AGENDA
Special City Council Meeting
Council Chambers, Chowchilla City Hall
130 S. Second Street, Chowchilla, CA 93610
Thursday, March 31, 2022
Open Session: 4:00 p.m.
City Hall is now open to the public for business. The City Council Chamber is OPEN to the public for City Council meetings, using the current COVID-19 prevention provisions.
City Council meetings will also be available to view and participate via Zoom. Please read Page 2 of this agenda packet for Zoom login and participation information.
Agendas for Special Meetings are posted 24 hours prior to the meeting in the kiosk located near City Hall, 130 S. Second St., Chowchilla, CA 93610.
Any writing or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection on the city website at www.CityofChowchilla.org.
The City of Chowchilla complies with the Americans with Disabilities Act (ADA of 1990). The Council Chambers is accessible to the physically disabled. If you need special assistance, please call (559) 665-8615, ext. 102 at least 1 day for a special meeting.
CALL TO ORDER/ROLL CALL:
Mayor: John Chavez
Mayor Pro Tem: Ray Barragan
Council Members: Waseem Ahmed, Diana Palmer, Kelly Smith City staff and contract employees present at the meeting will be noted in the minutes.
CONSIDERATION OF APPROVAL OF AGENDA
Additions and/or Deletions:
OPEN SESSION – 4:00 PM
PLEDGE OF ALLEGIANCE
INVOCATION:
NEW BUSINESS – Section 1
1.1 Presentation of the City’s Fiscal Year 2020-2021 Financial Statement Audit (Pruett)
ADJOURNMENT
I, Joann McClendon, CMC, City Clerk, do hereby declare under penalty of perjury that the foregoing agenda was posted at Chowchilla City Hall, 130 S Second Street, Chowchilla, CA and made available for public review on this 30th day of March, 2022 at or before 4:00pm.
Joann McClendon, CMC, City Clerk
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REPORT TO THE CITY COUNCIL
Item 1.1
CLICK HERE
TO RETURN TO
THE AGENDA
Meeting of: March 31, 2022
AGENDA SECTION: New Business
SUBJECT: Presentation of the City’s Fiscal Year 2020-2021 Financial Statement Audit PREPARED BY: Rod Pruett, City Administrator
ATTACHMENTS: PDF version of the Audit
Audit Communication Letter
Management Communication Letter
Government Audit Standards Report
REVIEWED BY
ADMINISTRATOR ☒ REVIEWED BYATTORNEY ☒ REVIEWED BY FINANCE ☒ RECOMMENDATION:
Accept the FY 2020/2021 audit as presented.
BACKGROUND:
Annually, the City has a financial statement audit performed by an independent audit firm which is presented to Council for acceptance.
The Final version of the audit is attached with all signatures on reports. We usually have bound copies for the presentation but due to the timing of the audit being completed and the need to have it done by March 31, 2022, the bound copies will be provided at a later time. The Audit Communication and Management Communication letters are also attached which has communication from the audit firm to management and Council. The Government Audit Standards Report provides information on Internal Controls and Compliance but does not provide an opinion on them.
The FY 2020/2021 audit was performed by Price Paige & Company, Inc. Fausto Hinojosa, the Managing Partner of Price Paige & Company oversaw the audit and Anthony Gonzales, the Audit Supervisor, will be presenting the audit to Council.
REASON FOR RECOMMENDATION:
The FY 2020/2021 audit has received a “clean”/ unmodified opinion, which is the best opinion you can receive. There were no findings and minimal journal entries. Accepting the results means that Council understands the results of the audit.
FISCAL IMPACT:
None
ALTERNATIVES:
Don’t accept the audit.
ACTIONS FOLLOWING APPROVAL:
Any journal entries proposed by the auditors will be uploaded to our system. The books for Fiscal Year 2020/2021 will be formally closed.
CITY OF CHOWCHILLA
CALIFORNIA
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
JUNE 30, 2021
CITY OF CHOWCHILLA
JUNE 30, 2021
TABLE OF CONTENTS
Page
Independent Auditor’s Report ................................................................................................................ 1 Management’s Discussion and Analysis............................................................................................... 3 Basic Financial Statements
Government-Wide Financial Statements:
Statement of Net Position ........................................................................................................... 12 Statement of Activities ................................................................................................................. 13 Fund Financial Statements:
Balance Sheet – Governmental Funds ....................................................................................... 16 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position .............................................................................................. 17 Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds ................................................................................... 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................... 19 Statement of Net Position – Proprietary Funds .......................................................................... 20 Statement of Revenues, Expenses, and Changes in
Net Position – Proprietary Funds ............................................................................................. 21 Statement of Cash Flows – Proprietary Funds ........................................................................... 22 Statement of Fiduciary Net Position – Fiduciary Funds .............................................................. 24 Statement of Changes in Fiduciary Net Position – Fiduciary Funds .......................................... 25 Notes to the Basic Financial Statements ........................................................................................... 28 Required Supplementary Information
Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual:
General Fund .............................................................................................................................. 64 CDBG Grants Special Revenue Fund ........................................................................................ 65 Impact Fees Special Revenue Fund ........................................................................................... 66 Measure N Special Revenue Fund ............................................................................................. 67 Notes to the Required Supplementary Information ........................................................................... 68 Cost-Sharing Multiple-Employer Defined Benefit Pension Plan Schedule of the City’s Proportionate Share of the Net Pension Liability ....................................... 69 Cost-Sharing Multiple-Employer Defined Benefit Pension Plan Schedule of Contributions ............................................................................................................... 70
CITY OF CHOWCHILLA
JUNE 30, 2021
TABLE OF CONTENTS
(Continued)
Page
Other Supplementary Information
Combining Nonmajor Special Revenue Funds Statements:
Combining Balance Sheet – Nonmajor Special Revenue Funds ............................................... 72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Special Revenue Funds .............................................................. 74 Combining Statement of Net Position – Nonmajor Enterprise Funds ............................................... 76 Combining Statement of Revenues, Expenses and Changes in Net Position – Nonmajor Enterprise Funds .................................................................................... 77 Combining Statement of Cash Flows – Nonmajor Enterprise Funds ............................................... 78 Combining Statement of Net Position – Internal Service Funds ....................................................... 80 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds ............................................................................................ 81 Combining Statement of Cash Flows – Internal Service Funds ........................................................ 82 Combining Statement of Fiduciary Net Position – Custodial Funds .................................................. 83 Combining Statement of Changes in Fiduciary Net Position – Custodial Funds .............................. 84 1 INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of Chowchilla, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Chowchilla, 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 as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
2 Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City Chowchilla, California, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison, schedule of the City’s proportionate share of the net pension liability, and schedule of contributions information on pages 3–10, 64–67, 69, and 70 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 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 29, 2022, on our consideration of the 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 the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Clovis, California
March 29, 2022
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
3 As management of the City of Chowchilla, we offer readers of the City of Chowchilla’s financial statements this narrative overview and analysis of the financial activities of the City of Chowchilla for the fiscal year ended June 30, 2021. We encourage readers to consider the information presented here in conjunction with information that is included within the financial statements.
FINANCIAL HIGHLIGHTS
The assets of the City of Chowchilla exceeded its liabilities as of June 30, 2021 by $50,470,293. Of this amount, unrestricted deficit net position of $13,520,877 may be used to meet the City’s ongoing obligations to citizens and creditors. As of June 30, 2020, the assets and deferred outflows of the City exceeded its liabilities and deferred inflows by $45,663,275 with unrestricted deficit net position totaling $14,260,564.
Total net position increased by $4,807,018 during the year ended June 30, 2021. Net position associated with governmental activities increased by $4,351,542 while net position associated with business-type activities increased by $455,476. For the year ended June 30, 2020, total net position increased by $2,207,847 with net position associated with governmental activities increasing by $1,995,267 and net position associated with business-type activities increasing by $212,580.
As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $21,623,324 an increase of $5,265,158 compared with the prior year. Of this amount, $5,710,941 is available for spending and $15,912,383 is restricted or otherwise designated for specific future uses. For the year ended June 30, 2020, the City’s governmental funds had combined ending fund balances of $16,358,166, with $3,433,827 being available for spending and $12,924,339 restricted for specific future uses. The combined ending fund balances as of June 30, 2020 represented an increase of $2,291,404 over the June 30, 2019 combined ending fund balances.
At the end of the current fiscal year, the fund balance for the general fund was $7,129,168 or 107 percent of general fund operating expenditures for the year ended June 30, 2021. The general fund’s fund balance increased by $1,673,870 for the year ended June 30, 2021. At the end of the prior fiscal year, the fund balance of the general fund was $5,455,298 or 85 percent of that year’s general fund operating expenditures. The general fund’s fund balance increased by $538,334 during the prior year.
The City’s total debt obligations (excluding post-retirement benefits) decreased by $1,032,447. This was attributable to not issuing any new debt in FY 2021 and making our scheduled principle payments on preexisting debt. During the prior year, total debt obligations decreased by $646,487.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City of Chowchilla’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.
Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenue and expense are reported in this statement for some items that will result in cash flows in future fiscal periods.
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
4 Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, highways and streets, culture and recreation, community development and other charges. The business-type activities of the City include water, sewer, storm drain and solid waste disposal systems, as well as airport activities.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government- wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spendable resources, as well as spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenue, expenditures and changes in fund balance provide reconciliations to facilitate this comparison between the two.
The City maintains 43 individual governmental funds. Many funds are grouped together by purpose or type for financial reporting purposes. There are 16 governmental funds presented for financial statement purposes.
Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenue, expenditures and changes in fund balance for the general fund which is considered a major fund, three special revenue funds, one debt service fund and one capital projects fund which are presented separately for the purpose of consistency. Data from the other ten special revenue funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.
The City adopts an annual budget for its general fund and all special revenue funds. Budgetary comparison statements have been provided for the general fund and the major special revenue funds to demonstrate compliance with the 2020/2021 budget.
Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements.
The City maintains five individual enterprise funds. Information is presented separately in the proprietary statement of net position and the proprietary statement of revenue, expense and changes in fund net position for all five enterprise funds.
An internal service fund is used to accumulate and allocate costs internally among the City’s various functions.
The City uses two internal service funds to account for its fleet maintenance and information technology activities. These funds costs are allocated amongst all funds that use those services, both governmental and business-type, so the funds themselves are excluded in the government-wide financial statements, but are presented separately in the proprietary funds’ financial statements.
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
5 Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.
Supplementary information. In addition to the basic financial statements and accompanying notes, this report also presents certain other supplementary information. The combining statements referred to earlier in connection with the non-major funds are presented after the basic financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. As of June 30, 2021, the City’s assets exceeded liabilities by $50,470,293. A significant portion of the City’s net position (51 percent) reflects its investment in capital assets, less any related debt used to acquire those assets that is still outstanding. Capital assets are used to provide services to citizens and they are not available for future spending. Although the investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
The following schedules represent a summary of the City’s net position and activities for the year ended June 30, 2021, with a comparison to the total net position and activities for the year ended June 30, 2020:
Statements of Net Position
June 30, 2021 and 2020
06/30/2021 06/30/2020 06/30/2021 06/30/2020 06/30/2021 06/30/2020 Assets
Current and other assets 46,199,686 $ 40,429,057 $ 7,415,730 $ 7,295,728 $ 53,615,416 $ 47,724,785 $ Capital assets 19,947,279 20,636,882 24,645,473 24,572,918 44,592,752 45,209,800 Total assets 66,146,965 61,065,939 32,061,203 31,868,646 98,208,168 92,934,585 Deferred Outflows of Resources 6,789,107 5,027,390 756,982 1,035,084 5,784,372 7,824,191 Liabilities
Long-term liabilities 29,064,079 29,115,722 14,689,463 14,968,857 43,753,542 44,084,579 Other liabilities 3,929,104 3,638,714 552,876 598,728 4,481,980 4,237,442 Total liabilities 32,993,183 32,754,436 15,242,339 15,567,585 48,235,522 48,322,021 Deferred Inflows of Resources 5,853,634 4,582,654 704,071 919,846 5,286,725 6,773,480 Net Position
Net investment in capital assets 12,617,178 12,921,936 13,346,651 13,011,978 25,963,829 25,933,914 Restricted 38,027,341 33,989,925 - - 38,027,341 33,989,925 Unrestricted (deficit) (17,046,001) (17,664,885) 3,525,124 3,404,321 (13,520,877) (14,260,564) Total net position 33,598,518 $ 29,246,976 $ 16,871,775 $ 16,416,299 $ 50,470,293 $ 45,663,275 $ Governmental Business-Type
Activities Totals Activities
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
6 Statements of Activities
For the Years Ended June 30, 2021 and 2020
06/30/2021 06/30/2020 06/30/2021 06/30/2020 06/30/2021 06/30/2020 Revenues:
Program revenues:
Charges for services 1,397,085 $ 784,398 $ 6,422,981 $ 5,660,638 $ 7,820,066 $ 6,445,036 $ Operating grants and contributions 3,772,425 2,443,023 4,229 25,000 3,776,654 2,468,023 Capital grants and contributions 406,021 668,036 116,054 95,686 522,075 763,722 General revenues:
Property taxes 1,018,041 1,050,743 18,514 16,536 1,036,555 1,067,279 Sales taxes 4,428,313 3,601,979 - - 4,428,313 3,601,979 Transient lodging taxes 288,647 248,830 - - 288,647 248,830 Franchises fees 287,979 275,844 - - 287,979 275,844
Documentary stamp 72,413 21,321 - - 72,413 21,321
Motor vehicle in lieu - unrestricted 2,339,898 2,207,895 - - 2,339,898 2,207,895 Investment earnings 490,653 638,484 26,810 88,742 517,463 727,226 Rental income 107,764 172,810 - - 107,764 172,810
Miscellaneous 329,181 177,941 278,431 123,272 607,612 301,213 Gain/loss on sale of capital assets - 13,628 15,300 4,180 15,300 17,808 Total revenues 14,938,420 12,304,932 6,882,319 6,014,054 21,820,739 18,318,986 Expenses:
General government 876,676 1,103,928 - - 876,676 1,103,928 Public safety 5,266,802 5,017,525 - - 5,266,802 5,017,525 Highways and streets 1,655,230 1,513,009 - - 1,655,230 1,513,009 Culture and recreation 797,281 759,594 - - 797,281 759,594 Community development 1,128,128 746,945 - - 1,128,128 746,945 Interest and fiscal charges 1,034,755 1,054,203 - - 1,034,755 1,054,203 Water - - 2,918,098 2,676,035 2,918,098 2,676,035
Solid waste - - 1,734,398 1,481,993 1,734,398 1,481,993 Sewer - - 1,726,879 1,516,384 1,726,879 1,516,384
Airport - - 46,186 175,779 46,186 175,779
Storm drain - - 46,282 65,744 46,282 65,744
Total expenses 10,758,872 10,195,204 6,471,843 5,915,935 17,230,715 16,111,139 Transfers (114,461) (45,000) 45,000 114,461 - -
Changes in net position 4,134,548 1,995,267 455,476 212,580 4,590,024 2,207,847 Net position at beginning of year 29,246,976 27,251,709 16,416,299 16,203,719 45,663,275 43,455,428 Prior period adjustments 216,994 - - - 216,994 -
Net position at end of year 33,598,518 $ 29,246,976 $ 16,871,775 $ 16,416,299 $ 50,470,293 $ 45,663,275 $ Totals
Governmental Business-Type
Activities Activities
Governmental activities. Governmental activities increased the City’s net position by $4,134,548 (an increase of $2,139,281 compared to the prior year). This was due primarily to an increase in sales tax revenue from Measure N.
Business-type activities. Business-type activities increased the City’s net position by $455,476 (an increase of $242,896 compared to the prior year).
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
7 FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City of Chowchilla uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.
Governmental funds. The purpose of the City’s governmental fund financial statements is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, an unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
As of June 30, 2021, the City’s governmental funds reported combined ending fund balances of $21,623,324, an increase of $5,265,158 in comparison to the prior year. Of this amount, $5,710,941 (26 percent) was unassigned, which is available for spending at the City’s discretion. The remainder of the fund balance is assigned to indicate that it is not available for new spending because it has already been designated to liquidate contracts and purchase orders of the prior period or cover the next year budget deficit ($782,255), restricted by external entities ($14,601,430) or non-spendable because the assets that will not be converted to cash within the next twelve months ($528,698).
The general fund is the City’s chief operating fund. At the end of the current fiscal year, the spendable portion of the fund balance of the general fund was $5,818,215 while the total fund balance was $7,129,168 As a measure of the general fund’s liquidity, it may be useful to compare both the spendable portion of the fund balance and total fund balance to total fund expenditures. Spendable portion of the fund balance represents 87 percent of total general fund operating expenditures, while total fund balance represents 107 percent of the same amount.
The fund balance of the City’s general fund increased by $1,673,870 during the year ended June 30, 2021.
Expenditures increased by 1% and revenue increased by 19% resulting in an excess of revenues over expenditures of $2,321,112. There was $456,998 transferred from other funds to the general fund and $1,321,234 transferred from the general fund to other funds.
Major Special Revenue funds have a combined fund balance of $7,646,218 All is restricted by external entities for various activities.
Proprietary funds. The City’s proprietary funds provide the same type of information found in the governmentwide financial statements, but in more detail.
Unrestricted net position of the proprietary funds was $3,590,203 as of June 30, 2021. The total increase in the net position of the proprietary funds was $380,748 for the year. Other factors concerning the finances of these funds have already been addressed in the discussion of the City’s business-type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
The general fund final budgeted expenditures were greater that the original budgeted expenditures by $1,128,947. Actual expenditures were $1,857,099 less than final budgeted expenditures. Final anticipated revenue was $490,808 greater than original anticipated revenue. Actual total revenue was $866,193 more than the final anticipated revenue. These numbers represent original City budget information and is not necessarily reflective of the activity reported in the budgetary comparison schedules. Management believes this information is the most accurate and useful for the users of the financial statements.
The large decrease in actual expenditures versus final budgeted expenditures is due to some projects being budgeted that were put on hold due to COVID-19.
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
8 CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets. The City’s total capital assets for its governmental and business-type activities as of June 30, 2021 amounted to $44,592,752 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, service lines, automobiles, equipment and streetlights. In addition, all sidewalks, bridges and roads within the city limits belong to the City.
City of Chowchilla's Capital Assets
(net of depreciation)
2021 2020 2021 2020 2021 2020
Land 721,926 $ 721,926 $ 2,030,152 $ 2,030,152 $ 2,752,078 $ 2,752,078 $ Construction in progress 464,428 390,153 2,888,780 2,767,040 3,353,208 3,157,193 Land improvements 479,187 553,832 417,705 454,976 896,892 1,008,808 Building improvements 4,590,975 4,789,743 2,253,871 2,332,805 6,844,846 7,122,548 Machinery, equipment and vehicles 2,587,002 2,516,497 857,872 253,174 3,444,874 2,769,671 Infrastructure 11,103,761 11,664,732 16,197,093 16,734,773 27,300,854 28,399,505 Total $ 20,636,883 19,947,279 $ 24,645,473 $ 24,572,920 $ 44,592,752 $ 45,209,803 $ Governmental Activities Business-Type Activities Total
Major capital asset events during the year ended June 30, 2021 included the following:
• Various infrastructure improvements amounted to $381,124 • Vehicles, machinery and equipment acquisitions amounted to $1,010,705 Additional information on the City’s capital assets can be found in note six.
Long-term liabilities. As of June 30, 2021, the City had $43,753,542 in outstanding long-term debt consisting of five revenue bond issues ($18,613,000), two loans from the State of California ($12,638,307), one certificates of participation ($70,000), one Pension Obligation Bond ($10,155,000), unfunded pension obligation ($1,290,678), net unamortized bond premiums/discounts ($559,813) and compensated absences ($426,744).
The revenue bonds are obligations of the water, sewer, general and streets and roads funds. Principal payments on the revenue bonds during the year reduced the amount owed by $457,147. The certificates of participation (COP’s) are an obligation of the water funds. Principal payments on the COP’s during the year reduced the amount owed by $70,000. There was a $160,300 principal decrease in the loans payable to the State of California for the completion of the city-wide water meter upgrade project which is an obligation of the water fund.
The City’s total debt obligations (including post-retirement benefits) decreased by $331,037. The Pension Obligation Bonds that were issued of $10,155,000 were used to pay down the Unfunded Liability. Compensated absences payable increased by $13,785 during the year.
City of Chowchilla's Outstanding Bonds, Certificates of Participation and Loans 2021 2020 2021 2020 2021 2020
Bonds 17,528,000 $ 18,220,147 $ 11,240,000 $ 11,350,000 $ 28,768,000 $ 29,570,147 $ Certificates of Participation - - 70,000 140,000 70,000 140,000 Loans 9,913,215 9,913,215 2,725,092 2,885,392 12,638,307 12,798,607 Total $ 28,133,362 27,441,215 $ 14,035,092 $ 14,375,392 $ 41,476,307 $ 42,508,754 $ Governmental Activities Business-Type Activities Total
Additional information on the City’s long-term liabilities can be found in notes seven, eight and nine.
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
9 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City continues to focus on maintaining a balanced budget and forecasting the needed resources to provide efficient and effective levels of service to the public. The City Council and staff continue to follow a conservative approach to the public’s finances. Various economic outlook indicators in California, such as COVID-19 related financial impacts, requires Chowchilla and most public agencies in California to look at multi-year budget projections and prepare for possible outcomes of the future. FY 20/21 had a lot of uncertainty with revenues due to COVID-19. Preliminary analysis with our sales tax consultants showed a projected 20% reduction in sales tax revenues. Fortunately, that was not what happened and we remained constant with prior year revenues. FY 21/22 has a much better outlook on revenues for Chowchilla and we believe we have successfully weathered the COVID-19 financial storm. Due to the City Council approving a conservative budget and dedication to building reserve levels in the past few years, Chowchilla positioned itself well for any negative COVID-19 impacts.
This conservative fiscal position does not mean that future goals and objectives are put aside, but rather, that each dollar spent is leveraged to its maximum so that we can continue to aggressively pursue the goals that our community so desperately needs. These needs can be captured in the City’s five Cornerstone Goals:
Provide a safe and secure community
Strengthen infrastructure and proactively plan for services, finances and processes Achieve and maintain fiscal reinforcement and growth
Enhance the quality of life and sense of place
Foster economic development and revenue production.
Specific goals, outcomes, and strategies to reach the outcomes under each of the Cornerstones can be found in the City’s Annual Adopted Budget document under individual department sections.
The City’s budget process, financial policies, and financial metrics are very transparent. This reflects the strategic priorities of the Council and demonstrate accountability to the tax and ratepayers. The City’s budget document meets Government Finance Officers’ Association standards and the City has been awarded the GFOA Distinguished Budget Presentation Award for the last 3 consecutive years.
The biggest economic factor in both the immediate and long-term range has been the COVID-19 Pandemic.
Revenues such as Sales Tax, Transient Occupancy Tax (TOT) and Business License are just a few examples of revenues that were expected to see significant reductions. While we did see a decrease in TOT revenues, our other revenue streams did not have a severe negative impact. There was no growth but revenues remained constant or had small reductions. Since TOT is not one of our major revenue sources, that impact was not too significant. This has been great news for Chowchilla and the FY 21/22 budget reflects this new financial information. The City received CARES Act funding from the State which help to offset any increased public safety expenditures. We have also been allocated American Rescue Plan Act (ARPA) funds in the amount of roughly $4 Million. This has been preliminarily dedicated to essential premium pay and major water infrastructure projects such as a new water tank and well.
Chowchilla is seeing some renewed interest in all the community and economic development sectors. We have seen and increase in business license and building permits as a result. Commercial, Industrial and Residential sectors are seeing increased activity. There are multiple residential projects in the works and a major distribution center project that is coming to Chowchilla which will bring roughly 300 jobs. With the new and more accepted “work from home” business model, there is a benefit for people to live in Chowchilla where cost of living is reasonable and work in the larger market cities that pay more. The County of Madera has seen this increase in demand as well.
Increased costs are going to be a significant issue to address as well. Everything is costing more now. construction costs, supplies, gas, to name a few, have skyrocketed in costs over the last few months and are causing budget and timing issues. The City will be monitoring these issues and forecasting accordingly.
CITY OF CHOWCHILLA
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2021
10 Even though the City issued Pension Obligation Bonds in 2019 to address the significant issue of CalPERS Unfunded Liabilities, there have been new Unfunded Liabilities since then that the City has to keep an eye on.
Even when the PERS Investment Portfolio performs at or above expectations, we still see an increase in Unfunded Liabilities.
Measure N, a 1% district sales tax add-on approved in 2018, is a Public Safety Measure which the funds are used to upgrade and purchase equipment as well as help with recruitment and retention of public safety employees. Retention of current employees due to increases in pension costs is allowed under this measure.
This measure has performed very well and has been coming in with more revenue than previously expected.
The FY 21/22 budget has the use of Measure M monies to help pay for a perimeter security project at the Police Department, a fire station expansion and the purchase of a new fire truck for the Fire Department. All these items have been needed for quite some time and could not be accomplished without Measure N. We have also used Measure N to hire additional personnel for both the Police and Fire Departments. 11 BASIC FINANCIAL STATEMENTS
CITY OF CHOWCHILLA
STATEMENT OF NET POSITION
JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement. 12 Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 19,522,835 $ 5,973,013 $ 25,495,848 $ Restricted cash and investments with fiscal agents 511,040 535,933 1,046,973 Accounts receivable, net 631,962 811,164 1,443,126
Intergovernmental receivables 2,146,420 164,306 2,310,726 Notes receivable, net 23,104,678 - 23,104,678
Prepaid expenses 10,868 3,000 13,868
Prepaid bond insurance 19,530 76,667 96,197
Land held for resale 104,000 - 104,000
Internal balances 148,353 (148,353) -
Capital assets:
Nondepreciable 1,186,354 4,918,932 6,105,286
Depreciable, net of accumulated depreciation 18,760,925 19,726,541 38,487,466 Total assets 66,146,965 32,061,203 98,208,168
DEFERRED OUTFLOWS OF RESOURCES
Contributions to pension plan in current fiscal year 578,281 70,516 648,797 Deferred outflows of resources from pensions 4,449,109 686,466 5,135,575 Total deferred outflows of resources 5,027,390 756,982 5,784,372
LIABILITIES
Accounts payable 470,227 277,218 747,445
Accrued salaries, wages, and benefits 224,060 - 224,060 Deposits 150,500 234,264 384,764
Accrued interest 3,084,317 41,394 3,125,711
Long-term liabilities:
Net pension liability 1,161,062 129,616 1,290,678
Due within one year 961,509 295,300 1,256,809
Due in more than one year 26,941,508 14,264,547 41,206,055 Total liabilities 32,993,183 15,242,339 48,235,522
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources from pensions 4,582,654 704,071 5,286,725 Total deferred inflows of resources 4,582,654 704,071 5,286,725
NET POSITION
Net investment in capital assets 12,617,178 13,346,651 25,963,829 Restricted for:
Highway and streets 5,388,235 - 5,388,235
Community development 25,537,225 - 25,537,225
Public safety 3,126,297 - 3,126,297
Construction projects 3,522,971 - 3,522,971
Debt service 452,613 - 452,613
Unrestricted 3,525,124 (17,046,001) (13,520,877)
Total net position $ 16,871,775 33,598,518 $ 50,470,293 $
CITY OF CHOWCHILLA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
The notes to the basic financial statements are an integral part of this statement. 13 Operating Capital
Charges for Grants and Grants and Governmental Business-Type Expenses Services Contributions Contributions Activities Activities Total
FUNCTIONS/PROGRAMS
Governmental activities:
General government 876,676 $ 189,756 $ 260,382 $ - $ (426,538) $ - $ (426,538) $ Public safety 5,266,802 146,180 322,381 - (4,798,241) - (4,798,241) Highways and streets 1,655,230 385,768 1,771,341 405,952 907,831 - 907,831 Culture and recreation 797,281 2,071 44,499 - (750,711) - (750,711) Community development 1,128,128 673,310 1,373,822 69 919,073 - 919,073 Interest and fiscal charges - 1,034,755 - - (1,034,755) - (1,034,755) Total governmental activities 10,758,872 1,397,085 3,772,425 406,021 (5,183,341) - (5,183,341) Business-type activities:
Water 2,918,098 2,696,730 - - - (221,368) (221,368)
Solid waste 1,734,398 1,783,349 - - - 48,951 48,951
Sewer 1,726,879 1,711,383 - 114,000 - 98,504 98,504
Airport 46,186 18,873 4,229 2,054 - (21,030) (21,030)
Storm drain 46,282 212,646 - - - 166,364 166,364
Total business-type activities 6,422,981 6,471,843 4,229 116,054 - 71,421 71,421 Total $ 7,820,066 17,230,715 $ 3,776,654 $ 522,075 $ (5,183,341) 71,421 (5,111,920) General revenues:
Taxes:
Property 1,018,041 18,514 1,036,555
Sales 4,428,313 - 4,428,313
Transient lodging 288,647 - 288,647
Franchise 287,979 - 287,979
Documentary stamp 72,413 - 72,413
Motor vehicle in lieu - unrestricted 2,339,898 - 2,339,898 Investment income 490,653 26,810 517,463
Rental income 107,764 - 107,764
Miscellaneous 329,181 278,431 607,612
Gain on sale of capital assets - 15,300 15,300
Transfers 45,000 (45,000) -
Total general revenues and transfers 384,055 9,317,889 9,701,944 Change in net position 455,476 4,134,548 4,590,024
Net position - beginning, restated 16,416,299 29,463,970 45,880,269 Net position - ending $ 16,871,775 33,598,518 $ 50,470,293 $ Program Revenues
Net (Expense) Revenue and
Changes in Net Position
14 THIS PAGE IS LEFT BLANK INTENTIONALLY
15 FUND FINANCIAL STATEMENTS
CITY OF CHOWCHILLA
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 16 Other Total
CDBG Impact Debt Capital Governmental Governmental
General Grants Fees Measure N Service Projects Funds Funds ASSETS
Cash and investments 5,345,167 $ 999,008 $ 4,047,008 $ 2,634,961 $ - $ - $ 6,268,332 $ 19,294,476 $ Restricted cash and investments with fiscal agents - - - - 511,040 - - 511,040 Accounts receivable 582,511 3,500 - - - - 45,771 631,782 Intergovernmental receivables 599,728 - - 497,934 - 93,272 955,486 2,146,420 Notes receivable, net - 21,579,282 - - - - 1,525,396 23,104,678 Due from other funds 715,617 - - - - - - 715,617
Prepaid expenses 4,146 - - - - - - 4,146Prepaid bond insurance - - - - 19,530 - - 19,530 Land held for resale - - - - - - 104,000 104,000
Advances to other funds - 524,552 - - - - - 524,552
Total assets $ 22,581,790 7,771,721 $ 4,047,008 $ 3,132,895 $ 530,570 $ 93,272 $ 8,898,985 $ 47,056,241 $
LIABILITIES
Accounts payable 329,287 $ 5,043 $ - $ 6,598 $ - $ 25,941 $ 79,459 $ 446,328 $ Deposits 150,500 - - - - - - 150,500 Due to other funds - - - - - 66,816 468,341 535,157
Advances from other funds - - 524,552 - - - - 524,552
Total liabilities 5,043 479,787 524,552 6,598 - 92,757 547,800 1,656,537
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 21,579,282 162,766 - - - - 2,034,332 23,776,380 Total deferred inflows of resources 21,579,282 162,766 - - - - 2,034,332 23,776,380
FUND BALANCES
Nonspendable:
Prepaid expenses 4,146 - - - - - - 4,146Advances to other funds 524,552 - - - - - - 524,552 Restricted for:
Highway and streets - - - - - - 4,989,045 4,989,045Community development 997,465 - - - - - 1,435,082 2,432,547Public safety - - - 3,126,297 - - - 3,126,297Construction projects - - 3,522,456 - 77,957 515 - 3,600,928Debt service - - - - 452,613 - - 452,613 Assigned to:
General government 50,258 - - - - - - 50,258Public safety 151,903 - - - - - - 151,903Culture and recreation 12,027 - - - - - - 12,027Community development 131,251 - - - - - - 131,251 Subsequent fiscal year budget deficit 436,816 - - - - - - 436,816 Unassigned - 5,818,215 - - - - (107,274) 5,710,941
Total fund balances 7,129,168 997,465 3,522,456 3,126,297 530,570 515 6,316,853 21,623,324 $ 22,581,790 7,771,721 $ 4,047,008 $ 3,132,895 $ 530,570 $ 93,272 $ 8,898,985 $ 47,056,241 $ Total liabilities, deferred inflows of resources, and fund balances Special Revenue
CITY OF CHOWCHILLA
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 17 Total fund balances - governmental funds $ 21,623,324 19,842,751
Contributions to the pension plan subsequent to the measurement date 549,180 Deferred outflows of resources from pensions 4,194,058
Deferred inflows of resources from pensions (4,319,086) Bonds and loans payable (27,476,273)
Net pension liability (1,107,797)
(3,084,317)
23,776,380
(399,702)
Net position of governmental activities $ 33,598,518
Amounts reported for governmental activities in the statement of net position are different because:
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. Those liabilities consist of:
Internal service funds are used by management to charge the costs to individual funds. These assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the statement of net position.
Interest payable on long-term debt does not require the use of current financial resources. Therefore, interest payable is not reported as a liability in the governmental funds balance sheet.
Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds.
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.
Pension related deferrals are reported as deferred outflows and inflows of resources on the statement of net position:
CITY OF CHOWCHILLA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 18 Other Total
CDBG Impact Debt Capital Governmental Governmental
General Grants Fees Measure N Service Projects Funds Funds
REVENUES
Taxes 3,648,384 $ - $ - $ 2,447,009 $ - $ - $ - $ 6,095,393 $ Licenses and permits 729,578 - - - - - - 729,578
Fines and penalties 122,340 - - - - - - 122,340
Intergovernmental revenues 2,967,329 51,668 - - - 106,484 3,150,781 6,276,262 Use of money and property 127,120 3,803 15,902 9,014 27 - 13,179 169,045 Charges for services 144,776 37,816 102,757 - - - 326,848 612,197 Miscellaneous - 218,240 - 9,403 81,716 - 19,822 329,181 Total revenues 7,957,767 93,287 118,659 2,465,426 81,743 106,484 3,510,630 14,333,996
EXPENDITURES
Current:
General government 343,275 - - - - - - 343,275
Public safety 3,687,910 - - 757,224 - - 1,104 4,446,238 Highways and streets - - - - - - 1,075,227 1,075,227
Culture and recreation 502,590 - - - - - - 502,590
Community development 837,514 61,277 - - - - 33,116 931,907 Capital outlay 265,366 - - - - 121,154 115,630 502,150
Debt service:
Principal - - - - 692,162 - - 692,162
Interest - - - - 738,020 - - 738,020
Fiscal charges - - - - 9,263 - - 9,263
Total expenditures 61,277 5,636,655 - 757,224 1,439,445 121,154 1,225,077 9,240,832 Excess (deficiency) of revenues over (under) expenditures 2,321,112 32,010 118,659 1,708,202 (1,357,702) (14,670) 2,285,553 5,093,164OTHER FINANCING SOURCES (USES) Transfers in 456,998 42,944 - - 1,384,469 84,168 484,735 2,453,314 Transfers out - (1,321,234) (45,000) (170,494) (4,635) - (956,951) (2,498,314) Total other financing sources (uses) (864,236) 42,944 (45,000) (170,494) 1,379,834 84,168 (472,216) (45,000) Net change in fund balances 74,954 1,456,876 73,659 1,537,708 22,132 69,498 1,813,337 5,048,164 Fund balances, beginning of year 922,511 5,455,298 3,448,797 1,588,589 508,438 (68,983) 4,503,516 16,358,166 Fund balances - ending $ 997,465 7,129,168 $ 3,522,456 $ 3,126,297 $ 530,570 $ 515 $ 6,316,853 $ 21,623,324 $ Special Revenue
CITY OF CHOWCHILLA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 19 Net change in fund balances - total governmental funds 5,048,164 $ Capital outlay 765,824
Depreciation expense (1,271,500)
(233,445)
Repayment of the principal of long-term debt 692,147
Amortization on bond discounts and premiums (466)
(286,991)
(1,057,830)
(101,555)
654,928
(74,728)
Change in net position of governmental activities 4,134,548 $ Amounts reported for governmental activities in the statement of activities are different because:
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items:
Accrued interest payable on long-term debt is reported in the governmentwide statement of activities, but does not require the use of current financial resources. This amount represents the change in accrued interest payable not reported in governmental funds.
The changes in net position of certain activities of the internal service funds is reported within governmental activities.
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.
The distribution of housing loans and corresponding payments that were recognized in the governmental funds are not recognized in the statement of activities.
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of these assets are allocated over their estimated useful lives and reported as depreciation expense. In the current period, these amounts are:
The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to increase (decrease) net position.
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.
CITY OF CHOWCHILLA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 20 Governmental
Activities
Other Internal
Solid Enterprise Service
Water Waste Sewer Funds Total Funds
ASSETS
Current assets:
Cash and investments 2,094,304 $ - $ 1,977,892 $ 1,900,817 $ 5,973,013 $ 228,359 $ Restricted cash and investments with fiscal agents 179,972 - 355,961 - 535,933 - Accounts receivable, net 326,178 228,014 226,723 30,249 811,164 180 Intergovernmental receivables - - 144,907 19,399 164,306 - Prepaid expenses - - 3,000 - 3,000 6,722
Prepaid bond insurance 60,438 - 16,229 - 76,667 -
Total current assets 228,014 2,660,892 2,724,712 1,950,465 7,564,083 235,261 Noncurrent assets:
Capital assets:
Nondepreciable 2,690,827 - 1,380,954 847,151 4,918,932 - Depreciable, net of accumulated depreciation - 12,837,830 6,568,644 320,067 19,726,541 104,528 Total noncurrent assets 15,528,657 - 7,949,598 1,167,218 24,645,473 104,528 Total assets 18,189,549 228,014 10,674,310 3,117,683 32,209,556 339,789
DEFERRED OUTFLOWS OF RESOURCES
Contributions to pension plan in current fiscal year 39,179 - 27,136 4,201 70,516 29,101 Deferred outflows of resources from pensions 370,184 - 270,928 45,354 686,466 255,051 Total deferred outflows of resources 409,363 - 298,064 49,555 756,982 284,152
LIABILITIES
Current liabilities:
Accounts payable 91,306 109,885 60,653 15,374 277,218 23,899 Accrued salaries, wages, and benefits - - - - - 224,060 Deposits 234,264 - - - 234,264 -
Due to other funds - 83,274 - - 83,274 97,186
Accrued interest 30,326 - 11,068 - 41,394 -
Compensated absences - - - - - 323,509
Current portion of long-term debt - 260,300 35,000 - 295,300 - Total current liabilities 616,196 193,159 106,721 15,374 931,450 668,654 Noncurrent liabilities:
Compensated absences - - - - - 103,235
Net pension liability 72,259 - 49,668 7,689 129,616 53,265 Long-term debt 11,169,729 - 3,094,818 - 14,264,547 -
Total noncurrent liabilities 11,241,988 - 3,144,486 7,689 14,394,163 156,500 Total liabilities 11,858,184 193,159 3,251,207 23,063 15,325,613 825,154
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources from pensions 380,471 - 277,467 46,133 704,071 263,568 Total deferred inflows of resources 380,471 - 277,467 46,133 704,071 263,568
NET POSITION (DEFICIT)
Net investment in capital assets 7,003,692 - 5,175,741 1,167,218 13,346,651 104,528 Unrestricted (643,435) 34,855 2,267,959 1,930,824 3,590,203 (569,309) Total net position (deficit) $ 34,855 6,360,257 $ 7,443,700 $ 3,098,042 $ 16,936,854 $ (464,781) Adjustment to report the cumulative internal balance
for the net effect of the activity between the internal service funds and the enterprise funds over time (65,079) Net position of business-type activities 16,871,775 $
Business-Type Activities - Enterprise Funds
CITY OF CHOWCHILLA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 21 Governmental
Activities
Other Internal
Solid Enterprise Service
Water Waste Sewer Funds Total Funds
Operating revenues:
Charges for services 2,696,730 $ 1,783,349 $ 1,711,383 $ 231,519 $ 6,422,981 $ 668,471 $ Miscellaneous 122,553 115 152,168 3,595 278,431 5,183
Total operating revenues 2,819,283 1,783,464 1,863,551 235,114 6,701,412 673,654 Operating expenses:
Personnel services 591,364 - 415,229 50,599 1,057,192 396,517 Materials, supplies and services 1,535,132 1,734,398 885,434 24,262 4,179,226 347,766 Depreciation 428,703 - 281,158 17,607 727,468 10,562
Total operating expenses 2,555,199 1,734,398 1,581,821 92,468 5,963,886 754,845 Operating income (loss) 264,084 49,066 281,730 142,646 737,526 (81,191) Nonoperating revenues (expenses):
Use of money and property 9,673 87 9,400 7,650 26,810 - Taxes - - - 18,514 18,514 -
Grants - capital - - 114,000 2,054 116,054 -
Grants - operating - - - 4,229 4,229 -
Gain (loss) on sale of assets 15,300 - - - 15,300 (10,542) Interest expense (348,641) - (142,311) - (490,952) -
Total nonoperating revenues (expenses) (323,668) 87 (18,911) 32,447 (310,045) (10,542) 49,153 (59,584) 262,819 175,093 427,481 (91,733)
Transfers in - 45,000 - - 45,000 -
Change in net position (14,584) 49,153 262,819 175,093 472,481 (91,733) Net position (deficit) - beginning (14,298) 6,374,841 7,180,881 2,922,949 (373,048) Net position (deficit) - ending 6,360,257 $ 34,855 $ 7,443,700 $ 3,098,042 $ (464,781) $ Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds (17,005) Changes in net position of business-type activities 455,476 $ Business-Type Activities - Enterprise Funds
Income (loss) before transfers
CITY OF CHOWCHILLA
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 22 Governmental
Activities
Other Internal
Solid Enterprise Service
Water Waste Sewer Funds Total Funds
Cash flows from operating activities:
Receipts from customers and users 2,655,718 $ 1,686,091 $ 1,686,063 $ 225,111 $ 6,252,983 $ 668,291 $ Payments to suppliers (1,580,594) (1,735,188) (777,129) (49,471) (4,142,382) (373,417) Payments to employees (510,264) - (357,961) (41,482) (909,707) (369,228) Other operating revenues 115 122,553 152,168 278,431 3,595 5,183 (48,982) 687,413 703,141 137,753 1,479,325 (69,171)
Cash flows from noncapital financing activities:
Grants received - - - 4,229 4,229 -
Transfer from other funds 45,000 - - - 45,000 -
Loans from other funds - 48,895 - - 48,895 96,727
Taxes received - - - 18,514 18,514 -
48,895 45,000 - 22,743 116,638 96,727
Principal paid (276,549) - (88,004) - (364,553) -
Interest paid (344,746) - (137,577) - (482,323) -
Grants received - - - 20,648 20,648 -
Acquisition of capital assets (48,383) - (672,971) (202,851) (924,205) (70,622) Proceeds from the sale of assets 15,300 - - 15,300 - -
- (654,378) (898,552) (182,203) (1,735,133) (70,622)
Cash flows from investing activities:
87 9,673 9,400 - 19,160 -
- - - 7,650 7,650 -
87 9,673 9,400 7,650 26,810 -
- 87,708 (186,011) (14,057) (112,360) (43,066)
- 2,186,568 2,519,864 1,914,874 6,621,306 271,425
$ - 2,274,276 $ 2,333,853 $ 1,900,817 $ 6,508,946 $ 228,359 $ Cash flows from capital and related
financing activities:
Net cash provided by (used for) capital and
related financing activities
Cash and cash equivalents - beginning
Net increase (decrease) in cash and
cash equivalents
Net cash provided by investing activities
Cash and cash equivalents - ending
Business-Type Activities - Enterprise Funds
Net cash provided by (used for) operating activities
Net cash provided by noncapital financing activities
Interest received
Rents received
CITY OF CHOWCHILLA
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(Continued)
The notes to the financial statements are an integral part of this statement. 23 Governmental
Activities
Other Internal
Solid Enterprise Service
Water Waste Sewer Funds Total Funds
Operating income (loss) 264,084 $ 49,066 $ 281,730 $ 142,646 $ 737,526 $ (81,191) $ Depreciation 428,703 - 281,158 17,607 727,468 10,562
(Increase) decrease in:
Accounts receivable (84,279) (97,258) (25,320) (6,408) (213,265) (180) Prepaid expenses - - - - - 71,629
Deferred outflows of resources from pensions 147,656 - 111,003 19,443 278,102 95,900 Increase (decrease) in:
Accounts payable and other liabilities (45,462) (790) 108,305 (25,209) 36,844 (142,936) Deposits 43,267 - - - 43,267 -
Unearned revenue - - - - - -
Compensated absences - - - - - 13,785
Net pension liability 47,662 - 32,675 4,821 85,158 35,995 Deferred inflows of resources from
pensions - (114,218) (86,410) (15,147) (215,775) (72,735) $ (48,982) 687,413 $ 703,141 $ 137,753 $ 1,479,325 $ (69,171) $ Reconciliation of operating income (loss) to net
cash provided by (used for) operating activities:
Adjustments to reconcile operating income
(loss) to net cash provided by (used for)
operating activities:
Net cash provided by (used for) operating activities
Business-Type Activities - Enterprise Funds
CITY OF CHOWCHILLA
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 24 Successor Agency
Custodial Private Purpose
Funds Trust Fund
ASSETS
Cash and investments (in City investment pool) 2,011,884 $ 74,160 $ Restricted cash with fiscal agents 753,627 -
Accounts receivable (net) 39,185 43,750
Prepaid expenses - 10,004
Prepaid bond insurance - 44,488
Land held for resale 338,000 -
Total assets 510,402 2,804,696
LIABILITIES
Accounts payable 8,967 513
Accrued interest - 62,396
Long-term debt due within one year - 260,000
Long-term debt due in more than one year 5,132,755 -
Total liabilities 5,455,664 8,967
NET POSITION
Restricted for:
Individuals, organizations, and other governments 2,795,729 - Redevelopment agency dissolution - (4,945,262)
Total net position 2,795,729 $ (4,945,262) $
CITY OF CHOWCHILLA
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The notes to the financial statements are an integral part of this statement. 25 Successor Agency
Custodial Private Purpose
Funds Trust Fund
ADDITIONS
Taxes $ 535,063 - $
Property tax collections 1,626,717 -
Investment earnings 5,072 823
Miscellaneous - 1,101
Total additions 1,631,789 536,987
DEDUCTIONS
Payments to bondholders 1,465,466 -
Administrative expenses 69,994 128,746
Interest 141,411 -
Total deductions 1,535,460 270,157
Change in net position 96,329 266,830
Net position - beginning, restated 2,699,400 (5,212,092) Net position (deficit) - ending $ (4,945,262) 2,795,729 $ 26 THIS PAGE IS LEFT BLANK INTENTIONALLY
27 NOTES TO THE BASIC FINANCIAL STATEMENTS
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
28 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
The City of Chowchilla (City) was incorporated on February 7, 1923, as a municipal corporation under the General Laws of the State of California. The City operates as a self-governing local government unit within the State of California. A five-member City Council appoints a City Administrator who administers the daily affairs under the policy guidance of the City Council. The City has limited authority to levy taxes and has the authority to determine user fees for the services that it provides. Voters elect a City Council that passes laws and determines broad policies. The City Council also oversees the operations of the City and approves all budgets, fund transfers, and fund balance reserves. Services provided by the City include public safety, streets and roads, water, sanitation, public improvements, culture and recreation, parks, building inspections, planning and zoning, redevelopment, and general administration.
Blended Component Units
A primary government is financially accountable for a component unit if it appoints a voting majority of an organization’s governing body and it is able to impose its will on the organization, or if there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. A primary government may also be financially accountable if an organization is fiscally dependent on the primary government regardless of whether the organization has a separately elected governing board, a governing board appointed by a higher level of government, or a jointly appointed board, and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the primary government. Based upon the application of these criteria, the following is a brief description of each component unit included within the City’s reporting entity. All such component units have been “blended” as though they are part of the primary government as the component unit’s governing body is substantially the same as the City’s primary government and there is a financial benefit or burden relationship between the City and the component unit. In addition, management of the City has operational responsibilities for the component unit, and/or the component units provide services almost entirely to the city or for the exclusive benefit of the City, even though it does not provide services directly to it, or the City is entirely or almost entirely responsible for the repayment of the debt of the component unit. Financial information for these component units can be obtained from the City’s Administrative Services Department and from the City’s website at http://ci.chowchilla.ca.us.
The Public Financing Authority (Authority) of the City of Chowchilla was formed on August 14, 1989, for the purpose of assisting the City in the financing of the acquisition, construction and installation of public capital improvements for the use, benefit and enjoyment of the citizens served by the City. The City Council serves as the governing board of the Authority and, therefore, is financially accountable for the operations of the Authority.
The Chowchilla Housing Authority (Housing Authority) was established on January 24, 2012. The Housing Authority was activated pursuant to State Law Section 34240 of the California Health and Safety Code, which allows for every City to establish a housing authority. The Housing Authority is designed to protect local housing funds and programs, provide new revenue opportunities for affordable housing programs, serve the public interest, promote public safety and welfare, and ensure decent, safe sanitary and affordable housing accommodations to persons of low income.
Since the City Council serves as the governing body of these entities, they are considered blended component units. As a result, the financial activities of these entities are integrally related to those of the City and are “blended” with those of the City.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
29 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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.
Government-Wide Financial Statements – The statement of net position and the statement of activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. These statements distinguish between the governmental and business-type activities of the City’s Governmental activities generally are 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 parties.
The Statement of Activities presents a comparison between direct expense and program revenues for each different identifiable activity of the City’s business-type activities and for each function 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 expenses 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 regards to interfund activities, payables, and receivables. All internal balances in the statement of net position have 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 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, interfund advances to/advances from, and transfers in/transfers out.
Fund Financial Statements – The fund financial statements provide information about the City’s funds. Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements 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. An accompanying schedule is 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 financial statements.
Proprietary 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 nonexchange 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.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
30 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued)
The City reports the following major governmental funds:
The General Fund is the City’s primary operating fund. It accounts for all financial resources of the City except for those required to be accounted for in another fund.
The Community Development Block Grant Special Revenue Fund accounts for the revenues received by the various CDBG grants, the uses of those funds (i.e., grants and loans for housing rehabilitation projects), as well as the receipt and re-use of program income generated by the repayment of CDBG loans.
The Impact Fees Special Revenue Fund accounts for the accumulation of resources from developers for the expected future capital cost of the City as a result of development. Impact fees collected are restricted for the use of general, police, fire and parks facilities; and streets and roads, signalization, water, sewer and storm drain capital projects.
The Measure N Special Revenue Fund accounts for 1% Public Safety Sales Tax add-on that was voter approved in 2018 and became effective April 1, 2019. Monies are allocated between Police and Fire Departments and are used for growth and efficiency of the departments.
The Debt Service Fund accounts for the accumulation of resources that are restricted, committed or assigned for the payment of principal and interest on long-term obligations of governmental funds.
The Capital Projects Fund accounts for the acquisition and construction of the City’s major capital projects, other than those financed by proprietary funds.
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 and non-major fund.
The City has five enterprise funds – water, solid waste, sewer, storm drain and airport. These funds 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 enterprise funds:
The Water Enterprise Fund accounts for the provision of water to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, distribution, maintenance, and debt service.
The Solid Waste Enterprise Fund accounts for the revenues and expenses for operation and maintenance of the solid waste system.
The Sewer Enterprise Fund accounts for the provision of wastewater collection and treatment services to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, and debt service.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
31 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued)
Additionally, the government reports the following fund types:
Internal Service Funds:
The Fleet Maintenance Internal Service Fund accounts for the cost associated with maintaining the citywide fleet of vehicles and rolling stock heavy equipment. Charges are assessed to each department on the basis of time/materials necessary to maintain their equipment.
The Information Technology Internal Service Fund accounts for the costs of providing computer and information services. User charges are recovered from other City departments that utilized the services provided.
The Employee Benefits Internal Service Fund accounts for compensated absences and other employee benefits that are provided by the City.
Fiduciary Funds:
The Custodial Funds accounts for assets held by the City as an agent for special districts.
The Successor Agency Private Purpose Trust Fund accounts for assets and 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, Proprietary and Fiduciary Fund Financial Statements – The government-wide, proprietary, and fiduciary 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 and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take 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 fiscal year in which all eligibility requirements have been satisfied.
Governmental Fund Financial Statements – Governmental funds are reported using current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when measurable and available. Property and sales taxes, interest, and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments and compensated absences, are 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.
Proprietary funds distinguish operating revenues and expenses from nonoperating 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 nonoperating expenses.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
32 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balances Cash and Cash Equivalents
For purposes of reporting cash flow, the City considers all highly liquid investments with maturity of three months or less when purchased to be cash and cash equivalents.
Cash and Investments
The City maintains a cash and investment pool that is available for all funds. Each fund-type balance in the pool is reflected on the combined balance sheet as cash and investments. The City apportions interest earnings to all funds based on their quarterly cash balances.
The City pools cash and investments with the City Treasurer except for investments managed by fiscal agents under bonded debt agreements. Interest from bank accounts and investments are allocated quarterly to the various funds based on the fund’s contribution to the pool. The City has stated investments at fair value in the statement of net position and balance sheet. The fair value of investments is based on published market prices and quotations from major investment brokers.
Cash and investments with fiscal agent represent funds held by various trustees from proceeds of the issuance of bonds in order to establish required reserve funds and to pay bond issuance costs per the respective trust agreements.
Credit Risk – The City’s investment policy limits certain types of investments to various ratings.
Custodial Credit Risk—Deposits – Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City has a deposit policy for custodial risk that requires collateralization on certificates of deposit and repurchase (and reverse) agreements. In addition, the City maintains custodial agreements with certain independent third parties.
Concentration of Credit Risk – The City places no limit on the amount the City may invest in any one issuer.
Interest Rate Risk – Reserve funds may be invested in securities exceeding 10 years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of the funds.
Restricted Assets
Certain proceeds of the general obligation debt and enterprise debt are classified as restricted assets on the balance sheet because their use is limited by applicable debt covenants. “Restricted cash and investments with fiscal agents” is used to report resources set aside for potential deficiencies in the repayment ability of the debt service fund and for payment of construction projects undertaken by the City.
Land Held for Resale
Land held for resale is recorded in the Low and Moderate Housing Asset Special Revenue Fund. Land held for resale is valued at the lower cost or estimated net realizable value.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
33 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balances (Continued) Internal Balances
Interfund transactions are reflected as loans, services provided or used, or reimbursements or transfers. Loans reported as receivables and payables, as appropriate, are subject to elimination upon consolidation and are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and the business-type activities are reported in the fund financial statements and are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources.
Services provided or used, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation.
Notes Receivable
The City engages in programs designed to encourage construction or improvement of housing for persons with low to moderate income and to encourage business development. Under these programs, grants or loans are provided under favorable terms to homeowners or developers who agree to spend these funds in accordance with the City’s terms. For financial statement purposes, the City has established an estimated allowance for potentially uncollectible loans. The balance of notes receivable includes loans that may be forgiven if certain terms and conditions of the loans are met.
Capital Assets
Capital assets, which include public domain (infrastructure) capital assets consisting of certain improvements, including streets (pavements, medians, curbs/gutters, sidewalks, traffic signals, monument signs and bridges), storm drains and water/sewer systems and improvements, are reported in the applicable governmental or business-type activities column in the government-wide financial statements.
Generally, capital asset acquisitions in excess of $5,000 (general capital assets) and $30,000 (infrastructure) are capitalized if they have an expected useful life of one year or more. Acquisitions of capital assets (including infrastructure) are recorded at historical cost at the time of purchase. Donated capital assets are recorded at their fair value at the date of donation.
Land and construction in progress are not depreciated. The other property, plant, equipment, and infrastructure of the City are depreciated using the straight-line method over the following estimated useful lives:
Land Improvements 20-50 years
Buildings and Improvements 20-50 years
Machinery, Equipment, and Vehicles 6-10 years
Infrastructure 20-100 years
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
34 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balances (Continued) Compensated Absences
It is the City’s policy to permit employees to accumulate a limited amount of earned but unused leave time.
Permanent employees earn from 12 to 30 vacation days per year depending upon their length of employment.
Accumulated vacation days can be carried forward up to 2 years. Each year, by September 30, certain employees may request to receive a cash payment for the value of all or a portion of their accumulated vacation leave. Upon termination or retirement, employees are compensated for the value of accrued vacation leave.
For full-time employees, sick leave is accumulated at the rate of 12 days per year up to a maximum of 250 days.
Employees may convert 25% of unused sick leave to vacation time during a fiscal year up to the limit of the employee’s maximum vacation accrual level. Upon retirement, employees may also convert a portion of their unused sick leave into service credit through the California Public Employees Retirement System.
The vacation and sick leave balances, along with compensatory leave and holiday hours are reflected in the Employee Benefits Fund, which is part of the Internal Service Funds in the Statement of Net Position.
Long-term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discounts. Bond issuance costs are expensed immediately.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether withheld from the actual debt proceeds received, are reported as debt service expenditures.
Pensions
In government-wide financial statements, pensions are recognized and disclosed using the accrual basis of accounting (see Note 9 and the RSI section immediately following the notes to financial statements), regardless of the amount recognized as pension expenditures on the modified accrual basis of accounting. The City recognizes a net pension liability for the qualified pension plan in which it participates, which represents the excess of the total pension liability over the fiduciary net position of the qualified pension plan, measured as the City’s proportionate share thereof in the case of a cost-sharing multiple-employer plan. Changes in the net pension liability during the period are recorded as pension expense, or as deferred inflows of resources or deferred outflows of resources depending on the nature of the change, in the period incurred. Those changes in net pension liability that are recorded as deferred inflows of resources or deferred outflows of resources that arise from changes in actuarial assumptions or other inputs and differences between expected or actual experience are amortized over the weighted average remaining service life of all participants including retirees, in the respective qualified pension plan and recorded as a component of pension expense beginning with the period in which they arose. Projected earnings on qualified pension plan investments are recognized as a component of pension expense. Differences between projected and actual investment earnings are reported as deferred inflows of resources or deferred outflows of resources and amortized as a component of pension expense on a closed basis over a five-year period beginning with the period in which the difference occurred.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
35 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balances (Continued) Interest Payable
In the government-wide financial statements, interest payable on long-term debt is recognized as a liability when incurred and is not recognized in the governmental funds’ financial statements.
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 intergovernmental revenues (primary grants and subventions) received but not earned (qualifying expenditures not yet incurred).
Unavailable Revenue
In the governmental 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.
Transfers
In the fund financial statements interfund transfers are recorded as transfers in (out) except for transactions that are described below:
Charges for services are recorded as revenues of the performing fund and expenditures of the requesting fund. Unbilled costs are recognized as an asset of the performing fund at the end of the fiscal year.
Reimbursements for expenditures, initially made by one fund that is properly applicable to another fund, are recorded as expenditures in the fund that is reimbursed.
Net Position
The government-wide and enterprise fund financial statements utilize a net position presentation. Net position is reported as net investment in capital assets, restricted or unrestricted.
Net investment in capital assets – groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the net position balance.
Restricted – represents external restrictions imposed by creditors, grantors, contributors, or laws of regulations of other governments and restrictions imposed by law through constitutional provisions or enable legislation.
Unrestricted – represents net position of the City, not restricted for any project or other purpose.
When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources as they are needed.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
36 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balances (Continued) Fund Balances
The governmental fund financial statements present fund balances based on classifications the 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 classification used in governmental fund financial statements are as follows.
Nonspendable Fund Balance – Amounts cannot be spent either because they are in nonspendable form (such as inventory or prepaid expenses, and long-term loans and notes receivable) or because they are legally or contractually required to be maintained intact (such as principal of a permanent fund).
Restricted Fund Balance – Amounts with external constraints placed on the use of these resources (such as debt covenants, grantors, contributors, or laws or regulations of other governments, etc.) or imposed by law through constitutional provisions or enabling legislation.
Committed Fund Balance – Amounts that can only be used for specific purposes pursuant to constraints imposed by City Council, the City’s highest level of decision-making authority, through an ordinance or resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified uses through the same type of formal action taken to establish the commitment.
Assigned Fund Balance – Amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Intent is expressed by the City Council or its designee and may be changed at the discretion of the City Council or its designee. For all governmental funds other than the General Fund, any remaining positive amounts not classified as nonspendable, restricted or committed must be designated as assigned fund balance.
Unassigned Fund Balance – These are either residual positive net resources of the General Fund in excess of what can properly be classified in one of the other four categories, or negative balances in all other funds.
In circumstances when expenditures are made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned.
Minimum Fund Balance Policy
The City’s minimum fund balance policy requires the City to maintain reserves equal to 2 months (17%) and 3 months (25%) of costs based on the annual adopted budget for Enterprise Funds and the General Fund, respectively. The use of these funds shall be allowed in situations resulting from the loss of revenues and must be replenished before the end of the following fiscal year.
Risk Management
The City participates with other public entities in a joint venture under a joint powers agreement which established 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.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
37 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balances (Continued) Property Tax Calendar
Madera County is responsible for assessing, collecting and distributing property taxes in accordance with enabling legislation. Revenue received is based on an allocations factor calculated by the County under the provisions of Proposition 13 plus a percentage of the increase in market value in specific areas. The City’s property tax is liened based on the assessed value listed as of the prior January 1 for all real and personal property located in the City. Property sold and the assessment date (January 1) is reassessed and the amount of property tax assessed is prorated.
Secured property taxes are levied on October 1 and are due in two installments on November 1 and February 1.
The tax becomes delinquent after December 10 and April 10, respectively. Unsecured property tax is levied on July 1, due on July 31, and becomes delinquent after August 31.
NOTE 2 – CASH AND INVESTMENTS
Cash and investments as of June 30, 2021 are classified in the accompanying financial statements as follows:
Statement of Net Position:
Cash and investments 25,495,848 $
Restricted cash and investments with fiscal agents 1,046,973 Statement of Fiduciary Net Position:
Cash and investments 2,086,044
Restricted cash with fiscal agents 753,627
Total cash and investments 29,382,492 $
Cash and investments as of June 30, 2021 consist of the following:
Cash on hand $ 2,000
Deposits with financial institutions 7,566,057
Investments 21,814,435
Total cash and investments 29,382,492 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
38 NOTE 2 – CASH AND INVESTMENTS (Continued)
Deposits
The carrying amount of the City’s cash deposits was $7,566,057 at June 30, 2021. Bank balances were $7,807,731, the total amount of which was insured and/or collateralized with securities held by the pledging financial institutions in the City’s name as described 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.
The market value of pledged securities 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 mortgage notes having a value of 150% of the City’s total cash deposits.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments of fiscal agents is credited directly to the related fund.
Investments Authorized by the California Government Code and the City’s Investment Policy In accordance with Section 53601 of the California Government Code and the City’s investment policy, the City is authorized to invest in Certificates of Deposit, the California Local Agency Investment Fund (LAIF), U.S.
Treasury Obligations, U.S. Government Agencies, Medium-Term Notes, Bankers’ Acceptances, and Commercial Paper of “prime” quality of the highest ranking or of the highest letter and numerical rating as provided by Moody’s Investor Services, Inc. or Standards and Poor’s Corporation. In accordance with the City’s investment policy, the City will not invest in repurchase agreements, reverse repurchase agreements, or any other type of investments prohibited by California Government Code Section 53601.
Disclosure Relating to 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.
Information about the sensitivity of the fair values of the City’s investments to market interest rate fluctuations is provided by the following table that shows the maturity date of each investment:
Investment Type Total
12 Months or
Less
State investment pool 20,013,835 $ 20,013,835 $
Held by fiscal agent:
Treasury Obligation Funds 1,202,322 1,202,322
Money Market Funds 598,278 598,278
Total $ 21,814,435 21,814,435 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
39 NOTE 2 – CASH AND INVESTMENTS (Continued)
Disclosure Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of year-end for each investment type:
Investment Type Total AAAm Not Rated
State investment pool 20,013,835 $ - $ 20,013,835 $
Held by fiscal agent:
Treasury Obligation Funds 1,202,322 1,202,322 -
Money Market Funds - 598,278 598,278
Total $ 21,814,435 1,202,322 $ 20,612,113 $
Ratings as of Year-End
Concentration of Credit Risk
The investment policy of the City contains no limitation on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. 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 are as follows:
Reported
Issuer Amount
US Bank Money Market $ 1,202,322
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
40 NOTE 2 – CASH AND INVESTMENTS (Continued)
Investment Valuation
Investments, including derivative instruments that are not hedging derivatives, are measured at fair value on a recurring basis. Recurring fair value measurements are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the statement of net position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s fair value:
Level 1 investments reflect prices quoted in active markets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments’ fair value measurements are as follows at June 30, 2021:
Fair Value
Investments Fair Value Level 1 Inputs
Debt securities:
Treasury Obligation Fund 1,202,322 $ 1,202,322 $
Investments not subject to fair value
heirarchy:
Money Market Funds 598,278 $
State Investment Pool 20,013,835
$ 20,612,113
Measurements
Treasury obligations are valued at marked to market based on quoted market closing prices.
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amount based upon the City’s pro-rata share of the amortized cost provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of the portfolio). The balance available for withdrawal is based in the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Although the City did not participate in any securities lending transactions or enter into any reverse repurchase agreements during the year, the City does have an investment in LAIF in the amount of $20,013,835. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members designated by State statute. The value of the pool shares in LAIF, which may be withdrawn, is determined on an amortized cost basis, which is different from the fair value of the City’s position in the pool.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
41 NOTE 3 – RECEIVABLES
Receivables as of year-end for the City’s individual major funds and aggregate nonmajor, including applicable allowances for uncollectible accounts, are as follows:
Governmental Activities
CDBG
Grants Measure N Other Total
Special Special Capital Internal Service Governmental Governmental General Revenue Revenue Projects Funds Funds Funds
Receivables:
Accounts receivable 582,511 $ 3,500 $ - $ - $ 180 $ 45,771 $ 631,962 $ Intergovernmental receivables 599,728 - 497,934 93,272 - 955,486 2,146,420 Notes receivable - 21,579,282 - - - 1,525,396 23,104,678 Less: allowance for
for uncollectibles - - - - - - -
Net receivables 1,182,239 $ 21,582,782 $ 497,934 $ 93,272 $ 180 $ 2,526,653 $ 25,883,060 $ Business-Type Activities - Enterprise Funds
Nonmajor
Solid Storm
Water Waste Sewer Drain Airport Total
Receivables:
Accounts receivable 342,666 $ 230,837 $ 232,149 $ 31,204 $ - $ 836,856 $ Intergovernmental receivables - - 144,907 - 19,399 164,306 Less: allowance for
for uncollectibles (16,488) (2,823) (5,426) (955) - (25,692) Net receivables 326,178 $ 228,014 $ 371,630 $ 30,249 $ 19,399 $ 975,470 $ Receivables are presented on the Statement of Net Position as follows:
Governmental Business-Type
Activities Activities Total
Accounts receivable, net 631,962 $ 811,164 $ 1,443,126 $ Intergovernmental receivables 2,146,420 164,306 2,310,726 Notes receivable, net 23,104,678 - 23,104,678
$ 975,470 25,883,060 $ 26,858,530 $
Receivables in governmental funds which are not expected to be collected in one year are as follows:
Notes receivable in CDBG Grants Special Revenue Fund 21,579,282 $ Notes receivable in Home Investment Program Grants Special Revenue Fund 1,447,962 Notes receivable in Low and Moderate Income Housing Asset Special Revenue Fund 77,434 Total $ 23,104,678
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
42 NOTE 4 – INTERNAL BALANCES
Due from and due to balances at June 30, 2021 are as follows:
Due From Due To
Governmental Funds:
Major Funds:
General Fund $ - 715,617 $
Capital Projects Fund 66,816 -
Nonmajor Funds:
SAFER Fire Grant Fund 1,104
Transit System Special Revenue Fund 421,678 -
Information Technology Internal Service Fund 97,186 -
Low and Moderate Low Income Housing Asset Fund - 45,559 Enterprise Funds:
Major Funds:
Solid Waste Fund 83,274 -
Total $ 715,617 715,617 $
The “due from” balance of $715,617 in the General Fund listed above represents loans made to other funds to cover operating cash deficit balances.
Advances to and from balances at June 30, 2021 are as follows:
Advances To Advances From
Governmental Funds:
Major Funds:
General Fund 524,552 $ - $
Impact Fees Special Revenue Fund 524,552 -
Total $ 524,552 524,552 $
The balance of $524,552 for advances from other funds in the Impact Fees Special Revenue Fund consists of cash advances from the General Fund and will be paid back with future impact fees. The City has indicated that there are no plans to collect on the advance within the next year.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
43 NOTE 5 – TRANSFERS
Transfers for the year ended June 30, 2021 are summarized as follows:
Transfers In Transfers Out
Governmental Funds:
Major Funds:
General Fund 456,998 $ (2) $ 1,321,234 (1)
CDBG Grants Special Revenue Fund 42,944 (5) -
Impact Fees Special Revenue Fund - 45,000 (6)
Measure N Special Revenue Fund 170,494 (2)
Debt Service Fund 1,384,469 (3) 4,635 (2)
Capital Projects Fund 84,168 (1), (3) -
Nonmajor Funds:
State Gas Tax Special Revenue Fund - 13,310 (3)
SB1 Special Revenue Fund 14,502 (1) -
Street and Road Fund (LTF) Special Revenue Fund 469,523 (3), (4) 148,595 (3) Measure T Special Revenue Fund - 239,781 (3)
Maintenance Assessment District Special Revenue Fund - 488,228 (2), (4) Transit System Special Revenue Fund - 23,383 (4)
HOME Investment Partnership Program
Special Revenue Fund - 710 (5)
EDBG Grant Special Revenue Fund 710 (5) 42,944 (5)
Enterprise Funds:
Major Funds:
Water Enterprise Fund 45,000 (6) -
Total $ 2,498,314 2,498,314 $
(1) The General Fund transferred out:
a. $14,502 to the SB1 Special Revenue Fund for future Street Projects. b. $70,858 to the Capital Projects Fund for the closing of Berenda Boat Ramp Project. c. $356,125, $122,914, and $756,835 to the Debt Service Fund for the Civic Center, General Fund CREB Bond, and Pension Obligation Bond debt service payments, respectively. (2) The General Fund transfers in consisted of $246,312 and $35,557 to cover operational and parks expenses from the Maintenance Assessment District Special Revenue Fund, $4,635 from the Debt Service Fund for closing of JCI project, and $170,494 from the Measure N Special Revenue Fund for the Police Department Fencing Project.
(3) The Gas Tax Fund transferred $13,310 to the Street and Road (LTF) Special Revenue Fund for various project costs. Street and Road (LTF) Special Revenue Fund transferred $148,595 to the Debt Service Fund for the PFA Streets debt service payment. Measure T Special Revenue Fund transferred $239,781 to the Street and Road (LTF) Special Revenue Fund for operations and maintenance. (4) Transit transferred $23,383 to the Street and Road (LTF) Special Revenue Fund for excess LTF funds due to additional COVID-19 funds and increases to original TDA allocations. Maintenance Assessment District Special Revenue Fund transferred $206,359 to the Street and Road (LTF) Special Revenue Fund for street light related costs incurred by the Street and Road (LTF) Special Revenue Fund.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
44 NOTE 5 – TRANSFERS (Continued)
(5) The EDBG Grant Special Revenue Fund transferred $42,944 to cover costs associated with grant maintenance and $710 was transferred in to cover contracted services for grant maintenance. (6) $45,000 was transferred from the Impact Fees Special Revenue Fund to cover expenses in the Water Enterprise Fund for the SCADA/SAMSARA project.
NOTE 6 – CAPITAL ASSETS
Capital assets activity of the governmental activities for the year ended June 30, 2021, was as follows:
Balance
July 1, 2020 Additions Reductions
Balance
June 30, 2021
Capital assets, not being depreciated:
Land 721,926 $ - $ - $ 721,926 $
Construction in progress 390,153 259,384 (185,109) 464,428 Total capital assets, not being depreciated 1,112,079 259,384 (185,109) 1,186,354 Capital assets, being depreciated:
Land improvements 1,569,968 - - 1,569,968
Buildings and improvements 7,677,380 - - 7,677,380
Machinery, equipment and vehicles 4,996,148 577,061 (281,534) 5,291,675 Infrastructure 20,257,293 - - 20,257,293
Total capital assets, being depreciated 34,500,789 577,061 (281,534) 34,796,316 Less accumulated depreciation for:
Land improvements (1,016,136) (74,645) - (1,090,781)
Buildings and improvements (2,887,637) (198,768) - (3,086,405) Machinery, equipment and vehicles (2,479,651) (449,912) 224,890 (2,704,673) Infrastructure (8,592,561) (560,971) - (9,153,532)
Total accumulated depreciation (14,975,985) (1,284,296) 224,890 (16,035,391) Total capital assets being depreciated, net 19,524,804 (707,235) (56,644) 18,760,925 Governmental activities capital assets, net 20,636,883 $ (447,851) $ (241,753) $ 19,947,279 $ Depreciation expense was charged to the following functions/programs of the governmental activities of the primary government as follows:
Governmental Activities:
General government $ 306,522
Public safety 259,279
Highways and streets 628,809
Culture and recreation 76,890
12,796
Total depreciation expense - governmental activities 1,284,296 $ Capital assets held by government's internal service funds are charged to the various functions based on their usage of the assets
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
45 NOTE 6 – CAPITAL ASSETS (Continued)
Capital assets activity of the business-type activities ended June 30, 2021 was as follows:
Balance
July 1, 2020 Additions Reductions
Balance
June 30, 2021
Capital assets, not being depreciated:
Land $ - 2,030,152 $ - $ 2,030,152 $
Construction in progress 121,740 2,767,040 - 2,888,780
Total capital assets, not being depreciated 4,797,192 121,740 - 4,918,932 Capital assets, being depreciated:
Land improvements - 1,253,762 - 1,253,762
Buildings and improvements - 3,989,173 - 3,989,173
Machinery, equipment, and vehicles 678,281 723,089 (49,825) 1,351,545 Infrastructure - 24,265,050 - 24,265,050
Total capital assets, being depreciated 678,281 30,231,074 (49,825) 30,859,530 Less accumulated depreciation for:
Land improvements (37,271) (798,786) - (836,057)
Buildings and improvements (78,934) (1,656,368) - (1,735,302) Machinery, equipment, and vehicles (73,583) (469,915) 49,825 (493,673) Infrastructure (537,680) (7,530,277) - (8,067,957)
Total accumulated depreciation (10,455,346) (727,468) 49,825 (11,132,989) Total capital assets being depreciated, net (49,187) 19,775,728 - 19,726,541 Business-type activities capital assets, net $ 72,553 24,572,920 $ - $ 24,645,473 $ Depreciation expense was charged to the following functions/programs of the governmental activities and business-type activities of the primary government as follows:
Business-Type Activities:
Water 428,702 $
Sewer 281,159
Storm drain 2,924
Airport 14,683
Total depreciation expense - business-type activities 727,468 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
46 NOTE 7 – LONG-TERM DEBT
The following is a summary of debt transactions of the City for the year ended June 30, 2021:
Amounts
June 30, June 30, Due Within
2020 Additions Reductions 2021 One Year
Governmental Activities:
Direct Placements
2000 Refunding of 1994 PFA Revenue Bonds 144,147 $ - $ (144,147) $ - $ - $ 2016 Civic Center Bond 381,000 - (188,000) 193,000 193,000 Total Direct Placements - 525,147 (332,147) 193,000 193,000 2005 Civic Center Bond 3,565,000 - - 3,565,000 -
2017 Series Lease Revenue Bonds 3,630,000 - (15,000) 3,615,000 20,000 State of California NSP Loan 9,913,215 - - 9,913,215 -
2019 Taxable Pension Obligation Bonds 10,500,000 - (345,000) 10,155,000 425,000 Add: Premiums 155,745 - (5,990) 149,755 -
Less: Discounts (121,153) - 6,456 (114,697) -
Compensated absences 412,959 319,722 (305,937) 426,744 323,509 Total Governmental Activities Long-Term Debt $ 319,722 28,580,913 $ (997,618) $ 27,903,017 $ 961,509 $ Business-Type Activities:
Direct Placements and Direct Borrowings
2001 USDA Sewer Bond 20,000 $ - $ (20,000) $ - $ - $
2001 Water Certificates of Participation 140,000 - (70,000) 70,000 70,000 State Water Revolving Loan 2,885,392 - (160,300) 2,725,092 160,300 Total Direct Placements and Borrowings - 3,045,392 (250,300) 2,795,092 230,300 2017 Series Water Bonds 8,150,000 - (25,000) 8,125,000 30,000 2017 Series Wastewater Bonds 3,180,000 - (65,000) 3,115,000 35,000 Add: Premiums 549,008 - (24,253) 524,755 -
Total Business-Type Activities Long-Term Debt $ - 14,924,400 $ (364,553) $ 14,559,847 $ 295,300 $ Long-term debt payable at June 30, 2021 is comprised of the following individual issues:
2000 Refunding of 1994 Public Financing Authority (PFA) Revenue Bonds In 1994, the City issued Revenue Bonds in the aggregate principal amount of $3,670,000 to finance the acquisition and construction of three projects: (1) capital improvements to the City Hall (the Land Acquisition/Facilities Rehabilitation Project) in the amount of $495,000; (2) Street/Road Improvement Project in the amount of $1,890,000; and (3) Wastewater Improvement Project in the amount of $920,000. The original amount of the note was secured by each project’s pledged sources of revenue, including the Street/Road Improvement Project’s pledge of the City’s net revenues from the state gas tax, and Measure A Funds; the Wastewater Plant Improvement Project’s net revenues from user fees collected by the Sewer Enterprise Fund; and General Fund revenues pledged for the Land Acquisition Project, to take advantage of lower interest rates and reduce the total future debt service payments. Semiannual payments range from $4,433 to $288,668 and are payable each March 15 and September 15 through 2021. In the event the City fails to make prompt payment, the Trustee may declare the entire unpaid balance immediately due. The City made final payment on this debt during the year ended June 30, 2021.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
47 NOTE 7 – LONG-TERM DEBT (Continued)
2005 Civic Center Bond
In 2005, the City issued Revenue Bonds in the aggregate principal amount of $5,890,000 to refund the 2002 $1,900,000 Civic Center Project Private Placement Financing and to finance certain public improvements. The original amount of the note ($5,890,000) was secured by revenues of the Public Financing Authority consisting primarily of lease payments to be received by the Authority from the City under a lease agreement dated July 1, 2005, by and between the Authority and the City which are payable from the City’s general fund for lease by the City of certain real property and public facilities located in the City and then constituting the Civic Center Project.
There is a provision whereby if the City is unable to make payment or does not comply with bond covenants the Trustee may, and shall at the written direction of the Owners of not less than a majority in aggregate principal amount of Bonds at that time outstanding, declare the principal of all bonds outstanding and the accrued interest thereon to be due and payable immediately. Semiannual payments range from $7,875 to $357,875 and are payable each January 1 and July 1 through 2036. During the year ended June 30, 2017 the 2005 Civic Center Bond was partially refunded by the 2016 Civic Center Bond for the purposes of savings on future debt service payments.
Annual debt service requirements to maturity of the 2005 Civic Center Bond are as follows:
Fiscal Year
Ending June 30 Principal Interest
2022 - $ 158,331 $
2023 - 158,331
2024 210,000 153,738
2025 220,000 144,331
2026 230,000 134,488
2027-2031 1,295,000 510,278
2032-2036 1,610,000 187,200
Total $ 1,446,697 3,565,000 $
2016 Refunding of 2005 Civic Center Bond
In 2016, the City issued Revenue Bonds in the aggregate principal amount of $1,120,000 to partially refund the 2005 Civic Center Bond. This was done to take advantage of lower interest rates and to save on future debt service payments. As a result, the 2005 Civic Center Bond is considered partially defeased and the liability for that bond is included in the statement of net position. The total debt service payments were reduced by $49,165. Semiannual payments range from $1,978 to $194,978 and are payable each January 1 and July 1 through 2022. There is a provision whereby if the City is unable to make payment or does not comply with bond covenants, the Trustee may declare the principal of all bonds outstanding and the accrued interest thereon to be due and payable immediately.
Annual debt service requirements to maturity of the 2016 Refunding of 2005 Civic Center Bonds are as follows:
Fiscal Year
Ending June 30 Principal Interest
2022 $ 1,978 193,000 $
Total $ 1,978 193,000 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
48 NOTE 7 – LONG-TERM DEBT (Continued)
2017 Series Lease Revenue Bonds
In 2018, the Chowchilla Public Financing Authority issued Revenue Bonds in the aggregate principal amount of $3,630,000 to finance the costs of clean renewable energy projects and other capital improvements. The original amount of the bonds ($3,630,000) were secured by a pledge of and and lien on revenues consisting primarily of lease payments from the City. There is a provision whereby if the City is unable to make payment or does not comply with bond covenants, the Trustee may, and shall at the written direction of the Owners of not less than a majority in aggregate principal amount of Bonds at that time outstanding, declare the principal of all bonds outstanding and the accrued interest thereon to be due and payable immediately. Principal is payable annually on June 1 in amounts ranging from $10,000 to $375,000, with interest due semi-annually at variable rates between 2.6% - 5.0%, maturing on June 1, 2047.
Annual debt service requirements to maturity of the 2017 Series Lease Revenue Bonds are as follows:
Fiscal Year
Ending June 30, Principal Interest
2022 20,000 $ 157,872 $
2023 20,000 157,318
2024 25,000 156,724
2025 25,000 155,929
2026 - 155,117
2027-2031 215,000 761,492
2032-2036 490,000 704,734
2037-2041 970,000 572,090
2042-2046 287,336 1,620,000
2047 9,994 230,000
Total $ 3,118,606 3,615,000 $
2019 Pension Obligation Bonds
In 2019, the Chowchilla Public Financing Authority issued Pension Obligation Bonds in the aggregate principal amount of $10,500,000 to finance a portion of the City’s unfunded accrued actuarial liability to the California Public Employees’ Retirement System (CalPERS) for the benefit of the City’s employees and pay the costs of issuance of the bonds. The bonds are unsecured obligations payable from any source of legally available funds of the City, including, but not limited to, amounts held by the City on deposit in its General Fund. Principal is payable annually on July 15 in amounts ranging from $10,000 to $640,000, with interest due semi-annually at variable rates between
2.94% - 4.75%, maturing on July 15, 2046. There is a provision whereby if the City is unable to make payment, does not comply with bond covenants, or files for reorganization or arrangement, the trustee may declare the entire unpaid principal and interest immediately due and payable.
Annual debt service requirements to maturity of the 2019 Pension Obligation Bonds are as follows:
Fiscal Year
Ending June 30, Principal Interest
2022 425,000 $ 396,108 $
2023 495,000 381,901
2024 530,000 365,675
2025 575,000 347,707
2026 620,000
2027-2031 2,755,000 1,448,427
2032-2036 2,935,000 881,272
2037-2041 1,180,000 347,581
2042-2046 630,000 92,744
2047 238 10,000
Total $ 10,155,000 4,261,653 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
49 NOTE 7 – LONG-TERM DEBT (Continued)
State of California Neighborhood Stabilization Program (NSP) Loan In fiscal year 2010-11, the City entered into a loan agreement with the Department of Housing and Community Development (DHCD). The City could borrow up to $10,000,000 to assist Olivero Ranch, LLC, in financing construction of 31 multi-family units, of which 30 units will be restricted to households at or below 50% of all AMI households in the City. The entire outstanding principal balance plus all accrued but unpaid interest is due in full on the 55th anniversary of the date of the Project’s receipt of certificates of occupancy. There is no interest due on the loan; however, any program income resulting from the financing provided to Olivero Ranch will be returned to the DHCD. The loan will be secured on the property on which the Project is located. The outstanding loan balance as of June 30, 2021 was $9,913,215. All loan payments will be generated by the operation of the housing development by the private developer which will pass through the City and back to the State.
2001 USDA Sewer Bond
The City entered into a loan agreement in 2001 for $268,325, with the United States Department of AgricultureRural Development (USDA-RD) for the purpose of construction capital improvements for the City’s wastewater system. Principal is payable annually on October 1 in amounts from $10,000 to $20,000, with interest due semiannually at 4.375%, maturing on September 1, 2020. There is a provision whereby if the City is unable to make payment, does not comply with covenants, or files for reorganization or rearrangement the trustee may declare the entire unpaid principal and interest immediately due and payable. The City made final payment on this debt during the year ended June 30, 2021.
2001 Water Certificate of Participation
Certificates of Participation (2000 Water System Improvement Project) in the amount of $1,114,558 were issued on August 30, 2001, for the purpose of financing the acquisition and construction of certain modifications, improvements and additions to the City’s water treatment storage and distribution facilities systems. Loan proceeds are utilized for the construction period only and are repaid with a United States Department of Agriculture Rural Development (USDA-RD) Bond Anticipation Note when the project is complete. The amount of the note is secured by the pledge of user fees collected by the Water Enterprise Fund. Principal is payable annually on August 1 in amounts from $50,000 to $70,000, with interest due semi-annually at 4.375% and matures on August 1, 2021. There is a provision whereby if the City is unable to make payment, does not comply with covenants, or files for reorganization or rearrangement, the trustee may declare the entire unpaid principal and interest immediately due and payable.
Annual debt service requirements to maturity for certificates of participation are as follows:
Fiscal Year
Ending June 30, Principal Interest
2022 1,531 70,000
Total $ 1,531 70,000 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
50 NOTE 7 – LONG-TERM DEBT (Continued)
2017 Series Water Revenue Bonds
In 2017, the Chowchilla Public Financing Authority issued Revenue Bonds in the aggregate principal amount of $8,160,000 to finance capital projects in the Water Fund. The original amount of the bonds ($8,160,000) were secured by installment payments to be made by the City of Chowchilla under an installment sale agreement. There is a provision whereby if the City is unable to make payment or does not comply with bond covenants, the Trustee may, and shall at the written direction of the Owners of not less than a majority in aggregate principal amount of Bonds at that time outstanding, declare the principal of all bonds outstanding and the accrued interest thereon to be due and payable immediately. These installment payments are secured by a pledge of and lien on the net revenues of the Water Fund. Principal is payable annually on June 1 in amounts from $10,000 to $775,000, with interest due semiannually at variable rates between 2.6% - 5.0%, maturing on June 1, 2047.
Annual debt service requirements to maturity of the 2017 Series Water Revenue Bonds are as follows:
Fiscal Year
Ending June 30, Principal Interest
2022 30,000 $ 360,720 $
2023 35,000 359,832
2024 - 358,737
2025 25,000 358,737
2026 40,000 357,737
2027-2031 580,000 1,745,100
2032-2036 1,345,000 1,580,630
2037-2041 2,470,000 1,233,149
2042-2046 3,310,000 505,066
2047-2048 12,673 290,000
Total $ 6,872,381 8,125,000 $
2017 Series Wastewater Revenue Bonds
In 2017, the Chowchilla Public Financing Authority issued Revenue Bonds in the aggregate principal amount of $3,310,000 to finance capital projects in the Sewer fund. The original amount of the bonds ($3,310,000) was secured by installment payments to be made by the City of Chowchilla under an installment sale agreement. There is a provision whereby if the City is unable to make payment or does not comply with bond covenants the Trustee may and shall at the written direction of the Owners of not less than a majority in aggregate principal amount of Bonds at that time outstanding, declare the principal of all bonds outstanding and the accrued interest thereon to be due and payable immediately. These installment payments are secured by a pledge of and lien on the net revenues of the Sewer Fund. Principal is payable annually on June 1 in amounts from $75,000 to $275,000, with interest due semiannually at variable rates between 2.33%-4.58%, maturing on June 1, 2047.
Annual debt service requirements to maturity of the 2017 Series Wastewater Revenue Bonds are as follows:
Fiscal Year
Ending June 30, Principal Interest
2022 $ 137,931 35,000 $
2023 136,531 35,000
2024 135,131 40,000
2025 133,531 45,000
2026 131,731 50,000
2027-2031 628,552 295,000
2032-2036 550,034 490,000
2037-2041 420,362 760,000
2042-2046 217,803 1,090,000
2047 12,595 275,000
Total $ 2,504,201 3,115,000 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
51 NOTE 7 – LONG-TERM DEBT (Continued)
State Water Revolving Loan
The City entered into a loan agreement in July 2014 with the State Water Resources Control Board for the purpose of undertaking a project which will enable the City to meet safe drinking water standards established pursuant Chapter 4 of Part 12 of Division 104 of the health and safety Code and the California Code of Regulations, Title 22, or to address other health concerns. The City was awarded a loan in the amount of $3,205,991 for the purpose of installing water meters citywide. The loan is to be repaid over a 20-year period at an interest rate of 0%, which does not begin until the project is completed. In the event of a default, the State shall charge interest in the amount of one tenth of one percent (0.1%) of the delinquent amount each day it remains unpaid past the tenth (10th) day after the date payment was due. The City completed the project during 2018 and the first payment was due on January 1, 2019.
Annual debt service requirements to maturity of the 2017 Series Wastewater Revenue Bonds are as follows:
Fiscal Year
Ending June 30, Principal
2022 160,300 $
2023 160,300
2024 160,300
2025 160,300
2026 160,300
2027-2031 801,498
2032-2036 801,498
2037-2039 320,596
Total $ 2,725,092
Special Assessment District Debt
On March 15, 2017, the Chowchilla Public Financing Authority issued $3,138,000 of 2017 Refunding Revenue Bonds (Reassessment District No 2003-1 Greenhills) for the purpose of creating annual debt savings. The total debt service payments were reduced by $140,898. The 2017 direct placement Refunding Bonds are secured by a pledge of and first lien on the revenues to be derived from the Local Agency Bonds (2003 Local Obligations).
The Authority will receive the reserve fund upon final maturity. The City acts as agent for the property owners in collecting assessment installments of principal and interest and forwarding collections to the bond trustee. The City’s liability, in the event of delinquent assessments shall not exceed the balance of the established Reserve Fund. The amount outstanding as of June 30, 2021 is $1,477,000.
On April 30, 2014, the City issued $3,962,800 of 2013-1 Limited Obligation Refunding Bonds (the “2013 Local Obligations”) pursuant to the provisions of the Improvement Bond Act of 1915 to refund the outstanding 2002-1 Local Obligations Improvement Bonds (the “2002-1 Local Obligations”), for the purpose of creating annual debt savings. The direct placement 2013 Local Obligations are fully secured by the unpaid special assessments levied on commitment. The 2013 Local Obligations are not secured by the general taxing power of the City, the State of California, or any political subdivision of the State. The City acts as agent for the property owners in collecting assessment installments of principal and interest and forwarding collections to the bond trustee. The City’s liability in the event of delinquent assessments, shall not exceed the balance of the established Reserve Fund. The amount outstanding as of June 30, 2021 is $2,305,328.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
52 NOTE 7 – LONG-TERM DEBT (Continued)
Special Assessment District Debt (Continued)
In 2007, the City issued Community Facilities District No. 2006-1 Improvement Area 1 Special Tax Bonds in the aggregate principal amount of $8,615,000 to finance certain capital expenses of the District, to pay costs of issuance of the Bonds, and to fund two years’ capitalized interest on the Bonds. The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended. The Bonds ($8,615,000) are secured under the Trust indenture by a pledge and lien upon Net Taxes levied on parcels within the District and all moneys in the Special Tax Fund. The Bonds were issued for the purpose of financing the acquisition, construction, expansion, improvement, or rehabilitation of facilities to serve the area within the District and its neighboring areas. Semiannual payments range from $13,375 to $560,486 and are payable each March 1 and September 1 through 2037. The amount outstanding as of June 30, 2021 is $6,350,000.
Since the City is not obligated in any manner for special assessment debt, the debt is not recorded in these financial statements.
NOTE 8 – DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the statement of net position (and when applicable, the balance sheet) 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 future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditures) until then. The City has pension related items that qualify to be reported in deferred outflows of resources. The pension-related deferred outflows of resources are described in detail in Note 9.
In addition to liabilities, the statement of net position (and when applicable, the balance sheet) 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 future period(s) and so, will not be recognized as an inflow of resources (revenue) until that time. The City has two types of items that qualify for reporting in this category, and they are unavailable revenues and pension deferrals.
Unavailable revenues arise only under a modified accrual basis of accounting and is reported only in the governmental funds balance sheet. Deferred inflows of resources reported in the governmental funds for unavailable revenues are as follows:
General Fund
CDBG
Grants
Special
Revenue
Other
Governmental
Funds Total
Intergovernmental $ - 162,766 $ 508,936 $ 671,702 $
Notes 21,579,282 - 1,525,396 23,104,678
Total $ 21,579,282 162,766 $ 2,034,332 $ 23,776,380 $
The City has pension-related items that qualify to be reported in deferred inflows of resources. The pensionrelated deferred inflows of resources are described in detail in Note 9.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
53 NOTE 9 – DEFINED BENEFIT PENSION PLAN
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 Chowchilla (City) sponsors seven rate plans (three miscellaneous and four 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 to total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonduty 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
2nd Tier
Miscellaneous
PEPRA
Prior to January 1, 2011 thru On or after
Hire date January 1, 2013 December 31, 2012 January 1, 2013 Benefit formula 2.5% @ 55 2% @ 60 2% @ 62
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 63 52 - 67
Monthly benefits, as a % of annual salary 2.0% to 2.5% 1.092% to 2.418% 1.0% to 2.5% Required employee contribution rates 8% 7% 6.75%
Required employer contribution rates 12.361% 8.794% 7.732% Safety
1st Tier
Safety (Police)
2nd Tier
Safety (Police)
PEPRA
Prior to January 1, 2011 thru On or after
Hire Date January 1, 2013 December 31, 2012 January 1, 2013 Benefit formula 3% @ 55 2% @ 55 2% @ 57
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50 - 55 50 - 55 50 - 57
Monthly benefits, as a % of annual salary 2.4% to 3.0% 1.426% to 2.0% 1.426% to 2.0% Required employee contribution rates 9% 7% 10.0%
Required employer contribution rates 21.746% 14.810% 11.114% Beginning in fiscal year 2016, 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 and side fund, if applicable. The dollar amounts are billed on a monthly basis. The City’s contribution for the unfunded liability was $112,290 for the fiscal year ended June 30, 2021.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
54 NOTE 9 – DEFINED BENEFIT PENSION PLAN (Continued)
General Information about the Pension Plans (Continued) Contributions – Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. 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. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.
The City’s contributions to the Plan recognized as a part of pension expense for the year ended June 30, 2021 were $523,962.
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 $1,290,678.
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, 2020, 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, 2019, rolled forward to June 30, 2020, 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, 2019 and 2020 was as follows:
Proportion - June 30, 2019 0.0057%
Proportion - June 30, 2020 0.0119%
Change - Increase (Decrease) 0.0062%
For the year ended June 30, 2021, the City recognized pension expense of $1,913,272. At June 30, 2021, the City reported deferred outflows of resources and inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to the measurement date 648,797 $ - $ Changes of Assumptions - 6,657
Differences between actual and expected experience 83,956 - Net differences between projected and actual earnings on plan investments - 32,996
Change in employer's proportion 396,445 4,335,223
Differences between the employer's actual contributions and the employer's proportionate share of contributions 944,845 4,622,178 Total $ 5,286,725 5,784,372 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
55 NOTE 9 – DEFINED BENEFIT PENSION PLAN (Continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions (Continued)
$648,797 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
2022 (13,209) $
2023 (28,165)
2024 (125,918)
2025 16,142
2026 -
Thereafter -
Actuarial Assumptions
The total pension liabilities in the June 30, 2019 actuarial valuations were determined using the following actuarial assumptions:
Valuation Date June 30, 2019
Measurement Date June 30, 2020
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%(1)
Mortality Derived using CalPERS' Membership
Data for all Funds(2)
(1) Net of pension plan investment expenses, including inflation (2) 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.
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2019 valuation were based on the results of December 2017 actuarial experience study for the period 1997 to 2015. Further details of the Experiences Study can be found on the CalPERS website.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
56 NOTE 9 – DEFINED BENEFIT PENSION PLAN (Continued)
Discount Rate
The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members 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 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 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 shortterm and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the 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 equivalent to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rates of return by asset class are as follows:
Asset Class (a)
New Strategic
Allocation
Real Return
Years 1-10(b)
Real Return
Years 11+(c)
Global Equity 50.00% 4.80% 5.98%
Fixed Income 28.00% 1.00% 2.62%
Inflation Assets 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Assets 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
(b) An expected inflation of 2.0% used for this period
(c)
An expected inflation of 2.92% used for this period
(a) In the CalPERS CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
57 NOTE 9 – DEFINED BENEFIT PENSION PLAN (Continued)
Discount Rate (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 -1%
6.15%
Current Discount Rate
7.15%
Discount Rate +1%
8.15%
$ 1,290,678 6,557,047 $ (3,048,686) $
Pension Plan Fiduciary Net Position
Detailed information about the Plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
Payable to the Pension Plan
The City had an outstanding amount of contributions of $29,451 due to the pension plan required for the year ended June 30, 2021.
NOTE 10 – POST-RETIREMENT HEALTH CARE BENEFITS
The City provides no post-employment benefits for its employees. However, former employees may be maintained on the City’s health insurance programs through the City’s Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance continuation plan.
NOTE 11 – RISK MANAGEMENT
The City is a member, along with fifty-eight other public entities, of Central San Joaquin Valley Risk Management Authority (the Authority) organized under a joint powers agreement pursuant to the California Government Code for the purpose of operating and maintaining a cooperative program of self-insurance and risk management which benefits its member cities through cost reductions, insurance coverage stability, and loss control techniques. The Authority is governed by a Board of Directors, consisting of one member appointed by each member city. The Authority maintains pooled coverage programs for its member cities for workers’ compensation, liability, auto-physical damage, property, employment practices liability, and errors and omissions coverage. For workers’ compensation and liability programs, each program and program year is accounted for and administered as a separate operation.
Under the pooled liability program, expected claims are actuarially determined as are required deposits to cover those claims along with all estimated operating costs. Each year is retrospectively adjusted five years following its conclusion and any funds remaining are returned to the member city. Likewise, funds paid out in excess of their original deposits are collected from the member city.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
58 NOTE 11 – RISK MANAGEMENT (Continued)
The City is covered for the first $1,000,000 of each general liability claim and $500,000 of each workers’ compensation claim through the Authority. The City has the right to receive refunds of the obligation to pay assessments based on a formula which, among other expenses, charges the City’s account for liability losses under $1,000,000 and workers’ compensation losses under $500,000. The Authority is a member of the local Agency Workers’ Compensation Excess Joint Powers Authority (LAWCX) for the purpose of providing excess coverage. Any claims of $500,000 up to $150,000,000 are covered under a purchased policy through the membership with the LAWCX. The Authority is a member of the California Affiliated Risk Management Authorities (CARMA) for the purpose of providing excess coverage in a risk sharing pool. The CARMA program provided coverage in excess for the Authority’s retained limit up to $19,000,000.
The financial position results of operations of the Authority are as follows for June 30, 2021:
Total assets 150,621,596 $
Total liabilities 129,774,819
Total net position $ 20,846,777
Revenues 55,391,674 $
Expenses 54,309,239
Change in net position $ 1,082,435
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 its governing documents.
The City has established the following retained limits for the coverages shown: $25,000 for liability; $100,000 for worker’s compensation; $1,000 for property damage; $500 deductible on vehicles.
NOTE 12 – DEFICIT IN FUND EQUITY
Nonmajor Governmental Funds
SAFER Fire Grant Fund – A deficit in fund balance at June 30, 2021, in the amount of $1,104, is due to current year expenditures in excess of revenues. This deficit is expected to be alleviated through future revenues or transfers from other funds.
Transit System Fund – A deficit in fund balance at June 30, 2021, in the amount of $106,170, is due to current year expenditures in excess of revenues. This deficit is expected to be alleviated through future revenues or transfers from other funds.
Internal Service Funds
Fleet Maintenance Internal Service Fund – A deficit in net position at June 30, 2021, in the amount of $3,473, is due to current year expenditures in excess of revenues. This deficit is expected to be alleviated through future revenues or transfers from other funds.
Information Technology Internal Service Fund – A deficit in net position at June 30, 2021, in the amount of $16,254, is due to current year expenditures in excess of revenues. This deficit is expected to be alleviated through future revenues or transfers from other funds.
Employee Benefits Internal Service Fund – A deficit in net position at June 30, 2021, in the amount of $439,456, exists because the fund was established on a pay-as-you go basis for the purpose of funding the annual accrued leave liability. As employees are paid for their accumulated leave in the future, the fund in which their normal salary is charged makes a transfer to the Employee Benefit Fund to offset the expense.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
59 NOTE 13 – 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 the City Attorney and 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 participates in various federal grant programs, the principal of which are subject to program compliance audits pursuant to the Single Audit Act as amended. Accordingly, the government’s compliance with applicable grant requirements will be established at a future date. The amount of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although the government anticipates such amounts, if any, will be immaterial.
Encumbrances
Encumbrance accounting is employed as an extension of formal budgetary integration for the General Fund, special revenue funds, and capital projects funds. At June 30, 2021, certain amounts which were previously restricted, committed, or assigned for specific purposes have been encumbered in the governmental funds.
Significant encumbrances included in governmental fund balances are as follows:
Restricted
Fund Balance
Committed
Fund Balance
Assigned
Fund Balance
General Fund - $ - $ 345,439 $
Capital Projects Fund 150,433 - -
Measure N 151,651
Non-Major Governmental 135,262 - -
Encumbrances Included in:
COVID-19 Pandemic
On March 11, 2020 the World Health Organization declared the outbreak of coronavirus (COVID-19) a pandemic.
Accordingly, some functions of the City’s operations have been limited to protect the health and safety of its employees. The financial impact that could occur as a result of the pandemic is unknown at this time.
NOTE 14 – RESTATEMENT OF BEGINNING FUND BALANCE
A. Implementation of GASB 84
The City has adopted the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities, which became effective during the year ended June 30, 2021. The intention of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported.
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
60 NOTE 14 – RESTATEMENT OF BEGINNING FUND BALANCE (Continued) B. Prior Period Adjustment
During the current fiscal year management became aware that certain revenues previously recorded as fiduciary fund activity did not meet the criteria for reporting as fiduciary. The revenues for these activities have been determined to be properly reported within the City’s General Fund. Accordingly, the city has recorded a prior period adjustment for this misstatement.
A summary of the original net position and effects of the correction are noted below.
GovernmentWide Governmental
Funds Fiduciary Fund
Governmental
Activities
General
Fund Custodial
prevoiusly reported $ 5,455,298 29,246,976 $ - $
Prior period adjustments:
Understatement of revenue 216,994 216,994 -
Total prior period adjustments 216,994 216,994 -
Change in accounting principle:
Record the beginning custodial net position in
compliance with GASB84 - - 2,699,400
Total change in accounting principle - - 2,699,400
$ 5,672,292 29,463,970 $ 2,699,400 $
Fund balance/net position, June 30, 2020, as
Fund balance/net position, July 1, 2020, as restated
NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X26 (“the Bill”) that dissolved all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Chowchilla that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit.
The Bill provides that upon dissolution of a redevelopment agency, the city of another unit of local government will agree to serve as the “Successor Agency” to hold the assets until they are distributed to other units of state and local government. On January 10, 2012 the City Council elected to become the Successor Agency for the former redevelopment agency in accordance with the Bill as part of City Resolution Number 5-12.
After enactment of the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments.)
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
61 NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY (Continued)
In future years, successor agencies will only be allocated revenue in the amount that is necessary to pay the 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.
The Bill directs the State Controller of the State of California to renew the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure of encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the Successor Agency by the Bill.
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 to the City.
In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012.
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.
Cash and Investments
As of June 30, 2021, the Successor Agency has a cash and investment balance of $74,160.
Long-Term Debt
Long-term debt reported in the Successor Agency Trust Fund at June 30, 2021 was comprised of the following:
Amounts Amounts Due
June 30, June 30, Due Within More Than
2020 Additions Reductions 2021 One Year One Year
2016 Successor Agency Tax 5,450,000 $ - $ (250,000) $ 5,200,000 $ 260,000 $ 4,940,000 $ Refunding Bond
Add: Premiums - 205,444 (12,689) 192,755 - 192,755
Total 5,655,444 $ - $ (262,689) $ 5,392,755 $ 260,000 $ 5,132,755 $
CITY OF CHOWCHILLA
NOTES TO THE BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
62 NOTE 15 – SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY (Continued)
2016 Successor Agency Tax Allocation Refunding Bonds
In 2016, the Successor Agency of the City of Chowchilla issued Tax Allocation Refunding Bonds in the aggregate principal amount of $6,190,000 to refund the 2005 RDA Tax Allocation Bonds. This was done to take advantage of lower interest rates and to save on future debt service payments. As a result, the 2005 RDA Tax Allocation Bonds are considered defeased and the liability for that bond is not included in fiduciary fund (privatepurpose trust fund) statement of net position. The total debt service payments were reduced by $365,124. The original amount of the note - $6,190,000 – was secured by a pledge of tax revenues consisting of tax increment payments to be received by the Successor Agency. Semiannual payments range from $5,294 to $390,294 and are payable each February 1 and August 1 through 2036.
There is a provision whereby if the Successor Agency is unable to make payment, does not comply with bond covenants, or files for reorganization or arrangement, the Trustee may declare the principal of all bonds outstanding and the accrued interest thereon to be due and payable immediately.
Annual debt service requirements to maturity of the 2016 Successor Agency Tax Allocation Refunding Bonds are as follows:
Fiscal Year
Ending June 30, Principal Interest
2022 260,000 $ 146,856 $
2023 265,000 138,981
2024 275,000 130,881
2025 285,000 121,056
2026-2030 1,595,000 425,619
2031-2035 1,760,000 216,591
2036-2037 760,000 21,038
Total $ 1,201,022 5,200,000 $
Insurance
The Successor Agency is covered under the City of Chowchilla’s insurance policies. Therefore, the limitation and self-insured retentions applicable to the City also apply to the Successor Agency. Additional information as to coverage can be found in Note 11.
63 REQUIRED SUPPLEMENTARY INFORMATION
CITY OF CHOWCHILLA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2021
64 Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Taxes 2,986,614 $ 2,986,614 $ 3,648,384 $ 661,770 $
Licenses and permits 298,800 666,057 729,578 63,521
Fines and penalties 218,098 283,098 122,340 (160,758)
Intergovernmental 2,656,614 2,657,450 2,967,329 309,879 Use of money and property 204,694 204,694 127,120 (77,574) Charges for services 158,489 192,354 144,776 (47,578)
Miscellaneous 77,457 101,307 218,240 116,933
Total revenues 6,600,766 7,091,574 7,957,767 866,193
EXPENDITURES
Current:
General government 547,337 526,176 343,275 182,901
Public safety 4,301,443 4,003,471 3,687,910 315,561
Culture and recreation 613,455 556,830 502,590 54,240
Community development 619,411 1,062,112 837,514 224,598 Capital outlay 283,165 1,345,165 265,366 1,079,799
Total expenditures 6,364,811 7,493,754 5,636,655 1,857,099 Excess (deficiency) of revenues
over (under) expenditures 235,955 (402,180) 2,321,112 2,723,292
OTHER FINANCING SOURCES (USES)
Transfers in 164,700 1,210,347 456,998 (753,349)
Transfers out (1,345,456) (866,875) (1,321,234) 24,222
Total other financing sources (uses) (702,175) (135,109) (864,236) (729,127) Net change in fund balance $ (537,289) (466,220) $ 1,456,876 1,994,165 $ Fund balances - beginning, restated 5,672,292
Fund balances - ending $ 7,129,168
CITY OF CHOWCHILLA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGET AND ACTUAL
CDBG GRANTS SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2021
65 Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Intergovernmental 530,000 $ 2,121,190 $ 51,668 $ (2,069,522) $ Use of money and property 15,230 15,230 3,803 (11,427)
Charges for services 10,700 10,700 37,816 27,116
Total revenues 2,147,120 555,930 93,287 (2,053,833)
EXPENDITURES
Current:
Community development 2,198,010 606,820 61,277 2,136,733 Total expenditures 2,198,010 606,820 61,277 2,136,733
Excess (deficiency) of revenues
over (under) expenditures (50,890) (50,890) 32,010 82,900
OTHER FINANCING SOURCES (USES)
Transfers in 43,000 8,000 42,944 (56)
Total other financing sources (uses) 43,000 8,000 42,944 (56) Net change in fund balance $ (7,890) (42,890) $ 74,954 $ 82,844 Fund balances - beginning 922,511
Fund balances - ending $ 997,465
CITY OF CHOWCHILLA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGET AND ACTUAL
IMPACT FEES SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2021
66 Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Use of money and property 72,171 $ 72,171 $ 15,902 $ (56,269) $ Charges for services 31,967 31,967 102,757 70,790
Miscellaneous 2,350 2,350 - (2,350)
Total revenues 106,488 106,488 118,659 12,171
Excess (deficiency) of revenues
over (under) expenditures 106,488 106,488 118,659 12,171
OTHER FINANCING SOURCES (USES)
Transfers out (45,000) (45,000) (45,000) -
Total other financing sources (uses) (45,000) (45,000) (45,000) - Net change in fund balance $ 61,488 61,488 $ 73,659 $ 12,171 Fund balances - beginning 3,448,797
Fund balances - ending $ 3,522,456
CITY OF CHOWCHILLA
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE – BUDGET AND ACTUAL
MEASURE N SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2021
67 Original Final Variance with
Budget Budget Actual Final Budget
REVENUES
Taxes 1,614,000 $ 1,614,000 $ 2,447,009 $ 833,009 $
Use of money and property 11,000 11,000 9,014 (1,986)
Miscellaneous - - 9,403 9,403
Total revenues 1,625,000 1,625,000 2,465,426 840,426
EXPENDITURES
Current:
Public safety 1,393,127 1,393,127 757,224 635,903
Total expenditures 1,393,127 1,393,127 757,224 635,903
Excess (deficiency) of revenues
over (under) expenditures 231,873 231,873 1,476,329 1,708,202
OTHER FINANCING SOURCES (USES)
Transfers out (684,096) (159,096) (170,494) 513,602
Total other financing sources (uses) (684,096) (159,096) (170,494) 513,602 Net change in fund balance $ (452,223) 72,777 $ 1,537,708 $ 1,989,931 Fund balances - beginning 1,588,589
Fund balances - ending $ 3,126,297
CITY OF CHOWCHILLA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2021
68 NOTE 1 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information
The City establishes annual budgets for the General, Special Revenue Funds, and Capital Projects Funds.
Except for encumbrances and long-term projects in progress, which are carried forward to the following year, all appropriations remaining will lapse at year end. The following procedures are followed in establishing the budgetary data reflected in the budgetary comparison schedules:
1) The department heads prepare a budget request based upon the previous year’s expenditures. 2) A meeting is held between the department heads, Finance Director and the City Administrator for the purpose of reviewing and prioritizing the budget requests. 3) The City Administrator submits the proposed City Budget to the City Council, who makes decisions regarding department budgets.
4) The approved budget is placed in the City accounting system and monitored by the Finance Department as well as by the department heads.
5) Budgets are adopted on the modified accrual basis. Revenues are budgeted in the year receipt is expected, and expenditures are budgeted in the year that the applicable purchase orders are expected to be issued. The Debt Service Fund budget is prepared to provide funding for general obligation debt service when liabilities are due for payment. The level of control (level at which expenditures may not exceed budget) is at fund level for the General Fund, fund level for the Special Revenue Funds, and project level for the Capital Projects Funds.
CITY OF CHOWCHILLA
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN SCHEDULE OF THE CITY’S
PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
LAST 10 YEARS*
AS OF JUNE 30, 2021
69 2015 2016 2017 2018 2019 2020 2021
Proportion of the net pension liability 0.1141% 0.1170% 0.1107% 0.1088% 0.1102% 0.0057% 0.0119% Proportionate share of the net pension liability 7,165,731 $ 8,032,145 $ 9,583,127 $ 10,793,945 $ 10,615,478 $ 579,267 $ 1,290,678 $ Covered payroll 3,644,535 $ 3,617,983 $ 3,411,501 $ 3,728,201 $ 3,960,212 $ 3,991,276 $ 4,313,602 $ Proportionate share of the net pension liability as percentage of covered payroll 196.62% 222.01% 280.91% 289.52% 268.05% 14.51% 29.92% Plan fiduciary net position as a percentage of the
total pension liability 78.02% 74.09% 70.07% 69.45% 70.84% 99.14% 97.37% Notes to Schedule:
Change in Benefit Terms - None
Change in Assumptions - None
*Schedule is intended to show information for ten years. Additional years will be displayed as they become available.
CITY OF CHOWCHILLA
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN
SCHEDULE OF CONTRIBUTIONS
LAST 10 YEARS*
AS OF JUNE 30, 2021
70 2014 2015 2016 2017 2018 2019 2020 2021
Actuarily required contribution (actuarially determined) $ 745,347 788,942 $ 848,864 $ 942,347 $ 1,034,227 $ 694,478 $ 523,962 $ 648,797 $ Contributions in relation to the actuarially determined contributions 745,347 788,942 848,864 942,347 1,034,227 11,304,271 523,962 648,797 Contribution deficiency (excess) $ - - $ - $ - $ - $ (10,609,793) $ - $ - $ Covered payroll 3,644,535 $ 3,617,983 $ 3,411,501 $ 3,728,201 $ 3,960,212 $ 3,991,276 $ 4,313,602 $ 4,892,282 $ Contributions as a percentage of covered payroll 21.65% 20.60% 24.88% 25.28% 26.12% 283.22% 12.15% 13.26% *Schedule is intended to show information for ten years. Additional years will be displayed as they become available. 71 OTHER SUPPLEMENTARY INFORMATION
CITY OF CHOWCHILLA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2021
72 Maintenance
State Street & SAFER Fire Measure T Assessment
Gas Tax SB1 Road (LTF) Grant Fund Fund District
ASSETS
Cash and investments 982,518 $ 663,375 $ 1,186,212 $ - $ 1,419,066 $ 638,993 $ Accounts receivable - - 45,771 - - -
Intergovernmental receivables 16,846 63,241 299,735 - 137,947 10,282 Notes receivable, net - - - - - -
Land held for resale - - - - - -
Total assets 999,364 $ 726,616 $ 1,531,718 $ - $ 1,557,013 $ 649,275 $
LIABILITIES
Accounts payable - $ - $ 63,798 $ - $ 1,171 $ 10,782 $
Due to other funds - - - 1,104 - -
Total liabilities - - 63,798 1,104 1,171 10,782
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - 299,735 - 99,455 -
Total deferred inflows of resources - - 299,735 - 99,455 -
FUND BALANCES (DEFICIT)
Restricted for:
Highway and streets 726,616 999,364 1,168,185 - 1,456,387 638,493 Community development - - - - - -
Transit - - - - - -
Unassigned - - - (1,104) - -
Total fund balances (deficit) 999,364 726,616 1,168,185 (1,104) 1,456,387 638,493 $ 726,616 999,364 $ 1,531,718 $ - $ 1,557,013 $ 649,275 $ Total liabilities, deferred inflows of
resources, and fund balances
CITY OF CHOWCHILLA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2021
(Continued)
73 Low and
Home Moderate
Investment Income
Transit Partnership EDBG Housing
System Program Grants Asset Fund Total
ASSETS
Cash and investments - $ 1,311,496 $ 66,672 $ - $ 6,268,332 $ Accounts receivable - - - - 45,771
Intergovernmental receivables 427,435 - - - 955,486
Notes receivable, net - 1,447,962 - 77,434 1,525,396
Land held for resale - - - 104,000 104,000
Total assets 427,435 $ 2,759,458 $ 66,672 $ 181,434 $ 8,898,985 $
LIABILITIES
Accounts payable 2,181 $ 207 $ 1,320 $ - $ 79,459 $
Due to other funds 421,678 - - 45,559 468,341
Total liabilities 423,859 207 1,320 45,559 547,800
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 109,746 1,447,962 - 77,434 2,034,332 Total deferred inflows of resources 109,746 1,447,962 - 77,434 2,034,332
FUND BALANCES (DEFICIT)
Restricted for:
Highway and streets - - - - 4,989,045
Community development 1,311,289 - 65,352 58,441 1,435,082 Transit - - - - -
Unassigned (106,170) - - - (107,274)
Total fund balances (deficit) 1,311,289 (106,170) 65,352 58,441 6,316,853 $ 427,435 2,759,458 $ 66,672 $ 181,434 $ 8,898,985 $
Total liabilities, deferred inflows of
resources, and fund balances
CITY OF CHOWCHILLA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
74 Maintenance
State Street & SAFER Fire Measure T Assessment
Gas Tax SB1 Road (LTF) Grant Fund Fund District
REVENUES
Intergovernmental 381,332 $ 347,041 $ 132,943 $ - $ 751,017 $ - $ Use of money and property 3,337 1,930 2,940 - - 3,724
Charges for services - - - - - 312,655
Miscellaneous - - 10,767 - - -
Total revenues 384,669 348,971 146,650 - 751,017 316,379
EXPENDITURES
Current:
Public safety - - - 1,104 - -
Highway and streets - - 307,688 - 129,417 297,964
Community development - - - - - -
Capital outlay - - 115,630 - - -
Total expenditures - - 423,318 1,104 129,417 297,964
Excess (deficiency) of revenues
over (under) expenditures 348,971 384,669 (276,668) (1,104) 621,600 18,415
OTHER FINANCING SOURCES (USES)
Transfers in - 14,502 469,523 - - -
Transfers out - (13,310) (148,595) - (239,781) (488,228) Total other financing
sources (uses) 14,502 (13,310) 320,928 - (239,781) (488,228) Net change in fund balances 371,359 363,473 44,260 (1,104) 381,819 (469,813) 363,143 628,005 1,123,925 - 1,074,568 1,108,306
$ 726,616 999,364 $ 1,168,185 $ (1,104) $ 1,456,387 $ 638,493 $ Fund balances (deficit) - beginning
Fund balances (deficit) - ending
CITY OF CHOWCHILLA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(Continued)
75 Low and
Home Moderate
Investment Income
Transit Partnership EDBG Housing
System Program Grants Asset Fund Total
REVENUES
Intergovernmental 234,119 $ 1,304,329 $ - $ - $ 3,150,781 $ Use of money and property - 642 606 - 13,179
Charges for services 14,193 - - - 326,848
Miscellaneous - 9,055 - - 19,822
Total revenues 257,367 1,304,971 606 - 3,510,630
EXPENDITURES
Current:
Public safety - - - - 1,104
Highway and streets 340,158 - - - 1,075,227
Community development - 2,911 30,205 - 33,116
Capital outlay - - - - 115,630
Total expenditures 340,158 2,911 30,205 - 1,225,077
Excess (deficiency) of revenues
over (under) expenditures 1,302,060 (82,791) (29,599) - 2,285,553
OTHER FINANCING SOURCES (USES)
Transfers in - - 710 - 484,735
Transfers out (710) (23,383) (42,944) - (956,951)
Total other financing
sources (uses) (710) (23,383) (42,234) - (472,216)
Net change in fund balances (106,174) 1,301,350 (71,833) - 1,813,337 9,939 4 137,185 58,441 4,503,516
Fund balances (deficit) - ending $ 1,311,289 (106,170) $ 65,352 $ 58,441 $ 6,316,853 $ Fund balances (deficit) - beginning
CITY OF CHOWCHILLA
COMBINING STATEMENT OF NET POSITION
NONMAJOR ENTERPRISE FUNDS
JUNE 30, 2021
76 Storm
Drain Airport Total
ASSETS
Current assets:
Cash and investments 1,823,018 $ 77,799 $ 1,900,817 $
Accounts receivable, net 30,249 - 30,249
Intergovernmental receivables 19,399 - 19,399
Total current assets 97,198 1,853,267 1,950,465
Noncurrent assets:
Capital assets:
Nondepreciable 394,200 452,951 847,151
Depreciable, net of accumulated depreciation 121,131 198,936 320,067 Total noncurrent assets 574,082 593,136 1,167,218
Total assets 671,280 2,446,403 3,117,683
DEFERRED OUTFLOWS OF RESOURCES
Contributions to pension plan in current fiscal year 3,015 1,186 4,201 Deferred outflows of resources from pensions 12,171 33,183 45,354 Total deferred outflows of resources 36,198 13,357 49,555
LIABILITIES
Current liabilities:
Accounts payable 3,580 11,794 15,374
Total current liabilities 11,794 3,580 15,374
Noncurrent liabilities:
Net pension liability 5,519 2,170 7,689
Total noncurrent liabilities 5,519 2,170 7,689
Total liabilities 17,313 5,750 23,063
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources from pensions 33,708 12,425 46,133 Total deferred outflows of resources 33,708 12,425 46,133
NET POSITION
Net investment in capital assets 593,136 574,082 1,167,218 Unrestricted 92,380 1,838,444 1,930,824
Total net position $ 666,462 2,431,580 $ 3,098,042 $
CITY OF CHOWCHILLA
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
77 Storm
Drain Airport Total
Operating revenues:
Charges for services 212,646 $ 18,873 $ 231,519 $
Miscellaneous 764 2,831 3,595
Total operating revenues 213,410 21,704 235,114
Operating expenses:
Personnel services 35,724 14,875 50,599
Materials, supplies and services 7,634 16,628 24,262
Depreciation 2,924 14,683 17,607
Total operating expenses 46,282 46,186 92,468
Operating income (loss) 167,128 (24,482) 142,646
Nonoperating revenues (expenses):
Use of money and property 7,400 250 7,650
Taxes 18,514 - 18,514
Grants - capital - 2,054 2,054
Grants - operating - 4,229 4,229
Total nonoperating revenues (expenses) 7,400 25,047 32,447 Change in net position 174,528 565 175,093
Net position - beginning 665,897 2,257,052 2,922,949
Net position - ending 2,431,580 $ 666,462 $ 3,098,042 $
CITY OF CHOWCHILLA
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
78 Storm
Drain Airport Total
Cash flows from operating activities:
Receipts from customers and users 206,238 $ 18,873 $ 225,111 $ Payments to suppliers (19,403) (30,068) (49,471)
Payments to employees (29,147) (12,335) (41,482)
Other operating revenues 2,831 764 3,595
(20,699) 158,452 137,753
Cash flows from noncapital financing activities:
Grants received - 4,229 4,229
Taxes received - 18,514 18,514
22,743 - 22,743
Grants received - 20,648 20,648
Acquisition of capital assets (202,851) - (202,851)
20,648 (202,851) (182,203)
Cash flows from investing activities:
250 7,400 7,650
250 7,400 7,650
22,942 (36,999) (14,057)
1,860,017 54,857 1,914,874
$ 77,799 1,823,018 $ 1,900,817 $
Net cash provided by (used for) operating activities
Net cash provided by noncapital financing activities
Cash flows from capital and related
financing activities:
Net cash provided by (used for) capital and
related financing activities
Interest received
Net increase (decrease) in cash and
cash equivalents
Cash and cash equivalents - beginning
Cash and cash equivalents - ending
Net cash provided by investing activities
CITY OF CHOWCHILLA
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
(Continued)
79 Storm
Drain Airport Total
Operating income (loss) 167,128 $ (24,482) $ 142,646 $
Depreciation 2,924 14,683 17,607
(Increase) decrease in:
Accounts receivable (6,408) - (6,408)
Deferred outflows of resources from pensions 14,382 5,061 19,443 Increase (decrease) in:
Accounts payable and other liabilities (11,769) (13,440) (25,209) Net pension liability 3,417 1,404 4,821
Deferred inflows of resources from pension (3,925) (11,222) (15,147) $ 158,452 (20,699) $ 137,753 $
Reconciliation of operating income (loss) to net
cash provided by (used for) operating activities:
Adjustments to reconcile operating income
(loss) to net cash provided by (used in)
operating activities:
Net cash provided by (used for) operating activities
CITY OF CHOWCHILLA
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
JUNE 30, 2021
80 Fleet Information Employee
Maintenance Technology Benefits Total
ASSETS
Current assets:
Cash and investments 9,863 $ - $ 218,496 $ 228,359 $
Accounts receivable, net 180 - - 180
Prepaid expenses 8,722 - (2,000) 6,722
Total current assets 10,043 8,722 216,496 235,261
Noncurrent assets:
Capital assets:
Depreciable, net of accumulated depreciation 104,528 - - 104,528 Total noncurrent assets 104,528 - - 104,528
Total assets 10,043 113,250 216,496 339,789
DEFERRED OUTFLOWS OF RESOURCES
Contributions to pension plan in current fiscal year 12,298 16,803 - 29,101 Deferred outflows of resources from pensions 122,550 132,501 - 255,051 Total deferred outflows of resources 134,848 149,304 - 284,152
LIABILITIES
Current liabilities:
Accrued salaries, wages, and benefits 605 18,146 5,148 23,899 Accrued payroll - - 224,060 224,060
Due to other funds - 97,186 - 97,186
Compensated absences - - 323,509 323,509
Total current liabilities 115,332 605 552,717 668,654
Noncurrent liabilities:
Compensated absences - - 103,235 103,235
Net pension liability 22,509 30,756 - 53,265
Total noncurrent liabilities 22,509 30,756 103,235 156,500 Total liabilities 23,114 146,088 655,952 825,154
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources from pensions 125,250 138,318 - 263,568 Total deferred inflows of resources 125,250 138,318 - 263,568
NET POSITION (DEFICIT)
Net investment in capital assets - 104,528 - 104,528
Unrestricted (deficit) (126,380) (3,473) (439,456) (569,309) Total net position (deficit) $ (21,852) (3,473) $ (439,456) $ (464,781) $
CITY OF CHOWCHILLA
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
81 Fleet Information Employee
Maintenance Technology Benefits Total
Operating revenues:
Charges for services 223,435 $ 445,036 $ - $ 668,471 $
Miscellaneous 269 4,914 - 5,183
Total operating revenues 445,305 228,349 - 673,654
Operating expenses:
Personnel services 159,731 223,001 13,785 396,517
Materials, supplies and services 89,256 258,510 - 347,766 Depreciation 10,562 - - 10,562
Total operating expenses 248,987 492,073 13,785 754,845 Operating income (loss) (46,768) (20,638) (13,785) (81,191) Nonoperating revenues (expenses):
Gain (loss) sale of assets - (10,542) - (10,542)
Total nonoperating revenues (expenses) (10,542) - - (10,542) Change in net position (20,638) (57,310) (13,785) (91,733) Net position - beginning, restated 35,458 17,165 (425,671) (373,048) Net position (deficit) - ending $ (21,852) (3,473) $ (439,456) $ (464,781) $
CITY OF CHOWCHILLA
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
82 Fleet Information Employee
Maintenance Technology Benefits Total
Cash flows from operating activities:
Receipts from customers and users 223,255 $ 445,036 $ - $ 668,291 $ Payments to suppliers (91,399) (282,018) - (373,417)
Payments to or received from employees (134,180) (189,392) (45,656) (369,228) Other operating revenues 269 4,914 - 5,183
(26,105) 2,590 (45,656) (69,171)
Cash flows from noncapital financing activities:
Loan from other funds 96,727 - - 96,727
96,727 - - 96,727
Acquisition of capital assets - (70,622) - (70,622)
(70,622) - - (70,622)
Net increase (decrease) in cash and cash equivalents 2,590 - (45,656) (43,066) - 7,273 264,152 271,425
$ - 9,863 $ 218,496 $ 228,359 $
Net cash provided by (used for) operating activities
Net cash provided by noncapital financing activities
Cash flows from capital and related
financing activities:
Cash and cash equivalents - beginning
Cash and cash equivalents - ending
Net cash provided by (used for) related
financing activities
Operating income (loss) (20,638) $ (46,768) $ (13,785) $ (81,191) $ Depreciation - 10,562 - 10,562
(Increase) decrease in:
Accounts receivable (180) - - (180)
Prepaid expenses - 5,598 66,031 71,629
Deferred outflows of resources from pensions 50,572 45,328 - 95,900 Increase (decrease) in:
Accounts payable and other liabilities (2,143) (29,106) (111,687) (142,936) Deposits - - - -
Compensated absences - - 13,785 13,785
Net pension liability 13,333 22,662 - 35,995
Deferred inflows of resources from pensions (34,381) (38,354) - (72,735) $ (26,105) 2,590 $ (45,656) $ (69,171) $
Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:
Adjustments to reconcile operating income
(loss) to net cash provided by (used for)
operating activities:
Net cash provided by (used for) operating activities
CITY OF CHOWCHILLA
COMBINING STATEMENT OF FIDUCIARY NET POSITION
CUSTODIAL FUNDS
JUNE 30, 2021
83 Community
Facilites District
Greenhills
Assessment
District
Pheasant Run
Assessment
District
Total Custodial
Funds
ASSETS
Cash and investments (in City investment pool) 833,597 $ 595,474 582,813 2,011,884 $ Restricted cash with fiscal agents 78,884 558,388 116,355 753,627 Accounts receivable (net) 3,574 16,279 19,332 39,185
Total assets 690,637 1,395,559 718,500 2,804,696
LIABILITIES
Accounts payable 3,968 2,998 2,001 8,967
Total liabilities 2,998 3,968 2,001 8,967
NET POSITION
Restricted for:
Individuals, organizations, and other governments 1,391,591 687,639 716,499 2,795,729 Total net position 1,391,591 $ 687,639 $ 716,499 $ 2,795,729 $
CITY OF CHOWCHILLA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
CUSTODIAL FUNDS
JUNE 30, 2021
84 Community
Facilites District
Greenhills
Assessment
District
Pheasant Run
Assessment
District
Total Custodial
Funds
ADDITIONS
Property tax collections $ 649,273 577,229 $ 400,215 $ 1,626,717 $ Investment earnings 1,861 1,752 1,459 5,072
Total additions 651,134 578,981 401,674 1,631,789
DEDUCTIONS
Payments to bondholders $ 535,091 556,206 $ 374,169 $ 1,465,466 $ Adminstrative expenses 33,899 21,369 14,726 69,994
Total deductions 556,460 590,105 388,895 1,535,460
Change in net position (11,124) 94,674 12,779 96,329
Net position - beginning, restated 592,965 1,402,715 703,720 2,699,400 Net position - ending $ 687,639 1,391,591 $ 716,499 $ 2,795,729 $ March 29, 2022
To the Honorable Mayor and City Council
City of Chowchilla, California
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 Chowchilla (the City) for the year ended June 30, 2021.
Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards (and, if applicable, Government Auditing Standards and the Uniform Guidance), as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 23, 2021. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. During 2021 the City changed accounting policies related to accounting and financial reporting for fiduciary activities by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 84, Fiduciary Activities. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
Management’s estimate of the allowance for doubtful accounts is based on historical revenues and analysis of the collectability of individual accounts. We evaluated the key factors and assumptions used to develop the allowance for doubtful accounts estimate in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the City-Wide Cost Allocation Plan, as approved in the annual budget, is based on past history, planned future activity, and other factors significant to the City’s operations that are required to support each operating department. We evaluated the methodology used by management to create this estimate and believe that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the net pension liability and related deferrals is based on actuarial valuations which include significant assumptions regarding discount rate, inflation, payroll growth, projected salary increases and investment rate of return. We evaluated the key factors and assumptions used to develop the liability and related deferrals in determining that it is reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. In addition, the material misstatements described as “AJE” noted as a result of our audit are included in the attached schedule.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated March 29, 2022.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the management’s discussion and analysis, budgetary comparison schedules, schedule of proportionate share of net pension liability, and schedule of contributions, as stated by the table of contents, which are required supplementary information (RSI) that supplements the basic financial statements.
Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining nonmajor fund financial statements, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
Restriction on Use
This information is intended solely for the information and use of the City Council and management of the City of Chowchilla and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Client: CHOWCHILLA, CITY OF
Engagement: 6‐30‐20 Audit
Current Period: 06/30/2020
Workpaper: Attachment: Corrected Audit Adjustments
Account Description
WorkpaperReference Debit Credit Net Income Effect
AJE01To post current year enterprise GASB 68 activity
280‐0200‐0000‐0500‐000 Net Pension Liability 1,029,586.00 0.00 280‐0100‐0000‐0300‐000 Pension Deferral Outflows 0.00 1,112,001.00 280‐0100‐0000‐0310‐000 CY Employer Contrib Outflows 392,458.00 0.00 280‐0200‐0000‐0400‐000 Pension Deferral Inflows 0.00 452,626.00 280‐7605‐0000‐2060‐002 Pension Expense GASB‐68 142,583.00 0.00 240‐0200‐0000‐0500‐000 Net Pension Liability 722,859.00 0.00 240‐0100‐0000‐0300‐000 Pension Deferral Outflows 0.00 779,788.00 240‐0100‐0000‐0310‐000 CY Employer Contrib Outflows 292,436.00 0.00 240‐0200‐0000‐0400‐000 Pension Deferral Inflows 0.00 333,525.00 240‐5705‐0000‐2060‐002 Pension Expense GASB‐68 98,018.00 0.00 220‐0200‐0000‐0500‐000 Net Pension Liability 56,677.00 0.00 220‐0100‐0000‐0300‐000 Pension Deferral Outflows 0.00 60,930.00 220‐0100‐0000‐0310‐000 CY Employer Contrib Outflows 40,092.00 0.00 220‐0200‐0000‐0400‐000 Pension Deferral Inflows 0.00 42,279.00 220‐3650‐0000‐2060‐002 Pension Expense GASB‐68 6,440.00 0.00 200‐0200‐0000‐0500‐000 Net Pension Liability 17,123.00 0.00 200‐0100‐0000‐0300‐000 Pension Deferral Outflows 0.00 18,372.00 200‐0100‐0000‐0310‐000 CY Employer Contrib Outflows 15,092.00 0.00 200‐0200‐0000‐0400‐000 Pension Deferral Inflows 0.00 15,607.00 200‐3805‐0000‐2060‐002 Pension Expense GASB‐68 1,764.00 0.00 601‐0200‐0000‐0500‐000 Net Pension Liability 112,206.00 0.00 601‐0100‐0000‐0300‐000 Pension Deferral Outflows 0.00 120,688.00 601‐0100‐0000‐0310‐000 CY Employer Contrib Outflows 158,780.00 0.00 601‐0200‐0000‐0400‐000 Pension Deferral Inflows 0.00 158,670.00 601‐3615‐0000‐2060‐002 Pension Expense GASB‐68 8,372.00 0.00 602‐0200‐0000‐0500‐000 Net Pension Liability 128,632.00 0.00 602‐0100‐0000‐0300‐000 Pension Deferral Outflows 0.00 137,372.00 602‐0100‐0000‐0310‐000 CY Employer Contrib Outflows 165,344.00 0.00 602‐0200‐0000‐0400‐000 Pension Deferral Inflows 0.00 165,930.00 602‐1715‐0000‐2060‐002 Pension Expense GASB‐68 9,326.00 0.00 Total 3,397,788.00 3,397,788.00 (266,503.00)
AJE02 D340To recognize revenue for receipts received within the period of availability (previously recorded as unavailable revenue). 305‐3620‐0000‐8025‐001 LTF St. Mtce ‐ Pr. Yr. 0.00 84,578.00 305‐0200‐0000‐0480‐000 Deferred Revenue 84,578.00 0.00
Total 84,578.00 84,578.00 84,578.00
AJE03 D340
To write off receivable balances related to the Berenda Boat Project (capital project fund). 512‐0100‐0000‐0222‐000 Intergovernmental A/R 0.00 69,499.07 512‐6620‐0000‐8650‐000 Grant Revenue 27,578.95 0.00
512‐6620‐0000‐3032‐000 Bad Debt Expense 41,920.12 0.00
Total 69,499.07 69,499.07 (69,499.07)
AJE04 RE225To correct SB1 apportionment from the SCO related to the final payment received. 302‐3606‐0000‐8520‐000 State Gas Tax ‐ RMRA 26,197.60 0.00 302‐0100‐0000‐0222‐000 Intergovernmental A/R 0.00 26,197.60 Total 26,197.60 26,197.60 (26,197.60)
CJE01 O200To correct cash receipt for fairmead
240‐0100‐0000‐0220‐000 A/R ‐ Manual Entries 141,673.00 0.00 240‐0100‐0000‐0222‐000 Intergovernmental A/R 0.00 141,673.00 Total 141,673.00 141,673.00 0.00
CJE02 O205To reclassify revenues to correct amount
100‐1600‐0000‐8901‐000 Misc Admin Fees 12,672.00 0.00
100‐1600‐0000‐8901‐001 Assess Dist Admin Reim 0.00 12,672.00 340‐1600‐0000‐8401‐000 Investment Earnings 0.00 11,458.61340‐2705‐0000‐8401‐000 Investments Earnings 11,458.61 0.00 Total 24,130.61 24,130.61 0.00CJE03 O210To correct accrued interest283‐0200‐0000‐0422‐000 Accrued Interest 20.94 0.00 283‐7605‐0000‐4038‐000 Bond Interest Pymt 0.00 20.94
283‐0200‐0000‐0422‐000 Accrued Interest 20.94 0.00
283‐7605‐0000‐4038‐000 Bond Interest Pymt 0.00 20.94
Total 41.88 41.88 41.88
CJE04 O215To correct sales tax for Measure N
340‐0100‐0000‐0222‐000 Intergovernmental A/R 161,586.04 0.00 100‐0100‐0000‐0222‐000 Intergovernmental A/R 0.00 161,586.04 340‐0100‐0000‐0222‐000 Intergovernmental A/R 247,990.34 0.00 100‐0100‐0000‐0222‐000 Intergovernmental A/R 0.00 247,990.34 100‐0100‐0000‐0200‐000 Cash ‐ Combined Fund 409,576.38 0.00 340‐0100‐0000‐0200‐000 Cash ‐ Combined Fund 0.00 409,576.38 Total 819,152.76 819,152.76 0.00
GRAND TOTAL 4,563,060.92 4,563,060.92 (277,579.79)
Client: CHOWCHILLA, CITY OF
Engagement: 6‐30‐20 Audit
Current Period: 06/30/2020
Workpaper: Attachment: Uncorrected Audit Differences
Account Description Misstatement
WorkpaperReference Debit Credit
Net Income
Effect
PJE01 Known Classification D410
400‐0300‐0000‐0601‐000 Fund Balance 40,331.00 0.00
400‐4815‐0000‐8651‐000 CDBG PI 0.00 40,331.00
Total 40,331.00 40,331.00 40,331.00
GRAND TOTAL 40,331.00 40,331.00 40,331.00
To book revenue adjustment for funds received in the CY but booked as revenue in the prior year.
March 29, 2022
To the City Council and Management of the
City of Chowchilla, California
In planning and performing our audit of the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Chowchilla, California (the City) as of and for the year ended June 30, 2021, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing 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’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
However, during our audit we became aware of other matters that are opportunities for strengthening internal controls and operating efficiency. The following points summarize our comments and suggestions regarding these matters. This letter does not affect our report dated March 29, 2022, on the financial statements of the City.
Grant Reconciliation
During our testing of current year revenues, we identified one receipt that was recognized as revenue in the current year that should have been recognized in the prior fiscal year. The receipt was the result of a drawdown on a reimbursement-based grant. These types of grants require the City to recognize revenues at the point in which eligible expenditures are incurred by the City. In order to reduce the likelihood of future misstatements of a similar nature, we recommend that the City, as part of the year-end closing process, prepare a reconciliation of all City grant activity (expenditures, receipts, local match, etc.), to ensure proper revenue recognition.
Implementation of Accounting Software
During our audit we became aware that the City is currently in the process of transitioning to a new accounting software (Tyler). As of year-end, the only module being utilized in the new accounting software is related to utility billings. Upon our initial review of activity recorded within the new accounting system, we identified unreconciled differences in the supporting schedules when compared to the City’s trial balance. These unreconciled differences appeared to be a result of the transition to the new software. As a best practice, we recommend that the City consider implementing additional reviews, reconciliations, and other processes to ensure an accurate transition from the old accounting system to the new. * * *
We will review the status of these comments during our next audit engagement. We have already discussed these comments and suggestions with various City personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing these recommendations.
This communication is intended solely for the information and use of City Management, City Council, and others within the City, and is not intended to be, and should not be, used by anyone other than those specified parties.
Sincerely,
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 Chowchilla, 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 the City of Chowchilla, 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 29, 2022.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing 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’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’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 financial statements.
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.
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.
Clovis, California
March 29, 2022