Annual Comprehensive Financial Report, 2014-15

County of San Luis Obispo, California Fiscal Year Ended June 30, 2015 Comprehensive Annual Financial Report Prepared under the direction of James P. Erb, CPA Auditor‐Controller‐Treasurer‐Tax Collector COUNTY OF SAN LUIS OBISPO COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2015 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal .............................................................................................................. 3 Certificate of Achievement for Excellence in Financial Reporting ................................................... 9 List of Elected and Appointed Officials...................................................................................... 10 Organizational Chart ............................................................................................................... 11 FINANCIAL SECTION Independent Auditor’s Report ................................................................................................. 15 Management’s Discussion and Analysis .................................................................................... 21 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position ........................................................................................... 41 Statement of Activities ................................................................................................ 42 Fund Financial Statements: Governmental Funds: Balance Sheet – Governmental Funds .......................................................................... 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 of Governmental Funds to the Government-Wide Statement of Activities .............................................................................................. 50 Proprietary Funds: Statement of Fund Net Position ................................................................................... 51 Statement of Revenues, Expenses, and Changes in Fund Net Position ............................ 52 Statement of Cash Flows ............................................................................................ 53 Fiduciary Funds: Statement of Fiduciary Net Position ............................................................................. 54 Statement of Changes in Fiduciary Net Position – Investment Trust Funds .......................... 55 Notes to Basic Financial Statements ................................................................................. 59 Required Supplementary Information: Description ...................................................................................................................... 101 Schedule of County’s Proportionate Share of the San Luis Obispo County Pension Plan’s Net Pension Liability ....................................................................................... 102 Schedule of the County’s Contributions to the San Luis Obispo County Pension Plan .................. 103 Other Post Employment Benefits Plan Schedule of Funding Progress ........................................ 104 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual Comparison – General Fund ........................................................................ 105 Notes to Required Supplementary Information ........................................................................ 107 Page FINANCIAL SECTION (Continued) Other Supplementary Information: Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Nonmajor Governmental Fund Descriptions ....................................................................... 113 Combining Balance Sheet ................................................................................................ 115 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ............... 116 Nonmajor Debt Service Funds: Combining Balance Sheet .................................................................................... 117 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................................. 118 Nonmajor Special Revenue Funds: Combining Balance Sheet .................................................................................... 119 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................................. 122 Nonmajor Special Revenue Funds – Special Districts: Combining Balance Sheet .................................................................................... 125 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ................................................................................. 126 Major and Nonmajor Budgetary Comparison Schedules: Capital Projects Fund ....................................................................................................... 129 Public Facilities Corporation .............................................................................................. 130 Pension Obligation Bonds ................................................................................................. 131 Public Financing Authority ........................................................................................... 132 Community Development Special Revenue Fund ........................................................... 133 County Medical Services Program (CMSP) Special Revenue Fund .................................... 134 Emergency Medical Services Special Revenue Fund ....................................................... 135 Driving Under the Influence Programs Special Revenue Fund ......................................... 136 Fish and Game Special Revenue Fund .......................................................................... 137 Road Impact Fees Special Revenue Fund ..................................................................... 138 Library Special Revenue Fund ...................................................................................... 139 Parks Special Revenue Fund ........................................................................................ 140 Public Facilities Fees Special Revenue Fund .................................................................. 141 Roads Special Revenue Fund ....................................................................................... 142 Wildlife Grazing Special Revenue Fund ......................................................................... 143 Flood Control Districts Special Revenue Funds .............................................................. 144 Lighting Control Districts Special Revenue Funds ........................................................... 145 County Service Area Districts Special Revenue Funds .................................................... 146 Nonmajor Enterprise Funds: Nonmajor Enterprise Fund Descriptions ............................................................................ 149 Combining Statement of Net Position ................................................................................ 150 Combining Statement of Revenues, Expenses, and Changes in Net Position ........................ 151 Combining Statement of Cash Flows ................................................................................. 152 Page FINANCIAL SECTION (Continued) Other Supplementary Information (Continued): Combining and Individual Fund Statements and Schedules (Continued): Internal Service Funds: Internal Service Fund Descriptions.................................................................................... 157 Combining Statement of Net Position ................................................................................ 159 Combining Statement of Revenues, Expenses, and Changes in Net Position ........................ 160 Combining Statement of Cash Flows ................................................................................. 161 Internal Service Funds – Insurance Funds: Combining Statement of Net Position ................................................................... 162 Combining Statement of Revenues, Expenses, and Changes in Net Position ............ 163 Combining Statement of Cash Flows..................................................................... 164 Fiduciary Funds: Fiduciary Fund Descriptions ............................................................................................. 167 Agency Funds: Combining Statement of Fiduciary Net Position ..................................................... 168 Combining Statement of Changes in Assets and Liabilities ...................................... 169 Investment Trust Funds: Combining Statement of Fiduciary Net Position ..................................................... 170 Combining Statement of Changes in Fiduciary Net Position .................................... 171 General Fund – Detailed Budgetary Comparison Schedules: Detail Schedule of Expenditures – Budget to Actual Comparison – General Fund ................. 175 STATISTICAL SECTION (UNAUDITED) Statistical Section Table of Contents ........................................................................................ 185 Net Position by Component ..................................................................................................... 187 Changes in Net Position .......................................................................................................... 188 Fund Balances, Governmental Funds ............................................................................................ 190 Changes in Fund Balances, Governmental Funds ...................................................................... 191 Estimated 30 Year Pension Liability Funding .............................................................................. 193 Assessed Valuation ................................................................................................................. 194 Direct and Overlapping Property Tax Rates .............................................................................. 195 Principal Property Taxpayers ................................................................................................... 196 Property Tax Levies and Collections ......................................................................................... 197 Special Assessment Billings and Collections .............................................................................. 198 Ratios of Total Debt Outstanding ............................................................................................. 199 Ratios of General Obligation Debt Outstanding ......................................................................... 200 Legal Debt Margin Information ................................................................................................ 201 Demographic and Economic Statistics ...................................................................................... 202 Principal Employers ................................................................................................................ 203 Full Time Equivalent County Government Employees by Function ............................................... 204 Operating Indicators by Function ............................................................................................. 205 Capital Asset Statistics by Function .......................................................................................... 206 ____________________________________________________________ INTRODUCTORY SECTION ____________________________________________________________ 1 2 February 26, 2016 The 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, 2015, 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 Brown Armstrong Accountancy Corporation, 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, 2015, 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 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, 2015, 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. 3 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 274,293 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 (Board) 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. 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 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 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. 4 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. Employment:  Unemployment in the County as of September 2015 was 4.1%, which is lower than the State of California rate of 5.9% and lower than the national average of 5.1%. Last year at this time unemployment in the County was 5.4%.  The State of California has a major presence in the County of San Luis Obispo with California Men's Colony, Atascadero State Hospital, CalTrans, 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 $39,170, as reported to the Franchise Tax Board, increased 3.3% from 2012 to 2013 (most recent data) for the residents of the County of San Luis Obispo.  The San Luis Obispo 2013 average family income of $39,170 was approximately 7.0% higher than the State average. For the second consecutive year, San Luis Obispo County ranked 14th out of 58 counties when comparing annual income. Retail Sales:  Retail sales for the County of San Luis Obispo as a whole showed essentially no change from 2012 to 2013 according to the State Board of Equalization.  From June 2014 to June 2015 sales tax revenue increased slightly by 0.4%. 5 Real Estate: People's desire to live in the area increased the median home price to $470,000 as of August 2015. This is an increase of 6.8% from the same period in the prior year. Increase of the median home price demonstrates that the local real estate market continues to rebound.  Property tax revenue indicators illustrate the continuing recovery of the local economy. Discretionary property tax receipts were $107 million, an increase of 6.0% over the prior year.  The total tax levy of secured property of $447,087,861 for FY 2014-15 is an increase of 6.26% 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 5.6% during 2014-15. This is the fifth straight year of increases.  The property tax delinquency rate has steadily decreased since 2008-2009 suggesting that foreclosures are slowing, and family income is remaining stable.  Building permits showed an increase of 19.7% during 2014 to 2015, which also indicates a strengthening housing market. Tourism:  Transient occupancy tax increased in 2015 by 8.87% in the unincorporated area. The pristine coastline, small town atmospheres, sweeping vineyards, excellent restaurants, and friendly attitudes of the local residents make San Luis Obispo County a desired tourist destination.  From surfing to wine tasting to zip lining, San Luis Obispo County has an abundance of activities that appeal to tourists and residents alike. The famous San Luis Obispo Thursday night Farmer's Market earned a TripAdvisor Certificate of Excellence for its consistent great reviews. Long-term financial planning:  The 2015-16 fiscal year budget was the first budget after a seven year pain plan that addressed the economic downturn. FY 2015-16 will be the first year that the County is able to return to fully funding its contingencies, while making significant investments in the many programs and services that we provide to the community. Property tax revenue has continued to increase and key economic indicators such as transient occupancy tax, property and sales taxes show signs of improvement allowing for a slight increase in the FY 2015-16 spending level. The final FY 2015- 16 budget authorized a $572.6 million spending level, which is an increase over the $545.6 million budget from the FY 2014-15. The general fund had $469.2 million appropriated to finance the current year's expenditures including contingencies, with $9.0 million placed in general reserves and $33.2 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 6 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 2015-16 capital budget recommended funding for four new capital projects. Total FY 2015-16 appropriations for Capital Projects are approximately $3.7 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 onetime expenditures. Annual budgets will not be increased to the point that ongoing operating costs become overly reliant upon cyclical or unreliable onetime 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 III 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 50/50 funding split between the County and the employees. Major Initiatives  Los Osos Sewer Project: In FY 2014-15 this high profile project continued with construction and completed the collection system pump stations. 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 continued in FY 2014-15, and the women's housing unit and security system was 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 69 women in a facility that was designed for 43 female inmates. When completed the expanded Women's Jail will house up to 198 inmates.  Behavioral Health: Implementation of the Electronic Health Record system continued in all areas of Behavioral Health. In FY 2015-16 evaluation of expanding the Electronic Health Records for jail services is planned in conjunction with Public Health. 7  Sheriff-Coroner: The Sheriffs Department established new occupational programming opportunities for inmates including animal care and grooming, sewing, welding, and sign making while researching alternatives to reduce a rising jail population and recidivism rates.  Emergency Services: In partnership with PG&E, the Office of Emergency Services completed an upgrade of all 131 Early Warning System sirens within the Diablo Canyon Emergency Planning Zone, including the primary and back-up controls of the system as a means for alerting the public during an emergency at the Diablo Canyon Power Plant or any other type of emergency.  Probation: In October 2014, the Probation Department broke ground on the Juvenile Hall expansion project. This $20 million project will provide among other things, much needed classrooms for the detained minors and a 15 bed in custody treatment program.  Airport: Construction will begin, with the assistance of a $24 million Federal Aviation Administration grant, to add a new terminal to the San Luis Obispo Airport. Construction will span two fiscal years and start in FY 2015-16.  Clerk-Recorder: Implemented an electronic filing system to track campaign finance statements of local candidates which assisted campaigns with managing their paperless filings and quickly made redacted information available online for public access.  Tax Collector: Gathered and analyzed property tax bills used in all 58 California counties, and then redesigned the San Luis Obispo County tax bills to take advantage of best ideas and make bills more readable. The new tax bills were mailed in FY 2015-16. 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, 2014. This was the twenty-ninth 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, Brown Armstrong Accountancy Corporation, 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 Board of Supervisors for its leadership responsibility and unfailing support to ensure the continued general fiscal health and integrity of the County. 8 9 COUNTY OF SAN LUIS OBISPO LIST OF ELECTED AND APPOINTED OFFICIALS JUNE 30, 2015 Elected Officials Board of Supervisors District #1 .......................................................................................................... Frank R. Mecham District #2 ............................................................................................................ Bruce S. Gibson District #3 ..................................................................................................................... Adam Hill District #4 ............................................................................................................. Lynn Comptom District #5 Chairperson ............................................................................................. Debbie Arnold Other Elected Officials Assessor ........................................................................................................ Tom J. Bordonaro Jr. Auditor-Controller-Treasurer-Tax Collector-Public Administrator ..................................... James P. Erb Clerk-Recorder ..........................................................................................................T ommy Gong District Attorney .............................................................................................................. Dan Dow Sheriff-Coroner ........................................................................................................ Ian Parkinson Appointed Officials Agricultural Commissioner ...................................................................................M artin Settevendemie Airport General Manager……………………………………………………………………………………………..…Kevin Bumen Chief Probation Officer ...................................................................................................... James Salio Child Support Services Director .............................................................................................. Julie Paik County Administrator ........................................................................................................ Dan Buckshi County Counsel ................................................................................................................. Rita L. Neal County Fire..................................................................................................................... Robert Lewin Behavioral Health Administrator ......................................................................................... Anne Robin General Services Department Interim Director ................................................................. Machelle Vieux Farm Advisor ................................................................................................................... Mary Bianchi Health Agency Director ....................................................................................................... Jeff Hamm Human Resources Director .................................................................................... Tami Douglas-Schatz Information Technology Director .........................................................................................Daniel Milei Library Director ................................................................................................... Christopher Barnickel Parks Director………………………………………………………………………………………………………………….Nick Franco Planning ..................................................................................................................... James Bergman Public Health Officer .................................................................................................. Penny Borenstein Public Works Director ...................................................................................................... Wade Horton Social Services Director ....................................................................................................... Lee Collins Veteran’s Services Director ......................................................................................... Dana Cummings 10 COUNTY OF SAN LUIS OBISPO ORGANIZATIONAL CHART 11 12 ____________________________________________________________ FINANCIAL SECTION ____________________________________________________________ 13 14 INDEPENDENT AUDITOR’S REPORT To the Honorable Board of Supervisors County of San Luis Obispo 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, 2015, 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 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 First 5 San Luis Obispo County, are based solely on the reports of the other auditor. We conducted our audit in accordance with auditing standards generally accepted to 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 amount and disclosures in the financial statements. The procedures selected depend on the auditors’ 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 County’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 County’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. 15 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County as of June 30, 2015, and the respective changes in financial position, and where applicable, cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matters As discussed in Note 1 to the financial statements, the County implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68 during fiscal year 2015. Our opinion is not modified with respect to this matter Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of County’s proportionate share of the County’s pension plans net pension liability, schedule of the County’s contributions to the County’s pension plan, other post employment benefits plan schedule of funding progress, and budgetary comparison information for the General Fund, 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 GASB, 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 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 combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements taken as a whole. 16 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and schedules 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 February 26, 2016, on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California February 26, 2016 17 18 ____________________________________________________________ MANAGEMENT’S DISCUSSION AND ANALYSIS ____________________________________________________________ 19 20 COUNTY OF SAN LUIS OBISPO MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2015 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 (FY) ended June 30, 2015. 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 2014-15 the County implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. GASB Statement No. 68 revises and establishes accounting and financial reporting requirements for state and local governments that provide their employees with pension benefits. GASB Statement No. 68 requires the County to recognize its long-term obligation for pension benefits as a liability, and to more comprehensively and comparably measure the annual costs of pension benefits. Accordingly, the County has recognized an obligation of $391 million for long-term pension benefits.  The assets of the County exceeded its liabilities at the close of the most recent fiscal year by $1,328,517 (net position). The majority of this amount, $1,343,696 is the net investment in capital assets, while $37,722 is restricted for specific purposes (restricted net position). Unrestricted net position indicates the portion of net position which may be used to meet the County’s ongoing obligations to citizens and creditors; however, the recording of the County’s pension liability in accordance with GASB Statement No. 68 created a negative unrestricted net position of $52,901.  The County’s net position decreased by $439,221 during the current fiscal year. The decrease in restricted and unrestricted net position represents the degree to which increases in expenditures exceeded increases in revenues along with adjustments related to the prior period and the cumulative effect of changes in accounting principle (Table B). The increase in net investment in capital assets represents capital acquisitions during the year reduced by depreciation and increased by retirement of long-term debt (Table A).  As of June 30, 2015, the County’s governmental activities reported combined ending net position of $1,017,889, a decrease of $463,267 in comparison with the prior year. Due to the recording of the long-term pension obligation, governmental net position, the amount available for spending at the County’s discretion for current and future needs, is negative (unrestricted net position) (Table A).  Business-type activities posted net program income of $19,202 before general revenues, contributions and transfers from other funds, a decrease of $38,734 when compared to net program income of $57,936 in the prior year. The difference from the prior year is due to a combination of a $31,122 decrease in contributed capital in the Los Osos Wastewater Fund related to decreased construction activity and an increase in expenses driven by pipeline repairs in the Nacimiento Water Contract Fund.  At the end of the fiscal year, the entire $271,286 fund balance of the general fund was either nonspendable ($5,089), restricted ($2,945), committed ($138,140), or assigned ($125,112).  The County issued new Assessment bonds of $4,635 to the United States Department of Agriculture (USDA) to finance costs of the Los Osos Wastewater project, a decrease of $33,484 over prior year issuances reflecting the completion of much of the construction phase of the project. 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 of resources, liabilities and deferred inflows of resources, 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. 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 22 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) 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-seven 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-five 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. 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. 23 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) 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 98 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 99 to 107 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 111 to 126 and 147 to 172 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 127 to 146 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 173 to 182 of this report. 24 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) GOVERNMENT-WIDE FINANCIAL ANALYSIS In accordance with changes in governmental accounting standards, the County applied 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 of resources exceeded liabilities and deferred inflows of resources by $1,328,517 as detailed in the table below: Table A Statement of Net Position June 30, 2015 (in thousands) June 30, June 30, 2015 2014 2014-2015 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 $ 471,091 $ 165,131 $ 636,222 $ 423,654 $ 165,254 $ 588,908 8.0% Other long-term assets 5,397 10,725 16,122 139,107 10,665 149,772 (89.2%) Capital assets 1,152,635 539,106 1,691,741 1,136,448 502,769 1,639,217 3.2% Total assets 1,629,123 714,962 2,344,085 1,699,209 678,688 2,377,897 (1.4%) Deferred Outflows of Resources 37,341 384 37,725 - - - - Liabilities: Long-term liabilities 579,290 366,976 946,266 158,203 337,903 496,106 90.7% Other liabilities 69,285 37,742 107,027 59,850 54,203 114,053 (6.2%) Total liabilities 648,575 404,718 1,053,293 218,053 392,106 610,159 72.6% Deferred Inflows of Resources - - - - - - - Net position: Invested in capital assets, net related debt 1,130,241 213,455 1,343,696 1,112,934 188,485 1,301,419 3.2% Restricted 37,722 - 37,722 43,109 - 43,109 (12.5%) Unrestricted (150,074) 97,173 (52,901) 325,113 98,097 423,210 (112.5%) Total net position $ 1,017,889 $ 310,628 $ 1,328,517 $ 1,481,156 $ 286,582 $ 1,767,738 (24.8%) Analysis of Net Position Unrestricted net position indicates the portion of net position which may be used to meet the County’s ongoing obligations to citizens and creditors. The recording of the County’s pension liability, per the requirements of GASB Statement No. 68, caused the County’s unrestricted net position to turn negative indicating that the majority of the County’s net position is invested in capital assets or otherwise restricted for use. In the prior year approximately 24%, or $423 million, of the County’s net position was unrestricted. The most significant portion of the County’s net position, $1,343,696, or 101%, of total net position, reflects its net investment in capital assets (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. 25 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) The remaining $37,722, or 2.8%, balance of the County’s net position 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 for business-type activities in all categories. Net position for governmental activities decreased $463 million and net position for business activities increased $24 million resulting in an overall decrease of $439 million in the County’s total net position. Net investment in capital assets, for business-type activities increased $25.0 million. 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. Net investment in capital assets, for governmental activities increased $17.3 million. The majority of the increase is associated with construction in progress for several large infrastructure projects having no related debt as well as the retirement of capital related long-term debt. The $5.4 million decrease to Restricted net position for governmental activities was primarily comprised of decreases in the Public Protection ($6.7 million), General Government ($108 thousand), and Public Assistance functions ($382 thousand) offset by increases in Debt Service ($1.4 million) and the Public Ways and Facilities function ($523 thousand). Restricted net position represents net position of the County which is subject to constraints imposed by creditors, grantors, contributors, laws, or regulations. There was a decrease of $476 million 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. When positive, this amount may be used to meet the County’s general obligations. The decrease was due to excess general expenses over net program revenues and increased expenses related to the posting of the pension liability in compliance with GASB Statement No. 68. 26 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) The table below indicates the changes in net position for governmental and business-type activities: Table B Statement of Activities For the Year Ended June 30, 2015 (in thousands) June 30, 2015 June 30, 2014 2014-2015 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 $ 54,198 $ 34,504 $ 88,702 $ 56,969 $ 37,611 $ 94,580 (6.2%) Operating grants and contributions 233,907 636 234,543 216,259 163 216,422 8.4% Capital grants and contributions 18,068 26,750 44,818 9,236 59,279 68,515 (34.6%) General revenues: Property taxes 155,374 4,782 160,156 152,256 4,402 156,658 2.2% Other taxes 22,984 659 23,643 22,088 32 22,120 6.9% Interest and investment income 3,174 183 3,357 599 595 1,194 181.2% Grants not restricted to specific programs 13,327 - 13,327 1,727 - 1,727 671.1% Other revenues - - - - 40 40 (100.0%) Total revenues 501,032 67,514 568,546 459,134 102,122 561,256 1.3% Expenses: General government 45,598 - 45,598 36,866 - 36,866 23.7% Public protection 162,432 - 162,432 148,135 - 148,135 9.7% Public ways and facilities 34,136 - 34,136 28,253 - 28,253 20.8% Health and sanitation 78,137 - 78,137 74,313 - 74,313 5.1% Public assistance 110,470 - 110,470 99,449 - 99,449 11.1% Education 9,457 - 9,457 9,611 - 9,611 (1.6%) Recreational and cultural services 9,755 - 9,755 7,745 - 7,745 26.0% Interest on Long-term debt 5,124 - 5,124 5,270 - 5,270 (2.8%) Airport - 6,187 6,187 - 5,664 5,664 9.2% Golf - 2,968 2,968 - 2,608 2,608 13.8% State water contract - 6,351 6,351 - 5,992 5,992 6.0% Nacimiento Water Contract - 15,776 15,776 - 13,840 13,840 14.0% Lopez dam - 6,132 6,132 - 6,116 6,116 0.3% General Flood Control - 845 845 - 809 809 4.4% County Service Areas - 4,194 4,194 - 3,857 3,857 8.7% Los Osos Wastewater - 235 235 - 231 231 1.7% Total expenses 455,109 42,688 497,797 409,642 39,117 448,759 10.9% Excess/(deficiency) before transfers 45,923 24,826 70,749 49,492 63,005 112,497 (37.1%) Transfers (2,676) 2,676 - (790) 790 - Special Item - - - (2,800) - (2,800) (100.0%) Change in net position 43,247 27,502 70,749 45,902 63,795 109,697 (35.5%) Net position at beginning of year 1,481,156 286,582 1,767,738 1,437,044 225,571 1,662,615 6.3% Prior Period Adjustment (35,486) - (35,486) - - - - Cumulative change of effect in accounting principal (471,028) (3,456) (474,484) (1,790) (2,784) (4,574) 10,274% Net position -end of year $ 1,017,889 $ 310,628 $ 1,328,517 $ 1,481,156 $ 286,582 $ 1,767,738 (24.8%) 27 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Analysis of Governmental and Business-type Activities Governmental Activities Governmental activities decreased the County’s net position by $463 million (including the cumulative effect of change in accounting principle to book the pension liability and prior period adjustment to record accreted value on the 2003 Capital Appreciation Bonds) compared to an increase of $44 million in the prior year. Factors contributing to the decrease are as follows: Total revenues from Governmental Activities increased by 9.1%, a $41.9 million increase over the prior year. Increases in Operating Grants and Contributions, Capital Grants and Contributions, Interest and Investment Income and Grants not Restricted to Specific Programs were offset by a slight decrease in Charges for Services. The Operating Grants and Contributions category increase of $17.6 million was primarily due to increases in the Public Protection, Health and Sanitation, and Public Assistance functions. All Public Protection areas received increased sales tax funding from Proposition 172. Additionally, the State of California (the State) increased funding in the form of various water related grants as well as an Office of Traffic Safety Grant designed to reduce the number of motorists driving under the influence. In the Health and Sanitation function, Behavioral Health Services and Mental Health Services Act programs received increased State funding. The increase was partially offset by a decrease to Drug and Alcohol Services’ federal funding for discretionary, prevention and youth services. Federal funding for community development block grants was also reduced. The increase in the Public Assistance function was a combination of increased State funding for Cal Works Assistance and increased federal funding for welfare administration. Capital Grants and Contributions increased by $8.8 million due to increased State funding for construction of the Women’s Jail, expansion of the Juvenile Hall, and Cayucos Pier restoration. Interest and Investment Income increased by $2.6 million, primarily driven by pre-funding the County’s pension contribution which resulted in significant savings to the County. Additionally, one time interest revenue was received relating to the back-payment from the State for SB90, mandated services, claims. Grants not Restricted to Specific Programs increased by $11.6 million. Approximately half of the increase came from a State $5 million back-payment for Senate Bill (SB) 90, mandated services, claims. The remainder is comprised of general Prop 172 sales tax increases. Charges for Services decreased by $2.8 million primarily due to decreases in the General Government and Public Protection functions. The decreases were somewhat offset by increases in the Education and Recreation functions. The decreases in the General Government function reflect decreases in damages and settlements from prior year insurance reimbursements related to a fire at the Sheriff’s Honor Farm and a lawsuit related to the construction of the government center. Treasury administrative fees also decreased as did SB 2557 administrative fees related to the distribution of property tax. The Public Protection function decrease primarily relates to a multi-year agreement between the County and the State Department of Water Resources that allows the County to sell some of its state water allocation back to the Department of Water Resources. Water was sold under this agreement in the prior fiscal year; however, no water was sold in the current fiscal year. The increase in the Education function is due to contributions from Friends of the Library groups for the Morro Bay and Cambria library projects while the increase in the Recreation function is comprised of a number of small increases for parks related fees. Total expenses from Governmental Activities increased $45.5 million or 11.1% over the prior year. Expenses in all functions with the exception of Education increased. Negotiated salary and benefits increases along with regular employee step increases caused higher salaries and benefits costs in all functions. General Government expenses also increased due to higher facilities maintenance costs, increased professional services costs related to the Property Tax System Modernization Project and increased insurance costs relating to the various general government activities. Non-payroll Public Protection costs increased primarily as a result of expenditures related to an Integrated Water Resources 28 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Management Grant. The majority of the increase in Public Ways and Facilities costs relates to increased repairs and maintenance of County roads. The Public Assistance increase in expenditures was driven by costs related to Social Services’ contracted programs and Supportive Care of Persons. County contributions towards the new 900-acre Pismo Preserve caused the increase in Recreation and Cultural Services expenses. The decrease in Education expenses reflects the completion of the Cambria and Atascadero Libraries projects. FY 2014-15 represented the final year of the County’s seven-year plan designed to navigate through the largest financial downturn in decades. The plan included a combination of short-term measures and expenditure reductions, with expenditure reductions addressing a larger share of the gap as the plan progressed. Expenditure measures included reducing department budgets, maintaining a partial hiring freeze, and bargaining with labor unions to share pension cost increases, reduce benefit pension plans (Tier 2 and Tier 3) for new employees, and set 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, and the County had a budget surplus moving into FY 2014-15. Business-type Activities Business-type Activities increased San Luis Obispo County’s net position by $24.0 million (including the cumulative effect of change in accounting principle adjustment to book the pension liability) compared to an increase of $61.0 million in the previous year. Revenues exceeding expenses by $24.8 million and a transfer of $2.7 million from Governmental Activities resulted in the total increase to net position. Key elements of current year activity are as follows: Total revenue decreased $34.6 million from the preceding year. The largest decrease occurred in Capital Grants and Contributions ($32.5 million) as construction activity for the Los Osos Wastewater Project began winding down resulting in less contributed capital. The decrease in total revenue was slightly offset by General Revenues increases in Other Taxes which rose by $627 thousand and Property Taxes which increased by $380 thousand. Expenses for Business-type Activities increased $3.6 million from the prior year. Within Business-type activities, the largest increase, $1.9 million was caused by costs related to major repairs to the Nacimiento pipeline. FUND FINANCIAL STATEMENT ANALYSIS (in thousands) 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, $6,008, represents amounts that are not spendable in form, or are legally or contractually required to be maintained intact, and includes (1) inventories of $108, (2) prepaid items of $2,362, and (3) long term receivables of $3,538.  Restricted fund balance, $23,508 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 $2,945, (2) Public facilities of $11,045, (3) Traffic impact programs of $7,236, (4) Wildlife and grazing programs of $15, and (5) Debt service of $2,267. 29 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued)  Committed fund balance, $216,649, 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, $19,373, (2) Tax reduction reserve, $42,758, (3) Automation projects, $13,717, (4) Roads, $13,494, (5) Building Replacement $25,151, (6) Solar plant mitigation, $14,952, and (7) Capital projects, $22,968.  Assigned fund balance, $125,112, 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, $14,100, (2) Tax reduction reserve, $23,640, (3) General government, $15,344, and (4) Subsequent Fiscal Year Budget, $39,685. As of the end of the current fiscal year, the County’s governmental funds reported combined ending fund balance of $370,791, an increase of 11.2%, or $37,206 in comparison with the prior year. Approximately 92% of the total fund balance, or $341,274, is available to meet the County’s current and future needs. 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 $266,197 while total fund balance reached $271,286. 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 $378 million. Spendable fund balance represents 70.4% of the total fund expenditures, while total fund balance represents 71.8% of the same amount, a 4.1% increase from the prior year. During the current fiscal year, the fund balance of the general fund increased by $32.1 million. The following provides an explanation for the change in fund balance.  Total revenues exceeded total expenditures by $58.4 million. General fund revenues ended the year with an increase of $26.5 million over the prior year. Total expenditures increased $24.6 million.  Most revenue categories were essentially unchanged from the prior year with the exception of Aid from Governmental Agencies which increased by $20.3 million and Fines, Forfeits, and Penalties and Revenue from the Use of Money and Property which increased by $2.2 and $2.3 million respectively. The $20.3 million increase in Aid from Governmental Agencies was driven by increases in state funding for Behavioral Health Services including Mental Health Services Act and Medi-Cal monies; Public Safety services which received increased Proposition 172 Sales Tax and a $5 million back- payment from the State for SB 90, mandated services, claims. Fines, Forfeits, and Penalties increased due to a drop in maintenance of effort revenue submitted to the State, plus increased traffic school fines and fees, county motor vehicle crime fines, and DNA identification fines. The increase in Revenue from the Use of Money and Property was primarily driven by pre-funding the County’s pension contribution which resulted in significant savings to the County. Additionally, one time interest revenue was received relating to the back-payment from the State for SB 90, mandated services, claims.  Total expenditures in the General Fund increased $24.6 million or 7.0% from the prior year. Expenditures increased in all functions except for Public Ways and Facilities which remained relatively flat. Negotiated salaries and benefit raises increased costs in all functions and comprised the majority of the increases in the Public Protection, Health and Sanitation, and Education functions. Additionally General Fund expenses increased due to higher maintenance costs for general government facilities, an increase in professional services costs related to the Property Tax System Modernization Project, increased insurance costs relating to the Administrative, General Services, and Information Technology departments, and the purchase and installation of an audio-visual and a digital microwave system. The Public Assistance increase in expenditures was driven by costs related to Social Services’ contracted programs and Supportive Care of Persons. Capital Projects The Capital Projects Fund handles construction projects for the County’s governmental funds. The fund had a total fund balance of $23.0 million. Capital outlay expenditures exceeded revenues by $6.6 million 30 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) and transfers in exceeded transfers out by $3.9 million. The net of these two factors resulted in a $2.7 million decrease in fund balance for the current year. Funding for specific projects comes from use of designations, public facilities fees, issuance of long-term debt, and aid from other government agencies. The General Fund transferred $2.6 million to the Capital Projects Fund of which $1.3 million is for facilities planning. The remaining $1.3 million is split between Parks projects and countywide facilities projects. 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 $512.7 million in the current fiscal year, which represents an increase of approximately 6.7% or $32 million from the prior fiscal year revenues of $480.7 million. The following table presents the amount of revenues from various sources and also displays increases or decreases from the prior year. Table C Revenues Classified by Source Governmental Funds Fund Financial Statements For the Year Ended June 30, 2015 (in thousands) 2014-2015 2013-2014 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Revenues by Source: Taxes $ 178,740 34.9% $ 177,765 37.0% $ 975 0.5% Licenses, Permits, Franchises 10,452 2.0% 10,694 2.2% (242) (2.3%) Fines, Forfeits, and Penalties 5,686 1.1% 5,257 1.0% 429 8.2% Revenues from Use of Money and Property 3,864 0.8% 1,373 0.3% 2,491 181.4% Aid from Governmental Agencies 261,351 51.0% 229,283 47.7% 32,068 14.0% Charges for Current Services 43,530 8.5% 50,071 10.5% (6,541) (13.1%) Other Revenues 9,110 1.7% 6,235 1.3% 2,875 46.1% Total $ 512,733 100% $ 480,678 100% $ 32,055 6.7% The following provides an explanation of revenues by source that changed significantly over the prior year in the governmental funds.  Revenues from the Use of Money and Property increased $2.5 million or 181.4%. Approximately half of the increase relates to one time interest revenue received from the State for back-payment of SB 90, mandated services, claims. The remainder of the increase primarily relates to prefunding the County’s pension contribution which resulted in savings of $1.4 million for the County.  Aid from Governmental Agencies increased $32.1 million or 14.0%. The increase in Aid from Governmental Agencies is primarily comprised of increases in State Aid for public safety including a flood control zone grant, funds for construction of a women’s jail, and Prop 172 Sales Tax. Increased Mental Health Services Act monies were also received, and the State also made a $5 million back-payment for SB 90, mandated services, claims. 31 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued)  Charges for Current Services decreased $6.5 million or 13.1%. The decrease is mostly caused by a decrease in water sold to the State Department of Water Resources as part of a multi- year agreement. The County did not sell any water back in the current fiscal year. Also contributing to the decrease was a lessening in the amount of interfund revenue due to the completion of various Library construction projects.  Other Revenues increased $2.9 million or 46.1%. The sale of the old Atascadero library caused the majority of the increase. In addition, community contributions for the construction of new branch libraries also rose. 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, 2015 (in thousands) 2014-2015 2013-2014 Increase/(Decrease) Amount Percent Amount Percent Amount Percent of Total of Total Change Expenditures by Function: General Government $ 51,207 10.8% $ 44,317 10.1% $ 6,890 15.5% Public Protection 157,783 33.3% 148,155 33.9% 9,628 6.5% Public Ways and Facilities 29,903 6.3% 28,528 6.5% 1,375 4.8% Health and Sanitation 75,116 15.9% 74,586 17.1% 530 0.7% Public Assistance 107,104 22.6% 99,442 22.8% 7,662 7.7% Education 11,388 2.4% 12,205 2.8% (817) (6.7%) Recreational and Cultural Services 10,104 2.1% 7,993 1.8% 2,111 26.4% Principal payments 6,070 1.3% 5,412 1.2% 658 12.2% Interest on Long- Term Debt 5,209 1.1% 5,419 1.2% (210) (3.9%) Capital outlay 20,019 4.2% 11,312 2.6% 8,707 77.0% Total $ 473,903 100% $ 437,369 100% $ 36,534 8.4% The following provides an explanation of the expenditures by function that changed significantly over the prior year.  General Government expenditures increased $6.9 million or 15.5%. Salaries and Benefits across all functions, including General Government, increased due to negotiated increases and regular employee step increases. Expenditures in the General Government function also rose with increased maintenance of general government facilities and the use of professional services for the Property Tax System Modernization Project.  Public Protection expenditures increased $9.6 million or 6.5%. The fluctuation is attributable to increased costs for Cal Fire services, a firearms training simulator for the Sheriff’s department, and an increase in Flood Control Zone pass-through grant monies.  Public Assistance expenditures increased $7.7 million or 7.7%. The increase is caused by a combination of increased expenditures for Social Services contracted and supportive care 32 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) programs and a decrease in County Medical Services Program costs that resulted from implementation of the Affordable Care Act.  Recreation and Cultural Services expenditures increased $2.1 million or 26.4%. The majority of the increase is caused by expenses associated with the new 900-acre Pismo Preserve and the restoration of the Cayucos pier.  Capital Outlay expenditures increased $8.7 million or 77%. The increase primarily relates to continuing construction activity on the Women’s Jail Project. The Cayucos Pier restoration project had significantly increased expenditures as well. 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 FY 2014-15. Table E Statement of Revenues, Expenses and Results of Operations Proprietary Funds Fund Financial Statements For the Year Ended June 30, 2015 (in thousands) Major Nonmajor Funds Funds Total Nacimiento Lopez Other Water Flood Los Osos Enterprise Total Airport Contract Control Wastewater Funds Enterprise Operating revenues $ 5,099 $ 9,682 $ 6,211 $ - $ 13,954 $ 34,946 Operating expenses 6,106 6,677 4,649 234 14,144 31,810 Operating income (loss) (1,007) 3,005 1,562 (234) (190) 3,136 Non-operating revenues (expenses), net 37 (7,247) (133) 13 2,376 (4,954) Net income (loss) before contributions and transfers (970) (4,242) 1,429 (221) 2,186 (1,818) Contributions and transfers, net 487 (23) - 29,351 (389) 29,426 Change in net position $ (483) $ (4,265) $ 1,429 $ 29,130 $ 1,797 $ 27,608 All the enterprise funds are expected to continue to meet all ongoing cost of operations and in the long term be able to maintain sufficient reserves.  The Airport Fund reported an operating loss of $1.0 million, $58 thousand more than the prior year loss of $942 thousand. Net position decreased by $483 thousand compared to an increase in net position of $726 thousand in the prior year. The decrease in net position is primarily attributable to the implementation of the new pension accounting standard. 33 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Passenger enplanement activity grew for the second consecutive year with a 2% increase over the prior year.  The Nacimiento Water Contract Fund realized operating income of $3.0 million, a significant decrease from the prior years’ operating income of $9.1 million. The decrease is mostly attributable to a $4.5 million decrease in water sales from the prior year and a $2.3 million increase in expenditures primarily related to pipeline repairs. The decreased revenue and increased expenditures created a $6.1 million or 67% decrease in operating income and a $4.3 million decrease in net position compared to a $1.6 million or 67% increase in the prior year’s net position.  The Lopez Flood Control Fund reported $1.6 million in operating income, a decrease of $152 thousand or 9% from the prior year. Net position increased by $1.4 million due to increases in property taxes and water sales and lower interest payments on debt.  The Los Osos Wastewater Fund reported an operating loss of $234 thousand primarily due to costs associated with the ongoing Water Conservation Program. Capital contributions decreased to $26.4 million, which is a $31.1 million decrease from the prior year amount and reflective of the winding down of the construction phases of the project. Capital contributions were the significant factor in the change in net position of $29.1 million. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget for expenditures and transfers out increased by $34.1 million, or 8%, during the course of the year contributing towards the final amended budget. This increase was funded in part by increases in budgeted revenues of $22.8 million and the use of reserves and designations for the balance. Unanticipated revenues totaling $16.8 million in State and Federal Aid, $1.6 million in Charges for Current Services, $2.2 million in Other Revenue, $413 thousand in Fines, Forfeits, and Penalties, $760 thousand in Inter-fund Revenues, and $1.1 million in Other Financing sources financed the budget augmentations. The largest budget augmentations occurred in the functional areas of General Government ($7.1 million), Health and Sanitation ($5.0 million), Public Assistance ($4.9 million), Public Protection ($3.7 million), and Public Works ($601 thousand). The $7.1 million in augmentations for the General Government function were primarily for the maintenance and upgrade of County facilities. The Health and Sanitation function augmentations were primarily for Public Health services, $3.1 million, and Drug and Alcohol services, $1.9 million, with the remainder to Mental Health Services. The increase in the Public Assistance function is comprised of $4.7 million for Social Services including housing placement and supportive services, adult and child protective services, and Workforce Investment Act programs; and $150 thousand for Veterans’ Services. Significant Public Protection function budget augmentations include $2.0 million for the Sheriff-Coroner’s programs and $546 thousand for Planning programs. The remaining increase is due to various smaller augmentations for District Attorney, Public Defender, Probation, County Fire, Emergency Services and the Agricultural Commissioner. At the close of the fiscal year, actual General Fund expenditures were 90.1% of budget, while General Fund revenues were realized at 103.7% of budget. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At June 30, 2015, the County had $1.7 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). This amount represents a net increase (including additions and deductions) of $52.5 million or 3.2% from last year. 34 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Table F Capital Assets June 30, 2015 (in thousands) Govern- Govern- Business Business Total mental mental Type Type Total Capital Capital Activities Activities Activities Activities Assets June Assets Total June 30, June 30, June 30, June 30, 30, June 30, Percent 2014 2015 2014 2015 2014 2015 Change $ 794,679 $ 794,547 $ 32,621 $ 32,621 $ 827,300 827,168 - Land $ - - 46,457 48,417 46,457 48,417 4.2% Water Rights Other Property Non - - 1,968 1,968 1,968 1,968 - Depreciable Construction- 39,682 58,202 110,491 150,532 150,173 208,734 39.0% in-progress Structures & 179,137 183,460 168,797 169,235 347,934 352,695 1.4% Improvements 75,588 80,476 3,148 3,365 78,736 83,841 6.5% Equipment Other Property 340 340 554 554 894 894 - Depreciable Infrastructure 341,432 346,338 193,948 194,363 535,380 540,701 1.0% Depreciable 1,430,858 1,463,363 557,984 601,055 1,988,842 2,064,418 3.8% Subtotal Less Accumulated (294,410) (310,728) (55,215) (61,949) (349,625) (372,677) 6.6% Depreciation $ 1,136,448 $ 1,152,635 $ 502,769 $ 539,106 $ 1,639,217 $ 1,691,741 3.2% Total Major additions and future commitments in capital assets - Governmental activities County Roads had the majority of additions in governmental activities with $8.2 million worth of assets. The Main Street Bridge in Cambria was the most significant Roads project. Other notable infrastructure additions during FY 2014-15 include the Cayucos Pier renovation ($2.3 million), a digital microwave system ($1 million), the remodel of the Morro Bay Library ($664 thousand), and the on-going development of a new Property Tax system ($650 thousand). Major on-going projects include construction of a Women’s Jail, and expansion of the Juvenile Hall. 35 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Major additions and future commitments in capital assets - Business-type activities The majority of the $36.3 million in additions and $33.3 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 nearing completion. In FY 2014-15, 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 Lopez Flood Control Zone recognized $631 thousand of assets related to a filtration system. More detailed information about the County's capital assets is presented in Notes 4 and 5 in the financial statements. Debt Administration At the end of the current fiscal year, the County of San Luis Obispo had total notes and bonds payable of $541.0 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 2014-15 was $146.2 million. Pension Obligation Bonds debt service payments are funded by County payroll benefits. The remainder of the County’s debt consists of: $42.8 million in certificates of participation, which are repaid from a variety of revenues; $72.8 million in State notes; $79.8 million in assessment bonds relating to the Los Osos Wastewater Project, and $189.3 million in revenue bonds which are repaid with water service revenue. General Obligation Bonds totaling $10.1 million are backed by the full faith and credit of the County. Table G Outstanding Debt June 30, 2015 (in thousands) Govern- Govern- Business Business Total Total mental mental Type Type Outstanding Outstanding Activities Activities Activities Activities Debt Debt Total June 30, June 30, June 30, June 30, June 30, June 30, Percent 2014 2015 2014 2015 2014 2015 Change Certificates of participation $ 25,785 $ 24,661 $ 18,716 $ 18,171 $ 44,501 $ 42,832 (3.8%) Pension Obligation Bonds 111,234 146,219 - - 111,234 146,219 31.5% State notes - - 46,529 72,774 46,529 72,774 56.4% Revenue bonds - - 192,902 189,332 192,902 189,332 (1.9%) General obligation bonds - - 10,489 10,057 10,489 10,057 (4.1%) Assessment Bonds - - 76,438 79,829 76,438 79,829 4.4% $ 137,019 $ 170,880 $ 345,074 $ 370,163 $ 482,093 $ 541,043 12.2% 36 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) The increase over last year for the County’s notes and bonds payable was $58.9 million, or 12.2%. This increase is the net of new debt issuances and scheduled debt payments. During FY 2014-15, the County issued $4.6 million in assessment bonds and $30.0 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 $567.8 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 $26.7 million for governmental activity and $328 thousand for business-type activities; landfill post-closure costs of $4.3 million; and a self-insurance liability of $18.6 million. More detailed information about the County’s long-term liabilities is presented in Note 10 to the financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES  The Fiscal Year 2015-16 budget represents a significant milestone for the County. FY 2014- 15 represented the final year of a seven year “pain plan” designed to bring the budget into structural balance. Fiscal Year 2015-16 is the first year the County was able to return to fully funding its contingencies, while making significant investments in the many programs and services provided to the community.  Over the course of the recent economic downturn, the County incrementally and methodically reduced its budget by over $80 million. The Fiscal Year 2015-16 budget reflects a balanced approach to addressing spending priorities while remaining sustainable in the long-term.  The County’s unemployment rate dropped to 4.1% in September 2015, lower than both the state rate of 5.9% and the national rate of 5.1%. However, the current drought, which is particularly severe in San Luis Obispo County, has impacted the local employment rate. It is estimated that several hundred agricultural jobs have been lost as a result of drought conditions.  Economic indicators continue to show signs of local economic improvement from the recent economic downturn:  The number of building permits issued increased 19.7% from the prior year, indicating a strengthening housing market.  Property transfer taxes for unincorporated areas came in 5.6% 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 $43.1 million to $45.4 million or 5.5%.  Transient Occupancy Tax (bed tax) collections continued an upward trend in FY 2014-15, with a 8.8% increase over FY 2013-14.  The Board of Supervisors adopted the FY 2015-16 budget in June 2015, with a $93.8 million fund balance in the general fund, of which $39.7 million was appropriated to finance the current year’s expenditures including contingencies, $9 million was placed in general reserves, and $33.2 million was earmarked for designations. The total General Fund budget for FY 2015-16 is $469 million, a 6.6% 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. 37 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) 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. 38 ____________________________________________________________ BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS ____________________________________________________________ 39 40 COUNTY OF SAN LUIS OBISPO STATEMENT OF NET POSITION JUNE 30, 2015 (In Thousands) Primary Government Governmental Business-Type Component Unit Activities Activities Total First 5 ASSETS Current Assets: Cash and cash equivalents $ 401,246 $ 52,001 $ 453,247 $ 8,510 Accounts receivable, net 88 1,684 1,772 - Property taxes receivable 11,779 - 11,779 - Other receivables 1,088 113,186 114,274 - Due from other governments 41,411 3,479 44,890 3 35 Deposits with others - 1 61 161 12 Internal balances 5,661 ( 5,661) - - Inventories 668 21 689 - Prepaid items 2,362 2 56 2,618 3 Other assets 6,788 - 6,788 - Loans receivable - 4 4 - Total Current Assets 471,091 165,131 636,222 8,860 Noncurrent Assets: Ristricted cash with fiscal agent 3,014 10,725 13,739 - OPEB asset 2,383 - 2,383 - Capital Assets: Nondepreciable 852,749 233,538 1,086,287 - Depreciable, net 299,886 305,568 605,454 - Total Noncurrent Assets 1,158,032 549,831 1,707,863 - Total Assets 1,629,123 714,962 2,344,085 8,860 DEFERRED OUTFLOWS OF RESOURCES Deferred pensions 37,341 3 84 37,725 - Total Deferred Outflows of Resources 37,341 3 84 37,725 - LIABILITIES Current Liabilities: Salaries and benefits payable 7,415 77 7,492 - Accounts payable 17,539 13,294 30,833 4 32 Deposits from others 3,340 4,238 7,578 17 Accrued interest 1,603 5,407 7,010 - Other current liabilities 7,384 - 7,384 - Unearned revenue 3,343 7,235 10,578 - Bonds and notes payable 6,788 7,319 14,107 - Compensated absenses 18,030 1 72 18,202 - Landfill closure/postclosure costs 397 - 397 - Self insurance payable 3,446 - 3,446 - Total Current Liabilities 69,285 37,742 107,027 4 49 Long-Term Liabilities: Net Pension Liability 387,446 3,976 391,422 34 Bonds and notes payable 164,092 362,844 526,936 - Compensated absences 8,700 1 56 8,856 - Landfill closure/postclosure costs 3,880 - 3,880 - Self insurance payable 15,172 - 15,172 - Total Long-Term Liabilities 579,290 366,976 946,266 34 Total Liabilities 648,575 404,718 1,053,293 4 83 NET POSITION Net investment in capital assets 1,130,241 213,455 1,343,696 - Restricted for: General government 1,997 - 1,997 - Public protection 4,857 - 4,857 - Health and sanitation 242 - 242 - Public assistance - - - - Public ways and facilities 18,424 - 18,424 - Recreation and culture 133 - 133 - Education - - - - Debt service 12,069 - 12,069 - Unrestricted (150,074) 97,173 (52,901) 8,377 Total Net Position $ 1,017,889 $ 310,628 $ 1,328,517 $ 8,377 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, 2015 (In Thousands) Program Revenues Fees, Fines, Operating Capital and Charges Grants and Grants and Functions/Programs Expenses for Services Contributions Contributions Total Governmental activities: General government $ 45,598 $ 12,407 $ 54 $ 156 $ 12,617 Public protection 162,432 20,774 62,359 9,701 92,834 Public ways and facilities 34,136 4,255 14,145 6,435 24,835 Health and sanitation 7 8,137 6,631 62,338 - 68,969 Public assistance 110,470 2,077 94,775 - 96,852 Education 9,457 2,998 105 - 3,103 Recreation and cultural services 9,755 5,056 131 1,776 6,963 Interest on long-term debt 5,124 - - - - Total governmental activities 455,109 54,198 233,907 18,068 306,173 Business-type activities: Airport 6,187 4,883 126 3 65 5,374 Golf 2,968 2,967 269 - 3,236 State Water Contract 6,351 6,562 13 - 6,575 Nacimiento Water Contract 1 5,776 9,682 9 - 9,691 Lopez Dam 6,128 6,208 8 - 6,216 Lopez Park 4 - - - - General Flood Control 845 7 94 - - 794 County Service Areas 4,194 3,408 211 - 3,619 Los Osos Wastewater 235 - - 26,385 26,385 Total business-type activities 4 2,688 34,504 636 26,750 61,890 Total primary government $ 497,797 $ 88,702 $ 234,543 $ 44,818 $ 368,063 Component unit: First Five San Luis Obispo $ 2,008 $ - $ 1,853 $ - $ 1,853 The accompanying notes are an integral part of these financial statements. 42 COUNTY OF SAN LUIS OBISPO STATEMENT OF ACTIVITIES (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Net (Expense) Revenue and Changes in Net Position Governmental Business-Type Component Unit Functions/Programs Activities Activities Total First 5 Governmental activities: General government $ (32,981) $ - $ (32,981) Public protection (69,598) - (69,598) Public ways and facilities (9,301) - (9,301) Health and sanitation (9,168) - (9,168) Public assistance (13,618) - (13,618) Education (6,354) - (6,354) Recreation and cultural services (2,792) - (2,792) Interest on long-term debt (5,124) - (5,124) Total governmental activities (148,936) - (148,936) Business-type activities: Airport - (813) ( 813) Golf - 2 68 268 State Water Contract - 2 24 224 Nacimiento Water Contract - (6,085) (6,085) Lopez Dam - 88 8 8 Lopez Park - (4) (4) General Flood Control - (51) (51) County Service Areas - (575) ( 575) Los Osos Wastewater - 26,150 26,150 Total business-type activities - 19,202 19,202 Total primary government $ (148,936) $ 19,202 $ (129,734) Component unit: First Five San Luis Obispo $ (156) General Revenues, Transfers and Special Item: Taxes: Property taxes 155,374 4,782 160,156 - Sales and use taxes 11,406 - 11,406 - Transient occupancy taxes 8,724 - 8,724 - Transfer tax 2,370 - 2,370 - Other taxes 484 - 484 - Grants not restricted to specific programs 13,327 - 13,327 - Interest earnings not restricted to specific programs 3,174 6 59 3,833 31 Other revenues - 1 83 183 6 Transfers (2,676) 2,676 - - Total General Revenues, Transfers and Special Items 192,183 8,300 200,483 37 Change in net position 43,247 27,502 70,749 (119) Net position - beginning of year 1 ,481,156 286,582 1,767,738 8,496 Prior period adjustment (35,486) - (35,486) - Cumulative effect of change in accounting principle (471,028) (3,456) (474,484) - Net position - end of year $ 1,017,889 $ 310,628 $ 1,328,517 $ 8,377 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, 2015 (In Thousands) Non-Major Total General Capital Projects Governmental Governmental Fund Fund Funds Funds ASSETS Cash and cash equivalents $ 261,295 $ 21,929 $ 79,207 $ 362,431 Restricted cash with fiscal agent - 748 2,266 3,014 Accounts receivables, net 58 - 21 79 Accrued property taxes receivable 11,779 - - 11,779 Other receivables 1 ,088 - - 1,088 Due from other governments 28,943 5,375 7,093 41,411 Due from other funds - - 208 208 Inventories 108 - - 108 Prepaid items 2 ,361 - 1 2,362 Loans receivable - - - - Advances to other funds 4 ,465 - 918 5,383 Other assets - - 6,788 6,788 Total assets $ 310,097 $ 28,052 $ 96,502 $ 434,651 LIABILITIES Salaries and benefits payable $ 6,453 $ - $ 330 $ 6,783 Accounts payable 6 ,795 2,590 7,209 16,594 Deposits from others 1 ,418 - 759 2,177 Unearned revenue 804 953 1,587 3,344 Other current liabilities 596 - 6,788 7,384 Advances from other funds - - 2,191 2,191 Total liabilities 16,066 3,543 18,864 38,473 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 22,745 1,541 1,101 25,387 Total deferred inflows of resources 22,745 1,541 1,101 25,387 FUND BALANCES Nonspendable 5 ,089 - 919 6,008 Restricted 2 ,945 - 20,563 23,508 Committed 138,140 22,968 55,541 216,649 Assigned 125,112 - - 125,112 Unassigned - - (486) (486) Total fund balances 271,286 22,968 76,537 370,791 Total liabilities, deferred inflows of resources, and fund balances $ 310,097 $ 28,052 $ 96,502 $ 434,651 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, 2015 (In Thousands) Total Fund Balances - Total Governmental Funds $ 370,791 Amounts reported for Governmental Activities in the Statement of Net Position were different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. 1,140,071 Accrued property tax and grant revenues are not available to pay for current-period expenditures and therefore are deferred in the funds. 25,388 The other post employment benefit (OPEB) asset is not available to pay for current- period expenditures and therefore is deferred in the funds. 2,383 Internal service funds are used by the County to charge the cost of vehicle fleet management, 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 Government-Wide Statement of Net Position. (3,167) Adjustments for internal service funds are necessary to "close" those funds by charging additional amounts to participating business-type activities to completely cover the internal service funds' costs for the year. 2,261 Interest on long-term debt is recognized as it accrues, regardless of when it is due. (1,603) The pension liability is not due and payable in the current period, and therefore is not reported in the fund financial statements. (352,797) The unamortized portion of changes to the net pension liability, the net difference between projected and actual earnings on pension plan investments, and contributions subsequent to the pension liability measurement date are not reported in the fund financial statements for governmental funds. 34,002 Long-termliabilities,includingbondsandnotespayable,arenotdueandpayableinthecurrent period. Therefore, they are not reported in the governmental funds as follows: Bonds and notes payable (170,880) Compensated absences (24,283) Landfill closure/post closure costs ( 4,277) (199,440) Net Position of Governmental Activities $ 1,017,889 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, 2015 (In Thousands) Non-Major Total General Capital Projects Governmental Governmental Fund Fund Funds Funds REVENUES Taxes $ 167,347 $ - $ 11,393 $ 178,740 Licenses, permits, and franchises 10,449 - 3 10,452 Fines, forfeitures, and penalties 4 ,344 543 799 5 ,686 Use of money and property 3 ,412 86 366 3 ,864 Aid from other governments 215,320 11,477 34,554 261,351 Charges for services 29,442 1,237 12,851 43,530 Other revenues 6 ,053 104 2,953 9 ,110 Total revenues 436,367 13,447 62,919 512,733 EXPENDITURES Current: General government 51,207 - - 51,207 Public protection 149,317 - 8,466 157,783 Public ways and facilities 2 ,024 - 27,879 29,903 Health and sanitation 70,503 - 4,613 75,116 Public assistance 104,501 - 2,603 107,104 Education 457 - 10,931 11,388 Recreation and cultural services - - 10,104 10,104 Debt service: Principal payments - - 6,070 6 ,070 Interest and fiscal charges - - 5,209 5 ,209 Capital outlay - 20,019 - 20,019 Total expenditures 378,009 20,019 75,875 473,903 Excess (deficiency) of revenues over (under) expenditures 58,358 (6,572) (12,956) 38,830 OTHER FINANCING SOURCES (USES) Transfers in 984 3,852 28,463 33,299 Transfers out ( 27,237) (12) (7,674) ( 34,923) Total other financing sources (uses) ( 26,253) 3,840 20,789 (1,624) Net change in fund balances 32,105 (2,732) 7,833 37,206 Fund balances - beginning 239,181 25,700 68,704 333,585 Fund balances - ending $ 271,286 $ 22,968 $ 76,537 $ 370,791 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 FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Net Change in Fund Balances - Total Governmental Funds $ 37,206 Amounts reported for governmental activities in the Statement of Revenues, Expenditures, and Changes in Fund Balances were 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. 3,568 Governmentalfundsreportcapitaloutlayasexpenditures. Theseexpenditureshave no effect on net position. Capital outlay expenditures that have no effect on net position are reported inthe following functional categories: Capital outlay 20,201 General government 3,414 Public protection 4,019 Public ways 6,290 Health and sanitation 137 Public assistance 54 Education 924 Recreation and cultural services 245 35,284 In the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense. (18,283) The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins, and donations) is to decrease net position. ( 1,090) Bond proceeds are reported as financing sources in governmental funds and thus contributetothechangeinfundbalance.Inthestatementofnetposition,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 6,070 Some expenses reported in the Government-Wide Statement of Activities do not require the useofcurrent financialresources. Therefore, theyare not reportedas expenditures in governmental funds: Change in compensated absences (515) Change in accrued interest payable 75 Change in landfill closure/postclosure costs (63) Change in OPEB 69 Change in Net Pension Liability (32,988) Change in deferred pension outflows 20,758 Capital appreciation bond accretion ( 4,529) Amortization of debt premiums, discounts and issuance costs 85 (17,108) InternalservicefundswereusedbytheCountytochargethecostsofvehiclefleet management,comprehensivepublicworksservices,andoperationsoftheCounty'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. ( 2,506) The net (revenue) expense allocable to business-type activities 1 06 Change in Net Position of Governmental Activities $ 43,247 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, 2015 (In Thousands) Business-Type Activities - Enterprise Funds Governmental Nacimiento Nonmajor Total Activities Water Lopez Los Osos Enterprise Enterprise Internal Airport Contract Flood Control Wastewater Funds Funds Service Funds ASSETS Current assets: Cash and investments $ 4,617 $ 10,888 $ 9,566 $ 6,770 $ 20,160 $ 52,001 $ 38,815 Acounts receivable, net - 31 - - 1,653 1,684 9 Other receivables 1 69 3 14 - 112,703 - 113,186 - Due from other governments 1 06 - - 3,373 - 3,479 - Deposits with others - 1 48 - - 13 1 61 - Inventories - - - - 21 21 5 60 Prepaid items 13 - 32 - 2 11 2 56 - Loans receivable - 4 - - - 4 - Total current assets 4,905 11,385 9,598 122,846 22,058 170,792 39,384 Noncurrent assets: Advances to other funds - - - - 6 54 6 54 - Restricted cash with fiscal agent - 10,725 - - - 10,725 - Capital assets: Nondepreciable: Land 23,224 3,110 2,154 2,470 1,663 32,621 - Construction in progress 2,552 - 1,325 146,096 5 59 150,532 - Water rights - - - - 48,417 48,417 - Other property - - 1,968 - - 1,968 - Depreciable: Infrastucture, net 6 92 154,887 24,401 - 1,943 181,923 - Structures and improvements, net 53,868 9,434 34,628 - 24,178 122,108 3 35 Equipment, net 6 03 - 28 - 4 10 1,041 12,228 Other property, net - - - - 4 96 4 96 - Total noncurrent assets 80,939 178,156 64,504 148,566 78,320 550,485 12,563 Total assets 85,844 189,541 74,102 271,412 100,378 721,277 51,947 DEFERRED OUTFLOWS OF RESOUCRES Deferred pensions 2 10 - - - 1 74 3 84 3,339 Total deferred outflows of resources 2 10 - - - 1 74 3 84 3,339 LIABILITIES Current liabilities: Salaries and benefits payable 38 - - - 39 77 6 32 Accounts payable 1 54 8 50 2 77 6,069 5,944 13,294 9 45 Interest payable 76 3,088 3 99 1,776 68 5,407 - Self insurance payable - - - - - - 3,446 Deposits from others 51 1,048 1 08 - 3,031 4,238 1,163 Unearned revenue 81 2,706 2,228 7 2,213 7,235 - Due to other funds - - - - 2 08 2 08 - Accrued vacation and sick leave - current 1 08 - - - 64 1 72 1,597 Notes and bond payable - current 55 3,495 1,972 1,271 5 26 7,319 - Total current liabilities 5 63 11,187 4,984 9,123 12,093 37,950 7,783 Noncurrent liabilities: Self insurance payable - - - - - - 15,172 Advances from other funds 3,405 - - - 4 41 3,846 - Accrued vacation and sick leave 49 - - - 1 07 1 56 8 49 Notes and bonds payable 6 24 185,829 38,942 128,503 8,946 362,844 - Net Pension Liability 2,174 - - - 1,802 3,976 34,649 Total noncurrent liabilities 6,252 185,829 38,942 128,503 11,296 370,822 50,670 Total liabilities 6,815 197,016 43,926 137,626 23,389 408,772 58,453 NET POSITION Net investment in capital assets 80,260 (21,893) 23,591 18,792 68,361 169,111 12,563 Unrestricted ( 1,021) 14,418 6,585 114,994 8,802 143,778 (15,730) Total net position $ 79,239 $ (7,475) $ 30,176 $ 133,786 $ 77,163 312,889 $ (3,167) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds ( 2,261) Net Position of Business-Type Activities per Government-Wide Financial Statements $ 310,628 The accompanying notes are an integral part of these financial statements. 51 COUNTY OF SAN LUIS OBISPO STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Business-Type Activities - Enterprise Funds Governmental Nacimiento Nonmajor Total Activities Water Lopez Los Osos Enterprise Enterprise Internal Airport Contract Flood Control Wastewater Funds Funds Service Funds OPERATING REVENUES: Charges for services $ 4,923 $ 9,682 $ 6,208 $ - $ 13,950 $ 34,763 $ 47,406 Other revenues 1 76 - 3 - 4 1 83 1 46 Total operating revenues 5,099 9,682 6,211 - 13,954 34,946 47,552 OPERATING EXPENSES: Salaries and benefits 1,508 - - 1 1,417 2,926 23,282 Services and supplies 2,337 4,478 3,342 2 33 11,582 21,972 18,945 Other charges 26 6 2 - 5 39 - Insurance and compensation claims - - - - - - 4,468 Depreciation 2,159 2,193 1,305 - 1,122 6,779 2,376 Countywide cost allocation 76 - - - 18 94 3 40 Total operating expenses 6,106 6,677 4,649 2 34 14,144 31,810 49,411 Operating income (loss) ( 1,007) 3,005 1,562 (234) (190) 3,136 ( 1,859) NONOPERATING REVENUES (EXPENSES): Property taxes - 1,282 1,296 - 2,204 4,782 - Interest income 12 538 27 13 69 6 59 1 25 Interest expense (101) (9,076) ( 1,464) - (328) (10,969) - Other non-operating revenue (expenses) - - - - (62) (62) 2 02 Aid from governmental agencies 1 26 9 8 - 4 93 6 36 78 Total nonoperating revenues (expenses) 37 (7,247) (133) 13 2,376 ( 4,954) 4 05 Income (Loss) before contributions and transfers (970) (4,242) 1,429 (221) 2,186 (1,818) (1,454) Capital contributions 3 65 - - 26,385 - 26,750 - Transfers in 1 77 - - 2,966 2 74 3,417 - Transfers out (55) (23) - - (663) (741) ( 1,052) Change in net position (483) (4,265) 1,429 29,130 1,797 27,608 ( 2,506) Net position - beginning 81,612 (3,210) 28,747 104,656 76,932 29,447 Cumulative effect of change in accounting principle ( 1,890) - - - ( 1,566) (30,108) Net position - beginning (restated) 79,722 (3,210) 28,747 104,656 75,366 (661) Net position - ending $ 79,239 $ (7,475) $ 30,176 $ 133,786 $ 77,163 $ (3,167) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (106) Change in Net Position of Business-Type Activities per Government-Wide Financial Statements $ 27,502 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, 2015 (In Thousands) Business-Type Activities - Enterprise Funds Governmental Nacimiento Nonmajor Total Activities Water Lopez Los Osos Enterprise Enterprise Internal Airport Contract Flood Control Wastewater Funds Funds Service Funds CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and third parties $ 5,072 $ 11,565 $ 7 ,738 $ - $ 13,330 $ 37,705 $ - Receipts from interfund billings - - - - - - 47,565 Payments for goods and services (2,443) (4,324) (3,100) (233) (11,248) (21,348) (15,122) Payments to employees for service (1,410) - - (1) (1,326) (2,737) (21,960) Payments for insurance benefits - - - - - - (4,242) Payments for premiums - - - - - - (3,936) Net cash provided by operating activities 1,219 7,241 4,638 (234) 756 1 3,620 2,305 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Property tax proceeds - 1,282 1,296 - 2,204 4,782 - Grants and subsidies from other government agencies 309 9 8 - 285 611 78 Advances from other funds 2,355 - - - (51) 2,304 - Due to other funds - - - - 208 208 - Transfers from other funds 177 - - 2,966 274 3,417 - Transfers to other funds ( 55) (23) - - (663) (741) (1,052) Net cash provided (used) by noncapital financing activities 2,786 1,268 1,304 2,966 2,257 1 0,581 (974) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchases and construction of capital assets (518) (226) (911) (61,509) (2,547) (65,711) (2,649) Proceeds from issuance of long-term debt - - - 34,639 231 3 4,870 - Proceeds from sale of capital assets - - - - - - 202 Capital contributions 365 - - 26,385 - 2 6,750 - Principal paid on capital debt (2,466) (3,563) (2,029) (1,244) (528) (9,830) - Interest paid on capital debt (104) (9,124) (1,414) - (320) (10,962) - Net cash (used) by capital and related financing activities (2,723) ( 12,913) (4,354) (1,729) (3,164) (24,883) (2,447) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 12 538 27 13 69 659 125 Net cash provided (used) by investing activities 12 538 27 13 69 659 125 Net increase (decrease) in cash and cash equivalents 1,294 (3,866) 1,615 1,016 (82) (23) (991) CASH AND CASH EQUIVALENTS: Beginning of year 3,323 25,479 7,951 5,754 20,242 6 2,749 39,806 End of year $ 4,617 $ 21,613 $ 9 ,566 $ 6,770 $ 20,160 $ 62,726 $ 38,815 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss) $ (1,007) $ 3,005 $ 1 ,562 $ (234) $ (190) $ 3 ,136 $ (1,859) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 2,159 2,193 1,305 - 1,122 6,779 2,376 Changes in assets and liabilities: - - - - - - - Receivables, net ( 45) (289) - - (1,054) (1,388) 13 Inventory - - - - - - 4 Prepaid items - - (2) - - (2) - Accounts payable (4) 160 246 - 597 999 (310) Deposits from others - (525) 42 - - (483) 454 Salaries and benefits payable 4 - - - 70 74 1,297 Unearned revenue 16 2,697 1,485 - 190 4,388 - Other accrued liabilities 77 - - - - 77 6 Accrued vacation and sick leave 19 - - - 21 40 22 Self-insurance liability - - - - - - 302 Total adjustments 2,226 4,236 3,076 - 946 1 0,484 4,164 Net cash provided (used) by operating activities $ 1,219 $ 7,241 $ 4 ,638 $ (234) $ 756 $ 13,620 $ 2 ,305 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, 2015 (In Thousands) SAN LUIS OBISPO PENSION TRUST FUND DECEMBER 31, 2014 (In Thousands) Investment San Luis Obispo Agency Trust County Funds Fund Pension Trust June 30, 2015 June 30, 2015 December 31, 2014 Total ASSETS Cash and cash equivalents $ 51,015 $ 362,192 $ 42,130 $ 455,337 Contributions receivable - - 1,703 1,703 Accrued interest and dividends receivable - - 1,672 1,672 Accounts receivable - - 3 3 Securities sold - - 100,171 100,171 Prepaid benefits - - 3 02 302 Investments pension trust: Bonds and notes, at fair value - - 243,335 243,335 International fixed income, at fair value - - 132,285 132,285 Collateralized mortgage obligations, at fair value - - 5,260 5,260 Domestic equities, at fair value - - 317,726 317,726 International equities, at fair value - - 271,396 271,396 Alternative investments, at fair value - - 64,159 64,159 Real estate, at fair value - - 103,490 103,490 Capital assets-net of accumulated depreciation - - 4 50 450 Total assets $ 51,015 $ 362,192 $ 1,284,082 $ 1,697,289 LIABILITIES Agency obligations $ 51,015 $ - $ - $ 51,015 Securities purchased - - 86,642 86,642 Accrued liabilities - - 1,597 1,597 Prefunded Contributions - - 22,507 22,507 Total liabilities $ 5 1,015 $ - $ 110,746 $ 161,761 NET POSITION Net position held in trust for pool participants $ - $ 362,192 $ - $ 362,192 Net position held in trust for pension benefits - - 1,173,336 1,173,336 Total net position $ - $ 362,192 $ 1 ,173,336 $ 1,535,528 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, 2015 (In Thousands) SAN LUIS OBISPO PENSION TRUST FUND FOR THE YEAR ENDED DECEMBER 31, 2014 (In Thousands) Investment San Luis Obispo Trust County Fund Pension Trust June 30, 2015 December 31, 2014 Total ADDITIONS Contributions: County contributions $ 1,040,189 $ - $ 1,040,189 Employer contributions - 3 2,047 32,047 Member contributions - 24,415 24,415 Total contributions 1,040,189 5 6,462 1,096,651 Investment income: Realized and unrealized gains and losses - 2 6,097 26,097 Interest 728 5,545 6,273 Dividends - 2 2,750 22,750 Real estate management trust income - 807 807 Real estate operating income, net - 1,506 1,506 Other investment income, net - (5) (5) Investment expenses - (5,033) (5,033) Total investment income 728 5 1,667 52,395 Total additions 1,040,917 108,129 1,149,046 DEDUCTIONS Benefits: Monthly benefit payments - 6 6,163 66,163 Refunds of contributions - 1,629 1,629 Death benefits - 303 303 Total benefits - 6 8,095 68,095 Administrative expenses - 2,085 2,085 Prefunded Discount Amortization - 332 332 Total administrative expenses - 2,417 2,417 Distributions from investment pool 8 79,739 - 879,739 Total deductions 8 79,739 7 0,512 950,251 Change in net position 1 61,178 3 7,617 198,795 Net position - beginning 2 01,014 1,135,719 1,336,733 Net position - ending $ 3 62,192 $ 1,173,336 $ 1,535,528 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 (In Thousands) JUNE 30, 2015 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 No. 14 and No. 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 (PFC) - 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 D290, 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) – 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 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 60 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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, 2015, the County implemented the following GASB Statements:  GASB Statement No. 68, Accounting and Financial Reporting for Pensions. The requirements of this statement are effective for financial statement periods beginning after June 15, 2014. GASB Statement No. 68 revises and establishes new financial reporting requirements for state and local governments that provide their employees with pension benefits. GASB Statement No. 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability, and to more comprehensively and comparably measure the annual costs of pension benefits. This statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency.  GASB Statement No. 69, Government Combinations and Disposals of Government Operations. The requirements of this statement are effective for government combinations and disposals of government operations occurring in financial reporting periods beginning after December 15, 2013. GASB Statement No. 69 establishes accounting and financial reporting standards related to government combinations and disposals of government operations. As used in this statement, the term government combinations includes a variety of transactions referred to as mergers, acquisitions, and transfers of operations. GASB Statement No. 69 requires disclosures to be made about government combinations and disposals of government operations to enable financial statement users to evaluate the nature and financial effects of those transactions.  GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. The requirements of this statement are effective for financial statements for reporting beginning after June 15, 2013. GASB Statement No. 70 improves accounting and financial reporting by state and local governments that extend and receive nonexchange financial guarantees.  GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – An Amendment of GASB Statement No. 68. The requirements of this statement are effective for financial statement periods beginning after June 15, 2014. GASB Statement No. 71 addresses an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government’s beginning net pension liability. The provisions of this statement are required to be applied simultaneously with the provisions of GASB Statement No. 68. 61 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County reports the following Major Governmental Funds:  The General Fund is the County’s primary operating fund. The General Fund is used to account for all revenues and expenditures necessary to carry out the basic governmental activities of the County that are not accounted for through other funds. For the County, the General Fund includes such activities as public protection, public ways and facilities, health and sanitation, public assistance, education, and recreational and cultural services.  The Capital Projects Fund is used to account for the financial resources restricted for the acquisition or construction of specific projects, or items other than those financed by proprietary funds. The County reports the following Major Proprietary Funds:  The Airport Fund accounts for the maintenance, operations, and development of the County- owned commercial service airports in San Luis Obispo and Oceano.  The Nacimiento Water Contract Fund accounts for the activities and delivery of water associated with the Nacimiento water supply reservoir and the contract with Monterey County.  The 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, 2014.  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 145 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. 62 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The Government-wide, Proprietary, and Fiduciary Fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, except that Agency Fund financial statements have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Nonexchange transactions, in which the County gives (or receives) value without directly receiving (or giving) equal value in exchange, include property, sales 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. 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, prepaid items, such as rent expense, are recorded using the consumption method which recognizes expenses during the period benefited by the prepayment. 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, 2015. The fair value of pooled investments is determined annually and is based on current market prices. 63 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County pool is not registered with the Securities and Exchange Commission as an investment company and does not issue separate investment reports. The County has not provided or obtained any legally binding guarantees to support the value of the shares. Participants may withdraw up to the amortized cost of their respective shares as displayed on the combined balance sheet. The share of the Treasurer's pool related to involuntary participants is 99.89 percent. Cash and Cash Equivalents The County’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. All short- term cash surpluses are maintained in the County Treasury cash and investments pool, the earnings from which are allocated quarterly to each fund based on average daily cash balances. Receivables and Payables All trade and property tax receivables are shown net of an allowance for uncollectible accounts. No uncollectible allowance is recorded for enterprise special district receivables, which are primarily for water service billings. These receivables are written off in the year they become uncollectible. Property Tax The County is responsible for the assessment, collection, and apportionment of property taxes for all taxing jurisdictions within the County, including 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.” 64 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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 N/A Infrastructure $100,000 20 to 100 years Structures and 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. 65 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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. Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the San Luis Obispo County Employees’ Retirement Plan (the Plan) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. E. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 2. CASH AND CASH EQUIVALENTS Cash in Treasury Investments made by the Treasurer are regulated by the California Government Code (GC) 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. 66 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 fiscal year 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. Most recently on July 14, 2015, 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 GC. 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 GC 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 GC; independent certified public accountants (CPAs) selected to review the County’s Comprehensive Annual Financial Report; and independent CPAs as deemed appropriate. Brown Armstrong Accountancy Corporation was selected to perform an Annual Investment Policy Compliance Audit for the fiscal year ended June 30, 2015. The results of these audits have been presented to the Board of Supervisors on a yearly basis. Under parameters established by the California GC, 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 GC. The California GC 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 GC, 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. Investments were authorized by the California GC 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. 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 1.001069008945 in the Quarterly Report of Investments as of June 30, 2015, which can be used for financial reporting by the pool participants. The 67 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 1.000375979 for its portfolio as of June 30, 2015. 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, 2015, 2.08% 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, 2015, 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 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 GC. 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 GC and all relevant laws. As of June 30, 2015, the table represents the County’s IP or where more restrictive, the Treasurer’s written policies and procedures, that address interest risk, credit risk, and concentration of credit risk. Maximum Percentage Maximum Investment Authorized Investment Type Maximum Maturity of Portfolio in One Issuer Bonds issued by a Local Agency Requires written approval of 1 year 5% County Treasurer for each investment. U.S. Treasury Notes 3 years 100% N/A U.S. Treasury Bonds 3 years 100% N/A U.S. Treasury Bills Maximum issued 100% N/A Cash Management Bills Maximum issued 100% N/A Registered State Warrants Requires written approval of 1 year 10% County Treasurer for each investment. Treasury Notes or Bonds of this state Not authorized in FY 2014-15 Registered Treasury Notes or Bonds of any of the Not authorized in FY 2014-15 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 2014-15 Federal Home Loan Mortgage Corp. Not authorized in FY 2014-15 68 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Maximum Percentage Maximum Investment Authorized Investment Type Maximum Maturity of Portfolio in One Issuer 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 2014-15 Commercial Paper 30 days 5% 2% Collateralized Certificates of Deposit 1 year 5% 1% Negotiable Certificates of Deposit Not authorized in FY 2014-15 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 2014-15 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 2014-15 Money Market Mutual Funds Not authorized in FY 2014-15 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 2014-15 interest Mortgage Pass-Through Securities Not authorized in FY 2014-15 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 GC. Interest Rate Risk In accordance with its investment policy, the County manages its exposure to declines in fair values by structuring the portfolio so that securities mature to meet cash flow requirements for ongoing operations and thereby avoiding the need to sell securities on the open market prior to maturity. Custodial Credit Risk The County minimizes this type of credit risk by pre-qualifying the custodial financial institution, and requiring the custodian to hold securities in the County Treasurer's name. Credit Risk The County minimizes its exposure to credit risk by pre-qualifying the financial institutions limiting investments to the safest types of securities, diversifying the portfolio, and setting limits per issuer. Concentration of Credit Risk At June 30, 2015, 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. 69 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2015. Investment Type S&P Moody's % of Portfolio* U.S. Treasuries AA+ Aaa 22.87% U.S. Government Agencies AA+ Aaa 58.63% CDARS Not Rated Not Rated 9.20% Local Agency Investment Fund Not Rated Not Rated 9.21% TRAN Not Rated Not Rated 0.09% Total 100.00% * 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 6% 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, 2015, the following investments exceeded the 5% disclosure threshold: Investment Type % of Portfolio U.S. Government Agencies-Federal Home Loan Bank 30.07% U.S. Government Agencies-Farm Credit Bank 28.56% At June 30, 2015, 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 7/02/15-6/02/16 0.32% 0.63 50,000 50,000 50,000 U.S. Treasuries 12/31/15-3/15/18 0.362%- 1.75 124,093 124,320 124,000 1.109% U.S. Government 1/26/16- 0.345%- Agencies 5/11/18 1.32% 1.77 317,923 318,621 317,152 Local Agency Investment On Fund Demand 0.31% - 50,035 50,054 50,000 TRAN 1/30/18 2.60% 2.58 494 494 488 Total Investments in County Treasury 1.50 $542,545 $543,489 $541,640 Deposits in Financial Institutions 339,831 339,831 339,831 Cash on Hand 179 179 179 Total Cash held in Treasury 882,555 883,499 881,650 Deposits in Transit 724 724 724 Outstanding Warrants (10,024) (10,024) (10,024) Total 873,255 874,199 872,350 Imprest Cash 957 957 957 Non-pool Cash Deposits 752 752 752 Other Cash Deposits 1,709 1,709 1,709 Total cash and cash equivalents $ 874,964 $ 875,908 $ 874,059 70 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Carrying Fair Restricted Cash with Fiscal Agent Amount Value Par Value U.S. Government & Federal Agencies $ 12,991 $ 12,991 $ 12,991 Certificates of Deposit & Money Market Accounts 748 748 748 Total 13,739 13,739 13,739 Total restricted and unrestricted cash and cash equivalents $ 888,703 $ 889,647 $ 887,798 Carrying Total Cash and Investments Summary Amount Total Governmental Activities $ 404,260 Total Business-type Activities 62,726 Total Fiduciary Funds , excluding San Luis Obispo County Trust Fund 413,207 Total Component Unit 8,510 Total Cash and Investments $ 888,703 The following represents a condensed statement of net position and changes in net position for the Treasurer’s investment pool as of June 30, 2015 (in thousands): Carrying Amount Fair Value Statement of Net Position: Net position held for pool participants $ 873,255 $ 874,199 Equity of internal pool participants $ 511,063 $ 512,007 Equity of external pool participants (voluntary and involuntary) 362,192 362,192 Total Equity $ 873,255 $ 874,199 Statement of Changes in Net Position: Revenue $ 3,241 $ 3,241 Investment Costs (744) (744) Net Deposits 200,071 200,071 Change in fair value - 479 Net change in pool 202,568 203,047 Net position at July 1, 2014 670,687 671,152 Net position at June 30, 2015 $ 873,255 $ 874,199 Restricted Cash with Fiscal Agent Cash and investments at June 30, 2015, 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 $ 12,978 Restricted interest on lease reserves 13 Restricted for Contractor Retentions 748 Total Restricted Cash $ 13,739 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 $751 and the combined financial institutions' balance was $767. The difference of $16 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 $767 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 Activities Business-Type Activities Nonmajor Internal Special Service Nacimiento Nonmajor General Fund Revenue Funds Funds Water Contract Enterprise Fund Accounts Receivable $ 5 8 $ 21 $ 9 $ 1,537 $ 1,653 Allowance for Doubtful Accounts - - - (1,506) - Net Accounts Receivable $ 5 8 $ 21 $ 9 $ 31 $ 1,653 4. CAPITAL ASSETS A summary of changes in capital assets for the year ended June 30, 2015, is as follows (in thousands): Balance Transfers & Balance Governmental Activities July 1, 2014 Additions Retirements Adjustments June 30, 2015 Capital assets, not being depreciated: Land $ 794,679 $ 3 $ (140) $ 5 $ 794,547 Construction in progress 39,682 27,298 (182) (8,596) 58,202 Total capital assets, not being depreciated 834,361 27,301 (322) (8,591) 852,749 Structures and improvements 179,137 1,430 (1,275) 4,168 183,460 Equipment 75,588 7,408 (3,982) 1,462 80,476 Infrastructure 341,432 2,061 - 2,845 346,338 Other property 340 - - - 340 Total capital assets, being depreciated 596,497 10,899 (5,257) 8,475 610,614 Less accumulated depreciation for: Structures and improvements (73,431) (3,914) 581 - (76,764) Equipment (45,276) (6,247) 3,646 114 (47,763) Infrastructure (175,684) (10,494) - - (186,178) Other property (19) (4) - - (23) Total accumulated depreciation (294,410) (20,659) 4,227 114 (310,728) Total capital assets being depreciated, net 302,087 (9,760) (1,030) 8,589 299,886 Governmental activities capital assets, net $ 1,136,448 $ 17,541 $ (1,352) $ (2) $ 1,152,635 72 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Balance Transfers & Balance Business-Type Activities July 1, 2014 Additions Retirements Adjustments June 30, 2015 Capital assets, not being depreciated: Land $ 32,621 $ - $ - $ - $ 32,621 Construction in progress 110,491 40,473 - (432) 150,532 Water Rights 46,457 1,960 - - 48,417 Other Property 1,968 - - - 1,968 191,537 42,433 - (432) 233,538 Total capital assets, not being depreciated Capital assets, being depreciated: Infrastructure 193,948 410 (7) 12 194,363 Structures and improvements 168,797 106 (88) 420 169,235 Equipment 3,148 190 (89) 116 3,365 Other Property 554 - - - 554 Total capital assets, being depreciated 366,447 706 (184) 548 367,517 Less accumulated depreciation for: Infrastructure (9,484) (2,957) 1 - (12,440) Structures and improvements (43,545) (3,664) 82 - (47,127) Equipment (2,130) (156) 76 (114) (2,324) Other Property (56) (2) - - (58) Total accumulated depreciation (55,215) (6,779) 159 (114) (61,949) Total capital assets being depreciated, net 311,232 (6,073) (25) 434 305,568 $ Business-type activities capital assets, net 502,769 $ 36,360 $ (25) $ 2 $ 539,106 Depreciation Expense Depreciation expense was charged to functions as follows (in thousands): Governmental Activities Amount General Government $ 3,647 Public Protection 2,768 Public Ways and Facilities 10,316 Health and Sanitation 529 Public Assistance 235 Education 193 Recreational and Cultural Services 595 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 2,376 Total Depreciation Expense-Governmental Activities $ 20,659 Business-type Activities Amount Airport $ 2,159 Nacimiento 2,193 Lopez Flood Control 1,305 Nonmajor Enterprise 1,122 Total Depreciation Expense-Business-type Activities $ 6,779 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, 2015 (in thousands): Governmental Activities Expended to Committed Project June 30, 2015 Funds Sheriff Women’s Jail Expansion $ 19,334 $ 21,365 Roads Infrastructure 22,574 27,042 SLO Probation Juvenile Hall Expansion 5,695 14,266 Parks & Recreation (Cayucos Pier) 2,764 1,284 Gen Govt - Atas Public Service Center 1,496 270 Property Tax System 1,324 1,736 Digital Microwave System 1,092 109 WTP 6th Membrane Filter Mod 667 64 Health-COC An Services Expansion 590 677 Business-Type Activities Expended to Committed Project June 30, 2015 Funds SLO Airport Facilities Infrastructure $ 2,552 $ 22 Los Osos Wastewater Project 146,066 33,274 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 No. 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, 2015, they had a carrying value of $8,226 net of accumulated depreciation of $2,561. The County 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, 2015 (in thousands): Year Ending June 30 General Fund Airport 2016 $ 610 $ 295 2017 610 278 2018 588 261 2019 577 261 2020 546 247 Later Years 1,040 6,162 Total $ 3,971 $ 7,504 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 $1,665 for the fiscal year ended June 30, 2015. 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 Statement No. 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, 2015, totaled $3,614. 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, 2015, for the next five years and for each five-year period thereafter (in thousands): Year Ending June 30 Minimum Lease Payments 2016 $ 2,412 2017 2,412 2018 2,308 2019 1,845 2020 1,743 2021-2025 5,948 2026-2030 2,822 2031-2035 234 Total $ 19,724 7. RISK MANAGEMENT The County is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The County has self-insurance programs for liability, workers' compensation, unemployment insurance and dental coverage. There were no liability and no 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 N/A Dental None – Funded by Employees N/A 75 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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 2013-14 and 2014-15, were as follows (in thousands): Beginning of the fiscal year Current year claims, Balance at fiscal liability changes & estimates Claim payments year end 2013-14 $ 18,832 $ 4,485 $ 5,001 $ 18,316 2014-15 $ 18,316 $ 4,945 $ 4,643 $ 18,618 8. INTERFUND RECEIVABLES AND PAYABLES The composition of interfund balances at June 30, 2015, was (in thousands): Receiver Fund (Due To) Sender Fund (Due From) Amount Nonmajor Enterprise Funds Nonmajor Governmental Funds $ 208 Total $ 208 The County Service Area 23 Enterprise Fund owes the Flood Control Zone Special Revenue Fund $208 for the local match portion of a grant. Payable Fund (Advances From Balance) Receivable Fund (Advances To Balance) Amount Nonmajor Governmental Funds Nonmajor Enterprise Funds $ 654 Nonmajor Governmental Funds 603 General Fund 934 2,191 Nonmajor Enterprise Funds General Fund 126 Nonmajor Governmental Funds 315 441 Airport General Fund 3,405 Total $ 6,037 76 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Nonmajor Governmental Funds’ advances from Nonmajor Enterprise Funds of $654 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 ($167) for future debt service obligations. Advances between Nonmajor Governmental Funds are internal loans of $603 from the Roads Special Revenue Fund to the Roads Impact Fees Special Revenue Fund, and advances related to the General Fund include an internal loan to the County Services Area 21 Special Revenue Fund ($81) and to the Library Special Revenue Fund ($853). The Nonmajor Enterprise Funds advances of $441 represent internal loans received by the County Services Areas Special Districts Enterprise Funds from the General Fund ($126) and from the County Services Area 10 Special Revenue Fund ($315). The Airport owes the General Fund $3,405 for internal loans for various projects including the refinancing of a State loan for the construction of hangars ($2,414). 9. TRANSFERS A reconciliation of transfers is detailed below (in thousands): Transfer From Transfer To Amount General Fund Nonmajor Governmental Funds $ 24,624 Capital Projects Fund 2,588 Airport 13 Nonmajor Enterprise Funds 12 27,237 Nonmajor Governmental Funds General Fund 949 Capital Projects Fund 1,264 Nonmajor Governmental Funds 2,268 Los Osos Wastewater 2,966 Nonmajor Enterprise Funds 227 7,674 Airport General Fund 1 Nonmajor Governmental Funds 54 55 Capital Projects Fund Nonmajor Enterprise Funds 12 Nonmajor Enterprise Funds General Fund 1 Nonmajor Governmental Funds 662 663 Internal Service Funds General Fund 33 Nonmajor Governmental Funds 855 Airport 164 1,052 Nacimiento Nonmajor Enterprise Funds 23 Total Transfers $ 36,716 77 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) General Fund transfers to Nonmajor Governmental Funds included contributions to the following Special Revenue Funds: Roads ($8,414), Library ($2,308), Community Development ($391), County Medical Services Program ($785) and Parks ($4,139). The General Fund also transferred $8,587 to the Pension Obligation Bond Debt Service Fund to finance debt service payments, $13 to the Airport, $12 to Golf, and $2,588 to the Capital Projects Fund for various capital projects. Nonmajor Governmental Fund transfers consist of contributions of Public Facilities Fees revenue from the Public Facilities Fees Special Revenue Fund to the General Fund ($397) for debt service, the Capital Projects Fund ($290), the Library Fund ($169), and the Parks Fund ($1,200) to fund capital and maintenance projects. The Parks Special Revenue Fund made transfers to the Capital Projects Fund ($43), to the Pension Obligation Bond Debt Service Fund ($149), and to the Lopez Park Enterprise Fund ($4) for debt service. The Roads Fund transferred $57 to Parks and $4 to Flood Control Zone 18 Special Revenue Fund for maintenance projects. The Road Impact Fee Special Revenue Fund transferred Impact Fees of $449 to the General Fund for debt service, and $417 to the Roads Fund for capital and maintenance projects. The Library Fund ($213), the County Medical Services Program Fund ($21) and the Driving Under the Influence Fund ($37) made transfers to the Pension Obligation Bond Debt Service Fund to finance debt service payments. Other Nonmajor Governmental Fund transfers include a transfer of $931 from the Library fund to the Capital Projects Fund related to the Atascadero Library project, $103 to the General Fund from the dissolution of County Service Area 17, $2,966 of grant related monies from the Flood Control District to the Los Osos Wastewater Fund, and $224 of transfers between various County Service Areas. The Airport Enterprise Fund transferred $1 to the General Fund and $54 to the Pension Obligation Bond Fund for debt service. The Capital Projects Fund transferred $12 to the Golf Fund for replacement of a water line at the Morro Bay Golf Course. Transfers from Nonmajor Enterprise funds included $1 of transfers from the County Service Areas to the General Fund for debt service, transfers from the Golf Enterprise Fund to the Pension Obligation Bond Debt Service Fund ($42), a $208 transfer of grant monies from the County Service Area 10 Enterprise fund to the Flood Control Zone Special Revenue Fund, and transfers between various County Services Areas ($412). The Garage Internal Service Fund transferred $33 to the General Fund and $35 to the Airport Fund for assets sales. Additionally, the Garage Internal Service Fund transferred $129 in fixed assets to the Airport Fund. 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 ($809) and Garage ($46) Internal Service Funds. The Nacimiento Fund transferred $23 to the County Service Area 10 Enterprise Fund as a refund of prepaid construction costs. 10. BONDED INDEBTEDNESS AND LONG-TERM DEBT Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2015, (in thousands) is as follows: 78 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Beginning Ending Balance Balance Due within Governmental Activities July 1, 2014 Adjustments Additions Reductions June 30, 2015 one year Bonds and notes payable: Certificates of participation $ 24,640 $ - $ - $ 1,040 $ 23,600 $ 1,073 Unamortized discount on COP (95) - - (4) (91) - Unamortized premium on COP 1,240 - - 88 1,152 - Pension Obligation Bonds 111,234 35,486 4,529 5,030 146,219 5,715 Total Bonds and notes payable 137,019 35,486 4,529 6,154 170,880 6,788 Other liabilities: Compensated absences 26,186 - 16,483 15,939 26,730 18,030 Landfill post-closure costs 4,214 - 468 405 4,277 397 Self insurance 18,316 - 4,945 4,643 18,618 3,446 Total other liabilities 48,716 - 21,896 20,987 49,625 21,873 Total Governmental Activities $ 185,735 $ 35,486 $ 26,425 $ 27,141 $ 220,505 $ 28,661 Business-Type Activities Bonds and notes payable: Certificates of participation $ 18,257 $ - $ 231 $ 743 $ 17,745 $ 766 Unamortized premium on COP 459 - - 33 426 - State notes 46,529 - 30,005 3,760 72,774 1,383 Revenue bonds 187,170 - - 3,357 183,813 3,504 Unamortized premium on Revenue 5,732 - - 213 5,519 - Bonds General obligation bonds 9,530 - - 375 9,155 395 Unamortized premium on General 959 - - 57 902 - obligation bonds Assessment bonds 76,438 - 4,635 1,244 79,829 1,271 Total bonds and notes payable 345,074 - 34,871 9,782 370,163 7,319 Other liabilities: Compensated absences 288 - 162 122 328 172 Total other liabilities 288 - 162 122 328 172 Total Business-Type Activities $ 345,362 $ - $ 35,033 $ 9,904 $ 370,491 $ 7,491 79 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Changes in Long-Term Liabilities Annual debt service requirements for governmental and business-type activities as of June 30, 2015, are summarized as follows: Governmental Activities Certificates of Participation Pension Obligation Bonds Year Ended Principal Interest Principal Unaccreted Interest Total June 30, Appreciation 2016 $ 1,073 1,002 $ 5,715 $ - $ 3,911 $ 9,626 2017 1,116 958 6,460 - 3,644 10,104 2018 1,159 913 7,265 - 3,336 10,601 2019 1,207 865 6,622 1,323 3,171 11,116 2020 1,253 816 49,246 1,799 1,586 52,631 2021-2025 8,289 3,370 33,739 17,500 - 51,239 2026-2030 4,714 1,504 33,614 34,661 - 68,275 2031-2035 2,975 800 3,558 4,983 - 8,541 2036-2040 1,814 141 - - - Total $ 23,600 $ 10,369 $ 146,219 $ 60,266 $ 15,648 $ 222,133 Business-Type Activities Certificates of Participation State Notes Revenue Bonds Year Ended Principal Interest Principal Interest Principal Interest June 30, 2016 $ 766 $ 795 $ 1,383 $ 605 $ 3,503 $ 9,192 2017 800 764 1,422 566 3,665 9,026 2018 828 732 2,786 1,429 3,850 8.837 2019 867 697 2,718 1,462 4,050 8,636 2020 903 659 2,783 1,397 4,260 8,424 2021-2025 5,199 2,615 14,580 5,954 24,915 38,522 2026-2030 5,553 1,224 15,281 4,216 32,125 31,273 2031-2035 1,307 344 8,272 2,865 41,500 21,913 2036-2040 480 243 9,135 2,003 53,560 9,842 2041-2045 575 147 10,089 1,049 12,385 291 2046-2050 467 39 4,325 131 - - Total $ 17,745 $ 8,259 $ 72,774 $ 21,677 $ 183,813 $ 145,956 Business-Type Activities (continued) General Obligation Bonds Assessment Bonds Year Ended June 30, Principal Interest Principal Interest 2016 $ 395 $ 445 $ 1,271 $ 2,173 2017 410 429 1,307 2,142 2018 425 413 1,343 2,106 2019 440 394 1,388 2,069 2020 460 374 1,415 2,030 2021-2025 2,695 1,489 7,725 9,533 2026-2030 3,510 669 8,862 8,394 2031-2035 820 20 10,167 7,088 2036-2040 - - 11,674 5,588 2041-2045 - - 13,394 3,868 2046-2050 - - 15,361 1,894 2051-2055 - - 5,922 151 Total $ 9,155 $ 4,233 $ 79,829 $ 47,036 80 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Long-term liabilities at June 30, 2015, consisted of the following: Original Date of Semi Annual Issue Outstanding at Issue Maturity Interest Rates Installments Amount 6/30/2015 Governmental Activities Certificates of Participation 2007 Series A 2/8/2007 2037 4% - 4.25% $304 - $308 $5,090 $4,350 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 6,335 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 12,915 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. $26,842 $23,600 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 $19,440 2003 Series C Capital Appreciation Bonds 7/2/2003 2031 5.27% - 5.73% zero - $15,000 44,199 144,480 Appreciation (60,266) 2009 Series A Term Bonds 8/19/2009 2019 7.45% $3,171 42,565 42,565 $134,759 $146,219 Business-Type Activities Certificates of Participation USDA 2009 4/30/2009 2049 4.375% $6 - $86 $1,631 $1,533 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 10,200 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 4,765 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 1,293 1,247 Used to finance a water system improvement project in County Service Area 10A. Debt service is provided by water sales revenues. $20,237 $17,745 81 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Original Date of Interest Semi Annual Issue Outstanding Issue Maturity Rates Installments Amount at 6/30/2015 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 $1,225 Santa Margarita Water System 1999 2018 3.41% $36 513 101 Lopez Recreation Area 2004 2024 2.5132% $21 325 167 Lopez Water Treatment Plant Upgrade 2006 2028 2.60% $1,672 25,945 20,658 Airport Hangars 2007 2025 4.6557% $86 1,000 679 Los Osos Waste Water Project 2012 2046 2.0% $336-$598 49,944 49,944 $80,738 $72,774 Revenue Bonds 1976 Water Bond-County Service Area 16 4/1/1976 2016 5.00% $7 - $9 $135 $8 Used to improve the Shandon Water System. Debt service is provided primarily by water sales revenues. 3.75% - $7,658 - 2007 Nacimiento Pipeline Project Series A 9/26/2007 2040 5.0% $10,048 157,845 147,515 5.196% - $2,132 - 2007 Nacimiento Pipeline Project Series B 9/26/2007 2040 5.571% $2,646 38,565 36,290 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 $183,813 General Obligation Bonds 2011 Refunding – Lopez Dam 2.0% - Remediation 5/12/2011 2030 5.5% $833 - $840 $10,760 $9,155 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. $1,609 - Assessment Bonds 2012 2037 2.75% $3,245 $82,291 $79,829 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 August 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. 82 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Description of Long-Term Lease Arrangements The County formed the Public Facilities Corporation and the Financing Authority for the purpose of issuing debt. On behalf of the County, these two entities issued all currently outstanding certificates of participation and the Lopez Dam remediation general obligation bond. Therefore, the County makes semi-annual lease payments in lieu of debt service to these entities from a variety of sources including State and Federal revenues, penalty assessments, golf course fees, water contract payments, and property taxes. For lease payment details, see above schedules for specific type of debt. Description of Special Assessment Bonds Special assessment debt has been issued to provide funds for the construction of streets, utility and water delivery systems. These bonds will be repaid from amounts levied against the property owners benefited by this construction. The County acts in an agent capacity for the assessment districts. In the event that a deficiency exists because of unpaid or delinquent special assessments at the time a debt service payment is due, the County must provide resources to cover the deficiency until other resources, for example, foreclosure proceeds, are received. Special assessment principal outstanding at June 30, 2015, totals $80,952 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 $27,058 at June 30, 2015. 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 $567,827 with a margin of $557,770. 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, 2015, had an arbitrage liability of $718,443. Subsequent Event In August 2015, the County refunded a portion of the 2007 Nacimiento Pipeline Project Series A Revenue Bonds. The refunding provided Net Present Value (NPV) savings of $5,037 or 4.569% (expressed as a % of refunded par) or 4.702% (expressed as a % of refunding par). Total cash flow savings are $12,730. 83 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 net investment in capital assets, restricted and unrestricted. Net Investment in Capital Assets - 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 investment in capital assets at June 30, 2015, is as follows (in thousands): Amount Governmental activities $ 1,130,241 Business-type activities 213,455 Total $ 1,343,696 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, 2015 is $18,281 restricted due to enabling legislation. Restricted net position at June 30, 2015, for governmental activities is as follows (in thousands): Amount RESTRICTED FOR: General Government Purchase obligations for Board of Supervisors related professional services $ 3 Purchase obligations for Administrative Office related professional services 1 Purchase obligations for Risk Management related professional services 28 Purchase obligations for Auditor-Controller-Treasurer-Tax Collector 104 related professional services Purchase obligations for Assessor related software 48 Purchase obligations for County Counsel related professional services 195 Purchase obligations for Human Resources related professional services 109 Purchase obligations for Utilities Management related professional 14 services Purchase obligations for building maintenance projects 91 Purchase obligations for Architectural Services related professional 9 services Purchase obligations for Information Technology related professional 169 services and equipment Purchase obligations for capital projects 5 Claims, contracts and other restrictions 1,221 Public Protection Purchase obligations for Agricultural Commissioner related equipment 1 Purchase obligations for Planning related training equipment, and 630 professional services Purchase obligations for Waste Management related supplies and 89 professional services Purchase obligations for Public Defender related professional services 6 Purchase obligations for District Attorney related software support and 15 supplies 84 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Purchase obligations for Sheriff-Coroner related professional services and 39 supplies Purchase obligations for Animal Services professional services, training, 44 and supplies Purchase obligations for Emergency Services related professional services 5 Purchase obligations for fire protection related software and equipment 255 Purchase obligations for flood control related engineering and 897 environmental services Purchase obligations for capital projects 2,876 Health and Sanitation Purchase obligations for Behavioral Health related professional services 137 and supplies Purchase obligations for Public Health related professional services and 105 software Public Ways and Facilities Purchase obligations for Public Works related professional services 91 Road maintenance and construction 7,236 Public facilities fees restricted for public facilities 11,046 Purchase obligations for capital projects 51 Recreation and Culture Parks equipment and maintenance services 133 Debt Service 12,069 Total Restricted Net Position $ 37,722 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, 2015 is as follows (in thousands): Amount Governmental activities $ (150,074) Business-type activities 97,173 Total $ (52,901) 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. 85 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 86 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Fund balances for all the major and nonmajor governmental funds as of June 30, 2015, are distributed as follows: General Capital Nonmajor Fund Projects Fund Gov’tl Funds Total Nonspendable: Inventories $ 108 $ - $ - $ 108 Prepaid Items 2,361 - 1 2,362 Advances to other funds 2,620 - 918 3,538 Subtotal 5,089 - 919 6,008 Restricted for: Tax loss reserves 2,945 - - 2,945 Public facilities - - 11,045 11,045 Traffic impact programs - - 7,236 7,236 Wildlife and grazing programs - - 15 15 Debt service - - 2,267 2,267 Subtotal 2,945 - 20,563 23,508 Committed to: Maintenance projects 4,355 - - 4,355 Assessor projects 363 - - 363 County Counsel projects 279 - - 279 Information Technology 236 236 projects Other general government 5,237 - - 5,237 Planning programs 1,657 - - 1,657 County fire programs 1,929 - - 1,929 Sheriff programs 108 - - 108 Public Defender programs 103 - - 103 Other public protection 177 - - 177 Public health programs 249 - - 249 Behavioral health programs 189 - - 189 Veteran’s Services programs 183 - - 183 Public works engineering & 109 - - 109 consulting services Fish and game programs - - 197 197 Flood control programs - - 19,373 19,373 Lighting programs - - 497 497 Community development - - 604 604 programs Medical services programs - - 859 859 Emergency medical services - - 843 843 Roads - - 13,494 13,494 Community service areas - - 1,345 1,345 Driving under the influence - - 518 518 programs Library - - 2,627 2,627 87 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Nonmajor General Capital Gov’tl Fund Projects Fund Funds Total Parks - - 4,891 4,891 Wildlife and grazing - - 5 5 programs General reserve 9,000 - - 9,000 Fire equipment 154 - - 154 Pension Obligation Bonds 8,689 - - 8,689 Internal financing 1,689 - - 1,689 Solar plant mitigation 14,952 - - 14,952 Solar plant law enforcement 4,271 - - 4,271 activities Automation projects 13,717 - - 13,717 Building replacement 25,151 - - 25,151 Organizational development 1,969 - - 1,969 Tax reduction reserve 42,758 - - 42,758 Lease financing 616 - - 616 Capital Projects - 22,968 - 22,968 Debt service - - 10,288 10,288 Subtotal 138,140 22,968 55,541 216,649 Assigned to: Tax reduction reserve 23,640 - - 23,640 General government 15,344 - - 15,344 Clerk Recorder programs 2,301 - - 2,301 Waste Management 2,236 - - 2,236 programs District Attorney programs 2,398 - - 2,398 Sheriff programs 6,109 - - 6,109 Probation programs 3,543 - - 3,543 Planning programs 1,234 - - 1,234 Other public protection programs 486 - - 486 Social Services programs 2,002 - - 2,002 Foster Care/Adoption programs 6,839 - - 6,839 Other public assistance programs 102 - - 102 Public ways and facilities 1,061 - - 1,061 Public Health programs 3,919 - - 3,919 Behavioral Health programs 14,100 - - 14,100 Subsequent Fiscal Year 39,685 - - 39,685 Budget Imprest cash 113 - - 113 Subtotal 125,112 - - 125,112 Unassigned Debt service - - (486) (486) Total $ 271,286 $ 22,968 $ 76,537 $ 370,791 88 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. The following is a summary of lapsing encumbrances at June 30, 2015, to be reappropriated during the next fiscal year (in thousands): Total Function Encumbrances General Government $ 2,301 Health & Sanitation 1,903 Public Protection 29,712 Public Assistance 493 Public Ways and Facilities 7,431 Education 3 Recreation 2,974 Total Lapsing Encumbrances $ 44,817 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 $28,216 over the next 20 years. The estimated amounts vary by year. For example, the principal amount due in 2015 was $914 while $2,066 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. At the present time, a potential contract extension agreement has not been finalized. 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, 2015. 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 the date of this report, the landfill closure is complete and only postclosure costs remain. 89 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The remaining estimated liability for landfill postclosure cost as of June 30, 2015, is $4,277 (in 2015 dollars). Of this, $3,225 is for the Maintenance Cost and $1,052 is the Corrective Action Cost. The cost estimates were provided by a licensed professional geologist in the Postclosure 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. 16. DEFINED BENEFIT PENSION PLAN Description of the System that Administers the Pension Plan The Pension Trust is a public employee retirement system established by the County of San Luis Obispo on November 1, 1958. Ten years later the Board of Supervisors adopted the present By-Laws and the San Luis Obispo County Employees Retirement Plan (the “Plan”) to provide retirement benefits to the employees of the County. The Pension Trust is administered by the Board of Trustees to provide retirement, disability, death, and survivor benefits for its members. 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 consisting of five employers: the County of San Luis Obispo (the “Employer”), the Superior Court in San Luis Obispo County, the San Luis Obispo Local Agency Formation Commission, the San Luis Obispo Air Pollution Control District and the San Luis Obispo County Pension Trust. The Plan exists, operates and is constituted under the authority of Section 53215 of Section 17 of Article XVI of the California Constitution and the Government Code Article 1.5 (Pension Trusts), of Chapter 2 (Officers and Employees), of Part 1 (Powers and Duties Common to Cities, Counties and Other Agencies), of Division 2 (Cities, Counties and Other Agencies), of Title 5 (Local Agencies) of the California Government Code. Pursuant to the foregoing California Government Code provisions, the County of San Luis Obispo Board of Supervisors established the San Luis Obispo County Pension Trust (the “Trust”) by the adoption of Chapter 2.56 of the San Luis Obispo County Code. Following the adoption of Chapter 2.56 of the County Code, the Board of Supervisors adopted the By-Laws of the Pension Trust. The San Luis Obispo County Employees Retirement Plan is part of those By-Laws. The County of San Luis Obispo Board of Supervisors may amend the Plan’s provisions. Participation in the Plan is mandatory for all regular employees. Participants are currently broken into 3 Tiers depending on date of hire: Tier 1 Tier 1 generally includes members hired before January 1, 2011. As of December 31, 2014 there were 1,712 active County employed members in Tier 1. Tier 2 Tier 2 generally includes members hired on or after January 1, 2011 but before January 1, 2013. Tier 2 only applies to members hired after the date each particular bargaining unit adopted Tier 2. Members hired in a bargaining unit that did not adopt Tier 2 are considered Tier 1 members. As of December 31, 2014 there were 301 active County employed members in Tier 2. Tier 3 Tier 3 includes all members hired on or after January 1, 2013. As of December 31, 2014 there were 380 active County employed members in Tier 3. 90 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. The Plan’s financial statements are prepared on the accrual basis of accounting. All assets are invested and held pursuant to, and in accordance with, the Investment Policy of the Plan. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized as revenues when due pursuant to formal commitments and statutory or contractual requirements. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Plan investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. All other securities are valued at the last reported market price at current exchange rates. Summary of Plans and Eligible Participants (The active number of County employees and their respective tiers covered by the benefit terms as of December 31, 2014.) Tiers Summary of Plan Active members Miscellaneous Tier 1 Vested after accumulation of five years of Pension Trust service 1,418 credit & eligible to receive a Service Retirement Allowance after members vesting and attaining a minimum age of 50. Miscellaneous Tier 2 Vested after accumulation of five years of Pension Trust service 257 credit & eligible to receive a Service Retirement Allowance after members vesting and attaining a minimum age of 50. Miscellaneous Tier 3 Vested after accumulation of five years of Pension Trust service 347 credit & eligible to receive a Service Retirement Allowance after members vesting and attaining a minimum age of 52. Probation Tier 1 Vested after accumulation of five years of Pension Trust service 91 members credit & eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Probation Tier 2 N/A - Probation Tier 3 Vested after accumulation of five years of Pension Trust service 13 members credit & eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Safety Tier 1 Vested after accumulation of five years of Pension Trust service 203 credit & eligible to receive a Service Retirement Allowance after members vesting and attaining a minimum age of 50. Safety Tier 2 Vested after accumulation of five years of Pension Trust service 44 members credit & eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Safety Tier 3 Vested after accumulation of five years of Pension Trust service 20 members credit & eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Benefit Provisions Members terminating employment before accruing five years of Pension Trust service credit forfeit the right to receive retirement benefits unless they establish reciprocity with another public agency within the prescribed time period. Non-vested members who terminate service are required to withdraw their accumulated contributions plus accrued interest. The amounts absorbed back into the pension trust fund are the employer contributions forfeited by non-vested members. Members who terminate after earning five years of Pension Trust service credit may leave their contributions on deposit and upon reaching age eligibility elect to take a retirement. Differences between expected and actual experience for vested or non-vested benefits may result in an increase or decrease to pension expense and net pension liability. 91 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Plan participants, upon vesting and attaining the minimum retirement age, 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 also provides a death benefit of $1 thousand paid to a beneficiary or estate if a member dies after retirement. For members within Tier 1, final average salary is the average monthly salary based on the highest twelve consecutive months of earnings. For members with Tier 2 or Tier 3 benefits, final average salary is the average monthly salary based on the highest thirty-six consecutive months of earnings. The retirement benefit for Tier 1, Tier 2, and Tier 3 members includes post-retirement cost-of-living adjustments (COLAs) based upon the Consumer Price Index. Tier 1 member COLAs are limited to a maximum of 3% annually. For Tier 2 and Tier 3 members, COLAs are limited to a maximum of 2% annually. There is no minimum COLA requirement, and COLAs must be approved by the Board of Trustees annually. Description of the terms of the plan’s Deferred Retirement Option Program (DROP) and the total DROP balance for those members currently participating in the DROP Deferred Retirement Option Program (DROP): A Tier 1 member, depending on Bargaining Unit, may elect to participate in the Pension Trust’s DROP. A Tier 1 member, depending on Bargaining Unit, at age 50 and with 5 or more Pension Trust service credits may participate. An equal amount to the amount that would have been paid had the member retired, is deposited into a DROP account monthly. The monthly addition to the DROP account is increased each year by the Cost-of-Living Adjustment approved by the Board of Trustees not to exceed 3% per year. Members electing to enter DROP must participate a minimum of 6 months up to a maximum of 5 years. Upon actual retirement the member may receive the accumulated DROP account balance in the form of a lump sum or as an annuity payment. Contributions Plan members are required by statute to contribute to the pension plan. Members’ contribution rates are formulated on the basis of age at date of entry and the actuarially calculated future benefits. The County is required by statute to contribute the remaining amounts necessary to finance the estimated benefits accrued to its members. Member and employer contribution rates for each plan are as follows: EMPLOYER EMPLOYEE CONTRIBUTION CONTRIBUTION PLAN RATES RATES Miscellaneous Tier 1 14.68-19.04% 9.01-18.56% Miscellaneous Tier 2 14.68-19.04% 4.89-11.66% Miscellaneous Tier 3 14.19-18.55% 3.75-11.50% Probation Tier 1 15.44-15.71% 16.00-23.98% Probation Tier 2 Not negotiated Not negotiated Probation Tier 3 15.09-15.21% 5.25-15.25% Safety Tier 1 21.72-28.39% 10.08-23.95% Safety Tier 2 21.72-28.39% 7.35-14.86% Safety Tier 3 21.11-27.78% 6.75-12.50% 92 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County’s contributions to the Plan for the past three fiscal years were equal to the required contributions for each year and are noted in the chart below. Fiscal Year Ended County contributions (in thousands) June 30, 2013 $29 June 30, 2014 $29 June 30, 2015 $30 In addition, the County contributes towards post employment benefits other than retirement (See Note 17). Description of the terms of the plan’s Deferred Retirement Option Program (DROP) and the total DROP balance for those members currently participating in the DROP The San Luis Obispo County Employees Retirement Plan establishes the basic obligations for employer and member contributions and benefits to and of the retirement system. The actual employer and member contribution rates in effect each year are based on recommendations made by an independent actuary that are approved by the Board of Trustees and adopted by the San Luis Obispo County Board of Supervisors. The entire Plan is 77.9% funded as of January 1, 2014; since this is a multi-employer cost sharing plan, the funded status is the same for all employees across the board. In general, this indicates that for every dollar of benefits due, the Trust had approximately 77.9 cents available for payment. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Total pension liability represents the portion of the actuarial present value of projected benefit payments attributable to past periods of service for current and inactive employees. The County’s share of the total pension liability as of December 31, 2014, was $1,478,497. The County’s share of the Plan’s fiduciary net position was $1,087,074 as of the same date. As of December 31, 2014, the Plan’s fiduciary net position was 73.5% of the total pension liability. At June 30, 2015, the County reported a liability of $391,422 for its proportionate share of the net pension liability of the Plan. The net pension liability was measured as of December 31, 2013. The pension liability used to calculate the net pension liability was determined by an actuarial valuation date of December 31, 2013, rolled forward using the Plan’s fiduciary net position as of December 31, 2014. The County’s proportion of the net pension liability was based on a projection of the County’s long-term share of contributions to the Plan relative to the projected contributions of all the Plan’s participants, actuarially determined. At December 31, 2014, the County’s proportionate share was 92.65%, compared to 92.64% at December 31, 2013, an increase of 0.01%. For the year ended June 30, 2015, the County recognized pension expense of $43,895. Pension expense represents the change in the net pension liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, actuarial gain/loss, actuarial assumptions or method and plan benefits. 93 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) At December 31, 2014, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources (in thousands) (in thousands) Deferred outflows of resources – change in proportion $ 39 $ - Deferred outflows of resources – net difference between projected and - actual earnings on pension plan investments 22,357 County contributions subsequent to the measurement date 15,329 - Deferred inflows of resources- change in actual vs. proportionate - - contributions Deferred inflows of resources – proportionate share of collective - - investment return $ 37,725 $ - Deferred outflows of resources above represent the unamortized portion of changes to net pension liability and the net difference between projected and actual earnings on pension plan investments which will be recognized in future periods in a systematic and rational manner. Additionally, the County recognized deferred outflows of resources for contributions subsequent to the December 31, 2014 measurement date. The County contributions of $15,329 made subsequent to the measurement date are reported as deferred outflows of resources for fiscal year ending June 30, 2015 and will be recognized as reduction of the net pension liability in the fiscal year ending June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in future pension expense as follows: Year Ending Net Deferred Outflows June 30 of Resources (in thousands) 2016 $ 5,589 2017 5,589 2018 5,589 2019 5,590 2020 - Thereafter - Total $ 22,357 Actuarial Assumptions The total pension liability in the January 1, 2014 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.75% Amortization growth rate Level percentage of payroll Salary increases 3.25% plus service-related merit component COLA increases 2.75% for Tier 1 and 2.00% for Tier 2 and Tier 3 Investment rate of return 7.25%, net of administrative expense Post-Retirement Mortality Sex distinct RP-2000 with generational mortality improvements using scale AA, a 105% multiplier and white collar adjustment The actuarial assumptions used in the January 1, 2014 valuation were based on the results of an actuarial experience study for the period from January 1, 2009 to December 31, 2013. 94 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The long-term expected rate of return on pension plan investments was determined using a building- block method in which best estimate ranges of expected future real rates of return are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage, adjusted for expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Weighted Average Long-Term Target Expected Real Asset Class Allocation Rate of Return Fixed Income 35% 1.56% Domestic Equities 23% 3.36% International Equities 22% 6.55% Alternative Investments 10% 4.10% Real Estate 10% 4.10% Discount Rate The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that Plan member contributions will be made at the current contribution rate and that Employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following table presents the net pension liability of the County’s proportionate share calculated using the discount rate of 7.25%, as well as what the County’s net pension liability would be if it were calculated using a discount rate that is one percentage-point lower 6.25% or one percentage-point higher 8.25% than the current rate: 1% Discount 1% Decrease Rate Increase (in thousands) (in thousands) (in thousands) 6.25% 7.25% 8.25% County’s proportionate share of the net $ 638 $422 $245 retirement plan liability Pension Plan Fiduciary Net Position Detailed information about the Plan’s fiduciary net position is available in the separately issued San Luis Obispo County Pension Trust CAFR. 95 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 17. POSTEMPLOYMENT 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 2014 ranged from $122 to $139 per month. The subsidy is adjusted annually to reflect changes in the medical component of the Consumer Price Index. Annual OPEB Cost and Net OPEB Asset The County’s annual Other Post Employment Benefits (OPEB) cost is equal to the (a) annual required contribution (ARC) less (b) one year’s interest on the beginning balance of the net OPEB asset plus/minus (c) any adjustment to the ARC. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost of each year and any unfunded actuarial liabilities (or funding excess) amortized over a thirty year open period. The ARC of $1,244 for the fiscal year ended June 30, 2015 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, 2015: Annual required contribution (ARC) $1,244 Interest on prior year net OPEB asset (164) Adjustment to ARC 439 Annual OPEB Cost 1,519 Contributions made 1,588 Increase (decrease) in net OPEB obligation (69) Net OPEB obligation (asset) – beginning of year (2,314) Net OPEB obligation (asset) – end of year ($2,383) 96 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the Net OPEB Obligation (Asset) for the fiscal year ended 2015 and the two preceding years are as follows: Fiscal Annual Percent of Net OPEB Year OPEB OPEB Cost Obligation Ended Cost Contributions Contributed (Asset) 2013 $1,632 $1,537 94% ($1,974) 2014 $1,479 $1,819 123% ($2,314) 2015 $1,519 $1,588 105% ($2,383) Funded Status and Funding Progress The funded status of the OPEB plan as of June 30, 2015, (based on the County’s June 30, 2013 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. 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 an open amortization period of 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. PRIOR PERIOD ADJUSTMENT The County decreased governmental activities’ beginning net position by $35.5 million to include the accreted value of 2003 Capital Appreciation Bonds through June 30, 2014 which had been disclosed in debt service footnote schedules but was not previously presented in the Statement of Net Position as required under accounting principles generally accepted in the United States of America. 97 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 19. CHANGE IN ACCOUNTING PRINCIPLE In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27, to improve accounting and financial reporting by state and local governments for pensions. In November 2013, the GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date to address an issue in Statement No. 68 concerning provisions related to certain pension contributions made to defined benefit pension plans prior to the implementation of that Statement by employers and nonemployer contributing entities. As of July 1, 2014, the County implemented these Statements decreasing beginning net position in the government wide statements by $474.5 million ($471.0 million governmental activities and $3.5 million business-type activities), to recognize $14.7 million of beginning deferred outflows of resources representing pension contributions made between the measurement date of the beginning net pension liability and the start of the fiscal year, to remove a $134.4 million net pension asset reported in FY 2013- 2014 under prior accounting standards, and to establish a beginning net pension liability of $354.8 million. The portion of the restatement reportable in the Fund Financial Statements was $1.9 million in the Airport Enterprise Fund, $1.6 million in the Golf Enterprise Fund, $28.4 million in the Public Works Internal Service Fund, and $1.7 million in the Garage Internal Service Fund. The discretely presented component unit First 5 San Luis Obispo County decreased its governmental activities’ beginning net position by $47 related to implementation of the new pension standards. 20. SUBSEQUENT EVENTS Current provisions of the County’s Retirement Plan permit the County to prepay its obligation to the Pension Trust on an annual basis. On July 8, 2015 the County made an advance payment of $42.6 million representing the County’s FY 2015-16 employer retirement and employer paid portion of employee normal retirement contributions to the Pension Trust. The prepayment resulted in a savings of $1.4 million to the County. On August 5, 2015 the County issued $107,115 of Series A Nacimiento Water Project Revenue Refunding Bonds to provide funds to advance refund certain 2007 Series A Nacimiento Water Project Revenue Bonds. The 2007 Series A bonds were issued to finance and refinance the costs of the acquisition, construction and equipping of certain public capital improvements within the County, generally comprising the Nacimiento Water Project. Proceeds from the 2015 Revenue Refunding Bonds will also be used to purchase a municipal bond insurance policy for the 2015 Bonds and to pay certain costs associated with the issuance of the 2015 Bonds. The Bonds will be repaid from and secured by water sales revenues. 98 ____________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION ____________________________________________________________ 99 100 REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information includes financial information and disclosures that are required by the Governmental Accounting Standards Board (GASB) but are not considered a part of the basic financial statements. Such information includes:  Schedule of the County’s Proportionate Share of the San Luis Obispo County Pension Plan’s Net Pension Liability  Schedule of the County’s Contributions to the San Luis Obispo County Pension Plan  Other Post Employment Benefits (OPEB) Plan Schedule of Funding Progress  Budgetary Comparison Schedule – General Fund  Note to required supplementary information 101 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE COUNTY’S PROPORTIONATE SHARE OF THE SAN LUIS OBISPO COUNTY PENSION PLAN’S NET PENSION LIABILITY FOR THE LAST 10 FISCAL YEARS* (in thousands) County's proportionate Plan fiduciary County's County's share of the net net pension as proportion of proportionate County's covered pension liability a percentage Fiscal Year Ending the net pension share of the employee (asset) as a percentage of the total June 30th liability net pension liability payroll of covered-employee payroll pension liability 2013 92.64% $ 354,823 $ 161,446 219.78% 74.78% 2014 92.65% $ 391,423 $ 168,662 232.08% 73.53% *In accordance with paragraph 81.a of GASB Statement No. 68 effective June 30, 2014, employers must disclose a 10-year history of their proportionate share of the pension plan’s net pension liability. Additional years will be presented as they become available. 102 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE COUNTY’S CONTRIBUTIONS TO THE SAN LUIS OBISPO COUNTY PENSION PLAN FOR THE LAST 10 FISCAL YEARS* (in thousands) County’s actual contributions as a Fiscal Year ending Actuarially required County’s covered percentage of covered- June 30th contributions Actual contributions employee payroll employee payroll 2014 $30,687 $29,691 $168,662 17.60% *In accordance with paragraph 81.a of GASB Statement No. 68 effective June 30, 2014, employers must disclose a 10-year history of their contributions to the pension plan. Additional years will be presented as they become available. 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. 103 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION OTHER POST EMPLOYMENT BENEFITS (OPEB) PLAN SCHEDULE OF FUNDING PROGRESS FOR THE YEAR ENDED JUNE 30, 2015 (in thousands) Unfunded AAL Actuarial (Funding Excess) Actuarial Actuarial Accrued Unfunded AAL as a percentage Valuation Value of Liability (AAL) (Funding Excess) Funded Annual Covered of Covered Payroll December 31 Assets (a) Entry Age (b) (b-a) Ratio (a/b) Payroll (c) ((b-a)/c) 2009 $ 6,324 $ 19,718 $ 13,394 32.1% $ 154,282 8.6% 2011* $ 8,775 $ 21,185 $ 12,410 41.4% $ 152,893 8.1% 2013* $ 11,105 $ 22,808 $ 11,703 48.69% $ 154,555 7.5% *Valuation Date June 30, 2011 and June 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 $8.8 million. The 2013 actuarial value of assets represent fiscal year 2011/2012 CERBT contributions of $11.1 million. 104 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, 2015 (In Thousands) Budgeted Amounts Variance with Original Final Actual Final Budget Revenues: Taxes $ 149,297 $ 149,297 $ 167,347 $ 1 8,050 Licenses, permits, and franchises 9 ,350 9 ,350 10,449 1,099 Fines, forfeits, and penalties 3 ,854 4 ,267 3 ,975 (292) Use of money and property 1 ,695 1 ,698 2 ,820 1,122 Aid from other governmental agencies 203,764 220,530 215,320 (5,210) Charges for current services 29,730 32,045 29,333 (2,712) Other revenue 4 ,666 6 ,846 6 ,053 (793) Total Revenues 402,356 424,033 435,297 11,264 Expenditures: Current: General government 46,978 55,432 43,950 11,482 Public protection 154,195 161,976 149,317 12,659 Public ways and facilities 2 ,123 2 ,811 2 ,024 787 Health and sanitation 76,511 81,678 70,503 11,175 Public assistance 103,885 109,268 104,501 4,767 Education 476 480 457 23 Contingencies 19,112 17,783 - 17,783 Total Expenditures 403,280 429,428 370,752 58,676 Excess (Deficiency) of Revenues Over (Under) Expenditures (924) (5,395) 64,545 (47,412) Other Financing Sources (Uses): Transfers in 602 1 ,721 138 (1,583) Transfers out ( 34,963) ( 37,970) ( 27,048) 10,922 Total Other Financing Sources (Uses) ( 34,361) (36,249) (26,910) 9,339 Net Change in Fund Balances ( 35,285) (41,644) 37,635 (38,073) Fund Balances, Beginning 200,280 200,280 200,280 - Fund Balances, Ending $ 164,995 $ 158,636 $ 237,915 $ 7 9,279 105 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Explanation of Differences between Budgetary Inflows and Outflows and Accounting Principles Generally Accepted in the United States of America Revenues and Expenditures Sources/Inflows of Resources: Actual amounts (budgetary basis) "Total Revenues" from the budgetary comparison schedule $ 435,297 Revenuesforfundsnot meetingtheespecialrevenuefunddefinitionwhicharepresented with the General Fund for financial reporting purposes 1,070 Total revenues as reported on the Statement ofRevenues, Expenditures,and Changesin Fund Balances - Governmental Funds $ 436,367 Uses/Outflows of Resources: Actual amounts (budgetary basis) "Total Expenditures" from the budgetary comparison schedule $ 370,752 Expenditures for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 7,257 Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ 378,009 Other Financing Sources (Uses) of Resources Actual amounts (budgetary basis) "Total Other Financing Sources (Uses)" from the budgetary comparison schedule $ (26,910) Other financing sources (uses) for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 6 57 Total Other Financing Sources (uses) as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ (26,253) 106 COUNTY OF SAN LUIS OBISPO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2015 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, 2015 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. 107 108 ____________________________________________________________ OTHER SUPPLEMENTARY INFORMATION ____________________________________________________________ 109 110 ____________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS ____________________________________________________________ 111 112 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 (County) 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 and 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. 113 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 and 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. 114 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 (In Thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds Assets Cash and cash equivalents $ 10,289 $ 68,918 $ 79,207 Restricted cash with fiscal agent 2,266 - 2,266 Accounts receivable - 21 21 Due from other governments - 7,093 7,093 Due from other funds - 2 08 2 08 Advances to other funds - 9 18 9 18 Prepaid items 1 1 Other assets 6,788 - 6,788 Total assets $ 19,343 $ 77,159 $ 96,502 Liabilities Salaries and benefits payable $ - $ 330 $ 330 Accounts payable - 7,209 7,209 Deposits from others - 7 59 7 59 Unearned revenue - 1,587 1,587 Other current liabilities 6,788 - 6,788 Advances from other funds 4 87 1,704 2,191 Total liabilities 7,275 11,589 18,864 Deferred Inflows of Resources Unavailable revenue - 1,101 1,101 Fund Balance Nonspendable - 9 19 9 19 Restricted 2,266 18,297 20,563 Committed 10,288 45,253 55,541 Assigned - - - Unassigned (486) - (486) Total fund balances 12,068 64,469 76,537 Total liabilities, deferred inflows of resources, and fund balances $ 19,343 $ 77,159 $ 96,502 115 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds Revenues Taxes $ - $ 11,393 $ 11,393 Licenses, permits, and franchises - 3 3 Fines, forfeits, and penalties - 7 99 7 99 Use of money and property 18 3 48 3 66 Aid from other governmental agencies - 34,554 34,554 Charges for current services 2,073 10,778 12,851 Other revenues 6 07 2,346 2,953 Total revenues 2,698 60,221 62,919 Expenditures Current: Public protection - 8,466 8,466 Public ways and facilities - 27,879 27,879 Health and sanitation - 4,613 4,613 Public assistance - 2,603 2,603 Education - 10,931 10,931 Recreation and cultural services - 10,104 10,104 Debt service: Principal payments 6,070 - 6,070 Interest and fiscal charges 5,209 - 5,209 Total expenditures 11,279 64,596 75,875 Excess (deficiency) of revenues over (under) expenditures ( 8,581) (4,375) (12,956) Other Financing Sources (Uses) Transfers in 9,958 18,505 28,463 Transfers out - (7,674) (7,674) Total other financing sources (uses) 9,958 10,831 20,789 Net change in fund balances 1,377 6,456 7,833 Fund balances - beginning 10,691 58,013 68,704 Fund balances - ending $ 12,068 $ 64,469 $ 76,537 116 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR DEBT SERVICES FUNDS JUNE 30, 2015 (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 $ 9,385 $ 1 $ 10,289 Restricted cash with fiscal agent 4 51 - 1,815 2,266 Other assets 2 95 5,715 7 78 6,788 Total assets $ 1,649 $ 15,100 $ 2,594 $ 19,343 Liabilities and Fund Balance Liabilities Other current liabilities $ 295 $ 5,715 $ 778 $ 6,788 Advances from other funds - - 4 87 4 87 Total liabilities 2 95 5,715 1,265 7,275 Fund Balances Restricted 4 51 - 1,815 2,266 Committed 9 03 9,385 - 10,288 Unassigned - - (486) (486) Total fund balances 1,354 9,385 1,329 12,068 Total liabilities and fund balances $ 1,649 $ 15,100 $ 2,594 $ 19,343 117 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR DEBT SERVICES FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (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 $ - $ 18 $ - $ 1 8 Charges for current services 7 56 - 1,317 2,073 Other revenues - 607 - 6 07 Total revenues 7 56 625 1,317 2,698 Expenditures Debt service: Principal payments 2 80 5,030 7 60 6,070 Interest and fiscal charges 4 76 4,176 5 57 5,209 Total expenditures 7 56 9,206 1,317 11,279 Excess (deficiency) of revenues over (under) expenditures - (8,581) - (8,581) Other financing sources (uses) Transfers in - 9,958 - 9,958 Transfers out - - - - Total other financing sources (uses) - 9,958 - 9,958 Net change in fund balances - 1,377 - 1,377 Fund balances - beginning 1,354 8,008 1,329 10,691 Fund balances - ending $ 1,354 $ 9,385 $ 1,329 $ 12,068 118 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS JUNE 30, 2015 (In Thousands) Emergency Driving Under Community Medical the Influence Development CMSP Services Programs Assets Cash and cash equivalents $ 870 $ 947 $ 404 $ 557 Accounts receivable - - - - Due from other governments - - 4 39 - Due from other funds - - - - Advances to other funds - - - - Prepaid items - - - 1 Total assets $ 870 $ 947 $ 843 $ 558 Liabilities Salaries and benefits payable $ - $ 1 1 $ - $ 2 8 Accounts payable 1 26 3 - 11 Deposits from others 1 40 - - - Unearned revenue - - - - Advances from other funds - - - - Total liabilities 2 66 14 - 39 Deferred Inflows of Resources Unavailable revenue - 74 - - Fund Balances Nonspendable - - - 1 Restricted - - - - Committed 6 04 8 59 8 43 5 18 Total fund balances 6 04 8 59 8 43 5 19 Total liabilities, deferred inflows of resources, and fund balances $ 870 $ 947 $ 843 $ 558 Continued 119 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET (Continued) NONMAJOR SPECIAL REVENUE FUNDS JUNE 30, 2015 (In Thousands) Road Public Fish and Impact Facilities Game Fees Library Parks Fees Assets Cash and cash equivalents $ 199 $ 7,839 $ 4,023 $ 5,737 $ 11,046 Accounts receivable - - - 21 - Due from other governments - - - 47 - Due from other funds - - - - - Advances to other funds - - - - - Prepaid items - - - - - Total assets $ 199 $ 7,839 $ 4,023 $ 5,805 $ 11,046 Liabilities Salaries and benefits payable $ - $ - $ 158 $ 133 $ - Accounts payable 2 - 385 279 - Deposits from others - - - 163 - Unearned revenue - - - 6 - Advances from other funds - 603 853 167 - Total liabilities 2 603 1,396 748 - Deferred Inflows of Resources Unavailable revenue - - - 166 - Fund Balances Nonspendable - - - - - Restricted - 7,236 - - 11,046 Committed 197 - 2,627 4,891 - Total fund balances 197 7,236 2,627 4,891 11,046 Total liabilities, deferred inflows of resources, and fund balances $ 199 $ 7,839 $ 4,023 $ 5,805 $ 11,046 Continued 120 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET (Continued) NONMAJOR SPECIAL REVENUE FUNDS JUNE 30, 2015 (In Thousands) Total Nonmajor Wildlife Special Special Revenue Roads Grazing Districts Funds Assets Cash and cash equivalents $ 14,915 $ 20 $ 22,361 $ 68,918 Accounts receivable - - - 21 Due from other governments 1,706 - 4,901 7,093 Due from other funds - - 2 08 208 Advances to other funds 6 03 - 3 15 918 Prepaid items - - - 1 Total assets $ 17,224 $ 20 $ 27,785 $ 77,159 Liabilities Salaries and benefits payable $ - $ - $ - $ 330 Accounts payable 1,716 - 4,687 7,209 Deposits from others 4 56 - - 759 Unearned revenue 94 - 1,487 1,587 Advances from other funds - - 81 1,704 Total liabilities 2,266 - 6,255 11,589 Deferred Inflows of Resources Unavailable revenue 8 61 - - 1,101 Fund Balances Nonspendable 6 03 - 3 15 919 Restricted - 15 - 18,297 Committed 13,494 5 21,215 45,253 Total fund balances 14,097 20 21,530 64,469 Total liabilities, deferred inflows of resources, and fund balances $ 17,224 $ 20 $ 27,785 $ 77,159 121 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, 2015 (In Thousands) Emergency Driving Under Community Medical the Influence Development CMSP Services Programs Revenues Taxes $ - $ - $ - $ - Licenses, permits, and franchises - - - - Fines, forfeits, and penalties - - 7 83 - Use of money and property 2 3 1 2 Aid from other governmental agencies 4,418 44 - - Charges for current services - 1 58 - 1,336 Other revenues 2 6 82 - - Total revenues 4,422 8 87 7 84 1,338 Expenditures Current: Public protection - - - - Public ways and facilities - - - - Health and sanitation 4,613 - - - Public assistance - 1,825 7 78 - Education - - - 1,471 Recreation and cultural services - - - - Total expenditures 4,613 1,825 7 78 1,471 Excess (deficiency) of revenues over (under) expenditures (191) (938) 6 (133) Other financing sources (uses) Transfers in 3 91 7 85 - - Transfers out - (21) - (37) Total other financing sources (uses) 3 91 7 64 - (37) Net change in fund balances 2 00 (174) 6 (170) Fund balances - beginning 4 04 1,033 8 37 6 89 Fund balances - ending $ 604 $ 859 $ 843 $ 519 Continued 122 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (Continued) NONMAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Road Public Fish and Impact Facilities Game Fees Library Parks Fees Revenues Taxes $ - $ - $ 7,671 $ - $ - Licenses, permits, and franchises - - - 3 - Fines, forfeits, and penalties 16 - - - - Use of money and property - 26 9 151 38 Aid from other governmental agencies - - 99 94 - Charges for current services - 1,205 249 5,035 2,055 Other revenues - - 1,443 98 - Total revenues 16 1,231 9,471 5,381 2,093 Expenditures Current: Public protection 1 9 - - - - Public ways and facilities - - - - - Health and sanitation - - - - - Public assistance - - - - - Education - - 9,460 - - Recreation and cultural services - - - 10,104 - Total expenditures 19 - 9,460 10,104 - Excess (deficiency) of revenues over (under) expenditures (3) 1,231 11 (4,723) 2,093 Other financing sources (uses) Transfers in - - 2,477 5,396 - Transfers out - (866) (1,144) (196) (2,056) Total other financing sources (uses) - (866) 1,333 5,200 (2,056) Net change in fund balances (3) 365 1,344 477 37 Fund balances - beginning 200 6,871 1,283 4,414 11,009 Fund balances - ending $ 197 $ 7,236 $ 2,627 $ 4,891 $ 11,046 Continued 123 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (Continued) NONMAJOR SPECIAL REVENUE FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Total Nonmajor Wildlife Special Special Revenue Roads and Grazing Districts Funds Revenues Taxes $ 1,592 $ - $ 2,130 $ 11,393 Licenses, permits, and franchises - - - 3 Fines, forfeits, and penalties - - - 799 Use of money and property 39 - 77 348 Aid from other governmental agencies 21,248 4 8,647 34,554 Charges for current services 2 35 - 5 05 10,778 Other revenues 52 - 69 2,346 Total revenues 23,166 4 11,428 60,221 Expenditures Current: Public protection - 2 8,445 8,466 Public ways and facilities 27,804 - 75 27,879 Health and sanitation - - - 4,613 Public assistance - - - 2,603 Education - - - 10,931 Recreation and cultural services - - - 10,104 Total expenditures 27,804 2 8,520 64,596 Excess (deficiency) of revenues over (under) expenditures ( 4,638) 2 2,908 (4,375) Other financing sources (uses) Transfers in 8,831 - 6 25 18,505 Transfers out (61) - (3,293) (7,674) Total other financing sources (uses) 8,770 - (2,668) 10,831 Net change in fund balances 4,132 2 2 40 6,456 Fund balances - beginning 9,965 18 21,290 58,013 Fund balances - ending $ 14,097 $ 20 $ 21,530 $ 64,469 124 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS – SPECIAL DISTRICTS JUNE 30, 2015 (In Thousands) Flood Control Lighting County Districts Districts Service Areas Total Assets Cash and cash equivalents $ 20,437 $ 497 $ 1,427 $ 22,361 Due from other governments 4,901 - - 4,901 Due from other funds 2 08 - - 2 08 Advances to other funds - - 3 15 3 15 Total assets $ 25,546 $ 497 $ 1,742 $ 27,785 Liabilities and Fund Balances Liabilities Accounts payable $ 4,686 $ - $ 1 $ 4,687 Unearned revenue 1,487 - - 1,487 Advances from other funds - - 81 81 Total liabilities 6,173 - 82 6,255 Fund Balances Nonspendable - - 3 15 3 15 Committed 19,373 4 97 1,345 21,215 Total fund balances 19,373 4 97 1,660 21,530 Total liabilities and fund balances $ 25,546 $ 497 $ 1,742 $ 27,785 125 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, 2015 (In Thousands) Flood Control Lighting County Districts Districts Service Areas Total Revenues Taxes $ 1,752 $ 3 3 $ 345 $ 2,130 Use of money and property 69 2 6 77 Aid from other governmental agencies 8,645 - 2 8,647 Charges for current services 4 91 10 4 5 05 Other revenue 67 1 1 69 Total revenues 11,024 46 3 58 11,428 Expenditures Current: Public protection 8,409 36 - 8,445 Public ways and facilities - - 75 75 Total expenditures 8,409 36 75 8,520 Excess (deficiency) of revenues over (under) expenditures 2,615 10 2 83 2,908 Other financing sources (uses) Transfers in 2 12 - 4 13 6 25 Transfers out ( 2,966) - (327) (3,293) Total other financing sources (uses) ( 2,754) - 86 (2,668) Net change in fund balances (139) 10 3 69 2 40 Fund balances - beginning 19,512 4 87 1,291 21,290 Fund balances - ending $ 19,373 $ 497 $ 1,660 $ 21,530 126 ____________________________________________________________ BUDGETARY COMPARISON SCHEDULES CAPITAL PROJECTS FUND PUBLIC FINANCING CORPORATION PENSION OBLIGATION BOND FUND NONMAJOR GOVERNMENTAL FUNDS ____________________________________________________________ 127 128 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeits, and penalties $ - $ 181 $ 543 $ 362 Revenue from use of money and property - - 86 86 Aid from other governmental agencies - 44,018 11,477 (32,541) Other Revenues - 2 35 1 04 (131) Charges for services 4 50 2,981 1,237 (1,744) Total revenues 4 50 47,415 13,447 (33,968) Expenditures Capital outlay 4,026 72,823 20,019 52,804 Total expenditures 4,026 72,823 20,019 52,804 Excess (deficiency) of revenues over (under) expenditures ( 3,576) (25,408) ( 6,572) 18,836 Other financing sources (uses) Transfers in 4,776 12,669 3,852 (8,817) Transfers out - (12) (12) - Total other financing sources (uses) 4,776 12,657 3,840 (8,817) Net change in fund balances 1,200 (12,751) ( 2,732) 10,019 Fund balances - beginning 25,700 25,700 25,700 - Fund balances - ending $ 26,900 $ 12,949 $ 22,968 $ 10,019 129 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Charges for current services $ - $ - $ 756 $ 756 Total revenues - - 7 56 7 56 Expenditures Debt service: Principal payments - - 2 80 (280) Interest and fiscal charges - - 4 76 (476) Total expenditures - - 7 56 (756) Net change in fund balances - - - - Fund balances - beginning 1,354 1,354 1,354 - Fund balances - ending $ 1,354 $ 1,354 $ 1,354 $ - 130 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Revenue from use of money and property $ 7 $ 7 $ 1 8 $ 1 1 Other revenues 9,740 9,740 6 07 (9,133) Total revenues 9,747 9,747 6 25 (9,122) Expenditures Debt service: Principal payments 5,030 5,030 5,030 - Interest and fiscal charges 4,176 4,176 4,176 - Total expenditures 9,206 9,206 9,206 - Excess (deficiency) of revenues over (under) expenditures 5 41 5 41 (8,581) (9,122) Other financing sources (uses) Transfers in 3 50 3 50 9,958 9,608 Transfers out - - - - Total other financing sources (uses) 3 50 3 50 9,958 9,608 Net change in fund balances 8 91 8 91 1,377 4 86 Fund balances - beginning 8,008 8,008 8,008 - Fund balances - ending $ 8,899 $ 8,899 $ 9,385 $ 486 131 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Charges for current services $ - $ - $ 1,317 $ 1,317 Total revenues - - 1,317 1,317 Expenditures Debt service: Principal payments 7 60 (760) Interest and fiscal charges - - 5 57 (557) Total expenditures - - 1,317 (1,317) Net change in fund balances - - - - Fund balances - beginning 1,329 1,329 1,329 - Fund balances - ending $ 1,329 $ 1,329 $ 1,329 $ - 132 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ - $ - $ 2 $ 2 Aid from other governmental agencies 3,521 8,196 4,418 (3,778) Other revenues - - 2 2 Total revenues 3,521 8,196 4,422 (3,774) Expenditures Current: Health and sanitation Services and supplies 6 41 1,090 8 23 2 67 Other charges 3,272 8,019 3,790 4,229 Contingencies 45 24 - 24 Total expenditures 3,958 9,133 4,613 4,520 Excess (deficiency) of revenues over (under) expenditures (437) (937) (191) 7 46 Other financing sources (uses) Transfers in 3 91 8 91 3 91 (500) Transfers out - - - - Total other financing sources (uses) 3 91 8 91 3 91 (500) Net change in fund balances (46) (46) 2 00 2 46 Fund balances - beginning 4 04 4 04 4 04 - Fund balances - ending $ 358 $ 358 $ 604 $ 246 133 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ 1 $ 1 $ 3 $ 2 Aid from other governmental agencies 50 50 44 (6) Charges for current services 1 10 1 10 1 58 48 Other revenues 6 95 6 95 6 82 (13) Total revenues 8 56 8 56 8 87 31 Expenditures Current: Public assistance Salaries, wages, and benefits 5 92 5 92 5 35 57 Services and supplies 1,940 2,973 1,290 1,683 Total expenditures 2,532 3,565 1,825 1,740 Excess (deficiency) of revenues over (under) expenditures ( 1,676) ( 2,709) (938) 1,771 Other financing sources (uses) Transfers in 1,676 1,676 7 85 (891) Transfers out - - (21) (21) Total other financing sources (uses) 1,676 1,676 7 64 (912) Net change in fund balances - (1,033) (174) 8 59 Fund balances - beginning 1,033 1,033 1,033 - Fund balances - ending $ 1,033 $ - $ 859 $ 859 134 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeits, and penalties $ 800 $ 857 $ 783 $ (74) Use of money and property 1 1 1 - Total revenues 8 01 8 58 7 84 (74) Expenditures Current: Public assistance Services and supplies 8 01 1,159 7 78 3 81 Total expenditures 8 01 1,159 7 78 3 81 Net change in fund balances - (301) 6 3 07 Fund balances - beginning 8 37 8 37 8 37 - Fund balances - ending $ 837 $ 536 $ 843 $ 307 135 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ 1 $ 1 $ 2 $ 1 Charges for current services 1,483 1,483 1,336 (147) Total revenues 1,484 1,484 1,338 (146) Expenditures Current: Education Salaries, wages, and benefits 1,177 1,138 1,023 1 15 Service and supplies 4 17 4 59 4 48 11 Contingencies 40 40 - 40 Total expenditures 1,634 1,637 1,471 1 66 Excess (deficiency) of revenues over (under) expenditures (150) (153) (133) 20 Other financing sources (uses) Transfers in - - - - Transfers out - - (37) (37) Total other financing sources (uses) - - (37) (37) Net change in fund balances (150) (153) (170) (17) Fund balances - beginning 6 89 6 89 6 89 - Fund balances - ending $ 539 $ 536 $ 519 $ (17) 136 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeits, and penalties $ 2 0 $ 2 0 $ 1 6 $ (4) Total revenues 20 20 16 (4) Expenditures Current: Public protection Services and supplies 20 20 19 1 Total expenditures 20 20 19 1 Excess (deficiency) of revenues over (under) expenditures - - (3) (3) Other financing sources (uses) Transfers in - - - - Transfers out - - - - Total other financing sources (uses) - - - - Net change in fund balances - - (3) (3) Fund balances - beginning 2 00 2 00 2 00 - Fund balances - ending $ 200 $ 200 $ 197 $ (3) 137 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ 6 $ 6 $ 2 6 $ 2 0 Charges for current services 8 43 4 77 1,205 7 28 Total revenues 8 49 4 83 1,231 7 48 Excess (deficiency) of revenues over (under) expenditures 8 49 4 83 1,231 7 48 Other financing sources (uses) Transfers in - - - - Transfers out ( 1,142) ( 3,552) (866) 2,686 Total other financing sources (uses) ( 1,142) (3,552) (866) 2,686 Net change in fund balances (293) (3,069) 3 65 3,434 Fund balances - beginning 6,871 6,871 6,871 - Fund balances - ending $ 6,578 $ 3,802 $ 7,236 $ 3,434 138 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 7,269 $ 7,344 $ 7,671 $ 327 Use of money and property 5 5 9 4 Aid from other governmental agencies 95 95 99 4 Charges for current services 2 69 2 69 2 49 (20) Other revenues 16 7 49 1,443 6 94 Total revenues 7,654 8,462 9,471 1,009 Expenditures Current: Education Salaries, wages, and benefits 5,819 5,894 5,612 2 82 Services and supplies 2,855 3,293 2,991 3 02 Other charges 5 9 86 8 57 1 29 Contingencies 4 53 4 53 - 4 53 Total expenditures 9,132 10,626 9,460 1,166 Excess (deficiency) of revenues over (under) expenditures ( 1,478) (2,164) 11 2,175 Other financing sources (uses) Transfers in 6 07 2,477 2,477 - Transfers out - - (1,144) (1,144) Total other financing sources (uses) 6 07 2,477 1,333 (1,144) Net change in fund balances (871) 3 13 1,344 1,031 Fund balances - beginning 1,283 1,283 1,283 - Fund balances - ending $ 412 $ 1,596 $ 2,627 $ 1,031 139 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeitures, and penalties $ 9 6 $ 160 $ 3 $ ( 157) Use of money and property 1 16 1 16 1 51 35 Aid from other governmental agencies 4 4 94 90 Charges for current services 4,606 5,159 5,035 (124) Other revenues 75 75 98 23 Total revenues 4,897 5,514 5,381 (133) Expenditures Current: Recreation and cultural services Salaries, wages, and benefits 4,380 4,632 4,434 1 98 Services and supplies 3,528 4,064 3,119 9 45 Other charges 5 51 4,760 2,540 2,220 Capital outlay 85 85 11 74 Contingencies 5 11 5 11 - 5 11 Total expenditures 9,055 14,052 10,104 3,948 Excess (deficiency) of revenues over (under) expenditures ( 4,158) (8,538) (4,723) 3,815 Other financing sources (uses) Transfers in 3,528 5,646 5,396 (250) Transfers out (21) (21) (196) (175) Total other financing sources (uses) 3,507 5,625 5,200 (425) Net change in fund balances (651) (2,913) 4 77 3,390 Fund balances - beginning 4,414 4,414 4,414 - Fund balances - ending $ 3,763 $ 1,501 $ 4,891 $ 3,390 140 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ - $ - $ 3 8 $ 3 8 Charges for current services 1,469 1,469 2,055 5 86 Total revenues 1,469 1,469 2,093 6 24 Other financing sources (uses) Transfers in - - - - Transfers out (400) (7,441) (2,056) 5,385 Total other financing sources (uses) (400) (7,441) (2,056) 5,385 Net change in fund balances 1,069 (5,972) 37 6,009 Fund balances - beginning 11,009 11,009 11,009 - Fund balances - ending $ 12,078 $ 5,037 $ 11,046 $ 6,009 141 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 1,504 $ 1,504 $ 1,592 $ 8 8 Use of money and property 15 15 39 24 Aid from other governmental agencies 27,652 39,283 21,248 (18,035) Charges for current services 1 28 5 95 2 35 (360) Other revenues 27 1 02 52 (50) Total revenues 29,326 41,499 23,166 (18,333) Expenditures Current: Public ways and facilities Services and supplies 17,269 20,215 19,224 9 91 Other charges 5 78 1,295 4 24 8 71 Capital outlay 20,402 34,640 8,156 26,484 Total expenditures 38,249 56,150 27,804 28,346 Excess (deficiency) of revenues over (under) expenditures ( 8,923) (14,651) ( 4,638) 10,013 Other financing sources (uses) Transfers in 9,104 11,514 8,831 (2,683) Transfers out (4) (4) (61) (57) Total other financing sources (uses) 9,100 11,510 8,770 (2,740) Net change in fund balances 1 77 (3,141) 4,132 7,273 Fund balances - beginning 9,965 9,965 9,965 - Fund balances - ending $ 10,142 $ 6,824 $ 14,097 $ 7,273 142 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Aid from other governmental agencies $ 4 $ 4 $ 4 $ - Total revenues 4 4 4 - Expenditures Current: Public protection Services and supplies 4 4 2 2 Total expenditures 4 4 2 2 Excess (deficiency) of revenues over (under) expenditures - - 2 2 Net change in fund balances - - 2 2 Fund balances - beginning 18 18 18 - Fund balances - ending $ 1 8 $ 1 8 $ 2 0 $ 2 143 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 1,606 $ 1,606 $ 1,752 $ 146 Use of money and property 19 19 69 50 Aid from other governmental agencies 8,435 14,758 8,645 (6,113) Charges for current services 4 84 4 84 4 91 7 Other revenues 68 68 67 (1) Total revenues 10,612 16,935 11,024 ( 5,911) Expenditures Current: Public protection Services and supplies 3,819 4,580 3,160 1,420 Other charges - 4,499 5,249 (750) Capital outlay 1 56 3,636 - 3,636 Total expenditures 3,975 12,715 8,409 4,306 Excess (deficiency) of revenues over (under) expenditures 6,637 4,220 2,615 (1,605) Other financing sources (uses) Transfers in 1,110 1,110 2 12 (898) Transfers out - (38) (2,966) (2,928) Total other financing sources (uses) 1,110 1,072 (2,754) (3,826) Net change in fund balances 7,747 5,292 (139) (5,431) Fund balances - beginning 19,512 19,512 19,512 - Fund balances - ending $ 27,259 $ 24,804 $ 19,373 $ (5,431) 144 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 3 4 $ 3 4 $ 3 3 $ (1) Use of money and property 1 1 2 1 Charges for current services 8 8 10 2 Other revenues - - 1 1 Total revenues 43 43 46 3 Expenditures Current: Public protection Services and supplies 84 84 36 48 Total expenditures 84 84 36 48 Excess (deficiency) of revenues over (under) expenditures (41) (41) 10 51 Other financing sources (uses) Transfers in - - - - Transfers out - - - - Total other financing sources (uses) - - - - Net change in fund balances (41) (41) 10 51 Fund balances - beginning 4 87 4 87 4 87 - Fund balances - ending $ 446 $ 446 $ 497 $ 5 1 145 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, 2015 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 329 $ 329 $ 345 $ 1 6 Use of money and property 1 1 6 5 Aid from other governmental agencies 2 2 2 - Charges for current services 4 4 4 - Other revenues - - 1 1 Total revenues 3 36 3 36 3 58 22 Expenditures Current: Public ways and facilities Services and supplies 1 33 1 32 75 57 Capital outlay 37 1 73 - 1 73 Total expenditures 1 70 3 05 75 2 30 Excess (deficiency) of revenues over (under) expenditures 1 66 31 2 83 2 52 Other financing sources (uses) Transfers in 1,430 1,430 4 13 (1,017) Transfers out (331) (342) (327) 15 Total other financing sources (uses) 1,099 1,088 86 (1,002) Net change in fund balances 1,265 1,119 3 69 (750) Fund balances - beginning 1,291 1,291 1,291 - Fund balances - ending $ 2,556 $ 2,410 $ 1,660 $ ( 750) 146 ____________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR ENTERPRISE FUNDS ____________________________________________________________ 147 148 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. State Water Project Accounts for revenues, expenses and net position relating to the countywide taxpayers’ obligations associated with the State Water Project, which provides for the delivery of state water into the County. 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. 149 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS JUNE 30, 2015 (In Thousands) General Flood State Water County Control Zone Project Golf Lopez Park Service Areas Total Assets Current assets: Cash and cash equivalents $ 1,357 $ 13,779 $ 1,163 $ 23 $ 3,838 $ 20,160 Accounts receivable, net - 1,248 10 - 395 1,653 Inventories - - 21 - - 21 Prepaid items - - 211 - - 211 Deposits with others - - - - 13 13 Total current assets 1,357 15,027 1,405 23 4,246 22,058 Noncurrent assets: Advances to other funds - - 487 167 - 654 Capital assets: Nondepreciable Land - - 1,333 - 330 1,663 Construction in progress - - 123 - 436 559 Water rights - 48,417 - - - 48,417 Depreciable Infrastructure, net - 86 - - 1,857 1,943 Structures and improvements, net - 6,611 8,899 - 8,668 24,178 Equipment, net - 5 142 - 263 410 Other property, net - - - - 496 496 Total noncurrent assets - 55,119 10,984 167 12,050 78,320 Total assets 1,357 70,146 12,389 190 16,296 100,378 Deferred Outflows of Resources Deferred pensions - - 174 - - 174 Total deferred outflows of resources - - 174 - - 174 Liabilities Current liabilities: Accounts payable 174 5,709 44 - 17 5,944 Salaries and benefits payable - - 39 - - 39 Deposits from others - 2,872 - - 159 3,031 Accrued interest - - 42 - 26 68 Unearned revenue - 2,018 - - 195 2,213 Due to other funds - - - - 208 208 Accrued vacation and sick leave - current - - 64 - - 64 Notes and bonds payable - current - - 287 17 222 526 Total current liabilities 174 10,599 476 17 827 12,093 Noncurrent liabilities: Advances from other funds - - 23 - 418 441 Accrued vacation and sick leave - noncurrent - - 107 - - 107 Notes and bonds payable - noncurrent - - 4,904 150 3,892 8,946 Net Pension Liability - - 1,802 - - 1,802 Total noncurrent liabilities - - 6,836 150 4,310 11,296 Total liabilities 174 10,599 7,312 167 5,137 23,389 Net Postion Net investment in capital assets - 55,119 5,306 - 7,936 68,361 Unrestricted 1,183 4,428 (55) 23 3,223 8,802 Total net position $ 1,183 $ 59,547 $ 5,251 $ 23 $ 11,159 $ 77,163 150 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) General Flood State Water County Control Zone Project Golf Lopez Park Service Areas Total Operating revenues Charges for current services $ 1 ,005 $ 6,562 $ 2,967 $ - $ 3,416 $ 13,950 Other revenues - - 3 - 1 4 Total operating revenues 1,005 6,562 2,970 - 3,417 13,954 Operating expenses Salaries and benefits - - 1,417 - - 1,417 Services and supplies 1,049 6,108 987 - 3,438 11,582 Other charges 3 2 - - - 5 Depreciation - 206 366 - 550 1,122 Countywide cost allocation - 4 14 - - 18 Total operating expenses 1,052 6,320 2,784 - 3,988 14,144 Operating income (loss) ( 47) 242 186 - ( 571) (190) Nonoperating revenues (expenses) Property taxes - 1,761 - - 443 2,204 Interest income 4 45 4 - 1 6 69 Interest expense - (10) (172) (4) ( 142) (328) Other non-operating revenues (expenses) - - (3) - (59) (62) Aid from governmental agencies - 13 269 - 211 493 Total nonoperating revenues (expenses) 4 1,809 98 (4) 469 2,376 Income (loss) before contributions and transfers ( 43) 2,051 284 (4) ( 102) 2,186 Capital Contributions - - - - - - Transfers in - - 24 4 246 274 Transfers out - - (42) - ( 621) (663) Change in net position ( 43) 2,051 266 - ( 477) 1,797 Net position - beginning 1,226 57,496 6,551 23 11,636 76,932 Cumulative effect of change in accounting principle - - (1,566) - - (1,566) Net position - beginning (restated) 1,226 57,496 4,985 23 11,636 75,366 Net position - ending $ 1 ,183 $ 59,547 $ 5,251 $ 23 $ 11,159 $ 77,163 151 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) General Flood State Water Control Zone Project Golf Cash Flows From Operating Activities Receipts from customers $ 1,005 $ 5,838 $ 2,987 Payments to employees for services - - (1,326) Payments for goods and services (888) (5,778) (1,253) Net cash provided (used) by operating activities 117 60 408 Cash Flows from Noncapital Financing Activities Property tax proceeds - 1,761 - Grants and subsidies form other governmental agencies - 13 269 Advances from other funds - - 23 Due to other funds - - - Transfers from other funds - - 24 Transfers to other funds - - (42) Net cash provided (used) by noncapital financing activities - 1,774 274 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets - (1,961) ( 49) Proceeds from issuance of long-term debt - - - Proceeds from capital contributions - - - Principal paid on capital debt - - (313) Interest paid on capital debt - - (173) Net cash provided (used) by capital and related financing activities - (1,961) (535) Cash Flows from Investing Activities Interest received 4 45 4 Net cash provided (used) by investing activities 4 45 4 Net increase (decrease) in cash and cash equivalents 121 (82) 151 Cash and cash equivalents at beginning of year 1,236 13,861 1,012 Cash and cash equivalents at end of year $ 1,357 $ 13,779 $ 1,163 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ (47) $ 242 $ 186 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense - 206 366 Changes in assets and liabilities: - - - (Increase) decrease in: - - - Receivables, net 9 (846) (206) Increase (decrease) in: Accounts payable 155 336 (29) Salaries and benefits payable - - 70 Unearned revenue - 122 - Accrued vacation and sick leave - - 21 Total adjustments 164 (182) 222 Net cash provided (used) by operating activities $ 117 $ 60 $ 408 152 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS (Continued) NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) County Lopez Park Service Areas Total Cash Flows From Operating Activities Receipts from customers $ - $ 3,500 $ 13,330 Payments to employees for services - - (1,326) Payments for goods and services - (3,329) (11,248) Net cash provided (used) by operating activities - 171 756 Cash Flows from Noncapital Financing Activities Property tax proceeds - 443 2,204 Grants and subsidies form other governmental agencies - 3 285 Advances from other funds - (74) (51) Due to other funds - 208 208 Transfers from other funds 4 246 274 Transfers to other funds - (621) (663) Net cash provided (used) by noncapital financing activities 4 205 2,257 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets - (537) (2,547) Proceeds from issuance of long-term debt - 231 231 Proceeds from capital contributions - - - Principal paid on capital debt - (215) (528) Interest paid on capital debt (4) (143) (320) Net cash provided (used) by capital and related financing activities (4) (664) (3,164) Cash Flows from Investing Activities Interest received - 16 69 Net cash provided (used) by investing activities - 16 69 Net increase (decrease) in cash and cash equivalents - (272) (82) Cash and cash equivalents at beginning of year 23 4,110 20,242 Cash and cash equivalents at end of year $ 23 $ 3,838 $ 20,160 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ - $ (571) $ (190) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense - 550 1,122 Changes in assets and liabilities: - - - (Increase) decrease in: - - - Receivables, net - (11) (1,054) Increase (decrease) in: Accounts payable - 135 597 Salaries and benefits payable - - 70 Unearned revenue - 68 190 Accrued vacation and sick leave - - 21 Total adjustments - 742 946 Net cash provided (used) by operating activities $ - $ 171 $ 756 153 154 ____________________________________________________________ COMBINING FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS ____________________________________________________________ 155 156 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. Combined 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. 157 158 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2015 (In Thousands) Combined Public Insurance Garage Works (5 Funds) Total Assets Current assets: Cash and cash equivalents $ 3,719 $ 13,993 $ 21,103 $ 38,815 Accounts receivable - 9 - 9 Inventory 10 5 50 - 5 60 Total current assets 3,729 14,552 21,103 39,384 Noncurrent assets: Capital assets: Structures and improvements, net 14 3 21 - 3 35 Equipment, net 5,181 7,047 - 12,228 Total noncurrent assets 5,195 7,368 - 12,563 Total assets 8,924 21,920 21,103 51,947 Deferred Outflows of Resources Deferred pensions 1 85 3,154 - 3,339 Total deferred outflows of resources 1 85 3,154 - 3,339 Liabilities Current liabilities: Accounts payable 2 06 3 73 3 66 9 45 Salaries and benefits payable 34 5 98 - 6 32 Self-insurance liability - - 3,446 3,446 Deposits from others - 1,163 - 1,163 Accured vacation and sick leave - current 69 1,528 - 1,597 Total current liabilities 3 09 3,662 3,812 7,783 Noncurrent liabilities: Self-insurance liability - - 15,172 15,172 Accrued vacation and sick leave - noncurrent 75 7 74 - 8 49 Net Pension Liability 1,921 32,728 - 34,649 Total noncurrent liabilities 1,996 33,502 15,172 50,670 Total liabilities 2,305 37,164 18,984 58,453 Net Postion Net investment in capital assets 5,195 7,368 - 12,563 Unrestricted 1,609 (19,458) 2,119 (15,730) Total net position $ 6,804 $ (12,090) $ 2,119 $ (3,167) 159 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Combined Public Insurance Garage Works (5 Funds) Total Operating revenues Charges for current services $ 6,035 $ 30,915 $ 10,456 $ 47,406 Other revenues 41 1 05 - 1 46 Total operating revenues 6,076 31,020 10,456 47,552 Operating expenses Salaries and benefits 1,323 21,959 - 23,282 Services and supplies 2,688 9,197 7,060 18,945 Insurance benefit payments - - 4,468 4,468 Depreciation 1,568 8 08 - 2,376 Countywide cost allocation 37 10 2 93 3 40 Total operating expenses 5,616 31,974 11,821 49,411 Operating income (loss) 4 60 (954) (1,365) (1,859) Nonoperating revenues (expenses) Interest income 11 40 74 1 25 Aid from governmental agencies - - 78 78 Other revenue (expense) 1 41 61 - 2 02 Total nonoperating revenues (expenses) 1 52 1 01 1 52 4 05 Income (loss) before transfers 6 12 (853) (1,213) (1,454) Transfers in - - - - Transfers out (243) (809) - (1,052) Change in net position 3 69 (1,662) (1,213) (2,506) Net position - beginning 8,104 18,011 3,332 29,447 Cumulative effect of change in accounting principle ( 1,669) (28,439) - (30,108) Net position - beginning (restated) 6,435 (10,428) 3,332 (661) Net position - ending $ 6,804 $ (12,090) $ 2,119 (3,167) 160 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Combined Public Insurance Garage Works (5 Funds) Total Cash Flows From Operating Activities Receipts from interfund billings $ 6,076 $ 31,033 $ 10,456 $ 47,565 Payments for goods and services (2,862) (8,844) (3,416) (15,122) Payments to employees for services (1,234) (20,726) - (21,960) Payments for insurance benefits - - (4,242) (4,242) Payments for premiums - - (3,936) (3,936) Net cash provided (used) by operating activities 1,980 1,463 (1,138) 2,305 Cash Flows from Noncapital Financing Activities Grants and subsidies from other governmental agencies - - 78 78 Transfers to other funds (243) (809) - (1,052) Net cash provided (used) by noncapital financing activities (243) (809) 78 (974) Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets (1,897) (752) - (2,649) Proceeds from sale of capital assets 141 61 - 202 Net cash provided (used) by capital and related financing activities (1,756) (691) - (2,447) Cash Flows from Investing Activities Interest received 11 40 74 125 Net cash provided (used) by investing activities 11 40 74 125 Net increase (decrease) in cash and cash equivalents (8) 3 (986) (991) Cash and cash equivalents at beginning of year 3,727 13,990 22,089 39,806 Cash and cash equivalents at end of year $ 3,719 $ 13,993 $ 21,103 $ 38,815 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) 460 (954) (1,365) $ (1,859) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 1,568 808 - 2,376 Changes in assets and liabilities: (Increase) decrease in: Receivables, net - 13 - 13 Inventory 6 (2) - 4 Increase (decrease) in: - - - Accounts payable (146) (89) (75) (310) Deposits from others - 454 - 454 Salaries and benefits payable 70 1,227 - 1,297 Other accrued liabilities - 6 - 6 Accrued vacation and sick leave 22 - - 22 Self-insurance liability - - 302 302 Total adjustments 1,520 2,417 227 4,164 Net cash provided (used) by operating activities $ 1,980 $ 1,463 $ (1,138) $ 2,305 161 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS – INSURANCE JUNE 30, 2015 (In Thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Assets Current assets: Cash and cash equivalents $ 15,675 $ 4,597 $ 339 $ 491 $ 1 $ 21,103 Total current assets 15,675 4,597 339 491 1 21,103 Total assets 15,675 4,597 339 491 1 21,103 Liabilities Current liabilities: Accounts payable 364 - - 2 - 366 Self-insurance payable 2,397 1,049 - - - 3,446 Total current liabilities 2,761 1,049 - 2 - 3,812 Noncurrent liabilities: Self-insurance liability 12,978 2,194 - - - 15,172 Total noncurrent liabilities 12,978 2,194 - - - 15,172 Total liabilities 15,739 3,243 - 2 - 18,984 Net Position Unrestricted ( 64) 1,354 339 489 1 2,119 Total net position $ (64) $ 1,354 $ 339 $ 489 $ 1 $ 2,119 162 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, 2015 (In Thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Operating revenues Charges for current services $ 5,077 $ 2,000 $ 130 $ 1,729 $ 1,520 $ 10,456 Total operating revenues 5,077 2,000 130 1,729 1,520 10,456 Operating expenses Services and supplies 3,017 2,584 28 166 1,265 7,060 Insurance benefit payments 2,407 - 219 1,510 332 4,468 Countywide cost allocation 202 90 - 1 - 293 Total operating expenses 5,626 2,674 247 1,677 1,597 11,821 Operating income (loss) (549) (674) (117) 52 (77) (1,365) Nonoperating revenues (expenses) Interest income 55 16 1 2 - 74 Aid from governmental agencies - - - - 78 78 Total nonoperating revenues (expenses) 55 16 1 2 78 152 Income (loss) before transfers (494) (658) (116) 54 1 (1,213) Transfers in - - - - - - Transfers out - - - - - - Change in net position (494) (658) (116) 54 1 (1,213) Net position - beginning 430 2,012 455 435 - 3,332 Net position - ending $ (64) $ 1,354 $ 339 $ 489 $ 1 $ 2,119 163 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS – INSURANCE FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Cash Flows From Operating Activities Receipts from interfund billings $ 5 ,077 $ 2,000 $ 130 $ 1,729 $ 1,520 $ 10,456 Payments for goods and services (2,231) (990) (28) (167) - (3,416) Payments for insurance benefits (1,920) (231) ( 219) (1,540) (332) (4,242) Payments for premiums (987) (1,684) - - (1,265) (3,936) Net cash provided (used) by operating activities (61) (905) ( 117) 22 ( 77) (1,138) Cash Flows from Noncapital Financing Activities Grants and subsidies from other governmental agencies - - - - 78 78 Transfers to other funds - - - - - - Net cash provided (used) by noncapital financing activities - - - - 78 78 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets - - - - - - Proceeds from sale of capital assets - - - - - - Net cash provided (used) by capital and related financing activities - - - - - - Cash Flows from Investing Activities Interest received 55 16 1 2 - 74 Net cash provided (used) by investing activities 55 16 1 2 - 74 Net increase (decrease) in cash and cash equivalents (6) (889) ( 116) 24 1 (986) Cash and cash equivalents at beginning of year 1 5,681 5 ,486 455 467 - 22,089 Cash and cash equivalents at end of year $ 15,675 $ 4,597 $ 339 $ 491 $ 1 $ 21,103 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ (549) $ (674) $ (117) $ 52 $ (77) $ (1,365) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in assets and liabilities: Increase (decrease) in: Accounts payable (15) (30) - (30) - (75) Self-insurance liability 503 (201) - - - 302 Total adjustments 488 (231) - (30) - 227 Net cash provided (used) by operating activities $ (61) $ (905) $ (117) $ 22 $ (77) $ (1,138) 164 ____________________________________________________________ COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS ____________________________________________________________ 165 166 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 Service Funds Accounts for temporary holding of funds for tax assessment areas created under the 1915 Improvement Act. Clearing and Revolving Funds Serve as a temporary holding fund for subsequent disposition to an outside agency or taxing authority. Other Agency 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). 167 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF FIDUCIARY NET POSITION AGENCY FUNDS JUNE 30, 2015 (In Thousands) Clearing and 1915 Act Other Revolving Funds Service Funds Agency Funds (98 Funds) (17 Funds) (30 Funds) Total ASSETS Cash and cash equivalents $ 2 3,796 $ 1,694 $ 2 5,525 $ 5 1,015 Total assets $ 2 3,796 $ 1,694 $ 2 5,525 $ 5 1,015 LIABILITIES Assets held as agency for others $ 2 3,796 $ 1,694 $ 2 5,525 $ 5 1,015 Total liabilities $ 2 3,796 $ 1,694 $ 2 5,525 $ 5 1,015 168 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Balance Balance June 30, 2014 Additions Deletions June 30, 2015 Clearing and Revolving Funds (98 Funds) Assets: Cash and cash equivalents $ 11,180 $ 1,027,568 $ 1,014,952 $ 23,796 Total assets $ 11,180 $ 1,027,568 $ 1,014,952 $ 23,796 Liabilities: Assets held as agency for others $ 11,180 $ 1,027,568 $ 1,014,952 $ 23,796 Total liabilities $ 11,180 $ 1,027,568 $ 1,014,952 $ 23,796 1915 Act Service Funds (17 Funds) Assets: Cash and cash equivalents $ 2,012 $ 431 $ 749 $ 1,694 Total assets $ 2,012 $ 431 $ 749 $ 1,694 Liabilities: Assets held as agency for others $ 2,012 $ 431 $ 749 $ 1,694 Total liabilities $ 2,012 $ 431 $ 749 $ 1,694 Other Agency Funds (30 Funds) Assets: Cash and cash equivalents $ 30,965 $ 300,497 $ 305,937 $ 25,525 Total assets $ 30,965 $ 300,497 $ 305,937 $ 25,525 Liabilities: Assets held as agency for others $ 30,965 $ 300,497 $ 305,937 $ 25,525 Total liabilities $ 30,965 $ 300,497 $ 305,937 $ 25,525 Total All Agency Funds Assets: Cash and cash equivalents $ 44,157 $ 1,328,496 $ 1,321,638 $ 51,015 Total assets $ 44,157 $ 1,328,496 $ 1,321,638 $ 51,015 Liabilities: Assets held as agency for others $ 44,157 $ 1,328,496 $ 1,321,638 $ 51,015 Total liabilities $ 44,157 $ 1,328,496 $ 1,321,638 $ 51,015 169 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS JUNE 30, 2015 (In Thousands) School Special Other Districts Districts Courts Local Boards (42 Funds) (32 Funds) (6 Funds) (19 Funds) Total ASSETS Cash and cash equivalents $ 321,849 $ 1 4,350 $ 2,181 $ 2 3,812 $ 362,192 Total assets $ 321,849 $ 1 4,350 $ 2,181 $ 2 3,812 $ 362,192 NET POSITION Assets held in trust for pool participants $ 321,849 $ 1 4,350 $ 2,181 $ 2 3,812 $ 362,192 Total Net Position $ 321,849 $ 1 4,350 $ 2,181 $ 2 3,812 $ 362,192 170 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) School Special Other Districts Districts Courts Local Boards (42 Funds) (32 Funds) (6 Funds) (19 Funds) Total Additions Contributions to pooled investments $ 960,058 $ 2 3,437 $ 2 2,774 $ 3 3,920 $ 1,040,189 Interest 621 46 - 61 728 Total additions 9 60,679 23,483 22,774 33,981 1,040,917 Deductions Distributions from investment pool 8 00,092 21,263 22,628 35,756 8 79,739 Total deductions 8 00,092 21,263 22,628 35,756 8 79,739 Change in net position 1 60,587 2,220 146 (1,775) 1 61,178 Net position - beginning 1 61,262 12,130 2,035 25,587 2 01,014 Net position - ending $ 321,849 $ 1 4,350 $ 2,181 $ 2 3,812 $ 362,192 171 172 ____________________________________________________________ GENERAL FUND DETAIL BUDGETARY COMPARISON SCHEDULES ____________________________________________________________ 173 174 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Budget Variance with Original Final Actual Final Budget General Government - Expenditures Legislative and Administrative Administrative Office Salaries, wages, and benefits $ 1,704 $ 1,704 $ 1,586 $ 118 Services and supplies 213 269 161 108 Expenditure transfers and reimbursements (85) (85) (88) 3 Total 1,832 1,888 1,659 229 Board of Supervisors Salaries, wages, and benefits 1,449 1,460 1,393 67 Services and supplies 221 222 200 22 Expenditure transfers and reimbursements (37) (37) (47) 10 Total 1,633 1,645 1,546 99 Clerk/Recorder Salaries, wages, and benefits 2,075 2,075 1,960 115 Services and supplies 1,131 1,212 1,053 159 Capital outlay - 367 - 367 Total 3,206 3,654 3,013 641 Total Legislative and Administrative 6,671 7,187 6,218 969 Finance Assessor Salaries, wages, and benefits 8,347 8,287 7,745 542 Services and supplies 815 1,340 861 479 Capital outlay 78 66 18 48 Total 9,240 9,693 8,624 1,069 Auditor-Controller Salaries, wages, and benefits 4,834 4,949 4,573 376 Services and supplies 218 368 217 151 Capital outlay - 29 - 29 Expenditure transfers and reimbursements (13) (13) (16) 3 Total 5,039 5,333 4,774 559 175 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Budget Variance with Original Final Actual Final Budget General Government - Expenditures (Continued) Treasurer-Tax Collector-Public Administrator Salaries, wages, and benefits 2,530 2,545 2,370 175 Services and supplies 315 443 422 21 Expenditure transfers and reimbursements - - (1) 1 Total 2,845 2,988 2,791 197 Total Finance 17,124 18,014 16,189 1,825 Counsel County Counsel Salaries, wages, and benefits 3,320 3,291 3,160 131 Services and supplies 213 458 175 283 Total Counsel 3,533 3,749 3,335 414 Personnel Personnel Salaries, wages, and benefits 2,194 2,181 1,982 199 Services and supplies 400 775 628 147 Total Personnel 2,594 2,956 2,610 346 Property Management General Services Salaries, wages, and benefits 7,930 7,612 7,233 379 Services and supplies 4,501 4,679 4,513 166 Other charges 73 73 72 1 Capital outlay 29 36 17 19 Expenditure transfers and reimbursements ( 2,744) (2,744) (2,766) 22 Total 9,789 9,656 9,069 587 Maintenance Projects Services and supplies 1,968 8,461 2,231 6,230 Expenditure transfers and reimbursements - (187) (116) (71) Total 1,968 8,274 2,115 6,159 Total Property Management 11,757 17,930 11,184 6,746 176 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) General Government - Expenditures (Continued) Other General Information Technology Salaries, wages, and benefits 9,972 10,010 9,386 624 Services and supplies 3,600 3,690 3,522 168 Capital outlay - 66 65 1 Expenditure transfers and reimbursements ( 2,858) (2,858) (3,033) 175 Total 10,714 10,908 9,940 968 Risk Management Salaries, wages, and benefits 806 816 784 32 Services and supplies 821 894 821 73 Expenditure transfers and reimbursements (74) (74) (74) - Total 1,553 1,636 1,531 105 Non-Department Financing Uses Expenditure transfers and reimbursements ( 9,042) (9,042) (9,056) 14 Total ( 9,042) (9,042) (9,056) 14 Contributions to Other Agencies Services and supplies 1,684 1,704 1,673 31 Total 1,684 1,704 1,673 31 Non-Departmental Other Expenditures Services and supplies 390 390 326 64 Total 390 390 326 64 Total Other General 5,299 5,596 4,414 1,182 Total General Government 46,978 55,432 43,950 11,482 Public Protection - Expenditures Judicial Court Operations Fund Other charges 2,427 2,427 2,397 30 Total 2,427 2,427 2,397 30 District Attorney Salaries, wages, and benefits 13,530 13,530 12,435 1,095 Services and supplies 1,508 1,599 1,431 168 Capital outlay 15 15 10 5 Expenditure transfers and reimbursements (266) (266) (210) (56) Total 14,787 14,878 13,666 1,212 177 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Protection - Expenditures (Continued) Family Support Salaries, wages, and benefits 3,644 3,644 3,357 287 Services and supplies 950 950 898 52 Total 4,594 4,594 4,255 339 Grand Jury Salaries, wages, and benefits 40 30 8 22 Services and supplies 99 109 100 9 Total 139 139 108 31 Public Defender Services and supplies 5,682 6,094 5,990 104 Total 5,682 6,094 5,990 104 Total Judicial 27,629 28,132 26,416 1,716 Police Protection Sheriff-Coroner Salaries, wages, and benefits 53,576 53,821 52,068 1,753 Services and supplies 10,544 11,168 10,399 769 Other charges 30 184 73 111 Capital outlay 240 1,526 1,326 200 Expenditure transfers and reimbursements (191) (191) (170) (21) Total Police Protection 64,199 66,508 63,696 2,812 Detention and Correction Probation Department Salaries, wages, and benefits 16,298 16,278 15,175 1,103 Services and supplies 3,715 3,868 3,429 439 Other charges 36 56 47 9 Capital outlay - 185 - 185 Expenditure transfers and reimbursements (250) (250) (265) 15 Total Detention and Correction 19,799 20,137 18,386 1,751 178 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Protection - Expenditures (Continued) Fire Protection County Fire Services and supplies 18,167 18,786 17,930 856 Capital outlay 1,009 2,956 1,463 1,493 Total Fire Protection 19,176 21,742 19,393 2,349 Protective Inspection Agricultural Commissioner Salaries, wages, and benefits 4,559 4,748 4,519 229 Services and supplies 793 751 731 20 Expenditure transfers and reimbursements - - (5) 5 Capital outlay 13 13 13 - Total Protective Inspection 5,365 5,512 5,258 254 Other Protection Animal Services Salaries, wages, and benefits 1,610 1,610 1,413 197 Services and supplies 950 959 876 83 Capital outlay - 27 14 13 Total 2,560 2,596 2,303 293 Emergency Services Salaries, wages, and benefits 800 800 721 79 Services and supplies 415 422 297 125 Other charges 385 385 102 283 Capital outlay 58 116 52 64 Total 1,658 1,723 1,172 551 Planning Department Salaries, wages, and benefits 10,690 10,772 9,884 888 Services and supplies 2,213 3,880 2,222 1,658 Capital outlay - 8 7 1 Total 12,903 14,660 12,113 2,547 179 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Protection - Expenditures (Continued) Waste Management Services and supplies 906 966 580 386 Total 906 966 580 386 Total Other Protection 18,027 19,945 16,168 3,777 Total Public Protection 154,195 161,976 149,317 12,659 Public Ways and Facilities - Expenditures Public Works Public Works Services and supplies 2,123 2,811 2,024 787 Total Public Works 2,123 2,811 2,024 787 Total Public Ways and Facilities 2,123 2,811 2,024 787 Health and Sanitation - Expenditures Health Public Health Salaries, wages, and benefits 17,397 17,153 15,596 1,557 Services and supplies 4,740 5,277 4,813 464 Other charges 1,580 4,453 564 3,889 Capital outlay - 85 48 37 Expenditure transfers and reimbursement ( 1,233) (1,233) (1,196) (37) Total 22,484 25,735 19,825 5,910 Behavioral Health Salaries, wages, and benefits 29,426 28,140 25,993 2,147 Services and supplies 24,819 26,518 24,735 1,783 Other charges 1,049 2,552 1,227 1,325 Expenditure transfers and reimbursement ( 1,267) (1,267) (1,277) 10 Total 54,027 55,943 50,678 5,265 Total Health 76,511 81,678 70,503 11,175 Total Health and Sanitation 76,511 81,678 70,503 11,175 180 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Assistance - Expenditures Administration Department of Social Services Salaries, wages, and benefits 42,466 42,641 40,750 1,891 Services and supplies 15,949 15,446 15,238 208 Other charges 6,946 11,590 10,362 1,228 Capital outlay 129 100 54 46 Expenditure transfers and reimbursement (67) (67) (50) (17) Total Administration 65,423 69,710 66,354 3,356 Aid Programs Aid Foster Care Non-Fed Services and supplies 68 68 68 - Other charges 21,578 21,954 21,549 405 Total 21,646 22,022 21,617 405 Calworks Assistance Other charges 12,352 12,352 11,869 483 Total 12,352 12,352 11,869 483 Total Aid Programs 33,998 34,374 33,486 888 General Relief General Relief Other charges 1,166 1,166 1,064 102 Total General Relief 1,166 1,166 1,064 102 Veterans Services Veterans Services Salaries, wages, and benefits 484 525 489 36 Services and supplies 41 609 426 183 Total Veterans Services 525 1,134 915 219 181 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2015 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Assistance - Expenditures (Continued) Other Assistance Law Enforcement Med Care Salaries, wages, and benefits 2,189 2,253 2,102 151 Services and supplies 1,105 1,203 1,129 74 Expenditure transfers and reimbursement (521) (572) (549) (23) Total Other Assistance 2,773 2,884 2,682 202 Total Public Assistance 103,885 109,268 104,501 4,767 Education - Expenditures Agriculture Education Farm Advisor Salaries, wages, and benefits 374 378 364 14 Services and supplies 102 102 93 9 Total Agriculture Education 476 480 457 23 Total Education 476 480 457 23 Total General Fund Expenditures (Before Contingencies) 384,168 411,645 370,752 40,893 Contingencies Appropriation for Contingencies Contingencies - General Fund Appropriation for contingency 19,112 17,783 - 17,783 Total Appropriation for Contingencies 19,112 17,783 - 17,783 Total Contingencies 19,112 17,783 - 17,783 Total General Fund Expenditures $ 4 03,280 $ 429,428 $ 370,752 $ 58,676 Explanation of Differences between Budgetary Outflows and GAAP Expenditures Uses/Outflows of Resources Actual amounts (budgetary basis) from the Budget to Actual Comparison Schedule $ 370,752 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. 7,257 Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ 378,009 182 ____________________________________________________________ STATISTICAL SECTION ____________________________________________________________ 183 184 COUNTY OF SAN LUIS OBISPO Statistical Section This part of the County of San Luis Obispo’s (County) 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 ......................... 187 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 .............................................................................................................................. 194 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 ..................................................................................... 199 Demographic and 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 .............................................................................................. 202 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 ......................................................................................................... 204 185 186 COUNTY OF SAN LUIS OBISPO NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Governmental Activities Invested in Capital Assets, net of related debt $ 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 $ 1 ,130,241 Restricted 40,178 50,061 52,566 41,188 36,385 36,258 31,477 28,863 43,109 37,722 Unrestricted 169,766 190,107 173,396 192,271 206,786 234,786 265,454 304,257 325,113 (150,074) Total governmental activities net position $ 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 $ 1 ,017,889 Business-type activities Invested in Capital Assets, net of related debt $ 122,534 $ 146,021 $ 155,907 $ 167,188 $ 160,627 $ 149,097 $ 153,801 $ 167,138 $ 188,485 $ 213,455 Unrestricted 19,178 16,511 16,202 12,266 18,117 38,665 33,081 58,433 98,097 97,173 Total business-type activities net position $ 141,712 $ 162,532 $ 172,109 $ 179,454 $ 178,744 $ 187,762 $ 186,882 $ 225,571 $ 286,582 $ 310,628 Total Primary Government Invested in Capital Assets, net of related debt $ 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 $ 1 ,343,696 Restricted 40,178 50,061 52,566 41,188 36,385 36,258 31,477 28,863 43,109 37,722 Unrestricted 188,944 206,618 189,598 204,537 224,903 273,451 298,535 362,690 423,210 ( 52,901) Total primary government net position $ 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 $ 1 ,328,517 Notes: Source - Statement of Net Position for FY 2003-2004 through 2011-2012 Statement of Net Position beginning in 2012-2013 and ongoing 187 COUNTY OF SAN LUIS OBISPO CHANGES IN NET POSITION LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Expenses Governmental Activities General government $ 39,872 $ 50,819 $ 46,971 $ 41,658 $ 36,561 $ 35,344 $ 35,231 $ 34,507 $ 36,866 $ 45,598 Public protection 100,234 120,165 135,987 136,755 134,768 132,413 136,219 142,353 148,135 162,432 Public ways and facilities 32,858 22,256 24,503 24,713 24,927 27,365 27,120 28,474 28,253 34,136 Health and sanitation 53,113 55,173 66,382 66,542 68,199 66,657 65,799 69,222 74,313 78,137 Public assistance 84,451 84,045 93,472 97,803 96,645 98,841 96,435 97,929 99,449 110,470 Education 7 ,786 8,626 9,966 10,967 10,390 10,057 10,000 9 ,922 9,611 9,457 Recreation and cultural services 4,244 6,106 6,024 7,561 8,708 7,363 7,344 9,735 7,745 9,755 Interest on long-term debt 7 ,184 5,163 5,771 5,433 6,356 6,787 6,620 6,041 5,270 5,124 Total Governmental Activities Expenses 329,742 352,353 389,076 391,432 386,554 384,827 384,768 398,183 409,642 455,109 Business-Type Activities Expenses Airport 3 ,703 4,021 7,809 4,559 5,204 7,732 5,422 5,435 5,664 6,187 Golf 2 ,867 3,301 3,033 3,249 2,974 2,690 2,863 2,779 2,608 2,968 State Water contract 5 ,102 4,792 5,179 5,661 5,630 6,705 6,761 5,536 5,992 6,351 Nacimiento Water contract 580 559 20,021 10,144 10,613 11,844 11,901 14,738 13,840 15,776 Lopez Dam 5 ,237 5,807 7,945 6,189 5,813 6,499 5,752 6,548 6,116 6,128 Lopez Park - - - - - - - - - 4 General Flood Control Zone 726 681 689 712 831 928 1,816 746 809 845 Transit 745 714 1,071 987 1,143 1,105 8 - - - County Service Areas 2,907 3,465 3,419 3,434 3,744 3,877 3,836 3,779 3,857 4,194 Los Osos Wastewater - - - - - 5 6,672 344 231 235 Total Business-Type Activities Expenses 21,867 23,340 49,166 34,935 35,952 41,385 45,031 39,905 39,117 42,688 Total Primary Government Expenses $ 351,609 $ 375,693 $ 438,242 $ 426,367 $ 422,506 $ 426,212 $ 429,799 $ 438,088 $ 448,759 $ 497,797 Program Revenues Governmental Activities Fees, Fines, Charges for Services General government $ 22,293 $ 18,743 $ 13,299 $ 17,729 $ 12,878 $ 13,971 $ 17,545 $ 16,575 $ 14,678 $ 12,407 Public protection 11,776 21,061 20,380 23,285 21,072 20,843 15,679 16,352 23,035 20,774 Public ways and facilities 9 ,730 7,236 7,580 4,190 3,234 11,549 5 ,069 5,465 4,356 4,255 Health and sanitation 8 ,831 6,505 6,583 6,863 7,026 7,453 6,014 5,196 6,570 6,631 Public assistance 2 ,438 2,798 2,864 2,784 925 2,399 2,366 2,920 2,070 2,077 Education 1 ,460 1,759 1,891 1,922 2,304 2,037 2,545 3,583 1,723 2,998 Recreation and cultural services 1 ,370 1,246 2,183 3,931 3,822 3,714 3,952 4,435 4,537 5,056 Operating Grants and Contributions General Government 1 ,442 1,454 446 751 377 1,120 628 122 252 54 Public Protection 39,054 41,429 40,924 38,080 40,034 37,244 45,646 50,477 54,233 62,359 Public ways and facilities 11,459 8 ,712 8,975 10,406 10,679 9 ,446 11,813 15,018 14,688 14,145 Health and sanitation 39,611 44,135 46,267 49,149 57,784 48,567 44,741 55,064 57,344 62,338 Public assistance 73,863 75,391 79,190 83,175 81,525 86,479 85,505 87,912 89,640 94,775 Education 250 299 262 260 259 289 175 175 102 105 Recreation and cultural services 158 167 185 178 177 357 18 350 - 131 Capital Grants and Contributions General government - 291 264 384 449 279 843 8 69 156 Public protection 208 1,799 319 82 - - - - 3,315 9,701 Public ways and facilities 6 ,253 6,008 15,130 5 ,966 10,259 7 ,411 12,930 3 ,479 5,570 6,435 Health and sanitation - - 34 - - - - - - Public assistance - - - - - - - - - Recreation and cultural services 805 171 979 423 173 81 247 50 282 1,776 Total Governmental Activities 231,001 239,204 247,755 249,558 252,977 253,239 255,716 267,181 282,464 306,173 Source: Statement of Activities (continued) 188 COUNTY OF SAN LUIS OBISPO CHANGES IN NET POSITION (Continued) LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 Business-Type Activities Fees, Fines, Charges for Services Airport 3 ,864 3,919 4,585 3,734 3,541 3,888 3,719 4,053 4,493 4,883 Golf 2 ,895 3,016 3,058 2,879 2,653 2,590 2,690 2,639 2,779 2,967 State Water Contract 5 ,098 4,458 5,309 5,767 6,513 6,453 6,609 6,185 6,358 6,562 Nacimiento Water Contract 5 ,509 6,893 3,018 284 355 7,968 13,893 13,800 13,685 9 ,682 Lopez Dam 4 ,717 5,987 6,453 5,494 6,164 6,359 6,440 6,174 6,123 6,208 General Flood Control Zone 562 575 600 637 661 1,870 1,252 730 861 794 Transit 57 52 55 63 - - - - - - County Service Areas 2 ,604 2,860 2,869 2,658 2,784 3,090 3,186 3,352 3,312 3,408 Operating Grants and Contributions Airport 279 281 820 144 182 180 372 132 127 126 Golf - - - - - - 5 - - 269 State Water Contract 8 8 8 8 8 10 10 13 13 13 Nacimiento Water Contract 23 25 28 31 31 30 28 29 12 9 Lopez Dam - - - 15 15 15 15 15 8 8 Transit 1 ,190 - - - 1,172 1,097 - - - - General Flood Control Zone - 543 624 962 - - - - - - County Service Areas 222 155 2 4 4 3 3 3 3 211 Los Osos Wastewater - - - - - - 35 1 - - Capital Grants and Contributions Airport 3 ,792 9,509 19,201 6 ,750 4,310 2,074 138 572 1,770 365 County Service Areas - - 165 275 339 288 64 294 2 - Los Osos Wastewater - - - - - 9,357 9,127 35,717 57,507 26,385 Total Business-Type Activities Revenues 30,820 38,281 46,795 29,705 28,732 45,272 47,586 73,709 97,053 61,890 Total Primary Government Revenues $ 261,821 $ 277,485 $ 294,550 $ 279,263 $ 281,709 $ 298,511 $ 303,302 $ 340,890 $ 379,517 $ 368,063 Net (Expense)/Revenues Governmental Activities $ (98,741) $ (113,149) $ (141,321) $ (141,874) $ (133,577) $ (131,588) $ (129,052) $ (131,002) $ (127,178) $ (148,936) Business-Type Activities 8,953 14,941 (2,371) (5,230) (7,220) 3 ,887 2,555 33,804 57,936 19,202 Total Primary Government net expense $ (89,788) $ (98,208) $ (143,692) $ (147,104) $ (140,797) $ (127,701) $ (126,497) $ (97,198) $ (69,242) $ (129,734) General Revenue and Other Changes in Net Position Governmental Activities Property Taxes $ 114,076 $ 128,867 $ 133,292 $ 141,195 $ 132,723 $ 139,214 $ 140,288 $ 143,182 $ 152,256 $ 155,374 Other Taxes 15,823 15,798 15,881 14,389 13,358 14,393 16,330 23,940 22,088 22,984 Interest and investment income 7 ,176 11,025 9 ,790 4,646 1,690 986 1,202 733 599 3,174 Unrestricted Grants 9 ,559 4,079 4,019 4,890 3,972 3,520 3,978 3,537 1,727 13,327 Other revenues - - - - - 172 - 4 - - Transfers (1,884) (319) (964) 845 (565) 150 8,048 (166) (790) (2,676) Special Item - - - - - - - - (2,800) - Total Governmental Activities 144,750 159,450 162,018 165,965 151,178 158,435 169,846 171,230 173,080 192,183 Business-type Activities Property Taxes 2 ,051 3,359 3,402 3,678 3,654 3,841 3,799 4,145 4,402 4,782 Other Taxes - - - 27 28 28 28 29 32 - Interest and investment income 1 ,085 1,897 7,290 6,190 1,900 965 755 385 595 659 Other revenues 86 304 292 572 363 447 31 160 40 183 Transfers 1 ,884 319 964 (845) 565 (150) (8,048) 166 790 2,676 Total Business-type Activities 5 ,106 5,879 11,948 9 ,622 6,510 5,131 (3,435) 4 ,885 5,859 8,300 Total Primary Government $ 149,856 $ 165,329 $ 173,966 $ 175,587 $ 157,688 $ 163,566 $ 166,411 $ 176,115 $ 178,939 $ 200,483 Change in Net Position Governmental Activities $ 46,009 $ 46,301 $ 20,697 $ 24,091 $ 17,601 $ 26,847 $ 40,794 $ 40,228 $ 45,902 $ 43,247 Business-Type Activities 14,059 20,820 9 ,577 4,392 (710) 9,018 (880) 38,689 63,795 27,502 Total Primary Government $ 60,068 $ 67,121 $ 30,274 $ 28,483 $ 16,891 $ 35,865 $ 39,914 $ 78,917 $ 109,697 $ 70,749 Notes: Source - Statement of Activities 189 COUNTY OF SAN LUIS OBISPO FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2006 2007 2008 2009 2010 General Fund Reserved $ 17,665 $ 29,841 $ 31,853 $ 40,561 $ 49,543 Unreserved 86,924 74,727 64,886 63,626 66,559 Total General Fund $ 104,589 $ 104,568 $ 96,739 $ 104,187 $ 116,102 All Other Governmental Funds Reserved $ 9,039 $ 30,278 $ 50,422 $ 42,697 $ 39,243 Unreserved, reported in: Special Revenue Funds 80,293 70,630 60,384 51,703 55,513 Capital Project Funds 27,245 31,638 21,233 23,248 20,859 Debt Service Funds - - - - - Total All Other Governmental Funds $ 116,577 $ 132,546 $ 132,039 $ 117,648 $ 115,615 2011 2012 2013 2014 2015 General Fund Nonspendable $ 3,333 $ 3,176 $ 3,092 $ 779 $ 5,089 Restricted 7,113 6,682 4,005 3,214 2,945 Committed 62,380 68,880 96,365 116,940 138,140 Assigned - - 104,237 118,248 125,112 Unassigned 87,741 102,291 - - - Total General Fund $ 160,567 $ 181,029 $ 207,699 $ 239,181 $ 271,286 All Other Governmental Funds Nonspendable $ 352 $ 390 $ 596 $ - $ 920 Restricted 22,065 19,788 18,311 20,164 20,563 Committed 55,446 61,144 65,903 74,240 78,508 Assigned 94 - - - - Unassigned - - - - (486) Total All Other Governmental Funds $ 77,957 $ 81,322 $ 84,810 $ 94,404 $ 99,505 Note: In 2011, the County began implementation of GASB Statement No. 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 190 COUNTY OF SAN LUIS OBISPO CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues Taxes $ 1 28,586 $ 141,934 $ 144,596 $ 1 54,155 $ 153,910 $ 155,419 $ 160,920 $ 171,771 $ 177,765 $ 178,740 Licenses, permits, and franchises 1 0,744 9 ,404 9,117 8,006 6,906 7,413 7,863 9,247 10,694 10,452 Fines, forfeits, and penalties 3 ,544 6,262 6,224 6,973 6,078 7,993 6,750 6,654 5,257 5,686 Revenues from use of money and property 6 ,637 9,789 8,452 4,122 1,644 1,242 2,273 1,475 1,373 3,864 Aid from governmental agencies 1 82,750 184,142 196,994 188,794 199,771 194,625 206,372 209,234 229,283 261,351 Charges for current services 5 5,547 55,083 50,592 54,208 47,065 56,486 45,538 41,690 50,071 43,530 Other revenues 7 ,146 6,750 3,122 6,856 5,358 6,531 8,451 11,342 6 ,235 9,110 Total revenues 394,954 413,364 419,097 423,114 420,732 429,709 438,167 451,413 480,678 512,733 Expenditures Current: General government 53,691 55,375 51,733 51,461 45,162 50,321 45,850 44,374 44,317 51,207 Public protection 116,791 126,043 134,058 140,746 136,857 135,636 138,579 143,832 148,155 157,783 Public ways and facilities 25,749 38,981 44,814 42,139 31,093 37,261 40,338 34,178 28,528 29,903 Health and sanitation 55,464 57,590 66,180 67,267 68,442 68,472 67,830 70,021 74,586 75,116 Public assistance 87,020 87,182 92,682 98,170 96,248 100,202 97,185 98,059 99,442 107,104 Education 7,891 8,755 9,698 11,016 13,020 10,191 9,973 9,901 12,205 11,388 Recreational and cultural services 4,159 8,005 9,911 8,654 8,313 7,187 6,998 7,538 7,993 10,104 Debt service: Principal payments 4,970 6,560 2,601 3,264 3,790 4,595 4,435 4,065 5,412 6,070 Interest and fiscal charges 5,774 6,401 5,593 5,181 5,954 6,464 6,289 5,863 5,419 5,209 Debt issuance costs - - - - 550 - - 269 - - Capital outlay 9,551 10,241 13,333 2,849 1,965 3,399 5,540 3,692 11,312 20,019 Total expenditures 371,060 405,133 430,603 430,747 411,394 423,728 423,017 421,792 437,369 473,903 Excess (deficiency) of revenues over expenditures 23,894 8,231 (11,506) (7,633) 9,338 5,981 15,150 29,621 43,309 38,830 Continued 191 COUNTY OF SAN LUIS OBISPO CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS (Continued) LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other Financing Sources Issuance of long-term debt - - - - - - - - - - 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 - - - - - - - Payment to San Luis Pension Trust - - - - - - - - - - Refunding bonds issued - - - - 42,565 - - - - - Payment to refunded escrow agent - - - - (42,000) - - (16,400) - - Discount on certificates of participation issued - - (119) - - - - - - - Transfers in 3 1,910 42,996 42,324 43,523 33,044 34,421 35,815 48,113 26,502 33,299 Transfers out ( 33,525) (42,817) (42,751) (42,833) (33,065) (33,595) (27,138) (47,021) (25,935) (34,923) Total other financing sources and uses ( 1,615) 5 ,269 6,779 6 90 544 826 8,677 5 37 567 (1,624) Special Item - - - - - - - - (2,800) - Net change in fund balances $ 2 2,279 $ 1 3,500 $ (4,727) $ (6,943) $ 9 ,882 $ 6,807 $ 23,827 $ 30,158 $ 41,076 $ 37,206 Debt Service as a percentage of non-capital expenditures 3.12% 3.50% 2.13% 2.13% 2.51% 2.80% 2.73% 2.48% 2.61% 2.57% Source: Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 192 COUNTY OF SAN LUIS OBISPO 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 Input Market Market Return Total Actuarial Actuarial Value Valuation as of Return for Past for Past Fiscal Contribution Compensation Total Accrued of Assets Total Normal Market Value of Funded Ratio January 1, Fiscal Year Year Rate at Valuation Contribution Liability (AAL) (AVA) Unfunded AAL Funded Ratio Cost Rate Assets (MVA) Using MVA 2015 7.25% 4.58% 34.77% $ 1 68 $ 5 8.3 $ 1 ,606 $ 1 ,231 $ 375 76.7% 21.64% $ 1 ,173 73.0% 2016 7.25% 7.25% 35.39% 173 6 1.1 1,681 1,271 410 75.6% 21.05% 1,240 73.8% 2017 7.25% 7.25% 35.70% 178 6 3.7 1,757 1,322 435 75.2% 20.52% 1,309 74.5% 2018 7.25% 7.25% 36.28% 184 6 6.7 1,833 1,366 467 74.5% 20.02% 1,379 75.2% 2019 7.25% 7.25% 36.55% 190 6 9.3 1,908 1,420 488 74.4% 19.55% 1,451 76.0% 2020 7.25% 7.25% 36.31% 196 7 1.0 1,982 1,490 492 75.2% 19.13% 1,525 76.9% 2021 7.25% 7.25% 36.05% 202 7 2.8 2,055 1,562 493 76.0% 18.75% 1,599 77.8% 2022 7.25% 7.25% 35.77% 209 7 4.6 2,127 1,635 492 76.9% 18.40% 1,673 78.7% 2023 7.25% 7.25% 35.51% 215 7 6.5 2,197 1,709 488 77.8% 18.08% 1,748 79.6% 2024 7.25% 7.25% 35.25% 223 7 8.4 2,266 1,783 483 78.7% 17.79% 1,822 80.4% 2025 7.25% 7.25% 35.02% 230 8 0.6 2,333 1,858 475 79.6% 17.54% 1,897 81.3% 2026 7.25% 7.25% 34.82% 238 8 2.8 2,399 1,933 466 80.6% 17.32% 1,972 82.2% 2027 7.25% 7.25% 34.61% 246 8 5.2 2,463 2,008 455 81.5% 17.11% 2,047 83.1% 2028 7.25% 7.25% 34.44% 255 8 7.7 2,526 2,084 442 82.5% 16.93% 2,123 84.0% 2029 7.25% 7.25% 34.28% 263 9 0.3 2,587 2,162 425 83.6% 16.77% 2,201 85.1% 3030 7.25% 7.25% 34.13% 273 9 3.1 2,647 2,240 407 84.6% 16.62% 2,279 86.1% 2031 7.25% 7.25% 33.99% 282 9 5.9 2,706 2,321 385 85.8% 16.48% 2,360 87.2% 2032 7.25% 7.25% 33.86% 292 9 9.0 2,763 2,404 359 87.0% 16.36% 2,443 88.4% 2033 7.25% 7.25% 33.75% 303 1 02.2 2,820 2,490 330 88.3% 16.26% 2,528 89.6% 2034 7.25% 7.25% 33.64% 314 1 05.5 2,877 2,579 298 89.6% 16.16% 2,617 91.0% 2035 7.25% 7.25% 33.53% 325 1 08.9 2,933 2,671 262 91.1% 16.07% 2,710 92.4% 2036 7.25% 7.25% 33.44% 337 1 12.6 2,989 2,769 220 92.6% 15.99% 2,807 93.9% 2037 7.25% 7.25% 33.35% 349 1 16.4 3,045 2,871 174 94.3% 15.93% 2,910 95.6% 2038 7.25% 7.25% 33.26% 362 1 20.3 3,102 2,980 122 96.1% 15.87% 3,019 97.3% 2039 7.25% 7.25% 33.16% 375 1 24.3 3,159 3,095 64 98.0% 15.82% 3,134 99.2% 2040 7.25% 7.25% 15.77% 389 6 1.3 3,218 3,218 - 100.0% 15.77% 3,257 101.2% 2041 7.25% 7.25% 15.38% 403 6 2.0 3,279 3,280 (1) 100.0% 15.73% 3,319 101.2% 2042 7.25% 7.25% 15.40% 418 6 4.4 3,342 3,343 (1) 100.0% 15.70% 3,382 101.2% 2043 7.25% 7.25% 15.41% 434 6 6.8 3,407 3,408 (1) 100.0% 15.68% 3,447 101.2% 2044 7.25% 7.25% 15.41% 450 6 9.3 3,476 3,477 (1) 100.0% 15.65% 3,515 101.1% 2045 7.25% 7.25% 15.43% 467 7 2.0 3,547 3,548 (1) 100.0% 15.64% 3,587 101.1% 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. The Unfunded Actuarial Liability presented in this schedule and used for funding purposes is calculated using the smoothed actuarial value of Plan assets. This differs from the Net Pension Liability used for financial statement reporting under GASB 68 which is measured using the market value of of Plan assets. Amounts in this schedule differ from those used for financial reporting. This projection contains values based on a January 1, 2015 actuariual valuation report. Net Pension Liability and related amounts used for financial reporting are based on a June 30, 2015 actuarial valuation report. All dollar amounts in millions. Source: Gabriel Roeder Smith & Company Supplementary exhibit to the 2015 SLO County Pension Trust Actuarial Valuation Report For the Year Beginning January 1, 2015 193 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 2006 $ 3 2,984,334 $ 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 2015 45,288,599 1,230,775 (1,093,212) 45,426,162 5.5% 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% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 194 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. COUNTY OF SAN LUIS OBISPO DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (PER $100 OF ASSESSED VALUES) (UNAUDITED) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 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 .00222 0.00221 0 .00220 0.00220 0.00220 0 .00290 0.00300 0 .00400 0.00400 0 .00400 Total Direct Rate 1.00222 1.00221 1.00220 1.00220 1.00220 1.00290 1.00300 1.00400 1.00400 1.00400 Cities, Schools, and Special Districts Combined Rates Arroyo Grande 0 .0423 0.0392 0.0422 0.0464 0.0464 0.0470 0.0477 0 .0576 0.0580 0.0569 Atascadero 0 .0975 0.0975 0.0975 0.0975 0.0975 0.0975 0.0442 0 .0452 0.0452 0.0590 Grover Beach 0 .0313 0.0295 0.0333 0.0382 0.0382 0.0389 0.0396 0 .0495 0.0499 0.0509 Morro Bay 0 .0231 0.0231 0.0492 0.0492 0.0492 0.0499 0.0501 0 .0510 0.0510 0.0510 Paso Robles 0 .1082 0.0952 0.0997 0.0948 0.0988 0.0389 0.0816 0 .0815 0.0815 0.0782 Pismo Beach 0 .0335 0.0295 0.0333 0.0382 0.0382 0.0389 0.0396 0 .0495 0.0499 0.0509 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 195 COUNTY OF SAN LUIS OBISPO PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND TEN YEARS AGO (In Thousands) (UNAUDITED) Fiscal Year 2015 Fiscal Year 2006 Percentage Percentage of Total of Total Assessed County Assessed County Taxpayer Industry Value Rank Assessed Value Rank Assessed Pacific Gas and Electric Company Utility $ 2,586,358 1 5.69% $ 2,250,814 1 6.37% Phillips 66 Company Oil Refinery 163,237 2 0.36% - - - Beringer Wine Estates Company Winery 9 2,622 3 0.20% 6 4,526 5 0.18% Mustang UCAL LLC Apartments 76,943 4 0.17% 4 2,742 7 0.12% Plains Exploation & Production Petroleum & Gas 7 1,391 5 0.16% - - - Pacific Bell Telephone Company Telephone 67,102 6 0.15% 7 1,450 3 0.20% Southern California Gas Company Utility 65,824 7 0.14% 4 8,365 6 0.14% Martin Hotel Management Company LLC Hotel 63,290 8 0.14% - - - E&J Gallo Winery Winery 6 2,096 9 0.14% - - - Pasquini Charles Jr Tre Etal Private 57,036 10 0.13% - - - TOSCO Corporation Petroleum & Gas - - - 134,999 2 0.38% Duke Energy Morro Bay, LLC Utility - - - 65,210 4 0.18% Charter Communications Communications - - - 41,756 8 0.12% Sierra Vista Hospital Inc Hospital - - - 41,685 9 0.12% ESJ Centers LLC ETAL Real Estate - - - 38,517 10 0.11% Total $ 3,305,899 7.28% $ 2,800,064 7.92% Total County Assessed Value $ 45,426,162 $ 33,216,326 Source: County Property Tax System 196 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 Levy Year Fiscal Year Amount Original Levy Subsequent Years* Amount Delinquent 2006 $ 3 24,547 $ 319,214 98.36% N/A $ 5,333 1.64% 2007 3 62,429 3 54,117 97.71% N/A 8,312 2.29% 2008 3 94,779 3 80,943 96.50% N/A 13,836 3.50% 2009 4 16,262 4 00,120 96.12% N/A 16,142 3.88% 2010 4 12,698 3 98,951 96.67% N/A 13,747 3.33% 2011 4 08,623 3 97,830 97.36% N/A 10,793 2.64% 2012 4 03,472 3 96,238 98.21% N/A 7,234 1.79% 2013 4 05,225 3 99,807 98.66% N/A 5,418 1.34% 2014 4 21,140 4 16,450 98.89% N/A 4,690 1.11% 2015 4 47,088 4 42,330 98.94% N/A 4,758 1.06% 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 197 COUNTY OF SAN LUIS OBISPO SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS (In Thousands) (UNAUDITED) Special Special Assessment Assessment Year ended June 30, Billings Collected (a) (a) 2011 $ - $ 3,127 * √ 2012 3,664 3,786 * 2013 3,494 3,545 * 2014 3,497 3,630 2015 3,489 3,598 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 198 COUNTY OF SAN LUIS OBISPO RATIOS OF TOTAL DEBT OUTSTANDING LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental Activities Certificates of Participation $ 23,107 $ 27,125 $ 33,319 $ 31,920 $ 30,420 $ 28,820 $ 27,895 $ 25,662 $ 24,640 $23,600 Less deferred amounts: For issuance discounts: - - (119) (115) (111) (107) (103) (99) (95) (91) Add deferred amounts: For issuance premiums: - - - - - - - 1,329 1,240 1,152 Pension Obligation Bonds 135,199 130,504 129,034 127,169 125,444 122,689 119,429 115,624 111,234 146,219 Total bonds and notes payable 158,306 157,629 162,234 158,974 155,753 151,402 147,221 142,516 137,019 170,880 Business Type Certificates of Participation 22,069 21,535 2 0,985 2 0,848 2 0,657 1 9,897 19,060 1 7,920 1 8,257 17,745 Add deferred amounts: For issuance premiums: - - - - - - - 492 459 426 Pension Obligation Bonds State Note 15,126 26,144 3 1,824 3 2,283 3 2,418 3 1,024 35,884 3 4,399 4 6,529 72,774 Revenue Bonds 61 56 196,461 196,456 196,450 196,444 193,483 190,389 187,170 183,813 Add deferred amounts: For issuance premiums: - - 6,371 6,371 6,371 6,371 6,158 5,945 5,732 5,519 General Obligation Bonds 12,260 12,000 1 1,730 1 1,450 1 1,155 1 0,760 10,245 9,890 9,530 9,155 Add deferred amounts: For issuance premiums: - - - - - 1,128 1,072 1,015 959 902 Bond Anticipation Notes - - - - - 8,677 - - - Assessment Bonds - - - - - - 15,364 3 9,527 7 6,438 7 9,829 Total bonds and notes payable 49,516 59,735 267,371 267,408 267,051 274,301 281,266 299,577 345,074 370,163 Total Outstanding Debt $ 207,822 $ 217,364 $ 429,605 $ 426,382 $ 422,804 $ 425,703 $ 428,487 $ 442,093 $ 482,093 $ 541,043 Percentage of Personal Income N/A 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* 0.63% 0.59% 1.06% 1.00% 1.00% 1.01% 1.04% 1.06% 1.12% 1.19% Net outstanding debt Per Capita $ 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 $ 1,972.50 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 Constitution 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. 199 COUNTY OF SAN LUIS OBISPO RATIOS OF GENERAL OBLIGATION DEBT OUTSTANDING LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Certificates of Participation $ 20,110 $ 19,545 $ 18,965 $ 18,361 $ 17,730 $ 17,075 $ 16,400 $ 14,427 $ 13,675 $12,915 Less deferred amounts: For issuance discounts: - - - - - - - (99) (95) (91) Add deferred amounts: For issuance premiums: - - - - - - - 1,330 1,240 1,152 General Obligation Bonds 12,260 12,000 11,730 11,450 11,155 10,760 10,245 9,890 9,530 9,155 Add deferred amounts: For issuance premiums: - - - - - 1,128 1,072 1,015 959 902 Assessment Bonds - - - - - - 15,364 39,527 76,438 79,829 Less resources restricted for principal repayment ( 10,018) ( 13,505) ( 15,297) ( 10,929) ( 10,665) (9,752) (9,666) (9,640) (10,691) (12,069) Net Total General Obligation Debt $ 22,352 $ 18,040 $ 15,398 $ 18,882 $ 18,220 $ 19,211 $ 33,415 $ 56,450 $ 91,056 $ 91,793 Percentage of Personal Income N/A 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* 0.07% 0.05% 0.04% 0.04% 0.04% 0.05% 0.08% 0.14% 0.21% 0.20% Net Outstanding debt Per Capita $ 84.91 $ 68.10 $ 57.17 $ 69.82 $ 66.68 $ 70.90 $ 123.08 $ 207.40 $ 334.33 $ 334.65 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 Constitution 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. 200 COUNTY OF SAN LUIS OBISPO LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Assessed Value of Property (a) (b) $ 3 3,216,326 $ 37,110,252 $ 40,453,074 $ 4 2,588,529 $ 42,419,637 $ 42,037,909 $ 41,340,430 $ 41,796,283 $ 43,059,945 $45,426,163 Debt Limit, 1.25% of Assessed Value 415,204 463,878 505,663 532,357 530,245 525,474 516,755 522,454 538,249 567,827 Amount of Debt Applicable to Limit General Obligation Bonds (c) 1 2,260 12,000 11,730 11,450 11,155 11,888 11,317 10,905 10,489 10,057 Less: Resources Restricted to Paying Principal - - - - - - - - - - Total Debt Applicable 1 2,260 12,000 11,730 11,450 11,155 11,888 11,317 10,905 10,489 10,057 Legal Debt Margin $ 402,944 $ 451,878 $ 493,933 $ 520,907 $ 519,090 $ 513,586 $ 505,438 $ 511,549 $ 527,760 $ 557,770 Total Debt Applicable as a Percentage of the Debt Limit 2.95% 2.59% 2.32% 2.15% 2.10% 2.26% 2.19% 2.09% 1.95% 1.77% 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 $42,414,148 Pipeline Right-of-Way (Unitary) 6 ,172 Aircraft 9 0,332 Total Local Assessed 42,510,652 State Assessed Local Utility 2 7,994 Unitary 2,887,517 Total State Assessed 2,915,511 Combined Assessed Values Sub-Total Combined Assessed Values 45,335,831 Aircraft 9 0,332 Total Combined Assessed Values $45,426,163 201 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) 2006 2 63,242 $ 9,488,605 $ 3 6,544 39.20 4 4,537 4.1 2007 2 64,900 9 ,977,057 38,144 37.30 4 4,610 4.6 2008 2 69,337 10,709,753 40,204 37.30 4 4,441 5.7 2009 2 70,429 10,237,494 38,179 39.30 4 4,874 9.0 2010 2 73,231 10,532,649 38,994 39.40 4 4,351 10.0 2011 2 70,966 10,966,438 40,322 40.30 4 4,104 9.9 2012 2 71,483 12,008,355 43,698 39.20 4 3,022 8.5 2013 2 72,177 N/A N/A N/A 4 2,600 6.4 2014 2 72,357 N/A N/A N/A 4 2,911 5.3 2015 2 74,293 N/A N/A N/A 41,853 4.4 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 2009 -2013 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. 202 COUNTY OF SAN LUIS OBISPO PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO (UNAUDITED) 2015 2006 Number of Percentage of Total Number of Percentage of Total Employer Employees Rank County Employment Employees Rank County Employment Cal Poly State University, SLO 3,055 1 2.12% 2,700 1 2.01% County of San Luis Obispo 2,800 2 1.94% 2,501 2 1.86% Atascadero State Hospital 2,000 3 1.39% 2,117 3 1.58% California Men's Colony 1,540 4 1.07% 1,577 5 1.18% Pacific Gas and Electric Company 1,900 5 1.32% 1,700 4 1.27% Cal Poly Corporation 1,400 6 0.97% 1,311 6 0.98% Tenet Healthcare 1,272 7 0.88% - - - Compass Health Inc 1,200 8 0.83% - - - Lucia Mar Unified School District 1,000 9 0.69% 1,065 7 0.79% Paso Robles Public Schools 935 10 0.65% 776 9 0.58% San Luis Coastal Unified School District - - - 790 8 0.59% Cuesta College - - - 771 10 0.57% Total Employment Labor Force 144,200 134,200 Source: 1. SLO Chamber of Commerence 2. State of California Employment Development Department 3. 2005-2006 San Luis Obispo County CAFR 203 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 2015 General Government 480.25 479.75 482.00 495.50 485.25 451.00 442.75 437.50 438.25 430.75 436.75 Public Protection 850.50 856.00 885.25 891.75 879.50 799.75 783.25 808.25 812.00 817.25 832.25 Public Ways and Facilities 184.00 185.00 185.25 191.25 199.25 202.25 194.25 193.75 193.75 188.75 190.75 Health and Sanitation 419.25 413.25 394.50 423.75 421.00 424.75 424.00 430.50 445.25 464.00 485.25 Public Assistance 439.00 438.75 443.75 453.25 437.25 426.75 424.75 425.75 428.00 478.00 500.75 Education 73.00 74.00 84.00 87.50 87.50 78.50 78.50 77.50 75.50 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 59.00 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 2,580.25 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. 204 COUNTY OF SAN LUIS OBISPO OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Function / Department 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Recreation and Cultural Services Parks Day Use Passes 62,951 66,899 65,895 47,156 47,011 51,519 57,135 56,601 42,821 57,564 Annual Passes 1,496 1,416 1,598 3,547 2,220 1,992 2,357 2,406 2,998 3,137 Daily Boat Launches 22,481 19,737 14,085 16,864 15,802 15,602 16,133 14,809 17,444 14,613 Annual Boat Passes 804 793 847 752 627 618 633 551 460 286 Public Protection Planning and Building Total Permits Issued 3,548 2,897 2,634 2,261 2,067 2,073 2,086 2,070 2,622 3,139 Number of New Affordable Housing 184 63 218 105 82 80 39 44 13 151 Sheriff Jail bookings (a) 14,927 18,718 18,321 14,158 13,025 12,682 1 2,966 13,273 12,583 11,375 Average daily population (a) 534 553 567 540 551 558 679 717 780 679 Health and Sanitation Mental Health Total number of patient days in State Hospitals 522 447 603 365 364 n/a 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 2,067 2,692 2,212 2,937 1588* 1,885 1,764 1,613 Public Health Number of Children enrolled in the Healthy Families Program 4,436 4,752 5,098 5,450 5,709 n/a 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 100 98 97 100 99 99 95 91 Percentage of live born infants whose mothers received prenatal care in the first trimester. n/a 82.7 76.0 7 8.0 78.0 78.5 81.7 80.0 79.0 79 Public Assistance Social Services Rate per 1,000 children entering out-of- home care for the first time (State Rate is 2.8) 3.8 2.9 n/a 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 77.1 69.8 88.7 94.1 96.8 97.6* 98.* 95.0 97.9 Education Library Annual number of items circulated per capita 6.0 7.0 7.5 9.2 9.4 10.0 10.1 n/a n/a 9.6 Annual Expenditure per capita for total Library budget $ 2 8.34 $ 31.07 $ 33.75 $ 38.43 $ 35.35 $ 35.35 $ 35.25 $ 34.35 $ 35.50 $ 3 6.13 Public Ways and Facilities Roads Pavement Condition Rating for all county roads (70 = "good") 70 69 65 62 65 60 58 60 61 61 Airport Airport Takeoffs and Landings (a) n/a 92,096 96,172 95,419 88,161 80,556 80,158 71,428 66,696 71,001 Passenger Enplanements 182,177 177,176 182,285 132,748 125,152 139,909 134,244 132,315 147,105 149,558 Note: (a) Data collected per calendar year Source: County Budget Performance Indicators * Restated 205 COUNTY OF SAN LUIS OBISPO CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Recreation and Cultural Services County golf courses 3 3 3 3 3 3 3 3 3 3 Park acreage 12,056 12,056 13,402 13,422 13,422 13,572 13,424 13,424 13,583 13,583 Public Protection Correction facility capacities (a) 693 684 693 693 693 689 637 717 797 797 Public Ways and Facilities Miles of county roads 1,321 1,321 1,334 1,336 1,329 1,332 1,333 1,335 1,336 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 206 207