................................................................ 42 Fund Financial Statements: Governmental Funds: Balance Sheet ................................................................................................................ 47 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position .................................................................. 48 Statement of Revenues, Expenditures, and Changes in Fund Balances ............................... 49 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ................................... 50 Proprietary Funds: Statement of Net Position ............................................................................................... 51 Statement of Revenues, Expenses, and Changes in Net Position ........................................ 52 Statement of Cash Flows ................................................................................................. 53 Fiduciary Funds: Statement of Fiduciary Net Position ................................................................................. 54 Statement of Changes in Net Position – Investment Trust Funds ....................................... 55 Notes to the Basic Financial Statements ............................................................. 59 i TABLE OF CONTENTS (continued) SECTION PAGE Required Supplementary Information Description ......................................................................................................................... 97 Schedule of Funding Progress – Defined Benefit Plan Schedule of Funding Progress ........................................................................................... 98 Schedule of Funding Progress – OPEB Plan ........................................................................... 98 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget to Actual Comparison – General Fund ..................................................................... 99 Notes to Required Supplementary Information ..................................................................... 101 Other Supplementary Information Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Nonmajor Governmental Fund Descriptions ...................................................................... 107 Combining Balance Sheet ................................................................................................ 109 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .............. 110 Debt Service Funds: Combining Balance Sheet ........................................................................................ 111 Combining Statement of Revenues Expenditures, and Changes in Fund Balances ...................................................................................................... 112 Special Revenue Funds: Combining Balance Sheet ........................................................................................ 113 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...................................................................................................... 116 Special Revenue Funds – Special Districts: Combining Balance Sheet ........................................................................................ 119 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ...................................................................................................... 120 Major and Nonmajor Budgetary Comparison Schedules: Capital Projects Fund ...................................................................................................... 123 Public Facilities Corporation ............................................................................................. 124 Pension Obligation Bonds ................................................................................................ 125 Public Financing Authority ............................................................................................... 126 Community Development Special Revenue Fund ............................................................... 127 County Medical Services Program (CMSP) Special Revenue Fund ....................................... 128 Emergency Medical Services Special Revenue Fund ........................................................... 129 Driving Under the Influence Programs Special Revenue Fund ............................................ 130 Fish and Game Special Revenue Fund .............................................................................. 131 Road Impact Fees Special Revenue Fund ......................................................................... 132 Library Special Revenue Fund .......................................................................................... 133 Parks Special Revenue Fund ............................................................................................ 134 Public Facilities Fees Special Revenue Fund ...................................................................... 135 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): Roads Special Revenue Fund .......................................................................................... 136 Wildlife Grazing Special Revenue Fund ............................................................................ 137 Flood Control Districts Special Revenue Funds ................................................................. 138 Lighting Control Districts Special Revenue Funds .............................................................. 139 County Service Area Districts Special Revenue Funds ....................................................... 140 Nonmajor Enterprise Funds: Nonmajor Enterprise Fund Descriptions ........................................................................... 143 Combining Statement of Net Position .............................................................................. 144 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .............. 145 Combining Statement of Cash Flows ............................................................................... 146 Internal Service Funds: Internal Service Fund Descriptions .................................................................................. 151 Combining Statement of Net Position .............................................................................. 153 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .............. 154 Combining Statement of Cash Flows ............................................................................... 155 Internal Service Funds – Insurance Funds Combining Statement of Net Position ...................................................................... 156 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ............................................................................................................... 157 Combining Statement of Cash Flows ........................................................................... 158 Fiduciary Funds: Fiduciary Fund Descriptions ............................................................................................ 161 Agency Funds: Combining Statement of Fiduciary Net Position ........................................................ 162 Combining Statement of Changes in Assets and Liabilities ........................................ 163 Investment Trust Funds: Combining Statement of Fiduciary Net Position ........................................................ 164 Combining Statement of Changes in Fiduciary Net Position ....................................... 165 General Fund – Detailed Budgetary Comparison Schedules: Detail Schedule of Expenditures – Budget to Actual Comparison – General Fund ................ 169 iii TABLE OF CONTENTS (continued) SECTION PAGE STATISTICAL SECTION (unaudited) Statistical Section Table of Contents ......................................................................................... 179 Net Position by Component ..................................................................................................... 181 Changes in Net Position .......................................................................................................... 182 Fund Balances, Governmental Funds ........................................................................................ 184 Changes in Fund Balances, Governmental Funds ....................................................................... 185 Estimated 30 Year Pension Liability Funding ............................................................................. 187 Assessed Valuation ................................................................................................................. 188 Direct and Overlapping Property Tax Rates ............................................................................... 189 Principal Property Taxpayers ................................................................................................... 190 Property Tax Levies and Collections ......................................................................................... 191 Special Assessments Billings and Collections ............................................................................. 192 Ratios of Total Debt Outstanding ............................................................................................. 193 Ratios of General Obligation Debt Outstanding ......................................................................... 194 Legal Debt Margin Information ................................................................................................ 195 Demographic and Economic Statistics ...................................................................................... 196 Principal Employers ................................................................................................................. 197 Full Time Equivalent County Government Employees by Function .............................................. 198 Operating Indicators by Function ............................................................................................. 199 Capital Assets Statistics by Function ......................................................................................... 200 iv ________________________________________________________________ INTRODUCTORY SECTION ________________________________________________________________ 1 2 COUNTY OF SAN LUIS OBISPO JAMES P. ERB, CPA Auditor-Controller AUDITOR CONTROLLER TREASURER TAX COLLECTOR Treasurer-Tax Collector 1055 MONTEREY ST, RM. D290 James W. Hamilton, CPA SAN LUIS OBISPO, CA 93408 Assistant (805) 781-5831 FAX (805) 781-5362 http://sloacttc.com December 16, 2014 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 Report (CAFR) of the County of San Luis Obispo (County) for the fiscal year ended June 30, 2014, 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 audited in accordance with generally accepted auditing standards (GAAS) by a firm of licensed certified public accountants. The County prepares its financial statements in accordance with generally accepted accounting principles (GAAP). The requirements for financial reporting in accordance with GAAP are established by the Governmental Accounting Standards Board (GASB). 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 report. 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 financial statements will be free from material misstatement. As management, we assert 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, 2014, are free of any material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the 3 accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the County of San Luis Obispo's financial statements for the fiscal year ended June 30, 2014, are fairly presented and in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the County of San Luis Obispo was part of a broader, federally mandated "Single Audit" designed to meet the requirements imposed by federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial 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 reports are available in the County of San Luis Obispo's separately issued Single Audit Report. 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 and the two should be read in conjunction with each other. 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 3,616 square miles and serves a population of 276,443 residents. Approximately 44% of the population resides in the unincorporated area. The seven incorporated cities in the county are Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach and San Luis Obispo. A five-member County Board of Supervisors 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 supervisors 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 five elected department heads responsible for the offices of the County Clerk-Recorder, Assessor, Auditor- Controller- Treasurer- Tax Collector- Public Administrator, District Attorney, and Sheriff-Coroner. 4 The County of San Luis Obispo provides a full range of services, including public safety and fire 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. 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 sections 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. 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 start of the next fiscal year. The proposed budget is prepared by fund, function (e.g., public safety), and department or division (e.g., Sheriff). During the year, department heads may make transfers of appropriations within a division with the approval of the County Administrator and Auditor-Controller-Treasurer-Tax Collector-Public Administrator. Transfers of appropriations between departments or increases in the budget from new revenue sources, reserves and/or contingencies require Board of Supervisors' approval. Monthly estimates for both revenues and expenditures are used to assist departments with budgetary control, and quarterly reports 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 part 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 Financial Condition The information presented in the financial 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. Unemployment Rates* Employment: 14.0% • Unemployment in the county as of 12.o% October 30, 2014 was 5.4%, which 10.0% is lower than the state rate of 7.3% .Q b.O.l -+-National 10 8.0% and lower than the national c: u Q l 6.0% average of 5.8%. Last year at this Q~l - California Q, 4.0% time unemployment in the county was 6.4%. 2.0% ...,_San Luis 0.0% Obispo 0 ...-4 N ("(') '<t ...-4 ...-4 ...-4 ...-4 ...-4 6 6 6 6 6 ...-4 ...-4 ...-4 ...-4 ...-4 *Source: US Bureau of Labor Statistics 5 • The State of California has a major presence in the County of San Luis Obispo with California Men's Colony, Atascadero State Hospital, CaiTrans, and California Polytechnic State University, making the State the largest employer in the county. The decrease in the county's unemployment has closely followed the decreasing trend in state unemployment over the past several years. Income: • Family average income of Median Income* $37,910, as reported to the Franchise Tax Board, $39,000 .,---------- increased 3.8% from 2011 to 2012 (most recent data) for the $38,000 +----------..- residents of the County of San $37,000 +-..,..-------------::;,~ Luis Obispo. $36,000 ~;;::;;;;;;;;;lf'i:---7''-------:.- "' • The San Luis Obispo 2012 ~ +---~rli,..-=:F--~~-=::;;t;:_ $35,000 County income average family income of 0 $37,910 was approximately $34,000 State Average 5.6% higher than the State $33,000 +----------- average. San Luis Obispo $32,000 +----------- County ranked 14th out of 58 counties when comparing $31,000 +--..----,----.-----.----,-- annual income; in 2011 we 2007 2008 2009 2010 2011 2012 were ranked 15th. *Source: California Franchise Tax Board Retail Sales: • Retail sales for the County of Sales Tax- Unincorporated* San Luis Obispo as a whole increased by 25.1% from 2011 $14,000,000 to 2012 according to the State $12,000,000 Board of Equalization. $10,000,000 "...'. .!!! $8,000,000 0 $6,000,000 • From June 2013 to June 2014 0 $4,000,000 sales tax revenue decreased v • Sales Tax $2,000,000 by 17.5%. The decrease was l $0 - caused by a spike in sales tax revenue in the prior year due to ~ the construction of a new solar farm in the Carissa Plains. *Source: County's Enterprise Financial System 6 Real Estate: People's desire to live in the area kept the median home price at $430,000 as of September 2014. This is an increase 2.4% from the same period in the prior year. Increase of the median home price demonstrates that the local real estate market is continuing to rebound. • Property tax revenue indicators illustrate the continuing recovery of the local economy. Discretionary property tax receipts were $101 million, an increase of 4.6% over the prior year. • The total tax levy of secured property of $421,139,733 for FY 2013-14 is an increase of 3.9% from the previous year. • 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 3.1% during 2013-14. This is the fourth straight year of increases which indicates that the housing market is recovering. • The property tax delinquency rate has steadily decreased since 2008-2009 suggesting that foreclosures are slowing down, and family income is remaining stable. • Building permits showed an increase of 26.7% from 2013 to 2014, which also indicates a strengthening housing market. Tourism: • Transient occupancy tax increased in 2014 by 6.68% in the unincorporated Transient Occupancy area. The pristine coastline, small town Tax* atmospheres, sweeping vineyards, excellent restaurants, and friendly $10,000,000 attitudes of the local residents make San Luis Obispo County a desired tourist $8,000,000 destination. ~ "' $6,000,000 - 0 0 $4,000,000 - • The county's seat, the city of San Luis $2,000,000 r- Obispo city was declared by moveto.com to be the Friendliest Small City in $0 k:::: ' 1 - ...,._ ::;"; 0'1 0 .-I America. From surfing to wine tasting to zip lining, San Luis Obispo County has an abundance of activities that appeal to *Source: County's Enterprise Financial System tourists and residents alike. 7 Long-term financial planning: • The 2014-15 fiscal year budget was developed as the final year in a seven year plan to address major changes in the overall financial status of the County. Property tax revenue has continued to increase and key economic indicators such as transient occupancy, property and sales taxes show signs of improvement allowing for a slight increase in the FY 2014-15 spending level. The final 2013-14 budget authorized a $545.6 million spending level, which is an increase over the $505.4 million budget from the FY 2012-13. The general fund had $439.8 million appropriated to finance the current year's expenditures including contingencies, with $9 million placed in general reserves and $24.9 million earmarked for designations. • Each year a 5-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 five-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 FY 2013-14 capital budget recommended funding for seven new capital projects. Total 2013-14 appropriations for Capital Projects are approximately $5.3 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. • Ongoing Budget Administration: The County Administrator shall submit Quarterly Financial Status Reports to the Board of Supervisors. The reports shall provide expenditure and revenue projections and identify projected variances along with recommendations and proposed corrective actions. • Budget Priorities: The budget is an effort to allocate resources in an effective and efficient manner in order to achieve the County's vision of a Safe, Healthy, Livable, Prosperous, and Well-Governed Community. • 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 8 ongoing operating costs become overly reliant upon cyclical 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 14, 2010. • Cost Recovery through Fees: Utilize fees to recover costs where reasonable and after all cost savings options have been explored. • Pension Cost: Governor Brown implemented a Public Employee Pension Reform Act (PEPRA) which took effect on January 1, 2013. In compliance with PEPRA the County established a Tier Ill retirement plan that complies with or exceeds the requirements of the pension reform legislation. In addition, the County and most labor units have adopted a 50150 funding split between the County and the employees. Major Initiatives • Los Osos Sewer Project: In FY 2013-14 this high profile project was well underway with the pipeline installation nearly complete, and the Public Works Department has begun to give tours of the Water Recycling Facility construction site. 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: The construction phase of the Women's Jail Expansion Project began in FY 2013-14 and the women's housing unit and security system are scheduled to be completed in December 2015. The medical/programming facility is scheduled for completion in October 2016. The Sheriff's Department is currently housing approximately 10 8 women in a facility that was designed for 43 female inmates. When completed the expanded Women's Jail will house up to 198 inmates. • Transition Public Health Clients: The County continues to collaborate with local stakeholders to transition enrolled County Medical Services Program clients and other uninsured individuals into the expanded Medi-Cal program or into the new State Health Insurance Exchange. Monthly meetings of the Affordable Care Act (ACA) Planning Group of local health care stakeholders are held to coordinate planning efforts for implementation of state and federal health care reforms. • Veterans Services: The County's Veterans Services Office helped to get AB1 01 passed through the state legislature providing an additional $2.6 million dollars to County Veterans Service Offices (CVSOs) around the state to better reach 9 veterans in the community. This was the first increase in funding to CVSOs since 1998. • District Attorney: In order to effectively prosecute more than 18,000 criminal cases per year, the County's District Attorney's Office has implemented a new case management system designed to manage and keep necessary and statutorily required records. It is a complex case management system that must also collaboratively integrate with the Sheriff, the Probation Department, the Court and other criminal justice partners. • Probation Collections Case Management: The County's Probation Department contracted for the new case management system and, and it is expected to increase efficiency and revenue recovery. • Property Tax System: The County's mainframe Property Tax system continues 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: • The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County of San Luis Obispo for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2013. This was the twenty-eight consecutive year that the County has received this prestigious award. In order to be awarded a Certificate of Achievement the County published an easily readable and efficiently organized Comprehensive Annual Financial Report (CAFR). This report 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 Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgements: • The preparation of the Comprehensive Annual Financial Report would not have been possible without the efficient and dedicated services of the staff of the Auditor-Controller-Treasurer-Tax Collector-Public Administrator's Office. We would like to acknowledge the special efforts of our Enterprise Financial System Operations Division and our independent auditors, Gallina LLP, for their assistance in the report preparation. We would also like to express our appreciation to all County departments who assisted in this process and to the 10 Board of Supervisors for its leadership responsibility and unfailing support to ensure the continued general fiscal health and integrity of the County. Respectfully submitted, mes P. Erb, CPA Dan Buckshi uditor-Controller-Treasurer-Tax Collector County Administrative Officer 11 12 COUNTY OF SAN LUIS OBISPO LIST OF ELECTED AND APPOINTED OFFICIALS JUNE 30, 2014 Elected Officials Board of Supervisors District #1 ................................................................................................. Frank R. Mecham District #2 Chairperson ................................................................................. Bruce S. Gibson District #3 ........................................................................................................... Adam Hill District #4 ............................................................................................................ Caren Ray District #5 ..................................................................................................... Debbie Arnold Other Elected Officials Assessor ............................................................................................. Tom J. Bordonaro Jr. Auditor-Controller-Treasurer-Tax Collector-Public Administrator .......................... James P. Erb Clerk-Recorder .......................................................................................... Julie L. Rodewald District Attorney ........................................................................................... Gerald T. Shea Sheriff-Coroner .............................................................................................. Ian Parkinson Appointed Officials Agricultural Commissioner ......................................................................... Martin Settevendemie Chief Probation Officer ............................................................................................ James Salio Child Support Services Director ..................................................................................... Phil Lowe County Administrator ............................................................................................. Dan Buckshi County Counsel ....................................................................................................... Rita L. Neal County Fire ............................................................................................................ Robert Lewin Behavioral Health Administrator ................................................................................. Anne Robin General Services Agency Director ............................................................................. Janette Pell Farm Advisor ...........................................................................................................M ary Bianchi Health Agency Director ............................................................................................ Jeff Hamm Human Resources Director .......................................................................... Tami Douglas-Schatz Library Director ........................................................................................ Christopher Barnickel Planning ............................................................................................................. James Bergman Public Health Officer ....................................................................................... Penny Borenstein Public Works Director ............................................................................................. Paavo Ogren Social Services Director ............................................................................................. Lee Collins Veteran’s Services Director ............................................................................... Dana Cummings 13 County of San Luis Obispo Organizational Chart 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 Auditor- Controller- Ag Child Support County Health Agency Library Treasurer-Tax Commissioner Services Counsel Public Health Collector-Public Mental Health Administrator* Drug & Alcohol Animal Services Medical Services Planning & District Human Farm Advisor Assessor* Building Attorney* Resources General General Services Sheriff- Clerk- Public Works Social Services Services Fleet Coroner* Recorder* Airports Information Golf Technology Parks & Rec Administrative Probation Veterans' Office Services County Fire** Emergency Services * Elected Officials **Contract 14 ________________________________________________________________ FINANCIAL SECTION ________________________________________________________________ 15 16 INDEPENDENT AUDITOR’S REPORT The Honorable Board of Supervisors County of San Luis Obispo, California Report on the Financial Statements 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, 2014, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the San Luis Obispo 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 have been furnished to us, and our opinion, insofar as it relates to the amounts included for the San Luis Obispo County Pension Trust and the First 5 San Luis Obispo County, are based solely on the reports 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of 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, as of June 30, 2014, and the respective changes in financial position, and where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 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 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedules of funding progress for both the defined benefit retirement plan and the other post employment benefits (OPEB) plan and budgetary comparison 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County'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 basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2014 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. Roseville, California December 16, 2014 18 ________________________________________________________________ MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________________________________ 19 20 COUNTY OF SAN LUIS OBISPO MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2014 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, 2014. 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) In FY 2013-14 the County implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. GASB 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows or deferred inflows of resources certain items that were previously reported as assets and liabilities. Additionally, the Standard requires that debt issuance amounts be expensed as incurred. Accordingly, the County expensed the remaining balances of amortized debt issuance costs creating a decrease of $4,574 in net position. The assets of the County exceeded its liabilities at the close of the most recent fiscal year by $1,767,738 (net position). Of this amount $423,210 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors, $43,109 is restricted for specific purposes (restricted net position), and $1,301,419 is invested in capital assets, net of related debt. (Table A) The County’s net position increased by $105,123 during the current fiscal year. The increase in restricted and unrestricted net position represents the degree to which increases in ongoing revenues exceeded increases in ongoing expenses (Table B). 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 A) As of June 30, 2014 the County’s governmental activities reported combined ending net position of $1,481,156, an increase of $44,112 in comparison with the prior year. Approximately 24% of the combined fund balances, or $423,210 is available for spending at the County’s discretion for current and future needs (unrestricted net position). (Table A) Business-type activities posted net program income of $57,936 before general revenues, contributions and transfers from other funds, an increase of $24,132 when compared to net program income of $33,804 in the prior year. The difference from the prior year is primarily due to an increase of $21,790 of contributed capital in the Los Osos Wastewater fund related to escalated construction activity. At the end of the fiscal year, the entire $239,181 fund balance of the general fund was either nonspendable ($779), restricted ($3,214), committed ($116,940) or assigned ($118,248). The County issued new Assessment bonds of $38,199 to the USDA to finance costs of the Los Osos Wastewater project, an increase of $14,026 over prior year issuances required by an increase in construction activities in the current fiscal year. Additional bonds will be issued as future project expenditures occur. 21 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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. 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 Position presents information on all of the County’s assets, deferred outflows, liabilities and deferred inflows, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The Statement of Activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of 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, the Los Osos wastewater 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, 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 43 of this report. 22 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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. 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-four 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-two 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 50 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 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, 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 seven 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. 23 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The basic proprietary fund financial statements can be found on pages 51 to 53 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 54 to 55 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 57 to 94 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 95 to 101 of this report. 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 105 to 120 and 141 to 165 of this report. Budgetary comparison schedules – The budgetary comparison schedules (other than the General Fund which is presented with the individual General Fund statements) for the Capital Projects, Pension Obligation Bond, Public Financing Corporation, Public Financing Authority, and non-major Special Revenue funds can be found on pages 121 to 140 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 176 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 position may serve over time as a useful indicator of a government’s financial position. In the case of the County, assets and deferred outflows exceeded liabilities and deferred inflows by $1,767,738 as detailed in the table below: 24 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table A Statement of Net Position June 30, 2014 (in thousands) 2013- June 30, 2014 June 30, 2013 2014 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 $ 423,654 $ 165,254 $ 588,908 $ 382,639 $ 167,426 $ 550,065 7.1% Other long-term assets 139,107 10,665 149,772 140,715 14,094 154,809 (3.3%) Capital assets 1,136,448 502,769 1,639,217 1,128,549 448,918 1,577,467 3.9% Total assets 1,699,209 678,688 2,377,897 1,651,903 630,438 2,282,341 4.2% Liabilities: Long-term liabilities 158,203 337,903 496,106 164,520 292,697 457,217 8.5% Other liabilities 59,850 54,203 114,053 50,339 112,170 162,509 (29.8%) Total liabilities 218,053 392,106 610,159 214,859 404,867 619,726 (1.5%) Net position: Net investment in capital assets 1,112,934 188,485 1,301,419 1,103,924 167,138 1,271,062 2.4% Restricted 43,109 - 43,109 28,863 - 28,863 49.4% Unrestricted 325,113 98,097 423,210 304,257 58,433 362,690 16.7% Total net position $ 1,481,156 $ 286,582 $ 1,767,738 $ 1,437,044 $ 225,571 $ 1,662,615 6.3% Analysis of Net Position Approximately 24% or $423,210 of the County’s net position represents unrestricted net position, which may be used to meet the County’s ongoing obligations to citizens and creditors. The most significant portion of the County’s net position, $1,301,419 or 74%, 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 position of $43,109, 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 position, both for the County as a whole, as well as for its separate governmental activities and business- type activities. Net position for governmental activities increased $44,112 and net position for business activities increased $61,011 resulting in an overall increase of $105,123 in the County’s total net position. Invested in capital assets, net related debt for business type activities increased $21,347. This increase is primarily due to construction activity in the Los Osos Wastewater fund that does not have related debt. The remainder is comprised of reductions to capital related debt from scheduled debt service principal payments and construction in progress in various nonmajor enterprise activities. Invested in capital assets, net related debt for governmental activities increased $9,010. 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. 25 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) There was an increase of $60,520 in unrestricted net position reported in connection with the Total Primary Government. This category represents net position of the County which is 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. The table on the next page indicates the changes in net position for governmental and business-type activities: 26 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table B Statement of Activities For the Year Ended June 30, 2014 (in thousands) June 30, 2014 June 30, 2013 2013- 2014 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 $ 56,969 $ 37,611 $ 94,580 $ 54,526 $ 36,933 $ 91,459 3.4% Operating grants and contributions 216,259 163 216,422 209,118 193 209,311 3.4% Capital grants and contributions 9,236 59,279 68,515 3,537 36,583 40,120 70.8% General revenues: Property taxes 152,256 4,402 156,658 143,182 4,145 147,327 6.3% Other taxes 22,088 32 22,120 23,940 29 23,969 (7.7%) Interest and investment income 599 595 1,194 733 385 1,118 6.8% Grants not restricted to specific programs 1,727 - 1,727 3,537 - 3,537 (51.2%) Other revenues - 40 40 4 160 164 (75.6%) Total revenues 459,134 102,122 561,256 438,577 78,428 517,005 8.6% Expenses: General government 36,866 - 36,866 34,507 - 34,507 6.8% Public protection 148,135 - 148,135 142,353 - 142,353 4.1% Public ways and facilities 28,253 - 28,253 28,474 - 28,474 (0.8%) Health sanitation 74,313 - 74,313 69,222 - 69,222 7.4% Public assistance 99,449 - 99,449 97,929 - 97,929 1.6% Education 9,611 - 9,611 9,922 - 9,922 (3.1%) Recreational and cultural services 7,745 - 7,745 9,735 - 9,735 (20.4%) Interest on Long-term debt 5,270 - 5,270 6,041 - 6,041 (12.8%) Airport - 5,664 5,664 - 5,435 5,435 4.2% Golf - 2,608 2,608 - 2,779 2,779 (6.2%) State water contract - 5,992 5,992 - 5,536 5,536 8.2% Nacimiento Water Contract - 13,840 13,840 - 14,738 14,738 (6.1%) Lopez dam - 6,116 6,116 - 6,548 6,548 (6.6%) General Flood Control - 809 809 - 746 746 8.4% County Service Areas - 3,857 3,857 - 3,779 3,779 2.1% Los Osos Wastewater - 231 231 - 344 344 (32.8%) Total expenses 409,642 39,117 448,759 398,183 39,905 438,088 2.4% Excess/(deficiency) before transfers 49,492 63,005 112,497 40,394 38,523 78,917 42.6% Transfers (790) 790 - (166) 166 - Special Item (2,800) - (2,800) - - - 100.0% Change in net position 45,902 63,795 109,697 40,228 38,689 78,917 39.0% Net position at beginning of year 1,437,044 225,571 1,662,615 1,396,816 186,882 1,583,698 5.0% Cumulative effect of change in accounting principle (1,790) (2,784) (4,574) - - - - Net position -end of year $ 1,481,156 $ 286,582 $ 1,767,738 $ 1,437,044 $ 225,571 $ 1,662,615 6.3% 27 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Analysis of Governmental and Business-type Activities Governmental Activities Governmental activities increased San Luis Obispo County’s net position by $44,112 (including the cumulative change of effect in accounting principle) compared to an increase of $40,228 in the prior year. Factors contributing to the increase are as follows: Total revenues from Governmental Activities grew by 4.0% with a net increase of $17.8 million from the prior year. Program Revenues overall were essentially unchanged; however, increases occurred in Operating Grants and Contributions and Capital Grants and Contributions. The Operating Grants and Contributions category rose primarily due to a number of small increases in the Public Protection, Health and Sanitation, and Public Assistance functions. The Public Protection function increased both due to a new grant from the State Department of Water Resources for Integrated Regional Water Management and due to increased sales tax funding from Proposition 172. In the Health and Sanitation function, Public Health and Mental Health saw increases in state aid which were partially offset by a decrease in state Mental Health Services Act funding. Drug and Alcohol Services received additional federal funding for discretionary, prevention and youth services, and there was an increase in federal community development block grant funds as well. The increase in the Public Assistance function was a combination of a decrease in County Medical Services Program funding, a result of shifts to Medi-Cal reimbursed services under the Health Care Affordability Act, and an increase in Cal Works assistance. Capital Grants and Contributions increased by $5.7 million primarily due to increased State funding of the Women’s Jail project. The La Panza Road widening project in Creston and the Santa Rosa Creek Bridge project in Cambria also had increased capital grants and contributions in the current year. Property Taxes increased by $9.1 million over the prior year reflecting an increase in property values as the economy begins to recover. The Other Taxes category decrease of $1.8 million was mostly caused by an 18% drop in sales and use tax from the prior fiscal year. Transfers from Governmental to Business-type activities increased by $624 thousand primarily due to the transfer of grant related monies from the Flood Control District to the Los Osos Wastewater fund. Total expenses from Governmental Activities increased $11.5 million over the prior year. Within Governmental Activities, the Health and Sanitation function had the most significant increase (7.4%) The majority of the Health and Sanitation increase was caused by increased Community Development activity including the First Time Homebuyer program. Behavioral Health salaries, residential services, and supportive services also increased in the current fiscal year. General Government (6.8%) and Public Protection (4.1%) also showed increases, but the overall Governmental Activities increases were slightly reduced by a 20.4% decrease in the Recreational and Cultural Services function. The increase in General Government functional expenses was caused by a $2.8 million dollar payment to the Los Osos Community Services District in connection with the resolution of the District’s bankruptcy, (see footnote 20 for further detail). The increase in expenses for the Public Protection function was comprised of increased labor costs for the Sheriff-Coroner and Probation departments related to the increase in caseloads caused by AB109 prison realignment as well as increased law enforcement coverage for the California Valley. The distribution of Integrated Regional Water Management grant monies also contributed to the increase in Public Protection expenses. The 20.4% decrease in the Recreational and Cultural Services function was due to a prior year spike caused by the loss on the retirement of Parks capital assets. 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, reduced benefit pension plans (Tier 2 and Tier 3) 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 eliminated from a peak of $30 million in FY 2009-10. 28 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Business-type Activities Business-type Activities increased San Luis Obispo County’s net position by $61.0 million (including the cumulative change of effect in accounting principle) compared to an increase of $38.7 million in the previous year. Revenues exceeded expenses by $63 million, and a transfer of $790 thousand from Governmental Activities resulted in the total increase to net position. Key elements of current year activity are as follows: Total revenue increased $23.7 million from the preceding year. The largest increase occurred in Capital Grants and Contributions ($22.7 million) due to escalated construction activity for the Los Osos Wastewater Project. The biggest increases in General Revenues for Business-type activities took place in Property Tax revenue which rose by $257 thousand and Interest and Investment Income which increased by $210 thousand. Expenses for Business-type Activities decreased $788 thousand from the prior year. Within Business-type activities, the largest decrease in expenses, $898 thousand, was primarily due to prior year increased activity in debt issuance, interest and arbitrage costs in the Nacimiento Water Contract fund. The decrease in expenses was offset slightly by an increase in State Water Contract professional and special services. 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. Total fund balance consists of the following components (see footnote 11 for additional detail): Nonspendable fund balance, $779, represents amounts that are not spendable in form, or are legally or contractually required to be maintained intact, and includes (1) inventories of $98 (2) prepaid items of $348 and (3) long term receivables of $333. Restricted fund balance, $23,378, 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 $3,214 (2) Public facilities of $11,009, (3) Traffic impact programs of $6,871, (4) Wildlife and grazing programs of $18 and (5) Debt service of $2,266. Committed fund balance, $191,180, represents amounts with constraints imposed by the Board of Supervisors for specified purposes. Significant components of this balance include commitments for (1) Flood control programs, $19,512, (2) Tax reduction reserve, $37,289, (3) Automation projects, $12,807 (4) Building Replacement $19,424 (5) Solar plant mitigation, $11,851, and (6) Capital projects, $22,385. Assigned fund balance, $118,248, represents amounts the County intends to use for specific purposes that are neither restricted nor committed. Significant components of this balance include (1) Behavioral Health programs, $12,576, (2) Tax reduction reserve, $22,187, (3) General government, $13,139, (4) Foster Care/Adoption programs, $8,517 and (5) Subsequent Fiscal Year Budget, $36,851. As of the end of the current fiscal year, the County’s governmental funds reported combined ending fund balance of $335,585 an increase of 14.0%, or $41,076 in comparison with the prior year. Approximately 93% of the total fund balance, or $309,428, is available to meet the County’s current and future needs. 29 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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 $238,402 while total fund balance reached $239,181. 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 $353.4 million. Spendable fund balance represents 67.5% of the total fund expenditures, while total fund balance represents 67.7% of the same amount, an 8.9% increase from the prior year. During the current fiscal year, the fund balance of the general fund increased by $31.5 million. The following provides an explanation for the change in fund balance. Total revenues exceeded total expenditures by $56.4 million. General fund revenues ended the year with an increase of $12.4 million over the prior year. Total expenditures increased $7.0 million. Most revenue categories were essentially unchanged from the prior year with the exception of Aid from Governmental Agencies and Taxes which increased by $9.9 million and $5.7 million respectively and Fines, Forfeits, and Penalties which decreased by $3.3 million. The $9.9 million increase in Aid from Governmental Agencies was driven by increases in state funding for Social Services including CalWorks and Medi-Cal, as well as increased state realignment revenue for Mental Health services. The Taxes increase is primarily due to increased secured property tax revenue. Fines, Forfeits, and Penalties decreased primarily because in the prior year the County had received settlement money from a contractor; however, in the current year revenue from traffic school fees, county motor vehicle crime fines, and administrative penalties for violations of hazardous waste requirements also decreased. Total expenditures in the General Fund increased $7.0 million (2.0%) from the prior year. Expenditures were down or relatively flat for all functions except for the Public Protection, Health and Sanitation, and Public Assistance functions each of which experienced a slight increase over the prior year. The increase in the Public Protection functions was driven by increased Sheriff-Coroner labor costs primarily related to AB109 prison realignment staffing. Health and Sanitation function increases were mainly due to increased residential services, and supportive services for Behavioral Health. The increase in the Public Assistance function is reflective of increased labor costs in Social Services. Capital Projects The Capital Projects Fund handles construction projects for the County’s governmental funds. The fund had a total fund balance of $25.7 million. Capital outlay expenditures exceeded revenues by $2.5 million and transfers in exceeded transfers out by $3.2 million. The net of these two factors resulted in a $616 thousand increase 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 transferred $2.9 million to the Capital Projects Fund of which $2.2 million is for the women’s jail project. The remaining $0.7 million is primarily for the Juvenile Services Hall project. Significant current year activities of the Capital Projects Fund are discussed in the Capital Assets section under Governmental Activities. Governmental Fund Revenues Revenues for all governmental funds combined totaled $480.7 million in the current fiscal year, which represents an increase of approximately 6.5% or $29.3 million from the prior fiscal year revenues of $451.4 million. The following table presents the amount of revenues from various sources and also displays increases or decreases from the prior year. 30 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table C Revenues Classified by Source Governmental Funds Fund Financial Statements For the Year Ended June 30, 2014 (in thousands) 2013-2014 2012-2013 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Revenues by Source: Taxes $ 177,765 37.0% $ 171,771 38.1% $ 5,994 3.5% Licenses, Permits, Franchises 10,694 2.2% 9,247 2.0% 1,447 15.6% Fines, Forfeits, and Penalties 5,257 1.0% 6,654 1.5% (1,397) (21.0%) Revenues from Use of Money and Property 1,373 0.3% 1,475 0.3% (102) (6.9%) Aid from Governmental Agencies 229,283 47.7% 209,234 46.4% 20,049 9.6% Charges for Current Services 50,071 10.5% 41,690 9.2% 8,381 20.1% Other Revenues 6,235 1.3% 11,342 2.5% (5,107) (45.0%) Total $ 480,678 100% $ 451,413 100% $ 29,265 6.5% The following provides an explanation of revenues by source that changed significantly over the prior year in the governmental funds. Taxes increased $6.0 million or 3.5%. Revenue from Current Property Taxes and Transient Occupancy Taxes increased for the fourth consecutive year. Property Tax in Lieu – Sales and Use Tax and Property Tax in Lieu – Vehicle License Fees both increased, but a decrease in Sales and Use Tax due to the completion of the new solar farm in the Carissa Plains offset the increases by $2.5 million. Licenses, Permits, and Franchises revenue increased $1.5 million or 15.6%. Increased construction permitting activity accounted for the majority of the increase; however, franchise fee and animal licenses revenue also increased over the prior year. Fines, Forfeits, and Penalties decreased $1.4 million or 21.0%. The most significant factor relates to a prior year receipt of a settlement from a contractor; however, in the current year revenue from traffic school fees and county motor vehicle crime fines, and administrative penalties for violations of hazardous waste requirements also decreased. Aid from Governmental Agencies increased $20.0 million or 9.6%. Approximately half of the increase relates to state funding for Social Services including CalWorks and Medi-Cal, as well as increased state realignment revenue for Mental Health services. Additionally, State Highway Users Tax funding was increased, and the County received a grant from the State Department of Water Resources for Integrated Regional Water Management. Charges for Current Services increased $8.4 million or 20.1%. The increase is due to increased revenue activity across functions. The largest factor contributing to the increase was a prior year issuance of $1.8 million in refunds of SB2557 property tax administrative fees previously charged to cities in the County. The refunds resulted from a Supreme Court decision regarding the method of calculation of the fees. Other significant increases were a result of increased billings for Behavioral Health Services, camping fees, sanitation services fees, and water sales for resale. 31 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Other Revenues decreased $5.1 million or 45.0%. The decrease was caused by prior year receipts of $1.7 million from a court settlement regarding a local development and prior year contributions of $1.9 million from Friends of the Libraries for the new Atascadero and Cambria libraries. Additionally, the County received $1.2 million less in tobacco settlement revenue in the current fiscal year. Revenue from reimbursements for foster care/adoption services, and various parks reimbursements also decreased. 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, 2014 (in thousands) 2013-2014 2012-2013 Increase/(Decrease) Amount Percent Amount Percent Amount Percent of Total of Total of Change Expenditures by Function: General Government $ 44,317 10.1% $ 44,374 10.5% $ (57) (0.1%) Public Protection 148,155 33.9% 143,832 34.1% 4,323 3.0% Public Ways and Facilities 28,528 6.5% 34,178 8.1% (5,650) (16.5%) Health and Sanitation 74,586 17.1% 70,021 16.6% 4,565 6.5% Public Assistance 99,442 22.8% 98,059 23.2% 1,383 1.4% Education 12,205 2.8% 9,901 2.3% 2,304 23.3% Recreational and Cultural Services 7,993 1.8% 7,538 1.8% 455 6.0% Principal payments 5,412 1.2% 4,065 1.0% 1,347 33.1% Interest on Long-Term Debt 5,419 1.2% 5,863 1.4% (444) (7.6%) Debt Issuance Costs - - 269 0.1% (269) (100.0%) Capital outlay 11,312 2.6% 3,692 0.9% 7,620 206.4% Total $ 437,369 100% $ 421,792 100% $ 15,577 3.7% The following provides an explanation of the expenditures by function that changed significantly over the prior year. Public Ways and Facilities expenditures decreased $5.7 million or 16.5%. The fluctuation is attributable primarily to decreased construction and maintenance activity in the Roads Fund including the construction phase completion of the Willow Road Interchange in Nipomo in the prior year, and the winding down of the Price Canyon Bridge project. Health and Sanitation expenditures increased $4.6 million or 6.5%. The majority of the increase is caused by increases in Behavioral Health residential and supportive services. Education expenditures increased $2.3 million or 23.3% due to construction costs associated with the new Atascadero and Cambria libraries. Capital Outlay expenditures increased $7.6 million or 206.4%. The majority of the increase is due to new construction activity on the Women’s Jail Project. The Atascadero Library project had significantly increased expenditures as well. 32 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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 2013-14 fiscal year. Table E Statement of Revenues, Expenses and Results of Operations Proprietary Funds Fund Financial Statements For the Year Ended June 30, 2014 (in thousands) Major Nonmajor Funds Funds Total Nacimiento Lopez Other Water Flood Los Osos Enterprise Total Airport Contract Control Wastewater Funds Enterprise Operating revenues $ 4,527 $ 13,685 $ 6,123 $ 3 $ 13,313 $ 37,651 Operating expenses 5,469 4,628 4,409 234 12,952 27,692 Operating income (loss) (942) 9,057 1,714 (231) 361 9,959 Non- operating revenues (expenses), net (68) (7,471) (501) 10 1,778 (6,252) Net income (loss) before contributions and transfers (1,010) 1,586 1,213 (221) 2,139 3,707 Contributions and transfers, net 1,736 - - 58,143 190 60,069 Change in net position $ 726 $ 1,586 $ 1,213 $ 57,922 $ 2,329 $ 63,776 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 $942 thousand, slightly less than the prior year loss of $1.1 million. Net position increased by $726 thousand compared to a decrease in net position of $683 thousand in the prior year. For the first time since FY 2010-11 passenger enplanement activity grew with an 11% increase over the prior year. The Nacimiento Water Contract Fund realized operating income of $9.1 million and increased net position by $1.6 million, an improvement over the prior year $641 thousand increase in net position. The fund’s total operating revenues decreased by $196 thousand, but the decrease was offset by a decrease in expenditures for contractors and an increase in expenditures for professional services leading to a net increase in operating income of $219 thousand (2%). 33 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The Lopez Flood Control Fund reported $1.7 million in operating income, an increase of $127 thousand or 8% over the prior year. Net position increased by $1.2 million due to increases in property taxes and water sales and decreases in maintenance and professional services expenses. The Los Osos Wastewater Fund reported an operating loss of $231 thousand primarily due to costs associated with the Water Conservation Program. Capital contributions increased to $57.5 million which is $21.8 million over the prior year amount. The increase in capital contributions was the significant factor in the change in net position of $57.9 million. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget for expenditures and transfers out increased by $27.4 million, or 33%, during the course of the year contributing towards the final amended budget. This increase was funded in part by increases in budgeted revenues of $18.5 million and the use of reserves and designations for the balance. Unanticipated revenues totaling $14.7 million in State and Federal Aid, $1.0 million in Charges for Current Services, $1.2 million in Other Revenue, $617 thousand in Fines, Forfeits, and Penalties, $579 thousand in Inter-fund Revenues, and $431 thousand in Other Financing sources financed the budget augmentations. The largest budget augmentations occurred in the functional areas of Public Assistance ($6.6 million), Public Protection ($5.8 million), and Health and Sanitation ($3.8 million). The increase for the Public Assistance function is comprised of $6.1 million for Social Services including Affordable Health Care Act implementation, the CalWorks and CalFresh programs, and Workforce Investment Act programs; and $520 thousand for Veterans’ Services. Significant Public Protection function budget augmentations include $2.8 million for the Sheriff-Coroner’s programs and $1.3 million for Planning programs. The remaining increase is due to various smaller augmentations for District Attorney, Probation, County Fire, and Emergency services. The Health and Sanitation function augmentations were primarily for Public Health services, $1.6 million, Mental Health services, $1.5 million, and Drug and Alcohol services, $588 thousand. At the close of the current fiscal year, actual General Fund expenditures were 89.7% of budget, while General Fund revenues were realized at 98.4% of budget. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At June 30, 2014, the County had $1.6 billion 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 on the following page). This amount represents a net increase (including additions and deductions) of $62 million or 3.9% from last year. 34 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table F Capital Assets June 30, 2014 (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 2013 2014 2013 2014 2013 2014 Change Land $ 789,246 $ 794,679 $ 32,617 $ 32,621 $ 821,863 $ 827,300 0.7% Water Rights - - 44,564 46,457 44,564 46,457 4.3% Other Property Non Depreciable - - 1,968 1,968 1,968 1,968 - Construction- in-progress 71,143 39,682 54,479 110,491 125,622 150,173 19.5% Structures & Improvements 177,637 179,137 169,175 168,797 346,812 347,934 0.3% Equipment 73,465 75,588 3,096 3,148 76,561 78,736 2.8% Other Property Depreciable 340 340 554 554 894 894 - Infrastructure Depreciable 295,829 341,432 191,153 193,948 486,982 535,380 9.9% Subtotal 1,407,660 1,430,858 497,606 557,984 1,905,266 1,988,842 4.4% Less Accumulated Depreciation (279,111) (294,410) (48,688) (55,215) (327,799) (349,625) 6.7% Total $ 1,128,549 $ 1,136,448 $ 448,918 $ 502,769 $ 1,577,467 $ 1,639,217 3.9% Major additions and future commitments in capital assets – Governmental activities County Roads had the majority of additions in governmental activities with $6.5 million worth of assets related to the Willow Road Interchange project in Nipomo. Other infrastructure additions during FY 2013-14 include construction on the North County Public Service Center ($1.2 million), the new Cambria library ($588 thousand), and the Cayucos Pier restoration project ($476 thousand). Major on-going projects include a Women’s Jail, a new Property Tax system, and expansion of the Juvenile Hall. Major additions and future commitments in capital assets – Business-type activities The majority of the $54 million in additions and $67 million in future commitments for business-type activities relate to the $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. In FY 2013-14, the County continued its water conservation program, implemented in FY 2012-13, with the goal of reducing indoor consumption to 50 gallons per person per day in accordance with the project’s Coastal Development Permit. The Nacimiento Water Contract Fund recognized $812 thousand of assets related to the transmission lines and pump stations. More detailed information about the County's capital assets is presented in Notes 4 and 5 in the financial statements. 35 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Debt Administration At the end of the current fiscal year, the County of San Luis Obispo had total notes and bonds payable of $482.0 million. 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 2013-14 was $111.2 million. Pension Obligation Bonds debt service payments are funded by County payroll benefits. The remainder of the County’s debt consists of: $44.5 million in certificates of participation, which are repaid from a variety of revenues; $46.5 million in State loans and $192.9 million in revenue bonds which are repaid with water service revenue. General Obligation Bonds totaling $10.5 million are backed by the full faith and credit of the County. Additionally, the County is liable for $2.1 million of special assessment debt in the event of default by the property owner subject to the assessment. Table G Outstanding Debt June 30, 2014 (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 2013 2014 2013 2014 2013 2014 Change Certificates of participation $ 26,892 $ 25,785 $ 18,412 $ 18,716 $ 45,304 $ 44,501 (1.8%) Pension Obligation Bonds 115,624 111,234 - - 115,624 111,234 (3.8%) State notes - - 34,399 46,529 34,399 46,529 35.3% Revenue bonds - - 196,334 192,902 196,334 192,902 (1.8%) General obligation bonds - - 10,905 10,489 10,905 10,489 (3.8%) Assessment Bonds - - 39,527 76,438 39,527 76,438 93.4% $ 142,516 $ 137,019 $ 299,577 $ 345,074 $ 442,093 $ 482,093 9.1% The increase over last year for the County’s notes and bonds payable was $40.0 million, or 9.1%. This increase is the net of new debt issuances and scheduled debt payments. During FY 2013-14, the County issued $38.1 million in Assessment Bonds and $13.7 million in State notes related to the Los Osos Wastewater Project. 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 $538,249 million. Additional information on the County’s long-term debt can be found in Note 10 to the financial statements. Other liabilities include compensated absences of $26.2 million for governmental activity and $288 thousand for business-type activities; landfill post-closure costs of $4.2 million; and a self-insurance liability of $18.3 million. More detailed information about the County’s long-term liabilities is presented in Note 10 to the financial statements. 36 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES The Fiscal Year 2014-15 budget reflects the final year of a seven year budget balancing plan that began in Fiscal Year 2008-09. The plan is designed to gradually close a structural budget gap by transitioning from the use of short-term solutions initially to increasing reliance on expenditure reductions so that structural balance is achieved by the end of year seven. The plan, which was used to close budget gaps ranging from a high of $30 million in FY 2009-10 to a low of $2 million in FY2012-13, has been successful with the FY 2014-15 budget projecting a surplus of approximately $5.8 million. The small surplus allowed staff to recommend a budget that begins to restore, and in some cases increase, service levels to support the County’s vision, mission, and community wide results. The County’s unemployment rate dropped to 5.4% in October 2014, lower than both the state rate of 7.3% and the national rate of 5.8%. Economic indicators continue to show signs of local economic improvement from the recent economic downturn: The number of building permits issued increased 26.7% from the prior year, indicating a strengthening housing market. Property transfer taxes for unincorporated areas came in 3.1% higher than the preceding year reflecting an increase in the value and number of real estate transactions. County assessed property tax valuations increased slightly from $41.8 million to $43.1 million or 3.0%. Transient Occupancy Tax (bed tax) collections continued an upward trend in FY 2013-14, with an increase of 6.68% over FY 2012-13. The Board of Supervisors adopted the FY 2014-15 budget in June 2014, with an $82.0 million fund balance in the general fund, of which $36.9 million was appropriated to finance the current year’s expenditures including contingencies, $9 million was placed in general reserves, and $24.9 million was earmarked for designations. The total General Fund budget for FY 2014-15 is $440 million, a 6.0% 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-Treasurer-Tax Collector-Public Administrator, Post Office Box 1149, San Luis Obispo, California 93406-1149. This report is also available online at www.slocounty.ca.gov. 37 38 ________________________________________________________________ BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS ________________________________________________________________ 39 40 COUNTY OF SAN LUIS OBISPO Statement of Net Position June 30, 2014 (in thousands) Primary Government Governmental Business-Type Component Unit ASSETS Activities Activities Total First 5 Current Assets: Cash and cash equivalents $ 367,359 $ 52,084 $ 419,443 $ 8,785 Accounts receivable, net 7,591 630 8,221 -- Property taxes receivable 12,857 -- 12,857 -- Other receivables 1,117 115,014 1 16,131 -- Due from other governments 30,693 289 30,982 368 Deposits with others -- 171 171 4 Internal balances 3,027 (3,027) - - -- Inventories 662 -- 662 -- Prepaid items 348 43 391 3 Loans receivable -- 50 50 -- Total Current Assets 423,654 165,254 588,908 9,160 Noncurrent Assets: Restricted cash with fiscal agent 2,438 10,665 13,103 -- Net pension asset 134,355 -- 134,355 -- OPEB asset 2,314 -- 2,314 -- Capital Assets: Nondepreciable 834,361 191,537 1,025,898 -- Depreciable, net 302,087 311,232 6 13,319 -- Total Noncurrent Assets 1,275,555 513,434 1,788,989 -- Total Assets 1,699,209 678,688 2,377,897 9,160 LIABILITIES Current Liabilities: Salaries and benefits payable 6,318 64 6,382 -- Accounts payable 14,593 14,657 29,250 589 Deposits from others 3,178 4,683 7,861 27 Accrued interest 1,678 4,766 6,444 -- Other current liabilities 573 -- 573 -- Unearned revenue 5,978 22,574 28,552 -- Bonds and notes payable 6,070 7,288 13,358 -- Compensated absences 17,570 171 17,741 -- Landfill closure/postclosure costs 405 -- 405 -- Self insurance payable 3,487 -- 3,487 -- Total Current Liabilities 59,850 54,203 114,053 616 Long Term Liabilities: Bonds and notes payable 130,949 337,786 4 68,735 -- Compensated absences 8,616 117 8,733 -- Landfill closure/postclosure costs 3,809 -- 3,809 -- Self insurance payable 14,829 -- 14,829 -- Total Long-term Liabilities 158,203 337,903 496,106 -- Total Liabilities 218,053 392,106 610,159 616 NET POSITION Net investment in capital assets 1,112,934 188,485 1,301,419 -- Restricted for: General government 2,105 -- 2,105 -- Public protection 11,599 -- 11,599 -- Health and sanitation 160 -- 160 -- Public assistance 382 -- 382 -- Public ways and facilities 17,901 -- 17,901 -- Recreation and culture 171 -- 171 -- Education 100 -- 100 -- Debt service 10,691 -- 10,691 -- Unrestricted 325,113 98,097 423,210 8,544 Total Net Position $ 1,481,156 $ 286,582 $ 1,767,738 $ 8,544 The accompanying notes are an integral part of these financial statements. 41 COUNTY OF SAN LUIS OBISPO Statement of Activities For the Year Ended June 30, 2014 (in thousands) Program Revenues Fees, Fines, Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental Activities: General government $ 36,866 $ 14,678 $ 252 $ 69 Public protection 148,135 23,035 54,233 3,315 Public ways and facilities 28,253 4,356 14,688 5,570 Health and sanitation 74,313 6,570 57,344 -- Public assistance 99,449 2,070 89,640 -- Education 9,611 1,723 102 -- Recreation and cultural services 7,745 4,537 -- 282 Interest on long-term debt 5 ,270 - - - - -- Total Governmental Activities 409,642 56,969 2 16,259 9,236 Business-Type Activities: Airport 5,664 4,493 127 1,770 Golf 2,608 2,779 -- -- State Water Contract 5,992 6,358 1 3 -- Nacimiento Water Contract 13,840 13,685 1 2 -- Lopez Dam 6,116 6,123 8 -- General Flood Control 8 09 861 -- -- County Service Areas 3,857 3,312 3 2 Los Osos Wastewater 2 31 -- - - 57,507 Total Business-Type Activities: 39,117 37,611 163 5 9,279 Total primary government $ 448,759 $ 94,580 $ 216,422 $ 68,515 Component Unit First Five San Luis Obispo $ 1,904 $ -- $ 1 ,939 $ - - General Revenues, Transfers and Special Item: 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 Special item Total General Revenues, Transfers and Special Items Change in net position Net position - beginning of year Cumulative effect of change in accounting principle Net position - end of year The accompanying notes are an integral part of these financial statements. 42 Net (Expense) Revenue and Changes in Net Position Component Primary Government Unit Governmental Business-Type First 5 Activities Activities Total San Luis Obispo $ (21,867) $ - - $ ( 21,867) ( 67,552) -- (67,552) (3,639) -- (3,639) ( 10,399) -- (10,399) (7,739) -- (7,739) (7,786) -- (7,786) (2,926) -- (2,926) (5,270) -- (5,270) (127,178) -- (127,178) -- 726 726 -- 171 171 -- 379 379 -- (143) (143) -- 15 15 -- 52 52 -- (540) (540) -- 57,276 57,276 -- 57,936 57,936 (127,178) 5 7,936 (69,242) -- -- -- $ 3 5 152,256 4,402 1 56,658 - - 11,358 -- 11,358 - - 8,021 -- 8,021 - - 2,245 -- 2,245 - - 464 32 496 - - 1,727 -- 1,727 - - 599 595 1,194 18 -- 40 40 10 (790) 790 -- - - (2,800) -- (2,800) - - 173,080 5,859 1 78,939 28 45,902 63,795 1 09,697 63 1,437,044 225,571 1,662,615 8,481 (1,790) (2,784) (4,574) - - $ 1 ,481,156 $ 286,582 $ 1,767,738 $ 8,544 The accompanying notes are an integral part of these financial statements. 43 44 ________________________________________________________________ BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS ________________________________________________________________ 45 46 COUNTY OF SAN LUIS OBISPO Balance Sheet Governmental Funds June 30, 2014 (in thousands) Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Assets Cash and cash equivalents $ 2 35,988 $ 2 3,940 $ 67,625 $ 327,553 Restricted cash with fiscal agent - - 172 2,266 2,438 Accounts receivable, net 2 3 - - -- 23 Accrued property taxes receivable 1 2,857 - - -- 12,857 Other receivables 1 ,117 - - -- 1,117 Due from other governments 2 4,064 3 ,566 3,063 30,693 Inventories 9 8 - - -- 98 Prepaid items 3 48 - - -- 348 Loans receivable - - -- 7,546 7,546 Advances to other funds 2 ,347 - - 620 2,967 Other assets - - -- 6,070 6,070 Total Assets $ 2 76,842 $ 2 7,678 $ 87,190 $ 391,710 Liabilities Salaries and benefits payable $ 5 ,500 $ - - $ 283 $ 5,783 Accounts payable 9 ,426 1,427 2,484 13,337 Deposits from others 1 ,611 - - 858 2,469 Unearned revenue 3 94 551 5,033 5,978 Other current liabilities 5 73 - - 6,070 6,643 Advances from other funds - - -- 2,095 2,095 Total Liabilities 1 7,504 1 ,978 16,823 36,305 Deferred Inflows of Resources Unavailable revenue 2 0,157 - - 1,663 21,820 Fund Balances: Nonspendable 7 79 - - -- 779 Restricted 3 ,214 - - 20,164 23,378 Committed 1 16,940 2 5,700 48,540 191,180 Assigned 1 18,248 - - -- 118,248 Total Fund Balances 2 39,181 2 5,700 68,704 333,585 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 2 76,842 $ 2 7,678 $ 87,190 $ 391,710 The accompanying notes are an integral part of these financial statements. 47 COUNTY OF SAN LUIS OBISPO Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position - Governmental Activities June 30, 2014 (in thousands) Fund Balance - total governmental funds (page 47) $ 3 33,585 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. 1 ,124,159 Accrued property tax and grant revenues are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 21,820 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. 134,355 The other post employment benefit (OPEB) asset is not available to pay for current-period expenditures and, therefore, is deferred in the funds. 2,314 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 position. 29,447 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. 2,155 Interest on long-term debt is recognized as it accrues, regardless of when it is due. ( 1,678) 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 (111,234) Bonds and notes payable (25,785) Compensated absences (23,768) Landfill closure/postclosure costs ( 4,214) Net position of governmental activities (page 41) $ 1,481,156 The accompanying notes are an integral part of these financial statements. 48 COUNTY OF SAN LUIS OBISPO Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2014 (in thousands) Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Revenues: Taxes $ 167,004 $ -- $ 10,761 $ 177,765 Licenses, permits, and franchises 10,694 -- -- 10,694 Fines, forfeits and penalties 2,177 2,436 644 5,257 Revenue from use of money and property 1,096 56 221 1,373 Aid from governmental agencies 1 95,037 3,597 30,649 2 29,283 Charges for current services 29,713 2,686 17,672 50,071 Other revenues 4,129 -- 2,106 6,235 Total revenues 4 09,850 8,775 62,053 4 80,678 Expenditures: Current: General government 44,317 -- -- 44,317 Public protection 1 43,703 -- 4,452 1 48,155 Public ways and facilities 2,045 -- 26,483 28,528 Health and sanitation 68,377 -- 6,209 74,586 Public assistance 94,528 -- 4,914 99,442 Education 441 -- 11,764 12,205 Recreation and cultural services -- -- 7,993 7,993 Debt service: Principal payments -- -- 5,412 5,412 Interest and fiscal charges -- -- 5,419 5,419 Capital outlay -- 11,312 -- 11,312 Total expenditures 3 53,411 11,312 72,646 4 37,369 Excess (Deficiency) of Revenues Over (Under) Expenditures 56,439 (2,537) (10,593) 43,309 Other Financing Sources (Uses): Transfers in 957 3,172 22,373 26,502 Transfers out (23,114) ( 19) (2,802) (25,935) Total Other Financing Sources (Uses) (22,157) 3,153 19,571 567 Special item (2,800) -- -- (2,800) Net Change in Fund Balances 31,482 616 8,978 41,076 Fund Balances - Beginning 2 07,699 25,084 59,726 2 92,509 Fund Balances - Ending $ 239,181 $ 25,700 $ 68,704 $ 333,585 The accompanying notes are an integral part of these financial statements. 49 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, 2014 (in thousands) Net Change in fund balance - total governmental funds (page 49) $ 41,076 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. (5,482) Governmental funds report capital outlay as expenditures. These expenditures have no effect on net position. Capital outlay expenditures that have no effect on net position are reported in the following functional categories: Capital outlay $ 10,482 General government 1,227 Public protection 1,244 Public ways 8,995 Health and sanitation 3 9 Public assistance 9 1 Education 588 Recreation and cultural services 7 2 22,738 In the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense. (16,530) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net position. ( 99) Bond proceeds are reported as financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net position, 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 position. Debt principal payments 5,412 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 (286) Change in accrued interest payable ( 64) Change in landfill closure/postclosure costs ( 63) Change in OPEB 775 Amortization of debt premiums, discounts and issuance costs 85 Amortization of prepaid pension contributions (764) 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. (877) The net (revenue) expense allocable to business-type activities ( 19) Change in net position of governmental activities (page 43) $ 45,902 The accompanying notes are an integral part of these financial statements. 50 COUNTY OF SAN LUIS OBISPO Statement of Fund Net Position Proprietary Funds June 30, 2014 (in thousands) Governmental Business-type Activities - Enterprise Funds Activities Nacimiento Nonmajor Total Internal Water Lopez Los Osos Enterprise Enterprise Service Airport Contract Flood Control Wastewater Funds Funds Funds Assets Current Assets: Cash and investments $ 3 ,323 $ 14,814 $ 7 ,951 $ 5,754 $ 20,242 $ 52,084 $ 3 9,806 Accounts receivable, net - - 4 -- -- 626 630 2 2 Other receivables 1 23 5 -- 114,886 - - 115,014 - - Due from other governments 2 89 - - - - -- -- 289 - - Deposits with others - - 148 - - 10 13 171 - - Inventories - - - - - - -- -- -- 5 64 Prepaid items 1 3 - - 30 -- -- 43 - - Loans receivable - - 50 - - -- -- 50 - - Total Current Assets 3 ,748 15,021 7 ,981 120,650 2 0,881 168,281 4 0,392 Noncurrent assets: Advances to other funds - - - - - - -- 670 670 - - Restricted cash with fiscal agent - - 10,665 - - -- -- 10,665 - - Capital assets: Nondepreciable: Land 2 3,224 3 ,110 2 ,154 2,470 1,663 32,621 - - Construction in progress 2 ,683 11 412 106,906 4 79 110,491 - - Water rights - - - - - - -- 46,457 46,457 - - Other property - - - - 1,968 - - -- 1,968 - - Depreciable: Infrastructure, net 7 38 156,681 2 5,215 - - 1,831 184,465 - - Structures and improvements, net 5 5,364 9 ,597 35,111 - - 25,179 125,251 3 72 Equipment, net 5 72 - - 37 -- 409 1,018 1 1,917 Other property, net - - - - - - -- 498 498 - - Total Noncurrent Assets 8 2,581 180,064 6 4,897 109,376 7 7,186 514,104 1 2,289 Total Assets 8 6,329 195,085 7 2,878 230,026 9 8,067 682,385 5 2,681 Liabilities: Current Liabilities: Salaries and benefits payable 3 4 - - - - -- 30 64 5 35 Accounts payable 1 58 6 90 3 1 8,188 5,590 14,657 1 ,256 Interest payable 7 9 3,136 4 13 1,068 7 0 4,766 - - Self insurance payable - - - - - - -- -- -- 3,487 Deposits from others 4 8 1,573 6 6 -- 2,996 4,683 7 09 Unearned revenue 6 5 9 742 19,735 2 ,023 22,574 - - Accrued vacation and sick leave - current 1 05 - - - - -- 66 171 1 ,561 Notes and bond payable - current 2 75 3,350 1 ,908 1,244 5 11 7,288 - - Total Current Liabilities 7 64 8,758 3 ,160 30,235 11,286 54,203 7 ,548 Noncurrent Liabilities: Self insurance payable - - - - - - -- -- -- 14,829 Advances from other funds 1 ,050 - - - - -- 492 1,542 - - Accrued vacation and sick leave 3 3 - - - - -- 84 117 8 57 Notes and bonds payable 2 ,870 189,537 4 0,971 95,135 9 ,273 337,786 - - Total Noncurrent Liabilities 3 ,953 189,537 4 0,971 95,135 9 ,849 339,445 1 5,686 Total Liabilities 4 ,717 198,295 4 4,131 125,370 2 1,135 393,648 2 3,234 Net Position Net investment in capital assets 7 9,436 (12,823) 2 2,018 32,939 66,915 188,485 1 2,289 Unrestricted 2 ,176 9 ,613 6 ,729 71,717 10,017 100,252 1 7,158 Total Net Position $ 8 1,612 $ ( 3,210) $ 2 8,747 $ 104,656 $ 76,932 288,737 $ 2 9,447 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (page 41) (2,155) Net position of business-type activities $ 2 86,582 The accompanying notes are an integral part of these financial statements. 51 COUNTY OF SAN LUIS OBISPO Proprietary Funds Statement of Revenues, Expenses and Changes in Net Position For the Year Ended June 30, 2014 (in thousands) Governmental Business-type Activities - Enterprise Funds Activities Nacimiento Nonmajor Total Internal Water Lopez Los Osos Enterprise Enterprise Service Airport Contract Flood Control Wastewater Funds Funds Funds Operating Revenues: Charges for current services $ 4,493 $ 13,685 $ 6,123 $ -- $ 13,310 $ 3 7,611 $ 43,250 Other revenues 34 -- -- 3 3 40 414 Total Operating Revenues 4,527 13,685 6,123 3 13,313 37,651 43,664 Operating Expenses: Salaries and benefits 1,307 -- -- 1 1,229 2,537 21,137 Services and supplies 1,812 2,432 3,068 233 10,568 18,113 16,249 Other charges 25 8 10 - - 8 51 -- Insurance benefit payments -- -- -- - - -- - - 4,259 Depreciation 2,160 2,180 1,308 - - 1,098 6,746 2,085 Countywide cost allocation 165 8 23 - - 49 2 45 202 Total Operating Expenses 5,469 4,628 4,409 234 12,952 27,692 43,932 Operating Income (Loss) (942) 9,057 1,714 (231) 361 9,959 (268) Nonoperating Revenues (Expenses): Property taxes -- 1,203 1,182 - - 2,049 4,434 -- Interest income 4 529 15 10 37 5 95 79 Interest expense (199) (9,215) (1,523) - - (324) (11,261) -- Aid from governmental agencies 127 12 8 -- 16 1 63 370 Other nonoperating revenue (expenses) -- -- (183) - - -- (183) 193 Total Nonoperating Revenues (Expenses) (68) (7,471) (501) 10 1,778 ( 6,252) 642 Income (Loss) Before Contributions and Transfers (1,010) 1,586 1,213 (221) 2,139 3,707 374 Capital contributions 1,770 -- -- 57,507 108 59,385 -- Transfers in 17 -- -- 639 171 8 27 -- Transfers out (51) -- -- (3) (89) (143) (1,251) Changes in net position 726 1,586 1,213 57,922 2,329 63,776 (877) Net Position - Beginning 80,886 (2,747) 28,017 46,986 74,603 30,324 Cumulative effect of change in accounting principle -- (2,049) (483) (252) - - -- Net Position - Ending $ 81,612 $ (3,210) $ 28,747 $ 104,656 $ 76,932 $ 29,447 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 19 Change in net position of business-type activities (page 43) $ 6 3,795 The accompanying notes are an integral part of these financial statements. 52 COUNTY OF SAN LUIS OBISPO Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2014 (in thousands) Governmental Business-type Activities - Enterprise Funds Activities Nacimiento Nonmajor Total Internal Water Lopez Los Osos Enterprise Enterprise Service Airport Contract Flood Control Wastewater Funds Funds Funds Cash Flows from Operating Activities: Receipts from customers and third parties $ 4 ,185 $ 10,901 $ 6 ,631 $ 3 $ 15,394 $ 37,114 $ - - Receipts from interfund billings - - - - - - -- -- -- 4 3,653 Payments for goods and services ( 1,917) ( 2,445) ( 3,100) ( 233) (10,248) (17,943) ( 13,372) Payments to employees for service ( 1,308) - - - - (1) (1,231) (2,540) ( 21,025) Payments for insurance benefits - - - - - - -- -- -- ( 4,740) Payments for premiums - - - - - - -- -- -- ( 2,723) Net Cash Provided (Used) by Operating Activities 9 60 8,456 3 ,531 (231) 3,915 16,631 1 ,793 Cash Flows from Noncapital Financing Activities: Property tax proceeds - - 1,203 1 ,182 - - 2,049 4,434 - - Grants and subsidies from other gov't agencies 1 27 1 2 8 -- 48 195 3 70 Advances from other funds 6 - - - - -- (61) (55) - - Transfers from other funds 1 7 - - - - 639 171 827 - - Transfers to other funds ( 51) - - - - (3) (89) (143) ( 1,251) Net Cash Provided (Used) by Noncapital and Related Financing Activities 9 9 1,215 1 ,190 636 2,118 5,258 ( 881) Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets ( 1,630) ( 824) ( 279) (58,758) (2,869) (64,360) ( 4,174) Proceeds from issuance of long-term debt - - - - - - 57,507 1,062 58,569 - - Proceeds from sale of capital assets - - - - - - -- -- -- 3 64 Capital contributions 1 ,770 - - - - -- 108 1,878 - - Principal paid on capital debt ( 263) (3,210) ( 1,850) (1,208) (487) (7,018) - - Interest paid on capital debt ( 157) (9,459) ( 1,589) ( 3) (319) (11,527) - - Net Cash Provided (Used) by Capital and Related Financing Activities ( 280) (13,493) ( 3,718) (2,462) (2,505) (22,458) ( 3,810) Cash Flows from Investing Activities: Interest received 4 529 1 7 10 39 599 8 0 Net Cash Provided (Used) by Investing Activities 4 529 1 7 10 39 599 8 0 Net Increase (Decrease) in Cash and Cash Equivalents 7 83 (3,293) 1 ,020 (2,047) 3,567 3 0 ( 2,818) Cash and Cash Equivalents - Beginning of Year 2 ,540 28,772 6 ,931 7,801 16,675 62,719 4 2,624 Cash and Cash Equivalents - End of Year $ 3 ,323 $ 25,479 $ 7 ,951 $ 5,754 $ 20,242 $ 62,749 $ 3 9,806 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ ( 942) $ 9,057 $ 1 ,714 $ (231) $ 361 $ 9,959 $ ( 268) Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense 2,160 2,180 1,308 -- 1,098 6,746 2,085 Change in Assets and Liabilities: Receivables, net (383) (60) -- -- 2,035 1,592 (11) Inventory -- -- -- -- - - -- 5 Prepaid items (8) -- (2) -- - - (10) -- Accounts payable 133 2 3 -- 380 518 301 Deposits from others -- -- -- -- - - -- 83 Salaries and benefits payable 4 -- -- -- 3 7 74 Unearned revenue (11) -- 508 -- 43 540 -- Other accrued liabilities 11 (2,723) -- -- - - (2,712) 25 Accrued vacation and sick leave (4) -- -- -- (5) (9) 15 Self-insurance liability -- -- -- -- - - -- (516) Total Adjustments 1,902 (601) 1,817 -- 3,554 6,672 2,061 Net Cash Provided (Used) by Operating Activities $ 960 $ 8,456 $ 3,531 $ (231) $ 3,915 $ 16,631 $ 1,793 Noncash Investing, Capital, and Financing Activities: Contributions of capital assets $ -- $ -- $ - - $ 3 5,717 $ -- $ 35,717 $ -- The accompanying notes are an integral part of these financial statements. 53 COUNTY OF SAN LUIS OBISPO Statement of Fiduciary Net Position Agency and Investment Trust Funds June 30, 2014 (in thousands) San Luis Obispo Pension Trust Fund December 31, 2013 (in thousands) Investment San Luis Obispo Agency Trust County Funds Fund Pension Trust 06/30/14 06/30/14 12/31/2013 Assets Cash and cash equivalents $ 44,157 $ 201,014 $ 34,395 Notes receivable -- - - Contributions receivable -- - - 1,467 Accrued interest and dividends receivable -- - - 1,477 Accounts receivable -- - - 6 Securities sold -- - - 67,710 Prepaid benefits -- - - 277 Investments pension trust: Bonds and notes, at fair value -- - - 235,194 International fixed income, at fair value -- - - 116,590 Collateralized mortgage obligations, at fair value -- - - 8,760 Domestic equities, at fair value -- - - 340,723 International equities, at fair value -- - - 267,611 Alternative investments, at fair value -- - - 73,002 Real estate, at fair value -- - - 97,723 Other investments, at fair value 7 Capital assets-net of accumulated depreciation -- - - 705 Total Assets 44,157 201,014 1,245,647 Liabilities Agency obligations 44,157 - - -- Securities purchased -- - - 108,670 Accrued liabilities -- - - 1,258 Total Liabilities 44,157 - - 109,928 Net Position Net position held in trust for pool participants -- 201,014 -- Net position held in trust for pension benefits -- - - 1,135,719 Total Net Position $ - - $ 201,014 $ 1,135,719 The accompanying notes are an integral part of these financial statements. 54 COUNTY OF SAN LUIS OBISPO Statement of Changes in Fiduciary Net Position Investment Trust Funds For the Year Ended June 30, 2014 (in thousands) San Luis Obispo Pension Trust Fund For the Year Ended December 31, 2013 (in thousands) Investment San Luis Obispo Trust County Fund Pension Trust 06/30/14 12/31/13 Additions Contributions: Employer contributions $ 822,393 $ 30,796 Member contributions -- 24,460 Total Contributions 822,393 55,256 Investment Income: Realized and unrealized gains and losses -- 96,397 Interest 344 5,829 Dividends -- 33,848 Real estate management trust income -- (112) Real estate operating income, net -- 1,406 Other investment income, net -- (6) Investment expenses -- (5,520) Total Investment Earnings 344 131,842 Total Additions 822,737 187,098 Deductions Benefits: Monthly benefit payments -- 60,237 Refunds of contributions -- 2,374 Death benefits -- 150 Total benefits -- 62,761 Administrative expenses -- 2,054 Total Administrative Expenses -- 2,054 Distributions from investment pool 812,037 -- Total deductions 812,037 64,815 Change in Net Position 10,700 122,283 Net Position - Beginning 190,314 1,013,436 Net Position - Ending $ 2 01,014 $ 1,135,719 The accompanying notes are an integral part of these financial statements. 55 56 ________________________________________________________________ NOTES TO THE BASIC FINANCIAL STATEMENTS ________________________________________________________________ 57 58 COUNTY OF SAN LUIS OBISPO NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2014 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) Statements 14 and 61. 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: 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-Treasurer-Tax Collector at 1055 Monterey, Room D220, San Luis Obispo, CA 93408. 59 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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-Treasurer-Tax Collector makes disbursements upon the 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 position 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 goods 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, 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. 60 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 column. The internal service funds are presented in a single column on the face of the proprietary fund statements. New Accounting Pronouncements For the fiscal year ended June 30, 2014, the County implemented the following Governmental Accounting Standards Board (GASB) Statements: GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. The requirements of this statement are effective for financial statement periods beginning after December 15, 2012; however, the GASB encouraged earlier application. GASB 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows or deferred inflows of resources certain items that were previously reported as assets and liabilities. GASB 65 improves financial reporting by clarifying the appropriate use of the financial statement elements deferred outflows of resources and deferred inflows of resources to ensure consistency in financial reporting. GASB Statement No. 66, Technical Corrections – 2012; an amendment of GASB Statements No. 10 and No. 62. The requirements of this statement are effective for financial statement periods beginning after December 15, 2012. GASB 66 resolves conflicting guidance that resulted from the issuance of Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements by removing the provision that limits fund-based reporting of an entity’s risk financing activities to the general fund and the internal service fund type. The statement also amends specific guidance on accounting for (1) operating lease payments that vary from a straight-line basis, (2) the difference between the initial investment (purchase price) and the principal amount of a purchased loan or group of loans, and (3) servicing fees related to mortgage loans that are sold when the stated service fee rate differs significantly from a current (normal) servicing rate fee. GASB 66 improves financial reporting resolving conflicting accounting and financial reporting guidance that could diminish the consistency of financial reporting and thereby enhance the usefulness of the financial reports. 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. 61 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 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 fleet operations, equipment maintenance 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, 2013. 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 99 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 137 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. 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 tax, 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. 62 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 and all other revenues to be available if they are collected within 60 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. 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-Treasurer- Tax Collector, 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, 2013. The fair value of pooled investments is determined annually and is based on current market prices. 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 99.98 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. 63 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Property Tax The County is responsible for the assessment, collection, and apportionment of property taxes for all taxing jurisdictions within the County, including schools, 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. Property taxes are accounted for in the Unapportioned Property Tax and Interest Fund, an Agency Fund, until allocation and disbursement to the taxing jurisdictions. Beginning in fiscal year 1993-94, 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 2001-02 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. Inventories and Prepaid Items Inventories held by the General Fund, and the Public Works and 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. 64 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 the 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 position. Bond premiums and discounts 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. 65 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 66 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 cash flow 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. Most recently on July 30, 2014, 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. Gallina, LLP was selected to perform an Annual Investment Program Compliance Audit for the fiscal year ended June 30, 2014. The results of these audits have been presented to the Board of Supervisors on a yearly basis. Under parameters established by the California Government Code, the County may purchase as investments: 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 of 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. 67 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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 1.000681869513 in the Quarterly Report of Investments as of June 30, 2014, 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 1.00029875 for its portfolio as of June 30, 2014. 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, 2014, 1.86% 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, 2014, 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 policies and procedures to reduce exposure to investment risks. The County IP gives the County Treasurer the authority to act in the best interest of the County in the face of changing market conditions and circumstances by making written exceptions to the County IP and the Treasurer’s written policies and procedures within the limits of the California Government Code and all relevant laws. As of June 30, 2014, 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. 68 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Maximum Percentage Maximum Investment of Portfolio in One Issuer Authorized Investment Type Maximum Maturity 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 1 year 10% N/A Treasury Notes or Bonds of this state Not authorized in FY 2013-14 Registered Treasury Notes or Bonds of any of the Not authorized in FY 2013-14 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 2013-14 Federal Home Loan Mortgage Corp. Not authorized in FY 2013-14 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 2013-14 Commercial Paper 30 days 5% 2% Collateralized Certificates of Deposit 1 year 5% 1% Negotiable Certificates of Deposit Not authorized in FY 2013-14 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 2013-14 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 2013-14 Money Market Mutual Funds Not authorized in FY 2013-14 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 times secured by a valid first priority security Not authorized in FY 2013-14 interest Mortgage Pass-Through Securities Not authorized in FY 2013-14 Local Agency Investment Fund N/A 15% N/A *An investment in a Tax Revenue Anticipation Note (TRAN) for $1,116,378, with an interest rate of 2.6%, issued by the Port San Luis Harbor District, was approved by the County Treasurer in January 2013. The investment is an exception to the above restriction of one (1) year as it has a maturity of five (5) years. However, it is within what is allowed by California Government Code. 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. 69 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2014, the County did not have investments in 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, 2014. Investment Type S&P Moody's % of Portfolio* U.S Treasuries AA+ Aaa 15.03% U.S. Government Agencies AA+ Aaa 49.04% CDARS Not Rated Not Rated 17.84% Local Agency Investment Fund Not Rated Not Rated 17.85% TRAN Not Rated Not Rated 0.24% 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 8% 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, 2014, the following investments exceeded the 5% disclosure threshold: Investment Type % of Portfolio U.S. Government Agencies-Federal Home Loan Bank 21.59% U.S. Government Agencies-Farm Credit Bank 27.45% At June 30, 2014, 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 7/03/14- 0.30% 0.25 50,001 50,001 50,000 5/07/15 U.S. Treasuries 12/31/15- 0.362%- 2.24 42,060 42,131 42,000 5/15/17 0.925% U.S. Government Agencies 1/21/16- 0.345%- 1/16/18 1.32% 2.39 137,071 137,450 136,527 Local Agency Investment On Fund Demand 0.22% - 50,028 50,043 50,000 TRAN 1/30/18 2.60% 3.58 658 658 651 Total Investments in County Treasury 1.56 $279,818 $280,283 $279,178 Deposits in Financial Institutions 401,793 401,793 401,793 Cash on Hand 165 165 165 Total Cash held in Treasury 681,776 682,241 681,136 Deposits in Transit 552 552 552 Outstanding Warrants (11,641) (11,641) (11,641) Total 670,687 671,152 670,047 Imprest Cash 857 857 857 70 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Weighted Average Maturity Interest Maturity Carrying Fair Instrument Dates Rate % Years Amount Value Par Value Non-pool Cash Deposits 1,855 1,855 1,855 Other Cash Deposits 2,712 2,712 2,712 Total cash and cash equivalents $ 673,399 $ 673,864 $ 672,759 Carrying Fair Restricted Cash with Fiscal Agent Amount Value Par Value U.S. Government & Federal Agencies $ 12,931 $ 12,931 $ 12,931 Certificates of Deposit & Money Market 172 172 172 Accounts Total 13,103 13,103 13,103 Total restricted and unrestricted cash and cash equivalents $ 686,502 $ 686,967 $ 685,862 Carrying Total Cash and Investments Summary Amount Total Governmental Activities $ 369,797 Total Business-type Activities 62,749 Total Fiduciary Funds 245,171 Total Component Unit 8,785 Total Cash and Investments $ 686,502 The following represents a condensed statement of net position and changes in net position for the Treasurer's investment pool as of June 30, 2014 (in thousands): Carrying Amount Fair Value Statement of Net Position: Net position held for pool participants $ 670,687 $ 671,152 Equity of internal pool participants $ 469,673 $ 470,138 Equity of external pool participants (voluntary and involuntary) 201,014 201,014 Total Equity $ 670,687 $ 671,152 Statement of Changes in Net Position: Revenue $ 2,261 $ 2,261 Investment Costs (965) (965) Net Deposits 46,702 46,702 Change in fair value - 244 Net change in pool 47,997 48,241 Net position at July 1, 2013 622,689 622,910 Net position at June 30, 2014 $ 670,687 $ 671,152 Restricted Cash with Fiscal Agent Cash and investments at June 30, 2014 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 $ 12,919 Restricted interest on lease reserves 12 Restricted for Contractor Retentions 172 Total Restricted Cash $ 13,103 71 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Cash Deposits outside of the Treasury Pool At fiscal year end, the carrying amount of the County's other cash deposits was $1,568,239 and the combined financial institutions' balance was $1,868,721. The difference of $300,482 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 $1,868,721 was covered by federal depository insurance or by collateral held by County's agent in the County's name. 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 Business Type Activities Activities Activities Nonmajor Internal Nacimiento Water Enterprise Service Contract General Fund Funds Funds Accounts $ 23 $ 1,510 $ 626 $ 22 Receivable Allowance for - (1,506) Doubtful Accounts Net Accounts $ 23 $ 4 $ 626 $ 22 Receivable 4. CAPITAL ASSETS A summary of changes in capital assets for the year ended June 30, 2014, is as follows (in thousands): Balance Transfers & Balance Governmental Activities July 1, 2013 Additions Retirements Adjustments June 30, 2014 Capital assets, not being depreciated: Land $ 789,246 $ 140 $ - $ 5,293 $ 794,679 Construction in progress 71,143 18,067 (54) (49,474) 39,682 Total capital assets, not being depreciated 860,389 18,207 (54) (44,181) 834,361 Capital assets, being depreciated: Structures and improvements 177,637 860 (27) 667 179,137 Equipment 73,465 5,398 (3,504) 229 75,588 Infrastructure 295,829 2,428 - 43,175 341,432 Other property 340 - - - 340 Total capital assets, being depreciated 547,271 8,686 (3,531) 44,071 596,497 Less accumulated depreciation for: Structures and improvements (69,530) (3,926) 25 - (73,431) Equipment (42,921) (5,646) 3,291 - (45,276) Infrastructure (166,645) (9,039) - - (175,684) Other property (15) (4) - - (19) (279,111) (18,615) 3,316 - (294,410) Total accumulated depreciation 268,160 (9,929) (215) 44,071 302,087 Total capital assets being depreciated, net $1,128,549 $ 8,278 $ (269) $ (110) $ 1,136,448 Governmental activities capital assets, net 72 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Balance Transfers & Balance Business-Type Activities July 1, 2013 Additions Retirements Adjustments June 30, 2014 Capital assets, not being depreciated: Land $ 32,617 $ 3 $ - $ 1 $ 32,621 Construction in progress 54,479 57,146 - (1,134) 110,491 Water Rights 44,564 1,893 - - 46,457 Other Property 1,968 - - - 1,968 Total capital assets, not being depreciated 133,628 59,042 - (1,133) 191,537 Capital assets, being depreciated: Infrastructure 191,153 1,568 - 1,227 193,948 Structures and improvements 169,175 4 (394) 12 168,797 Equipment 3,096 60 (8) - 3,148 Other Property 554 - - - 554 Total capital assets, being depreciated 363,978 1,632 (402) 1,239 366,447 Less accumulated depreciation for: Infrastructure (6,577) (2,907) - - (9,484) Structures and improvements (40,074) (3,683) 212 - (43,545) Equipment (1,983) (155) 8 - (2,130) Other Property (54) (2) - - (56) (48,688) (6,747) 220 - (55,215) Total accumulated depreciation 315,290 (5,115) (182) 1,239 311,232 Total capital assets being depreciated, net $ 448,918 $ 53,927 $ (182) $ 106 $ 502,769 Business-type activities capital assets, net Depreciation expense Depreciation expense was charged to functions as follows (in thousands): Governmental Activities Amount General Government $ 3,499 Public Protection 2,649 Public Ways and Facilities 8,862 Health and Sanitation 515 Public Assistance 231 Education 191 Recreational and Cultural Services 583 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 2,085 Total Depreciation Expense-Governmental Activities $ 18,615 Business-type Activities Amount Airport $ 2,160 Nacimiento 2,180 Lopez Flood Control 1,308 Nonmajor Enterprise 1,098 Total Depreciation Expense-Business-type Activities $ 6,746 73 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, 2014 (in thousands): Governmental Activities Expended to Committed Project June 30, 2014 Funds Sheriff Women’s Jail Expansion $ 7,775 $ 7,794 Behavioral Health Electronic Health 338 242 Record System Roads Infrastructure 18,160 8,699 Library – Atascadero Site Evaluation 2,671 825 North County Public Service Center 1,347 420 SLO Probation Juvenile Hall Expansion 1,683 1,490 Parks & Recreation (Bob Jones Trail) 642 26 Property Tax System 674 1,110 Business-Type Activities Expended to Committed Project June 30, 2014 Funds SLO Airport Facilities Infrastructure $ 2,683 $ 296 Los Osos Wastewater Project 106,708 66,610 Nacimiento Water Project 11 6,867 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, 2014 they had a carrying value of $8,415 net of accumulated depreciation of $2,372. 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, 2014 (in thousands): Year Ending June 30 General Fund Airport 2015 $ 628 $ 284 2016 628 281 2017 600 254 2018 584 237 2019 576 237 Later Years 1,697 6,858 Total $ 4,713 $ 8,151 74 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 $1,452,824 for the fiscal year ended June 30, 2014. 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, 2014 totaled $3,285,379. 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, 2014 for the next five years and for each five-year period thereafter (in thousands): Year Ending Minimum Lease Payments June 30 2015 $ 2,011 2016 1,961 2017 1,756 2018 1,325 2019 1,236 2020-2024 5,125 2025-2029 2,133 2030-2034 488 Total $ 16,035 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 was one liability and nine 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 $ 455,138 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. 75 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The estimated claims liability for the Protected Self Insurance Fund was recorded at a discounted 85% confidence level, and the estimated liability for the Workers' Compensation Self Insurance Fund was recorded at a discounted 80% 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 2012-13 and 2013-14, were as follows (in thousands): Beginning of the fiscal year Current year claims, Balance at fiscal liability changes & estimates Claim payments year end 2012-13 $ 19,255 $ 4,085 $ 4,508 $ 18,832 2013-14 $ 18,832 $ 4,485 $ 5,001 $ 18,316 8. INTERFUND RECEIVABLES AND PAYABLES The composition of interfund balances at June 30, 2014 was (in thousands): Payable Fund (Advances From Balance) Receivable Fund (Advances To Balance) Amount Nonmajor Governmental Funds Nonmajor Enterprise Funds 670 Nonmajor Governmental Funds 281 General Fund 1,144 2,095 Nonmajor Enterprise Funds GeneralFund 153 Nonmajor Governmental Funds 339 492 Airport General Fund 1,050 Total $ 3,637 Nonmajor Governmental Funds advances from Nonmajor Enterprise Funds of $670 are comprised of reserve funds from the Golf Enterprise Fund to the Public Financing Authority Debt Service Fund ($487) and from the Lopez Park Enterprise Fund to the Parks Special Revenue Fund ($183) for future debt service obligations. Advances between Nonmajor Governmental Funds are internal loans of $281 from the Roads Special Revenue Fund to the Roads Impact Fees Special Revenue Fund, and advances related to the General Fund include internal loans to the County Services Area 21 Special Revenue Fund ($122) and to the Library Special Revenue Fund ($1,022). The Nonmajor Enterprise Funds advances of $492 represent internal loans received by the County Services Areas Special Districts Enterprise Funds from the General Fund ($153) and from the County Services Area 10 Special Revenue Fund ($339). The Airport owes the General Fund $1,050 for an internal loan for various projects. 76 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 $ 20,168 Capital Projects Fund 2,929 Airport 17 23,114 Nonmajor Governmental Funds General Fund 683 Capital Projects Fund 97 Nonmajor Governmental Funds 1,231 Los Osos Wastewater 639 Nonmajor Enterprise Funds 152 2,802 Airport Nonmajor Governmental Funds 51 Capital Projects Fund Nonmajor Enterprise Funds 19 Nonmajor Enterprise Funds Nonmajor Governmental Funds 89 Internal Service Funds General Fund 274 Nonmajor Governmental Funds 831 Capital Projects 146 1,251 Los Osos Wastewater Nonmajor Governmental Funds 3 Total Transfers $ 27,329 General Fund transfers to Nonmajor Governmental Funds included contributions to the following Special Revenue Funds: Roads ($5,831), Library ($607), Community Development ($412), County Medical Services Program ($1,893) and Parks ($3,541). The General Fund also transferred $7,884 to the Pension Obligation Bond Debt Service Fund to finance debt service payments, $17 to the Airport, and $2,929 to the Capital Projects Fund of which $2,164 is for the Women’s Jail project. Nonmajor Governmental Fund transfers consist of contributions of Public Facilities Fees revenue from the Public Facilities Fees Special Revenue Fund to the General Fund ($200), the Capital Projects Fund ($97), and the Library Fund ($174) to fund capital and maintenance projects. The Parks Special Revenue Fund made transfers to the General Fund to fund maintenance projects ($14), to the Pension Obligation Bond Debt Service Fund ($136), the Golf Fund ($2) and to the Lopez Park Enterprise Fund ($5) for debt service. The Roads Fund transferred $15 to the Road Impact Fees fund and transferred $4 to Flood Control Zone 18 for maintenance projects. The Road Impact Fee Special Revenue Fund transferred Impact Fees of $450 to the General Fund for certificate of participation payments and $642 to the Roads Fund for capital and maintenance projects. The Library Fund ($204), the County Medical Services Program Fund ($22) and the Driving Under the Influence Fund ($34) made transfers to the Pension Obligation Bond Debt Service Fund to finance debt service payments. Other Nonmajor Governmental Fund transfers include $639 of grant related monies from the Flood Control District to the Los Osos 77 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Wastewater Fund, $19 to the General Fund for planning services and $145 of transfers between various County Service Areas. The Airport Enterprise Fund transferred $51 to the Pension Obligation Bond Fund for debt service. The Capital Projects Fund transferred $19 to the Golf Fund to replace a water line at the Morro Bay Golf Course. Transfers from Nonmajor Enterprise funds included transfers from the Golf Enterprise Fund to the Pension Obligation Bond Debt Service Fund ($42) and transfers between various County Services Areas ($47). The Garage Internal Service Fund transferred $46 to the General Fund for assets sales, and the Protected Self Insurance Internal Service Fund transferred $228 to the General Fund and $142 to the Capital Projects Fund for fire damage repair and equipment replacement costs. The Public Works Internal Service Fund transferred $4 to the Capital Projects Fund for a Water Quality Lab remodel. 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 ($785) and Garage ($46) Internal Service Funds. The Los Osos Wastewater Fund transferred $3 of interest to the Flood Control Zone. 78 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, 2014 (in thousands) is as follows: Beginning Ending Balance Balance Due within Governmental Activities July 1, 2013 Additions Reductions June 30, 2014 one year Bonds and notes payable: Certificates of participation $ 25,662 $ - $ 1,022 $ 24,640 $ 1,040 Unamortized discount on COP (99) - (4) (95) - Unamortized premium on COP 1,329 - 89 1,240 Pension Obligation Bonds 115,624 - 4,390 111,234 5,030 Total Bonds and notes payable 142,516 - 5,497 137,019 6,070 Other liabilities: Compensated absences 25,860 15,345 15,019 26,186 17,570 Landfill post-closure costs 4,151 602 539 4,214 405 Self insurance 18,832 4,485 5,001 18,316 3,487 Total other liabilities 48,843 20,432 20,559 48,716 21,462 Total Governmental Activities $ 191,359 $ 20,432 $ 26,056 $ 185,735 $ 27,532 Business-Type Activities Bonds and notes payable: Certificates of participation $ 17,920 $ 1,062 $ 725 $ 18,257 $ 743 Unamortized premium on COP 492 - 33 459 State notes 34,399 13,654 1,524 46,529 1,569 Revenue bonds 190,389 - 3,219 187,170 3,357 Unamortized premium on Revenue Bonds 5,945 - 213 5,732 - General obligation bonds 9,890 - 360 9,530 375 Unamortized premium on 1,015 - 56 959 - General obligation bonds Assessment bonds 39,527 38,119 1,208 76,438 1,244 Total bonds and notes payable 299,577 52,835 7,338 345,074 7,288 Other liabilities: Compensated absences 297 137 146 288 171 Total other liabilities 297 137 146 288 171 Total Business-Type Activities $ 299,874 $ 52,972 $ 7,484 $ 345,362 $ 7,459 79 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Annual debt service requirements for governmental activities as of June 30, 2014 are summarized as follows: Governmental Activities Certificates of Participation Pension Obligation Bonds Year Ended June 30, Principal Interest Principal Interest 2015 $ 1,040 $ 1,032 $ 5,030 $ 4,140 2016 1,073 1,002 5,715 3,911 2017 1,116 958 6,460 3,644 2018 1,159 913 7,265 3,336 2019 1,207 865 3,610 7,506 2020-2024 6,810 3,531 60,394 31,972 2025-2029 6,926 1,924 17,457 47,138 2030-2034 2,845 930 5,303 18,421 2035-2039 2,464 247 - - Total $ 24,640 $ 11,402 $ 111,234 $ 120,068 Business-Type Activities Certificates of Participation State Notes Revenue Bonds Year Ended Principal Interest Principal Interest Principal Interest June 30, 2015 $ 743 $ 815 $ 1,569 $ 753 $ 3,357 $ 9,337 2016 766 789 1,616 706 3.503 9,192 2017 800 758 1,665 657 3,665 9,026 2018 828 726 2,207 1,005 3,850 8,837 2019 867 691 2,233 943 4,050 8,636 2020-2024 4,959 2,823 11,636 3,741 23,675 39,763 2025-2029 5,760 1,472 10,614 2,284 30,530 32,874 2030-2034 2,158 394 4,884 1,240 39,425 23,982 2035-2039 463 228 3,582 870 50,910 12,491 2040-2044 526 136 3,955 497 24,205 1,155 2045-2049 387 44 2,568 103 - - Total $ 18,257 $ 8,876 $ 46,529 $ 12,799 $ 187,170 $ 155,293 Business-Type Activities (continued) General Obligation Bonds Assessment Bonds Year Ended June 30, Principal Interest Principal Interest 2015 $ 375 $ 461 $ 1,244 $ 2,069 2016 395 445 1,271 2,050 2017 410 429 1,307 2,015 2018 425 413 1,343 1,978 2019 440 394 1,388 1,941 2020-2024 2,560 1,623 7,508 9,105 2025-2029 3,325 847 8,619 7,997 2030-2034 1,600 82 9,897 6,726 2035-2039 11,358 5,267 2040-2044 13,025 3,594 2045-2049 14,946 1,673 2050-2051 4,532 99 Total $ 9,530 $ 4,694 $ 76,438 $ 44,514 80 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Long-term liabilities at June 30, 2014 consisted of the following: Original Date of Semi Annual Issue Outstanding Issue Maturity Interest Rates Installments Amount at 6/30/2014 Governmental Activities Certificates of Participation 2007 Series A 2/8/2007 2037 4% - 4.25% $304 - $308 5,090 4,470 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 6,495 Used to finance improvements to the Vineyard Drive Interchange. Debt service is provided by Development Fees. 2012 Series A 10/15/2012 2028 .5%-5.0% $1,034-1,289 14,427 13,675 Lease Revenue Refunding Bonds used to refund the 2002 A Certificates of Participation. The original COP was partially used to finance a portion of the new government center. Debt service is provided by semi-annual payments funded by general County revenues. 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 24,470 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 $161,601 $135,874 Business-Type Activities Certificates of Participation USDA 2009 4/30/2009 2049 4.375% $6 - $86 1,631 1,553 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 5/12/2011 2030 2.0% - 5.5% $928 - $934 11,990 10,620 Remediation 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. 2012 Series A 10/15/2012 2028 .5%- 5.0% $381-$475 5,323 5,045 Lease Revenue Refunding Bonds used to refund the 2002 A Certificates of Participation. The original COP was partially used to the finance the Dairy Creek Golf Course. Debt service is provided by semi-annual lease payments from the Dairy Creek Golf Course. USDA 2013 07/01/2013 2053 2.75% $18-$67 1,062 1,039 Used to finance a water system improvement project in County Service Area 23. Debt service is provided by water sales revenues. $20,006 $18,257 81 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Original Date of Interest Semi Annual Issue Outstanding at Issue Maturity Rates Installments Amount 6/30/2014 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 $1,358 Santa Margarita Water System 1999 2018 3.41% $36 513 132 Lopez Recreation Area 2004 2024 2.5132% $21 325 183 Lopez Water Treatment Plant Upgrade 2006 2028 2.60% $1,672 25,945 21,770 Airport Hangars 2006 2025 4.6124% $334 4,734 2,414 Airport Hangars 2007 2025 4.6557% $86 1,000 731 Los Osos Waste Water Project 2012 2046 2.0% $336-$598 19,941 19,941 $55,469 $46,529 Revenue Bonds 1976 Water Bond-County Service Area 16 4/1/1976 2016 5.00% $7 - $9 $135 $15 Used to improve the Shandon Water System. Debt service is provided primarily by water sales revenues. 2007 Nacimiento Pipeline Project 3.75% - $7,658 - Series A 9/26/2007 2040 5.0% $10,048 157,845 150,250 2007 Nacimiento Pipeline Project 5.196% - Series B 9/26/2007 2040 5.571% $2,132 - $2,646 38,565 36,905 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 $187,170 General Obligation Bonds 2011 Refunding – Lopez Dam 2.0% - Remediation 5/12/2011 2030 5.5% $833 - $840 $10,760 $9,530 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. Assessment Bonds 2012 2037 2.75% $1,609 - $3,245 $77,656 $76,438 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. 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 82 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2014 totals $2,078 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 $26,474 at June 30, 2014. 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. The liability for compensated absences is typically liquidated from the Parks, County Medical Services Program, Driving Under the Influence Program, Library and General funds. 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 $538,249 with a margin of $528,719. 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, 2014 had an arbitrage liability of $687,749. 11. NET POSITION/FUND BALANCES The government-wide and business-type activities fund financial statements utilize a net position presentation. Net position is categorized as invested 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 position. 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 position invested in capital assets, net of related debt at June 30, 2014 is as follows (in thousands): Amount Governmental activities $ 1,112,934 Business-type activities 188,485 Total $ 1,301,419 83 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Restricted Net Position - 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 position at June 30, 2014 is $17,880 restricted due to enabling legislation. Restricted net position at June 30, 2014 for governmental activities is as follows (in thousands): Amount RESTRICTED FOR: General Government Purchase obligations for Board of Supervisorsrelated professional services $ 1 Purchase obligations for Administrative Office related professional services 6 Purchase obligations for Risk Management related professional services 83 and supplies Purchase obligations for Human Resources related professional services 57 Purchase obligations for Auditor-Controller-Treasurer-Tax Collector 57 related professional services Purchase obligations for County Counsel related professional services 52 Purchase obligations for Capital Project report software 32 Purchase obligations for General Services related professional services 15 Purchase obligations for building maintenance projects 32 Purchase obligations for Information Technology related professional 153 services, equipment and training Purchase obligations for capital projects 57 Claims, contracts and other restrictions 1,560 Public Protection Purchase obligations for Agricultural Commissioner related furniture 7 Purchase obligations for Planning related software, equipment, and 413 professional services Purchase obligations for Waste Management related supplies and 60 professional services Purchase obligations for Probation related professional services and 32 supplies Purchase obligations for Public Defender related professional services 8 Purchase obligations for District Attorney related software support and 42 update services Purchase obligations for Sheriff-Coroner related supplies, equipment, and 194 services Purchase obligations for Animal Services equipment 9 Purchase obligations for Emergency Services related equipment and 7 professional services Purchase obligations for Flood Control related engineeringand 776 environmental services Purchase obligations for fire protectiontraining, software, and equipment 1,510 Purchase obligations for capital projects 8,541 Health and Sanitation Purchase obligations for Behavioral Health related professional services 19 Purchase obligations for Public Health related professional servicesand 120 supplies Claims, contracts and other restrictions 21 Public Assistance Purchase obligations for Social Services related supplies and professional 53 services Purchase obligations for Veterans’ Services related supplies and 329 professional services Public Ways and Facilities Purchase obligations for Public Works relatedprofessional services 8 Road maintenance and construction 6,871 Public facilities fees restricted for public facilities 11,010 Purchase obligations for capital projects 12 84 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Amount Education Purchase obligations for capital projects 97 Claims, contracts and other restrictions 3 Recreation and Culture Purchase obligations for capital projects 167 Claims, contracts and other restrictions 4 Debt Service 10,691 Total Restricted Net Position $ 43,109 Unrestricted Net Position – This category represents net position of the County, not restricted for any project or other purpose. Unrestricted net position at June 30, 2014 is as follows (in thousands): Amount Governmental activities $ 325,113 Business-type activities 98,097 Total $ 423,210 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 resolution adopted by a 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. As a practice, for financial statement presentation the County Auditor-Controller-Treasurer-Tax Collector assigns non-restricted and non-committed fund balance of the General Fund to its intended purpose. Assigned fund balance can be identified by departments and the County Administrative Officer for specific uses during the County’s budgeting process. Budgets requested by departments require approval by the County Board of Supervisors. 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. 85 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Fund balances for all the major and nonmajor governmental funds as of June 30, 2014 are distributed as follows: Capital Nonmajor General Projects Gov’tl Fund Fund Funds Total Nonspendable: Inventories $ 98 $ - $ - $ 98 Prepaid Items 348 - - 348 Advances to other funds 333 - - 333 Subtotal 779 - - 779 Restricted for: Tax loss reserves 3,214 - - 3,214 Public facilities - - 11,009 11,009 Traffic impact programs - - 6,871 6,871 Wildlife and grazing - - 18 18 programs Debt service - - 2,266 2,266 Subtotal 3,214 - 20,164 23,378 Committed to: Maintenance projects 4,852 - - 4,852 Human resources projects 363 - - 363 Assessor projects 307 - - 307 Other general government 2,471 - - 2,471 Planning programs 1,207 - - 1,207 County fire programs 2,444 - - 2,444 Sheriff programs 230 - - 230 Other public protection 202 - - 202 Public health programs 141 - - 141 Behavioral health 19 - - 19 programs Social Services programs 53 - - 53 Veteran’s Services 459 - - 459 programs Public works engineering 87 - - 87 & consulting services Fish and game programs - - 200 200 Flood control programs - - 19,512 19,512 Lighting programs - - 487 487 Community development - - 404 404 programs Medical services programs - - 1,033 1,033 Emergency medical - - 837 837 services Roads - - 9,965 9,965 Community service areas - - 1,291 1,291 Driving under the - - 689 689 influence programs Library - - 1,283 1,283 Parks - - 4,414 4,414 86 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Capital Nonmajor General Projects Gov’tl Fund Fund Funds Total General reserve $ 9,000 $ - $ - $ 9,000 Fire equipment 114 - - 114 Pension Obligation Bonds 7,189 - - 7,189 Internal financing 4,163 - - 4,163 Solar plant mitigation 11,851 - - 11,851 Automation projects 12,807 - - 12,807 Building replacement 19,424 - - 19,424 Organizational 1,775 - - 1,775 development Tax reduction reserve 37,289 - - 37,289 Lease financing 493 - - 493 Capital Projects - 25,700 - 25,700 Debt service - - 8,425 8,425 Subtotal 116,940 25,700 48,540 191,180 Assigned to: Tax reduction reserve 22,187 - - 22,187 General government 13,139 - - 13,139 Clerk Recorder programs 2,401 - - 2,401 Waste Management 2,123 - - 2,123 programs District Attorney programs 2,418 - - 2,418 Sheriff programs 5,035 - - 5,035 Probation programs 3,235 - - 3,235 Planning programs 1,334 - - 1,334 Other public protection programs 914 - - 914 Social Services programs 1,552 - - 1,552 Foster Care/Adoption programs 8,517 - - 8,517 Other Public assistance programs 2,117 - - 2,117 Public ways and facilities 1,309 - - 1,309 Public Health programs 2,412 - - 2,412 Behavioral Health programs 12,576 - - 12,576 Recreation programs 46 - - 46 Subsequent Fiscal Year 36,851 - - 36,851 Budget Imprest cash 82 - - 82 Subtotal 118,248 - - 118,248 Total $ 239,181 $ 25,700 $ 68,704 $ 333,585 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. 87 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The following is a summary of lapsing encumbrances at June 30, 2014 to be reappropriated during the next fiscal year (in thousands): Total Function Encumbrances General Government $ 1,904 Health & Sanitation 2,482 Public Protection 2,599 Public Assistance 626 Public Ways and Facilities 7,695 Education 4 Recreation 905 Total Lapsing Encumbrances $ 16,215 13. OTHER COMMITMENTS In 1965, San Luis Obispo County Flood Control and Water Conservation District (District), a blended component unit of the County, began payments in accordance with a contract with the State Department of Water Resources (DWR) for a water supply from the State Water Project. Estimated future principal payments for the State Water contract will total $28,351,609 over the next 21 years. The estimated amounts vary by year. For example, the principal amount due in 2014 is $867,739 while $2,004,774 is due in 2035. In 1992 the District entered Water Supply Contracts, of like terms, with various sub-contractors which presently provide resources to cover approximately 85% of the capital costs. The contract with the DWR expires in 2035, and during 2013 the State began formal contract extension negotiations with the District and all of the other State Water contractors. The negotiations are still in progress. 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, 2014. 15. 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, 2014 is $4,213,548 (in 2014 dollars). Of this $3,177,569 is for the Maintenance Cost and $1,035,979 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. 88 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 16. 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 multiple-employer cost sharing 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 “Employer”). 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. Participants are currently broken into 3 Tiers depending on date of hire. 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 are issued for the Plan and are available at the County of San Luis Obispo Auditor-Controller-Treasurer-Tax Collector'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, the member’s age, and the member’s bargaining unit. 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 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 as approved by the Board of Trustees. The Plan also provides death benefits for both active and retired participants. The participants' accumulated contributions may be withdrawn at any time should the participant leave the employment of the Employer prior to retirement. Summary of Significant Accounting Policies Basis of Accounting – The Plan's financial statements are prepared on the accrual basis of accounting. The Plan uses the calendar year for financial reporting purposes. Assets are invested and held pursuant to, and in accordance with, the Investment Policy of the Plan that is established by the Trustees. Investments including corporate notes, bonds, collateralized mortgage obligations, equities, futures, real estate investment funds, equity real estate holdings, alternative investments, 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. Contributions 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. Other expenses are recognized when the corresponding liabilities are incurred. The net appreciation (depreciation) in fair value of investments held by the Plan is recorded as an increase (decrease) to investment income based on the valuation of investments at year-end. 89 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The Plan’s financial statements as a whole are presented in conformance with accounting principles generally accepted in the United States of America, as promulgated by the Governmental Accounting Standard Board (GASB). GASB requires certain disclosures and also requires local government pensions to report using the full accrual method of accounting. The Plan’s statements comply with all material requirements of these pronouncements. They are presented in conformance with GASB Statement No. 25, “Financial Reporting for Defined Benefit Pension Plans;” GASB Statement No. 34, “Basic Financial Statements;” GASB Statement No. 37 “Management’s Discussion and Analysis for State and Local Governments;” and GASB Statement No. 40, “Deposit and Investment Risk Disclosures. Third Party Transactions – There were no investments in loans or investments in leases with parties related to the Trust, Plan or Trustees. Concentrations – As of December 31, 2013, the Trust held no investments of a single issuer comprising 5% or more of the Plan Net Position. Funding Policy – The Trustees establish and may amend the funding policy with the goal of providing guidelines for the process to be utilized in determining the Annually Required Contribution (ARC) rate. The Trustees recommend to Board of Supervisors changes to the ARC based on the advice of the Plan Actuary in conjunction with the findings of the Annual Actuarial Valuation. The Actuarial Cost Method used to determine the ARC is the Entry Age Normal Cost Funding Method. This method is one of the actuarial methods authorized under GASB 27. Participants were required to contribute to the Plan for the 2013 calendar year at rates ranging from 3.75% to 24.55% of includable compensation as defined in the Plan document, depending upon the hire date, age of hire, and the collective bargaining agreement under which the participant is covered. The rates charged to the Employer were established at a range of 14.19% to 28.39% of payroll. There were no legal or contractual maximum contribution rates in effect during 2013. During June of 2013, the Board of Trustees unanimously passed the recommendation for an increase of 0.94% to the total contribution rate as recommended by the Actuary in the January 1, 2013 Actuarial Evaluation. The increased total contribution rate took into consideration: a) continuing with the remaining 27 years of the 30 year amortization for unfunded liabilities that was reset in 2010 to 30 years; b) continuing the smoothing of the 2008 asset loss to a 10-year basis instead of the 5-year smoothing applied otherwise. The Employers implemented the increased total contribution rates for the majority of members in Tier 1 and Tier 2 effective December 22, 2014 depending on bargaining unit. The increase was adjusted to 0.97% to account for the deferred implementation. Tier 3 rates were unchanged. Total contributions and appropriations to the Plan in 2013 amounted to $55,013,425. Of this total, $30,795,872 was regular Employer appropriations. Employee contributions amounted to $24,217,553. The Employee contributions did not include Employee Additional Voluntary Contributions of $84,620 and County Additional for Employee Contributions of $157,565. The contributed amounts were actuarially determined as described above and were based on an actuarial valuation report as of December 31, 2013. 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, 2014, (based on an actuarial valuation report as of December 31, 2013) were as follows (in thousands): Amount Annual Required Contribution (ARC) $ 33,417 Interest on beginning net pension asset (9,796) Adjustment to the ARC 7,939 Annual Pension Cost (APC) 31,560 Employer contributions made 30,796 Increase (decrease) in net pension asset (764) Net pension asset / (obligation), beginning of year 135,119 Net pension asset / (obligation), end of year $ 134,355 90 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Three-Year Trend Information Year Ended Annual Pension Percentage of APC Net Pension June 30 Cost (APC) Contribution Contributed Asset 2012* $27,195 $30,436 112% $133,214 2013* $29,036 $30,941 107% $135,119 2014* $31,560 $30,796 98% $134,355 *Based on an Actuarial Valuation date January 1 Annual Pension Costs and Net Pension Asset figures are taken directly from the Annual Actuarial Valuation as of December 31, 2013. The Net Pension Asset is allocated among various reserves. For the year ended December 31, 2013, these reserves were generally credited with interest at the rate of 6.75% for member deposits and 7.25% for other reserves (Current, Retirees and Beneficiaries, Cost of Living). In addition any additional employee or additional employer for employee contributions, as well as compounded interest credited to these additional contributions, earned interest at the rate of 2.30%. 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. Funded Status The Plan’s funded status based upon the most recent actuarial valuation performed by Gabriel, Roeder Smith and Company as of December 31, 2013 and dated January 1, 2014 is as follows: Schedule of Funded Status (Funding Actuarial Unfunded Excess) Accrued AAL UAAL as a Actuarial Actuarial Liability (UAAL) Annual Percentage Valuation Value of (AAL) Entry Funding Covered of Covered Date Assets Age Excess) Payroll Payroll Funded Ratio Jan 1 (a) (b) (b-a) (a/b) (c) (b-a)/c 2014 $1,182,924 $1,518,751 $335,827 77.9% $164,704 203.9% The Actuarial Value of Assets was determined on a market related blend basis, with each year’s 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. 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. 91 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2013 (January 1, 2014) Actuarial Cost Method Entry Age Normal Amortization Method 30 years declining, Closed Method Remaining Amortization Period 26 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% for Tier 1/ 2.00% for Tier 2 and Tier 3 Amortization of Unfunded Actuarial Liabilities is done as a level percent of payroll over 26 years (27 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. 17. 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 2013 ranged from $115 to $139 per month. The subsidy is adjusted annually to reflect changes in the medical component of the Consumer Price Index. 92 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 $1,244 for the fiscal year ended June 30, 2014 includes the normal cost for current active employees of $628 and a component for amortization of the total unfunded actuarial accrued liability (UAAL) of $616. The following table shows the components of the Net OPEB Asset as of June 30, 2014: Annual required contribution (ARC) $1,244 Interest on prior year net OPEB asset (140) Adjustment to ARC 375 Annual OPEB Cost 1,479 Contributions made 1,819 Increase (decrease) in net OPEB obligation (340) Net OPEB obligation (asset) – beginning of year (1,974) Net OPEB obligation (asset) – end of year ($2,314) 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 2014 and the two preceding years are as follows: Fiscal Annual Percent of Net OPEB Year OPEB OPEB Cost Obligation Ended Cost Contributions Contributed (Asset) 2012 $1,625 $1,698 105% ($2,068) 2013 $1,632 $1,537 94% ($1,974) 2014 $1,479 $1,819 123% ($2,314) Funded Status and Funding Progress The funded status of the OPEB plan as of June 30, 2014 (based on the County’s June 30, 2012 actuarial valuation) is as follows: Actuarially accrued liability $22,808 Actuarial value of plan assets (11,105) Unfunded actuarially accrued liability $11,703 Funded ratio (actuarial value of plan assets/AAL) 48.69% Covered payroll (active plan members) $154,555 UAAL as a percentage of covered payroll 7.57% 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. 93 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) In the County’s June 30, 2013 actuarial valuation the Entry Age Normal, Level Percent of Pay actuarial cost method was used. The actuarial assumptions included a 7.10% investment rate of return, an inflation rate of 3.75% per year, and assumed future medical inflation of 4% per year. The OPEB plan’s unfunded actuarial liability is being amortized by level percent of payroll contributions over 30 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. 18. CHANGE IN ACCOUNTING PRINCIPLE In accordance with the FY 2013-14 implementation of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the County no longer amortizes the costs of debt issuance. Instead, debt issuance amounts are expensed as incurred. Accordingly, the County expensed the remaining balances of unamortized debt issuance costs. The adjustment is shown as a cumulative effect of change in accounting principal in the current fiscal year which resulted in a reduction of Net Position of $1,790 for governmental activities and $2,784 for business-type activities. Total impact to Net Position is a decrease of $4,574. 19. SUBSEQUENT EVENT Current provisions of the County’s Retirement Plan permit the County to prepay its obligation to the Pension Trust on an annual basis. On May 6, 2014 the County Board of Supervisors approved an agreement for an advance payment of $43.3 million representing the County’s FY 2014-15 employer retirement and employer paid portion of employee normal retirement contributions to the Pension Trust. The prepayment was made on July 8, 2014 and resulted in a savings of $1.4 million to the County. 20. SPECIAL ITEM The Los Osos Community Services District filed for Chapter 9 bankruptcy on August 25, 2006. The following month, Governor Schwarzenegger signed Assembly Bill 2701 which allowed the County to assume responsibility for the Los Osos Wastewater Project which consists primarily of a wastewater collection system and treatment plant. The County has worked closely with the District to ensure that county-wide taxpayers do not inherit a financial burden as a result of the bankruptcy. As part of the settlement and resolution of the District bankruptcy the County paid $2.8 million in FY 2013-14 in exchange for the District’s assignment to the County of all its rights and obligations under its Solid Waste Franchise Agreement with Waste Connections, Inc., and Mission Country Disposal. Although the Franchise Agreement automatically terminates on August 31, 2023 (subject to a thirty-six month extension option by the County), the County reserved the right to enter into subsequent exclusive franchise agreements for solid waste collection services within the District boundaries. 94 ________________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION ________________________________________________________________ 95 96 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 9 7 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION SAN LUIS OBISPO COUNTY PENSION TRUST SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2014 (in thousands) Unfunded Unfunded AAL Actuarial AAL (Funding Excess) Actuarial Actuarial Accrued (Funding Annual as a Percentage Valuation Value of Liability (AAL) Excess) Funded Covered of Covered Jan 1 Assets (a) Entry Age (b) (b-a) Ratio (a/b) Payroll (c) Payroll ((b-a)/c) 2005 $651,751 $715,085 $63,334 91.1% $135,189 46.8% 2006 $700,060 $831,290 $131,230 84.2% $143,902 91.2% 2007 $759,758 $994,861 $253,103 76.4% $152,117 154.6% 2008 $829,764 $1,057,124 $277,360 78.5% $162,436 140.0% 2009 $875,602 $1,150,214 $274,612 76.1% $168,677 162.8% 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% 2013 $1,122,151 $1,468,001 $345,850 76.4% $164,299 210.5% 2014 $1,182,924 $1,518,751 $335,827 77.9% $164,704 203.9% 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. COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION SAN LUIS OBISPO COUNTY OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2014 (in thousands) Unfunded Unfunded AAL Actuarial AAL (Funding Excess) Actuarial Actuarial Accrued (Funding Annual as a Percentage Valuation Value of Liability (AAL) Excess) Funded Covered of Covered Dec 31 Assets (a) Entry Age (b) (b-a) Ratio (a/b) Payroll (c) Payroll ((b-a)/c) 2009 $6,324 $19,718 $13,394 32.1% $154,282 8.6% 2011* $8,775 $21,185 $12,410 41.42% $152,893 8.1% 2013* $11,105 $22,808 $11,703 48.69% $154,555 7.6% *Valuation Date 6/30/2011 and 6/30/2013 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 2009/2010 CERBT contributions of $6.3 million. The 2011 actuarial value of assets represent fiscal year 2010/2011 CERBT contributions of $8.7 million. The 2013 actuarial value of assets represent fiscal year 2011/2012 CERBT contributions of $11.1 million. 98 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 141,626 $ 143,234 $ 167,004 $ 23,770 Licenses, permits, and franchises 9,641 9,641 10,694 1,053 Fines, forfeits, and penalties 4,159 4,776 1,288 (3,488) Use of money and property 584 584 575 (9) Aid from other governmental agencies 194,625 207,686 195,037 (12,649) Charges for services 28,515 30,120 28,948 (1,172) Other revenue 3,782 5,007 4,129 (878) Total Revenues 382,932 401,048 407,675 6,627 Expenditures: Current: General government 44,281 51,512 39,905 11,607 Public protection 150,665 158,435 143,703 14,732 Public ways and facilities 1,956 2,637 2,045 592 Health and sanitation 71,931 75,742 68,377 7,365 Public assistance 100,845 107,617 94,528 13,089 Education 475 480 441 39 Contingencies 15,551 15,233 -- 15,233 Total Expenditures 385,704 411,656 348,999 62,657 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,772) (10,608) 58,676 69,284 Other Financing Sources (Uses): Transfers in 445 876 307 (569) Transfers out (25,090) (25,214) (23,047) 2,167 Total Other Financing Sources (Uses) (24,645) (24,338) (22,740) 1,598 Net change in fund balances (27,417) (34,946) 35,936 70,882 Fund balances, beginning 162,787 162,787 162,787 -- Fund balances, ending $ 135,370 $ 127,841 $ 198,723 $ 70,882 Continued 99 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, 2014 (in thousands) Explanation of Differences between Budgetary Outflows and GAAP Expenditures: Actual amounts (budgetary basis) "Total Revenues" from the Budgetary Comparison Schedule $ 407,675 Revenues for funds not meeting the special revenue fund defininition which are presented with the General Fund for financial reporting purposes 2,175 Total Revenues as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 409,850 Uses/outflows of resources Actual amounts (budgetary basis) "Total Expenditures" from the Budgetary Comparison Schedule $ 348,999 Expenditures for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 4,412 Total Expenditures as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 353,411 Other financing sources/(uses) of resources Actual amounts (budgetary basis) "Total Other Financing Sources (Uses)" from the Budgetary Comparison Schedule $ (22,740) Other financing sources (uses) for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 583 Total Other Financing Sources (Uses) as reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ (22,157) 100 COUNTY OF SAN LUIS OBISPO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2014 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, 2014 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. B. 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. 101 102 ________________________________________________________________ OTHER SUPPLEMENTARY INFORMATION ________________________________________________________________ 103 104 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS ________________________________________________________________ 105 106 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). San Luis Obispo County Public Financing Authority (PFA) The PFA is a joint exercise of powers authority created to assist in the financing, construction, and equipping of public facilities for its members. 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: 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. 1 07 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. 1 08 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Governmental Funds June 30, 2014 (in thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds ASSETS Cash and cash equivalents $ 8,912 $ 58,713 $ 67,625 Restricted cash with fiscal agent 2,266 - - 2,266 Accounts receivable -- 7,546 7,546 Due from other governments -- 3,063 3,063 Advances to other funds -- 620 620 Other assets 6,070 - - 6,070 Total Assets $ 1 7,248 $ 69,942 $ 8 7,190 LIABILITIES Salaries and benefits payable $ -- $ 283 $ 283 Accounts payable -- 2,484 2,484 Deposits from others -- 858 858 Unearned revenue -- 5,033 5,033 Other current liabilities 6,070 - - 6,070 Advances from other funds 487 1,608 2,095 Total Liabilities 6,557 10,266 16,823 DEFERRED INFLOWS OF RESOURCES Unavailable revenue -- 1,663 1,663 FUND BALANCES Restricted 2,266 17,898 20,164 Committed 8,425 40,115 48,540 Total Fund Balances 10,691 58,013 68,704 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 1 7,248 $ 69,942 $ 8 7,190 109 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2014 (in thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds Revenues: Taxes $ -- $ 10,761 $ 10,761 Fines, forfeits and penalties -- 644 644 Use of money and property 8 213 221 Aid from other governmental agencies -- 30,649 30,649 Charges for current services 2,070 15,602 17,672 Other revenues 600 1,506 2,106 Total revenues 2,678 59,375 62,053 Expenditures: Current: Public protection -- 4,452 4,452 Public ways and facilities -- 26,483 26,483 Health and sanitation -- 6,209 6,209 Public assistance -- 4,914 4,914 Education -- 11,764 11,764 Recreation and cultural services -- 7,993 7,993 Debt service: Principal payments 5,412 -- 5,412 Interest and fiscal charges 5,419 -- 5,419 Total expenditures 10,831 61,815 72,646 Excess (deficiency) of revenues over (under) expenditures (8,153) (2,440) (10,593) Other financing sources (uses): Transfers in 9,204 13,169 22,373 Transfers out -- ( 2,802) (2,802) Total other financing sources and (uses) 9,204 10,367 19,571 Net changes in fund balances 1,051 7,927 8,978 Fund balances - beginning 9,640 50,086 59,726 Fund balances - ending $ 10,691 $ 58,013 $ 68,704 110 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2014 (in thousands) Total Debt Service Debt Service Debt Service Nonmajor Public Facilities Pension Obligation Public Financing Debt Service Corporation Bonds Authority Funds ASSETS Cash and cash equivalents $ 903 $ 8,008 $ 1 $ 8,912 Restricted cash with fiscal agent 451 -- 1,815 2,266 Other assets 280 5,030 760 6,070 Total Assets $ 1 ,634 $ 1 3,038 $ 2,576 $ 17,248 LIABILITIES AND FUND BALANCES Liabilities: Other current liabilities $ 280 $ 5,030 $ 760 $ 6,070 Advances from other funds -- -- 487 487 Total Liabilities 280 5,030 1,247 6,557 Fund Balances: Restricted 451 -- 1,815 2,266 Committed 903 8,008 ( 486) 8,425 Total Fund Balances 1,354 8,008 1,329 10,691 Total Liabilities and Fund Balances $ 1,634 $ 1 3,038 $ 2,576 $ 17,248 111 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, 2014 (in thousands) Total Debt Service Debt Service Debt Service Nonmajor Public Facilities Pension Obligation Public Financing Debt Service Corporation Bonds Authority Funds Revenues: Use of money and property $ -- $ 8 $ -- $ 8 Charges for current services 756 -- 1,314 2,070 Other revenues -- 600 -- 600 Total revenues 756 608 1,314 2,678 Expenditures: Debt service: Principal payments 270 4,390 752 5,412 Interest and fiscal charges 487 4,370 562 5,419 Total expenditures 757 8,760 1,314 10,831 Excess (deficiency) of revenues over (under) expenditures (1) (8,152) -- (8,153) Other financing sources (uses): Transfers in -- 9,204 -- 9,204 Total other financing sources and (uses) -- 9,204 -- 9,204 Net changes in fund balances (1) 1,052 -- 1,051 Fund balances - beginning 1,355 6,956 1,329 9,640 Fund balances - ending $ 1,354 $ 8,008 $ 1,329 $ 10,691 112 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2014 (in thousands) Community Emergency Driving Under the Development CMSP Med Services Influence Pgms ASSETS Cash and cash equivalents $ 495 $ 1,051 $ 3 01 $ 724 Accounts receivable -- -- - - -- Due from other governments -- -- 5 36 -- Advances to other funds -- -- - - -- Total Assets $ 4 95 $ 1,051 $ 8 37 $ 7 24 LIABILITIES Accounts payable $ 50 $ 7 $ - - $ 8 Salaries and benefits payable -- 11 - - 27 Deposits from others 41 -- - - -- Unearned revenue -- -- - - -- Advances from other funds -- -- - - -- Total Liabilities 91 18 - - 35 DEFERRED INFLOWS OF RESOURCES Unavailable revenue -- -- - - -- FUND BALANCES Restricted -- -- - - -- Committed 404 1,033 8 37 689 Total Fund Balances 404 1,033 8 37 689 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 4 95 $ 1,051 $ 8 37 $ 7 24 continued 113 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds (continued) June 30, 2014 (in thousands) Road Public Impact Facilities Fish and Game Fees Library Parks Fees ASSETS Cash and cash equivalents $ 204 $ 7,152 $ 2,862 $ 5 ,117 $ 11,029 Accounts receivable -- -- -- 6 5 -- Due from other governments -- -- -- 2 4 -- Advances to other funds -- -- -- - - -- Total Assets $ 2 04 $ 7,152 $ 2,862 $ 5,206 $ 11,029 LIABILITIES Accounts payable $ 4 $ -- $ 37 $ 159 $ -- Salaries and benefits payable -- -- 139 1 06 -- Deposits from others -- -- -- 215 20 Unearned revenue -- -- 380 - - -- Advances from other funds -- 281 1,023 1 82 -- Total Liabilities 4 281 1,579 6 62 20 DEFERRED INFLOWS OF RESOURCES Unavailable revenue -- -- -- 130 -- FUND BALANCES Restricted -- 6,871 -- - - 11,009 Committed 200 -- 1,283 4 ,414 -- Total Fund Balances 200 6,871 1,283 4 ,414 11,009 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 2 04 $ 7,152 $ 2,862 $ 5,206 $ 11,029 continued 114 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds (continued) June 30, 2014 (in thousands) Total Nonmajor Wildlife Special Special Revenue Roads Grazing Districts Funds ASSETS Cash and cash equivalents $ 9,969 $ 18 $ 19,791 $ 58,713 Accounts receivable -- -- 7,481 7,546 Due from other governments 2,503 -- - - 3,063 Advances to other funds 281 -- 339 620 Total Assets $ 1 2,753 $ 1 8 $ 27,611 $ 6 9,942 LIABILITIES Accounts payable $ 575 $ -- $ 1,644 $ 2,484 Salaries and benefits payable -- -- - - 283 Deposits from others 579 -- 3 858 Unearned revenue 101 -- 4,552 5,033 Advances from other funds -- -- 122 1,608 Total Liabilities 1,255 -- 6,321 10,266 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 1,533 -- - - 1,663 FUND BALANCES Restricted -- 18 - - 17,898 Committed 9,965 -- 21,290 40,115 Total Fund Balances 9,965 18 21,290 58,013 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 12,753 $ 1 8 $ 27,611 $ 6 9,942 115 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, 2014 (in thousands) Community Emergency Driving Under the Development CMSP Med Services Influence Pgms Revenues: Taxes $ -- $ -- $ -- $ -- Fines, forfeits and penalties -- -- 6 18 -- Use of money and property 1 2 - - 1 Aid from other governmental agencies 5,603 1,215 - - -- Charges for current services -- 82 - - 1,402 Other revenues 288 801 - - -- Total revenues 5,892 2,100 618 1,403 Expenditures: Current: Public protection -- -- - - -- Public ways and facilities -- -- - - -- Health and sanitation 6,209 -- - - -- Public assistance -- 4,178 7 36 -- Education -- -- - - 1,424 Recreation and cultural services -- -- - - -- Total expenditures 6,209 4,178 736 1,424 Excess (deficiency) of revenues over (under) expenditures (317) (2,078) (118) (21) Other financing sources (uses): Transfers in 412 1,893 - - -- Transfers out -- (22) - - (34) Total other financing sources (uses) 412 1,871 -- (34) Net changes in fund balances 95 (207) (118) (55) Fund Balances - beginning 309 1,240 9 55 744 Fund Balances - ending $ 404 $ 1,033 $ 837 $ 689 continued 116 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, 2014 (in thousands) Road Public Fish and Impact Facilities Game Fees Library Parks Fees Revenues: Taxes $ -- $ -- $ 7,207 $ -- $ -- Fines, forfeits and penalties 24 -- -- 2 -- Use of money and property -- 14 6 119 21 Aid from other governmental agencies -- -- 95 5 4 -- Charges for current services -- 1,310 359 4,797 2,050 Other revenues -- -- 79 102 -- Total revenues 24 1,324 7,746 5,074 2,071 Expenditures: Current: Public protection 7 -- -- - - -- Public ways and facilities -- -- -- - - -- Health and sanitation -- -- -- - - -- Public assistance -- -- -- - - -- Education -- -- 10,340 - - -- Recreation and cultural services -- -- -- 7,993 -- Total expenditures 7 -- 10,340 7,993 -- Excess (deficiency) of revenues over (under) expenditures 17 1,324 (2,594) (2,919) 2,071 Other financing sources (uses): Transfers in -- 15 781 3,541 -- Transfers out -- (1,093) (204) ( 157) (470) Total other financing sources (uses) -- (1,078) 577 3,384 (470) Net changes in fund balances 17 246 (2,017) 465 1,601 Fund Balances - beginning 183 6,625 3,300 3 ,949 9,408 Fund Balances - ending $ 200 $ 6,871 $ 1,283 $ 4,414 $ 11,009 continued 117 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, 2014 (in thousands) Total Nonmajor Wildlife Special Special Revenue Roads Grazing Districts Funds Revenues: Taxes $ 1,501 $ -- $ 2,053 $ 10,761 Fines, forfeits and penalties -- -- -- 644 Use of money and property 14 -- 35 213 Aid from other governmental agencies 20,732 4 2,946 30,649 Charges for current services 354 -- 5,248 15,602 Other revenues 168 -- 68 1,506 Total revenues 22,769 4 10,350 59,375 Expenditures: Current: Public protection -- 1 4,444 4,452 Public ways and facilities 26,430 -- 53 26,483 Health and sanitation -- -- -- 6,209 Public assistance -- -- -- 4,914 Education -- -- -- 11,764 Recreation and cultural services -- -- -- 7,993 Total expenditures 26,430 1 4,497 61,815 Excess (deficiency) of revenues over (under) expenditures (3,661) 3 5,853 (2,440) Other financing sources (uses): Transfers in 6,473 -- 54 13,169 Transfers out (19) -- ( 803) (2,802) Total other financing sources (uses) 6,454 -- (749) 10,367 Net changes in fund balances 2,793 3 5,104 7,927 Fund Balances - beginning 7,172 15 16,186 50,086 Fund Balances - ending $ 9,965 $ 18 $ 21,290 $ 58,013 118 COUNTY OF SAN LUIS OBISPO Combining Balance Sheet Nonmajor Special Revenue Funds - Special Districts June 30, 2014 (in thousands) Flood Control Lighting County Districts Districts Service Areas Total ASSETS Cash and cash equivalents $ 18,223 $ 489 $ 1 ,079 $ 19,791 Accounts receivable 7,481 -- - - 7,481 Advances to other funds -- -- 3 39 339 Total Assets $ 2 5,704 $ 4 89 $ 1 ,418 $ 2 7,611 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,639 $ 2 $ 3 $ 1,644 Deposits from others 1 -- 2 3 Unearned revenue 4,552 -- - - 4,552 Advances from other funds -- -- 1 22 122 Total Liabilities 6,192 2 1 27 6,321 Fund Balances: Committed 19,512 487 1 ,291 21,290 Total Fund Balances 19,512 487 1 ,291 21,290 Total Liabilities and Fund Balances $ 2 5,704 $ 4 89 $ 1 ,418 $ 2 7,611 119 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, 2014 (in thousands) Flood Control Lighting County Districts Districts Service Areas Total Revenues: Taxes $ 1,656 $ 31 $ 3 66 $ 2,053 Use of money and property 32 1 2 35 Aid from other governmental agencies 2,944 -- 2 2,946 Charges for current services 5,236 8 4 5,248 Other revenue 67 -- 1 68 Total revenues 9,935 40 375 10,350 Expenditures: Current: Public protection 4,403 41 -- 4,444 Public ways and facilities -- -- 53 53 Total expenditures 4,403 41 53 4,497 Excess (deficiency) of revenues over (under) expenditures 5,532 (1) 322 5,853 Other financing sources (uses): Transfers in 7 -- 47 54 Transfers out (658) -- (145) (803) Total other financing sources (uses) (651) -- ( 98) (749) Net changes in fund balances 4,881 (1) 224 5,104 Fund Balances - beginning 14,631 488 1,067 16,186 Fund Balances - ending $ 19,512 $ 487 $ 1,291 $ 21,290 120 ________________________________________________________________ BUDGETARY COMPARISON SCHEDULES CAPITAL PROJECTS FUND PUBLIC FINANCING CORPORATION PENSION OBLIGATION BOND FUND NON MAJOR GOVERNMENTAL FUNDS ________________________________________________________________ 121 122 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeits, and penalties $ -- $ 2,167 $ 2,436 $ 269 Revenue from use of money and property -- -- 56 56 Aid from other governmental agencies -- 3,138 3,597 459 Charges for services -- 8,823 2,686 (6,137) Total Revenues -- 14,128 8,775 (5,353) Expenditures: Capital Outlay 1,371 33,223 11,312 21,911 Total Expenditures 1,371 33,223 11,312 21,911 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,371) (19,095) (2,537) 16,558 Other Financing Sources (Uses): Transfers in 3,935 7,684 3,172 (4,512) Transfers out 204 (30) (19) 11 Total Other Financing Sources (Uses) 4,139 7,654 3,153 (4,501) Net change in fund balances 2,768 (11,441) 616 12,057 Fund balances, beginning 25,084 25,084 25,084 -- Fund balances, ending $ 27,852 $ 13,643 $ 25,700 $ 12,057 123 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Charges for current services $ -- $ -- $ 756 $ 756 Total Revenues -- -- 756 756 Expenditures: Debt Service: Principal -- -- 270 (270) Interest and fiscal charges -- -- 487 (487) Total Expenditures -- -- 757 (757) Excess (Deficiency) of Revenues Over (Under) Expenditures -- -- (1) (1) Net change in fund balances -- -- (1) (1) Fund balances, beginning 1,355 1,355 1,355 -- Fund balances, ending $ 1,355 $ 1,355 $ 1,354 $ (1) 124 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Revenue from use of money and property $ 12 $ 12 $ 8 $ (4) Other revenue 10,003 10,003 600 (9,403) Total Revenues 10,015 10,015 608 (9,407) Expenditures: Debt Service: Principal payments 4,390 4,390 4,390 -- Interest and fiscal charges 4,373 4,373 4,370 3 Total Expenditures 8,763 8,763 8,760 3 Excess (Deficiency) of Revenues Over (Under) Expenditures 1,252 1,252 (8,152) (9,404) Other Financing Sources (Uses): Transfers in -- -- 9,204 9,204 Total Other Financing Sources (Uses) -- -- 9,204 9,204 Net change in fund balances 1,252 1,252 1,052 (200) Fund balances, beginning 6,956 6,956 6,956 -- Fund balances, ending $ 8,208 $ 8,208 $ 8,008 $ (200) 125 COUNTY OF SAN LUIS OBISPO Public Financing Authority Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Charges for current services $ -- $ -- $ 1,314 $ 1,314 Total Revenues -- -- 1,314 1,314 Expenditures: Debt Service: Interest and fiscal charges -- -- 562 (562) Principal payments -- -- 752 (752) Total Expenditures -- -- 1,314 (1,314) Net change in fund balances -- -- -- -- Fund balances, beginning 1,329 1,329 1,329 -- Fund balances, ending $ 1,329 $ 1,329 $ 1,329 $ -- 126 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, 2014 (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 3,538 9,736 5,603 (4,133) Other revenue -- -- 288 288 Total Revenues 3,538 9,736 5,892 (3,844) Expenditures: Current: Health and sanitation Services and supplies 651 1,041 746 295 Other charges 3,279 9,107 5,463 3,644 Contingencies 37 37 -- 37 Total Expenditures 3,967 10,185 6,209 3,976 Excess (Deficiency) of Revenues Over (Under) Expenditures (429) (449) (317) 132 Other Financing Sources (Uses): Transfers in 391 412 412 -- Total Other Financing Sources (Uses) 391 412 412 -- Net change in fund balances (38) (37) 95 132 Fund balances, beginning 309 309 309 -- Fund balances, ending $ 271 $ 272 $ 404 $ 132 127 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 4 $ 4 $ 2 $ (2) Aid from governmental agencies 2,489 2,489 1,215 (1,274) Charges for current services 119 119 82 (37) Other revenues 693 693 801 108 Total Revenues 3,305 3,305 2,100 (1,205) Expenditures: Current: Public assistance Salaries wages benefits 977 977 609 368 Services and supplies 4,195 5,366 3,569 1,797 Total Expenditures 5,172 6,343 4,178 2,165 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,867) (3,038) (2,078) 960 Other Financing Sources (Uses): Transfers in 1,798 1,798 1,893 95 Transfers out -- -- (22) (22) Total Other Financing Sources (Uses) 1,798 1,798 1,871 73 Net change in fund balances (69) (1,240) (207) 1,033 Fund balances, beginning 1,240 1,240 1,240 -- Fund balances, ending $ 1,171 $ -- $ 1 ,033 $ 1,033 128 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeits, and penalties $ 800 $ 800 $ 618 $ (182) Use of money and property 1 1 -- (1) Total Revenues 801 801 618 (183) Expenditures: Current: Public assistance Services and supplies 801 1,159 736 423 Total Expenditures 801 1,159 736 423 Net change in fund balances -- (358) (118) 240 Fund balances, beginning 955 955 955 -- Fund balances, ending $ 955 $ 597 $ 837 $ 240 129 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 3 $ 3 $ 1 $ (2) Charges for current services 1,400 1,400 1,402 2 Total Revenues 1,403 1,403 1,403 -- Expenditures: Current: Education Salaries wages benefits 1,014 1,040 1,006 34 Service and supplies 394 426 418 8 Contingencies 124 66 -- 66 Total Expenditures 1,532 1,532 1,424 108 Excess (Deficiency) of Revenues Over (Under) Expenditures (129) (129) (21) (108) Other Financing Sources (Uses): Transfers out -- -- (34) (34) Total Other Financing Sources (Uses) -- -- (34) (34) Net change in fund balances (129) (129) (55) 74 Fund balances, beginning 744 744 744 -- Fund balances, ending $ 615 $ 615 $ 689 $ 74 130 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeits, and penalties $ 20 $ 20 $ 24 $ 4 Total Revenues 20 20 24 4 Expenditures: Current: Public protection Services and supplies 20 20 7 13 Total Expenditures 20 20 7 13 Net change in fund balances -- -- 17 17 Fund balances, beginning 183 183 183 -- Fund balances, ending $ 183 $ 183 $ 200 $ 17 131 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 19 $ 19 $ 1 4 $ (5) Charges for current services 2,583 2,509 1,310 (1,199) Total Revenues 2,602 2,528 1,324 (1,204) Excess (Deficiency) of Revenues Over (Under) Expenditures 2,602 2,528 1,324 (1,204) Other Financing Sources (Uses): Transfers in 15 15 15 -- Transfers out (2,983) (4,583) (1,093) 3,490 Total Other Financing Sources (Uses) (2,968) (4,568) (1,078) 3,490 Net change in fund balances (366) (2,040) 246 2,286 Fund balances, beginning 6,625 6,625 6,625 -- Fund balances, ending $ 6,259 $ 4,585 $ 6,871 $ 2,286 132 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 6,888 $ 6,888 $ 7 ,207 $ 319 Use of money and property 5 5 6 1 Aid from other governmental agencies 106 164 95 (69) Charges for services 362 362 359 (3) Other revenue 56 2,732 79 (2,653) Total Revenues 7,417 10,151 7,746 (2,405) Expenditures: Current: Education Salaries and benefits 5,869 5,869 5,417 452 Services and supplies 2,671 3,055 2,789 266 Other charges 5 2,515 2,134 381 Contingencies 424 424 -- 424 Total Expenditures 8,969 11,863 10,340 1,523 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,552) (1,712) (2,594) (882) Other Financing Sources (Uses): Transfers in 607 781 781 -- Transfers out -- -- (204) (204) Total Other Financing Sources (Uses) 607 781 577 (204) Net change in fund balances (945) (931) (2,017) (1,086) Fund balances, beginning 3,300 3,300 3,300 -- Fund balances, ending $ 2,355 $ 2,369 $ 1 ,283 $ (1,086) 133 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Licenses, permits and franchises $ 101 $ 162 $ 2 $ (160) Use of money and property 113 113 119 6 Aid from other governmental agencies 5 5 54 49 Charges for services 4,209 4,636 4,797 161 Other revenue 75 88 102 14 Total Revenues 4,503 5,004 5,074 70 Expenditures: Current: Recreational and cultural services Salaries wages benefits 4,294 4,294 4,052 242 Services and supplies 3,275 3,712 3,324 388 Other charges 112 3,648 560 3,088 Capital outlay 55 128 57 71 Contingencies 550 286 -- 286 Total Expenditures 8,286 12,068 7,993 4,075 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,783) (7,064) (2,919) 4,145 Other Financing Sources (Uses): Transfers in 3,541 5,047 3,541 (1,506) Transfers out (21) (21) (157) (136) Total Other Financing Sources (Uses) 3,520 5,026 3,384 (1,642) Net change in fund balances (263) (2,038) 465 2,503 Fund balances, beginning 3,949 3,949 3,949 -- Fund balances, ending $ 3,686 $ 1,911 $ 4 ,414 $ 2,503 134 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ -- $ -- $ 21 $ 21 Charges for current services 865 865 2,050 1,185 Total Revenues 865 865 2,071 1,206 Other Financing Sources (Uses): Transfers out (1,571) (6,362) (470) 5,892 Total Other Financing Sources (Uses) (1,571) (6,362) (470) 5,892 Net change in fund balances (706) (5,497) 1,601 7,098 Fund balances, beginning 9,408 9,408 9,408 -- Fund balances, ending $ 8,702 $ 3,911 $ 11,009 $ 7 ,098 135 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 1,461 $ 1,461 $ 1,501 $ 40 Use of money and property 25 25 14 (11) Aid from other governmental agencies 15,974 29,622 20,732 (8,890) Charges for services 545 692 354 (338) Other revenue 90 166 168 2 Total Revenues 18,095 31,966 22,769 (9,197) Expenditures: Current: Public ways and facilities Services and supplies 17,603 18,882 26,152 (7,270) Other charges 513 995 278 717 Capital outlay 8,557 26,652 -- 26,652 Total Expenditures 26,673 46,529 26,430 20,099 Excess (Deficiency) of Revenues Over (Under) Expenditures (8,578) (14,563) (3,661) 10,902 Other Financing Sources (Uses): Transfers in 8,362 9,962 6,473 (3,489) Transfers out (4) (4) (19) (15) Total Other Financing Sources (Uses) 8,358 9,958 6,454 (3,504) Net change in fund balances (220) (4,605) 2,793 7,398 Fund balances, beginning 7,172 7,172 7,172 -- Fund balances, ending $ 6,952 $ 2,567 $ 9,965 $ 7,398 136 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Aid from governmental agencies $ 4 $ 4 $ 4 $ -- Total Revenues 4 4 4 -- Expenditures: Current: Public protection Services and supplies 4 4 1 3 Total Expenditures 4 4 1 3 Net change in fund balances -- -- 3 3 Fund balances, beginning 15 15 15 -- Fund balances, ending $ 15 $ 15 $ 18 $ 3 137 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 1,578 $ 1,578 $ 1 ,656 $ 78 Use of money and property 36 36 32 (4) Aid from other governmental agencies 13 13 2,944 2,931 Charges for services 471 510 5,236 4,726 Other revenue 11,419 11,419 67 (11,352) Total Revenues 13,517 13,556 9,935 (3,621) Expenditures: Current: Public protection Services and supplies 5,501 7,349 3,074 4,275 Other charges -- -- 1,321 (1,321) Capital outlay 1,255 1,548 8 1,540 Total Expenditures 6,756 8,897 4,403 4,494 Excess (Deficiency) of Revenues Over (Under) Expenditures 6,761 4,659 5,532 873 Other Financing Sources (Uses): Transfers in 188 188 7 (181) Transfers out (5,946) (6,003) (658) 5,345 Total Other Financing Sources (Uses) (5,758) (5,815) (651) 5,164 Net change in fund balances 1,003 (1,156) 4,881 6,037 Fund balances, beginning 14,631 14,631 14,631 -- Fund balances, ending $ 15,634 $ 13,475 $ 19,512 $ 6,037 138 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, 2014 (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 1 (1) Charges for services -- 8 8 -- Total Revenues 35 43 40 (3) Expenditures: Current: Public protection Services and supplies 37 45 41 4 Total Expenditures 37 45 41 4 Net change in fund balances (2) (2) (1) 1 Fund balances, beginning 488 488 488 -- Fund balances, ending $ 486 $ 486 $ 487 $ 1 139 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, 2014 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 346 $ 346 $ 366 $ 20 Use of money and property 2 2 2 -- Aid from other governmental agencies 2 2 2 -- Charges for services 4 4 4 -- Other revenue -- -- 1 1 Total Revenues 354 354 375 21 Expenditures: Current: Public ways and facilities Services and supplies 131 131 53 78 Capital outlay 36 36 -- 36 Total Expenditures 167 167 53 114 Excess (Deficiency) of Revenues Over (Under) Expenditures 187 187 322 135 Other Financing Sources (Uses): Transfers in 1,040 1,040 47 (993) Transfers out (175) (280) (145) 135 Total Other Financing Sources (Uses) 865 760 (98) (858) Net change in fund balances 1,052 947 224 (723) Fund balances, beginning 1,067 1,067 1,067 -- Fund balances, ending $ 2,119 $ 2,014 $ 1,291 $ (723) 140 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR ENTERPRISE FUNDS ________________________________________________________________ 141 142 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. 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. State Water Project Accounts for revenues, expenses and net position relating to the countywide taxpayer’s obligations associated with the State Water Project, which provides for the delivery of state water into the County. 1 43 COUNTY OF SAN LUIS OBISPO Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2014 (in thousands) General Flood State Water County Control Zone Project Golf Lopez Park Service Areas Total ASSETS Current Assets: Cash and cash equivalents $ 1,236 $ 13,861 $ 1,012 $ 23 $ 4,110 $ 20,242 Accounts receivable, net 9 402 36 -- 179 626 Deposits with others -- -- -- -- 13 13 Total Current Assets 1,245 14,263 1,048 2 3 4,302 20,881 Noncurrent assets: Advances to other funds -- -- 487 183 - - 670 Capital Assets Nondepreciable: Land -- -- 1,333 - - 330 1,663 Construction in progress -- -- 88 -- 391 479 Water rights -- 46,457 -- -- - - 46,457 Depreciable: Infrastructure, net -- 98 -- -- 1,733 1,831 Structures & improvements, net -- 6,802 9,241 - - 9,136 25,179 Equipment, net -- 7 154 - - 248 409 Other property, net -- -- -- -- 498 498 Total Noncurrent Assets -- 53,364 11,303 183 12,336 77,186 Total Assets 1,245 67,627 12,351 206 16,638 98,067 LIABILITIES Current Liabilities: Accounts payable 19 5,373 73 -- 125 5,590 Salaries and benefits payable -- -- 30 -- - - 30 Deposits from others -- 2,862 -- -- 134 2,996 Accrued interest -- -- 43 -- 27 70 Unearned revenue -- 1,896 -- -- 127 2,023 Accrued vacation and sick leave - current -- -- 66 -- - - 66 Notes and bonds payable - current -- -- 280 16 2 15 511 Total Current Liabilities 19 10,131 492 16 6 28 11,286 Noncurrent Liabilities: Advances from other funds -- -- -- -- 492 492 Accrued vacation and sick leave - noncurrent -- -- 84 -- - - 84 Notes and bonds payable - noncurrent -- -- 5,224 167 3,882 9,273 Total Noncurrent Liabilities -- -- 5,308 167 4,374 9,849 Total Liabilities 19 10,131 5,800 183 5,002 21,135 NET POSITION Net investment in capital assets -- 53,364 5,312 - - 8,239 66,915 Unrestricted 1,226 4,132 1,239 2 3 3,397 10,017 Total Net Position $ 1,226 $ 57,496 $ 6,551 $ 2 3 $ 11,636 $ 76,932 144 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2014 (in thousands) General Flood State Water County Control Zone Project Golf Lopez Park Service Areas Total Operating Revenues: Charges for current services $ 861 $ 6,358 $ 2,779 $ - - $ 3,312 $ 13,310 Other revenues -- -- 2 -- 1 3 Total operating revenues 861 6,358 2,781 -- 3,313 13,313 Operating expenses: Salaries and benefits -- -- 1,229 -- -- 1,229 Services and supplies 802 5,766 842 -- 3,158 10,568 Other charges 2 -- -- -- 6 8 Depreciation -- 206 364 -- 528 1,098 Countywide cost allocation 5 14 -- -- 3 0 49 Total operating expenses 809 5,986 2,435 -- 3,722 12,952 Operating income (loss) 52 372 346 -- ( 409) 361 Nonoperating revenues (expenses): Property taxes -- 1,632 -- -- 417 2,049 Interest income 3 24 2 -- 8 37 Interest expense -- (6) (175) (5) ( 138) (324) Aid from governmental agencies -- 13 -- -- 3 16 Total nonoperating revenues (expenses) 3 1,663 (173) (5) 290 1,778 Income (loss) before contributions and transfers 55 2,035 173 (5) ( 119) 2,139 Capital contributions -- -- -- -- 108 108 Transfers in -- -- 21 5 145 171 Transfers out -- -- (42) -- (47) (89) Change in net position 55 2,035 152 -- 8 7 2,329 Net position - beginning 1,171 55,461 6,399 23 11,549 74,603 Net position - ending $ 1,226 $ 57,496 $ 6,551 $ 2 3 $ 11,636 $ 76,932 145 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2014 (in thousands) General Flood State Control Zone Water Project Golf Cash Flows from Operating Activities: Receipts from customers $ 861 $ 8,383 $ 2,737 Payments to employees for service -- - - (1,231) Payments for goods and services (870) ( 5,460) (832) Net Cash Provided (Used) by Operating Activities (9) 2,923 674 Cash Flows from Noncapital Financing Activities: Property tax proceeds -- 1,632 -- Grants and subsidies from other gov't agencies -- 13 -- Advances from other funds -- - - -- Transfers from other funds -- - - 21 Transfers to other funds -- - - (42) Net Cash Provided (Used) by Noncapital and Related Financing Activities -- 1,645 (21) Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets -- ( 1,892) (64) Proceeds from issuance of long-term debt -- - - -- Proceeds from capital contributions -- - - -- Principal paid on capital debt -- - - (278) Interest paid on capital debt -- - - (175) Net Cash Provided (Used) by Capital and Related Financing Activities -- ( 1,892) (517) Cash Flows from Investing Activities: Interest received 3 24 2 Net Cash Provided (Used) by Investing Activities 3 24 2 Net Increase (Decrease) in Cash and Cash Equivalents (6) 2,700 138 Cash and Cash Equivalents - Beginning of Year 1,242 11,161 874 Cash and Cash Equivalents - End of Year $ 1,236 $ 13,861 $ 1,012 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ 52 $ 372 $ 346 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense -- 206 364 Change in Assets and Liabilities: Receivables, net 6 2,039 (12) Accounts payable (67) 321 11 Salaries and benefits payable 3 Unearned revenue -- (15) (33) Accrued vacation and sick leave -- -- (5) Total Adjustments (61) 2,551 328 Net Cash Provided (Used) by Operating Activities: $ (9) $ 2,923 $ 674 146 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2014 (in thousands) County Lopez Park Service Areas Total Cash Flows from Operating Activities: Receipts from customers $ -- $ 3,413 $ 15,394 Payments to employees -- - - (1,231) Payments for goods and services -- ( 3,086) (10,248) Net Cash Provided (Used) by Operating Activities -- 3 27 3,915 Cash Flows from Noncapital Financing Activities: Property tax proceeds -- 4 17 2,049 Grants and subsidies from other gov't agencies -- 3 5 48 Advances from other funds -- ( 61) (61) Transfers from other funds 5 1 45 171 Transfers to other funds -- ( 47) (89) Net Cash Provided (Used) by Noncapital and Related Financing Activities 5 4 89 2,118 Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets -- ( 913) (2,869) Proceeds from issuance of long-term debt -- 1,062 1,062 Proceeds from capital contributions -- 1 08 108 Principal paid on capital debt -- ( 209) (487) Interest paid on capital debt (5) ( 139) (319) Net Cash Provided (Used) by Capital and Related Financing Activities (5) ( 91) (2,505) Cash Flows from Investing Activities: Interest received -- 1 0 39 Net Cash Provided (Used) by Investing Activities -- 1 0 39 Net Increase (Decrease) in Cash and Cash Equivalents -- 7 35 3,567 Cash and Cash Equivalents - Beginning of Year 23 3,375 16,675 Cash and Cash Equivalents - End of Year $ 23 $ 4 ,110 $ 20,242 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ -- $ ( 409) $ 361 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense -- 528 1,098 Change in Assets and Liabilities: Receivables, net -- 2 2,035 Accounts payable -- 115 380 Salaries and benefits payable -- 3 Unearned revenue -- 91 43 Accrued vacation and sick leave -- -- (5) Total Adjustments -- 736 3,554 Net Cash Provided (Used) by Operating Activities: $ -- $ 3 27 $ 3,915 147 148 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS ________________________________________________________________ 149 150 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: 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. 1 51 152 COUNTY OF SAN LUIS OBISPO Combining Statement of Net Position Internal Service Funds June 30, 2014 (in thousands) Combined Public Insurance Garage Works (5 funds) Total ASSETS Current Assets: Cash and cash equivalents $ 3 ,727 $ 13,990 $ 2 2,089 $ 39,806 Accounts receivable - - 22 - - 22 Inventory 1 6 5 48 - - 564 Total Current Assets 3 ,743 14,560 2 2,089 40,392 Noncurrent assets: Capital Assets: Structures & improvements, net 3 3 3 39 - - 372 Equipment, net 4 ,833 7 ,084 - - 11,917 Total Noncurrent Assets 4 ,866 7 ,423 - - 12,289 Total Assets 8 ,609 21,983 2 2,089 52,681 LIABILITIES Current Liabilities: Accounts payable 3 52 4 63 4 41 1,256 Salaries and benefits payable 3 1 504 - - 535 Self insurance liability - - - - 3,487 3,487 Deposits from others - - 709 - - 709 Accrued vacation and sick leave - current 7 1 1,490 - - 1,561 Total Current Liabilities 4 54 3,166 3 ,928 7,548 Noncurrent Liabilities: Self insurance liability - - - - 14,829 14,829 Accrued vacation and sick leave 5 1 806 - - 857 Total Noncurrent Liabilities 5 1 8 06 14,829 15,686 Total Liabilities 5 05 3,972 18,757 23,234 NET POSITION Net investment in capital assets 4 ,866 7 ,423 - - 12,289 Unrestricted 3 ,238 10,588 3 ,332 17,158 Total Net Position $ 8 ,104 $ 18,011 $ 3 ,332 $ 29,447 153 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the Year Ended June 30, 2014 (in thousands) Combined Public Insurance Garage Works (5 funds) Total Operating Revenues: Charges for current services $ 5,861 $ 28,497 $ 8 ,892 $ 4 3,250 Other revenues 3 411 -- 4 14 Total Operating Revenues 5 ,864 28,908 8,892 43,664 Operating Expenses: Salaries and benefits 1 ,234 19,903 -- 21,137 Services and supplies 2 ,724 7,325 6,200 16,249 Insurance benefit payments -- -- 4,259 4,259 Depreciation 1 ,320 765 -- 2,085 Countywide cost allocation 96 61 45 2 02 Total Operating Expenses 5 ,374 28,054 10,504 43,932 Operating Income (Loss) 490 854 (1,612) (268) Nonoperating Revenues (Expenses): Interest income 7 25 47 79 Aid from governmental agencies -- -- 370 3 70 Other revenue (expense) 153 40 -- 1 93 Total Nonoperating Revenues (Expenses) 160 65 417 6 42 Income (Loss) Before Transfers 650 919 (1,195) 3 74 Transfers out (92) (789) (370) ( 1,251) Change in Net Position 558 130 (1,565) (877) Net position - beginning 7 ,546 17,881 4,897 30,324 Net position - ending $ 8,104 $ 18,011 $ 3,332 $ 2 9,447 154 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2014 (in thousands) Combined Public Insurance Garage Works (5 funds) Total Cash Flows from Operating Activities: Receipts from interfund billings $ 5 ,864 $ 28,897 $ 8 ,892 $ 43,653 Payments for goods and services ( 2,713) (7,135) ( 3,524) (13,372) Payments to employees for service ( 1,216) (19,809) - - (21,025) Payments for insurance benefits - - -- (4,740) (4,740) Payments for premiums - - -- (2,723) (2,723) Net Cash Provided (Used) by Operating Activities 1 ,935 1,953 (2,095) 1 ,793 Cash Flows from Noncapital Financing Activities: Grants and subsidies from other gov't agencies - - -- 370 370 Transfers to other funds ( 92) (789) ( 370) (1,251) Net Cash Provided (Used) by Noncapital and Related Financing Activities ( 92) (789) - - (881) Cash Flows from Capital and Related Financing Activities: Purchases and construction of capital assets ( 2,096) (2,078) - - (4,174) Proceeds from sale of capital assets 2 36 128 - - 364 Net Cash Provided (Used) by Capital and Related Financing Activities ( 1,860) (1,950) - - (3,810) Cash Flows from Investing Activities: Interest received 7 26 4 7 8 0 Net Cash Provided (Used) by Investing Activities 7 26 4 7 8 0 Net Increase (Decrease) in Cash and Cash Equivalents ( 10) (760) (2,048) (2,818) Cash and Cash Equivalents - Beginning of Year 3 ,737 14,750 2 4,137 4 2,624 Cash and Cash Equivalents - End of Year $ 3 ,727 $ 13,990 $ 2 2,089 $ 39,806 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ 490 $ 854 $ ( 1,612) $ (268) Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation expense 1,320 765 -- 2 ,085 Change in Assets and Liabilities: Receivables, net -- (11) -- (11) Inventory 7 (2) -- 5 Accounts payable 99 169 33 301 Deposits from others -- 83 -- 83 Salaries and benefits payable 4 70 -- 74 Other accrued liabilities -- 25 -- 25 Accrued vacation and sick leave 15 - - -- 15 Self-insurance liability -- - - (516) (516) Total Adjustments 1,445 1,099 (483) 2 ,061 Net Cash Provided (Used) by Operating Activities $ 1,935 $ 1 ,953 $ (2,095) $ 1,793 155 COUNTY OF SAN LUIS OBISPO Combining Statement of Net Position Internal Service Funds - Insurance June 30, 2014 (in thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total ASSETS Current Assets: Cash and cash equivalents $ 1 5,681 $ 5,486 $ 455 $ 467 $ - - $ 22,089 Total Current Assets 1 5,681 5,486 455 467 - - 22,089 LIABILITIES Current Liabilities: Accounts payable 3 79 30 -- 32 - - 441 Self insurance payable 2 ,345 1,142 -- -- - - 3,487 Total Current Liabilities 2 ,724 1,172 -- 32 - - 3,928 Noncurrent Liabilities: Self insurance liability 1 2,527 2,302 -- -- - - 14,829 Total Noncurrent Liabilities 1 2,527 2,302 -- -- - - 14,829 Total Liabilities 1 5,251 3,474 -- 32 - - 18,757 NET POSITION Unrestricted 4 30 2,012 455 435 - - 3,332 Total Net Position $ 4 30 $ 2,012 $ 455 $ 435 $ - - $ 3,332 156 COUNTY OF SAN LUIS OBISPO Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds - Insurance For the Year Ended June 30, 2014 (in thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Operating Revenues: Charges for current services $ 4,833 $ 766 $ 166 $ 1,650 $ 1,477 $ 8,892 Total Operating Revenues 4 ,833 766 1 66 1,650 1,477 8,892 Operating Expenses: Services and supplies 2 ,786 2,070 18 150 1,176 6,200 Insurance benefit payments 1 ,849 -- 278 1,460 672 4,259 Countywide cost allocation -- 43 - - 2 -- 45 Total Operating Expenses 4 ,635 2,113 2 96 1,612 1,848 1 0,504 Operating Income (Loss) 198 (1,347) (130) 38 (371) (1,612) Nonoperating Revenues (Expenses): Interest income 32 12 1 1 1 47 Aid from governmental agencies -- -- - - -- 370 370 Total Nonoperating Revenues (Expenses) 32 12 1 1 371 417 Income (Loss) Before Transfers 230 (1,335) (129) 39 -- (1,195) Transfers out -- (370) - - -- -- (370) Change in net position 230 (1,705) (129) 39 -- (1,565) Net position - beginning 200 3,717 5 84 396 -- 4,897 Net position - ending $ 430 $ 2,012 $ 455 $ 435 $ -- $ 3,332 157 COUNTY OF SAN LUIS OBISPO Combining Statement of Cash Flows Internal Service Funds - Insurance For the Year Ended June 30, 2014 (in thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Cash Flows from Operating Activities: Receipts from interfund billings $ 4 ,833 $ 7 65 $ 166 $ 1,650 $ 1,478 $ 8 ,892 Payments for goods and services ( 1,866) (1,457) ( 18) (154) ( 29) (3,524) Payments for insurance benefits ( 2,393) 7 1 (278) (1,468) (672) (4,740) Payments for premiums ( 920) (655) - - -- (1,148) ( 2,723) Net Cash Provided (Used) by Operating Activities ( 346) (1,276) ( 130) 28 (371) (2,095) Cash Flows from Noncapital Financing Activities: Transfers to other funds - - (370) - - -- -- (370) Grants and subsidies from other gov't agencies - - -- -- -- 370 3 70 Net Cash Provided (Used) by Noncapital and Related Financing Activities - - (370) - - -- 370 - - Cash Flows from Investing Activities: Interest received 3 2 12 1 1 1 47 Net Cash Provided (Used) by Investing Activities 3 2 12 1 1 1 47 Net Increase (Decrease) in Cash and Cash Equivalents ( 314) (1,634) ( 129) 29 -- (2,048) Cash and Cash Equivalents - Beginning of Year 1 5,995 7 ,120 5 84 438 - - 24,137 Cash and Cash Equivalents - End of Year $ 1 5,681 $ 5,486 $ 4 55 $ 467 $ - - $ 22,089 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) 1 98 (1,347) ( 130) 38 (371) (1,612) Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Change in Assets and Liabilities: Accounts payable 24 19 -- (10) -- 33 Self-insurance liability (568) 52 -- - - -- (516) Total Adjustments (544) 71 -- (10) -- (483) Net Cash Provided (Used) by Operating Activities $ (346) $ (1,276) $ (130) $ 28 $ (371) $ (2,095) 158 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS ________________________________________________________________ 159 160 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 (42 funds), Special Districts (32 funds), Courts (6 funds), and Other Local Boards (19 funds) 1 61 COUNTY OF SAN LUIS OBISPO Combining Statement of Fiduciary Net Position Agency Funds June 30, 2014 (in thousands) 1915 Act Other Clearing Funds Service Funds Agency Funds (90 Funds) (17 Funds) (30 Funds) Total ASSETS Cash and cash equivalents $ 11,180 $ 2,012 $ 30,965 $ 44,157 Total Assets 11,180 2,012 30,965 44,157 LIABILITIES Assets held as agency for others 11,180 2,012 30,965 44,157 Total Liabilities $ 1 1,180 $ 2,012 $ 30,965 $ 44,157 162 COUNTY OF SAN LUIS OBISPO Combining Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2014 (in thousands) July 1, 2013 Additions Deductions June 30, 2014 Clearing and Revolving Funds (90 funds) Assets: Cash and cash equivalents $ 11,879 $ 958,383 $ 959,082 $ 11,180 Total Assets 11,879 958,383 959,082 11,180 Liabilities: Assets held as agency for others 11,879 958,383 959,082 11,180 Total Liabilities $ 11,879 $ 958,383 $ 959,082 $ 1 1,180 1915 Act Service Funds (17 funds) Assets: Cash and cash equivalents $ 2,060 $ 506 $ 554 $ 2,012 Total Assets 2,060 506 5 54 2,012 Liabilities: Assets held as agency for others 2,060 506 5 54 2,012 Total Liabilities $ 2 ,060 $ 5 06 $ 554 $ 2,012 Other Agency Funds (30 funds) Assets: Cash and cash equivalents $ 26,483 $ 264,159 $ 259,677 $ 30,965 Total Assets 26,483 264,159 259,677 30,965 Liabilities: Assets held as agency for others 26,483 264,159 259,677 30,965 Total Liabilities $ 26,483 $ 264,159 $ 259,677 $ 3 0,965 Total All Agency Funds Assets: Cash and cash equivalents $ 40,422 $ 1,223,048 $ 1,219,313 $ 44,157 Total Assets 40,422 1,223,048 1,219,313 44,157 Liabilities: Assets held as agency for others 40,422 1,223,048 1,219,313 44,157 Total Liabilities $ 40,422 $ 1,223,048 $ 1,219,313 $ 4 4,157 163 COUNTY OF SAN LUIS OBISPO Combining Statement of Fiduciary Net Position Investment Trust Funds June 30, 2014 (in thousands) School Special Other Districts Districts Courts Local Boards (42 Funds) (32 Funds) (6 Funds) (19 Funds) Total ASSETS Cash and cash equivalents $ 161,262 $ 1 2,130 $ 2 ,035 $ 25,587 $ 201,014 Total Assets 1 61,262 1 2,130 2 ,035 2 5,587 201,014 NET POSITION Assets held in trust for pool participants 161,262 1 2,130 2 ,035 2 5,587 201,014 Total Net Position $ 1 61,262 $ 1 2,130 $ 2 ,035 $ 25,587 $ 201,014 164 COUNTY OF SAN LUIS OBISPO Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds For the Year Ended June 30, 2014 (in thousands) School Special Other Districts Districts Courts Local Boards (42 Funds) (32 Funds) (6 Funds) (19 Funds) Total Additions Contributions to pooled investments $ 7 56,915 $ 7,667 $ 18,764 $ 3 9,048 $ 822,393 Interest 286 23 -- 3 5 344 Total Additions 757,201 7,690 18,764 3 9,083 822,737 Deductions Distributions from investment pool 7 48,740 6,842 18,948 3 7,507 812,037 Total Deductions 7 48,740 6,842 18,948 3 7,507 812,037 Change in Net Position 8,461 848 (184) 1 ,575 10,700 Net Position - Beginning 1 52,801 11,282 2,219 24,012 190,314 Net Position - Ending $ 161,262 $ 1 2,130 $ 2,035 $ 25,587 $ 201,014 165 166 ________________________________________________________________ GENERAL FUND DETAIL BUDGETARY COMPARISON SCHEDULES ________________________________________________________________ 167 168 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget General Government - Expenditures Legislative and Administrative Administrative Office: Salaries wages benefits $ 1,632 $ 1,632 $ 1,470 $ 162 Services and supplies 170 180 100 80 Expenditure transfers and reimbursements (85) (85) (85) -- Total 1,717 1,727 1,485 242 Board of Supervisors: Salaries wages benefits 1,443 1,443 1,326 117 Services and supplies 255 317 212 105 Expenditure transfers and reimbursements (36) (36) (36) -- Total 1,662 1,724 1,502 222 Clerk/Recorder: Salaries wages benefits 2,050 2,050 1,933 117 Services and supplies 1,011 1,014 844 170 Capital outlay -- 48 -- 48 Total 3,061 3,112 2,777 335 Total Legislative and Administrative 6,440 6,563 5,764 799 Finance Assessor: Salaries wages benefits 8,159 7,772 7,278 494 Services and supplies 829 1,321 1,070 251 Capital outlay 35 106 100 6 Total 9,023 9,199 8,448 751 Auditor-Controller: Salaries wages benefits 4,703 4,703 4,197 506 Services and supplies 271 505 268 237 Capital outlay -- 54 10 44 Expenditure transfers and reimbursements (9) (9) (19) 10 Total 4,965 5,253 4,456 797 Treasurer-Tax Collector-Public Administrator: Salaries wages benefits 2,837 2,675 2,325 350 Services and supplies 311 472 351 121 Expenditure transfers and reimbursements -- -- (1) 1 Total 3,148 3,147 2,675 472 Total Finance 17,136 17,599 15,579 2,020 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, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget General Government - Expenditures (continued) Counsel County Counsel: Salaries wages benefits $ 3,304 $ 3,201 $ 3,072 $ 129 Services and supplies 185 488 265 223 Total Counsel 3,489 3,689 3,337 352 Personnel Personnel: Salaries wages benefits 1,926 1,926 1,818 108 Services and supplies 394 836 370 466 Total Personnel 2,320 2,762 2,188 574 Property Management General Services: Salaries wages benefits 7,921 7,440 7,057 383 Services and supplies 4,298 4,833 7,634 (2,801) Other charges 73 73 72 1 Capital outlay -- 36 35 1 Expenditure transfers and reimbursement (2,679) (2,679) (2,722) 43 Total 9,613 9,703 12,076 (2,373) Maintenance Projects: Services and supplies 2,082 7,756 1,278 6,478 Expenditure transfers and reimbursement -- (52) (31) (21) Total 2,082 7,704 1,247 6,457 Total Property Management 11,695 17,407 13,323 4,084 Other General Information Technology: Salaries wages benefits 9,777 9,572 8,826 746 Services and supplies 3,220 3,495 672 2,823 Capital outlay -- 66 -- 66 Expenditure transfers and reimbursement (2,956) (2,956) (2,925) (31) Total 10,041 10,177 6,573 3,604 Risk Management: Salaries wages benefits 784 792 759 33 Services and supplies 769 868 783 85 Expenditure transfers and reimbursement (77) (77) (78) 1 Total 1,476 1,583 1,464 119 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, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget General Government - Expenditures (continued) Other General (continued) Non-Department Financing Uses: Expenditure transfers and reimbursement $ (10,201) $ (10,201) $ (10,235) $ 34 Total (10,201) (10,201) (10,235) 34 Contributions to Other Agencies: Services and supplies 1,885 1,933 1,912 21 Total 1,885 1,933 1,912 21 Total Other General 3,201 3,492 (286) 3,778 Total General Government 44,281 51,512 39,905 11,607 Public Protection - Expenditures Judicial Court Operations Fund: Other charges 2,284 2,427 2,411 16 Total 2,284 2,427 2,411 16 District Attorney: Salaries wages benefits 13,476 13,476 12,259 1,217 Services and supplies 1,369 1,749 1,801 (52) Capital outlay -- 5 5 -- Expenditure transfers and reimbursement (262) (262) (260) (2) Total 14,583 14,968 13,805 1,163 Family Support: Salaries wages benefits 3,622 3,622 3,253 369 Services and supplies 1,054 1,054 600 454 Total 4,676 4,676 3,853 823 Grand Jury: Salaries wages benefits 39 40 39 1 Services and supplies 99 98 93 5 Total 138 138 132 6 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, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures (continued) Judicial (continued) Public Defender: Services and supplies $ 5,590 $ 5,902 $ 5,890 $ 12 Total 5,590 5,902 5,890 12 Total Judicial 27,271 28,111 26,091 2,020 Police Protection Sheriff-Coroner: Salaries wages benefits 52,705 52,933 50,967 1,966 Services and supplies 9,783 10,751 10,512 239 Other charges -- 318 303 15 Capital outlay 125 1,435 427 1,008 Expenditure transfers and reimbursement (209) (209) (165) (44) Total Police Protection 62,404 65,228 62,044 3,184 Detention and Correction Probation Department: Salaries wages benefits 15,670 15,670 14,527 1,143 Services and supplies 3,603 3,792 2,895 897 Capital outlay -- 357 117 240 Expenditure transfers and reimbursement (285) (285) (297) 12 Total Detention and Correction 18,988 19,534 17,242 2,292 Fire Protection County Fire: Services and supplies 17,544 17,704 16,584 1,120 Capital outlay 1,624 2,512 469 2,043 Total Fire Protection 19,168 20,216 17,053 3,163 Protective Inspection Agricultural Commissioner: Salaries wages benefits 4,514 4,584 4,341 243 Services and supplies 732 759 661 98 Expenditure transfers and reimbursement -- -- (4) 4 Total Protective Inspection 5,246 5,343 4,998 345 Other Protection Animal Services: Salaries wages benefits 1,581 1,570 1,458 112 Services and supplies 896 907 796 111 Capital outlay -- 27 -- 27 Total 2,477 2,504 2,254 250 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, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures (continued) Other Protection (continued) Emergency Services: Salaries wages benefits $ 772 $ 794 $ 693 $ 101 Services and supplies 398 533 332 201 Other charges 405 405 176 229 Capital outlay 30 58 27 31 Total 1,605 1,790 1,228 562 Planning Department: Salaries wages benefits 10,276 10,420 9,350 1,070 Services and supplies 2,305 4,299 2,269 2,030 Capital outlay 15 15 7 8 Total 12,596 14,734 11,626 3,108 Waste Management: Services and supplies 910 975 1,167 (192) Total 910 975 1,167 (192) Total Other Protection 17,588 20,003 16,275 3,728 Total Public Protection 150,665 158,435 143,703 14,732 Public Ways and Facilities - Expenditures Public Works: Services and supplies 1,956 2,637 2,045 592 Total 1,956 2,637 2,045 592 Total Public Ways and facilities 1,956 2,637 2,045 592 Health and Sanitation - Expenditures Health Public Health: Salaries wages benefits 16,608 16,658 15,366 1,292 Services and supplies 4,675 4,835 5,853 (1,018) Other charges 1,610 3,003 72 2,931 Capital outlay -- 42 22 20 Expenditure transfers and reimbursement (1,157) (1,157) (1,101) (56) Total 21,736 23,381 20,212 3,169 continued 173 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget Health and Sanitation - Expenditures (continued) Health (continued) Behavioral Health: Salaries wages benefits $ 25,871 $ 27,204 $ 24,349 $ 2,855 Services and supplies 25,645 26,378 23,735 2,643 Other charges 869 969 1,207 (238) Expenditure transfers and reimbursement (2,190) (2,190) (1,126) (1,064) Total 50,195 52,361 48,165 4,196 Total Health 71,931 75,742 68,377 7,365 Total Health and Sanitation 71,931 75,742 68,377 7,365 Public Assistance - Expenditures Administration Department of Social Services: Salaries wages benefits 38,443 41,556 36,696 4,860 Services and supplies 15,636 17,786 13,628 4,158 Other charges 7,029 7,863 6,256 1,607 Capital outlay 107 107 92 15 Expenditure transfers and reimbursement (67) (67) (63) (4) Total Administration 61,148 67,245 56,609 10,636 Aid Programs Aid Foster Care Non-Fed: Services and supplies 68 68 68 -- Other charges 20,783 20,783 19,500 1,283 Total 20,851 20,851 19,568 1,283 Calworks Assistance: Other charges 12,150 12,150 11,493 657 Total 12,150 12,150 11,493 657 Total Aid Programs 33,001 33,001 31,061 1,940 Medical Services Medical Assistance Program: Services and supplies 2,500 2,401 1,250 1,151 Total Medical Services 2,500 2,401 1,250 1,151 continued 174 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget Public Assistance - Expenditures (continued) General Relief General Relief: Other charges $ 1,172 $ 1,172 $ 971 $ 201 Total General Relief 1,172 1,172 971 201 Veterans Service Veterans Service: Salaries wages benefits 429 432 417 15 Services and supplies 39 576 109 467 Total Veterans Service 468 1,008 526 482 Other Assistance Law Enforcement Med Care: Salaries wages benefits 2,001 1,965 1,877 88 Services and supplies 1,068 1,338 2,745 (1,407) Expenditure transfers and reimbursement (513) (513) (511) (2) Total Other Assistance 2,556 2,790 4,111 (1,321) Total Public Assistance 100,845 107,617 94,528 13,089 Education - Expenditures Agricultural Education Farm Advisor: Salaries wages benefits 372 372 341 31 Services and supplies 103 108 100 8 Total Agricultural Education 475 480 441 39 Total Education 475 480 441 39 Total General Fund - Expenditures 370,153 396,423 348,999 47,424 (Before Contingencies) continued 175 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2014 Original Adjusted Variance with Description Budget Budget Actual Final Budget Contingencies Appropriation for Contingencies Contingencies - General Fund: Appropriation for contingency $ 15,551 $ 15,233 $ -- $ 15,233 Total 15,551 15,233 -- 15,233 Total Appropriation for Contingency 15,551 15,233 -- 15,233 Total Contingency 15,551 15,233 -- 15,233 Total General Fund Expenditures $ 385,704 $ 411,656 $ 348,999 $ 62,657 Explanation of Differences between Budgetary Outflows and GAAP Expenditures Uses/outflows of resources Actual amounts (budgetary basis) from the Budget to Actual Comparison Schedule $ 348,999 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 4,412 Total expenditures as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 353,411 176 ________________________________________________________________ STATISTICAL SECTION ________________________________________________________________ 177 178 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 .................................... 181 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 ........... 188 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 ................................................................................................................... 193 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 ................................................................................................... 196 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......................................................................................................................... 198 179 180 County of San Luis Obispo Net Position by Component Last Ten Fiscal Years (in thousands) (UNAUDITED) 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Governmental Activities Net Investment in Capital Assets $ 981,543 $ 996,381 $ 1,012,458 $ 1,047,361 $ 1,063,955 $ 1,071,844 $ 1,084,978 $ 1,099,885 $ 1,103,924 $ 1,112,934 Restricted 48,141 40,178 50,061 52,566 41,188 36,385 36,258 31,477 28,863 43,109 Unrestricted 130,632 169,766 190,107 173,396 192,271 206,786 234,786 265,454 304,257 325,113 Total governmental activities net position $ 1,160,316 $ 1,206,325 $ 1,252,626 $ 1,273,323 $ 1,297,414 $ 1,315,015 $ 1,356,022 $ 1,396,816 $ 1,437,044 $ 1,481,156 Business-type activities Net Investment in Capital Assets $ 114,785 $ 122,534 $ 146,021 $ 155,907 $ 167,188 $ 160,627 $ 149,097 $ 153,801 $ 167,138 $ 188,485 Unrestricted 12,867 19,178 16,511 16,202 12,266 18,117 38,665 33,081 58,433 98,097 Total business-type activities net position $ 127,652 $ 141,712 $ 162,532 $ 172,109 $ 179,454 $ 178,744 $ 187,762 $ 186,882 $ 225,571 $ 286,582 Total Primary Government Net Investment in Capital Assets $ 1,096,328 $ 1,118,915 $ 1,158,479 $ 1,203,268 $ 1,231,143 $ 1,232,471 $ 1,234,075 $ 1,253,686 $ 1,271,062 $ 1,301,419 Restricted 48,141 40,178 50,061 52,566 41,188 36,385 36,258 31,477 28,863 43,109 Unrestricted 143,499 188,944 206,618 189,598 204,537 224,903 273,451 298,535 362,690 423,210 Total primary government net position $ 1,287,968 $ 1,348,037 $ 1,415,158 $ 1,445,432 $ 1,476,868 $ 1,493,759 $ 1,543,784 $ 1,583,698 $ 1,662,615 $ 1,767,738 Notes: Source - Statement of Net Assets for FY 2003-2004 through 2011-2012 Statement of Net Position beginning in 2012-2013 and ongoing 181 County of San Luis Obispo Changes in Net Position Last Ten Fiscal Years (in thousands) (UNAUDITED) 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Expenses Governmental Activities General government $ 29,565 $ 39,872 $ 50,819 $ 46,971 $ 41,658 $ 36,561 $ 35,344 $ 35,231 $ 34,507 $ 36,866 Public protection 106,402 100,234 120,165 135,987 136,755 134,768 132,413 136,219 142,353 148,135 Public ways and facilities 23,647 32,858 22,256 24,503 24,713 24,927 27,365 27,120 28,474 28,253 Health and sanitation 52,540 53,113 55,173 66,382 66,542 68,199 66,657 65,799 69,222 74,313 Public assistance 83,209 84,451 84,045 93,472 97,803 96,645 98,841 96,435 97,929 99,449 Education 7,459 7,786 8,626 9,966 10,967 10,390 10,057 10,000 9,922 9,611 Recreation and cultural services 4,238 4,244 6,106 6,024 7,561 8,708 7,363 7,344 9,735 7,745 Interest on long term debt 4,173 7,184 5,163 5,771 5,433 6,356 6,787 6,620 6,041 5,270 Total Governmental Activities Expenses 311,233 329,742 352,353 389,076 391,432 386,554 384,827 384,768 398,183 409,642 Business-type Activities Expenses Airport 3,628 3,703 4,021 7,809 4,559 5,204 7,732 5,422 5,435 5,664 Golf 2,905 2,867 3,301 3,033 3,249 2,974 2,690 2,863 2,779 2,608 Hospital 2,149 - - - - - - - - - State Water contract 5,451 5,102 4,792 5,179 5,661 5,630 6,705 6,761 5,536 5,992 Naciemento Water contract 497 580 5 59 20,021 10,144 10,613 11,844 11,901 14,738 13,840 Lopez Dam 5,418 5,237 5,807 7,945 6,189 5,813 6,499 5,752 6,548 6,116 General Flood Control Zone 526 726 6 81 6 89 7 12 8 31 9 28 1,816 7 46 809 Transit 933 745 7 14 1,071 9 87 1,143 1,105 8 - - County Service Areas 2,692 2,907 3,465 3,419 3,434 3,744 3,877 3,836 3,779 3,857 Los Osos Wastewater - - - - - - 5 6,672 3 44 231 Total Business-type Activities Expenses 24,199 21,867 23,340 49,166 34,935 35,952 41,385 45,031 39,905 39,117 Total Primary Government Expenses $ 335,432 $ 351,609 $ 375,693 $ 438,242 $ 426,367 $ 422,506 $ 426,212 $ 429,799 $ 438,088 $ 448,759 Program Revenues Governmental Activities Fees, Fines, Charges for Services General government $ 29,911 $ 22,293 $ 18,743 $ 13,299 $ 17,729 $ 12,878 $ 13,971 $ 17,545 $ 16,575 $ 14,678 Public protection 7,642 11,776 21,061 20,380 23,285 21,072 20,843 15,679 16,352 23,035 Public ways and facilities 6,607 9,730 7,236 7,580 4,190 3,234 11,549 5,069 5,465 4,356 Health and sanitation 8,555 8,831 6,505 6,583 6,863 7,026 7,453 6,014 5,196 6,570 Public assistance 2,680 2,438 2,798 2,864 2,784 9 25 2,399 2,366 2,920 2,070 Education 1,853 1,460 1,759 1,891 1,922 2,304 2,037 2,545 3,583 1,723 Recreation and cultural services 1,110 1,370 1,246 2,183 3,931 3,822 3,714 3,952 4,435 4,537 Operating Grants and Contributions General Government 2,404 1,442 1,454 4 46 7 51 3 77 1,120 6 28 1 22 252 Public Protection 33,888 39,054 41,429 40,924 38,080 40,034 37,244 45,646 50,477 54,233 Public ways and facilities 9,099 11,459 8,712 8,975 10,406 10,679 9,446 11,813 15,018 14,688 Health and sanitation 37,474 39,611 44,135 46,267 49,149 57,784 48,567 44,741 55,064 57,344 Public assistance 67,559 73,863 75,391 79,190 83,175 81,525 86,479 85,505 87,912 89,640 Education 250 250 2 99 2 62 2 60 2 59 2 89 1 75 1 75 102 Recreation and cultural services 1,029 158 1 67 1 85 1 78 1 77 3 57 18 3 50 - Capital Grants and Contributions General government 311 - 2 91 2 64 3 84 4 49 2 79 8 43 8 69 Public protection 935 208 1,799 3 19 82 - - - - 3,315 Public ways and facilities 4,091 6,253 6,008 15,130 5,966 10,259 7,411 12,930 3,479 5,570 Health and sanitation 177 - - 34 - - - - - - Public assistance 80 - - - - - - - - - Recreation and cultural services 403 805 1 71 9 79 4 23 1 73 81 2 47 50 282 Total Governmental Activities 216,058 231,001 239,204 247,755 249,558 252,977 253,239 255,716 267,181 282,464 Source: Statement of Activities (continued) 182 County of San Luis Obispo Changes in Net Position Last Ten Fiscal Years (in thousands) (UNAUDITED) 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Business-type Activities Fees, Fines, Charges for Services Airport $ 4,206 $ 3,864 $ 3,919 $ 4,585 $ 3,734 $ 3,541 $ 3,888 $ 3,719 $ 4,053 $ 4,493 Golf 2,719 2,895 3,016 3,058 2,879 2,653 2,590 2,690 2,639 2,779 Hospital - - - - - - - - - - State Water Contract 5,506 5,098 4,458 5,309 5,767 6,513 6,453 6,609 6,185 6,358 Nacimiento Water Contract 31 5,509 6,893 3,018 2 84 3 55 7,968 13,893 13,800 13,685 Lopez Dam 4,383 4,717 5,987 6,453 5,494 6,164 6,359 6,440 6,174 6,123 General Flood Control Zone 550 562 5 75 6 00 6 37 6 61 1,870 1,252 7 30 861 Transit 74 57 52 55 63 - - - - - County Service Areas 2,323 2,604 2,860 2,869 2,658 2,784 3,090 3,186 3,352 3,312 Operating Grants and Contributions Airport 11 279 2 81 8 20 1 44 1 82 1 80 3 72 1 32 127 Golf 75 - - - - - - 5 - - Hospital - - - - - - - - - - State Water Contract 8 8 8 8 8 8 10 10 13 13 Nacimiento Water Contract 20 23 25 28 31 31 30 28 29 12 Lopez Dam 14 - - - 15 15 15 15 15 8 Transit 950 1,190 - - - 1,172 1,097 - - - General Flood Control Zone - - 5 43 6 24 9 62 - - - - - County Service Areas 3 222 1 55 2 4 4 3 3 3 3 Los Osos Wastewater - - - - - - - 35 1 - Capital Grants and Contributions Airport 3,188 3,792 9,509 19,201 6,750 4,310 2,074 1 38 5 72 1,770 County Service Areas - - - 1 65 2 75 3 39 2 88 64 2 94 2 Los Osos Wastewater - - - - - - 9,357 9,127 35,717 57,507 Total Business-type Activities Revenues 24,061 30,820 38,281 46,795 29,705 28,732 45,272 47,586 73,709 97,053 Total Primary Government Revenues $ 240,119 $ 261,821 $ 277,485 $ 294,550 $ 279,263 $ 281,709 $ 298,511 $ 303,302 $ 340,890 $ 379,517 Net (Expense)/Revenues Governmental Activities $ (95,175) $ (98,741) $ (113,149) $ (141,321) $ (141,874) $ (133,577) $ (131,588) $ (129,052) $ (131,002) $ (127,178) Business-Type Activities (138) 8,953 14,941 (2,371) (5,230) (7,220) 3,887 2,555 33,804 57,936 Total Primary Government net expense $ (95,313) $ (89,788) $ (98,208) $ (143,692) $ (147,104) $ (140,797) $ (127,701) $ (126,497) $ (97,198) $ (69,242) General Revenue and Other Changes in Net Position Governmental Activities Property Taxes $ 98,025 $ 114,076 $ 128,867 $ 133,292 $ 141,195 $ 132,723 $ 139,214 $ 140,288 $ 143,182 $ 152,256 Other Taxes 14,333 15,823 15,798 15,881 14,389 13,358 14,393 16,330 23,940 22,088 Interest and investment income 4,420 7,176 11,025 9,790 4,646 1,690 9 86 1,202 7 33 599 Unrestricted Grants 4,609 9,559 4,079 4,019 4,890 3,972 3,520 3,978 3,537 1,727 Other revenues 331 - - - - - 1 72 - 4 - Transfers 1,494 (1,884) (319) (964) 8 45 (565) 1 50 8,048 (166) (790) Special Item - - - - - - - - - (2,800) Total Governmental Activities 123,212 144,750 159,450 162,018 165,965 151,178 158,435 169,846 171,230 173,080 Business-type Activities Property Taxes 1,765 2,051 3,359 3,402 3,678 3,654 3,841 3,799 4,145 4,402 Other Taxes - - - - 27 28 28 28 29 32 Interest and investment income 406 1,085 1,897 7,290 6,190 1,900 9 65 7 55 3 85 595 Other revenues 182 86 3 04 2 92 5 72 3 63 4 47 31 1 60 40 Transfers (1,494) 1,884 3 19 9 64 (845) 5 65 (150) (8,048) 1 66 790 Total Business-type Activities 859 5,106 5,879 11,948 9,622 6,510 5,131 (3,435) 4,885 5,859 Total Primary Government $ 124,071 $ 149,856 $ 165,329 $ 173,966 $ 175,587 $ 157,688 $ 163,566 $ 166,411 $ 176,115 $ 178,939 Change in Net Position Governmental Activities $ 28,037 $ 46,009 $ 46,301 $ 20,697 $ 24,091 $ 17,601 $ 26,847 $ 40,794 $ 40,228 $ 45,902 Business-Type Activities 721 14,059 20,820 9,577 4,392 (710) 9,018 (880) 38,689 63,795 Total Primary Government $ 28,758 $ 60,068 $ 67,121 $ 30,274 $ 28,483 $ 16,891 $ 35,865 $ 39,914 $ 78,917 $ 109,697 183 County of San Luis Obispo Fund Balances, Governmental Funds Last Ten Fiscal Years (in thousands) (UNAUDITED) 2005 2006 2007 2008 2009 2010 General Fund Reserved $ 18,255 $ 17,665 $ 29,841 $ 31,853 $ 40,561 $ 49,543 Unreserved 76,200 86,924 74,727 64,886 63,626 66,559 Total General Fund $ 94,455 $ 104,589 $ 104,568 $ 96,739 $ 104,187 $ 116,102 All Other Governmental Funds Reserved $ 41,727 $ 9,039 $ 30,278 $ 50,422 $ 42,697 $ 39,243 Unreserved, reported in: Special Revenue Funds 42,828 80,293 70,630 60,384 51,703 55,513 Capital Project Funds 19,877 27,245 31,638 21,233 23,248 20,859 Debt Service Funds - - - - - - Total all other Governmental Funds $ 104,432 $ 116,577 $ 132,546 $ 132,039 $ 117,648 $ 115,615 2011 2012 2013 2014 General Fund Nonspendable $ 3,333 $ 3,176 $ 3,092 $ 779 Restricted 7,113 6,682 4,005 3,214 Committed 62,380 68,880 96,365 116,940 Assigned - - 104,237 118,248 Unassigned 87,741 102,291 - - Total General Fund $ 160,567 $ 181,029 $ 207,699 $ 239,181 All Other Governmental Funds Nonspendable $ 352 $ 390 $ 596 $ - Restricted 22,065 19,788 18,311 20,164 Committed 55,446 61,144 65,903 74,240 Assigned 94 - - - Unassigned - - - - Total all other Governmental Funds $ 77,957 $ 81,322 $ 84,810 $ 94,404 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 184 County of San Luis Obispo Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (in thousands) (UNAUDITED) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenues Taxes $ 1 12,565 $ 128,586 $ 141,934 $ 144,596 $ 154,155 $ 153,910 $ 155,419 $ 160,920 $ 171,771 $ 177,765 Licenses, permits, and franchises 1 3,637 10,744 9 ,404 9,117 8,006 6,906 7 ,413 7,863 9 ,247 10,694 Fines, forfeits, and penalties 6 ,105 3,544 6,262 6,224 6,973 6 ,078 7 ,993 6,750 6 ,654 5,257 Revenues from use of money and property 4 ,063 6,637 9,789 8,452 4,122 1 ,644 1 ,242 2,273 1 ,475 1,373 Aid from governmental agencies 1 60,452 182,750 184,142 196,994 188,794 1 99,771 194,625 206,372 209,234 229,283 Charges for current services 5 4,769 55,547 55,083 50,592 54,208 47,065 5 6,486 45,538 41,690 5 0,071 Other revenues 4 ,712 7,146 6,750 3,122 6,856 5 ,358 6 ,531 8,451 1 1,342 6 ,235 Total revenues 356,303 394,954 413,364 419,097 423,114 420,732 429,709 438,167 451,413 480,678 Expenditures Current: General government 4 9,074 53,691 55,375 51,733 51,461 45,162 50,321 45,850 44,374 44,317 Public protection 1 07,355 116,791 126,043 134,058 140,746 136,857 135,636 138,579 143,832 148,155 Public ways and facilities 2 4,096 25,749 38,981 44,814 42,139 31,093 37,261 40,338 34,178 28,528 Health and sanitation 5 2,894 55,464 57,590 66,180 67,267 68,442 68,472 67,830 70,021 74,586 Public assistance 8 2,673 87,020 87,182 92,682 98,170 96,248 100,202 97,185 98,059 99,442 Education 7 ,802 7,891 8,755 9,698 11,016 13,020 10,191 9,973 9,901 12,205 Recreational and cultural services 5 ,092 4,159 8,005 9,911 8,654 8,313 7,187 6,998 7,538 7,993 Debt service: Principal payments 1 ,895 4,970 6,560 2,601 3,264 3,790 4,595 4,435 4,065 5,412 Interest and fiscal charges 6 ,226 5,774 6,401 5,593 5,181 5,954 6,464 6,289 5,863 5,419 Debt issuance costs - - - - - 550 - - 269 - Capital outlay 1 8,673 9,551 10,241 13,333 2,849 1,965 3,399 5,540 3,692 11,312 Total expenditures 355,780 371,060 405,133 430,603 430,747 411,394 423,728 423,017 421,792 437,369 Excess (deficiency) of revenues over expenditures 523 23,894 8,231 (11,506) (7,633) 9,338 5,981 15,150 29,621 43,309 continued 185 County of San Luis Obispo Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (in thousands) (UNAUDITED) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Other Financing Sources Refunding certificates of participation issued - - - - - - - - 14,427 - Premium on refunding certificates of participation issued - - - - - - - - 1,418 - Proceeds of long term debt - - 5,090 7,325 - - - - - - Refunding bonds issued - - - - - 42,565 - - - - Payment to refunded escrow agent - - - - - (42,000) - - (16,400) - Discount on certificates of participation issued - - - (119) - - - - - - Transfers in 1 9,792 31,910 42,996 42,324 43,523 33,044 3 4,421 35,815 48,113 2 6,502 Transfers out ( 19,093) (33,525) (42,817) (42,751) (42,833) ( 33,065) (33,595) (27,138) (47,021) (25,935) Total other financing sources and uses 6 99 (1,615) 5 ,269 6,779 6 90 5 44 8 26 8,677 5 37 567 Special Item - - - - - - - - - (2,800) Net change in fund balances $ 1 ,222 $ 22,279 $ 13,500 $ (4,727) $ (6,943) $ 9 ,882 $ 6,807 $ 23,827 $ 30,158 $ 41,076 2.55% 3.12% 3.50% 2.13% 2.13% 2.51% 2.80% 2.73% 2.48% 2.61% Debt Service as a percentage of non-capital expenditures Source: Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 186 San Luis Obispo County Estimated 30 Year Pension Liability Funding Projection Based on January 1, 2014 Actuarial Valuation with Tier 3 (AB 340) 7.25% Investment Rate of Return Assumption 3.75% Payroll Growth Assumption Actuarial Actuarial Market Funded Valuation Input Market Market Return Total Accrued Value Total Value of Ratio as of Return for Past for Past Fiscal Contribution Compensation Total Liability of Assets Unfunded Funded Normal Assets Using January 1, Fiscal Year Year Rate at Valuation Contribution (AAL) (AVA) AAL Ratio Cost Rate (MVA) MVA 2014 7.25% 13.07% 34.23% $ 165 $ 5 6.4 $ 1,519 $ 1,183 $ 3 36 77.9% 22.52% $ 1,136 74.8% 2015 7.25% 7.25% 34.23% 170 58.0 1,596 1,239 3 57 77.6% 21.82% 1,205 75.5% 2016 7.25% 7.25% 34.59% 175 60.5 1,674 1,287 3 87 76.9% 21.22% 1,275 76.2% 2017 7.25% 7.25% 34.60% 181 62.5 1,752 1,346 4 06 76.8% 20.65% 1,347 76.9% 2018 7.25% 7.25% 34.87% 186 65.0 1,829 1,399 4 30 76.5% 20.10% 1,421 77.7% 2019 7.25% 7.25% 34.85% 192 67.0 1,905 1,462 4 43 76.7% 19.60% 1,495 78.5% 2020 7.25% 7.25% 34.52% 199 68.5 1,980 1,534 4 46 77.5% 19.15% 1,570 79.3% 2021 7.25% 7.25% 34.19% 205 70.1 2,054 1,608 4 46 78.3% 18.75% 1,645 80.1% 2022 7.25% 7.25% 33.85% 212 71.8 2,127 1,682 4 45 79.1% 18.37% 1,720 80.9% 2023 7.25% 7.25% 33.53% 219 73.5 2,197 1,756 4 41 79.9% 18.02% 1,794 81.7% 2024 7.25% 7.25% 33.25% 227 75.3 2,266 1,830 4 36 80.8% 17.72% 1,868 82.4% 2025 7.25% 7.25% 32.98% 234 77.3 2,333 1,903 4 30 81.6% 17.45% 1,942 83.2% 2026 7.25% 7.25% 32.74% 243 79.4 2,399 1,977 4 22 82.4% 17.21% 2,016 84.0% 2027 7.25% 7.25% 32.51% 251 81.6 2,463 2,052 4 11 83.3% 16.99% 2,090 84.9% 2028 7.25% 7.25% 32.32% 260 84.0 2,525 2,126 3 99 84.2% 16.80% 2,165 85.7% 2029 7.25% 7.25% 32.13% 269 86.5 2,586 2,201 3 85 85.1% 16.62% 2,240 86.6% 2030 7.25% 7.25% 31.96% 279 89.1 2,645 2,278 3 67 86.1% 16.47% 2,317 87.6% 2031 7.25% 7.25% 31.80% 289 91.8 2,704 2,356 3 48 87.1% 16.32% 2,395 88.6% 2032 7.25% 7.25% 31.66% 299 94.7 2,761 2,436 3 25 88.2% 16.20% 2,475 89.6% 2033 7.25% 7.25% 31.53% 310 97.7 2,817 2,518 2 99 89.4% 16.09% 2,557 90.8% 2034 7.25% 7.25% 31.40% 321 1 00.9 2,873 2,604 2 69 90.6% 15.98% 2,643 92.0% 2035 7.25% 7.25% 31.29% 333 1 04.2 2,929 2,693 2 36 91.9% 15.89% 2,732 93.3% 2036 7.25% 7.25% 31.19% 345 1 07.6 2,985 2,786 1 99 93.3% 15.81% 2,825 94.6% 2037 7.25% 7.25% 31.09% 358 1 11.3 3,041 2,884 1 57 94.8% 15.74% 2,923 96.1% 2038 7.25% 7.25% 30.99% 371 1 15.0 3,098 2,988 1 10 96.4% 15.68% 3,026 97.7% 2039 7.25% 7.25% 30.89% 385 1 18.8 3,156 3,098 58 98.2% 15.62% 3,136 99.4% 2040 7.25% 7.25% 15.56% 399 62.1 3,215 3,215 - 100.0% 15.58% 3,254 101.2% 2041 7.25% 7.25% 15.25% 414 63.1 3,276 3,278 ( 2) 100.1% 15.53% 3,316 101.2% 2042 7.25% 7.25% 15.24% 429 65.4 3,340 3,341 ( 1) 100.0% 15.50% 3,380 101.2% 2043 7.25% 7.25% 15.24% 445 67.9 3,407 3,408 ( 1) 100.0% 15.47% 3,446 101.1% 2044 7.25% 7.25% 15.24% 462 70.4 3,477 3,478 ( 1) 100.0% 15.44% 3,516 101.1% Discussion: This projection is prepared by the SLO County Pension Trust's actuary and is a supplement to the annual Actuarial Valuation Report. It's purpose is to project progress towards fully funding the Actuarial Accrued Liability of the San Luis Obispo County Employees Retirement Plan. Current policy of the Plan Sponsor is to fund the Retirement Plan such that the Unfunded AAL reaches $0 over the 30 years ending in 2040. Notes: Projections subject to change annually. Funding policy of the Plan Sponsor subject to change. Projection assumes no actuarial gains and losses, other than from assets. Projection based on constant population. Tier 3 changes include No DROP, 2% COLA, pay limited to Social Security Taxable Wage Base ($117,000 for 2014), 3 year Final Average Compensation for members hired on or after January 1, 2013. All dollar amounts in millions. Source: Gabriel Roeder Smith & Company Supplementary exhibit to the 2014 SLO County Pension Trust Actuarial Valuation Report For the Year Beginning January 1, 2014 187 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 2005 29,677,821 836,182 (627,898) 29,886,105 9.3% 1.0023 2006 32,984,334 933,185 (701,193) 33,216,326 11.1% 1.0022 2007 36,890,449 1,000,873 (781,070) 37,110,252 11.7% 1.0021 2008 40,252,987 1,035,443 (835,356) 40,453,074 9.0% 1.0020 2009 42,348,044 1,132,435 (891,949) 42,588,530 5.3% 1.0020 2010 42,185,284 1,148,662 (914,309) 42,419,637 -0.4% 1.0020 2011 41,846,720 1,118,384 (927,194) 42,037,910 -0.9% 1.0029 2012 41,223,923 1,081,597 (965,089) 41,340,431 -1.7% 1.0030 2013 41,667,316 1,138,202 (1,009,234) 41,796,284 1.1% 1.0040 2014 42,900,845 1,195,631 (1,036,531) 43,059,945 3.0% 1.0040 Source: County Property Tax Information Booklet 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 tnecreP Total Net Assessed Value Increase from Prior Year Percentage Increase from Prior Year for Fiscal Year Ended June 30 *Due to Article XIII‐A,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. 188 County of San Luis Obispo Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (per $100 of assessed values) (UNAUDITED) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 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 .00223 0.00222 0.00221 0.00220 0.00220 0.00220 0.00290 0.00300 0.00400 0.00400 Total Direct Rate 1.00223 1.00222 1.00221 1.00220 1.00220 1.00220 1.00290 1.00300 1.00400 1.00400 Cities, Schools, and Special Districts Combined Rates Arroyo Grande 0 .0593 0.0423 0.0392 0.0422 0.0464 0.0464 0.0470 0.0477 0.0576 0.0580 Atascadero 0 .0975 0.0975 0.0975 0.0975 0.0975 0.0975 0.0975 0.0442 0.0452 0.0452 Grover Beach 0 .0463 0.0313 0.0295 0.0333 0.0382 0.0382 0.0389 0.0396 0.0495 0.0499 Morro Bay 0 .0081 0.0231 0.0231 0.0492 0.0492 0.0492 0.0499 0.0501 0.0510 0.0510 Paso Robles 0 .1775 0.1082 0.0952 0.0997 0.0948 0.0988 0.0389 0.0816 0.0815 0.0815 Pismo Beach 0 .0463 0.0335 0.0295 0.0333 0.0382 0.0382 0.0389 0.0396 0.0495 0.0499 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 189 County of San Luis Obispo Principal Property Taxpayers Current Year and Ten Years Ago (in Thousands) (UNAUDITED) Fiscal Year 2014 Fiscal Year 2005 Percentage Percentage of Total of Total Assessed County Assessed County Taxpayer Industry Value Rank Assessed Value Rank Assessed Pacific Gas & Electric Co. Utility $ 2,565,300 1 5.96% $ 2,168,919 1 7.28% Beringer Wine Estates Company Winery 9 5,337 2 0.22% 65,500 5 0.22% Plains Exploation & Production Petroleum & Gas 8 2,999 3 0.19% - - - Mustang UCAL LLC Apartments 7 8,423 4 0.18% - - - Pacific Bell Telephone Co Telephone 7 2,603 5 0.17% 72,519 4 0.24% E&J Gallo Winery Winery 6 3,115 6 0.15% - - - Martin Hotel Mgmt Co LLC Hotel 6 1,484 7 0.14% - - - Southern California Gas Co Utility 6 0,148 8 0.14% 48,983 7 0.16% Pasquini Charles Jr Tre Etal Private 5 6,778 9 0.13% - - - Twin Cities Comm Hospital Inc Hospital 5 4,445 10 0.13% - - - TOSCO Corp Petroleum & Gas - - - 174,001 2 0.58% Duke Energy Morro Bay, LLC Utility - - - 130,715 3 0.44% UHS-Corona Inc. A DE Corp Health Care - - - 55,470 6 0.19% Sierra Vista Hospital Inc Hospital - - - 45,941 8 0.15% Charter Communications Communications - - - 40,246 9 0.14% ESJ Centers LLC ETAL Real Estate - - - 32,432 10 0.11% Total $ 3,190,632 7.41% $ 2,834,726 9.51% Total County Assessed Value $ 43,059,945 $ 29,886,105 Source: County Property Tax System 190 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 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% 2013 405,225 399,807 98.66% N/A 5,418 1.34% 2014 421,140 416,450 98.89% N/A 4,690 1.11% Note: Amounts do not include Tax collections for Bonds or Special Assessments Source: County Property Tax Booklet *Collections in Subsequent Years are not available from the County's current property tax system 191 County of San Luis Obispo Special Assessment Billings and Collections (in thousands) (UNAUDITED) Special Special Year ended Assessment Assessment June 30, Billings Collected (a) (a) 2011 - $ 3,127 * √ 2012 3,664 3,786 * 2013 3,494 3,545 * 2014 3,497 3,630 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: a.County Property Tax System * Amounts restated √ In 2011 the special assessment collected source is Public Works by County Enterprise System 192 County of San Luis Obispo Ratios of Total Debt Outstanding Last Ten Fiscal Years (in thousands) (UNAUDITED) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Governmental Activities Certificates of Participation $25,323 $23,107 $27,125 $33,319 $31,920 $30,420 $28,820 $27,895 $25,662 $24,640 Less deferred amounts: For issuance discounts: - - - (119) (115) (111) (107) (103) (99) (95) Add deferred amounts: For issuance premiums: - - - - - - - - 1,329 1,240 Pension Obligation Bonds 137,194 135,199 130,504 129,034 127,169 125,444 122,689 119,429 115,624 111,234 Total bonds and notes payable 162,517 158,306 157,629 162,234 158,974 155,753 151,402 147,221 142,516 137,019 Business Type Certificates of Participation 22,577 22,069 21,535 20,985 20,848 20,657 19,897 19,060 17,920 18,257 Add deferred amounts: For issuance premiums: - - - - - - - - 492 459 Pension Obligation Bonds State Note 3,077 15,126 26,144 31,824 32,283 32,418 31,024 35,884 34,399 46,529 Revenue Bonds 66 61 56 196,461 196,456 196,450 196,444 193,483 190,389 187,170 Add deferred amounts: For issuance premiums: - - - 6,371 6,371 6,371 6,371 6,158 5,945 5,732 General Obligation Bonds 12,510 12,260 12,000 11,730 11,450 11,155 10,760 10,245 9,890 9,530 Add deferred amounts: For issuance premiums: - - - - - - 1,128 1,072 1,015 959 Bond Anticipation Notes - - - - - - 8,677 - - - Assessment Bonds - - - - - - - 15,364 39,527 76,438 Total bonds and notes payable 38,230 49,516 59,735 267,371 267,408 267,051 274,301 2 81,266 299,577 345,074 Total Outstanding Debt $200,747 $207,822 $217,364 $429,605 $426,382 $422,804 $425,703 $428,487 $442,093 $482,093 Percentage of Personal Income 2.40% N/A N/A N/A N/A N/A N/A N/A N/A N/A Percentage of Assessed Value of Taxable Property* 0.67% 0.63% 0.59% 1.06% 1.00% 1.00% 1.01% 1.04% 1.06% 1.12% Net outstanding debt Per Capita $ 769.95 $ 789.47 $ 820.55 $ 1,595.05 $ 1,576.69 $ 1,547.42 $ 1,571.06 $ 1,578.32 $ 1,624.28 $ 1,770.08 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. 193 County of San Luis Obispo Ratios of General Obligation Debt Outstanding Last Ten Fiscal Years (in thousands) (UNAUDITED) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Certificates of Participation $20,655 $20,110 $19,545 $18,965 $18,361 $17,730 $17,075 $16,400 $14,427 $13,675 Less deferred amounts: For issuance discounts: - - - - - - - - (99) (95) Add deferred amounts: For issuance premiums: - - - - - - - - 1,330 1,240 General Obligation Bonds 12,510 12,260 12,000 11,730 11,450 11,155 10,760 10,245 9,890 9,530 Add deferred amounts: For issuance premiums: - - - - - - 1,128 1,072 1,015 959 Assessment Bonds - - - - - - - 15,364 39,527 76,438 Less resources restricted for principal repayment (6,888) (10,018) (13,505) (15,297) (10,929) (10,665) (9,752) (9,666) (9,640) (10,691) Net Total General Obligation Debt $ 26,277 $ 22,352 $ 18,040 $ 15,398 $ 18,882 $ 18,220 $ 19,211 $ 3 3,415 $ 5 6,450 $ 91,056 Percentage of Personal Income 0.30% N/A N/A N/A N/A N/A N/A N/A N/A N/A Percentage of Assessed Value of Taxable Property* 0.09% 0.07% 0.05% 0.04% 0.04% 0.04% 0.05% 0.08% 0.14% 0.21% Net outstanding debt Per Capita $100.78 $84.91 $ 68.10 $ 57.17 $ 69.82 $ 66.68 $ 7 0.90 $ 1 23.08 $ 2 07.40 $ 334.33 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. 194 County of San Luis Obispo Legal Debt Margin Information Last Ten Fiscal Years (in thousands) (UNAUDITED) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Assessed Value of Property (a) (b) $ 29,886,105 $ 3 3,216,326 $ 37,110,252 $ 40,453,074 $ 4 2,588,529 $ 4 2,419,637 $ 4 2,037,909 $ 4 1,340,430 $ 41,796,283 $ 43,059,945 Debt Limit, 1.25% of Assessed Value 373,576 415,204 463,878 5 05,663 532,357 530,245 525,474 516,755 5 22,454 538,249 Amount of Debt Applicable to Limit General Obligation Bonds (c) 12,510 12,260 12,000 11,730 11,450 11,155 11,888 11,317 10,905 10,489 Less: Resources Restricted to Paying Principal - - - - - - - - - Total Debt Applicable 1 2,510 1 2,260 12,000 11,730 11,450 11,155 11,888 11,317 10,905 10,489 Legal Debt Margin $ 361,066 $ 402,944 $ 451,878 $ 493,933 $ 520,907 $ 519,090 $ 513,586 $ 505,438 $ 511,549 $ 527,760 Total Debt Applicable as a Percentage of the Debt Limit 3.35% 2.95% 2.59% 2.32% 2.15% 2.10% 2.26% 2.19% 2.09% 1.95% 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 $40,097,982 Pipeline Right-of-Way (Unitary) 6 ,144 Aircraft 6 9,220 Total Local Assessed 40,173,346 State Assessed Local Utility 34,364 Unitary 2,852,234 Total State Assessed 2,886,599 Combined Assessed Values Sub-Total Combined Assessed Values 42,990,725 Aircraft 69,220 Total Combined Assessed Values $43,059,945 195 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,f) (2,a,d) (2,a,d) (4,c) (3,b,e) (2,a) 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 10,966,438 40,322 40.30 44,104 9.9 2012 271,483 12,008,355 43,698 39.20 43,022 8.5 2013 272,177 N/A N/A N/A 42,600 6.4 2014 272,357 N/A N/A N/A 42,911 5.3 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. Calendar year 2004 -2010 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. f. Calendar year 2011-2013 figures are projections based on the 2010 census 196 County of San Luis Obispo Principal Employers Current Year and Ten Years Ago (UNAUDITED) 2014 2005 Number of Percentage of Total Number of Percentage of Total Employer Employees Rank County Employment Employees Rank County Employment County of San Luis Obispo 2,800 1 1.97% 2,675 1 2.01% Cal Poly State University, SLO 2,573 2 1.81% 2,442 2 1.83% Atascadero State Hospital 2,300 3 1.62% 2,057 3 1.54% California Men's Colony 2,000 4 1.41% 1,700 5 1.27% Pacific Gas and Electric Company 1,700 5 1.20% 1,955 4 1.47% Tenet Healthcare 1,200 6 0.85% - - - Lucia Mar Unified School District 1,000 7 0.71% 1,060 7 0.79% Paso Robles Public Schools 935 8 0.66% 825 9 0.62% Cal Poly Corporation 906 9 0.64% - - San Luis Coastal Unified School District 902 10 0.64% 825 8 0.62% Cal Poly Foundation - - - 1,365 6 1.02% Sierra Vista Regional Medical Center - - - 780 10 0.58% Total Employment Labor Force 141,800 133,400 Source: 1. SLO Chamber of Commerence 2. State of California Employment Development Department 197 County of San Luis Obispo Full Time Equivalent County Government Employees by Function Last Ten Fiscal Years (UNAUDITED) Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Government 480.25 479.75 482.00 495.50 485.25 451.00 442.75 437.50 438.25 430.75 Public Protection 850.50 856.00 885.25 891.75 879.50 799.75 783.25 808.25 812.00 817.25 Public Ways and Facilities 184.00 185.00 185.25 191.25 199.25 202.25 194.25 193.75 193.75 188.75 Health and Sanitation 419.25 413.25 394.50 423.75 421.00 424.75 424.00 430.50 445.25 464.00 Public Assistance 439.00 438.75 443.75 453.25 437.25 426.75 424.75 425.75 428.00 478.00 Education 73.00 74.00 84.00 87.50 87.50 78.50 78.50 77.50 75.50 75.50 Recreation and Cultural Services 56.50 55.00 59.00 58.00 58.00 56.00 56.00 52.00 55.00 55.00 Total 2,502.50 2,501.75 2,533.75 2,601.00 2,567.75 2,439.00 2,403.50 2,425.25 2,447.75 2,509.25 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. 198 County of San Luis Obispo Operating Indicators by Function Last Ten Fiscal Years (UNAUDITED) Function / Department 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Recreation and Cultural Services Parks Day Use Passes 53,906 62,951 66,899 65,895 47,156 47,011 51,519 57,135 56,601 42,821 Annual Passes 1,436 1,496 1,416 1,598 3,547 2,220 1,992 2,357 2,406 2,998 Daily Boat Launches 21,085 22,481 19,737 14,085 16,864 15,802 15,602 16,133 14,809 17,444 Annual Boat Passes 795 804 793 847 752 627 618 633 551 460 Public Protection Planning and Building Total Permits Issued 3,747 3,548 2,897 2,634 2,261 2,067 2,073 2,086 2,070 2,622 Number of New Affordable Housing 267 184 63 218 105 82 80 39 44 13 Sheriff Jail bookings (a) 14,240 14,927 18,718 18,321 14,158 13,025 12,682 1 2,966 13,273 12,583 Average daily population (a) 506 534 553 567 540 551 558 679 717 780 Health and Sanitation Mental Health Total number of patient days in State Hospitals 986 522 447 603 365 364 n/a n/a n/a n/a Day Treatment Days provided to youth in out-of-county group home facilities n/a n/a n/a 2,067 2,692 2,212 2,937 1588* 1,885 1,764 Public Health Number of Children enrolled in the Healthy Families Program 4,331 4,436 4,752 5,098 5,450 5,709 n/a n/a n/a n/a Percentage of the State allocated caseload enrolled in the Women, Infants & Children(WIC) Program n/a n/a n/a 100 98 97 100 99 99 95 Percentage of live born infants whose mothers received prenatal care in the first trimester. n/a n/a 82.7 76.0 7 8.0 78.0 78.5 81.7 80.0 79.0 Public Assistance Social Services Rate per 1,000 children entering out-of- home care for the first time (State Rate is 2.8) 2.9 3.8 2.9 n/a n/a 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 77.1 69.8 88.7 94.1 96.8 97.6* 98.* 95.0 Education Library Annual number of items circulated per capita 5.8 6.0 7.0 7.5 9.2 9.4 10.0 10.1 n/a n/a Annual Expenditure per capita for total Library budget $ 2 7.37 $ 28.34 $ 31.07 $ 33.75 $ 38.43 $ 35.35 $ 35.35 $ 35.25 $ 34.35 $ 3 5.50 Public Ways and Facilities Roads Pavement Condition Rating for all county roads (70 = "good") 58 70 69 65 62 65 60 58 60 61 Airport Airport Takeoffs and Landings (a) 101,849 n/a 92,096 96,172 95,419 88,161 80,556 80,158 71,428 66,696 Passenger Enplanements 173,370 182,177 177,176 182,285 132,748 125,152 139,909 134,244 132,315 147,105 Note: (a) Data collected per calendar year Source: County Budget Performance Indicators * Restated 199 County of San Luis Obispo Capital Asset Statistics by Function Last Ten Fiscal Years (UNAUDITED) Function/Program 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Recreation and Cultural Services County golf courses 3 3 3 3 3 3 3 3 3 3 Park acreage 12,026 12,056 12,056 13,402 13,422 13,422 13,572 13,424 13,424 13,583 Public Protection Correction facility capacities (a) 693 693 684 693 693 693 689 637 717 797 Public Ways and Facilities Miles of county roads 1,317 1,321 1,321 1,334 1,336 1,329 1,332 1,333 1,335 1,336 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 200