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APPENDIX C -SAMPLE CONTRACT AGREEMENT
City of Los Banos Request for Qualifications
On-Call Engineering Services Page 14of14
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TO:
FROM:
DATE:
SUBJECT:
TYPE OF REPORT:
RECOMMENDATION:
tOsBanos
• At the Crossroads of California h •
Mayor Llanez and City Council Members
Vanessa Portillo, Finance Director ~ •
June 19, 2024
Fiscal Year 2022-2023 Annual Comprehensive Finance Report Consent Agenda
Staff recommends that Council adopt a Resolution accepting the 2022-2023 Annual Comprehensive Financial Report (ACFR), and the Government Auditing Standards Report prepared by Price Paige & Company, our independent auditors.
BACKGROUND:
The City's fiscal year runs from July 1 through June 30. Price Paige & Company, independent auditors who specialize in governmental audits, audited the City's books for fiscal year ending June 30, 2023. They assisted staff in preparing the City's ACFR.
The ACFR summarizes financial activity in the previous fiscal year and fund balances at June 30, 2023, as well as provides a narrative explanation in the transmittal letter and notes of significant policies, events, and activities of the past year. The report presents historical and comparative information that can be useful to City staff, elected officials, and external users such as debt rating agencies, businesses, other public agencies, and the City's residents.
DISCUSSION:
The City's ACFR is prepared in accordance with generally accepted accounting principles (GAAP) as promulgated by the Government Accounting Standards Board (GASB). The attached ACFR has received an unmodified, or clean, opinion from our independent auditors, Price Paige & Company. An unmodified report communicates that the ACFR, and audited information within, fairly present the City's financial position for the fiscal year ending June 30, 2023.
The City has received a clean audit report for the past several years and has been awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers' Association (GFOA) for nine (9) consecutive years. The GFOA established the Certificate of Achievement for Excellence in Financial Reporting Program to encourage and assist state and local governments to go beyond the minimum requirements of generally accepted accounting principles to prepare annual comprehensive financial reports that 173
evidence the spirit of transparency and full disclosure and then to recognize individual governments that succeed in achieving that goal. The City, once again, has chosen to submit its ACFR to the GFOA for review and consideration of the award.
The ACFR for the Fiscal Year Ending June 30, 2023 is available for review in the Finance Department located at City Hall and on the City's website, www.losbanos.org.
FISCAL IMPACT:
There is no immediate financial impact or budget action necessary as a result of the recommended action.
Reviewed by:
ATTACHMENTS:
Resolution
Annual Comprehensive Financial Statements (ACFR)
Audit Communication Letter
Government Audit Standards Report
2 174
RESOLUTION NO. --
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LOS
BANOS ACCEPTING THE 2022/2023 FISCAL YEAR AUDIT
REPORTS CONSISTING OF THE ANNUAL COMPREHENSIVE
FINANCIAL REPORT AND THE GOVERNMENT AUDITING
STANDARDS REPOR'T:
WHEREAS, the City of Los Banos is required to undergo an annual fiscal audit performed by an independent auditor; and
WHEREAS, the auditing firm of Price Paige & Company has completed the 2022/2023 Fiscal Year audit and all related reports and presented their findings to the Los Banos City Council;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Los Banos hereby accept the 2022/2023 Fiscal Year Audit Reports consisting of the Annual Comprehensive Financial Report (ACFR), and the Government Auditing Standards Report.
The foregoing resolution was introduced at a regular meeting of the City Council of the City of Los Banos held on the 19th day of June 2024, by Council Member ____ _ who moved for its adoption, which motion was duly seconded by Council Member _ _____ , and the Resolution was adopted by the following vote:
AYES:
NOES:
ABSENT:
APPROVED:
Paul Llanez, Mayor
ATTEST:
Lucille L. Mallonee, City Clerk
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176
City of Los Banos
u · e e
na ort,
• •
• 1 ear-e ~ • -#
.
177
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Financial Statements
TABLE OF CONTENTS
INTRODUCTORY SECTION
PAGE
Letter of Transmittal ............................................................................................................................................... .............. i GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................................................. vi Organization Chart .... .. ........................................................................................................................................................ vii Directory of City Officials .............................................................................................................. ...................................... viii
FINANCIAL SECTION
Independent Auditor's Report .............................................. .............................................................................................. 1 Management's Discussion and Analysis ............................ .......... .............................................................. ......... ... .. ........... 5 Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position ............................................... ........................................................................................... 18 Statement of Activities ............................................................................................................................................... 20 Fund Financial Statements:
Governmental Funds:
Balance Sheet .............................................. ......................................................................................................... 22 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position ................................................................................................... 23 Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................................. 24 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities ..... ....................................... 25 Proprietary Funds:
Statement of Net Position .................................................................................................................................... 27 Statement of Revenues, Expenses and Changes in Net Position ......................................................................... 28 Statement of Cash Flows ............................................................................. .. ..................................... .................. 29 Fiduciary Fund:
Statement of Fiduciary Net Position ............. .. ..................................................................................................... 31 Statement of Changes in Fiduciary Net Position .................................................................................................. 32 Notes to the Basic Financial Statements ............................................................................................................................ 34 178
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Financial Statements
TABLE OF CONTENTS {Continued)
FINANCIAL SECTION (Continued)
Required Supplementary Information:
Budgetary Comparison Schedules:
PAGE
General Fund ................................. .. ............................................................................................................................ 67 Impact Fees Special Revenue Fund .............................................................................................. ............................... 69 Community Development Block Grant and Home Grants Special Revenue Fund ...................................................... 70 Streets and Roads Special Revenue Fund ........................................................................................ ........................... 71 Public Safety Special Revenue Fund ............................ ............. ................................................................................... 72 Notes to the Budgetary Comparison Schedules ................... .............................................. .................... ..................... 73 Pension Plans:
Cost-Sharing Multiple-Employer Plan:
Schedule of Proportionate Share of Net Pension Liability ................................................................................... 75 Schedule of Contributions ........................ ........................................................... ................................................. 76 Retiree Healthcare Plan (OPEB):
Schedule of Changes in Net OPEB Liability and Related Ratios ........................................................................... 77 Schedule of Contributions .................................................................................................................................... 78 Combining and Individual Fund Financial Statements and Schedules:
Non major Governmental Funds:
Combining Balance Sheet .......................... ................................................................................... ..... .................... ...... 81 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .................................................... 82 Budgetary Comparison Schedules:
Assessment Districts Fund .............................................. ........................................... .................................................. 84 CMAQ Grant Fund ....................................................................................................................................................... 85 HCD Grant Fund .............................................................................................................. ............................................ 86 Capital Projects Funds .............................................................................................................. ................................... 87 Internal Service Funds:
Combining Statement of Net Position .............. ........................................................................................................... 89 Combining Statement of Revenues, Expenses and Changes in Net Position ....... .. ..................................................... 90 Combining Statement of Cash Flows ........................................................................................................................... 91 179
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Financial Statements
TABLE OF CONTENTS (Continued)
STATISTICAL SECTION
PAGE
Net Position by Components - Last Ten Fiscal Years ........... ............................................................................... ............... 94 Changes in Net Position - Last Ten Fiscal Years ................................................................................... .. ..... .................. ..... 95 Fund Balances - Governmental Funds - Last Ten Fiscal Years ........................................................................................... 97 Changes in Fund Balances - Governmental Funds - Last Ten Fiscal Years ......................................................... ............... 98 Assessed Value of Taxable Property- Last Ten Fiscal Years ................................................... ......................................... 100 Tax Revenue by Source - General Fund - Last Ten Fiscal Years ....................................................................................... 101 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years ................................................................................. 102 Principal Property Taxpayers - Current Year and Ten Years Ago .. ................................................................... ................ 103 Property Tax Levies and Collections - Last Ten Fiscal Years ...................................................................... ................ ...... 104 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years ............................................................................................ 105 Ratios of General Fund Debt Outstanding - Last Ten Fiscal Years ................................................................................... 106 Direct and Overlapping Governmental Activities Debt.. ................................................................................................ .. 107 Legal Debt Margin Information - Last Ten Fiscal Years ................................... .......................... .. ..................................... 108 Pledged-Revenue Coverage - Last Ten Fiscal Years ...................................................................... .................... ............... 109 Demographic and Economic Statistics - Last Ten Fiscal Years ................................................................... ...................... 110 Principal Employers - Current Year and Nine Years Ago .................................................................................................. 111 Full-Time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years ................................ ... 112 Operating Information, Operating Indicators by Function/Program - Last Ten Fiscal Years ................................. .......... 113 Operating Information, Capital Assets Statistics by Function/Program - Last Ten Fiscal Years ...................................... 114 180
INTRODUCTORY SECTION
181
LOsBanos
·\1 1h, C.ro~smcul1 of ( .alifnrnia
May 31, 2024
Honorable Mayor,
Members of the City Council, and
Citizens of the City of Los Banos
City Hall
520 J Street
Los Banos, CA 93635
SUBJECT: Annual Comprehensive Financial Report -June 30, 2023 Phone: (209) 827-7000
Fax: (209) 827-7010
www.losbanos.org
We are pleased to submit the Annual Comprehensive Financial Report (ACFR) of the City of Los Banos (City) for the fiscal year ended June 30, 2023. This report is published in accordance with local ordinance and state law requirements that financial statements be presented in conformity with Generally Accepted Accounting Principles (GAAP) and audited in accordance with Generally Accepted Auditing Standards by a firm of licensed certified public accountants.
This report consists of management's representations concerning the finances of the City. Management assumes full responsibility for the completeness and reliability of all information presented in this report. In order to provide a reasonable basis for making these representations, management of the City has established an internal control framework designed both to ensure the assets of the government are protected from loss, theft or misuse, and to ensure adequate accounting data is compiled to allow for the preparation of the financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. As a recipient of federal, state, and local financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to the appropriate programs. This internal control structure is subject to periodic evaluation by management.
Price Paige & Company, a firm of licensed certified public accountants approved by the City Council, has audited the City's financial statements. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2023 were 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.
Price Paige & Company concluded that there is reasonable basis for rendering an unmodified ("clean") opinion for the City's financial statements for the fiscal year ended June 30, 2023, were fairly presented in conformity with GAAP. The independent auditors' report is presented as the first component of the financial section of this report. in addition, the City may be required to undergo an annual single audit in compliance with provisions of the Title 2 U.S. Code of Federal Regulations. The report of the Single Audit is published separately from this ACFR. This fiscal year a Single Audit was not required as the City expended less than the threshold amount of federal awards which is outlined in the requirements.
Generally accepted accounting principles require 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 182
MD&A can be found in the financial section of this document, immediately following the report of the independent auditor.
Profile of the City Los Banos
The City, incorporated in 1907 as a General Law City has a population of 47,347, and is the second largest city in Merced County. The City is located near the geographical center of California in the San Joaquin Valley approximately 70 miles northwest of Fresno, 80 miles east of the Pacific Ocean and 120 miles south of Sacramento. The Crossroads of California describes Los Banos because State Highway 33, 165 and 152 pass through the City and Interstate 5 is six miles to the west. Los Banos is famous for its agricultural products, including melons, almonds, walnuts, apricots, cotton, tomatoes, and dairy products.
The City delivers a full range of municipal services which include Police, Fire, Community and Economic Development, Recreation, Park Maintenance, and Public Utilities under the Council-Manager form of government.
The City Council meets the first and third Wednesdays of every month. Policy making and legislative authority are vested in the City Council, which consists of a mayor and four Council Members. The Mayor is directly elected by the people and serves a two-year term. Four Council Members, a City Clerk, and a City Treasurer are elected and serve four-year terms. The City Manager is appointed by the City Council and is responsible for implementing policies and overseeing the day-to-day operations of the City.
The City Council is required to adopt a budget no later than the close of the prior fiscal year. The budget is prepared by fund (e.g., General Fund) and department (e.g., Police). After adoption, departmental adjustments may be done with the approval from the City Manager provided that there is no change to the fund balance. Budget amendments to increase appropriations may be taken to the City Council for their approval throughout the year.
Local Economy
Important to any community is the current economic condition and outlook for the Nation, the State, and the City.
The economic forecasts for the City and Merced County continue to show signs of improvement. The financial fallout of the pandemic has been significant but the economy is beginning to recover as retail stores, fitness centers, and restaurants start to operate at full capacity once more. Sales and transient occupancy taxes have seen an improvement within our city as citizens start to shop and travel now that all shelter in place restrictions have been lifted. Economic recovery signs are promising but it is still too soon to tell if City finances will return to their prepandemic state. On the other hand, the State and Nation as a whole is experiencing high fuel prices and inflation which could lead to less consumer spending and limited travel in the future.
Unemployment rates are slowly on the mend; the City experienced an increase in unemployment rates at 12.8%, down from last year's 10.5%. Merced County's unemployment rate of 10.8% is an increase from last year's rate of
9.8%. California's unemployment rate is 4.9% which is an increase from last year's number of 4.6%. These numbers reflect the current economic conditions of businesses post pandemic. As employment is an integral component to our economy, City staff continues to work with two recruitment firms to help attract potential businesses to the community. The City contracts with retail recruiters and industrial recruiters to solicit national retailers, major businesses, and industries to locate in the City of Los Banos. As more businesses move to the City with the help of these partnerships, the City will benefit immensely with job creation, increased sales tax revenue, and a larger property tax base. The City issued over 54 new residential permits and finalized a total of 202 permits in Fiscal Year 2022-2023. These numbers continue to be a reflection of the shortage in available homes in the Central Valley and the demand for affordable housing from the Bay Area. In Fiscal Year 2022-2023 there were five (5) finalized commercial building permit; 390 N. Mercey Springs Rd (7-11 Fuel Station); 1350 E. Pacheco Blvd. (IHOP Restaurant); 1337 E. Pacheco Blvd. (DD's Discount); 1321 E. Pacheco Blvd. {Five Below). The following three (3) commercial building permits are new issuances for Fiscal Year 2022-2023 bringing additional benefit to the City: Merced School Employees Federal Credit Union, Los Banos Police Station and the Ag Sports Complex Restroom/ Concession. ii
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Long Term Financial Planning
The City maintains an annual budget and it serves as the foundation for the City's financial planning and control. The objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget adopted by the City Council. The level of budgetary control (i.e., the level where the expenditures cannot legally exceed the appropriated amount) is maintained at the departmental level for the General Fund and at the fund level for all other funds. Department heads may transfer resources within a department as they see fit with the approval of the City Manager. The City Council may amend funds by an affirmative vote at any regular or special City Council Meeting.
The City Council has approved to maintain a 30% General Fund reserve to safeguard the City and improve its ability to respond to emergency needs. The current year budget provides a 128% operating reserve in the General Fund.
This policy provides reassurance and protection against uncertain fluctuations in the local economy.
Retirement rates have increased as a result of Cal PERS' changes in the amortization period for the unfunded accrued liability and the phasing down of the decrease in the discount rate implemented in previous years. CalPERS experienced 4.5% favorable investment gain and along with the reduction of the discount rate to 6.9%, the estimated overall funded status of CalPERS' was reduced to 70%. Due to the lower discount rate and the investment performance, the unfunded liability and employer normal costs will increase moving forward. These current changes will first impact contribution rates in FY 2023-2024. The City continues to develop a plan to help mitigate the anticipated impact of future increases in employer rates and has assigned $2,000,000 in funds to assist with these rate impacts. The City is currently looking at plans to utilize these funds either by investing in a Section 115 Trust, paying down the unfunded accrued liability, or use the funds to help pay future employer contributions.
Major Achievements and Future Objectives
The City's continued exploration of new revenues sources as well as expense management has proven positive in its efforts as the City strives to keep up with personnel, infrastructure and equipment needs. There is an outlined fiveyear Capital Improvement Plan in the current budget to recognize capital needs throughout the City.
Some of those objectives by department are highlighted as follows:
Administration
• Security System Replacement/key entry
($25,000)
• Point to Point Project ($200,000)
• 2 Mid-size SUV's ($120,000)
• ERP System ($71,385)
• VPN Project ($776)
Community and Economic Development
Department
• Downtown Gateway Sign ($250,000)
• Downtown Infrastructure & Streetscape
($290,500)
• Pacheco Flag Poles ($15,500)
• VPN Project ($333)
• Vehicle ($75,000)
iii
Police Department
• Range Classroom Phase 2 ($104,416)
• Surveillance System ($41,024}
• Four Police Vehicles ($193,000)
• Police Canine & Vehicle ($120,000)
• Body Camera Replacements ($150,000)
• Online Reporting System ($35,000)
• VPN Project ($6,747)
Fire Department
• Fire Station #1 Kitchen Remodel
($1550,000)
• Electronic Gate Controllers Station #1
($26,000)
• Turnouts and Specialized Equipment
($36,000}
• Portion of Ladder Truck ($200,960)
• VPN Project ($1,808
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Engineering Department
• Vehicle ($35,000)
• VPN Project ($53)
Streets Department
• SBl Street Overlays ($1,200,000)
• Thermoplastic Striping ($100,000)
• 7th Street Parking Lot ($75,000)
• 5th Street ADA ($30,000)
• F Street Yard Fencing ($33,000)
• Camera Project ($10,000)
• 2- ¾ Ton Utility Pickup ($160,000)
• Crash Bar ($40,000)
• 5-yard Dump Truck ($150,000)
• Computer Network Cabinets ($3,750)
• VPN Project ($125)
Recreation Department
• AC Unit Replacement & Community Center
Repairs ($88,500)
• VPN Project ($735)
Cash Management
Maintenance Department
• F Street Fencing ($33,000)
• Catholic Park Playground ($65,000)
• ¾ Ton Utility Truck ($80,000)
• ½ Ton Utility Truck ($45,000)
• VPN Project ($295)
Measure H
• Camera Intersection Project ($45,000)
• Drone ($18,000)
• License Plate Reader ($65,000)
• Fire Reporting System ($28,000)
• Turnouts & SCBA Project ($25,000)
• 7th Street Ballpark Landscape improvements
($150,000)
• Ward Rd. Median Improvements ($75,000)
• ADA 7•h Street Ballpark ($150,000)
• Miller & Lux Flooring ($40,000)
• Scout Hut Improvements ($40,000)
• Meadowlands II Basketball Court ($30,000)
• Community Center Mural ($20,000)
• Community Center Improvements ($60,000)
• Gardens I Park Playground ($22,000)
• Gardens Ill Park Playground ($150,000)
• College Greens Park Playground ($150,000)
• Projector Screen ($12,000)
The City finance staff focuses on safety, liquidity and yield of investments. The highest priority of cash management and investments is to ensure adequate funds are available to meet the City's obligations and all investments are in safe instruments. Yield, while important, is considered in third priority after safety and liquidity. The City invests in the Local Agency Investment Fund (LAIF) operated by the state for the benefit of local governments. The City also has investments in Wells Fargo Institutional Securities. Bond proceeds, debt service monies, debt service reserves, etc. are invested according to the bond covenants of each issue. Finance staff continues to work on updating the City's investment policy in order to improve the rate of returns on the City's investments, while still maintaining the safety and liquidity needs of the City.
Awards and Acknowledgments
Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement of Excellence in Financial Reporting to the City of Los Banos for its annual comprehensive financial report for the fiscal year ended June 30, 2022. This is the nineth consecutive year that the government has achieved this prestigious award. In order to receive the 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 annual comprehensive financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. iv
185
We would like to recognize the Mayor and City Council for their guidance and support in the City's pursuit of excellence in financial reporting. The preparation of the Annual Comprehensive Financial Report (ACFR) was made possible by the dedicated service of the entire Finance Department staff. We are profoundly proud of the ACFR and our department is committed to producing financial statements that are accountable and informative to the public.
Credit must also be given to all members of the departments who assisted and contributed to the preparation of this report. The City continues to strive to maintain fiscal sustainability, efficiency in services, and a safe and healthy community for our citizens to live and thrive.
Respectfully submitted,
Vanessa Portillo
Finance Director City Manager
V
186
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Los Banos
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
~P-~
Executive Director/CEO
vi
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CITY OF LOS BANOS
ORGANIZATION CHART
I Citizens of Los Banos I
Mayor Pro Tern Council Member Mayor Council Member Council Member District 1 District 2 DistrictJ District 4
Kenneth Lambert Douglas Begonia Paul Llanez Breit Jones Deborah Lewis I
I City Clerk I I City Treasurer
Lucy Mallonee I I Lucy Lawrence
City Manager
Josh Pinheiro
Planning Commission I I Tree Commission
I
City Attorney
Airport Advisory I Economic Development William Vaughn Commission Advisory Commission I
Traffic Safety I Parks & Recreation
Committee C I ommission
I I I I I I
Public Works Community&
Human Resources Fire Chief Director/City Finance Director Police Chief Economic Parks & Recreation Director Development Paul Tualla Engineer Vanessa Portillo Ray Reyna Director Joe Heim Lucy Mallonee Charles Bergson Stacy Souza Elms vii
188
Mayor
Mayor Pro Tern
Council Member
Council Member
Council Member
City Clerk
City Treasurer
City Manager
City Attorney
Human Resources Director
Fire Chief
Police Chief
Public Works Director/Engineer
Finance Director
City of Los Banos
Directory of City Officials
June 30, 2023
Elected Officials
Appointed Officials
Community & Economic Development Director
Parks & Recreation Director
viii
Paul Llanez
Kenneth Lambert
Brett Jones
Deborah Lewis
Doug Begonia
Lucy Mallonee
Lucy Lawrence
Josh Pinheiro
William Vaughn
Lucy Mallonee
Paul Tuai la
Ray Reyna
Charles Bergson
Vanessa Portillo
Stacy Souza Elms
Joe Heim
189
FINANCIAL SECTION
190
II PRICE PAIGE & COMPANY
Certified Public Accountants
The Place to Be
INDEPENDENT AUDITOR'S REPORT
To the Honorable Mayor and Members of the City Council
City of Los Banos, 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 the City of Los Banos, California (the City), as of and for the year ended June 30, 2023, 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 financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, 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 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.
Change in Accounting Principle
As discussed in Note 7 to the financial statements, in 2023 the City adopted new accounting guidance, GASB No. 96, Subscription-Based Information Technology Arrangements. Our opinions are not modified with respect to this matter.
Responsibilities of Management for the Financial Statements 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 rai se 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 th at may raise substantial doubt shortly thereafter.
1 570 N. Magnolia Avenue, Suite I 00
Clovis, CA 936 11
www.ppc.cpa
tel S59.299.9540
fax S59.299.2344
191
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 generally accepted auditing standards and Government Auditing Standards 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 generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 5-15, budgetary comparison information on pages 67-73, the proportionate share of net pension liability on page 75, the schedule of pension contributions on page 76, the schedules of changes in the net OPEB liability and related ratios on page 77, and the schedule of OPEB contributions on page 78, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying combining and individual nonmajor fund financial statements, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing 2 192
and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon.
Our opinions on the basic 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 basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic 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 May 31, 2024, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City's internal control over financial reporting and compliance.
Clovis, California
May 31, 2024
3 193
MANAGEMENT'S DISCUSSION AND ANALYSIS
4 194
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
As management of the City of Los Banos (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2023. We encourage readers to consider the information presented here in conjunction with the additional information that we have furnished in our letter of transmittal, which can be found on pages i-v of this report.
Financial Highlights
The City's assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $305,652,052 (net position). The unrestricted net position of $65,679,537 may be used to meet the government's ongoing obligations to citizens and creditors.
The City's total net position increased by $15,097,939, with $10,337,954 attributable to governmental activities and $4,759,985 attributable to business-type activities. The City's total assets increased by $19,502,668 due to various equipment purchases and infrastructure improvements throughout the year. Liabilities increased by $24,109,632. An increase in pension and other post-employment benefits (OPEB) liabilities contributed to this decrease.
The deferred outflows of resources increased by $8,144,742 and was mainly due to pension and OPEB related activity within the governmental type activities funds. The deferred inflows of resources decreased by $11,575,611. The decrease can be largely attributed to pension and OPEB activities in the governmental type funds as well.
As of the close of the current fiscal year, the City's governmental funds reported a combined ending fund balance of $101,403,000. This is a decrease of $10,184,763 in comparison with the prior fiscal year. Approximately 31.4% or $31,906,732 is available for spending at the government's discretion and is referred to as the unassigned fund balance.
At the end of the current fiscal year, total fund balance for the General Fund was $40,766,202. Of this amount, $8,561,711 was assigned for various capital projects and Measure H expenditures, and for subsequent year budget deficits, $276,926 was committed for public safety capital outlay, the City's general plan update. $31,927,438 was unassigned for discretionary use and $127 was considered nonspendable. The unassigned fund balance is 128% of the total General Fund expenditures.
Overview of the Financial Statements
This Management's Discussion and Analysis is intended to serve as an introduction to the City's basic financial statements.
The City's basic financial statements consist of three components: 1) government-wide financial statements 2) fund financial statements, and 3) notes to the basic financial statements. This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves.
Government-Wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business.
The Statement of Net Position presents financial information on all the City's assets, liabilities, and deferred inflows/outflows 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 during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). 5 195
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues, referred to as governmental activities from other functions that are intended to recover all or a significant portion of their costs through user fees and charges, known as business-type activities. The governmental activities of the City include general government, public safety, highways and streets, parks and recreation, and economic development. The business-type activities of the City include water, wastewater, airport, and solid waste operations.
The government-wide financial statements include not only the City itself, which is known as the primary government, but all legally-separate entities or component units for which the government is financially accountable. Currently, there are no component units of the City.
The government-wide financial statements can be found on pages 18-20 of this report.
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in assessing a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. 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.
The City maintains sixty-nine (69) individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund, impact fee special revenue funds, CDBG & HOME grant special revenue funds, streets and roads special revenue funds, public safety special revenue funds, and capital grants special revenue fund which are considered to be major funds. Data from the nineteen (19) non-major governmental funds are combined into a single aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report.
The City adopts an annual appropriated budget for its General Fund. A budgetary comparison schedule has been provided for the General Fund to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 22-25 of this report.
Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprises funds to account for its water, wastewater, airport, and solid waste operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for the management of its retiree health benefits, its information technology, and for its fleet of vehicles. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. 6 196
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.
The proprietary fund financial statements provide separate information about the activities the government operates like businesses, such as the water, wastewater, and solid waste systems as well as the municipal airport, all of which are considered to be major funds of the City. Conversely, all internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds are provided in the form of combining statements in the combining and individual fund statements and schedules section of this report.
The basic proprietary fund financial statements can be found on pages 27-29 of this report.
Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
At this time, the City maintains the Neighborhood Stabilization Program (NSP) Impound Fund as a fiduciary fund. This custodial fund reports resources held by the City in a custodial capacity for individuals, private organizations, and other governments.
The fiduciary fund financial statements can be found on page 31-32 of this report.
Notes to the Financial Statements. The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 34-64 of this report.
Other Information. In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City's progress in funding its obligation to provide pension and other post-employment benefits (OPEB) to its employees. Required supplementary information can be found on pages 67-78 of this report.
The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the required supplementary information on pensions and OPEB. Combining and individual fund statements and schedules can be found on pages 81-82 of this report.
Government-Wide Overall Financial Analysis
Net Position: A condensed presentation of the City's net position shown below totals $305,652,052 as of June 30, 2023. (in thousands of dollars)
Governmental Activities Business• T:tpe Activities Total Activities 2022 2023 2022 2023 2022 2023
Current and other assets $ 116,601 $ 109,910 $ 80,408 $ 86,214 $ 197,009 $ 196,124 Capital assets 97 800 117 355 54 575 55 333 152 375 172,688 Total assets 214,401 227,265 134,983 141,547 349,384 368,812 Deferred outflows of resources 8,149 14,415 2,030 3 909 10179 18,324 Long-term liabilities outstanding 34,283 48,133 11,145 17,109 45,428 65,242 Other liabilities 3,526 7,047 1,740 2,456 5,266 9,503
Total liabilities 37,809 55,180 12,885 19,565 50,694 74,745 Deferred inflows of resources 13,645 5,066 4,670 1,673 18,315 6,739 Net position:
Net investment in capital assets 97,030 103,770 54,515 55,241 151,545 159,011 Restricted 50,603 56,060 24,761 24,902 75,364 80,962
Unrestricted 23,463 21,603 40,182 44,076 63,645 65,679
Total net position $ 171,096 $ 181,433 $ 119,458 $ 124,219 $ 290,554 $ 305,652 7 197
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
By far, the largest portion of the City's net position $159,011,069 (52.0%) reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, vehicles, and infrastructure), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to its citizens. Accordingly, these assets are 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 this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of the City's net position $80,961,446 (26.5%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $65,679,537 (21.5%) is unrestricted and may be used to meet the government's ongoing needs and obligations to its citizens and creditors.
At the end of the current fiscal year, the City is able to report positive balances in all of the reported categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. The prior fiscal year showed positive balances in all but one of the reported categories.
Changes in Net Position: Below is a current year recap of the changes in net position. The full Statement of Activities can be seen on page 20.
2022 2023
Program revenues $ 67,866,041 $ 38,372,121
General revenues 38,052,991 33,599,792
Governmental expenses (32,484,702) (37,368,233)
Business-type expenses (17,229,697) (19,505,741)
Net increase (decrease) $ 56,204,633 $ 15,097,939
Program revenues reflect charges for services, operating and capital grants or contributions for other sources.
General revenues consist of a variety of taxes, unrestricted investment earnings, and gain on sale of capital assets. These revenues reflect a $4,453,199 overall decrease from the 2022 fiscal year. This decrease was primarily due to one-time ARPA funding received in fiscal year 2022 and not in fiscal year 2023.
The City's overall net position increased $15,097,939 (5.2%) from the prior fiscal year. The reasons for this overall increase are discussed in the following sections for governmental activities and business-type activities. 8 198
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
Key elements of this increase are as follows:
(in thousands of dollars)
Program revenues:
Charges for services
Operating grants
Ca pita I grants
General revenues:
Property taxes
Sales taxes
Other taxes
Use of money and property
American Rescue Plan Act
Motor vehicle in-lieu
Gain on sale of capital assets
Settlement
Miscellaneous
Total revenues
Expenses:
General government
Public safety
Highways and streets
Parks and recreation
Economic development
Interest on long-term debt
Water
Sewer
Airport
Solid waste
Total expenses
Increase (decrease) in
net position before transfers
Transfers
Increase (decrease) in
net position
Net position - beginning
Net position - ending
$
$
Governmental Activities
2022
12,870 $
3,757
26,319
10,416
14,499
1,436
629
9,817
so
29 217
80,039
2,817
16,320
6,408
5,647
1,288
4 32,484
47,555
47,555
123,541
171,096 $
2023
7,502 $
5,470
3,204
12,268
14,521
1,387
3,150
48 49
116
47,715
4,582
18,935
7,178
5,389
1,281
3 37,368
10,347
(9)
10,338
171,096
181,434 $
Business-Type Activities
2022 2023
23,579 $
26 1,315
(121)
52 600
428
25,879
5,370
5,095
366
6,399
17,230
8,649
8,649
110,809
119,458 $
21,751 $
33 412
6 1,880
5 170
24,257
5,251
5,730
380
8,145
19,506
4,751
9 4,760
119,458
124,218 $
Total Activities
2022
36,449 $
3,783
27,634
10,416
14,499
1,436
508
9,817
so
81 600
645
105,918
2,817
16,320
6,408
5,647
1,288
4 5,370
5,095
366
6,399
49,714
56,204
2023
29,253
5,503
3,616
12,274
14,521
1,387
5,030
48 54
286
71,972
4,582
18,935
7,178
5,389
1,281
3 5,251
5,730
380
8,145
56,874
15,098
56,204 15,098
234,350 290,554
290,554 $ 305,652 =========
Governmental Activities. During the current fiscal year, net position for governmental activities increased $10,337,954 or
6.0% from the prior fiscal year for an ending balance of $181,433,233. The City is still experiencing growth in property tax due to development and home sales (this growth has also produced increased fees) and an increase in sales tax due to consumer spending. The increase in the overall net position of governmental activities is the result of this tax revenue growth and interest earnings. The full Statement of Net Position can be found on pages 18-19.
Business-type Activities. For the City's business-type activities, the results for the current fiscal year were positive in that overall net position increased to reach an ending balance of $124,218,819. The total increase in net position for businesstype activities (water, wastewater, and solid waste and airport funds) was $4,759,985 or 4.0% from the prior fiscal year.
The growth, in large part, is attributable to charges for services in the water, wastewater and solid waste activities being greater than the expense (in order to build reserves for replacing infrastructure). The actual charges for services decreased $1,828,544 from the previous year's amounts. The City adopted rate increases effective July 1, 2019, for five years.
9 199
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
Net Cost of Services: The table below presents the total cost of each of the City's governmental activities as well as each of the activities' net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost shows the financial burden that was placed on the City's taxpayers by each of these functions. The total governmental activities cost of $37,368,233 were offset by charges for services of $7,501,980, operating grants/contributions of $5,469,842, and capital grants/contributions of $3,204,332, bringing the net expense to cost of services to $21,192,079. Streets received a total of $3,184,194 from capital grants/contributions reflecting the restricted subventions for infrastructure and other capital improvements. Public Safety represents the highest proportion of total net costs at $18,934,458. (in thousands of dollars)
Total Cost of Service Net Cost of Service
2022 2023 2022 2023
General government $ 2,817 $ 4,582 $ (1,595) $ (3,858)
Public safety 16,320 18,934 (11,973) (16,526)
Highways and streets 6,408 7,178 25,045 1,478
Parks and recreation 5,647 5,389 (154) (1,381)
Economic development 1,288 1,281 (858) (902)
Interest of long-term debt 4 3 (4) (3)
Total $ 32,484 $ 37,367 $ 10,461 $ (21,192)
Financial Analysis of Governmental Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. These funds have been classified as governmental or proprietary.
Governmental Funds
The focus of the City's governmental funds is 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 serves as a useful measure of a government's net resources available for spending at the end of the fiscal year.
To provide an overview of the City's funds, following is a table showing the increases and decreases to total assets, liabilities, revenues, and expenditures of the City fund types from fiscal year 2022 to 2023. The total revenues and expenditures do not include any "other financing sources (uses)".
General fund
Special revenue funds
Capital projects fund
Other funds
Increase (Decrease) from Prior Year
Assets Liabilities
$ 2,902,900 $ 296,788
5,529,441 1,159,618
(15,813,665) 1,892,514
342,224 (147,976)
Revenues Exeenditures
$ (8,555,419) $ 3,549,620
(995,438) 3,983,882
254,417 15,333,456
152,821 (322,209)
As of June 30, 2023, the City's governmental funds reported combined ending fund balances of $101,403,000 or a decrease of $10,184,763 from the prior fiscal year. Approximately 54.5% of this total amount ($55,254,504) is not available for new spending because it is restricted to public safety street maintenance, impact fee related projects and capital grant projects.
Of the remaining balance, $61,546 is assigned for economic development, $2,725,084 for subsequent year budget deficit, $2,000,000 for future PERS employer contributions, and $3,774,660 for Measure H activity. $31,906,732 or 31.5% as unassigned and available for spending in the future at the government's discretion. However, approximately $8.8 million of the General Fund's unassigned fund balance is needed to comply with the City's minimum fund balance policy. 10 200
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
General Fund
The assets in the General Fund realized an increase of 7.3% whereas liabilities increased by 18.6%. The total fund balance for General Funded ended the year at $40,766,202 with $31,927,438 as unassigned and available for discretionary use.
This was an overall fund balance increase of 6.8% from the previous fiscal year. The significant reasons for the increase to the total General Fund balance was due to growth in property and sales tax revenues, permit activity due to increased development within the City and interest earnings. Further analysis of the General Fund budget is discussed below under the "General Fund Budgetary Highlights".
Major Governmental Funds. There are six major governmental funds: General Fund, Impact Fees Special Revenue Fund, CDBG and HOME Grants Special Revenue Fund, Streets and Roads Special Revenue Fund, Public Safety Special Revenue Fund, and Capital Grants Special Revenue Fund. Changes in the General Fund are highlighted in the Financial Analysis section above. The following are changes in the other major funds:
Impact Fee Fund. These funds account for fees collected from developers for new development and used for future impact of capital needs within the City. At June 30, 2023, the impact fee funds had a total fund balance of $31,063,748.
The entire amount of the fund balance has been committed for capital projects. During the current year, funds were expended towards City Hall and Community Center rehabilitations, upgrades to City Public Works Facilities, street rehabilitation, and expenditures related to the new Police Facility. Most of the remaining fund equity position will be used on expanding public safety facilities and traffic improvements in order to mitigate safety and traffic impact from new development. Fund equity increased due to increased development and interest earnings.
CDBG and HOME Grants. These funds account for grant funding received from the State of California to assist low to moderate income homeowners. The total fund balance at June 30, 2023, was $745,994 and was generated from repayment of loans. These funds are restricted and are required to be sent back to the State or used back into the program. The City will utilize all program income available. Fund equity increased due to interest earnings.
Streets and Roads. These funds include Regional Surface Transportation Program (RSTP), Transportation Expenditure Plan (TEP), Gas Tax, and Local Transportation Fund (LTF). These funds are used to maintain, repair, and improve the City's 123 miles of streets, 5 miles of alleys, 227 miles of curbs and gutters, and 216 miles of sidewalks. The fund balance at June 30, 2023 was $8,752,036. Fund equity increased due to a 3% increase in Measure V funding.
Public Safety Special Revenue. These funds are generated from a special half cent sales tax for public safety known as Measure P, and revenues received from public safety grants, public safety impact fees, and community facility districts for police and fire services. The total fund balance at June 30, 2023 was $7,463,087. Fund equity increased due to a 6% increase in Assessments and increased development.
Capital Grants. These funds are used for major capital projects. They include the Traffic Mitigation fund which are fees collected from developers to help mitigate the development impact on the City. The Emergency Operations Fund is also in this grouping. The City received $5,000,000 from the state in fiscal year 2019-2020 to build an emergency operations center in the future and the Police Facilities CIP fund which is accounting for the construction of the new police station.
The total fund balance at June 30, 2023 was $11,771,391. Fund equity decreased due to the construction and completion of the Police Station.
Non-Major Governmental Funds. These funds include Assessment Districts which are used to maintain the sidewalks, landscaping, parks, street signs, streetlights, trees, fences, and storm drains within designated districts throughout the City; and Housing Community Development grant used to help cities prepare and implement plans and process improvements that streamline housing approvals and accelerate housing production. The total fund balance at June 30, 2023 was $840,542. Fund equity increased due to a 5% increase in Assessment Revenue and interest earnings.
There are no restrictions, commitments, or other limitations that would significantly affect the availability of fund resources for the future.
11 201
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
General Fund Budgetary Highlights
Original budget compared to final budget. At mid-year, the City Council approved budget adjustments for the General Fund. The most significant adjustments to expenditures at mid-year were increases to technical services in the building Department in the amount of $500,000 for contracted permitting services, and an increases to insurance for all departments in the aggregate amount of $865,338 to account for the change in estimated member contributions to CSJVRMA.
Final budget compared to actual results. Total revenues exceeded budget expectations by $2,244,130 or 8.9%. The most significant differences between estimated revenues and actual revenues were property taxes and use of property and money. Revenue for property taxes was anticipated at $8,453,776 but the actual amount received was $10,522,723 for a $2,068,947 amount over budget. Estimated revenues for use of property and money was $965,994 and the actual amount received was $1,866,692 exceeding the budget by $900,698. These positive variances exceeded the budget by 31% or $2,969,645. This was due to increased property values and home sales for property taxes and increased consumer spending within in the City.
Expenditure variances were positive, coming in 15% under the amended budget. The most significant savings were found in general government (administration), public safety, parks and recreation, and capital outlay. General government (administration) realized a positive variance of $229,027, public safety $1,133,067, and capital outlay $2,668,904. There was a total positive variance of $4,436,810 between the amended budget and actual expenditures.
In fiscal year 2018-2019, the citizens of Los Banos passed a ½ percent sales tax measure known as the Los Banos Essential City Services Measure (Measure H). The sales tax proceeds from this measure are used to support vital services of the City, such as Public Safety and Recreation, and to maintain fiscal sustainability. A Citizens' Oversight Committee was established to review, make recommendations, and annually report on the revenue and expenditures of these funds.
Since the establishment of Measure H, the City has been able to hire additional Public Safety and Recreation personnel as well as purchase equipment for Police and Fire and offer more recreational activities. The City budgeted $4,021,358 in Measure H sales tax revenue and received $3,905,905 failing to meet budget expectations by $115,453. Measure H expenditures were budgeted at $3,432,930 and ended the year at $1,378,676. This was an expenditure savings of $2,054,254 for the fiscal year.
Capital Assets and Debt Administration
Capital assets. The City's investment in capital assets for its governmental and business-type activities as of June 30, 2023, amounts to $172,688,586 (net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery, equipment, vehicles, park facilities, roads, highways, bridges, wells, and the wastewater treatment plant.
There was a total increase in capital assets (net of accumulated depreciation) for the current fiscal year in the amount of $20,313,165.
For governmental activities, capital assets (net of accumulated depreciation) increased $19,555,317 and business-type activities increased by $757,848 in fiscal year 2022-2023.
A recap of the City's capital assets, net of accumulated depreciation, is shown next:
(in thousands of dol lars)
Governmental Activities Business-t:z:ee Activities Total Descrietion 2022 2023 2022 2023 2022 2023
Land $ 30,819 $ 32,160 $ 8,068 $ 8,068 $ 38,887 $ 40,228 Buildings, structures and improvements 20,272 21,654 10,063 10,063 30,335 31,717 Equipment 19,819 21,347 12,168 12,684 31,987 34,031
Right-to-use IT scubscription 75 73 89 75 162
Infrastructure 148,100 150,824 72,547 74,945 220,647 225,769 Construction in progress 4,389 22,596 405 1,135 4,794 23,731 Less: accumulated depreciation (125,599) (131,299) (48,751) (51,651) (174,350) (182,950) Total capital assets $ 97,875 $ 117,355 $ 54,500 $ 55,333 $ 152,375 $ 172,688 12 202
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
The City's depreciation expense for the year totals $9,046,918. This includes $6,113,983 in depreciation expense for governmental activities and $2,932,935 for the business-type funds. There is more detailed information about the City's capital assets in Note 6 to the financial statements on page 48-49 of this report.
Major capital asset events during the current fiscal year include the projects stated as follows:
• The Los Banos Designated Local Agency (DLA) transferred land in the amount of $1,341,604. • Playground Equipment at City Park paid by Recreation in the amount of $103,868. • Southpoint Park Improvements paid by Park Improvement Impact Fund in the amount of $1,679,064. • Purchase of 3 Chevy Tahoe SUVs paid by the General Fund in the amount of $253,135. • Purchase of 5 Ford F-250 trucks paid by Public Works in the amount of $321,214. • 2023 Caterpillar M420 paid by the Wastewater Fund in the amount of $160,958. • Place and B Street traffic signal and street overlay paid by the Traffic Impact Fund in the amount of $1,214,277. • Fairground's waterline paid by the water fund in the amount of $1,559,080.
Long-term Debt: A recap of the City's long-term debt is shown below. There was no change in the financing lease with California Infrastructure and Economic Development Bank (!Bank). The balance remained in the amount of $14,000,000 ($13,336,944 for project uses and $663,056 for capitalized interest). An increase in IT subscription liability of $132,749 was due to GASB 96 implementation. An increase of $951,066 was recorded for employee compensated absences. (in thousands of dollars)
Governmental Activities Business-Type Activities Total
Debt Tlpes 2022 2023 2022 2023 2022
Financing lease $ 14,000 $ 14,000 $ $ $ 14,000 $
IT subscription liability 75 73 60 75
Comp. absences 758 860 221 273 979
Total debt $ 14,833 $ 14,933 $ 221 $ 333 $ 15,054 $
More detailed information about the City's long-term debt is presented in Note 7 to the financial statements.
Economic Factors and Next Year's Budgets and Rates
2023
14,000
133
1,133
15,266
The City's property taxes are received in January and April whereas sales taxes are received on a monthly basis requiring the City to maintain a reserve in order to meet cash-flow needs of the General Fund. Property tax values have risen, therefore so have the property taxes in lieu of vehicle license fees. Sales taxes have also continued to increase for the City. The City remains consistent with a conservative approach to revenues and anticipates a modest growth in General Fund revenues in the next fiscal year. The City will continue to work diligently to preserve existing reserves in order to meet additional personnel expenditures that will impact the General Fund in future fiscal years as well as impending infrastructure/capital project needs. Sales tax is the City's largest source of revenue representing 38. 7% of the General Fund. Sales tax is anticipated to increase by 1%. The second largest revenue is property tax which makes up 38.4% of the General Fund. Property tax revenues are budgeted to increase 15.8% in 2022-2023.
Personnel costs will increase for next fiscal year due to step increases for all employee groups and increases due to the Memorandum of Understandings entered into with the bargaining groups in 2021. Health benefits continue to rise as well as employer contributions to Cal PERS for retirement benefits for employees.
The City is a member of a public entity risk pool (see notes to these financial statements). The City will see a 2% increase in workers compensation as well as an overall 32% increase in property, auto, and liability. 13 203
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
The City participates in the CalPERS retirement program for its employees. Changes that have affected the City's employer's rates include the changing of the amortization period for the unfunded accrued liability from a 30-year to a 20-year amortization period as well as phasing down the discount rate to 7%.
Following is the employee rate, employer's normal cost rate, and unfunded accrued liability (UAL) by fiscal year:
2.7%@55 3%@50
Miscellaneous Safety
Employer Employer
Employee Normal Cost UAL Employee Normal Cost UAL
2021 8.00% 15.037% $973,034 9.00% 25.540% $905,186
2022 8.00% 14.870% $940,667 9.00% 25.590% $875,076
2023 8.00% 14.900% $1,070,875 9.00% 25.640% $1,012,162
2.0%@60 3%@55
Miscellaneous Safety
Employer Employer
Employee Normal Cost UAL Employee Normal Cost UAL
2021 7.00% 9.442% $5,385 9.00% 22.397% $7,523
2022 7.00% 9.300% $5,206 9.00% 22.470% $7,273
2023 7.00% 9.300% $6,093 9.00% 22.480% $8,860
2.0%@62 2.7%@57
Miscellaneous Safety
Employer Employer
Employee Normal Cost UAL Employee Normal Cost UAL
2021 7.25% 7.874% $7,878 13.75% 13.884% $5,660
2022 7.25% 7.730% $7,616 13.75% 13.980% $5,471
2023 7.25% 7.760% $8,980 13.75% 13.660% $5,013 Police
13.75% 13.660% $1,971 Fire
The City completed an actuarial study to comply with Governmental Accounting Standards Board (GASB) pronouncement 75 to determine the unfunded liability for other post-employment benefits (OPEB). The City paid $570,742 for retirement health benefits and sent another $988,834 for future retiree health benefits to the California Employers' Retiree Benefit Trust (CERBT) in order to comply with the City's Actuarially Determined Contribution (ADC).
A five-year utility rate increase was adopted by City Council on June 5, 2019, that increased water, wastewater, and solid waste rates by CPI not to exceed 3.5%. These rate changes complied with Prop 218 and were approved by the City Council. In fiscal year 2022-2023 utility rates were increased by a CPI of 3.21% as of July 1, 2024. The City will continue to evaluate current rates in the coming fiscal years to determine if the water, wastewater, and solid waste rates require additional adjusting in the future.
The City began work on an impact fee study to determine if the current impact fees in place were cost effective or if there was a need for an increase to meet future demands on the City. The development impact fee justification study was completed on December 31, 2019. The revised impact fees were adopted by City Council on January 15, 2020 and became effective April 5, 2020. These impact fees were increased by CPI in September 2020. In Fiscal year 2022-23 the Impact Fees were increased by the Construction Price Index. 14 204
CITY OF LOS BANOS I JUNE 30, 2023
Management's Discussion and Analysis
The local economy has been steadily improving since the pandemic, however, there are indications of a looming recession due to rising inflation. Our local economy has been enjoying an increase in property tax revenue, indicating an uptick in housing, however, consumer spending will probably stay static as the economy works through the existing macroeconomic cycles. ARPA funding received in fiscal year 2021-22 continues to help the City recover from the COVID19 pandemic and is allowing for much needed capital replacement projects that have been delayed. A continued conservative budget approach has been prepared for FY 2022-2023 in anticipation of any lingering effects of the forementioned economic issues. The City is also continuing its planned uses for the ARPA funding that was received this fiscal year as a response to the aftermath of COVID-19. The next steps for the City will be to implement the spending plan for ARPA funds and utilize them to address any vital needs that have been postponed as a result of this unprecedented event and the ever-changing economic landscape.
REQUESTS FOR INFORMATION
This financial report is designed to provide the citizens, taxpayers, customers, investors, and creditors of the City with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions about this report or need additional information, please contact:
City of Los Banos
Finance Department
520 J Street
Los Banos, CA 93635
(209) 827-7000
15 205
BASIC FINANCIAL STATEMENTS
16 206
GOVERNMENT-WIDE FINANCIAL STATEMENTS
17 207
CITY OF LOS BANOS I JUNE 30, 2023
Statement of Net Position
ASSETS
Cash and investments
Restricted cash and investments with fiscal agents
Restricted cash and investments
Receivables:
Accounts receivable
Taxes receivable
Interest receivable
Intergovernmental receivables
Loans receivable
Internal balances
Inventories
Prepaid items
Capital assets, not being depreciated:
Land
Construction in progress
Capital assets, being depreciated:
Building and structures
Machinery and equipment
Infrastructure
Right-to-use IT subscription
Less: accumulated depreciation and amortization
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions
Deferred outflows from OPEB
Total deferred outflows of resources
LIABILITIES
Accounts payable and other current liabilities
Retainage payable
Unearned revenue
Interest payable
Deposits
Noncurrent liabilities:
Due within one year:
Compensated absences
IT subscription liability
Long-term debt
Due in more than one year:
Compensated absences
IT subscription liability
Long-term debt
Net pension liability
Net OPEB liability
Landfill closure and postclosure liability
Total liabilities
$
Governmental Business-Type
Activities Activities
100,812,932 $ 52,549,895
1,382,292
31,639,316
1,306,864 1,632,094
3,492,719
229,496 173,892
532,428
1,965,539
(121,284) 121,284
49,825
308,144 48,542
32,160,818 8,067,666
22,595,650 1,134,859
21,653,548 10,062,987
21,346,826 12,684,982
150,824,431 74,945,064
72,733 88,935
(131,298,559) {51,651,354)
227,264,577 141,547,987
11,101,510 2,831,876
3,313,207 1,077,040
14,414,717 3,908,916
5,325,906 1,247,421
895,207 31,853
55,550
128,333
29,346 922,972
619,951 178,872
48,052 18,899
240,347 94,401
24,681 41,117
14,000,000
22,987,228 6,666,057
10,880,802 3,537,075
6,770,729
55,179,853 19,564,946
The notes to the basic financial statements are an integral part of this statement. 18 Total
$ 153,362,827
1,382,292
31,639,316
2,938,958
3,492,719
403,388
532,428
1,965,539
49,825
356,686
40,228,484
23,730,509
31,716,535
34,031,808
225,769,495
161,668
{182,949,913)
368,812,564
13,933,386
4,390,247
18,323,633
6,573,327
927,060
55,550
128,333
952,318
798,823
66,951
334,748
65,798
14,000,000
29,653,285
14,417,877
6,770,729
74,744,799
208
CITY OF LOS BANOS I JUNE 30, 2023
Statement of Net Position
(Continued)
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions
Deferred inflows from OPEB
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Restricted for:
Public safety
Highways and streets
Parks and recreation
Development projects
Capital projects
Economic development
Total restricted
Unrestricted
Total net position
Governmental Business-Type
Activities Activities
1,788,850 607,751
3,277,358 1,065,387
5,066,208 1,673,138
103,769,799 55,241,270
7,463,087
8,770,330
842,954
31,063,748
5,208,386 24,901,408
2,711,533
56,060,038 24,901,408
21,603,396 44,076,141
$ 181,433,233 $ 124,218,819
The notes to the basic financial statements are an integral part of this statement. 19 Total
2,396,601
4,342,745
6,739,346
159,011,069
7,463,087
8,770,330
842,954
31,063,748
30,109,794
2,711,533
80,961,446
65,679,537
$ 305,652,052
209
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Statement of Activities
Charges for
~ enses Services
FunctionsL Programs
Primary government:
Governmental activities:
General government $ 4,582,391 $ 704,193
Public safety 18,934,458 2,088,339
Highways and streets 7,178,208 532,417
Parks and recreation 5,389,019 4,007,996
Economic development 1,281,357 169,035
Interest on long-term debt 2,800
Total governmental activities 37,368,233 7,501,980
Business-type activities:
Water 5,251,235 7,144,159
Wastewater 5,729,799 7,664,081
Airport 379,962 209,924
Solid waste 8,144,745 6,732,996
Total business-type activities 19,S0S,741 21,7Sl,160
Total primary government $ 56,873,974 $ 29,253,140
General revenues:
Taxes:
Property
Sales
Transient taxes and other
Franchise
Use of money and property
Motor vehicle in-lieu
Gain on sale of capital assets
Miscellaneous
Transfers
Total general revenues
Change in net position
Net position - beginning (restated)
Net position - ending
Net (Expense) Revenue and
Pro~ram Revenues Changes in Net Position
Operating Capital
Grants and Grants and Governmental Business-Type
Contributions Contributions Activities Activities
$ $ 20,138 $ (3,858,060) $
320,007 (16,526,112)
4,939,649 3,184,194 1,478,052
(1,381,023)
210,186 (902,136)
(2,800)
S,469,842 3,204,332 (21,192,079)
295,710 2,188,634
116,492 2,050,774
10,000 (160,038)
22,60S (1,389,144)
32,60S 412,202 2,690,226
$ 5,502,447 L___i,616,534 (21,192,079) 2,690,226
12,268,378 6,073
14,S20,721
635,230
752,176
3,149,636 1,880,468
47,806
48,609 4,6S3
116,312 169,730
(8,835) 8,835
31,S30,033 2,069,7S9
10,337,954 4,7S9,985
171,095,279 119,458,834
$ 181,433,233 L._!_2__4,218,819
The notes to the basic financial statements are an integral part of this statement. 20 Total
$ (3,858,060)
(16,526,112)
1,478,0S2
(1,381,023)
(902,136)
(2,800)
(21,192,079)
2,188,634
2,050,774
(160,038)
(1,389,144)
2,690,226
(18,501,8S3)
12,274,4Sl
14,S20,721
635,230
752,176
5,030,104
47,806
53,262
286,042
~ ---
33,599,792
15,097,939
290,554,113
$ 305,652,052
210
FUND FINANCIAL STATEMENTS
The funds described below were determined to be major funds by the City in fiscal year 2023. Individual nonmajor funds may be found in the Combining Financial Statements and Schedules.
GENERAL FUND
This fund is the primary operating fund of the City. It accounts for normal recurring activities traditionally associated with government, which are not required to be accounted for in another fund . These activities are funded primarily by property taxes, sales and use taxes, interest and rental income, charges for services, and State grants.
IMPACT FEES SPECIAL REVENUE FUND
This fund accounts for fees collected from developers to cover the anticipated costs of improvements that will be necessary as a result of the impact the development has on the City.
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) AND HOME GRANTS SPECIAL REVENUE FUND This fund accounts for certain designated projects paid for with Community Development Block Grant (CDBG) and HOME Investments Partnership Program (HOME) Federal program monies received from the State, along with repayments of CDBG and HOME loans.
STREETS AND ROADS SPECIAL REVENUE FUND
These funds are used for the maintenance, repair, and improvements of the City's 123 miles of streets, 5 miles of alleys, 227 miles of curbs and gutters, and 216 miles of sidewalks. Street services accomplishes a wide range of duties that include pavement management, concrete improvements, sidewalk maintenance, painting street and curb markings, traffic signs and signals, bridges, minor construction, flood control, and traffic surveys.
PUBLIC SAFETY SPECIAL REVENUE FUND
This fund accounts for a half-cent sales tax approved by local citizens in November 2004 by 77.9%. This measure passed is to be used for 911 services, Police, and Fire Protection. These funds are split 50/50 with the Police and Fire Departments.
These funds also account for revenues received for public safety grants, impact fees and community facility districts.
CAPITAL GRANTS CAPITAL PROJECTS FUND
This fund is used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds.
21 211
CITY OF LOS BANOS I JUNE 30, 2023
Governmental Funds
Balance Sheet
Capital
Projects
Special Revenue Funds Fund
CDBG Nonmajor
Impact and Home Streets and Public Capital Governmental General Fees Grants Roads Safety Grants
ASSETS
Cash and investments 39,569,897 31,278,045 596,518 8,241,126 6,899,979 12,930,018 Restricted cash with fiscal agents 1,382,292
Accounts receiva ble 391,720 886,543 2,884 34 10,711
Taxes receivable 2,544,851 188,795 704,420
Interest receivable 92,711 85,882 2,051 17,021 14,615 14,970 Intergovernmental receivables 35,362 26,871 144,54 1 325,654 Prepaid items 127 308,000
Due from other funds 20,706
Loans receivable 1,965,539
Tota I assets $ 42,655,374 $ 32,277,341 $ 2,711,533 8,772,630 $ 7,629,725 $ 14,635,280 $
LIABILITIES
Accounts payable 1,703,326 $ 1,204,293 s 20,594 s 166,638 s 1,979,482 Retainage payable l ,S00 9,300 884,407
Due to other funds
Deposits 29,346
Advances from other funds 155,000
Total liabilities 1,889,172 1,213,593 20,594 166,638 2,863 889
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - loans 1,965,539
Total deferred inflows of resources 1,96S,539
FUND BALANCES
Nonspendable 127 308,000
Restricted 31,063,748 745,994 8,752,036 7,463,087 6,338,391 Committed 276,926 5,125,000
Assigned 8,561,711
Unassigned 31,927,438
Total fund balances 40,766,202 31,063,748 745,994 8 752,036 7,463,087 11,771391 Total liabilities, deferred inflows of
resources and fund balances 42,655,374 $ 32,277,341 $ 2,711,533 $ 8,772,630 $ 7,629,725 $ 14,635,280 s The notes to the basic financial statements are an integral part of this statement. 22 Funds
964,897
14,972
54,653
1,353
1,035,875
174,627
20,706
195,333
861,248
(20,706)
840,542
1,035,875
Total
Governmental
Funds
100,480,480
1,382,292
1,306,864
3,492,719
228,603
532,428
308,127
20,706
1,96S,539
$ 109,717,758
S,248,960
895,207
20,706
29,346
1S5,000
6,349,219
1,965,539
1,965,539
308,127
55,224,504
5,401,926
8,561,711
31,906,732
101,403,000
s 109,717,758
212
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position Amounts reported for governmental activities in the statement of net position are different because :
Total fund balances - governmental funds $ 101,403,000
Capital assets used in governmental activities are not current assets or financial resources and, therefore, were not reported in the governmental funds.
Pension related deferrals are reported as deferred outflows and inflows of resources on the statement of net position.
OPEB related deferrals are reported as deferred outflows and inflows of resources on the statement of net position.
Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds.
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds.
Net pension liability
Net OPEB liability
Compensated absences
IT subscription liability
Long-term debt
Interest payable on long-term debt does not require the use of current financial resources. Therefore, interest payable is not reported as a liability in the governmental funds balance sheet.
Internal service funds are not governmental funds; however, they are used by management to charge the costs of certain activities, such as insurance, central services, and maintenance to individual governmental funds. The net current assets of the internal service funds are therefore included in governmental activities in the following line items of the statement of net position :
Cash and investments
Interest receivable
Prepaid items
Capital assets, net of accumulated depreciation
Deferred outflows from pensions
Deferred outflows from OPEB
Accounts payable and other current liabilities
Compensated absences
Net pension liability
Net OPEB liability
Deferred inflows from pensions
Deferred inflows from OPEB
Internal balances
117,153,820
9,018,776
34,762
1,965,539
(22,111,255)
(10,550,915)
(843,197)
(72,733}
(14,000,000)
(128,333)
332,452
893
17 201,627
371,966
100,451
(76,946)
(17,101)
(875,973)
(329,887)
(78,082)
(99,364)
33,716
Net position of governmental activities $ 181,433,233
The notes to the basic financial statements are an integral part of this statement. 23 213
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances Capital
Projects
Seecial Revenue Funds Fund
CDBG Nonmajor
Impact and Home Streets and Public Capital Governmental General Fees Grants Roads Safetr Grants
REVENUES
Taxes:
Property 10,S22,723 1,745,656
Sales 10,599,511 1,471,545 3,921,210
Franchise 752,176
Other 635,230
Licenses and permits 869,724
Intergovernmental 160,823 1,288,631 210,186 2,755,200 190,036 Charges for services 1,860,152 1,749,568 16,954
Fines 43,723
Use of property and money 1,866,692 748,398 17,623 162,993 139,980 190,071 Loan repayments 49,128
Miscellaneous 83,778 30,294 720 404 11,289
Total revenues 27,394,532 3,816,891 277,657 4,390,142 6,025,125 190,071
EXPENDITURES
Current:
General government 4,599,377
Public safety 14,791,558 210,186 3,410,616
Highways and streets 350,600 1,187,870 2,279,129
Parks and recreation 2,228,795
Economic development 1,273,737 32,599
Debt service:
Interest and fiscal charges 2,800 308,000
Capital outlay:
General government 97,859 162,988
Public safety 680,330 132,684 418,868 17,588,2SO
Highways and streets 7S6,757 162,293
Parks and recreation 531,199 1,377,789
Economic development 304,774
Total expenditures 24,861,029 3,618,088 242 785 2,441,422 3,829,484 17,896,250 Excess {deficiency) of revenues over
(under) expenditures 2,533,503 198,803 34 872 1,948,720 2,195,641 !17,706,179)
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 35,640
Proceeds from IT subscription 26,842 45,892
Insurance recoveries 20,138
Transfers in 1,176
Transfers out (10,011)
Total other financing sources (uses) 72,609 45,892 1,176 Net change in fund balances 2,606,112 198,803 34,872 1,994,612 2,196,817 (17,706,179) Fund balances (deficits) - beginning 38,160,090 30,864,945 711,122 6,757,424 5,266,270 29 477,570 Fund balances (deficits) - ending 40,766,202 31,063,748 745,994 8,752,036 7,463,087 11,771,391 The notes to the basic financial statements are an integral part of this statement. 24 Funds
2,974,792
23,879
2,998,671
2,343,015
178,425
2,521,440
477,231
12,969
12,969
490,200
350,342
840,542
Total
Governmental
Funds
12,268,379
15,992,266
752,176
635,230
869,724
4,604,876
6,601,466
43,723
3,149,636
49,128
126,485
45,093,089
4,599,377
18,412,360
3,817,599
4,571,810
1,306,336
310,800
260,847
18,820,132
919,050
2,087,4 13
304,774
55,410,498
!10,317,409)
48,609
72,734
20,138
1,176
(10,011)
132,646
(10,184,763)
111,587,763
$ 101,403,000
214
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities Amounts reported for governmental activities in the statement of activities are different because:
Net change in fund balances - total governmental funds
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are capitalized and allocated over their estimated useful lives, and reported as depreciation expense.
The capital outlay expenditures are, therefore, added back to fund balance.
Depreciation and amortization expense is deducted from the fund balance.
Depreciation expense is net of internal service fund depreciation of $50,118 which has already been allocated to internal service funds.
Accrued interest payable on long-term debt is reported in the government-wide statement of activities, but does not require the use of current financial resources. This amount represents the change in accrued interest payable not reported in governmental funds.
Changes to net pension liability and pension related deferred outflows and inflows of resources do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
Changes to net OPEB liability and OPEB related deferred outflows and inflows of resources do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
Some amounts included in the statement of activities do not provide or require the use of current financial resources and, therefore, are not reported as revenues or expenditures in the governmental funds (net change).
Deferred loans
Compensated absences
Internal service funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurance to individual funds. The portion of net revenue (expense) of these internal service funds arising out of the transactions with governmental funds is reported with governmental activities because they service those activities.
Change in net position of governmental activities
The notes to the basic financial statements are an integral part of this statement. 25 $ (10,184,763)
25,519,834
(6,063,866)
35,000
655,153
524,634
(55,281)
(95,809)
3,052
$ 10,337,954
215
MAJOR PROPRIETARY FUNDS
Proprietary funds account for the City operations financed and operated in a manner similar to a private business enterprise. The intent of the City is that the cost of providing goods and services be financed primarily through user charges.
The City reported all of its enterprise funds as major funds in fiscal year 2023.
WATER
Accounts for activities associated with the acquisition or construction of water facilities and production, distribution, and transmission of potable water to users.
WASTEWATER
Accounts for activities associated with the acquisition or construction, and operation and maintenance of wastewater facilities for drainage, treatment, and disposal of sanitary wastewater.
AIRPORT
Accounts for activities associated with the operations and capital improvements of the City's municipal airport.
SOLID WASTE FUND
Accounts for activities associated with the collection and disposal of refuse throughout the City.
INTERNAL SERVICE FUNDS
Accounts for financial transactions related to the City's fleet maintenance and repairs, information technology services, and retiree health programs. These services are provided to other departments or agencies of the City on a cost reimbursement basis.
26 216
CITY OF LOS BANOS I JUNE 30, 2023
Proprietary Funds
Statement of Net Position
ASSETS
Current assets:
Cash and investments
Restricted cash and investments
Accounts receivable
Interest receivable
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Advances to other funds
Capital assets:
Land
Construction in progress
Buildings and improvements
Machinery and equipment
Infrastructure
Right-to-use IT subscription
Less: accumulated depreciation and amorti zation
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCTS
Deferred outflows from pensions
Deferred outflows from OPES
Total deferred outflows of resources
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities
Retainage payable
Unearned revenue
Deposits
IT subscription liability
Compensated absences
Total current liabilities
Noncurrent liabilities:
IT subscription liability
Compensated absences
Net pension liability
Net OPEB liability
Landfill closure and postclosure liability
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions
Deferred inflows from OPES
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Restricted for capital projects
Unrestricted
Total net position
Water
29,814,888
13,311,088
472,135
95,091
11,340
144
43,704,686
155,000
760,822
95,235
322,145
6,147,607
33,743,013
75,081
(20,498,805)
20,800,098
64 504 784
1,074,483
3981462
1472 945
397,864
914,392
14,197
72,403
l,398,8S6
31,965
37,963
2,529,431
1,308,577
3,907 936
5,306,792
229,301
394,151
623 452
20,598,936
13,311,088
26137 461
60,047,485
Adjustment to report the cumulative internal balance fort he net effect of the activity between the internal service funds and the enterprise funds over time Net position of business-type activities (page 20)
$
Business•Ttee Activities - Enterprise Funds
Wastewater Aireort Solid Waste Total
17,170,566 $ 774,455 4,789,986 52,549,895
11,590,320 6,737,908 31,639,316
592,340 43,039 524,580 1,632,094
56,288 2,013 20,500 173,892
38,485 49,825
48,312 86 48,542
29,457,826 857,992 12,073,060 86,093264
155,000
7,306,844 8,067,666
918,111 63,307 58,206 1,134,859
9,038,917 669,767 32,158 10,062,987
3,613,7S2 445,814 2,477,809 12,684,982
38,442,890 2,739,243 19,918 74,945,064
13,854 88,935
(26,543,490) (3,138,656) (1,470,403) 151,651,354)
32,777,024 779,475 1,131,542 55,488,139
62,234 850 1,637,467 13 204 602 141!581,703
1,002,940 754,453 2,831,876
382 475 296,103 1,077,040
1,385,415 1,050,556 3,908,916
494,Sll 4,302 350,744 1,247,421
31,853 31,853
55,550 5S,550
5,000 3,580 922,972
4,702 18,899
58 709 47,760 178 872
590 073 7,882 458,756 2,455,567
9,152 41,117
25,873 30,565 94,401
2,360,802 1,775,824 6,666,057
1,256,077 972,421 3,537,075
6,770,729 6 770 729
3,642,752 9,558,691 17,109,379
4,232 825 7,882 10,017,447 19 564,946
216,714 161,736 607,751
378 337 292,899 1,065,387
595,051 454,635 1,673,138
32,745,171 779,475 1,117,688 55,241,270
11,590,320 24,901,408
14,456,898 850110 2 665,388 44,109,857
58,792 389 1,629,585 3,783,076 124,252,535
133,716)
124,218,819
The notes to the basic financial statements are an integral part of this statement. 27 Governmental
Activities -
Internal Service
Funds
$ 332,452
893
17 333,362
37,709
1,519,0SS
(1,355,137)
201,627
534,989
371,966
100,4S1
472417
76,946
14 000
90 946
3,101
875,973
329,887
1,208,961
1,299 907
78,082
99 364
177,446
20 1,627
(671,574)
(469,947)
217
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Proprietary Funds
Statement of Revenues, Expenses and Changes in Net Position Business-T~ee Activities - Enterprise Funds
Water Wastewater Airport Solid Waste Total
Operating revenues:
Water charges $ 7,144,159 $ $ $ $ 7,144,159
Wastewater charges 7,664,081 7,664,081
Solid waste charges 6,644,901 6,644,901
Airport charges 209,924 209,924
Interdepartmental charges
Miscellaneous 46 954 20,583 107,083 468 175,088
Total operating revenues 7,191,113 7,684,664 317,007 6,645,369 21,838,153 Operating expenses:
Personnel services 1,776,367 1,455,692 17,405 1,235,580 4,485,044 Contractual services 355,052 626,134 14,852 3,542,549 4,538,587 Utilities 998,164 301,098 196,131 111,381 1,606,774
Repairs and maintenance 453,760 665,915 34,807 676,435 1,830,917 Insurance 123,392 87,354 19,970 63,125 293,841
Other supplies and expenses 412,808 1,141,473 4,509 77,950 1,636,740 Depreciation 1,123,697 1,443,946 92,288 273,004 2,932,935 Total operating expenses 5,243,240 5,721,612 379,962 5,980,024 17,324,838 Operating income (loss) 1,947,873 1,963,052 (62,955) 665,345 4,513,315 Nonoperating revenues (expenses):
Investment earnings 924,296 575,014 17,431 222,400 1,739,141 Interest and fiscal charges (2,444) (2,444)
Rental income 34,965 34,965
Intergovernmental revenue 10,000 22,605 32,605
Property tax revenue 6,073 6,073
Gain (loss) on sale of assets 1,024 3,629 4,653
Landfill closure fees 5,992 5,992
Landfill closure/postclosure change
in estimate (2,059,509) (2,059,509)
Agricultural sales 101,004 101,004
Total nonoperating revenues (expenses) 922,876 714,612 33,504 (1,808,512) (137,520) Income (loss) before capital contributions and transfers 2,870,749 2,677,664 (29,451) (1,143,167) 4 375,795 Capital contributions 295,710 116,492 412,202
Transfers in 8,835 8,835
Total capital contributions and transfers 304,545 116,492 421,037 Change in net position 3,175,294 2,794,156 (29,451) (1,143,167) 4,796,832 Net position - beginning (restated) 56,872,191 55,998,233 1,659,036 4,926,243 Net position - ending $ 60,047,485 $ 58,792,389 $ 1,629,585 $ 3,783,076 Adjustments for the net effect of the current year activity between the internal service funds and the enterprise funds (36,847) Changes in net position of business-type activities (page 20) $ 4,759,985 The notes to the basic financial statements are an integral part of this statement. 28 Governmental
Activities -
Internal Service
Fund
$
3,097,415
3,097,415
2,198,738
183,242
342,862
325,020
16,454
33,612
50,118
3,150,046
(52,631)
18,836
18,836
(33,795)
(33,795)
(436,152)
$ (469,947)
218
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Proprietary Funds
Statement of Cash Flows
Water
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users 7,299,783
Receipts from interfund services provided
Payments to suppliers (2,125,833)
Payments to or on behalf of employees for services (2,052,662) Receipts from other operating revenues 46,954
Net cash provided by (used for) operating activities 3,168,242
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers in 8,835
Advances to other funds 125,000
Property taxes and grants received
Agricultural sales - co-op
Net cash provided by (used for) noncapita l financing activities 133,835
CASH FLOWS FROM CAPITAL AN D RELATED
FINANCING ACTIVITIES
Principal payments on long-term debt (13,479)
Acquisition of capita l assets (1,907,676)
Proceeds from the sale of assets 1,024
Inte rest paid 12,444)
Net cash provided by (used for) capital and related
financing activities (1,922,575)
CASH FLOWS FROM INVESTIN G ACTIVITIES
Rental receipts
Investment earnings {losses) 8S9,209
Net cash provided by (used for) investing activities 859,209 Net increase (decrea se) in cash and ca sh equivalents 2,238,711 Cash and cash equivalents• beginning 40,887,265
Cash and cash equivalents - ending $ 43,125,976
Business-Type Activities - Enterprise Funds
Wastewater Airport Solid Waste
7,770,283 $ 188,500 6,711,49S
(2,374,737) (271,579) (4,S04,965)
(1,886,091) (17,405) (1,400,540)
20,583 107,083 468
3,530,038 6,599 806,458
45,747 16,710
101,004
101,004 45,747 16,710
(1,233,502) (2,556) (120,996)
3,629
(1,229,873) (2,SS6) (120,996)
34,965
537,578 15,931 209,622
572,S43 15,931 209,622
2,973,712 65,721 911,794
25,787,174 708,734 10,616,100
28,760,886 774,455 11,527,894
Reconciliation of O(!erating lns;2me llossl to Cash Flows Provis!i:d B~ fused Forl Ogerating Ag;ivities Operating income (loss) 1,947,873 $ 1,963,052 $ (62,955) $ 665,345 Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:
Depreciation expense 1,123,697 1,443,946 92,288 273,004 Landfill closure/postclosure change in estimate (2,053,517) (Increase) decrease in:
Accounts receivable 121,062 106,202 (21,424) 60,602
Inventories (3,362) 3,630
Prepaid items (144) 42,910 (86)
Deferred outflows of resources for pensions (681,1S7) (596,066) (464,324) Deferred outflows of resources for OPEB (40,786) (44,088) (S2,766) Increase (decrease) in:
Accounts payable and other liabilities 220,849 404,327 (4,940) 58,186 Customer deposits 34,562
Compensated absences 14,223 15,017 22,576
Net pension liability 1,320,409 1,110,8S4 884,539
Net OPES liability 204,260 211,312 221,120
Landfill closure and postclosure liability 1,967,884
Deferred inflows of resources for pensions (879,032) (930,209) (655,116) Deferred inflows of resources for OPES (214,212) (197,219) (120,989) Net cash provided by (used for} operating activities 3,168,242 3,530,038 $ 6,599 806,458 Schedul!iJ gf NQn-Cash Ca ~ltal and Financial Related Activities Capital contributions 295,710 $ 116,492 $ $
$
$
$
The notes to the basic financial statements are an integral part of this statement. 29 Governmental
ActivitiesInternal Service
Tota l Fund
21,970,061 $
3,097,415
(9,277,114) {864,823)
(5,356,698) (2,120,947)
175,088
7 511,337 111,645
8,835
125,000
62,457
101,004
297,296
(13,479)
(3,264,730) (76,733)
4,653
(2,444)
(3,276,000) (76,733)
34,965
1,622,340 18,227
l,657,30S 18,227
6,189,938 53,139
77,999,273 279,313
84,189,211 $ 332,452
4,513,315 $ (52,63 1)
2,932,935 50,118
(2,053,517)
266,442
268
42,680 (17)
(1,741,547) (254,111)
(137,640) (30,876)
678,422 36,384
34,562
51,816 6,975
3,315,802 513,872
636,692 115,075
1,967,884
(2,464,357) (254,169)
(532,420) (18,975)
7,511,337 $ 111,645
412,202 $
219
FIDUCIARY FUND
NSP IMPOUND CUSTODIAL FUND
A custodial fund is used to account for assets held by the City as a custodian for individual homeowners participating in the Habitat Neighborhood Stabilization Program by collecting and disbursing property taxes and insurance. The financial activities of this fund are excluded from the entity-wide financial statements but is presented in separate Fiduciary Fund financial statements.
30 220
CITY OF LOS BANOS I JUNE 30, 2023
Fiduciary Fund
Statement of Fiduciary Net Position
ASSETS
Cash
Accounts receivable
Total assets
LIABILITIES
Accounts payable
Total liabilities
NET POSITION (DEFICIT)
Restricted for:
Individuals and other organizations
Total net position (deficit)
NSP Impound
Custodial Fund
$ 7,459
426
7,885
3,176
3,176
4,709
$ 4,709
The notes to the basic financial statements are an integral part of this statement. 31 221
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Fiduciary Fund
Statement of Changes in Fiduciary Net Position
ADDITIONS
Collections on behalf of others:
Impound collections
Total additions
DEDUCTIONS
Payments of property insurance
Payments of property taxes
Total deductions
Net increase (decrease) in fiduciary net position
Net position - beginning
Net position - ending
NSP Impound
Custodial Fund
$ 19,361
19,361
10,138
15,568
25,706
(6,345)
11,054
$ 4,709
The notes to the basic financial statements are an integral part of this statement. 32 222
NOTES TO THE BASIC FINANCIAL STATEMENTS
33 223
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Los Banos, California (the City) was incorporated as a general law city on May 8, 1907. The City operates under the Council-Manager form of government consisting of five elected council members, including the Mayor and a City Manager appointed by the City Council. The City provides the following services as authorized: public safety (police and fire), sanitation (solid waste disposal, sanitary, wastewater, and storm water utilities), water utility, community and economic development, streets, parks and recreation, and general administrative services.
The financial statements and accounting policies of the City conform with generally accepted accounting principles applicable to governments. Significant accounting policies are summarized below:
A. Description of the Financial Reporting Entity
As required by generally accepted accounting principles, the financial statements present the City of Los Banos as the primary government. The City does not have any component units.
B. Basis of Presentation
The City's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.
These standards require that the financial statements described below be presented .
Government-Wide Financial Statements: The Statement of Net Position and the Statement of Activities display information about the primary government (the City). These statements include the financial activities of the overall City government, except for fiduciary activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the City's funds, including fiduciary funds. Separate 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 and enterprise funds are aggregated and reported as non major funds.
Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities.
34 224
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Major Funds
Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.
The City reported the following major governmental funds in the accompanying financial statements:
General Fund-The General Fund is the primary operating fund of the City. It accounts for normal recurring activities traditionally associated with government, which are not required to be accounted for in another fund. These activities are funded primarily by property taxes, sales and use taxes, interest and rental income, charges for services and State Grants.
Impact Fees Special Revenue Fund - This fund accounts for fees collected from developers to cover the anticipated costs of improvements that will be necessary as a result of the impact the development has on the City.
Community Development Block Grant (CDBG) and Home Grants Special Revenue Fund - This fund accounts for certain designated projects paid for with Community Development Block Grant (CDBG) and HOME Investments Partnership Program (HOME) Federal program monies received from the State, along with repayments of CDBG and HOME loans.
Streets and Roads Special Revenue Fund - These funds are used for the maintenance, repair, and improvement of the City's 123 miles of streets, 5 miles of alleys, 227 miles of curbs and gutters, and 216 miles of sidewalks. Street Services accomplishes a wide range of duties that include pavement management, concrete improvement, sidewalk maintenance, painting street and curb markings, traffic signs and signals, bridges, minor construction, flood control, and traffic surveys.
Public Safety Special Revenue Fund - This fund accounts for a half-cent sales tax approved by local citizens in November 2004 by 77.9%. This measure was passed to be used for 911 services, police, and fire protection. These funds are split 50/50 with the Police and Fire Departments. These funds also account for revenues received for public safety grants, impact fees and community facility districts.
Capital Grants Capital Projects Fund - This fund is used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds.
The City reported all of its enterprise funds as major funds in the accompanying financial statements:
Water Fund - Accounts for activities associated with the acquisition or construction of water facilities and production, distribution, and transmission of potable water to users.
Wastewater Fund - Accounts for activities associated with the acquisition or construction, operation and maintenance of wastewater facilities for drainage, and treatment and disposal of sanitary wastewater.
Airport Fund - Accounts for activities associated with the operations and capital improvements of the City's municipal airport.
Solid Waste Fund - Accounts for activities associated with the collection and disposal of refuse throughout the City. 35 225
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Major Funds (Continued)
The City also reports the following fund types:
Internal Service Funds - Accounts for financial transactions related to the City's fleet maintenance and repairs, information technology services, and retiree health programs. These services are provided to other departments or agencies of the City on a cost reimbursement basis.
Fiduciary Fund - A custodial fund is used to account for assets held by the City as a custodian for individual homeowners participating in the Habitat Neighborhood Stabilization Program by collecting and disbursing property taxes and insurance. The financial activities of this fund are excluded from the entity-wide financial statements but are presented in separate Fiduciary Fund financial statements.
D. Basis of Accounting
The government-wide and proprietary financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred, regardless of when the related cash flows take place.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues other than grant reimbursements reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. The City considers all grant reimbursement revenues reported in the governmental funds to be available if the revenues are collected within 180 days. Expenditures are recorded when the related liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Governmental capital asset acquisitions under capital leases are reported as other financing sources.
Those revenues susceptible to accrual at both the City-wide and Fund level are property, sales and franchise taxes, current service charges, and interest revenue. Fines and licenses and permits are not susceptible to accrual because they are not measurable until received in cash.
Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include taxes, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenues from entitlements and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.
Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.
Certain indirect costs are included in program expenses reported for individual functions and activities.
As a general rule, 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 charges between the government's business-type activities and various other functions of the government. Elimination of these charges would distort the direct cost and program revenues reported for the various functions concerned. 36 226
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Basis of Accounting (Continued)
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments.
Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
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 operations. The principal operating revenues of the City's enterprise funds and internal service funds are charges to customers for sales and services. The City also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system . Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
E. Property Tax Revenues
Merced County assesses properties and bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on January 1.
Secured property tax is due in two installments, on November 1 and February 1, and becomes a lien on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured property tax is due on July 31 and becomes delinquent on August 31.
The term "unsecured" refers to taxes on personal property other than real estate, land, and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the City in the fiscal year they are assessed provided they become available as defined above.
F. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
G. Cash Equivalents
For purposes of the Statement of Cash Flows, the City considers all highly liquid investments (including all restricted assets) with a maturity of three months or less when purchased to be cash equivalents. The City maintains a cash and investment pool that is available for use by all funds. As the proprietary funds' share of this pool is readily available when needed, this share is also considered to be a cash equivalent. Deposit assets in the proprietary funds are related to insurance and benefits and are not considered cash equivalents for purposes of the Statement of Cash Flows. 37 227
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Compensated Absences
City employees are granted vacation in varying amounts and sick leave at eight hours per month. In the event of termination, an employee is reimbursed for accumulated vacation and compensatory time off leave at various rates as determined by the employee personnel manual. The value of accumulated vacation allowance is accrued as appropriated for all funds. With respect to obligations of the governmental fund types, the amounts are presented in the governmentwide financial statements. Historically, the compensated absences liability for governmental activities has generally been liquidated by the General fund and other governmental funds.
Compensated absences activity for the year ended June 30, 2023 was as follows:
Governmental Business-Type
Activities Activities Total
Beginning balance $ 150,839 $ 31,666 $ 182,505
Additions 1,178,895 360,436 1,539,331
Payments (469,436) (118,829) (588,265)
Ending balance $ 860,298 $ 273,273 $ 1,133,571
Current portion $ 619,951 $ 178,872 $ 798,823
I. Inventor!£ of Supplies and Prepaid Items
Inventories are physically counted annually and valued at cost, on a first-in-first-out method, which approximates market value. Inventories consist of expendable supplies held on a consumption basis, wherein the cost is recorded as an expense at the time an item is consumed.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.
J. Subscription-Based Information Technology Arrangements fSBITAs) Lessee: The City enters into noncancellable subscription-based information technology arrangements (SBITAs) for the acquisition of various information technology services. SBITAs are accounted for in accordance with GASB Statement No.
96. Upon commencement of a subscription, the City recognizes a subscription liability and an intangible right-to-use subscription asset (subscription asset) in the government-wide financial statements. Subscription liabilities are recognized when their initial individual values are $25,000 or more. The subscription liability is initially measured at the present value of payments expected to be made during the subscription term and is subsequently reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at or before the subscription commencement date, and any directly attributable initial costs. The subscription asset is amortized on a straight-line basis over its useful life. 38 228
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) J. Subscription-Based Information Technology Arrangements (SBITAs) (Continued) Key estimates and judgments related to SBITAs include determining the discount rate used to discount expected subscription payments to present value, the subscription term, and the composition of subscription payments.
The City generally uses the interest rate charged by the subscription provider as the discount rate. When the interest rate charged by the provider is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for SBITAs, which is the prime rate at the inception of the subscription.
The subscription term includes the noncancellable period of the subscription and subscription payments that the City is reasonably certain to make.
The measurement of subscription liability excludes any variable payments such as payments based on the number of user seats unless they depend on an index or a rate or are fixed in substance.
The City monitors changes in circumstances that would require a remeasurement of its SBITAs and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability. Subscription assets are reported with other intangible assets, and subscription liabilities are reported as liabilities on the Statement of Net Position.
This disclosure provides information on the accounting policies related to Subscription-Based Information Technology Arrangements (SBITAs) in accordance with GASB Statement No. 96 and should be read in conjunction with the accompanying financial statements.
K. Unearned Revenue
Unearned revenue is that for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. The City typically records intergovernmental revenues (primary grants and subventions) received but not earned (qualifying expenditures not yet incurred).
L. Unearned Revenue
In the fund financial statements, unavailable revenue is recorded when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City records unavailable revenue for transactions for which revenues have been earned, but for which funds are not available to meet current financial obligations.
M. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Los Banos' (City) California Public Employees' Retirement System (Cal PERS) plan (the Plan) and additions to/deductions from the Plan's fiduciary net position have been determined on the same basis as they are reported by Cal PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
39 229
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City Retirees Benefits Plan (OPEB Plan) and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis.
For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.
Investments are reported at fair value.
Generally accepted accounting principles require 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
Measurement Date
Measurement Period
June 30, 2021
June 30, 2022
July 1, 2021 to June 30, 2022
NOTE 2-BUDGET AND BUDGETARY ACCOUNTING
A. Budgeting Procedures
The City Council reviews and adopts an annual budget for the General, Special Revenue, Capital Projects and Enterprise Funds. The City Council holds public hearings and may modify the appropriations by general approval. Budgeted amounts may be transferred between line items within departments with the City Manager's approval. The legal level of expenditure control in the funds is considered to be at the department level. Operating appropriations lapse at the end of each fiscal year.
The budget is reported on the same basis as the fund types and on a basis consistent with accounting principles generally accepted in the United States of America. Additional appropriations or other changes during the fiscal year may be submitted by the department for Council review and approval.
B. Deficit Fund Balance/ Net Position
The following funds contained a deficit fund balance or net position as of June 30, 2023. The deficit fund balance in the HCD Grant was caused by expenditures in excess of recognized revenue, which will be alleviated through additional grant funding or subsidized by the City through a transfer of funds. The deficit net position in the Internal Service Funds is caused by each fund's portion of the City's pension and other postemployment benefits liabilities. In the event the pension and other postemployment benefits liabilities become due in the future, the remaining balances will be subsidized by the City through a transfer of funds.
Governmental Funds
HCD Grant Special Revenue Fund
Internal Service Funds
Fleet Maintenance
Information Technology
$
40 20,706
610,031
108,516
230
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS
The City's dependence on property tax receipts, which are received semi-annually, requires it to maintain significant cash reserves to finance operations during the remainder of the year. The City pools cash from all sources and all funds except cash and investments held by trustees so that it can be invested at the maximum yield consistent with safety and liquidity, while individual funds can make expenditures at any time.
A. Policies
California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the City's cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law, this collateral is held in a separate investment pool by another institution in the City's name and places the City ahead of general creditors of the institution.
The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to increase security, the City employs the Trust Department of a bank as the custodian of certain City-managed investments, regardless of their form .
The City's investments are carried at fair value, as required by generally accepted accounting principles. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year-end, and it includes the effects of these adjustments in income for that fiscal year.
Except as described below, the City pools idle cash from all funds for the purpose of maximizing interest through investment activities. Pooled investments do not include certain bond proceeds. Investments are carried at fair value with the exception of money market investments and certain nonparticipating guaranteed investment contracts, which are carried at cost. The fair value of investments is based on published market prices and quotations from major investment brokers.
The State Local Agency Investment Fund (LAIF) is an external investment pool established under California State statutes.
LAIF is not registered with the Securities and Exchange Commission. LAIF falls under the regulatory oversight of the State of California. Based on information obtained from the State of California, the investment in LAIF has been recorded at fair value.
Interest income on pooled investments is allocated on the basis of quarterly ending cash balances in the General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, Water Fund, Wastewater Fund, Airport Fund, and Solid Waste Fund as required by law or as directed by the City Council adopted budget. The remainder or interest income is credited to all funds, as required by California Government Code. 41 231
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS (Continued)
B. Classifications
Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of the City debt instruments or Agency agreements.
Primary Government:
Cash and investments
Restricted cash with fiscal agents
Restricted cash and investments
Cash and investments in primary government
Fiduciary Fund:
Cash
Total cash and investments
Cash and investments as of June 30, 2023 consisted of the following:
Cash on hand and in bank
Cash with fiscal agents
Investments
Total cash and investments
$ 153,362,827
1,382,292
31,639,316
186,384,435
7,459
$ 186,391,894
$ 48,136,492
1,382,292
136,873,110
$ 186,391,894
Restricted cash and investments of $24,901,408 are held in the Water and Wastewater Enterprise Funds for future infrastructure impacted by development.
Restricted cash and investments of $6,737,908 are held in the Solid Waste Enterprise Fund to pay for landfill closure and postclosure costs.
42 232
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS (Continued)
C. Investments Authorized by the California Government Code and the City's Investment Policy The City's Investment Policy and the California Government Code allow the City to invest in the following, provided the credit ratings of the issuers are acceptable to the City and approved percentages and maturities are not exceeded. The table below also identifies certain provisions of the California Government Code, or the City's Investment Policy where the City's Investment Policy is more restrictive.
Maximum Maximum
Maximum Percentage Investment
Authorized Investment Type Maturity of Portfolio In One Issuer Non-negotiable Certificates of Deposit 1 year No limit $250,000 Bankers' Acceptances 180 days No limit No Limit
U.S. Treasury Bills and Notes 5 years No limit No Limit U.S. Government Agency Securities 5 years No limit No Limit U.S. Government Sponsored Securities 5 years No limit No Limit Repurchase Agreements N/A No limit $1 Million
Commercial Paper 270 days No limit $1 Million
State Local Agency Investment Fund N/A No limit $50 Million per Account
Money Market Mutual Funds N/A No limit None
Insured Passbook on Demand Deposits
with Banks and Savings and Loans N/A No limit $250,000
D. Investments Authorized by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City resolutions, bond indentures or State statutes. The table below identifies the investment types that are authorized for investments held by fiscal agents. The bond indentures contain no limitations for the maximum investment in any one issuer or the maximum percentage of the portfolio that may be invested in any one investment type. The table also identifies certain provisions of these debt agreements.
Authorized Investment Type
Bankers' Acceptances
U.S. Treasury Bills and Notes
State General Obligations
Municipal Obligations
U.S. Government Agency Securities
U.S. Government Sponsored Securities
Federal Housing Administration Debentures
Repurchase Agreements
Commercial Paper
State Local Agency Investment Fund
Money Market Fund
Defeasance Securities
Pre-funded Municipal Obligations
Investment Agreements
Unsecured Certificates of Deposit
CalTrust
Maximum
Maturity
360 days
None
None
None
3 years
3 years
None
1 year
270 days
N/A
N/A
N/A
None
N/A
30 days
None
43 Minimum
Credit
Quality
A-1
N/A
A
Aaa/AAA
AAA
AAA
N/A
A
A-1+
N/A
AAm
N/A
AAA
AA
A-1
N/A
233
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS (Continued)
E. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Normally, the longer the maturity of an investment, the greater sensitivity of its fair value to changes in market interest rates. The City generally manages its interest rate risk by holding investments to maturity.
Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity or earliest call date:
Investment Type
Held by City:
State Local Agency Investment Fund
Money Market Mutual Funds
Total investments
Cash with fiscal agents
Cash on hand and in bank
Total cash and investments
$
$
12 Months 13 to 24
or Less Months
51,378,212 $
85,494,898
136,873,110 $
25 to 36 More than
Months 36 Months Total
- $ $ $ 51,378,212
85,494,898
- $ $ 136,873,110
1,382,292
48,136,492
$ 186,391,894
The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City reports its investments in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pooled share. The balance is available for withdrawal on demand and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage-backed securities, other asset-backed securities, loans to certain State funds, United States Treasury Notes and Bills, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. At June 30, 2023, these investments matured in an average of 260 days.
F. Credit Risk
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. The actual ratings as of June 30, 2023 were provided by Standard and Poor's investment rating system. The Local Agency Investment Fund was not rated as of June 30, 2023.
Investment Type AAAm Total
Held by City:
Money Market Mutual Funds $ 85,494,898 $ 85,494,898
Total $ 85,494,898 85,494,898
Not rated:
State Local Agency Investment Fund 51,378,212
Cash with fiscal agents 1,382,292
Cash on hand and in banks 48,136,492
Total $ 186,391,894
44 234
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS (Continued)
G. Concentration of Credit Risk
The City's potential losses from credit risk are increased if a significant portion of its resources are invested in a single issuer. If the issuer did not make good on its obligation to the City, the impact could be potentially damaging. At June 30, 2023, the City did not have any investments in any one issuer, other than money market mutual funds and the Local Agency Investment Fund, which represent 5% or more of the total investments.
H. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a city will not be able to recover its deposits or will not be able to recover collateral securities that are in possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterpart (e.g., brokerdealer) to a transaction, a city will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits and investments other than the following provision for deposits:
The California Government Code requires that a financial institution secure deposits made by the state or local government units by pledging securities in an undivided collateral pool held by a depository regulated under the state law (unless so waived by the government unit). 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.
As of June 30, 2023, the carrying amount of the City's bank deposits was $48,136,492 and the respective bank balances totaled $51,032,466. Of the total bank balance, $500,000 was insured through the Federal Depository Insurance Company (FDIC). The remaining balance was collateralized with pooled securities held by the financial institution's trust department. These securities are held in the name of the financial institution and not that of the City.
I. Investment Valuation
Investments, including derivative instruments that are not hedging derivatives, are measured at fair value on a recurring basis. Recurring fair value measurements are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the Statement of Net Position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset's fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City does not have any investments that are measured using Level 3 inputs. Fair value measurements of the City's investments are as follows:
Investment in the State Local Agency Investment Fund: valued at $51,403,801, based on the City's pro-rata share of the fair value provided by the LAIF for the entire LAIF portfolio. LAIF invests in numerous types of investments ranging from all levels in the fair value hierarchy. Accordingly, LAIF is not an investment type that can be categorized in any level in the fair value hierarchy.
Investment in the Money Market Mutual Funds is valued at $85,479,015. Money market funds have a maturity of less than one year and are presented at amortized costs, which approximates fair value. Since they are presented at amortized costs, they are not an investment type that can be categorized at any level in the fair value hierarchy. 45 235
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 4 - INTERFUND TRANSACTIONS
A. Due From/To Other Funds
Due From/To Other Funds represents short-term borrowings resulting from a fund's temporary need for additional cash.
Primarily, these amounts have been recorded when timing differences between when the services are provided and when they are paid for/reimbursed causes the funds to temporarily overdraw their share of pooled cash. These balances are generally expected to be repaid within the next few months and not longer than a 12-month fiscal operating cycle. The composition of interfund balances at June 30, 2023, is as follows:
Due From Other Funds Due To Other Funds Amount
General Fund HCD Grant Special Revenue Fund $ 20,706
Total $ 20,706
B. Advances Between Funds
At June 30, 2023, the following funds had long-term advances that were not expected to be repaid within one year.
Funds Making Advances Funds Receiving Advances Amount
Water Enterprise Fund General Fund $ 155,000
Total $ 155,000
In July 2012, the Water Enterprise Fund provided an interfund loan to the General Fund in the amount of $1,200,000 to pay off the City's 1993 Certificates of Participation and 2002 Lease Revenue Bonds early, thereby reducing future interest costs. The interfund advance bears an interest rate equivalent to the yield of the average quarterly investment portfolio or 1%, whichever is greater. The General Fund repaid $115,000 in principal during the fiscal year ended June 30, 2023, and expects to repay the entire advance by fiscal year ending June 30, 2024.
C. lnterfund Transfers
The following schedule summarizes the City's transfer activity for the year ended June 30, 2023:
Fund Making Transfer
General Fund
Restitution Fund
SLESF
Water
Fund Receiving Transfers
(A) Supplement of funds for operational costs from the General Fund. (B) Transfer of proceeds of rental revenue related to restiution agreement. 46 $
$
Amount
Transferred
1,176 (A)
8,835 (B)
10,011
236
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 5 - LOANS RECEIVABLE
At June 30, 2023, the City had the following loans receivable:
Residential Rehabilitation Program
Commercial Micro-Enterprise Program
First-Time Home Buyer Program
Neighborhood Stabilization Program
Total
A. Residential Rehabilitation Program
Outstanding
Balance as of
June 30, 2023
$ 803,884
$
34,190
586,069
541,396
1,965,539
The City administers a Housing Rehabilitation Loan Program using the Housing and Community Development Act Funds.
Under this program, residents with incomes below a certain level are eligible to receive low-interest loans, secured by deeds of trust, for construction work on their homes. Federal grants are used to fund these loans. Upon approval of loans, the City disburses the funds, and arranges for and collects repayments. As of June 30, 2023, outstanding loans of this program amounted to $803,884.
B. Commercial Micro-Enterprise Program
The City along with Merced County Economic Development Corporation (MCEDCO) administered a Micro-Enterprise Loan Program for technical assistance in development and implementation of small businesses. Under this program, business owners with incomes below a certain level are eligible to receive low interest loans, secured by deeds of trust, for capital or operations of their businesses. The Micro-Enterprise Program also encourages business owners to upgrade, renovate and improve their businesses. Upon approval of the loan, the City disburses the funds, and arranges for and collects repayments. As of June 30, 2023, outstanding loans of this program amounted to $34,190.
C. First-Time Home Buyer Program
The City along with Merced County Association of Governments (MCAG) administered a First-Time Home Buyer Program using the Housing and Community Development Act Funds. Under this program, residents with incomes below a certain level are eligible to receive low or no interest loans, secured by deeds of trust, for the purchase of their first home. The First-Time Home Buyer Program encourages those that would not be able to receive a bank loan due to low income to be able to purchase their own home. Upon approval of the loan, the City disburses the funds, and arranges for and collects repayments. As of June 30, 2023, outstanding loans of this program amounted to $586,069.
D. Neighborhood Stabilization Program
In fiscal year 2012-13, the City was awarded the Neighborhood Stabilization Program (NSP) grant from the State of California Housing and Community Development Department. The purpose of the NSP is to address the housing crisis occurring within the City by providing funds to purchase, rehabilitate, and resell vacant and foreclosed properties. The City entered into various loan agreements with residents, with zero interest and a maturity of 20/30 years. At June 30, 2023, loans outstanding totaled $541,395.
47 237
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 6 - CAPITAL ASSETS
Capital assets, which include land, equipment, buildings, construction in progress, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the government-wide financial statements and proprietary fund financial statements.
Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset's lives are not capitalized.
Equipment, buildings, and infrastructure of the City are depreciated using the straight-line method over the following estimated useful lives:
Machinery and equipment
Buildings, structures and improvements
Infrastructure
3-20 years
25-50 years
20-60 years
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period.
A. Governmental Activities
Capital assets activity of the governmental activities for the year ended June 30, 2023 was as follows:
Balance Balance
June 30, 2022 Additions Deletions Transfers June 30, 2023 Governmental Activities:
Capital assets not being depreciated:
Land $ 30,819,214 $ 1,341,604 $ $ $ 32,160,818
Construction in progress 4,388,914 19,577,676 (1,370,940) 22,595,650 Total capital assets not being depreciated 35,208,128 20,919,280 (1,370,940) 54,756,468 Capital assets being depreciated & amortized:
Buildings, structures and improvements 20,272,446 667,838 713,264 21,653,548 Machinery and equipment 19,818,891 1,528,309 (414,911) 414,537 21,346,826 Infrastructure 148,100,152 2,481,140 243,139 150,824,431 Right-to-use IT subscription 72,733 72,733
Total capital assets being depreciated 188,191,489 4,750,020 (414,911) 1,370,940 193,897,538 Less accumulated depreciation and amortization for:
Buildings, structures and improvements (8,400,812) (646,112) (9,046,924) Machinery and equipment (14,599,041) (974,824) 414,911 (15,158,954) Infrastructure (102,599,634) (4,491,133) (107,090,767)
Right-to-use IT subscription (1,914) (1,914)
Total accumulated depreciation & amortization (125,599,487) !6,113,983) 414,911 (131,298,559) Total capital assets being depreciated & amortized, net 62,592,002 (1,363,963) 1,370,940 62,598,979 Governmental activities capital assets, net $ 97,800,130 $ 19,555,317 $ $ $ 117,3SS,447 48 238
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 6 - CAPITAL ASSETS (Continued)
B. Business-Type Activities
Capital assets activity of the business-type activities for the year ended June 30, 2023 was as follows:
Balance
June 30, 2022 Additions Deletions Transfers
Business-Type Activities:
Capital assets not being depreciated:
Land $ 8,067,666 $ $ $
Construction in progress 404,807 2,413,262 (1,683,210)
Total capital assets not being depreciated 8,472,473 2,413,262 (1,683,210) Capital assets being depreciated & amortized:
Buildings, structures and improvements 10,062,987
Machinery and equipment 12,168,753 469,204 (32,943) 79,968 Infrastructure 72,547,358 794,463 1,603,243
Right-to-use IT subscription 75,081 13,854
Total capital assets being depreciated 94,854,179 1,277,521 (32,943) 1,683,211 Less accumulated depreciation and amortization for:
Buildings, structures and improvements (9,622,974) (176,808) 25,001 Machinery and equipment (7,637,925) (797,012) 7,943
Infrastructure (31,490,464) (1,943,734)
Right-to-use IT subscription (15,381)
Total accumulated depreciation & amortization (48,751,363) (2,932,935) 32,944 Total capital assets being depreciated & amortized, net 46,102,816 (1,655,414) 1 1,683,211 Business-type activities capital assets, net $ 54,575,289 $ 757,848 $ 1 $ 1 C. Depreciation Allocation
Balance
June 30, 2023
$ 8,067,666
1,134,8S9
9,202,525
10,062,987
12,684,982
74,945,064
88,935
97,781,968
(9,774,781)
(8,426,994)
(33,434,198)
(15,381)
(51,651,354)
46,130,614
$ 55,333,139
Depreciation expense is charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or programs are as follows for the year ended June 30, 2023:
Depreciation Allocation
Governmental Activities:
General government
Public safety
Economic development
Parks and recreation
Highways and streets
Internal service fund
Total governmental activities
Business-type Activities:
Water
Wastewater
Airport
Solid Waste
Total business-type activities
49 $
$
$
$
134,675
664,844
38,243
1,289,670
3,936,433
50,118
6,113,983
1,123,697
1,443,946
92,288
273,004
2,932,935
239
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 7 - SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS (SBITAs) AS A LESSEE In fiscal year 2023, the City entered a three-year SBITA as a lessee for OpenGov software, which has been recorded in the General Fund and Solid Waste Fund. An initial SBITA liability was recorded in the amount of $86,587 during fiscal year 2023. As of June 30, 2023, the value of the SBITA liability was $85,613. The city is required to make annual principal and interest payments of $29,936, $31,433, and $33,006, respectively. The SBITA has an interest rate of 8.25%. The software has a three-year subscription term. The value of the right-to-use software as of the end of the current fiscal year was $84,309 and had accumulated amortization of $2,279. In accordance with GASB 96, certain variable and other payments are not included in the measurement of the subscription liability. There were no outflows of resources recognized in the reporting period for variable and other payments.
In fiscal year 2023, the City entered into a five-year SBITA as lessee for Sensus software, which has been recorded in the Water Fund. An initial SBITA liability was recorded in the amount of $59,631 during fiscal year 2023. As of June 30, 2023, the value of the SBITA liability was $46,161. The City is required to make annual principal and interest payments of $15,914. Annual payments are expected to increase by 3% each year. The SBITA has an interest rate of 4.75%. The software has a five-year subscription term. The value of the right-to-use software as of the end of the current fiscal year was $60,064 and had accumulated amortization of $15,016. In accordance with GASB 96, certain variable and other payments are not included in the measurement of the subscription liability. There were no outflows of resources recognized in the reporting period for variable and other payments.
The future principal and interest SBITA payments as of June 30, 2023, are as follows:
Fiscal Years Opengov
Ending June 30 Principal Interest Total
2024 $ 28,408 $ 1,529 $ 29,937
2025 26,714 4,719 31,433
2026 30,491 2,516 33,007
Total $ 85,613 $ 8,764 $ 94,377
Fiscal Years Sensus
Ending June 30 Principal Interest Total
2024 $ 14,197 $ 2,193 $ 16,390
2025 15,364 1,518 16,882
2026 16,600 789 17,389
Total $ 46,161 $ 4,500 $ 50,661
50 240
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 8- LONG-TERM DEBT
In the government-wide financial statements and the proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Bond premiums and discounts, including prepaid bond insurance, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Bond issuance costs are reported as debt service expenditures.
A. Current Year Transactions and Balances
Governmenta I Activities
Direct Borrowings
iBank Financing Lease
Total Governmental Activity Debt
B. !Bank Financing Lease
$
$
Original
Issue
Amount
14,000,000
14,000,000
$
s
Balance
June 30, 2022 Additions Retirements
$ 14,000,000 $
$ 14,000,000 $
$
$
Balance
June 30, 2023
14,000,000
14,000,000
$
$
Current
Portion
On December 6, 2021, the City entered into a financing lease with California Infrastructure and Economic Development Bank (IBank) for an amount not to exceed $14,000,000 ($13,336,944 for project uses and $663,056 for capitalized interest). The proceeds from this obligation will help finance the cost of constructing a new police station and finance interest payments. The capitalized interest payments commence February 1, 2021 thru February 1, 2024. The City paid the 1% origination fee from the General Fund. The financing lease has a fixed interest rate of 2.2% and payments are due every February 1 and August 1, commencing August 1, 2024 and maturing on August 1, 2051. In addition to the base rental payment that consists of principal and interest payments, commencing August 1, 2024, an additional rental payment of 0.3% of the outstanding principal component is due August 1 of each year thereafter. The additional rental payment is represented in its own column in annual payments required below.
As of June 30, 2023, the City has drawn down $11,954,652 of the loan proceeds for project costs, with $1,382,292 remaining available for future draws. The total amount of the undrawn proceeds for this project are recorded as cash with fiscal agent in the Police Station Capital Projects Fund in the Governmental Funds Balance Sheet.
The City has certain reporting covenants required by the financing lease including providing the annual audited financial statements, annual budget approved by City Council, and annual certification of compliance. Should the City fail to cure any reporting covenant noncompliance within 30 days, an amount of $1,000 shall automatically be imposed monthly as liquidated damages charged to the City and shall continue to be imposed throughout the liquidated damages period.
The City is not permitted to prepay all or a portion of the outstanding principal until December 6, 2031, which is ten years after the effective date.
51 241
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 8 - LONG-TERM DEBT (Continued)
B. IBank Financing Lease (Continued)
The annual debt service requirements for the City's financing lease are as follows:
Base
For the Years Principal Interest Rental
Ending June 30 Component Component Payments
2024 $ $ 308,000 $ 308,000 $
2025 367,023 303,963 670,986
2026 375,098 295,799 670,897
2027 383,350 287,456 670,806
2028 391,784 278,930 670,714
2029-2033 2,092,063 1,260,041 3,352,104
2034-2038 2,332,541 1,016,918 3,349,459
2039-2043 2,600,661 745,849 3,346,510
2044-2048 2,899,601 443,621 3,343,222
2049-2053 2,557,879 114,077 2,671,956
Total $ 14,000,000 $ 5,054,654 $ 19,054,654 $
NOTE 9 - LANDFILL CLOSURE AND POSTCLOSURE CARE COST
Additional
Rental Total
Payments Payments
- $ 308,000
42,000 712,986
40,899 711,796
39,774 710,580
38,624 709,338
174,962 3,527,066
142,169 3,491,628
105,608 3,452,118
64,843 3,408,065
19,393 2,691,349
668,272 $ 19,722,926
State and Federal laws and regulations require the City to clean close its landfill site (due to subsurface hydrologic condition - the site operated under waste discharge requirements) when the landfill stopped accepting waste in 1991. The City received a clean closure extension until December 2017. The City has requested a review of the clean closure requirement by the State Water Resource Control Board and has asked to pursue alternative closure methods. Due to this request, the City's requirement to close the landfill was placed on hold until the State Water Resource Control Board finished reviewing the City's request. The State Water Resource Control Board approved an alternative method of clean closure for the landfill at the end of this fiscal year. Clean closure is expected to begin in fiscal year 2024.
Most of the costs associated with closure and post closure care will be the construction cost associated with the clean closure process directly. The closure costs are ongoing with the start of the construction planned for fiscal year 2023- 2024. Due to the change in construction materials, the City anticipates ongoing maintenance costs will be virtually eliminated and thus, they expect no annual costs.
The City reports a portion of these closure and post closure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $6,770,729 reported as landfill closure and postclosure care liability at June 30, 2023, represents the cumulative amount reported to date based on the use of 100 percent of the estimated capacity of the landfill. These amounts are based on what it would cost to perform all closure and postclosure care. Actual cost may be higher due to inflation, changes in technology, or changes in regulations.
The City is required by State and Federal laws and regulations to have financial assurance in place to finance closure and post closure care. The City has chosen to set up and fund a trust in order to meet this obligation.
Subsequent to June 30, 2023, the City received a revised estimate for the City's liability of post-closure costs which was approved by the State Water Resource Control Board. The June 30, 2023 financial statements reflect this updated estimate as it best reflects the City's liability for these costs. At June 30, 2023, there is $6,737,908 restricted for closure and post closure costs. The City expects to fund any additional closure and post closure costs from revenues of the solid waste collection operations, interest earnings on the accumulated assets held in trust, and internal financing if necessary. 52 242
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 10- NET POSITION AND FUND BALANCES
A. Net Position
Net position is the excess of all the City's assets and deferred outflows of resources over all its liabilities and deferred inflows of resources, regardless of fund. It is the City's policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. In the government-wide financial statements, net position is classified in the following categories:
Net investment in capital assets groups all capital assets netted by related debt into a component of net position.
Restricted net position presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. These restrictions principally include developer fees received for use on capital projects, debt service requirements, and grant-funding sources.
Unrestricted net position presents the net position of assets that do not meet the definition of "net investment in capital assets" or "restricted net position".
B. Fund Balances
Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less its liabilities.
The City's fund balances are classified in accordance with Governmental Accounting Standards Board Statement No. 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the City to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the City prioritizes and expends funds in the following order: Restricted, Committed, Assigned and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint:
Nonspendable fund balances represents balances set aside to indicate items that do not represent available spendable resources even though they are a component unit of assets. Fund balances are required to be maintained intact such as Permanent Funds, and assets not expected to be converted to cash such as prepaids, notes receivable, and land held for redevelopment are included.
Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation, which requires the resources to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources.
Committed fund balances are amounts that can only be used for specific purposes pursuant to constraints imposed by City Council, the City's highest level of decision-making authority, through an ordinance or resolution (equally binding). These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified uses through the same type of formal action taken to establish the commitment.
Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources.
Assigned fund balances are amounts constrained by the City's intent to be used for a specific purpose but are neither restricted nor committed. Intent is expressed by the City Council or its designee and may be changed at the direction of the City Council or its designee. This category includes encumbrances and nonspendables when it is the City's intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of special revenue, capital projects and debt service funds which have not been restricted or committed.
Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual General Fund balance and residual fund deficits, if any, of other governmental funds. 53 243
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 10- NET POSITION AND FUND BALANCES (Continued)
B. Fund Balances (Continued)
Detailed classifications of the City's fund balances as of June 30, 2023 are as follows:
COBG
Impact and Home Streets and Public
Fund Balance Classifications General Fees Grants Roads Safetl Nonspendable:
Items not in spendable form:
Prepaid items 127 $ $ $ $
Total nonspendable 127
Restricted for:
Public safety 7,463,087
Highways and streets 8,752,036
Parks and recreation
Development projects 31,063,748
Capital projects
Police Station
Economic development 745,994
Total restricted 31,063,748 745,994 8,752,036 7,463,087 Committed for:
Public safety 200,960
Police Station
Economic development 75,966
Total committed 276,926
Assigned for:
General government 3,774,660
Public safety 421
Economic development 61,546
Pension reserve 2,000,000
Subsequent year budget deficit 2,725,084
Total assigned 8,561,711
Unassigned: 31,927,438
Total Fund Balances 40,766,202 31,063,748 745,994 8,752,036 7,463,087 (A) Various operating costs, vehicle purchases and capital projects Other
Capital Governmental
Projects Funds Total
$ 308,000 s 308,127
308,000 308,127
7,463,087
18,294 8,770,330
842,954 842,954
31,063,748
5,208,386 5,208,386
1,130,005 1,130,005
745,994
6,338,391 861,248 55 224,504
200,960
S,l.25,000 5,125,000
75,966
5,125,000 5,401,926
3,774,660
421
61,546
2,000,000
2,725,084
8,561,711
!20,706) 31,906,732
11,771,391 840,542 101,403,000
{B) Projects include various street improvements such as overlays throughout the City as needed and various park improvements such as playground equipment for the parks located in the assessment districts
(C} Projects include improvements to City Hall, improvements to the Community Center, traffic related improvements due to new development, Police and Fire equipment purchases and facility improvements and various economic development projects (OJ Projects include a new Emergency Operations center and various other capital projects (E) Purchase of fire vehicles for future fleet replacement (F) Construction of a new Police Station
{G) Costs associated with the completion of the City's General Plan Update (H) Various one-time expenditures for equipment, capital improvements, and Measure H activity (I) Various one time expenditures for Public Safety capital needs (J) Projects include relocation of the municipal airport, development of an industrial park and various other economic development projects {K) Funds to pay down the Unfunded Accrued Liability or future increases in employer pension contributions C. Minimum Fund Balance Policies
(A)
(B)
(B)
(C)
(DJ
(F)
(C)
(E)
(Fl
(G)
(H)
(I)
(J)
(K)
The City's Budget and Fiscal Policy requires the City to strive to maintain 20-40% of the subsequent year's budgeted revenues for restricted fund balances in the special revenue funds and cash flow of 30% of General Fund expenditures for unassigned fund balance in the General Fund,
54 244
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 11- PENSION PLAN
A. General Information about the Pension Plan
Plan Description - All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost Sharing Multiple-Employer Plan (the Plan) administered by the California Public Employees' Retirement System (CalPERS). The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all others). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools.
The City sponsors seven rate plans (three miscellaneous and four safety). Benefit provisions under the Plan are established by State statute and City resolution. Cal PERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the Cal PERS website.
Benefits Provided - Cal PERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for the Plan are applied as specified by the Public Employees' Retirement Law.
The rate plan provisions and benefits in effect at June 30, 2023 are summarized as follows:
Hire date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a % of annual salary
Required employee contribution rates
Required employer contribution rates
Hire Date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefits, as a% of annual salary
Required employee contribution rates
Required employer contribution rates
Miscellaneous
1st Tier
Prior to
January 1, 2011
2.7%@ 55
5 years service
monthly for life
50 to 55
2.0%to 2.7%
8.000%
14.900%
Safety
1st Tier
Prior to
January 1, 2013
3%@50
5 years service
monthly for life
50 3.0%
9.000%
25.640%
Miscellaneous
2nd Tier
January 1, 2011 thru
December 31, 2012
2%@60
5 years service
monthly for life
50 to 63
1.092% to 2.418%
7.000%
9.300%
Safety
2nd Tier
January 1, 2011 thru
December 31, 2012
3%@55
5 years service
monthly for life
50 to 55
2.4%to 3.0%
9.000%
22.480%
Miscellaneous
PEPRA
On or after
January 1, 2013
2%@62
5 years service
monthly for life
52 to 67
1.0%to 2.5%
7.250%
7.760%
Safety
PEPRA
Fire and Police
On or after
January 1, 2013
2.7%@ 57
5 years service
monthly for life
50 to 57
2.0%to 2.7%
13.750%
13.660%
Beginning in fiscal year 2016, CalPERS collects employer contributions for the Plan as a percentage of payroll for the normal cost portion as noted in the rates above and as a dollar amount for contributions toward the unfunded liability.
The dollar amounts are billed on a monthly basis. The City's required contribution for the unfunded liability was $2,113,954 for the fiscal year ended June 30, 2023.
55 245
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 11- PENSION PLAN (Continued)
A. General Information about the Pension Plan (Continued) Contributions - Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that the employer rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS' annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.
The City's contributions to the plan recognized as a part of pension expense for the year ended June 30, 2023 were $3,484,241.
B. Pension Liabilities. Pension Expenses and Deferred Outflows/ Inflows of Resources Related to Pensions As of June 30, 2023, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $29,653,285.
The City's net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2022, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021, rolled forward to June 30, 2022, using standard update procedures. The City's proportion of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City's proportionate share of the net pension liability for the Plan as of the measurement dates ended June 30, 2021 and 2022 was as follows:
Proportion - June 30, 2021
Proportion - June 30, 2022
Change - lnrease (Decrease)
0.2639%
0.2567%
-0.0072%
For the year ended June 30, 2023, the City recognized pension expense of $2,237,577. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows of
of Resources Resources
Pension contributions subsequent to the measurement date $ 3,777,240 $ Changes of assumptions 3,014,431
Differences between actual and expected experience 909,319 360,673 Net difference between projected and actual earning on plan investments 5,059,613
Change in employer's proportion 1,172,783 354,136
Differences between the employer's actual contributions and the employer's proportionate share of contributions 1,681,792 Total $ 13,933,386 $ 2,396,601
56 246
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 11- PENSION PLAN (Continued)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/ Inflows of Resources Related to Pensions (Continued) $3,777,240 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. Other amounts reported as deferred outflow of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ending
June 30
2024
2025
2026
2027
2028
$ 2,091,752
1,688,113
888,815
3,090,865
Historically, the pension liability for governmental activities has generally been liquidated by the General Fund.
C. Actuarial Assum ptions
The total pension liabilities in the June 30, 2021 actuarial valuations were determined using the following actuarial assumptions:
Valuation Date
Measurement Date
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate
Inflation
Payroll Growth
Projected Salary Increase
Investment Rate of Return
Mortality
June 30, 2021
June 30, 2022
Entry-Age Normal Cost Method
6.90%
2.30%
2.80%
Varies by Entry Age and Service
6.90%{l)
Derived using CalPERS' Membership
Data for all Funds(2
l
ri) Net of pension plan investment expenses, including inflation. '
2 l The mortality table was developed based on Cal PERS specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2020.
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2021, valuation were based on the results of December 2017 actuarial experience study for the period 1997 to 2015. Further details of the Experiences Study can be found on the CalPERS website.
57 247
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 11- PENSION PLAN (Continued)
C. Actuarial Assumptions (Continued)
Change of Assumptions - Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, Cal PERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 Cal PERS Experience Study and Review of Actuarial Assumptions.
D. Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected PERF cash flows. Using historical returns of all the funds' asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11 + years) using a building-block approach. Using the expected nominal returns for both 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 single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rates of return by asset class are as follows:
New Strategic
Asset Class Allocation Real Return(a,b)
Global Equity - Cap-weighted 30.00% 4.54%
Global Equity - Non-Cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed Securities 5.00% 0.50%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
1 '
1 An expected inflation of 2.30% used for this period.
!bl Figures are based on the 2021 Asset Liability Management study. 58 248
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 11- PENSION PLAN (Continued)
D. Discount Rate (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following presents the City's proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
$
Discount Rate -1%
5.90%
45,354,359 $
Current Discount Rate
6.90%
29,653,285
E. Pension Plan Fiduciary Net Position
$
Discount Rate +1%
7.90%
16,780,215
Detailed information about the Plan's fiduciary net position is available in the separately issued Cal PERS financial reports.
F. Payable to the Pension Plan
The City did not have any outstanding contributions payable to the pension plan as of June 30, 2023.
NOTE 12 - POSTEMPLOYMENT BENEFITS
A. Plan Description
The City administers the City Retirees Benefits Plan (OPEB Plan), an agent multiple-employer defined benefit postemployment healthcare plan. Benefits are provided to eligible employees as follows:
Dispatchers Fire General Police
(Hired before 1/1/08) (Hired before 4/1/10) (Hired before 7 /1/08) (Hired before 4/1/10) § Eligibility 50% at 10 years plus 5% per year to 100% at 20 years § Benefits
Medical only Provided
§ Required Ag~ 50 l!lll lQ+ ¥r~. of service Age 50 wLlO+ yrs. of servic~ Age 50 wl lO+ ¥rs. of serviC!: A£!;: !2Q wl lO+ yrs. cf service Service City pays all medical benefits City pays all medical benefits City pays all medical benefits City pays all medical benefits up to HMO rates based on up to HMO rates based on up to HMO rates based on up to HMO rates based on eligibility rate above eligibility rate above eligibility rate above eligibility rate above Note: No limitation to Note: No limitation to Note: No limitation to Note: No limitation to benefits for employees benefits for employees benefits for employees benefits for employees hired prior to 8/7 /02 hired prior to 8/7 /02 hired prior to 8/7 /02 hired prior to 8/7/02 Dependents are eligible to enroll, and benefits continue on to surviving spouses.
Eligible employees hired after the dates listed above, or with less than 10 years of service will receive the Public Employees Medical and Hospital Act minimum benefit.
59 249
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 12 - POSTEMPLOYMENT BENEFITS (Continued)
B. Employees Covered
As of the June 30, 2021 actuarial valuation, the following current and former employees were covered by the benefit terms under the OPEB plan :
Active employees
Inactive employees, spouses, or beneficiaries currently receiving benefit payments Inactive employees entitled to, but not yet receiving benefits Total
C. Contributions
181
91 11
283
The OPEB Plan and its contribution requirements were established by a resolution incorporated into the City's policies and procedures manual and Memoranda of Understanding with the applicable employee bargaining units and has since been eliminated for all employees hired after the dates provided in the plan description chart found in Section A of this note. The City makes contributions based on an actuarially determined rate. For the fiscal year ended June 30, 2023, the City's cash contributions were $1,559,576 in payments to the trust and the estimated implied subsidy was $108,000 resulting in total payments of $1,667,576.
D. Net OPES Liability
The City's net OPEB liability was measured as of June 30, 2022, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2021. The total OPEB liability in the June 30, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate
Pre-Retirement Turnover
Healthcare cost trend rates
6.25%
2.50%
2.75% per anum, in aggregate
6.75%
Derived from CalPERS Membership Data for all Funds
Derived from CalPERS Membership Data for all Funds
Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3. 75% in 2076 Medicare (Non-Kaiser) - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Kaiser) - 4.60% for 2023, decreasing to an ultimate rate of 3.75% in 2076 (1) Discount rate was updated based on newer capital market assumptions (2) Inflation rate decreased from 2.75% to 2.50% which decreased the discount rate, medical trend and aggregate salary increases by 0.25%. (3) For participants eligible for supplemental benefits, age-based claims valued post-65 except for Medicare Advantage plans (4) Demographic assumptions updated to CalPERS Experience Study 2000-2019 (S) Decreased medical trend rate for Kaiser Senior Advantage (6) Mortality improvement scale was updated to Scale MP-2021 60 250
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 12 - POSTEMPLOYMENT BENEFITS (Continued)
D. Net OPEB Liability (Continued)
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 weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Global Equities 49.00% 4.56%
Fixed Income 23.00% 1.56%
TIPS 5.00% (0.08%)
Commodities 3.00% 1.22%
REITs 20.00% 4.06%
Total 100.00%
* CalPERS approved new CERBT asset allocations in March 2022.
This is not expected to impact the expected long-term rate of return assumption for CERBT Strategy 1.
E. Discount Rate
The discount rate used to measure the total OPEB liability is 6.25%. This is the expected long-term rate of return on City assets using investment Strategy 1 within the California Employers' Retiree Benefit Trust (CERBT). The projection of cash flows used to determine the discount rate assumed that the City contribution will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position is projected to cover all future OPEB payments. Therefore, the discount rate was set equal to the long-term expected rate of return.
61 251
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 12 - POSTEMPLOYMENT BENEFITS (Continued)
F. Changes in the OPEB Liability
The changes in the net OPEB liability for the OPEB Plan are as follows :
Total OPEB
Increase (Decrease)
OPEB Fiduciary
Liability Net Position Net OPEB Liability
Balance at June 30, 2022
(Measurement Date June 30, 2021) $ 26,847,705 $ 14,734,366 $ Changes recognized for the measurement period:
Service cost 677,250
Interest on total OPEB liability 1,687,371
Contributions:
Employer - City's contribution 2,045,389
Net investment income {1,979,055)
Benefit payments, including refunds of employee
contributions (1,054,036) (950,036)
Implicit Rate Subsidy fulfilled (104,000)
Administrative expenses {6,251)
Net changes 1,310,585 {993,953)
Balance at June 30, 2023
(Measurement Date June 30, 2022) $ 28,158,290 $ 13,740,413 $ Historically, the OPEB liability for governmental activities has generally been liquidated by the General Fund.
G. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate 12,113,339
677,250
1,687,371
{2,045,389)
1,979,055
{104,000)
104,000
6,251
2,304,538
14,417,877
The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021:
$
1% Decrease
5.25%
18,174,360 $
Current Discount Rate
6.25%
14,417,877 $
1% Increase
7.25%
11,308,801
H. Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021:
1% Decrease
$ 10,661,178
Current Healthcare Cost
Trend Rates
$ 14,417,877
62 1% Increase
$ 19,061,545
252
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 12 - POSTEMPLOYMENT BENEFITS (Continued)
I. OPEB Expense and Deferred Outflows and Inflows of Resources Related to OPEB For the year ended June 30, 2023, the City recognized an OPEB expense of $1,174,798. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
OPEB contributions subsequent to the measurement date $ 1,667,576 $ Changes of assumptions 1,547,023
Differences between actual and expected experience 33,529 4,342,745 Net difference between projected and actual earning on OPEB Plan investments 1,142,119
Total $ 4,390,247 $ 4,342,745
The $1,667,576 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2022 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2024.
Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows:
Year Ending
June 30
2024 $ (272,146)
2025 (289,592)
2026 (351,019)
2027 88,332
2028 (344,588)
Thereafter (451,061)
NOTE 13 - RISK MANAGEMENT
The City manages risk by participating in the public entity risk pools described below and by retaining certain risks.
Public entity risk pools are formally organized as separate entities established under the Joint Exercise of Powers Act of the State of California. As separate entities, those entities exercise full powers and authorities within the scope of the related Joint Powers Agreements including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each risk pool is governed by a board consisting of representatives from member municipalities. Each risk pool controls the operations of the respective risk pool, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on that board. Obligations and liabilities of these risk pools are not the City's responsibility.
The City participates with other public entities in a joint venture under a joint venture powers agreement, which establishes the Central San Joaquin Valley Risk Management Authority (CSJVRMA). The relationship between the City and CSJVRMA is such that CSJVRMA is not a component unit of the City for financial reporting purposes. 63 253
CITY OF LOS BANOS I JUNE 30, 2023
Notes to the Basic Financial Statements
NOTE 13 - RISK MANAGEMENT (Continued)
The City is covered for the first $1,000,000 of each general liability claim and $500,000 of each worker's compensation claim through the CSJVRMA. The City has the right to receive dividends or the obligation to pay assessments based on a formula, which among other expenses, charges the City's account for liability losses under $1,000,000 and worker's compensation losses under $500,000. The CSJVRMA participates in excess pools, which provide general liability coverage from $1,000,000 to $29,000,000 and Workers Compensation coverage from $500,000 to $5,000,000 and purchases excess insurance above $50,000,000 to the statutory limit.
CSJVRMA is a consortium of fifty-four (54) cities in the San Joaquin Valley, California. It was established under the provisions of California Government Code Section 6500 et. seq. A Board of Directors governs the CSJVRMA, which meets 3-4 times per year, consisting of one member appointed by each member city. The day-to-day business is handled by a management group employed by the CSJVRMA. The annual financial report may be obtained from the consortium's executive office at 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833.
NOTE 14 - COMMITMENTS AND CONTINGENCIES
The City is subject to litigation arising in the normal course of business. In the opinion of the City attorney, there is no pending litigation which is likely to have a material adverse effect on the financial position of the City.
The City participates in various federal grant programs, the principal of which are subject to program compliance audits pursuant to the Single Audit Act as amended. Accordingly, the government's compliance with applicable grant requirements will be established at a future date. The amount of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although the government anticipates such amounts, if any, will be immaterial.
NOTE 15 - PRIOR PERIOD ADJUSTMENT
A. Implementation of GASB 96
The beginning net position for Business-Type Activities has been restated as a result of the implementation of the Governmental Accounting Standards Board, Statement No. 96, Subscription Based Information Technology Arrangements (SBITAs). The beginning fund balance of the Water Fund financial statements was also restated to conform to this presentation.
Description
Beginning net position
Change in accounting principle:
Record beginning net position in
compliance with GASBs 96
Beginning net position, as restated
$
$
Business-Type
Activities
Water
Fund
119,443,384 $ 56,856,741
15,450 15,450
119,458,834 $ 56,872,191 -----------
64 254
REQUIRED SUPPLEMENTARY INFORMATION
65 255
BUDGETARY COMPARISON SCHEDULES
66 256
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
General Fund
Budgeted Amount
Variance with
Original Final Actual Final Budget
REVENUES
Taxes:
Property $ 8,4S3,776 $ 8,4S3,776 $ 10,522,723 $ 2,068,947 Sales 10,681,828 10,681,828 10,599,511 (82,317)
Franchise 662,641 662,641 752,176 89,53S
Other 668,200 668,200 635,230 (32,970)
Licenses and permits 1,690,53S 1,690,535 869,724 (820,811) I nte rgovern menta I 4,984,142 125,800 160,823 35,023
Charges for services 1,750,128 1,790,128 1,860,152 70,024 Fines 30,000 30,000 43,723 13,723
Use of property and money 965,994 965,994 1,866,692 900,698 Miscellaneous 76,000 81,500 83,778 2,278
Total revenues 29,963,244 25,150,402 27,394,532 2,244,130
EXPENDITURES
Current:
General government:
Administration 2,620,063 4,778,404 4,576,004 202,400
Contingency 50,000 50,000 23,373 26,627
Total general government 2,670,063 4,828,404 4,599,377 229,027 Public safety:
Administration 13,213 13,213
Police 11,812,430 11,871,630 11,279,920 591,710
Fire 2,215,275 2,307,154 1,950,100 357,054
Building 988,047 989,647 711,178 278,469
Code enforcement 692,981 742,981 837,147 (94,166)
Total public safety 15,708,733 15,924,625 14,791,558 1,133,067 Highways and streets:
Engineering 271,282 352,282 348,366 3,916
Streets 2,234 (2,234)
Total highway and streets 271,282 352,282 350,600 1,682 Parks and recreation:
Administration 205,000 205,000 103,548 101,452
Recreation 1,168,459 1,214,918 1,144,961 69,957
Maintenance 905,942 990,346 980,286 10,060
Total parks and recreation 2,279,401 2,410,264 2,228,795 181,469 Economic development:
Economic development 200,000 (200,000)
Community development 1,323,060 1,496,111 1,073,737 422,374 Total economic development 1,323,060 1,496,111 1,273,737 222,374 Debt service:
Interest and fiscal charges 3,087 3,087 2,800 287
Total debt service 3,087 3,087 2,800 287
Capital outlay 8,498,066 4,283,066 1,614,162 2,668,904
Total expenditures 30,753,692 29,297,839 24,861,029 4,436,810 (Continued)
67 257
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
General Fund
(Continued)
Budgeted Amount
Original Final
Excess (deficiency) of revenues over
(under) expenditures (790,448) (4,147,437)
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets
Proceeds from IT subscription
Insurance recoveries
Transfers out (525,000)
Total other financing sources (uses) (525,000)
Net change in fund balance (790,448) (4,672,437)
Fund balance - beginning 38,160,090 38,160,090
Fund balance - ending $ 37,369,642 $ 33,487,653
68 Variance with
Actual Final Budget
2,533,503 6,680,940
35,640 35,640
26,842 26,842
20,138 20,138
(10,011) 514,989
72,609 597,609
2,606,112 7,278,549
38,160,090
$ 40,766,202 $ 7,278,549
258
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
Impact Fees Special Revenue Fund
Budgeted Amount
Variance with
Original Final Actual Final Budget
REVENUES
I ntergove rn me nta I $ 1,067,952 $ 1,067,952 $ 1,288,631 $ 220,679 Charges for services 3,935,875 3,935,875 1,749,568 (2,186,307) Use of property and money 31,740 31,740 748,398 716,658 Miscellaneous 2,585,000 3,198,649 30,294 (3,168,355)
Total revenues 7,620,567 8,234,216 3,816,891 (4,417,325)
EXPENDITURES
Current:
Highways and streets:
Road 2,657,000 2,514,883 1,187,870 1,327,013
Total highway and streets 2,657,000 2,514,883 1,187,870 1,327,013 Capital outlay 7,117,995 7,211,122 2,430,218 4,780,904
Total expenditures 9,774,995 9,726,005 3,618,088 6,107,917 Excess (deficiency) of revenues over
(under) expenditures (2,154,428) (1,491,789) 198,803 1,690,592 Net change in fund balance (2,154,428) (1,491,789) 198,803 1,690,592 Fund balance - beginning 30,864,945 30,864,945 30,864,945 Fund balance - ending $ 28,710,517 $ 29,373,156 $ 31,063,748 $ 1,690,592 69 259
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
Community Development Block Grant and Home Grants Special Revenue Fund Budgeted Amount
Variance with
Original Final Actual Final Budget
REVENUES
Intergovernmental $ 206,676 $ 206,676 $ 210,186 $ 3,Sl0 Use of property and money so so 17,623 17,S73
Loan repayments SS,000 SS,000 49,128 (S,872}
Miscellaneous 720 720
Total revenues 261,726 261,726 277,6S7 lS,931
EXPENDITURES
Current:
Public safety:
Code enforcement 201,676 201,676 210,186 {8,Sl0}
Total public safety 201,676 201,676 210,186 (8,SlO}
Economic development:
Economic development SS,930 SS,930 32,S99 23,331
Total economic development SS,930 SS,930 32,S99 23,331
Total expenditures 2S7,606 2S7,606 242,78S 14,821
Net change in fund balance 4,120 4,120 34,872 30,7S2
Fund balance - beginning 711,122 711,122 711,122
Fund balance - ending $ 71S,242 $ 71S,242 $ 74S,994 $ 30,7S2 70 260
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
Streets and Roads Special Revenue Fund
Bud1:1eted Amount
Variance with
Original Final Actual Final Budget
REVENUES
Taxes:
Sales $ 1,437,000 $ 1,437,000 $ 1,471,545 $ 34,545
Intergovernmental 2,784,543 2,687,239 2,755,200 67,961
Use of property and money 5,500 5,500 162,993 157,493
Miscellaneous 350 350 404 54
Total revenues 4,227,393 4,130,089 4,390,142 260,053
EXPENDITURES
Current:
Highways and streets:
Roads 3,662,132 3,686,332 2,279,129 1,407,203
Total highways and streets 3,662,132 3,686,332 2,279,129 1,407,203 Capital outlay 2,510,000 2,510,000 162,293 2,347,707
Total expenditures 6,172,132 6,196,332 2,441,422 3,754,910 Excess (deficiency) of revenues over
(under) expenditures (1,944,739) (2,066,243) 1,948,720 4,014,963
OTHER FINANCING SOURCES (USES)
Proceeds from IT subscription 45,892 45,892
Total other financing sources (uses) 45,892 45,892
Net change in fund balance (1,944,739) (2,066,243) 1,994,612 4,060,855 Fund balances - beginning 6,757,424 6,757,424 6,757,424 Fund balances - ending $ 4,812,685 $ 4,691,181 $ 8,752,036 $ 4,060,855 71 261
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
Public Safety Special Revenue Fund
Budgeted Amount
Variance with
Original Final Actual Final Budget
REVENUES
Taxes :
Property $ 1,646,378 $ 1,646,378 $ 1,745,656 $ 99,278
Sales 4,221,390 4,221,390 3,921,210 (300,180)
I nte rgove rn mental 160,000 253,600 190,036 (63,564)
Charges for services 12,500 12,500 16,954 4,454
Use of property and money 11,090 11,090 139,980 128,890 Miscellaneous 11,289 11,289
Total revenues 6,051,358 6,144,958 6,025,125 (119,833)
EXPENDITURES
Current:
Public safety:
Police 1,523,490 1,630,893 1,487,199 143,694
Fire 1,703,744 1,847,029 1,923,417 (76,388)
Total public safety 3,227,234 3,477,922 3,410,616 67,306 Capital outlay 17,312,891 805,100 418,868 386,232
Total expenditures 20,540,125 4,283,022 3,829,484 453,538 Excess (deficiency) of revenues over
(under) expenditures (14,488,767) 1,861,936 2,195,641 333,705
OTHER FINANCING SOURCES (USES)
Transfers in 1,176 1,176
Total other financing sources (uses) 1,176 1,176
Net change in fund balance (14,488,767) 1,861,936 2,196,817 334,881 Fund balance - beginning 5,266,270 5,266,270 5,266,270
Fund balance - ending $ (9,222,497) $ 7,128,206 $ 7,463,087 $ 334,881 72 262
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Notes to the Budgetary Comparison Schedules
NOTE 1- BUDGETARY DATA
The City Council reviews and adopts an annual budget for the General, Special Revenue, Capital Projects and Enterprise Funds. The City Council holds public hearings and may modify the appropriations by general approval. Budgeted amounts may be transferred between line items within departments with the City Manager's approval. The legal level of expenditure control in the funds is considered to be at the department level. Operating appropriations lapse at the end of each fiscal year.
The budget is reported on the same basis as the fund types and on a basis consistent with accounting principles generally accepted in the United States of America. Additional appropriations or other changes during the fiscal year may be submitted by the department for Council review and approval.
NOTE 2 - EXCESS EXPENDITURES OVER APPROPRIATIONS
The City incurred expenditure in excess of appropriations in the following amounts for the year ended June 30, 2023:
General Fund
Current:
General government:
Code enforcement
Highways and streets:
Streets
Economic development:
Economic development
CDBG and HOME Grants Special Revenue
Current:
Code enforcement
Public Safety Special Revenue
Current:
General government:
Public safety:
Fire
$ 94,166
2,234
200,000
8,510
76,388
73 263
PENSION PLANS
74 264
CITY OF LOS BANOS I LAST 10 FISCAL YEARS*
Pension Plans - Cost-Sharing Multiple-Employer Plan
Schedule of Proportionate Share of Net Pension Liability Proportion of the net pension liability
Proportionate share of the net pension
liability
Covered payrol I
Proportionate share of the net pension
liability as percentage of covered payroll
Plan fiduciary net position as a percentage
of the total pension liability
NOTES TO SCHEDULE
Chang_es in Benefit Terms - None
Changes in Assumptions
2015
0.2286%
$ 14,362,655
$ 7,839,915
183.20%
78.86%
2016
0.2416%
$ 16,582,007
$ 8,075,142
205.35%
75.82%
2017 2018
0.2311% 0.2261%
$ 19,994,163 $ 22,419,524
$ 8,274,888 $ 9,052,650
241.62% 247.66%
71.81% 71.38%
2019 2020 2021 2022 2023
0.2262% 0.2251% 0.2298% 0.2639% 0.2567%
$ 21,796,766 $ 23,063,963 $ 24,997,926 $ 14,269,911 $ 29,653,285 $ 9,437,456 $ 9,995,545 $ 10,680,273 $ 10,465,119 $ 10,709,965 230.96% 230.74% 234.06% 136.36% 276.88%
73.65% 74.49% 74.26% 86.19% 74.08%
Effective with the June 30, 2021 valuation date (2022 measu rement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated, combined with risk estimates, and are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. In addition, demographic assumptions and the inflation rate assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. *Schedule is intended to show information for ten years. Additional years will be displayed as they become available. 75 265
CITY OF LOS BANOS I LAST TEN YEARS
Pension Plans - Cost-Sharing Multiple-Employer Plan
Schedule of Contributions
2014
Actuarially required contribution (actuarially determined) $ 2,007,582 Contributions in relation to the actuarially determined contributions 2,007,582
Contribution deficiency {excess) .?.
Covered payroll $ 7,839,915
Contributions as a percentage of covered payroll 25.61% $
s
$
2015 2016 2017
2,092,368 $ 2,438,630 $ 2,720,626 $
2,092,368 2,438,630 2,720,626
s $ s
8,075,142 $ 8,274,888 $ 9,052,650 $
25.91% 29.47% 30.05%
76 2018 2019 2020 2021 2022 2023
2,937,919 $ 2,874,876 $ 3,012,522 $ 3,223,098 $ 3,484,241 $ 3,777,240 2,937,919 2,874,876 3,012,522 3,223,098 3,484,241 3,777,240 9,437,456 s 9,995,545 $ 10,680,273 $ 10,465,119 $ 10,709,965 $ 11,425,144
31.13% 28.76% 28.21% 30.80% 32.53% 33.06%
266
CITY OF LOS BANOS I LAST TEN YEARS*
Pension Plans - Retiree Healthcare Plan (OPEB)
Schedule of Changes in Net OPEB Liability and Related Ratios 2018 2019 2020 2021 2022 2023
Total OPEB Liability:
Service cost 948,983 $ 977,452 $ 821,453 781,199 804,635 677,250 Interest on total OPEB liability 1,580,117 1,634,419 1,954,156 1,788,099 1,899,949 1,687,371 Changes of assumptions 839,742 602,389 1,092,741
Differences between expected and actual experience 69,969 (2,795,350) (3,799,097) Benefit payments, including refunds of employee contributions (580,388) (685,805) (754,824) (784,836) (881,555) (950,036) Implicit rate subsidy (150,022) (150,022) (150,022) (100,000) (105,000) (104,000) Net change in total OPES liability 1,798,690 2,685,755 (322,198) 1,684,462 (988,327) 1,310,585 Total OPEB liability - beginning 21,989,323 23,788,013 26,473,768 26,151,570 27,836,032 26,847,705 Total OPES liability - ending (a) $ 23,788,013 $ 26,473,768 $ 26,151,570 $ 27,836,032 26,847,705 28,158,290 OPEB Plan Fiduciary Net Position:
Net investment income (loss) $ 516,055 $ 472,333 $ 461,290 $ 308,600 $ 2,913,771 $ (1,979,055) Contributions:
Employer - City's Contribution 1,080,904 1,848,085 1,883,561 1,951,758 2,106,055 1,941,389 Employer - Implicit Subsidy 150,022 150,022 150,022 105,000 105,000 104,000 Administrative expenses (2,512) (3,079) (1,614) (4,446) (4,017) (6,251) Benefit payments, including refunds of employee contributions (580,388) (685,805) (754,824) (784,836) (881,555) (950,036) Implicit rate subsidy fulfilled (150,022) (150,022) (150,022) (100,000) (105,000) (104,000) Net change in plan fiduciary net position 1,014,059 1,631,534 1,588,413 1,476,076 4,134,254 (993,953) Plan fiduciary net position beginning 4,890,030 5,904,089 7,535,623 9,124,036 10,600,112 14,734,366 Plan fiduciary net position - ending (b) $ 5,904,089 $ 7,535,623 $ 9,124,036 $ 10,600,112 14,734,366 13,740,413 Net OPES liability - ending (a) - (b) 17,883,924 $ 18,938,145 $ 17,027,534 $ 17,235,920 12,113,339 14,417,877 Plan fiduciary net position as a percentage of the total OPEB liability 24.82% 28.46% 34.89% 38.08% 54.88% 48.80% Covered-employee payroll $ 9,057,433 $ 9,057,433 9,306,512 $ 11,322,323 $ 11,563,678 13,722,458 Net OPEB liability as a percentage of covered-employee payroll 197.45% 209.09% 182.96% 152.23% 104.75% 105.07% Notes to Schedule:
*Schedule is intended to show information for ten years. Additional information will be displayed as it becomes available. 77 267
CITY OF LOS BANOS I LAST TEN YEARS*
Pension Plans - Retiree Healthcare Plan (OPEB)
Schedule of Contributions
Actuarially Determined Contribution (ADC)
Contributions in relation to the actuarially
determined contributions
Contribution deficiency {excess)
Covered-employee payroll
Contributions as a percentage of covered-employee payroll Notes to Schedule:
Methods and assumptions used to determine contributions:
$
Actuarial Cost Method
Amortization Method
Amortization Period
Inflation
Entry age normal, level percent of pay
Level percent of pay
24-year closed period for 2022/23
2.50%
2.75%
2018
1,997,107
(1,230,926)
766,181
9,057,433
13.59%
2019 2020
$ 2,115,559 $ 1,871,790
(1,998,107) (2,056,758)
117,452 $ (184,968)
9,306,512 $ 11,322,323
21.47% 18.17%
Assumed Payroll Growth
Health Trend Rates
lnvestinent Rate of Return
Retirement Age
Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Non-Kaiser) - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Kaiser) -4.60% for 2023, decreasing to an ultimate rate of 3.75% in 2076
6.25%
50 years
Mortality CalPERS 2000-2019 Experience Study
*Schedule is intended to show information for ten years. Additional information wi ll be displayed as it becomes available. 78 2021
1,906,609
(2,211,055)
$ (304,446) $
$ 11,563,678 $
19.12%
2022
1,938,870
(2,045,389)
(106,519)
13,722,458
14.91%
2023
1,555,716
(1,667,576)
(111,860)
14,824,737
11.25%
268
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
79 269
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
ASSESSMENT DISTRICTS
These funds are used for maintenance of sidewalks, landscaping, parks, street signs, streetlights, trees, fences, storm drains and professional services in designated districts within the City that are then charged to the residents through the property tax roll.
CMAQGRANT
This fund is used to account for the sale of equipment purchased with grant funding from the Congestion Mitigation and Air Quality (CMAQ) grants in previous fiscal years.
HCDGRANT
This fund is used to account for two HCD grants. The first grant provides funding for the Planning Grants Program (PGP) that is used to prepare, adopt, and implement a plan for Accelerating Housing Production and Streamlined Housing Production. This includes updating planning documents, entitlement processes or zoning ordinances in accordance with this plan. The second grant provides funding for the Local Early Action Plan (LEAP) which provides financial assistance for technical assistance, preparation, and adoption of planning documents and process improvements to accelerate housing production and facilitate compliance to implement the sixth cycle of the regional housing needs assessment. 80 270
CITY OF LOS BANOS I JUNE 30, 2023
Non major Governmental Funds
Combining Balance Sheet
Special Revenue Funds
Total
Nonmajor
Assessment CMAQ HCD Governmental
Districts Grant Grant Funds
ASSETS
Cash and investments $ 946,654 $ 18,243 $ - $ 964,897
Accounts receivable 14,972 14,972
Taxes receivable 54,653 54,653
Interest receivable 1,302 51 1,353
Total assets $ 1,017,581 $ 18,294 $ - $ 1,035,875
LIABILITIES
Accounts payable $ 174,627 $ - $ - $ 174,627
Due to other funds 20,706 20,706
Total liabilities 174,627 20,706 195,333
FUND BALANCES:
Restricted 842,954 18,294 861,248
Unassigned (20,706) (20,706)
Total fund balances 842,954 18,294 (20,706) 840,542
Total liabiliti es and fund balances $ 1,017,581 $ 18,294 $ - $ 1,035,875 81 271
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Non major Governmental Funds
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Special Revenue Funds
Total
Nonmajor
Assessment CMAQ HCD Governmental
Districts Grants Grant Funds
REVENUES
Charges for services $ 2,974,792 $ - $ $ 2,974,792
Use of property and money 23,461 418 23,879
Total revenues 2,998,253 418 2,998,671
EXPENDITURES
Current:
Parks and recreation 2,343,015 2,343,015
Capital outlay:
Parks and recreation 178,425 178,425
Total expenditures 2,521,440 2,521,440
Excess (deficiency) of revenues over
(under) expenditures 476,813 418 477,231
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 12,969 12,969
Total other financing sources (uses) 12,969 12,969
Net change in fund balances 476,813 13,387 490,200
Fund balances - beginning 366,141 4,907 (20,706) 350,342 Fund balances - ending $ 842,954 $ 18,294 $ (20,706) $ 840,542 82 272
BUDGETARY COMPARISON SCHEDULES
83 273
CITY OF LOS BANOS I JUNE 30, 2023
Budgetary Comparison Schedule
Assessment Districts Fund
Special Revenue
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
REVENUES
Charges for services $ 2,976,118 $ 2,974,792 $ (1,326)
Use of property and money 1,010 23,461 22,451
Total revenues 2,977,128 2,998,253 21,125
EXPENDITURES
Current:
Parks and recreation 2,715,790 2,343,015 372,775
Capital outlay:
Parks and recreation 326,561 178,425 148,136
Total expenditures 3,042,351 2,521,440 520,911
Excess (deficiency) of revenues over
(under) expenditures (65,223) 476,813 542,036
OTHER FINANCING SOURCES (USES)
Transfers in (525,000) 525,000
Total other financing sources (uses) (525,000) 525,000
Net change in fund balance (590,223) 476,813 1,067,036
Fund balance - beginning 366,141 366,141
Fund balance - ending $ (224,082) $ 842,954 $ 1,067,036 84 274
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
CMAQ Grant Fund
Special Revenue
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
REVENUES
Use of property and money $ - $ 418 $ 418
Total revenues 418 418
EXPENDITURES
Current:
Highways and streets
Total expenditures
Excess (deficiency) of revenues over
(under) expenditures 418 418
OTHER FINANCING SOURCES (USES)
Proceeds from sale of capital assets 12,969 12,969
Total other financing sources (uses) 12,969 12,969
Net change in fund balance 13,387 13,387
Fund balance - beginning 4,907 4,907
Fund balance - ending $ 4,907 $ 18,294 $ 13,387
85 275
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
HCD Grant Fund
REVENUES
Intergovernmental
Total revenues
EXPENDITURES
Current:
Economic development
Total expenditures
Excess (deficiency) of revenues over
{under) expenditures
Net change in fund balance
Fund balance - beginning
Fund balance - ending
$
Final Budgeted
Amounts
Special Revenue
Actual
Amounts
Variance with
Final Budget
22,413 _;_$ _ ____ - _;_$ ___ (,_22-'-,4_1--'.,! 3)
22,413 {22,413)
22,413 22,413
22,413 22,413
{20,706) (20,706)
(20,706) ,;;. $ = = a:a:(_20~, 7_;0~6)
86 276
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Budgetary Comparison Schedule
Capital Projects Fund
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
REVENUES
Use of property and money $ - $ 190,071 $ 190,071
Total revenues 190,071 190,071
EXPENDITURES
Debt service:
Interest and fiscal charges 350,000 308,000 42,000
Capital outlay 21,445,000 17,588,250 3,856,750
Total expenditures 21,795,000 17,896,250 3,898,750
Excess (deficiency) of revenues over
(under) expenditures (21,795,000) (17,706,179) 4,088,821 Net change in fund balance (21,795,000) (17,706,179) 4,088,821 Fund balance - beginning 29,477,570 29,477,570
Fund balance - ending $ 7,682,570 $ 11,771,391 $ 4,088,821 87 277
INTERNAL SERVICE FUNDS
FLEET MAINTENANCE
This fund is used for the maintenance, service, and repair of the City's fleet.
INFORMATION TECHNOLOGY
This fund is used to support, maintain, and enhance the City's information technology hardware, software, and communications infrastructure.
RETIREE'S HEAL TH BENEFITS
This fund is used to charge the departments for retiree health benefits. 88 278
CITY OF LOS BANOS I JUNE 30, 2023
Internal Service Funds
Combining Statement of Net Position
Retiree's
Fleet Information Health
Maintenance Technology Benefits Total
ASSETS
Current assets:
Cash and investments $ 44,910 $ 39,637 $ 247,905 $ 332,452 Interest receivable 198 695 893
Prepaid items 17 17
Total current assets 44,927 39,835 248,600 333,362
Noncurrent assets:
Capital assets:
Buildings and improvements 37,709 37,709
Machinery and equipment 768,296 750,759 1,519,055
Less: accumulated depreciation (780,770) (574,367) (1,355,137) Total noncurrent assets 25,235 176,392 201,627
Total assets 70,162 216,227 248,600 S34,989
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions 219,883 152,083 371,966 Deferred outflows from OPEB 76,591 23,860 100,451
Total deferred outflows of resources 296,474 175,943 472,417
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities 70,551 6,395 76,946 Compensated absences 11,953 2,047 14,000
Total current liabilities 82,504 8,442 90,946
Noncurrent liabilities:
Compensated absences 3,101 3,101
Net pension liability 517,824 358,149 875,973
Net OPEB liability 251,529 78,358 329,887
Total noncurrent liabilities 772,454 436,507 1,208,961
Total liabilities 854,958 444,949 1,299,907
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions 45,947 32,135 78,082
Deferred inflows from OPEB 75,762 23,602 99,364
Total deferred inflows of resources 121,709 55,737 177,446
NET POSITION (DEFICIT)
Net investment in capital assets 25,235 176,392 201,627 Unrestricted (635,266) (284,908) 248,600 (671,574)
Total net position (deficit) $ (610,031) $ (108,516) $ 248,600 $ (469,947) 89 279
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Internal Service Funds
Combining Statement of Revenues, Expenses and Changes in Net Position Retiree's
Fleet Information Health
Maintenance Technology Benefits Total
Operating revenues:
Interdepartmental charges $ 1,138,476 $ 403,223 $ 1,555,716 $ 3,097,415 Total operating revenues 1,138,476 403,223 1,555,716 3,097,415 Operating expenses:
Personnel services 518,629 125,889 1,554,220 2,198,738
Contractual services 8,517 174,725 183,242
Utilities 342,597 265 342,862
Repairs and maintenance 325,020 325,020
Insurance 8,775 7,679 16,454
Other supplies and expenses 32,547 1,065 33,612
Depreciation 3,921 46,197 50,118
Total operating expenses 1,240,006 355,820 1,554,220 3,150,046 Operating income (loss) (101,530) 47,403 1,496 (52,631) Nonoperating revenues (expenses):
Investment earnings 5,282 4,213 9,341 18,836
Total nonoperating revenues (expenses) 5,282 4,213 9,341 18,836 Change in net position (96,248) 51,616 10,837 (33,795)
Net position (deficit) - beginning (513,783) (160,132) 237,763 (436,152) Net position (deficit) - ending $ (610,031) $ (108,516) $ 248,600 $ (469,947) 90 280
CITY OF LOS BANOS I FOR THE YEAR ENDED JUNE 30, 2023
Internal Service Funds
Combining Statement of Cash Flows
Retiree's
Fleet Information Health
Maintenance Technologies Benefits Total
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from interfund services provided $ 1,138,476 $ 403,223 $ 1,555,716 $ 3,097,415 Payments to suppliers (685,972) (178,851) (864,823)
Payments to or on behalf of employees for services (419,555) (147,172) (1,554,220) (2,120,947) Net cash provided by (used for) operating activities 32,949 77,200 1,496 111,645
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets (76,733) (76,733)
Net cash provided by (used for) capital and related
financing activities (76,733) (76,733)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment earnings 5,281 4,117 8,829 18,227
Net cash provided by (used for) investing activities 5,281 4,117 8,829 18,227 Increase (decrease) in cash and cash equivalents 38,230 4,584 10,325 53,139 Cash and equivalents - beginning 6,680 35,053 237,580 279,313 Cash and equivalents - ending $ 44,910 $ 39,637 $ 247,905 $ 332,452 Reconciliation of Operating Income (Loss) to Net Cash Provided By (Used For} Operating Activities Operating income (loss) $ (101,530) $ 47,403 $ 1,496 $ (52,631) Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation expense 3,921 46,197 50,118
(Increase) decrease in:
Prepaid items (17) (17)
Deferred outflows of resources for pensions (154,403) (99,708) (254,111) Deferred outflows of resources for OPEB (28,691) {2,185) {30,876) Increase (decrease) in:
Accounts payable and other liabilities 31,501 4,883 36,384 Compensated absences 6,970 5 6,975
Net pension liability 316,042 197,830 513,872
Net OPEB liability 103,638 11,437 115,075
Deferred inflows of resources for pensions (138,772) {115,397) (254,169) Deferred inflows of resources for OPEB (5,710) (13,265) (18,975) Net cash provided (used) by operating activities $ 32,949 $ 77,200 $ 1,496 $ 111,645 91 281
STATISTICAL SECTION
92 282
STATISTICAL SECTION - OVERVIEW
This part of the City of Los Banos' Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health.
Contents
Financial Trends: These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.
Revenue Capacity: These schedules contain information to help the reader assess the government's most significant local revenue sources, sales and property taxes.
Debt Capacity: These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future.
Demographic and Economic Information: These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place.
Operating Information: These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the government provides and the activities it performs. 93 283
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Net Position by Components
2013-2014
§overnmental actjvjtjes
Net investment in capital assets $ 83,335,435
Restricted 11,942,215
Unrestricted 10,906,999
Total governmental activities
net position $ 106,184,649
Business-type activities
Net investment in capital assets $ 46,049,921
Restricted 8,154,696
Unrestricted 16,092,089
Total business-type activities
net position $ 70,296,706
Primary government
Net investment in capital assets $ 129,385,356
Restricted 20,096,911
Unrestricted 26,999,088
Total primary government
net position $ 176,481,355
$
$
$
$
$
$
2014-2015 2015-2016 2016-2017
74,482,065 $ 83,051,535 $ 77,813,813
12,507,436 14,014,590 19,345,542
_ _ (639,257) 4,527,558 5,374,816
86,350,244 $ 101,593,683 $ 102,534,171
45,206,093 $ 45,816,837 $ 46,906,196
8,748,625 10,468,024 12,796,446
18,127,680 21,106,896 23,730,905
72,082,398 $ 77,391,757 $ 83,433,547
119,688,158 $ 128,868,372 $ 124,720,009
21,256,061 24,482,614 32,141,988
17,488,423 25,634,454 29,105,721
158,432,642 $ 178,985,440 $ 185,967,718
94 Fiscal Years
2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 $ 73,679,314 $ 71,701,732 $ 70,986,296 $ 72,183,070 $ 97,029,611 $ 103,769,799 28,042,938 34,310,692 41,605,638 50,090,885 50,602,889 56,060,038 (10,084,047) !9,085,174) (4,680,881) 1,266,673 23,462,779 21,603,396 $ 91,638,205 $ 96,927,250 $ 107,911,053 $ 123,540,628 $ _171,095,279 $ 181,433,233 $ 51,171,643 $ 55,063,074 $ 55,419,531 $ 54,939,541 $ 54,500,208 $ 55,241,270 14,747,937 15,627,011 18,399,783 23,107,727 24,760,956 24,901,408 20,300,902 22,318,541 26,982,634 32,746,134 40,182,220 44,076,141 $ 86,220,482 $ 93,008,626 $ 100,801,948 $ 110,793,402 $ 119,443,384 $ 124,218,819 $ 124,850,957 $ 126,764,806 $ 126,405,827 $ 127,122,611 $ 151,529,819 $ 159,011,069 42,790,875 49,937,703 60,005,421 73,198,612 75,363,845 80,961,446 10,216,855 13,233,367 22,301,753 34,012,807 63,644,999 65,679,537 $ 177,858,687 $ 189,935,876 $ 208,713,001 $ 234,334,030 $ 290,538,663 $ 305,652,052 284
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Changes in Net Position
2013-2014
Expenses
Governmental activities:
General government $ 1,075,846
Public safety 11,462,611
Highways and streets 5,509,207
Parks and recreation 3,246,159
Economic development 898,589
Interest on long-term debt 11,251
Total governmental activities 22,203,663
Business-type activities:
Water 4,116,815
Wastewater 4,127,310
Airport 509,952
Solid waste 6,964,870
Total business-type activities 15,718,947
Total primary government expenses $ 37,922,610
Program Revenue
Governmental activities:
Charges for services $ 3,629,571
Operating grants and contributions 3,625,821
Capital grants and contributions 1,469,956
Total governmental activities 8,725,348
Business-type activities:
Charges for services 16,802,170
Operating grants and contributions 24,737
Capital grants and contributions
Total business-type activities 16,826,907
Total primary government program
revenue $ 25,552,255
$
$
$
$
2014-2015 2015-2016 2016-2017
1,142,994 $ 1,371,651 $ 1,186,905
11,382,513 9,687,489 12,473,523
5,581,131 6,023,160 6,222,855
3,319,476 4,281,104 4,735,095
770,417 582,985 681,828
10,451 11,594 11,232
22,206,982 21,957,983 25,311,438
4,012,484 4,400,180 4,356,044
3,996,860 4,418,235 4,197,226
427,161 361,224 330,699
5,419,558 6,060,817 6,282,604
13,856,063 15,240,456 15,166,573
36,063,045 $ 37,198,439 $ 40,478,011
4,022,788 $ 5,001,906 $ 5,593,570
3,596,504 3,385,289 3,808,707
1,775,933 2,623,070 4,753,878
9,395,225 11,010,265 14,156,155
17,823,033 19,539,564 20,693,974
15,334 24,812 34,588
17,838,367 19,564,376 20,728,562
27,233,592 $ 30,574,6_±_], $ ~,7!2
95 Fiscal Years
2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 $ 1,487,571 $ 1,535,597 $ 1,615,041 $ 1,680,946 $ 2,817,462 $ 4,582,391 15,813,709 16,098,104 18,938,351 18,002,198 16,319,501 18,934,458 6,436,759 6,987,449 6,456,997 6,232,243 6,408,485 7,178,208 4,612,509 4,799,711 5,131,771 4,812,593 5,647,346 5,389,019 945,745 980,764 1,018,880 942,026 1,287,958 1,281,357
9,779 8,249 6,641 1,203 3,950 2,800
29,306,072 30,409,874 33,167,681 31,671,209 32,484,702 37,368,233 4,772,454 4,928,253 4,810,242 5,132,183 5,368,954 5,251,235 4,527,236 4,557,451 4,896,520 4,878,692 5,095,317 5,729,799 336,645 337,840 336,588 305,973 366,282 379,962
5,745,491 6,732,856 7,593,755 8,027,609 6,399,144 8,144,745 15,381,826 16,556,400 17,637,105 18,344,457 17,229,697 19,505,741 $ 44,687,898 $ 46,966,274 $ 50,804,786 $ 50,015,666 $ 49,714,399 $ 56,873,974 $ 8,037,154 $ 7,799,743 $ 8,896,352 $ 10,355,202 $ 12,870,076 $ 7,501,980 5,172,313 5,673,812 6,015,032 4,052,293 3,757,028 5,469,842 ~ 69, 161 6,650,241 10,976,153 8,218,079 26,318,868 3,204,332 16,678,628 20,123,796 25,887,537 22,625,574 42,945,972 16,176,154 21,568,675 20,979,032 22,831,073 26,263,090 23,579,704 21,751,160 27,363 22,604 25,342 130,305 25,696 32,605
159,298 653,940 833,776 1,146,422 1,314,669 412,202
21,755,336 21,655,576 23,690,191 27,539,817 24,920,069 22,195,967 ~ _38,433,964 ?_~41,779,32_2 $~~49,577,728 $_ 50,165,391 $ 67,866,041 S___i!l,3_7?,121 285
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Changes in Net Position
(Continued)
Fiscal Years
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2020-2021 2021-2022 2022-2023 Net (expense)/revenue:
Governmental activities $ {13,478,315) $ {12,811,757) $ {10,947,718) $ {11,155,283) $ {12,627,444) $ {10,286,078) $ {7,280,144) $ {9,045,635) $ 10,461,270 $ {21,192,079) Business-type activities 1,107,9~0 3,982,304 4,323,920 5,56_1,989 _ _ 6,373,510 5,099,176 ___ 6,053,086 9,195,360 7,690,372 2,690,226 Total primary government (expenses)
revenue, net $ {12,370,355) _$ __ (8,829,453) $ (6,623,798) $ (5,593,294) $ {6,253,934) $ (5,186,902) $ (1,227,058) $ 149,725 $ 18,151,642 $ (18,501,853) General Revenues
Governmental activities:
Taxes:
Property taxes $ 5,578,732 $ 5,704,220 $ 6,229,501 $ 6,793,665 $ 6,793,665 $ 7,305,948 $ 9,382,154 $ 9,382,154 $ 10,416,190 $ 12,268,378 Sales taxes 3,829,042 4,012,401 4,613,579 5,594,516 5,594,516 7,750,981 12,762,086 12,762,086 14,498,643 14,520,721 Other taxes 1,072,950 1,158,812 1,237,553 1,181,620 1,181,620 1,118,412 1,233,540 1,233,540 1,485,952 1,435,212 Use of money and property 1,205,110 1,145,645 1,287,188 1,935,306 1,935,306 1,876,676 902,417 902,417 629,466 3,149,636 American Rescue Plan Act 9,816,684
Insurance recoveries 240,396
Developer contributions 1,975,532
Miscellaneous 243,265 80,389 124,913 76,560 76,560 215,189 395,013 395,013 246,446 164,921 Transfers (5,124) (5,696) (3,776) (6,544) (6,544) (3,259) (8,835) Extraordinary item 12,051,254
Total governmental activities 26,191,157 ____g,_095, 771 13,488,9~ 15,575,123 15,575,123 ~263,9Q 24,675,210 24,675,210 _ 37,093,381 31,530,033 Business-type activities:
Property taxes 7,626 8,454 3,860 3,717 3,717 3,963 4,077 4,077 6,073 Use of money and property 384,004 334,106 529,413 1,245,717 1,245,717 1,138,933 188,669 188,669 (120,628) 1,880,468 Developer contributions 427,312
Settlement 600,000
Miscellaneous 161,373 131,545 158,676 432,990 432,990 594,081 603,348 603,348 480,238 174,383 Transfers (Note 4) 5,124 5,696 _1,776 6,544 6,544 --- _3,259 8,835 Total business-type activities 985,439 479,801 695,725 1,688,968 1,688,968 ___ 1,740,236 796,094 796,094 959,610 2,069,759 Total primary government general
revenues $ 27,176,596 s 12,575,572 s 14,184,683 $ 17,264,091 s 17,264,091 s 20,004,183 $ 25,471,304 $ 25,471,304 ~ - 38,052,991 $ 33,599,792 Changes in Net Position
Governmental $ 12,712,842 s (715,986) $ 2,541,240 s 861,514 s 2,947,679 $ 7,977,869 $ 17,395,066 $ 15,629,575 $ 47,554,651 $ 10,337,954 Business-type 2,093,399 4,462,105 5,019,645_ 7,069,235 8,062,478 6,839,412 6,849,180 9,991,454 8,649,982 ___ 4,759,985 Total primary government s 14,806,241 $ __ 3,746,119 s 7,560,885 $ 7,930,749 $ 11,010,157 $ 14,817,281 $ 24,244,246 $ 25,621,029 $ 56,204,633 $ 15,097,939 96 286
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Governmental Funds
Fund Balances
General Fund:
Nonspendable
Committed
Assigned
Unassigned
Total general funds !>ll2
l
All other governmental funds:
Non spendable
Restricted
Committed
Unassigned
Total all other governmental funds
Source: City of Los Banos Finance Department
Notes:
____lQg-2014
$ 698
693,821
7,202,640
$ 7,897,159
$
11,732,860
(751,255)
$ 10,981,605
2014-2015
$ 2,933 $
2,179,757
7,843,490.
$ 10,026,180 $
$ $
12,294,820
(733,613)
$ 11,561,207 $
Fiscal Years
2015-2016 2016-2017 2017-2018 2018-2019
3,938 $ 248 $ 2,970 $ 1,087
494,657 674,349
3,335,429 3,266,323 3,916,672 3,717,891
8,638,970 _ _ 9,017,100 8,709,291_ 11,437,736
11,978,337 $ 12,283,671 $ 13,123,591 ~J,063
852,459 $ $ 7,293 $ 4,862
13,818,032 19,174,130 24,888,393 31,350,743
(701,772) (672,702) (659,139) (635,273)
13,968,719 ~ 18,501,428 $ 24,236,547 _$ _ ~,720,332
(1) Increase in fund balance for FY 2013-2014 due to one time revenue from the dissolution of the Los Banos Redevelopment Agency. (2) Increase in fund balance for FY 2014-2015 due to one time spike from the end of the State of California Triple Flip program and an increase in property tax. 97 2019-2020 2020-2021 2021-2022 2022-2023
$ 2,381 $ $ $ 127
457,876 4,457,852 276,926 276,926
6,214,047 5,911,193 5,836,627 8,561,711
15,011,639 18,269,391 32,046,537 31,927,438
$ 21,685,943 $ 28,638,436 $ 38,160,090 $ 40,766,202
$ 2,431 $ $ 615,945 $ 308,000
38,833,591 47,685,213 67,707,434 55,224,504
5,125,000 5,125,000
-- ~ (20,706) (20,706)
$ __ __Bl,_836,022 $ 47,685,213 $ 73,427,673 $ 60,636,798 287
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Governmental Funds
Changes in Fund Balances
Fiscal Years
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Revenues
Taxes:
Property $ 6,262,533 $ 6,863,634 $ 6,316,878 $ 6,504,693 $ 7,198,259 $ 7,859,108 $ 8,546,862 $ 9,382,154 $ 10,416,190 $ 12,268,379 Sales 4,671,192 5,026,830 6,094,290 6,458,115 8,075,623 9,248,865 11,767,581 13,873,892 15,872,165 15,992,266 Franchise 480,391 511,545 534,702 546,061 563,611 540,449 566,328 619,158 687,723 752,176 Motor vehicle 1,124,654 919,197
Othertaxes 364,429 398,625 523,261 595,119 652,890 621,498 518,924 583,634 748,705 635,230 Licenses and permits 305,953 456,341 855,171 1,123,244 1,012,757 763,207 1,169,141 2,168,888 1,983,293 869,724 Intergovernmental 1,686,798 1,050,293 1,595,939 2,019,191 2,141,795 2,602,521 8,125,304 3,558,388 12,396,321 4,604,876 Charges for services 2,824,440 3,477,841 5,581,250 7,702,436 8,538,554 8,661,055 8,562,532 12,331,082 10,833,175 6,601,466 Fines 60,509 62,505 50,546 64,129 67,496 59,806 45,227 35,593 60,238 43,723 Use of property and money 1,150,414 1,092,444 1,205,110 1,145,645 1,287,188 1,935,306 1,876,676 902,417 629,444 3,149,636 Loan repayments 182,621 166,407 391,262 49,128
Miscellaneous 141,901 98,708 250,317 280,468 356,333 271,538 216,264 358,418 218,192 126,485 Total revenues 19,073,214 19,957,963 23,007,464 26,439,101 29,894,506 32,563,353 41,577,460 43,980,031 ~236,708 45,093,089 Expenditures
Current:
General government 1,046,961 1,067,648 1,083,155 1,117,098 1,276,300 1,229,744 1,315,025 1,325,624 2,679,438 4,599,377 Public safety 10,912,197 11,167,699 12,202,688 13,423,807 14,592,038 14,442,012 15,509,530 16,767,602 17,425,855 18,412,360 Highways and streets 1,135,565 1,158,587 1,248,137 1,583,281 2,084,503 2,253,092 2,424,323 2,292,767 2,650,115 3,817,599 Parks and recreation 2,422,510 2,555,130 2,858,994 3,546,943 3,228,685 3,481,902 3,825,646 3,561,389 4,174,850 4,571,810 Economic development 700,675 550,212 503,184 630,829 803,714 890,423 903,798 860,877 1,201,133 1,306,336 Debt service:
Principal 9,828 13,263
Interest 11,251 10,451 11,594 11,232 7,950 7,049 6,100 5,100 51,005 310,800 98 288
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Governmental Funds
Changes in Fund Balances
(Continued)
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Capital outlay:
General government 86,723 5,425 5,000 28,245 412,723 55,642 413,056 200,676 342,260 260,847 Public safety 468,591 349,660 477,051 1,191,984 320,123 141,586 2,740,067 2,593,217 3,313,303 18,820,132 Highways and streets 934,291 254,298 199,387 250,037 424,544 2,348,437 4,056 1,279 919,050 Parks and recreation 35,150 200,162 372,016 65,670 358,599 522,532 425,141 665,977 779,103 2,087,413 Economic development 519 473 6,521 3,348 100 4,392 251 247,408_ 304,_774 Total expenditures 17,754,433 17,319,745 18,977,555 21,615,700 23,334,772 23,452,918 29,911,374 28,277,285 32,865,749 55,410,498 Excess (deficiency) of revenues over
(under) expenditures 1,318,781 2,638,218 4,029,909 4,823,401 6,559,734 9,110,435 11,666,086 15,702,746 21,370,959 (10,317,409) Other Financing Sources (Uses)
Issuance of financing lease 70,501 14,000,000
Cost of issuance (140,000)
Insurance recoveries 240,396 81,779 50,659 57,632 2,387 20,138 Transfer in 164,497 130,932 235,979 126,993 27,025 1,004 824,533 13,011,700 1,176 Transfer out (149,065) (137,694) (241,102) (132,688) (30,801) (7,548) (827,792) (13,011,700) (10,011) Proceeds from sale of capital assets 72,734
Sale of capital assets 4,815 83,243 17,910 20,337 19,081 5,587 2,257,084 41,306 30,768 48,609 Total other financing sources (uses) ___ 20,247 76,481 323,684 14,642 15,305 8_0,822 2,304,484 98,938 13,893,155 132,646 Net changes in fund balances $ 1,339,028 $ 2,714,699 $ 4,353,593 s 4,838,043_ $ 6,575,039 $ __ 9,191,257 $ 13,970,570 s 15,801,684 $ 35,264,114 $ (10,184,763) Debt service as a percentage of
noncapital expenditures 0.07% 0.06% 0.12% 0.12% 0.04% 0.03% 0.03% 0.02% 0.18% 0.95% Source: City of Los Banos Finance Department
99 289
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Assessed Value of Taxable Property
(In thousands of dollars)
Real Property
Fiscal Year Land Improvements
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
Source:
--
338,088 1,530,444
448,810 1,686,158
543,391 1,738,793
573,208 1,881,326
633,774 2,025,405
715,389 2,195,513
783,078 2,380,184
847,060 2,522,661
923,911 2,668,290
1,010,882 3,025,638
Merced County Assessor's Office
Merced County Auditor-Controller's Office
Personal
Property
Personal
50,653
67,439
67,619
67,928
67,987
66,186
68,165
72,207
71,507
79,809
Less Total Taxable Total Direct
Utility (l) Total Exemptions Assessed Value Rate
2,429 1,921,614 77,042 1,844,572 1.00%
3,167 2,205,574 78,314 2,127,260 1.00%
3,163 2,352,966 82,650 2,270,316 1.00%
3,152 2,525,614 103,904 2,421,710 1.00%
3,147 2,730,313 109,628 2,620,685 1.00%
111 2,977,199 118,291 2,858,908 1.00%
111 3,231,538 122,474 3,109,064 1.00%
109 3,442,037 125,358 3,316,679 1.00%
107 3,663,815 124,677 3,539,138 1.00%
104 4,116,433 128,023 3,988,410 1.00%
Notes: Estimated value of taxable property not readily available in the State of California. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of actual property and is subject to the limitations of Proposition 13 passed in 1978. (1) Aircraft value not available after FY 2017-2018
100
290
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
General Fund
Tax Revenue by Source
Fiscal Year Property
2011-2012 4,411,414
2012-2013 4,919,660
2013-2014 5,541,291
2014-2015 6,112,770 (1)
2015-2016 5,551,292
2016-2017 5,675,697
2017-2018 6,200,655
2018-2019 6,764,382
2019-2020 7,275,270
2020-2021 7,987,042
2021-2022 8,839,328
2022-2023 10,522,723
Source: City of Los Banos Finance Department
Notes:
Sales and Use Franchise
2,437,124 424,274
2,571,065 435,827
2,684,458 480,391
2,842,662 511,545
3,829,042 (2) 534,702
4,012,401 546,061
4,613,579 563,611
5,594,516 540,449
7,750,981 566,328
9,282,344 619,158
10,515,455 687,723
10,599,511 752,176
(1) Increase in property tax due to Triple Flip ending; last admin fee settlement payment. (2) Sales tax increase due to increase in Triple Flip ending and true up payments. 101
Motor Vehicle Other Total
18,734 282,145 7,573,691
286,742 8,213,294
364,429 9,070,569
15,232 398,625 9,880,834
523,261 10,438,297
595,119 10,829,278
652,890 12,030,735
621,498 13,520,845
518,924 16,111,503
583,634 18,472,178
748,705 20,791,211
635,230 22,509,640
291
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Direct and Overlapping Property Tax Rates (rate per $1,000 of assessed value) Fiscal Year
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
Source:
Notes:
City Direct Rates_ Overlapping Rates
Los Banos
City of County of Total Unified School Merced
Los Banos Merced District District Bond College Bond Total Rate
0.1953 0.8047 1.0000 0.0868 0.0250 0.1118
0.1953 0.8047 1.0000 0.0961 0.0234 0.1195
0.1953 0.8047 1.0000 0.1070 0.0214 0.1284
0.1953 0.8047 1.0000 0.1144 0.0207 0.1351
0.1953 0.8047 1.0000 0.0792 0.0209 0.1001
0.1953 0.8047 1.0000 0.0711 0.0202 0.0913
0.1953 0.8047 1.0000 0.0797 0.0218 0.1015
0.1953 0.8047 1.0000 0.0796 0.0199 0.0995
0.1953 0.8047 1.0000 0.0796 0.0198 0.0994
0.1954 0.8046 1.0000 0.0703 0.0177 0.0880
Merced County Auditor-Controller-Tax Collector
In 1978, California voters passed Proposition 13 which sets the property tax rate at 1.00% fixed amount. This 1.00% is shared by all taxing agencies, including the City of Los Banos, for which the subject property resides within. The City of Los Banos's portion varies by several Tax Rate Areas (TRAs) within the City.
Information prior to 2012 is not available.
102
292
CITY OF LOS BANOS I CURRENT YEAR AND TEN YEARS AGO
Principal Property Taxpayers
Owner
WAL-MART REAL ESTATE BUSINESS TRUST $
DR HORTON CA3 INC
FRANCISCAN HOSPITALLER SISTERS
TARGET CORP
STONEFIELD HOME INC
CONRAD ETHAN
WARD ROAD APARTMENTS 11 LP
HOME DEPOT USA INC
SUTTER VALLEY HOSPITALS
BGRE LL C
KAGOME USA INC
CAMERA PROPERTIES LLC
LOS BANOS DAIRYMEN ASSN
COLORADO/EAGLE ROCK LLC
MEMORIAL HOSPITAL LOS BANOS
LOWES HIW INC
COMCAST OF SAN JOAQUIN INC
SOLOMON FRANK JR
MCCORDUCK PROPERTIES LOS BANOS LLC
Top 10 Assessed Values $
Total Assessed Value 2010-2011 $
Total Assessed Value 2020-2021 $
Source: Merced County Assessors Office
2021-2022
Assessed Value Rank
2S,907,818 1
23,967,471 2
22,667,674 3
21,563,017 4
21,253,128 5
20,802,859 6
19,197,531 7
13,600,000 8
13,488,798 9
12,996,451 10
195,444,747
1,746,843,921
3,539,138,117
103
2011-2012
Percent of Percent of
Total City Total City
Assessed Value Assessed Value Rank Assessed Value
0.73%
0.68% 16,979,001 4 0.97%
0.64%
0.61%
0.60% 21,037,819 2 1.20%
0.59%
0.54% 9,464,430 8 0
0.38%
0.38%
0.37%
18,513,411 3 1.06%
8,954,004 9 0.51%
24,123,814 1 1.38%
6,501,910 10 0.37%
0.00%
12,217,840 5 0.70%
0.00%
10,899,979 6 0.62%
9,994,544 7 0.57%
5.52% $ 138,686,752 7.92%
293
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Property Tax Levies and Collections
Fiscal Current Tax
Year Levies
2011-2012 1,929,638
2012-2013 2,129,214
2013-2014 2,352,266
2014-2015 2,861,634
2015-2016 3,006,979
2016-2017 3,197,238
2017-2018 3,537,012
2018-2019 3,843,207
2019-2020 4,098,951
2020-2021 4,565,361
2021-2022 4,834,896
2022-2023 5,420,501
Source: Merced County Auditor-Controller
Percent of Delinquent
Current Tax Current Taxes Tax Total Tax
Collections Collected ol Collections Collections
1,929,638 100% 1,929,638
2,129,214 100% 2,129,214
2,352,266 100% 2,352,266
2,861,634 100% 2,861,634
3,006,979 100% 3,006,979
3,197,238 100% 3,197,238
3,537,012 100% 3,537,012
3,843,207 100% 3,843,207
4,098,951 100% 4,098,951
4,565,361 100% 4,565,361
4,834,896 100% 4,834,896
5,420,501 100% 5,420,501
Notes: (1) Revenue and Taxation Code Sections 7401 through 4717 provide for an alternative method of distribution of tax levies and collections known as the Teeter Plan. Merced County distributes 100% of the current secured roll to the City of Los Banos. 104
294
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Ratios of Outstanding Debt by Type
Fiscal
Years
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
Source:
Notes:
Governmental Activities (
3 )
Lease Tax
Revenue Allocation Capital Financed
Bond Bonds 111 Leases Leases COP's
215,905
173,077
351,212
253,750
151,203
65,593
7,573
14,000,000
14,000,000
California Municipal Statistics, City of Los Banos Finance Department (1) Tax Allocation Bonds are zero in 2011-2012 due to the State dissolving the RDAs. {2) See Assessed Value of Taxable Property schedule for Assessed Values.
Notes
Payable _
(3) Governmental Activities are zero in Fi scal Year 2012-2013, due to City paying off the GF debt. (4) Business Activities are zero in Fisca l Year 2019-2020, due to City paying off Debt.
Bonds
105
Business-Type Activities141
Total Percent of
Capital Notes Primary Per Assessed
Leases COP's Payable Government Population Capita Valuation 12) 2,208,432 64,174 2,488,511 37,168 67 0.13%
1,897,114 39,780 2,109,971 38,670 55 0.10%
1,570,796 14,347 1,936,355 39,359 49 0.09%
1,229,477 1,483,227 39,993 37 0.06%
868,159 1,019,362 40,986 25 0.04%
428,159 493,752 41,898 12 0.02%
7,573 41,923 0.00%
42,869 0.00%
14,000,000 46,639 300 0.49%
14,000,000 46,639 300 0.45%
295
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Ratios of General Fund Debt Outstanding
Fiscal
Year
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
2019-2020
2020-2021
2021-2022
2022-2023
Source:
Notes:
General Debt Outstanding
General Fund
Debt Redevelopment Total Assessed
Outstandin~ Bonds 1
'
1 Total Property Value
1,461,684 1,461,684 1,743,715,991
1,749,273,122
215,905 215,905 1,844,571,341
173,077 173,077 2,127,260,281
351,212 351,212 2,270,316,588
253,750 253,750 2,620,761,000
151,203 151,203 2,620,685,704
65,593 65,593 2,858,907,614
7,573 7,573 3,109,064,142
3,316,678,388
3,539,138,117
3,988,408,584
California Municipal Statistics, City of Los Banos Finance Department. (1) Tax Allocation Bonds are zero in 2011-2012 due to the State dissolving the RDAs. (2) General Fund debt paid off in 2013.
106
Percent of Actual
Taxable Value
Population of Property Per Capita
36,421 0.08% 40
36,546 0.00%
37,168 0.01% 6
38,670 0.01% 4
39,359 0.02% 9
39,993 0.01% 6
40,986 0.01% 4
41,898 0.00% 2
41,923 0.00%
42,869 0.00%
46,639 0.00%
47,347 0.00%
296
CITY OF LOS BANOS
Direct and Overlapping Governmental Activities Debt
2022-2023 Assessed Valuation: $ 3,988,408,584
Overlappinl! Tax and Assessment Debt
Merced Community College District School Facilities Improvement District No. 2 Los Banos Unified School District
Total Overlapping Tax and Assessment Debt
Direct and Overlapping General Fund Debt
Merced County General Fund Obligations
Merced County Office of Education Certificates of Participation Los Banos Unified School District Certificate of Participation Total Direct and Overlapping General Fund Debt
Overlapping Tax Increment Debt {Successor Agency}
Total Direct Debt
Total Overlapping Debt
Combined Total Debt
Ratios to 2020-2021 Assessed Valuation:
Total Overlapping Tax and Assessment Debt
Total Direct Debt
Combined Total Debt
Ratios to Successor Agency Redevelopment Incremental Valuation ($ 667,208,706}:
Total Overlapping Tax Increment Debt
1.40%
0.00%
2.33%
2.36%
$
$
Total Debt
6/30/2023
3,829,847
79,958,714
57,758,084
6,840,000
18,125,000
17,783,013
% Applicable 1
'
1 57.046%
67.255%
10.537%
12.743%
67.255%
99.291%
City's Share of
Debt 6/30/2023 -
$ 2,184,775
53,776,233
55,961,008
6,085,813
871,621
12,189,969
19,147,403
17,656,931
92,765,342
$ 92,765,342
Notes: (1) 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 estimated value. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue, and non-bonded capital lease obligations.
Source: California Municipal Statistics
107
297
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Legal Debt Margin Information
(In Thousands of Dollars)
Fiscal Years
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 Assessed value $ 1,844,572 $ 2,127,260 $ 2,270,317 $ 2,421,710 $ 2,620,686 $ 2,858,908 $ 3,109,064 $ 3,316,679 $ 3,539,138 $ 3,988,410 25% of full assessed value 461,143 531,815 567,579 605,428 655,172 714,727 777,266 829,170 884,785 997,103 Debt limit
(15% of reduced assessed value) 69,171 79,772 85,137 90,814 98,276 107,209 116,590 124,375 132,718 149,565 Total net debt applicable to limit - ---
Legal debt margin $ 69,171 s 79,772 s 85,137 s 90,814 s 98,276 $ 107,209 s 116,590 $ 124,375 $ 132,718 s 149,565 Total net debt applicable to the limit
as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Source: Assessed Valuation California Municipal Statistics Note: We have no General Obligation Bonds
108
298
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Pledged-Revenue Coverage
2013-2014
Water Revenue Bonds:
Water revenue $ 5,301,489 $
Less: operating expenses131 (3,004,186)
Net available revenue 2,297,303
Debt service111 4,434,626
Coverage ratio 0.52
Wastewater Revenue Bonds:
Wastewater revenue141 4,989,878
Less: operating expenses(') {2,773,005)
Net available revenue 2,216,873
Debt service(') 2,379,577
Coverage ratio 0.93
Source: City of Los Banos Finance Department
(1) 2002 Water COP called in Fiscal Year 2013-2014.
(2) 1997 Wastewater COP called in Fiscal Year 2013-2014. 2014-2015 2015-2016 2016-2017
5,413,681 $ 6,001,003 $ 6,342,156
(3,107,370) {3,115,891) {3,342,002)
2,306,311 2,885,112 __ 3_,000,154
N/A N/A N/A
5,565,988 6,184,581 6,930,523
(2,752,898) {2,832,174) {3,077,148)
2,813,090 3,352,407 3,853,375
470,309 470,115 468,929
5.98 7.13 8.22
(3) Depreciation, Compensated Absences and Charge Outs not included in Operating Expenses. (4) Revenue includes Ag Farming Income and rental income. 109
$
Fiscal Years
2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 6,653,861 $ 6,247,950 $ 7,333,876 $ 8,508,884 $ 8,343,075 $ 7,191,004 {3,528,711) (3,646,595) {3,617,167) (3,977,327) {4,124,429) {4,411,755) 3,125,150 2,601,355 3,716,709 4,531,557 4,218,646 2,779,249
N/A N/A N/A N/A N/A N/A
7,345,806 6,962,261 7,507,222 9,299,700 8,896,888 7,801,789 {3,235,389) (3,269,692) (3,260,548) (3,573,699) (3,608,221) (3,889,555) 4,110,417 3,692,569 4,246,674 5,726,001 5,288,667 3,912,234 471,598 468,124 468,433
8.72 7.89 9.07 N/A N/A N/A
299
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Demographic and Economic Statistics
City of Los Banos
Calendar Labor
Year Population111 Force1
'
1 Employment
2014 37,168 15,800 13,800
2015 38,670 15,800 14,000
2016 39,359 15,900 14,100
2017 39,993 15,789 14,178
2018 40,986 16,100 14,700
2019 41,898 16,200 14,700
202d31 41,923 17,400 13,900
2021 42,869 17,500 15,100
2022 46,639 17,000 15,400
2023 47,347 17,400 15,600
Source: (1 ) California State Department of Finance.
Unemployment
Rate1
'
1 Numbers
13.1% 2,100
11.6% 1,800
11.0% 1,800
10.3% 1,633
10.4% 1,700
10.1% 1,700
20.0% 3,500
13.5% 2,400
9.7% 1,700
13.2% 2,200
(2) State of California Employment Development Department (City of Los Banos). (3) Numbers are due to COVID-19 Pandemic.
110
Merced County
Unemployment
Labor
Population111 Force1
'
1 Employment Rate1
'
1 Numbers
264,922 115,000 100,200 12.8% 14,700
266,134 115,100 102,000 11.4% 13,100
271,579 115,500 103,000 10.7% 12,400
274,665 114,578 103,022 10.1% 10,676
279,977 115,700 106,500 8.0% 9,300
282,928 113,400 104,000 8.1% 9,300
283,521 114,600 96,700 15.6% 17,900
284,836 116,400 103,900 10.8% 12,600
283,311 115,600 107,400 7.0% 8,100
285,337 119,500 108,700 9.0% 10,700
300
CITY OF LOS BANOS I CURRENT YEAR AND NINE YEARS AGO
Principal Employers
Employer Employees
Los Banos Unified School District 1,123
Memorial Hospital 360
Wal-Mart 327
Kagome 193
City of Los Banos 179
Target 160
Home Depot 145
Save Mart 102
APEX 99
Marshall's 81
Central California Irrigation Dist.
Food for Less
Kmart
Total 2,769
Source: (1) City of Los Banos Finance Department.
2022-2023
Rank
1 2
3 4
5 6
7 8
9 10
2012-2013
Percent of Total Percent of Total
City Employment Employees Rank City Employment
6.45% 876 1 6.59%
2.07% 246 2 1.85%
1.88% 190 3 1.43%
1.11% 140 6 1.05%
1.03% 169 4 1.27%
0.92% 162 5 1.22%
0.83% 90 8 0.68%
0.59% 97 7 0.73%
0.57% 0.00%
0.47% 0.00%
0.00% 0.00%
0.00% 89 9 0.67%
0.00% 86 10 0.65%
15.93% 2,145 16.14%
111
301
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Full-Time Equivalent City Government Employees by Function/Program Fiscal Years
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
FUNCTIONLPROGRAM
General Government:
Administration 5.18 5.35 5.35 5.68 5.13 5.13 5.13 5.13 5.13 5.13 Community and Economic 2.00 2.00 2.00 3.00 3.00 3.00 3.00 3.00 3.00 4.00 Water Admin 4.34 4.27 4.27 4.60 4.72 4.72 4.72 4.72 4.72 4.72 Wastewater Admin 4.25 4.19 4.19 4.52 4.72 4.72 4.72 4.72 4.72 4.72 Solid Waste Admin 4.22 4.17 4.17 4.49 4.72 4.72 4.72 4.72 4.72 4.72 Police:
Sworn 39.00 39.00 39.00 40.00 41.00 41.00 47.00 48.00 48.00 48.00 Non-Sworn 19.50 19.50 20.50 23.50 24.50 24.50 26.50 26.50 26.50 26.50 Code Enforcement 2.50 2.50 2.50 2.50 2.50 4.50 5.50 5.50 5.50 5.50 Fire:
Sworn 15.90 15.90 15.90 15.90 15.90 15.90 17.90 17.90 17.90 17.90 Non-Sworn 1.00 1.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Building Sworn 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 Building Non-Sworn 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Public Works:
Engineering 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 Water 10.85 11.19 11.19 11.76 11.76 11.76 11.76 11.76 11.76 11.95 Wastewater 10.26 10.59 10.59 10.90 10.90 10.90 10.90 10.90 10.90 11.31 Solid Waste 6.00 6.33 6.33 7.65 7.65 7.65 7.65 7.65 7.65 7.69 Streets 7.80 7.80 8.80 11.05 11.05 11.05 11.05 11.05 11.05 11.41 Maintenance 7.15 7.15 7.15 9.40 10.40 10.05 10.05 10.05 10.05 10.05 Recreation 1.19 1.19 1.19 1.19 1.19 2.54 3.54 3.54 3.54 3.54 Airport 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Fleet 2.21 2.22 2.22 2.21 2.21 2.21 2.21 2.21 2.21 3.21 Redevelopment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Information Technology 3.00 3.00 3.00 3.00 3.00 3.00 3.00 1.00 1.00 1.00 147.00 148.00 151.00 164.00 167.00 170.00 182.00 181.00 181.00 184.00 Source: City of Los Banos Finance Department
112
302
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Operating Information, Operating Indicators by Function/Program Fiscal Years
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
FUNCTION/ PROGRAM
Police:
Jail Bookings 121 1,151 1,610 1,724 1,905 1,508 1,261 1,063 Traffic Collisions 121 407 421 546 631 361 425 369
Parking Citations 121 1,102 654 966 889 611 778 443
Moving Citations 121 3,017 2,929 3,803 2,919 1,509 707 1,162 Fire:
Fire Calls 699 677 914 973 989 961 983
Medical Calls 1,557 1,664 1,793 1,737 1,923 1,889 1,930 Inspections 676 720 751 732 751 816 559
Public Works
Streets:
Street Surfacing (Miles) 141 0.14 0.55 0.52 1.04 1.04 3.12 10.27 Parks and Recreation:
Rec. Youth Program Enrollments 111131151 1,158 1,240 1,202 1,266 1,295 1,264 1,231 Water:
Water Delivered (millions) 2,765 2,389 2,169 2,158 2,415 2,496 2,455 Connections 10,871 10,816 11,369 11,648 11,974 11,974 12,425 Sewer:
Average Daily Flow (mgd) 2.90 2.93 2.90 2.80 2.70 2.50 2.80 Connections 10,699 10,640 11,077 11,294 11,601 11,843 12,062 Solid Waste:
Street Sweeping,
Miles per Year 23,704 22,576 22,386 21,225 22,163 23,406 20,730 Green Waste Pick-ups 11,163 10,193 10,491 10,546 10,822 11,341 11,284 Recycling Pick-ups 11,059 10,205 10,600 10,535 10,807 10,807 11,268 Source: Various City Departments
Notes: (1) In FY 2014-2015 the city offered British Soccer. (2) Bookings, Collisions and Citation numbers have decreased due to Law changes and reduction in staffing. (3) In FY 2019-2020, the City offered 2 new youth programs (4h Stem & Volleyball), however the City did not offer Tee-Ball or Spring Soccer due to COVID-19. (4) In FY 2019-2020, the increase is due to Measure V funding and the City now owns its own equipment and is able to complete more projects. (5) No youth enrollment due to COVID-19 and all programs suspended. 113
2020-2021 2021-2022 2022-2023
1,206 985 877
404 487 497
743 888 492
2,653 3,381 1,408
1,080 1,075 1,077
1,854 2,097 2,311
541 890 989
5.53 2.04 0.64
0 1,621 2,241
2,707 2,757 2,726
12,781 13,168 13,394
3.30 3.30 3.46
12,428 12,783 12,990
20,133 21,903 23,796
11,658 12,035 12,271
11,646 12,029 12,268
303
CITY OF LOS BANOS I LAST TEN FISCAL YEARS
Operating Information, Capital Assets Statistics by Function/Program Fiscal Years
2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
FUNCTIONL PROGRAM
Police:
Stations 1 1 1 1 1 1 1 1 1 1
Patrol Units 17 18 15 14 18 16 19 19 22 23
Motorcycle Units 2 2 2 2 2 2 2 2 2 3
Fire:
Stations 2 2 2 2 2 2 2 2 2 2
Service Units 14 13 14 16 16 15 15 16 16 16
Public Works
Streets:
Miles 110 123 123 123 123 123 123 125 131 136
Parks and Recreation:
Acreage 233 233 233 233 233 233 233 281 270 275
Playgrounds 32 32 32 32 32 32 32 36 36 35
Baseball/Softball Diamonds 5 5 5 5 5 5 5 9 9 9
Soccer/Football Fields 4 4 4 4 4 4 4 4 4 4
Basketball Courts 13 13 13 13 13 13 13 14 14 18
Water:
Water Mains (miles) 170 172 172 172 172 172 172 172 172 172 Fire Hydrants 1,510 1,510 1,510 1,510 1,510 1,510 1,510 1,510 1,620 1,620 Storage Capacity (gallons) 5,100,000 5,100,000 5,100,000 5,100,000 5,100,000 5,100,000 5,100,000 5,100,000 5,100,000 5,100,000 Sewer:
Sanitary Sewers (miles) 130 130 130 130 131 131 131 133 133 133 Solid Waste:
Street Sweepers 2 2 2 2 2 2 2 2 2 2
Source: Various City Departments
114
304
II PRICE PAIGE & COMPANY
Certified Public Accountants
The Place to Be
May 31, 2024
To the Honorable Mayor and Members of the City Council
City of Los Banos, California
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Los Banos, California (the City) for the year ended June 30, 2023. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and, if applicable, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated July 12, 2023. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. As described in Note 7 to the financial statements, the City changed accounting policies related to Subscription Based Information Technology Arrangements by adopting Statement of Governmental Accounting Standards (GASS Statement) No. 96, Subscription Based Information Technology Arrangements, in 2023. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the government-wide financial statements. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City's financial statements were:
Management's estimate of the net pension liability and related deferrals is based on actuarial valuations.
We evaluated the methods, assumptions, and data used to develop the liability and related deferrals in determining that it is reasonable in relation to the financial statements taken as a whole.
Other postemployment benefit obligations are determined using terms of various healthcare plans offered, together with relevant actuarial assumptions and healthcare cost trend rates, projected annual rates and discount rates. We evaluated the key factors and assumptions used develop the other postretirement benefit obligation in determining that is it reasonable in relation to the financial statements taken as a whole.
570 N. Magnolia Avenue, Suite I 00
Clovis, CA 9361 1
www.ppc.cpa
tel 559.299.9540
fax 559.299.2344
305
Management's estimate of the landfill closure and postclosure care cost is based on various factors including: landfill total estimated capacity, cumulated capacity used, estimated costs to close (adjusted annually for inflation). We evaluated the key factors and assumptions used to develop the landfill closure and post closure care cost in determining that it is reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users.
The most sensitive disclosure affecting the financial statements was:
The disclosure of the Deficit Fund Balance/Net Position in Note 2 to the financial statements provides information regarding the City's funds which have liabilities that exceed their assets resulting in a deficit fund balance.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We noted two uncorrected misstatements during our audit in which the City did not recognize leases that meet the criteria for recognition in the financial statements under GASB87, Leases. This resulted in an understatement of assets and liabilities for Governmental Activities and the Wastewater Fund in the approximate amount of $48,179 and $55,086, respectively.
Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. The uncorrected misstatements or the matters underlying them could potentially cause future period financial statements to be materially misstated, even though, in our judgment, such uncorrected misstatements are immaterial to the financial statements under audit. In addition, the attached schedule of material misstatements detected as a result of audit procedures were corrected by management.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated May 31, 2024.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. 306
In our audit engagement letter previously provided to you, we communicated the following significant risks of material misstatement (significant risks) as part of our audit planning:
• Management override of controls
• Improper revenue recognition due to fraud
During the course of the audit, we identified an additional significant risk:
• Implementation of GASB 96
These risks were addressed within our audit procedures and we have no findings to report related to these risks.
Other Matters
We applied certain limited procedures to the management's discussion and analysis, budgetary comparison schedules, the proportionate share of net pension liability, the schedule of pension contributions, the schedule of changes in net OPEB liability and related ratios, and the schedule of OPEB contributions, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual fund financial statements and schedules (supplementary information), which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
Restriction on Use
This information is intended solely for the information and use of the Honorable Mayor, City Council, and management of the City of Los Banos, California and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
307
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308
Client:
Engagement:
Current Period:
Workpaper:
Account
AJE07
CITY OF LOS BANOS
6-30-23 Audit
6/30/2023
Corrected Material Audit Adjustments
Description
JE JN03749 - To reclassify funds from MCAG to intergovernmental revenue for pioneer Rd. Widening 229-000-390-010 Misc Revenues
229-000-330-010 Intergovernmental Revenues
229-000-390-010
229-000-330-010
Total
Misc Revenues
Intergovernmental Revenues
Workpaper
Reference
0203
Debit
290,812.51
0.00 843,333.26
0.00 1,134,145.77
Credit
0.00 290,812.51
0.00 843,333.26
1,134,145.77
Net Income Effect
0.00 309
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310
II PRICE PAIGE & COMPANY
Certified Public Accountants
The Place to Be
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council
City of Los Banos, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Los Banos, California (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 31, 2024.
Report on 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 entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies.
Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 570 N. Magnolia Avenue, Suite I 00
Clovis, CA 93611
www.ppc.cpa
tel 559.299.9540
fax 559.299.2344
311
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 entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Clovis, California
May 31, 2024
312
TO:
FROM:
DATE:
SUBJECT:
TYPE OF REPORT:
RECOMMENDATION:
LOsBanos
Al the Crossroads of California
Mayor Llanez and City Council Members
Vanessa Portillo, Finance Director V(.p •
June 19, 2024
Authorize City Manager to Execute a One-Year Agreement for Independent Auditing Services with Price, Paige & Company for the Fiscal Year 2023-2024 Audit Period
Consent Agenda
Staff recommends that Council adopt a Resolution Authorizing the City Manager to Execute a One-Year Agreement for Independent Audit Services with Price, Paige & Company for the Fiscal Year 2023-2024 Audit Period.
BACKGROUND:
The City arranges for an annual audit of its financial statements by independent auditors. The auditors play a critical role in evaluating the City's system of internal controls and overall financial management and condition. They also assist in the preparation of the Annual Comprehensive Financial Report (ACFR} and help with the implementation of new Governmental Accounting Standard Board (GASB} pronouncements.
After conducting a Request for Proposals (RFP} in December 2018, the City entered into a contract for auditing services, in March 2019, with Price, Paige & Company for a period of five (5) years, covering audits of the City's activities for FY 2018/19 through FY 2020/21 with the option to extend the agreement for an additional two (2) one-year terms, covering audits for FY 2021/22 and FY 2022/23.
The City's contract with the firm has now expired. Furthermore, the Finance Division is in the midst of completing the migration of the City's financial data to its new financial software system. Given the reasonable and personalized service Price, Paige & Company has provided to the City, Staff is recommending the extension of the audit services agreement for an additional year to encompass the audit period of FY 2023/24.
313
DISCUSSION:
The Finance Division is in the midst of a significant special project involving the configuration of the City's financial data to a new financial software system. It is the opinion of staff that Price, Paige & Company has provided excellent customer service and technical expertise. Due to the additional workload of migrating the City's financial system to a new software, staff believes that it would be prudent to engage Price, Paige & Company for an additional year of auditing services, so that the City will not need to transition to a new firm during this critical period.
Moreover, Staff is requesting a one-year extension with Price, Paige & Company to afford the Finance team the proper time frame to conduct an RFP, evaluate the proposals, and recommend an audit firm to Council.
FISCAL IMPACT:
Estimated audit costs for the FY2023/24 reporting period were included in the FY2024/25 budget. The cost proposal includes the following:
Service
Audit Period:
FY2023/24
City Audit $56,000
State Controller's Reports $7,750
Single Audit (one major program) $7,000
GASB 96 Implementation $5,000
GASB 68 Calculation $1,910
GASB 75 Calculation $1,910
AVA Report $1,800
Gann Review $1,200
Total $82,570
The contract will cover the one-year fiscal reporting period for FY2023/24. Compensation shall not exceed $82,570.
Reviewed by:
ATTACHMENTS:
Resolution
Professional Services Agreement - First Amendment
Exhibit A -Audit Proposals
2 314
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LOS BANOS
APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT FOR
AUDITING SERVICES WITH PRICE, PAIGE & COMPANY FOR A ONE-YEAR
EXTENSION
WHEREAS, the City is required by law to have an independent, annual financial audit; and
WHEREAS, the City solicited Request for Proposals for Professional Audit Services in accordance with the provisions of the Los Banos Municipal Code, for three years beginning in fiscal year 2019, with a City option to extend the term of the agreement for up to two additional fiscal years; and
WHEREAS, the City selected Price, Paige & Company as its independent auditor to perform the City's audits through Fiscal Year 2022/23; and WHEREAS, the contract with Price, Paige & Company is now expired and Staff recommends an amendment to the Professional Service Agreement for a one-year extension to perform the City's audits for Fiscal Year 2023/24; and
WHEREAS, Price, Paige and Company will perform the work outlined in the Scope of Services and according to a not to exceed Fee Schedule included; and NOW THEREFORE BE IT RESOLVED, that the City Council ofthe City of Los Banos does hereby approve the above mentioned extension and authorizes the City Manager to execute said Amendment.
The foregoing resolution was introduced at a regular meeting of the City Council of the City of Los Banos held on the 19th day of June 2024 by Council Member ___ who moved its adoption, which motion was duly seconded by Council Member ___ and the Resolution adopted by the following vote:
AYES:
NOES:
ABSENT:
APPROVED:
Paul Llanez, Mayor
ATTEST:
Lucille L. Mallonee, City Clerk
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316
FIRST AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT
FOR AUDIT SERVICES
[Price, Paige & Company]
THIS FIRST AMENDMENT TO AGREEMENT ("First Amendment") is made and entered into this __ day of _ ______ 2024, by and between the City of Los Banos, a California municipal corporation (herein referred to as "City") and Price, Paige & Company, a California corporation (herein referred to as "Consultant").
RECITALS
A. WHEREAS, City and Consultant entered into a professional services agreement dated March 19, 2019 ("Agreement') for professional auditing services; and B. WHEREAS, City and Consultant desire to amend the Agreement to include the preparation of the City's financial audit for Fiscal Year 2023/2024.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, the parties hereby agree as follows:
1. Term. Section 2 of the Agreement shall be amended to include audit services for fiscal year ending June 30, 2024.
2. Scope of Services. Section 3 of the Agreement shall be amended to include additional professional services as set forth in Consultant's Audit Proposal dated June 13, 2024 attached hereto as Exhibit A and incorporated herein by this reference.
3. Compensation. Section 4 of the Agreement shall be amended to include additional compensation for the additional professional services, not to exceed $82,570 as set forth in Consultant's Audit Proposal dated June 13, 2024 unless authorized in writing by the City.
4. Integration/Effective Date. Except as expressly amended herein, all other terms and conditions of the Agreement shall remain in full force and effect. This Amendment No. 1 shall be effective upon execution of the parties to this amendment.
Ill
Ill
Ill
Ill
Ill
Ill
I II
Ill
Ill
1 317
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment on the dates set forth below.
Date: , 2024 - --------
Date: _________ , 2024
ATTEST:
CITY CLERK
Lucille L. Mallonee, City Clerk
APPROVED AS TO FORM:
William A. Vaughn
City Attorney
2 PRICE, PAIGE & COMPANY. a
California corporation
By:
Title:
CITY OF LOS BANOS, a
California municipal corporation
By:
Title:
318
Iii PR.ICE PAIGE & COMPANY
Certified Public Accountants
The Place to Be
June 13, 2024
Honorable Mayor Paul Llanez
Vanessa Portillo, Director of Finance
City of Los Banos
520 J Street
Los Banos, California 93635
EXHIBIT A
We are pleased to confirm our understanding of the services we are to provide for the City of Los Banos, California (the City) for the year ending June 30, 2024.
Audit Scope and Objectives
We will audit the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, including the disclosures, which collectively comprise the basic financial statements, of the City as of and for the year ending June 30, 2024. Accounting standards generally accepted in the United States of America (GAAP) provide for certain required supplementary information (RSI), such as management's discussion and analysis (MD&A), to supplement the City's basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. As part of our engagement, we will apply certain limited procedures to the City's RSI in accordance with auditing standards generally accepted in the United States of America (GAAS). These limited procedures will consist 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 will not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient appropriate evidence to express an opinion or provide any assurance. The following RSI is required by GAAP and will be subjected to certain limited procedures, but will not be audited:
1) Management's Discussion and Analysis
2) Budgetary Comparison Schedules - General Fund and Major Special Revenue Funds 3) Cost-Sharing Multiple-Employer Pension Plan Schedule of Proportional Share of Net Pension Liability 4) Cost-Sharing Multiple-Employer Pension Plan Schedule of Pension Contributions 5) Retiree Healthcare Plan (OPES) Schedule of Changes in Net OPES Liability and Related Ratios 6) Retiree Healthcare Plan (OPES) Schedule of Contributions We have also been engaged to report on supplementary information other than RSI that accompanies the City's financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with GAAS, and we will provide an opinion on it in relation to the financial statements as a whole in a report combined with our auditor's report on the financial statements.
570 N. Magnolia Avenue, Suite I 00
Clovis, CA 93611
www.ppc.cpa
tel 559.299. 9540
fax 559.299.2344
319
June 13 2024
Page2
1) Schedule of Expenditures of Federal Awards
2) Combining and Individual Fund Financial Statements and Schedules for Nonmajor Governmental Funds 3) Combining Budgetary Comparison Schedules - Nonmajor Governmental Funds and Capital Grants Funds 4) Combining Schedules for Internal Services Funds
In connection with our audit of the basic financial statements, we will read the following other information and consider whether a material inconsistency exists between the other information and the basic 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.
1) Introductory Section
2) Statistical Section
The objectives of our audit 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 issue an auditor's report that includes our opinions about whether your financial statements are fairly presented, in all material respects, in conformity with GAAP, and report on the fairness of the supplementary information referred to in the second paragraph when considered in relation to the financial statements as a whole. 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 and Government Auditing Standards will always detect a material misstatement when it exists. Misstatements, including omissions, can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment of a reasonable user made based on the financial statements. The objectives also include reporting on:
• Internal control over financial reporting and compliance with provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. • Internal control over compliance related to major programs and an opinion (or disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of federal awards that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Auditor's Responsibilities for the Audit of the Financial Statements and Single Audit We will conduct our audit in accordance with GAAS; the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of the Uniform Guidance, and will include tests of accounting records, a determination of major program(s) in accordance with Uniform Guidance, and other procedures we consider necessary to enable us to express such opinions. As part of an audit in accordance with GAAS and Government Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit.
We will evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. We will also evaluate the overall presentation of the financial statements, including the disclosures, and determine whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the government or to acts by management or employees acting on behalf of the government. Because the determination of waste and abuse is subjective, Government Auditing Standards do not expect auditors to perform specific procedures to detect waste or abuse in financial audits nor do they expect auditors to provide reasonable assurance of detecting waste or abuse.
Because of the inherent limitations of an audit, combined with the inherent limitations of internal control, and because we will not perform a detailed examination of all transactions, there is an unavoidable risk that some 2024
LOSBANOS
320
June 13, 2024