Del Rey CSD

DEL REY COMMUNITY SERVICES DISTRICT DRAFT MUNICIPAL SERVICE REVIEW AND SPHERE OF INFLUENCE UPDATE February 2025 Prepared for: Fresno Local Agency Formation Commission Prepared by: AM Consulting Engineers, Suite 124 – Fresno CA 93710 – P: 559.473.1371 – F: 559.513.8449 DEL REY COMMUNITY SERVICES DISTRICT District Contact Manager: Carlos Arias Address: 10649 E. Morro Ave., Del Rey, CA 93616 Phone: (559) 888-2272 Website: https://delreycsd.com/ Management Information District Formation: 1963 Principal Act: Municipal Water District Act of 1911 (California Water Code 7100) District Powers: Water, Sewer, Solid waste, Storm Drainage, Street lighting, and Parks maintenance Governing Body: Five-member Board of Directors elected by district for four-year terms Board Members: 1. Daniel Ramirez, President term expires 12/04/2026 2. Joaquin Nunez, Director term expires 12/04/2026 3. Stephanie Graza, Director term expires 12/06/2028 4. Maria Norma Cisneros, Director term expires 12/06/2028 Board Meetings: Board Meetings are held on the 3rd Thursday of every month at 7:00 PM (Summer) /6:00 PM (Fall) at the District Hall Staffing: District Manager, Plant Supervisor, Office Assistant, Plant Operator, Maintenance personnel ( Full-Time – 4, Part Time – 1) Service Information Population Served: Approximately 1,800 Sphere of Influence (SOI): 344.2 acres Infrastructure: Municipal Groundwater Wells, Sewer Collection System, and WWTP Fiscal Information Budget: $1,774,385.00 (Proposed Budget 2024-2025) Sources of Funding: Service fees for water and sewer Administrative Policies Policies/Procedures: Yes By-Laws: Yes Previous SOI update: 2008 AM Consulting Engineers, Suite 124 – Fresno CA 93710 – P: 559.473.1371 – F: 559.513.8449 Del Rey Community Services District Draft MSR and SOI Update Municipal Service Review Table of Contents 1. MUNICIPAL SERVICE REVIEW .................................................................................................................... 3 FRESNO LAFCO MSR POLICY ......................................................................................................................... 3 ENVIRONMENTAL REVIEW ............................................................................................................................ 3 2. AUTHORIZED DISTRICT SERVICES .............................................................................................................. 6 GROWTH AND POPULATION PROJECTIONS ................................................................................................. 7 SPHERE OF INFLUENCE ................................................................................................................................. 7 LAND USE ELEMENT ...................................................................................................................................... 8 DISADVANTAGED UNINCORPORATED COMMUNITIES ................................................................................. 8 3. DISTRICT INFRASTRUCTURE .................................................................................................................... 11 WATER INFRASTRUCTURE........................................................................................................................... 11 DISTRICT WELLS .......................................................................................................................................... 11 DISTRIBUTION SYSTEM ............................................................................................................................... 11 WASTEWATER INFRASTRUCTURE ............................................................................................................... 13 WASTEWATER TREATMENT PLANT ............................................................................................................ 14 4. DISTRICT FINANCES ................................................................................................................................. 15 1996 SEWER REVENUE BONDS ................................................................................................................... 15 STATE WATER LOAN .................................................................................................................................... 15 ADOPTED BUDGET ...................................................................................................................................... 15 AUDITOR’S REPORT ..................................................................................................................................... 18 FINANCIAL ANALYSIS OF THE DISTRICT'S FUNDS ........................................................................................ 18 OPPORTUNITIES FOR SHARED FACILITIES ................................................................................................... 19 GOVERNMENT ACCOUNTABILITY ............................................................................................................... 19 LIST OF FIGURES Figure 1-1 Del Rey CSD Location and Vicinity Map ....................................................................................... 4 Figure 1-2 Del Rey CSD Service Boundary ..................................................................................................... 5 Figure 2-1 Proposed Land Use Map ............................................................................................................ 10 Figure 3-1 District Wells .............................................................................................................................. 12 iii Del Rey Community Services District Draft MSR and SOI Update Municipal Service Review 1. MUNICIPAL SERVICE REVIEW FRESNO LAFCO MSR POLICY The Local Agency Formation Commission (“LAFCo”) is charged with determining and updating the spheres of influence (“SOI”) for local agencies (special districts and cities) within the County of Fresno. SOIs are planning tools used to provide guidance for individual boundary change proposals. They discourage duplication of services by local agencies, identify the need for specific reorganization studies, and provide the basis for recommendations to local agencies for potential government reorganizations. Every determination made by LAFCo must be consistent with the SOI for that local agency. This Municipal Service Review (“MSR”) has been prepared pursuant to the Commission’s MSR program and presents data and analysis in support of the Commission’s determinations pursuant to Government Code sections 56425 and 56430, to evaluate the District’s services, service policies, and financial practices in place to provide services in its existing SOI. An MSR is required to prepare or update a local agency’s sphere of influence. While the Commission is not required by law to make any changes to SOI, the Commission may, at its discretion, opt to reaffirm, expand, or shrink an SOI, or approve, deny, or approve with conditions any changes of organization or reorganization impacting the governmental agency as a result of the information gathered during the MSR update process. In accordance with GC section 56066, Fresno County is the principal county for Del Rey CSD. Therefore, Fresno LAFCo is responsible for updating the SOI for the District consistent with GC section 56425. ENVIRONMENTAL REVIEW The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (“CKH”) directs LAFCo to comply with the California Environmental Quality Act (“CEQA”). An MSR gathers data to present an independent assessment of services provided within a defined geographic area in the County and provides a foundation that may support future LAFCo actions. Therefore, an MSR is exempted under CEQA Statute and Guidelines section 15306. 3 DEL REY COMMUNITY SERVICES DISTRICT MUNICIPAL SERVICE REVIEW FOR 180 FRESNO COUNTY LAFCO 41 180 FRESNO LEGEND MAJOR ROAD HIGHWAY SANGER 41 DEL REY 99 FOWLER 41 PARLIER 99 FIGURE 1-1: REGIONAL LOCATION AND SELMA VICINITY MAP AM Consulting Engineers • 5150 N. Sixth Street Suite 124 • Fresno, California 93710 • (559) 473-1371 AMERICAN AVE. ST. A VIL A .EVA RETNEC .EVA YER LED P O R TO LA A V E . ST. O M S PI W ILD W O O D A V E C . A R R R O ST. M E L A V E O . M JEFFERSON AVE. CHICO AVE. REDONDO AVE. .EVA ALONAIDNI AMERICAN AVE. .EVA YER LED DEL REY COMMUNITY SERVICES DISTRICT MUNICIPAL SERVICE REVIEW FOR FRESNO COUNTY LAFCO LEGEND DISTRICT SOI DISTRICT AREA FIGURE 1-2: SERVICE AREA BOUNDARY AM Consulting Engineers • 5150 N. Sixth Street Suite 124 • Fresno, California 93710 • (559) 473-1371 Del Rey Community Services District Draft MSR and SOI Update Authorized District Services 2. AUTHORIZED DISTRICT SERVICES The Del Rey Community Services District (CSD) is committed to providing high-quality essential services that enhance the well-being of the community. Below is a detailed overview of the authorized services offered by the Del Rey CSD: 1. Water Supply: Del Rey CSD focus on delivery of safe and reliable water that includes - - Water Quality Monitoring: Regular testing of water sources to ensure compliance with state safety standards. - Infrastructure Maintenance: Maintenance and improvements to water lines, storage facilities, and pumping stations to prevent disruptions and leaks. - Conservation Programs: Initiatives aimed at promoting water conservation among residents. 2. Sewer Collection and Wastewater Treatment - Maintenance of Sewer Lines: Routine inspection, cleaning, and maintenance of the sewer collection system to prevent blockages and overflows. - WWTP: The District owns and operates the WWTP to treat wastewater effectively to ensure the WWTP can accommodate peak demand flows and compliance with state regulations. 3. Public Safety and Emergency Services: Del Rey CSD collaborates with local agencies (Fresno County) to maintain a safe community. - Emergency Response Services: Coordination with fire departments, police department and emergency medical services to ensure prompt responses to emergencies. 4. Parks and Recreation - Parks Maintenance: Regular upkeep of parks including landscaping, playground equipment, and sports facilities. - Community Events: Hosting events throughout the year that encourage community participation, such as clean-up days, and workshops. 5. Solid Waste Management: The District has an agreement with IWS for Solid Waste Management for regular collection of household waste, recyclables, industrial waste and yard waste to maintain community cleanliness. 6 Del Rey Community Services District Draft MSR and SOI Update Authorized District Services GROWTH AND POPULATION PROJECTIONS Del Rey is one of several unincorporated communities within Fresno County, located midway between the Cities of Sanger and Parlier. Land uses in the District are regulated by the County of Fresno for the unincorporated land within the District and the Fresno County General Plan Land Use Element designates majority of the District’s territory for urban density areas, commercial facilities, and agricultural use. The District’s Community Plan was prepared in January 2008. The focus of the District’s Community Plan is to provide community development designed to accommodate the growth of the twenty-year period between 2007 and 2027. The Community Plan represents an agreement on the fundamental values and a vision that is shared by the residents and the business community of Del Rey and the surrounding area of interest. Its purpose is to provide decision makers and staff with direction for confronting present issues, as an aid in coordinating planning issues with other governmental agencies, and for navigating future growth. The unincorporated community of Del Rey lies in the San Joaquin Valley’s east-side region. Located in Fresno County, Del Rey is seven miles east of Highway 99 and five miles south of Highway 180. Del Rey Avenue runs north and south through the District. Del Rey has experienced a population decline over the last decade. According to the 2020 U.S. Census, the community’s population is 1,358, which was down from 1,639 at the 2010 Census and up from 950 at the 2000 Census. The previous District’s Community Plan projects that the area within the District’s planned SOI will accommodate approximately 4,254 residents by the year 2033. According to the District’s Community Plan, the District’s planning area has a total area of 345 acres, and contains a mixture of residential, agricultural, commercial, public and industrial land use. This size corresponds to the proposed Sphere of Influence (SOI) limits. Of the 345 acres of planning area, the existing District service area is 278 acres, and the existing SOI is 77 acres. SPHERE OF INFLUENCE Del Rey’s Sphere of Influence (SOI) was last updated by Fresno LAFCO in 2008. The current SOI is coterminous with the District’s boundary. The District’s current SOI encompasses approximately 278 acres. Del Rey CSD depicts planned land uses within the 345 acres comprising its future SOI boundary. In Del Rey CSD, land use is primarily centered around agriculture. The Residential zones feature single-family homes, while commercial areas include local retail and service businesses. The industrial spaces support agricultural processing and related activities. Public facilities encompass schools, parks, and community centers, and transportation infrastructure ensures connectivity. Del Rey CSD Land Use Distribution Land Use Existing Total Acreage Proposed Total Acreage Total Acreage Residential 84.4 acres 47 acres 131.4 acres Commercial 5.50 acres 10 acres 15.50 acres Industrial 140.70 acres 0 140.70 acres Public Facilities 46.70 acres 20 acres 66.70 acres Total 277.2 acres 77 acres 344.2 acres 7 Del Rey Community Services District Draft MSR and SOI Update Authorized District Services To expand industrial and residential development within Del Rey, it is recommended that the 77 acres around the existing District boundary be considered for inclusion in the SOI. This is consistent with the Del Rey Community Plan prepared in January 2008. The Del Rey Community Service District’s infrastructure is sufficient to provide the existing residents with required services. There is the potential for growth in the District if Union Community is built and annexed into the District. Future and planned development will incur the total costs for the establishment of necessary infrastructure. LAND USE ELEMENT The Land Use Element describes future land use in the community and includes goals, objectives and policies and standards that will guide such development. The Land Use Element is the heart of the Community Plan Update. The proposed Land Use Map (Figure 2-1) shows the proposed location, extent and intensity of land uses. The following land use categories are proposed: Public Lands and Open Space; Medium Density Residential (2.8 – 5.8 dwelling units per net acre); Medium High Density Residential (5.8 to 14.5 dwelling units per net acre); Central Business Commercial and Service Commercial. DISADVANTAGED UNINCORPORATED COMMUNITIES The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (“CKH”) requires LAFCo to make determinations regarding disadvantaged unincorporated communities (“DUCs”) when considering a change of organization, reorganization, SOI expansion, and when conducting municipal service reviews. For any updates to a SOI of a local agency (city or special district) that provides public facilities or services related to sewer, municipal and industrial water, or fire protection, the Commission shall consider and prepare written determinations regarding the present and planned capacity of public facilities and adequacy of public services, and infrastructure needs or deficiencies for any DUC within or contiguous to the SOI of a city or special district. GC section 56033.5 defines a DUC as: i) all or a portion of a “disadvantaged community” as defined by section 79505.5 of the Water Code (community with an annual median household income (“MHI”) that is less than 80 percent of the statewide annual median household income); and a status of ii) “inhabited territory” as defined by GC section 56046 (12 or more registered voters), or as determined by Commission policy. Fresno LAFCo policy further refines the definition of a DUC as having at least 15 dwelling units at a density not less than one unit per acre. In 2015, the Fresno LAFCo adopted a DUC database management and implementation guidelines (“DUC database”) to fulfill its responsibility to periodically identify DUCs pursuant to Senate Bill 244 (Wolk). The DUC database established a system to identify, record, and track DUC locations within Fresno County using Geographic Information Systems (“GIS”). GIS files are derived from the U.S. Census Bureau’s American Community Survey (“ACS”) compiled for the five-year period 2016-2020 to identify the demographic composition for the various census geographies. Although the ACS provides single-year estimates, the five-year estimate between years 2018-2022 provide more precise data and mapping information for analyzing small populations. The five-year reports are the most reliable form of information generated by the U.S. Census Bureau.21 8 Del Rey Community Services District Draft MSR and SOI Update Authorized District Services The statewide MHI reported for years 2018 through 2022 was $95,521. Hence, the calculated threshold for a DUC is any geographic unit with a reported MHI that is less than $48,897. Del Rey’s Median Household Income is approximately $48,857 as per 2022 American Community Survey 5- year estimates. The census block group data was utilized to provide the economic and population backgrounds for this section of the MSR. A large portion of the District is located within census geographic units that exceeded the threshold for Disadvantaged Communities as defined by California Water Code section 79505.5. Based Fresno LAFCo’s updated DUC database, the District does not contain any DUCs. 9 e e v v A A y a e ol el R a n D di n I American Ave American Ave Jefferson Ave Jefferson Ave e v A y Proposed Del Rey Community Plan e R el Opportunity Site D Proposed Land Use Lincoln Ave Residential: Medium Density Residential: Medium High Density Commercial: Central Business Commercial: Service Commercial Industrial: Limited Industrial: General DRAFT Public Facilities: Park Public Facilities NAIP 2022 Imagery o 0 500 1,000 Feet 5/28/2024 \\ppeng.com\pzdata\clients\Fresno_County of-1397\139724001-Community Plans Update\400 GIS\Map\FresnoCounty_Community_Plans_Update\FresnoCounty_Community_Plans_Update.aprx Prepared By Del Rey Community Services District Draft MSR and SOI Update District Infrastructure 3. DISTRICT INFRASTRUCTURE WATER INFRASTRUCTURE The community is located within the boundaries of the Consolidated Irrigation District (CID). Two branches of the Garfield irrigation ditch run through Del Rey’s Community Plan boundaries. These ditches carry water from the Kings River and provide irrigation to surrounding cropland. Del Rey is located in the Kings sub-basin of the San Joaquin Valley groundwater basin in the Tulare Lake hydrologic region. The groundwater is relatively free of contaminants and is used by residential, commercial, and industrial customers. Groundwater provides all the potable water for the community. The Del Rey Community Services District (District) owns and operates the water system that provides water service to residential, commercial, and industrial customers in the District. The District operates four wells to supply water to the community. TYPE METERED FLAT RATE TOTAL Residential - 303 303 Commercial 27 8 35 Industrial - 11 11 Irrigation - - 0 Total Active Connection - - 349 Total Fire Hydrants - - 38 Total Backflow Prevention Devices - - 17 DISTRICT WELLS The District's distribution system consists of water mains ranging in size from 6 to 10 inches. The District's water system is supplied from four active wells. The District extracts groundwater from four (4) active wells, Well Nos. 04, 05, 06, and 07. The District’s existing well capacities range from 700 to 1,400 gallons per minute (gpm), with a total combined capacity of approximately 3,900 gpm. The typical life expectancy of a groundwater well is around 50 to 80 years, depending on factors like water quality, construction, maintenance, and the condition of the surrounding aquifer. Regular inspections, proper sealing, and ensuring the well is not over-pumped can help extend its lifespan. The locations of the District's active wells are shown in the figure below. All active wells are operated automatically by pressure switches located on adjacent hydropneumatic tanks at the wells. The pressure settings for "on" and "off' are varied on a seasonal basis to allow different wells to be lead or lag. DISTRIBUTION SYSTEM The District’s water distribution system consists of a network of water lines located throughout the community. Currently, there are approximately 349 connections in the District’s water system, which includes single family and multi‐family residential, commercial, industrial, and landscape irrigation connections. Water lines within the system range in diameter from 6 to 10‐inches. The water mains are usually placed in a grid pattern with 10‐inch mains every half mile and 8‐inch mains at the quarter mile locations. Depending on the number of units served, the intervening mains are either 6 or 8‐inches in ‐ 11 AMERICAN AVE. AVILA ST. .EVA RETNEC .EVA YER LED PO R TO LA AVE. O ST. M PIS W ILD W O O D AVE. C AR M R R O ST. EL AVE. O M JEFFERSON AVE. CHICO AVE. REDONDO AVE. .EVA ALONAIDNI AMERICAN AVE. .EVA YER LED DEL REY COMMUNITY SERVICES DISTRICT MUNICIPAL SERVICE REVIEW FOR FRESNO COUNTY LAFCO LEGEND DISTRICT SOI WELL 06 DISTRICT AREA WELL LOCATION WELL 05 WELL 04 WELL 07 FIGURE 3-1: EXISTING GROUND WELL LOCATIONS AM Consulting Engineers • 5150 N. Sixth Street Suite 124 • Fresno, California 93710 • (559) 473-1371 Del Rey Community Services District Draft MSR and SOI Update District Infrastructure diameter. There is one pressure zone throughout the District's system, which is maintained between 45 and 65 psi. Water is distributed through a grid system of buried pipelines that supply services and provide fire protection through fire hydrants and fire sprinklers at buildings so equipped. The pipeline sizes within the grid system vary between 6 and 10 inches in diameter. Pipe Diameter (inches) Length of Pipe (ft.) 6 9,016 8 13,238 10 3,532 Total 25,786 WASTEWATER INFRASTRUCTURE The District’s sewer collection system consists of approximately 3.7 miles of 6- through 15-inch-diameter sewers. The backbone of the system consists of trunk and interceptor sewers, generally 10 inches in diameter and larger. The trunk and interceptor sewers convey the wastewater generated by the District’s customers to the WWTP. The District currently serves a total of 320 sewer connections. Influent wastewater is comprised mainly of domestic wastewater from residential and commercial properties. The WWTP receives wastewater flows from industrial users. The breakdown of these connections by service type is provided in Table 3-3. Category Number of connections Residential 303 Commercial/Institutional 11 Industrial 6 Total 320 The District’s existing sewer collection system consists of a network of 6 and 8-inch diameter “collection” lines that connect to larger “mains” that range from 10 to 15-inches in diameter. Wastewater from most of Del Rey flows into a 12-inch line that runs along S Del Rey to POM Wonderful and then to a 15-inch trunk line that runs along POM Wonderful to the WWTP. Most of the sewer pipes of the 4.58-mile-long collection system are made of Vitrified Clay, Polyvinyl Chloride, or Asbestos Cement. It is unknown when the pipes were installed but the sewer system is believed to be 50 years old. The District’s sewer collection system operates with two lift stations one is located at the intersection of Jefferson Ave and Autumn. This facility currently receives flows from the areas to the south and east of the lift station and discharges into the S Del Rey line. The other lift station is located at the WWTP. Table 4-1 provides a summary of the existing sewer pipelines within the District’s collection system. 13 Del Rey Community Services District Draft MSR and SOI Update District Infrastructure WASTEWATER TREATMENT PLANT The District owns and operates a WWTP under the current Waste Discharge Requirements (WDRs) Order No. 96-284, which sets the plant’s maximum allowable discharge at 0.30 million gallons per day (MGD). The District’s existing sewer collection system consists of sewer pipelines ranging in size from 6 to 15 inches. The wastewater is conveyed by the sewer collection system to the District’s wastewater treatment plant (WWTP), which is located east of the community, south of American Avenue, and east of the Garfield Ditch. Pipe size Length (ft) 6-Inch 5,234 8-inch 13,057 10-inch 1,110 12-inch 2,149 15-inch 1,837 Total Length 23,387 14 Del Rey Community Services District Draft MSR and SOI Update District Finances 4. DISTRICT FINANCES This section of the MSR analyzes financial information provided by the District to determine the District’s revenue and financial systems in place to provide services to its constituents. The analysis is based on available financial data, adopted budget for Fiscal Year ("FY") 2022-2023, the audited financial statement for year ending June 30, 2023. The District acquires revenue from non-enterprise services, receiving a substantial amount of its support as property tax revenue. During the year ending June 30, 2023, property tax and assessments represent 94% of total revenue. However, property tax-based revenue is not sufficient to fund the District’s operation and capital improvement costs. The District therefore relies on revenue from user fees, facility rental fees and services, grants, contributions, impact fees, to minimize the difference between revenue and expenditure. The District’s revenues come primarily from user charges for water and sewer services provided. The District recently increased water and sewer rates to ensure the long-term feasibility of the District’s infrastructure. The District regularly monitors grant opportunities and engages potential stakeholders and organizations to develop a strategic collaborative approach to pursue available grant funds. For the 2022-23 fiscal year, the District secured allocations from Fresno County ARPA, Fresno County CDBG, Small Community Drought Relief, and Clean Water Small Community Grant Program. 1996 SEWER REVENUE BONDS In 1996 the District issued Sewer Bonds for $932,000 and these bonds combined with a government grant of $1,222,600 were used to finance construction of a domestic wastewater treatment plant. The balance remaining is approximately $494,900 as of June 30, 2023. STATE WATER LOAN In 2005 the District obtained a loan from the State of California under the safe drinking water program. The balance remaining is approximately $71,825 as of June 30, 2023. ADOPTED BUDGET Consistent with policy, the District adopts a preliminary budget on or before July 1st which includes anticipated revenue and expenditures for the forthcoming fiscal year (FY) from July 1st to June 30th of each year. The final budget is adopted during a duly noticed public hearing on or before August 30th each fiscal year after making any changes to the preliminary budget. The District accounts for various revenues and expenditures in spreadsheet format. This fiscal year, District staff intends to provide its board members with a mid-year report to monitor the District’s financial trend throughout the year. The budget may be revised by District board members during the year to consider unanticipated income deficits and/or expenditures. For the preparation of this MSR, the District provided LAFCo with adopted budgets from FY 2019-20, FY 2020-21, FY 2021-22, FY 2022-23. 15 Del Rey Community Services District Draft MSR and SOI Update District Finances Adopted Budget Financial Year Revenue Expenses Variance FY 2019-2020 $1,117,021.00 $1,285,815.00 ($168,794.00) FY 2020-2021 $1,277,569.00 $1,177,431.00 $100,138.00 FY 2021-2022 $1,180,260.00 $1,102,274.00 $77,986.00 FY 2022-2023 $1,242,142.00 $1,789,428.00 ($547,286.00) FY 2023-2024 $1,207,950.00 $1,375,662.00 ($167,712.00) According to the District’s adopted budget for FY 2024-25, total District revenue amounted to $1,774,385, while total expenditures amounted to $1,694,409 and a surplus of approximately $79,976. In FY 2024-25, the District experienced improved financial performance following the completion of a rate study, which resulted in rate increases that strengthened its financial position. Additional information is provided later in this section referencing the District’s audited financial statements for the year ending June 30, 2023. Proposed Budget Fiscal Year 2024-2025 Category Revenue Expense Variance Solid Waste $147,715.00 Sewer $731,240.00 Water $654,480.00 Property Taxes $108,000.00 Meters Fees $2,100.00 Recreation $1,250.00 Hall Rentals $3,500.00 Street Lighting Transfer $11,000.00 Reimbursement from Del Rey Packing $15,000.00 CDBG Grant Reimbursement for Engineer $100,000.00 Late Fees $100.00 Total Costs $1,207,950.00 Category Revenue Expense Variance Salaries and Wages $250,146.00 Health Insurance – Employees $59,233.00 Health Insurance – Retirees $14,808.00 Employment Taxes – Employer $19,136.00 Retirement- Cal Pers $10,477.00 Workers Compensation $23,883.00 Directors Fees $27,000.00 Telephone Expense $8,000.00 General Administrative Expense $5,000.00 Office Supplies $2,000.00 16 Del Rey Community Services District Draft MSR and SOI Update District Finances Postage and Shipping $2,000.00 Alarm Service $1,200.00 Bank Service Charges $1,000.00 Legal Services $30,000.00 Accounting Services $20,000.00 Annual Audit Fees $15,000.00 Computer and Software $2,000.00 Membership $3,000.00 South Kings GSA $168,000.00 Fuel and Oil $8,000.00 Utilities – Power Expense $339,000.00 Street Lighting $11,000.00 Engineer Fees $100,000.00 Water Testing Expense $150,000.00 Maintenance – Water $25,000.00 Maintenance – Sewer $12,000.00 Maintenance – Buildings $6,000.00 Maintenance – Vehicles $10,000.00 Maintenance – Equipment $35,000.00 Pest Control $2,000.00 Supplies and Consumables $22,000.00 Small Tools $1,000.00 Equipment Rental $2,000.00 Uniform Expense $5,000.00 Solid Waste Contract $100,000.00 Liability Insurance Expense $40,000.00 License and Permits $100,000.00 Interest – Sewer Bonds $22,275.00 State Water Loan $5,750.00 Sewer Rev, Bond Principle Payment $29,000.00 Compliance Expense $500.00 Property Tax Expense $4,000.00 Payroll Service Expense $3,000.00 Total Costs $1,694,408.00 $79,977.00 17 Del Rey Community Services District Draft MSR and SOI Update District Finances AUDITOR’S REPORT The District provided LAFCo a copy of its independent auditor’s report for the FY ending June 30, 2022. The District’s financial audit was reviewed to determine the District’s fiscal status, assess financial practices, and review pertinent management findings. The District General Manager plans to follow up with the auditor and Board of Directors to maintain transparency. FINANCIAL ANALYSIS OF THE DISTRICT'S FUNDS The District utilizes fund accounting to maintain compliance with financial regulations. This analysis focuses on General Funds, Capital Projects Funds, and Debt Service Funds. 1. General Funds: The General Funds provide essential insights into the District's operational financing. As of June 30, 2022, the proprietary funds reported a combined ending fund balance of $13,028,894, marking an increase of $432,388 from the previous year. Of this amount, $1,015,529 remains unrestricted and available for discretionary spending, which is vital for assessing the District's short-term financial health and operational flexibility. 2. Capital Projects Funds: The District’s investment in capital assets for its business-type activities, as of June 30, 2022, stands at $4,162,041, net of depreciation. This includes investments in land, buildings, machinery, and vehicles, which are crucial for ongoing capital projects. 3. Debt Service Funds: Regarding debt administration, the District's long-term obligations totaled $600,471 as of June 30, 2022. Out of this total, $33,476 is due within the current fiscal year, while the remaining amount, classified as deferred liabilities, will be payable over the next 14 years. 4. Economic Factors and Next Year's Budgets and Rates: For the year ending June 30, 2022, the budget anticipates a surplus of $59,038, despite a projected revenue decline of $78,274 compared to the previous year. While expenses are expected to decrease by $25,830, charges for services are projected to drop by $285,484. Conversely, non-operating revenue is expected to increase by $25,000. Transfers from the water remediation fund are anticipated to decline by $140,000. Salary and benefits are projected to decrease by $5,284, while services and supplies may rise by $64,783. User rates are not expected to increase during the year ending June 30, 2022. 18 Del Rey Community Services District Draft MSR and SOI Update District Finances OPPORTUNITIES FOR SHARED FACILITIES The District does not share any facilities. GOVERNMENT ACCOUNTABILITY This section of the MSR considers various topics, such as compliance with state disclosure laws, the Ralph M. Brown Act, public participation, i.e. open meetings, accessible staff, election processes, and the agency’s governing structure. Additionally, this considers the agency’s level of participation with the Commission's MSR program. Accountability for community service needs, including governmental structure and operational efficiencies is evaluated as part of the MSR Program to encourage the orderly formation of local government agencies, create logical boundaries, and promote the efficient delivery of services. This MSR is an informational document that will be used by LAFCo, other local agencies, and the public at large to examine the government structure of the District. The District is an independent special district with a separate board of directors, and functions independently from the County of Fresno. The District is not governed by other legislative bodies, neither a city council nor a county board of supervisors. The District operates under the authority granted by the California Government Code Section 61000 et seq. The existing structure of the District as a community service district is sufficient to allow the District to continue service provision in the foreseeable future. There are no legal or administrative limitations on the District that would affect the provision of service in the future. Therefore, a reorganization of the current government structure is not likely to significantly improve services. The current government structure can provide adequate service within district boundaries. The District is run by a five-member Board of Directors. Each member has a four-year term. The County and the District have a good working relationship. 19 Del Rey Community Services District Draft MSR and SOI Update Appendix A - District By-Laws APPENDIX A DISTRICT BY-LAWS 20 Del Rey Community Services District Draft MSR and SOI Update Appendix C - District Financials APPENDIX B AUDITED DISTRICT FINANCIALS FY 2022-2023 21 DEL REY COMMUNITY SERVICES DISTRICT INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS JUNE 30, 2023 TABLE OF CONTENTS Page BOARD OF DIRECTORS AND ADMINISTRATION 1 INDEPENDENT AUDITOR’S REPORT 2 - 4 MANAGEMENT’S DISCUSSION AND ANALYSIS 5 - 8 FINANCIAL STATEMENTS Statement of Net Position 9 - 10 Statement of Revenues, Expenses and Changes in Net Position 11 Statement of Cash Flows 12 - 13 Notes to Financial Statements 14 - 21 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison 22 - 23 Proportionate Share of the Net Pension Liability 24 - 26 Changes in the District’s Total OPEB Liability and Related Ratios 27 - 37 SUPPLEMENTARY INFORMATION Assessed Valuation of the District 38 Insurance Coverage 39 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS 40 - 41 BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SCHEDULE OF FINDINGS AND QUESTIONED COSTS 42 SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS 43 DEL REY COMMUNITY SERVICES DISTRICT BOARD OF DIRECTORS AND ADMINISTRATION JUNE 30, 2023 Board of Directors Stephanie Garza President Joaquin Nunez Vice-President Daniel Ramirez Director Rumaldo Reyna Director Rolando Sanchez Director Administration Carlos Arias District Manager 1 INDEPENDENT AUDITOR’S REPORT To the Board of Directors Del Rey Community Services District Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of the business-type activities and each major fund of the Del Rey Community Services District (District) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and each major fund of the District as of June 30, 2023, 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. Basis for Opinion 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. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Del Rey Community Services District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management 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, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Del Rey Community Services District’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not 2 detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit 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 Del Rey Community Services District’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Del Rey Community Services District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 5-8, and the budgetary comparison schedule on pages 22-23, be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the financial statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial that collectively comprise the District’s basic financial statements. The Assessed Valuation of District, Insurance Coverage, Water and Sewer Capacity (Connection) Fees, and Annual Water & Sewer Capacity Fee Deposit Report, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Assessed Valuation of District Insurance Coverage, Water and Sewer Capacity (Connection) Fees, and Annual Water & Sewer Capacity Fee Deposit Report were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the 3 auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Assessed Valuation of District, Insurance Coverage, Water and Sewer Capacity (Connection) Fees, and Annual Water & Sewer Capacity Fee Deposit Report are fairly stated in all material respects in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 12, 2024, on our consideration of Del Rey Community Services District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Del Rey Community Services District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Del Rey Community Services District’s internal control over financial reporting and compliance. Clovis, California February 12, 2024 4 DEL REY COMMUNITY SERVICES DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2023 As management of Del Rey Community Services District, we offer readers of the District's financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, 2023. We encourage readers to consider the information presented here in conjunction with information that is included within the financial statements. Financial Highlights  Total assets and deferred outflows of resources of the District exceeded its total liabilities and deferred inflows of resources as of June 30, 2023, by $12,560,674. Of this amount, $11,818,277 is restricted and reserved by external laws and regulations or debt covenants.  Total assets and deferred outflows of resources decreased by $86,152.  During the current year, the District's capital assets increased by a net of $68,146. This increase was mostly attributable to ongoing TCP treatment construction.  Long-term liabilities decreased by $273,969 for the year ended June 30, 2023. This overall decrease is due to a decrease in OPEB liability related adjustments. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Del Rey Community Services District's basic financial statements. The District's basic financial statements are comprised of three components: I) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District's finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the District's assets and liabilities, with the two 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 District is improving or deteriorating. The statement of activities presents information showing how the District'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 related cash flows. Thus, revenue and expense are reported in this statement for some items that will only result in cash flow in future fiscal periods. 5 DEL REY COMMUNITY SERVICES DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) YEAR ENDED JUNE 30, 2023 Financial Highlights (continued) Both of the government-wide financial statements distinguish functions of the District that are principally proprietary in nature (business-type activities) which are functions that are intended to recover all or a significant portion of their costs through user fees and charges. The District has no governmental activities. The government-wide financial statements include only the District itself. The District has no component units. 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 District, 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 District can be divided into two categories: governmental funds and proprietary funds. The District has no governmental funds and four proprietary funds, the Water Fund, the Sewer Fund, the Solid Waste Fund, and Nonmajor Enterprise Funds. Proprietary funds. Proprietary funds are used to account for essentially the same functions reported as business- type 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 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. Notes to the 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. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain other supplementary information. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. As of June 30, 2023, the District's assets exceeded liabilities by $12,560,674. Of that amount, $8,154,815, representing 65% of the District's net position, is restricted for debt service or specific expenditures relating to sewer repair, maintenance, service-life extension, park improvements, and the TCP project. Capital assets are used to provide services to customers, and they are not available for future spending. The following tables represent summaries of the District's net position and changes in net position for the current and prior years: 6 DEL REY COMMUNITY SERVICES DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) YEAR ENDED JUNE 30, 2023 Del Rey Community Services District’s Net Position Business-Type Prior Year Activities Total Total Current assets $ 9,373,312 $ 9,373,312 $ 9,764,825 Capital assets, net of accumulated depreciation 4,230,187 4,230,187 4 ,120,058 Noncurrent assets 274,888 274,888 319,829 Deferred outflows of resources 356,261 356,261 116,088 Total assets and deferred outflows of resources 14,234,648 1 4,234,648 14,320,800 Current liabilities 386,381 386,381 373,296 Noncurrent liabilities 994,858 994,858 1 ,268,827 Deferred inflows of resources 292,735 292,735 82,171 Net position 12,560,674 1 2,560,674 12,596,506 Total liabilities, deferred inflows of resources, and net position $ 14,234,648 $ 1 4,234,648 $ 14,320,800 Del Rey Community Services District’s Changes in Net Position Prior Year Business-Type Current Year Total Activities Total (as restated) REVENUE Program revenue Charges for services $ 1 ,174,201 $ 1,174,201 $ 1,143,434 Other 67,941 67,941 36,826 Total Revenues 1,242,142 1,242,142 1,180,260 EXPENSE Water 493,416 493,416 365,462 Sewer 947,630 947,630 615,612 Solid waste 178,432 178,432 132,073 Nonmajor enterprise funds 169,950 169,950 64,285 Total Expenses 1,789,428 1,789,428 1,177,431 Net operating income/(loss) (547,286) (547,286) 2,829 Net nonoperating revenue/(expense) 377,430 377,430 131,048 Change in net position (169,856) (169,856) 133,877 Net position, beginning of year 12,736,984 12,736,984 12,603,107 Net position, end of year $ 1 2,567,128 $ 1 2,567,128 $ 12,736,984 7 DEL REY COMMUNITY SERVICES DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) YEAR ENDED JUNE 30, 2023 Business-type activities. Business-type activities decreased the District's net position by $169,856, accounting for 100 percent of the total decrease in net position. Financial Analysis of the District's Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Proprietary Funds. The purpose of the District's proprietary fund financial statements is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the District's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of June 30, 2023, the District's proprietary funds reported a combined ending fund balance of $12,560,674 a decrease of $169,856, in comparison to the prior year. Of the entire ending fund balance, $742,397 is unrestricted and is available for spending at the District's discretion. Capital Asset and Debt Administration Capital assets. The District's investment in capital assets for its business-type activities as of June 30, 2023, amounted to $4,230,187 (net of allowance for depreciation). This investment in capital assets includes land, building, improvements, machinery & equipment, furniture & fixtures, vehicles, and construction in progress. Additional information on the District's capital assets can be found in note four. Debt administration. The District's long-term debt totaled $566,725 as of June 30, 2023. Of this total amount, $34,746 is due and payable during the year ending June 30, 2024. The remainder, referred to as deferred liabilities, is due and payable over the next 13 years. Additional information on the District's long-term debt can be found in note five. Economic Factors and Next Year's Budgets and Rates The budget for the year ending June 30, 2024 projects a deficit of $167,712. Revenue is anticipated to decrease by $446,225 compared to June 30, 2023, while expenses are expected to decrease by $448,369. Charges for services are anticipated to decrease by $34,192, while non-operating revenue is expected to decrease by $412,033. Salaries, wages and employee benefits are expected to decrease by $17,141 and services and supplies are anticipated to decrease by $4,191 compared to June 30, 2023. User rates are not expected to increase during the year ending June 30, 2024. Requests for Information This financial report is designed to provide a general overview of Del Rey Community Services District's finances for all those with an interest in the District's finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the General Manager, Del Rey Community Services District, 10649 Morro Ave, Del Rey, CA 93616. 8 DEL REY COMMUNITY SERVICES DISTRICT STATEMENT OF NET POSITION JUNE 30, 2023 Nonmajor Water Sewer Solid Waste Enterprise Funds Total ASSETS Current assets Cash and cash equivalents $ 8,136 $ 208,827 $ - $ 54,241 $ 271,204 Investments 4,764 - - - 4,764 Accounts receivable, net 33,819 37,943 10,724 - 82,486 Interest receivable 58,802 - - 563 59,365 Prepaid expenses 3,908 7 ,816 1,042 261 13,027 Due from other funds 59,006 33,392 - - 92,398 Other assets Restricted cash and investments 8,761,770 - - 8 8,298 8,850,068 Total current assets 8,930,205 287,978 1 1,766 143,363 9,373,312 Capital assets, net of accumulated depreciation 1,738,136 1,806,726 - 685,325 4,230,187 Noncurrent assets Bond issuance costs - 6 ,891 - - 6,891 Cash and investments - 199,395 - - 199,395 Net pension asset 20,580 41,161 5,488 1,373 68,602 Total non-current assets 20,580 247,447 5,488 1,373 274,888 Total assets 2,342,151 17,254 830,061 13,878,387 10,688,921 DEFERRED OUTFLOWS OF RESOURCES Items related to pension plan 51,793 103,586 13,812 3,453 172,644 Items related to OPEB 55,085 110,170 1 4,689 3,673 183,617 TOTAL ASSETS AND DEFERRED OUTFLOW OF RESOURCES 1 0,795,799 2,555,907 4 5,755 837,187 14,234,648 The accompanying notes are an integral part of the financial statements. 9 DEL REY COMMUNITY SERVICES DISTRICT STATEMENT OF NET POSITION JUNE 30, 2023 Nonmajor Water Sewer Solid Waste Enterprise Funds Total LIABILITIES Current liabilities Accounts payable and accrued expenses 70,151 140,302 1 8,707 4,677 233,837 Accrued interest payable - 12,181 - - 12,181 Deposits - - - 1 2,171 12,171 Due to other funds - - 9 3,446 - 93,446 Current portion of long-term debt 5,746 29,000 - - 34,746 Total current liabilities 75,897 181,483 112,153 16,848 386,381 Non-current liabilities Notes payable, less current portion 66,079 465,900 - - 531,979 OPEB liability 138,864 277,727 3 7,030 9,258 4 62,879 Total liabilities 280,840 925,110 149,183 2 6,106 1,381,239 DEFERRED INFLOWS OF RESOURCES Items related to pension plan 19,732 39,464 5,262 268 64,726 Items related to OPEB 68,403 136,805 1 8,241 4,560 2 28,009 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 368,975 1,101,379 172,686 30,934 1,673,974 NET POSITION Net investment in capital assets 1,666,311 1,311,826 - 685,325 3,663,462 Restricted for sewer and lighting improvements - 147,860 - 1 6,345 164,205 Restricted for debt service - 51,535 - - 51,535 Restricted for TCP project 7,939,075 - - - 7,939,075 Unrestricted 821,438 (56,693) (126,931) 104,583 7 42,397 Total net position 1 0,426,824 1,454,528 (126,931) 806,253 12,560,674 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION $ 10,795,799 $ 2,555,907 $ 45,755 $ 837,187 $ 14,234,648 The accompanying notes are an integral part of the financial statements. 10 DEL REY COMMUNITY SERVICES DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2023 Nonmajor Water Sewer Solid Waste Enterprise Funds Total Operating Revenue Residential $ 64,587 $ 194,495 $ 79,348 $ - $ 3 38,430 Commercial 36,406 99,194 3,072 - 138,672 Industrial 111,577 360,055 26,276 - 497,908 Taxes 52,646 52,646 - 22,873 128,165 Reimbursements - - - 11,956 11,956 Recreation fees - - - 59,070 59,070 Other 52,515 - - 15,426 67,941 Total operating revenue 317,731 706,390 108,696 109,325 1,242,142 Operating Expense Salaries and wages 59,006 131,433 20,131 20,827 231,397 Employee benefits and payroll taxes 23,019 51,274 7,854 8,125 90,272 Pension expense / (recovery) 65,205 145,241 22,246 23,014 255,706 OPEB expense ( 679) (1,513) (232) (240) (2,664) Directors' fees 1,715 3,820 5 85 605 6,725 Professional fees 38,805 86,436 13,239 13,696 152,176 Utilities 110,353 129,397 - 21,131 260,881 Repair, maintenance, and testing 61,045 113,370 - - 174,415 License and permits 3,623 48,136 - - 51,759 Insurance 10,460 33,125 - - 43,585 General and administrative 58,197 116,392 15,519 3,879 193,987 Solid waste contract services - - 99,090 - 99,090 Depreciation 62,667 90,519 - 78,913 232,099 Total operating expense 493,416 947,630 178,432 169,950 1,789,428 Operating income (loss) (175,685) (241,240) (69,736) (60,625) (547,286) Nonoperating Revenues/(Expenses) TCP Revenue 297,810 - - - 297,810 Interest income 114,223 - - - 114,223 Interest expense - (34,603) - - (34,603) Net nonoperating revenues/(expenses) 412,033 (34,603) - - 377,430 Change in net position 236,348 (275,843) (69,736) (60,625) (169,856) Net Position - beginning of year 10,488,840 1,730,371 (57,195) 866,878 13,028,894 Prior Period Adjustment (298,364) - - - (298,364) Net Position - beginning of year (restated) 10,190,476 1,730,371 (57,195) 866,878 12,730,530 Net Position, End of Year $ 10,426,824 $ 1,454,528 $ (126,931) $ 8 06,253 $ 12,560,674 The accompanying notes are an integral part of the financial statements. 11 DEL REY COMMUNITY SERVICES DISTRICT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2023 Nonmajor Water Sewer Solid Waste Enterprise Funds Total Operating Activities Received from customers $ 47,338 $ 737,774 $ 117,564 $ 109,325 $ 1,012,001 Payments to suppliers (274,210) (510,701) (125,770) (37,780) (948,461) Payments to employees (103,928) (255,279) (67,921) (50,821) (477,949) Net cash provided by (used in) operating activities (330,800) (28,206) (76,127) 20,724 (414,409) Non-capital Financing Activities Due to other funds - - 76,127 (75,079) 1 ,048 Net cash provided by (used in) noncapital financing activities - - 76,127 (75,079) 1 ,048 Capital and Related Financing Activities Grant revenue 297,810 - - - 297,810 Increase in bond isuance costs - (432) - - (432) Principal paid on notes payable (5,746) (28,000) - - ( 33,746) Interest paid on notes payable - (34,775) - - ( 34,775) Purchase of capital assets (616,566) 155,432 - 160,889 (300,245) Net cash provided (used) in capital and related financing activities (324,502) 92,225 - 160,889 ( 71,388) Investing Activities Interest received 85,650 - - (258) 85,392 Change in cash and cash equivalents (569,652) 64,019 - 106,276 (399,357) Cash and Investments Beginning of year 9,344,322 344,203 - 36,263 9,724,788 End of year $ 8 ,774,670 $ 408,222 $ - $ 142,539 $ 9,325,431 The accompanying notes are an integral part of the financial statements. 12 DEL REY COMMUNITY SERVICES DISTRICT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2023 Nonmajor Water Sewer Solid Waste Enterprise Funds Total Reconciliation of Operating Income (Loss) to Net Cash Provided By/(Used) for Operating Activities Operating income (loss) $ (175,685) $ (241,240) $ (69,736) $ (60,625) $ (547,286) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 62,667 90,519 - 78,913 232,099 Changes in assets and liabilities: (Increase) Decrease in accounts receivable (270,393) 31,384 8,868 - (230,141) (Increase) Decrease in prepaid expense (866) (1,732) (231) (57) (2,886) (Increase) Decrease in net pension asset 47,886 95,771 12,770 3,191 159,618 (Increase) Decrease in deferred outflows 5,984 (27,865) ( 1,945) (488) ( 24,314) Increase (Decrease) in accounts payable 10,854 21,707 2,894 724 36,179 Increase (Decrease) in accrued liabilities - - - - - Increase (Decrease) in deposits - - - 864 864 Increase (Decrease) in OPEB liability (37,507) (75,016) (10,002) (2,501) (125,026) Increase (Decrease) in deferred inflows 26,260 78,266 (18,745) 703 86,484 Net Cash Provided/(Used) by Operating Activities $ (330,800) $ (28,206) $ (76,127) $ 20,724 $ (414,409) Summary of cash balances, end of year Cash and cash equivalents 12,900 208,827 - 54,241 275,968 Restricted cash 8,761,770 199,395 - 88,298 9,049,463 $ 8 ,774,670 $ 408,222 $ - $ 142,539 $ 9,325,431 The accompanying notes are an integral part of the financial statements. 13 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 1: Summary of Significant Accounting Policies Del Rey Community Services District (the District) was organized in 1963 under the Municipal Water District Act of 1911 (California Water Code 7100). A five-member board of directors, who are elected at large, provide governance. The District was formed to secure a high quality, reliable source of water, sewer, solid waste, street lighting, and recreation services to the public. Those services are provided on a continuing basis and are financed through user charges. The Board of Directors has the authority to fix rates and charges for the District's services. The District also may incur indebtedness, including issuing bonds, and is exempt from federal and state income taxes. The accounting and reporting policies of the District conform to generally accepted accounting principles applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Government Accounting Standards Board (GASB), the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units, and by the Financial Accounting Standards Board (when applicable). Financial Reporting Entity As required by generally accepted accounting principles, these general purpose financial statements present the District in conformance with GASB Statement No. 14, "The Financial Reporting Entity." Under Statement No. 14, component units are organizations that are included in the District's reporting entity because of the significance of their operational or financial relationships with the District. The District has no component units. Government-Wide and Fund Financial Statements The government-wide financial statements, which are the statement of net position and the statement of activities, report information on all of the nonfiduciary activities of the primary government. Governmental activities, which normally are supported by taxes and intergovernmental revenue, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The District has no governmental activities. The statement of activities demonstrates the degree to which the direct expenses of a given function or activity are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or activity. Program revenue include charges to customers, grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the fund financial statements. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds financial statements. Revenues are recorded when earned and expenses are recorded when liabilities are incurred, regardless of the timing of related cash flow. Property taxes are recognized as revenue in the year in which they are levied. Grants and similar items are recognized as revenue when all eligibility requirements imposed by the provider have been met. 14 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 1: Summary of Significant Accounting Policies (continued) Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued) The financial statements of the District are prepared in accordance with generally accepted accounting principles. The District's reporting entity applies all relevant Governmental Accounting Standards Board (GASB) pronouncements and applicable Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, unless they conflict with the GASB pronouncements. The District's reporting entity does not apply FASB pronouncements of APB opinions issued after November 30, 1989. Proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recognized when earned and expenses are recorded when liabilities are incurred, regardless of the timing of related cash flow. Amounts reported as program revenue include charges to customers for goods and services, operating grants and contributions and capital grants and contributions. Assets, Liabilities and Net Position or Equity 1. Cash and Investments GAAP allows a financial statement issuer to choose the focus of the statement of cash flows as either cash or “cash and cash equivalents.” The District reports restricted and unrestricted cash, including bank deposits and the District’s investment in the State of California Local Agency Investment Fund (LAIF), as well as cash equivalents in the statement of cash flows. The District defines cash equivalents as certain highly liquid investments with an original maturity of three months or less. 2. Property, Plant and Equipment Capital assets, which include property, plant and equipment are reported in the applicable governmental columns in the government-wide financial statements. Capital assets are defined by the District as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of three years. All material fixed assets are valued at historical cost. Donated fixed assets are valued at their estimated fair value on the date donated. When an asset is disposed of, cost and related accumulated depreciation is removed and any gain or loss arising from its disposal is credited or charged to operations. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Depreciation is recorded by using the straight-line method. The book value of each asset is reduced by equal amounts over its estimated useful life as follows: Estimated ueseful life in years Buildings 30-40 Water System 20-40 Sewer System 5-40 Park Development 10-40 General Equipment 5-10 Statement Reclassifications Certain reclassifications may have been made in the prior year’s amounts to conform with current year financial statement presentation. 15 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 1: Summary of Significant Accounting Policies (continued) Assets, Liabilities and Net Position or Equity (continued) 3. Net Position Net position comprise the various net earnings from operating income, nonoperating revenue and expense and capital contributions. Net position is classified in the following three components: Nonspendable – Amounts that are not in spendable form (such as inventory) or are required either legally or contractually to be maintained intact. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of invested capital assets, net of related debt. Invested in capital assets, net of related debt – This component of net position consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvements of those assets. Restricted – This component of net position consists of constraints imposed by creditors (such as through debt covenants), grantors, contributors or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Restrictions for the year ended June 30, 2023 were as follows: Lighting 16,345 Restricted for lighting repairs, improvements associated lighting expenses Sewer 147,860 Restricted for repairs to the connections or further connection improvements and area extensions Debt service 51,535 Restriction for current liability for the water bonds, principal and interest included TCP water well 7,939,075 Restricted towards construction of the TCP water well project Unrestricted net position – This component of net position consists of net position that do not meet the definition of restricted or invested in capital assets, net of related debt. Budgets and Budgetary Accounting The District established a budget for its enterprise fund for the year ended June 30, 2023. The budget is adopted on a basis consistent with generally accepted accounting principles (GAAP). Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 16 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 2: Cash and Investments The District pools all of its cash and investments except those funds held by outside fiscal agents under the provisions of bond indentures and certain restricted funds which are held in separate deposit or investment accounts as required by bond indentures, loan covenants, and statutory or regulatory requirements. Interest earned on non-pooled funds is credited directly to the related funds. Cash and investments are reported in the financial statements as follows: Cash and cash equivalents $ 2 71,204 Investments 4,764 Restricted cash and investments 9 ,049,463 Total cash and investments $ 9,325,431 Cash and investments as of June 30, 2023, consisted of the following: Cash on hand $ 2 2 Deposits with financial institutions 244,505 Local Agency Investment Fund (LAIF) 4,764 County of Fresno 9 ,049,463 Money market funds 26,677 Total cash and investments $ 9,325,431 Investment Policy California statutes authorize districts to invest idle, surplus, or reserve funds in a variety of credit instruments as provided for in the California Government Code, Section 53600, et seq., Chapter 4 – Financial Affairs. The table below identifies the investment types that are authorized for the District by the California Government Code (or the District’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by a bond trustee that are governed by the provisions of debt agreements of the District rather than the general provisions of the California Government Code or the District’s investment policy. 17 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 2: Cash and Investments (continued) The District’s Investment Policy authorizes the following: Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity of Portfolio in One Issuer Local Agency Bonds 5 Years None None U.S. Treasury Obligations 5 Years None None U.S. Agency Securities 5 Years None None Bankers Acceptances 180 Days 40% 30% Commercial Paper 270 Days 25% 10% Negotiable Certificates of Deposit 5 Years 30% None Repurchase Agreements 1 Year None None Reverse Repurchase Agreements 92 Days 20% of base value None Medium Term Notes 5 Years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 10% Mortgage Pass-Through Securities 5 Years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None JPA Pools (other investment pools) N/A None None Disclosures Relating to Interest Rate Risk: Interest rate risk that changes in the market interest rates will adversely affect the fair value of an investment. Generally the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As of June 30, 2023, the District has the following investments: 12 months Investment Type or less Total Money market funds $ 26,677 $ 26,677 Local Agency Investment Fund 4,764 4,764 County of Fresno 9 ,049,463 9,049,463 Total investments $ 9,080,904 $ 9,080,904 Cash on hand and deposits at banks 244,527 Total cash and investments $ 9,325,431 Disclosures Relating to Credit Risk: Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical organization. LAIF does not have a rating provided by a nationally recognized statistical rating organization. 18 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 2: Cash and Investments (continued) The custodial risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the District’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government’s indirect investment in securities through the use of mutual funds or government investment pools. As of June 30, 2023, the balances in financial institutions were $244,527. The balance in financial institutions covered by the Federal Depository Insurance Corporation (FDIC) is $244,527. The excess amount of $0 was collateralized as required under the California Government Code, by pledging financial institution with assets held in common pool for the District and other governmental agencies, but not in the name of the District. Note 3: Accounts Receivable and Uncollectable Accounts Changes in accounts receivable for the year ended June 30, 2023, are as follows: As of June 30, As of June 30, Increase/ 2023 2022 (Decrease) Industrial Users $ 36,774 $ 56,485 $ (19,711) Commercial / Other Users 45,712 94,225 (48,513) Total $ 82,486 $ 150,710 $ (68,224) Note 4: Property, Plant and Equipment The following is an analysis of the District’s capital assets as of June 30, 2023: Beginning Additions/ Disposals/ Ending Balance Completions Adjustments Balance Land $ 427,734 $ - $ - $ 427,734 Auto/transport equipment 74,153 - - 7 4,153 Buildings 6 69,034 - - 669,034 Furniture and fixtures 59,828 - - 5 9,828 Improvements 9 20,161 - - 920,161 Machinery and equipment 7 24,500 1,984 - 726,484 Miscellaneous 1,114,176 - - 1,114,176 Park improvements 2 94,571 - - 294,571 Sewer system 3,082,038 - - 3,082,038 Water system 2,115,949 - - 2,115,949 Construction in progress-water system 1 53,251 - - 153,251 Construction in progress-TCP project 5 94,914 298,261 - 893,175 Total 10,230,309 300,245 - 10,530,554 Allowance for depreciation (6,068,268) ( 232,099) - (6,300,367) 4,162,041 6 8,146 - 4,230,187 Depreciation expense for the year ended June 30, 2023, totals $232,099. 19 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 5: Long-Term Debt The District generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt. The District’s debt issues and transactions are summarized below: 1996 Sewer Revenue Bonds 4.5% - $932,000 1996 Sewer Bonds issued on March 8, 1996. Proceeds of these bonds combined with a government grant of $1,222,600 were used to finance construction of a domestic wastewater treatment plant. First payment of interest only was due March 2, 1997, and thereafter semi-annually on the 2nd of September and March in each year with principal due in March of each year; balance of $494,900 at June 30, 2023, and $522,900 at June 30, 2022. Future payments of the bonds are as follows: Year Ending Principal Reserve June 30, Principal Interest Total Balance Requirements 2024 $ 29,000 $ 22,275 $ 51,275 $ 465,900 $ 51,275 2025 30,000 20,970 50,970 435,900 50,970 2026 31,000 19,620 50,620 404,900 50,620 2027 33,000 18,225 51,225 371,900 51,225 2028 34,000 16,740 50,740 337,900 50,740 2029 36,000 15,210 51,210 301,900 51,210 2030 38,000 13,590 51,590 263,900 51,590 2031 39,000 11,880 50,880 224,900 50,880 2032 41,000 10,125 51,125 183,900 51,125 2033 43,000 8,280 51,280 140,900 51,280 2034 45,000 6,345 51,345 95,900 51,345 2035 47,000 4,320 51,320 48,900 51,320 2036 48,900 2,205 51,105 - Total $ 4 94,900 $ 169,785 $ 664,685 1996 Sewer Revenue Bond Requirements The bonds are authorized by ordinance 1996-1, in strict accordance with the Sewer Revenue Bond Act of 1933. All revenues derived from the sewer service are pledged to pay the principal and interest on the bonds. The agreement which governs the bond issuance requires 120% of net revenue to be maintained and a reserve requirement equal to all payments during the next 12 months. 20 DEL REY COMMUNITY SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2023 Note 5: Long-Term Debt (continued) State Water Loan In circa 2005 the District obtained a loan from the State of California under the safe drinking water program. The loan terms are zero interest for 30 years and require semi-annual payments of $2,873 ($5,746 annually) beginning July 1, 2006, and continuing each January 1, and July 1, with the last payment scheduled for January 1, 2036. The balance is $71,825 at June 30, 2023, and $77,571 at June 30, 2022. Required payments on the loan at June 30, 2023, including current maturities are as follows: 2024 $ 5,746 $ 66,079 2025 5,746 60,333 2026 5,746 54,587 2027 5,746 48,841 2028 5,746 43,095 Thereafter 43,095 - $ 71,825 Note 6: Subsequent Events In compliance with accounting standards, subsequent events were evaluated through February 12, 2024, which is the date the financial statements were available to be issued. Management has determined that no events require disclosure in accordance with the accounting standards subsequent to June 30, 2023. 21 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON FOR THE YEAR ENDED JUNE 30, 2023 Variance Positive Budget Actual (Negative) OPERATING REVENUES Water $ 261,891 $ 212,570 $ (49,321) Sewer 6 35,165 653,744 18,579 Solid Waste 1 02,988 108,696 5,708 Hall Rentals 10,250 59,070 48,820 Taxes 1 35,000 128,165 (6,835) Late Charges 100 - (100) Other Income 49,000 79,897 30,897 Total Operating Income 1,194,394 1,242,142 47,748 OPERATING EXPENSES Salaries 2 41,037 231,397 9,640 Health & Life Insurance 77,271 77,801 (530) Employment taxes employer 18,439 19,126 (687) Retirement 13,051 (6,655) 19,706 Pension expense - 255,706 (255,706) OPEB expense - (2,664) 2,664 Worker's Compensation Insurance 13,252 7,153 6,099 Director's Fees 10,875 6,725 4,150 Telephone (communication) 6,000 7,791 (1,791) General administrative 3,000 34,798 (31,798) Postage and Shipping 2,000 1,837 163 Computer Software 2,000 2,077 ( 77) Office Supplies 3,000 1,971 1,029 Alarm Service 1,241 - 1,241 Bank Service Charges 1,000 850 150 Legal 30,000 45,606 (15,606) Accounting 16,600 16,800 (200) Audit Contract 15,000 12,200 2,800 Engineering Fees 24,000 77,570 (53,570) Dues Subscription Fees 3,000 3,584 (584) SIGMA Recharge Fees 22,374 22,000 374 South Kings GSA 85,000 85,000 - Fuel and Oil 8,000 5,435 2,565 Utilities 3 10,730 260,881 49,849 General Maintenance & Repairs 27,500 28,341 (841) Equipment Rental 2,500 786 1,714 Small Tools 2,500 - 2,500 Pest Control 2,000 1,263 737 Supplies and Consumables 20,000 26,191 (6,191) Uniform Expense 3,000 3,968 (968) Compliance Expense 500 - 500 Payroll Service expense 2,500 (315) 2,815 Auto Repair and Maintenance 2,000 8,882 (6,882) Testing 1 28,000 130,494 (2,494) 22 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON (continued) FOR THE YEAR ENDED JUNE 30, 2023 Variance Positive Budget Actual (Negative) Solid Waste Contract 88,452 99,090 (10,638) General Liability Insurance 22,366 36,432 (14,066) Licenses and Permits 46,000 51,759 (5,759) Property Taxes 7,000 3,449 3,551 Depreciation - 2 32,099 (232,099) TOTAL OPERATING EXPENSES 1,261,188 1,789,428 (528,240) NON-OPERATING REVENUES (EXPENSES) TCP Revenue - 2 97,810 297,810 Interest Income - 1 14,223 114,223 Interest Expense (23,535) (34,603) (11,068) TOTAL NON-OPERATING REVENUE (EXPENSES) (23,535) 3 77,430 400,965 CHANGE IN NET ASSETS $ (90,329) $ ( 169,856) $ (79,527) BUDGETED PRINCIPAL PAYMENTS State Water Loan (5,750) (5,746) 4 Sewer Bond Principal $ (28,000) $ (28,000) $ - CHANGE IN NET ASSETS AFTER PRINCIPAL PAYMENTS $ ( 124,079) $ ( 203,602) $ (79,523) 23 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION PROPORTIONATE SHARE OF THE NET PENSION LIABILITY YEAR ENDED JUNE 30, 2023 Note 1: Pension Plan General Information About the Pension Plan Plan Description All qualified permanent and probationary employees are eligible to participate in the District's cost-sharing multiple employer defined benefit pension plan administered by the California Public Employees' Retirement System (CalPERS). CalPERS acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and District resolution. Cal PERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website at www.calpers.ca.gov. Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one full time employment. All members are eligible for non-duty disability benefits after 5 years of service. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law. The 1328 Classic Plan provisions and benefits in effect at June 30, 2023, are summarized as follows: Benefit Provision Misc. Plan Benefit Formula 2.0%@60 Social Security Coverage Yes Full/Modified Full Employee Contribution Rate 7% Final Average Compensation Period Three Years Sick Leave Credit Yes Non-Industrial Disability Standard Industrial Disability No Pre-Retirement Death Benefit Optional Settlement W2 Post- Retirement Death Benefit $2,000 COLA 2% Covered Employees 12 Inactive Employees Receiving Benefits 3 Inactive Employees Entitled Yet Not Receiving 7 Active Employees 2 24 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION PROPORTIONATE SHARE OF THE NET PENSION LIABILITY YEAR ENDED JUNE 30, 2023 Note 1: Pension Plan (Continued) The 26898 PEPRA Plan provisions and benefits in effect at June 30, 2023, are summarized as follows: Benefit Provision Misc. Plan Benefit Formula 2.0%@62 Social Security Coverage Yes Full/Modified Full Employee Contribution Rate 7.75% Final Average Compensation Period Three Years Sick Leave Credit Yes Non-Industrial Disability Standard Industrial Disability No Pre-Retirement Death Benefit Optional Settlement W2 Post- Retirement Death Benefit $2,000 COLA 2% Covered Employees 2 Inactive Employees Receiving Benefits 0 Inactive Employees Entitled Yet Not Receiving 0 Active Employees 2 Contributions Section 20814© of the California Public Employee' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial valuation process. For public agency cost-sharing plans covered by either the Miscellaneous or Safety risk pools, the Plan's actuarially determined rate is based on the estimated amount necessary to pay the Plan's allocated share of the risk pool's costs of benefits earned by employees during the year, and any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer's Contribution Schedule 10-Year Data Begins in 2014 and Includes Both Plans Employer Year Contribution Amount 2014 $ - 2015 6 ,312 2016 4 ,896 2017 8 ,730 2018 8 ,749 2019 9 ,368 2020 13,507 2021 10,406 2022 11,881 2023 11,977 25 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION PROPORTIONATE SHARE OF THE NET PENSION LIABILITY YEAR ENDED JUNE 30, 2023 Note 1: Pension Plan (Continued) Net Pension Liability, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension Miscellaneous Plan, 1328 Classic Plan Ten-Year Schedule of Changes in The Net Pension Liability Share of Pool's Plan's Share of Annual Valuation Accrued Market value of Pool's Unfunded Funded Covered Date Liability Assets (MVA) Liability Ratio Payroll 6/30/2013 $ 527,513 $ 633,982 $ (106,469) 120.18% 112,017 6/30/2014 579,333 730,119 (150,786) 126.03% 116,095 6/30/2015 610,935 734,420 (123,485) 120.21% 119,857 6/30/2016 624,366 701,543 (77,177) 112.36% 77,583 6/30/2017 650,777 749,033 (98,256) 115.10% 85,799 6/30/2018 734,604 819,920 (85,316) 111.61% 93,600 6/30/2019 720,929 804,083 (83,154) 111.53% 99,840 6/30/2020 770,467 836,544 (66,077) 108.58% 110,760 6/30/2021 783,818 960,106 (176,288) 122.49% 76,960 6/30/2022 815,682 857,319 (41,637) 105.10% 79,116 At June 30, 2023, the District reported a pension asset of $68,602 for its proportionate share of the net pension liability. The District is responsible for its proportionate share of the net pension liability of the Plans. The District's net pension liability is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2023, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2022 rolled forward to June 30, 2023 using standard update procedures. The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. Net Pension Liability, Pension Expense, and Deferred Outflows of Resource and Deferred Inflows of Resources Related to Pension PEPRA Plan Ten-Year Schedule of Changes in The Net Pension Liability Share of Pool's Plan's Share of Annual Valuation Accrued Market value of Pool's Unfunded Funded Covered Date Liability Assets (MVA) Liability Ratio Payroll 6/30/2017 $ 1,791 $ 1,826 $ (35) 101.95% $ 14,186 6/30/2018 6,446 6,198 2 48 96.15% 24,960 6/30/2019 11,788 11,116 6 72 94.30% 27,040 6/30/2020 19,124 17,925 1,199 93.73% 30,680 6/30/2021 28,396 31,130 (2,734) 109.63% 32,240 6/30/2022 41,605 37,655 3,950 90.51% 66,889 26 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) Summary of Results Background The District maintains a program which pays part or all of monthly medical insurance premiums on behalf of retired former employees, provided that the employee has satisfied certain requirements. As of June 30, 2022, the District continues to fund the benefits on a pay-as-you-go basis. GASB Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions”, often referred to as GASB 75, requires governmental entities to (1) record annual expense for their OPEB and (2) disclose certain information in their year-end financial statements. The District has requested this actuarial valuation to determine what its OPEB obligations under the program are, and what the impact of GASB 75 will be for the 2022-2023 year. This report also includes GASB 75 results that were accrued and disclosed by the District during the 2021-2022 year. Actuarial Present Value of Projected Benefit Payments The Actuarial Present Value of Projected Benefit Payments (APVPBP) for all current and former employees, as of June 30, 2021, is $1,046,289. This is the amount the District would theoretically need to set aside at this time to fully fund all those future benefits. The total value of $1,046,289 is the sum of these amounts: Future benefits of current employees $ 926,398 Future benefits of current retirees 119,891 APVPBP $ 1,046,289 This figure may be compared to the APVPBP of $1,086,399 that was shown in the 2019 valuation report. We would have expected the APVPBP to be approximately $1,105,000 by 2021 as employees continue working and benefits are paid to retirees. The difference between the 2019 figure of $1,086,399 and this year’s figure of $1,046,289 is due to: ● Expected change in the APVPBP since 2019 $ 18,241 ● Changes in assumptions 143,126 ● Miscellaneous other experience gains and losses ( 201,477) Total of changes $ (40,110) The assumption changes are explained below under “Actuarial Assumptions”. The experience gain of $201,477 is mostly from a new employee replacing a previous employee, and from 3 persons delaying their retirement. 27 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) These figures are computed by (1) estimating the OPEB benefits that will be paid to each current and former employee and their beneficiaries (if applicable), upon the employee’s retirement from the District, (2) estimating the likelihood that each payment will be made, taking into consideration the likelihood of remaining employed until retirement age and the likelihood of survival after retirement, and (3) discounting each expected future payment back to the present date at an assumed rate of investment return. Net OPEB Liability The Total OPEB Liability (TOL) is the portion of the APVPBP which has been “earned” by employees based on past years of service (i.e. benefits allocated to past years of service). The Plan Fiduciary Net Position (FNP) is equal to the value of assets that have been accumulated in an irrevocable trust for these benefits. The Net OPEB Liability or Asset (NOL) is the excess of the Total OPEB Liability over the Plan Fiduciary Net Position. At the end of each fiscal year, the District must show a liability equal to the NOL. At June 30, 2021 and June 30, 2022, these amounts are: June 30, 2021 June 30, 2022 Total OPEB Liability $ 587,905 $ 462,879 Plan Fiduciary Net Position - - Net OPEB Liability $ 587,905 $ 462,879 OPEB Expense under GASB 75 GASB 75 requires that the annual change in the TOL be recognized as OPEB expense, except for certain specific changes which are to be recognized over different periods of time. Changes in actuarial assumptions, and experience gains and losses, are to be recognized over the average of the expected remaining service lives of all employees. This average for District employees is 5.5 years. The unrecognized remaining amounts of assumption changes, experience gains/losses and investment earnings differences are called “deferred outflows and inflows of resources relating to OPEB” (see Exhibit 5). The OPEB Expense for the fiscal year ending June 30, 2022 was $46,186. For the year ending June 30, 2023, the OPEB Expense is $(2,663). Derivations of these amounts are shown in Exhibit 4. 28 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Disclosure Information as of June 30, 2022 and June 30, 2023 Amounts to be disclosed in the footnotes to the District’s audited financial statements as of June 30, 2022 and as of June 30, 2023 are shown in Exhibits 2 through 6 of this report. Numbers labelled as “June 30, 2021” are to be disclosed at June 30, 2022. Numbers labelled as “June 30, 2022” are to be disclosed at June 30, 2023. For GASB 75 reporting, we use a one-year “lookback” which is the reason for the differences in dates. Exhibit 7 shows estimated retiree benefits and OPEB expense for the 9 years after that. Actuarial Assumptions All actuarial assumptions are unchanged from the June 30, 2020 valuation, except as described below. The assumptions are described in detail in Exhibit 9. The discount rate has been changed from 2.18% to 4.09%. The discount rate for an unfunded plan is required to be based on a 20-year index of high-quality bonds. The District has elected to use the S&P Municipal Bond 20 Year High Grade Rate Index, which was 2.66% as of June 30, 2020; 2.18% as of June 30, 2021; and 4.09% as of June 30, 2022. Changing the discount rate had the effect of decreasing the APVPBP by $(146,584). Exhibit 1 - Actuarial Values as of June 30, 2022 The Actuarial Present Value of Projected Benefit Payments (APVPBP) as of June 30, 2022 of all future employer-paid benefits from the program, for all current and former employees, is: Actuarial Present Values Number of Persons Current Employees $ 926,398 5 Retired Employees 119,891 2 $ 1,046,289 7 As of June 30, 2022, the District has not accumulated any assets in an irrevocable trust toward this liability. The Total OPEB Liability (TOL) as of June 30, 2021 is the portion of the APVPBP which has been “earned” to date by current and former employees, based on the years of service already completed: Current employees $ 468,014 Retired former employees 119,891 Totals $ 587,905 29 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Exhibit 1 - Actuarial Values as of June 30, 2022 (continued) Summary of Participating Employees As of June 30, 2020 as of June 30, 2022 Active Employees Number 5 employees 5 employees Average Age 54.2 years 54.2 years Average Service 6.4 years 6.4 years Retired Former Employees and Surviving Spouses Number 2 persons 2 persons Average Age 78.0 years 78.0 years Exhibit 2 - Total OPEB Liability As of June 30, 2020, June 30, 2021 and June 30, 2022 the Total OPEB Liability is: June 30, 2020 June 30, 2021 June 30, 2022 Discount rate 2.66 % 2.18 % 4.09 % Value of benefits for employees $ 478,437 $ 468,014 Value of benefits for retirees 133,372 119,891 Total OPEB Liability $ 668,356 $ 587,905 $ 587,905 The Total OPEB Liability has changed from June 30, 2020 to June 30, 2021 in this way: Value at June 30, 2020 $ 668,356 Service cost 46,572 Interest 17,469 Differences between actual and expected experience (162,091) Assumption changes 40,843 Benefit changes 0 Benefits paid to retirees (23,244) Administrative expense 0 Net changes $ (80,451) Value at June 30, 2021 $ 587,905 30 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Exhibit 2 - Total OPEB Liability (continued) The Total OPEB Liability has changed from June 30, 2021 to June 30, 2022 in this way: Value at June 30, 2021 $ 587,905 Service cost 29,249 Interest 12,595 Differences between actual and expected experience 0 Assumption changes (146,584) Benefit changes 0 Benefits paid to retirees (20,286) Administrative expense 0 Net changes $ (125,026) Value at June 30, 2022 $ 462,879 Exhibit 3 - Sensitivity of the Total OPEB Liability The following presents the Total OPEB Liability (TOL) as well as what the TOL would be if it were calculated using a discount rate that is 1-percentage-point higher or lower than the current discount rate, as of June 30, 2021 and June 30, 2022: 1% Decrease Discount Rate 1% Increase 1.18% 2.18% 3.18% Total OPEB Liability 6-30-2021 $ 688,190 $ 587,905 $ 507,270 3.09% 4.09% 5.09% Total OPEB Liability 6-30-2022 $ 532,304 $ 462,879 $ 406,012 The following presents the TOL as well as what the TOL would be if it were calculated using healthcare cost trend rates that are 1-percentage-point higher or lower than the current healthcare cost trend rates, as of June 30, 2021 and June 30, 2022: 1% Decrease Trend Rate 1% Increase 4.50% 5.50% 6.50% Total OPEB Liability 6-30-2021 $ 507,645 $ 587,905 $ 686,501 Total OPEB Liability 6-30-2022 $ 401,283 $ 462,879 $ 538,049 31 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Exhibit 4 – OPEB Expense for the Fiscal Year Ending June 30, 2023 For the year ending June 30, 2022, the District recognized OPEB expense of $46,186, computed as follows: Service cost $ 46,572 Interest 17,469 Expected investment return - Administrative expense - Change in TOL due to changes in benefits - Recognition of difference between actual and expected experience (36,245) Recognition of changes in assumptions 18,390 Recognition of difference between projected and actual earnings on investments - Total $ 46,186 For the year ending June 30, 2023, the District will recognize OPEB expense of $(2,663), computed as follows: Service cost $ 29,249 Interest 12,595 Expected investment return - Administrative expense - Change in TOL due to changes in benefits - Recognition of difference between actual and expected experience (36,245) Recognition of changes in assumptions (8,262) Recognition of difference between projected and actual earnings on investments - Total $ (2,663) 32 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Exhibit 5 - Deferred Outflows and Inflows of Resources The values of deferred outflows and inflows of resources related to OPEB as of June 30, 2021, to be reported as of June 30, 2022, are: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ - $ 150,909 Changes of assumptions 81,289 15,954 Net difference between projected and actual earnings on OPEB plan investments - - District contributions subsequent to the measurement date 20,286 - Total $ 101,575 $ 166,863 Amounts reported as deferred outflows and inflows of resources related to OPEB as of June 30, 2021, to be reported as of June 30, 2022, will be recognized in OPEB expense as follows: Year Ended June 30, 2023 $ (17,855) 2024 (17,855) 2025 (19,183) 2026 (22,289) 2027 (8,665) Thereafter 273 33 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) The values of deferred outflows and inflows of resources related to OPEB as of June 30, 2022, to be reported as of June 30, 2023, are: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ - $ 114,664 Changes of assumptions 59,101 132,088 Net difference between projected and actual earnings on OPEB plan investments - - District contributions subsequent to the measurement date 22,941 - Total $ 82,042 $ 246,752 Amounts reported as deferred outflows and inflows of resources related to OPEB as of June 30, 2022, to be reported as of June 30, 2023, will be recognized in OPEB expense as follows: Year Ended June 30, 2024 $ (44,507) 2025 (45,835) 2026 (48,941) 2027 (35,317) 2028 (13,051) Thereafter - 34 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Exhibit 6 – Schedule of Changes in the Total OPEB Liability Reporting date 6/30/2022 6/30/2023 Total OPEB Liability Service cost $ 46,572 $ 29,249 Interest 17,469 12,595 Changes of benefit terms - - Differences between actual and expected experience (162,091) - Changes of assumptions 40,843 (146,584) Benefits paid to retirees (23,244) (20,286) Net change in total OPEB liability (80,451) (125,026) Total OPEB liability - beginning 668,356 587,905 Total OPEB liability - ending $ 5 87,905 $ 4 62,879 Covered-employee payroll $ 2 07,087 $ 2 27,839 Total OPEB liability as a percentage of covered-employee payroll 283.89% 203.16% Exhibit 7 – Ten-Year Projection of Costs Shown below are estimates of (a) the benefits expected to be paid to retirees, and (b) the amounts the District is expected to accrue as GASB 75 OPEB expense, for the next ten years. For these estimates, it is assumed that all actuarial assumptions and the size of the workforce will remain unchanged, that the promised benefits will remain the same, that the District will continue paying benefits to retirees each year, and that there are no experience gains or losses. Employer-Paid Projected Retiree Implicit Rate GASB 75 Payments Subsidy Payments OPEB Expense Fiscal Year Ending: 2023 $ 19,000 $ 4,232 $ (2,663) 2024 15,000 - (7,000) 2025 17,000 - (7,000) 2026 19,000 - (9,000) 2027 20,000 - 6 ,000 2028 22,000 - 30,000 2029 24,000 - 44,000 2030 25,000 - 46,000 2031 26,000 - 48,000 2032 28,000 498 49,000 35 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Exhibit 8 - Summary of Benefit Provisions The District contributes toward post-retirement benefits for employees who retire with a pension from CalPERS and select medical coverage with CalPERS. The District pays 100% of the CalPERS medical premiums for eligible retired employees. Payments are made for as long as the retiree lives. The District makes no other payments to the retiree’s dependents or to any other person. The District does not pay for dental or vision coverage, or any other benefits. Exhibit 9 - Summary of Actuarial Assumptions Actuarial Assumptions: The following assumptions as of June 30, 2022 were selected by the District in accordance with the requirements of GASB 75. These assumptions, in my opinion, are reasonable and appropriate for purposes of determining OPEB costs under GASB 75. 20-Year Bond Rate: The District has chosen to use the “S&P Municipal Bond 20 Year High Grade Rate Index” as its 20-year bond rate. That Index was 2.66% at June 30, 2020; 2.18% at June 30, 2021; and 4.09% at June 30, 2022. Discount rate: 2.66% at June 30, 2020; 2.18% at June 30, 2021; and 4.09% at June 30, 2022. Since the benefits are not funded, the discount rate is equal to the 20-Year Bond Rate. Medical Cost Increases (Trend): Medical premium amounts are assumed to increase 5.5% per year. Payroll Growth: Total payroll is assumed to increase 3% per year in the future. Coverage Elections: 100% of future eligible retired employees are assumed to participate in this program. Employees are assumed to keep the same medical plan after retirement that they have while employed. Mortality: Mortality rates are taken from the 2017 CalPERS valuation. Funding Method: The Entry Age actuarial cost method has been used, with normal costs calculated as a level percentage of payroll, as required by GASB 75. Disability: Incidence of disability is considered to be included in the termination and retirement rates here, so no explicit recognition of disablement has been included. Inflation: Long-term inflation is assumed to be 2.75% per year. 36 DEL REY COMMUNITY SERVICES DISTRICT REQUIRED SUPPLEMENTARY INFORMATION CHANGES IN THE DISTRICT’S TOTAL OPEB LIABILITY AND RELATED RATIOS YEAR ENDED JUNE 30, 2023 Note 2: Other Post-Employment Benefits (OPEB) (continued) Age-Specific Claims: The per person annual “true cost” of medical coverage for the 2019-2020 fiscal year has been developed from the monthly insurance premiums, the demographics of the employee population and industry norms. The annual “true cost” amounts used in this valuation were (sample rates only are shown): Age 50 14,501 Age 55 17,883 Age 60 20,844 Age 62 21,822 Age 64 22,362 These age-specific rates were developed so as to reproduce in the aggregate the same total premium that would be paid to the carriers for all current employees and all current retirees. Retirement: Retirement rates are taken from the 2017 CalPERS OPEB Assumptions Model (for classified employees) and from the 2016 valuation of Cal STRS (for certificated employees). Sample rates are: 10 Years Service 20 Years Service 30 Years Service Age 55 5.5% 11.3% 23.4% Age 58 6.6% 12.4% 20.1% Age 61 9.4% 15.3% 24.1% Age 64 14.7% 22.1% 30.8% Turnover (withdrawal): Likelihood of termination within the next year is taken from the 2017 CalPERS OPEB Assumptions Model. Sample rates are: 5 Years Service 10 Years Service 15 Years Service Age 20 6.54% Age 30 6.15% 4.16% 2.62% Age 40 5.19% 3.75% 2.43% Age 50 4.41% 2.86% 1.88% 37 DEL REY COMMUNITY SERVICES DISTRICT SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2023 ASSESSED VALUATION OF THE DISTRICT The assessed valuation of Del Rey Community Services District for the fiscal year ended June 30, 2023, as provided by the County of Fresno Assessor’s Office, is as follows: For Rate Homeowners Computation Exemptions For Tax Levy Secured: a. Maintenance account $ 118,475,003 $ 543,200 $ 117,931,803 b. Lighting account 29,091,503 445,200 28,646,303 Unsecured: a. Maintenance account 7,824,694 - 7 ,824,694 b. Lighting account 5,402,494 - 5 ,402,494 $ 160,793,694 $ 988,400 $ 159,805,294 38 DEL REY COMMUNITY SERVICES DISTRICT SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2023 Insurance Coverage TYPE OF COVERAGE Limit PROPERTY Blanket Building & Personal Property $ 6,995,789 Coverage Extension Blanket 2,000,000 CRIME Employee Theft 2 50,000 Forgery or Alteration 2 50,000 Inside the Premises – Theft 2 50,000 Inside the Premises – Robbery 2 50,000 Outside the Premises 2 50,000 Computer Fraud 2 50,000 Funds Transfer Fraud 2 50,000 Money Orders 2 50,000 GENERAL LIABILITY General Aggregate 10,000,000 Products – Comp/Op AGG 10,000,000 Personal and Advertising Injury 1,000,000 Each Occurrence Limit for the above items 1,000,000 Damage to Rented Premises 1,000,000 Medical Payment 10,000 WORKERS' COMP AND EMPLOYER LIABILITY Each Accident 1,000,000 Disease – Each Employee 1,000,000 Disease – Policy Limit 1,000,000 EQUIPMENT Scheduled Equipment: Computer 79,500 Unscheduled Equipment (Maximum item $10,000) 1 50,000 Borrowed, Rental & Land 1 00,000 AUTOMOBILE COVERAGE Combined Single Limit CSL 1,000,000 Automobile Medical Payments 5,000 Uninsured Motorists Coverage 1,000,000 PUBLIC OFFICIALS & MANAGEMENT LIABILITY Bodily Injury & Property Damage 10,000,000 Aggregate 1,000,000 Each Occurrence 1,000,000 Personal Injury & Advertising Injury-Each Action for Injunctive Relief 1,000,000 Damage to premises rent to you 1,000,000 Wrongful acts 1,000,000 Employment practices 1,000,000 Employee benefit plans 1,000,000 39 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Del Rey Community Services District We have audited, 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, the financial statements of the governmental activities, the business-type activities and each major fund of the Del Rey Community Services District (District), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated February 12, 2024. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Del Rey Community Services District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Del Rey Community Services District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 40 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. February 12, 2024 41 DEL REY COMMUNITY SERVICES DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2023 SECTION I – SUMMARY OF AUDITOR’S RESULTS Financial Statements Type of auditor’s report issued: Unmodified Internal control over financial reporting:  Material weaknesses identified? Yes No  Significant deficiency(ies) identified? Yes No Non-compliance material to financial statements noted? Yes No SECTION II – FINANCIAL STATEMENT FINDINGS There were no financial statement finding to be reported in accordance with Generally Accepted Government Auditing Standards (GAGAS). SECTION III – FEDERAL AWARDS FINDINGS There are no federal award findings in accordance with GAGAS and the Compliance Supplement. 42 DEL REY COMMUNITY SERVICES DISTRICT SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2022 The District did not have any prior year findings. 43 Del Rey Community Services District Draft MSR and SOI Update Appendix C - Proposed District Financial Budget for FY 2023-2024 & 2024-2025 APPENDIX C PROPOSED DISTRICT FINANCIAL BUDGET FOR FY 2023-2024 & FY 2024-2025 22