Attach 2 - Audited Financial Statements — Marysville City Council, April 5, 2022

CITY OF MARYSVILLE, CALIFORNIA
Audited Financial Statements and Supplemental Information June 30, 2021
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CITY OF MARYSVILLE, CALIFORNIA
Audited Financial Statements and Supplemental Information June 30, 2021
Table of Contents
INDEPENDENT AUDITOR’S REPORT .................................................................................................... 1 Management’s Discussion and Analysis ....................................................................................................... 3

BASIC FINANCIAL STATEMENTS
GOVERNMENT-WIDE FINANCIAL STATEMENTS:

Government-wide Statement of Net Position ........................................................................................... 16 Government-wide Statement of Activities ............................................................................................... 17 FUND FINANCIAL STATEMENTS:

Governmental Funds:

Balance Sheet – Governmental Funds ................................................................................................... 18 Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position ...................................................................................... 19 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ........................................................................................................................ 20 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the
Government-wide Statement of Activities .......................................................................................... 21 Proprietary Funds:

Statement of Net Position – Proprietary Fund – Wastewater ................................................................ 22 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Fund – Wastewater ........................................................................................................... 23 Statement of Cash Flows – Proprietary Fund – Wastewater ................................................................. 24 Fiduciary Funds:

Statement of Fiduciary Net Position ..................................................................................................... 25 Statement of Changes in Fiduciary Net Position – Redevelopment Successor Agency Private-Purpose Trust Fund ................................................................................. 26 Notes to the Basic Financial Statements .................................................................................................. 27

REQUIRED SUPPLEMENTARY INFORMATION
Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Budgetary Basis) – General Fund .................................................................... 61 Schedule of the Proportionate Share of the Net Pension Liability and Schedule of Contributions to the Pension Plan – Miscellaneous Plan (Unaudited) ......................................................................................................................................... 62 Schedule of the Proportionate Share of the Net Pension Liability and Schedule of Contributions to the Pension Plan – Safety Plan (Unaudited) ......................................................................................................................................... 63

COMBINING STATEMENTS AND INDIVIDUAL FUND

STATEMENTS AND SCHEDULES
Non-Major Special Revenue Funds:

Combining Balance Sheet – Nonmajor Special Revenue Funds ........................................................... 64 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Special Revenue Funds .......................................................................... 66 Agency Funds:

Combining Statement of Assets and Liabilities – Agency Funds .......................................................... 68

CITY OF MARYSVILLE, CALIFORNIA
Audited Financial Statements and Supplemental Information June 30, 2021
Table of Contents

COMPLIANCE REPORTS
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .............................................................................................................................. 69 Schedule of Findings ............................................................................................................................... 71 Summary Schedule of Prior Audit Findings ........................................................................................... 73 Corrective Action Plan ............................................................................................................................ 74 550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564-8727
FAX: (916) 564-8728
1 INDEPENDENT AUDITOR’S REPORT
To the City Council
Marysville, California
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 Marysville, California as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America.

To the City Council
City of Marysville, California
2 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Budgetary Comparison for the General Fund, Schedule of Proportionate Share of the Net Pension Liability and Schedule of Contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 28, 2022 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulation, contracts, grant agreements and other matters.

The purpose of that report is 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

March 28, 2022
CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 3 -
This section of the City of Marysville’s Annual Financial Report presents a narrative overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2021. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the City’s financial statements, which follow this section.

FINANCIAL HIGHLIGHTS
 The assets of the City of Marysville exceeded liabilities by $11.65 million (net position). This is an increase of $2.58 million from the balance of $9.07 million reported in the prior fiscal year. The City has an unrestricted deficit of $18.99 million due to the effects of the GASB Statement No. 68 implementation, $4.34 million is restricted for specific purposes such as loan programs, street projects, and other community development, and $26.30 million is net investment in capital assets.  The City’s current year’s change in net position was an increase of $2.58 million.  The General Fund has a fund surplus of $6.78 million as of June 30, 2021.

OVERVIEW OF THE FINANCIAL STATEMENTS
The financial section of this report consists of six parts:
 Independent Auditor’s Report;
 Management’s Discussion and Analysis (this section);
 Basic Financial Statements that include:
o Government-Wide Financial Statements;
o Fund Financial Statements;
o Notes to Basic Financial Statements
 Required Supplementary Information
 Combining Statements and Individual Fund Statements and Schedules.  Other Reports
The basic financial statements include two kinds of statements that present different views of the City:

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 (page 16) presents information on all the City’s assets and liabilities, with the difference between the two reported as “net position.” Over time, increases or decreases in net position may serve as a useful indicator of the City’s financial improvement or deterioration.

The Statement of Activities (page 17) presents information showing how the government’s net position changed during the past 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 (accrual basis of accounting).

CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 4 -
Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., earned but unused vacation leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenue – “governmental activities” from other functions that are intended to recover all or a significant portion of their costs through user’s fees and charges – “businesstype activities.” The government activities of the City of Marysville include general government, public safety, streets, public works, and parks. The business-type activity of the City is the wastewater system.

FUND FINANCIAL STATEMENTS
A “fund” is a group of related accounts that is used to maintain control over resources that that have been segregated for specific activities or objectives. The City of Marysville, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City of Marysville can be divided into three categories:
 Governmental Funds;
 Proprietary Funds; and
 Fiduciary Funds.

Governmental Funds are used to account for essentially the same functions reported as “governmental activities” in the government-wide financial statements. However, unlike those statements, the focus in these statements is 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. This information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental 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 of Marysville maintains several individual government funds organized according to their type (special revenue, capital projects, etc.). The fund financial statements provide detailed information about each of the City’s most significant funds, called major funds. The concept of major funds, and the determination of which are major funds, was established by GASB Statement 34 and replaces the concept of combining like funds and presenting them as one total. Instead, each major fund is presented individually, with all non-major funds summarized and presented only in a single column. Subordinate schedules present the detail of these non-major funds. Major funds present the major activities of the City for the year and may change from year to year as a result of changes in the pattern or the City’s activities.

Information is presented separately in the governmental funds balance sheet and in the governmental funds statements of revenues expenditures and changes in fund balances for the following major funds (found starting on page 18):
 General Fund
CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 5 -
 Capital Projects Fund
Data from the remaining 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” starting on page 64.

Proprietary Funds are generally used to account for services for which the City charges customers.

Proprietary Funds provide the same type of information as shown in the government-wide financial statements, only in more detail. The City maintains one type of Proprietary Fund and one Enterprise Fund, as described below.

Enterprise Funds are used to report the same functions as presented as business-type activities in the government-wide financial statements. The City uses an Enterprise Fund to account for wastewater collection and treatment.

The debt service for the wastewater system is combined into the business-type activities column of the Statement of Net Position (page 16) and the remaining debt service issues are combined into the governmental activities column of that report.

Fiduciary Funds are used to account for resources held for the benefit of parties outside the City. Since the resources of these funds are not available to support the City’s own programs, they are not reflected in the government-wide financial statements. The City elected to serve as the successor agency for its former redevelopment agency which was dissolved by state law. The successor agency activity is accounted for in a private purpose fund. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All the City’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the City’s government-wide financial statements because the City cannot use these resources to finance its operations.

NOTES TO FINANCIAL STATEMENTS
The Notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 27-60 of this report.

COMBINING STATEMENTS AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES This section of the report includes additional detailed information about Non-Major Governmental, Proprietary and Fiduciary Funds and can be found beginning on page 64.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
The fiscal year ended June 30, 2021 is the seventeenth year in which the City of Marysville has presented its financial statements under the reporting model required by the Governmental Accounts Standards Board (GASB) Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. A comparative analysis of government-wide data is included in this report.

ANALYSIS OF NET POSITION
With the consolidation of government-wide net position into one statement and other changes such as the exclusion of Fiduciary Funds, net position may now serve as a useful indicator of a government’s financial position. For the City, assets exceeded liabilities by $11.65 million. The City reported positive balances in the investment in capital assets and restricted categories of net position, in both the governmental and business-type activities. The unrestricted net position were deficits in governmental and positive for business-type activities.

The Summary of Net Position is as follows:

TABLE 1

SUMMARY OF NET POSITION
AS OF JUNE 30
 Total Net Position increased by $2.58 million from 2020 to 2021. 2021 2020 2021 2020 2021 2020
ASSETS:

Current and Other asset $ 9,593,847 13,422,646 $ 1,292,479 $ 452,420 $ 14,715,125 $ 10,046,267 $ Capital Assets, Net 18,730,882 17,051,979 31,288,712 31,291,529 50,019,594 48,343,508 TOTAL ASSETS $ 26,645,826 32,153,528 $ 32,581,191 $ 31,743,949 $ 64,734,719 $ 58,389,775 $

DEFERRED OUTFLOWS
OF RESOURCES $ 17,634,621 625,275 $ 33,511 $ 1,104,788 $ 658,786 $ 18,739,409 $ LIABILITIES:

Liabilities due
after one year 24,291,179 38,488,442 14,497,622 24,747,039 38,788,801 63,235,481 Current Liabilities 3,675,023 2,819,853 590,911 950,170 4,265,934 3,770,023 TOTAL LIABILITIES $ 41,308,295 27,966,202 $ 15,088,533 $ 25,697,209 $ 43,054,735 $ 67,005,504 $

DEFERRED OUTFLOWS
OF RESOURCES $ 968,064 10,064,045 $ 625,146 $ 87,832 $ 10,689,191 $ 1,055,896 $ NET POSITION:

Investment in
Capital assets 9,038,890 7,290,053 17,261,615 7,547,997 26,300,505 14,838,050 Restricted 4,341,256 4,244,603 0 0 4,341,256 4,244,603
Unrestricted (18,631,590) (9,530,568) (360,592) (484,301) (18,992,182) (10,014,869) TOTAL NET POSITION $ 2,004,088 (5,251,444) $ 16,901,023 $ 7,063,696 $ 11,649,579 $ 9,067,784 $ Governmental Activities Business-type Activities TOTALS CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 7 -
 $26.30 million (225.76% of Total Net Position) investment in capital assets (e.g., land, buildings, other improvements, construction in progress and equipment), less any outstanding related debt used to acquire these assets. The City uses these capital assets to provide services to the community; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
 $4.34 million (37.27% of Total Net Position) in restricted net position are earmarked and represent resources that are subject to external restrictions on how they may be used. The increase in this figure from 2020 to 2021 can be found in the Restricted Net position in the Governmental Activities.
 The remaining unrestricted deficit is $18.99 million.

CHANGES IN NET POSITION
The following table reflects the change in net position for Governmental and Business-Type Activities:

TABLE 2

CHANGE IN NET POSITION
AS OF JUNE 30
2021 2020 2021 2020 2021 2020
PROGRAM REVENUES:

Charges for Services $1,338,372 $1,502,499 $3,815,045 $3,532,392 $5,153,417 $5,034,891 Operating Grants and Contributions 2,805,743 1,794,503 - - 2,805,743 1,794,503 Capital Grants and Contributions 1,057,424 449,519 - - 1,057,424 449,519 GENERAL REVENUES:

Sales and Use Taxes 6,743,579 5,542,854 - - 6,743,579 5,542,854 Property Taxes 1,469,783 1,317,036 - - 1,469,783 1,317,036 Transient Occupancy Tax 162,192 130,913 - - 162,192 130,913 Franchise Fees 594,921 559,873 - - 594,921 559,873
Gas Taxes 319,583 328,677 - - 319,583 328,677
Other Taxes 978,737 363,267 - - 978,737 363,267
Motor Vehicle In-Lieu 984,336 974,448 - - 984,336 974,448 Investment Income 11,543 46,132 3,026 6,532 14,569 52,664 Rental Income 170,112 162,732 - - 170,112 162,732
Miscellaneous Revenues 199,041 104,689 9,532 63,416 208,573 168,105 Gain(Loss) on Sale of Fixed Assets 754,739 - (15,616) - 739,123 - LCWD loan debt forgiven - - 9,377,605 - 9,377,605 -
Transfers 42,159 89,621 (42,159) (89,621) - -
TOTAL REVENUES $17,632,264 $13,366,763 $13,147,433 $3,512,719 $30,779,697 $16,879,482 Governmental Activities Business-type Activities TOTALS CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 8 -
Governmental Activities decreased the City’s net position by $7.26 million and Business-type Activities increased the City’s net position by $9.84 million, respectively.

REVENUES
The Governmental Activities total revenues were $17.63 million and Business-Type Activity revenues were $13.15 million for the year ended June 30, 2021. This represented a total increase of $13.90 million from 2020. This increase in revenues was attributed primarily to an increase in sales and use tax revenue of $1.20 million and LCWD debt loan forgiveness of $9.38 million.

Program revenues include charges for services and grants and contributions. Program revenues provided $5.20 million (29.50% of total revenues) for governmental activities and approximately $3.82 million for business-type activities.

General revenues include, among other things, taxes, assessments and intergovernmental revenues. General revenues provided $12.43 million (70.50% of total revenues). The majority of general revenues came from property, sales and use taxes.
2021 2020 2021 2020 2021 2020
EXPENSES:

Governmental Activities:

General Government 4,438,880 $ 3,831,458 $ - $ - $ 4,438,880 $ 3,831,458 $ Public Safety 17,547,029 6,083,680 - - 17,547,029 6,083,680 Streets and Public Works 1,181,260 1,006,314 - - 1,181,260 1,006,314 Parks and Recreation 848,396 500,323 - - 848,396 500,323 Interest on Long-Term Debt 872,231 1,617,137 - - 872,231 1,617,137 Business-Type Activities
Wastewater - - 2,674,033 2,097,563 2,674,033 2,097,563
Interest on Long-Term Debt - - 636,073 714,383 636,073 714,383 TOTAL EXPENSES 13,038,912 24,887,796 3,310,106 2,811,946 28,197,902 15,850,858 CHANGE IN NET POSITION 327,851 (7,255,532) 9,837,327 700,773 2,581,795 1,028,624 NET POSITION, JULY 1: 2,004,088 1,676,237 7,063,696 6,362,923 9,067,784 8,039,160 NET POSITION, JUNE 30 $ 2,004,088 (5,251,444) $ 16,901,023 $ 7,063,696 $ 11,649,579 $ 9,067,784 $ Governmental Activities Business-type Activities TOTALS CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 9 -
The fiscal year ended June 30, 2021 revenues are reflected graphically as follows:

The fiscal year ended June 30, 2020 revenues are reflected graphically as follows:

EXPENSES
Expenses for the City totaled $28.20 million. Governmental activities incurred $24.89 million in expenses which includes $11.51 in GASB 34 pension adjustments and business-type activities incurred $3.31 million in expenses during the year. Governmental activities expenses were 20.90% funded by program revenues, fees, grants and contributions. The remainder of the funding came from general revenues. On the other hand, business-type activities expenses were 100% funded by program revenues, with the exception of interest and investment earnings.

The fiscal year ended June 30, 2021 expenses are reflected graphically as follows:

CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 11 -
The fiscal year ended June 30, 2020 expenses are reflected graphically as follows:

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
The City of Marysville uses fund accounting to segregate accounts for specific activities or objectives, including demonstrating finance-related legal compliance.

GOVERNMENTAL FUNDS
The focus of the City’s government funds is to provide information on near-term inflows, outflows and balances of resources that are available to provide services and capital project construction. In particular, unreserved fund balance may serve as a useful measure of a government’s net spendable resources.

At the end of FY 2020-21 the City’s governmental funds reported combined fund balance of $11.18 million.

The City has an unassigned fund balance of $6.26 million. The remainder of the governmental ending fund balance of $4.92 million is non-spendable, committed, or restricted to indicate that it is not available for new spending because it has been designated to pay for prior year commitments and other specific requirements.

PROPRIETARY FUNDS
The City’s Proprietary Funds statements provide the same type of information found in the governmentwide financial statements, but in more detail.

GENERAL FUND BUDGETARY HIGHLIGHTS
During the fiscal year General Fund revenue was $2.81 million higher than the amended budget estimate, which was primarily due to the continued increase in overall sales tax revenue and grants received. Another primary increase was the amount collected for construction and encroachment permits.

The General Fund expense budget was $160,108 higher than the amended budget estimate, which was primarily due to an increase in repairs to public buildings and grounds and capital outlay for emergency equipment and vehicles.

CAPITAL ASSET AND DEBT ADMINISTRATION

CAPITAL ASSETS
The City’s investment in capital assets, net of depreciation, as of June 30, 2021, totaled $50.02 million and consists of the coverage:

TABLE 3

CAPITAL ASSETS, NET OF DEPRECIATION
AS OF JUNE 30
This investment in capital assets includes land, buildings, improvements other than buildings, and equipment. The City’s investment in capital assets had a net increase from FY 2019-20 of $1.68 million.

The increase principally resulted from the current fiscal year’s construction in progress in the Sewer Enterprise Fund of $.79 million and $.69 million in City-wide vehicles. Infrastructure acquired prior to FY 2003-04 has not been recorded. The City is not required to record those infrastructure costs expended in those previous fiscal years.

For government-wide financial statement presentation, all depreciable capital assets are depreciated from the acquisition date over their useful lives. Governmental fund financial statements record capital asset purchases as expenditures.
2021 2020 2021 2020 2021 2020
Capital assets, not
being depreciated:

Intangible Asset - Right to Capacity $ - - $ 12,300,000 $ 12,300,000 $ 12,300,000 $ 12,300,000 $ Construction in Progress 870,693 242,001 16,380,438 16,220,155 17,251,131 16,462,156 Land 6,057,051 6,057,051 - - 6,057,051 6,057,051
Depreciable capital assets, net:

Sewer Plant - - 2,184,835 2,295,149 2,184,835 2,295,149 Infrastructure 4,818,982 4,411,014 - - 4,818,982 4,411,014 Buildings 2,275,131 2,522,551 19,079 21,709 2,294,210 2,544,260 Machinery and Equipment 1,141,611 959,013 121,433 138,075 1,263,044 1,097,088 Vehicles 3,567,414 2,860,349 50,812 65,474 3,618,226 2,925,823 Equipment Under Capital Lease - - 232,115 250,967 232,115 250,967 TOTAL $ 17,051,979 18,730,882 $ 31,288,712 $ 31,291,529 $ 50,019,594 $ 48,343,508 $ Governmental Activities Business-type Activities Total
CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 13 -

DEBT ADMINISTRATION
At the end of FY 2020-21, the City of Marysville had long-term liabilities of $25.58 million and $14.92 million for governmental activities and business-type activities, respectively. Additional information about the City’s long-term obligations can be found in Note F in the Notes to Basic Financial Statements.

TABLE 4

OUTSTANDING DEBT
AS OF JUNE 30
2021 2020 2021 2020 2021 2020
Pension Obligation Bond 13,923,031 $ 14,163,816 $ - $ - $ 13,923,031 $ 14,163,816 $ BBT Lease 2019 6,457,000 6,780,000 - - 6,457,000 6,780,000 Cert of Participation, 2017 Series A 1,027,762 1,027,762 - - 1,027,762 1,027,762 PNC Equipment Lease 2020 892,238 950,000 - - 892,238 950,000 FNB Wildland Engine Lease 576,485 - - - 576,485 -
Cert of Participation, 2017 Series B 174,516 176,717 - - 174,516 176,717 Ford Lease September 2017 167,840 328,146 - - 167,840 328,146 Enterprise Lease May 2018 152,541 275,117 - - 152,541 275,117 Ford Lease 2020 82,321 106,594 - - 82,321 106,594
GM Tahoe Lease 2020 49,710 - - - 49,710 -
GM Silverado Lease 2020 28,651 - - - 28,651 -
GM Silverado Lease 2020 28,451 28,451 - - 28,451 28,451 Ford Lease 2019 20,030 29,011 - - 20,030 29,011
GM Colorado Lease 2020 14,161 20,745 - - 14,161 20,745
GM Lease 2019 11,128 21,662 - - 11,128 21,662
Ford Lease May 2018 9,158 17,721 - - 9,158 17,721
Compentated Absences 320,597 291,141 2,792 3,224 323,389 294,365 Net Pension Liability 980,599 14,474,652 27,703 831,119 1,008,302 15,305,771 OPEB Liability 18,449 23,275 - - 18,449 23,275
Sewer Revenue Bonds, 2012 Series A - - 11,305,000 11,555,000 11,305,000 11,555,000 Linda County Water District Loan - - 1,840,000 1,920,000 1,840,000 1,920,000 Pension Obligation Bonds - - 821,969 836,184 821,969 836,184 Enterprise Lease May 2018 - - 51,144 64,823 51,144 64,823 BBT Lease 2019 - - 39,600 68,400 39,600 68,400
Linda County Water District Loan - - - 9,377,605 - 9,377,605 Add: Unamortized Bond Premium 641,848 669,453 830,953 865,627 1,472,801 1,535,080 TOTAL $ 39,384,263 25,576,516 $ 14,919,161 $ 25,521,982 $ 40,495,677 $ 64,906,245 $ Governmental Activities Business-type Activities Total
CITY OF MARYSVILLE, CALIFORNIA _______________
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
______________________________________________________________________________ ____________________________________________________________________________________________ - 14 -
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The property assessed valuations increased slightly from 5.03% in FY 2018-19 to 5.83% in FY 2019-20 with a slight decrease to 5.23% in FY 2020-21. This overall increase over the three-year period indicates property values continue to stabilize with the pattern of an increasing economy in the City. The City’s General Fund reserves have increased and the fund balance as of June 30, 2021 is $6,777,398. This is a positive outlook as the ending fund balance as of June 30, 2021 was estimated to be $4,938,657 for budgeting purposes going into FY 2021-22.

The voters passed Measure C in June 2016 which called for a 1% transactions and use tax that took effect October 1, 2016. The sales tax was estimated to between $1.60 million and $1.70 million each full fiscal year for a period of ten years. Actual Measure C revenue received in FY 2020-21 was $3,886,692. This new revenue source has helped to rebuild deteriorated infrastructure, fund public safety, offset debt service payments, increase financial reserve funds to above the 20% Council approved minimum, and help rebuild levels of services in all areas of City services provided to the residents.

The voters passed Measure F in November 2016, which called for a cannabis business tax on medical marijuana dispensaries. Measure F had the potential to generate approximately $650,000 a year to the General Fund which would help pay for general City services. With the addition of adult use sales, the City generated $978,737 in FY 2020-21.

The City has or will be awarded approximately $6.08 million in grant funds in FY 2020-21 and FY 2021- 22 to be used for street improvements, public safety personnel and equipment, housing rehabilitation, park improvements, and the 5th Street Improvement Project that will start construction in 2022. The City will continue to aggressively pursue grant funding for much-needed projects and to offset personnel costs.

Both Moody’s Investor Service and S&P Raters have recently upgraded the City’s credit rating and have listed a positive outlook for the City based on the City’s financial rebuilding strategy that has resulted in an increase in the fund balance reserves. The increase in the City’s credit rating also signals that the financial markets have confidence in the City’s policies and an improved financial future.

The City has faced several financial challenges over the past decade in the areas of personnel cuts, service level reductions, increases in the areas of unfunded pension liability, workers’ compensation and liability insurance costs. The City is very optimistic and believes that City finances will continue to strengthen in the future, both short and long term, and will continue to fund all its financial obligations such as debt service, pension and personnel costs as it has in past years.

REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Marysville’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Marysville Finance Department at 526 C Street, Marysville, CA 95901, phone (530) 749-3903.

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BASIC FINANCIAL STATEMENTS

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CITY OF MARYSVILLE, CALIFORNIA
Governmental Business-type
Activities Activities Total
ASSETS
Current assets:

Cash and investments 6,021,595 $ 740,625 $ 6,762,220 $
Accounts receivable 541,267 385,248 926,515
Interest receivable 605 969 1,574
Loans receivable 2,377,039 2,377,039
Due from other governments 6,409 3,582,467 3,588,876
Restricted cash 899,673 899,673
Total current assets 13,422,646 1,133,251 14,555,897
Noncurrent assets:

Advances to Redevelopment Successor Agency 159,228 159,228 Capital assets, net of accumulated depreciation
Non-depreciable 6,927,744 28,680,438 35,608,182
Depreciable 11,803,138 2,608,274 14,411,412
Total capital assets, net of accumulated depreciation 18,730,882 31,288,712 50,019,594 Total assets 32,153,528 32,581,191 64,734,719

DEFERRED OUTFLOWS OF RESOURCES
Pension 625,275 33,511 658,786
Current liabilities:

Accounts payable 625,434 30,916 656,350
Salaries and benefits payable 560,989 6,150 567,139
Deposits and other payables 711,400 711,400
Interest payable 393,154 132,306 525,460
Deferred revenue 98,709 98,709
Long-term debt, due within one year 421,539 1,285,337 1,706,876 Total current liabilities 3,675,023 590,911 4,265,934
Long-term liabilities:

Long-term debt, due after one year 14,467,127 22,971,534 37,438,661 Long-term compensated absences 320,597 2,792 323,389
Net pension liability 980,599 27,703 1,008,302
Other post employment benefits payable 18,449 18,449
Total long-term liabilities 24,291,179 14,497,622 38,788,801 Total liabilities 27,966,202 15,088,533 43,054,735

DEFERRED INFLOWS OF RESOURCES
Pension 10,064,045 625,146 10,689,191

NET POSITION
Net investment in capital assets 9,038,890 17,261,615 26,300,505 Restricted net position 4,341,256 4,341,256
Unrestricted net position (18,631,590) (360,592) (18,992,182) Total net position (5,251,444) $ 16,901,023 $ 11,649,579 $ The accompanying notes are an integral part of these financial statements.

GOVERNMENT-WIDE STATEMENT OF NET POSITION

LIABILITIES
June 30, 2021
16 Operating Capital
Charges for Grants and Grants and Governmental Business-type Expenses Services Contributions Contributions Activities Activities Total Governmental Activities:

General government $ 4,438,880 $ 873,454 $ 208,704 $ (3,356,722) $ (3,356,722) Public safety 17,547,029 2, 199,498 018,601 $ 581,565 (14,747,365) (14,747,365) Streets and public works 1,181,260 224,900 578,438 97,937 475,859 97,937 Parks and recreation 40,520 848,396 ( 807,876) (807,876) Interest on long-term debt
and issuance 872,231 (872,231) (872,231)
Total governmental activities 24, 1, 887,796 2, 338,372 1, 805,743 (19, 057,424 (19, 686,257) 686,257) Business-type activities:

Wastewater 3, 2,674,033 815,045 1, $ 1, 141,012 141,012 Interest on long-term debt 636,073 (636,073) (636,073)
Total business-type activities 3,310,106 3, 815,045 504,939 504,939 Total government $ 5,153,417 28,197,902 $ 2, $ 1, 805,743 $ (19,686,257) 057,424 (19, 504,939 181,318) General revenues:

Taxes:

Sales and use taxes 6,743,579 6, 743,579
Property taxes 1,469,783 1,469,783
Transient occupancy tax 162,192 162,192
Franchise fees 594,921 594,921
Gas taxes 319,583 319,583
Other taxes 978,737 978,737
Motor vehicle in-lieu 984,336 984,336
Investment income 11,543 3,026 14,569
Rental income 170,112 170,112
Miscellaneous revenues 199,041 9,532 208,573
Gain(loss) on sale of fixed assets 754,739 (15,616) 739,123 LCWD loan debt forgiven 9, 9,377,605 377,605
Transfers:

Transfers 42,159 - (42,159)
Total general revenues 12,430,725 9, 21, 332,388 763,113 Changes in net position 9, (7,255,532) 2, 837,327 581,795 Net position, beginning of year 2,004,088 7,063,696 9,067,784 Net position, end of year $ 16, (5,251,444) $ 11, 901,023 $ 649,579 The accompanying notes are an integral part of these financial statements.

Program Revenues

CITY OF MARYSVILLE, CALIFORNIA

GOVERNMENT-WIDE STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2021
17 Capital Nonmajor
General Projects Governmental
Fund Fund Funds Total
ASSETS
Cash and investments $ 1,485,576 4,536,019 $ 6,021,595 $ Accounts receivable, net 41,063 500,204 541,267
Interest receivable 144 461 605
Loans receivable 2,317,933 59,106 2,377,039
Due from other governments 887,180 2,532,917 $ 162,370 3,582,467 Due from other funds 1,211,803 1,211,803
Restricted cash 899,673 899,673
TOTAL ASSETS $ 887,180 9,740,183 $ 4,007,086 $ 14,634,449 $

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable $ 94,110 511,973 19,351 $ 625,434 $
Accrued payroll liabilities 11,385 549,604 560,989
Deposits and other payables 711,400 711,400
Due to other funds 880,440 331,363 1,211,803
Deferred revenue 98,709 98,709
Total liabilities 1,871,686 974,550 362,099 3,208,335

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 116,034 132,320 248,354

TOTAL DEFERRED INFLOWS
OF RESOURCES 132,320 116,034 248,354
Fund balances:

Nonspendable 59,106 2,377,039 2,317,933
Restricted 899,673 2,536,530 1,636,857
Unassigned 6,777,398 (203,404) 6,264,191 (309,803)
TOTAL FUND BALANCE (203,404) 7,736,177 3,644,987 11,177,760

TOTAL LIABILITIES, DEFERRED
INFLOWS AND FUND BALANCES $ 887,180 9,740,183 $ 4,007,086 $ 14,634,449 $ The accompanying notes are an integral part of these financial statements.

CITY OF MARYSVILLE, CALIFORNIA

BALANCE SHEET

GOVERNMENTAL FUNDS
June 30, 2021
18 Total Governmental Fund Balances 11,177,760 $
Amounts reported for governmental activities in the statement of net position are different because:

Pension contributions subsequent to the valuation measurement date and other items will reduce the pension liability in the future and are reported as deferred outflows of resources on the statement of net position. 625,275 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 18,730,882 Certain receivables are not available to pay current period expenditures and therefore are deferred in the governmental funds 248,354 Long-term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds balance sheet.

Long-term debt (24,256,871)
Compensated absences (320,597)
OPEB payable (18,449)
Net pension liability (980,599)
Employee pension differences to be recognized in the future as pension expense are reported as deferred inflows of resources on the statement of net position. (10,064,045)
Interest payable on long-term debt does not require the use of current financial resources and, therefore, is not reported in the governmental funds. (393,154) Net Position of Governmental Activities (5,251,444) $
The accompanying notes are an integral part of these financial statements.

CITY OF MARYSVILLE, CALIFORNIA

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO GOVERNMENT-WIDE STATEMENT OF NET POSITION
June 30, 2021
19 Capital Nonmajor
General Projects Governmental
Fund Fund Funds Totals
REVENUES:

Taxes and assessments 2,610,712 $ $ 2,610,712
Sales and use taxes 6,743,579 6,743,579
Motor vehicle in lieu tax 984,336 984,336
Franchise tax 594,921 594,921
Licenses, permits and fees 721,212 721,212
Intergovernmental revenues 1,048,289 840,022 $ 549,860 $ 2,438,171 Reimbursements 1,008,734 236,837 1,245,571
Charges for services 591,467 230,323 821,790
Use of money and property 15 186,163 (16) 186,162
Program income (3,552) (3,552)
Other revenues 206,486 206,486
Insurance proceeds 37,624 37,624
Total revenues 14,733,523 1,076,874 776,615 16,587,012
EXPENDITURES:

Current:

General government 5,065 2,635,830 2,640,895
Public safety 23,683 5,955,151 55,141 6,033,975
Streets and public works 527,046 461,249 988,295
Parks and recreation 798,111 - 798,111
Debt Service:

Principal retirement 791,215 57,762 45,498 894,475
Interest and fiscal charges 903,598 31,350 6,522 941,470 Capital outlay 2,117,985 464,471 224,559 2,807,015
Total expenditures 12,075,422 2,230,780 798,034 15,104,236 Excess (deficiency) of revenues
over (under) expenditures 2,658,101 (1,153,906) (21,419) 1,482,776 OTHER FINANCING SOURCES (USES):

Issuance of long-term debt 63,585 576,485 38,923 678,993 Proceeds from sale of assets 858,457 40,774 899,231
Transfers in 177,080 369,141 290,439 836,660
Transfers out (670,528) (123,973) (794,501)
Total other financing sources (uses) 428,594 945,626 246,163 1,620,383 Excess of revenues and other sources
over expenditures and other uses 3,086,695 (208,280) 224,744 3,103,159 Fund balance - beginning of year 4,649,482 4,876 3,420,243 8,074,601 Fund balance - end of year $ (203,404) 7,736,177 $ 3,644,987 $ 11,177,760 $ The accompanying notes are an integral part of these financial statements.

CITY OF MARYSVILLE, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - For the Year Ended June 30, 2021

GOVERNMENTAL FUNDS
20 Net Change in Fund Balances - Total Governmental Funds 3,103,159 $ Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the government-wide statement of activities and changes in net position, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded in the current period.

Capital outlay 2,807,015
Depreciation expense (918,385)
Governmental funds report proceeds from disposal of capital assets as revenues.

However, in the government-wide statement of activities, only the gain or (loss) on the sale of capital assets is reported. This is the difference between the gain or (loss) and proceeds.

Proceeds from sale of capital assets (899,231)
Gain on sale of capital assets 754,739
Some receivables are deferred in the governmental funds because the amounts do not represent current financial resources that are recognized under the accrual basis in the statement of activities. Deferred receivables in the governmental funds are recognized once received in the subsequent period, but will not be accrued again in the statement of activities.

Deferred revenue recognized 248,354
Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Government-wide Statement of Net Position. Repayment of principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. These are the amounts by which proceeds exceeded repayments.

Principal repayment 894,475
Amortization of premium 27,605
Issuance of bonds (678,993)
Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not expenditures in the governmental funds.

Change in other post employment benefits payable 4,826
Change in long-term interest payable 41,634
Change in pension liability (12,611,274)
Change in compensated absences (29,456)
Change in Net Position of Governmental Activities (7,255,532) $ The accompanying notes are an integral part of these financial statements.

For the Year Ended June 30, 2021

CITY OF MARYSVILLE, CALIFORNIA

RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

TO THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES
21 ASSETS:

Current Assets:

Cash and investments $ 740,625
Accounts receivable, net 385,248
Interest receivable 969
Due from other governments 6,409
Advances to Successor Agency 159,228
Total current assets 1,292,479
Noncurrent Assets:

Capital assets:

Nondepreciable 28,680,438
Depreciable 2,608,274
Total capital assets, net of accumulated depreciation 31,288,712 Total assets 32,581,191
DEFERRED OUTFLOWS OF RESOURCES:

Deferred outflows related to pensions 33,511
LIABILITIES:

Current Liabilities:

Accounts payable 30,916
Salaries and benefits payable 6,150
Interest payable 132,306
Long-term debt, due within one year 421,539
Total current liabilities 590,911
Long-term Liabilities:

Long-term debt, due after one year, net 14,467,127
Long-term compensated absences 2,792
Net pension liability 27,703
Total long-term liabilities 14,497,622
Total liabilities 15,088,533
DEFERRED INFLOWS OF RESOURCES:

Deferred inflows related to pensions 625,146
NET POSITION:

Invested in capital assets, net of related debt 17,261,615 Unrestricted (360,592)
Total net position 16,901,023 $
The accompanying notes are an integral part of these financial statements.

CITY OF MARYSVILLE, CALIFORNIA

STATEMENT OF NET POSITION

PROPRIETARY FUND - WASTEWATER FUND
June 30, 2021
22 Operating revenues:

Service charges $ 3,815,045
Other revenues 9,532
Total operating revenues 3,824,577
Operating expenses:

Salaries and expenses 1,060,046
Operations and maintenance 1,334,546
Other operating expense 5,402
Depreciation and amortization expense 274,039
Total operating expenses 2,674,033
Income from operations 1,150,544
Non-operating revenues (expenses):

Interest income 3,026
Interest expense (636,073)
Loss on disposal of capital asset (15,616)
LCWD loan debt forgiven 9,377,605
Total nonoperating expenses 8,728,942
Income before transfers 9,879,486
Other financing uses:

Transfers in 29,943
Transfers out (72,102)
Total other financing uses (42,159)
Change in net position 9,837,327
Net position, beginning of year 7,063,696
Net position, end of year $ 16,901,023
The accompanying notes are an integral part of these financial statements.

CITY OF MARYSVILLE, CALIFORNIA

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

PROPRIETARY FUND - WASTEWATER FUND
For the Year Ended June 30, 2021
23 Cash Flows from Operating Activities
Cash received from customers 3,837,552 $
Cash paid to suppliers (1,412,304)
Cash paid to employees and related benefits (249,632)
Cash provided by operating activities 2,175,616
Repayments received on advances to other funds 6,231
Debt principal paid (14,215)
Transfers (42,159)
Cash provided by noncapital financing activities (50,143) Cash Flows from Capital and Related Financing Activities Contributions from other funds for acquiring capital assets (125 ,744) Capital expenditures (286,838)
Capital debt principal paid (372,479)
Interest paid (602,869)
Cash used for capital and related financing activities (1,387,93 0) Cash Flows from Investing Activities
Interest received 3,082
Cash provided by investing activities 3,082
Increase in cash and cash equivalents 740,625
Cash and cash equivalents, beginning of year -
Cash and cash equivalents, end of year $ 740,625
Reconciliation of operating income from operations to cash provided by operating activities:

Operating income $ 1,150,544
Adjustments to reconcile operating income to cash
provided by operating activities:

Depreciation and amortization 274,039
Amortization of premiums on debt (34,674)
(Increase) decrease in assets:

Accounts receivable 12,975
Due from other governments 7,048
(Decrease) increase in liabilities:

Accounts payable (37,682)
Accrued payroll liabilities (1,377)
Accrued compensated absences (432)
Deferred outflows 1,071,277
Pension liability (803,416)
Deferred inflows 537,314
Cash provided by operating activities 2,175,616 $
The accompanying notes are an integral part of these financial statements.

Cash Flows from Noncapital Financing Activities

CITY OF MARYSVILLE, CALIFORNIA

STATEMENT OF CASH FLOWS

PROPRIETARY FUND - WASTEWATER FUND
For the Year Ended June 30, 2021
24 Redevelopment
Successor Agency
Private-Purpose Agency
Trust Fund Funds
ASSETS
Cash and investments $ 547,864 490,418 $
Receivables:

Accounts receivable 375
Interest receivable 46 49
Due from other governments 21,722
Capital assets, net of accumulated depreciation
Non-depreciable 29,120
Depreciable 12,977
TOTAL ASSETS 532,561 570,010 $

LIABILITIES
Accounts payable 18,019 $
Interest payable 880
Advances from other City funds 159,228
Due to other governments 551,991
Long-term debt:

Due within one year 70,400
TOTAL LIABILITIES 230,508 570,010 $

NET POSITION
Held in trust for other purposes 302,053
TOTAL NET POSITION 302,053 $
The accompanying notes are an integral part of these financial statements.

CITY OF MARYSVILLE, CALIFORNIA

STATEMENT OF FIDUCIARY NET POSITION
June 30, 2021
25 ADDITIONS
Property taxes $ 103,073
Use of money and property (556)
TOTAL ADDITIONS 102,517

DEDUCTIONS
Operations and maintenance 40,000
Depreciation expense 1,622
Other Operating Expense 9,600
Debt Service:

Interest and fiscal charges 15,060
TOTAL DEDUCTIONS 66,282
CHANGE IN NET POSITION 36,235
Net position, beginning of year 265,818
Net position, end of year $ 302,053
The accompanying notes are an integral part of these financial statements.

CITY OF MARYSVILLE, CALIFORNIA

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
June 30, 2021

REDEVELOPMENT SUCCESSOR AGENCY PRIVATE-PURPOSE TRUST FUND 26 (This page intentionally left blank.)

NOTES TO THE BASIC FINANCIAL STATEMENTS

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CITY OF MARYSVILLE, CALIFORNIA

NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2021
27 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Marysville (the City) was incorporated on February 5, 1851, under the laws and regulations of the State of California (the State). The City lies at the confluence of the Yuba and Feather Rivers at the foot of the Sierra Mountains and is located about 40 miles north of Sacramento. Marysville and neighboring Yuba City, commonly known as the “Twin Cities,” form a regional community of approximately 125,000 people. The City’s economic base is agriculture (rice, peaches, tomatoes, etc.), government (Beale Air Force Base and District 3 Office of Caltrans), and retail trade services.

The City operates under a City Manager-Council form of government and provides the following services: public safety (Police and Fire), highways and streets, sewer, culture-recreation, public improvements, planning and zoning, and general administration. The voters of the City of Marysville, California, give authority and responsibility for operations to the City Council. The City Council has the authority to employ administrative and support personnel to carry out its directives. The primary method used to monitor the performance of the City’s management is the financial budget, which is adopted annually by the City Council.

The financial statements of the City have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. In addition, the City applies all Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions and Accounting Research Bulletins (ARB) issued after November 30, 1989, unless they conflict with or contradict GASB pronouncements related to its proprietary operations. The more significant of these accounting policies are described below.

Reporting Entity: The City operates as a self-governing local government unit within the State. It has limited authority to levy taxes and has the authority to determine user fees for the services that it provides.

The City’s main funding sources include property taxes, sales taxes, other inter-governmental revenue from state and federal sources, user fees, and federal and state financial assistance.

The financial reporting entity consists of (a) the primary government, the City, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Financial accountability is defined as the appointment of a voting majority of the component unit’s board, and either (a) the City has the ability to impose its will on the organization or (b) there is a potential for the organization to provide a financial benefit to or impose a financial burden on the City.

These basic financial statements present the financial status of the City and its component units, which are included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and so data from these units are combined with data of the primary government. The City’s reporting entity includes the following component units:

Marysville Financing Authority: The Financing Authority issues debt on behalf of the City. The debt is backed by the City’s General Fund. The Financing Authority is governed by the City Council, and is reported as a blended component unit.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
28 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Redevelopment Successor Agency Private-Purpose Trust Fund: The City of Marysville Community Development Agency (the Agency) was formed as a separate legal entity under the Community Redevelopment Law. On December 29, 2011, the California Supreme Court upheld Assembly Bill 1X 26 (“the Bill”) that provides for the dissolution of all redevelopment agencies in the State of California. On January 17, 2012, the City Council elected to become Successor Agency for the redevelopment agency in accordance with the bill as part of City Resolution No. 2012-02. Based upon the nature of the successor agency’s custodial role, it is reported as a fiduciary fund privatepurpose trust fund.

Basis of Presentation—Government-wide Financial Statements: The government-wide financial statements (i.e. the statement of net position and statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external parties.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the fund financial statements.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Certain indirect costs are included in the program expenses of most business-type activities. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements.

Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Sales taxes are recognized when the underlying sales transaction takes place. Grants and similar items are recognized as revenues when all eligibility requirements are met.

Basis of Presentation—Fund Financial Statements: The accounts of the City are organized on the basis of funds. A fund is a separate self-balancing set of accounts. Each fund was established for the purpose of accounting for specific activities in accordance with applicable regulations, restrictions or limitations.

Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
29 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 to 180 days of the end of the current fiscal period, depending on the revenue source. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period.

All other revenue items are considered to be measurable and available only when cash is received by the government.

The City reports the following major governmental funds:

General Fund – The General Fund is the primary operating fund of the City. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. For the City, the General Fund includes such activities as public safety, public works, parks and recreation, and economic development services.

Capital Projects Fund – The Capital Projects Fund is used to account for financial resources used for the acquisition or construction of major capital facilities.

The City reports the following major enterprise fund:

Wastewater Enterprise Fund – The Wastewater Enterprise Fund is used to account for all revenues and expenses for operation maintenance and capital improvement funding of the Marysville Wastewater facilities.

Additionally, the City reports the following fund types:

GOVERNMENTAL FUNDS
Special Revenue Funds – Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.

Debt Service Funds – Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. The City has no debt service funds.

Capital Projects Fund – The Capital Project Fund is used to account for financial resources used for the acquisition or construction of major capital facilities.

PROPRIETARY FUNDS
Enterprise Funds – Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. Costs are financed or recovered primarily through user charges.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
30 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FIDUCIARY FUNDS
Private-Purpose Trust – Private Purpose Trust funds are used to account for trust arrangements where the principal and income benefit individuals, private organizations, or other governments. Examples include successor agencies for redevelopment agencies.

Agency Funds – Agency Funds account for assets held by the City in a purely custodial capacity.

Agency Funds typically involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments.

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 fund are charges to customers or other funds for sales and services. Operating expenses for enterprise 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.

Cash and Cash Equivalents: The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition, including the City’s investment in California Local Agency Investment Fund (LAIF).

Highly liquid money market investments with maturities of one year or less at time of purchase are stated at amortized cost.

Receivables and Payables: Sales, use, and utility user taxes related to the current fiscal year are accrued as revenue and receivables and considered available if received within 90 days of year-end. Property taxes related to the current fiscal year are accrued as revenue and receivables and considered available if received within 60 days of year-end. Federal and State grants are considered receivable and accrued as revenue when reimbursable costs are incurred under the accrual basis of accounting in the governmentwide statement of net position. The amount recognized as revenue under the modified accrual basis of accounting is limited to the amount that is deemed measurable and collectible if received within 180 days of year-end. Unbilled utility revenue earned is recognized as revenue and accounts receivable in the enterprise funds.

Transactions between funds that represent lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Eliminations have not been made between or within the fund types.

The City has provided an allowance for doubtful accounts of $98,629 at June 30, 2021 related to its wastewater operations estimated by the City to be uncollectible.

Property Taxes: The County of Yuba (the County) is responsible for the collection and allocation of property taxes. Under California law, property taxes are assessed and collected by the County up to 1% of the full cash value of taxable property, plus other increases approved by the voters and distributed in

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
31 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) accordance with statutory formulas. The City recognizes property taxes when the individual installments are due, provided they are collected within 60 days after year end. Secured property taxes are levied on or before September 30 of each year. They become a lien on real property on March 1 preceding the fiscal year for which taxes are levied. These taxes are paid in two equal installments; the first is due November 1 and delinquent with penalties after December 10; the second is due February 1 and delinquent with penalties after April 10. Secured property taxes, which are delinquent and unpaid as of June 30, are declared to be tax defaulted and are subject to redemption penalties, costs, and interest when paid.

The term “unsecured” refers to taxes on personal property other than land and buildings. Property tax revenues are recognized in the fiscal year for which they are levied, provided they are due and collected within sixty days after fiscal year-end. The County apportions secured property tax revenue in accordance with the alternate methods of distribution, the “Teeter Plan,” as prescribed by Section 4717 of the California Revenue and Taxation code. Therefore, the City receives 100% of the secured property tax levies to which it is entitled, whether or not collected. Unsecured delinquent taxes are considered fully collectible.

These taxes are accrued as intergovernmental receivables only if they are received from the County within 60 days after year-end for the governmental funds and are accrued when earned for governmentwide presentation regardless of the timing of the related cash flows.

Capital Assets: Capital assets for governmental fund types of the City are not capitalized in the funds used to acquire or construct them. Capital acquisitions are reflected as expenditures in the governmental fund, and the related assets are reported in the government-wide financial statements at historical cost or estimated historical cost if purchased or constructed. Contributed capital assets are recorded at their estimated fair market value on the date donated.

Public domain (infrastructure) capital assets consisting of certain improvements other than buildings, but including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems have been capitalized prospectively beginning June 30, 2005.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not included in the current year’s additions to governmental or business-type capital assets. Capital assets are depreciated using the straight-line method over the following useful lives:

Buildings and improvements 80 to 150 years
Machinery, equipment and vehicles 5 to 40 years
It is the policy of the City to capitalize all land, building, improvements, equipment, and eventually infrastructure assets, except assets costing less than $5,000. Interest incurred during the construction phase of capital assets of business-type activities is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Costs of assets sold or retired and the resulting gain or loss is included in the operating statement of the related proprietary fund.

In governmental funds, the sale of general capital assets is included in the statement of revenues, expenditures and changes in fund balances as proceeds from sale. The proceeds reported in the governmental fund are eliminated and the gain or loss on sale is reported in the government-wide presentation.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
32 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Compensated Absences: It is the City’s policy to permit employees to accumulate earned but unused vacation. Vacation credits must be used during the next succeeding year. Vacation is accrued when incurred in the government-wide presentation and in the proprietary funds and reported as a liability.

Amounts that are expected to be liquidated with expendable available financial resources, for example, as a result of employee resignations or retirements that are currently payable, are reported as expenditures and a fund liability of the governmental fund that will pay it. Amounts not expected to be liquidated with expendable available financial resources represent a reconciling item between the fund and governmentwide presentation. No expenditure is reported in the governmental fund financial statements for these amounts.

Unused vacation is paid to employees upon termination after one year of service. The maximum accrual for all employees for vacation is one times the employees’ annual vacation leave credits. There is no limit as to the accrual of sick leave. Sick leave is not payable upon termination, but may be converted to service credits under the City’s defined benefit pension plan.

Long-term Obligations: Long-term debt of governmental funds are reported at face value in the government-wide financial statements and represent a reconciling item between the fund and governmentwide presentation. Certain other governmental fund obligations not expected to be financed with current available financial resources are also reported in the government-wide financial statements and represent a reconciling item between the fund and government-wide presentation. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds.

For governmental fund types, proceeds from borrowing are reported as another financing source net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures.

Deferred Outflows and Inflows of Resources: In addition to liabilities, the statement of financial position reports a separate section for deferred outflows and deferred inflows of resources. Deferred outflows of resources represent a consumption of net position by the government that is applicable to a future reporting period. Deferred inflows of resources represent an acquisition of net position that is applicable to a future reporting period. These amounts will not be recognized as an outflow of resources (expenditure/expense) or an inflow of resources (revenue) until the earnings process is complete. The governmental funds report unavailable revenues for grants and other revenues when the amounts meet the asset recognition criteria and were accrued as receivables, but the amounts were not received in the availability period. Deferred outflows and inflows of resources include amounts deferred related to the City’s pension plan under GASB 68 as described in Note H.

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 Commission’s California Public Employee’s Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Fund Equity: In the fund financial statements, governmental funds report nonspendable, restricted, committed, assigned and unassigned balances.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
33 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Nonspendable Funds – Fund balance should be reported as nonspendable when the amounts cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact. Nonspendable balances are not expected to be converted to cash within the next operating cycle, which comprise prepaid items and long-term receivables.

Restricted Funds – Fund balance should be reported as restricted when constraints placed on the use of resources are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation.

Committed Funds – Fund balance should be reported as committed when the amounts can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority, the City Council. These amounts cannot be used for any other purpose unless the City Council modifies or removes the fund balance commitment.

Assigned Funds – Fund balance should be reported as assigned when the amounts are constrained by the government’s intent to be used for specific purposes but are neither restricted nor committed.

Unassigned Funds – Unassigned fund balance is the residual classification of the City’s funds and includes all spendable amounts that have not been restricted, committed, or assigned to specific purposes.

Net Position: The government-wide financial statements utilize a net position presentation. Net position is categorized as investment in capital assets (net of related debt), restricted and unrestricted.

Net Investment in Capital Assets – This category groups all capital assets into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.

Restricted Net Position – This category 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.

Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose.

The City Council establishes, modifies or rescinds fund balance commitments and assignments by passage of a resolution. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted, committed, assigned and unassigned resources as they are needed. The City’s committed, assigned, or unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.

Use of Estimates: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
34 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Budgetary Information: The City Council annually adopts the budget resolution for all operating funds of the City. Budgetary control is legally maintained at the fund level. Department heads submit budget requests to the City Administrator. The Administrator prepares an estimate of revenues and prepares recommendations for the next year’s budget. The preliminary budget may or may not be amended by the City Council and is adopted by resolution by the City Council on or before June 30.

All budget amounts presented in the accompanying financial statements have been adjusted for legally authorized revisions of the annual budgets during the year. Appropriations, except open project appropriations, and unexpended grant appropriations, lapse at the end of each fiscal year. Amounts shown in the financial statements represent the original budgeted amounts and all supplemental appropriations. The supplemental appropriations were immaterial. The budgetary data is prepared on the modified accrual basis consistent with the related “actual” amounts, except as indicated below. The City does not use encumbrance accounting.

Excess Expenditures Over Appropriations: The following funds had excess expenditures over appropriations.

Total
Expenditures and Excess
Fund Appropriations Transfers Out Expenditures
Nonmajor Special Revenue Funds:

COPS/SLESF Grant 188,163 $ 240,978 $ 52,815 $
Community Development Block Grant (CDBG) - 163,204 163,204 Home Program Income - 2,753 2,753
The COPS/SLESF Grant Fund is over budget due to vehicles purchased under capital leases that are included in capital outlay expenditures but offset by $38,293 of proceeds from issuance of debt. The CDBG and Home Program Funds are not budgeted.

New Pronouncements: In June 2017, the GASB issued Statement No. 87, Leases. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this definition should be accounted for under the leases guidance, unless specifically excluded in this Statement. The requirements of this Statement are effective for the year ended June 30, 2022.

In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. This Statement enhances disclosures about capital assets and the cost of borrowing for a reporting period and simplifies the accounting for interest cost incurred before the end of a construction period. Interest cost incurred before the end of a construction period will be recognized as an expense rather than being recorded as part of the cost of capital assets in a business-type activity or

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
35 NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) enterprise fund and interest cost incurred by a fund using the current financial resources measurement focus before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The requirements of this Statement are effective for the year ended June 30, 2022.

The City is currently analyzing the impact of the required implementation of these new statements.

NOTE B – CASH AND INVESTMENTS
The City follows the practice of pooling cash and investments of all funds. Cash represents cash on hand, demand deposits in the bank and amounts invested in the State of California Local Agency Investment Fund (LAIF). Cash and investments at June 30, 2021 are classified in the accompanying financial statements as follows:

Governmental Business-Type Fiduciary
Activities Activities Funds Total
Cash and cash equivalents 6,021,595 $ 740,625 $ 1,038,282 $ 7,800,502 $ Restricted cash 899,673 8 99,673
$ 740,625 6,921,268 $ 1,038,282 $ 8,700,175 $
As of June 30, 2021, the City’s cash and investments consisted of the following:

Cash on hand 900 $
Deposits in financial institutions 4,980,349
California Local Agency Investment Fund 1,855,528
Yuba County investment pool 963,725
Held by bond trustee:

Money market mutual fund 899,673
Total cash and investments 8,700,175 $
Investment policy: California statutes authorize cities to invest idle or surplus funds in a variety of credit instruments as provided for in the California Government Code, Section 53600, Chapter 4 - Financial Affairs. The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
36 NOTE B – CASH AND INVESTMENTS (Continued)
Maximum Maximum
Maximum Percentage Investment
Maturity Of Portfolio In One Issuer
U.S. Treasury obligations 5 years None None
U.S. Agency securities 5 years None None
Local agency bonds 5 years None 10%
Mortgage-back securities 5 years 20% None
Bankers acceptances 180 days 40% 2,000,000 $
High grade commercial paper 270 days 25% 1,000,000 $
FDIC insured or fully collaterized
time certificates of deposit 180 days None None
Negotiable certificates of deposit 5 years 30% None
LAIF N/A 30,000,000 $ 20,000,000 $
CLASS None None None
Medium term corporate notes 5 years 30% 1,000,000 $
Repurchase Agreements 365 days 20% None
Money market fund None 20% 10%
The City complied with the provisions of California Government Code pertaining to the types of investments held, institutions in which deposits were made and security requirements. The City will continue to monitor compliance with applicable statutes pertaining to public deposits and investments.

Investments Authorized by Debt Agreements: Investment of debt proceeds held by the bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The Pension Obligation Bond debt agreement contains certain provisions that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum
Maximum Percentage Investment
Maturity Of Portfolio* In One Issuer
Federal securities 5 years None None
U.S. government agency obligations 5 years None None
Municipal obligations None None 10%
Bankers acceptances 365 days 40% 30%
Commercial paper 270 days 25% 10%
Certificates of deposit 365 days None None
Money market funds 5 years 30% 5%
Local Agency Investment Fund 365 days 20% None
Interest Rate Risk: Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
37 NOTE B – CASH AND INVESTMENTS (Continued)
Information about the sensitivity of the fair values of the City’s investments (including investments held by the bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:
12 Months 13-24 More Than
Total or Less Months 60 Months
LAIF 1,855,528 $ 1,855,528 $
Cash in Yuba County pool 963,725 963,725
Held by bond trustee:

Money market mutual funds 899,673 899,673
Total 3,718,926 $ 3,718,926 $ - $ - $
Remaining Maturity
(in months)
Credit Risk: Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The current rating of the money market mutual funds is AAA. LAIF does not have ratings assigned by a nationally recognized statistical organization.

Concentration of Credit Risk: The investment policy of the City contains no limitations on the amount that can be invested with any one issuer beyond that stipulated by the California Government Code. As of June 20, 2021, no investments represented more than 5% of the total investments (other than mutual funds and external investment pools) in any one issuer.

Custodial Credit Risk: Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The 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, other than the following provision for deposits: The California Governmental Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies.

California law also allows financial institutions to secure public agency deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2021, the carrying amount of the City’s deposits was $4,980,349 and the balance in financial institutions was $5,012,611. Of the balance in financial institutions, $250,000 was covered by federal depository insurance and $4,762,611 was covered by the pledging financial institution with assets held in a common pool for the City and other governmental agencies.

Investment in LAIF: LAIF is stated at amortized cost, which approximates fair value. The LAIF is a special fund of the California State Treasury through which local governments may pool investments.

The total fair value amount invested by all public agencies in LAIF is $193,463,490,765 managed by the State Treasurer. Of that amount, 2.31% is invested in structured notes and asset-backed securities. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. The fair value of the City’s investment in this pool is

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
38 NOTE B – CASH AND INVESTMENTS (Continued)
reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. At June 30, 2021, these investments matured in an average of 291 days.

Investment in the County of Yuba Investment Pool: The City has cash in the County of Yuba Treasury.

The County maintains an investment pool and allocates interest to the various funds based upon the average daily cash balances. Investments held in the County’s investment pool are available on demand to the City and are stated at cost, which approximates fair value. Information regarding fair value measurements of the County pool may be found in the notes to the County of Yuba financial statements at www.yuba.gov/auditor-controller. As of June 30, 2021, the weighted average maturity of investments contained in the County of Yuba investment pool was approximately 342.

Fair Value Measurement: The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. 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.

NOTE C – INTERFUND TRANSACTIONS
Interfund balances at June 30, 2021 were as follows:

Due from
Other Funds
General
Due to Other Funds Fund
Major Fund:

Capital Projects 880,440 $
Nonmajor Funds:

CDBG Principal and Interest 312,880
HOME Program Income 18,483
$ 1,211,803
These balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
39 NOTE C – INTERFUND TRANSACTIONS (Continued)
Transfers during the year ended June 30, 2021 were as follows:

Capital Nonmajor Wastewater
General Projects Governmental Enterprise
Transfers out Fund Fund Funds Fund Total
Major Governmental Funds:

General 350,816 $ 289,769 $ 29,943 $ 670,528 $
Nonmajor Governmental Funds:

Gas Tax 18,325 18,325
Transportation and Transit 670 670
CDBG Principal and Interest 4,978 $ 4,978
COPS/SLESF Grant 100,000 100,000
Enterprise Fund:

Wastewater 72,102 72,102
$ 369,141 177,080 $ 290,439 $ 29,943 $ 866,603 $
Transfers In
Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expand them and (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due.

Interfund long-term advances at June 30, 2021 were as follows:

Advances Advances
to Other From Other
Fund Funds Funds
Enterprise Fund:

Wastewater 159,228 $
Fiduciary Fund - Private-Purpose Trust:

Redevelopment Successor Agency 159,228 $
$ 159,228 159,228 $
Advance from Wastewater Enterprise Fund: During the year ended June 30, 2000, the City’s Wastewater Enterprise Fund advanced to the Agency $500,000 to be used for improvements at the baseball field. On December 6, 2013, the State of California approved this amount as eligible for tax revenues deposited into the Redevelopment Property Tax Trust Fund created by the State to receive all taxes due to the dissolved Agency. Interest accrues at the LAIF interest rate and will be added to the advance balance annually when approved by the State. A payment of $7,120 was made during the fiscal year ended June 30, 2021.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
40 NOTE D – LOANS RECEIVABLE
The following is a summary of the various types of loans receivable outstanding as of June 30, 2021:

General Fund – The City made loans to small businesses under the Small Business Emergency Economic Relief Fund through the Yuba-Sutter Economic Development Corporation to mitigate the impact of COVID-19. These loans are zero interest, secured loans with repayment to begin within 90 days of the lifting of the Stay-At-Home order or receipt of an SBA financial award and will be repaid over three years. The City made loans to its employees for computer purchases. These loans have an interest rate of 6% and varying due dates.

CDBG Principal and Interest Special Revenue Fund – The City participates in a CDBG Revolving Loan program. The program is federally funded and provides assistance to private parties and forprofit businesses to carry out economic development. Loans have been provided to qualifying businesses located within the City. Interest rates vary depending on the terms of the loan and interest may be deferred until the related property is refinanced or sold. Accrued but unpaid interest is added to the loan balance. Interest rates range from zero to 10%.

HOME Program Income Fund – The City has made various loans to qualifying participants within the City as part of the Federal First Time Home Buyers Program (HOME), which are owner occupied housing rehabilitation programs. Interest rates vary depending on the terms of the loan and interest is deferred until the loan is refinanced or sold and may be waived under certain conditions if the loan is carried to full term. Also, the City utilizes proceeds received from pay-offs under the Housing Revolving Loan Fund to reloan to qualifying participants. The interest rate on the loans is 3% to

3.75%.

Activity in loans receivable for the year ended June 30, 2021 is as follows:

Balance at Payments Balance at
July 1, 2020 Additions Received Adjustments June 30, 2021 Major Governmental Fund:

General:

Small Business Emergency
Economic Relief 75,000 $ (17,564) $ 57,436 $
Employees - computers 1,670 $ 1,670
Nonmajor Governmental Funds:

CDBG Principal and Interest:

Block grant loans 1,381,462 27,531 (9,085) (39,984) $ 1,359,924 HOME Program Income:

HOME loans 949,108 8,901 958,009
Total Loans Receivable 2,405,570 $ 38,102 $ (26,649) $ (39,984) $ 2,377,039 $

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
41 NOTE E – CAPITAL ASSETS
Governmental capital assets activity for the year ended June 30, 2021 was as follows:

Balance at Balance at
June 30, 2020 Additions Retirements Adjustments Transfers June 30, 2021 Capital assets, not being depreciated:

Land 6,057,051 $ $ 6,057,051
Construction in progress 242,001 1,165,624 $ (536,932) $ 870,693 Total capital assets,
not being depreciated 6,299,052 1,165,624 - - (536,932) 6,927,744 Capital assets, being depreciated:

Infrastructure 5,029,336 536,932 5,566,268
Buildings 5,095,653 (272,262) $ 4,823,391
Machinery and equipment 331,172 2,700,012 (123,424) 2,907,760 Vehicles 5,156,081 1,310,219 (569,342) 5,896,958
Total capital assets,
being depreciated 17,981,082 1,641,391 (965,028) - 536,932 19,194,377 Less accumulated depreciation for:

Infrastructure (618,322) (128,964) (747,286)
Buildings (2,573,102) (107,410) 132,252 (2,548,260)
Machinery and equipment (148,574) (1,740,999) 123,424 (1,766,149) Vehicles (2,295,732) (533,437) 499,625 (2,329,544)
Total accumulated depreciation (918,385) (7,228,155) 755,301 - - (7,391,239) Capital assets being
depreciated, net 723,006 10,752,927 (209,727) - 536,932 11,803,138

GOVERNMENTAL ACTIVITIES
CAPITAL ASSETS, NET $ 1,888,630 17,051,979 $ $ - (209,727) $ - $ 18,730,882 $ Depreciation expense for governmental capital assets was charged to functions as follows:

General government 106,481 $
Public safety 568,654
Streets and public works 192,965
Parks and recreation 50,285
Total governmental activities depreciation expense 918,385 $

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
42 NOTE E – CAPITAL ASSETS (Continued)
Business-type capital assets activities for the year ended June 30, 2021 was as follows:

Balance at Balance at
June 30, 2020 Additions Retirements Adjustments June 30, 2021 Capital assets,
not being depreciated:

Intangible asset - Right to Capacity $ 12,300,000 12,300,000 $ Construction in progress 16,220,155 160,283 $ 16,380,438 Total capital assets,
not being depreciated 28,520,155 160,283 28,680,438
Capital assets, being depreciated:

Sewer plant 7,122,339 110,774 7,233,113
Buildings 1,483,400 1,483,400
Machinery and equipment 1,329,456 15,781 (502,118) $ 843,119 Vehicles 383,408 383,408
Equipment under capital lease 570,426 570,426
Total capital assets,
being depreciated 10,889,029 126,555 (502,118) 10,513,466 Less accumulated depreciation for:

Sewer plant (4,827,190) (221,088) (5,048,278)
Buildings (1,461,691) (2,630) (1,464,321)
Machinery and equipment (1,191,381) (16,807) 486,502 (721,686) Vehicles (317,934) (14,662) (332,596)
Equipment under capital lease (319,459) (18,852) (338,311) Total accumulated depreciation (8,117,655) (274,039) 486,502 (7,905,192) Capital assets being
depreciated, net 2,771,374 (147,484) (15,616) 2,608,274

BUSINESS-TYPE ACTIVITIES
CAPITAL ASSETS, NET $ 12,799 31,291,529 $ $ - (15,616) $ 31,288,712 $ Depreciation expense for business-type capital assets was charged to functions as follows:

Wastewater 274,039 $

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
43 NOTE F – LONG-TERM LIABILITIES
Long-term liability activity for the year ended June 30, 2021 was as follows:

Balance Balance Due Within
June 30, 2020 Additions Payments Adjustments June 30, 2021 One Year Governmental Activities:

Pension Obligation Bonds 14,163,816 $ (240,785) $ 13,923,031 $ 552,389 $ BBT Lease 2019 6,780,000 (293,000) (30,000) $ 6,457,000 304,000 Cert of Participation 2017 Series A 1,027,762 1,027,762 PNC Equipment Lease 2020 950,000 (57,762) 892,238 59,669 FNB Wildland Engine Lease 2020 576,485 $ 576,485 50,789 Cert of Participation 2017 Series B 176,717 (2,201) 174,516 6,214 Ford Lease September 2017 328,146 (160,306) 167,840 167,840 Enterprise Leases May 2018 275,117 (57,339) (65,237) 152,541 42,560 Ford Lease 2020 106,594 (24,273) 82,321 25,792
GM Tahoe Lease 2020 63,585 (13,875) 49,710 11,609
GM Silverado Lease 2020 38,923 (10,272) 28,651 9,137
GM Silverado Lease 2020 28,451 28,451 18,489
Ford Lease 2019 29,011 (8,981) 20,030 9,653
GM Colorado Lease 2020 20,745 (6,584) 14,161 6,910
GM Lease 2019 21,662 (10,534) 11,128 11,128
Ford Lease May 2018 17,721 (8,563) 9,158 9,158
678,993 23,925,742 (894,475) (95,237) 23,615,023 1,285,337 Add: unamortized bond premium 669,453 (27,605) 641,848
678,993 24,595,195 (922,080) (95,237) 24,256,871 1,285,337 Compensated absences 291,141 29,456 320,597
Net pension liability (13,494,053) 14,474,652 980,599
OPEB liability (4,826) 23,275 18,449
Governmental activities
long-term liabilities 39,384,263 $ 708,449 $ (14,420,959) $ (95,237) $ 25,576,516 $ 1,285,337 $ Business-Type Activities:

Sewer revenue bonds, 2012 Series A 11,555,000 $ (250,000) $ 11,305,000 $ 255,000 $ Linda County Water District Loan 1,920,000 (80,000) 1,840,000 80,000 Pension Obligation Bonds 836,184 (14,215) 821,969 32,611 Enterprise Lease May 2018 64,823 (13,679) 51,144 14,328 BBT Lease 2019 68,400 (39,600) 10,800 $ 39,600 39,600
Linda County Water District Loan 9,377,605 (9,377,605)
- 23,822,012 (397,494) (9,366,805) 14,057,713 421,539
Add: unamortized bond premium 865,627 (34,674) 830,953
Total long-term debt 24,687,639 - (432,168) (9,366,805) 14,888,666 421,539 Compensated absences 3,224 (432) 2,792
Net pension liability 831,119 (803,416) 27,703
Business-type activities
long-term liabilities 25,521,982 $ - $ (1,236,016) $ (9,366,805) $ 14,919,161 $ 421,539 $

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
44 NOTE F – LONG-TERM LIABILITIES (Continued)
Long-term debt of the City’s governmental activities consists of the following as of June 30, 2021, all of which is direct debt:
2019 Pension Obligation Bond:

On July 1, 2019, the City issued Taxable Pension Obligation Bonds in the amount of $15,000,000 to finance a portion of the City’s unfunded accrued actuarial liability to the California Public Employees’ Retirement System (CalPERS) for the benefit of the City’s employees and pay for a portion of the City’s remaining required normal FY19/20 monthly payments to CalPERS. Debt service will be funded from the revenue of the General Fund and the Sewer Fund. The bonds were split between governmental activities and businesstype activities based on the proportion of pension contributions expense. Interest rates vary from 2.6% to 5.0%. Interest on the Bonds is payable semiannually on each January 1 and July 1, commencing January 1, 2020. The principal installments and interest are payable annually beginning on July 1, 2020 and the final payment will be made on July 1, 2044.

The Indenture of Trust states that an event of default exists if the City fails to make the due and punctual payment of the principal or interest or if the City fails to observe any of the agreements or conditions of the Indenture for a period of 30 days. If default occurs, the principal and accrued interest could be due and payable immediately. $ 13,923,031 Obligation under site and facility lease:

The City entered into a lease agreement with the Marysville Public Financing Authority to refund prior 2011 Taxable Certificates of Participation. The interest component of the lease will be calculated based on the Taxable Rate. Principal payments ranging from $293,000 to $506,000 are due annually beginning October 1, 2020 through October 1, 2036 and interest payments ranging from $7,792 to $104,820 are due semi-annually on April 1 and October 1 beginning on April 1, 2020 through October 1, 2036. To provide for repayment of the lease, the City intends to lease, on a long-term basis, the business park and a development project. Should the City default on lease payments or any covenants of the lease agreement, the trustee could re-let the property and terminate the lease agreement. 6,457,000 $1,027,762 Clean Renewable Energy Bonds (CREB), Series A:

On September 1, 2017, the Marysville Financing Authority issued bonds and entered into a lease agreement with the City to finance its clean renewable energy projects consisting of solar photovoltaic energy systems at the City Hall and Police Department, City Fire Department, and City Corporation Yard. Principal payments ranging from $2,985 to $134,966 are due annually on September 1 through September 1, 2038 and interest payments, at a rate of 5.62%, ranging from $420 to $28,880 are due semiannually on March 1 and September 1 through September 1, 2038. To provide for repayment of the bonds, the City has leased three parcels of land bordered by or near F and 15th Streets to the Marysville Financing Authority under a leaseback agreement. Should the City default on lease payments or any covenants of the lease agreement, payments could be enforced, the lease could be terminated or legal action could be taken. 1,027,762

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
45 NOTE F – LONG-TERM LIABILITIES (Continued)
$ 892,238
$176,907 Clean Renewable Energy Bonds (CREB), Series B:

On September 1, 2017, the Marysville Financing Authority issued bonds and entered into a lease agreement with the City to finance its clean renewable energy projects consisting of solar photovoltaic energy systems at the City Hall and Police Department, City Fire Department, and City Corporation Yard. Principal payments ranging from $190 to $31,292 are due annually on September 1 through September 1, 2031 and interest payments at a rate of 5.42% ranging from $483 to $4,794 are due semiannually on March 1 and September 1 through September 1, 2031. To provide for repayment of the bonds, the City has leased three parcels of land bordered by or near F and 15th Streets to the Marysville Financing Authority under a leaseback agreement. See terms of default above. 174,516 Obligation under capital lease:

The City entered into a purchase option lease agreement with Ford Motor Credit Company, LLC dated September 20, 2017 for the acquisition of nineteen 2017 Ford Police Interceptor Utility vehicles. Due in annual installments of $175,728 beginning September 20, 2017 and ending September 20, 2021, including interest at 4.70%. The cost of the assets were $803,219 and accumulated depreciation was $602,414 at June 30, 2021. See default terms above. 167,840
576,485
Obligation under capital lease:

The City entered into a purchase option lease agreement with Community First National Bank dated December 1, 2020 for the acquisition of one Type 3 Wildland Engine. Due in annual installments of $66,839 beginning December 10, 2021 and ending December 10, 2030, including interest at 2.78%. The cost of the asset was $576,485 and accumulated depreciation was $22,419 at June 30, 2021. See default terms above.

Obligation under capital lease:

The City entered into a purchase option lease agreement with PNC Equipment Finance, LLC dated December 4, 2019 for the acquisition of one 2020 Pierce Enforcer 1500 Pumper and one Ford Type 6 F550 fire engine. Due in annual installments of $89,112 beginning December 4, 2021 and ending December 4, 2034, including interest at 3.3%. The cost of the assets were $967,948 and accumulated depreciation was $83,017 at June 30, 2021.

Should the City default on lease payments or any covenants of the lease agreement, the Lessor can demand full payment of the outstanding lease payments or retake possession of equipment or require the City to return property, with the City being responsible for a loss on resale or re-lease of equipment.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
46 NOTE F – LONG-TERM LIABILITIES (Continued)
Obligation under capital lease:

The City entered into a master equity lease agreement with Enterprise FM Trust, dated October 4, 2018 for the lease of vehicles from time to time as deemed necessary by the City. On February 6, 2019 through December 16, 2019 the City leased ten vehicles. Four of those vehicles were returned to Enterprise in April and June of 2021. The cost of the remaining assets were $218,013 and accumulated depreciation was $63,344 as of June 30, 2021. See default terms above. $ 152,541
Obligation under capital lease:

The City entered into a purchase option lease agreement with Altec Capital Services, LLC dated April 1, 2020 for the acquisition of one 2019 Ford F550 Altec Bucket vehicle. Due in annual installments of $30,945 beginning April 1, 2021 and ending April 1, 2024, including interest at 7.5%. The cost of the asset was $137,539 and accumulated depreciation was $21,777 as of June 30, 2021. See default terms above. 82,321 Obligation under capital lease:

The City entered into a purchase option lease agreement with GM Financial dated May 20, 2021 for the acquisition of one 2020 Chevy Tahoe police vehicle. Due in annual installments of $13,875 beginning May 20, 2021 and ending May 20, 2024, including interest at 4.56%. The cost of the asset was $63,585 and accumulated depreciation was $1,060 at June 30, 2021. See default terms above. 49,710 Obligation under capital lease:

The City entered into a purchase option lease agreement with GM Financial dated September 10, 2020 for the acquisition of one 2020 Chevy Silverado police vehicle. Due in annual installments of $10,414 beginning September 10, 2020 and ending September 10, 2023, including interest at 4.46%. The cost of the asset was $38,923 and accumulated depreciation was $6,487 at June 30, 2021. See default terms above. 28,651 Obligation under capital lease:

The City entered into a purchase option lease agreement with GM Financial dated April 8, 2020 for the acquisition of one 2020 Chevrolet Silverado 1500 vehicle. Due in annual installments of $10,472 beginning April 8, 2020 and ending April 8, 2023, including interest at 5.13%. The cost of the asset was $38,923 and accumulated depreciation was $9,731 as of June 30, 2021. See default terms above. 28,451 Obligation under capital lease:

The City entered into a purchase option lease agreement with Ford Motor Credit Company, LLC dated May 23, 2019 for the acquisition of one 2019 Ford Explorer police vehicle. Due in annual installments of $11,155 beginning May 23, 2019 and ending May 23, 2023, including interest at 7.5%. The cost of the asset was $48,518 and accumulated depreciation was $20,207 at June 30, 2021. See default terms above. 20,030

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
47 NOTE F – LONG-TERM LIABILITIES (Continued)
Obligation under capital lease:

The City entered into a purchase option lease agreement with GM Financial dated April 8, 2020 for the acquisition of one 2020 Chevrolet Colorado vehicle. Due in annual installments of $7,608 beginning April 8, 2021 and ending April 8, 2023, including interest at 7.5%. The cost of the asset was $28,354 and accumulated depreciation was $7,089 as of June 30, 2021. See default terms above. $ 14,161
Obligation under capital lease:

The City entered into a purchase option lease agreement with General Motor dated June 11, 2019 for the acquisition of one 2019 Chevy Tahoe police vehicle. Due in annual installments of $11,756 beginning June 11, 2019 and ending June 11, 2022, including interest at 7.55%. The cost of the asset was $43,390 and accumulated depreciation was $17,883 at June 30, 2021. See terms of default above. 11,128 Obligation under capital lease:

The City and Ford Motor Credit Company, LLC amended the above lease terms to include an additional vehicle. Amendment dated June 25, 2018 for the acquisition of one 2018 Ford Police Interceptor Utility vehicle. Due in annual installments of $9,795 beginning June 25, 2018 and ending June 25, 2022, including interest at 6.95%. The cost of the asset was $43,009 and accumulated depreciation was $32,147 at June 30, 2021. See terms of default above. 9,158
$ 2,207,230
Long-term debt of the City’s business-type activities consists of the following as of June 30, 2021, all of which is direct debt:
$13,135,000 Sewer Revenue Bonds, 2012 Series A:

Issued on November 9, 2012 to finance the acquisition and construction of certain improvements and facilities for the Sewer System. The serial bonds with principal payments of $215,000 to $315,000 are due beginning November 1, 2013 through November 1, 2027 with term bonds maturing on November 1 of 2023, 2032, 2038 and 2045. The serial bonds have stated interest rates of 0.55% to 3% and the term bonds have interest rates of 4.00% and 5.00%. Repayment is secured by a pledge and lien of the net revenues of the sewer system. Should the City default on payments or any covenants of the agreement, the interest rate will increase to 10% per annum or the bonds could immediately become due and payable. $ 11,305,000
Linda County Water District Agreement:

In the agreement dated November 9, 2018 the City borrowed $2,000,000 from Linda County Water District for the construction of the wastewater delivery pipeline. Annual payments of at least $80,000 are due beginning February 1, 2019 through February 1, 2043, including interest at LAIF plus 1%. The default provisions are the same as the previous loan. 1,840,000

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
48 NOTE F – LONG-TERM LIABILITIES (Continued)
2019 Pension Obligation Bond
On July 1, 2019 the City issued Taxable Pension Obligation Bonds in the amount of $15,000,000. The debt was split between the governmental activities and the business-type activities. See page 45 for terms and details. $ 821,969 Obligation under capital lease:

The City entered into a master equity lease agreement with Enterprise FM Trust, dated October 4, 2018 for the lease of vehicles from time to time as deemed necessary by the City. On October 31, 2019 the City leased two 2019 Ford F250 vehicles. The cost of the asset was $73,307 and accumulated depreciation was $22,495 as of June 30, 2021. Should the City default on lease payments or any covenants of the lease agreement, the Lessor can demand full payment of the outstanding lease payments or retake possession of equipment or require the City to return property, with the City being responsible for a loss on resale or re-lease of equipment. 51,144
Obligation under site and facility lease:

The City entered into a lease agreement with the Marysville Public Financing Authority to refund prior Lease Revenue Bonds, Series 2001. The interest component of the lease will be calculated based on the Taxable Rate. Principal payments ranging from $39,600 to $70,400 are due annually beginning October 1, 2020 through October 1, 2021 and interest payments ranging from $990 to $3,520 are due semi-annually on April 1 and October 1 beginning on April 1, 2020 through October 1, 2021. To provide for repayment of the lease, the City has leased the city hall to the Authority under a leaseback agreement. The refinancing involved both business-type activities and fiduciary activities. The liability has been allocated based on the debt service requirements of the respective bond issue refinanced: $79,200 business-type activities and $140,800 fiduciary activities. Should the City default on lease payments or any covenants of the lease agreement, the trustee could relet the property and terminate the lease agreement. 39,600 Linda County Water District Agreement:

Dated September 19, 2012 for the City share of the added capacity resulting from the improvements to the wastewater facilities and pipeline owned and maintained by the water district. The total project costs were estimated to be $34,168,332 for increased capacity of

5.0 million gallons per day (MGD) of which the City was allocated 1.8 MGD and $12,300,600 of the project costs. On January 1, 2021, the City entered into an agreement with the District to close out the remaining balance on the loan and make monthly operation and maintenance payments towards the capacity charge instead. The remaining loan balance of $9,377,605 was reported as revenue at June 30, 2021. $ 14,057,713

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
49 NOTE F – LONG-TERM LIABILITIES (Continued)
Principal and interest payments on debt are due as follows:

Year Ending
June 30: Principal Interest Principal Interest
2022 1,285,337 $ 913,203 $ 421,539 $ 628,887 $
2023 952,059 860,665 382,307 614,818
2024 1,034,374 824,089 397,480 599,544
2025 1,075,553 790,303 402,581 585,523
2026 1,103,951 757,214 409,005 573,001
2027-2031 6,838,122 2,992,564 2,280,229 2,620,082
2032-2036 8,234,308 1,419,854 2,812,994 2,033,012
2037-2041 2,940,240 202,445 3,232,657 1,314,798
2042-2046 151,079 8,257 3,718,921 468,873
Totals 23,615,023 $ 8,768,594 $ 14,057,713 $ 9,438,538 $ Governmental Activities Business-Type Activities
The Wastewater Fund has pledged a portion of its net revenue to repay $13,135,000 for the Sewer Revenue Bonds to finance certain sewer system improvements. Total principal and interest remaining on the bonds through 2045 is $19,599,519. For fiscal year 2021, the principal and interest paid by the Wastewater fund for these loans was $781,338. The City was in compliance with its debt coverage related to the Sewer Revenue Bond for the year ending June 30, 2020. The City completed a rate study in June 2019 and increased rates in October 2019 to meet the coverage ratio in future periods.

NOTE G – NET POSITION/FUND BALANCE
The following are the purposes for which net positions are restricted:

Governmental
Activities
Public safety 149,011 $
Public works
Capital projects
Other 1,051,133
Debt service 899,673
Community development 2,168,150
$ 4,267,967

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
50 NOTE G – NET POSITION/FUND BALANCE (Continued)
The following are the components of the Governmental Funds fund balances:

Capital Nonmajor Total
General Projects Governmental Governmental
Fund Fund Funds Funds
Fund balances:

Nonspendable:

Loans receivable 59,106 $ 2,317,933 $ 2,377,039 $
Total Nonspendable 59,106 2,317,933 2,377,039
Restricted for:

Public safety 149,011 149,011
Public works 1,051,133 1,051,133
Debt service 899,673 899,673
Community development 363,424 363,424
Total Restricted 899,673 1,563,568 2,463,241
Unassigned/Unrestricted 6,710,633 (203,404) $ (309,803) 6,197,426 Total Unassigned 6,710,633 (203,404) (309,803) 6,197,426 Total fund balances 7,669,412 $ (203,404) $ 3,571,698 $ 11,037,706 $ NOTE H – PENSION PLANS
Plan Descriptions: All qualified permanent and probationary employees are eligible to participate in the City’s cost-sharing multiple-employer defined benefit pension plan (the Plan or PERF C) administered by the California Public Employees’ Retirement System (CalPERS). PERF C consists of a miscellaneous risk pool and a safety risk pool and the following rate plans:
 City Miscellaneous Plan Classic Tier 1
 City Miscellaneous Plan Classic Tier 2
 City Miscellaneous PEPRA Tier 3
 Safety Police Plan Classic
 Safety Police Plan PEPRA
 Safety Fire Plan Classic
 Safety Fire Plan PEPRA
Although one pension plan exists, CalPERS provides the information separately for the Miscellaneous and Safety Risk Pools and the information is presented separately where available. Benefit provisions under the Plan is established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website at www.calpers.ca.gov.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
51 NOTE H – PENSION PLANS (Continued)
Benefits Provided: CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 (52 for PEPRA Miscellaneous Plan) with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is the Optional Settlement 2 Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.

The Plan’s provisions and benefits in effect at June 30, 2021, are summarized as follows:

City City City
Miscellaneous Miscellaneous Miscellaneous
Classic Tier 1 Classic Tier 2 PEPRA Tier 3
Prior to On or after On or after
January 1, 1982 January 1, 1982 January 1, 2013
Benefit formula (at full retirement) 2.0% @ 55 2.0% @ 55 2.0% @ 62 Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Final average compensation period One Year Three Year Three Year Retirement age 50 - 63 50 - 63 52 - 67
Monthly benefits, as a % of eligible
compensation 1.426% to 2.418% 1.426% to 2.418% 1.0% to 2.5% Required employee contribution rates 0.00% 7.00% 6.75%
Required employer contribution rates 0.000% 10.484% 7.732% Safety Police Safety Police Safety Fire Safety Fire
Classic PEPRA Classic PEPRA
Prior to On or after Prior to On or after
January 1, 2013 January 1, 2013 January 1, 2013 January 1, 2013 Benefit formula (at full retirement) 3.0% @ 50 2.7% @ 57 2.0% @ 50 2.7% @ 57 Benefit vesting schedule 5 years service 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life monthly for life Final average compensation period Three Year Three Year Three Year Three Year Retirement age 50 50 - 57 50 - 55 50-57
Monthly benefits, as a % of eligible
compensation 3.00% 2.0% to 2.7% 2.0% to 2.7% 2.0% to 2.7% Required employee contribution rates 9.00% 13.00% 9.00% 13.00% Required employer contribution rates 22.437% 13.044% 18.152% 13.044% The Miscellaneous Plan & Safety is closed to new participants that were not CalPERS participants prior to January 1, 2013 under the Public Employees’ Pension Reform Act of 2013 (PEPRA). Any new participants that were not previously CalPERS participants would be required to join the PEPRA Miscellaneous Plan.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
52 NOTE H – PENSION PLANS (Continued)
Contributions: Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

For the year ended June 30, 2021, the employer contributions made to the Plan were as follows for the year ended June 30, 2021:

Normal UAL
Cost Amortization Total
City Miscellaneous Risk Pool 118,177 $ 5,191 $ 123,368 $ Safety Risk Pool 332,618 7,396 340,014
$ 12,587 450,795 $ 463,382 $
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions:

As of June 30, 2021, the City reported a net pension liability for its proportionate share of the net pension liability as follows:

Liability/Asset
City Miscellaneous Risk Pool 157,312 $
Safety Risk Pool 850,990
Total Net Pension Liability 1,008,302 $
Proportionate Share
of Net Pension
The City’s net pension liability is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June 30, 2021 and 2020 was as follows:

Miscellaneous Safety
Plan Plan
Proportion - June 30, 2020 0.11786% 0.16958%
Proportion - June 30, 2021 0.00373% 0.01277%
Change - Increase (Decrease) -0.11413% -0.15681%

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
53 NOTE H – PENSION PLANS (Continued)
For the year ended June 30, 2021, the City recognized a pension credit of $554,519 for the Miscellaneous Plan and $896,292 for its Safety Plan. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to the Plan combined from the following sources:

Deferred Deferred
Outflows of Inflows of
City Miscellaneous Risk Pool Resources Resources
Pension contributions subsequent to measurement date 123,368 $ Change in assumptions 1,122 $
Net differences between projected and actual earnings
on plan investments 4,673
Difference between employer's and proportionate share
of contributions 437,620
Difference between expected and actual experience 8,107 Change in employer's proportion 54,147 3,111,208
Total 190,295 $ 3,549,950 $
Deferred Deferred
Outflows of Inflows of
Safety Risk Pool Resources Resources
Pension contributions subsequent to measurement date 340,014 $ Change in assumptions 2,835 $
Net differences between projected and actual earnings
on plan investments 18,496
Difference between employer's and proportionate
share of contributions 43,991 326,563
Difference between expected and actual experience 65,990 Change in Employer's Proportion 6,809,843
Total 468,491 $ 7,139,241 $
Total - all risk pools 658,786 $ 10,689,191 $
The $463,382 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as net deferred inflows of resources related to pensions will be recognized as pension expense as follows:

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
54 NOTE H – PENSION PLANS (Continued)
City
Fiscal Year Ended Miscellaneous Safety
June 30 Risk Pool Risk Pool Total
2022 (1,283,201) $ (2,557,864) $ (3,841,065) $
2023 (1,234,013) (2,483,966) (3,717,979)
2024 (968,049) (1,978,201) (2,946,250)
2025 2,240 9,267 11,507
Thereafter -- -
$ (7,010,764) (3,483,023) $ (10,493,787) $
Actuarial Assumptions: The total pension liabilities in the actuarial valuations for the Plan were determined using the following actuarial assumptions:

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:

Discount Rate 7.15%
Inflation 2.50%
Payroll Growth 2.75%
Projected Salary Increase Varies by entry age and service Mortality Derived using CalPERS Membership Data for all Funds The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

Discount Rate: The discount rate used to measure the total pension liability was 7.15% for the Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long term expected discount rate is applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
55 NOTE H – PENSION PLANS (Continued)
(first 10 years) and the long-term (11-60 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 longterm returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The table below reflects the long-term expected real rate of return by asset class for the Plan. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of return are net of administrative expenses.

New Strategic Real Return Real Return
Asset Class Allocation Years 1 - 10(a) Years 11+(b)
Global Equity 50.0% 4.80% 5.98%
Global Fixed Income 28.0% 1.00% 2.62%
Inflation Sensitive 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Estate 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% (0.92)%
Total 100.0%
(a) An expected inflation of 2.0% used for this period. (b) An expected inflation of 2.92% used for this period.

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 Plans, calculated using the discount rate for the Plans, 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:

City
Miscellaneous Safety
Risk Pool Risk Pool Total
1% Decrease 6.15% 6.15% 6.15%
Net Pension Liability $ 5,250,779 2,557,577 $ 7,808,356 $ Current Discount Rate 7.15% 7.15% 7.15%
Net Pension Liability $ 850,990 157,312 $ 1,008,302 $
1% Increase 8.15% 8.15% 8.15%
Net Pension Asset (1,825,952) $ (2,759,454) $ (4,585,406) $ Pension Plan Fiduciary Net Position: Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
56 NOTE I – POST EMPLOYMENT HEALTH CARE BENEFITS
Plan Description: One City employee and his spouse are the only persons currently eligible for postretirement health benefits. The City has computed the post-employment benefits using the alternative measurement method. The liability has not been funded nor has a trustee been appointed. The benefit provisions are established in the form of a binding contract with the employee. The plan currently does not issue stand-alone financial statements. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement 75.

Total OPEB Liability: The City’s total OPEB liability of $18,449 was measured using the Alternative Measurement Method as of June 30, 2021. Changes in the total OPEB liability are as follows:

Annual required contribution 1,839 $
Interest on net OPEB obligation 83
Benefit payments (6,748)
Decrease in net OPEB obligation (4,826)
Total OPEB liability, July 1 23,275
Total OPEB liability, June 30 18,449 $
Actuarial Assumptions and Other Inputs: The total OPEB liability was determined using the following assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:

Discount rate 4.50 percent
Healthcare trend rate 3 percent per year
Retirees' share of benefit-related costs None
Remaining life expectancy 9 years
Additional disclosures and required supplementary information required by GASB No. 75 were omitted due to immateriality of the OPEB liability.

NOTE J – INSURANCE
The City is a member of the Northern California Cities Self Insurance Fund (NCCSIF) along with twenty other northern California cities. The NCCSIF is a joint powers authority (JPA) organized in accordance with Article I, Chapter 5, Division 7, Title I of the California Government Fund Programs. The purpose is to create a common pool of funds to be used to meet obligations of the parties to provide workers’ compensation benefits for their employees and to provide excess liability insurance. The NCCSIF provides claims processing administrative services, risk management services and actuarial studies. A member from each city governs the NCCSIF. The City of Marysville council members do not have significant oversight responsibility, since they evenly share all factors of responsibility with the other cities. The City does not retain the risk of loss. However, ultimate liability for payment of claims and insurance premiums resides with member cities. The NCCSIF is empowered to make supplemental assessments as needed to eliminate deficit positions of member cities. If the JPA becomes insolvent, the City is responsible only to the extent of any deficiency in its equity balance.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
57 NOTE J – INSURANCE (Continued)
Banking Layer/
Coverage NCCSIF Excess Deductible
Liability 500,000 $ 39,500,000 $ 50,000 $
Employers liability 500,000 4,500,000 100,000
Property 1,000,000,000 - 5,000
Boiler and machinery 100,000,000 - 2,500
Mobile equipment 5,527,605 - 2,000
Workers Compensation liability 500,000 - 100,000
Cyber Excess 3,000,000 4,000,000 50,000
Crime 3,000,000 - 5,000
Deadly Weapon Response Program 500,000 - 10,000
The NCCSIF establishes claims liabilities based on estimates of the ultimate cost of claims (including future claims settlement expenses) that have been reported but not settled, plus estimates of claims that have been incurred but not reported. Because actual claims costs depend on various factors, the claims liabilities are recomputed periodically using a variety of actuarial and statistical techniques to produce current estimates that reflect recent settlements, claim frequency, and other economic and social factors.

A provision of inflation is implicit in the calculation of estimated future claims costs. Adjustments to claims liabilities are charged or credited to expense in the periods in which they are made.

Settlements have not exceeded the insurance coverage for the past three fiscal years. There have not been any significant reductions in insurance coverage over the prior year. The audited financial statements of the JPA are available at the NCCSIF’s office.

The City’s insurance coverage and the respective coverage providers are as follows:

Coverage Provider Payment Source
LIABILITY CLAIMS:
$0 - 25,000 Self-insured Banking layer
25,001 - 500,000 Northern California Cities Self-Insurance Fund Shared risk pool 500,001 - $40,000,000 California Joint Powers Risk Management Authority Shared risk pool WORKERS' COMPENSATION:
$0 - 100,000 Self-insured Banking layer
100,001 - 500,000 Northern California Cities Self-Insurance Fund Shared risk pool 500,001 Staturory PRISM Shared risk pool
Amount

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
58 NOTE K – COMMITMENTS AND CONTINGENCIES
The City participates in various federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors. The audits by the grantors for the year ended June 30, 2021, have not yet been conducted. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the City expects such amounts, if any, to be immaterial.

The City is party to various claims, legal actions and complaints that arise in the normal operation of business. Management and the City’s legal counsel believe that there are no material loss contingencies that would have a material adverse impact on the financial position of the City.

NOTE L – SUCCESSOR AGENCY TRUST FOR FORMER MARYSVILLE
In an effort to balance its budget, the State of California adopted ABx1 26 on June 28, 2011, as amended by AB1484 on June 27, 2012, which suspended all new redevelopment activities except for limited specified activities as of that date and dissolved redevelopment agencies on January 31, 2012.

Under the provisions of AB 1484, the City may elect to become the Housing Successor and retain the housing assets. The City elected to become the Housing Successor and on February 1, 2012, certain housing assets were transferred to the City’s Low Mod Income Housing Asset Special Revenue Fund.

The activities of the Housing Successor are reported in the Low Mod Income Housing Assets Special Revenue Fund as the City has control of those assets, which may be used in accordance with the low and moderate income housing provisions of California Redevelopment Law.

The City also elected to become the Successor Agency and on February 1, 2012, the Redevelopment Agency’s remaining assets were distributed to and liabilities were assumed by the Successor Agency.

ABx1 26 requires the establishment of an Oversight board to oversee the activities of the Successor Agency and one was established in April 2012. The activities of the Successor Agency are subject to review and approval of the Oversight Board, which is comprised of seven members, including one member of the City Council, one former Redevelopment Agency employee appointed by the Mayor and the remaining members are appointed by external agencies with an interest in Successor Agency assets.

Pursuant to Senate Bill 107, on July 1, 2018, a single consolidated County Oversight Board was established for the four city Oversight Boards.

The activities of the Successor Agency are reported in the Successor Agency to the Redevelopment Agency Private-Purpose Trust Fund as the activities are under the control of the Oversight Board. The City provides administrative services to the Successor Agency to wind down the affairs of the former Redevelopment Agency, including paying debt service payments of existing Redevelopment Agency debt agreements. Currently, the last of the obligations of the former Redevelopment Agency will terminate in 2022.

The following disclosures of the Successor Agency as of June 30, 2021 are required by debt continuing disclosure requirements.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
59 NOTE L – SUCCESSOR AGENCY TRUST FOR FORMER MARYSVILLE (Continued) Successor agency capital asset activity for the fiscal year ended June 30, 2021 was as follows:

Balance at Balance at
June 30, 2020 Additions Retirements Transfers June 30, 2021 Capital assets, not being depreciated:

Land 29,120 $ 29,120 $
Capital assets, being depreciated:

Buildings 48,663 48,663
Less: accumulated depreciation
Buildings (34,064) (1,622) $ (35,686)

FIDUCIARY
CAPITAL ASSETS, NET $ (1,622) 43,719 $ - $ - $ 42,097 $ Long-term Liabilities
The following is a summary of changes in the Successor Agency’s long-term liabilities for the year ended June 30, 2021:

Balance Balance Due Within
July 1, 2020 Additions Retirements Adjustments June 30, 2021 One Year BBT Lease 2019 121,600 $ (70,400) $ 19,200 $ 70,400 $ 70,400 $ $ - 121,600 $ (70,400) $ 19,200 $ 70,400 $ 70,400 $
Lease Revenue Bonds, 2001 Series A: As previously described, these bonds were issued to refinance the Marysville Community Agency 1992 Tax Allocation Refunding Bonds, along with the City’s 1992 Certificates of Participation. Details on this debt issuance can be found in Note F.

The pledged revenues for these bonds represent tax revenues deposited into the Redevelopment Property Tax Trust Fund administered by the County of Yuba Auditor-Controller’s Office, less property tax administration fees and tax sharing payments made to other local agencies as required under Community Redevelopment Law (net pledged tax increment revenues). A portion of the net pledged tax increment revenues reported above are not intended to represent the amount received by the Agency and reported in the Successor Agency Private-Purpose Trust Fund. Although the Agency does not receive all of the net pledged tax increment revenues, additional revenues would be available to the Agency in the future, if necessary, to make debt service payments.

CITY OF MARYSVILLE, CALIFORNIA
NOTES TO BASIC FINANCIAL STATEMENTS (Continued)
June 30, 2021
60 NOTE L – SUCCESSOR AGENCY TRUST FOR FORMER MARYSVILLE (Continued) Future debt service for Successor Agency at June 30, 2021 is as follows:

Principal Interest
Year Ending June 30,
2022 70,400 $ 1,760 $
1,760 70,400
Due within one year (70,400)
Total - $ 1,760 $
BBT Lease 2019
State Approval of Enforceable Obligations: The Successor Agency prepares a Recognized Obligation Payment Schedule (ROPS) semiannually that contains all proposed expenditures for the subsequent sixmonth period. The ROPS is subject to the review and approval of the Oversight Board as well as the State Department of Finance. The amount, if any, of current obligations that may be denied by the State Department of Finance cannot be determined at this time. The City expects such amounts, if any, to be immaterial.

NOTE M – SUBSEQUENT EVENTS
In October 2021, the City entered into a contract agreement with AECOM for $450,000 and Sacramento Area Council of Governments for $40,000 to complete a Green Zone Specific Plan.

In October 2021, the City entered into a contract agreement with Lamon Construction Company for street resurfacing in an amount of $440,831.

COMPLIANCE REPORT

REQUIRED SUPPLEMENTARY INFORMATION

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STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -

BUDGET AND ACTUAL (BUDGETARY BASIS) - GENERAL FUND
Variance with
Actual Final Budget
(Budgetary Positive/
Original Final Basis) (Negative)
Revenues:

Taxes and assessments 1,836,117 $ 2,216,117 $ 2,610,712 $ 394,595 $ Sales and use taxes 4,487,810 5,235,000 6,743,579 1,508,579 Motor vehicle in lieu tax 1,013,071 1,013,071 984,336 (28,735) Franchise tax 505,000 505,000 594,921 89,921
Licenses, fees and permits 442,400 442,400 721,212 278,812 Use of money and property 175,500 175,500 186,163 10,663 Intergovernmental revenues 932,275 847,698 1,048,289 200,591 Reimbursements 491,100 764,900 1,008,734 243,834
Charges for services 720,541 670,500 591,467 (79,033)
Other revenue 44,050 50,349 206,486 156,137
Proceeds from insurance recovery 37,624 37,624
Total revenues 10,647,864 11,920,535 14,733,523 2,812,988 Expenditures:

Current:

General government 2,407,059 2,894,236 2,635,830 258,406 Public safety 5,632,519 5,326,585 5,955,151 (322,632)
Streets and public works 827,048 772,048 527,046 245,002 Parks and recreation 500,713 638,160 798,111 (159,951)
Debt Service:

Principal retirement 758,110 758,110 791,215 (33,105)
Interest and other charges 899,540 905,040 903,598 1,442 Capital outlay 315,201 53,000 464,471 (149,270)
Total expenditures 10,772,055 11,915,314 12,075,422 (160,108) Excess (deficiency) of revenues
over expenditures 5,221 (124,191) 2,658,101 2,652,880
Other financing sources (uses):

Issuance of long term debt 63,585 63,585
Proceeds from sale of assets 500 500 858,457 857,957
Transfers in 122,000 122,000 177,080 55,080
Transfers out (460,969) (460,969) (670,528) (209,559)
Total other financing sources (338,469) 428,594 (338,469) 767,063 Excess (deficiency) of revenues and other
sources over expenditures and other uses (462,660) 3,086,695 (333,248) 3,419,943 Fund balances - beginning of year 4,649,482 4,649,482 4,649,482 Fund balances - end of year 4,186,822 $ 4,316,234 $ 7,736,177 $ 3,419,943 $ The accompanying notes are an integral part of these financial statements.

Budgeted Amounts

CITY OF MARYSVILLE, CALIFORNIA
For the Year Ended June 30, 2021
61 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Proportion of the net pension liability 0.00373% 0.11786% 0.11472% 0.11082% 0.10814% 0.10273% 0.08314% Proportionate share of the net pension liability $ 4,719,585 157,312 $ 4,323,365 $ 4,368,711 $ 3,756,736 $ 2,818,412 $ 2,724,272 $ Covered payroll - measurement period $ 1,330,077 1,398,175 $ 1,217,647 $ 1,209,884 $ 1,172,974 $ 1,228,822 $ 1,243,549 $ Proportionate share of the net pension liability
as a percentage of covered payroll 11.25% 354.84% 355.06% 361.09% 320.27% 229.36% 219.07% Plan fiduciary net position as a percentage of
the total pension liability 99.13% 73.56% 74.82% 74.10% 76.05% 81.56% 82.70% Notes to Schedule:

June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution
(actuarially determined) $ 406,932 123,368 $ 327,447 $ 269,762 $ 247,565 $ 209,655 $ 130,826 $ Contributions in relation to the actuarially
determined contributions (123,368) (5,155,280) (327,447) (269,762) (247,565) (209,655) (130,826) Contribution deficiency (excess) - $ (4,748,348) $ - $ - $ - $ - $ - $ Covered payroll - fiscal year $ 1,398,175 1,517,815 $ 1,330,077 $ 1,217,647 $ 1,209,884 $ 1,172,974 $ 1,228,822 $ Contributions as a percentage of covered payroll 8.13% 368.71% 24.62% 22.15% 20.46% 17.87% 10.65% Valuation date: June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 Methods and assumptions used to determine contribution rates Actuarial cost method
Amortized method
Remaining amortization period
Asset valuation method Market
Value
Market
Value
Market
Value
Market
Value
Market
Value
Market
Value
15-year
smoothed
market
Inflation 2.50% 2.625% 2.75% 2.75% 2.75% 2.75% 2.75%
Salary increases
Payroll growth 2.75% 2.875% 3.00% 3.00% 3.00% 3.00% 3.00% Investment rate of return 7.00% (1) 7.25% (1) 7.375% (1) 7.50% (1) 7.50% (1) 7.50% (1) 7.50% (1) Mortality (4) (3) (3) (3) (2) (2) (2)
Notes to Schedule:

Varies by Entry Age and Service
Omitted years: The year ended June 30, 2015 was the first year of implementation of GASB Statement No. 68, the information prior to this date were not presented. (1) Net of administrative expenses, includes inflation. (2) Probabilities of retirement and mortality are based on CalPERS' 2010 Experience Study for the period from 1997 to 2007. (3) Probabilities of retirement and mortality are based on CalPERS' 2014 Experience Study for the period from 1997 to 2011. (4) Probabilities of retirement and mortality are based on CalPERS' 2017 Experience Study for the period from 1997 to 2015.

Entry age normal
Level percentage of payroll, closed
Varies, not more than 30 years

CITY OF MARYSVILLE, CALIFORNIA

REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2020

SCHEDULE OF THE PROPORTIONATE SHARE OF THE

NET PENSION LIABILITY - MISCELLANEOUS PLAN (UNAUDITED)
Last 10 Years
Last 10 Years

SCHEDULE OF CONTRIBUTIONS TO THE PENSION PLAN - MISCELLANEOUS PLAN (UNAUDITED) Change in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013 as they have minimal cost impact. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes in assumptions: The discount rate was changed from 7.50% in 2015 to 7.65% in 2016 and to 7.15% in 2018 Omitted years: GASB Statement No. 68 was implemented during the year ended June 30, 2015. No information was available prior to this date. 62 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Proportion of the net pension liability 0.01277% 0.16958% 0.17282% 0.16880% 0.17725% 0.18427% 0.14064% Proportionate share of the net pension liability $ 10,586,186 850,990 $ 10,140,138 $ 10,086,254 $ 9,180,407 $ 7,592,673 $ 6,728,712 $ Covered payroll - measurement period $ 1,641,904 1,994,870 $ 1,485,180 $ 1,395,874 $ 1,366,046 $ 1,011,871 $ 996,792 $ Proportionate share of the net pension liability
as a percentage of covered payroll 42.66% 644.75% 682.75% 722.58% 672.04% 750.36% 675.04% Plan fiduciary net position as a percentage of
the total pension liability 97.37% 66.47% 66.78% 65.97% 68.30% 73.23% 76.23% Notes to Schedule:

June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Contractually required contribution
(actuarially determined) $ 1,191,731 340,014 $ 1,013,415 $ 852,710 $ 657,260 $ 663,213 $ 322,800 $ Contributions in relation to the actuarially
determined contributions (340,014) (10,006,650) (1,013,415) (852,710) (657,260) (663,213) (322,800) Contribution deficiency (excess) - $ (8,814,919) $ - $ - $ - $ - $ - $ Covered payroll - fiscal year $ 1,994,870 2,110,027 $ 1,641,904 $ 1,485,180 $ 1,395,874 $ 1,366,046 $ 1,011,871 $ Contributions as a percentage of covered payroll 16.11% 501.62% 61.72% 57.41% 47.09% 48.55% 31.90% Valuation date: June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 Methods and assumptions used to determine contribution rates:

Actuarial cost method
Amortized method
Remaining amortization period
Asset valuation method Market
Value
Market
Value
Market
Value
Market
Value
Market
Value
Market
Value
15-year
smoothed
market
Inflation 2.50% 2.625% 2.75% 2.75% 2.75% 2.75% 2.75%
Salary increases
Payroll growth 2.75% 2.875% 3.00% 3.00% 3.00% 3.00% 3.00% Investment rate of return 7.00% (1) 7.25% (1) 7.375% (1) 7.50% (1) 7.50% (1) 7.50% (1) 7.50% (1) Mortality (4) (3) (3) (3) (2) (2) (2)
Notes to Schedule:

Entry age normal

CITY OF MARYSVILLE, CALIFORNIA

REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended June 30, 2020

SCHEDULE OF THE PROPORTIONATE SHARE OF THE

NET PENSION LIABILITY - SAFETY PLAN (UNAUDITED)
Last 10 Years
Change in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan changes which occurred after June 30, 2013 as they have minimal cost impact. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).

Changes in assumptions: The discount rate was changed from 7.50% in 2015 to 7.65% in 2016 and to 7.15% in 2018.

Omitted years: GASB Statement No. 68 was implemented during the year ended June 30, 2015. No information was available prior to this date.

SCHEDULE OF CONTRIBUTIONS TO THE PENSION PLAN - SAFETY PLAN (UNAUDITED) Last 10 Years
Omitted years: The year ended June 30, 2015 was the first year of implementation of GASB Statement No. 68, the information prior to this date were not presented.

Level percentage of payroll, closed
Varies, not more than 30 years
Varies by Entry Age and Service
(1) Net of administrative expenses, includes inflation. (2) Probabilities of retirement and mortality are based on CalPERS' 2010 Experience Study for the period from 1997 to 2007. (3) Probabilities of retirement and mortality are based on CalPERS' 2014 Experience Study for the period from 1997 to 2011. (4) Probabilities of retirement and mortality are based on CalPERS' 2017 Experience Study for the period from 1997 to 2015. 63 (This page intentionally left blank.)

COMBINING STATEMENTS AND INDIVIDUAL FUND STATEMENTS
Narcotics Asset
Gas Tax Enforcement Seizure Sidewalk
Fund Fund Fund Fund
ASSETS
Cash and investments 945,241 $ 1,229 $ 1,093 $ 13,895 $ Receivables:

Accounts receivable 39,535 1,528
Interest receivable 86 1
Loans receivable
Due from other governments 87,337
TOTAL ASSETS $ 1,229 1,072,199 $ 1,093 $ 15,424 $

LIABILITIES AND FUND BALANCES
Liabilities:

Accounts payable 19,259 $
Accrued payroll liabilities 11,385
Due to other funds
TOTAL LIABILITIES 30,644

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue

TOTAL DEFERRED INFLOWS

OF RESOURCES
Fund balances:

Nonspendable
Restricted 1,041,555 1,229 $ 1,093 $ 15,424 $
Unassigned
TOTAL FUND BALANCES 1,229 1,041,555 1,093 15,424

TOTAL LIABILITIES, DEFERRED
INFLOWS, AND FUND BALANCES $ 1,229 1,072,199 $ 1,093 $ 15,424 $ Special Revenue

CITY OF MARYSVILLE, CALIFORNIA

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
June 30, 2021
64 Law
Enforcement
Grant

CDBG HOME
Transportation Principal Program 2015 COPS/SLESF
and Transit and Interest Income CDBG Grant
Fund Fund Fund Fund Fund Totals
3,046 $ 44,514 $ 337,481 $ 139,077 $ 1,485,576 $

41,063
31 4 22 144
1,359,924 958,009 2,317,933
162,370 75,033
$ 1,363,001 - $ 1,002,527 $ 337,481 $ 214,132 $ 4,007,086 $ 92 $ - $ 19,351 $
11,385
312,880 $ 18,483 331,363
312,880 18,575 362,099

1,359,924 958,009 2,317,933
25,943 337,481 $ 214,132 1,636,857
(309,803) (309,803)
1,050,121 983,952 337,481 214,132 3,644,987
$ 1,363,001 - $ 1,002,527 $ 337,481 $ 214,132 $ 4,007,086 $ Continued
Revolving Loan Funds
Special Revenue
65 Narcotics Asset
Gas Tax Enforcement Seizure Sidewalk
Fund Fund Fund Fund

REVENUES
Intergovernmental revenue 333,083 $
Reimbursements
Charges for services 230,323
Use of money and property (1) 453 $ (6) $
Program income
TOTAL REVENUES 563,859 (1) (6)

EXPENDITURES
Current:

General government
Public safety
Streets and public works 461,249
Parks and Recreation
Debt Service:

Principal retirement 24,692
Interest and other charges 5,158
Capital outlay
TOTAL EXPENDITURES 491,099
REVENUES OVER (UNDER) EXPENDITURES 72,760 (1) (6)

OTHER FINANCING SOURCES (USES)
Issuance of debt
Proceeds from sale of assets 40,774
Transfers in 290,439
Transfers out (18,325)

TOTAL OTHER FINANCING
SOURCES AND USES 312,888
NET CHANGE IN FUND BALANCES (1) 385,648 (6)
Beginning of year 1,230 655,907 1,093 $ 15,430
End of year $ 1,229 1,041,555 $ 1,093 $ 15,424 $

CITY OF MARYSVILLE, CALIFORNIA

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended June 30, 2021
Special Revenue
66 Law
Enforcement
Grant

CDBG HOME
Transportation Principal Program 2015 COPS/SLESF
and Transit and Interest Income CDBG Grant
Fund Fund Fund Fund Fund Totals
216,777 $ 549,860 $

230,323
(218) $ (20) $ (224) (16)
(12,454) 8,902 (3,552)
(12,672) 8,882 216,553 776,615
2,312 2,753 5,065
55,141 55,141
461,249

45,498 20,806
6,522 1,364
160,892 63,667 224,559
163,204 2,753 140,978 798,034
(175,876) 6,129 75,575 (21,419)
38,923 38,923
40,774
290,439
$ (4,978) (670) (100,000) (123,973)
(4,978) (670) (61,077) 246,163
(180,854) (670) 6,129 14,498 224,744
1,230,975 670 977,823 337,481 $ 199,634 3,420,243
$ 1,050,121 - $ 983,952 $ 337,481 $ 214,132 $ 3,644,987 $ Continued
Revolving Loan Funds
Special Revenue
67 Levee Mary Aaron
Commission Museum
Fund Fund Totals
ASSETS
Cash and investments $ 16,931 530,933 $ 547,864 $
Receivables:

Accounts receivable 375 375
Interest receivable 48 1 49
Due from other governments 21,722 21,722
TOTAL ASSETS 553,078 $ 16,932 $ 570,010 $

LIABILITIES
Accounts payable 17,235 $ 784 $ 18,019 $
Due to other agencies 535,843 16,148 551,991
TOTAL LIABILITIES 553,078 $ 16,932 $ 570,010 $

CITY OF MARYSVILLE, CALIFORNIA
Combining Statement of Assets and Liabilities
Agency Funds
June 30, 2021
68 OTHER REPORTS

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550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564-8727
FAX: (916) 564-8728
69 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
City Council
City of Marysville, California
Marysville, California
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Marysville, California (the City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 28, 2022.

Internal Control Over Financial Reporting
In planning and performing our audit, 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 and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify certain deficiencies in internal control described in the accompanying schedule of findings as Findings 2021-001 and 2021-002 that we consider to be material weaknesses.

Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of 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 To the City Council
City of Marysville, California
70 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.

City of Marysville’s Response to Findings
City of Marysville’s response to the findings identified in our audit is described in the accompanying schedule of findings. City of Marysville’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

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.

March 28, 2022

CITY OF MARYSVILLE, CALIFORNIA

SCHEDULE OF FINDINGS
For the Year Ended June 30, 2021
71 CURRENT YEAR FINDINGS
Finding 2021-001 – Internal Controls over Financial Reporting and Year-End Closing Procedures – Material Weakness
Condition: The design and implementation of internal controls is crucial to the effective operation of city government and for accurate financial reporting. Turnover in personnel, the shortage of qualified support staff and resources dedicated to the close-out of the general ledger and preparing for the audit has resulted in 60 adjustments being identified during the audit process and has delayed completion of the audit.

Criteria: Internal controls over financial reporting should be in place to ensure the City has the ability to initiate, record, process and report financial data consistent with the assertions of management in the financial statements. Due to turnover in accounting staff assigned to closing the books and the lack of a complete closing checklist, the Finance Department staff did not identify and record all year-end closing entries prior to the start of the audit.

Cause: The City has had turnover in the accounting staff and did not have sufficient qualified resources to properly reconcile general ledger accounts and close the City’s books.

Effect: A number of audit adjustments needed to be posted to properly report balances in the City’s financial statements. The volume of entries also increases the risk of error in preparing the financial statements.

Recommendation: We recommend that the City develop internal control procedures to create a responsible structure for accurate financial reporting. Procedures should be in place to prepare the required reconciliations at year-end and throughout the year and post entries needed to close the books prior to the start of the audit. We believe that the year-end closing process could proceed more quickly and smoothly by developing a comprehensive closing procedures checklist. The City needs to ensure that all balance sheet accounts are reviewed and reconciled to supporting schedules prior to the beginning of the audit.

City’s Response: See Corrective Action Plan.

Finding 2021-002 – Capital Asset Accounting – Material Weakness Condition: A number of items were noted in our audit of the City’s capital assets.  The three properties acquired from the Redevelopment Agency need to be recorded at their fair value at the acquisition date. These properties are currently reflected with a zero value.  The City has recorded land with a value of $4.5 million in the general ledger that is not listed on the capital asset list, so it is not clear what parcels of land the City owns that makes up this amount.
 City Hall is reported as acquired in 1939 for a cost of $1.2 million, which appears high. Any remodel work should be shown on a separate line item and depreciated starting with the date the remodel was completed over the estimated life of the improvements.

Criteria: An accurate list of capital assets needs to be maintained to support amounts reported in the financial statements.

CITY OF MARYSVILLE, CALIFORNIA

SCHEDULE OF FINDINGS (CONTINUED)
For the Year Ended June 30, 2021
72 Cause: A capital asset inventory has not been completed until recently and compared to the listing of capital assets.

Effect: The capital assets, net of accumulated depreciation, reflected in the City’s general ledger is likely misstated.

Recommendation: Procedures need to be established to ensure the capital asset list is up-to-date.

Periodic inspections of assets need to be performed to ensure that recorded assets exist. Reconciliations of the subsidiary ledger to the general ledger need to be performed on a periodic basis.

City’s Response: See Corrective Action Plan.

CITY OF MARYSVILLE, CALIFORNIA

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the Year Ended June 30, 2021
73 STATUS OF PRIOR YEAR FINDINGS
Finding 2020-001 – Internal Controls over Financial Reporting and Year-End Closing Procedures – Material Weakness
See Finding 2021-001 for current status.

Finding 2020-002 – Capital Asset Accounting – Material Weakness See Finding 2021-002 for current status.
74 CITY OF MARYSVILLE
FINANCE DEPARTMENT
526 C STREET
MARYSVILLE, CALIFORNIA
95901

TELEPHONE
(530) 749‐3903

FACSIMILE
(530) 749‐3992
City of Marysville
Schedule of Finding Responses – Corrective Action Plan
June 30, 2021
Finding 2021‐001 – Internal Controls over Financial Reporting and Year‐End Closing Procedures – Material Weakness
The City of Marysville concurs with this finding. We will be using these recommendations/comments to develop an internal control procedure structure and to create a year‐end closing process to insure quick and smooth progress to the audit and throughout the year. This will be done by merging a current template that the City has created, and a template created by the auditors to create a comprehensive process. This work will be done by the Finance Department with services as needed from outside consultants to produce, develop, and implement the necessary changes. The bulk of this development will be during the 4th quarter of FY 2021‐22 and anticipated to be mostly completed by the end of the 1st quarter of FY 2022‐23. We have also established that we will have our books closed by the end of October thus allowing for an additional month to implement and review before the trial balance is submitted to the auditors to begin review.

Finding 2021‐002 – Capital Asset Accounting – Material Weakness Again, the City of Marysville concurs with this finding. The three conditions listed will take some time to research through records to find the timeline and backup as City records are not in electronic form at this time and the items go back several years. Some of this research was completed in FY 2021‐22 but addition records need to still be found. All our assets have been added to the City’s financial system and have been compared to the asset listing provided to the auditors and the numbers in the audit. A part of the year end process will include adding assets to the financial system for tracking and making sure that assets are being depreciated according to our Capital Asset Policy.

Marysville City CouncilApril 5, 2022

Marysville City Council
April 5, 2022