Annual Comprehensive Financial Report, 2020-21

Annual Comprehensive Financial Report County of San Luis Obispo, California Fiscal Year Ended June 30, 2021 Prepared under the direction of James W. Hamilton, CPA Auditor-Controller (cid:121) Treasurer-Tax Collector Cover photo of Pismo Beach at sunset from the Ontario Ridge Trail taken by Rachael Koenig, Auditor-Controller-Treasurer-Tax Collector’s Office COUNTY OF SAN LUIS OBISPO ANNUAL COMPREHENSIVE FINANCIAL REPORT JUNE 30, 2021 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 The accompanying notes are an integral part of these financial statements. FINANCIAL SECTION (CONTINUED) Required Supplementary Information Description .................................................................................................................. 90 Schedule of the County’s Proportionate Share of the San Luis Obispo County Pension Plan’s Net Pension Liability .............................................................................. 91 Schedule of the County’s Contributions to the San Luis Obispo County Pension Plan ......... 92 Other Post-Employment Benefits (OPEB) Plan Schedule of Changes in the County’s Net OPEB Liability and Related Ratios ............................................................. 93 Other Post-Employment Benefits (OPEB) Plan Schedule of Actuarially Determined Plan Contributions and Related Ratios ........................................................ 94 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Comparison - General Fund ............................................................... 95 Notes to Required Supplementary Information ............................................................... 97 Other Supplementary Information: Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds: Nonmajor Governmental Fund Descriptions ............................................................ 98 Combining Balance Sheet ..................................................................................... 100 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................................................................................... 104 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual Comparison: Capital Projects ................................................................................................... 108 Community Development ..................................................................................... 109 Emergency Medical Services ................................................................................ 110 Driving Under the Influence Programs .................................................................. 111 Fish and Game .................................................................................................... 112 Road Impact Fees ............................................................................................... 113 Library ................................................................................................................ 114 Parks .................................................................................................................. 115 Public Facilities Fees ............................................................................................ 116 Roads ................................................................................................................. 117 Wildlife Grazing ................................................................................................... 118 Flood Control Districts ......................................................................................... 119 Lighting Control Districts ...................................................................................... 120 County Service Area Districts ............................................................................... 121 Public Facilities Corporation ................................................................................. 122 Pension Obligation Bonds .................................................................................... 123 SLO County Financing Authority ........................................................................... 124 The accompanying notes are an integral part of these financial statements. FINANCIAL SECTION (CONTINUED) Nonmajor Enterprise Funds: Nonmajor Enterprise Fund Descriptions ................................................................ 125 Combining Statement of Net Position ................................................................... 126 Combining Statement of Revenues, Expenses, and Changes in Net Position ............ 127 Combining Statement of Cash Flows ..................................................................... 128 Internal Service Funds: Internal Service Fund Descriptions ....................................................................... 129 Combining Statement of Net Position ................................................................... 130 Combining Statement of Revenues, Expenses, and Changes in Net Position ............ 131 Combining Statement of Cash Flows ..................................................................... 132 Internal Service Funds – Insurance Funds: Combining Statement of Net Position ...................................................... 133 Combining Statement of Revenues, Expenses, and Changes in Net Position ......................................................................................... 134 Combining Statement of Cash Flows ....................................................... 135 Fiduciary Funds: Fiduciary Fund Description ................................................................................... 136 Agency Funds: Combining Statement of Fiduciary Net Position ........................................ 137 Combining Statement of Changes in Assets and Liabilities ........................ 138 Investment Trust Funds: Combining Statement of Fiduciary Net Position ........................................ 139 Combining Statement of Changes in Fiduciary Net Position ...................... 140 General Fund - Detail Budgetary Comparison Schedules: Detail Schedule of Expenditures – Budget to Actual Comparison ............................ 141 The accompanying notes are an integral part of these financial statements. STATISTICAL SECTION (UNAUDITED) Statistical Section Table of Contents .............................................................................. 149 Net Position by Component ........................................................................................... 150 Changes in Net Position ................................................................................................ 151 Fund Balances, Governmental Funds ............................................................................. 153 Changes in Fund Balances, Governmental Funds ............................................................ 154 Assessed Valuation .......................................................................................................1 55 Direct and Overlapping Property Tax Rates ....................................................................1 56 Principal Property Taxpayers .........................................................................................1 57 Property Tax Levies and Collections ...............................................................................1 58 Special Assessment Billings and Collections ....................................................................1 59 Ratios of Total Debt Outstanding ...................................................................................1 60 Ratios of General Bonded Debt Outstanding ................................................................... 161 Legal Debt Margin Information ......................................................................................1 62 Demographic and Economic Statistics ............................................................................1 63 Principal Employers ......................................................................................................1 64 Full Time Equivalent County Government Employees by Function .................................... 165 Operating Indicators by Function ...................................................................................1 66 Capital Asset Statistics by Function ................................................................................1 67 The accompanying notes are an integral part of these financial statements. ________________________________________________________________ INTRODUCTORY SECTION ________________________________________________________________ COUNTY OF SAN LUIS OBISPO AUDITOR - CONTROLLER TREASURER - TAX COLLECTOR James W. Hamilton, CPA Auditor-Controller Treasurer-Tax Collector January 17, 2022 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 Annual Comprehensive Financial Report of the County of San Luis Obispo (County) for the fiscal year ended June 30, 2021, 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, 2021, 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, 2021, 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 282,249 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-Coroner). 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 Annual Comprehensive 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 has two discretely presented component units. The first is the Children and Families Commission of San Luis Obispo County (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 is discretely presented in the Government-Wide Financial Statements. The other discretely presented component unit is the San Luis Obispo County Pension Trust which is an independent trust that administers the San Luis Obispo County Employees Retirement Plan on behalf of the County and is a fiduciary component unit. The San Luis Obispo County Pension Trust is presented in the Fiduciary Fund Financial Statements. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the County operates. 3 Employment: • Unemployment in the County, as of September 2021, was 4.6% which is lower than both the state rate of 7.3% and the national rate of 4.8%. During the same 12.0% period last year, unemployment in the County was 7.2%. The fall in the County’s 10.0% unemployment rate has closely followed 8.0% the trend in unemployment at the state and national level decreasing after strict 6.0% COVID-19 pandemic measures were lifted. 4.0% • The State of California has a major 2.0% presence in the County of San Luis Obispo 0.0% with California Men’s Colony, Atascadero State Hospital, Caltrans, and the California Polytechnic State University, making the State the largest employer in the County. Wages: • Average income increased by 8.1% to $55,143, from 2019 to 2020 (most recent data) for the residents of the County of San Luis Obispo whereas average income for the state increased by 11.4% as reported by the Bureau of Labor Statistics. • As reported by the Bureau of Labor Statistics, the highest earning 2020 occupational groups in the County consisted of physicians, psychiatrists, dentists, personal financial advisors, computer and information systems managers, chief executives, architectural and engineering managers, pharmacists, first-line supervisors of police and detectives and pediatricians. egatnecreP 71/9 81/9 91/9 02/9 12/9 UNEMPLOYMENT RATES* National State County *Source: US Bureau of Labor Statistics $85,000 $75,000 $65,000 $55,000 $45,000 $35,000 2016 2017 2018 2019 2020 sralloD AVERAGE ANNUAL INCOME* State County *Source: US Bureau of Labor Statistics 4 Retail Sales: • Although COVID-19 impacted tourism spending, sales and use tax revenue increased 8.6% to $13.6 million for FY 2020-21. $14,000,000 • According to Visit SLO CAL, $12,000,000 tourists spent $1.19 billion in $10,000,000 calendar year 2020. The leading sectors for tourism spending were $8,000,000 lodging ($411 million), food $6,000,000 service ($310 million), retail ($150 $4,000,000 million), and recreation ($120 $2,000,000 million). $0 2017 2018 2019 2020 2021 Real Estate and Property Taxes: The County’s median home price increased from $645,000 in August 2020 to $748,500 in July 2021. This is a 16% increase from the prior year. The increase in median home price demonstrates people’s continued desire to live in the area and a healthy local real estate market. • Discretionary property tax receipts were $145 million in FY 2020-21, an increase of 3.6% over the prior year. • The total tax levy on secured property, which excludes unsecured property, direct charges, and school bonds, was $599,507,672 for FY 2020-21, an increase of 4.5% from the previous year. • Property transfer tax is related to the value and number of real estate transactions during the year. In the County’s unincorporated areas property transfer taxes increased 10.4% to $4.2 million in FY 2020-21. • The property tax delinquency rate decreased from 1.6% in FY 2019-20 to 1.1% in FY 2020-21. sralloD SALES TAX REVENUE - UNINCORPORATED* *Source: County's Enterprise Financial System $800,000 $750,000 $700,000 $650,000 $600,000 $550,000 $500,000 2017 2018 2019 2020 2021 sralloD MEDIAN HOME PRICES* *Source: Corelogic 5 Tourism: • The scenic coastline, rolling vineyards, and abundance of outdoor activities continues to make $16,000,000 San Luis Obispo County a tourist $14,000,000 destination. With shelter-at-home $12,000,000 orders related to COVID-19 being $10,000,000 lifted Transient Occupancy Tax (TOT) collections in the $8,000,000 unincorporated areas increased $6,000,000 51% in FY 20-21. $4,000,000 $2,000,000 • Airline passenger travel saw a 217% $0 increase at the San Luis Obispo 2017 2018 2019 2020 2021 County Airport when comparing June 2020 to June 2021. Long-term financial planning: • The County expects that COVID-19 will significantly impact the budget in the current and future years. As such, the County anticipates a multi-year budget strategy to achieve structural balance. The FY 2021-22 comprehensive budget authorized a $754 million governmental fund spending level, an increase over the $679 million budget for FY 2020-21. The budget provides support to the development of departmental programs and services and assists County operations in responding to continuously changing needs, including the health and safety of the community. The increase in property tax revenue and intergovernmental revenue allowed for an increase in the FY 2021-22 spending level. In FY 2021-22, the General Fund has $720.8 million appropriated to finance expenditures, including contingencies of $27.6 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. The General Reserve, established per Government Code §29127, is accessible only upon declaration of emergency by the Board of Supervisors. As of June 30, 2021, the General Reserve was $13.0 million. In addition to the General Reserve, reserves exist for building replacement ($40.7 million), automation projects ($12.4 million), and tax-loss mitigation purposes ($43.3 million). Other classifications of General Fund balance are described in Footnote 11. • The County was allotted $55 million of Coronavirus State and Local Fiscal Recovery Funds under the American Rescue Plan Act of 2021. These funds are provided to the County in two equal payments. The first payment of $27.5 million sralloD TRANSIENT OCCUPANCY TAX* *Source: County's Enterprise Financial System 6 was received in June 2021, with the second payment of $27.5 million due to be received twelve months after the first payment. As of June 30, 2021, none of the Coronavirus State and Local Fiscal Recovery Funds had been spent. However, on June 15, 2021, the County Board of Supervisors adopted broad expenditure categories for the use of the funds based on the US Department of Treasury defined eligible uses. County Defined Use Category Dollar Allocation Public Health and Negative Economic Impacts $30M Water, Sewer, and Broadband $15M Restoration of Government Services $10M Total Allocation $55M • On November 16, 2021, the County Board of Supervisors voted to remove the County from the Integrated Waste Management Authority (IWMA) Joint Powers Agreement (JPA). The JPA had consisted of representatives from the County, seven cities, and special districts. Transitional withdrawal of the County from the IWMA will continue through FY 2021-22 and result in County Public Works managing the County solid waste resources. • Each year a 5-year Capital Improvement Program (CIP) is compiled. The CIP is a plan for short-range and long-range capital acquisition and development. It also includes plans to improve or rehabilitate County-owned roads and facilities. The plan provides the mechanism for estimating capital requirements; setting priorities; monitoring and evaluating the progress of capital projects; and informing the public of projected capital improvements and unfunded needs. While the CIP covers a five-year planning period, it is updated each year to reflect ongoing changes as new projects are added, existing projects 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 budgeted capital expenditures for FY 2021-22 increased 16% from the prior year and are approximately $8 million. • 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 County will receive its portion of annual installment payments for the economic assistance through FY 2024-25 and the payments will be used for economic development ($4.0 million), safety ($4.5 million), affordable housing ($6.4 million), infrastructure ($5.0 million), roads ($1.2 million), libraries ($2.0 million), and General Fund tax loss mitigation ($12.1 million). 7 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. • 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, 2020, approximately 54% of County employees fall under PEPRA. Major Initiatives • COVID-19: The County has taken many actions to address the impacts of COVID- 19 since a local health emergency was declared by the County Health Officer on March 13, 2020. Since the initial declaration, the County’s efforts have shifted from emergency response to on-going crisis management. Testing, contact tracing, and updating the public with the most current information has continued since the onset but with the development of vaccines the County also established three mass vaccination sites to expedite its distribution. At full capacity the vaccination sites could administer more than 15,000 doses per week. As of December 6, 2021, 8 63.6% of residents 5 and older were fully vaccinated and 70.6% of residents were partially vaccinated. • Administrative Office: In coordination with the California Complete Count Committee, the Administrative Office managed the County’s participation in outreach for the 2020 Census, increasing the County’s self-response rate from 66.3% in the prior census to 68.5%. • Behavioral Health: Behavioral Health staff, in collaboration with the Courts, Probation, the District Attorney’s Office and the Public Defender, held the first successful graduations from the Mental Health Diversion Court program, which is an intensive behavioral health treatment program of up to 18 months to reduce criminal justice recidivism. • District Attorney: Despite temporary court closures, social distancing measures, and quarantines of justice partner staff, the District Attorney’s Office was able to complete 20 jury trials as well as implementing new technology to appear via remote video for hearings that did not require courtroom appearances. • Public Works: Completed construction of two new water storage tanks in Community Service Area 10A to provide the community with the required amount of water storage, improve firefighting capabilities, and ensure an additional 50 years of service life. • Sheriff: Installed new wi-fi cabling in the jail to facilitate the inmate technology upgrade to include the use of tablets by inmates who earn tablet use through good behavior. Tablets allow inmates to purchase services such as movies, games, music, and commissary services. • Social Services: Launched the Active Supportive Intervention Services for Transition (ASIST) Program which achieved a 91% success rate at moving youth with complex needs to permanency and home-based care. 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 Annual Comprehensive Financial Report for the fiscal year ended June 30, 2020. This was the thirty-fifth 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 Annual Comprehensive Financial Report. This report satisfied both Generally 9 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 Annual Comprehensive Financial Report 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 Government Finance Officers Association presented the County with its Distinguished Budget Presentation Award for its annual budget document for the fiscal year beginning July 1, 2020. In order to receive this prestigious award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. • The County of San Luis Obispo earned the California State Controller’s Award for Counties Financial Transaction Reporting for the fiscal year ending June 30, 2020. This is the fifth consecutive year that the County has earned this award which recognizes the County’s professionalism in preparing an accurate and timely report. Acknowledgments: The preparation of the Annual Comprehensive Financial Report would not have been possible without the efficient and dedicated services of the staff of the Auditor- Controller-Treasurer-Tax Collector’s Office. We would like to acknowledge the special efforts of our Enterprise Financial System Operations Division and our independent auditors, CliftonLarsonAllen LLP, for their assistance in the report preparation. We would also like to express our appreciation to all County departments who assisted in this process and to the Board of Supervisors for its leadership responsibility and unfailing support to ensure the continued general fiscal health and integrity of the County. Respectfully submitted, James W. Hamilton, CPA Wade Horton Auditor-Controller-Treasurer-Tax Collector County Administrative Officer 10 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to County of San Luis Obispo California For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2020 Executive Director/CEO 11 COUNTY OF SAN LUIS OBISPO LIST OF ELECTED AND APPOINTED OFFICIALS JUNE 30, 2021 Elected Officials Board of Supervisors District #1 .................................................................................................... John Peschong District #2 .................................................................................................. Bruce S. Gibson District #3 ................................................................................................. Dawn Ortiz-Legg District #4 Chairperson .................................................................................... Lynn Compton District #5 ..................................................................................................... Debbie Arnold Other Elected Officials Assessor ............................................................................................. Tom J. Bordonaro Jr. Auditor-Controller-Treasurer-Tax Collector-Public Administrator ................. James W. Hamilton County Clerk-Recorder .................................................................................... Tommy Gong District Attorney ..................................................................................................... Dan Dow Sheriff-Coroner .............................................................................................. Ian Parkinson Appointed Officials Agricultural Commissioner ......................................................................... Martin Settevendemie Director of Airports ......................................................................................... Courtney Johnson Behavioral Health Administrator ................................................................................ Anne Robin Central Services Director ................................................................................ Christopher Lopez Chief Probation Officer .......................................................................................... Robert Reyes Director of Child Support Services ......................................................................... Natalie Walter County Administrative Officer ................................................................................ Wade Horton County Counsel ...................................................................................................... Rita L. Neal County Fire Chief ..................................................................................................... Eddy Moore Director of UC Cooperative Extension .................................................................. Katherine Soule Health Agency Director ............................................................................................ Michael Hill Human Resources Director ......................................................................... Tami Douglas-Schatz Director of Information Technology .......................................................................... Daniel Milei Library Director ........................................................................................ Christopher Barnickel Director of Parks and Recreation ................................................................................ Nick Franco Director of Planning and Building ............................................................................. Trevor Keith Public Health Officer ....................................................................................... Penny Borenstein Director of Public Works ........................................................................................... John Diodati County Social Services Director ............................................................................... Devin Drake Veterans’ Services Officer ....................................................................................... Morgan Boyd 12 County(cid:3)of(cid:3)San(cid:3)Luis(cid:3)Obispo(cid:3)Organizational(cid:3)Chart (cid:3)(cid:3)(cid:3)(cid:3)Citizens(cid:3)of(cid:3)San(cid:3)Luis(cid:3)Obispo(cid:3)County Special(cid:3)Districts(cid:3)Governed(cid:3)by(cid:3) Boards,(cid:3)Commissions(cid:3)and(cid:3) ---------------- Board(cid:3)of(cid:3)Supervisors* ------------------ the(cid:3)Board(cid:3)of(cid:3)Supervisors Committees County(cid:3)Administrator Land Public Health(cid:3)&(cid:3)Human Community Fiscal(cid:3)& Internal Based Protection Services Services Administrative Support Auditor(cid:882) Controller(cid:882) Agricultural Child(cid:3)Support(cid:3) County Airports Treasurer(cid:882)Tax(cid:3) Commissioner Services Health(cid:3)Agency(cid:3) Counsel Collector(cid:882)Public(cid:3) Public(cid:3)Health(cid:3) Mental(cid:3)Health(cid:3)Drug(cid:3) Administrator* &(cid:3)Alcohol(cid:3)Animal(cid:3) Services(cid:3)(cid:3)Medical(cid:3) Services UC(cid:3) Planning(cid:3)& Administrative(cid:3) County(cid:3)Fire** Cooperative(cid:3) Central(cid:3)Services Building Office Extension District(cid:3) Public(cid:3)Works Social(cid:3)Services Library Assessor* Human(cid:3)Resources(cid:3) Attorney* Emergency(cid:3) Veterans'(cid:3) Parks(cid:3)&(cid:3) Information(cid:3) Clerk(cid:882)Recorder* Services Services Recreation Technology Probation Sheriff(cid:882) Coroner* Public(cid:3) Defender** * Elected Officials **Contract 13 ________________________________________________________________ FINANCIAL SECTION ________________________________________________________________ CliftonLarsonAllen LLP CLAconnect.com 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, 2021, 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 and 100 percent of the assets and revenues of the discretely presented component unit, respectively. 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 CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details. 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, 2021, 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 Cumulative effect of change in accounting principle As disclosed in Note 19 to the financial statements, the County adopted GASB Statement No. 84 Fiduciary Activities. As a result of the implementation of this standard, the County reported a restatement for the change in accounting principle. Our opinion is not modified with respect to this matter. As disclosed in Note 19 to the financial statements, the County reported a restatement for the cumulative change in accounting principle related to loans receivable. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedule of 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 15 ________________________________________________________________ MANAGEMENT’S DISCUSSION AND ANALYSIS ________________________________________________________________ COUNTY OF SAN LUIS OBISPO MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2021 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, 2021. We encourage readers to consider the information presented here in conjunction with the transmittal letter at the front of this report and the County’s financial statements, which begin on page 41. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL HIGHLIGHTS The assets of the County exceeded its liabilities at the close of the most recent fiscal year by $1,460,246 (net position). The majority of this amount, $1,494,484 is the net investment in capital assets, while $104,024 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 $138,262 (Table A). The County’s total net position increased by $94,388. The increase is the combination of a $83,737 increase in governmental activities and a $10,651 increase in business-type activities. The change in the total net position is comprised of an increase in restricted net position and a decrease in negative unrestricted net position caused by increased revenues and decreased expenses (Table B). The $3.0 million increase in net investment in capital assets represents capital acquisitions during the year reduced by depreciation and increased by retirement of long-term debt (Table A). As of June 30, 2021, the County’s governmental activities reported combined ending net position of $1,066,479, an increase of $83,737 in comparison with the prior year. Due to the recording of the long- term pension and OPEB obligations, no amount of the governmental activities’ 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 $6,065 before general revenues, contributions and transfers from other funds, an increase of $1,470 when compared to net program income of $4,595 in the prior year. The difference from the prior year is related to increased Airport operating grants of $2,936 and capital grants of $633. These increases were offset by a net decrease in Fees, Fines, and Charges for Services across all business-type activities of $1,439. Overall expenses for business-type activities increased $895 thousand. At the end of the fiscal year, the entire $402,300 fund balance of the General Fund was either nonspendable $9,861, restricted $24,212, committed $194,669 or assigned $173,558. Consistent with the prior year, the County prepaid its $70.1 million employer retirement contribution to the San Luis Obispo County Pension Trust (Pension Trust) in July of 2021. The prior year prepayment was $61.6 million. The County will save an estimated $1.5 million by prepaying the employer retirement contribution. 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. 17 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Government-wide financial statements The Government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the County’s assets, deferred outflows 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. 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. 18 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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. 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 County also discretely presents the San Luis Obispo County Pension Trust which is an independent trust that administers the San Luis Obispo County Employees Retirement Plan on behalf of the County. The San Luis Obispo County Pension Trust is a fiduciary component unit and is presented in the Fiduciary Fund Financial Statements. 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 89 of this report. 19 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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 90 to 97 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 including the County’s General Fund and 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 98 to 107 and 125 to 140 of this report. Budgetary comparison schedules - The budgetary comparison schedules (other than the General Fund which is presented in the required supplementary information section) 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 108 to 124 of this report. Detail budgetary schedules demonstrating legal level of compliance with budgetary control for the General Fund are presented on pages 141 to 148 of this report. 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 $1,441,596 as detailed in the table below: Table A Statement of Net Position June 30, 2021 (in thousands) June 30, 2021 June 30, 2020 2020-2021 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 $ 725,741 $ 167,177 $ 892,918 $ 620,672 $ 160,246 $ 780,918 14.3% Other noncurrent assets 22,230 10,499 32,729 21,957 10,375 32,332 1.2% Capital assets 1,241,383 584,991 1,826,374 1,227,138 589,280 1,816,418 0.5% Total assets 1,989,354 762,667 2,752,021 1,869,767 759,901 2,629,668 4.7% Deferred Outflows of Resources 114,546 4,450 118,996 81,473 5,151 86,624 37.4% Liabilities: Current liabilities 142,883 32,803 175,686 99,278 39,499 138,777 26.6% Long-term liabilities 828,237 339,563 1,167,800 810,625 340,909 1,151,534 1.4% Total liabilities 971,120 372,366 1,343,486 909,903 380,408 1,290,311 4.1% Deferred Inflows of Resources 66,301 984 67,285 58,595 1,528 60,123 11.9% Net position: Net investment in capital assets 1,210,972 283,512 1,494,484 1,202,709 288,782 1,491,491 0.2% Restricted 104,024 - 104,024 66,655 - 66,655 56.1% Unrestricted (248,517) 110,255 (138,262) (286,622) 94,334 (192,288) (28.1%) Total net position $ 1,066,479 $ 393,767 $ 1,460,246 $ 982,742 $ 383,116 $ 1,365,858 6.9% 20 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Analysis of Net Position The County’s total net position increased by $94.4 million or 6.9%. The total net position increase was a combination of increased total assets ($122.4 million), increased deferred outflows of resources ($32.4 million), increased total liabilities ($53.2 million), and increased deferred inflow of resources ($7.2 million). Causes for the changes in each of these categories are detailed below. The overall $122.4 million increase in total assets, 4.7%, is primarily due to inflows of the governmental activities’ cash and restricted cash ($121.2 million) and an increase in governmental activities’ due from other governments ($5.6 million). Increased cash resulted from decreased total governmental activities expenses of $21.4 million combined with increased governmental activities program revenues of $26.1 million and increased business-type activities program revenues of $2.4 million. The increases to cash were offset by a $6.9 million reduction to Community Development loans receivable. In governmental activities general revenues also increased for property taxes ($9.4 million), sales and use tax ($1.1 million), transient occupancy tax ($5.0 million), transfer tax ($401 thousand), and other taxes ($51 thousand). Additionally, grants not restricted to specific programs increased $37.3 million due to federal COVID-19 awards being recognized ($27.0 million CARES, $8.4 million Emergency Rental Assistance Program, and $3.6 million in reimbursed FEMA expenses). Additional information regarding changes in revenues and expenses can be found after Table B – Statement of Activities. The $32.4 million increase, or 37.4%, in deferred outflows of resources was the combination of increases in deferred pension resources ($29.7 million) and deferred OPEB resources ($2.9 million), and slightly offset by a decrease in deferred loss on debt refunding ($182 thousand). The pension deferred outflows net increase was caused primarily by changes in the net difference between projected and actual earnings on pension plan investments from the prior year and slightly offset by a $1.9 million increase in County contributions subsequent to the measurement date. The OPEB deferred outflows increase was primarily attributable to the difference between the expected and actual liability, combined with contributions made between the measurement date and reporting date. Total liabilities of the County increased $53.2 million, or 4.1%. The largest contributors to the increase were the County’s net pension obligation of $12.1 million, the OPEB liability of $6.5 million, and unearned revenue of $32.3 million. The increase in unearned revenue relates to the County’s 1st installment of the American Rescue Plan Act ($27.5 million) which had been received but not yet spent as of June 30, 2021. Deferred inflows of resources increased $7.2 million, or 11.9%. The increase is the combination of a $32.4 million increase related to deferred pension resources associated with the change in the net difference between projected and actual earnings on pension plan investments and a restatement related to Community Development loans receivable. A change in deferred inflow recognition resulted in a restatement of $18.0 million. 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 $1,494,484. 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 $104,024, or 7.1%, of the balance of the County’s net position represents resources that are subject to external restrictions on how they may be used. 21 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) At the end of the current fiscal year, the County reported positive balances for business-type activities in all net position categories. In total, the County’s net position increased $94.4 million. Total net position for governmental activities increased $83.8 million and total net position for business-type activities increased $10.7 million due to normal operating activities. Net Investment in Capital Assets for business-type and governmental activities increased a net of $3.0 million. Business-type activities net investment decreased $5.3 million due to the depreciation of existing capital projects exceeding the increase in new assets being depreciated. New business-type capital assets include State Water Project water rights ($3.1 million) and construction in progress related to the Airport rehabilitation project ($2.0 million). The remainder is the reduction to capital related debt from scheduled debt service principal payments. Governmental activities net investment increased $8.3 million. The increase is related to the new Animal Services Facility ($7.3 million) and Roads projects including: work beginning on the Tefft St/Hwy 101 Interchange Operational Improvement Project ($1.2 million), widening of Los Berros Road in Nipomo to allow for the incorporation of bike lanes ($541 thousand), pedestrian enhancements in Oceano ($447 thousand), and replacement of the Jack Creek Road Bridge in Templeton ($407 thousand). The retirement of capital related long-term debt also contributed to the increase. Restricted net position represents net position of the County which is subject to constraints imposed by creditors, grantors, contributors, laws, or regulations. The $37.4 million, or 56.1%, increase to Restricted net position for governmental activities is primarily comprised of increases to the General Government ($9.0 million), Public Protection ($12.6 million), Health and Sanitation ($17.6 million), and Public Ways and Facilities ($2.3 million). Debt Service decreased $7.1 million. The General Government increase related to purchase obligations for capital outlay for countywide automation ($2.9 million increase), as well as increased claims, contracts and other restrictions imposed by grantors or contributors. The Public Protection increase was driven by capital project retention payments associated with the new Animal Services Facility ($303 thousand) and Women’s Jail Expansion ($1.6 million). Health and Sanitation’s increase related to the recognition of additional Mental Health Services Act funds as restricted. Public Ways and Facilities’ increase related to increased Public Facilities Fees ($1.2 million) and Road Impact Fees ($899 thousand). The Debt Service decrease was the combination of increased Pension Obligation Bond payments ($4.5 million) and transfers out of debt proceeds received for the 2020 Lease Revenue Bonds Series A for the construction of the new Animal Services Facility. There was an increase of $54.0 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 table on the next page indicates the changes in net position for governmental and business-type activities: 22 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table B Statement of Activities For the Year Ended June 30, 2021 (in thousands) June 30, 2021 June 30, 2020 2020-2021 Govern- Business- Total Govern- Business- Total Total mental Type Primary mental Type Primary % Activities Activities Government Activities Activities Government Chg Revenues: Program revenues: Charges for services $ 60,886 $ 53,767 $ 114,653 $ 55,269 $ 55,206 $ 110,475 3.8% Operating grants and contributions 285,082 7,709 292,791 261,619 4,666 266,285 10.0% Capital grants and contributions 16,859 3,884 20,743 19,884 3,123 23,007 (9.8%) General revenues: Property taxes 208,371 4,387 212,758 198,927 4,043 202,970 4.8% Other taxes 34,440 - 34,440 27,878 - 27,878 23.5% Interest and investment income 696 405 1,101 12,849 2,169 15,018 (92.7%) Grants not restricted to specific programs 41,157 - 41,157 3,845 - 3,845 970.4% Other revenues 4,813 76 4,889 1,144 2,889 4,033 21.2% Total revenues 652,304 70,228 722,532 581,415 72,096 653,511 10.6% Expenses: General government 55,612 - 55,612 53,926 - 53,926 3.1% Public protection 204,861 - 204,861 241,749 - 241,749 (15.3%) Public ways and facilities 36,017 - 36,017 33,199 - 33,199 8.5% Health and sanitation 121,358 - 121,358 113,463 - 113,463 7.0% Public assistance 134,476 - 134,476 132,868 - 132,868 1.2% Education 14,213 - 14,213 14,322 - 14,322 (0.8%) Recreation and cultural services 10,497 - 10,497 11,501 - 11,501 (8.7%) Interest on long-term debt 9,645 - 9,645 7,057 - 7,057 36.7% Airport - 9,146 9,146 - 10,133 10,133 (9.7%) Golf - 3,869 3,869 - 3,347 3,347 15.6% State Water Contract - 6,928 6,928 - 7,709 7,709 (10.1%) Nacimiento Water Contract - 14,816 14,816 - 13,257 13,257 11.8% Lopez Flood Control - 7,087 7,087 - 6,733 6,733 5.3% Lopez Park - 1 1 - 2 2 (50.0%) General Flood Control - 1,170 1,170 - 913 913 28.1% County Service Areas - 4,697 4,697 - 4,670 4,670 0.6% Los Osos Wastewater - 11,581 11,581 - 11,636 11,636 (0.5%) Total expenses 586,679 59,295 645,974 608,085 58,400 666,485 (3.1%) Excess/(deficiency) before transfers 65,625 10,933 76,558 (26,670) 13,696 (12,974) (690.1%) Transfers 282 (282) - (493) 493 - - Change in net position 65,907 10,651 76,558 (27,163) 14,189 (12,974) (690.1%) Net position - beginning of year 982,742 383,116 1,365,858 1,009,905 368,927 1,378,832 (0.9%) Cumulative effect of change in accounting principal 17,830 - 17,830 - - - - Net position - end of year $ 1,066,479 $ 393,767 $ 1,460,246 $ 982,742 $ 383,116 $ 1,365,858 6.9% 23 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Analysis of Governmental and Business-type Activities Governmental Activities Governmental Activities increased the County’s net position by $83.7 million compared to a decrease of $27.2 million in the prior year. Overall, total revenues for governmental activities increased $70.9 million, or 12.2%. Significant factors contributing to the overall increase in revenues from the prior year are detailed below: Grants Not Restricted to Specific Programs increased by $37.3 million, or 970.4% due to the receipt of Federal Aid of $27.0 million from the CARES Act, $8.4 million from the Emergency Rental Assistance Program (ERAP), and a $1.9 million increase in FEMA reimbursement from the prior year. Operating Grants and Contributions increased by $23.5 million, or 9.0%, primarily due to a $11.9 million increase in state aid for Medi-Cal, a $6.0 million increase in state aid for Mental Health Services Act, and various increases in other state awards related to Behavioral and Public Health programs. Property Taxes rose $9.4 million, or 4.7% over the prior year, a function of the regular 2% increase in assessed property value allowed by California’s Proposition 13. Other Taxes increased by $6.6 million, or 23.5%, due to a $1.1 million increase in sales tax revenues and a $5.0 million increase in transient occupancy taxes collected. Changes for Services increased by $5.6 million, or 10.2%, mostly attributable to an increase in camping fees, an increase in road impact fees, and an increase in recording fees. Overall, total expenses decreased by $21.4 million, or 3.5%. Notable factors contributing to the overall decrease in expenses from the prior year are detailed below: Public Protection expenses decreased by $36.9 million, or 15.3% primarily due to a decrease in overall net pension related expenses of $25.5 million. Additionally, services and supplies decreased by $6.7 million due to a decrease in professional services. Other charges decreased by $3.4 million mainly due to $3.1 million in grant payments being made to the Templeton and Oceano Community Services Districts in FY 2019-20 related to the Integrated Regional Water Management (IRWM) Grant Program. Health and Sanitation expenses increased $7.9 million, or 7.0% due to the combination of a $4.1 million increase in salaries and wages, a $3.8 million increase in professional services, and a $1.2 million increase in purchases and supplies related to the County’s emergency response to COVID-19 offset by a decrease in other charges. Public Ways and Facilities expenses increased $2.8 million, or 8.5% due to an increase in services and supplies expense related to Roads projects. For FY 2020-21, the County was able to maintain its funding of General Fund contingencies at a level of 5%, while still making investments in the many programs and services provided to the community. Business-type Activities Business-type activities increased the County’s net position by $10.7 million compared to an increase of $14.2 million in the previous year. Revenues exceeding expenses by $10.9 million, and a transfer of $282 thousand to governmental activities resulted in the total increase to net position. Key elements of current year business-type activity are as follows: 24 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Total revenue decreased $1.9 million or 2.6% from the preceding year. Airport’s Fees, Fines, and Charges for Services decreased $2.2 million due to reduced passenger travel during the pandemic. Airport parking fees collected decreased $783 thousand and passenger facility charges decreased $460 thousand from the prior year. The reduction in fees collected due to reduced travel was offset by additional Operating Grants and Contributions from the CARES Act revenue issued by the Federal Aviation Administration to support airport’s loss of revenue experienced during the pandemic. The Airport received $5.0 million in CARES Act funding, a $2.5 million increase over FY 2019- 20. While passenger travel decreased, the use of the County’s golf courses increased. Overall, Golf’s Fees, Fines, and Charges for Services increased $1.6 million. Increased use of the courses and the addition of the TopTracer digital technology at the Dairy Creek Golf Course driving range resulted in increased revenues. The largest increase occurring in Operating Grants and Contributions ($4.8 million) related to the Airport receiving $4.5 million in CARES Act funding from the Federal Aviation Administration. Additionally, Other Revenues decreased $2.8 million related to the receipt of settlement damages for leakage repairs associated with the Nacimiento water pipeline in the prior year. Expenses for business-type activities increased $895 thousand or 1.5% from the prior year. Within business-type activities, the largest increase, $1.6 million, related to increased professional services costs for repairs to the Nacimiento water pipeline. Decreased operating expenses in the Airport and State Water helped offset the increase. 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, $9,867, decreased by $8.9 million, 47.3% 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 $93, (2) prepaid items of $498, and (3) long-term receivables of $9,276. The decrease from the prior year primarily relates to the repayment of an advance made from the General Fund to the Los Osos Wastewater Fund for a settlement payment made to a contractor of the Los Osos wastewater treatment facility. • Restricted fund balance, $82,318, increased $14.3 million, or 21.1%, 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 $4,227, (2) General Public Protection programs of $7,215, (3) Mental Health Services Act funds of $2,774, (4) Public Facilities funds of $15,796, (5) Traffic impact programs of $11,512, (6) Automation projects of $6,746, and (7) Debt service of $29,341. The increase mostly relates to an increase in amounts restricted for automation projects and public protection programs. • Committed fund balance, $283,305, increased $40.3 million, or 16.6%, 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, $18,857, (2) Tax reduction reserve, $43,305, (3) Automation projects, $12,354, (4) Roads, $20,162, (5) Building replacement, $40,748, (6) Solar plant mitigation, $15,640, (7) Capital projects, $17,107, (8) SB 1090 Economic Development, $13,126 and (9) COVID-19 services, $20,022. The increase is mostly attributable to the increase in amounts committed for COVID-19 services of $20.0 million, a 175% increase from the 25 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) $7.3 million committed in the prior year. Additionally, a prior period adjustment of $19.2 million occurred in the Community Development Fund due to a change in the recognition of the deferred inflows of resources. • Assigned fund balance, $173,558, increased $54.1 million, or 45.3%, 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) Public Health programs, $17,596, (2) Tax reduction reserve, $19,712, (3) General Government, $17,635, (4) Social Services programs, $12,534, and (5) Subsequent Fiscal Year Budget, $69,001. The largest changes in the assigned fund balance category were increases in subsequent fiscal year budget ($32.6 million), Public Health programs ($16.4 million), and general government programs ($10.9 million). As of the end of the current fiscal year, the County’s governmental funds reported combined ending fund balance of $549,048, an increase of 22.2%, or $99.9 million in comparison with the prior year. Approximately 83.2% of the total fund balance, or $456,863, 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 $392,439 while total fund balance reached $402,300. 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 $509 million. Spendable fund balance represents 77.1% of the total fund expenditures, while total fund balance represents 79.0% of the same amount, a 13.5% increase from the prior year. During the current fiscal year, the fund balance of the General Fund increased by $78.1 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 $100.3 million, which was an $81.8 million increase from the prior year. General Fund revenues ended the year with an increase of $95.7 million or 18.6% more than the prior year. The largest revenue increase occurred in Aid from Other Governments, which increased by $80.7 million. This increase includes a $27.0 million increase in CARES Act funding, an $8.4 million increase in federal Emergency Rental Assistance Program (ERAP) monies, a $1.9 million increase in FEMA funding, an $11.9 million increase in State Aid for Medi-Cal, a $5.7 million increase in State Aid for public safety, and a $4.7 million increase in State Aid realignment backfill. The second largest increase was in Taxes with a $19.6 million, or 9.5% increase from the prior year due to an increase in revenues from property taxes, sales taxes, and transient occupancy taxes. Total expenditures in the General Fund increased $13.9 million, or 2.8%, from the prior year. Expenditures increased for the General Government, Public Ways and Facilities, Health and Sanitation, and Education functions. The majority of the increase relates to a redistribution of $8.3 million of ERAP funding to the State to administer the program. Other increases across functions related to retirement expense, worker’s compensation insurance, and medical insurance premiums ($7.5 million). Expenditures decreased for the Public Protection, Public Assistance, and Recreation and Cultural Services functions due to reduced professional services. 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 $19.0 million. Capital outlay expenditures exceeded revenues by $12.3 million and net transfers totaled $12.4 million. The combination of these two factors resulted in a $110 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 $5.1 million to the Capital Projects Fund for various capital projects including $991 thousand for renovations to the Women’s Jail and $437 thousand for renovations to Honor Farm Jail, $413 thousand for construction of the Sheriff and County Fire co-located emergency dispatch facility, and $171 thousand for Los Osos Landfill remediation. The remainder was for development of the new Probation Department building and various general government projects. 26 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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 $674.3 million in the current fiscal year and increased by approximately 14.9%, or $87.2 million, from the prior fiscal year revenues of $587.1 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, 2021 (in thousands) 2020-2021 2019-2020 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Revenues by Source: Taxes $ 243,406 36.1% $ 223,041 38.0% $ 20,365 9.1% Licenses, Permits, and Franchises 12,522 1.9% 11,477 1.9% 1,045 9.1% Fines, Forfeitures, and Penalties 4,352 0.6% 3,916 0.7% 436 11.1% Use of Money and Property 1,084 0.2% 12,247 2.1% (11,163) (91.1%) Aid from Governmental Agencies 348,093 51.6% 277,267 47.2% 70,826 25.5% Charges for Current Services 51,694 7.7% 46,712 8.0% 4,982 10.7% Other Revenues 13,104 1.9% 12,396 8.0% 708 5.7% Total $ 674,255 100% $ 587,056 100% $ 87,199 14.9% The following provides an explanation of revenues by source that changed significantly over the prior year in the governmental funds. Taxes increased $20.4 million, or 9.1% primarily due to the regular 2% increase in assessed property value allowed by California’s Proposition 13, a 50% increase in transient occupancy taxes, and an increase in sales tax revenues. Licenses, Permits, and Franchises increased $1.0 million, or 9.1%. The increase was driven by an increase in land use and building permits as well as an increase in franchise fees. Use of Money and Property decreased $11.2 million, or 91.1% due to a decrease in the fair market value of various investments and decreased interest earnings from the prior year. Aid from Governmental Agencies increased $70.8 million, or 25.5% primarily due to increased state and federal aid related to the COVID-19 pandemic. Federal aid of $27.0 million was received from the CARES Act and $8.4 million was received from the Emergency Rental Assistance Program (ERAP). State aid increased with regards to Medi-Cal, Public Health and Safety, and Mental Health. 27 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Charges for Services increased $5.0 million, or 10.7%. The increase was driven by an increase in election services, recording fees, camping fees, and fire protection services. Other Revenues increased $708 thousand, or 5.7%. The increase is primarily attributable to reimbursements from participating cities for the construction of the new Animal Services facility. 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, 2021 (in thousands) 2020-2021 2019-2020 Increase/(Decrease) Percent Percent Percent Amount of Total Amount of Total Amount Change Expenditures by Function: General Government $ 64,686 10.8% $ 54,078 9.1% $ 10,608 19.6% Public Protection 199,299 33.4% 205,162 34.7% (5,863) (2.9%) Public Ways and Facilities 37,099 6.2% 43,865 7.4% (6,766) (15.4%) Health and Sanitation 117,359 19.6% 108,158 18.3% 9,201 8.5% Public Assistance 129,141 21.6% 131,154 22.2% (2,013) (1.5%) Education 13,368 2.2% 12,769 2.2% 599 4.7% Recreation and Cultural Services 10,976 1.8% 11,637 2.0% (661) (5.7%) Principal payments 5,289 0.9% 10,561 1.8% (5,272) (49.9%) Interest on Long-Term Debt 7,030 1.2% 6,416 1.1% 614 9.6% Capital outlay 13,795 2.3% 7,645 1.3% 6,150 80.4% Total $ 598,042 100% $ 591,445 100% $ 6,597 1.1% The following provides an explanation of the expenditures by function that changed significantly over the prior year. General Government expenditures increased $10.6 million, or 19.6%. The increase primarily relates to a redistribution of $8.3 million of the County’s Emergency Rental Assistance Program funding to the State of California’s Department of Housing and Community Development to administer the program on the County’s behalf. Public Ways and Facilities expenditures decreased $6.8 million, or 15.4% primarily due to the completion of several large projects, such as the Geneseo Road project and the Estrella River Bridge project. Health and Sanitation expenditures increased $9.2 million, or 8.5%. The increase is primarily due to salaries, services, and supplies needed to respond to the COVID-19 pandemic. Principal Payments on Long-Term Debt decreased by $5.3 million, or 49.9% due to the payoff of the 2008 Series A Vineyard Drive Interchange Certificates of Participation in the prior year. Capital Outlay expenditures increased $6.2 million, or 80.4%. The increase is primarily due to the construction of the Animal Services Facility, a joint effort between the County and participating cities. 28 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 2020-21 fiscal year. Table E Statement of Revenues, Expenses and Results of Operations Proprietary Funds Fund Financial Statements For the Year Ended June 30, 2021 (in thousands) Major Nonmajor Funds Funds Total Nacimiento State Other Water Water Los Osos Enterprise Total Airport Contract Project Wastewater Funds Enterprise Operating revenues $ 6,202 $ 17,458 $ 7,470 $ 5,334 $ 17,558 $ 54,022 Operating expenses 9,123 7,795 6,870 8,190 15,640 47,618 Operating income (loss) (2,921) 9,663 600 (2,856) 1,918 6,404 Non-operating revenues (expenses), net 7,605 (6,630) 2,455 (3,290) 767 907 Net income (loss) before contributions and transfers 4,684 3,033 3,055 (6,146) 2,685 7,311 Contributions and transfers, net 841 - - 2,371 390 3,602 Change in net position $ 5,525 $ 3,033 $ 3,055 $ (3,775) $ 3,075 $ 10,913 All the enterprise funds are expected to continue to meet their ongoing cost of operations and to be able to maintain sufficient reserves in the long-term. The Airport Fund reported an operating loss of $2.9 million, a $1.2 million increase from the prior year operating loss of $1.7 million. Operating revenues decreased by $2.5 million compared to the prior year due to the ongoing COVID-19 pandemic. Enplanement activity decreased for only the second time since the 2013-14 fiscal year, declining by approximately 30% from the prior year. Net position increased by $5.5 million compared to an increase in net position of $3.4 million in the prior year. Despite the operating revenue decline, net position increased as a result of non-operating revenues of $7.6 million which include the Federal Aviation Administration’s CARES Act funds and Airport Improvement Program grants. The Nacimiento Water Contract Fund realized operating income of $9.7 million, a decrease of $3.8 million from the prior year’s operating income of $13.5 million. Operating income decreased by $3.8 million due to a decrease in operating revenues of $2.0 million and an increase in operating expenses of $1.8 million. The decrease in operating revenues is primarily attributable to the receipt of a $2.6 million settlement in the prior year for pipeline repairs and slightly offset by an $800 thousand increase in water sales in the current fiscal year. The $1.8 million increase in operating expenses is due to $1.2 million in costs 29 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) associated with the North Salinas River crossing repair as well an increase in electricity expense. Overall net position increased $3.0 million compared to an increase in net position of $7.1 million in the prior year. The State Water Project Fund realized operating income of $600 thousand, a $381 thousand increase from the prior year’s operating income of $219 thousand. The increase is primarily attributable to a $736 thousand decrease in operating expenses over the prior year but was offset by $355 thousand in decreased water sales. Overall, net position increased by $3.1 million, which is primarily attributable to property tax receipts. The Los Osos Wastewater Fund reported an operating loss of $2.9 million, consistent with the prior year’s operating loss. The wastewater plant began full-service operations in FY 2016-17. Both operating revenue and expense remained relatively similar to the prior year. Operating revenue increased by $73 thousand and operating expenses decreased $19 thousand. Overall net position decreased $3.8 million, which is equal to the prior year’s decrease in net position. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget for expenditures and transfers out increased by $71.0 million, or 12.6%, during the year, leading to the final amended budget. This increase was funded by increases to both budgeted revenues and transfers-in ($70 million) and the uses of reserves and designations for the balance. Unanticipated revenues totaling $54.3 million in State, Federal, and Other Governmental Aid, $1.4 million in Other Revenue, $250 thousand in Licenses, Permits and Franchises, $279 thousand in Interfund Revenues, $311 thousand in Charges for Current Services, $316 thousand in Fines, Forfeitures, and Penalties, and $12.7 million in Other Financing Sources financed the budget augmentations. General Government function augmentations of $28.2 million were primarily for $8.3 million of payments for emergency services and Clerk-Recorder program augmentations of $1.4 million with the remaining augmentations going toward the maintenance and upgrade of County facilities. Public Protection function augmentations of $16.0 million were primarily divided among Emergency Services augmentations of $5.9 million, County Fire which received $4.2 million in augmentations, Sheriff-Coroner program augmentations of $2.7 million, Planning and Building program augmentations of $1.4 million, Public Defender program augmentations totaling $1.1 million, Waste Management program augmentations of $283 thousand, and various smaller augmentations totaling $473 thousand to the District Attorney, Probation, Animal Services, and Agricultural Commissioner’s programs. The $12.8 million increase in the Public Assistance function relates almost entirely to Social Services including CalWORKS assistance, law enforcement medical care and indigent burial programs. Recreation augmentations totaling $3.3 million were primarily for Parks related capital projects. Public Ways and Facilities augmentations of $2.2 million were for $1.3 million of Development Services for outside agency projects, with the remainder primarily relating to Special District projects. At the close of the fiscal year, actual General Fund expenditures were 82.8% of the current budget, while General Fund revenues were realized at 96.0% of budget. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets On June 30, 2021, the County had $1.8 billion invested in a broad range of capital assets, including land, buildings, systems improvements, machinery and equipment, park facilities, golf courses, airport facilities, roads, bridges, dams, and water and sewer lines (see Table F). This amount represents a net increase (including additions and deductions) of $10.0 million or 0.5% from last year. 30 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) Table F Capital Assets June 30, 2021 (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 2020 2021 2020 2021 2020 2021 Change Land $ 795,532 $ 796,008 $ 36,513 $ 36,718 $ 832,045 $ 832,726 0.1% Water Rights - - 61,212 64,277 61,212 64,277 5.0% Other Property Non-Depreciable - - 1,968 1,968 1,968 1,968 - Construction-in- progress 35,171 45,188 3,997 3,470 39,168 48,658 24.2% Structures & Improvements 268,005 277,769 210,480 212,043 478,485 489,812 2.4% Equipment 104,901 106,582 10,317 10,899 115,218 117,481 2.0% Other Property Depreciable 1,258 1,258 554 554 1,812 1,812 - Infrastructure Depreciable 434,516 447,306 381,692 385,248 816,208 832,554 2.0% Subtotal 1,639,383 1,674,111 706,733 715,177 2,346,116 2,389,288 1.8% Less Accumulated Depreciation (412,245) (432,728) (117,453) (130,186) (529,698) (562,914) 6.3% Total $ 1,227,138 $ 1,241,383 $ 589,280 $ 584,991 $ 1,816,418 $ 1,826,374 0.5% Major additions and future commitments in capital assets - Governmental Activities County Roads had the majority of additions in governmental activities with $11.9 million worth of assets. Microsurfacing, overlay, and chip seal projects throughout the County comprised most of the road additions. Other major roads projects include work beginning on the Tefft St/Hwy 101 Interchange Operational Improvement Project ($1.2 million), widening of Los Berros Road in Nipomo to allow for the incorporation of bike lanes ($541 thousand), pedestrian enhancements in Oceano ($447 thousand), and replacement of the Jack Creek Road Bridge in Templeton ($407 thousand). Other notable capital asset additions during FY 2020-21 include work on the new Animal Services Facility ($7.2 million), enhancement of the Arroyo Grande levee ($3.8 million), and $1.3 million of radio modernization. The Co-located dispatch project continued ($413 thousand) and roof improvements were made to both the Grover Beach Health Campus ($178 thousand) and the San Luis Obispo Vet’s Hall ($122 thousand). Major additions and future commitments in capital assets - Business-type Activities Within business-type activities, The County constructed two new water storage tanks in Cayucos ($1.6 million); the Airport continued work on the runway rehabilitation and safety projects ($1.2 million) and isolation valves were installed on the Nacimiento Water Project ($653 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 2020-21 was $89.8 million. Pension Obligation Bonds debt service payments are funded by County payroll benefits. 31 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) The remainder of the County’s debt consists of $33.4 million in certificates of participation, which are repaid from a variety of revenues; $90 million in State loans; $72.9 million in assessment bonds relating to the Los Osos Wastewater project; $163 million in revenue bonds which are repaid with water service revenue; and $23.8 million in lease revenue bonds for the construction and equipping of an animal services facility. General Obligation Bonds totaling $7.1 million are backed by the full faith and credit of the County. Table G Outstanding Debt June 30, 2021 (in thousands) Govern- Govern- Business- Business- mental mental Type Type Activities Activities Activities Activities Total Total Total June 30, June 30, June 30, June 30, June 30, June 30, Percent 2020 2021 2020 2021 2020 2021 Change Certificates of Participation $ 13,076 $ 11,891 $ 11,299 $ 10,377 $ 24,375 $ 22,268 (8.6%) Certificates of Participation from Direct Borrowings 5,636 8,347 2,871 2,818 8,507 11,165 31.2% Pension Obligation Bonds 93,733 89,825 - - 93,733 89,825 (4.2%) State Notes from Direct Borrowings 1,744 1,586 81,079 88,385 82,823 89,971 8.6% Lease Revenue Bonds 24,403 23,807 - - 24,403 23,807 (2.4%) Revenue Bonds - - 167,918 162,983 167,918 162,983 (2.9%) General Obligation Bonds - - 7,645 7,104 7,645 7,104 (7.1%) Assessment Bonds - 391 73,943 72,483 73,943 72,874 (1.4%) Total $ 138,592 $ 135,847 $ 344,755 $ 344,150 $ 483,347 $ 479,997 (0.7%) The decrease from the prior year for the County’s certificates of participation, notes, and bonds payable was $3.4 million, or 0.7%. The decrease was caused by $17.3 million of debt payments offset by an $11 million increase of a Los Osos Wastewater Project loan and the issuance of $2.8 million of Certificates of Participation to finance the construction of a storm drain improvement project in Oceano. Additionally, in FY 2020-21, a change in accounting principle resulted in an ending balance increase of $391 thousand to include Special District Assessment Bond debt related to Roads which was previously recorded in a Fiduciary Fund. Detailed information on the issuance of debt and change in accounting principle can be found in Notes 10 and 19. 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 $777.5 million. Other liabilities include compensated absences of $37.6 million for governmental activities and $529 thousand for business-type activities; landfill post-closure costs of $7.2 million; and a self-insurance liability of $21.0 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. 32 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 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 2020-21 budget. The impacts COVID-19 will have to the County’s funding sources are not yet fully known, but the County has received grants to support specific programs to address issues related to the pandemic (including direct response), as well as more broad allocations to generally assist local governments. Significant allocations include: • $28.3 million in Coronavirus Relief Funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. • $55.0 million in American Rescue Plan Act (ARPA) funds. • $5.2 million of Federal Emergency Management Agency (FEMA) expense reimbursement from the beginning of the pandemic through FY 2020-21. The Governor’s FY 2021-22 January budget proposal continues to emphasize the homeless challenges that the State is facing. The State has invested $1 billion in state and federal revenues towards homeless programs and services since the onset of the COVID-19 pandemic, and the FY 2021-22 budget proposes to allocate $1.75 billion of one-time General Fund revenue to fund proposals to address the homeless crisis. The proposals include: • $750 million of additional funding for continued Project Homekey acquisitions and operations. This funding would provide for additional competitive grants for local governments to purchase and rehabilitate housing (including hotels, motels, vacant apartment buildings, and other buildings) and convert them into interim or permanent long-term housing. As a part of this, the Governor is seeking early action from the Legislature on $250 million to continue funding Project Homekey projects in the current year. As previously reported, our county received $15 million from Project Homekey in October 2020. This funding was allocated to the Housing Authority of San Luis Obispo (HASLO), Peoples’ Self-Help Housing and the El Camino Homeless Organization (ECHO) to convert a Motel 6 into a homeless shelter and low-income housing facility. • $750 million to expand outpatient treatment options and help counties provide treatment in less restrictive, community-based residential care settings. This funding will be allocated to counties through a competitive grant process to fund efforts to acquire and rehabilitate property to expand the community continuum of behavioral health treatment resources and infrastructure. Counties will be required a provide a local match. • $250 million of one-time General Fund to be provided to counties for the acquisition or rehabilitation of adult residential facilities and residential care facilities for the elderly. The closure of Diablo Canyon Power Plant (Diablo Canyon) in 2025 is expected to 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 addition to unitary taxes from the value of the plant, the County receives direct funding from PG&E for emergency preparedness and response activities. PG&E also initiates a variety of expenditures including emergency equipment, infrastructure and training which provide sales tax, as well as general economic benefits to the community. The reduction in unitary taxes from Diablo Canyon will occur gradually as the assessed value of the plant declines leading up to the closure in 2025. Total unitary tax revenue, inclusive of Diablo Canyon, is budgeted to decrease by approximately $488 thousand in FY 2021-22, representing an 8% decrease compared to the FY 2020- 33 MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) 21 budget. 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 it $34.9 million portion in FY 2018-19. Economic indicators show signs of an improving economy although COVID-19 continues to impact normal business activities. • Sales tax revenue for unincorporated areas came in at $13.6 million, or 8.8% higher than the preceding year. • County assessed property tax valuations increased from $59.5 million to $62.2 million or 4.5%. • Transient Occupancy Tax collections were $15.0 million, which is a $5 million, or 50%, increase from FY 2019-20. This increase is primarily attributable to a rebound in tourism demand after COVID-19 shelter in place orders were lifted. The Board of Supervisors adopted the FY 2021-22 budget in June 2021, with a $172.9 million fund balance in the General Fund, of which $69.0 million was appropriated to finance the current year’s expenditures including contingencies. $13 million was placed in general reserves, and $64.8 million was earmarked for designations. The total General Fund budget for FY 2021-22 is $640.9 million, a 10.6% 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, 2021 (IN THOUSANDS) Primary Government Component Unit Governmental Business-Type First 5 Activities Activities Total San Luis Obispo ASSETS Current Assets: Cash and cash equivalents $ 606,990 $ 7 1,710 $ 678,700 $ 9,384 Accounts receivable, net 15,512 3,646 19,158 - Property taxes receivable 16,909 - 16,909 - Other receivables 2,196 1 04,170 1 06,366 - Due from other governments 48,723 1,669 50,392 188 Deposits with others 3 86 89 4 Internal balances 15,008 (15,008) - - Inventories 710 20 730 - Prepaid items 498 662 1,160 3 Loans receivable (net of allowance for uncollectibles) 19,192 222 19,414 - Total Current Assets 7 25,741 1 67,177 8 92,918 9,579 Noncurrent Assets: Restricted cash with fiscal agent 22,230 10,211 32,441 - Prepaid insurance - 288 288 - Capital Assets: Nondepreciable 8 41,196 1 06,433 9 47,629 - Depreciable, net 4 00,187 4 78,558 8 78,745 - Total Noncurrent Assets 1,263,613 5 95,490 1,859,103 - Total Assets 1,989,354 7 62,667 2,752,021 9,579 DEFERRED OUTFLOWS OF RESOURCES Deferred pensions 93,026 925 93,951 74 Deferred OPEB 21,520 261 21,781 - Deferred loss on refunding - 3,264 3,264 - Total Deferred Outflows of Resources 1 14,546 4,450 1 18,996 74 LIABILITIES Current Liabilities: Accounts payable 24,097 8,872 32,969 184 Salaries and benefits payable 18,091 207 18,298 - Deposits from others 17,977 2,179 20,156 - Accrued interest 4,346 4,379 8,725 - Other current liabilities 2,095 - 2,095 - Unearned revenue 37,495 5,359 42,854 - Bonds and notes payable 11,745 11,606 23,351 - Compensated absences 22,169 201 22,370 5 Landfill closure/postclosure costs 716 - 716 - Self-insurance payable 4,152 - 4,152 - Total Current Liabilities 1 42,883 32,803 1 75,686 189 Long-Term Liabilities: Net pension liability 6 31,109 6,276 6 37,385 101 Net OPEB liability 34,172 415 34,587 - Bonds and notes payable 1 24,102 3 32,544 4 56,646 - Compensated absences 15,461 328 15,789 15 Landfill closure/postclosure costs 6,529 - 6,529 - Self-insurance payable 16,864 - 16,864 - Total Long-Term Liabilities 8 28,237 3 39,563 1,167,800 116 Total Liabilities 9 71,120 3 72,366 1,343,486 305 DEFERRED INFLOWS OF RESOURCES Deferred pensions 64,649 643 65,292 1 Deferred OPEB 1,652 20 1,672 - Deferred bond refunding - 321 321 - Total Deferred Inflows of Resources 66,301 984 67,285 1 NET POSITION Net investment in capital assets 1,210,972 2 83,512 1,494,484 - Restricted for: General government 13,917 - 13,917 - Public protection 18,088 - 18,088 - Health and sanitation 17,650 - 17,650 - Public assistance 2,814 - 2,814 - Public ways and facilities 28,026 - 28,026 - Recreation and cultural services 202 - 202 - Education 217 - 217 - Debt service 23,110 - 23,110 - Unrestricted (248,517) 1 10,255 (138,262) 9,347 Total Net Position $ 1,066,479 $ 393,767 $ 1,460,246 $ 9,347 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, 2021 (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 $ 55,612 $ 15,502 $ 789 $ - $ 16,291 Public protection 204,861 2 3,552 6 7,187 3,814 9 4,553 Public ways and facilities 3 6,017 5,532 1 1,073 1 2,856 2 9,461 Health and sanitation 121,358 8,038 9 1,988 - 100,026 Public assistance 134,476 926 113,555 - 114,481 Education 1 4,213 1,622 219 - 1,841 Recreation and cultural services 1 0,497 5,714 271 189 6,174 Interest on long-term debt 9,645 - - - - Total governmental activities 586,679 6 0,886 285,082 1 6,859 362,827 Business-type activities: Airport 9,146 6,140 7,580 1,138 1 4,858 Golf 3,869 4,376 105 200 4,681 State Water Contract 6,928 7,470 15 - 7,485 Nacimiento Water Contract 1 4,816 1 7,458 - - 1 7,458 Lopez Flood Control 7,087 6,927 6 - 6,933 Lopez Park 1 - - - - General Flood Control - Salinas Dam 1,170 1,370 - - 1,370 County Service Areas 4,697 4,702 3 - 4,705 Los Osos Wastewater 1 1,581 5,324 - 2,546 7,870 Total business-type activities 5 9,295 5 3,767 7,709 3,884 6 5,360 Total primary government $ 645,974 $ 114,653 $ 292,791 $ 20,743 $ 428,187 Component unit: First 5 San Luis Obispo $ 1 ,871 $ - $ 2 ,049 $ - $ 2 ,049 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, 2021 (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 $ (39,321) $ - $ (39,321) Public protection (110,308) - (110,308) Public ways and facilities (6,556) - (6,556) Health and sanitation (21,332) - (21,332) Public assistance (19,995) - (19,995) Education (12,372) - (12,372) Recreation and cultural services (4,323) - (4,323) Interest on long-term debt (9,645) - (9,645) Total governmental activities (223,852) - (223,852) Business-type activities: Airport - 5,712 5,712 Golf - 812 812 State Water Contract - 557 557 Nacimiento Water Contract - 2,642 2,642 Lopez Flood Control - (154) (154) Lopez Park - (1) (1) General Flood Control - 200 200 County Service Areas - 8 8 Los Osos Wastewater - (3,711) (3,711) Total business-type activities - 6,065 6,065 Total primary government $ (223,852) $ 6,065 $ (217,787) Component unit: First 5 San Luis Obispo $ 178 General Revenues: Taxes: Property taxes 208,371 4,387 212,758 - Sales and use taxes 1 3,617 - 1 3,617 - Transient occupancy taxes 1 4,984 - 1 4,984 - Transfer tax 4,264 - 4,264 - Other taxes 1,575 - 1,575 - Grants not restricted to specific programs 4 1,157 - 4 1,157 - Interest earnings not restricted to specific programs 696 405 1,101 92 Other revenues 4,813 76 4,889 100 Transfers 282 (282) - - Total General Revenues and Transfers 289,759 4,586 294,345 192 Change in net position 6 5,907 1 0,651 76,558 370 Net position - beginning of year, as restated 982,742 383,116 1,365,858 8,977 Cumulative effect of change in accounting principle 1 7,830 - 1 7,830 - Net position - end of year $ 1,066,479 $ 393,767 $ 1,460,246 $ 9 ,347 37 ________________________________________________________________ BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS ________________________________________________________________ COUNTY OF SAN LUIS OBISPO BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2021 (IN THOUSANDS) Nonmajor Total General Capital Projects Governmental Governmental Fund Fund Funds Funds ASSETS Cash and cash equivalents $ 451,897 $ 13,914 $ 95,112 $ 560,923 Restricted cash with fiscal agent - 1,885 2 0,345 2 2,230 Accounts receivable, net 1 5,087 - 401 1 5,488 Accrued property taxes receivable 1 6,909 - - 1 6,909 Other receivables 2,196 - - 2,196 Due from other governments 3 6,760 1,400 1 0,563 4 8,723 Due from other funds - 8,134 400 8,534 Inventories 93 - - 93 Loans receivable, net of allowance for uncollectibles - - 1 9,192 1 9,192 Advances to other funds 9,276 - 2,690 1 1,966 Prepaid items 492 - 6 498 Other assets - - 3 3 Total assets $ 532,710 $ 25,333 $ 148,712 $ 706,755 LIABILITIES Accounts payable $ 16,465 $ 4 ,408 $ 2 ,839 $ 23,712 Salaries and benefits payable 1 6,191 - 531 1 6,722 Due to other funds - - 8,134 8,134 Deposits from others 9,957 - 2,531 1 2,488 Unearned revenue 3 6,917 498 80 3 7,495 Other current liabilities 2,095 - - 2,095 Advances from other funds - 48 991 1,039 Total liabilities 8 1,625 4,954 1 5,106 101,685 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 4 8,785 1,387 5,850 5 6,022 Total deferred inflows of resources 4 8,785 1,387 5,850 5 6,022 FUND BALANCES Nonspendable 9,861 - 6 9,867 Restricted 2 4,212 1,885 5 6,221 8 2,318 Committed 194,669 1 7,107 7 1,529 283,305 Assigned 173,558 - - 173,558 Unassigned - - - - Total fund balances 402,300 1 8,992 127,756 549,048 Total liabilities, deferred inflows of resources, and fund balances $ 532,710 $ 25,333 $ 148,712 $ 706,755 The accompanying notes are an integral part of these financial statements. 38 COUNTY OF SAN LUIS OBISPO STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) Total Fund Balances - Total Governmental Funds $ 549,048 Amounts reported for Governmental Activities in the Statement of Net Position were different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. 1,228,160 Accrued property tax and grant revenues are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 56,022 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. (25,627) 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. 3,681 Interest on long-term debt is recognized as it accrues, regardless of when it is due. (4,346) 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. (575,874) 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. (31,012) 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. 25,893 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. 18,031 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 (20,238) Bonds and notes payable (115,609) Compensated absences (34,405) Landfill closure/postclosure costs ( 7,245) (177,497) Net Position of Governmental Activities $ 1,066,479 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 ENDED JUNE 30, 2021 (IN THOUSANDS) Nonmajor Total General Capital Projects Governmental Governmental Fund Fund Funds Funds REVENUES Taxes $ 225,758 $ - $ 1 7,648 $ 243,406 Licenses, permits, and franchises 12,522 - - 12,522 Fines, forfeitures, and penalties 3,577 319 456 4,352 Use of money and property 995 - 8 9 1,084 Aid from other governments 320,356 189 27,548 348,093 Charges for services 35,775 1,004 14,915 51,694 Other revenues 10,253 - 2,851 13,104 Total revenues 609,236 1,512 63,507 674,255 EXPENDITURES Current: General government 64,686 - - 64,686 Public protection 191,559 - 7,740 199,299 Public ways and facilities 3,796 - 33,303 37,099 Health and sanitation 114,904 - 2,455 117,359 Public assistance 128,616 - 525 129,141 Education 620 - 12,748 13,368 Recreation and cultural services 4,571 - 6,405 10,976 Debt service: Principal payments 158 - 5,131 5,289 Interest and fiscal charges 1 7 - 7,013 7,030 Capital outlay - 1 3,795 - 13,795 Total expenditures 508,927 1 3,795 75,320 598,042 Excess (deficiency) of revenues over (under) expenditures 100,309 (12,283) (11,813) 76,213 OTHER FINANCING SOURCES (USES) Debt Issued - - 2,841 2,841 Transfers in 1,433 1 2,393 23,558 37,384 Transfers out (23,604) - (12,490) (36,094) Total other financing sources (uses) (22,171) 1 2,393 13,909 4,131 Net change in fund balances 78,138 110 2,096 80,344 Fund balances - beginning, as restated 324,530 1 8,882 1 05,772 449,184 Cumulative effect of change in accounting principle ( 368) - 19,888 19,520 Fund balances - ending $ 402,300 $ 18,992 $ 127,756 $ 549,048 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, 2021 (IN THOUSANDS) Net Change in Fund Balances - Total Governmental Funds $ 80,344 Amounts reported for governmental activities in the Statement of Revenues, Expenditures, and Changes in Fund Balances were different because: Propertytax, intergovernmentalrevenueandotherrevenueintheStatement ofActivities thatdo not provide current financial resources are not reported as revenues in the funds. (5,414) Governmental funds report capital outlay as expenditures. Theseexpenditures haveno effecton net position. Capital outlay expenditures that have no effect on net position are reported in the following functional categories: Capital outlay $ 13,460 General government 3 ,457 Public protection 7 ,234 Public ways 11,941 Health and sanitation 289 Public assistance 105 Education 144 Recreation and cultural services 350 36,980 IntheStatementofActivities,thecostofcapitalassetsisallocatedovertheirestimatedusefullives and reported as depreciation expense. ( 22,238) Theneteffectofvarious miscellaneoustransactions involvingcapital assets(i.e., sales, trade-ins, and donations) is to decrease net position. (144) Bondproceedsarereportedasfinancingsourcesingovernmentalfundsandthuscontributetothe change in fund balance. In the Statement of Net Position, however, issuing debt increases long- term liabilities and does not affect the Statement of Activities. Similarly, repayment of principal is an expenditure in the governmental funds, but reduces the liability in the Statement of Net Position. Debt principal payments 5 ,419 Debt Issuance (2,841) SomeexpensesreportedintheGovernment-WideStatementofActivitiesdonotrequiretheuseof current financial resources. Therefore, they are not reported as expenditures in governmental funds: Change in compensated absences $ ( 2,142) Change in accrued interest payable (3,020) Change in landfill closure/postclosure costs (86) Change in net OPEB liability (5,900) Change in deferred OPEB outflows 2 ,578 Change in deferred OPEB inflows 392 Change in Net Pension Liability ( 12,083) Change in deferred pension outflows ( 47,610) Change in deferred pension inflows 45,206 Change in capital appreciation bond accretion 328 Amortization of debt premiums, discounts and issuance costs 275 ( 22,062) InternalservicefundswereusedbytheCountytochargethecostsofvehiclefleetmanagement, comprehensive public works services, and operations of the County's workers' compensation, protected self-insurance, unemployment, anddental insuranceprograms to individual funds. The net revenue or expenditure effect of internal service funds is reported with governmental activities. (4,399) Repayment and issuance of community development loans are reported as revenue and expendituresinthefundstatementswhichcontributetothechangeinfundbalance. However,in theStatementofNetPositionloanrepaymentsandissuanceschangedeferredinflowsanddonot affect the Statement of Activities. - The net (revenue) expense allocable to business-type activities 262 The accompanying notes are an integral part of these financial statements. Change in Net Position of Governmental Activities $ 65,907 41 COUNTY OF SAN LUIS OBISPO STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2021 (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 $ 16,762 $ 15,628 $ 13,703 $ 5,768 $ 19,849 $ 71,710 $ 46,067 Accounts receivable, net - 2 3,235 - 409 3,646 24 Other receivables 326 - - 103,844 - 104,170 - Due from other governments 1,669 - - - - 1,669 - Deposits with others - - - - 86 86 - Inventories - - - - 20 20 617 Loans receivable - - - 222 - 222 - Prepaid items - - - - 662 662 - Total current assets 18,757 15,630 16,938 109,834 21,026 182,185 46,708 Noncurrent assets: Advances to other funds - - - - 60 60 - Restricted cash with fiscal agent - 9,723 - - 488 10,211 - Prepaid insurance - 288 - - - 288 - Capital assets: Nondepreciable: Land 24,030 3,259 - 5,406 4,022 36,717 - Construction in progress 2,608 164 - - 699 3,471 - Water rights - 64,277 - 64,277 - Other property - - - - 1,968 1,968 - Depreciable: Infrastructure, net 415 143,833 12 165,582 22,535 332,377 - Structures and improvements, net 75,066 8,415 5,461 715 49,912 139,569 357 Equipment, net 4,962 7 2 100 1,045 6,116 12,866 Other property, net - - - - 496 496 - Total noncurrent assets 107,081 165,689 69,752 171,803 81,225 595,550 13,223 Total assets 125,838 181,319 86,690 281,637 102,251 777,735 59,931 DEFERRED OUTFLOWS OF RESOURCES Deferred pensions 516 - - - 409 925 8,142 Deferred OPEB 161 - - - 100 261 1,990 Deferred loss on refunding - 3,264 - - - 3,264 - Total deferred outflows of resources 677 3,264 - - 509 4,450 10,132 LIABILITIES Current liabilities: Accounts payable 752 972 6,753 77 318 8,872 385 Salaries and benefits payable 111 - - - 96 207 1,369 Interest payable - 2,395 - 1,640 344 4,379 - Self-insurance payable - - - - - - 4,152 Deposits from others 79 595 1,048 5 452 2,179 5,489 Unearned revenue 44 3,135 2,138 - 42 5,359 - Due to other funds - - - - 400 400 - Accrued vacation and sick leave - current 102 - - - 99 201 2,227 Notes and bonds payable - current - 4,745 - 3,840 3,021 11,606 - Total current liabilities 1,088 11,842 9,939 5,562 4,772 33,203 13,622 Noncurrent liabilities: Self-insurance liability - - - - - - 16,864 Advances from other funds 5,506 - - 2,293 3,188 10,987 - Accrued vacation and sick leave 157 - - - 171 328 998 Notes and bonds payable - 158,238 - 143,454 30,852 332,544 - Net OPEB Liability 256 - - - 159 415 3,160 Net Pension Liability 3,500 - - - 2,776 6,276 55,235 Total noncurrent liabilities 9,419 158,238 - 145,747 37,146 350,550 76,257 Total liabilities 10,507 170,080 9,939 151,309 41,918 383,753 89,879 DEFERRED INFLOWS OF RESOURCES Deferred pensions 359 - - - 284 643 5,658 Deferred OPEB 12 - - - 8 20 153 Bond refunding - 321 - - - 321 - Total deferred inflows of resources 371 321 - - 292 984 5,811 NET POSITION Net investment in capital assets 106,516 5,361 69,752 55,060 46,823 283,512 13,223 Unrestricted 9,121 8,821 6,999 75,268 13,727 113,936 (38,850) Total net position $ 1 15,637 $ 14,182 $ 76,751 $ 1 30,328 $ 60,550 397,448 $ (25,627) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds ( 3,681) Net Position of Business-Type Activities per Government-Wide Financial Statements $ 3 93,767 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, 2021 (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 $ 6,172 $ 17,458 $ 7,470 $ 5,324 $ 17,522 $ 53,946 $ 59,180 Other revenues 30 - - 10 36 76 75 Total operating revenues 6,202 17,458 7,470 5,334 17,558 54,022 59,255 OPERATING EXPENSES: Salaries and benefits 2,233 - - - 1,798 4,031 32,354 Services and supplies 3,141 5,522 6,643 3,752 11,119 30,177 22,668 Other charges 30 - - - 3 33 - Insurance benefit payments - - - - - - 5,799 Depreciation 3,513 2,203 2 04 4,366 2,469 12,755 2,740 Countywide cost allocation 2 06 70 23 72 2 51 6 22 5 55 Total operating expenses 9,123 7,795 6,870 8,190 15,640 47,618 64,116 Operating income (loss) ( 2,921) 9,663 6 00 ( 2,856) 1,918 6,404 ( 4,861) NONOPERATING REVENUES (EXPENSES): Property taxes - - 2,460 45 1,882 4,387 - Interest income 30 3 48 - 11 16 4 05 7 Interest expense (5) ( 6,978) (20) ( 3,346) ( 1,245) (11,594) - Sale of capital assets - - - - - - 2 45 Aid from governmental agencies 7,580 - 15 - 1 14 7,709 1,211 Other revenues - - - - - - 7 Total nonoperating revenues (expenses) 7,605 ( 6,630) 2,455 ( 3,290) 7 67 9 07 1,470 Income (loss) before contributions and transfers 4,684 3,033 3,055 ( 6,146) 2,685 7,311 ( 3,391) Capital contributions 1,138 - - 2,546 2 00 3,884 - Transfers in - - - - 2 50 2 50 3 98 Transfers out (297) - - (175) (60) (532) ( 1,406) Change in net position 5,525 3,033 3,055 ( 3,775) 3,075 10,913 ( 4,399) Net position - beginning 110,112 11,149 73,696 134,103 57,475 (21,228) Net position - ending $ 115,637 $ 14,182 $ 76,751 $ 130,328 $ 60,550 $ (25,627) Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (262) Change in Net Position of Business-Type Activities per Government-Wide Financial Statements $ 10,651 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, 2021 (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 $ 6,099 $ 11,994 $ 4,611 $ 5,334 $ 17,505 $ 45,543 $ - Receipts from interfund billings - - - - - - 59,240 Payments for goods and services (2,893) (5,541) (6,308) (3,804) (1,829) (20,375) (17,083) Payments to employees for services (2,095) - - - (12,361) (14,456) (31,773) Payments for insurance benefits - - - - - - (4,922) Payments for premiums - - - - - - (6,542) Net cash provided (used) by operating activities 1,111 6,453 (1,697) 1,530 3,315 10,712 (1,080) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Property tax proceeds - - 2,460 - 1,882 4,342 - Grants and subsidies from other governmental agencies 8,583 - 1 4 - 114 8,711 1,210 Advances from other funds - - - - 1,673 1,673 - Due from other funds - - - - 300 300 - Transfers from other funds - - - - 250 250 398 Transfers to other funds ( 297) - - ( 175) (60) ( 532) (1,406) Other Nonoperating Revenue/Expenses - - - 4 5 - 4 5 - Net cash provided (used) by noncapital financing activities 8,286 - 2,474 ( 130) 4,159 14,789 202 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchases and construction of capital assets (2,211) ( 700) (3,064) - (2,493) (8,468) (2,379) Proceeds from sale of capital assets - - - - - - 245 Advances to other funds - - - - 1 9 1 9 - Advances from other funds (1,242) - - - (6) (1,248) - Capital contributions 1,138 - - 5,126 200 6,464 - Principal paid on capital debt ( 378) (4,346) - (2,757) (2,910) (10,391) - Interest paid on capital debt (9) (7,462) (19) (3,773) (1,360) (12,623) - Net cash provided (used) by capital and related financing activities (2,702) (12,508) (3,083) (1,404) (6,550) (26,247) (2,134) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 3 0 348 - 1 1 1 6 405 7 Net cash provided (used) by investing activities 3 0 348 - 1 1 1 6 405 7 Net increase (decrease) in cash and cash equivalents 6,725 (5,707) (2,306) 7 940 ( 341) (3,005) CASH AND CASH EQUIVALENTS: Beginning of year 10,037 31,058 16,009 5,761 19,397 82,262 49,072 End of year $ 16,762 $ 25,351 $ 13,703 $ 5,768 $ 20,337 $ 81,921 $ 46,067 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ (2,921) $ 9,663 $ 600 $ (2,856) $ 1,918 $ 6,404 $ (4,861) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 3,513 2,203 204 4,366 2,469 12,755 2,740 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net (65) (2) (1,633) 2 (30) (1,728) (16) Inventory - - - - 1 6 1 6 (27) Prepaid items - - - - 176 176 221 Deferred outflows - pension 287 - - - 268 555 4,824 Deferred outflows - OPEB (22) - - - (14) (36) ( 241) Increase (decrease) in: Accounts payable 489 5 0 357 1 8 (1,200) ( 286) ( 627) Deposits from others - - ( 906) - 3 7 ( 869) 110 Salaries and benefits payable 9 - - - 3 5 4 4 ( 131) Deferred inflows - pension ( 273) - - - ( 249) ( 522) (4,538) Deferred inflows - OPEB (3) - - - (2) (5) (43) Net OPEB liability 5 0 - - - 3 0 8 0 570 Net pension liability 8 5 - - - ( 106) (21) 6 2 Unearned revenue (38) (5,461) ( 319) - (33) (5,851) - Self-insurance liability - - - - - - 877 Total adjustments 4,032 (3,210) (2,297) 4,386 1,397 4,308 3,781 Net cash provided (used) by operating activities $ 1,111 $ 6,453 $ (1,697) $ 1,530 $ 3,315 $ 10,712 $ (1,080) The accompanying notes are an integral part of these financial statements. 44 COUNTY OF SAN LUIS OBISPO STATEMENT OF FIDUCIARY NET POSITION CUSTODIAL AND INVESTMENT TRUST FUNDS JUNE 30, 2021 (IN THOUSANDS) SAN LUIS OBISPO PENSION TRUST FUND DECEMBER 31, 2020 (IN THOUSANDS) San Luis Obispo Investment County Trust Custodial Total Pension Trust Funds Funds Fiduciary December 31, 2020 June 30, 2021 June 30, 2021 Funds ASSETS Cash and cash equivalents $ 61,482 $ 520,623 $ 113,172 $ 695,277 Receivables: Contributions 1,272 - - 1,272 Interest and dividends 585 - - 585 Securities sold 1,171 - - 1,171 Taxes for other governments - - 486 486 Investments at fair value: Bonds and notes 268,621 - - 268,621 International fixed income 153,501 - - 153,501 Collateralized mortgage obligations 7,365 - - 7,365 Domestic equities 359,291 - - 359,291 International equities 370,824 - - 370,824 Alternative investments 172,467 - - 172,467 Real estate 206,419 - - 206,419 Other assets 189 - 2,190 2,379 Capital assets, net 6,758 - 17 6,775 Total assets $ 1 ,609,945 $ 520,623 $ 115,865 2,246,433 LIABILITIES Other current liabilities $ 1,266 $ - $ 68,090 6 9,356 Prefunded contributions 29,762 - - 2 9,762 Securities purchased 12,591 - - 1 2,591 Other long-term liabilities - - 9 9 Total liabilities $ 4 3,619 $ - $ 6 8,099 111,718 NET POSITION Restricted for: Pensions $ 1 ,566,326 $ - $ - 1,566,326 Pool Participants - 5 20,623 - 520,623 Individuals, organizations and other governments - - 4 7,766 4 7,766 Total net position $ 1 ,566,326 $ 5 20,623 $ 4 7,766 2,134,715 The accompanying notes are an integral part of these financial statements. 45 COUNTY OF SAN LUIS OBISPO STATEMENT OF CHANGES IN FIDUCIARY NET POSITION CUSTODIAL AND INVESTMENT TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) SAN LUIS OBISPO PENSION TRUST FUND FOR THE YEAR ENDED DECEMBER 31, 2020 (IN THOUSANDS) San Luis Obispo Investment County Trust Custodial Total Pension Trust Funds Funds Fiduciary December31,2020 June30,2021 June30,2021 Funds ADDITIONS Contributions: Contributions to pooled investments $ - $ 1,202,409 $ - $ 1,202,409 Employer contributions 5 6,306 - - 5 6,306 Member contributions 3 5,888 - - 3 5,888 Total contributions 9 2,194 1,202,409 - 1,294,603 Investment income: Realized and unrealized gains and losses 144,466 - - 144,466 Interest 3,406 4,121 917 8,444 Dividends 7,908 - - 7,908 Investment expenses (3,529) - - (3,529) Total investment income 152,251 4,121 917 157,289 Property taxes collected for other governments - - 212,276 212,276 Sales taxes collected for other governments - - 15,381 1 5,381 Other Income 36 - 11,183 1 1,219 Total additions 244,481 1,206,530 239,757 1,690,768 DEDUCTIONS Benefits: Monthly benefit payments 109,135 - - 109,135 Refunds of contributions 3,168 - - 3,168 Death benefits 865 - - 865 Total benefits 113,168 - - 113,168 Administrative expenses 2,570 - 30 2,600 Distributions from pooled investments - 1,119,380 - 1,119,380 Depreciation expense - - - - Interest expenses - - 24,973 2 4,973 Payments to other local governments - - 2 ,558 2,558 Prefunded discount amortization 1,421 - - 1,421 Property taxes distributed to other governments - - 206,219 206,219 Total deductions 1 17,159 1 ,119,380 2 33,780 1 ,470,319 Change in net position 1 27,322 8 7,150 5 ,977 220,449 Net position - beginning 1 ,439,004 4 33,473 4 1,369 1,913,846 Cumulative effect of Change in Accounting Principle - - 4 20 420 Net position - ending $ 1 ,566,326 $ 5 20,623 $ 4 7,766 $ 2 ,134,715 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, 2021 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, 80, and 84. 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. 47 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Also, included in the accompanying financial statements as investment trust funds are the assets of numerous self- governed schools, special districts, and regional boards and authorities for which the County Treasurer acts as custodian of those assets. The financial reporting for these governmental entities, which are independent of the County, is limited to the total amount of cash and investments and the related fiduciary responsibility of the County for disbursement of these assets. Activities of these entities are administered by separate boards and are independent of the County Board of Supervisors. The County Auditor-Controller-Treasurer-Tax Collector makes disbursements upon the request of the entity’s officers. The County Board of Supervisors has no effective authority to govern, manage, approve budgets, assume financial accountability, establish revenue limits, nor to appropriate surplus funds available in these entities. Seven cities and numerous self-governed special districts provide services to the residents of the County. The operations of these entities have been excluded from the basic financial statements as each entity conducts its own day-to-day operations and answers to its own governing board. Discretely Presented Component Units Children and Families Commission of 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. The County also discretely presents the San Luis Obispo County Pension Trust which is an independent trust that administers the San Luis Obispo County Employees Retirement Plan on behalf of the County, and is a fiduciary component unit which is presented in the Fiduciary Fund Financial Statements. 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 Countywide 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. 48 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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, 2021, the County implemented the following Governmental Accounting Standards Board (GASB) Statements: • GASB Statement No. 84, Fiduciary Activities (GASB 84). The requirements of this statement are effective for financial statement periods beginning after December 15, 2020. GASB 84 improves consistency in accounting and financial reporting for fiduciary activities by providing guidance on how to report specific fiduciary activities based on certain criteria. • GASB Statement No. 98, The Annual Comprehensive Financial Report (GASB 98). The requirements of this statement are effective for fiscal years ending after December 15, 2021; however, the County has implemented this Statement this fiscal year. GASB 98 establishes the term annual comprehensive financial report and its acronym ACFR. This Statement was developed in response to concerns raised by stakeholders that the common pronunciation of the former acronym sounds like a profoundly objectionable racial slur. 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. 49 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) • 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 of 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. • 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, 2020. • 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 Custodial Funds account for the resources held by the County in a custodial capacity on behalf of other agencies. 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 fiduciary 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. 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 taxes, 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 50 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) accounting. However, prepaid items, such as rent expense, are recorded using the consumption method which recognizes expenses during the period benefited by the prepayment. Debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recognized as expenditures only to the extent that payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. The County eliminates the effect of interfund activity from the Government-wide financial statements by consolidating internal activities and indirect expenses in the statement of activities. Interfund services provided and used are not eliminated in the process of consolidation. When both restricted and unrestricted resources are available for use, it is the County’s policy to use restricted resources first, and then unrestricted resources as they are needed. D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND EQUITY Deposits and Investments In accordance with 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, 2021. 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 99.88 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 51 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. 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. 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 53 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 CalPERS. 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. 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) 54 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 1994-95. Fitch reaffirmed the County Pool’s “AAAf/S1” rating on September 9, 2020. 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 Annual Comprehensive 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, 2021. The results of these audits are 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 1.66 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, 2021, the CTSTF NAV was $1.006 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 1.00008297 for its portfolio as of June 30, 2021. 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, 2021, 2.31% of the LAIF pool includes Medium-term and Short-term Structured notes and Asset-backed securities. The Local Investment Advisory Board, which consists of five members as designated by statute, provides oversight for LAIF. As of June 30, 2021, the County’s combined pool includes funds deposited in collateralized interest-bearing bank accounts known as Public Investment Money Market Accounts (PIMMAs) and FDIC Insured Placement Service 55 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Deposits. Per CGC §53631 et seq., PIMMAs are depository accounts, not investments, and are fully liquid and collateralized by eligible securities. Placement Service Deposits are when a single large deposit is placed into individual deposits of less than $250,000 with network banks. As a result, full FDIC insurance is maintained. Placement Service Deposits are not term deposits, and the full balance is available at any time on demand. PIMMAs and Placement Service Deposits are not investments by code, but 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 1.001761739887 in the Quarterly Report of Investments as of June 30, 2021, 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’s IP and the Treasurer’s written policies and procedures to reduce exposure to investment risks. The County’s 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’s IP and the Treasurer’s written policies and procedures within the limits of the CGC and all relevant laws. As of June 30, 2021, 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 2020-21 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 25% N/A U.S. Government Agencies: Farm Credit 4 years 25% N/A Local Agency Investment Fund (LAIF) N/A 15% N/A Joint Powers Authority Pool N/A 20% 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. Public Investment Money Market Accounts (PIMMA) N/A 50% 20% FDIC Insured Placement Service Deposits N/A 15% Up to $250,000 per participating bank 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 10% of County Treasurer for each type of investment. Investments authorized, but not utilized in FY 2020-21 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 issued by a Local Agency Requires specific written approval of 1 year 5% County Treasurer for each type of investment. 56 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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. Investments not authorized in FY 2020-21 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 County’s IP, the County manages 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 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, 2021, 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, 2021. Investment Type S&P Moody's % of Portfolio* U.S. Government Agencies AA+ Aaa 32.46% U.S. Treasuries AA+ Aaa 24.31% Supranationals AAA Aaa 26.40% CalTRUST-Short-Term Fund AAf/S1+ Not Rated 9.64% LAIF Not Rated Not Rated 7.19% Total 100.00% *Where a percentage limit is specified, that limit is applicable only on the date of purchase. Bank Deposit accounts such as PIMMAs and Placement Service Deposits are tracked, managed, and reported as part of the County’s combined pool and are included in portfolio percentage limit calculations. Percentages that exceeded the limits authorized in the County’s IP as of June 30, 2021, were due to maturities and reductions in bank deposit accounts. 57 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2021, the following investments exceeded the 5% disclosure threshold: Investment Type % of Portfolio* U.S. Government Agencies-Federal Home Loan Bank 16.91% U.S. Government Agencies-Farm Credit Bank 15.55% Supranationals – IADB 12.85% Supranationals – IBRD 10.65% At June 30, 2021, the County had the following investments and interest-bearing deposits (in thousands): Weighted Average Interest Rate Maturity Instrument Maturity Dates % Years Fair Value Cost U.S. Government Agencies 8/27/21-4/14/25 0.090%-2.903% 1.70 $ 338,667 $ 338,033 U.S. Treasuries 7/15/21-2/28/25 0.124%-2.828% 1.67 253,595 252,143 Supranationals 1/18/22-4/03/25 0.206%-1.700% 2.66 275,394 277,647 CalTRUST On Demand 0.19% - 100,528 99,964 LAIF On Demand 0.560% - 75,067 75,000 Total Investments in County Treasury $ 1,043,251 $ 1,042,787 Deposits in Financial Institutions $ 320,030 $ 320,030 Cash on Hand 343 343 Total Cash held in Treasury 1,363,624 1,363,160 Deposits in Transit 5,222 5,222 Outstanding Warrants (19,920) (19,920) Total 1,348,926 1,348,462 Imprest Cash 1,271 1,271 Non-pool Cash Deposits 2,623 2,623 Other Cash Deposits 3,894 3,894 Total Cash and Cash Equivalents $ 1,352,820 $ 1,352,356 Restricted Cash with Fiscal Agent U.S. Government & Federal Agencies $ 30,556 $ 30,556 Certificates of Deposit & Money Market Accounts 1,885 1,885 Total 32,441 32,441 Total restricted and unrestricted cash and cash equivalents $ 1,385,261 $ 1,384,797 Total Cash and Investments Summary Fair Value Total Governmental Activities $ 629,220 Total Business-Type Activities 81,921 Total Investment and Custodial Fiduciary Funds 633,795 Total Fiduciary Component Unit – SLO Pension Trust as of December 31, 2020 61,482 SLO Pension Trust Fund Perspective Difference 1 (30,541) Total Component Unit – First 5 9,384 Total Cash and Investments as of June 30, 2021 $ 1,385,261 1 Perspective amount represents the combination of the change in Total SLO Pension Trust cash from the Pension Trust's ACFR Reporting Date of 12/31/2020 to the County's ACFR Reporting Date of 6/30/2021 and the portion of Pension Trust’s cash held outside of the County’s financial system. The cash balance in the County’s Treasury for San Luis Obispo County Pension Trust as of 6/30/2021 is $30,941. 58 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The following represents a condensed statement of net position and changes in net position for the Treasurer's investment pool as of June 30, 2021 (in thousands): Fair Value Statement of Net Position: Net position held for pool participants $ 1,348,926 Equity of internal pool participants $ 828,305 Equity of external pool participants (voluntary and involuntary) 520,621 Total Equity $ 1,348,926 Statement of Changes in Net Position: Revenue $ 13,238 Investment costs (894) Net deposits 217,322 Change in fair value (10,129) Net change in pool net position 219,537 Net position at July 1, 2020 1,129,389 Net position at June 30, 2021 $ 1,348,926 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, 2021: Fair Value Measurements Using Investments by fair value level Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Debt securities US Treasuries $ 253,595 $ 253,595 $ - $ - US Government Agencies 338,667 338,667 - - Supranationals 275,394 275,394 - - Total measured at fair value 867,656 867,656 - - Investments measured at amortized cost LAIF 75,067 - - - CalTRUST 100,528 - - - Total investments in County Treasury $ 1,043,251 $ - $ - $ - 59 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Restricted Cash with Fiscal Agent Cash and investments at June 30, 2021, 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 $ 30,147 Restricted interest on lease reserves 409 Restricted for contractor retentions 1,885 Total Restricted Cash $ 32,441 Cash Deposits Outside of the Treasury Pool At fiscal year-end, the carrying amount of the County's other cash deposits was $2,259,083 and the combined financial institutions' balance was $2,622,482. The difference of $363,399 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 $2,622,482 was covered by federal depository insurance or by collateral held by the County's agent in the County's name. 3. RECEIVABLES Accounts receivable at year-end of the County’s major individual funds and nonmajor and Internal Service Funds in the aggregate, including the applicable allowance for uncollectible accounts, are as follows (in thousands): Governmental Activities Internal Nonmajor Special Service General Fund Revenue Funds Funds Accounts Receivable $ 15,087 $ 401 $ 24 Allowance for Doubtful Accounts - - - Net Accounts Receivable $ 15,087 $ 401 $ 24 Business-Type Activities Nonmajor Nacimiento Water State Water Enterprise Contract Contract Funds Accounts Receivable $ 2 $ 3,235 $ 409 Allowance for Doubtful Accounts - - - Net Accounts Receivable $ 2 $ 3,235 $ 409 60 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 4. CAPITAL ASSETS A summary of changes in capital assets for the year ended June 30, 2021, is as follows (in thousands): Balance Transfers & Balance Governmental Activities July 1, 2020 Additions Retirements Adjustments June 30, 2021 Capital assets, not being depreciated: Land $ 795,532 $ 54 $ - $ 422 $ 796,008 Construction in progress 35,171 23,433 (85) (13,331) 45,188 Total capital assets, not being depreciated 830,703 23,487 (85) (12,909) 841,196 Capital assets, being depreciated: Structures and improvements 268,005 4,246 (20) 5,538 277,769 Equipment 104,901 6,236 (4,716) 161 106,582 Infrastructure 434,516 5,580 - 7,210 447,306 Other property 1,258 - - - 1,258 Total capital assets, being depreciated 808,680 16,062 (4,736) 12,909 832,915 Less accumulated depreciation for: Structures and improvements (101,983) (5,841) 20 - (107,804) Equipment (70,439) (7,958) 4,476 - (73,921) Infrastructure (239,762) (11,163) - - (250,925) Other property (61) (17) - - (78) (412,245) (24,979) 4,496 - (432,728) Total accumulated depreciation 396,435 (8,917) (240) 12,909 400,187 Total capital assets being depreciated, net $ 1,227,138 $ 14,570 $ (325) $ - $ 1,241,383 Governmental activities capital assets, net Balance Transfers & Balance Business-Type Activities July 1, 2020 Additions Retirements Adjustments June 30, 2021 Capital assets, not being depreciated: Land $ 36,513 $ 91 $ - $ 114 $ 36,718 Construction in progress 3,997 1,694 - (2,221) 3,470 Water rights 61,212 3,065 - - 64,277 Other property 1,968 - - - 1,968 Total capital assets, not being depreciated 103,690 4,850 - (2,107) 106,433 Capital assets, being depreciated: Infrastructure 381,692 3,025 - 531 385,248 Structures and improvements 210,480 - - 1,563 212,043 Equipment 10,317 591 (22) 13 10,899 Other property 554 - - - 554 Total capital assets, being depreciated 603,043 3,616 (22) 2,107 608,744 Less accumulated depreciation for: Infrastructure (45,457) (7,415) - - (52,872) Structures and improvements (67,767) (4,707) - - (72,474) Equipment (4,171) (633) 22 - (4,782) Other property (58) - - - (58) (117,453) (12,755) 22 - (130,186) Total accumulated depreciation 485,590 (9,139) - 2,107 478,558 Total capital assets being depreciated, net $ 589,280 $ (4,289) $ - $ - $ 584,991 Business-type activities capital assets, net 61 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Depreciation Expense Depreciation expense was charged to functions as follows (in thousands): Governmental Activities Amount General Government $ 4,978 Public Protection 4,062 Public Ways and Facilities 10,684 Health and Sanitation 679 Public Assistance 245 Education 425 Recreational and Cultural Services 1,166 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 2,740 Total Depreciation Expense - Governmental Activities $ 24,979 Business-Type Activities Amount Airport $ 3,513 Los Osos Wastewater 4,366 Nacimiento Water Contract 2,203 State Water Project 204 Nonmajor Enterprise 2,469 Total Depreciation Expense - Business-type Activities $ 12,755 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, 2021 (in thousands): Governmental Activities Expended to Committed Remaining Project June 30, 2021 Funds Budget Roads Infrastructure $ 17,390 $ 13,501 $ 13,408 Health – COC – Animal Services Facility 9,483 493 10,373 CDF-SLO-Program for Co-located 2,775 - 11,897 Dispatch Los Osos Landfill Remediation 1,772 43 - Radio Monitorization 1,367 4,733 - Women’s Jail 1,251 100 51 Sheriff JMS/RMS Implementation Project 1,078 3,121 - Templeton to Atascadero Connector 710 - 204 Business-Type Activities Expended to Committed Remaining Project June 30, 2021 Funds Budget Airport Runway Rehab $ 1,140 $ - $ - Airport Master Plan Update 740 - 615 62 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 41 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, 2021, they had a carrying value of $7,340 net of accumulated depreciation of $4,972. 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, 2021 (in thousands): Year Ending Governmental Business-Type June 30, Activities Activities 2022 $ 274 $ 1,187 2023 216 1,097 2024 192 951 2025 156 752 2026 98 554 Later Years 556 7,660 Total $ 1,492 $ 12,201 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 $2,634 for the fiscal year ended June 30, 2021. 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, 2021, totaled $5,235. The following rental costs represent future minimum payments under leases that have remaining non-cancelable terms as of June 30, 2021, for the next five years and for each five-year period thereafter (in thousands): Year Ending Minimum Lease June 30, Payments 2022 $ 4,336 2023 3,265 2024 2,505 2025 2,249 2026 1,759 2027-2031 4,134 2032-2036 2,009 Total $ 20,257 63 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 Public Risk Innovation, Solutions, and Management (PRISM). The County is a member of PRISM, 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 $ 199,166 maximum ----- Dental None - Funded by Employees ----- Annual actuarial valuations are obtained for the Workers' Compensation and the 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 PRISM is available on request from the Office of Risk Management, County of San Luis Obispo. The estimated claims liability for the Protected Self-Insurance Fund was recorded at a discounted 85% confidence level, and the estimated liability for the Workers' Compensation Self-Insurance Fund was 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 2019-20 $ 19,568 $ 4,708 $ 4,136 $ 20,140 2020-21 $ 20,140 $ 6,892 $ 6,016 $ 21,016 8. INTERFUND RECEIVABLES AND PAYABLES The composition of interfund balances as of June 30, 2021, was (in thousands): Payable Fund (Due to Balance) Receivable Fund (Due from Balance) Amount Nonmajor Governmental Funds Capital Projects Fund $ 8,134 Nonmajor Enterprise Funds Nonmajor Governmental Funds 400 Total $ 8,534 The SLO County Financing Authority owes the Capital Projects Fund $8,134 for bond proceeds for the Animal Services Facility. County Service 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. 64 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Payable Fund (Advances from Balance) Receivable Fund (Advances to Balance) Amount Capital Projects General Fund $ 48 Nonmajor Governmental Funds General Fund 931 Nonmajor Enterprise Funds 60 991 Nonmajor Enterprise Funds General Fund 2,791 Nonmajor Governmental Funds 397 3,188 Airport Fund General Fund 5,506 Los Osos Wastewater Fund Nonmajor Governmental Funds 2,293 Total $ 12,026 Advances related to the General Fund include an internal loan of $48 to the Capital Projects Fund to fund the Cayucos Veteran’s Hall rehabilitation, an internal loan to the County Services Area 21 Special Revenue Fund of $23, a loan of $239 related to the restoration of the Cayucos Pier, and an operating loan of $669 for Parks related to reduced revenues due to COVID-19. Nonmajor Governmental Funds’ advances from Nonmajor Enterprise Funds of $60 is for future debt payments from the Lopez Park Enterprise Fund to the Parks Special Revenue Fund. The Nonmajor Enterprise Funds advances of $3,188 represent internal loans received by the County Services Areas Enterprise Funds from the General Fund ($2,670), from the County Services Area 10 Special Revenue Fund ($255), and from the General Flood Control Zone Special Revenue Fund ($142). The Golf Fund also received $121 from the General Fund. The Airport owes the General Fund $5,506 for internal loans for various projects including the refinancing of a State loan for the construction of hangars and the new terminal. The Los Osos Wastewater Fund received a long-term operating loan from the General Flood Control Zone Special Revenue Fund of $2,293. 9. TRANSFERS A reconciliation of transfers is detailed below (in thousands): Transfer From Transfer To Amount General Fund Nonmajor Governmental Funds $ 18,044 Capital Projects Fund 5,124 Internal Service Funds 398 Nonmajor Enterprise Funds 38 23,604 Nonmajor Governmental Funds Capital Projects Fund 7,269 Nonmajor Governmental Funds 4,123 General Fund 886 Nonmajor Enterprise Funds 212 12,490 Airport Fund General Fund 220 Nonmajor Governmental Funds 77 297 65 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Transfer From Transfer To Amount Los Osos Wastewater Fund General Fund 111 Nonmajor Governmental Funds 64 175 Nonmajor Enterprise Funds Nonmajor Governmental Funds 59 General Fund 1 60 Internal Service Funds Nonmajor Governmental Funds 1,191 General Fund 215 1,406 Total Transfers $ 38,032 General Fund transfers to Nonmajor Governmental Funds included contributions to the following Special Revenue Funds: Roads ($6,241), Library ($656), Community Development ($39), and Parks ($240). The General Fund also transferred $10,868 to the Pension Obligation Bond Debt Service Fund to finance debt service payments, $39 to the Golf Fund, $398 to Internal Service Funds as reimbursement for General Fund related COVID-19 expenses, and $5,124 to the Capital Projects Fund for various capital projects including renovations to the Women’s Jail, construction of the Sheriff and County Fire co-located emergency dispatch facility, and new Probation Department building project. Nonmajor Governmental Funds’ transfers consist of contributions of Public Facilities Fees revenue from the Public Facilities Fees Special Revenue Fund to the General Fund for $399 for lease debt service payments. In addition, the Public Facilities Fees Special Revenue Fund transferred $428 to the Parks Fund for various park projects and $46 to the Capital Projects Fund for Park’s maintenance projects. The Debt Service Public Facilities Corporation Fund transferred $2,841 to the Roads Fund for the Oceano drainage project. The Debt Service SLO County Financing Authority Fund transferred $7,223 to the Capital Project Fund for the debt related to the construction of the Animal Services Facility. The Parks Special Revenue Fund made transfers to the Pension Obligation Bond Debt Service Fund ($90) and the General Fund ($87). The Roads Fund transferred $4 to Flood Control District 16 Special Revenue Fund and $20 to the General Fund. The Road Impact Fee Special Revenue Fund transferred Impact Fees of $347 to the General Fund for debt service payments, and $462 to the Roads Fund for capital and maintenance projects. Parks Special Revenue Fund transferred $2 to the Lopez Park Enterprise Fund for debt service payment. The Library Fund ($264) and the Driving Under the Influence Fund ($32) made transfers to the Pension Obligation Bond Debt Service Fund to finance debt service payments. The Library Fund transferred $33 to the General Fund for repayment for staffing assistance. County Service Area 16 Special Revenue Fund transferred $2 to the Special Revenue Flood Control Zone. The County Service Area Special Revenue Funds transferred $210 to County Service Area Enterprise Funds. The Airport Enterprise Fund transferred $220 to the General Fund and $77 to the Pension Obligation Bond Fund for debt service. The Los Osos Wastewater Fund transferred $111 to the General Fund and $64 to the Special Revenue Flood Control Districts Fund for debt service. Transfers from Nonmajor Enterprise Funds included $54 of transfers from the Golf Enterprise Fund to the Pension Obligation Bond Debt Service Fund and County Services Area 16 Enterprise Fund transferred $5 to Special Revenue Flood Control Districts Fund. County Services Area 23 Enterprise Fund transferred $1 in debt service payments to the General Fund. The Garage Internal Service Fund transferred $21 to the General Fund due to early vehicle retirement. The Workers Compensation Internal Service Fund transferred $194 to the General Fund for an on-site employee medical clinic. The Public Works ($1,137) and the Garage ($54) Internal Service Funds made transfers to the Pension Obligation Bond Debt Service Fund for debt service payments. 66 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 10. BONDED INDEBTEDNESS AND LONG-TERM DEBT Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2021, is as follows (in thousands): Beginning Ending Balance Balance Due within Governmental Activities July 1, 2020 Adjustments Additions Reductions June 30, 2021 one year Bonds and notes payable: Certificates of participation (COP) $ 12,368 $ - $ - $ 1,096 $ 11,272 $ 1,145 Certificates of participation from 5,636 - 2,841 130 8,347 184 direct borrowings Unamortized premium on COP 708 - - 89 619 - Unamortized premium on Lease 4,023 - - 186 3,837 - State n otes from direct borrowings 1,744 - - 158 1,586 160 Pension Obligation Bonds 93,733 (328) - 3,580 89,825 9,619 Lease Revenue Bonds 20,380 - - 410 19,970 590 Assessment Bonds from direct 436* - - 45 391 47 borrowings Total bonds and notes payable 139,028 (328) 2,841 5,694 135,847 11,745 Other liabilities: Compensated absences 35,519 - 20,334 18,223 37,630 22,169 Landfill post-closure costs 7,159 - 645 559 7,245 716 Self-insurance 20,140 - 6,892 6,016 21,016 4,152 Total other liabilities 62,818 - 27,871 24,798 65,891 27,037 Total Governmental Activities $ 201,846 $ (328) $ 30,712 $ 30,492 $ 201,738 $ 38,782 *Beginning balance restated, see Footnote 19, Change in Accounting Principle Beginning Ending Balance Balance Due within Business-Type Activities July 1, 2020 Adjustments Additions Reductions June 30, 2021 one year Bonds and notes payable: Certificates of participation (COP) $ 11,037 $ - $ - $ 889 $ 10,148 $ 935 Certificates of participation from 2,871 - - 53 2,818 54 direct borrowings Unamortized premium on COP 262 - - 33 229 - State notes from direct borrowings 81,079 - 11,023 3,717 88,385 3,857 Revenue bonds 159,841 - - 4,511 1 55,330 4,745 Unamortized premium on revenue 8,077 - - 424 7,653 - bonds General obligation bonds 7,025 - - 485 6,540 510 Unamortized premium on general 620 - - 56 564 - obligation bonds Assessment bonds 73,943 - - 1,460 72,483 1,505 Total bonds and notes payable 344,755 - 11,023 11,628 344,150 11,606 Other liabilities: Compensated absences 513 - 203 187 529 201 - Total other liabilities 513 203 187 529 201 Total Business-Type Activities $ 345,268 $ - $ 11,226 $ 11,815 $ 344,679 $ 11,807 67 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Annual debt service requirements for governmental activities as of June 30, 2021, are summarized as follows: Governmental Activities Certificates of Participation, Including Direct Borrowings Pension Obligation Bonds Year Ended June 30, Principal Interest Principal Unaccreted Total Appreciation 2022 1,329 730 9,361 259 9,619 2023 1,389 671 9,412 813 10,225 2024 1,442 611 9,441 1,409 10,850 2025 1,513 547 9,457 2,048 11,505 2026 1,572 485 9,462 2,723 12,185 2027-2031 4,521 1,624 42,692 21,938 64,631 2032-2036 2,629 1,053 - - - 2037-2041 1,830 611 - - - 2042-2046 1,780 330 - - - 2047-2051 710 107 - - - 2052-2056 434 64 - - - 2057-2061 470 25 - - - Total $ 19,619 $ 6,858 $ 89,825 $ 29,190 $ 119,015 State Notes Lease Revenue Bonds______ Assessment Bonds___ ____ Year Ended June 30, Principal Interest Principal Interest Principal Interest 2022 $ 160 $ 15 $ 590 $ 787 47 20 2023 162 14 610 763 50 17 2024 163 12 635 738 53 15 2025 165 11 665 712 56 12 2026 166 10 685 685 58 8 2027-2031 770 19 3,900 2,980 127 7 2032-2036 - - 4,760 2,117 - - 2037-2041 - - 4,320 1,178 - - 2042-2045 - - 3,805 312 - - Total $ 1,586 $ 81 $ 19,970 $ 10,272 391 79 Business-Type Activities Certificates of Participation, Including Direct Borrowings State Notes Revenue Bonds Year Ended June 30, Principal Interest Principal Interest Principal Interest 2022 $ 989 $ 584 $ 3,857 $ 1,722 $ 4,745 $ 7,064 2023 1,038 536 3,826 1,753 4,990 6,817 2024 1,087 484 3,737 1,668 5,250 6,558 2025 1,144 428 3,800 1,584 5,525 6,283 2026 1,198 371 3,885 1,499 5,815 5,994 2027-2031 5,335 1,000 18,877 6,170 33,580 25,456 2032-2036 416 353 14,073 4,489 42,230 16,806 2037-2041 497 270 15,537 3,024 53,195 5,846 2042-2046 597 171 17,154 1,407 - - 2047-2051 535 59 3,639 73 - - 2052-2056 130 5 - - - - 2057-2061 - - - - - - Total $ 12,966 $ 4,261 $ 88,385 $ 23,389 $ 155,330 $ 80,824 General Obligation Bonds Assessment Bonds Year Ended June 30, Principal Interest Principal Interest 2022 $ 510 $ 327 $ 1,505 $ 1,972 2023 540 300 1,541 1,931 2024 565 271 1,587 1,888 2025 595 239 1,632 1,844 2026 630 206 1,677 1,798 2027-2031 3,700 484 9,105 8,262 2032-2036 - - 10,455 6,919 2037-2041 - - 11,999 5,378 2042-2046 - - 13,764 3,609 2047-2051 - - 15,793 1,581 2052-2056 - - 3,425 47 Total $ 6,540 $ 1,827 $ 72,483 $ 35,229 68 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Long-term liabilities at June 30, 2021, consisted of the following: Original Date of Semi Annual Issue Outstanding Issue Maturity Interest Rates Installments Amount at 6/30/2021 Governmental Activities Certificates of Participation 2007 Series A 2/8/2007 2036 4% - 4.25% $79 - $307 $5,090 $3,525 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. 2012 Series A 10/15/2012 2027 0.5% - 5.0% $192 - $1,289 14,427 7,747 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% $114 - $320 6,000 5,506 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 initially consisted of the 2nd floor office spaces and the subterranean level 1 (also known as P1) located at 1055 Monterey St., City of San Luis Obispo. A collateral substitution was requested by the County to free up this original collateral to use as collateral for the Lease Revenue Bonds 2020A and Lease Revenue Refunding Bonds 2020B. Said substitution was approved by IBank on November 20, 2019 per its Resolution 19-22. Collateral was replaced by the County of San Luis Obispo Public Library and Office Building located at 6555 Capistrano Ave., Atascadero. Oceano Drainage Project 2/01/2021 2061 1.75% $25 - $98 2,841 2,841 A direct borrowing from the USDA used to finance a storm drain improvement project on Highway 1 & 13th street in Oceano, CA. Debt service is provided by the County’s General Fund. The loan is secured by a Certificate of Participation bond with first lien position in the amount of $2,841 fully registered as to both principal and interest in the name of the United States of America, acting through the United States Department of Agriculture. $28,358 $19,619 State Note 10/8/2015 2030 1.00% $88 $2,197 $1,586 A direct borrowing from the California Energy Commission (CEC) 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 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 2030 5.27% - 5.73% zero - $15,000 $44,199 $119,015 2003 Series C CABs Unaccreted Interest (29,190) $44,199 $89,825 Lease Revenue Bonds 2020 Lease Revenue Bonds Series A 3/01/2020 2044 4.0% $318- $1,030 $16,145 $15,880 Used to finance the construction and equipping of an Animal Services Facility and pay certain costs of issuance associated with the 2020A Bonds. Debt service is provided by facility charges made by participating cities to the County and the County’s General Fund. Collateral for this debt consists of the County Government Center located at 1055 Monterey St., City of San Luis Obispo. 2020 Lease Revenue Refunding Bonds Series B 3/01/2020 2036 4.0% $82 - $347 4,235 4,090 Used to prepay and refund all of the $5,620 outstanding principal amount of County of San Luis Obispo Certificates of Participation (Vineyard Drive Interchange Improvements, 2008 Series A) and pay certain costs of issuance associated with the 2020B Bonds. Debt service is provided by development fees. Collateral for this debt consists of the County Government Center located at 1055 Monterey St., City of San Luis Obispo. $20,380 $19,970 69 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Original Date of Interest Semi Annual Issue Outstanding Issue Maturity Rates Installments Amount at 6/30/2021 Assessment Bonds Sherwood Drive Underground Utility 12/21/2006 2027 5.45% $11-$67 $818 $391 Assessment District Limited Obligation Improvement Bond, Series 2006 A direct borrowing originally from Mission Community Bank (now Pacific Premier Bank) used to finance the replacement of overhead utility lines in the public right-of-way with an underground system, and removal of all overhead lines and supporting structures in the public right-of-way in the area of Sherwood Drive between Wedgewood Street and Lampton Street, including portions of Castle Street, Drake Street, Jean Street, and Kerwin Street, in the unincorporated community of Cambria. Debt service is provided by semi- annual payments from special assessments levied against all benefitted real property within the boundaries of the Sherwood Drive Underground Utility Assessment District. Business-Type Activities Certificates of Participation US Department of Agriculture (USDA) 4/30/2009 2049 4.375% $31 - $86 $1,631 $1,398 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% $189 - $928 11,990 7,290 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% $71 - $476 5,323 2,858 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% $20 - $67 1,621 1,420 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 $12,966 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. The Airport Fuel Farm loan with the California Department of Transportation was paid off on 9/09/2020. One of the Los Osos Wastewater Project loans from the State of California Department of Water Resources was modified with an additional loan amount of $11,023 on 4/29/2021. Cayucos Water Treatment Facility 1998 2023 3.0315% $87 $3,011 $335 Lopez Recreation Area 2004 2024 2.5132% $10 325 60 Lopez Water Treatment Plant Upgrade 2006 2030 2.60% $836 25,945 13,180 Airport Fuel Farm 2007 2025 4.6557% $86 1,000 - Los Osos Wastewater Project 2012 2046 2.0% $1,565 - $2,147 80,484 74,810 $110,765 $88,385 Revenue Bonds 2018 Nacimiento Water Project Revenue Refunding Bonds Series A 5/07/2018 2040 3.0% - 5.0% $433 - $9,173 $27,045 $23,125 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. 2007 Nacimiento Pipeline Project Series B 9/26/2007 2040 5.2% - 5.6% $887 - $2,636 38,565 31,850 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. 70 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 2015 Nacimiento Water Project Revenue Refunding Bonds Series A 8/5/2015 2038 3.0%-5.0% $2,271 - $8,094 107,115 100,355 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 $155,330 General Obligation Bonds 2011 Refunding – Lopez Dam Remediation 5/12/2011 2030 2.0% - 5.5% $169 - $840 $10,760 $6,540 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 5/24/2012 2051 2.75% $997 - $3,472 $83,129 $72,483 Issued by 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, 2021, totals $73,057 with interest rates from 2.52% to 5.45%. 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 $38,159 at June 30, 2021. 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 71 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 $777,508 with a margin of $770,968. Direct Placement Debt The County does not have any direct placement debt as of June 30, 2021. Direct Borrowings The County’s outstanding notes from direct borrowings related to governmental activities of $10,324 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 $91,203 contain a provision that if default continues after the cure period, the 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, 2021 had an arbitrage liability of $148. 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, 2021, is as follows (in thousands): Amount Governmental activities $ 1,210,972 Business-type activities 283,512 Total $ 1,494,484 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. 72 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Included in total restricted net position at June 30, 2021, is $15,796 of Public Facility Fees, $11,512 of Road Impact Fees, and $44 of Wildlife and Grazing programs restricted due to enabling legislation. The remaining $76,672 of restricted net position is restricted due to restrictions imposed by creditors, grantors, or contributors. Restricted net position at June 30, 2021, for governmental activities is as follows (in thousands): Amount RESTRICTED FOR: General Government Purchase obligations for Board of Supervisors professional services $ 2 Purchase obligations for Non-Departmental related professional services 8 Purchase obligations for Administrative Office related professional services 122 Purchase obligations for Assessor related equipment maintenance and professional services 41 Purchase obligations for Clerk-Recorder equipment maintenance 11 Purchase obligations for County Counsel office equipment 8 Purchase obligations for Human Services professional services and software 114 Purchase obligations for Utilities Management related professional services 19 Purchase obligations for Building Maintenance projects 4 Purchase obligations for Information Technology related equipment and professional services 213 Purchase obligations for Central Services related professional services 11 Purchase obligations for Auditor-Controller-Treasurer-Tax Collector related professional services 164 Purchase obligations for Talent Development professional services 48 Claims, contracts and other restrictions imposed by grantors or contributors 13,152 Total General Government 13,917 Public Protection Purchase obligations for Waste Management related professional services 122 Purchase obligations for Grand Jury related supplies 1 Purchase obligations for Public Defender related professional services 12 Purchase obligations for Sheriff-Coroner related equipment and professional services 235 Purchase obligations for Animal Services professional services 7 Purchase obligations for Emergency Services related professional services 100 Purchase obligations for Probation related software, equipment, and professional services 192 Purchase obligations for fire protection related vehicles and equipment 1,880 Purchase obligations for Planning and Building related professional services 1,363 Purchase obligations for flood control related engineering and environmental services 1,142 Wildlife and Grazing programs restricted by enabling legislation 44 Claims, contracts and other restrictions imposed by grantors or contributors 12,990 Total Public Protection 18,088 Health and Sanitation Purchase obligations for Public Health related professional services and computer software 225 Purchase obligations for Behavioral Health related professional services and computer software 406 Claims, contracts and other restrictions imposed by grantors or contributors 17,019 Total Health and Sanitation 17,650 Public Assistance Claims, contracts and other restrictions imposed by grantors or contributors 2,814 Public Ways and Facilities Purchase obligations for Public Works related professional services 718 Road impact fees restricted by enabling legislation for road maintenance and construction 11,512 Public facilities fees restricted by enabling legislation for public facilities 15,796 Total Public Ways and Facilities 28,026 Recreation and Cultural Services Parks equipment and maintenance services 202 Education Library equipment and vehicles 104 Driving Under the Influence software services 87 Claims, contracts and other restrictions imposed by grantors or contributors 16 Prepaid expenses 8 Purchase obligations for Farm Advisor computer supplies 2 Total Education 217 73 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Debt Service 23,110 Total Restricted Net Position $ 104,024 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, 2021, is as follows (in thousands): Amount Governmental activities $ (248,517) Business-type activities 110,255 Total $ (138,262) The Public Works Internal Service Fund reported a deficit in net position of $31,441 at June 30, 2021. This deficit is mainly due to the fund’s net pension liability of $52,861 and the County plans to reduce the deficit with increased future charges. The Worker’s Compensation and Protected Self-Insurance Internal Service Funds reported deficits in net position of $1,837 and $2,448, respectively, at June 30, 2021. The deficits are mainly due to increased payouts from each fund, without sufficient charges to users. Net position for each fund fluctuates and over time, aims to break-even. Should deficits continue, the amount charged to users will be increased to offset increasing costs. FUND BALANCE 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 74 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Administrative Officer for specific uses during the County’s budgeting process. Budgets requested by departments require approval by the County Board of Supervisors. • Unassigned Fund Balance – is the residual classification for the General Fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. Fund balances for all the major and nonmajor governmental funds as of June 30, 2021, are distributed as follows: Capital Nonmajor General Projects Governmental Fund Fund Funds Total Nonspendable: Inventories $ 93 $ - $ - $ 93 Prepaid items 492 - 6 498 Advances to other funds 9,276 - - 9,276 Subtotal 9,861 - 6 9,867 Restricted for: General Government 1,898 - - 1,898 programs & encumbrances Automation projects 6,746 - - 6,746 Tax reduction reserves 4,227 - - 4,227 Public Protection programs 7,215 - - 7,215 Public Ways and Facilities 672 - - 672 programs & encumbrances Health and Sanitation 632 - - 632 programs & encumbrances Mental Health Services Act 2,774 - - 2,774 Education programs 2 - - 2 Recreation programs 38 - - 38 Lease financing 8 - - 8 Public facilities - - 15,796 15,796 Traffic impact programs - - 11,512 11,512 Flood Control Districts - - 1,142 1,142 services Library equipment & - - 104 104 maintenance services Driving Under the Influence - - 87 87 services Community Service Areas - - 46 46 road maintenance Wildlife and grazing programs - - 44 44 Parks equipment and - - 34 34 maintenance services Debt service - 1,885 27,456 29,341 Subtotal $ 24,212 $ 1,885 $ 56,221 $ 82,318 Capital Nonmajor Projects Governmental General Fund Fund Funds Total Committed to: Maintenance projects $ 7,025 $ - $ - $ 7,025 County Counsel services 1,048 - - 1,048 75 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Human Resources services 331 - - 331 Clerk Recorder services 451 - - 451 IT projects 171 - - 171 Other general government 8,278 - - 8,278 Fire equipment 3,582 - - 3,582 Sheriff programs 240 - - 240 Emergency services programs 95 - - 95 Other public protection 170 - - 170 Public health programs 828 - - 828 Behavioral Health programs 17 - - 17 Social Services programs 42 - - 42 Public works engineering & 56 - - 56 consulting services Community parks programs 85 - - 85 Fish and game programs - - 183 183 Flood control programs - - 18,857 18,857 Lighting programs - - 513 513 Community development - - 20,916 20,916 programs Emergency medical services - - 601 601 Roads - - 20,162 20,162 Community service areas - - 3,058 3,058 Driving under the influence - - 659 659 programs Library - - 5,064 5,064 Parks - - 1,516 1,516 General reserve 13,000 - - 13,000 SB1090 Economic 13,126 - - 13,126 development COVID-19 services 20,022 - - 20,022 Internal financing 4,589 - - 4,589 Solar plant safety 843 - - 843 Solar plant mitigation 15,640 - - 15,640 Automation projects 12,354 - - 12,354 Prado Rd Interchange project 1,435 - - 1,435 Talent Development 1,822 - - 1,822 Rainy Day Fund 4,370 - - 4,370 Building replacement 40,748 - - 40,748 Tax reduction reserve 43,305 - - 43,305 Lease financing 996 - - 996 Capital Projects - 17,107 - 17,107 Subtotal $ 194,669 $ 17,107 $ 71,529 $ 283,305 Capital Nonmajor Projects Governmental General Fund Fund Funds Total Assigned to: Tax reduction reserve $ 19,712 $ - $ - $ 19,712 Clerk Recorder services 257 - - 257 IT projects 239 - - 239 General government 17,635 - - 17,635 Sheriff-Coroner & Emergency 7,885 - - 7,885 Services programs Probation programs 10,569 - - 10,569 76 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) District Attorney programs 3,876 - - 3,876 Planning programs 2,005 - - 2,005 Other public protection 3,242 3,242 programs - - Foster Care & Social Services 12,534 - - 12,534 programs Law Enforcement Medical 167 167 Care services - - Veterans’ Services programs 132 132 - - Public ways and facilities 1,829 - - 1,829 Behavioral Health programs 6,741 - - 6,741 Public Health programs 17,596 - - 17,596 Subsequent Fiscal Year 69,001 - - 69,001 Budget Imprest cash 138 - - 138 Subtotal $ 173,558 $ - $ - $ 173,558 Total $ 402,300 $ 18,992 $ 127,756 $ 549,048 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, 2021, to be reappropriated during the next fiscal year (in thousands): Fund Total Encumbrances General Fund $ 2,658 Capital Projects Fund 13,101 Nonmajor Governmental Fund 6,914 $ Total Lapsing Encumbrances 22,673 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 $25,729 over the next 14 years. The estimated amounts vary by year. For example, the principal amount due in 2021 is $1,152 while $2,431 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 77 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2021. 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 the date of this report, the landfill closure is complete and only postclosure costs remain. The remaining estimated liability for landfill postclosure cost as of June 30, 2021, is $7,245 (in 2021 dollars). Of this, $4,607 is for the Maintenance Cost and $2,638 is the Corrective Action Cost. The cost estimates were provided by a licensed professional geologist in the Postclosure 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. 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 one-time 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, 2021, the Agricultural Preserve Program tax abatements were $16,067. 78 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 six 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, the San Luis Obispo County Pension Trust, and the San Luis Obispo Regional Transit Authority. The Plan exists, operates and is constituted under the authority of Section 53215 of Section 17 of Article XVI of the California Constitution and the Government Code Article 1.5 (Pension Trusts), of Chapter 2 (Officers and Employees), of Part 1 (Powers and Duties Common to Cities, Counties and Other Agencies), of Division 2 (Cities, Counties and Other Agencies), of Title 5 (Local Agencies) of the California Government Code. Pursuant to the foregoing California Government Code provisions, the County of San Luis Obispo Board of Supervisors established the San Luis Obispo County Pension Trust (the “Trust”) by the adoption of Chapter 2.56 of the San Luis Obispo County Code. Following the adoption of Chapter 2.56 of the County Code, the Board of Supervisors adopted the By-Laws of the Pension Trust. The San Luis Obispo County Employees Retirement Plan is part of those By-Laws. The County of San Luis Obispo Board of Supervisors has the sole authority to amend the Plan’s provisions. Participation in the Plan is mandatory for all regular employees. Participants are currently broken into 3 Tiers depending on date of hire: Tier 1 generally includes members hired before January 1, 2011. As of December 31, 2020, there were Tier 1 905 active County employed members in Tier 1. 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 Tier 2 a bargaining unit that did not adopt Tier 2 are considered Tier 1 members. As of December 31, 2020, there were 293 active County employed members in Tier 2. Tier 3 includes all members hired on or after January 1, 2013. As of December 31, 2020, there were Tier 3 1,386 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. 79 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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, 2020, are shown in the following table: Tiers Summary of Plan Active members Vested after accumulation of five years of Pension Trust service credit & 730 members Miscellaneous Tier 1 eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Vested after accumulation of five years of Pension Trust service credit & 243 members Miscellaneous Tier 2 eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Vested after accumulation of five years of Pension Trust service credit & 1,195 members Miscellaneous Tier 3 eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 52. Vested after accumulation of five years of Pension Trust service credit & 71 members Probation Tier 1 eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. N/A - Probation Tier 2 Vested after accumulation of five years of Pension Trust service credit & 48 members Probation Tier 3 eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Vested after accumulation of five years of Pension Trust service credit & 104 members Safety Tier 1 eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Vested after accumulation of five years of Pension Trust service credit & 50 members Safety Tier 2 eligible to receive a Service Retirement Allowance after vesting and attaining a minimum age of 50. Vested after accumulation of five years of Pension Trust service credit & 143 members Safety Tier 3 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 80 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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: EMPLOYER EMPLOYEE CONTRIBUTION CONTRIBUTION PLAN RATES RATES Miscellaneous Tier 1 24.22-26.42% 15.65-25.51% Miscellaneous Tier 2 24.22-26.42% 7.26-18.61% Miscellaneous Tier 3 23.73-25.93% 5.64-17.96% Probation Tier 1 23.43-25.67% 21.83-30.67% Probation Tier 2 Not negotiated Not negotiated Probation Tier 3 25.17% 9.75-22.62% EMPLOYER EMPLOYEE CONTRIBUTION CONTRIBUTION PLAN RATES RATES Safety Tier 1 34.85-42.59% 16.72-34.67% Safety Tier 2 37.30-42.59% 10.95-25.58% Safety Tier 3 31.26-41.98% 10.59-22.95% 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, 2019 $43,432 June 30, 2020 $49,018 June 30, 2021 $53,737 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. 81 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The entire Plan is 65.1% funded as of January 1, 2021; 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 65.1 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, 2020, was $2,104,072. The County’s share of the Plan’s fiduciary net position was $1,466,687 as of the same date. As of December 31, 2020, the Plan’s fiduciary net position was 69.71% of the total pension liability. At June 30, 2021, the County reported a liability of $637,385 for its proportionate share of the net pension liability of the Plan. The net pension liability was measured as of December 31, 2020. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation date of January 1, 2020. The actuarial assumptions used in the January 1, 2020 valuation were based on the results of an actuarial experience study for the period January 1, 2015 through December 31, 2019. Measurements as of December 31, 2020, are based on the fair value of assets on that date, and the Total Pension Liability as of the valuation date, January 1, 2020. The actuarial assumptions were rolled forward to the Pension Trust Plan’s fiscal year-end of December 31, 2020. There were no significant events between the January 1, 2020 valuation date and the December 31, 2020 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 contributions to the Plan relative to the projected contributions of all the Plan’s participants, actuarially determined. At December 31, 2020, the County’s proportionate share was 93.64%, compared to 93.80% at December 31, 2019, a decrease of 0.16%. 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 governmental activities. For the year ended June 30, 2021, the County recognized pension expense of $69,536. 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, 2020, 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 $ 874 $ 912 Deferred outflows and inflows of resources – difference between expected and actual experience 22,929 249 Deferred outflows of resources – changes in actuarial assumptions 43,148 - Deferred outflows of resources – net difference between projected and actual earnings on pension plan investments - 64,131 County contributions subsequent to the measurement date 27,000 - $ 93,951 $ 65,292 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 $27,000 for contributions for the fiscal year ending June 30, 2021 made subsequent to the measurement date of December 31, 2020. 82 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) The $27,000 of subsequent contributions will be recognized as reduction of the net pension liability in the fiscal year ending June 30, 2022. 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, 2020, and is 5 years. The difference between the actual employer contributions and the proportionate share of the employer contributions during the measurement period ended December 31, 2020 is also recognized over 5 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 Recognition June 30, (in thousands) 2022 $ (840) 2023 17,080 2024 (17,204) 2025 2,623 Thereafter - Total $ 1,659 Actuarial Assumptions The total pension liability in the January 1, 2020 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.25% 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 6.875%, net of administrative expense Post-Retirement Mortality Males: Pub-2010, Amount-Weighted, Above Median Income, with generational mortality improvements using scale MP-2019, and a 99% multiplier. Females: Pub-2010, Amount-Weighted, Above Median Income, with generational mortality improvements using scale MP-2019, and a 101% multiplier. The actuarial assumptions used in the January 1, 2020 valuation were based on the results of an actuarial experience study for the period January 1, 2015 – December 31, 2019. 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 Cash Equivalents/Short Duration Govt 10% (1.50%) Equities – Public Market 30% 3.23% Real Assets 15% 5.13% Private Markets 30% 5.42% US Treasury – Long Duration/TIPS 15% (1.11%) 83 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) Discount Rate The discount rate used to measure the total pension liability was 6.875%. 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 6.875%, 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, 5.875%, or one percentage-point higher, 7.875%, than the current rate: 1% Discount 1% Decrease Rate Increase (in thousands) (in thousands) (in thousands) 5.875% 6.875% 7.875% County net pension liability as of December 31, 2020 $927,118 $637,385 $400,390 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 ACFR. 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 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. 84 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) At June 30, 2021 a total of 4,034 employees were covered by the OPEB Plan’s benefit terms: Active Plan Members 2,688 Inactive Plan Members 1,083 Inactive Plan members entitled to but not yet receiving benefits 263 4,034 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. In FY 20-21 the County provided the following to eligible retirees: Employee Healthcare Benefit Calendar Year 2020 $139 per month Calendar Year 2021 $143 per month 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, 2021, the funding was a combination of direct premium payments to contracted medical, dental and vision providers, plus a contribution of $526 thousand to the CERBT. 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 $34.6 million as of June 30, 2021. The June 30, 2021 net OPEB Liability was determined by the actuary using a measurement date of June 30, 2020. 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 June 30, 2021 was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount Rate 6.25% Inflation 2.25% Health care cost trend rate 6.7% for FY 2021, gradually decreasing over several decades to an ultimate rate of 3.8% in FY 2076 and later years. Actuarial cost method Entry Age Normal 85 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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 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 13 years Reimbursement eligibility 40% of all retirants will apply for and receive the reimbursement Payroll growth rate 2.75% per annum Salary increases 2.75% plus service-related merit component Investment rate of return 6.25% Post-retirement mortality Males: Pub-2010, Amount-Weighted, Above Median Income, with generational mortality improvements using scale MP-2019, and a 99% multiplier. Females: Pub-2010, Amount-Weighted, Above Median Income, with generational mortality improvements using scale MP-2019, and a 101% multiplier. The withdrawal, retirement, disability, mortality, and salary scale are based on an experience study for the five- year period ending December 31, 2019 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 6.25% 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% 7.15% Fixed Income 25% plus/minus 5% 3.65% Treasury Inflation-Protected Securities (TIPS) 5% plus/minus 3% 2.82% Global Real Estate Investment Trusts (REITs) 8% plus/minus 5% 6.68% Commodities 3% plus/minus 3% 4.13% Cash - plus 2% - The long-term expected real rate of return, net of expenses, for CERBT Strategy 1 is assumed to be 6.25%. 86 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 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: Total OPEB Plan Fiduciary Net OPEB Liability Less Net Position Equals Liability Balances as of June 30, 2020 $48,208 $20,172 $28,036 Projected Changes for fiscal year-end June 30, 2021: Service Cost 1,652 - 1,652 Interest Cost 3,140 - 3,140 Differences between expected and actual experience 4,990 - 4,990 Actuarial Gains/Losses - - - Change in Assumptions 1,269 - 1,269 Net Investment Income - 732 (732) Benefit Payments (3,102) (3,102) - Employer Contributions - 3,778 (3,778) Administrative Expenses - (10) 10 Other Deductions - - - Net Projected Changes 7,949 1,398 6,551 Projected Balances as of June 30, 2021 $56,157 $21,570 $34,587 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, 2021, the OPEB Plan’s fiduciary net position was 38.4% 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 6.25%, as well as what the liability would be if it were calculated using a discount rate that is one percentage-point lower, 5.25%, or one percentage-point higher, 7.25%, than the current rate: 1% Discount 1% Decrease Rate Increase (in thousands) (in thousands) (in thousands) 5.25% 6.25% 7.27% Net OPEB Liability $41,165 $34,587 $29,115 The sensitivity of the Net OPEB liability to changes in healthcare trend rates is presented below: 1% Trend 1% Decrease Rate Increase (in thousands) (in thousands) (in thousands) 5.7% 6.7% 7.7% Net OPEB Liability $28,644 $34,587 $41,805 87 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) OPEB Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2021, the County recognized OPEB expense of $5,770. OPEB expense represents the change in the net OPEB 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. The County’s discretely presented component unit did not report any OPEB liability, expense or deferred outflows or inflows of resources. At June 30, 2021, 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 $ 4,250 $ 1,672 Deferred outflows of resources – changes in actuarial assumptions 13,394 - Deferred outflows of resources – net difference between projected and actual earnings on pension plan investments 446 - County contributions subsequent to the measurement date 3,691 - $ 21,781 $ 1,672 $3,691 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, 2022. Amounts reported as deferred (inflows) outflows of resources related to OPEB will be recognized in OPEB expense as follows: Year ended Future Recognition June 30, (in thousands) 2022 $ 3,479 2023 3,479 2024 3,492 2025 3,495 2026 1,749 Thereafter 724 $ 16,418 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. 88 NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued) 19. CHANGE IN ACCOUNTING PRINCIPLE GASB Statement No. 84 During the fiscal year ended June 30, 2021, the County implemented GASB Statement No. 84, Fiduciary Activities, to improve accounting and financial reporting by state and local governments. As of July 1, 2020, the County implemented this Statement decreasing beginning net position in the government- wide statements by $108 thousand. This included a $436 thousand increase to Governmental Activities long-term liabilities, to include Special District Assessment Bond debt related to Roads which was previously recorded in a Fiduciary Fund. The portion of the restatement reportable in the fund financial statements was a $368 thousand decrease in fund balance to the General Fund, a $696 thousand increase to fund balance in the Roads Fund, and a $420 thousand increase to net position in the fiduciary statements for Custodial Funds. Community Development Fund The Community Development Fund’s beginning fund balance increased by $19,192 due to a change in the accounting treatment of the community development loans issued and the deferred inflow recorded. The adjustment also increased beginning net position in the government-wide statements by $17,938. 20. SUBSEQUENT EVENTS Pension Obligation Prefunding 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 16, 2021, the County made an advance payment of $70.1 million representing the County’s FY 2020-21 employer retirement and employer paid portion of employee normal retirement contributions to the Pension Trust. The prepayment resulted in a savings of $1.5 million to the County. 89 ________________________________________________________________ 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 90 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE COUNTY’S PROPROTIONATE 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% 2019 93.80% $625,259 $194,717 321.11% 68.34% 2020 93.64% $637,385 $211,200 301.79% 69.71% *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. Changes to benefit terms None Changes of assumptions None 91 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 June 30th contributions contributions (excess) covered payroll covered 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% 2020 $53,675 $49,018 $4,658 $202,414 24.22% 2021 $52,724 $53,874 ($1,150) $204,688 26.32% *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. Changes to benefit terms None Changes of assumptions None 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. 92 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 YEARS1 (in thousands) Fiscal Fiscal Fiscal Fiscal Year Year Year Year 2017-18 2018-19 2019-20 2020-21 Total OPEB liability: Service cost $ 688 $ 611 $ 1,538 $ 1,652 Interest 1,949 2,007 3,073 3,140 Differences between expected and actual - (2,842) - 4,990 experience Changes of assumptions - 19,530 1,129 1,269 Benefit payments (1,690) (1,526) (3,037) (3,102) Net change in total OPEB liability 947 17,780 2,703 7,949 Total OPEB liability – beginning 26,775 27,722 45,502 48,208 Total OPEB liability – ending (a) $ 27,222 $ 45,502 $ 48,205 $ 56,157 Plan Fiduciary net position: Employer contributions 1,707 2,521 3,922 3,778 Net investment income 1,155 1,286 1,161 732 Benefit payments (1,690) (1,526) (3,037) (3,102) Administrative expense (7) (8) (4) (10) Other deductions - (1,171) - - Net change in plan fiduciary net position 1,165 1,102 2,042 1,398 Plan fiduciary net position – beginning 15,860 17,025 18,127 20,172 Plan fiduciary net position – ending (b) $ 17,025 $ 18,127 $ 20,169 $ 21,570 County’s net OPEB liability – ending (a) – (b) $ 10,697 $ 27,375 $ 28,036 $ 34,587 Plan fiduciary net position as a percentage of the total OPEB liability 61.4% 39.8% 41.8% 38.4% Covered-employee payroll 2 $ 190,136 $ 193,294 $ 202,414 $ 204,688 County’s net OPEB liability as a percentage of covered-employee payroll 5.6% 14.2% 13.9% 16.9% 1 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. 2 Contributions made to the OPEB plan are not based on measure of pay. The County has elected to use the GASB 75 “lookback” method where assets and liabilities are measured as of the prior fiscal year but applied to the current fiscal year. Changes to benefit terms None Changes of assumptions The discount rate decreased from 6.50% as of June 30, 2020 to 6.25% as of June 30, 2021. The investment rate of return decreased from 6.50% as of June 30, 2020 to 6.25% as of June 30, 2021. The Notes to RSI are integral to the above schedule. 93 COUNTY OF SAN LUIS OBISPO REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS (OPEB) PLAN SCHEDULE OF ACTUARIALLY DETERMINED AND PLAN CONTRIBUTIONS AND RELATED RATIOS FOR THE LAST 10 FISCAL YEARS 1 (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 2 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% 2020 $ 4,229 $ 3,778 $ (451) $ 202,414 1.87% 2021 $ 5,134 $ 3,691 $ (1,443) $ 204,688 1.80% 1 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. 2 Contributions made to the OPEB plan are not based on measure of pay. ^Restated based on updated actuarial information. Changes to benefit terms None Changes of assumptions The discount rate decreased from 6.50% as of June 30, 2020 to 6.25% as of June 30, 2021. The investment rate of return decreased from 6.50% as of June 30, 2020 to 6.25% as of June 30, 2021. The Notes to RSI are integral to the above schedule. 94 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, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 208,862 $ 208,862 $ 225,758 $ 16,896 Licenses, permits, and franchises 12,127 12,377 12,522 145 Fines, forfeitures, and penalties 4,070 4,386 3,311 (1,075) Use of money and property 3,920 3,920 838 (3,082) Aid from other governments 265,173 319,558 320,356 798 Charges for services 34,963 35,552 35,775 223 Other revenue 7,296 8,725 8,385 (340) Total Revenues 536,411 593,380 606,945 13,565 Expenditures: Current: General government 55,404 78,266 58,214 20,052 Public protection 202,833 218,847 191,559 27,288 Public ways and facilities 4,591 6,806 3,796 3,010 Health and sanitation 117,715 126,473 114,904 11,569 Public assistance 138,022 150,816 128,616 22,200 Education 629 644 620 24 Recreation and Culture 4,980 8,326 4,571 3,755 Contingencies 27,027 24,189 - 24,189 Total Expenditures 551,201 614,367 502,280 112,087 Excess (Deficiency) of Revenues Over (Under) Expenditures (14,790) (20,987) 104,665 125,652 Other Financing Sources (Uses): Transfers in 359 1,155 797 (358) Transfers out (15,479) (23,837) (22,321) 1,516 Total Other Financing Sources (Uses) (15,120) (22,682) (21,524) 1,158 Net change in fund balances (29,910) (43,669) 83,141 126,810 Fund balances, beginning, restated 232,531 232,531 232,531 - Fund balances, ending $ 202,621 $ 188,862 $ 315,672 $ 126,810 Continued 95 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, 2021 (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 $ 606,945 Revenues for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 2,291 Total Revenues as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 609,236 Uses/outflows of resources Actual amounts (budgetary basis) "Total Expenditures" from the budgetary comparison schedule $ 502,280 Expenditures for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes 6,647 Total Expenditures as reported in the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 508,927 Other financing sources/(uses) of resources Actual amounts (budgetary basis) "Total Other Financing Sources (Uses)" from the Budgetary Comparison Schedule $ (21,524) Other financing sources (uses) for funds not meeting the special revenue fund definition which are presented with the General Fund for financial reporting purposes (647) Total Other Financing Sources (Uses) as reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds $ (22,171) 96 COUNTY OF SAN LUIS OBISPO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2021 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, 2021 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. 97 ________________________________________________________________ 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. 98 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. 99 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2021 (IN THOUSANDS) Special Revenue Emergency Driving Under Community Medical the Influence Fish and Development Services Programs Game Assets Cash and cash equivalents $ 3,885 $ 264 $ 773 $ 202 Restricted cash with fiscal agent - - - - Accounts receivable, net - - - - Due from other governments - 3 37 16 - Due from other funds - - - - Loans receivable, net of allowance for uncollectibles 19,192 - - - Advances to other funds - - - - Prepaid items - - 2 - Other assets - - - - Total assets $ 23,077 $ 601 $ 791 $ 202 Liabilities Accounts payable $ 535 $ - $ 3 $ 1 9 Salaries and benefits payable - - 24 - Due to other funds - - - - Deposits from others 1,626 - - - Unearned revenue - - - - Advances from other funds - - - - Total liabilities 2,161 - 27 19 Deferred Inflows of Resources Unavailable revenue - - 16 - Total deferred inflows of resources - - 16 - Fund Balances Nonspendable - - 2 - Restricted - - 87 - Committed 20,916 6 01 6 59 1 83 Assigned - - - - Unassigned - - - - Total fund balances 20,916 6 01 7 48 1 83 Total liabilities, deferred inflows of resources, and fund balances $ 23,077 $ 601 $ 791 $ 202 100 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2021 (IN THOUSANDS) Special Revenue Road Public Impact Facilities Fees Library Parks Fees Assets Cash and cash equivalents $ 11,512 $ 5,511 $ 3,348 $ 15,796 Restricted cash with fiscal agent - - - - Accounts receivable, net - 2 40 - Due from other governments - - - - Due from other funds - - - - Loans receivable, net of allowance for uncollectibles - - - - Advances to other funds - - - - Prepaid items - 4 - - Other assets - - - - Total assets $ 11,512 $ 5,517 $ 3,388 $ 15,796 Liabilities Accounts payable $ - $ 1 $ 147 $ - Salaries and benefits payable - 3 44 1 63 - Due to other funds - - - - Deposits from others - - 5 60 - Unearned revenue - - - - Advances from other funds - - 9 68 - Total liabilities - 3 45 1,838 - Deferred Inflows of Resources Unavailable revenue - - - - Total deferred inflows of resources - - - - Fund Balances Nonspendable - 4 - - Restricted 11,512 1 04 34 15,796 Committed - 5,064 1,516 - Assigned - - - - Unassigned - - - - Total fund balances 11,512 5,172 1,550 15,796 Total liabilities, deferred inflows of resources, and fund balances $ 11,512 $ 5,517 $ 3,388 $ 15,796 101 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2021 (IN THOUSANDS) Special Revenue Flood Wildlife Control Lighting County Roads Grazing Districts Districts Service Areas Assets Cash and cash equivalents $ 17,791 $ 44 $ 17,748 $ 513 $ 2,480 Restricted cash with fiscal agent - - - - - Accounts receivable, net - - 346 1 1 2 Due from other governments 4,733 - 5,477 - - Due from other funds - - - - 400 Loans receivable, net of allowance for uncollectibles - - - - - Advances to other funds - - 2,435 - 255 Prepaid items - - - - - Other assets 3 - - - - Total assets $ 22,527 $ 44 $ 26,006 $ 514 $ 3,147 Liabilities Accounts payable $ 1,940 $ - $ 186 $ - $ 8 Salaries and benefits payable - - - - - Due to other funds - - - - - Deposits from others 345 - - - - Unearned revenue 8 0 - - - - Advances from other funds - - - - 2 3 Total liabilities 2,365 - 186 - 3 1 Deferred Inflows of Resources Unavailable revenue - - 5,821 1 1 2 Total deferred inflows of resources - - 5,821 1 1 2 Fund Balances Nonspendable - - - - - Restricted - 4 4 1,142 - 4 6 Committed 20,162 - 18,857 513 3,058 Assigned - - - - - Unassigned - - - - - Total fund balances 20,162 4 4 19,999 513 3,104 Total liabilities, deferred inflows of resources, and fund balances $ 22,527 $ 44 $ 26,006 $ 514 $ 3,147 102 COUNTY OF SAN LUIS OBISPO COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) JUNE 30, 2021 (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 $ 3 $ 15,232 $ 10 $ 95,112 Restricted cash with fiscal agent - 6 20,339 20,345 Accounts receivable, net - - - 401 Due from other governments - - - 10,563 Due from other funds - - - 400 Loans receivable, net of allowance for uncollectibles - - - 19,192 Advances to other funds - - - 2,690 Prepaid items - - - 6 Other assets - - - 3 Total assets $ 3 $ 15,238 $ 20,349 $ 1 48,712 Liabilities Accounts payable $ - $ - $ - $ 2,839 Salaries and benefits payable - - - 531 Due to other funds - - 8,134 8,134 Deposits from others - - - 2,531 Unearned revenue - - - 80 Advances from other funds - - - 991 Total liabilities - - 8,134 15,106 Deferred Inflows of Resources Unavailable revenue - - - 5,850 Total deferred inflows of resources - - - 5,850 Fund Balances Nonspendable - - - 6 Restricted 3 15,238 12,215 56,221 Committed - - - 71,529 Assigned - - - - Unassigned - - - - Total fund balances 3 15,238 12,215 127,756 Total liabilities, deferred inflows of resources, and fund balances $ 3 $ 15,238 $ 20,349 $ 1 48,712 103 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (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 - 425 - 3 1 Use of money and property - - - - Aid from other governments 2,405 - 59 - Charges for services - - 1,308 - Other revenues 726 - 1 - Total revenues 3,131 425 1,368 3 1 Expenditures Current: Public protection - - - 3 4 Public ways and facilities - - - - Health and sanitation 2,455 - - - Public assistance - 525 - - Education - - 1,528 - Recreation and cultural services - - - - Debt service: Principal payments - - - - Interest and fiscal charges - - - - Total expenditures 2,455 525 1,528 3 4 Excess (deficiency) of revenues over (under) expenditures 676 (100) (160) (3) Other financing sources (uses) Debt Issued - - - - Transfers in 39 - - - Transfers out - - (33) - Total other financing sources (uses) 39 - (33) - Net change in fund balances 715 (100) (193) (3) Fund balances - beginning 1,009 701 941 186 Cumulative effect of change in accounting principle 19,192 - - - Fund balances - ending $ 20,916 $ 601 $ 748 $ 183 104 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, 2021 (IN THOUSANDS) Special Revenue Road Public Impact Facilities Fees Library Parks Fees Revenues Taxes $ - $ 10,363 $ - $ - Licenses, permits, and franchises - - - - Fines, forfeitures, and penalties - - - - Use of money and property 1 7 - 1 6 1 9 Aid from other governments - 128 151 - Charges for services 1,691 3 1 5,949 2,010 Other revenues - 360 1 4 - Total revenues 1,708 10,882 6,130 2,029 Expenditures Current: Public protection - - - - Public ways and facilities - - - - Health and sanitation - - - - Public assistance - - - - Education - 11,220 - - Recreation and cultural services - - 6,405 - Debt service: Principal payments - - - - Interest and fiscal charges - - - - Total expenditures - 11,220 6,405 - Excess (deficiency) of revenues over (under) expenditures 1,708 ( 338) ( 275) 2,029 Other financing sources (uses) Debt Issued - - - - Transfers in - 656 668 - Transfers out ( 809) ( 298) ( 181) ( 871) Total other financing sources (uses) ( 809) 358 487 ( 871) Net change in fund balances 899 2 0 212 1,158 Fund balances - beginning 10,613 5,152 1,338 14,638 Cumulative effect of change in accounting principle - - - - Fund balances - ending $ 11,512 $ 5,172 $ 1,550 $ 15,796 105 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, 2021 (IN THOUSANDS) Special Revenue Flood Wildlife Control Lighting County Roads and Grazing Districts Districts Service Areas Revenues Taxes $ 2,057 $ - $ 4,128 $ 42 $ 1,058 Licenses, permits, and franchises - - - - - Fines, forfeitures, and penalties - - - - - Use of money and property 1 7 - - 1 6 Aid from other governments 23,539 4 1,258 - 4 Charges for services 353 - 571 1 0 6 Other revenues 391 - 340 1 4 Total revenues 26,357 4 6,297 5 4 1,078 Expenditures Current: Public protection - 4 7,669 3 3 - Public ways and facilities 32,525 - - - 778 Health and sanitation - - - - - Public assistance - - - - - Education - - - - - Recreation and cultural services - - - - - Debt service: Principal payments 4 5 - - - - Interest and fiscal charges 2 3 - - - - Total expenditures 32,593 4 7,669 3 3 778 Excess (deficiency) of revenues over (under) expenditures (6,236) - (1,372) 2 1 300 Other financing sources (uses) Debt Issued - - - - - Transfers in 9,544 - 7 5 - - Transfers out (24) - - - ( 210) Total other financing sources (uses) 9,520 - 7 5 - ( 210) Net change in fund balances 3,284 - (1,297) 2 1 9 0 Fund balances - beginning 16,182 4 4 21,296 492 3,014 Cumulative effect of change in accounting principle 696 - - - - Fund balances - ending $ 20,162 $ 44 $ 19,999 $ 513 $ 3,104 106 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, 2021 (IN THOUSANDS) Debt Service Total Debt Service Debt Service Debt Service Nonmajor Public Facilities Pension Obligation Financing Governmental Corporation Bonds Authority Funds Revenues Taxes $ - $ - $ - $ 17,648 Licenses, permits, and franchises - - - - Fines, forfeitures, and penalties - - - 456 Use of money and property - 5 8 89 Aid from other governments - - - 27,548 Charges for services 308 - 2,678 14,915 Other revenues - 1,014 - 2,851 Total revenues 308 1,019 2,686 63,507 Expenditures Current: Public protection - - - 7,740 Public ways and facilities - - - 33,303 Health and sanitation - - - 2,455 Public assistance - - - 525 Education - - - 12,748 Recreation and cultural services - - - 6,405 Debt service: Principal payments 150 3,580 1,356 5,131 Interest and fiscal charges 158 5,492 1,340 7,013 Total expenditures 308 9,072 2,696 75,320 Excess (deficiency) of revenues over (under) expenditures - ( 8,053) (10) (11,813) Other financing sources (uses) Debt Issued 2,841 - - 2,841 Transfers in - 12,576 - 23,558 Transfers out ( 2,841) - ( 7,223) (12,490) Total other financing sources (uses) - 12,576 ( 7,223) 13,909 Net change in fund balances - 4,523 ( 7,233) 2,096 Fund balances - beginning 3 10,715 19,448 105,772 Cumulative effect of change in accounting principle - - - 19,888 Fund balances - ending $ 3 $ 15,238 $ 12,215 $ 1 27,756 107 ________________________________________________________________ BUDGETARY COMPARISON SCHEDULES CAPITAL PROJECTS FUND SAN LUIS OBISPO COUNTY PUBLIC FACILITIES CORPORATION PENSION OBLIGATION BONDS FUND SLO COUNTY FINANCING AUTHORITY NONMAJOR GOVERNMENTAL FUNDS ________________________________________________________________ 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, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ - $ - $ 319 $ 319 Use of money and property - - - - Aid from other governments - 3,315 189 ( 3,126) Charges for services - 1,195 1,004 (191) Other revenues - - - - Total Revenues - 4,510 1,512 ( 2,998) Expenditures: Capital outlay 7,047 52,362 13,795 38,567 Total Expenditures 7,047 52,362 13,795 38,567 Excess (Deficiency) of Revenues Over (Under) Expenditures ( 7,047) (47,852) (12,283) 35,569 Other Financing Sources (Uses): Transfers in 7,047 46,293 12,393 (33,900) Transfers out - - - - Total Other Financing Sources (Uses) 7,047 46,293 12,393 (33,900) Net change in fund balances - ( 1,559) 110 1,669 Fund balances, beginning 18,882 18,882 18,882 - Fund balances, ending $ 18,882 $ 17,323 $ 18,992 $ 1,669 108 COUNTY OF SAN LUIS OBISPO Community Development Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Aid from other governments $ 3 ,490 $ 16,774 $ 2 ,405 $ ( 14,369) Charges for services - - - - Other revenues - - 726 726 Total Revenues 3,490 1 6,774 3,131 (13,643) Expenditures: Current: Health and sanitation Services and supplies 440 1,124 427 697 Other charges 3,089 1 5,689 2,028 1 3,661 Contingencies 55 55 - 55 Total Expenditures 3,584 1 6,868 2,455 1 4,413 Excess (Deficiency) of Revenues Over (Under) Expenditures ( 94) ( 94) 676 770 Other Financing Sources (Uses): Transfers in 39 39 39 - Total Other Financing Sources (Uses) 39 39 39 - Net change in fund balances ( 55) ( 55) 715 770 Fund balances, beginning, restated 2 0,201 2 0,201 2 0,201 - Fund balances, ending $ 2 0,146 $ 2 0,146 $ 20,916 $ 770 109 COUNTY OF SAN LUIS OBISPO Emergency Medical Services Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ 800 $ 800 $ 425 $ (375) Use of money and property 1 1 - (1) Total Revenues 801 801 425 (376) Expenditures: Current: Public assistance Services and supplies 801 1,052 525 527 Total Expenditures 801 1,052 525 527 Net change in fund balances - (251) (100) 151 Fund balances, beginning 701 701 701 - Fund balances, ending $ 701 $ 450 $ 601 $ 151 110 COUNTY OF SAN LUIS OBISPO Driving Under the Influence Program Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 18 $ 18 $ - $ (18) Charges for services 1,449 1,449 1,308 (141) Aid from other governments 38 59 59 - Other revenues 2 2 1 (1) Total Revenues 1,507 1,528 1,368 (160) Expenditures: Current: Education Salaries, wages, and benefits 1,012 1,128 940 188 Services and supplies 429 787 568 219 Other charges 20 20 20 - Contingencies 56 56 - 56 Total Expenditures 1,517 1,991 1,528 463 Excess (Deficiency) of Revenues Over (Under) Expenditures (10) (463) (160) 303 Other Financing Sources (Uses): Transfers out - - (33) (33) Total Other Financing Sources (Uses) - - (33) (33) Net change in fund balances (10) (463) (193) 270 Fund balances, beginning 941 941 941 - Fund balances, ending $ 931 $ 478 $ 748 $ 270 111 COUNTY OF SAN LUIS OBISPO Fish and Game Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ 27 $ 27 $ 31 $ 4 Total Revenues 27 27 31 4 Expenditures: Current: Public protection Services and supplies 33 33 34 (1) Total Expenditures 33 33 34 (1) Net change in fund balances (6) (6) (3) 3 Fund balances, beginning 186 186 186 - Fund balances, ending $ 180 $ 180 $ 183 $ 3 112 COUNTY OF SAN LUIS OBISPO Road Impact Fees Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 17 $ 17 Charges for services - - 1,691 1,691 Total Revenues - - 1,708 1,708 Expenditures: Current: Public ways and facilities Services and supplies - - - - Total Expenditures - - - - Excess (Deficiency) of Revenues Over (Under) Expenditures - - 1,708 1,708 Other Financing Sources (Uses): Transfers out (926) (4,816) (809) 4,007 Total Other Financing Sources (Uses) (926) (4,816) (809) 4,007 Net change in fund balances (926) (4,816) 899 5,715 Fund balances, beginning 10,613 10,613 10,613 - Fund balances, ending $ 9,687 $ 5,797 $ 11,512 $ 5,715 113 COUNTY OF SAN LUIS OBISPO Library Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 10,304 $ 10,304 $ 10,363 $ 59 Use of money and property 65 65 - (65) Aid from other governments 116 128 128 - Charges for services 64 64 31 (33) Other revenues 15 565 360 (205) Total Revenues 10,564 11,126 10,882 (244) Expenditures: Current: Education Salaries, wages, and benefits 7,034 7,211 6,909 302 Services and supplies 4,093 4,708 4,109 599 Other charges 8 141 115 26 Capital outlay - 206 87 119 Contingencies 558 428 - 428 Total Expenditures 11,693 12,694 11,220 1,474 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,129) (1,568) (338) 1,230 Other Financing Sources (Uses): Transfers in 640 660 656 (4) Transfers out (33) (33) (298) (265) Total Other Financing Sources (Uses) 607 627 358 (269) Net change in fund balances (522) (941) 20 961 Fund balances, beginning 5,152 5,152 5,152 - Fund balances, ending $ 4,630 $ 4,211 $ 5,172 $ 961 114 COUNTY OF SAN LUIS OBISPO Parks Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Fines, forfeitures, and penalties $ 57 $ 79 $ - $ (79) Use of money and property 54 54 16 (38) Aid from other governments 23 729 151 (578) Charges for services 5,985 6,085 5,949 (136) Other revenues 20 20 14 (6) Total Revenues 6,139 6,967 6,130 (837) Expenditures: Current: Recreation and cultural services Salaries, wages, and benefits 2,942 2,942 2,761 181 Services and supplies 2,935 3,200 3,361 (161) Other charges - 555 283 272 Capital outlay 32 3,460 - 3,460 Contingencies 340 340 - 340 Total Expenditures 6,249 10,497 6,405 4,092 Excess (Deficiency) of Revenues Over (Under) Expenditures (110) (3,530) (275) 3,255 Other Financing Sources (Uses): Transfers in 240 2,688 668 (2,020) Transfers out (21) (21) (181) (160) Total Other Financing Sources (Uses) 219 2,667 487 (2,180) Net change in fund balances 109 (863) 212 1,075 Fund balances, beginning 1,338 1,338 1,338 - Fund balances, ending $ 1,447 $ 475 $ 1,550 $ 1,075 115 COUNTY OF SAN LUIS OBISPO Public Facilities Fees Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 19 $ 19 Charges for services 1,668 1,668 2,010 342 Total Revenues 1,668 1,668 2,029 361 Expenditures: Current: General government Salaries, wages, and benefits - - - - Services and supplies - - - - Total Expenditures - - - - Excess (Deficiency) of Revenues Over (Under) Expenditures 1,668 1,668 2,029 361 Other Financing Sources (Uses): Transfers out (400) (13,682) (871) 12,811 Total Other Financing Sources (Uses) (400) (13,682) (871) 12,811 Net change in fund balances 1,268 (12,014) 1,158 13,172 Fund balances, beginning 14,638 14,638 14,638 - Fund balances, ending $ 15,906 $ 2,624 $ 15,796 $ 13,172 116 COUNTY OF SAN LUIS OBISPO Roads Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 1,969 $ 1,969 $ 2,057 $ 88 Use of money and property 125 125 17 (108) Aid from other governments 19,502 33,172 23,539 (9,633) Charges for services 217 217 353 136 Other revenues 7 771 391 (380) Total Revenues 21,820 36,254 26,357 (9,897) Expenditures: Current: Public ways and facilities Services and supplies 19,687 23,948 32,331 (8,383) Other charges 546 834 194 640 Capital outlay 9,929 38,553 - 38,553 Debt Service - - 68 (68) Total Expenditures 30,162 63,335 32,593 30,742 Excess (Deficiency) of Revenues Over (Under) Expenditures (8,342) (27,081) (6,236) 20,845 Other Financing Sources (Uses): Transfers in 7,145 14,067 9,544 (4,523) Transfers out (4) (36) (24) 12 Total Other Financing Sources (Uses) 7,141 14,031 9,520 (4,511) Net change in fund balances (1,201) (13,050) 3,284 16,334 Fund balances, beginning, restated 16,878 16,878 16,878 - Fund balances, ending $ 15,677 $ 3,828 $ 20,162 $ 16,334 117 COUNTY OF SAN LUIS OBISPO Wildlife and Grazing Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ 1 $ 1 $ - $ (1) Aid from other governments 4 4 4 - Total Revenues 5 5 4 (1) Expenditures: Current: Public protection Services and supplies 8 8 4 4 Total Expenditures 8 8 4 4 Net change in fund balances (3) (3) - 3 Fund balances, beginning 44 44 44 - Fund balances, ending $ 41 $ 41 $ 44 $ 3 118 COUNTY OF SAN LUIS OBISPO Flood Control Districts Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 3,927 $ 3,927 $ 4,128 $ 201 Use of money and property 177 177 - (177) Aid from other governments 4,328 4,328 1,258 (3,070) Charges for services 569 569 571 2 Other revenues 438 671 340 (331) Total Revenues 9,439 9,672 6,297 (3,375) Expenditures: Current: Public protection Services and supplies 8,435 9,286 7,465 1,821 Other charges 490 490 177 313 Capital outlay 3,942 4,336 27 4,309 Total Expenditures 12,867 14,112 7,669 6,443 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,428) (4,440) (1,372) 3,068 Other Financing Sources (Uses): Transfers in 28 28 75 47 Transfers out (20) (515) - 515 Total Other Financing Sources (Uses) 8 (487) 75 562 Net change in fund balances (3,420) (4,927) (1,297) 3,630 Fund balances, beginning 21,296 21,296 21,296 - Fund balances, ending $ 17,876 $ 16,369 $ 19,999 $ 3,630 119 COUNTY OF SAN LUIS OBISPO Lighting Districts Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 42 $ 42 $ 42 $ - Use of money and property 5 5 1 (4) Charges for services 9 9 10 1 Other revenues - - 1 1 Total Revenues 56 56 54 (2) Expenditures: Current: Public protection Services and supplies 65 65 33 32 Capital outlay 47 47 - 47 Total Expenditures 112 112 33 79 Net change in fund balances (56) (56) 21 77 Fund balances, beginning 492 492 492 - Fund balances, ending $ 436 $ 436 $ 513 $ 77 120 COUNTY OF SAN LUIS OBISPO County Service Areas Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Taxes $ 1,030 $ 1,030 $ 1,058 $ 28 Use of money and property 26 26 6 (20) Aid from other governments 4 4 4 - Charges for services 4 4 6 2 Other revenues 2 2 4 2 Total Revenues 1,066 1,066 1,078 12 Expenditures: Current: Public ways and facilities Services and supplies 1,064 1,118 778 340 Total Expenditures 1,064 1,118 778 340 Excess (Deficiency) of Revenues Over (Under) Expenditures 2 (52) 300 352 Other Financing Sources (Uses): Transfers out (52) (52) (210) (158) Total Other Financing Sources (Uses) (52) (52) (210) (158) Net change in fund balances (50) (104) 90 194 Fund balances, beginning 3,014 3,014 3,014 - Fund balances, ending $ 2,964 $ 2,910 $ 3,104 $ 194 121 COUNTY OF SAN LUIS OBISPO Public Facilities Corporation Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Charges for services $ - $ - $ 308- $ 308 Total Revenues - - 308 308 Expenditures: Debt Service: Principal payments - - 150 (150) Interest and fiscal charges - - 158 (158) Total Expenditures - - 308 (308) Excess (Deficiency) of Revenues Over (Under) Expenditures - - - - Other Financing Sources (Uses): Debt issued - - 2,841 2,841 Transfers out - - (2,841) (2,841) Total Other Financing Sources (Uses) - - - - Net change in fund balances - - - - Fund balances, beginning 3 3 3 - Fund balances, ending $ 3 $ 3 $ 3 $ - 122 COUNTY OF SAN LUIS OBISPO Pension Obligation Bonds Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of Money and Property $ 99 $ 99 $ 5 $ (94) Other revenues 12,700 12,700 1,014 (11,686) Total Revenues 12,799 12,799 1,019 (11,780) Expenditures: Debt Service: Principal payments 3,580 3,580 3,580 - Interest and fiscal charges 5,492 5,492 5,492 - Total Expenditures 9,072 9,072 9,072 - Excess (Deficiency) of Revenues Over (Under) Expenditures 3,727 3,727 (8,053) (11,780) Other Financing Sources (Uses): Transfers in - - 12,576 12,576 Total Other Financing Sources (Uses) - - 12,576 12,576 Net change in fund balances 3,727 3,727 4,523 796 Fund balances, beginning 10,715 10,715 10,715 - Fund balances, ending $ 14,442 $ 14,442 $ 15,238 $ 796 123 COUNTY OF SAN LUIS OBISPO Financing Authority Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual Comparison For the Year Ended June 30, 2021 (in thousands) Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Revenues: Use of money and property $ - $ - $ 8 $ 8 Charges for services - - 2,678 2,678 Total Revenues - - 2,686 2,686 Expenditures: Debt Service: Principal payments - - 1,356 (1,356) Interest and fiscal charges - - 1,340 (1,340) Total Expenditures - - 2,696 (2,696) Excess (Deficiency) of Revenues Over (Under) Expenditures - - (10) (10) Other Financing Sources (Uses): Transfers out - - (7,223) (7,223) Debt issued - - - - Total Other Financing Sources (Uses) - - (7,223) (7,223) Net change in fund balances - - (7,233) (7,233) Fund balances, beginning 19,448 19,448 19,448 - Fund balances, ending $ 19,448 $ 19,448 $ 12,215 $ (7,233) 124 ________________________________________________________________ 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 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. 125 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS JUNE 30, 2021 (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 $ 3,415 $ 10,544 $ 1,032 $ 2 5 $ 4,833 $ 19,849 Accounts receivable, net - 8 23 - 3 78 4 09 Inventories - - 20 - - 20 Prepaid items - - 6 62 - - 6 62 Deposits with others - - - - 86 86 Total current assets 3,415 10,552 1,737 25 5,297 21,026 Noncurrent assets: Restricted cash with fiscal agent - 1 4 87 - - 4 88 Advances to other funds - - - 60 - 60 Capital assets: Nondepreciable Land - 2,155 1,333 - 5 34 4,022 Construction in progress - 2 2 26 - 4 71 6 99 Water rights - - - - - - Other property - 1,968 - - - 1,968 Depreciable Infrastructure, net - 20,536 5 - 1,994 22,535 Structures and improvements, net - 31,882 7,742 - 10,288 49,912 Equipment, net - 2 15 3 23 - 5 07 1,045 Other property, net - - - - 4 96 4 96 Total noncurrent assets - 56,759 10,116 60 14,290 81,225 Total assets 3,415 67,311 11,853 85 19,587 102,251 Deferred Outflows of Resources Deferred pensions - - 4 09 - - 4 09 Deferred OPEB - - 1 00 - - 1 00 Total deferred outflows of resources - - 5 09 - - 5 09 Liabilities Current liabilities: Accounts payable 35 35 1 41 - 1 07 3 18 Salaries and benefits payable - - 96 - - 96 Deposits from others - 2 72 13 - 1 67 4 52 Interest payable - 2 99 27 - 18 3 44 Unearned revenue - 17 - - 25 42 Due to other funds - - - - 4 00 4 00 Accrued vacation and sick leave - current - - 99 - - 99 Notes and bonds payable - current - 2,418 3 65 19 2 19 3,021 Total current liabilities 35 3,041 7 41 19 9 36 4,772 Noncurrent liabilities: Advances from other funds - - 1 21 - 3,067 3,188 Accrued vacation and sick leave - noncurrent - - 1 71 - - 1 71 Notes and bonds payable - noncurrent - 25,156 2,722 40 2,934 30,852 Net OPEB Liability - - 1 59 - - 1 59 Net Pension Liability - - 2,776 - - 2,776 Total noncurrent liabilities - 25,156 5,949 40 6,001 37,146 Total liabilities 35 28,197 6,690 59 6,937 41,918 Deferred Inflows of Resources Deferred pensions - - 2 84 - - 2 84 Deferred OPEB - - 8 - - 8 Total deferred inflows of resources - - 2 92 - - 2 92 Net Position Net investment in capital assets - 29,184 6,542 - 11,097 46,823 Unrestricted 3,380 9,930 (1,162) 26 1,553 13,727 Total net position $ 3,380 $ 39,114 $ 5,380 $ 2 6 $ 12,650 $ 60,550 126 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) General Flood Control Zone - Lopez County Salinas Dam Flood Control Golf Lopez Park Service Areas Total Operating revenues Charges for services $ 1,370 $ 6,927 $ 4,376 $ - $ 4,849 $ 1 7,522 Other revenues - - 31 - 5 36 Total operating revenues 1,370 6,927 4,407 - 4,854 17,558 Operating expenses Salaries and benefits - - 1,798 - - 1,798 Services and supplies 1,148 4,436 1,441 - 4,094 11,119 Other charges - 3 - - - 3 Depreciation - 1,510 423 - 536 2,469 Countywide cost allocation 16 71 90 - 74 251 Total operating expenses 1,164 6,020 3,752 - 4,704 15,640 Operating income (loss) 206 907 655 - 150 1,918 Nonoperating revenues (expenses) Property taxes - 1,322 - - 560 1,882 Interest income 4 6 - - 6 16 Interest expense - (1,034) (96) (1) (114) (1,245) Aid from governmental agencies - 6 105 - 3 114 Total nonoperating revenues (expenses) 4 300 9 (1) 455 767 Income (loss) before contributions and transfers 210 1,207 664 (1) 605 2,685 Capital Contributions - - 200 - - 200 Transfers in - - 38 2 210 250 Transfers out - - (52) - (8) (60) Change in net position 210 1,207 850 1 807 3,075 Net position - beginning 3,170 37,907 4,530 25 11,843 57,475 Net position - ending $ 3,380 $ 3 9,114 $ 5,380 $ 26 $ 1 2,650 $ 6 0,550 127 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (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 and third parties $ 1,369 $ 6,932 $ 4,447 $ - $ 4,757 $ 1 7,505 Payments for goods and services (1,150) (4,414) (2,113) - (4,684) (12,361) Payments to employees for services - - (1,829) - - (1,829) Net cash provided (used) by operating activities 219 2,518 505 - 73 3,315 Cash Flows from Noncapital Financing Activities Property tax proceeds - 1,322 - - 560 1,882 Grants and subsidies from other governmental agencies - 6 105 - 3 114 Advances from other funds - - - - 1,673 1,673 Due from other funds - - 300 - - 300 Transfers from other funds - - 38 2 210 250 Transfers to other funds - - (52) - (8) (60) Net cash provided (used) by noncapital financing activities - 1,328 391 2 2,438 4,159 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets - (79) (333) - (2,081) (2,493) Proceeds from sale of capital assets - - - - - - Advances to other funds - - - 19 - 19 Advances from other funds - - - - (6) (6) Capital Contributions - - 200 - - 200 Principal paid on capital debt - (2,329) (349) (19) (213) (2,910) Interest paid on capital debt - (1,111) (132) (2) (115) (1,360) Net cash provided (used) by capital and related financing activities - (3,519) (614) (2) (2,415) (6,550) Cash Flows from Investing Activities Interest received 4 6 - - 6 16 Net cash provided (used) by investing activities 4 6 - - 6 16 Net increase (decrease) in cash and cash equivalents 223 333 282 - 102 940 Cash and cash equivalents at beginning of year 3,192 10,212 1,237 25 4,731 19,397 Cash and cash equivalents at end of year $ 3,415 $ 1 0,545 $ 1,519 $ 25 $ 4,833 $ 2 0,337 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 206 $ 907 $ 655 $ - $ 150 $ 1,918 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense - 1,510 423 - 536 2,469 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net - 2 30 - (62) (30) Inventory - - 16 - - 16 Prepaid items - 63 113 - - 176 Deferred outflows - pensions - - 268 - - 268 Deferred outflows - OPEB - - (14) - - (14) Increase (decrease) in: Accounts payable 13 10 (706) - (517) (1,200) Deposits from others - 24 12 - 1 37 Salaries and benefits payable - - 35 - - 35 Deferred inflows - pensions - - (249) - - (249) Deferred inflows - OPEB - - (2) - - (2) Net OPEB liability - - 30 - - 30 Net pension liability - - (106) - - (106) Unearned revenue - 2 - - (35) (33) Total adjustments 13 1,611 (150) - (77) 1,397 Net cash provided (used) by operating activities $ 219 $ 2,518 $ 505 $ - $ 73 $ 3,315 128 ________________________________________________________________ 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. 129 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2021 (IN THOUSANDS) Combined Public Insurance Garage Works (5 Funds) Total Assets Current assets: Cash and cash equivalents $ 6,094 $ 21,364 $ 18,609 $ 46,067 Accounts receivable, net - 24 - 24 Inventories 15 602 - 617 Total current assets 6,109 21,990 18,609 46,708 Noncurrent assets: Capital assets: Structures and improvements, net 129 228 - 357 Equipment, net 4,977 7,889 - 12,866 Total noncurrent assets 5,106 8,117 - 13,223 Total assets 11,215 30,107 18,609 59,931 Deferred Outflows of Resources Deferred pensions 350 7,792 - 8,142 Deferred OPEB 101 1,889 - 1,990 Total deferred outflows of resources 451 9,681 - 10,132 Liabilities Current liabilities: Accounts payable 211 - 174 385 Salaries and benefits payable 78 1,291 - 1,369 Self-insurance liability - - 4,152 4,152 Deposits from others - 5,489 - 5,489 Accrued vacation and sick leave 96 2,131 - 2,227 Total current liabilities 385 8,911 4,326 13,622 Noncurrent liabilities: Self-insurance liability - - 16,864 16,864 Accrued vacation and sick leave 100 898 - 998 Net OPEB liability 161 2,999 - 3,160 Net pension liability 2,374 52,861 - 55,235 Total noncurrent liabilities 2,635 56,758 16,864 76,257 Total liabilities 3,020 65,669 21,190 89,879 Deferred Inflows of Resources Deferred pensions 243 5,415 - 5,658 Deferred OPEB 8 145 - 153 Total deferred inflows of resources 251 5,560 - 5,811 Net Position Net investment in capital assets 5,106 8,117 - 13,223 Unrestricted 3,289 (39,558) ( 2,581) (38,850) Total net position $ 8,395 $ (31,441) $ (2,581) $ (25,627) 130 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) Combined Public Insurance Garage Works (5 Funds) Total Operating revenues Charges for services $ 6,407 $ 39,950 $ 12,823 $ 59,180 Other revenues 10 65 - 75 Total operating revenues 6,417 40,015 12,823 59,255 Operating expenses Salaries and benefits 1,264 30,481 6 09 32,354 Services and supplies 3,046 7,933 11,689 22,668 Insurance benefit payments - - 5,799 5,799 Depreciation 1,735 1,005 - 2,740 Countywide cost allocation 1 29 1 74 2 52 5 55 Total operating expenses 6,174 39,593 18,349 64,116 Operating income (loss) 2 43 4 22 (5,526) (4,861) Nonoperating revenues (expenses) Interest income 5 1 1 7 Aid from governmental agencies 71 1,138 2 1,211 Sale of capital assets 1 62 83 - 2 45 Other revenues (expense) 7 - - 7 Total nonoperating revenues (expenses) 2 45 1,222 3 1,470 Income (loss) before capital contributions and transfers 4 88 1,644 (5,523) (3,391) Transfers in 2 2 68 1 28 3 98 Transfers out (75) (1,136) (195) (1,406) Change in net position 4 15 7 76 (5,590) (4,399) Net position - beginning 7,980 (32,217) 3,009 (21,228) Net position - ending $ 8,395 $ (31,441) $ (2,581) $ (25,627) 131 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) Combined Public Insurance Garage Works (5 Funds) Total Cash Flows From Operating Activities Receipts from interfund billings $ 6,416 $ 40,001 $ 12,823 $ 59,240 Payments for goods and services ( 3,272) (8,635) (5,176) (17,083) Payments to employees for services ( 1,434) (29,730) (609) (31,773) Payments for insurance benefits - - (4,922) ( 4,922) Payments for premiums - - (6,542) ( 6,542) Net cash provided (used) by operating activities 1,710 1,636 (4,426) (1,080) Cash Flows from Noncapital Financing Activities Grants and subsidies from other governmental agencies 71 1,138 1 1,210 Transfers from other funds 2 2 68 1 28 3 98 Transfers to other funds (75) (1,136) (195) (1,406) Net cash provided (used) by noncapital financing activities (2) 2 70 (66) 2 02 Cash Flows from Capital and Related Financing Activities Purchases and construction of capital assets ( 1,460) (919) - (2,379) Proceeds from sale of capital assets 1 62 83 - 2 45 Net cash provided (used) by capital and related financing activities ( 1,298) (836) - (2,134) Cash Flows from Investing Activities Interest received 5 1 1 7 Net cash provided (used) by investing activities 5 1 1 7 Net increase (decrease) in cash and cash equivalents 4 15 1,071 (4,491) (3,005) Cash and cash equivalents at beginning of year 5,679 20,293 23,100 49,072 Cash and cash equivalents at end of year $ 6,094 $ 21,364 $ 18,609 $ 46,067 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 243 $ 422 $ (5,526) $ (4,861) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 1,735 1,005 - 2,740 Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in: Receivables, net - (16) - (16) Inventory (1) (26) - (27) Prepaid expenses - - 2 21 2 21 Deferred outflows - pensions 2 66 4,558 - 4,824 Deferred outflows - OPEB (10) (231) - (241) Increase (decrease) in: Accounts payable (93) (536) 2 (627) Deposits from others - 1 10 - 1 10 Salaries and benefits payable 39 (170) - (131) Deferred inflows - pensions (242) (4,296) - (4,538) Deferred inflows - OPEB (3) (40) - (43) Net OPEB liability 26 5 44 - 5 70 Net pension liability (250) 3 12 - 62 Self-insurance liability - - 8 77 8 77 Total adjustments 1,467 1,214 1,100 3,781 Net cash provided (used) by operating activities $ 1,710 $ 1,636 $ (4,426) $ (1,080) 132 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS - INSURANCE JUNE 30, 2021 (IN THOUSANDS) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Assets Current assets: Cash and cash equivalents $ 15,251 $ 1,617 $ 166 $ 1,102 $ 473 $ 18,609 Total current assets 15,251 1,617 166 1,102 473 18,609 Total assets 15,251 1,617 166 1,102 473 18,609 Liabilities Current liabilities: Accounts payable 41 96 - 37 - 174 Self-insurance liability 2,937 1,215 - - - 4,152 Total current liabilities 2,978 1,311 - 37 - 4,326 Noncurrent liabilities: Self-insurance liability 14,110 2,754 - - - 16,864 Total noncurrent liabilities 14,110 2,754 - - - 16,864 Total liabilities 17,088 4,065 - 37 - 21,190 Net Position Unrestricted ( 1,837) ( 2,448) 166 1,065 473 ( 2,581) Total net position $ (1,837) $ (2,448) $ 166 $ 1,065 $ 473 $ (2,581) 133 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, 2021 (IN THOUSANDS) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Operating revenues Charges for services $ 5,376 $ 2,622 $ 349 $ 1,894 $ 2,582 $ 12,823 Total operating revenues 5,376 2,622 3 49 1,894 2,582 12,823 Operating expenses Salaries and benefits 6 09 - - - - 6 09 Services and supplies 4,349 5,266 59 2 24 1,791 11,689 Insurance benefit payments 2,750 3 54 4 19 1,750 5 26 5,799 Countywide cost allocation 1 00 1 52 - - - 2 52 Total operating expenses 7,808 5,772 4 78 1,974 2,317 18,349 Operating income (loss) ( 2,432) (3,150) (129) (80) 2 65 (5,526) Nonoperating revenues (expenses) Interest income - - - - 1 1 Aid from governmental agencies 2 - - - - 2 Total nonoperating revenues (expenses) 2 - - - 1 3 Income (loss) before transfers ( 2,430) (3,150) (129) (80) 2 66 (5,523) Transfers in 34 - 94 - - 1 28 Transfers out (195) - - - - (195) Change in net position ( 2,591) (3,150) (35) (80) 2 66 (5,590) Net position - beginning 7 54 7 02 2 01 1,145 2 07 3,009 Net position - ending $ (1,837) $ (2,448) $ 166 $ 1,065 $ 473 $ (2,581) 134 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS - INSURANCE FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) Workers' Protected Unemployment Dental Compensation Self-Insurance Insurance Insurance OPEB Total Cash Flows From Operating Activities Receipts from interfund billings $ 5,376 $ 2,622 $ 349 $ 1,894 $ 2,582 $ 12,823 Payments for goods and services ( 3,041) (1,838) (59) (228) (10) (5,176) Payments to employees for services (609) - - - - (609) Payments for insurance benefits ( 2,126) (101) (419) (1,750) (526) (4,922) Payments for premiums ( 1,272) (3,489) - - (1,781) ( 6,542) Net cash provided (used) by operating activities ( 1,672) ( 2,806) (129) (84) 2 65 (4,426) Cash Flows from Noncapital Financing Activities Grants and subsidies from other governmental agencies 1 - - - - 1 Transfers from other funds 34 - 94 1 28 Transfers to other funds (195) - - - - (195) Net cash provided (used) by noncapital financing activities (160) - 94 - - (66) Cash Flows from Investing Activities Interest received - - - - 1 1 Net cash provided (used) by investing activities - - - - 1 1 Net increase (decrease) in cash and cash equivalents ( 1,832) (2,806) (35) (84) 2 66 (4,491) Cash and cash equivalents at beginning of year 17,083 4,423 2 01 1,186 2 07 23,100 Cash and cash equivalents at end of year $ 15,251 $ 1,617 $ 166 $ 1,102 $ 473 $ 18,609 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ (2,432) $ (3,150) $ ( 129) $ (80) $ 265 $ (5,526) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in assets and liabilities: (Increase) decrease in: Prepaid Items 2 21 - - - - 2 21 Increase (decrease) in: Accounts payable (85) 91 - (4) - 2 Salaries and benefits payable - - - - - - Self-insurance liability 6 24 2 53 - - - 8 77 Total adjustments 7 60 3 44 - (4) - 1,100 Net cash provided (used) by operating activities $ (1,672) $ (2,806) $ ( 129) $ (84) $ 265 $ (4,426) 135 ________________________________________________________________ COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS ________________________________________________________________ FIDUCIARY FUNDS PENSION TRUST: The San Luis Obispo County Pension Trust is an independent trust that administers the San Luis Obispo County Employees Retirement Plan on behalf of the County. 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. CUSTODIAL FUNDS: These funds account for assets held by the County as an agent for various local governments. The County has the following types of Custodial 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. 136 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF FIDUCIARY NET POSITION CUSTODIAL FUNDS JUNE 30, 2021 (IN THOUSANDS) Clearing and 1915 Act Other Revolving Funds Service Funds Custodial Funds (92 Funds) (17 Funds) (35 Funds) Total ASSETS Cash and cash equivalents $ 9 3,965 $ 116 $ 19,091 $ 1 13,172 Taxes for other governments 486 - - 486 Other assets 3 - 2,187 2,190 Capital assets, net - - 17 Total assets $ 9 4,454 $ 116 $ 21,295 $ 1 15,865 LIABILITIES Other current liabilities $ 5 9,241 $ - $ 8,849 $ 68,090 Other long-term liabilities 9 - - Total liabilities $ 5 9,250 $ - $ 8 ,849 $ 68,099 NET POSITION Restricted for: Individuals, organizations and other governments $ 3 5,204 $ 1 16 $ 1 2,446 $ 47,766 137 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES CUSTODIAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) Clearing and 1915 Act Other Revolving Funds Service Funds Agency Funds (92 Funds) (17 Funds) (35 Funds) Total ADDITIONS Interest $ 848 $ 1 $ 6 8 $ 917 Property taxes collected for other governments 212,227 49 - 212,276 Sales taxes collected for other governments - - 15,381 15,381 Other Income 9,133 - 2,050 11,183 Total additions 222,208 50 17,499 239,757 DEDUCTIONS Administrative expenses 22 - 8 30 Interest expenses 24,967 6 - 24,973 Payments to other local governments 2,288 9 2 61 2,558 Property taxes distributed to other governments 192,527 43 13,649 206,219 Total deductions 2 19,804 5 8 1 3,918 2 33,780 Change in net position 2 ,404 ( 8) 3 ,581 5,977 Net position - beginning 3 2,800 7 4 8 ,495 41,369 Cumulative effect of change in accounting principle - 5 0 3 70 4 20 Net position - ending $ 3 5,204 $ 1 16 $ 1 2,446 $ 4 7,766 138 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS JUNE 30, 2021 (IN THOUSANDS) School Special Other Districts Districts Courts Local Boards (39 Funds) (32 Funds) (6 Funds) (19 Funds) Total ASSETS Cash and cash equivalents $ 439,572 $ 48,197 $ 1,321 $ 31,533 $ 520,623 Total assets $ 439,572 $ 48,197 $ 1,321 $ 31,533 $ 520,623 NET POSITION Net position held in trust for pool participants $ 439,572 $ 48,197 $ 1,321 $ 31,533 $ 520,623 Total Net Position $ 439,572 $ 48,197 $ 1,321 $ 31,533 $ 520,623 139 COUNTY OF SAN LUIS OBISPO COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION INVESTMENT TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2021 (IN THOUSANDS) School Special Other Districts Districts Courts Local Boards (39 Funds) (32 Funds) (6 Funds) (19 Funds) Total Additions Contributions to pooled investments $ 1,085,600 $ 3 9,834 $ 1 4,268 $ 6 2,707 $ 1,202,409 Interest 3,534 380 - 207 4,121 Total additions 1,089,134 40,214 14,268 62,914 1,206,530 Deductions Distributions from investment pool 1,030,691 13,707 14,169 60,813 1,119,380 Total deductions 1,030,691 13,707 14,169 60,813 1,119,380 Change in net position 58,443 26,507 99 2,101 87,150 Net position - beginning 3 81,129 21,690 1,222 29,432 4 33,473 Net position - ending $ 439,572 $ 4 8,197 $ 1,321 $ 3 1,533 $ 520,623 140 ________________________________________________________________ GENERAL FUND DETAIL BUDGETARY COMPARISON SCHEDULES ________________________________________________________________ COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget General Government - Expenditures Legislative and Administrative Administrative Office: Salaries, wages, and benefits $ 2,601 $ 2,601 $ 2,369 $ 2 32 Services and supplies 4 46 1,911 8 79 1,032 Other charges - - - - Expenditure transfers and reimbursements (109) (109) (110) 1 Total 2,938 4,403 3,138 1,265 Board of Supervisors: Salaries, wages, and benefits 1,493 1,563 1,462 101 Services and supplies 2 21 2 01 1 80 21 Expenditure transfers and reimbursements (38) (38) (38) - Total 1,676 1,726 1,604 122 Clerk/Recorder: Salaries, wages, and benefits 2,501 2,580 2,361 219 Services and supplies 1,199 2,444 2,116 328 Capital outlay - 5 87 1 87 400 Expenditure transfers and reimbursements (1) (1) (1) - Total 3,699 5,610 4,663 947 Communications & Outreach Salaries, wages, and benefits 1 16 1 22 1 07 15 Services and supplies 27 21 9 12 Total 1 43 1 43 1 16 27 Total Legislative and Administrative 8,456 11,882 9,521 2,361 Finance Assessor: Salaries, wages, and benefits 9,782 9,786 8,944 842 Services and supplies 1,102 1,119 8 84 235 Total 10,884 10,905 9,828 1,077 Auditor-Controller-Treasurer-Tax Collector Public Administrator: Salaries, wages, and benefits 7,814 7,814 7,336 478 Services and supplies 6 99 7 64 4 77 287 Expenditure transfers and reimbursements (15) (15) (15) - Total 8,498 8,563 7,798 765 Total Finance 19,382 19,468 17,626 1,842 continued 141 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget General Government - Expenditures (continued) Counsel County Counsel: Salaries, wages, and benefits $ 3,900 $ 3,939 $ 3,665 $ 274 Services and supplies 9 91 1,991 8 72 1,119 Capital outlay 6 6 - 6 Total Counsel 4,897 5,936 4,537 1,399 Personnel Personnel: Salaries, wages, and benefits 5,171 5,271 5,027 244 Services and supplies 1,896 2,356 1,919 437 Expenditure transfers and reimbursement ( 1,119) ( 1,243) ( 1,256) 13 Total Personnel 5,948 6,384 5,690 694 Talent Development: Salaries, wages, and benefits 1 86 2 13 2 03 10 Services and supplies 4 45 5 55 4 84 71 Expenditure transfers and reimbursement (6) (6) (6) - Total Talent Development 6 25 7 62 6 81 81 Total Personnel 6,573 7,146 6,371 775 Property Management Facilities Management: Salaries, wages, and benefits 4,400 4,610 4,121 489 Services and supplies 4,323 4,212 3,835 377 Expenditure transfers and reimbursements ( 2,039) ( 2,039) ( 2,152) 113 Total 6,684 6,783 5,804 979 Maintenance Projects: Services and supplies 3,238 10,097 2,821 7,276 Total 3,238 10,097 2,821 7,276 Central Services Salaries, wages, and benefits 1,762 1,911 1,805 106 Services and supplies 2,982 2,909 2,879 30 Other charges 1 11 36 36 - Capital outlay - 40 40 - Expenditure transfers and reimbursements (521) (521) (585) 64 Total 4,334 4,375 4,175 200 Total Property Management 14,256 21,255 12,800 8,455 continued 142 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget General Government - Expenditures (continued) Other General Information Technology: Salaries, wages, and benefits $ 13,450 $ 13,617 $ 12,611 $ 1 ,006 Services and supplies 6,368 6,405 4,667 1,738 Capital outlay - 12 12 - Other charges - 15 15 - Expenditure transfers and reimbursements ( 5,653) ( 5,551) ( 5,605) 54 Total 14,165 14,498 11,700 2,798 Non-Department Financing Uses: Services and supplies - 1,938 - 1,938 Other Charges - 8,291 8,291 - Expenditure transfers and reimbursements (14,805) (14,805) (14,822) 17 Total (14,805) ( 4,576) ( 6,531) 1,955 Contributions to Other Agencies: Services and supplies 1,867 2,057 1,786 271 Total 1,867 2,057 1,786 271 Non-Department Other: Services and supplies 6 13 6 00 4 04 196 Total 6 13 6 00 4 04 196 Total Other General 1,840 12,579 7,359 5,220 Total General Government 55,404 78,266 58,214 20,052 Public Protection - Expenditures Judicial Court Operations Fund: Other charges 2,427 2,427 2,427 - Total 2,427 2,427 2,427 - District Attorney: Salaries, wages, and benefits 18,295 18,326 17,321 1,005 Services and supplies 2,140 2,221 1,934 287 Other charges 86 1 26 1 13 13 Capital outlay - 18 18 - Expenditure transfers and reimbursements (26) (26) (25) (1) Total 20,495 20,665 19,361 1,304 Child Support Services: Salaries, wages, and benefits 3,945 3,945 3,227 718 Services and supplies 8 40 8 40 7 23 117 Total 4,785 4,785 3,950 835 Grand Jury: Salaries, wages, and benefits 32 43 42 1 Services and supplies 94 84 47 37 Expenditure transfers and reimbursements - - (29) 29 Total 1 26 1 27 60 67 continued 143 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures (continued) Judicial (continued) Public Defender: Services and supplies $ 7,459 $ 8,588 $ 7,792 $ 7 96 Total 7,459 8,588 7,792 796 Total Judicial 3 5,292 3 6,592 3 3,590 3,002 Police Protection Sheriff-Coroner: Salaries, wages, and benefits 70,753 71,916 69,053 2,863 Services and supplies 14,391 14,608 13,791 817 Other charges - 1 35 29 106 Capital outlay 1 41 1,334 8 00 534 Expenditure transfers and reimbursements (936) (936) (952) 16 Total Police Protection 84,349 87,057 82,721 4,336 Detention and Correction Probation Department: Salaries, wages, and benefits 20,370 20,494 18,821 1,673 Services and supplies 6,099 6,172 4,887 1,285 Expenditure transfers and reimbursements (248) (248) (237) (11) Total Detention and Correction 26,221 26,418 23,471 2,947 Fire Protection County Fire: Salaries, wages, and benefits - 1 1 - Services and supplies 26,601 27,529 21,109 6,420 Other charges - - - - Capital outlay 5 74 3,891 6 63 3,228 Expenditure transfers and reimbursements - - (1) 1 Total Fire Protection 27,175 31,421 21,772 9,649 Protective Inspection Agricultural Commissioner: Salaries, wages, and benefits 5,832 5,848 5,631 217 Services and supplies 9 85 9 50 8 53 97 Capital outlay 12 53 11 42 Expenditure transfers and reimbursements (3) (3) (9) 6 Total Protective Inspection 6,826 6,848 6,486 362 Other Protection Animal Services: Salaries, wages, and benefits 1,934 2,010 1,762 248 Services and supplies 1,041 1,048 8 83 165 Total 2,975 3,058 2,645 413 continued 144 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget Public Protection - Expenditures (continued) Other Protection (continued) Emergency Services: Salaries, wages, and benefits $ 1,115 $ 1,228 $ 858 $ 370 Services and supplies 6 01 5,388 3,475 1,913 Other charges 3 40 7 81 6 57 124 Capital outlay - 5 67 4 34 133 Expenditure transfers and reimbursements - - (352) 352 Total 2,056 7,964 5,072 2,892 Planning Department: Salaries, wages, and benefits 13,764 13,873 12,350 1,523 Services and supplies 2,842 4,167 2,662 1,505 Capital outlay - 7 7 - Expenditure transfers and reimbursements - - (18) 18 Total 16,606 18,047 15,001 3,046 Waste Management: Services and supplies 1,327 1,436 8 01 635 Other charges 6 6 - 6 Total 1,333 1,442 8 01 641 Total Other Protection 22,970 30,511 23,519 6,992 Total Public Protection 202,833 218,847 191,559 2 7,288 Public Ways and Facilities - Expenditures Public Works: Services and supplies 4,590 6,288 3,616 2,672 Other charges 1 5 18 1 80 338 Total 4,591 6,806 3,796 3,010 Total Public Ways and Facilities 4,591 6,806 3,796 3,010 Health and Sanitation - Expenditures Health Public Health: Salaries, wages, and benefits 24,856 26,658 25,376 1,282 Services and supplies 14,772 17,091 16,467 624 Other charges 1,043 2,237 1,225 1,012 Capital outlay - 1,183 2 39 944 Expenditure transfers and reimbursements ( 7,199) ( 7,665) ( 9,575) 1,910 Total 33,472 39,504 33,732 5,772 continued 145 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget Health and Sanitation - Expenditures (continued) Health (continued) Behavioral Health: Salaries, wages, and benefits $ 36,925 $ 36,332 $ 33,868 $ 2,464 Services and supplies 47,395 49,865 46,308 3,557 Other charges 1,975 2,774 2,646 128 Capital outlay - 50 50 - Expenditure transfers and reimbursements ( 2,052) ( 2,052) ( 1,700) (352) Total 84,243 86,969 81,172 5,797 Total Health 117,715 126,473 114,904 1 1,569 Total Health and Sanitation 117,715 126,473 114,904 1 1,569 Public Assistance - Expenditures Administration Department of Social Services: Salaries, wages, and benefits 54,675 54,890 51,019 3,871 Services and supplies 20,250 21,521 19,413 2,108 Other charges 13,094 22,992 12,157 10,835 Capital outlay 10 52 46 6 Expenditure transfers and reimbursements (119) (119) (233) 114 Total Administration 87,910 99,336 82,402 16,934 Aid Programs Aid Foster Care Non-Fed: Services and supplies 92 92 92 - Other charges 28,463 28,464 25,428 3,036 Expenditure transfers and reimbursement (238) (238) - (238) Total 28,317 28,318 25,520 2,798 Calworks Assistance: Other charges 10,791 12,042 10,282 1,760 Total 10,791 12,042 10,282 1,760 Total Aid Programs 39,108 40,360 35,802 4,558 General Relief General Relief: Other charges 1,573 1,619 1,427 192 Total General Relief 1,573 1,619 1,427 192 continued 146 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget Public Assistance - Expenditures (continued) Veterans Service Veterans Service: Salaries, wages, and benefits $ 798 $ 825 $ 679 $ 146 Services and supplies 1 16 89 67 22 Other charges - - - Total Veterans Service 9 14 9 14 7 46 168 Other Assistance Law Enforcement Med Care: Salaries, wages, and benefits 1 37 2 57 2 35 22 Services and supplies 8,603 8,553 8,227 326 Expenditure transfers and reimbursements (223) (223) (223) - Total Other Assistance 8,517 8,587 8,239 348 Total Public Assistance 138,022 150,816 128,616 2 2,200 Education - Expenditures Agricultural Education UC Cooperative Extension Salaries, wages, and benefits 5 09 5 58 5 36 22 Services and supplies 1 20 86 84 2 Total Agricultural Education 6 29 6 44 6 20 24 Total Education 6 29 6 44 6 20 24 Recreation and Culture - Expenditures Community Parks Salaries, wages, and benefits 2,951 2,995 2,720 275 Services and supplies 1,861 1,961 1,743 218 Capital outlay 25 3,172 - 3,172 Other Charges 143 198 108 90 Total Community Parks 4,980 8,326 4,571 3,755 Total Recreation and Culture 4,980 8,326 4,571 3,755 Total General Fund - Expenditures 524,174 590,178 502,280 8 7,898 (Before Contingencies) continued 147 COUNTY OF SAN LUIS OBISPO General Fund Detail Schedule of Expenditures Budget to Actual Comparison (in thousands) For the Year Ended June 30, 2021 Original Final Variance with Description Budget Budget Actual Final Budget Contingencies Appropriation for Contingencies Contingencies - General Fund: Appropriation for contingency $ 27,027 $ 24,189 $ - $ 24,189 Total 27,027 24,189 - 24,189 Total Appropriation for Contingency 27,027 24,189 - 24,189 Total Contingency 27,027 24,189 - 24,189 Total General Fund Expenditures $ 551,201 $ 614,367 $ 502,280 $ 112,087 Explanation of Differences between Budgetary Outflows and GAAP Expenditures Uses/outflows of resources Actual amounts (budgetary basis) from the Budget to Actual Comparison Schedule $ 502,280 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 6,647 Total expenditures as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ 508,927 148 ________________________________________________________________ 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 .………… 150 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 .……………………………………………………………………………………………………… 155 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 ..………………………………………………………………… 160 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 ………………………………………………………………….. 163 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 ………………………………………………………………… 165 149 County of San Luis Obispo Net Position by Component Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Governmental Activities Net investment in capital assets $ 1 ,099,885 $ 1 ,103,924 $ 1 ,112,934 $ 1 ,130,241 $ 1 ,168,573 $ 1 ,178,967 $ 1 ,185,073 $ 1 ,188,830 $ 1 ,202,709 $ 1 ,210,972 Restricted 31,477 28,863 43,109 37,722 41,230 64,822 29,836 41,281 66,655 104,024 Unrestricted 265,454 304,257 325,113 (150,074) (170,962) (226,970) (217,606) (220,206) (286,622) (248,517) Total governmental activities net position $ 1 ,396,816 $ 1 ,437,044 $ 1 ,481,156 $ 1 ,017,889 $ 1 ,038,841 $ 1 ,016,819 $ 997,303 $ 1 ,009,905 $ 982,742 $ 1 ,066,479 Business-Type Activities Net investment in capital assets $ 153,801 $ 167,138 $ 188,485 $ 213,455 $ 237,157 $ 270,246 $ 283,410 $ 285,888 $ 288,781 $ 283,512 Unrestricted 33,081 58,433 98,097 97,173 93,158 85,316 73,113 83,039 94,335 110,255 Total business-Type activities net position $ 186,882 $ 225,571 $ 286,582 $ 310,628 $ 330,315 $ 355,562 $ 356,523 $ 368,927 $ 383,116 $ 393,767 Total Primary Government Net investment in capital assets $ 1 ,253,686 $ 1 ,271,062 $ 1 ,301,419 $ 1 ,343,696 $ 1 ,405,730 $ 1 ,449,213 $ 1 ,468,483 $ 1 ,474,718 $ 1 ,491,490 $ 1 ,494,484 Restricted 31,477 28,863 43,109 37,722 41,230 64,822 29,836 41,281 66,655 104,024 Unrestricted 298,535 362,690 423,210 ( 52,901) (77,804) (141,654) (144,493) (137,167) (192,287) (138,262) Total primary government net position $ 1 ,583,698 $ 1 ,662,615 $ 1 ,767,738 $ 1 ,328,517 $ 1 ,369,156 $ 1 ,372,381 $ 1 ,353,826 $ 1 ,378,832 $ 1 ,365,858 $ 1 ,460,246 Note: 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 2011-12 Statement of Net Position beginning in FY 2012-13 and ongoing 150 County of San Luis Obispo Changes in Net Position Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Program Expenses Governmental Activities General government $ 35,231 $ 34,507 $ 36,866 $ 45,598 $ 53,282 $ 56,390 $ 56,858 $ 54,434 $ 53,926 $ 55,612 Public protection 136,219 142,353 148,135 162,432 170,134 187,255 183,814 213,809 241,749 204,861 Public ways and facilities 27,120 28,474 28,253 34,136 33,418 32,098 41,606 34,202 33,199 36,017 Health and sanitation 65,799 69,222 74,313 78,137 88,326 99,150 103,822 119,259 113,463 121,358 Public assistance 96,435 97,929 99,449 110,470 118,089 125,102 122,753 131,432 132,868 134,476 Education 10,000 9 ,922 9 ,611 9 ,457 11,934 12,787 12,754 12,698 14,322 14,213 Recreation and cultural services 7 ,344 9 ,735 7 ,745 9 ,755 8 ,702 10,385 8,927 11,891 11,501 10,497 Interest on long term debt 6 ,620 6 ,041 5 ,270 5 ,124 4 ,602 4 ,555 11,840 1,468 7,057 9,645 Total Governmental Activities Expenses 384,768 398,183 409,642 455,109 488,487 527,722 542,374 579,193 608,085 586,679 Business-Type Activities Expenses Airport 5 ,422 5 ,435 5 ,664 6 ,187 6 ,117 6 ,391 7,966 8,398 10,133 9,146 Golf 2 ,863 2 ,779 2 ,608 2 ,968 3 ,131 3 ,111 3,297 3,491 3,347 3,869 State Water Contract 6 ,761 5 ,536 5 ,992 6 ,351 5 ,848 5 ,571 5,909 6,973 7,709 6,928 Nacimiento Water Contract 11,901 14,738 13,840 15,776 14,888 14,191 14,044 14,318 13,257 14,816 Lopez Flood Control 5 ,752 6 ,548 6 ,116 6 ,128 6 ,220 6 ,387 7,072 7,004 6,733 7,087 Lopez Park - - - 4 4 4 3 3 2 1 General Flood Control Zone - Salinas Dam 1 ,816 746 809 845 824 851 1,056 1,142 913 1,170 Transit 8 - - - - - - - - - County Service Areas 3 ,836 3 ,779 3 ,857 4 ,194 4 ,065 4 ,218 4,445 4,747 4,670 4,697 Los Osos Wastewater 6 ,672 344 231 235 3 ,807 10,322 10,918 11,544 11,636 11,581 Total Business-Type Activities Expenses 45,031 39,905 39,117 42,688 44,904 51,046 54,710 57,620 58,400 59,295 Total Primary Government Expenses $ 4 29,799 $ 4 38,088 $ 4 48,759 $ 4 97,797 $ 5 33,391 $ 5 78,768 $ 597,084 $ 636,813 $ 666,485 $ 645,974 Program Revenues Governmental Activities Fees, Fines, Charges for Services General government $ 17,545 $ 16,575 $ 14,678 $ 12,407 $ 13,702 $ 14,839 $ 12,937 $ 13,484 $ 12,967 $ 15,502 Public protection 15,679 16,352 23,035 20,774 20,768 21,231 23,666 22,946 21,291 23,552 Public ways and facilities 5 ,069 5 ,465 4 ,356 4 ,255 9 ,434 7 ,462 6,155 5,721 4,797 5,532 Health and sanitation 6 ,014 5 ,196 6 ,570 6 ,631 7 ,179 6 ,757 7,501 7,698 8,571 8,038 Public assistance 2 ,366 2 ,920 2 ,070 2 ,077 2 ,107 2 ,032 1,763 1,194 1,155 926 Education 2 ,545 3 ,583 1 ,723 2 ,998 1 ,952 1 ,644 2,006 1,943 2,193 1,622 Recreation and cultural services 3 ,952 4 ,435 4 ,537 5 ,056 4 ,975 5 ,127 5,592 5,515 4,295 5,714 Operating Grants and Contributions General Government 628 122 252 54 735 748 321 200 685 789 Public Protection 45,646 50,477 54,233 62,359 63,528 52,205 58,184 59,592 59,974 67,187 Public ways and facilities 11,813 15,018 14,688 14,145 11,025 9 ,918 11,506 10,485 11,302 11,073 Health and sanitation 44,741 55,064 57,344 62,338 61,950 67,626 76,494 76,211 74,699 91,988 Public assistance 85,505 87,912 89,640 94,775 98,414 102,784 105,848 107,758 114,525 113,555 Education 175 175 102 105 124 132 173 143 204 219 Recreation and cultural services 18 350 - 131 153 273 671 200 230 271 Capital Grants and Contributions General government 843 8 69 156 45 - 349 930 - - Public protection - - 3 ,315 9 ,701 4 ,420 7 ,820 656 1,197 1,799 3,814 Public ways and facilities 12,930 3 ,479 5 ,570 6 ,435 6 ,031 6 ,655 8,893 14,361 17,732 12,856 Health and sanitation - - - - - - - - - - Education - - - - - - - - 267 - Recreation and cultural services 247 50 282 1 ,776 10,804 1 ,157 191 28 86 189 Total Governmental Activities 255,716 267,181 282,464 306,173 317,346 308,410 322,906 329,606 336,772 362,827 Source: Statement of Activities (continued) 151 County of San Luis Obispo Changes in Net Position Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-2018 2018-19 2019-20 2020-21 Business-Type Activities Fees, Fines, Charges for Services Airport 3 ,719 4 ,053 4 ,493 4 ,883 5 ,165 5 ,662 7,158 8,947 8,300 6,140 Golf 2 ,690 2 ,639 2 ,779 2 ,967 2 ,589 2 ,291 2,584 2,717 2,750 4,376 State Water Contract 6 ,609 6 ,185 6 ,358 6 ,562 6 ,846 5 ,941 6,110 7,656 7,825 7,470 Nacimiento Water Contract 13,893 13,800 13,685 9 ,682 17,048 15,149 15,709 16,947 16,732 17,458 Lopez Flood Control 6 ,440 6 ,174 6 ,123 6 ,208 6 ,530 6 ,708 6,677 7,148 6,978 6,927 Lopez Park - - - - - - - - - - General Flood Control Zone - Salinas Dam 1 ,252 730 861 794 960 904 909 913 2,884 1,370 County Service Areas 3 ,186 3 ,352 3 ,312 3 ,408 - 2 ,301 3,662 3,894 4,492 4,702 Los Osos Wastewater - - - - 3 ,551 3 ,620 4,467 5,100 5,245 5,324 Operating Grants and Contributions Airport 372 132 127 126 126 126 396 328 4,644 7,580 Golf 5 - - 269 - 1 ,017 - - - 105 State Water Contract 10 13 13 13 13 14 14 14 14 15 Nacimiento Water Contract 28 29 12 9 9 - 6 - - - Lopez Flood Control 15 15 8 8 8 - 7 5 5 6 Lopez Park - - - - - - - - - - Transit - - - - - - - - - - General Flood Control Zone - Salinas Dam - - - - - - - 26 - - County Service Areas 3 3 3 211 295 3 3 13 3 3 Los Osos Wastewater 35 1 - - 2 ,810 18 - - - - Capital Grants and Contributions Airport 138 572 1 ,770 365 7 ,069 15,379 2,211 3,139 505 1,138 Nacimiento Water Contract - - - - - - 24 - - 200 County Service Areas 64 294 2 - - - - - - - Los Osos Wastewater 9 ,127 35,717 57,507 26,385 4 ,157 10,086 2,982 4,860 2,618 2,546 Total Business-Type Activities Revenues 47,586 73,709 97,053 61,890 57,176 69,219 52,919 61,707 62,995 65,360 Total Primary Government Revenues $ 3 03,302 $ 3 40,890 $ 3 79,517 $ 3 68,063 $ 3 74,522 $ 3 77,629 $ 375,825 $ 391,313 $ 399,767 $ 428,187 Net (Expense)/Revenues Governmental Activities $ (129,052) $ (131,002) $ (127,178) $ (148,936) $ (171,141) $ (219,312) $ (219,468) $ (249,587) $ (271,313) $ (223,852) Business-Type Activities 2 ,555 33,804 57,936 19,202 12,272 18,173 (1,791) 4,087 4,595 6,065 Total Primary Government net expense $ (126,497) $ (97,198) $ (69,242) $ (129,734) $ (158,869) $ (201,139) $ (221,259) $ (245,500) $ (266,718) $ (217,787) General Revenue and Other Changes in Net Position Governmental Activities Property Taxes $ 1 40,288 $ 1 43,182 $ 1 52,256 $ 1 55,374 $ 1 63,367 $ 1 73,153 $ 180,051 $ 189,689 $ 198,927 $ 208,371 Other Taxes 16,330 23,940 22,088 22,984 21,953 23,072 25,708 27,224 27,878 34,440 Interest and investment income 1 ,202 733 599 3 ,174 4 ,401 3 ,289 3,171 12,952 12,849 696 Unrestricted Grants 3 ,978 3 ,537 1 ,727 13,327 3 ,140 63 2,740 2,115 3,845 41,157 Other revenues - 4 - - - 5 2 35,445 1,144 4,813 Transfers 8 ,048 (166) (790) (2,676) (768) (2,292) 2,267 ( 625) ( 493) 282 Special Item - - (2,800) - - - - - - Total Governmental Activities 169,846 171,230 173,080 192,183 192,093 197,290 213,939 266,800 244,150 289,759 Business-Type Activities Property Taxes 3 ,799 4 ,145 4 ,402 4 ,782 4 ,782 3 ,814 3,858 3,912 4,043 4,387 Other Taxes 28 29 32 - - - - - - - Interest and investment income 755 385 595 659 847 630 1,272 1,590 2,169 405 Other revenues 31 160 40 183 268 338 - 574 2,889 76 Transfers (8,048) 166 790 2 ,676 768 2 ,292 (2,267) 625 493 ( 282) Total Business-Type Activities (3,435) 4 ,885 5 ,859 8 ,300 6 ,665 7 ,074 2,863 6,701 9,594 4,586 Total Primary Government $ 1 66,411 $ 1 76,115 $ 1 78,939 $ 2 00,483 $ 1 98,758 $ 2 04,364 $ 216,802 $ 273,501 $ 253,744 $ 294,345 Change in Net Position Governmental Activities $ 40,794 $ 40,228 $ 45,902 $ 43,247 $ 20,952 $ (22,022) $ (5,529) $ 17,213 $ ( 27,163) $ 65,907 Business-Type Activities (880) 38,689 63,795 27,502 18,937 25,247 1,072 10,788 14,189 10,651 Total Primary Government $ 39,914 $ 78,917 $ 1 09,697 $ 70,749 $ 39,889 $ 3,225 $ (4,457) $ 28,001 $ ( 12,974) $ 76,558 Source: Statement of Activities 152 County of San Luis Obispo Fund Balances, Governmental Funds Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 General Fund Nonspendable $ 3,176 $ 3,092 $ 7 79 $ 5,089 $ 3,454 $ 3,535 $ 18,511 $ 19,222 $ 18,734 $ 9,861 Restricted 6 ,682 4,005 3,214 2,945 2,872 2,649 10,083 12,276 10,915 24,212 Committed 68,880 96,365 116,940 138,140 168,619 164,492 152,501 169,846 175,455 194,669 Assigned - 104,237 118,248 125,112 122,925 126,596 107,145 127,007 119,426 173,558 Unassigned 102,291 - - - - - - - - - Total General Fund $ 181,029 $ 207,699 $ 239,181 $ 271,286 $ 297,870 $ 297,272 $ 288,240 $ 328,351 $ 324,530 $ 402,300 All Other Governmental Funds Nonspendable $ 3 90 $ 596 $ - $ 920 $ 3,776 $ 3 $ 24 $ 36 $ 4 $ 6 Restricted 19,788 18,311 20,164 20,563 21,317 24,192 24,750 33,496 57,057 58,106 Committed 61,144 65,903 74,240 78,508 61,926 94,904 62,307 66,616 67,593 88,636 Assigned - - - - - - - - - - Unassigned - - - (486) - - (3,038) - - - Total all other Governmental Funds $ 81,322 $ 84,810 $ 94,404 $ 99,505 $ 87,019 $ 119,099 $ 84,043 $ 100,148 $ 124,654 $ 146,748 Source: Balance Sheet - Governmental Funds 153 County of San Luis Obispo Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Revenues Taxes $ 1 60,920 $ 171,771 $ 177,765 $ 178,740 $ 185,764 $ 196,822 $ 2 03,583 $ 217,106 $ 2 23,041 $ 243,406 Licenses, permits, and franchises 7 ,863 9,247 10,694 10,452 10,539 11,446 1 1,140 12,133 1 1,477 12,522 Fines, forfeitures, and penalties 6 ,750 6,654 5,257 5,686 5,173 4,339 5 ,977 4,396 3 ,916 4,352 Revenues from use of money and property 2 ,273 1,475 1,373 3,864 4,939 3,984 3 ,779 12,268 1 2,247 1 ,084 Aid from governmental agencies 2 06,372 209,234 229,283 261,351 256,490 2 54,350 2 62,660 271,961 2 77,267 348,093 Charges for current services 4 5,538 41,690 50,071 43,530 46,308 49,460 4 9,793 47,957 4 6,712 51,694 Other revenues 8 ,451 11,342 6 ,235 9,110 11,504 8 ,481 6 ,869 25,278 1 2,396 13,104 Total revenues 438,167 451,413 480,678 512,733 520,717 528,882 5 43,801 591,099 587,056 674,255 Expenditures Current: General government 45,850 44,374 44,317 51,207 54,461 54,918 60,445 54,991 54,078 64,686 Public protection 138,579 143,832 148,155 157,783 156,096 164,839 1 75,175 185,033 205,162 199,299 Public ways and facilities 40,338 34,178 28,528 29,903 41,044 29,077 42,254 35,267 43,865 37,099 Health and sanitation 67,830 70,021 74,586 75,116 81,591 88,623 99,885 103,512 108,158 117,359 Public assistance 97,185 98,059 99,442 107,104 111,227 113,392 1 17,066 121,327 131,154 129,141 Education 9,973 9,901 12,205 11,388 10,534 11,560 11,640 12,191 12,769 13,368 Recreational and cultural services 6,998 7,538 7,993 10,104 9,888 9,963 10,358 10,574 11,637 10,976 Debt service: Principal payments 4,435 4,065 5,412 6,070 6,788 7,576 50,989 5,093 10,561 5,289 Interest and fiscal charges 6,289 5,863 5,419 5,209 4,687 4,639 11,666 1,204 6,416 7,030 Debt issuance costs - 269 - - - - - - - - Capital outlay 5,540 3,692 11,312 20,019 30,465 11,554 11,828 6,374 7,645 13,795 Total expenditures 423,017 421,792 437,369 473,903 506,781 496,141 5 91,306 535,566 591,445 598,042 Excess (deficiency) of revenues over (under) expenditures 15,150 29,621 43,309 38,830 13,936 32,741 (47,505) 55,533 (4,389) 76,213 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Other Financing Sources Refunding certificates of participation issued - 14,427 - - - - - - - - Premium on refunding certificates of participation issued - 1,418 - - - - - - - - Proceeds of long-term debt - - - - - - - - 20,384 2 ,841 Premium on lease revenue bonds issued - - - - - - - - 4,023 - Payment to refunded escrow agent - (16,400) - - - - - - - - Discount on certificates of participation issued - - - - - - - - - - Transfers in 3 5,815 48,113 26,502 33,299 35,803 57,668 5 4,782 31,633 3 6,803 37,384 Transfers out ( 27,138) (47,021) (25,935) (34,924) (35,641) (58,927) ( 51,365) (30,950) ( 36,136) (36,094) Total other financing sources and uses 8 ,677 5 37 567 (1,625) 1 62 (1,259) 3 ,417 6 83 25,074 4 ,131 Special Item - - (2,800) - - - - - - - Net change in fund balances $ 23,827 $ 30,158 $ 41,076 $ 37,205 $ 14,098 $ 3 1,482 $ (44,088) $ 5 6,216 $ 2 0,685 $ 80,344 Debt Service as a percentage of 2.73% 2.48% 2.61% 2.57% 2.54% 2.62% 11.25% 1.23% 3.05% 2.20% non-capital expenditures Source: Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 154 County of San Luis Obispo Assessed Valuation* Last Ten Fiscal Years (In Thousands) (UNAUDITED) Percentage Change Fiscal Year Net Assessed from Prior Ended, Secured Unsecured Exemptions Valuations Year Tax Rate 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 2020 58,382,427 2,345,033 (1,277,412) 59,540,048 5.8% 1.0040 2021 61,279,618 2,349,231 (1,428,237) 62,200,611 4.5% 1.0040 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% *Discussion: 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. Source: County Assessed Values, Exemptions and Growth % Book tnecreP 2102 3102 4102 5102 6102 7102 8102 9102 0202 1202 Total Net Assessed Value Change from Prior Year Percent Change over Prior Year Fiscal Year 155 County of San Luis Obispo Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (per $100 of assessed values) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 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 .00300 0.00400 0.00400 0.00400 0.00374 0.00400 0.00400 0.00400 0.00400 0.00400 Total Direct Rate 1.00300 1.00400 1.00400 1.00400 1.00374 1.00400 1.00400 1.00400 1.00400 1.00400 Cities, Schools, and Special Districts Combined Rates Arroyo Grande 0 .0477 0.0576 0.0580 0.0569 0.0756 0.0680 0.1085 0.1051 0.0965 0 .0827 Atascadero 0 .0442 0.0452 0.0452 0.0590 0.1373 0.1373 0.1373 0.1373 0.1373 0.1373 Grover Beach 0 .0396 0.0495 0.0499 0.0509 0.0940 0.1023 0.1599 0.1901 0.1815 0.1677 Morro Bay 0 .0501 0.0510 0.0510 0.0510 0.0688 0.0683 0.0683 0.0683 0.0683 0.0614 Paso Robles 0 .0816 0.0815 0.0815 0.0782 0.0955 0.0828 0.0828 0.1291 0.1222 0 .1160 Pismo Beach 0 .0396 0.0495 0.0499 0.0509 0.0700 0.0680 0.1085 0.1051 0.0965 0.0827 San Luis Obispo - - - - 0.0683 0.0683 0.0683 0.0683 0.0683 0.0583 Note: Rates shown represent the most common rates encountered for the tax rate areas within these cities. Source: County Property Tax Rate Book 156 County of San Luis Obispo Principal Property Taxpayers Current Year and Ten Years Ago (In Thousands) (UNAUDITED) Fiscal Year 2020-21 Fiscal Year 2011-12 Percentage Percentage of Total of Total County County Assessed Assessed Taxpayer Industry Assessed Value Rank Value Assessed Value Rank Value Pacific Gas & Electric Co. Utility $ 1 ,773,687 1 2.85% $ 2,543,033 1 6.15% High Plans Ranch II LLC Solar Ranch 802,327 2 1.29% - - - Phillips 66 Company Oil Refinery 169,952 3 0.27% - - - Jamestown Premier Commercial 151,907 4 0.24% - - - Southern California Gas Co. Utility 140,745 5 0.23% 63,738 7 0.15% E&J Gallo Winery/Vineyards Winery 9 9,552 6 0.16% - - - CAP VIII - Mustang Village LLC Apartments 9 7,030 7 0.16% 75,358 6 0.18% Firestone Walker LLC Brewery 9 1,103 8 0.15% - - - Treasury Wine Estates Winery 8 8,182 9 0.14% - - - Sierra Vista Hospital Hospital 8 3,300 10 0.13% 56,615 9 0.14% TOSCO Corp Petroleum & Gas - - - 138,970 2 0.34% Plains Exploration & Prod Co Petroleum & Gas - - - 91,305 3 0.22% Beringer Wine Estates Company Winery - - - 89,882 4 0.22% Pacific Bell Telephone Co Communications - - - 81,038 5 0.20% Martin Hotel Management Hotel - - - 61,074 8 0.15% Twin Cities Com. Hospital Hospital - - - 53,788 10 0.13% Total $ 3 ,497,785 5.62% $ 3,254,801 7.87% Total County Assessed Value $ 62,200,611 $ 41,340,431 Sources: County Property Tax System 2011-2012 San Luis Obispo County Annual Comprehensive Financial Report 157 County of San Luis Obispo Property Tax Levies and Collections Last Ten Fiscal Years (In Thousands) (UNAUDITED) Collected within the Fiscal Year of the Levy Collections in Fiscal Year Total Levy for Collected % of Original Subsequent Delinquent % of Levy Ended June 30, the Fiscal Year Amount Levy Years* Amount Delinquent 2012 $ 4 03,472 $ 3 96,238 98.21% N/A $ 7,234 1.79% 2013 4 05,225 3 99,807 98.66% N/A 5,418 1.34% 2014 4 21,140 4 16,450 98.89% N/A 4,690 1.11% 2015 4 47,088 4 42,330 98.94% N/A 4,758 1.06% 2016 4 70,629 4 66,465 99.12% N/A 4,164 0.88% 2017 4 95,277 4 90,890 99.11% N/A 4,387 0.89% 2018 5 22,528 5 17,777 99.09% N/A 4,751 0.91% 2019 5 49,869 5 44,994 99.11% N/A 4,874 0.89% 2020 5 73,449 5 64,422 98.43% N/A 9,027 1.57% 2021 5 99,508 5 92,847 98.89% N/A 6,660 1.11% Note: Amounts do not include tax collections for bonds or special assessments Source: County Property Tax Booklet *Collections in subsequent years are not available from the County's current property tax system. 158 County of San Luis Obispo Special Assessment Billings and Collections (In Thousands) (UNAUDITED) Special Special Year ended Assessment Assessment June 30, Billings Collected 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 2020 5,063 5,106 2021 5,042 5,084 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. * Amounts restated Source: County Property Tax System 159 County of San Luis Obispo Ratios of Total Debt Outstanding Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Governmental Activities Certificates of Participation $ 2 7,895 $ 2 5,662 $ 2 4,640 $ 2 3,600 $ 2 2,527 $ 2 1,411 $ 26,135 $ 24,808 $ 18,004 $ 19,619 Less deferred amounts: For issuance discounts: ( 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 7 08 6 19 State notes - - - - - - 2,056 1,901 1,744 1,586 Pension Obligation Bonds 1 19,429 1 15,624 1 11,234 1 46,219 1 45,291 1 43,890 9 9,407 9 6,903 93,733 89,825 Lease revenue bonds - - - - - - - - 20,380 19,970 Add deferred amounts: For issuance premiums: - - - - - - - - 4,023 3,837 Assessment Bonds from direct borrowings*** - - - - - - - - 436 3 91 Total bonds and notes payable 1 47,221 1 42,516 1 37,019 1 70,880 1 68,794 1 66,193 128,405 124,334 139,028 135,847 Business-Type Activities Certificates of Participation 19,060 17,920 18,257 17,745 17,194 16,470 1 5,678 1 4,811 13,908 12,966 Add deferred amounts: For issuance premiums: - 492 459 426 393 361 328 295 2 62 2 29 State Note 35,884 34,399 46,529 72,774 86,611 85,674 8 7,667 8 4,409 81,079 88,385 Revenue Bonds 1 93,483 1 90,389 1 87,170 1 83,813 1 77,198 1 73,535 168,410 164,126 159,841 155,330 Add deferred amounts: For issuance premiums: 6,158 5,945 5,732 5,519 10,058 9,623 8,926 8,502 8,077 7,653 Unamortized outflow on Bond Refinancing - - - - (4,171) (3,990) (3,808) - - - General Obligation Bonds 10,245 9,890 9,530 9,155 8,760 8,350 7,925 7,485 7,025 6,540 Add deferred amounts: For issuance premiums: 1,072 1,015 959 902 846 790 733 677 6 20 564 Bond Anticipation Notes - - - - - - - - - - Assessment Bonds 15,364 39,527 76,438 79,829 79,396 78,089 7 6,746 7 5,358 73,943 72,483 Total bonds and notes payable 2 81,266 2 99,577 3 45,074 3 70,163 3 76,285 3 68,902 362,605 355,663 344,755 344,150 Total Outstanding Debt $ 428,487 $ 442,093 $ 482,093 $ 541,043 $ 545,079 $ 535,095 $ 491,010 $ 479,997 $ 4 83,783 $ 4 79,997 Percentage of Personal Income** 3.57% 3.52% 3.76% 3.86% 3.76% 3.58% 3.13% 2.92% 2.80% N/A Percentage of Assessed Value of Taxable Property1 1.04% 1.06% 1.12% 1.19% 1.13% 1.06% 0.92% 0.85% 0.81% 0.77% Net outstanding debt Per Capita $ 1,578.32 $ 1,624.28 $ 1,770.08 $ 1,972.50 $ 1,960.88 $ 1,916.46 $ 1,753.31 $ 1,713.66 $ 1 ,707.27 $ 1 ,700.62 Note: See the Demographic Statistics Schedule for detailed information on personal income and population. Source: Notes to the Financial Statements, Note 10 ** Restated for FY 2011-12 through FY 2018-19 *** Restated for FY 2019-20 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. 160 County of San Luis Obispo Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Certificates of Participation $ 1 6,400 $ 14,427 $ 13,675 $ 12,915 $ 12,137 $ 11,326 $ 10,482 $ 9,606 $ 8,693 $ 7,747 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 9 75 8 86 797 708 619 Lease Revenue Bonds - - - - - - - - 20,380 19,970 Less deferred amounts: For issuance premiums: - - - - - - - - 4,023 3,837 General Obligation Bonds 10,245 9,890 9,530 9,155 8,760 8,350 7,925 7,485 7,025 6,540 Add deferred amounts: For issuance premiums: 1,072 1,015 9 59 9 02 8 46 7 90 7 33 677 620 564 State Notes - - - - - - 2,056 1,901 1,744 1,586 Assessment Bonds 15,364 39,527 76,438 79,829 79,396 78,089 76,746 75,358 73,943 72,483 Less resources restricted for principal repayment (2,893) (2,684) (2,683) (2,683) (2,688) (2,692) (2,712) (8,061) (30,167) (27,456) Net Total General Obligation Debt $ 4 0,188 $ 63,406 $ 99,064 $ 101,179 $ 99,427 $ 96,755 $ 96,037 $ 8 7,688 $ 86,969 $ 85,890 Percentage of Personal Income** 0.33% 0.51% 0.77% 0.72% 0.69% 0.65% 0.61% 0.53% 0.50% N/A Percentage of Assessed Value of Taxable Property1 0.10% 0.15% 0.23% 0.22% 0.21% 0.19% 0.18% 0.16% 0.15% 0.14% Net outstanding debt Per Capita $ 1 48.03 $ 232.96 $ 363.73 $ 368.87 $ 357.68 $ 346.53 $ 342.93 $ 3 13.06 $ 307.19 $ 304.31 Note: See the Demographic Statistics Schedule for detailed information on personal income and population. Source: Notes to the Financial Statements, Note 10 ** Restated for FY 2011-12 through FY 2018-19 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. 161 County of San Luis Obispo Legal Debt Margin Information Last Ten Fiscal Years (In Thousands) (UNAUDITED) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Assessed Value of Property (a) $ 41,340,430 $ 41,796,283 $ 43,059,945 $ 45,426,163 $ 48,172,375 $ 50,647,598 $ 53,415,961 $ 56,262,663 $ 59,450,048 $ 62,200,611 Debt Limit, 1.25% of Assessed Value 516,755 522,454 538,249 567,827 602,155 633,095 667,700 703,283 743,126 777,508 Amount of Debt Applicable to Limit General Obligation Bonds (b) 11,317 10,905 10,489 10,057 9,606 9,140 8,658 7,485 7,025 6,540 Less: Resources Restricted to Paying Principal - - - - - - - - - - Total Debt Applicable 1 1,317 10,905 10,489 10,057 9 ,606 9,140 8,658 7,485 7,025 6,540 Legal Debt Margin $ 505,438 $ 511,549 $ 527,760 $ 557,770 $ 592,549 $ 623,955 $ 659,042 $ 695,798 $ 736,101 $ 770,968 Total Debt Applicable as a Percentage of the Debt Limit 2.19% 2.09% 1.95% 1.77% 1.60% 1.44% 1.30% 1.06% 0.95% 0.84% Source: (a) County Assessed Values, Exemptions and Growth % Book (b) Notes to the Financial Statements, Note 10 162 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) (1,a) (1,a) (4,c) (3,b,d) (2,e) 2012 271,483 1 2,008,355 43,698 39.20 43,022 8.5 2013 272,177 1 2,547,278 45,388 39.50 42,600 6.4 2014 272,357 1 2,823,005 45,947 39.50 42,911 5.3 2015 274,293 1 4,034,209 49,873 39.30 41,853 4.4 2016 277,977 1 4,552,207 51,442 39.00 43,117 4.5 2017 279,210 1 4,937,322 53,006 38.80 43,112 3.6 2018 280,048 1 5,700,229 55,580 39.60 42,713 3.2 2019 280,101 1 6,465,164 58,108 39.60 42,673 2.9 2020 283,111 1 7,270,828 61,004 40.00 42,556 11.5 2021 282,249 N/A N/A N/A 40,403 5.9 Sources: 1. Bureau of Economic Analysis 2. State of California Employment Development Department 3. California Department of Education & California Community Colleges Chancellor's Office 4. U.S. Census Bureau Notes: N/A = not available a. Data for prior 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. Data for school year ending in the stated calendar year e. Data as of June 30, 2021 163 County of San Luis Obispo Principal Employers Current Year and Ten Years Ago (UNAUDITED) 2021 2012 Number of Percentage of Total Number of Percentage of Total Employer Employees Rank County Employment Employees Rank County Employment County of San Luis Obispo* 2,807 1 2.14% 2,601 1 2.01% Atascadero State Hospital 2,300 2 1.75% 2,200 3 1.70% California Men's Colony 2,000 3 1.53% 1,768 4 1.36% Cal Poly State University, SLO 1,912 4 1.46% 2,426 2 1.87% Pacific Gas and Electric Company 1,700 5 1.30% 1,719 5 1.33% Tenet Healthcare 1,312 6 1.00% 1,409 6 1.09% Lucia Mar Unified School District 1,070 7 0.82% 1,100 7 0.85% Community Action Partnership of San Luis Obispo County 942 8 0.72% - - - Paso Robles Public Schools 935 9 0.71% 831 9 0.64% Cuesta College 854 10 0.65% - - - San Luis Coastal Unified School District - - - 828 10 0.64% King Ventures - - - 850 8 0.66% Total Employment Labor Force 131,100 129,700 Sources: Pacific Coast Business Times State of California Employment Development Department 2011-12 San Luis Obispo County Annual Comprehensive Financial Report 2020-21 County Budget Report* 164 County of San Luis Obispo Full Time Equivalent County Government Employees by Function Last Ten Fiscal Years (UNAUDITED) Function/Program 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18* 2018-19* 2019-20* 2020-21* General Government 437.50 438.25 430.75 436.75 440.50 430.75 437.50 441.00 455.25 458.00 Public Protection 808.25 812.00 817.25 832.25 848.25 867.00 909.50 912.00 899.75 904.25 Public Ways and Facilities 193.75 193.75 188.75 190.75 207.75 234.75 237.75 246.75 247.75 248.75 Health and Sanitation 430.50 445.25 464.00 485.25 505.50 556.00 536.50 530.00 531.00 530.00 Public Assistance 425.75 428.00 478.00 500.75 524.00 524.00 523.00 522.00 523.50 526.75 Education 77.50 75.50 75.50 75.50 77.50 78.00 77.75 78.00 78.25 78.50 Recreation and Cultural Services 52.00 52.00 55.00 59.00 60.00 61.00 61.00 61.00 61.00 61.00 Total 2,425.25 2,444.75 2,509.25 2,580.25 2,663.50 2,751.50 2,783.00 2,790.75 2,796.50 2,807.25 Source: County Budget Report Notes: 2012-2017 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. 165 County of San Luis Obispo Operating Indicators by Function Last Ten Fiscal Years (UNAUDITED) Function / Department 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Recreation and Cultural Services Parks Day Use Passes 57,135 56,601 42,821 57,564 n/a n/a n/a n/a n/a n/a Daily Passes* n/a n/a 246,727 239,140 189,232 230,915 257,220 60,902 59,194 62,559 Annual Passes 2,357 2,406 2,998 3,137 n/a n/a n/a n/a n/a n/a Annual Vehicle Passes* n/a n/a 8,744 12,584 9,614 6,504 8,066 3,974 1,823 1,716 Daily Boat Launches* 16,133 14,809 26,110 23,706 16,001 16,312 24,340 9,664 11,210 11,810 Annual Boat Passes* 238 551 1,412 1,245 480 1,383 1,353 1,629 1,288 764 Public Protection Planning and Building Total Permits Issued 2,086 2,070 2,622 3,139 3,355 3,927 3,542 3,256 3,299 3,624 Number of New Affordable Housing 39 44 13 151 99 65 133 131 n/a n/a Sheriff Jail bookings 12,966 13,273 12,583 11,375 11,018 11,774 11,324 10,246 8,144 6,235 Average daily population 679 717 780 679 603 632 621 636 552 448 Health and Sanitation Mental Health Day Treatment Days provided to youth in out-of-county group home facilities** 1,588 1,885 1,764 1,613 1,381 604 n/a n/a n/a n/a Public Health Percentage of the State allocated caseload enrolled in the Women, Infants & Children (WIC) Program 99 99 95 91 86 76 72 68 n/a n/a Percentage of live born infants whose mothers received prenatal care in the first trimester. 8 2 80 79 79 80 78 78 84 86 94 Public Assistance Social Services Percentage of child abuse/neglect referrals where a response is required within 10 days that were timely 98 98 96 98 97 n/a n/a 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 91 95 95 94 92 Education Library Annual number of items circulated per capita 10.1 10.1 9.8 9.6 10.5 10.3 11.6 12.1 12.1 8.9 Annual Expenditure per capita for total Library budget $ 3 5.25 $ 34.35 $ 35.50 $ 36.13 $ 36.27 $ 38.10 $ 40.36 $ 40.57 $ 44.47 $ 4 3.00 Public Ways and Facilities Roads Pavement Condition Rating for all County roads (70 = "good") 58 60 61 61 65 66 65 65 60 60 Airport Airport Takeoffs and Landings 80,158 71,428 66,696 71,001 71,181 71,001 77,917 82,110 68,067 75,082 Passenger Enplanements 134,244 132,315 147,105 149,558 155,744 180,141 226,588 259,481 215,900 150,065 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. ** Performance measure deleted in FY 2017-18 due to Continuum of Care Reform effective 1/1/2017. 166 County of San Luis Obispo Capital Asset Statistics by Function Last Ten Fiscal Years (UNAUDITED) Function/Program 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Recreation and Cultural Services County golf courses 3 3 3 3 3 3 3 3 3 3 Park acreage 13,424 13,424 13,583 13,583 13,583 13,583 13,583 13,583 13,841 13,841 Public Protection Correction facility capacities (a) 637 717 797 797 797 909 909 * 909 909 909 Public Ways and Facilities Miles of county roads 1,333 1,335 1,336 1,336 1,338 1,338 1,339 1,339 1,349 1,349 Airport Number of runways 2 2 2 2 2 2 2 2 2 2 Notes: The 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 2017-18 facility capacity number restated by Sheriff's Department Source: County departments' management 167