City of Monte Sereno
Notes to Financial Statements
June 30, 2023
NOTE 6 – PENSION PLAN – Continued
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 (Public Employees’ Retirement Fund) cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 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 long-term 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 long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These rates are net of administrative expenses:
Asset Class (1)
Assumed
Asset
Allocation Real Return 1,2
Global Equity-Cap Weighted 30.0% 4.54%
Global Equity-Non-Cap Weighted 12.00% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
(1) An expected inflation of 2.30% used for this period. (2) Figures are based on the 2021 Asset Liability Management study.
31
City of Monte Sereno
Notes to Financial Statements
June 30, 2023
NOTE 6 – PENSION PLAN – Continued
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the City Miscellaneous Plan, calculated using the current discount rate for the Plan, as well as what the City’s 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:
1% Decrease 5.90%
Net Pension Asset $1,093,568
Current Discount Rate 6.90%
Net Pension Asset $188,003
1% Increase 7.90%
Net Pension Asset ($557,053)
Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
NOTE 7 – OTHER POSTEMPLOYMENT BENEFITS
Postemployment Healthcare Plan (OPEB)
Plan Description – The City’s defined benefit postemployment healthcare plan is a single-employer defined benefit plan provides medical benefits to employees and their spouses who satisfy the requirements for retirement under CalPERS (attained age 50 with five years of service or satisfaction of the requirements for a disability retirement.) No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
Benefits Provided – The City provides medical insurance benefits to eligible retirees and their spouses.
Benefits are provided through CalPERS Health Insurance, and the cost of benefits is limited to the PERS Choice Single Health Plan Premium. The City's governing board has the authority to establish and amend the benefit terms as needed.
Employees Covered – At the June 30, 2022, valuation date, the following employees were covered by the benefit terms for the OPEB Plan:
Count
Inactive employees or beneficiaries currently receiving benefits 4 Inactive employees entitled to but not yet receiving benefits 3 Active employees 9
Total 16
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City of Monte Sereno
Notes to Financial Statements
June 30, 2023
NOTE 7 – OTHER POSTEMPLOYMENT BENEFITS - Continued
Total OPEB Liability – The City’s Total OPEB liability was measured as of June 30, 2022, was determined by an actuarial valuation as of June 30, 2022 that was based on the following actuarial methods and assumptions:
Actuarial Assumptions:
Contribution Policy No pre-funding
Discount Rate 3.65% at June 30, 2022
Inflation 2.50% annually
Mortality, Retirement, Disability, Termination CalPERS 1997-2015 Experience Study Mortality Improvement Mortality projected fully generational with Scale MP-2021 Healthcare Trend Cost Rate Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Non-Kaiser) - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Medicare (Kaiser) - 4.60% for 2023, decreasing to an ultimate rate of 3.75% in 2076 Change in Total OPEB Liability – The changes in the total OPEB liability for the City are as follows:
Total OPEB
Liability
Balance at June 30, 2022 $705,897
Changes for the year:
Service Cost 86,788
Interest on the Total OPEB Liability 27,368
Differences between Expected and Actual Experience 30,728 Benefit payments (39,159)
Administrative Expense
Changes of assumptions 31,328
Net changes 137,053
Balance at June 30, 2023 $842,950
Sensitivity of the Total OPEB liability to Changes in the Discount Rate – The following presents the total OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower (2.65%) or one percentage point higher (4.65%) than the current rate, for year ended June 30, 2023:
Discount Rate
-1.0% Discount Rate Current Rate +1.0% Discount Rate
2.65% 3.65% 4.65%
$978,099 $842,950 $734,142
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City of Monte Sereno
Notes to Financial Statements
June 30, 2023
NOTE 7 – OTHER POSTEMPLOYMENT BENEFITS - Continued
Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates – The following presents the total OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage higher than the current rate, for year ended June 30, 2023:
Healthcare Trend Rate
-1.0% Decrease Current Trend +1.0% Increase
$713,583 $842,950 $1,009,224
Expense and Deferred Outflows/Inflows of Resources Related to OPEB Under GASB Statement No. 75 – For the fiscal year ended June 30, 2023, the City recognized OPEB expense of $54,356. As of fiscal year ended June 30, 2023, the City reported deferred inflows of resources related to OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Changes of assumptions $127,709 $173,605
Differences between expected and
actual experience 270,224 26,519.00
Total $154,228 $443,829
The amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:
Fiscal Year Ended Annual
June 30 Amortization
2024 ($58,909)
2025 (56,404)
2026 (68,481)
2027 (93,502)
2028 (21,191)
Thereafter 8,886
Total ($289,601)
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The City is involved as a defendant in various legal proceedings. While it is not feasible to predict or determine the outcome in these cases, it is the opinion of the City that the outcome will have no materially adverse effect on the financial position of the City.
The City may receive State and Federal funds for specific purposes that are subject to audit by the grantor agencies. Such audits could generate expenditure disallowances under the terms of the grants. It is believed that any required reimbursements would not be material.
The City participates in a Public Entity Risk Pool. See Note 10 for details. 34
City of Monte Sereno
Notes to Financial Statements
June 30, 2023
NOTE 9 – NATURE AND PURPOSE OF REPORTED FUND BALANCE CLASSIFICATIONS Fund Balance
In the fund financial statements, governmental funds report the following classifications of fund balance:
Restatement and Adjustment of Beginning Fund Balance and Net Position During the year ended June 30, 2023, it was noted that the General Fund was the only fund with an equity or fund balance account and after allocation to the other funds, it was still not balanced. This correction resulted in an increase both of beginning fund balance and beginning net position in the amount of $22,179.
NOTE 10 – RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and injuries to employees. The City has joined Bay Cities Joint Powers Insurance Authority (BCJPIA). BCJPIA is a public entity risk pool that is currently operating a common risk management agency with nineteen members. Annual premiums are paid by members and are adjusted retrospectively to cover costs. Excess premiums, if any, are returned to the members based on an equity allocation five years after the close of the program year. Member deductibles range from $5,000 to $350,000 with a self-insured retention of $1,000,000 by BCJPIA. The City’s self-insured retention is $5,000. BCJPIA has purchased excess insurance up to $38,000,000 from a private company to provide coverage for losses and claims in excess of the stated limits.
NOTE 11 – PARTICIPATION IN JOINT POWERS AUTHORITIES
The City is a member of the West Valley Solid Waste Management Authority (WVSWMA) for solid waste management and Silicon Valley Animal Control Authority (SVACA) for animal control services.
The City pays an annual premium to each entity for the services. The relationships between the City and the JPA’s are such that they are not component units of the City for financial reporting purposes. Each entity is summarized below.
Non-Major Governmental Funds
Law Loma Serena Rose Andrews Storm
General Enforcement Gas Tax Street Lighting Street Lighting Drainage Fund Balance Classifications Fund Fund Fund Fund Fund Fund Total Restricted for:
Capital projects $502,677 $90,524 $593,201
Law enforcement $168,464 168,464
Road impact fees $12,256 $39 $12,295
Total Restricted Fund Balances 168,464 502,677 12,256 39 90,524 773,960 Unassigned:
General fund $5,276,936 5,276,936
Total Unassigned Fund Balances 5,276,936 5,276,936
Total Fund Balances $5,276,936 $168,464 $502,677 $12,256 $39 $90,524 $6,050,896 35
City of Monte Sereno
Notes to Financial Statements
June 30, 2023
NOTE 11 – PARTICIPATION IN JOINT POWERS AUTHORITIES - Continued Description of WVSWMA
This program is a joint venture with the cities of Los Gatos, Campbell, Monte Sereno, and Saratoga to provide a coordinated Solid Waste Management Authority to their respective cities in order to meet State and Federal requirements, as well as local objectives regarding solid waste. Each city has a representative on the Rate Review Committee of the Program, which makes recommendations regarding budgets, policies, and procedures to the city managers of the member cities. WVSWMA is administered by a Board of Directors consisting of four Directors, one each appointed by the Legislative Body of the cities of Campbell, Los Gatos, Monte Sereno and Saratoga. Costs of the programs are allocated based on population with Monte Sereno’s portion of the budget equaling 3.5 percent for the year.
Description of SVACA
This program is a joint venture with the cities of Campbell, Santa Clara, Mountain View, and Monte Sereno to own, manage, operate and maintain the Animal Control Services in the area in order to provide the residents with more efficient and economical animal control services. SVACA is administered by a Board of Directors consisting of four Directors, one each appointed by the Legislative Body of the cities of Santa Clara, Campbell, Mountain View, and Monte Sereno. Costs of the program are allocated in proportions to the population of the member agency, the amount of licensed animals owned or kept by residents of the member agency, and the total number of days that an animal from each member agency is held at the current animal shelter facility. During the current year Monte Sereno’s proportional share of those costs was 1.5% and is expected to be 1.64% for the fiscal year 2023-2024.
Audited financial statements are available from these entities.
NOTE 12 – NEW GASB PRONOUNCEMENTS
The following Governmental Accounting Standards Board (GASB) pronouncements became effective in fiscal year 2022-2023:
GASB Statement No. 91 – In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations. The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with such arrangements. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. This Statement is effective for reporting periods beginning after December 15, 2021, or fiscal year 2022-23. The implementation of this Statement did not have a material effect on the financial statements.
GASB Statement No. 92 – In January 2020, GASB issued Statement No. 92, Omnibus 2020. The primary objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements for a variety of topics. This Statement is effective for reporting periods beginning after June 15, 2022, or the fiscal year 2022-23. The implementation of this Statement did not have a material effect on the financial statements.
36
City of Monte Sereno
Notes to Financial Statements
June 30, 2023
NOTE 12 – NEW GASB PRONOUNCEMENTS - Continued
GASB Statement No. 94 – In March 2020, GASB issued Statement No. 94, Public-Private and PublicPublic Partnerships and Availability Payment Arrangements. The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). This Statement is effective for reporting periods beginning after June 15, 2022, or the fiscal year 2022-23. The implementation of this Statement did not have a material effect on the financial statements.
GASB Statement No. 96 – In May 2020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements. The primary objective of this Statement is to improve financial reporting by establishing a definition for subscription-based information technology arrangements (SBITAs) and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. This Statement is effective for reporting periods beginning after June 15, 2022, or the fiscal year 2022-23. The implementation of this Statement did not have a material effect on the financial statements.
GASB Statement No. 99 – In April 2022, GASB issued Statement No. 99, Omnibus 2022. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. This Statement is effective for reporting periods beginning after June 15, 2022, or the fiscal year 2022-23. The implementation of this Statement did not have a material effect on the financial statements.
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Required Supplementary Information
June 30, 2023
City of Monte Sereno
CITY OF MONTE SERENO
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)
REVENUES
Property taxes $2,237,700 $2,251,505 $2,577,879 $326,374 Sales taxes 12,000 8,900 13,967 5,067
Franchise fee 310,000 310,000 362,831 52,831
Real property transfer tax 145,000 97,600 81,869 (15,731) License and permits 914,100 746,300 739,502 (6,798)
Fines and penalities 3,000 1,200 1,204 4
Investment earnings 10,000 45,014 112,154 67,140
Intergovernmental / Other agencies 908,585 739,785 417,483 (322,302) Other revenue 280,700 204,970 298,965 93,995
Total Revenues 4,821,085 4,405,274 4,605,854 200,580
EXPENDITURES
Current:
General Government 2,898,494 2,407,051 3,114,803 (707,752) Public safety 627,000 85,500 68,819 16,681
Public works 368,000 572,130 75,766 496,364
Community development 20,000 21,000 27,600 (6,600)
Capital outlay 725,000 600,000 600,000
Total Expenditures 4,638,494 3,685,681 3,286,988 398,693
EXCESS OF REVENUES
OVER EXPENDITURES 182,591 719,593 1,318,866 599,273
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers (out) (1,000,430) (1,000,430)
Total Other Financing Sources (Uses) (1,000,430) (1,000,430) NET CHANGE IN FUND BALANCE $182,591 $719,593 318,436 ($401,157) Fund balance at beginning of year 4,949,750
Prior Period Adjustment (Note 9) 8,750
Fund balance at beginning of year - as restated 4,958,500 FUND BALANCE AT END OF YEAR $5,276,936
40
CITY OF MONTE SERENO
LAW ENFORCEMENT FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)
REVENUES
Property taxes $89,000 $111,842 $191,417 $79,575
Intergovernmental/ other agencies 100,000 100,000 165,271 65,271 Total Revenues 189,000 211,842 356,688 144,846
EXPENDITURES
Current:
Public safety 1,110,604 1,110,604 1,175,875 (65,271)
Total Expenditures 1,110,604 1,110,604 1,175,875 (65,271)
EXCESS OF REVENUES
OVER EXPENDITURES (921,604) (898,762) (819,187) 79,575
OTHER FINANCING SOURCES (USES)
Transfers in 855,260 855,260
Transfers (out)
Total Other Financing Sources (Uses) 855,260 855,260
NET CHANGE IN FUND BALANCE ($921,604) ($898,762) 36,073 $934,835 Fund balance at beginning of year 38,544
Prior Period Adjustment (Note 9) 93,847
Fund balance at beginning of year - as restated 132,391 FUND BALANCE AT END OF YEAR $168,464
41
CITY OF MONTE SERENO
GAS TAX FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2023
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual (Negative)
REVENUES
Gas tax $191,000 $191,000 $159,503 ($31,497)
Investment earnings 1,200 5,245 7,263 2,018
Total Revenues 192,200 196,245 166,766 (29,479)
EXPENDITURES
Current:
General Government 3,000 3,000 2,996 4
Public works 11,000 17,845 57,933 (40,088)
Total Expenditures 14,000 20,845 60,929 (40,084)
EXCESS OF REVENUES
OVER EXPENDITURES 178,200 175,400 105,837 (69,563)
OTHER FINANCING SOURCES (USES)
Transfers in 133,380 133,380
Transfers (out)
Total Other Financing Sources (Uses) 133,380 133,380
NET CHANGE IN FUND BALANCE $178,200 $175,400 239,217 $63,817 Fund balances (deficits) at beginning of year - as previously stated 374,280 Prior Period Adjustment (Note 9) (110,820)
Fund balanceat beginning of year - as restated 263,460
FUND BALANCE AT END OF YEAR $502,677
42
CITY OF MONTE SERENO
MISCELLANEOUS PLAN – COST-SHARING MULTIPLE-EMPLOYER DEFINED PENSION PLAN
SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY/ (ASSET) AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS **
Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022Plan's Proportion of the Net Pension Liability (Asset) 0.01204% 0.01091% 0.01124% 0.00518% 0.00424% 0.01321% 0.01579% -0.04568% 0.00402%Plan's Proportionate Share of the Net Pension Liability (Asset) $749,395 $748,563 $972,944 $513,753 $408,507 $528,780 $666,025 ($867,343) $188,003Plan's Covered Payroll $713,447 $723,056 $673,336 $672,548 $774,294 $903,345 $841,740 $806,851 $953,625Plan's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of it's Covered Payroll 105.04% 103.53% 144.50% 76.39% 52.76% 58.54% 79.12% -107.50% 19.71%Plan’s Fiduciary Net Position as a Percentage of the Total Pension Liability 79.82% 78.40% 74.06% 73.31% 75.26% 75.26% 75.10% 88.29% 76.68%* Fiscal year 2015 was the 1st year of implementation.
Miscellaneous Plan
43
CITY OF MONTE SERENO
MISCELLANEOUS PLAN – COST-SHARING MULTIPLE-EMPLOYER DEFINED PENSION PLAN
SCHEDULE OF PENSION CONTRIBUTIONS
AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS **
Miscellaneous Plan
Fiscal Year 2015 2016 2017 2018 2019Actuarially determined contribution $111,286 $121,561 $667,968 $59,622 $79,188Contributions in relation to the actuarially determined contributions (111,286) (121,561) (667,968) (59,622) (79,188) Contribution deficiency (excess)Covered payroll $723,056 $673,336 $672,548 $774,294 $903,345Contributions as a percentage of covered payroll 15.39% 18.05% 99.32% 7.70% 8.77%Valuation date: 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Miscellaneous Plan
Fiscal Year 2020 2021 2022 2023Actuarially determined contribution $93,864 $125,384 $82,134 $78,418Contributions in relation to the actuarially determined contributions (93,864) (813,146) (82,134) (78,418)Contribution deficiency (excess) ($687,762)Covered payroll $841,740 $806,851 $953,625 $947,329Contributions as a percentage of covered payroll 11.15% 15.54% 8.61% 8.28%Valuation date: 6/30/2018 6/30/2019 6/30/2020 6/30/2021Notes to ScheduleMethods and assumptions used to determine contribution rates:Actuarial cost method Entry age normalAmortization method Level percentage of payroll, closedRemaining amortization period 30 yearsAsset valuation method 5-year smoothed marketInflation 2.30%Salary increases Varies by Entry Age and ServiceInvestment rate of return 6.90%, net of pension plan investment and administrative expenses, including inflation* Fiscal year 2015 was the 1st year of implementation, therefore only nine years are shown. 44
CITY OF MONTE SERENO
SCHEDULE OF CHANGES IN TOTAL OTHER POST-EMPLOYMENT BENEFITS
LIABILITY AND RELATED RATIOS
AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS **
Measurement Date 2017 2018 2019 2020 2021 2022Total OPEB Liability (TOL)Service Cost $97,527 $94,841 $105,142 $139,568 $112,123 $86,788Interest on the total OPEB Liability 25,244 30,267 33,454 29,175 18,555 27,368 Changes in benefit termsDifferences between expected and actual experience (467,951) 30,728 Changes of assumptions (33,667) 49,469 212,695 (102,474) (153,791) 31,328Benefit Payments (11,211) (7,732) (14,591) (28,152) (35,827) (39,159)Net change in total OPEB liability 77,893 166,845 336,700 (429,834) (58,940) 137,053Total OPEB liability - beginning 613,233 691,126 857,971 1,194,671 764,837 705,897Total OPEB liability - ending (a) $691,126 $857,971 $1,194,671 $764,837 $705,897 $842,950Covered payroll $774,294 $903,345 $841,740 $806,851 $957,255 $906,889TOL as a percentage of covered employee payroll 89.26% 94.98% 141.93% 94.79% 73.74% 92.95%Notes to Schedule:
* Fiscal year 2018 was the first year of implementation.Historical information is required only for measurement periods for which GASB 75 is applicable. Future year's information will be displayed up to 10 years as information becomes available. 45
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City of Monte Sereno
Note to Budgetary Information
For the Year Ended June 30, 2023
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the City Council and made available to the public for review. Any new appropriation or appropriation transfer between funds or department requires approval by the City Council. Several supplemental appropriations were necessary during the year and are reflected in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at the fund level. The Budgetary Comparison Schedules present both the original adopted and the final budget with all amendments. Budgets are adopted each year for all general and law enforcement funds.
The City had the following funds with expenditures in excess of appropriations for the year ended June 30, 2023:
Negative
Budgeted Amount Actual Variance with
Expenditure Final Amount Final Budget
Law Enforcement Fund 1,110,604 1,175,875 (65,271)
Gas Tax Fund 20,845 60,929 (40,084)
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Supplementary Information
June 30, 2023
City of Monte Sereno
CITY OF MONTE SERENO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2023
Total
Loma Serena Rose Andrews Storm Nonmajor
Street Lighting Street Lighting Drainage Governmental
Fund Fund Fund Funds
ASSETS
Cash and investments available for operations $12,251 $39 $90,524 $102,814 Accounts receivable 5 5
Total Assets $12,256 $39 $90,524 $102,819
LIABILITIES
Accounts payable and accrued liabilities
Total Liabilities
FUND BALANCES
Restricted $12,256 $39 $90,524 $102,819
Total Fund Balance 12,256 39 90,524 102,819
Total Liabilities and Fund Balances $12,256 $39 $90,524 $102,819 50
CITY OF MONTE SERENO
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2023
Total
Loma Serena Rose Andrews Storm Nonmajor
Street Lighting Street Lighting Drainage Governmental
Fund Fund Fund Funds
REVENUES
Property taxes $2,695 $2,695
Other revenue $10,036 10,036
Total Revenues 2,695 10,036 12,731
EXPENDITURES
Current:
Public Works & Engineering 1,608 $516 49,927 52,051
Capital outlay
Total Expenditures 1,608 516 49,927 52,051
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES 1,087 (516) (39,891) (39,320)
OTHER FINANCING SOURCES (USES)
Transfers in 1,383 649 9,758 11,790
Transfers (out)
Total Other Financing Sources (Uses) 1,383 649 9,758 11,790 NET CHANGE IN FUND BALANCES 2,470 133 (30,133) (27,530) Fund balances (deficits) at beginning of year - as previously stated 9,384 39 90,524 99,947 Prior Period Adjustment 402 (133) 30,133 30,402
Fund balance at beginning of year - as restated 9,786 (94) 120,657 130,349 FUND BALANCES AT END OF YEAR $12,256 $39 $90,524 $102,819 51
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INDEPENDENT AUDITOR’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Members of the City Council
City of Monte Sereno, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of the City of Monte Sereno, California, as of and for the year ended June 30, 2023, and have issued our report thereon dated May 20, 2024.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified certain deficiencies in internal control that we consider to be material weaknesses as listed on the Schedule of Material Weaknesses included as part of our separately issued Memorandum on Internal Control dated May 20, 2024, which is an integral part of our audit and should be read in conjunction with this report.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. 53
The results of our test disclosed no instance of noncompliance that are required to be reported under Government Auditing Standards.
We have also issued a separate Memorandum on Internal Control dated May 20, 2024 which is an integral part of our audit and should be read in conjunction with this report.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Pleasant Hill, California
May 20, 2024
54
STAFF REPORT
Meeting: City Council - Jun 04 2024
Agenda Heading: NEW BUSINESS
Staff Contact: Reynold Samoranos,
Department: Finance Manager
Title: Consider Resolution Setting Appropriation Limits for Fiscal Year 2024-25 Recommendation(s):
Staff recommends the City Council consider adopt a resolution setting the Appropriations Limit for Fiscal Year 2024-2025 based upon the Price Factor and Population data provided by the State of California Department of Finance.
Background Information:
Article XIII B of the California Constitution requires the City Council to annually set an “appropriations limit” by resolution. The appropriations limitation imposed by Propositions 4 and 111 creates a restriction on the amount of tax proceeds which can be appropriated in any fiscal year. This limit does not apply to the entire City budget. Certain expenditures of tax proceeds do not count toward this limit, including voter approved debt, regulatory and user fees, qualified capital outlays, and costs of complying with legal mandates. The limit is based on actual appropriations during the base year (FY 1986-87) and is increased each year using growth of population and inflation factors. Proposition 111, which was approved by the voters in June 1990, amended the factors used in the calculation of each year's limit. The factors to be used now are:
a. Price Factor - At the City's option, either the change in California per capita income or increase in non-residential assessed valuation due to new local nonresidential construction. b. Population Factor – At the City's option, either the annual change in City or County population.
Attached is the calculation for the FY 2024-2025 appropriations limit, which is $8,928,528. (Attachment 2). The proposed budget for Fiscal Year 2024-2025 is $7,239,106 and is below the appropriation limit set for the upcoming fiscal year.
Public Noticing:
The City Council’s agenda was posted at City Hall and the agenda, and this report appear on the City’s website.
Attachments:
Attachment 2 - Appropriations LimitCalculations.2024-2025 (Final Calculation) REVISED
ATTACHMENT 2
CITY OF MONTE SERENO
FY 2024-2025 APPROPRIATIONS LIMIT
Per Capita Change 1.0362
* Population Change 1.0051
Calculation Factor FY24-2025 = 1.0362 x 1.0051 1.0415
FY 23-24 Limit $8,572,759 x 1.0415 $8,928,528
Appropriations Subject to Limit $7,239,106
Appropriations under Limit $1,689,422
* On June 5, 1990, the California electorate passed Proposition 111 which modified the method of adjusting the annual appropriations limit. Beginning with the 1990-91 appropriations limit, the City may choose from the following indices when determining the adjustment factor:
The annual growth in the City’s population OR the annual growth in the County’s population as provided by the State Department of Finance.
AND
The annual growth in the California Per Capita Personal Income OR the growth in the nonresidential assessed valuation due to new construction within the City.
In computing the 2024-2025 appropriations limit, the population growth of the City of Monte Sereno and the California Per Capita Personal Income change were used.