CITY OF AVENAL
“Pistachio Capital of the World®”
REGULAR CITY COUNCIL/SUCCESSOR AGENCY/PFA MEETING
APRIL 11, 2024; 5:15 P.M.
AVENAL THEATER & EVENT CENTER, 233 E. KINGS ST., AVENAL, CA VIA ZOOM VIDEO/WEB CONFERENCING:
Web Link: bit.ly/AvenalCouncil or use https://us02web.zoom.us/j/87243440488 Or by calling +1 669 900 6833 and use meeting ID 872 4344 0488 to join.
Study Session: None
LAST ORDINANCE: 2022-06 CITY LAST RESOLUTION: 2024-15
(SA) LAST RESOLUTION: 2023-02 PFA LAST RESOLUTION: 2023-01 AGENDA
1. CALL TO ORDER & PLEDGE OF ALLEGIANCE:
2. ROLL CALL: Councilmembers: Louis Gravelle, Ricardo Verdugo, Pablo Hernandez, Mayor Pro Tem Alejandro Ramirez; Mayor Alvaro Preciado.
CITY CLERK:
Government Code Section 54952.3: The members of the City Council/Successor Agency are entitled to receive a total of $300.00 per month because of being elected to the City Council. They receive no other compensation for sitting as a member of Successor Agency.
3. CLOSED SESSION: (City/Successor Agency):
It is the intent of this governing body to meet in closed session to review its position and to instruct its designated representatives: Any person may directly address the Council/Agency at this time on items of interest regarding Closed Session.
A. Conference with Real Property Negotiator(s) (Government Code § 54956.8).
It is the intent of this governing body to meet in Closed Session to confer with its real property negotiator(s) concerning the purchase, sale, exchange, or lease of real property by or for this agency as follows:
1. Property Description: APN: 040-320-009-000; & 040-320-014-000 Negotiator(s): City Manager/City Attorney.
Party with whom negotiating: CrisCom Company. Instructions to negotiator concerning: Terms of Payment.
2. Property Description: APN: 040-165-007 Negotiator(s): City Manager/City Attorney/CrisCom.
Party with whom negotiating: County of Kings/State of California. Instructions to negotiator concerning: Terms.
B. Pending Litigation (Government Code § 54956.9).
Conference with legal counsel – EXISTING LITIGATION (Government Code § 54956.9(d)(1)).
Parties, case/claim no: Ross Family Properties, LLC, v. City of Avenal (Kings County Superior Court, Case No. 24CU0071)
4. PUBLIC COMMENT/ANNOUNCEMENTS & UNSCHEDULED APPEARANCES:
Any person may directly address the Council/Agency at this time on any item on the agenda or on any other items of interest to the public that is within the subject matter jurisdiction of the City Council/Successor Agency. State Law prohibits any member of the Council/Agency from commenting or acting on matters not on the agenda. Three (3) minutes are allowed per person.
5. CONSENT CALENDAR:
All items listed under the consent calendar are routine and enacted by one motion: (Action).
A. Consider City of Avenal/Successor Agency’s Approval of Minutes for March 28, 2024.
B. Consider Approval of Council Policy 2024-01 (Council Stipend/Compensation) Resolution 2024-16.
6. MAYOR & COUNCIL MEMBER/ SUCCESSOR AGENCY/ ITEMS FOR CONSIDERATION:
A. Proclamation - Autism Acceptance and Awareness Month 2024
7. ACTIVITY REPORTS/SPECIAL PRESENTATIONS & COMMITTEE REPORTS:
A. Activity Reports:
1. Public Works/Code Enforcement/Animal Control Activity Report: Scott Davis, Public Works Supervisor. a. City Engineer Report, Javier Andrade - A&M Consulting Engineers
2. IT Department Activity Report: Humberto Bermudez, IT Manager.
3. Recreation Department Activity Report: Anna Lara, Community Activities Senior Leader.
4. Administrative Activity Report: Director of Public Safety, Robert Nevarez.
April 11, 2024 Pg. 1
B. Special Presentations/Reports:
1) None.
8. PUBLIC HEARING(s):
A. None
9. OLD BUSINESS:
A. None.
10. NEW BUSINESS:
A. Consider ratification & adoption of the Fiscal Year 2020-2021 Financial Audit - EMERGENCY ITEM
11. CORRESPONDENCE/ANNOUNCEMENTS/CLOSING COMMENTS:
Any Council member may request an item be placed on a future agenda, provided that a simple majority also support adding said item. Discussion or action on any item not on the current agenda is strictly prohibited. Closing comments are intended for Council members to report attendance of any special events and pertinent information back to the public.
• Upcoming/Future Agenda Items to Consider.
• Correspondence/Announcements/Information/Closing Comments.
12. ADJOURNMENT:
1) In compliance with the Americans with Disability Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office (559) 386-5766. Avenal Theater & Event Center, 233 East Kings Street Avenal, CA 93204. Notification 48 hours prior to the meeting will enable the city to make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.02.35.1044 AA Title II].
2) Materials related to an item on this Agenda submitted to the [Council/ Authority] after distribution of the agenda packet are available for public inspection in the [City Clerks] office at 919 Skyline Blvd., Avenal, CA 93204 during normal business hours.
I certify this Agenda of the City of Avenal City Council workshop is to be posted at the following locations: 1) City Council Chambers, Avenal Theater 233 E. Kings St.; 2) City Hall 919 Skyline Blvd.; 3) Avenal Lumber, 600 Skyline Blvd.; and 4) T&T Market, 801 Skyline Blvd. Avenal CA 93204 on, April 8, 2024.
__ /s/ Maria Ortiz
Maria Ortiz, City Clerk
April 11, 2024 Pg. 2
CIUDAD DE AVENAL
"Capital Mundial® del Pistacho"
REUNIÓN ORDINARIA DEL CONCEJO MUNICIPAL/AGENCIA
SUCESORA/PFA EL 11 DE ABRIL DE 2024; 5:15 P.M.
AVENAL THEATER & EVENT CENTER, 233 E. KINGS ST., AVENAL, CA A TRAVÉS DE VIDEO/CONFERENCIA WEB DE ZOOM:
Enlace web: bit.ly/AvenalCouncil o utilizar https://us02web.zoom.us/j/87243440488 O llamando al +1 669 900 6833 y usando el ID de reunión 872 4344 0488 para unirse.
Sesión de estudio: Ninguna
ÚLTIMA ORDENANZA: 2022-06 ÚLTIMA RESOLUCIÓN DE LA CIUDAD:
2024-15
(SA) ÚLTIMA RESOLUCIÓN: 2023-02 ÚLTIMA RESOLUCIÓN DE LA PFA:
2023-01
AGENDA
1. LLAMADO AL ORDEN Y JURAMENTO A LA BANDERA:
2. PASE NOMINAL: Concejales: Louis Gravelle, Ricardo Verdugo, Pablo Hernández, Alcalde Interino Alejandro Ramírez; Alcalde Álvaro Preciado.
SECRETARIO MUNICIPAL:
Sección 54952.3 del Código de Gobierno: Los miembros del Concejo Municipal/Agencia Sucesora tienen derecho a recibir un total de $300.00 por mes debido a ser elegidos para el Concejo Municipal. No reciben ninguna otra compensación por ser miembros de la Agencia Sucesora.
3. SESIÓN CERRADA: (Ciudad/Agencia Sucesora):
Es la intención de este órgano rector reunirse en sesión cerrada para revisar su posición e instruir a sus representantes designados: Cualquier persona puede dirigirse directamente al Consejo/Agencia en este momento sobre temas de interés relacionados con la Sesión Cerrada.
A. Conferencia con Negociador(es) de Bienes Raíces (Código de Gobierno § 54956.8).
Es la intención de este órgano rector reunirse en sesión cerrada para consultar con su(s) negociador(es) de bienes inmuebles con respecto a la compra, venta, intercambio o arrendamiento de bienes inmuebles por o para esta agencia de la siguiente manera:
1. Descripción de la propiedad: APN: 040-320-009-000; y 040-320-014-000 Negociador(es): Administrador de la Ciudad/Abogado de la Ciudad.
Parte con quien negociar: Empresa CrisCom. Instrucciones al negociador relativas a: Condiciones de pago.
2. Descripción de la propiedad: APN: 040-165-007 Negociador(es): Administrador de la Ciudad/Abogado de la Ciudad/CrisCom.
Parte con la que se negocia: Condado de Kings/Estado de California. Instrucciones al negociador relativas a:
Términos.
B. Litigio pendiente (Código de Gobierno § 54956.9).
Conferencia con un asesor legal – LITIGIO EXISTENTE (Código de Gobierno § 54956.9(d)(1)).
Partes, caso/reclamación n.º: Ross Family Properties, LLC, contra la ciudad de Avenal (Tribunal Superior del Condado de Kings, caso n.º 24CU0071)
4. COMENTARIOS PÚBLICOS/ANUNCIOS Y APARICIONES NO PROGRAMADAS:
Cualquier persona puede dirigirse directamente al Concejo/Agencia en este momento sobre cualquier tema de la agenda o sobre cualquier otro tema de interés para el público que esté dentro de la jurisdicción del Ayuntamiento/Agencia Sucesora. La ley estatal prohíbe que cualquier miembro del Consejo/Agencia comente o actúe sobre asuntos que no estén en la agenda. Se permiten tres (3) minutos por persona.
5. CALENDARIO DE CONSENTIMIENTO:
Todos los elementos enumerados en el calendario de consentimiento son rutinarios y se promulgan mediante una moción: (Acción).
A. Considere la aprobación de las actas de la Ciudad de Avenal/Agencia Sucesora para el 28 de marzo de 2024.
B. Considerar la aprobación de la Resolución 2024-16 de la Política del Consejo 2024-01 (Estipendio/Compensación del Consejo).
6. ALCALDE Y CONCEJAL / AGENCIA SUCESORA / TEMAS A CONSIDERAR:
A. Proclamación - Mes de la Concientización y Aceptación del Autismo 2024 April 11, 2024 Pg. 3
7. INFORMES DE ACTIVIDADES/PRESENTACIONES ESPECIALES E INFORMES DE COMITÉS:
A. Informes de actividad:
1. Informe de Actividades de Obras Públicas/Aplicación de Códigos/Control de Animales: Scott Davis, Supervisor de Obras Públicas.
a. Reporte del Ingeniero, Javier Andrade – A&M Consulting Engineers
2. Reporte de Actividad del Departamento de TI: Humberto Bermúdez, Gerente de TI.
3. Informe de Actividades del Departamento de Recreación: Anna Lara, Líder Senior de Actividades Comunitarias.
4. Informe de Actividad Administrativa: Director de Seguridad Pública, Robert Nevarez.
B. Presentaciones/Informes Especiales:
1) Ninguno.
8. AUDIENCIA(s) PÚBLICA(s):
A. Ninguno
9. NEGOCIOS ANTIGUOS:
A. Ninguno.
10. NUEVOS NEGOCIOS:
A. Ninguno.
11. CORRESPONDENCIA/ANUNCIOS/COMENTARIOS DE CIERRE:
Cualquier miembro del Consejo podrá solicitar que un tema se incluya en un orden del día futuro, siempre que una mayoría simple apoye también la adición de dicho tema. Queda terminantemente prohibido debatir o actuar sobre cualquier tema que no figure en el orden del día actual. Los comentarios finales tienen la intención de que los miembros del Consejo informen al público sobre la asistencia a cualquier evento especial y la información pertinente. • Próximos y futuros puntos del orden del día a tener en cuenta. • Correspondencia/Anuncios/Información/Comentarios finales.
12. APLAZAMIENTO:
1) De conformidad con la Ley de Estadounidenses con Discapacidades, si necesita asistencia especial para participar en esta reunión, comuníquese con la Oficina del Secretario Municipal al (559) 386-5766. Avenal Theater & Event Center, 233 East Kings Street Avenal, CA 93204. La notificación 48 horas antes de la reunión permitirá a la ciudad hacer arreglos razonables para garantizar la accesibilidad a esta reunión [28 CFR 35.02.35.1044 AA Título II].
2) Los materiales relacionados con un tema de esta Agenda presentados al [Concejo/Autoridad] después de la distribución del paquete de la agenda están disponibles para inspección pública en la oficina de [Secretarios Municipales] en 919 Skyline Blvd., Avenal, CA 93204 durante el horario comercial normal.
Certifico que esta Agenda del taller del Concejo Municipal de la Ciudad de Avenal se publicará en los siguientes lugares: 1) Cámaras del Concejo Municipal, Teatro Avenal 233 E. Kings St.; 2) Ayuntamiento 919 Skyline Blvd.; 3) Avenal Lumber, 600 Skyline Blvd.; y 4) T&T Market, 801 Skyline Blvd. Avenal CA 93204 el 8 de abril de 2024.
__ /s/ María Ortiz
María Ortiz, Secretaria Municipal
April 11, 2024 Pg. 4
CITY OF AVENAL
“Pistachio Capital of the World®”
REGULAR CITY COUNCIL/SUCCESSOR AGENCY/PFA MEETING
March 28, 2024, 5:15 P.M.
AVENAL THEATER & EVENT CENTER, 233 E. KINGS ST., AVENAL, CA VIA ZOOM VIDEO/WEB CONFERENCING:
Web Link: bit.ly/AvenalCouncil or use https://us02web.zoom.us/j/87243440488 Or by calling +1 669 900 6833 and use meeting ID 872 4344 0488 to join.
MINUTES
CALL TO ORDER & PLEDGE OF ALLEGIANCE: by Mayor Preciado at 5:16 p.m.
ROLL CALL: Councilmen’s: Lou Gravelle, Pablo Hernandez, Councilman Ricardo Verdugo joined meeting at 5:30 p.m.
Mayor Pro Tem Alejandro Ramirez, Mayor Alvaro Preciado.
ABSENT: None.
STAFF: Lopez, Ortiz, Price, Bermudez, Davis, Velasco. Williams.
LEGAL COUNCEL: Moses Diaz.
CITY CLERK:
Government Code Section 54952.3: The members of the City Council/Successor Agency are entitled to receive a total of $300.00 per month because of being elected to the City Council. They receive no other compensation for sitting as a member of Successor Agency.
The City Council went into Closed Session at 5:19 p.m.
CLOSED SESSION: (City/Successor Agency):
It isthe intent of this governing body to meet in closed session to review its position and to instruct its designated representatives:
Any person may directly address the Council/Agency at this time on items of interest regarding Closed Session.
A. Conference with Real Property Negotiator(s) (Government Code § 54956.8).
It is the intent of this governing body to meet in Closed Session to confer with its real property negotiator(s) concerning. The purchase, sale, exchange, or lease of real property by or for this agency as follows:
1. Property Description: APN: 040-320-009-000; & 040-320-014-000 Negotiator(s): City Manager / City Attorney. Party with whom negotiating: CrisCom Company. Instructions to negotiator concerning: Terms of Payment.
2. Property Description: APN: 040-165-007. Negotiator(s): City Manager / City Attorney.
Party with whom negotiating: CrisCom Company. Instructions to negotiator concerning: Terms.
B. Initiate Litigation (Government Code § 54956.9).
Conference with legal counsel – EXISTING LITIGATION (Government Code § 54956.9(d)(1)).
Parties, case/claim no: Ross Family Properties, LLC, v. City of Avenal (Kings County Superior Court, Case No. 24CU0071)
Mayor Preciado reopened meeting at 6:16 p.m. with nothing to report.
PUBLIC COMMENT/ANNOUNCEMENTS & UNSCHEDULED APPEARANCES:
Maria Ortiz, City Clerk announced: no public comment form submitted.
AGENDA ITEM NO. 5. – A.
April 11, 2024 Pg. 5
Joint Meeting City Council/Successor Agency/PFA – March 28, 2024
Cecilio Velasco, Chief of Police introduced Irma Soto, Senior Police Officer & Michael Harding, Police Officer to the Council. Chief Velasco stated that they are experienced and professional police and happy they’re on board. Senior Officer Soto and Officer Harding thanked the City Council now Avenal is their community.
CONSENT CALENDAR:
All items listed under the consent calendar are routine and enacted by one motion: (Action).
A. Consider City of Avenal/Successor Agency’s Approval of Minutes for March 14, 2024.
B. Consider Approval for Traffic Lines (striping) for South Seventh Ave. Road Project.
Councilman/Council Member/Successor Agency Member Gravelle motioned to approve Consent Calendar, second by Councilman/Successor Agency Member Hernandez, and motion carried.
Roll Call Vote:
AYES: Gravelle, Hernandez, Verdugo, Ramirez, Preciado.
NOES: None.
ABSENT: None.
ABSTAIN: None.
MAYOR & COUNCIL MEMBERS/ SUCCESSOR AGENCY/ITEMS FOR CONSIDERATION:
A. Updates Regarding City Warrants, and Financial Statements (Informational) Griselda Price, Director of Administrative Services reported that Warrants & Financial Statements: As the Council is aware, City Staff is working with Price Paige & Company to help clean and organize the City’s financial books and bring all its numbers to actuality. Over the past few months, the Finance Department has worked closely with PP&C to provide all necessary information. The hope was to have an update and caught up on warrants and financial statements by the end of 2023, but many factors hindered PP&C from completing these tasks City Staff spoke to Josh Giosa, partner at PP&C who indicated they would provide a memo updating progress and current timeline for completing tasks for the City, as well as bank statements and General Ledger to show the status.
Audit: The 2020/2021 audit work is completed, per Sotomayor, as of Monday March 25th, 2024 (see attached email). The report is being drafted and staff expects to have it to Council before the April 11th meeting. Sotomayor is already preparing to initiate the 2021/2022 audit soon after.
ACTIVITY REPORTS/SPECIAL PRESENTATIONS & COMMITTEE REPORTS:
A. Activity Reports:
1) Police Department Activity Report: Cecilio Velasco, Chief of Police.
Cecilio Velasco, Chief of Police reported the following: 1) Avenal Police Department announces the return of Police Explore; 2) Leadership Stability; 3) Recruit and Retain the Best; 4) International Model of Community Trust; 5) Amongst the safest cities in America; and 6) Embrace wellness amongst our employees.
B. Special Presentations/Reports:
1) None.
PUBLIC HEARING(s):
A. None
OLD BUSINESS:
A. None.
NEW BUSINESS:
A. Consider Establishing One Additional Employment Position (Property & Evidence Officer) within Avenal Police Department (Resolution 2024-16): Chief Velasco.
Chief Velasco reported the following the strategic review of the Avenal Police Department's needs, it has been identified that the succession planning for the Property and Evidence responsibilities would be significantly enhanced by the creation of a April 11, 2024 Pg. 6
Joint Meeting City Council/Successor Agency/PFA – March 28, 2024
part-time Property and Evidence Officer. This action is aimed at ensuring the department's long-term operational stability and maintaining the integrity of our evidence management process, which is crucial for the justice system's effectiveness.
Creating the Property and Evidence Officer position is critical to the department's operation, and while the workload has remained consistent, the importance of preparing for future needs cannot be overstated. Currently these auxiliary duties are fulfilled by a Reserve Officer, who is also a retiree, and could plan to take time off in the future, creating a gap in fulfilling these duties.
Chief Velasco continues that to address this, the creation of a new part-time position within APD will serve as a key component in our succession planning efforts. This proactive approach will facilitate a smooth transition and continuous operation, safeguarding against potential operational vulnerabilities. Funding for this position will be allocated from existing personnel funds, capitalizing on savings from current vacancies. The use of existing funds ensures that the addition of this role is financially responsible and sustainable. Staff would recommend making any necessary adjustments in the next Fiscal Year budget to accommodate for the new position. Given the critical nature of the Property and Evidence Officer's role in our department and the necessity of robust succession planning, it is recommended that the City Council approve the establishment of an additional part-time Property and Evidence Officer position. This decision will reflect our commitment to maintaining the highest standards of operation within the Avenal Police Department and our foresight in planning for its future needs.
Staff recommends by Resolution, establishing one additional employment position within the Avenal Police Department, a part time Property and Evidence Officer. The Police Department- Utilize existing funds in the Personnel Budget for FY 2023/2024, and budget accordingly for FY 2024/2025.
RESOLUTION 2024-15: AMENDING AN EXISTING EMPOYMENT POSITION WITHIN CITY HALL PROPERTY & EVIDENCE OFFICER. Councilman Verdugo approved, second by Councilman Hernandez, and motion carried.
Roll Call Vote:
AYES: Verdugo, Hernandez, Gravelle, Ramirez, Preciado.
NOES: None.
ABSENT: None.
ABSTAIN: None.
CORRESPONDENCE/ANNOUNCEMENTS/CLOSING COMMENTS:
City Manager Lopez reported the following: 1) Financials will be presented at the next meeting; 2) Measure A brought in $700,00 and thanked the City Council.
Councilman Verdugo reported the following: 1) attended the Easter Egg Extravaganza great event and well attended.
Mayor Preciado reported the following: 1) attended many meetings and thanked all for attending.
ADJOURNMENT:
Mayor Preciado re-opened meeting at 7:22 with no further business the meeting was adjourned at 7:41 p.m.
Respectfully submitted,
Maria Ortiz, City Clerk
April 11, 2024 Pg. 7
City of Avenal
919 Skyline Blvd.
Avenal, CA 93204
Phone: (559) 386-5766
AGENDA ITEM NO. 5. - B
TO: The Honorable Mayor and City Council
FROM: Antony V. López, City Manager
DATE: April 11, 2024
RE: Consider Approval of Council Policy 2024-01 (Council Stipend/Compensation) INFORMATION: Following the Avenal City Council's motion on March 14, 2024, to adopt Option 1 - Performance-Based Incremental Compensation regarding Council compensation/stipend, staff has prepared a comprehensive draft policy for a new council member compensation schedule. This policy is designed to promote active participation and engagement among council members in city governance and community activities. This policy will take effect starting May 1, 2024 and will be fully incorporated into the Fiscal Year 2024/2025 budget.
BACKGROUND:
The draft policy establishes a transparent and equitable compensation structure, offering a base pay of $300/month for council members, with additional pay for attending council and board meetings, and active participation in city events. The policy caps the total monthly compensation at $950 per council member (per Government Code § 36516) and introduces a Community Grant Fund to reallocate unused funds for the benefit of community projects and initiatives.
To fully implement this policy, several components will still be in development:
• Exhibit A: The list of approved council board assignments and committees, which will outline eligible meetings and participation for additional compensation. • Exhibit B: Details regarding the Community Grant Fund, including its management, application process, and eligibility criteria.
• Special Committee Consideration: The possibility of creating a special committee to review and recommend grant funding requests, ensuring a comprehensive approach to community support.
CONCLUSION:
The new policy reflects the council's commitment to fostering a culture of active participation and accountability. It aligns council members' compensation with their direct contributions to the city's governance and community wellbeing. As we move forward with finalizing the remaining components of the policy, staff remains dedicated to ensuring its successful implementation and integration into our city's budgetary and operational frameworks.
RECOMMENDATION:
Approve Resolution 2024-16, adopting Council Policy 2024-01 (Council Stipend/Compensation), and continue working with staff and provide direction on the details for Exhibits A and B, at future meetings.
FISCAL IMPACT:
Allocate $9,500 of Measure A funds for the FY 2023/2024, and allocate $57,000 annually from Measure A.
April 11, 2024 Pg. 8
City of Avenal
Council Compensation
Council Policy 2024-01
Council Policy: 2024-01 Pg.
Draft 04/08/2024
1 Performance-Based Incremental Compensation Policy for Avenal City Council Members Council Policy: 2024-01
Effective Date: 05/01/2024
1. POLICY PURPOSE
The purpose of the performance-based incremental compensation policy is to establish a fair and transparent compensation structure for the Avenal City Council members that encourages full participation in council meetings, board meetings, and city events. This policy aims to incentivize active engagement and attendance, ensuring council members are directly contributing to the governance and community activities of Avenal.
2. BASE COMPENSATION
Base Pay: Each council member shall receive a base monthly compensation of $300 for being a sitting member of the Avenal City Council.
3. ADDITIONAL COMPENSATION – See Exhibit A for more details Council and Board Meetings: Council members attending each Regular City Council meeting shall receive an additional $150 per day of meeting(s).
Assignments and Auxiliary Board Meetings: Council members attending board/committee meeting where the City has an appointed representative (i.e. KCAG, KCAPTA, LAFCO, or similar board assignments), shall receive an additional $100 per day of meeting(s). • A list of eligible boards, committees, and meetings shall be pre-determined and approved by a majority of the Council, attached to this policy as Exhibit A. Attendance will be determined by those meeting minutes.
• Ad-hoc, special assignments, or similar functions where City councilmember representation is required, or beneficial, can be eligible with the signed consent of the City Manager, Mayor, and Mayor Pro-Tem.
Special Council Meetings: For each Special City Council meeting attended, council members shall receive an additional $100 per day of meeting(s).
City Events and Functions:
• Active Participation: Council members who actively participate in city events (by signing up with the corresponding department to help manage or oversee a part of the event) shall receive an additional $100 per day of event(s), contingent upon verification by City Staff. • Attendance Only: Council members attending city events/functions, without committing to an active role/participation in the event, but stay for the majority of said event, shall receive an additional $50 per day of event(s) contingent upon verification by City Staff.
4. MAXIMUM COMPENSATION
The total maximum compensation for any council member in a single month shall not exceed $950, or per applicable law by California Government Code § 36516.
April 11, 2024 Pg. 9
City of Avenal
Council Compensation
Council Policy 2024-01
Council Policy: 2024-01 Pg.
Draft 04/08/2024
2 5. ATTENDANCE VERIFICATION
Verification Process: The attendance of council members at council meetings, board/committee meetings, special meetings, and city events shall be verified by both the City Manager and City Clerk. • Monthly Report: A tally/roll of each council member's attendance and participation will be presented as part of the consent calendar once per month during a city council meeting, ensuring transparency and accountability.
6. COMMUNITY GRANT FUND – See Exhibit B for more details • Fund Purpose: Remaining funds and budget surpluses from the allocated compensation budget shall be reallocated into a special City Council - Community Grant Fund. This fund is designed to support ad-hoc requests by recognized and eligible groups or causes within the community, as well as provide additional funding for established organizations' regular yearly requests.
6. A. COMMUNITY GRANT FUND MANAGEMENT
• Application Process: City Staff will develop a comprehensive application process for entities seeking funding from the Community Grant Fund. This process will include detailed guidelines on how to apply, the types of projects or initiatives eligible for funding, and any necessary documentation or information required. The aim is to ensure a transparent and fair process that is accessible to all eligible groups within the Avenal community. • Eligibility Determination: Eligibility criteria will be established to define which groups or causes are considered "recognized and eligible" for funding. These criteria will be designed to ensure that only applications with a clear benefit to the Avenal community and alignment with the city's strategic goals are considered. City Staff will be responsible for the initial review of applications to determine eligibility based on the established criteria. • Funding Consideration: All eligible funding requests will be considered on a case-by-case basis, contingent upon the availability of funds within the Community Grant Fund.
Consideration will be given to the potential impact of the proposed project or initiative on the community, the feasibility of the proposal, and the applicant's ability to execute the project successfully.
• Special Committee Delegation: The Council may choose to delegate the review and recommendation process for budget requests to a special committee. This committee can be comprised of no more than two council members, city staff, and community members, ensuring a broad perspective in the decision-making process. The inclusion of community members is particularly important for maintaining a close connection with the community's needs and priorities.
• Administration: The City Manager will be delegated the authority to administer the approval and disbursement of funds based on the recommendations of the special committee or the city council, as applicable. This administrative role includes ensuring that funds are distributed according to the decisions made and that recipients comply with any stipulated conditions or reporting requirements.
• Future Policy Development: The specifics of the application process, eligibility criteria, and committee structure will be developed and added to this policy at a later date, allowing for thoughtful consideration and the incorporation of best practices. The development of these aspects will be guided by the overarching goal of maximizing the benefit to the Avenal community while ensuring responsible management of the Community Grant Fund.
April 11, 2024 Pg. 10
City of Avenal
Council Compensation
Council Policy 2024-01
Council Policy: 2024-01 Pg.
Draft 04/08/2024
3 7. POLICY REVIEW AND AMENDMENTS
• This policy shall be subject to review and possible amendments at regular intervals or as deemed necessary by the Avenal City Council to ensure its effectiveness and alignment with the city's goals and the council members' roles and responsibilities.
8. OPT-OUT PROVISION FOR COUNCIL MEMBER COMPENSATION
• Voluntary Compensation Forfeiture: Council members reserve the right to refuse part or all of the components of additional pay allocated for attending and participating in council meetings, city events, and other qualifying activities. Instead of receiving this pay, they may choose to direct the equivalent funds toward the Community Grant Fund. This opt-out must be applied on a per meeting or per component basis; partial forfeiture of pay for individual components is not permitted. Council members wishing to exercise this option must notify the City Clerk in writing prior to the compensation disbursement period.
9. CONCLUSION
The implementation of the Performance-Based Incremental Compensation Policy represents Avenal City Council's commitment to incentivizing participation, ensuring accountability, and aligning compensation with community engagement. Council members are encouraged to actively participate in all scheduled meetings and city events to foster a vibrant, engaged, and well-governed community.
VISUAL CHART:
APPROVAL
This policy shall be effective by Resolution approved by the Avenal City Council and shall remain in effect until said Resolution is amended or revoked.
Component Eligible pay
Base Pay $300
Regular Meeting Attendance $150/meeting
Special Meeting Attendance $100/ day of meeting(s)
Board/Committee Meetings $100/day of meeting(s)
City Event Participation $100 (active) / $50 (attend)
Maximum Monthly Compensation $950
Attendance Verification Yes
Budget Allocation $57,000/year
Additional Notes
Unused funds go to Community Grant
Fund
April 11, 2024 Pg. 11
Board Primary Alternate Meeting Dates Time Location
Kings County
Area Public
Transit Agency
(KCAPTA) Alvaro Preciado Alex Ramirez
4th Wednesday
every month 3:30pm
Kings County
BOS Chambers -
Hanford
Kings County
Association of
Governments
(KCAG) Alvaro Preciado Alex Ramirez
4th Wednesday
every month 4:30pm
Kings County
BOS Chambers -
Hanford
Kings County
Abandoned
Vehicle
Abatement
Service
Authority
(KCAVASA) Alvaro Preciado Alex Ramirez Quarterly
Immediately
following the
adjournment of
the KCAG
Commission
Kings County
BOS Chambers -
Hanford
Kings
Community
Action
Organization
(KCAO) Antony López None
3rd Wednesday
every month 4:30 PM
KCAO Main
Office - Hanford
Kings County
Commission on
Aging Council
(KCCOAC)
Pablo
Hernandez None
3rd Thursday
every month 2:00 PM
Commission on
Aging/Senior
Center - Armona
Special Board Appointments 2020-2021
April 11, 2024 Pg. 12
City of Avenal
919 Skyline Blvd.
Avenal, CA 93204
Phone: (559) 386-5766
AGENDA ITEM NO. 6. - A
TO: The Honorable Mayor and City Council
FROM: Antony V. López, City Manager
DATE: April 11, 2024
RE: Proclamation - Autism Acceptance and Awareness Month 2024 INFORMATION:
Staff is pleased to present support of the proposed proclamation for the City of Avenal to declare April as Autism Acceptance and Awareness Month. This initiative is not just a formal declaration; it symbolizes our city's commitment to fostering an inclusive and supportive community for all its members, especially those affected by autism.
Background and Importance
Autism affects approximately 1 in 36 children, cutting across all demographic lines. This complex condition presents both unique challenges and strengths. Recognizing and addressing these needs through Autism Acceptance and Awareness Month is crucial. It signifies our dedication to understanding autism's multifaceted nature and ensures that individuals and families affected by autism receive the support and resources they need.
Community Support
The Avenal community has shown robust support for individuals with autism and their families. Our Avenal Police Department officers wear autism awareness patches throughout April as one example. Additionally, our Community Activities staff's ongoing engagement with parents and families of special needs children exemplifies the City’s proactive approach. Through regular meetings, we have identified and work to integrate activities suited for all demographics into our events, ensuring inclusivity and accessibility for everyone.
Conclusion
Adopting this proclamation is a reaffirmation of our city's values of inclusivity, understanding, and support for all its residents, particularly those directly affected by autism. It aligns with our ongoing efforts, such as the commendable initiatives by our APD and Community Activities staff, and reiterates that we are a community that acknowledges and celebrates diversity in all forms.
Staff strongly advocates for the adoption of this proclamation and urge the City Council to recognize the significance of Autism Acceptance and Awareness Month. Let us stand united in supporting this initiative, reflecting the strength and compassion of our community.
RECOMMENDATION:
By motion, approve Proclamation 2024-01.
April 11, 2024 Pg. 13
Proclamation
Autism Acceptance and Awareness Month 2024
WHEREAS, autism affects an estimated 1 in 36 children and is a complex disorder that affects each person differently, resulting in unique strengths and challenges; and WHEREAS, autism can cause challenges with verbal and nonverbal communication, social interaction, and repetitive behaviors, and can affect anyone, regardless of age, race, ethnicity, gender, or socioeconomic background; and WHEREAS, autism is often accompanied by medical conditions that impact quality of life; and
WHEREAS, a comprehensive, collaborative approach will help to advance research, providing a better understanding of the many forms of autism, while strengthening advocacy efforts and ensuring access to services and resources throughout the life span; and
WHEREAS, early diagnosis and intervention tailored to individual needs can have lifelong benefits, easing the transition to adulthood and fostering greater independence; and,
WHEREAS, each person and family affected by autism should have access to reliable information, services, supports and opportunities to live up to their greatest potential; and,
WHEREAS, the City of Avenal is honored to take part in the annual observance of Autism Awareness Month and World Autism Day to address the diverse needs of individuals and families affected by autism;
NOW, THEREFORE, I, Alvaro M. Preciado, do hereby proclaim April as Autism Acceptance and Awareness Month in the City of Avenal, California and pledge to increase understanding and acceptance of Autistic People throughout the city.
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused the Seal of the City of Avenal to be affixed this 14th day of December, in the year 2023.
SIGNATURE: ________________________
Alvaro M. Preciado,
Mayor of Avenal
ATTEST: _____________________________
Maria A. Ortiz, City Clerk
April 11, 2024 Pg. 14
City of
Avenal
TO: Honorable Mayor & City Council
FROM: Antony V. Lopez, City Manager
PREPARED BY: Rob Williams, Public Works Director
DATE: April 4, 2024
RE: Public Works Monthly Report March 2024
INFORMATION:
7300 CODE ENFORCEMENT:
The Code Enforcement Department has been working hard to catch up on property abatements, good to have Lupe back as well as graffiti control and illegal venders. It was a busy month, monthly reports will resume in May.
8100 PARKS & LANDSCAPE:
Staff continues to maintain Rice Park, landscaped areas on Skyline, Neighborhood Park, Skate Park, Sport Complex, the Ken Brown Public Safety Center, and Elliott Park. The control panel for the well at the Sport Complex is being built and we are waiting for a schedule for installation. Staff is starting to catch up with the weed situation from the rain this year.
9000 ANIMAL CONTROL DEPARTMENT:
Staff continues to maintain the Animal Shelter. The spay/neuter program is continuing to go well there were 9 dogs for the shelter and 19 dogs and for Avenal Citizens. There are still good numbers on the amount of dogs rescued. SEE ATTACHED REPORT.
13000 STREETS:
Staff maintains city streets, signs, flags, and banners. Staff was able to get some patching done in town but have been busy with other projects as well. We are working with A&M Consulting Engineers with ideas to repair the Cutoff until we get more funding to rebuild it. The Seventh Ave. Road Project is progressing well.
The paving is complete and the utility boxes are being raised and concreted in. The striping is scheduled for 4/11-12/24. Staff is installing cross walks and STOP legends. The City Engineer continues to work on the Community Center getting it ready to go to bid.
14100 WATER DISTRIBUTION: The contractor for the 18” water line project has made the tie-ins at I-5 and Tank 3 and the new water line is in service. They will complete the installation of the valves on the cutoff and water plant 4/5/24 then finishing odds and ends with plans to be completely finished at the end of April. Staff continues to repair and maintain the distribution system within the City. 15000 WASTEWATER COLLECTIONS:
Staff continues to report monthly to Regional Water Quality Control Board regarding overflows. There was one (1) call for sewer plug. The City Engineer is preparing the bid for the sewer line from the P.W. Yard and Community Building to Whitney St. Staff is continuing the enzyme treatment for grease. 18000 VEHICLES, EQUIPMENT & BUILDING MAINTENANCE:
AGENDA ITEM NO. 7. A. – 1)
April 11, 2024 Pg. 15
Staff continues to maintain city-owned property, vehicles, and equipment and continues monthly/quarterly reporting to SJVAPCD. Staff submitted the yearly report to the Bureau of Automotive Repair.
April 11, 2024 Pg. 16
To: Rob Williams, Public Works Director
From: Raul Valadez, Animal Control Department
For: March 01, 2024 to March 31, 2024
Total Entries 71
RETURNED TO OWNER 5
ADOPTED 2
DIED IN SHELTER 0
EUTHANIZED 4
ESCAPED FROM SHELTER 0
33 REMAINING IN SHELTER 18
28 DOGS RESCUED 38
Total Dogs brought in this month (DETAINED) 34
DOG BITE(S) 1
CITATIONS 1
COMPLAINTS 8
CALL OUT 18
CATS DETAINED 4
EUTHANIZED 1
RESCUED 0
REDEEMED 0
ADPOTDED 0
Roosters/Chickens/Owls/Turtles, etc. 2
Deceased Animals
Dogs 0
Cats 5
Other Animals Deceased 0
Animal Control Activity Report
City Of Avenal
Animal Control Activity Report
April 1, 2024
April 11, 2024 Pg. 17
To: Rob Williams, Public Works Director
From: Raul Valadez, Animal Control Department
For: March 01, 2024 to March 31, 2024
Total Entries 49
RETURNED TO OWNER 0
ADOPTED 0
DIED IN SHELTER 0
EUTHANIZED 1
ESCAPED FROM SHELTER 0
REMAINING IN SHELTER 30
DOGS RESCUED 18
Total Dogs brought in this month (DETAINED) 21
DOG BITE(S) 2
CITATIONS 0
CATS DETAINED 0
EUTHANIZED 0
RESCUED 0
REDEEMED 0
ADPOTDED 0
Roosters/Chickens/Owls/Turtles, etc. 0
Deceased Animals
Dogs 6
Cats 15
Other Animals Deceased 0
Animal Control Activity Report
City Of Corcoran
Animal Control Activity Report
April 1, 2024
April 11, 2024 Pg. 18
City of Avenal
919 Skyline Blvd.
Avenal, CA 93204
Phone: (559) 386-5766
AGENDA ITEM NO. 7. - A.1
TO: The Honorable Mayor and City Council
FROM: Raul Valadez, Animal Control Officer II
DATE: April 11, 2024
RE: Animal Shelter March 2024 Overview
March was an interesting month. We noticed an increase of dumped/abandoned dogs, from the hills to Plymouth Ave. we found young pups out on the cutoff road.
One was in very bad shape. He ate blue pills from a near by field. We and our neighbors in Coalinga, Gimme Love, managed to get the small pups help at no expense to us. The current area we feel that needs more attention is the horse corrals. This is the area in which most dumped dogs that are left in the hills congregate. We are currently working on getting 3 other dogs that have been spotted in the Avenal Prison.
The Shelter finally got ahold of a dumped stray that was going around the Elementary school, Tamarack Elementary and the prison thanks to a resident that let us use her property to lure the dog in. we are still working hard to get the stray dog issue under control. Our mission is to secure public health and safety. And we will continue to do so to the best of our abilities.
We have noticed as well of many dogs that have been running at large are dogs that have owners. Some calls we get are from owners letting dogs go out for a couple of hours and wait for them to get back home.
The Shelter has had an increase of pet owners trying to surrender their pets saying, “they just don’t want them anymore”. In these cases, we still take the animal in.
Another portion of them is saying they just found the dog so they took it in, and also put it in their cars and bringing them to us. At times they don’t know if the dog is sick, friendly or has flea/tics. They just don’t want it anymore. This is an issue we are facing due to the fact we can’t confirm their story. This is still a problem that Staff is learning how to navigate and approach. At this time, we are bailing out irresponsible pet owners from a situation of caring for a pet – despite the pet having no fault. We are doing are best to accommodate and work with all situations.
The shelter is working with code enforcement to educate and enforce the chicken, rooster etc. problem.
April 11, 2024 Pg. 19
919 Skyline Blvd.
Avenal, CA 93204
Phone: (559) 386-5766
Fax: (559) 386-0629
“Pistachio Capital of the World”
“Oasis in the Sun – Gateway to the Coast”
AGENDA ITEM NO. 7- A.2
TO: The Honorable Mayor and City Council
FROM: Humberto Bermudez, IT Manager
DATE: April 10th, 2024
RE: Information Technology Monthly Report March 2024
CURRENT PROJECTS:
Internet:
-Limited staff prevent the final antenna installation.
-Cal.Net has not received a response from Hewitson’s regarding construction on or near their site. Staff explores using local sites for construction instead. -By recommendation of RSUSD IT, City Staff contract Sebastian Co. to diagnose the fiber ends at both facilities. Diagnosis complete and awaiting new fiber ends to arrive for retermination.
-Starlink antenna arrives for testing of satellite internet across remote facilities where AirFiber may not be feasible.
Phone System: CSI performs the GSM overhaul at Avenal PD.
Emails: Before continuing with BitTitan, as per new regulations, the City restarts the process of obtaining the cityofavenal.gov domain.
Services:
-Regular Security Maintenance
-Continuing reorganizing documentation of all services for future reference -Beginning ordering equipment to replace Kings County IT’s loaned networking equipment.
Server purchasing to follow soon after. The City’s next scheduled check-in call is on April 19th.
Other:
-Continuing to assist in local events (Food distributions, Easter egg hunt) -Continues to maintain the city website and provide tech support across all facilities.
April 11, 2024 Pg. 20
Community Activities: April Activity Report
To: Honorable Mayor and Council Members
From: Anna Lara-Nieto, Senior Recreation Leader
cc: Antony V. Lopez, City Manager
Date: April 11
th
, 2024
Re: Community Activities Staff Report
Information:
Updates:
1) Community Garden –
• All Garden participants who turned in an application have been called and 4 have already started to plant. We still have 4 small boxes available.
• Permanent numbers for boxes are in and will be installed by the end of this week. • In the works, benches, citrus trees, decorative gate, arched name over entrance. • City Manager and the City Engineer are also working on a plan for the restrooms. 2) Easter Extravaganza – Was held on March 23rd from 11 – 2 pm. • Event was very well attended by community.
• Avenal Local Rotary Club and CHP held the Bicycle Rodeo. Avenal State prison donated several bikes, along with CHP who purchased 2 new bikes for the bike raffle. • Avenal Assembly of God Church members came out and did contest games on the basketball court throughout the event.
3) Rental Report-see attachment
Working on:
1) Avenal Old Timers Day
2) Family Tea- Time
3) Summer Kidz Spot program
Collaborations:
1) Avenal State Prison Kidz Day
2) Health Collaborative Outdoor Movies
3) Gear up / RSUSD Resource/ Health Fair
4) Rotary – OTD/Food Distributions
5) KCAO – Scholarships for Kidz Spot Summer Program
6) Valley Voices
7) Family Engagement Back to School Event
April 11, 2024 Pg. 21
RENTALS MARCH/APRIL
Veterans Hall
• Seniors, Monday-Friday 10-4pm
• Every Saturday, KCAO (tax program) 8am-4pm. By appointment only • AA Group- Paid Rental
• Assembly of God- Paid Rental
Avenal Theater
• St. Joseph Catholic Church- Paid Rental
Recreation Center
• Kings County Election Office- Paid rental
• Valley Voices- Every 2nd Friday of each month- Covid/Food Distribution – Paid Rental • St. Joseph Catholic Church- Paid Rental
• 3- Community paid rental
Rice Park Pavilion & Sports Complex
• 6 Community – Paid Rental
April 11, 2024 Pg. 22
City of Avenal
919 Skyline Blvd.
Avenal, CA 93204
Phone: (559) 386-5766
EMERGENCY ITEM
TO: The Honorable Mayor and City Council
FROM: Griselda Price, Director of Administrative Services DATE: April 11, 2023
RE: Consider ratification and formal adoption of the Fiscal Year 2020-2021 Financial Audit
INFORMATION:
Mr. Ivan Sotomayor, CPA with Sotomayor and Associates, CPAs the City’s independent auditor, has submitted the FY 20/21 Audited Financial Statements for the Council/Agency Members on April 9, 2023. The FY 20/21 Audit is included in the Council Packet for the City Council/Successor Agency/PFA consideration.
The FY 20/21 Audit contains no findings, compared to previous audits that highlighted the City’s struggles to reconcile the finance system with the bank statements in FY 15/16; 16/17; 17/18; 18/19; and 19/20.
Of note, there was no report for the Single Audit given that the expenditures are below the single audit threshold of $750,000.
This is being presented as an Emergency Item given that the final audit was submitted after the agenda was posted for the April 11th meeting, and approving the audit to share with our grantors and other agencies as soon as possible is of upmost importance to not lose funding and allow projects to proceed.
RECOMMENDATION:
By motion, formal acceptance of the FY 20/21 Audited Financial Statements, ratifying the City Manager’s acceptance of said audit and consent to continue with Sotomayor and Associates, CPAs for the FY 21/22 audit, with an upcoming representation letter.
Direct Staff to present this item once again at the next City Council meeting in the Consent Calendar.
April 11, 2024 Pg. 23
DRAFT
City of Avenal
California
Report on Financial Statements
For the Year Ended June 30, 2021
April 11, 2024 Pg. 24
DRAFT
CITY OF AVENAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT......................................................................................................................................................1 BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Statement of Net Position....................................................................................................................................................................4 Statement of Activities.........................................................................................................................................................................5 Fund Financial Statements:
Governmental Funds:
Balance Sheet...........................................................................................................................................................................................7 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position…................................................................................................................................................................8 Statement of Revenues, Expenditures and Changes in Fund Balances..............................................................................9 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities............................................................................................10 Proprietary Funds:
Statement of Net Position.................................................................................................................................................................12 Statement of Revenues, Expenses and Changes in Net Position.......................................................................................13 Statement of Cash Flows…..............................................................................................................................................................14 Fiduciary Funds:
Statement of Fiduciary Net Position – Successor Agency of the Redevelopment Agency.....................................................................................................................................................................15 Statement of Changes in Fiduciary Net Position – Successor Agency of the Redevelopment Agency….................................................................................................................................................................16 Notes to the Basic Financial Statements..............................................................................................................................................18
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the City’s Net Other Postemployment Benefits Liability and Related Ratios...............................................................................................................................................................................................................51 Proportionate Share of Net Pension Liability....................................................................................................................................52 Schedule of Contributions….....................................................................................................................................................................53 April 11, 2024 Pg. 25
DRAFT
TABLE OF CONTENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
(Continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION (Continued)
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget to Actual:
General Fund…......................................................................................................................................................................................54 CalHOME Special Revenue Fund.................................................................................................................................................55 Home Program Income Special Revenue Fund........................................................................................................................56 CDBG Program Income Special Revenue Fund......................................................................................................................57 Home Investment Special Revenue Fund...................................................................................................................................58 Notes to the Required Supplementary Information.................................................................................................................59
OTHER SUPPLEMENTARY INFORMATION
Nonmajor Governmental Funds............................................................................................................................................................61 Combining Nonmajor Governmental Funds Statements:
Combining Balance Sheet – Nonmajor Governmental Funds............................................................................................62 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances – Nonmajor Governmental Funds...........................................................................................63 Combining Balance Sheet – Nonmajor Special Revenue Funds…...................................................................................64 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances – Nonmajor Special Revenue Funds…..................................................................................65 Combining Balance Sheet – Nonmajor Capital Projects Fund...........................................................................................66 Combing Statement of Revenues, Expenditures, and
Changes in Fund Balance – Nonmajor Capital Projects Fund…........................................................................................67 OTHER INDEPENDENT AUDITOR’S REPORT
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.......................................................................................................69 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance............................................................................................71 Schedule of Expenditures of Federal Awards.............................................................................................................................................73 Notes to the Schedule of Expenditures of Federal Awards…................................................................................................................74
FINDINGS AND QUESTIONED COSTS
Schedule of Findings and Questioned Costs................................................................................................................................................75 Summary of Prior Year Findings .....................................................................................................................................................................76 Corrective Action Plan.........................................................................................................................................................................................78 April 11, 2024 Pg. 26
1 DRAFT
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of Avenal, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Avenal, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise City’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) 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 the City 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 The City’s management is responsible for the preparation and fair presentation of the 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 the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
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 opinions. 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 GAAS will always detect a material misstatement when it exists. The risk of not 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 aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
Sotomayor & Associates, LLP
Certified Public Accountants
699 Hampshire Road, Suite 101
Westlake Village, California 91361
(626) 397-4900
Fax: (626) 397-4908
E-mail: [email protected]
Web Site www.sotomayorcpa.com
April 11, 2024 Pg. 27
2 DRAFT
• 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 the City’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 the City’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 and budgetary comparison information be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial 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.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements are presented for the purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements are the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic 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 March 15, 2024 on our consideration of City’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 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 City’s internal control over financial reporting and compliance.
Sotomayor & Associates, LLP
Certified Public Accountants
Westlake Village, CA
March 15, 2024
April 11, 2024 Pg. 28
DRAFT
GOVERNMENT-WIDE FINANCIAL STATEMENTS
April 11, 2024 Pg. 29
The notes to the basic financial statements are an integral part of this statement. 4 DRAFT
CITY OF AVENAL
STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments $ 4,428,441 $ 6,070,885 $ 10,499,326 Cash with fiscal agent 810,317 - 810,317
Receivables:
Consumer receivables - 979,053 979,053
Taxes 56,779 - 56,779
Intergovernmental 1,552,800 - 1,552,800
Grants 82,505 - 82,505
Community loans 0 - -
Notes 64,600 - 64,600
Internal balances 3,378,999 (3,378,999) -
Advances to other funds 1,740,000 - 1,740,000
Due from Successor Agency - - -
Inventories - 77,765 77,765
Other assets - 12,962 12,962
Non-depreciable 1,197,273 1,672,188 2,869,461
Depreciable, net of accumulated depreciation 19,157,227 11,021,699 30,178,926 Total assets 32,468,941 16,455,553 48,924,494
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions 802,415 481,997 1,284,412 Deferred outflows from OPEB 1,469,280 302,970 1,772,250 Total deferred outflows of resources 2,271,695 784,967 3.056,662
LIABILITIES
Accounts payable 443,771 272,569 716,340
Accrued interest payable 85,192 - 85,192
Consumer deposits - 95,638 95,638
Unearned revenue 100,000 - 100,000
Due to Successor Agency 327,870 - 327,870
Due in one year:
Compensated absences 147,766 28,394 176,160
Revenue bond payable 410,000 - 410,000
Noncurrent liabilities:
Compensated absences - 68,238 68,238
Revenue bond payable 4,785,000 - 4,785,000
Net pension liability 1,529,062 1,895,103 3,424,165
Other postemployment benefit obligation 13,895,862 2,865,327 16,761,234 Total liabilities 21,724,523 5,225,313 26,949,836
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions 1,931,271 398,234 2,329,505 Deferred inflows from OPEB 16,011 88,637 104,648
Total deferred inflows of resources 1,947,282 486,871 2,434,153
NET POSITION
Net investment in capital assets 15,159,500 12,693,887 27,853,387 Restricted for:
Highway and streets - - -
Community development - - -
Unrestricted (4,090,669) (1,165,551) (5,256,220)
Total net position $ 11,068,831 $ 11,528,336 $ 22,597,167 April 11, 2024 Pg. 30
The notes to the basic financial statements are an integral part of this statement. 5 DRAFT
CITY OF AVENAL
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Net (Expense) Revenue and
Program Revenues Changes in Net Position
Charges For
Operating
Grants and
Capital
Grants and Governmental
BusinessType
Expenses Services Contributions Contributions Activities Activities Total FUNCTIONS/PROGRAMS:
Governmental activities:
General government $ 1,025,113 $ 30,929 $ 21,740 - $ (972,444) $ - $ (972,444) Building regulations 79,544 - - - (79,544) - (79,544)
Planning - 6,383 - - 6,383 - 6,383
Community development 558,696 275,903 1,051,290 - 768,497 - 768,497 Public safety: -
Law enforcement 3,76,801 129,435 162,846 - (2,784,520) - (2,784,520) Animal control 221,538 70,475 - - (151,061) - (151,061) Parks and recreation 349,424 4,432 - - (344,992) - (344,992) Highway & Streets 1,975,731 - 1,129,904 - (845,827) - (845,827) Interest on long-term debt (5,720) - - - (5,720) - (5,720) Total governmental activities 7,281,125 517,557 2,365,780 - (4,394,788) - (4,397,788) Business-type activities:
Water 5,231,135 5,797,376 - - - 566,242 566,242
Sewer 2,554,790 3,794,508 - - - 1,239,719 1,239,719
Solid waste 1,069,271 608,558 123,572 - - (337,141) (337,141) Streetlight 60,169 62,001 - - - 1,833 1,833
Total business-type activities 8,915,365 10,262,443 123,572 - - 1,470,652 1,470,652 Total $ 16,196,490 $ 10,780,000 $ 2,489,352 $ - $ (4,394,788) $ 1,470,652 $ (2,927,136) General revenues:
Taxes:
Property taxes 583,496 - 583,496
Sales taxes 342,106 - 342,106
Franchise taxes 332,302 - 332,302
Other taxes 7,277 - 7,277
Motor vehicle in-lieu 2,216,538 - 2,216,538
Rental income 337,379 - 337,379
Investment income 55,990 3,444 59,434
Miscellaneous 151,108 20,598 171,706
Transfers (937,974) 881,446 (56,528)
Total general revenues and transfers 3,088,222 905,488 3,993,710 Change in net position (1,309,566) 2,376,140 1,066,574
Net position - beginning 12,378,397 9,152,196 21,530,593 Prior period restatement* - - -
Net position - beginning (restated) 12,378,397 9,152,196 21,530,593 Net position - ending $ 11,068,831 $ 11,528,336 $ 22,597,167 April 11, 2024 Pg. 31
6 DRAFT
THIS PAGE IS LEFT BLANK INTENTIONALLY.
April 11, 2024 Pg. 32
7 DRAFT
FUND FINANCIAL STATEMENTS
April 11, 2024 Pg. 33
CITY OF AVENAL
The notes to the basic financial statements are an integral part of this statement. 7 DRAFT
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
General
Fund
Avenal
Public
Financing
Authority
Debt Service
Fund
CalHOME
Special
Revenue
Fund
HOME
Program
Income
Special
Revenue
Fund
CDBG
Program
Income
Special
Revenue
Fund
Home Investment
Special Revenue
Funds
Other
Governmental
Funds
Total
Governmental
Funds
ASSETS
Cash and investments $ 3,353,588 $ 109,741 $ 219,695 $ 205,270 $ 25,438 $ 446 $ 514,263 $ 4,428,441 Cash with fiscal agent 246,000 564,317 - - - - - 810,317 Receivables:
Taxes 56,779 - - - - - - 56,779
Intergovernmental 21,759 - - - - - 1,531,041 1,552,800
Community loans - - 2,535,091 5,595,687 4,060,432 - - 12,191,210 Notes 64,600 - - - - - - 64,600
Interfund receivables - - - - - - - -
Due from Successor Agency - 3,455,000 - - - - - 3,455,000 Advances to other funds - 1,740,000 - - - - - 1,740,000 Total assets $ 3,742,726 $ 5,869,058 $ 2,754,786 $ 5,800,957 $ 4,085,870 $ 446 $ 2,045,304 $ 24,299,147
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 276,922 $ - $ - $ - $ - $ - $ 166,849 $ 443,771 Due to Successor Agency - 327,870 - - - - - 327,870
Interfund payables - - - - - - - -
Advances from other funds - 330,569 - - - - - 330,569
Unearned Revenue 100,000 - - - - - - 100,000
-
Total liabilities 376,922 658,439 - - - - 166,849 1,202,210
DEFERRED INFLOWS OF
RESOURCES
Unavailable revenues - loans - - 2,535,091 5,595,687 4,060,432 - - 12,191,210 Total deferred inflows of resources - - 2,535,091 5,595,687 4,060,432 - - 12,191,210 Fund balances:
Nonspendable:
Notes receivable 64,600 - - - - - - 64,600
Restricted for:
Public safety - - - - - - - -
Highways and streets - - - - - - - -
Community development - - - - - - - -
Debt service - - - - - - - -
Committed:
Capital projects - - - - - - - -
Assigned:
General government - - - - - - - -
Unassigned 3,301,204 5,210,619 219,695 205,269 25,439 446 1,878,455 10,841,127 Total fund balances 3,365,804 5,210,619 219,695 205,269 25,439 446 1,878,455 10,905,727 Total liabilities and fund balances $ 3,742,726 $ 6,412,948 $ 2,754,786 $ 5,800,956 $ 4,085,871 $ 446 $ 2,045,304 $ 24,299,147 April 11, 2024 Pg. 34
The notes to the basic financial statements are an integral part of this statement. 8 CITY OF AVENAL
DRAFT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE
SHEET TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
Amounts reported for governmental activities in the statement of net position are different because:
Total fund balances -governmental funds $ 10,905,727
Capital assets used in governmental activities were not current financial resources and, therefore, were not reported in the governmental funds. 20,354,500 Long-term liabilities were not due and payable in the current period; therefore, they are not reported in the governmental funds balance sheet:
Net pension liability (1,529,062)
Other postemployment benefits (13,895,862)
Loan payable (5,195,000)
Compensated absences (147,766)
Unmatured interest on long-term debt is not accrued in the governmental funds, but rather is recognized as an expenditure when due. (85,192) Pension related deferrals are reported as deferred outflows and inflows of resources on the Statement of Net Position. 786,404
Post employment benefit deferrals are reported as deferred outflows and inflows of resources on the Statement of Net Position (461,991) Other long-term assets are not available to pay for current period expenditures and, therefore, they are deferred in the governmental funds. 337,073 Net position of governmental activities $ 11,068,831
April 11, 2024 Pg. 35
The notes to the basic financial statements are an integral part of this statement. 9 CITY OF AVENAL
DRAFT
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
JUNE 30, 2021
General
Fund
Avenal
Public
Financing
Authority
Debt Service
Fund
CalHOME
Special
Revenue
Fund
HOME
Program
Income
Special
Revenue
Fund
CDBG
Program
Income
Special
Revenue
Fund
Home
Investment
Special Revenue
Funds
Other
Governmental
Funds
Total
Governmental
Funds
REVENUES
Property taxes 2,789,954 -
- - - - - 2789,954
Other taxes 690,944 - - - - - - 690,944
Intergovernmental revenues 266,567 - - - - 3,851 2,095,528 2,365,946 Charges for services 98,293 - - - - - - 98,293
Licenses and permits 293,316 - - - - - - 293,316
Fines and penalties 25,818 - - - - - - 25,818
Investment income 25,321 29,516 73 74 11 (98) 1,093 55,990 Rents 341,369 - - - -
- (3,991) 337,378
Loan repayments - - 48,818 52,277 26,647 - - 127,742
Other revenue 353,163 - - - - 47,500 - 400,663
Total revenues 4,884,745 29,516 48,891 52,351 26,658 51,253 2,092,630 7,186,044
EXPENDITURES
Current:
General government 737,079 -
- - - - 43,336 780,415
Building regulation 79,544 -
- - - - - 79,544
Community development 192,814 - 350 1,600 950 85,500 272,931 554,145 Public safety:
Law enforcement 2,899,548 - - - -
- - 2,899,548
Animal control 221,536 - - - -
- - 221,536
Parks and recreation 501,358 - - - -
- 182,617 683,975
Highways and streets -
- - - -- 450,414 450,414
Capital outlay:
General government 3,289 - - - -
- - 3,289
Building regulation -
- - - -- - -
Community development -
- - - -- - -
Public safety:
Law enforcement -
- - - -- - -
Animal control -
- - - - - - -
Parks and recreation -
- - - - - - -
Highways and streets -
- - - - - 1,409,823 1,409,823
Debt service: -
Principal - 390,000 - - - - - 390,000
Interest - 248,051 - - - - - 248,051
Total expenditures 4,635,168 638,051 350 1,600 950 85,500 2,359,121 7,720,740 Excess (deficiency) of revenues over
(under) expenditures 249,577 (608,535) 48,541 50,751 25,708 (34,247) (266,491) (534,696)
OTHER FINANCING SOURCES
(USES)
Transfers in - - - - - - - -
Transfers out - - - - - - (937,974) (937,974)
Total other financing sources (uses) - - - - - - (937,974) (937,974) Net change in fund balances 249,577 (608,535) 48,541 50,751 25,708 (34,247) (1,204,465) (1,472,670) Fund balances - beginning 3,116,227 5,819,154 171,154 154,518 (269) 34,693 3,082,920 12,378,397 Prior Period adjustments - - - - - - - -
Fund balances - ending $ 3,365,804 $ 5,210,619 $ 219,695 $ 205,269 $ 25,439 $ 446 $ 1,878,455 $ 10,905,727 April 11, 2024 Pg. 36
CITY OF AVENAL
The notes to the basic financial statements are an integral part of this statement. 10 DRAFT
RECONCILIATION OF THE GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances - total governmental funds $ (1,472,670) Governmental funds report capital outlay as expenditures. However, in the statement of activities, the costs of those assets are capitalized. This is the amount of capital assets recorded. 735,640
Depreciation expense on capital assets is reported in the government-wide statement as changes in net position, but it does not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in the governmental funds. (5,585,000)
Changes to net pension liability and pension related deferred outflows and inflows of resources do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (633,214) Community loans are reported in the governmental funds as expenditures and are not expenses in the statement of activities. This is the amount of community loans given. (2,976,487)
Compensated absences expense reported in the statement of activities does not require the use of current financial resources and, therefore, is reported as an expenditure in the governmental funds. -
Repayment of long-term principal is an expenditure in governmental funds, but the repayment reduced long-term liabilities in the government-wide statement of net position. 390,000
Other post-employment benefit expense is reported in the government-wide statement of activities, but it does not require the use of current financial resources.
Therefore, the expense is not reported as an expenditure in the governmental funds. 8,232,165
Change in net position of governmental activities $ (1,309,566) April 11, 2024 Pg. 37
DRAFT
THIS PAGE IS LEFT BLANK INTENTIONALLY.
April 11, 2024 Pg. 38
DRAFT
PROPRIETARY FUNDS
April 11, 2024 Pg. 39
CITY OF AVENAL
The notes to the basic financial statements are an integral part of this statement. 12 DRAFT
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2021
Water Sewer Solid Waste Street Light
Fund Fund Fund Fund Total
ASSETS
Current assets:
Cash and investments $ 2,062,137 $ 2,951,688 $ 489,829 $ 567,213 $ 6,070,885 Consumer receivables 546,949 289,799 132,271 10,034 979,053 Supplies inventory 58,198 19,567 - - 77,765
Other assets 12,962 - - - 12,962
Total current assets 2,680,246 3,261,054 622,100 77,265 7,140,665 Noncurrent assets:
Advances to other funds - - - - -
Capital assets:
Nondepreciable 101,000 - - - 101,000
Construction in progress 427,151 1,144,037 - - 1,571,188 Depreciable, net 8,341,635 2,179,919 - 500,145 11,021,699 Total noncurrent assets 8,869,786 3,323,956 - 500,145 12,693,887 Total assets 11,550,032 6,585,010 622,100 1,077,410 19,834,552
DEFERRED OUTFLOWS OF
RESOURCES
Deferred outflows from OPEB 115,347 129,802 57,821 - 302,970 Deferred outflows from pensions 194,047 257,592 30,358 - 481,997 Total deferred outflows of resources 309,394 387,394 88,179 - 784,697
LIABILITIES
Current liabilities:
Accounts payable 181,284 43,419 45,621 2,245 272,569
Deposits 95,898 (14) (232) (14) 95,638
Compensated absences - - - - -
Total current liabilities 277,182 43,405 45,389 2,231 368,207 Noncurrent liabilities:
Advances from other funds 3,455,000 - - - 3,455,000
Compensated absences 32,027 60,119 4,486 - 96,632
Net pension liability 763,779 1,012,393 118,931 - 1,895,103 Other postemployment benefits obligation 1,090,903 1,227,617 546,852 - 2,865,372 Total noncurrent liabilities 5,341,709 2,300,129 670,269 - 8,312,107 Total liabilities 5,618,891 2,343,534 715,658 2,231 8,680,314
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from OPEB 151,616 170,616 - - 322,232
Deferred inflows from pensions 35,544 47,402 5,691 - 88,637 Total deferred inflows of resources 187,160 218,018 5,691 - 410,869
NET POSITION
Net investment in capital assets 8,869,786 3,323,956 - 500,145 12,693,887 Unrestricted (2,816,411) 1,086,896 (11,070) 575,034 (1,165,551) Total net position $ 6,053,375 $ 4,410,852 $ (11,070) $ 1,075,179 $ 11,528,336 April 11, 2024 Pg. 40
The notes to the basic financial statements are an integral part of this statement. 13 CITY OF AVENAL
DRAFT
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Water Sewer Solid Waste Streetlight
Fund Fund Fund Fund Total
Operating revenues
Charges for services $ 5,797,376 $ 3,794,508 $ 608,558 $ 62,001 $ 10,262,443 Operating expenses:
Personnel costs 2,008,654 1,658,335 311,835 6,899 3,985,723 Operations 451,371 152,470 - 59 603,900
Contract services - - 614,416 - 614,416
Franchise 93,789 - - - 93,789
Utilities 1,529,434 201,699 - 30,221 1,761,354
Administration 392,841 400,337 143,020 - 936,198
Depreciation 496,868 141,949 - 27,959 666,776
Total operating expenses 4,972,957 2,554,790 1,069,271 65,138 8,662,156 Operating income (loss) 824,419 1,239,718 (460,713) (3,137) 1,600,287 Nonoperating revenues (expenses):
Connection fees 24,238 20,158 - - 44,396
Other revenue 20,629 468 - - 21,066
Other surcharges and surtaxes - - 25 - 25
Interest income (438) 2,858 91 235 2,777
Department of Correction - 448 - - 448
Interest expense (174,305) - - - (174,305)
Total nonoperating revenues
(expenses) (129,879) 23,932 116 235 (105,593)
Other financing sources (uses):
Transfers in/(out) 121,240 913,307 (153,101) - 881,446
Total other financing sources (uses) 121,240 913,307 (153,101) - 881,446 Change in net position 815,783 2,176,957 (613,698) (2,902) 2,376,140 Net position - beginning 5,237,592 2,233,895 602,628 1,078,081 9,152,196 Prior period restatement* - - - - -
Net position - beginning (restated) 5,237,592 2,233,895 602,628 1,078,081 9,152,196 Net position - ending $ 6,053,375 $ 4,410,852 $ (11,070) $ 1,075,179 $ 11,528,336 * Prior period adjustment is required due to correction of interest income in various funds and Avenal City Operating Authority Fund balance not reported April 11, 2024 Pg. 41
The notes to the basic financial statements are an integral part of this statement. 14 CITY OF AVENAL
DRAFT
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Water Sewer Solid Waste Street Light
Fund Fund Fund Fund Total
Cash flows from operating activities:
Cash received from customers $ 2,999,890 $ 1,553,197 $ 746,301 $ 63,513 $ 5,362,901 Cash payments to suppliers for goods and services (763,239) 234,134) 2,656 (27,686) 1,022,403) Cash payments to employees for services (2,287,631) (2,070,559) (312,129) (6,899) 4,677,218) Cash payments to Other - - (710,343) - (710,343)
Net cash provided (used) by operating activities (50,980) (751,496) (273,515) 28,928 (1,047,063) Cash flows from noncapital financing activities:
Prior period adjustment - - - - -
Cash received/paid from other funds (18,760) 913,775 - (2) 895,013 Cash received for connection fees 44,867 20,606 123,542 - 189,014 Net cash provided (used) by noncapital financing activities 26,107 934,381 123,542 (2) 1,084,027 Cash flows from capital and related financing activities:
Acquisition of capital assets (21,676) - - - (21,676)
Gain (Loss) on Disposal of Equipment 1,791 1,791
Interest paid on capital debt (174,305) - - - (174,305) Net cash provided (used) by capital and related financing activities (194,190) - - - (194,190)
Cash flows from investing activities:
Interest on investments (438) 2,858 787 237 3,444
Net cash provided (used) by investing activities (438) 2,858 787 237 3,444 Increase (decrease) in cash and cash equivalents (219,501) 185,743 (149,186) 29,163 (153,782) Cash and cash equivalents - July 1 2,281,638 2,765,945 639,015 538,068 6,224,666 Cash and cash equivalents - June 30 $ 2,062,137 $ 2,951,688 $ 489,829 $ 567,231 $ 6,070,884 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 824,419 $ 1,239,718 $ (460,713) $ (3,137) $ 1,600,287 Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:
Depreciation 496,868 141,949 - 27,959 666,776
Changes in assets, deferred outflows of resources,
Liabilities and deferred inflow of resources:
(Increase) decrease in consumer receivables (87,754) (117,936) (27,679) (2,624) (235,993) (Increase) decrease in supplies inventory 2,177 (6,248) - - (4,071) (Increase) decrease in receivables from other funds 295,662 - - - 295,662 (Increase) decrease in deferred outflows of resources
for pensions (108,557) 136,645 (22,487) - 5,601
(Increase) decrease in deferred outflows of resources
for OPEB 156,960 119,663 - - 276,623
Increase (decrease) in accounts payable 50,228 41,150 2,656 1,764 95,798 Increase (decrease) in consumer deposits 14,226 - - - 14,226 Increase (decrease) in compensated absences payable (15,068) (16,157) (157) - (31,382) Increase (decrease) in other postemployment benefits
obligation (1,856,424) (2,170,466) 212,515 4,966 (3,809,409) Increase (decrease) in net pension liability 467,602 212,483 17,605 - 697,690 Increase (decrease) in deferred inflows of resources
for pensions 12,024 37,431 4,745 - 54,200
Increase (decrease) in deferred inflows of resources
for OPEB (303,343) (369,728) - - (673,071)
Net cash provided (used) by operating activities $ (50,980) $ (751,496) $ (273,515) $ 28,928 $ (1,047,063) April 11, 2024 Pg. 42
CITY OF AVENAL
STATEMENT OF FIDUCIARY NET POSITION
SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY
JUNE 30, 2021
Trust
Funds
The notes to the basic financial statements are an integral part of this statement. 15 DRAFT
ASSETS
Current assets:
Cash and investments $ 234,991
Due from City of Avenal 327,870
Total current assets 562,861
Land Inventory -
Total noncurrent assets -
Total assets 562,861
LIABILITIES
Current liabilities:
Accounts payable 3,310
Total current liabilities 3,310
Due to City of Avenal Public Finance Authority 1,740,000 Total noncurrent liabilities 1,740,000
Total liabilities 1,743,310
NET POSITION
Held in trust
$ (1,180,449)
April 11, 2024 Pg. 43
CITY OF AVENAL
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY
JUNE 30, 2021
Trust
Funds
The notes to the basic financial statements are an integral part of this statement. 16 DRAFT
ADDITIONS
Intergovernmental revenues $ 199,347
Interest (21,948)
Total additions 177,399
DEDUCTIONS
Planning and community development 142,874
Bond principal payments -
Interest and fiscal charges 89,850
Total deductions 232,724
Change in net position (55,325)
Net position - beginning (1,125,124)
Prior year adjustments -
Net position - ending $ (1,180,449)
April 11, 2024 Pg. 44
DRAFT
NOTES TO THE BASIC FINANCIAL STATEMENTS
April 11, 2024 Pg. 45
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
18 DRAFT
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Avenal have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for governmental accounting and financial reporting principles. The most significant of the government’s accounting principles are described below.
Reporting Entity
The City of Avenal (the “City”) was incorporated in 1979 as a general law city. The City has a council/manager form of government and is governed by a five-member elected council. The City Manager is appointed by the City Council. The City provides the following services: public safety (law enforcement, animal control, and emergency services), water utility, sanitation (solid waste disposal and sanitary wastewater), parks and recreation, planning and community development, public works, street maintenance, building regulation and general administrative services.
The accompanying basic financial statements include the financial activities of the City; the primary government; and its component unit, the Avenal Public Financing Authority (the “Authority”). Financial information for the City and this component unit are accounted for in the accompanying financial statements in accordance with principles defining the governmental reporting entity adopted by the Governmental Accounting Standards Board. The City Council members, in separate session, serve as the governing board of the Authority. As such, this entity is presented on a blended basis.
No separate annual financial statements are prepared for the Authority.
Blended Component Units
The Avenal Public Financing Authority (the Authority) is a joint exercise of powers authority organized and existing under and pursuant to a Joint Exercise of Powers Agreement dated March 20, 1989. The agreement is between the City and the Authority, and under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing for public capital improvements to be owned by the City or the Authority. The City Council acts as the governing board of the Authority and is responsible for the Authority’s fiscal and administrative activities. The funds of the Authority have been included in the governmental activities of the financial statements.
Basis of Presentation
The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements.
The statement of net position and the statement of activities display information about the primary government (the City) and its component unit. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities are generally financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parities.
April 11, 2024 Pg. 46
19 DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued)
The statement of activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the City’s business-type activities and for each of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are included in the program expense reported for individual function. Certain indirect costs, which cannot be identified and broken down, are included in the program expense reported for individual functions and activities. Program revenues include 1) fines, fees, and charges paid by the recipients of goods and services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes are presented instead as general revenues.
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regard to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated, except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the statement of activities, interfund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated: Due to/Due from Other Funds, Advance to Other Funds/Advance from Other Funds, and Transfers In/Transfer Out.
Fund Financial Statements – The fund financial statements provide information about the City’s funds. Separate statements for each fund category – governmental and proprietary – are presented. The emphasis of fund financials is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. All accompanying schedules are presented to reconcile and explain the differences in funds and changes in fund balances as presented in these statements to the net position and changes in net position presented in the government-wide financialstatements.
Propriety fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as nonoperating expenses.
The City reports the following major governmental funds:
The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.
The Avenal Public Financing Authority Debt Service Fund is used to account for the repayment of debt issued by the Avenal Public Financing Authority.
The CalHOME Special Revenue Fund is used to account for CalHOME grant activities.
The HOME Program Income Special Revenue Fund is used to account for HOME Investment Partnership loan repayments. Receipts are transferred to the appropriate funds.
The CDBG Program Income Special Revenue Fund is used to account for community development block grant loan repayments.
The HOME Investment Special Revenue Funds is used for federal HOME Investment Partnership grants activity.
April 11, 2024 Pg. 47
20 DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued)
Enterprise fund financial statements include a statement of net position, a statement of revenues, expenses and changes in net position, and a statement of cash flows for each major enterprise fund.
The City has four enterprise funds – the Water, Sewer, Solid Waste, and Street Light – which are used to account for operations that are financed and operated in a manner similar to private business enterprise. In an enterprise fund, the intent of the City Council is that the costs (expenses, including depreciation) of providing services to the general public, on a continuing basis, be financed or recovered primarily through user charges.
The City reports the following major proprietary funds:
The Water Fund is used to account for financial activity of the water utility system.
The Sewer Fund is used to account for the financial activity of the sewage collections wastewater treatment utility system.
The Solid Waste Fund is used to account for the financial activity of the solid waste utility system.
The Street Light Fund is used to account for the financial activity of the street light system.
The City’s fiduciary funds represent agency trust funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The agency trust funds are accounted for on an economic resources measurement focus and accrual basis of accounting.
The City reports the following fiduciary fund:
The Successor Agency of the Redevelopment Agency is used to account for assets liabilities of the former redevelopment agency until they are distributed to other units of state and local government as a result of the dissolution of the redevelopment agency.
Measurement Focus Basis of Accounting
Government-Wide and Proprietary Fund Financial Statements – The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flow takes place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales taxes are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting (Continued)
Governmental Fund Financial Statements – Governmental funds are reported using current financial resources measurement focus and modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when measurable and available. Property and sales taxes, interest, certain state and federal grants, and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and capital leases are reported as other financing sources.
The City applies all applicable GASB pronouncements (including all NCGA Statements and Interpretations currently in effect), as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the committee on Accounting Procedure. In addition, the City applies all FASB Statements and Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB pronouncements, to its business-type activities.
Propriety funds distinguish operating revenues and expenses from non-operating items. Operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of each fund. Nonoperating revenues, such as interest income, state and federal grants, and subsidies, result from nonexchange transactions or ancillary activities. Operating expenses include costs for providing services and delivering goods such as administrative expenses and depreciation on capital assets. All other expenses not meeting this definition are reported as non-operating expenses.
Assets, Liabilities and Net Position
Cash and Cash Equivalents
For purposes of the statement of cash flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
All cash and cash equivalents of the proprietary funds are pooled with the City’s pooled cash and cash equivalents.
The City follows the practice of pooling the cash from all funds for investment purposes.
Receivables
Proprietary fund receivables are shown net of allowance for uncollectible accounts. All customers are billed monthly.
The estimated value of services provided, but unbilled at year-end, has been included in the accompanying financial statements.
Grant and entitlement revenues are recorded as receivables in the funds when all eligibility requirements have been met.
The corresponding governmental fund revenues are recorded when they become available, with the differences recorded as deferred revenue. Proprietary fund revenues are recorded as non-operating revenues when the receivables are recorded. Some grant and entitlement revenues are not susceptible to accrual, in which case the corresponding revenues are recorded when received.
The City accrues as receivable all property taxes received during the first sixty (60) days of the new fiscal year.
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued)
Supplies Inventory and Prepaid Items
Inventory items are recorded as expenditures at the time of purchase. Records are not maintained for inventory and supplies on hand.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.
Interfund Transactions
Activity between funds that represent lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “interfund receivables/payables” (i.e. the current interfund loans) or “advances to/advances from” (i.e. the noncurrent interfund loans). Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.
Capital Assets
The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set the capitalization threshold for reporting capital assets at $5,000. The City has chosen not to capitalize infrastructure in place prior to the adoption of GASB Statement No. 34. Gifts or contributions of capital assets are recorded at fair value when received.
Depreciation is recorded on a straight-line basis over the useful lives of the assets asfollows:
Buildings.........................................................10-50 years Improvements...................................................5-10 years Machinery and equipment................................3-25 years Infrastructure ..................................................15-50 years In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments’ basic financial statements. In accordance with this statement, the City has included the value of all infrastructure capital assets acquired since the beginning of the 2003 fiscal year into the current year basic financial statements.
The City defines infrastructure as capital assets that are stationary and have expected useful lives significantly in excess of most capital assets. The assets include the street system, water purification and distribution system, sewer collection and treatment system, parks and recreation improvement, storm water conveyance system, and buildings combined with the site amenities, such as parking and landscaped areas used by the City in the conduct of its business.
Interest Payable
In the government-wide financial statements, interest payable of long-term debt is recognized as the liability is incurred for government fund types and proprietary fund types.
In the fund financial statements, proprietary fund types recognize the interest payable when the liability is incurred.
Unearned Revenue
Unearned revenue is that for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. The City typically records unearned revenues related to intergovernmental revenues (primarily grants and subventions) received but not earned (qualifying expenditures not yet incurred).
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued)
Unavailable Revenue
In the fund financial statements, unavailable revenue is recorded when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City records unavailable revenue for transactions for which revenues have been earned, but for which funds are not available to meet current financial obligations. Typical transactions for which unavailable revenue is recorded are intergovernmental revenues when funding requirements have been met, but the related funding is not yet available.
Compensated Absences Payable
It is the City’s policy to permit employees to accumulate a maximum amount of 320 hours of earned or unused vacation and sick leave. Sick leave is accumulated at 8 hours per month for full-time regular employees. Vacation is accumulated at 10 days per year for full-time regular employees with less than five years of service and employees earn an additional day for each year after five years. This amount is included as a liability in the government-wide and proprietary fund financial statements.
Long-Term Debt
In the government-wide and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities.
Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Avenal’s California Public Employees’ Retirement System (CalPERS) plan (Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Property Tax Calendar
Property taxes are assessed, collected and allocated by Kings County throughout the fiscal year according to the following property tax calendar.
Lien Date January 1
Levy Date July 1 to June 30
Due Dates November 1,1st installment; February 1,2
nd installment
Delinquent Dates December 10, 1
st installment; April 10, 2nd installment
Revenues from taxpayer-assessed taxes (sales and use, business license, transient occupancy, utility users, gas, and franchise fees) are accrued in the governmental funds when they are both measurable and available. The City considers these revenues available if they are received during the period when settlement of prior fiscal year accounts payable occurs. Historically, the majority of these taxes are received within 60 days of the fiscal year-end.
Risk Management
The City participates with other public entities in a joint venture under a joint powers agreement which establishes the Central San Joaquin Valley Risk Management Authority (CSJVRMA). The relationship between the City and CSJVRMA is such that CSJVRMA is not a component unit of the City for financial reporting purposes.
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued)
Classification of Net Position
In the government-wide financial statements, net position is classified in the following categories:
Net Investment in capital assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category.
Restricted net position – This category presents external restrictions imposed by creditors, grantors, contributors, or by laws or regulations of other governments, and restrictions imposed by law through constitutional provisions and enabling legislation. Additionally, this category presents restrictions placed on the categories of capital projects, and specific projects and programs as established by the City Council.
Unrestricted net position – This category consists of all resources that do not meet the definition of “net investment in capital assets” or “restricted net position.”
When an expense is incurred for purposes for which both restricted and unrestricted net position are available, the City’s policy is to apply restricted resources first and then unrestricted resources as needed.
Fund Balance Classification
The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:
• Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. The City has classified inventories and prepaid items as being Nonspendable as these items are not expected to be converted to cash or are not expected to be converted to cash within the next year. • Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. Debt service resources are to be used for future servicing of the revenue note and are restricted through debtcovenants.
• Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the City Council. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action (ordinance or resolution) that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractualrequirements.
• Assigned: This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council or through the City Council delegating this responsibility to the City manager through the budgetary process. This classification also includes the remaining positive fund balance for all governmental funds except for the GeneralFund.
• Unassigned: This classification includes amounts that have not been assigned to other funds or restricted, committed or assigned to a specific purpose within theCity.
The City would typically use restricted resources first, followed by committed resources, and then assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds.
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Accordingly, actual results could differ from those estimates.
NOTE 2 – CASH AND INVESTMENTS
The City follows the practice of pooling cash and investments in all funds. Interest income earned on pooled cash and investments is allocated monthly to the various funds based on the month-end cash and investment balances.
Summary of Deposits and Investments
A reconciliation of the City’s deposit and investment balances as of June 30, 2021 is as follows:
Cash on hand $ 350
Primary government deposits 7,328,652
Local Agency Investment Fund 3,405,315
U.S. government securities 810,317
Total cash and investments $ 11,544,634
Government-Wide:
Statement of Net Position:
Cash and investments $ 10,499,326
Cash with fiscal agent 810,317
Fiduciary Funds 234,991
Total $ 11,544,634
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2 – CASH AND INVESTMENTS (Continued)
Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’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 bond trustees that are governed by the provision of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.
Securities of U.S. Government, or its agencies
Certificates of Deposit (or time deposits) placed with
commercial banks and/or savings and loan companies
Negotiable Certificates of Deposit
Bankers' Acceptances
Local Agency Investment Fund deposits (state pool)
Repurchase Agreements (Repos)
Passbook savings account demand deposits
Investments Authorized by the Debt Agreements
Investment of debt proceeds held by the bond trustee are governed by provisions of the debt agreements rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risks, credit risk, and concentration of credit risk.
Maximum Maximum
Maximum Percentage Investment in
Authorized Investment Type Maturity of Portfolio Non Issuer U.S. Treasury Bonds/Bills None None None
U.S. Government Agency Bonds None None None
Negotiable Certificates of Deposit 365 days None None
Time Certificates of Deposit 365 days None None
Banker's Acceptances 365 days None None
Commercial Paper 365 days None None
Money Market Fund None None None
All the City’s investment activities were within State statutes and the City’s investment policy.
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2 – CASH AND INVESTMENTS (Continued)
Interest Rate Risk
Interest rate risk is the risk that changes in 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. One of the ways the City manages its exposure to interest rate risk is by maintaining funds in liquid, shortterm investments which can be converted to cash when necessary to meet disbursement requirements.
Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity.
Remaining Maturity (in Months)
12 Months 13 to 60 More than 60
Investment Type Total or Less Months Months
State investment pool $ 3,405,315 $ 3,405,315 $ - $ -
Morgan Stanley certificate of
deposit with Multi Bank Securities 246,000 - 246,000 -
Held by bond trustee:
Treasury obligation funds 564,317 564,317 - -
Total $ 4,215,631 $ 3,969,631 $ 246,000 $ -
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The City does not have any investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City’s investments.
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 rating organization.
Presented below is the minimum rating required (where applicable) by the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type. The column marked “exempt from disclosure” identifies those investment types for which GASB Statement No. 40 does not require disclosure as to credit risk:
Rating as of Year-End
Exempt from
Investment Type Total Disclosure AAAm Not Rated
State investment pool $ 3,405,315 $ 3,405,315 $ $ -
Morgan Stanley certificate of deposit
with Multi Bank Securities 246,000 - 246,000 -
Held by bond trustee:
Treasury obligation funds 564,317 - 564,317 -
Total $ 4,215,631 $ 3,405,315 $ 810,317 $ -
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2 – CASH AND INVESTMENTS (Continued)
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a city will not be able to recover its deposits or will not be able to recover collateral securities that are in possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterpart (e.g. broker-dealer) to a transaction, a city 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 City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits:
As of June 30, 2021, the carrying amount of the City’s bank deposits was $ 87,328,652. the total amount of which was collateralized or insured with securities held by the pledging financial institutions in the City’s name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City’s name.
According to California law, the fair value of pledged securities with banking institutions must equal at least 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgages having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. The City, however, has not waived the collateralization requirements.
Local Agency Investment Fund
The City participates in an external investment pool, as defined by the Governmental Accounting Standards Board (GASB) Statement No. 31, by way of its funds on deposit in the Local Agency Investment Fund (LAIF) managed by the State of California Treasurer and is not registered with the Securities and Exchange Commission. These funds are pooled with those of other agencies in the State and invested in accordance with State guidelines. The value of the city’s shares in the LAIF that may be withdrawn is determined on an amortized costs basis, which may be different from the fair value of the City’s position in the pool. The City’s portion of the June 30, 2021 balance was $ 3,405,315. A breakdown of the investments included in the balance is not available at the balance sheet date.
Investment Valuation
The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.
Fair value measurements of the City’s investments are as follows at June 30, 2020:
Investments Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Morgan Stanley certificate of deposit
with Multi Bank Securities 246,000 246,000 - -
Held by bond trustee:
Treasury obligation funds 564,317 - 564,317 -
Total $ 810,317 $ 246,000 $ 564,317 $ -
Treasury obligations categorized as Level 2 are valued using a matrix pricing technique that values securities based on their relationship to benchmark quoted prices.
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 3 – INTERFUND ACTIVITIES
Interfund balances for the purpose of the government-wide statements have been eliminated. The composition of interfund balances in the fund level statements as of June 30, 2021 is as follows:
Interfund Receivables/Payables
Current interfund balances arise in the normal course of business and are expected to be repaid shortly after the end of the fiscal year. At June 30, 2021, the interfund balances are as follows:
Long-Term Interfund Advances
At June 30, 2021, the funds below have made advances that were not expected to be repaid in one year or less.
Transfers Between Funds
With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to reimburse a fund that has made expenditures on behalf of another fund. Current year transfers included activity to recognize the refunding of debt. Transfers in and out consisted of the following as of June 30, 2021:
Due to Fund Due from Fund Amount
None None -
Total $ -
Advances From Advances To Amount
Avenal Public Financing Authority Debt
Service Fund Water Fund $ 3,455,000
Total $ 3,455,000
6,557 Transfers
In Out Reasons
Major Funds:
Governmental funds:
General Fund $ - $ 937,974 Capital assets from capital improvement projects and 20% Cost of Refuse Service to Residents
Other governmental funds:
CDBG Program Income Special
Revenue Fund -
Capital Improvement Project Fund -
Enterprise funds:
Water Fund
Sewer Fund
121,240
816,734
-
-
20% Cost of Refuse Service to Residents
Total $ 937,974 $ 937,974
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 4 – NOTES RECEIVABLE
On October 3, 2007, the City entered into an agreement with Avenal Sand Drags Association for the sale of land that includes the sand drag tracks with a sales price of $68,000 payable to the City. In 2014, the City approved an addendum to the agreement. The terms of the revised agreement call for five annual interest only payments commencing September 18, 2014, followed by 10 annual principal payments of $6,800 each, together with accrued interest commencing on September 18, 2019. The interest is a 5% fixed rate, simple interest. If the City determines that the sand drags tracks and/or other use conducted by Avenal Sand Drags Association are no longer in the best interest of the City, the City retains the right to repurchase the property for the original sales price. As of June 30, 2021, the balance of this note receivable was $68,000.
NOTE 5 – HOUSING LOANS RECEIVABLE
The housing grant funds expended are recorded as expenditures in the year the loans are made to participants even though the amounts will be recovered as the loans are paid. The City maintains detailed records of these loans and records loan principal and interest payments as program revenues in the year that such payments are received. Loans which have monthly/annual activity are “performing” loans and are included as receivables and unavailable revenue.
Such loans totaled $32,410 as of June 30, 2021. Deferred payment loans are not required to be paid back until the participating homeowner sells, transfers title to the property, or discontinues residence in the dwelling, at which time the full amount of the deferred loan is due. Deferred payment loans are “non-performing” loans that are also recorded as receivables and unavailable revenue. Such loans totaled $12,191,210 as of June 30, 2021.
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 6 – CAPITAL ASSETS
In accordance with GASB Statement No. 34, the City has reported all capital assets including infrastructure additions as of the beginning of the 2002-03 fiscal year in the government-wide statement of net position. The City elected to use the basic approach whereby accumulated depreciation and depreciation expense have been recorded. The following tables present summary information on capital assets:
Depreciation expense on capital assets was charged to the governmental functions as follows:
Balances
July 1, 2020 Increases Decreases
Balances
June 30, 2021
Governmental Activities:
Capital assets not being depreciated:
Land $ 1,131,602 $
0 - $ - $ 1,131,602
Construction in progress 105,554 1,620,935 (1,660,818) 65,671 Total capital assets not being depreciated 1,237,156 1,620,935 1,197,273 Capital assets being depreciated:
Buildings and improvements 11,937,062 253,612 - 12,190,674 Machinery and equipment 4,584,409 51,654 - 4,636,063
Infrastructure 25,792,966 1,407,206 - 27,200,172
Total capital assets being depreciated 42,314,437 1,712,472 - 44,026,909 Less accumulated depreciation for:
Buildings and improvements (3,520,855) (303,493) - (3,824,348) Machinery and equipment (3,163,065) (268,727) - (3,431,792) Infrastructure (15,918,741) (786,359) - (16,705,100)
Total accumulated depreciation (22,602,661) (1,358,579) - (23,961,240) Total capital assets being depreciated, net 19,711,776 353,893 - 20,065,669 Governmental activities capital assets, net $ 20,948,932 $ 1,974,828 $ (1,660,818) $ 21,262,942 General government $ 299,406
Community development -
Parks and recreation 176,790
Highway and streets 725,116
Public safety 105,186
Public works 52,081
Total $ 1,358,579
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 6 – CAPITAL ASSETS (Continued)
Balances Balances
July 1, 2019 Increases Decreases June 30, 2020
Business-Type Activities:
Capital assets not being depreciated:
Land $ 101,000 $ - $ - $ 101,000
Construction in progress 633,214 $ 937,974 - 1,571,188
Total capital assets not being depreciated 734,214 937,974 - 1,672,188 Capital assets being depreciated:
Buildings and improvements 7,939,279 - - 7,939,279
Machinery and equipment 1,530,427 - - 1,530,427
Utility system - - - -
Infrastructure 21,732,064 - - 21,732,064
Total capital assets being depreciated 31,201,770 - - 31,201,770 Less accumulated depreciation for:
Buildings and improvements (4,560,361) (164,941) - (4,725,302) Machinery and equipment (1,161,915) (54,639) - (1,216,554) Utility system - - - -
Infrastructure (13,791,019) (447,196) - (14,238,215)
Total accumulated depreciation (19,513,295) (666,776) - (20,180,071) Total capital assets being depreciated, net 11,688,475 (666,776) - 11,021,699 Business-type activities capital assets, net $ 12,422,689 $ 271,198 - 12,693,887 Total capital assets $ 33,371,621 $ 2,246,026 $ - $ 33,956,829 Depreciation expense on capital assets was charged to the business-type functions as follows:
Water $ 496,868
Sewer 141,949
Solid Waste -
Streetlight 27,959
Total $ 666,776
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 7 – DEFERRED INFLOWS/OUTFLOWS OF RESOURCES
GASB Statement No. 63 provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. This Statement also amends the net asset reporting requirements and other pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets.
GASB Statement No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities.
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The City has no items that qualify for reporting in this category.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. Deferred inflows of resources reported in the governmental funds for unavailable revenues are as follows:
HOME CDBG
Program Program
CalHome Income Income
Special Special Special
Revenue Fund Revenue Fund Revenue Fund Total
CalHOME loans $ 2,535,091 $ - $ - $ 2,535,091
HOME loans - 5,595,687 - 5,595,687
CDBG loan - - 4,060,432 4,060,432
Total $ 2,535,091 $ 5,595,687 $ 4,060,432 $ 12,191,210
April 11, 2024 Pg. 61
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 8 – OPERATING LEASES
Rental Expense
The City entered into two lease agreements effective May 1, 2015 with Stanton Office Machine Company to lease copiers for City Hall and the Police Department. The City Hall copy machine lease is payable for 60 months with payments of $363 per month plus applicable taxes. The City Hall copy machine lease has a separate maintenance agreement, recorded as an expense at $115 per month plus applicable taxes. The Police Department copy machine lease is also payable for 60 months with payments of $218 per month plus applicable taxes. The Police Department copy machine lease also has a separate maintenance agreement, recorded as an expense at $155 per month plus applicable taxes. The total lease payment for the year ended June 30, 2021 was $12,179.14.
The City entered into a lease agreement effective March 1, 2015 with Avaya Financial Services to lease telephone equipment for City Hall. The telephone equipment lease is payable for 60 months with payments of $177 per month plus applicable taxes. The total lease payment for the year ended June 30, 2021 was $3,847.37.
Future minimum operating lease commitments are as follows:
Year Ending June 30,
2021 9,928
$ 9,928
Lease Between the City of Avenal and the Avenal Hospital District A lease memorandum between the City of Avenal (the City) and the Avenal Hospital District (the District) provides for a below market rental rate of $1 per year from July 8, 2010 to December 31, 2015. There are two one-year options to renew the lease on the same terms and conditions. Although the Hospital District is a legal entity, there are no hospital services or operations at this facility. Part of the operations of the Avenal Police Department occupy this facility.
At the end of April 2018, a Joint Powers Agreement was signed which created the City of Avenal Operating Authority (CAOA). The members of this CAOA are the City of Avenal and the Avenal Hospital District (District).
The City of Avenal Police Department is granted continued use of the property at 317 Alpine Street in Avenal, on the same terms as the current lease agreement dated July 8, 2010, including Addendum No. 1 dated December 10, 2015, for a period of fifty years. The City shall pay rent to the CAOA at $1 per year.
The City is responsible for management of the property, can charge the District for allocated staff time, and handles District funds to pay obligations. Also, the City does not assume any District obligations, holds the City harmless and indemnifies the City for claims related to District debt. 34 April 11, 2024 Pg. 62
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 9 – COMPENSATED ABSENCES
The City’s policy relating to compensated absences is described in Note 1. As shown in the table below, the long-term portion of this debt, amounting to $68,238 for business- type activities at June 30, 2021 is expected to be paid in future years from future resources. In prior years, compensated absences have been liquidated primarily by the general fund and the proprietary funds.
Balance
July 1, 2020 Incurred Satisfied
Balance
June 30, 2021
Amounts
Due Within
One Year
Amounts Due in
More
Than One Year
Governmental Activities:
Compensated absences $ 188,180 $ 113,747 $ (154,161) $ 147,766 $ 147,766 $ - Business-Type Activities:
Compensated absences $ 96,457 $ 39,101 $ (38,927) $ 96,632 $ 28,394 $ 68,238 April
35 11, 2024 Pg. 63
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
36 NOTE 10 – LONG-TERM OBLIGATIONS
The following is a summary of long-term obligation transactions for governmental activities for the year ended June 30, 2021:
Balance
July 1, 2020
Incurred
or Issued
Satisfied
or Matured
Balance
June 30, 2021
Amounts
Due Within
One Year
Amounts
Due in More
Than One Year
Governmental Activities:
Revenue bonds $ 5,585,000 $ 390,000 $ 5,195,000 $ 5,195,000 $ 410,000 $ 4,785,000 Total governmental activities $ 5,585,000 $ 390,000 $ 5,195,000 $ 5,195,000 $ 410,000 $ 4,785,000 Revenue Bonds
2005 Avenal Public Financing Authority Revenue Bonds
In September 2005, the City issued $9,660,000 in revenue bonds. The bonds refinance the 1997 Avenal Public Financing Authority Refunding Revenue Bonds. The bonds authorized and issued have stated interest rates for each payment starting at 2.875% per annum and increasing annually to prescribed increments not exceeding .5% through the term of the bonds to a maximum of 5.0% per annum. The interest rate at June 30, 2021 was 4.375% per annum. These bonds are special obligations of the Authority and are payable solely from Public Finance Authority revenues. The Public Financing Authority maintains $658,440 as a minimum reserve for the authorized bonds. Below is a schedule of remaining debt service:
2005 Avenal Public Financing
Authority Refunding Revenue Bonds
Fiscal Years Ending Principal Interest Total
2021 390,000 264,155 654,155
2022 410,000 246,350 656,350
2023-2027 2,330,000 723,613 3,053,613
2028-2032 1,075,000 484,375 1,559,375
2033-2037 1,380,000 179,500 1,559,500
Totals $ 5,585,000 $ 1,897,993 $ 7,482,993
April 11, 2024 Pg. 64
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
37 NOTE 11 – PENSION PLAN
A. General Information about the Pension Plans
Plan Description – All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost Sharing Multiple-Employer Plan (Plan) administered by the California Public Employees’ Retirement System (CalPERS). The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other.) Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City of Avenal’s (City) sponsors four rate plans (two miscellaneous and two safety.) Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
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 year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for the Plan are applied as specified by the Public Employees’ Retirement Law.
The rate plan provisions and benefits in effect at June 30, 2021 are summarized as follows:
Miscellaneous
1st Tier
Miscellaneous
PEPRA
Prior to On or after
Hire date January 1, 2013 January1,2013
Benefit formula 2% @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 - 66 52 - 67
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 2.0% Required employee contribution rates 7.0% 6.75%
Required employer contribution rates 10.340% 67.590%
Unfunded accrued liability $157,158 $4,942
Safety
1st Tier
Safety
PEPRA
Prior to On or after
Hire date January 1, 2013 January 1, 2013
Benefit formula 3% @ 55 2.7% @ 57
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 - 55 50 - 57
Monthly benefits, as a % of eligible compensation 2.0% to 3.0% 2.0% to 2.7% Required employee contribution rates 9.0% 13.0%
Required employer contribution rates 20.640% 13.130%
Unfunded accrued liability $53,242.92 $6,929
April 11, 2024 Pg. 65
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CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
38 NOTE 11 – PENSION PLAN (Continued)
A. General Information about the Pension Plan (Continued) Beginning in fiscal year 2019, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability.
The dollar amounts are billed on a monthly basis. The City’s required contribution for the unfunded liability was $150,061 for the fiscal year ended June 30, 2021.
Contributions – Section 20814(c) of the California Public Employees’ 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. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
The City’s contributions to the plan for the year ended June 30, 2021 were $600,802.
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2021, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $3,424,165.
The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2018, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2017, rolled forward to June 30, 2018, using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June 30, 2020 and 2021 was as follows:
Total
Proportion - June 30, 2020 0.0303%
Proportion - June 30, 2021 0.0303%
Change - Increase/(Decrease) 0.0011%
For the year ended June 30, 2021, the City recognized pension expense of $862,107. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $ 608,070 $ - Changes in assumptions - 24937
Differences between actual and expected experience 264,048 - Net differences between projected and actual earnings on plan investments 116,193 -
Changes in employer's proportions 141,131 4590
Differences between the employer's actual contributions and the employer's proportionate share of contributions 154,970 75121 Total $ 1,284,412 $ 104,648
April 11, 2024 Pg. 66
39 DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 11 – PENSION PLAN (Continued)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$600,802 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as deferred outflow of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30
2021 $ 356,923
2022 39,577
2023 62,379
2024 10,746
C. Actuarial Assumptions
The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:
Valuation Date June 30, 2018
Measurement Date June 30, 2019
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.75%
Projected Salary Increase Varies by Entry Age and Service Investment Rate of Return 7.15%(2)
Mortality
Derived using CalPERS'
Membership Data for all Funds(3)
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation (3) The mortality table was developed based on CalPERS specific data.
The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016.
Change of Assumptions –In Fiscal Year 2016-17, the financial reporting discount rate for the PERF C was lowered from 7.65 percent to 7.15 percent. In December 2016, the CalPERS Board approved lowering the funding discount rate used from 7.50 percent to 7.00 percent, which is to be phased-in over a three-year period (7.50 percent to 7.375 percent,
7.375 percent to 7.25 percent, and 7.25 percent to 7.00 percent) beginning with the June 30, 2016 valuation reports. The funding discount rate includes a 15 basis-point reduction for administrative expenses, and the remaining decrease is consistent with the change in the financial reporting discount rate.
April 11, 2024 Pg. 67
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
40 NOTE 11 – PENSION PLAN (Continued)
D. Discount Rate
The discount rate used to measure the total pension liability was 7.15 percent and reflects the long-term expected rate of return for the Plan net of investment expenses and without reduction for administrative expenses. The projection of cash flows used to determine the discount rate assumed that contributions from plan numbers will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long- term market return expectations as well as the expected PERF cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set to equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rates of return by asset class can be found in CalPERS’ Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2021.
The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.
Asset Class
New Strategic
Allocation
Real Return
Years 1-10(a)
Real Return
Years 11+(b)
Global Equity 50.00% 4.80% 5.98%
Global Fixed Income 28.00% 1.00% 2.62%
Inflation Sensitive 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% (0.92%)
Total 100%
(a) An expected inflation of 2.0% used for this period
(b) An expected inflation of 2.92% used for this period April 11, 2024 Pg. 68
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
41 NOTE 11 – PENSION PLAN (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate – The following presents the City’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
Discount Rate is -1%
6.15%
Current Discount Rate
7.15%
Discount Rate +1%
8.15%
Miscellaneous Plan 4,429,383 2,768,365 1,393,1667
Safety Plan 1,049,281 655,800 314,426
Total $ 5,478,664 $ 3,424,165 $ 1,707,593
E. Pension Plan Fiduciary NetPosition
Detailed information about the Plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
F. Payable to the Pension Plan
The City did not have a payable for the outstanding number of contributions to the pension plan for the year ended June 30, 2021.
April 11, 2024 Pg. 69
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
42 NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS A. Plan Description
The City provides a self-funded, single employer, defined benefit plan to provide medical coverage for all eligible active and retired City employees. Retirees are currently covered by the CalPERS medical program as permitted under the Public Employees Medical and Hospital and Care Act (PEMHCA). As such, the City is obligated to contribute toward the cost of retiree medical coverage for the retiree’s lifetime or until coverage is discontinued. This coverage is available for employees who satisfy the requirements for retirement under CalPERS (attained age 50 with 5 years of State or public agency service or approved disability retirement). An employee cannot terminate employment before meeting the age condition and be entitled to receive benefits.
B. Funding Policy
The City funds the benefits on a pay-as-you-go basis. The City’s contribution for each employee shall be the amount necessary to pay the full cost of an employee’s enrollment in a health benefit plan. Dependent coverage is available but, if selected, is paid by the employee. A covered spouse who survives the retiree, if entitled to survivor benefits under the CalPERS retirement program, may continue coverage and receive the premium subside for the remainder of his or her lifetime as well, provided they apply for benefits within 60 days of the employee’s death.
C. Employees Covered
As of the June 30, 2021 actuarial valuation, the following current and former employees were covered by the benefit terms under the HC Plan:
Active 49
Inactive employees or beneficiaries currently receiving benefits 15 Inactive employees entitled to, but not yet receiving benefits 0 Total 64
D. Contributions
The required contribution is based on projected pay-as-you-go financing requirements. For the measurement date ended June 30, 2021, the City’s cash contributions were $128,075 in total payments, which were recognized as a reduction to the OPEB liability.
E. Change in Assumptions
The discount rate decreased from 2.79 percent at June 30, 2019 to 2.66 percent at June 30, 2020, resulting in a change in assumption in the amount of $405,863.
F. Discount Rate
The discount rate used was based on the Bond Buyer 20-bond General Obligation index. At June 30, 2021, the rate is 2.63 percent. The City does not prefund any portion of the OPEB liability; the funding is a “pay-as-you-go” method.
April 11, 2024 Pg. 70
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
43 NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (Continued) G. Total OPEB Liability
Because the City has not contributed to a qualifying trust, the fiduciary net position of the plan is $0 and the net OPEB liability is by definition equal to the total OPEB liability. The City’s total OPEB liability of $13,990,779 was based on an actuarial valuation as of June 30, 2018, a measurement date of June 30, 2018, and a discount rate of 3.13 percent. The results of the June 30, 2018 actuarial valuation were used to determine the total OPEB liability as of the June 30, 2018 measurement date, without adjustment.
The total OPEB liability was determined using an actuarial valuation as of June 30, 2018, using the following actuarial assumptions.
Actuarial Valuation Date 6/30/2021
Contribution Policy Pay-as-you-go
Actuarial Cost Method Entry Age Normal Cost, Level Percent of Pay Discount Rate 2.66% at June 30, 2020 (Bond Buyer 20 Index)
2.79% at June 30, 2019 (Bond Buyer 20 Index)
General Inflation 2.63% per annum
Mortality, Disability, Termination, Retirement CalPERS 2014 Experience Study Mortality Improvement MacLeod Watts Scale 2017 applied generationally from 2008
Salary Increases 3.125% per year
Medical Trend 4.9% in 2023 decreasing to 4.8% in 2025 and later Healthcare Participation at Retirement Active employees and current retirees: 100% for the member’s lifetime
Spouse Participation 75% are assumed to be married participants who will choose to cover a spouse in retirement
Medical Plan at Retirement
Active employees and current retirees under age 65:
Coverage is assumed to continue in the medical plan
offered by the City until age 65. Current Medicare-eligible retirees: Those currently covered by a supplemental plan are assumed to remain in that plan until the retiree’s death.
H. Changes in the OPEB Liability
The components of the City of Avenal’s total OPEB liability as of June 30, 2021, were as follows:
Total OPEB
Liability
Balance at 6/30/20* $ 14,893,053
Changes for the year:
Service cost 1.208,894
Interest 446,550
Assumption changes 405,863
Benefit payments and refunds (193,126)
Net Changes 1,868,181
Balance at 6/30/21** $ 16,761,234
*Measurement date 6/30/19
**Measurement date 6/30/20
April 11, 2024 Pg. 71
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
44 NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (Continued) I. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2018:
J. Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2018:
K. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB As of fiscal year, ended June 30, 2021, the City reported deferred outflows of resources related to OPEB from the following sources:
The City will recognize the Deferred contribution in the next fiscal year. In addition, future recognition of these deferred resources is shown below.
Current - 1%
1.66%
Current
2.66%
Current + 1%
3.66%
Total OPEB Liability $ 20,401,473 $ 16,761,234 $ 13,965,501 Current - 1% Current
Trend
Current + 1%
Total OPEB Liability $ 13,892,034 $ 16,761,234 $ 20,531,847 Deferred Outflows of Resources Deferred Inflows of Resources Employer contributions made
subsequent to the measurement date $ 221,346 $ -
Difference Between Expected and
Actual Experience $ 626,895 $ 1,598,457
Changes of assumptions 1,145355 731,048
Total $ 1,993,596 $ 2,329,505
Fiscal Year Ended
June 30
Deferred Outflows/
(Inflows) of Resources
2022 $ (91,455)
2023 (91,455)
2024 (91,455)
2025 (91,455)
2026 (91,455)
Thereafter (99,980)
Total $(557,255)
April 11, 2024 Pg. 72
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
45 NOTE 13 – RISK MANAGEMENT
The City is exposed to various risks and losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Risk of loss is primarily handled through the Central San Joaquin Valley Risk Management Authority (CSJVRMA). CSJVRMA is a consortium of cities for workers’ compensation programs and the pooled liability program in the San Joaquin Valley, California. It was established under the provisions of California Government Code Section 6500 et. seq. CSJVRMA is governed by a Board of Directors which meets three to four times per year, consisting of one member appointed by each member city. The dayto-day business is handled by a management group employed by CSJVRMA.
CSJVRMA provides $4,500,000 coverage limits in excess of the retained limit of $500,000 and also participates in the California Association of Counties Excess Insurance Authority (CSAC-EIA) for coverage in excess of $5,000,000 up to the statutory limit.
Under the pooled liability program, expected claims are actuarially determined and deposited with CSJVRMA along with all estimated operating costs. Each year is retrospectively adjusted five years following its conclusion and any funds remaining are returned to the City. Likewise, funds paid out in excess of the City’s original deposit are collected from the City. The risk sharing pool covers the first $1,000,000 of losses. CSJVRMA is a member of the California Affiliated Risk Management Authorities (CARMA), which provides coverage in excess of the retained limit up to $29,000,000.
The latest financial information and the most current information available for CSJVRMA for the fiscal year ended June 30, 2021:
Total assets $ 150,621,596
Total liabilities 129,774,819
Member's equity $ 20,846,777
Total revenues $ 55,391,674
Total expenses 54,084,619
Excess of income (loss) over expenses $ 1,307,055
At the termination of the joint powers agreement and after all claims have been settled, any excess or deficit will be divided among the cities in accordance with governing documents.
April 11, 2024 Pg. 73
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
46 NOTE 14 – COMMITMENTS AND CONTINGENCIES
General Liability
There are various claims and legal actions pending against the City for which no provision has been made in the financial statements. In the opinion of City Management, liabilities arising from these claims and legal actions, if any, will not be material to these financial statements.
Federal Awards and Grants
The City has received federal grants for specific purposes that are subject to review and audit by the federal government. Although such audits could result in expenditure disallowances under grant terms, any required reimbursements are not expected to be material.
Landfill
The City entered into a lease agreement with Madera Disposal Systems, Inc., a California Corporation. Madera Disposal Systems, Inc. will lease the City’s landfill site. They will assume all liabilities associated with the landfill and in return they will pay the City a set rental fee plus $30 per ton of waste accepted over 300 tons daily. The City will also have a guaranteed rate on tipping fees for City waste. The lease is for the permitted life on the landfill which ends in year 2029.
NOTE 15 – DEFICIT FUND EQUITY
The following funds had deficit fund balances as of June 30, 2021:
0BGovernmental Funds:
Nonmajor Funds:
Tire Amnesty Special Revenue Fund $ -
Community Development Block Grant Fund -
Water Trans Line Grant Fund -
Avenal City Operating Authority -
April 11, 2024 Pg. 74
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
47 NOTE 16 – SUCCESSOR AGENCY TRUST FUND
On January 26, 2013, the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Assembly Bill 1X26 as part of City Resolution Number 2013-11.
Under the control of an oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution of the redevelopment agency (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments).
Successor agencies are only allocated revenue in the amount that is necessary to pay estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated.
Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill.
The City’s position on this issue is not a position of settled law and there is considerable uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue favorably for the City.
After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private-purpose trust fund) in the financial statements of the City.
Long-Term Debt
Long-term debt reported in the Successor Agency Trust Fund at June 30, 2021 was comprised of the following:
Balance
July 1, 2020 Additions Retirements
Balance
June 30, 2021
Due Within
One Year
Avenal 2005 Refunding
Revenue Bond $ 2,225,000 $ 485,000 $ - $ 2,225,000 $ 485,000 2005 Avenal Public Finance Authority Refunding Revenue Bonds In September 2005, the Agency issued $4,585,000 in Refunding Revenue Bonds. The proceeds were used to refinance the 1997 Tax Allocation Bonds. The bonds authorized and issued have stated interest rates for each payment starting at
2.875% per annum and increasing annually in prescribed increments not exceeding .5% through the term of the bonds to a minimum of 5.0% per annum. The interest rate at June 30, 2021, was 4.375% per annum. The 2005 Revenue Refunding Bonds are repaid from the property tax revenues collected on properties within the redevelopment project area. The debt agreement requires a reserve account to be held by the trustee. Interest earned on the reserve account is applied to the interest owed.
April 11, 2024 Pg. 75
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
48 NOTE 16 – SUCCESSOR AGENCY TRUST FUND (Continued)
Long Term Debt (Continued)
Annual debt service requirements to maturity for the Avenal 2005 Revenue Refunding Bonds are as follows:
Fiscal Years Ending Principal Interest Total
2020 $ 235,000 $ 100,491 $ 335,491
2021 250,000 89,850 339,850
2022-2026 1,415,000 253,575 1,668,575
2027 325,000 16,250 341,250
Total $ 2,225,000 $ 460,166 $ 2,685,166
NOTE 17 – SUBSEQUENT EVENT
On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19), a global pandemic recommended containment and mitigation measures worldwide. The COVID-19 outbreak in the United States has caused business disruption through mandated and voluntary closing of businesses and shelter in place orders for all but those essential services. While the business disruption is currently expected to be temporary, there is considerable uncertainty around the duration of the closings and shelter in place orders. As a result, the outbreak has caused uncertainty in the financial markets. Although many of the City of Avenal’s services are considered essential, City Hall was closed to the public, certain other services transitioned to online-only and because the City’s major revenue sources, including businesses that collect sales taxes, are directly impacted by these events, it is probable that this matter will negatively impact the City. However, the ultimate financial impact and duration cannot be estimated at this time.
The correction resulted in the restatement of beginning total fund balance for various funds to correct interest income not previously reported and fund balance for Avenal City Operating Authority not reported.
NOTE 18 – PRONOUNCEMENTS
(1) New Accounting Pronouncements Adopted
Governmental Accounting Standards Board Statement No. 95 In May 2020, the GASB issued Statement No. 95 Postponement of The Effective Dates of Certain Authoritative Guidance. GASB Statement No. 95 provide temporary relief to governments and other stakeholders in light of the COVID-19 pandemic. That objective is accomplished by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15, 2018, and later. The effective dates of certain provisions pronouncements are postponed by one year.
(2) New Accounting Pronouncements Not Yet Adopted
Governmental Accounting Standards Board Statement No. 91 The GASB has issued Statement No. 91, "Conduit Debt Obligations." The requirements of this Statement are effective for reporting periods beginning after December 15, 2020. Earlier application is encouraged. The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments April 11, 2024 Pg. 76
DRAFT
CITY OF AVENAL
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
49 extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2023.
Governmental Accounting Standards Board Statement No. 94 The GASB has issued statement No. 94, “Public-Private and Public-Public Partnerships and Availability Payment Arrangements”. The objective of this Statement is to better meet the information needs of financial statement users by improving the comparability of financial statements among governments that enter into PPPs and APAs and by enhancing the understandability, reliability, relevance, and consistency of information about PPPs and APAs. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2023.
Governmental Accounting Standards Board Statement No. 96 The GASB has issued statement No. 96, “Subscription-Based Information Technology Arrangements”. The objective of this Statement is to better meet the information needs of financial statement users by (a) establishing uniform accounting and financial reporting requirements for SBITAs; (b) improving the comparability of financial statements among governments that have entered into SBITAs; and (c) enhancing the understandability, reliability, relevance, and consistency of information about SBITAs. The City will implement this statement, as applicable, to its financial statements for the year ending June 30, 2023.
Governmental Accounting Standards Board Statement No. 97 The GASB has issued statement No. 97, “Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans”. The primary objectives of this Statement are to (a) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (b) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (c) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans.
April 11, 2024 Pg. 77
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April 11, 2024 Pg. 78
DRAFT
REQUIRED SUPPLEMENTARY INFORMATION
April 11, 2024 Pg. 79
CITY OF AVENAL
REQUIRED SUPPLEMENTARY
INFORMATION
DRAFT
51 SCHEDULE OF CHANGES IN THE CITY’S NET OTHER POSTEMPLOYMENT
BENEFITS LIABILITY AND RELATED RATIOS
FOR THE YEAR ENDED JUNE 30, 2021
Fiscal Year Ending 2021 2020 2019
Measurement Date 06/30/2020 06/30/2019 06/30/2018
Discount Rate on the Measurement Date 2.66% 2.79% 2.98% Total OPEB Liability
Service Cost $ 1,208,894 $ 1,233,237 $ 1,143,993
Interest 446,550 451,093 413,907
Changes of Benefit terms - - -
Differences between expected and actual experience - (1,196,200) - Changes of assumptions 405,863 587,529 420,572
Benefit payments (193,126) (173,385) (135,116)
Net change in total OPEB liability 1,868,181 902,274 1,843,356 Total OPEB liability - beginning 14,893,053 13,990,779 12,147,423 Total OPEB liability – ending (a) 16,761,234 14,893,053 13,990,779 Plan fiduciary net position – beginning - - -
Plan fiduciary net position – ending (b) - - -
Net OPEB liability – ending (a) – (b) $ 16,761,234 $ 14,893,053 $ 13,990,779 Covered-employee payroll 3,535,941 3,670,844 3,437,200
Net OPEB liability as a % of covered-employee
payroll
474.02 % 405.71% 407.04%
April 11, 2024 Pg. 80
CITY OF AVENAL
REQUIRED SUPPLEMENTARY
INFORMATION
DRAFT
52 PROPORTIONATE SHARE OF NET PENSION
LIABILITY LAST TEN YEARS*
NOTES TO SCHEDULE
Changes in Benefit Terms - None
Changes in Assumptions - None
*Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
2017 2018 2019 2020 2021
Proportion of the net pension liability 0.0285% 0.0290% 0.0292% 0.0303% 0.0315% Proportionate share of the net pension liability $ 2,464,592 2,880,505 2,813,825 3,104,329 3,424,165 Covered payroll $ 2,389,045 2,284,031 2,696,343 3,138,337 3,243,431 Proportionate share of the net pension liability
as percentage of covered payroll 103.16% 126.11% 104.36% 98.92% 105.57% Plan fiduciary net position as a percentage of the
total pension liability 77.40% 76.08% 78.10% 77.60% 77.32% April 11, 2024 Pg. 81
CITY OF AVENAL
REQUIRED SUPPLEMENTARY
INFORMATION
DRAFT
53 SCHEDULE OF CONTRIBUTIONS
LAST TEN YEARS*
*Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
2017 2018 2019 2020 2021
Actuarily required contribution (actuarially
determined) $ 364,226 439,707 515,718 600,802 608,070
Contributions in relation to the actuarially
determined contributions 364,226 439,707 515,718 600,802 608,070 Contribution deficiency (excess) $ - - - - -
Covered payroll $ 2,284,031 2,696,343 3,138,337
3,243,431
2,903,782
Contributions as a percentage of covered
payroll
15.95% 16.31% 16.43% 18.52% 20.94%
April 11, 2024 Pg. 82
CITY OF AVENAL
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET (GAAP BASIS) AND ACTUAL
DRAFT
54 GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2021
Variance with
Budgeted Amount Final Budget -
Positive
Original Final Actual (Negative)
REVENUES
Property taxes $ 2,693,000 $ 2,693,000 $ 2,789,954 $ 96,954 Other taxes 677,852 677,852 690,944 13,092
Intergovernmental revenues 210,500 210,500 266,567 56,067 Charges for services 124,260 124,260 98,293 (25,967)
Licenses and permits 159,350 159,350 293,316 133,966
Fines and penalties 33,660 33,660 25,818 (7,842)
Investment income 40,130 40,130 25,321 (14,809)
Rent 520,236 520,236 341,369 (178,867)
Other revenue 208,900 208,900 159,382 (49,518)
Total revenues 4,667,888 4,667,888 4,690,964 23,076
EXPENDITURES
Current services:
General government 622,903 622,903 737,079 (114,176)
Building regulations 183,750 183,750 79,544 104,206
Community development 511,853 511,853 192,814 319,039
Public safety:
Law enforcement 3,582,380 3,582,380 2,899,548 682,832
Animal control 227,600 227,600 212,536 6,064
Parks and recreation 716,820 716,820 501,358 215,462
Capital outlay:
General government 51,300 51,300 3,289 47,911
Community development - - - -
Parks and recreation 1,000 1,000 - 1,000
Public safety:
Law enforcement 62,183 62,183 - 62,183
Animal control - - - -
Debt Service:
Principal - - - -
Interest - - - -
Total expenditures 5,959,689 5,959,689 4,635,168 1,324,521 Excess (deficiency) of revenues over
(under) expenditures (1,291,801) (1,291,801) 55,796 1,347,597
OTHER FINANCING SOURCES (USES)
Transfers in $ 214,375
$
214,375 $ - $ (214,375)
Transfers out (132,000) (132,000) - 132,000
Total other financing sources (uses) 82,375 82,375 - (82,375) Net change in fund balances (1,209,426) (1,209,426) 55,796 1,265,222 Fund balance - beginning 3,116,227 3,116,227 3,116,227 - Prior period adjustment - - 193,781 193,781
Fund balance - ending $ 1,906,801 $ 1,906,801 $ 3,365,804 $ 1,459,003 April 11, 2024 Pg. 83
CITY OF AVENAL
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET (GAAP BASIS) AND ACTUAL
DRAFT
55 CalHOME SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2021
Variance with
Budgeted Amounts Final Budget -
Positive
Original Final Actual (Negative)
REVENUES
Intergovernmental revenues $ - $ - $ - $ -
Investment income 30 30 73 43
Loan repayments 500 500 48,818 48,318
Total revenues 530 530 48,892 48,362
EXPENDITURES
Current services:
Community development - - 350 (350)
Total expenditures - - 350 (350)
Excess (deficiency) of revenues over (under)
expenditures 530 530 48,542 48,012
OTHER FINANCING SOURCES (USES)
Transfers in
$ -
-
$ -
-
$ -
-
$ -
-
Transfers out - - - -
Total other financing sources (uses) - - - -
Net change in fund balances 530 530 48,542 48,012
Fund balance - beginning 64,586 64,586 64,586 -
Fund balance - ending $ 65,116 $ 65,116 $ 113,128 $ 48,012 April 11, 2024 Pg. 84
CITY OF AVENAL
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET (GAAP BASIS) AND ACTUAL
DRAFT
56 HOME PROGRAM INCOME SPECIAL REVENUE
FUND FOR THE YEAR ENDED JUNE 30, 2021
Variance with
Budgeted Amount Final Budget -
Positive
Original Final Actual (Negative)
REVENUES
Investment income $ 20 $ 20 $ 74 $ 54
Loan repayments 5,600 5,600 52.277 46,677
Total revenues 5,620 5,620 52,351 46,731
EXPENDITURES
Transfers in - - - -
Community development 78 78 1,600 (1,522)
Net change in fund balances 5,542 5,542 50,751 45,209
Fund balance - beginning 154,518 154,518 154,518 -
Fund balance - ending $ 160,060 $ 160,060 $ 205,269 $ 45,209 April 11, 2024 Pg. 85
CITY OF AVENAL
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET (GAAP BASIS) AND ACTUAL
CDBG PROGRAM INCOME SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2021
DRAFT
57 Variance with
Budgeted Amount Final Budget -
Positive
Original Final Actual (Negative)
REVENUES
Investment income $ 110 $ 110 $ 10 $ (99)
Loan repayments 36,200 36,200 26,647 (9,553)
Total revenues 36,310 36,310 26,657 (9,653)
EXPENDITURES
Community development - - 950 (950)
Total expenditures - - 950 (950)
Excess (deficiency) of revenues over
(under) expenditures 36,310 36,310 25,707 (10,603)
OTHER FINANCING SOURCES (USES)
Transfers in $ - $ - $ - $ -
Transfers out - - - -
Total other financing sources (uses) - - - -
Net change in fund balances 36,310 36,310 25,707 (10,603) Fund balance - beginning - - 280,619 280,619
Fund balance - ending $ 36,310 $ 36,310 $ 306,326 $ 270,016 April 11, 2024 Pg. 86
CITY OF AVENAL
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – BUDGET (GAAP BASIS) AND ACTUAL
HOME INVESTMENT SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2021
DRAFT
58 Variance with
Budgeted Amount Final Budget -
Positive
Original Final Actual (Negative)
REVENUES
Intergovernmental revenues $ 4,941,041 $ 4,941,041 $ 3,851 $ (4,937,190) Investment income - - (98) (98)
Total revenues 4,941,041 4,941,041 3,753 (4,937,288)
EXPENDITURES
Current services:
Community development 4,949,081 4,949,081 85,500 4,863,581 Total expenditures 4,949,081 4,949,081 85,500 4,863,581 Excess (deficiency) of revenues over
(under) expenditures (8,040) (8,040) (81,747) (73,707)
OTHER FINANCING SOURCES
(USES)
Transfers in $ - $ - $ - $ -
Transfers out - - - -
Total other financing sources (uses) - - - -
Net change in fund balances (8,040) (8,040) (81,747) (73,707) Fund balance - beginning 34,696 34,696 34,693 -
Fund balance - ending $ 26,653 $ 26,653 $ (47,054) $ (73,707) April 11, 2024 Pg. 87
CITY OF AVENAL
NOTES TO THE REQUIRED SUPPLEMENTARY
INFORMATION FOR THE YEAR ENDED JUNE 30, 2021
DRAFT
59 NOTE 1 – BUDGETARY INFORMATION
The City follows these procedures annually in establishing the budgetary data reflected in the budgetary comparison schedules:
1. The City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them.
2. The City Council reviews the proposed budget at specially scheduled sessions, which are open to the public.
The Council also conducts a public hearing on the proposed budget to obtain comments from interested persons.
3. Prior to June 1, the budget is legally adopted through passage of a resolution. This budget is reported as Original Budget in the budgetary comparison schedules.
4. During the fiscal year, changes to the adopted budget may be authorized as follows:
a) Items requiring City Council action – appropriation of fund balance revenues, transfers of appropriations between funds, appropriation of any non-departmental revenue, new interfund loans or advances, and creation of new capital projects or increases to existing capital projects. b) Items delegated to the City Manager – transfers between departments within funds, appropriation of unbudgeted departmental revenues, and approval of transfers which increase salary and benefit appropriations.
c) Item delegated to department head – allocation of departmental appropriations to line-item level.
5. Formal budgetary integration is employed as a management tool for all funds. Annual budgets are legally adopted and amended as required for the general, special revenue or enterprise funds. Project length budgets are adopted for the capital projects funds. All budgets are prepared on a basis consistent with generally accepted accounting principles (GAAP), and budgetary comparisons for the general and major special revenue funds are presented on that basis in the required supplementary information. A debt service payment schedule for the debt service fund is also approved as part of the budget process.
6. Budget amounts are reflected after all authorized amendments and revisions. This budget is reported as the Final Budget in the budgetary comparison schedules.
7. For each legally adopted operating budget, expenditures may not exceed budgeted appropriations at the activity level. The legal appropriation basis is at the level called “department”. A “department” for legal appropriation purposes may be a single organization, or an entire department having multiple organizations with the same fund, or an entire fund.
April 11, 2024 Pg. 88
DRAFT
OTHER SUPPLEMENTARY INFORMATION
April 11, 2024 Pg. 89
DRAFT
61 NONMAJOR GOVERNMENTAL FUNDS
The Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditure for specified purposes.
Local Transportation Funds
To account for Local Transportation Fund tax revenue restricted to street maintenance and construction.
Tire Amnesty Special Revenue Fund
To account for CalRecycle grant funding for the cost of cleanup, abatement and other actions related to the disposal of waste tires at cleanup projects and amnesty events.
Gas Tax Special Revenue Fund
To account for the City’s apportioned share of revenue assessed by the State of California on the sale of gasoline in the State. The funds are to be used exclusively for maintenance and improvement of the City’s streets and roads.
Community Development Block Grant Funds
To account for annual federal grants that provide for development of a viable urban community by providing suitable housing, principally for low and moderate-income residents.
Parks and Recreation Grants Funds
To account for expenditures of the park and recreation grants from the State of California.
Capital Projects Funds
To account for financial resources to be used for the acquisition or construction of major capital facilities and improvements (other than those financed by proprietary funds).
Capital Improvement Project Fund
To accumulate revenues to fund specific projects designated by the City Council.
Avenal City Operating Authority Fund
To account for the financial resources to be used in the management of the Ken Brown Public Safety Center.
April 11, 2024 Pg. 90
CITY OF AVENAL
DRAFT
62 COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTALFUNDS
JUNE 30, 2021
Nonmajor Special
Revenue
Nonmajor Capital
Projects
Total
Nonmajor
Governmental
Funds
ASSETS
Cash and investments $ 2,795,239 $ 9,709 $ 2,804,948
Receivables:
Intergovernmental 770,473 - 770,473
Total assets $ 3,565,712 $ 9,709 $ 3,575,421
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 166,849 $ - $ 166,849
Interfund payables - - -
Total liabilities 166,849 - 166,849
Fund balances:
Restricted for:
Highways and streets 1,272,312 - 1,272,312
Community development 1,639,701 - 1,639,701
Committed:
Capital projects - 9,709 9,709
Unassigned 486,850 - 486,850
Total fund balances 3,398,863 9,709 3,408,572
Total liabilities and fund balances $ 3,565,712 $ 9,709 $ 3,575,421 April 11, 2024 Pg. 91
CITY OF AVENAL
DRAFT
63 COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTALFUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Nonmajor
Special
Revenue
Nonmajor
Capital
Projects
Total
Nonmajor
Governmental
Funds
REVENUES
Intergovernmental revenues $ 2,314,511 $ - $ 2,314,511
Investment income 1,077 13 1,090
Rents (3,991) - (3,991)
Miscellaneous1 - - -
Total revenues 2,311,597 13 2,311,610
EXPENDITURES
Current:
General government 43,336 - 43.336
Community development 37,085 - 37,085
Parks and recreation 9,035 - 9,035
Highways and streets 450,414 - 450,414
Capital outlay:
Parks and recreation -
-
-
Highways and streets 1,367,323 - 1,367,323
Total expenditures 1,907,193 - 1,907,193
Excess (deficiency) of revenues over
(under) expenditures 404,404 13 404,417
OTHER FINANCING SOURCES (USES)
Transfers out - - -
Total other financing sources (uses) - - -
Net change in fund balances 404,404 13 404.417
Fund balances - beginning 2,994,459 96,96 3,004,155
Prior year adjustments - - -
Fund balances - ending $ 3,398,863 $ 9,709 $ 3,408,572
April 11, 2024 Pg. 92
CITY OF AVENAL
DRAFT
64 COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2021
Community
Development Water Trans Avenal City
Local Tire Gas Tax Block Grant Parks and Line Grant Operating Transportation Amnesty Fund Funds Recreation Funds Authority Totals ASSETS
Cash and investments $ 891,617 $ - $ 1,605,359 $ - $ 98,640 $ 245,923 $ (46,300) $ 2,795,239 Receivables: -
Intergovernmental 503,399 - 52,380 - - 214,694 - 770,473 Total assets $ 1,3,95,016 $ - $ 1,657,739 $ - $ 98,640 $ 460,617 $ (46,300) $ 3,565,712
LIABILITIES AND FUND
BALANCES
Liabilities:
Accounts payable $ 122,704 $ - $ 18,038 $ - $ - $ 25,079 $ 1,028 $ 166,849 Interfund payables $ - - - - - - - -
Total liabilities - - 18,038 - - 25,079 - 166,849
Fund balances:
Restricted:
Highways and streets 1,272,312 - - - - - - 1,272,312
Community development - - 1,639,701 - - - - 1,639,701
Unassigned - - - - 98,640 130,778 (47,328) 486,850
Total fund balances 1,272,312 - 1,639,701 - 98,640 130,778 (37,328) 3,398,863 Total liabilities and fund balances $ 1,395,016 $ - $ 1,657,739 $ - $ 98,640 $ 155,857 $ (46,300) $ 3,565,712 April 11, 2024 Pg. 93
CITY OF AVENAL
DRAFT
65 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Community
Development Water Trans Avenal City
Local Tire Gas Tax Block Grant Parks and Line Grant Operating Transportation Amnesty Fund Funds Recreation Funds Authority Totals
REVENUES
Intergovernmental revenues $ 511,399 $ - $ 616,505 $ - $ - $ 1,184,607 $ - $ 2,314,511 Investment income 561 - 599 - (81) (2) - 1,077
Rents - - - - - - (3,991) (3,991)
Miscellaneous - - - - - - - -
Total revenues 511,960 - 619,104 - (81) 1,184,605 (3,991) 2,311,597
EXPENDITURES
Current:
General government - - - - - - 43,336 43,336
Community development - - - - 37,085 - 37,085
Parks and recreation - - - - 9,035 - - 9,035
Streets 2,498 - 447,916 - - - - 450,414
Capital outlay:
Parks and recreation - - - - - - -
Streets 1,301,652 - 65,671 - - - - 1,367,323
Total expenditures 1,304,150 - 513,587 - 9,035 37,085 43,336 1,907,193 Excess (deficiency) of revenues over
(under) expenditures
(792,190) - 105,517 - (9,116) 1,147,520 (47,327) 404,404
OTHER FINANCING SOURCES
(USES)
Transfer In -
- - - - - - -
Transfer Out - - - - - (937,974) - -
Total other financing sources (uses) - - - - - (937,974) - - Net change in fund balances (792,190) - 105,517 - (9,116)
209,546 (47,327) 404.404
Fund balances - beginning 1,219,360 - 1,534,184 - 107,756 (78,768) (1) 2,994,459 Prior period adjustments 845,142 - - - - - - 845,142
Fund balances - ending $ 1,272,312 $ - $ 1,639,701 $ - $ 98,640 $ 130,778 $ (47,327) $ 4,032,077 April 11, 2024 Pg. 94
CITY OF AVENAL
66 DRAFT
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECTS FUND
JUNE 30, 2021
Capital
Improvement
Project Fund
ASSETS
Cash and cashequivalents $ 9,709
Total assets $ 9,709
LIABILITIES
Accounts payable $ -
Total liabilities $ -
FUND BALANCE
Fund balance:
Committed:
Capital projects
9,709
Total fund balance
9,709
Total liabilities and fund balance $ 9,709
LIABILITIE
S
April 11, 2024 Pg. 95
67 CITY OF AVENAL
DRAFT
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
NONMAJOR CAPITAL PROJECTS FUND FOR THE
YEAR ENDED JUNE 30, 2021
Capital
Improvement
Project Fund
REVENUES
Intergovernmental revenue $ 0
Investment income $ 13
Total revenues 13
OTHER FINANCING SOURCES (USES)
Transfers in -
Transfers out -
Total other financing sources (uses) -
Net change in fund balance 13
Fund balance - beginning 9,696
Prior year adjustments -
Fund balance - ending $ 9,709
April 11, 2024 Pg. 96
DRAFT
OTHER INDEPENDENT AUDITOR’S REPORTS
April 11, 2024 Pg. 97
DRAFT
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April 11, 2024 Pg. 98
69 DRAFT
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 Honorable Mayor and City Council
City of Avenal, California
We have audited, in accordance with the 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, each major fund, and the aggregate remaining fund information of City of Avenal, California (the City), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 15, 2024.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of Avenal, State of California’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 opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Avenal, State of California’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Avenal, State of California’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 City’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 and therefore, material weaknesses or significant deficiencies may exist that were not identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Avenal, State of California’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.
Sotomayor & Associates, LLP
Certified Public Accountants
699 Hampshire Road, Suite 101
Westlake Village, California 91361
(626) 397-4900
Fax: (626) 397-4908
E-mail: [email protected]
Web Site www.sotomayorcpa.com
April 11, 2024 Pg. 99
70 DRAFT
City of Avenal, State of California’s Responses to Finding City of Avenal, State of California’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. City of Avenal, State of California’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.
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 City’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 City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Sotomayor & Associates, LLP
Certified Public Accountants
March 15, 2024
April 11, 2024 Pg. 100
71 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR
EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE REQUIRED BY UNIFORM GUIDANCE
To the Honorable Mayor and City Council
City of Avenal, California
Report on Compliance for Each Major Federal Program
We have audited the City of Avenal, California’s (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of City’s major federal programs for the year ended June 30, 2021. The City’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program.
However, our audit does not provide a legal determination of the City’s compliance.
Opinion on Each Major Federal Program
In our opinion, the City of Avenal, California, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2021.
Sotomayor & Associates, LLP
Certified Public Accountants
699 Hampshire Road, Suite 101
Westlake Village, California 91361
(626) 397-4900
Fax: (626) 397-4908
E-mail: [email protected]
Web Site www.sotomayorcpa.com
April 11, 2024 Pg. 101
DRAFT
Report on Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of City’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Sotomayor & Associates, LLP
Certified Public Accountants
March 15, 2024
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CITY OF AVENAL
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2021
Contract/
Federal Pass-Through
Federal Grantor/Pass Through CFDA Entity Identifying Federal Grantor/Program or Cluster Title Number Number Expenditures U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Passed through California Department of Housing and
Urban Development
Avenal Community Center 14.228 16-CDBG-11133 253,612
Rental Housing Development 14.239 15-HOME-10091 36,160
Home Investment Partnership Program 14.239 15-HOME-10892 3,840 COVID Sustenance Payments 14.228 20-CDBG-CV1-00055 26,904 Total U.S. Department of Housing and Urban Development $ 320,516 U.S. DEPARTMENT OF WATER
Direct Award:
Solar Generation System at Wastewater Treatment Plant-Planning 66.458 D17-04006 39,192 Solar Generation System at Wastewater Treatment Plant-Construction 66.458 C-06-8392-110 814,094 Avenal 18” Water Transmission Line Replacement Project 66.468 D20-02007 - Avenal Water Transmission Line Planning Project 66.468 D16-02003 120,457 Total U.S. Department of Water $ 973,743
TOTAL EXPENDITURES OF FEDERAL AWARDS $ 1,294,259
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CITY OF AVENAL
NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the activity of all federal award programs of the City of Avenal. Federal awards received directly from federal agencies, as well as federal awards passed through other government agencies are included in the schedule. The information in this SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The expenditures are below the single audit threshold of $750,000 and are presented for information purposes only.
BASIS OF ACCOUNTING
The accompanying SEFA is presented using the modified accrual basis of accounting except for programs recorded in the City’s enterprise funds, which are presented using the accrual basis of accounting, which is described in Note 1 of the City’s basic financial statements.
RELATIONSHIP TO BASIC FINANCIAL STATEMENTS
Federal award expenditures agree or can be reconciled with the amounts reported in the City’s basic financial statements.
INDIRECT COST RATE
The City has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. 74 April 11, 2024 Pg. 104
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CITY OF AVENAL
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
SECTION I – SUMMARY OF AUDITOR’S RESULTS
Financial Statements
Type of auditor'sreport issued: Unmodified
Internal control over financial reporting:
Material weaknesses identified. X Yes No
Significant deficienciesidentified that
are not considered to be material weaknesses? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal Awards
Internal control over major programs:
Material weaknesses identified. Yes X No
Significant deficienciesidentified that
are not considered to be material weaknesses? Yes X None reported Type of auditor's report issued on compliance
for major programs: Unmodified
Any audit findings disclosed that are required to be
reported in accordance with
2 CFR section 200.516(a). Yes X No
Identification of major programs:
CFDA Number(s) Name of Federal Program orCluster
14.239 Home Investment PartnershipsProgram
Dollar threshold used to distinguish between Type A
and Type B programs: $750,000
Auditee qualified as low-risk auditee? Yes X No
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CITY OF AVENAL
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
SECTION II – FINANCIAL STATEMENT FINDINGS
Finding 2021-1 Bank Reconciliation - Repeated in Current Year None reported.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None reported.
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CITY OF AVENAL
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30. 2021
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Finding 2020-1 Bank Reconciliation
Condition: During our audit procedures, we noticed that the City continues leaving the bank reconciliation unreconciled. The total cash balance on the operating bank account reconciliation did not reconcile to the cash balances recorded on the general ledger as of June 30, 2021, 2020, 2019 and 2018.
Criteria: The City should be clearing out all reconciling items from the bank reconciliation monthly to identify potential errors within the system and ensure their cash balance is correct.
Cause: The staff member responsible for approving the bank reconciliation is not checking all reconciling items are accounted for.
Effect: The City did not have a complete and accurate bank reconciliation as of June 30, 2020.
Recommendation: The City should consider a new accounting system that has the bank reconciliation module. The system will not allow finalizing the bank reconciliation until it is properly reconciled. Currently, it is prepared manually which allows us to stay continually unreconciled. The person responsible for approving should only sign if it is completely balanced.
Auditee’s Comments: The City is working with other software companies for quotes and demonstrations to find an appropriate program for the City to use.
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