City of Piedmont
COUNCIL AGENDA REPORT
DATE: March 21, 2022
TO: Mayor and Council
FROM: Sara Lillevand, City Administrator
SUBJECT: Consideration of the Acceptance of the 2020-2021 Audited Financial Statements
RECOMMENDATION
Review and accept the City’s independent auditor’s reports for 2020-2021:
a) Annual Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
b) Measure B Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
c) Measure BB Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
d) Measure F Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
BACKGROUND
The City’s independent auditor, Mann-Urrutia-Nelson CPAs & Associates, LLP (MUN), has completed the audit of the City’s financial statements and provided auditor’s reports for the fiscal year ended June 30, 2021. The Finance Department is responsible for the preparation and fair presentation of the financial statements in accordance with Generally Accepted Accounting Principles (GAAP). The Audit Committee, consisting of Mayor Teddy King and Vice Mayor Jennifer Cavenaugh, met via conference call with the audit partner and City staff on March 16, 2022 to discuss the auditor’s financial report and recommendations regarding internal control.
The Annual Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021 contains a number of sections. These include the Independent Auditor’s Report, Management’s Discussion and Analysis, individual financial statements, Notes to the Basic Financial Statements, and the Required Supplemental Information. The audit partner from MUN will be available at the March 21, 2022 City Council meeting to answer any questions.
DISCUSSION
The audit addresses the City’s general financial statements and the Measure B, Measure BB, and Measure F sales tax special revenue funds. The audits found no exception to conformance with generally accepted accounting principles and the standards applicable to financial audits contained in the Government Auditing Standards issued by the Comptroller General.
MUN opined that the general purpose financial statements present fairly, in all material ways, the City’s financial position of the government activities, the business-type activities, each major fund, and the aggregate remaining fund information as of June 30, 2021. The audited financial statements include the statement of net position, statement of activities and changes in net position, balance sheets, statements of revenues, expenditures, and changes in fund balances, and statements of cash flows.
In summary, the City received a clean audit opinion, with no material weaknesses, no significant deficiencies, nor any compliance exceptions. For an overview of the Annual Financial Statements and Independent Auditor’s Report, see the Management’s Discussion and Analysis beginning on page 3 of the report
By: Michael Szczech, Finance Director
ATTACHMENTS
A. Annual Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
B. Auditor’s Letter on Compliance and Internal Control
C. Measure B Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
D. Measure BB Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
E. Measure F Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2021
F. Appropriations Limit Calculation as of June 30, 2022 G. Management Letter
H. Letter Communicating with Those Charged with Governance ________________________________________________________________________________________ City of Piedmont
Financial Statements
and
Independent Auditor's Report
For the Year Ended
June 30, 2021
________________________________________________________________________________________ Attachment A Agenda Report Page 3
CITY OF PIEDMONT
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
FINANCIAL SECTION:
Independent Auditor's Report 1 - 2
Management's Discussion and Analysis 3 - 13
Basic Financial Statements:
Government-wide Financial Statements
Statement of Net Position 14
Statement of Activities 15
Fund Financial Statements
Governmental Funds
Balance Sheet 16
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 17
Statement of Revenues, Expenditures, and Changes in Fund Balances 18 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 19
Proprietary Funds
Statement of Net Position 20
Statement of Revenues, Expenses, and Changes in Net Position 21 Statement of Cash Flows 22 - 23
Fiduciary Funds
Statement of Fiduciary Net Position 24
Statement of Changes in Fiduciary Net Position 25
Notes to Basic Financial Statements 26 - 64
Required Supplemental Information
Budgetary Comparison Schedule - General Fund 65
Notes to Required Supplementary Information 66
Schedule of the City's Proportionate Share of the Net Pension Liability 67 Schedule of Pension Contributions 68
Schedule of Funding Progress for Police and Fire Pension (Closed) Plan 69 - 70 Schedule of Changes in the City's Net OPEB Liability and Related Ratios 71 Schedule of OPEB Contributions 72
Attachment A Agenda Report Page 4
CITY OF PIEDMONT
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Combining Financial Statements, Schedules and Other Supplementary Information Budgetary Comparison Schedule - Equipment Replacement Fund 73 Budgetary Comparison Schedule - Facilities Maintenance Fund 74 Non-Major Governmental Funds:
Description of Non-major Funds 75
Combining Balance Sheets 76 - 78
Combining Statements of Revenues, Expenditures, and Changes in Fund Balances 79 - 81 Budgetary Comparison Schedules:
Streets Projects Fund 82
Schoolmates Program Fund 83
Projects and Services Fund 84
Measure D Fund 85
Abandoned Vehicle Fund 86
Measure B Sales Tax Fund 87
Measure BB Sales Tax Fund 88
COPS 89
Measure F Fund 90
Athletic Facility Preservation Fund 91
Tobacco Grant Fund 92
Capital Improvement Fund 93
Sidewalk Repair Fund 94
Internal Service Funds
Description of Internal Service Funds 95
Combining Statement of Net Position 96
Combining Statement of Revenues, Expenses, and Changes in Net Position 97 Combining Statement of Cash Flows 98
General Fund
Description of General Fund 99
Combining Balance Sheet 100
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance 101 Attachment A Agenda Report Page 5
CITY OF PIEDMONT
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Other 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 102 - 103 Attachment A Agenda Report Page 6
INDEPENDENT AUDITOR'S REPORT
To the City Council of
the City of Piedmont
Piedmont, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Piedmont as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Piedmont, as of June 30, 2021, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment A Agenda Report Page 7
"+
(
+(
+)"':
('# %
+#(1% %0
,'##)'*+%%
$
#%+'#%0
'%7( 4%
(#
&)) /#%'#
/'(#)
%%
$
#% D5-
D/" 4'#' #'+# %$ (','
(&'%0"
+4
)%% %0'+$%%
"D
+
)) /#%'#
4"'#)'4*
+
#
"**7))
4%
('#%0
#'%
(%%
+ ,$
"')"
8/'"
%0%%0
$#
$
#%C+('+)/++' #
#(#*7+'+%0
:/(
%"7) $4"'+ #'#, "$%' #, "%0
#
"*/#(#($> "+4
)'*"
!
#/
,/#(+4
#+' #
"
*%
(+)0
(/*
+#(
"
*%
(+)0
(/*
++*'+%
('#%0
%:*
,) #%
#%+:
4"
+
#%
(% +/44*
$
#%%0
:+')
,'##)'* +%%
$
#%+D /)0 '#, "$%' # *%0 /
0 # % 4"% , %0
:+') ,'##)'* +%%
$
#%+ '+ "
8/'"
( :7 %0
!
"#$
#%*)) /#%'#
%#("(+ "(&0 ) #+'(
"+'%% :
#
++
#%'*4"% ,,'##)'*"
4 "%'#
, "4*)'#
%0
:+'),'##)'*+%%
$
#%+'##44" 4"'%
4
"%' #*
) # $') "0'+% "')*) #%
3%DB
0!
44*'
()
"%'#
*'$'%
( 4" )
(/"
+ % %0
"
8/'"
( +/44*
$
#%"7 '#, "$%' # '# )) "(#)
&'%0 /('%'#
+%#("(+
#
"**7
))
4%
('#%0
#'%
(%%
+ ,$
"')&0')0) #+'+%
( ,'#8/'"'
+ ,$#
$
#%: /%%0
$
%0 (+ ,4"
4"'#
%0
'#, "$%' # #( ) $4"'#
%0
'#, "$%' # , " ) #+'+%
#)7 &'%0 $#
$
#%C+ "
+4 #+
+ % /" '#8/'"'
+ %0
:+'),'##)'*+%%
$
#%+#( %0
"A# &*
(
&
:%'#
((/"'#
/"/('% ,%0
:+'),'##)'*+%%
$
#%+DB
(
# %
34"
++# 4'#' # "4" !'(
#7++/"#)
#%0
'#, "$%' #:
)/+
%0
*'$'%
(4" )
(/"
+( # %4" !'(
/+
&'%0+/,,')'
#%
!'(
#)
%
34"
++# 4'#' # "4" !'(
#7++/"#)
D
/"/('%&+) #(/)%
(, "%0
4/"4 +
,, "$'#
4'#' #+ #%0
,'##)'*+%%
$
#%+%0%) **
)%'!
*7) $4"'+
%0
'%7 ,
'
($ #%C+:+'),'##)'*+%%
$
#%+D0
) $:'#'#
#('#('!'(/*# #$> ",/#(,'##)'*+%%
$
#%+#(
:/(
%"7) $4"'+ #+)0
(/*
+"
4"
+
#%
(, "4/"4 +
+ ,(('%' #*#*7+'+#("
# %"
8/'"
(4"% ,%0
:+'),'##)'*+%%
$
#%+D
0
) $:'#'#
#('#('!'(/*# #$> ",/#(,'##)'*+%%
$
#%+#(%0
:/(
%"7) $4"'+ #+)0
(/*
+"
%0
"
+4 #+':'*'%7 ,$#
$
#%#(&
"
(
"'!
(," $#("
*%
('"
)%*7% %0
/#(
"*7'#
)) /#%'#
#( %0
""
) "(+
/+
( % 4"
4"
%0
:+') ,'##)'* +%%
$
#%+D /)0 '#, "$%' # 0+ :
# +/:>
)%
( % %0
/('%'#
4" )
(/"
+
44*'
( '# %0
/('% , %0
:+') ,'##)'* +%%
$
#%+ #( )
"%'# (('%' #* 4" )
(/"
+ '#)*/('#
) $4"'#
#(
"
) #)'*'#
+/)0'#, "$%' #('"
)%*7% %0
/#(
"*7'#
)) /#%'#
#( %0
""
) "(+/+
(% 4"
4"
%0
:+'),'##)'*
+%%
$
#%+ " % %0
:+') ,'##)'* +%%
$
#%+ %0
$+
*!
+ #( %0
" (('%' #* 4" )
(/"
+ '# )) "(#)
&'%0
/('%'#
+%#("(+
#
"**7))
4%
('#%0
#'%
(%%
+ ,$
"')D # /" 4'#' #%0
) $:'#'#
#('#('!'(/*
# #$> ",/#(,'##)'*+%%
$
#%+#(%0
:/(
%"7) $4"'+ #+)0
(/*
+"
,'"*7+%%
('#**$%
"'*"
+4
)%+
'#"
*%' #% %0
:+'),'##)'*+%%
$
#%++&0 *
D
+
! '
)%
# )) "(#)
&'%0
&
0!
*+ '++/
( /""
4 "% (%
( =")0 2 # /"
) #+'(
"%' # ,%0
'%7 ,
'
($ #%C+'#%
"#*) #%" * !
",'##)'*"
4 "%'#
#( # /"%
+%+ ,'%+) $4*'#)
&'%0
)
"%'#4" !'+' #+ ,*&+"
/*%' #+) #%")%+#(
"#%
"
$
#%+#( %0
"$%%
"+D0
4/"4 +
,%0%"
4 "%
'++ *
*7% (
+)"':
%0
+) 4
, /"%
+%'#
,'#%
"#*) #%" * !
",'##)'*"
4 "%'#
#() $4*'#)
#(%0
"
+/*%+
, %0% %
+%'#
#( # % % 4" !'(
# 4'#' # # %0
,,
)%'!
#
++ , %0
'%7 ,
'
($ #%9+ '#%
"#* ) #%" * !
"
,'##)'* "
4 "%'#
" # ) $4*'#)
D 0% "
4 "% '+ # '#%
"* 4"% , # /('% 4
", "$
( '# )) "(#)
&'%0
'# ) #+'(
"'#
%0
'%7 ,
'
($ #%C+ '#%
"#* ) #%" * !
" ,'##)'* "
4 "%'#
#(
) $4*'#)
D
)"$
#%
*', "#'
=")02
MannMuntiaMgmCPA's
Attachment A Agenda Report Page 8
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
The Management’s Discussion and Analysis (MD&A) provides an overview of the City of Piedmont’s activities and financial performance for the fiscal year ended June 30, 2021. To obtain a complete picture of the City’s financial condition, this narrative overview and analysis should be read in conjunction with the accompanying Basic Financial Statements.
FINANCIAL HIGHLIGHTS
Government-wide
Net position is defined as the excess of assets and deferred outflows of resources over liabilities and deferred inflows of resources. As of June 30, 2021, the City's government-wide net position amounted to a positive balance of $45,956,320. This represents an increase of $8,449,495 from the June 30, 2020 balance of $37,506,825. Governmental activities of $34,533,119 accounts for 75% of total net position. Business-type activities of $11,423,201 accounts for 25% of total net position. Deferred Outflows of Resources represent a consumption of net position or fund balance that applies to a future period. Of the $9,389,409 in Deferred Outflows of Resources, $3,776,944 includes contribution payments made to CalPERS during fiscal year 2020-21, as well as changes in the net pension liability totaling $4,352,867. As allowed by GASB No. 68, the CalPERS measurement date is June 30, 2020 and contributions subsequent to the measurement date are reflected as a deferred outflow. The remaining $1,259,598 in Deferred Outflows of Resources relates to changes in the Net OPEB liability. Deferred Inflows of Resources represent an acquisition of net position or fund balance that applies to a future period and amounts to $10,843,221. The deferred Inflows include deferrals due to changes in the net pension liability, net pension asset - police & fire, and net OPEB liability. Notes 7, 8, and 9 discuss the impacts of these changes to net position.
Net position increased by $8,449,495 due to the following factors:
Net investment in capital assets increased $1,013,868 to $42,243,641 due to the following:
Governmental activities decreased by $35,408 due primarily to annual depreciation. Capital improvements were limited, especially the improvement of city streets, due to the COVID-19 pandemic.
Business-type activities increased $1,049,276 due primarily to additions to the sewer infrastructure and the purchase of sewer related heavy equipment, offset by depreciation. Unrestricted net position decreased by $6,303,202 to $(3,267,371) due to the following:
Increased revenue coupled with an increase in expenses resulted in a decrease in net position. Total revenues from governmental activities increased $5,400,000 to $36,665,000 primarily due to an increase in Real Property Transfer Tax of $2,700,000; increase of $742,000 in Charges for Services primarily due to the increase in recreational programs as COVID-19 health restrictions waned; and increases in property tax receipts of $652,000 Personnel related expenses increased primarily due to salary and wage increases per collective bargaining agreements and increases in pension costs.
As of June 30, 2021, capital assets, net of depreciation, amount to $48,445,561 and are reported in the Statement of Net Position.
3 Attachment A Agenda Report Page 9
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Fund level
Governmental fund balances increased $6,348,514 to $27,513,197. Of this amount, the unassigned fund balance was $7,442,296, an increase of $1,900,202 from the prior year. Enterprise fund net position increased $1,087,881 to $11,423,201. Of this amount, net investment in capital assets totaled $11,453,384, an increase of $1,049,276 from the prior year.
Fiduciary funds
The trust funds net position increased $905,270 to $24,070,060. The trust funds represent the police and fire pension plan and OPEB for $17,355,863 and $6,714,197, respectively.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplementary information and other supplementary information in addition to the basic financial statements themselves.
Government-Wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on all the City’s assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include administration, public works, public safety, and recreation. The business-type activities of the City include sewer and aquatics. The government-wide financial statements can be found on pages 14 - 15 of this report.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Piedmont can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental funds
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. 4 Attachment A Agenda Report Page 10
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City maintains sixteen individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, which is considered a major fund. The City also reports Equipment Replacement and Facilities Maintenance funds as major funds. Data for these funds are also presented separately. Data from the other fourteen governmental funds are combined and aggregated on the above mentioned statements. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report.
The City adopts an annual appropriated budget for its General Fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 16 - 19 of the report.
Proprietary funds
The City maintains two different types of proprietary funds, enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Piedmont uses an enterprise fund to account for its sewer and aquatic activity. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Piedmont’s various functions. The City uses internal service funds to account for its insurance activity. The Sewer and Aquatic Funds are included within the business-type activities and Internal Service Funds have been included within governmental activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information on the City’s business-type activities, the Sewer and Aquatic Enterprise Funds. The City’s two internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report.
The basic proprietary fund financial statements can be found on pages 20 - 23 of this report.
Fiduciary funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City of Piedmont’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statements can be found on pages 24 - 25 of this report.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 26 - 64 of this report.
5 Attachment A Agenda Report Page 11
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Required Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information consisting of budgetary comparison schedules for the General Fund, pension required schedules, and OPEB required schedules. Required supplementary information can be found on pages 65 - 72 of this report.
Other information
The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 75 - 101 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net position may serve over time as a useful indicator of the government's financial position. In the case of the City of Piedmont, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $45,956,320 at the close of the most recent year.
GASB No. 68 has a material impact on the City’s financial statements, since it sets standards for measuring and recognizing assets, liabilities, and impact to net position, as well as, expands the note disclosures regarding the City’s pension systems. GASB No. 68 requires the City to include pension assets of the Police & Fire Pension Trust and the liabilities of the City’s CalPERS pension in the financial statements. The impact is shown in the negative unrestricted net position in the table below.
GASB No. 75 has a material impact on the City's financial statements, since it sets standards for measuring and recognizing assets, liabilities, and impact to net position, as well as, expands the note disclosures regarding the City's OPEB plan. GASB No. 75 requires the City to include the liabilities of the City's OPEB plan in the financial statements.
The impact is shown in the negative unrestricted net position in the table below.
The largest portion of the City’s net position reflects its investment in capital assets (e.g., land, buildings, equipment and infrastructure); less any related debt used to acquire those assets that is still outstanding. The City of Piedmont uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
6 Attachment A Agenda Report Page 12
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Statement of Net Position
As of June 30, 2021 and 2020
(in thousands)
Governmental Activities Business-Type Activities Total Government 2021 2020
Net
Change 2021 2020
Net
Change 2021 2020
Net
Change
ASSETS
Current and other
assets $ 33,145 $ 26,262 $ 6,883 $ 2,539 $ 2,708 $ (169) $ 35,684 $ 28,970 $ 6,714 Noncurrent assets 46,576 42,837 3,739 17,655 17,286 369 64,231 60,123 4,108 Total Assets 79,721 69,099 10,622 20,194 19,994 200 99,915 89,093 10,822 Deferred Outflows of
Resources 8,868 7,475 1,393 521 384 137 9,389 7,859 1,530
LIABILITIES
Long-term liabilities 39,277 37,041 2,236 7,895 8,486 (591) 47,172 45,527 1,645 Other liabilities 4,447 3,916 531 887 1,025 (138) 5,334 4,941 393 Total Liabilities 43,724 40,957 2,767 8,782 9,511 (729) 52,506 50,468 2,038 Deferred Inflows of
Resources 10,333 8,445 1,888 510 532 (22) 10,843 8,977 1,866
NET POSITION
Net investment in
capital assets 30,790 30,826 (36) 11,453 10,405 1,048 42,244 41,231 1,013 Restricted 6,980 5,848 1,132 - - - 6,980 5,848 1,132
Unrestricted (3,237) (9,502) 6,265 (30) (69) 39 (3,267) (9,571) 6,304 Total Net Position $ 34,533 $ 27,172 $ 7,361 $ 11,423 $ 10,336 $ 1,087 $ 45,957 $ 37,508 $ 8,449 At the end of the fiscal year, the City is able to report a positive net position for Governmental and Business-type Activities and as a whole. The change in net position is mentioned in the financial highlight section above. 7 Attachment A Agenda Report Page 13
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Changes in Net Position
For the Years Ended June 30, 2021 and 2020
(in thousands)
Governmental Activities Business-Type Activities
2021 2020 Net Change 2021 2020 Net Change
REVENUES:
Program revenues
Charges for services $ 4,673 $ 3,677 $ 996 $ 2,749 $ 3,021 $ (272) Operating grants and
contributions 2,561 2,024 537 - - -
General revenues
Taxes and fees 28,303 24,706 3,597 - - -
Investment earnings 740 562 178 15 97 (82)
Other revenue 388 322 66 - - -
Transfers (224) (250) 26 224 250 (26)
Total Revenues 36,441 31,041 5,400 2,988 3,368 (380)
EXPENSES:
Administration 3,706 3,752 (46) - - -
Public works 4,679 5,866 (1,187) - - -
Street improvement 805 242 563 - - -
Safety: police 6,571 7,197 (626) - - -
Safety: fire 6,946 7,161 (215) - - -
Recreation 3,497 4,255 (758) - - -
NonDepartmental 2,876 2,584 292 - - -
Interest - 16 (16) - - -
Sewer - - - 1,668 2,409 (741)
Aquatics - - - 232 643 (411)
Total Expenses 29,080 31,073 (1,993) 1,900 3,052 (1,152) Change in net position 7,361 (32) 7,393 1,088 316 772
Net position - beginning 27,172 27,204 (32) 10,335 10,019 316 Net position - ending $ 34,533 $ 27,172 $ 7,361 $ 11,423 $ 10,335 $ 1,088 Governmental Activities. On a full accrual basis, governmental activities increased the City of Piedmont's net position by $7,361,614 primarily due to increased tax revenues.
Business-type Activities. Business-type activities increased the City of Piedmont's net position due to lower than expected expenditures as the preliminary work for Phase VI of the sewer project has not begun.
Financial Analysis of the Government’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds.
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
8 Attachment A Agenda Report Page 14
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $27,513,197, an increase of $6,348,514 compared with the prior year. A total of $7,442,296, approximately 27%, constitutes unassigned General Fund balance.
General Fund
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, fund balance and unassigned fund balance of the General Fund were $11,204,482 and $7,442,296, respectively. As a measure of the General Fund's liquidity, it may be useful to compare both total fund balance and unassigned fund balance to total fund expenditures. Total fund balance and unassigned fund balance are 42% and 28% of total General Fund expenditures, respectively. During the current fiscal year, the fund balance of the City's general fund increased by $2,564,608.
General Fund revenues totaled $33,932,347, an increase of $5,199,034 from the prior year. The primary reasons for this change are:
Real Property Transfer Tax revenue increased by $2,683,967 due to the combination of a 57% increase in the number of homes sold and an 11% increase in the average home sale price. Intergovernmental revenue increased by $338,102 primarily due to an increase in mutual aid revenue received for assistance in battling the states wildfires.
Service charge revenue increased $784,127 from the prior year primarily due to an increase in recreational programming as COVID-19 health restrictions wanes and higher planning and building charges as construction/remodeling activity increased.
Property tax revenues increased $652,000 to $15,442,493 due to the standard maximum 2% annual assessment increase and supplemental receipts for the increase in the assessed annual valuation of homes sold.
Due to the volatile nature of the real estate market, this category is budgeted conservatively at $2.8 million. The table below shows the number of homes sold and the average sales price for the last ten fiscal years:
Fiscal Year # Sold Average Sales Price Real Property Transfer Tax 2011-12 148 $1,341,700 $2,700,925
2012-13 155 $1,582,243 $3,186,001
2013-14 168 $1,839,248 $4,001,012
2014-15 154 $1,971,270 $3,901,252
2015-16 120 $1,836,197 $3,117,999
2016-17 127 $2,138,872 $3,522,078
2017-18 132 $2,278,523 $3,845,198
2018-19 122 $2,424,600 $3,819,816
2019-20 108 $2,574,599 $3,602,634
2020-21 170 $2,847,358 $6,286,601
9 Attachment A Agenda Report Page 15
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
General fund expenditures totaled $26,739,603, an increase of $1,574,585 from the prior year. The increase is due primarily to the following:
Administration expenses increased $370,939 primarily due to:
$101,000 increase in legal and consulting costs primarily related to COVID-19 related policy issues. $98,000 increase in costs related to collective bargaining as all labor contracts expired on June 30, 2021.
$84,000 increase in personnel related expenses due to salary increases and pension related costs. $50,000 in recruiting costs as two department head positions turned over during the fiscal year. Public Works expenses increased $436,878 primarily due to:
$233,000 increase in personnel related expenses due to salary increases and pension related costs. $136,000 increase in consulting costs due to the housing element and other planning and building department projects.
Janitorial costs $115,000 higher due to COVID-19 precautionary measures. Police expenses increased $170,819 primarily due to:
$214,000 increase in personnel related expenses due to salary increases and pension related costs. Offset by lower training costs due to COVID-19 limitations. Fire expenses increased $551,883 primarily due to overtime costs incurred to assist other agencies in battling the state's wildfires. This amount is offset by mutual aid revenue received. Recreation expenses decreased $261,236 primarily due to facility closures and lower personnel costs due to part-time employees being furloughed due to COVID-19. Non-Departmental expenses increased $305,302 primarily due to:
$230,000 increase in General Liability premiums and claim payments. $80,000 increase in Unemployment Insurance payments due to furloughed recreation employees. Offset by lower training costs due to COVID-19 limitations.
Equipment Replacement Fund
The Equipment Replacement Fund is used to replace the capital assets of the City. The fund balance of the Equipment Replacement Fund increased $33,414 to $3,097,100. The City Council authorized transfers from the General Fund to the Equipment Replacement Fund for $610,500 to fund necessary future capital needs.
Purchases during the fiscal year totaled $590,280. Major items included a Street Sweeper vehicle and costs associated with the implementation and upgrading the City's various operating systems, including a new financial system, an operating system for our recreational activities, and a safety timekeeping system.
Facilities Maintenance Fund
The Facilities Maintenance Fund is used to maintain the City's facilities, primarily its buildings and parks. The fund balance of the Facilities Maintenance Fund increased $2,810,952 to $9,339,708. The City Council authorized transfers from the General Fund and Projects and Services Fund to Facilities Maintenance Fund for $4,044,911 to fund necessary future capital.
The Facilities Maintenance Fund expenditures totaled $1,258,283 and included approximately $523,000 for the repair and/or replacement of sidewalks, $92,000 to resurface tennis courts, and the remainder for various repairs, maintenance and improvements to the City's parks and municipal buildings, primarily the Corporation Yard, Community Hall and the Police Department headquarters.
Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Three funds comprise the City’s proprietary funds: the Sewer Enterprise Fund, Aquatics Enterprise Fund, and the Internal Service Fund.
10 Attachment A Agenda Report Page 16
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Sewer Fund
The Sewer Fund is used to account for the sanitary sewer and storm water systems of the City. The net position of the Sewer Fund increased $1,318,140 to $11,221,614. This total increase offsets the net capital improvements of the sewer system which increased $393,294 to $17,293,728. The unrestricted net position of the Sewer Fund increased $245,274 to $129,806.
The City Council approved loans to the Sewer Fund for $800,000 from the Equipment Replacement Fund and the Facilities Maintenance Fund. The funds are to assist in the completion of rehabilitating the sewer system to cover costs related to design documents so that they can be submitted to apply for a State Water Resources Control Board loan to reimburse for design and construction costs.
Aquatics Fund
The Aquatics Fund is used to account for the operations of the Piedmont Community Pool. The net position of the Aquatics Fund decreased $230,259 to $201,587. The pool closed on March 16, 2020 due to COVID-19 County health orders and remains closed to date.
Internal Service Fund
The Internal Service Funds' net position amounted to $1,010,586, an increase of $3,893 from the prior fiscal year. This increase is due to transfers from the General Fund exceeding insurance premiums and claims paid.
GENERAL FUND BUDGETARY HIGHLIGHTS
The General Fund's original budget of $28,293,106 increased $362,086 to the final amended budget of $28,655,192.
The additional appropriations consisted primarily of administrative fees (legal, labor negotiation, and recruiting), and General Liability and Workers' Compensation insurance premium and claim costs.
The General Fund's actual expenditures of $26,739,603 was less than the final amended budget of $28,655,192.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City's total capital assets for its governmental and business-type activities as of June 30, 2021 amount to $48,445,561 (net of accumulated depreciation). Capital assets include land, construction-in-progress, buildings, equipment, and infrastructure. The major portion of infrastructure includes the pavement, sidewalk, curb, and gutter, parks and underground utility systems of the City, as well as the sewer system. The City's capital assets increased $334,296 from $48,111,265 to $48,445,561.
CAPITAL ASSETS (NET OF DEPRECIATION) (in thousands)
Governmental Activities Business-type Activities Total
2021 2020 2021 2020 2021 2020
Land $ 5,683 $ 5,683 $ - $ - $ 5,683 $ 5,683
Construction in progress 210 1,511 - - 210 1,511
Buildings & improvements 2,718 2,500 362 385 3,080 2,885 Vehicles 2,009 2,305 493 337 2,502 2,642
Property and equipment 1,613 1,608 - - 1,613 1,608
Infrastructure 18,556 17,218 16,801 16,563 35,357 33,781 Total $ 30,789 $ 30,825 $ 17,656 $ 17,285 $ 48,445 $ 48,110 Additional information on the City of Piedmont's capital assets can be found in Note 4 on pages 45 - 46 of this report. 11 Attachment A Agenda Report Page 17
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Long-term Debt
At the end of the current fiscal year, the City had total long-term outstanding debt of $6,201,920, a decrease of $679,572 from the prior fiscal year. The City has sewer loans outstanding for Phase I, Phase II, Phase III, Phase IV, and Phase V of the sewer rehabilitation project with the State of California Water Resources Control Board.
At June 30, 2021, the City’s governmental and business-type activities had total long-term debts and obligations as scheduled below.
Type of Indebtedness
Outstanding
June 30, 2021
Outstanding
June 30, 2020
Business-type Activities
Sewer Loan - Phase I 278,614 413,044
Sewer Loan - Phase II 404,927 533,372
Sewer Loan - Phase III 607,609 750,363
Sewer Loan - Phase IV 1,102,372 1,196,733
Sewer Loan - Phase V 3,808,398 3,987,980
Total Business-type Activities 6,201,920 6,881,492
Total Outstanding Debt $ 6,201,920 $ 6,881,492
Additional information about the City’s long-term debt can be found in Note 5 on pages 46 - 49 of this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
General Fund
Approximately 70 percent of the City’s general revenue sources are property related. The largest portion is property tax revenue, which accounts for approximately 60% of property related revenue. This revenue source has historically been relatively stable, even during periods of economic recession. The average annual growth rate of property tax revenue over the past twenty years is 5.8%. There has not been a year of negative growth over this time frame. In FY 2021-22 property tax revenue is projected to increase 4.0% over FY 2020-21 levels based on the estimated assessed valuations provided by Alameda County.
One of the critical sources of General Fund revenue is the voter approved parcel tax which represents approximately 7% of the General Fund revenues and provides discretionary funding to maintain essential services. In March 2020, Piedmont voters approved a four-year extension of the parcel tax at the current level, plus a maximum annual increase limited to the lower of the Consumer Price Index or 4%. The tax will be imposed from July 1, 2021 through June 30, 2025.
Another critical source of General Fund revenue is the real property transfer tax, which is realized when homes are sold. The City's real estate market has been remarkably healthy throughout the COVID-19 pandemic. However, there is no guarantee this favorable trend will continue. During this fiscal year, real property transfer tax was $6.3 million and represents approximately 18% of General Fund revenues. This was a record year for transfer tax receipts and was 57% higher than the next closest year ($4.0 million in FY 2013-14). Real property transfer tax is an area the City monitors closely as tax receipts will fluctuate since they are dependent on the strength of the real estate market in Piedmont. The economy is now facing serious headwinds with rising inflation. This may cause an increase in interest rates which can adversely affect the real estate market. This may have a detrimental impact on our transfer tax receipts. Given this, it is prudent to continue treating this revenue source in a conservative manner. We have budgeted $2.8 million for FY 2021-22, which is a 33% decline from the average of the past 5 years.
The City’s salary and benefit costs represent approximately 65% of the General Fund. Four-year employee agreements have been finalized for all bargaining units and unrepresented employees for the period July 1, 2021 through June 30, 2025. The agreements provide for salary increases, resets employee contributions for medical benefits, and capped the percentage amount the employees contribute to the CalPERS pension plan. This was necessary to remain competitive in the local labor market and will not adversely affect the City’s financial position. 12 Attachment A Agenda Report Page 18
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2021
Pension costs and retiree medical costs continue to rise at a faster pace than revenue despite the various measures taken beginning in 2013 to contain these costs, including elimination of employer paid member pension contributions, employee cost sharing of pension costs, and the restructuring of postretirement health insurance benefits. We have budgeted pension and retiree medical expenses at $4.5 million compared to $3.7 million actual in FY 2021-22, an increase of $0.8 million or 20%. For reference, had the Council not taken the initiative to implement the cost reduction measures noted above, these costs would have been approximately $1.1 million higher at $5.5 million or 22% more than what we are budgeting today.
In May 2018, the City established a Pension Rate Stabilization Fund with an initial contribution of $2.0 million. We partnered with the Public Agency Retirement Services (PARS) to establish a Section 115 Trust. The trust will allow us to smooth the effect of rising pension costs which are expected to more than double over the next ten years. Through the deposit of funds into the Section 115 Trust Program, the City could expect to earn a rate of return greater than what would be attained through the City’s investment with the State of California Local Agency Investment Fund (LAIF).
An additional $750,000 was transferred into the trust in November 2018 and $1.0 million in November 2021. These additional contributions were in response to the lower than expected investment results at CalPERS in FY 2019-20 and the effect of the changes in their amortization policy. Amortization periods for the Unfunded Accrued Liability have been shortened from 30 years to 20 years, which lowers our overall liability, but increases annual payments. The City closely monitors its pension liability to assure adequate funding is available to meet these rising costs.
As a general practice, in years when revenues exceed budget estimates, the City Council prudently treats the surplus as "onetime" revenue and has directed the funds to address facility maintenance, equipment replacement, and underfunded liabilities. This practice is and will continue to be extremely important to the longterm health of the City, especially when considering an expended definition of "facilities maintenance" to include such critical civic infrastructure as our streets, sidewalks, storm drains and parks. In FY 2020-21, revenues in excess of the budgeted amount were transferred to the Facilities Maintenance and the Pension Stabilization Funds.
Sewer Fund
On August 4, 2014, the United States Environmental Protection Agency (EPA) issued a negotiated Consent Decree (CD). The CD is intended to provide an expanded period of time (21 years) to allow the City to rehabilitate the sewer systems in order to substantially reduce the amount of infiltration and inflow (I&I) in the EBMUD system. The City has divided the project into seven phases. The City has completed Phases I through V. The State Water Resources Control Board (SWRCB) has reimbursed the City for the majority of the costs incurred for all phases by providing funding through low interest rate loans. The City expects to begin preliminary work on Phase VI during FY 2021-22.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Piedmont's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, 120 Vista Avenue, City of Piedmont, California, 94611.
13 Attachment A Agenda Report Page 19
CITY OF PIEDMONT
STATEMENT OF NET POSITION
JUNE 30, 2021
Governmental
Activities
Business-Type
Activities Total
ASSETS
Cash and investments (Note 2) $ 24,556,212 $ 3,192,749 $ 27,748,961 Restricted cash and investments (Note 2) 3,667,217 - 3,667,217 Accounts receivable 3,993,031 139,702 4,132,733
Interest receivable 33,680 5,863 39,543
Prepaid expenses 94,969 - 94,969
Internal balances 800,000 (800,000) -
Capital assets (Note 4):
Land and construction in progress 5,892,937 - 5,892,937 Depreciable, net of accumulated depreciation 24,897,320 17,655,304 42,552,624 Total capital assets 30,790,257 17,655,304 48,445,561
Net pension asset (Note 8) 15,785,970 - 15,785,970
Total Assets 79,721,336 20,193,618 99,914,954
DEFERRED OUTFLOWS OF RESOURCES
2021 pension contributions (Note 7) 3,601,354 175,590 3,776,944 Changes in the net pension liability (Note 7) 4,095,573 257,294 4,352,867 Changes in the net OPEB liability (Note 9) 1,171,066 88,532 1,259,598 Total Deferred Outflows of Resources 8,867,993 521,416 9,389,409
LIABILITIES
Accounts payable 988,350 72,502 1,060,852
Accrued wages and benefits 534,994 3,408 538,402
Accrued interest payable - 80,916 80,916
Deposit payable 707,051 - 707,051
Unearned revenue 1,268,538 - 1,268,538
Compensated absences (Note 5):
Due within one year 625,268 36,263 661,531
Due in more than one year 369,249 22,272 391,521
Claims payable (Note 11):
Due within one year 322,387 - 322,387
Due in more than one year 800,006 - 800,006
Net OPEB liability (Note 9):
Due in more than one year 8,125,606 795,117 8,920,723
Long-term liabilities (Note 5):
Due within one year - 693,574 693,574
Due in more than one year - 5,508,346 5,508,346
Net pension liability (Note 7):
Due in more than one year 29,981,771 1,569,204 31,550,975 Total Liabilities 43,723,220 8,781,602 52,504,822
DEFERRED INFLOWS OF RESOURCES
Changes in the net pension liability (Note 7) 1,664,065 82,283 1,746,348 Changes in the net pension asset - police & fire (Note 8) 2,587,053 - 2,587,053 Changes in the net OPEB liability (Note 9) 6,081,872 427,948 6,509,820 Total Deferred Inflows of Resources 10,332,990 510,231 10,843,221
NET POSITION
Net investment in capital assets 30,790,257 11,453,384 42,243,641 Restricted for:
Community development 1,682,170 - 1,682,170
Public safety 570,500 - 570,500
Recreation 185,498 - 185,498
Street improvement 874,665 - 874,665
Section 115 pension trust 3,667,217 - 3,667,217
Unrestricted (3,237,188) (30,183) (3,267,371)
Total Net Position $ 34,533,119 $ 11,423,201 $ 45,956,320 See accompanying notes to the basic financial statements. 14 Attachment A Agenda Report Page 20
CITY OF PIEDMONT
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Program Revenues Net (Expense) Revenue and Change in Net Position Primary Government
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital
Grants and
Contributions
Governmental
Activities
Business-Type
Activities
Total Primary
Government
PRIMARY GOVERNMENT
Governmental activities:
Administration $ 3,705,874 $ 580,882 $ 19,025 $ - $ (3,105,967) $ - $ (3,105,967) Public works 4,678,525 1,286,094 1,579,127 - (1,813,304) - (1,813,304) Street improvement 804,649 - - - (804,649) - (804,649)
Public safety: police services 6,570,591 180,498 334,942 - (6,055,151) - (6,055,151) Public safety: fire services 6,946,376 226,259 513,197 - (6,206,920) - (6,206,920) Recreation 3,497,428 2,399,707 115,000 - (982,721) - (982,721) Nondepartmental 2,875,531 - - - (2,875,531) - (2,875,531) Total governmental activities 29,078,974 4,673,440 2,561,291 - (21,844,243) - (21,844,243) Business-type activities:
Sewer 1,668,374 2,748,553 - - - 1,080,179 1,080,179
Aquatic 231,790 525 - - - (231,265) (231,265)
Total business-type activities 1,900,164 2,749,078 - - - 848,914 848,914 Total primary government $ 30,979,138 $ 7,422,518 $ 2,561,291 $ - (21,844,243) 848,914 (20,995,329) General revenues:
Taxes:
Property tax 15,442,493 - 15,442,493
Sales tax 244,763 - 244,763
Franchise tax 560,828 - 560,828
Utility users tax 1,238,177 - 1,238,177
Real property transfer tax 6,286,601 - 6,286,601
Business license and rental tax 620,351 - 620,351
Parcel tax 2,411,381 - 2,411,381
Paramedic tax 69,502 - 69,502
Motor vehicle license fee 1,428,557 - 1,428,557
Investment earnings 739,536 14,775 754,311
Other revenues 387,860 - 387,860
Transfers (224,192) 224,192 -
Total general revenues and transfers 29,205,857 238,967 29,444,824 Change in net position 7,361,614 1,087,881 8,449,495
Net position - July 1, 2020 27,171,505 10,335,320 37,506,825 Net position - June 30, 2021 $ 34,533,119 $ 11,423,201 $ 45,956,320 15 Attachment A Agenda Report Page 21
CITY OF PIEDMONT
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2021
General
Fund
Equipment
Replacement
Facilities
Maintenance
Other
Governmental
Funds
Total
Governmental
Funds
ASSETS
Cash and investments $ 7,036,021 $ 2,526,220 $ 9,150,496 $ 3,694,703 $ 22,407,440 Restricted cash and investments 3,667,217 - - - 3,667,217 Receivables:
Accounts 3,701,184 - - 291,847 3,993,031
Interest 19,414 2,923 8,495 2,848 33,680
Prepaid expenses 94,969 - - - 94,969
Advances to other funds - 600,000 200,000 - 800,000
Total Assets $ 14,518,805 $ 3,129,143 $ 9,358,991 $ 3,989,398 $ 30,996,337
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable $ 845,564 $ 32,043 $ 19,283 $ 75,667 $ 972,557 Accrued wages and benefits 521,872 - - 13,122 534,994
Deposits payable 707,051 - - - 707,051
Unearned revenue 1,239,836 - - 28,702 1,268,538
Total Liabilities 3,314,323 32,043 19,283 117,491 3,483,140
FUND BALANCES
Nonspendable 94,969 600,000 200,000 - 894,969
Restricted 3,667,217 - - 3,785,516 7,452,733
Assigned - 2,497,100 9,139,708 86,391 11,723,199
Unassigned 7,442,296 - - - 7,442,296
Total Fund Balances 11,204,482 3,097,100 9,339,708 3,871,907 27,513,197 Total Liabilities and Fund
Balances $ 14,518,805 $ 3,129,143 $ 9,358,991 $ 3,989,398 $ 30,996,337 See accompanying notes to the basic financial statements. 16 Attachment A Agenda Report Page 22
CITY OF PIEDMONT
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2021
Total fund balances of governmental funds $ 27,513,197
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 are not reported in governmental funds, net of accumulated depreciation of $37,117,736. 30,790,257
Net pension asset related to the police and fire pension plan is not a current financial resource and therefore not reported in the funds. 15,785,970 Deferred outflows related to the 2021 pension contributions were made subsequent to the measurement date. 3,601,354
Deferred outflows related to changes in the net pension liability and net pension asset are not reported in the governmental funds. 4,095,573
Deferred outflows related to changes in the net OPEB liability are not reported in the governmental funds. 1,171,066
Long-term liabilities are not due in the current period and, therefore are not reported in the governmental funds.
Compensated absences (994,517)
Net pension liability (29,981,771)
Net OPEB liability (8,125,606)
Deferred inflows related to changes in the net pension liability and asset (4,251,118) Deferred inflows related to changes in the net OPEB liability (6,081,872) Internal service funds are used by management to charge costs of certain activities such as insurance and employee benefits to individual government funds. The assets and liabilities of the internal service funds are included in the governmental activities of the Statement of Net Position.
Cash and investments 2,148,772
Accounts payable (15,793)
Claims payable (1,122,393)
Net position of governmental activities $ 34,533,119
See accompanying notes to the basic financial statements. 17 Attachment A Agenda Report Page 23
CITY OF PIEDMONT
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
General
Fund
Equipment
Replacement
Facilities
Maintenance
Other
Governmental
Funds
Total
Governmental
Funds
REVENUES
Property tax $ 15,442,493 $ - $ - $ - $ 15,442,493
Sales tax 244,763 - - - 244,763
Franchise tax 560,828 - - - 560,828
Utility users tax 1,238,177 - - - 1,238,177
Real property transfer tax 6,286,601 - - - 6,286,601
Business license and rental tax 620,351 - - - 620,351
Gas tax - - - 466,337 466,337
Licenses and permits 709,986 - - - 709,986
Intergovernmental 2,224,176 - - 862,039 3,086,215
Use of money and property 861,355 13,194 24,324 7,850 906,723 Current service charges 2,977,984 - - 630,395 3,608,379 Measure B tax - - - 511,024 511,024
Parcel tax 2,411,381 - - - 2,411,381
Contributions and donations 13,962 - - 169,700 183,662
Other revenues 340,290 - - 47,570 387,860
Total Revenues 33,932,347 13,194 24,324 2,694,915 36,664,780
EXPENDITURES
Current:
Administration 3,583,138 41,464 31,507 - 3,656,109
Public works 4,470,211 - 19,841 32,148 4,522,200
Street improvement - - - 48,250 48,250
Public safety:
Police services 6,530,461 8,250 17,268 358,428 6,914,407 Fire services 6,875,292 - 16,610 - 6,891,902
Recreation 2,404,970 - 107,222 706,355 3,218,547
Nondepartmental 2,875,531 - - - 2,875,531
Capital outlay - 540,566 1,065,835 582,919 2,189,320
Total Expenditures 26,739,603 590,280 1,258,283 1,728,100 30,316,266 Excess (Deficiency) of Revenues
over Expenditures 7,192,744 (577,086) (1,233,959) 966,815 6,348,514
OTHER FINANCING SOURCES
(USES)
Transfers in 51,183 610,500 4,044,911 46,612 4,753,206
Transfers out (4,679,319) - - (73,887) (4,753,206)
Total Other Financing
Sources (Uses) (4,628,136) 610,500 4,044,911 (27,275) - Net Change in Fund Balances 2,564,608 33,414 2,810,952 939,540 6,348,514 Fund Balances - July 1, 2020 8,639,874 3,063,686 6,528,756 2,932,367 21,164,683 Fund Balances - June 30, 2021 $ 11,204,482 $ 3,097,100 $ 9,339,708 $ 3,871,907 $ 27,513,197 See accompanying notes to the basic financial statements. 18 Attachment A Agenda Report Page 24
CITY OF PIEDMONT
RECONCILIATION OF THE
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Reconciliation of the change in fund balances - total governmental funds to the change in net position of governmental activities:
Net change in fund balances - total governmental funds $ 6,348,514 Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets are capitalized and allocated over their estimated useful lives and reported as depreciation expense.
Capital asset purchases 2,189,321
Depreciation expense (1,952,744)
Government funds only report the disposal of capital assets to the extent proceeds are received from the sale. In the Statement of Activities, a gain or loss is reported for each disposal. (47,793)
Government funds only report the transfer of capital assets to enterprise funds as a disposal of capital assets. In the Statement of Activities, a transfer is reported. (224,192) Compensated absences expenditures reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in a governmental fund. This is the net change in compensated absences for the current period. 7,554
Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.
Pension expense related to deferred outflows and inflows of resources (647,774) Other postemployment benefits 1,684,835
Internal service funds are used by management to charge the costs of certain activities, such as equipment replacement, to individual funds. The net revenue (expense) of the internal service funds is reported with the governmental funds. 3,893 Change in net position of governmental activities $ 7,361,614 See accompanying notes to the basic financial statements. 19 Attachment A Agenda Report Page 25
CITY OF PIEDMONT
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2021
Business-Type Activities
Governmental
Activities
Sewer Fund Aquatic Fund Total
Internal Service
Funds
ASSETS
Current Assets
Cash and investments $ 3,141,051 $ 51,698 $ 3,192,749 $ 2,148,772 Receivables:
Accounts, net 139,702 - 139,702 -
Interest 5,607 256 5,863 -
Total Current Assets 3,286,360 51,954 3,338,314 2,148,772 Non Current Assets
Capital assets, net 17,293,728 361,576 17,655,304 -
Total Non-Current Assets 17,293,728 361,576 17,655,304 - Total Assets 20,580,088 413,530 20,993,618 2,148,772
DEFERRED OUTFLOWS OF RESOURCES
Changes in the net pension liability 414,755 18,129 432,884 - Changes in the net OPEB liability 81,144 7,388 88,532 - Total Deferred Outflows of Resources 495,899 25,517 521,416 -
LIABILITIES
Current Liabilities
Accounts payable 45,039 27,463 72,502 15,793
Interest payable 80,916 - 80,916 -
Accrued wages and benefits - 3,408 3,408 -
Long-term liabilities - current 693,574 - 693,574 -
Compensated absences - current 36,263 - 36,263 -
Claims payable - current - - - 322,387
Total Current Liabilities 855,792 30,871 886,663 338,180 Non-Current Liabilities
Advances from other funds 800,000 - 800,000 -
Long-term liabilities - noncurrent 5,508,346 - 5,508,346 - Compensated absences - noncurrent 22,272 - 22,272 -
Claims payable - noncurrent - - - 800,006
Net pension liability 1,487,340 81,864 1,569,204 -
Net OPEB liability 733,281 61,836 795,117 -
Total Non-Current Liabilities 8,551,239 143,700 8,694,939 800,006 Total Liabilities 9,407,031 174,571 9,581,602 1,138,186
DEFERRED INFLOWS OF RESOURCES
Changes in the net pension liability 76,622 5,661 82,283 - Changes in the net OPEB liability 370,720 57,228 427,948 - Total Deferred Inflows of Resources 447,342 62,889 510,231 -
NET POSITION
Net investment in capital assets 11,091,808 361,576 11,453,384 - Unrestricted 129,806 (159,989) (30,183) 1,010,586
Total Net Position $ 11,221,614 $ 201,587 $ 11,423,201 $ 1,010,586 See accompanying notes to the basic financial statements. 20 Attachment A Agenda Report Page 26
CITY OF PIEDMONT
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Business-Type Activities
Governmental
Activities
Sewer Fund Aquatic Fund Total
Internal
Service Funds
OPERATING REVENUES
Charges for services $ 2,748,553 $ 525 $ 2,749,078 $ -
Total Operating Revenue 2,748,553 525 2,749,078 -
OPERATING EXPENSES
Contract and professional services 280,336 67,086 347,422 - Services and supplies 51,734 42,329 94,063 -
Salaries and benefits 708,812 98,785 807,597 -
Insurance and claims expense - - - 1,733,424
Depreciation 509,878 23,590 533,468 -
Total Operating Expenses 1,550,760 231,790 1,782,550 1,733,424 Operating Income (Loss) 1,197,793 (231,265) 966,528 (1,733,424)
NON-OPERATING REVENUES
(EXPENSES)
Interest income 13,769 1,006 14,775 -
Interest expense (117,614) - (117,614) -
Other income - - - 1,737,317
Total Non-Operating Revenues
(Expenses) (103,845) 1,006 (102,839) 1,737,317
Income (Loss) Before Contributions 1,093,948 (230,259) 863,689 3,893
CONTRIBUTIONS
Capital contributions 224,192 - 224,192 -
Total Contributions 224,192 - 224,192 -
Change in net position 1,318,140 (230,259) 1,087,881 3,893 Net Position - July 1, 2020 9,903,474 431,846 10,335,320 1,006,693 Net Position - June 30, 2021 $ 11,221,614 $ 201,587 $ 11,423,201 $ 1,010,586 See accompanying notes to the basic financial statements. 21 Attachment A Agenda Report Page 27
CITY OF PIEDMONT
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Business-Type Activities
Governmental
Activities
Sewer Fund Aquatic Fund Total
Internal
Service Funds
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash received from customers $ 2,745,211 $ 16,037 $ 2,761,248 $ - Claims and premium paid - - - (1,680,370)
Cash paid to suppliers (387,246) (154,063) (541,309) -
Cash paid to employees (748,265) (159,233) (907,498) -
Net Cash Provided by (Used for)
Operating Activities 1,609,700 (297,259) 1,312,441 (1,680,370)
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Other income - - - 1,737,317
Net Cash Provided by Non-Capital
Financing Activities - - - 1,737,317
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition of capital assets (678,980) - (678,980) -
Principal paid on long-term debt (679,572) - (679,572) - Interest paid on long-term debt (126,248) - (126,248) - Net Cash Used for Capital and Related
Financing Activities (1,484,800) - (1,484,800) -
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 21,774 1,882 23,656 -
Net Cash Provided by Investing Activities 21,774 1,882 23,656 - Net Increase (Decrease) in Cash and Cash
Equivalents 146,674 (295,377) (148,703) 56,947
Cash and Cash Equivalents - July 1, 2020 2,994,377 347,075 3,341,452 2,091,825 Cash and Cash Equivalents - June 30, 2021 $ 3,141,051 $ 51,698 $ 3,192,749 $ 2,148,772 See accompanying notes to the basic financial statements. 22 Attachment A Agenda Report Page 28
CITY OF PIEDMONT
STATEMENT OF CASH FLOWS (continued)
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Business-Type Activities
Governmental
Activities
Sewer Fund Aquatic Fund Total
Internal
Service Funds
RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES:
Operating Income (Loss) $ 1,197,793 $ (231,265) $ 966,528 $ (1,733,424) Adjustments to reconcile operating income
(loss) to net cash provided by (used for)
operating activities:
Depreciation expense 509,878 23,590 533,468 -
Pension and OPEB expense (49,141) (6,440) (55,581) -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (3,342) 15,512 12,170 -
Increase (decrease) in:
Accounts payable (55,176) (44,648) (99,824) 11,882
Claims payable - - - 41,172
Accrued wages - (49,436) (49,436) -
Compensated absences 9,688 (4,572) 5,116 -
Net Cash Provided by (Used for) Operating
Activities $ 1,609,700 $ (297,259) $ 1,312,441 $ (1,680,370) See accompanying notes to the basic financial statements. 23 Attachment A Agenda Report Page 29
CITY OF PIEDMONT
STATEMENT OF FIDUCIARY NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2021
Custodial Fund
Police and Fire
Pension Plan
Trust OPEB Trust
2017
Undergrounding
Refunding Bond
Fund
ASSETS
Restricted cash (Note 2) $ - $ - $ 387,304
Restricted investments (Note 2) 17,397,563 12,486,333 - Interest receivable 5,767 - -
Total Assets 17,403,330 12,486,333 387,304
LIABILITIES
Accounts payable and other liabilities 47,467 - -
Total Liabilities 47,467 - -
NET POSITION
Restricted for:
Police and fire pension 17,355,863 - -
OPEB - 6,714,197 -
Individuals, organizations, and other governments - - 387,304 Total Net Position $ 17,355,863 $ 6,714,197 $ 387,304
See accompanying notes to the basic financial statements. 24 Attachment A Agenda Report Page 30
CITY OF PIEDMONT
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Custodial Fund
Police and Fire
Pension Plan
Trust OPEB Trust
2017
Undergrounding
Refunding Bond
Fund
ADDITIONS
Assessments $ - $ - $ 376,182
Contributions from employees - 75,944 -
Investment income:
Net increase in fair value of investments 3,669,946 (2,886,068) - Interest and dividends 334,332 - -
Net investment income 4,004,278 (2,886,068) -
Total Additions 4,004,278 (2,810,124) 376,182
DEDUCTIONS
Pension benefits paid 198,760 - -
Administrative expenses 90,124 - 8,856
Debt service:
Principal - - 244,359
Interest - - 99,197
Total Deductions 288,884 - 352,412
Change in Fiduciary Net Position 3,715,394 (2,810,124) 23,770 Fiduciary Net Position - July 1, 2020 13,640,469 9,524,321 15,454 Change in accounting principle (Note 16) - - 348,080
Fiduciary Net Position - July 1, 2020, Restated 13,640,469 9,524,321 363,534 Fiduciary Net Position - June 30, 2021 $ 17,355,863 $ 6,714,197 $ 387,304 See accompanying notes to the basic financial statements. 25 Attachment A Agenda Report Page 31
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Piedmont is a residential community located in the East Bay Hills, approximately ten miles east of San Francisco, California. The City was incorporated as a municipal corporation in 1907; population at June 30, 2021 was approximately 11,317.
The City operates under the Council-Administrator form of government, with five elected Council members served by a full-time City Administrator and staff. At June 30, 2021, the City's staff was comprised of 92 full-time employees who were responsible for the following City-provided services:
Public Safety - The City employs 19 sworn and 9 non-sworn police personnel to provide round-the-clock police services from a central station, and 25 fire personnel to provide round-the-clock fire services from a central station.
Streets and Roads - The City contracts the construction and maintenance of its streets, curbs, gutters, and related public property.
Recreation, Public Works, Administration and other services are provided by a total of 40 full-time and 5 part-time employees.
In addition, the City employs approximately 316 seasonal recreational personnel.
The accounting policies of the City of Piedmont conform to accounting principles generally accepted in the United States of America as applicable to governments. Following is a summary of the more significant policies.
A. The Reporting Entity
The accompanying basic financial statements present the financial activities of the City, which has no component units.
B. Basis of Presentation
The City's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America. These standards require that the financial statements described below be presented.
Government-wide Financial Statements:
The Statement of Net Position and Statement of Activities display information about the reporting government as a whole. They include the activities of the overall City government except for fiduciary activities. Eliminations have been made to minimize the double counting of internal service activities. The City's net position is reported in three parts - net investment in capital assets; restricted net position; and unrestricted net position. The City first utilizes restricted resources to finance qualifying activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in part by fees charged to external parties for goods or services.
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
26 Attachment A Agenda Report Page 32
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Financial Statements:
The fund financial statements provide information about the City's funds, including fiduciary funds. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories with each major fund displayed in a separate column. A fund is considered major if it is the primary operating fund of the City or meets the following criteria:
a. Total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and b. Total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined.
All remaining governmental funds are aggregated and reported as nonmajor funds in a single column, regardless of their fund type.
The funds of the financial reporting entity are described below:
Governmental Funds
General Fund - The General Fund is the general operating fund of the City and is always classified as a major fund. It is used to account for all activities except those legally or administratively required to be accounted for in other funds.
Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects.
Debt Service Funds - Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditures for principal and interest.
Capital Project Funds - Capital Project Funds are used to account for financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets.
Proprietary Funds
Enterprise Funds - Enterprise funds are used to account for business-like activities provided to the general public.
These activities are financed primarily by user charges and the measurement of financial activity focuses on net income measurement similar to the private sector.
Internal Service Funds - Internal service funds are used to account for, and finance, services and commodities furnished by a designated department of a governmental unit to other departments of the same governmental unit.
The City uses internal service funds to account for insurance activities.
Fiduciary Funds (not included in government-wide statements) Pension (and Other Employee Benefit) Trust Funds - Pension (and Other Employee Benefit) Trust Funds are used to report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, other postemployment benefit plans, and other employee benefit plans. 27 Attachment A Agenda Report Page 33
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Custodial Funds - Custodial Funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.
Major Funds
The City reported the following major governmental funds in the accompanying financial statements:
General Fund - This 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 a separate fund.
Equipment Replacement Fund - This fund is used to account for the accumulation of resources used for the replacement of capital assets used by governmental funds.
Facilities Maintenance Fund - This fund is used to account for the accumulation of resources used for the maintenance of capital assets used by governmental funds.
The City reports the following major proprietary funds in the accompanying financial statements:
Sewer Fund - This fund is used to account for the operations of the sewer and storm drain systems.
Aquatic Fund - This fund is used to account for the operations of the Piedmont Community Pool.
The City also reports the following fund types:
Police and Fire Pension Trust Fund - This fund accounts for the pension investment activity including retirement payments to 10 retired City employees and/or surviving spouses.
OPEB Trust Fund - This fund accounts for OPEB trust investment activity for post-employment retiree healthcare benefits.
Custodial Fund - The Custodial fund accounts for resources held by the City as an agent for individuals, private organizations, and other governmental entities. This fund accounts for amounts held for one underground utility assessment district.
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" revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements regardless of the measurement focus applied.
Measurement Focus
On the government-wide Statement of Net Position and the Statement of Activities, both governmental and proprietary activities are presented using the economic resources measurement focus as defined in item "b" below.
In the fund financial statements, the "current financial resources" measurement focus or the "economic resources" measurement focus is used as appropriate:
a. All governmental funds are accounted for using a "current financial resources" measurement focus. With this measurement focus, only current assets and deferred outflows of resources, and current liabilities and deferred inflows of resources, generally are included on their balance sheets. Their operating statements present sources 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 period. 28 Attachment A Agenda Report Page 34
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) b. All proprietary 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 deferred outflows of resources, and all liabilities and deferred inflows of resources (whether current or noncurrent) associated with the operation of these funds are reported.
Proprietary fund equity is classified as net position.
c. Fiduciary funds use the "economic resources" measurement focus and the accrual basis of accounting.
Basis of Accounting
In the government-wide Statement of Net Position and Statement of Activities, both governmental and proprietary 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 is 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. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The City defines available to be within 60 days of year-end.
Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for general obligation bond principal and interest which are reported when due. Governmental capital asset acquisitions are reported as expenditures in governmental funds. Proceeds from governmental long-term liabilities and acquisitions under capital leases are reported as other financing sources.
Those revenues susceptible to accrual include taxes, intergovernmental revenues, interest and charges for services.
Certain indirect costs are included in program expenses reported for individual functions and activities.
Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position are available to finance program expenditures. The City's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.
All proprietary funds utilize 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 is used.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal operations. The principal operating revenues of the enterprise and internal service funds are charges for services. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed.
D. Property Taxes
The County of Alameda levies, bills, and collects property taxes and special assessments for the City as follows:
Secured Unsecured
Valuation Dates March 1 March 1
Lien/levy Dates January 1 January 1
Due Dates 50% on November 1 and February 1 August 31
Delinquent as of December 10 and April 10 August 31
29 Attachment A Agenda Report Page 35
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The term "unsecured" refers to taxes on personal property other than real estate, land, and buildings. These taxes are secured by liens on the property being taxed. Property tax revenue is recognized in accordance with applicable GASB pronouncements; that is, in the fiscal year for which the taxes have been levied providing they become available.
Available means due, or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities in the current period. The County remits the entire amount of the tax levy to the City (net of County administrative fees), and handles all delinquencies, retaining any interest and penalties. The County remits a property tax clean-up payment for the current period each September following the close of the fiscal year. The City makes an exception to the 60-day recognition period to recognize this revenue in the current period.
E. Cash and Investments
The City pools the cash of all funds, except for monies deposited with fiscal agents in accordance with related bond indentures and monies held in the police and fire pension trust, and OPEB trust. The cash and investments balance in each fund represents that fund's equity share of the City's cash and investment pool. As the City places no restrictions on the deposit or withdrawal of a particular fund's equity in the pool, the pool operates like a demand deposit account for the participating funds.
For purposes of the statement of cash flows, the City considers cash and cash equivalents as short-term highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Because the only investments held by the proprietary funds are the Local Agency Investment Fund (LAIF), which meets the definition of a cash equivalent, and investments in Multi-Bank Securities, the entire pooled balance is reported as cash and investments.
F. Accounts and Interest Receivables
In the government-wide statements, receivables consist of all revenues earned at year-end and not yet received.
Receivables are recorded in the financial statements net of any allowance for doubtful accounts if applicable, and estimated refunds due. Major receivable balances for the governmental activities include sales and use taxes, franchise taxes, grants, fines, interest, and other fees. Federal and state grants are considered receivable and accrued as revenue when reimbursable costs are incurred.
In the fund financial statements, material receivables in governmental funds include revenue accruals such as sales tax, franchise tax, and grants and other similar intergovernmental revenues since they are usually both measurable and available. Nonexchange transactions collectible but not available are recorded as deferred inflows of resources in the fund financial statements in accordance with modified accrual, but are not deferred in the government-wide financial statements in accordance with the accrual basis. Interest and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available. Long-term loans in governmental funds are treated as expenditures in the year advanced and as revenues in the year repayment is measurable and available. Loans receivable are recorded in the fund financial statements, but are recorded as deferred inflows of resources to indicate they do not represent current financial resources. Proprietary fund material receivables consist of all revenues earned at year-end and not yet received. Service charges and interest earnings compose the majority of proprietary fund receivables.
G. Capital Assets
The accounting treatment of property, plant and equipment 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.
Government-wide Financial Statements
In the government-wide financial statements, capital assets with a cost of $5,000 or more are capitalized. All capital assets are valued at historical cost, or estimated historical cost if actual is unavailable, except for donated capital assets which are recorded at their acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset lives are not capitalized. 30 Attachment A Agenda Report Page 36
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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:
Building and improvements 60 years
Vehicles 4 - 20 years
Furniture, fixtures, and equipment 7 - 25 years
Pavement system 28 years
Sidewalk, curb, and gutters 40 years
Traffic signals 25 years
Street lights 25 years
Bridges 75 years
Park facilities system 25 - 40 years
Sewer and storm drains 50 years
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of debt financed capital assets of business-type activities is included as part of the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period.
Fund Financial Statements
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 financial statements.
H. Compensated Absences
A liability is calculated for all the costs of compensated absences based upon benefits earned by employees in the current period for which there is a probability of payment at termination. The salary and related payroll costs are those in effect at June 30, 2021. Compensated absences include vacation pay and compensated time off. The City's liability for compensated absences is recorded at the City-wide level in the Statement of Net Position for governmental activities or in the proprietary funds as appropriate.
I. Long-Term Liabilities
In the government-wide financial statements and the proprietary fund types in the fund financial statements, long-term liabilities, and other long term obligations are reported as liabilities in the applicable governmental activities, businesstype activities, or proprietary fund type statement of net position. Initial issue bond premiums and discounts, are deferred and amortized over the life of the bonds using the straight-line method. The difference between the reacquisition price of refunding bonds and the net carrying amount of refunded debt (deferred amount on refunding) is amortized over the shorter of the lives of the refunding debt or remaining life of the refunded debt. Bond issuance costs, except for insurance, are expensed in the period incurred. Amortization of bond premiums or discounts, insurance costs, and deferred amounts on refunding are included in interest expense.
In the fund financial statements, governmental fund types recognize bond premiums, discounts, and issuance costs during the period issued. The face amount of debt issued is reported as other financing sources. Premiums received are reported as other financing sources, while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 31 Attachment A Agenda Report Page 37
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’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.
K. Section 115 Trust
In fiscal year 2017-18, the City Council approved the creation of a Section 115 Trust Agreement with U.S. Bank National Association, Trustee, and Public Agency Retirement Services (PARS), Trust Administrator. The Section 115 Trust was established as a means to set aside monies to fund the City's pension obligations. Contributions to the Section 115 trust are irrevocable, the assets are dedicated to providing benefits to plan members, and the assets are protected from creditors of the City. The purpose of the creation of the Section 115 Trust was to address the City's pension obligations by accumulating assets to reduce the net pension liability. However, in accordance with generally accepted accounting principles, the assets in the Section 115 Trust are not considered to have present service capacity as plan assets and are therefore considered restricted assets of the City rather than plan assets. Accordingly, the Section 115 Trust's assets are recorded as restricted for pension benefits in the City's General Fund rather than assets of the pension plan during the measurement of the net pension liability. The assets held in trust will be considered pension plan assets at the time they are transferred out of the Trust into the pension plan.
L. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City's plan (OPEB Plan) and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.
Investments are reported at fair value.
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date June 30, 2020
Measurement Date June 30, 2021
Measurement Period July 1, 2020 - June 30, 2021
M. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. Deferred outflows of resources recorded for the City relate to the City's defined benefit pension plan and the OPEB plan. See Notes 7 and 9.
In addition to liabilities, the statement of net position or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Deferred inflows of resources recorded for the City relate to the City's defined benefit pension plan, the police and fire pension plan, and OPEB plan. See Notes 7, 8, and 9. 32 Attachment A Agenda Report Page 38
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. Interfund Transactions
Interfund transactions are reflected as either loans, services provided, reimbursements, or transfers. Loans are reported as receivables and payables as appropriate, are subject to elimination upon consolidation and are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances”. Advances between funds, as reported in the fund financial statements, are offset by nonspendable fund balance in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources.
Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses.
Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation.
O. Equity Classifications
Government-wide Financial Statements
Net position is the excess of all the City's assets and deferred outflows of resources over all its liabilities and deferred inflows of resources, regardless of fund. Net position is divided into three categories. These categories apply only to net position, which is determined at the government-wide level, and are described below:
a. Net investment in capital assets - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position - Consists of net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation.
c. Unrestricted net position - All other net position that does not meet the definition of "restricted" or "net investment in capital assets."
Fund Financial Statements
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 purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:
a. Nonspendable - Amounts that cannot be spent because they are either (1) not in spendable form or (2) legally or contractually required to be maintained intact.
b. Restricted - Amounts that are restricted for specific purposes when constraints placed on the use of resources are either (1) externally imposed by creditors, grantors, contributors, laws, or regulations of other governments; or (2) imposed by law through constitutional provisions or enabling legislation. c. Committed - Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority. d. Assigned - Amounts that are constrained by the City Council's intent to be used for specific purposes through a resolution, but are neither restricted or committed. The City Council assigns fund balances for specific purposes by resolution adopting the annual budget for the upcoming fiscal year, or by an amending budget resolution during the fiscal year.
33 Attachment A Agenda Report Page 39
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) e. Unassigned - Amounts representing the residual classification for the general fund or any other fund with a negative fund balance.
Further detail about the City's fund balance classification is described in Note 10.
P. General Budget Policies
The City operates under the general laws of the State of California and annually adopts a budget for its governmental and proprietary funds to be effective July 1 for the ensuing fiscal year. From the effective date of the budget, which is adopted and controlled at the department level, the amounts stated therein as proposed expenditures become appropriations to the various City departments. Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Encumbrances are considered to be expenditures in the year the commitment is entered into. Budget appropriations lapse at the end of the fiscal year unless encumbered by specific Council approval.
Q. Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates.
R. Reclassifications
Certain accounts in prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements.
S. Implementation of Governmental Accounting Standards Board Statements Effective July 1, 2020, the City implemented the following accounting and financial reporting standards:
Governmental Accounting Standards Board Statement No. 84 In January 2017, GASB issued Statement No. 84, Fiduciary Activities. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. Additionally, this Statement describes four fiduciary funds that should be reported, as well as provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources. The City adopted this accounting guidance for its June 30, 2021 yearend.
Governmental Accounting Standards Board Statement No. 90 In August 2018, GASB issued Statement No. 90, Majority Equity Interests - an amendment of GASB Statements No. 14 and No. 61. The primary objectives of this Statement are to improve the consistency and comparability of reporting a government's majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government's holding of the equity interest meets the definition of an investment. This Statement establishes that ownership of a majority equity interest in a legally separate organization results in the government being financially accountable for the legally separate organization and, therefore, the government should report that organization as a component unit. The City adopted this accounting guidance for its June 30, 2021 year-end. 34 Attachment A Agenda Report Page 40
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. Future Governmental Accounting Standards Board Statements These statements are not effective until July 1, 2021 or later. The City has not determined the effects, if any, on the financial statements.
Governmental Accounting Standards Board Statement No. 87 In June 2017, GASB issued Statement No. 87, Leases. This Statement (1) increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract; and (2) establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Additionally, under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The City has not determined what impact, if any, this pronouncement will have on the financial statements. Application of this statement is effective for the City's fiscal year ending June 30, 2022.
Governmental Accounting Standards Board Statement No. 89 In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. This statement requires interest costs incurred before the end of a construction period be recognized as an expense in the period in which the costs is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. The City has not determined what impact, if any, this pronouncement will have on the financial statements. Application of this statement is effective for the City's fiscal year ending June 30, 2022.
Governmental Accounting Standards Board Statement No. 91 In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations. The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligation; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. The City has not determined what impact, if any, this pronouncement will have on the financial statements. Application of this statement is effective for the City's fiscal year ending June 30, 2023.
Government Accounting Standards Board Statement No. 92
In January 2020, GASB issued Statement No. 92, Omnibus 2020. The primary objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. The City has not determined what impact, if any, this pronouncement will have on the financial statements. Application of this statement is effective for the City's fiscal year ending June 30, 2022.
Government Accounting Standards Board Statement No. 93
In March 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates. The primary objective of this Statement is to address accounting and financial reporting implications that result from the replacement of an interbank offered rate (IBOR). The City has not determined what impact, if any, this pronouncement will have on the financial statements. The removal of LIBOR as an appropriate benchmark interest rate is effective for the City's fiscal year ending June 30, 2022. All other requirements of this statement are effective for the City's fiscal year ending June 30, 2022.
35 Attachment A Agenda Report Page 41
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government Accounting Standards Board Statement No. 94
In March 2020, GASB issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). A PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. This Statement also provides guidance for accounting and financial reporting for availability payment arrangements (APAs). An APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction. The City has not determined what impact, if any, this pronouncement will have on the financial statements. The requirements of this statement are effective for the City's fiscal year ending June 30, 2023.
Government Accounting Standards Board Statement No. 96
In May 2020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for governments, defines a SBITA, establishes that a SBITA results in a right-to-use subscription asset-an intangible asset-and a corresponding liability, provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA, and requires note disclosures regarding a SBITA. The City has not determined what impact, if any, this pronouncement will have on the financial statements. The requirements of this statement are effective for the City's fiscal year ending June 30, 2023.
Government Accounting Standards Board Statement No. 97
In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans an Amendment of GASB Statements No. 14 and No. 84, and a Supersession of GASB Statement No. 32. The primary objectives of this Statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a partial component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. The City has not determined what impact, if any, this pronouncement will have on the financial statements. The requirements of this statement related to the accounting and financial reporting for Section 457 plans are effective for the City's fiscal year ending June 30, 2022. 36 Attachment A Agenda Report Page 42
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2: CASH AND INVESTMENTS
Cash and investments as of June 30, 2021 were classified in the accompanying financial statements as follows:
Cash and
Investments
Restricted Cash
and
Investments Total
Governmental activities $ 24,556,212 $ 3,667,217 $ 28,223,429 Business-type activities 3,192,749 - 3,192,749
Total government-wide cash and investments 27,748,961 3,667,217 31,416,178 Fiduciary activities - 30,271,200 30,271,200
Total cash and investments $ 27,748,961 $ 33,938,417 $ 61,687,378 Cash and investments were carried at fair value as of June 30, 2021 and consisted of the following:
Cash on hand $ 904
Cash in banks 319,939
Total cash 320,843
Certificates of deposit 6,511,343
Local Agency Investment Fund (LAIF) 21,304,079
Held in Trust:
Equity mutual funds 12,486,333
Fixed income securities 8,624,768
Domestic equities 12,338,362
Money market funds 101,650
Total investments 61,366,535
Total cash and investments $ 61,687,378
37 Attachment A Agenda Report Page 43
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
Authorized Investments of the City
The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). This table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.
Authorized Investment Type
Maximum
Maturity
Maximum
Percentage of
Portfolio
Minimum
Quality
Requirements
Maximum
Investment in
one Issuer
Local Agency Bonds 5 years None None None
U.S. Treasury Obligations 5 years None None None
State Obligations - CA and Others 5 years None None None CA Local Agency Obligations 5 years None None None
U.S. Agency Obligations 5 years None None None
Banker's Acceptances 180 days 40% None 30%
Commercial Paper - Pooled Funds 270 days 40% of the
agency's
money
Highest letter
and number
rating by an
NRSROH
None
Commercial Paper - Non-Pooled Funds 270 days 25% of the agency's
money
Highest letter
and number
rating by an
NRSROH
None
Negotiable Certificates of Deposit 5 years 30% None None Non-negotiable Certificates of Deposit 5 years None None None Placement Service Deposits 5 years 30% None None
Placement Service Certificates of Deposit 5 years 30% None None Repurchase Agreements 1 year None None None
Reverse Repurchase Agreements and
Securities Lending Agreements
92 days 20% of the
base value of
the portfolio
None None
Medium-Term Notes 5 years 30% "A" rating
category or its
equivalent or
better
None
Mutual Funds and Money Market Mutual Funds N/A 20% Multiple None Collateralized Bank Deposits 5 years None None None
Mortgage Pass-Through Securities 5 years 20% "AA" rating category or its
equivalent or
better
None
County Pooled Investment Funds N/A None None None
Joint Powers Authority Pool N/A None Multiple None
Local Agency Investment Fund (LAIF) N/A None None None
Voluntary Investment Program Fund N/A None None None
Supranational Obligations 5 years 30% "AA" rating
category or its
equivalent or
better
None
38 Attachment A Agenda Report Page 44
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
The City complies with the provisions of the California Government Code (or the City's investment policy, where more restrictive) pertaining to the types of investments held, institutions in which deposits were made and security requirements. The City will continue to monitor compliance with applicable statutes pertaining to public deposits and investments.
Investments Authorized by the Police and Fire Pension Board Investment of funds in the Police and Fire pension are managed by an investment advisor. The Piedmont Police and Fire Pension Fund investment policy allows the investment advisor to manage the Pension Fund in a manner consistent with the investment objectives as outlined in the April 2006 investment policy, the Prudent Expert Rule, and the provisions of the Employee Retirement Income Security Act of 1974.
The investment policy grants the advisor full power and authority to make purchases, sales, exchanges, conversion and trades in connection therewith as the advisor deems appropriate to the provisions of Sections 2.144 and 2.145 of the Piedmont City Code. The assets in the plan are invested in a manner that is consistent with generally accepted standards of fiduciary responsibility, to insure the security of principal, and maximum yield on all pension fund investments through a mix of well diversified, high quality, fixed income and equity securities.
Authorized investments include the following:
Authorized Investment Type
Maximum
Percentage of
Portfolio
Minimum Credit
Rating
Domestic Equities 5% per issuer N/A
Foreign Equity Investments Traded on U.S. Based Exchanges 20% N/A Cash 10% N/A
S&P Stock Index Futures None N/A
Fixed Income Securities None B/B overall
portfolio
Commercial Paper None A-2/P-2
Certificates of Deposit None None
Bankers Acceptances None None
U.S. Treasury Bonds, Notes, and Bills None None
Debt Instruments of U.S. Government Agencies None None
Repurchase Agreements with U.S. Treasury Securities as Collateral None None Repurchase Agreements with U.S. Treasury Agencies as Collateral None None Corporate Notes None B/B
Asset-Backed Securities None None
Municipal Debt None Baa/BBB
Mortgage-Backed Pass-Through Securities by GSE's and CMBS None None Collateralized Mortgage Obligations None None
Other investments are also permissible upon Board approval.
Investments Authorized by the OPEB Trust Fund
Investment of funds in the OPEB (Other Post-employment Benefits) Trust are managed by the same investment advisor as the Police and Fire Pension Trust. The OPEB investment policy allows the investment advisor to manage the OPEB Trust Fund in a manner consistent with the investment objectives as outlined in the May 2013 investment policy.
39 Attachment A Agenda Report Page 45
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
The investment policy grants the advisor full power and authority to make purchases, sales, exchanges, conversions and trades in connection therewith as the advisor deems appropriate. The advisor is expected to operate within the Prudent Expert Rule, the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and other pertinent state and federal laws, regulations, and rulings that relate to the investment process. The assets of the Trust shall be invested in a manner that is consistent with generally accepted standards of fiduciary responsibility to insure the security of principal and maximum yield on all investments through a mix of well-diversified fixed income and equity securities. The following are the OPEB Trust Fund investment policies and guidelines:
The investment policy specified the long-term asset allocation targets:
Asset Class Minimum Target Maximum
Equity 25% 60% 75%
Fixed Income 25% 40% 75%
The cash holdings should not exceed 10% of the market value in the portfolio. The asset allocation targets are to be pursued on a long-term strategic basis and may be revised when significant changes occur within the economic and/or capital market environment or in the stream of future benefits expected to be paid. Capital market assumptions and projections shall be reviewed annually. Benefit payments shall be reviewed quarterly. Benefit liabilities and assumptions shall be reviewed no less frequently than every three years.
The equity portion of the Trust shall be invested in marketable equity securities with certain restrictions placed:
Equity Types Restrictions
Equity mutual funds None
Individual U.S. Stocks a. 5% maximum exposure at cost
b. 10% maximum exposure at market value
c. 5% maximum of company's outstanding shares
Individual non-U.S. Stocks (including American
Depository receipts, foreign-listed securities) 25% maximum at cost The fixed income portion of the Trust shall be invested in marketable, fixed-income securities with certain restrictions specified below. All fixed income securities held directly must be rated B/B or better by Moody's Investors Services and Standard & Poor's Corporation.
Fixed-Income Types Restrictions
U.S. Treasury bonds, notes, and bills None
Debt instruments issued by U.S. Government or Agencies None Repurchase agreements with U.S. Treasury Securities and Agencies of U.S. Government as collateral None
Certificates of deposit and banker's acceptances None
Diversified fixed-income mutual funds None
Asset-backed securities None
Mortgage-backed pass through securities issued by
Government Sponsored Enterprises (GSEs) and
Commercials (CMBS) None
Collateralized Mortgage Obligations (CMOs) Has certain restrictions Commercial paper or variable rate notes a. A-2/P-2 or higher by S&P or Moody's b. 10% maximum exposure at market value
Private placements 5% maximum exposure at cost
Eurodollar securities and non-dollar denominated
instruments 15% maximum exposure at cost
Preferred stock 10% maximum exposure at cost
Debt for equity exchanges 5% maximum exposure at cost
Mortgage-backed derivative instruments 10% maximum exposure at cost 40 Attachment A Agenda Report Page 46
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
The following investments are explicitly prohibited by the OPEB Trust Investment Policy:
Asset Class Prohibited Investment
Equity a. Future
b. Derivatives
c. Short sale
d. Private placements
e. Commodities
Fixed-Income a. Interest-only strips
b. Inverse floating rate notes
Investment Valuation
Investments are measured at fair value on a recurring basis. Recurring fair value measurements are those that Governmental Accounting Standards Board (GASB) Statements require or permit in the statement of net position at the end of each reporting period. Fair value measurements are categorized based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments’ fair value measurements are as follows at June 30, 2021:
Fair Value Measurements Using
Investments Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value Certificates of deposit $ - $ 6,511,343 $ - $ 6,511,343 Held in Trust:
Equity mutual funds 12,486,333 - - 12,486,333
Fixed income securities - 8,624,768 - 8,624,768
Equity securities 12,338,362 - - 12,338,362
Money market funds 101,650 - - 101,650
Total $ 24,926,345 $ 15,136,111 $ - $ 40,062,456
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which is recorded on an amortized cost basis. The investment balance of $21,304,079 is not subject to valuation on a recurring basis.
Disclosure Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City's interest rate risk is mitigated is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. 41 Attachment A Agenda Report Page 47
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
Information about the sensitivity of the fair values of the City's investments (including investments held in trust) to market rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity as of June 30, 2021:
Remaining Maturity
Investments
12 months or
less 1-5 years
More than 5
years Fair Value
Police and Fire Pension Trust Fund:
Fixed income securities $ 4,957,551 $ - $ - $ 4,957,551 Domestic equities 12,338,362 - - 12,338,362
Money market funds 101,650 - - 101,650
Total Police and Fire Pension Trust Fund 17,397,563 - - 17,397,563 OPEB Trust Fund:
Equity mutual funds 12,486,333 - - 12,486,333
Total OPEB Trust Fund 12,486,333 - - 12,486,333
City and Agency Funds:
Fixed income securities 3,667,217 - - 3,667,217
Certificates of deposit 2,486,105 4,025,238 - 6,511,343 Local Agency Investment Fund 21,304,079 - - 21,304,079
Total City and Agency Funds 27,457,401 4,025,238 - 31,482,639 Total Investments $ 57,341,297 $ 4,025,238 $ - $ 61,366,535 Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City had no investments (including investments held in trust) that were highly sensitive to interest rate fluctuations as of June 30, 2021.
42 Attachment A Agenda Report Page 48
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.
Presented below is the minimum rating required by (where applicable) the California Government Code, the investment policy, or debt agreements, and the actual rating as of the fiscal year for each investment type.
Rating as of Fiscal Year End
Investment Type Total S&P Moody's
Police and Fire Pension Trust Fund:
Fixed income securities $ 4,957,551 Not rated Not rated Domestic equities 12,338,362 Not rated Not rated
Money market funds 101,650 Not rated Not rated
OPEB Trust Fund
Equity mutual funds 12,486,333 Not rated Not rated
City and Agency Funds
Fixed income securities 3,667,217 Not rated Not rated
Certificates of deposit 6,511,343 Not rated Not rated
Local Agency Investment Fund 21,304,079 Not rated Not rated $ 61,366,535
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 collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the government unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City's deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
Allocation of Interest Income Among Funds
Interest income from pooled investments is allocated to those funds which are required by law or administrative action to receive interest. Interest is allocated monthly based on the ending cash balances of the previous month in each fund receiving interest.
43 Attachment A Agenda Report Page 49
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 3: INTERFUND TRANSACTIONS
Advances to/from Other Funds
Advances to/from other funds are non-current interfund loans and are offset by a nonspendable fund balance in applicable governmental funds to indicate they are not in spendable form. The composition of advances to/from other funds as of June 30, 2021 was as follows:
Receivable Fund Payable Fund Description Amount
Proprietary Funds
Equipment Replacement Sewer Sewer replacement project $ 600,000 Facilities Maintenance Sewer Sewer replacement project 200,000 Total Proprietary Funds 800,000
Total Advances to/From Other Funds $ 800,000
Sewer Replacement Project - In October 2014, the City approved an interfund loan to the Sewer Fund from the Equipment Replacement and Facilities Funds in the amounts of $600,000 and $200,000, respectively to meet capital requirements of the Sewer Fund. The loan bears interest based on the Local Agency Investment Fund rate, not to exceed 1.0%. Interest only payments are due during the replacement of the sewer system. Principal and interest payments begin approximately in FY 2028, when phase VII loan payments begin. Under this schedule, the loan is set to retire in FY 2035.
Interfund Transfers to/from Other Funds
Transfers between funds during the fiscal year ended June 30, 2021 were as follows:
Transfer From Transfer To Description of Transfer Amount Major Governmental Funds
General Fund Equipment Replacement Funding for capital outlay $ 610,000 Facilities Maintenance Funding for capital outlay 4,022,707 Tobacco Grant General Fund subsidy 46,612
Total Major Governmental Interfund Transfers $ 4,679,319 Non-Major Governmental Funds
Projects and Services Equipment Replacement Capital projects $ 500 Projects and Services Facilities Maintenance Capital projects 22,204 Measure D Fund General Fund Administrative cost recovery 51,183 Total Non- Major Governmental Interfund Transfer $ 73,887 Intra-fund Transfers between Funds
Intra-fund transfers are not presented on the Statement of Revenues, Expenditures, and Changes in Fund Balances for the governmental funds as they are presented on a net basis. Intrafund transfers during the year ended June 30, 2021 consisted of a transfer between the General Fund and the Traffic Safety fund for $20,000. 44 Attachment A Agenda Report Page 50
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 4: CAPITAL ASSETS
Governmental Activities:
Balance at
July 1, 2020 Additions Retirements Transfers
Balance at
June 30, 2021
Capital assets not being depreciated
Land $ 5,683,095 $ - $ - $ - $ 5,683,095
Construction-in-progress 1,511,214 58,170 (9,370) (1,350,172) 209,842 Total capital assets not being
depreciated 7,194,309 58,170 (9,370) (1,350,172) 5,892,937 Capital assets being depreciated
Buildings and improvements 4,372,835 216,657 - 238,494 4,827,986 Vehicles 4,257,995 289,132 (320,188) (224,192) 4,002,747 Property and equipment 4,898,736 251,434 - 72,902 5,223,072 Infrastructure 45,762,451 1,373,928 (236,768) 1,061,640 47,961,251 Total capital assets being depreciated 59,292,017 2,131,151 (556,956) 1,148,844 62,015,056 Less accumulated depreciation
Buildings and improvements (1,872,969) (236,624) - - (2,109,593) Vehicles (1,952,851) (322,321) 281,765 - (1,993,407)
Property and equipment (3,290,700) (319,151) - - (3,609,851) Infrastructure (28,544,141) (1,074,648) 236,768 (22,864) (29,404,885) Total accumulated depreciation (35,660,661) (1,952,744) 518,533 (22,864) (37,117,736) Total capital assets being depreciated,
net 23,631,356 178,407 (38,423) 1,125,980 24,897,320
Total Capital Assets, net $ 30,825,665 $ 236,577 $ (47,793) $ (224,192) $ 30,790,257 Depreciation was charged to functions based on their usage of the related assets as follows:
Governmental Activities:
Administration $ 102,194
Public works 107,826
Street improvement 756,399
Public safety - police 250,863
Public safety - fire 274,118
Recreation 461,344
Total governmental activities depreciation expense $ 1,952,744 45 Attachment A Agenda Report Page 51
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 4: CAPITAL ASSETS (CONTINUED)
Business-type Activities:
Balance at
July 1, 2020 Additions Retirements Transfers
Balance at
June 30, 2021
Capital assets being depreciated
Building and improvements $ 579,916 $ - $ - $ - $ 579,916 Vehicles 1,009,681 - - 224,192 1,233,873
Infrastructure 22,079,735 678,980 - - 22,758,715
Total capital assets being depreciated 23,669,332 678,980 - 224,192 24,572,504 Less accumulated depreciation
Building and improvements (194,750) (23,590) - - (218,340) Vehicles (672,600) (68,285) - - (740,885)
Infrastructure (5,516,382) (441,593) - - (5,957,975)
Total accumulated depreciation (6,383,732) (533,468) - - (6,917,200) Total capital assets being depreciated,
net 17,285,600 145,512 - 224,192 17,655,304
Total Capital Assets, net $ 17,285,600 $ 145,512 $ - $ 224,192 $ 17,655,304 Depreciation was charged to functions based on their usage of the related assets as follows:
Business-type Activities:
Sewer $ 509,878
Aquatics 23,590
Total business-type activities depreciation expense $ 533,468 NOTE 5: LONG-TERM LIABILITIES
Governmental activities long-term liabilities issued and outstanding at June 30, 2021 were comprised of the following:
Type of Indebtedness
Outstanding
June 30, 2021
Compensated absences $ 994,517
Total governmental activities $ 994,517
46 Attachment A Agenda Report Page 52
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 5: LONG-TERM LIABILITES (CONTINUED)
Business-type activities long-term liabilities issued and outstanding at June 30, 2021 were comprised of the following:
Type of Indebtedness Maturity Interest Rates
Authorized
and Issued
Outstanding
June 30, 2021
Sewer Rehab Loan - Phase I 2022 2.40% $ 2,266,920 $ 278,614 Sewer Rehab Loan - Phase II 2023 2.50% 2,211,812 404,927 Sewer Rehab Loan - Phase III 2025 2.50% 2,512,708 607,609 Sewer Rehab Loan - Phase IV 2031 1.00% 1,900,188 1,102,372 Sewer Rehab Loan - Phase V 2037 1.70% 4,397,000 3,808,398 Compensated absences 58,535
Total business-type activities $ 6,260,455
The following is a summary of changes in the City's long-term liabilities for the fiscal year ended June 30, 2021:
Balance at
July 1, 2020 Additions Reductions
Balance
June 30, 2021
Current
Portion
Governmental Activities:
Other liabilities:
Compensated absences 1,002,071 791,747 (799,301) 994,517 625,268 Total Governmental Activities $ 1,002,071 $ 791,747 $ (799,301) $ 994,517 $ 625,268 Balance at
July 1, 2020 Additions Reductions
Balance
June 30, 2021
Current
Portion
Business-type Activities
Sewer Rehab Loan - Phase I $ 413,044 $ - $ (134,430) $ 278,614 $ 137,655 Sewer Rehab Loan - Phase II 533,372 - (128,445) 404,927 131,657 Sewer Rehab Loan - Phase III 750,363 - (142,754) 607,609 146,323 Sewer Rehab Loan - Phase IV 1,196,733 - (94,361) 1,102,372 95,305 Sewer Rehab Loan - Phase V 3,987,980 - (179,582) 3,808,398 182,634 Total loans payable 6,881,492 - (679,572) 6,201,920 693,574 Other liabilities:
Compensated absences 48,847 44,414 (34,726) 58,535 36,263 Total Business-type Activities $ 6,930,339 $ 44,414 $ (714,298) $ 6,260,455 $ 729,837 47 Attachment A Agenda Report Page 53
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 5: LONG-TERM LIABILITES (CONTINUED)
A description of the long-term liabilities at June 30, 2021 follows:
A. Governmental Activities
Compensated Absences
At June 30, 2021, compensated absences totaled $994,517, of which $625,268 was recorded as a current liability and the non-current portion totaled $369,249. For governmental activities, compensated absences are liquidated by the general fund.
B. Business-type Activities
Sewer Rehabilitation Loan - Phase I
In August 2001, the City entered into a loan agreement with the State of California Water Resources Control Board to provide funding for a sewer rehabilitation project (Phase I). Funds are drawn on the agreement as work is completed up to a maximum amount of $2,226,920 plus any construction period interest. The loan accrues interest at a rate of
2.4 percent annually. Principal and interest payments are due in 20 annual installments with the first payment due one year after completion of the project. The project was completed in July 2002 and the first principal installment was paid in July 2003. Final payment is due July 2022.
Sewer Rehabilitation Loan - Phase II
In October 2003, the City entered into a loan agreement with the State of California Water Resources Control Board to provide funding for a sewer rehabilitation project (Phase II). Funds are drawn on the agreement as work is completed up to a maximum amount of $2,211,812 plus any construction period interest. The loan accrues interest at a rate of
2.5 percent annually. Principal and interest payments are due in 20 annual installments with the first payment due one year after completion of the project. The project was completed in December 2003 and the first principal installment was paid in December 2004. Final payment is due December 2023. Net revenues, defined as all sewer enterprise fund revenues less operations and maintenance costs (excluding depreciation and amortization expenses), are pledged for future debt service.
Sewer Rehabilitation Loan - Phase III
In September 2004, the City entered into a loan agreement with the State of California Water Resources Control Board to provide funding for a sewer rehabilitation project (Phase III). Funds are drawn on the agreement as work is completed up to a maximum amount of $2,512,708 plus any construction period interest. The loan accrues interest at a rate of 2.5 percent annually. Principal and interest payments are due in 20 annual installments with the first payment due one year after completion of the project. The project was completed in May 2005 and the first principal installment was paid in May 2006. Final payment is due May 2025. Net revenues, defined as all sewer enterprise fund revenues less operations and maintenance costs (excluding depreciation and amortization expenses), are pledged for future debt service.
Sewer Rehabilitation Loan - Phase IV
In October 2009, the City entered into a loan agreement with the State of California Water Resources Control Board to provide funding for a sewer rehabilitation project (Phase IV). Funds are drawn on the agreement as work is completed up to a maximum amount of $1,900,188 plus any construction period interest. The loan accrues interest at a rate of
1.0 percent annually. Annual principal payments are due each September 1, commencing September 1, 2012. Final payment is due September 2031. Net revenues, defined as all sewer enterprise fund revenues less operations and maintenance costs (excluding depreciation and amortization expenses), are pledged for future debt service. 48 Attachment A Agenda Report Page 54
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 5: LONG-TERM LIABILITES (CONTINUED)
Sewer Rehabilitation Loan - Phase V
In October 2016, the City entered into a loan agreement with the State of California Water Resources Control Board to provide funding for a sewer rehabilitation project (Phase V). Funds are drawn on the agreement as work is completed up to a maximum amount of $4,397,000 plus any construction period interest. The loan accrues interest at a rate of
1.7 percent annually. Annual principal payments are due each July 31, commencing July 31, 2019. Final payment is due July 2038. Net revenues, defined as all sewer enterprise fund revenues less operations and maintenance costs (excluding depreciation and amortization expenses), are pledged for future debt service.
Business-type Activities Long-Term Liabilities Future Debt Service For the Year
Ending June 30 Principal Interest Total
2022 $ 693,574 $ 107,765 $ 801,339
2023 707,885 93,455 801,340
2024 578,169 78,829 656,998
2025 447,874 67,344 515,218
2026 294,548 59,157 353,705
2027 - 2031 1,538,780 229,745 1,768,525
2032 - 2036 1,223,495 119,718 1,343,213
2037 - 2041 717,595 24,535 742,130
Total $ 6,201,920 $ 780,548 $ 6,982,468
NOTE 6: ASSESSMENT DEBT WITHOUT CITY COMMITMENT
In December 2017, the City administered the issuance of the City of Piedmont Reassessment District No. 2017-1 Limited Obligation Refunding Bonds in the principal amount of $3,917,261. The proceeds from the issuance of the bonds were used to refund the Dudley/Blair Underground Utility Assessment District bonds, the Wildwood/Crocker Underground Utility Assessment District bonds and the Piedmont Hills Underground Assessment District bonds and to pay the costs of issuance of the bonds. At June 30, 2021, the outstanding principal of the bond issue was $3,262,594.
The City is not liable for the repayment of this debt and is only acting as an agent for the property owners in collecting the assessments, forwarding the collections to the bondholders, and initiating foreclosure proceedings. For this reason, this debt is not reported as a long-term liability of the City.
NOTE 7: DEFINED BENEFIT PENSION PLAN
A. General Information about the Pension Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees’ Retirement System (CalPERS.) The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors six rate plans (three miscellaneous and three safety). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
49 Attachment A Agenda Report Page 55
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 7: DEFINED BENEFIT PENSION PLAN (CONTINUED)
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 (age 62 for Miscellaneous Plan members if membership date is on or after January 1, 2013) with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the following: the Special Death Benefit (Safety only), the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
The rate plan provisions and benefits in effect at June 30, 2021 are summarized as follows:
Miscellaneous
Hire Date
Tier I
Prior to January 1, 2013
Tier II
Prior to January 1, 2013
Tier III (PEPRA)
On or After
January 1, 2013
Benefit Formula 3.0% @ 60 2.0% @ 60 2.0% @ 62
Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 and up 60 and up 62 and up
Monthly Benefits, as a % of
Eligible Compensation 2.0% to 3.0% 2.0% 2.0%
Required Employee Contribution
Rates 8.000% 7.000% 6.750%
Required Employer Contribution
Rates * 35.428% 9.202% 8.001%
Safety
Hire Date Tier I
Prior to January 1, 2013
Tier II
Prior to January 1, 2013
Tier III (PEPRA)
On or After
January 1, 2013
Benefit Formula 3.0% @ 50 2.0% @ 50 2.7% @ 57
Benefit Vesting Schedule 5 years service 5 years service 5 years service Benefit Payments monthly for life monthly for life monthly for life Retirement Age 50 and up 50 and up 57 and up
Monthly Benefits, as a % of
Eligible Compensation 3.0% 2.0% 2.70%
Required Employee Contribution
Rates 9.000% 9.000% 13.750%
Required Employer Contribution
Rates * 57.363%
20.290% (police)
20.575% (fire) 14.287%
* The required employer contribution rate includes the normal cost rate plus the employer unfunded liability. 50 Attachment A Agenda Report Page 56
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 7: DEFINED BENEFIT PENSION PLAN (CONTINUED)
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The City's contributions to the Plan for the year ending June 30, 2021 were $3,776,944.
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2021, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $31,550,975.
The City's net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2020, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City's proportion of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City's proportionate share of the net pension liability for the Plan as of June 30, 2019 and 2020 was as follows:
Proportion - June 30, 2019 0.27862%
Proportion - June 30, 2020 0.28998%
Change - Increase (Decrease) 0.01136%
For the year ended June 30, 2021, the City recognized pension expense of $5,969,639. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Pension Contributions Made Subsequent to Measurement Date $ 3,776,944 $ - Differences between Employer's Contributions and Proportionate Share of Contributions - 1,605,457
Differences between Expected and Actual Experience 2,201,693 - Changes of Assumptions - 140,891
Change in Employer's Proportion 1,390,372 -
Differences between Projected and Actual Investment Earnings 760,802 - Total $ 8,129,811 $ 1,746,348
51 Attachment A Agenda Report Page 57
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 7: DEFINED BENEFIT PENSION PLAN (CONTINUED)
$3,776,944 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30,
2022 $ 575,154
2023 943,685
2024 712,472
2025 375,208
Actuarial Assumptions
The total pension liability in the June 30, 2019 actuarial valuation was determined using the following actuarial assumptions:
Valuation Date June 30, 2019
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Investment Rate of Return 7.15% net of pension plan investment expenses; includes inflation
Mortality (1) Derived using CalPERS membership data for all funds.
Post Retirement Benefit Increase Contract COLA up to 2.50% until purchasing power protection allowance floor on purchasing power applies,
2.50% thereafter.
(1) The mortality table used was developed based on CalPERS' specific data. The table includes 15 years of mortality improvements using Society of Actuaries 90 percent Scale MP 2016. For more details on this table, please refer to the December 2017 experience study report available on CalPERS website under Forms and Publications.
All other actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study for the fiscal years 1997 to 2015, including updates to salary increase, mortality and retirement rates.
Changes in Assumptions
For the measurement period June 30, 2020, there were no changes in assumptions.
Discount Rate
The discount rate used to measure the total pension liability was 7.15 percent. 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. 52 Attachment A Agenda Report Page 58
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 7: DEFINED BENEFIT PENSION PLAN (CONTINUED)
Long-term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund (PERF) cash flows. Using historical returns of all of the Public Employees Retirement Funds’ asset classes (which includes the agent plan and two cost-sharing plans or PERF A, B, and C funds), expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each PERF fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The table below reflects long-term expected real rates of return by asset class. The rates of return were calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the Board effective on December 19, 2017.
Asset Class
Assumed Asset
Allocation
Real Return
Years 1-10 (a)
Real Return
Years 11+ (b)
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% (0.92%)
(a) An expected inflation of 2.0% used for this period
(b) An expected inflation of 2.92% used for this period Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City's proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
Discount Rate -1%
(6.15%)
Current Discount Rate
(7.15%)
Discount Rate +1%
(8.15%)
Net Pension Liability (Asset) $ 48,478,290 $ 31,550,975 $ 17,628,939 Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
53 Attachment A Agenda Report Page 59
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 8: PIEDMONT POLICE AND FIRE PENSION PLAN (CLOSED PLAN) A. General Information about the Pension Plan
Plan Description
The Piedmont Police and Fire Pension Plan (the Plan) is a single-employer defined benefit pension plan for the City's police and fire employees hired before July 1, 1971. The Plan is closed to new participants. Section 26.1 of the City Ordinance grants authority to establish and manage benefit terms to the Police and Fire Pension Board (the Board).
The Board is comprised of the mayor, one member of the City Council, one member of the police department, one member of the fire department, and one community representative.
As of June 30, 2021, the Plan covers 10 retired City employees or surviving spouses, who receive monthly benefits, which will continue for life.
Funding Policy
Contributions are determined by an actuarial valuation. Currently, assets exceed the total pension liability, so the contribution rate is 0%.
Benefit Terms
Benefits for service retirement - Benefit is 50% of final average salary (FAS) (average over the 12 months before retirement, 36 months if advanced in rank during the last 3 years before retirement) plus 3 1/3% x FAS for each year of service greater than 25 but less than 30 years. The maximum benefit is 66 2/3% of pay. Benefits are payable for participant's lifetime with 50% of the benefit payable to eligible spouse upon the death of the participant.
Benefits for duty related disability - Benefit is 50% of FAS plus 3 1/3% x FAS for each year of service greater than 25 but less than 30 years. The maximum benefit is 66 2/3% of pay. Benefits are payable for participant's lifetime with 50% of the benefit payable to eligible spouse or minor children upon the death of the participant.
A 2% cost-of-living adjustment is payable to certain retirees.
B. Net Pension Liability (Asset)
The City's net pension liability (asset) is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability (asset) of the Plan is based on a valuation as of June 30, 2020. A summary of principal assumptions and methods used to determine the net pension liability (asset) follows. 54 Attachment A Agenda Report Page 60
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 8: PIEDMONT POLICE AND FIRE PENSION PLAN (CLOSED PLAN) (CONTINUED) Actuarial Assumptions
The total pension liability (asset) in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions:
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 5.00%
Inflation 2.50%
Salary Increases 2.00%
Investment Rate of Return 6.00% net of pension plan investment expenses Mortality
Service retirements and beneficiaries California PERS mortality table for healthy recipients (based on CalPERS 1997-2015 experience study), with generational mortality projection (to recognize future mortality
improvement) utilizing Society of Actuaries Scale MP-2019.
Disability retirements California PERS mortality table for work-related disabled retirees (based on CalPERS 1997-2015 experience study), with generational mortality projection (to recognize future mortality improvement) utilizing Society of Actuaries Scale MP-2019.
Changes of Assumptions
In FY 20/21, the general inflation rate was lowered from 2.75% to 2.5% and the long-term rate of return was lowered from 6% to 5.5% based on capital market assumption review and the lower inflation rate. In Fiscal Year 2019/20, the mortality improvement scale was updated to Scale MP-2019.
Discount Rate
The discount rate was set equal to the long-term expected rate of return. The long-term expected rate of return was used as current assets are expected to be sufficient to cover all future benefit payments and expenses due to the magnitude of the Plan’s 667% funded ratio and the average age of the group (83).
The 5.5% long-term expected rate of return was based on an assumed long-term asset allocation of 60% equities and 40% fixed income with expected real rates of return of 4.29% and .78%. The sensitivity of the net pension liability/(asset) to a 1% change in the discount rate is shown below. 1% Decrease
4.5%
Current Discount Rate
5.5%
1% Increase
6.5%
Net pension liability (asset) $ (15,684,714) $ (15,785,970) $ (15,875,822) 55 Attachment A Agenda Report Page 61
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 8: PIEDMONT POLICE AND FIRE PENSION PLAN (CLOSED PLAN) (CONTINUED) C. Changes in the Net Pension Liability (Asset)
The changes in the net pension liability (asset) for the Plan follows:
Increase (Decrease)
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
Balance at July 1, 2020 $ 1,629,200 $ 13,640,469 $ (12,011,269) Changes in the year:
Interest 93,213 - 93,213
Net investment income - 3,914,153 (3,914,153)
Changes of assumptions 46,239 - 46,239
Benefit payments (151,293) (151,293) -
Net changes (11,841) 3,762,860 (3,774,701)
Balance at June 30, 2021 $ 1,617,359 $ 17,403,329 $ (15,785,970) D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2021, the City recognized pension expense/(credit) of $(1,464,176). At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Net differences between projected and actual earnings on plan investments $ - $ 2,587,053
Total $ - $ 2,587,053
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30,
2022 $ (654,324)
2023 (666,297)
2024 (646,380)
2025 (620,052)
NOTE 9: OTHER POST EMPLOYMENT BENEFITS
Plan Description
The City of Piedmont Retiree Healthcare Plan (the "Plan") is a single-employer defined benefit healthcare plan administered by the City. Effective January 1, 1997, all City employees were enrolled in the PERS Health Care Plan.
The City provides postretirement healthcare benefits to eligible employees who retire directly from the City. The City pays healthcare coverage up to a cap for eligible retirees and their dependents. 56 Attachment A Agenda Report Page 62
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 9: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
The City reports the financial activity of the other post-employment benefits (OPEB) in the fiduciary OPEB Trust Fund, and no separate financial report is prepared.
In fiscal 2010, the City established an OPEB irrevocable trust with the City Administrator and Finance Director acting as trustees for the OPEB Trust Fund.
Benefits Provided
Tier 1 Eligibility:
Hired before May 1, 2018 or January 1, 2018 depending on the MOU group Retire under CalPERS directly from City service
Premium is paid up to active cap of Kaiser Region 1 Premium (based on coverage level) on PEMHCA Unequal Method
Active cap is based on 2013 Kaiser Bay Area premiums plus 50% of subsequent annual premium changes
Unequal Method: increase City contributions for retirees annually until reach formula for employees. Maximum yearly increase $100/month. 2021 Monthly Retiree Caps are $813.64, $1,627.28 and $2,115.46 for Single, Dual and Family coverages respectively
Members contribute $50 semi-monthly
Tier 2 Eligibility:
Retire directly from the City under CalPERS
Hired on or after May 1, 2018 or January 1, 2018 depending on the MOU group
Retire under CalPERS directly from City service
Disability retirement
PEMHCA minimum benefit is paid monthly ($143/month in 2021, $149/month in 2022)
Other The City pays Kaiser Single Non-Medicare rate for 2 retirees hired before October 1, 1984 with special agreements. The retiree currently under 65 will stop benefiting upon reaching age 65; the payments for the other retiree will continue for life since she is not Medicare eligible.
No dental, vision, or life benefits
Employees Covered
As of the June 30, 2021 actuarial valuation, the following current and former employees were covered by the benefit terms under the Plan:
Active employees 92
Inactive employees currently receiving benefits 62
Inactive employees entitled to, but not yet receiving benefits 13 Total 167
Contributions
Following is a summary of the City's contribution policy:
The City contributes the pay-as-you go cost.
The City reimburses itself from the OPEB trust for a level % of OPEB cash benefit payments beginning Fiscal Year End 2030.
The Police and Fire Pension Plan assets are transferred to the OPEB trust once the Police and Fire Pension Plan no longer has participants. Thereafter all OPEB benefits are paid from the OPEB trust. 57 Attachment A Agenda Report Page 63
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 9: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
Net OPEB Liability
The City's net OPEB liability ("NOL") was measured as of June 30, 2021 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2020 based on the following actuarial methods and assumptions:
Actuarial Cost Method Entry Age Normal Cost, level percentage of payroll Expected Long Term Rate of Return on
Investments
5.75% at June 30, 2021
6.50% at June 30, 2020
20-Year Municipal Bond
(Bond Buyer 20-Bond GO)
2.16% at June 30, 2021
2.21% at June 30, 2020
Discount Rate 5.22% at June 30, 2021
5.97% at June 30, 2020
General Inflation 2.75% annually
Mortality, Retirement, Disability,
Termination
CalPERS 1997-2015 Experience Study
Mortality Improvement Mortality projected fully generational with Scale MP-2019 Salary increases Aggregate - 2.75% annually
Merit - CalPERS 1997-2015 Experience Study
Medical Trend Non-Medicare - 7% for 2021, decreasing to an ultimate rate of 3.75% in 2076
Medicare:
Kaiser: 6.05% for 2021, 4.75% for 2022, decreasing to an ultimate rate of 3.75% in 2076
Non-Kaiser: 6.05% for 2021, 5.85% for 2022, decreasing to an ultimate rate of 3.75% in 2076
PEMHCA Minimum Increases Increase 4% annually
Participation at Retirement Currently covered (Tier 1): 100% Currently covered (Tier 2): 70% (eligible for PEMHCA minimum only) Currently not covered: 0%
Coverage at Retirement 80% elect 2-party or family coverage at retirement Miscellaneous - 20% have family coverage until age 65 Safety - 35% have family coverage until age 65
Changes of Assumptions
In Fiscal Year 2020/21, general inflation was lowered from 2.75% to 2.5%, the long-term rate of return was lowered from 6.5% to 5.5% based on capital market assumption review and the lower inflation rate, and the discount rate was updated based on crossover test. In Fiscal Year 2019/20, the discount rate was updated based on the crossover test, the long-term rate of return was updated due to change in the target asset allocation, Kaiser Medicare Health Trend was updated, Medicare eligibility and family coverage at retirement rates were updated based on the City's experience, and the mortality improvement scale was updated to Scale MP-2019.
Discount Rate
The discount rate used to measure the total OPEB liability was 5.22 percent. The table below reflects long-term expected real rates of return presented as geometric means.
Asset Class Component
Target Allocation
Osterweis Fund
Investment Policy
Allocation
Equity 65% 4.29%
Fixed Income 35% .78%
Assumed Long-term Rate of Inflation 2.50%
Expected Long-term Net Rate of Return, Rounded 5.75%
58 Attachment A Agenda Report Page 64
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 9: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
Changes in the Net OPEB Liability
Total OPEB
Liability
(a)
Plan Fiduciary
Net Position
(b)
Net OPEB
Liability/(Asset)
(c) = (a) - (b)
Balance at July 1, 2020 $ 19,078,743 $ 9,503,371 $ 9,575,372 Service cost 674,535 - 674,535
Interest cost 1,154,436 - 1,154,436
Assumption changes 1,331,335 - 1,331,335
Contributions - employer - 833,801 (833,801)
Contributions - employee - 96,894 (96,894)
Net investment income - 2,886,067 (2,886,067)
Benefit payments (831,994) (831,994) -
Administrative expenses - (1,807) 1,807
Net change 2,328,312 2,982,961 (654,649)
Balance at June 30, 2021 $ 21,407,055 $ 12,486,332 $ 8,920,723 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the Net OPEB Liability of the City if it were calculated using a discount rate that is one percentage-point lower or one percentage-point higher than the current rate, for measurement period ended June 30, 2021:
1% Decrease
(4.22%)
Current Discount
Rate
(5.22%)
1% Increase
(6.22%)
Net OPEB Liability $ 11,946,442 $ 8,920,723 $ 6,460,447 Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend Rate The following represents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage-point lower or one percentage-point higher than the current rate (Non-medicare 6.05% decreasing to 3.75%, Medicare 6.05% decreasing to 3.75%), for measurement period ended June 30, 2021:
1% Decrease
Current Healthcare
Cost Trend Rate 1% Increase
Net OPEB Liability $ 6,292,532 $ 8,920,723 $ 12,245,359 59 Attachment A Agenda Report Page 65
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 9: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2021, the City recognized OPEB expense/(credit) of $(987,362). As of fiscal year ended June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Differences between expected and actual experience $ - $ 2,397,283 Changes in assumptions 1,259,598 2,260,315
Net difference between projected and actual earnings
on plan investments - 1,852,222
Total $ 1,259,598 $ 6,509,820
Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as follows:
For the
Fiscal Year
Ending June 30,
Recognized
Net Deferred
Outflows (Inflows)
of Resources
2022 $ (2,101,376)
2023 (1,649,378)
2024 (959,377)
2025 (682,736)
2026 142,645
NOTE 10: FUND BALANCE
GASB Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions” provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balances more transparent. The following classifications describe the relative strength of the spending constraints:
Non Spendable: Amounts that cannot be spent because they are either (a) not in spendable form (not expected to be converted to cash) or (b) legally or contractually required to be maintained intact.
Restricted: Amounts subject to externally enforceable legal restrictions or constrained for a specific purpose by external parties, constitutional provision, or enabling legislation. This fund balance type is essentially the same definition as restricted net position under GASB Statement No. 34.
Committed: Amounts that can only be used for specific purposes pursuant to constraints imposed by the formal action of City Council. Committed amounts cannot be used for any other purpose unless the government removes or changes the specified use by taking the same type of action (legislation, resolution, ordinance) it employed to previously commit those amounts. Action to constrain resources must occur prior to year-end; however, the amount can be determined in the subsequent period.
60 Attachment A Agenda Report Page 66
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 10: FUND BALANCE (CONTINUED)
Assigned: Amounts that are not restricted by the funding agency but are for specific purposes and assigned by City Council for that purpose. City Council's action in creating the fund is to ensure that the funds are used for their intended purpose. That purpose is not always planned for the current fiscal year as it may take several years to build up a sufficient fund balance to be able to implement the stated purpose. This classification also represents all remaining amounts (except negative balances) reported in governmental funds, other than the general fund, that are not classified as non spendable, restricted, or committed.
Unassigned: Residual amounts in the general fund, not classified as non spendable, restricted, committed, or assigned. For other governmental fund types, unassigned is only used when a deficit or negative fund balance occurs.
The City Council establishes (and modifies or rescinds) fund balance commitments by approval of a resolution.
Currently, the City Council has not committed any fund balances.The City Council delegates authority to the Finance Director to assign amounts to be used for specific purposes. Assignments are less formal than commitments and can be changed by the Finance Director.
The accounting policies of the City consider restricted fund balance to have been spent first when an expenditure is incurred for the purposes for which both restricted and unrestricted fund balance is available. Similarly, when an expenditure is incurred for purposes for which amounts in any of the unrestricted classifications of fund balance could be used, the City considers committed amounts to be reduced first, followed by assigned amounts, as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds.
As of June 30, 2021, fund balances were comprised of the following:
General Fund
Equipment
Replacement
Facilities
Maintenance
Non-Major
Governmental
Funds
Total
Governmental
Funds
Nonspendable
Prepaid expenses $ 94,969 $ - $ - $ - $ 94,969
Advances - 600,000 200,000 - 800,000
Total Nonspendable 94,969 600,000 200,000 - 894,969
Restricted
Projects and services - - - 1,348,746 1,348,746
Street projects - - - 493,928 493,928
Schoolmates program - - - 185,498 185,498
Measure D - - - 16,154 16,154
Measure B sales tax - - - 307,370 307,370
Measure BB sales tax - - - 472,683 472,683
COPS - - - 531,080 531,080
Measure F - - - 73,367 73,367
Athletic facility preservation - - - 317,270 317,270
Abandoned vehicle - - - 39,420 39,420
Section 115 Trust 3,667,217 - - - 3,667,217
Total Restricted 3,667,217 - - 3,785,516 7,452,733
Assigned
Capital improvement - - - 67,301 67,301
Equipment replacement - 2,497,100 - - 2,497,100
Facilities maintenance - - 9,139,708 - 9,139,708
Sidewalk repair - - - 19,090 19,090
Total Assigned - 2,497,100 9,139,708 86,391 11,723,199
Unassigned 7,442,296 - - - 7,442,296
Total Fund Balance $ 11,204,482 $ 3,097,100 $ 9,339,708 $ 3,871,907 $ 27,513,197 61 Attachment A Agenda Report Page 67
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 11: RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions, and natural disasters. The City manages risk by participating in the public entity risk pools described below and by retaining certain risks.
Public entity risk pools are formally organized separate entities established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these risk pools exercise full powers and authorities within the scope of the related Joint Powers Agreements including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Each risk pool is governed by a board consisting of representatives from member municipalities. Each board controls the operations of the respective risk pool, including selection of management and approval of operating budgets, independent of any influence by member municipalities beyond their representation on the board. Obligations and liabilities of these risk pools are the City’s responsibility.
A. Risk Pools
General Liability - Bay Cities Joint Powers Insurance Authority (BCJPIA) covers general liability claims, including excess liability, in an mount up to $29,000,000. The City has a deductible or uninsured liability of up to $10,000 per claim. Once the City's deductible is met, BCJPIA becomes responsible for payment of all claims up to the limit.
During the fiscal year ended June 30, 2021, the City contributed $883,208 for current year coverage.
Workers' Compensation - BCJPIA also covers workers' compensation liability in an amount up to $1,000,000 per claim. The City has a deductible or uninsured liability of up to $150,000 per claim. The Local Agency Workers' Compensation Excess Insurance Joint Powers Authority (LAWCX) covers workers' compensation claims in excess of $1,000,000 per claim up to $300,000,000. During the fiscal year ended June 30, 2021, the City contributed $527,648 for current year coverage.
Financial statements for BCJPIA and LAWCX may be obtained from Bickmore & Associates, 1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833.
The City’s contribution with each risk pool equals the ratio of the City’s payroll to the total payrolls of all entities participating in the same layer of each program, in each program year. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating.
B. Liability for Uninsured Claims
The City has retained the risk for the uninsured portion of the above claims as discussed above. Activity for the City's liability for uninsured claims was as follows for the year ended June 30, 2021:
General Liability Workers' Compensation Total
2021 2020 2021 2020 2021 2020
Beginning balance $ 91,221 $ 103,092 $ 990,000 $ 967,000 $ 1,081,221 $ 1,070,092 Incurred claims 130,943 70,637 195,495 167,317 326,438 237,954 Claims paid (104,771) (82,508) (180,495) (144,317) (285,266) (226,825) Ending Balance $ 117,393 $ 91,221 $ 1,005,000 $ 990,000 $ 1,122,393 $ 1,081,221 Current portion $ 40,422 $ 29,288 $ 281,965 $ 295,890 $ 322,387 $ 325,178 62 Attachment A Agenda Report Page 68
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 12: PARCEL TAX
The City of Piedmont is required by the Municipal Code to refund or reduce subsequent taxes regarding any excess of the ending General Fund unencumbered fund balance over 25 percent of that year's General Fund expenditures. This calculation applies only to the City's General Fund and excludes the Deposits and Bonds, Traffic Safety, and Pension Rate Stabilization Trust Funds which are combined into the General Fund for financial reporting purposes. The unencumbered General Fund balance at June 30, 2021 did not exceed the 25 percent of expenditures limitation.
Amount
General fund expenditures $ 27,739,603
Fund balance limitation, 25% of expenditures 6,934,901
Unencumbered General fund balance at year end 6,509,006 Amount below fund balance limitation $ (425,895)
NOTE 13: EXCESS EXPENDITURES AND TRANSFERS OUT OVER APPROPRIATIONS The following funds incurred expenditures and transfers out in excess of appropriations in the following amounts for the year ended June 30, 2021:
Fund
Excess
Expenditures and
Transfers Out
Schoolmates Program $ 118,652
Projects and Services 22,704
Measure D 33,188
Tobacco Grant 44,070
The excess expenditures were covered by available fund balance in the funds.
NOTE 14: CONTINGENCIES AND COMMITMENTS
Grant Awards
The City participates in certain federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Any liability for reimbursement which may arise as the result of these audits is not believed to be material.
Litigation
The City is involved in several pending lawsuits of a nature common to many similar jurisdictions. City management estimates that potential claims against the City, not covered by insurance, will not have a material adverse effect on the financial statements of the City.
Contracts
At June 30, 2021, the City had construction contracts outstanding of approximately $1,376,354 related to various construction projects.
63 Attachment A Agenda Report Page 69
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 14: CONTINGENCIES AND COMMITMENTS (CONTINUED)
Public Health Emergency
The World Health Organization declared the worldwide coronavirus (COVID-19) outbreak a public health emergency on January 3, 2020 and officially declared it as a pandemic as of March 11, 2020. Management has performed an evaluation of certain financial statement line items such as investments, accounts receivable, accounts payable, and accrued expenses to determine whether valuation or impairment adjustments should be made. Management has determined that the amounts reported on the financial statements are properly valued as of June 30, 2021. However, since the duration and full effects of the COVID-19 outbreak are yet unknown there could be future negative impacts to the financial condition of the City.
NOTE 15: SUBSEQUENT EVENT
American Rescue Plan Act Funding
Signed into law on March 11, 2021, the American Rescue Plan Act of 2021 ("ARPA") provides $350 billion in additional funding for state and local governments. The local funding portion is approximately $130 billion, equally divided between cities and counties. Localities will receive the funds in two tranches - the first after the U.S. Treasury certifies the proceeds to each jurisdiction and the second one year later. The City's portion was determined to be $2,663,729. As of June 30, 2021, the City had not received their funding portion.
General Obligation Bonds
In December 2021, the City issued 2021 General Obligation Bonds in the principal amount of $19,500,000 for the purpose of constructing new pool facilities and related areas.
Management has evaluated subsequent events through March 7, 2022, the date on which the financial statements were available for issuance. Management has determined no other subsequent events requiring disclosure have occurred.
NOTE 16: CHANGE IN ACCOUNTING PRINCIPLE
As a result of implementing GASB Statement No. 84, Fiduciary Activities, beginning net position of custodial funds has been restated to $363,534. Prior to GASB Statement No. 84, custodial funds (previously, agency funds) only reported assets and liabilities and reported no net position or measurement of results of operations. 64 Attachment A Agenda Report Page 70
REQUIRED SUPPLEMENTARY INFORMATION
Attachment A Agenda Report Page 71
CITY OF PIEDMONT
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Property taxes $ 15,135,000 $ 15,135,000 $ 15,442,493 $ 307,493 Sales tax 120,000 120,000 244,763 124,763
Franchise tax 520,000 520,000 560,828 40,828
Utility users tax 1,175,000 1,175,000 1,238,177 63,177
Real property transfer tax 2,200,000 2,200,000 6,286,601 4,086,601 Business licenses and rental tax 336,000 336,000 620,351 284,351 Licenses and permits 326,000 326,000 709,986 383,986
Intergovernmental 1,625,000 1,625,000 2,224,176 599,176 Use of money and property 512,000 512,000 861,355 349,355 Charges for services 2,708,500 2,708,500 2,977,984 269,484 Parcel tax 2,410,000 2,410,000 2,411,381 1,381
Contribution and donations 20,000 20,000 13,962 (6,038) Other revenues 435,000 435,000 340,290 (94,710)
Total Revenues 27,522,500 27,522,500 33,932,347 6,409,847
EXPENDITURES
Current:
Administration 3,393,485 3,650,747 3,583,138 67,609
Public works 5,379,251 5,416,759 4,470,211 946,548
Public safety:
Police services 6,918,886 6,918,886 6,530,461 388,425
Fire services 6,950,585 6,950,585 6,875,292 75,293
Recreation 2,700,428 2,700,428 2,404,970 295,458
Nondepartmental 2,950,471 3,017,787 2,875,531 142,256
Total Expenditures 28,293,106 28,655,192 26,739,603 1,915,589 Excess (deficiency) of revenues over expenditures (770,606) (1,132,692) 7,192,744 4,494,258
OTHER FINANCING SOURCES (USES)
Transfers in 1,122,000 1,122,000 51,183 (1,070,817)
Transfers out (552,927) (4,052,927) (4,679,319) (626,392) Total Other Financing Sources (Uses) 569,073 (2,930,927) (4,628,136) (1,697,209) Net change in fund balance $ (201,533) $ (4,063,619) 2,564,608 $ 2,797,049 Fund balance - July 1, 2020 8,639,874
Fund balance - June 30, 2021 $ 11,204,482
65 Attachment A Agenda Report Page 72
CITY OF PIEDMONT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY ACCOUNTING AND CONTROL
FOR THE YEAR ENDED JUNE 30, 2021
Budgetary Information
The amounts reported as the original budgeted amounts in the budgetary schedules reflect the amounts when the original appropriations were adopted. The amounts reported as the final budgeted amounts in the budgetary schedules reflect the amounts after all budget amendments have been accounted for. The City did not formally adopt a budget for the Abandoned Vehicle nonmajor special revenue fund.
Budgetary Controls
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. The City Council approves total appropriations on a departmental basis. Budgetary comparison schedules are presented for all funds. The budgetary comparison schedules present both the original adopted budget and the final budget with all amendments.
66 Attachment A Agenda Report Page 73
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Prepared for the City's Miscellaneous and Safety Plan, Cost Sharing Defined Benefit Pension Plan As of June 30, 2021
Last 10 Years *
Measurement Period
2020 2019 2018 2017 2016 2015 2014
Proportion of the net pension liability 0.28998 % 0.27862 % 0.27018 % 0.26200 % 0.25701 % 0.24111 % 0.24773 % Proportionate share of the net pension liability $ 31,550,975 $ 28,550,576 $ 26,035,468 $ 25,982,764 $ 22,238,992 $ 16,549,792 $ 15,419,642 Covered payroll $ 10,804,215 $ 10,517,384 $ 10,265,025 $ 9,471,727 $ 9,305,356 $ 9,157,966 $ 8,752,938 Proportionate share of the net pension liability
as a percentage of covered payroll 292.02 % 271.46 % 253.63 % 274.32 % 238.99 % 180.71 % 176.17 % Plan fiduciary net position as a percentage of
the total pension liability 75.10 % 75.30 % 75.30 % 73.29 % 74.06 % 78.40 % 79.82 % Notes to Schedule:
Changes in assumptions. In 2020 and 2019, there were no changes in assumptions. In 2018, assumptions for individual salary increases and overall payroll growth are reduced from 3.00 percent to 2.75 percent. In 2017, the accounting discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate. * Fiscal year 2015 was the 1st year of implementation, therefore only seven years are shown. 67 Attachment A Agenda Report Page 74
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF PENSION CONTRIBUTIONS
Prepared for the City's Miscellaneous and Safety Plan, Cost Sharing Defined Benefit Pension Plan As of June 30, 2021
Last 10 Years *
Fiscal Year-End
2021 2020 2019 2018 2017 2016 2015
Contractually required contribution (actuarially
determined) $ 3,776,944 $ 3,367,402 $ 2,920,619 $ 2,521,862 $ 2,295,957 $ 2,072,601 $ 1,934,849 Contributions in relation to the actuarially
determined contributions 3,776,944 3,367,402 2,920,619 2,521,862 2,295,957 2,072,601 1,934,849 Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - Covered payroll $ 11,098,592 $ 10,804,215 $ 10,517,384 $ 10,265,025 $ 9,471,727 $ 9,305,356 $ 9,157,966 Contributions as a percentage of covered
payroll 34.03 % 31.17 % 27.77 % 24.57 % 24.24 % 22.27 % 21.13 % * Fiscal year 2015 was the 1st year of implementation, therefore only seven years are shown. 68 Attachment A Agenda Report Page 75
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS FOR POLICE AND FIRE PENSION (CLOSED) PLAN Last 10 Years *
Fiscal Year-End
2021 2020 2019 2018 2017 2016 2015 2014
Total Pension Liability
Interest $ 93,213 $ 97,631 $ 104,393 $ 112,356 $ 119,038 $ 141,412 $ 148,653 $ 156,380 Differences between expected and
actual experience - 25,239 - 74,556 - (270,454) - -
Change of assumptions 46,239 (15,617) - (93,912) - - - - Benefit payments, including refunds of
employee contributions (151,293) (210,488) (223,674) (227,770) (233,036) (251,005) (287,175) (283,192) Net change in total pension liability (11,841) (103,235) (119,281) (134,770) (113,998) (380,047) (138,522) (126,812) Total pension liability - beginning 1,629,200 1,732,435 1,851,716 1,986,486 2,100,484 2,480,531 2,619,053 2,745,865 Total pension liability - ending (a) $ 1,617,359 $ 1,629,200 $ 1,732,435 $ 1,851,716 $ 1,986,486 $ 2,100,484 $ 2,480,531 $ 2,619,053 Plan Fiduciary Net Position
Net investment income $ 3,914,153 $ 902,277 $ 833,644 $ 649,249 $ 1,321,041 $ (539,063) $ 213,159 $ 1,837,733 Benefit payments, including refunds of
employee contributions (151,293) (210,488) (223,674) (227,770) (233,036) (251,005) (287,175) (283,192) Administrative expenses - (1,350) (12,000) (3,405) (7,183) (2,025) - - Net change in plan fiduciary net position 3,762,860 690,439 597,970 418,074 1,080,822 (792,093) (74,016) 1,554,541 Plan fiduciary net position - beginning 13,640,469 12,950,030 12,352,060 11,933,986 10,853,164 11,645,257 11,719,273 10,164,732 Plan fiduciary net position - ending (b) $ 17,403,329 $ 13,640,469 $ 12,950,030 $ 12,352,060 $ 11,933,986 $ 10,853,164 $ 11,645,257 $ 11,719,273 Plan's net pension liability (asset) - ending
(a)-(b) $(15,785,970) $(12,011,269) $(11,217,595) $(10,500,344) $ (9,947,500) $ (8,752,680) $ (9,164,726) $ (9,100,220) Fiduciary net position as a percentage of
total pension liability 1,076 % 837 % 748 % 667 % 601 % 517 % 469 % 447 % Covered employee payroll $ - $ - $ - $ - $ - $ - $ - $ - Net pension liability as percentage of
covered employee payroll N/A N/A N/A N/A N/A N/A N/A N/A 69 Attachment A Agenda Report Page 76
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS FOR POLICE AND FIRE PENSION (CLOSED) PLAN (CONTINUED) Last 10 Years *
Employer Actuarially Determined Contribution for fiscal year June 30, 2021:
Actuarial
Valuation Date
Actuarially
Determined
Contribution
(ADC)
Employer
Contributions
Contribution
Deficiency
(Excess) Covered Payroll
ADC as a % of
Covered Payroll
2014 $ - $ - $ - $ - NA
2015 - - - - NA
2016 - - - - NA
2017 - - - - NA
2018 - - - - NA
2019 - - - - NA
2020 - - - - NA
2021 - - - - NA
The actuarially determined contribution is based on the same assumptions as the net pension liability (asset). * Fiscal year 2014 was the 1st year of implementation of GASB 67, therefore only eight years are shown. 70 Attachment A Agenda Report Page 77
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS For the Measurement Periods Ended June 30
Last 10 Years*
(Amounts in 000's)
2021 2020 2019 2018
Total OPEB liability
Service cost $ 675 $ 948 $ 944 $ 1,179
Interest 1,155 1,225 1,155 1,361
Changes of benefit terms - - - (1,104)
Actual vs. expected experience - (1,743) - (4,473)
Changes in assumptions 1,331 (2,620) 355 (2,016)
Benefit payments (832) (772) (641) (562)
Net change in total OPEB liability 2,329 (2,962) 1,813 (5,615) Total OPEB liability, beginning 19,078 22,040 20,227 25,842 Total OPEB liability, ending (a) $ 21,407 $ 19,078 $ 22,040 $ 20,227 Plan fiduciary net position
Contributions - employer $ 834 $ 774 $ 642 $ 1,028
Contributions - employee 97 89 161 -
Net investment income 2,886 580 597 441
Benefit payments (832) (772) (641) (562)
Administrative expenses (2) (2) (1) (2)
Net change in plan fiduciary net position 2,983 669 758 905 Plan fiduciary net position, beginning 9,503 8,834 8,076 7,171 Plan fiduciary net position, ending (b) $ 12,486 $ 9,503 $ 8,834 $ 8,076 Net OPEB liability, ending (a) - (b) $ 8,921 $ 9,575 $ 13,206 $ 12,151 Plan fiduciary net position as a percentage
of the total OPEB liability 58.33 % 49.81 % 40.08 % 39.93 % Covered-employee payroll $ 13,111 $ 12,373 $ 11,344 $ 11,022 Net OPEB liability as a percentage of
covered-employee payroll 68.04 % 77.39 % 116.41 % 110.24 % Notes to Schedule:
Changes of assumptions: For the measurement period ended June 30, 2021, general inflation was lowered from
2.75% to 2.5%, the long-term rate of return was lowered from 6.5% to 5.5% based on capital market assumption review and the lower inflation rate, and the discount rate was updated based on crossover test. For the measurement period ended June 30, 2020, the discount rate was updated based on the crossover test, the long-term rate of return was updated due to change in the target asset allocation, Kaiser Medicare Health Trend was updated, Medicare eligibility and family coverage at retirement rates were updated based on the City's experience, and the mortality improvement scale was updated to Scale MP-2019. For the measurement period ended June 30, 2019, the discount rate was changed from 5.54 percent (net of administrative expense) to 5.42 percent. * Schedule is intended to show information for ten years. Fiscal year 2018 was the first year of implementation, therefore only four years are shown. Additional years' information will be displayed as it becomes available. 71 Attachment A Agenda Report Page 78
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF OPEB CONTRIBUTIONS
For the Fiscal Year Ended June 30
Last 10 Years*
(Amounts in 000's)
2021 2020 2019 2018
Actuarially Determined Contribution (ADC) $ 834 $ 774 $ 642 $ 1,028 Contributions in relation to the ADC (834) (774) (642) (1,028) Contribution deficiency (excess)** $ - $ - $ - $ -
Covered-employee payroll 13,111 12,373 11,344 11,022
Contributions as a percentage of coveredemployee payroll 6.36 % 6.26 % 5.66 % 9.33 % * Schedule is intended to show information for ten years. Fiscal year 2018 was the first year of implementation, therefore only four years are shown. Additional years' information will be displayed as it becomes available. ** The City contributes $100 per month for every Tier 1 active employee in addition to contributing the pay-as-you go cost.
72 Attachment A Agenda Report Page 79
COMBINING FINANCIAL STATEMENTS, SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION Attachment A Agenda Report Page 80
CITY OF PIEDMONT
EQUIPMENT REPLACEMENT - MAJOR CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ 39,000 $ 39,000 $ 13,194 $ (25,806) Total Revenues 39,000 39,000 13,194 (25,806)
EXPENDITURES
Current:
Administrative - - 41,464 (41,464)
Public safety - police services 60,000 60,000 8,250 51,750 Capital outlay 1,013,800 1,079,300 540,566 538,734
Total Expenditures 1,073,800 1,139,300 590,280 549,020
Excess (deficiency) of revenues over expenditures (1,034,800) (1,100,300) (577,086) 523,214
OTHER FINANCING SOURCES (USES)
Transfers in 302,927 3,802,927 610,500 (3,192,427)
Total Other Financing Sources (Uses) 302,927 3,802,927 610,500 (3,192,427) Net change in fund balance $ (731,873) $ 2,702,627 33,414 $ (2,669,213) Fund balance - July 1, 2020 3,063,686
Fund balance - June 30, 2021 $ 3,097,100
73 Attachment A Agenda Report Page 81
CITY OF PIEDMONT
FACILITIES MAINTENANCE - MAJOR CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ 62,000 $ 62,000 $ 24,324 $ (37,676) Total Revenues 62,000 62,000 24,324 (37,676)
EXPENDITURES
Current:
Administration - 233,524 31,507 202,017
Public works 492,800 180,775 19,841 160,934
Public safety - police services - 17,325 17,268 57
Public safety - fire services - 62,325 16,610 45,715
Recreation 70,000 493,076 107,222 385,854
Capital outlay 767,500 865,982 1,065,835 (199,853)
Total Expenditures 1,330,300 1,853,007 1,258,283 594,724 Excess (deficiency) of revenues over expenditures (1,268,300) (1,791,007) (1,233,959) 557,048
OTHER FINANCING SOURCES (USES)
Transfers in - - 4,044,911 4,044,911
Total Other Financing Sources (Uses) - - 4,044,911 4,044,911 Net change in fund balance $ (1,268,300) $ (1,791,007) 2,810,952 $ 4,601,959 Fund balance - July 1, 2020 6,528,756
Fund balance - June 30, 2021 $ 9,339,708
74 Attachment A Agenda Report Page 82
NON-MAJOR GOVERNMENTAL FUNDS
The following funds are reported in total on the Governmental Fund Financial Statements under the column Other Governmental Funds.
SPECIAL REVENUE FUNDS
Streets Projects - accounts for revenues and expenditures associated with the maintenance and improvements of the City's roads and street landscaping that is funded through the receipt of the City's share of the gas tax.
Schoolmates Program - accounts for the operation of the before- and after-school child care program for elementary school age children operated by the Piedmont Recreation Department.
Projects and Services - accounts for the Private Contribution Fund. The Private Contribution Fund is used to account for all citizen and other private contributions and donations to the City.
Measure D - accounts for surcharges collected for the continuation and expansion of municipal recycling programs.
Abandoned Vehicle - accounts for abandoned vehicle abatement funding as the City is a participant in the Alameda County Abandoned Vehicle Program for receiving reimbursement of expenses arising from the investigation of reported abandoned vehicles.
Measure B Sales Tax - accounts for a tax approved by Alameda County voters in November 2000 to provide programmatic pass-through funds for bicycle and pedestrian paths & safety improvements, mass transit, paratransit, and local streets and roads projects.
Measure BB Sales Tax - accounts for a tax approved by Alameda County voters in November 2014 to provide for the direct funding for local street projects and bicycle and pedestrian projects based on population and road mileage.
COPS - accounts for revenues and expenditures of the State of California funded Supplemental Law Enforcement Services grant.
Measure F - accounts for the additional $10 fee associated with registering a vehicle in the County. Fees are restricted to reduce traffic congestion and vehicle related pollution.
Athletic Facility Preservation - accounts for funds to be used for repairing, refurnishing, and replacing City athletic facilities.
Tobacco Grant - accounts for Prop. 56 grant funds to be used to promote a healthier California by reducing illegal sales and marketing of cigarettes and tobacco products, including e-cigarettes, to minors.
CAPITAL PROJECT FUNDS
Capital Improvement - accounts for the City's major capital projects.
Sidewalk Repair - accounts for sidewalk reimbursement revenue associated with the repair/replacement of City sidewalks under article V, section 18.26 of the City code. 75 Attachment A Agenda Report Page 83
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2021
Special Revenue Funds
Streets Projects
Schoolmates
Program
Projects and
Services Measure D
Abandoned
Vehicle
ASSETS
Cash and investments $ 537,554 $ 230,111 $ 1,343,746 $ 7,685 $ 38,121 Receivables:
Accounts 27,755 - 5,000 8,392 1,243
Interest 187 410 - 77 56
Total Assets $ 565,496 $ 230,521 $ 1,348,746 $ 16,154 $ 39,420
LIABILITIES
Accounts payable $ 71,568 $ 3,199 $ - $ - $ -
Accrued wages and benefits - 13,122 - - -
Unearned revenue - 28,702 - - -
Total Liabilities 71,568 45,023 - - -
FUND BALANCES
Restricted 493,928 185,498 1,348,746 16,154 39,420
Assigned - - - - -
Total Fund Balances 493,928 185,498 1,348,746 16,154 39,420 Total Liabilities and Fund Balances $ 565,496 $ 230,521 $ 1,348,746 $ 16,154 $ 39,420 76 Attachment A Agenda Report Page 84
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS (CONTINUED)
JUNE 30, 2021
Special Revenue Funds
Measure B Sales
Tax
Measure BB
Sales Tax COPS Measure F
Athletic Facility
Preservation
ASSETS
Cash and investments $ 203,116 $ 375,338 $ 490,453 $ 65,461 $ 316,803 Receivables:
Accounts 104,080 96,845 40,707 7,825 -
Interest 174 500 820 81 467
Total Assets $ 307,370 $ 472,683 $ 531,980 $ 73,367 $ 317,270
LIABILITIES
Accounts payable $ - $ - $ 900 $ - $ -
Accrued wages and benefits - - - - -
Unearned revenue - - - - -
Total Liabilities - - 900 - -
FUND BALANCES
Restricted 307,370 472,683 531,080 73,367 317,270
Assigned - - - - -
Total Fund Balances 307,370 472,683 531,080 73,367 317,270 Total Liabilities and Fund Balances $ 307,370 $ 472,683 $ 531,980 $ 73,367 $ 317,270 77 Attachment A Agenda Report Page 85
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS (CONTINUED)
JUNE 30, 2021
Special Revenue
Funds Capital Projects
Tobacco Grant
Capital
Improvement Sidewalk Repair
Total
Non-major
Governmental
Funds
ASSETS
Cash and investments $ - $ 67,225 $ 19,090 $ 3,694,703
Receivables:
Accounts - - - 291,847
Interest - 76 - 2,848
Total Assets $ - $ 67,301 $ 19,090 $ 3,989,398
LIABILITIES
Accounts payable $ - $ - $ - $ 75,667
Accrued wages and benefits - - - 13,122
Unearned revenue - - - 28,702
Total Liabilities - - - 117,491
FUND BALANCES
Restricted - - - 3,785,516
Assigned - 67,301 19,090 86,391
Total Fund Balances - 67,301 19,090 3,871,907
Total Liabilities and Fund Balances $ - $ 67,301 $ 19,090 $ 3,989,398 78 Attachment A Agenda Report Page 86
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2021
Special Revenue Funds
Streets
Projects
Schoolmates
Program
Projects and
Services Measure D
Abandoned
Vehicle
REVENUES
Gas tax $ 466,337 $ - $ - $ - $ -
Intergovernmental - - - - 4,869
Use of money and property 1,338 1,150 - 221 155
Current service charges - 586,127 - - -
Measure B tax - - - - -
Contributions and donations - - 120,550 - -
Other revenues - - - 39,110 -
Total Revenues 467,675 587,277 120,550 39,331 5,024
EXPENDITURES
Current:
Public works - - - 22,005 -
Street improvements 48,250 - - - -
Public safety:
Police services - - - - -
Recreation - 706,355 - - -
Capital outlay 354,528 - - - -
Total Expenditures 402,778 706,355 - 22,005 -
Excess (Deficiency) of Revenues over Expenditures 64,897 (119,078) 120,550 17,326 5,024
OTHER FINANCING SOURCES (USES)
Transfers in - - - - -
Transfers out - - (22,704) (51,183) -
Total Other Financing Sources (Uses) - - (22,704) (51,183) - Net change in fund balances 64,897 (119,078) 97,846 (33,857) 5,024 Fund balances - July 1, 2020 429,031 304,576 1,250,900 50,011 34,396 Fund balances - June 30, 2021 $ 493,928 $ 185,498 $ 1,348,746 $ 16,154 $ 39,420 79 Attachment A Agenda Report Page 87
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2021
Special Revenue Funds
Measure B Sales
Tax
Measure BB
Sales Tax COPS Measure F
Athletic Facility
Preservation
REVENUES
Gas tax $ - $ - $ - $ - $ -
Intergovernmental - 476,385 197,434 45,893 -
Use of money and property 145 867 2,293 181 1,264
Current service charges - - - - 44,268
Measure B tax 511,024 - - - -
Contributions and donations - - - - 49,150
Other revenues - - - - -
Total Revenues 511,169 477,252 199,727 46,074 94,682
EXPENDITURES
Current:
Public works - - - - -
Street improvements - - - - -
Public safety:
Police services - - 174,358 - -
Recreation - - - - -
Capital outlay 205,722 5,012 - 6,718 -
Total Expenditures 205,722 5,012 174,358 6,718 -
Excess (Deficiency) of Revenues over Expenditures 305,447 472,240 25,369 39,356 94,682
OTHER FINANCING SOURCES (USES)
Transfers in - - - - -
Transfers out - - - - -
Total Other Financing Sources (Uses) - - - - -
Net change in fund balances 305,447 472,240 25,369 39,356 94,682 Fund balances - July 1, 2020 1,923 443 505,711 34,011 222,588 Fund balances - June 30, 2021 $ 307,370 $ 472,683 $ 531,080 $ 73,367 $ 317,270 80 Attachment A Agenda Report Page 88
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2021
Special
Revenue Funds Capital Projects
Tobacco Grant
Capital
Improvement Sidewalk Repair
Total
Non-major
Governmental
Funds
REVENUES
Gas tax $ - $ - $ - $ 466,337
Intergovernmental 137,458 - - 862,039
Use of money and property - 236 - 7,850
Current service charges - - - 630,395
Measure B tax - - - 511,024
Contributions and donations - - - 169,700
Other revenues - - 8,460 47,570
Total Revenues 137,458 236 8,460 2,694,915
EXPENDITURES
Current:
Public works - 3,000 7,143 32,148
Street improvements - - - 48,250
Public safety:
Police services 184,070 - - 358,428
Recreation - - - 706,355
Capital outlay - 10,939 - 582,919
Total Expenditures 184,070 13,939 7,143 1,728,100
Excess (Deficiency) of Revenues over Expenditures (46,612) (13,703) 1,317 966,815
OTHER FINANCING SOURCES (USES)
Transfers in 46,612 - - 46,612
Transfers out - - - (73,887)
Total Other Financing Sources (Uses) 46,612 - - (27,275) Net change in fund balances - (13,703) 1,317 939,540
Fund balances - July 1, 2020 - 81,004 17,773 2,932,367
Fund balances - June 30, 2021 $ - $ 67,301 $ 19,090 $ 3,871,907 81 Attachment A Agenda Report Page 89
CITY OF PIEDMONT
STREETS PROJECTS - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Gas tax $ 243,000 $ 423,000 $ 466,337 $ 43,337
Use of money and property - - 1,338 1,338
Total Revenues 243,000 423,000 467,675 44,675
EXPENDITURES
Current:
Street improvements - 180,000 48,250 131,750
Capital outlay 430,000 250,000 354,528 (104,528)
Total Expenditures 430,000 430,000 402,778 27,222
Net change in fund balance $ (187,000) $ (7,000) 64,897 $ 71,897 Fund balance - July 1, 2020 429,031
Fund balance - June 30, 2021 $ 493,928
82 Attachment A Agenda Report Page 90
CITY OF PIEDMONT
SCHOOLMATES PROGRAM - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ 5,000 $ 5,000 $ 1,150 $ (3,850) Charges for services 460,000 460,000 586,127 126,127
Total Revenues 465,000 465,000 587,277 122,277
EXPENDITURES
Current:
Recreation 585,203 585,203 706,355 (121,152)
Capital outlay 2,500 2,500 - 2,500
Total Expenditures 587,703 587,703 706,355 (118,652)
Net change in fund balance $ (122,703) $ (122,703) (119,078) $ 3,625 Fund balance - July 1, 2020 304,576
Fund balance - June 30, 2021 $ 185,498
83 Attachment A Agenda Report Page 91
CITY OF PIEDMONT
PROJECTS AND SERVICES - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Contributions and donations $ 5,000 $ 5,000 $ 120,550 $ 115,550 Total Revenues 5,000 5,000 120,550 115,550
OTHER FINANCING SOURCES (USES)
Transfers out - - (22,704) (22,704)
Total Other Financing Sources (Uses) - - (22,704) (22,704) Net change in fund balance $ 5,000 $ 5,000 97,846 $ 92,846 Fund balance - July 1, 2020 1,250,900
Fund balance - June 30, 2021 $ 1,348,746
84 Attachment A Agenda Report Page 92
CITY OF PIEDMONT
MEASURE D - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 221 $ 221
Other revenues 43,000 43,000 39,110 (3,890)
Total Revenues 43,000 43,000 39,331 (3,669)
EXPENDITURES
Current:
Public works 40,000 40,000 22,005 17,995
Total Expenditures 40,000 40,000 22,005 17,995
Excess (deficiency) of revenues over expenditures 3,000 3,000 17,326 14,326
OTHER FINANCING SOURCES (USES)
Transfers out - - (51,183) (51,183)
Total Other Financing Sources (Uses) - - (51,183) (51,183) Net change in fund balance $ 3,000 $ 3,000 (33,857) $ (36,857) Fund balance - July 1, 2020 50,011
Fund balance - June 30, 2021 $ 16,154
85 Attachment A Agenda Report Page 93
CITY OF PIEDMONT
ABANDONED VEHICLE - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original* Final*
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ - $ - $ 4,869 $ 4,869
Use of money and property - - 155 155
Total Revenues - - 5,024 5,024
Net change in fund balance $ - $ - 5,024 $ 5,024
Fund balance - July 1, 2020 34,396
Fund balance - June 30, 2021 $ 39,420
*The City did not adopt a budget for the Abandoned Vehicle Fund for the year ended June 30, 2021. 86 Attachment A Agenda Report Page 94
CITY OF PIEDMONT
MEASURE B SALES TAX - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 145 $ 145
Measure B tax 430,000 430,000 511,024 81,024
Total Revenues 430,000 430,000 511,169 81,169
EXPENDITURES
Current:
Capital outlay 430,000 430,000 205,722 224,278
Total Expenditures 430,000 430,000 205,722 224,278
Net change in fund balance $ - $ - 305,447 $ 305,447
Fund balance - July 1, 2020 1,923
Fund balance - June 30, 2021 $ 307,370
87 Attachment A Agenda Report Page 95
CITY OF PIEDMONT
MEASURE BB SALES TAX - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ 400,000 $ 400,000 $ 476,385 $ 76,385 Use of money and property - - 867 867
Total Revenues 400,000 400,000 477,252 77,252
EXPENDITURES
Current:
Capital outlay 400,000 400,000 5,012 394,988
Total Expenditures 400,000 400,000 5,012 394,988
Net change in fund balance $ - $ - 472,240 $ 472,240
Fund balance - July 1, 2020 443
Fund balance - June 30, 2021 $ 472,683
88 Attachment A Agenda Report Page 96
CITY OF PIEDMONT
COPS - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ 145,000 $ 145,000 $ 197,434 $ 52,434 Use of money and property 6,000 6,000 2,293 (3,707)
Total Revenues 151,000 151,000 199,727 48,727
EXPENDITURES
Current:
Public safety: police services 481,750 605,713 174,358 431,355 Total Expenditures 481,750 605,713 174,358 431,355
Net change in fund balance $ (330,750) $ (454,713) 25,369 $ 480,082 Fund balance - July 1, 2020 505,711
Fund balance - June 30, 2021 $ 531,080
89 Attachment A Agenda Report Page 97
CITY OF PIEDMONT
MEASURE F - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ 40,000 $ 40,000 $ 45,893 $ 5,893
Use of money and property - - 181 181
Total Revenues 40,000 40,000 46,074 6,074
EXPENDITURES
Current:
Capital outlay 45,000 45,000 6,718 38,282
Total Expenditures 45,000 45,000 6,718 38,282
Net change in fund balance $ (5,000) $ (5,000) 39,356 $ 44,356 Fund balance - July 1, 2020 34,011
Fund balance - June 30, 2021 $ 73,367
90 Attachment A Agenda Report Page 98
CITY OF PIEDMONT
ATHLETIC FACILITY PRESERVATION - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 1,264 $ 1,264
Charges for services 30,000 30,000 44,268 14,268
Contributions and donations - - 49,150 49,150
Total Revenues 30,000 30,000 94,682 64,682
EXPENDITURES
Current:
Recreation 40,000 40,000 - 40,000
Total Expenditures 40,000 40,000 - 40,000
Net change in fund balance $ (10,000) $ (10,000) 94,682 $ 104,682 Fund balance - July 1, 2020 222,588
Fund balance - June 30, 2021 $ 317,270
91 Attachment A Agenda Report Page 99
CITY OF PIEDMONT
TOBACCO GRANT - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ 140,000 $ 140,000 $ 137,458 $ (2,542) Total Revenues 140,000 140,000 137,458 (2,542)
EXPENDITURES
Current:
Public safety - police services - 140,000 184,070 (44,070) Total Expenditures - 140,000 184,070 (44,070)
Excess (deficiency) of revenues over expenditures 140,000 - (46,612) (46,612)
OTHER FINANCING SOURCES (USES)
Transfers in - - 46,612 46,612
Total Other Financing Sources (Uses) - - 46,612 46,612
Net change in fund balance $ 140,000 $ - - $ -
Fund balance - July 1, 2020 -
Fund balance - June 30, 2021 $ -
92 Attachment A Agenda Report Page 100
CITY OF PIEDMONT
CAPITAL IMPROVEMENT - CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 236 $ 236
Total Revenues - - 236 236
EXPENDITURES
Current:
Public works 20,000 20,000 3,000 17,000
Capital outlay 3,055 3,055 10,939 (7,884)
Total Expenditures 23,055 23,055 13,939 9,116
Net change in fund balance $ (23,055) $ (23,055) (13,703) $ 9,352 Fund balance - July 1, 2020 81,004
Fund balance - June 30, 2021 $ 67,301
93 Attachment A Agenda Report Page 101
CITY OF PIEDMONT
SIDEWALK REPAIR - CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
2020 - 2021
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Other revenues $ 15,000 $ 15,000 $ 8,460 $ (6,540)
Total Revenues 15,000 15,000 8,460 (6,540)
EXPENDITURES
Current:
Public works 20,000 20,000 7,143 12,857
Total Expenditures 20,000 20,000 7,143 12,857
Net change in fund balance $ (5,000) $ (5,000) 1,317 $ 6,317 Fund balance - July 1, 2020 17,773
Fund balance - June 30, 2021 $ 19,090
94 Attachment A Agenda Report Page 102
INTERNAL SERVICE FUNDS
Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis.
The concept of major funds does not extend to internal service funds because they do not do business with outside parties. For the Statement of Activities, the net revenues and expenses of each internal service fund are eliminated by netting them against the operations of the City departments that generated them. The remaining balance sheet items are consolidated with these same funds in the Statement of Net Position. However, internal service funds are still presented separately in the fund financial statements.
95 Attachment A Agenda Report Page 103
CITY OF PIEDMONT
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
JUNE 30, 2021
Governmental Activities -
Internal Service Funds
Workers'
Compensation
Insurance
Liabilities
Total Internal
Service Funds
ASSETS
Current Assets
Cash and investments $ 1,761,961 $ 386,811 $ 2,148,772
Total Current Assets 1,761,961 386,811 2,148,772
Total Assets 1,761,961 386,811 2,148,772
LIABILITIES
Current Liabilities
Accounts payable 8,293 7,500 15,793
Claims payable - current 281,965 40,422 322,387
Total Current Liabilities 290,258 47,922 338,180
Non-Current Liabilities
Claims payable 723,035 76,971 800,006
Total Non-Current Liabilities 723,035 76,971 800,006
Total Liabilities 1,013,293 124,893 1,138,186
NET POSITION
Unrestricted 748,668 261,918 1,010,586
Total Net Position $ 748,668 $ 261,918 $ 1,010,586
96 Attachment A Agenda Report Page 104
CITY OF PIEDMONT
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Governmental Activities -
Internal Service Funds
Workers'
Compensation
Insurance
Liabilities
Total Internal
Service Funds
OPERATING EXPENSES
Insurance and claims expenses $ 719,273 $ 1,014,151 $ 1,733,424 Total Operating Expenses 719,273 1,014,151 1,733,424
Operating Loss (719,273) (1,014,151) (1,733,424)
NON-OPERATING REVENUES (EXPENSES)
Other income 722,374 1,014,943 1,737,317
Total Non-Operating Revenues 722,374 1,014,943 1,737,317 Change in net position 3,101 792 3,893
Net Position - July 1, 2020 745,567 261,126 1,006,693
Net Position - June 30, 2021 $ 748,668 $ 261,918 $ 1,010,586 97 Attachment A Agenda Report Page 105
CITY OF PIEDMONT
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
Governmental Activities -
Internal Service Funds
Workers
Compensation
Insurance
Liabilities
Total Internal
Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Claims and premiums paid $ (697,155) $ (983,215) $ (1,680,370) Net Cash Used for Operating Activities (697,155) (983,215) (1,680,370)
CASH FLOWS FROM NON-CAPITAL FINANCING
ACTIVITIES
Other income 722,374 1,014,943 1,737,317
Net Cash Provided by Non-Capital Financing Activities 722,374 1,014,943 1,737,317 Net Increase in Cash and Cash Equivalents 25,219 31,728 56,947 Cash and Cash Equivalents - July 1, 2020 1,736,742 355,083 2,091,825 Cash and Cash Equivalents - June 30, 2021 $ 1,761,961 $ 386,811 $ 2,148,772
RECONCILIATION OF OPERATING LOSS TO NET CASH
USED FOR OPERATING ACTIVITIES:
Operating Loss $ (719,273) $ (1,014,151) $ (1,733,424)
Changes in assets and liabilities:
Increase (decrease) in:
Accounts payable 7,118 4,764 11,882
Claims payable 15,000 26,172 41,172
Net Cash Used for Operating Activities $ (697,155) $ (983,215) $ (1,680,370) 98 Attachment A Agenda Report Page 106
GENERAL FUND
The following funds are reported in total on the Governmental Fund Financial Statements under the column General Fund.
GENERAL FUND
General Fund - the general operating fund of the City and is used to account for all financial resources.
Deposits and Bonds - accounts for the receipt and use of deposits held by the City.
Traffic Safety - accounts for City revenue from vehicle code fines and parking ticket citation fees. The revenue comes from Alameda County and the Superior Court of California as a result of vehicle code violations and parking enforcement efforts by the Police Department. At the end of each fiscal year, revenue in the fund is transferred to the General fund.
Pension Rate Stabilization - accounts for funds held in a Section 115 Trust with the Public Agency Retirement Services (PARS) to aid in funding future pension expense and allow the City to smooth the effect of rising pension costs.
99 Attachment A Agenda Report Page 107
CITY OF PIEDMONT
GENERAL FUND
COMBINING BALANCE SHEET
JUNE 30, 2021
General
Deposits and
Bonds Traffic Safety
Pension Rate
Stabilization
Total
General
Fund
ASSETS
Cash and investments $ 6,302,716 $ 704,623 $ 28,682 $ - $ 7,036,021 Restricted cash and investments - - - 3,667,217 3,667,217 Receivables:
Accounts 3,701,040 - 144 - 3,701,184
Interest 19,414 - - - 19,414
Prepaid expenses 94,969 - - - 94,969
Due from other funds - - - 1,000,000 1,000,000
Total Assets $ 10,118,139 $ 704,623 $ 28,826 $ 4,667,217 $ 15,518,805
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable $ 841,151 $ 3,846 $ 567 $ - $ 845,564
Accrued wages and benefits 521,872 - - - 521,872
Deposits payable 6,274 700,777 - - 707,051
Due to other funds 1,000,000 - - - 1,000,000
Unearned revenue 1,239,836 - - - 1,239,836
Total Liabilities 3,609,133 704,623 567 - 4,314,323
FUND BALANCES
Nonspendable 94,969 - - - 94,969
Restricted - - - 4,667,217 4,667,217
Unassigned 6,414,037 - 28,259 - 6,442,296
Total Fund Balances 6,509,006 - 28,259 4,667,217 11,204,482 Total Liabilities and Fund
Balances $ 10,118,139 $ 704,623 $ 28,826 $ 4,667,217 $ 15,518,805 100
Attachment A Agenda Report Page 108
CITY OF PIEDMONT
GENERAL FUND
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE FISCAL YEAR ENDED JUNE 30, 2021
General
Deposits and
Bonds Traffic Safety
Pension Rate
Stabilization
Total
General
Fund
REVENUES
Property tax $ 15,442,493 $ - $ - $ - $ 15,442,493
Sales tax 244,763 - - - 244,763
Franchise tax 560,828 - - - 560,828
Utility users tax 1,238,177 - - - 1,238,177
Real property transfer tax 6,286,601 - - - 6,286,601
Business license and rental tax 620,351 - - - 620,351
Licenses and permits 709,986 - - - 709,986
Intergovernmental 2,224,176 - - - 2,224,176
Use of money and property 208,616 - - 652,739 861,355
Current service charges 2,977,984 - - - 2,977,984
Parcel tax 2,411,381 - - - 2,411,381
Contributions and donations - - 13,962 - 13,962
Other revenues 340,290 - - - 340,290
Total Revenues 33,265,646 - 13,962 652,739 33,932,347
EXPENDITURES
Current:
Administration 3,583,138 - - - 3,583,138
Public works 4,470,211 - - - 4,470,211
Public safety:
Police services 6,530,461 - - - 6,530,461
Fire services 6,875,292 - - - 6,875,292
Recreation 2,404,970 - - - 2,404,970
Nondepartmental 3,875,531 - - (1,000,000) 2,875,531
Total Expenditures 27,739,603 - - (1,000,000) 26,739,603 Excess (Deficiency) of Revenues
over Expenditures 5,526,043 - 13,962 1,652,739 7,192,744
OTHER FINANCING SOURCES
(USES)
Transfers in 71,183 - - - 71,183
Transfers out (4,679,319) - (20,000) - (4,699,319)
Total Other Financing
Sources (Uses) (4,608,136) - (20,000) - (4,628,136)
Net Change in Fund Balances 917,907 - (6,038) 1,652,739 2,564,608 Fund Balances - July 1, 2020 5,591,099 - 34,297 3,014,478 8,639,874 Fund Balances - June 30, 2021 $ 6,509,006 $ - $ 28,259 $ 4,667,217 $ 11,204,482 101
Attachment A Agenda Report Page 109
OTHER REPORTS
Attachment A Agenda Report Page 110
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 of
the City of Piedmont
Piedmont, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Piedmont (the “City”), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 7, 2022.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment B Agenda Report Page 111
(+
0
4/"4 +
,%0'+"
4 "%'++ *
*7% (
+)"':
%0
+) 4
, /"%
+%'#
,'#%
"#*) #%" *#() $4*'#)
#(%0
"
+/*%+ , %0% %
+%'#
#( # % % 4" !'(
# 4'#' # # %0
,,
)%'!
#
++ , %0
#%'%7C+ '#%
"#* ) #%" * " #
) $4*'#)
D0'+"
4 "%'+#'#%
"*4"% ,#/('%4
", "$
('#)) "(#)
&'%0
'# ) #+'(
"'#
%0
#%'%7C+'#%
"#*) #%" *#() $4*'#)
D)) "('#
*7%0'+) $$/#')%' #'+# %+/'%:*
, "#7
%0
"4/"4 +
D
)"$
#%
*', "#'
=")02
MannUrrutiaNelsonCPA's
Attachment B Agenda Report Page 112
____________________________________________________________________________________________
CITY OF PIEDMONT
MEASURE B FUND
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED JUNE 30, 2021
____________________________________________________________________________________________
MANN, URRUTIA, NELSON, CPAS & ASSOCIATES, LLP
1760 CREEKSIDE OAKS DRIVE, SUITE 160
SACRAMENTO, CA 95833
Attachment C Agenda Report Page 113
CITY OF PIEDMONT
MEASURE B FUND
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Independent Auditor's Report 1 - 2
Financial Statements
Balance Sheet 3
Statement of Revenues, Expenditures and Changes in Fund Balance 4 Notes to the Financial Statements 5 - 6
Independent Auditor's Report on Measure B Compliance and on Internal Control Over Compliance 7 - 8
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 9 - 10
Attachment C Agenda Report Page 114
INDEPENDENT AUDITOR'S REPORT
To the City Council
City of Piedmont
Piedmont, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Measure B Fund of the City of Piedmont (the City) as of and for the year ended June 30, 2021 and the related notes to the financial statements, as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Measure B Fund of the City as of June 30, 2021, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment C Agenda Report Page 115
!
!&
1*.13-11(*.)/,(,6(7.)&)3.&41,&,(5(),1+0(1(),/)4<,6((&1-0(%-)*&)**/)/,+-0+/0,,/&)**/)/, +0(1(),7&.04<,6(7.)&)3.&4+/1.,./)/7,6( .,</7.(*5/),&1/7-)( ,6(36&)'(1.).,17.)&)3.&4+/1.,./)
7/0,6(<(&0,6()()*(*.)&33/0*&)3(;.,6&33/-),.)'+0.)3.+4(1'()(0&44<&33(+,(*.),6().,(* ,&,(1/75(0.3&A
-0/+.)./).1)/,5/*.7.(*;.,60(1+(3,,/,6.15&,,(0A &)&'(5(),6&1/5.,,(*&5&)&'(5(),1*.13-11./)&)*&)&4<1.1,6&,&33/-),.)'+0.)3.+4(1'()(0&44<&33(+,(*.) ,6().,(*
,&,(1 /75(0.3&0(D-.0(,/@(+0(1(),(*,/1-++4(5(),,6(@&1.37.)&)3.&41,&,(5(),1A -365.11.)'
.)7/05&,./) &4,6/-'6 )/, & +&0, /7 ,6( @&1.3 7.)&)3.&4 1,&,(5(),1 .1 0(D-.0(* @< ,6( C/8(0)5(),&4 33/-),.)'
,&)*&0*1 %/&0* ;6/ 3/)1.*(01 ., ,/ @( &) (11(),.&4 +&0, /7 7.)&)3.&4 0(+/0,.)' 7/0 +4&3.)' ,6( @&1.3 7.)&)3.&4 1,&,(5(),1 .) &) &++0/+0.&,( /+(0&,./)&4 (3/)/5.3 /0 6.1,/0.3&4 3/),(9,A -0 /+.)./) /) ,6( @&1.3 7.)&)3.&4 1,&,(5(),1.1)/,&77(3,(*@<,6.15.11.)'.)7/05&,./)A
")'
($%
)&33/0*&)3(;.,6
;(6&8(&41/.11-(*/-00(+/0,*&,(*(3(5@(0 /)
/-03/)1.*(0&,./)/7,6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*/)/-0,(1,1/7.,13/5+4.&)3(;.,63(0,&.) +0/8.1./)1/74&;10('-4&,./)13/),0&3,1&)*'0&),&'0((5(),1&)*/,6(05&,,(01A 6(+-0+/1(/7,6&,0(+/0,.1,/
*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*3/5+4.&)3(&)*,6(0(1-4,1/7,6&, ,(1,.)'&)*)/,,/+0/8.*(&)/+.)./)/),6((77(3,.8()(11/7,6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'/0/) 3/5+4.&)3(A
6&,0(+/0,.1&).),('0&4+&0,/7&)&-*.,+(07/05(*.)&33/0*&)3(;.,6
.)3/)1.*(0.)',6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*3/5+4.&)3(A
&30&5(),/ &4.7/0).&
(3(5@(0
MamMinutiaMgmCPA's
Attachment C Agenda Report Page 116
CITY OF PIEDMONT
MEASURE B FUND
BALANCE SHEET
JUNE 30, 2021
Streets and
Roads
Bike and
Pedestrian Total
ASSETS
Cash and investments (Note 3) $ 199,935 $ 3,181 $ 203,116 Other receivables 95,767 8,313 104,080
Accrued interest receivable 167 7 174
TOTAL ASSETS $ 295,869 $ 11,501 $ 307,370
FUND BALANCE
Restricted for Measure B programs & projects 295,869 11,501 307,370 TOTAL FUND BALANCE 295,869 11,501 307,370
TOTAL LIABILITIES AND FUND BALANCE $ 295,869 $ 11,501 $ 307,370 See accompanying notes to the basic financial statements. 3 Attachment C Agenda Report Page 117
CITY OF PIEDMONT
MEASURE B FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2021
Streets and
Roads
Bike and
Pedestrian Total
REVENUES
Measure B pass-through revenue
Pass-through allocation $ 470,210 $ 40,814 $ 511,024
Interest 139 6 145
Total Revenues 470,349 40,820 511,169
EXPENDITURES
Public works 174,485 31,237 205,722
Total Expenditures 174,485 31,237 205,722
NET CHANGE IN FUND BALANCE 295,864 9,583 305,447
FUND BALANCE - BEGINNING OF YEAR 5 1,918 1,923
FUND BALANCE - END OF YEAR $ 295,869 $ 11,501 $ 307,370 See accompanying notes to the basic financial statements. 4 Attachment C Agenda Report Page 118
CITY OF PIEDMONT
MEASURE B FUND
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: BACKGROUND - MEASURE B
Under Measure B, approved by the voters of Alameda County in 1986 and 2000, the City receives a portion of the proceeds of an additional one-half cent sales tax to be used for transportation-related expenditures. These measures were adopted with the intention that the funds generated by the additional sales tax will not fund expenditures previously paid by property taxes, but rather, would be used for additional projects and programs.
Projects funded by Measure B during the year were as follows:
Street Resurfacing - To improve, repair, and overlay cities streets.
Bike and Pedestrian - To provide sidewalk and ADA improvements and to implement the bikeway network.
The pool of funds held by the County is allocated among the cities in the County, based on the cities' populations and the number of roads within their city limits for other transportation-related projects. Funds allocated for streets and roads; bike lanes and pedestrian lanes are recorded as a special revenue fund.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
All transactions of the Measure B Fund of the City of Piedmont, California are included as separate special revenue and capital project funds in the basic financial statements of the City.
The financial statements are intended to present the financial position and results of operations of only transactions recorded under the Measure B Fund. The fund itself is included in the financial statements of the City.
B. Basis of Presentation
The Measure B Fund's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.
C. 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" revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements regardless of the measurement focus applied.
All governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when measurable and available and expenditures are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
D. Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 5 Attachment C Agenda Report Page 119
CITY OF PIEDMONT
MEASURE B FUND
NOTES TO THE FINANCIAL STATEMENTS (continued)
JUNE 30, 2021
NOTE 3: CASH AND INVESTMENTS
The Measure B fund participates in the City’s cash and investment pool. See the City's Basic Financial Statements for disclosures related to cash and investments and the related custodial risk categorization.
NOTE 4: COMMITMENTS AND CONTINGENCIES
The City participates in several grant programs. These programs did not require a Single Audit during the year ended June 30, 2021. However, these programs are subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
The World Health Organization declared the worldwide coronavirus (COVID-19) outbreak a public health emergency on January 30, 2020 and officially declared it a pandemic as of March 11, 2020. The City has performed an evaluation of financial statement line items to determine whether valuation of impairment adjustments should be made. The City has determined that the amounts reported on the Measure B Fund's financial statements are properly valued as of June 30, 2021.
However, since the duration and full effects of the COVID-19 outbreak are yet unknown there could be future negative impacts to Measure B Fund's financial position that have yet to be determined. 6 Attachment C Agenda Report Page 120
INDEPENDENT AUDITOR'S REPORT ON MEASURE B COMPLIANCE
AND ON INTERNAL CONTROL OVER COMPLIANCE
To the City Council
City of Piedmont
City of Piedmont, California
Report on Compliance for Measure B Fund
We have audited the accompanying financial statements of the Measure B Fund of the City of Piedmont's (the City) compliance with the requirements described in the Master Program Funding Agreement between the City and the Alameda County Transportation Commission (ACTC) that could have a direct and material effect on the Measure B Funds for the year ended June 30, 2021.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants specified in the Master Programs Funding Agreement between the City and the ACTC.
Auditor's Responsibility
Our responsibility is to express an opinion on the City's compliance based on our audit of the types of compliance requirements referred to above. We conducted our 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 requirements specified in the Master Programs Funding Agreement between the City and ACTC. Those standards and requirements require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on Measure B Funds occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance. However, our audit does not provide a legal determination of the City's compliance with those requirements.
Opinion on Compliance
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have direct and material effect on Measure B Funds for the year ended June 30, 2021.
Report on Internal Control over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on Measure B Funds to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance and to test and report on internal control over compliance in accordance with the requirements noted above, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment C Agenda Report Page 121
(9.1,1;6(),6(*(1.')/0/+(0&,./)/7&3/),0/4/8(03/5+4.&)3( */(1)/,&44/;5&)&'(5(),/0(5+4/<((1.),6()/05&43/-01(/7+(07/05.)',6(.0&11.')(*7-)3,./)1,/+0(8(), /0*(,(3,&)*3/00(3,)/)3/5+4.&)3(;.,6&,<+(/73/5+4.&)3(0(D-.0(5(),/),.5(4<@&1.1A
.1&*(7.3.()3</0&3/5@.)&,./)/7*(7.3.()3.(1.).),(0)&43/),0/4/8(03/5+4.&)3( 1-36,6&,,6(0(.1&0(&1/)&@4(+/[email protected].,<,6&,5&,(0.&4)/)3/5+4.&)3(;.,6&,<+(/73/5+4.&)3(0(D-.0(5(),;.44)/, @( +0(8(),(* /0 *(,(3,(* &)* 3/00(3,(* /) & ,.5(4< @&1.1A
.1 & *(7.3.()3< /0 & 3/5@.)&,./) /7 *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ;.,6 & ,<+( /7 3/5+4.&)3( 0(D-.0(5(), ,6&, .1 4(11 1(8(0( ,6&) & 5&,(0.&4 ;(&G)(11 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( <(, .5+/0,&),()/-'6,/5(0.,&,,(),./)@<,6/1(36&0'(*;.,6'/8(0)&)3(A -03/)1.*(0&,./)/7.),(0)&43/),0/4/8(03/5+4.&)3(;&17/0,6(4.5.,(*+-0+/1(*(130.@(*.),6(7.01,+&0&'0&+6/7 ,6.1 1(3,./) &)* ;&1 )/, *(1.')(* ,/ .*(),.7< &44 *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ,6&, 5.'6, @( 5&,(0.&4 ;(&G)(11(1 /0 1.').7.3&), *(7.3.()3.(1A =(*.* )/, .*(),.7< &)< *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ,6&, ;( 3/)1.*(0,/@(5&,(0.&4;(&G)(11(1A/;(8(05&,(0.&4;(&G)(11(15&<(9.1,,6&,6&8()/, @(().*(),.7.(*A
'!&
!
6(+-0+/1(/7,6.10(+/0,/).),(0)&43/),0/4/8(03/5+4.&)3(.11/4(4<,/*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&4 3/),0/41/8(03/5+4.&)3(&)*,6(0(1-4,1/7,6&,,(1,.)'@&1(*/),6(0(D-.0(5(),1/7,6(
A33/0*.)'4<,6.10(+/0,.1)/,1-.,&@4(7/0&)</,6(0+-0+/1(A
&30&5(),/ &4.7/0).&
(3(5@(0
MamUrrutiaNelsonCPA's
Attachment C Agenda Report Page 122
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 of
the City of Piedmont
City of Piedmont, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Measure B Fund of the City of Piedmont (the “Fund”), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise Fund’s basic financial statements and have issued our report thereon dated December 22, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Piedmont’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Piedmont’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Piedmont’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment C Agenda Report Page 123
'!&
!
6(+-0+/1(/7,6.10(+/0,.11/4(4<,/*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&43/),0/4&)*3/5+4.&)3(&)*,6( 0(1-4,1 /7 ,6&, ,(1,.)' &)* )/, ,/ +0/8.*( &) /+.)./) /) ,6( (77(3,.8()(11 /7 ,6( (),.,<E1 .),(0)&4 3/),0/4 /0 /) 3/5+4.&)3(A
6.10(+/0,.1&).),('0&4+&0,/7&)&-*.,+(07/05(*.)&33/0*&)3(;.,6
.) 3/)1.*(0.)',6((),.,<E1.),(0)&43/),0/4&)*3/5+4.&)3(A33/0*.)'4<,6.13/55-).3&,./).1)/,1-.,&@4(7/0&)< /,6(0+-0+/1(A
&30&5(),/ &4.7/0).&
(3(5@(0
Mam Unntia NelsonCPA's
Attachment C Agenda Report Page 124
____________________________________________________________________________________________
CITY OF PIEDMONT
MEASURE BB FUND
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED JUNE 30, 2021
____________________________________________________________________________________________
MANN, URRUTIA, NELSON, CPAS & ASSOCIATES, LLP
1760 CREEKSIDE OAKS DRIVE, SUITE 160
SACRAMENTO, CA 95833
Attachment D Agenda Report Page 125
CITY OF PIEDMONT
MEASURE BB FUND
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Independent Auditor's Report 1 - 2
Financial Statements
Balance Sheet 3
Statement of Revenues, Expenditures and Change in Fund Balance 4 Notes to the Financial Statements 5 - 6
Independent Auditor's Report on Measure BB Compliance and on Internal Control Over Compliance 7 - 8
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 9 - 10
Attachment D Agenda Report Page 126
INDEPENDENT AUDITOR'S REPORT
To the City Council
City of Piedmont
Piedmont, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Measure BB Fund of the City of Piedmont (the City) as of and for the year ended June 30, 2021 and the related notes to the financial statements, as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Measure BB Fund of the City as of June 30, 2021, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment D Agenda Report Page 127
!
!&
1*.13-11(*.)/,(,6(7.)&)3.&41,&,(5(),1+0(1(),/)4<,6((&1-0(%%-)*&)**/)/,+-0+/0,,/&)**/ )/, +0(1(), 7&.04< ,6( 7.)&)3.&4 +/1.,./) /7 ,6( .,< /7.(*5/), &1 /7 -)( ,6( 36&)'(1 .) .,1 7.)&)3.&4
+/1.,./)7/0,6(<(&0,6()()*(*.)&33/0*&)3(;.,6&33/-),.)'+0.)3.+4(1'()(0&44<&33(+,(*.),6().,(* ,&,(1/7
5(0.3&A-0/+.)./).1)/,5/*.7.(*;.,60(1+(3,,/,6.15&,,(0A &)&'(5(),6&1/5.,,(*&5&)&'(5(),1*.13-11./)&)*&)&4<1.1,6&,&33/-),.)'+0.)3.+4(1'()(0&44<&33(+,(*.) ,6().,(*
,&,(1 /75(0.3&0(D-.0(,/@(+0(1(),(*,/1-++4(5(),,6(@&1.37.)&)3.&41,&,(5(),1A -365.11.)'
.)7/05&,./) &4,6/-'6 )/, & +&0, /7 ,6( @&1.3 7.)&)3.&4 1,&,(5(),1 .1 0(D-.0(* @< ,6( C/8(0)5(),&4 33/-),.)'
,&)*&0*1 %/&0* ;6/ 3/)1.*(01 ., ,/ @( &) (11(),.&4 +&0, /7 7.)&)3.&4 0(+/0,.)' 7/0 +4&3.)' ,6( @&1.3 7.)&)3.&4 1,&,(5(),1 .) &) &++0/+0.&,( /+(0&,./)&4 (3/)/5.3 /0 6.1,/0.3&4 3/),(9,A -0 /+.)./) /) ,6( @&1.3 7.)&)3.&4 1,&,(5(),1.1)/,&77(3,(*@<,6.15.11.)'.)7/05&,./)A
")'
($%
)&33/0*&)3(;.,6
;(6&8(&41/.11-(*/-00(+/0,*&,(*(3(5@(0 /)
/-03/)1.*(0&,./)/7,6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*/)/-0,(1,1/7.,13/5+4.&)3(;.,63(0,&.) +0/8.1./)1/74&;10('-4&,./)13/),0&3,1&)*'0&),&'0((5(),1&)*/,6(05&,,(01A 6(+-0+/1(/7,6&,0(+/0,.1,/
*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*3/5+4.&)3(&)*,6(0(1-4,1/7,6&, ,(1,.)'&)*)/,,/+0/8.*(&)/+.)./)/),6((77(3,.8()(11/7,6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'/0/) 3/5+4.&)3(A
6&,0(+/0,.1&).),('0&4+&0,/7&)&-*.,+(07/05(*.)&33/0*&)3(;.,6
.)3/)1.*(0.)',6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*3/5+4.&)3(A
&30&5(),/ &4.7/0).&
(3(5@(0
MannUrrutiaNelsonCPA's
Attachment D Agenda Report Page 128
CITY OF PIEDMONT
MEASURE BB FUND
BALANCE SHEET
JUNE 30, 2021
Streets and
Roads
Bike and
Pedestrian Total
ASSETS
Cash and investments (Note 3) $ 348,331 $ 27,007 $ 375,338 Other receivables 90,063 6,782 96,845
Accrued interest receivable 465 35 500
TOTAL ASSETS $ 438,859 $ 33,824 $ 472,683
FUND BALANCE
Restricted for Measure BB capital projects 438,859 33,824 472,683 TOTAL FUND BALANCE 438,859 33,824 472,683
TOTAL LIABILITIES FUND BALANCE $ 438,859 $ 33,824 $ 472,683 See accompanying notes to the basic financial statements. 3 Attachment D Agenda Report Page 129
CITY OF PIEDMONT
MEASURE BB FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2021
Streets and
Roads
Bike and
Pedestrian Total
REVENUES
Measure BB pass-through revenue
Pass-through allocation $ 443,022 $ 33,363 $ 476,385
Interest 806 61 867
Total Revenues 443,828 33,424 477,252
EXPENDITURES
Public works 5,012 - 5,012
Total Expenditures 5,012 - 5,012
NET CHANGE IN FUND BALANCE 438,816 33,424 472,240
FUND BALANCE - BEGINNING OF YEAR 43 400 443
FUND BALANCE - END OF YEAR $ 438,859 $ 33,824 $ 472,683 See accompanying notes to the basic financial statements. 4 Attachment D Agenda Report Page 130
CITY OF PIEDMONT
MEASURE BB FUND
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: BACKGROUND - MEASURE BB
Measure BB is a tax that was approved by the voters of Alameda County in November 2014, which implemented a 30 year Transportation Expenditure Plan. The measure extended Measure B which was the original 0.5 percent transportation sales tax approved in 2000 from ending April 1, 2022 to April 1, 2045 and increased the tax by 0.5 percent. This resulted in a 1 percent total sales tax in the County dedicated to transportation expenses. The City receives a portion of the proceeds to be used for transportation-related expenditures. The Measure BB Fund accounts for the direct funding from the measure for local street projects and bicycle and pedestrian projects based on population and road mileage provided by the additional 0.5 percent.
Projects funded by Measure BB during the year were as follows:
Street Resurfacing - To improve, repair, and overlay cities streets.
Bike and Pedestrian - To provide sidewalk and ADA improvements and to implement the bikeway network.
The pool of funds held by the County is allocated among the cities in the County, based on the cities' populations and the number of roads within their city limits for other transportation-related projects. Funds allocated for streets and roads, bike lanes and pedestrian lanes are recorded as a special revenue fund.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
All transactions of the Measure BB Fund of the City of Piedmont, California are included as separate special revenue and capital project funds in the basic financial statements of the City.
The financial statements are intended to present the financial position, results of operations and cash flows of only transactions recorded under the Measure BB Fund. The fund itself is included in the financial statements of the City.
B. Basis of Presentation
The Measure BB Fund's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.
C. 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" revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements regardless of the measurement focus applied.
All governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when measurable and available and expenditures are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
D. Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 5 Attachment D Agenda Report Page 131
CITY OF PIEDMONT
MEASURE BB FUND
NOTES TO THE FINANCIAL STATEMENTS (continued)
JUNE 30, 2021
NOTE 3: CASH AND INVESTMENTS
The Measure BB fund participates in the City’s cash and investment pool. See the City's Basic Financial Statements for disclosures related to cash and investments and the related custodial risk categorization.
NOTE 4: COMMITMENTS AND CONTINGENCIES
The City participates in several grant programs. These programs did not require a Single Audit during the year ended June 30, 2021. However, these programs are subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
The World Health Organization declared the worldwide coronavirus (COVID-19) outbreak a public health emergency on January 30, 2020 and officially declared it a pandemic as of March 11, 2020. The City has performed an evaluation of financial statement line items to determine whether valuation of impairment adjustments should be made. The City has determined that the amounts reported on the Measure BB Fund's financial statements are properly valued as of June 30, 2020. However, since the duration and full effects of the COVID-19 outbreak are yet unknown there could be future negative impacts to Measure BB Fund's financial position that have yet to be determined.
6 Attachment D Agenda Report Page 132
INDEPENDENT AUDITOR'S REPORT ON MEASURE BB COMPLIANCE
AND ON INTERNAL CONTROL OVER COMPLIANCE
To the City Council
City of Piedmont
Piedmont, California
Report on Compliance for Measure BB Fund
We have audited the accompanying financial statements of the Measure BB Fund of the City of Piedmont's (the City) compliance with the requirements described in the Master Program Funding Agreement between the City and the Alameda County Transportation Commission (ACTC) that could have a direct and material effect to the Measure BB Funds for the year ended June 30, 2021.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants specified in the Master Programs Funding Agreement between the City and the ACTC.
Auditor's Responsibility
Our responsibility is to express an opinion on the City's compliance based on our audit of the types of compliance requirements referred to above. We conducted our 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 requirements specified in the Master Programs Funding Agreement between the City and ACTC. Those standards and requirements require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on Measure BB Funds occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance. However, our audit does not provide a legal determination of the City's compliance with those requirements.
Opinion on Compliance
In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have direct and material effect on Measure BB Funds for the year ended June 30, 2021.
Report on Internal Control over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on Measure BB Funds to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance and to test and report on internal control over compliance in accordance with the requirements noted above, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment D Agenda Report Page 133
(9.1,1;6(),6(*(1.')/0/+(0&,./)/7&3/),0/4/8(03/5+4.&)3( */(1)/,&44/;5&)&'(5(),/0(5+4/<((1.),6()/05&43/-01(/7+(07/05.)',6(.0&11.')(*7-)3,./)1,/+0(8(), /0*(,(3,&)*3/00(3,)/)3/5+4.&)3(;.,6&,<+(/73/5+4.&)3(0(D-.0(5(),/),.5(4<@&1.1A
.1&*(7.3.()3</0&3/5@.)&,./)/7*(7.3.()3.(1.).),(0)&43/),0/4/8(03/5+4.&)3( 1-36,6&,,6(0(.1&0(&1/)&@4(+/[email protected].,<,6&,5&,(0.&4)/)3/5+4.&)3(;.,6&,<+(/73/5+4.&)3(0(D-.0(5(),;.44)/, @( +0(8(),(* /0 *(,(3,(* &)* 3/00(3,(* /) & ,.5(4< @&1.1A
.1 & *(7.3.()3< /0 & 3/5@.)&,./) /7 *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ;.,6 & ,<+( /7 3/5+4.&)3( 0(D-.0(5(), ,6&, .1 4(11 1(8(0( ,6&) & 5&,(0.&4 ;(&G)(11 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( <(, .5+/0,&),()/-'6,/5(0.,&,,(),./)@<,6/1(36&0'(*;.,6'/8(0)&)3(A -03/)1.*(0&,./)/7.),(0)&43/),0/4/8(03/5+4.&)3(;&17/0,6(4.5.,(*+-0+/1(*(130.@(*.),6(7.01,+&0&'0&+6/7 ,6.1 1(3,./) &)* ;&1 )/, *(1.')(* ,/ .*(),.7< &44 *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ,6&, 5.'6, @( 5&,(0.&4 ;(&G)(11(1 /0 1.').7.3&), *(7.3.()3.(1A =(*.* )/, .*(),.7< &)< *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ,6&, ;( 3/)1.*(0,/@(5&,(0.&4;(&G)(11(1A/;(8(05&,(0.&4;(&G)(11(15&<(9.1,,6&,6&8()/, @(().*(),.7.(*A
'!&
!
6(+-0+/1(/7,6.10(+/0,/).),(0)&43/),0/4/8(03/5+4.&)3(.11/4(4<,/*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&4 3/),0/41/8(03/5+4.&)3(&)*,6(0(1-4,1/7,6&,,(1,.)'@&1(*/),6(0(D-.0(5(),1/7,6(
A33/0*.)'4<,6.10(+/0,.1)/,1-.,&@4(7/0&)</,6(0+-0+/1(A
&30&5(),/ &4.7/0).&
(3(5@(0
MannMinutiaNelsonCPA's
Attachment D Agenda Report Page 134
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 of
the City of Piedmont
Piedmont, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Measure BB Fund of the City of Piedmont (the “Fund”), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise Fund’s basic financial statements and have issued our report thereon dated December 22, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Piedmont’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Piedmont’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Piedmont’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment D Agenda Report Page 135
'!&
!
6(+-0+/1(/7,6.10(+/0,.11/4(4<,/*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&43/),0/4&)*3/5+4.&)3(&)*,6( 0(1-4,1 /7 ,6&, ,(1,.)' &)* )/, ,/ +0/8.*( &) /+.)./) /) ,6( (77(3,.8()(11 /7 ,6( (),.,<E1 .),(0)&4 3/),0/4 /0 /) 3/5+4.&)3(A
6.10(+/0,.1&).),('0&4+&0,/7&)&-*.,+(07/05(*.)&33/0*&)3(;.,6
.) 3/)1.*(0.)',6((),.,<E1.),(0)&43/),0/4&)*3/5+4.&)3(A33/0*.)'4<,6.13/55-).3&,./).1)/,1-.,&@4(7/0&)< /,6(0+-0+/1(A
&30&5(),/ &4.7/0).&
(3(5@(0
MannUnntiaNelsonCPA's
Attachment D Agenda Report Page 136
____________________________________________________________________________________________
CITY OF PIEDMONT
MEASURE F FUND
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED JUNE 30, 2021
____________________________________________________________________________________________
MANN, URRUTIA, NELSON, CPAS & ASSOCIATES, LLP
1760 CREEKSIDE OAKS DRIVE, SUITE 160
SACRAMENTO, CA 95833
Attachment E Agenda Report Page 137
CITY OF PIEDMONT
MEASURE F FUND
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Independent Auditor's Report 1 - 2
Financial Statements
Balance Sheet 3
Statement of Revenues, Expenditures, and Change in Fund Balance 4 Notes to the Financial Statements 5 - 6
Independent Auditor's Report on Measure F Compliance and on Internal Control Over Compliance 7 - 8
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 9 - 10
Attachment E Agenda Report Page 138
INDEPENDENT AUDITOR'S REPORT
To the City Council
City of Piedmont
Piedmont, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Measure F Fund of the City of Piedmont (the City) as of and for the year ended June 30, 2021 and the related notes to the financial statements, as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Measure F Fund of the City as of June 30, 2021, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment E Agenda Report Page 139
%
1*.13-11(*.)/,(,6(7.)&)3.&41,&,(5(),1+0(1(),/)4<,6((&1-0(-)*&)**/)/,+-0+/0,,/&)**/)/, +0(1(),7&.04<,6(7.)&)3.&4+/1.,./)/7,6( .,</7.(*5/),&1/7-)( ,6(36&)'(1.).,17.)&)3.&4+/1.,./)
7/0,6(<(&0,6()()*(*.)&33/0*&)3(;.,6&33/-),.)'+0.)3.+4(1'()(0&44<&33(+,(*.),6().,(* ,&,(1/75(0.3&A
-0/+.)./).1)/,5/*.7.(*;.,60(1+(3,,/,6.15&,,(0A &)&'(5(),6&1/5.,,(*&5&)&'(5(),1*.13-11./)&)*&)&4<1.1,6&,&33/-),.)'+0.)3.+4(1'()(0&44<&33(+,(*.) ,6().,(*
,&,(1 /75(0.3&0(D-.0(,/@(+0(1(),(*,/1-++4(5(),,6(@&1.37.)&)3.&41,&,(5(),1A -365.11.)'
.)7/05&,./) &4,6/-'6 )/, & +&0, /7 ,6( @&1.3 7.)&)3.&4 1,&,(5(),1 .1 0(D-.0(* @< ,6( C/8(0)5(),&4 33/-),.)'
,&)*&0*1 %/&0* ;6/ 3/)1.*(01 ., ,/ @( &) (11(),.&4 +&0, /7 7.)&)3.&4 0(+/0,.)' 7/0 +4&3.)' ,6( @&1.3 7.)&)3.&4 1,&,(5(),1 .) &) &++0/+0.&,( /+(0&,./)&4 (3/)/5.3 /0 6.1,/0.3&4 3/),(9,A -0 /+.)./) /) ,6( @&1.3 7.)&)3.&4 1,&,(5(),1.1)/,&77(3,(*@<,6.15.11.)'.)7/05&,./)A !(&'#$
)&33/0*&)3(;.,6
;(6&8(&41/.11-(*/-00(+/0,*&,(*(3(5@(0 /)
/-03/)1.*(0&,./)/7,6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*/)/-0,(1,1/7.,13/5+4.&)3(;.,63(0,&.) +0/8.1./)1/74&;10('-4&,./)13/),0&3,1&)*'0&),&'0((5(),1&)*/,6(05&,,(01A 6(+-0+/1(/7,6&,0(+/0,.1,/
*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*3/5+4.&)3(&)*,6(0(1-4,1/7,6&, ,(1,.)'&)*)/,,/+0/8.*(&)/+.)./)/),6((77(3,.8()(11/7,6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'/0/) 3/5+4.&)3(A
6&,0(+/0,.1&).),('0&4+&0,/7&)&-*.,+(07/05(*.)&33/0*&)3(;.,6
.)3/)1.*(0.)',6( .,<1.),(0)&43/),0/4/8(07.)&)3.&40(+/0,.)'&)*3/5+4.&)3(A
&30&5(),/ &4.7/0).&
(3(5@(0
MannUrrutiaNelsonCPA's
Attachment E Agenda Report Page 140
CITY OF PIEDMONT
MEASURE F FUND
BALANCE SHEET
JUNE 30, 2021
Local Road
Improvement
and Repair
Program
ASSETS
Cash and investments (Note 3) $ 65,461
Other receivables 7,825
Accrued Interest receivable 81
TOTAL ASSETS $ 73,367
FUND BALANCE
Restricted for Measure F capital projects $ 73,367
TOTAL FUND BALANCE 73,367
TOTAL LIABILITIES AND FUND BALANCE $ 73,367
See accompanying notes to the basic financial statements. 3 Attachment E Agenda Report Page 141
CITY OF PIEDMONT
MEASURE F FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2021
Local Road
Improvement
and Repair
Program
REVENUES
Measure F pass-through revenue
Pass-through allocation $ 45,893
Interest 181
Total Revenues 46,074
EXPENDITURES
Public works 6,718
Total Expenditures 6,718
CHANGE IN FUND BALANCE 39,356
FUND BALANCE - BEGINNING OF YEAR 34,011
FUND BALANCE - END OF YEAR $ 73,367
See accompanying notes to the basic financial statements. 4 Attachment E Agenda Report Page 142
CITY OF PIEDMONT
MEASURE F FUND
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2021
NOTE 1: BACKGROUND - MEASURE F
The Measure F Alameda County Vehicle Registration Fee (Measure F) was approved by the voters in November 2010, with 63 percent of the vote. The fee will generate about $10.7 million per year by a $10 per year vehicle registration fee. The collection of the $10 per year vehicle registration fee started in the first week of May 2011. The goal of Measure F is to sustain the County's transportation network and reduce traffic congestion and vehicle related pollution. The program includes the following four categories of projects:
Local Road Improvement and Repair Program (60 percent) Transit for Congestion Relief (25 percent)
Local Transportation Technology (10 percent)
Pedestrian and Bicyclist Access and Safety Program (5 percent) The Alameda County Transportation Commission administers the program and distributes an equitable share of funds among the four planning areas of the county over successive five year cycles. Geographic equity will be measured by a formula, weighted 50 percent by population of the planning area and 50 percent of registered vehicles of the planning area.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
All transactions of the Measure F Fund of the City of Piedmont, California (City) are included as a separate capital project fund in the basic financial statements of the City.
The accompanying financial statements are intended to present the financial position and results of operations of only transactions recorded under the Measure F Fund. The fund itself is included in the financial statements of the City.
B. Basis of Presentation
The Measure F Fund's basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.
C. 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" revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements regardless of the measurement focus applied.
All governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when measurable and available and expenditures are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
D. Description of Fund
The accounts are maintained on the basis of fund accounting. A fund is a separate accounting entity with a selfbalancing set of accounts. The City uses special revenue funds to account for the proceeds of specific revenues (other than for capital projects) that are legally restricted to be expended for specified purposes. 5 Attachment E Agenda Report Page 143
CITY OF PIEDMONT
MEASURE F FUND
NOTES TO THE FINANCIAL STATEMENTS (continued)
JUNE 30, 2021
E. Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 3: CASH AND INVESTMENTS
The Measure F fund participates in the City’s cash and investment pool. See the City's Basic Financial Statements for disclosures related to cash and investments and the related custodial risk categorization.
NOTE 4: COMMITMENTS AND CONTINGENCIES
The City participates in several grant programs. These programs did not require a Single Audit during the year ended June 30, 2021. However, these programs are subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
The World Health Organization declared the worldwide coronavirus (COVID-19) outbreak a public health emergency on January 30, 2020 and officially declared it a pandemic as of March 11, 2020. The City has performed an evaluation of financial statement line items to determine whether valuation of impairment adjustments should be made. The City has determined that the amounts reported on the Measure F Fund's financial statements are properly valued as of June 30, 2020. However, since the duration and full effects of the COVID-19 outbreak are yet unknown there could be future negative impacts to Measure F Fund's financial position that have yet to be determined.
6 Attachment E Agenda Report Page 144
)
)),
)
/,6( .,< /-)3.4
.,</7.(*5/),
.(*5/), &4.7/0).&
%
& &'
=(6&8(&-*.,(*,6(&33/5+&)<.)'7.)&)3.&41,&,(5(),1/7,6((&1-0(-)*/7,6( .,</7.(*5/),1>,6( .,<? 3/5+4.&)3(;.,6,6(0(D-.0(5(),1*(130.@(*.),6(
@(,;((),6( .,<&)*,6(
4&5(*& /-),<
0&)1+/0,&,./) /55.11./)>
?,6&,3/-4*6&8(&*.0(3,&)*5&,(0.&4(77(3,,/,6((&1-0( -)*7/0,6(<(&0()*(*-)(
A
! #
$
&)&'(5(), .1 0(1+/)1.@4( 7/0 3/5+4.&)3( ;.,6 ,6( 4&;1 &)* 0('-4&,./)1 3/),0&3,1 &)* '0&), 0(D-.0(5(),1 &1 1+(3.7.(*.),6(
@(,;((),6( .,<&)*,6(
A
&' #
$
-00(1+/)[email protected].,<.1,/(9+0(11&)/+.)./)/),6( .,<13/5+4.&)3(@&1(*/)/-0&-*.,/7,6(,<+(1/73/5+4.&)3( 0(D-.0(5(),1 0(7(00(* ,/ &@/8(A =(3/)*-3,(* /-0 &-*., /7 3/5+4.&)3( .) &33/0*&)3( ;.,6 &-*.,.)' 1,&)*&0*1 '()(0&44< &33(+,(* .) ,6( ).,(*
,&,(1 /7 5(0.3&B ,6( 1,&)*&0*1 &++4.3&@4( ,/ 7.)&)3.&4 &-*.,1 3/),&.)(* .)
.11-(*@<,6( /5+,0/44(0C()(0&4/7,6().,(* ,&,(1B&)*0(D-.0(5(),11+(3.7.(*
.),6(
@(,;((),6( .,<&)*
A
6/1(1,&)*&0*1&)*0(D-.0(5(),10(D-.0(
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
) /-0 /+.)./) ,6( .,< 3/5+4.(* .) &44 5&,(0.&40(1+(3,1 ;.,6 ,6( ,<+(1 /7 3/5+4.&)3(0(D-.0(5(),10(7(00(* ,/ &@/8(,6&,3/-4*6&8(*.0(3,&)*5&,(0.&4(77(3,/)(&1-0(-)*17/0,6(<(&0()*(*-)( A
*
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
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment E Agenda Report Page 145
(9.1,1;6(),6(*(1.')/0/+(0&,./)/7&3/),0/4/8(03/5+4.&)3( */(1)/,&44/;5&)&'(5(),/0(5+4/<((1.),6()/05&43/-01(/7+(07/05.)',6(.0&11.')(*7-)3,./)1,/+0(8(), /0*(,(3,&)*3/00(3,)/)3/5+4.&)3(;.,6&,<+(/73/5+4.&)3(0(D-.0(5(),/),.5(4<@&1.1A
.1&*(7.3.()3</0&3/5@.)&,./)/7*(7.3.()3.(1.).),(0)&43/),0/4/8(03/5+4.&)3( 1-36,6&,,6(0(.1&0(&1/)&@4(+/[email protected].,<,6&,5&,(0.&4)/)3/5+4.&)3(;.,6&,<+(/73/5+4.&)3(0(D-.0(5(),;.44)/, @( +0(8(),(* /0 *(,(3,(* &)* 3/00(3,(* /) & ,.5(4< @&1.1A
.1 & *(7.3.()3< /0 & 3/5@.)&,./) /7 *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ;.,6 & ,<+( /7 3/5+4.&)3( 0(D-.0(5(), ,6&, .1 4(11 1(8(0( ,6&) & 5&,(0.&4 ;(&G)(11 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( <(, .5+/0,&),()/-'6,/5(0.,&,,(),./)@<,6/1(36&0'(*;.,6'/8(0)&)3(A -03/)1.*(0&,./)/7.),(0)&43/),0/4/8(03/5+4.&)3(;&17/0,6(4.5.,(*+-0+/1(*(130.@(*.),6(7.01,+&0&'0&+6/7 ,6.1 1(3,./) &)* ;&1 )/, *(1.')(* ,/ .*(),.7< &44 *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ,6&, 5.'6, @( 5&,(0.&4 ;(&G)(11(1 /0 1.').7.3&), *(7.3.()3.(1A =(*.* )/, .*(),.7< &)< *(7.3.()3.(1 .) .),(0)&4 3/),0/4 /8(0 3/5+4.&)3( ,6&, ;( 3/)1.*(0,/@(5&,(0.&4;(&G)(11(1A/;(8(05&,(0.&4;(&G)(11(15&<(9.1,,6&,6&8()/, @(().*(),.7.(*A
& %
6(+-0+/1(/7,6.10(+/0,/).),(0)&43/),0/4/8(03/5+4.&)3(.11/4(4<,/*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&4 3/),0/41/8(03/5+4.&)3(&)*,6(0(1-4,1/7,6&,,(1,.)'@&1(*/),6(0(D-.0(5(),1/7,6(
A33/0*.)'4<,6.10(+/0,.1)/,1-.,&@4(7/0&)</,6(0+-0+/1(A
&30&5(),/ &4.7/0).&
(3(5@(0
MannUnntia Nelson CAA's
Attachment E Agenda Report Page 146
)),
)
0
)
/
+
)
9/
/,6( .,< /-)3.4/7
,6( .,</7.(*5/),
.(*5/), &4.7/0).&
=(6&8(&-*.,(*.)&33/0*&)3(;.,6,6(&-*.,.)'1,&)*&0*1'()(0&44<&33(+,(*.),6().,(* ,&,(1/75(0.3&&)*
,6(1,&)*&0*1&++4.3&@4(,/7.)&)3.&4&-*.,13/),&.)(*.)
.11-(*@<,6( /5+,0/44(0
C()(0&4/7,6().,(*
,&,(1,6(7.)&)3.&41,&,(5(),1/7,6((&1-0(-)*/7,6( .,</7.(*5/),>,6(M-)*N?&1 /7 &)* 7/0 ,6( <(&0 ()*(* -)(
&)* ,6( 0(4&,(* )/,(1 ,/ ,6( 7.)&)3.&4 1,&,(5(),1 ;6.36 3/44(3,.8(4< 3/5+0.1(-)*E1@&1.37.)&)3.&41,&,(5(),1&)*6&8(.11-(*/-00(+/0,,6(0(/)*&,(*(3(5@(0 A
*
!
)+4&)).)'&)*+(07/05.)'/-0&-*.,/7,6(7.)&)3.&41,&,(5(),1;(3/)1.*(0(* .,</7.(*5/),E1.),(0)&43/),0/4 /8(0 7.)&)3.&4 0(+/0,.)' >.),(0)&4 3/),0/4? &1 & @&1.1 7/0 *(1.').)' &-*., +0/3(*-0(1 ,6&, &0( &++0/+0.&,( .) ,6(
3.03-51,&)3(1 7/0 ,6( +-0+/1( /7 (9+0(11.)' /-0 /+.)./)1 /),6(7.)&)3.&4 1,&,(5(),1@-, )/,7/0,6(+-0+/1(/7 (9+0(11.)'&)/+.)./)/),6((77(3,.8()(11/7 .,</7.(*5/),E1.),(0)&43/),0/4A33/0*.)'4<;(*/)/,(9+0(11&) /+.)./)/),6((77(3,.8()(11/7 .,</7.(*5/),E1.),(0)&43/),0/4A
(9.1,1 ;6() ,6( *(1.') /0 /+(0&,./) /7 & 3/),0/4 */(1 )/, &44/; 5&)&'(5(), /0 (5+4/<((1 .) ,6( )/05&4 3/-01( /7 +(07/05.)' ,6(.0 &11.')(* 7-)3,./)1 ,/ +0(8(), /0 *(,(3, &)* 3/00(3,
5.11,&,(5(),1/)&,.5(4<@&1.1A
.1&*(7.3.()3</0&3/5@.)&,./)/7*(7.3.()3.(1.).),(0)&4 3/),0/41-36,6&,,6(0(.1&0(&1/)&@4(+/[email protected].,<,6&,&5&,(0.&45.11,&,(5(),/7,6((),.,<E17.)&)3.&41,&,(5(),1;.44 )/, @( +0(8(),(* /0 *(,(3,(* &)* 3/00(3,(* /) & ,.5(4< @&1.1A .1 & *(7.3.()3< /0 &
3/5@.)&,./)/7*(7.3.()3.(1.).),(0)&43/),0/4,6&,.14(111(8(0(,6&)&5&,(0.&4;(&G)(11<(,.5+/0,&),()/-'6,/ 5(0.,&,,(),./)@<,6/1(36&0'(*;.,6'/8(0)&)3(A
-03/)1.*(0&,./)/7.),(0)&43/),0/4;&17/0,6(4.5.,(*+-0+/1(*(130.@(*.),6(7.01,+&0&'0&+6/7,6.11(3,./)&)* ;&1 )/, *(1.')(* ,/ .*(),.7< &44 *(7.3.()3.(1 .) .),(0)&4 3/),0/4 ,6&, 5.'6, @( 5&,(0.&4 ;(&G)(11(1 /0 1.').7.3&), *(7.3.()3.(1AC.8(),6(1(4.5.,&,./)1*-0.)'/-0&-*.,;(*.*)/,.*(),.7<&)<*(7.3.()3.(1.).),(0)&43/),0/4,6&,;( 3/)1.*(0,/@(5&,(0.&4;(&G)(11(1A/;(8(05&,(0.&4;(&G)(11(15&<(9.1,,6&,6&8()/,@(().*(),.7.(*A
'
1 +&0, /7 /@,&.).)' 0(&1/)&@4( &11-0&)3( &@/-, ;6(,6(0 ,6( -)*1 7.)&)3.&4 1,&,(5(),1 &0( 70(( 70/5 5&,(0.&4
5.11,&,(5(),;(+(07/05(*,(1,1/7.,13/5+4.&)3(;.,63(0,&.)+0/8.1./)1/74&;10('-4&,./)13/),0&3,1&)*'0&), &'0((5(),1)/)3/5+4.&)3(;.,6;6.363/-4*6&8(&*.0(3,&)*5&,(0.&4(77(3,/),6(7.)&)3.&41,&,(5(),1A/;(8(0 +0/8.*.)'&)/+.)./)/)3/5+4.&)3(;.,6,6/1(+0/8.1./)1;&1)/,&)/@F(3,.8(/7/-0&-*.,&)*&33/0*.)'4<;(*/ )/,(9+0(111-36&)/+.)./)A
6(0(1-4,1/7/-0,(1,1*.134/1(*)/.)1,&)3(1/7)/)3/5+4.&)3(/0/,6(05&,,(01,6&, &0(0(D-.0(*,/@(0(+/0,(*-)*(0
A
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment E Agenda Report Page 147
& %
6(+-0+/1(/7,6.10(+/0,.11/4(4<,/*(130.@(,6(13/+(/7/-0,(1,.)'/7.),(0)&43/),0/4&)*3/5+4.&)3(&)*,6( 0(1-4,1 /7 ,6&, ,(1,.)' &)* )/, ,/ +0/8.*( &) /+.)./) /) ,6( (77(3,.8()(11 /7 ,6( (),.,<E1 .),(0)&4 3/),0/4 /0 /) 3/5+4.&)3(A
6.10(+/0,.1&).),('0&4+&0,/7&)&-*.,+(07/05(*.)&33/0*&)3(;.,6
.) 3/)1.*(0.)',6((),.,<E1.),(0)&43/),0/4&)*3/5+4.&)3(A33/0*.)'4<,6.13/55-).3&,./).1)/,1-.,&@4(7/0&)< /,6(0+-0+/1(A
&30&5(),/ &4.7/0).&
(3(5@(0
MmmMantiaNelsonCPA's
Attachment E Agenda Report Page 148
CITY OF PIEDMONT
APPROPRIATIONS LIMIT CALCULATION
AS OF JUNE 30, 2022
____________________________________________________________________________________________ Attachment F Agenda Report Page 149
INDEPENDENT ACCOUNTANT’S REPORT ON APPLYING AGREED-UPON PROCEDURES To The Honorable Mayor and
Members of the City Council
City of Piedmont
Piedmont, California
We have performed the procedures enumerated below on the Appropriations Limit Calculation of the City of Piedmont (the City) as of June 30, 2022. The City’s management is responsible for the Appropriations Limit Calculation.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. Additionally, the League of California Cities (as presented in the publication entitled Agreed-upon Procedures Applied to Appropriations Limitation Prescribed by Article XIII-B of the California Constitution) has agreed to and acknowledged that the procedures performed are appropriate for its purposes. The report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures and associated findings are as follows:
1. We obtained the completed internal calculations and compared the limit and annual adjustment factors included in those calculations to the limit and annual adjustment factors that were adopted by a resolution of the City Council. We compared the population and inflation options included in the aforementioned calculations to those that were selected by a recorded vote of the City Council.
Finding: No exceptions were noted as a result of our procedures.
2. For the Appropriations Limit Calculation, we added the June 30, 2021 appropriation limit to the annual permitted adjustments and agreed the resulting amount to the June 30, 2022 appropriations limit.
Finding: No exceptions were noted as a result of our procedures
3. We compared current year information presented in the appropriations limit calculation to supporting worksheets.
Finding: No exceptions were noted as a result of our procedures.
4. We compared the June 30, 2021 appropriations limit presented in the appropriations limit calculation to the prior year appropriations limit adopted by the City Council during the prior year.
Finding: No exceptions were noted as a result of our procedures.
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Appropriations Limit Calculation. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
M A N N • U R R U T I A • N E L S O N C P A s & A S S O C I A T E S , L L P GLENDALE • ROSEVILLE • SACRAMENTO • SOUTH LAKE TAHOE • KAUAI, HAWAII SAC RAMEN TO OFF IC E • 1760 CREEKS ID E OAKS WAY , SUITE 160 • SAC RA M EN TO , CA 95833 • O . 916.929.0540 • F . 916.929.0541 WWW.M UN C PA S.C OM
Attachment F Agenda Report Page 150
,
,
*
3
*
*
(
7
01112
(
(
-
:'&''
MannMantiaNdgonCPA's
Attachment F Agenda Report Page 151
CITY OF PIEDMONT
APPROPRIATIONS LIMIT CALCULATION
JUNE 30, 2022
Amount Source
Total revised prior year's appropriation limit (at June 30, 2021) $ 26,974,379 Revised prior year's Measure Y voter approved increase (2,410,000) A. Revised prior year's appropriations limit (at June 30, 2021) 24,564,379 B. Adjustment factors for the current fiscal year:
1. Population change 0.9999 * State Finance
2. Inflation (per capita personal income change) 1.0573 * State Finance Total adjustment 1.0572 * (B1 x B2)
C. Annual adjustment 1,405,082 A x (B - 1)
D. Other Adjustments
Lost responsibility (-) -
Transfer to fees (-) -
Voter Approved Increase (+) 2,422,000
Assumed Responsibility (+) -
2,422,000
E. Total adjustments 3,827,082 C+D
F. Current year's appropriations limit (at June 30, 2022) $ 28,391,461 A+E * Rounded to the nearest ten thousandth
Attachment F Agenda Report Page 152
Management Letter
March 7, 2022
To the City Council and Management
of the City of Piedmont
In planning and performing our audit of the financial statements of the City of Piedmont (the City) as of and for the year ended June 30, 2021, in accordance with auditing standards generally accepted in the United States of America, we considered the City¶V LQWHUQDO FRQWURO RYHU ILQDQFLDO UHSRUWLQJ LQWHUQDO FRQWURO
DV D EDVLV IRU Gesigning auditing
procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the &LW\¶V internal control.
Accordingly, we do not express an opinion on the effectiveness of the &LW\¶V internal control.
However, during our audit we became aware of deficiencies in internal control other than significant deficiencies and material weaknesses and matters that are opportunities for strengthening internal controls and operating efficiency.
The memorandum that accompanies this letter summarizes our comments and suggestions regarding those matters.
This letter does not affect our report dated March 7, 2022, on the financial statements of the City of Piedmont.
We will review the status of these comments during our next audit engagement. We have already discussed many of these comments and suggestions with various City personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations.
7KH&LW\RI3LHGPRQW¶VUHVSRQVHVWRWKHILQGLQJVLGHQWLILHGLQRXUDXGLWDUHGHVFULEHGLQWKHDFFRPSDQ\LQJDWWDFKPHQW The City of 3LHGPRQW¶VUHVSRQVHVZHUHQRWVXEMHFWHGWRWKHDXGLWLQJSURFHGXUHVDSSOLHGLQWKHDXGLWRIWKHILQDQFLDO statements and, accordingly, we express no opinion on them.
This communication is intended solely for the information and use of management, City Council, and others within the City, and is not intended to be, and should not be, used by anyone other than those specified parties.
Sincerely,
Mann, Urrutia, Nelson CPAs & Associates LLP
Sacramento, California
MannUrrutiaNdgonCPA's
Attachment G Agenda Report Page 153
City of Piedmont
Summary of Control Deficiencies
June 30, 2021
Capital Assets
During our review of the City’s capital asset schedules, we noted the following:
• The City incorrectly recorded current year capital asset additions in the sewer fund as a direct adjustment to fund balance.
• The City incorrectly recorded a current year capital asset transfer from a governmental fund and to a businesstype fund as a direct adjustment to fund balance. • Accumulated depreciation and current year depreciation expense were understated as the City did not record depreciation for current year capital asset additions.
• Current year street paving additions on the capital asset schedule, City Asset Report, and general ledger were overstated and required adjustment.
• The capital asset schedule reported prior year disposals rather than the current year disposals. • The construction in progress schedule provided as part of the capital asset schedule included incorrect beginning balances.
The implementation of the new ERP system in FY 2020/21 may have contributed to the issues noted above. However, some of the issues are a result of the City’s process for recording certain transactions and data entry errors in the manual capital asset schedules. With the implementation of the new ERP system, we recommend the City review the various capital asset reports contained within the system and work with the system vendor, if necessary, to determine if the capital asset information can be obtained directly from the system and reduce the manual data entry on an excel spreadsheet. We further recommend the City use contra asset, transfers, and/or capital contribution accounts when recording the transfer of capital assets between funds.
Management’s Response:
Management agrees. The finance staff will further review the capability of the Caselle capital asset module and strive to streamline the related accounting processes. As we have accomplished in other accounting processes (Accounts Payable, Payroll, Budgeting, Recreation), it is our goal to reduce, and possibly eliminate, manual processes and the use of “shadow systems” in capital asset accounting.
Attachment G Agenda Report Page 154
City of Piedmont
Status of Prior Year Findings
June 30, 2021
Capital Assets
Business-Type Capital Assets. Upon receipt of the trial balance to be audited, we noted that capital asset balance sheet accounts had not changed from the prior year. Capital asset acquisitions were being recorded as expenses and current year depreciation expense and related accumulated depreciation for all business-type capital assets had not been recorded. We recommend the City properly record capital asset acquisitions as additions to the capital asset balance sheet accounts and properly record depreciation expense and accumulated depreciation in the proprietary funds.
Status: Partially implemented
Governmental Capital Assets. During review of the City’s governmental capital asset schedule, we noted that additions to construction in progress were incomplete. Additionally, we noted the City did not capitalize the full amount of expenditures incurred for various projects and was unable to provide the basis for the amounts capitalized versus expensed. We recommend the City ensure that all additions to capital assets are identified and properly recorded prior to providing the schedule for audit. Further, all capital asset additions should be properly supported by invoices and/or a documented basis supporting the calculation of the cost.
Status: Implemented
Preparation and Review of Time Cards (Repeat Finding)
During our review of the payroll process, we noted out of 40 time cards tested, 3 were not signed by the employee, 1 was not approved by the supervisor, and 1 was not signed by either party. We recommend that management remind staff of the established process, which states that time cards must be completed and signed by every employee.
Status: Implemented
Revenues
During our testing of ten items recorded as miscellaneous revenue, we noted two items were incorrectly recorded as miscellaneous revenue. We recommend that management review the accounts and ensure amounts are recorded in the proper account.
Status: Implemented
Fund Balance Reconciliation (Repeat Finding)
Upon starting the audit, we identified that beginning fund balances for several funds did not agree to the prior year audit report. Beginning with incorrect fund balances could mislead any financial statement analysis that is performed during the year. We recommend that management perform a reconciliation of fund balance accounts once the audit is complete and trial balance is finalized to ensure that fund balances are recorded correctly.
Status: Implemented
Attachment G Agenda Report Page 155
March 7, 2022
To the City Council
City of Piedmont
120 Vista Avenue
Piedmont, California 94611
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Piedmont (the City for the year ended June 30, 2021.
Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards (and, if applicable, Government Auditing Standards and the Uniform Guidance), as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 22, 2021. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. As described in Note 1 to the financial statements, the City adopted Statement of Governmental Accounting Standards (GASB Statement) No. 84, Fiduciary Activities, in 2021. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the Statement of Changes in Fiduciary Net Position. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
Depreciation – based on the City’s capitalization policy Workers’ compensation and general liability claims – based on known claim information and loss history Net pension liability, net pension asset (closed plan), net other post-employment benefits (OPEB) liability – based on actuarial valuations
We evaluated the key factors and assumptions used to develop the estimates in determining that they are reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The material misstatements in Attachment A were detected as a result of audit procedures and corrected by management.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report.
We are pleased to report that no such disagreements arose during the course of our audit.
Attachment H Agenda Report Page 156
Management Representations
We have requested certain representations from management that are included in the management representation letter dated March 7, 2022.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, VLPLODUWR REWDLQLQJ D ³VHFRQG RSLQLRQ´ RQ FHUWDLQ VLWXDWLRQV,ID FRQVXOWDWLRQLQYROYHV DSSOLFDWLRQRI DQ DFFRXQWLQJ principle to the City¶VILQDQFLDOVWDWHPHQWVRUDGHWHUPLQDWLRQRIWKHW\SHRIDXGLWRU¶VRSLQLRQWKDWPD\EHH[SUHVVHG on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City¶V DXGLWRUV +RZHYHU WKHVH GLVFXVVLRQV RFFXUUHG LQ WKH normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
:H DSSOLHG FHUWDLQ OLPLWHG SURFHGXUHV WR PDQDJHPHQW¶V GLVFXVVion and analysis; the budgetary comparison schedules for the general fund and major special revenue funds; and the required GASB pension and OPEB schedules, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing WKH LQIRUPDWLRQIRU FRQVLVWHQF\ ZLWKPDQDJHPHQW¶V UHVSRQVHVWR RXU LQTXLULHVWKH EDVLFILQDQFLDO VWDWHPHQWV DQG other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the non-major funds combining financial statements and budgetary comparison schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
Restriction on Use
This information is intended solely for the information and use of the City Council and management of the City of Piedmont and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Mann, Urrutia, Nelson CPAs & Associates LLP
Mann Muntia NelsonCPA's
Attachment H Agenda Report Page 157
Description
Assets &
Deferred
Outflows
Liabilities &
Deferred
Inflows
Equity/Amt to
be Provided Revenue Expense
Current Year Differences
To correct capital assets $ (328,609) $ - $ (172,295) $ - $ 156,314 To correct due to bondholder per
implementation of GASB 84 - (380,706) 348,080 376,182 343,556 To adjust net OPEB liability 1,030,597 (790,566) - - (1,821,163) To correct capital asset transfers - - (903,171) - (903,171) Total Income Statement Effect $ 376,182 $(2,224,464)
Balance Sheet Effect $ 701,988 $ (1,171,272) $ (727,386) Effect - Increase (Decrease)
Attachment A
CITY OF PIEDMONT
SUMMARY OF AUDIT ADJUSTMENTS
June 30, 2021
Attachment H Agenda Report Page 158