“Our mission is to maintain the character of our “small town” community while striking an appropriate balance between economic development and preservation of our quality of life. We help create a dynamic and vital City by providing quality, cost-effective municipalservices and by forming partnerships with residents and organizations in the constant pursuit of excellence.”
Page Item STANDING AGENDA ITEMS
1. Call to Order and Flag Salute
2. Roll call
3. Special Presentation: Siskiyou Child Abuse Prevention Council Collaborative Proclamation
4. Public Comment:
This time is set aside for citizens to address the City Council on matters listed on the Consent Agenda as well as other items not included on the Regular Agenda. If your comments concern an agenda item noted on the regular agenda, please address the Council when that item is open for public comment.
Each speaker is allocated three (3) minutes to speak. Speakers may not cede their time. Comments should be limited to matters within the jurisdiction of the City. Council discussion or action cannot be taken on items not listed on the agenda other than to receive comments. If you have documents to present to members of Council, please provide a minimum of seven (7) copies to the Deputy City Clerk. Email Comments may be submitted to the City Clerk’s Office ([email protected]). Items received no later than 12:00 pm on the day of the meeting will be provided to the City Council prior to the meeting. These items will NOT be read into the record.
5. Council and Staff Comments
6. Committee Updates:
a) Downtown Enhancement Advisory Committee
b) Library Tax Advisory Committee
c) Beautification Committee
d) Active Transportation Committee
Mt. Shasta City Council Regular Meeting Agenda
Monday, March 25, 2024, 5:30 p.m.
This meeting will be presented in a hybrid format and can be attended in two ways:
In-Person at the Mt. Shasta City Park Upper Lodge, 1315 Nixon Rd. Mt. Shasta, CA OR
Online at the following link:
MountShasta.22Ave.tv
For the safety of our staff, the council, and public, we are no longer allowing members of the audience to carry large bags, backpacks, or other items outside of small personal items such as purses or satchels. Only service animals are allowed inside council chambers; nonservice pets are not allowed under any circumstances. Violators will be asked to remove the bag and/or animal, and refusal to do so will be cause for removal from the meeting.
Mt. Shasta City Council Regular Meeting March 25, 2024 1 Mt. Shasta Regular City Council Meeting Agenda
Monday, March 25, 2024
CITY COUNCIL BUSINESS
All Resolutions and Ordinances on this agenda, or added hereto, shall be introduced or adopted, as applicable, by title only, and the full reading thereof is hereby waived. a. Approval of Minutes: March 11, 2024 Regular and Special Meetings b. Approval of Disbursements: Accounts Payable: 3/8/2024; Total Gross Payroll and Taxes: For Period Ending 3/3/2024
c. Monthly Investment and Revenue Report
d. Committee Minutes: Downtown Enhancement Advisory Committee 1/31 and 2/28/2024
e. Resolution Accepting the State-Mandated Wastewater Treatment and Disposal Improvements
Background: Staff will present the proposed fiscal year 2024/2025 operating budget for Council review and discussion.
Report By: Muriel Terrell, Finance Director
Recommended Council Action: Review and discuss the proposed operating budget for fiscal year 2024-2025; direct staff.
Authority
Background: The City’s Independent Auditor, Charles Pillon, CPA, has completed the audit of the financial statements for the 2022-2023 fiscal year. There was an additional audit required for the Mount Shasta Public Financing Authority, which is presented for the Council’s approval. The audited financial statements have been distributed and the final report will now be issued.
Report By: Muriel Terrell, Finance Director
Recommended Council Action: Staff respectfully requests that City Council review and adopt Resolution CCR-24-XX, A Resolution of the City Council of the City of Mt. Shasta Accepting the Independent Audit Reports for Fiscal Year 2022-2023.
Mt. Shasta City Council Regular Meeting March 25, 2024 2 5-28
29-59
60-145
Mt. Shasta Regular City Council Meeting Agenda
Monday, March 25, 2024
CITY COUNCIL/STAFF REPORTING PERIOD
10. Reports on Outside Meetings
11. Future Agenda Items and Meetings (Appearing on the agenda within 60-90 days):
a. Discussion and Possible Action: Downtown Enhancement Advisory Committee Fiscal Review and Project Approval – 4/8/2024
b. Amendment to Parking Ordinance – 4/8/2024
c. Resolution Calling an Election and Requesting Consolidation – 5/2024 d. Expansion of Enhanced Infrastructure Financing District boundaries – TBD e. Discussion and Possible Action: City Manager Salary – TBD f. Approval of Funds to Complete a Survey of Washington Avenue – TBD g. Amendment of Parklet Ordinance – TBD
h. Discussion and Possible Action: Beautification Committee Fiscal Review and Project Approval – TBD
i. General Plan & Housing Annual Progress Report – TBD
j. Graffiti Ordinance – TBD
k. Discussion and Possible Action: Rental, Lease, or Purchase of Lot Located at the northwest corner of Alma and N. Mt. Shasta Blvd – TBD
Future Agenda Items Over 90 Days:
l. Discussion and Possible Action: Review of Chapter 13.95 Extraction and Exportation of Groundwater from the City of Mt. Shasta
m. Objective Design Standards Presentation/Discussion
12. Adjourn
I, Kathryn Joyce, declare under penalty of perjury that this agenda has been posted at least 72 hours in advance at the Mt.
Shasta City Hall, 305 N. Mt. Shasta Blvd, Mt. Shasta, CA, in the glass case and on the City website at www.mtshastaca.gov.
Agendas and packets shall be made available at least 72 hours in advance of regular meetings and 24 hours in advance of special meetings on the City’s web site. Any writings or documents pertaining to an open session item provided to a majority of the City Council less than 72 hours prior to the meeting shall be made available on the City’s web site www.mtshastaca.gov.
Availability of Public Records: All public records related to an open session item on this agenda, which are not exempt from disclosure pursuant to the California Public Records Act, that are distributed to a majority of the legislative body will be available for public inspection at City Hall located at 305 North Mt. Shasta Blvd.
The City of Mt. Shasta does not discriminate on the basis of race, color, national origin, sex, religion, age or disability in employment or provision of services. In compliance with the Americans with Disabilities Act, if you need special assistance, a disability-related modification or accommodation, agenda materials in an alternative format, or auxiliary aids to participate in this meeting, please contact the Office of the City Clerk at 530-326-7516 or [email protected] as soon as possible.
Providing at least 72 hours’ notice will help ensure that reasonable arrangements can be made.
Mt. Shasta City Council Regular Meeting March 25, 2024 3 April 2024: The Siskiyou Child Abuse Prevention Council Collaborative Proclamation
____________________
____________________________
John Stackfleth
Mayor, City of Mt. Shasta Date
Whereas, to become healthy adults, all children deserve to live in safe, stable and nurturing homes and communities;
Whereas, children are vital to Siskiyou County’s prosperity and future success; Whereas, the people of Siskiyou County believe in the celebration of life, inclusion, and hope through our children, and deplore and condemn acts of violence committed upon the children of our communities; Whereas, the lives of children--who have been hurt or lost to child abuse--are honored by studying their stories in order to prevent future abuse and protect the innocence, health and lives of all our county’s children; Whereas, child abuse, rape, sexual assault and sexual harassment impact our society; Whereas, child abuse, neglect and sexual assault prevention is a community responsibility affecting both the current and future generations;
Whereas, research has shown the enormous impact that positive parenting practices have on a child’s social, emotional, and intellectual development and future success:
Whereas, communities that understand the importance of prevention and support for the well-being of citizens, thrive and prosper;
Whereas, effective child abuse and sexual assault prevention succeed because of partnerships among citizens and all sectors of the county;
Whereas, April is the month to focus public attention on the needs of all children, and prevention of sexual assault;
Whereas, with leadership, dedication, and encouragement, there is evidence that we can be successful in preventing child abuse and sexual violence in Siskiyou County; Therefore, we hereby proclaim April as Child Abuse Prevention and Sexual Assault Awareness Month–as well as April 6th–12th, 2024 as Week of the Young Child. We call upon all citizens, community agencies, faith groups, medical facilities, elected leaders and businesses to increase their participation in efforts to support families, thereby preventing child abuse and strengthening families in the communities in which we live.
Mt. Shasta City Council Regular Meeting March 25, 2024 4 Mt. Shasta City Council Special Meeting DRAFT Minutes
March 11, 2024, 5:00 p.m.
City Park Upper Lodge 1315 Nixon Road, Mt. Shasta
Meeting allowed for virtual attendance via ZOOM
Our mission is to maintain the character of our “small town” community while striking an appropriate balance between economic development and preservation of our quality of life. We help create a dynamic and vital City by providing quality, cost-effective municipal services and by forming partnerships with residents and organizations in the constant pursuit of excellence.”
STANDING AGENDA ITEMS
1. Call to Order and Roll Call: At the hour of 5:00 p.m. Mayor John Stackfleth called the meeting to order.
Council Members Present: Stackfleth, Collings, Clure. Stearns arrived at 5:07 p.m.
Council Members Absent: Redmond
2. Interview of Applicant and Possible Appointment of Planning Commissioner a. Patty McCarthy
Interview of applicant.
COUNCIL ACTION: Appoint Patty McCarthy to the Planning Commission.
MOTION: Clure
SECOND: Collings
AYES: Stackfleth, Collings, Clure
NAYS: None
ABSENT: Redmond, Stearns
ABSTAIN: None
3. Adjourn: There being no further business, the meeting was adjourned at 5:08 p.m.
Respectfully Submitted by: Kathryn M. Joyce, CMC Administrative Assistant/Deputy City Clerk Mt. Shasta City Council Regular Meeting March 25, 2024 5 Mt. Shasta City Council Regular Meeting DRAFT Minutes
Monday, March 11, 2024; 5:30 p.m.
City Park Upper Lodge 1315 Nixon Road, Mt. Shasta
Meeting allowed for virtual attendance via ZOOM
“Our mission is to maintain the character of our “small town” community while striking an appropriate balance between economic development and preservation of our quality of life. We help create a dynamic and vital City by providing quality, cost-effective municipal services and by forming partnerships with residents and organizations in the constant pursuit of excellence.”
STANDING AGENDA ITEMS
1. Call to Order and Flag Salute: At the hour of 5:30 p.m. Mayor Stackfleth called the meeting to order and led the audience in the flag salute.
2. Roll Call:
Council Members Present: Stackfleth, Collings, Redmond, Stearns, Clure Council Members Absent: None
3. Special Presentation: None
4. Public Comment:
John Fryer – Comments in support of the museum, letter of support.
Thomas Wisby – Comments regarding nuisance property, short-term rentals, tax, tourism and hospitality.
5. Council and Staff Comments:
Todd Juhasz, City Manager – Comments regarding development of The Landing, grant possibilities for future development. Update on the old hospital property cleanup.
Clarifying questions from Council.
Tessa Clure, Councilmember – Comments regarding Audit Committee meeting.
6. Committee Updates:
a) Downtown Enhancement Advisory Committee
b) Library Tax Advisory Committee
c) Beautification Committee
d) Active Transportation Committee
Todd Juhasz, City Manager – Update on DEAC power box art, next meeting date.
Clarifying questions from Council.
CITY COUNCIL BUSINESS
Mt. Shasta City Council Regular Meeting March 25, 2024 6 City of Mt. Shasta Regular City Council Meeting Minutes Monday, March 11, 2024
7. Consent Agenda:
COUNCIL ACTION: Approved the following Consent Agenda items. All Resolutions and Ordinances on this agenda, or added hereto, shall be introduced or adopted, as applicable, by title only, and the full reading thereof is hereby waived.
a. Approval of Minutes: February 26, 2024 Regular and Special Meetings b. Approval of Disbursements: Accounts Payable: 2/21, 2/27, and 3/4/2024; Total Gross Payroll and Taxes: For Period Ending 2/18/2024
c. Police Department Report February 2024
d. Letter of Support for the Mt. Shasta Museum Lease
COUNCIL ACTION: Approve items a-d
MOTION TO APPROVE: Clure
SECOND: Redmond
AYES: Stackfleth, Collings, Redmond, Stearns, Clure
NOES: None
ABSENT: None
ABSTAIN: None
8. Resolution for Revised Snow Removal Fee in Downtown Area Todd Juhasz, City Manager – Introduction of the item, review of cost of snow removal, options.
Ken Kellogg, Public Works Director – Review of staff report and exhibits, breakdown of cost based on square footage.
Clarifying questions from Council and discussion.
Johanna Altorfer – Comments regarding business versus owner fees, calculations.
Thomas Wisby – Comments regarding fees for businesses.
Council and staff discussion.
COUNCIL ACTION: Table the discussion
MOTION: Redmond
SECOND: Collings
AYES: Stackfleth, Redmond, Collings, Clure, Stearns
NOES: None
ABSENT: None
ABSTAIN: None
COUNCIL ACTION: Form a subcommittee of two City Council Members to work with staff and businesses to dig deeper and see if more of the unanswered questions might be answered.
MOTION: Stearns
SECOND: Clure
AYES: Stackfleth, Collings, Clure, Stearns
NOES: Redmond
ABSENT: None
ABSTAIN: None
Councilmember Collings and Mayor Stackfleth were appointed to the snow removal ad hoc committee.
Mt. Shasta City Council Regular Meeting March 25, 2024 7 City of Mt. Shasta Regular City Council Meeting Minutes Monday, March 11, 2024
9. Approval of funds for grant writing services for the latest round of Federal Rebuilding American Infrastructure with Sustainability and Equity (RAISE) grant funds Todd Juhasz, City Manager – Review of federal grant, previous application and re-submission.
Clarifying questions from Council.
No public comment.
COUNCIL ACTION: Approve funds for grant writing services for the latest round of federal RAISE funds in the amount of $6,330.
MOTION: Clure
SECOND: Redmond
AYES: Stackfleth, Redmond, Collings, Clure, Stearns
NOES: None
ABSENT: None
ABSTAIN: None
10. Reports on Outside Meetings:
John Stackfleth, Mayor – Review of Audit Committee meeting, Colliers Interpretive and Information Center meeting.
11. Future Agenda Items (Appearing on the agenda within 60-90 days):
COUNCIL ACTION: Reviewed items a through n.
a. Noll & Tam Contract – 3/25/2024
b. Fiscal year 24/25 budget projection – TBD
c. Expansion of Enhanced Infrastructure Financing District boundaries – TBD d. Discussion and Possible Action: City Manager Salary – TBD e. Approval of Funds to Complete a Survey of Washington Avenue – TBD f. Amendment of Parklet Ordinance – TBD
g. Discussion and Possible Action: Downtown Enhancement Advisory Committee Fiscal Review and Project Approval - TBD
h. Discussion and Possible Action: Beautification Committee Fiscal Review and Project Approval – TBD i. General Plan & Housing Annual Progress Report – TBD
j. Graffiti Ordinance – TBD
k. Discussion and Possible Action: Rental, Lease, or Purchase of Lot Located at the northwest corner of Alma and N. Mt. Shasta Blvd – TBD
l. Graffiti Ordinance – TBD
Future Agenda Items Over 90 Days:
m. Discussion and Possible Action: Review of Chapter 13.95 Extraction and Exportation of Groundwater from the City of Mt. Shasta
n. Objective Design Standards Presentation/Discussion
12. Adjourn: There being no further business, the meeting was adjourned at 6:54 p.m.
Respectfully Submitted By: Kathryn M. Joyce, Administrative Assistant/Deputy City Clerk Mt. Shasta City Council Regular Meeting March 25, 2024 8 City Council Agenda Item #7b
Staff Report
Meeting Date: March 25, 2024
To: Mayor and City Council
From: Muriel Howarth Terrell, Finance Director
Subject: Approval of Warrants and Payroll
Recommendation:
Staff requests the Mayor and City Council Approve warrants paid including payroll benefits and withholding, and payroll distribution, in the amount of $465,465,27.
Background & Summary:
Approval of Check Numbers 52056-520595 $ 309,941.80
Total Payroll Distribution $ 90,064.48
Total EFTPS – CalPERS, Nationwide $ 24,532.77
Total Payroll EFTPS Taxes $ 40,926.22
$ 465,465.27
Financial Impact:
Expenditures are consistent with the Budget that the City Council has adopted.
Attachments:
1.) Check Registers – 3/08/24
2.) ACH Payroll Distribution – 3/07/24
3.) EFTPS Reports – 3/07/24
Regular
x Consent
Closed
Presentation
Mt. Shasta City Council Regular Meeting March 25, 2024 9 Mt. Shasta City Council Regular Meeting March 25, 2024 10 Mt. Shasta City Council Regular Meeting March 25, 2024 11 Mt. Shasta City Council Regular Meeting March 25, 2024 12 Mt. Shasta City Council Regular Meeting March 25, 2024 13 Mt. Shasta City Council Regular Meeting March 25, 2024 14 Mt. Shasta City Council Regular Meeting March 25, 2024 15 City Council Agenda Item # 7d
Staff Report
Meeting Date: March 25, 2024
To: Mayor and City Council
From: Muriel Howarth Terrell, Director of Finance
Subject: Revenue Status Update, Monthly Investment and Financial Report for the Period Ending February 29, 2024
Recommendation:
Staff respectfully requests the City Council review the provided information regarding the City’s revenue and investments.
Background & Summary:
Revenues:
Revenue for this report has been updated to recognize the collections for July 2023 through February 2024.
Property Tax Revenue:
The City has received $427,993 in property tax for the current fiscal year. This represents the December payment and a small amount of delinquent payments. The amount is $29,000 more than the prior year.
Sales Tax Revenue:
The City has received $870,663 through February 29, 2024 in sales tax for fiscal year 2023-2024 for July- December, 2023. This is $33,869 less than the prior year a decrease of 3.7%.
Transient Occupancy Tax:
The city has received $729,116 in TOT for through February 2024 of fiscal year 2023-2024. The prior year amount was $728,428. The amount collected is just slightly over the previous year.
Regular
X Consent
Closed
Presentation
Mt. Shasta City Council Regular Meeting March 25, 2024 16 2 As of February 29, 2024, the combined funds the City of Mt. Shasta had invested in the Local Agency Investment Fund (L.A.I.F.) totaled $254,168. The February 2024 LAIF statement is attached, along with the performance data for the month of January. Most surplus funds over which the City has control are currently invested in ProEquities. The balance of the City’s cash funds are held in the pooled checking account with Tri Counties Bank and LAIF.
Current investment rates are:
L.A.I.F. February 29, 2024 4.122%
Treasury Note – 3 month January 31, 2024 5.37%
Treasury Note – 2 Yr. January 31, 2024 4.21%
Treasury Note – 5 Yr. January 31, 2024 3.84%
Treasury Note – 10 Yr. January 31, 2024 3.91%
Treasury Note – 30 Yr. January 31, 2024 4.17%
Bloomberg as reported by Chandler Asset Management
The LAIF average increased slightly from last month, with the short term notes experiencing decreases and the long term 10 and 30 year notes experiencing slight increases. We continue to anticipate the LAIF rate slowly increasing staying just above 4%. Short term CD rates are now better than the LAIF rate and longer-term notes may offer better yields it does not give us the liquidity we need. The LAIF rate remains the best available rate that meets the City’s requirement for liquidity and safety.
Financial Impact:
The investments are in compliance with the City’s investment policy and provides for meeting the City’s cash flow needs for the next month and 6 month periods.
Compliance with 2014-17 City Council Strategic Plan:
The City Council’s leadership efforts to ensure adherence to the best possible financial practices and overall transparency falls under Strategic Focus IV – Grow Mt. Shasta Pride and Quality and the Municipal Responsibilities of Progressive Leadership and Financial Health and Economic Opportunity.
Attachments:
• LAIF Monthly Statement
• LAIF Performance Report
• LAIF Monthly Balances
• February 2024 Chandler Asset Management
Mt. Shasta City Council Regular Meeting March 25, 2024 17 Mt. Shasta City Council Regular Meeting March 25, 2024 18 Mt. Shasta City Council Regular Meeting March 25, 2024 19 Mt. Shasta City Council Regular Meeting March 25, 2024 20 Mt. Shasta City Council Regular Meeting March 25, 2024 21 Mt. Shasta City Council Regular Meeting March 25, 2024 22 “Our mission is to maintain the character of our ‘small town’ community while striking an appropriate balance between economic development and preservation of our quality of life. We help create a dynamic and vital City by providing quality, cost-effective municipal services and by forming partnerships with residents and organizations in the constant pursuit of excellence.” Mount Shasta Downtown Enhancement Advisory Commitee Regular Mee�ng September 27, 2023 Page 1 of 2 MEETING MINUTES - Mount Shasta City Council - Friday, January 31, 2024, 8:45am
STANDING AGENDA ITEMS
1. Call to order: Commitee Member Ashley Hagge called the mee�ng to order at 8.45am
2. Roll call:
Present: Ashley Hagge, Jake Pritchard, Erika Bruser, Dani Williams (remotely.)
3. Public Comment: Observa�on, Eric & Shashell from Power Organics
4. Staff & Members Comment: None
5. Consent Agenda: Approval of Minutes: Dani/Ashley
6. Minutes: Jake/Ashley
7. Biketober Event:
Scheduling, permits, need to start now. Winter Magic the Chamber of Commerce may not be proceeding with running it next year, so DEAC may need to spearhead it. Bike groups did have a fun day event at the start the idea growing. Small scale debut. Chamber could help get the word out, but need to get the course defined and cleared. There is one sec�on that makes it difficult to finish the course at Shas�ce Park. We could include the Boys and Girls club.
Keep regular mee�ng to focus on this event Feb 28th.
8. Flower of Life: Gary Mt Shasta Crane can’t contribute to help. Jake reaching out to others to see if he can find someone who is qualified to do. Erika to tell Ashley update.
9. Power Box Art:
Submissions to review (Jake on computer) Vo�ng proceeded. Jake to contact the ar�sts with the contract. Also contact the high school for submissions. Placement of which boxes will be defined next mee�ng. Big box to be the children art collage. Social media for winning ar�sts.
Mt. Shasta City Council Regular Meeting March 25, 2024 23 Mount Shasta Downtown Enhancement Advisory Commitee Regular Mee�ng September 27, 2023 Page 2 of 2
10. Façade Improvements: Dani to do leter to be sent. Signage not included because it’s approval through planning.
11. Parkers Plaza: There are too many living in cars in the plaza. And incidents of interac�ons with homeless that are involving valdalism. Can ask to put sign up that states 24 hours only parking, not 72 hours as current. Unless snow removal condi�ons exist. Ashley to send email to Robert Gibson police chief, copy Todd. Cri�cal infrastructure ordinance.
12. All other ar�cles on hold
Adjorn: Mee�ng adjorned at 9:50am. Next mee�ng Feb 28, 8.30am at City Hall.
Mt. Shasta City Council Regular Meeting March 25, 2024 24 “Our mission is to maintain the character of our ‘small town’ community while striking an appropriate balance between economic development and preservation of our quality of life. We help create a dynamic and vital City by providing quality, cost-effective municipal services and by forming partnerships with residents and organizations in the constant pursuit of excellence.” Mount Shasta Downtown Enhancement Advisory Commitee Regular Mee�ng September 27, 2023 Page 1 of 2 MEETING MINUTES - Mount Shasta City Council - Friday, Feb 28, 2024, 8:45am
STANDING AGENDA ITEMS
1. Call to order: Commitee Member Ashley Hagge called the mee�ng to order at 8.38am
2. Roll call:
Present: Ashley Hagge, Jake Pritchard, Erika Bruser, Dani Williams.
3. Public Comment: None
4. Staff & Members Comment: None
5. Consent Agenda: Approval of Minutes: Dani/Ashley
6. Power Box Art:
Artworks have been voted and selected, an proceeding with ge�ng ar�sts agreements out for disclaimers for winning ar�sts, and then announce on social media the winners. Erika to send scanned artwork to Ashley. DAC to choose placement once agreements returned.
7. Façade Improvements: Dani received a list of business/building owners. Once Kathy has printed the leters and provided envelopes Dani will coordinate mail out. Todd to print leters.
8. Art in Public Places: Flower of Life, Reaching out to Redding/Medford crane companies to get quotes.
Other Art in public places, looking at murals and how to incorporate, thinking that it will be a separate project.
9. Biketober Event:
Considering commitees we will ask to be incorporated into the project. Boys and girls club (u�lize the Art Van); Siskiyou County Art Council (art cart or similar booth?); Concert in the Park (stage, band contacts, etc); Bike Shasta (trail, race event, permits, full running & receive entry proceeds, trike race for kids? fun side events); Vendors for parking area, work out cost of vendor booths to cover space rental; T-shirt (Dani check with Bike Shasta to go halves) or mug (metal); wrist bands for beer garden (under/over 21); Ashley email Shannon to review previous applica�on for permits; Update map at next mee�ng. Ashley email Kaila regarding vendors list.
Thrive (for non-alcoholic kombucha). Main Costs: Insurance, permits, license, band, toilets, beer, marke�ng (token. Banners, etc). Biketoberfest banner across Mt Shasta Blvd a month before. Set up mee�ng with Shannon/ Mike Kellog, to review the site and make sure we have everything covered. Race �mes usually 9-3, have band Mt. Shasta City Council Regular Meeting March 25, 2024 25 Mount Shasta Downtown Enhancement Advisory Commitee Regular Mee�ng September 27, 2023 Page 2 of 2 start 1-2, then 3-5, then a headliner 5-7. Have three bands. Finish around 7pm. Music playing all day. Sea�ng (Jonathan/Solanos). Possible sponsorship to cover band. Mulled wine op�on for none beer drinkers. Pepsi for sodas. Lederhosien for bar workers. Date TBA. Tenta�ve 5th October.
10. Parkers Plaza: On hold.
11. Future Agenda Items: Alleyway spaces. Mural Projects.
Adjorn: Mee�ng adjorned at 10.14am. Next mee�ng Mar 13th, 8.30am at City Hall. Mee�ng a�er that 17th April, Dani remote.
Mt. Shasta City Council Regular Meeting March 25, 2024 26 RESOLUTION CCR-24-XX
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MT. SHASTA
ACCEPTING THE STATE-MANDATED WASTEWATER TREATMENT
AND DISPOSAL IMPROVEMENTS
WHEREAS, the City of Mt. Shasta has strived to improve the quality of life for its residents through various infrastructure projects; and
WHEREAS, the State-Mandated Wastewater Treatment and Disposal Project was undertaken with the aim of improving treated wastewater quality; and WHEREAS, the City Council has thoroughly reviewed the plans, costs, and potential impacts associated with the construction of the State-Mandated Wastewater Treatment and Disposal Improvements; and
WHEREAS, after careful consideration, the City Council finds that State-Mandated Wastewater Treatment and Disposal Improvements aligns with the City's long-term goals and objectives, enhances public welfare, and fosters economic growth and community development.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Mt. Shasta:
Section 1: The City Council hereby accepts the completed the State-Mandated Wastewater Treatment and Disposal Improvements as presented and acknowledges its successful execution and fulfillment of its intended purpose.
Section 2: The City Council extends its gratitude to all parties involved in the planning, development, and execution of the State-Mandated Wastewater Treatment and Disposal Improvements including but not limited to, consultants, city staff, and community members.
Section 3: The City Council directs the City Manager to ensure proper documentation of the completion of the State-Mandated Wastewater Treatment and Disposal Improvements and to take any necessary administrative actions to finalize the project including, but not limited to, filing a Notice of Completion, Notice of Acceptance of the Work.
Section 4: The City Council affirms its commitment to maintaining and preserving the StateMandated Wastewater Treatment and Disposal Improvements to ensure its continued benefit to the community for years to come.
Section 5: This resolution shall take effect immediately upon its passage and approval.
Passed and adopted this 25th day of March, 2024 by the following vote:
AYES:
NOES:
ABSENT:
Mt. Shasta City Council Regular Meeting March 25, 2024 27 ABSTAIN:
DATED: March 25, 2024
ATTEST: CITY OF MT. SHASTA
______________________________ ______________________________ Kathryn M. Joyce, Deputy City Clerk John Stackfleth, Mayor Mt. Shasta City Council Regular Meeting March 25, 2024 28 DATE: March 25, 2024
TO: Mayor Stackfleth and City Council
FROM: Finance Director Terrell
SUBJECT: 2024-2025 Proposed Operating Budget All Funds
RECOMMENDATION:
We respectfully request your review and discuss the Proposed Operating Budget All Fund for fiscal year 2024-2025.
BACKGROUND:
General Fund:
Our City relies heavily on Sales Tax and Transient Occupancy Taxes (TOT) they represent about fifty percent (50%) of our general fund revenues.
Pre-COVID actual 2018-2019 TOT $821,454 Sales Tax $1,260,633 Actual 2019-2020 TOT $727,545 Sales Tax $1,287,491
Actual 2020-2021 TOT $1,037,318 Sales Tax $1,523,959
Actual 2021-2022 TOT $1,186,841 Sales Tax $1,665,866
Actual 2022-2023 TOT $1,254,916 Sales Tax $1,693,783
Budgeted 2023-2024 TOT $1,224,000 Sales Tax $1,724,000
Budgeted 2024-2025 TOT $1,468,000 Sales Tax $1,760,000
For fiscal year 2023-2024 General Fund revenues are estimated at $6.014 million, which is approximately $200,000 higher than the 2022-2023 actuals. The new 2024-2025 budget includes projected increases in the TOT due to the approved increase to the TOT rate.
In determining expenditures for the General Fund, we start with employee and benefit costs as a starting point. The authorized positions worksheet is as required part of developing the budget and incudes the increases already approved by Council. Union negotiations will begin in April of 2024 and was not a part of this budget. There are pending grants that may increase fire positions and this too is not a part of this budget. Each department head then developed all other costs within their departments using historical data. The majority of the deficits for the current fiscal year and the proposed budget is due to the increases in salaries.
The transfer from Gas Tax for Snow Removal is anticipated to be about $40,000, which is much less than the previous year due to the snow season we had this year. We expect the administrative cost allocation to be in the $350,000 range. In total General Fund expenditures are projected at $6.77 million.
Mt. Shasta City Council Regular Meeting March 25, 2024 29 This budget includes the $75,000 transfer out of the General Fund to be set aside for the Equipment Replacement Fund.
The General Fund is projected to have a carryover of around $1.56 million. This creates a reserve of about 25.16% going into the 2024-2025 fiscal year. The amount going into the 2025-2026 fiscal year after the projected loss in 2024-2025 of $310,757 $ will be $1.24 million and creates a reserve percentage of 18.91%.
Enterprise Funds:
In the Drainage Fund we continue with the determination of potential new rates with the proposition 218 process currently underway. Shortfalls for the contract labor for this analysis will be made up through the new rates if the process is unsuccessful the shortfall will need to be provided by the general fund, economic enhancement fund or through grants.
In the Solid Waste Fund, we are continuing negotiations between the City and Waste Management to determine which entity will be billing for the continued service provided by Waste Management. We anticipate this coming to Council before the end of the calendar year.
In the Water and Wastewater funds budgets reflect the rate increases as specified in the rate studies. In the Wastewater fund an additional employee was budgeted as a part of the study and has been reflected in this budget as well as the previous budget. There are no projects expected in fiscal year 2024-2025.
Special Revenue Funds
In the Gas Tax and Transportation Funds we had anticipate approximately $500,000 to $750,000 in construction to occur this summer into fall of 2024, however Siskiyou County road crews are not available for the fiscal year 2024-2025 schedule. The projects for road construction and maintenance will be pushed out until the 2025-2026 fiscal year. These funds will continue to accumulate and will increase the amount of construction that be expected in 2025-2026.
In the CDBG for Food and Subsistence programs have been completed with the only current funding to be for Senior Snow Removal.
For the Brownfield removal of the stockpiled soil at the old Roseburg has been and the site is currently doing surveys to determine deed restrictions on portions of the property.
In the rest of the special revenue funds they are consistent from year to year and are reflected as such.
Mt. Shasta City Council Regular Meeting March 25, 2024 30 Mt. Shasta City Council Regular Meeting March 25, 2024 31 Mt. Shasta City Council Regular Meeting March 25, 2024 32 Mt. Shasta City Council Regular Meeting March 25, 2024 33 Mt. Shasta City Council Regular Meeting March 25, 2024 34 Mt. Shasta City Council Regular Meeting March 25, 2024 35 Mt. Shasta City Council Regular Meeting March 25, 2024 36 Mt. Shasta City Council Regular Meeting March 25, 2024 37 Mt. Shasta City Council Regular Meeting March 25, 2024 38 Mt. Shasta City Council Regular Meeting March 25, 2024 39 Mt. Shasta City Council Regular Meeting March 25, 2024 40 Mt. Shasta City Council Regular Meeting March 25, 2024 41 Mt. Shasta City Council Regular Meeting March 25, 2024 42 Mt. Shasta City Council Regular Meeting March 25, 2024 43 Mt. Shasta City Council Regular Meeting March 25, 2024 44 Mt. Shasta City Council Regular Meeting March 25, 2024 45 Mt. Shasta City Council Regular Meeting March 25, 2024 46 Mt. Shasta City Council Regular Meeting March 25, 2024 47 Mt. Shasta City Council Regular Meeting March 25, 2024 48 Mt. Shasta City Council Regular Meeting March 25, 2024 49 Mt. Shasta City Council Regular Meeting March 25, 2024 50 Mt. Shasta City Council Regular Meeting March 25, 2024 51 Mt. Shasta City Council Regular Meeting March 25, 2024 52 Mt. Shasta City Council Regular Meeting March 25, 2024 53 Mt. Shasta City Council Regular Meeting March 25, 2024 54 Mt. Shasta City Council Regular Meeting March 25, 2024 55 Mt. Shasta City Council Regular Meeting March 25, 2024 56 Mt. Shasta City Council Regular Meeting March 25, 2024 57 Mt. Shasta City Council Regular Meeting March 25, 2024 58 Mt. Shasta City Council Regular Meeting March 25, 2024 59 City Council Agenda Item #9
Staff Report
Meeting Date: March 25, 2024
To: Mayor and City Council
From: Muriel Howarth Terrel, Finance Director
Subject: 2022-2023 Audited Financial Statements City of Mt. Shasta and Mount Shasta Public Financing Authority
Recommendation:
Staff respectfully requests that City Council review and adopt Resolution CCR-24-XX, A Resolution of the City Council of the City of Mt. Shasta Accepting the Independent Audit Reports for Fiscal Year 2022-2023.
Background & Summary:
The City’s Independent Auditor, Charles Pillon, CPA, has completed the audit of the financial statements for the 2022-2023 fiscal year. There was an additional audit required for the Mount Shasta Public Financing Authority, which is presented for the Councils approval. The audited financial statements have been distributed and the final report will now be issued.
Derived from the same underlying basic financial statements information as the City’s Budget Reports which are reported on separately, the Audited Financial Statements differ significantly in the presentation of that information. The City’s Budget Reports are presented primarily on a cash basis to show the operating capabilities of each of the operational funds of the City during a single period. The Audited Financial Statements, based on “generally accepted accounting principles”(GAAP), promulgated by the Governmental Accounting Standards Board (GASB), focus more on presenting an overall picture of the financial position of the City. In addition to the financial information, the Audited Financial Statements includes two auditor’s reports, detailed notes to the financial statements, and the Auditor’s Schedule of Findings.
The initial report in the Audited Financial Statements is a Statement of Net Position for Governmental Activities and Business-Type Activities on page 5. This statement for Governmental Activities combines all of the City’s Funds except for the Enterprise Funds and Trust and Agency Funds under Governmental Activities and the City’s eight Enterprise Funds under Business-Type Activities.
The Governmental Activities portion of this statement includes all of the capital assets, accumulated depreciation, and long-term debt of the City’s General Fund and Special Revenue X Regular
Consent
Closed
Presentation
Mt. Shasta City Council Regular Meeting March 25, 2024 60 2 Funds to represent what purportedly is the City’s financial net worth, just as if they were any other private business entity. The Enterprise Funds are reported in the same manner. This year, the City reports Governmental assets, net of accumulated deprecation of $14.91 million dollars.
Net position is $5.46 million the difference being pension liabilities and long-term debt. Along with the Enterprise Funds, the City has reported net assets of just over $76.83 million.
The Business-Type Activities portion of the Statement of Net Assets has always been reported on a net assets basis although the terminology has been changed from reporting “retained earnings” to “net position”. Total Assets for the Enterprise Funds net of depreciation are just over $61.92 million. Total Net Position is $42.88 million which is higher than last year.
The second report is a Statement of Activities, again combining funds in the same manner, on page 6. This statement reformats the revenues and expenditures of the City as presented in the City’s internal Budget Reports adding depreciation and subtracting principle payments of debt and capital outlay. This statement shows expenditures and related program revenues by type of activity rather than by fund. The statement then adds the amounts of general revenues including taxes and investment earnings that are not committed to a particular activity. The result is the change in net assets for the 2022-2023 fiscal year. The City expended $8.90 million on governmental activities, and collected $451,500 in charges for services and $3,238,323 in grants and contributions. The City collected $5.03 million in taxes, investment earnings and extraordinary earnings. Net position went up down $184,226.
After these statements, the Financial Statements then present most of the familiar old form Balance Sheets and Changes in Fund Balance in substantially the same manner that government entities have always reported, with the exception of the addition of reconciliations back to the two prior statements. These statements correspond most directly to the Budget Reports that Council receives.
As always, we suggest that the most interesting and informative part of the financial statements are the accompanying notes to the financial statements on pages 13 through 38. Note 1 gives a detailed summary of the financial organization of the City and how municipal fund accounting is carried out, along with an explanation of any new Accounting Standards format and Funds groupings. Notes 3 through 9 basically follow the balance sheet categories. Note 2 discloses the impact of recently issued accounting standards. Notes 3 outlines cash and investments and 4 outlines receivables. Note 5 outlines operating transfers in and out. Note 6 recaps all of the capital asset reporting. Note 7 outlines the long-term debt. Note 8 explains the position of the pension obligation. Note 9 details fund balance following GASB 54 which redefined how fund balances of the governmental funds are presented in the financial statements. The remaining notes, 10, 11, 12, 13, 14, 15, 16, 17 and 18 details risk management, contingent liabilities, prior period adjustments, subsequent evernts, deferred conpensation plan, agreements, loan recievable, and stewardship, compliance and accountability that are required to be disclosed for the financials statements to be in compliance with GAAP. These statements do not necessarily include all financial data but are important for the reader of the financial statements to evaluate the City’s fiscal position.
Mt. Shasta City Council Regular Meeting March 25, 2024 61 3 The next section is the Required Supplementary Information that includes the Cost-sharing Multiple-employer Defined Benefit Pension Plan information.
The next section is the Supplementary Information that includes all of the non-major Government funds This information is combined and reported in the financials at the beginning of the audited financials in Other Governmental Funds. Included in this Supplementary Information are Budget Comparison Schedules, which are similar to our Final Budget Report, and Combining Statements which details the underlying non-major Fund information that makes up the Governmental Activities.
The last section is the Single Audit Schedules and Reports that are required when a government expends more than $750,000 of federal awards. Included in this last section are required reports, a schedule of expenditures of federal awards, notes to the schedule and a schedule of findings and questioned costs.
The primary purpose of an independent audit is to assure the users of the financial statements that they can rely on those statements to accurately present the financial status of the City. The audit is not a guarantee that the statements are absolutely perfect, nor that there have been no defalcations or misappropriation of City resources. The Auditor’s Report states that after studying and analyzing the City’s financial records, using their expertise, accepted standards, and due diligence, they have reached the conclusion that the financial statement “present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Mt. Shasta…”
One additional item, the Management Discussion and Analysis (MD&A), that GASB 34 suggested for inclusion as a part of the Financial Statements is not included in the statements. If the report is included it requires management to prepare in layman’s terms an analysis of the Financial Statements. Since the Council is already provided with the periodic budget reports along with the initial, amended, and final budget reviews, they have already received most of what would be included in the MD&A.
The Mount Shasta Public Financing Authority was created on May 13, 2019 as a result of a Joint Exercise of Powers Agreementbetween the City of Mt. Shasta and the Mount Shasta Industrial Development Authority. The purpose of the Authority is to finance public capital inmprovments for the benefit of the City, which included the refinance of the City’s Series 2008 Revenue Bond debt. The Authority is a component unit of the City and as such is included in the City of Mt.
Shasta Financials and is reported separately with its own financial statements and single audit.
The Authority undertook the sale and issuance of bonds. Bond proceeds are used to design, construct and acquire public capital improvemtns and lease, lease-back, sell or resell such improvements to the City. The projects included in this years reports are the New Corporate Yard Garage, Solar and Energy Efficient Improvements and Refinance of Debt and the Downtown Collection Sewer System Improvements. The notes to the financial statements detail this debt.
Mt. Shasta City Council Regular Meeting March 25, 2024 62 4 The opinion on the City of Mt. Shasta’s and the Mount Shasta Public Financing Authority’sFinancial Statements were considered qualified, or in laymen’s terms, a clean report.
However, material weaknesses were identified related to the Independent Auditor’s Report in 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.
This finding was caused by not identifying and correcting misstatements before the start of the audit. The schedule of expenditures of federal awards were prepared without including the grant portion of a major federal award and some subrecipient pass through balances were incorrect. A corrective action plan was implemented to ensure the recording of all adjustments are posted prior to the start of the audit.
Government code and practice requires that the City Council formally accept the independent auditor’s report. By the very nature of the independence of the auditor, the City cannot alter or change the reports, so the purpose of the practice is only to assure that the governing body has been presented with the report. Staff has prepared a resolution accepting the audit report.
Financial Impact:
There are no direct financial impacts associated with the City Council’s acceptance of the independent third party annual audit process.
Attachments:
• Financial Statements
• Proposed Resolution CCR-24-XX
Mt. Shasta City Council Regular Meeting March 25, 2024 63 RESOLUTION CCR-24-XX
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MT. SHASTA
ACCEPTING THE INDEPENDENT AUDIT REPORTS AND SINGLE AUDIT FOR FISCAL YEAR 2022 – 2023
WHEREAS, the City Council has received the published financial statements for the City of Mt.
Shasta and Mount Shasta Public Financing Authority (A Component Unit of the City of Mt.
Shasta) for the 2022-2023 fiscal year; and,
WHEREAS, the Council has received and reviewed the reports of the independent auditor, Charles Pillon, on those financial statements; and,
WHEREAS, the Council has reviewed the reports of the Independent Auditor on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Mt. Shasta that the published City of Mt. Shasta Financial Statements and Mount Shasta Public Financing Authority Financial Statements for Fiscal Year ended June 30, 2023, and the Independent Auditor’s Report on those statements is accepted and made available to the interested public.
IT IS HEREBY CERTIFIED that the foregoing Resolution was introduced and duly adopted by the City Council of the City of Mt. Shasta at a regular meeting held on the 25th day of March 2024 by the following vote:
ROLL CALL VOTE:
AYES:
NOES:
ABSENT:
ABSTAIN:
DATED: March 25, 2024
ATTEST: CITY OF MT. SHASTA
_____________________________ _____________________________ Kathryn M. Joyce, Deputy City Clerk John Stackfleth, Mayor Mt. Shasta City Council Regular Meeting March 25, 2024 64 CITY OF MT. SHASTA
Mt. Shasta, California
BASIC FINANCIAL STATEMENTS
and
SINGLE AUDIT REPORTS
June 30, 2023
Mt. Shasta City Council Regular Meeting March 25, 2024 65 CITY OF MT. SHASTA
TABLE OF CONTENTS
June 30, 2023
Page
Number
CITY OFFICIALS .......................................................................................................................................... 1 INDEPENDENT AUDITOR’S REPORT ....................................................................................................... 2 BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements
Statement of Net Position ....................................................................................................................... 5 Statement of Activities ............................................................................................................................ 6 Fund Financial Statements
Governmental Funds:
Balance Sheet – Governmental Funds and Reconciliation of Governmental Fund Balance to the Statement of Net Position – Governmental Activities ............................................................... 7 Statement of Revenues, Expenditures and Changes in
Fund Balance – Governmental Funds ................................................................................................ 8 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental Funds to the Statement of Activities – Governmental Activities ................. 9 Proprietary Funds:
Statement of Net Position – Proprietary Funds .................................................................................... 10 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds ...................... 11 Statement of Cash Flows – Proprietary Funds ..................................................................................... 12 Notes to the Financial Statements ...................................................................................................... .13 REQUIRED SUPPLEMENTARY INFORMATION (Unaudited):
Budgetary Comparison Schedule
General Fund ........................................................................................................................................ 39 Community Development Block Grant Fund ........................................................................................ 40 Cost-Sharing Multiple-Employer Defined Benefit Pension Plans Schedule of the Local Government’s Proportionate Share of the Net Pension Liability .................... 41 Schedule of the Plan Contributions – Combined Plans ....................................................................... 42 SUPPLEMENTARY INFORMATION:
Combining Statements
Combining Balance Sheet – Non-Major Governmental Funds ............................................................ 43 Combining Statement of Revenues, Expenditures and Changes in Fund Balance – Non-Major Governmental Funds ............................................................................. 45 Mt. Shasta City Council Regular Meeting March 25, 2024 66 CITY OF MT. SHASTA
TABLE OF CONTENTS
June 30, 2023
Page
Number
SINGLE AUDIT SCHEDULES AND 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 ……………………….... 47 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance ………………………... 49 Schedule of Expenditures of Federal Awards ………………………………………………………………... 51 Notes to the Schedule of Expenditures of Federal Awards …………………………………………………. 52 Schedule of Findings and Questioned Costs ………………………………….……………………………… 53 Corrective Action Plan ………………………………….…………………………………………..…………… 55 Mt. Shasta City Council Regular Meeting March 25, 2024 67 CITY OF MT. SHASTA CITY OFFICIALS
June 30, 2023
CITY COUNCIL
Mayor ……………………………………………………………………………………………..Tessa Clure
Council Member ………………………………………………………………………………John Redmond Council Member ………………………………………………………………………………John Stackfleth Council Member ………………………………………………………………………………Jeffrey Collings Council Member …………………………………………………………………………………...Tim Sterns
ADMINISTRATIVE
City Manager ……………………………………………………………………………………..Todd Juhasz Finance Director …………………………………………………………………Muriel Howarth Terrell City Clerk ........................................................................................................................John Kennedy City Treasurer ………………………………………………………………………Rhonda Boss-Monaghan Chief of Police ………………………………………………………………………………….Robert Gibson Fire Chief ……………………………………………………………………………………...Cory Burns Public Works Director …………………………………………………………………………….Ken Kellogg City Attorney …………………………………………………………………………………..John Kenny 1 Mt. Shasta City Council Regular Meeting March 25, 2024 68 INDEPENDENT AUDITOR’S REPORT
To the City Council and Audit Committee
City of Mt. Shasta, California
Report on the Audit of the Financial Statements
Opinions
I 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 Mt. Shasta, California as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City of Mt. Shasta, California’s basic financial statements as listed in the table of contents.
In my 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 City of Mt. Shasta, California as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
I conducted my 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. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am required to be independent of the City of Mt. Shasta, California and to meet my other ethical responsibilities, in accordance with the relevant ethical requirements relating to my audit. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Mt. Shasta, California’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
2 Mt. Shasta City Council Regular Meeting March 25, 2024 69 INDEPENDENT AUDITOR’S REPORT
(Continued)
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, I:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Mt. Shasta, California’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in my judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Mt. Shasta, California’s ability to continue as a going concern for a reasonable period of time.
I am required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that I identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis (not presented), the budgetary comparison information on pages 39-40 and the pension disclosure schedules on pages 41-42 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. I 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 my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Mt. Shasta, California’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements on pages 43-46 and schedule of expenditures of federal awards on page 51, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing 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 my opinion, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 3 Mt. Shasta City Council Regular Meeting March 25, 2024 70 INDEPENDENT AUDITOR’S REPORT
(Continued)
Other Information
Management has omitted Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board. My opinion on the basic financial statements is not affected by this missing information.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated March 6, 2024, on my consideration of the City of Mt. Shasta, California's internal control over financial reporting and on my tests of its compliance with certain provision of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Mt. Shasta, California’s internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Mt. Shasta, California's internal control over financial reporting and compliance.
Charles W. Pillon, CPA
Anderson, California
March 6, 2024
4 Mt. Shasta City Council Regular Meeting March 25, 2024 71
BASIC FINANCIAL STATEMENTS
Mt. Shasta City Council Regular Meeting March 25, 2024 72 Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments, current unrestricted $ 4,115,887 $ 382,302 $ 4,498,189 Cash and investments, current restricted - 731,090 731,090 Receivables (net of allowances for bad
debts, where applicable):
Trade accounts - 412,046 412,046
Loans 771,517 771,517 -
Intergovernmental 1,525,920 4,918,258 6,444,178
Interest 1,811 131 1,942
Assessments and other 322,735 322,735 -
Prepaid expenses 20,749 - 20,749
Cash investments, non-current unrestricted 242,972 668,056 911,028 Contributed capital invested 39,918 - 39,918
Capital assets:
Non-depreciable 995,504 33,157,371 34,152,875
Depreciable, net 6,870,380 21,653,538 28,523,918
Total Assets 14,907,393 61,922,792 76,830,185
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - pensions 2,117,025 257,910 2,374,935
LIABILITIES
Accounts payable 470,473 1,541,377 2,011,850
Accrued liabilities 260,108 16,380 276,488
Overdraft payable 438,526 386,232 824,758
Due to other governments 4,803 - 4,803
Unearned revenue 57,930 - 57,930
Deposits - 172,712 172,712
Long-term liabilities:
Due within one year 246,055 451,177 697,232
Due in more than one year 1,293,330 16,085,457 17,378,787 Net pension liability 4,482,829 601,646 5,084,475
Total Liabilities 7,254,054 19,254,981 26,509,035
DEFERRED INFLOWS OF RESOURCES
Deferred inflows - pensions 323,005 41,079 364,084
NET POSITION
Net investment in capital assets 6,536,889 38,688,754 45,225,643 Restricted 2,592,762 760,257 3,353,019
Unrestricted 317,708 3,435,631 3,753,339
Total Net Position $ 9,447,359 $ 42,884,642 $ 52,332,001 CITY OF MT. SHASTA
Statement of Net Position
June 30, 2023
The accompanying notes are an integral
part of these financial statements.
5 Mt. Shasta City Council Regular Meeting March 25, 2024 73 Operating Capital BusinessCharges for Grants and Grants and Governmental Type Expense Services Contributions Contributions Activities Activities Total Governmental Activities:
General government $ 1,521,019 $ 117,366 $ 507,116 $ - $ (896,537) $ (896,537) - $ Public safety 3,169,436 294,485 170,769 (2,704,182) - (2,704,182) - Public works - administration 67,769 18,346 - - (49,423) (49,423) - Public works - streets & roads 1,250,415 - 244,751 (1,005,664) - (1,005,664) - Public works - buildings and grounds 321,666 - - - (321,666) (321,666) - Community development 2,347,157 21,303 2,315,687 - (10,167) (10,167) - Library 198,609 - - - (198,609) (198,609) -
Interest on long-term debt 26,055 - - - (26,055) (26,055) - Total Governmental Activities 8,902,126 451,500 3,238,323 (5,212,303) - (5,212,303) - Business-Type Activities:
Water 967,849 701,674 2,695,941 - 2,429,766 - 2,429,766 Sewer 1,826,508 2,241,643 7,101,478 - 7,516,613 - 7,516,613 Garbage 1,281,057 1,282,941 - - - 1,884 1,884
Drainage 99,201 25,811 - - (73,390) - (73,390)
Total Business-Type Activities 4,174,615 4,252,069 9,797,419 - 9,874,873 - 9,874,873 Total Primary Government $ 13,076,741 $ 4,703,569 $ 3,238,323 $ 9,797,419 (5,212,303) 9,874,873 4,662,570 General Revenues:
Taxes:
Property 701,550 701,550 -
Sales 2,850,802 2,850,802 -
Transient occupancy 1,254,916 1,254,916 -
Other 85,692 52,773 138,465
Investment earnings 15,126 771 15,897
Net change in fair value of investments 17,975 12,632 30,607 Other 120,016 120,016 -
Transfers in (out) (18,000) 18,000 -
5,028,077 84,176 5,112,253
Changes in Net Position (184,226) 9,959,049 9,774,823
Net position, beginning, as reported 9,631,585 33,375,681 43,007,266 Prior period adjustment (450,088) - (450,088)
Net Position, Beginning, as Restated 9,631,585 32,925,593 42,557,178 Net Position, Ending $ 9,447,359 $ 42,884,642 $ 52,332,001 Total General Revenues
CITY OF MT. SHASTA
Statement of Activities
For The Year Ended June 30, 2023
Program Revenues
Net (Expense) Revenues and
Changes in Net Position
The accompanying notes are an integral
part of these financial statements.
6 Mt. Shasta City Council Regular Meeting March 25, 2024 74 Community
Development Other Total
General Block Grant Debt Service Governmental Governmental Fund Fund Fund Funds Funds
ASSETS
Cash and investments, unrestricted $ 1,610,472 $ - $ 2,748,387 - $ $ 4,358,859 Receivables, net of allowance
Loans - 771,517 - - 771,517
Intergovernmental 662,706 607,442 - 255,772 1,525,920
Interest 388 - - 1,423 1,811
Special assessments and other 322,735 - - - 322,735
Prepaid expenses 20,749 - - - 20,749
Total Assets $ 2,617,050 $ 1,378,959 $ 3,005,582 - $ $ 7,001,591
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 96,642 $ 171,945 $ - $ 201,886 $ 470,473 Accrued liabilities 260,108 - - - 260,108
Overdraft payable - 427,436 - 11,090 438,526
Due to other governments - - - 4,803 4,803
Unearned revenue 35,441 - - 22,489 57,930
Total Liabilities 392,191 599,381 - 240,268 1,231,840
Fund Balances
Nonspendable 20,749 771,517 - - 792,266
Restricted - - 2,592,762 - 2,592,762
Committed 159,814 - - 172,037 331,851
Unassigned 2,044,296 8,061 - 515 2,052,872
Total Fund Balances 2,224,859 779,578 2,765,314 - 5,769,751 Total Liabilities and Fund Balances $ 2,617,050 $ 1,378,959 $ 3,005,582 - $ $ 7,001,591 Total governmental fund balance, as above $ 5,769,751
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and therefore not reported in the funds 7,865,884
Contributed capital investment used in governmental activities is not a financial resource and therefore not reported in the funds 39,918 Long-term liabilities, including bonds and bond premium payable, are not due and payable in the current period and therefore are not reported in the funds (1,342,277) Pension liabilities are not due and payable in the current period and therefore are not reported on the balance sheet (4,482,829)
Compensated absenses in governmental activities are not due and payable in the current period and therefore are not reported in the balance sheet (197,108) Deferred outflows and inflows are not receivable or due and payable in the current period and therefore are not reported on the balance sheet 1,794,020 Net Position of Governmental Activities $ 9,447,359
CITY OF MT. SHASTA
Balance Sheet - Governmental Funds and
June 30, 2023
Statement of Net Position - Governmental Activities
Reconciliation of Governmental Fund Balance to the
The accompanying notes are an integral
part of these financial statements.
7 Mt. Shasta City Council Regular Meeting March 25, 2024 75 Community
Development Other Total
General Block Grant Debt Service Governmental Governmental Fund Fund Fund Funds Funds
REVENUES
Property taxes $ 701,550 $ - $ - $ 701,550 - $
Sales and use taxes 2,325,568 - - 525,234 2,850,802
Transient occupancy taxes 1,254,916 - - 1,254,916 -
Franchises 85,692 - - - 85,692
Assessments - - - 58,838 58,838
Licenses and permits 117,366 - - 117,366 -
Intergovernmental revenues 512,579 243,391 1,088,986 - 1,844,956 CARES Act Covid-19 revenues - 1,342,273 - 1,342,273 -
Charges for services 249,744 - - 14,126 263,870
Fines, forfeitures and penalties 11,426 - - - 11,426
Use of money and property 2,607 5,624 308,672 6,895 323,798 Net change in fair value of investments 5,870 - - 12,105 17,975 Other and administrative 118,086 - - 53,024 171,110
Total Revenues 5,385,404 1,591,288 308,672 1,759,208 9,044,572
EXPENDITURES
Current:
City council 47,152 - - - 47,152
City administration 242,844 - - 242,844 -
City clerk 12,930 - - - 12,930
Finance and personnel 441,796 - - 441,796 -
City attorney 76,318 - - - 76,318
Police protection 1,389,528 - - 53,347 1,442,875
Fire protection 999,595 - - 19,876 1,019,471
Public safety dispatching 480,617 - - 480,617 -
Animal regulation - code enforcement 136,481 - - 136,481 - Planning 340,023 - - 340,023 -
Public works - administration 67,769 - - - 67,769
Public works - streets & roads 595,679 - - 595,679 -
Public works - buildings & grounds 297,363 - - 297,363 - Public transit assistance - - - 81,818 81,818
Insurance 275,201 - - 275,201 -
Community and economic development 156,121 138,938 - 715,948 1,011,007 CARES Act Covid-19 assistance - 1,336,150 - 1,336,150 - Library - - - 198,609 198,609
Other 304,512 - - 304,512 -
Capital outlay 60,715 - - 128,752 189,467
Debt service:
Principal payments 45,464 157,200 - 24,752 227,416
Interest 33,498 151,472 - 2,907 187,877
Total Expenditures 6,003,606 1,475,088 308,672 1,226,009 9,013,375 (618,202) 116,200 - 533,199 31,197
OTHER FINANCING SOURCES (USES)
Operating transfers in (out) 102,695 (10,498) (110,197) - (18,000) Re-measurement of lease liability (687) - - - (687)
Total Other Financing Sources (Uses) 102,008 (10,498) (110,197) - (18,687) Changes in Fund Balance (516,194) 105,702 - 423,002 12,510 Fund Balance - Beginning of Year 2,741,053 673,876 2,342,312 - 5,757,241 Fund Balance - End of Year $ 2,224,859 $ 779,578 $ 2,765,314 - $ $ 5,769,751 CITY OF MT. SHASTA
Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds For The Year Ended June 30, 2023
Excess (Deficiency) of Revenues Over (Under)
Expenditures
The accompanying notes are an integral
part of these financial statements. 8
Mt. Shasta City Council Regular Meeting March 25, 2024 76 Changes in Fund Balance - Governmental Funds $ 12,510
Amounts reported for governmental activities in the statement of activities is different because:
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation/amortization expense:
Capital outlay 189,467
Depreciation expense (865,126)
Amortization expense (12,578)
Governmental funds report repayments of principal on long-term obligations as expenditures, but it is reported as a reduction of long-term liabilities in the Statement of Net Position. 70,216 Governmental funds report issuance of long-term debt, including bond premium, as a revenue, but the issuance is reported as long-term liabilities in the Statement of Net Position and does not affect the Statement of Activities. 687
Governmental funds do not report the amortization of bond premium as a reduction of interest expenditure, but it is reported in the Statement of Activities 9,938 Governmental funds do not report the change in accrual of interest on long-term obligations, but it is reported in the Statement of Activities 412
Governmental funds do not report the change in compensated absences as revenue or (expenditure), but it is reported in the Statement of Activities (27,242) Governmental funds do not report the decrease of unfunded pension oblications revenue or (expenditure), but it is reported in the Statement of Activities 437,490 Changes in Net Position - Governmental Activities $ (184,226) Reconciliation of the Statement of Revenues, Expenditures and CITY OF MT. SHASTA
For The Year Ended June 30, 2023
Changes in Fund Balance - Governmental Funds
to the Statement of Activities - Governmental Activities The accompanying notes are an integral
part of these financial statements.
9 Mt. Shasta City Council Regular Meeting March 25, 2024 77 Total
Enterprise
Water Sewer Garbage Drainage Funds
ASSETS
Cash and investments, current unrestricted $ 166,277 $ 216,025 - $ $ 382,302 - $ Cash and investments, current restricted - 731,090 - 731,090 - Receivables (net of allowances for bad
debts, where applicable):
Trade accounts 70,073 222,657 117,213 2,103 412,046
Intergovernmental 598,617 4,319,641 - 4,918,258 -
Notes - - - - -
Interest - - 131 - 131
Cash investments, non-current unrestricted 668,056 - - - 668,056 Capital assets:
Non-depreciable 4,376,542 28,780,829 - 33,157,371 -
Depreciable, net 11,022,860 9,960,902 669,776 - 21,653,538 Total Assets 16,902,425 44,015,119 333,369 671,879 61,922,792
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - pensions 126,520 127,911 3,479 - 257,910
LIABILITIES
Accounts payable 12,899 1,416,904 111,574 1,541,377 -
Accrued liabilities 7,002 9,054 - 324 16,380
Overdraft payable 371,604 - 14,628 - 386,232
Deposits 86,589 86,123 - 172,712 -
Long-term liabilities:
Due within one year 20,138 431,039 - 451,177 -
Due in more than one year 137,705 15,947,752 - 16,085,457 - Net pension liability 295,142 298,388 8,116 - 601,646
Total Liabilities 559,475 18,560,864 111,574 23,068 19,254,981
DEFERRED INFLOWS OF RESOURCES
Deferred inflows - pensions 20,151 20,373 - 555 41,079
NET POSITION
Net investment in capital assets 15,260,779 22,758,199 669,776 - 38,688,754 Restricted:
Restricted for capital projects 87,726 - - 29,167 116,893 Restricted for debt service reserve 19,596 - - 19,596 - Restricted for short-lived asset reserve 623,768 - - 623,768 - Unrestricted 1,188,540 2,072,504 221,795 (47,208) 3,435,631 Total Net Position $ 16,449,319 $ 25,561,793 $ 221,795 $ 651,735 $ 42,884,642 CITY OF MT. SHASTA
Statement of Net Position - Proprietary Funds
June 30, 2023
The accompanying notes are an integral
part of these financial statements.
10 Mt. Shasta City Council Regular Meeting March 25, 2024 78 Total
Enterprise
Water Sewer Garbage Drainage Funds
REVENUES
User fees and charges $ 701,674 $ 2,241,643 $ 1,282,941 $ 25,811 $ 4,252,069
OPERATING EXPENSES
Cost of power and water 11,564 54,221 - 65,785 -
Maintenance, operations, and administration 491,122 836,847 1,281,057 76,590 2,685,616 Depreciation and amortization 460,878 391,427 22,611 - 874,916 Total Operating Expenses 963,564 1,282,495 1,281,057 99,201 3,626,317 Operating Income (Loss) (261,890) 959,148 1,884 (73,390) 625,752
NONOPERATING REVENUES (EXPENSES)
Interest earned - 6 727 38 771
Net change in fair value of investments 11,378 174 951 129 12,632 Franchise fees - 52,773 - 52,773 -
Interest expense (4,285) (544,013) - (548,298) -
Total Nonoperating Revenues (Expenses) 7,093 (543,833) 54,451 167 (482,122) Capital grants and contributions 2,695,941 7,101,478 - 9,797,419 - Transfers in (out) - - 18,000 - 18,000
Changes in Net Position 2,441,144 7,516,793 56,335 (55,223) 9,959,049
NET POSITION
Beginning of year, as reported 14,458,263 18,045,000 165,460 706,958 33,375,681 Prior period adjustments (450,088) - - - (450,088)
Beginning of Year, as Restated 14,008,175 18,045,000 165,460 706,958 32,925,593 End of Year $ 16,449,319 $ 25,561,793 221,795$ 651,735$ $ 42,884,642 CITY OF MT. SHASTA
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
For The Year Ended June 30, 2023
The accompanying notes are an integral
part of these financial statements.
11 Mt. Shasta City Council Regular Meeting March 25, 2024 79 Total
Enterprise
Water Sewer Garbage Drainage Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 711,314 $ 2,228,094 $ 1,282,145 $ 25,836 $ 4,247,389 Payments to suppliers (338,328) (641,308) (1,282,298) (46,652) (2,308,586) Payments to employees (243,700) (359,261) (22,244) - (625,205) Net cash provided (used) by operating activities 129,286 1,227,525 (153) (43,060) 1,313,598
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Receipt of franchise fees - 52,773 - 52,773 -
Interfund transfers and repayments - - - 18,000 18,000
Net cash provided (used) by non-capital financing activities - 52,773 - 18,000 70,773
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
Capital grants received 4,913,279 3,379,535 - 8,292,814 - Purchase of capital assets (4,874,102) (12,942,296) - (17,816,398) - Proceeds from debt issuance 8,229,848 - - 8,229,848 -
Principal paid on capital debt (4,308) (119,941) - (124,249) - Interest payments on debt (4,338) (323,009) - (327,347) - Net cash provided (used) by capital and related financing 30,531 (1,775,863) - (1,745,332) -
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 242 5 744 41 1,032
Net change in fair value of investments 11,378 174 951 129 12,632 Net cash provided (used) by investing activities 11,620 179 1,695 170 13,664 Net Increase (Decrease) in Cash 171,437 (548,159) 54,315 (24,890) (347,297) CASH
Beginning of Year 662,896 1,279,249 161,710 24,890 2,128,745 End of Year $ 834,333 $ 731,090 216,025$ -$ 1,781,448 $ Comprised of:
Cash and investments, current unrestricted $ 166,277 $ 216,025$ - -$ 382,302 $ Cash investments, non-current unrestricted 668,056 - - - 668,056 Cash and investments, restricted 731,090 - - - 731,090
Cash and Investments $ 834,333 $ 731,090 216,025$ -$ 1,781,448 $ Reconciliation of operating income (loss) to cash
provided (used) by operating activities:
Operating income (loss) $ (261,890) $ 959,148 1,884$ $ (73,390) $ 625,752 Adjustments to reconcile operating income (loss) to
cash provided (used) by operating activities:
Depreciation and amortization 460,878 391,427 22,611 - 874,916 (Increase) decrease in accounts
receivable (3,273) (16,656) (796) 25 (20,700)
Decrease in deferred outflows of resources related
to pensions (77,852) (78,708) (2,141) - (158,701)
Increase in accounts payable (46,971) (76,217) (1,241) 8,583 (115,846) Increase in compensated absences 5,293 6,668 - 11,961 - Increase (decrease) in deposits and other liabilities 16,740 5,101 - 252 22,093 Increase in net pension liability 153,214 154,900 - 4,213 312,327 (Decrease) in deferred inflows of resources related
to pensions (116,853) (118,138) - (3,213) (238,204)
Net Cash Provided (Used) by Operating Activities $ 129,286 $ 1,227,525 $ (153) $ (43,060) $ 1,313,598 Note regarding operating activities:
The respective change in accounts payable does
not reflect the payable related to capital assets $ 54,198 $ 1,336,288 $ - $ 1,390,486 - Proprietary Funds
For The Year Ended June 30, 2023
CITY OF MT. SHASTA
Statement of Cash Flows
The accompanying notes are an integral
part of these financial statements.
12 Mt. Shasta City Council Regular Meeting March 25, 2024 80 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
13 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Mt. Shasta, California’s (hereafter “the City”) financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governmental entities. The more significant accounting policies established in GAAP and used by the City are discussed below.
A. Reporting Entity
The City operates under a City Manager - City Council form of government and provides the following services:
public safety, streets and roads, library, water, sewer, sanitation and drainage, public improvements, planning and zoning, and general administrative services.
The City has defined its reporting entity in accordance with U.S. generally accepted accounting principles, which provides guidance for determining which governmental activities, organization, and functions should be included in the reporting entity. In evaluating how to define the City for financial reporting purposes, management has considered all potential component units. The primary criterion for including a potential component unit within the reporting entity is the governing body's financial accountability. A primary government is financially accountable if it appoints a voting majority of a component unit's governing body and it imposes its will on the component unit, or if there is a potential for the component unit to provide specific financial benefits to, or impose specific financial burdens on, the primary government unit. A primary government may also be financially accountable if a component unit is fiscally dependent on the primary governmental entity regardless of whether the component unit has a separately elected governing board, a governing board appointed by a higher level of government, or a jointly appointed board.
In accordance with GASB Statement No. 61, the City's financial reporting entity comprises the following:
Primary Government:
City of Mt. Shasta
Blended Component Unit:
The Mount Shasta Public Financing Authority
Blended component units are separate legal entities that meet the component unit criteria described above and whose governing body is the same or substantially the same as the City's governing board or the component unit provides services entirely to the City. This component units' fund is blended into those of the City by appropriate activity type to compose the primary government presentation.
The component unit that is blended in the reporting activity of the City's report is as follows:
The Mount Shasta Public Financing Authority (Authority) was created on May 13, 2019, as a result of a Joint Exercise of Powers Agreement between the City and the Mount Shasta Industrial Development Authority. The fund is reported as a debt service fund. The Authority’s purpose is to finance public capital improvements for the benefit of the City, including refinance of the City’s 2008 Revenue Bond debt. Separate financial statements for Authority may be obtained by contacting the City.
B. Basis of Presentation
The financial statement presentation required by GASB provides a comprehensive, entity-wide perspective of the City’s overall financial position and results of operations while maintaining the presentation of the financial position, results of operations and cash flows, as applicable, of the City’s major funds.
Government-wide Financial Statements:
The statement of net position and statement of activities include the financial activities of the overall government.
Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities are reported separately from business-type activities (such as water, sewer, garbage, and drainage).
Mt. Shasta City Council Regular Meeting March 25, 2024 81 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
14 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The statement of activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the City’s business-type activities and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and therefore are clearly identifiable to a particular function. Program revenues include charges paid by recipients of goods and services offered by the program, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented instead as general revenues.
When both restricted and unrestricted net position are available, restricted resources are depleted first before the unrestricted resources are used.
Fund Financial Statements:
Fund financial statements of the City are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund equity, revenues, and expenditures/expenses. Funds are organized into two major categories: governmental and proprietary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria:
Total assets, liabilities, revenues, or expenditure/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category type; and Total assets, liabilities, revenues, or expenditures/expenses for the individual governmental or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined.
The funds of the City are described below:
Major Governmental Funds:
The General Fund: is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.
Community Development Block Grant Fund: Accounts for the financing of home rehabilitation, job creation and retention, community public works and planning activities to support community and economic development as financed by monies passed through the State by the federal government.
The Debt Service Fund: Established to account for the financing and refinancing of public capital improvements for the benefit of the City.
Major Proprietary Funds:
The Enterprise Funds (Water, Sewer, Garbage and Drainage) are used to account for operations that are financed and operated in a manner similar to a private business enterprise where the intent of the governing body is that the costs (expenses) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.
The Water Fund: Established to account for the operations of the City’s water utility, a self-supporting activity which renders a service on a user charge basis to residents and businesses within the City.
The Sewer Fund: Established to account for the operations of the City’s sewer utility, a self-supporting activity which renders a service on a user charge basis to residents and businesses within the City.
The Garbage Fund: Established to account for the operations of the City’s garbage utility, a self-supporting activity which renders a service on a user charge basis to residents and businesses within the City.
The Drainage Fund: Established to account for the operations of the City’s drainage utility, a self-supporting activity which renders service on a user charge basis to residents and businesses within the City.
Mt. Shasta City Council Regular Meeting March 25, 2024 82 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
15 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Additionally, the City reports the following non-major funds:
Business Improvement Fund: Accounts for proceeds from special business improvement area tax funded through downtown City businesses that primarily provides parking.
Fire Assessment Fund: Established to account for fire suppression equipment acquisition, as financed by fire suppression assessments levied on property owners.
Development Impact Fund: Established to account for the collection of impact fees that are to ensure that new development projects contribute their share to the orderly development of infrastructure necessary to accommodate the anticipated growth of the community.
Local Transportation Fund: Established to account for the construction and maintenance of the streets and roads of the City, as well as to provide mass transit, as financed from “Transportation Development Act” monies passed through the County of Siskiyou by the State.
Transportation Project Fund: Established to account for transportation projects funded through various funding sources. In the current year, this fund is recognizing the Safe Routes to School and Bicycling Transportation projects.
COPS Fund: Accounts for State public safety grant funded through the State of California.
Community Public Safety Enhancement Fund: Accounts for the community enhancement program which contributes to public safety which is run through the police department and funded from public donations.
Gas Tax Fund: Established to account for the construction and maintenance of the streets and roads of the City as financed by gas taxes received from the State.
Springhill Assessment Fund: Accounts for sewer main line trunk extension funded by property owners.
The Capital Projects Fund: Established to account for the acquisition and installation of a new corporate yard garage and solar facilities and related improvements within the City.
Economic Enhancement Fund: Established to account from excess CDBG program income that would not be used for CDBG regulated expenditures. The de-federalized dollars are intended to be used to provide economic development within the City.
Special Projects Grant Fund: Established to account for the environmental assessments of Brownfield Sites funded through the U.S. Environmental Protection Agency.
Library Fund: Established to account for the operation of the City’s Library which is funded through an additional .25% sales tax on sales within the city limits of Mt. Shasta.
Other Special Revenue Funds: Includes activity in the Beautification Projects, Fire Training and Public Works Reimbursable funds.
C. Measurement Focus and Basis of Accounting:
Measurement focus is a term used to describe “which” transactions are recorded within the various financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus applied.
Measurement Focus:
In the government-wide statements, both governmental and business-type activities are presented using the economic resources measurement focus as defined below. In the fund financial statements, the current financial resources measurement focus or the economic resources measurement focus is used as appropriate.
Mt. Shasta City Council Regular Meeting March 25, 2024 83 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
16 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) All governmental funds utilize a current financial resources measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present resources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the year.
All proprietary (enterprise) funds utilize an economic resources measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is classified as net position.
Basis of Accounting:
In the government-wide statements, both governmental and business-type activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred, or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.
In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting.
Under the modified accrual basis of accounting, revenues are recognized when measurable and available.
Measurable means knowing or being able to reasonably estimate the amount. For this purpose, the City considers property taxes as available if they are collected within 60 days after year end. A one-year availability period is used for revenue recognition for all other governmental fund revenues. Expenditures (including capital outlays) are recorded when the related fund liability is incurred. All proprietary funds utilize the accrual basis of accounting, as described above.
Amounts reported as program revenues include: (1) charges to customers or applicants for goods, services, or privileges provided, including fees, fines, and forfeitures, (2) operating grants and contributions, and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenues include all taxes.
D. Assets, Liabilities, Net Position or Fund Equity
Cash and Cash Equivalents:
For purposes of the statement of cash flows, the City considers, as cash equivalents, all highly liquid investments with a maturity at the date of purchase of three months or less.
Investments:
The City is a voluntary participant in the California Local Agency Investment Fund (“LAIF”). LAIF is an external investment pool through which local governments may pool investments. Investments in LAIF are highly liquid, as deposits can be converted to cash within 24 hours without the loss of interest. The regulatory oversight of LAIF rests with the Local Agency Investment Board. GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, provides that amounts held in external investment pools be reported at fair value.
The City also has investments in a brokerage firm, Time Value Investments (“TVI”), for the purpose of obtaining higher rates of return. Investments in TVI are money market and fixed income investments in U.S. Government Bonds and Certificates of Deposit with maturities ranging from 4 months to 4 years. The fair value is materially equivalent to the value of the investments. The types of investments are within the scope of the City’s investment policy.
Mt. Shasta City Council Regular Meeting March 25, 2024 84 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
17 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Receivables:
In the fund financial statements, material receivables in governmental funds are the same as those in the government-wide statements since they are both measurable and available. Interest earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available. Proprietary fund material receivables consist of all revenues earned at year-end but not yet received. Allowances for uncollectible accounts receivable are based on historical trends, periodic aging of accounts receivable, and management’s detailed analysis of the composition of accounts receivable. Management has determined all receivables are fully collectable.
Property Taxes:
The County of Siskiyou assesses, bills, and collects property taxes for the City. The County remits the property taxes to the City when the taxes are collected, and the allocation has been determined. Property taxes attach as an enforceable lien as of January 1st and are due November 1 and February 1 (secured), and July 1 (unsecured).
The City participates in an alternative method of distribution of property tax levies and assessments knows as the “Teeter Plan.” The California Revenue and Taxation Code allows counties to distribute secured real property, assessment, and supplemental property taxes on an accrual basis resulting in full payment to cities each fiscal year.
Any subsequent delinquent payments and related penalties and interest during a fiscal year will revert to Siskiyou County. The Teeter Plan payment is included in property tax revenue.
Interfund Receivables and Payables:
During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. These may include amounts relating to goods and services type transactions, and interfund loans. Short-term activities are reported as due to/due from other funds. Long-term interfund loans are shown as advances to or advances from other funds in the government-wide financial statements.
Capital Assets:
The accounting treatment over property, plant, equipment, and infrastructure assets (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements.
In the government-wide financial statements, property, plant, equipment, and infrastructure assets are accounted for as capital assets. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available, except donated capital assets are recorded at their estimated fair market value at the date of donation. Items with a cost of $5,000 or more are accounted for as capital assets. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized. Costs of assets sold or retired (and related amounts of accumulated depreciation) are eliminated from the accounts in the year of sale or retirement and the resulting gain or loss is included in the operating statement of the related fund.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Due to the early implementation of GASB Statement No. 89, interest incurred during the construction phase of capital assets of business-type activities is no longer included as part of the capitalized value of the assets constructed, but rather reported as an expense in the current period.
Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets’ estimated useful lives using the straight-line method of depreciation.
The range of estimated useful lives by type of asset is as follows:
Utility plants 7 to 50 years
Buildings and improvements 5 to 35 years
Equipment, furnishings, and vehicles 3 to 35 years
Infrastructure 10 to 40 years
Mt. Shasta City Council Regular Meeting March 25, 2024 85 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
18 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same as in the government-wide statements.
Compensated Absences:
Vacation and accrued compensatory time off pay is vested to the employees as it accrues and is payable upon separation of service. Sick leave does not vest to the employees and is paid only when sick leave is taken.
Therefore, only vacation and accrued compensatory time off pay has been accrued in the accompanying financial statements for proprietary and government-wide statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements.
However, if material, a liability is recognized for that portion of accumulated sick leave benefits that is estimated will be taken as “terminal leave” prior to retirement.
Deferred Outflows/Inflows of Resources:
In addition to assets, the statement of net position includes a separate section for deferred outflows of resources.
This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) which will only be recognized as an outflow of resources (expense/expenditures) in the future. In addition to liabilities, the statement of net position includes a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and would only be recognized as an inflow of resources (revenue) at that time.
For the City’s pension plans, City contributions subsequent to the measurement date, differences between expected and actual experience, differences due to changes in assumptions, differences due to differences in proportions, differences between projected and actual earnings on plan investments and differences between projected and actual contributions are reported as deferred outflows/inflows of resources in the government-wide statement of net position. City contributions subsequent to the measurement date will be amortized during the next fiscal year.
Differences between expected and actual experience, changes in assumptions, differences in proportion, and differences between projection and actual contributions are amortized over the estimated service lives of the plan participants. Difference between projected and actual earnings on pension plan investments will be amortized over a five-year period.
Long-Term Liabilities:
In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the statements of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bond issuance costs are expensed in the period the debt is issued. Current portions of debt obligations are reported as long-term liabilities:
due within one year.
In the governmental funds’ financial statements, bond premiums and discounts, as well as bond issuance costs, are recognized during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
Net Pension Liability:
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to this liability, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plan (the Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by 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.
Mt. Shasta City Council Regular Meeting March 25, 2024 86 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
19 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Unearned Revenue:
Unearned revenue consists of public works reimbursables, parking fees and business licenses paid in advance by the City’s customers.
Equity Classifications:
In the government-wide financial statements, equity is classified as net position and displayed as follows:
Net investment in capital assets: Consists of capital assets net of accumulated depreciation and reduced by any outstanding balances of bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvements of those assets.
Restricted net position: Consists of net position with constraints placed on the use either by external groups such as creditors, grantors, contributors, or laws or regulations or other governments, or by law through constitutional provisions or enabling legislation.
Unrestricted net position: Consists of all other net position that do not meet the definition of restricted or invested in capital assets, net of related debt.
The government-wide statement of net position reports $3,353,019 of restricted net position, all of which is restricted by enabling legislation or constraints placed on use by creditors.
Fund Balance Classifications:
Applying the requirements of GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions; the governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purpose for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:
Nonspendable: This classification includes amounts that cannot be spent because they are either (a) legally or contractually required to be maintained intact or (b) not in spendable form.
Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as a debt covenant), grantors, contributors, or laws or regulation of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.
Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the City Council. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action (ordinance or resolution) that was employed when the funds were initially committed. This classification also includes contractual obligations.
Assigned: This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council or through the City Council delegation of this responsibility to the City Manager through the budgetary process.
Unassigned: This classification includes residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts.
When an expenditure is incurred for purposes for which both restricted and unrestricted resources are available, the City considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the City Council has provided otherwise in its commitment or assignment actions.
Mt. Shasta City Council Regular Meeting March 25, 2024 87 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
20 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Revenues, Expenditures and Expenses
Operating Revenues and Expenses:
Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services. It also includes all revenues and expenses not related to capital and related financing, noncapital financing, or investing activities.
Expenditures/Expenses:
In the government-wide financial statements, expenses are classified by function for both governmental and business-type activities.
In the fund financial statements, expenditures are classified by character (current, debt service or capital outlay) for governmental funds, and by operating or nonoperating classifications for proprietary funds. Governmental funds report expenditures of financial resources and Proprietary funds report expenses relating to use of economic resources.
F. Estimates
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
G. Budgets
The City adopts an annual budget for the fiscal year commencing the following July 1. Budgets are adopted on a basis consistent with generally accepted accounting principles. The level of control (the level at which expenditures may not exceed budget) is the fund level. Unused appropriations lapse at the end of the fiscal year. The City does not use encumbrance accounting.
H. Budgetary Comparison
Under GASB Statement No. 34, budgetary comparison information is required to be presented for the general fund and each major special revenue fund with a legally adopted budget. The Authority is not legally required to adopt a budget for the debt service fund.
I. Blended Component Unit
As stated in Note 1, Section A, Financial Reporting Entity, the Authority, a blended component unit of the City, was created to finance public capital improvements for the benefit of the City, including refinance of the City’s 2008 Revenue Bond debt. During the fiscal year ended June 30, 2020, the Authority issued two Series 2019 Revenue Bonds in order to finance City capital projects and refinance the debt. See Note 7 for a full description. The Bonds are special obligations of the Authority payable from the Net Revenues pledged under the Indenture, consisting primarily of (1) base rental payments to be made by the City to the Authority as rental for certain City-owned property under a site lease agreement dated October 1, 2019, by and between the Authority and the City; and (2) installment payments to be made by the City under two installment sale agreements, (i) dated August 1, 2019, to repay the Series 2019 Wastewater Enterprise Revenue Bond owned by the United States Department of Agriculture issued to acquire and construct the project known as the Downtown Collection Wastewater System Improvement Project; and (ii) dated October 1, 2019, to repay Series 2019 Revenue Bonds owned and issued by the Authority for two purposes, (1) to acquire and install certain new solar and energy efficient equipment and improvements located at the City’s Corporate Yard Garage, City Hall, Police Station, Fire Station and the Wastewater Treatment Plant; and (2) to prepay and discharge the 2008 Installment Sale Agreement (i.e. Series 2008 Revenue Bonds) by and between the City and IBank.
Mt. Shasta City Council Regular Meeting March 25, 2024 88 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
21 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I. Blended Component Unit (Continued)
In the fund financial statements, when the Authority is blended into the City’s financial statements as a component unit, the Authority is presented as a debt service fund. Interest earnings from the lease and installment sale agreements with the City are shown as revenues, while principal repayments and interest on the revenue bond debt are shown as debt service expenditures. Significant items related to the long-term debt issuance and debt premium are shown as other financing sources, while proceeds from the debt issuance invested in the City capital projects and refinancing are shown as other financing uses.
In the government-wide financial statements, when the Authority is blended into the City’s financial statements, the long-term assets and liabilities of the Authority are eliminated, and the long-term debt related to the repayment of the revenue bonds and accrued interest is shown in the governmental activities or the business-type activities based on the Governmental Fund affected by the capital project paid for by the issuance of the bond debt. The Capital Projects Fund, a Governmental Fund of the City’s General Fund, accounts for the capital improvements and related long-term debt in the governmental activities used for the acquisition and construction of a portion of the new corporate yard garage and the solar energy equipment installed at the corporate yard, the City Hall, Police Station and Fire Station. The Water and Sewer Funds, Proprietary Funds of the City, account for the capital improvements and related long-term debt in the business-type activities used for the acquisition and construction of a portion of the new corporate yard garage and the solar energy equipment installed at the corporate yard and the wastewater treatment plant, as well as the refinance of the 2008 Wastewater Revenue Bond debt.
NOTE 2 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Effective in Future Fiscal Years
Effective for fiscal years beginning July 1, 2024, the GASB issued Statement No. 101, Compensated Absences.
This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means.
This Statement will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. In addition, the model can be applied consistently to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave.
The model also will result in a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences.
Effective for fiscal years beginning July 1, 2024, the GASB issued Statement No. 102, Certain Risk Disclosures.
This Statement requires a government to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. Additionally, this Statement requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely to begin to occur within 12 months of the date the financial statements are issued.
NOTE 3 CASH AND INVESTMENTS
The City follows the practice of pooling cash of all funds, unless the funds are required by law, debt covenant or other instrument to be held in a separate account. Interest income on pooled cash invested is allocated quarterly to the various funds based on the same proportion that such funds bear to the total monies invested.
Mt. Shasta City Council Regular Meeting March 25, 2024 89 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
22 NOTE 3 CASH AND INVESTMENTS (Continued)
Cash and investments as of June 30, 2023, are classified according to liquidity and separated between unrestricted and restricted in the accompanying financial statements as follows:
Statement of Net Position
Cash and investments, current unrestricted 4,498,189 $
Cash and investments, current restricted 731,090
Cash investments, non-current unrestricted 911,028
Cash and Investments $ 6,140,307
Consisted of the following
Cash on hand $ 300
Deposits with banks 4,875,892
Time Value Investments brokerage 1,020,420
LAIF 243,695
Cash and Investments $ 6,140,307
Investments Authorized:
The City manages its pooled idle cash investments under the guidelines of the State of California Government Code Section 53601 which specifically authorizes investments in the following instruments: treasury bills, treasury notes, federal agency securities, bankers’ acceptances, nonnegotiable certificates of deposit, commercial paper, negotiable certificates of deposit, and repurchase agreements. All investment activities are conducted with financial institutions approved by the City Council.
Interest Rate Risk:
While the City’s investment policy does not address interest rate risk, the City manages its exposure to interest rate risks through reliance on the managers of the Local Agency Investment Fund (LAIF) for its investment in those funds and the Finance Director and City Treasurer for the City’s investment in money market accounts, US Government bonds and certificates of deposit.
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.
LAIF does not have such a rating.
Concentration of Credit Risk:
The investment policy of the City contains no limitation on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There are no investments in any one issuer that represent 5 percent or more of total City investments or reporting unit.
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 has provisions for financial institutions that limit custodial credit risk for deposits. Financial institutions are required to 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. 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.
Mt. Shasta City Council Regular Meeting March 25, 2024 90 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
23 NOTE 3 CASH AND INVESTMENTS (Continued)
California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The City’s financial institutions also have insurance through the Federal Depository Insurance Corporation (FDIC). The City’s investment policy has no additional provisions for limiting custodial credit risk for deposits.
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments; however, it is the practice of the City Treasurer that all investments are insured, registered, or held by the Treasurer’s custodial agent in the City’s name.
The City’s balance in banks was $4,167,321, all of which was covered by federal depository insurance, or the collateral requirements discussed in the preceding paragraph. The bank balance differs from the book balance of $4,875,892 because of outstanding deposits net of outstanding checks.
Equity in Pooled Cash and Investment
The City invests funds in the State Treasurer’s Pooled Money Investment Account (PMIA) through LAIF, a voluntary program created by statue in 1977. The PMIA has regulatory oversight from the Pooled Money Investment Board and an in-house Investment Committee. The Local Agency Investment Advisory Board has oversight of LAIF. LAIF is an unrated external investment pool.
Carrying value of investments must be at fair value if the difference between carrying value and fair value becomes material. During the year ended June 30, 2023, the City recognized an adjustment to the fair value of the investments in the City’s external investment pool held by LAIF by increasing cash and cash investments in various Funds by $16,963; and the City recognized an adjustment to the fair value of the investments held with the City’s brokerage firm, TVI, by decreasing cash and cash investments in various Funds by $13,519.
In accordance with authorized investment laws, the State Treasurer’s Investment Pool (LAIF) invests in various structured notes and mortgage-backed securities, such as collateralized mortgage obligations. As of June 30, 2023, PIMA’s weighted average maturities were 1.07 years. (Copies of a report of LAIF’s investments may be obtained from the State Treasurer’s Office; Local Agency Investment Fund; P.O. Box 942809; Sacramento, CA 94209-0001) NOTE 4 RECEIVABLES
The following is the composition of loans receivable, net of zero allowance for doubtful loans, at June 30, 2023:
Community
Development Block
Grant Fund
$ 771,517
NOTE 5
Mortgage and business loans
OPERATING TRANSFERS IN/OUT
The following is a summary of operating transfers in/out for the year ended June 30, 2023:
Transfer In To
General
Fund
Community
Development
Block Grant
Fund
Non-major
Governmental
Funds
Total
Transfers In
General Fund $ - $ - $ 120,695 $ 120,695
Drainage Fund 18,000 - - 18,000
Non-major Governmental Funds - 10,498 - 10,498
Total Transfers Out $ 18,000 $ 10,498 $ 120,695 $ 149,193 Transfer Out From
All of the transfers were to pay for a fund’s share of a project or activity that occurred in another fund.
Mt. Shasta City Council Regular Meeting March 25, 2024 91 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
24 NOTE 6 CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2023 was as follows:
Balance
July 1, 2022 Additions
Retirements
and Transfers
Balance
June 30, 2023
Governmental Activities
Capital Assets not being Depreciated:
Land $ 747,310 $ - $ - $ 747,310
Construction in progress 251,484 - (3,290) 248,194
Total Capital Assets not being Depreciated 998,794 - (3,290) 995,504 Capital Assets being Depreciated:
Buildings and improvements 1,708,222 - - 1,708,222
Right to use asset - building 13,959 - (686) 13,273
Equipment, furnishings and vehicles 4,424,567 193,443 (33,082) 4,584,928 Right to use asset - equipment 23,052 - - 23,052
Infrastructure 23,969,201 - - 23,969,201
Total Capital Assets being Depreciated 30,139,001 193,443 (33,768) 30,298,676 Less Accumulated Depreciation and Amortization:
Buildings and improvements 644,319 29,876 - 674,195
Right to use asset - building 6,980 6,293 - 13,273
Equipment, furnishings and vehicles 3,161,624 262,332 (33,082) 3,390,874 Right to use asset - equipment 6,285 6,285 - 12,570
Infrastructure 18,764,466 572,918 - 19,337,384
Total Accumulated Depreciation and Amortization 22,583,674 877,704 (33,082) 23,428,296 Total Capital Assets being Depreciated, Net 7,555,327 (684,261) (686) 6,870,380 Governmental Activities Capital Assets, Net 8,554,121 (684,261) (3,976) 7,865,884 Business-Type Activities
Capital Assets not being Depreciated:
Land 264,788 - - 264,788
Construction in progress 21,818,200 16,733,719 (5,659,336) 32,892,583 Total Capital Assets not being Depreciated 22,082,988 16,733,719 (5,659,336) 33,157,371 Capital Assets being Depreciated:
Buildings and improvements 1,207,868 - - 1,207,868
Equipment, furnishings and vehicles 2,212,957 146,095 - 2,359,052 Infrastructure 25,433,156 - 5,659,336 31,092,492
Total Capital Assets being Depreciated 28,853,981 146,095 5,659,336 34,659,412 Less Accumulated Depreciation:
Buildings and improvements 289,548 25,051 - 314,599
Equipment, furnishings and vehicles 737,512 102,887 - 840,399 Infrastructure 11,103,898 746,978 - 11,850,876
Total Accumulated Depreciation 12,130,958 874,916 - 13,005,874 Total Capital Assets being Depreciated, Net 16,723,023 (728,821) 5,659,336 21,653,538 Business-Type Activities Capital Assets, Net 38,806,011 16,004,898 - 54,810,909 Government-Wide Capital Assets, Net $47,360,132 $15,320,637 $ (3,976) $ 62,676,793 Mt. Shasta City Council Regular Meeting March 25, 2024 92 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
25 NOTE 6 CAPITAL ASSETS (Continued)
Depreciation expense was charged to functions/programs as follows:
Governmental Activities
General government $ 62,530
Public safety 229,678
Public works – streets, roads, buildings & garage 585,496 Depreciation Expense – Governmental Activities $ 877,704 Business-Type Activities
Water $ 460,878
Sewer 391,427
Drainage 22,611
Depreciation Expense – Business-Type Activities $ 874,916 NOTE 7 LONG-TERM DEBT
Long-term liabilities at June 30, 2023 consisted of the following:
Interest Annual Principal Original Issue
Types of indebtedness (purpose) Maturity Rates Installments Amount Governmental Activities
Revenue Bonds
2019 Issue (financed the acquisition and installation of a new corporate yard garage and solar equipment)
Term Current Interest Bond 8/1/2044 2.65% - 4% $120,000 - $220,000 1,121,646 $ Capital Lease Obligation
Master Equipment Lease Purchase Agreement - Type II Wildland Fire Engine Community First National Bank 5/1/2026 2.966% Approx. $25,000 127,489 Lease Liabilities
Building Lease Agreement - Upper Lodge Facility
Mt. Shasta Recreation and Parks District 7/1/2023 3.00% $ 7,200.00 13,960 Equipment Lease Agreement - Lanier IMC 3000 Copier
U.S. Bank 1/9/2024 7.50% $ 2,299.92 5,228
Equipment Lease Agreement - Lanier IMC 2500, 6000 Copiers De Lage Landen 8/19/2025 7.50% $ 4,936.72 17,824
Total Lease Liabilities 37,012
Governmental Activities $ 1,286,147
Mt. Shasta City Council Regular Meeting March 25, 2024 93 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
26 NOTE 7 LONG-TERM DEBT (Continued)
Business-Type Activities
Revenue Bonds
2019 Issue (financed the acquisition and installation of a new corporate yard garage and solar equipment)
Term Current Interest Bond 8/1/2044 2.65% - 4% $120,000 - $220,000 2,263,355 $ 2019 Issue (refinanced 2008 revenue bonds)
Term Current Interest Bond 8/1/2044 2.65% - 4% $120,000 - $220,000 930,000 2019 Issue (financed the downtown sewer collection system improvements) Term Current Interest Bond 8/1/2059 2.125% $9,100 - $48,300 1,309,000 Total Revenue Bonds 4,502,355
Anticipation Notes
Series 2021 WasteWater Revenue Bond Anticipation Notes
(USDA Grant and Loan Anticipation Financing)
CoBank, ACB Revolving Credit 5/1/2024 1.2% - 4% Not Applicable 9,209,000 Series 2021 Revolving Credit Promissory Notes
(SWRCB Grant and Loan Anticipation Financing)
CoBank, ACB Revolving Credit 5/1/2024 1.2% - 4% Not Applicable 3,000,000 Total Anticipation Notes 12,209,000
Line of Credit
CoBank, ACB Term Revolver Credit Line 5/1/2024 1.2% - 4% Not Applicable 3,000,000 Business-Type Activities $ 19,711,355
The following is a summary of long-term liabilities activity for the fiscal year ended June 30, 2023:
Balance Balance Due in
July 1, 2022 Additions Reductions June 30, 2023 One Year Governmental Activities
Revenue bonds $ 1,060,275 $ 32,950 - $ $ 1,027,325 34,231$ Revenue bond premium 221,537 9,938 - 211,599 9,938
Interest payable 13,694 - 412 13,282 13,282
Capital lease obligation 103,565 24,753 - 78,812 25,497 Lease liabilities 24,460 13,201 - 11,259 5,421
Compensated absences 169,866 27,242 197,108 - 157,686
Governmental Activities $ 1,593,397 $ 27,242 $ 81,254 $ 1,539,385 246,055$ Business-Type activities
Revenue bonds $ 4,277,823 $ 124,249 - $ $ 4,153,574 133,469$ Anticipation notes 3,826,459 8,229,848 12,056,307 - -
Interest payable 60,579 220,950 281,529 - 281,529
Compensated absences 33,262 11,962 - 45,224 36,179
Business-Type Activities $ 8,198,123 $ 8,462,760 $ 124,249 $ 16,536,634 451,177$ Mt. Shasta City Council Regular Meeting March 25, 2024 94 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
27 NOTE 7 LONG-TERM DEBT (Continued)
REVENUE BONDS:
As stated in Note 1, Sections A and I, the Mount Shasta Public Financing Authority (Authority), a component unit of the City, was created on May 13, 2019, as a result of a Joint Exercise of Powers Agreement between the City and the Mount Shasta Industrial Development Authority. The Authority’s purpose is to finance public capital improvements for the benefit of the City and refinance the City’s 2008 Revenue Bond debt. The Series 2019 Revenue Bonds shown in the first table of Note 7, is split between Governmental and Business-type Activities based on the capital improvements made for the specific fund. The revenue bond was issued for $4,315,000 to finance the acquisition and construction of a new corporate yard garage which serves the City’s public works department, as well as the water and sewer operations, thus the share of the financing related to the corporate garage, $1,090,000, is allocated between the governmental activity (i.e. public works) and the business-type activities. The revenue bond was also issued to finance the acquisition and installation of solar energy efficient equipment in the new corporate garage, City Hall, police station, fire station and the wastewater treatment plant, thus the share of the financing related to the solar equipment installation, $2,295,000, is allocated between the governmental activity (i.e. public works and general government) and the business-type activities of the water and sewer funds. Lastly, the revenue bond was issued to prepay and discharge the 2008 revenue bond debt of the sewer operations, thus, $930,000 of the revenue bonds have been allocated to the sewer fund. These bonds have varying interest rates based on when the bonds mature according to rates established in the bond maturity schedule. These rates are not subject to change based on market conditions.
Governmental and Business-Type Activities Combined:
Term Current Interest Bond, maturity 8/1/2044
Payment: pursuant to the Indenture of Trust dated October 1, 2019, and as described in the immediately preceding paragraph, the Authority issued limited obligations in the amount of $4,315,000. The amount allocated to governmental activities for the corporate garage and solar equipment, $1,121,646, will accrue interest from the date of delivery of the bonds, and interest thereon will be payable semiannually on February 1 and August 1 of each year, commencing February 1, 2020. Similarly, the amounts allocated to business-type activities, $3,193,354 for the corporate garage and solar equipment ($2,263,354) and refinance ($930,000), will accrue and pay interest in similar fashion.
Redemption: The Bonds are subject to optional, extraordinary, and mandatory sinking account redemption prior to their stated maturity dates, as provided in the Indenture Agreement.
Reserve Fund: A Reserve Fund is established with the Bond Trustee pursuant to the Indenture in an amount equal to the Reserve Requirement, $267,937.50. The Reserve Fund is satisfied by the City purchasing a Municipal Bond Debt Service Reserve Insurance Policy (Reserve Policy) from the Municipal Assurance Corp. and deposit the Reserve Policy with the Trustee. The City purchased this policy as part of the bond debt issuance costs in October 2019.
Security: The Bonds are limited obligations of the Authority and, as such, only the Revenues of the Authority are pledged as security for the Bonds. Revenues are defined as 1) all installment payments, including interest, payable by the City to the Authority using the Net Revenues of the Wastewater (Sewer) Enterprise 2) all base rental payments, including interest, payable by the City to the Authority and 3) amounts deposited in the Reserve Fund.
There are no significant default provisions.
Governmental Activities:
Capital Lease Obligation
Through a master equipment lease purchase agreement with Community First National Bank dated as of April 21, 2021, the City’s Governmental Activities purchased a 2021 Type II Wildland Fire Engine for $377,489 that included a down payment of $250,000 and lease financing of $127,489. The effective date is May 1, 2021 and is financed over five years with semi-annual equal payments of principal, and accrued interest thereon, of $13,829.79, starting November 1, 2021 and maturing May 1, 2026.
Mt. Shasta City Council Regular Meeting March 25, 2024 95 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
28 NOTE 7 LONG-TERM DEBT (Continued)
Security and Default: Consistent with lease purchase agreements, security lies solely in the right to repossess the equipment in the event of default. In addition, failure to pay any lease payment at the time specified in the lease will constitute default, and under these circumstances, the Lessor has the option to demand payment of the outstanding principal and accrued interest thereon immediately due and payable.
Lease Liabilities
Upper Lodge Facility Lease: Pursuant to the implementation of GASB Statement No. 87, Leases, on July 1, 2021, the City recorded a lease liability in Governmental Activities in the amount of $13,960. An incremental borrowing rate of 3% was used to calculate the present value of the future minimum lease payments to record the liability. The lease term is from July 1, 2021 to June 30, 2023, with no options to renew. Monthly payments of $600 are due to the Mt. Shasta Recreation and Parks District for the City’s right to use the facility for 3 meetings per month. There are no significant default provisions. During the year ended June 30, 2023, the lease liability was re-measured pursuant to Statement No. 87 due to changing rental payments.
Equipment Lease – Lanier IMC 3000: Also pursuant Statement No. 87, the City recorded a lease liability in Governmental Activities in the amount of $5,228. An incremental borrowing rate of 7.5% was used to calculate the present value of the future minimum lease payments to record the liability. The remaining lease term ends January 9, 2024, with no options to renew, except to roll over month-to-month. Monthly payments of $191.66 are due to U.S. Bank for the City’s right to use the copier equipment. Consistent with equipment lease agreements, security lies solely in the right to repossess the equipment in the event of default.
Equipment Lease – Lanier IMC 2500 & 6000: Also pursuant Statement No. 87, the City recorded a lease liability in Governmental Activities in the amount of $17,824. An incremental borrowing rate of 7.5% was used to calculate the present value of the future minimum lease payments to record the liability. The remaining lease term ends August 19, 2025, with no options to renew, except to roll over month-to-month. Quarterly payments of $1,234.18 are due to De Lage Landen for the City’s right to use the copier equipment. Consistent with equipment lease agreements, security lies solely in the right to repossess the equipment in the event of default.
Business-type Activities:
Term Current Interest Bond, maturity 8/1/2059
On May 9, 2019, an obligation of funds between the United States Department of Agriculture (USDA) Rural Development and the City of Mt. Shasta was authorized to fund a sewer project called the Downtown Sewer Collection Project. The funding from USDA Rural Development includes a loan of $1,309,000 in the form of Series 2019 Wastewater Enterprise Revenue Bond (Bond), and a grant of $2,151,880. The debt was issued on August 28, 2019 and will mature on August 1, 2059. The name of the owner of the bond is the USDA and the issuer is the Authority for the benefit of the City. The repayment of the bond by the Authority is made pursuant to an Installment Sale Agreement dated August 1, 2019, by and between the Authority and the City, whereby the City repays the annual debt service under the Installment Sale Agreement in amount exactly equal to the debt service required to repay the Bond.
Pledged Assets, Debt Reserves and Default: The City is obligated to pay the installment payments from Net Revenues as defined in the Trust Agreement dated August 1, 2019, by and between the Authority and the City.
There is a required debt service reserve equal to at least one annual loan installment that accumulates at the rate of 10% of one annual payment per year for 10 years or until a total of $51,065 has accumulated. Ten percent of the proposed loan payment would equal $426 per month. This would equate to $19,596 at June 30, 2023 and has been deposited by the City. Additionally, there is a required short-lived asset reserve to be deposited based on an annual assessment of the facility’s short-lived asset needs to pay for repairs and/or replacement of major system assets.
The assessed needs at June 30, 2023, of $623,768, has been deposited by the City. In the event of default, the Bond includes a provision that if the City is more than 30 days late on an installment payment, the full amount of the unpaid principal balance, together with accrued interest, becomes due immediately.
Mt. Shasta City Council Regular Meeting March 25, 2024 96 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
29 NOTE 7 LONG-TERM DEBT (Continued)
Revenue Bond and Promissory Note Anticipation Notes
On May 1, 2021, the City entered into an interim financing agreement with CoBank, ACB (CoBank), for the Federal loan anticipation financing for the State Mandated Wastewater Treatment Plant and Disposal Improvement Project. In anticipation of the Series 2021 Wastewater Revenue Bonds to be issued by the USDA in the amount of $9,209,000, Series 2021 Wastewater Revenue Bond Anticipation Notes (USDA Grant and Loan Anticipation Financing), on a drawdown basis, were approved by the City and are being financed by CoBank in the aforementioned interim financing agreement. The amount drawn down from this financing as of June 30, 2023 was $9,209,000. The total principal outstanding at the end of construction will be repaid from the proceeds of the Series 2021 Wastewater Revenue Bonds to be issued when the conditions of completion have been met. During the interim financing arrangement, interest is charged on the outstanding balance of the loan at the 1-month LIBOR Rate plus 1.4%. The project is expected to be finished and the USDA Rural Development RUS financing issued in FY23-24.
In anticipation of the Promissory Note with the State of California Water Resources Control Board (SWRCB) in the amount of $4,926,942, Series 2021 Revolving Credit Promissory Notes (SWRCB Loan Anticipation Financing), on a draw-down basis, were approved by the City and are being financed by SWRCB. The amount drawn down from this financing as of June 30, 2023 was $2,847,307. The total principal outstanding at the end of construction will be repaid from the proceeds of the Promissory Note to be financed when the conditions of completion have been met. During the interim financing arrangement, no interest is being charged. The project is expected to be finished and the State financing received in FY23-24.
Security and Default: Pursuant to Government Code, the proceeds of the RD/RUS financing are pledged for the payment of the interim financing obligation and the interest thereon. Default is defined as the City failing to make any payment to the lender or a termination or material modification of the RD/RUS letter of conditions. In the event of default, the lender may suspend construction financing and declare all outstanding principal and accrued interest thereon immediately due and payable.
The City also has an open Term Revolver Credit Line with CoBank for the purpose of meeting construction related cash flow needs in the interim before funds are received from interim financing or grant funds. The amount approved on a draw-down basis is $3,000,000. There is zero outstanding on this credit line at June 30, 2023.
The debt service requirements for the revenue bonds are as follows:
Year Ended June 30, Principal Interest Principal Interest 2024 $ 34,232 $ 31,363 $ 133,469 $ 115,437
2025 37,482 30,287 135,719 111,606
2026 37,482 29,163 136,119 107,738
2027 38,122 28,029 140,978 103,795
2028 38,763 26,876 145,938 99,711
2029-2033 218,389 110,622 802,911 416,773
2034-2038 259,761 71,574 936,238 282,905
2039-2043 252,407 35,790 759,792 169,547
2044-2048 110,687 3,330 444,310 74,676
2049-2053 - 200,200 - 46,720
2054-2058 - 222,200 - 24,531
2059-2061 - - 95,700 3,055
Totals $ 1,027,325 $ 367,034 $ 4,153,574 $ 1,556,494
Governmental Activities Business-Type Activities
Revenue Bonds
Mt. Shasta City Council Regular Meeting March 25, 2024 97 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
30 NOTE 7 LONG-TERM DEBT (Continued)
The debt service requirements for the anticipation notes are as follows:
Year Ended June 30, Principal Interest
2024 $ 578,325 - $
2025 312,681 195,691
2026 315,835 192,537
2027 319,057 189,315
2028 322,347 186,025
2029-2033 1,663,585 878,275
2034-2038 1,756,979 784,881
2039-2043 1,587,645 681,133
2044-2048 1,154,822 565,883
2049-2053 1,282,848 437,857
2054-2058 1,425,068 295,637
2059-2063 1,583,055 137,650
2064 332,385 7,063
Totals $ 12,056,307 $ 5,130,272
Anticipation Notes
Business-Type Activities
The debt service requirements for the capital lease obligations are as follows:
Year Ended June 30, Principal Interest
2024 $ 25,497 $ 2,163
2025 26,263 1,396
2026 27,053 607
Totals $ 78,812 $ 4,166
Capital Lease
Governmental Activities
The debt service requirements for the lease liabilities are as follows:
Year Ended June 30, Principal Interest
2024 $ 5,421 $ 666
2025 4,627 310
2026 1,211 23
Totals $ 11,259 $ 998
Lease Liabilities
Governmental Activities
NOTE 8 PENSION PLANS
General Information about the Pension Plans
Plan Description, Benefits Provided, and Employees Covered The Plan is a cost-sharing multiple employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). The June 30, 2022 GASB 68 actuarial valuation report for the combined Miscellaneous (employees other than Safety) and Safety (police and fire) Risk Pools list a full description of the assumptions for funding purposes, but not accounting purposes, and membership information. The benefit provided from Appendix B of the June 30, 2022 actuarial valuation reports for the CalPERS Miscellaneous and Safety Risk Pools are available on the CalPERS’ website (www.calpers.ca.gov) under “Forms and “Publications”.
Mt. Shasta City Council Regular Meeting March 25, 2024 98 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
31 NOTE 8 PENSION PLANS (continued)
Contribution Description
Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that an actuary determine the employer contribution rates for all public employers on an annual basis, and that the rates shall be effective on the July 1 following notice of a change in the rate. The CalPERS’ annual actuarial valuation process determines the total plan contributions. For public-agency cost-sharing plans covered by either the Plan, the basis of the Plan’s actuarially determined rate is the estimated amount necessary to pay the Plan’s allocated share of the risk pool’s costs of benefits earned by employees during the year, and any unfunded accrued liability. PERL requires the employer to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the measurement period ended June 30, 2022 (the measurement date), the basis for the contribution rates is actual contributions made, and not the actuarially determined contribution. The employees and the employer had the following contribution rates, shown as a percentage of the annual payroll.
Miscellaneous Risk Pool
Contribution Type Classic PEPRA
Employee (Charged) 7.00% 6.75%
Employee (Effective) 6.91% 6.75%
Employer 10.34% 7.59%
Safety Risk Pool
Contribution Type Classic - Fire Classic - Police PEPRA - Fire PEPRA - Police Employee (Charged) 9.00% 9.00% 13.00% 13.00%
Employee (Effective) 8.99% 8.95% 13.00% 13.00%
Employer 18.19% 18.19% 13.13% 13.13%
The charged employee contribution rate is the percentage that the plan charges the employees after the first $400 in earnings for Classic plans. The Classic plan charges the first $400 in earnings at two-thirds of the charged rate.
The effective employee contribution rate takes this into consideration.
Employer contribution rates may change if the Plan amends its contracts. It is the responsibility of the employer to make necessary accounting adjustments to reflect the impact due to any employer-paid member contributions, or situations where members pay a portion of the employer contribution.
Actuarial Methods and Assumptions Used to Determine Plan Contributions CalPERS derived the actuarial methods and assumptions used to set the actuarially determined contributions for Fiscal Year 2021–2022 from the June 30, 2021 funding valuation report.
Actuarial Cost Method
Actuarial Assumptions:
Investment rate of return 6.90%
Inflation 2.30%
Salary increases Varies by Entry Age and Service
Mortality rate table1
Post Retirement Benefit Increase
1 The mortality table used was developed based on CalPERS-specific data. The table rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.
Derived using CalPERS' Membership Data for all Funds
Contract COLA up to 2.3% until Purchasing Power
Protection Allowance Floor on Purchasing Power applies
Entry-Age Normal
Mt. Shasta City Council Regular Meeting March 25, 2024 99 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
32 NOTE 8 PENSION PLANS (continued)
All other actuarial assumptions used in the June 30, 2022 valuation use the results of the 2021 CalPERS Experience Study and Review of Actuarial Assumptions, including updates to salary increases, mortality, and retirement rates, as a basis. Employers should refer to CalPERS’ Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022, to obtain the required supplementary information for proper financial reporting.
Amortization of Deferred Outflows and Deferred Inflows of Resources Description of the Amortization Methodology
Under GASB 68, agencies recognize actuarial gains and losses related to changes in total pension liability and fiduciary net position in the pension expense systematically over time.
Agencies recognize the first amortized amount of a gain or loss in the pension expense for the year the gain or loss occurs. Agencies categorize the remaining amounts as deferred outflows and deferred inflows of resources related to pensions that are to be recognized in future pension expense.
The amortization period differs depending on the source of the gain or loss:
Difference between projected and actual
earnings
Five-year straight-line amortization
All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members
provided with benefits (active, inactive and retired), as of the beginning of the measurement period.
The report amortizes the Net Difference between the Projected and Actual Investment Earnings on Pension Plan Investments over a five-year period on a straight-line basis. The report recognizes one-fifth of the total in the Pension Expense during the measurement period and amortizes the remaining Net Difference between Projected and Actual Investment Earning on Pension Plan Investments at the measurement date over the remaining four-year period.
The Net Difference between Projected and Actual Investment Earnings on Pension Plan Investments in the Schedule of Collective Pension Amounts represents the unamortized balance relating to the current measurement period and the prior measurement period on a net basis.
The employer should amortize deferred outflows and deferred inflows of resources relating to Differences between Expected and Actual Experience, Changes of Assumptions, and employer-specific amounts over the EARSL of members provided with pensions through the Plan. The EARSL for PERF C for the June 30, 2022 measurement date is 3.7 years.
CalPERS derived the EARSL by dividing the total service years of 574,665 (the sum of remaining service lifetimes of all active employees) by 153,587 (the total number of participants: active, inactive, and retired) in PERF C.
Inactive employees and retirees have remaining service lifetimes equal to zero. The basis of total future service is the members’ probability of decrementing due to an event other than receiving a cash refund.
The Schedule of Collective Pension Amounts does not reflect employer-specific amounts such as changes in the employer proportion, differences between actual employer contributions and employers’ proportionate shares of contributions, and employer contributions to PERF C subsequent to the measurement date, as defined in GASB 68 paragraphs 54, 55, and 57. Appropriate treatment of such amounts is the responsibility of the employers.
CalPERS’ website provides CalPERS’ Comprehensive Annual Financial Report for the fiscal year ended June 30, 2022, and the CalPERS’ GASB 68 Accounting Valuation Reports for the public agency Miscellaneous and Safety Risk Pools, which together provide additional financial and actuarial information required for GASB 68 disclosures.
Mt. Shasta City Council Regular Meeting March 25, 2024 100 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
33 NOTE 8 PENSION PLANS (continued)
Allocation of Net Pension Liability and Pension Expense to Individual Plans A key aspect of GASB 68 pertaining to cost-sharing employers is the establishment of an approach to allocate the net pension liability and pension expense to the individual employers within the risk pool. Paragraph 49 of GASB 68 indicates that for pools with contribution rates within the pool based on separate relationships, the proportional allocation should reflect those relationships. The allocation method utilized by CalPERS determines the employer’s share by reflecting these relationships through the plans they sponsor within the risk pool. The valuation uses plan liability and asset-related information where available, and proportional allocations of individual plan amounts as of the valuation date where not available.
1. In determining a cost-sharing plan’s proportionate share, CalPERS’ staff calculated the total amounts of liabilities and assets for the risk pool on the valuation date (June 30, 2021). The risk pool’s fiduciary net position (FNP) subtracted from its total pension liability (TPL) determines the net pension liability (NPL) at the valuation date.
2. Using standard actuarial roll-forward methods, the staff then calculated the risk-pool TPL at the measurement date (June 30, 2022). The staff then subtracted the risk-pool FNP at the measurement date from this number to determine the NPL for the risk pool at the measurement date.
3. We calculated the individual plan’s TPL, FNP, and NPL at the valuation date. We calculated this and the subsequent steps each risk pool separately.
4. We calculated two ratios by dividing the plan’s individual TPL and FNP as of the valuation date from (3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively.
5. The plan’s TPL as of the Measurement Date is equal to the risk-pool TPL generated in (2), multiplied by the TPL ratio generated in (4).
6. The plan’s FNP as of the Measurement Date is equal to the FNP generated in (2) multiplied by the FNP ratio generated in (4), plus any additional side fund (or unfunded liability) contributions made by the employer on behalf of the plan during the measurement period.
7. The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in (5).
8. We combined the results from each risk pool for the results in this report.
Please refer to the CalPERS “Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan Schedules of Employer Allocations and Collective Pension Amounts” report for the Miscellaneous and Safety Risk Pools, available from CalPERS’ website under the GASB 68 section.
Each plan’s proportion of aggregate employer contributions is equal to the plan’s proportion of FNP calculated in (4). Each plan’s proportionate share of risk-pool pension expense is the sum of the related proportionate shares of the components of the aggregate pension expense.
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2023, the contributions recognized as part of pension expense for each Plan were as follows:
Measurement Year Ended June 30, 2022 Miscellaneous Safety Contributions - employer $ 262,024 $ 263,757
Contributions - employee $ 23,796 $ 19,479
Mt. Shasta City Council Regular Meeting March 25, 2024 101 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
34 NOTE 8 PENSION PLANS (continued)
As of June 30, 2023, the City reported net pension liabilities for its proportionate shares of the net pension liability of each Plan as follows:
Miscellaneous $ 2,705,247
Safety 2,379,228
Total $ 5,084,475
Net Pension
Liability
The City’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2022, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for each Plan as of June 30, 2021 and 2022 was as follows:
Miscellaneous Safety Total
Proportion - June 30, 2021 0.06851% 0.03477% 0.04661%
Proportion - June 30, 2022 0.05781% 0.03462% 0.04402%
Change - Increase (Decrease) -0.01070% -0.00015% -0.00259% For the year ended June 30, 2023, the City recognized net pension expense of $88,816.
At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Measurement Year Ended June 30, 2022
Deferred Inflows
of Resources
Changes in assumptions $ 517,108 $ -
Differences between actual and expected experience 152,794 62,223 Net difference between projected and actual earnings
on pension plan investments 871,243 - Difference between actual contributions vs. proportionate share of contributions - 298,878
Change in employer's proportion 207,956 2,983
Pension contributions made subsequent to the
measurement date 625,834 - Total $ 2,374,935 $ 364,084
Deferred Outflows
of Resources
The amount of $625,834 reported as deferred outflows of resources related to contributions subsequent to the measurement date for the miscellaneous and safety plans, will be recognized as reduction of the net pension liability in the measurement year ended June 30, 2023.
Mt. Shasta City Council Regular Meeting March 25, 2024 102 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
35 NOTE 8 PENSION PLANS (continued)
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the pension plans will be recognized as pension expense as follows:
Measurement Year Ended June 30,
2023 $ 364,424
2024 312,631
2025 175,689
2026 532,273
2027 - Thereafter - Total $ 1,385,017
Discount Rate
The discount rate used to measure the total pension liability for PERF C was 6.9%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
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 each Plan, calculated using the discount rate for each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
Plan's Net Pension Liability/(Asset)
Discount Rate
-1%
5.90%
Current
Discount Rate
6.90%
Discount
Rate
+1%
7.90%
Miscellaneous $ 4,066,665 $ 2,705,247 $ 1,585,138
Safety 3,520,694 2,379,228 1,446,338
Total $ 7,587,359 $ 5,084,475 $ 3,031,476
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
Long-Term Expected Rate of Return
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. Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.
Mt. Shasta City Council Regular Meeting March 25, 2024 103 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
36 NOTE 8 PENSION PLANS (continued)
The expected real rates of return by asset class are as follows:
Asset Class
Assumed Asset
Allocation
Real Return
Years 1 - 101,2
Global equity - cap-weighted 30.0% 4.45%
Global equity non-cap-weighted 12.0 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 15.0 3.21
Leverage (5.0) (0.59)
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021-22 Asset Liability Management study.
NOTE 9 FUND BALANCE
The following table provides details of the Fund Balance classifications used in the Balance Sheet of the governmental funds:
June 30, 2023 General Fund
Special
Revenue Funds Total
Nonspendable for:
Loans receivable $ - $ 771,517 $ 771,517
Prepaid expenses 20,749 20,749 - Nonspendable Fund Balance $ 20,749 $ 771,517 $ 792,266 Restricted for:
Police $ - $ 52,356 $ 52,356
Fire - 111,933 111,933
Sewer assessement - 140,885 140,885
Community development - 229,154 229,154
Capital projects fund - 4,233 4,233
Streets & roads 1,094,014 - 1,094,014
Library - 960,187 960,187
Restricted Fund Balance $ 2,592,762 - $ $ 2,592,762
Committed for:
Capital assets $ 159,814 $ 159,814 - $
Library capital projects - 172,037 172,037
Committed Fund Balance $ 159,814 $ 172,037 $ 331,851
Mt. Shasta City Council Regular Meeting March 25, 2024 104 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
37 NOTE 10 RISK MANAGEMENT
The City belongs to a joint power authority called Small Cities Organized Risk Effort (SCORE). The cities in SCORE are involved in a program whereby they share risk for general liability, workers compensation, and employment practices to limits of $25,000,000 for general liability, $100,000,000 for workers compensation, and $1,000,000 for employment practices. Each City has a self-insured retention (SIR) of $25,000 in a banking plan. Losses above the SIR are covered under the program risk sharing provisions up to $500,000 for liability, or $150,000 for workers compensation. Beyond these limits, coverage is provided by larger joint powers authorities: California Joint Powers Risk Management Authority (CJPRMA), Local Agencies Excess Workers Compensation Excess Joint Powers Authority (LAWCX), and Employment Risk Management Authority (ERMA) through a combination of self-insurance and/or reinsurance to the maximum limits. There has been no significant reduction in any of the insurance coverages from the prior year.
NOTE 11 CONTINGENCIES
The City is involved in certain claims and lawsuits. In the opinion of the City's management, of the remaining unsettled lawsuits, it is unlikely that these claims and lawsuits will have a material adverse effect on the accompanying financial statements.
The City has received federal and state grants for specific purposes that are subject to reviews by the grantor agencies. Such reviews could lead to requests for reimbursement to the grantor agency for expenditures disallowed under the terms of the grant. The amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time, although City management expects such amounts, if any to be immaterial.
The Sewer Fund has deposits collected in prior years for prepaid sewer connections. The landowners who purchased connections before March 25, 1991 do not have to pay the difference between the prepaid connection cost and the current cost of construction. Therefore, the City will be liable for any costs over the amount that was prepaid. As of June 30, 2023, there are 105 connections that were purchased before March 25, 1991. The dollar amount of the potential excess costs to be incurred by the City is undeterminable.
NOTE 12 PRIOR PERIOD ADJUSTMENT
During the fiscal year ended June 30, 2023, the City discovered that previously recorded $450,088 of grant receivables in the Water Fund for the Tank 1 and Roseburg Water System Improvement Project will become uncollectible because they were not billed within the period allotted in the grant agreement. A prior period adjustment was recorded in this fund as a decrease in beginning Net Position on page 11 because the revenue recognition criteria was not fully satisfied in the year that these costs should have been billed for reimbursement. The effect on the prior change in net position for FY21-22, the effect on beginning net position for the Water Fund and the overall effect on beginning net position for the Business-Type Activities, is presented as follows:
Business-Type
BUSINESS-TYPE ACTIVITIES Water Fund Activities
Net Position - July 1, 2022 - as previously reported $ 14,458,263 $ 33,375,681 Prior Period Adjustments:
(450,088) (450,088)
Net impact on the Net Position: (Decrease) (450,088) (450,088) Net Position - July 1, 2022 - as restated $ 14,008,175 $ 32,925,593 Effect on the Change in Net position
Change in Net Position, as previously reported FY21-22 $ 5,894,979 $ 12,676,783 Prior period adjustment (450,088) (450,088)
Change in Net Position, as restated FY21-22 $ 5,444,891 $ 12,226,695
1. Prior period adjustment for correcting the beginning grant receivable balance
Mt. Shasta City Council Regular Meeting March 25, 2024 105 CITY OF MT. SHASTA
Notes to the Financial Statements
June 30, 2023
38 NOTE 13 SUBSEQUENT EVENTS
As of March 6, 2024, the date in which the financial statements were available to be issued and the issuance date, the City’s City Council and management have reviewed the financial statements and they are not aware of any events that have occurred subsequent to the balance sheet date and through the date of the independent auditor’s report that would require adjustments to or disclosure in the financial statements.
NOTE 14 DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan (the "Plan") created in accordance with IRS Code Section 457. Amounts deferred by employees and the related income are held in trust by the plan provider for the exclusive benefit of the participants and their beneficiaries. The amounts are not owned by the City, nor are they available to the City's creditors. The Plan is funded solely by the employees' voluntary contributions to the Plan up to the limits prescribed by the IRS. The City does not match employee contributions; therefore, no expense is reported with respect to this plan.
Under the provisions of GASB Statement No. 84, Fiduciary Activities, which has superseded GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, the City is not required to report the value of the plan assets since the assets are held in trust for the exclusive benefit of the participants and their beneficiaries. Consequently, the values of the plan assets and any related liability to plan participants have been excluded from the City's financial statements.
NOTE 15 AGREEMENTS
The City has an agreement with the Mt. Shasta Fire Protection District to provide fire personnel services to the District. The City received $190,000 for the year ended June 30, 2023.
NOTE 16 COMMITMENTS
The City had contractual commitments at June 30, 2023, of approximately $1,297,000 for construction of various City sewer and water projects. The City also had contractual commitments at June 30, 2023, of approximately $122,000 for a subrecipient agreement for services provided for the Covid-19 supplemental food program.
NOTE 17 LOAN RECEIVABLE
During the year ended June 30, 2023, the City provided a $105,000 loan to a local business under the 18-CDBG12914 Economic Development Grant Program. According to the terms of this loan and the grant program, principal and interest shall be deferred to provide the necessary timeframe to meet, document and verify eligibility for forgiveness of the loan. The deferral period for forgiveness will be one year from the closing date. The deferral period may be extended with approval from Lender. Loans awarded under this program will become eligible for complete forgiveness once the CDBG “National Objective Standards” as stated in Section 3.4 of the Guidelines for Business Assistance Loan/Grant Program operated by City of Mt. Shasta with CDBG Funding adopted January 23, 2023. As of the date of this audit report, the eligibility requirements have not been met and the City is providing the extended timeframe to meet the eligibility for loan forgiveness.
NOTE 18 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgetary information – the annual budget is adopted on a basis consistent with generally accepted accounting principles for all major Governmental funds of the City and significant non-major Governmental funds. The budget is adjusted throughout the year as necessary.
Excess of expenditures over appropriations – for the year ended June 30, 2023, expenditures exceeded appropriations for the General Fund by $50,458 primarily due to approved but unbudgeted capital outlay expenditures. The City’s Community Development Block Grant Fund’s expenditures exceeded appropriations by $569,088 due to approved but unbudgeted CARES Act assistance expenditures, which were offset by additional revenues billed to the grant.
Mt. Shasta City Council Regular Meeting March 25, 2024 106
REQUIRED SUPPLEMENTARY INFORMATION SECTION
(UNAUDITED)
Mt. Shasta City Council Regular Meeting March 25, 2024 107 Favorable
(Unfavorable)
Original Final Actual Variance With
Budget Budget Amounts Final Budget
REVENUES
Property taxes $ 615,000 $ 635,000 $ 701,550 $ 66,550
Sales and use taxes 2,231,265 2,311,565 2,325,568 14,003 Transient occupancy taxes 1,224,000 1,224,000 1,254,916 30,916 Franchise and other licenses 90,100 90,100 85,692 (4,408) Licenses and permits 32,500 52,500 117,366 64,866
Intergovernmental revenues 622,825 522,825 512,579 (10,246) Charges for services 263,100 265,600 249,744 (15,856)
Fines, forfeitures and penalties 6,600 6,600 11,426 4,826 Use of money and property 650 650 2,607 1,957
Net change in fair value of investments - 5,870 - 5,870 Other 388,100 388,100 118,086 (270,014)
Total Revenues 5,474,140 5,496,940 5,385,404 (111,536)
EXPENDITURES
Current:
City council 49,280 50,980 47,152 3,828
City administrator 257,439 284,984 242,844 42,140
City clerk 8,029 13,029 12,930 99
Finance and administration 1,262,110 1,269,513 1,089,278 180,235 City attorney 61,000 65,000 76,318 (11,318)
Police protection 1,731,543 1,985,661 2,006,626 (20,965) Fire protection 882,716 954,557 999,595 (45,038)
Planning 451,746 281,874 340,023 (58,149)
Streets and roads 487,235 570,776 595,679 (24,903)
Buildings and grounds 232,956 267,577 297,363 (29,786)
Community and economic development 114,721 143,969 156,121 (12,152) Capital outlay - - 60,715 (60,715)
Debt service:
Principal payments 32,951 32,951 45,464 (12,513)
Interest 32,277 32,277 33,498 (1,221)
Total Expenditures 5,604,003 5,953,148 6,003,606 (50,458) Excess (Deficiency) of Revenues Over (Under) Expenditures (129,863) (456,208) (618,202) (161,994)
OTHER FINANCING SOURCES (USES)
Operating transfers in (out) 92,000 92,000 102,695 10,695 Re-measurement of lease liability - - (687) (687)
Total Other Financing Sources (Uses) 92,000 92,000 102,008 10,008 Change in Fund Balance $ (37,863) $ (364,208) $ (516,194) $ (151,986) CITY OF MT. SHASTA
Budgetary Comparison Schedule
For The Year Ended June 30, 2023
General Fund
The accompanying notes are an integral
part of these financial statements.
39 Mt. Shasta City Council Regular Meeting March 25, 2024 108 Favorable
(Unfavorable)
Original Final Actual Variance With
Budget Budget Amounts Final Budget
REVENUES
Intergovernmental revenues 86,000 151,000 243,391 92,391 CARES Act Covid-19 revenues 755,000 755,000 1,342,273 587,273 Use of money and property 15,025 15,025 5,624 (9,401)
Total Revenues 856,025 921,025 1,591,288 670,263
EXPENDITURES
Current:
Community and economic development 86,000 151,000 138,938 12,062 CARES Act Covid-19 assistance 755,000 755,000 1,336,150 (581,150) Total Expenditures 841,000 906,000 1,475,088 (569,088)
Excess (Deficiency) of Revenues Over (Under) Expenditures 15,025 15,025 116,200 101,175
OTHER FINANCING SOURCES (USES)
Operating transfers in (out) (15,025) (15,025) (10,498) 4,527 Total Other Financing Sources (Uses) (15,025) (15,025) (10,498) 4,527 Change in Fund Balance $ - $ 105,702 - $ $ 105,702
Budgetary Comparison Schedule
Community Development Black Grant Fund
For The Year Ended June 30, 2023
CITY OF MT. SHASTA
The accompanying notes are an integral
part of these financial statements.
40 Mt. Shasta City Council Regular Meeting March 25, 2024 109
Measurement Year Ending June 30: 1
2014 2015 2016 2017 2018 2019 2020 2021 2022
Plan's proportion of the net pension liability 0.03677% 0.03478% 0.03669% 0.03691% 0.03753% 0.03836% 0.03933% 0.04661% 0.04402% Plan's proportionate share of the net pension liability $2,288,034 $2,387,208 $3,174,391 $3,660,325 $3,616,147 $3,930,972 $4,279,666 $2,521,006 $5,084,475 Plan's covered-employee payroll $1,395,764 $1,504,449 $1,711,974 $1,749,876 $1,770,620 $2,015,466 $1,934,681 $1,931,680 $1,975,448 Plan's proportionate share of the net pension liability as percentage of its covered-employee payroll 163.93% 158.68% 185.42% 209.18% 204.23% 195.04% 221.21% 130.51% 257.38% Plan's proportionate share of the fiduciary net position as a percentage of the plan's total pension liability 18.97% 18.99% 23.69% 25.01% 23.69% 24.58% 25.48% 14.55% 72.14% Plan's proportionate share of aggregate employer
contributions 2
$269,809 $349,779 $368,746 $399,015 $465,252 $512,667 $598,343 $675,255 $770,427 1 GASB 68 requires historical information only for measurement periods for which GASB 68 is applicable.
PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
COMBINED PLANS
2 The Plan’s proportionate share of aggregate contributions may not match the actual contributions made by the employer during the measurement period. The Plan’s proportionate share of aggregate contributions uses the Plan’s proportion of fiduciary net position multiplied by the total employer contribution amount as its basis, as well as any additional side fund (or unfunded liability) contributions made by the employer during the measurement period. GASB 68 does not require that we display this data for employers participating in cost-sharing plans, but it we show it here because we use it in the calculation of the Plan’s pension expense.
CITY OF MT. SHASTA
Cost-Sharing Multiple-Employer Defined Benefit Pension Plan June 30, 2023
Last 10 Years
SCHEDULE OF THE LOCAL GOVERNMENT'S
The accompanying notes are an integral
part of these financial statements.
Mt.
41 Shasta City Council Regular Meeting March 25, 2024 110 Measurement Year Ending June 30: 1
2014 2015 2016 2017 2018 2019 2020 2021 2022
Actuarially determined contribution 2 $ 205,584 215,802$ 274,569$ 326,891$ 353,005$ 436,230$ 441,494$ 485,179$ 525,780$ Contributions in relation to the actuarially
determined contribution 205,584 215,802 274,569 326,891 353,005 436,230 441,494 485,179 525,780 Contribution deficiency (excess) $ - -$ -$ -$ -$ -$ -$ -$ -$ Covered employee payroll $ 1,395,764 1,504,449$ 1,711,974$ 1,749,876$ 1,770,620$ 2,015,466$ 1,934,681$ 1,931,680$ 1,975,448$ Contributions as a percentage of coveredemployee payroll 14.73% 14.34% 16.04% 18.68% 19.94% 21.64% 22.82% 25.12% 26.62% 1 GASB 68 requires historical information only for measurement periods for which GASB 68 is applicable.
Notes to Schedule:
Change in Assumptions: None
COMBINED PLANS
2 GASB 68 assumes that employers contribute an amount equal to the actuarially determined contribution. However, some employers may choose to make additional contributions towards their side fund or their unfunded liability. Employer contributions for such plans exceed the actuarially determined contribution. CalPERS determined that employer obligations referred to as "side funds" do not conform to the circumstances described in the paragraph 120 of GASB 68, therefore CalPERS does not consider them separately financed specific liabilities.
Change in Benefit Terms: There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified period (also known as "Golden Handshakes"). Employers that have done so may need to report this information as a separate liability in their financial statement as CalPERS considers such amounts to be separately financed employer-specific liabilities. These employers should consult with their auditors.
CITY OF MT. SHASTA
Cost-Sharing Multiple-Employer Defined Benefit Pension Plan June 30, 2023
Last 10 Years
SCHEDULE OF PLANS CONTRIBUTIONS
The accompanying notes are an integral
part of these financial statements. 42
Mt. Shasta City Council Regular Meeting March 25, 2024 111
SUPPLEMENTARY INFORMATION
Mt. Shasta City Council Regular Meeting March 25, 2024 112 Community
Business Fire Development Local Transportation Public Safety Improvement Assessment Impact Transportation Project COPS Enhancement Gas Tax Balance Fund Fund Fund Fund Fund Fund Fund Fund Forward
ASSETS
Cash and investments $ 69,967 $ 101,086 $ 40,655 $ 534,088 $ 60,321$ - $ 69,201 532,705$ $ 1,408,023 Receivables (net of allowances for doubtful
Accounts, where applicable):
Intergovernmental 10,790 - - 10,114 7,947 35 20,540 - 49,426 Interest 41 57 24 288 - - - 313 723
Total Assets $ 70,008 $ 111,933 $ 40,679 $ 544,490 $ 7,947 60,356$ $ 69,201 553,558$ $ 1,458,172
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ - $ - $ - $ - $ 8,000$ - $ 57,952 -$ 65,952 $ Overdraft payable - - - - 7,178 - - - 7,178
Due to other governments - - - 4,803 - - - - 4,803
Total Liabilities - - - 4,803 7,178 8,000 57,952 - 77,933 Fund Balances
Restricted 70,008 111,933 40,679 539,687 769 52,356 11,249 553,558 1,380,239 Unassigned - - - - - - - - -
Total Fund Balances 70,008 111,933 40,679 539,687 769 52,356 11,249 553,558 1,380,239 Total Liabilities and Fund Balances $ 70,008 $ 111,933 $ 40,679 $ 544,490 $ 7,947 60,356$ $ 69,201 553,558$ $ 1,458,172 Special Revenue Funds
CITY OF MT. SHASTA
Combining Balance Sheet - Nonmajor Governmental Funds
June 30, 2023
The accompanying notes are an integral
part of these financial statements.
43 Mt. Shasta City Council Regular Meeting March 25, 2024 113 Special Other
Balance Springhill Capital Economic Projects Special
Brought Assessment Projects Enhancement Grant Library Revenue Forward Fund Fund Fund Fund Fund Funds Total
ASSETS
Cash and investments $ 1,408,023 $ 140,802 4,233$ $ 91,230 -$ 1,071,251 $ 32,848$ $ 2,748,387 Receivables (net of allowances for doubtful
Accounts, where applicable):
Intergovernmental 49,426 - - 135,866 - 70,480 - 255,772 Interest 723 83 - - - 616 1 1,423
Total Assets $ 1,458,172 $ 140,885 4,233$ $ 91,230 135,866$ $ 1,142,347 32,849$ $ 3,005,582
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 65,952 $ - -$ $ 125,811$ - $ 10,123 -$ 201,886 $ Overdraft payable 7,178 - 3,912 - - - 11,090
Due to other governments 4,803 - - - - - - 4,803
Unearned revenue - - - 4,388 - 18,101 - 22,489
Total Liabilities 77,933 - - 134,111 - 10,123 18,101 240,268 Fund Balances
Restricted 1,380,239 140,885 4,233 91,230 1,755 960,187 14,233 2,592,762 Committed - - - - - 172,037 - 172,037
Unassigned - - - - - - 515 515
Total Fund Balances 1,380,239 140,885 4,233 91,230 1,755 1,132,224 14,748 2,765,314 Total Liabilities and Fund Balances $ 1,458,172 $ 140,885 4,233$ $ 91,230 135,866$ $ 1,142,347 32,849$ $ 3,005,582 CITY OF MT. SHASTA
Combining Balance Sheet - Nonmajor Governmental Funds (Continued) June 30, 2023
Special Revenue Funds
The accompanying notes are an integral
part of these financial statements.
44 Mt. Shasta City Council Regular Meeting March 25, 2024 114 Community
Business Fire Development Local Transportation Public Safety Improvement Assessment Impact Transportation Project COPS Enhancement Gas Tax Balance Fund Fund Fund Fund Fund Fund Fund Fund Forward
REVENUES
Sales and use taxes $ - $ - $ - $ - $ - -$ $ 133,539$ - $ 133,539 Assessments 9,877 48,961 - - - - - - 58,838
Intergovernmental revenues - - - 172,353 165,306 - 72,398 - 410,057 Charges for services 14,126 - - - - - - - 14,126
Use of money and property 289 383 161 1,573 - - 1,751 - 4,157 Net change in fair value of investments 309 447 180 2,360 1,578 - 2,354 - 7,228 Other revenue 1,930 - - - - - 51,094 - 53,024
Total Revenues 12,405 63,917 341 176,286 166,884 - 51,094 210,042 680,969
EXPENDITURES
Current:
Police protection - - - - 31,914 - 21,433 - 53,347
Fire protection 19,876 - - - - - - - 19,876
Public transit assistance - - - 81,818 - - - - 81,818
Capital outlay - - - - 110,716 - 21,326 - 132,042
Debt service:
Principal 24,752 - - - - - - - 24,752
Interest - 2,907 - - - - - - 2,907
Total Expenditures 6,498 47,535 - 81,818 142,630 - 42,759 - 321,240 5,907 16,382 341 94,468 24,254 - 8,335 210,042 359,729
OTHER FINANCING SOURCES (USES)
Operating transfers in (out) - - - - (70,000) - (5,000) (43,108) (118,108) Total Other Financing Sources (Uses) - - - - (70,000) - (5,000) (43,108) (118,108) Changes in Fund Balances 5,907 16,382 341 94,468 (45,746) - 3,335 166,934 241,621
FUND BALANCES
Beginning of year 64,101 95,551 40,338 445,219 769 98,102 7,914 386,624 1,138,618 End of year $ 70,008 $ 111,933 $ 40,679 $ 539,687 $ 769 52,356$ $ 11,249 553,558$ $ 1,380,239 Special Revenue Funds
CITY OF MT. SHASTA
Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds For The Year Ended June 30, 2023
Excess of Revenues Over (Under)
Expenditures
The accompanying notes are an integral
part of these financial statements.
45 Mt. Shasta City Council Regular Meeting March 25, 2024 115 Special Other
Balance Springhill Capital Economic Projects Special
Brought Assessment Projects Enhancement Grant Library Revenue Forward Fund Fund Fund Fund Fund Funds Total
REVENUES
Sales and use taxes $ 133,539 $ - -$ $ - -$ 391,695 $ -$ 525,234 $ Assessments 58,838 - - - - - - 58,838
Intergovernmental revenues 410,057 - - 678,929 - - - 1,088,986 Charges for services 14,126 - - - - - - 14,126
Use of money and property 4,157 558 - 14 - 2,110 56 6,895 Net change in fair value of investments 7,228 622 - (534) - 4,734 55 12,105 Other revenue 53,024 - - - - - - 53,024
Total Revenues 680,969 1,180 - 678,929 (520) 398,539 111 1,759,208
EXPENDITURES
Current:
Police protection 53,347 - - - - - - 53,347
Fire protection 19,876 - - - - - - 19,876
Public transit assistance 81,818 - - - - - - 81,818
Community development 6,498 - - 1,705 689,004 18,741 - 715,948 Library - - - - - 198,609 - 198,609
Capital outlay 132,042 - - - - (3,290) - 128,752
Debt service:
Principal 24,752 - - - - - - 24,752
Interest 2,907 - - - - - - 2,907
Total Expenditures 321,240 - - 1,705 689,004 195,319 18,741 1,226,009 359,729 1,180 - (2,225) (10,075) 203,220 (18,630) 533,199
OTHER FINANCING SOURCES (USES)
Operating transfers in (out) (118,108) - - 5,498 (2,587) 5,000 - (110,197) Total Other Financing Sources (Uses) (118,108) - - 5,498 (2,587) 5,000 - (110,197) Changes in Fund Balances 241,621 1,180 - 3,273 (12,662) 203,220 (13,630) 423,002
FUND BALANCES
Beginning of year 1,138,618 139,705 4,233 87,957 14,417 929,004 28,378 2,342,312 End of year $ 1,380,239 $ 140,885 4,233$ $ 91,230 1,755$ $ 1,132,224 14,748$ $ 2,765,314 CITY OF MT. SHASTA
Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds (Continued) For The Year Ended June 30, 2023
Special Revenue Funds
Excess of Revenues Over (Under)
Expenditures
The accompanying notes are an integral
part of these financial statements.
46 Mt. Shasta City Council Regular Meeting March 25, 2024 116
SINGLE AUDIT SCHEDULES AND REPORTS
Mt. Shasta City Council Regular Meeting March 25, 2024 117 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 City Council and Audit Committee
City of Mt. Shasta, California
I have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Mt. Shasta, California as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City of Mt. Shasta, California's basic financial statements, and have issued my report thereon dated March 6, 2024.
Report on Internal Control Over Financial Reporting
In planning and performing my audit of the financial statements, I considered the City of Mt. Shasta, California'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 my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Mt.
Shasta, California's internal control. Accordingly, I do not express an opinion on the effectiveness of the City of Mt. Shasta, California'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 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.
My 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. I identified certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item 2023-001 that I consider to be material weaknesses.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Mt. Shasta, California's financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit and, accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 47 Mt. Shasta City Council Regular Meeting March 25, 2024 118 INDEPENDENT AUDITOR’S REPORT
(Continued)
City of Mt. Shasta, California’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City of Mt.
Shasta, California’s response to the findings identified in my audit and described in the accompanying schedule of findings and questioned costs. City of Mt. Shasta, California’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, I express no opinion on the response.
Purpose of This Report
The purpose of this report is solely to describe the scope of my 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.
Charles W. Pillon, CPA
Anderson, California
March 6, 2024
48 Mt. Shasta City Council Regular Meeting March 25, 2024 119 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the City Council and Audit Committee
City of Mt. Shasta, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
I have audited City of Mt. Shasta, California’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of City of Mt. Shasta, California’s major federal programs for the year ended June 30, 2023.
City of Mt. Shasta, California’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
In my opinion, City of Mt. Shasta, California complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2023.
Basis for Opinion on Each Major Federal Program
I conducted my audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). My responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of my report.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to City of Mt.
Shasta, California’s federal programs.
Auditor’s Responsibilities for the Audit of Compliance
My objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on City of Mt. Shasta, California’s compliance based on my audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City of Mt. Shasta, California’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, I:
49 Mt. Shasta City Council Regular Meeting March 25, 2024 120 INDEPENDENT AUDITOR’S REPORT
(Continued)
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding City of Mt. Shasta, California’s compliance with the compliance requirements referred to above and performing such other procedures as I considered necessary in the circumstances.
Obtain an understanding of City of Mt. Shasta, California’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of City of Mt. Shasta, California’s internal control over compliance. Accordingly, no such opinion is expressed.
I am required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that I identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
My consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during my audit I did not identify any deficiencies in internal control over compliance that I consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
My audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of my testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Charles W. Pillon, CPA
Anderson, California
March 6, 2024
50 Mt. Shasta City Council Regular Meeting March 25, 2024 121 Passed-through
Pass-Through Other Award Federal to
Federal Agency/Program or Cluster Title ALN Agency Number Expenditures Subrecipients Economic Development Cluster
Department of Commerce
Economic Adjustment Assistance 11.307 43,999
Total Economic Development Cluster: Department of Commerce 43,999 Clean Water State Revolving Fund Cluster
United States Environmental Protection Agency
Capitalization Grants for Clean Water State
Revolving Funds: State Mandated Wastewater
Treatment and Disposal Improvement Project 66.458
California State
Water Resources
Control Board D1701041 2,359,855
2,359,855
United States Department of Agriculture
Cooperative Forestry Assistance 10.664 38,259
Water and Waste Disposal Systems for Rural
Communities: State Mandated Wastewater
Treatment and Disposal Improvement Project 10.760 10,930,530 Loan balance - beginning of period = $ 4,872,165
Loans current period = $ 4,336,835
Loan balance - end of period = $ 9,209,000
Total United States Department of Agriculture 10,968,789 Department of Housing and Urban Development
Community Development Block Grants/State's
Program and Non-Entitlement Grants in Hawaii
COVID-19 CV-02 Supplemental Food 14.228 State of California 20-CDBG-CV2-3-
00094 370,822 370,822
COVID-19 CV-02 Subsistence 14.228 State of California
20-CDBG-CV2-3-
00106 965,328 116,505
2018 Business Assistance 14.228 State of California 18-CDBG-12914 113,582 8,499 2018 Micro Enterprise Program - Technical
Assistance 14.228 State of California 18-CDBG-12916 35,903 4,196 2018 Microenterprise Financial Assistance 14.228 State of California 18-CDBG-12915 94,455 15,815 Non Housing OTC (2019) Pine Street Water
Project 14.228 State of California 20-CDBG-12093 1,996,726 Total ALN 14.228: Department of Housing and Urban Development 3,576,816 515,837 United States Environmental Protection Agency
Brownfields Multipurpose, Assessment, Revolving
Loan Fund, and Cleanup Cooperative Agreements 66.818 BF-99T45801-0 130,694 Brownfields Multipurpose, Assessment, Revolving
Loan Fund, and Cleanup Cooperative Agreements 66.818 BF-98T07101-0 337,006 Total ALN 66.818: United States Environmental Protection Agency 467,700 15,013,305
Total Expenditures of Federal Awards $ 17,417,159 $ 515,837 Total Other Programs (Treated individually for major program determination) Other Programs (Treated individually for major program determination) CITY OF MT. SHASTA
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2023
Total Clean Water State Revolving Fund Cluster: United States Environmental Protection Agency
The accompanying notes are an
intergral part of this schedule 51
Mt. Shasta City Council Regular Meeting March 25, 2024 122 CITY OF MT. SHASTA
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2023
NOTE A—BASIS OF PRESENTATION
The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of the City of Mt. Shasta (the City) under programs of the federal government for the fiscal year ended June 30, 2023.
The information in this Schedule is presented in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial net position or changes in net position of the City.
NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, when applicable, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Also, when applicable, recognition is following the Uniform Guidance for federal awards granted after December 26, 2014.
2. Pass-through entity identifying numbers are presented where available.
NOTE C—SUBRECIPIENTS
Of the federal expenditures presented in the schedule, the City provided $515,837 of the federal awards to subrecipients.
NOTE D—INDIRECT COST RATE
The City did not elect to use the 10% de Minimis indirect cost rate on the federal awards presented in this schedule.
NOTE E—FEDERAL LOANS
a) The City was approved by the United States Department of Agriculture (USDA) Rural Development to receive a loan totaling $9,209,000 for the State Mandated Wastewater Treatment Plant and Disposal Improvement Project. Interim loan financing was received for the construction period. Due to this loan having “continuing compliance requirements” pursuant to the 2023 Compliance Supplement, the amount listed for this loan includes the beginning of the period loan balance plus proceeds used during the year. The balance owing at the end of the period is $9,209,000.
b) The City was approved by the pass-through entity, California State Water Resources Control Board, to receive a pass-through loan (i.e. sub-award) from the Environmental Protection Agency Clean Water State Revolving Fund totaling $6,926,942 for the State Mandated Wastewater Treatment Plant and Disposal Improvement Project. $2,000,000 of this loan is funded using Principal Forgiveness subsidy funding and has reduced the loan balance at the end of the period. Due to this loan not having “continuing compliance requirements” pursuant to the 2023 Compliance Supplement, the amount listed for ALN 66.458 is the fiscal year expenditures funded by this loan during the fiscal year under audit without the beginning loan balance.
The balance owing at the end of the period is $2,847,307. 52 Mt. Shasta City Council Regular Meeting March 25, 2024 123 CITY OF MT. SHASTA
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2023
SUMMARY OF AUDITOR’S RESULTS
1. The independent auditor’s report expresses an unmodified opinion on whether the financial statements of the City of Mt. Shasta, California were prepared in accordance with GAAP.
2. Material weaknesses were identified relating to the audit of the financial statements as reported in the 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.
3. No instances of noncompliance material to the financial statements of the City of Mt. Shasta were identified which would be required to be reported in accordance with Government Auditing Standards.
4. No material weakness was identified in internal control over compliance for the major federal award program reported in the Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance.
5. The independent auditor’s report on compliance over major federal award programs expressed an unmodified opinion on all major federal award programs.
6. There are no audit findings that are required to be reported in accordance with 2 CFR Section 200.516(a) reported in this Schedule.
7. The programs tested as major programs were:
United States Department of Agriculture, Water and Waste Disposal Systems for Rural Communities, ALN 10.760
8. The threshold used for distinguishing between Type A and B programs was $750,000.
9. The City of Mt. Shasta did not qualify as a low-risk auditee. 53 Mt. Shasta City Council Regular Meeting March 25, 2024 124 CITY OF MT. SHASTA
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2023
FINDINGS – FINANCIAL STATEMENT AUDIT
Finding 2023-001 Lack of Effective Internal Control over Financial Close and Reporting Condition: I identified and posted numerous material audit adjustments as part of my audit in order to agree the financial statements with the underlying support. These were required in order for the financial statements to be prepared in accordance and/or conformity with generally accepted accounting principles (GAAP). In addition, there were material misstatements in the preparation of the schedule of expenditures of federal awards.
Criteria: The City must present its financial statements in accordance with generally accepted accounting principles and the schedule of expenditures of federal awards must be in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. In accordance with Statement on Auditing Standards No. 122c, external auditors cannot be part of an entity’s internal controls over the preparation of the financial statements, or the schedule of expenditures of federal awards, and are prohibited from auditing their own work, which could impair independence.
Cause: The Finance Director did not identify and correct material misstatements in the financial statements before the start of the audit. The schedule of expenditures of federal awards was prepared without including the grant portion of a major federal award and the some subrecipient pass-through balances were incorrect.
Effect: This is a material weakness in the internal controls over financial close and reporting, which includes the preparation of the schedule of expenditures of federal awards. Year-end financial statements contained material misstatements which could lead to inaccurate decisions that impact the City, as well as impacting the external users of the financial statements. There are no questioned costs related to this finding.
Context: This is a new finding. The items consisted of adjustments to properly record grant revenues and expenditures, correct year-end balances for investments, loans receivable, grant related receivables, accounts payable, interest payable, long-term debt, capital assets and depreciation, and ensure the schedule of expenditures of federal awards was fairly stated.
Recommendation: I recommend that the City takes steps to ensure that all adjustments necessary to prepare the financial statements, and related notes, in accordance with GAAP be identified and posted prior to the start of the audit. The City should also ensure that the schedule of expenditures of federal awards is fairly stated by including all federal awards and amounts passed through to subrecipients are correct.
Views of Responsible Officials: The City agrees with this finding.
FINDINGS – MAJOR FEDERAL AWARD PROGRAMS AUDIT
NONE
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
NONE
54 Mt. Shasta City Council Regular Meeting March 25, 2024 125 Mt. Shasta City Council Regular Meeting March 25, 2024 126
MOUNT SHASTA PUBLIC
FINANCING AUTHORITY
Mt. Shasta, California
BASIC FINANCIAL STATEMENTS
June 30, 2023
Mt. Shasta City Council Regular Meeting March 25, 2024 127
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California)
TABLE OF CONTENTS
June 30, 2023
Page
Number
INDEPENDENT AUDITOR’S REPORT 1
BASIC FINANCIAL STATEMENTS
Statement of Net Position, Governmental Funds Balance Sheet and Reconciliation of Governmental Fund Balance to the Statement of Net Position – Governmental Activities 3
Statement of Activities and Governmental Fund Revenues, Expenditures and Change in Fund Balance 4
Reconciliation of Statement of Revenues, Expenditures, and Change in Fund Balance – Governmental Funds to the Statement of Activities - Governmental Activities 5 Notes to the Financial Statements 6
OTHER SCHEDULES AND 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 13
Schedule of Findings and Questioned Costs 15
Mt. Shasta City Council Regular Meeting March 25, 2024 128 INDEPENDENT AUDITOR’S REPORT
To the Board of Directors and Audit Committee
Mount Shasta Public Financing Authority
Mt. Shasta, California
Report on the Audit of the Financial Statements
Opinions
I have audited the accompanying financial statements of the governmental activities and major fund of the Mount Shasta Public Financing Authority, a component unit of the City of Mt. Shasta, California as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.
In my 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 Mount Shasta Public Financing Authority as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
I conducted my 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. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am required to be independent of the Mount Shasta Public Financing Authority and to meet my other ethical responsibilities, in accordance with the relevant ethical requirements relating to my audit. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Mount Shasta Public Financing Authority’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
1 Mt. Shasta City Council Regular Meeting March 25, 2024 129 INDEPENDENT AUDITOR’S REPORT
(Continued)
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, I:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Mount Shasta Public Financing Authority’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in my judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Mount Shasta Public Financing Authority’s ability to continue as a going concern for a reasonable period of time.
I am required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that I identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis (not presented), be presented to supplement the basic financial statements. Management has omitted Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. My opinion on the basic financial statements is not affected by this missing information.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated March 6, 2024, on my consideration of the Mount Shasta Public Financing Authority's internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my 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 Mount Shasta Public Financing Authority's internal control over financial reporting and compliance.
Charles W. Pillon, CPA
Anderson, California
March 6, 2024
2 Mt. Shasta City Council Regular Meeting March 25, 2024 130
BASIC FINANCIAL STATEMENTS
Mt. Shasta City Council Regular Meeting March 25, 2024 131 Governmental
Activities
General Statement of
Fund Adjustments Net Position
ASSETS
Restricted cash and investments $ - $ - $ -
Interest receivable - 62,073 62,073
Investment in lease to the City of Mt. Shasta - 1,005,000 1,005,000 Installment notes receivable with the City of Mt. Shasta - 4,175,900 4,175,900 Contributed capital investment in the City of Mt. Shasta - 36,198 36,198 Total Assets $ 5,279,171 - $ $ 5,279,171
LIABILITIES AND FUND BALANCE
Liabilities
Interest payable $ - $ 62,073 $ 62,073
Due within one year - 177,638 177,638
Due in more than one year - 5,214,861 5,214,861
Total Liabilities - 5,454,572 5,454,572
Fund Balance/Net Position
Fund balance - (175,401)
Total Liabilities and Fund Balance $ -
Total Net Position $ (175,401) $ (175,401)
Total governmental fund balance, as above $ -
Amounts reported for governmental activities in the Statement of Net Position are different because:
Interest receivable used in governmental activities is not a financial resource and therefore not reported in the funds 62,073
Contributed capital investment used in governmental activities is not a financial resource and therefore not reported in the funds 36,198 Long-term investment in the capital lease to the City of Mt. Shasta in governmental activitites is not a financial resource and therefore not reported in the funds 1,005,000 Long-term installment notes receivable with the City of Mt. Shasta in governmental activitites are not financial resources and therefore not reported in the funds 4,175,900 Long-term liabilities, as follows, are not due and payable in the current period and therefore are not reported in the funds:
2019 Series Revenue Bonds payable (3,925,000)
2019 Series Revenue Bonds Premium payable (211,599)
2019 Series Wastewater Enterprise Revenue Bonds payable (1,255,900) Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when legally due, however, the Statement of Activities reflects interest payable as the obligation is incurred (62,073)
Net Position of Governmental Activities $ (175,401)
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Statement of Net Position, Governmental Funds Balance Sheet and June 30, 2023
Reconciliation of Governmental Fund Balance to the
Statement of Net Position - Governmental Activities
The accompanying notes are an integral
part of these financial statements.
3 Mt. Shasta City Council Regular Meeting March 25, 2024 132 General Statement of
Fund Adjustments Activities
REVENUES
Lease interest income $ 31,330 $ (375) $ 30,955
Installment note interest income 120,142 (1,509) 118,633 Total Revenues 151,472 (1,884) 149,588
EXPENDITURES
Debt service:
Principal payments 157,200 (157,200) -
Interest charges 151,472 (11,822) 139,650
Total Expenditures 308,672 (169,022) 139,650
Excess (Deficiency) of Revenues Over (Under)
Expenditures/Expenses (157,200) 167,138 9,938
OTHER FINANCING SOURCES (USES)
Proceeds from lease investment reduction 30,000 (30,000) - Proceeds from installment note repayments 127,200 (127,200) - Total Other Financing Sources (Uses) 157,200 (157,200) - Change in Fund Balance/Net Position - 9,938 9,938
Fund Balance - Beginning of Year - (185,339) (185,339)
Fund Balance - End of Year $ (175,401) - $ $ (175,401)
For The Year Ended June 30, 2023
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Statement of Activities and Governmental Fund Revenues, Expenditures and Change in Fund Balance
The accompanying notes are an integral
part of these financial statements.
4 Mt. Shasta City Council Regular Meeting March 25, 2024 133 Change in Fund Balance - Governmental Funds $ -
Amounts reported for governmental activities in the statement of activities is different because:
Governmental funds report interest income when it is legally due, however, in the Statement of Activities it is reported when incurred
Lease interest income (375)
Installment note interest income (1,509)
Governmental funds report proceeds from repayments of long-term debt, as a revenue, but the repayment is reported as a reduction of investment in lease or installment notes receivable in the Statement of Net Position and does not affect the Statement of Activities:
Lease investment (30,000)
Installment note receivable (127,200)
Governmental funds do not report the amortization of bond premium as a reduction of interest expenditure, but it is reported in the Statement of Activities 9,938 Repayment of bond principal is reported as expenditure in governmental funds and, thus, has the effect of reducing fund balance because current resources have been used. However, the principal payments reduce liabilities in the Statement of Net Position and does not affect the Statement of Activities 157,200
Interest expense in the Statement of Activities is reported when incurred in contrast to governmental funds where it is recorded when legally due 1,884 Change in Net Position - Governmental Activities 9,938$ Reconciliation of the Statement of Revenues, Expenditures and
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) For The Year Ended June 30, 2023
Changes in Fund Balance - Governmental Funds
to the Statement of Activities - Governmental Activities The accompanying notes are an integral
part of these financial statements.
5 Mt. Shasta City Council Regular Meeting March 25, 2024 134
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Notes to the Financial Statements
June 30, 2023
6 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Mount Shasta Public Financing Authority’s (hereafter “the Authority”), a component unit of the City of Mt.
Shasta, California, (hereafter “the City”), financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations).
The accounting policies of the Authority conform to accounting principles generally accepted in the United States of America as applicable to governmental entities. The more significant accounting policies established in GAAP and used by the City are discussed below.
A. Reporting Entity
The Authority was created on May 13, 2019, as a result of a Joint Exercise of Powers Agreement between the City and the Mount Shasta Industrial Development Authority (Development Authority). The Authority is empowered to exercise any powers common to the City and the Development Authority.
The Authority's purpose is to finance public capital improvements. The Authority undertakes the sale and issuance of bonds. Bond proceeds are then used to design, construct, and acquire public capital improvements and lease, lease-back, sell, or re-sell such improvements to the City.
The Agreement is effective until terminated by the members as evidenced by a resolution adopted by the governing board of each respective member. The Agreement cannot terminate while any bonds remain outstanding. Upon dissolution of the Authority, any surplus assets shall be returned to the City and the Development Authority in proportion to any contributions made.
The Authority is a component unit of the City, and accordingly, is included in the basic financial statements of the City because the City Council exercises oversight responsibility over the operation of the Authority and the Authority provides specific financial benefits to the City. Only the accounts of the Authority are included herein; therefore, these financial statements do not purport to represent the financial position or results of operations of the City. The financial data of the Authority is included in the City's annual financial report. Administrative costs of the Authority are paid by the City and are not included in the accompanying financial statements.
B. Basis of Presentation
Government-wide and Fund Financial Statements:
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, while the governmental fund financial statements are reported using the current financial resources measurement and the modified accrual basis of accounting.
The operations of the fund statements are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balances, revenues, and expenditures. Authority resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The Authority only uses a governmental fund.
Governmental fund types account for the activities of the Authority. The measurement focus is based upon spending or financial flow and the determination of changes in fund balance (net current assets). The following are the Authority's governmental fund types:
General fund accounts for the accumulation of financial resources for, and the payment of, general long-term debt principal, interest, and related costs.
The statement of net position and statement of activities columns reflect consolidated results of operations using the accrual basis of accounting and eliminating all interfund activity.
Basis of Accounting:
Refers to when revenues and expenditures are recognized in the accounts and reported in the basic financial statements.
Mt. Shasta City Council Regular Meeting March 25, 2024 135
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Notes to the Financial Statements
June 30, 2023
7 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental fund types are accounted for using the modified accrual basis of accounting. Revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available) as net current assets. “Measurable” means the amount of the transaction can be determined and ”available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. A sixty (60) day availability period is used for revenue recognition for all other governmental fund revenues. Revenues not considered available are recorded as deferred revenues, unavailable. Revenues considered susceptible to accrual include interest and lease payments. Expenditures are generally recognized when the related fund liability is incurred, except for unmatured interest on general long-term debt, which is recognized when due.
The statement of net position and statement of activities columns represent operations on the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Capital Assets: are not capitalized in the accompanying financial statements as they are under capital lease or installment sale to the City.
Investment in Lease to City of Mt. Shasta: is recorded as direct financing lease to the City.
Installment Sale to the City of Mt. Shasta: is recorded as installment notes receivable with the City.
Contributed Capital: represents excess bond premium invested in the City projects.
Bond Issuance Costs: are expensed immediately, as incurred.
Bond Premium and Discount: are amortized on a straight-line basis over the life of the related debt obligations which is not materially different from the effective interest method.
Use of Estimates: in preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America are required by management as well as assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
C. Budgetary Comparison
Under GASBS No. 34, budgetary comparison information is required to be presented for the general fund. The Authority is not legally required to adopt a budget; therefore, budget comparison information is not included for the general fund.
NOTE 2 INVESTMENT IN LEASE TO THE CITY OF MT. SHASTA
New Corporate Yard Garage
On October 1, 2019, the City and the Authority entered into an agreement for the Authority to finance the design, construction and/or rehabilitation of a new corporate yard garage. In order to finance the project, the City will lease certain real property and improvements thereon commonly known as the City of Mount Shasta City Hall, Police and Fire Station (“Leased Property”), pursuant to a Site and Facilities Lease, dated October 1, 2019, for an advance rental equal to $1,090.000 of the Series 2019 Revenue Bonds. In turn, the Authority, pursuant to a Lease Agreement, will sublease the Leased Property to the City, in consideration for Base Rental Payments to be made by the City to the Authority, according to a schedule that corresponds in amount to the principal and interest coming due with respect to the Bonds issued for this project. The first principal payment made under the lease was made on August 1, 2020 and will have a final maturity of August 1, 2044.
Mt. Shasta City Council Regular Meeting March 25, 2024 136
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Notes to the Financial Statements
June 30, 2023
8 NOTE 2 INVESTMENT IN LEASE TO THE CITY OF MT. SHASTA (Continued) Future minimum lease payments to be received as of June 30, 2023, are as follows:
Year Ended June 30, Total
2024 $ 60,612
2025 64,638
2026 63,587
2027 62,538
2028 61,487
2029-2033 310,838
2034-2038 314,887
2039-2043 313,956
2044-2045 123,600
Total Lease Payments 1,376,143
Less: unearned income (371,143)
Net Investment in Lease Receivable $ 1,005,000
NOTE 3 INSTALLMENT NOTES RECEIVABLES
The following is a summary of the Authority’s installment notes receivable future minimum installment payments to be received from the City as of June 30, 2023:
Year Ended June 30, Total
2024 $ 253,888
2025 250,456
2026 246,912
2027 248,386
2028 249,799
2029-2033 1,043,307
2034-2038 1,233,561
2039-2043 1,100,161
2044-2048 509,405
2049-2053 246,920
2054-2058 246,731
2059-2060 98,758
Total Installment Notes Receivable 5,728,284
Less: unearned income (1,552,384)
Net Installment Notes Receivable $ 4,175,900
Solar and Energy Efficient Improvements and Refinance
On October 1, 2019, the City and the Authority entered into an agreement for the Authority to finance the acquisition and installation of solar and energy efficient equipment in the new corporate yard garage, City Hall, Police and Fire Stations, and the Wastewater treatment plant. Also, the Authority agreed to provide additional financing to prepay and discharge the Series 2008 Revenue Bond debt of the City’s Sewer Fund. These are defined as the “project”.
The Authority has agreed to provide the financing for the solar and energy efficient improvements in the amount of $2,295,000 and to discharge the revenue bond debt in the amount of $930,000, by selling the project to the City for $3,225,000, in consideration of the agreement by the City to pay the purchase price of the project in semiannual installments of principal and interest. The installment payments will be secured by an irrevocable pledge of the Net Revenues of the Wastewater operations. The first principal payment made under the installment sale was made on August 1, 2020 and will have a final maturity of August 1, 2044.
Mt. Shasta City Council Regular Meeting March 25, 2024 137
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Notes to the Financial Statements
June 30, 2023
9 NOTE 3 INSTALLMENT NOTES RECEIVABLES (Continued)
Future minimum installment payments to be received under this agreement, as of June 30, 2023, are as follows:
Year Ended June 30, Total
2024 $ 204,500
2025 201,050
2026 197,600
2027 199,075
2028 200,400
2029-2033 796,600
2034-2038 986,719
2039-2043 853,306
2044-2045 262,725
Total Installment Notes Receivable 3,901,975
Less: unearned income (981,975)
Net Installment Notes Receivable $ 2,920,000
Downtown Collection Sewer System Improvements
On August 1, 2019, the City and the Authority entered into an agreement for the Authority to finance the acquisition and improvement of/to the Wastewater system known as the downtown collection system for $1,309,000. The Authority has agreed to provide financing for the improvement project by selling the project to the City in consideration of the agreement by the City to pay the purchase price of the project in semiannual installments of principal and interest. The installment payments will be secured by an irrevocable pledge of the Net Revenues of the Wastewater operations. The first principal payment made under the installment sale was made on August 1, 2020 and will have a final maturity of August 1, 2059.
Future minimum installment payments to be received under this agreement, as of June 30, 2023, are as follows:
Year Ended June 30, Total
2024 $ 49,388
2025 49,406
2026 49,312
2027 49,311
2028 49,399
2029-2033 246,707
2034-2038 246,842
2039-2043 246,855
2044-2048 246,680
2049-2053 246,920
2054-2058 246,731
2059-2060 98,758
Total Installment Notes Receivable 1,826,309
Less: unearned income (570,409)
Net Installment Notes Receivable $ 1,255,900
Mt. Shasta City Council Regular Meeting March 25, 2024 138
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Notes to the Financial Statements
June 30, 2023
10 NOTE 4 LONG-TERM DEBT
The Authority’s long-term debt obligations consist of the following at June 30, 2023:
Annual Original
Interest Principal Issue
Types of indebtedness (purpose) Maturity Rates Installments Amount Governmental Activities
Revenue Bonds:
2019 Issue (financed the acquisition and installation of a new corporate yard garage and solar equipment; and refinance the 2008 revenue bonds) Term Current Interest Bond 8/1/2044 2.65% - 4% $120,000 - $220,000 4,315,000 $ 2019 Issue (financed the downtown sewer collection system improvements) Term Current Interest Bond 8/1/2059 2.125% $9,100 - $48,300 1,309,000 $ Governmental Activities $ 5,624,000
The following is a summary of long-term liabilities activity for the fiscal year ended June 30, 2023: Balance Balance Due in July 1, 2022 Additions Reductions June 30, 2023 One Year Governmental Activities
Series 2019 Revenue Bonds -
Garage, Solar, Refinance 4,060,000 $ $ 135,000 - $ $ 3,925,000 $ 145,000 Amortized bond premium 221,537 - 9,938 211,599 9,938
Series 2019 Wastewater
Enterprise Revenue Bond 1,278,100 22,200 - 1,255,900 22,700 Governmental Activities $ 5,559,637 $ 167,138 - $ $ 5,392,499 $ 177,638 REVENUE BONDS:
The Authority was created on May 13, 2019, as a result of a Joint Exercise of Powers Agreement between the City and the Mount Shasta Industrial Development Authority. The Authority’s purpose is to finance public capital improvements for the benefit of the City, which includes the refinance of the City’s Series 2008 Revenue Bond debt.
Term Current Interest Bond, maturity 8/1/2044
The Series 2019 Revenue Bonds shown in the first table of Note 4 on page 10, were issued for $4,315,000 to finance the acquisition and construction of a new corporate yard garage, the acquisition and installation of solar energy efficient equipment in the new corporate garage, City Hall, Police and Fire stations, and the Wastewater treatment plant, and to prepay and discharge the 2008 revenue bond debt of the sewer operations. The bonds will accrue interest from the date of delivery, and interest thereon will be payable semiannually on February 1 and August 1 of each year, commencing February 1, 2020. These bonds have varying interest rates based on when the bonds mature according to rates established in the bond maturity schedule. These rates are not subject to change based on market conditions.
The repayment of the bonds by the Authority is made pursuant to a Lease Agreement and an Installment Sale Agreement dated October 1, 2019, by and between the Authority and the City, whereby the City repays the annual debt service under the Lease Agreement and the Installment Sale Agreement in amount exactly equal to the debt service required to repay the Bond. The Series 2019 Revenue Bonds first principal payment was made on August 1, 2020 and will have a final maturity of August 1, 2044.
Redemption: The Bonds are subject to optional, extraordinary, and mandatory sinking account redemption prior to their stated maturity dates, as provided in the Indenture Agreement.
Mt. Shasta City Council Regular Meeting March 25, 2024 139
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Notes to the Financial Statements
June 30, 2023
11 NOTE 4 LONG-TERM DEBT (Continued)
Reserve Fund: A Reserve Fund is established with the Bond Trustee pursuant to the Indenture in an amount equal to the Reserve Requirement, $267,937.50. The Reserve Fund is satisfied by the City purchasing a Municipal Bond Debt Service Reserve Insurance Policy (Reserve Policy) from the Municipal Assurance Corp. and deposit the Reserve Policy with the Trustee. The City purchased this policy as part of the bond debt issuance costs in October 2019.
Security: The Bonds are limited obligations of the Authority and, as such, only the Revenues of the Authority are pledged as security for the Bonds. Revenues are defined as 1) all installment payments, including interest, payable by the City to the Authority using the Net Revenues of the Wastewater (Sewer) Enterprise 2) all base rental payments, including interest, payable by the City to the Authority and 3) amounts deposited in the Reserve Fund.
There are no significant default provisions.
The payment schedule for these bonds are as follows:
Year Ended
June 30, Principal Interest
2024 $ 145,000 $ 120,113
2025 150,000 115,688
2026 150,000 111,188
2027 155,000 106,613
2028 160,000 101,888
2029-2033 890,000 411,988
2034-2038 1,050,000 253,638
2039-2043 850,000 120,681
2044-2045 375,000 11,325
Totals $ 3,925,000 $ 1,353,122
Term Current Interest Bond, maturity 8/1/2059
On May 9, 2019, an obligation of funds between the United States Department of Agriculture (USDA) Rural Development and the City was authorized to fund a sewer project called the Downtown Sewer Collection System Project. The funding from USDA Rural Development includes a loan of $1,309,000 in the form of Series 2019 Wastewater Enterprise Revenue Bond. The debt was issued on August 28, 2019 and will mature on August 1, 2059. The name of the owner of the bond is the USDA and the issuer is the Authority for the benefit of the City.
The repayment of the bond by the Authority is made pursuant to an Installment Sale Agreement dated August 1, 2019, by and between the Authority and the City, whereby the City repays the annual debt service under the Installment Sale Agreement in amount exactly equal to the debt service required to repay the Bond. The Series 2019 Wastewater Enterprise Revenue Bond’s first principal payment was made on August 1, 2020 and will have a final maturity of August 1, 2044.
Pledged Assets, Debt Reserves and Default: The City is obligated to pay the installment payments from Net Revenues as defined in the Trust Agreement dated August 1, 2019, by and between the Authority and the City.
There is a required debt service reserve equal to at least one annual loan installment that accumulates at the rate of 10% of one annual payment per year for 10 years or until a total of $51,065 has accumulated. Ten percent of the proposed loan payment would equal $426 per month. This would equate to $19,596 at June 30, 2023 and has been deposited by, and recorded by, the City. Additionally, there is a required short-lived asset reserve to be deposited based on an annual assessment of the facility’s short-lived asset needs to pay for repairs and/or replacement of major system assets. The assessed needs at June 30, 2023 of $623,768 has been deposited and recorded by the City. In the event of default, this Bond of $1,309,000 includes a provision that if the City is more than 30 days late on an installment payment, the full amount of the unpaid principal balance, together with accrued interest, becomes due immediately.
Mt. Shasta City Council Regular Meeting March 25, 2024 140
MOUNT SHASTA PUBLIC FINANCING AUTHORITY
(A Component Unit of the City of Mt. Shasta, California) Notes to the Financial Statements
June 30, 2023
12 NOTE 4 LONG-TERM DEBT (Continued)
The payment schedule for these bonds are as follows:
Year Ended
June 30, Principal Interest
2024 $ 22,700 $ 26,688
2025 23,200 26,206
2026 23,600 25,713
2027 24,100 25,211
2028 24,700 24,699
2029-2033 131,300 115,407
2034-2038 146,000 100,842
2039-2043 162,200 84,656
2044-2048 180,000 66,680
2049-2053 200,200 46,728
2054-2058 222,200 24,531
2059-2060 95,700 3,060
Totals $ 1,255,900 $ 570,421
NOTE 5 RISK MANAGEMENT
The Authority is exposed to various risks of loss related to torts; theft of, damage to, and distribution of assets; errors and omissions; and natural disasters. Because of the close relationship between the Authority and the City, the Authority’s liability coverage is provided by the City’s insurance policies. Complete information on risk management can be found in the City’s audited financial statements.
NOTE 6 SUBSEQUENT EVENTS
As of March 6, 2024, the date in which the financial statements were available to be issued and the issuance date, the City’s City Council and management have reviewed the financial statements and they are not aware of any events that have occurred subsequent to the balance sheet date and through the date of the independent auditor’s report that would require adjustments to or disclosure in the financial statements.
Mt. Shasta City Council Regular Meeting March 25, 2024 141
OTHER SCHEDULES AND REPORTS
Mt. Shasta City Council Regular Meeting March 25, 2024 142 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 Board of Directors and Audit Committee
Mount Shasta Public Financing Authority
Mt. Shasta, California
I have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities and the major fund of the Mount Shasta Public Financing Authority, a component unit of the City of Mt. Shasta, California as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Mount Shasta Public Financing Authority's basic financial statements, and have issued my report thereon dated March 6, 2024.
Report on Internal Control Over Financial Reporting
In planning and performing my audit of the financial statements, I considered the Mount Shasta Public Financing Authority’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 my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Mount Shasta Public Financing Authority's internal control. Accordingly, I do not express an opinion on the effectiveness of the Mount Shasta Public Financing Authority'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 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.
My 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. I identified certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item 2023-001 that I consider to be material weaknesses.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Mount Shasta Public Financing Authority's financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of my audit and, accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
13 Mt. Shasta City Council Regular Meeting March 25, 2024 143 INDEPENDENT AUDITOR’S REPORT
(Continued)
Mount Shasta Public Financing Authority’s Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the Mount Shasta Public Financing Authority’s response to the findings identified in my audit and described in the accompanying schedule of findings and questioned costs. Mount Shasta Public Financing Authority’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, I express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of my 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.
Charles W. Pillon, CPA
Anderson, California
March 6, 2024
14 Mt. Shasta City Council Regular Meeting March 25, 2024 144 Mount Shasta Public Financing Authority
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2023
FINDINGS – FINANCIAL STATEMENT AUDIT
Finding 2023-001 Lack of Effective Internal Control over Financial Close and Reporting Condition: I identified and posted numerous material audit adjustments as part of my audit in order to agree the financial statements with the underlying support. These were required in order for the financial statements to be prepared in accordance and/or conformity with generally accepted accounting principles (GAAP).
Criteria: The City must present its financial statements in accordance with generally accepted accounting principles. In accordance with Statement on Auditing Standards No. 122c, external auditors cannot be part of an entity’s internal controls over the preparation of the financial statements and are prohibited from auditing their own work, which could impair independence.
Cause: The Finance Director did not identify and correct material misstatements in the financial statements before the start of the audit.
Effect: This is a material weakness in the internal controls over financial close and reporting. Year-end financial statements contained material misstatements which could lead to inaccurate decisions that impact the Authority, as well as impacting the external users of the financial statements. There are no questioned costs related to this finding.
Context: This is a new finding. The items consisted of adjustments to properly record investments, revenues and debt related expenditures.
Recommendation: I recommend that the Authority takes steps to ensure that all adjustments necessary to prepare the financial statements, and related notes, in accordance with GAAP be identified and posted prior to the start of the audit.
Views of Responsible Officials: The Authority agrees with this finding.
SUMMARY OF PRIOR AUDIT FINDINGS
NONE
15 Mt. Shasta City Council Regular Meeting March 25, 2024 145