Annual Comprehensive Financial Report, 2015-16

Comprehensive Annual Financial Report County of San Luis Obispo, California Fiscal Year Ended June 30, 2016 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, 2016 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal .............................................................................................................. 3 Certificate of Achievement for Excellence in Financial Reporting ................................................... 13 List of Elected and Appointed Officials...................................................................................... 14 Organizational Chart ............................................................................................................... 15 FINANCIAL SECTION Independent Auditor’s Report ................................................................................................. 19 Management’s Discussion and Analysis .................................................................................... 25 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position ........................................................................................... 43 Statement of Activities ................................................................................................ 44 Fund Financial Statements: Governmental Funds: Balance Sheet – Governmental Funds .......................................................................... 49 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position ..................................................... 50 Statement of Revenues, Expenditures, and Changes in Fund Balances ...................................................................................................... 51 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities .............................................................................................. 52 Proprietary Funds: Statement of Fund Net Position ................................................................................... 53 Statement of Revenues, Expenses, and Changes in Fund Net Position ............................ 54 Statement of Cash Flows ............................................................................................ 55 Fiduciary Funds: Statement of Fiduciary Net Position ............................................................................. 56 Statement of Changes in Fiduciary Net Position – Investment Trust Funds .......................... 57 Notes to Basic Financial Statements ................................................................................. 61 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 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual Comparison: 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 COUNTY OF SAN LUIS OBISPO JAMES P. ERB, CPA Auditor-Controller AUDITOR  CONTROLLER  TREASURER  TAX COLLECTOR Treasurer-Tax Collector 1055 MONTEREY ST, RM. D290 James W. Hamilton, CPA SAN LUIS OBISPO, CA 93408 Assistant (805) 781-5831  FAX (805) 781-5362 http://sloacttc.com December 21, 2016 Honorable Board of Supervisors County of San Luis Obispo 1055 Monterey Street, Suite D430 San Luis Obispo, California 93408 To the Citizens of San Luis Obispo County and Your Honorable Board: The Comprehensive Annual Financial Report (CAFR) of the County of San Luis Obispo (County) for the fiscal year ended June 30, 2016, 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, 2016, are free of any material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the 3 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, 2016, are fairly presented and in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the County of San Luis Obispo was part of a broader, federally mandated “Single Audit” designed to meet the requirements imposed by federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the County of San Luis Obispo’s separately issued Single Audit Report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and the two should be read in conjunction with each other. The County of San Luis Obispo’s MD&A can be found immediately following the report of the independent auditors. Profile of the Government The County of San Luis Obispo, incorporated in 1850, is located on the central coast of the State of California, midway between Los Angeles and San Francisco. The County of San Luis Obispo currently occupies a land area of 3,616 square miles and serves a population of 277,977 residents. Approximately 43% of the population resides in the unincorporated area. The seven incorporated cities in the county are Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach and San Luis Obispo. A five-member County Board of Supervisors is the legislative authority and governance for the County. Each supervisor is elected to a four-year term in nonpartisan districts. The terms are staggered with two supervisors being elected then three supervisors being elected in alternating election years. The Board is responsible among other things for establishing ordinances, adopting the budget, appointing committees, and hiring the County Administrator and non-elected department heads. The County Administrator is responsible for carrying out the policies and ordinances of the Board and for overseeing the day-to-day operations of the County. The County has five elected department heads responsible for the offices of the County Clerk-Recorder, Assessor, Auditor – Controller – Treasurer - Tax Collector, District Attorney, and Sheriff- Coroner. 4 The County of San Luis Obispo provides a full range of services, including public safety and fire protection; construction and maintenance of highways, streets, and other infrastructure; health and social programs that promote the well-being of the community; and recreational activities and cultural events. The annual budget serves as the foundation for the County of San Luis Obispo’s financial planning and control. The County Budget Act, as presented in California Government Code sections 29000 and 30200, provides the general provisions and requirements for preparing and approving the County budget. All County departments are required to submit budget requests to the County Administrator. The budgets are then reviewed by the County Administrator and compiled into a proposed budget with a County Administrator’s recommendation. Public hearings are set in the month of June, with the Board of Supervisors adopting the final budget before the start of the next fiscal year. The proposed budget is prepared by fund, function (e.g., public safety), and department or division (e.g., Sheriff). During the year, department heads may make transfers of appropriations within a division with the approval of the County Administrator and Auditor-Controller – Treasurer - Tax Collector. Transfers of appropriations between departments or increases in the budget from new revenue sources, reserves and/or contingencies require Board of Supervisors’ approval. Monthly estimates for both revenues and expenditures are used to assist departments with budgetary control, and quarterly reports are submitted by each department to the County Administrator and the Board on the status of their budgets. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund this comparison is presented as part of the required supplementary information immediately following the notes to the financial statements. For other governmental funds with appropriated annual budgets, this comparison is presented in the governmental fund subsection of the statements. The County of San Luis Obispo has various blended component units which primarily provide utility and debt financing services. The County’s only discretely presented component unit is First 5, which allocates funds from the California Children and Families Trust Fund and advocates for quality programs and services, supporting children prenatal to age 5, to ensure that every child is healthy and ready to learn in school. 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. 5 Employment:  Unemployment in the county as of September 2016 was 4.2% which is lower than the state rate of 5.5% and lower than the national average of 5.0%. At this time last year unemployment in the county was 4.1%  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. Wages:  Average income increased by 4.2% to $43,100, from 2014 to 2015 (most recent data) for the residents of the County of San Luis Obispo, as reported by the Bureau of Labor Statistics.  In 2015, the five highest sectors for annual salaries were management, legal, architecture and engineering, healthcare practitioners, and computer and mathematical. 6 Retail Sales:  Retail sales for the County of San Luis Obispo increased by 4.7% from 2013 to 2014 according to the State Board of Equalization; however, from June 2015 to June 2016 sales tax revenue decreased by 16.1% due to decreased construction on solar farms located in the county. Real Estate: People’s desire to live in the area increased the median home price to $509,500 as of August 2016. This is an increase of 8.4% from the same period in the prior year. Increase of the median home price demonstrates that the local real estate market is robust.  Property tax revenue indicators illustrate the strength of the local economy. Discretionary property tax receipts were $113 million, an increase of 5.4% over the prior year.  The total tax levy of secured property of $470,628,993 for FY 2015-16 is an increase of 5.27% 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 12.0% during 2015-16. This is the sixth 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 6.9% during 2015 to 2016, which also indicates a strengthening housing market. 7 Tourism:  Transient occupancy tax increased in 2016 by 6.0% in the unincorporated area and is expected to increase by an average of 4.4% in the seven incorporated cities. 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 to farmers’ markets, San Luis Obispo County has an abundance of activities that appeal to tourists and residents alike. The Visit California Poppy Award for Commitment to Community was given to the CA Highway 1 Discovery Route’s Stewardship Travel Program. Long-term financial planning:  The 2016-17 fiscal year budget represents conservative growth when compared to the FY 2015-16 budget. The growth in budget should not be viewed as “adding back” to those programs and services that were previously reduced during the economic downturn as community needs are continuously changing and County operations must be flexible enough to respond to those changing needs. Property tax revenue has continued to increase and key economic indicators such as transient occupancy, property and sales taxes show signs of improvement allowing for a slight increase in the FY 2016-17 spending level. The final 2016-17 budget authorized a $587.9 million spending level, which is an increase over the $572.6 million budget from the FY 2015-16. The general fund had $493.2 million appropriated to finance the current year’s expenditures including contingencies, with $13 million placed in general reserves and $34.4 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 8 reflect ongoing changes as new projects are added, existing projects modified, and completed projects deleted from the plan document. The five-year CIP does not appropriate funds; rather it serves as a budgeting tool, identifying those Capital Project appropriations to be made through the adoption of the County’s annual budget. The FY 2016-17 capital budget recommended funding for six capital projects. Total 2016-17 appropriations for Capital Projects are approximately $1.5 million. Many of the existing projects will be completed over multiple years.  In June of 2016, PG&E announced plans to close Diablo Canyon Nuclear Power Plant by fiscal year 2024-25. Currently the power plant contributes approximately $22 million of unitary tax which is distributed based on unitary factors to 91 different agencies. San Luis Coastal Unified School District and the County General Fund are the largest recipients of the unitary tax receiving 35.6% and 27% respectively. Additionally, PG&E contributes about 1,500 head of household jobs to residents who live within the County boundaries. The power plant is scheduled to be fully depreciated over the next nine years or about 11% a year, which will determine the amount of unitary tax received by the County. The County, San Luis Coastal Unified School District, and the incorporated cities have worked with PG&E to negotiate a $122.5 to $147.5 million joint proposal agreement that provides for a nine-year transition plan to soften the decrease in unitary taxes, provide money to the local jurisdictions to evaluate and put plans in place to deal with the economic impact, and to maintain the current level of emergency preparedness until all spent fuel is cooled and in dry cask storage. We believe, with the nine-year time frame and the joint proposal agreement, the County and local jurisdictions will be able to adequately plan for the closing of the power plant in fiscal year 2024-25. The joint proposal must still be approved by the California Public Utilities Commission. That approval is anticipated to occur in the fall of 2017. Relevant Financial Policies:  Balanced Budget: The County Administrative Officer shall present a balanced budget for all County operating funds on an annual basis.  Ongoing Budget Administration: The County Administrator shall submit Quarterly Financial Status Reports to the Board of Supervisors. The reports shall provide expenditure and revenue projections and identify projected variances along with recommendations and proposed corrective actions.  Budget Priorities: The budget is an effort to allocate resources in an effective and efficient manner in order to achieve the County’s vision of a Safe, Healthy, Livable, Prosperous, and Well-Governed Community.  Use of “One-Time” Funds: One-time revenue shall be dedicated for use for one- time expenditures. Annual budgets will not be increased to the point that ongoing operating costs become overly reliant upon cyclical or unreliable one- time revenues. 9  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 2015-16 this high-profile project completed the construction of the Los Osos Water Recycling Facility and began the process of connecting nearly 4,700 customers according to the phased connection plan. 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.  District Attorney: Implemented a new case management system enabling prosecutors immediate access to case documents, including testing results and reports, thus reducing the need for continued court appearances and related staffing costs.  Women’s Jail Expansion: Continued with construction on the Women’s Jail Project which broke ground in February 2014. Completion and occupation of the women’s housing portion of the project is anticipated to be in FY 2016-17.  Social Services: Working with contractors, placed nearly all 50 of the most vulnerable homeless individuals into permanent housing identified for the 50 Now program, far exceeding the goal established for the program in Year 2.  Airports: Developed a financial plan and obtained full eligible FAA grant funding for construction of a new terminal at the San Luis Obispo County Regional Airport. Construction will span two fiscal years and started in FY 2015-16.  Library: Renovated library facilities in Morro Bay and Shell Beach. 10  Parks and Recreation: Completed the restoration of the Cayucos Pier and had a successful grand re-opening of the pier in October 2015.  Administration: Led a County Drought Task Force to create contingency and emergency plans for the most vulnerable communities. The County saved an estimated 4,500 gallons per week, and reduced water usage for users in the Utility Manager system and County Operations Center by 36% compared to December 2013.  Clerk-Recorder: Implemented VoteCal, the statewide voter registration database, in November 2015. San Luis Obispo County was among the first counties to go live in the state.  Tax Collector: After a comprehensive study of tax bills in all 58 counties, the office redesigned property tax bills. The new bills include numbered sections for easy reference, emphasizes due dates rather than delinquency dates in an effort to reduce late penalties, and includes use of color to improve readability. By using more modern technology and outsourcing the printing, the new bills were produced at 1/3 less cost than the old bills.  Information Technology: Completed the migration of the County Property Tax and Warrants Management systems off the mainframe to a modern technology platform in April 2016. 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, 2015. This was the thirtieth 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. 11 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’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. 12 13 COUNTY OF SAN LUIS OBISPO LIST OF ELECTED AND APPOINTED OFFICIALS JUNE 30, 2016 Elected Officials Board of Supervisors District #1 .......................................................................................................... Frank R. Mecham District #2 ............................................................................................................ Bruce S. Gibson District #3 ..................................................................................................................... Adam Hill District #4 Chairperson ........................................................................................... Lynn Comptom District #5 ............................................................................................................... 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 Behavioral Health Administrator ......................................................................................... Anne Robin Central Services ............................................................................................................... Will Clemens Chief Probation Officer ...................................................................................................... James Salio Child Support Services Director .............................................................................................. Julie Paik County Administrator ........................................................................................................ Dan Buckshi County Counsel ................................................................................................................. Rita L. Neal County Fire...................................................................................................................... Scott Jalbert 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 ....................................................................................... Christopher Lopez 14 COUNTY OF SAN LUIS OBISPO ORGANIZATIONAL CHART Citizens of San Luis Obispo County Special Districts Governed Boards, Commissions, and ---------------- Board of Supervisors* ------------------ by the Board of Supervisors Committees County Administrator Land Public Health & Human Community Fiscal & Internal Based Protection Services Services Administrative Support Auditor- Controller- Agricultural Child Support Health Agency Airports Treasurer-Tax County Commissioner Services Public Health Collector-Public Counsel Mental Health Drug Administrator* & Alcohol Animal Services Medical Services Planning & County Administrative Central Farm Advisor Building Fire** Office Services District Human Public Works Social Services Library Assessor* Attorney* Resources Emergency Parks & Clerk- Information Veterans' Services Recreation Recorder* Technology Services Probation Sheriff- Coroner* * Elected Officials **Contract 15 16 ____________________________________________________________ FINANCIAL SECTION ____________________________________________________________ 17 18 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, 2016, 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. 19 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, 2016, 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. 72, Fair Value Measurement and Application; GASB Statement No. 76, Hierarchy of Generally Accepted Accounting Principles for State and Local Governments; and GASB Statement No. 79, Certain External Investment Pools and Pool Participants, during fiscal year 2016. 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. 20 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 December 21, 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 December 21, 2016 21 22 ____________________________________________________________ MANAGEMENT’S DISCUSSION AND ANALYSIS ____________________________________________________________ 23 24 COUNTY OF SAN LUIS OBISPO MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2016 As management of the County of San Luis Obispo, (the County), we offer readers the County’s financial statements, this narrative overview, and analysis of the financial activities of the County for the fiscal year ended June 30, 2016. 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 41. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL HIGHLIGHTS  The assets of the County exceeded its liabilities at the close of the most recent fiscal year by $1,369,156 (net position). The majority of this amount, $1,405,730 is the net investment in capital assets, while $41,230 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 68 created a negative unrestricted net position of $77,804.  The County’s net position increased by $40,639 during the current fiscal year. The increase in net investments in capital assets represents capital acquisitions during the year reduced by depreciation and increased by retirement of long-term debt. (Table A). The increase in restricted net position represents the degree to which increases in revenues exceeded increases in expenditures (Table B). Negative unrestricted net position increased due to an increase in the County’s pension obligation.  As of June 30, 2016, the County’s governmental activities reported combined ending net position of $1,038,841, an increase of $20,952 in comparison with the prior year. Due to the recording of the long-term pension obligation, no amount of governmental net position is available for spending at the County’s discretion for current and future needs (unrestricted net position). (Table A)  Business-type activities posted net program income of $12,272 before general revenues, contributions and transfers from other funds, a decrease of $6,930 when compared to net program income of $19,202 in the prior year. The difference from the prior year is primarily due to decreased capital grants and contributions in the Los Osos Wastewater fund.  At the end of the fiscal year, the entire $297,870 fund balance of the General Fund was either nonspendable ($3,454), restricted ($2,872), committed ($168,619) or assigned ($122,925).  In August, 2016, the County issued $107,115 of Refunding Bonds to provide funds to refund certain 2007 Series A Nacimiento Water Project Revenue Bonds. 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. 25 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Government-wide financial statements The Government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the County’s assets, deferred outflows, liabilities and deferred inflows, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The Statement of Activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused employee vacation balances). Both of the government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (Governmental Activities) from other functions that are intended to recover all or a significant portion of their cost through user fees and charges (Business- type Activities). The governmental activities of the County include public protection, public ways and facilities, health and sanitation, public assistance, education, recreational and cultural services, and general government. The main business-type activities of the County include the airport, golf courses, flood control districts, the Nacimiento water project, the Los Osos wastewater project and county services areas. Blended component units are included in our basic financial statements and consist of legally separate entities for which the County is financially accountable and that have substantially the same board as the County or provide services entirely to the County. They include county service areas, flood control districts, waterworks districts, lighting maintenance districts, and the San Luis Obispo County Public Facilities Corporation and San Luis Obispo County Financing Authority. The County discretely presents the First 5 San Luis Obispo County component unit. The mission of First 5 is to allocate funds from the California Children and Families Trust Fund and advocate for quality programs and services, supporting children prenatal to age 5, to ensure that every child is healthy and ready to learn in school. First 5 does not meet the requirements for blending, and therefore its financial activities are presented separately from the County. The government-wide financial statements can be found on pages 41 to 45 of this report. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds - Governmental funds are used to account for essentially the same functions reported as Governmental Activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on the balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for Governmental Funds with similar information presented for Governmental Activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. 26 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Both the governmental fund balance sheet and the governmental fund statements of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between Governmental Funds and Governmental Activities. The County maintains twenty-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 47 to 52 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, wastewater facility, 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 53 to 55 of this report. Fiduciary funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 56 to 57 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 59 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. 27 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Other Supplementary Information - In addition to the basic financial statements, accompanying notes, and required supplementary information, this report also presents certain other supplementary information concerning the County’s General Fund and special revenue funds budgetary schedules and combining and individual fund statements. Combining and individual fund statements and schedules – The combining and individual fund statements and schedules referred to earlier provide information for non-major governmental funds, enterprise, internal service funds, and fiduciary funds and are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 111 to 126 and 147 to 171 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. GOVERNMENT-WIDE FINANCIAL ANALYSIS In accordance with changes in governmental accounting standards, the County applied Governmental Accounting Standards Board (GASB) Statement No. 34 to these financial statements. As stated earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the County, assets and deferred outflows exceeded liabilities and deferred inflows by $1,369,156 as detailed in the table below: Table A Statement of Net Position June 30, 2016 (in thousands) 2015- June 30, 2016 June 30, 2015 2016 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 $ 497,228 $ 165,795 $ 663,023 $ 471,091 $ 165,131 $ 636,222 4.2% Other long-term assets 4,819 11,283 16,102 5,397 10,725 16,122 (0.1%) Capital assets 1,190,307 569,155 1,759,462 1,152,635 539,106 1,691,741 4.0% Total assets 1,692,354 746,233 2,438,587 1,629,123 714,962 2,344,085 4.0% Deferred Outflows of Resources 115,143 5,309 120,452 37,341 384 37,725 219.3% Liabilities: Long-term liabilities 691,907 378,123 1,070,030 579,290 366,976 946,266 13.1% Other liabilities 76,749 43,104 119,853 69,285 37,742 107,027 12.0% Total liabilities 768,656 421,227 1,189,883 648,575 404,718 1,053,293 13.0% Deferred Inflows of Resources - - - - - - - Net position: Net investment in capital assets 1,168,573 237,157 1,405,730 1,130,241 213,455 1,343,696 4.6% Restricted 41,230 - 41,230 37,722 - 37,722 9.3% Unrestricted (170,962) 93,158 (77,804) (150,074) 97,173 (52,901) 47.1% Total net position $ 1,038,841 $ 330,315 $ 1,369,156 $ 1,017,889 $ 310,628 $ 1,328,517 3.1% 28 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) 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 68, caused the County’s unrestricted net position to remain negative indicating that the majority of the County’s net position is invested in capital assets or otherwise restricted for use. The most significant portion of the County’s net position, $1,405,730 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. The remaining $41,230, or 3%, of the 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 increased $21 million and net position for business activities increased $19.7 million resulting in an overall increase of $40.7 million in the County’s total net position. Net Investment in Capital Assets for business type activities increased $23.7 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 at the Airport and in various nonmajor enterprise activities. Net Investment in Capital Assets for governmental activities increased $38.3 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 $3.5 million increase to Restricted net position for governmental activities was primarily comprised of increases in the General Government ($1.5 million), Public Ways and Facilities ($1.2 million) and Debt Service functions ($1 million) offset by decreases in Public Protection ($104 thousand) and Recreation and Culture ($111 thousand) functions. 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 $24.9 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 expenditures over net program revenues and increased expenditures related to the posting of the pension liability in compliance with GASB 68. The table on the next page indicates the changes in net position for governmental and business-type activities: 29 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Table B Statement of Activities For the Year Ended June 30, 2016 (in thousands) June 30, 2016 June 30, 2015 2015- 2016 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 $ 60,117 $ 42,689 $ 102,806 $ 54,198 $ 34,504 $ 88,702 15.9% Operating grants and contributions 235,929 3,261 239,190 233,907 636 234,543 2.0% Capital grants and contributions 21,300 11,226 32,526 18,068 26,750 44,818 (27.4%) General revenues: Property taxes 163,367 4,782 168,149 155,374 4,782 160,156 5.0% Other taxes 21,953 - 21,953 22,984 - 22,894 (4.5%) Interest and investment income 4,401 847 5,248 3,174 659 3,833 36.9% Grants not restricted to specific programs 3,140 - 3,140 13,327 - 13,327 (76.4%) Other revenues - 268 268 - 183 183 46.4% Total revenues 510,207 63,073 573,280 501,032 67,514 568,546 0.8% Expenses: General government 53,282 - 53,282 45,598 - 45,598 16.9% Public protection 170,134 - 170,134 162,432 - 162,432 4.7% Public ways and facilities 33,418 - 33,418 34,136 - 34,136 (2.1%) Health and sanitation 88,326 - 88,326 78,137 - 78,137 13.0% Public assistance 118,089 - 118,089 110,470 - 110,470 6.9% Education 11,934 - 11,934 9,457 - 9,457 26.2% Recreational and cultural services 8,702 - 8,702 9,755 - 9,755 (10.8%) Interest on Long-term debt 4,602 - 4,602 5,124 - 5,124 (10.2%) Airport - 6,117 6,117 - 6,187 6,187 (1.1%) Golf - 3,131 3,131 - 2,968 2,968 5.5% State Water Contract - 5,848 5,848 - 6,351 6,351 (7.9%) Nacimiento Water Contract - 14,888 14,888 - 15,776 15,776 (5.6%) Lopez Dam - 6,220 6,220 - 6,128 6,128 1.5% Lopez Park - 4 4 - 4 4 - General Flood Control - 824 824 - 845 845 (2.5%) County Service Areas - 4,065 4,065 - 4,194 4,194 (3.1%) Los Osos Wastewater - 3,807 3,807 - 235 235 1,520% Total expenses 488,487 44,904 533,391 455,109 42,688 497,797 7.2% Excess/(deficiency) before transfers 21,720 18,169 39,889 45,923 24,826 70,749 (43.6%) Transfers (768) 768 - (2,676) 2,676 - Change in net position 20,952 18,937 39,889 43,247 27,502 70,749 (43.6%) Net position at beginning of year 1,017,889 310,628 1,328,517 1,481,156 286,582 1,767,738 (24.8%) Prior Period Adjustment - 750 750 (35,486) - (35,486) (102.1%) Cumulative change of effect in accounting principal - - - (471,028) (3,456) (474,484) (100%) Net position - end of year $ 1,038,841 $ 330,315 $ 1,369,156 $ 1,017,889 $ 310,628 $ 1,328,517 3.1% 30 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Analysis of Governmental and Business-type Activities Governmental Activities Governmental Activities increased San Luis Obispo County’s net position by $21 million compared to a decrease of $463 million in the prior year. The most significant component of the change is the prior year adjustment of $471 million to book the pension liability. Other factors contributing to the increase over the prior year are as follows: Total revenues from Governmental Activities increased by 1.8%, a $9.2 million increase over the prior year. An $8 million increase in Property Taxes along with increases in Charges for Services and Capital Grants and Contributions were offset by a decrease in Grants Not Restricted to Specific Programs. The Charges for Services category increase of $5.9 million was primarily due to increases in the General Government and Public Ways and Facilities functions, slightly offset by a decrease in the Education function. The General Government function had a variety of small increases in Clerk-Recorder fees. A $4.7 million receipt for construction costs related to a development abandoned by the initial developer is the driver for the Public Ways and Facilities increase. The decrease in the Education function was mostly caused by the prior year receipt of community monies for the Cambria and Morro Bay library projects. Capital Grants and Contributions increased by $3.2 million due to a combination of increased State funding for construction of the Women’s Jail and the expansion of the Juvenile Hall, and a decrease in funding related to the prior year funding for the Cayucos Pier restoration. Grants not Restricted to Specific Programs decreased by $10.2 million. Approximately half the decrease relates to a prior year $5 million back-payment from the State for SB90 mandated services claims. The remainder is comprised of Prop 172 sales tax decreases. Total expenses from Governmental Activities increased $33.4 million or 7.3% over the prior year. Expenses in all functions grew except for Public Ways and Facilities and Recreation and Cultural Services which fell slightly. Negotiated salary and benefits increases along with regular employee step increases and an increased pension liability caused higher salaries and benefits costs in all functions except Education which decreased a little. General Government expenses also rose due to the implementation of the Clerk-Recorder’s new recording and cashiering system and implementation of a Countywide energy efficiency retrofit project. Non-payroll increases in Health and Sanitation occurred due to increased professional services expenditures for Behavioral Health programs. Fiscal Year 2015-16 represented the first year the County was able to fully restore its General Fund contingencies to a level of 5%, while making significant investments in the many programs and services provided to the community, following the completion of the seven year “pain plan” utilized during the economic downturn. Business-type Activities Business-type Activities increased San Luis Obispo County’s net position by $19.7 million compared to an increase of $24.0 million in the previous year. Revenues exceeded expenses by $18.2 million and a transfer of $768 thousand from Governmental Activities resulted in the total increase to net position. Key elements of current year activity are as follows: Total revenue decreased $4.4 million or 6.6% from the preceding year. The only category to decrease was Capital Grants and Contributions ($15.5 million) as construction activity for the Los Osos Wastewater Project wound down resulting in less contributed capital. The decrease in total revenue was slightly offset by increases in Charges for Services which rose by $8.2 million due to water sales and a $2.6 million increase in Operating Grants and Contributions related to the Los Osos Wastewater project. 31 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Expenses for Business-type Activities increased $2.2 million or 5.2% from the prior year. Within Business-type Activities, the largest increase, $3.6 million, was caused by costs related to the activation of the Los Osos Wastewater system including first year depreciation of $1 million. A prior year adjustment of $750 thousand was recognized by the Airport for the value of a commercial maintenance facility which was conveyed to the County when the owner closed the facility in 2009. FUND FINANCIAL STATEMENT ANALYSIS FINANCIAL ANALYSIS OF COUNTY'S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of the County’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, total fund balance less the nonspendable portion may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Total fund balance consists of the following components (see footnote 11 for additional detail):  Nonspendable fund balance, $7,230, represents amounts that are not spendable in form, or are legally or contractually required to be maintained intact, and includes (1) inventories of $99, (2) prepaid items of $668, and (3) long term receivables of $6,463.  Restricted fund balance, $24,189, 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 $2,872, (2) Public facilities of $11,866, (3) Traffic impact programs of $7,667, (4) Wildlife and grazing programs of $15, and (5) Debt service of $1,769.  Committed fund balance, $230,545, 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, $16,197, (2) Tax reduction reserve, $43,429, (3) Automation projects, $15,940, (4) Pension Obligation Bonds, $24,587, (5) Building Replacement $29,408, (6) Solar plant mitigation, $15,276, and (7) Capital projects, $16,116.  Assigned fund balance, $122,925, 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, $17,217, (2) Tax reduction reserve, $9,997, (3) General government, $14,975, and (4) Subsequent Fiscal Year Budget, $39,989. As of the end of the current fiscal year, the County’s governmental funds reported combined ending fund balance of $384,889, an increase of 3.8%, or $14,098 in comparison with the prior year. Approximately 91.8% of the total fund balance, or $353,470, 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 $294,416 while total fund balance reached $297,870. 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 $393 million. Spendable fund balance represents 74.9% of the total fund expenditures, while total fund balance represents 75.8% of the same amount, a 4% increase from the prior year. During the current fiscal year, the fund balance of the General Fund increased by $26.6 million. The following provides an explanation for the change in fund balance. 32 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued)  Total revenues exceeded total expenditures by $56.8 million. General Fund revenues ended the year with an increase of $13.8 million or 3.2% over the prior year. Total expenditures increased $15.3 million.  Most revenue categories were essentially unchanged from the prior year except for Taxes which increased by $6.4 million, Other Revenues and Charges for Current Services which increased by $2.9 and $2.8 million respectively. The $2.9 million increase in Other Revenues was a combination of decreased sales of assets, related to the prior year sale of the old Atascadero library, and the receipt of $5 million from a contractor who abandoned a development. Charges for Current Services increased due to larger billings for Fire Protection and Behavioral Health Services and due to increased billings by the General Fund for overhead costs.  Total expenditures in the General Fund increased $15.3 million, 4.0%, from the prior year. Expenditures increased across all functions. Negotiated salaries and benefit raises increased costs in all functions and comprised most of the increases in the Public Protection, Public Assistance, and Education functions. Additionally, General Fund expenses rose due to higher maintenance costs for general government facilities and purchases of several software systems including Office 365 and Budget Formulation & Management, a replacement for the County’s budget preparation software. Greater professional services expenditures for Behavioral Health also contributed to the increase. Capital Projects The Capital Projects Fund handles construction projects for the County’s governmental funds. The fund had a total fund balance of $16.1 million. Capital outlay expenditures exceeded revenues by $13.3 million and transfers in totaled $6.4 million. The net of these two factors resulted in a $6.9 million decrease in fund balance for the current year. Funding for specific projects comes primarily from use of designations, public facilities fees, issuance of long-term debt, and aid from other government agencies. The General Fund transferred $6.2 million to the Capital Projects Fund of which $1.8 million is for the Juvenile Hall expansion project and the remainder going toward general government and parks 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 $520.7 million in the current fiscal year, an increase of approximately 1.6% or $8 million from the prior fiscal year revenues of $512.7 million. The following table presents the amount of revenues from various sources and also displays increases or decreases from the prior year. 33 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Table C Revenues Classified by Source Governmental Funds Fund Financial Statements For the Year Ended June 30, 2016 (in thousands) 2015-2016 2014-2015 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Revenues by Source: Taxes $ 185,764 35.7% $ 178,740 34.9% $ 7,024 3.9% Licenses, Permits, Franchises 10,539 2.0% 10,452 2.0% 87 0.8% Fines, Forfeitures, and Penalties 5,173 1.0% 5,686 1.1% (513) (9.0%) Revenues from Use of Money and Property 4,939 0.9% 3,864 0.8% 1,075 27.8% Aid from Governmental Agencies 256,490 49.3% 261,351 51.0% (4,861) (1.9%) Charges for Current Services 46,308 8.9% 43,530 8.5% 2,778 6.4% Other Revenues 11,504 2.2% 9,110 1.7% 2,394 26.3% Total $ 520,717 100% $ 512,733 100% $ 7,984 1.6% 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 $1.1 million or 27.8% due to increased interest earnings the majority of which were in the general fund.  Aid from Governmental Agencies decreased $4.9 million or 1.9%. The reduction is a combination of decreased State Aid and increased Federal and Other Governmental Aid. Overall State Aid decreased by $9.1 million with $5 million of the decrease relating to a prior year one-time back payment for SB 90 mandated claims. Other factors affecting State Aid include the expiration of a flood control zone grant offset by increases in Medi-Cal and monies to the Capital Projects fund for construction of the women’s jail. A $3.6 million increase in Federal Aid is mostly comprised of increased Welfare Administration monies, while a $599 thousand increase in Other Governmental Aid is related to Social Services programs.  Other Revenues increased $2.4 million or 26.3%. The increase was a combination of receipt of $5 million from a contractor who abandoned a development and a decrease related to the prior year sale of the Atascadero library. The following table presents the amount of expenditures by function as well as increases or decreases from the prior year. 34 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Table D Expenditures By Function Including Capital Outlay Governmental Funds Fund Financial Statements For the Year Ended June 30, 2016 (in thousands) 2015-2016 2014-2015 Increase/(Decrease) Amount Percent Amount Percent Amount Percent of Total of Total Change Expenditures by Function: General Government $ 54,461 10.8% $ 51,207 10.8% $ 3,254 6.4% Public Protection 156,096 30.8% 157,783 33.3% (1,687) (1.1%) Public Ways and 41,044 8.1% 29,903 6.3% 11,141 37.3% Facilities Health and Sanitation 81,591 16.1% 75,116 15.9% 6,475 8.6% Public Assistance 111,227 21.9% 107,104 22.6% 4,123 3.8% Education 10,534 2.1% 11,388 2.4% (854) (7.5%) Recreational and Cultural Services 9,888 2.0% 10,104 2.1% (216) (2.1%) Principal payments 6,788 1.3% 6,070 1.3% 718 11.8% Interest on Long-Term 0.9% Debt 4,687 5,209 1.1% (522) (10.0%) Capital outlay 30,465 6.0% 20,019 4.2% 10,446 52.2% Total $ 506,781 100% $ 473,903 100% $ 32,878 6.9% The following provides an explanation of the expenditures by function that changed significantly over the prior year.  General Government expenditures increased $3.3 million or 6.4%. Salaries and benefits rose across almost all functions, including General Government, due to negotiated increases and regular employee step increases. Services and supplies expenditures in the General Government function also rose with the implementation of a new recording and cashiering system in the Clerk-Recorder’s Office and the implementation of the single largest energy efficiency retrofit project in the history of the County that will save energy, reduce costs, and reduce greenhouse gas emissions in a number of County facilities.  Public Ways and Facilities expenditures increased $11.1 million or 37.3%. The fluctuation is primarily attributable to microsurfacing, overlay, and chip seal projects throughout the County, particularly in the Los Osos area due to completion of the community’s new wastewater system. Additionally, the replacement of the Tar Springs Bridge on Branch Mill Road in the south county contributed to the overall increase in expenditures.  Health and Sanitation expenditures increased $6.5 million or 8.6%. The growth is caused by increased professional services expenditures for youth and adult outpatient services as well as for Mental Health Services Act enhanced crisis and adult full service partnership services.  Capital Outlay expenditures increased $10.4 million or 52.2%. The increase primarily relates to continuing construction activity on both the Women’s Jail Project and the expansion of the Juvenile Hall. 35 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Proprietary Funds The County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The following table shows actual revenues, expenses, and results of operations for the FY 2015-16. Table E Statement of Revenues, Expenses and Results of Operations Proprietary Funds Fund Financial Statements For the Year Ended June 30, 2016 (in thousands) Major Nonmajor Funds Funds Total Nacimiento Lopez Other Water Flood Los Osos Enterprise Total Airport Contract Control Wastewater Funds Enterprise Operating revenues $ 5,232 $ 17,168 $ 6,531 $ 28 $ 14,075 $ 43,034 Operating expenses 5,818 5,569 4,831 2,092 13,594 31,904 Operating income (loss) (586) 11,599 1,700 (2,064) 481 11,130 Non- operating revenues (expenses), net (193) (7,412) (83) 1,110 2,311 (4,267) Net income (loss) before contributions and transfers (779) 4,187 1,617 (954) 2,792 6,863 Contributions and transfers, net 7,004 (487) - 5,638 (161) 11,994 Change in net position $ 6,225 $ 3,700 $ 1,617 $ 4,684 $ 2,631 $ 18,857 All the enterprise funds are expected to continue to meet their ongoing cost of operations and to be able to maintain sufficient reserves in the long-term.  The Airport Fund reported an operating loss of $586 thousand, $414 thousand less than the prior year loss of $1.0 million. Net position increased by $6.2 million compared to a decrease in net position of $483 thousand in the prior year. The increase in net position is primarily due to capital contributions of $7 million for the construction of a new terminal along with a number of small decreases in various operating expenses. Enplanement activity grew for the second consecutive year with a 4.1% increase over the prior year.  The Nacimiento Water Contract Fund realized operating income of $11.6 million, a significant increase from the prior years’ operating income of $3.0 million. The increase is mostly attributable to an additional $6.2 million in water sales and $1.6 million in other billings to outside agencies over the prior year. The increased revenue significantly contributed to the $8.6 million increase in operating income over the prior year and the $3.7 million increase in net position, compared to the prior years’ $4.3 million decrease in net position. 36 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued)  The Lopez Flood Control Fund reported $1.7 million in operating income, an increase of $138 thousand or 8.8% from the prior year. Net position increased by $1.6 million due to increases in water sales and interest income and slightly lower interest payments on debt.  The Los Osos Wastewater Fund reported an operating loss of $2.1 million. FY 15-16 was the first year that depreciation was reported for fund operations which contributed $1 million to the operating loss. Services and supplies costs also increased with the ramp-up of operations. Capital contributions decreased to $4.2 million, a $22.2 million decrease from the prior year amount which is 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 $4.7 million. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget for expenditures and transfers out increased by $37.1 million, or 8%, during the year, contributing towards the final amended budget. This increase was funded in part by increases in budgeted revenues of $21.9 million and the use of reserves and designations for the balance. Unanticipated revenues totaling $12.1 million in State and Federal Aid, $1.4 million in Charges for Current Services, $4.4 million in Other Revenue, $518 thousand in Fines, Forfeitures, and Penalties, $892 thousand in Inter-fund Revenues, and $2.6 million in Other Financing sources financed the budget augmentations. The largest budget augmentations occurred in the functional areas of Health and Sanitation ($6.9 million), Public Ways and Facilities ($4.7 million), General Government ($4.5 million), Public Assistance ($3.3 million), and Public Protection ($2.5 million). The $6.9 million in Health and Sanitation function augmentations were primarily for Public Health services, $4.5 million, and Mental Health Services, $2.1 million, with the remainder to Drug and Alcohol Services. Most of Public Ways and Facilities’ $4.7 million augmentation is for construction costs related to a development abandoned by the initial developer. The $4.5 million in augmentations for the General Government function were primarily for the maintenance and upgrade of County facilities including a renovation of the Los Osos tennis courts. The $3.3 million increase in the Public Assistance function relates to Social Services including foster care and adoption assistance, housing placement and supportive services. Significant Public Protection function budget augmentations include $1.6 million for the Sheriff-Coroner’s programs. The remaining increase is due to various smaller augmentations for the Office of Emergency Services, Probation, and Planning and Building. At the close of the fiscal year, actual General Fund expenditures were 87.9% of budget, while General Fund revenues were realized at 100.9% of budget. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At June 30, 2016, the County had $1.8 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 $67.7 million or 4% from last year. 37 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Table F Capital Assets June 30, 2016 (in thousands) Govern- Govern- Business Business Total Total mental mental Type Type Capital Capital Activities Activities Activities Activities Assets Assets Total June 30, June 30, June 30, June 30, June 30, June 30, Percent 2015 2016 2015 2016 2015 2016 Change Land $ 794,547 $ 795,091 $ 32,621 $ 35,710 $ 827,168 $ 830,801 0.4% Water Rights - - 48,417 51,028 48,417 51,028 5.4% Other Property Non Depreciable - - 1,968 1,968 1,968 1,968 - Construction- in-progress 58,202 74,891 150,532 15,325 208,734 90,216 (56.8%) Structures & Improvements 183,460 188,692 169,235 170,845 352,695 359,537 1.9% Equipment 80,476 84,779 3,365 3,736 83,841 88,515 5.6% Other Property Depreciable 340 340 554 554 894 894 - Infrastructure Depreciable 346,338 372,510 194,363 359,686 540,701 732,196 35.4% Subtotal 1,463,363 1,516,303 601,055 638,852 2,064,418 2,155,155 4.4% Less Accumulated Depreciation (310,728) (325,996) (61,949) (69,697) (372,677) (395,693) 6.2% Total $ 1,152,635 $ 1,190,307 $ 539,106 $ 569,155 $ 1,691,741 $ 1,759,462 4.0% Major additions and future commitments in capital assets - Governmental Activities County Roads had the majority of additions in governmental activities with $18.2 million worth of assets. Microsurfacing, overlay, and chip seal projects throughout the County comprised most of the road additions. Other major roads projects include the widening of River Road in the north county and the replacement of the Tar Springs Bridge on Branch Mill Road in the south county. Other notable capital asset additions during FY 2015-16 include the Cayucos Pier renovation ($909 thousand), information technology network equipment ($478 thousand), and upgrades to the boat-in camps at Santa Margarita Lake ($264 thousand). Major on-going projects include a new planning and building permit tracking system, construction of a Women’s Jail, and expansion of the Juvenile Hall. Major additions and future commitments in capital assets - Business-type Activities Within Business-type Activities, $23.1 million of the additions 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. Construction was completed in FY 2015-16. Other major additions include, the construction of the new airport terminal which increased capital assets by $10.5 million and has $23.7 million in future commitments. More detailed information about the County's capital assets is presented in Notes 4 and 5 in the financial statements. 38 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) Debt Administration At the end of the current fiscal year, the County of San Luis Obispo had total notes and bonds payable of $545 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 2015-16 was $145.3 million. Pension Obligation Bonds debt service payments are funded by County payroll benefits. The remainder of the County’s debt consists of: $41.1 million in certificates of participation, which are repaid from a variety of revenues; $86.7 million in State loans; $79.4 million in assessment bonds relating to the Los Osos Wastewater project, and $183.1 million in revenue bonds which are repaid with water service revenue. General Obligation Bonds totaling $9.6 million are backed by the full faith and credit of the County. Table G Outstanding Debt June 30, 2016 (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 2015 2016 2015 2016 2015 2016 Change Certificates of participation $ 24,661 $ 23,503 $ 18,171 $ 17,587 $ 42,832 $ 41,090 (4.1%) Pension Obligation Bonds 146,219 145,291 - - 146,219 145,291 (0.6%) State notes - - 72,774 86,611 72,774 86,611 19.0% Revenue bonds - - 189,332 183,085 189,332 183,085 (3.3%) General obligation bonds - - 10,057 9,606 10,057 9,606 (4.5%) Assessment Bonds - 79,829 79,396 79,829 79,396 (0.5%) $ 170,880 $ 168,794 $ 370,163 $ 376,285 $ 541,043 $ 545,079 0.7% The increase over last year for the County’s certificates of participation, notes, and bonds payable was $4 million, or 0.7%. This increase is the net of new debt issuances and scheduled debt payments. During FY 2015-16, the County issued $107,115 of 2015 Series A Nacimiento Water Project Revenue Refunding Bonds to provide funds to advance refund certain 2007 Series A Nacimiento Water Project Revenue Bonds. The bonds will be repaid from and secured by water sales revenues. Additional information on the issuance of debt can be found in Note 10 to the financial statements. 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 $602.2 million. Other liabilities include compensated absences of $27.4 million for Governmental Activities and $354 thousand for Business-type Activities; landfill post-closure costs of $5.6 million; and a self-insurance liability of $18.7 million. More detailed information about the County’s long-term debt and other long- term liabilities is presented in Note 10 to the financial statements. 39 MANAGEMENT’S DISCUSSION AND ANALYSIS (Continued) ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES  Even though the recent recession is behind us, the County remains mindful of the work that was required to get to this point, and is very cognizant of the level of effort that will be necessary to maintain a solid financial position. The County is committed to employing the same strategies that helped during years of budget difficulty as a guide to investing in programs and services, while sustaining fiscal health.  The Fiscal Year 2016-17 budget represents conservative growth compared to the Fiscal Year 2015-16 budget; however, the growth is not viewed as “adding back” to previously reduced programs and services. County operations must be flexible enough to respond to the changing needs of the community. The FY 2016-17 budget focuses on ensuring that the County can meet both current and future needs.  The five-year drought, which is affecting all areas of California, is particularly severe in San Luis Obispo County due to a reliance on groundwater and the major presence of the agricultural industry.  Various State revenues which fund local transportation infrastructure continue to decline including the Highway Users Tax (fuel tax) and Transportation Development Act revenues which are affected by declining gasoline sales and prices.  Economic indicators continue to show signs of local economic improvement from the recent economic downturn:  The number of building permits issued increased 6.9% from the prior year, indicating a solid housing market.  Property transfer taxes for unincorporated areas came in 12% higher than the preceding year reflecting an increase in the value and number of real estate transactions.  County assessed property tax valuations increased from $45.4 million to $48.1 million or 6%.  Transient Occupancy Tax (bed tax) collections continued an upward trend in FY 2015-16, with a 6% increase over FY 2014-15.  The Board of Supervisors adopted the FY 2016-17 budget in June 2016, with a $102.6 million fund balance in the general fund, of which $40 million was appropriated to finance the current year’s expenditures including contingencies, $13 million was placed in general reserves, and $34.4 million was earmarked for designations. The total General Fund budget for FY 2016-17 is $493 million, a 5.1% increase from the previous year. The County budget also includes community-wide results and indicators as well as department goals and performance measures that gauge how departments are meeting the needs of the community. REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the County's finances and to show the County's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the County Auditor-Controller-Treasurer-Tax Collector-Public Administrator, Post Office Box 1149, San Luis Obispo, California 93406-1149. This report is also available online at www.slocounty.ca.gov. 40 ____________________________________________________________ BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS ____________________________________________________________ 41 42 COUNTY OF SAN LUIS OBISPO STATEMENT OF NET POSITION JUNE 30, 2016 (In Thousands) Primary Government Governmental Business-Type Component Unit Activities Activities Total First 5 ASSETS Current Assets: Cash and cash equivalents $ 420,565 $ 57,428 $ 477,993 $ 8,414 Accounts receivable, net 535 2,225 2,760 - Property taxes receivable 11,487 - 11,487 - Other receivables 3,650 113,402 117,052 - Due from other governments 42,006 2,707 44,713 3 24 Deposits with others - 13 13 12 Internal balances 10,131 (10,131) - - Inventories 5 70 - 570 - Prepaid items 6 68 1 51 819 2 Other assets 7,616 - 7,616 - Total Current Assets 497,228 165,795 663,023 8,752 Noncurrent Assets: Restricted cash with fiscal agent 3,702 11,005 14,707 - Prepaid insurance - 2 78 278 OPEB asset 1,117 - 1,117 - Capital Assets: - Nondepreciable 869,982 104,031 974,013 - Depreciable, net 320,325 465,124 785,449 - Total Noncurrent Assets 1,195,126 580,438 1,775,564 - Total Assets 1,692,354 746,233 2,438,587 8,752 DEFERRED OUTFLOWS OF RESOURCES Deferred pensions 115,143 1,138 116,281 - Deferred loss on refunding - 4,171 4,171 - Total Deferred Outflows of Resources 115,143 5,309 120,452 - LIABILITIES Current Liabilities: Salaries and benefits payable 9,428 90 9,518 18 Accounts payable 20,476 11,730 32,206 4 15 Deposits from others 3,825 4,272 8,097 - Accrued interest 1,695 6,187 7,882 - Other current liabilities 8,511 - 8,511 - Unearned revenue 2,627 13,053 15,680 - Bonds and notes payable 7,576 7,603 15,179 - Compensated absences 18,514 1 69 18,683 - Landfill closure/postclosure costs 6 40 - 640 - Self insurance payable 3,457 - 3,457 - Total Current Liabilities 76,749 43,104 119,853 4 33 Long-Term Liabilities: Net Pension Liability 501,541 5,085 506,626 21 Bonds and notes payable 161,218 372,853 534,071 - Compensated absences 8,918 1 85 9,103 - Landfill closure/postclosure costs 4,980 - 4,980 - Self insurance payable 15,250 - 15,250 - Total Long-Term Liabilities 691,907 378,123 1,070,030 21 Total Liabilities 768,656 421,227 1,189,883 4 54 DEFERRED INFLOWS OF RESOURCES Deferred pensions - - - 22 Total Deferred Inflows of Resources - - - 22 NET POSITION Net investment in capital assets 1,168,573 237,157 1,405,730 - Restricted for: General government 3,506 - 3,506 - Public protection 4,753 - 4,753 - Health and sanitation 1 74 - 174 - Public assistance 17 - 17 - Public ways and facilities 19,618 - 19,618 - Recreation and culture 22 - 22 - Education 1 - 1 - Debt service 13,139 - 13,139 - Unrestricted (170,962) 93,158 (77,804) 8,276 Total Net Position $ 1,038,841 $ 330,315 $ 1,369,156 $ 8,276 The accompanying notes are an integral part of these financial statements. 43 COUNTY OF SAN LUIS OBISPO STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2016 (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 $ 53,282 $ 13,702 $ 735 $ 4 5 $ 14,482 Public protection 170,134 20,768 63,528 4,420 88,716 Public ways and facilities 3 3,418 9,434 11,025 6,031 26,490 Health and sanitation 88,326 7,179 61,950 - 69,129 Public assistance 118,089 2,107 98,414 - 100,521 Education 1 1,934 1,952 124 - 2,076 Recreation and cultural services 8,702 4,975 153 10,804 15,932 Interest on long-term debt 4,602 - - - - Total governmental activities 488,487 60,117 235,929 21,300 317,346 Business-type activities: Airport 6,117 5,165 126 7,069 12,360 Golf 3,131 2,589 - - 2,589 State Water Contract 5,848 6,846 13 - 6,859 Nacimiento Water Contract 1 4,888 17,048 9 - 17,057 Lopez Dam 6,220 6,530 8 - 6,538 Lopez Park 4 - - - - General Flood Control 824 9 60 - - 960 County Service Areas 4,065 3,551 295 - 3,846 Los Osos Wastewater 3,807 - 2,810 4,157 6,967 Total business-type activities 44,904 42,689 3,261 11,226 57,176 Total primary government $ 533,391 $ 102,806 $ 239,190 $ 32,526 $ 374,522 Component unit: First Five San Luis Obispo $ 1,945 $ - $ 1,799 $ - $ 1,799 The accompanying notes are an integral part of these financial statements. 44 COUNTY OF SAN LUIS OBISPO STATEMENT OF ACTIVITIES (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (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 $ (38,800) $ - $ (38,800) Public protection (81,418) - (81,418) Public ways and facilities (6,928) - (6,928) Health and sanitation (19,197) - (19,197) Public assistance (17,568) - (17,568) Education (9,858) - (9,858) Recreation and cultural services 7,230 - 7,230 Interest on long-term debt (4,602) - (4,602) Total governmental activities (171,141) - (171,141) Business-type activities: Airport - 6,243 6,243 Golf - (542) ( 542) State Water Contract - 1,011 1,011 Nacimiento Water Contract - 2,169 2,169 Lopez Dam - 3 18 318 Lopez Park - (4) (4) General Flood Control - 1 36 136 County Service Areas - (219) ( 219) Los Osos Wastewater - 3,160 3,160 Total business-type activities - 12,272 12,272 Total primary government $ (171,141) $ 12,272 $ (158,869) Component unit: First Five San Luis Obispo $ (146) General Revenues and Transfers: Taxes: Property taxes 163,367 4,782 168,149 - Sales and use taxes 9,575 - 9,575 - Transient occupancy taxes 9,249 - 9,249 - Transfer tax 2,655 - 2,655 - Other taxes 474 - 474 - Grants not restricted to specific programs 3,140 - 3,140 - Interest earnings not restricted to specific programs 4,401 8 47 5,248 45 Other revenues - 2 68 268 - Transfers (768) 7 68 - - Total General Revenues and Transfers 192,093 6,665 198,758 45 Change in net position 20,952 18,937 39,889 (101) Net position - beginning of year 1 ,017,889 310,628 1,328,517 8,377 Prior period adjustment 7 50 750 - Net position - end of year $ 1,038,841 $ 330,315 $ 1,369,156 $ 8,276 The accompanying notes are an integral part of these financial statements. 45 46 ____________________________________________________________ BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS ____________________________________________________________ 47 48 COUNTY OF SAN LUIS OBISPO BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2016 (In Thousands) Non-Major Total General Capital Projects Governmental Governmental Fund Fund Funds Funds ASSETS Cash and cash equivalents $ 287,720 $ 18,296 $ 71,902 $ 377,918 Restricted cash with fiscal agent - 1,933 1,769 3,702 Accounts receivables, net 176 - 353 529 Accrued property taxes receivable 11,487 - - 11,487 Other receivables 3 ,379 271 - 3,650 Due from other governments 28,769 8,379 4,858 42,006 Due from other funds 1 ,692 - - 1,692 Inventories 99 - - 99 Prepaid items 667 - 1 668 Advances to other funds 3 ,680 - 3,775 7,455 Other assets - - 7,616 7,616 Total assets $ 337,669 $ 28,879 $ 90,274 $ 456,822 LIABILITIES Salaries and benefits payable $ 8,193 $ - $ 410 $ 8,603 Accounts payable 7 ,473 4,420 7,582 19,475 Deposits from others 1 ,556 - 1,140 2,696 Unearned revenue 1 ,336 885 406 2,627 Other current liabilities 935 - 7,576 8,511 Advances from other funds - - 1,197 1,197 Total liabilities 19,493 5,305 18,311 43,109 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 20,306 7,458 1,060 28,824 Total deferred inflows of resources 20,306 7,458 1,060 28,824 FUND BALANCES Nonspendable 3 ,454 - 3,776 7,230 Restricted 2 ,872 - 21,317 24,189 Committed 168,619 16,116 45,810 230,545 Assigned 122,925 - - 122,925 Unassigned - - - - Total fund balances 297,870 16,116 70,903 384,889 Total liabilities, deferred inflows of resources, and fund balances $ 337,669 $ 28,879 $ 90,274 $ 456,822 The accompanying notes are an integral part of these financial statements. 49 COUNTY OF SAN LUIS OBISPO RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES JUNE 30, 2016 (In Thousands) Total Fund Balances - Total Governmental Funds $ 384,889 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. 1,177,265 Accrued property tax and grant revenues are not available to pay for current-period expenditures and therefore are deferred in the funds. 28,824 The other post employment benefit (OPEB) asset is not available to pay for current- period expenditures and therefore is deferred in the funds. 1,117 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. (2,536) 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. 2,181 Interest on long-term debt is recognized as it accrues, regardless of when it is due. (1,695) The pension liability is not due and payable in the current period, and therefore is not reported in the fund financial statements. (456,714) 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. 104,863 Long-termliabilities,includingbondsandnotespayable,arenotdueandpayableinthecurrent period. Therefore, they are not reported in the governmental funds as follows: Bonds and notes payable $ (168,794) Compensated absences (24,939) Landfill closure/post closure costs ( 5,620) (199,353) Net Position of Governmental Activities $ 1,038,841 The accompanying notes are an integral part of these financial statements. 50 COUNTY OF SAN LUIS OBISPO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Non-Major Total General Capital Projects Governmental Governmental Fund Fund Funds Funds REVENUES Taxes $ 173,794 $ - $ 11,970 $ 185,764 Licenses, permits, and franchises 10,539 - - 10,539 Fines, forfeitures, and penalties 3 ,823 526 824 5 ,173 Use of money and property 4 ,157 156 626 4 ,939 Aid from other governments 216,622 15,278 24,590 256,490 Charges for services 32,270 834 13,204 46,308 Other revenues 8 ,934 403 2,167 11,504 Total revenues 450,139 17,197 53,381 520,717 EXPENDITURES Current: General government 54,461 - - 54,461 Public protection 150,386 - 5,710 156,096 Public ways and facilities 2 ,120 - 38,924 41,044 Health and sanitation 76,895 - 4,696 81,591 Public assistance 108,958 - 2,269 111,227 Education 474 - 10,060 10,534 Recreation and cultural services - - 9,888 9 ,888 Debt service: Principal payments - - 6,788 6 ,788 Interest and fiscal charges - - 4,687 4 ,687 Capital outlay - 30,465 - 30,465 Total expenditures 393,294 30,465 83,022 506,781 Excess (deficiency) of revenues over (under) expenditures 56,845 (13,268) (29,641) 13,936 OTHER FINANCING SOURCES (USES) Transfers in 938 6,416 28,449 35,803 Transfers out ( 31,199) - (4,442) ( 35,641) Total other financing sources (uses) ( 30,261) 6,416 24,007 162 Net change in fund balances 26,584 (6,852) (5,634) 14,098 Fund balances - beginning 271,286 22,968 76,537 370,791 Fund balances - ending $ 297,870 $ 16,116 $ 70,903 $ 384,889 The accompanying notes are an integral part of these financial statements. 51 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, 2016 (In Thousands) Net Change in Fund Balances - Total Governmental Funds $ 14,098 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. 3,437 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 $ 30,465 General government 3,895 Public protection 2,858 Public ways 17,077 Health and sanitation 106 Public assistance 35 Education 10 Recreation and cultural services 1,341 55,787 In the statement of activities, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense. (18,278) The net effect of various miscellaneous transactions involving capital assets (i.e. sales, trade-ins, and donations) is to decrease net position. (316) 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 6,788 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 $ ( 656) Change in accrued interest payable (92) Change in landfill closure/postclosure costs ( 1,343) Change in OPEB ( 1,266) Change in Net Pension Liability (103,917) Change in deferred pension outflows 70,861 Capital appreciation bond accretion ( 4,787) Amortization of debt premiums, discounts and issuance costs 85 (41,115) 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. 6 31 The net (revenue) expense allocable to business-type activities (80) Change in Net Position of Governmental Activities $ 20,952 The accompanying notes are an integral part of these financial statements. 52 COUNTY OF SAN LUIS OBISPO STATEMENT OF FUND NET POSITION PROPRIETARY FUNDS JUNE 30, 2016 (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 $ 4,382 $ 16,649 $ 9,818 $ 7,641 $ 18,938 $ 57,428 $ 42,647 Accounts receivable, net - 1 06 - - 2,119 2,225 6 Other receivables 2 04 - - 113,198 - 113,402 - Due from other governments 2,307 - - 4 00 - 2,707 - Deposits with others - - - - 13 13 - Inventories - - - - - - 4 71 Prepaid items - - 34 - 1 17 1 51 - Total current assets 6,893 16,755 9,852 121,239 21,187 175,926 43,124 Noncurrent assets: Advances to other funds - - - - 1 50 1 50 - Restricted cash with fiscal agent - 10,518 - - 4 87 11,005 - Prepaid insurance - 2 78 - - - 2 78 - Capital assets: Nondepreciable: Land 23,189 3,259 2,155 5,444 1,663 35,710 - Construction in progress 12,926 7 1,366 - 1,027 15,326 - Water rights - - - - 51,027 51,027 - Other property - - 1,968 - - 1,968 - Depreciable: Infrastructure, net 6 46 152,860 23,781 163,989 1,984 343,260 - Structures and improvements, net 52,373 9,264 34,359 8 96 23,235 120,127 3 16 Equipment, net 4 93 - 39 3 08 4 01 1,241 12,726 Other property, net - - - - 4 96 4 96 - Total noncurrent assets 89,627 176,186 63,668 170,637 80,470 580,588 13,042 Total assets 96,520 192,941 73,520 291,876 101,657 756,514 56,166 DEFERRED OUTFLOWS OF RESOURCES Deferred pensions 5 95 - - - 5 43 1,138 10,280 Deferred loss on refunding - 4,171 - - - 4,171 - Total deferred outflows of resources 5 95 4,171 - - 5 43 5,309 10,280 LIABILITIES Current liabilities: Salaries and benefits payable 47 - - - 43 90 8 25 Accounts payable 2,294 7 40 55 3,281 5,360 11,730 1,001 Interest payable 97 2,829 3 85 2,811 65 6,187 - Self insurance payable - - - - - - 3,457 Deposits from others 39 1,058 1 25 - 3,050 4,272 1,129 Unearned revenue 44 9,002 2,276 - 1,731 13,053 - Due to other funds 1,692 - - - - 1,692 - Accrued vacation and sick leave - current 98 - - - 71 1 69 1,614 Notes and bond payable - current 57 3,665 2,037 1,307 5 37 7,603 - Total current liabilities 4,368 17,294 4,878 7,399 10,857 44,796 8,026 Noncurrent liabilities: Self insurance liability - - - - - - 15,250 Advances from other funds 3,144 - - 2,752 5 12 6,408 - Accrued vacation and sick leave 82 - - - 1 03 1 85 8 79 Notes and bonds payable 5 66 183,593 36,849 143,255 8,590 372,853 - Net Pension Liability 2,741 - - - 2,344 5,085 44,827 Total noncurrent liabilities 6,533 183,593 36,849 146,007 11,549 384,531 60,956 Total liabilities 10,901 200,887 41,727 153,406 22,406 429,327 68,982 NET POSITION Net investment in capital assets 89,004 (21,590) 24,782 26,075 71,343 189,614 13,042 Unrestricted ( 2,790) 17,815 7,011 112,395 8,451 142,882 (15,578) Total net position $ 86,214 $ (3,775) $ 31,793 $ 138,470 $ 79,794 332,496 $ (2,536) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds ( 2,181) Net Position of Business-Type Activities per Government-Wide Financial Statements $ 330,315 The accompanying notes are an integral part of these financial statements. 53 COUNTY OF SAN LUIS OBISPO STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (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 $ 5,199 $ 17,048 $ 6,530 $ 2 8 $ 13,961 $ 42,766 $ 50,214 Other revenues 33 120 1 - 1 14 2 68 1 80 Total operating revenues 5,232 17,168 6,531 28 14,075 43,034 50,394 OPERATING EXPENSES: Salaries and benefits 1,562 - - - 1,450 3,012 26,375 Services and supplies 1,830 3,153 3,422 8 33 10,612 19,850 16,598 Other charges 26 152 3 2 26 32 4 39 - Insurance and compensation claims - - - - - - 3,386 Depreciation 2,276 2,197 1,342 1,013 1,101 7,929 2,429 Countywide cost allocation 1 24 67 64 20 3 99 6 74 5 71 Total operating expenses 5,818 5,569 4,831 2,092 13,594 31,904 49,359 Operating income (loss) (586) 11,599 1,700 ( 2,064) 4 81 11,130 1,035 NONOPERATING REVENUES (EXPENSES): Property taxes - 1,350 1,246 - 2,186 4,782 - Interest income 29 562 64 48 1 44 8 47 2 96 Interest expense (52) (9,333) ( 1,401) ( 1,748) (325) (12,859) - Other non-operating revenue (expenses) (296) - - - (2) (298) 2 30 Aid from governmental agencies 1 26 9 8 2,810 3 08 3,261 - Total nonoperating revenues (expenses) (193) (7,412) (83) 1,110 2,311 ( 4,267) 5 26 Income (Loss) before contributions and transfers (779) 4,187 1,617 (954) 2,792 6,863 1,561 Capital contributions 7,069 - - 4,157 - 11,226 - Transfers in 23 - - 1,489 1 97 1,709 - Transfers out (88) (487) - (8) (358) (941) (930) Change in net position 6,225 3,700 1,617 4,684 2,631 18,857 6 31 Net position - beginning 79,239 (7,475) 30,176 133,786 77,163 ( 3,167) Prior period adjustment 7 50 - - - - - Net position - beginning (restated) 79,989 (7,475) 30,176 133,786 77,163 ( 3,167) Net position - ending $ 86,214 $ (3,775) $ 31,793 $ 138,470 $ 79,794 $ (2,536) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 80 Change in Net Position of Business-Type Activities per Government-Wide Financial Statements $ 18,937 The accompanying notes are an integral part of these financial statements. 54 COUNTY OF SAN LUIS OBISPO STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (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 $ 5,159 $ 23,717 $ 6 ,579 $ 28 $ 12,923 $ 48,406 $ - Receipts from interfund billings - - - - - - 50,397 Payments for goods and services 161 (3,334) (3,696) (1,000) ( 11,511) (19,380) (14,438) Payments to employees for service (1,348) - - - (1,271) (2,619) (22,898) Payments for insurance benefits - - - - - - (3,297) Payments for premiums - - - - - - (2,621) Net cash provided by operating activities 3,972 2 0,383 2,883 (972) 141 2 6,407 7,143 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Property tax proceeds - 1,350 1,246 - 2,186 4,782 - Grants and subsidies from other government agencies (2,075) 9 8 - 513 (1,545) - Advances from other funds - - - 2,752 71 2,823 - Advances to other funds - - - - 487 487 - Due to other funds - - - - (208) (208) - Transfers from other funds 23 - - 1,489 197 1,709 - Transfers to other funds ( 88) (487) - (8) (358) (941) (930) Net cash provided (used) by noncapital financing activities (2,140) 872 1,254 4,233 2,888 7,107 (930) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchases and construction of capital assets (10,509) (156) (506) (26,453) (3,268) (40,892) (2,909) Proceeds from issuance of long-term debt - 107 - 16,059 215 1 6,381 - Proceeds from sale of capital assets - - - - - - 232 Grants and subsidies from other government agencies - - - 5,783 - 5,783 - Advances from other funds (261) - - - - (261) - Due to other funds 1,692 - - - - 1,692 - Capital contributions 7,069 - - 4,157 - 1 1,226 - Principal paid on capital debt ( 56) (6,137) (2,028) (1,271) (543) (10,035) - Interest paid on capital debt ( 31) (9,870) (1,415) (713) (312) (12,341) - Net cash (used) by capital and related financing activities (2,096) (16,056) (3,949) (2,438) (3,908) (28,447) (2,677) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 29 355 64 48 144 640 296 Net cash provided (used) by investing activities 29 355 64 48 144 640 296 Net increase (decrease) in cash and cash equivalents (235) 5,554 252 871 (735) 5,707 3,832 CASH AND CASH EQUIVALENTS: Beginning of year 4,617 2 1,613 9,566 6,770 20,160 6 2,726 3 8,815 End of year $ 4,382 $ 27,167 $ 9 ,818 $ 7,641 $ 19,425 $ 68,433 $ 42,647 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss) $ (586) $ 11,599 $ 1 ,700 $ (2,064) $ 481 $ 11,130 $ 1 ,035 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 2,276 2,197 1,342 1,013 1,101 7,929 2,429 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: Receivables, net ( 36) 253 - - (673) (456) 2 Inventory - - - - 21 21 90 Prepaid items 13 - (2) - 94 105 - Accounts payable 2,140 38 (222) 79 (584) 1,451 56 Deposits from others ( 12) - 17 - 4 9 ( 35) Salaries and benefits payable 9 - - - 3 12 193 Deferred pensions (385) - - - (369) (754) (6,940) Net pension liability 567 - - - 542 1,109 10,178 Unearned revenue ( 37) 6,296 48 - (483) 5,824 - Other accrued liabilities - - - - - - 42 Accrued vacation and sick leave 23 - - - 4 27 4 Self-insurance liability - - - - - - 89 Total adjustments 4,558 8,784 1,183 1,092 (340) 1 5,277 6,108 Net cash provided (used) by operating activities $ 3,972 $ 20,383 $ 2 ,883 $ (972) $ 141 $ 26,407 $ 7 ,143 The accompanying notes are an integral part of these financial statements. 55 COUNTY OF SAN LUIS OBISPO STATEMENT OF FIDUCIARY NET POSITION AGENCY AND INVESTMENT TRUST FUNDS JUNE 30, 2016 (In Thousands) SAN LUIS OBISPO PENSION TRUST FUND DECEMBER 31, 2015 (In Thousands) Investment San Luis Obispo Agency Trust County Funds Fund Pension Trust June 30, 2016 June 30, 2016 December 31, 2015 ASSETS Cash and cash equivalents $ 69,478 $ 328,662 $ 36,730 Contributions receivable - - 2,054 Accrued interest and dividends receivable - - 1,321 Accounts receivable - - 21 Securities sold - - 17,924 Prepaid benefits - - 60 Investments pension trust: Bonds and notes, at fair value - - 308,080 International fixed income, at fair value - - 121,581 Collateralized mortgage obligations, at fair value - - 5,001 Domestic equities, at fair value - - 260,146 International equities, at fair value - - 258,033 Alternative investments, at fair value - - 55,698 Real estate, at fair value - - 118,507 Capital assets-net of accumulated depreciation - - 1 97 Total assets $ 69,478 $ 328,662 $ 1,185,353 LIABILITIES Agency obligations $ 69,478 $ - $ - Securities purchased - - 26,916 Accrued liabilities - - 1,062 Prefunded Contributions - - 21,572 Total liabilities $ 6 9,478 $ - $ 49,550 NET POSITION Net position held in trust for pool participants $ - $ 328,662 $ - Net position restricted for pensions - - 1,135,803 Total net position $ - $ 328,662 $ 1 ,135,803 The accompanying notes are an integral part of these financial statements. 56 COUNTY OF SAN LUIS OBISPO STATEMENT OF CHANGES IN FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) SAN LUIS OBISPO PENSION TRUST FUND FOR THE YEAR ENDED DECEMBER 31, 2015 (In Thousands) Investment San Luis Obispo Trust County Fund Pension Trust June 30, 2016 December 31, 2015 ADDITIONS Contributions: County contributions $ 864,828 $ - Employer contributions - 3 3,618 Member contributions - 24,587 Total contributions 864,828 5 8,205 Investment income: Realized and unrealized gains and losses - (31,450) Interest 1,475 5,765 Dividends - 1 0,279 Real estate management trust income - 1,539 Real estate operating income, net - 1,314 Other investment income, net - - Investment expenses - (4,153) Total investment income 1,475 (16,706) Total additions 866,303 4 1,499 DEDUCTIONS Benefits: Monthly benefit payments - 7 2,442 Refunds of contributions - 1,613 Death benefits - 999 Total benefits - 7 5,054 Administrative expenses - 2,528 Prefunded Discount Amortization - 1,450 Total administrative expenses - 3,978 Distributions from investment pool 8 99,833 - Total deductions 8 99,833 7 9,032 Change in net position ( 33,530) ( 37,533) Net position - beginning 3 62,192 1,173,336 Net position - ending $ 3 28,662 $ 1,135,803 The accompanying notes are an integral part of these financial statements. 57 58 ____________________________________________________________ NOTES TO THE BASIC FINANCIAL STATEMENTS ____________________________________________________________ 59 60 COUNTY OF SAN LUIS OBISPO NOTES TO THE BASIC FINANCIAL STATEMENTS (IN THOUSANDS) JUNE 30, 2016 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. FINANCIAL REPORTING ENTITY The County of San Luis Obispo (the County) was established by an act of the Legislature on February 18, 1850 as one of California’s original 27 Counties. The County is a political subdivision of the State of California and may exercise the powers specified by the Constitution and laws of the State. The County exercises its powers through an elected five-member Board of Supervisors. The County provides various services on a countywide basis including public protection, public ways and facilities, health and sanitation, public assistance, education, recreational and cultural services. The County reporting entity includes all significant organizations, departments, and agencies over which the County is considered financially accountable. The component units discussed below are included in the County’s reporting entity because of the significance of their operational and financial relationships with the County. The accompanying financial statements present the financial position of the County and those County-related entities that meet the criteria for component units established by the Governmental Accounting Standards Board (GASB) Statements 14 and 61. Blended Component Units These component units are so intertwined with the County that they are, in substance, the same as the County and, therefore, are blended and reported as if they were part of the County. Each of the following entities’ governing bodies are substantively the same as the governing body of the County, are fiscally accountable to the County, and have a significant relationship with the County, and therefore are included in its government-wide, governmental fund and proprietary fund financial statements: County Service Areas – County Service Areas have been established for the purpose of providing specific services to distinct geographical areas within the County. These services include drainage and sewer collections facilities maintenance, street lighting energy charges, centralized septic services, wastewater disposal and treatment, and fire and emergency medical services in various unincorporated areas of the county. Flood Control and Water Conservation Districts – Flood control and water conservation districts have been established for the purpose of providing specific flood and conservation services to distinct geographical areas within the county. These services include weather and hydrological data collections services, delivery, water treatment and 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 Authority’s members. San Luis Obispo County Public Facilities Corporation - The PFC is a nonprofit public benefit corporation organized to assist public agencies within the County of San Luis Obispo with the acquisition and construction of various public facilities. Separate financial statements or additional financial information for each of the component units may be obtained from the Auditor-Controller-Treasurer-Tax Collector at 1055 Monterey, Room D290, San Luis Obispo, CA 93408. 61 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Also, included in the accompanying financial statements as investment trust funds are the assets of numerous self-governed schools, special districts, and regional boards and authorities for which the County Treasurer acts as custodian of those assets. The financial reporting for these governmental entities, which are independent of the County, is limited to the total amount of cash and investments and the related fiduciary responsibility of the County for disbursement of these assets. Activities of these entities are administered by separate boards and are independent of the County Board of Supervisors. The County Auditor-Controller-Treasurer-Tax Collector makes disbursements upon the request of the entity’s officers. The County Board of Supervisors has no effective authority to govern, manage, approve budgets, assume financial accountability, establish revenue limits, nor to appropriate surplus funds available in these entities. Seven cities and numerous self-governed special districts provide services to the residents of the county. The operations of these entities have been excluded from the basic financial statements as each entity conducts its own day-to-day operations and answers to its own governing board. Discretely Presented Component Unit First 5 San Luis Obispo County – First 5 was created in 1998 with the passage of Proposition 10, the California Children and Families First Act. First 5’s mission is to allocate funds from the California Children and Families Trust Fund and advocate for quality programs and services, supporting children prenatal to age 5, to ensure that every child is healthy and ready to learn in school. First 5 is governed by a nine-member commission that includes public officials and community leaders from the fields of early childhood education, health care, and family support. The County can influence the day-to-day operations and financial decisions of First 5 as the County Board of Supervisors appoints all commission members. First 5 is reported as a discretely presented component unit because its governing body is not the substantively the same as the County’s governing body, and it does not provide services entirely or exclusively to the County. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-wide Financial Statements The Government-wide financial statements consist of the statement of net position and the statement of activities that report information about the County and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. The statements distinguish between governmental and business-type activities of the County. Governmental activities generally are financed through taxes, intergovernmental revenues and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the County and for each function of the County’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Internal activities and indirect expenses are consolidated in the statement of activities. Examples of expenses that have been eliminated include the allocation of indirect costs under the County-wide Cost Allocation Plan and internal payments for services provided between departments. Amounts reported as program revenues include 1) fees, fines and charges to customers or applicants for goods or services offered by the programs, 2) operating grants and contributions that are restricted to meeting the operational requirements of a particular program, and 3) capital grants and contributions restricted to particular programs. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operation. The principal operating revenues of the 62 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, 2016, the County implemented the following Governmental Accounting Standards Board (GASB) Statements:  GASB Statement No. 72, Fair Value Measurement and Application. The requirements of this statement are effective for financial statement periods beginning after June 15, 2015. GASB 72 addresses accounting and financial reporting issues related to fair value measurements, provides guidance for determining a fair value measurement for financial reporting purposes, and provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. GASB 72 increases comparability of financial statements among governments by requiring measurement of certain assets and liabilities at fair value using a consistent and more detailed definition of fair value and accepted valuation techniques. The Statement also enhances fair value application guidance and related disclosures in order to provide information to financial statement users about the impact of fair value measurements on a government’s financial position.  GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The requirements of this statement are effective for financial periods beginning after June 15, 2015. GASB 76 reduces the hierarchy of generally accepted accounting principles (GAAP) to two categories of authoritative GAAP. The GAAP Hierarchy consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities and the framework for selecting those principles. GASB 76 improves financial reporting by directing governments to apply financial reporting guidance with less variation, which will improve the usefulness of financial statement information for making decisions and assessing accountability. The Statement will also enhance the comparability of financial statement information among governments.  GASB Statement No. 79, Certain External Investment Pools and Pool Participants. The requirements of this statement are effective for financial statement periods beginning after June 15, 2015, except for certain provisions on portfolio quality, custodial credit risk, and shadow pricing. Those provisions are effective for reporting periods beginning after December 15, 2015. GASB 79 addresses accounting and financial reporting for certain investment pools and pool participants, specifically establishing criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial reporting purposes. The Statement also establishes additional note disclosure requirements for qualify external investment pools that measure all of their investments at amortized cost for financial reporting purposes and for governments that participate in those pools. The provisions of the Statement enhance comparability of financial statements among governments. 63 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, construction management 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, 2015.  The Investment Trust Funds account for the assets of legally separate entities that deposit cash with the County Treasurer. These entities include school and community college districts, other special districts governed by local boards, regional boards and authorities and pass through funds for tax collections for cities. These funds represent the assets, primarily cash and investments, and the related liability of the County to disburse these monies on demand. The County reports on 99 different Investment Trust Funds.  The Agency Funds account for the resources held by the County in a custodial capacity on behalf of other agencies. The County reports on 137 different Agency Funds. These include accounts for temporary holding of funds for the tax assessment areas created under the 1915 Improvement Act, temporary clearing funds, and other temporary holding funds not classified in other agency categories. 64 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. Interfund services provided and used are not eliminated in the process of consolidation. 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, 2016. The fair value of pooled investments is determined annually and is based on current market prices. 65 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 99.85 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. Deferred Outflows and Inflows of Resources In addition to assets, the financial statements may report a separate section for deferred outflows of resources. A deferred outflow of resources is defined as a consumption of net position that is applicable to a future reporting period. In addition to liabilities, the financial statements may report a separate section for deferred inflows of resources which are defined as an acquisition of net position that is applicable to a future reporting period. 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. 66 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Interfund Transactions Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the Government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by nonspendable fund balance in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Inventories and Prepaid Items Inventories held by the General Fund, and the Public Works and Garage Internal Service Funds are carried at cost (first-in, first-out). The Internal Service Funds’ inventories are controlled by perpetual inventory systems, and are adjusted as appropriate to reflect year-end physical inventory counts. Governmental Funds (other than the General Fund) record inventory as expenditures when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the Government-wide and Fund financial statements. Capital Assets Capital assets, which include land, structures and improvements, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activity columns in the Government-wide financial statements. Capital assets are defined as assets with an initial individual cost greater than the capitalization threshold for the specified type of asset and an estimated useful life beyond a single fiscal period. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. General infrastructure assets acquired prior to July 1, 1980, are reported at estimated historical cost using deflated replacement costs. Normal maintenance and repairs are not capitalized, but are charged to operations when incurred. Betterments or major improvements, which significantly increase values, change capacities, or extend useful lives, are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations. Capital outlays are recorded as expenditures in the General, Special Revenue, and Capital Projects Funds and as capital assets in the Government-wide financial statements to the extent the County’s capitalization thresholds are met. Interest incurred during the construction phase on financing capital assets of business-type activities is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Amortization of assets acquired under capital leases is included in depreciation and amortization. Facilities and improvements, infrastructure, and machinery and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the estimated useful lives. The capitalization thresholds and estimated useful lives of specific asset types are as follows: Asset Type Capitalization Threshold Estimated Useful Life Land No threshold --------------- Infrastructure $100,000 20 to 100 years Structures & Improvements $25,000 15 to 50 years Equipment $5,000 2 to 15 years Capital Lease By asset type Lease term or useful life 67 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Compensated Absences The County’s policy is to permit employees to accumulate earned but unused vacation and sick leave benefits. Each year-end, a liability is accrued for the balance of unpaid compensatory time off, sick leave, and vacation earned. Accumulated benefits will be liquidated in future years as employees elect to use them. In the normal course of business, all payments of these accumulated benefits will be funded from appropriations in the year in which they are to be paid; therefore, the total liability is recorded as long-term. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee designations and retirements. Long-term Obligations In the Government-wide financial statements, and in proprietary funds in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund, financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the fund financial statements, governmental funds report fund balance in classifications based primarily on the extent to which the County is bound to honor the constraints on the specific purposes for which amounts in the funds can be spent. The fund balance classifications used are nonspendable, restricted, committed, assigned and unassigned (see Note 11 for a description of these categories). In circumstances when an expenditure is made for a purpose for which amounts are available from multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. E. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 68 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) DETAIL NOTES ON ALL FUNDS 2. CASH AND CASH EQUIVALENTS Cash in Treasury Investments made by the Treasurer are regulated by the California Government Code (CGC) and by the County's Investment Policy (IP). The objectives of the policy in order of priority are safety and preservation of capital, liquidity sufficient to meet scheduled cash flow needs, and then yield, subject to safety and liquidity, while maintaining compliance with federal, state, and local laws and regulations. The San Luis Obispo County Investment Pool is rated by Fitch Ratings, one of the Nationally Recognized Statistical Rating Organizations. Fitch has consistently rated the County Pool with their highest rating since FY 1994-95. The County Pool’s “AAA” fund credit quality 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” fund volatility rating reflects the pool’s low market risk and capacity to return stable principal value to meet anticipated cash flow requirements, even in adverse interest rate environments. Effective August 23, 2016, Fitch revised their bond rating scales. The addition of an “f” suffix to the Fund Credit Quality Rating indicates a fund rather than an individual user or issuer. In addition, the previously assigned Fund Volatility Ratings have been renamed Fund Market Risk Sensitivity Ratings, and the related rating scale has been revised from “V1” to “V6” to “S1” to “S6”. Consequently, Fitch revised its highest rating for the County Pool from “AAA/V1” to “AAAf/S1”. 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 CGC. The CTOC and the Board of Supervisors review and approve the County’s Investment Policy 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. The CGC directs the CTOC to cause an annual Investment Policy 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 CGC; 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 Program Compliance Audit for the fiscal year ended June 30, 2016. The results of these audits have been presented to the Board of Supervisors on a yearly basis. Under parameters established by the CGC, 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 CGC. The CGC 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 CGC, 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 are stated at fair value. 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. 69 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Investments were authorized by the California Government Code and the County Treasurer's IP: Securities were held in a customer-segregated safekeeping account during the fiscal year. A Cash Statement and Asset List is requested monthly from the appropriate institutions and verified against records maintained in the Treasury. Governmental Accounting Standards Board (GASB) Statement No. 31 requires governmental external investment pools to report certain investments at fair value in the financial statements and report the change in the fair value of investments in the year in which the change occurred. In compliance with these requirements, the fair value of the County's combined pool is determined annually and is based on current market prices received from the securities custodian, CalTRUST, 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 1.002271912280 in the Quarterly Report of Investments as of June 30, 2016, which can be used for financial reporting by the pool participants. The fair value of the investments is the pool participant’s amount invested balance multiplied by the fair value dollar factor. The County’s combined pool has invested in the CalTRUST Short-Term Fund (CTSTF). CalTRUST is a Joint Powers Agency Authority created by local public agencies to provide a method for local public agencies to pool their assets for investment purposes. CalTRUST is governed by a Board of Trustees made up of experienced local agency treasury and investment officers. The CalTRUST Board sets overall policies for the program and selects and supervises the activities of the investment manager, currently Wells Fargo Capital Management. Public agencies invest in shares of beneficial interest with a Net Asset Value (NAV) that fluctuates. CalTRUST attempts to minimize NAV fluctuation, and historically, the NAV of this fund has been stable. This type of investment is an authorized investment under California GC §53601 (p). As of June 30, 2016, the CTSTF NAV was $1.002 per $1.00 of investment. 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 1.000621222 for its portfolio as of June 30, 2016. 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, 2016, 2.81% 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. GASB Statement No. 79 establishes specific criteria used to determine whether a qualifying external investment pool my elect to use an amortized cost exception to fair value measurement. The criteria provide qualifying external investment pools and participants in those pools with consistent application of an amortized cost-based measurement for financial reporting purposes. There was no material impact on the County’s financial statement as a result of the implementation of GASB Statement No. 79. As of June 30, 2016, the County’s combined pool includes funds deposited in collateralized Public Investment Money Market Accounts (PIMMAs) and Certificates of Deposit (CDs) placed through the Certificate of Deposit Account Registry Service (CDARS). PIMMAs are interest-bearing active bank accounts and by CGC §53631 et seq., are considered depository accounts, not investments. PIMMAs are fully liquid and collateralized by eligible securities per CGC §53651 et seq. Deposits placed through CDARS as authorized by CGC §53635.8, are distributed into individual CDs 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. Even though PIMMAs 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 CGC. 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 70 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) procedures within the limits of the California GC and all relevant laws. As of June 30, 2016, 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 specific written 1 year 5% approval of County Treasurer for each type of 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 specific written 1 year 10% approval of County Treasurer for each type of investment. Treasury Notes or Bonds of this state Not authorized in FY 2015-16 Registered Treasury Notes or Bonds of any of the Not authorized in FY 2015-16 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% specific written approval of County Treasurer for each type of investment. U.S. Government Agencies: Federal National Mortgage Assoc. Not authorized in FY 2015-16 Federal Home Loan Mortgage Corp. Not authorized in FY 2015-16 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 2015-16 Commercial Paper 30 days 5% 2% Collateralized Certificates of Deposit 1 year 5% 1% Negotiable Certificates of Deposit Not authorized in FY 2015-16 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 2015-16 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 2015-16 Money Market Mutual Funds (Shares of Beneficial 10% per issuer. Requires Interest) issued by a Joint Powers Authority specific written approval of N/A 10% County Treasurer for each type of investment Money Market Mutual Funds (Shares of Beneficial Interest) issued by diversified management Not authorized in FY 2015-16 companies 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 2015-16 interest Mortgage Pass-Through Securities Not authorized in FY 2015-16 Local Agency Investment Fund N/A 15% N/A Supranationals Not authorized in FY 2015-16 *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. 71 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Interest Rate Risk In accordance with its investment policy, the County manages its exposure to declines in fair values by structuring the portfolio so that securities mature to meet cash flow requirements for ongoing operations and thereby avoiding the need to sell securities on the open market prior to maturity. Custodial Credit Risk The County minimizes this type of credit risk by pre-qualifying the custodial financial institution, and requiring the custodian to hold securities in the County Treasurer's name. Credit Risk The County minimizes its exposure to credit risk by pre-qualifying the financial institutions limiting investments to the safest types of securities, diversifying the portfolio, and setting limits per issuer. Concentration of Credit Risk At June 30, 2016, the County did not have investments in corporate bonds or medium term notes. 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, 2016. Investment Type S&P Moody's % of Portfolio* U.S. Treasuries AA+ Aaa 27.34% U.S. Government Agencies AA+ Aaa 54.25% CDARS Not Rated Not Rated 6.01% Local Agency Investment Fund Not Rated Not Rated 9.98% CalTRUST-Short-Term Fund AAf/S1+ Not Rated 2.37% TRAN Not Rated Not Rated 0.05% Total 100.00% *Bank Deposit accounts such as PIMMAs 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 4% and 7% respectively, of the County’s combined pool inclusive of the PIMMAs 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, 2016, the following investments exceeded the 5% disclosure threshold: Investment Type % of Portfolio U.S. Government Agencies-Federal Home Loan Bank 26.84% U.S. Government Agencies-Farm Credit Bank 27.41% *Federal Home Loan Bank and Farm Credit Bank are 19.13% and 19.53% respectively, of the County’s combined pool inclusive of the PIMMAs and therefore are within the limits authorized in the Treasurer’s Investment Policy. At June 30, 2016, the County had the following investments and interest-bearing deposits (in thousands): Weighted Average Maturity Interest Maturity Fair Instrument Dates Rate % Years Value Cost CDARS 7/28/16- 0.349%- 0.81 $ 38,000 $ 38,000 6/29/17 0.628% U.S. Treasuries 8/31/16- 0.410%- 1.18 172,976 172,126 2/15/19 1.265% U.S. Government 7/18/16- 0.570%- Agencies 4/26/19 1.340% 1.10 343,179 341,551 Local Agency Investment On Fund Demand 0.58% - 63,126 63,000 CalTRUST On Demand 0.73% - 15,030 15,000 TRAN 1/30/18 2.60% 1.58 307 304 Total Investments in County Treasury 0.97 $ 632,618 $ 629,981 72 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Deposits in Financial Institutions 263,221 263,221 Cash on Hand 190 190 Total Cash held in Treasury 896,029 893,392 Deposits in Transit 571 571 Outstanding Warrants (14,519) (14,519) Total 882,081 879,444 Imprest Cash 1,303 1,303 Non-pool Cash Deposits 1,163 1,163 Other Cash Deposits 2,466 2,466 Total cash and cash equivalents $ 884,547 $ 881,910 Fair Restricted Cash with Fiscal Agent Value Cost U.S. Government & Federal Agencies $ 12,775 $ 12,775 Certificates of Deposit & Money Market 1,932 1,932 Accounts Total 14,707 14,707 Total restricted and unrestricted cash and cash equivalents $ 899,254 $ 896,617 Fair Total Cash and Investments Summary Value Total Governmental Activities $ 424,267 Total Business-type Activities 68,433 Total Fiduciary Funds 398,140 Total Component Unit 8,414 Total Cash and Investments $ 899,254 The following represents a condensed statement of net position and changes in net position for the Treasurer's investment pool as of June 30, 2016, (in thousands): Fair Value Statement of Net Position: Net position held for pool participants $ 882,079 Equity of internal pool participants $ 554,171 Equity of external pool participants (voluntary and involuntary) 327,908 Total Equity $ 882,079 Statement of Changes in Net Position: Revenue $ 5,394 Investment Costs (851) Net Deposits 2,253 Change in fair value 1,087 Net change in pool 7,883 Net position at July 1, 2015 874,196 Net position at June 30, 2016 $ 882,079 Fair Value Measurements The County categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is divided into 3 levels with each level based on the source used to measure the fair value of the asset. 73 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County has the following recurring fair value measurements as of June 30, 2016: Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Investments by fair value level (Level 1) (Level 2) (Level 3) Debt securities US Treasuries $ 172,976 $ 172,976 $ - $ - US Government Agencies 343,179 343,179 - - TRAN 307 - 307 CDARS 38,000 38,000 - - Total measured at fair value $ 554,462 $ 554,155 $ 307 $ - Investments measured at amortized cost LAIF 63,126 - - - Cal TRUST 15,030 - - - Total investments in County Treasury $ 632,618 $ - $ - $ - Restricted Cash with Fiscal Agent Cash and investments at June 30, 2016 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 $ 12,773 Restricted interest on lease reserves 1 Restricted for Contractor Retentions 1,933 Total Restricted Cash $ 14,707 Cash Deposits Outside of the Treasury Pool At fiscal year end, the carrying amount of the County's other cash deposits was $1,068,171 and the combined financial institutions' balance was $1,160,908. The difference of $92,737 between the County's deposit balance and the financial institutions' balance results from transactions in transit, and outstanding warrants and bond coupons. The entire bank balance of $1,160,908 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 Nonmajor Internal Special Service General Fund Revenue Funds Funds Accounts $ 176 $ 353 $ 6 Receivable Allowance for - - - Doubtful Accounts Net Accounts $ 176 $ 353 $ 6 Receivable 74 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Business-Type Activities Nonmajor Nacimiento Water Enterprise Contract Funds Accounts $ 106 $ 2,119 Receivable Allowance for - - Doubtful Accounts Net Accounts $ 106 $ 2,119 Receivable 4. CAPITAL ASSETS A summary of changes in capital assets for the year ended June 30, 2016, is as follows (in thousands): Balance Transfers & Balance Governmental Activities July 1, 2015 Additions Retirements Adjustments June 30, 2016 Capital assets, not being depreciated: Land $ 794,547 $ 95 $ (31) $ 480 $ 795,091 Construction in progress 58,202 43,125 (197) (26,239) 74,891 Total capital assets, not being depreciated 852,749 43,220 (228) (25,759) 869,982 Capital assets, being depreciated: Structures and improvements 183,460 1,344 (1,006) 4,894 188,692 Equipment 80,476 5,239 (4,667) 3,731 84,779 Infrastructure 346,338 9,139 (20) 17,053 372,510 Other property 340 - - - 340 Total capital assets, being depreciated 610,614 15,722 (5,693) 25,678 646,321 Less accumulated depreciation for: Structures and improvements (76,764) (4,049) 1,000 - (79,813) Equipment (47,763) (6,316) 4,347 72 (49,660) Infrastructure (186,178) (10,339) 20 - (196,497) Other property (23) (3) - - (26) (310,728) (20,707) 5,367 72 (325,996) Total accumulated depreciation 299,886 (4,985) (326) 25,750 320,325 Total capital assets being depreciated, net $1,152,635 $ 38,235 $ (554) $ (9) $ 1,190,307 Governmental activities capital assets, net 75 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Balance Transfers & Balance Business-Type Activities July 1, 2015 Additions Retirements Adjustments June 30, 2016 Capital assets, not being depreciated: Land $ 32,621 $ 151 $ (35) $ 2,973 $ 35,710 Construction in progress 150,532 11,439 - (146,646) 15,325 Water Rights 48,417 2,611 - - 51,028 Other Property 1,968 - - - 1,968 Total capital assets, not being depreciated 233,538 14,201 (35) (143,673) 104,031 Capital assets, being depreciated: Infrastructure 194,363 22,965 - 142,358 359,686 Structures and improvements 169,235 157 (425) 1,878 170,845 Equipment 3,365 195 (92) 268 3,736 Other Property 554 - - - 554 Total capital assets, being depreciated 367,517 23,317 (517) 144,504 534,821 Less accumulated depreciation for: Infrastructure (12,440) (3,987) - - (16,427) Structures and improvements (47,127) (3,759) 168 - (50,718) Equipment (2,324) (183) 85 (72) (2,494) Other Property (58) - - - (58) (61,949) (7,929) 253 (72) (69,697) Total accumulated depreciation 305,568 15,388 (264) 144,432 465,124 Total capital assets being depreciated, net $ 539,106 $ 29,589 $ (299) $ 759 $ 569,155 Business-type activities capital assets, net Depreciation Expense Depreciation expense was charged to functions as follows (in thousands): Governmental Activities Amount General Government $ 3,611 Public Protection 2,720 Public Ways and Facilities 10,104 Health and Sanitation 595 Public Assistance 242 Education 351 Recreational and Cultural Services 655 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 2,429 Total Depreciation Expense-Governmental Activities $ 20,707 Business-type Activities Amount Airport $ 2,276 Golf 365 Los Osos Wastewater 1,013 State Water Project 206 Nacimiento 2,197 Lopez Flood Control 1,342 Nonmajor Enterprise 530 Total Depreciation Expense-Business-type Activities $ 7,929 76 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, 2016, (in thousands): Governmental Activities Expended to Committed Remaining Project June 30, 2016 Funds Budget Sheriff Women’s Jail Expansion $ 33,472 $ 10,952 $ 3,089 SLO Probation Juvenile Hall Expansion 19,016 1,695 - Roads Infrastructure 15,985 15,255 23,220 WTP 6th Membrane Filter Mod 928 14 30 MS Office 365 Project 789 154 - Health-COC An Svs Expansion 628 639 - AG Levee WMP Alt3a (Prop1E/HMGP)FCZ1 559 127 836 New Storage Tanks – CSA 10 Water 531 - 164 SST Capital Project 464 3,871 1,103 General Government SLO - Elevator 424 491 1,022 Parks – Avila -Bob Jones Trail (Ontario Rd) 118 14 3,579 Budget Prep System Replacement 391 932 - Permit Tracking System 381 681 - Business-Type Activities Expended to Committed Remaining Project June 30, 2016 Funds Budget SLO Airport Facilities Infrastructure $ 12,926 $ 23,746 $ 25,188 6. LEASES County as Lessor The County's General Fund and Enterprise Funds receive revenue from various properties leased to others under agreements classified as operating leases in accordance with Financial Accounting Standards Board (FASB) Statement 13. The leases cover periods ranging generally from 1 to 40 years. The General Fund leases portions of the former County General Hospital and North County healthcare facilities. The original cost of these facilities was $10,787. As of June 30, 2016 they had a carrying value of $8,036 net of accumulated depreciation of $2,751. The Airport leases portions of airport land to various operators. The cost and carrying value of the original Airport land area is $2,011. The following is a schedule of minimum future rentals to be received under these non-cancelable operating leases at June 30, 2016 (in thousands): Year Ending June 30 General Fund Airport 2017 $ 707 $ 328 2018 684 271 2019 673 261 2020 638 247 2021 167 238 Later Years 1,180 5,762 Total $ 4,049 $ 7,107 77 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 $2,327 for the fiscal year ended June 30, 2016. County as Lessee Operating Leases: The County has commitments under long-term real property operating lease agreements for facilities used in operations. These leases do not meet any of the four criteria for capitalization set by FASB 13. The County is the lessee under operating leases for real property used to house certain County functions. In addition to real property leases, the County has also entered into operating leases for equipment, of which most are data processing and office equipment leases. Management expects that in the normal course of business, leases that expire will be renewed or replaced by other leases. Commitments under the operating lease agreements for equipment, as described above, are not material. Rental payments for fiscal year ended June 30, 2016 totaled $3,375. 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, 2016 for the next five years and for each five-year period thereafter (in thousands): Year Ending Minimum Lease June 30 Payments 2017 $ 2,722 2018 2,226 2019 2,121 2020 2,012 2021 1,715 2022-2026 6,503 2027-2031 3,618 2032-2036 1,676 Total $ 22,593 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 claims settlements and there were three 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 $ 218,883 maximum ----- Dental None–Funded by Employees ----- 78 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 85% confidence level. Beginning of the fiscal year Current year claims, Balance at fiscal liability changes & estimates Claim payments year end 2014-15 $ 18,316 $ 4,945 $ 4,643 $ 18,618 2015-16 $ 18,618 $ 4,377 $ 4,288 $ 18,707 8. INTERFUND RECEIVABLES AND PAYABLES The composition of interfund balances at June 30, 2016 was (in thousands): Payable Fund (Due to Balance) Receivable Fund (Due from Balance) Amount Airport General Fund $ 1,692 Total $ 1,692 The Airport owes the General Fund $1,692 for construction costs on the new airport terminal project. Payable Fund (Advances from Balance) Receivable Fund (Advances to Balance) Amount Nonmajor Governmental Funds Nonmajor Enterprise Funds $ 150 Nonmajor Governmental Funds 659 General Fund 388 1,197 Nonmajor Enterprise Funds General Fund 148 Nonmajor Governmental Funds 364 512 Airport General Fund 3,144 Los Osos Wastewater Nonmajor Governmental Funds 2,752 Total $ 7,605 Nonmajor Governmental Funds’ advances from Nonmajor Enterprise Funds of $150 are comprised of funds from the Lopez Park Enterprise Fund to the Parks Special Revenue Fund for future debt service obligations. Advances between Nonmajor Governmental Funds are internal loans of $659 from the Roads Special Revenue Fund to the Roads Impact Fees Special Revenue Fund. Advances related to the General Fund include an internal loan to the County Services Area 21 Special Revenue Fund of $193 and a loan of $195 related to the restoration of the Cayucos Pier. 79 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The Nonmajor Enterprise Funds advances of $512 represent internal loans received by the County Services Areas Special Districts Enterprise Funds from the General Fund ($148) and from the County Services Area 10 Special Revenue Fund ($275), and from the Flood Control Zone for ($89). The Airport owes the General Fund $3,144 for internal loans for various projects including the refinancing of a State loan for the construction of hangars. The Los Osos Wastewater Fund received a long-term operating loan from the Flood Control Zone Fund of $2,752. 9. TRANSFERS A reconciliation of transfers is detailed below (in thousands): Transfer From Transfer To Amount General Fund Nonmajor Governmental Funds $ 24,971 Capital Projects Fund 6,203 Airport 13 Nonmajor Enterprise Funds 12 31,199 Nonmajor Governmental Funds General Fund 882 Capital Projects Fund 213 Nonmajor Governmental Funds 1,673 Los Osos Wastewater 1,489 Nonmajor Enterprise Funds 185 4,442 Airport General Fund 35 Nonmajor Governmental Funds 53 88 Nonmajor Enterprise Funds General Fund 1 Nonmajor Governmental Funds 357 358 Internal Service Funds General Fund 20 Nonmajor Governmental Funds 900 Airport 10 930 Los Osos Wastewater Nonmajor Governmental Funds 8 Nacimiento Nonmajor Governmental Funds 487 Total Transfers $ 37,512 General Fund transfers to Nonmajor Governmental Funds included contributions to the following Special Revenue Funds: Roads ($11,146), Library ($634), Community Development ($591), County Medical Services Program ($318) and Parks ($3,617). The General Fund also transferred $8,665 to the Pension Obligation Bond Debt Service Fund to finance debt service payments, $13 to the Airport, $12 to Golf, and $6,203 to the Capital Projects Fund for various capital projects. 80 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Nonmajor Governmental Fund transfers consist of contributions of Public Facilities Fees revenue from the Public Facilities Fees Special Revenue Fund to the General Fund ($398) for debt service, and to the Capital Projects Fund ($206), and the Library Fund ($541) to fund capital and maintenance projects. The Parks Special Revenue Fund made transfers to the Capital Projects Fund ($7), to the Pension Obligation Bond Debt Service Fund ($160), and to the Lopez Park Enterprise Fund ($4) for debt service. The Parks Special Revenue Fund also transferred $31 to the General Fund for the purchase of equipment. The Roads Fund transferred $4 to Flood Control Zone 18 Special Revenue Fund for maintenance projects. The Road Impact Fee Special Revenue Fund transferred Impact Fees of $453 to the General Fund for debt service, and $703 to the Roads Fund for capital and maintenance projects. The Library Fund ($212), the County Medical Services Program Fund ($18) and the Driving Under the Influence Fund ($35) made transfers to the Pension Obligation Bond Debt Service Fund to finance debt service payments. Other Nonmajor Governmental Fund transfers include a transfer of $1,489 of grant related monies from the Flood Control District to the Los Osos Wastewater Fund, and $181 of transfers between various County Service Areas. The Airport Enterprise Fund transferred $35 to the General Fund and $53 to the Pension Obligation Bond Fund for debt service. Transfers from Nonmajor Enterprise funds included $1 of transfers from the County Service Areas to the General Fund for debt service, transfers of $44 from the Golf Enterprise Fund to the Pension Obligation Bond Debt Service Fund, a $293 transfer of grant monies from the County Service Area 23 Enterprise fund to the Flood Control Zone Special Revenue Fund, and transfers between various County Services Areas ($20). The Garage Internal Service Fund transferred $20 to the General Fund and $10 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 ($851) and Garage ($49) Internal Service Funds. The Los Osos Wastewater Fund transferred $8 to the Flood Control Zone Special Revenue Fund for debt service and the Nacimiento Construction Fund transferred surplus funds of $487 to the Flood Control Zone Special Revenue Fund. 10. BONDED INDEBTEDNESS AND LONG TERM DEBT Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2016 (in thousands) is as follows: Beginning Ending Balance Balance Due within Governmental Activities July 1, 2015 Adjustments Additions Reductions June 30, 2016 one year Bonds and notes payable: Certificates of participation $ 23,600 $ - $ - $ 1,073 $ 22,527 $ 1,116 Unamortized discount on COP (91) - - (4) (87) - Unamortized premium on COP 1,152 - - 89 1,063 - Pension Obligation Bonds 146,219 - 4,787 5,715 145,291 6,460 Total Bonds and notes payable 170,880 - 4,787 6,873 168,794 7,576 Other liabilities: Compensated absences 26,730 - 16,515 15,813 27,432 18,514 Landfill post-closure costs 4,277 - 1,740 397 5,620 640 Self insurance 18,618 - 4,377 4,288 18,707 3,457 Total other liabilities 49,625 - 22,632 20,498 51,759 22,611 Total Governmental Activities $ 220,505 $ - $ 27,419 $ 27,371 $ 220,553 $ 30,187 81 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Beginning Ending Balance Balance Due within Business-Type Activities July 1, 2015 Adjustments Additions Reductions June 30, 2016 one year Bonds and notes payable: Certificates of participation $ 17,745 $ - $ 215 $ 766 $ 17,194 $ 799 Unamortized premium on COP 426 - - 33 393 - State notes 72,774 - 15,220 1,383 86,611 1,422 Revenue bonds 183,813 - 107,115 113,730 177,198 3,665 Unamortized premium on Revenue 5,519 - 9,828 5,289 10,058 - Bonds Unamortized outflows on Bond - - 181 4,352 (4,171) - Refinancing General obligation bonds 9,155 - - 395 8,760 410 Unamortized premium on General 902 - - 56 846 - obligation bonds Assessment bonds 79,829 - 838 1,271 79,396 1,307 Total bonds and notes payable 370,163 - 133,397 127,275 376,285 7,603 Other liabilities: Compensated absences 328 - 162 136 354 169 - Total other liabilities 328 162 136 354 169 Total Business-Type Activities $ 370,491 $ - $ 133,559 $ 127,409 $ 376,639 $ 7,772 Annual debt service requirements for governmental activities as of June 30, 2016, are summarized as follows: Governmental Activities Certificates of Participation Pension Obligation Bonds Year Ended June 30, Principal Interest Principal Unaccreted Interest Total Appreciation 2017 $ 1,116 $ 958 $ 6,460 $ - $ 3,644 $ 10,104 2018 1,159 913 7,265 - 3,336 10,601 2019 1,207 865 6,976 969 3,171 11,116 2020 1,253 816 49,609 1,436 1,586 52,631 2021 1,301 765 7,091 1,949 - 9,040 2022-2026 7,423 2,923 35,704 18,681 - 54,385 2027-2031 4,824 1,398 32,186 32,444 - 4,630 2032-2036 3,105 665 - - - - 2037-2041 1,139 65 - - - - Total $ 22,527 $ 9,368 $ 145,291 $ 55,479 $ 11,737 $ 212,507 Business-Type Activities Certificates of Participation State Notes Revenue Bonds Year Ended June 30, Principal Interest Principal Interest Principal Interest 2017 $ 799 $ 770 $ 1,422 $ 566 $ 3,665 $ 8,395 2018 829 738 3,070 1,828 3,850 8,206 2019 867 703 3,104 1,758 4,050 8,005 2020 903 665 3,177 1,685 4,270 7,793 2021 942 625 3,252 1,610 4,495 7,569 2022-2026 5,456 2,387 16,778 6,885 26,265 34,052 2027-2031 5,335 985 16,303 4,933 33,510 26,791 2032-2036 416 337 11,030 3,518 42,280 18,019 2037-2041 497 255 12,178 2,370 54,813 6,716 2042-2046 597 156 13,445 1,103 - - 2047-2051 535 43 2,852 57 - - 2052-2056 18 1 - - - - Total $ 17,194 $ 7,665 $ 86,611 $ 26,313 $ 177,198 $ 125,546 82 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Business-Type Activities (continued) General Obligation Bonds Assessment Bonds Year Ended June 30, Principal Interest Principal Interest 2017 $ 410 $ 429 $ 1,307 $ 2,165 2018 425 413 1,343 2,129 2019 440 394 1,388 2,091 2020 460 374 1,415 2,053 2021 485 351 1,460 2,013 2022-2026 2,840 1,343 7,942 9,432 2027-2031 3,700 484 9,105 8,262 2032-2036 - - 10,455 6,920 2037-2041 - - 11,999 5,378 2042-2046 - - 13,764 3,609 2047-2051 - - 15,793 1,581 2052-2056 - - 3,425 48 Total $ 8,760 $ 3,788 $ 79,396 $ 45,681 Long-term liabilities at June 30, 2016 consisted of the following: Original Date of Semi Annual Issue Outstanding at Issue Maturity Interest Rates Installments Amount 6/30/2016 Governmental Activities Certificates of Participation 2007 Series A 2/8/2007 2037 4% - 4.25% $304 - $308 $5,090 $4,225 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 6,165 Used to finance improvements to the Vineyard Drive Interchange. Debt service is provided by Development Fees. 2012 Series A 10/15/2012 2028 0.5% -5.0% $1,034-1,289 14,427 12,137 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 $22,527 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 $13,725 2003 Series C Capital Appreciation Bonds 7/2/2003 2031 5.27% - 5.73% zero - $15,000 44,199 144,480 2003 Series C CABs Unaccreted Interest (55,479) 2009 Series A Term Bonds 8/19/2009 2019 7.45% $3,171 42,565 42,565 $134,759 $145,291 83 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Date of Maturity Interest Semi Annual Original Outstanding Issue Rates Installments Issue at 6/30/2016 Amount Business-Type Activities Certificates of Participation USDA 2009 4/30/2009 2049 4.375% $6 - $86 $1,631 $1,513 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 9,765 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 0.5%- 5.0% $381-$475 5,323 4,478 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 1,508 1,438 Used to finance a water system improvement project in County Service Area 10A. Debt service is provided by water sales revenues. $20,452 $17,194 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 $1,087 Santa Margarita Water System 1999 2018 3.41% $36 513 68 Lopez Recreation Area 2004 2024 2.5132% $21 325 150 Lopez Water Treatment Plant Upgrade 2006 2028 2.60% $1,672 25,945 19,515 Airport Fuel Farm 2007 2025 4.6557% $86 1,000 624 Los Osos Waste Water Project 2012 2046 2.0% $336-$598 65,167 65,167 $95,961 $86,611 Revenue Bonds 1976 Water Bond-County Service Area 16 4/1/1976 2016 5.00% $7 - $9 $135 $0 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 34,440 5.196% - $2,132 - 2007 Nacimiento Pipeline Project Series B 9/26/2007 2040 5.571% $2,646 38,565 35,645 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. 2015 Nacimiento Water Project Revenue Refunding Bonds Series A 8/5/2015 2038 3.0%-5.0% $2,603-$8,097 107,115 107,113 The 2007 bonds were 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. The 2015 Series A Nacimiento Water Project Revenue Refunding Bonds were issued to provide funds to advance refund certain 2007 Series A Nacimiento Water Project Revenue Bonds. $303,660 $177,198 General Obligation Bonds 2011 Refunding – Lopez Dam 2.0% - Remediation 5/12/2011 2030 5.5% $833 - $840 $10,760 $8,760 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 $83,129 $79,396 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. 84 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Public Facilities Corporation The SLO County Public Facilities Corporation (PFC) was incorporated on September 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 SLO 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. 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, 2016 totals $79,396 with interest rates from 3.25% 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 $27,786 at June 30, 2016. 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 $602,155 with a margin of $593,395. 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, 2016 had an arbitrage liability of $718,443. 85 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Fiscal Year 2015-16 Debt Issue On August 5, 2015, the County issued $107,115 of the 2015 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. 11. NET POSITION/FUND BALANCES The government-wide and business-type activities fund financial statements utilize a net position presentation. Net position is categorized as invested capital assets (net of related debt), restricted and unrestricted. 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, 2016 is as follows (in thousands): Amount Governmental activities $ 1,168,573 Business-type activities 237,157 Total $ 1,405,730 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, 2016 is $19,533 restricted due to enabling legislation. Restricted net position at June 30, 2016 for governmental activities is as follows (in thousands): Amount RESTRICTED FOR: General Government Purchase obligations for Board of Supervisors related professional services $ 20 Purchase obligations for Auditor-Controller-Treasurer-Tax Collector 85 related professional services Purchase obligations for Assessor related software and professional 149 services Purchase obligations for County Counsel related professional services 162 Purchase obligations for Human Resources related professional services 60 Purchase obligations for building maintenance projects 48 Purchase obligations for Information Technology related professional 162 services and equipment Purchase obligations for capital projects 2 Claims, contracts and other restrictions 2,818 Total General Government 3,506 Public Protection Purchase obligations for Waste Management related professional services 55 Purchase obligations for Grand Jury related supplies 1 Purchase obligations for Sheriff-Coroner related professional services and 33 supplies 86 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Purchase obligations for Animal Services professional services and training 9 Purchase obligations for Emergency Services related professional services 1 Purchase obligations for Probation related equipment 4 Purchase obligations for fire protection related software and equipment 1,992 Purchase obligations for Agriculture Commissioner related equipment 3 Purchase obligations for Planning related training, equipment, and 885 professional services Purchase obligations for capital projects 684 Purchase obligations for flood control related engineering and 1,086 environmental services Total Public Protection 4,753 Health and Sanitation Purchase obligations for Behavioral Health related supplies 18 Purchase obligations for Public Health related professional services and 156 software Total Health and Sanitation 174 Public Ways and Facilities Purchase obligations for Public Works related professional services, 71 supplies, and software Road maintenance and construction 7,667 Public facilities fees restricted for public facilities 11,866 Purchase obligations for capital projects 14 Total Public Ways and Facilities 19,618 Recreation and Culture Parks equipment and maintenance services 22 Public Assistance Purchase obligation for Veteran Services related supplies and professional 17 services Education Claims, contracts and other restrictions 1 Debt Service 13,139 Total Restricted Net Position $ 41,230 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, 2016 is as follows (in thousands): Amount Governmental activities $ (170,962) Business-type activities 93,158 Total $ (77,804) In the fund financial statements, governmental funds report fund balance in classifications based primarily on the extent to which the County is bound to honor the constraints imposed on the use of resources reported in the funds. In circumstances when an expenditure is made for a purpose for which amounts are available from multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. As prescribed by GASB Statement No. 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. 87 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued)  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. Fund balances for all the major and nonmajor governmental funds as of June 30, 2016, are distributed as follows: Capital General Projects Nonmajor Fund Fund Gov’tl Funds Total Nonspendable: Inventories $ 99 $ - $ - $ 99 Prepaid Items 667 - 1 668 Advances to other funds 2,688 - 3,775 6,463 Subtotal 3,454 - 3,776 7,230 Restricted for: Tax loss reserves 2,872 - - 2,872 Public facilities - - 11,866 11,866 Traffic impact programs - - 7,667 7,667 Wildlife and grazing - - 15 15 programs Debt service - - 1,769 1,769 Subtotal 2,872 - 21,317 24,189 Committed to: Maintenance projects 11,555 - - 11,555 County Counsel projects 567 - - 567 Assessor projects 376 - - 376 Information Technology 307 - - 307 projects Other general government 2,200 - - 2,200 Planning programs 1,469 - - 1,469 County fire programs 2,402 - - 2,402 Other public protection 129 - - 129 Public health programs 232 - - 232 88 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Capital General Projects Nonmajor Fund Fund Gov’tl Funds Total Behavioral health 93 - - 93 programs Veterans’ Services 189 - - 189 programs Public works engineering 111 - - 111 & consulting services Fish and game programs - - 188 188 Flood control programs - - 16,197 16,197 Lighting programs - - 511 511 Community development - - 381 381 programs Medical services programs - - 762 762 Emergency medical - - 791 791 services Roads - - 6,037 6,037 Community service areas - - 1,399 1,399 Driving under the - - 515 515 influence programs Library - - 3,704 3,704 Parks - - 3,952 3,952 Wildlife and grazing - - 5 5 programs General reserve 9,000 - - 9,000 Fire equipment 550 - - 550 Pension Obligation Bonds 24,587 - - 24,587 Internal financing 2,137 - - 2,137 Solar plant mitigation 15,276 - - 15,276 Solar plant law 6,320 - - 6,320 enforcement activities Automation projects 15,940 - - 15,940 Building replacement 29,408 - - 29,408 Organizational 1,777 - - 1,777 development Tax reduction reserve 43,429 - - 43,429 Lease financing 565 - - 565 Capital Projects - 16,116 - 16,116 Debt service - - 11,368 11,368 Subtotal 168,619 16,116 45,810 230,545 Assigned to: Tax reduction reserve 9,997 - - 9,997 General government 14,975 - - 14,975 Clerk Recorder programs 1,953 - - 1,953 Sheriff programs 8,260 - - 8,260 Probation programs 5,373 - - 5,373 District Attorney programs 2,915 - - 2,915 Waste Management 2,347 - - 2,347 programs Emergency Services 1,411 - - 1,411 programs Other public protection programs 1,103 - - 1,103 Social Services programs 3,183 - - 3,183 89 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Capital General Projects Nonmajor Fund Fund Gov’tl Funds Total Foster Care/Adoption programs 4,155 - - 4,155 Veterans’ Services programs 90 - - 90 Public ways and facilities 6,011 - - 6,011 Behavioral Health 17,217 - - 17,217 programs Public Health programs 3,828 - - 3,828 Subsequent Fiscal Year 39,989 - - 39,989 Budget Imprest cash 118 - - 118 Subtotal 122,925 - - 122,925 Unassigned - - - - Total $ 297,870 $ 16,116 $ 70,903 $ 384,889 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, 2016 to be reappropriated during the next fiscal year (in thousands): Total Function Encumbrances General Government $ 3,055 Health & Sanitation 3,672 Public Protection 8,132 Public Assistance 855 Public Ways and Facilities 19,050 Education 5 Recreation 1,185 Total Lapsing Encumbrances $ 35,954 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 $27,885 over the next 19 years. The estimated amounts vary by year. For example, the principal amount due in 2016 is $953 while $2,117 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. 90 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2016. 15. LANDFILL POSTCLOSURE CARE COSTS The Los Osos Landfill is a closed facility under the responsibility of the County. State and federal laws and regulations require the County of San Luis Obispo to perform various maintenance and monitoring activities at the site. By agreement with the land owner, the County assumed responsibility for all closure and postclosure costs when the facility stopped accepting waste. As of this date, the landfill closure is complete and only postclosure costs remain. The remaining estimated liability for landfill postclosure cost as of June 30, 2016, is $5,620 (in 2016 dollars). Of this $3,190 is for the Maintenance Cost and $2,430 is the Corrective Action Cost. The cost estimates were provided by a licensed professional geologist in the Post Closure Maintenance Plan dated May 8, 2012 and the Engineers Estimate of Corrective Action Update dated March 18, 2016. 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 has the sole authority to amend the Plan’s provisions. 91 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2015, there were 1,568 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 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, 2015, there were 306 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, 2015, there were 571 active County employed members in Tier 3. 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 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, 2015, is shown in the table below: Tiers Summary of Plan Active members Miscellaneous Tier 1 Vested after accumulation of five years of Pension Trust service credit & 1,289 eligible to receive a Service Retirement Allowance after vesting and members attaining a minimum age of 50. Miscellaneous Tier 2 Vested after accumulation of five years of Pension Trust service credit & 258 members eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Miscellaneous Tier 3 Vested after accumulation of five years of Pension Trust service credit & 514 members eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 52. Probation Tier 1 Vested after accumulation of five years of Pension Trust service credit & 87 members 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 credit & 23 members 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 credit & 192 members eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Safety Tier 2 Vested after accumulation of five years of Pension Trust service credit & 48 members 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 credit & 34 members eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. 92 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 employer contributions forfeited by non-vested members are absorbed back into the pension trust fund. 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. 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 $1,000 (one-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 age 50 or more with 5 or more years of service may elect to participate in the Pension Trust’s DROP. An equal amount to the amount that would have been paid had the member retired, is deposited into a DROP account monthly. The 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 statue to contribute to the pension plan. Members’ contribution rates are formulated based on 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: 93 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) EMPLOYER EMPLOYEE CONTRIBUTION CONTRIBUTION PLAN RATES RATES Miscellaneous Tier 1 15.17-19.87% 11.14-19.53% Miscellaneous Tier 2 15.17-19.87% 5.37-12.63% Miscellaneous Tier 3 14.68-19.38% 3.75-11.99% Probation Tier 1 15.44-16.24% 17.02-25.00% Probation Tier 2 Not negotiated Not negotiated Probation Tier 3 15.62-15.74% 5.78-15.78% Safety Tier 1 21.24-29.02% 14.35-25.18% Safety Tier 2 22.35-29.20% 8.58-16.09% Safety Tier 3 21.74-28.41% 7.38-13.13% 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, 2014 $28,867 June 30, 2015 $30,174 June 30, 2016 $31,997 In addition, the County contributes towards post-employment benefits other than retirement (See Note 17). 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 76.7% funded as of January 1, 2015; 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, SLOCPT had approximately 76.7 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, 2015, was $1,562,052. The County’s share of the Plan’s fiduciary net position was $1,055,425 as of the same date. As of December 31, 2015, the Plan’s fiduciary net position was 67.57% of the total pension liability. At June 30, 2016, the County reported a liability of $506,626 for its proportionate share of the net pension liability of the Plan. The net pension liability was measured as of December 31, 2015. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation date of January 1, 2015. The actuarial assumptions used in the January 1, 2015 valuation were based on the results of an actuarial experience study for the period January 1, 2009 through December 31, 2013. Measurements as of December 31, 2015, are based on the fair value of assets on that date, and the Total Pension Liability as of the valuation date, January 1, 2015. The actuarial assumptions were rolled forward to the Pension Trust Plan’s fiscal year-end of December 31, 2015. There were no significant events between the January 1, 2015 valuation date and the December 31, 2015 measurement date for the Pension Plan’s GASB Statement No. 67 valuation. 94 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2015, the County’s proportionate share was 92.92%, compared to 92.65% at December 31, 2014, an increase of 0.27%. For the year ended June 30, 2016, the County recognized pension expense of $67,271. 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. At December 31, 2015, 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 $ 894 $ - Deferred outflows of resources – difference between expected and actual - experience 7,171 Deferred outflows of resources – net difference between projected and actual - earnings on pension plan investments 91,913 County contributions subsequent to the measurement date 16,303 - Deferred inflows of resources- change in actual vs. proportionate contributions - - Deferred inflows of resources – proportionate share of collective investment - - return $ 116,281 $ - 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 along with deferred outflows of resources of $16,303 for contributions for the fiscal year ending June 30, 2016 made subsequent to the measurement date of December 31, 2015. The $16,303 of subsequent contributions will be recognized as reduction of the net pension liability in the fiscal year ending June 30, 2017. The difference between projected and actual investment earnings on pension plan investments is amortized over five years on a straight-line basis beginning in the year in which they occur. One-fifth was recognized in pension expense during the Plan’s measurement period, and the remaining difference will be amortized over the remaining four-year period. Changes in assumptions and difference between expected and actual experience are recognized over the average expected remaining service lives of all employees that are provided with pensions through the Plan, determined as of January 1, 2015, and is 4.758 years. The difference between the actual employer contributions and the proportionate share of the employer contributions during the measurement period ended December 31, 2015 is also recognized over 4.758 years. Amortizable 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) 2017 $ 26,529 2018 26,529 2019 26,529 2020 20,391 2021 - Thereafter - Total $ 99,978 95 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Actuarial Assumptions The total pension liability in the January 1, 2016 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 3.00% 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 Gender 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, 2016 valuation were based on the results of an actuarial experience study for the period January 1, 2009 – December 31, 2013. 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 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% 1.69% Domestic Equities 23% 3.78% International Equities 22% 7.96% Alternative Investments 10% 4.10% Real Estate 10% 2.70% 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 all plan employers collectively - the County’s proportionate share is not broken out - calculated using the discount rate of 7.25%, as well as what all employers’ cumulative 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% All Employers’ net pension liability $768,956 $506,626 $336,349 (includes contract agencies) 96 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 17. POST-EMPLOYMENT HEALTHCARE BENEFITS Plan Description and Benefits The County administers a single-employer defined post-employment 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 2015 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 $2,429 for the fiscal year ended June 30, 2016 includes the normal cost for current active employees of $1,129 and a component for amortization of the total unfunded actuarial accrued liability (UAAL) of $1,300. The following table shows the components of the Net OPEB Asset as of June 30, 2016: Annual required contribution (ARC) $2,429 Interest on prior year net OPEB asset (173) Adjustment to ARC 443 Annual OPEB Cost 2,699 Contributions made 1,433 Increase (decrease) in net OPEB obligation 1,266 Net OPEB obligation (asset) – beginning of year (2,383) Net OPEB obligation (asset) – end of year ($1,117) 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 2016 and the two preceding years are as follows: 97 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Annual Percent of Net OPEB Fiscal Year OPEB OPEB Cost Obligation Ended Cost Contributions Contributed (Asset) 2014 $1,479 $1,819 123% ($2,314) 2015 $1,519 $1,588 105% ($2,383) 2016 $2,699 $1,433 53% ($1,117) Funded Status and Funding Progress The funded status of the OPEB plan as of June 30, 2016, (based on the County’s June 30, 2015 actuarial valuation) is as follows: Actuarially accrued liability $38,286 Actuarial value of plan assets (14,110) Unfunded actuarially accrued liability $24,176 Funded ratio (actuarial value of plan assets/AAL) 36.86% Covered payroll (active plan members) $161,272 UAAL as a percentage of covered payroll 14.99% 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, 2015, actuarial valuation, the Entry Age Normal, Level Percent of Pay actuarial cost method was used. The actuarial assumptions included a 7.28% investment rate of return, an inflation rate of 3.75% per year, and assumed future medical inflation of 3.5% 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 increased the Airport Fund’s beginning net position by $750 to include value of a commercial aircraft maintenance facility conveyed to the County when the owner, American Eagle Airlines, closed the facility in 2009. 19. 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 12, 2016, the County made an advance payment of $46.3 million representing the County’s FY 2016-17 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. 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 (asset) a percentage Fiscal Year Ending the net pension share of the employee as a percentage of of the total June 30th liability net pension liability payroll covered-employee payroll pension liability 2013 92.64% $ 354,823 $ 1 61,446 219.78% 74.78% 2014 92.65% $ 391,423 $ 1 68,662 232.08% 73.53% 2015 92.92% $ 506,626 $ 1 75,547 288.60% 67.57% *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 Actuarially Contribution contributions as a Fiscal year ending required Actual deficiency County’s covered- percentage of covered- June 30th contributions contributions (excess) employee payroll employee payroll 2014 $ 30,687 $ 29,691 $ 996 $ 168,662 17.60% 2015 $ 32,839 $ 31,239 $ 1,600 $ 175,547 17.80% *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, 2016 (in thousands) Unfunded AAL (Funding Unfunded Excess) as Actuarial AAL a Percentage Actuarial Actuarial Accrued (Funding Funded of Covered Valuation Value of Liability (AAL) Excess) Ratio Covered Payroll Jan 1 Assets (a) Entry Age (b) (b-a) (a/b) Payroll (c) ((b-a)/c) 2011 $ 8,775 $ 21,185 $ 12,410 41.42% $ 152,893 8.12% 2013 11,105 22,808 1 1,702 48.69% 154,555 7.57% 2015 14,110 38,286 2 4,176 36.85% 161,272 14.99% *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, 2016 (In Thousands) Budgeted Amounts Variance with Original Final Actual Final Budget Revenues: Taxes $ 161,074 $ 161,074 $ 173,794 $ 1 2,720 Licenses, permits, and franchises 9 ,602 9 ,603 10,539 936 Fines, forfeits, and penalties 3 ,845 4 ,362 3 ,577 (785) Use of money and property 1 ,770 1 ,770 3 ,259 1,489 Aid from other governmental agencies 216,113 228,181 216,623 (11,558) Charges for current services 32,106 34,353 32,258 (2,095) Other revenue 3 ,513 7 ,928 8 ,930 1,002 Total Revenues 428,023 447,271 448,980 1,709 Expenditures: Current: General government 54,245 64,302 47,414 16,888 Public protection 159,529 166,004 150,386 15,618 Public ways and facilities 2 ,557 7 ,390 2 ,120 5,270 Health and sanitation 81,731 89,088 76,895 12,193 Public assistance 112,167 115,691 108,958 6,733 Education 533 535 474 61 Contingencies 21,678 20,757 - 20,757 Total Expenditures 432,440 463,767 386,247 77,520 Excess (Deficiency) of Revenues Over (Under) Expenditures (4,417) (16,496) 62,733 79,229 Other Financing Sources (Uses): Transfers in 1 ,493 3 ,953 88 (3,865) Transfers out ( 33,068) ( 35,991) ( 29,577) 6,414 Total Other Financing Sources (Uses) ( 31,575) (32,038) (29,489) 2,549 Net Change in Fund Balances ( 35,992) (48,534) 33,244 81,778 Fund Balances, Beginning 271,286 271,286 271,286 - Fund Balances, Ending $ 235,294 $ 222,752 $ 304,530 $ 8 1,778 105 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, 2016 (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 $ 448,980 Revenues forfundsnot meetingthe especialrevenue funddefinitionwhicharepresented with the General Fund for financial reporting purposes 1,159 Total revenues as reported on the Statement of Revenues, Expenditures, and Changesin Fund Balances - Governmental Funds $ 450,139 Uses/Outflows of Resources: Actual amounts (budgetary basis) "Total Expenditures" from the budgetary comparison schedule $ 386,247 Expenditures for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 7,047 Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ 393,294 Other Financing Sources (Uses) of Resources Actual amounts (budgetary basis) "Total Other Financing Sources (Uses)" from the budgetary comparison schedule $ (29,489) Other financing sources (uses) for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes (772) Total Other Financing Sources (uses) as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ (30,261) 106 COUNTY OF SAN LUIS OBISPO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2016 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, 2016 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, 2016 (In Thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds Assets Cash and cash equivalents $ 11,368 $ 60,534 $ 71,902 Restricted cash with fiscal agent 1,769 - 1,769 Accounts receivable - 3 53 3 53 Due from other governments - 4,858 4,858 Advances to other funds - 3,775 3,775 Prepaid items - 1 1 Other assets 7,576 40 7,616 Total assets $ 20,713 $ 69,561 $ 90,274 Liabilities Salaries and benefits payable $ - $ 410 $ 410 Accounts payable - 7,582 7,582 Deposits from others - 1,140 1,140 Unearned revenue - 4 06 4 06 Other current liabilities 7,576 - 7,576 Advances from other funds - 1,197 1,197 Total liabilities 7,576 10,735 18,311 Deferred Inflows of Resources Unavailable revenue - 1,060 1,060 Fund Balance Nonspendable - 3,776 3,776 Restricted 1,769 19,548 21,317 Committed 11,368 34,442 45,810 Assigned - - - Unassigned - - - Total fund balances 13,137 57,766 70,903 Total liabilities, deferred inflows of resources, and fund balances $ 20,713 $ 69,561 $ 90,274 115 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Total Debt Special Nonmajor Service Revenue Governmental Funds Funds Funds Revenues Taxes $ - $ 11,970 $ 11,970 Fines, forfeitures, and penalties - 8 24 8 24 Use of money and property 63 5 63 6 26 Aid from other governments - 24,590 24,590 Charges for current services 1,813 11,391 13,204 Other revenues 5 85 1,582 2,167 Total revenues 2,461 50,920 53,381 Expenditures Current: Public protection - 5,710 5,710 Public ways and facilities - 38,924 38,924 Health and sanitation - 4,696 4,696 Public assistance - 2,269 2,269 Education - 10,060 10,060 Recreation and cultural services - 9,888 9,888 Debt service: Principal payments 6,788 - 6,788 Interest and fiscal charges 4,687 - 4,687 Total expenditures 11,475 71,547 83,022 Excess (deficiency) of revenues over (under) expenditures ( 9,014) (20,627) (29,641) Other Financing Sources (Uses) Transfers in 10,083 18,366 28,449 Transfers out - (4,442) (4,442) Total other financing sources (uses) 10,083 13,924 24,007 Net change in fund balances 1,069 (6,703) (5,634) Fund balances - beginning 12,068 64,469 76,537 Fund balances - ending $ 13,137 $ 57,766 $ 70,903 116 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR DEBT SERVICES FUNDS JUNE 30, 2016 (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 $ 905 $ 10,449 $ 1 4 $ 11,368 Restricted cash with fiscal agent 4 52 - 1,317 1,769 Other assets 3 05 6,460 8 11 7,576 Total assets $ 1,662 $ 16,909 $ 2,142 $ 20,713 Liabilities and Fund Balance Liabilities Other current liabilities $ 306 $ 6,460 $ 810 $ 7,576 Total liabilities 3 06 6,460 8 10 7,576 Fund Balances Restricted 4 52 - 1,317 1,769 Committed 9 04 10,449 15 11,368 Total fund balances 1,356 10,449 1,332 13,137 Total liabilities and fund balances $ 1,662 $ 16,909 $ 2,142 $ 20,713 117 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, 2016 (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 $ 2 $ 58 $ 3 $ 6 3 Charges for current services 7 59 - 1,054 1,813 Other revenues - 585 - 5 85 Total revenues 7 61 643 1,057 2,461 Expenditures Debt service: Principal payments 2 95 5,715 7 78 6,788 Interest and fiscal charges 4 64 3,947 2 76 4,687 Total expenditures 7 59 9,662 1,054 11,475 Excess (deficiency) of revenues over (under) expenditures 2 (9,019) 3 (9,014) Other financing sources (uses) Transfers in - 10,083 - 10,083 Transfers out - - - - Total other financing sources (uses) - 10,083 - 10,083 Net change in fund balances 2 1,064 3 1,069 Fund balances - beginning 1,354 9,385 1,329 12,068 Fund balances - ending $ 1,356 $ 10,449 $ 1,332 $ 13,137 118 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS JUNE 30, 2016 (In Thousands) Emergency Driving Under Community Medical the Influence Development CMSP Services Programs Assets Cash and cash equivalents $ 699 $ 745 $ 356 $ 550 Accounts receivable - - - - Due from other governments - 54 4 35 - Advances to other funds - - - - Prepaid items - - - 1 Other assets - - - - Total assets $ 699 $ 799 $ 791 $ 551 Liabilities Salaries and benefits payable $ - $ 1 4 $ - $ 3 1 Accounts payable 1 47 6 - 4 Deposits from others 1 71 - - - Unearned revenue - - - - Advances from other funds - - - - Total liabilities 3 18 20 - 35 Deferred Inflows of Resources Unavailable revenue - 17 - - Fund Balances Nonspendable - - - 1 Restricted - - - - Committed 3 81 7 62 7 91 5 15 Assigned - - - - Unassigned - - - - Total fund balances 3 81 7 62 7 91 5 16 Total liabilities, deferred inflows of resources, and fund balances $ 699 $ 799 $ 791 $ 551 Continued 119 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET (Continued) NONMAJOR SPECIAL REVENUE FUNDS JUNE 30, 2016 (In Thousands) Road Public Fish and Impact Facilities Game Fees Library Parks Fees Assets Cash and cash equivalents $ 192 $ 8,326 $ 3,939 $ 4,798 $ 11,893 Accounts receivable - - - - - Due from other governments - - - - - Advances to other funds - - - - - Prepaid items - - - - - Other assets - - - - - Total assets $ 192 $ 8,326 $ 3,939 $ 4,798 $ 11,893 Liabilities Salaries and benefits payable $ - $ - $ 188 $ 177 $ - Accounts payable 4 - 47 178 - Deposits from others - - - 146 27 Unearned revenue - - - - - Advances from other funds - 659 - 345 - Total liabilities 4 659 235 846 27 Deferred Inflows of Resources Unavailable revenue - - - - - Fund Balances Nonspendable - - - - - Restricted - 7,667 - - 11,866 Committed 188 - 3,704 3,952 - Assigned - - - - - Unassigned - - - - - Total fund balances 188 7,667 3,704 3,952 11,866 Total liabilities, deferred inflows of resources, and fund balances $ 192 $ 8,326 $ 3,939 $ 4,798 $ 11,893 Continued 120 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET (Continued) NONMAJOR SPECIAL REVENUE FUNDS JUNE 30, 2016 (In Thousands) Total Nonmajor Wildlife Special Special Revenue Roads Grazing Districts Funds Assets Cash and cash equivalents $ 12,211 $ 20 $ 16,805 $ 60,534 Accounts receivable - - 3 53 353 Due from other governments 2,144 - 2,225 4,858 Advances to other funds 6 59 - 3,116 3,775 Prepaid items - - - 1 Other assets 40 - - 40 Total assets $ 15,054 $ 20 $ 22,499 $ 69,561 Liabilities Salaries and benefits payable $ - $ - $ - $ 410 Accounts payable 6,446 - 7 50 7,582 Deposits from others 7 96 - - 1,140 Unearned revenue 1 01 - 3 05 406 Advances from other funds - - 1 93 1,197 Total liabilities 7,343 - 1,248 10,735 Deferred Inflows of Resources Unavailable revenue 1,015 - 28 1,060 Fund Balances Nonspendable 6 59 - 3,116 3,776 Restricted - 15 - 19,548 Committed 6,037 5 18,107 34,442 Assigned - - - - Unassigned - - - - Total fund balances 6,696 20 21,223 57,766 Total liabilities, deferred inflows of resources, and fund balances $ 15,054 $ 20 $ 22,499 $ 69,561 121 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, 2016 (In Thousands) Emergency Driving Under Community Medical the Influence Development CMSP Services Programs Revenues Taxes $ - $ - $ - $ - Fines, forfeitures, and penalties - - 8 01 - Use of money and property 4 5 2 4 Aid from other governments 3,745 1 56 - - Charges for current services - 1 81 - 1,314 Other revenues 1 33 6 74 - - Total revenues 3,882 1,016 8 03 1,318 Expenditures Current: Public protection - - - - Public ways and facilities - - - - Health and sanitation 4,696 - - - Public assistance - 1,414 8 55 - Education - - - 1,286 Recreation and cultural services - - - - Total expenditures 4,696 1,414 8 55 1,286 Excess (deficiency) of revenues over (under) expenditures (814) (398) (52) 32 Other financing sources (uses) Transfers in 5 91 3 18 - - Transfers out - (17) - (35) Total other financing sources (uses) 5 91 3 01 - (35) Net change in fund balances (223) (97) (52) (3) Fund balances - beginning 6 04 8 59 8 43 5 19 Fund balances - ending $ 381 $ 762 $ 791 $ 516 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, 2016 (In Thousands) Road Public Fish and Impact Facilities Game Fees Library Parks Fees Revenues Taxes $ - $ - $ 8,085 $ - $ - Fines, forfeitures, and penalties 23 - - - - Use of money and property - 63 25 138 88 Aid from other governments - - 113 319 - Charges for current services - 1,527 173 5,024 1,876 Other revenues - - 492 53 - Total revenues 23 1,590 8,888 5,534 1,964 Expenditures Current: Public protection 32 - - - - Public ways and facilities - - - - - Health and sanitation - - - - - Public assistance - - - - - Education - - 8,774 - - Recreation and cultural services - - - 9,888 - Total expenditures 32 - 8,774 9,888 - Excess (deficiency) of revenues over (under) expenditures (9) 1,590 114 (4,354) 1,964 Other financing sources (uses) Transfers in - - 1,175 3,617 - Transfers out - (1,159) (212) (202) (1,144) Total other financing sources (uses) - (1,159) 963 3,415 (1,144) Net change in fund balances (9) 431 1,077 (939) 820 Fund balances - beginning 197 7,236 2,627 4,891 11,046 Fund balances - ending $ 188 $ 7,667 $ 3,704 $ 3,952 $ 11,866 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, 2016 (In Thousands) Total Nonmajor Wildlife Special Special Revenue Roads and Grazing Districts Funds Revenues Taxes $ 1,672 $ - $ 2,213 $ 11,970 Fines, forfeitures, and penalties - - - 824 Use of money and property 91 - 1 43 563 Aid from other governments 16,861 2 3,394 24,590 Charges for current services 7 12 - 5 84 11,391 Other revenues 1 63 - 67 1,582 Total revenues 19,499 2 6,401 50,920 Expenditures Current: Public protection - 2 5,676 5,710 Public ways and facilities 38,748 - 1 76 38,924 Health and sanitation - - - 4,696 Public assistance - - - 2,269 Education - - - 10,060 Recreation and cultural services - - - 9,888 Total expenditures 38,748 2 5,852 71,547 Excess (deficiency) of revenues over (under) expenditures (19,249) - 5 49 (20,627) Other financing sources (uses) Transfers in 11,852 - 8 13 18,366 Transfers out (4) - (1,669) (4,442) Total other financing sources (uses) 11,848 - (856) 13,924 Net change in fund balances ( 7,401) - (307) (6,703) Fund balances - beginning 14,097 20 21,530 64,469 Fund balances - ending $ 6,696 $ 20 $ 21,223 $ 57,766 124 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS – SPECIAL DISTRICTS JUNE 30, 2016 (In Thousands) Flood Control Lighting County Districts Districts Service Areas Total Assets Cash and cash equivalents $ 14,702 $ 511 $ 1,592 $ 16,805 Accounts receivable 3 53 - - 3 53 Due from other governments 2,225 - - 2,225 Advances to other funds 2,842 - 2 74 3,116 Total assets $ 20,122 $ 511 $ 1,866 $ 22,499 Liabilities and Fund Balances Liabilities Accounts payable $ 750 $ - $ - $ 750 Unearned revenue 3 05 - - 3 05 Advances from other funds - - 1 93 1 93 Total liabilities 1,055 - 1 93 1,248 Deferred Inflows of Resources Unavailable revenue 28 - - 28 Total deferred inflows of resources 28 - - 28 Fund Balances Nonspendable 2,842 - 2 74 3,116 Committed 16,197 5 11 1,399 18,107 Total fund balances 19,039 5 11 1,673 21,223 Total liabilities, deferred inflows of resources, and fund balances $ 20,122 $ 511 $ 1,866 $ 22,499 125 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, 2016 (In Thousands) Flood Control Lighting County Districts Districts Service Areas Total Revenues Taxes $ 1,849 $ 3 4 $ 330 $ 2,213 Use of money and property 1 27 4 12 1 43 Aid from other governmental agencies 3,392 - 2 3,394 Charges for current services 5 70 10 4 5 84 Other revenue 67 - - 67 Total revenues 6,005 48 3 48 6,401 Expenditures Current: Public protection 5,642 34 - 5,676 Public ways and facilities - - 1 76 1 76 Total expenditures 5,642 34 1 76 5,852 Excess (deficiency) of revenues over (under) expenditures 3 63 14 1 72 5 49 Other financing sources (uses) Transfers in 7 92 - 21 8 13 Transfers out ( 1,489) - (180) (1,669) Total other financing sources (uses) (697) - (159) (856) Net change in fund balances (334) 14 13 (307) Fund balances - beginning 19,373 4 97 1,660 21,530 Fund balances - ending $ 19,039 $ 511 $ 1,673 $ 21,223 126 ____________________________________________________________ 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeits, and penalties $ - $ 6 5 $ 526 $ 461 Use of money and property - - 1 56 1 56 Aid from other governmental agencies - 27,510 15,278 (12,232) Charges for services - 2,531 8 34 (1,697) Other Revenues - 2 49 4 03 1 54 Total revenues - 30,355 17,197 (13,158) Expenditures Capital outlay 1,719 56,249 30,465 25,784 Total expenditures 1,719 56,249 30,465 25,784 Excess (deficiency) of revenues over (under) expenditures ( 1,719) (25,894) (13,268) 12,626 Other financing sources (uses) Transfers in 4,321 15,399 6,416 (8,983) Transfers out - - - - Total other financing sources (uses) 4,321 15,399 6,416 (8,983) Net change in fund balances 2,602 (10,495) ( 6,852) 3,643 Fund balances - beginning 22,968 22,968 22,968 - Fund balances - ending $ 25,570 $ 12,473 $ 16,116 $ 3,643 129 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ - $ - $ 2 $ 2 Charges for current services - - 7 59 7 59 Total revenues - - 7 61 7 61 Expenditures Debt service: Principal payments - - 2 95 (295) Interest and fiscal charges - - 4 64 (464) Total expenditures - - 7 59 (759) Excess (deficiency) of revenues over (under) expenditures - - 2 2 Other financing sources (uses) Transfers in - - - - Transfers out - - - - Total other financing sources (uses) - - - - Net change in fund balances - - 2 2 Fund balances - beginning 1,354 1,354 1,354 - Fund balances - ending $ 1,354 $ 1,354 $ 1,356 $ 2 130 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ 9 $ 9 $ 5 8 $ 4 9 Other revenues 10,028 10,028 5 85 (9,443) Total revenues 10,037 10,037 6 43 (9,394) Expenditures Debt service: Principal payments 5,715 5,715 5,715 - Interest and fiscal charges 3,947 3,947 3,947 - Total expenditures 9,662 9,662 9,662 - Excess (deficiency) of revenues over (under) expenditures 3 75 3 75 (9,019) (9,394) Other financing sources (uses) Transfers in - - 10,083 10,083 Transfers out - - - - Total other financing sources (uses) - - 10,083 10,083 Net change in fund balances 3 75 3 75 1,064 6 89 Fund balances - beginning 9,385 9,385 9,385 - Fund balances - ending $ 9,760 $ 9,760 $ 10,449 $ 689 131 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ - $ - $ 3 $ 3 Charges for services - - 1,054 1,054 Total revenues - - 1,057 1,057 Expenditures Debt service: Principal payments 7 78 (778) Interest and fiscal charges - - 2 76 (276) Total expenditures - - 1,054 (1,054) 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 1,329 1,329 1,329 - Fund balances - ending $ 1,329 $ 1,329 $ 1,332 $ 3 132 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ - $ - $ 4 $ 4 Aid from other governmental agencies 3,504 7,536 3,745 (3,791) Other revenues - - 1 33 1 33 Total revenues 3,504 7,536 3,882 (3,654) Expenditures Current: Health and sanitation Services and supplies 7 81 1,032 7 84 2 48 Other charges 3,315 7,595 3,912 3,683 Contingencies 40 40 - 40 Total expenditures 4,136 8,667 4,696 3,971 Excess (deficiency) of revenues over (under) expenditures (632) (1,131) (814) 3 17 Other financing sources (uses) Transfers in 5 91 1,091 5 91 (500) Transfers out - - - - Total other financing sources (uses) 5 91 1,091 5 91 (500) Net change in fund balances (41) (40) (223) (183) Fund balances - beginning 6 04 6 04 6 04 - Fund balances - ending $ 563 $ 564 $ 381 $ ( 183) 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ 1 $ 1 $ 5 $ 4 Aid from other governmental agencies 66 1 54 1 56 2 Charges for current services 2 32 2 32 1 81 (51) Other revenues 6 86 6 86 6 74 (12) Total revenues 9 85 1,073 1,016 (57) Expenditures Current: Public assistance Salaries, wages, and benefits 5 38 5 38 4 19 1 19 Services and supplies 9 55 1,976 9 95 9 81 Total expenditures 1,493 2,514 1,414 1,100 Excess (deficiency) of revenues over (under) expenditures (508) (1,441) (398) 1,043 Other financing sources (uses) Transfers in 5 08 5 08 3 18 (190) Transfers out - - (17) (17) Total other financing sources (uses) 5 08 5 08 3 01 (207) Net change in fund balances - (933) (97) 8 36 Fund balances - beginning 8 59 8 59 8 59 - Fund balances - ending $ 859 $ (74) $ 762 $ 836 134 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeits, and penalties $ 846 $ 846 $ 801 $ (45) Use of money and property 1 1 2 1 Total revenues 8 47 8 47 8 03 (44) Expenditures Current: Public assistance Services and supplies 8 69 1,250 8 55 3 95 Total expenditures 8 69 1,250 8 55 3 95 Net change in fund balances (22) (403) (52) 3 51 Fund balances - beginning 8 43 8 43 8 43 - Fund balances - ending $ 821 $ 440 $ 791 $ 351 135 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ 1 $ 1 $ 4 $ 3 Charges for current services 1,340 1,340 1,314 (26) Total revenues 1,341 1,341 1,318 (23) Expenditures Current: Education Salaries, wages, and benefits 9 68 9 68 9 30 38 Service and supplies 3 78 3 79 3 56 23 Contingencies 25 25 - 25 Total expenditures 1,371 1,372 1,286 86 Excess (deficiency) of revenues over (under) expenditures (30) (31) 32 63 Other financing sources (uses) Transfers in - - - - Transfers out - - (35) (35) Total other financing sources (uses) - - (35) (35) Net change in fund balances (30) (31) (3) 28 Fund balances - beginning 5 19 5 19 5 19 - Fund balances - ending $ 489 $ 488 $ 516 $ 2 8 136 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeits, and penalties $ 2 0 $ 2 0 $ 2 3 $ 3 Total revenues 20 20 23 3 Expenditures Current: Public protection Services and supplies 46 46 32 14 Total expenditures 46 46 32 14 Excess (deficiency) of revenues over (under) expenditures (26) (26) (9) 17 Other financing sources (uses) Transfers in - - - - Transfers out - - - - Total other financing sources (uses) - - - - Net change in fund balances (26) (26) (9) 17 Fund balances - beginning 1 97 1 97 1 97 - Fund balances - ending $ 171 $ 171 $ 188 $ 1 7 137 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ - $ - $ 6 3 $ 6 3 Charges for current services - (140) 1,527 1,667 Total revenues - (140) 1,590 1,730 Excess (deficiency) of revenues over (under) expenditures - (140) 1,590 1,730 Other financing sources (uses) Transfers in - 1 40 - (140) Transfers out ( 1,079) (3,729) (1,159) 2,570 Total other financing sources (uses) ( 1,079) (3,589) (1,159) 2,430 Net change in fund balances (1,079) (3,729) 4 31 4,160 Fund balances - beginning 7,236 7,236 7,236 - Fund balances - ending $ 6,157 $ 3,507 $ 7,667 $ 4,160 138 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 7,803 $ 7,803 $ 8,085 $ 282 Use of money and property 5 5 25 20 Aid from other governmental agencies 98 1 12 1 13 1 Charges for current services 2 38 2 38 1 73 (65) Other revenues 16 1 75 4 92 3 17 Total revenues 8,160 8,333 8,888 5 55 Expenditures Current: Education Salaries, wages, and benefits 6,046 6,005 5,502 5 03 Services and supplies 3,114 3,505 3,218 2 87 Other charges 5 46 44 2 Capital Outlay - 10 10 - Contingencies 4 71 4 71 - 4 71 Total expenditures 9,636 10,037 8,774 1,263 Excess (deficiency) of revenues over (under) expenditures ( 1,476) (1,704) 1 14 1,818 Other financing sources (uses) Transfers in 6 34 1,175 1,175 - Transfers out - (853) (212) 6 41 Total other financing sources (uses) 6 34 3 22 9 63 6 41 Net change in fund balances (842) (1,382) 1,077 2,459 Fund balances - beginning 2,627 2,627 2,627 - Fund balances - ending $ 1,785 $ 1,245 $ 3,704 $ 2,459 139 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Fines, forfeitures, and penalties $ 9 8 $ 176 $ - $ ( 176) Use of money and property 1 20 1 20 1 38 18 Aid from other governmental agencies 3 3 3 19 3 16 Charges for current services 4,809 5,235 5,024 (211) Other revenues 76 85 53 (32) Total revenues 5,106 5,619 5,534 (85) Expenditures Current: Recreation and cultural services Salaries, wages, and benefits 4,939 4,938 4,641 2 97 Services and supplies 3,577 4,241 3,790 4 51 Other charges 1 05 2,437 1,288 1,149 Capital outlay 84 1 80 1 69 11 Contingencies 2 00 2 00 - 2 00 Total expenditures 8,905 11,996 9,888 2,108 Excess (deficiency) of revenues over (under) expenditures ( 3,799) (6,377) (4,354) 2,023 Other financing sources (uses) Transfers in 3,617 3,923 3,617 (306) Transfers out (21) (21) (202) (181) Total other financing sources (uses) 3,596 3,902 3,415 (487) Net change in fund balances (203) (2,475) (939) 1,536 Fund balances - beginning 4,891 4,891 4,891 - Fund balances - ending $ 4,688 $ 2,416 $ 3,952 $ 1,536 140 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Use of money and property $ - $ - $ 8 8 $ 8 8 Charges for current services 1,852 1,853 1,876 23 Total revenues 1,852 1,853 1,964 1 11 Other financing sources (uses) Transfers in - - - - Transfers out (400) (5,781) (1,144) 4,637 Total other financing sources (uses) (400) (5,781) (1,144) 4,637 Net change in fund balances 1,452 (3,928) 8 20 4,748 Fund balances - beginning 11,046 11,046 11,046 - Fund balances - ending $ 12,498 $ 7,118 $ 11,866 $ 4,748 141 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 1,578 $ 1,578 $ 1,672 $ 9 4 Use of money and property 20 20 91 71 Aid from other governmental agencies 19,656 40,147 16,861 (23,286) Charges for current services 1 41 7 28 7 12 (16) Other revenues 8 1 74 1 63 (11) Total revenues 21,403 42,647 19,499 (23,148) Expenditures Current: Public ways and facilities Services and supplies 19,650 22,282 38,035 (15,753) Other charges 5 57 1,057 7 13 3 44 Capital outlay 18,887 45,556 - 45,556 Total expenditures 39,094 68,895 38,748 30,147 Excess (deficiency) of revenues over (under) expenditures (17,691) (26,248) (19,249) 6,999 Other financing sources (uses) Transfers in 11,773 14,423 11,852 ( 2,571) Transfers out (4) (144) (4) 1 40 Total other financing sources (uses) 11,769 14,279 11,848 ( 2,431) Net change in fund balances (5,922) (11,969) ( 7,401) 4,568 Fund balances - beginning 14,097 14,097 14,097 - Fund balances - ending $ 8,175 $ 2,128 $ 6,696 $ 4,568 142 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Aid from other governmental agencies $ 4 $ 4 $ 2 $ (2) Total revenues 4 4 2 (2) Expenditures Current: Public protection Services and supplies 4 4 2 2 Total expenditures 4 4 2 2 Excess (deficiency) of revenues over (under) expenditures - - - - Net change in fund balances - - - - Fund balances - beginning 20 20 20 - Fund balances - ending $ 2 0 $ 2 0 $ 2 0 $ - 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 1,749 $ 1,749 $ 1,849 $ 100 Use of money and property 31 31 1 27 96 Aid from other governmental agencies 6,606 6,639 3,392 (3,247) Charges for current services 4 97 9 93 5 70 (423) Other revenues 68 68 67 (1) Total revenues 8,951 9,480 6,005 (3,475) Expenditures Current: Public protection Services and supplies 5,860 7,908 5,198 2,710 Other charges 2,005 2,005 4 19 1,586 Capital outlay 1,688 3,047 25 3,022 Total expenditures 9,553 12,960 5,642 7,318 Excess (deficiency) of revenues over (under) expenditures (602) (3,480) 3 63 3,843 Other financing sources (uses) Transfers in 2 44 2 44 7 92 5 48 Transfers out ( 8,952) (9,042) (1,489) 7,553 Total other financing sources (uses) ( 8,708) (8,798) (697) 8,101 Net change in fund balances (9,310) (12,278) (334) 11,944 Fund balances - beginning 19,373 19,373 19,373 - Fund balances - ending $ 10,063 $ 7,095 $ 19,039 $ 11,944 144 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 3 5 $ 3 5 $ 3 4 $ (1) Use of money and property 2 2 4 2 Charges for current services 8 8 10 2 Total revenues 45 45 48 3 Expenditures Current: Public protection Services and supplies 32 36 34 2 Total expenditures 32 36 34 2 Excess (deficiency) of revenues over (under) expenditures 13 9 14 5 Other financing sources (uses) Transfers in - - - - Transfers out - - - - Total other financing sources (uses) - - - - Net change in fund balances 13 9 14 5 Fund balances - beginning 4 97 4 97 4 97 - Fund balances - ending $ 510 $ 506 $ 511 $ 5 145 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, 2016 (In Thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues Taxes $ 330 $ 330 $ 330 $ - Use of money and property 4 4 12 8 Aid from other governmental agencies 2 2 2 - Charges for current services 4 4 4 - Total revenues 3 40 3 40 3 48 8 Expenditures Current: Public ways and facilities Services and supplies 1 17 1 17 1 76 (59) Capital outlay 33 1 68 - 1 68 Total expenditures 1 50 2 85 1 76 1 09 Excess (deficiency) of revenues over (under) expenditures 1 90 55 1 72 1 17 Other financing sources (uses) Transfers in 1,041 1,041 21 (1,020) Transfers out (225) (225) (180) 45 Total other financing sources (uses) 8 16 8 16 (159) (975) Net change in fund balances 1,006 8 71 13 (858) Fund balances - beginning 1,660 1,660 1,660 - Fund balances - ending $ 2,666 $ 2,531 $ 1,673 $ ( 858) 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, 2016 (In Thousands) General Flood State Water County Control Zone Project Golf Lopez Park Service Areas Total Assets Current assets: Cash and cash equivalents $ 1,334 $ 12,797 $ 780 $ 23 $ 4,004 $ 18,938 Accounts receivable, net - 1,862 81 - 176 2,119 Prepaid items - - 117 - - 117 Deposits with others - - - - 13 13 Total current assets 1,334 14,659 978 23 4,193 21,187 Noncurrent assets: Restricted cash with fiscal agent - - 487 - - 487 Advances to other funds - - - 150 - 150 Capital assets: Nondepreciable Land - - 1,333 - 330 1,663 Construction in progress - - 153 - 874 1,027 Water rights - 51,027 - - - 51,027 Depreciable Infrastructure, net - 73 7 - 1,904 1,984 Structures and improvements, net - 6,419 8,574 - 8,242 23,235 Equipment, net - 2 152 - 247 401 Other property, net - - - - 496 496 Total noncurrent assets - 57,521 10,706 150 12,093 80,470 Total assets 1,334 72,180 11,684 173 16,286 101,657 Deferred Outflows of Resources Deferred pensions - - 543 - - 543 Total deferred outflows of resources - - 543 - - 543 Liabilities Current liabilities: Accounts payable 6 5,225 24 - 105 5,360 Salaries and benefits payable - - 43 - - 43 Deposits from others - 2,887 - - 163 3,050 Accrued interest - - 40 - 25 65 Unearned revenue - 1,582 - - 149 1,731 Accrued vacation and sick leave - current - - 71 - - 71 Notes and bonds payable - current - - 299 17 221 537 Total current liabilities 6 9,694 477 17 663 10,857 Noncurrent liabilities: Advances from other funds - - 53 - 459 512 Accrued vacation and sick leave - noncurrent - - 103 - - 103 Notes and bonds payable - noncurrent - - 4,572 133 3,885 8,590 Net Pension Liability - - 2,344 - - 2,344 Total noncurrent liabilities - - 7,072 133 4,344 11,549 Total liabilities 6 9,694 7,549 150 5,007 22,406 Net Position Net investment in capital assets - 57,521 5,835 - 7,987 71,343 Unrestricted 1,328 4,965 (1,157) 23 3,292 8,451 Total net position $ 1,328 $ 62,486 $ 4,678 $ 23 $ 11,279 $ 79,794 150 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) General Flood State Water County Control Zone Project Golf Lopez Park Service Areas Total Operating revenues Charges for current services $ 960 $ 6,846 $ 2,589 $ - $ 3,566 $ 13,961 Other revenues 1 109 1 - 3 114 Total operating revenues 961 6,955 2,590 - 3,569 14,075 Operating expenses Salaries and benefits - - 1,450 - - 1,450 Services and supplies 811 5,587 901 - 3,313 10,612 Other charges - - - - 3 2 32 Depreciation - 206 365 - 530 1,101 Countywide cost allocation 15 55 259 - 7 0 399 Total operating expenses 826 5,848 2,975 - 3,945 13,594 Operating income (loss) 135 1,107 (385) - ( 376) 481 Nonoperating revenues (expenses) Property taxes - 1,736 - - 450 2,186 Interest income 10 98 6 - 3 0 144 Interest expense - (15) (163) (4) ( 143) (325) Other non-operating revenues (expenses) - - - - (2) (2) Aid from governmental agencies - 13 - - 295 308 Total nonoperating revenues (expenses) 10 1,832 (157) (4) 630 2,311 Income (loss) before contributions and transfers 145 2,939 (542) (4) 254 2,792 Capital Contributions - - - - - - Transfers in - - 13 4 180 197 Transfers out - - (44) - ( 314) (358) Change in net position 145 2,939 (573) - 120 2,631 Net position - beginning 1,183 59,547 5,251 23 11,159 77,163 Net position - ending $ 1 ,328 $ 62,486 $ 4,678 $ 23 $ 11,279 $ 79,794 151 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) General Flood State Water Control Zone Project Golf Cash Flows From Operating Activities Receipts from customers $ 960 $ 5,904 $ 2,519 Payments to employees for services - - (1,271) Payments for goods and services (993) (6,127) (1,064) Net cash provided (used) by operating activities (33) (223) 184 Cash Flows from Noncapital Financing Activities Property tax proceeds - 1,736 - Grants and subsidies form other governmental agencies - 13 - Advances to other funds - - 487 Advances from other funds - - 30 Due to other funds - - - Transfers from other funds - - 13 Transfers to other funds - - (44) Net cash provided (used) by noncapital financing activities - 1,749 486 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets - (2,606) ( 87) Proceeds from issuance of long-term debt - - - Principal paid on capital debt - - (320) Interest paid on capital debt - - (165) Net cash provided (used) by capital and related financing activities - (2,606) (572) Cash Flows from Investing Activities Interest received 10 98 6 Net cash provided (used) by investing activities 10 98 6 Net increase (decrease) in cash and cash equivalents (23) (982) 104 Cash and cash equivalents at beginning of year 1,357 13,779 1,163 Cash and cash equivalents at end of year $ 1,334 $ 12,797 $ 1,267 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 135 $ 1,107 $ (385) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense - 206 365 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net - (615) ( 71) Inventory - - 21 Prepaid items - - 94 Increase (decrease) in: Accounts payable (168) (484) ( 20) Deposits from others - - - Salaries and benefits payable - - 3 Deferred pensions - - (369) Net pension liability - - 542 Unearned revenue - (437) - Accrued vacation and sick leave - - 4 Total adjustments (168) (1,330) 569 Net cash provided (used) by operating activities $ (33) $ (223) $ 184 152 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS (Continued) NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) County Lopez Park Service Areas Total Cash Flows From Operating Activities Receipts from customers $ - $ 3,540 $ 12,923 Payments to employees for services - - (1,271) Payments for goods and services - (3,327) (11,511) Net cash provided (used) by operating activities - 213 141 Cash Flows from Noncapital Financing Activities Property tax proceeds - 450 2,186 Grants and subsidies form other governmental agencies - 500 513 Advances to other funds - - 487 Advances from other funds - 41 71 Due to other funds - (208) (208) Transfers from other funds 4 180 197 Transfers to other funds - (314) (358) Net cash provided (used) by noncapital financing activities 4 649 2,888 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets - (575) (3,268) Proceeds from issuance of long-term debt - 215 215 Principal paid on capital debt - (223) (543) Interest paid on capital debt (4) (143) (312) Net cash provided (used) by capital and related financing activities (4) (726) (3,908) Cash Flows from Investing Activities Interest received - 30 144 Net cash provided (used) by investing activities - 30 144 Net increase (decrease) in cash and cash equivalents - 166 (735) Cash and cash equivalents at beginning of year 23 3,838 20,160 Cash and cash equivalents at end of year $ 23 $ 4,004 $ 19,425 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ - $ (376) $ 481 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense - 530 1,101 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net - 13 (673) Inventory - - 21 Prepaid items - - 94 Increase (decrease) in: Accounts payable - 88 (584) Deposits from others - 4 4 Salaries and benefits payable - - 3 Deferred pensions - - (369) Net pension liability - - 542 Unearned revenue - (46) (483) Accrued vacation and sick leave - - 4 Total adjustments - 589 (340) Net cash provided (used) by operating activities $ - $ 213 $ 141 153 154 ____________________________________________________________ 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, 2016 (In Thousands) Combined Public Insurance Garage Works (5 Funds) Total Assets Current assets: Cash and cash equivalents $ 4,208 $ 15,339 $ 23,100 $ 42,647 Accounts receivable - 6 - 6 Inventory 12 4 59 - 4 71 Total current assets 4,220 15,804 23,100 43,124 Noncurrent assets: Capital assets: Structures and improvements, net 10 3 06 - 3 16 Equipment, net 5,007 7,719 - 12,726 Total noncurrent assets 5,017 8,025 - 13,042 Total assets 9,237 23,829 23,100 56,166 Deferred Outflows of Resources Deferred pensions 5 68 9,712 - 10,280 Total deferred outflows of resources 5 68 9,712 - 10,280 Liabilities Current liabilities: Accounts payable 1 50 5 70 2 81 1,001 Salaries and benefits payable 41 7 84 - 8 25 Self-insurance liability - - 3,457 3,457 Deposits from others - 1,129 - 1,129 Accrued vacation and sick leave - current 71 1,543 - 1,614 Total current liabilities 2 62 4,026 3,738 8,026 Noncurrent liabilities: Self-insurance liability - - 15,250 15,250 Accrued vacation and sick leave - noncurrent 77 8 02 - 8 79 Net Pension Liability 2,482 42,345 - 44,827 Total noncurrent liabilities 2,559 43,147 15,250 60,956 Total liabilities 2,821 47,173 18,988 68,982 Net Position Net investment in capital assets 5,017 8,025 - 13,042 Unrestricted 1,967 (21,657) 4,112 (15,578) Total net position $ 6,984 $ (13,632) $ 4,112 $ (2,536) 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, 2016 (In Thousands) Combined Public Insurance Garage Works (5 Funds) Total Operating revenues Charges for current services $ 5,571 $ 31,856 $ 12,787 $ 50,214 Other revenues 71 1 09 - 1 80 Total operating revenues 5,642 31,965 12,787 50,394 Operating expenses Salaries and benefits 1,460 24,915 - 26,375 Services and supplies 2,602 6,878 7,118 16,598 Insurance benefit payments - - 3,386 3,386 Depreciation 1,544 8 85 - 2,429 Countywide cost allocation - 1 13 4 58 5 71 Total operating expenses 5,606 32,791 10,962 49,359 Operating income (loss) 36 (826) 1,825 1,035 Nonoperating revenues (expenses) Interest income 31 97 1 68 2 96 Other revenue (expense) 1 92 38 - 2 30 Total nonoperating revenues (expenses) 2 23 1 35 1 68 5 26 Income (loss) before transfers 2 59 (691) 1,993 1,561 Transfers out (79) (851) - (930) Change in net position 1 80 (1,542) 1,993 6 31 Net position - beginning 6,804 (12,090) 2,119 (3,167) Net position - ending $ 6,984 $ (13,632) $ 4,112 $ (2,536) 160 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Combined Public Insurance Garage Works (5 Funds) Total Cash Flows From Operating Activities Receipts from interfund billings $ 5,643 $ 31,968 $ 12,786 $ 50,397 Payments for goods and services (2,661) (6,738) (5,039) (14,438) Payments to employees for services (1,271) (21,627) - (22,898) Payments for insurance benefits - - (3,297) (3,297) Payments for premiums - - (2,621) (2,621) Net cash provided (used) by operating activities 1,711 3,603 1,829 7,143 Cash Flows from Noncapital Financing Activities Transfers to other funds (79) (851) - (930) Net cash provided (used) by noncapital financing activities (79) (851) - (930) Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets (1,366) (1,543) - (2,909) Proceeds from sale of capital assets 192 40 - 232 Net cash provided (used) by capital and related financing activities (1,174) (1,503) - (2,677) Cash Flows from Investing Activities Interest received 31 97 168 296 Net cash provided (used) by investing activities 31 97 168 296 Net increase (decrease) in cash and cash equivalents 489 1,346 1,997 3,832 Cash and cash equivalents at beginning of year 3,719 13,993 21,103 38,815 Cash and cash equivalents at end of year $ 4,208 $ 15,339 $ 23,100 $ 42,647 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 36 $ (826) $ 1,825 $ 1,035 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 1,544 885 - 2,429 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net - 2 - 2 Inventory (1) 91 - 90 Increase (decrease) in: Accounts payable (57) 198 (85) 56 Deposits from others - (35) - (35) Salaries and benefits payable 7 186 - 193 Deferred pensions (383) (6,557) - (6,940) Net pension liability 561 9,617 - 10,178 Other accrued liabilities - 42 - 42 Accrued vacation and sick leave 4 - - 4 Self-insurance liability - - 89 89 Total adjustments 1,675 4,429 4 6,108 Net cash provided (used) by operating activities $ 1,711 $ 3,603 $ 1,829 $ 7,143 161 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS – INSURANCE JUNE 30, 2016 (In Thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Assets Current assets: Cash and cash equivalents $ 16,967 $ 5,148 $ 219 $ 668 $ 98 $ 23,100 Total current assets 16,967 5,148 219 668 98 23,100 Total assets 16,967 5,148 219 668 98 23,100 Liabilities Current liabilities: Accounts payable 281 - - - - 281 Self-insurance payable 2,461 996 - - - 3,457 Total current liabilities 2,742 996 - - - 3,738 Noncurrent liabilities: Self-insurance liability 13,070 2,180 - - - 15,250 Total noncurrent liabilities 13,070 2,180 - - - 15,250 Total liabilities 15,812 3,176 - - - 18,988 Net Position Unrestricted 1,155 1,972 219 668 98 4,112 Total net position $ 1,155 $ 1,972 $ 219 $ 668 $ 98 $ 4,112 162 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, 2016 (In Thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Operating revenues Charges for current services $ 6,315 $ 3,000 $ 136 $ 1,778 $ 1,558 $ 12,787 Total operating revenues 6,315 3,000 136 1,778 1,558 12,787 Operating expenses Services and supplies 3,293 2,285 25 156 1,359 7,118 Insurance benefit payments 1,604 - 233 1,447 102 3,386 Countywide cost allocation 324 133 - 1 - 458 Total operating expenses 5,221 2,418 258 1,604 1,461 10,962 Operating income (loss) 1,094 582 (122) 174 97 1,825 Nonoperating revenues (expenses) Interest income 125 36 2 5 - 168 Total nonoperating revenues (expenses) 125 36 2 5 - 168 Income (loss) before transfers 1,219 618 (120) 179 97 1,993 Change in net position 1,219 618 (120) 179 97 1,993 Net position - beginning (64) 1,354 339 489 1 2,119 Net position - ending $ 1,155 $ 1,972 $ 219 $ 668 $ 98 $ 4,112 163 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS – INSURANCE FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Cash Flows From Operating Activities Receipts from interfund billings $ 6 ,314 $ 3,000 $ 136 $ 1,778 $ 1,558 $ 12,786 Payments for goods and services (2,443) (1,053) (25) (159) (1,359) (5,039) Payments for insurance benefits (1,448) (67) ( 233) (1,447) (102) (3,297) Payments for premiums (1,256) (1,365) - - - (2,621) Net cash provided (used) by operating activities 1,167 515 ( 122) 172 97 1,829 Cash Flows from Noncapital Financing Activities Grants and subsidies from other governmental agencies - - - - - - Transfers to other funds - - - - - - Net cash provided (used) by noncapital financing activities - - - - - - 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 125 36 2 5 - 168 Net cash provided (used) by investing activities 125 36 2 5 - 168 Net increase (decrease) in cash and cash equivalents 1,292 551 ( 120) 177 97 1,997 Cash and cash equivalents at beginning of year 1 5,675 4 ,597 339 491 1 21,103 Cash and cash equivalents at end of year $ 16,967 $ 5,148 $ 219 $ 668 $ 98 $ 23,100 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 1 ,094 $ 582 $ (122) $ 174 $ 97 $ 1,825 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in assets and liabilities: Increase (decrease) in: Accounts payable (83) - - (2) - (85) Self-insurance liability 156 (67) - - - 89 Total adjustments 73 (67) - (2) - 4 Net cash provided (used) by operating activities $ 1 ,167 $ 515 $ (122) $ 172 $ 97 $ 1,829 164 ____________________________________________________________ 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, 2016 (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 $ 3 8,892 $ 1,355 $ 2 9,231 $ 6 9,478 Total assets $ 3 8,892 $ 1,355 $ 2 9,231 $ 6 9,478 LIABILITIES Assets held as agency for others $ 3 8,892 $ 1,355 $ 2 9,231 $ 6 9,478 Total liabilities $ 3 8,892 $ 1,355 $ 2 9,231 $ 6 9,478 168 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Balance Balance June 30, 2015 Additions Deletions June 30, 2016 Clearing and Revolving Funds (98 Funds) Assets: Cash and cash equivalents $ 23,796 $ 1,095,223 $ 1,080,127 $ 38,892 Total assets $ 23,796 $ 1,095,223 $ 1,080,127 $ 38,892 Liabilities: Assets held as agency for others $ 23,796 $ 1,095,223 $ 1,080,127 $ 38,892 Total liabilities $ 23,796 $ 1,095,223 $ 1,080,127 $ 38,892 1915 Act Service Funds (17 Funds) Assets: Cash and cash equivalents $ 1,694 $ 522 $ 861 $ 1,355 Total assets $ 1,694 $ 522 $ 861 $ 1,355 Liabilities: Assets held as agency for others $ 1,694 $ 522 $ 861 $ 1,355 Total liabilities $ 1,694 $ 522 $ 861 $ 1,355 Other Agency Funds (30 Funds) Assets: Cash and cash equivalents $ 25,525 $ 337,350 $ 333,644 $ 29,231 Total assets $ 25,525 $ 337,350 $ 333,644 $ 29,231 Liabilities: Assets held as agency for others $ 25,525 $ 337,350 $ 333,644 $ 29,231 Total liabilities $ 25,525 $ 337,350 $ 333,644 $ 29,231 Total All Agency Funds Assets: Cash and cash equivalents $ 51,015 $ 1,433,095 $ 1,414,632 $ 69,478 Total assets $ 51,015 $ 1,433,095 $ 1,414,632 $ 69,478 Liabilities: Assets held as agency for others $ 51,015 $ 1,433,095 $ 1,414,632 $ 69,478 Total liabilities $ 51,015 $ 1,433,095 $ 1,414,632 $ 69,478 169 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS JUNE 30, 2016 (In Thousands) School Special Other Districts Districts Courts Local Boards (41 Funds) (33 Funds) (6 Funds) (19 Funds) Total ASSETS Cash and cash equivalents $ 287,841 $ 1 5,043 $ 1,844 $ 2 3,934 $ 328,662 Total assets $ 287,841 $ 1 5,043 $ 1,844 $ 2 3,934 $ 328,662 NET POSITION Assets held in trust for pool participants $ 287,841 $ 1 5,043 $ 1,844 $ 2 3,934 $ 328,662 Total Net Position $ 287,841 $ 1 5,043 $ 1,844 $ 2 3,934 $ 328,662 170 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) School Special Other Districts Districts Courts Local Boards (41 Funds) (33 Funds) (6 Funds) (19 Funds) Total Additions Contributions to pooled investments $ 804,561 $ 8,270 $ 1 9,878 $ 3 2,119 $ 864,828 Interest 1,306 76 - 93 1,475 Total additions 8 05,867 8,346 19,878 32,212 8 66,303 Deductions Distributions from investment pool 8 39,875 7,653 20,215 32,090 8 99,833 Total deductions 8 39,875 7,653 20,215 32,090 8 99,833 Change in net position (34,008) 693 (337) 122 (33,530) Net position - beginning 3 21,849 14,350 2,181 23,812 3 62,192 Net position - ending $ 287,841 $ 1 5,043 $ 1,844 $ 2 3,934 $ 328,662 171 172 ____________________________________________________________ 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, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget General Government - Expenditures Legislative and Administrative Administrative Office Salaries, wages, and benefits $ 1,883 $ 1,883 $ 1,652 $ 231 Services and supplies 197 198 240 (42) Expenditure transfers and reimbursements (85) (85) (85) - Total 1,995 1,996 1,807 189 Board of Supervisors Salaries, wages, and benefits 1,523 1,523 1,357 166 Services and supplies 204 207 212 (5) Expenditure transfers and reimbursements (39) (39) (39) - Total 1,688 1,691 1,530 161 Clerk/Recorder Salaries, wages, and benefits 2,092 2,126 2,028 98 Services and supplies 1,096 1,355 1,295 60 Capital outlay 5 372 5 367 Expenditure transfers and reimbursements - - (1) 1 Total 3,193 3,853 3,327 526 Total Legislative and Administrative 6,876 7,540 6,664 876 Finance Assessor Salaries, wages, and benefits 8,770 8,770 7,646 1,124 Services and supplies 826 1,287 862 425 Capital outlay 10 58 8 50 Expenditure transfers and reimbursements - - (2) 2 Total 9,606 10,115 8,514 1,601 Auditor-Controller Salaries, wages, and benefits 4,950 4,950 4,697 253 Services and supplies 222 343 242 101 Capital outlay - 3 - 3 Expenditure transfers and reimbursements (11) (11) (27) 16 Total 5,161 5,285 4,912 373 175 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget General Government - Expenditures (Continued) Treasurer-Tax Collector-Public Administrator Salaries, wages, and benefits 2,549 2,536 2,366 170 Services and supplies 332 356 344 12 Expenditure transfers and reimbursements - - (6) 6 Total 2,881 2,892 2,704 188 Total Finance 17,648 18,292 16,130 2,162 Counsel County Counsel Salaries, wages, and benefits 3,375 3,396 3,249 147 Services and supplies 221 822 269 553 Capital outlay - 7 - 7 Total Counsel 3,596 4,225 3,518 707 Personnel Personnel Salaries, wages, and benefits 2,455 2,455 2,335 120 Services and supplies 683 830 641 189 Total Personnel 3,138 3,285 2,976 309 Property Management Facilities Management Salaries, wages, and benefits 7,646 6,217 5,994 223 Services and supplies 4,979 4,425 4,391 34 Other charges 101 101 101 - Capital outlay 41 34 21 13 Expenditure transfers and reimbursements ( 2,573) (2,463) (2,879) 416 Total 10,194 8,314 7,628 686 Maintenance Projects Services and supplies 7,078 15,221 4,634 10,587 Expenditure transfers and reimbursements - (69) (50) (19) Total 7,078 15,152 4,584 10,568 Central Services Salaries, wages, and benefits - 1,017 730 287 Services and supplies - 1,289 1,181 108 Capital outlay - 16 - 16 Expenditure transfers and reimbursements - (277) (312) 35 Total - 2,045 1,599 446 Total Property Management 17,272 25,511 13,811 11,700 176 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget General Government - Expenditures (Continued) Other General Information Technology Salaries, wages, and benefits 10,388 10,365 9,877 488 Services and supplies 3,925 4,116 3,810 306 Expenditure transfers and reimbursements ( 3,257) (3,257) (3,358) 101 Total 11,056 11,224 10,329 895 Risk Management Salaries, wages, and benefits 871 871 818 53 Services and supplies 846 883 781 102 Expenditure transfers and reimbursements (61) (61) (61) - Total 1,656 1,693 1,538 155 Non-Department Financing Uses Services and supplies 1,035 1,035 694 341 Expenditure transfers and reimbursements (10,335) (10,335) (10,394) 59 Total ( 9,300) (9,300) (9,700) 400 Contributions to Other Agencies Services and supplies 1,914 1,931 1,818 113 Total 1,914 1,931 1,818 113 Non-Departmental Other Expenditures Services and supplies 389 389 330 59 Total 389 389 330 59 Total Other General 5,715 5,937 4,315 1,622 Total General Government 54,245 64,790 47,414 17,376 Public Protection - Expenditures Judicial Court Operations Fund Other charges 2,427 2,427 2,394 33 Total 2,427 2,427 2,394 33 District Attorney Salaries, wages, and benefits 13,759 13,684 12,449 1,235 Services and supplies 1,518 1,540 1,464 76 Other charges - 68 68 - Capital outlay 10 16 16 - Expenditure transfers and reimbursements (231) (231) (218) (13) Total 15,056 15,077 13,779 1,298 177 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Protection - Expenditures (Continued) Child Support Services Salaries, wages, and benefits 3,664 3,664 3,201 463 Services and supplies 979 979 915 64 Total 4,643 4,643 4,116 527 Grand Jury Salaries, wages, and benefits 32 32 17 15 Services and supplies 98 104 85 19 Capital outlay 6 - - - Total 136 136 102 34 Public Defender Services and supplies 5,952 6,054 5,937 117 Total 5,952 6,054 5,937 117 Total Judicial 28,214 28,337 26,328 2,009 Police Protection Sheriff-Coroner Salaries, wages, and benefits 54,949 55,905 54,287 1,618 Services and supplies 11,209 11,433 10,361 1,072 Other charges - 74 93 (19) Capital outlay 395 911 597 314 Expenditure transfers and reimbursements (165) (165) (161) (4) Total Police Protection 66,388 68,158 65,177 2,981 Detention and Correction Probation Department Salaries, wages, and benefits 16,550 16,550 15,481 1,069 Services and supplies 3,936 3,912 3,685 227 Other charges - 10 5 5 Capital outlay - 231 191 40 Expenditure transfers and reimbursements (266) (266) (264) (2) Total Detention and Correction 20,220 20,437 19,098 1,339 178 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Protection - Expenditures (Continued) Fire Protection County Fire Services and supplies 19,727 20,450 18,483 1,967 Capital outlay 787 2,295 82 2,213 Total Fire Protection 20,514 22,745 18,565 4,180 Protective Inspection Agricultural Commissioner Salaries, wages, and benefits 4,665 4,704 4,521 183 Services and supplies 802 778 783 (5) Capital outlay 7 7 4 3 Expenditure transfers and reimbursements - - (2) 2 Total Protective Inspection 5,474 5,489 5,306 183 Other Protection Animal Services Salaries, wages, and benefits 1,733 1,733 1,408 325 Services and supplies 983 1,028 858 170 Total 2,716 2,761 2,266 495 Emergency Services Salaries, wages, and benefits 834 834 791 43 Services and supplies 410 452 284 168 Other charges 435 709 74 635 Capital outlay 24 36 27 9 Total 1,703 2,031 1,176 855 Planning Department Salaries, wages, and benefits 11,363 10,955 9,680 1,275 Services and supplies 1,970 3,975 2,177 1,798 Other charges - 50 76 (26) Capital outlay - 10 10 - Total 13,333 14,990 11,943 3,047 179 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Protection - Expenditures (Continued) Waste Management Services and supplies 967 1,056 527 529 Total 967 1,056 527 529 Total Other Protection 18,719 20,838 15,912 4,926 Total Public Protection 159,529 166,004 150,386 15,618 Public Ways and Facilities - Expenditures Public Works Public Works Services and supplies 2,557 3,390 2,120 1,270 Other charges - 4,000 - 4,000 Total Public Works 2,557 7,390 2,120 5,270 Total Public Ways and Facilities 2,557 7,390 2,120 5,270 Health and Sanitation - Expenditures Health Public Health Salaries, wages, and benefits 18,409 18,415 16,601 1,814 Services and supplies 4,976 5,345 4,620 725 Other charges 1,580 5,780 317 5,463 Capital outlay 119 255 106 149 Expenditure transfers and reimbursement ( 1,438) (1,438) (1,305) (133) Total 23,646 28,357 20,339 8,018 Behavioral Health Salaries, wages, and benefits 30,791 30,191 28,321 1,870 Services and supplies 27,379 29,490 28,192 1,298 Other charges 1,097 2,232 1,361 871 Expenditure transfers and reimbursement ( 1,182) (1,182) (1,318) 136 Total 58,085 60,731 56,556 4,175 Total Health 81,731 89,088 76,895 12,193 Total Health and Sanitation 81,731 89,088 76,895 12,193 180 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Assistance - Expenditures Administration Department of Social Services Salaries, wages, and benefits 45,610 45,731 43,289 2,442 Services and supplies 16,781 16,879 16,345 534 Other charges 8,996 11,525 10,145 1,380 Capital outlay 90 41 35 6 Expenditure transfers and reimbursement (52) (52) (52) - Total Administration 71,425 74,124 69,762 4,362 Aid Programs Aid Foster Care Non-Fed Services and supplies 68 68 68 - Other charges 22,430 23,030 22,174 856 Total 22,498 23,098 22,242 856 Calworks Assistance Other charges 12,816 12,816 11,852 964 Total 12,816 12,816 11,852 964 Total Aid Programs 35,314 35,914 34,094 1,820 General Assistance General Assistance Other charges 1,144 1,182 1,157 25 Total General Assistance 1,144 1,182 1,157 25 Veterans Services Veterans Services Salaries, wages, and benefits 717 646 529 117 Services and supplies 48 302 113 189 Total Veterans Services 765 948 642 306 181 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (Continued) FOR THE YEAR ENDED JUNE 30, 2016 (In Thousands) Budget Variance with Original Final Actual Final Budget Public Assistance - Expenditures (Continued) Other Assistance Law Enforcement Med Care Salaries, wages, and benefits 2,760 2,623 2,425 198 Services and supplies 1,300 1,441 1,436 5 Expenditure transfers and reimbursement (541) (541) (558) 17 Total Other Assistance 3,519 3,523 3,303 220 Total Public Assistance 112,167 115,691 108,958 6,733 Education - Expenditures Agriculture Education Farm Advisor Salaries, wages, and benefits 432 432 381 51 Services and supplies 101 103 93 10 Total Agriculture Education 533 535 474 61 Total Education 533 535 474 61 Total General Fund Expenditures (Before Contingencies) 410,762 443,498 386,247 57,251 Contingencies Appropriation for Contingencies Contingencies - General Fund Appropriation for contingency 21,678 20,757 - 20,757 Total Appropriation for Contingencies 21,678 20,757 - 20,757 Total Contingencies 21,678 20,757 - 20,757 Total General Fund Expenditures $ 4 32,440 $ 464,255 $ 386,247 $ 78,008 Explanation of Differences between Budgetary Outflows and GAAP Expenditures Uses/Outflows of Resources Actual amounts (budgetary basis) from the Budget to Actual Comparison Schedule $ 386,247 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. 7,047 Total expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ 393,294 182 ____________________________________________________________ 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) 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Governmental Activities Net investment in capital assets $ 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 $ 1 ,168,573 Restricted 50,061 52,566 41,188 36,385 36,258 31,477 28,863 43,109 37,722 41,230 Unrestricted 190,107 173,396 192,271 206,786 234,786 265,454 304,257 325,113 (150,074) (170,962) Total governmental activities net position $ 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 $ 1 ,038,841 Business-type activities Net investment in capital assets $ 146,021 $ 155,907 $ 167,188 $ 160,627 $ 149,097 $ 153,801 $ 167,138 $ 188,485 $ 213,455 $ 237,157 Unrestricted 16,511 16,202 12,266 18,117 38,665 33,081 58,433 98,097 97,173 93,158 Total business-type activities net position $ 162,532 $ 172,109 $ 179,454 $ 178,744 $ 187,762 $ 186,882 $ 225,571 $ 286,582 $ 310,628 $ 330,315 Total Primary Government Net investment in capital assets $ 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 $ 1 ,405,730 Restricted 50,061 52,566 41,188 36,385 36,258 31,477 28,863 43,109 37,722 41,230 Unrestricted 206,618 189,598 204,537 224,903 273,451 298,535 362,690 423,210 ( 52,901) ( 77,804) Total primary government net position $ 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 $ 1 ,369,156 Notes: Source - Statement of Net Assets for FY 2006-2007 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) 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Expenses Governmental Activities General government $ 50,819 $ 46,971 $ 41,658 $ 36,561 $ 35,344 $ 35,231 $ 34,507 $ 36,866 $ 45,598 $ 53,282 Public protection 120,165 135,987 136,755 134,768 132,413 136,219 142,353 148,135 162,432 170,134 Public ways and facilities 22,256 24,503 24,713 24,927 27,365 27,120 28,474 28,253 34,136 33,418 Health and sanitation 55,173 66,382 66,542 68,199 66,657 65,799 69,222 74,313 78,137 88,326 Public assistance 84,045 93,472 97,803 96,645 98,841 96,435 97,929 99,449 110,470 118,089 Education 8,626 9,966 10,967 10,390 10,057 10,000 9 ,922 9,611 9,457 11,934 Recreation and cultural services 6 ,106 6,024 7 ,561 8,708 7,363 7,344 9,735 7,745 9,755 8,702 Interest on long-term debt 5 ,163 5,771 5 ,433 6,356 6,787 6,620 6,041 5,270 5,124 4,602 Total Governmental Activities Expenses 352,353 389,076 391,432 386,554 384,827 384,768 398,183 409,642 455,109 488,487 Business-Type Activities Expenses Airport 4 ,021 7,809 4 ,559 5,204 7,732 5,422 5,435 5,664 6,187 6,117 Golf 3 ,301 3,033 3 ,249 2,974 2,690 2,863 2,779 2,608 2,968 3,131 State Water contract 4 ,792 5,179 5 ,661 5,630 6,705 6,761 5,536 5,992 6,351 5,848 Nacimiento Water contract 559 20,021 10,144 10,613 11,844 11,901 14,738 13,840 15,776 14,888 Lopez Dam 5 ,807 7,945 6 ,189 5,813 6,499 5,752 6,548 6,116 6,128 6,220 Lopez Park - - - - - - - - 4 4 General Flood Control Zone 681 689 712 831 928 1,816 746 809 845 824 Transit 714 1,071 987 1,143 1,105 8 - - - - County Service Areas 3 ,465 3,419 3 ,434 3,744 3,877 3,836 3,779 3,857 4,194 4,065 Los Osos Wastewater - - - - 5 6,672 344 231 235 3,807 Total Business-Type Activities Expenses 23,340 49,166 34,935 35,952 41,385 45,031 39,905 39,117 42,688 44,904 Total Primary Government Expenses $ 375,693 $ 438,242 $ 426,367 $ 422,506 $ 426,212 $ 429,799 $ 438,088 $ 448,759 $ 497,797 $ 533,391 Program Revenues Governmental Activities Fees, Fines, Charges for Services General government $ 18,743 $ 13,299 $ 17,729 $ 12,878 $ 13,971 $ 17,545 $ 16,575 $ 14,678 $ 12,407 $ 13,702 Public protection 21,061 20,380 23,285 21,072 20,843 15,679 16,352 23,035 20,774 20,768 Public ways and facilities 7 ,236 7,580 4 ,190 3,234 11,549 5 ,069 5,465 4,356 4,255 9,434 Health and sanitation 6 ,505 6,583 6 ,863 7,026 7,453 6,014 5,196 6,570 6,631 7,179 Public assistance 2 ,798 2,864 2,784 925 2,399 2,366 2,920 2,070 2,077 2,107 Education 1 ,759 1,891 1 ,922 2,304 2,037 2,545 3,583 1,723 2,998 1,952 Recreation and cultural services 1 ,246 2,183 3 ,931 3,822 3,714 3,952 4,435 4,537 5,056 4,975 Operating Grants and Contributions General Government 1 ,454 446 751 377 1,120 628 122 252 54 735 Public Protection 41,429 40,924 38,080 40,034 37,244 45,646 50,477 54,233 62,359 63,528 Public ways and facilities 8 ,712 8,975 10,406 10,679 9 ,446 11,813 15,018 14,688 14,145 11,025 Health and sanitation 44,135 46,267 49,149 57,784 48,567 44,741 55,064 57,344 62,338 61,950 Public assistance 75,391 79,190 83,175 81,525 86,479 85,505 87,912 89,640 94,775 98,414 Education 299 262 260 259 289 175 175 102 105 124 Recreation and cultural services 167 185 178 177 357 18 350 - 131 153 Capital Grants and Contributions General government 291 264 384 449 279 843 8 69 156 45 Public protection 1 ,799 319 82 - - - - 3,315 9,701 4,420 Public ways and facilities 6 ,008 15,130 5 ,966 10,259 7 ,411 12,930 3 ,479 5,570 6,435 6,031 Health and sanitation - 34 - - - - - - - Recreation and cultural services 171 979 423 173 81 247 50 282 1,776 10,804 Total Governmental Activities 239,204 247,755 249,558 252,977 253,239 255,716 267,181 282,464 306,173 317,346 Source: Statement of Activities (continued) 188 COUNTY OF SAN LUIS OBISPO CHANGES IN NET POSITION (Continued) LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Business-Type Activities Fees, Fines, Charges for Services Airport 3 ,919 4,585 3 ,734 3,541 3,888 3,719 4,053 4 ,493 4,883 5,165 Golf 3 ,016 3,058 2 ,879 2,653 2,590 2,690 2,639 2 ,779 2,967 2,589 State Water Contract 4 ,458 5,309 5 ,767 6,513 6,453 6,609 6,185 6 ,358 6,562 6,846 Nacimiento Water Contract 6 ,893 3,018 284 355 7,968 13,893 13,800 13,685 9 ,682 17,048 Lopez Dam 5,987 6,453 5 ,494 6,164 6,359 6,440 6,174 6 ,123 6,208 6,530 General Flood Control Zone 575 600 637 661 1,870 1,252 730 861 794 960 Transit 52 55 63 - - - - - - 3,551 County Service Areas 2 ,860 2,869 2 ,658 2,784 3,090 3,186 3,352 3 ,312 3,408 - Operating Grants and Contributions Airport 281 820 144 182 180 372 132 127 126 126 Golf - - - - - 5 - - 269 - State Water Contract 8 8 8 8 10 10 13 13 13 13 Nacimiento Water Contract 25 28 31 31 30 28 29 12 9 9 Lopez Dam - - 15 15 15 15 15 8 8 8 Transit - - - 1,172 1,097 - - - - - General Flood Control Zone 543 624 962 - - - - - - - County Service Areas 155 2 4 4 3 3 3 3 211 295 Los Osos Wastewater - - - - - 35 1 - - 2,810 Capital Grants and Contributions Airport 9 ,509 19,201 6 ,750 4,310 2,074 138 572 1,770 365 7,069 County Service Areas - 165 275 339 288 64 294 2 - - Los Osos Wastewater - - - - 9,357 9,127 35,717 57,507 26,385 4 ,157 Total Business-Type Activities Revenues 38,281 46,795 29,705 28,732 45,272 47,586 73,709 97,053 61,890 57,176 Total Primary Government Revenues $ 277,485 $ 294,550 $ 279,263 $ 281,709 $ 298,511 $ 303,302 $ 340,890 $ 379,517 $ 368,063 $ 374,522 Net (Expense)/Revenues Governmental Activities $ (113,149) $ (141,321) $ (141,874) $ (133,577) $ (131,588) $ (129,052) $ (131,002) $ (127,178) $ (148,936) $ (171,141) Business-Type Activities 14,941 (2,371) (5,230) (7,220) 3 ,887 2,555 33,804 57,936 19,202 12,272 Total Primary Government net expense $ (98,208) $ (143,692) $ (147,104) $ (140,797) $ (127,701) $ (126,497) $ (97,198) $ (69,242) $ (129,734) $ (158,869) General Revenue and Other Changes in Net Position Governmental Activities Property Taxes $ 128,867 $ 133,292 $ 141,195 $ 132,723 $ 139,214 $ 140,288 $ 143,182 $ 152,256 $ 155,374 $ 163,367 Other Taxes 15,798 15,881 14,389 13,358 14,393 16,330 23,940 22,088 22,984 21,953 Interest and investment income 11,025 9 ,790 4 ,646 1,690 986 1,202 733 599 3,174 4,401 Unrestricted Grants 4,079 4,019 4 ,890 3,972 3,520 3,978 3,537 1 ,727 13,327 3 ,140 Other revenues - - - - 172 - 4 - - - Transfers (319) (964) 845 (565) 150 8,048 (166) (790) (2,676) (768) Special Item - - - - - - - (2,800) - - Total Governmental Activities 159,450 162,018 165,965 151,178 158,435 169,846 171,230 173,080 192,183 192,093 Business-type Activities Property Taxes 3 ,359 3,402 3 ,678 3,654 3,841 3,799 4,145 4 ,402 4,782 4,782 Other Taxes - - 27 28 28 28 29 32 - - Interest and investment income 1 ,897 7,290 6 ,190 1,900 965 755 385 595 659 847 Other revenues 304 292 572 363 447 31 160 40 183 268 Transfers 319 964 (845) 565 (150) (8,048) 166 790 2,676 768 Total Business-type Activities 5 ,879 11,948 9 ,622 6,510 5,131 (3,435) 4 ,885 5 ,859 8,300 6,665 Total Primary Government $ 165,329 $ 173,966 $ 175,587 $ 157,688 $ 163,566 $ 166,411 $ 176,115 $ 178,939 $ 200,483 $ 198,758 Change in Net Position Governmental Activities $ 46,301 $ 20,697 $ 24,091 $ 17,601 $ 26,847 $ 40,794 $ 40,228 $ 45,902 $ 43,247 $ 20,952 Business-Type Activities 20,820 9 ,577 4,392 (710) 9 ,018 (880) 38,689 63,795 27,502 18,937 Total Primary Government $ 67,121 $ 30,274 $ 28,483 $ 16,891 $ 35,865 $ 39,914 $ 78,917 $ 109,697 $ 70,749 $ 39,889 Notes: Source - Statement of Activities 189 COUNTY OF SAN LUIS OBISPO FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2007 2008 2009 2010 General Fund Reserved $ 29,841 $ 31,853 $ 40,561 $ 49,543 Unreserved 74,727 64,886 63,626 66,559 Total General Fund $ 104,568 $ 96,739 $ 104,187 $ 116,102 All Other Governmental Funds Reserved $ 30,278 $ 50,422 $ 42,697 $ 39,243 Unreserved, reported in: Special Revenue Funds 70,630 60,384 51,703 55,513 Capital Project Funds 31,638 21,233 23,248 20,859 Debt Service Funds - - - - Total All Other Governmental Funds $ 132,546 $ 132,039 $ 117,648 $ 115,615 2011 2012 2013 2014 2015 2016 General Fund Nonspendable $ 3,333 $ 3,176 $ 3,092 $ 779 $ 5,089 $ 3,454 Restricted 7,113 6,682 4,005 3,214 2,945 2,872 Committed 62,380 68,880 96,365 116,940 138,140 168,619 Assigned - - 104,237 118,248 125,112 122,925 Unassigned 87,741 102,291 - - - - Total General Fund $ 160,567 $ 181,029 $ 207,699 $ 239,181 $ 271,286 $ 297,870 All Other Governmental Funds Nonspendable $ 352 $ 390 $ 596 $ - $ 920 $ 3,776 Restricted 22,065 19,788 18,311 20,164 20,563 21,317 Committed 55,446 61,144 65,903 74,240 78,508 61,926 Assigned 94 - - - - - Unassigned - - - - (486) - Total All Other Governmental Funds $ 77,957 $ 81,322 $ 84,810 $ 94,404 $ 99,505 $ 87,019 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) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenues Taxes $ 1 41,934 $ 144,596 $ 154,155 $ 153,910 $ 155,419 $ 160,920 $ 171,771 $ 177,765 $ 178,740 $ 185,764 Licenses, permits, and franchises 9 ,404 9,117 8,006 6,906 7,413 7,863 9,247 10,694 10,452 10,539 Fines, forfeits, and penalties 6 ,262 6,224 6,973 6,078 7,993 6,750 6,654 5,257 5,686 5,173 Revenues from use of money and property 9 ,789 8,452 4,122 1,644 1,242 2,273 1,475 1,373 3,864 4,939 Aid from governmental agencies 1 84,142 196,994 188,794 199,771 194,625 206,372 209,234 229,283 261,351 256,490 Charges for current services 5 5,083 50,592 54,208 47,065 56,486 45,538 4 1,690 50,071 43,530 46,308 Other revenues 6 ,750 3,122 6,856 5,358 6,531 8,451 11,342 6 ,235 9,110 11,504 Total revenues 413,364 419,097 423,114 420,732 429,709 438,167 451,413 480,678 512,733 520,717 Expenditures Current: General government 55,375 51,733 51,461 45,162 50,321 45,850 44,374 44,317 51,207 54,461 Public protection 126,043 134,058 140,746 136,857 135,636 138,579 143,832 148,155 157,783 156,096 Public ways and facilities 38,981 44,814 42,139 31,093 37,261 40,338 34,178 28,528 29,903 41,044 Health and sanitation 57,590 66,180 67,267 68,442 68,472 67,830 70,021 74,586 75,116 81,591 Public assistance 87,182 92,682 98,170 96,248 100,202 97,185 98,059 99,442 107,104 111,227 Education 8,755 9,698 11,016 13,020 10,191 9,973 9,901 12,205 11,388 10,534 Recreational and cultural services 8,005 9,911 8,654 8,313 7,187 6,998 7,538 7,993 10,104 9,888 Debt service: Principal payments 6,560 2,601 3,264 3,790 4,595 4,435 4,065 5,412 6,070 6,788 Interest and fiscal charges 6,401 5,593 5,181 5,954 6,464 6,289 5,863 5,419 5,209 4,687 Debt issuance costs - - - 550 - - 269 - - - Capital outlay 10,241 13,333 2,849 1,965 3,399 5,540 3,692 11,312 20,019 30,465 Total expenditures 405,133 430,603 430,747 411,394 423,728 423,017 421,792 437,369 473,903 506,781 Excess (deficiency) of revenues over expenditures 8,231 (11,506) (7,633) 9,338 5,981 15,150 29,621 43,309 38,830 13,936 Continued 191 COUNTY OF SAN LUIS OBISPO CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS (Continued) LAST TEN FISCAL YEARS (In Thousands) (UNAUDITED) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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 4 2,996 42,324 43,523 33,044 34,421 35,815 4 8,113 26,502 33,299 35,803 Transfers out ( 42,817) (42,751) (42,833) (33,065) (33,595) (27,138) (47,021) (25,935) (34,923) (35,641) Total other financing sources and uses 5 ,269 6,779 6 90 544 826 8,677 5 37 5 67 (1,624) 1 62 Special Item - - - - - - - (2,800) - - Net change in fund balances $ 1 3,500 $ (4,727) $ (6,943) $ 9 ,882 $ 6,807 $ 23,827 $ 30,158 $ 41,076 $ 37,206 $ 14,098 Debt Service as a percentage of non-capital expenditures 3.50% 2.13% 2.13% 2.51% 2.80% 2.73% 2.48% 2.61% 2.57% 2.54% 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, 2016 ACTUARIAL VALUATION WITH TIER 3 (AB 340) 7.125% INVESTMENT RATE OF RETURN ASSUMPTION 3.375% 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 2016 7.125% -1.44% 38.90% 177 6 8.9 1,749 1,248 501 71.4% 21.35% 1,136 65.0% 2017 7.125% 7.125% 39.94% 182 7 2.8 1,829 1,281 548 70.0% 20.79% 1,203 65.8% 2018 7.125% 7.125% 40.63% 188 7 6.2 1,908 1,326 582 69.5% 20.29% 1,273 66.7% 2019 7.125% 7.125% 41.42% 193 7 9.9 1,987 1,371 616 69.0% 19.84% 1,346 67.7% 2020 7.125% 7.125% 42.06% 198 8 3.5 2,065 1,423 642 68.9% 19.43% 1,421 68.8% 2021 7.125% 7.125% 41.99% 204 8 5.8 2,143 1,497 646 69.9% 19.07% 1,498 69.9% 2022 7.125% 7.125% 41.87% 210 8 8.1 2,219 1,572 647 70.8% 18.73% 1,576 71.0% 2023 7.125% 7.125% 41.77% 217 9 0.4 2,294 1,650 644 71.9% 18.43% 1,654 72.1% 2024 7.125% 7.125% 41.66% 223 9 2.9 2,368 1,729 639 73.0% 18.16% 1,734 73.2% 2025 7.125% 7.125% 41.55% 230 9 5.5 2,440 1,809 631 74.1% 17.92% 1,815 74.4% 2026 7.125% 7.125% 41.47% 237 9 8.2 2,512 1,891 621 75.3% 17.71% 1,897 75.5% 2027 7.125% 7.125% 41.40% 244 1 01.1 2,581 1,975 606 76.5% 17.52% 1,980 76.7% 2028 7.125% 7.125% 41.35% 252 1 04.1 2,650 2,059 591 77.7% 17.34% 2,065 77.9% 2029 7.125% 7.125% 41.32% 260 1 07.3 2,717 2,146 571 79.0% 17.19% 2,152 79.2% 2030 7.125% 7.125% 41.31% 268 1 10.6 2,782 2,235 547 80.3% 17.05% 2,241 80.6% 2031 7.125% 7.125% 41.32% 276 1 14.2 2,846 2,327 519 81.8% 16.93% 2,333 82.0% 2032 7.125% 7.125% 41.33% 285 1 17.9 2,909 2,423 486 83.3% 16.81% 2,429 83.5% 2033 7.125% 7.125% 41.37% 294 1 21.8 2,972 2,522 450 84.9% 16.71% 2,528 85.1% 2034 7.125% 7.125% 41.43% 304 1 25.9 3,033 2,626 407 86.6% 16.62% 2,632 86.8% 2035 7.125% 7.125% 41.52% 314 1 30.3 3,094 2,735 359 88.4% 16.54% 2,741 88.6% 2036 7.125% 7.125% 41.65% 324 1 34.9 3,154 2,850 304 90.4% 16.46% 2,856 90.6% 2037 7.125% 7.125% 41.84% 335 1 40.0 3,214 2,972 242 92.5% 16.40% 2,978 92.7% 2038 7.125% 7.125% 42.15% 346 1 45.7 3,274 3,102 172 94.7% 16.34% 3,108 94.9% 2039 7.125% 7.125% 42.82% 357 1 52.9 3,335 3,242 93 97.2% 16.29% 3,248 97.4% 2040 7.125% 7.125% 16.97% 369 6 2.6 3,396 3,394 2 99.9% 16.25% 3,400 100.1% 2041 7.125% 7.125% 16.51% 381 6 2.9 3,459 3,458 1 100.0% 16.21% 3,464 100.1% 2042 7.125% 7.125% 16.48% 394 6 4.9 3,523 3,521 2 99.9% 16.18% 3,527 100.1% 2043 7.125% 7.125% 16.45% 407 6 7.0 3,588 3,587 1 100.0% 16.15% 3,593 100.1% 2044 7.125% 7.125% 16.44% 421 6 9.2 3,656 3,655 1 100.0% 16.13% 3,661 100.1% 2045 7.125% 7.125% 16.43% 435 7 1.5 3,727 3,725 2 99.9% 16.12% 3,731 100.1% 2046 7.125% 7.125% 16.42% 450 7 3.8 3,800 3,799 1 100.0% 16.10% 3,805 100.1% 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 Plan assets. Amounts in this schedule differ from those used for financial reporting. This projection contains values based on a January 1, 2016 actuarial valuation report. Net Pension Liability and related amounts used for financial reporting are based on a June 30, 2016 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, 2016 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 2007 $ 3 6,890,449 $ 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 2016 48,037,099 1,257,845 (1,122,568) 48,172,375 6.0% 1.0037 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% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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 .00221 0.00220 0.00220 0.00220 0.00290 0.00300 0.00400 0.00400 0.00400 0.00374 Total Direct Rate 1.00221 1.00220 1.00220 1.00220 1.00290 1.00300 1.00400 1.00400 1.00400 1.00374 Cities, Schools, and Special Districts Combined Rates Arroyo Grande 0 .0392 0 .0422 0.0464 0 .0464 0.0470 0.0477 0 .0576 0.0580 0.0569 0.0756 Atascadero 0 .0975 0 .0975 0.0975 0 .0975 0.0975 0.0442 0 .0452 0.0452 0.0590 0.1373 Grover Beach 0 .0295 0 .0333 0.0382 0 .0382 0.0389 0.0396 0 .0495 0.0499 0.0509 0.0940 Morro Bay 0 .0231 0 .0492 0.0492 0 .0492 0.0499 0.0501 0 .0510 0.0510 0.0510 0.0688 Paso Robles 0.0952 0 .0997 0.0948 0 .0988 0.0389 0.0816 0 .0815 0.0815 0.0782 0.0955 Pismo Beach 0 .0295 0 .0333 0.0382 0 .0382 0.0389 0.0396 0 .0495 0.0499 0.0509 0.0700 San Luis Obispo - - - - - - - - - 0.0683 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 2016 Fiscal Year 2007 Percentage Percentage of Total of Total Assessed County Assessed County Taxpayer Industry Value Rank Assessed Value Rank Assessed Pacific Gas & Electric Co. Utility $ 2,683,257 1 5.57% $ 2,177,838 1 5.88% Phillips 66 Company Oil Refinery 155,118 2 0.32% - - - Beringer Wine Estates Company Winery 9 0,412 3 0.19% 6 5,609 4 0.18% Southern California Gas Co Utility 8 1,863 4 0.17% 5 3,458 7 0.14% Mustang UCAL LLC Apartments 78,358 5 0.16% 7 0,825 3 0.19% E&J Gallo Winery Winery 7 1,920 6 0.15% - - - Pacific Bell Telephone Co Telephone 7 0,939 7 0.15% - - - Freeport-McMoran Oil & Gas Petroleum & Gas 69,100 8 0.14% - - - Martin Hotel Mgmt Co LLC Hotel 64,891 9 0.13% - - - Sierra Vista Hospital Inc Hospital 59,296 10 0.12% - - - TOSCO Corp Petroleum & Gas - - - 140,179 2 0.38% AT&T California Communications - - - 61,619 5 0.17% Duke Energy Morro Bay LLC Utility - - - 61,400 6 0.17% Charter Communications LLC Real Estate - - - 50,720 8 0.14% Centex Homes Developer - - - 49,786 9 0.13% Twin Cities Com. Hospital Hospital - - - 45,587 10 0.12% Total $ 3,425,154 7.11% $ 2,777,021 7.49% Total County Assessed Value $ 48,172,375 $ 37,055,966 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 2007 $ 3 62,429 $ 354,117 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% 2016 4 70,629 4 66,465 99.12% N/A 4,164 0.88% 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 2016 3,496 3,633 Note: The billings and collections shown are for those Special Assessment Bonds related to the Los Osos Wastewater Project 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) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Governmental Activities Certificates of Participation $ 27,125 $ 33,319 $ 31,920 $ 30,420 $ 28,820 $ 27,895 $ 25,662 $ 24,640 $ 23,600 $ 22,527 Less deferred amounts: For issuance discounts: - (119) (115) (111) (107) (103) (99) (95) (91) (87) Add deferred amounts: For issuance premiums: - - - - - - 1,329 1,240 1,152 1,063 Pension Obligation Bonds 130,504 129,034 127,169 125,444 122,689 119,429 115,624 111,234 146,219 145,291 Total bonds and notes payable 157,629 162,234 158,974 155,753 151,402 147,221 142,516 137,019 170,880 168,794 Business Type Certificates of Participation 21,535 2 0,985 2 0,848 2 0,657 1 9,897 19,060 1 7,920 1 8,257 1 7,745 1 7,194 Add deferred amounts: For issuance premiums: - - - - - - 492 459 426 393 Pension Obligation Bonds State Note 26,144 3 1,824 3 2,283 3 2,418 3 1,024 35,884 3 4,399 4 6,529 7 2,774 8 6,611 Revenue Bonds 56 196,461 196,456 196,450 196,444 193,483 190,389 187,170 183,813 177,198 Add deferred amounts: For issuance premiums: - 6,371 6,371 6,371 6,371 6,158 5,945 5,732 5,519 1 0,058 Unamortized outflow on Bond Refinancing 12,000 - - - - - - - - (4,171) General Obligation Bonds - 1 1,730 1 1,450 1 1,155 1 0,760 10,245 9,890 9,530 9,155 8,760 Add deferred amounts: For issuance premiums: - - - - 1,128 1,072 1,015 959 902 846 Bond Anticipation Notes - - - - 8,677 - - - - - Assessment Bonds - - - - - 15,364 3 9,527 7 6,438 7 9,829 7 9,396 Total bonds and notes payable 59,735 267,371 267,408 267,051 274,301 281,266 299,577 345,074 370,163 376,285 Total Outstanding Debt $ 217,364 $ 429,605 $ 426,382 $ 422,804 $ 425,703 $ 428,487 $ 442,093 $ 482,093 $ 541,043 $ 545,079 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* 0.59% 1.06% 1.00% 1.00% 1.01% 1.04% 1.06% 1.12% 1.19% 1.13% Net outstanding debt Per Capita $ 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 $ 1,960.89 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) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Certificates of Participation $ 19,545 $ 18,965 $ 18,361 $ 17,730 $ 17,075 $ 16,400 $ 14,427 $ 13,675 $ 12,915 $ 12,137 Less deferred amounts: For issuance discounts: - - - - - - (99) (95) (91) (87) Add deferred amounts: For issuance premiums: - - - - - - 1,330 1,240 1,152 1,063 General Obligation Bonds 12,000 11,730 11,450 11,155 10,760 10,245 9,890 9,530 9,155 8,760 Add deferred amounts: For issuance premiums: - - - - 1,128 1,072 1,015 959 902 846 Assessment Bonds - - - - - 15,364 39,527 76,438 79,829 79,396 Less resources restricted for principal repayment ( 13,505) ( 15,297) ( 10,929) ( 10,665) (9,752) (9,666) (9,640) (10,691) (12,069) (13,139) Net Total General Obligation Debt $ 18,040 $ 15,398 $ 18,882 $ 18,220 $ 19,211 $ 33,415 $ 56,450 $ 91,056 $ 91,793 $ 88,976 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* 0.05% 0.04% 0.04% 0.04% 0.05% 0.08% 0.14% 0.21% 0.20% 0.18% Net Outstanding debt Per Capita $ 68.10 $ 57.17 $ 69.82 $ 66.68 $ 70.90 $ 123.08 $ 207.40 $ 334.33 $ 334.65 $ 320.08 Note: 1. See the Demographic Statistics Schedule for detail information on personal income and population. 2. Source - Notes to the Financial Statements, Note 10 * Due to Article XIII-A, added to the California 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) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Assessed Value of Property (a) (b) $ 3 7,110,252 $ 40,453,074 $ 42,588,529 $ 42,419,637 $ 42,037,909 $ 41,340,430 $ 41,796,283 $ 43,059,945 $ 45,426,163 $ 48,172,375 Debt Limit, 1.25% of Assessed Value 463,878 505,663 532,357 530,245 525,474 516,755 522,454 538,249 567,827 602,155 Amount of Debt Applicable to Limit General Obligation Bonds (c) 1 2,000 11,730 11,450 11,155 11,888 11,317 10,905 10,489 10,057 9 ,606 Less: Resources Restricted to Paying Principal - - - - - - - - - - Total Debt Applicable 1 2,000 11,730 11,450 11,155 11,888 11,317 10,905 10,489 10,057 9 ,606 Legal Debt Margin $ 451,878 $ 493,933 $ 520,907 $ 519,090 $ 513,586 $ 505,438 $ 511,549 $ 527,760 $ 557,770 $ 592,549 Total Debt Applicable as a Percentage of the Debt Limit 2.59% 2.32% 2.15% 2.10% 2.26% 2.19% 2.09% 1.95% 1.77% 1.60% 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 $45,029,609 Pipeline Right-of-Way (Unitary) 6 ,295 Aircraft 9 1,300 Total Local Assessed 45,127,204 State Assessed Local Utility 2 4,718 Unitary 3,020,453 Total State Assessed 3,045,171 Combined Assessed Values Sub-Total Combined Assessed Values 48,081,075 Aircraft 9 1,300 Total Combined Assessed Values $48,172,375 201 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) 2007 2 64,900 $ 9,977,057 $ 3 8,144 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 12,547,278 45,388 39.50 4 2,600 6.4 2014 2 72,357 12,823,005 45,947 39.50 4 2,911 5.3 2015 2 74,293 N/A N/A N/A 4 1,853 4.4 2016 2 77,977 N/A N/A N/A 4 3,117 4.5 Sources: 1. State Department of Finance 2. Employment Development Department, Research Division, Los Angeles 3. San Luis Obispo County Schools & Cuesta College 4. U.S. Census Bureau Notes: N/A = not available 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) 2016 2007 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 2.17% 2,677 1 2.00% County of San Luis Obispo 2,800 2 1.99% 2,546 2 1.90% Atascadero State Hospital 2,000 3 1.42% 2,155 3 1.61% California Men's Colony 1,540 4 1.10% 1,800 5 1.35% Pacific Gas and Electric Company 1,900 5 1.35% 1,800 4 1.35% Cal Poly Corporation 1,400 6 1.00% 1,400 6 1.05% Tenet Healthcare 1,272 7 0.90% - - - Compass Health Inc 1,200 8 0.85% - - - Lucia Mar Unified School District 1,000 9 0.71% 1,042 7 0.78% Paso Robles Public Schools 935 10 0.67% 803 10 0.60% Cuesta College - - - 830 8 0.62% San Luis Unified School District - - - 821 9 0.61% Total Employment Labor Force 140,600 133,800 Source: 1. SLO Chamber of Commerce 2. State of California Employment Development Department 3. 2006-2007 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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Government 482.00 495.50 485.25 451.00 442.75 437.50 438.25 430.75 436.75 440.50 Public Protection 885.25 891.75 879.50 799.75 783.25 808.25 812.00 817.25 832.25 848.25 Public Ways and Facilities 185.25 191.25 199.25 202.25 194.25 193.75 193.75 188.75 190.75 207.75 Health and Sanitation 394.50 423.75 421.00 424.75 424.00 430.50 445.25 464.00 485.25 505.50 Public Assistance 443.75 453.25 437.25 426.75 424.75 425.75 428.00 478.00 500.75 524.00 Education 84.00 87.50 87.50 78.50 78.50 77.50 75.50 75.50 75.50 77.50 Recreation and Cultural Services 59.00 58.00 58.00 56.00 56.00 52.00 55.00 55.00 59.00 60.00 Total 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 2,663.50 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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Recreation and Cultural Services Parks Day Use Passes 66,899 65,895 47,156 47,011 51,519 57,135 56,601 42,821 57,564 n/a Daily Passes n/a n/a n/a n/a n/a n/a n/a 246,727* 239,140* 189,232 Annual Passes 1,416 1,598 3,547 2,220 1,992 2,357 2,406 2,998 3,137 n/a Annual Vehicle Passes n/a n/a n/a n/a n/a n/a n/a 8,744 12,584 9,614 Daily Boat Launches 19,737 14,085 16,864 15,802 15,602 16,133 14,809 26,110* 23,706* 16,001 Annual Boat Passes 793 847 752 627 618 238* 551 1,412* 1,245* 480 Public Protection Planning and Building Total Permits Issued 2,897 2,634 2,261 2,067 2,073 2,086 2,070 2,622 3,139 3,355 Number of New Affordable Housing 63 218 105 82 80 39 44 13 151 99 Sheriff Jail bookings (a) 18,718 18,321 14,158 13,025 12,682 12,966 13,273 12,583 11,375 11,018 Average daily population (a) 553 567 540 551 558 679 717 780 679 603 Health and Sanitation Mental Health Total number of patient days in State Hospitals 447 603 365 364 n/a 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 2,067 2,692 2,212 2,937 1588* 1,885 1,764 1,613 1,381 Public Health Number of Children enrolled in the Healthy Families Program 4,752 5,098 5,450 5,709 n/a 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 100 98 97 100 99 99 95 91 86 Percentage of live born infants whose mothers received prenatal care in the first trimester. 82.7 76.0 7 8.0 78.0 78.5 8 1.7 80.0 79.0 79 80 Public Assistance Social Services Rate per 1,000 children entering out-of- home care for the first time (State Rate is 2.8) 2.9 n/a 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 77.1 69.8 88.7 94.1 96.8 97.6* 98.0* 96.1* 97.9 97.0 Education Library Annual number of items circulated per capita 7.0 7.5 9.2 9.4 10.0 10.1 10.1* 9.8* 9.6 10.5 Annual Expenditure per capita for total Library budget $ 3 1.07 $ 33.75 $ 38.43 $ 35.35 $ 35.35 $ 35.25 $ 34.35 $ 35.50 $ 3 6.13 $ 36.27 Public Ways and Facilities Roads Pavement Condition Rating for all county roads (70 = "good") 69 65 62 65 60 58 60 61 61 64 Airport Airport Takeoffs and Landings (a) 92,096 96,172 95,419 88,161 80,556 80,158 71,428 66,696 71,001 71,181 Passenger Enplanements 177,176 182,285 132,748 125,152 139,909 134,244 132,315 147,105 149,558 155,744 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 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Recreation and Cultural Services County golf courses 3 3 3 3 3 3 3 3 3 3 Park acreage 12,056 13,402 13,422 13,422 13,572 13,424 13,424 13,583 13,583 13,583 Public Protection Correction facility capacities (a) 684 693 693 693 689 637 717 797 797 797 Public Ways and Facilities Miles of county roads 1,321 1,334 1,336 1,329 1,332 1,333 1,335 1,336 1,336 1,338 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