Agenda packet — El Cajon City Council, January 25, 2022

CITY COUNCIL

HOUSING AUTHORITY AND

SUCCESSOR AGENCY TO THE EL CAJON

REDEVELOPMENT AGENCY

Council Chamber
200 Civic Center Way
El Cajon, CA 92020
Agenda
JANUARY 25, 2022, 3:00 p.m.

Please note that as of December 14, 2021, the California Department of Public Health mandates properly fitting masks in indoor public spaces, regardless of vaccination status.

Bill Wells, Mayor Graham Mitchell, City Manager
Michelle Metschel, Deputy Mayor Vince DiMaggio, Assistant City Manager Steve Goble, Councilmember Morgan Foley, City Attorney
Gary Kendrick, Councilmember Angela Cortez, City Clerk
Phil Ortiz, Councilmember

CALL TO ORDER: Mayor Bill Wells

ROLL CALL: City Clerk Angela Cortez

PLEDGE OF ALLEGIANCE TO FLAG AND MOMENT OF SILENCE

POSTINGS: The City Clerk posted Orders of Adjournment of the January 11, 2022, Meeting and the Agenda of the January 25, 2022, Meeting in accordance to State Law and Council/Authority/Successor Agency to the Redevelopment Agency Policy.

PRESENTATIONS:

AGENDA CHANGES:

CONSENT ITEMS:

Consent Items are routine matters enacted by one motion according to the RECOMMENDATION listed below. With the concurrence of the City Council, a Council Member or person in attendance may request discussion of a Consent Item at this time.

1. Minutes of the City Council/Housing Authority/Successor Agency to the El Cajon Redevelopment Agency Meeting

RECOMMENDATION:

That the City Council/Housing Authority/Successor Agency to the El Cajon Redevelopment Agency approves Minutes of the January 11, 2022 Meeting of the El Cajon City Council/Housing Authority/Successor Agency to the El Cajon Redevelopment Agency.

2. Warrants
RECOMMENDATION:

That the City Council approves payment of Warrants as submitted by the Finance Department.

3. Approval of Reading Ordinances by Title Only
RECOMMENDATION:

That the City Council approves the reading by title and waives the reading in full of all Ordinances on the Agenda.

4. Award of Bid No. 015-22 – Networking and Datacenter Equipment

RECOMMENDATION:

That the City Council adopts the next Resolution, in order, to:

Find the second, third, and fourth apparent low bidders non-responsive for the reason set forth in the agenda report; and

1. Award the bid to the lowest responsive, responsible bidder, Quest Media & Supplies, Inc., in the amount of $852,612.07.

2. 5. CalRecycle Grant and Payment Programs

RECOMMENDATION:

That the City Council adopts the next Resolution, in order, and:

Authorizes the City Manager, or such person designated by the City Manager, to apply for any CalRecycle grant or payment program applications for which the City is eligible;

1. Authorizes the City Manager, or such person designated by the City Manager, to execute any related agreements and all such other documents necessary to accept the grants or payment programs; and

2. Authorizes the City Manager, or such person designated by the City Manager, to execute contracts and contract amendments necessary to utilize any funds received per these grants or payment program guidelines.

3. PUBLIC COMMENT:

At this time, any person may address a matter within the jurisdiction of the City Council/Housing Authority/Successor Agency to the El Cajon Redevelopment Agency that is not on the Agenda. Comments relating to items on today’s docket are to be taken at the time the item is heard. State law prohibits discussion or action on items not on the Agenda; however, Council, Authority and Agency Members may briefly respond to statements or questions. An item may be placed on a future Agenda.

WRITTEN COMMUNICATIONS:

PUBLIC HEARINGS:

ADMINISTRATIVE REPORTS:

6. Update on Homeless Programs and CDBG CARES Act Programs

RECOMMENDATION:

That the City Council receives the report and provides feedback and direction on homeless and CARES Act programming and funding.

7. Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021, and Other Written Communication from the City's Independent Auditor

RECOMMENDATION:

That the City Council receives and accepts the Annual Comprehensive Financial Report and other written communication from the independent accounting firm of Rogers, Anderson, Malody & Scott, LLP, for the fiscal year ended June 30, 2021.

8. Update on Employee Mental Wellness Programs

RECOMMENDATION:

That the City Council receives a report on the City’s Employee Mental Wellness Programs and provides direction for 2022.

9. Microenterprise Home Kitchen Operations (MEHKO)

RECOMMENDATION:

That the City Council accepts the report and directs staff to initiate a Zoning Code amendment to incorporate Microenterprise Home Kitchen Operations performance standards.

COMMISSION REPORTS:

ACTIVITIES REPORTS/COMMENTS OF MAYOR WELLS
SANDAG (San Diego Association of Governments) Board of Directors; SANDAG – Audit Committee, San Diego Division; LAFCO.

10. Council Activity Report

ACTIVITIES REPORTS/COMMENTS OF COUNCILMEMBERS:

11. COUNCILMEMBER STEVE GOBLE
MTS (Metropolitan Transit System Board); East County Advanced Water Purification Joint Powers Authority Board; Chamber of Commerce – Government Affairs Committee; SANDAG – Board of Directors – Alternate; SANDAG Public Safety Committee – Alternate; METRO Commission/Wastewater JPA – Alternate.

12. COUNCILMEMBER GARY KENDRICK
METRO Commission/Wastewater JPA; Heartland Communications; Heartland Fire Training JPA.

13. DEPUTY MAYOR MICHELLE METSCHEL
Harry Griffen Park Joint Steering Committee; Heartland Communications – Alternate; Heartland Fire Training JPA – Alternate.

14. COUNCILMEMBER PHIL ORTIZ
League of California Cities, San Diego Division; East County Economic Development Council; MTS (Metropolitan Transit System Board) – Alternate; East County Advanced Water Purification Joint Powers Authority Board – Alternate; Chamber of Commerce – Government Affairs Committee – Alternate.

JOINT COUNCILMEMBER REPORTS:

GENERAL INFORMATION ITEMS FOR DISCUSSION:

ORDINANCES: FIRST READING

ORDINANCES: SECOND READING AND ADOPTION

CLOSED SESSIONS:

ADJOURNMENT: The Adjourned Regular Joint Meeting of the El Cajon City Council/ El Cajon Housing Authority/Successor Agency to the El Cajon Redevelopment Agency held this 25th day of January 2022, is adjourned to Tuesday, February 8, 2022, at 3:00 p.m.

City Council
Agenda Report
Agenda Item 1.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Angela Cortez, City Clerk
SUBJECT: Minutes of the City Council/Housing Authority/Successor Agency to the El Cajon Redevelopment Agency Meeting
RECOMMENDATION:

Attachments
01-11-22 DRAFT minutes - 3pm

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 1 - 3:00 p.m.

JOINT MEETING OF THE

EL CAJON CITY COUNCIL/HOUSING

AUTHORITY/SUCCESSOR AGENCY

TO THE EL CAJON

REDEVELOPMENT AGENCY

MINUTES

CITY OF EL CAJON

EL CAJON, CALIFORNIA

January 11, 2022

A Regular Joint Meeting of the El Cajon City Council/Housing Authori ty/ Successor Agency to the El Cajon Redevelopment Agency, held Tuesday, January 11, 2022, was called to order by Mayor/Chair Bill Wells at 3:00 p.m., in the Council Chambers, 200 Civic Center Way, El Cajon, California.

R O L L C A L L
Council/Agencymembers present: Goble, Kendrick, and Ortiz Council/Agencymembers absent: None
Deputy Mayor/Vice Chair present: Metschel
Mayor/Chair present: Wells
Other Officers present: Mitchell, City Manager/Executive Director DiMaggio, Assistant City Manager
Foley, City Attorney/General Counsel
Cortez, City Clerk/Secretary

PLEDGE OF ALLEGIANCE TO FLAG led by Mayor Wells and MOMENT OF SILENCE. (The Courts have concluded that sectarian prayer, as part of City Coun cil Meetings, is not permitted under the Constitution).

POSTINGS: The City Clerk posted Orders of Adjournment of the December 14, 2021, meeting and the Agenda of the January 11 , 2022, meeting in accordance with State Law and El Cajon City/Housing Autho rity/Successor Agency to the El Cajon Redevelopment Agency Policy.

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 2 - 3:00 p.m.

PRESENTATIONS: None

AGENDA CHANGES: None

CONSENT ITEMS: (1 – 8)

MOTION BY ORTIZ, SECOND BY KENDRICK, to APPROVE Consent Items 1 to 8.

MOTION CARRIED BY UNANIMOUS VOTE.

1. Minutes of El Cajon City Council/ Housing Authority/Successor Agency to the El Cajon Redevelopment Agency Meetings

Approves Minutes of the December 14 , 20 21, Meeting of the El Cajon City Council/ Housing Authority/Successor Agency to the El Cajon Redevelopment Agency.

2. Warrants

Approves payment of Warrants as submitted by the Finance Department.

3. Approval of Reading Ordinances by Title only

Approves the reading by title and waive s the reading in full of all Ordinances on the Agenda.

4. Ratification of Board of Supervisors Appointment to Gillespie Field Deve lopment Council

Ratify the reappointment of Phyllis Trombi to the Gillespie Field Development Council by the San Diego County Board of Supervisors.

5. Award of Fleet Fueling Services

Adopts Resolution No. 001-22 to award a contract to Cardlock Fuel Systems, LLC dba SC Fuels (SCF) for Fleet Fueling Services in the estimated amount of $530,000 for the initial one-year term, with four additional one-year renewal options.

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 3 - 3:00 p.m.

CONSENT ITEMS: (Continued)

6. Award of Bid No. 010-22 – Median & Rights-of-Way Maintenance

Adopts Resolution No. 002 -22 to Approve Plans and Specifications for Median & Rights-of-Way Maintenance, Bid No. 010-22; and Resolution No. 003-22 to Award the bid to the lowest responsive, responsible bidder, GeoCal Environmental Management & Landscaping, in the amount of $103,491.24 for the initial one -year term, with up to four additional one-year renewal options.

7. CalRecycle Beverage Container Recycling Program

That the City Council adopts Resolution No. 004-22 to:

1. Authorize the City Manager to apply for Beverage Container Recycling City/County Payment Program funds in the amount of $25 ,787 from the State of California Department of Resources Recycling and Recovery (CalRecycle);

2. Appropriate Beverage Container Recycling City/County Payment Program funds in the amount of $25,787 for Recycled Beverage Container diversion; and

3. Authorize the City Manager, or such person designated by the City Manager, to execute the Payment Program agreement and all such other documents necessary to obtain the Beverage Container Recycling funds, in such form as approved by the City Manager with approval of the City Attorney.

8. Award of Bid No. 014-22 – Overlay 2022

Adopts Resolution No. 005-22 to Approve Plans and Specifications for Overlay 2022, Bid No. 014-22; and Resolution No. 006-22 to Award the bid to the lowest responsive, responsible bidder, Superior Ready Mix Concrete, LP dba SRM Contracting & Paving, in the amount of $2,519,995.47.

PUBLIC COMMENT:

Suzanne Hansen spoke in favor of the mask mandate.

WRITTEN COMMUNICATIONS: None

PUBLIC HEARINGS: None

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 4 - 3:00 p.m.

ADMINISTRATIVE REPORTS:

9. Veterans Memorial Location

RECOMMENDATION:

That the City Council provides additional feedba ck and directs staff on possible Veterans Memorial development options.

DISCUSSION

Director of Parks & Recreation, Frank Carson, provided detailed information of the Item.

Discussion ensued among Council and Staff concerning the following:
 Engaging the Veterans in the community for input;
 Concerns of vandalism if the Veterans Memorial is placed in the Prescott Promenade;
 Fundraiser ideas; and
 City Council’s preferred location is in front of the Police Department.

No comments were received for the Item.

10. Update on Expenditures Related to the American Rescue Plan Act

RECOMMENDATION:

That the City Council receives the report and provides feedback.

DISCUSSION

City Manager Mitchell provided detailed information of the Item.

Discussion ensued among Council and Staff concerning the following:
 Business Grant Program for those not previously eligible;  Identify goals for available money; and
 Surplus funds could be allocated towards economic development.

No comments were received for the Item.

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 5 - 3:00 p.m.

ADMINISTRATIVE REPORTS: (Continued)

11. Downtown El Cajon Business Partners' Annual Report

RECOMMENDATION:

That the City Council receives the annual report and provides feedback.

DISCUSSION

City Manager Mitchell provided d etailed information of the Item, and announced that Cathy Zeman from the Downtown El Cajon Business Partners was present to answer questions from the City Council.

Discussion ensued among Council, Ms. Zeman and Staff concerning the following:
 Increase the Clean and Safe funds;
 Clarification that the Downtown Business Partners only take care of the business district, not the entire City;
 Proposed partnership with LiveNation to better promote the downtown restaurants;
 Utilize current surplus of funds of the Business Partners to encourage new businesses in the downtown area;
 Request for diversity in downtown El Cajon; and
 Request to utilize the lawn area in front of The Magnolia.

No comments were received for the Item.

COMMISSION REPORTS: None

ACTIVITIES REPORTS/COMMENTS OF MAYOR WELLS:

SANDAG (San Diego Association of Governments) Board of Directors; SANDAG – Audit Committee; LAFCO.

12. Council Activities Report/Comments

Report as submitted.

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 6 - 3:00 p.m.

ACTIVITIES REPORTS OF COUNCILMEMBERS:

13. COUNCILMEMBER STEVE GOBLE
MTS (Metropolitan Transit System Board); East County Advanced Water Purification Joint Powers Authority Board; Chamber of Commerce – Government Affairs Committee; SANDAG – Board of Directors – Alternate; SANDAG Public Safety Committee – Alternate; METRO Commission/Wastewater JPA – Alternate.

Council Activities Report/Comments.

In addition to the submitted report, Councilmember Goble stated the East County Advanced Water Purification Joint Powers Authority Board would move their meeting from February to May 2022.

14. COUNCILMEMBER GARY KENDRICK
METRO Commission/Wastewater JPA; Heartland Communications; Heartland Fire Training JPA.

Council Activities Report/Comments.

Report as stated.

15. DEPUTY MAYOR MICHELLE METSCHEL
Harry Griffen Park Joint Steering Committee; Heartland Communications – Alternate; Heartland Fire Training JPA – Alternate.

Council Activities Report/Comments.

Report as submitted.

16. COUNCILMEMBER PHIL ORTIZ
League of California Cities, San Diego Division; East County Economic Development Council; MTS (Metropolitan T ransit System Board) – Alternate; East County Advanced Water Purification Joint Powers Authority Board – Alternate; Chamber of Commerce – Government Affairs Committee – Alternate.

Council Activities Report/Comments.

Report as submitted.

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 7 - 3:00 p.m.

JOINT COUNCILMEMBER REPORTS: None

GENERAL INFORMATION ITEMS FOR DISCUSSION: None

ORDINANCES: FIRST READING - None

ORDINANCES: SECOND READING AND ADOPTION

17. Zoning Code Amendment No. 2021-0002

RECOMMENDATION:

That Mayor Wells requests the City Clerk to recite the title.

DISCUSSION

No comments were received for the Item.

The City Clerk recited the title of the ordinance for a second reading.

An Ordinance to Amend Title 17 of the El Cajon Municipal Code to Update the City's Zoning Code Including Ad opting Additional Objective Standards for New Development.

MOTION BY KENDRICK, SECOND BY ORTIZ, to Adopt Ordinance No. 5113, to Amend Title 17 of the El Cajon Municipal Code to Update the City's Zoning Code Including Adopting Additional Objective Standards for New Development.

MOTION CARRIED BY UNANIMOUS VOTE.

18. Amendment to Chapter 8.24 - Garbage, Rubbish and Refuse Ordinance

RECOMMENDATION:

That Mayor Wells requests the City Clerk to recite the title.

DISCUSSION

No comments were received for the Item.

Joint Meeting: El Cajon City Council/Housing Authority/ January 11, 2022 Successor Agency to the Redevelopment Agency - 8 - 3:00 p.m.

ORDINANCES: SECOND READING AND ADOPTION (Item 18 – Continued)

The City Clerk recited the title of the ordinance for a second reading.

An Ordinance to Amend Chapter 8.24 of the El Cajon Municipal Code to Further Regulate the Disposal of Organic Waste from Residential and Commercial Sources.

MOTION BY KENDRICK, S ECOND BY ORTIZ, to Adopt Ordinance No. 5114, to Amend Chapter 8.24 of the El Cajon Municipal Code to Further Regulate the Disposal of Organic Waste from Residential and Commercial Sources.

MOTION CARRIED BY UNANIMOUS VOTE.

CLOSED SESSIONS:

RECOMMENDATION: That the City Council/Housing Authority/Successor Agency to the El Cajon Redevelopment Agency adjourned Closed Session as follows:

19. Closed Session - Conference with Legal Counsel - Existing Litigation - pursuant to paragraph (1) of subdivisi on (d) of Government Code section 54956.9:

National Prescription Opiate Litigation, 1:17-md-2804 (N.D. Ohio)

MOTION BY WELLS, SECOND BY ORTIZ, t o ADJOURN to Closed Session at 3:57 p.m.

MOTION CARRIED BY UNANIMOUS VOTE.

RECONVENE TO OPEN SESSION AT 4:15 p.m.

City Attorney Foley reported the following actions:
 Direction given to negotiators.

Adjournment: Mayor Wells adjourned the Regular Joint Meeting of the El Cajon City Council/ Housing Authority/Successor Agency to the El Cajon Redevelopment Agency held this 11th day of January, 20 22, at 4:16 p.m., to Tuesday, January 25, 2022, at 3:00 p.m.

________________________
ANGELA L. CORTEZ, CMC
City Clerk/Secretary

City Council
Agenda Report
Agenda Item 4.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Mara Romano, Purchasing Agent
SUBJECT: Award of Bid No. 015-22 – Networking and Datacenter Equipment RECOMMENDATION:

That the City Council adopts the next Resolution, in order, to:

Find the second, third, and fourth apparent low bidders non-responsive for the reason set forth in the agenda report; and

1. Award the bid to the lowest responsive, responsible bidder, Quest Media & Supplies, Inc., in the amount of $852,612.07.

2. BACKGROUND:

At the June 8, 2021, City Council meeting, the City Council allocated a portion of the American Rescue Plan Act funds for the City network, cybersecurity, and video equipment upgrades; and to expand the broadband and fiber networks. The bid included the procurement of networking equipment for the North Datacenter Infrastructure, Video Network Fire Admin, and Fiber Network projects.

This solicitation was advertised on November 18, 2021. The City received five responses on December 20, 2021, and evaluated all submissions.

According to Section 8 of the bid specifications’ General Conditions:
"The bidder shall not change the wording in the attached specifications or conditions. No words or comments shall be added to the general conditions or detailed specifications. Any explanation or alternative offered shall be set forth in a letter attached to the front cover of the specifications. Alternatives which do not substantially comply with the City's specifications cannot be considered. Conditional bids cannot be accepted." The apparent second low bidder, ConvergeOne, Inc, submitted a bid that included a Master Sales Agreement with additional terms and conditions. The apparent third and fourth low bidders (EVO DC, LLC dba VPLS and CDW Government, LLC respectively) included terms and conditions with their bid responses. When a vendor sets forth such conditions within their proposal it is deemed a conditional bid. Therefore, the three aforementioned bids are considered non-responsive.

Staff recommends awarding the bid to the lowest responsive, responsible bidder; Quest Media & Supplies, Inc. in the amount of $852,612.07 (includes sales tax). The summary of bids is attached, and complete proposals are on file in the Purchasing Division.

FISCAL IMPACT:

The fiscal impact is $852,612.07. Sufficient funds are available in Fiscal Year 2021-22 Annual Budget: Citywide IT Fund (615110) and Fire Admin Offices at PSC (PS50012) and American Rescue Plan Act Funds (ARPA05).

Prepared By: Mara Romano, Purchasing Agent
Reviewed By: Sara Diaz, Director of Information Technology Approved By: Graham Mitchell, City Manager
Attachments
Resolution
Bid Summary - 015-22

Page 1 of 2 ends

RESOLUTION NO. __-22

RESOLUTION AWARDING BID FOR

NETWORKING AND DATACENTER EQUIPMENT
(Bid No. 015-22)

WHEREAS, on June 8, 2021, the El Cajon City Council allocated a portion of the American Rescue Plan Act funds for network, cybersecurity, video equipment upgrades, and expansion of the broadband and fiber networks (the "Project") for the City of El Cajon (the "City"); and

WHEREAS, t he bid included the procurement of networking equipment for the North Datacenter Infrastructure, Video Network Fire Admin, and Fiber Network projects ; and

WHEREAS, the solicitation was advertised on November 18, 2021; the City received five (5) responses on December 20, 2021; and all submissions were evaluated; and

WHEREAS, according to the General Conditions listed in the bid specifications at Section 8, the bidders are not allowed to change specifications, which includes terms and conditions altering the City’s contract, as to do so creates a conditional bid, which cannot be accepted; and

WHEREAS, the apparent second low bidder, ConvergeOne, Inc., submitted a bid that included a Master Sales Agreement with additional terms and conditions; and

WHEREAS, the apparent third and fourth low bidders (EVO DC, LLC dba VPLS , and CDW Government, LLC , respectively) included terms and condi tions with their bid responses; and

WHEREAS, as a result of their presentation of conditional bids, the bids of the apparent second, third, and fourth low bidders are considered non-responsive; and

WHEREAS, s taff recommends awarding the bid to the lowest responsive, responsible bidder, Quest Media & Supplies, Inc. , in the amount of $ 852,612.07 (which includes sales tax); and

WHEREAS, sufficient money is available in the City’s Fiscal Year 2021-22 Annual Budget Citywide IT Fund; Fire Admin Offices at PSC Fund; and American Rescue Plan Act Funds; and

WHEREAS, the City Council believes it to be in the best interests of the City to award the bid to the lowest responsive, responsible bidder in the amount of $852,612.07.

Page 2 of 2 ends

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EL CAJON AS FOLLOWS:

1. The above recitals are true and correct , and are the findings of the City Council.

2. The City Council hereby finds that the bids submitted by ConvergeOne, Inc., EVO DC, LLC d ba VPLS, and CDW Government, LLC to be unacceptable conditional bids and, therefore, are hereby rejected.

3. The City Council hereby awards the bid for the Project to the lowest responsive, responsible bidder:

Quest Media & Supplies, Inc.

in an amount not to exceed $852,612.07.

4. The City Manager and City Clerk are authorized and directed to execute a contract for the Project on behalf of the City of El Cajon, with such changes or amendments as maybe approved by the City Manager.

01/25/22 CC Agenda
Reso – Bid 015-22 – Networking & Datacenter Equipment – Awd (Quest Media) 011822

City of El Cajon – Purchasing Division

BID EVALUATION
(To be included as an attachment to the agenda report.) Bid No. 015-22 Bid Name: Networking and Datacenter Equipment

Solicitation Due Date/Time: December 20, 2021/
2:00 p.m.

Initial Date of Advertisement: November 19, 2021

Number of Responses Received: 5

Bid Estimate: $1,000,000.00

SUMMARY OF BIDS (INCLUDE ANY ADD. ALTS.):

BID EVALUATION (TOP THREE LOWEST RESPONSES):

Bidder Bid Responsiveness Notes
Quest Media & Supplies, Inc. Yes
ConvergeOne, Inc. No Submitted a conditional bid.

EVO DC, LLC dba VPLS No Submitted a conditional bid.

CDW Government, LLC No Submitted a conditional bid.

Lotus, USA, Inc. Yes Signed and dated Acknowledgement of System for Award Management (SAM) Requirement form but
did not complete.

Verified through SAM.gov website that the entity has
active registration to participate in federally funded
procurements.

Specifications state the vendor must submit a current
letter (within the last year) from Cisco verifying the
vendor is an authorized dealer.

The City provided additional time for the vendor to
submit a letter. The vendor submitted a 2020 Cisco
Channel Partner letter before the timeframe given
and submitted a 2022 letter less than 24 hours after
the timeframe given. Confirmed through Cisco
website that vendor is an authorized dealer.

LEGAL REVIEW REQUIRED: YES  NO  IF YES, DATE LEGAL REVIEW COMPLETED: JANUARY 10, 2022 RENEWAL OPTIONS: YES  NO  IF YES, SPECIFY TERM W/RENEWAL OPTIONS: ________________________________ LOWEST, RESPONSIVE, RESPONSIBLE BIDDER NAME AND AMOUNT: QUEST MEDIA & SUPPIES, INC. - $852,612.07 (tax included)
PURCHASING DIVISION:

Review Completed By: Mara Romano Date: January 13, 2022

City Council
Agenda Report
Agenda Item 5.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Yazmin Arellano, Director of Public of Works
SUBJECT: CalRecycle Grant and Payment Programs
RECOMMENDATION:

That the City Council adopts the next Resolution, in order, and:

Authorizes the City Manager, or such person designated by the City Manager, to apply for any CalRecycle grant or payment program applications for which the City is eligible;

1. Authorizes the City Manager, or such person designated by the City Manager, to execute any related agreements and all such other documents necessary to accept the grants or payment programs; and

3. BACKGROUND:

The State of California Department of Resources Recycling and Recovery (CalRecycle) distributes funds for specific grants and payment programs to assist the City with recycling and litter reduction efforts. The attached Resolution would allow the City Manager, or such person designated by the City Manager, to apply for CalRecyle funds and enter into any related agreements for a period of up to five (5) years.

CALIFORNIA ENVIRONMENTAL QUALITY ACT:

N/A
FISCAL IMPACT:

N/A
Prepared By: Sara Marshall, Sr. Management Analyst
Reviewed By: Yazmin Arellano, Director of Public Works
Approved By: Graham Mitchell, City Manager
Attachments
Resolution

Page 1 of 1 ends

RESOLUTION NO. ___-22

RESOLUTION OF THE CITY COUNCIL OF

THE CITY OF EL CAJON AUTHORIZING

SUBMITTAL OF APPLICATIONS FOR ALL

CALRECYCLE GRANT AND PAYMENT PROGRAMS

FOR WHICH THE CITY OF EL CAJON IS ELIGIBLE

WHEREAS, Public Resources Code sections 48000 et seq., 14581, and 42023.1(g), authorize the Department of Resources Recycling and Recovery ("CalRecycle") to administer various grant and payment programs in furtherance of the State of California’s efforts to reduce, recycle and reuse solid waste generated in the state thereby preserving landfill capacity and protecting public health and safety and the environment; and

WHEREAS, in furtherance of this authority, CalRecycle is required to establish procedures governing the administration of the payment programs; and administration of the application, awarding, and management of the grant programs; and

WHEREAS, CalRecycle’s procedures for administering payment and grant programs require, among other things, an applicant’s governing body to declare by resolution certain authorizations related to the administration of the payment and grant program.

NOW, THEREFORE, BE I T RESOLVED that the City of El Cajon (the "City") is authorized to submit an application to CalR ecycle for any and all grant and payment programs offered; and

BE IT FURTHER RESOLV ED that the City Manager, or such person designated by the City Manager, is hereby authorized and empowered to execute in the name of the City all documents, including but not limited to, applications, agreements, amendments and requests for payment, necessary to secure funds and implement the approved grant or payment project; and

BE IT FURTHER RESOLVED that these authorizations are effective from the date of adoption through January 24, 2027, or until rescinded by the City Manager or the City Council.

01/25/22 CC Agenda
Reso – Approve Auth for Submittal of CalRecycle Apps 011822 City Council
Agenda Report
Agenda Item 6.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Jamie Van Ravesteyn, Housing Manager
SUBJECT: Update on Homeless Programs and CDBG CARES Act Programs RECOMMENDATION:

That the City Council receives the report and provides feedback and direction on homeless and CARES Act programming and funding.

BACKGROUND:

The City launched a series of homeless programs in late 2017 and early 2018. Many of these programs continue to operate, some with changes in either service providers or funding sources. In addition, starting in 2020, new CDBG CARES Act funding provided additional programming to prevent, prepare for or respond to the pandemic, and a majority of that funding is allocated to homeless programs. The purpose of this agenda item is to provide a report on the homeless and CARES Act programs managed by the City since 2020 to present. This report provides:

An overview of the programs offered;1.

A summary of program results;2.

An assessment of those programs; and3.

Recommendations. 4.

Program Overview
Since 2020, the City funded or operated 11 different homeless-related programs or projects, and allocated nearly $2.8 million in general and other funds to support those programs. All the programs discussed here were aimed at 1) housing homeless individuals (both temporary and permanent housing), 2) preventing homelessness, or 3) addressing community impacts as a result of homelessness. The following sections of this report provide updates on these programs, most of which are ongoing.

El Cajon Homeless Outreach & Flexible Housing Assistance Program In September 2020, the City contracted with Home Start, Inc. to provide a dedicated Homeless Outreach Specialist with flexible housing assistance funds to help homeless individuals and families in El Cajon. The Outreach Specialist (or Navigator) connects homeless households with services and works to secure permanent housing. The program is funded with Low and Moderate Income Housing Asset Funds (LMIHAF) totaling $200,000 annually. The contract was renewed in September 2021. This program seeks out all available resources throughout the County to fill basic needs, and the other resources are used first, whenever possible.

The Outreach Specialist continually engages unsheltered persons in El Cajon and works to connect them with housing options, while at the same time addressing multiple barriers made even more challenging by the pandemic. Very recently, the Outreach Specialist was successful in relocating 17 individuals from Prescott Promenade in one day. The Specialist assisted those individuals in finding temporary emergency housing, enrolling in the Coordinated Entry System (CES), and accessing the services they needed. They are all now working to prepare for and find permanent housing.

A Way Back Home Program
In October 2020, the City contracted with The Salvation Army (TSA) to make the “A Way Back Home” program available once again. This program reunites homeless individuals in El Cajon with their families by providing assistance with transportation, food and sometimes an overnight stay while en-route. The program is also funded with LMIHAF funds of $10,000 annually, and the contract was renewed for 2021-22.

TSA reports issues with losing contact with individuals that are seeking service while TSA is waiting for family members to confirm they will receive them. In the last three months, seven (7) individuals sought TSA’s reunification service, but did not return to complete the process. To address this issue, TSA staff are encouraging individuals to wait on-site while staff works to get in contact with the receiving families. TSA is also committed to finding other ways to encourage more participation as well. This program continues to be available and is expected to assist more individuals as TSA adjusts its internal procedures.

Emergency Shelter Program
The City contracts annually with the East County Transitional Living Center (ECTLC) to fund the Emergency Shelter Program using CDBG funds, currently totaling $100,000. This non-faith-based program typically operates primarily in the winter months, providing emergency shelter, case management, meals and other services for families and individuals experiencing homelessness. CDBG funds were awarded to this program as a part of the annual allocation process in FY 20-21 and FY 21-22.

Further, in 2020, the City Council awarded $185,294 in CDBG-CV (CARES Act) funding for the continuation of these essential services beyond the winter months to assist individuals and families experiencing homelessness to reduce their risk of exposure to, and to prevent the spread of COVID-19. In May 2021, the City Council awarded another $100,000 in CDBG-CV3 (CARES Act) funding for FY 21-22.

Rotational Shelter Program
The City also contracts annually with the Interfaith Shelter Network (ISN) to fund the Rotational Shelter Program using CDBG funds totaling $10,000. This non-faith-based program typically provides seasonal, nighttime shelter for homeless individuals and families at East County area places of worship that volunteer to provide shelter, meals and support.

With COVID-19, the rotational shelter program was required to modify its operations in 2020 to accommodate shelter guests at area hotels instead of on religious properties, in order to ensure the safety of the volunteers and congregants. ISN continues to work with the congregations, and plans to return to the typical rotational shelter model. The East County winter 21/22 shelter operation is expected to open by the end of this month.

Rental Housing/Utility Assistance (COVID-19)
In May 2020, the City Council awarded CDBG-CV (CARES Act) funding for a new rental In May 2020, the City Council awarded CDBG-CV (CARES Act) funding for a new rental housing and utility assistance program to assist individuals and families impacted by COVID-19, to keep them from losing their homes and falling into homelessness. A total of $572,362 was awarded to three agencies (CSA San Diego County, Interfaith Shelter Network, and Home Start, Inc.) to provide the services. The City’s program assisted residents with up to 3 months of past-due rent and/or utility assistance. In January 2021, the City Council re-distributed a portion of the original CDBG-CV funding from another provider to Home Start, Inc. ($120,000), and further awarded a new allocation of CDBG-CV3 funds of $100,000 to Home Start, Inc. for continuation of the program. The three agencies operated the program continuously from May 2020 to February 2021, expending a total of $433,320.

In March 2021, the County of San Diego opened its emergency rental/utility assistance program (“ERAP”) and later expanded it. The ERAP funds are able to pay for much deeper assistance (covering up to 18 months of rent and utilities) and El Cajon residents are eligible to apply. The City’s housing and utility assistance program was permanently suspended as of August 2021, and all residents are referred to the ERAP program for assistance. A balance of $240,690 of El Cajon’s CDBG-CV funds is available for re-allocation to another eligible project that prevents, prepares for or responds to the coronavirus pandemic. On December 14, 2021, staff presented City Council with options for re-purposing the funds to another COVID-19-related service or need not currently being met. The City Council deferred its decision on re-allocation of the available funds until after its workshop to be held in January.

Emergency Motel Stays Program
In 2020 and 2021, the City Council awarded a total of $145,000 in CDBG-CV (CARES Act) funding to Home Start, Inc. for the provision of an emergency motel voucher program to assist homeless families and individuals with immediate shelter to reduce their risk of exposure and to prevent the spread of COVID-19. Between June 2020 and May 2021, the program assisted 243 homeless individuals, with an average stay of approximately 7 nights and an average cost of $587 per person. The program also served as a gateway to permanent housing for 47 individuals. The program concluded in 2021, and a new, refined Emergency (Scatter-Site) Motel program was implemented, with a new allocation of CDBG-CV3 funding, as described below.

East County Homeless Task Force
Since 2019, the City has contributed $5,000 annually to assist in sustaining the East County Homeless Task Force (Task Force). The Task Force, with new direction, plays a role in coordinating efforts in the East County region as well as helping to understand homeless services needs. In addition to financial support, several staff members are involved with the organization's steering committee. However, more recently, the ECHTF has taken on more of an advocating role. Staff seeks City Council direction for continuing to support this effort.

Neighborhood Quality of Life Team
Between January 2020 and December 2021, the Neighborhood Quality of Life Team (a multi-departmental team) provided 116 clean-up events throughout the City. The team is supported by a contract for cleaning services with Urban Corps. The Quality of Life Team ensures that the City's parks, right-of-ways, and drainage channels are clear of debris and trash.

Between July 2020 and December 2021, the City removed 425 tons of debris from parks, streets and drainage channels. To date, the City's contractor has removed at least 185 tons of debris. Clean up costs are funded solely by the General Fund.

Homeless Outreach Events
Police Department staff previously accompanied homeless service providers twice per month in an effort to make contact and offer assistance to the City's homeless community. In March of 2021, the number of outreach events was increased, and the outreach events are now occurring every Friday. The City's contribution to this program continues to be two police officers for three hours per event. A typical outreach event results in 15 to 20 homeless individuals contacted.

Emergency Scatter-Site Motel Program
In May 2021, the City Council awarded $400,000 in CDBG-CV3 (CARES Act) funding to Home Start, Inc. for the provision of a refined emergency motel program to assist homeless families and individuals with immediate shelter, to reduce their risk of exposure and to prevent the spread of COVID-19. This program provides emergency motel room vouchers, housing placement and emergency housing assistance for homeless families and individuals impacted by COVID-19 that are housing-focused and housing-ready, with the goal of attaining permanent housing. Beginning July 1, 2021, Home Start, Inc. has assisted 17 homeless households that have benefited from this program.

Acquisition and/or Rehabilitation of Facility Serving the Homeless Also in May 2021, the City Council allocated the balance of the CDBG-CV3 funds ($299,307) for assisting in the acquisition and/or rehabilitation of a facility for use as a shelter or navigation center. The funds are likely to be leveraged with other available funding (potentially with other jurisdictions). The funds will be set aside until an appropriate facility, operator, and funding source are identified, and must be expended within a three-year timeframe. Until a project is identified, the funds will remain on reserve for this purpose.

Summary of Programs
Over the last 24 months, the City has allocated $2.48 million on direct homeless assistance/housing programs, over $300,000 on neighborhood cleanup efforts, and $15,000 to the Task Force, for a total of nearly $2.8 million. Between January 2020 and December 2021, staff estimates that more than 2,900 individuals have received shelter and services, 2,124 of those were assisted with some form of housing or shelter, and 737 individuals were assisted into permanent housing.

The table below identifies the total expenditures between January 2020 and December 2021 (24 months) for each program discussed above, and the results of those expenditures.

Program
Jan 2020 – Dec
2021
Expenditures
Results
El Cajon Homeless
Outreach and Flexible
Housing Assistance
Program
(Home Start, Inc.)
$170,979 total
($61,981 of total
is housing
assistance/
flex funds)
917 persons enrolled in program (666
households)
62 households permanently housed (114
persons)
Average of $2,758 per household
housed
12 households (22 persons) housed in
bridge housing
A Way Back Home
Program
(The Salvation Army)
$2,707
9 individuals (nine households)
permanently housed with family
Average of $301 per
person/household
Emergency Shelter
Program
(ECTLC)
$461,524
306 individuals sheltered (annual FY
19-20 CDBG funding)
620 individuals sheltered (CDBG-CV
funding)
385 individuals sheltered (annual FY
20-21 CDBG funding)
236 individuals sheltered to date (annual
FY 21-22 CDBG funding)
Total of 1,547 individuals sheltered over
the past 24 months
Of this total, 420 individuals (286
adults and 134 children) have moved
into permanent housing with
assistance from ECTLC
Rotational Shelter
Program
(Interfaith Shelter
Network)
$14,792
38 individuals sheltered (annual FY 20-21
CDBG funding)
48 individuals sheltered to date (annual
FY 21-22 CDBG funding)
44 individuals moved into permanent
housing with assistance from ISN
Housing/Utility
Assistance Program
(CSA San Diego
County, Interfaith
Shelter Network, Home
Start, Inc.)
$433,320
103 households assisted to remain in their
homes
Average of $4,206 per household
Emergency Motel Stays
Program
(Home Start, Inc.)
$142,568
243 individuals sheltered
1,646 night stays (average stay per
person is 7 nights)
47 individuals moved into permanent
housing (19%)
Average cost of $587 per person
Emergency
(Scatter-Site) Motel
Program
(Home Start, Inc.)
$14,340
52 persons to date (17 households)
enrolled in program
East County Homeless
Task Force $5,000 per year Assisted in regional coordination Neighborhood Quality of
Life Team
>$300,000
116 clean-ups conducted
425 tons of debris removed by City team
185 tons of debris removed by City
contractor
Homeless Outreach
Events
$55,232
65 outreach events conducted
10 to 15 homeless individuals contacted
per event
133 homeless individuals enrolled in
benefits between 7/1/21 and 12/31/21
Program Assessment
Staff believes that the majority of the City's programs are functioning well to help achieve the goal of securing permanent housing for those experiencing homelessness and to address community impacts as a result of homelessness. In the last two years, over 730 persons have been assisted with finding permanent housing.

The El Cajon Outreach & Flexible Housing Assistance Program has become an essential component of the City’s ability to respond to homelessness. Home Start, Inc. has proven to be a valuable partner and player in the region, with knowledgeable staff and responsive services to meet the needs. Home Start, Inc. appears to be effective at finding resources, establishing and maintaining relationships, utilizing the resources prudently and only as needed, and meeting the compliance and program requirements of all of its funding partners.

The Way Back Home Program has not been as effective over the past year as in previous years, but it continues to fill a gap in services for those homeless individuals who have family members that are willing to receive and support them. Without this program, homeless individuals who want to “go home” are without resources to connect with those family members who are willing to receive them, particularly due to the high cost of transportation. Staff recommends continuing to provide this cost-effective program through TSA until the funds are expended in order to keep this resource available for those who need it.

The Emergency Shelter (through ECTLC) and the Rotational Shelter (through Interfaith Shelter Network) programs continue to address the need for basic overnight shelter and services for those experiencing homelessness in the City. Each fulfill a different need in the community and staff considers the programs cost-effective and essential.

The new Emergency (Scatter-Site) Motel program is underway with an allocation of CDBG-CV3 funding, as described above. However, Home Start, Inc. is currently utilizing other available funds for this service first prior to tapping into this resource, in order to extend the benefits of the services as far as possible in the community. While the program has already been working to enroll individuals, the shelter and housing location services are beginning in earnest this month.

The program will help individuals and families on a path to securing permanent housing.

Staff is also continuing to work with neighboring jurisdictions (including the County) and the East County Homeless Task Force on a regional approach to jointly address homelessness in East County. Staff will return to City Council once a project or facility serving the homeless is identified.

Finally, the City’s Neighborhood Quality of Life Team and the Homeless Outreach Events Finally, the City’s Neighborhood Quality of Life Team and the Homeless Outreach Events continue to perform vital services and address community impacts as a result of homelessness within the City, and will be continued throughout 2022. During 2021, the City began increased power washing activities in areas where illegal encampments were located on sidewalks. This effort will continue to expand into 2022.

Other ideas or needs that have been discussed include:

Touchless pedestrian push buttons at heavily-traveled intersections (to prevent the spread of the coronavirus);

1. Other shelter options including potential safe parking programs; and2.

Adding the funds to the reserve allocation for Acquisition/Rehabilitation of a Facility Serving the Homeless.

3. Staff seeks City Council feedback on these or other eligible ideas. Additional research will be required to work out details and determine eligibility prior to implementing any specific potential project ideas, and a public hearing to re-allocate the funds will be necessary.

Recommendations
Based on its analysis of the existing homeless programs and needs in the community, staff makes the following recommendations:

Continue the El Cajon Homeless Outreach & Flexible Housing Assistance and the Way Back Home programs;

1. Continue the Emergency Shelter, Rotational Shelter and Emergency (Scatter-Site) Motel programs;

2. Continue to work with neighboring jurisdictions, including the County, on a regional approach to jointly addressing homelessness in East County;

3. Conduct additional research, as directed by City Council, for potential project(s) for the use of CDBG-CV and CV3 funds available for re-purposing;

4. Continue the Homeless Outreach Events and the enhanced Neighborhood Quality of Life Team efforts; and

5. Consider whether to continue financial support for the East County Homeless Task Force.6.

Staff seeks City Council feedback on this report's findings and recommendations, as well as any further City Council direction.

Prepared By: Jamie van Ravesteyn, Housing Manager and Deyanira Pelayo-Brito, Housing Specialist
Reviewed By: Anthony Shute, Director of Community Development Approved By: Graham Mitchell, City Manager
City Council
Agenda Report
Agenda Item 7.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Clay Schoen, Director of Finance
SUBJECT: Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021, and Other Written Communication from the City's Independent Auditor
RECOMMENDATION:

BACKGROUND:

Annual Comprehensive Financial Report and Independent Auditors' Report The Annual Comprehensive Financial Report (ACFR) is prepared annually to present the City's financial condition and the fiscal year-end results of government-wide operations. The financial statements have been audited by the firm of Rogers, Anderson, Malody & Scott, LLP, whose Independent Auditors' Report states that, in their opinion, the financial statements are presented fairly in all material respects and are in conformance with generally accepted accounting principles (a "clean" audit opinion).

The ACFR is included as part of this report and is available on the City's website at www.elcajon.gov/your-government/departments/finance/financial-reports.

Other Correspondence
The purpose of the Independent Auditors' Report on Internal Control Over Financial Reporting is solely to describe the scope of the auditors' testing of internal control and compliance, and the results of that testing, not to provide an opinion of the effectiveness of the City's internal control or on compliance. Given these limitations, the independent auditors did not identify any deficiencies in internal control that they consider material weaknesses or significant deficiencies.

Article XIII-B of the California Constitution establishes a statutory appropriations limit for the State and each local government within the State. The appropriations limit is adjusted annually for the cost of living and change in population. Additionally, the annual calculation of the appropriations limit is required to be reviewed as part of the annual financial audit.

The Independent Accountant's Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets, prescribed by Article XIII-B of the California Constitution is the result of that review.

Additionally, the auditors issued a letter in accordance with the Statement on Auditing Standards 114 (SAS 114). The standard requires the communication between the auditor and client to identify certain information, such as qualitative aspects of accounting practices, management representations, and other audit findings or issues, among others.

CALIFORNIA ENVIRONMENTAL QUALITY ACT:

None.

FISCAL IMPACT:

None.

Prepared By: Clay Schoen, Director of Finance
Reviewed By:

Approved By: Graham Mitchell, City Manager
Attachments
ACFR 2020-21
Internal Control Report
GANN Limit Report
SAS114 Letter
City of El Cajon
California
Fiscal Year Ending June 30, 2021

ANNUAL COMPREHENSIVE

F I N A N C I A L R E P O R T

City of El Cajon, California

Annual Comprehensive Financial Report
Fiscal Year Ended June 30, 2021

Honoring and celebrating
the people who make El Cajon
The Valley of Opportunity

Prepared by the Finance Department

CITY OF EL CAJON

TABLE OF CONTENTS

INTRODUCTORY SECTION

Letter of Transmittal .................................................................................................................................................. 3

Certificate of Achievement for Excellence in Financial Reporting ............................................................................ 7

List of Principal Officials ........................................................................................................................................... 8

Organizational Chart ................................................................................................................................................. 9

Map of the City ........................................................................................................................................................ 10

FINANCIAL SECTION

Independent Auditor’s Report ................................................................................................................................. 13

Management’s Discussion and Analysis (Unaudited) ............................................................................................ 17

Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position .......................................................................................................................... 33 Statement of Activities ............................................................................................................................... 34 Fund Financial Statements
Governmental Funds
Balance Sheet ..................................................................................................................................... 38 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................................................. 41 Statement of Revenues, Expenditures and Changes in Fund Balances ............................................ 42 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................................ 44 Proprietary Funds
Statement of Net Position ................................................................................................................... 46 Statement of Revenues, Expenses and Changes in Fund Net Position ............................................ 47 Statement of Cash Flows .................................................................................................................... 48 Fiduciary Funds
Statement of Fiduciary Net Position .................................................................................................... 50 Statement of Changes in Fiduciary Net Position ................................................................................ 51 Notes to the Basic Financial Statements ......................................................................................................... 52

Required Supplementary Information (Unaudited)
Budgetary Information
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Budgetary Basis)
General Fund ............................................................................................................................... 96 Low and Moderate Income Housing Major Special Revenue Fund ............................................. 99 Reconciliation of Schedule of Revenues, Expenditures, and Changes in Fund Balances Budgetary To GAAP Basis – Major Governmental Funds ................................................................ 100 Notes to the Budgetary Information ......................................................................................................... 101 Net Pension Liability
Schedule of Changes in the Net Pension Liability and Related Ratios ................................................... 102 Schedule of Plan Contributions ............................................................................................................... 106 Notes to Required Supplementary Information – Net Pension Liability .................................................. 107

CITY OF EL CAJON

TABLE OF CONTENTS

FINANCIAL SECTION (continued)

Other Post-Employment Benefits (OPEB)
Schedule of Changes in the OPEB Liability and Related Ratios ........................................................... 108 Schedule of Plan Contributions - OPEB .................................................................................................. 109 Notes to Required Supplementary Information - OPEB .......................................................................... 110

Supplementary Information
General Fund
Balance Sheet (GAAP Basis) .................................................................................................................. 112 Schedule of Revenues, Expenditures and Changes in Fund Balances (GAAP Basis) ......................... 113 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Budgetary Basis)
General Fund - Recreation Special Programs ........................................................................... 114 General Fund - Magnolia Performing Arts .................................................................................. 115 Nonmajor Governmental Funds
Combined Balance Sheet ........................................................................................................................ 116 Combined Statement of Revenues, Expenditures and Changes in Fund Balances ............................... 117 Nonmajor Special Revenue Funds
Combining Balance Sheet ....................................................................................................................... 120 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .............................. 122 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Gas Tax ............................................................................................................................................. 124 Transit ............................................................................................................................................. 125 Federal/County Asset Forfeiture ....................................................................................................... 126 Local Public Safety ............................................................................................................................ 127 Housing In-Lieu Fees ....................................................................................................................... 128 State Certified Access Specialist Program ....................................................................................... 129 Community Development Block Grant .............................................................................................. 130 HOME ............................................................................................................................................. 131 Nonmajor Capital Projects Fund
Combining Balance Sheet ....................................................................................................................... 134 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .............................. 136 Internal Service Funds
Combining Statement of Net Position...................................................................................................... 140 Combining Statement of Revenues, Expenses and Changes in Net Position ........................................ 142 Combining Statement of Cash Flows ...................................................................................................... 144 Fiduciary Funds
Combining Statement of Fiduciary Net Position ...................................................................................... 148 Combining Statement of Changes in Fiduciary Net Position .................................................................. 149

STATISTICAL SECTION, Unaudited

Financial Trends
Net Position by Component ........................................................................................................................... 153 Changes in Net Position ................................................................................................................................. 154 Fund Balance of Governmental Funds .......................................................................................................... 156 Changes in Fund Balance of Governmental Funds ....................................................................................... 157

CITY OF EL CAJON

TABLE OF CONTENTS

iii

STATISTICAL SECTION, Unaudited (continued)

Revenue Capacity
Tax Revenues by Source, Governmental Funds ........................................................................................... 158 Principal Sales Tax Producers ....................................................................................................................... 159 Taxable Sales by Category ............................................................................................................................ 160 Assessed Value of Taxable Property ............................................................................................................. 161 Direct and Overlapping Property Tax Rates .................................................................................................. 162 Property Tax Levies and Collections ............................................................................................................. 163 Principal Property Tax Payers ....................................................................................................................... 164 Debt Capacity
Ratios of Outstanding Debt by Type .............................................................................................................. 165 Direct and Overlapping Governmental Activities Debt ................................................................................... 166 Legal Debt Margin Information ....................................................................................................................... 167 Pledged-Revenue Coverage .......................................................................................................................... 168 Demographic and Economic Information
Demographic and Economic Statistics .......................................................................................................... 169 Top Ten Employers ........................................................................................................................................ 170 Operating Information
Full-time Equivalent City Government Employees by Function/Program ...................................................... 171 Operating Indicators by Function/Program .................................................................................................... 172 Capital Asset Statistics by Function/Program ................................................................................................ 173

ACKNOWLEDGEMENTS

INTRODUCTORY SECTION
1 INTRODUCTORY SECTION
2 CITY OF EL CAJON

200 Civic Center Way ● El Cajon, California 92020

December 8, 2021

To the Honorable Mayor, Members of the City Council and Residents of the City of El Cajon:

The City of El Cajon annually publishes a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of certified public a ccountants. Pursuant to that requirement, we hereby issue the annual comprehensive financial statements of the City of El Cajon (“the City”) for the fiscal year ended June 30, 2021.

This report consists of management’s representations concerning the finances of the City. Management, therefore, assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework over financial reporting that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in con formity with GAAP. The City’s comprehensive framework of internal controls has been designed to provide reasonable assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

Rogers, Anderson, Malody & Scott, LLP, a firm of certified public accountants, audited the City’s financial statements with a goal to provide reasonable assurance that the basic financial statements of the City for the fiscal year ended June 30, 2021, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified (“clean”) opinion that the City’s basic financial statements for the fiscal year ended June 30, 2021 , were fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report.

The independent audit of the basic financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements requir e the independent auditor to report not only on the fair presentation of the financial statements, but also report on the City’s internal control over financial reporting and compliance with legal requirements involving the administration of federal awards. Although the independent auditor reports on internal control and compliance with legal matters, they do not express an opinion on them. These reports are contained in the City’s separately issued Single Audit Report. 3 GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors.

Profile of the Government

The City, incorporated on November 12, 1912, is located in the southern part of the state, just 15 miles due east of San Diego. The City currently occupies a land area of 14.4 square miles and serves a population of 103,243. The City has experienced population growth of approximately 2.7% over the past ten years.

By a vote of the people, the City became a charter city during fiscal year 2011-12, giving the city council more local control of municipal affairs. Policy-making and legislative authority are vested in the city council consisting of the mayor and four other council members. As part of the November 8, 2016, general election, Measure S passed directing district elections in the subsequent election of the City’s four council members. The mayor is elected to serve a four -year term and council members serve four-year staggered terms. The city council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring both the city manager and city attorney. The City operates under the council -manager form of government. The city manager is responsible for carrying out the policies and ordinances of the city council, for overseeing the day -to-day operations of the City, and for appointing the directors of the various departments.

The City provides a full range of services, including police and fire protection, animal control, construction and maintenance of streets, parks, civic facilities, and other infrastructure, right -of-way regulation, city planning and building regulation, recreational activities, cultural events, housing assistance and wastewater services.

The City is financially accountable for the El Cajon Housing Authority and El Cajon Public Financing Authority, both of which are reported as blended component units within the City’s financial statements. Additional information on these separate entities can be found in Note 1 (page 53) of the notes to the basic financial statements.

The annual budget serves as the foundation for the City’s financial planning and control. All departments of the City are required to submit requests for appropriation to the city manager in March of each year. The city manager uses these requests as the starting point for developing a proposed budget. The city manager then presents this proposed budget to the city council for review in June. The city council has a public hearing to adopt a final budget no later than June 30, the close of the City’s fiscal year. The appropriated budget is prepared by fund (e.g., general fund), function (e.g., public safety), department (e.g., police) and activity (e.g., patrol). The city manager may transfer appropriations between departments within a fund. However, transfers of appropriations between funds require approval of the city council. Budget -to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund and major special revenue fund, this comparison is presented as part of the required supplementary information in the accompanying financial statements. For governmental funds that have appropriated annual budgets, other than the general fund and the major special revenue fund, this comparison is presented in the supplementary section of the accompanying financial statements.

Local Economy

After a tumultuous fiscal year 2019-20 affected by the impacts of the Covid-19 pandemic, fiscal year 2020-21 was largely positive. Economic indicators generally improved throughout the year. State Gross Domestic Product (GDP) increased at an 8.1% annual rate for the second quarter 2021, while national GDP grew at

6.7% for the same period. Unemployment rates have improved significantly over the fiscal year as well. The State unemployment rate for October 2021 was 7.3%, compared to 9.3% at the same point last year. For the same period, national unemployment was 4.6%, down from 6.9%.

4 Recent disruptions in supply chains have driven inflation up recently. The Consumer Price Index (CPI) for the San Diego region, measuring from September 2020 to September 2021 was up 6.5%, and up 5.4% nationally.

While San Diego information for October 2021 has not been release, the national annual CPI continued to increase to 6.2%. The Federal Open Market Committee has expressed that it is their opinion that this i s a temporary situation, and it is expected that i nflation will return to acceptable levels once the normal flow of good resumes.

Housing indicators are positive, led by privately -owned housing units authorized nationally, which increased

3.4% in October 2021 from the previous year. Additionally, housing starts increase 0.4% for the same period; however, completions are down 8.4%. These indicators, taken together suggest this segment of the economy is beginning recovery, although not recognized throughout the full cycle of permit-construction-completion.

Sales Tax Revenues – Regular sales tax revenue increased $4.2 million from the prior fiscal year, a 16.4% increase. This change is primarily attributable to the direct economic impacts of the Covid -19 public health crisis experienced the year before , but also increases in internet sales attributable to the City . The City’s additional district sales tax, known as “Prop J” also increased 18.5%, or $1.9 million from the previous year.

Property Taxes – Property taxes collected in fiscal year 2020-21 increased 5.2% from the prior year. According to data from the County of San Diego Assessor’s Office, the total assessed valuation of taxable property in El Cajon for fiscal year 2020-21 was $10.6 billion; this represents a 5.8% increase from the prior year. For fiscal year 2021-22, total assessed values grew to $11.0 billion, an increase of 3.7% from fiscal year 2020-21.

The majority of economic indicators are positive, and suggest the economy is in the process of recovering from the economic impacts of the Covid-19 pandemic. While areas of concern remain, the outlook is guardedly optimistic. It is critical that the City continues to commit to maintain ing healthy reserves and making conservative decisions until certainty improves.

Long Term Financial Planning

The City utilizes many sources to evaluate and provide current and long range financial planning. These sources include the Annual Comprehensive Financial Report (ACFR), the annual budget, and the five -year business plan. In conjunction with the ACFR and the annual budget, the five-year business plan is reviewed and updated annually as a forerunner to preparing the annual budget.

As directed by the City Council Poli cy on Fund Balance (No. B-12), the general fund maintains a committed fund balance equal to 20% of annual budget expenditures, $ 15.6 million at June 30, 2021 . Additionally, the general fund had reserves of $8.0 million for unfunded retirement obligations and $6.5 million for economic uncertainty. The $23.6 million unassigned fund balance at June 30, 2021, provides resources for future needs.

The city council periodically rebalances these assignments based on anticipated needs, which was done on June 22, 2021 . Based on recent analysis and information received to date, general fund revenue and expenditure projections for fiscal year 2021-22 are conservatively estimated. The City must continue to operate in a fiscally conservative manner and priori tize capital outlay expenditures based upon available funding.

In November 2008, the voters approved Proposition J, a twenty-year half-cent sales tax measure, intended to preserve essential City services and bridge the City’s long-standing fiscal needs. A total of $11.8 million was collected in fiscal year 2020-21 as a result of Proposition J and was vital in maintaining essential services.

Transportation related maintenance and capital projects were primarily funded by Gas Tax, TransNet, and the General Fund. A combined total of $8.5 million was utilized to reconstruct and resurface major thoroughfares and local residential streets, and to maintain or improve streetlights and traffic signals. Projects are prioritized based upon need and available funding.
5 Major Fiscal Issues

The City contributes to the California Public Employees Retirement System (CalPERS), an agent multiple - employer defined benefit pension plan for its employees. Each year an independent actuary, engaged by the pension plan, calculates the amount of the annual contribution that the City must make to the pension plan to ensure that the plan will be able to fully meet its obligation s. As a matter of policy, the City fully funds each year’s actuarially determined contribution to the pension plan. The unfunded actuarial liability associated with employee services rendered to date is being systematically funded as part of the actuariall y determined contribution. Employer rates are expected to increase for a number of reasons including investment returns different than assumed and discount rate changes; rate increases are taken into consideration in the five-year business plan. Although t he Public Employees’ Pension Reform Act (PEPRA) established new retirement benefit levels and limits for “new members” effective January 1, 2013, it will be many years before PEPRA fully impacts employer contribution rates.

Throughout 2021 the City initiated several strategies to address its growing pension funding shortfalls. In October 2020, the City Council adopted a Pension Funding Policy that provides guidance on both goals and specific actions. Additionally, while the City has maintained designations of General Fund equity for unfunded pension liabilities, it directed the establishment of a Public Agency Retirement Services Section 115 Trust to provide pension rate stabilization and give the City additional pension funding options. Most notably, in January 2021 the City issued $147.2 million in Pension Obligation Bonds as a way to take advantage of favorable interest rates to improve its pension plan’s funded status.

The City obtains a biennial actuarial valuation of its liability for other post-employment benefits (OPEB). In fiscal year 2007 -08, the City began making contributions to the California Employee Retiree Benefit Trust (CERBT) fund to transition to pre -funding the OPEB obligation rather than continue the practice of pay -as- you-go.

Awards and Acknowledgements

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its annual comprehensive financial report for the fiscal year ended June 30, 2020. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

The preparation of this Annual Comprehensive Financial Report could not have been accomplished without the dedicated efforts of the Finance Department staff and the assistance of the City’s auditors, Rogers, Anderson, Malody & Scott, LLP. In particular, we would like to express our appreciation to members of the Finance Department who prepared this report. We would also like t o thank the Mayor and members of the City Council for their support and commitment to fiscal integrity and financial leadership.

Sincerely,

Graham Mitchell Clay Schoen
City Manager Director of Finance
6 Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of El Cajon
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
7 CITY OF EL CAJON
List of Principal Officials
Fiscal Year Ended June 30, 2021

MAYOR

Bill Wells

COUNCILMEMBERS

Gary Kendrick, Mayor Pro Tem
Steve Goble
Michelle Metschel
Phil Ortiz

CITY MANAGER

Graham Mitchell

CITY ATTORNEY

Morgan Foley

MANAGEMENT TEAM

Vince DiMaggio – Assistant City Manager
Angela Cortez – City Clerk
Mike Moulton – Police Chief
Steve Swaney – Fire Chief
Tony Shute – Director of Community Development
Marisol Thorn – Director of Human Resources
Sara Diaz – Director of Information Services
Yazmin Arellano – Acting Director of Public Works
Frank Carson – Director of Recreation
Clay Schoen – Director of Finance

8 CITY OF EL CAJON
Organizational Chart
Fiscal Year Ended June 30, 2021

Citizens

City Council
Commissions
& Boards
City Attorney
City Manager
Recreation
Fire
Public Works

Community Development

Human Resources
City Clerk

Finance
Police
Information Technology

9 C it y o f E l C a jo n , S a n G I S , E s r i, H E R E , G a r m in , S a f e G r a p h , M E T I / N A S A , U S G S , B u r e a u o f L a n d M a n a g e m e n t , E P A , N P S , U S D A F
S a n G I S , E s r i, H E R E ,
G a r m in , S a f e G r a p h , F A O , M E T I /
N A S A , U S G S , B u r e a u o f L a n d
M a n a g e m e n t , E P A , N P S
10 FINANCIAL SECTION
11 FINANCIAL SECTION
12 Independent Auditor’s Report

To the Honorable Mayor and Members of the City Council
City of El Cajon, California

Report on the Audit of the Financial Statements

Opinions

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 City of El Cajon, 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.

In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of El Cajon, 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.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements

The City’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
13 Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the required supplementary information, such as management’s discussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements.

Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

14 Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements and the nonmajor fund budgetary comparison schedules are presented for purposes of additional analysis and are not a required part of 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 accompanying supplementary information referred to above is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information included in the Annual Report

Management is responsible for the other information included in the annual report. The other information comprises the letter of transmittal and the statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 8, 2021 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 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.

San Bernardino, California
December 8, 2021

15 16

CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

As management of the City of El Cajon, we offer readers of these financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 202 1. We encourage readers to consider the information pre sented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report.

FINANCIAL HIGHLIGHTS

 At June 30, 2021, the City’s total net position was $219.9 million. Of this amount, governmental activities net position accounts for $1 51.3 million and business -type ac tivities total $68 .6 million. The City’s overall net position decreased by $2.6 million or 1.2 percent, from the previous fiscal year.

 The decrease in the City’s total net position was corresponding to the changes in the following financial statement elements: (1) total assets in the governmental activities increased by $16.4 million or 4. 7 percent primarily due to cash received from the American Rescue Plan Act (ARPA), which was offset by a decrease in capital assets of $9.7 million that is a result of depreciation and the sale of assets; (2) total liabilities of the City increased by $168.1 million or 71.4 percent primarily due to the issuance of pension obligation bonds, increase in the net pension liability, and unearned revenue from the ARPA distribution; (3) deferred outflows of resources in creased by $145.1 million and deferred inflows of resources decreased by $2.7 million from the prior fiscal year. Pension and OPEB related items account for the change in deferred outflows and inflows of resources with the pension obligation bond proceeds used to pay for pension benefits subsequent to the measurement date resulting in the large increase to deferred outflows.

 Total government-wide revenues were $126.1 million, which increased by $9 million or 7.7 percent from the prior fiscal year, mostly due to increased sales taxes and gains on the sale of property . Total expenses were $128.7 million, a de crease of $ 0.3 million, or 0.2 percent, from last fiscal year . The expense decreases were incurred in public safety, recreation, and wastewater, but were offset by increases in community development and interest on long-term debt.

 At June 30, 2021, the City’s governmental funds reported combined fund balances of $109.8 million, a $12 million increase from the prior fiscal year. This was primarily due to higher than anticipated sales tax revenue and proceeds from the sale of capital assets during the fiscal year.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the City of El Cajon’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 basic financial statements. This report also includes required supplementary information , and other supplementary information that presents additional detail to support the basic financial statements.

Government-Wide Financial Statements

The government-wide financial statements provide a broad overview of the City’s finances, in a manner similar to private-sector businesses. The government-wide financial statements can be found beginning on page 33 of this report.

17 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position . Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City’s net position changed durin g 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, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods.

Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all of their costs through user fees and charges ( business-type activities ). The governmental activities of the City include general government, public safety consisting of police and fire , public works, parks and recreation, and community development. The business-type activity of the City includes wastewater operations.

The government-wide financial statements include the City ( primary government), and all legally separate entities (comp onent units) for which the City is financially accountable. The El Cajon Public Financing Authority and the El Cajon Housing Authority, though legally separate, are treated as programs of the City and are included in the basic financial statements as an integral part of the primary government.

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 City’s funds are divided into three categories: governmental funds, proprietary funds, and fiduciary funds . The fund financial statements can be found beginning on page 37 of this report.

Governmental funds

Governmental funds are used to account for essentially the same functions reported as governmental activities in the governm ent-wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

The focus of the governmental funds is narrower than that of the gover nment-wide financial statements; therefore, it is useful to compare the information presented for t he governmental funds with similar information presented for governmental activities in the governm ent-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 revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

18 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

The City maintains 18 individual gov ernmental funds. Information is presented separately in the governmental fund financial statements for the following major governmental funds: General Fund, Low and Moderate Income Hous ing Asset Special Revenue Fund, Federal, State, and Local Grants Special Revenue Fund, and Pension Obligation Bonds Debt Service Fund . Data from the other 14 nonmajor governmental funds are combined into a single, aggregate presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report.

Proprietary funds

The City maintains two differe nt types of proprietary funds: enterprise funds and internal service funds.

Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for its w astewater activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses five internal service funds to acc ount for its Vehicle Maintenance, Vehicle and Equipment Replacement, Self-Insurance, Information Technology Services, and Other Post -Employment Benefits. These services predominantly benefit governmental rather than business-type functions, so they have been included with governmental activities in the government-wide financial statements. Individual fund data for each of the internal service funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report.

Fiduciary funds

Fiduciary funds are used to account for resources held for the benefit of p arties outside the government.

Fiduciary funds are not reported in the government -wide financial statement s because the resources of those funds are not available to support the City’s own programs. The basis of accounting for these funds is much like that used for proprietary funds. The City reports two types of fiduciary fund s. The private - purpose trust fund accounts for the activities of the Successor Agency to the El Cajon Redevelopment Agency. The custodial funds are used for the collections of delinquent refuse assessments for the City’s franchised waste hauler and property -based improvement district (PBID) assessments for the Greater Downtown El Cajon , and for the activities of the Heartland Fire Training Authority (HFTA) and Heartland Communications Facility Authority (HCFA).

Notes to the Basic Financial Statements

The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statemen ts. The notes are presented immediately following the basic financial statements and can be found beginning on page 52 of this report.

Other information

In addition to the basic financial statements and accompanying notes, this report also presents certain Required Supplementary I nformation related to the City’s budget process and budgetary comparison schedules for the General Fund and major Special Revenue Funds and the City’s progress in funding its obligations to provide pension and post-employment benefits to its employees. The required supplementary information can be found beginning on page 95 of this report.

Combining and individual statements for the nonmajor governmental funds , internal service funds , and custodial fiduciary funds are presented in the Supplementary I nformation section of the report . The supplementary information can be found beginning on page 111 of this report. 19 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS

Net position over time may serve as a useful indicator of the City’s financial position. At June 30, 2021, the City’s net position totaled $ 219.9 million, which represents a n overall decrease of $2.6 million from the previous fiscal year . As noted earlier, t his decrease was primarily due to an increase in total liabilities , mostly resulting from the issuance of pension obligation bonds and rec lassification of unearned revenue related to the ARPA distribution . The decrease in capital assets in the governmental activities also contributed to the decline in the City’s total net position.

The following is the condensed statement of net position for the fiscal years ended June 30, 2021 and 2020.

2021 2020 2021 2020 2021 2020
ASSETS
Current & other assets $ 148.2 $ 122.1 $ 30.4 $ 28.4 $ 178.6 $ 150.5 Capital assets, net 217.4 227.1 57.5 58.2 274.9 285.3 Total assets 365.6 349.2 87.9 86.6 453.5 435.8

DEFERRED OUTFLOWS
OF RESOURCES 164.7 25.2 6.9 1.3 171.6 26.5

LIABILITIES
Long-term liabilities 154.5 12.9 15.7 10.5 170.2 23.4 Net pension liability 195.7 188.7 9.2 8.9 204.9 197.6 Net OPEB liability 4.5 5.2 0.4 0.4 4.9 5.6 Other liabilities 22.7 7.6 0.8 1.2 23.5 8.8 Total liabilities 377.4 214.4 26.1 21.0 403.5 235.4

DEFERRED INFLOWS
OF RESOURCES 1.6 4.2 0.1 0.2 1.7 4.4

NET POSITION
Net investment in capital assets 216.3 225.8 47.9 48.2 264.2 274.0 Restricted 42.8 37.1 0.6 0.6 43.4 37.7 Unrestricted (107.8) (107.1) 20.1 17.9 (87.7) (89.2) Total net position $ 151.3 $ 155.8 $ 68.6 $ 66.7 $ 219.9 $ 222.5 Governmental
activities
Business-type
activities Total
Condensed Statement of Net Position
June 30, 2021 and 2020
(in millions)
At June 30, 202 1, t he largest portion of the City’s total net position ($264.2 million) reflects the net investment in capital assets . This component consists of capital assets, net of accumulated depreciation, reduced by any outstanding debt used for the acquisition, construction, or improve ment of those assets.

The City uses these capital assets , which include land, buildings, machinery and equipment, and infrastructure, to provide services to its citizens. The amount of net investment in capital assets is not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources used to repay the debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 20 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

An additional portion o f the City’s net position ($43. 4 million) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position can be used for ongoing operations without constraints established by debt covenants, enabling legislation, or other legal requirements. The City’s unrestricted net position , at June 30, 2021 , was a defici t of $87.7 million, primarily due to the recognition of long -term liabilities ( pension obligation bonds, compensated absences), net pension, and net OPEB liabilities.

The following is the condensed statement of activities for the fiscal years ended June 30, 2021 and 2020.

2021 2020 2021 2020 2021 2020

REVENUES
Program revenues:

Charges for services 15.2$ 11.8$ 24.1$ 21.3$ 39.3$ 33.1$ Operating grants & contributions 8.9 6.4 - - 8.9 6.4 Capital grants &
contributions 4.6 4.0 - - 4.6 4.0 General revenues:

Property taxes 22.1 21.0 - - 22.1 21.0 Sales taxes 42.0 35.9 - - 42.0 35.9 Other taxes 9.3 8.6 - - 9.3 8.6 Intergovernmental 0.1 0.1 - - 0.1 0.1 Investment earnings 0.1 3.2 (0.1) 1.1 - 4.3 Other - (0.1) (0.2) 3.8 (0.2) 3.7 Total revenues 102.3 90.9 23.8 26.2 126.1 117.1

EXPENSES
General government 8.4 8.4 - - 8.4 8.4 Public safety 63.8 66.5 - - 63.8 66.5 Public works 18.9 18.2 - - 18.9 18.2 Recreation 4.9 7.3 - - 4.9 7.3 Community development 9.3 4.8 - - 9.3 4.8 Interest on long-term debt 1.5 - - - 1.5 - Wastewater - - 21.9 23.8 21.9 23.8 Total expenses 106.8 105.2 21.9 23.8 128.7 129.0 Change in net position (4.5) (14.3) 1.9 2.4 (2.6) (11.9) Net position, beginning 155.8 170.1 66.7 64.3 222.5 234.4 Net position, ending 151.3$ 155.8$ 68.6$ 66.7$ 219.9$ 222.5$ Condensed Statement of Activities
For the fiscal years ended June 30, 2021 and 2020
(in millions)
Governmental
activities
Business-type
activities
Total
21 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

Governmental Activities

Revenues – Over 70 percent of the revenue sources for the City’s governmental activities are generated through taxes collected. The chart below illustrates the governmental activities revenue sources.

The City’s revenue sources for governmental activities increased by $11.4 million, or 12.5 percent from the previous fiscal year. Key elements of this change are as follows:

 Sales taxes were $6.1 million or 17 percent higher compared to the prior fiscal year, which is primarily attributable to an increase in sales volume post -pandemic and the cost of items purchased, such as vehicles.

 Charges for services were higher by $3.4 million, or 28.8 percent, primarily from the sale of properties funded by the Community Development Block Grant (CDBG) and Low and Moderate Income Housing Asset Fund for which the proceeds are restricted for use within the respective programs.

 Property taxes were $1.1 million or 5.2 percent higher compared to the prior fiscal year because of a

5.8 percent increase in the assessed values of residential, commercial, and industrial properties.

 Operating grants and contributions in creased by $2. 5 million, or 39.1 percent, primarily due to an increase in federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funds recognized as revenue.

 Investment earnings decreased by $3.1 million. This de crease is primarily due to unrealized losses resulting with the fair market value adjustment of the City’s investments at June 30, 202 1. 22 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

Expenses – Over 60 percent of expenses for governmental activities are related to public safety. The chart below shows governmental expenses by function.

Overall governmental expenses rose by $1.6 million from the prior fiscal year due to increases in community development and interest on long -term debt associated with the newly issued pension obligation bonds , partially offset by decreases in recreation and public safety.

 Community development expenses were higher than the prior fiscal year primarily due to programs funded by the CARES Act.

 Interest on long-term debt increased due to the issuance of Pension Obligation Bonds during the fiscal year.

Business-type Activities

The City’s business-type activity consists solely of the wastewater enterprise fund, which reported a net position of $68.6 million at June 30, 2021. Wastewater total revenues exceeded total expenses resulting in an increase in the overall net position by $1.9 million from the prior fiscal year. This growth is attributable to an increase in charges for service primarily resulting from the annual rate increase.

The largest portion of the wastewater net position ($47.9 million) reflects the investment in capital assets used to deliver wastewater services. Additionally, $0.6 million is restricted for debt service. The remaining balance of unrestricted net position can be used for ongoing wastewater operations without constraints established by enabling legislation or other legal requirements. As of June 30, 2021, the wastewater fund’s unrestricted net position was $20.1 million.
23 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS

The City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements.

Governmental Funds

The focus of the City’s governmental funds 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, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

At June 30, 202 1, the City’s governmental funds reporte d combined fund balances of $109.7 million, an increase of $12.0 million from the prior year . Approximately 21.6 percent of this amount ($ 23.6 million) constitutes unassigned fund balance, which is available for spending at the City’s discretion. The remainder of the fund balance is either restricted, committed , assigned, or nonspendable to indicate that it is : a) restricted for particular purposes ($ 42.8 million), b) committe d for economic uncertainty and cash flow reserves ($15.6 million), c) assigned for particular purposes ($ 27.8 million), and d) not in spendable form ($4 thousand).

General Fund
The General Fund is the chief operating fund of the City. At the end of the fiscal year, total fund balance was $53.7 million; of which $23.6 million was unassigned fund balance. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance to to tal General Fund expenditures of $76.4 million. Unassigned fund balance represented 30.9 percent of total General Fund expenditures for the year.

The Gener al Fund’s fund balance increased by $4 .3 million from the previous fiscal year. Excess of revenues over expenditures was $7.4 million.

Revenues of the General Fund were $83.7, which was $3.2 million higher than the prior year. As mentioned in the preceding section about the government -wide analysis of revenue sources, revenues from sales taxes were the primary drivers of this increase.

Total General Fund expenditures were $76.4 million, a decrease of $4.1 million compared to previous fiscal year. The most significant de creases were in recreation and public works , which spent $2.4 million and $1.6 million less than the prior year , respectively. The reduced expenditures in recreation were primarily due to decreased operating expenditures for the Magnolia Performing Arts Center, which was closed for the majority of the fiscal year due to Covid-19 restrictions. The reduced expenditures in public works w ere primarily from decreased personnel expenditures due to multiple vacant positions.

Low and Moderate Income Housing Asset Fund Special Revenue Fund The Low and Moderate Income Housing Asset Fund (LMIHAF) Special Revenue Fund accounts for the housing assets and functions of the former El Cajon Redevelopment Agency for the purpose of developing affordable housing. As of June 30, 2021, the LMIHAF had total assets of $19.6 million, $12 million of which were loans receivable.

The LMIHAF had t otal revenues of $0.3 million from investment earnings and interest on loans . Total expenditures were $1 million, which were primarily costs associated with the sale of the Lexington Senior Apartments leasehold interest. Other financing sources totaled $4. 8 million from the proceeds for the sale of the leasehold interest. During the fiscal year, loan repayments of $0.3 million were received as accounted for in the balance sheet.
24 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

Federal, State, and Local Grants Special Revenue Fund
This fund accounts for grant revenues received from federal, state, and other local agencies for program/project expenditures prescribed by the grant provisions . As of June 30, 2021, total fund balance was $1.4 million, and unearned revenues totaled $15 million for the American Rescue Plan Act (ARPA) funds that were received before all grant requirements were met by the City. Total revenues exceeded total expenditures by a negligible amount since most of these grants were expenditure driven to be eligible for reimbursement. This fund received $15 million in ARPA Funds from the U.S. Department of the Treasury with the majority remaining unearned, as the spending requirements were not met as of fiscal year end.

Pension Obligation Bond Debt Service Fund
The Pension Obligation Bonds (POB) Fund accounts for financial resources accumulated for debt service payments. As of June 30, 2021, the fund balance totaled $11 thousand, which represents cash restricted for upcom ing debt service payments. Total expenditures were $137.7 million, which was the lump sum payment made to the City’s pension plans to reduce the City’s Unfunded Accrued Liability (UAL). Total other financing sources were $137.7 million, which was comprised of the loan proceeds from the debt issuance.

Nonmajor Governmental Funds
These funds are used to account for the proceeds of specific revenue sources that typically are legally restricted to expen ditures for specified purposes. The total ending fund bala nces for these funds was approximately $36.5 million at June 30, 2021, an increase o f $15.5 million from the prior fiscal year. This increase can be attributed to the reclassification of the HOME Special Revenue Fund as a nonmajor governmental fund. Other contributing factors to this increase are a large funding transfer to the Capital Projects Fund from the General Fund for capital improvement projects , and proceeds from the sale of property in the CDBG Special Revenue Fund.

Proprietary funds

The City’s proprietary fund statements provide the same type of information found in the government -wide financial statements, but in more detail.

Wastewater Enterprise Fund
This fund is used to account for activities where fees are charged to external users for wastewater services.

Operating revenues increased by $2.8 million to $24.1 million during the fiscal year. Operating expenses totaled $21.9 million, a $1.9 million decrease from previous year , primarily due to a decrease in disposal costs paid to the City of San Diego resulting from prior year reconciliation payments paid in the previous year. Nonoperating expenses totaled ($0.3 million) , primarily due to fiscal charges and interest expenses.

As of June 30, 2021, the fund’s net position increased by $1.9 million to $68.6 million.

Internal Service Funds
These funds are used to account for the financing of goods or services provided by one fund/department to another fund/department on a cost-reimbursement basis. Additionally, an internal service fund is used to accumulate resources for the replacement of vehicles and equipment, and another is used for the City’s self-insurance for general and worker’s compensation claims. Total operating revenues exceeded operating expenses by $0.1 million and total nonoperating expenses were $0.1 million. The total net position of the internal service funds increased to $12.3 million at June 30, 2021. 25 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

GENERAL FUND BUDGETARY HIGHLIGHTS

The General Fund final budget for revenues and other financing sources was $74.1 million and t he final budget for expenditures and other financing uses was $83.1 million. The following graphs depict the original budget, final budget, and actual results for the General Fund revenues and other financ ing sources and expenditures and other financing uses.

Actual revenues and other financing sources performed better than budgetary expectations by approximately $9.5 million. Actual sales taxes received exceeded the budgeted amounts by $9.3 million.

26 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

Actual expenditures and other financing uses were under the final budg et by $3.7 million. This savings is primarily due to General Government ($2.3 million under budget). The majority of the General Government savings is attributable to a $2 million budgeted transfer to the City’s Public Agency Retirement Services (PARS) 115 Trust account for pension stabilization. This $2 million was recorded on the balance sheet as cash with fiscal agent instead of recognized as an expenditure during the fiscal year.

The budgetary comparison schedule showing more details of the General Fund original and final budgets can be found in the Required Supplementary Information beginning on page 95.

27 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At June 30, 20 21, the City reported capital assets with a carrying value of $274.9 million, a decrease of $10.5 million from the prior year. The following table provides a summary of the City’s capital assets as of June 30, 2021 and 2020.

2021 2020 2021 2020 2021 2020
Land 21.7$ 22.1$ 0.1$ 0.1$ 21.8$ 22.2$ Rights of way 31.2 31.2 - - 31.2 31.2 Construction in progress 1.8 2.6 0.8 0.7 2.6 3.3 Use rights 1.1 1.3 - - 1.1 1.3 Land improvements 1.9 2.4 - - 1.9 2.4 Buildings & improvements 78.4 81.9 0.1 0.1 78.5 82.0 Machinery, equipment & vehicles 5.2 5.8 1.0 1.0 6.2 6.8 Interest in Mission Gorge Mains - - 4.8 5.1 4.8 5.1 Infrastructure 76.1 79.8 50.7 51.3 126.8 131.1 Total 217.4$ 227.1$ 57.5$ 58.3$ 274.9$ 285.4$ Governmental activities Business-type activities Total
City of El Cajon
Capital Assets (net of depreciation)
Comparative Data as of June 30, 2021 and 2020
(in millions)

Some of the major changes to the City’s capital assets include:
 Sale of Crisis House and leasehold interest in Lexington Senior Apartments  Completion of wastewater pipeline replacement in various locations  Replacement of traffic signals at Chase Ave. and Prescott Ave.  Replacement of 2,500 square feet of rubber tile surfacing at Kennedy Park  Replacement and upgrades of traffic signals and street lights in various locations throughout the City  Purchase of six vehicles for public safety, and two vehicles for public works  Purchase of IT networking equipment for both City Hall and the Police Headquarters

A number of capital projects were still in progress at fiscal year ended June 30, 2021. Major capital projects in progress that were significant included improvements to City streets and channel drains. These projects added approximately $1.8 million to construction in progress.

Additional information on capital assets can be found in Note 4 of the Notes to the Basic Financial Statements beginning on page 69.

28 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

Long-Term Debt

The City’s outstanding long -term debt at the end of fiscal years 202 1 and 2020 are presented in the schedule below.

2021 2020 2021 2020 2021 2020
Pension Obligation Bonds 141.5$ -$ 5.7$ -$ 147.2$ -$ Capital Lease 1.1 1.3 - - 1.1 1.3 CA State Water Resources Loan - - 9.6 10.0 9.6 10.0 Total 142.6$ 1.3$ 15.3$ 10.0$ 157.9$ 11.3$ Governmental activities Business-type activities Total
City of El Cajon
Long-Term Debt
Comparative Data as of June 30, 2021 and 2020
(in millions)

As previously stated, the City issued Taxable Pension Obligation Bonds during the fiscal year in the amount of $147.2 million in order to pay down a significant portion of the City’s Unfunded Accrued Liability (UAL) with the California Public Employee’s Retirement System (CalPERS) . The bonds bear variable interest rates averaging to 2.864% that is expected to provide long-term savings when compared to t he 7.15% discount rate CalPERS applies on the UAL.

Additional information on long-term debt can be found in Note 5 of the Notes to the Basic F inancial Statements beginning on page 70.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

The following factors were considered in preparing the City’s General Fund budget for fiscal year 2021-22:

 The global pandemic – and reactions to it – threatened the City’s financial stability this past year . As such, the FY20-21 budget anticipated a downturn in revenue, included cost control measures, and the reliance on $3.6 million from General Fund reserves to meet the City’s obligations and community needs. The revenues in FY20-21 were not as dire as anticipated, expenditures were strictly controlled, and actual reserves utilized were only $1.4 million. The national and local economy continues to recover from the Covid -19 recession. The vaccine rollout and fiscal relief provided by the American Rescue Plan Act have accelerated the recovery. U.S. job growth has continued and national unemployment decreased to 6.1% with California’s unemployment at 8.3%. Inflation continues to play a role with the Bureau of Labor Statistics reporting in May 2021 that the Consumer Price Index for the preceding 12 months increased by 4.2 percent.
29 CITY OF EL CAJON
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the fiscal year ended June 30, 2021

 General Fund revenues and other financing sources are anticipated to increase by $9.6 million in FY 2021-22 over FY 2020 -21. This repre sents an overall increase of 12.9 percent. The majority of this increase is due to the sales tax growth as a result of the recovering economy, but also as a result of increased capture of sales tax from internet sales. It is also expected that Transient Occupancy Taxes (TOT) will rebound, along with modest growth in most other categories.

 General Fund expenditures and other financing uses are anticipated to increase by $0.6 million, or 0.8 percent, in FY 2021-22 compared to the revised FY 2020 -21 budget. The majority of this increase is the result of the restoration of the measures put in place to mitigate the effects of the public health crisis related to the Covid-19 virus.

 The City issued $147.2 million in Pension Obligation Bonds during FY 2020-21 to address its unfunded CalPERS liability. The expected total savings over the life of the bonds is $104.7 million, but savings in the first year are modest. The immediate impact on the FY 2021 -22 budget include a decrease in the amortized portion of the unfunded CalPERS liability of $9.8 million, off set by the addition of the debt service payment of $9.1 million. The net result is an estimated savings of approximately $0.7 million.

 The City reduced the use of part-time and temporary staff during the previous two fiscal years because of the economic impacts related to the public health crisis related to the Covid -19 virus. As economic conditions have improved, the resumption of this practice is anticipated in the FY 2021 -22 budget.

 The City continues to have significant employee turnover through retirement and other attrition. In order to ensure efficient continuity of ongoing programs and services, the FY 2021-22 budget authorizes the limited hiring of new staff prior to the separation of the departing incumbent. The duration of the short training and development overlap periods and the positions to which they will apply will be determined on a case-by-case basis by the City Manager.

 The FY 202 1-22 budget maintains a strong General Fund reserve of over $42 million. This reserve balance represents approximately 50.5 percent of the City’s General Fund expenditures. This balance will protect the City in the event of an economic or natural disaster and will allow the City to maintain services. During the upcoming fiscal year, the City will continue to seek strategies to reduce costs while augmenting revenue through economic development initiatives.

REQUESTS FOR INFORMATION

This Annual Comprehensive Financial Report is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. If you have any questions about this report or need additional financial information, contact the City of El Cajon Finance Department, 200 Civic Center Way, El Cajon, CA 92020, (619) 441-1668 or visit the City’s web site at www.cityofelcajon.us. 30 BASIC FINANCIAL STATEMENTS
31 32
Governmental Business-type
Activities Activities Total
ASSETS
Cash and investments (note 2)
Cash and investments 110,032,043$ 27,571,007$ 137,603,050$ Cash and investments, restricted 2,132,144 592,205 2,724,349 Receivables:

Accounts, net 196,872 2,138,259 2,335,131 Interest 298,118 82,051 380,169
Intergovernmental 1,235,801 15,584 1,251,385 Taxes 10,404,601 - 10,404,601 Loans (note 3) 23,853,262 - 23,853,262 Prepaid items 4,330 - 4,330 Capital assets (note 4):

Non-depreciable 54,758,666 877,665 55,636,331 Amortizable or depreciable 162,658,616 56,601,060 219,259,676 Total assets 365,574,453 87,877,831 453,452,284

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - pension (note 6) 163,592,328 6,836,166 170,428,494 Deferred outflows - OPEB (note 8) 1,154,038 85,463 1,239,501 Total deferred outflows of resources 164,746,366 6,921,629 171,667,995

LIABILITIES
Accounts payable 2,103,833 218,594 2,322,427 Accrued interest payable 1,524,039 171,015 1,695,054 Accrued liabilities 3,557,842 19,946 3,577,788 Deposits payable 749,367 350,808 1,100,175 Unearned revenue 14,788,441 29,489 14,817,930 Noncurrent liabilities:

Due within one year (note 5) 9,096,804 837,301 9,934,105 Due in more than one year:

Long-term obligations (note 5) 145,352,593 14,896,760 160,249,353 Net pension liability (note 6) 195,689,875 9,247,375 204,937,250 Net OPEB liability (note 8) 4,488,701 377,850 4,866,551 Total liabilities 377,351,495 26,149,138 403,500,633

DEFERRED INFLOWS OF RESOURCES
Deferred inflows - pension (note 6) 650,985 - 650,985 Deferred inflows - OPEB (note 8) 981,396 72,678 1,054,074 Total deferred inflows of resources 1,632,381 72,678 1,705,059

NET POSITION
Net investment in capital assets 216,346,514 47,925,951 264,272,465 Restricted for:

Public safety 43,871 - 43,871 Public works 7,542,819 - 7,542,819 Community development 33,199,814 - 33,199,814 Debt service 11,464 592,205 603,669 Other 2,038,034 - 2,038,034 Unrestricted (deficit) (107,845,573) 20,059,488 (87,786,085) Total net position 151,336,943$ 68,577,644$ 219,914,587$ The accompanying notes are an integral part of these financial statements.

CITY OF EL CAJON
Statement of Net Position
June 30, 2021
33 Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Governmental activities:

General government 8,411,073$ 3,222,477$ 48,517$ -$ Public safety 63,835,598 2,181,275 1,567,766 50,000 Public works 18,905,842 1,473,685 2,446,648 4,484,119 Recreation 4,900,145 265,879 123,199 116,430 Community development 9,329,987 8,122,977 4,704,064 - Interest on long-term debt 1,499,559 - - - Total government activities 106,882,204 15,266,293 8,890,194 4,650,549 Business-type activity:

Wastewater 21,948,424 24,087,595 - - Total business-type activity 21,948,424 24,087,595 - - Total 128,830,628$ 39,353,888$ 8,890,194$ 4,650,549$ General revenues:

Taxes
Property taxes
Sales taxes
Franchise taxes
Transient lodging taxes
Business license taxes
Intergovernmental (unrestricted)
Investment earnings
Other
Total general revenues
Change in net position
Net position, beginning
Net position, ending
The accompanying notes are an integral part of these financial statements.

Statement of Activities

CITY OF EL CAJON
For the fiscal year ended June 30, 2021
Program Revenues
34 Governmental Business-type
Activities Activities Total
(5,140,079)$ -$ (5,140,079)$
(60,036,557) - (60,036,557) (10,501,390) - (10,501,390) (4,394,637) - (4,394,637) 3,497,054 - 3,497,054
(1,499,559) - (1,499,559) (78,075,168) - (78,075,168) - 2,139,171 2,139,171
- 2,139,171 2,139,171
(78,075,168) 2,139,171 (75,935,997)
22,102,541 - 22,102,541
42,005,039 - 42,005,039
6,388,777 - 6,388,777
2,126,234 - 2,126,234
832,383 - 832,383
76,565 - 76,565
92,406 (70,097) 22,309
2,786 (238,837) (236,051)
73,626,731 (308,934) 73,317,797
(4,448,437) 1,830,237 (2,618,200)
155,785,380 66,747,407 222,532,787
151,336,943$ 68,577,644$ 219,914,587$
Changes in Net Position
Net (Expenses) Revenues and
35 36

CITY OF EL CAJON

GOVERNMENTAL FUND FINANCIAL STATEMENTS
GENERAL FUND is the City's primary operating fund. This fund accounts for a ll financial resources except those required to be accounted for in another fund. The fund will continue to exist indefinitely.

SPECIAL REVENUE FUNDS are used to account for specific revenue sources that are legally restricted to expenditures for specified purposes. T he following are the major Special Revenue Funds used by the City :

Low and Moderate Income Housing Asset Fund
This fund accounts for the housing set-aside funds that were tran sferred from the former Redevelopment Agency when it was dissolved on February 1, 2012. This fund is used to account for activities designed to increase, improve, and preserve affordable housing for low and moderate income residents of El Cajon.

Federal, State and Local Grants
This fund accounts for grant revenues received from federal, state and other local agencies and the related expenditures prescribed by the grant provisions/agreements.

DEBT SERVICE FUND is used to accumulate financial resources that will be used to make principal and interest payments on general long-term debt. The major debt service fund is listed below:

Pension Obligation Bonds
This fund is used to accumulate resources for the repayment of t he 2021 Taxable Pension Obligation Bonds that financed a portion of the City’ s obligations with the California Public Employee’s Retirement System.
37 Low and Federal,
Moderate Income State, and
General Housing Asset Local Grants
ASSETS
Cash and investments (note 2) 46,327,684$ 7,595,276$ 15,309,297$ Cash and investments
with fiscal agent 2,038,034 - - Receivables:

Accounts 196,872 - - Interest 234,411 22,440 1,830 Intergovernmental 104,979 - 290,150 Taxes 10,362,764 - -
Loans (note 3) - 11,965,718 648,536 Prepaid items 4,330 - - Due from other funds (note 11) 129,676 - - Total assets 59,398,750$ 19,583,434$ 16,249,813$

LIABILITIES
Accounts payable 1,271,326$ 41,114$ 209,980$ Accrued liabilities 3,539,347 - - Deposits payable 749,367 - - Due to other funds (note 11) - - - Unearned revenue 160,934 - 14,627,507 Total liabilities 5,720,974 41,114 14,837,487

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - 1,312,537 - Total deferred inflows of resources - 1,312,537 - FUND BALANCES (DEFICITS) (note 12)
Nonspendable 4,330 - - Restricted 2,038,034 18,229,783 1,412,326 Committed 15,531,197 - - Assigned 12,461,966 - - Unassigned 23,642,249 - - Total fund balances 53,677,776 18,229,783 1,412,326 Total liabilities, deferred inflows of
resources and fund balances 59,398,750$ 19,583,434$ 16,249,813$ The accompanying notes are an integral part of these financial statements.

Special Revenue

CITY OF EL CAJON
Balance Sheet
Governmental Funds
June 30, 2021
38 Debt Service
Pension Total Total
Obligation Nonmajor Governmental
Bonds Governmental Funds
-$ 25,015,289$ 94,247,546$
11,464 - 2,049,498 - - 196,872 - 39,437 298,118
- 840,672 1,235,801 - 41,837 10,404,601 - 11,239,008 23,853,262
- - 4,330 - - 129,676 11,464$ 37,176,243$ 132,419,704$
-$ 411,142$ 1,933,562$
- 7,801 3,547,148 - - 749,367 - 129,676 129,676
- - 14,788,441 - 548,619 21,148,194 - 116,373 1,428,910 - 116,373 1,428,910 - - 4,330 11,464 21,194,767 42,886,374
- - 15,531,197 - 15,322,832 27,784,798
- (6,348) 23,635,901 11,464 36,511,251 109,842,600
11,464$ 37,176,243$ 132,419,704$
39 40
Fund balances of governmental funds (page 39) 109,842,600$ Amounts reported for governmental activities in the statement of net position are different because:

Capital assets, net of depreciation used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.

Capital assets 389,666,060
Accumulated amortization or depreciation (175,529,491)
Other Post Employment Benefits (OPEB) related adjustments that are not financial resources and, therefore, not reported in the governmental funds.

Deferred outflows of resources 1,106,990
Deferred inflows of resources (941,386)
Net OPEB liability (4,311,742)
Expenditures in the governmental funds that are recorded when paid and are recorded as a liability for the purposes of the statement of net position.

Accrued interest payable for the current portion due of interest due on capital lease payable (1,483,612) Long-term liabilities are not due and payable in the current period and, accordingly, are not reported as a liabilities in the funds.

Compensated absences payable (8,122,525)
Capital lease payable (1,070,768)
Pension obligation bonds payable (137,723,000)
Pension related adjustments that are not financial resources and, therefore, not reported in the governmental funds.

Deferred outflows of resources 159,034,883
Deferred inflows of resources (650,985)
Net pension liability (192,167,955)
Deferred interest on loans receivable that are not available to pay for current-period expenditures and, therefore, are not recognized in the governmental funds Deferred inflows of resources 1,428,910
The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position:

Capital assets, net of accumulated depreciation 3,280,713 Deferred outflows 4,604,493
Compensated absences (282,304)
Claims payable (3,456,000)
Deferred inflows (40,010)
Pension obligation bonds (3,794,800)
Net pension liability (3,521,920)
Net OPEB liability (176,959)
Other assets and liabilities 15,645,751
Net position of governmental activities (page 33) 151,336,943$ The accompanying notes are an integral part of these financial statements.

June 30, 2021

CITY OF EL CAJON
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
Governmental Funds
41 Low and Federal,
Moderate Income State, and
General Housing Asset Local Grants

REVENUES
Taxes 73,449,117$ -$ -$
Intergovernmental 1,177,853 - 4,421,731 Licenses and permits 1,701,436 - - Fines and forfeitures 363,311 - - Special assessments 367,954 - - Charges for services 4,522,468 14,640 - Use of money and property 1,771,781 295,265 1,565 Other 371,840 1,335 -
Total revenues 83,725,760 311,240 4,423,296

EXPENDITURES
Current
General government 6,818,005 - - Public safety 55,467,149 - 382,827 Public works 7,508,141 - - Recreation 4,031,807 - - Community development 2,516,582 974,400 3,393,818 Capital outlay 34,572 - 606,919 Debt service
Interest - - - Principal - - - Total expenditures 76,376,256 974,400 4,383,564 Excess (deficiency) of revenues
over (under) expenditures 7,349,504 (663,160) 39,732 OTHER FINANCING SOURCES (USES):

Sale of capital assets - 4,750,000 - Proceeds from issuance of debt - - - Transfers in (note 11) 210,372 - - Transfers out (note 11) (3,235,000) - - Total other financing sources (uses) (3,024,628) 4,750,000 - Net change in fund balances 4,324,876 4,086,840 39,732 Fund balance, beginning 49,352,900 14,142,943 1,372,594 Fund balances, ending 53,677,776$ 18,229,783$ 1,412,326$ The accompanying notes are an integral part of these financial statements.

CITY OF EL CAJON
Special Revenue
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the fiscal year ended June 30, 2021
42 Debt Service
Pension Total Total
Obligation Nonmajor Governmental
Bonds Governmental Funds
-$ 1,743,303$ 75,192,420$ - 6,541,057 12,140,641 - - 1,701,436 - 6,961 370,272 - - 367,954 - 108,097 4,645,205 - 183,452 2,252,063 - 200,161 573,336 - 8,783,031 97,243,327 7,550,321 - 14,368,326 111,174,483 54,552 167,079,011 10,936,872 4,073,324 22,518,337
3,744,628 82,456 7,858,891 4,305,232 1,839,293 13,029,325
- 3,043,188 3,684,679 - 35,372 35,372 - 197,035 197,035 137,711,536 9,325,220 228,770,976
(137,711,536) (542,189) (131,527,649) - 1,060,000 5,810,000 137,723,000 - 137,723,000 - 3,663,328 3,873,700 - (638,700) (3,873,700) 137,723,000 4,084,628 143,533,000
11,464 3,542,439 12,005,351 - 32,968,812 97,837,249 11,464$ 36,511,251$ 109,842,600$ 43 Net changes in fund balances - total governmental funds (page 43) 12,005,351$ Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of these assets are allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays, excluding the internal service funds, exceeded depreciation in the current period.

Capital outlay 349,603
Donated asset 116,430
Amortization or depreciation expense (9,472,819)
The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has an effect on net position.

Capital lease payable 197,035
Proceeds from issuance of debt (137,723,000)
Net difference in the accrued interest payable on long term debt. (1,464,187) Compensated absences reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. (512,947)
Net difference in current year pension plan contribution and pension plan expense as of the measurement date. 131,903,757
Net difference in current year OPEB contribution and OPEB expense as of the measurement date. 253,236
Interest accrued on long-term loans receivable and retention held that is not available in the current period and, therefore, is not included in the governmental funds. (143,495) Internal service funds are not governmental funds. However, they are used by management to charge the net costs of certain activities such as insurance, vehicle maintenance and replacement, information technology replacement to individual governmental funds. The net expense of the internal service funds is reported with governmental activities. 42,599

Changes in net position of governmental activities (page 35) (4,448,437)$ The accompanying notes are an integral part of these financial statements.

CITY OF EL CAJON
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Governmental Funds
For the fiscal year ended June 30, 2021
44 CITY OF EL CAJON

PROPRIETARY FUND FINANCIAL STATEMENTS
ENTERPRISE FUNDS are used to account for activities where fees are charged to external users for goods or services.

Wastewater
This fund accounts for activities related to the sanitary sewer d isposal and maintenance of the City's sewer lines and related facilities . It is a self-supporting activity that provides services on a user charge basis to residences and businesses.

INTERNAL SERVICE FUNDS account for the charges to the City departments or other funds, on a cost-reimbursement basis, for equipment, benef its, insurance, and other administrative services. The Internal Service Funds primarily serve governmental activities of the City.
45 Business-type Activity Governmental Activities
Enterprise Fund Internal Service Funds
Wastewater
ASSETS
Current assets:

Cash and investments (note 2)
Cash and investments 27,571,007$ 15,784,497$ Cash and investments, restricted 592,205 82,646 Receivables:

Accounts, net of allowance for bad debt 2,138,259 - Interest 82,051 -
Intergovernmental 15,584 -
Total current assets 30,399,106 15,867,143 Noncurrent assets:

Capital assets, not being depreciated (note 4):

Land 82,300 -
Construction in progress 795,365 - Capital assets, being depreciated, net (note 4):

Buildings and improvements 137,241 - Machinery and equipment 35,150 393,872 Vehicles 925,837 2,886,841
Interest in Mission Gorge Mains 4,795,464 - Infrastructure 50,707,368 -
Total noncurrent assets 57,478,725 3,280,713 Total assets 87,877,831 19,147,856

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pensions (note 6) 6,836,166 4,557,445 Deferred outflows of resources related to OPEB (note 8) 85,463 47,048 Total deferred outflows of resources 6,921,629 4,604,493

LIABILITIES
Current liabilities:

Accounts payable 218,594 170,271 Accrued interest payable 171,015 40,427 Accrued liabilities 19,946 10,694 Claims payable (note 9) - 500,000 Compensated absences (note 5) 214,705 113,858 Deposits payable 350,808 -
California State Water Resources Control Board (note 5) 433,596 - Bonds payable - current (note 5) 189,000 126,000 Unearned revenues 29,489 -
Total current liabilities 1,627,153 961,250 Noncurrent liabilities:

Claims payable (note 9) - 2,956,000 Compensated absences (note 5) 274,382 168,446 California State Water Resources Control Board (note 5) 9,119,178 - Bonds payable (note 5) 5,503,200 3,668,800 Net pension liability (note 6) 9,247,375 3,521,920 Net OPEB liability (note 8) 377,850 176,959 Total noncurrent liabilities 24,521,985 10,492,125 Total liabilities 26,149,138 11,453,375

DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to OPEB (note 8) 72,678 40,010 Total deferred inflows of resources 72,678 40,010

NET POSITION
Net investment in capital assets 47,925,951 3,280,713 Restricted for debt service 592,205 - Unrestricted 20,059,488 8,978,251
Total net position 68,577,644$ 12,258,964$ The accompanying notes are an integral part of these financial statements.

CITY OF EL CAJON
Statement of Net Position
Proprietary Funds
June 30, 2021
46 Business-type Activity Governmental Activities
Enterprise Fund Internal Service Funds
Wastewater
Operating revenues
Charges for services 24,029,617$ 9,826,752$ Fines 57,678 -
Licenses and permits 300 - Total operating revenues 24,087,595 9,826,752 Operating expenses
Salaries and benefits 4,377,559 3,216,560 Materials, services and supplies 15,714,646 3,900,620 Insurance claims/premiums - 1,773,331 Depreciation 1,856,219 841,318
Total operating expenses 21,948,424 9,731,829 Operating income (loss) 2,139,171 94,923 Nonoperating revenues (expenses):

Investment earnings (70,097) -
Other revenues 7,866 4,690
Interest expense and fiscal charges (246,703) (57,014) Total nonoperating revenues (expenses) (308,934) (52,324) Income (loss) before operating transfers 1,830,237 42,599 Change in net position 1,830,237 42,599 Net position, beginning 66,747,407 12,216,365 Net position, ending 68,577,644$ 12,258,964$ The accompanying notes are an integral part of these financial statements.

CITY OF EL CAJON
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the fiscal year ended June 30, 2021
47 Business-type
Activity
Governmental
Activities
Enterprise Fund Internal Service Funds
Wastewater

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and charges to other funds 26,632,042$ 9,835,694$ Payments to suppliers (16,137,063) (5,750,441)
Payments to employees (9,975,773) (7,162,636) Net cash provided by (used for) operating activities 519,206 (3,077,383) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Proceeds from pension obligation bonds 5,692,200 3,794,800 Payments for bond issuance cost on long-term debt (24,881) (16,587) Net cash provided by (used for) noncapital financing activities 5,667,319 3,778,213

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisitions of infrastructure, vehicles and equipment (1,134,482) (601,890) Repayment of long term borrowing (principal) (424,678) - Repayment of long term borrowing (interest) (167,527) - Net cash (used for) capital and related financing activities (1,726,687) (601,890)

CASH FLOWS FROM INVESTING ACTIVITIES
Net investment income (40,075) -
Net cash provided by (used for) investing activities (40,075) - Net increase (decrease) in cash and cash equivalents 4,419,763 98,940 Cash and cash equivalents, beginning 23,743,449 15,768,203 Cash and cash equivalents, ending 28,163,212$ 15,867,143$ Reconciliation of cash and cash equivalents at end of year to the Statement of Net Position:

Cash and investments 27,571,007$ 15,784,497$
Cash and investments, restricted 592,205 82,646 Total cash and cash equivalents at end of year 28,163,212$ 15,867,143$ Reconciliation of operating income to net cash provided by (used for) operating activities:

Operating income (loss) 2,139,171$ 94,923$
Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities
Depreciation expense 1,856,219 841,318
Other nonoperating revenue 7,866 4,690 Pension related adjustments (5,465,302) (3,643,536) OPEB related adjustments (19,550) (10,763) Changes in assets and liabilities:
(Increase) in accounts receivable, net of allowance for bad debt 2,459,114 4,252 (Increase) in intergovernmental receivable 16,172 - Increase (decrease) in accounts payable (422,418) (70,068) Increase (decrease) in accrued liabilities (94,911) (40,848) Increase (decrease) in deposits payable 31,806 - Increase (decrease) in claims payable - (309,000) Increase (decrease) in compensated absences payable (18,450) 51,649 Increase in unearned revenue 29,489 -
Total adjustments (1,619,965) (3,172,306)
Net cash provided by (used for) operating activities 519,206$ (3,077,383)$ Noncash investing,capital, and financing activities:

Change in fair value of investments (438,135)$ -$ The accompanying notes are an integral part of these financial statements.

CITY OF EL CAJON
Statement of Cash Flows
Proprietary Funds
For the fiscal year ended June 30, 2021
48 CITY OF EL CAJON

FIDUCIARY FUND FINANCIAL STATEMENTS
FIDUCIARY FUNDS are used to report assets held by the City in a custodial capacity for other funds, governments or individuals. The City reports the following two types of fiduciary funds:

Custodial Funds
These funds are used to account for assets held in a custodial capa city for other agencies/organizations, and therefore cannot be used to suppo rt the City's programs.

The City's custodial funds are used to account for special assessmen ts collected for other agencies and for the financial transactions of the Heartl and Communications Facility Authority and Heartland Fire Training Authority.

Private Purpose Trust Fund
This fund is used to report resources held and administered und er trust or similar arrangement for the benefits of individuals, private organizations or other governments.

In fiscal year 2012, a private-purpose trust fund was established f or the Successor Agency to the Former El Cajon Redevelopment Agency to account for the act ivities related to the dissolution of the former redevelopment agency. 49 Successor
Agency to the
Former El Cajon
Custodial Redevelopment
Funds Agency
ASSETS
Cash and investments 5,935,387$ 3,733,244$
Cash and investments with fiscal agent - 1,305,942 Receivables:

Accounts 176,461 -
Intergovernmental 613,126 -
Interest 17,217 5,220
Loans - 1,747,361
Prepaids 150,820 208,768
Total assets 6,893,011 7,000,535

DEFERRED OUTFLOW OF RESOURCES
Deferred amount on refunding - 779,000 Total deferred outflow of resources - 779,000

LIABILITIES
Accounts payable and other liabilities 680,782 14,177 Interest payable - 639,127
Due to other agencies 103,483 -
Long-term debt - 51,082,796
Total liabilities 784,265 51,736,100

NET POSITION (DEFICIT)
Restricted for:

Other agencies 6,108,746 -
Unrestricted (deficit) - (43,956,565) Total net position 6,108,746$ (43,956,565)$
The accompanying notes are an integral part of these financial statements.

CITY OF EL CAJON
Statement of Fiduciary Net Position (Deficit)
Fiduciary Funds
June 30, 2021
Private Purpose
Trust Fund
50 Successor
Agency to the
Former El Cajon
Custodial Redevelopment
Funds Agency

ADDITIONS
Contributions
Other agencies 3,960,255$ 71,925$
Participants 103,353 -
Property taxes - 4,152,507
Investment earnings 8,896 (19,278)
Assessment collections for other agencies 535,696 - Interest on loan - 55,637
Miscellaneous 20,807 -
Total additions 4,629,007 4,260,791

DEDUCTIONS
Administrative expenses - 34,770 Payments of assessments to other agencies 536,300 - Program/project expenses 3,670,093 249,865
Interest and fiscal agent expenses - 2,488,501 Total deductions 4,206,393 2,773,136
Net change in fiduciary net position 422,614 1,487,655 Net position (deficit), beginning 5,686,132 (45,444,220) Net position (deficit), ending 6,108,746$ (43,956,565)$ The accompanying notes are an integral part of these financial statements.

Private Purpose
Trust Fund
Statement of Changes in Fiduciary Net Position (Deficit)

CITY OF EL CAJON
Fiduciary Funds
For the fiscal year ended June 30, 2021
51 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

Notes Page

Note 1. Summary of Significant Accounting Policies ............................................................................................. 53 Reporting entity…. .............................................................................................................................. 53 Basic financial statements and presentation ...................................................................................... 54 Measurement focus and basis of accounting ..................................................................................... 56 Budgetary information ......................................................................................................................... 56 Revenues and expenditures/expenses ............................................................................................... 57 Cash, cash equivalents and investments............................................................................................ 58 Receivables…. .................................................................................................................................... 58 Prepaid items ...................................................................................................................................... 59 Capital assets ...................................................................................................................................... 59 Deferred outflows or inflows of resources ........................................................................................... 59 Pension………... ................................................................................................................................. 60 Other post-employment benefits (OPEB) ........................................................................................... 60 Fund balance policies and flow assumption ....................................................................................... 60 Net position flow assumption .............................................................................................................. 61 Use of estimates ................................................................................................................................. 61 Effect of new accounting standards .................................................................................................... 62

Note 2. Cash and Investments ............................................................................................................................... 62 Note 3. Loans Receivable ...................................................................................................................................... 68 Note 4. Capital Assets ……. ................................................................................................................................... 69 Note 5. Long-Term Liabilities ................................................................................................................................. 70 Note 6. Defined Benefit Pension Plans .................................................................................................................. 74 Note 7. Defined Contribution Pension Plan............................................................................................................ 82 Note 8. Other Post-Employment Benefits .............................................................................................................. 82 Note 9. Risk Management ...................................................................................................................................... 88 Note 10. Commitments and Contingencies ............................................................................................................ 89 Note 11. Interfund Balances and Transfers ............................................................................................................ 90 Note 12 . Fund Balances and Deficits ..................................................................................................................... 91 Note 13 . Joint Ventures….. .................................................................................................................................... 92 Note 14 . Tax Abatements ...................................................................................................................................... 93 52 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the City of El Cajon have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below.

Reporting entity

The City of El Cajon (City) was incorporated o n November 12, 1912 . The City was a general law city until 2012, when it became a charter city by vote of the people on June 5, 2012. The City operates under a Council-Manager form of government and provides the following services: police and fire protection , animal control, emergency medical services, construction and maintenance of civic facilities and infrastructure, community development (planning and building regulation), recreational and cultural activities, housing assistance, and wastewater services.

As required by GAAP, the accompanying financial statements present the activities of the City (the primary government) and its component units for which the City is considered financially accountable. Financial accountability is demonstrated by the City Council acting as the governing board for each of the component units.

The component units discussed below are included in the City’s financial statements because of the significance of their operational and financial relationships with the City.

El Cajon Housing Authority
The City Council adopted Resolution No. 32 -11 on March 9, 2011, establishing the El Cajon Housing Authority (Housing Authority). The City Council serves as the Commissioners of the Housing Authority. On January 24, 2012, the Commissioners appointed certain City staff to serve as the officials of the Housing Authority, and authorized the Housing Authority to accept the housing assets and enforceable obligations of the former El Cajon Redevelopment Agency. The transactions of the Housing Authority are blended into the City’s financial statements. The Housing Authority does not issue separate financial statements.

El Cajon Public Financing Authority
The El Cajon Public Financing Authority ( Authority) was formed on November 9, 2004 by the Joint Exercise of Powers Agreement (JPA Agreement) between the City and the former El Cajon Redevelopment Agency . The Authority is a separate entity constituting a public instrumentality of the State of California and was created to facilitate financing of public improvement projects of the City and the former Redevelopment Agency. A five - member Board governs the Authority. The City’s council members constitute the Board of the Authority. During the fiscal year, there were no transactions for the Authority to blend into the City’s financial statements nor there were separately issued financial statements for the Financing Authority.

Successor Agency to the Former El Cajon Redevelopment Agency Pursuant to the ABx1 26 (the Dissolution Act), on January 2012, the City Council adopted a resolution electing to serve as the Successor Agency to the former El Cajon Redevelopment Agency (Successor Agency). The Successor Agency is a separate legal entity from the City that operates under the control of the Oversight Board comprised of representatives of the affected taxing entities of the redevelopment project area. The Oversight Board is tasked with fulfilling the obligations of the former Redevelopment Agency, including but not limited to maintaining necessary bond reserves and disposing of excess property. Pursuant to Health and Safety Code Section 34179 (j), beginning July 1, 2018, oversight of the Successor Agency was taken over by the County of San Diego Countywide Redevelopment Successor Agency Oversight Board. The Successor Agency’s financial transactions are accounted for in a private-purpose trust fund under the fiduciary fund of the City’s financial statements. The Successor Agency issues separate financial statements , which can be obtained from https://www.cityofelcajon.us/your- government/departments/community-development/successor-agency/documents.

53 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basic financial statements and presentation

Government-Wide Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all the non -fiduciary activities of the City and its blended component units .

Governmental activities, which are normally supported by taxes, intergovernmental revenues, and other non-exchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external customers for support. The governmental activities incorporate data from governmental funds and internal service funds, while business -type activities incorporate data from the City’s enterprise fund. Fiduciary funds are excluded from the government-wide financial statements.

Generally, the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are payments in lieu of taxes and other the interfund services provided and other charges between the functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Fund Financial Statements
The fund financial statements provide information about the City’s funds, including the blended component units and fiduciary funds. Separate financial statements for each fund category-governmental, proprietary, and fiduciary-are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds.

The determination of a given fund as a major fund is generally based on its relative size in any of the following four groupings of financial statement elements: assets plus deferred outflows of resources, liabilities plus deferred inflows of resources, revenues, and expenditures/expense s. An individual fund is a major fund if it reports, for at least one of the above groupings, both at least 10 percent of the fund type and at least 5 percent of the combined total for governmental and enterprise funds.

The City reports the following major governmental funds in the accompanying financial statements:

 General Fund is the City’s primary operating fund, always classified and presented as a major fund.

This fund accounts for all financial resources except those required to be accounted f or in another fund.

 Low and Moderate Income Housing Asset Special Revenue Fund (LMIHAF) accounts for the loan repayments, proceeds from sale of property and other revenues generated from the housing assets transferred by the former El Cajon Redevelopment Agency. These financial resources are used for developing affordable housing within the City.

 Federal, State, and Local Grants Fund accounts for grant revenues received from federal, state, and other local agencies. Expenditures are made and accounted for as p rescribed by the grant provisions/agreements. In fiscal year 202 1, the fund was reported as a major fund with the City receiving the American Rescue Plan Act grant funding.

 Pension Obligation Bonds Debt Service Fund accounts for financial resources accumulated for making the required debt service payments. In fiscal year 2021, the fund was used to report the proceeds from the issuance of Pension Obligation Bonds, and the corresponding expenditures for the City’s pension contributions.
54 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basic financial statements and presentation (continued)

The City reports the following major enterprise fund:

 Wastewater Enterprise Fund primarily accounts for the sanitary sewer disposal and maintenance of the City’s sewer lines and related facilities. The fund is a self -supporting activity that provides services on a user charge basis to residences and businesses.

The City also reports the following fund types:

 Internal Service Funds account for goods and services provided to other City funds, on a cost reimbursement basis, in the following areas: fleet equipment, information technology equipment and systems, property, liability, and worker’s compensation insurance, and other post-employment benefits.

 Fiduciary Funds: The City uses a Private-Purpose Trust Fund to account for resources held and administered under trust or similar arrangement for the benefits of individuals, private organizations, or other governments. The transactions of the Successor Agency to the Former El Cajon Redevelopment Agency are accounted for in the private-purpose trust fund.

Another fiduciary fund type used by the City is the Custodial Fund, which accounts for resources held by the City in a purely custodial capacity. The activities include the receipt, temporary investment, and remi ttance of fiduciary resources to individuals, private organizations, or other governments. The City uses the custodial fund to account for monies received, and remitted to other governments and agencies.

The City also uses the custodial fund to report transactions for the Heartland Communications Facility Authority (HCFA) and Heartland Fire Training Authority (HFTA). The HCFA and HFTA were formed by cities and fire districts in San Diego County for the purpose of providing emergency and dispatching services and training of firefighters of the participating agencies.

During the course of operations, the City has activity between funds for various purposes. Any residual balances outstanding at year-end are reported as due from/to other funds . While these balances are reported in fund financial statements, certain eliminations are made in the government -wide financial statements. Balances between the funds included in governmental activities (the governmental and internal service funds) are el iminated so that only the net amount is included as internal balances in the governmental activities column.

Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements, these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the government -wide financial statements.

Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. 55 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Measurement focus and basis of accounting

The government-wide financial statements are reported using the economic-resources measurement focus and the full accrual basis of accounting, as are the fund financial statements of the proprietary and fiduciary funds. Revenues are recorded when earned and expenses are recorded at the same time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenues in the year for which they are levied. Grants are recognized as revenue s as soon as all eligibility requirements imposed by the provider have been met.

Governmental funds financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. R evenues are recognized when measurable and available. The City considers all revenues available when they are collected within 60 days after fiscal year end for such items as property taxes, sales taxes, franchise fees, and transient occupancy taxes.

Expenditure driven grants are recognized as revenues when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the fiscal year or within six months of fiscal year end.

In the governmental fund financial statements, e xpenditures are recorded when a related fund liability is incurred except for debt service expenditures. Principal and interest of general long-term debt are recorded when payment is due. General capital asset acquisitions are reported as expenditures in the governmental funds. The governmental funds financial statements do not present long -term debt. Issuance of long -term debt, bond premiums, and discounts are reflected as other financing sources (uses) and recognized in the period in which they are issued.

Budgetary information

Budgetary basis of accounting
The City prepares and adopts annual budgets on a basis consistent with generally accepted accounting principles, with the exception of the General Fund and three special revenue funds: LMIHAF, HOME and Community Development Block Grant (CDBG). The General Fund, on a GAAP basis, includes two funds that were considered special revenue funds prior to the implementation of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definition. The three funds are budgeted as separate individual fu nds, but are consolidated into the General Fund for financial reporting purposes. The appropriated annual budgets for the LMIHAF, HOME, and CDBG special revenue funds include loan repayments and disbursements, which are reported as a decrease or increase i n the loan receivable on a GAAP basis. Federal, State, and Local Grants and Various Donations special revenue funds do not have appropriated budget since the means control the use of the resources (e.g. grant/donor requirements) and the grant funds and donations vary from year to year.

Appropriations in the capital project funds are now based on the length of the projects. A change in practice in the budgeting of Capital Improvement Projects is incorporated in the Fiscal Year 2020-21 Annual Budget.

For many years, the appropriation for capital projects expired at fiscal year -end, and renewed for the following year with the adoption of the annual budget. This practice had several negative consequences, but most notably made projects difficult to understand and thus hindered transparency. Additionally, this practice created a significant administrative burden with very little value. The capital project budget is entirely project based, as opposed to fiscal year based. Once approved by City Council, the project’s scope and budget remains in effect until the project is completed or cancelled. Since annual budgets are not adopted for the capital project funds, budget ary comparison schedules are not presented because comparison of budgetary amounts to actual revenues and expenditures is not meaningful. 56 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Budgetary information (continued)

The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the department level. For the purpose of this requirement, each fund, other than the General Fund, is considered a separate department. The City Manager may make transfers of appropriations within a department. Transfers of appropriations between funds and departments require the approval of the City Council.

Appropriations for operations in all budgeted funds lapse at fiscal year-end to the extent that they have not been expended, regardless of any related encumbrances. Encumbrances are commitments related to unperformed (executory) contracts for goods or services (i.e., purchase orders, contracts, and commitments). Encumbrance accounting is utilized to the extent necess ary to assure effective budget ary control and accountability and to facilitate effective cash planning and control. While all appropriations and encumbrances lapse at year-end, valid outstanding encumbrances, those for which performance under the executory contract is expected in the next year are re-appropriated and become part of the subsequent year’s budget.

Additional budgetary information is provided in the required supplementary information beginning on page

95. Revenues and expenditures/expenses

Property taxes
The County of San Diego (County) bills and collects property taxes on behalf of numerous special districts and incorporated cities, including the City of El Cajon . The City’s current year tax collection is received through periodic apportionments from the County. The County’s tax calendar is from July 1 to June 30.

Property taxes attach as a lien on the property on January 1. Taxes are levied on July 1 and are payable in two equal installments on November 1 and February 1, and become delinquent after December 10 and April 10, respectively.

Since the passage of California’s Proposition 13, beginning with Fiscal Year 1978-79 general property taxes are based either on a flat 1% rate applied to the 1975-76 full value of the property or on 1% of the sales price of any property sold or of the cost of any new construction after the 1975 -76 valuations. Taxable values of properties (exclusive of increases related to sales and new construction) can rise a t a maximum of 2% per year.

Program revenues
Amounts reported as program revenues include a) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment (b) grants and contributions that are restricted to supporting the operational needs of a particular function or segment, and (c) grants and contributions that are restricted to financing the acquisition or construction of capital assets. All taxes, including those dedicated for specific purposes, and other internally dedicated resources are reported as general revenues rather than as program revenues.

Compensated Absences
Under certain circumstances and according to negotiated labor agreements, City employees are all owed to accumulate earned but unused vacation balances, compensatory time, and sick leave benefits. The total amount of these unpaid leave balances is accrued and reported as compensated absences in the government-wide and proprietary fund financial statements.

57 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenues and expenditures/expenses (continued)

Proprietary funds operating and non-operating revenues and expenses Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing ope rations. The principal operating revenues of the wastewater fund and internal service funds are charges to customers for sales and services. The wastewater fund also recognizes as operating revenue the portion of sewer fees intended to recover the cost of connecting new customers to the system. Operating expenses for the wastewater enterprise fund and internal service funds include the cost of supplies and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not m eeting this definition are reported as nonoperating revenues and expenses.

Cash, cash equivalents and investments

The City’s cash and cash equivalents include cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

In the accompanying financial statements, investments are stated at fair value except for certain investment contracts that are reported at cost because they are not transferable and they have terms that are no t affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as i nvestment earnings reported for the fiscal year. Investment earnings include interest earnings, changes in fair value and any gains or losses realized upon the liquidation or sale of investments.

In accordance with generally accepted accounting principles, an investment is defined as a security or other asset that (a) a government holds primarily for the purpose of income or profit and (b) has a present service capacity based solely on its ability to generate cash or to be sold to generate cash. Investments not measured at fair value continue to include, for example, money market investments, 2a7 -like external investment pools and synthe tic guaranteed investment contracts. A government is permitted in certain circumstances to establish the fair value of an investment that does not have a readily determinable fair value by using the net asset value per share (or its equivalent) of the investment.

Receivables

The City’s receivables are comprised of accounts, interest, intergovernmental, taxes, and loans. Long-term housing loans receivables consist primarily of first -time homebuyer and housing developer loans.

Repayment of these loans is dependent on future residual receipts generated by the property. These receivables are reported in the governmental fund statements and are recorded with an offset to restricted fund balances, as resources are not available for expenditures.

The wastewater (sewer) utility revenues are recorded as billed to customers on an annual basis as part of the County’s Fixed Charge Special Assessments for the property tax roll, with the exception of some accounts that are billed directly to the customers on an annual basis.

Accounts receivables are reported net of an allowance for bad debt. The calculation of the allowance is based on a variety of factors, including the age of the receivables, historical trends, economic conditions, and significant one-time events.

58 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Prepaid items

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government -wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.

Capital assets

Capital assets, which include land; buildings and improvements; equipment; interest in Mission Gorge Sewer Mains and infrastructure assets (i.e., roads, bridges, traffic signals, curbs and gutters, wastewater system, etc.), are reported in the applicable governmental or business -type activities columns in the government-wide financial statements. The City defines capital assets as machinery and equipment and capital construction with an initial, individual cost of $10,000 or more and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at acquisition value on the date of donation.

The estimated useful lives of capital assets using the straight-line method of depreciation are as follows:

Category Useful Life
Infrastructure 5 - 60 years
Buildings and improvements 10 - 50 years
Machinery and equipment 2 – 20 years
Interest in Mission Gorge Mains 60 years

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets lives are not capitalized. Improvements a re capitalized and depreciated, if applicable, over the remaining useful lives of the related ca pital assets. Capital assets and the related obligations acquired under lease/purchase agreements, if any, are capitalized and accounted for in accordance with generally accepted accounting principles.

Deferred outflows or inflows of resources

In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element represents the consumption of net positio n that applies to future period (s) and so will not be recogn ized as an expense/expenditure until then. The City reports deferred outflows of resources related to pension and other postemployment benefits (OPEB).

In addition to liabilities, the statement of net position reports a separate section for deferred in flows of resources. This separate financial statement element represents an acquisition of net positio n that applies to future period(s) and so will not be recognized as resources or revenue until then. The City reports two types of deferred inflows of res ources. The firs t type, unavailable revenue, is reported only in the governmental funds balance sheet. This amount reported represents interest on housing loans, which has been earned but ha s not met the recognition criteria based on modified accrual basis of accounting and retention held by granting agency until project completion . The second type is reported in the proprietary funds balance sheet and the statement of net position and includes pension and OPEB related items.

59 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Pension

For purposes of measuring the net pension liability, deferred outflows and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position and additions to/deductions from the Plan’s fiduciary net positi on have been determined on the same basis as they are reported by the California Public Employees’ Retirement System (CalPERS) Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

GASB Statement No. 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. The following timeframes were used in these financial statements.

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Measurement Period July 1, 2019 to June 30, 2020

Other post-employment benefits (OPEB)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan), the assets of which are held by the California Employers’ Retiree Benefit Trust Program (CERBT), and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with benefits terms. Investments are reported at fair value.

GASB Statement No. 75 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Measurement Period July 1, 2019 to June 30, 2020

Fund balance policies and flow assumption

Governmental funds report fund balance classifications based on the extent to which the City is bound to observe the constraints imposed on the use of resources. Governmental fund balances are classified as follows:

 Nonspendable - These are amounts th at cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. This includes prepaid items.

 Restricted - These are amounts that can be used only for specific purposes because of a) constitutional provisions, charter requirements or enabling legislation or b) constraints that are externally imposed by creditors, grantors, contributors, laws or regulations of other governments.

60 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fund balance policies and flow assumption (continued)

 Committed - These amounts can be used only for specific purposes as determined by a formal action of the City Council. As the City’s highest level of decision-making authority, the City Council uses a resolution to establish a commitment of fund balance. Similarly, the City Council may only modify or rescind the commitment by adopting a subsequent resolution.

 Assigned - These amounts are constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed. The City Council, through City Council Policy No. B -12, has delegated to the City Manager the authority to establish assigned fund balances.

 Unassigned fund balance - This amount represents the residual balance when the balances do not meet any of the above classifications. The General Fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it may be necessary to report a negative unassigned fund balance if expenditures incurred for specific purposes exceed the amounts restricted, committed or assigned for those purposes.

The City Council Policy on Fund Balance (No. B-12) also establishes the order of use of unrestricted fund balance. It is the City’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Committed amounts should be reduced first, followed by assigned amounts, then the unassigned amounts.

In the General Fund, Restricted fund balance represents the amount deposited into the 115 trust for pension funding. Committed fund balance represents the operating reserve equal to 20% of annual expenditures .

Assigned fund balance is an amount to assist in accelerating the reduction of the unfunded pension liability and stabilize service levels during economic uncertainty. Unassigned fund balance represents the residual fund balance and is to mitigate the effects of unforeseen changes in revenues and/or exp enditures.

In the Special Revenue and Capital Projects Funds, assigned fund balance represents the intent to utilize the portion of fund balance for the purposes that these funds were established.

Net position flow assumption

Sometimes the City will fund outlays for a particular purpose from both restricted (e.g. restricted grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government -wide and pr oprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position is applied.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the related reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates.

Management believes that the estimates are reasonable.

61 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Effect of new accounting standards

The City implemented the requirements of the following accounting standard in fiscal year ending June 30, 2021:

In October 2021, GASB issued Statement No. 98, The Annual Comprehensive Financial Report , which establishes the new term and the accompanying acronym ACFR as a replacement of the previous instances of Comprehensive Annual Financial Report.

The City implemented the requirements of the following accounting standards prior to the fiscal year ending June 30, 2021 effective date:

In January 2017, GASB issued Statement No. 84 , Fiduciary Activities , which establishes the criteria for identifying and reporting fiduciary activities for all state and local governments. The objective of the statement is to enhance the consistency and comparability of fiduciary activity reporting and to improve the usefulness of the fiduciary activity information. The implementation o f this statement has resulted in changes to the presentation of the fiduciary fund financial statements by removing revenues collected that are derived from the City’s own -source revenues or programs, reclassifying the Miscellaneous Deposit Agency Fund to a Special Assessment Custodial Fund, and in cluding accruals and ending net position to custodial funds not previously required. The City implemented this Statement beginning with fiscal year 2020 reporting period.

NOTE 2. CASH AND INVESTMENTS

Cash and investments as of June 30, 2021, totaled $151,301,972, and are reported in the accompanying financial statements as follows:

Cash and Cash and Total
Cash and Investments, Investments with Cash and
Government-wide Statement of Net Position Investments Restricted Fiscal Agent Investments Governmental activities 110,032,043$ 82,646$ 2,049,498$ 112,164,187$ Business-type activities 27,571,007 592,205 - 28,163,212 Total Statement of Net Position 137,603,050 674,851 2,049,498 140,327,399 Fiduciary Funds Statement of Net Position 9,668,631 - 1,305,942 10,974,573 Total cash and investments 147,271,681$ 674,851$ 3,355,440$ 151,301,972$

62 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 2. CASH AND INVESTMENTS (continued)

Cash and investments at June 30, 2021, consisted of the following:

Cash on hand 4,755$
Deposits with financial institutions 13,798,159
Investments 137,499,058
Total cash and investments 151,301,972$

Investments Authorized by the California Government Code and City’s Investment Policy

The following table lists some of the investment types authorized for the City by the California Government Code Section 53601 and the City’s investment policy. The tab le also identifies certain provisions of the California Government Code or the City’s investment policy, if more restrictive, that address interest rate risk and concentration of credit risk. This table does not address investments of debt proceeds held by the bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

Authorized Investments

Maximum
Maturity
Maximum
Percentage
of Portfolio

Maximum Investment
in One Issuer
Bank Deposits N/A N/A None
Negotiable Certificates of Deposit N/A 30% None
Timed Certificates of Deposit 1 year 20% None
Placement Service Deposits N/A 30% None
Securities of the US Government or its Agencies 5 years None None US Treasury Bills, Notes, Bonds or Certificates 5 years None None Medium-Term Notes 5 years 30% None
Municipal Debt 5 years 20% None
Supranationals 5 years 30% None
Asset-Backed Securities 5 years 20% None
Bankers' Acceptance 180 days 30% 30%
Commercial paper 270 days 25% 10%
Repurchase Agreements 30 days 30% None
Money Market Mutual Funds N/A 15% None
County of San Diego Treasury N/A 30% None
JPA Pools (other investment pools)/CAMP 5 years 30% None Local Agency Investment Fund (LAIF) N/A None $ 75,000,000 per LAIF account

63 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 2. CASH AND INVESTMENTS (continued)

Investment in State Investment Pool

The City is a voluntary participant in the Local Agency Investment Fund (LAIF), a governmental investment pool regulated by the California Government Code . The investment pool is managed and directed by the California State Treasurer and is not registered with the Securities and Exchange Commission. An oversight committee comprised of California State officials and various participants provide oversight to the management of the fund. LAIF has a maximum of 15 transactions per month with a minimum amount of $5,000. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Any withdrawal of $10,000,000 requires 24 -hour notice. The maximum investment in LAIF is $75,000,000 per account.

The fair value of the City’s investment in this p ool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). As of June 30, 20 21, the fair v alue of the City’s LAIF investments was $55,598,934. The fair value was determined by multiplying the City’s LAIF balance by the fair value factor of 1.00008297 as determined by LAIF.

Investment in JPA Pool/CAMP

The City is a voluntary participant in the CAMP Trust (Trust), which was established as a nontaxable investment portfolio under provisions of the California Joint Exercise of Powers Act to provide California Public Agencies with comprehensive investment ma nagement services. CAMP is directed by a Board of Trustees made up of local government finance directors and treasurers. There are no minimum deposit requirements or limits on deposits and withdrawals. The contract creating the Trust specifies the types of investments that can be made by the investment portfolio with available cash: U.S. Government securities, securities of federally sponsored agencies, repurchase agreements, banker’s acceptances, negotiable certificates of deposit and commercial paper. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by CAMP.

Investments Authorized by Debt Agreements

The City, acting in its capacity as the Successor Agency to the former El Cajon Redevelopment Agency, has funds invested in accordance with various bond indenture and trustee agreements. The investment of these bond issuances is in accordance with the Permitted Investments se ction and applicable account restrictions outlined in the indenture of each bond issuance. The permitted investments in each indenture will vary based upon the maturity, cash flow demands, and reserve requirements associated with each issuance. In general, the permitted investments of each indenture will closely resemble the City’s investment policy, but may include certain investment options not authorized by applicable law for the investment policy (CGC § 53601).
64 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 2. CASH AND INVESTMENTS (continued)

Interest Rate Risk and Interest Rate Fluctuations

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. In general, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City’s investments (including investments held by bond trustees) did not include investments that are highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information below).

One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and b y timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investment by maturity:

12 or less 13 to 24 25 to 60 > 60
Investment Type Total
US Agency securities 42,466,118$ 5,868,445$ 6,511,755$ 30,085,918$ -$ US Treasuries 23,222,630 4,465,481 2,071,004 16,686,145 - Corporate notes 14,582,118 4,966,395 4,069,448 5,546,275 - Municipal debt 163,086 - - 163,086 - CAMP cash pool 160,230 160,230 - - - LAIF 55,598,934 55,598,934 - - - Held by fiscal agent:

Invesco STIT Treasury Private 1,305,942 1,305,942 - - - Total 137,499,058$ 72,365,427$ 12,652,207$ 52,481,424$ -$ Remaining Maturity (in months)

65 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 2. CASH AND INVESTMENTS (continued)

Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year -end for each investment type.

Minimum
Investment Type Total Legal Rating S&P Rating Moodys Rating Not Rated US Agency securities 42,466,118$ N/A AA+ Aaa -$
US Treasuries 23,222,630 N/A N/A Aaa -
Corporate notes 14,582,118 "A category" A-/A/A+/AA-/AA/AA+/AAA A2/A1/Aa3/Aa2/Aa1/Aaa 1,378,656 Municipal debt 163,086 N/A N/A N/A 163,086
CAMP cash pool 160,230 N/A Not Rated Not Rated 160,230 LAIF 55,598,934 N/A Not Rated Not Rated 55,598,934
Held by fiscal agent:

Invesco STIT Treasury Private 1,305,942 N/A N/A N/A 1,306,012 Total 137,499,058$

Concentration of Credit Risk

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. 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 investments are as follows:

Issuer Type Amount
Federal National Mortgage Association US Agency securities 25,230,493$ Federal Home Loan Mortgage Corporation US Agency securities 12,588,414 Total 37,818,907$

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial c redit risk for investments is the risk that, in the event of a failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of a nother party.

The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for depos its: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). 66 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 2. CASH AND INVESTMENTS (continued)

Custodial Credit Risk (continued)

The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure Agency deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2021, the City’s deposits with financial institutions in excess of federal depository insurance limits were held in collateralized accounts.

Fair Value Measurement

The City categorizes its fair value measurements within the fair value hierarchy established by GASB Statement No. 72. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

U.S. Treasury securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. U.S. Agency securities , corporate notes, and Municipal debt classified in Level 2 of the fair value hierarchy are valued using of matrix pricing techniques maintained by the pricing vendors for these securities. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices

The City has the following hierarchy levels for investments as of June 30, 2021:

Total Level 1 Level 2 Level 3
Investments by fair value level
US Agency securities 42,466,118$ -$ 42,466,118$ -$ US Treasuries 23,222,630 23,222,630 - - Corporate notes 14,582,118 - 14,582,118 - Municipal debt 163,086 - 163,086 - Total investments by fair value level 80,433,952$ 23,222,630$ 57,211,322$ -$ Investments not subject to GASB Statement No. 72
CAMP cash pool 160,230$
Invesco STIT Treasury Private 1,305,942
LAIF 55,598,934
Total investments not subject to GASB
Statement No. 72 57,065,106$
Total investments 137,499,058$

67 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 3. LOANS RECEIVABLE

Governmental Activities:

Low & Moderate
Income Housing
Asset (LMIHAF) HOME CDBG
Federal,State
and Local
Grants Total
First Time Homebuyer 4,545,335$ 7,954,603$ -$ 648,536$ 13,148,474$ Mobile Home Rehabilitation - 54,410 194,185 - 248,595 Single Family Rehabilitation 101,596 1,687,449 93,622 - 1,882,667 Multi-Family Projects:

Chambers Senior Residences 5,690,232 - - - 5,690,232 Lexington Avenue Senior Apartment 209,606 - - - 209,606 South Sunshine Associates LP 1,418,949 1,254,739 - - 2,673,688 11,965,718$ 10,951,201$ 287,807$ 648,536$ 23,853,262$

The City and Housing Authority make various acquisition, construction, and rehabilitation loans to developers and low and moderate -income households. The l oans are secured by deeds of trust , or certificates of title for mobile homes. The loans carry interest rates ranging from 0% to 5% with repayment terms from 10 to 55 years or upon sale or transfer of property. Repayment of these loans is not guaranteed until cash is received, and in some instances, the loans are either not fully recovered or forgiven.

Chambers Senior Residences, LP – In fiscal year 2010, t he former redevelopment agency entered into a Disposition Development Agreement with Chambers Senior Residences, L.P. for the development and construction of affordable housing units for seniors and families with very low and/or moderate incomes.

The loan amount to the developer was $4,500,000, secured by a deed of trust, and bears an interest rate of 3%. Loan repayments are based on residual receipts from monies earned on the property . At June 30, 2021, the balance outstanding includes $4,500,000 of principal and $1,190,232 of accrued interest.

Lexington Avenue Senior Apartments – In fiscal year 1994, the City and the former redevelopment agency entered into a Disposition and Development Agreement (DDA) with Lexington Avenue Senior Apartments (original developer) to provide for the development of affordable housing within the Project Area. On March 3, 2020, the Housing Authority and the original developer agreed to terminate the lease and DDA. This allowed t he Housing Authority to enter into a new DDA and sale of the leasehold interest to a new developer/operator, Thomas Safran & Associates Development, Inc. The sale was completed on December 14, 2020 with the new developer/operator assuming the outstanding loan balance of $206,250. The new agreement includes an interest rate of 3%. As of June 30, 2021, the outstanding balance includes $206,250 of principal and $3,356 of accrued interest.

South Sunshine Associates, LP - The City and the Housing Authority entered into a HOME Funding Agreement and Affordable Housing Agreement, respectively, with South Sunshine Associates, L.P. for the acquisition and development of a 70 -unit affordable housing project for low-income families and veteran households. In fiscal year 2016, the City agreed to loan HOME funds for up to $1,200,000, secured by a deed of trust, with an interest rate of 3% accruing upon project completion. The project was completed on December 23, 2019 and a certificate of occupancy was signed by the City Building Official. The loan is due on or before July 31, 2073. As of June 30, 2021, the outstanding balance of the HOME loan includes total principal of $1,200,000 and $54,739 of accrued interest.

In fiscal year 2018, the Housing Authority agreed to loan the developer LMIHAF funds for up to $1,300,000, secured by a deed of trust and assignment of rents, with an interest rate of 3%. Loan repayments are based on residual receipts from monies earned on the property. The loan is due on or before December 31, 2070.

As of June 30, 20 21, the balance outstanding includes a loan disbursement of $ 1,300,000 and accrued interest of $118,949.
68 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 4. CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30, 2021 is as follows:

Beginning Ending
Balance Additions Deletions Balance
Governmental Activities
Capital assets, not being depreciated:

Land 22,154,186$ -$ (422,585)$ 21,731,601$ Rights of way 31,190,652 - - 31,190,652 Construction in progress 2,595,354 1,511,783 (2,270,724) 1,836,413 Total assets, not being depreciated: 55,940,192 1,511,783 (2,693,309) 54,758,666 Capital assets being amortized or depreciated:

Use rights 2,003,895 - - 2,003,895 Land improvements 9,058,255 116,430 - 9,174,685 Buildings and improvements 114,565,279 178,078 (368,000) 114,375,357 Vehicles and equipment 20,090,295 809,802 (43,770) 20,856,327 Infrastructure 200,052,282 722,554 - 200,774,836 Total assets being amortized or depreciated 345,770,006 1,826,864 (411,770) 347,185,100 Less accumulated amortization or depreciation for:

Use rights (672,736) (221,860) - (894,596) Land improvements (6,616,406) (697,508) - (7,313,914) Buildings and improvements (32,701,700) (3,640,677) 368,000 (35,974,377) Vehicles and equipment (14,317,081) (1,358,407) 43,770 (15,631,718) Infrastructure (120,316,194) (4,395,685) - (124,711,879) Total accumulated amortization or depreciation (174,624,117) (10,314,137) 411,770 (184,526,484) Total capital assets being amortized or depreciated, net 171,145,889 (8,487,273) - 162,658,616 Governmental activity capital assets, net 227,086,081$ (6,975,490)$ (2,693,309)$ 217,417,282$ Beginning Ending
Balance Additions Deletions Balance
Business-type activities
Capital assets, not being depreciated:

Land 82,300$ -$ -$ 82,300$ Construction in progress 706,602 274,573 (185,810) 795,365 Total assets, not being depreciated: 788,902 274,573 (185,810) 877,665 Capital assets being depreciated:

Buildings and improvements 427,527 - - 427,527 Vehicles and equipment 2,148,252 29,386 - 2,177,638 Interest in Mission Gorge Mains 8,805,762 - - 8,805,762 Infrastructure 101,385,207 1,016,333 - 102,401,540 Total assets being depreciated 112,766,748 1,045,719 - 113,812,467 Less accumulated depreciation for:

Buildings and improvements (283,062) (7,224) - (290,286) Vehicles and equipment (1,082,577) (134,074) - (1,216,651) Interest in Mission Gorge Mains (3,863,535) (146,763) - (4,010,298) Infrastructure (50,126,014) (1,568,158) - (51,694,172) Total accumulated depreciation (55,355,188) (1,856,219) - (57,211,407) Total capital assets being depreciated, net 57,411,560 (810,500) - 56,601,060 Business-type activity capital assets, net 58,200,462$ (535,927)$ (185,810)$ 57,478,725$

69 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 4. CAPITAL ASSETS (continued)

Amortization and Depreciation

Amortization and depreciation expense are charged to functions based on their usage of the related assets.

The amounts allocated to each function are as follows:

Governmental Activities:

General government 1,144,239$
Public safety 2,709,718
Public works 4,464,607
Recreation 639,020
Community development 515,235
Total depreciation expense - governmental activities 9,472,819$ Business-type Activities:

Wastewater 1,856,219$
Total depreciation expense - business-type activities 1,856,219$

NOTE 5. LONG-TERM LIABILITIES

Summary of the changes in long-term liabilities for the fiscal year ended June 30, 2021, is as follows:

Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Governmental Activities:

Compensated absences 7,840,233$ 4,767,535$ (4,202,939)$ 8,404,829$ 3,698,272$ Claims payable (note 9) 3,765,000 957,927 (1,266,927) 3,456,000 500,000 Capital lease 1,267,803 - (197,035) 1,070,768 202,532 Pension obligation bonds - 141,517,800 - 141,517,800 4,696,000 Total governmental activities 12,873,036$ 147,243,262$ (5,666,901)$ 154,449,397$ 9,096,804$ Business-type Activities:

Notes from direct borrowings
CA State Water Resources 9,977,452$ -$ (424,678)$ 9,552,774$ 433,596$ Other long-term liabilities
Compensated absences 507,537 238,892 (257,342) 489,087 214,705 Pension obligation bonds - 5,692,200 - 5,692,200 189,000 Total business-type activities 10,484,989$ 5,931,092$ (682,020)$ 15,734,061$ 837,301$ 70 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 5. LONG-TERM LIABILITIES (continued)

Pension obligation bonds $ 147,210,000

On January 27, 2021, the City issued its 2021 Taxable Pension Obligation Bonds in the amount of $147,210,000. The bonds were issued for the purpose of refunding a portion of the City’s obligations with the California Public Employee’s Retirem ent System (CalPERS ). The bonds bear variable interest rates ranging from 0.449% to 3.284% with an average rate of 2.864% and are payable semi -annually on April 1 and October 1 of each year, commencing October 1, 2021 until maturity.

The bonds do not constitute an obligatio n of the City for which the City is obligated to levy or pledge any form of taxation. The bonds do not constitute an indebtedness of the City, the State, or any of its political subdivisions in contravention of any constitutional or statutory debt limit or restriction. For the purposes of paying principal and interest the City is obligated, under the trust agreement, to annually appropriate amounts sufficient to meet the debt service requirement in the fiscal year. The City refunded a portion of both Miscellaneous and Safety plans with CalPERS. The Miscellaneous plan portion was allocated to both governmental and business-type activities based on the allocation of the unfunded accrued liability.

The annual debt service requirements to amortize the 2021 Pens ion Obligation Bonds outstanding as of June 30, 2021 is provided below.

Year ending
June 30, Principal Interest Principal Interest Principal Interest 2022 4,696,000$ 4,070,176$ 189,000$ 163,708$ 4,885,000$ 4,233,884$ 2023 5,335,200 3,434,725 214,800 138,149 5,550,000 3,572,874 2024 5,369,000 3,400,099 216,000 136,755 5,585,000 3,536,854 2025 5,417,200 3,350,329 217,800 134,753 5,635,000 3,485,081 2026 5,479,800 3,286,460 220,200 132,185 5,700,000 3,418,645 2027-2031 28,859,000 14,972,533 1,161,000 602,215 30,020,000 15,574,748 2032-2036 32,320,400 11,519,723 1,299,600 463,349 33,620,000 11,983,072 2037-2041 37,333,200 6,500,612 1,501,800 261,472 38,835,000 6,762,084 2042-2043 16,708,000 827,456 672,000 33,280 17,380,000 860,736 Totals 141,517,800$ 51,362,114$ 5,692,200$ 2,065,865$ 147,210,000$ 53,427,978$ Governmental Activities Business-type Activities Total

Capital lease

County of San Diego $ 1,070,768

In October 2016, the City entered into an installment sale agreement (Agreement) with the County of San Diego (County). The County’s Regional Communication System (RCS) provides a standardized communication services platform to public safety and public service agencies operating in San Diego and Imperial Counties. The initial system became operational in 1 998 and had an anticipated end -of-life in 2012. Work began to replace the aging system in 2013. The City ’s continued participation in the system has obligated the City to its proportionate share of the cost of the RCS upgrade. The Agreement between the City and the County represents the City’s share of the backbone infrastructure, including radio equipment.
71 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 5. LONG-TERM LIABILITIES (continued)

Capital lease (continued)

The leased asset, Use Right (Note 4), is amortized on a straight-line basis over 10 years. At June 30, 2021, the net book value of the asset is $1,109,299, which consists of $2,003,895 initial cost, less accumulated amortization of $894,596

The future minimum lease payments by fiscal year and the present value of the minimum lease payments are as follows:

Year ending June 30
2022 232,407$
2023 232,407
2024 232,407
2025 232,407
2026 232,407
Total minimum lease payments 1,162,035$
Less: interest at 2.79% (91,267)
Present value of minimum lease payments 1,070,768$

Direct borrowing

California State Water Resources Control Board $ 9,552,774

The City entered into an installment sale agreement (Agreement) with the California State Water Resources Control Board (CSWRCB) to finance the construction of the Johnson Avenue Sewer Interceptor Project (Project) in March 2014, amended in April 2015, and in June 2017, wherein the City agreed to sell to CSWRCB and CSWRCB purchased from the City the Project. Simultaneously, the City purchased from the CSWRCB and the CSWRCB sold to the City the Project. All rights, title and interest in the Project immediately vests with the City on the date of execution and delivery of the Agreement.

The CSWRCB agreed to provide funding for this project of up to $11,300,000 at an interest rate of 2.1% per annum payable in annual installments beginning October 19, 2016 through October 19, 2035. Funding has been p rovided in full or in part by the Clean Water State Revolving Fund (CWSRF) through an agreement with the CSWRCB. CWSRF is capitalized through a variety of funding sources, including grants from the United States Environmental Protection Agency and state b ond proceeds. CSWRCB agrees to forgive $2,000,000 of the principal due contingent on the City’s performance under the Agreement. The Agreement also contains a termination clause that requires immediate repayment of the remaining principal and any accrued i nterest upon violation by the City of any material provision of the Agreement that is not remedied in a reasonable time as determined by CSWRCB. The City has drawn down the full amount available under the Agreement.

72 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 5. LONG-TERM LIABILITIES (continued)

Direct borrowing (continued)

California State Water Resources Control Board (continued)

Pledged revenues - The City has pledged the net revenues of the wastewater enterprise fund, and any reserve fund, towards this obligation until the note is paid off. The City also agreed, to the extent permitted by law, to fix, prescribe and collect sewer rates during each fiscal year necessary to yield net revenues that are at least 1.2 times the highest year’s debt service under this agreement, or 1.1 t imes the highest year’s debt service for all debts. As of June 30, 2021, pledged net revenues and debt service are $6,740,089 and $592,205, respectively.

Reserve fund - The CSWRCB also required that the City maintain s and funds a separate account for a reserve amount, up to an amount not exceeding the lesser of (i) ten percent of the aggregate principal amount of the obligation, (ii) the maximum annual debt service with respect to the obligation, or (iii) 125 percent of the average annual debt service wi th respect to the obligation. As of June 30, 20 21, the City has restricted cash and investments in the amount of $592,205 for this purpose.

Debt service requirement - The debt service requirement provided by CSWRCB, and presented below, is based on the $7,552,774 non-forgivable portion only. A debt service requirement for the forgivable portion, $2,000,000, will not be established by CSWRCB unless the City fails to meet the performance criteria under the Agreement.

Year ending June 30 Principal Interest Total
2022 433,596$ 158,608$ 592,204$
2023 442,702 149,503 592,205
2024 451,999 140,206 592,205
2025 461,491 130,714 592,205
2026 471,182 121,023 592,205
2027-2031 2,508,554 452,469 2,961,023
2032-2036 2,783,250 177,774 2,961,024
Totals 7,552,774$ 1,330,297$ 8,883,071$

73 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 5. LONG-TERM LIABILITIES (continued)

Compensated absences

The total unpaid vacation balances, compensatory time and sick leave benefits accumulated by City employees are accrued and reported as compensated absences. Compensated absences balances for the fiscal year ended June 30, 2021, are as follows:

Major Governmental Fund
General Fund 7,946,804$
Nonmajor Governmental Funds
Gas Tax Special Revenue Fund 175,684
Transit Special Revenue Fund 37
Internal Service Funds 282,304
Total governmental activities 8,404,829$
Wastewater Enterprise Fund 489,087$
Total business-type activities 489,087$
Governmental Activities:

Business-type Activities:

NOTE 6. DEFINED BENEFIT PENSION PLANS

Pension Plan Description

The City provides retirement benefits to all eligible employees (employees who work at least 1,000 hours per fiscal year) through California Public Employees’ Retirement System (CalPERS), an agent multiple - employer defined benefit pension plan that acts as a common investment and administrative agent for participating public entities within the State of California. Retirement benefits under a defined benefit plan (Plan) is based on a formula, rather than contributions and earnings to a savings plan, and ar e calculated based on a member’s years of service credit, age at retirement and final compensation (average salary for a defined period of employment). There are three basic types of retirement: Non -Industrial Disability retirement for employees who can no longer perform the usual duties of their current position due to illness or injury, Industrial Disability retirement for safety risk pool (police and fire) employees who are unable to perform the usual duties of their current position due to job-related illness or injury, and Service retirement or “normal” retirement. The benefit provisions and all other requirements are established by State Statute, as recently amended by the Public Employees’ Pension Reform Act (PEPRA), and City ordinance.

74 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 6. DEFINED BENEFIT PENSION PLANS (continued)

Pension Plan Description (continued)

The Plan consists of individual rate plans (benefit tiers) within a safety risk pool and a miscellaneous risk pool (all other). Rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. The City sponsors five rate plans (three safety and two miscellaneous). Plan assets may be used to pay benefits for any employer rate plan of the safe ty and miscellaneous pools. CalPERS’ Annual Comprehensive Financial R eport and a full de scription of the pension plan regarding benefit provisions, assumptions and membership information are available online at www.calpers.ca.gov.

The rate plan provisions and benefits in effect at June 30, 20 21, are summarized as noted below. All members have a benefit-vesting schedule of five years of service and receive benefit payments monthly for life.

MISCELLANEOUS
SAFETY
Tier 1
SAFETY
Tier 2 MISCELLANEOUS SAFETY
Benefit formula 3.0% @ 60 3.0% @ 50 3.0% @ 55 2.0% @ 62 2.7% @ 57 Retirement age 50 - 60+ 50+ 50 - 55+ 52 - 67+ 50 - 57+
Monthly benefits, percentage
eligibile compensation 2.0% to 3.0% 3.0% 2.4% to 3.0% 1.0% to 2.5% 2.0% to 2.7% Member Paid Contribution
Rate 8.000% 9.000% 9.000% 6.250% 13.000%
Employer Contribution Rate -
Normal Cost 12.342% 21.224% 21.224% 12.342% 21.224%

CLASSIC MEMBER
Membership date prior to
January 1, 2013

PEPRA MEMBER
Membership date on or after
January 1, 2013

Employees Covered

During the 2019-20 measurement period, the following number of employees were covered by the benefit terms of the Plan:

Miscellaneous Safety
Inactive employees or beneficiaries currently receiving benefits 528 308 Inactive employees entitled to but not yet receiving benefits 324 133 Active employees 216 174
Totals 1,068 615

75 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 6. DEFINED BENEFIT PENSION PLANS (continued)

Contributions

Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers to be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

The total contributions to the Plans for the fiscal year ended June 30, 2021 is $166,893,459, which consisted of $55,499,867 and $111,393,592 for the Miscellaneous and Safety Plans, respectively.

Net Pension Liability Information

The City’s net pension liability for each Plan is measured as the to tal pension liability, less the p lan’s fiduciary net position. The total pension liability of each of the Plan s is measured as of June 30, 20 20 (measurement date) using an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The June 30, 2020 total pension liability was based on the following actuarial methods and assumptions:

Actuarial cost method Entry Age Normal
Actuarial Assumptions:

Discount rate 7.15%
Inflation 2.50%
Payroll growth 2.75%
Salary increases Varies by entry age and service
Mortality rate* Derived using CalPERS’ membership data for all funds Post-retirement benefit increase Contract COLA up to 2.0% until Purchasing Power Protection Allowance Floor on purchasing power applies; 2.50% thereafter

* The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre -retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP -2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

All other actuarial a ssumptions used in June 30, 2019 valuation were based on an actuarial experience study for the period 1997 to 2015, including salary increases, mortality rates and re tirement rates. The Experience Study report can be accessed on the CalPERS website at www.calpers.ca.gov under Forms and Publications.

In February 2020, the City established a Section 115 irrevocable trust to set aside funds to address pension funding needs in the long term. The Trust is owned and monitored by the City but externally managed by investment professionals. The Trust allows the City to have full control and flexibility on use of trust assets as a budget stabilization tool to fund pension contributions in future years. As of June 30, 2021 the City reported the account balance of $2,038,034 as cash and investments held by fiscal ag ent in the City’s General Fund.
76 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 6. DEFINED BENEFIT PENSION PLANS (continued)

Change of Assumptions

There were no changes of assumptions in measurement period 2020. Demographic assumptions and inflation rate used for the June 30, 2019 valuation were based on the CalPERS Experience Study and Review of Actuarial Assumptions December 2017.

Discount Rate

The discount rate used to measure the total pension liability was 7.15 percent for each Plan. The projection of cash flows used to determine the disco unt 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 Plans’ fid uciary 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.

Expected Rate of Return

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 expecte d pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of bene fits for cash flows as the one calculated using both short -term and long - term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.

Assumed
Asset Real Return Real Return
Asset class(1) Allocation Years 1-10(2) Years 11+(3)
Global equity 50.0 % 4.80 % 5.98 %
Fixed income 28.0 % 1.00 % 2.62 %
Inflation assets 0.0 % 0.77 % 1.81 %
Private equity 8.0 % 6.30 % 7.23 %
Real assets 13.0 % 3.75 % 4.93 %
Liquidity 1.0 % 0.00 % (0.92)%
Liquidity is included in Short-term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
(2) An expected inflation of 2.00% used for this period. (3) An expected inflation of 2.92% used for this period. (1) In the System's CAFR, Fixed Income is included in Global Debt Securities; 77 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 6. DEFINED BENEFIT PENSION PLANS (continued)

Schedule of Changes in Net Pension Liability

Total Pension Increase (Decrease) in Plan Net Pension
Liability Fiduciary Net Position Liability (Asset)
(a) (b) (c) = (a) - (b)

MISCELLANEOUS
Balance at 06/30/2019 (valuation date) 235,533,446$ 161,489,480$ 74,043,966$ Changes recognized for the measurement period:

Service cost 2,977,187 - 2,977,187 Interest on total pension liability 16,469,083 - 16,469,083 Differences between expected and
actual experience 294,443 - 294,443 Net plan to plan resource movement - - - Contributions from the employer - 7,760,121 (7,760,121) Contributions from the employees - 1,221,300 (1,221,300) Net investment income - 8,085,826 (8,085,826) Benefit payments, including refunds
of employee contributions (13,959,312) (13,959,312) - Administrative expense - (227,661) 227,661 Other miscellaneous income - - - Net changes during 2019-20 5,781,401 2,880,274 2,901,127 Balance at 06/30/2020 (measurement date) 241,314,847$ 164,369,754$ 76,945,093$ SAFETY
Balance at 06/30/2019 (valuation date) 333,732,468$ 210,204,765$ 123,527,703$ Changes recognized for the measurement period:

Service cost 4,723,268 - 4,723,268 Interest on total pension liability 23,341,882 - 23,341,882 Differences between expected and
actual experience (650,086) - (650,086) Contributions from the employer - 11,019,557 (11,019,557) Contributions from the employees - 1,756,898 (1,756,898) Net investment income - 10,470,492 (10,470,492) Benefit payments, including refunds
of employee contributions (17,968,239) (17,968,239) - Administrative expense - (296,337) 296,337 Other miscellaneous income - - - Net changes during 2019-20 9,446,825 4,982,371 4,464,454 Balance at 06/30/2020 (measurement date) 343,179,293$ 215,187,136$ 127,992,157$

78 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 6. DEFINED BENEFIT PENSION PLANS (continued)

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following tables present the net pension liabilities of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2020:

Miscellaneous
Discount Rate
Net Pension
Liability
Impact on
Liability

6.15% 105,395,142$ 28,450,049$

7.15% 76,945,093 -

8.15% 53,129,672 (23,815,421)
Safety
Discount Rate
Net Pension
Liability
Impact on
Liability

6.15% 173,781,092$ 45,788,935$

7.15% 127,992,157 -

8.15% 90,386,398 (37,605,759)

Pension Plan’s Fiduciary Net Position

Detailed information about th e Plan’s fiduciary net position is available in a separately issued CalPERS financial report. A full description of the pension plan regarding number of employees covered, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the June 30, 2020 Actuarial Valuation Report, Appendix B. This report and CalPERS’ audited financial statements are available on the CalPERS’ website https://www.calpers.ca.gov/ under Forms and Publications.
79 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 6. DEFINED BENEFIT PENSION PLANS (continued)

Pension Expense

For the measurement period ending June 30, 20 20, the total pension expense recognized is $ 25,880,864 consisting of $9,955,680 and $15,925,184, for Miscellaneous and Safety, respectively.

Under GASB Statement No. 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized as pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

Amortization is computed on a straight-line basis and the period differs depending on the source of the gain or loss:

Miscellaneous Safety
Differences between expected and actual
experience 2.2 years 3.6 years
Changes in assumptions 0.1 years 1.5 years
Net difference between projected and actual
earnings on plan investments 5.0 years 5.0 years

The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants. For the measur ement period ending June 30, 2020 , the EARSL used for the Plans is as follows:

Miscellaneous Safety
Total future service years (a) 2,321 2,165
Total number of participants (active, inactive and retired) 1,059 608 EARSL for the 2019-20 measurement period 2.2 years 3.6 years

(a) The sum of the remaining service years of the active employees. Inactive employees and retirees have remaining service years equal to 0. Total future service years is based on the members' probability of decrementing due to an event other than receiving a cash refund.

80 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 6. DEFINED BENEFIT PENSION PLANS (continued)

Deferred Outflows and Inflows of Resources Related to Pensions

The following tables present the deferred outflows and deferred inflows of resources related to pensions as of the measurement date of June 30, 2020.

Deferred Outflows of Resources Miscellaneous Safety
Pension contributions subsequent to the measurement date 55,499,867$ 111,393,592$ Differences between expected and actual experience 481,545 633,811 Net difference between projected and actual earnings on plan investments 986,642 1,433,037 Total Deferred Outflows of Resources - Pension 56,968,054$ 113,460,440$ Deferred Inflows of Resources Miscellaneous Safety
Differences between expected and actual experience -$ (469,507)$ Changes in assumptions - (181,478)
Net difference between projected and actual earnings on plan investments - - Total Deferred Inflows of Resources - Pension -$ (650,985)$

The $166,893,459 reported as deferred outflows of resources related to contributions subsequent the June 30, 2020 measurement date will be recognized as a reduction of the net pension liability during the fiscal year ending June 30, 2022.

The remaining amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in the future as pension expense as follows:

Measurement Period
Ended June 30 Miscellaneous Safety
2021 (365,539)$ (847,265)$
2022 385,030 428,065
2023 797,422 963,996
2024 651,274 871,067
2025 - -
Thereafter - -
Deferred Outflows / (Inflows) of Resources

81 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 7. DEFINED CONTRIBUTION PENSION PLAN

City provides a defined contribution retirement plan (the "Plan") for specified part -time, temporary and seasonal employees who work less than 1,000 hours per fiscal year in lieu of Social Security coverage. In a defined contribution plan, benefits depend solely on amount contributed to the plan plus investment earnings. The plan provisions were established by the City Council to comply with the Omnibus Budget Reconciliation Act of 1990 . The plan is a qualified pension plan as specified by Internal Reven ue Code Section 414(I), and is administered by Nationwide Retirement Solutions.

Eligible employees are fully vested effective their dates of hire. If participating employees become eligible for participation in CalPERS, by virtue of working more than 1,000 hours per fiscal year or otherwise, contributions to the Plan shall cease once the employee is enrolled in CalPERS. If a participating employee is hired into a regular full-time position, all contributions and earnings in the plan are transferred to the City’s Deferred Compensation Plan, also administered by Nationwide Retirement Solutions.

Contributions are equal to 7.5% of each participating employee's compensation and are made by the City.

Contributions are invested with a third party administrator in a liquid savings account. Earnings are at a variable rate and accrue daily commencing on the date the funds are posted. For the year ended June 30, 2021, the City’s total payroll and covered payroll was $ 368,193. The City made employer contributions of $26,409. The assets held in trust by the plan administrator had a fair value of $ 659,831 at June 30, 2021.

Distribution shall be by lump sum only, twelve months after termination of employment. Such distribution shall include investment earnings accrued to date of fund withdrawal. In the event of a participating employee’s death, the waiting period will be waived.

NOTE 8. OTHER POST-EMPLOYMENT BENEFITS

Plan Description

The City has established a retiree healthcare plan (Plan) and is participating in an agent multiple-employer defined benefit retiree healthcare plan. Following is the description of current retiree benefit plan provided to retired miscellaneous and safety members who retired on or after July 14, 1988:

Benefit types provided Medical only
Required service 5 years and retiring directly from City service Minimum Age 50
Dependent Coverage Yes
Benefit Minimum employer contribution in accordance
with the Public Employees Medical and Hospital
Care Act (PEMHCA)
Duration of Benefits As long as eligible employee is enrolled in CalPERS healthcare plans
82 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 8. OTHER POST-EMPLOYMENT BENEFITS (continued)

Employees Covered

As of the June 30, 20 20 actuarial valuation, the following current and former employees were covered by the benefit terms under the Plan:

Active employees 413
Inactive employees or beneficiaries currently receiving benefits 193 Total 606

Contributions

The annual contribution is a combination of projected pay -as-you go and an additional amount to prefund health benefits as determined annually by the City Council. For the fiscal year ended June 30, 202 1, the City’s cash contributions were $20 0,000 in prefunding payment to the trust and $3 38,575 of premium payments to CalPERS for PEMHCA health benefi ts resulti ng in total payments of $ 538,575. The City created a California Employer’s Retiree Benefit Trust (CERBT) account with CalPERS in fiscal year 2008 for the purpose of prefunding obligations.

Net OPEB Liability Information

The City’s net OPEB liability was measured as of June 30, 20 20 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 201 9 that was rolled forward to determine the June 30, 2020 total OPEB liability, based on the following actuarial methods and assumptions:

Actuarial cost method Entry age normal
Asset valuation method Market value basis
Amortization method Over 20 years using level percentage of payroll Actuarial Assumptions:

Discount rate 7.28%
Expected rate of return 7.28%
Inflation rate 2.50%
Payroll increases 2.75%
Healthcare cost trend rate 6.00% decreasing to 5.00%
Minimum contribution 4% annual increase in CalPERS minimum required contributions

The June 30, 2020 valuation reflects updated census, plan and rate information and healthcare trend rates.

In addition, all other actuarial assumptions used in the valuation were based on the results of t he 2017 CalPERS Experience Study f or the period from 1997 to 2015, including updates to salary increases, mortality and retirement rates.

83 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 8. OTHER POST-EMPLOYMENT BENEFITS (continued)

Expected Rate of Return

The long-term expected rate of return on OPEB plan investments was determined using a building –block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan’s target asse t allocation as of June 30, 2020 are summarized in the following table:

Asset class Target allocation
Long-term expected
real rate of return
CERBT
Global Equity 59.0% 5.50 %
Global Debt Securities 25.0% 2.35 %
Inflation Assets 5.0% 1.50 %
Commodities 3.0% 1.75 %
REITs 8.0% 3.65 %
Total 100.0%
Long-term expected rate of return is 7.28%

Discount Rate

The discount rate used to measure the City’s total OPEB liability was 7.28 %. This discount rate assumes the City continues to fully fund for its retiree benefits through CERBT trust under its investment allocation strategy 1. The rate is reasonable given the current level of actuarial funding and the City’s annual contributions to the CERBT trust. The projection of cash flows used to determine the discount rate is based on the assumption that the City’s contributions are made at rates equal to the actuarially determined contribution rates, in addition to the amount of annual benefit payments. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long -term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to de termine the total OPEB liability.

84 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 8. OTHER POST-EMPLOYMENT BENEFITS (continued)

Schedule of Changes in Net OPEB Liability

Increase (Decrease)
Total OPEB in Plan Fiduciary Net OPEB
Liability Net Position Liability (Asset)
(a) (b) (c) = (a) - (b)
Balance at 06/30/2019 (valuation date) 11,005,844$ 5,375,643$ 5,630,201$ Changes recognized for the measurement period:

Service cost 240,400 - 240,400 Interest 792,235 - 792,235 Differences between expected
and actual experience (666,003) - (666,003) Changes of assumptions - - - Contributions - employer - 940,805 (940,805) Net investment income - 192,108 (192,108) Benefit payments, including refunds of
member contributions (740,805) (740,805) - Administrative expense - (2,631) 2,631 Net changes (374,173) 389,477 (763,650) Balance at 06/30/2020 (measurement date) 10,631,671$ 5,765,120$ 4,866,551$

Sensitivity of the Net OPEB Liability to Changes in the Discount Rate

The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measur ement period ended June 30, 2020:

Discount Rate Net OPEB Liability Impact on Liability

6.28% 6,028,961$ 1,162,410$

7.28% 4,866,551 -

8.28% 3,887,647 (978,904)

85 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 8. OTHER POST-EMPLOYMENT BENEFITS (continued)

Sensitivity of the Net OPEB Liability to Changes in Healthcare Cost Trends

The following presents the net OPEB liability of the City if it were calculated using a healthcare cost trend rate that is one percentag e point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2020:

Healthcare Cost
Trend Rates Net OPEB Liability Impact on Liability
1% Decrease 3,701,686$ (1,164,865)$
Current Rate 4,866,551 -
1% Increase 6,273,464 1,406,913

OPEB Plan Fiduciary Net Position

CalPERS issues a publicly available CERBT financial report that may be obtained from the CalPERS’ website at www.calpers.ca.gov. The plan itself does not issue financial statements.

Recognitions of Deferred Outflows and Deferred Inflows of Resources

Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time.

Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The recognition period differs depending on the source of the gain or loss.

Sources of Gains and Losses Recognition Period

Net differences between projected and actual
earnings on OPEB plan investments
5 years
All other amounts 5 years

86 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 8. OTHER POST-EMPLOYMENT BENEFITS (continued)

OPEB Expense and Deferred Outflows and Inflows of Resources Related to OPEB

For the fiscal year ended June 30, 202 1, the City recognized OPEB expense of $ 678,633. At the end of the fiscal year, the City reported deferred outflows and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB contributions subsequent to measurement period 538,575$ -$ Differences between expected and actuarial experience 13,502 (1,054,074) Changes of assumptions 491,601 -
Differences between projected and actual earnings 195,823 - Total 1,239,501$ (1,054,074)$

The $538,575 reported as deferred outflows of resources related to contribution s subsequent to the June 30, 2020 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2022.

The remaining $(353,148) of deferred outflow s and deferred inflows of resources will be recognized in the future as OPEB expense as follows:

Measurement period Deferred Outflows/(Inflows)
Ended June 30 of Resources
2021 41,772$
2022 (151,260)
2023 (151,722)
2024 (91,938)
2025 -
Thereafter -

87 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 9. RISK MANAGEMENT

The City is exposed to various general liability risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City established self - insurance programs and maintains contracts with various insurance companies to manage excessive risks.

The City uses the Self Insurance Fund to account for and financ e risks for claim liabilities . The estimated liability for pendi ng and incurred but not reported (IBNR) claims at June 30, 202 1, has been reported in the financial statements as claims payable in the Self Insurance Internal Service Fund and is based on history and actuarial studies. There were no significant changes in insurance coverage from the prior year, and there were no settlements in excess of the insurance coverage in any of the prior three years.

General Liability and Worker’s Compensation Insurance

The City is self-insured for general liability through CSAC Excess Insurance Authority (EIA) with a self-insured retention (SIR) of $250,000. The total general liability policy limit is $25,000,000, including the $250,000 SIR.

The Risk Manager administered claims against the City.

The City is also self-insured for the first $125,000 on each workers’ compensation claim and is a participating member agency of an excess worker’s compensation insurance program that covers losses up to the statutory limit. Athens Administrators is the City’s third party claims admini strator. Loss control services are obtained on an as needed basis.

Changes in the balance of claim liabilities during the past two years are as follows:

General Worker's Total
Liability Compensation Claims
Liability - June 30, 2019 1,604,000$ -$ 1,604,000$ Current fiscal year claims 48,960 645,916 694,876 Claims payments (90,809) (101,472) (192,281) Changes to estimates 251,849 1,406,556 1,658,405 Liability - June 30, 2020 1,814,000 1,951,000 3,765,000 Current fiscal year claims 77,359 742,079 819,438 Claims payments (119,385) (682,568) (801,953) Changes to estimates (464,974) 138,489 (326,485) Liability - June 30, 2021 1,307,000$ 2,149,000$ 3,456,000$

The City’s accrued liability at year -end of $3,456,000 was established based on the 70% confidence level of funding of the actuarially computed expected liability.

Property Insurance

The City participates in the Public Entity Property Insurance Program (PEPIP) through Alliant In surance Services for coverage of the City's physical assets. This includes all real and personal property owned by the City or for which the City has assumed responsibility to insure, e.g. buildings, structures, computer equipment, heavy-duty equipment, mechanical equipment, vehicles, fu rniture and fixtures. The deductible varies depending on the type of loss.

88 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 10. COMMITMENTS AND CONTINGENCIES

Operating Leases

The City has entered into several operating leases in the conduct of its day-to-day operations to provide for services. None of these operating leases is considered to be significant commitments.

Federal and State Grants

The City has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursement to the granting agency for expenditures disallowed under terms of the g rant. City management believes such disallowances, if any, would not have a material effect on the City’s financial position.

Litigation

The City is a defendant in a number of lawsuits that have arisen in the normal course of business. While substantial damages are alleged in some of these actions, their outcome cannot be predicted with certainty.

In the opinion of the City’s legal counse l, these actions when finally adjudicated will not have a material effect on the City’s financial position.

Significant Encumbrances

As discussed in Note 1, Budgetary information, Budgetary basis of accounting, encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. The encumbrances and related appropriation lapse at the end of the year, but are re -appropriated and become part of the subsequ ent year’s budget because performance under the executory contract is expected in the next year.

At fiscal year end, the significant encumbrances expected to be honored upon performance by the vendor in the next year were as follows:

Encumbrance Amount
Governmental Funds:

Nonmajor Governmental FundsNew enterprise resource planning (ERP) system 1,867,715$ Battery energy storage system 636,777
Total 2,504,492$

89 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 11. INTERFUND BALANCES AND TRANSFERS

Due To/Due From

The composition of due to/due from other funds for the fiscal year ended June 30, 2021 is as follows:

Due To Due From Amount
General Fund Non-Major Special
Revenue Fund 123,909$
Non-Major Capital
Project Fund 5,767
Totals 129,676$

The amounts due to the General Fund from the CDBG nonmajor special revenue fund and the Parks and Recreation Improvement Grants capital project fund were due to cash flow needs at fiscal year-end. These funds will be repaid in the next fiscal year, as grant reimbursements become available to the borr owing fund.

Transfers In/Transfers Out

Transfers in and transfers out for the fiscal year ended June 30, 2021 are as follows:

Major Funds Nonmajor Funds
Transfers Out
General
Fund
Capital
Projects Total
Major Funds
General Fund -$ 3,235,000$ 3,235,000$ Nonmajor Funds
Special Revenue 210,372 309,246 519,618 Capital Projects - 119,082 119,082 Total 210,372$ 3,663,328$ 3,873,700$
Transfers In

The transfers from the General fund to the nonmajor capital projects funds are for funding for public safety energy efficiency project.

The transfers from the nonmajor special revenue funds provide annual subsidy to the General Fund to fund the police officers assigned to patrol schools in the Grossmont Union High School District and to manage the Crime Free Multi-Housing program. The General Fund also received five percent of the Certified Access Specialist Program fees collected for administration costs.

The transfers from non major special revenue funds to the non major capital project funds are funding for American with Disabilities Act (ADA) curb ramps and sidewalks program, City downtown bollards, and park facilities improvements.

The transfers between non major capital project f unds are funding for Kennedy Park resurfacing and a shade structure.

90 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 12. FUND BALANCES AND DEFICITS

Fund balances for the fiscal year ended June 30, 2021 are as follows:

General
Low and
Moderate
IncomeHousing
Asset
Federal,
State, and
Local Grants
Pension
Obligation
Bonds Non-Major
Total
Governmental
Funds
Nonspendable
Prepaid items 4,330$ -$ -$ -$ -$ 4,330$ Restricted
Animal shelter operations - - - - 41,549 41,549 Animal shelter project - - - - 266,637 266,637 Community development - 7,576,602 64,588 - 1,646,050 9,287,240 Debt service - - - 11,464 - 11,464 Loans receivable - 10,653,181 648,536 - 11,181,947 22,483,664 Public safety - - 624,790 - 594,507 1,219,297 Public works project - - 74,412 - 604,738 679,150 RTCIP impact fee - - - - 727,074 727,074 RMRA - - - - 2,661,639 2,661,639 Transportation projects - - - - 3,470,626 3,470,626 PARS Trust for UAL 2,038,034 - - - - 2,038,034 Committed 15,531,197 - - - - 15,531,197 Assigned
Capital projects - - - - 15,322,832 15,322,832 Economic uncertainty 6,500,000 - - - 6,500,000 Unfunded retirement obligations 5,961,966 - - - 5,961,966 Unassigned 23,642,249 - - (6,348) 23,635,901 Totals 53,677,776$ 18,229,783$ 1,412,326$ 11,464$ 36,511,251$ 109,842,600$ Special Revenue

The General Fund’s committed fund balance of $15,531,197 is established as an operating reserve based on 20% of annual expenditures. This reserve serves as both a last resort to mitigate the effect of unexpected events outside of the City’s control, and a source of cash flow for the General Fund between the months of July and December when expenditures typically exceed revenues until cash receipts from the City’s primary revenue sources begin to come in.

Fund Deficit

The fund deficit reported for nonmajor governmental funds was for the Parks and Recreation Improvement Grants Capital Projects Fund. The $6,348 deficit in the fund was due to expenditures being incurred before the grant revenue was received.

91 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 13. JOINT VENTURES

The City represents the greatest membership share in two of the joint powers authorities to which it belongs.

A summary of each joint power authority, the City's participation, and any related party transactions with each authority are as follows:

Heartland Fire Training Authority

The purpose of Heartland Fire Training Authority (HFTA) is to provide a fire-fighting training facility and training courses for personnel of the member agencies. HFTA was created on October 1, 1999, as amended, by a Joint Powers Agreement (JPA) between a number of cities and fire protection districts in San Diego County.

For the current fiscal year, the JPA members consist of the Cities of El Cajon, La Mesa, Lemon Grove, and Santee, the Fire Protection Districts of Alpine, Bonita-Sunnyside, Lakeside, and San Miguel, the Viejas Band of Kumeyaay Indians, and the Barona Band of Mission Indians. One elected official from each member agency is appointed to the HFTA Commission. The Commission approves an annual budget based on the costs of operating the facility and providing training to member agency personnel. El Cajon’s membership share was

14.14% for the fiscal year ending June 30, 2021.

On May 12, 2020 , HFTA entered into a Facility Lease Agreeme nt with the City of El Cajon. The executed agreement included a proposed capital improvement project based on a prioritized list of capital improvement needs. The lease agreement provides for annual rent payments of $69,630 that was utilized by the City of El Cajon to fund the capital improvement project. The City also provides clerical and accounting services for HFTA. Charges for services were $32,521 for the fiscal year ending June 30, 2021.

Annual financial statements may be obtained from HFTA, c/o City of El Cajon, Finance Department, 200 Civic Center Way, El Cajon, CA 92020.

Heartland Communications Facility Authority

The purpose of the Heartland Communication Facility Authority (HCFA) is to equip, maintain, operate and staff a facility to provide emergency call receiving and dispatching services to member agencies. HCFA was created on June 25, 1986, as amended, by a Joint Powers Agreement (JPA) between a number of cities and fire protection districts in San Diego County. For the current fiscal year, the JPA members consist of the Cities of El Cajon, La Mesa, Lemon Grove, and Santee, and the Fire Protection Districts of Alpine, Bonita-Sunnyside, Lakeside, the Viejas Band of Kumeyaay Indians, and San Miguel . One elected official from each member agency is appointed to the HCFA Commission. The commission approves an annual budget based on the costs of operating the Authority. El Cajon’s membership share was 26.86% for the fiscal year ending June 30, 2021.

HCFA leases a portion of the property located at 100 E. Lexington Avenue from the City. Lease payments totaled $ 52,744 for the fiscal year ending June 30, 2021. The City also provides clerical and accounting services for HCFA. Charges for services were $44,884 for the fiscal year ending June 30, 2021.

Annual financial statements may be obtained from HCFA, c/o City of El Cajon, Finance Department, 200 Civic Center Way, El Cajon, CA 92020.

92 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 14. TAX ABATEMENTS

Sunroad E C Land, Inc.

In March 2013, as part of the City’s revitalization program, the City and Sunroad E C Land, Inc. (Sunroad), entered into an Owner Participation and Development Agreement for redevelopment of real property. Sunroad owns the land and agreed to construct a BMW motorcar dealership (BMW) consistent with BMW USA’s new image requirement that includes modern European style frontage, showroom service areas, and customer waiting areas. In consideration for Sunroad’s investment in the City, the City agreed to retu rn to Sunroad a percentage of the net sales taxes (based on sales taxes in excess of $93,000 per quarter) derived by BMW as follows:

Percentage of Net
Fiscal Year Operating Years Sales Taxes
FY2012-13 through FY2016-17 Years 1 through 5 75%
FY2017-18 through FY2021-22 Years 6 through 10 60%
FY2022-23 through FY2026-27 Years 11 through 15 50%

In FY 2020-21, the total amount rebated to Sunroad under this agreement was $4,691.

El Cajon Hotels, LP and Magnolia Hotel, Inc.

In August 2015, as part of the City’s revitalization program, the City and El Cajon Hotels, Inc. entered into a Disposition and Development Agreement to develop real property into a 120-room Courtyard by Marriott Hotel (Courtyard). As an economic incentive to building and operating a quality hotel , the City and El Cajon Hotel, Inc. agreed to a transient occupancy tax (TOT) rebate sharing program . In December 2015, the TOT agreement was assigned by El Cajon Hotel, Inc. to Magnolia Hotel, Inc. (Hotel) as follows:

Percentage of TOT
Fiscal Year Operating Years rebate due to Hotel
FY2017-18 through FY2021-22 Years 1 through 5 100%
FY2022-23 through FY2026-27 Years 6 through 10 50%

In FY 2020-21, the total amount rebated to the Hotel under this agreement was $373,169.

Tipton Enterprises, Inc. dba Tipton Honda

In June 2015, the City and Tipton Enterprises, Inc. entered into an Owner Participation and Development Agreement to redevelop the existing Honda dealership that included the acquisition of the adjacent property for expansion. Tipton Honda represented that they will invest approximately $2.3 million into the acquisition and redevelopment of this dealersh ip. In consideration for this approximate investment, the City agreed to return to Tipton Honda a percentage of the net sales taxes (based on sales taxes in exce ss of $342,000 per year) not to exceed $2.3 million as follows:

Percentage of Net
Fiscal Year Operating Years Sales Taxes
FY2017-18 through FY2022-23 Years 1 through 6 65%
FY2023-24 through FY2028-29 Years 7 through 12 50%

In FY 2020-21, the total amount rebated to Honda under this agreement was $152,380. 93 CITY OF EL CAJON

NOTES TO THE BASIC FINANCIAL STATEMENTS
For the fiscal year ended June 30, 2021

NOTE 14. TAX ABATEMENTS (continued)

Oremor European, LLC dba Mercedes-Benz of El Cajon

In February, 2018, the City and Oremor European, LLC entered into an operating covenant for operation of a first-class motor vehicle dealership in compliance with all facility and image requirements of Mercedes-Benz.

As an economic incentive to operate the dealership, the City agreed to return to Mercedes-Benz a percentage of net sales taxes (based on sales taxes in excess of $300,000 per year) as follows:

Percentage of Net
Fiscal Year Operating Years Sales Taxes
FY2018-19 through FY2022-23 Years 1 through 5 75%
FY2023-24 through FY2027-28 Years 6 through 10 60%

In FY 2020-21, the total amount rebated to Mercedes-Benz under this agreement was $109,728.

94 REQUIRED SUPPLEMENTARY INFORMATION
95 Actual Variance with
Original Final Amounts1 Final Budget

REVENUES
Taxes
Sales and use 32,735,587$ 32,735,587$ 41,999,181$ 9,263,594$ Property 21,638,712 21,638,712 21,623,736 (14,976) Franchise 6,335,994 6,335,994 6,388,778 52,784 Transient lodging 1,841,733 1,841,733 2,126,234 284,501 Business licenses 798,619 798,619 832,383 33,764 Property transfer 400,000 400,000 478,805 78,805 Total taxes 63,750,645 63,750,645 73,449,117 9,698,472 Intergovernmental:

Motor vehicle license fees 50,000 50,000 76,565 26,565 Reimbursements 932,100 932,100 1,091,794 159,694 Total intergovernmental 982,100 982,100 1,168,359 186,259 Licenses and permits 1,460,200 1,460,200 1,701,436 241,236 Fines and forfeitures 593,000 593,000 363,311 (229,689) Special assessments 350,000 350,000 367,954 17,954 Charges for services:

Planning and engineering 1,193,800 1,193,800 1,392,474 198,674 Public safety 738,500 738,500 585,982 (152,518) All others 1,996,142 1,996,142 2,371,362 375,220 Total charges for services 3,928,442 3,928,442 4,349,818 421,376 Use of money and property 2,381,890 2,381,890 1,760,216 (621,674) Other:

Sale of property - - 2,787 2,787 Miscellaneous 400,260 400,260 254,124 (146,136) Total other 400,260 400,260 256,911 (143,349) Total revenues 73,846,537 73,846,537 83,417,122 9,570,585 (Continued)
basis combine an additional fund pursuant to GASB Statement No.54.

See Notes to Required Supplementary Information on page 101. 1 Includes only the General Fund as defined by the City's budget. Financial statements prepared on a GAAP Budgeted Amounts

CITY OF EL CAJON
Budget and Actual (Budgetary Basis)
General Fund
For the fiscal year ended June 30, 2021
Schedule of Revenues, Expenditures and Changes in Fund Balance 96 Actual Variance with
Original Final Amounts1 Final Budget

EXPENDITURES
General government:

City council 492,267$ 492,267$ 475,581$ 16,686$ Council contingency 60,000 60,000 6,500 53,500 City manager 2,096,854 2,101,685 2,101,685 - Community services and events 132,900 132,900 101,155 31,745 City attorney 800,079 692,362 581,546 110,816 City clerk and elections 621,114 621,114 576,264 44,850 Human resources 848,382 848,383 824,579 23,804 Finance 2,047,810 2,150,695 2,150,695 - Other financing uses - 2,000,000 - 2,000,000 Total general government 7,099,406 9,099,406 6,818,005 2,281,401 Public safety:

Police:

Administration 3,092,032 3,131,460 3,131,460 - Inspection and training 2,177,595 2,314,695 2,314,695 - Records 1,067,005 1,041,258 1,041,258 - Communications 2,607,096 2,637,529 2,637,529 - Patrol 16,595,587 16,362,745 16,362,745 -
Special operations unit 2,848,173 3,088,066 3,088,066 - Traffic enforcement 2,178,316 1,961,861 1,961,861 - Investigation 5,650,568 5,775,325 5,775,325 - Laboratory 955,184 1,009,196 1,009,196 - Auxillary 119,951 120,869 120,869 - Animal control 1,073,054 1,315,454 1,315,454 - Total police 38,364,561 38,758,458 38,758,458 - Fire:

Administration 2,006,857 1,936,523 1,910,400 26,123 Emergency medical services 222,300 222,301 179,394 42,907 Suppression 12,549,984 12,710,319 12,710,319 - Heartland Fire and Rescue 2,074,386 2,074,387 1,908,578 165,809 Total fire 16,853,527 16,943,530 16,708,691 234,839 Total public safety 55,218,088 55,701,988 55,467,149 234,839 (Continued)
basis combine an additional fund pursuant to GASB Statement No.54 See Notes to Required Supplementary Information on page 101.

CITY OF EL CAJON
General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance For the fiscal year ended June 30, 2021
Budgeted Amounts
1 Includes only the General Fund as defined by the City's budget. Financial statements prepared on a GAAP Budget and Actual (Budgetary Basis)
97 Actual Variance with
Original Final Amounts1 Final Budget
Public works:

Administration 502,183$ 507,941$ 507,941$ -$ Facilities maintenance 2,241,525 2,241,526 2,075,107 166,419 Engineering 1,302,043 1,302,043 1,061,668 240,375 Traffic engineering and maintenance 1,715,226 1,720,807 1,705,758 15,049 Parks 2,084,554 1,679,314 1,623,040 56,274 Street maintenance 821,662 821,662 534,627 287,035 Total public works 8,667,193 8,273,293 7,508,141 765,152 Recreation 3,216,451 3,216,451 2,871,132 345,319 Community development:

Housing 570,407 526,849 489,476 37,373 Planning 997,141 1,040,699 1,040,699 - Building and fire safety 1,007,299 1,007,299 986,407 20,892 Total community development 2,574,847 2,574,847 2,516,582 58,265 Total expenditures 76,775,985 78,865,985 75,181,009 3,684,976 Excess (deficiency) of revenues over
(under) expenditures (2,929,448) (5,019,448) 8,236,113 13,255,561

OTHER FINANCING SOURCES (USES)
Transfers in 210,277 210,277 210,372 (95) Transfers out (1,000,000) (4,235,000) (4,235,000) - Total other financing sources (uses) (789,723) (4,024,723) (4,024,628) (95) Net change in fund balance (3,719,171) (9,044,171) 4,211,485 13,255,466 Fund balance, beginning 48,802,670 48,802,670 48,802,670 -

Fund balance, ending 45,083,499$ 39,758,499$ 53,014,155$ 13,255,466$ (Concluded)
basis combine an additional fund pursuant to GASB Statement No.54 See Notes to Required Supplementary Information on page 101. 1 Includes only the General Fund as defined by the City's budget. Financial statements prepared on a GAAP For the fiscal year ended June 30, 2021
Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance General Fund
Budget and Actual (Budgetary Basis)
98 Actual Variance with
Original Final Amounts Final Budget

REVENUES
Charges for services -$ -$ 14,640$ 14,640$ Use of money and property 1 1 295,266 295,265 Other 4,715,420 4,715,420 292,211 (4,423,209) Total revenues 4,715,421 4,715,421 602,117 (4,113,304)

EXPENDITURES
Current:

Community development 7,248,587 7,248,587 974,400 15,471,574 Capital outlay 2,000 2,000 - 2,000 Total expenditures 7,250,587 7,250,587 974,400 15,473,574 Excess (deficiency) of revenues over
(under) expenditures (2,535,166) (2,535,166) (372,283) 2,162,883

OTHER FINANCING SOURCES
Sales of capital assets - - 4,750,000 4,750,000 Transfers in 303,000 303,000 - (303,000) Total other financing sources 303,000 303,000 4,750,000 4,447,000 Net change in fund balance (2,232,166) (2,232,166) 4,377,717 6,609,883 Fund balance, beginning 13,964,472 13,964,472 13,964,472 - Fund balance, ending 11,732,306$ 11,732,306$ 18,342,189$ 6,609,883$ See Notes to Required Supplementary Information on page 101.

Budgeted Amounts

CITY OF EL CAJON
Low and Moderate Income Housing Asset Major Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis)
For the fiscal year ended June 30, 2021
99 Low and
Moderate
Income
General Housing Asset
Actual revenues from budgetary basis schedules 83,417,122$ 602,117$ Differences - Budget to GAAP:

GAAP reporting entity differences:

Recreation Special Programs is not budgeted in General Fund 193,242 - Magnolia Performing Arts is not budgeted in General Fund 115,396 - Loan repayments are budgetary resources but are not revenues for financial reporting purpose - (290,877) Total revenues as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds (page 42) 83,725,760 311,240 Actual expenditures from budgetary basis schedules 75,181,009 974,400 Differences - Budget to GAAP
GAAP reporting entity differences:

Recreation Special Programs is not budgeted in General Fund 445,603 - Magnolia Performing Arts is not budgeted in General Fund 749,644 - Total expenditures as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds (page 42) 76,376,256 974,400 Actual other financing sources (uses) from budgetary basis schedules (4,024,628) 4,750,000 Differences - Budget to GAAP
GAAP reporting entity differences:

Magnolia Performing Arts is not budgeted in General Fund 1,000,000 - Total other financing sources (uses) as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds (page 42) (3,024,628) 4,750,000 Net change in fund balances as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds (page 42) 4,324,876 4,086,840 Fund balances, beginning of year (GAAP Basis) (page 42) 49,352,900 14,142,943 Fund balances, end of year (GAAP Basis) (page 42) 53,677,776$ 18,229,783$ See Notes to Required Supplementary Information on page 101.

Recreation Special Programs Fund and Magnolia Performing Arts Fund are included with the General Fund for financial reporting purposes on a GAAP basis, pursuant to GASB Statement No.54

CITY OF EL CAJON
Reconciliation of Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budgetary to GAAP Basis
For the fiscal year ended June 30, 2021
Major Governmental Funds
100

CITY OF EL CAJON
Notes to the Required Supplementary Information
Budgetary Information
For the fiscal year ended June 30, 2021

1. Budgetary control and accounting
Budgets are generally prepared on a basis consistent with generally accepted accounting principles (GAAP), with the exception of the General Fund, Low and Moderate Income Housing Asset Fund Special Revenue Fund, HOME Special Revenue Fund and Community Development Block Grant Special Revenue Fund. The differences of actual amounts presented using the budgetary basis versus GAAP basis for the major governmental funds are presented in the Reconciliation of Schedules of Revenues, Expenditures, and Change in Fund Balances - Budgetary to GAAP Basis on page 100.

The budget process includes submittal of each department's budget request for the next fiscal year, a detailed review of each department's proposed budget by the City Manager, and a final recommended budget that is transmitted to the City Council for review before the required date of adoption. Once transmitted to the City Council, the preliminary budget is made available for inspection. Prior to adoption, a budget workshop meeting is held by the City Council that includes a public hearing to give the public the opportunity to comment upon the preliminary budget. Notice of such public hearing is published in a newspaper of general circulation and the City's website.

The approval of the budget is accomplished by the adoption of a Budget Resolution by the City Council, prior to the beginning of the fiscal year. Annual budgets are adopted for all governmental funds except for the Federal, State, and Local Grants and Various Donations Special Revenue Funds and Capital Projects Funds. The Capital Projects Fund is appropriated on a project-lenth basis. The level of budgetary control is at the department level. For purposes of this requirement, each fund other than the General Fund is considered to be a separate department. The City Manager is authorized to transfer appropriations within a departmental budget. Any appropriation transfers between departments or funds require City Council approval.

Appropriations for operations lapse at year-end to the extent that they have not been expended or encumbered.

2. General Fund
The General Fund Budgetary Comparison Schedule presented on pages 96-98 is the budgetary and actual amounts as reported in the City's budget. The financial statements for the General Fund, prepared on a GAAP basis, include two funds that were considered special revenue funds prior to the implementation of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. These additional funds that are combined with the General Fund (GAAP basis) are the Recreation Special Programs and Magnolia Performing Arts funds. These two funds are budgeted as separate individual funds, but are consolidated into the General Fund for financial reporting purposes. A reconciliation of the Schedule of Revenues, Expenditures and Changes in Fund Balances from budgetary to the GAAP Basis is presented on page 100. The Combined Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance of the General Fund (GAAP Basis) and budgetary comparison schedules of the two funds are presented as Supplementary Information on pages 112-115.

3. Federal, State, and Local Grants Major Special Revenue Fund Budgetary to actual comparison schedule is not presented for the Federal, State, and Local Grants Special Revenue Fund because this fund is not budgeted annually. The fund does not have appropriated budget since the grant awards, agreements and requirements control the use of the resources and sometimes span a period of more than one fiscal year.
101
2013-14 2014-15 2015-16
Total Miscellaneous Pension Liability
Service cost 2,765,638$ 2,565,998$ 2,551,598$ Interest on total pension liability 13,910,118 14,457,238 14,844,856 Changes in benefits - - - Differences between expected and actual experience - 57,598 (1,504,597) Changes in assumptions - (3,292,566) - Benefit payments, including refunds of employee contributions (9,543,379) (10,108,043) (10,781,021) Net change in total pension liability 7,132,377 3,680,225 5,110,836 Total pension liability - beginning 188,857,112 195,989,489 199,669,714 Total Miscellaneous pension liability - ending (a) 195,989,489$ 199,669,714$ 204,780,550$ Miscellaneous Plan fiduciary net position
Contributions - employer 4,086,776$ 4,676,850$ 5,294,296$ Contributions - employee 1,273,729 1,169,243 1,142,365 Net investment income 21,642,095 3,217,684 736,004 Benefit payments (9,543,379) (10,108,043) (10,781,021) Plan to plan resource movement - 256 - Administrative expense - (162,571) (86,686) Other miscellaneous income(expense) - - - Net change in plan fiduciary net position 17,459,221 (1,206,581) (3,695,042) Plan fiduciary net position - beginning 125,984,050 143,443,271 142,236,690 Miscellaneous Plan fiduciary net position - ending (b) 143,443,271$ 142,236,690$ 138,541,648$ Net pension liability - ending (a)-(b) 52,546,218$ 57,433,024$ 66,238,902$ Miscellaneous Plan fiduciary net position as a percentage of the total pension liability (b)/(a) 73.19% 71.24% 67.65% Miscellaneous Plan covered payroll 2
14,761,877$ 14,329,579$ 14,348,523$
Net pension liability as a percentage of Miscellaneous Plan covered payroll 355.96% 400.80% 461.64%
See Note 1 of the Notes to Required Supplementary Information - Net Pension Liability on page 107. 2 Covered payroll represents the payroll on which contributions to the pension plan are based.

Measurement PeriodMeasurement Period

CITY OF EL CAJON
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios - Miscellaneous Plan for the Measurement Periods ending June 30
Last Seven Years 1
1 Historical information is required only for measurement periods for which GASB Statement No. 68 is applicable. 102
2016-17 2017-18 2018-19 2019-20
2,765,699$ 2,812,784$ 2,825,180$ 2,977,187$ 15,080,991 15,414,119 16,060,380 16,469,083 - - - - (1,052,850) (217,246) 3,530,348 294,443 11,547,296 (1,094,357) - -
(11,469,789) (12,329,214) (13,120,445) (13,959,312) 16,871,347 4,586,086 9,295,463 5,781,401 204,780,550 221,651,897 226,237,983 235,533,446 221,651,897$ 226,237,983$ 235,533,446$ 241,314,847$
5,729,154$ 5,952,503$ 7,126,866$ 7,760,121$ 1,179,611 1,148,838 1,240,802 1,221,300 15,602,402 12,639,219 10,236,329 8,085,826 (11,469,789) (12,329,214) (13,120,445) (13,959,312) - (364) 2,323 - (204,547) (232,773) (111,407) (227,661) - (442,040) 364 - 10,836,831 6,736,169 5,374,832 2,880,274 138,541,648 149,378,479 156,114,648 161,489,480 149,378,479$ 156,114,648$ 161,489,480$ 164,369,754$
72,273,418$ 70,123,335$ 74,043,966$ 76,945,093$

67.39% 69.00% 68.56% 68.11%
13,975,942$ 14,120,404$ 14,671,685$ 15,802,477$ 517.13% 496.61% 504.67% 486.92%
Measurement Period
103
2013-14 2014-15 2015-16
Total Safety Plan pension liability
Service cost 3,989,127$ 4,099,136$ 4,327,007$ Interest on total pension liability 19,271,768 20,106,901 20,881,842 Changes in benefits - - - Differences between expected and actual experience - 1,748,846 704,978 Changes in assumptions - (4,926,806) - Benefit payments, including refunds of employee contributions (13,894,694) (14,624,385) (15,165,608) Net change in total pension liability 9,366,201 6,403,692 10,748,219 Total pension liability - beginning 261,909,693 271,275,894 277,679,586 Total Safety Plan pension liability - ending (a) 271,275,894$ 277,679,586$ 288,427,805$ Safety Plan fiduciary net position
Contributions - employer 5,671,725$ 7,064,751$ 7,138,821$ Contributions - employee 1,408,399 1,452,168 1,448,543 Net investment income 28,540,504 4,131,876 913,046 Benefit payments (13,894,694) (14,624,385) (15,165,608) Plan to plan resource movement - - - Administrative expense - (209,628) (113,503) Other Miscellaneous Income/(Expense) - - - Net change in plan fiduciary net position 21,725,934 (2,185,218) (5,778,701) Plan fiduciary net position - beginning 166,698,392 188,424,326 186,239,108 Safety Plan fiduciary net position - ending (b) 188,424,326 186,239,108 180,460,407 Net pension liability - ending (a) - (b) 82,851,568$ 91,440,478$ 107,967,398$ Safety Plan fiduciary net position as a percentage
of the total pension liability (b)/(a) 69.46% 67.07% 62.57% Safety Plan covered payroll 2
14,089,384$ 15,063,157$ 15,983,328$
Net pension liability as percentage of Safety Plan covered payroll 588.04% 607.05% 675.50% See Note 1 of the Notes to Required Supplementary Information - Net Pension Liability on page 107. 2 Covered payroll represents the payroll on which contributions to the pension plan are based.

Measurement Period Measurement Period
Last Seven Years 1

CITY OF EL CAJON
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios - Safety Plan for the Measurement Periods ending June 30
1 Historical information is required only for measurement periods for which GASB Statement No. 68 is applicable. 104
2016-17 2017-18 2018-19 2019-20
4,627,095$ 4,665,299$ 4,417,341$ 4,723,268$ 21,187,689 21,939,641 22,690,389 23,341,882 - - - - (4,240,228) 2,153,863 791,993 (650,086) 17,772,474 (1,270,346) - - (15,884,588) (16,516,560) (17,029,399) (17,968,239) 23,462,442 10,971,897 10,870,324 9,446,825 288,427,805 311,890,247 322,862,144 333,732,468 311,890,247$ 322,862,144$ 333,732,468$ 343,179,293$
7,963,467$ 8,172,881$ 9,762,519$ 11,019,557$ 1,501,090 1,391,912 1,663,961 1,756,898 20,358,562 16,375,994 13,272,580 10,470,492 (15,884,588) (16,516,560) (17,029,399) (17,968,239) - (474) - - (266,438) (302,512) (144,636) (296,337) - (574,475) 474 - 13,672,093 8,546,766 7,525,499 4,982,371 180,460,407 194,132,500 202,679,266 210,204,765 194,132,500 202,679,266 210,204,765 215,187,136 117,757,747$ 120,182,878$ 123,527,703$ 127,992,157$

62.24% 62.78% 62.99% 62.70%
15,120,732$ 15,449,544$ 14,818,817$ 16,153,448$ 778.78% 777.91% 833.59% 792.35%
Measurement Period
105
Fiscal Year
Actuarially
Determined
Contribution
Contributions in
relation to the
actuarially
determined
contributions
Contributions
deficiency
(excess)
Covered
payroll 2
Contributions
as a percentage
of covered
payroll
Miscellaneous
2013-14 4,086,776$ (4,086,776)$ -$ 14,761,877$ 27.68% 2014-15 4,274,354 (4,676,850) (402,496) 14,329,579 32.64% 2015-16 5,106,525 (5,294,296) (187,771) 14,348,523 36.90% 2016-17 5,525,288 (5,729,154) (203,866) 13,975,942 40.99% 2017-18 5,952,503 (5,952,503) - 14,120,404 42.16% 2018-19 6,938,792 (7,126,866) (188,074) 14,671,685 48.58% 2019-20 7,760,121 (7,760,121) - 15,802,477 49.11% 2020-21 3
8,612,734 (55,499,867) (46,887,133) 14,508,921 382.52% Safety
2013-14 5,671,725$ (5,671,725)$ -$ 14,089,384$ 40.26% 2014-15 6,461,007 (7,064,751) (603,744) 15,063,157 46.90% 2015-16 6,886,886 (7,138,821) (251,935) 15,983,328 44.66% 2016-17 7,680,772 (7,963,467) (282,695) 15,120,732 52.67% 2017-18 8,172,881 (8,172,881) - 15,449,544 52.90% 2018-19 9,530,187 (9,762,519) (232,332) 14,818,817 65.88% 2019-20 11,019,557 (11,019,557) - 16,153,448 68.22% 2020-21 3
11,818,856 (111,393,592) (99,574,736) 18,179,616 612.74% See Note 2 of the Notes to Required Supplementary Information - Net Pension Liability on page 107. 2 Covered payroll represents the payroll on which the contributions to the pension plan are based. 3 In fiscal year 2020-21, the City issued Pension Obligation Bonds to pay down a portion of its unfunded CalPERS liability.
1 Historical information is required only for measurement periods for which GASB Statement No. 68 is applicable.

CITY OF EL CAJON
Required Supplementary Information
Schedule of Plan Contributions - Pension
Last Eight Fiscal Years 1
106

1. Notes to Schedule of Changes in the Net Pension Liability and Related Ratios Benefit changes.

Changes of assumptions.

2. Notes to Schedule of Plan Contributions for the Fiscal Years June 30:
a.
b.
c.

Actuarial cost method Entry Age Normal
Amortization method/period Details on Appendix A of the June 30, 2017 Funding Valuation Report.

Asset valuation method Fair value of assets. Details on the June 30, 2017 Funding Valuation Report.

Inflation 2.625%
Salary increases Varies by entry age and service
Payroll growth 2.875%
Investment rate of return 7.25% net of pension plan investment and administrative expenses including inflation.

Retirement age The probabilities of retirement are based on the 2017 California Public Employees' Retirement System (CalPERS) experience study for the period 1997 to 2015.

Mortality The probabilities of mortality are based on the 2017 CalPERS experience study for the period from 1997 to 2015. Pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP- 2016 published by the Society of Actuaries.

The City makes contributions equal to the actuarially determined contributions. However, the City may choose to make additional contributions towards its unfunded liability. Contributions for the plan exceed the actuarially determined contributions.

Includes one year's payroll growth using 2.75 percent payroll growth assumption for fiscal years ended June 30, 2018-20, 3.00 percent payroll growth assumption for fiscal years ended June 30, 2014-17.

The following actuarial methods and assumptions from the June 30, 2017 funding valuation report, were used to set the actuarially determined contributions for measurement period 2019-20:

CITY OF EL CAJON
Notes to Required Supplementary Information
Net Pension Liability - Miscellaneous and Safety Plans June 30, 2021
The figures above include any liability impact that may have resulted from voluntary benefit changes that occurred after the June 30, 2019 valuation. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the June 30, 2019 valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.

No changes in 2019 or 2020. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions from December 2017. There were no changes in the discount rate. For the measurement date June 30, 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, the amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense.) In 2014, the amounts reported were based on the 7.5 percent discount rate.
107
2016-17 2017-18 2018-19 2019-20
Total OPEB Liability
Service cost 78,533$ 78,533$ 233,261$ 240,400$ Interest on total OPEB liability 391,440 397,219 795,418 792,235 Differences between expected and actual experience - 54,005 (868,788) (666,003) Changes in assumptions - 718,115 520,123 - Changes in benefit terms - 4,588,311 - - Benefit payments (293,421) (308,359) (733,949) (740,805) Net change in total OPEB liability 176,552 5,527,824 (53,935) (374,173) Total OPEB liability - beginning 5,355,403 5,531,955 11,059,779 11,005,844 Total OPEB liability - ending (a) 5,531,955$ 11,059,779$ 11,005,844$ 10,631,671$ Plan fiduciary net position
Contributions - employer 949,193$ 958,359$ 1,383,949$ 940,805$ Net investment income 321,424 276,640 296,391 192,108 Benefit payments (293,421) (308,359) (733,949) (740,805) Administrative expense (1,685) (6,613) (1,063) (2,631) Net change in plan fiduciary net position 975,511 920,027 945,328 389,477 Plan fiduciary net position - beginning 2,534,777 3,510,288 4,430,315 5,375,643 Plan fiduciary net position - ending (b) 3,510,288$ 4,430,315$ 5,375,643$ 5,765,120$ Net OPEB liability - ending (a)-(b) 2,021,667$ 6,629,464$ 5,630,201$ 4,866,551$ Plan fiduciary net position as a percentage
of the total OPEB liability (b)/(a) 63.45% 40.06% 48.84% 54.23% Covered-employee payroll 2
31,664,513$ 24,276,000$ 27,922,328$ 28,690,192$ Net OPEB liability as percentage of covered-employee payroll 6.38% 27.31% 20.16% 16.96% See Notes to Required Supplementary Information - Other Postemployment Benefits on page 110. 2 Contributions to OPEB are not based on measure of pay.

CITY OF EL CAJON
1 Historical information is required only for measurement periods for which GASB Statement No.75 is applicable.

Measurement Period
Required Supplementary Information
Schedule of Changes in the Net OPEB Liability and Related Ratios for the Measurement Periods ending June 30
Last Four Years 1
108
Fiscal Year
Actuarially
Determined
Contribution
Contributions
in relation to
the actuarially
determined
contributions
Contributions
deficiency
(excess)
Covered-
employee
payroll 2
Contributions
as a percentage
of covered-
employee payroll
2016-17 398,230$ (949,193)$ (550,963)$ 24,275,515$ 3.91% 2017-18 398,230 (958,359) (560,129) 24,988,882 3.84% 2018-19 769,774 (1,383,949) (614,175) 27,922,328 4.96% 2019-20 740,805 (940,805) (200,000) 28,220,048 3.33% 2020-21 717,072 (538,575) 178,497 27,160,174 1.98% 1 Historical information is required only for measurement periods for which GASB Statement No.75 is applicable.

See Notes to Required Supplementary Information - Other Postemployment Benefits on page 110.

CITY OF EL CAJON
2 Contributions to OPEB are not based on measure of pay.

Required Supplementary Information
Schedule of Plan Contributions - OPEB
Last Five Fiscal Years 1
109
Actuarial cost method Entry Age Normal
Actuarial valuation date June 30, 2019
Measurement date June 30, 2020
Asset valuation method Market value basis
Funding policy
Expected rate of return
Discount rate
Inflation 2.50%
Payroll increases
Medical trend rates
Fiscal Year End
2021 6.00%
2022 5.50%
2023+ 5.00%
Minimum contribution
Participation rates and
spouse coverage
Pre-retirement turnover, mortality, retirement, and disability retirement rates are based on the 2017 CalPers experience study for the pension plan.
40% of eligible employees will elect medical insurance coverage and 40% of future retirees are assumed to elect spouse coverage
Medical costs in future years are adjusted by the following trends:

CITY OF EL CAJON
Notes to Required SupplementaryInformation
Other Post Employment Benefits (OPEB)
June 30, 2021
The OPEB liabilities and actuarially determined contribution were based on the following actuarial assumptions and methods:

Fund a recommended actuarially determined contribution (ADC) to fully fund the benefits over a reasonable period of time through an amortization of the net (unfunded) OPEB liability.

7.28%

7.28%. This discount rate assumes the City fully funds for its retiree beenfits through the California Employers' Retiree Benefit Trust (CERBT) under its investment allocation strategy 1. The rate reflects the CERBT published median interest rate for strategy 1.

2.75% plus merit scale. Prior valuation used a rate of 3.0% and has been updated to reflect the 2017 experience study for the CalPERS pension plan.

The CalPers minimum required contribution is assumed to increase 4% per year.
110

SUPPLEMENTARY INFORMATION
111
Recreation Magnolia
General Special Performing
Fund Programs Arts Total1
ASSETS
Cash and investments 45,406,440$ (29,387)$ 950,631$ 46,327,684$ Cash and investments with fiscal agent 2,038,034 - - 2,038,034 Receivables:

Accounts 163,736 33,136 - 196,872 Interest 234,411 - - 234,411 Intergovernmental 104,979 - - 104,979 Taxes 10,362,764 - - 10,362,764 Prepaid items 4,330 - - 4,330 Due from other funds 129,676 - - 129,676 Total assets 58,444,370$ 3,749$ 950,631$ 59,398,750$

LIABILITIES
Accounts payable 1,148,065$ 1,453$ 121,808$ 1,271,326$ Accrued liabilities 3,534,751 4,596 - 3,539,347 Deposits payable 747,399 1,968 - 749,367 Unearned revenue - 160,934 - 160,934 Total liabilities 5,430,215 168,951 121,808 5,720,974

FUND BALANCES
Nonspendable:

Prepaid items 4,330 - - 4,330 Restricted 2,038,034 - - 2,038,034 Committed 15,531,197 - - 15,531,197 Assigned:

Economic uncertainty 6,500,000 - - 6,500,000 Unfunded retirement obligations 5,961,966 - - 5,961,966 Unassigned 22,978,628 (165,202) 828,823 23,642,249 Total fund balances 53,014,155 (165,202) 828,823 53,677,776 Total liabilities and fund balances 58,444,370$ 3,749$ 950,631$ 59,398,750$

CITY OF EL CAJON
Balance Sheet
General Fund (GAAP Basis)
June 30, 2021
1 The total for General Fund (GAAP Basis) includes additional funds that do not meet the criteria to be classified as special revenue funds, pursuant to GASB Statement No. 54. This total is reported on the Balance Sheet- Governmental Funds for the General Fund (page 38).
112
Reconciliation
Recreation Magnolia to Fund
General Special Performing Financial
Fund Programs Arts Statements Total1

REVENUES
Taxes 73,449,117$ -$ -$ -$ 73,449,117$ Intergovernmental 1,168,359 9,494 - - 1,177,853 Licenses and permits 1,701,436 - - - 1,701,436 Fines and forfeitures 363,311 - - - 363,311 Special assessments 367,954 - - - 367,954 Charges for services 4,349,818 172,650 - - 4,522,468 Use of money and property 1,760,216 (3,831) 15,396 - 1,771,781 Other 256,911 14,929 100,000 - 371,840 Total revenues 83,417,122 193,242 115,396 - 83,725,760

EXPENDITURES
Current:

General government 6,818,005 - - - 6,818,005 Public safety 55,467,149 - - - 55,467,149 Public works 7,508,141 - - - 7,508,141 Recreation 2,871,132 440,590 720,085 - 4,031,807 Community development 2,516,582 - - - 2,516,582 Capital outlay - 5,013 29,559 - 34,572 Total expenditures 75,181,009 445,603 749,644 - 76,376,256 Excess (deficiency) of revenues
over (under) expenditures 8,236,113 (252,361) (634,248) - 7,349,504

OTHER FINANCING SOURCES (USES)
Transfers in 210,372 - 1,000,000 (1,000,000) 210,372 Transfers out (4,235,000) - - 1,000,000 (3,235,000) Total other financing sources (uses) (4,024,628) - 1,000,000 - (3,024,628) Net change in fund balances 4,211,485 (252,361) 365,752 - 4,324,876 Fund balances, beginning 48,802,670 87,159 463,071 - 49,352,900 Fund balances, ending 53,014,155$ (165,202)$ 828,823$ -$ 53,677,776$ 1 The total for General Fund (GAAP Basis) includes additional funds that do not meet the criteria to be classified as special revenue funds, pursuant to GASB Statement No. 54. This total is reported on the Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds for the General Fund (page 42).

For the fiscal year ended June 30, 2021

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balances General Fund (GAAP Basis)
113
Actual Amounts Variance with
Original Final Budgetary Basis Final Budget

REVENUES
Intergovernmental 7,000$ 7,000$ 9,494$ 2,494$ Charges for services 565,200 565,200 172,650 (392,550) Use of money and property 3,400 3,400 (3,831) (7,231) Other 76,000 76,000 14,929 (61,071) Total revenues 651,600 651,600 193,242 (458,358)

EXPENDITURES
Current:

Recreation 731,420 731,420 440,590 290,830 Capital outlay 6,714 6,714 5,013 1,701 Total expenditures 738,134 738,134 445,603 292,531 Excess (deficiency) of revenues over
(under) expenditures (86,534) (86,534) (252,361) (165,827) Net change in fund balance (86,534) (86,534) (252,361) (165,827) Fund balance, beginning 87,159 87,159 87,159 - Fund balance, ending 625$ 625$ (165,202)$ (165,827)$ 1 Recreation Special Programs is considered General Fund (GAAP Basis), pursuant to GASB Statement No. 54.

This fund has a legally adopted budget and as such, a budgetary comparison schedule is presented.

A reconciliation of the budgetary comparison schedule-General Fund to the Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds (GAAP Basis) is included in Required Supplementary Information on page 100.

Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Recreation Special Programs1
Budget and Actual
For the fiscal year ended June 30, 2021
114
Actual Amounts Variance with
Original Final Budgetary Basis Final Budget

REVENUES
Other -$ -$ 100,000$ 100,000$ Total revenues - - 100,000 100,000

EXPENDITURES
Current:

Recreation 508,272 923,612 704,689 218,923 Capital outlay - 29,660 29,559 101 Total expenditures 508,272 953,272 734,248 219,024 Excess (deficiency) of revenues over
(under) expenditures (508,272) (953,272) (634,248) 319,024

OTHER FINANCING SOURCES
Transfers in 1,000,000 1,000,000 1,000,000 - Total other financing sources 1,000,000 1,000,000 1,000,000 - Net change in fund balance 491,728 46,728 365,752 319,024 Fund balance, beginning 463,071 463,071 463,071 - Fund balance, ending 954,799$ 509,799$ 828,823$ 319,024$ 1 Magnolia Performing Arts is considered General Fund (GAAP Basis), pursuant to GASB Statement No. 54. This fund has a legally adopted budget and as such, a budgetary comparison schedule is presented.

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Magnolia Performing Arts1
Budget and Actual
For the fiscal year ended June 30, 2021
Budgeted Amounts
Actual amounts, on a budgetary basis, do not reflect the full revenues and expenditures of the Magnolia Performing Arts, and only present the net budgetary impact of the activities. The full revenue and expenditure amounts, pursuant to GAAP Basis, are included and presented in the General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances (GAAP Basis) on page 113.
115
Special Capital
Revenue Projects
Funds Funds Total
ASSETS
Cash and investments 6,645,258$ 18,370,031$ 25,015,289$ Receivables:

Interest 18,315 21,122 39,437 Intergovernmental 220,197 620,475 840,672 Taxes 41,837 - 41,837 Loans 11,239,008 - 11,239,008 Total assets 18,164,615$ 19,011,628$ 37,176,243$

LIABILITIES
Accounts payable 172,111$ 239,031$ 411,142$ Accrued liabilities 7,801 - 7,801 Due to other funds 123,909 5,767 129,676 Total liabilities 303,821 244,798 548,619 Deferred inflows of resources
Unavailable grant revenue 54,740 61,633 116,373 54,740 61,633 116,373

FUND BALANCES (DEFICITS)
Restricted:

Animal shelter operations 41,549 - 41,549 Animal shelter project 266,637 - 266,637 Community development 1,646,050 - 1,646,050 Loans receivable 11,181,947 - 11,181,947 Public safety 594,507 - 594,507 Public works projects 604,738 - 604,738 RTCIP impact fee - 727,074 727,074 RMRA - 2,661,639 2,661,639 Streets projects 3,470,626 - 3,470,626 Assigned:

Capital projects - 15,322,832 15,322,832 Unassigned - (6,348) (6,348) Total fund balances 17,806,054 18,705,197 36,511,251 Total liabilities, deferred inflows of
resources and fund balances 18,164,615$ 19,011,628$ 37,176,243$

CITY OF EL CAJON
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2021
116
Special Capital
Revenue Projects
Funds Funds Total

REVENUES
Taxes -$ 1,743,303$ 1,743,303$ Intergovernmental 3,894,383 2,646,674 6,541,057 Fines and forfeitures 6,961 - 6,961 Charges for services 28,100 79,997 108,097 Use of money and property 116,760 66,692 183,452 Other 52,195 147,966 200,161 Total revenues 4,098,399 4,684,632 8,783,031

EXPENDITURES
Current:

Public safety 51,946 2,606 54,552 Public works 2,703,810 1,369,514 4,073,324 Recreation - 82,456 82,456 Community development 1,839,293 - 1,839,293 Capital outlay 203,868 2,839,320 3,043,188 Capital lease:

Interest 35,372 - 35,372 Principal 197,035 - 197,035 Total expenditures 5,031,324 4,293,896 9,325,220 Excess (deficiency) of revenues
over (under) expenditures (932,925) 390,736 (542,189)

OTHER FINANCING SOURCES (USES)
Sales of capital assets 1,060,000 - 1,060,000 Transfers in - 3,663,328 3,663,328 Transfers out (519,618) (119,082) (638,700) Total other financing sources (uses) 540,382 3,544,246 4,084,628 Net change in fund balances (392,543) 3,934,982 3,542,439 Fund balances, beginning 18,198,597 14,770,215 32,968,812 Fund balances, ending 17,806,054$ 18,705,197$ 36,511,251$ For the fiscal year ended June 30, 2021

CITY OF EL CAJON
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 117

118

CITY OF EL CAJON

NONMAJOR SPECIAL REVENUE FUNDS
SPECIAL REVENUE FUNDS are used to account for specific revenue sources that are legally restricted to expenditures for specified purposes. The following are the nonmajor Special Revenue Funds used by the City:

Gas Tax
This fund accounts for gas tax revenues from the State and expen ded for construction and maintenance of City streets and street infrastructure.

Transit
This fund accounts for Transportation Development Act (TDA) Art icle 4 monies allocated by the San Diego Association of Governments (SANDAG) to be used for support of public transportation systems and aid to public transportation research and projects.

Federal/County Asset Forfeiture
This fund accounts for revenues from assets seized primarily from illegal narcotics activity to be used to supplement law enforcement activities.

Local Public Safety
This fund accounts for the allocation of the state's sales tax reve nue (Proposition 172) to be used for public safety, including sheriffs, police and fire protection.

Housing In-Lieu Fees
This fund accounts for in-lieu fees received from developers as an alternative to constructing affordable housing units. These funds will be utiliz ed by the City to support the development of affordable housing units.

State CASP
This fund accounts for fees collected with business license applications and renewals as mandated by State (Assembly Bill 1379) for the Certified Access Specialist Program (CASP).

Community Development Block Grant (CDBG)
This fund accounts for federal grants used for public services and programs and public facilities projects which benefit citizens with special needs such as seniors, people with disability and low and moderate income households.

HOME
This fund accounts for federal grants to support local affordable housing initiatives under the Home Investment Partnerships Program.

Various Donations
This fund accounts for various donations received to pay for specific functions and/or programs of the City. This fund is not budgeted annually because donations vary from year to year.
119
Federal/
County Local
Asset Public
Gas Tax Transit Forfeiture Safety
ASSETS
Cash and investments 3,523,728$ 612,526$ 158,566$ 401,282$ Receivables:

Interest 10,481 1,827 472 1,465 Intergovernmental - - - - Taxes - - - 41,837 Loans - - - - Total assets 3,534,209$ 614,353$ 159,038$ 444,584$

LIABILITIES
Accounts payable 57,476$ 9,596$ -$ 9,115$ Accrued liabilities 6,107 19 - - Due to other funds - - - - Total liabilities 63,583 9,615 - 9,115

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Total deferred inflows of resources - - - -

FUND BALANCES
Restricted:

Animal shelter operations - - - - Animal shelter project - - - - Community development - - - - Loans receivable - - - - Public safety - - 159,038 435,469 Public works projects - 604,738 - - Streets projects 3,470,626 - - - Total fund balances 3,470,626 604,738 159,038 435,469 Total liabilities, deferred inflows of
resources and fund balances 3,534,209$ 614,353$ 159,038$ 444,584$

CITY OF EL CAJON
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2021
Budgeted
120
Unbudgeted
Community
Housing Development Total Nonmajor
In-Lieu State Block Various Special Revenue
Fees CASP Grant HOME Donations Funds
312,462$ 86,772$ -$ 1,238,487$ 311,435$ 6,645,258$ 922 - - 3,148 - 18,315 - - 216,065 4,132 - 220,197 - - - - - 41,837 - - 287,807 10,951,201 - 11,239,008 313,384$ 86,772$ 503,872$ 12,196,968$ 311,435$ 18,164,615$ -$ 247$ 93,290$ 2,387$ -$ 172,111$ - - 1,187 488 - 7,801 - - 123,909 - - 123,909 - 247 218,386 2,875 - 303,821 - - - 54,740 - 54,740 - - - 54,740 - 54,740 - - - - 41,549 41,549 - - - - 266,637 266,637 313,384 86,525 - 1,242,892 3,249 1,646,050 - - 285,486 10,896,461 - 11,181,947 - - - - - 594,507 - - - - - 604,738 - - - - - 3,470,626 313,384 86,525 285,486 12,139,353 311,435 17,806,054 313,384$ 86,772$ 503,872$ 12,196,968$ 311,435$ 18,164,615$ Budgeted

CITY OF EL CAJON
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2021
121
Federal/
County Local
Asset Public
Gas Tax Transit Forfeiture Safety

REVENUES
Intergovernmental 2,297,919$ 100,314$ -$ 473,884$ Fines and forfeitures - - 6,961 - Charges for services - - - - Use of money and property (9,816) 197 (768) (1,017) Other - - - 50,000 Total revenues 2,288,103 100,511 6,193 522,867

EXPENDITURES
Current:

Public safety - - 36,021 15,925 Public works 2,623,250 80,560 - - Community development - - - - Capital outlay - - - 203,868 Capital lease
Interest - - - 35,372 Principal - - - 197,035 Total expenditures 2,623,250 80,560 36,021 452,200 Excess (deficiency) of revenues over
(under) expenditures (335,147) 19,951 (29,828) 70,667

OTHER FINANCING SOURCES (USES)
Sales of capital assets - - - - Transfers out (79,691) - - (160,000) Total other financing (uses) (79,691) - - (160,000) Net change in fund balances (414,838) 19,951 (29,828) (89,333) Fund balances, beginning 3,885,464 584,787 188,866 524,802 Fund balances, ending 3,470,626$ 604,738$ 159,038$ 435,469$

CITY OF EL CAJON
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds
For the fiscal year ended June 30, 2021
Budgeted
122
Unbudgeted
Community
Housing Development Total Nonmajor
In-Lieu State Block Various Special Revenue
Fees CASP Grant HOME Donations Funds
-$ -$ 929,379$ 92,887$ -$ 3,894,383$ - - - - - 6,961 - 28,100 - - - 28,100 (25) - - 128,189 - 116,760 - - - 2,195 - 52,195 (25) 28,100 929,379 223,271 - 4,098,399 - - - - - 51,946 - - - - - 2,703,810 - 6,808 1,730,627 101,858 - 1,839,293 - - - - - 203,868 - - - - - 35,372 - - - - - 197,035 - 6,808 1,730,627 101,858 - 5,031,324 (25) 21,292 (801,248) 121,413 - (932,925) - - 1,060,000 - - 1,060,000 - (1,264) (278,663) - - (519,618) - (1,264) 781,337 - - 540,382 (25) 20,028 (19,911) 121,413 - (392,543) 313,409 66,497 305,397 12,017,940 311,435 18,198,597 313,384$ 86,525$ 285,486$ 12,139,353$ 311,435$ 17,806,054$ Budgeted

CITY OF EL CAJON
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds
For the fiscal year ended June 30, 2021
123
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental 2,659,466$ 2,659,466$ 2,297,919$ (361,547)$ Use of money and property - - (9,816) (9,816) Total revenues 2,659,466 2,659,466 2,288,103 (371,363)

EXPENDITURES
Current:

Public works 2,985,787 2,985,787 2,623,250 362,537 Capital outlay 45,200 45,200 - 45,200 Total expenditures 3,030,987 3,030,987 2,623,250 407,737 Deficiency of revenues (under)
expenditures (371,521) (371,521) (335,147) 36,374 OTHER FINANCING SOURCES (USES):

Transfers out (264,500) (264,500) (79,691) 184,809 Total other financing sources (uses) (264,500) (264,500) (79,691) 184,809 Net change in fund balance (636,021) (636,021) (414,838) 221,183 Fund balance, beginning 3,885,464 3,885,464 3,885,464 - Fund balance, ending 3,249,443$ 3,249,443$ 3,470,626$ 221,183$ Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Gas Tax Special Revenue Fund
Budget and Actual
For the fiscal year ended June 30, 2021
124
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental 97,392$ 97,392$ 100,314$ 2,922$ Use of money and property - - 197 197 Total revenues 97,392 97,392 100,511 3,119

EXPENDITURES
Current:

Public works 106,575 106,575 80,560 26,015 Capital outlay - - - - Total expenditures 106,575 106,575 80,560 26,015 Excess (deficiency) of revenues over
(under) expenditures (9,183) (9,183) 19,951 29,134 Net change in fund balance (9,183) (9,183) 19,951 29,134 Fund balance, beginning 584,787 584,787 584,787 - Fund balance, ending 575,604$ 575,604$ 604,738$ 29,134$ Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Transit Special Revenue Fund
Budget and Actual
For the fiscal year ended June 30, 2021
125
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Fines and forfeitures 31,000$ 31,000$ 6,961$ (24,039)$ Use of money and property 1,000 1,000 (768) (1,768) Total revenues 32,000 32,000 6,193 (25,807)

EXPENDITURES
Current:

Public safety 67,850 67,850 36,021 31,829 Total expenditures 67,850 67,850 36,021 31,829 Deficiency of revenues (under)
expenditures (35,850) (35,850) (29,828) 6,022 Net change in fund balance (35,850) (35,850) (29,828) 6,022 Fund balance, beginning 188,866 188,866 188,866 - Fund balance, ending 153,016$ 153,016$ 159,038$ 6,022$ Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Federal/County Asset Forfeiture Special Revenue Fund
Budget and Actual
For the fiscal year ended June 30, 2021
126
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Intergovernmental 408,800$ 408,800$ 473,884$ 65,084$ Use of money and property - - (1,017) (1,017) Other - - 50,000 50,000 Total revenues 408,800 408,800 522,867 114,067

EXPENDITURES
Current:

Public safety 37,500 37,500 15,925 21,575 Capital outlay 211,500 251,500 203,868 47,632 Debt Service:

Interest 35,517 35,517 35,372 145 Principal 196,890 196,890 197,035 (145) Total expenditures 481,407 521,407 452,200 69,207 Excess of revenues over expenditures (72,607) (112,607) 70,667 183,274

OTHER FINANCING SOURCES (USES)
Transfers out (160,000) (160,000) (160,000) - Total other financing sources (uses) (160,000) (160,000) (160,000) - Net change in fund balance (232,607) (272,607) (89,333) 183,274 Fund balance, beginning 524,802 524,802 524,802 - Fund balance, ending 292,195$ 252,195$ 435,469$ 183,274$ Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Local Public Safety Special Revenue Fund
Budget and Actual
For the fiscal year ended June 30, 2021
127
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Use of money and property -$ -$ (25)$ (25)$ Total revenues - - (25) (25)

OTHER FINANCING SOURCES (USES)
Transfers out (303,000) (303,000) - 303,000 Total other financing sources (303,000) (303,000) - 303,000 Net change in fund balance (303,000) (303,000) (25) 302,975 Fund balance, beginning 313,409 313,409 313,409 - Fund balance, ending 10,409$ 10,409$ 313,384$ 302,975$ Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Housing In-Lieu Fees Special Revenue Fund
Budget and Actual
For the fiscal year ended June 30, 2021
128
Actual Variance with
Original Final Amounts Final Budget

REVENUES
Charges for services 26,000$ 26,000$ 28,100$ 2,100$ Total revenues 26,000 26,000 28,100 2,100

EXPENDITURES
Current:

Community development 26,740 26,740 6,808 19,932 Total expenditures 26,740 26,740 6,808 19,932 Excess of revenues over expenditures (740) (740) 21,292 22,032

OTHER FINANCING SOURCES (USES)
Transfers out (1,170) (1,170) (1,264) (94) Total other financing sources (uses) (1,170) (1,170) (1,264) (94) Net change in fund balance (1,910) (1,910) 20,028 21,938 Fund balance, beginning 66,497 66,497 66,497 - Fund balance, ending 64,587$ 64,587$ 86,525$ 21,938$ Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance State Certified Access Specialist Program (CASP) Special Revenue Fund Budget and Actual
For the fiscal year ended June 30, 2021
129
Actual Amounts Variance with
Original Final Budgetary Basis Final Budget

REVENUES
Intergovernmental 2,373,747$ 4,408,950$ 929,379$ (3,479,571)$ Total revenues 2,373,747 4,408,950 929,379 (3,479,571)

EXPENDITURES
Current:

Community development 1,549,640 3,089,700 1,730,627 1,359,073 Total expenditures 1,549,640 3,089,700 1,730,627 1,359,073 Excess (deficiency) of revenues over
(under) expenditures 824,107 1,319,250 (801,248) (2,120,498)

OTHER FINANCING SOURCES (USES)
Sale of capital assets - - 1,060,000 1,060,000 Transfers out (824,107) (2,054,859) (278,663) 1,776,196 Total other financing sources (824,107) (2,054,859) 781,337 2,836,196 Net change in fund balance - (735,609) (19,911) 715,698 Fund balance, beginning 305,397 305,397 305,397 - Fund balance, ending 305,397$ (430,212)$ 285,486$ 715,698$ 1 Actual amounts presented reflect the full revenues and expenditures of the Community Development Block Grant Fund on a budgetary basis that include both loan repayments and disbursements. Pursuant to GAAP basis, these amounts are considered an increase or reduction in the loan receivable as presented in the Combining Statement of Revenues, Expenditures and Changes in Fund Balances (GAAP Basis) for Nonmajor Special Revenue Funds on pages 122 and 123.

Budgeted Amounts

CITY OF EL CAJON
Schedule of Revenues, Expenditures and Changes in Fund Balance Community Development Block Grant (CDBG) Special Revenue Fund 1 Budget and Actual
For the fiscal year ended June 30, 2021
130
Actual Amounts Variance with
Original Final Budgetary Basis Final Budget

REVENUES
Intergovernmental 646,351$ 646,351$ 92,888$ (553,463)$ Use of money and property - - 128,189 128,189 Other - - 544,120 544,120 Total revenues 646,351 646,351 765,197 118,846

EXPENDITURES
Current:

Community development 646,351 646,351 66,398 579,953 Total expenditures 646,351 646,351 66,398 579,953 Excess (deficiency) of revenues over
(under) expenditures - - 698,799 698,799 Net change in fund balance - - 698,799 698,799 Fund balance, beginning 12,017,940 12,017,940 12,017,940 - Fund balance, ending 12,017,940$ 12,017,940$ 12,716,739$ 698,799$ 1 Actual amounts presented reflect the full revenues and expenditures of the HOME Fund on a budgetary basis that include both loan repayments and disbursements. Pursuant to GAAP basis, these amounts are considered an increase or reduction in the loan receivable as presented in the Combining Statement of Revenues, Expenditures and Changes in Fund Balances (GAAP Basis) for Nonmajor Special Revenue Funds on pages 122 and 123.

CITY OF EL CAJON
HOME Special Revenue Fund 1
Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual
For the fiscal year ended June 30, 2021
Budgeted Amounts
131

132

CITY OF EL CAJON

NONMAJOR CAPITAL PROJECTS FUNDS
CAPITAL PROJECTS FUNDS are used to account for financial resources to be used for the acquisition, construction and preservation of majo r capital facilities, infrastructure, and equipment, other than those financed by proprietary funds assets.

Appropriations in the capital project funds are entirely project based, as opposed to fiscal year based. Once approved by City Council, the project’s scope an d budget remain in effect until the project is completed or cancelled. Since annual b udgets are not adopted for the capital project funds, budgetary comparison schedules a re not presented because comparison of the budgetary amounts to actual revenues a nd expenditures is not meaningful.

The following are the nonmajor Capital Project Funds used by the City:

City Capital Improvement Program
This fund is used to account for the acquisition, construction, and preservation of City- owned facilities and other capital assets.

Parks and Recreation Improvement Grants
This fund is used to account for state grants to repair and improve City recreational facilities.

Parks Impact Fees
This fund is used to account for City parks and recreational improvements financed with park impact fees.

Public Works Transportation Projects
This fund accounts for research, planning, construction, improve ment, maintenance, and operation of public streets, highways, and their related publi c facilities for traffic funded with TransNet (half-percent special sales tax), Specific Street Ob ligations, Gas Tax, Highway Safety Grants, and other transportation related funding.

Public Safety Facilities
This fund was established to account for the proceeds resulting from the half-cent sales tax increase for ten years authorized by Proposition O, as approved by votes in November 2004. Expenditures in this fund are restricted for the construction of new public safety facilities including an animal shelter, as well as upgrades to existing fire facilities.
133
Parks and
City Capital Recreation Parks Public Works
Improvement Improvement Impact Transportation
Program Grants Fees Projects
ASSETS
Cash and investments 10,444,840$ -$ 137,914$ 4,036,430$ Receivables:

Interest - - 407 9,665 Intergovernmental - - - 620,475 Total assets 10,444,840$ -$ 138,321$ 4,666,570$

LIABILITIES
Accounts payable 21,645$ 581$ -$ 216,805$ Due to other funds - 5,767 - - Total liabilities 21,645 6,348 - 216,805

DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - - - 61,633 Total deferred inflows of resources - - - 61,633

FUND BALANCES (DEFICITS)
Restricted:

RTCIP impact fee - - - 727,074 RMRA - - - 2,661,639 Assigned:

Capital projects 10,423,195 - 138,321 999,419 Unassigned - (6,348) - - Total fund balances 10,423,195 (6,348) 138,321 4,388,132 Total liabilities, deferred inflows of
resources and fund balances 10,444,840$ -$ 138,321$ 4,666,570$

CITY OF EL CAJON
Combining Balance Sheet
Nonmajor Capital Projects Funds
June 30, 2021
134
Total
Public Safety Nonmajor
Facilities Capital Projects
Projects Funds
3,750,847$ 18,370,031$
11,050 21,122
- 620,475
3,761,897$ 19,011,628$
-$ 239,031$
- 5,767
- 244,798
- 61,633
- 61,633
- 727,074
- 2,661,639
3,761,897 15,322,832
- (6,348)
3,761,897 18,705,197
3,761,897$ 19,011,628$
135
Parks and
City Capital Recreation Parks Public Works
Improvement Improvement Impact Transportation
Program Grants Fees Projects

REVENUES
Taxes -$ -$ 11,295$ 1,726,150$ Intergovernmental - - - 2,646,674 Charges for services - - - 79,997 Use of money and property 69,630 - 3 539 Other - - - 147,966 Total revenues 69,630 - 11,298 4,601,326

EXPENDITURES
Current:

Public safety - - - - Public works 119,015 - - 1,250,499 Recreation - 82,456 - - Capital outlay 79,721 222,463 21,105 2,369,618 Total expenditures 198,736 304,919 21,105 3,620,117 Excess (deficiency) of revenues over
(under) expenditures (129,106) (304,919) (9,807) 981,209

OTHER FINANCING SOURCES (USES)
Transfers in 3,235,000 336,781 - 91,547 Transfers out (119,082) - - - Total other financing sources (uses) 3,115,918 336,781 - 91,547 Net change in fund balances 2,986,812 31,862 (9,807) 1,072,756 Fund balances (deficits), beginning 7,436,383 (38,210) 148,128 3,315,376 Fund balances (deficits), ending 10,423,195$ (6,348)$ 138,321$ 4,388,132$

CITY OF EL CAJON
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances (Deficit)
Nonmajor Capital Projects Funds
For the fiscal year ended June 30, 2021
136
Total
Nonmajor
Public Safety Capital
Facilities Projects
Projects Funds
5,858$ 1,743,303$
- 2,646,674
- 79,997
(3,480) 66,692
- 147,966
2,378 4,684,632
2,606 2,606
- 1,369,514
- 82,456
146,413 2,839,320
149,019 4,293,896
(146,641) 390,736
- 3,663,328
- (119,082)
- 3,544,246
(146,641) 3,934,982
3,908,538 14,770,215
3,761,897$ 18,705,197$
137

138

CITY OF EL CAJON

INTERNAL SERVICE FUNDS
INTERNAL SERVICE FUNDS are used to account for financing of goods or services provided by one fund, or department, to other funds, or departments, on a cost-reimbursement basis.

Vehicle Maintenance
This fund accounts for maintenance and operating expenses of t he City's automotive and equipment fleets.

Vehicle and Equipment Replacement
This fund accounts for the replacement of the City's automoti ve and equipment fleets.

Self Insurance
This fund accounts for liability insurance premiums, payment of cl aims and to establish reserves against future claims.

Information Technology Services
This fund accounts for the City's information technology servi ces and replacement of equipment.

Other Post-Employment Benefits
This fund accounts for post-employment benefits of the City in cluding annual required healthcare contributions and terminal conversions o f vacation and sick time.
139
Vehicle and
Vehicle Equipment Self
Maintenance Replacement Insurance
ASSETS
Current assets:

Cash and investments 1,068,899$ 4,373,706$ 7,051,890$ Cash and investments, restricted - - 82,646 Total current assets 1,068,899 4,373,706 7,134,536 Noncurrent assets:

Capital assets, being depreciated net:

Machinery and equipment - 25,219 - Vehicles 26,916 2,859,925 -
Total noncurrent assets 26,916 2,885,144 - Total assets 1,095,815 7,258,850 7,134,536

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions 1,709,042 - 569,681 Deferred outflows related OPEB 20,430 - 3,597 Total deferred outflows of resources 1,729,472 - 573,278

LIABILITIES
Current liabilities:

Accounts payable 81,752 - 15,165 Accrued interest payable 15,160 - 5,053 Accrued liabilities 3,820 - 1,267 Claims payable - Due within one year - - 500,000 Compensated absences - Due within one year 47,496 - - Bonds payable - Due within one year 47,250 - 15,750 Total current liabilities 195,478 - 537,235 Noncurrent liabilities:

Claims payable - Due in more than one year - - 2,956,000 Compensated absences - Due in more than one year 29,379 - - Bonds payable 1,375,800 - 458,600 Net pension liability 2,222,381 - 587,862 Net OPEB liability 85,373 - 17,670 Total noncurrent liabilities 3,712,933 - 4,020,132 Total liabilities 3,908,411 - 4,557,367

DEFERRED INFLOWS OF RESOURCES
Deferred inflows related OPEB 17,374 - 3,059 Total deferred inflows of resources 17,374 - 3,059

NET POSITION
Net investment in capital assets 26,916 2,885,144 - Unrestricted (deficit) (1,127,414) 4,373,706 3,147,388 Total net position (1,100,498)$ 7,258,850$ 3,147,388$

CITY OF EL CAJON
Combining Statement of Net Position
Internal Service Funds
June 30, 2021
140
Information Other Post
Technology Employment
Services Benefits Total
2,584,471$ 705,531$ 15,784,497$
- - 82,646 2,584,471 705,531 15,867,143
368,653 - 393,872 - - 2,886,841 368,653 - 3,280,713 2,953,124 705,531 19,147,856
2,278,722 - 4,557,445 23,021 - 47,048 2,301,743 - 4,604,493 71,254 2,100 170,271
20,214 - 40,427 5,607 - 10,694 - - 500,000 66,362 - 113,858 63,000 - 126,000 226,437 2,100 961,250
- - 2,956,000 139,067 - 168,446 1,834,400 - 3,668,800 711,677 - 3,521,920 73,916 - 176,959 2,759,060 - 10,492,125 2,985,497 2,100 11,453,375 19,577 - 40,010 19,577 - 40,010 368,653 - 3,280,713 1,881,140 703,431 8,978,251
2,249,793$ 703,431$ 12,258,964$
141
Vehicle and
Vehicle Equipment Self
Maintenance Replacement Insurance
Operating revenues:

Charges for services 2,200,000$ -$ 3,585,151$ Total operating revenues 2,200,000 - 3,585,151 Operating expenses:

Salaries and benefits 746,872 - 222,100 Materials, services and supplies 1,280,352 32,959 436,042 Insurance claims/premiums 4,202 - 1,769,129 Depreciation 14,180 719,099 - Total operating expenses 2,045,606 752,058 2,427,271 Operating income (loss) 154,394 (752,058) 1,157,880 Nonoperating revenues (expenses):

Other revenues - - 1,083 Interest expense and fiscal charges (21,380) - (7,127) Total nonoperating revenues (expenses) (21,380) - (6,044) Change in net position 133,014 (752,058) 1,151,836 Net position (deficit), beginning (1,233,512) 8,010,908 1,995,552 Net position (deficit), ending (1,100,498)$ 7,258,850$ 3,147,388$

CITY OF EL CAJON
Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds
For the fiscal year ended June 30, 2021
142
Information Other Post
Technology Employment
Services Benefits Total
3,156,695$ 884,906$ 9,826,752$
3,156,695 884,906 9,826,752
1,178,160 1,069,428 3,216,560
2,148,767 2,500 3,900,620
- - 1,773,331 108,039 - 841,318 3,434,966 1,071,928 9,731,829
(278,271) (187,022) 94,923
3,607 - 4,690 (28,507) - (57,014) (24,900) - (52,324) (303,171) (187,022) 42,599
2,552,964 890,453 12,216,365
2,249,793$ 703,431$ 12,258,964$
143
Vehicle and
Vehicle Equipment Self
Maintenance Replacement Insurance

CASH FLOW FROM OPERATING ACTIVITIES
Receipts from interfund charges 2,200,000$ -$ 3,590,485$ Payments to suppliers (1,263,302) (32,959) (2,288,534) Payments to employees (2,116,070) - (985,506) Net cash provided by (used for) operating activities (1,179,372) (32,959) 316,445 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Proceeds from pension obligation bonds 1,423,050 - 474,350 Payments for bond issuance cost on long-term debt (6,220) - (2,073) Net cash provided by noncapital financing activities 1,416,830 - 472,277

CASH FLOWS FROM CAPITAL AND RELATED FINANCING

ACTIVITIES
Acquisitions of vehicles and equipment - (307,321) - Net cash (used for) capital and related financing activities - (307,321) - Net increase (decrease) in cash and cash equivalents 237,458 (340,280) 788,722 Cash and cash equivalents, beginning 831,441 4,713,986 6,345,814 Cash and cash equivalents, ending 1,068,899$ 4,373,706$ 7,134,536$ - - -
Reconciliation of cash and cash equivalents at end of year to the Statement of Net Position:

Cash and investments 1,068,899$ 4,373,706$ 7,051,890$ Cash and investments, restricted - - 82,646 Total cash and cash equivalents at end of year 1,068,899$ 4,373,706$ 7,134,536$ Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:

Operating income (loss) 154,394$ (752,058)$ 1,157,880$ Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:

Depreciation expense 14,180 719,099 - Other nonoperating revenue - - 1,083 Pension related adjustments (1,366,326) - (455,443) OPEB related adjustments (4,673) (824)
Decrease in accounts receivable - - 4,252 Increase (decrease) in accounts payable 21,252 - (76,941) (Decrease) in accrued liabilities (11,979) - (4,562) (Decrease) in claims payable - - (309,000) Increase in compensated absences payable 13,780 - - Total adjustments (1,333,766) 719,099 (841,435) Net cash provided by (used for) operating activities (1,179,372)$ (32,959)$ 316,445$

CITY OF EL CAJON
Combining Statement of Cash Flows
Internal Service Funds
For the fiscal year ended June 30, 2021
144
Information Other Post
Technology Employment
Services Benefits Total
3,160,303$ 884,906$ 9,835,694$
(2,165,246) (400) (5,750,441) (2,991,632) (1,069,428) (7,162,636)
(1,996,575) (184,922) (3,077,383)
1,897,400 - 3,794,800
(8,294) - (16,587) 1,889,106 - 3,778,213
(294,569) - (601,890) (294,569) - (601,890) (402,038) (184,922) 98,940
2,986,509 890,453 15,768,203
2,584,471$ 705,531$ 15,867,143$
- -
2,584,471$ 705,531$ 15,784,497$
- - 82,646 2,584,471$ 705,531$ 15,867,143$
(278,271)$ (187,022)$ 94,923$
108,039 - 841,318
3,607 - 4,690
(1,821,767) - (3,643,536) (5,266) (10,763)
- - 4,252 (16,479) 2,100 (70,068)
(24,307) - (40,848) - - (309,000) 37,869 - 51,649
(1,718,304) 2,100 (3,172,306)
(1,996,575)$ (184,922)$ (3,077,383)$
145

146

CITY OF EL CAJON

FIDUCIARY FUNDS - CUSTODIAL FUNDS
FIDUCIARY FUNDS - Custodial Funds are used to account for assets held by the City in a purely custodial capacity for other governments, agencies, or individuals.

Special Assessments
This fund accounts for the special assessments levied and collected for the Downtown El Cajon Business Improvement District and for the delinquent re fuse service fees liened, assessed, and collected for Waste Management.

Heartland Communications Facility Authority
This fund accounts for activities to provide emergency call recei ving and dispatching services to participating agencies.

Heartland Fire Training Authority
This fund accounts for activities of the fire-fighting trainin g facility and training courses for personnel of the member agencies.
147
Heartland Heartland
Special Communications Fire Training
Assessments Facility Authority Authority Total
ASSETS
Cash and investments 96,063$ 4,607,416$ 1,231,908$ 5,935,387$ Receivables:

Accounts 7,420 163,994 5,047 176,461 Intergovernmental - 612,301 825 613,126 Interest - 13,653 3,564 17,217 Prepaid expenses - 150,820 - 150,820 Total assets 103,483 5,548,184 1,241,344 6,893,011

LIABILITIES
Accounts payable and other liabilities - 660,277 20,505 680,782 Due to other agencies 103,483 - - 103,483 Total liabilities 103,483 660,277 20,505 784,265

NET POSITION
Restricted for:

Organizations and other agencies - 4,887,907 1,220,839 6,108,746 Total net position -$ 4,887,907$ 1,220,839$ 6,108,746$

CITY OF EL CAJON
Combining Statement of Fiduciary Net Position
Fiduciary Funds - Custodial Funds
June 30, 2021
148
Heartland Heartland
Special Communications Fire Training
Assessments Facility Authority Authority Total

ADDITIONS
Contributions
Other agencies -$ 3,613,435$ 346,820$ 3,960,255$ Participants - - 103,353 103,353 Investment earnings - 9,506 (610) 8,896 Assessment collections for other agencies 535,696 - - 535,696 Miscellaneous - 11,063 9,744 20,807 Total additons 535,696 3,634,004 459,307 4,629,007

DEDUCTIONS
Payments of assessments to other agencies 536,300 - - 536,300 Program/project expenses - 3,289,841 380,252 3,670,093 Total deductions 536,300 3,289,841 380,252 4,206,393 Net change in fiduciary net position (604) 344,163 79,055 422,614 Net position, beginning 604 4,543,744 1,141,784 5,686,132 Net position, ending -$ 4,887,907$ 1,220,839$ 6,108,746$

CITY OF EL CAJON
Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds - Custodial Funds
For the fiscal year ended June 30, 2021
149

150

STATISTICAL SECTION
151

STATISTICAL SECTION
The Statistical Section presents detailed information as a conte xt for understanding what the information in the financial statements, note disclosures, a nd required supplementary information say about the City's overall financial health.

Financial Trends (Pages 153-157)
These schedules contain trend information to help the reader un derstand how the City's financial performance and well-being have changed over time.

Revenue Capacity (Pages 158-164)
These schedules contain information to help the reader assess the Ci ty's most significant local revenue source, the property tax.

Debt Capacity (Pages 165-168)
These schedules present information to help the reader assess the a ffordability of the City's current levels of outstanding debt and the City's abil ity to issue additional debt in the future.

Demographic and Economic Information (Pages 169-170)
These schedules offer demographic and economic indicators to he lp the reader understand the environment within which the City's financial a ctivities take place.

Operating Information (Pages 171-174)
These schedules contain service and infrastructure data to help t he reader understand how the information in the City's financial statements relate s to the services the City provides and the activities it performs.
152
2012 (a) 2013 2014 2015 (b) 2016 2017 2018 2019 2020 2021 Governmental activities
Net investment in capital assets 187,945,040$ 193,537,908$ 210,077,278$ 214,159,409$ 218,963,053$ 217,482,744$ 224,144,319$ 229,501,003$ 225,818,278$ 216,346,514$ Restricted 58,728,019 59,087,555 61,853,603 65,833,008 58,121,515 57,960,163 50,168,314 50,726,336 37,057,587 42,836,002 Unrestricted 20,608,443 28,212,027 30,515,904 (104,296,561) (94,443,051) (91,791,772) (97,584,297) (110,074,824) (107,090,485) (107,845,573) Total governmental activities net position 267,281,502$ 280,837,490$ 302,446,785$ 175,695,856$ 182,641,517$ 183,651,135$ 176,728,336$ 170,152,515$ 155,785,380$ 151,336,943$ Business-type activities
Net investment in capital assets 37,954,007$ 37,072,743$ 46,121,178$ 38,577,875$ 36,498,175$ 38,505,588$ 43,106,240$ 41,234,527$ 48,223,010$ 47,925,951$ Restricted - - - 261,645 231,764 264,273 357,552 592,205 592,205 592,205 Unrestricted 19,536,586 18,044,303 6,881,080 14,669,740 21,239,228 19,898,344 18,826,347 22,430,175 17,932,192 20,059,488 Total business-type activities net position 57,490,593$ 55,117,046$ 53,002,258$ 53,509,260$ 57,969,167$ 58,668,205$ 62,290,139$ 64,256,907$ 66,747,407$ 68,577,644$ Primary government
Net investment in capital assets 225,899,047$ 230,610,651$ 256,198,456$ 252,737,284$ 255,461,228$ 255,988,332$ 267,250,559$ 270,735,530$ 274,041,288$ 264,272,465$ Restricted 58,728,019 59,087,555 61,853,603 66,094,653 58,353,279 58,224,436 50,525,866 51,318,541 37,649,792 43,428,207 Unrestricted 40,145,029 46,256,330 37,396,984 (89,626,821) (73,203,823) (71,893,428) (78,757,950) (87,644,649) (89,158,293) (87,786,085) Total primary government net position 324,772,095$ 335,954,536$ 355,449,043$ 229,205,116$ 240,610,684$ 242,319,340$ 239,018,475$ 234,409,422$ 222,532,787$ 219,914,587$ Source: City of El Cajon - Finance Department
Notes:
(b) The City implemented GASB Statement 68 in fiscal year 2015, which had a significant effect on the unrestricted fund balance. (a) The El Cajon Redevelopment Agency was dissolved as of February 1, 2012. The former redevelopment agency's assets, liabilities, and net position were transferred to the Successor Agency Trust Fund

CITY OF EL CAJON
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
153
2012 (a) 2013 2014 2015 2016 2017 2018 2019 2020 2021
Expenses
Governmental activities:

General government 7,696,562$ 9,148,684$ 11,388,403$ 9,344,953$ 8,606,868$ 9,205,742$ 8,375,482$ 8,118,423$ 8,360,591$ 8,411,073$ Public safety 38,633,076 40,578,344 42,919,265 45,235,084 47,292,321 52,741,903 58,123,097 64,202,864 66,478,760 63,835,598 Public works 11,680,268 12,281,575 10,796,564 10,806,104 10,984,725 13,175,937 14,984,088 17,520,996 18,208,412 18,905,842 Recreation 4,697,831 4,622,822 4,958,144 5,526,542 5,526,453 3,242,986 4,916,098 4,602,764 7,294,395 4,900,145 Community development 8,972,209 4,669,220 2,665,013 2,906,824 3,501,648 3,089,380 4,223,953 4,337,787 4,761,873 9,329,987 Interest on long-term debt 2,910,351 987,165 792,604 483,777 174,542 55,909 50,652 43,072 37,833 1,499,559 Total governmental activities expenses 74,590,297 72,287,810 73,519,993 74,303,284 76,086,557 81,511,857 90,673,370 98,825,906 105,141,864 106,882,204 Business-type activities:

Wastewater 16,398,495 17,710,456 17,378,120 15,867,424 16,700,356 19,429,363 17,389,328 20,017,217 23,790,188 21,948,424 Total business-type activities expenses 16,398,495 17,710,456 17,378,120 15,867,424 16,700,356 19,429,363 17,389,328 20,017,217 23,790,188 21,948,424 Total primary government expenses 90,988,792$ 89,998,266$ 90,898,113$ 90,170,708$ 92,786,913$ 100,941,220$ 108,062,698$ 118,843,123$ 128,932,052$ 128,830,628$ Program Revenues
Governmental activities:

Charges for services:

General government 1,175,685$ 2,229,570$ 2,416,175$ 1,523,652$ 1,824,092$ 1,653,820$ 2,319,957$ 2,474,624$ 2,889,061$ 3,222,477$ Public safety 4,758,621 4,145,824 4,956,285 4,580,713 3,829,943 1,714,929 2,018,135 2,203,829 2,591,701 2,181,275 Public works 1,303,160 1,184,869 1,270,454 1,067,571 1,198,740 1,145,382 1,728,558 1,541,113 1,411,722 1,473,685 Recreation 677,070 696,275 1,153,051 992,221 843,635 823,711 679,813 667,450 2,683,986 265,879 Community development 1,128,417 2,166,733 332,193 1,540,318 1,962,232 1,417,215 1,864,899 3,339,544 2,237,967 8,122,977 Operating grants and contributions 9,264,974 6,811,610 6,717,307 6,970,968 6,049,885 6,478,047 7,581,512 6,878,948 6,353,384 8,890,194 Capital grants and contributions 9,396,184 16,162,285 23,453,340 14,847,109 7,468,431 5,625,620 3,819,611 6,755,129 3,966,957 4,650,549 Total governmental activities revenues 27,704,111 33,397,166 40,298,805 31,522,552 23,176,958 18,858,724 20,012,485 23,860,637 22,134,778 28,807,036 Business-type activities:

Wastewater
Charges for services 13,382,226 15,369,359 15,363,078 20,341,567 19,577,156 19,903,017 20,395,530 21,060,708 21,351,388 24,087,595 Total business-type activities revenues 13,382,226 15,369,359 15,363,078 20,341,567 19,577,156 19,903,017 20,395,530 21,060,708 21,351,388 24,087,595 Total primary government revenues 41,086,337$ 48,766,525$ 55,661,883$ 51,864,119$ 42,754,114$ 38,761,741$ 40,408,015$ 44,921,345$ 43,486,166$ 52,894,631$ (Continued)
Fiscal Year

CITY OF EL CAJON
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
154
2012 (a) 2013 2014 2015 2016 2017 2018 2019 2020 2021
Fiscal Year

CITY OF EL CAJON
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Net (expense)/revenue
Governmental activities (46,886,186)$ (38,890,644)$ (33,221,188)$ (42,780,732)$ (52,909,599)$ (62,653,133)$ (70,660,885)$ (74,965,269)$ (83,007,086)$ (78,075,168)$ Business-type activities (3,016,269) (2,341,097) (2,015,042) 4,474,143 2,876,800 473,654 3,006,202 1,043,491 (2,438,800) 2,139,171 Total primary government net expense (49,902,455)$ (41,231,741)$ (35,236,230)$ (38,306,589)$ (50,032,799)$ (62,179,479)$ (67,654,683)$ (73,921,778)$ (85,445,886)$ (75,935,997)$ General Revenues and Changes in Net Position
Governmental activities:

Taxes
Property taxes 27,082,113$ 20,468,597$ 21,692,259$ 21,360,064$ 21,396,116$ 17,575,902$ 18,709,738$ 20,147,423$ 20,964,049$ 22,102,541$ Sales taxes 22,466,903 24,328,310 25,367,434 26,056,239 29,493,906 37,559,282 37,163,462 37,055,679 35,936,128 42,005,039 Franchise taxes 4,721,291 4,767,474 4,791,459 5,044,461 5,196,514 5,148,007 5,311,723 5,511,422 5,947,736 6,388,777 Transient lodging taxes 1,046,237 1,057,224 1,138,761 1,330,117 1,378,472 1,408,750 1,613,926 2,116,816 1,794,920 2,126,234 Business license taxes 747,522 768,726 766,515 788,397 775,603 833,371 837,895 843,422 818,288 832,383 Intergovernmental, unrestricted - 51,550 87,385 828,833 40,931 45,845 54,999 50,668 83,545 76,565 Investment earnings 299,103 179,961 39,032 54,446 599,306 241,282 402,994 2,645,785 3,159,443 92,406 Other 1,531,970 1,352,057 801,775 676,603 703,000 821,817 (356,651) 18,233 (64,158) 2,786 Special item - net gain(loss) on sale - (597,018) - - - - - - - - Special item - payment to affected taxing entities - - - (1,234,000) - - - - - - Extraordinary gain - net transfer of assets 21,677,883 - - - - - - - - - Transfer in(out) 5,682 69,751 145,863 54,944 271,412 28,495 - - - - Total governmental activities 79,578,704 52,446,632 54,830,483 54,960,104 59,855,260 63,662,751 63,738,086 68,389,448 68,639,951 73,626,731 Business-type activities:

Investment earnings 82,552 24,511 42,103 69,455 187,377 146,614 144,106 879,492 1,093,630 (70,097) Other 1,465,778 15,015 4,014 5,413,909 1,667,142 107,265 471,626 43,785 3,835,670 (238,837) Special item - net loss on sale of properties - (2,225) - - - - - - - - Transfer in(out) (5,682) (69,751) (145,863) (54,944) (271,412) (28,495) - - - - Total business-type activities 1,542,648 (32,450) (99,746) 5,428,420 1,583,107 225,384 615,732 923,277 4,929,300 (308,934) Total primary government 81,121,352$ 52,414,182$ 54,730,737$ 60,388,524$ 61,438,367$ 63,888,135$ 64,353,818$ 69,312,725$ 73,569,251$ 73,317,797$ Changes in Net Position
Governmental activities 32,692,518$ 13,555,988$ 21,609,295$ 12,179,372$ 6,945,661$ 1,009,618$ (6,922,799)$ (6,575,821)$ (14,367,135)$ (4,448,437)$ Business-type activities (1,473,621) (2,373,547) (2,114,788) 9,902,563 4,459,907 699,038 3,621,934 1,966,768 2,490,500 1,830,237 Total primary government 31,218,897$ 11,182,441$ 19,494,507$ 22,081,935$ 11,405,568$ 1,708,656$ (3,300,865)$ (4,609,053)$ (11,876,635)$ (2,618,200)$ (Concluded)
Source: City of El Cajon - Finance Department
Notes:
(b) The City implemented GASB Statement 68 in fiscal year 2015, which had a significant effect on the unrestricted fund balance. (a) The El Cajon Redevelopment Agency was dissolved as of February 1, 2012. The former redevelopment agency's assets, liabilities, and net position were transferred to the Successor Agency Trust Fund 155
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General fund
Nonspendable -$ 2,331$ 2,616$ 1,769$ 8,379$ 15,598$ 7,071$ 2,507$ -$ 4,330$ Restricted - - - - - - - - - 2,038,034 Committed 10,003,509 10,614,730 11,415,896 12,101,021 13,052,990 13,052,990 13,052,990 15,939,481 15,619,455 15,531,197 Assigned 5,370,474 4,947,648 3,520,000 6,020,000 6,020,000 14,500,000 14,500,000 14,500,000 13,612,686 12,461,966 Unassigned 3,401,384 10,969,345 12,987,788 12,430,127 16,573,355 14,613,935 21,239,581 18,617,202 20,120,759 23,642,249 Total general fund 18,775,367$ 26,534,054$ 27,926,300$ 30,552,917$ 35,654,724$ 42,182,523$ 48,799,642$ 49,059,190$ 49,352,900$ 53,677,776$ All other governmental funds
Nonspendable -$ 4,219$ 3,117$ 1,234,000$ -$ 568,839$ -$ -$ -$ -$ Restricted 32,917,930 31,072,800 31,521,762 33,798,874 31,368,390 31,236,465 34,195,345 35,871,669 35,927,192 40,848,340 Committed - - - - - - - - - - Assigned 25,454,019 27,270,420 29,729,317 29,851,850 26,613,467 26,043,452 15,847,758 13,360,745 12,595,367 15,322,832 Unassigned - (16,521) (42,390) - (2,250) (13,157) (8,343) (6,348) (38,210) (6,348) Total all other governmental funds 58,371,949$ 58,330,918$ 61,211,806$ 64,884,724$ 57,979,607$ 57,835,599$ 50,034,760$ 49,226,066$ 48,484,349$ 56,164,824$ Total fund balance 77,147,316$ 84,864,972$ 89,138,106$ 95,437,641$ 93,634,331$ 100,018,122$ 98,834,402$ 98,285,256$ 97,837,249$ 109,842,600$ Source: City of El Cajon - Finance Department
Fiscal Year

CITY OF EL CAJON
Fund Balance of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
156
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Revenues
Taxes 64,998,157$ 62,523,559$ 64,226,217$ 64,639,654$ 60,540,666$ 64,994,212$ 65,198,527$ 67,830,438$ 66,979,234$ 75,192,420$ Intergovernmental 8,477,915 6,772,809 7,353,362 7,588,943 6,950,884 7,554,839 8,604,212 10,421,364 9,047,131 12,140,641 Licenses and permits 927,820 959,941 1,043,011 1,376,417 1,810,129 1,190,944 1,387,579 1,984,864 1,720,324 1,701,436 Fines and forfeitures 1,073,953 948,898 730,257 707,147 614,923 634,882 685,061 573,407 543,091 370,272 Special assessments 377,558 378,829 385,163 379,048 377,388 368,315 367,458 366,589 366,681 367,954 Charges for services 6,248,868 5,964,400 6,165,821 5,876,605 5,165,405 3,387,982 4,561,823 4,559,913 4,811,503 4,645,205 Use of money and property 1,153,444 994,581 897,274 1,700,784 1,515,971 1,336,554 1,309,683 3,758,860 6,849,675 2,252,063 Other 3,207,720 5,269,805 3,481,182 6,053,602 6,166,811 3,393,023 2,776,383 2,481,587 1,030,115 573,336 Total revenues 86,465,435 83,812,822 84,282,287 88,322,200 83,142,177 82,860,751 84,890,726 91,977,022 91,347,754 97,243,327 Expenditures
General government 7,446,595 8,943,751 11,158,991 8,490,159 8,720,888 7,483,195 5,945,279 6,699,620 7,135,491 14,368,326 Public safety 38,458,168 39,216,674 41,758,874 44,909,375 45,379,458 45,326,731 48,075,169 52,026,698 54,868,132 167,079,011 Public works 5,553,901 5,523,424 5,196,417 5,161,698 5,695,177 9,930,389 11,193,499 12,358,617 12,407,958 22,518,337 Recreation 4,426,742 4,362,631 4,634,936 5,084,634 5,113,117 3,222,345 3,469,092 3,733,382 6,540,475 7,858,891 Community development 5,906,316 5,013,538 2,970,194 2,958,140 3,236,546 3,327,458 3,578,642 3,926,542 4,459,817 13,029,325 Capital outlay 13,997,614 9,054,501 6,443,922 6,269,915 8,907,171 6,982,930 13,555,195 13,551,753 6,173,793 3,684,679 Debt service: principal 1,362,000 2,997,000 7,187,000 7,472,000 7,990,000 176,498 181,423 186,484 191,687 197,035 Debt service: interest & fiscal charges 2,742,813 987,165 792,604 483,777 174,542 55,909 76,147 43,072 18,408 35,372 Total expenditures 79,894,149 76,098,684 80,142,938 80,829,698 85,216,899 76,505,455 86,074,446 92,526,168 91,795,761 228,770,976 Excess (deficiency) of revenues
over (under) expenditures 6,571,286 7,714,138 4,139,349 7,492,502 (2,074,722) 6,355,296 (1,183,720) (549,146) (448,007) (131,527,649) Other financing sources (uses)
Sale of capital assets - - - - - - - - - 5,810,000 Proceeds from issuance of debt - - - - - - - - - 137,723,000 Transfers in 30,436,534 11,555,208 16,101,370 15,070,867 12,427,065 5,454,368 3,539,200 10,629,962 5,284,107 3,873,700 Transfers out (32,542,205) (11,551,690) (15,967,585) (15,029,834) (12,155,653) (5,425,873) (3,539,200) (10,629,962) (5,284,107) (3,873,700) Total other financing sources (uses) (2,105,671) 3,518 133,785 41,033 271,412 28,495 - - - 143,533,000 Extraordinary loss (36,972,442) - - - - - - - - - Special item - payment to affected
taxing entities - - - (1,234,000) - - - - - - Net change in fund balances 4,465,615$ 7,717,656$ 4,273,134$ 7,533,535$ (1,803,310)$ 6,383,791$ (1,183,720)$ (549,146)$ (448,007)$ 12,005,351$ Debt service as percentage of
noncapital expenditures 6.23% 5.94% 10.83% 10.67% 10.70% 0.33% 0.36% 0.29% 0.25% 0.10% Source: City of El Cajon - Finance Department
Fiscal Year

CITY OF EL CAJON
Changes in Fund Balance of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
157
Fiscal Year Property
Sales and Use
(a) (b) Franchise
Transient
Occupancy
Business
License
Property
Transfer Other Total
2012 (c ) 26,866,252$ 30,141,782$ 4,721,291$ 1,046,237$ 747,522$ 215,861$ 1,259,212$ 64,998,157$ 2013 20,224,259 32,662,638 4,767,474 1,057,224 768,726 244,338 2,798,900 62,523,559 2014 21,285,194 33,814,507 4,791,459 1,138,761 766,515 407,065 2,022,716 64,226,217 2015 20,987,827 33,584,316 5,044,461 1,330,117 788,397 372,237 2,532,300 64,639,655 2016 21,086,961 29,620,061 5,196,514 1,378,472 775,603 309,155 2,173,900 60,540,666 2017 17,223,736 37,559,282 5,148,007 1,408,750 833,371 352,166 2,468,900 64,994,212 2018 18,339,325 37,192,949 5,311,723 1,613,926 837,895 370,413 1,899,754 65,565,985 2019 19,834,547 37,063,099 5,511,422 2,116,816 843,422 312,876 2,514,845 68,197,027 2020 20,483,031 35,936,128 5,947,736 1,794,920 818,288 481,018 1,518,113 66,979,234 2021 21,623,736 42,005,040 6,388,778 2,126,234 832,383 478,805 1,737,445 75,192,420 Source: City of El Cajon - Finance Department
Notes: (a) The voters of the City approved Proposition O, a sales tax increase of half percent which was in effect from 04/01/2005 through 03/31/2015.
(b) The voters of the City approved Proposition J, a sales tax increase of half percent which will be in effect from 04/01/2009 through 03/31/2029.
(c ) Since its dissolution on 02/01/2012, the former Redevelopment Agency's property tax increment revenues have been recorded in the Successor Agency Trust Fund.

CITY OF EL CAJON
Tax Revenues by Source, Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
158
Business Name Business Category Business Name Business Category Auto City Used Automotive Dealers Best Buy Electronics/Appliance Stores Best Buy Electronics/Appliance Stores BMW New Motor Vehicle Dealers BMW New Motor Vehicle Dealers East County Preowned Superstore Used Automotive Dealers East County Preowned Superstore Used Automotive Dealers El Cajon Ford New Motor Vehicle Dealers El Cajon Ford New Motor Vehicle Dealers El Cajon Mitsubishi New Motor Vehicle Dealers Enterprise Rent A Car Transportation/Rentals Enterprise Rent A Car Transportation/Rentals Ferguson Enterprises Plumbing/Electrical Supplies Ferguson Enterprises Plumbing/Electrical Supplies G&M Oil Service Stations G P Resources Service Stations Genesee Scientific Medical/Biotech G&M Oil Service Stations Home Depot Building Materials Home Depot Building Materials Hyundai of El Cajon New Motor Vehicle Dealers JC Penney Department Stores Inland Kenworth New Motor Vehicle Dealers Lexus New Motor Vehicle Dealers J & B Materials Building Materials Macys Department Stores Lexus New Motor Vehicle Dealers Main Street Gas & Mini Mart Service Stations Mercedes Benz New Motor Vehicle Dealers Mossy Nissan New Motor Vehicle Dealers Mossy Nissan New Motor Vehicle Dealers Sears Department Stores Russell Sigler Contractors Soco Group Service Stations
Subaru of El Cajon New Motor Vehicle Dealers Subaru of El Cajon New Motor Vehicle Dealers Target Discount Department Stores Super Star Stations Service Stations Team Kia of El Cajon New Motor Vehicle Dealers Target Discount Department Stores Toyota Lease Trust Auto Lease Team Kia of El Cajon New Motor Vehicle Dealers Toyota of El Cajon New Motor Vehicle Dealers Toyota of El Cajon New Motor Vehicle Dealers Tripton Honda New Motor Vehicle Dealers Tripton Honda New Motor Vehicle Dealers USA Food Mart Service Stations United Oil Service Stations Walmart Discount Department Stores Walmart Discount Department Stores Percent of Fiscal Year Total Paid By Top 25 Accounts = 46.99% Percent of Fiscal Year Total Paid By Top 25 Accounts = 46.06% Sources: State Board of Equalization
California Department of Taxes and Fees Administration
State Controller's Office
The HdL Companies

CITY OF EL CAJON
Principal Sales Tax Producers (Listed Alphabetically)
Current Fiscal Year and Nine Years Ago
Fiscal Year 2021 Fiscal Year 2012
159
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Apparel Stores 76,656$ 80,630$ 83,364$ 82,324$ 84,241$ 86,123$ 85,294$ 87,675$ 86,541$ 58,955$ General Merchandise 148,864 145,964 147,430 151,929 155,714 154,451 147,400 134,383 119,974 107,241 Food Stores 45,544 45,473 47,891 47,291 45,809 45,374 47,041 47,961 46,271 51,726 Eating and Drinking Places 127,204 133,326 137,793 143,339 150,819 159,558 164,357 173,666 186,546 169,593 Building Materials 185,665 192,786 209,128 230,531 247,753 261,868 272,995 280,374 323,993 296,446 Auto Dealers and Supplies 420,554 500,822 569,150 610,892 696,517 752,207 780,013 751,463 742,782 727,653 Service Stations 387,731 378,912 353,581 339,384 275,627 243,765 267,201 287,686 212,079 140,676 Other Retail Stores 240,927 251,955 264,852 267,323 280,789 286,048 280,452 291,415 295,436 280,236 All Other Outlets 345,541 401,943 431,732 451,971 479,017 508,471 612,843 626,266 667,280 831,376 Total 1,978,686$ 2,131,811$ 2,244,921$ 2,324,984$ 2,416,286$ 2,497,865$ 2,657,596$ 2,680,889$ 2,680,902$ 2,663,902$ Sources: State Board of Equalization
California Department of Taxes and Fees Administration
State Controller's Office
The HdL Companies
Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative infomration regarding the sources of City revenue.

CITY OF EL CAJON
Taxable Sales by Category
Last Ten Calendar Years
(in thousands of dollars)
Calendar Year
160
Fiscal Year
Residential
Property
Commercial
Property
Industrial
Property
Other
Property
Unsecured
Property
Taxable
Assessed
Value (a)
Change
from Prior
Year
Direct Tax
Rate (b)
2012 4,564,734$ 1,291,942$ 421,873$ 312,156$ 497,007$ 7,087,712$ -1.70% 0.27601 2013 4,607,898 1,310,579 444,734 334,147 439,823 7,137,181 0.70% 0.27945 2014 4,787,559 1,331,941 443,994 339,905 425,276 7,328,675 2.68% 0.11063 2015 5,108,591 1,368,047 447,675 344,706 400,064 7,669,083 4.64% 0.11052 2016 5,427,999 1,417,330 465,784 349,895 419,799 8,080,807 5.37% 0.11042 2017 5,731,130 1,495,880 472,218 368,216 441,287 8,508,731 5.30% 0.11031 2018 6,166,301 1,539,417 507,733 350,122 426,269 8,989,842 5.65% 0.11052 2019 6,555,644 1,595,490 539,786 377,385 450,730 9,519,035 5.89% 0.11022 2020 6,925,985 1,661,394 570,715 394,050 494,779 10,046,923 5.55% 0.11014 2021 7,387,271 1,728,043 594,413 410,744 505,699 10,626,170 5.77% 0.11012 Sources: San Diego County Assessor 2011/12 - 2020/21 Combined Tax Rolls HdL, Coren & Cone
Notes: (a) Exempt values are not included in the Taxable Assessed Value (b) Total Direct Rate is the weighted average of all individual direct rates applied by the City/Agency preparing the statistical section information and excludes revenues derived from aircraft. Beginning in 2013-14 the Total Direct Rate no longer includes revenue generated from the former redevelopment tax rate areas. Challenges to recognized enforceable obligations are assumed to have been resolved during 2012-13. For the purposes of this report, residual revenue is assumed to be distributed to the City/Agency in the same proportions as general fund revenue.

CITY OF EL CAJON
Assessed Value of Taxable Property
Last Ten Fiscal Years
(in thousands of dollars)
161
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Basic City and County Levy (a) 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 Overlapping Tax Rates
Cajon Valley School - General Bond 0.06084 0.06274 0.08634 0.08294 0.08145 0.07801 0.08761 0.08477 0.07882 0.07882 Grossmont Healthcare District Bond 0.00000 0.02005 0.02005 0.02005 0.02352 0.02352 0.02352 0.02352 0.02490 0.02490 Grossmont Healthcare District Prop G 6-06-06 0.02005 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 Grossmont Union High Bond 0.06121 0.06103 0.06167 0.06118 0.06053 0.05717 0.06613 0.06482 0.06704 0.06704 Grossmont-Cuyamaca Community College 0.03082 0.03173 0.04752 0.04650 0.04539 0.04005 0.04671 0.04225 0.04038 0.04038 La Mesa Spring Valley Elementary 0.02556 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 Metropolitan Water District 0.00370 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 0.00350 Santee Elementary Bond 0.03308 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 Total Direct & Overlapping Tax Rates (b) 1.23526 1.17905 1.21908 1.21417 1.21439 1.20225 1.22747 1.21886 1.21464 1.21464 City's Share of 1% Levy per Proposition 13 (c) 0.11174 0.11174 0.11174 0.11174 0.11174 0.11174 0.11174 0.11174 0.11174 0.11174 Sources: San Diego County Assessor 2011/12 - 2020/21 Tax Rate Table HdL, Coren & Cone
Note: (a)
(b)
(c)
In 1978, California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds.

Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all property owners.

City's Share of 1% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the City. The ERAF portion of the City's Levy has been subtracted where known.

Fiscal Year

CITY OF EL CAJON
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
162
Fiscal Year
Taxes Levied
for the Fiscal
Year Amount
Percentage of
Levy Amount
Percentage of
Levy
2012 6,558,058$ 6,375,739$ 97.22 % 44,668$ 6,420,407$ 97.90 2013 6,705,944 6,532,219 97.41 47,089 6,579,308 98.11 2014 7,038,840 6,846,801 97.27 25,902 6,872,703 97.64 2015 7,188,741 7,058,431 98.19 34,693 7,093,124 98.67 2016 7,574,543 7,443,382 98.27 41,488 7,484,870 98.82 2017 7,986,215 7,831,502 98.06 47,880 7,879,382 98.66 2018 8,434,486 8,291,346 98.30 21,906 8,313,252 98.56 2019 8,920,584 8,746,728 98.05 46,373 8,793,101 98.57 2020 9,256,244 9,027,399 97.53 82,836 9,110,235 98.42 2021 9,782,316 9,537,408 97.50 - 9,537,408 97.50 Source: San Diego County Auditor/Controller, Property Tax Apportionment Report 2020-21 Note: (a) Information required by GASB Statement 44 differs from information reported. Collections in subsequent years represent total delinquent amounts received during the fiscal year, regardless of the fiscal year of the tax levy.

Data for delinquent tax collections by levy year is not available from the San Diego County Auditor/Controller's Office.

CITY OF EL CAJON
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the
Fiscal Year of the Levy Total Collections to Date
Collections in
Subsequent
Years (a)
163
Taxpayer Taxable Value Rank
Percent of
City Total
Taxable
Value Taxable Value Rank
Percent of
City Total
Taxable
Value
Star-West Parkway Mall L P 251,274,655$ 1 2.36% G K N Aerospace Chem-Tronics Inc 96,973,410 2 0.91% 51,899,305$ 3 0.73% B9 MF 1250 Petree St LLC 86,670,934 3 0.82% Lysinger 1999 Trust 10-22-03 47,836,125 4 0.45% Kaiser Foundation Health Plan Inc 47,687,281 5 0.45% 43,484,966 4 0.61% Cox Communications California 38,037,447 6 0.36% 22,924,917 10 0.32% Terraza T I C I LLC 35,359,252 7 0.33%
Harsch Investment Properties LLC 30,545,694 8 0.29% Helf Properties Inc 30,401,715 9 0.29%
Walmart Real Estate Business Trust 28,709,955 10 0.27% Parkway Plaza LP 219,477,958 1 3.10%
Conrad Prebys Trust 86,157,110 2 1.22%
El Cajon Energy Center LLC 36,861,416 5 0.52% San Diego Forest Park LLC 32,048,191 6 0.45% Calpeak Power-El Cajon LLC 28,826,668 7 0.41% Sears Roebuck and Company 26,506,776 8 0.37% Pacific Gilespie Partners IV LP 25,490,344 9 0.36% Total Top 10 Taxpayers 693,496,468 6.53% 573,677,651 8.09% City Total Taxable Value (a) 10,626,169,520$ 100.00% 7,086,663,877$ 100% Sources: San Diego County Assessor 2011/12 and 2020/21 Combined Tax Rolls and SBE Non Unitary Tax Roll HdL, Coren & Cone
Fiscal Year 2021 Fiscal Year 2012

CITY OF EL CAJON
Principal Property Tax Payers
Current Fiscal Year and Nine Years Ago
164
Fiscal Year
Sales Tax
Revenue
Bonds
Capital
Leases
Notes
Payable
Pension
Obligation
Bonds
Obligation
Due to San
Diego Metro
Wastewater
Note Payable
to State Water
Resources
Control Board
Pension
Obligation
Bonds
Total Primary
Government
Percentage
of Personal
Income
(a)
Per
Capita
(a)
2012 25,195,000$ -$ 451,000$ -$ 9,858,817$ -$ -$ 35,504,817$ 1.71% 353$ 2013 22,255,000 - 394,000 - 9,858,817 - - 32,507,817 1.56% 324 2014 15,125,000 - 337,000 - 9,858,817 - - 25,320,817 1.23% 250 2015 7,710,000 - 280,000 - 9,858,817 1,308,225 - 19,157,042 0.96% 190 2016 - - - - 9,858,817 3,768,749 - 13,627,566 0.66% 133 2017 - 1,827,397 - - 9,858,817 3,871,418 - 15,557,632 0.73% 151 2018 - 1,645,974 - - 9,858,817 7,313,590 - 18,818,381 0.85% 178 2019 - 1,459,490 - - 9,858,817 10,393,396 - 21,711,703 0.95% 206 2020 - 1,267,803 - - - 9,977,452 - 11,245,255 0.46% 108 2021 - 1,070,768 - 141,517,800 - 9,552,774 5,692,200 157,833,542 6.09% 1,529 Source: City of El Cajon - Finance Department
Notes: (a) See Demographic and Economic Statistics on page 166 for personal income and population data.

Details regarding the City's outstanding debt can be found in Note 5 of the Notes to the Basic Financial Statements on pages 70-74.

CITY OF EL CAJON
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities Business-type Activities
165
Total Debt Percent Applicable City’s Share of
06/30/2021 to City of El Cajon (a) Debt 06/30/2021
OVERLAPPING TAX AND ASSESSMENT DEBT:

Metropolitan Water District 26,830,000$ 0.322% 86,393$ Grossmont-Cuyamaca Community College District 399,720,377 18.563% 74,200,094 Grossmont Union High School District 611,620,166 19.102% 116,831,684 Cajon Valley Union School District 169,617,572 47.025% 79,762,663 La Mesa-Spring Valley School District 13,884,849 8.670% 1,203,816 Santee School District 63,361,524 3.313% 2,099,167 Grossmont Healthcare District 249,978,330 17.528% 43,816,202 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 318,000,019$ (b) TOTAL OVERLAPPING GENERAL FUND DEBT:

San Diego County General Fund Obligations 211,585,000$ 1.799% 3,806,414$ San Diego County Pension Obligation Bonds 400,125,000 1.799% 7,198,249 San Diego County Superintendent of Schools Certificates of Participation 8,585,000 1.799% 154,444 Grossmont-Cuyamaca Community College District General Fund Obligations 33,185,000 19.102% 6,338,999 Cajon Valley Union School District Certificates of Participation 16,287,000 47.025% 7,658,962 La Mesa-Spring Valley School District Certificates of Participation 10,017,723 8.670% 868,537 Santee School District Certificates of Participation 23,099,849 3.313% 765,298 TOTAL OVERLAPPING GENERAL FUND DEBT 26,790,903$ (b) OVERLAPPING TAX INCREMENT DEBT (Successor Agencies): 56,680,000$ 90.402 - 100% 52,038,887$ (b) TOTAL DIRECT DEBT - City of El Cajon
Pension Obligation Bonds 141,517,800$ 100.000% 141,517,800$ Capital Lease Obligations 1,070,768 100.000% 1,070,768 TOTAL DIRECT DEBT - City of El Cajon 142,588,568$
COMBINED TOTAL DEBT 539,418,377$
Ratios to 2020-21 Assessed Valuation (in thousands of dollars): 10,626,170$ Total Overlapping Tax and Assessment Debt 2.99%
Total Overlapping General Fund Debt 0.25%
Overlapping Tax Increment Debt (Successor Agencies) 0.49% Total Direct Debt 1.34%
Combined Total Debt 5.07%
Source: San Diego County Assessor Data. MuniServices, LLC / an Avenu Insights & Analytics Company Notes: (a)
(b) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and non-bonded capital lease obligations.

CITY OF EL CAJON
Direct and Overlapping Governmental Activities Debt
The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.

As of June 30, 2021
166
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Net assessed valuation 7,087,712$ 7,137,181$ 7,328,675$ 7,669,083$ 8,080,807$ 8,508,731$ 8,989,842$ 9,519,035$ 10,046,923$ 10,626,170$ State legal debt limit (a) 1,063,157 1,070,577 1,099,301 1,150,362 1,212,121 1,276,310 1,348,476 1,427,855 1,507,038 1,593,926 Less amount of debt applicable to the limit: (b)
Sales Tax Revenue Bonds 25,195 22,255 15,125 7,710 - - - - - - Notes Payable 451 394 337 2,890 - - - - - - Capital Lease Obligations - - - - - 1,827 1,646 1,459 1,268 1,071 Pension Obligation Bonds 141,518
Total net debt applicable to limit 25,646 22,649 15,462 10,600 - 1,827 1,646 1,459 1,268 142,589 Legal debt margin 1,037,511$ 1,047,928$ 1,083,839$ 1,139,762$ 1,212,121$ 1,274,483$ 1,346,830$ 1,426,396$ 1,505,770$ 1,451,337$ Total net debt applicable to the limit as a
percentage of debt limit 2.41% 2.12% 1.41% 0.92% 0.00% 0.14% 0.12% 0.10% 0.08% 8.95% Sources:San Diego County Assessor 2011/12 - 2020/21 Combined Tax Rolls HdL, Coren & Cone
City of El Cajon Finance Department
Notes: (a) State law limits indebtedness for California cities to 15% of the assessed valuation of property within the City. (b) Details regarding the City's outstanding debt can be found in Note 5 of the Notes to the Basic Financial Statements on pages 70-74.

CITY OF EL CAJON
Legal Debt Margin Information
Last Ten Fiscal Years
(in thousands of dollars)
Fiscal Year
167
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

NOTE PAYABLE - STATE WATER

RESOURCES CONTROL BOARD
Wastewater Revenues -$ -$ -$ -$ 21,431,675$ 19,985,038$ 20,910,132$ 21,848,143$ 22,350,809$ 24,087,595$ Less: Operations and Maintenance - - - - (12,260,836) (14,563,908) (13,833,983) (14,128,459) (20,830,199) (21,948,424) Net revenues - - - - 9,170,839 5,421,130 7,076,149 7,719,684 1,520,610 2,139,171 Debt Service
Principal - - - - - 184,664 270,557 467,098 415,943 424,678 Interest - - - - - 64,545 86,995 125,107 176,261 167,527 Coverage - - - - - 21.75 19.79 13.04 2.57 3.61 REVENUE BONDS (a)
Sales Tax Revenues 7,674,879$ 8,334,328$ 8,447,073$ 7,528,077$ 126,155$ -$ 29,487$ 7,420$ 27,459$ 5,858$ Debt Service
Principal - 2,940,000 7,130,000 7,415,000 - - - - - - Interest 1,008,400 964,300 772,600 466,700 - - - - - - Coverage 7.61 2.13 1.07 0.96 - - - - - - TAX ALLOCATION BONDS (b)
Property Tax Incremental Revenues 6,313,512$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Debt Service
Principal 1,305,000 - - - - - - - - - Interest 1,708,769 - - - - - - - - - Pass-through payments 1,555,164 - - - - - - - - - Coverage 1.38 - - - - - - - - - Source: City of El Cajon - Finance Department
Notes: (a) The Sales Tax Revenue Bonds (Proposition O - Public Safety Building Bonds) were paid in full in fiscal year 2016. (b) The El Cajon Redevelopment Agency's outstanding tax allocation bonds were transferred to the Successor Agency on 02/01/2012.

Fiscal Year

CITY OF EL CAJON
Pledged-Revenue Coverage
Last Ten Fiscal Years
168
Calendar
Year
Population
(a)
Personal Income
(in thousands) (b)
Per Capita
Personal Income
(b)
Unemployment
Rate
(c)
Median Age
(b)
% of Population
25+ with High
School Degree
(b)
% of Population
25+ with
Bachelor's Degree
(b)
2011 100,562 $ 2,071,175 $ 20,596 13.5% 33.0 79.6% 16.2% 2012 100,460 2,088,061 20,785 9.5% 32.6 78.8% 17.1%
2013 101,256 2,058,940 20,334 8.3% 32.4 78.6% 17.9%
2014 101,003 1,991,880 19,721 9.2% 32.4 78.4% 17.5%
2015 102,337 2,075,352 20,279 7.5% 32.8 79.2% 18.2%
2016 102,803 2,133,683 20,755 6.7% 33.3 80.4% 19.1%
2017 105,557 2,201,499 20,856 6.5% 34.1 81.1% 19.1%
2018 105,559 2,296,327 21,753 3.6% 33.8 82.2% 19.1%
2019 104,393 2,450,181 23,470 3.6% 34.0 83.0% 20.1%
2020 103,243 2,593,529 25,120 12.1% 34.0 84.0% 20.9%
Source: HdL, Coren & Cone
Notes: (a) Population: California State Department of Finance. (b) Income, Age, and Education Data: US Census Bureau, most recent American Community Survey. (c) Unemployment Data: California Employment Develoment Department.

CITY OF EL CAJON
Demographic and Economic Statistics
Last Ten Calendar Years
169
Number of
Employees Rank
Percent of
Total
Employment
Number of
Employees Rank
Percent of
Total
Employment
Grossmont-Cuyamaca Community College District (a) 2,987 1 6.68% 738 2 1.37% Cajon Valley Union School District (b) 1,907 2 4.27% 1,670 1 3.11% GKN Aerospace Chem-Tronics Inc. 800 3 1.79% 617 3 1.15% Grossmont Union High School District 644 4 1.44% 573 4 1.07% Taylor Guitars 525 5 1.17% 388 7 0.72%
Avocado Post Acute (formerly Eldorado Care Center) 473 6 1.06% 350 8 0.65% City of El Cajon 422 7 0.94% 426 6 0.79%
Wal-Mart (2 locations) 409 8 0.91% 440 5 0.82%
San Diego Post-Acute Center 407 9 0.91%
Home Depot 387 10 0.87%
Country Hills Post Acute 350 9 0.65%
University Mechanical and Engineering 349 10 0.65%
Total Top 10 Employers 8,961 20.04% 5,901 10.98%
Total City Labor Force 44,700 53,700
Source: MuniServices, LLC /an Avenu Insights & Analytics Company (Results based on direct correspondence with City's local businesses) 2011-12 previously published City of El Cajon Annual Comprehensive Financial Report City Labor Force: California Employment Development Department Labor Force Data.

Notes: (a) Includes full-time classified and certificated employees in El Cajon only and the district office. (b) Includes full-time and part-time classified employees, full-time and part-time certificated employees, certificated adminstrators, management and supervisory.

CITY OF EL CAJON
Top Ten Employers
Current Fiscal Year and Nine Years Ago
Business Name
Fiscal Year 2012Fiscal Year 2021
170
Function/Program 2012 2013 2014 2015 2016 2017 2018 (a) 2019 (b) 2020 2021 General Government
City Manager 4.50 9.35 9.35 14.20 14.75 3.05 3.85 6.35 6.75 5.50 City Clerk 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 City Attorney 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Finance 9.45 11.45 14.00 11.30 11.50 12.40 13.00 15.50 15.09 13.55 Human Resources (b) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.50 5.00 4.00 Information Technology (b) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9.00 8.00 7.00 Administrative Services (b) 4.40 4.00 4.00 4.00 3.80 16.50 17.00 0.00 0.00 0.00 Police
Officers 120.00 122.00 122.00 122.00 122.00 122.00 124.00 126.00 126.00 126.00 Civilians 68.70 69.20 69.20 70.20 66.20 66.20 65.20 63.20 64.00 63.00 Animal Control 5.00 5.00 5.00 5.00 5.00 5.00 7.00 7.00 6.00 7.00 Fire
Firefighters and Officers 73.00 72.00 72.00 72.00 73.00 59.00 56.00 57.00 57.00 58.00 Civilians 2.20 2.20 2.20 2.20 2.20 2.20 2.70 2.70 3.00 3.00 Public Works
Administration and Engineering 14.63 19.05 14.10 13.80 14.70 14.30 14.40 14.00 13.40 10.70 Traffic and Streets Maintenance 22.65 23.05 24.85 25.05 26.90 22.90 27.95 27.20 26.65 23.45 Parks, Facilities, and Vehicle Maintenance 41.55 44.25 43.10 42.65 40.40 26.65 25.80 25.05 26.20 24.65 Wastewater 31.35 30.25 29.75 30.30 29.70 33.05 33.35 28.25 28.25 30.65 Recreation 14.45 15.00 15.00 16.00 16.00 16.00 41.55 41.55 43.50 43.50 Community Development 20.25 20.5 20.5 18.8 18.9 18.9 21.50 22.00 23.00 19.00 Total 437.13 452.30 450.05 452.50 450.05 423.15 458.30 455.30 456.84 444.00 Source: City of El Cajon - Finance Department
Note: (a) Beginning in fiscal year 2018, part-time and seasonal employees were included in total full-time equivalent employee count.
(b) Beginning in fiscal year 2019, Administrative Services was split into Human Resources and Information Technology.

Fiscal Year

CITY OF EL CAJON
Full-time Equivalent City Government Employees
By Function/Program
Last Ten Fiscal Years
171
Function/Program 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Community Development
Building permits issued 1,238 1,376 1,534 1,971 2,016 2,063 2,208 2,501 2,520 1,976 Building inspections conducted 4,337 5,340 2,522 9,529 9,608 5,631 6,919 11,142 9,580 4,500 Police
Physical arrests 4,513 5,015 5,088 6,589 5,121 4,861 4,754 6,385 6,432 4,208 Traffic violations 9,968 10,915 3,653 3,100 2,953 2,434 2,244 2,003 1,907 1,593 Parking violations 4,049 3,085 2,764 3,191 2,498 2,411 2,443 2,797 2,266 1,955 Animal Control (c)
Licenses issued 2,290 2,254 2,025 1,985 1,978 1,819 1,679 1,340 1,471 510 Adoptions 1,106 1,112 951 971 816 1,071 1,064 1,054 1,530 491 Fire
Emergency responses 13,177 11,549 12,087 12,833 13,616 14,462 15,562 15,802 14,993 15,753 Fires extinguished (a)(b) 752 410 368 348 409 279 157 125 360 496 Fires investigated (b) 318 410 368 96 165 38 10 125 360 2 Inspections 3,684 3,921 535 813 632 1,827 1,849 609 106 864 Abatement compliance 580 407 418 2,770 88 146 73 230 228 49 Public works
Street resurfacing (miles) 3 11 6 5 9 4 5 8 27 19
Recreation
Facility rentals 346 362 367 334 348 362 378 386 182 8
Classes and other bookings 2,156 1,799 1,704 1,596 1,134 1,218 1,281 1,433 811 3,487 Attendance 195,677 85,574 88,875 113,924 92,871 96,455 100,677 105,226 113,552 117,600 Wastewater
Average daily sewage transportation
(thousands of gallons) 7,809 7,780 7,941 7,728 6,980 7,421 6,458 7,321 7,630 6,420 Source: City of El Cajon Departments
Notes: (a) In fiscal year 2012, El Cajon Fire Department became part of the Heartland Fire and Rescue JPA and responds to fires in La Mesa, Lemon Grove, and San Miguel fire districts.
(b) Data presented are for fires within El Cajon city limits. (c) As of October 2020, San Diego Humane Society was contracted to provide animal shelter and care services at the El Cajon Animal Shelter.

CITY OF EL CAJON
Operating Indicators by Function/Program
Last Ten Fiscal Years
Fiscal Year
172
Function/Program 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 General Government
City Hall 1 1 1 1 1 1 1 1 1 1
Police
Headquarters 1 1 1 1 1 1 1 1 1 1
Animal shelter 1 1 1 1 1 1 1 1 1 1
Patrol vehicle 56 56 56 56 56 59 59 59 59 59
Undercover vehicles 30 30 30 34 34 31 31 31 31 31
Tactical vehicles 5 5 5 5 5 5 5 5 5 5
Fire
Stations 4 4 4 4 4 4 4 4 4 4
Engines/Pumper trucks 7 7 7 7 7 7 7 7 7 7
Ladder truck 1 1 1 1 1 1 1 1 1 1
Battalion chief units 2 2 2 2 2 2 2 2 2 2
Ambulances (b) 7 7 7 7 4 1 1 1 0 0
Public works
Streets (miles) 194 194 194 194 194 194 194 194 194 194 Streetlights 2,331 2,352 2,356 2,360 2,360 2,688 2,732 2,732 2,732 2,732 Traffic signals 112 112 112 112 112 112 113 113 113 113 (Continued)

CITY OF EL CAJON
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
Fiscal Year
173
Function/Program 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

CITY OF EL CAJON
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
Fiscal Year
Parks and recreation
Acreage 120 120 120 120 120 120 120 120 120 120
Community/recreation centers 6 6 6 6 6 7 7 7 7 7
Playing fields 5 5 5 5 5 5 5 5 5 5
Playing courts 5 5 5 5 5 5 5 5 5 5
Playgrounds 6 6 6 6 6 7 7 7 7 8
Outdoor gym 0 0 0 0 0 2 2 2 2 2
Tennis courts 1 1 1 1 1 1 1 1 1 1
Baseball/Softball diamonds 5 5 5 5 5 5 5 5 5 5
Soccer/Football/Fields 5 5 5 5 5 5 5 5 5 5
Outdoor basketball courts 3 3 3 3 3 3 3 3 3 4
Gymnasiums 4 4 4 4 4 4 4 4 4 4
Swimming pool 1 1 1 1 1 1 1 1 1 1
Skate park/Skate plaza 1 1 1 1 1 2 2 2 2 2
Outdoor multi-use sports area 0 0 0 0 0 0 0 0 0 1
Dog park 1 1 1 1 1 3 3 3 3 4
Amphitheaters 3 3 3 3 3 3 3 3 3 3
Performing arts center 1 1 1 1 1 1 1 1 1 1
Wastewater
Sanitary sewers (miles) 195 195 195 195 195 195 195 195 195 195 Storm sewers (miles) 72 72 72 72 72 82 82 82 82 82
Source: City of El Cajon Departments
Notes: (a) All divisions of the Police Department moved into the new Public Safety Center in fiscal year 2012. (b) Three (3) ambulances were sold in fiscal year 2017. (Concluded)
174

CITY OF EL CAJON

ACKNOWLEDGEMENTS
Finance Department
Lori Bogan
Lilia Calip
Victoria Danganan
Luca Gonzales
Lee Ann Jones-Santos
Jason Kang
Martha Lopez
Zachary Moran
Maria Navarro
Nahid Razi
Autumn Reberger
Martin Reid
Mara Romano
Clay Schoen, CPA
Heidi Steppler

C I T Y O F E L C A J O N
200 Civic Center Way
El Cajon, California 92020
www.cityofelcajon.us

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

Independent Auditor’s Report

The Honorable City Council
City of El Cajon, California

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of El Cajon (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 December 8, 2021.

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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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.

San Bernardino, California
December 8, 2021

Independent Accountant’s Report

To the Honorable City Council,

We have performed the procedures enumerated below (as presented in the publication entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution) to the accompanying Appropriations Limit Worksheet for the year ended June 30, 2021. The City of El Cajon’s (the City) management is responsible for the accompanying Appropriations Limit Worksheet for the year ended June 30, 2021.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting the City in meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution. Additionally, the League of California Cities has agreed to and acknowledged that the procedures performed are appropriate to meet for their purposes. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and the associated findings are as follows:

1. We obtained the completed worksheets and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned documents to those that were selected by a recorded vote of the City Council.

Finding: No exceptions were noted as a result of our procedures.

2. For the accompanying Appropriations Limit worksheet, we added last year’s limit to total adjustments and agreed the resulting amount to this year’s limit.

Finding: No exceptions were noted as a result of our procedures.

3. We agreed the current year information presented in the accompanying Appropriations Limit Worksheet to the other documents referenced in number one above.

Finding: No exceptions were noted as a result of our procedures.

4. We agreed the prior year appropriations limit presented in the accompanying Appropriations Limit Worksheet to the prior year appropriations limit adopted by the City Council during the prior year.

Finding: No exceptions were noted as a result of our procedures.

We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA.

We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriations Limit Worksheet for the year ended June 30, 2021. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the City Council and management of the City of El Cajon, California, and is not intended to be and should not be used by anyone other than these specified parties.

San Bernardino, California
December 8, 2021

CITY OF EL CAJON

APPROPRIATIONS LIMIT COMPUTATION
2020- 2021

2020-21
Per Capita Personal Income change 3.73%
Population change:

County population growth 0.27%
CPI change converted to a ratio 1.0373
Population change converted to a ratio 1.0027
Calculation of growth factor 1.0401
2019-2020 Appropriations Limit 166,883,786$
2020-2021 Appropriations Limit
($166,883,786 X 1.0401)* 173,575,944$
* = allow for rounding

-1-

To the Honorable City Council
City of El Cajon, California

We have audited the financial statements of the City of El Cajon (the City) as of and for the year ended June 30, 2021, and have issued our report thereon dated December 8, 2021. Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit

As communicated in our engagement letter dated May 14, 2021, our responsibility, as described by professional standards, is to form and express opinions about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

Planned Scope and Timing of the Audit

We conducted our audit consistent with the planned scope and timing we previously communicated to you.

Compliance with All Ethics Requirements Regarding Independence

The engagement team, others in our firm, and our firm have complied with all relevant ethical requirements regarding independence.

-2-
Significant Risks Identified

We have identified the possibility of the following significant risks:

Management's override of internal controls over financial reporting: Management override of internal controls is the intervention by management in handling financial information and making decisions contrary to internal control policy.

Revenue recognition: Management's failure to recognize revenue in accordance with generally accepted accounting principles.

These significant risks are presumptive in most audits and merit attention by the auditors due to the direct impact over financial reporting and internal control processes. Although identified as significant risks, we noted no matters of management override of controls or deviations from generally accepted accounting principles which caused us to modify our audit procedures or any related matters which are required to be communicated to those charged with governance due to these identified risks.

Qualitative Aspects of the City’s Significant Accounting Practices

Significant Accounting Policies

Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note I to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during 2021. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.

Significant Accounting Estimates

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on 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 markedly from management’s current judgments.

The most sensitive accounting estimates affecting the financial statements are as follows:

Management's estimate of the fair value of investments is based on information provided by financial institutions. We evaluated the key factors and assumptions used to develop the fair value of investments in determining that it is reasonable in relation to the financial statements taken as a whole.

Management's estimate of capital asset depreciation is based on historical estimates of each capitalized item's useful life. We evaluated the key factors and assumptions used to develop the estimated useful lives in determining that it is reasonable in relation to the financial statements taken as a whole.

Management's estimate of the net OPEB liability, related deferred inflows and outflows and OPEB expense are based on actuarial reports provided by independent actuaries. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements taken as a whole.

-3-
Management's estimate of the net pension liability, related deferred inflows and outflows and pension expense are based on actuarial reports provided by independent actuaries. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable in relation to the financial statements taken as a whole.

Financial Statement Disclosures

Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to:

The disclosure of fair value of investments in the notes to the financial statements represents amounts susceptible to market fluctuations.

The disclosure of accumulated depreciation in the notes to the financial statements is based on estimated useful lives which could differ from actual useful lives of each capitalized item.

The disclosure of net OPEB liability, deferred inflows and outflows and OPEB expense in the notes to the financial statements are based on actuarial assumptions. Actual future liabilities, deferred inflows and outflows and pension expense may vary from disclosed estimates.

The disclosure of net pension liability, deferred inflows and outflows and pension expense in the notes to the financial statements are based on actuarial assumptions. Actual future liabilities, deferred inflows and outflows and pension expense may vary from disclosed estimates.

The disclosure related to the effects of Covid 19.

The financial statement disclosures are neutral, consistent, and clear.

Significant Difficulties Encountered during the Audit

We encountered no significant difficulties in dealing with management relating to the performance of the audit.

Uncorrected and Corrected Misstatements

For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit.

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit.

Representations Requested from Management

We have requested certain written representations from management, which are included in the attached letter dated December 8, 2021.

-4-
Management’s Consultations with Other Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues

In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the city, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.

Other Information included in Annual Reports

Pursuant to professional standards, our responsibility as auditors for other information in documents containing the City’s audited financial statements does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information.

However, in accordance with such standards:

We applied certain limited procedures to the required supplementary information (RSI), as listed in the basic financial statements table of contents, which are required information 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 and individual nonmajor fund financial statements, the budgetary comparison schedules, 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.

We were not engaged to report on the transmittal letter and statistical section, which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information and we do not express an opinion or provide any assurance on it.

Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements.

This report is intended solely for the information and use of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties.

December 8, 2021

The Valley of Opportunity
~~~
C"o ~ '\.~
'.i"Porate(\
December 8, 2021
Rogers, Anderson, Malady & Scott, LLP
735 E Carnegie Drive, Suite 100
San Bernardino, California 92408
Finance
This representation letter is provided in connection with your audit of the basic financial statements of the City of El Cajon (the City) as of June 30, 2021 and for the year then ended, and the related notes to the financial statements , for the purpose of expressing opinions on whether the basic financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows, where applicable, of the various opinion units of the City in accordance with accounting principles generally accepted for governments in the United States of America (U.S. GAAP).

Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances , makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.

We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of December 8, 2021:

Financial Statements
• We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated May 14, 2021 , for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S. GAAP.
• We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
• We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.
• We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements.
• We have reviewed, approved, and taken responsibility for the financial statements and related notes.
• We have a process to track the status of audit findings and recommendations. • We have identified and communicated to you all previous audits, attestation engagements , and other studies related to the audit objectives and whether related recommendations have been implemented.
• Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable.

City ofEI Cajon • 200 Civic Center Way• El Cajon , CA 92020 (619) 441-1721 •Fax (619) 588-1190
www.cityofelcajon .us
-1-
• All related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP. • All events subsequent to the date of the financial statements and for which U.S. GAAP requires c;idjustment or disclosure have been adjusted or disclosed. • The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.
• All component units, as well as joint ventures with an equity interest , are included and other joint ventures and related organizations are properly disclosed. • All funds and activities are properly classified .
• All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments , GASB Statement No. 37, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments: Omnibus as amended, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, for presentation as major are identified and presented as such and all other funds that are presented as major are considered important to financial statement users.
• All components of net position, nonspendable fund balance, and restricted, committed , assigned, and unassigned fund balance are properly classified and, if applicable , approved . • Our policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available is appropriately disclosed and net position/fund balance is properly recognized under the policy.
• All revenues within the statement of activities have been properly classified as program revenues , general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal.
• All expenses have been properly classified in or allocated to functions and programs in the statement of activities , and allocations, if any, have been made on a reasonable basis. • All interfund and intra-City transactions and balances have been properly classified and reported . • Deposit and investment risks have been properly and fully disclosed . • Capital assets, including infrastructure assets , are properly capitalized, reported , and if applicable , depreciated .
• All required supplementary information is measured and presented within the prescribed guidelines .
• With regard to investments and other instruments reported at fair value:
o The underlying assumptions are reasonable and they appropriately reflect management's intent and ability to carry out its stated courses of action. o The measurement methods and related assumptions used in determining fair value are appropriate in the circumstances and have been consistently applied. o The disclosures related to fair values are complete , adequate , and in accordance with U.S.

GAAP.
o There are no subsequent events that require adjustments to the fair value measurements and disclosures included in the financial statements .
-2-
Information Provided
• We have provided you with :
o Access to all information , of which we are aware that is relevant to the preparation and fair presentation of the financial statements of the various opinion units referred to above , such as records , documentation , meeting minutes , and other matters ; o Additional information that you have requested from us for the purpose of the audit ; and o Unrestricted access to persons within the City from whom you determined it necessary to obtain audit evidence .
o A final version of the annual report (including all the documents that, together, comprise the annual report) in a timely manner prior to the date of the auditor's report. • All transactions have been recorded in the accounting records and are reflected in the financial statements .
• We have disclosed to you the results of our assessment of the risk thatthe financial statements may be materially misstated as a result of fraud .
• We have no knowledge of any fraud or suspected fraud that affects the City and involves :
o Management;
o Employees who have significant roles in internal control; or o Others where the fraud could have a material effect on the financial statements. • We have no knowledge of any allegations of fraud , or suspected fraud , affecting the City's financial statements communicated by employees, former employees , vendors, regulators, or others. • We have disclosed to you all known actual or possible litigation, claims , and assessments whose effects should be considered when preparing the financial statements . There have been no changes or updates to legal information disclosed to you by our attorneys since the date of such legal response and now.
• We have disclosed to you the identity of the City's related parties and all the related party relationships and transactions of which we are aware.
• There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in accounting , internal control, or financial reporting practices . • The City has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities .
• We have disclosed to you all guarantees , whether written or oral, under which the City is contingently liable.
• We have disclosed to you all significant estimates and material concentrations known to management that are required to be disclosed in accordance with GASB Statement No. 62 (GASB- 62), Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements . Significant estimates are estimates at the balance sheet date that could change materially within the next year. Concentrations refer to volumes of business, revenues , available sources of supply , or markets or geographic areas for which events could occur that would significantly disrupt normal finances within the next year. • We have identified and disclosed to you the laws, regulations, and provisions of contracts and grant agreements that could have a direct and material effect on financial statement amounts , including legal and contractual provisions for reporting specific activities in separate funds. -3-
• There are no:
o Violations or possible violations of laws or regulations, or provisions of contracts or grant agreements whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, including applicable budget laws and regulations.
o Unasserted claims or assessments that our lawyer has advised are probable of assertion and must be disclosed in accordance with GASB-62.
o Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by GASB-62.
o Continuing disclosure consent decree agreements or filings with the Securities and Exchange Commission and we have filed updates on a timely basis in accordance with the agreements (Rule 240, 15c2-12).
• Unless disclosed to you, the City has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset or future revenue been pledged as collateral , except as disclosed to you.
• We have complied with all aspects of grant agreements and other contractual agreements that would have a material effect on the financial statements in the event of noncompliance. • All electronic copies of documents provided to you were copies of the true, unaltered originals.

Supplementary Information in Relation to the Financial Statements as a Whole With respect to the supplementary information accompanying the financial statements:
• We acknowledge our responsibility for the presentation of the supplementary information in accordance with accounting principles generally accepted in the United States of America. • We believe the supplementary information, including its form and content, is fairly presented in accordance with any applicable criteria.
• The methods of measurement or presentation have not changed from those used in the prior period.
• When the supplementary information is not presented with the audited financial statements , management will make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by the City of the supplementary information and the auditor's report thereon.
• We acknowledge our responsibility to include the auditor's report on the supplementary information in any document containing the supplementary information and that indicates the auditor reported on such supplementary information.
• We acknowledge our responsibility to present the supplementary information with the audited financial statements or, if the supplementary information will not be presented with the audited financial statements, to make the audited financial statements readily available to the intended users of the supplementary information no later than the date of issuance by the City of the supplementary information and the auditor's report thereon. -4-
Required Supplementary Information
With respect to the required supplementary information accompanying the financial statements:
• We acknowledge our responsibility for the presentation of the required supplementary information in accordance with accounting principles generally accepted in the United States of America . • We believe the required supplementary information, including its form and content, is measured and fairly presented in accordance with any applicable criteria. • The methods of measurement or presentation have not changed from those used in the prior period.

Pension and Postretirement Benefits
We believe that the actuarial assumptions and methods used to measure pension and other postemployment benefit liabilities and costs for financial accounting purposes are appropriate in the circumstances.

Use of a Specialist
We agree with the findings of specialists in evaluating the net pension liability and net OPEB liability (and related deferred amounts) and have adequately considered the qualifications of the specialist in determining the amounts and disclosures used in the financial statements and underlying accounting records. We did not give or cause any instructions to be given to specialists with respect to the values or amounts derived in an attempt to bias their work, and we are not otherwise aware of any matters that have had an impact on the independence or objectivity of the specialists.

Graham Mitchell, City Manager
hoen, Director of Finance
-5-
City Council
Agenda Report
Agenda Item 8.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Marisol Thorn, Director of Human Resources
SUBJECT: Update on Employee Mental Wellness Programs
RECOMMENDATION:

That the City Council receives a report on the City’s Employee Mental Wellness Programs and provides direction for 2022.

BACKGROUND:

The City Council held its priority-setting workshop on March 1, 2021. One priority that resulted from the workshop was the request for staff to establish a robust Mental Wellness Program for City employees. In previous years, the City implemented numerous employee mental wellness programs. However, some of these programs were limited to a specific employee group or reactive by design. Those programs included public safety employee assistance, a chaplain for fire personnel, and the Station Dog pilot program. This report highlights the programs implemented in the past year, along with suggestions for 2022.

City wellness programs implemented in 2021 include:

Acquired a second station dog, assigned to Station 8, to continue mental wellness support.

Introduced by the El Cajon Police Officers’ Association, the City established a Wellness Annual Incentive program, but expanded the program to all benefited City staff. This incentive program encourages employees to obtain annual physical and wellness checks.

Coordinated a specialized mental wellness training for law enforcement personnel to provide awareness of their own personal triggers and stressors.

Launched an Indoor Plant Wellness Program for employees who were interested in participating in the program. A total of 171 live indoor plants were provided to City employees for their workspace.

Launched an alternate work schedule and telework program for City employees in an effort to improve work-life balance.

Added and improved existing gym equipment at two City sites to encourage employees to stay healthy and fit.

Enhanced workers’ compensation services to all injured City employees to ensure proper care is provided by the City’s designated Third Party Administrator for Workers’ Compensation Benefits.

With the recent COVID-19 pandemic, mental wellness has once again remained at the With the recent COVID-19 pandemic, mental wellness has once again remained at the forefront. The City continues to look for innovative ways to maintain a healthy, productive, and resilient workforce. Staff has been addressing mental wellness in a multifaceted manner. In 2022, staff is working to include a dental hygiene component, which would bring onsite dental services, encouraging employees to attend to their basic dental needs while reducing commute time away from work. This program will not require City expenditure of funds. In line with the onsite dental visits, staff will incorporate dental visits into the existing Annual Wellness Incentive Program.

Also in 2022, staff will be proposing a final prong to the multifaceted approach by focusing on wellness education. This includes training and resources that address topics such as work-life balance, soft skills, resiliency and mindfulness. This last prong requires additional resources, including the possible addition of an additional HR staff member, to provide and/or coordinate in-house training, bring onsite specialized programs, and adding a resource center for employees. Although mental wellness is an ever-evolving field, staff believes having a multifaceted approach will allow the City to continue and better-address the wellbeing of all City employees.

CALIFORNIA ENVIRONMENTAL QUALITY ACT:

N/A
FISCAL IMPACT:

N/A
Prepared By: Marisol Thorn, Director of Human Resources Reviewed By:

Approved By: Graham Mitchell, City Manager
City Council
Agenda Report
Agenda Item 9.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Anthony Shute, Director of Community Development
SUBJECT: Microenterprise Home Kitchen Operations (MEHKO) RECOMMENDATION:

That the City Council accepts the report and directs staff to initiate a Zoning Code amendment to incorporate Microenterprise Home Kitchen Operations performance standards.

BACKGROUND:

Assembly Bills (AB) 626 and 377 authorize the County of San Diego (County) to adopt an ordinance to permit the operation of home-based restaurants called Microenterprise Home Kitchen Operations (MEHKO) throughout the County. On September 15, 2021, the County Board of Supervisors (Board) directed the County Department of Environmental Health and Quality (DEHQ) to engage in a public outreach program and prepare an ordinance authorizing MEHKOs for Board consideration within 120 days.

On October 12, 2021, the City Council received an agenda report and staff presentation which identified potential concerns related to the MEHKO program. After a presentation from County DEHQ Director Heather Buonomo and public comments on the item, City Council directed staff to return with additional information and clarifications on MEHKOs.

On December 14, 2021, the City Council received a second agenda report and staff presentation which examined jurisdictions in the County of Riverside, the first jurisdiction in the State to adopt a MEHKO ordinance in 2019, and found negligible health and zoning code violations associated with operating MEHKOs. The City Council then directed staff to send a letter to the County supporting a MEHKO Ordinance.

On January 12, 2022, the County Board of Supervisors voted unanimously to adopt an ordinance allowing MEHKOs as part of a temporary program for a two-year period. The second ordinance reading is expected during the Board's meeting on January 26, 2022. If the Board then votes in favor, MEHKOs will be allowed to operate 30 days later.

DISCUSSION
The temporary MEHKO ordinance approved by the Board will apply to all jurisdictions in the County and includes requirements or operational provisions for categories including food safety certificates, allowable food storage areas, potable water, and ongoing testing to be enforced by DEHQ. Nuisance complaints regarding the operation of a MEHKO will be enforced by individual cities within the County, which may choose to utilize existing performance standards or adopt new standards. Violation of a performance standard is considered a nuisance and would be subject to code compliance action.

The City’s zoning code currently contains performance standards for residential zones, but it does not include specific regulations related to MEHKOs. In order to ensure that performance standards are clear and concise for MEHKOs operating in the City, staff recommends that the City Council initiates an amendment to the zoning code to:

Add definitions for MEHKO-specific terminology to ensure proper enforcement; Establish restrictions and conditions related to commercial equipment not intended for residential purposes; and
Establish performance standards related to traffic and congestion, grease storage and disposal, fire hazards, vermin, wood-burning, refuse storage, etc.

RECOMMENDATION:

Staff recommends that the City Council accepts the report and directs staff to initiate a Zoning Code amendment to incorporate Microenterprise Home Kitchen Operations performance standards.

Prepared By: Noah Alvey, Deputy Director of Community Development Reviewed By: Anthony Shute, Director of Community Development Approved By: Graham Mitchell, City Manager
Attachments
San Diego County Department of Environmental Health and Quality Microenterprise Home Kitchen Operations (MEHKO) FAQs revised 11/09/2021
January 12, 2022, County Board Minute Order for MEHKO
Rev. 11/09/2021 1

County of San Diego

DEPARTMENT OF ENVIRONMENTAL HEALTH AND QUALITY

FOOD AND HOUSING DIVISION
P.O. BOX 129261, SAN DIEGO, CA 92112-9261
Phone: (858) 505- 6900 | Fax: ( 858) 999 - 8920 | www.sdcdehq.org Microenterprise Home Kitchen Operation (MEHKO) FAQs
*NOTE: Some sections below will only be in effect if a local MEHKO program is adopted.

General Info

1. What does the new law do?
The new law establishes a “microenterprise home kitchen operation” , also referred to as MEHKO, as a new type of retail food facility to be operated by a resident in a private home. However, the law requires a County to opt into a local program in order for MEHKOs to be able to operate. The County Board of Supervisors will be the governing body that can make the decision as to whether to opt into a program for the entire county.

2. When does the new law go into effect?
The new law was effective January 1, 2019. However, the new law gives the county “full discretion” to authorize the MEHKOs in their jurisdiction. Currently, no program has been authorized within San Diego County.

3. What is a Microenterprise Home Kitchen Operation or MEHKO? A MEHKO is a type of food service, like a mini restaurant, that is operated by a resident in a private home where food is stored, handled, and prepared that may be served to customers. Food must be prepared the day of service and can be eaten onsite or be delivered to the customer by the operator. Food may also be sold through an internet website or a phone based mobile app belonging to an Internet Food Service Intermediary, but delivery must be by the MEHKOs operator or an employee of the MEHKOs facility. Food products may not be sold to a wholesale or retail facility. Third party delivery apps such as UberEats, Postmates, or GrubHub etc. cannot be used by MEHKOs facilities unless as provided for in California Retail Food Code (CRFC) Section 114367.5.

A MEHKO does not include either of the following:
• A catering operation, as defined in CRFC Section 113739.1. • A cottage food operation, as defined in CRFC Section 113758.

4. Who is the “local enforcement agency” for MEHKOs in the San Diego region? The local enforcement agency for food facilities, including MEHKOs, in the San Diego region is the County of San Diego Department of Environmental Health and Quality (DEHQ)

5. What is meant by “private home”?
“Private home” means a dwelling, including an apartment or other leased space, where individuals reside. The MEHKO must be conducted within the primary residence. Second homes, vacation homes, or motor homes DO NOT qualify as a MEHKO.

6. If a person is renting a private residence/apartment or lives in a Homeowner’s Association (HOA), can they still operate a MEHKO?
A person must check their lease agreement to see if there are any restrictions to operating a home-based business out of the residence/apartment. If you have an HOA, it is advised that you make sure that a MEHKO is allowed by your HOA before applying for a health permit.

Rev. 11/09/2021 2

7. What is the difference between a MEHKO and a Cottage Food Operation (CFO)? A CFO is restricted to preparing and selling only prepackaged, properly labeled, non -potentially hazardous foods that have been approved by the California Department of Public Health (CDPH) (https://www.cdph.ca.gov/Programs/CEH/DFDCS/CDPH%20Document%20Library/FDB/FoodSafetyPr ogram/CottageFood/ApprovedCottageFoodsList.pdf), which may be sold directly or indirectly to the consumer. CFOs may not allow on -site food consumption. A MEHKO is able to prepare and serve potentially hazardous foods and are able to provide onsite dining, pick-up, or delivery options to their customers.

8. Can a person operate both a Cottage Food Operation (CFO) and a MEHKO in their residential kitchen?
No, the law does not allow a CFO and a MEHKO in the same residence. The definition of a MEHKO does not include a CFO [California Health & Safety Code (HSC) section 113825(b)].

9. Can a person operate multiple Cottage Food Operations (CFOs) or multiple MEHKOs in their residence?
No. A cottage food operator is an individual who operates a cottage food operation in his or her private home and is the owner. (HSC section 113758). A MEHKO is a food facility that is operated by a resident in a private home where food is stored, handled and prepared ( HSC section 113825). Both a CFO and MEHKO have limitations for the gross dollar amount allowed, number of employees, type of operation, allowed foods, etc. in a single residence. The law does not allow limits to be aggregated by multiple operations in the same residence.

10. Are multiple people living in the same residence allowed to each operate a Cottage Food Operation (CFO) or MEHKO in that residence?
No. See Questions 8 and 9 above.

Application Process

11. Is a permit required to operate a MEHKO?
Yes, a health permit is required from the County of San Diego Department of Environmental Health and Quality (DEHQ), Food and Housing Division, prior to operating.

12. How does a person who wants to operate a MEHKO obtain a permit from DEHQ? If the MEHKO program is approved in San Diego County, a person (the operator) must complete a permit application package that includes a health permit application form and “ Standard Operational Procedures” form and pay a permit fee. Once the application and procedures are reviewed and approved by DEHQ , an initial inspection will be scheduled and conducted at the private residence to verify compliance with state law. Once compliance is verified, the permit will be issued. , Once MEHKOs are approved in San Diego County an application packet can be picked up at the Department of Environmental Health Office, located at 5500 Overland Ave, Suite 170 San Diego, CA 92123, or online at www.sdcdehq.org
.

13. How long does the application process take for a MEHKO? The application process is determined by the level of detail and completeness of the application package. The standard application review time for MEHKOs is 20 calendar days if the application package is complete and the level of detail in the operational procedures is included to demonstrate compliance with the law . If the application must be sent back for revisions an additional 10 calendar days for review may be added.

14. Is approval from the DEHQ Plan Check Unit required prior to obtaining a MEHKO permit? Plan check approval is not required prior to obtaining a health permit to operate. However, if any remodel work is to b e done at the residence in order to support the MEHKO, operators must contact their local Building Department to determine what, if any, approvals will be needed prior to starting construction.

Rev. 11/09/2021 3

15. What fees are associated with operating a MEHKO?
In order to operate a MEHKO , the init ial health permit fee will need to be paid prior to starting the operation, and then the operator will be responsible for paying their annual permit fee in each subsequent year. Additional fees will be applied for any justified complaint response as well as for reinspections that are needed to ensure compliance with the CRFC. For a list of current fees, please refer to the current fee schedule found at www.sdcdehq.org.

16. If an operator moves to a new residence, do they need to go through the application process again?
Yes, DEHQ permits are non-transferable. If an operator moves to a new residence, they must go through the application process again.

17. How does a customer determine if a MEHKO has an approved permit? A MEHKO is required to display their permit, or a legible copy, during hours of operation. Customers can also visit www.SDFoodInfo.org
to determine if a MEHKO has a valid permit.

Operational Requirements

18. Does a person need any special training or certification to operate a MEHKO ? The operator of the MEHKO needs to successfully pass an approved and accredited food safety manger course and any individual, other than the operator, who is involved with the preparation, storage, or service of food in a MEHKO must also obtain a food handler card from one of the schools approved by DEHQ. For a list of approved food safety man ager and food handler courses, visit our website at www.sdcountyfoodhandlers.org.

19. Can a MEHKO have employees?
A MEHKO can have one full time equivalent employee who is an individual employed for the MEHKO; this does not include household family members.

20. Are kids and pets allowed to be in a MEHKO?
Yes, the law exempts a MEHKO from certain requirements of the CRFC. However, MEHKOs facilities are required to keep all kids and animals outside of the kitchen and dining areas during food service and preparation.

21. Are there any meal or sales limitations for MEHKOs? Yes, food preparation is limited to 30 meals per day or 60 individual meals per week and gross annual sales cannot exceed $50,000. Records of all sales must be kept so that compliance with this limitation can be verified. The law also allows for DEHQ to limit the number of individual meals prepared if the physical space available for food preparation, food storage, and equipment storage is not adequate to support the number of meals being prepared.

22. Are there any restrictions to the type of food a MEHKO can serve? A MEHKO can prepare and sell food and beverages that have been approved by the local enforcement agency for same day on-site consumption or delivery with the exception of food or beverages that:
• Involve the production, service, or sale of raw milk or raw milk products • Involve the service or sale of raw oysters
• Involve food processes that require a Hazard Analysis Critical Control Point (HACCP) Plan such as:
o Smoking food as a method of food preservation
o Curing food
o Using food additives or adding components such as vinegar as a method of food preservation
o Operating a molluscan shellfish life support system display tank used to store and display shellfish that are offered for human consumption
o Using acidification or activity to prevent the growth of Clostridium botulinum Rev. 11/09/2021 4

o Packaging potentially hazardous food using a Reduced-Oxygen Packaging method o Preparing food by another method that is determined by the lead local agency to require a HACCP plan
• Involve the manufacturing of ice cream without a license from California Department of Food and Agriculture
• Contains alcohol without the appropriate liquor license from Alcohol Beverage Control (ABC)

23. Can I keep leftovers to serve the next day, or prepare foods, including condiments, beverages, or sauces, in advance?
Per the CRFC requirements, all food and beverages cannot be served the next day as part of the MEHKO operation. MEHKOs must prepare and serve all food and beverages on the same day.

24. Can I package food or beverages at my MEHKO?
Yes, a MEHKO may portion food into containers for same -day pick up or delivery service. However, MEHKOs cannot use reduced-oxygen packaging (such as vacuum packing) or seal their foods in cans, bottles, or jars.

25. Can alcoholic beverages be sold from a MEHKO?
MEHKOs must have a valid license from the California Department of Alcoholic Beverage Control (ABC) in order to sell, serve, provide, or allow alcohol to be consumed on- site at the MEHKO. This includes allowing patrons to bring their own alcohol. Contac t ABC for more information: www.abc.ca.gov .

26. Can homegrown fruits and vegetables be used in a MEHKO? Yes, however care should be taken to ensure all fruit and produce is grown and handled using best management practices associated with a community food producer and all produce must be thoroughly washed prior to use.

27. Can a MEHKO add in cannabis, CBD, or Kava to the products they sell as part of their operation? Current restrictions imposed by the California Department of Public Health (CDPH) and the FDA prohibit a food facility from putting these ingredients into any food products that are offered to the public for consumption.

28. Can a MEHKO operate as a caterer?
Per the CRFC requirements, a MEHKO is prohibited from operating as a caterer or advertising any catering options as part of their permitted operation. Only permanent food facilities approved for operation) such as a restaurant, banquet facility or other ap proved commercial kitchen) or operators who have obtained a Catering permit at an approved commercial kitchen may operate as a caterer.

29. Can a MEHKO support a mobile food facility or act as a commissary for a food truck? Per the CRFC requirements, MEHKOs may not sell to, operate as, or act as a commissary for a mobile food facility, such as a food truck or food cart.

30. Can an operator of a MEHKO sell or give away food products at temporary community events or at Certified Farmer’s Markets?
An operator of a MEHKO cannot sell food products at a temporary community event or a Certified Farmer’s Market. A MEHKO can only conduct food service directly to the public from the residential home or sold through an internet website or a phone based mobile app belonging to an Internet Food Service Intermediary. Internet Food Service Intermediaries must be registered with the California Department of Public Health.

31. Can an operator of a MEHKO donate any leftover food? An operator of a MEHKO may donate food to a food bank or to any other nonprofit charitable organization as long as the food has been handled in compliance with food safety requirements. For more information on food donations, contact the DEHQ -FHD information specialist at (858) 505 -6900, or one of the two San Diego Based Food Banks - Feeding San Diego at (858) 452-3663, or the San Diego Food Bank at (858) 527-1419.

Rev. 11/09/2021 5

32. Where can I advertise my MEHKO business?
A MEHKO may advertise their business through an i nternet food service intermediary or other online platform such as social media, as well as through print media. The MEHKO must clearly identify San Diego County Department of Environmental Health and Quality, Food and Housing Division as the permit issuer, the permit number, and the following statement “Made in a Home Kitchen” in a conspicuous font and location within the advertisement. A MEHKO is prohibited from posting signage to advertise the business in front of the residence.

Inspection Process

33. How often will a MEHKO be inspected?
All MEHKOs will receive one annual routine inspection. The first inspection will occur before a permit is issued to ensure compliance with the law.

34. Can a MEHKO be inspected more frequently?
State law prohibits conducting routine inspections of MEHKOs more than once a year. Additional inspections may be required in response to a complaint, if it is suspected that adulterated or otherwise unsafe food has been produced or served by the MEHKO, or if the MEHKO has violated state law (California Retail Food Code).

35. What areas of a private residence will be permitted and inspected as part of a MEHKO? The areas of a private residence t hat will be permitted and inspected as part of a MEHKO includes the kitchen, onsite customer eating area, food storage areas, bathroom (toilet room), janitorial or cleaning areas, and trash storage areas. Any utensils and equipment used in the MEHKO will also be inspected.

36. What records are required to be maintained for review by the local enforcement agency? An operator of a MEHKO must maintain the following documents onsite for review during an inspection:
• Written standard operating procedures that include a menu and hours of operation • A valid permit issued by DEHQ, or a legible copy of the valid permit, must be displayed onsite at all times when the MEHKO is in operation
• A copy of a valid driver’s license of the person delivering food on behalf of the MEHKO • A copy of the most recent DEHQ inspection report
• Records of all receipts from the sales of food

37. Why isn’t a letter grade posted at a MEHKO like it is at a permanent food facility or a mobile food facility?
The law exempts a MEHKO from any local grading or placarding system. Their permit to operate must be retained on site, and on display, at all times. However, just like permanent food facilities and mobile food facilities, inspection report data and violation information relating to any inspections conducted at a permitted MEHKO can be found at www.SDFoodInfo.org.

Equipment Requirements

38. Is commercial grade equipment required in a MEHKO?
No, commercial equipment/appliances are not required as long as the equipment/appliances used in a MEHKO are kept clean, stored in a sanitary manner, and are in good working order.

39. Can a MEHKO use an open-air barbecue or an outdoor wood-burning oven? Yes, a MEHKO may use an open-air barbecue or an outdoor wood-burning oven as long as the barbecue or wood-burning oven is:
• Operated on the same premises and is within reasonable proximity to the MEHKO • Cannot be accessed by the public
• Is not in a location that constitutes a fire hazard
• Meets the requirements of CRFC Section 114143
Rev. 11/09/2021 6

40. Are restrooms required to be available for MEHKO customers? Yes, clean toilet facilities, in good condition, shall be available for the MEHKO operator, food handlers, and any employees at all times. If the MEHKO allows customers to consume food or beverages on site, the MEHKO must provide a restroom for those customers to use.

Land Use

41. If there are complaints about odors, traffic, parking, and/or excessive noise, what agency should be notified?
Any complaints involving nuisance concerns can be reported directly to the local city’s Code Enforcement Department, or for MEHKOs in the unincorporated areas , to the County of San Diego Department of Planning & Development Services, Code Enforcement Program.

42. Are there special requirements for disposing of fats, oils or grease that are produced in a MEHKO?
Fats, oils and grease (sometimes known as FOG) are produced when cooking foods that contain fat, such as meat or dairy products, or are prepared using fat (for baking, sautéing, marinating, frying, etc.).

They can cause blockages of residential and community plumbing and sewers and can result in sewage backups and overflows both inside and outside of residences. Please do not dispose of fats, oils and grease down the drain. For more information about how to properly dispose of fats, oils and grease, please contact your sewer agency or local city code enforcement for any additional restrictions on the disposal of fats, oils or grease.

43. Are grease traps required for MEHKOs?
State law (California Retail Food Code) prohibits requiring MEHKOs to install grease traps. Please see Question 42 above for proper disposal of fats, oils and grease.

For additional information, please visit
the Department of Environmental Health’s webpage at: http://www.sdcdehq.org

If you have any questions that have not been answered in these FAQ’s, or if additional clarification is needed, please contact the DEHQ-FHD Information Specialist at (858) 505-6900 or by email at [email protected].

JANUARY 12, 2022 1

COUNTY OF SAN DIEGO

BOARD OF SUPERVISORS - LAND USE
WEDNESDAY, JANUARY 12, 2022

MINUTE ORDER NO. 1

SUBJECT: AUTHORIZING MICROENTERPRISE HOME KITCHEN OPERATIONS IN SAN DIEGO COUNTY (DISTRICTS: ALL)

OVERVIEW
State law, the California Retail Food Code (CRFC), establishes uniform health and sanitation standards at the State level for the regulation of retail food operations (food facilities) to prevent foodborne illness.

The CRFC defines a food facility as an operation that stores, prepares, serves, sells, or otherwise provides food for human consumption at the retail level, and includes restaurants, mobile food trucks, grocery stores, delis, food carts, schools and cottage food operations. The Department of Environmental Health and Quality (DEHQ) is the local enforcement agency of the CRFC for all 18 incorporated cities (local jurisdictions), as well as the unincorporated communities in the region. DEHQ implements a food program conducting inspections at more than 15,000 food facilities annually, focusing on compliance with the CRFC and reviewing food handling practices to protect the public’s health and prevent the incidence of foodborne illness.

Prior to 2012, California required food sold to consumers be made at inspected commercial kitchens. In 2013, the California Homemade Food Act allowed, certain low-risk food products not requiring refrigeration, such as bread, pie, fruit jam, and dried food, to be made in private home kitchens and sold as a fully packaged and labeled product to consumers. These operations, commonly known as cottage food operations, provide an opportunity for home cooks to start a small business.

In 2019, the enactment of Assembly Bill (AB) 626, California Retail Food Code: Microenterprise Home Kitchen Operations expanded the opportunity for home cooks to operate a small business. This law established a microenterprise home kitchen operation (MEHKO) as a new type of restricted food service facility in the CRFC. Once authorized, MEHKOs home cooks can prepare and sell a wide range of foods in a home kitchen (like a mini restaurant), including foods that require time and temperature control in order to prevent bacteria growth, such as meat, fish, poultry, and dairy products.

MEHKOs cannot operate or be permitted until authorization is granted by the governing body of the local enforcement agency. The County of San Diego (County) Board of Supervisors (Board), as the governing body of DEHQ, has the authority to authorize a local MEHKO program for the entire San Diego region. If approved, the Board would be authorizing MEHKOs for both the unincorporated communities and the 18 incorporated cities in the region.

On September 15, 2021 (2), the Board directed staff to return with an ordinance authorizing MEHKOs throughout San Diego county consistent with State law (the CRFC), conduct community and local jurisdiction outreach to both the unincorporated areas and the 18 incorporated cities in the region, provide opportunities for public input in drafting the ordinance, and implement a public education program for small volume home-based retail food operations and food safety, following the adoption of a MEHKO ordinance.

JANUARY 12, 2022 2
If authorized throughout San Diego county, MEHKOs will be subject to the requirements established in the CRFC. The CRFC exempts MEHKOs from specific standards normally required for a food facility, primarily to accommodate the differences between a home kitchen and a commercial kitchen. During community and local jurisdiction outreach, options for authorization and potential food safety components were presented for input. The food safety components supplement the CRFC and clarify requirements for MEHKOs to protect public health. The feedback received was incorporated into proposed amendments to the County of San Diego Code of Regulatory Ordinances (MEHKO ordinance). Specifically, the proposed MEHKO ordinance includes optional requirements or operational provisions in the following food safety component categories:
· Food Safety Certificate
· Allowable Food Storage Areas
· Number of MEHKOs per Residence
· Potable Water for Private Wells - Initial Testing
· Potable Water for Private Wells - Ongoing Testing

The CRFC prohibits jurisdictions from imposing restrictions on MEHKO for zoning purposes, or requiring additional permits to operate, other than a health permit. Local jurisdictions can, however, investigate and enforce their regulations. Each jurisdiction is responsible for enforcing its own related regulations, including but not limited to code compliance.

As the governing body for the unincorporated communities in the region, the County is responsible for ensuring the unincorporated communities are safe and sustainable. During community outreach, concerns for possible community impacts were raised. This item includes a summary of community concerns related to possible MEHKO impacts, as well as the existing processes to address possible impacts, and options the Board may take to further address possible impacts by MEHKOs for the unincorporated areas of the region.

Today’s request is for the Board to provide direction regarding authorization of a MEHKO program for the region by selecting one of the following options:
· Option 2a - Authorize a Microenterprise Home Kitchen Operations Program · Option 2b - Decline to Authorize a Microenterprise Home Kitchen Operations Program

If the Board selects Option 2a and authorizes a MEHKO program for the region, the Board is requested to provide direction on the type of authorization by selecting one of the following options:
· Option 3a - Authorize a MEHKO Program by Ordinance
· Option 3b - Temporarily Authorize a MEHKO Program by Ordinance (for a period of two years)

If the Board authorizes a MEHKO program, there is a request to add 1.0 staff year in DEHQ to account for the additional work associated with MEHKOs, as well as a request to waive Board Policy B-29:

Fees, Grants, Revenue Contracts - Department Responsibility for Cost Recovery for MEHKO permit fees that do not cover the full cost of services, and a request to provide direction on the optional food safety components included in the MEHKO Ordinance.

Additionally, if the Board authorizes a MEHKO program, the Board is requested to provide direction on regulations to address potential community issues arising from MEHKOs in the unincorporated communities by either:
· Option 9a - Continue with Existing Nuisance Regulations and Collect Data · Option 9b - Amend the Regulatory Code to include Title 3 Division 8 - Regulation of Microenterprise Home Kitchen Operations
JANUARY 12, 2022 3
Adoption of any of the proposed ordinances require two steps. If the Board takes action to authorize a MEHKO program by ordinance (Option 3a) or temporarily authorize a MEHKO program by ordinance (Option 3b), or adopt amendments to the regulations to address potential community issues arising from MEHKOs (Option 9b), the Board is requested to approve the first reading of the ordinance(s) on January 12, 2022. If approved, the ordinance(s) will be brought back for adoption on January 26, 2022, and be effective 30 days after adoption.

RECOMMENDATION(S)

CHIEF ADMINISTRATIVE OFFICER
On January 12, 2022:

OPTIONS FOR MICROENTERPRISE HOME KITCHEN OPERATIONS PROGRAM

AUTHORIZATION
See the Background Section of the Board Letter under “Options for Board Consideration for the Authorization of a MEHKO” for additional details on microenterprise home kitchen operations (MEHKO) program authorization options.

1. Find that none of the options presented to the Board today require additional environmental analysis.

Option 2a will be a discretionary decision to allow a new activity. However, this option would be subject to strict limitations on how many meals could be prepared, cooked, and served on the same day, as well as on a weekly basis, from each home kitchen operation. With those limitations, therefore, a finding can be made, with certainty, that allowing such activity would not have a significant effect on the environment pursuant to CEQA Exemption 15061(b)(3). In addition, Option 2b would affirmatively reject this new program and decisions to reject projects are exempt from CEQA review pursuant to CEQA Exemption 15270.

2. Provide direction regarding authorization of a MEHKO program for the region by selecting either option 2a or 2b.
2a. Authorize a Microenterprise Home Kitchen Operations Program. (Staff Recommendation) · Waive Board Policy B-29: Fees, Grants, Revenue Contracts - Department Responsibility for Cost Recovery for MEHKO permit fees.
· Approve the request to add 1.00 (one) staff year in the DEHQ to perform inspections and conduct education and outreach and direct the Department of Human Resources (DHR) to classify the position at the appropriate level.

2b. Decline to Authorize a Microenterprise Home Kitchen Operations Program.

3. If 2a is selected to Authorize a Microenterprise Home Kitchen Operations Program, then provide direction on the type of authorization by selecting either option 3a or 3b. No staff recommendation for these options. Staff can implement either option.
3a. Authorize a MEHKO Program by Ordinance: If the Board adopts an ordinance authorizing a MEHKO program for the region, the program will be implemented as codified in State law (CRFC), and subject to any local requirements included in the adopted ordinance, including the food safety components discussed in recommendations 4 through 8. · Set a hearing for January 26, 2022 for consideration and adoption of amendments to the San Diego County Code of Regulatory Ordinances.

JANUARY 12, 2022 4
· Approve the introduction of the Ordinance, (first reading), read title and waive further reading of the Ordinance entitled: ORDINANCE AUTHORIZING A

MICROENTERPRISE HOME KITCHEN OPERATIONS PROGRAM THROUGHOUT

THE COUNTY OF SAN DIEGO AND INCORPORATING BY REFERENCE HEALTH AND SAFETY CODE SECTIONS 113789, 113825, 114367, 114367.1 - 114367.6 AND 114390.

3b. Temporarily Authorize a MEHKO Program by Ordinance (for a period of two years): If the Board adopts an ordinance authorizing a MEHKO program temporarily for the region for a period of two years, the program will be implemented as codified in State law (CRFC), and subject to any local requirements included in the adopted ordinance, including the food safety components discussed in recommendations 4 through 8.
· Set a hearing for January 26, 2022 for consideration and adoption of amendments to the San Diego County Code of Regulatory Ordinances.

· Approve the introduction of the Ordinance, (first reading), read title and waive further reading of the Ordinance entitled: ORDINANCE TEMPORARILY AUTHORIZING A

MICROENTERPRISE HOME KITCHEN OPERATIONS PROGRAM THROUGHOUT

THE COUNTY OF SAN DIEGO AND INCORPORATING BY REFERENCE HEALTH AND SAFETY CODE SECTIONS 113789, 113825, 114367, 114367.1 - 114367.6 AND 114390

OPTIONS FOR FOOD SAFETY COMPONENTS INCLUDED IN THE ORDINANCE See the Background Section of the Board Letter under “Community and Local Jurisdiction Outreach” for additional details on the food safety components options.

If 2a is selected to Authorize a Microenterprise Home Kitchen Operations Program, provide direction on the following food safety components by choosing one in each category.

4. Food Safety Certificate
(See proposed language in San Diego County Regulatory Code Section 61.504 (a).) 4a. Require a food safety certificate be submitted as part of the MEHKO application. (Staff Recommendation)

4b. Remove proposed requirement for food safety certificate found in San Diego County Regulatory Code Section 61.504 (a). Food safety certificates will be required for MEHKOs within 60 days of operation, in accordance with the CRFC.

5. Allowable Food Storage Areas
(See proposed language in San Diego County Regulatory Code Section 61.504 (c).) 5a. Only allow food storage in areas outside of the residence (including garages, outdoor sheds, workshops etc.), if stored inside a refrigerator or freezer. (Staff Recommendation)

5b. Remove proposed operational provision found in San Diego County Regulatory Code Section

61.504(c). MEHKO food storage will be allowed anywhere outside of the residence.

JANUARY 12, 2022 5

6. Number of MEHKOs per Residence
(See proposed language in San Diego County Regulatory Code Section 61.504 (d).) 6a. Only allow one MEHKO to operate in each residence, in accordance with California Department of Public Health (CDPH) guidance. (Staff Recommendation)

6b. Remove proposed operational provision found in San Diego County Regulatory Code Section

61.504 (d). No limit on the number of MEHKOs allowed at each residence.

7. Potable Water for Private Wells - Initial Testing
(See proposed language in San Diego County Regulatory Code Section 61.504 (e).) 7a. Require a full panel of testing (bacteria, metals, nitrates) results be submitted as part of the MEHKO application.This is the same testing Cottage Food Operators are currently required to submit with their permit application. (Staff Recommendation)

7b. Only require bacteriological testing results be submitted as part of the MEHKO application.

8. Potable Water for Private Wells - Ongoing Testing
(See proposed language in San Diego County Regulatory Code Section 61.504 (f).) 8a. Require a full panel of testing results (bacteria, metals, nitrates) be submitted annually.

8b. Require a full panel of testing results (bacteria, metals, nitrates) be submitted quarterly.

8c. Require only bacteriological testing results be submitted annually. This is the same testing Cottage Food Operators are currently required to submit with their permit application. (Staff Recommendation)

8d. Require only bacteriological testing results be submitted quarterly.

OPTIONS FOR REGULATIONS TO ADDRESS POTENTIAL COMMUNITY ISSUES

ARISING FROM MEHKOS IN THE UNINCORPORATED COMMUNITIES
See the Background Section of the Board Letter “Options for Board Consideration for Regulations to Address Potential Community Issues Arising from MEHKOs in the Unincorporated Communities” for additional details on the options.

9. Provide direction regarding regulations to address potential community issues arising from MEHKOs for the unincorporated communities by selecting either option 9a or 9b. 9a. Continue with Existing Regulations and Collect Data in Unincorporated Communities. (Staff Recommendation)

JANUARY 12, 2022 6
9b. Amend the Regulatory Code to include Title 3 Division 8 - Regulation of Microenterprise Home Kitchen Operations in the Unincorporated Communities: If the Board adopts this option, additional nuisance regulations would be added to County Code section 38.101. The ordinance identifies community impacts related to traffic, waste disposal, and others that may be deemed a public nuisance and subject to enforcement. The regulations would only apply to unincorporated communities.
· In accordance with State CEQA Guidelines section 15061(b)(3), find that it can be seen with certainty that there is no possibility that Option 9b may have a significant effect on the environment. Options 9b will be a discretionary decision to adopt a new ordinance. This Ordinance would not result in any new development and will allow the unincorporated County to address violations and impacts that could arise from MEHKOs through a public nuisance abatement and to ensure that MEHKOs are operating in compliance with the San Diego County Regulatory Code.

· Set a hearing for January 26, 2022 for consideration and adoption of amendments to the San Diego County Code of Regulatory Ordinances to add Title 3 Division 8.

· Approve the introduction of the Ordinance, (first reading), read title and waive further reading of the Ordinance entitled: REGULATION OF MICROENTERPRISE HOME

KITCHEN OPERATIONS

If on January 12, 2022, the Board takes the actions recommended in items 3a or 3b and/or 9b above, then on January 26, 2022:

Consider and adopt the Ordinance(s) amending the San Diego County Code of Regulatory Ordinances (second reading).

EQUITY IMPACT STATEMENT
Authorizing microenterprise home kitchen operations (MEHKOs) in the region would result in economic benefits to local communities and home cooks from a wide variety of backgrounds. Data from Riverside County, the first county to adopt a MEHKO program, found that MEHKO operators were 85% people of color and 60% women. MEHKOs would create opportunities for self-reliance and empowerment for local community members, such as immigrants, by increasing their family income and contributing positively to the local economy.

FISCAL IMPACT
Funds for this request are included in the Fiscal Year (FY) 2021-22 Operational Plan in the Department of Environmental Health and Quality (DEHQ). If the Board of Supervisors (Board) authorizes microenterprise home kitchen operations (MEHKOs) (Option 2a), this request will result in estimated costs and revenue of $176,400 in FY 2021-22 and an increase of 1.00 full-time staff year. The funding source is permit fees. There will be no change in net General Fund cost.

A waiver of Board Policy B-29 is requested because the current fees do not cover all operating costs.

The total unrecovered cost per Board Policy B-29 for these permits is approximately $13,200 in DEHQ for FY 2021-22 and, if approved, will be funded with existing departmental savings.

There is no fiscal impact if the Board declines to authorize MEHKOs (Option 2b) or for any of the options presented for Board consideration for the regulations to address potential community issues arising from MEHKOs in the unincorporated communities (Options 9a and 9b), and there will be no change in net General Fund and no additional staff years associated with these options.

JANUARY 12, 2022 7

BUSINESS IMPACT STATEMENT
The average restaurant startup cost is $275,000 for a leased building. It is difficult for many cooks to benefit independently from their labor, skills and limited resources, and they may miss an opportunity to make an income, or they may choose to operate illegally, which can be treated as a criminal act.

Legalizing home cooked food sales through the authorization of microenterprise home kitchen operations (MEHKOs) will:
· regulate unsafe private kitchen practices that may cause foodborne illness when food is cooked in an informal economy and at unpermitted facilities;

· promote food justice in communities that do not have access to healthy and affordable food options;

· enable home cooks, who are mostly underrepresented groups such as women, immigrants and people of color, to use their skills to generate income.

If authorized by the Board of Supervisors, MEHKOs will allow home cooks of all socioeconomic levels the opportunity to start a home-based business, preparing and serving food to the public throughout the region.

ACTION:

ON MOTION of Supervisor Vargas, seconded by Supervisor Anderson, the Board of Supervisors took the following actions:

1. Found that none of the options presented to the Board today require additional environmental analysis. Option 2a will be a discretionary decision to allow a new activity. However, this option would be subject to strict limitations on how many meals could be prepared, cooked, and served on the same day, as well as on a weekly basis, from each home kitchen operation. With those limitations, therefore, a finding can be made, with certainty, that allowing such activity would not have a significant effect on the environment pursuant to CEQA Exemption 15061(b)(3). In addition, Option 2b would affirmatively reject this new program and decisions to reject projects are exempt from CEQA review pursuant to CEQA Exemption 15270.

2. Provided direction regarding authorization of a MEHKO program for the region by selecting option 2a.
2a. Authorize a Microenterprise Home Kitchen Operations Program. (Staff Recommendation) · Waive Board Policy B 29: Fees, Grants, Revenue Contracts Department Responsibility for Cost Recovery for MEHKO permit fees.

· Approve the request to add 1.00 (one) staff year in the DEHQ to perform inspections and conduct education and outreach and direct the Department of Human Resources (DHR) to classify the position at the appropriate level.

3. Provided direction on the type of authorization by selecting option 3b. 3b. Temporarily Authorize a MEHKO Program by Ordinance (for a period of two years): If the Board adopts an ordinance authorizing a MEHKO program temporarily for the region for a period of two years, the program will be implemented as codified in State law (CRFC), and subject to any local requirements included in the adopted ordinance, including the food safety\ components discussed in recommendations 4 through 8.
· Set a hearing for January 26, 2022 for consideration and adoption of amendments to the San Diego County Code of Regulatory Ordinances.

JANUARY 12, 2022 8
· Approved the introduction of the Ordinance, (first reading), read title and waive further reading of the Ordinance entitled: ORDINANCE TEMPORARILY AUTHORIZING A

MICROENTERPRISE HOME KITCHEN OPERATIONS PROGRAM THROUGHOUT

THE COUNTY OF SAN DIEGO AND INCORPORATING BY REFERENCE HEALTH AND SAFETY CODE SECTIONS 113789, 113825, 114367, 114367.1 114367.6 AND 114390.

Provided direction on the following food safety components by choosing one in each category.

7. Potable Water for Private Wells Initial Testing
(See proposed language in San Diego County Regulatory Code Section 61.504 (e).) 7a. Require a full panel of testing (bacteria, metals, nitrates) results be submitted as part of the MEHKO application.This is the same testing Cottage Food Operators are currently required to submit with their permit application. (Staff Recommendation)

8. Potable Water for Private Wells Ongoing Testing
(See proposed language in San Diego County Regulatory Code Section 61.504 (f).) 8c. Require only bacteriological testing results be submitted annually. This is the same testing Cottage Food Operators are currently required to submit with their permit application. (Staff Recommendation)

9. Provided direction regarding regulations to address potential community issues arising from MEHKOs for the unincorporated communities by selecting option 9a. 9a. Continue with Existing Regulations and Collect Data in Unincorporated Communities. (Staff Recommendation)

10. Direct the Chief Administrative Officer to work with all jurisdictions within the region, on a voluntary basis, to gather data related to MEHKO implementation during authorization, including but not limited to potential community impacts such as traffic, noise, wastewater, and code or nuisance complaints as well as food safety related data such as number of permitted MEHKOs, complaints or reports of foodborne illness, and retail food safety compliance.

11. Direct the Chief Administrative Officer to provide informational/educational trainings for city staff and operational leads in all jurisdictions in the region to share best practices to reduce, prevent and/or address nuisance activity, and possible approaches related to local land use nuisance regulations.

JANUARY 12, 2022 9

12. Direct the Chief Administrative Officer to explore options for the County to support legislative efforts for greater transparency around food delivery entities.

13. Direct the Chief Administrative Officer to remove the options not chosen from the ordinance as directed, including any option directional language, and renumber as necessary for first and second readings.

AYES: Vargas, Anderson, Lawson-Remer, Fletcher, Desmond

State of California)
County of San Diego)
§

I hereby certify that the foregoing is a full, true and correct copy of the Original entered in the Minutes of the Board of Supervisors.

ANDREW POTTER
Clerk of the Board of Supervisors

Signed
by Andrew Potter
City Council
Agenda Report
Agenda Item 10.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Mayor Wells
SUBJECT: Council Activity Report
RECOMMENDATION:

That the City Council accepts and files the following report of Council/Mayor activities attended during the current agenda period.

BACKGROUND:

Government Code Section 53232.3(d) requires members of a legislative body to provide brief reports on meetings attended at the expense of the local agency at the next regular meeting of the legislative body.

REPORT:

Since the last City Council meeting, I have attended the following events on behalf of the City of El Cajon:

January 25, 2022 - Attend City Council Meeting(s)
I am available to answer questions.

Submitted By: Bill Wells, Mayor
City Council
Agenda Report
Agenda Item 11.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Councilmember Goble
SUBJECT: COUNCILMEMBER STEVE GOBLE
MTS (Metropolitan Transit System Board); East County Advanced Water Purification Joint Powers Authority Board; Chamber of Commerce – Government Affairs Committee; SANDAG – Board of Directors – Alternate; SANDAG Public Safety Committee – Alternate; METRO
Commission/Wastewater JPA – Alternate.

RECOMMENDATION:

That the City Council accepts and files the following report of Council/Mayor activities attended during the current agenda period.

BACKGROUND:

REPORT:

Since the last City Council meeting, I have attended the following events on behalf of the City of El Cajon:

January 7, 2022 - Emails with Khaled M re: Cert of Occupancy January 8, 2022 - Emails with Dick B re: right-turn lane on N Johnson January 10, 2022 - Emails with Karen P re: County Working Families Ordinance January 10, 2022 - Emails with Gary B re: solar permit status January 10, 2022 - Emails with Harold B re: Rescue Mission project January 13, 2022 - Emails with City Mgr re: Emergency Cabins permit status January 13, 2022 - Meeting with Youlian at ASAP re: property status January 14, 2022 - Emails with Rob B @ Amikas re: cabin permits January 17, 2022 - Email to Mayor, City Manager re: SANDAG mtg recap January 17, 2022 - Emails with Maxine G re: Safe Parking proposal January 18, 2022 - Emails with Dustin C. re: status of business grant app January 18, 2022 - Emails with Ron K re: Safe Parking proposal January 20, 2022 - Attend MTS Board Meeting
January 21, 2022 - Meeting with John D.

January 22, 2022 - Redistricting Meeting #4 of 4
January 24, 2022 - Meeting with City Manager
January 25, 2022 - City Council Meeting(s)
I am available to answer questions.

Submitted By: Steve Goble, Councilmember
City Council
Agenda Report
Agenda Item 12.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Councilmember Kendrick
SUBJECT: COUNCILMEMBER GARY KENDRICK
METRO Commission/Wastewater JPA; Heartland Communications; Heartland Fire Training JPA.

RECOMMENDATION:

That the City Council accepts and files the following report of Council/Mayor activities attended during the current agenda period.

BACKGROUND:

REPORT:

Since the last City Council meeting, I have attended the following events on behalf of the City of El Cajon:

January 13, 2022 – Heartland Fire Training Authority JPA January 22, 2022 – Redistricting Hearing
January 25, 2022 – Attend City Council Meeting(s)
I am available to answer questions.

Submitted By: Gary Kendrick, Mayor Pro Tem
City Council
Agenda Report
Agenda Item 13.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Deputy Mayor Metschel
SUBJECT: DEPUTY MAYOR MICHELLE METSCHEL
Harry Griffen Park Joint Steering Committee; Heartland Communications – Alternate; Heartland Fire Training JPA – Alternate.

RECOMMENDATION:

That the City Council accepts and files the following report of Council/Mayor activities attended during the current agenda period.

BACKGROUND:

REPORT:

Since the last City Council meeting, I have attended the following events on behalf of the City of El Cajon:

January 18, 2022 – Meeting with Omar Passions regarding Safe Parking location January 22, 2022 – Redistricting Hearing
January 25, 2022 – Attend City Council Meeting(s)
I am available to answer questions.

Submitted By: Michelle Metschel, Councilmember
City Council
Agenda Report
Agenda Item 14.

DATE: January 25, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Councilmember Ortiz
SUBJECT: COUNCILMEMBER PHIL ORTIZ
League of California Cities, San Diego Division; East County Economic Development Council; MTS (Metropolitan Transit System Board) – Alternate; East County Advanced Water Purification Joint Powers Authority Board – Alternate; Chamber of Commerce – Government Affairs Committee – Alternate.

RECOMMENDATION:

That the City Council accepts and files the following report of Council/Mayor activities attended during the current agenda period.

BACKGROUND:

REPORT:

Since the last City Council meeting, I have attended the following events on behalf of the City of El Cajon:

January 12, 2022 – Meeting with Cox Communications
January 12, 2022 – VECA Meeting
January 19, 2022 – ECEDC Board Meeting
January 21, 2022 – Meeting with Jim Heunink – First Lutheran Church January 22, 2022 – Redistricting Hearing
January 25, 2022 – Attend City Council Meeting(s)
I am available to answer questions.

Submitted By: Phil Ortiz, Councilmember

El Cajon City CouncilJanuary 25, 2022

El Cajon City Council
January 25, 2022