Annual Comprehensive Financial Report, 2018-19

Comprehensive Annual Financial Report County of San Luis Obispo, California Fiscal Year Ended June 30, 2019 Prepared under the direction of James W. Hamilton, CPA Auditor-Controller Treasurer-Tax Collector Cover photo of Fiscalini Ranch Preserve, Cambria taken by Ryan Richmond, Auditor-Controller-Treasurer-Tax Collector’s Office COUNTY OF SAN LUIS OBISPO COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2019 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal .......................................................................................................... 1 Certificate of Achievement for Excellence in Financial Reporting ......................................... 11 List of Elected and Appointed Officials .............................................................................. 12 Organizational Chart ........................................................................................................ 13 FINANCIAL SECTION Independent Auditors’ Report ........................................................................................... 14 Management’s Discussion and Analysis ............................................................................. 17 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position ............................................................................................. 35 Statement of Activities.................................................................................................. 36 Fund Financial Statements: Governmental Funds: Balance Sheet .............................................................................................................. 38 Reconciliation of Governmental Funds Balance Sheet to the Government- Wide Statement of Net Position – Governmental Activities ............................................. 39 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ................................................................................................... 40 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities – Governmental Activities.............................................................................. 41 Proprietary Funds: Statement of Fund Net Position ..................................................................................... 42 Statement of Revenues, Expenses, and Changes in Fund Net Position ............................. 43 Statement of Cash Flows .............................................................................................. 44 Fiduciary Funds: Statement of Fiduciary Net Position ............................................................................... 45 Statement of Changes in Fiduciary Net Position ............................................................. 46 Notes to Basic Financial Statements ............................................................................... 47 FINANCIAL SECTION (CONTINUED) Required Supplementary Information Description .................................................................................................................. 89 Schedule of the County’s Proportionate Share of the San Luis Obispo County Pension Plan’s Net Pension Liability .............................................................................. 90 Schedule of the County’s Contributions to the San Luis Obispo County Pension Plan ......... 91 Other Post-Employment Benefits (OPEB) Plan Schedule of Changes in the County’s Net OPEB Liability and Related Ratios ............................................................. 92 Other Post-Employment Benefits (OPEB) Plan Schedule of Actuarially Determined Plan Contributions and Related Ratios ........................................................ 93 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Comparison - General Fund ............................................................... 94 Notes to Required Supplementary Information ............................................................... 96 Other Supplementary Information: Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Nonmajor Governmental Fund Descriptions ............................................................ 97 Combining Balance Sheet ....................................................................................... 99 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................................................................................... 103 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual Comparison: Capital Projects ................................................................................................... 107 Community Development ..................................................................................... 108 Emergency Medical Services ................................................................................ 109 Driving Under the Influence Programs .................................................................. 110 Fish and Game .................................................................................................... 111 Road Impact Fees ............................................................................................... 112 Library ................................................................................................................ 113 Parks .................................................................................................................. 114 Public Facilities Fees ............................................................................................ 115 Roads ................................................................................................................. 116 Wildlife Grazing ................................................................................................... 117 Flood Control Districts ......................................................................................... 118 Lighting Control Districts ...................................................................................... 119 County Service Area Districts ............................................................................... 120 Public Facilities Corporation ................................................................................. 121 Pension Obligation Bonds .................................................................................... 122 SLO County Financing Authority ........................................................................... 123 FINANCIAL SECTION (CONTINUED) Nonmajor Enterprise Funds: Nonmajor Enterprise Fund Descriptions ................................................................ 124 Combining Statement of Net Position ................................................................... 125 Combining Statement of Revenues, Expenses, and Changes in Net Position ............ 126 Combining Statement of Cash Flows ..................................................................... 127 Internal Service Funds: Internal Service Fund Descriptions ....................................................................... 128 Combining Statement of Net Position ................................................................... 129 Combining Statement of Revenues, Expenses, and Changes in Net Position ............ 130 Combining Statement of Cash Flows ..................................................................... 131 Internal Service Funds – Insurance Funds: Combining Statement of Net Position ...................................................... 132 Combining Statement of Revenues, Expenses, and Changes in Net Position ......................................................................................... 133 Combining Statement of Cash Flows ....................................................... 134 Fiduciary Funds: Fiduciary Fund Description ................................................................................... 135 Agency Funds: Combining Statement of Fiduciary Net Position ........................................ 136 Combining Statement of Changes in Assets and Liabilities ........................ 137 Investment Trust Funds: Combining Statement of Fiduciary Net Position ........................................ 138 Combining Statement of Changes in Fiduciary Net Position ...................... 139 General Fund - Detail Budgetary Comparison Schedules: Detail Schedule of Expenditures – Budget to Actual Comparison ............................ 140 STATISTICAL SECTION (UNAUDITED) Statistical Section Table of Contents .............................................................................. 148 Net Position by Component ........................................................................................... 149 Changes in Net Position ................................................................................................ 150 Fund Balances, Governmental Funds ............................................................................. 152 Changes in Fund Balances, Governmental Funds ............................................................ 153 Estimated 30 Year Pension Liability Funding ................................................................... 155 Assessed Valuation ....................................................................................................... 156 Direct and Overlapping Property Tax Rates .................................................................... 157 Principal Property Taxpayers ......................................................................................... 158 Property Tax Levies and Collections ............................................................................... 159 Special Assessment Billings and Collections .................................................................... 160 Ratios of Total Debt Outstanding ................................................................................... 161 Ratios of General Obligation Debt Outstanding ............................................................... 162 Legal Debt Margin Information ...................................................................................... 163 Demographic and Economic Statistics ............................................................................ 164 Principal Employers ...................................................................................................... 165 Full Time Equivalent County Government Employees by Function .................................... 166 Operating Indicators by Function ................................................................................... 167 Capital Asset Statistics by Function ................................................................................ 168 ________________________________________________________________ INTRODUCTORY SECTION ________________________________________________________________ COUNTY OF SAN LUIS OBISPO AUDITOR - CONTROLLER TREASURER - TAX COLLECTOR James W. Hamilton, CPA Auditor-Controller Treasurer-Tax Collector Lydia J. Corr, CPA Assistant Auditor-Controller Treasurer-Tax Collector January 17, 2020 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, 2019, 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 County finances. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework designed to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the County’s financial statements in conformity with GAAP. The County’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’s financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide a reasonable assurance that the financial statements of the County for the fiscal year ended June 30, 2019, are free of any material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the County’s financial statements for the fiscal year ended June 30, 2019, are fairly presented and in conformity 1 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 County’s financial statements 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’s separately issued Single Audit Report. GAAP requires 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’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 currently occupies a land area of 3,616 square miles and serves a population of 280,101 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 (Board) is the legislative authority and governance for the County. Each supervisor is elected to a four-year term in nonpartisan districts. The terms are staggered with two supervisors being elected then three supervisors being elected in alternating election years. The Board is responsible, among other things, for establishing ordinances, adopting the budget, appointing committees, and hiring the County Administrative Officer and non-elected department heads. The County Administrative Officer 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. The County 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. 2 The annual budget serves as the foundation for the County’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 Administrative Officer. The budgets are then reviewed by the County Administrative Officer and compiled into a proposed budget with a County Administrative Officer’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 Administrative Officer 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 Administrative Officer and the Board on the status of the departmental budgets. Budget-to-actual comparisons are provided in the Comprehensive Annual Financial 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 funds subsection of the statements. The County 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 operates. 3 Employment: Unemployment in the County, as of September 2019, was 2.4% which is lower than both the state rate of 4.0% 7.0% and the national rate of 3.5%. During the same period last year, unemployment in 6.0% the County was 2.7%. 5.0% The State of California has a major 4.0% presence in the County of San Luis 3.0% Obispo with California Men’s Colony, 2.0% Atascadero State Hospital, CalTrans, and the California Polytechnic State 1.0% University, making the State the largest 0.0% employer in the County. The decrease in the County’s unemployment rate has closely followed the decreasing trend in state unemployment over the past several years. Wages: Average income increased by 5.2% to $48,180, from 2017 to 2018 (most recent data) for the residents of the County of San Luis Obispo, as reported by the Bureau of Labor Statistics. As reported by the Bureau of Labor Statistics, the highest earning 2018 occupational groups consisted of family and general healthcare practitioners, physicians and surgeons, psychiatrists, chief executives, dentists, architects and engineers, human resource managers, and pharmacists. egatnecreP 51/9 61/9 71/9 81/9 91/9 Unemployment Rates* National State County *Source: US Bureau of Labor Statistics $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2014 2015 2016 2017 2018 sralloD Average Annual Income* State County *Source: Bureau of Labor Statistics 4 Retail Sales: The increase in sales tax revenue of $631,100 or 5.6% from June 2018 to $15,000,000 June 2019 was less than the prior year increase of 11.7%. $10,000,000 With a wide variety of activities offering $5,000,000 year-round visitor appeal, the County continues to benefit fiscally from the $0 tourism industry. Tourists spent 20152016 approximately $281 million in retail 2017 2018 2019 locally in 2018 which is a 9.6% decrease in spending from 2017 as reported by the tourism marketing agency Visit SLO CAL. Real Estate: The County’s median home price decreased from $605,000 in August 2018 to $595,000 in August 2019. This is a 1.7% decrease from the same period in the prior year. After several consecutive years of increases, this could be an indicator that the housing market is leveling off. Property tax revenue indicators continue to illustrate the strength of the local economy. Discretionary property tax receipts were $132 million in FY 2018-19, an increase of 5.6% over the prior year. The total tax levy on secured property, which excludes unsecured property, direct charges, and school bonds, was $549,868,636 for FY 2018-19, an increase of 5.2% from the previous year. Property Transfer Tax is related to the value and number of real estate transactions during the year. The County’s unincorporated areas’ property transfer taxes decreased 5.6% in FY 2018-19; this is the first year with a decrease after eight years of increases. The property tax delinquency rate of 0.9% has remained unchanged over the last four years. The rate continues to demonstrate a stable local economy. sralloD Sales Tax Revenue ‐ Unincorporated* *Source: County's Enterprise Financial System 5 Tourism: Transient Occupancy Tax (TOT) collections in the unincorporated areas $12,000,000 increased 11% in the 2018-19 fiscal year. This increase is consistent with $10,000,000 the seven incorporated cities budgeted $8,000,000 increase of 10% for TOT collections for the same time period. $6,000,000 $4,000,000 The San Luis Obispo (SLO) County $2,000,000 Regional Airport announced that it will add direct flights to San Diego and $0 Portland in 2020. Additionally, direct 2015 2016 2017 flights to Dallas/Ft. Worth and Las 2018 2019 Vegas were added in 2019. Based on an economic impact study conducted by the airport, these flights will help the airport contribute more than $85 million to the regional economy each year. Long-term financial planning: The FY 2019-20 budget’s growth continues to be conservative as the County remains committed to maintaining a strategic reserve. The final FY 2019-20 comprehensive budget authorized a $648.0 million governmental fund spending level, an increase over the $631.9 million budget for FY 2018-19. The budget provides support to the development of departmental programs and services and assists County operations in responding to the continuously changing needs of constituents. The ongoing increase in property tax revenue along with other key economic indicators such as transient occupancy tax and sales tax growth allowed for a moderate increase in the FY 2019-20 spending level. The General Fund has $591.2 million appropriated to finance the current year’s expenditures including contingencies of $26.1 million. The General Fund reports fund balance intended for a variety of long-term needs in classifications based on the extent to which the amounts are restricted for use. For example, for FY 2018-19, $13.0 million is set aside in the General Reserve. The General Reserve, established per Government Code §29127, is accessible only upon declaration of emergency by the Board of Supervisors. In addition, reserves exist for building replacement ($42.2 million), automation projects ($12.0 million), and tax mitigation purposes (aka “rainy-day” funds) ($43.4 million). Other classifications of General Fund balance are described in Footnote 11. 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 sralloD Transient Occupancy Tax* *Source: County's Enterprise Financial System 6 plan provides the mechanism for estimating capital requirements; setting priorities; monitoring and evaluating the progress of capital projects; and informing the public of projected capital improvements and unfunded needs. While the CIP covers a five-year planning period, it is updated each year to reflect ongoing changes as new projects are added, existing projects are modified, and completed projects are removed 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 2019-20 capital budget recommended funding for eighteen capital projects. Total FY 2019- 20 appropriations for capital projects increased 43% from the prior year and are approximately $5.9 million. Some of the existing projects will be completed over multiple years. In September 2018, Governor Jerry Brown signed Senate Bill 1090, a bipartisan bill that will provide $85 million in economic assistance to the community. The bill is an effort, in part, to lessen the effects of lost tax revenue that will result from the closure of the Diablo Canyon Nuclear Power Plant. PG&E plans to close the plant by fiscal year 2024-25. The new law also calls for the California Public Utilities Commission to approve elements of the Joint Proposal Agreement developed by the County, San Luis Coastal Unified School District, and the incorporated cities. 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 Administrative Officer shall submit Quarterly Financial Status Reports to the Board of Supervisors. The reports shall provide expenditure and revenue projections and identify and clarify 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. 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. 7 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. As of December 31, 2018, approximately 44% of County employees fall under PEPRA. Major Initiatives Countywide: Joint department efforts helped to ensure passage of Senate Bill 1090, which will provide $85 million to the County, cities, and schools to mitigate the impacts of the closure of the Diablo Canyon Power Plant. The funds are broken into two components: Economic Development Funds ($10 million) and the Essential Services Mitigation Funds ($75 million). Roughly half of the Essential Services Mitigation Funds will go to local schools to maintain critical programs. The County’s portion is $3.6 million for Economic Development Funds and $31.3 million in Essential Services Mitigation Funds. Airports: A new passenger record was set with 485,911 passengers in 2018, an increase of 19.2% from 2017. A second daily flight between San Luis Obispo and Denver was added. New daily service to Dallas/Ft. Worth began April 2, 2019. Additional flights to Las Vegas, Portland, and San Diego were announced in FY 2019-20. Clerk-Recorder: Successfully implemented the County’s new voting system, including high speed paper ballot counting machines, ballot on demand printing, and full ballot scanning with electronic adjudication of overvotes, stray marks, and write-in values. Health Agency: Launched the Community Action Team partnership with Transitions Mental Health Association and law enforcement agencies to focus on outreach and preventative engagement with the county’s most vulnerable populations, including those impacted by mental illness, substance abuse, and homelessness. Library: Celebrated the 100th anniversary of the County of San Luis Obispo public libraries. Implemented fine-free library services as a means to increase access to the community and is now offering free and low-cost digital passes to California museums, science centers, zoos, theatres, and other cultural destinations. Parks: Implemented Phase I at El Chorro Park which included Request for Proposals for the design of the miniature golf course and a Go Kart track. These projects are scheduled for completion in Fiscal Year 2019-20. 8 Fleet Services: Reduced the County’s annual fuel consumption by over 8,471 gallons and reduced greenhouse gas emission production by over 67 million grams of carbon dioxide. Fleet Services also reduced the production of solid hazardous waste by 30% and was recognized as one of the 100 Best Fleets in North America by the National Association of Fleet Administrators ranking #40 of 38,000 municipal fleets. UC Cooperative Extension: Served over 4,000 residents through 4-H Youth Development, UC CalFresh Nutrition Education, UC Master Food Preserver and the UC Master Gardener Programs. Sheriff: Utilized a Homeland Security Grant and provided all school employees in the County with access to a smart phone application that can be used to call 911 and immediately notify other employees on the school campus of an emergency incident. Worked with other departments such as County Probation and Health Services on the Stepping Up Initiative to reduce recidivism of individuals suffering from mental health disorders. Social Services: Held four Community Connections events that served 369 homeless persons. Housed 88 families through the Housing Support Program, Bringing Families Home Program, and Housing and Disability Income Advocacy Program. Additionally, 73 families have received ongoing housing services from prior years. 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, 2018. This was the thirty-third 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. The California State Controller presented the County of San Luis Obispo its Award for Counties Financial Transaction Reporting for the fiscal year ending June 30, 2018. This is the third consecutive year that the County has earned this award and recognized the County’s professionalism in preparing an accurate and timely report. 9 10 11 COUNTY OF SAN LUIS OBISPO LIST OF ELECTED AND APPOINTED OFFICIALS JUNE 30, 2019 Elected Officials Board of Supervisors District #1 ..................................................................................................... John Peschong District #2 .................................................................................................. Bruce S. Gibson District #3 ............................................................................................................ Adam Hill District #4 ...................................................................................................... Lynn Compton District #5 Chairperson ................................................................................... Debbie Arnold Other Elected Officials Assessor .............................................................................................. Tom J. Bordonaro Jr. Auditor-Controller-Treasurer-Tax Collector-Public Administrator ................. James W. Hamilton Clerk-Recorder ................................................................................................ Tommy Gong District Attorney ..................................................................................................... Dan Dow Sheriff-Coroner .............................................................................................. Ian Parkinson Appointed Officials Agricultural Commissioner ......................................................................... Martin Settevendemie Airport General Manager ........................................................................................ Kevin Bumen Behavioral Health Administrator ................................................................................ Anne Robin Central Services Director ........................................................................................ Will Clemens Chief Probation Officer ............................................................................................ James Salio Child Support Services Director ............................................................................. Natalie Walter County Administrator ............................................................................................ Wade Horton County Counsel ....................................................................................................... Rita L. Neal County Fire Chief .................................................................................................... Scott Jalbert UC Cooperative Extension Director ..................................................................... Katherine Soule Health Agency Director ............................................................................................ Michael Hill Human Resources Director .......................................................................... Tami Douglas-Schatz Information Technology Director ............................................................................... Daniel Milei Library Director ........................................................................................ Christopher Barnickel Parks Director .......................................................................................................... Nick Franco Planning Director .................................................................................................... Trevor Keith Public Health Officer ....................................................................................... Penny Borenstein Public Works Director (Interim) ................................................................................ John Diodati Social Services Director ........................................................................................... Devin Drake Veterans’ Services Director ............................................................................ Christopher Lopez 12 County of San Luis Obispo Organizational Chart Citizens of San Luis Obispo County Special Districts Governed Boards, Commissions and ---------------- Board of Supervisors* ------------------ by the Board of Supervisors Committees County Administrator Health & Land Public Community Fiscal & Internal Human Based Protection Services Administrative Support Services Auditor- Controller- Agricultural Child Support County Airports Treasurer-Tax Commissioner Services Health Agency Counsel Collector-Public Public Health Mental Health Administrator* Drug & Alcohol Animal Services Medical Services UC Planning & Administrative County Fire** Cooperative Central Services Building Office Extension District Human Public Works Social Services Library Assessor* Attorney* Resources Emergency Veterans' Parks & Information Clerk-Recorder* Services Services Recreation Technology Probation Sheriff- Coroner* Public Defender** *Elected Officials **Contract 13 ________________________________________________________________ FINANCIAL SECTION ________________________________________________________________ INDEPENDENT AUDITORS’ REPORT To the Honorable Board of Supervisors County of San Luis Obispo, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County of San Luis Obispo, California (County), as of and for the year ended June 30, 2019, 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. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the San Luis Obispo County Pension Trust which represent 60 percent of the assets and 2 percent of the total revenue/contributions of the aggregate remaining fund information. 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 discretely presented component unit and net pension trust fund, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 14 To the Honorable Board of Supervisors County of San Luis Obispo, California An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County, as of June 30, 2019, and the respective changes in financial position, and where applicable, cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described in Note 20 to the basic financial statements, prior period adjustments were recorded for the correction of errors in the prior year financial statements. Our opinions are 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 the County’s proportionate share of the San Luis Obispo County’s pension plan’s net pension liability, schedule of the County’s contributions to the San Luis Obispo County’s pension plan, other post-employment benefits (OPEB) plan schedule of changes in the County’s net OPEB liability and related ratios, other post-employment benefits (OPEB) plan schedule of actuarially determined plan contributions and related ratios, 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 the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial 15 ________________________________________________________________ MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________________________________ COUNTY OF SAN LUIS OBISPO MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2019 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, 2019. 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 35. 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 $1,378,832 (net position). The majority of this amount, $1,474,718 is the net investment in capital assets, while $41,281 is restricted for specific purposes (restricted net position). Unrestricted net position indicates the portion of net position which may be used to meet the County’s ongoing obligations to citizens and creditors; however, the recording of the County’s pension liability in accordance with GASB Statement No. 68 (GASB 68) and the County’s OPEB liability in accordance with GASB Statement No. 75 (GASB 75) created a negative unrestricted net position of $137,167. The County’s net position increased by $25,006. $28,001 of the change is for current fiscal year activity, while a net $2,995 prior period adjustment comprised of a $4,611 reduction in governmental activities and a $1,616 increase in business-type activities offset the overall current year increase. The increase in net investment in capital assets represents capital acquisitions during the year reduced by depreciation and increased by retirement of long-term debt (Table A). The increase in restricted and the decrease in negative unrestricted net position represents the degree to which increases in revenues exceeded increases in expenses (Table B). As of June 30, 2019, the County’s governmental activities reported combined ending net position of $1,009,905, an increase of $12,602 in comparison with the prior year. Due to the recording of the long- term pension and OPEB obligations, 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 $4,087 before general revenues, contributions and transfers from other funds, an increase of $5,878 when compared to net program loss of $1,791 in the prior year. The difference from the prior year is primarily due to increased fees, fines, and charges for services of $6,046 in all enterprise activities. The largest increases related to higher revenues for Airport ($1,789) and Los Osos Wastewater Treatment Plant ($633) customer charges, and increased water sale revenue for the State Water Contract ($1,546) and Nacimiento Water Contract ($1,238). At the end of the fiscal year, the entire $328,351 fund balance of the General Fund was either nonspendable $19,222, restricted $12,276, committed $169,846 or assigned $127,007. Consistent with the prior year, the County prepaid its $55.0 million employer retirement contribution to the San Luis Obispo County Pension Trust (Pension Trust) in July of 2019. The prior year prepayment was $53.2 million. The County will save an estimated $1.5 million by prepaying the employer retirement contribution. 17 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the County’s basic financial statements. The County’s basic financial statements include four components: 1) government-wide financial statements, 2) fund financial statements, 3) notes to the financial statements, and 4) required supplementary information. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements The Government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the County’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The Statement of Activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused employee vacation balances). Both of the government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (Governmental Activities) from other functions that are intended to recover all or a significant portion of their cost through user fees and charges (Business-type Activities). The governmental activities of the County include public protection, public ways and facilities, health and sanitation, public assistance, education, recreation 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 SLO 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 35 to 37 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. 18 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Governmental funds - Governmental funds are used to account for essentially the same functions reported as Governmental Activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on the balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for Governmental Funds with similar information presented for Governmental Activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between Governmental Funds and Governmental Activities. The County maintains twenty-five individual governmental funds organized according to their type: general, special revenue, debt service, and capital projects. Information is presented separately in the governmental funds’ balance sheet and in the governmental funds’ statement of revenues, expenditures, and changes in fund balances for the General Fund, and the Capital Projects Fund, which are considered to be major funds. Data from the remaining twenty-three governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the nonmajor 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 nonmajor governmental funds is provided in the other supplementary information section of this report. The basic governmental fund financial statements can be found on pages 38 to 41 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, 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 government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The Airport, Nacimiento Water Contract, State Water Project, 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 information section of this report. The basic proprietary fund financial statements can be found on pages 42 to 44 of this report. 19 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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 45 to 46 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 47 to 88 of this report. Required Supplementary Information - The notes to the basic financial 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 89 to 96 of this report. Other Supplementary Information - In addition to the basic financial statements, accompanying notes, and required supplementary information, this report also presents certain other supplementary information concerning the County’s General Fund, special revenue funds budgetary schedules, and combining and individual fund statements and schedules. Combining and individual fund statements and schedules - The combining and individual fund statements and schedules referred to earlier provide information for nonmajor governmental funds, nonmajor enterprise funds, internal service funds, and fiduciary funds and are presented following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 97 to 106 and 124 to 139 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 Bonds, San Luis Obispo County Public Facilities Corporation, SLO County Financing Authority, and nonmajor Special Revenue funds can be found on pages 107 to 123 of this report. Detail budgetary schedules demonstrating legal level of compliance with budgetary control for the General Fund are presented on pages 140 to 147 of this report. 20 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) GOVERNMENT-WIDE FINANCIAL ANALYSIS As stated earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the County, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1,378,832 as detailed in the table below: Table A Statement of Net Position June 30, 2019 (in thousands) 2018- June 30, 2019 June 30, 2018 2019 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 $ 589,848 $ 148,133 $ 737,981 $ 518,137 $ 140,569 $ 658,706 12.0% Other noncurrent assets 3,386 10,236 13,622 3,329 10,320 13,649 (0.2%) Capital assets 1,214,459 596,352 1,810,811 1,212,274 603,100 1,815,374 (0.3%) Total assets 1,807,693 754,721 2,562,414 1,733,740 753,989 2,487,729 3.0% Deferred Outflows of Resources 176,881 5,843 182,724 115,667 4,956 120,623 51.5% Liabilities: Current liabilities 77,947 38,282 116,229 73,889 39,604 113,493 2.4% Long-term liabilities 872,051 352,460 1,224,511 683,941 361,781 1,045,722 17.1% Total liabilities 949,998 390,742 1,340,740 757,830 401,385 1,159,215 15.7% Deferred Inflows of Resources 24,671 895 25,566 94,274 1,037 95,311 (73.2%) Net position: Net investment in capital assets 1,188,830 285,888 1,474,718 1,185,073 283,410 1,468,483 0.4% Restricted 41,281 - 41,281 29,836 - 29,836 38.4% Unrestricted (220,206) 83,039 (137,167) (217,606) 73,113 (144,493) (5.1%) Total net position $ 1,009,905 $ 368,927 $ 1,378,832 $ 997,303 $ 356,523 $ 1,353,826 1.8% Analysis of Net Position The County’s total net position increased by $25,006 or 1.8%. The increase was a combination of increases in total assets ($74.7 million), deferred outflows of resources ($62.1 million), and total liabilities ($181.5 million) along with decreased deferred inflows of resources ($69.7 million). Causes for the changes in each of these categories are detailed below. The overall increase in total assets, 3.0%, is primarily due to inflows of governmental activities’ cash ($40.5 million) and accounts receivable ($34.5 million). The significant cash increase occurred due to higher interest revenue earned, coupled with the County’s reduction of debt payments, resulting from prior year’s cash outflow of $46 million for final debt service payments on the 2003 Series A Standard and 2009 Series A Term Pension Obligation Bonds. Accounts receivable increased due to the County recording economic mitigation funds from PG&E for the impending closure of the Diablo Canyon Nuclear Power Plant. 21 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Of the $62.1 million, or 51.5%, increase in deferred outflows of resources, $42.5 million was related to deferred pension resources and $19.8 million was related to deferred OPEB resources. The pension deferred outflows net increase was caused primarily by a $27.3 million increase in the net difference between projected and actual earnings on pension plan investments, a $21.0 million increase in differences between expected and actual experience, and a decrease of $5.6 million in changes to actuarial assumptions. The OPEB deferred outflows increase was primarily attributed to a $16.9 million increase to changes in actuarial assumptions. Total liabilities of the County increased $181,525, or 15.7%. The largest contributor to the increase was an increase in the County’s net pension obligation of $178.8 million. Additionally, the County’s net OPEB liability increased $16.7 million. Unearned revenue in governmental activities increased $4.9 million related to Social Services’ programs. The overall increase in long-term liabilities was offset by a $6.2 million decrease to accounts payable. Deferred inflows of resource decreased $69.8 million, or 73.2%. $71.6 million of the decrease was related to deferred pension resources associated with the change in the net difference between projected and actual earnings on pension plan investments. The total decrease was offset slightly by the $2.5 million increase to OPEB deferred inflows associated with changes in the actuarial assumptions. 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, and the recording of the County’s OPEB liability per the requirements of GASB 75, 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 is net investment of capital assets of $1,474,718. This amount reflects 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 $41,281, or 3.0%, 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 net position categories. Total net position for governmental activities increased $12.6 million. The increase is comprised of a $17.2 million increase due to normal operating activities and a $4.6 million prior period adjustment to record a reduction of other assets associated with resources accumulated for pension obligation bond debt service payments made in the prior year. Total net position for business-type activities increased $10.8 million due to normal operating activities and increased an additional $1.6 million with a prior period adjustment to record capital assets associated with the Los Osos Wastewater Plant received but not recorded in the prior year. The overall effect of the prior period adjustments and normal operating activities was an increase of $25.0 million in the County’s total net position. Net Investment in Capital Assets for business-type and governmental activities increased $6.2 million. Business-type activities increased $2.5 million due to the Airport’s car wash and runway rehabilitation that does not have related debt. The remainder is comprised of an increase in State Water Project water rights and reduction to capital related debt from scheduled debt service principal payments. Governmental activities increased $3.8 million, the increase is associated with construction in progress for several large projects including the Women’s Jail Expansion, Roads, and Parks upgrades, which have no related debt. The retirement of capital related long-term debt also contributed to the increase. 22 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The $11,445, or 38.4% increase to Restricted net position for governmental activities is primarily comprised of increases to the General Government ($1.8 million), Public Protection ($877 thousand), Public Ways and Facilities ($3.4 million), and Debt Service ($5.3 million) functions. The General Government increases related to additional software and implementation purchases. The Public Protection increase related to additional professional services for planning and related services. The Public Ways and Facilities increase related to additional road maintenance and construction. Restricted net position increased slightly for the Recreation and Cultural Services and Public Assistance functions and decreased slightly for the Health and Sanitation and Education functions. The increases and decreases are mostly due to fluctuations in purchase obligations. Restricted net position represents net position of the County which is subject to constraints imposed by creditors, grantors, contributors, laws, or regulations. There was an increase of $7.3 million in Unrestricted net position reported in connection with the Total Primary Government. This category represents the portion of the County’s net position 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 increase was mainly due to the governmental activities’ increase in other revenues. The increase in overall general revenues was offset by higher total primary government expenses compared to the prior year. The table on the next page indicates the changes in net position for governmental and business-type activities: 23 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table B Statement of Activities For the Year Ended June 30, 2019 (in thousands) June 30, 2019 June 30, 2018 2018-2019 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 $ 58,501 $ 53,322 $ 111,823 $ 59,620 $ 47,276 $ 106,896 4.6% Operating grants and contributions 254,589 386 254,975 253,197 426 253,623 0.5% Capital grants and contributions 16,516 7,999 24,515 10,089 5,217 15,306 60.2% General revenues: Property taxes 189,689 3,912 193,601 180,051 3,858 183,909 5.3% Other taxes 27,224 - 27,224 25,708 - 25,708 5.9% Interest and investment income 12,952 1,590 14,542 3,171 1,272 4,443 227.3% Grants not restricted to specific programs 2,115 - 2,115 2,740 - 2,740 (22.8%) Other revenues 35,445 574 36,019 2 - 2 1800850% Total revenues 597,031 67,783 664,814 534,578 58,049 592,627 12.2% Expenses: General government 54,434 - 54,434 56,858 - 56,858 (4.3%) Public protection 213,809 - 213,809 183,814 - 183,814 16.3% Public ways and facilities 34,202 - 34,202 41,606 - 41,606 (17.8%) Health and sanitation 119,259 - 119,259 103,822 - 103,822 14.9% Public assistance 131,432 - 131,432 122,753 - 122,753 7.1% Education 12,698 - 12,698 12,754 - 12,754 (0.4%) Recreation and cultural services 11,891 - 11,891 8,927 - 8,927 33.2% Interest on long-term debt 1,468 - 1,468 11,840 - 11,840 (87.6%) Airport - 8,398 8,398 - 7,966 7,966 5.4% Golf - 3,491 3,491 - 3,297 3,297 5.9% State Water Contract - 6,973 6,973 - 5,909 5,909 18.0% Nacimiento Water Contract - 14,318 14,318 - 14,044 14,044 2.0% Lopez Flood Control - 7,004 7,004 - 7,072 7,072 (1.0%) Lopez Park - 3 3 - 3 3 - General Flood Control - 1,142 1,142 - 1,056 1,056 8.1% County Service Areas - 4,747 4,747 - 4,445 4,445 6.8% Los Osos Wastewater - 11,544 11,544 - 10,918 10,918 5.7% Total expenses 579,193 57,620 636,813 542,374 54,710 597,084 6.7% Excess/(deficiency) before transfers 17,838 10,163 28,001 (7,796) 3,339 (4,457) (728.2%) Transfers (625) 625 - 2,267 (2,267) - - Change in net position 17,213 10,788 28,001 (5,529) 1,072 (4,457) (728.2%) Net position - beginning of year 997,303 356,523 1,353,826 1,016,819 355,562 1,372,381 (1.4%) Prior Period Adjustment (4,611) 1,616 (2,995) (2,042) - (2,042) 46.7% Cumulative change of effect in accounting principle - - - (11,945) (111) (12,056) - Net position - end of year $ 1,009,905 $ 368,927 $ 1,378,832 $ 997,303 $ 356,523 $ 1,353,826 1.8% 24 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Analysis of Governmental and Business-type Activities Governmental Activities Governmental Activities increased the County’s net position by $12.6 million compared to a decrease of $19.6 million in the prior year. Overall, total revenues for governmental activities increased $62.5 million, or 11.7%. The increase in revenues was offset by a prior period adjustment of $4.6 million to reflect the removal of a current asset related to the payment of pension obligation bonds as well as governmental expenditures which increased by $36.8 million, or 6.8%. Remaining significant factors contributing to the overall increase in net position from the prior year are detailed below: Capital Grants and Contributions increased by $6.4 million, or 63.7%, due to state and federal increases in roads funding. Property Taxes rose $9.6 million or 5.4% over the prior year, a function of the regular 2% increase in assessed property value allowed by California’s Proposition 13. Other Taxes rose $1.5 million or 5.9% driven primarily by increases in sales ($631 thousand) and transient occupancy taxes ($1.1 million). The increases in taxes reflect the County’s continued economic stability and status as a popular tourist destination. Interest and Investment Income increased by $9.8 million, or 308.5%, due to increased interest earnings and a positive fair market value adjustment of $3.8 million. Other Revenues increased by $35.4 million driven almost entirely by the recognition of economic impact mitigation funds for the impending closure of the Diablo Canyon Nuclear Power Plant. Total expenses from governmental activities increased $36.8 million, or 6.8%, over the prior year. Increases to Public Protection ($30.0 million), Health and Sanitation ($15.4 million), Public Assistance ($8.7 million), and Recreation and Cultural Services ($3.0 million) were offset by decreases to General Government ($2.4 million), Public Ways and Facilities ($7.4 million), and Education ($56 thousand). The General Government decrease resulted from decreased expenditures for maintenance projects, utilities, and countywide automation projects including the historical map preservation project and the Integrated Document Management (IDM) upgrade. Public Protection increased expenditures were driven by increased pension and OPEB expenses as well as increased costs to reimburse the State for fire personnel. Public Ways and Facilities expenditures decreased due to a prior year $3 million payment for work on the Spanish Springs project. Health and Sanitation expenditures increased due to increased pension and OPEB expenses as well as higher expenditures for professional services related to behavioral health programs. Public Assistance increased expenditures were caused by increased pension and OPEB expenses combined with increased law enforcement medical care professional services expenditures for jail inmates. The overall decrease in Education expenditures were the net result of decreased pension and OPEB expenses exceeding the increased expenditures related to the Cambria Library and the Black Gold Library Cooperative. The increase in Recreation and Cultural Services total expenses stems from increased pension and OPEB expenses along with a payment to the SLO Land Conservancy for the Octagon Barn-Bob Jones trail project. In addition, interest expense on long-term debt decreased by $10.3 million due to the prior year retirement of the 2003 Series A Standard A and 2009 Series A Term Pension Obligation Bonds. For FY 2018-19, the County was able to maintain its General Fund contingencies at a level of 5%, while still making investments in the many programs and services provided to the community. 25 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Business-type Activities Business-type activities increased the County’s net position by $12.4 million compared to an increase of $961 thousand in the previous year. Revenues exceeded expenses by $10.2 million, a transfer of $625 thousand from governmental activities, and a $1.6 million prior period adjustment for the Los Osos Wastewater Fund’s contributed assets, resulted in the total increase to net position. Key elements of current year business-type activity are as follows: Total revenue increased $9.7 million or 16.8% from the preceding year. The largest increases occurred in Charges for Services ($6.0 million), and Capital Grants and Contributions ($2.8 million). The increase in Charges for Services was primarily driven by increases in Airport rent and concessions revenue, parking, landing, and passenger facility fees, along with increased water sales revenue in the State Water Project Fund. Capital Grants and Contributions increased due to capital contributions related to the Airport ($3.1 million) and the Los Osos Wastewater Project ($4.8 million). Expenses for business-type activities increased $2.9 million or 5.3% from the prior year. Within business-type activities, the largest increase, $1.5 million, was caused by payments to the California State Water Resources Department for the State Water Project. The remainder of the change is the result of various small increases and decreases among the other enterprise funds. FUND FINANCIAL STATEMENT ANALYSIS FINANCIAL ANALYSIS OF THE 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 beneficial 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, $19,258, increased by $723 thousand, 3.9% from the prior year. Nonspendable fund balance represents amounts that are not spendable in form or are legally or contractually required to be maintained intact, and includes (1) inventories of $106, (2) prepaid items of $1,606, and (3) long-term receivables of $17,546. The increase from the prior year primarily relates to pension prefunding payment of employer contributions and employer for employee contributions. Restricted fund balance, $45,772, increased $10.9 million, or 31.4%, from the prior year. Restricted fund balance represents amounts that are subject to externally enforceable legal restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation. Significant components of this balance include amounts restricted for (1) Tax reduction reserves of $3,305, (2) General Public protection programs of $3,125, (3) Mental Health Services Act funds of $5,836, (4) Public facilities of $13,714, (5) Traffic impact programs of $10,102, and (6) Debt service of $9,642. The majority of the increase to restricted fund balance relates to an increase in amounts restricted in the General Fund for public protection programs and public facilities. 26 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Committed fund balance, $236,462, increased $21.7 million, or 10.1%, from the prior year. Committed fund balance 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, $20,925, (2) Tax reduction reserve, $43,424, (3) Automation projects, $12,028, (4) Roads, $15,045, (5) Building replacement, $42,197, (6) Solar plant mitigation, $4,979, (7) Capital projects, $17,134, and (8) Maintenance projects, $9,420. The increase is partly due to the County receiving the first installment of the economic impact mitigation funds for the impending closure of the Diablo Canyon Nuclear Power Plant ($8.5 million). Additionally, $10.8 million in pension obligation bond debt payments were committed. Assigned fund balance, $127,007, increased $19.9 million, or 18.5%, from the prior year. Assigned fund balance 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, $19,454, (2) Tax reduction reserve, $10,593, (3) Sheriff-Coroner programs, $11,061, and (4) Subsequent Fiscal Year Budget, $32,265. The largest changes in the assigned fund balance category were increases to general government programs ($14.2 million), foster care and adoption programs ($1.7 million), and Behavioral Health programs ($2.6 million). As of the end of the current fiscal year, the County’s governmental funds reported combined ending fund balance of $428,499, an increase of 15.1%, or $56,216 in comparison with the prior year. Approximately 84.8% of the total fund balance, or $363,469, 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 $309,129 while total fund balance reached $328,351. 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 $460.1 million. Spendable fund balance represents 67.1% of the total fund expenditures, while total fund balance represents 71.3% of the same amount, a 7.2% increase from the prior year. During the current fiscal year, the fund balance of the General Fund increased by $40.1 million. The following provides an explanation for significant contributors to the change in the General Fund’s fund balance. Total revenues exceeded total expenditures by $64.8 million. General Fund revenues ended the year with an increase of $42.2 million or 8.7% over the prior year. The largest revenue increase occurred in Other Revenues, which increased by $18.1 million. The increase was due to the County recognizing economic impact mitigation funding for the impending closure of the Diablo Canyon Nuclear Power Plant. Other large increases include Taxes with a $12.4 million increase and Use of Money and Property which increased $6.8 million. Taxes increased due to property taxes which are allowed up to a 2% increase by California’s Proposition 13 and increases in both transient occupancy tax and sales tax. The Use of Money and Property increase was driven by an increase in the fair market value of investments and interest revenue. Fines, Forfeitures, and Penalties decreased by $1.2 million primarily due to reduced revenues from court fines. Total expenditures in the General Fund increased $11.1 million, or 2.5%, from the prior year. Expenditures increased for the Public Protection, Health and Sanitation, Public Assistance, and Education functions; negotiated salaries and benefit raises increased costs in most functions and were the major component in the overall rise. In addition, increased professional services expenditures for mental health programs and contracting out jail medical services contributed to the rise in expenditures. Expenditures decreased for the General Government and Public Ways and Facilities functions due to reduced professional services and the completion of several construction projects in the prior year. 27 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Capital Projects The Capital Projects Fund handles construction projects for the County’s governmental funds. The fund ended the fiscal year with a total fund balance of $18.7 million. Capital outlay expenditures exceeded revenues by $3.3 million and net transfers totaled $4.1 million. The combination of these two factors resulted in a $735 thousand increase 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 $3.9 million to the Capital Projects Fund of which $534 thousand is for upgrades to the Los Osos Community Park and $430 thousand is related to design and construction of a new County Fire and Sheriff dispatch center. The remainder was for general government, public health 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 $591.1 million in the current fiscal year and was an increase of approximately 8.7%, or $47.2 million, from the prior fiscal year revenues of $543.8 million. The following table presents the amount of revenues from various sources and also displays increases or decreases from the prior year. Table C Revenues Classified by Source Governmental Funds Fund Financial Statements For the Year Ended June 30, 2019 (in thousands) 2018-2019 2017-2018 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Revenues by Source: Taxes $ 217,106 36.7% $ 203,583 37.4% $ 13,523 6.6% Licenses, Permits, Franchises 12,133 2.1% 11,140 2.0% 993 8.9% Fines, Forfeitures, and Penalties 4,396 0.7% 5,977 1.1% (1,581) (26.5%) Use of Money and Property 12,268 2.1% 3,779 0.7% 8,489 224.6% Aid from Governmental Agencies 271,961 46.0% 262,660 48.3% 9,301 3.5% Charges for Current Services 47,957 8.1% 49,793 9.2% (1,836) (3.7%) Other Revenues 25,278 4.3% 6,869 1.3% 18,409 268.0% Total $ 591,099 100% $ 543,801 100% $ 47,298 8.7% The following provides an explanation of revenues by source that changed significantly over the prior year in the governmental funds. Taxes increased $13.5 million or 6.6% primarily due to the regular 2% increase in assessed property value allowed by California’s Proposition 13 and increases to both transient occupancy tax and sales tax revenues. Licenses, Permits, and Franchises increased $993 thousand, or 8.9%. The increase was driven by an increase in land use and building plans review fees being collected. Fines, Forfeitures, and Penalties decreased $1.6 million, or 26.5%. The decrease was primarily due to court fines and collections related to vehicle infractions. 28 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Revenues from the Use of Money and Property increased $8.5 million, or 224.6%, due to an increase in the fair market value of various investments. Other Revenues increased $18.4 million, or 268.0%. The increase is primarily attributable to economic mitigation revenues related to the closure of the Diablo Canyon Nuclear Power Plant being recognized. The following table presents the amount of expenditures by function as well as increases or decreases from the prior year. Table D Expenditures by Function Including Capital Outlay Governmental Funds Fund Financial Statements For the Year Ended June 30, 2019 (in thousands) 2018-2019 2017-2018 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Expenditures by Function: General Government $ 54,991 10.3% $ 60,445 10.2% $ (5,454) (9.0%) Public Protection 185,033 34.4% 175,175 29.6% 9,858 5.6% Public Ways and Facilities 35,267 6.6% 42,254 7.1% (6,987) (16.5%) Health and Sanitation 103,512 19.3% 99,885 16.9% 3,627 3.6% Public Assistance 121,327 22.7% 117,066 19.8% 4,261 3.6% Education 12,191 2.3% 11,640 2.0% 551 4.7% Recreation and Cultural Services 10,574 2.0% 10,358 1.8% 216 2.1% Principal payments 5,093 1.0% 50,989 8.6% (45,896) (90.0%) Interest on Long-Term Debt 1,204 0.2% 11,666 2.0% (10,462) (89.7%) Capital outlay 6,374 1.2% 11,828 2.0% (5,454) (46.1%) Total $ 535,566 100% $ 591,306 100% $ (55,740) (9.4%) The following provides an explanation of the expenditures by function that changed significantly over the prior year. General Government expenditures decreased $5.5 million, or 9.0%. While total salaries and benefits were essentially unchanged from the prior year, reduced services and supplies and professional services associated with countywide maintenance projects were the primary cause of the decrease. Public Protection expenditures increased $9.9 million, or 5.6%. The increase related to increased salaries and services & supplies spread across multiple departments: specifically, increased billings from the State to County Fire for services and increased County Fire equipment purchases and increased professional services expenditures for both Planning and the Public Defender. Public Ways and Facilities expenditures decreased $7.0 million, or 16.5%. While microsurfacing, overlay, and chip seal projects continued throughout the County and new projects like the seismic retrofitting of Avila Beach Drive have begun, the decrease is mostly due to larger projects being completed in the prior year. These included the San Juan Creek Pedestrian Bridge and the Klau Creek Bridge projects. Principal and Interest Payments on Long-Term Debt decreased by $56.4 million, or 89.9% due to the early payoff of the 2009 Series A Term Pension Obligation Bonds made in the prior year. Capital Outlay expenditures decreased $5.5 million, or 46.1%. The decrease is primarily due to winding down activity associated with the Women’s Jail Project. 29 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 2018-19 fiscal year. Table E Statement of Revenues, Expenses and Results of Operations Proprietary Funds Fund Financial Statements For the Year Ended June 30, 2019 (in thousands) Major Nonmajor Funds Funds Total Nacimiento State Other Water Water Los Osos Enterprise Total Airport Contract Project Wastewater Funds Enterprise Operating revenues $ 9,021 $ 16,947 $ 7,656 $ 5,363 $ 14,781 $ 53,768 Operating expenses 8,288 6,798 6,811 8,231 14,761 44,889 Operating income (loss) 733 10,149 845 (2,868) 20 8,879 Non- operating revenues (expenses), net 801 (6,864) 2,575 (3,241) 715 (6,014) Net income (loss) before contributions and transfers 1,534 3,285 3,420 (6,109) 735 2,865 Contributions and transfers, net 2,828 - - 5,388 408 8,624 Change in net position $ 4,362 $ 3,285 $ 3,420 $ (721) $ 1,143 $ 11,489 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 realized operating income of $733 thousand, a $1.2 million increase over the prior year loss of $450 thousand. Net position increased by $4.4 million compared to an increase in net position of $1.5 million in the prior year. Operating revenues increased $1.8 million over the prior year due to increased passenger traffic at the new terminal with the recent addition of new flights to Seattle, Denver and Dallas/Ft. Worth. Enplanement activity grew for the sixth consecutive year with a 14.5% increase over the prior year. The Nacimiento Water Contract Fund realized operating income of $10.1 million, an increase of $408 thousand from the prior year’s operating income of $9.7 million. The increase is primarily attributable to a $1.2 million increase in water sales over the prior year. The increased revenue exceeded the increase in operating expenses causing net position to increase $3.3 million. 30 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The State Water Project Fund realized operating income of $845 thousand, a $621 thousand increase from the prior year operating income of $224 thousand. The increase is primarily attributable to a $1.5 million increase in water sales over the prior year. The increased revenue exceeded the increase in operating expenses causing net position to increase $3.4 million. The Los Osos Wastewater Fund reported an operating loss of $2.9 million, a decrease of $123 thousand over the prior year. Since the wastewater treatment plant began full-service operations in FY 2016-17 both operating revenues and expenses have steadily increased. Increased usage resulted in additional user revenue of $558 thousand, but also came with increased services and supplies cost of $458 thousand. Operating revenue increased by $868 thousand and operating expenses increased $745 thousand. Capital contributions increased by $1.9 million and overall net position decreased $721 thousand, compared to a $5.9 million decrease in the prior year. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget for expenditures and transfers out increased by $37.1 million, or 7.1%, during the year, leading to the final amended budget. This increase was funded in part by increases to both budgeted revenues and transfers in totaling $19.7 million and the use of reserves and designations for the balance. Unanticipated revenues totaling $8.1 million in State and Federal Aid, $2.3 million in Other Revenue, $1.3 million in Charges for Current Services, $513 thousand in Licenses, Permits and Franchises, $207 thousand in Fines, Forfeitures, and Penalties, $212 thousand in Interfund Revenues, and $7.1 million in Other Financing Sources financed the budget augmentations. The largest budget expenditure augmentations occurred in the functional areas of General Government ($15.0 million), Public Protection ($11.6 million), Public Ways and Facilities ($3.6 million), Health and Sanitation ($4.2 million), and Public Assistance ($2.7 million). The $15.0 million in the General Government function augmentations were primarily for the maintenance and upgrade of County facilities. The Public Protection augmentations were primarily divided among Sheriff-Coroner programs which received $5.7 million in augmentations, Planning and Building programs augmentations of $1.7 million, and County Fire which received an additional $3.6 million for vehicle replacements and supplies. Public Ways and Facilities augmentations of $1.7 million for Development Services for outside agency projects, $1.7 million for Sustainable Groundwater Management Act management, and $178 thousand for Services provided for Special District projects. Health and Sanitation augmentations relate to Public Health programs, which received $2.0 million, $1.2 million for Mental Health programs, $524 thousand for Drug and Alcohol programs, and Mental Health Services Act programs received $515 thousand. The $2.7 million increase in the Public Assistance function relates almost entirely to Social Services including foster care and adoption assistance, housing placement and supportive services. $74 thousand of the Public Assistance augmentation went to Veterans’ Services programs. At the close of the fiscal year, actual General Fund expenditures were 86.8% of the current budget, while General Fund revenues were realized at 98.0% of budget. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At June 30, 2019, 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 decrease (including additions and deductions) of $4.6 million or 0.3% from last year. 31 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table F Capital Assets June 30, 2019 (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 2018 2019 2018 2019 2018 2019 Change Land $ 795,505 $ 795,513 $ 36,519 $ 36,513 $ 832,024 $ 832,026 - Water Rights - - 56,434 58,591 56,434 58,591 3.8% Other Property Non Depreciable - - 1,968 1,968 1,968 1,968 - Construction-in- progress 19,727 28,891 4,108 2,097 23,835 30,988 30.0% Structures & Improvements 259,579 263,455 205,262 209,774 464,841 473,229 1.8% Equipment 95,752 103,034 9,947 10,164 105,699 113,198 7.1% Other Property Depreciable 845 980 554 554 1,399 1,534 9.6% Infrastructure Depreciable 406,692 412,682 380,493 381,471 787,185 794,153 0.9% Subtotal 1,578,100 1,604,555 695,285 701,132 2,273,385 2,305,687 1.4% Less Accumulated Depreciation (365,826) (390,096) (92,185) (104,780) (458,011) (494,876) 8.0% Total $ 1,212,274 $ 1,214,459 $ 603,100 $ 596,352 $ 1,815,374 $ 1,810,811 (0.3%) Major additions and future commitments in capital assets - Governmental Activities County Roads had the majority of additions in governmental activities with $13.5 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 seismic retrofit of the Avila Beach Drive Bridge and the phase one completion of the Air Park Drive Bridge replacement ($5 million). Other notable capital asset additions during FY 2018-19 include the continued work on the Women’s Jail Expansion ($1.8 million), the replacement of the roofs at the Library’s San Luis Obispo branch ($402 thousand) and the Veteran’s Memorial Building ($471 thousand). The County purchased office space in Atascadero for the Health Agency’s Driving Under the Influence program ($160 thousand), purchased a Special Bomb Response Vehicle ($207 thousand) and upgraded the County’s enterprise document management system server ($822 thousand). Major additions and future commitments in capital assets - Business-type Activities Within business-type activities, major additions include the construction of the Airport’s car wash facility ($495 thousand) and the rehabilitation of the Airport’s main runway ($122 thousand). More detailed information about the County's capital assets is presented in Notes 4 and 5 in the financial statements. Debt Administration At the end of the current fiscal year, the County of San Luis Obispo had total notes and bonds payable of $480 million. In July 2003, the County issued Pension Obligation Bonds to refund the Unfunded Actuarial Accrued Liability due to the Pension Trust. The balance remaining on the County’s Pension Obligation Bonds at the end of the FY 2018-19 was $96.9 million. Pension Obligation Bonds debt service payments are funded by County payroll benefits. 32 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The remainder of the County’s debt consists of $40.6 million in certificates of participation, which are repaid from a variety of revenues; $86.3 million in State loans; $75.4 million in assessment bonds relating to the Los Osos Wastewater project, and $172.6 million in revenue bonds which are repaid with water service revenue. General Obligation Bonds totaling $8.2 million are backed by the full faith and credit of the County. Table G Outstanding Debt June 30, 2019 (in thousands) Business- Business- Government Type Type al Activities Governmental Activities Activities Total Total Total June 30, Activities June 30, June 30, June 30, June 30, Percent 2018 June 30, 2019 2018 2019 2018 2019 Change Certificates of Participation $ 21,059 $ 19,768 $ 13,035 $ 12,184 $ 34,094 $ 31,952 (6.3%) Certificates of Participation from direct borrowings 5,883 5,762 2,971 2,922 8,854 8,684 (1.9%) Pension Obligation Bonds 99,407 96,903 - - 99,407 96,903 (2.5%) State notes from direct borrowings 2,056 1,901 87,667 84,409 89,723 86,310 (3.8%) Revenue Bonds - - 177,336 172,628 177,336 172,628 (2.7%) General Obligation Bonds - - 8,658 8,162 8,658 8,162 (5.7%) Assessment Bonds - - 76,746 75,358 76,746 75,358 (1.8%) Total $ 128,405 $ 124,334 $ 366,413 $ 355,663 $ 494,818 $ 479,997 (3.0%) The decrease from the prior year for the County’s certificates of participation, notes, and bonds payable was $14.8 million, or 3.0%. This decrease is the result of debt payments being made and no issuance of new debt in FY 2018- 19. 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 $703.3 million. Other liabilities include compensated absences of $28.7 million for governmental activities and $385 thousand for business-type activities; landfill postclosure costs of $7 million; and a self-insurance liability of $19.6 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. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES The County is committed to providing services with integrity, collaboration, professionalism, accountability and responsiveness, and these values are reflected in the Fiscal Year 2018-19 budget which represents conservative growth compared to the Fiscal Year 2017-18 budget. The County’s conservative approach to budgeting has ensured its ability to sustain fiscal health in recent years and will be central to the County’s ability to respond to potential changes in State and Federal policy. 33 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) In prior years, the elimination of the In-Home Supportive Services (IHSS) Maintenance of Effort contribution decreased state funding and resulted in a significant increase in the County’s share of IHSS program costs; however, the Governor’s FY 2019-20 Proposed Budget makes several positive changes affecting the existing funding structure for IHSS. The Governor is proposing to increase state funding for IHSS by an estimated $241.7 million in FY 2019-20, growing to $547.3 million in FY 2022-23. The changes would offset what would have been County costs for IHSS. The County expects to receive an additional $8.9 million in state funding for critical transportation infrastructure projects with the April 2017 passage of Senate Bill 1. Senate Bill 1 has enabled the County to reduce its General Fund contribution to Roads programs significantly, freeing up General Fund dollars for other critical programs and services. The closure of Diablo Canyon Power Plant (Diablo Canyon) in 2025 will have significant ramifications to the local community. According to a 2013 study by the California Polytechnic State University in San Luis Obispo, Diablo Canyon, one of the largest employers in the county, contributes approximately $1 billion annually to the local economy. In total, over 80 governmental agencies receive unitary tax paid by Diablo Canyon’s owner, PG&E, with the County directly receiving over $8 million annually. In addition, the County receives over $2 million annually to fund emergency preparedness and response activities, and PG&E spends approximately $2.6 million annually on emergency equipment, infrastructure and training which provides a general benefit to the community. The closure of Diablo Canyon will incrementally reduce the County’s discretionary revenue over the next several years, reduce emergency preparedness resources in the long term, and eliminate a significant number of high paying jobs, which will impact the overall economic landscape of the community. In September 2018, Senate Bill 1090 approved the payment of $85 million by PG&E to the community to, in part, lessen the effects of lost tax revenue associated with Diablo Canyon’s closure. The County began receiving payment of its $34.9 million in FY 2018-19. Currently, economic indicators show signs of a stable local economy: Sales tax revenue for unincorporated areas came in at $11.8 million, or 5.6% higher than the preceding year. County assessed property tax valuations increased from $53.4 million to $56.2 million or 5.3%. Transient Occupancy Tax (bed tax) collections continued an upward trend in FY 2018-19, with a 10% increase over FY 2017-18. The Board of Supervisors adopted the FY 2018-19 budget in June 2018, with an $83.1 million fund balance in the General Fund, of which $32.6 million was appropriated to finance the current year’s expenditures including contingencies. $13 million was placed in general reserves, and $13.2 million was earmarked for designations. The total General Fund budget for FY 2019-20 is $557.3 million, a 6.6% increase from the previous year. The County budget also includes community-wide results and indicators as well as department goals and performance measures that gauge how departments are meeting the needs of the community. 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, Post Office Box 1149, San Luis Obispo, California 93406-1149. This report is also available online at www.slocounty.ca.gov. 34 ________________________________________________________________ BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS ________________________________________________________________ COUNTY OF SAN LUIS OBISPO STATEMENT OF NET POSITION JUNE 30, 2019 (IN THOUSANDS) Primary Government Governmental Business-Type Component Unit Activities Activities Total First 5 ASSETS Current Assets: Cash and cash equivalents $ 448,173 $ 57,651 $ 505,824 $ 8,701 Accounts receivable, net 34,652 4,296 38,948 - Property taxes receivable 13,218 - 13,218 - Other receivables 1,716 109,276 110,992 - Due from other governments 38,609 3,202 41,811 633 Deposits with others 2 8 6 88 1 4 Internal balances 27,570 (27,570) - - Inventories 744 4 8 792 - Prepaid items 1,612 929 2,541 3 Other assets - - - - Loans receivable 23,552 215 23,767 - Total Current Assets 589,848 148,133 737,981 9,351 Noncurrent Assets: Restricted cash with fiscal agent 3,386 9,916 13,302 - Prepaid insurance - 320 320 - Capital Assets: Nondepreciable 824,404 99,169 923,573 - Depreciable, net 390,055 497,183 887,238 - Total Noncurrent Assets 1,217,845 606,588 1,824,433 - Total Assets 1,807,693 754,721 2,562,414 9,351 DEFERRED OUTFLOWS OF RESOURCES Deferred pensions 156,313 2,006 158,319 1 9 Deferred OPEB 20,568 210 20,778 - Deferred loss on refunding - 3,627 3,627 - Total Deferred Outflows of Resources 1 76,881 5,843 182,724 1 9 LIABILITIES Current Liabilities: Accounts payable 14,939 6,997 21,936 473 Salaries and benefits payable 12,498 125 12,623 2 8 Deposits from others 5,869 3,640 9,509 - Accrued interest 668 4,910 5,578 - Other current liabilities 1,707 - 1,707 - Unearned revenue 6,458 12,039 18,497 - Bonds and notes payable 10,016 10,393 20,409 - Compensated absences 21,524 178 21,702 - Landfill closure/postclosure costs 516 - 516 - Self-insurance payable 3,752 - 3,752 - Total Current Liabilities 77,947 38,282 116,229 501 Long-Term Liabilities: Net pension liability 701,108 6,707 707,815 120 Net OPEB liability 27,099 276 27,375 - Bonds and notes payable 114,318 345,270 459,588 - Compensated absences 7,194 207 7,401 - Landfill closure/postclosure costs 6,516 - 6,516 - Self-insurance payable 15,816 - 15,816 - Total Long-Term Liabilities 872,051 352,460 1,224,511 120 Total Liabilities 949,998 390,742 1,340,740 621 DEFERRED INFLOWS OF RESOURCES Deferred pensions 252 514 766 5 Deferred OPEB 2,476 2 6 2,502 - Deferred bond refunding - 355 355 - Deferred community development loans 21,943 - 21,943 - Total Deferred Inflows of Resources 24,671 895 25,566 5 NET POSITION Net investment in capital assets 1,188,830 285,888 1,474,718 - Restricted for: General government 4,027 - 4,027 - Public protection 4,082 - 4,082 - Health and sanitation 7 4 - 74 - Public assistance 1 4 - 14 - Public ways and facilities 24,870 - 24,870 - Recreation and cultural services 132 - 132 - Education 2 1 - 21 - Debt service 8,061 - 8,061 - Unrestricted (220,206) 83,039 (137,167) 8,744 Total Net Position $ 1,009,905 $ 368,927 $ 1,378,832 $ 8,744 The accompanying notes are an integral part of these financial statements. 35 COUNTY OF SAN LUIS OBISPO STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2019 (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 $ 54,434 $ 13,484 $ 200 $ 930 $ 14,614 Public protection 213,809 22,946 59,592 1,197 83,735 Public ways and facilities 34,202 5,721 10,485 14,361 30,567 Health and sanitation 119,259 7,698 76,211 - 83,909 Public assistance 131,432 1,194 107,758 - 108,952 Education 12,698 1,943 143 - 2,086 Recreation and cultural services 11,891 5,515 200 28 5,743 Interest on long-term debt 1,468 - - - - Total governmental activities 579,193 58,501 254,589 16,516 329,606 Business-type activities: Airport 8,398 8,947 328 3,139 12,414 Golf 3,491 2,717 - - 2,717 State Water Contract 6,973 7,656 14 - 7,670 Nacimiento Water Contract 14,318 16,947 - - 16,947 Lopez Flood Control 7,004 7,148 5 - 7,153 Lopez Park 3 - - - - General Flood Control - Salinas Dam 1,142 913 26 - 939 County Service Areas 4,747 3,894 13 - 3,907 Los Osos Wastewater 11,544 5,100 - 4,860 9,960 Total business-type activities 57,620 53,322 386 7,999 61,707 Total primary government $ 636,813 $ 111,823 $ 254,975 $ 24,515 $ 391,313 Component unit: First 5 San Luis Obispo $ 2,142 $ - $ 2,195 $ - $ 2,195 The accompanying notes are an integral part of these financial statements. 36 COUNTY OF SAN LUIS OBISPO STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2019 (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 $ (39,820) $ - $ (39,820) Public protection (130,074) - (130,074) Public ways and facilities (3,635) - (3,635) Health and sanitation (35,350) - (35,350) Public assistance (22,480) - (22,480) Education (10,612) - (10,612) Recreation and cultural services (6,148) - (6,148) Interest on long-term debt (1,468) - (1,468) Total governmental activities (249,587) - (249,587) Business-type activities: Airport - 4,016 4,016 Golf - (774) (774) State Water Contract - 697 697 Nacimiento Water Contract - 2,629 2,629 Lopez Flood Control - 149 149 Lopez Park - (3) (3) General Flood Control - (203) (203) County Service Areas - (840) (840) Los Osos Wastewater - (1,584) (1,584) Total business-type activities - 4,087 4,087 Total primary government $ ( 249,587) $ 4,087 $ ( 245,500) Component unit: First 5 San Luis Obispo $ 53 General Revenues and Transfers: Taxes: Property taxes 189,689 3,912 193,601 - Sales and use taxes 11,834 - 11,834 - Transient occupancy taxes 11,664 - 11,664 - Transfer tax 2,860 - 2,860 - Other taxes 866 - 866 - Grants not restricted to specific programs 2,115 - 2,115 - Interest earnings not restricted to specific programs 12,952 1,590 14,542 168 Other revenues 35,445 574 36,019 - Transfers (625) 625 - - Total General Revenues and Transfers 266,800 6,701 273,501 168 Change in net position 17,213 10,788 28,001 221 Net position - beginning of year 997,303 356,523 1,353,826 8,523 Prior period adjustment (4,611) 1,616 (2,995) - Net position - end of year $ 1,009,905 $ 368,927 $ 1,378,832 $ 8,744 The accompanying notes are an integral part of these financial statements. 37 ________________________________________________________________ BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS ________________________________________________________________ COUNTY OF SAN LUIS OBISPO BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2019 (IN THOUSANDS) Nonmajor Total General Capital Projects Governmental Governmental Fund Fund Funds Funds ASSETS Cash and cash equivalents $ 301,951 $ 20,401 $ 78,788 $ 401,140 Restricted cash with fiscal agent - 1,581 1,805 3,386 Accounts receivable, net 34,482 - 162 34,644 Accrued property taxes receivable 13,218 - - 13,218 Other receivables 1,716 - - 1,716 Due from other governments 32,918 1,409 4,282 38,609 Due from other funds 1,692 - 400 2,092 Inventories 106 - - 106 Loans receivable - - 23,552 23,552 Advances to other funds 19,511 - 3,223 22,734 Prepaid items 1,570 - 36 1,606 Other assets - - 2 2 Total assets $ 407,164 $ 23,391 $ 112,250 $ 542,805 LIABILITIES Salaries and benefits payable $ 10,798 $ - $ 535 $ 11,333 Accounts payable 9,939 2,690 1,311 13,940 Deposits from others 2,700 - 2,080 4,780 Unearned revenue 5,499 704 255 6,458 Other current liabilities 1,707 - - 1,707 Advances from other funds - - 388 388 Total liabilities 30,643 3,394 4,569 38,606 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 48,170 1,282 2,696 52,148 Deferred loans - - 23,552 23,552 Total deferred inflows of resources 48,170 1,282 26,248 75,700 FUND BALANCES Nonspendable 19,222 - 36 19,258 Restricted 12,276 1,581 31,915 45,772 Committed 169,846 17,134 49,482 236,462 Assigned 127,007 - - 127,007 Unassigned - - - - Total fund balances 328,351 18,715 81,433 428,499 Total liabilities, deferred inflows of resources, and fund balances $ 407,164 $ 23,391 $ 112,250 $ 542,805 The accompanying notes are an integral part of these financial statements. 38 COUNTY OF SAN LUIS OBISPO RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION – GOVERNMENTAL ACTIVITIES JUNE 30, 2019 (IN THOUSANDS) Total Fund Balances - Total Governmental Funds $ 4 28,499 Amounts reported for Governmental Activities in the Statement of Net Position were different because: Capital assets used in governmental activities are not financial resources andtherefore are not reported in governmental funds. 1 ,200,770 Accrued property tax and grant revenues are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 52,148 Internal service funds are used by the County to charge the costs 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 Statement of Net Position. (17,467) 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. 3,132 Interest on long-term debt is recognized as it accrues, regardless of when it is due. (668) The pension liability of governmental funds is not due and payable in the current period, and therefore is not reported in the fund financial statements. (633,789) The other post-employment benefit (OPEB) of governmental funds is not due and payable in the current period, and therefore is not reported in the fund financial statements. (24,542) 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. 141,077 The unamortized portion of changes to the net other post-employment benefit (OPEB) liability, the net difference between projected and actual earnings on OPEB investments, and contributions subsequent to the OPEB liability measurement date are not reported in the fund financial statements for governmental funds. 16,384 Repayment and issuance of community development loans are reported as revenue and expenditures in the fund statements which contribute to the change in fund balance. However, in the Statement of Net Position loan repayments and issuances change deferred inflows. 1,609 Long-term liabilities, including bonds and notes payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds as follows: Certificates of participation (25,529) Bonds and notes payable (98,805) Compensated absences (25,882) Landfill closure/postclosure costs (7,032) (157,248) Net Position of Governmental Activities $ 1,009,905 The accompanying notes are an integral part of these financial statements. 39 COUNTY OF SAN LUIS OBISPO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENED JUNE 30, 2019 (IN THOUSANDS) Nonmajor Total General Capital Projects Governmental Governmental Fund Fund Funds Funds REVENUES Taxes $ 201,230 $ - $ 15,876 $ 217,106 Licenses, permits, and franchises 12,133 - - 12,133 Fines, forfeitures, and penalties 3,330 420 646 4,396 Use of money and property 9,493 590 2,185 12,268 Aid from other governments 241,915 1,690 28,356 271,961 Charges for services 34,036 344 13,577 47,957 Other revenues 23,335 1 1,942 25,278 Total revenues 525,472 3,045 62,582 591,099 EXPENDITURES Current: General government 54,991 - - 54,991 Public protection 181,103 - 3,930 185,033 Public ways and facilities 3,594 - 31,673 35,267 Health and sanitation 99,265 - 4,247 103,512 Public assistance 120,587 - 740 121,327 Education 575 - 11,616 12,191 Recreation and cultural services - - 10,574 10,574 Debt service: Principal payments 276 - 4,817 5,093 Interest and fiscal charges 239 - 965 1,204 Capital outlay - 6,374 - 6,374 Total expenditures 460,630 6,374 68,562 535,566 Excess (deficiency) of revenues over (under) expenditures 64,842 (3,329) (5,980) 55,533 OTHER FINANCING SOURCES (USES) Transfers in 2,124 4,064 25,445 31,633 Transfers out (26,855) - (4,095) (30,950) Total other financing sources (uses) (24,731) 4,064 21,350 683 Net change in fund balances 40,111 735 15,370 56,216 Fund balances - beginning 288,240 17,980 66,063 372,283 Fund balances - ending $ 328,351 $ 18,715 $ 81,433 $ 428,499 The accompanying notes are an integral part of these financial statements. 40 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, 2019 (IN THOUSANDS) Net Change in Fund Balances - Total Governmental Funds $ 56,216 Amounts reported for governmental activities in the Statement of Revenues, Expenditures, and Changes in Fund Balances were different because: Property tax, intergovernmental revenue and other revenue in the Statement of Activitiesthatdonotprovidecurrentfinancialresourcesarenotreportedasrevenuesin the funds. 17,864 Governmentalfunds reportcapitaloutlayas expenditures. Theseexpenditures haveno effect on net position. Capital outlay expenditures that have no effect on net position are reported in the following functional categories: Capital outlay $ 4,236 General government 2,778 Public protection 3,617 Public ways 13,553 Health and sanitation 394 Public assistance 109 Education 175 Recreation and cultural services 288 25,150 IntheStatementofActivities,thecostofcapitalassetsisallocatedovertheirestimated useful lives and reported as depreciation expense. (23,084) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net position. (101) Bond proceeds are reported as financing sources in governmental funds and thus contribute to the change in fund balance. In the Statement of Net Position, however, issuing debt increases long-term liabilities and does not affect the Statement of Activities.Similarly,repaymentofprincipalisanexpenditureinthegovernmentalfunds, but reduces the liability in the Statement of Net Position. Debt principal payments 5,093 SomeexpensesreportedintheGovernment-WideStatementofActivitiesdonotrequire theuseofcurrentfinancialresources. Therefore,theyarenotreportedasexpenditures in governmental funds: Change in compensated absences $ 216 Change in accrued interest payable (349) Change in landfill closure/postclosure costs (151) Change in net OPEB liability (14,911) Change in deferred OPEB outflows 17,730 Change in deferred OPEB inflows (2,242) Change in Net Pension Liability (156,951) Change in deferred pension outflows 85,247 Change in deferred pension inflows 16,035 Change in capital appreciation bond accretion (1,107) Amortization of debt premiums, discounts and issuance costs 85 (56,398) Internal service funds were used by the County to charge the costs 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 net revenue or expenditure effect of internal service funds is reported with governmental activities. (8,860) Repaymentandissuanceofcommunitydevelopmentloansarereportedasrevenueand expenditures in the fund statements which contribute to the change in fund balance. However, in the Statement of Net Position loan repayments and issuances change deferred inflows and do not affect the Statement of Activities. 632 The net (revenue) expense allocable to business-type activities 701 Change in Net Position of Governmental Activities $ 17,213 The accompanying notes are an integral part of these financial statements. 41 COUNTY OF SAN LUIS OBISPO STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2019 (IN THOUSANDS) Business-Type Activities - Enterprise Funds Governmental Nacimiento Nonmajor Total Activities Water State Water Los Osos Enterprise Enterprise Internal Airport Contract Project Wastewater Funds Funds Service Funds ASSETS Current assets: Cash and investments $ 6,545 $ 16,919 $ 13,708 $ 5,836 $ 14,643 $ 57,651 $ 47,033 Accounts receivable, net - - 3,947 1 348 4,296 8 Other receivables 339 - - 108,937 - 109,276 - Due from other governments 3,202 - - - - 3,202 - Deposits with others - - - - 86 86 - Inventories - - - - 48 48 638 Loans receivable - - - 215 - 215 - Prepaid items - - - - 929 929 6 Total current assets 10,086 16,919 17,655 114,989 16,054 175,703 47,685 Noncurrent assets: Advances to other funds - - - - 97 97 - Restricted cash with fiscal agent - 9,428 - - 488 9,916 - Prepaid insurance - 320 - - - 320 - Capital assets: Nondepreciable: Land 24,030 3,259 - 5,406 3,818 36,513 - Construction in progress 244 177 - - 1,676 2,097 - Water rights - - 58,591 - 58,591 - Other property - - - - 1,968 1,968 - Depreciable: Infrastructure, net 508 146,804 36 171,869 24,222 343,439 - Structures and improvements, net 80,972 8,755 5,844 3,057 48,045 146,673 277 Equipment, net 5,593 12 2 200 768 6,575 13,412 Other property, net - - - - 496 496 - Total noncurrent assets 111,347 168,755 64,473 180,532 81,578 606,685 13,689 Total assets 121,433 185,674 82,128 295,521 97,632 782,388 61,374 DEFERRED OUTFLOWS OF RESOURCES Deferred pensions 994 - - - 1,012 2,006 20,152 Deferred OPEB 114 - - - 96 210 1,942 Deferred loss on refunding - 3,627 - - - 3,627 - Total deferred outflows of resources 1,108 3,627 - - 1,108 5,843 22,094 LIABILITIES Current liabilities: Accounts payable 366 279 5,999 120 233 6,997 999 Salaries and benefits payable 62 - - - 63 125 1,165 Interest payable 83 2,543 - 1,892 392 4,910 - Self-insurance payable - - - - - - 3,752 Deposits from others 85 366 2,802 - 387 3,640 1,089 Unearned revenue 71 9,076 2,585 - 307 12,039 - Due to other funds 1,692 - - - 400 2,092 - Accrued vacation and sick leave - current 97 - - - 81 178 2,040 Notes and bond payable - current 66 4,285 - 3,236 2,806 10,393 - Total current liabilities 2,522 16,549 11,386 5,248 4,669 40,374 9,045 Noncurrent liabilities: Self-insurance liability - - - - - - 15,816 Advances from other funds 9,107 - - 12,755 581 22,443 - Accrued vacation and sick leave 78 - - - 129 207 796 Notes and bonds payable 378 168,342 - 139,588 36,962 345,270 - Net OPEB Liability 150 - - - 126 276 2,557 Net Pension Liability 3,323 - - - 3,384 6,707 67,319 Total noncurrent liabilities 13,036 168,342 - 152,343 41,182 374,903 86,488 Total liabilities 15,558 184,891 11,386 157,591 45,851 415,277 95,533 DEFERRED INFLOWS OF RESOURCES Deferred pensions 255 - - - 259 514 5,168 Deferred OPEB 14 - - - 12 26 234 Bond refunding - 355 - - - 355 - Total deferred inflows of resources 269 355 - - 271 895 5,402 NET POSITION Net investment in capital assets 110,903 (920) 64,473 70,110 41,322 285,888 13,689 Unrestricted (4,189) 4,975 6,269 67,820 11,296 86,171 (31,156) Total net position $ 106,714 $ 4,055 $ 70,742 $ 137,930 $ 52,618 372,059 $ (17,467) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (3,132) Net Position of Business-Type Activities per Government-Wide Financial Statements $ 368,927 The accompanying notes are an integral part of these financial statements. 42 COUNTY OF SAN LUIS OBISPO STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Business-Type Activities - Enterprise Funds Governmental Nacimiento Nonmajor Total Activities Water State Water Los Osos Enterprise Enterprise Internal Airport Contract Project Wastewater Funds Funds Service Funds OPERATING REVENUES: Charges for services $ 8,994 $ 16,947 $ 7,656 $ 5,354 $ 14,675 $ 53,626 $ 57,443 Other revenues 27 - - 9 106 142 179 Total operating revenues 9,021 16,947 7,656 5,363 14,781 53,768 57,622 OPERATING EXPENSES: Salaries and benefits 1,544 - - - 1,932 3,476 38,743 Services and supplies 3,004 4 ,547 6,575 3,839 10,211 28,176 19,568 Other charges 29 - - - 3 32 - Insurance benefit payments - - - - - - 5,143 Depreciation 3,481 2 ,198 204 4,364 2,398 12,645 2,734 Countywide cost allocation 230 53 32 28 217 560 560 Total operating expenses 8,288 6 ,798 6,811 8,231 14,761 44,889 66,748 Operating income (loss) 733 10,149 845 (2,868) 20 8,879 (9,126) NONOPERATING REVENUES (EXPENSES): Property taxes - - 2,198 50 1,664 3,912 - Interest income 64 550 419 147 410 1,590 1,315 Interest expense (23) (7,414) (56) (3,438) (1,403) (12,334) - Sale of capital assets 432 - - - - 432 259 Aid from governmental agencies 328 - 14 - 44 386 - Total nonoperating revenues (expenses) 801 (6,864) 2,575 (3,241) 715 (6,014) 1,574 Income (loss) before contributions and transfers 1,534 3 ,285 3,420 (6,109) 735 2,865 (7,552) Capital contributions 3,139 - - 4,860 - 7,999 - Transfers in 13 - - 852 462 1,327 - Transfers out (324) - - (324) (54) (702) (1,308) Change in net position 4,362 3 ,285 3,420 (721) 1,143 11,489 (8,860) Net position - beginning 102,352 770 67,322 137,035 51,475 (8,607) Prior period adjustment - - - 1,616 - - Net position - beginning, restated 102,352 770 67,322 138,651 51,475 (8,607) Net position - ending $ 106,714 $ 4,055 $ 70,742 $ 137,930 $ 52,618 $ (17,467) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (701) Change in Net Position of Business-Type Activities per Government-Wide Financial Statements $ 10,788 The accompanying notes are an integral part of these financial statements. 43 COUNTY OF SAN LUIS OBISPO STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Business-Type Activities - Enterprise Funds Governmental Nacimiento Nonmajor Total Activities Water State Water Los Osos Enterprise Enterprise Internal Airport Contract Project Wastewater Funds Funds Service Funds CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and third parties $ 9,125 $ 17,089 $ 6,728 $ 5,364 $ 14,189 $ 52,495 $ - Receipts from interfund billings - - - - - - 57,628 Payments for goods and services (4,931) (4,785) (6,543) (3,886) (10,829) (30,974) (15,352) Payments to employees for services (1,539) - - - (1,020) (2,559) (30,025) Payments for insurance benefits - - - - - - (4,480) Payments for premiums - - - - - - (4,786) Net cash provided (used) by operating activities 2,655 12,304 185 1,478 2,340 18,962 2,985 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Property tax proceeds - - 2,198 - 1,664 3,862 - Grants and subsidies from other governmental agencies 327 - 14 - 47 388 - Advances from other funds - - - 310 400 710 - Due from other funds 5,940 - - - - 5,940 - Due from other governments (3,043) - - - - (3,043) - Transfers from other funds 13 - - 852 462 1,327 - Transfers to other funds (324) - - (324) (54) (702) (1,308) Net cash provided (used) by noncapital financing activities 2,913 - 2,212 838 2,519 8,482 (1,308) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchases and construction of capital assets (919) (89) (2,155) (851) (466) (4,480) (2,966) Proceeds from sale of capital assets 432 - - - 5 437 271 Advances to other funds - - - - 18 18 - Advances from other funds 860 - - - 1 861 - Due to other funds (8,217) - - - - (8,217) - Capital contributions 3,139 - - 6,021 - 9,160 - Deposits from others - - 49 - - 49 - Principal paid on capital debt (63) (4,121) - (3,177) (2,713) (10,074) - Interest paid on capital debt (24) (7,751) (56) (3,228) (1,512) (12,571) - Net cash provided (used) by capital and related financing activities (4,792) (11,961) (2,162) (1,235) (4,667) (24,817) (2,695) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 64 550 419 147 410 1,590 1,315 Net cash provided (used) by investing activities 64 550 419 147 410 1,590 1,315 Net increase (decrease) in cash and cash equivalents 840 893 654 1,228 602 4,217 297 CASH AND CASH EQUIVALENTS: Beginning of year 5,705 25,454 13,054 4,608 14,529 63,350 46,736 End of year $ 6,545 $ 26,347 $ 13,708 $ 5,836 $ 15,131 $ 67,567 $ 47,033 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 733 $ 10,149 $ 845 $ (2,868) $ 20 $ 8,879 $ (9,126) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 3,481 2,198 204 4,364 2,398 12,645 2,734 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: Receivables, net 89 1 (1,291) - (26) (1,227) 7 Inventory - - - - (17) (17) (148) Prepaid items 1 - - - 84 85 12 Deferred outflows - pension (392) - - - (476) (868) (9,954) Deferred outflows - OPEB (110) - - - (92) (202) (1,853) Accounts payable (1,679) (312) 63 (18) 11 (1,935) 68 Deposits from others 8 127 - - 43 178 55 Salaries and benefits payable 4 - - - 6 10 86 Deferred inflows - pension (65) - - - (87) (152) (1,817) Deferred inflows - OPEB 14 - - - 12 26 234 Net OPEB liability 94 - - - 77 171 1,599 Net pension liability 460 - - - 944 1,404 20,426 Unearned revenue 17 141 364 - (557) (35) - Self-insurance liability - - - - - - 662 Total adjustments 1,922 2,155 (660) 4,346 2,320 10,083 12,111 Net cash provided (used) by operating activities $ 2,655 $ 12,304 $ 185 $ 1,478 $ 2,340 $ 18,962 $ 2,985 Noncash investing, capital, and financing activities: Contributions of capital assets $ - $ - $ - $ 2,270 $ - $ 2,270 $ - The accompanying notes are an integral part of these financial statements. 44 COUNTY OF SAN LUIS OBISPO STATEMENT OF FIDUCIARY NET POSITION AGENCY AND INVESTMENT TRUST FUNDS JUNE 30, 2019 (IN THOUSANDS) SAN LUIS OBISPO PENSION TRUST FUND DECEMBER 31, 2018 (IN THOUSANDS) Investment San Luis Obispo Agency Trust County Funds Funds Pension Trust June 30, 2019 June 30, 2019 December 31, 2018 ASSETS Cash and cash equivalents $ 117,364 $ 481,397 $ 5 5,156 Contributions receivable - - 3,014 Accrued interest and dividends receivable - - 769 Accounts receivable - - 2 3 Securities sold - - 1,262 Prepaid benefits - - 6 2 Investments pension trust: Bonds and notes, at fair value - - 2 64,058 International fixed income, at fair value - - 1 52,894 Collateralized mortgage obligations, at fair value - - 4,365 Domestic equities, at fair value - - 2 50,085 International equities, at fair value - - 2 58,785 Alternative investments, at fair value - - 1 24,393 Real estate, at fair value - - 1 92,203 Capital assets-net of accumulated depreciation - - 3,560 Total assets $ 117,364 $ 481,397 $ 1,310,629 LIABILITIES Agency obligations $ 117,364 $ - $ - Securities purchased - - 10,667 Accrued liabilities - - 1,284 Prefunded contributions - - 27,058 Total liabilities $ 1 17,364 $ - $ 39,009 NET POSITION Net position held in trust for pool participants $ - $ 481,397 $ - Net position restricted for pensions - - 1,271,620 Total net position $ - $ 481,397 $ 1,271,620 The accompanying notes are an integral part of these financial statements. 45 COUNTY OF SAN LUIS OBISPO STATEMENT OF CHANGES IN FIDUCIARY NET POSITION AGENCY AND INVESTMENT TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) SAN LUIS OBISPO PENSION TRUST FUND FOR THE YEAR ENDED DECEMBER 31, 2018 (IN THOUSANDS) Investment San Luis Obispo Trust County Funds Pension Trust June 30, 2019 December 31, 2018 ADDITIONS Contributions: County contributions $ 1,079,041 $ - Employer contributions - 46,244 Member contributions - 32,953 Total contributions 1,079,041 79,197 Investment income: Realized and unrealized gains and losses - (60,132) Interest 7,519 4,120 Dividends - 9,452 Real estate management trust income - - Real estate operating income, net - 375 Other investment income, net - - Investment expenses - (3,849) Total investment income 7,519 (50,034) Total additions 1,086,560 29,163 DEDUCTIONS Benefits: Monthly benefit payments - 92,812 Refunds of contributions - 1,757 Death benefits - 6 0 Total benefits - 94,629 Administrative expenses - 1,972 Prefunded discount amortization - 1,413 Total administrative expenses - 3,385 Distributions from investment pool 1 ,070,646 - Total deductions 1 ,070,646 9 8,014 Change in net position 1 5,914 ( 68,851) Net position - beginning 4 65,483 1,340,471 Net position - ending $ 4 81,397 $ 1,271,620 The accompanying notes are an integral part of these financial statements. 46 ________________________________________________________________ NOTES TO THE BASIC FINANCIAL STATEMENTS ________________________________________________________________ COUNTY OF SAN LUIS OBISPO NOTES TO THE BASIC FINANCIAL STATEMENTS (IN THOUSANDS) JUNE 30, 2019 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 California State 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, and recreational and cultural services. The County reporting entity includes all significant organizations, departments, and agencies over which the County is considered financially accountable. The component units discussed below are included in the County’s reporting entity because of the significance of their operational and financial relationships with the County. The accompanying financial statements present the financial position of the County and those County-related entities that meet the criteria for component units established by the Governmental Accounting Standards Board (GASB) Statement Nos. 14, 61 and 80. 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 have governing bodies which 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, water delivery, water treatment and distribution services, and the construction of the Lopez Dam Seismic Remediation project. SLO County Financing Authority (the Authority) – The Authority was created to assist in the financing, construction, and equipping of public facilities for one or both of the Authority’s members. San Luis Obispo County Public Facilities Corporation (PFC) – The PFC is a nonprofit public benefit corporation organized to assist public agencies within the County of San Luis Obispo with the acquisition and construction of various public facilities. Separate financial statements or additional financial information for each of the component units may be obtained from the Auditor-Controller-Treasurer-Tax Collector at 1055 Monterey, Room D290, San Luis Obispo, CA 93408. 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 47 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) for disbursement of these assets. Activities of these entities are administered by separate boards and are independent of the County Board of Supervisors. The County Auditor-Controller-Treasurer-Tax Collector makes disbursements upon the request of the entity’s officers. The County Board of Supervisors has no effective authority to govern, manage, approve budgets, assume financial accountability, establish revenue limits, nor to appropriate surplus funds available in these entities. Seven cities and numerous self-governed special districts provide services to the residents of the County. The operations of these entities have been excluded from the basic financial statements as each entity conducts its own day-to-day operations and answers to its own governing board. Discretely Presented Component Unit First 5 San Luis Obispo County (First 5) – First 5 was created in 1998 with the passage of Proposition 10, the California Children and Families First Act. First 5’s mission is to allocate funds from the California Children and Families Trust Fund and advocate for quality programs and services, supporting children prenatal to age 5, to ensure that every child is healthy and ready to learn in school. First 5 is governed by a nine-member commission that includes public officials and community leaders from the fields of early childhood education, health care, and family support. The County can influence the day-to-day operations and financial decisions of First 5 as the County Board of Supervisors appoints all commission members. First 5 is reported as a discretely presented component unit because its governing body is not substantively the same as the County’s governing body, and it does not provide services entirely or exclusively to the County. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-wide Financial Statements The Government-wide financial statements consist of the statement of net position and the statement of activities that report information about the County and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. The statements distinguish between governmental and business-type activities of the County. Governmental activities generally are financed through taxes, intergovernmental revenues and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the County and for each function of the County’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Internal activities and indirect expenses are consolidated in the statement of activities. Examples of expenses that have been eliminated include the allocation of indirect costs under the County-wide Cost Allocation Plan and internal payments for services provided between departments. Amounts reported as program revenues include 1) fees, fines and charges to customers or applicants for goods or services offered by the programs, 2) operating grants and contributions that are restricted to meeting the operational requirements of a particular program, and 3) capital grants and contributions restricted to particular programs. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Enterprise funds, reported as business-type activities, 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 an enterprise fund’s principal ongoing operation. The principal operating revenues of the County enterprise funds (Airport, Nacimiento Water Contract, State Water Project, Los Osos Wastewater, and nonmajor enterprise) are charges to customers for sales and services. Operating expenses for enterprise 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. 48 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County’s internal service funds also distinguish operating revenues and expenses from nonoperating items, receive revenue primarily from charges to customers, and have services, administrative expenses, and deprecation of capital assets as costs; however, the internal service funds are reported as governmental activities in the Government-wide financial statements because they principally serve internal County operations. 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, 2019, the County implemented the following Governmental Accounting Standards Board (GASB) Statements: GASB Statement No. 83, Certain Asset Retirement Obligations (GASB 83). The requirements of this statement are effective for financial statement periods beginning after June 15, 2018. GASB 83 addresses accounting and financial reporting for the retirement of certain tangible capital assets with a legally enforceable liability. GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements (GASB 88). The requirements of this statement are effective for financial statement periods beginning after June 15, 2018. GASB 88 improves the information that is disclosed in the notes to governmental financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The County reports the following Major Governmental Funds: The General Fund is the County’s primary operating fund. The General Fund is used to account for all revenues and expenditures necessary to carry out the basic governmental activities of the County that are not accounted for through other funds. For the County, the General Fund includes such activities as public protection, public ways and facilities, health and sanitation, public assistance, education, and recreational and cultural services. The Capital Projects Fund is used to account for the financial resources restricted for the acquisition or construction of specific projects, or items other than those financed by proprietary funds. The County reports the following Major Proprietary Funds: The Airport Fund accounts for the maintenance, operations, and development of the County-owned commercial service airports in San Luis Obispo and Oceano. The Nacimiento Water Contract Fund accounts for the activities and delivery of water associated with the Nacimiento water supply reservoir and the contract with Monterey County. The State Water Project Fund accounts for revenues, expenses and net position relating to the countywide taxpayers’ obligations associated with the State Water Project, which provides for the delivery for state water into the County. The Los Osos Wastewater Fund accounts for the construction, operation and maintenance of the wastewater treatment plant serving the community of Los Osos. 49 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 & property damage. The County reports the following Fiduciary Funds: The Pension Trust Fund accumulates contributions from the County and its employees, as well as 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, 2018. 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 95 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 135 different Agency Funds. These include accounts for temporary holding of funds for the tax assessment areas created under the 1915 Improvement Act, temporary clearing funds, and other temporary holding funds not classified in other agency categories. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The Government-wide, Proprietary, and Fiduciary Fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, except that Agency Fund financial statements have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Nonexchange transactions, in which the County gives (or receives) value without directly receiving (or giving) equal value in exchange, include property tax, sales tax, transient occupancy taxes, grants, entitlements, and donations. On an accrual basis of accounting, revenues from property taxes are recognized in the fiscal year for which the taxes are levied. Revenues from sales and transient 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. 50 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, 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, the 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, 2019. The fair value of pooled investments is determined annually and is based on current market prices. The County pool is not registered with the Securities and Exchange Commission as an investment company and does not issue separate investment reports. The County has not provided or obtained any legally binding guarantees to support the value of the shares. Participants may withdraw up to the amortized cost of their respective shares as displayed on the combined balance sheet. The share of the Treasurer's pool related to involuntary participants is 99.79 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 or fund balance 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 or fund balance that is applicable to a future reporting period. 51 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Property Tax The County is responsible for the assessment, collection, and apportionment of property taxes for all taxing jurisdictions within the County, including schools, cities, and special districts. Property taxes, for which the lien date is January 1, are payable in two equal installments, November 1 and February 1, and become delinquent on December 10 and April 10, respectively. Property taxes receivable are recognized when levied. Property taxes on the unsecured roll are due on the January 1 lien date and become delinquent on August 31. The County is permitted by Article XIII-A of the State of California Constitution (known as Proposition 13) to levy a maximum tax of $1.00 per $100.00 of full cash value. Property taxes are accounted for in the Unapportioned Property Tax and Interest Fund, an Agency Fund, until allocation and disbursement to the taxing jurisdictions. Beginning in fiscal year 1993-94, the County of San Luis Obispo adopted the "Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds" provided for in Revenue and Taxation Code Sections 4701- 4717, which is commonly known as the "Teeter Plan". The Teeter Plan has no impact on tax rates or collection procedures. It merely changes the way the collections of delinquent taxes and penalties are distributed among the taxing agencies. Those agencies participating in the Teeter Plan receive 100% of the secured property taxes billed each year without regard to delinquencies. The General Fund covers the delinquent amount to all agencies and, in return, receives the delinquent taxes, penalties and interest when collected. As a result of the Teeter Plan, secured property taxes receivable are recorded in the General Fund only, and there is no allowance for uncollectible amounts. Penalties and interest are deposited into the Tax Loss Reserve Fund. Once the Tax Loss Reserve Fund balance exceeds 25% of the secured delinquent roll, the excess may be credited to the General Fund. The Teeter Plan was amended beginning fiscal year 2001-02 by removing unitary tax payments (including PG&E), so that all agencies in the County will share in any delinquency that may occur. Unsecured property is not part of the Teeter Plan. Unsecured property taxes receivable are accrued to taxing agencies, net of the uncollectible amount which is estimated based on prior year collections. Interfund Transactions Activities 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” in the fund financial statements. 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 the 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. 52 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Capital Assets Capital assets, which include land, structures and improvements, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activity columns in the Government-wide financial statements. Capital assets are defined as assets with an initial individual cost greater than the capitalization threshold for the specified type of asset and an estimated useful life beyond a single fiscal period. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets and capital assets received in a service concession arrangement are recorded at acquisition value. 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 Proprietary Funds and Government-wide financial statements to the extent the County’s capitalization thresholds are met. Interest incurred during the construction phase on financing capital assets of business-type activities is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Amortization of assets acquired under capital leases is included in depreciation and amortization. Facilities and improvements, infrastructure, and machinery and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the estimated useful lives. The capitalization thresholds and estimated useful lives of specific asset types are as follows: Asset Type Capitalization Threshold Estimated Useful Life Land No threshold --------------- Infrastructure $100,000 20 to 100 years Structures & Improvements $25,000 15 to 50 years Equipment $5,000 2 to 15 years Capital Lease By asset type Lease term or useful life Compensated Absences The County’s policy is to permit employees to accumulate earned but unused vacation and sick leave benefits. Each year-end, a liability is accrued for the balance of unpaid compensatory time off, sick leave, and vacation earned. Accumulated benefits will be liquidated in future years as employees elect to use them. In the normal course of business, all payments of these accumulated benefits will be funded from appropriations in the year in which they are to be paid. 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. 53 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources relating to pensions and pension expense, information about the fiduciary net position of the County’s pension plan with San Luis Obispo County Pension Trust (SLOCPT) and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by SLOCPT. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefits’ terms. Investments are reported at fair value. Other Postemployment Benefits (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the County’s OPEB Plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by San Luis Obispo County Pension Trust (SLOCPT). For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments and participating interest‐earning investment contracts that have a maturity at the time of purchase of one year or less, which are reported at cost. Fund Equity In the fund financial statements, governmental funds report fund balance in classifications based primarily on the extent to which the County is bound to honor the constraints on the specific purposes for which amounts in the funds can be spent. The fund balance classifications used are nonspendable, restricted, committed, assigned and unassigned (see Note 11 for a description of these categories). In circumstances when an expenditure is made for a purpose for which amounts are available from multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. E. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. DETAIL NOTES ON ALL FUNDS 2. CASH AND CASH EQUIVALENTS Cash in Treasury Investments made by the Treasurer are regulated by the California Government Code (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. 54 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The San Luis Obispo County Investment Pool is rated by Fitch Ratings, one of the Nationally Recognized Statistical Rating Organizations. Fitch has consistently rated the County Pool with their highest rating since Fiscal Year (FY) 1994-95. Fitch reaffirmed the County Pool’s “AAAf/S1” rating on September 21, 2019. The County Pool’s “AAAf” fund credit quality rating reflects the “the highest underlying credit quality (or lowest vulnerability to default)”. The “f” suffix to the Fund Credit Quality Rating indicates a fund rather than an individual issue or issuer. The County Pool’s “S1” rating reflects the pool’s low sensitivity to market risk and capacity to return stable principal value to meet anticipated cash flow requirements, even in adverse interest rate environments. The County Treasury Oversight Committee (CTOC) was created by the Board of Supervisors' Resolution and consists of 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 IP annually. The County Treasurer prepares and submits a comprehensive investment report to the members of the CTOC and the investment pool participants every quarter. The report covers the type of investments in the pool, maturity dates, par value, actual costs and fair value. CGC directs the CTOC to cause an annual IP compliance audit. A list of providers for the annual compliance audit is specified in the Board Resolution which created the CTOC. These providers are the 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. CLA (CliftonLarsonAllen LLP) was selected to perform an Annual Investment Program Compliance Audit for the FY ended June 30, 2019. The results of these audits have been presented to the Board of Supervisors on a yearly basis. All such audits from prior years have had no findings. Under 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; debt issuances guaranteed by the International Bank for Reconstruction (IBRD), International Finance Corporation (IFC), or the Inter-American Development Bank (IADB) that are eligible for purchase and sale within the United States; as well as other investments established by the CGC. 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 provides cash flow for the funding needs of the County, school districts, and other local agencies required by law to keep funds in the Treasury. The combined pool’s investments are stated at fair value and have a weighted-average maturity of 1.07 years. Interest is apportioned to the separate funds based on the individual fund's average daily balance. Securities are 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. 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 BlackRock. Public agencies invest in shares of beneficial interest with a Net Asset Value (NAV) that fluctuates. CalTRUST attempts to minimize NAV fluctuation. This type of investment is an authorized investment under CGC §53601 (p). As of June 30, 2019, the CTSTF NAV was $1.002 per $1.00 of investment. The County’s combined pool has invested in the State’s Local Agency Investment Fund (LAIF). This fund is not registered with the Securities and Exchange Commission as an investment company but is required to invest according to CGC. Market valuation is conducted quarterly. LAIF provided a fair value dollar factor of 1.001711790 for its portfolio as of June 30, 2019. 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, 2019, 1.77% 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. 55 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The County’s combined pool includes funds deposited in collateralized interest-bearing bank accounts hereinafter referred to as Public Investment Money Market Accounts (PIMMAs). Per CGC §53631 et seq., PIMMA’s are depository accounts, not investments, and are fully liquid and collateralized by eligible securities. 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. 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 LAIF, except for instruments which are carried at amortized cost plus accrued interest. The County Treasury has provided a fair value dollar factor of 1.003494368668 in the Quarterly Report of Investments as of June 30, 2019, 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 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 procedures within the limits of the CGC and all relevant laws. As of June 30, 2019, 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 Maximum Investment Type Percentage Maximum Investment in One Issuer Maturity of Portfolio Investment types utilized by the combined pool in FY 2018-19 U.S. Treasury Notes 4 years 100% N/A U.S. Treasury Bills Maximum 100% N/A issued U.S. Government Agencies: Federal Home Loan Bank 4 years 20% N/A U.S. Government Agencies: Farm Credit 4 years 20% N/A Local Agency Investment Fund (LAIF) N/A 15% N/A Money Market Mutual Funds (Shares of Beneficial Interest) 15% per issuer. Requires specific written issued by a Joint Powers Authority N/A 15% approval of County Treasurer for each type of investment. Supranationals 10% per issuer (IBRD, IFC, or IADB only). 4 years 20% Must have AAA/A-1+ by 1 of the 3 credit rating agencies. Investments authorized, but not utilized in FY 2018-19 U.S. Treasury Bonds 4 years 100% N/A CDARS 1 year 15% 1% Bankers’ Acceptances-Domestic 30 days 10% 4% Commercial Paper 30 days 5% 2% Collateralized Certificates of Deposit 1 year 5% 1% Tri-Party Repurchase Agreements 15% of all 30 days N/A repos Cash Management Bills Maximum 100% N/A issued Bonds, Notes, Warrants, other evidences of indebtedness of No more than 10% of issuer debt and any local agency within this state assets. Requires specific written approval 1 year 5% of County Treasurer for each type of investment. Bonds issued by a Local Agency Requires specific written approval of 1 year 5% County Treasurer for each type of investment. Registered State Warrants Requires specific written approval of 1 year 10% County Treasurer for each type of investment. 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. 56 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Investments not authorized in FY 2018-19 U.S. Government Agencies: Federal National Mortgage Assoc. U.S. Government Agencies: Federal Home Loan Mortgage Corp. Bankers’ Acceptances-Foreign Negotiable Certificates of Deposit Bi-Party Repurchase Agreements Medium-Term Notes Money Market Mutual Funds (Shares of Beneficial Interest) issued by diversified management companies Treasury Notes or Bonds of this state Registered Treasury Notes or Bonds of any of the other 49 United States Notes, Bonds, or other obligations that are at all times secured by a valid first priority security interest Mortgage Pass-Through Securities Investments not authorized in the County’s IP Reverse Repurchase Agreements Securities Lending Agreements Interest Rate Risk In accordance with its IP, 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, 2019, the County did not have investments in 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, 2019. Investment Type S&P Moody's % of Portfolio* U.S. Government Agencies AA+ Aaa 43.55% U.S. Treasuries AA+ Aaa 32.37% Supranationals AAA Aaa 14.04% CalTRUST-Short-Term Fund AAf/S1+ Not Rated 8.14% LAIF Not Rated Not Rated 1.90% 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. 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, 2019, the following investments exceeded the 5% disclosure threshold: Investment Type % of Portfolio* U.S. Government Agencies-Federal Home Loan Bank 19.54% U.S. Government Agencies-Farm Credit Bank 24.01% Supranationals - IBRD 10.57% *Farm Credit Bank is 18.69% and Supranationals-IBRD is 8.22% of the County’s combined pool inclusive of the PIMMAs and therefore are within the limits authorized in the IP. 57 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) At June 30, 2019, the County had the following investments and interest-bearing deposits (in thousands): Weighted Average Interest Rate Maturity Instrument Maturity Dates % Years Fair Value Cost Supranationals 7/30/19-2/08/21 1.820%-2.750% 0.65 $ 120,875 $ 120,177 U.S. Treasuries 7/15/19-12/15/21 1.307%-2.881% 1.08 278,636 275,995 U.S. Government Agencies 8/05/19-4/25/22 1.440%-2.903% 1.44 374,863 371,872 LAIF On Demand 2.440% - 16,268 16,000 CalTRUST On Demand 2.550% - 70,089 69,964 Total Investments in County Treasury 1.07 $ 860,731 $ 854,008 Deposits in Financial Institutions $ 266,469 $ 266,469 Cash on Hand 335 335 Total Cash held in Treasury 1,127,535 1,120,812 Deposits in Transit 1,338 1,338 Outstanding Warrants (18,021) (18,021) Total 1,110,852 1,104,129 Imprest Cash 1,556 1,556 Non-pool Cash Deposits 878 878 Other Cash Deposits 2,434 2,434 Total Cash and Cash Equivalents $ 1,113,286 $ 1,106,563 Restricted Cash with Fiscal Agent U.S. Government & Federal Agencies $ 11,721 $ 11,721 Certificates of Deposit & Money Market Accounts 1,581 1,581 Total 13,302 13,302 Total restricted and unrestricted cash and cash equivalents $ 1,126,588 $ 1,119,865 Total Cash and Investments Summary Fair Value Total Governmental Activities $ 451,559 Total Business-type Activities 67,567 Total Fiduciary Funds 598,761 Total Component Unit 8,701 Total Cash and Investments $ 1,126,588 The following represents a condensed statement of net position and changes in net position for the Treasurer's investment pool as of June 30, 2019 (in thousands): Fair Value Statement of Net Position: Net position held for pool participants $ 1,110,853 Equity of internal pool participants $ 629,456 Equity of external pool participants (voluntary and involuntary) 481,397 Total Equity $ 1,110,853 Statement of Changes in Net Position: Revenue $ 21,022 Investment costs (881) Net deposits 42,948 Change in fair value 10,744 Net change in pool net position 73,833 Net position at July 1, 2018 1,037,020 Net position at June 30, 2019 $ 1,110,853 58 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. The County has the following recurring fair value measurements as of June 30, 2019: 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 $ 278,636 $ 278,636 $ - $ - US Government Agencies 374,863 374,863 - - Supranationals 120,875 120,875 - - Total measured at fair value 774,374 774,374 - - Other investments: LAIF 16,268 - - - CalTRUST 70,089 - - - Total investments in County Treasury $ 860,731 $ - $ - $ - Restricted Cash with Fiscal Agent Cash and investments at June 30, 2019, 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 $ 11,582 Restricted interest on lease reserves 139 Restricted for Contractor Retentions 1,581 Total Restricted Cash $ 13,302 Cash Deposits Outside of the Treasury Pool At fiscal year-end, the carrying amount of the County's other cash deposits was $686,979 and the combined financial institutions' balance was $878,141. The difference of $191,162 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 $878,141 was covered by federal depository insurance or by collateral held by the County's agent in the County's name. 59 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 3. RECEIVABLES Accounts receivable at year-end of the County’s major individual funds and nonmajor and Internal Service Funds in the aggregate, including the applicable allowance for uncollectible accounts, are as follows (in thousands): Governmental Activities Nonmajor Special Internal Service General Fund Revenue Funds Funds Accounts $ 34,482 $ 162 $ 8 Receivable Allowance for - - - Doubtful Accounts Net Accounts $ 34,482 $ 162 $ 8 Receivable Business-Type Activities State Water Los Osos Nonmajor Contract Wastewater Enterprise Funds Accounts $ 3,947 $ 1 $ 348 Receivable Allowance for - - - Doubtful Accounts Net Accounts $ 3,947 $ 1 $ 348 Receivable 4. CAPITAL ASSETS A summary of changes in capital assets for the year ended June 30, 2019, is as follows (in thousands): Balance Transfers & Balance Governmental Activities July 1, 2018 Additions Retirements Adjustments June 30, 2019 Capital assets, not being depreciated: Land $ 795,505 $ 3 $ - $ 5 $ 795,513 Construction in progress 19,727 14,401 (18) (5,219) 28,891 Total capital assets, not being depreciated 815,232 14,404 (18) (5,214) 824,404 Capital assets, being depreciated: Structures and improvements 259,579 2,758 (423) 1,541 263,455 Equipment 95,752 6,347 (1,283) 2,218 103,034 Infrastructure 406,692 4,535 - 1,455 412,682 Other property 845 135 - - 980 Total capital assets, being depreciated 762,868 13,775 (1,706) 5,214 780,151 Less accumulated depreciation for: Structures and improvements (90,613) (6,048) 342 - (96,319) Equipment (57,186) (8,731) 1,204 - (64,713) Infrastructure (217,993) (11,024) - - (229,017) Other property (34) (13) - - (47) (365,826) (25,816) 1,546 - (390,096) Total accumulated depreciation 397,042 (12,041) (160) 5,214 390,055 Total capital assets being depreciated, net $ 1,212,274 $ 2,363 $ (178) $ - $ 1,214,459 Governmental activities capital assets, net 60 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Balance Transfers & Balance Business-Type Activities July 1, 2018 Additions Retirements Adjustments June 30, 2019 Capital assets, not being depreciated: Land $ 36,519 $ - $ (6) $ - $ 36,513 Construction in progress 4,108 663 - (2,674) 2,097 Water rights 56,434 2,157 - - 58,591 Other property 1,968 - - - 1,968 Total capital assets, not being depreciated 99,029 2,820 (6) (2,674) 99,169 Capital assets, being depreciated: Infrastructure 380,493 3 - 975 381,471 Structures and improvements 205,262 2,863 - 1,647 209,772 Equipment 9,947 218 (53) 52 10,164 Other property 554 - - - 554 Total capital assets, being depreciated 596,256 3,084 (53) 2,674 601,961 Less accumulated depreciation for: Infrastructure (30,591) (7,440) - - (38,031) Structures and improvements (58,463) (4,636) - - (63,099) Equipment (3,073) (569) 52 - (3,590) Other property (58) - - - (58) (92,185) (12,645) 52 - (104,778) Total accumulated depreciation 504,071 (9,561) (1) 2,674 497,183 Total capital assets being depreciated, net $ 603,100 $ (6,741) $ (7) $ - $ 596,352 Business-type activities capital assets, net Depreciation Expense Depreciation expense was charged to functions as follows (in thousands): Governmental Activities Amount General Government $ 5,617 Public Protection 4,214 Public Ways and Facilities 10,604 Health and Sanitation 975 Public Assistance 245 Education 396 Recreational and Cultural Services 1,031 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 2,734 Total Depreciation Expense-Governmental Activities $ 25,816 Business-Type Activities Amount Airport $ 3,481 Nacimiento Water Contract 2,198 State Water Project 204 Los Osos Wastewater 4,364 Nonmajor Enterprise 2,398 Total Depreciation Expense-Business-type Activities $ 12,645 61 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, 2019 (in thousands): Governmental Activities Expended to Committed Remaining Project June 30, 2019 Funds Budget Roads Infrastructure $ 15,529 $ 10,465 $ 25,909 AG Levee WMP Alta3a 1,181 106 3,023 New Storage Tanks – CSA 10 Water 1,005 1 2,758 Health – COC – Animal Services Facility 965 675 202 CDF-SLO-Program for Co-located Dispatch 699 - 2,046 Health–SLO–Public Health HVAC 534 - 189 Los Osos Landfill Remediation 534 26 506 Vets Hall Roof Replacement 518 83 237 Library Roof Replacement 492 31 - Templeton to Atlas Connector 491 - 69 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 55 years. The General Fund leases portions of the former County General Hospital. The original cost of these facilities was $12,313. As of June 30, 2019, they had a carrying value of $7,986 net of accumulated depreciation of $4,327. 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 rental payments to be received under these non-cancelable operating leases at June 30, 2019 (in thousands): Year Ending Governmental Business-Type June 30, Activities Activities 2020 $ 285 $ 862 2021 194 800 2022 181 766 2023 126 638 2024 104 510 Later Years 769 8,188 Total $ 1,659 $ 11,764 Minimum future rental payments do not include contingent rental payments, 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 rental payments amounted to $3,425 for the fiscal year ended June 30, 2019. 62 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 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, 2019 totaled $4,269. The following rental costs represent future minimum payments under leases that have remaining non-cancelable terms as of June 30, 2019, for the next five years and for each five-year period thereafter (in thousands): Minimum Year Ending Lease June 30, Payments 2020 $ 3,589 2021 2,851 2022 2,570 2023 2,010 2024 1,499 2025-2029 5,603 2030-2034 2,543 2035-2039 1,287 Total $ 21,952 7. RISK MANAGEMENT The County is exposed to various risks of loss 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 claim settlements and there were seven 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 $ 104,041 maximum ----- Dental None - Funded by Employees ----- Annual actuarial valuations are obtained for the Workers' Compensation and the General Liability Funds. These valuations provide the basis for premiums charged to insured departments. The County's SIR amounts are paid directly, without the use of purchased annuity contracts. Financial information on CSAC Excess Insurance Authority is available on request from the Office of Risk Management, County of San Luis Obispo. 63 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The estimated claims liability for the Protected Self-Insurance Fund was recorded at a discounted 85% confidence level, and the estimated liability for the Workers' Compensation Self-Insurance Fund was also recorded at a discounted 85% confidence level. Beginning of the fiscal year Current year claims, Claim Balance at liability changes & estimates payments fiscal year-end 2017-18 $ 19,563 $ 3,179 $ 3,835 $ 18,907 2018-19 $ 18,907 $ 5,093 $ 4,432 $ 19,568 8. INTERFUND RECEIVABLES AND PAYABLES The composition of interfund balances at June 30, 2019, was (in thousands): Payable Fund (Due to Balance) Receivable Fund (Due from Balance) Amount Airport Fund General Fund $ 1,692 Nonmajor Enterprise Funds Nonmajor Governmental Funds 400 Total $ 2,092 The Airport Fund owes the General Fund $1,692 for construction costs relating to the new airport terminal project. County Services Area 10 Enterprise Fund owes $400 to the County Service Area 10 Special Revenue Fund for costs relating to the Cayucos strand water tank project. Payable Fund (Advances from Balance) Receivable Fund (Advances to Balance) Amount Nonmajor Governmental Funds General Fund $ 291 Nonmajor Enterprise Funds 97 388 Nonmajor Enterprise Funds General Fund 163 Nonmajor Governmental Funds 418 581 Airport Fund General Fund 9,107 Los Osos Wastewater Fund General Fund 9,950 Nonmajor Governmental Funds 2,805 12,755 Total $ 22,831 Nonmajor Governmental Funds’ advances from Nonmajor Enterprise Funds of $97 are comprised of funds from the Lopez Park Enterprise Fund to the Parks Special Revenue Fund for future debt service obligations. Advances related to the General Fund include an internal loan to the County Services Area 21 Special Revenue Fund of $53 and a loan of $238 related to the restoration of the Cayucos Pier. The Nonmajor Enterprise Funds advances of $581 represent internal loans received by the County Services Areas Enterprise Funds from the General Fund ($42), from the County Services Area 10 Special Revenue Fund ($255), and from the General Flood Control Zone Special Revenue Fund ($163). The Golf Fund also received $121 from the General Fund. 64 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The Airport owes the General Fund $9,107 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 General Flood Control Zone Special Revenue Fund of $2,805 and $9,950 from the General Fund. 9. TRANSFERS A reconciliation of transfers is detailed below (in thousands): Transfer From Transfer To Amount General Fund Nonmajor Governmental Funds $ 22,557 Capital Projects Fund 3,889 Nonmajor Enterprise Funds 396 Airport Fund 13 26,855 Nonmajor Governmental Funds Nonmajor Governmental Funds 1,544 General Fund 1,458 Los Osos Wastewater Fund 852 Capital Projects Fund 175 Nonmajor Enterprise Funds 66 4,095 Airport Fund General Fund 266 Nonmajor Governmental Funds 58 324 Los Osos Wastewater Fund General Fund 245 Nonmajor Governmental Funds 79 324 Nonmajor Enterprise Funds Nonmajor Governmental Funds 54 Internal Service Funds Nonmajor Governmental Funds 1,153 General Fund 155 1,308 Total Transfers $ 32,960 General Fund transfers to Nonmajor Governmental Funds included contributions to the following Special Revenue Funds: Roads ($7,146), Library ($667), Community Development ($629), Flood Control Zone ($23), and Parks ($4,203). The General Fund also transferred $9,889 to the Pension Obligation Bond Debt Service Fund to finance debt service payments, $13 to the Airport Fund, $396 to the Golf Fund, and $3,889 to the Capital Projects Fund for various capital projects. Nonmajor Governmental Fund transfers consist of contributions of Public Facilities Fees revenue from the Public Facilities Fees Special Revenue Fund to the General Fund ($358) for debt service and $47 for updates to the Cayucos Fire Station, to the Parks Fund ($519) for various park projects, and to the Capital Projects Fund ($175) to fund parks and other capital and maintenance projects. The Public Facilities Corporation Debt Service Fund transferred $135 to the Financing Authority Debt Service Fund for debt service payment. The Parks Special Revenue Fund made transfers to the Pension Obligation Bond Debt Service Fund ($182), and to the Lopez Park Enterprise Fund 65 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) ($3) for debt service. The Roads Fund transferred $8 to Flood Control Zone 18 Special Revenue Fund for reimbursement of maintenance costs. The Road Impact Fee Special Revenue Fund transferred Impact Fees of $441 to the General Fund for debt service, and $437 to the Roads Fund for capital and maintenance projects. The Flood Control Zone Fund transferred $610 into the General Fund for sustainable groundwater plans and $852 into the Los Osos Wastewater Project Fund for grant related monies. Community Services Area 21 Special Revenue Fund transferred $2 to the General Fund for debt service. The Library Fund ($233) and the Driving Under the Influence Fund ($30) made transfers to the Pension Obligation Bond Debt Service Fund to finance debt service payments. Other Nonmajor Governmental Fund transfers of $63 occurred between various County Service Area Special Revenue to County Service Area Enterprise Funds. The Airport Enterprise Fund transferred $266 to the General Fund and $58 to the Pension Obligation Bond Fund for debt service. The Los Osos Wastewater Fund transferred $245 to the General Fund and $79 to the Flood Control Zone Fund for debt service. Transfers from Nonmajor Enterprise Funds included $48 of transfers from the Golf Enterprise Fund to the Pension Obligation Bond Debt Service Fund and County Services Area 23 Enterprise Fund transferred $6 to County Service Area 21 Special Revenue Fund. The Public Works Internal Service Fund transferred $150 to the General Fund for remodels to the Government Center Building. The Garage Internal Service Fund transferred $5 to the General Fund due to early vehicle retirement. The Public Works ($1,099) and Garage ($54) Internal Service Funds transferred to the Pension Obligation Bond Debt Service Fund for debt service payments. 10. BONDED INDEBTEDNESS AND LONG-TERM DEBT Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2019, is as follows (in thousands): Beginning Ending Balance Balance Due within Governmental Activities July 1, 2018 Adjustments Additions Reductions June 30, 2019 one year Bonds and notes payable: Certificates of participation (COP) $ 20,252 $ - $ - $ 1,206 $ 19,046 $ 1,254 Certificates of participation from 5,883 - - 121 5,762 125 direct borrowings Unamortized discount on COP (79) - - (4) (75) - Unamortized premium on COP 886 - - 89 797 - State notes from direct borrowings 2,056 - - 155 1,901 157 Pension Obligation Bonds 99,407 1,107 - 3,611 96,903 8,480 Total bonds and notes payable 128,405 1,107 - 5,178 124,334 10,016 Other liabilities: Compensated absences 29,061 - 18,236 18,579 28,718 21,524 Landfill postclosure costs 6,881 - 618 467 7,032 516 Self-insurance 18,907 - 5,093 4,432 19,568 3,752 Total other liabilities 54,849 - 23,947 23,478 55,318 25,792 Total Governmental Activities $ 183,254 $ 1,107 $ 23,947 $ 28,656 $ 179,652 $ 35,808 66 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Beginning Ending Balance Balance Due within Business-Type Activities July 1, 2018 Adjustments Additions Reductions June 30, 2019 one year Bonds and notes payable: Certificates of participation (COP) $ 12,707 $ - $ - $ 818 $ 11,889 $ 852 Certificates of participation from 2,971 - - 49 2,922 51 direct borrowings Unamortized premium on COP 328 - - 33 295 - State notes from direct borrowings 87,667 - - 3,258 84,409 3,331 Revenue bonds 168,410 - - 4,284 164,126 4,284 Unamortized premium on revenue 8,926 - - 424 8,502 - bonds General obligation bonds 7,925 - - 440 7,485 460 Unamortized premium on general 733 - - 56 677 - obligation bonds Assessment bonds 76,746 - - 1,388 75,358 1,415 Total bonds and notes payable 366,413 - - 10,750 355,663 10,393 Other liabilities: Compensated absences 373 - 160 148 385 178 - Total other liabilities 373 160 148 385 178 Total Business-Type Activities $ 366,786 $ - $ 160 $ 10,898 $ 356,048 $ 10,571 Annual debt service requirements for governmental activities as of June 30, 2019, are summarized as follows: Governmental Activities Certificates of Participation, Pension Obligation Bonds including Direct Borrowings Year Ended June 30, Principal Interest Principal Unaccreted Interest Total Appreciation 2020 $ 1,379 $ 1,030 $ 8,258 $ 222 $ - $ 8,480 2021 1,431 974 8,337 703 - 9,040 2022 1,494 916 8,392 1,228 - 9,620 2023 1,558 850 8,428 1,797 - 10,225 2024 1,621 781 8,447 2,403 - 10,850 2025-2029 7,722 2,806 42,191 22,404 - 64,595 2030-2034 3,788 1,651 12,850 10,875 - 23,725 2035-2039 3,582 775 - - - - 2040-2044 1,324 300 - - - - 2045-2047 909 53 - - - - Total $ 24,808 $ 10,136 $ 96,903 $ 39,632 $ - $ 136,535 Governmental Activities (Continued) State Notes Year Ended June 30, Principal Interest 2020 $ 157 $ 19 2021 158 17 2022 160 15 2023 162 14 2024 163 12 2025-2029 841 36 2030-2031 260 3 Total $ 1,901 $ 116 67 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Business-Type Activities Certificates of Participation, State Notes Revenue Bonds including Direct Borrowings Year Ended June 30, Principal Interest Principal Interest Principal Interest 2020 $ 903 $ 668 $ 3,331 $ 1,792 $ 4,284 $ 7,520 2021 942 628 3,409 1,714 4,510 7,298 2022 989 584 3,488 1,635 4,745 7,064 2023 1,038 536 3,571 1,553 4,990 6,817 2024 1,087 484 3,479 1,470 5,250 6,558 2025-2029 5,760 1,548 18,161 6,135 30,585 28,456 2030-2034 2,158 471 12,995 4,327 38,480 20,553 2035-2039 463 305 12,753 3,098 48,590 10,448 2040-2044 554 213 14,080 1,770 22,692 929 2045-2049 665 102 9,142 368 - - 2050-2053 252 18 - - - - Total $ 14,811 $ 5,557 $ 84,409 $ 23,862 $ 164,126 $ 95,643 Business-Type Activities (Continued) General Obligation Bonds Assessment Bonds Year Ended June 30, Principal Interest Principal Interest 2020 $ 460 $ 374 $ 1,415 $ 2,053 2021 485 351 1,460 2,013 2022 510 327 1,505 1,972 2023 540 300 1,541 1,931 2024 565 271 1,587 1,888 2025-2029 3,325 848 8,619 8,750 2030-2034 1,600 81 9,897 7,479 2035-2039 - - 11,358 6,020 2040-2044 - - 13,025 4,346 2045-2049 - - 14,946 2,426 2050-2052 - - 10,005 417 Total $ 7,485 $ 2,552 $ 75,358 $ 39,295 Long-term liabilities at June 30, 2019, consisted of the following: Original Date of Semi Annual Issue Outstanding Issue Maturity Interest Rates Installments Amount at 6/30/2019 Governmental Activities Certificates of Participation 2007 Series A 2/8/2007 2037 4% - 4.25% $304 - $308 $5,090 $3,820 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. Collateral for this debt are the Paso Robles Courthouse building and the County Department of Social Services building located in the City of San Luis Obispo. 2008 Series A 1/23/2008 2038 4% - 4.625% $440 - $451 7,325 5,620 Used to finance improvements to the Vineyard Drive Interchange. Debt service is provided by Development Fees. Collateral for this debt are the County offices of the Agricultural Commissioner located at Sierra Way and the Health Department located at 2191 Johnson. 2012 Series A 10/15/2012 2028 0.5% - 5.0% $1,034 - $1,289 14,427 9,606 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. Collateral for this debt are the County properties located in the City of San Luis Obispo namely the Old Courthouse, Courthouse Annex B and Courthouse Annex C. IBank Loan 10/01/2016 2046 3.75% $240 - $320 6,000 5,762 A direct borrowing from the California Infrastructure & Economic Development Bank (I-Bank) used for the final construction costs of the new terminal building at the San Luis Obispo County Regional Airport. The debt is backed by the General Fund and repaid using a combination of Passenger Facility Charges, Customer Facility Charges, and other local funding from Airport operations. Collateral for this debt are the 2nd floor office spaces and the subterranean level 1 (also known as P1) located at 1055 Monterey St., City of San Luis Obispo. $32,842 $24,808 68 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Original Date of Semi Annual Issue Outstanding Issue Maturity Interest Rates Installments Amount at 6/30/2019 State Note 2015 2030 1.00% $175 $2,197 $1,901 A direct borrowing from the California Energy Commission (CEC) is to be used for energy conservation projects. Projects to be implemented by the loan were identified through the Sustainable Solutions Turnkey program with PG&E. These projects will provide estimated long-term energy savings to the County of $140,000 annually. 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 C Capital Appreciation Bonds (CAB) 7/2/2003 2031 5.27% - 5.73% zero - $15,000 $44,199 $136,535 2003 Series C CABs Unaccreted Interest (39,632) $44,199 $96,903 Original Interest Semi Annual Issue Outstanding Date of Issue Maturity Rates Installments Amount at 6/30/2019 Business-Type Activities Certificates of Participation US Department of Agriculture (USDA) 4/30/2009 2049 4.375% $6 - $86 $1,631 $1,447 2009 A direct borrowing from the USDA 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 8,345 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 Lopez 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 3,544 Lease Revenue Refunding Bonds used to refund the 2002 A Certificates of Participation. The original COP was partially used to finance the Dairy Creek Golf Course. Debt service is provided by semi-annual lease payments from the Dairy Creek Golf Course. Collateral for this debt are the County properties located in the City of San Luis Obispo namely the Old Courthouse, Courthouse Annex B and Courthouse Annex C. USDA 2013 07/01/2013 2053 2.75% $18 - $67 1,621 1,475 A direct borrowing from the USDA used to finance a water system improvement project in County Service Area 10A. Debt service is provided by water sales revenues. $20,565 $14,811 State Notes The County has directly 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 and water service revenue and hangar rental revenue. Cayucos Water Treatment Facility 1998 2023 3.0315% $174 $3,011 $649 Lopez Recreation Area 2004 2024 2.5132% $21 325 97 Lopez Water Treatment Plant Upgrade 2006 2028 2.60% $1,672 25,945 15,754 Airport Fuel Farm 2007 2025 4.6557% $86 1,000 444 Los Osos Wastewater Project 2012 2046 2.0% $336 - $598 69,461 67,465 $99,742 $84,409 Revenue Bonds 2018 Nacimiento Water Project Revenue Refunding Bonds Series A 5/07/2018 2040 3.0% - 5.0% $1,063 - $9,173 $27,045 $23,515 Used to refund all of the outstanding 2007 Nacimiento Water Project Revenue Bonds Series A which 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. 69 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Original Date of Interest Semi Annual Issue Outstanding Issue Maturity Rates Installments Amount at 6/30/2019 2007 Nacimiento Pipeline Project Series B 9/26/2007 2040 5.2% - 5.6% $2,132 - $2,646 38,565 33,496 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 $107,115 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. $172,725 $164,126 General Obligation Bonds 2011 Refunding – Lopez Dam Remediation 5/12/2011 2030 2.0% - 5.5% $833 - $840 $10,760 $7,485 Used to refund the 2000 A general obligation (GO) issue. The original GO Bonds were used to improve and retrofit the Lopez Dam. Debt service is provided by applicable property taxes. Assessment Bonds 2012 2037 2.75% $1,609 - $3,245 $83,129 $75,358 Issued to the USDA to finance the construction of the Los Osos Wastewater Project. Debt service is provided by amounts levied against property owners who benefit from the project. 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 San Luis Obispo County Financing Authority was formed on August 22, 2000, as a joint exercise of powers authority between the County and the Lopez 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, 2019, totals $76,103 with interest rates from 2.52% to 6.85%. 70 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 $29,103 at June 30, 2019. 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, 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 $703,283 with a margin of $695,798. Direct Placement Debt The County does not have any direct placement debt as of June 30, 2019. Direct Borrowings The County’s outstanding notes from direct borrowings related to governmental activities of $7,663 contain default provisions and where applicable (1) the entire obligation becomes due and payable if the County is unable to make installment/lease payments, and (2) the lessor terminates the lease or re-let the leased premises. The County’s outstanding notes from direct borrowings related to business-type activities of $87,331 contain a provision that if default continues after the cure period, entire obligation becomes due and payable. 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, 2019 had an arbitrage liability of $145,788. 11. NET POSITION/FUND BALANCES The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted. Net Investment in Capital Assets - This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category. Net Investment in Capital Assets at June 30, 2019, is as follows (in thousands): Amount Governmental activities $ 1,188,830 Business-type activities 285,888 Total $ 1,474,718 71 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Restricted Net Position - This category presents net position with external restrictions imposed on its use 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, 2019, is $13,713 of Public Facility Fees and $10,102 of Road Impact Fees restricted due to enabling legislation. The remaining $17,466 of restricted net position is restricted due to restrictions imposed by creditors, grantors, or contributors. Restricted net position at June 30, 2019, for governmental activities is as follows (in thousands): Amount RESTRICTED FOR: General Government Purchase obligations for Non-Departmental related professional services $ 23 Purchase obligations for Administrative office related professional services 12 Purchase obligations for Assessor related equipment and professional services 8 Purchase obligations for Clerk-Recorder equipment and professional services 17 Purchase obligations for Utilities Management software and professional services 19 Purchase obligations for building maintenance projects 59 Purchase obligations for Information Technology related training, software and 351 professional services Purchase obligations for Central Services related professional services 1 Purchase obligations for Auditor-Controller-Treasurer-Tax Collector related 65 professional services Claims, contracts and other restrictions imposed by grantors or contributors 3,472 Total General Government 4,027 Public Protection Purchase obligations for Waste Management related professional services 34 Purchase obligations for Grand Jury related supplies 1 Purchase obligations for District Attorney software support and supplies 8 Purchase obligations for Sheriff-Coroner related training, professional services 48 and supplies Purchase obligations for Animal Services professional services 7 Purchase obligations for Emergency Services professional services 133 Purchase obligations for Probation related safety equipment 140 Purchase obligations for fire protection related software and equipment 1,414 Purchase obligations for Agricultural Commissioner related professional services 57 Purchase obligations for Planning & Building related professional services 1,478 Purchase obligations for capital projects 4 Purchase obligations for flood control related engineering and environmental 758 services Total Public Protection 4,082 Health and Sanitation Purchase obligations for Behavioral Health related professional services 54 Purchase obligations for Public Health related professional services 20 Total Health and Sanitation 74 Public Ways and Facilities Purchase obligations for Public Works related software and professional services 1,055 Road impact fees restricted by enabling legislation for road maintenance and 10,102 construction Public facilities fees restricted by enabling legislation for public facilities 13,713 Total Public Ways and Facilities 24,870 Recreation and Cultural Services Parks equipment and maintenance services 132 Public Assistance Purchase obligation for Law Enforcement Medical Care professional services 14 72 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Education Library equipment 21 Debt Service 8,061 Total Restricted Net Position $ 41,281 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, 2019, is as follows (in thousands): Amount Governmental activities $ (220,206) Business-type activities 83,039 Total $ (137,167) 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. 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. 73 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Fund balances for all the major and nonmajor governmental funds as of June 30, 2019, are distributed as follows: Capital Nonmajor Projects Governmental General Fund Fund Funds Total Nonspendable: Inventories $ 106 $ - $ - $ 106 Prepaid items 1,570 - 36 1,606 Advances to other funds 17,546 - - 17,546 Subtotal 19,222 - 36 19,258 Restricted for: Tax reduction reserves 3,305 - - 3,305 General Government 10 - - 10 programs Public Protection programs 3,125 - - 3,125 Mental Health Services Act 5,836 - - 5,836 Public facilities - - 13,714 13,714 Traffic impact programs - - 10,102 10,102 Wildlife and grazing - - 38 38 programs Debt service - 1,581 8,061 9,642 Subtotal 12,276 1,581 31,915 45,772 Capital Nonmajor Projects Governmental General Fund Fund Funds Total Committed to: Maintenance projects 9,420 - - 9,420 County Counsel services 417 - - 417 Human Resources services 123 - - 123 IT projects 351 - - 351 Other general government 6,697 - - 6,697 Fire equipment 2,850 - - 2,850 Planning programs 1,525 - - 1,525 Other public protection 1,005 - - 1,005 Public health programs 836 - - 836 Behavioral Health programs 20 - - 20 Social Services’ programs 33 - - 33 Veterans’ Services 11 - - 11 programs Public works engineering & 1,071 - - 1,071 consulting services Educational programs 8 - - 8 Fish and game programs - - 189 189 Flood control programs - - 20,925 20,925 Lighting programs - - 472 472 Community development - - 466 466 programs Emergency medical services - - 781 781 Roads - - 15,045 15,045 Community service areas - - 2,747 2,747 Driving under the influence - - 972 972 programs 74 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Capital Nonmajor Projects Governmental General Fund Fund Funds Total Library - - 4,398 4,398 Parks - - 3,481 3,481 Wildlife and grazing - - 6 6 programs General reserve 13,000 - - 13,000 SB1090 Economic 8,505 - - 8,505 development Internal financing 3,918 - - 3,918 Solar plant safety 843 - - 843 Solar plant mitigation 4,979 - - 4,979 Automation projects 12,028 - - 12,028 Prado Rd Interchange 1,435 - - 1,435 project Talent Development 1,822 - - 1,822 Building replacement 42,197 - - 42,197 Organizational development 1,508 - - 1,508 Tax reduction reserve 43,424 - - 43,424 Lease financing 1,010 - - 1,010 Capital Projects - 17,134 - 17,134 Pension Obligation Bonds 10,810 - - 10,810 Subtotal 169,846 17,134 49,482 236,462 Capital Nonmajor Projects Governmental General Fund Fund Funds Total Assigned to: Tax reduction reserve 10,953 - - 10,953 General government 17,244 - - 17,244 Clerk-Recorder programs 612 - - 612 Sheriff-Coroner programs 11,061 - - 11,061 Probation programs 8,990 - - 8,990 District Attorney 2,993 - - 2,993 programs Waste Management 13 - - 13 programs Planning programs 1,939 - - 1,939 Emergency Services 720 - - 720 Other public protection 4,573 4,573 programs - - Social Services programs 7,226 - - 7,226 Foster Care and Adoption 5,954 5,954 programs - - Veterans’ Services 148 148 programs - - Public ways and facilities 1,836 - - 1,836 Behavioral Health 19,454 - - 19,454 programs Public Health programs 549 - - 549 Subsequent Fiscal Year 32,625 - - 32,625 Budget Imprest cash 117 - - 117 Subtotal 127,007 - - 127,007 Total $ 328,351 $ 18,715 $ 81,433 $ 428,499 75 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 12. LAPSING ENCUMBRANCES The County allows some encumbrances to lapse at year-end and then automatically reappropriates them as part of the subsequent year’s budget. The following is a summary of lapsing encumbrances at June 30, 2019, to be reappropriated during the next fiscal year (in thousands): Fund Total Encumbrances General Fund $ 3,720 Capital Projects Fund 5,595 Nonmajor Governmental Fund 7,332 Total Lapsing Encumbrances $ 16,647 13. OTHER COMMITMENTS In 1965, San Luis Obispo County Flood Control and Water Conservation District (District) 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 $26,867 over the next 16 years. The estimated amounts vary by year. For example, the principal amount due in 2019 is $1,025 while $2,303 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. A proposed Delta conveyance would require a contract extension agreement for financing beyond 2035. 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, 2019. 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 landowner, 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 costs as of June 30, 2019, is $7,032 (in 2019 dollars). Of this, $4,471 is for the Maintenance Cost and $2,561 is the Corrective Action Cost. The cost estimates were provided by a licensed professional geologist in the Post Closure Maintenance Plan dated May 2017 and revised cost dated May 29, 2018, 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. 76 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 16. TAX ABATEMENTS Tax abatements are agreements between the County and individuals or entities in which the County promises to forgo tax revenues and the individual or entity promises to take specific action that contributes to San Luis Obispo County’s economic development or otherwise benefits the county’s citizens. The County offers property tax abatements through the Agricultural Preserve Program (Program), as provided by the California Land Conservation Act of 1965 also known as the “Williamson Act”. The purpose of the Program is to protect agricultural lands and limited types of open space and outdoor recreation lands of statewide importance. Local agreements are administered under the County Rules of Procedure to Implement the Land Conservation Act of 1965, which were first adopted in 1972. Participation in the Program is voluntary; the agricultural preserve is established at the landowner’s request if Program criteria are met. Once a landowner enters into a contract with the County, the land is reassessed based on the agricultural income producing capability of the land, and the abatement is determined by specific dollar amount. To be eligible for the Program, individual properties must be within a rural use category and meet a minimum size requirement of 40-100 acres depending on the type of land being preserved. Landowners must agree to keep the land in large parcels ranging from 20-320 acres, not to create new parcels smaller than the applicable minimum, and not to create separate conveyance of an existing parcel that would result in separate ownership smaller than the agricultural preserve minimum parcel size. In return, the County will reassess the property on the basis of the agricultural income producing capacity of the land. The minimum term of a contract is 20 years, except for properties located within one mile of an urban reserve line or adjacent to a village reserve line which are eligible for a 10-year minimum term contract. Non-renewal is the most common method for a landowner to terminate a land conservation project; however, a property owner may request cancellation of a land conservation contract in order to terminate the contract on all or a portion of the property within one year after an application is accepted for processing. Under the nonrenewal process, the annual tax assessment increases over a defined period until the assessment reflects the Proposition 13 value, including the annual inflationary factor, of the property. Under the cancellation process, a significant onetime cancellation fee is assessed based upon a certain percentage of the current fair market value of the property. For the fiscal year ended June 30, 2019, the Agricultural Preserve Program tax abatements were $14,393. 17. 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 77 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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, 2018, there were 1,140 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, 2018, there were 309 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, 2018, there were 1,122 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, 2018, are shown in the following table: Active Tiers Summary of Plan members Miscellaneous Tier 1 Vested after accumulation of five years of Pension Trust service credit & 928 members eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Miscellaneous Tier 2 Vested after accumulation of five years of Pension Trust service credit & 257 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 & 985 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 & 72 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 & 44 members eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. 78 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Safety Tier 1 Vested after accumulation of five years of Pension Trust service credit & 140 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 & 52 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 & 93 members eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Benefit Provisions Members terminating employment before accruing five years of Pension Trust service credit forfeit the right to receive retirement benefits unless they establish reciprocity with another public agency within the prescribed time- period. Non-vested members who terminate service are required to withdraw their accumulated contributions plus accrued interest. The 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 and may include a compensation pickup for various management bargaining units. 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 with no pickup. 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) 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: 79 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) EMPLOYER EMPLOYEE CONTRIBUTION CONTRIBUTION PLAN RATES RATES Miscellaneous Tier 1 18.62-23.72% 14.59-22.97% Miscellaneous Tier 2 18.62-23.72% 8.41-16.07% Miscellaneous Tier 3 18.13-23.23% 6.79-16.51% Probation Tier 1 20.04-20.11% 20.83-27.36% Probation Tier 2 Not negotiated Not negotiated Probation Tier 3 19.61-21.54% 9.59-19.64% Safety Tier 1 27.97-34.81% 19.12-30.79% Safety Tier 2 27.97-34.81% 13.01-21.70% Safety Tier 3 27.36-34.20% 11.81-18.74% 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. County contributions Fiscal Year Ended (in thousands) June 30, 2017 $35,415 June 30, 2018 $42,046 June 30, 2019 $43,432 In addition, the County contributes towards post-employment benefits other than retirement (See Note 18). 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 67.1% funded as of January 1, 2019; 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 67.1 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, 2018, was $1,900,795. The County’s share of the Plan’s fiduciary net position was $1,192,980 as of the same date. As of December 31, 2018, the Plan’s fiduciary net position was 62.76% of the total pension liability. At June 30, 2019, the County reported a liability of $707,815 for its proportionate share of the net pension liability of the Plan. The net pension liability was measured as of December 31, 2018. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation date of January 1, 2018. The actuarial assumptions used in the January 1, 2018, valuation were based on the results of an actuarial experience study for the period January 1, 2013 through December 31, 2017. Measurements as of December 31, 2018, are based on the fair value of assets on that date, and the Total Pension Liability as of the valuation date, January 1, 2018. The actuarial assumptions were rolled forward to the Pension Trust Plan’s fiscal year-end of December 31, 2018. There were no significant events between the January 1, 2018, valuation date and the December 31, 2018, measurement date for the Pension Plan’s GASB Statement No. 67 valuation. The County’s proportion of the net pension liability was based on a projection of the County’s long-term share of 80 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) contributions to the Plan relative to the projected contributions of all the Plan’s participants, actuarially determined. At December 31, 2018, the County’s proportionate share was 93.82%, compared to 93.67% at December 31, 2017, an increase of 0.15%. The General Fund, Parks Fund, Driving Under the Influence Program Fund, and Library Fund have typically been used to liquidate the net pension liability. For the year ended June 30, 2019, the County recognized pension expense of $108,257. 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, 2018, 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 $ 2,829 $ - Deferred outflows and inflows of resources – difference between expected and actual experience 27,401 766 Deferred outflows of resources – changes in actuarial assumptions 29,320 - Deferred outflows of resources – net difference between projected and actual earnings on pension plan investments 77,045 - County contributions subsequent to the measurement date 21,724 - $ 158,319 $ 766 Deferred outflows of resources above represent the unamortized portion of changes to net pension liability, changes in actuarial assumptions, and the net difference between projected and actual earnings on pension plan investments along with deferred outflows of resources of $21,724 for contributions for the fiscal year ending June 30, 2019, made subsequent to the measurement date of December 31, 2018. The $21,724 of subsequent contributions will be recognized as reduction of the net pension liability in the fiscal year ending June 30, 2020. 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, 2018, and is 4.9799 years. The difference between the actual employer contributions and the proportionate share of the employer contributions during the measurement period ended December 31, 2018, is also recognized over 4.9799 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 Future June 30, Recognition (in thousands) 2020 $ 51,931 2021 31,228 2022 17,257 2023 35,211 2024 202 Thereafter - Total $ 135,829 81 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Actuarial Assumptions The total pension liability in the January 1, 2018, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50% Amortization growth rate Level percentage of payroll Salary increases 2.75% plus service-related merit component COLA increases 2.50% for Tier 1 and 2.00% for Tier 2 and Tier 3 Investment rate of return 7.00%, net of administrative expense Post-Retirement Mortality RP-2014 Mortality Tables with generational mortality improvements using scale MP-2017, a 105% multiplier for healthy males and 115% multiplier for healthy females, and white-collar adjustment applied to RP-2014 The actuarial assumptions used in the January 1, 2018 valuation were based on the results of an actuarial experience study for the period January 1, 2013 – December 31, 2017. 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 30% 2.32% Domestic Equities 20% 3.76% International Equities 20% 6.02% Alternative Investments 15% 4.92% Real Estate 15% 4.77% Discount Rate The discount rate used to measure the total pension liability was 7.00%. 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 County’s portion of the net pension liability calculated using the discount rate of 7.00%, as well as what the County’s portion of the net pension liability would be if it were calculated using a discount rate that is one percentage-point lower, 6.00%, or one percentage-point higher, 8.00%, than the current rate: 1% Discount 1% Decrease Rate Increase (in thousands) (in thousands) (in thousands) 6.00% 7.00% 8.00% County net pension liability $ 967,112 $707,815 $495,695 82 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. 18. POST-EMPLOYMENT HEALTHCARE BENEFITS General Information about the OPEB Plan Plan Description The County’s San Luis Obispo County Retiree Health Care Plan (the OPEB Plan), an agent multi-employer defined post-employment benefit (OPEB) plan is administered by the County utilizing an irrevocable trust. The OPEB Plan is funded solely funded by the County for the benefit of its employees. The County assists eligible retirees by paying a portion of their premiums for medical care. The County Board of Supervisors must approve any modification, alteration, or amendment of OPEB benefits. 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 is an IRS Section 115 trust fund administered by CalPERS. CalPERS issues a publicly available financial report consisting of financial statements and required supplementary information for the CERBT. The report may be obtained by writing to CalPERS, Lincoln Plaza North, 400 Q Street, Sacramento, CA 95811. Benefit Eligibility and Employees Covered To be eligible for benefits, a member must be eligible to retire, attain a minimum age of 50-52, depending on date of hire, and complete a minimum of 5 years of service with the County. In addition, the member must begin receiving their County pension within 120 days of termination of employment. Members receiving disability retirements are also eligible to receive the retirement reimbursement. In the event of a retirant’s death, qualified surviving spouses and dependents under the age of 23 are eligible to receive the OPEB benefit. At June 30, 2019 a total of 3,853 employees were covered by the OPEB Plan’s benefit terms: Active Plan Members 2,649 Inactive Plan Members 993 Inactive Plan members entitled to but not yet receiving benefits 211 3,853 Benefits Provided The County contracts with BCC to provide healthcare, vision, and dental benefits to eligible county retirees and their dependents. Through BCC, retirees are offered substantially the same health plans as active County employees as well as unique plans for retirees receiving Medicare benefits. Retirees who elect to participate in a County-sponsored health insurance plan are eligible to a monthly subsidy funded by the County’s OPEB benefit. The amounts the County contributes toward retiree medical premiums depends on bargaining unit. In FY 18-19 the County provided the following to eligible retirees: Non-management Employees Management Employees Calendar Year 2018 $133 per month $139 per month Calendar Year 2019 $136 per month $139 per month 83 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Contributions The County makes all contributions to the trustee for investment and reinvestment pursuant to the terms of the agreement with the CERBT. Employees are not required to contribute to the plan. For the fiscal year ended June 30, 2019, the funding was a combination of $1,620 in premium payments to contracted medical, dental and vision providers, plus a contribution of $888 thousand to the CERBT. The implicit rate subsidy, recognized this fiscal year, was $1,417 thousand. The County has selected the Actuarially Determined Contribution (ADC) funding method of contributing 100% of the ADC to fund the CERBT. Net OPEB Liability The County reported a net OPEB liability of $27.4 million as of June 30, 2019. The June 30, 2019 net OPEB Liability was determined by the actuary on December 9, 2019, using a measurement date of June 30, 2018. 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. The total OPEB liability as of the measurement date of June 30, 2018 was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount Rate 6.75% Inflation 2.5% Health care cost trend rate 6.9% for FY 2019, gradually decreasing over several decades to an ultimate rate of 4.0% in FY 2076 and later years. In addition, the rates above were increased to reflect the projected effect of the Affordable Care Act’s Excise Tax on high-cost health insurance plans. The additional trend rate adjustments vary by year, but average 0.38% beginning calendar year 2032 for plans other than Medicare plans. Actuarial cost method Entry Age Normal Amortization method for investment gains and Straight-line amortization over a closed 5-year period losses Amortization method for effects of assumption Straight-line amortization over a closed period equal to the changes and experience gains and losses average of the expected remaining service lives of all members that are provided with OPEB through the plan Amortization method for ADC purposes Level percentage of payroll over a rolling amortization period of 15 years Reimbursement eligibility 40% of all retirants will apply for and receive the reimbursement Payroll growth rate 2.75% per annum 84 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Salary increases Inflation of 2.5% plus productivity increase rate of 0.25% plus an additional service-related merit component. Investment rate of return 6.75% Post-retirement mortality RP-2014 Mortality Tables with generational mortality improvements using scale MP-2017, and additional adjustments. The withdrawal, retirement, disability, mortality, and salary scale are based on an experience study for the five- year period ending December 31, 2017 completed for the San Luis Obispo County Pension Trust. Other assumptions were developed by the actuary based on County experience and actuarial standards. Discount Rate The actuarially assumed discount rate of 6.75% per annum, compounded annually, reflects the County’s current policy of pay-as-you-go plus additional funding of the OPEB liability, and the County’s ongoing selection of a “less conservative” (Strategy 1) portfolio invested by the CERBT. Per GASB guidance, the discount rate was determined by calculating the single rate that produces the same present value of expected benefit payments as (1) the expected long-term rate of return on plan assets during the period when projected assets are sufficient to pay future retiree benefits, and (2) the 20-year municipal bond rate after assets are projected to be exhausted. The CERBT Strategy 1 portfolio consists of the following assets managed internally by the California Public Employees Retirement System (CalPERS) and/or external advisors: Long-Term Expected Target Nominal Rate Asset Class Allocation Target Range of Return Global Equity 59% plus/minus 5% 7.45% Fixed Income 25% plus/minus 5% 4.49% Treasury Inflation-Protected Securities (TIPS) 5% plus/minus 3% 4.07% Global Real Estate Investment Trusts (REITs) 8% plus/minus 5% 6.69% Commodities 3% plus/minus 3% 4.95% Cash - plus 2% 3.08% The long-term expected real rate of return, net of expenses, for CERBT Strategy 1 is assumed to be 6.75%. Changes in the Net OPEB Liability The table below shows the changes in the total OPEB liability, the OPEB Plan fiduciary net position, and the net OPEB liability over the past fiscal year in thousands: 85 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Total OPEB Plan Fiduciary Net OPEB Liability Less Net Position Equals Liability Balances as of June 30, 2018 $27,722 $17,025 $10,697 Projected Changes for fiscal year-end June 30, 2019: Service Cost 611 - 611 Interest Cost 2,007 - 2,007 Differences between expected and actual experience (2,842) - (2,842) Actuarial Gains/Losses - - - Change in Assumptions 19,530 - 19,530 Net Investment Income - 1,286 (1,286) Benefit Payments (1,526) (1,526) - Employer Contributions - 2,521 (2,521) Administrative Expenses - (8) 8 Other Deductions - (1,171) 1,171 Net Projected Changes 17,780 1,102 16,678 Projected Balances as of June 30, 2019 $45,502 $18,127 $27,375 Total OPEB liability represents the portion of the actuarial present value of projected benefit payments to be provided to current and inactive employees that is attributable to the employees’ past periods of service. Plan fiduciary net position describes the resources available to pay for the cost of OPEB benefits. The Net OPEB liability is the amount remaining after the OPEB Plan’s fiduciary net position is offset against the County’s total OPEB liability. Governmental funds contributing towards liquidating the liability include the General Fund, Driving Under the Influence Fund, Library Fund, and Parks Fund. At June 30, 2019, the OPEB Plan’s fiduciary net position was 39.8% of the total OPEB liability. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate and Healthcare Costs The following table presents the net OPEB liability calculated using the discount rate of 6.75%, as well as what the liability would be if it were calculated using a discount rate that is one percentage-point lower, 5.75%, or one percentage-point higher, 7.75%, than the current rate: 1% Discount 1% Decrease Rate Increase (in thousands) (in thousands) (in thousands) 5.75% 6.75% 7.75% Net OPEB Liability $32,640 $27,375 $22,981 The sensitivity of the Net OPEB liability to changes in healthcare trend rates is presented below: 1% Discount 1% Decrease Rate Increase (in thousands) (in thousands) (in thousands) Net OPEB Liability $22,526 $27,375 $33,259 OPEB Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2019, the County recognized OPEB expense of $1,873. OPEB expense represents the change in the net OPEB liability during the measurement period, adjusted for actual contributions and the deferred 86 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) recognition of changes in investment gain/loss, actuarial gain/loss, actuarial assumptions or method and plan benefits. The County’s discretely presented component unit did not report any OPEB liability, expense or deferred outflows or inflows of resources. At June 30, 2019, the County reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources (in thousands) (in thousands) Deferred outflows and inflows of resources – difference between expected and actual experience $ - $ 2,452 Deferred outflows of resources – changes in actuarial assumptions 16,853 - Deferred outflows of resources – net difference between projected and actual earnings on pension plan investments - 50 County contributions subsequent to the measurement date 3,925 - $ 20,778 $ 2,502 $3,925 reported as deferred outflows of resources related to OPEB resulting from County contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability for the fiscal year ending June 30, 2020. Amounts reported as deferred (inflows) outflows of resources related to OPEB will be recognized in OPEB expense as follows: Future Recognition Year ended (in thousands) 2020 $ 2,277 2021 2,277 2022 2,277 2023 2,277 2024 2,290 Thereafter 2,953 $ 14,351 The Schedule of Changes in the County’s Net OPEB Liability and Related Ratios and the Schedule of Actuarially Determined Contributions and Plan Contributions and Related Ratios are included as Required Supplementary Information following the Notes to the Financial Statements and present multi-year trend information about the OPEB liability, OPEB Plan fiduciary net position, actuarially determined contributions, and covered-employee payroll. 19. ASSUMPTION OF OPERATIONS On June 5, 2018, the Board of Supervisors passed a resolution for application, plan for services, and budget for submittal to the San Luis Obispo Local Agency Formation Commission (LAFCO) to establish fire authority for the unincorporated area of Cayucos. With the resolution, the County assumed responsibility for fire protection services formerly provided by the Cayucos Fire Protection District which dissolved on November 30, 2018. As a result, the County assumed ownership of capital assets with a net book value of $37 thousand. Additionally, the General Fund recorded a cash increase of $294 thousand and an increase in net position of $25 thousand due to assumption of operations. 87 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 20. PRIOR PERIOD ADJUSTMENTS The County recorded a prior period adjustment of $1.6 million in the Los Osos Wastewater Fund to account for the Bayridge Estates and Vista De Oro sewage collection systems which were contributed to the County by the Los Osos Community Services District in FY 2017-18. In addition, the County recorded a reduction of net position of $4.6 million in the Statement of Activities to reduce other assets associated with resources accumulated for a Pension Obligation Bonds debt service payments made in the prior year. 21. 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 15, 2019, the County made an advance payment of $55.0 million representing the County’s FY 2019-20 employer retirement and employer paid portion of employee normal retirement contributions to the Pension Trust. The prepayment resulted in an estimated savings of $1.5 million to the County. 88 ________________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION ________________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION Required supplementary information includes financial information and disclosures that are required by the GASB but are not considered a part of the basic financial statements. Such information includes: Schedule of 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 Changes in the County’s Net OPEB Liability and Related Ratios Other Post-Employment Benefits (OPEB) Plan Schedule of Actuarially Determined Plan Contributions and Related Ratios Budgetary Comparison Schedule – General Fund Notes to Required Supplementary Information 89 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 County’s County’s share of the net Plan fiduciary Measurement proportion of proportionate pension liability net position as a Date the net share of the County’s (asset) as a percentage of December pension net pension covered percentage of the total 31st liability liability payroll covered payroll pension liability 2013 92.64% $354,823 $153,942** 230.49% 74.78% 2014 92.65% $391,423 $157,730** 248.16% 73.53% 2015 92.92% $506,626 $166,433** 304.40% 67.57% 2016 93.10% $602,805 $172,192** 350.08% 64.59% 2017 93.67% $529,033 $186,278** 284.00% 70.36% 2018 93.82% $707,815 $193,122 366.51% 62.76% *In accordance with paragraph 81.a of GASB 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. **Restated in accordance with the GASB Statement No. 82 definition of covered payroll as the payroll on which contributions to a pension plan are based as of the measurement date. 90 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) Fiscal County’s actual Year Actuarially Contribution contributions as a ending required Actual deficiency County’s percentage of covered June 30th contributions contributions (excess) covered payroll payroll 2014 $30,956 $28,867^ $2,089 $155,754** 18.53% 2015 $30,687 $30,174^ $513 $162,273** 18.59% 2016 $32,839 $31,997^ $843 $170,552** 18.76% 2017 $35,066 $35,415^ ($349) $181,338** 19.53% 2018 $45,153 $42,046^ $3,107 $190,135 22.11% 2019 $48,198 $43,432 $4,766 $193,294 22.47% *In accordance with paragraph 81.a of GASB 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. ^Restated to reflect a fiscal year measurement period. **Restated in accordance with the GASB Statement No. 82 definition of covered payroll as the payroll on which fiscal year contributions to a pension plan are based. 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. 91 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN SCHEDULE OF CHANGES IN THE COUNTY’S NET OPEB LIABILITY AND RELATED RATIOS FOR THE LAST 10 FISCAL YEARS* (in thousands) Fiscal Fiscal Year Year 2017-18 2018-19 Total OPEB liability: Service cost $ 688 $ 611 Interest 1,949 2,007 Differences between expected and actual experience - (2,842) Changes of assumptions - 19,530 Benefit payments (1,690) (1,526) Net change in total OPEB liability 947 17,780 Total OPEB liability – beginning 26,775 27,722 Total OPEB liability – ending (a) $ 27,722 $ 45,502 Plan Fiduciary net position: Employer contributions 1,707 2,521 Net investment income 1,155 1,286 Benefit payments (1,690) (1,526) Administrative expense (7) (8) Other deductions - (1,171) Net change in plan fiduciary net position 1,165 1,102 Plan fiduciary net position – beginning 15,860 17,025 Plan fiduciary net position – ending (b) $ 17,025 $ 18,127 County’s net OPEB liability – ending (a) – (b) $ 10,697 $ 27,375 Plan fiduciary net position as a percentage of the total OPEB liability 61.4% 39.8% Covered-employee payroll $ 190,136 $ 193,294 County’s net OPEB liability as a percentage of covered- employee payroll 5.6% 14.2% *In accordance with paragraphs 57.a and 57.b of GASB 75 effective June 30, 2018, employers must disclose a 10- year history of the OPEB information detailed above. Additional years will be presented as they become available. The County has elected to use the GASB 75 look-back method where assets and liabilities are measured as of the prior fiscal year end but applied to the current fiscal year end. The Notes to RSI are integral to the above schedule. 92 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN SCHEDULE OF ACTUARIALLY DETERMINED PLAN CONTRIBUTIONS AND RELATED RATIOS FOR THE LAST 10 FISCAL YEARS* (in thousands) Actuarially Plan Annual Plan Contributions Fiscal Year Contributions Determined Contributions Covered- as a Percentage of Ended in relation to Contribution Over/(Under) Employee Covered-Employee June 30th the ADC (ADC) ADC Payroll Payroll (a) (b) (b-a) 2017 $ 1,621^ $ 1,682^ $ 61^ $ 181,338^ 0.93%^ 2018 $ 1,707 $ 2,521 $ 814 $ 190,136 1.33% 2019 $ 3,982 $ 3,925 $ (57) $ 193,294 2.03% *In accordance with paragraph 57.c of GASB 75 effective June 30, 2018, employers must disclose a 10-year history of the OPEB information detailed above. Additional years will be presented as they become available. ^Restated based on updated actuarial information. The Notes to RSI are integral to the above schedule. 93 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 191,403 $ 191,403 $ 201,230 $ 9,827 Licenses, permits, and franchises 10,680 11,192 12,133 941 Fines, forfeitures, and penalties 3,903 4,110 2,978 (1,132) Use of money and property 2,065 2,065 7,294 5,229 Aid from other governments 242,957 251,023 241,792 (9,231) Charges for services 34,213 35,729 34,017 (1,712) Other revenue 5,165 13,423 20,305 6,882 Total Revenues 490,386 508,945 519,749 10,804 Expenditures: Current: General government 54,756 67,342 49,181 18,161 Public protection 184,812 196,394 181,103 15,291 Public ways and facilities 4,664 8,202 3,594 4,608 Health and sanitation 101,816 106,048 99,265 6,783 Public assistance 130,954 133,613 120,587 13,026 Education 620 620 575 45 Contingencies 24,355 19,401 - 19,401 Total Expenditures 501,977 531,620 454,305 77,315 Excess (Deficiency) of Revenues Over (Under) Expenditures (11,591) (22,675) 65,444 88,119 Other Financing Sources (Uses): Transfers in 223 1,333 1,311 ( 22) Transfers out (18,695) (26,109) (25,468) 641 Total Other Financing Sources (Uses) (18,472) (24,776) (24,157) 619 Net change in fund balances (30,063) (47,451) 41,287 88,738 Fund balances, beginning 222,848 222,848 222,848 - Fund balances, ending $ 192,785 $ 175,397 $ 264,135 $ 88,738 94 COUNTY OF SAN LUIS OBISPO GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (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 $ 519,749 Revenues for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 5,723 Total Revenues as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 525,472 Uses/outflows of resources Actual amounts (budgetary basis) "Total Expenditures" from the budgetary comparison schedule $ 454,305 Expenditures for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 6,325 Total Expenditures as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 460,630 Other financing sources/(uses) of resources Actual amounts (budgetary basis) "Total Other Financing Sources (Uses)" from the Budgetary Comparison Schedule $ (24,157) Other financing sources (uses) for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes (574) Total Other Financing Sources (Uses) as reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ (24,731) 95 COUNTY OF SAN LUIS OBISPO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2019 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 of San Luis Obispo (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 (the Board), 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, 2019 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 and Financing Authority debt service funds. 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. 96 ________________________________________________________________ OTHER SUPPLEMENTARY INFORMATION ________________________________________________________________ ________________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS ________________________________________________________________ NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS: Special revenue funds are used to account for revenues that are restricted by law or administrative actions to expenditures for specified purposes. 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. Emergency Medical Services Accounts for payments to physicians, hospitals, and other providers of emergency medical care from revenues imposed and collected by the courts. Driving Under the Influence Programs Accounts for resources collected from persons convicted of driving under the influence to provide education and rehabilitation programs. Fish & Game Accounts for funds generated by fines levied as a result of Fish and Game violations. Road Impact Fees Accounts for resources collected from developers to add, maintain, and improve roads in specific areas where the fees were allocated. Library Accounts for resources used to provide library services throughout the County. Parks Accounts for resources used to provide parks and recreational services countywide. Public Facilities Fees Accounts for resources collected from the building permit process to build public facilities such as fire and law enforcement stations, library and general government structures. Roads Accounts for resources used to maintain the County road system. Wildlife & Grazing Accounts for resources used to provide for range improvements and the control of predators. 97 NONMAJOR GOVERNMENTAL FUNDS (Continued) 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. DEBT SERVICE FUNDS: Debt service funds are used to account for the accumulation of resources for and the payment of general long-term debt principal and interest. San Luis Obispo County Public Facilities Corporation (PFC) The PFC is a non-profit public benefit corporation organized to assist public agencies within the County of San Luis Obispo with the acquisition and construction of various public facilities. Pension Obligation Bonds The Pension Obligation Bonds debt service fund is used to account for the accumulation of monies for payment of taxable pension obligation bonds. These bonds were issued to fund the County’s unfunded actuarial accrued liability (UAAL). SLO County Financing Authority The SLO County Financing Authority is a joint exercise of powers authority created to assist in the financing, construction, and equipping of public facilities for its members. 98 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2019 (IN THOUSANDS) Special Revenue Emergency Driving Under Community Medical the Influence Fish and Development Services Programs Game Assets Cash and cash equivalents $ 1,960 $ 335 $ 1,013 $ 190 Restricted cash with fiscal agent - - - - Accounts receivable, net - - - - Due from other governments 71 446 - - Due from other funds - Loans receivable 23,552 - - - Advances to other funds - - - - Prepaid items - - 4 - Other assets - - - - Total assets $ 25,583 $ 781 $ 1,017 $ 190 Liabilities Salaries and benefits payable $ - $ - $ 34 $ - Accounts payable 376 - 7 1 Deposits from others 1,189 - - - Unearned revenue - - - - Advances from other funds - - - - Total liabilities 1,565 - 41 1 Deferred Inflows of Resources Unavailable revenue - - - - Deferred loans 23,552 - - - Total deferred inflows of resources 23,552 - - - Fund Balances Nonspendable - - 4 - Restricted - - - - Committed 466 781 972 189 Assigned - - - - Unassigned - - - - Total fund balances 466 781 976 189 Total liabilities, deferred inflows of resources, and fund balances $ 25,583 $ 781 $ 1,017 $ 190 99 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2019 (IN THOUSANDS) Special Revenue Road Public Impact Facilities Fees Library Parks Fees Assets Cash and cash equivalents $ 10,102 $ 4,716 $ 4,752 $ 13,714 Restricted cash with fiscal agent - - - - Accounts receivable, net - - 102 - Due from other governments - - - - Due from other funds - - - - Loans receivable - - - - Advances to other funds - - - - Prepaid items - 1 31 - Other assets - - - - Total assets $ 10,102 $ 4,717 $ 4,885 $ 13,714 Liabilities Salaries and benefits payable $ - $ 241 $ 260 $ - Accounts payable - 77 224 - Deposits from others - - 554 - Unearned revenue - - - - Advances from other funds - - 335 - Total liabilities - 318 1,373 - Deferred Inflows of Resources Unavailable revenue - - - - Deferred loans - - - - Total deferred inflows of resources - - - - Fund Balances Nonspendable - 1 31 - Restricted 10,102 - - 13,714 Committed - 4,398 3,481 - Assigned - - - - Unassigned - - - - Total fund balances 10,102 4,399 3,512 13,714 Total liabilities, deferred inflows of resources, and fund balances $ 10,102 $ 4,717 $ 4,885 $ 13,714 100 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2019 (IN THOUSANDS) Special Revenue Flood Wildlife Control Lighting County Roads Grazing Districts Districts Service Areas Assets Cash and cash equivalents $ 15,211 $ 44 $ 17,861 $ 472 $ 2,162 Restricted cash with fiscal agent - - - - - Accounts receivable, net - - 44 - 16 Due from other governments 3,123 - 642 - - Due from other funds - - - - 400 Loans receivable - - - - - Advances to other funds - - 2,968 - 255 Prepaid items - - - - - Other assets 2 - - - - Total assets $ 18,336 $ 44 $ 21,515 $ 472 $ 2,833 Liabilities Salaries and benefits payable $ - $ - $ - $ - $ - Accounts payable 4 95 - 131 - - Deposits from others 3 13 - - - 24 Unearned revenue 2 55 - - - - Advances from other funds - - - - 53 Total liabilities 1,063 - 131 - 77 Deferred Inflows of Resources Unavailable revenue 2,228 - 459 - 9 Deferred loans - - - - - Total deferred inflows of resources 2,228 - 459 - 9 Fund Balances Nonspendable - - - - - Restricted - 38 - - - Committed 15,045 6 20,925 472 2,747 Assigned - - - - - Unassigned - - - - - Total fund balances 15,045 44 20,925 472 2,747 Total liabilities, deferred inflows of resources, and fund balances $ 18,336 $ 44 $ 21,515 $ 472 $ 2,833 101 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2019 (IN THOUSANDS) Debt Service Total Debt Service Debt Service Debt Service Nonmajor Public Facilities Pension Obligation Financing Governmental Corporation Bonds Authority Funds Assets Cash and cash equivalents $ 633 $ 5,611 $ 12 $ 78,788 Restricted cash with fiscal agent 457 4 1,344 1,805 Accounts receivable, net - - - 162 Due from other governments - - - 4,282 Due from other funds - - - 400 Loans receivable - - - 23,552 Advances to other funds - - - 3,223 Prepaid items - - - 36 Other assets - - - 2 Total assets $ 1,090 $ 5,615 $ 1,356 $ 112,250 Liabilities Salaries and benefits payable $ - $ - $ - $ 535 Accounts payable - - - 1,311 Deposits from others - - - 2,080 Unearned revenue - - - 255 Advances from other funds - - - 388 Total liabilities - - - 4,569 Deferred Inflows of Resources Unavailable revenue - - - 2,696 Deferred loans - - - 23,552 Total deferred inflows of resources - - - 26,248 Fund Balances Nonspendable - - - 36 Restricted 1,090 5,615 1,356 31,915 Committed - - - 49,482 Assigned - - - - Unassigned - - - - Total fund balances 1,090 5,615 1,356 81,433 Total liabilities, deferred inflows of resources, and fund balances $ 1,090 $ 5,615 $ 1,356 $ 112,250 102 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Special Revenue Emergency Driving Under Community Medical the Influence Fish and Development Services Programs Game Revenues Taxes $ - $ - $ - $ - Licenses, permits, and franchises - - - - Fines, forfeitures, and penalties - 612 - 33 Use of money and property 20 8 25 2 Aid from other governments 3,677 - - - Charges for services - - 1,502 - Other revenues 91 - 160 - Total revenues 3,788 620 1,687 35 Expenditures Current: Public protection - - - 24 Public ways and facilities - - - - Health and sanitation 4,247 - - - Public assistance - 740 - - Education - - 1,388 - Recreation and cultural services - - - - Debt service: Principal payments - - - - Interest and fiscal charges - - - - Total expenditures 4,247 740 1,388 24 Excess (deficiency) of revenues over (under) expenditures (459) (120) 299 11 Other financing sources (uses) Transfers in 629 - - - Transfers out - - (30) - Total other financing sources (uses) 629 - (30) - Net change in fund balances 170 (120) 269 11 Fund balances - beginning 296 901 707 178 Fund balances - ending $ 466 $ 781 $ 976 $ 189 103 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Special Revenue Road Public Impact Facilities Fees Library Parks Fees Revenues Taxes $ - $ 9,449 $ - $ - Licenses, permits, and franchises - - - - Fines, forfeitures, and penalties - - 1 - Use of money and property 290 109 273 369 Aid from other governments - 124 227 - Charges for services 1,097 132 5,632 2,652 Other revenues - 704 41 - Total revenues 1,387 10,518 6,174 3,021 Expenditures Current: Public protection - - - - Public ways and facilities - - - - Health and sanitation - - - - Public assistance - - - - Education - 10,228 - - Recreation and cultural services - - 10,574 - Debt service: Principal payments - - - - Interest and fiscal charges - - - - Total expenditures - 10,228 10,574 - Excess (deficiency) of revenues over (under) expenditures 1,387 290 (4,400) 3,021 Other financing sources (uses) Transfers in - 667 4,722 - Transfers out (878) (233) (185) (1,100) Total other financing sources (uses) (878) 434 4,537 (1,100) Net change in fund balances 509 724 137 1,921 Fund balances - beginning 9,593 3,675 3,375 11,793 Fund balances - ending $ 10,102 $ 4,399 $ 3,512 $ 13,714 104 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Special Revenue Flood Wildlife Control Lighting County Roads and Grazing Districts Districts Service Areas Revenues Taxes $ 1,875 $ - $ 3,753 $ 39 $ 760 Licenses, permits, and franchises - - - - - Fines, forfeitures, and penalties - - - - - Use of money and property 385 1 515 14 67 Aid from other governments 23,733 5 586 - 4 Charges for services 209 - 537 11 4 Other revenues 220 - 44 - 17 Total revenues 26,422 6 5,435 64 852 Expenditures Current: Public protection - 2 3,857 47 - Public ways and facilities 31,317 - - - 356 Health and sanitation - - - - - Public assistance - - - - - Education - - - - - Recreation and cultural services - - - - - Debt service: Principal payments - - - - - Interest and fiscal charges - - - - - Total expenditures 31,317 2 3,857 47 356 Excess (deficiency) of revenues over (under) expenditures (4,895) 4 1,578 17 496 Other financing sources (uses) Transfers in 7,583 - 110 - 6 Transfers out (8) - (1,462) - (64) Total other financing sources (uses) 7,575 - (1,352) - (58) Net change in fund balances 2,680 4 226 17 438 Fund balances - beginning 12,365 40 20,699 455 2,309 Fund balances - ending $ 15,045 $ 44 $ 20,925 $ 472 $ 2,747 105 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Debt Service Total Debt Service Debt Service Debt Service Nonmajor Public Facilities Pension Obligation Financing Governmental Corporation Bonds Authority Funds Revenues Taxes $ - $ - $ - $ 15,876 Licenses, permits, and franchises - - - - Fines, forfeitures, and penalties - - - 646 Use of money and property 18 50 39 2,185 Aid from other governments - - - 28,356 Charges for services 612 - 1,189 13,577 Other revenues - 665 - 1,942 Total revenues 630 715 1,228 62,582 Expenditures Current: Public protection - - - 3,930 Public ways and facilities - - - 31,673 Health and sanitation - - - 4,247 Public assistance - - - 740 Education - - - 11,616 Recreation and cultural services - - - 10,574 Debt service: Principal payments 330 3,610 877 4,817 Interest and fiscal charges 430 48 487 965 Total expenditures 760 3,658 1,364 68,562 Excess (deficiency) of revenues over (under) expenditures (130) (2,943) (136) (5,980) Other financing sources (uses) Transfers in - 11,593 135 25,445 Transfers out (135) - - (4,095) Total other financing sources (uses) (135) 11,593 135 21,350 Net change in fund balances (265) 8,650 (1) 15,370 Fund balances - beginning 1,355 (3,035) 1,357 66,063 Fund balances - ending $ 1,090 $ 5,615 $ 1,356 $ 81,433 106 ________________________________________________________________ BUDGETARY COMPARISON SCHEDULES CAPITAL PROJECTS FUND NONMAJOR SPECIAL REVENUE FUNDS SAN LUIS OBISPO PUBLIC FACILITIES CORPORATION PENSION OBLIGATION BONDS FUND SAN LUIS OBISPO FINANCING AUTHORITY ________________________________________________________________ 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ - $ - $ 420 $ 420 Use of money and property - - 590 590 Aid from other governments - 2,734 1,690 (1,044) Charges for services - 483 344 (139) Other revenues - - 1 1 Total Revenues - 3,217 3,045 (172) Expenditures: Capital outlay 4,113 19,871 6,374 13,497 Total Expenditures 4,113 19,871 6,374 13,497 Excess (Deficiency) of Revenues Over (Under) Expenditures (4,113) (16,654) (3,329) 13,325 Other Financing Sources (Uses): Transfers in 3,727 14,210 4,064 (10,146) Total Other Financing Sources (Uses) 3,727 14,210 4,064 (10,146) Net change in fund balances (386) (2,444) 735 3,179 Fund balances, beginning 17,980 17,980 17,980 - Fund balances, ending $ 17,594 $ 15,536 $ 18,715 $ 3,179 107 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 20 $ 20 Aid from other governments 3,642 6,165 3,677 (2,488) Charges for services - - - - Other revenues - - 91 91 Total Revenues 3,642 6,165 3,788 (2,377) Expenditures: Current: Health and sanitation Services and supplies 1,058 1,048 1,048 - Other charges 3,213 5,746 3,199 2,547 Contingencies 46 46 - 46 Total Expenditures 4,317 6,840 4,247 2,593 Excess (Deficiency) of Revenues Over (Under) Expenditures (675) (675) (459) 216 Other Financing Sources (Uses): Transfers in 629 629 629 - Total Other Financing Sources (Uses) 629 629 629 - Net change in fund balances ( 46) ( 46) 170 216 Fund balances, beginning 296 296 296 - Fund balances, ending $ 2 50 $ 2 50 $ 4 66 $ 2 16 108 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ 800 $ 800 $ 612 $ (188) Use of money and property 1 1 8 7 Other revenues - - - - Total Revenues 801 801 620 (181) Expenditures: Current: Public assistance Services and supplies 806 1,153 740 413 Total Expenditures 806 1,153 740 413 Net change in fund balances (5) (352) (120) 232 Fund balances, beginning 901 901 901 - Fund balances, ending $ 8 96 $ 5 49 $ 7 81 $ 2 32 109 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 3 $ 3 $ 25 $ 22 Charges for services 1,369 1,369 1,502 133 Other revenues 34 194 160 ( 34) Total Revenues 1,406 1,566 1,687 121 Expenditures: Current: Education Salaries, wages, and benefits 934 933 812 121 Services and supplies 444 444 396 48 Other charges - 20 20 - Capital outlay - 160 160 - Contingencies 70 70 - 70 Total Expenditures 1,448 1,627 1,388 239 Excess (Deficiency) of Revenues Over (Under) Expenditures (42) (61) 299 360 Other Financing Sources (Uses): Transfers out - - ( 30) ( 30) Total Other Financing Sources (Uses) - - ( 30) ( 30) Net change in fund balances (42) (61) 269 330 Fund balances, beginning 707 707 707 -- Fund balances, ending $ 6 65 $ 6 46 $ 9 76 $ 3 30 110 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ 20 $ 22 $ 33 $ 11 Use of money and property - - 2 2 Total Revenues 20 22 35 13 Expenditures: Current: Public protection Services and supplies 23 25 24 1 Total Expenditures 23 25 24 1 Net change in fund balances (3) (3) 11 14 Fund balances, beginning 178 178 178 - Fund balances, ending $ 1 75 $ 1 75 $ 1 89 $ 14 111 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 290 $ 290 Charges for services - - 1,097 1,097 Total Revenues - - 1,387 1,387 Expenditures: Current: Public ways and facilities Services and supplies - - - - Total Expenditures - - - - Excess (Deficiency) of Revenues Over (Under) Expenditures - - 1,387 1,387 Other Financing Sources (Uses): Transfers out (1,516) (4,188) (878) 3,310 Total Other Financing Sources (Uses) (1,516) (4,188) (878) 3,310 Net change in fund balances (1,516) (4,188) 509 4,697 Fund balances, beginning 9,593 9,593 9,593 - Fund balances, ending $ 8,077 $ 5,405 $ 10,102 $ 4,697 112 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 9 ,206 $ 9,206 $ 9,449 $ 243 Use of money and property 20 20 109 89 Aid from other governments 117 125 124 (1) Charges for services 110 110 132 22 Other revenues 15 729 704 ( 25) Total Revenues 9,468 10,190 10,518 328 Expenditures: Current: Education Salaries, wages, and benefits 6,702 6,702 6,161 541 Services and supplies 3,491 4,062 3,704 358 Other charges 5 358 358 - Capital outlay - 8 5 3 Contingencies 510 510 - 510 Total Expenditures 10,708 11,640 10,228 1,412 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,240) (1,450) 290 1,740 Other Financing Sources (Uses): Transfers in 667 667 667 - Transfers out - - (233) (233) Total Other Financing Sources (Uses) 667 667 434 (233) Net change in fund balances (573) (783) 724 1,507 Fund balances, beginning 3,675 3,675 3,675 - Fund balances, ending $ 3,102 $ 2,892 $ 4,399 $ 1,507 113 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ 90 $ 262 $ 1 $ (261) Use of money and property 166 166 273 107 Aid from other governments 40 115 227 112 Charges for services 5,675 5,827 5,632 (195) Other revenues 43 71 41 ( 30) Total Revenues 6,014 6,441 6,174 (267) Expenditures: Current: Recreation and cultural services Salaries, wages, and benefits 5,400 5,487 5,179 308 Services and supplies 3,809 5,102 4,618 484 Other charges 755 1,399 743 656 Capital outlay 300 2,146 34 2,112 Contingencies 200 40 - 40 Total Expenditures 10,464 14,174 10,574 3,600 Excess (Deficiency) of Revenues Over (Under) Expenditures (4,450) (7,733) (4,400) 3,333 Other Financing Sources (Uses): Transfers in 4,327 6,493 4,722 (1,771) Transfers out ( 21) ( 21) (185) (164) Total Other Financing Sources (Uses) 4,306 6,472 4,537 (1,935) Net change in fund balances (144) (1,261) 137 1,398 Fund balances, beginning 3,375 3,375 3,375 - Fund balances, ending $ 3,231 $ 2,114 $ 3,512 $ 1,398 114 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 369 $ 369 Charges for services 1,989 1,989 2,652 663 Total Revenues 1,989 1,989 3,021 1,032 Expenditures: Current: General government Salaries, wages, and benefits - - - - Services and supplies - - - - Total Expenditures - - - - Excess (Deficiency) of Revenues Over (Under) Expenditures 1,989 1,989 3,021 1,032 Other Financing Sources (Uses): Transfers out (1,100) (3,430) (1,100) 2,330 Total Other Financing Sources (Uses) (1,100) (3,430) (1,100) 2,330 Net change in fund balances 889 (1,441) 1,921 3,362 Fund balances, beginning 11,793 11,793 11,793 - Fund balances, ending $ 12,682 $ 10,352 $ 13,714 $ 3,362 115 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 1 ,789 $ 1,789 $ 1,875 $ 86 Use of money and property 30 30 385 355 Aid from other governments 25,251 45,131 23,733 (21,398) Charges for services 196 324 209 (115) Other revenues 540 742 220 (522) Total Revenues 27,806 48,016 26,422 (21,594) Expenditures: Current: Public ways and facilities Services and supplies 18,817 21,437 30,681 (9,244) Other charges 544 884 636 248 Capital outlay 16,650 49,884 - 49,884 Total Expenditures 36,011 72,205 31,317 40,888 Excess (Deficiency) of Revenues Over (Under) Expenditures (8,205) (24,189) (4,895) 19,294 Other Financing Sources (Uses): Transfers in 8,210 10,883 7,583 (3,300) Transfers out (4) (8) (8) - Total Other Financing Sources (Uses) 8,206 10,875 7,575 (3,300) Net change in fund balances 1 (13,314) 2,680 15,994 Fund balances, beginning 12,365 12,365 12,365 - Fund balances, ending $ 12,366 $ (949) $ 15,045 $ 15,994 116 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 1 $ 1 Aid from other governments 4 4 5 1 Total Revenues 4 4 6 2 Expenditures: Current: Public protection Services and supplies 4 4 2 2 Total Expenditures 4 4 2 2 Net change in fund balances - - 4 4 Fund balances, beginning 40 40 40 - Fund balances, ending $ 40 $ 40 $ 44 $ 4 117 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 3,509 $ 3,509 $ 3,753 $ 244 Use of money and property 84 84 515 431 Aid from other governments 5,631 8,631 586 (8,045) Charges for services 537 537 537 - Other revenues 1 1 44 43 Total Revenues 9,762 12,762 5,435 (7,327) Expenditures: Current: Public protection Services and supplies 8,082 8,687 3,806 4,881 Other charges 3,008 3,008 51 2,957 Capital outlay 627 3,627 - 3,627 Total Expenditures 11,717 15,322 3,857 11,465 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,955) (2,560) 1,578 4,138 Other Financing Sources (Uses): Transfers in 48 48 110 62 Transfers out (610) (610) (1,462) (852) Total Other Financing Sources (Uses) (562) (562) (1,352) (790) Net change in fund balances (2,517) (3,122) 226 3,348 Fund balances, beginning 20,699 20,699 20,699 - Fund balances, ending $ 18,182 $ 17,577 $ 20,925 $ 3,348 118 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 39 $ 39 $ 39 $ - Use of money and property 5 5 14 9 Charges for services 9 9 11 2 Total Revenues 53 53 64 11 Expenditures: Current: Public protection Services and supplies 53 53 47 6 Capital outlay 66 66 - 66 Total Expenditures 119 119 47 72 Net change in fund balances ( 66) ( 66) 17 83 Fund balances, beginning 455 455 455 - Fund balances, ending $ 389 $ 389 $ 472 $ 83 119 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 378 $ 666 $ 760 $ 94 Use of money and property 15 15 67 52 Aid from other governments 2 2 4 2 Charges for services 4 4 4 - Other revenues - 4 17 13 Total Revenues 399 691 852 161 Expenditures: Current: Public ways and facilities Services and supplies 139 497 356 141 Capital outlay 40 40 - 40 Total Expenditures 179 537 356 181 Excess (Deficiency) of Revenues Over (Under) Expenditures 220 154 496 342 Other Financing Sources (Uses): Transfers in 1,086 1,086 6 (1,080) Transfers out (626) (639) ( 64) 575 Total Other Financing Sources (Uses) 460 447 ( 58) (505) Net change in fund balances 680 601 438 (163) Fund balances, beginning 2,309 2,309 2,309 - Fund balances, ending $ 2,989 $ 2,910 $ 2,747 $ (163) 120 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 18 $ 18 Charges for services - - 612 612 Total Revenues - - 630 630 Expenditures: Debt Service: Principal payments - - 330 (330) Interest and fiscal charges - - 430 (430) Total Expenditures - - 760 (760) Excess (Deficiency) of Revenues Over (Under) Expenditures - - (130) (130) Other Financing Sources (Uses): Transfers out - - (135) (135) Total Other Financing Sources (Uses) - - (135) (135) Net change in fund balances - - (265) (265) Fund balances, beginning 1,355 1,355 1,355 - Fund balances, ending $ 1,355 $ 1,355 $ 1,090 $ (265) 121 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, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 2 ,054 $ 2,054 $ - $ (2,054) Use of money and property 287 287 50 (237) Other revenues 14,460 14,476 665 (13,811) Total Revenues 16,801 16,817 715 (16,102) Expenditures: Debt Service: Principal payments 3,610 3,610 3,610 - Interest and fiscal charges 7,543 7,558 48 7,510 Total Expenditures 11,153 11,168 3,658 7,510 Excess (Deficiency) of Revenues Over (Under) Expenditures 5,648 5,649 (2,943) (8,592) Other Financing Sources (Uses): Transfers in - - 11,593 11,593 Total Other Financing Sources (Uses) - - 11,593 11,593 Net change in fund balances 5,648 5,649 8,650 3,001 Fund balances, beginning (3,035) (3,035) (3,035) - Fund balances, ending $ 2,613 $ 2,614 $ 5,615 $ 3,001 122 COUNTY OF SAN LUIS OBISPO SLO COUNTY FINANCING AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET TO ACTUAL COMPARISON FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 39 $ 39 Charges for services - - 1,189 1,189 Total Revenues - - 1,228 1,228 Expenditures: Debt Service: Principal payments - - 877 (877) Interest and fiscal charges - - 487 (487) Total Expenditures - - 1,364 (1,364) Excess (Deficiency) of Revenues Over (Under) Expenditures - - (136) (136) Other Financing Sources (Uses): Transfers in - - 135 135 Total Other Financing Sources (Uses) - - 135 135 Net change in fund balances - - (1) (1) Fund balances, beginning 1,357 1,357 1,357 - Fund balances, ending $ 1,357 $ 1,357 $ 1,356 $ (1) 123 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS NONMAJOR ENTERPRISE FUNDS ________________________________________________________________ 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 – Salinas Dam Accounts for the operation of the Salinas dam and pipeline used to deliver water to the City of San Luis Obispo from Santa Margarita Lake. Lopez Flood Control 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. 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. 124 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS JUNE 30, 2019 (IN THOUSANDS) General Flood Control Zone - Lopez County Salinas Dam Flood Control Golf Lopez Park Service Areas Total Assets Current assets: Cash and cash equivalents $ 1,374 $ 9,339 $ 303 $ 24 $ 3,603 $ 14,643 Accounts receivable, net - 16 59 - 273 348 Inventories - - 48 - - 48 Prepaid items - 58 871 - - 929 Deposits with others - - - - 86 86 Total current assets 1,374 9,413 1,281 24 3,962 16,054 Noncurrent assets: Restricted cash with fiscal agent - 1 487 - - 488 Advances to other funds - - - 97 - 97 Capital assets: Nondepreciable Land - 2,155 1,333 - 330 3,818 Construction in progress - 24 221 - 1,431 1,676 Water rights - - - - - - Other property - 1,968 - - - 1,968 Depreciable Infrastructure, net - 22,532 6 - 1,684 24,222 Structures and improvements, net - 32,869 7,551 - 7,625 48,045 Equipment, net - 176 261 - 331 768 Other property, net - - - - 496 496 Total noncurrent assets - 59,725 9,859 97 11,897 81,578 Total assets 1,374 69,138 11,140 121 15,859 97,632 Deferred Outflows of Resources Deferred pensions - - 1,012 - - 1,012 Deferred OPEB - - 96 - - 96 Total deferred outflows of resources - - 1,108 - - 1,108 Liabilities Current liabilities: Accounts payable 18 136 60 - 19 233 Salaries and benefits payable - - 63 - - 63 Deposits from others - 208 1 - 178 387 Interest payable - 339 32 - 21 392 Unearned revenue 240 13 - - 54 307 Due to other funds - - - - 400 400 Accrued vacation and sick leave - current - - 81 - - 81 Notes and bonds payable - current - 2,245 337 18 206 2,806 Total current liabilities 258 2,941 574 18 878 4,669 Noncurrent liabilities: Advances from other funds - - 121 - 460 581 Accrued vacation and sick leave - noncurrent - - 129 - - 129 Notes and bonds payable - noncurrent - 30,016 3,502 79 3,365 36,962 Net OPEB Liability - - 126 - - 126 Net Pension Liability - - 3,384 - - 3,384 Total noncurrent liabilities - 30,016 7,262 79 3,825 41,182 Total liabilities 258 32,957 7,836 97 4,703 45,851 Deferred Inflows of Resources Deferred pensions - - 259 - - 259 Deferred OPEB - - 12 - - 12 Total deferred inflows of resources - - 271 - - 271 Net Position Net investment in capital assets - 27,463 5,533 - 8,326 41,322 Unrestricted 1,116 8,718 (1,392) 24 2,830 11,296 Total net position $ 1,116 $ 36,181 $ 4,141 $ 24 $ 11,156 $ 52,618 125 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) General Flood Control Zone - Lopez County Salinas Dam Flood Control Golf Lopez Park Service Areas Total Operating revenues Charges for services $ 913 $ 7,148 $ 2,720 $ - $ 3,894 $ 14,675 Other revenues 4 22 13 - 67 106 Total operating revenues 917 7,170 2,733 - 3,961 14,781 Operating expenses Salaries and benefits - - 1,932 - - 1,932 Services and supplies 1,117 4,145 969 - 3,980 10,211 Other charges - 3 - - - 3 Depreciation - 1,520 368 - 510 2,398 Countywide cost allocation 8 56 94 - 59 217 Total operating expenses 1,125 5,724 3,363 - 4,549 14,761 Operating income (loss) (208) 1,446 (630) - (588) 20 Nonoperating revenues (expenses) Property taxes - 1,143 - - 521 1,664 Interest income 37 263 4 1 105 410 Interest expense - (1,194) (79) (3) (127) (1,403) Aid from governmental agencies 26 5 - - 13 44 Total nonoperating revenues (expenses) 63 217 (75) (2) 512 715 Income (loss) before contributions and transfers (145) 1,663 (705) (2) (76) 735 Transfers in - - 396 3 63 462 Transfers out - - (48) - (6) (54) Change in net position (145) 1,663 (357) 1 (19) 1,143 Net position - beginning 1,261 34,518 4,498 23 11,175 51,475 Net position - ending $ 1,116 $ 36,181 $ 4,141 $ 24 $ 11,156 $ 52,618 126 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) General Flood Control Zone - Lopez County Salinas Dam Flood Control Golf Lopez Park Service Areas Total Cash Flows From Operating Activities Receipts from customers $ 1,231 $ 6,563 $ 2,716 $ - $ 3,679 $ 14,189 Payments to employees for services - - (1,020) - - (1,020) Payments for goods and services (1,120) (4,139) (1,547) - (4,023) (10,829) Net cash provided (used) by operating activities 111 2,424 149 - (344) 2,340 Cash Flows from Noncapital Financing Activities Property tax proceeds - 1,143 - - 521 1,664 Grants and subsidies from other governmental agencies 27 7 - - 13 47 Advances from other funds - - - - 400 400 Transfers from other funds - - 396 3 63 462 Transfers to other funds - - (48) - (6) (54) Net cash provided (used) by noncapital financing activities 27 1,150 348 3 991 2,519 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets - - (62) - (404) (466) Proceeds from sale of capital assets - 5 - - - 5 Advances to other funds - - - 18 - 18 Advances from other funds - - 1 - - 1 Principal paid on capital debt - (2,173) (323) (18) (199) (2,713) Interest paid on capital debt - (1,267) (114) (3) (128) (1,512) Net cash provided (used) by capital and related financing activities - (3,435) (498) (3) (731) (4,667) Cash Flows from Investing Activities Interest received 37 263 4 1 105 410 Net cash provided (used) by investing activities 37 263 4 1 105 410 Net increase (decrease) in cash and cash equivalents 175 402 3 1 21 602 Cash and cash equivalents at beginning of year 1,199 8,938 787 23 3,582 14,529 Cash and cash equivalents at end of year $ 1,374 $ 9,340 $ 790 $ 24 $ 3,603 $ 15,131 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ (208) $ 1,446 $ (630) $ - $ (588) $ 20 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense - 1,520 368 - 510 2,398 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net 75 (16) (21) - (64) (26) Inventory - - (17) - - (17) Prepaid items - (10) 94 - - 84 Deferred outflows - pensions - - (476) - - (476) Deferred outflows - OPEB - - (92) - - (92) Increase (decrease) in: Accounts payable 5 35 (29) - - 11 Deposits from others - 40 - - 3 43 Salaries and benefits payable - - 6 - - 6 Deferred inflows - pensions - - (87) - - (87) Deferred inflows - OPEB - - 12 - - 12 Net OPEB liability - - 77 - - 77 Net pension liability - - 944 - - 944 Unearned revenue 239 (591) - - (205) (557) Accrued vacation and sick leave - - - - - - Total adjustments 319 978 779 - 244 2,320 Net cash provided (used) by operating activities $ 111 $ 2,424 $ 149 $ - $ (344) $ 2,340 127 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS ________________________________________________________________ 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 law enforcement vehicles for use by various County departments at the lowest possible maintenance and operating costs. Public Works Accounts for resources used to provide comprehensive engineering services in the form of manpower, equipment and contractual services and supplies to all departments, agencies, and private citizens as requested or required by state law or local ordinance. Insurance Funds Account for the operations of the County’s Workers’ Compensation, Protected Self-Insurance, Unemployment, Dental Insurance, and Other Post-Employment Benefits (OPEB) programs. 128 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2019 (IN THOUSANDS) Combined Public Insurance Garage Works (5 Funds) Total Assets Current assets: Cash and cash equivalents $ 4,874 $ 15,574 $ 26,585 $ 47,033 Accounts receivable, net - 8 - 8 Inventories 11 627 - 638 Prepaid items - 6 - 6 Total current assets 4,885 16,215 26,585 47,685 Noncurrent assets: Capital assets: Structures and improvements, net 3 274 - 277 Equipment, net 5,635 7,777 - 13,412 Total noncurrent assets 5,638 8,051 - 13,689 Total assets 10,523 24,266 26,585 61,374 Deferred Outflows of Resources Deferred pensions 979 19,173 - 20,152 Deferred OPEB 106 1,836 - 1,942 Total deferred outflows of resources 1,085 21,009 - 22,094 Liabilities Current liabilities: Accounts payable 307 478 214 999 Salaries and benefits payable 54 1,103 8 1,165 Self-insurance liability - - 3,752 3,752 Deposits from others - 1,089 - 1,089 Accrued vacation and sick leave 80 1,960 - 2,040 Total current liabilities 441 4,630 3,974 9,045 Noncurrent liabilities: Self-insurance liability - - 15,816 15,816 Accrued vacation and sick leave 107 689 - 796 Net OPEB liability 139 2,418 - 2,557 Net pension liability 3,269 64,050 - 67,319 Total noncurrent liabilities 3,515 67,157 15,816 86,488 Total liabilities 3,956 71,787 19,790 95,533 Deferred Inflows of Resources Deferred pensions 251 4,917 - 5,168 Deferred OPEB 13 221 - 234 Total deferred inflows of resources 264 5,138 - 5,402 Net Position Net investment in capital assets 5,638 8,051 - 13,689 Unrestricted 1,750 (39,701) 6,795 (31,156) Total net position $ 7,388 $ (31,650) $ 6,795 $ (17,467) 129 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Combined Public Insurance Garage Works (5 Funds) Total Operating revenues Charges for services $ 6,589 $ 38,042 $ 12,812 $ 57,443 Other revenues 97 82 - 179 Total operating revenues 6,686 38,124 12,812 57,622 Operating expenses Salaries and benefits 1,699 36,786 258 38,743 Services and supplies 2,934 7,708 8,926 19,568 Insurance benefit payments - - 5,143 5,143 Depreciation 1,828 906 - 2,734 Countywide cost allocation 136 117 307 560 Total operating expenses 6,597 45,517 14,634 66,748 Operating income (loss) 89 (7,393) (1,822) (9,126) Nonoperating revenues (expenses) Interest income 126 390 799 1,315 Sale of capital assets 233 26 - 259 Other revenues (expense) - - - - Total nonoperating revenues (expenses) 359 416 799 1,574 Income (loss) before transfers 448 (6,977) (1,023) (7,552) Transfers in - - - - Transfers out (59) (1,249) - (1,308) Change in net position 389 (8,226) (1,023) (8,860) Net position - beginning 6,999 (23,424) 7,818 (8,607) Net position - ending $ 7,388 $ (31,650) $ 6,795 $ (17,467) 130 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Combined Public Insurance Garage Works (5 Funds) Total Cash Flows From Operating Activities Receipts from interfund billings $ 6,686 $ 38,130 $ 12,812 $ 57,628 Payments for goods and services (2,897) (7,768) (4,687) (15,352) Payments to employees for services (1,496) (28,529) - (30,025) Payments for insurance benefits - - (4,480) (4,480) Payments for premiums - - (4,786) (4,786) Net cash provided (used) by operating activities 2,293 1,833 (1,141) 2,985 Cash Flows from Noncapital Financing Activities Transfers from other funds - - - - Transfers to other funds (59) (1,249) - (1,308) Net cash provided (used) by noncapital financing activities (59) (1,249) - (1,308) Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets (1,729) (1,237) - (2,966) Proceeds from sale of capital assets 245 26 - 271 Net cash provided (used) by capital and related financing activities (1,484) (1,211) - (2,695) Cash Flows from Investing Activities Interest received 126 390 799 1,315 Net cash provided (used) by investing activities 126 390 799 1,315 Net increase (decrease) in cash and cash equivalents 876 (237) (342) 297 Cash and cash equivalents at beginning of year 3,998 15,811 26,927 46,736 Cash and cash equivalents at end of year $ 4,874 $ 15,574 $ 26,585 $ 47,033 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 89 $ (7,393) $ (1,822) $ (9,126) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 1,828 906 - 2,734 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net - 7 - 7 Inventory 4 (152) - (148) Prepaid expenses - 12 - 12 Deferred outflows - pensions (417) (9,537) - (9,954) Deferred outflows - OPEB (102) (1,751) - (1,853) Increase (decrease) in: - Accounts payable 168 140 (240) 68 Deposits from others - 55 - 55 Salaries and benefits payable 4 (177) 259 86 Deferred inflows - pensions (77) (1,740) - (1,817) Deferred inflows - OPEB 13 221 - 234 Net OPEB liability 87 1,512 - 1,599 Net pension liability 696 19,730 - 20,426 Self-insurance liability - - 662 662 Total adjustments 2,204 9,226 681 12,111 Net cash provided (used) by operating activities $ 2,293 $ 1,833 $ (1,141) $ 2,985 131 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS - INSURANCE JUNE 30, 2019 (IN THOUSANDS) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Assets Current assets: Cash and cash equivalents $ 20,047 $ 5,768 $ 104 $ 560 $ 106 $ 26,585 Prepaid expenses - - - - - - Total current assets 20,047 5,768 104 560 106 26,585 Total assets 20,047 5,768 104 560 106 26,585 Liabilities Current liabilities: Accounts payable 161 20 - 33 - 214 Salaries and benefits payable 8 - - - - 8 Self-insurance liability 2,632 1,120 - - - 3,752 Total current liabilities 2,801 1,140 - 33 - 3,974 Noncurrent liabilities: Self-insurance liability 13,418 2,398 - - - 15,816 Total noncurrent liabilities 13,418 2,398 - - - 15,816 Total liabilities 16,219 3,538 - 33 - 19,790 Net Position Unrestricted 3,828 2,230 104 527 106 6,795 Total net position $ 3,828 $ 2,230 $ 104 $ 527 $ 106 $ 6,795 132 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, 2019 (IN THOUSANDS) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Operating revenues Charges for services $ 5,849 $ 2,750 $ 155 $ 1,583 $ 2,475 $ 12,812 Total operating revenues 5,849 2,750 155 1,583 2,475 12,812 Operating expenses Salaries and benefits 258 - - - - 258 Services and supplies 3,980 3,068 29 207 1,642 8,926 Insurance benefit payments 1,958 598 191 1,508 888 5,143 Countywide cost allocation 141 160 1 5 - 307 Total operating expenses 6,337 3,826 221 1,720 2,530 14,634 Operating income (loss) (488) (1,076) (66) (137) (55) (1,822) Nonoperating revenues (expenses) Interest income 587 181 4 21 6 799 Total nonoperating revenues (expenses) 587 181 4 21 6 799 Income (loss) before transfers 99 (895) (62) (116) (49) (1,023) Transfers in - - - - - - Transfers out - - - - - - Change in net position 99 (895) (62) (116) (49) (1,023) Net position - beginning 3,729 3,125 166 643 155 7,818 Net position - ending $ 3,828 $ 2,230 $ 104 $ 527 $ 106 $ 6,795 133 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS - INSURANCE FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Cash Flows From Operating Activities Receipts from interfund billings $ 5,849 $ 2,750 $ 155 $ 1,583 $ 2,475 $ 12,812 Payments for goods and services (3,080) (1,316) (30) (238) (23) (4,687) Payments to employees for services - - - - - - Payments for insurance benefits (1,830) (64) (191) (1,508) (887) (4,480) Payments for premiums (1,273) (1,893) - - (1,620) (4,786) Net cash provided (used) by operating activities (334) (523) (66) (163) (55) (1,141) Cash Flows from Investing Activities Interest received 587 181 4 21 6 799 Net cash provided (used) by investing activities 587 181 4 21 6 799 Net increase (decrease) in cash and cash equivalents 253 (342) (62) (142) (49) (342) Cash and cash equivalents at beginning of year 19,794 6,110 166 702 155 26,927 Cash and cash equivalents at end of year $ 20,047 $ 5,768 $ 104 $ 560 $ 106 $ 26,585 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ (488) $ (1,076) $ (66) $ (137) $ (55) $ (1,822) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in assets and liabilities: Increase (decrease) in: Accounts payable (232) 18 - (26) - (240) Salaries and benefits payable 259 - - - - 259 Self-insurance liability 127 535 - - - 662 Total adjustments 154 553 - (26) - 681 Net cash provided (used) by operating activities $ (334) $ (523) $ (66) $ (163) $ (55) $ (1,141) 134 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS ________________________________________________________________ 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 Account for temporary holding of funds for tax assessment areas created under the 1915 Improvement Act. Clearing Funds Serve as a temporary holding fund for subsequent disposition to an outside agency or taxing authority. Other Funds Account for temporary holding of funds that are not specifically classified in other agency categories. INVESTMENT TRUST FUNDS These funds are used by the County to account for the assets of legally separate entities who deposit cash with the County Treasurer. These include school and community college districts: other special districts governed by local boards, regional boards and authorities: courts and pass through funds for tax collections for cities. These funds represent the assets, primarily cash and investments, and the related liability of the County to disburse these monies on demand. The County combines Investment Trust Funds into four reporting types because of their similar nature: School Districts Special Districts, Courts, and Other Local Boards. 135 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF FIDUCIARY NET POSITION AGENCY FUNDS JUNE 30, 2019 (IN THOUSANDS) Clearing and 1915 Act Other Revolving Funds Service Funds Agency Funds (88 Funds) (17 Funds) (30 Funds) Total ASSETS Cash and cash equivalents $ 78,411 $ 812 $ 38,141 $ 117,364 Total assets $ 78,411 $ 812 $ 38,141 $ 117,364 LIABILITIES Assets held as agency for others $ 78,411 $ 812 $ 38,141 $ 117,364 Total liabilities $ 78,411 $ 812 $ 38,141 $ 117,364 136 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Balance Balance July 01, 2018 Additions Deletions June 30, 2019 Clearing and Revolving Funds (88 Funds) Assets: Cash and cash equivalents $ 65,134 $ 1,337,523 $ 1,324,246 $ 78,411 Total assets $ 65,134 $ 1,337,523 $ 1,324,246 $ 78,411 Liabilities: Assets held as agency for others $ 65,134 $ 1,337,523 $ 1,324,246 $ 78,411 Total liabilities $ 65,134 $ 1,337,523 $ 1,324,246 $ 78,411 1915 Act Service Funds (17 Funds) Assets: Cash and cash equivalents $ 903 $ 164 $ 255 $ 812 Total assets $ 903 $ 164 $ 255 $ 812 Liabilities: Assets held as agency for others $ 903 $ 164 $ 255 $ 812 Total liabilities $ 903 $ 164 $ 255 $ 812 Other Agency Funds (30 Funds) Assets: Cash and cash equivalents $ 39,060 $ 4 40,731 $ 4 41,650 $ 38,141 Total assets $ 39,060 $ 4 40,731 $ 4 41,650 $ 38,141 Liabilities: Assets held as agency for others $ 39,060 $ 4 40,731 $ 4 41,650 $ 38,141 Total liabilities $ 39,060 $ 4 40,731 $ 4 41,650 $ 38,141 Total All Agency Funds Assets: Cash and cash equivalents $ 105,097 $ 1,778,418 $ 1,766,151 $ 117,364 Total assets $ 105,097 $ 1,778,418 $ 1,766,151 $ 117,364 Liabilities: Assets held as agency for others $ 105,097 $ 1,778,418 $ 1,766,151 $ 117,364 Total liabilities $ 105,097 $ 1,778,418 $ 1,766,151 $ 117,364 137 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS JUNE 30, 2019 (IN THOUSANDS) School Special Other Districts Districts Courts Local Boards (38 Funds) (32 Funds) (6 Funds) (19 Funds) Total ASSETS Cash and cash equivalents $ 432,978 $ 19,010 $ 1,869 $ 27,540 $ 481,397 Total assets $ 432,978 $ 19,010 $ 1,869 $ 27,540 $ 481,397 NET POSITION Net position held in trust for pool participants $ 432,978 $ 19,010 $ 1,869 $ 27,540 $ 481,397 Total Net Position $ 432,978 $ 19,010 $ 1,869 $ 27,540 $ 481,397 138 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) School Special Other Districts Districts Courts Local Boards (38 Funds) (32 Funds) (6 Funds) (19 Funds) Total Additions Contributions to pooled investments $ 1,000,072 $ 10,908 $ 20,058 $ 48,003 $ 1,079,041 Interest 6,749 406 - 364 7,519 Total additions 1,006,821 11,314 20,058 48,367 1,086,560 Deductions Distributions from investment pool 999,008 10,197 20,139 41,302 1,070,646 Total deductions 999,008 10,197 20,139 41,302 1,070,646 Change in net position 7,813 1,117 (81) 7,065 15,914 Net position - beginning 425,165 17,893 1,950 20,475 465,483 Net position - ending $ 432,978 $ 19,010 $ 1,869 $ 27,540 $ 481,397 139 ________________________________________________________________ GENERAL FUND DETAIL BUDGETARY COMPARISON SCHEDULES ________________________________________________________________ COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget General Government - Expenditures Legislative and Administrative Administrative Office: Salaries, wages, and benefits $ 2,112 $ 2,112 $ 1,795 $ 317 Services and supplies 171 619 270 349 Other charges - 300 150 150 Expenditure transfers and reimbursements (85) (85) (85) - - Total 2,198 2,946 2,130 816 Board of Supervisors: Salaries, wages, and benefits 1,573 1,573 1,430 143 Services and supplies 222 223 206 17 Expenditure transfers and reimbursements (42) (42) (43) 1 Total 1,753 1,754 1,593 161 Clerk/Recorder: Salaries, wages, and benefits 2,360 2,360 2,107 253 Services and supplies 1,210 1,513 1,188 325 Capital outlay - 6 - 6 Expenditure transfers and reimbursements - - (1) 1 Total 3,570 3,879 3,294 585 Total Legislative and Administrative 7,521 8,579 7,017 1,562 Finance Assessor: Salaries, wages, and benefits 9,788 9,788 8,791 997 Services and supplies 1,027 1,519 1,140 379 Capital outlay 10 18 8 10 Total 10,825 11,325 9,939 1,386 Auditor-Controller-Treasurer-Tax Collector Public Administrator: Salaries, wages, and benefits 8,136 8,136 6,802 1,334 Services and supplies 673 729 582 147 Other charges - 1 1 - Capital outlay 100 108 107 1 Expenditure transfers and reimbursements (20) (20) (18) (2) Total 8,889 8,954 7,474 1,480 Total Finance 19,714 20,279 17,413 2,866 Counsel County Counsel: Salaries, wages, and benefits 3,978 3,773 3,634 139 Services and supplies 477 1,380 954 426 Total Counsel 4,455 5,153 4,588 565 140 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget General Government - Expenditures (continued) Personnel Personnel: Salaries, wages, and benefits $ 3,192 $ 3,548 $ 3,226 $ 322 Services and supplies 819 1,011 823 188 Expenditure transfers and reimbursement - (356) (313) (43) Total Personnel 4,011 4,203 3,736 467 Property Management Facilities Management: Salaries, wages, and benefits 4,530 4,530 3,965 565 Services and supplies 4,089 4,192 3,765 427 Other charges 28 28 - 28 Expenditure transfers and reimbursements (1,819) (1,819) (1,945) 126 Total 6,828 6,931 5,785 1,146 Maintenance Projects: Services and supplies 4,012 13,562 4,769 8,793 Total 4,012 13,562 4,769 8,793 Central Services Salaries, wages, and benefits 1,782 1,764 1,672 92 Services and supplies 2,742 2,772 2,765 7 Other charges 107 110 110 - Expenditure transfers and reimbursements (556) (556) (537) (19) Total 4,075 4,090 4,010 80 Total Property Management 14,915 24,583 14,564 10,019 Other General Information Technology: Salaries, wages, and benefits 13,343 13,294 12,112 1,182 Services and supplies 4,901 5,079 4,392 687 Capital outlay - 13 - 13 Expenditure transfers and reimbursements (5,789) (5,789) (5,533) (256) Total 12,455 12,597 10,971 1,626 Risk Management: Salaries, wages, and benefits 970 970 892 78 Services and supplies 1,019 1,019 879 140 Expenditure transfers and reimbursements (62) (62) (62) - Total 1,927 1,927 1,709 218 141 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget General Government - Expenditures (continued) Other General (continued) Non-Department Financing Uses: Other Charges $ - $ 60 $ - $ 60 Expenditure transfers and reimbursements (13,164) (13,164) (13,218) 54 Total (13,164) (13,104) (13,218) 114 Contributions to Other Agencies: Services and supplies 2,448 2,644 2,013 631 Other charges - - 10 (10) Total 2,448 2,644 2,023 621 Non-Department Other: Services and supplies 474 481 378 103 Total 474 481 378 103 Total Other General 4,140 4,545 1,863 2,682 Total General Government 54,756 67,342 49,181 18,161 Public Protection - Expenditures Judicial Court Operations Fund: Other charges 2,427 2,559 2,407 152 Total 2,427 2,559 2,407 152 District Attorney: Salaries, wages, and benefits 16,314 16,229 15,042 1,187 Services and supplies 1,956 2,316 2,204 112 Other charges 147 153 122 31 Capital outlay 6 63 46 17 Expenditure transfers and reimbursements (26) (26) (25) (1) Total 18,397 18,735 17,389 1,346 Child Support Services: Salaries, wages, and benefits 3,772 3,622 3,034 588 Services and supplies 901 1,111 849 262 Total 4,673 4,733 3,883 850 Grand Jury: Salaries, wages, and benefits 38 38 17 21 Services and supplies 96 97 75 22 Expenditure transfers and reimbursements - - (7) 7 Total 134 135 85 50 142 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures (continued) Judicial (continued) Public Defender: Services and supplies $ 7,074 $ 7,074 $ 6,779 $ 295 Total 7,074 7,074 6,779 295 Total Judicial 32,705 33,236 30,543 2,693 Police Protection Sheriff-Coroner: Salaries, wages, and benefits 62,996 67,067 64,251 2,816 Services and supplies 13,205 13,569 13,225 344 Other charges - 169 99 70 Capital outlay 250 926 642 284 Expenditure transfers and reimbursements (121) (253) (269) 16 Total Police Protection 76,330 81,478 77,948 3,530 Detention and Correction Probation Department: Salaries, wages, and benefits 18,729 18,728 17,069 1,659 Services and supplies 5,034 5,075 4,806 269 Capital outlay - 35 - 35 Expenditure transfers and reimbursements (257) (257) (268) 11 Total Detention and Correction 23,506 23,581 21,607 1,974 Fire Protection County Fire: Salaries, wages, and benefits - 195 195 - Services and supplies 24,433 26,134 24,576 1,558 Other charges - 156 61 95 Capital outlay 691 2,277 379 1,898 Total Fire Protection 25,124 28,762 25,211 3,551 Protective Inspection Agricultural Commissioner: Salaries, wages, and benefits 5,371 5,293 5,056 237 Services and supplies 893 971 891 80 Expenditure transfers and reimbursements (2) (2) (2) - Total Protective Inspection 6,262 6,262 5,945 317 Other Protection Animal Services: Salaries, wages, and benefits 1,934 1,889 1,800 89 Services and supplies 891 947 937 10 Capital outlay 7 7 7 - Total 2,832 2,843 2,744 99 143 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures (continued) Other Protection (continued) Emergency Services: Salaries, wages, and benefits $ 912 $ 973 $ 934 $ 39 Services and supplies 553 887 653 234 Other charges 420 429 148 281 Capital outlay 15 51 29 22 Total 1,900 2,340 1,764 576 Planning Department: Salaries, wages, and benefits 12,615 11,491 11,007 484 Services and supplies 2,374 5,079 3,417 1,662 Other charges - 142 124 18 Expenditure transfers and reimbursements - - (1) 1 Total 14,989 16,712 14,547 2,165 Waste Management: Services and supplies 1,150 1,166 793 373 Other charges 14 14 1 13 Total 1,164 1,180 794 386 Total Other Protection 20,885 23,075 19,849 3,226 Total Public Protection 184,812 196,394 181,103 15,291 Public Ways and Facilities - Expenditures Public Works: Services and supplies 4,664 6,708 2,665 4,043 Other charges - 1,450 885 565 Capital outlay - 44 44 - Total 4,664 8,202 3,594 4,608 Total Public Ways and facilities 4,664 8,202 3,594 4,608 Health and Sanitation - Expenditures Health Public Health: Salaries, wages, and benefits 22,606 20,698 19,487 1,211 Services and supplies 6,655 7,639 6,465 1,174 Other charges 1,306 2,505 1,693 812 Capital outlay 40 336 73 263 Expenditure transfers and reimbursements (2,233) (1,747) (2,049) 302 Total 28,374 29,431 25,669 3,762 144 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget Health and Sanitation - Expenditures (continued) Health (continued) Behavioral Health: Salaries, wages, and benefits $ 37,674 $ 34,300 $ 33,064 $ 1,236 Services and supplies 35,579 42,265 40,405 1,860 Other charges 1,392 1,637 1,612 25 Capital outlay - 57 57 - Expenditure transfers and reimbursements (1,203) (1,642) (1,542) (100) Total 73,442 76,617 73,596 3,021 Total Health 101,816 106,048 99,265 6,783 Total Health and Sanitation 101,816 106,048 99,265 6,783 Public Assistance - Expenditures Administration Department of Social Services: Salaries, wages, and benefits 52,687 52,872 47,649 5,223 Services and supplies 19,724 19,727 18,125 1,602 Other charges 12,285 13,573 10,567 3,006 Capital outlay 39 39 15 24 Expenditure transfers and reimbursements (66) (101) (66) (35) Total Administration 84,669 86,110 76,290 9,820 Aid Programs Aid Foster Care Non-Fed: Services and supplies 92 92 92 - Other charges 25,643 26,482 25,765 717 Expenditure transfers and reimbursement (238) (238) (94) (144) Total 25,497 26,336 25,763 573 Calworks Assistance: Other charges 11,374 11,354 9,444 1,910 Total 11,374 11,354 9,444 1,910 Total Aid Programs 36,871 37,690 35,207 2,483 145 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget Public Assistance - Expenditures (continued) General Relief General Relief: Other charges $ 1,141 $ 1,246 $ 1,221 $ 25 Total General Relief 1,141 1,246 1,221 25 Veterans Service Veterans Service: Salaries, wages, and benefits 680 752 695 57 Services and supplies 96 98 93 5 Other charges - 105 94 11 Total Veterans Service 776 955 882 73 Other Assistance Law Enforcement Med Care: Salaries, wages, and benefits 4,562 2,773 2,623 150 Services and supplies 3,803 5,724 5,217 507 Expenditure transfers and reimbursements (868) (885) (853) (32) Total Other Assistance 7,497 7,612 6,987 625 Total Public Assistance 130,954 133,613 120,587 13,026 Education - Expenditures Agricultural Education UC Cooperative Extension Salaries, wages, and benefits 492 492 468 24 Services and supplies 121 119 98 21 Capital outlay 7 9 9 - Total Agricultural Education 620 620 575 45 Total Education 620 620 575 45 Total General Fund - Expenditures 477,622 512,219 454,305 57,914 (Before Contingencies) 146 COUNTY OF SAN LUIS OBISPO GENERAL FUND DETAIL SCHEDULE OF EXPENDITURES BUDGET TO ACTUAL COMPARISON (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2019 (IN THOUSANDS) Original Final Variance with Description Budget Budget Actual Final Budget Contingencies Appropriation for Contingencies Contingencies - General Fund: Appropriation for contingency $ 24,355 $ 19,401 $ - $ 19,401 Total 24,355 19,401 - 19,401 Total Appropriation for Contingency 24,355 19,401 - 19,401 Total Contingency 24,355 19,401 - 19,401 Total General Fund Expenditures $ 501,977 $ 531,620 $ 454,305 $ 77,315 Explanation of Differences between Budgetary Outflows and GAAP Expenditures Uses/outflows of resources Actual amounts (budgetary basis) from the Budget to Actual Comparison Schedule $ 454,305 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 6,325 Total expenditures as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 460,630 147 ________________________________________________________________ STATISTICAL SECTION ________________________________________________________________ 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 .………… 149 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 .……………………………………………………………………………………………………… 156 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 ..………………………………………………………………… 161 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 ………………………………………………………………….. 164 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 ………………………………………………………………… 166 148 COUNTY OF SAN LUIS OBISPO NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 Governmental Activities Net investment in capital assets $ 1,071,844 $ 1,084,978 $ 1,099,885 $ 1,103,924 $ 1,112,934 $ 1,130,241 $ 1,168,573 $ 1,178,967 $ 1,185,073 $ 1,188,830 Restricted 36,385 36,258 31,477 28,863 43,109 37,722 41,230 64,822 29,836 41,281 Unrestricted 206,786 234,786 265,454 304,257 325,113 (150,074) (170,962) (226,970) (217,606) (220,206) Total governmental activities net position $ 1,315,015 $ 1,356,022 $ 1,396,816 $ 1,437,044 $ 1,481,156 $ 1,017,889 $ 1,038,841 $ 1,016,819 $ 997,303 $ 1,009,905 Business-type Activities Net investment in capital assets $ 160,627 $ 149,097 $ 153,801 $ 167,138 $ 188,485 $ 213,455 $ 237,157 $ 270,246 $ 283,410 $ 285,888 Unrestricted 18,117 38,665 33,081 58,433 98,097 97,173 93,158 85,316 73,113 83,039 Total business-type activities net position $ 178,744 $ 187,762 $ 186,882 $ 225,571 $ 286,582 $ 310,628 $ 330,315 $ 355,562 $ 356,523 $ 368,927 Total Primary Government Net investment in capital assets $ 1,232,471 $ 1,234,075 $ 1,253,686 $ 1,271,062 $ 1,301,419 $ 1,343,696 $ 1,405,730 $ 1,449,213 $ 1,468,483 $ 1,474,718 Restricted 36,385 36,258 31,477 28,863 43,109 37,722 41,230 64,822 29,836 41,281 Unrestricted 224,903 273,451 298,535 362,690 423,210 (52,901) (77,804) (141,654) (144,493) (137,167) Total primary government net position $ 1,493,759 $ 1,543,784 $ 1,583,698 $ 1,662,615 $ 1,767,738 $ 1,328,517 $ 1,369,156 $ 1,372,381 $ 1,353,826 $ 1,378,832 Notes: With the implementation of GASB Statement No. 68, which required the presentation of the County's net pension obligation, Unrestricted Net Position became negative. Sources: Statement of Net Assets for FY 2009-2010 through 2011-2012 Statement of Net Position beginning in 2012-2013 and ongoing 149 COUNTY OF SAN LUIS OBISPO CHANGES IN NET POSITION LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 Expenses Governmental Activities General government $ 36,561 $ 35,344 $ 35,231 $ 34,507 $ 36,866 $ 45,598 $ 53,282 $ 56,390 $ 56,858 $ 54,434 Public protection 134,768 132,413 136,219 142,353 148,135 162,432 170,134 187,255 183,814 213,809 Public ways and facilities 24,927 27,365 27,120 28,474 28,253 34,136 33,418 32,098 41,606 34,202 Health and sanitation 68,199 66,657 65,799 69,222 74,313 78,137 88,326 99,150 103,822 119,259 Public assistance 96,645 98,841 96,435 97,929 99,449 110,470 118,089 125,102 122,753 131,432 Education 10,390 10,057 10,000 9,922 9,611 9,457 11,934 12,787 12,754 12,698 Recreation and cultural services 8,708 7,363 7,344 9,735 7,745 9,755 8,702 10,385 8,927 11,891 Interest on long term debt 6,356 6,787 6,620 6,041 5,270 5,124 4,602 4,555 11,840 1,468 Total Governmental Activities Expenses 386,554 384,827 384,768 398,183 409,642 455,109 488,487 527,722 542,374 579,193 Business-type Activities Expenses Airport 5,204 7,732 5,422 5,435 5,664 6,187 6,117 6,391 7,966 8,398 Golf 2,974 2,690 2,863 2,779 2,608 2,968 3,131 3,111 3,297 3,491 State Water Contract 5,630 6,705 6,761 5,536 5,992 6,351 5,848 5,571 5,909 6,973 Nacimiento Water Contract 10,613 11,844 11,901 14,738 13,840 15,776 14,888 14,191 14,044 14,318 Lopez Flood Control 5,813 6,499 5,752 6,548 6,116 6,128 6,220 6,387 7,072 7,004 Lopez Park - - - - - 4 4 4 3 3 General Flood Control Zone - Salinas Dam 831 928 1,816 746 809 845 824 851 1,056 1,142 Transit 1,143 1,105 8 - - - - - - - County Service Areas 3,744 3,877 3,836 3,779 3,857 4,194 4,065 4,218 4,445 4,747 Los Osos Wastewater - 5 6,672 344 231 235 3,807 10,322 10,918 11,544 Total Business-type Activities Expenses 35,952 41,385 45,031 39,905 39,117 42,688 44,904 51,046 54,710 57,620 Total Primary Government Expenses $ 422,506 $ 426,212 $ 429,799 $ 438,088 $ 448,759 $ 497,797 $ 533,391 $ 578,768 $ 597,084 $ 636,813 Program Revenues Governmental Activities Fees, Fines, Charges for Services General government $ 12,878 $ 13,971 $ 17,545 $ 16,575 $ 14,678 $ 12,407 $ 13,702 $ 14,839 $ 12,937 $ 13,484 Public protection 21,072 20,843 15,679 16,352 23,035 20,774 20,768 21,231 23,666 22,946 Public ways and facilities 3,234 11,549 5,069 5,465 4,356 4,255 9,434 7,462 6,155 5,721 Health and sanitation 7,026 7,453 6,014 5,196 6,570 6,631 7,179 6,757 7,501 7,698 Public assistance 925 2,399 2,366 2,920 2,070 2,077 2,107 2,032 1,763 1,194 Education 2,304 2,037 2,545 3,583 1,723 2,998 1,952 1,644 2,006 1,943 Recreation and cultural services 3,822 3,714 3,952 4,435 4,537 5,056 4,975 5,127 5,592 5,515 Operating Grants and Contributions General Government 377 1,120 628 122 252 54 735 748 321 200 Public Protection 40,034 37,244 45,646 50,477 54,233 62,359 63,528 52,205 58,184 59,592 Public ways and facilities 10,679 9,446 11,813 15,018 14,688 14,145 11,025 9,918 11,506 10,485 Health and sanitation 57,784 48,567 44,741 55,064 57,344 62,338 61,950 67,626 76,494 76,211 Public assistance 81,525 86,479 85,505 87,912 89,640 94,775 98,414 102,784 105,848 107,758 Education 259 289 175 175 102 105 124 132 173 143 Recreation and cultural services 177 357 18 350 - 131 153 273 671 200 Capital Grants and Contributions General government 449 279 843 8 69 156 45 - 349 930 Public protection - - - - 3,315 9,701 4,420 7,820 656 1,197 Public ways and facilities 10,259 7,411 12,930 3,479 5,570 6,435 6,031 6,655 8,893 14,361 Health and sanitation - - - - - - - - - - Public assistance - - - - - - - - - - Recreation and cultural services 173 81 247 50 282 1,776 10,804 1,157 191 2 8 Total Governmental Activities Revenues 252,977 253,239 255,716 267,181 282,464 306,173 317,346 308,410 322,906 329,606 Source: Statement of Activities (continued) 150 COUNTY OF SAN LUIS OBISPO CHANGES IN NET POSITION (CONTINUED) LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 Business-type Activities Fees, Fines, Charges for Services Airport 3,541 3,888 3,719 4,053 4,493 4,883 5,165 5,662 7,158 8,947 Golf 2,653 2,590 2,690 2,639 2,779 2,967 2,589 2,291 2,584 2,717 State Water Contract 6,513 6,453 6,609 6,185 6,358 6,562 6,846 5,941 6,110 7,656 Nacimiento Water Contract 355 7,968 13,893 13,800 13,685 9,682 17,048 15,149 15,709 16,947 Lopez Flood Control 6,164 6,359 6,440 6,174 6,123 6,208 6,530 6,708 6,677 7,148 Lopez Park - - - - - - - - - - General Flood Control Zone - Salinas Dam 661 1,870 1,252 730 861 794 960 904 909 913 County Service Areas 2,784 3,090 3,186 3,352 3,312 3,408 - 2,301 3,662 3,894 Los Osos Wastewater - - - - - - 3,551 3,620 4,467 5,100 Operating Grants and Contributions Airport 182 180 372 132 127 126 126 126 396 328 Golf - - 5 - - 269 - 1,017 - - State Water Contract 8 10 10 13 13 13 13 1 4 1 4 1 4 Nacimiento Water Contract 31 30 28 29 12 9 9 - 6 - Lopez Flood Control 15 15 15 15 8 8 8 - 7 5 Lopez Park - - - - - - - - - - Transit 1,172 1,097 - - - - - - - - General Flood Control Zone - Salinas Dam - - - - - - - - - 2 6 County Service Areas 4 3 3 3 3 211 295 3 3 1 3 Los Osos Wastewater - - 35 1 - - 2,810 1 8 - - Capital Grants and Contributions Airport 4,310 2,074 138 572 1,770 365 7,069 15,379 2,211 3,139 Nacimiento Water Contract - - - - - - - - 2 4 - County Service Areas 339 288 64 294 2 - - - - - Los Osos Wastewater - 9,357 9,127 35,717 57,507 26,385 4,157 10,086 2,982 4,860 Total Business-Type Activities Revenues 28,732 45,272 47,586 73,709 97,053 61,890 57,176 69,219 52,919 61,707 Total Primary Government Revenues $ 281,709 $ 298,511 $ 303,302 $ 340,890 $ 379,517 $ 368,063 $ 374,522 $ 377,629 $ 375,825 $ 391,313 Net (Expense)/Revenues Governmental Activities $ (133,577) $ (131,588) $ (129,052) $ (131,002) $ (127,178) $ (148,936) $ (171,141) $ (219,312) $ (219,468) $ (249,587) Business-Type Activities (7,220) 3,887 2,555 33,804 57,936 19,202 12,272 18,173 (1,791) 4,087 Total Primary Government net expense $ (140,797) $ (127,701) $ (126,497) $ (97,198) $ (69,242) $ (129,734) $ (158,869) $ (201,139) $ (221,259) $ (245,500) General Revenue and Other Changes in Net Position Governmental Activities Property Taxes $ 132,723 $ 139,214 $ 140,288 $ 143,182 $ 152,256 $ 155,374 $ 163,367 $ 173,153 $ 180,051 $ 189,689 Other Taxes 13,358 14,393 16,330 23,940 22,088 22,984 21,953 23,072 25,708 27,224 Interest and investment income 1,690 986 1,202 733 599 3,174 4,401 3,289 3,171 12,952 Unrestricted Grants 3,972 3,520 3,978 3,537 1,727 13,327 3,140 6 3 2,740 2,115 Other revenues - 172 - 4 - - - 5 2 35,445 Transfers (565) 150 8,048 (166) (790) (2,676) (768) (2,292) 2,267 ( 625) Special Item - - - - (2,800) - - - - Total Governmental Activities 151,178 158,435 169,846 171,230 173,080 192,183 192,093 197,290 213,939 266,800 Business-type Activities Property Taxes 3,654 3,841 3,799 4,145 4,402 4,782 4,782 3,814 3,858 3,912 Other Taxes 28 28 28 29 32 - - - - - Interest and investment income 1,900 965 755 385 595 659 847 630 1,272 1,590 Other revenues 363 447 31 160 40 183 268 338 - 574 Transfers 565 (150) (8,048) 166 790 2,676 768 2,292 (2,267) 625 Total Business-type Activities 6,510 5,131 (3,435) 4,885 5,859 8,300 6,665 7,074 2,863 6,701 Total Primary Government $ 157,688 $ 163,566 $ 166,411 $ 176,115 $ 178,939 $ 200,483 $ 198,758 $ 204,364 $ 216,802 $ 273,501 Change in Net Position Governmental Activities $ 17,601 $ 26,847 $ 40,794 $ 40,228 $ 45,902 $ 43,247 $ 20,952 $ (22,022) $ (5,529) $ 17,213 Business-Type Activities (710) 9,018 (880) 38,689 63,795 27,502 18,937 25,247 1,072 10,788 Total Primary Government $ 16,891 $ 35,865 $ 39,914 $ 78,917 $ 109,697 $ 70,749 $ 39,889 $ 3,225 $ (4,457) $ 28,001 Source: Statement of Activities 151 COUNTY OF SAN LUIS OBISPO FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2010 General Fund Reserved $ 49,543 Unreserved 66,559 Total General Fund $ 116,102 All Other Governmental Funds Reserved $ 39,243 Unreserved, reported in: Special Revenue Funds 55,513 Capital Projects Fund 20,859 Debt Service Funds - Total all other Governmental Funds $ 115,615 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Fund Nonspendable $ 3,333 $ 3,176 $ 3,092 $ 779 $ 5,089 $ 3,454 $ 3,535 $ 18,511 $ 19,222 Restricted 7,113 6,682 4,005 3,214 2,945 2,872 2,649 10,083 12,276 Committed 62,380 68,880 96,365 116,940 138,140 168,619 164,492 152,501 169,846 Assigned - - 104,237 118,248 125,112 122,925 126,596 107,145 127,007 Unassigned 87,741 102,291 - - - - - - - Total General Fund $ 160,567 $ 181,029 $ 207,699 $ 239,181 $ 271,286 $ 297,870 $ 297,272 $ 288,240 $ 328,351 All Other Governmental Funds Nonspendable $ 352 $ 390 $ 596 $ - $ 920 $ 3,776 $ 3 $ 24 $ 36 Restricted 22,065 19,788 18,311 20,164 20,563 21,317 24,192 24,750 33,496 Committed 55,446 61,144 65,903 74,240 78,508 61,926 94,904 62,307 66,616 Assigned 94 - - - - - - - - Unassigned - - - - (486) - - (3,038) - Total all other Governmental Funds $ 77,957 $ 81,322 $ 84,810 $ 94,404 $ 99,505 $ 87,019 $ 119,099 $ 84,043 $ 100,148 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 152 COUNTY OF SAN LUIS OBISPO CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Revenues Taxes $ 1 53,910 $ 155,419 $ 160,920 $ 171,771 $ 177,765 $ 178,740 $ 1 85,764 $ 196,822 $ 203,583 $ 2 17,106 Licenses, permits, and franchises 6 ,906 7,413 7,863 9,247 10,694 1 0,452 10,539 11,446 11,140 1 2,133 Fines, forfeitures, and penalties 6 ,078 7,993 6,750 6,654 5,257 5,686 5,173 4,339 5,977 4 ,396 Revenues from use of money and property 1 ,644 1,242 2,273 1,475 1,373 3,864 4,939 3,984 3,779 1 2,268 Aid from governmental agencies 1 99,771 194,625 206,372 209,234 229,283 261,351 256,490 254,350 262,660 2 71,961 Charges for current services 4 7,065 56,486 45,538 41,690 50,071 4 3,530 46,308 49,460 49,793 4 7,957 Other revenues 5 ,358 6,531 8,451 11,342 6 ,235 9,110 11,504 8 ,481 6,869 2 5,278 Total revenues 420,732 429,709 438,167 451,413 480,678 512,733 520,717 528,882 543,801 591,099 Expenditures Current: General government 45,162 50,321 45,850 44,374 44,317 51,207 54,461 54,918 60,445 5 4,991 Public protection 136,857 135,636 138,579 143,832 148,155 157,783 156,096 164,839 175,175 185,033 Public ways and facilities 31,093 37,261 40,338 34,178 28,528 29,903 41,044 29,077 42,254 3 5,267 Health and sanitation 68,442 68,472 67,830 70,021 74,586 75,116 81,591 88,623 99,885 103,512 Public assistance 96,248 100,202 97,185 98,059 99,442 107,104 111,227 113,392 117,066 121,327 Education 13,020 10,191 9 ,973 9 ,901 12,205 11,388 10,534 11,560 11,640 1 2,191 Recreational and cultural services 8 ,313 7 ,187 6 ,998 7 ,538 7 ,993 10,104 9,888 9,963 10,358 1 0,574 Debt service: Principal payments 3 ,790 4 ,595 4 ,435 4 ,065 5 ,412 6 ,070 6,788 7,576 50,989 5,093 Interest and fiscal charges 5 ,954 6 ,464 6 ,289 5 ,863 5 ,419 5 ,209 4,687 4,639 11,666 1,204 Debt issuance costs 550 - - 269 - - - - - - Capital outlay 1 ,965 3 ,399 5 ,540 3 ,692 11,312 20,019 30,465 11,554 11,828 6,374 Total expenditures 411,394 423,728 423,017 421,792 437,369 473,903 506,781 496,141 591,306 535,566 Excess (deficiency) of revenues over (under) expenditures 9 ,338 5 ,981 15,150 29,621 43,309 38,830 13,936 32,741 (47,505) 5 5,533 Source: Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds (continued) 153 COUNTY OF SAN LUIS OBISPO CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS (CONTINUED) LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Other Financing Sources Refunding certificates of participation issued - - - 14,427 - - - - - - Premium on refunding certificates of participation issued - - - 1,418 - - - - - - Proceeds of long-term debt - - - - - - - - - - Refunding bonds issued 4 2,565 - - - - - - - - - Payment to refunded escrow agent ( 42,000) - - (16,400) - - - - - - Discount on certificates of participation issued - - - - - - - - - - Transfers in 3 3,044 34,421 35,815 48,113 26,502 33,299 35,803 57,668 54,782 3 1,633 Transfers out ( 33,065) (33,595) ( 27,138) (47,021) ( 25,935) (34,924) (35,641) (58,927) ( 51,365) ( 30,950) Total other financing sources (uses) 5 44 826 8,677 5 37 567 (1,625) 1 62 (1,259) 3 ,417 6 83 Special Item - - - - (2,800) - - - - - Net change in fund balances $ 9 ,882 $ 6,807 $ 23,827 $ 3 0,158 $ 41,076 $ 3 7,205 $ 14,098 $ 31,482 $ (44,088) $ 5 6,216 Debt Service as a percentage of non-capital expenditures 2.51% 2.80% 2.73% 2.48% 2.61% 2.57% 2.54% 2.62% 11.25% 1.23% Source: Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 154 COUNTY OF SAN LUIS OBISPO ESTIMATED 30 YEAR PENSION LIABILITY FUNDING SCHEDULE BASED ON JANUARY 1, 2019 ACTUARIAL VALUATION WITH TIER 3 (AB 340) 7.00% DISCOUNT RATE ASSUMPTION - 6.5% ACTUAL RETURNS 2.75% PAYROLL GROWTH ASSUMPTION Input Market Determined Actuarial Actuarial Value Valuation as of Return for Past Contribution Compensation Determined Accrued of Assets Total Normal Market Value of Funded Ratio January 1, Fiscal Year Rate at Valuation Contribution Liability (AAL) (AVA) Unfunded AAL Funded Ratio Cost Rate Assets (MVA) Using MVA 2019 -4.01% 44.52% $ 201 $ 89 $ 2,030 $ 1,363 $ 667 67.1% 20.60% $ 1 ,272 62.6% 2020 7.00% 45.47% 206 94 2,108 1,403 704 66.6% 20.12% 1,346 63.9% 2021 7.00% 45.76% 212 97 2,185 1,465 720 67.1% 19.72% 1,424 65.2% 2022 7.00% 45.89% 217 100 2,262 1,534 728 67.8% 19.33% 1,504 66.5% 2023 7.00% 46.65% 223 104 2,338 1,588 750 67.9% 18.98% 1,588 67.9% 2024 7.00% 46.40% 228 106 2,414 1,674 739 69.4% 18.67% 1,674 69.4% 2025 7.00% 46.21% 234 108 2,488 1,763 725 70.8% 18.39% 1,763 70.8% 2026 7.00% 46.03% 240 110 2,561 1,852 709 72.3% 18.14% 1,852 72.3% 2027 7.00% 45.87% 246 113 2,633 1,944 689 73.8% 17.90% 1,944 73.8% 2028 7.00% 45.73% 252 115 2,704 2,037 666 75.4% 17.69% 2,037 75.4% 2029 7.00% 45.61% 258 118 2,773 2,133 640 76.9% 17.49% 2,133 76.9% 2030 7.00% 45.50% 265 120 2,840 2,230 610 78.5% 17.31% 2,230 78.5% 2031 7.00% 45.41% 271 123 2,906 2,330 575 80.2% 17.16% 2,330 80.2% 2032 7.00% 45.32% 278 126 2,970 2,434 536 81.9% 17.01% 2,434 81.9% 2033 7.00% 45.24% 285 129 3,033 2,540 492 83.8% 16.88% 2,540 83.8% 2034 7.00% 45.17% 293 132 3,094 2,651 443 85.7% 16.75% 2,651 85.7% 2035 7.00% 45.11% 300 135 3,154 2,766 388 87.7% 16.64% 2,766 87.7% 2036 7.00% 45.05% 308 139 3,214 2,887 327 89.8% 16.54% 2,887 89.8% 2037 7.00% 44.99% 316 142 3,272 3,013 259 92.1% 16.45% 3,013 92.1% 2038 7.00% 44.95% 324 146 3,330 3,146 184 94.5% 16.37% 3,146 94.5% 2039 7.00% 42.96% 333 143 3,388 3,287 101 97.0% 16.29% 3,287 97.0% 2040 7.00% 18.55% 341 63 3,445 3,429 16 99.5% 16.22% 3,429 99.5% 2041 7.00% 17.77% 350 62 3,503 3,494 9 99.7% 16.16% 3,494 99.7% 2042 7.00% 17.19% 360 62 3,560 3,556 4 99.9% 16.11% 3,556 99.9% 2043 7.00% 16.07% 369 59 3,618 3,618 - 100.0% 16.07% 3,618 100.0% 2044 7.00% 16.03% 379 61 3,677 3,677 - 100.0% 16.03% 3,677 100.0% 2045 7.00% 16.00% 390 62 3,737 3,737 - 100.0% 16.00% 3,737 100.0% 2046 7.00% 15.97% 400 64 3,799 3,799 - 100.0% 15.97% 3,799 100.0% 2047 7.00% 15.95% 411 66 3,862 3,862 - 100.0% 15.95% 3,862 100.0% 2048 7.00% 15.93% 422 67 3,928 3,928 - 100.0% 15.93% 3,928 100.0% 2049 7.00% 15.92% 434 69 3,996 3,996 - 100.0% 15.92% 3,996 100.0% Discussion: This schedule is prepared by the SLO County Pension Trust's actuary and is a supplement to the annual Actuarial Valuation Report. Its purpose is to estimate 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 2043. Notes: Subject to change annually. Funding policy of the Plan Sponsor subject to change. Assumes no actuarial gains and losses, other than from assets. 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 Statement No. 68 which is measured using the market value of Plan assets. Amounts in this schedule differ from those used for financial reporting. This schedule contains values based on a January 1, 2019 actuarial valuation report. Net Pension Liability and related amounts used for financial reporting are based on a June 30, 2019 actuarial valuation report. All dollar amounts in millions. Source: Gabriel Roeder Smith & Company Supplementary exhibit to the 2019 SLO County Pension Trust Actuarial Valuation Report For the Year Beginning January 1, 2019 155 COUNTY OF SAN LUIS OBISPO ASSESSED VALUE LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) Percentage Change Fiscal Net Assessed from Prior Year Secured Unsecured Exemptions Valuations Year Tax Rate 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 2017 50,458,742 1,362,539 (1,173,683) 50,647,598 5.1% 1.0040 2018 53,278,739 1,386,183 (1,248,961) 53,415,961 5.5% 1.0040 2019 56,147,148 1,420,625 (1,305,110) 56,262,663 5.3% 1.0040 Source: County Assessed Values, Exemptions and Growth % Book 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 156 tnecreP Total Net Assessed Value Increase from Prior Year Percent 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) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 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 0.00220 0.00290 0.00300 0.00400 0.00400 0.00400 0.00374 0.00400 0.00400 0.00400 Total Direct Rate 1.00220 1.00290 1.00300 1.00400 1.00400 1.00400 1.00374 1.00400 1.00400 1.00400 Cities, Schools, and Special Districts Combined Rates Arroyo Grande 0 .0464 0.0470 0.0477 0.0576 0 .0580 0.0569 0 .0756 0.0680 0.1085 0.1051 Atascadero 0.0975 0.0975 0.0442 0.0452 0 .0452 0.0590 0 .1373 0.1373 0.1373 0.1373 Grover Beach 0 .0382 0.0389 0.0396 0.0495 0 .0499 0.0509 0 .0940 0.1023 0.1599 0.1901 Morro Bay 0 .0492 0.0499 0.0501 0.0510 0 .0510 0.0510 0 .0688 0.0683 0.0683 0.0683 Paso Robles 0 .0988 0.0389 0.0816 0.0815 0 .0815 0.0782 0 .0955 0.0828 0.0828 0.1291 Pismo Beach 0 .0382 0.0389 0.0396 0.0495 0 .0499 0.0509 0 .0700 0.0680 0.1085 0.1051 San Luis Obispo - - - - - - 0.0683 0.0683 0.0683 0.0683 Note: Rates shown represent the most common rates encountered for the tax rate areas within these cities. Source: County Property Tax Rate Book 157 COUNTY OF SAN LUIS OBISPO PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND TEN YEARS AGO (IN THOUSANDS) (UNAUDITED) Fiscal Year 2019 Fiscal Year 2010 Percentage of Percentage of Assessed Total County Assessed Total County Taxpayer Industry Value Rank Assessed Value Value Rank Assessed Value Pacific Gas & Electric Co. Utility $ 2,578,307 1 4.58% $ 2,451,314 1 5.78% Phillips 66 Company Oil Refinery 1 61,646 2 0.29% - - - Jamestown Premier Commercial 1 13,238 3 0.20% - - - Southern California Gas Co. Utility 1 08,816 4 0.19% 58,333 8 0.14% CAP VIII - Mustang Village LLC Apartments 9 2,424 5 0.16% 74,976 4 0.18% AT&T California Telephone 9 0,307 6 0.16% - - - Treasury Wine Estates Winery 9 0,052 7 0.16% - - - E&J Gallo Winery/Vineyards Winery 8 5,577 8 0.15% - - - Sierra Vista Hospital Hospital 8 0,002 9 0.14% 50,423 10 0.12% Firestone Walker LLC Brewery 6 8,644 10 0.12% - - - TOSCO Corp Petroleum & Gas - - - 1 66,755 2 0.39% Pacific Bell Telephone Co Communications - - - 84,774 3 0.20% Beringer Wine Estates Company Winery - - - 68,966 5 0.16% Plains Exploration & Prod Co Petroleum & Gas - - - 61,378 6 0.14% Martin Hotel Management Hotel - - - 60,967 7 0.14% Twin Cities Com. Hospital Hospital - - - 54,652 9 0.13% Total $ 3,469,013 6.15% $ 3,132,538 7.38% Total County Assessed Value $ 56,262,663 $ 4 2,419,637 Source: 2018-2019 County Property Tax System 2009-2010 San Luis Obispo County CAFR 158 COUNTY OF SAN LUIS OBISPO PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) Collected within the Total Levy Fiscal Year of the Levy Fiscal for the Collected % of Collections in Delinquent % of Year Fiscal Year Amount Original Levy Subsequent Years* Amount Levy Delinquent 2010 $ 4 12,698 $ 398,951 96.67% N/A $ 13,747 3.33% 2011 408,623 397,830 97.36% N/A 1 0,793 2.64% 2012 403,472 396,238 98.21% N/A 7 ,234 1.79% 2013 405,225 399,807 98.66% N/A 5 ,418 1.34% 2014 421,140 416,450 98.89% N/A 4 ,690 1.11% 2015 447,088 442,330 98.94% N/A 4 ,758 1.06% 2016 470,629 466,465 99.12% N/A 4 ,164 0.88% 2017 495,277 490,890 99.11% N/A 4 ,387 0.89% 2018 522,528 517,777 99.09% N/A 4 ,751 0.91% 2019 549,869 544,994 99.11% N/A 4 ,874 0.89% 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 159 COUNTY OF SAN LUIS OBISPO SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS (IN THOUSANDS) (UNAUDITED) Special Special Year ended Assessment Assessment June 30, Billings (a) Collected (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 2017 3,490 3,577 2018 5,063 5,196 2019 5,058 5,065 Note: The billings and collections shown are for the Special Assessment Bonds related to the Los Osos 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. 160 COUNTY OF SAN LUIS OBISPO RATIOS OF TOTAL DEBT OUTSTANDING LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Governmental Activities Certificates of Participation $30,420 $28,820 $27,895 $25,662 $24,640 $23,600 $22,527 $21,411 $26,135 $24,808 Less deferred amounts: For issuance discounts: (111) (107) (103) (99) (95) (91) (87) (83) ( 79) (75) Add deferred amounts: For issuance premiums: - - - 1,329 1,240 1,152 1,063 975 886 797 State notes - - - - - - - - 2,056 1,901 Pension Obligation Bonds 125,444 122,689 119,429 115,624 111,234 146,219 145,291 143,890 9 9,407 96,903 Total bonds and notes payable 155,753 151,402 147,221 142,516 137,019 170,880 168,794 166,193 128,405 124,334 Business-Type Activities Certificates of Participation 20,657 19,897 19,060 17,920 18,257 17,745 17,194 16,470 1 5,678 14,811 Add deferred amounts: For issuance premiums: - - - 492 459 426 393 361 328 295 State Note 32,418 31,024 35,884 34,399 46,529 72,774 86,611 85,674 8 7,667 84,409 Revenue Bonds 196,450 196,444 193,483 190,389 187,170 183,813 177,198 173,535 168,410 164,126 Add deferred amounts: For issuance premiums: 6,371 6,371 6,158 5,945 5,732 5,519 10,058 9,623 8,926 8,502 Unamortized outflow on Bond Refinancing - - - - - - (4,171) (3,990) (3,808) - General Obligation Bonds 11,155 10,760 10,245 9,890 9,530 9,155 8,760 8,350 7,925 7,485 Add deferred amounts: For issuance premiums: - 1,128 1,072 1,015 959 902 846 790 733 677 Bond Anticipation Notes - 8,677 - - - Assessment Bonds - - 15,364 39,527 76,438 79,829 79,396 78,089 7 6,746 75,358 Total bonds and notes payable 267,051 274,301 281,266 299,577 345,074 370,163 376,285 368,902 362,605 355,663 Total Outstanding Debt $422,804 $425,703 $428,487 $442,093 $482,093 $541,043 $545,079 $535,095 $491,010 $479,997 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* 1.00% 1.01% 1.04% 1.06% 1.12% 1.19% 1.13% 1.06% 0.92% 0.85% Net outstanding debt Per Capita $ 1,547.42 $ 1,571.06 $ 1,578.32 $ 1,624.28 $ 1,770.08 $ 1,972.50 $ 1,960.88 $ 1,916.46 $ 1,753.31 $1,713.66 Note: See the Demographic Statistics Schedule for detail information on personal income and population. 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. 161 COUNTY OF SAN LUIS OBISPO RATIOS OF GENERAL OBLIGATION DEBT OUTSTANDING LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Certificates of Participation $17,730 $17,075 $16,400 $14,427 $13,675 $12,915 $12,137 $11,326 $10,482 $9,606 Less deferred amounts: For issuance discounts: - - - (99) (95) (91) (87) (83) (79) (75) Add deferred amounts: For issuance premiums: - - - 1,330 1,240 1,152 1,063 975 886 797 General Obligation Bonds 11,155 10,760 10,245 9,890 9,530 9,155 8,760 8,350 7,925 7,485 Add deferred amounts: For issuance premiums: - 1,128 1,072 1,015 959 902 846 790 733 677 State Notes - - - - - - - - 2,056 1,901 Assessment Bonds - - 15,364 39,527 76,438 79,829 79,396 78,089 76,746 75,358 Less resources restricted for principal repayment ( 3,551) (2,848) (2,893) (2,684) (2,683) (2,683) (2,688) (2,692) (2,712) (8,061) Net Total General Obligation Debt $ 25,334 $ 26,115 $ 40,188 $ 6 3,406 $ 9 9,064 $ 101,179 $ 9 9,427 $ 9 6,755 $ 9 6,037 $ 87,688 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 Property1 0.06% 0.06% 0.10% 0.15% 0.23% 0.22% 0.21% 0.19% 0.19% 0.16% Net outstanding debt Per Capita $ 92.72 $ 96.38 $ 148.03 $ 2 32.96 $ 3 63.73 $ 3 68.87 $ 3 57.68 $ 3 46.53 $ 3 42.93 $ 313.06 Note: See the Demographic Statistics Schedule for detail information on personal income and population. Source: Notes to the Financial Statements, Note 10 1 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. 162 COUNTY OF SAN LUIS OBISPO LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (IN THOUSANDS) (UNAUDITED) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Assessed Value of Property (a) $ 42,419,637 $ 42,037,909 $ 41,340,430 $ 41,796,283 $ 43,059,945 $45,426,163 $48,172,375 $50,647,598 $53,415,961 $56,262,663 Debt Limit, 1.25% of Assessed Value 530,245 525,474 516,755 522,454 538,249 567,827 602,155 633,095 667,700 703,283 Amount of Debt Applicable to Limit General Obligation Bonds (b) 11,155 11,888 11,317 10,905 10,489 10,057 9,606 9,140 8,658 7,485 Less: Resources Restricted to Paying Principal - - - - - - - - - - Total Debt Applicable 11,155 11,888 11,317 10,905 10,489 10,057 9 ,606 9,140 8,658 7 ,485 Legal Debt Margin $ 5 19,090 $ 513,586 $ 505,438 $ 511,549 $ 527,760 $ 5 57,770 $ 592,549 $ 623,955 $ 659,042 $ 695,798 Total Debt Applicable as a Percentage of the Debt Limit 2.10% 2.26% 2.19% 2.09% 1.95% 1.77% 1.60% 1.44% 1.30% 1.06% Source: (a) Countywide Assessed Values & Exemptions (b) Footnote 10 Bonded Indebtedness and Long-Term Debt 163 COUNTY OF SAN LUIS OBISPO DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Personal Income Per Unemployment Calendar Population (in thousands) Capita Income Median Age School Enrollment Rate Year (1,a,f) (2,a,d) (2,a,d) (4,c) (3,b,e) (2,a) 2010 273,231 $ 1 0,532,649 $ 38,994 39.40 44,351 10.0 2011 270,966 1 0,966,438 4 0,322 40.30 44,104 9.9 2012 271,483 1 2,008,355 4 3,698 39.20 43,022 8.5 2013 272,177 1 2,547,278 4 5,388 39.50 42,600 6.4 2014 272,357 1 2,823,005 4 5,947 39.50 42,911 5.3 2015 274,293 1 4,034,209 4 9,873 39.30 41,853 4.4 2016 277,977 1 4,552,207 5 1,442 39.00 43,117 4.5 2017 279,210 N/A N/A N/A 43,112 3.6 2018 280,048 N/A N/A N/A 42,713 3.2 2019 280,101 N/A N/A N/A 42,673 2.9 Sources: 1. State Department of Finance 2. Employment Development Department, Research Division, Los Angeles 3. California Department of Education & 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 2012 - 2016 figures are projections based on the American Community Survey 5-Year Estimates d. Prior years were revised per the US Department of Commerce e. Data for School Year ending in the stated calendar year f. Prior years were revised per the State Department of Finance 164 COUNTY OF SAN LUIS OBISPO PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO (UNAUDITED) 2019 2010 Number of Percentage of Total Number of Percentage of Total Employer Employees Rank County Employment Employees Rank County Employment Cal Poly State University, SLO 3,000 1 2.12% 2,516 1 1.83% County of San Luis Obispo 2,920 2 2.06% 2,439 2 1.77% Atascadero State Hospital 2,000 3 1.41% 2,300 3 1.67% Pacific Gas and Electric Company 1,866 4 1.32% 1,600 5 1.16% California Men's Colony 1,517 5 1.07% 2,000 4 1.45% Cal Poly Corporation 1,400 6 0.99% - - - Tenet Healthcare 1,305 7 0.92% 1,400 6 1.02% Compass Health Inc 1,200 8 0.85% - - - Lucia Mar Unified School District 1,000 9 0.71% 1,074 7 0.78% Paso Robles Public Schools 935 10 0.66% 935 8 0.68% Catholic Healthcare West - - - 908 9 0.66% Cuesta College - - - 825 10 0.60% San Luis Coastal Unified School District - - - 825 10 0.60% Total Employment Labor Force 141,700 137,800 Source: 1. SLO Chamber of Commerce 2. State of California Employment Development Department 3. 2009-2010 San Luis Obispo County CAFR 165 COUNTY OF SAN LUIS OBISPO FULL TIME EQUIVALENT COUNTY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Function/Program 2010 2011 2012 2013 2014 2015 2016 2017 2018* 2019* General Government 451.00 442.75 437.50 438.25 430.75 436.75 440.50 430.75 437.50 441.00 Public Protection 799.75 783.25 808.25 812.00 817.25 832.25 848.25 867.00 909.50 912.00 Public Ways and Facilities 202.25 194.25 193.75 193.75 188.75 190.75 207.75 234.75 237.75 246.75 Health and Sanitation 424.75 424.00 430.50 445.25 464.00 485.25 505.50 556.00 536.50 530.00 Public Assistance 426.75 424.75 425.75 428.00 478.00 500.75 524.00 524.00 523.00 522.00 Education 78.50 78.50 77.50 75.50 75.50 75.50 77.50 78.00 77.75 78.00 Recreation and Cultural Services 56.00 56.00 52.00 52.00 55.00 59.00 60.00 61.00 61.00 61.00 Total 2,439.00 2,403.50 2,425.25 2,444.75 2,509.25 2,580.25 2,663.50 2,751.50 2,783.00 2,790.75 Source: County Budget Report Notes: 2010-2017 Position allocation figures were calculated at the time of budget preparation for the following year. * Position allocation figures are calculated based on the adopted budgets. Figures include limited-term but do not include part-time or contract positions. 166 COUNTY OF SAN LUIS OBISPO OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Function / Department 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Recreation and Cultural Services Parks Day Use Passes 47,011 51,519 57,135 56,601 42,821 57,564 n/a n/a n/a n/a Daily Passes* n/a n/a n/a n/a 246,727 239,140 189,232 230,915 257,220 60,902 Annual Passes 2,220 1,992 2,357 2,406 2,998 3,137 n/a n/a n/a n/a Annual Vehicle Passes* n/a n/a n/a n/a 8,744 12,584 9,614 6,504 8,066 3,974 Daily Boat Launches* 15,802 15,602 16,133 14,809 26,110 23,706 16,001 16,312 24,340 9,664 Annual Boat Passes* 627 618 238 551 1,412 1,245 480 1,383 1,353 1,629 Public Protection Planning and Building Total Permits Issued 2,067 2,073 2,086 2,070 2,622 3,139 3,355 3,927 3,542 3,256 Number of New Affordable Housing ** 82 80 39 44 13 151 99 65 133 131 Sheriff Jail bookings 13,025 12,682 12,966 13,273 12,583 11,375 11,018 11,774 11,324 10,246 Average daily population 551 558 679 717 780 679 603 632 621 636 Health and Sanitation Mental Health Total number of patient days in State Hospitals 364 n/a n/a n/a 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*** 2,212 2,937 1,588 1,885 1,764 1,613 1,381 604 n/a n/a Public Health Number of Children enrolled in the Healthy Families Program 5,709 n/a n/a n/a 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 97 100 99 99 95 91 86 76 72 68 Percentage of live born infants whose mothers received prenatal care in the first trimester. 78 7 8.5 81.7 80 79 79 80 78 78 84 Public Assistance Social Services Percentage of child abuse/neglect referrals where a response is required within 10 days that were timely 94.1 96.8 97.6 98.0 96.1 97.9 97.0 n/a n/a n/a Percentage of child abuse/neglect referrals where a response is required within 10 days and where contact was made within the required period. n/a n/a n/a n/a n/a n/a n/a 91 95 95 Education Library Annual number of items circulated per capita 9.4 10.0 10.1 10.1 9.8 9.6 10.5 10.3 11.6 12.1 Annual Expenditure per capita for total Library budget $ 3 5.35 $ 35.35 $ 3 5.25 $ 34.35 $ 35.50 $ 36.13 $ 36.27 $ 38.10 $ 40.36 $ 40.57 Public Ways and Facilities Roads Pavement Condition Rating for all County roads (70 = "good") 65 60 58 60 61 61 65 66 65 65 Airport Airport Takeoffs and Landings 88,161 80,556 80,158 71,428 66,696 71,001 71,181 71,001 77,917 82,110 Passenger Enplanements 125,152 139,909 134,244 132,315 147,105 149,558 155,744 180,141 226,588 259,481 Source: County Budget Performance Indicators * In FY 2018-19, the data tracking system was updated to more accurately collect the data. Data prior to FY 2018-19 is not comparable. ** This measure was revised in FY 2017-18 to include homeless set aside units provided and rehab units funded. *** Performance measure deleted in FY 2017-18 due to Continuum of Care Reform effective 1/1/2017. 167 COUNTY OF SAN LUIS OBISPO CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Function/Program 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Recreation and Cultural Services County golf courses 3 3 3 3 3 3 3 3 3 3 Park acreage 13,422 13,572 13,424 13,424 13,583 13,583 13,583 13,583 13,583 13,583 Public Protection Correction facility capacities (a) 693 689 637 717 797 797 797 909 909 * 909 Public Ways and Facilities Miles of county roads 1,329 1,332 1,333 1,335 1,336 1,336 1,338 1,338 1,339 1,339 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 * Fiscal Year 2018 facility capacity number restated by Sheriff's Department Source: County departments' management 168