City of Piedmont
COUNCIL AGENDA REPORT
DATE: March 18, 2024
TO: Mayor and Council
FROM: Rosanna Bayon Moore, City Administrator
SUBJECT: Consideration of the Acceptance of the 2022-2023 Audited Financial Statements
RECOMMENDATION
Review and accept the City’s independent auditor’s reports for 2022-2023:
a) Annual Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023
b) Measure B Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023
c) Measure BB Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023
d) Measure F Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023
BACKGROUND
The City’s independent auditor, Mann-Urrutia-Nelson CPAs & Associates, LLP (MUN), who has been our auditor since 2015, has completed the audit of the City’s financial statements and provided auditor’s reports for the fiscal year ended June 30, 2023. 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 Vice Mayor Betsy Andersen and Councilmember Conna McCarthy, met with the audit partner and City staff on March 6, 2024 to discuss the auditor’s financial report and report on internal controls.
The Annual Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023 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 18, 2024 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, 2023. 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 4 of the report.
By: Michael Szczech, Finance Director
ATTACHMENTS
A. Annual Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023
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, 2023
D. Measure BB Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023
E. Measure F Program Financial Statements and Independent Auditor’s Report for the Year Ended June 30, 2023
F. Appropriations Limit Calculation as of June 30, 2024 G. Letter Communicating with Those Charged with Governance Agenda Report Page 2
________________________________________________________________________________________ City of Piedmont
Financial Statements
and
Independent Auditor's Report
For the Year Ended
June 30, 2023
________________________________________________________________________________________ Attachment A Agenda Report Page 3
CITY OF PIEDMONT
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2023
TABLE OF CONTENTS
Page
FINANCIAL SECTION:
Independent Auditor's Report 1 - 3
Management's Discussion and Analysis 4 - 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 - 66
Required Supplemental Information
Budgetary Comparison Schedule - General Fund 67
Notes to Required Supplementary Information 68
Schedule of the City's Proportionate Share of the Net Pension Liability 69 Schedule of Pension Contributions 70
Schedule of Funding Progress for Police and Fire Pension (Closed) Plan 71 - 73 Schedule of Changes in the City's Net OPEB Liability and Related Ratios 74 - 75 Schedule of OPEB Contributions 76 - 77
Attachment A Agenda Report Page 4
CITY OF PIEDMONT
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2023
TABLE OF CONTENTS
Page
Combining Financial Statements, Schedules and Other Supplementary Information Budgetary Comparison Schedule - Facilities Capital Fund 80 Non-Major Governmental Funds:
Description of Non-major Funds 81
Combining Balance Sheets 82 - 84
Combining Statements of Revenues, Expenditures, and Changes in Fund Balances 85 - 87 Budgetary Comparison Schedules:
Streets Projects Fund 88
Schoolmates Program Fund 89
Projects and Services Fund 90
Measure D Fund 91
Abandoned Vehicle Fund 92
Measure B Sales Tax Fund 93
Measure BB Sales Tax Fund 94
COPS 95
Measure F Fund 96
Athletic Facility Preservation Fund 97
Capital Improvement Fund 98
Sidewalk Repair Fund 99
Equipment Replacement Fund 100
Facilities Maintenance Funds 101
Internal Service Funds
Description of Internal Service Funds 102
Combining Statement of Net Position 103
Combining Statement of Revenues, Expenses, and Changes in Net Position 104 Combining Statement of Cash Flows 105
General Fund
Description of General Fund 106
Combining Balance Sheet 107
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance 108 Attachment A Agenda Report Page 5
CITY OF PIEDMONT
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2023
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 109
Attachment A Agenda Report Page 6
INDEPENDENT AUDITOR'S REPORT
To the City Council of
the City of Piedmont
Piedmont, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Piedmont (the City) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Piedmont, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Change in Accounting Principle
As described in Note 1 to the financial statements, in 2023, the City adopted new accounting guidance, GASB Statement No. 96, Subscription-Based Information Technology Arrangements. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
U
MUN CPAs, LLP 1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE•ROSEVILLE•SACRAMENTO•ZEPHYR COVE•KAUAI
Attachment A Agenda Report Page 7
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions.
Reasonable assurance is a high level of assurance, but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the budgetary comparison information for the General Fund, pension related schedules and OPEB related schedules as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements and budgetary comparison schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and the budgetary comparison schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Attachment A Agenda Report Page 8
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Sacramento, California
February 28, 2024
MUN CPAsLLP
Attachment A Agenda Report Page 9
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2023
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, 2023. 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, 2023, the City's government-wide net position amounted to a positive balance of $64,275,409. This represents an increase of $10,768,016 from the June 30, 2022 balance of $53,507,393. Governmental activities of $49,748,278 accounts for 77% of total net position. Business-type activities of $14,527,131 accounts for 23% 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 $19,494,028 in Deferred Outflows of Resources, $4,457,038 includes contribution payments made to CalPERS during fiscal year 2022-23, as well as changes in the net pension liability totaling $14,063,811 and changes in the net pension asset - police & fire totaling $211,706. As allowed by GASB No. 68, the CalPERS measurement date is June 30, 2022 and contributions subsequent to the measurement date are reflected as a deferred outflow. The remaining $761,473 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 $6,594,482. The deferred Inflows include deferrals due to changes in the net pension liability and net OPEB liability and deferrals related to leases. Notes 3, 8, 9 and 10 discuss the impacts of these changes to net position.
Net position increased by $10,768,016 due to the following factors:
Net investment in capital assets increased $3,287,347 to $47,253,646 due to the following:
Governmental activities increased by $1,844,016 due primarily to the capital improvement of streets and sidewalks, which were greater than annual depreciation. Business-type activities increased $1,443,331 due primarily to additions to the aquatics construction in progress and the purchase of sewer related heavy equipment, offset by depreciation.
Unrestricted net position increased by $6,807,611 to $8,815,217 due to the following:
Increase in net pension liability net of deferred outflow/inflow - $1,040,967. Increase in other post employment benefits liability net of deferred outflow/inflow - $1,886,709. Increase in Police and Fire Pension Asset net of deferred outflow - $865,795 Total revenues from governmental activities increased $964,486 to $29,335,207 primarily due to an increase in property taxes.
As of June 30, 2023, capital assets, net of depreciation, amount to $57,939,732 and are reported in the Statement of Net Position.
Fund level
Governmental fund balances increased $1,507,289 to $31,408,297. Of this amount, the unassigned fund balance was $7,381,031, an increase of $17,542 from the prior year. Enterprise fund net position increased $3,566,660 to $14,527,131. Of this amount, net investment in capital assets totaled $13,289,532, an increase of $1,443,331 from the prior year. 4 Attachment A Agenda Report Page 10
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2023
Fiduciary funds
The trust funds net position increased $2,620,850 to $28,218,242. The trust funds represent the police and fire pension plan and OPEB for $16,133,211 and $12,085,031, respectively.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is 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 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.
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. 5 Attachment A Agenda Report Page 11
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2023
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 the Facilities Capital fund as a major fund. Data for this fund is 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 - 66 of this report.
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 67 - 76 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 81 - 108 of this report. 6 Attachment A Agenda Report Page 12
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2023
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 $64,275,409 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.
Statement of Net Position
As of June 30, 2023 and 2022
(in thousands)
Governmental Activities Business-Type Activities Total Government 2023 2022
Net
Change 2023 2022
Net
Change 2023 2022
Net
Change
ASSETS
Current and other
assets $ 40,499 $ 38,819 $ 1,680 $ 24,310 $ 25,650 $ (1,340) $ 64,809 $ 64,469 $ 340 Noncurrent assets 49,370 45,561 3,809 23,456 18,947 4,509 72,826 64,508 8,318 Total Assets 89,869 84,380 5,489 47,766 44,597 3,169 137,635 128,977 8,658 Deferred Outflows of
Resources 18,781 10,249 8,532 713 529 184 19,494 10,778 8,716
LIABILITIES
Long-term liabilities 44,958 25,962 18,996 31,075 31,720 (645) 76,033 57,682 18,351 Other liabilities 7,703 7,368 335 2,523 1,668 855 10,226 9,036 1,190 Total Liabilities 52,661 33,330 19,331 33,598 33,388 210 86,259 66,718 19,541 Deferred Inflows of
Resources 6,241 18,752 (12,511) 353 778 (425) 6,594 19,530 (12,936)
NET POSITION
Net investment in
capital assets 33,964 32,120 1,844 13,290 11,846 1,444 47,254 43,967 3,287 Restricted 8,206 7,534 672 - - - 8,206 7,534 672
Unrestricted 7,578 2,893 4,685 1,238 (886) 2,124 8,816 2,007 6,809 Total Net Position $ 49,748 $ 42,547 $ 7,201 $ 14,528 $ 10,960 $ 3,568 $ 64,276 $ 53,508 $ 10,768 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, 2023
Changes in Net Position
For the Years Ended June 30, 2023 and 2022
(in thousands)
Governmental Activities Business-Type Activities
2023 2022 Net Change 2023 2022 Net Change
REVENUES:
Program revenues
Charges for services $ 7,820 $ 6,963 $ 857 $ 2,958 $ 2,801 $ 157 Operating grants and
contributions 3,709 2,887 822 - - -
General revenues
Taxes and fees 29,276 28,913 363 1,349 - 1,349
Investment earnings 810 (930) 1,740 559 (502) 1,061
Other revenue 485 388 97 - - -
Transfers (1,235) - (1,235) 1,235 - 1,235
Total Revenues 40,865 38,221 2,644 6,101 2,299 3,802
EXPENSES:
Administration 3,773 3,359 414 - - -
Public works 6,072 5,546 526 - - -
Street improvement 1,193 678 515 - - -
Safety: police 6,947 6,376 571 - - -
Safety: fire 6,955 6,175 780 - - -
Recreation 5,232 4,880 352 - - -
NonDepartmental 3,488 3,193 295 - - -
Interest 4 - 4 - - -
Sewer - - - 1,647 1,837 (190)
Aquatics - - - 886 925 (39)
Total Expenses 33,664 30,207 3,457 2,533 2,762 (229)
Change in net position 7,201 8,014 (813) 3,568 (463) 4,031 Net position - beginning 42,547 34,533 8,014 10,960 11,423 (463) Net position - ending $ 49,748 $ 42,547 $ 7,201 $ 14,528 $ 10,960 $ 3,568 Governmental Activities. On a full accrual basis, governmental activities increased the City of Piedmont's net position by $7,201,356 primarily due to increased interest and investment earnings.
Business-type Activities. Business-type activities increased the City of Piedmont's net position due to transfers from governmental funds.
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, 2023
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $31,408,297, an increase of $1,507,289 compared with the prior year. A total of $7,381,031, approximately 24%, 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 $11,779,502 and $7,381,031, 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 36% and 23% of total General Fund expenditures, respectively. During the current fiscal year, the fund balance of the City's general fund increased by $302,973.
General Fund revenues totaled $36,736,594, an increase of $1,771,723 from the prior year. The primary reasons for this change are:
Property tax revenues increased $1,304,969 to $17,528,512 due to the standard maximum 2% annual assessment increase and supplemental receipts for the increase in the assessed annual valuation of homes sold. Use of money and property increased $1,218,623 due to higher interest income and unrealized gains on fixed income investments as interest rates rose to 20 year highs. Service charge revenue increased $449,793 from the prior year primarily due to higher recreational related receipts as camp and program offerings were increased due to community demand.
Offset by:
Real Property Transfer Tax revenue decreased by $1,516,259. The number of homes sold dropped 27% to 111 from 152 due to the weakening real estate market.
Due to the volatile nature of the real estate market, this category is budgeted conservatively each year. 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 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
2021-22 152 $3,090,3 $5,981,156
2022-23 111 $3,097,797 $4,464,897
9 Attachment A Agenda Report Page 15
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2023
General fund expenditures totaled $32,655,593, an increase of $1,624,032 from the prior year. The increase is due primarily to the following:
Administration expenses increased $218,873 primarily due to:
$310,000 increase in compensated related expenses due to the addition of a Communications Manager position, higher health benefit and retirement costs, and annual cost of living salary increases required by collective bargaining agreements. $108,000 increase in information technology related costs primarily due to the implementation of system upgrades.
Offset by:
$231,000 decrease in legal expenses primarily related to human resource issues. Public Works expenses increased $138,346 primarily due to:
Park and City maintenance costs increased by $196,000 due to increased clean-up necessitated by a heavy storm season.
$77,000 was expended to perform a City-wide tree inventory to aid in future maintenance scheduling. $59,000 increase in compensation costs due to annual cost of living salary increases required by collective bargaining agreements.
Offset by:
$215,000 decrease in Planning and Building department expenses. Permit processing work previously performed by third party consultants was shifted to internal resources. Police expenses increased $198,309 primarily due to:
$129,000 increase in personnel related expenses due to salary increases and pension related costs. Other operating costs increased $47,000.
Fire expenses increased $343,570 primarily due to:
$236,000 increase personnel related costs, primarily pension costs. $93,000 increase in operating costs due to the rollout of the Emergency Preparedness training program.
Recreation expenses increased $430,488 as personnel and third party contractor costs increased due to an expanded offering of recreation programs and camps. This increase was more than offset by the revenue generated from the increased activity.
Non-Departmental expenses increased $294,446 primarily due to:
$324,000 increase in insurance expense due to a rise in the required actuarial determined claim liability reserve.
$187,000 increase in Workers' Compensation and General Liability premiums and claim payments. Offset by:
$153,000 decline in funds transferred from the General Fund to Capital Funds.
Facilities Capital Fund
The Facilities Capital Fund is used to provide funding for the City's facilities, primarily its buildings and parks. The Facilities Capital Fund was established in FY 2022/23 and had an ending fund balance $10,797,969. The City Council authorized transfers from the General Fund and Facilities Maintenance to Facilities Capital Fund for $11,828,367 to fund necessary future capital.
The Facilities Maintenance Fund expenditures totaled $1,203,308 and included approximately $602,000 for the repair and/or replacement of sidewalks, $122,000 to resurface tennis courts, and the remainder for various repairs, maintenance and improvements to the City's parks and municipal buildings, primarily the Community Hall and City Hall.
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, 2023
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 $1,379,349 to $13,521,041. This total increase offsets the net capital improvements of the sewer system which increased $368,541 to $16,986,863. The unrestricted net position of the Sewer Fund increased $1,040,005 to $1,335,496.
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 increased $2,187,311 to $1,006,090. Construction began on the new Community Pool in January 2023 and is scheduled to open in Fall 2024. The old pool, which was reaching end of life, closed on March 16, 2020 due to COVID-19 County health orders.
Internal Service Fund
The Internal Service Funds' net position amounted to $1,010,586, which did not change from the prior year balance.
GENERAL FUND BUDGETARY HIGHLIGHTS
The General Fund's original budget of $33,880,753 increased $543,692 to the final amended budget of $34,424,445.
The additional appropriations consisted primarily of public safety personnel costs, workers' compensation and general liability insurance related expenses, and planning and building consulting services.
The General Fund's actual expenditures of $32,655,593 was less than the final amended budget of $34,424,445.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City's total capital assets for its governmental and business-type activities as of June 30, 2023 amount to $57,939,732 (net of accumulated depreciation/amortization). Capital assets include land, construction-in-progress, SBITA work-in-progress, buildings, equipment, infrastructure, and ROU subscription assets. 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 $6,872,854 from $51,066,878 to $57,939,732.
CAPITAL ASSETS (NET OF DEPRECIATION) (in thousands)
Governmental Activities Business-type Activities Total
2023 2022 2023 2022 2023 2022
Land $ 5,683 $ 5,683 $ - $ - $ 5,683 $ 5,683
Construction in progress 164 485 6,469 1,591 6,633 2,076 SBITA work in progress 353 - - - 353 -
Buildings & improvements 2,970 2,733 - - 2,970 2,733
Vehicles 1,827 1,786 797 1,010 2,624 2,796
Property and equipment 1,565 1,308 - - 1,565 1,308
Infrastructure 21,340 20,125 16,190 16,346 37,530 36,471 ROU subscription asset 583 - - - 583 -
Total $ 34,485 $ 32,120 $ 23,456 $ 18,947 $ 57,941 $ 51,067 Additional information on the City of Piedmont's capital assets can be found in Note 5 on pages 46 - 47 of this report. 11 Attachment A Agenda Report Page 17
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2023
Long-term Debt
At the end of the current fiscal year, the City had total long-term outstanding debt of $30,298,451, a decrease of $380,928 from the prior fiscal year. The City has subscription liabilities, 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 and the 2021 general obligation bond.
At June 30, 2023, the City’s governmental and business-type activities had total long-term debts and obligations as scheduled below.
Type of Indebtedness
Outstanding
June 30, 2023
Outstanding
June 30, 2022
Governmental Activities
Subscription (SBITA) liability $ 519,550 $ -
Business-type Activities
Sewer Loan - Phase I - 140,959
Sewer Loan - Phase II 138,322 273,270
Sewer Loan - Phase III 311,303 461,284
Sewer Loan - Phase IV 910,811 1,007,069
Sewer Loan - Phase V 3,440,882 3,626,621
2021 General Obligation Bonds 24,977,583 25,170,176
Total Business-type Activities 29,778,901 30,679,379
Total Outstanding Debt $ 30,298,451 $ 30,679,379
Additional information about the City’s long-term debt can be found in Note 6 on pages 47 - 51 of this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
General Fund
Approximately 67 percent of the City’s general revenue sources are property related. The largest portion is property tax revenue, which accounts for approximately 72% 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 5.2%. There has not been a year of negative growth over this time frame. In FY 2023-24 property tax revenue is projected to increase 4.2% over FY 2022-23 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. In March 2024, Piedmont residents will vote on Measure F. If passed, the measure would increase the parcel tax by 20% and extend its term by 12 years, through June 2037. It would allow for an annual tax increase of the lower of the Consumer Price Index or 4%.
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 had been remarkably healthy throughout the COVID-19 pandemic, generating record Transfer Tax receipts, $6.3 million in FY 2020-21 and $6.0 million in FY 2021-22. These receipts represented approximately 17% of General Fund revenues in each of the years. In comparison, the next highest level of receipts was $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 dealing with higher inflation and interest rates. This has caused an increase in mortgage rates which has adversely affected the real estate market. This has had a detrimental impact on our transfer tax receipts as they have eased. In FY 2022/23, tax receipts were $4.5 million, 25% lower than the prior year, and 12% of General Fund revenue. Given this, it is prudent to continue treating this revenue source in a conservative manner. We have budgeted $3.4 million for FY 2023-24, which is 30% below the average of the past 5 years. 12 Attachment A Agenda Report Page 18
CITY OF PIEDMONT
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2023
The City’s salary and benefit costs represent approximately 63% 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.
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 $5.2 million compared to $4.8 million actual last year, an increase of $0.4 million or 8%.
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 long-term health of the City, especially when considering an expanded definition of "facilities maintenance" to include such critical civic infrastructure as our streets, sidewalks, storm drains and parks. In FY 2022-23, revenues in excess of the budgeted amount were transferred to the Facilities Capital and Equipment Replacement 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 began design work on Phase IV in FY 2022-23.
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, 2023
Governmental
Activities
Business-Type
Activities Total
ASSETS
Cash and investments (Note 2) $ 32,090,146 $ 5,248,514 $ 37,338,660 Restricted cash and investments (Note 2) 4,316,293 19,612,365 23,928,658 Accounts receivable 2,637,772 162,650 2,800,422
Interest receivable 192,059 79,043 271,102
Leases receivable (Note 3) 380,353 - 380,353
Prepaid expenses 82,178 7,761 89,939
Internal balances 800,000 (800,000) -
Capital assets (Note 5):
Land and construction in progress 6,199,771 6,469,205 12,668,976 Depreciable, net of accumulated depreciation 28,283,893 16,986,863 45,270,756 Total capital assets 34,483,664 23,456,068 57,939,732
Net pension asset (Note 9) 14,886,464 - 14,886,464
Total Assets 89,868,929 47,766,401 137,635,330
DEFERRED OUTFLOWS OF RESOURCES
2023 pension contributions (Note 8) 4,304,898 152,140 4,457,038 Changes in the net pension liability (Note 8) 13,554,918 508,893 14,063,811 Changes in the net pension asset - police & fire (Note 9) 211,706 - 211,706 Changes in the net OPEB liability (Note 10) 709,644 51,829 761,473 Total Deferred Outflows of Resources 18,781,166 712,862 19,494,028
LIABILITIES
Accounts payable 1,487,736 1,008,289 2,496,025
Accrued wages and benefits 595,227 - 595,227
Accrued interest payable - 388,108 388,108
Deposit payable 626,448 - 626,448
Unearned revenue 3,596,919 - 3,596,919
Compensated absences (Note 6):
Due within one year 793,428 51,163 844,591
Due in more than one year 247,652 15,970 263,622
Claims payable (Note 12):
Due within one year 451,152 - 451,152
Due in more than one year 952,625 - 952,625
Net OPEB liability (Note 10):
Due in more than one year 7,459,014 741,659 8,200,673
Long-term liabilities (Note 6):
Due within one year 151,649 1,075,762 1,227,411
Due in more than one year 367,901 28,703,139 29,071,040 Net pension liability (Note 8):
Due in more than one year 35,931,032 1,614,594 37,545,626 Total Liabilities 52,660,783 33,598,684 86,259,467
DEFERRED INFLOWS OF RESOURCES
Leases (Note 3) 369,811 - 369,811
Changes in the net pension liability (Note 8) 2,897,697 176,891 3,074,588 Changes in the net OPEB liability (Note 10) 2,973,526 176,557 3,150,083 Total Deferred Inflows of Resources 6,241,034 353,448 6,594,482
NET POSITION
Net investment in capital assets 33,964,114 13,289,532 47,253,646 Restricted for:
Community development 1,716,811 - 1,716,811
Public safety 550,881 - 550,881
Recreation 1,216,362 - 1,216,362
Street improvement 406,199 - 406,199
Section 115 pension trust 4,316,293 - 4,316,293
Unrestricted 7,577,618 1,237,599 8,815,217
Total Net Position $ 49,748,278 $ 14,527,131 $ 64,275,409 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, 2023
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 $ 3,773,052 $ 1,203,924 $ 379,593 $ - $ (2,189,535) $ - $ (2,189,535) Public works 6,070,928 1,149,622 2,010,289 - (2,911,017) - (2,911,017) Street improvement 1,193,305 - - - (1,193,305) - (1,193,305) Public safety: police services 6,947,342 274,958 121,540 - (6,550,844) - (6,550,844) Public safety: fire services 6,955,397 368,216 - - (6,587,181) - (6,587,181) Recreation 5,231,966 4,823,611 1,197,880 - 789,525 - 789,525 Nondepartmental 3,487,860 - - - (3,487,860) - (3,487,860) Debt interest 3,634 - - - (3,634) - (3,634)
Total governmental activities 33,663,484 7,820,331 3,709,302 - (22,133,851) - (22,133,851) Business-type activities:
Sewer 1,647,090 2,957,417 - - - 1,310,327 1,310,327
Aquatic 886,154 - - - - (886,154) (886,154)
Total business-type activities 2,533,244 2,957,417 - - - 424,173 424,173 Total primary government $ 36,196,728 $ 10,777,748 $ 3,709,302 $ - (22,133,851) 424,173 (21,709,678) General revenues:
Taxes:
Property tax 17,528,512 1,348,453 18,876,965
Sales tax 227,099 - 227,099
Franchise tax 591,006 - 591,006
Utility users tax 1,534,144 - 1,534,144
Real property transfer tax 4,464,897 - 4,464,897
Business license and rental tax 745,047 - 745,047
Parcel tax 2,520,255 - 2,520,255
Paramedic tax 69,502 - 69,502
Motor vehicle license fee 1,595,239 - 1,595,239
Investment earnings 809,956 559,007 1,368,963
Other revenues 484,577 - 484,577
Transfers (1,235,027) 1,235,027 -
Total general revenues 29,335,207 3,142,487 32,477,694
Change in net position 7,201,356 3,566,660 10,768,016
Net position - July 1, 2022 42,546,922 10,960,471 53,507,393 Net position - June 30, 2023 $ 49,748,278 $ 14,527,131 $ 64,275,409 15 Attachment A Agenda Report Page 21
CITY OF PIEDMONT
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2023
General
Fund Facilities Capital
Other
Governmental
Funds
Total
Governmental
Funds
ASSETS
Cash and investments $ 10,663,570 $ 10,870,218 $ 8,103,209 $ 29,636,997 Restricted cash and investments 4,316,293 - - 4,316,293 Receivables:
Accounts 2,291,194 - 345,171 2,636,365
Interest 94,256 59,131 38,672 192,059
Leases 380,353 - - 380,353
Prepaid expenses 82,178 - - 82,178
Advances to other funds - - 800,000 800,000
Total Assets $ 17,827,844 $ 10,929,349 $ 9,287,052 $ 38,044,245
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
LIABILITIES
Accounts payable $ 912,906 $ 131,380 $ 403,257 $ 1,447,543 Accrued wages and benefits 581,582 - 13,645 595,227
Deposits payable 626,448 - - 626,448
Unearned revenue 3,557,595 - 39,324 3,596,919
Total Liabilities 5,678,531 131,380 456,226 6,266,137
DEFERRED INFLOWS OF
RESOURCES
Leases 369,811 - - 369,811
Total Deferred Inflows of
Resources 369,811 - - 369,811
FUND BALANCES
Nonspendable 82,178 - 800,000 882,178
Restricted 4,316,293 - 4,629,434 8,945,727
Assigned - 10,797,969 3,401,392 14,199,361
Unassigned 7,381,031 - - 7,381,031
Total Fund Balances 11,779,502 10,797,969 8,830,826 31,408,297 Total Liabilities, Deferred Inflows
of Resources, and Fund
Balances $ 17,827,844 $ 10,929,349 $ 9,287,052 $ 38,044,245 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, 2023
Total fund balances of governmental funds $ 31,408,297
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 $40,910,498. 34,483,664
Net pension asset related to the police and fire pension plan is not a current financial resource and therefore not reported in the funds. 14,886,464 Deferred outflows related to the 2023 pension contributions were made subsequent to the measurement date. 4,304,898
Deferred outflows related to changes in the net pension liability and net pension asset are not reported in the governmental funds. 13,766,624
Deferred outflows related to changes in the net OPEB liability are not reported in the governmental funds. 709,644
Long-term liabilities are not due in the current period and, therefore are not reported in the governmental funds.
Compensated absences (1,041,080)
Long-term liabilities net of premiums and discounts (519,550) Net pension liability (35,931,032)
Net OPEB liability (7,459,014)
Deferred inflows related to changes in the net pension liability and asset (2,897,697) Deferred inflows related to changes in the net OPEB liability (2,973,526) 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 2,453,149
Accounts receivable 1,407
Accounts payable (40,193)
Claims payable (1,403,777)
Net position of governmental activities $ 49,748,278
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, 2023
General
Fund Facilities Capital
Other
Governmental
Funds
Total
Governmental
Funds
REVENUES
Property tax $ 17,528,512 $ - $ - $ 17,528,512
Sales tax 227,099 - - 227,099
Franchise tax 591,006 - - 591,006
Utility users tax 1,534,144 - - 1,534,144
Real property transfer tax 4,464,897 - - 4,464,897
Business license and rental tax 745,047 - - 745,047
Gas tax - - 557,012 557,012
Licenses and permits 695,359 - - 695,359
Intergovernmental 2,251,390 - 1,500,158 3,751,548
Use of money and property 1,103,888 245,472 120,598 1,469,958 Current service charges 4,630,018 - 1,626,157 6,256,175 Parcel tax 2,520,255 - - 2,520,255
Contributions and donations 33,804 - 1,240,259 1,274,063 Other revenues 411,175 - 73,617 484,792
Total Revenues 36,736,594 245,472 5,117,801 42,099,867
EXPENDITURES
Current:
Administration 3,708,119 86,920 93,575 3,888,614
Public works 5,922,989 4,472 103,944 6,031,405
Street improvement - - 670,941 670,941
Public safety:
Police services 7,513,278 - 242,082 7,755,360
Fire services 8,042,616 - 12,819 8,055,435
Recreation 3,726,775 9,313 1,380,296 5,116,384
Nondepartmental 3,487,860 - - 3,487,860
Capital outlay - 1,102,603 2,994,993 4,097,596
Debt service - principal 250,322 - - 250,322
Debt service - interest 3,634 - - 3,634
Total Expenditures 32,655,593 1,203,308 5,498,650 39,357,551 Excess (Deficiency) of Revenues
over Expenditures 4,081,001 (957,836) (380,849) 2,742,316
OTHER FINANCING SOURCES (USES)
Transfers in 29,041 11,828,367 2,106,544 13,963,952
Transfers out (3,807,069) (72,562) (11,319,348) (15,198,979) Total Other Financing Sources
(Uses) (3,778,028) 11,755,805 (9,212,804) (1,235,027)
Net Change in Fund Balances 302,973 10,797,969 (9,593,653) 1,507,289 Fund Balances - July 1, 2022 11,476,529 - 18,424,479 29,901,008 Fund Balances - June 30, 2023 $ 11,779,502 $ 10,797,969 $ 8,830,826 $ 31,408,297 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, 2023
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 $ 1,507,289 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 4,154,943
Depreciation expense (2,503,901)
Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.
Debt principal payments 250,322
Implementation of SBITA (57,348)
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. (52,550)
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 2,156,103 Other postemployment benefits 1,746,498
Change in net position of governmental activities $ 7,201,356 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, 2023
Business-Type Activities
Governmental
Activities
Sewer Fund Aquatic Fund Total
Internal Service
Funds
ASSETS
Current Assets
Cash and investments $ 4,024,165 $ 1,224,349 $ 5,248,514 $ 2,453,149 Receivables:
Accounts, net 149,634 13,016 162,650 1,407
Interest 31,479 47,564 79,043 -
Prepaid expenses 7,761 - 7,761 -
Total Current Assets 4,213,039 1,284,929 5,497,968 2,454,556 Non Current Assets
Restricted cash and investments - 19,612,365 19,612,365 - Capital assets, nondepreciable - 6,469,205 6,469,205 -
Capital assets, net 16,986,863 - 16,986,863 -
Total Non-Current Assets 16,986,863 26,081,570 43,068,433 - Total Assets 21,199,902 27,366,499 48,566,401 2,454,556
DEFERRED OUTFLOWS OF RESOURCES
Changes in the net pension liability 648,834 12,199 661,033 - Changes in the net OPEB liability 44,438 7,391 51,829 - Total Deferred Outflows of Resources 693,272 19,590 712,862 -
LIABILITIES
Current Liabilities
Accounts payable 131,591 876,698 1,008,289 40,193
Interest payable 63,108 325,000 388,108 -
Long-term liabilities - current 578,169 497,593 1,075,762 - Compensated absences - current 51,163 - 51,163 -
Claims payable - current - - - 451,152
Total Current Liabilities 824,031 1,699,291 2,523,322 491,345 Non-Current Liabilities
Advances from other funds 800,000 - 800,000 -
Long-term liabilities - noncurrent 4,223,149 24,479,990 28,703,139 - Compensated absences - noncurrent 15,970 - 15,970 -
Claims payable - noncurrent - - - 952,625
Net pension liability 1,538,660 75,934 1,614,594 -
Net OPEB liability 679,815 61,844 741,659 -
Total Non-Current Liabilities 7,257,594 24,617,768 31,875,362 952,625 Total Liabilities 8,081,625 26,317,059 34,398,684 1,443,970
DEFERRED INFLOWS OF RESOURCES
Changes in the net pension liability 171,230 5,661 176,891 - Changes in the net OPEB liability 119,278 57,279 176,557 - Total Deferred Inflows of Resources 290,508 62,940 353,448 -
NET POSITION
Net investment in capital assets 12,185,545 1,103,987 13,289,532 - Unrestricted 1,335,496 (97,897) 1,237,599 1,010,586
Total Net Position $ 13,521,041 $ 1,006,090 $ 14,527,131 $ 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, 2023
Business-Type Activities
Governmental
Activities
Sewer Fund Aquatic Fund Total
Internal
Service Funds
OPERATING REVENUES
Charges for services $ 2,957,417 $ - $ 2,957,417 $ -
Total Operating Revenue 2,957,417 - 2,957,417 -
OPERATING EXPENSES
Contract and professional services 222,954 1,730 224,684 - Services and supplies 36,906 17,407 54,313 -
Salaries and benefits 624,114 3,361 627,475 -
Insurance and claims expense - - - 2,486,028
Depreciation 670,657 - 670,657 -
Total Operating Expenses 1,554,631 22,498 1,577,129 2,486,028 Operating Income (Loss) 1,402,786 (22,498) 1,380,288 (2,486,028)
NON-OPERATING REVENUES
(EXPENSES)
Property tax - 1,348,453 1,348,453 -
Interest income 69,022 489,985 559,007 -
Interest expense (92,459) (863,656) (956,115) -
Other income (expense) - - - 2,486,028
Total Non-Operating Revenues
(Expenses) (23,437) 974,782 951,345 2,486,028
Income Before Transfers 1,379,349 952,284 2,331,633 -
TRANSFERS
Transfers in - 1,235,027 1,235,027 -
Total Transfers - 1,235,027 1,235,027 -
Change in net position 1,379,349 2,187,311 3,566,660 -
Net Position - July 1, 2022 12,141,692 (1,181,221) 10,960,471 1,010,586 Net Position - June 30, 2023 $ 13,521,041 $ 1,006,090 $ 14,527,131 $ 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, 2023
Business-Type Activities
Governmental
Activities
Sewer Fund Aquatic Fund Total
Internal
Service Funds
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash received from customers $ 2,950,236 $ (13,016) $ 2,937,220 $ - Claims and premium paid - - - (2,164,310)
Cash paid to suppliers (290,627) 604,776 314,149 -
Cash paid to employees (794,095) (3,459) (797,554) -
Net Cash Provided by (Used for)
Operating Activities 1,865,514 588,301 2,453,815 (2,164,310)
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Other income - - - 2,484,621
Ad valorem tax - 1,348,453 1,348,453 -
Transfers from other funds - 1,235,027 1,235,027 -
Net Cash Provided by Non-Capital
Financing Activities - 2,583,480 2,583,480 2,484,621
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Acquisition of capital assets (302,115) (4,877,830) (5,179,945) - Principal paid on long-term debt (707,885) - (707,885) - Interest paid on long-term debt (101,454) (974,999) (1,076,453) - Net Cash Used for Capital and Related
Financing Activities (1,111,454) (5,852,829) (6,964,283) -
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 46,517 473,519 520,036 -
Net Cash Provided by Investing Activities 46,517 473,519 520,036 - Net Increase (Decrease) in Cash and Cash
Equivalents 800,577 (2,207,529) (1,406,952) 320,311
Cash and Cash Equivalents - July 1, 2022 3,223,588 23,044,243 26,267,831 2,132,838 Cash and Cash Equivalents - June 30, 2023 $ 4,024,165 $ 20,836,714 $ 24,860,879 $ 2,453,149 Reconciliation of Cash and Cash Equivalents
to the Statement of Net Position
Cash and investments $ 4,024,165 $ 1,224,349 $ 5,248,514 $ 2,453,149 Restricted cash and investments - 19,612,365 19,612,365 - Cash and Cash Equivalents - June 30, 2023 $ 4,024,165 $ 20,836,714 $ 24,860,879 $ 2,453,149 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, 2023
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) $ 1,402,786 $ (22,498) $ 1,380,288 $ (2,486,028) Adjustments to reconcile operating income
(loss) to net cash provided by (used for)
operating activities:
Depreciation expense 670,657 - 670,657 -
Pension and OPEB expense (174,601) 22 (174,579) -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (7,181) (13,016) (20,197) -
Prepaid expenses (7,761) - (7,761) -
Increase (decrease) in:
Accounts payable (23,006) 623,913 600,907 19,208
Claims payable - - - 302,510
Accrued wages - (120) (120) -
Compensated absences 4,620 - 4,620 -
Net Cash Provided by (Used for) Operating
Activities $ 1,865,514 $ 588,301 $ 2,453,815 $ (2,164,310) 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, 2023
Custodial Fund
Police and Fire
Pension Plan
Trust OPEB Trust
2017
Undergrounding
Refunding Bond
Fund
ASSETS
Restricted cash (Note 2) $ - $ - $ 386,543
Restricted investments (Note 2) 16,122,006 12,085,031 - Accounts receivable - - 2,740
Interest receivable 11,205 - -
Total Assets 16,133,211 12,085,031 389,283
NET POSITION
Restricted for:
Police and fire pension 16,133,211 - -
OPEB - 12,085,031 -
Individuals, organizations, and other governments - - 389,283 Total Net Position $ 16,133,211 $ 12,085,031 $ 389,283
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, 2023
Custodial Fund
Police and Fire
Pension Plan
Trust OPEB Trust
2017
Undergrounding
Refunding Bond
Fund
ADDITIONS
Assessments $ - $ - $ 352,505
Contributions from employees - 61,100 -
Investment income:
Net increase in fair value of investments 1,255,618 1,192,680 - Interest and dividends 354,623 - -
Net investment income 1,610,241 1,192,680 -
Total Additions 1,610,241 1,253,780 352,505
DEDUCTIONS
Pension benefits paid 146,959 - -
Administrative expenses 96,212 - 12,607
Debt service:
Principal - - 250,860
Interest - - 85,754
Total Deductions 243,171 - 349,221
Change in Fiduciary Net Position 1,367,070 1,253,780 3,284 Fiduciary Net Position - July 1, 2022 14,766,141 10,831,251 385,999 Fiduciary Net Position - June 30, 2023 $ 16,133,211 $ 12,085,031 $ 389,283 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, 2023
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, 2023 was approximately 11,368.
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, 2023, the City's staff was comprised of 83 full-time employees who were responsible for the following City-provided services:
Public Safety - The City employs 27 sworn and 7 non-sworn police personnel to provide round-the-clock police services from a central station, and 18 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 38 full-time and 10 part-time employees.
In addition, the City employs approximately 90 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, 2023
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.
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. 27 Attachment A Agenda Report Page 33
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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.
Facilities Capital Fund - This fund is used to account for the accumulation of resources used for the replacement 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 Plan 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. 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. 28 Attachment A Agenda Report Page 34
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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, 2023
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 Receivable
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. Prepaid Expenses
Payments for services that will benefit periods beyond June 30, 2023 are recorded as prepaid costs in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.
H. 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.
30 Attachment A Agenda Report Page 36
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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.
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. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.
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.
I. 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, 2023. 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.
J. 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, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. 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.
L. 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.
M. 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, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 - June 30, 2023
N. 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 assets 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, the police and fire pension plan, and the OPEB plan. See Notes 8, 9, and 10.
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 assets 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, OPEB plan, and leases. See Notes 8 and 10.
32 Attachment A Agenda Report Page 38
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) O. 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.
P. 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, 2023
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 11.
Q. Leases
Lessor
The City is a lessor for several leases of property and buildings. The City recognizes a lease receivable and a deferred inflow of resources in the financial statements.
At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the lease term.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease terms, and (3) lease receipts. The City uses its incremental borrowing rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable are composed of fixed payments from the lessee.
The City monitors changes in circumstances that would require a remeasurement of its leases, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
R. Subscription-Based Information Technology Arrangements (SBITA) A SBITA is defined as a contractual agreement that conveys control of the right to use another party's (a SBITA vendor's) information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a minimum contractual period of greater than one year, in an exchange or exchange-like transaction.
The City uses various SBITA assets that it contracts through cloud computing arrangements, such as software as a service and platform as a service. The related obligations are presented in amounts equal to the present value of subscription payments, payable during the remaining SBITA term. SBITA assets are reported with other capital assets and SBITA liabilities are reported with long-term debt on the statement of net position.
S. 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.
34 Attachment A Agenda Report Page 40
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) T. 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.
U. 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.
V. Implementation of Governmental Accounting Standards Board Statements Effective July 1, 2022, the City implemented the following accounting and financial reporting standards:
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. There was no impact to the financial statements as a result of this statement.
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. There was no impact to the financial statements as a result of this statement.
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. See Note 17 for additional details.
35 Attachment A Agenda Report Page 41
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) W. Future Governmental Accounting Standards Board Statements These statements are not effective until July 1, 2023 or later. The City has not determined the effects, if any, on the financial statements.
Government Accounting Standards Board Statement No. 99
In April 2022, GASB issued Statement No. 99, Omnibus 2022. The primary objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for guarantees. The City has not determined what impact, if any, this pronouncement will have on the financial statements. The requirements of this statement related to leases, PPPs and SBITAs are effective for the City's fiscal year ending June 30, 2023 and the requirements related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement 53 are effective for the City's fiscal year ending June 30, 2024.
Government Accounting Standards Board Statement No. 100 In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections - An Amendment of GASB Statement No. 62. The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. The requirements of this statement are effective for the City's fiscal year ending June 30, 2024.
Government Accounting Standards Board Statement No. 101 In June 2022, GASB issued Statement No. 101, Compensated Absences. The primary objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences by aligning the recognition and measurement guidance under a unified model and amending certain previously required disclosures. The requirements of this statement are effective for the City's fiscal year ending June 30, 2025.
Government Accounting Standards Board Statement No. 102 In December 2023, GASB issued Statement No. 102, Certain Risk Disclosures. The primary objective of this Statement is to provide users of government financial statements with essential information about risks related to a government's vulnerabilities due to certain concentrations or constraints. A concentration is defined as a lack of diversity related to an aspect of a significant inflow of resources or outflow of resources. A constraint is a limitation imposed on a government by an external party or by formal action of the government's highest level of decisionmaking authority. The requirements of this statement are effective for the City's fiscal year ending June 30, 2025. 36 Attachment A Agenda Report Page 42
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 2: CASH AND INVESTMENTS
Cash and investments as of June 30, 2023 were classified in the accompanying financial statements as follows:
Cash and
Investments
Restricted Cash
and
Investments Total
Governmental activities $ 32,090,146 $ 4,316,293 $ 36,406,439 Business-type activities 5,248,514 19,612,365 24,860,879 Total government-wide cash and investments 37,338,660 23,928,658 61,267,318 Fiduciary activities - 28,593,580 28,593,580
Total cash and investments $ 37,338,660 $ 52,522,238 $ 89,860,898 Cash and investments were carried at fair value as of June 30, 2023 and consisted of the following:
Cash on hand $ 900
Cash in banks 270,575
Total cash 271,475
U.S. agency securities 26,595,359
Certificates of deposit 13,091,302
Local Agency Investment Fund (LAIF) 17,379,432
Held in Trust:
Equity mutual funds 12,085,031
Fixed income securities 8,853,725
Domestic equities 10,538,725
Money market funds 1,045,849
Total investments 89,589,423
Total cash and investments $ 89,860,898
37 Attachment A Agenda Report Page 43
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
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, 2023
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, 2023
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, 2023
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, 2023:
Fair Value Measurements Using
Investments Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value U.S. agency securities $ - $ 26,595,359 $ - $ 26,595,359 Certificates of deposit - 13,091,302 - 13,091,302
Held in Trust:
Equity mutual funds 12,085,031 - - 12,085,031
Fixed income securities - 8,853,725 - 8,853,725
Domestic equities 10,538,725 - - 10,538,725
Money market funds 1,045,849 - - 1,045,849
Total $ 23,669,605 $ 48,540,386 $ - $ 72,209,991
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 $17,379,432 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, 2023
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, 2023:
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 $ 4,537,432 $ - $ - $ 4,537,432 Domestic equities 10,538,725 - - 10,538,725
Money market funds 1,045,849 - - 1,045,849
Total Police and Fire Pension Trust Fund 16,122,006 - - 16,122,006 OPEB Trust Fund:
Equity mutual funds 12,085,031 - - 12,085,031
Total OPEB Trust Fund 12,085,031 - - 12,085,031
City and Custodial Funds:
Fixed income securities 4,316,293 - - 4,316,293
Certificates of deposit - 13,091,302 - 13,091,302
U.S. agency securities - 26,595,359 - 26,595,359
Local Agency Investment Fund 17,379,432 - - 17,379,432
Total City and Custodial Funds 21,695,725 39,686,661 - 61,382,386 Total Investments $ 49,902,762 $ 39,686,661 $ - $ 89,589,423 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, 2023.
42 Attachment A Agenda Report Page 48
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
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 $ 4,537,432 Not rated Not rated Domestic equities 10,538,725 Not rated Not rated
Money market funds 1,045,849 Not rated Not rated
OPEB Trust Fund
Equity mutual funds 12,085,031 Not rated Not rated
City and Custodial Funds
Fixed income securities 4,316,293 Not rated Not rated
Certificates of deposit 13,091,302 Not rated Not rated
U.S. agency securities 26,595,359 AA+ Aaa
Local Agency Investment Fund 17,379,432 Not rated Not rated $ 89,589,423
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer of securities. When investments are concentrated in one issuer, this concentration presents a heightened risk of potential loss. The City's investment policy contains limitations on the amount that can be invested in any one issuer.
Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) at June 30, 2023, that represent 5 percent or more of total City investments are as follows:
Issuer Investment Type Amount
Federal Home Loan Banks Government agency securities $ 20,914,597 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. As of June 30, 2023, the carrying amount of the City's deposits was $270,575 and the bank balances were $469,923, of which $263,332 was insured by FDIC coverage limits.
43 Attachment A Agenda Report Page 49
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
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.
NOTE 3: LEASES RECEIVABLE
The City is reporting leases receivable of $380,353 at June 30, 2023. For the year ended June 30, 2023, the City reported lease revenue of $105,597 and interest revenue of $10,907 related to lease payments received.
Buildings
On July 19, 2021, the City entered into an agreement with Piedmont Educational Foundation for the lease of a portion of a building. The lease has a term of 4.5 years and the lease receivable was discounted to a net present value at July 19, 2021 using 2.5% interest rate.
On May 12, 2022, the City entered into an agreement with Piedmont Center for the Arts, Inc. for the lease of a portion of a building. The terms of this agreement include monthly rental payments increasing annually based on the Consumer Price Index (CPI) for all Urban Consumers for the San Francisco/Oakland/San Jose Metropolitan Area published by the United States Department of Labor. The lease has a term of 5 years and the lease receivable was discounted to a net present value at May 12, 2022 using a 2.5% interest rate and CPI increase of 3%.
Cell Tower Sites
On August 10, 2016, the City entered into an amendment to the microcell site lease agreement with New Cingular Wireless PCS, LLC. The terms of this agreement include base monthly payments of $1,200 increasing annually by 4% over the base rent paid during the previous year. The lease has a term of 10 years and the lease receivable was discounted to a net present value at October 1, 2017 using a 2.5% interest rate and 4% annual increase.
On August 1, 2019, the City entered into an agreement for a cell tower site with AT&T. The terms of the agreement include monthly rental payments increasing annually based on the CPI. The lease has a term of 6.5 years and the lease receivable was discounted to a net present value at August 1, 2019 using a 2.5% interest rate and CPI increase of 3%.
On March 1, 2022, the City entered into an agreement for a cell tower site with GST Towers. The terms of the agreement include monthly rental payments increasing annually based on the CPI. The lease has a term of 5 years and the lease receivable was discounted to a net present value at March 1, 2022 using a 2.5% interest rate and CPI increase of 3%.
Future payments due to the City under the agreements are as follows:
Year Ended June 30 Principal Interest Total
2024 $ 108,879 $ 8,274 $ 117,153
2025 115,327 5,479 120,806
2026 103,106 2,585 105,691
2027 48,518 693 49,211
2028 4,523 21 4,544
Total $ 380,353 $ 17,052 $ 397,405
The City has recorded a deferred inflow of resources associated with these leases that will be recognized as revenue over the lease terms. As of June 30, 2023, the balance of the deferred inflow of resources was $369,811. 44 Attachment A Agenda Report Page 50
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 4: 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, 2023 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 fiscal year 2028, when phase VII loan payments begin. Under this schedule, the loan is set to retire in fiscal year 2035.
Interfund Transfers to/from Other Funds
Transfers between funds during the fiscal year ended June 30, 2023 were as follows:
Transfer From Transfer To Description of Transfer Amount Major Governmental Funds
General Fund Facilities Capital Funding for capital outlay $ 1,817,069 Equipment Replacement Funding for capital outlay 690,000 Facilities Maintenance Funding for capital outlay 1,300,000 Facilities Capital Aquatic Fund Capital projects 72,562 Total Major Governmental Interfund Transfers $ 3,879,631 Non-Major Governmental Funds
Projects and Services General Fund City-wide beautification $ 5,044 Projects and Services Aquatic Fund Capital projects 1,162,465 Projects and Services Facilities Maintenance Capital projects 46,469 Schoolmates Program Facilities Maintenance Capital projects 70,075 Facilities Maintenance Facilities Capital Capital projects 9,975,000 Measure D Fund General Fund Administrative cost recovery 23,997 Capital Improvement Facilities Capital Capital projects 36,298 Total Non- Major Governmental Interfund Transfers $ 11,319,348 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, 2023 consisted of a transfer between the General Fund and the Traffic Safety fund for $20,000. 45 Attachment A Agenda Report Page 51
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 5: CAPITAL ASSETS
Governmental Activities:
Balance at
July 1, 2022
(Note 17)
Prior Period
Adjustment Additions Retirements Transfers
Balance at
June 30, 2023
Capital assets not being
depreciated
Land $ 5,683,095 $ - $ - $ - $ - $ 5,683,095
Construction-in-progress 484,735 - 339,621 - (660,619) 163,737 SBITA work-in-progress - - 288,064 - 64,875 352,939
Total capital assets not being
depreciated 6,167,830 - 627,685 - (595,744) 6,199,771
Capital assets being depreciated
Buildings and improvements 5,156,541 - 542,363 - - 5,698,904 Vehicles 3,922,247 - 334,435 - - 4,256,682
Property and equipment 5,215,542 - 478,119 (28,242) 226,828 5,892,247 Infrastructure 50,317,825 - 2,114,993 (225,048) 368,916 52,576,686 ROU subscription asset - 712,524 57,348 - - 769,872
Total capital assets being
depreciated 64,612,155 712,524 3,527,258 (253,290) 595,744 69,194,391 Less accumulated depreciation
Buildings and improvements (2,423,178) - (306,018) - - (2,729,196) Vehicles (2,136,491) - (293,393) - - (2,429,884)
Property and equipment (3,907,809) - (448,179) 28,242 - (4,327,746) Infrastructure (30,192,409) - (1,269,351) 225,048 - (31,236,712) ROU subscription asset - - (186,960) - - (186,960)
Total accumulated depreciation (38,659,887) - (2,503,901) 253,290 - (40,910,498) Total capital assets being
depreciated, net 25,952,268 712,524 1,023,357 - 595,744 28,283,893 Total Capital Assets, net $ 32,120,098 $ 712,524 $ 1,651,042 $ - $ - $ 34,483,664 Depreciation was charged to functions based on their usage of the related assets as follows:
Governmental Activities:
Administration $ 429,775
Public works 464,277
Street improvement 522,364
Public safety - police 297,115
Public safety - fire 238,326
Recreation 552,044
Total governmental activities depreciation expense $ 2,503,901 46 Attachment A Agenda Report Page 52
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 5: CAPITAL ASSETS (CONTINUED)
Business-type Activities:
Balance at
July 1, 2022 Additions Retirements
Balance at
June 30, 2023
Capital assets not being depreciated
Construction-in-progress $ 1,591,375 $ 4,877,830 $ - $ 6,469,205 Total capital assets not being depreciated 1,591,375 4,877,830 - 6,469,205 Capital assets being depreciated
Building and improvements 579,916 - (579,916) -
Vehicles 1,788,463 - - 1,788,463
Infrastructure 22,758,708 302,115 - 23,060,823
Total capital assets being depreciated 25,127,087 302,115 (579,916) 24,849,286 Less accumulated depreciation
Building and improvements (579,916) - 579,916 -
Vehicles (778,624) (212,487) - (991,111)
Infrastructure (6,413,142) (458,170) - (6,871,312)
Total accumulated depreciation (7,771,682) (670,657) 579,916 (7,862,423) Total capital assets being depreciated, net 17,355,405 (368,542) - 16,986,863 Total Capital Assets, net $ 18,946,780 $ 4,509,288 $ - $ 23,456,068 Depreciation was charged to functions based on their usage of the related assets as follows:
Business-type Activities:
Sewer $ 670,657
Total business-type activities depreciation expense $ 670,657 NOTE 6: LONG-TERM LIABILITIES
Governmental activities long-term liabilities issued and outstanding at June 30, 2023 were comprised of the following:
Type of Indebtedness
Authorized
and Issued
Outstanding
June 30, 2023
Subscription (SBITA) liability $ 769,872 $ 519,550
Compensated absences 1,041,080
Total governmental activities $ 1,560,630
47 Attachment A Agenda Report Page 53
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 6: LONG-TERM LIABILITES (CONTINUED)
Business-type activities long-term liabilities issued and outstanding at June 30, 2023 were comprised of the following:
Type of Indebtedness Maturity Interest Rates
Authorized
and Issued
Outstanding
June 30, 2023
Sewer Rehab Loan - Phase I 2022 2.40% $ 2,266,920 $ -
Sewer Rehab Loan - Phase II 2023 2.50% 2,211,812 138,322 Sewer Rehab Loan - Phase III 2025 2.50% 2,512,708 311,303 Sewer Rehab Loan - Phase IV 2031 1.00% 1,900,188 910,811 Sewer Rehab Loan - Phase V 2037 1.70% 4,397,000 3,440,882 2021 General Obligation Bonds 2051 5.00% 19,500,000 19,500,000 Premium on bonds 5,477,583
Compensated absences 67,133
Total business-type activities $ 29,846,034
The following is a summary of changes in the City's long-term liabilities for the fiscal year ended June 30, 2023:
Balance at
July 1, 2022
(Note 17)
Prior Period
Adjustment Additions Reductions
Balance
June 30, 2023
Current
Portion
Governmental Activities:
Subscription (SBITA) liability $ - $ 712,524 $ 57,348 $ (250,322) $ 519,550 $ 151,649 Total SBITAs payable - 712,524 57,348 (250,322) 519,550 151,649 Other liabilities:
Compensated absences 988,530 - 900,746 (848,196) 1,041,080 793,428 Total Governmental Activities $ 988,530 $ 712,524 $ 958,094 $ (1,098,518) $ 1,560,630 $ 945,077 Balance at
July 1, 2022 Additions Reductions
Balance
June 30, 2023
Current
Portion
Business-type Activities
Sewer Rehab Loan - Phase I $ 140,959 $ - $ (140,959) $ - $ - Sewer Rehab Loan - Phase II 273,270 - (134,948) 138,322 138,322 Sewer Rehab Loan - Phase III 461,284 - (149,981) 311,303 153,730 Sewer Rehab Loan - Phase IV 1,007,069 - (96,258) 910,811 97,220 Sewer Rehab Loan - Phase V 3,626,621 - (185,739) 3,440,882 188,897 Total loans payable 5,509,203 - (707,885) 4,801,318 578,169 2021 General Obligation Bonds 19,500,000 - - 19,500,000 305,000 Premium on bonds 5,670,176 - (192,593) 5,477,583 192,593 Total bonds payable 25,170,176 - (192,593) 24,977,583 497,593 Other liabilities:
Compensated absences 62,513 51,163 (46,543) 67,133 51,163 Total Business-type Activities $ 30,741,892 $ 51,163 $ (947,021) $ 29,846,034 $ 1,126,925 48 Attachment A Agenda Report Page 54
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 6: LONG-TERM LIABILITES (CONTINUED)
A description of the long-term liabilities at June 30, 2023 follows:
A. Governmental Activities
Subscriptions (SBITAs) Payable
The City has entered into SBITAs involving various software as a service subscriptions. The total of the City's SBITA assets are recorded at a cost of $1,122,811 less accumulated amortization of $186,960.
Future debt service payments on the SBITAs are as follows:
For the Year
Ending June 30 Principal Interest Total
2024 $ 151,649 $ 5,748 $ 157,397
2025 153,323 4,074 157,397
2026 46,661 2,382 49,043
2027 48,310 1,852 50,162
2028 38,248 1,304 39,552
2029 - 2030 81,359 1,339 82,698
Total $ 519,550 $ 16,699 $ 536,249
Compensated Absences
At June 30, 2023, compensated absences totaled $1,041,080, of which $793,428 was recorded as a current liability and the non-current portion totaled $247,652. 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 was paid in 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.
49 Attachment A Agenda Report Page 55
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 6: LONG-TERM LIABILITES (CONTINUED)
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.
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.
Future debt service payments on the sewer rehabilitation loans are as follows:
For the Year
Ending June 30 Principal Interest Total
2024 $ 578,169 $ 78,829 $ 656,998
2025 447,874 67,344 515,218
2026 294,548 59,157 353,705
2027 298,861 54,844 353,705
2028 303,241 50,464 353,705
2029 - 2033 1,477,965 184,232 1,662,197
2034 - 2038 1,156,562 80,323 1,236,885
2039 - 2043 244,098 4,135 248,233
Total $ 4,801,318 $ 579,328 $ 5,380,646
2021 General Obligation Bonds
In September 2021, the City authorized issuance of the 2021 General Obligation Bonds in the principal amount of $19,500,000 to provide funds to construct new pool facilities, restrooms, and related areas. The bonds are payable in annual installments of $305,000 to $1,245,000, with an interest rate of 5% and maturity on September 1, 2051. 50 Attachment A Agenda Report Page 56
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 6: LONG-TERM LIABILITES (CONTINUED)
Future debt service payments on the general obligation bonds are as follows:
For the Year
Ending June 30 Principal Interest Total
2024 $ 305,000 $ 967,375 $ 1,272,375
2025 320,000 951,750 1,271,750
2026 340,000 935,250 1,275,250
2027 355,000 917,875 1,272,875
2028 375,000 899,625 1,274,625
2029 - 2033 2,185,000 4,188,875 6,373,875
2034 - 2038 2,795,000 3,569,375 6,364,375
2039 - 2043 3,590,000 2,775,250 6,365,250
2044 - 2048 4,615,000 1,754,625 6,369,625
2049 - 2053 4,620,000 476,500 5,096,500
Total $ 19,500,000 $ 17,436,500 $ 36,936,500
Total Business-type Activities Long-Term Liabilities Future Debt Service For the Year
Ending June 30 Principal Interest Total
2024 $ 883,169 $ 1,046,204 $ 1,929,373
2025 767,874 1,019,094 1,786,968
2026 634,548 994,407 1,628,955
2027 653,861 972,719 1,626,580
2028 678,241 950,089 1,628,330
2029 - 2033 3,662,965 4,373,107 8,036,072
2034 - 2038 3,951,562 3,649,698 7,601,260
2039 - 2043 3,834,098 2,779,385 6,613,483
2044 - 2048 4,615,000 1,754,625 6,369,625
2049 - 2053 4,620,000 476,500 5,096,500
Total $ 24,301,318 $ 18,015,828 $ 42,317,146
NOTE 7: 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, 2023, the outstanding principal of the bond issue was $2,753,431.
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. 51 Attachment A Agenda Report Page 57
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 8: 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.
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, 2023 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 15.25% 8.63% 7.47%
Required UAL Contribution $835,496 $4,129 $5,976
52 Attachment A Agenda Report Page 58
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 8: DEFINED BENEFIT PENSION PLAN (CONTINUED)
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 25.64%
19.87% (police)
19.87% (fire)
13.66% (police)
13.66% (fire)
Required UAL Contribution
$1,885,332
$6,396 (police)
$3,598 (fire)
$7,447 (police)
$310 (fire)
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, 2023 were $4,457,038.
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2023, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $37,545,626.
The City's net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2022, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. The City's proportion of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City's proportionate share of the net pension liability for the Plan as of June 30, 2021 and 2022 was as follows:
Proportion - June 30, 2021 0.33038%
Proportion - June 30, 2022 0.32505%
Change - Increase (Decrease) (0.00533%)
53 Attachment A Agenda Report Page 59
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 8: DEFINED BENEFIT PENSION PLAN (CONTINUED)
For the year ended June 30, 2023, the City recognized pension expense of $3,132,361. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Pension Contributions Made Subsequent to Measurement Date $ 4,457,038 $ - Differences between Employer's Contributions and Proportionate Share of Contributions - 2,637,185
Differences between Expected and Actual Experience 1,309,751 437,403 Changes of Assumptions 3,804,536 -
Change in Employer's Proportion 2,731,100 -
Differences between Projected and Actual Investment Earnings 6,218,424 - Total $ 18,520,849 $ 3,074,588
$4,457,038 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30,
2024 $ 3,120,996
2025 2,604,387
2026 1,467,120
2027 3,796,720
Actuarial Assumptions
The total pension liability in the June 30, 2021 actuarial valuation was determined using the following actuarial assumptions:
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Investment Rate of Return 6.90% 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' Membership Data for all Funds. The table includes 15 years of mortality improvements using 90 percent of scale MP 2016 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report available on CalPERS website.
Changes in Assumptions
Effective with the June 30, 2021 valuation date (2022 measurement date), the accounting discount rate was reduced from 7.15% to 6.90%.
54 Attachment A Agenda Report Page 60
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 8: DEFINED BENEFIT PENSION PLAN (CONTINUED)
Discount Rate
The discount rate used to measure the total pension liability was 6.90 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.
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. Using historical returns of all 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 next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points.
The table below reflects long-term expected real rates of return by asset class.
Asset Class
Assumed Asset
Allocation
Real Return
Years 1-10 (a,b)
Global Equity - Cap-weighted 30.0% 4.45%
Global Equity - Non Cap-weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage (5.0%) (0.59%)
(a) An expected inflation of 2.3% used for this period
(b) Figures are based on the 2021-22 Asset Liability Management Study 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 as of the measurement date, 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 one-percentage point lower or one-percentage point higher than the current rate:
Discount Rate -1%
(5.90%)
Current Discount Rate
(6.90%)
Discount Rate +1%
(7.90%)
Net Pension Liability (Asset) $ 56,884,654 $ 37,545,626 $ 21,704,555 Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.
55 Attachment A Agenda Report Page 61
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 9: 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, 2023, the Plan covers 7 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, 2022. A summary of principal assumptions and methods used to determine the net pension liability (asset) follows. 56 Attachment A Agenda Report Page 62
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 9: PIEDMONT POLICE AND FIRE PENSION PLAN (CLOSED PLAN) (CONTINUED) Actuarial Assumptions
The total pension liability (asset) in the June 30, 2022 actuarial valuation was determined using the following actuarial assumptions:
Measurement Date June 30, 2023
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 5.50%
Inflation 2.50%
Salary Increases 2.00%
Investment Rate of Return 5.50% net of pension plan investment expenses Mortality
Service retirements and beneficiaries California PERS mortality table for healthy recipients (based on CalPERS 2000-2019 experience study), with generational mortality projection (to recognize future mortality
improvement) utilizing Society of Actuaries Scale MP-2021.
Disability retirements California PERS mortality table for work-related disabled retirees (based on CalPERS 2000-2019 experience study), with generational mortality projection (to recognize future mortality improvement) utilizing Society of Actuaries Scale MP-2021.
Changes of Assumptions
There were no changes in assumptions.
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 1294% funded ratio and the average age of the group (85).
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
(4.50%)
Current Discount Rate
(5.50%)
1% Increase
(6.50%)
Net pension liability (asset) $ (14,811,485) $ (14,886,464) $ (14,953,407) 57 Attachment A Agenda Report Page 63
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 9: 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, 2022 $ 1,324,879 $ 14,766,141 $ (13,441,262) Changes in the year:
Interest 68,827 - 68,827
Net investment income - 1,514,029 (1,514,029)
Benefit payments (146,959) (146,959) -
Net changes (78,132) 1,367,070 (1,445,202)
Balance at June 30, 2023 $ 1,246,747 $ 16,133,211 $ (14,886,464) D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2023, the City recognized pension expense/(credit) of $(865,793). At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Net differences between projected and actual earnings on plan investments $ 211,706 $ -
Total $ 211,706 $ -
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,
2024 $ (106,606)
2025 (80,278)
2026 539,776
2027 (141,186)
NOTE 10: 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.
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.
58 Attachment A Agenda Report Page 64
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 10: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
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 2023 Kaiser Bay Area premiums plus 50% of subsequent annual premium changes
Maximum yearly increase $100/month (formerly unequal method). 2023 Monthly Retiree Caps are $913.74, $1,827.48 and $2,375.72 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 ($151/month in 2023, $157/month in 2024)
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, 2023 actuarial valuation, the following current and former employees were covered by the benefit terms under the Plan:
Active employees 99
Inactive employees currently receiving benefits 76
Inactive employees entitled to, but not yet receiving benefits 14 Total 189
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. 59 Attachment A Agenda Report Page 65
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 10: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
Net OPEB Liability
The City's net OPEB liability ("NOL") was measured as of June 30, 2023 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2022 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, 2023
5.75% at June 30, 2022
20-Year Municipal Bond
(Bond Buyer 20-Bond GO)
3.65% at June 30, 2023
3.54% at June 30, 2022
Discount Rate 5.50% at June 30, 2023
5.47% at June 30, 2022
General Inflation 2.50% annually
Mortality, Retirement, Disability,
Termination
CalPERS 2000-2019 Experience Study
Mortality Improvement Mortality projected fully generational with Scale MP-2021 Salary increases Aggregate - 2.75% annually
Merit - CalPERS 2000-2019 Experience Study
Medical Trend Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of
3.75% in 2076
Medicare:
Kaiser: 4.60% for 2023, decreasing to an ultimate rate of 3.75% in 2076
Non-Kaiser: 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076
PEMHCA Minimum Increases Increase 4% annually
Participation at Retirement Currently covered (Tier 1): 95% Currently covered (Tier 2): 60% (eligible for PEMHCA minimum only) Coverage at Retirement 80% elect 2-party 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 2022/23, the discount rate was increased from 5.47% to 5.50% based on the municipal bond rate as of the measurement date and crossover test.
Discount Rate
The discount rate used to measure the total OPEB liability was 5.50 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%
60 Attachment A Agenda Report Page 66
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 10: 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, 2022 $ 19,796,609 $ 10,831,251 $ 8,965,358 Service cost 578,686 - 578,686
Interest cost 1,084,274 - 1,084,274
Assumption changes (67,669) - (67,669)
Contributions - employer - 1,109,478 (1,109,478)
Contributions - employee - 61,100 (61,100)
Net investment income - 1,192,680 (1,192,680)
Benefit payments (1,106,197) (1,106,197) -
Administrative expenses - (3,282) 3,282
Net change 489,094 1,253,779 (764,685)
Balance at June 30, 2023 $ 20,285,703 $ 12,085,030 $ 8,200,673 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, 2023:
1% Decrease
(4.50%)
Current Discount
Rate
(5.50%)
1% Increase
(6.50%)
Net OPEB Liability $ 10,677,224 $ 8,200,673 $ 6,144,399 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 6.50% decreasing to 3.75%, Medicare 5.65% decreasing to 3.75%), for measurement period ended June 30, 2023:
1% Decrease
Current Healthcare
Cost Trend Rate 1% Increase
Net OPEB Liability $ 6,046,204 $ 8,200,673 $ 10,864,019 61 Attachment A Agenda Report Page 67
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 10: OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2023, the City recognized OPEB expense/(credit) of $(777,228). As of fiscal year ended June 30, 2023, 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 $ - $ 1,573,017 Changes in assumptions 658,122 1,577,066
Net difference between projected and actual earnings
on plan investments 103,351 -
Total $ 761,473 $ 3,150,083
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
2024 $ (1,067,815)
2025 (791,174)
2026 34,206
2027 (550,731)
2028 (10,914)
Thereafter (2,182)
NOTE 11: 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 provisions, 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.
62 Attachment A Agenda Report Page 68
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 11: 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, 2023, fund balances were comprised of the following:
General Fund
Facilities
Capital
Non-Major
Governmental
Funds
Total
Governmental
Funds
Nonspendable
Prepaid expenses $ 82,178 $ - $ - $ 82,178
Advances - - 800,000 800,000
Total Nonspendable 82,178 - 800,000 882,178
Restricted
Projects and services - - 1,224,169 1,224,169
Street projects - - 350,135 350,135
Schoolmates program - - 1,216,362 1,216,362
Measure D - - 54,505 54,505
Measure BB sales tax - - 739,181 739,181
COPS - - 504,527 504,527
Measure F - - 56,064 56,064
Athletic facility preservation - - 438,137 438,137
Abandoned vehicle - - 46,354 46,354
Section 115 Trust 4,316,293 - - 4,316,293
Total Restricted 4,316,293 - 4,629,434 8,945,727
Assigned
Capital improvement - - 27,162 27,162
Facilities replacement - 10,797,969 - 10,797,969
Equipment replacement - - 2,979,356 2,979,356
Facilities maintenance - - 371,406 371,406
Sidewalk repair - - 23,468 23,468
Total Assigned - 10,797,969 3,401,392 14,199,361
Unassigned 7,381,031 - - 7,381,031
Total Fund Balance $ 11,779,502 $ 10,797,969 $ 8,830,826 $ 31,408,297 63 Attachment A Agenda Report Page 69
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 12: 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, 2023, the City contributed $1,233,200 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, 2023, the City contributed $608,920 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, 2023:
General Liability Workers' Compensation Total
2023 2022 2023 2022 2023 2022
Beginning balance $ 87,267 $ 117,393 $ 1,014,000 $ 1,005,000 $ 1,101,267 $ 1,122,393 Incurred claims 238,893 40,273 405,015 384,290 643,908 424,563 Claims paid (109,382) (70,399) (232,015) (375,290) (341,397) (445,689) Ending Balance $ 216,778 $ 87,267 $ 1,187,000 $ 1,014,000 $ 1,403,778 $ 1,101,267 Current portion $ 80,150 $ 34,863 $ 371,002 $ 300,656 $ 451,152 $ 335,519 64 Attachment A Agenda Report Page 70
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 13: 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, 2023 did not exceed the 25 percent of expenditures limitation.
Amount
General fund expenditures $ 32,644,938
Fund balance limitation, 25% of expenditures 8,161,235
Unencumbered General fund balance at year end 7,424,193 Amount below fund balance limitation $ (737,042)
NOTE 14: 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, 2023:
Fund
Excess
Expenditures and
Transfers Out
Streets Projects $ 65,941
Projects and Services 1,213,978
Measure D 7,601
Measure B Sales Tax 215,788
Measure BB Sales Tax 60,363
Measure F 44,963
Athletic Facility Preservation 15,602
Sidewalk Repair 34,127
Facilities Maintenance 1,202,357
The excess expenditures were covered by available fund balance in the funds.
NOTE 15: 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, 2023, the City had construction contracts outstanding of approximately $23,154,679 related to various construction projects.
65 Attachment A Agenda Report Page 71
CITY OF PIEDMONT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 16: SUBSEQUENT EVENT
Community Pool Electrification
In October 2023, the City borrowed $750,000 to finance electrification of the new pool facilities. The loan has a 0% interest rate and a term of 15 years.
Management has evaluated subsequent events through February 28, 2024, the date on which the financial statements were available for issuance. Management has determined no other subsequent events requiring disclosure have occurred.
NOTE 17: CHANGE IN ACCOUNTING PRINCIPLE
For June 30, 2023, the City implemented GASB Statement No. 96, Subscription-Based Information Technology Arrangements. These changes were incorporated in the financial statements, but had no effect on the beginning net position of the governmental activities, business-type activities, or the fund financial statements. 66 Attachment A Agenda Report Page 72
REQUIRED SUPPLEMENTARY INFORMATION
Attachment A Agenda Report Page 73
CITY OF PIEDMONT
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Property taxes $ 16,875,000 $ 16,875,000 $ 17,528,512 $ 653,512 Sales tax 225,000 225,000 227,099 2,099
Franchise tax 578,000 578,000 591,006 13,006
Utility users tax 1,150,000 1,150,000 1,534,144 384,144 Real property transfer tax 3,200,000 3,200,000 4,464,897 1,264,897 Business licenses and rental tax 615,000 615,000 745,047 130,047 Licenses and permits 624,000 624,000 695,359 71,359
Intergovernmental 3,161,864 3,161,864 2,251,390 (910,474) Use of money and property 844,559 844,559 1,103,888 259,329 Charges for services 3,950,000 3,950,000 4,630,018 680,018 Parcel tax 2,522,000 2,522,000 2,520,255 (1,745)
Contribution and donations 30,000 30,000 33,804 3,804
Other revenues 320,615 320,615 411,175 90,560
Total Revenues 34,096,038 34,096,038 36,736,594 2,640,556
EXPENDITURES
Current:
Administration 4,249,445 4,249,445 3,708,119 541,326
Public works 7,296,866 7,489,531 5,922,989 1,566,542
Public safety:
Police services 7,624,043 7,624,043 7,513,278 110,765
Fire services 7,951,633 8,051,633 8,042,616 9,017
Recreation 3,251,295 3,251,295 3,726,775 (475,480)
Nondepartmental 3,505,471 3,756,498 3,487,860 268,638
Capital outlay 2,000 2,000 - 2,000
Debt service - principal - - 250,322 (250,322)
Debt service - interest - - 3,634 (3,634)
Total Expenditures 33,880,753 34,424,445 32,655,593 1,768,852 Excess (deficiency) of revenues over expenditures 215,285 (328,407) 4,081,001 871,704
OTHER FINANCING SOURCES (USES)
Transfers in - - 29,041 29,041
Transfers out (3,704,056) (3,704,056) (3,807,069) (103,013) Total Other Financing Sources (Uses) (3,704,056) (3,704,056) (3,778,028) (73,972) Net change in fund balance $ (3,488,771) $ (4,032,463) 302,973 $ 797,732 Fund balance - July 1, 2022 11,476,529
Fund balance - June 30, 2023 $ 11,779,502
67 Attachment A Agenda Report Page 74
CITY OF PIEDMONT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY ACCOUNTING AND CONTROL
FOR THE YEAR ENDED JUNE 30, 2023
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 Projects and Services, Abandoned Vehicle, and Measure B Sales Tax nonmajor special revenue funds or the Capital Improvement and Sidewalk Repair nonmajor capital projects funds.
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.
68 Attachment A Agenda Report Page 75
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, 2023
Last 10 Years *
Measurement Period
2022 2021 2020 2019 2018 2017 2016 2015 2014
Proportion of the net pension
liability 0.32505 % 0.33038 % 0.28998 % 0.27862 % 0.27018 % 0.26200 % 0.25701 % 0.24111 % 0.24773 % Proportionate share of the net
pension liability $ 37,545,626 $ 17,867,729 $ 31,550,977 $ 28,550,576 $ 26,035,468 $ 25,982,764 $ 22,238,992 $ 16,549,792 $ 15,419,642 Covered payroll $ 10,824,143 $ 11,098,592 $ 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 346.87 % 160.99 % 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 76.68 % 88.29 % 75.10 % 75.30 % 75.30 % 73.29 % 74.06 % 78.40 % 79.82 % Notes to Schedule:
Changes in assumptions. In 2022, the accounting discount rate was reduced from 7.15 percent to 6.90 percent. In 2021, 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 nine years are shown. 69 Attachment A Agenda Report Page 76
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, 2023
Last 10 Years *
Fiscal Year-End
2023 2022 2021 2020 2019 2018 2017 2016 2015
Contractually required
contribution (actuarially
determined) $ 4,457,038 $ 4,176,329 $ 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 4,457,038 4,176,329 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 $ 12,213,712 $ 10,824,143 $ 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 36.49 % 38.58 % 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 nine years are shown. 70 Attachment A Agenda Report Page 77
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS FOR POLICE AND FIRE PENSION (CLOSED) PLAN Last 10 Years *
Fiscal Year-End
2023 2022 2021 2020 2019
Total Pension Liability
Interest $ 68,827 $ 83,881 $ 93,213 $ 97,631 $ 104,393
Differences between expected and
actual experience - (168,860) - 25,239 -
Change of assumptions - (23,006) 46,239 (15,617) -
Benefit payments, including
refunds of employee
contributions (146,959) (184,495) (151,293) (210,488) (223,674) Net change in total pension liability (78,132) (292,480) (11,841) (103,235) (119,281) Total pension liability - beginning 1,324,879 1,617,359 1,629,200 1,732,435 1,851,716 Total pension liability - ending (a) $ 1,246,747 $ 1,324,879 $ 1,617,359 $ 1,629,200 $ 1,732,435 Plan Fiduciary Net Position
Net investment income $ 1,514,029 $ (2,452,693) $ 3,914,153 $ 902,277 $ 833,644 Benefit payments (146,959) (184,495) (151,293) (210,488) (223,674) Administrative expenses - - - (1,350) (12,000)
Net change in plan fiduciary net
position 1,367,070 (2,637,188) 3,762,860 690,439 597,970 Plan fiduciary net position - beginning 14,766,141 17,403,329 13,640,469 12,950,030 12,352,060 Plan fiduciary net position - ending (b) $ 16,133,211 $ 14,766,141 $ 17,403,329 $ 13,640,469 $ 12,950,030 Plan's net pension liability (asset) -
ending (a)-(b) $(14,886,464) $(13,441,262) $(15,785,970) $(12,011,269) $(11,217,595) Fiduciary net position as a percentage
of total pension liability 1,294 % 1,115 % 1,076 % 837 % 748 % Covered employee payroll $ - $ - $ - $ - $ -
Net pension liability as percentage of
covered employee payroll N/A N/A N/A N/A N/A
71 Attachment A Agenda Report Page 78
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS FOR POLICE AND FIRE PENSION (CLOSED) PLAN (CONTINUED) Last 10 Years *
Fiscal Year-End
2018 2017 2016 2015 2014
Total Pension Liability
Interest $ 112,356 $ 119,038 $ 141,412 $ 148,653 $ 156,380 Differences between expected and
actual experience 74,556 - (270,454) - -
Change of assumptions (93,912) - - - -
Benefit payments, including
refunds of employee
contributions (227,770) (233,036) (251,005) (287,175) (283,192) Net change in total pension liability (134,770) (113,998) (380,047) (138,522) (126,812) Total pension liability - beginning 1,986,486 2,100,484 2,480,531 2,619,053 2,745,865 Total pension liability - ending (a) $ 1,851,716 $ 1,986,486 $ 2,100,484 $ 2,480,531 $ 2,619,053 Plan Fiduciary Net Position
Net investment income $ 649,249 $ 1,321,041 $ (539,063) $ 213,159 $ 1,837,733 Benefit payments (227,770) (233,036) (251,005) (287,175) (283,192) Administrative expenses (3,405) (7,183) (2,025) - -
Net change in plan fiduciary net
position 418,074 1,080,822 (792,093) (74,016) 1,554,541 Plan fiduciary net position - beginning 11,933,986 10,853,164 11,645,257 11,719,273 10,164,732 Plan fiduciary net position - ending (b) $ 12,352,060 $ 11,933,986 $ 10,853,164 $ 11,645,257 $ 11,719,273 Plan's net pension liability (asset) -
ending (a)-(b) $(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 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
72 Attachment A Agenda Report Page 79
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, 2023:
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
2022 - - - - NA
2023 - - - - NA
The actuarially determined contribution is based on the same assumptions as the net pension liability (asset). 73 Attachment A Agenda Report Page 80
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)
2023 2022 2021
Total OPEB liability
Service cost $ 579 $ 754 $ 675
Interest 1,084 1,132 1,155
Changes of benefit terms - 247 -
Actual vs. expected experience - (1,626) -
Changes in assumptions (68) (1,168) 1,331
Benefit payments (1,106) (949) (832)
Net change in total OPEB liability 489 (1,610) 2,329
Total OPEB liability, beginning 19,797 21,407 19,078
Total OPEB liability, ending (a) $ 20,286 $ 19,797 $ 21,407 Plan fiduciary net position
Contributions - employer $ 1,109 $ 952 $ 834
Contributions - employee 61 73 97
Net investment income 1,193 (1,728) 2,886
Benefit payments (1,106) (949) (832)
Administrative expenses (3) (2) (2)
Net change in plan fiduciary net position 1,254 (1,654) 2,983 Plan fiduciary net position, beginning 10,832 12,486 9,503 Plan fiduciary net position, ending (b) $ 12,086 $ 10,832 $ 12,486 Net OPEB liability, ending (a) - (b) $ 8,200 $ 8,965 $ 8,921 Plan fiduciary net position as a percentage of the total OPEB liability 59.58 % 54.72 % 58.33 % Covered-employee payroll $ 14,167 $ 13,657 $ 13,111
Net OPEB liability as a percentage of covered-employee payroll 57.88 % 65.64 % 68.04 % Notes to Schedule:
Changes of assumptions: For the measurement period ended June 30, 2023, the discount rate was changed from
5.47% to 5.50%. 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 from 5.22% to 5.47%. 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 six years are shown. Additional years' information will be displayed as it becomes available. 74 Attachment A Agenda Report Page 81
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS (CONTINUED) For the Measurement Periods Ended June 30
Last 10 Years*
(Amounts in 000's)
2020 2019 2018
Total OPEB liability
Service cost $ 948 $ 944 $ 1,179
Interest 1,225 1,155 1,361
Changes of benefit terms - - (1,104)
Actual vs. expected experience (1,743) - (4,473)
Changes in assumptions (2,620) 355 (2,016)
Benefit payments (772) (641) (562)
Net change in total OPEB liability (2,962) 1,813 (5,615) Total OPEB liability, beginning 22,040 20,227 25,842
Total OPEB liability, ending (a) $ 19,078 $ 22,040 $ 20,227 Plan fiduciary net position
Contributions - employer $ 774 $ 642 $ 1,028
Contributions - employee 89 161 -
Net investment income 580 597 441
Benefit payments (772) (641) (562)
Administrative expenses (2) (1) (2)
Net change in plan fiduciary net position 669 758 905
Plan fiduciary net position, beginning 8,834 8,076 7,171 Plan fiduciary net position, ending (b) $ 9,503 $ 8,834 $ 8,076 Net OPEB liability, ending (a) - (b) $ 9,575 $ 13,206 $ 12,151 Plan fiduciary net position as a percentage of the total OPEB liability 49.81 % 40.08 % 39.93 % Covered-employee payroll $ 12,373 $ 11,344 $ 11,022
Net OPEB liability as a percentage of covered-employee payroll 77.39 % 116.41 % 110.24 % 75 Attachment A Agenda Report Page 82
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF OPEB CONTRIBUTIONS
For the Fiscal Year Ended June 30
Last 10 Years*
(Amounts in 000's)
2023 2022 2021
Actuarially Determined Contribution (ADC) $ 1,109 $ 951 $ 834 Contributions in relation to the ADC (1,109) (951) (834) Contribution deficiency (excess)** $ - $ - $ -
Covered-employee payroll $ 14,167 $ 13,657 $ 13,111
Contributions as a percentage of covered-employee payroll 7.83 % 6.96 % 6.36 % * Schedule is intended to show information for ten years. Fiscal year 2018 was the first year of implementation, therefore only six 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.
76 Attachment A Agenda Report Page 83
CITY OF PIEDMONT
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF OPEB CONTRIBUTIONS (CONTINUED)
For the Fiscal Year Ended June 30
Last 10 Years*
(Amounts in 000's)
2020 2019 2018
Actuarially Determined Contribution (ADC) $ 774 $ 642 $ 1,028 Contributions in relation to the ADC (774) (642) (1,028) Contribution deficiency (excess)** $ - $ - $ -
Covered-employee payroll $ 12,373 $ 11,344 $ 11,022
Contributions as a percentage of covered-employee payroll 6.26 % 5.66 % 9.33 % 77 Attachment A Agenda Report Page 84
COMBINING FINANCIAL STATEMENTS, SCHEDULES AND OTHER SUPPLEMENTARY INFORMATION Attachment A Agenda Report Page 85
CITY OF PIEDMONT
FACILITIES CAPITAL - MAJOR CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 245,472 $ 245,472
Total Revenues - - 245,472 245,472
EXPENDITURES
Current:
Administrative - 100,000 86,920 13,080
Public works - - 4,472 (4,472)
Recreation 250,000 250,000 9,313 240,687
Capital outlay 3,825,000 3,825,000 1,102,603 2,722,397
Total Expenditures 4,075,000 4,175,000 1,203,308 2,971,692 Excess (deficiency) of revenues over expenditures (4,075,000) (4,175,000) (957,836) 3,217,164
OTHER FINANCING SOURCES (USES)
Transfers in 9,891,864 9,891,864 11,828,367 1,936,503
Transfers out - - (72,562) (72,562)
Total Other Financing Sources (Uses) 9,891,864 9,891,864 11,755,805 1,863,941 Net change in fund balance $ 5,816,864 $ 5,716,864 10,797,969 $ 5,081,105 Fund balance - July 1, 2022 -
Fund balance - June 30, 2023 $ 10,797,969
80 Attachment A Agenda Report Page 86
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.
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.
Equipment Replacement Fund - accounts for the accumulation of resources used for the replacement of capital assets used by governmental funds.
Facilities Maintenance Fund - accounts for the accumulation of resources used for the maintenance of capital assets used by governmental funds.
81 Attachment A Agenda Report Page 87
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2023
Special Revenue Funds
Streets
Projects
Schoolmates
Program
Projects and
Services Measure D
Abandoned
Vehicle
ASSETS
Cash and investments $ 336,036 $ 1,265,021 $ 1,224,169 $ 45,721 $ 46,076 Receivables:
Accounts 75,617 - - 8,360 -
Interest 1,506 8,255 - 424 278
Advances to other funds - - - - -
Total Assets $ 413,159 $ 1,273,276 $ 1,224,169 $ 54,505 $ 46,354
LIABILITIES
Accounts payable $ 63,024 $ 3,945 $ - $ - $ -
Accrued wages and benefits - 13,645 - - -
Unearned revenue - 39,324 - - -
Total Liabilities 63,024 56,914 - - -
FUND BALANCES
Nonspendable - - - - -
Restricted 350,135 1,216,362 1,224,169 54,505 46,354
Assigned - - - - -
Total Fund Balances 350,135 1,216,362 1,224,169 54,505 46,354 Total Liabilities and Fund
Balances $ 413,159 $ 1,273,276 $ 1,224,169 $ 54,505 $ 46,354 82 Attachment A Agenda Report Page 88
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS (CONTINUED)
JUNE 30, 2023
Special Revenue Funds
Measure B
Sales Tax
Measure BB
Sales Tax COPS Measure F
Athletic
Facility
Preservation
ASSETS
Cash and investments $ 67,291 $ 543,870 $ 503,504 $ 47,638 $ 475,788 Receivables:
Accounts - 235,960 - 8,178 -
Interest 876 1,893 3,058 248 2,951
Advances to other funds - - - - -
Total Assets $ 68,167 $ 781,723 $ 506,562 $ 56,064 $ 478,739
LIABILITIES
Accounts payable $ 68,167 $ 42,542 $ 2,035 $ - $ 40,602 Accrued wages and benefits - - - - -
Unearned revenue - - - - -
Total Liabilities 68,167 42,542 2,035 - 40,602
FUND BALANCES
Nonspendable - - - - -
Restricted - 739,181 504,527 56,064 438,137
Assigned - - - - -
Total Fund Balances - 739,181 504,527 56,064 438,137
Total Liabilities and Fund
Balances $ 68,167 $ 781,723 $ 506,562 $ 56,064 $ 478,739 83 Attachment A Agenda Report Page 89
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS (CONTINUED)
JUNE 30, 2023
Capital Projects
Capital
Improvement
Sidewalk
Repair
Equipment
Replacement
Facilities
Maintenance
Total
Non-major
Governmental
Funds
ASSETS
Cash and investments $ 15,440 $ 23,468 $ 3,114,912 $ 394,275 $ 8,103,209 Receivables:
Accounts 11,491 - 611 4,954 345,171
Interest 231 - 16,498 2,454 38,672
Advances to other funds - - 600,000 200,000 800,000
Total Assets $ 27,162 $ 23,468 $ 3,732,021 $ 601,683 $ 9,287,052
LIABILITIES
Accounts payable $ - $ - $ 152,665 $ 30,277 $ 403,257
Accrued wages and benefits - - - - 13,645
Unearned revenue - - - - 39,324
Total Liabilities - - 152,665 30,277 456,226
FUND BALANCES
Nonspendable - - 600,000 200,000 800,000
Restricted - - - - 4,629,434
Assigned 27,162 23,468 2,979,356 371,406 3,401,392
Total Fund Balances 27,162 23,468 3,579,356 571,406 8,830,826 Total Liabilities and Fund
Balances $ 27,162 $ 23,468 $ 3,732,021 $ 601,683 $ 9,287,052 84 Attachment A Agenda Report Page 90
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2023
Special Revenue Funds
Streets
Projects
Schoolmates
Program
Projects and
Services Measure D
Abandoned
Vehicle
REVENUES
Gas tax $ 557,012 $ - $ - $ - $ -
Intergovernmental - - - - 3,335
Use of money and property (391) 20,868 - 1,172 695
Current service charges - 1,558,830 - - -
Contributions and donations - - 1,208,934 - -
Other revenues - - - 38,231 -
Total Revenues 556,621 1,579,698 1,208,934 39,403 4,030
EXPENDITURES
Current:
Administration - - - - -
Public works - - - 13,604 -
Street improvements 670,941 - - - -
Public safety:
Police services - - - - -
Fire services - - - - -
Recreation - 866,966 - - -
Capital outlay - - - - -
Total Expenditures 670,941 866,966 - 13,604 -
Excess (Deficiency) of Revenues over
Expenditures (114,320) 712,732 1,208,934 25,799 4,030
OTHER FINANCING SOURCES
(USES)
Transfers in - - - - -
Transfers out - (70,075) (1,213,978) (23,997) -
Total Other Financing Sources
(Uses) - (70,075) (1,213,978) (23,997) -
Net change in fund balances (114,320) 642,657 (5,044) 1,802 4,030 Fund balances - July 1, 2022 464,455 573,705 1,229,213 52,703 42,324 Fund balances - June 30, 2023 $ 350,135 $ 1,216,362 $ 1,224,169 $ 54,505 $ 46,354 85 Attachment A Agenda Report Page 91
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023
Special Revenue Funds
Measure B
Sales Tax
Measure BB
Sales Tax COPS Measure F
Athletic
Facility
Preservation
REVENUES
Gas tax $ - $ - $ - $ - $ -
Intergovernmental - 1,330,701 121,540 44,582 -
Use of money and property 3,238 3,564 7,367 359 7,093
Current service charges - - - - 67,327
Contributions and donations - - - - 31,325
Other revenues - - - - -
Total Revenues 3,238 1,334,265 128,907 44,941 105,745
EXPENDITURES
Current:
Administration - - - - -
Public works - - - - -
Street improvements - - - - -
Public safety:
Police services - - 24,551 - -
Fire services - - - - -
Recreation - - - - 40,602
Capital outlay 215,788 1,017,988 31,321 104,963 -
Total Expenditures 215,788 1,017,988 55,872 104,963 40,602 Excess (Deficiency) of Revenues over
Expenditures (212,550) 316,277 73,035 (60,022) 65,143
OTHER FINANCING SOURCES
(USES)
Transfers in - - - - -
Transfers out - - - - -
Total Other Financing Sources
(Uses) - - - - -
Net change in fund balances (212,550) 316,277 73,035 (60,022) 65,143 Fund balances - July 1, 2022 212,550 422,904 431,492 116,086 372,994 Fund balances - June 30, 2023 $ - $ 739,181 $ 504,527 $ 56,064 $ 438,137 86 Attachment A Agenda Report Page 92
CITY OF PIEDMONT
NON-MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023
Capital Projects
Capital
Improvement
Sidewalk
Repair
Equipment
Replacement
Facilities
Maintenance
Total
Non-major
Governmental
Funds
REVENUES
Gas tax $ - $ - $ - $ - $ 557,012
Intergovernmental - - - - 1,500,158
Use of money and property 437 - 58,713 17,483 120,598
Current service charges - - - - 1,626,157
Contributions and donations - - - - 1,240,259
Other revenues - 31,240 - 4,146 73,617
Total Revenues 437 31,240 58,713 21,629 5,117,801
EXPENDITURES
Current:
Administration - - 42,451 51,124 93,575
Public works 2,499 34,127 - 53,714 103,944
Street improvements - - - - 670,941
Public safety:
Police services - - 195,227 22,304 242,082
Fire services - - - 12,819 12,819
Recreation - - - 472,728 1,380,296
Capital outlay - - 1,023,271 601,662 2,994,993
Total Expenditures 2,499 34,127 1,260,949 1,214,351 5,498,650 Excess (Deficiency) of Revenues
over Expenditures (2,062) (2,887) (1,202,236) (1,192,722) (380,849)
OTHER FINANCING SOURCES
(USES)
Transfers in - - 690,000 1,416,544 2,106,544
Transfers out (36,298) - - (9,975,000) (11,319,348)
Total Other Financing
Sources (Uses) (36,298) - 690,000 (8,558,456) (9,212,804) Net change in fund balances (38,360) (2,887) (512,236) (9,751,178) (9,593,653) Fund balances - July 1, 2022 65,522 26,355 4,091,592 10,322,584 18,424,479 Fund balances - June 30, 2023 $ 27,162 $ 23,468 $ 3,579,356 $ 571,406 $ 8,830,826 87 Attachment A Agenda Report Page 93
CITY OF PIEDMONT
STREETS PROJECTS - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Gas tax $ 589,341 $ 589,341 $ 557,012 $ (32,329)
Use of money and property - - (391) (391)
Total Revenues 589,341 589,341 556,621 (32,720)
EXPENDITURES
Current:
Street improvements 275,000 275,000 670,941 (395,941)
Capital outlay 330,000 330,000 - 330,000
Total Expenditures 605,000 605,000 670,941 (65,941)
Net change in fund balance $ (15,659) $ (15,659) (114,320) $ (98,661) Fund balance - July 1, 2022 464,455
Fund balance - June 30, 2023 $ 350,135
88 Attachment A Agenda Report Page 94
CITY OF PIEDMONT
SCHOOLMATES PROGRAM - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 20,868 $ 20,868
Charges for services 1,086,319 1,086,319 1,558,830 472,511 Total Revenues 1,086,319 1,086,319 1,579,698 493,379
EXPENDITURES
Current:
Recreation 1,018,084 1,018,084 866,966 151,118
Total Expenditures 1,018,084 1,018,084 866,966 151,118
Excess (deficiency) of revenues over expenditures 68,235 68,235 712,732 644,497
OTHER FINANCING SOURCES (USES)
Transfers out (124,450) (124,450) (70,075) 54,375
Total Other Financing Sources (Uses) (124,450) (124,450) (70,075) 54,375 Net change in fund balance $ (56,215) $ (56,215) 642,657 $ 698,872 Fund balance - July 1, 2022 573,705
Fund balance - June 30, 2023 $ 1,216,362
89 Attachment A Agenda Report Page 95
CITY OF PIEDMONT
PROJECTS AND SERVICES - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Contributions and donations $ - $ - $ 1,208,934 $ 1,208,934 Total Revenues - - 1,208,934 1,208,934
Excess (deficiency) of revenues over expenditures - - 1,208,934 1,208,934
OTHER FINANCING SOURCES (USES)
Transfers out - - (1,213,978) (1,213,978)
Total Other Financing Sources (Uses) - - (1,213,978) (1,213,978) Net change in fund balance $ - $ - (5,044) $ (5,044)
Fund balance - July 1, 2022 1,229,213
Fund balance - June 30, 2023 $ 1,224,169
*The City did not adopt a budget for the Projects and Services Fund for the year ended June 30, 2023. 90 Attachment A Agenda Report Page 96
CITY OF PIEDMONT
MEASURE D - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 1,172 $ 1,172
Other revenues 35,000 35,000 38,231 3,231
Total Revenues 35,000 35,000 39,403 4,403
EXPENDITURES
Current:
Public works 30,000 30,000 13,604 16,396
Total Expenditures 30,000 30,000 13,604 16,396
Excess (deficiency) of revenues over expenditures 5,000 5,000 25,799 20,799
OTHER FINANCING SOURCES (USES)
Transfers out - - (23,997) (23,997)
Total Other Financing Sources (Uses) - - (23,997) (23,997) Net change in fund balance $ 5,000 $ 5,000 1,802 $ (3,198) Fund balance - July 1, 2022 52,703
Fund balance - June 30, 2023 $ 54,505
91 Attachment A Agenda Report Page 97
CITY OF PIEDMONT
ABANDONED VEHICLE - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original* Final*
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ - $ - $ 3,335 $ 3,335
Use of money and property - - 695 695
Total Revenues - - 4,030 4,030
EXPENDITURES
Current:
Public safety 8,500 8,500 - 8,500
Total Expenditures 8,500 8,500 - 8,500
Net change in fund balance $ (8,500) $ (8,500) 4,030 $ 12,530 Fund balance - July 1, 2022 42,324
Fund balance - June 30, 2023 $ 46,354
*The City did not adopt a budget for the Abandoned Vehicle Fund for the year ended June 30, 2023. 92 Attachment A Agenda Report Page 98
CITY OF PIEDMONT
MEASURE B SALES TAX - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 3,238 $ 3,238
Total Revenues - - 3,238 3,238
EXPENDITURES
Capital outlay - - 215,788 (215,788)
Total Expenditures - - 215,788 (215,788)
Net change in fund balance $ - $ - (212,550) $ (212,550) Fund balance - July 1, 2022 212,550
Fund balance - June 30, 2023 $ -
*The City did not adopt a budget for the Measure B Sales Tax Fund for the year ended June 30, 2023. 93 Attachment A Agenda Report Page 99
CITY OF PIEDMONT
MEASURE BB SALES TAX - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ 942,000 $ 942,000 $ 1,330,701 $ 388,701 Use of money and property - - 3,564 3,564
Total Revenues 942,000 942,000 1,334,265 392,265
EXPENDITURES
Capital outlay 957,625 957,625 1,017,988 (60,363)
Total Expenditures 957,625 957,625 1,017,988 (60,363)
Net change in fund balance $ (15,625) $ (15,625) 316,277 $ 331,902 Fund balance - July 1, 2022 422,904
Fund balance - June 30, 2023 $ 739,181
94 Attachment A Agenda Report Page 100
CITY OF PIEDMONT
COPS - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ 100,000 $ 100,000 $ 121,540 $ 21,540 Use of money and property - - 7,367 7,367
Total Revenues 100,000 100,000 128,907 28,907
EXPENDITURES
Current:
Public safety: police services 132,250 131,494 24,551 106,943 Capital outlay - 400,000 31,321 368,679
Total Expenditures 132,250 531,494 55,872 475,622
Net change in fund balance $ (32,250) $ (431,494) 73,035 $ 504,529 Fund balance - July 1, 2022 431,492
Fund balance - June 30, 2023 $ 504,527
95 Attachment A Agenda Report Page 101
CITY OF PIEDMONT
MEASURE F - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Intergovernmental $ 40,000 $ 40,000 $ 44,582 $ 4,582
Use of money and property - - 359 359
Total Revenues 40,000 40,000 44,941 4,941
EXPENDITURES
Capital outlay 60,000 60,000 104,963 (44,963)
Total Expenditures 60,000 60,000 104,963 (44,963)
Net change in fund balance $ (20,000) $ (20,000) (60,022) $ (40,022) Fund balance - July 1, 2022 116,086
Fund balance - June 30, 2023 $ 56,064
96 Attachment A Agenda Report Page 102
CITY OF PIEDMONT
ATHLETIC FACILITY PRESERVATION - SPECIAL REVENUE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 7,093 $ 7,093
Charges for services 55,000 55,000 67,327 12,327
Contributions and donations - - 31,325 31,325
Total Revenues 55,000 55,000 105,745 50,745
EXPENDITURES
Current:
Recreation 25,000 25,000 40,602 (15,602)
Total Expenditures 25,000 25,000 40,602 (15,602)
Net change in fund balance $ 30,000 $ 30,000 65,143 $ 35,143 Fund balance - July 1, 2022 372,994
Fund balance - June 30, 2023 $ 438,137
97 Attachment A Agenda Report Page 103
CITY OF PIEDMONT
CAPITAL IMPROVEMENT - CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 437 $ 437
Total Revenues - - 437 437
EXPENDITURES
Current:
Public works - - 2,499 (2,499)
Total Expenditures - - 2,499 (2,499)
Excess (deficiency) of revenues over expenditures - - (2,062) (2,062)
OTHER FINANCING SOURCES (USES)
Transfers out - - (36,298) (36,298)
Total Other Financing Sources (Uses) - - (36,298) (36,298) Net change in fund balance $ - $ - (38,360) $ (38,360)
Fund balance - July 1, 2022 65,522
Fund balance - June 30, 2023 $ 27,162
*The City did not adopt a budget for the Capital Improvement Fund for the year ended June 30, 2023. 98 Attachment A Agenda Report Page 104
CITY OF PIEDMONT
SIDEWALK REPAIR - CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Other revenues $ - $ - $ 31,240 $ 31,240
Total Revenues - - 31,240 31,240
EXPENDITURES
Current:
Public works - - 34,127 (34,127)
Total Expenditures - - 34,127 (34,127)
Net change in fund balance $ - $ - (2,887) $ (2,887)
Fund balance - July 1, 2022 26,355
Fund balance - June 30, 2023 $ 23,468
*The City did not adopt a budget for the Sidewalk Repair Fund for the year ended June 30, 2023. 99 Attachment A Agenda Report Page 105
CITY OF PIEDMONT
EQUIPMENT REPLACEMENT - CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 58,713 $ 58,713
Total Revenues - - 58,713 58,713
EXPENDITURES
Current:
Administrative 65,100 65,100 42,451 22,649
Public safety - police services 205,000 205,000 195,227 9,773 Capital outlay 2,009,000 2,009,000 1,023,271 985,729
Total Expenditures 2,279,100 2,279,100 1,260,949 1,018,151 Excess (deficiency) of revenues over expenditures (2,279,100) (2,279,100) (1,202,236) 1,076,864
OTHER FINANCING SOURCES (USES)
Transfers in 1,072,192 1,072,192 690,000 (382,192)
Total Other Financing Sources (Uses) 1,072,192 1,072,192 690,000 (382,192) Net change in fund balance $ (1,206,908) $ (1,206,908) (512,236) $ 694,672 Fund balance - July 1, 2022 4,091,592
Fund balance - June 30, 2023 $ 3,579,356
100
Attachment A Agenda Report Page 106
CITY OF PIEDMONT
FACILITIES MAINTENANCE - CAPITAL PROJECTS FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
2022 - 2023
Budgeted Amounts
Original Final
Actual
Amounts
Variance
with Final
Budget
Positive
(Negative)
REVENUES
Use of money and property $ - $ - $ 17,483 $ 17,483
Other revenues - - 4,146 4,146
Total Revenues - - 21,629 21,629
EXPENDITURES
Current:
Administration 126,500 126,500 51,124 75,376
Public works 3,150 3,150 53,714 (50,564)
Public safety - police services 15,750 15,750 22,304 (6,554) Public safety - fire services 55,750 55,750 12,819 42,931 Recreation 430,750 430,750 472,728 (41,978)
Capital outlay 803,000 803,000 601,662 201,338
Total Expenditures 1,434,900 1,434,900 1,214,351 220,549 Excess (deficiency) of revenues over expenditures (1,434,900) (1,434,900) (1,192,722) 242,178
OTHER FINANCING SOURCES (USES)
Transfers in 1,364,450 1,364,450 1,416,544 52,094
Transfers out (8,500,000) (8,500,000) (9,975,000) (1,475,000) Total Other Financing Sources (Uses) (7,135,550) (7,135,550) (8,558,456) (1,422,906) Net change in fund balance $ (8,570,450) $ (8,570,450) (9,751,178) $ (1,180,728) Fund balance - July 1, 2022 10,322,584
Fund balance - June 30, 2023 $ 571,406
101
Attachment A Agenda Report Page 107
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.
102
Attachment A Agenda Report Page 108
CITY OF PIEDMONT
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
JUNE 30, 2023
Governmental Activities -
Internal Service Funds
Workers'
Compensation
Insurance
Liabilities
Total Internal
Service Funds
ASSETS
Current Assets
Cash and investments $ 1,935,841 $ 517,308 $ 2,453,149
Accounts receivable, net 1,407 - 1,407
Total Current Assets 1,937,248 517,308 2,454,556
Total Assets 1,937,248 517,308 2,454,556
LIABILITIES
Current Liabilities
Accounts payable 1,580 38,613 40,193
Claims payable - current 371,002 80,150 451,152
Total Current Liabilities 372,582 118,763 491,345
Non-Current Liabilities
Claims payable 815,997 136,628 952,625
Total Non-Current Liabilities 815,997 136,628 952,625
Total Liabilities 1,188,579 255,391 1,443,970
NET POSITION
Unrestricted 748,669 261,917 1,010,586
Total Net Position $ 748,669 $ 261,917 $ 1,010,586
103
Attachment A Agenda Report Page 109
CITY OF PIEDMONT
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
Governmental Activities -
Internal Service Funds
Workers'
Compensation
Insurance
Liabilities
Total Internal
Service Funds
OPERATING EXPENSES
Insurance and claims expenses $ 1,013,935 $ 1,472,093 $ 2,486,028 Total Operating Expenses 1,013,935 1,472,093 2,486,028
Operating Loss (1,013,935) (1,472,093) (2,486,028)
NON-OPERATING REVENUES (EXPENSES)
Other income 1,013,935 1,472,093 2,486,028
Total Non-Operating Revenues 1,013,935 1,472,093 2,486,028 Change in net position - - -
Net Position - July 1, 2022 748,669 261,917 1,010,586
Net Position - June 30, 2023 $ 748,669 $ 261,917 $ 1,010,586 104
Attachment A Agenda Report Page 110
CITY OF PIEDMONT
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2023
Governmental Activities -
Internal Service Funds
Workers'
Compensation
Insurance
Liabilities
Total Internal
Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Claims and premiums paid $ (843,262) $ (1,321,048) $ (2,164,310) Net Cash Used for Operating Activities (843,262) (1,321,048) (2,164,310)
CASH FLOWS FROM NON-CAPITAL FINANCING
ACTIVITIES
Other income 1,012,528 1,472,093 2,484,621
Net Cash Provided by Non-Capital Financing Activities 1,012,528 1,472,093 2,484,621 Net Increase in Cash and Cash Equivalents 169,266 151,045 320,311 Cash and Cash Equivalents - July 1, 2022 1,766,575 366,263 2,132,838 Cash and Cash Equivalents - June 30, 2023 $ 1,935,841 $ 517,308 $ 2,453,149
RECONCILIATION OF OPERATING LOSS TO NET CASH
USED FOR OPERATING ACTIVITIES:
Operating Loss $ (1,013,935) $ (1,472,093) $ (2,486,028) Changes in assets and liabilities:
Increase (decrease) in:
Accounts payable (2,326) 21,534 19,208
Claims payable 172,999 129,511 302,510
Net Cash Used for Operating Activities $ (843,262) $ (1,321,048) $ (2,164,310) 105
Attachment A Agenda Report Page 111
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.
106
Attachment A Agenda Report Page 112
CITY OF PIEDMONT
GENERAL FUND
COMBINING BALANCE SHEET
JUNE 30, 2023
General
Deposits and
Bonds Traffic Safety
Pension Rate
Stabilization
Total
General
Fund
ASSETS
Cash and investments $ 9,987,981 $ 635,633 $ 39,956 $ - $ 10,663,570 Restricted cash and investments - - - 4,316,293 4,316,293 Receivables:
Accounts 2,291,025 - 169 - 2,291,194
Interest 94,256 - - - 94,256
Leases 380,353 - - - 380,353
Prepaid expenses 82,178 - - - 82,178
Total Assets $ 12,835,793 $ 635,633 $ 40,125 $ 4,316,293 $ 17,827,844
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND
BALANCES
LIABILITIES
Accounts payable $ 900,072 $ 11,725 $ 1,109 $ - $ 912,906 Accrued wages and benefits 581,582 - - - 581,582
Deposits payable 2,540 623,908 - - 626,448
Unearned revenue 3,557,595 - - - 3,557,595
Total Liabilities 5,041,789 635,633 1,109 - 5,678,531
DEFERRED INFLOWS OF
RESOURCES
Leases 369,811 - - - 369,811
Total Deferred Inflows of
Resources 369,811 - - - 369,811
FUND BALANCES
Nonspendable 82,178 - - - 82,178
Restricted - - - 4,316,293 4,316,293
Unassigned 7,342,015 - 39,016 - 7,381,031
Total Fund Balances 7,424,193 - 39,016 4,316,293 11,779,502 Total Liabilities, Deferred
Inflows of Resources, and
Fund Balances $ 12,835,793 $ 635,633 $ 40,125 $ 4,316,293 $ 17,827,844 107
Attachment A Agenda Report Page 113
CITY OF PIEDMONT
GENERAL FUND
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE FISCAL YEAR ENDED JUNE 30, 2023
General
Deposits and
Bonds Traffic Safety
Pension Rate
Stabilization
Total
General
Fund
REVENUES
Property tax $ 17,528,512 $ - $ - $ - $ 17,528,512
Sales tax 227,099 - - - 227,099
Franchise tax 591,006 - - - 591,006
Utility users tax 1,534,144 - - - 1,534,144
Real property transfer tax 4,464,897 - - - 4,464,897
Business license and rental tax 745,047 - - - 745,047
Licenses and permits 695,359 - - - 695,359
Intergovernmental 2,251,390 - - - 2,251,390
Use of money and property 825,526 - 35 278,327 1,103,888 Current service charges 4,630,018 - - - 4,630,018
Parcel tax 2,520,255 - - - 2,520,255
Contributions and donations - - 33,804 - 33,804
Other revenues 411,175 - - - 411,175
Total Revenues 36,424,428 - 33,839 278,327 36,736,594
EXPENDITURES
Current:
Administration 3,708,119 - - - 3,708,119
Public works 5,922,989 - - - 5,922,989
Public safety:
Police services 7,502,623 - 10,655 - 7,513,278
Fire services 8,042,616 - - - 8,042,616
Recreation 3,726,775 - - - 3,726,775
Nondepartmental 3,487,860 - - - 3,487,860
Debt service - principal 250,322 - - - 250,322
Debt service - interest 3,634 - - - 3,634
Total Expenditures 32,644,938 - 10,655 - 32,655,593
Excess (Deficiency) of Revenues
over Expenditures 3,779,490 - 23,184 278,327 4,081,001
OTHER FINANCING SOURCES
(USES)
Transfers in 49,041 - - - 49,041
Transfers out (3,807,069) - (20,000) - (3,827,069)
Total Other Financing
Sources (Uses) (3,758,028) - (20,000) - (3,778,028)
Net Change in Fund Balances 21,462 - 3,184 278,327 302,973 Fund Balances - July 1, 2022 7,402,731 - 35,832 4,037,966 11,476,529 Fund Balances - June 30, 2023 $ 7,424,193 $ - $ 39,016 $ 4,316,293 $ 11,779,502 108
Attachment A Agenda Report Page 114
OTHER REPORTS
Attachment A Agenda Report Page 115
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, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated February 28, 2024.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Sacramento, California
February 28, 2024
MUNCPAsLLP
U
MUN CPAs, LLP 1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE•ROSEVILLE•SACRAMENTO•ZEPHYR COVE•KAUAI
Agenda Report Page 116
Attachment B
____________________________________________________________________________________________
CITY OF PIEDMONT
MEASURE B FUND
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED JUNE 30, 2023
____________________________________________________________________________________________ MUN, CPAs, LLP
1760 CREEKSIDE OAKS DRIVE, SUITE 160
SACRAMENTO, CA 95833
Attachment C Agenda Report Page 117
CITY OF PIEDMONT
MEASURE B FUND
FOR THE YEAR ENDED JUNE 30, 2023
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
Attachment C Agenda Report Page 118
INDEPENDENT AUDITOR'S REPORT
To the City Council
City of Piedmont
Piedmont, California
Opinion
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, 2023 and the related notes to the financial statements, as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Measure B Fund of the City of Piedmont, as of June 30, 2023, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
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 Goverment Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Piedmont, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 2, the financial statements present only the Measure B Fund and do not purport to, and do not present fairly the financial position of the City of Piedmont as of June 30, 2023, the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Our opinion is not modified with respect to this matter.
Management has omitted a management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Piedmont’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
Attachment C Agenda Report Page 119
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Piedmont's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Piedmont's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2023, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.
Sacramento, California
December 13, 2023
MUNCPAsLLP
Attachment C Agenda Report Page 120
CITY OF PIEDMONT
MEASURE B FUND
BALANCE SHEET
JUNE 30, 2023
Streets and
Roads
Bike and
Pedestrian Total
ASSETS
Cash and investments (Note 3) $ 67,291 $ - $ 67,291
Accrued interest receivable 876 - 876
TOTAL ASSETS $ 68,167 $ - $ 68,167
LIABILITIES
Accounts payable $ 68,167 $ - $ 68,167
TOTAL LIABILITIES 68,167 - 68,167
FUND BALANCE
Restricted for Measure B programs & projects - - -
TOTAL FUND BALANCE - - -
TOTAL LIABILITIES AND FUND BALANCE $ 68,167 $ - $ 68,167 See accompanying notes to the basic financial statements. 3 Attachment C Agenda Report Page 121
CITY OF PIEDMONT
MEASURE B FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2023
Streets and
Roads
Bike and
Pedestrian Total
REVENUES
Interest income $ 3,238 $ - $ 3,238
Total Revenues 3,238 - 3,238
EXPENDITURES
Public works 201,572 14,216 215,788
Total Expenditures 201,572 14,216 215,788
NET CHANGE IN FUND BALANCE (198,334) (14,216) (212,550) FUND BALANCE - BEGINNING OF YEAR 198,334 14,216 212,550 FUND BALANCE - END OF YEAR $ - $ - $ -
See accompanying notes to the basic financial statements. 4 Attachment C Agenda Report Page 122
CITY OF PIEDMONT
MEASURE B FUND
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2023
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 123
CITY OF PIEDMONT
MEASURE B FUND
NOTES TO THE FINANCIAL STATEMENTS (continued)
JUNE 30, 2023
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, 2023. 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.
6 Attachment C Agenda Report Page 124
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
Opinion on Measure B Fund
We have audited the Measure B Fund of the City of Piedmont's (the City) compliance with the types of 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 B Fund for the year ended June 30, 2023.
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 the Measure B Fund for the year ended June 30, 2023.
Basis for Opinion on Measure B Fund
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 the requirements specified in the Master Programs Funding Agreement between the City and ACTC. Our responsibilities under those standards and the requirements specified in the Master Programs Funding Agreement are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City of Piedmont and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of City of Piedmont’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements as specified in the Master Programs Funding Agreement between the City and the ACTC.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Master Programs Funding Agreement between the City and the ACTC will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of the Measure B Fund.
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
Attachment C Agenda Report Page 125
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Master Programs Funding Agreement between the City and the ACTC, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Master Programs Funding Agreement between the City and the ACTC, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.
Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.
A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Master Programs Funding Agreement. Accordingly, this report is not suitable for any other purpose.
Sacramento, California
December 13, 2023
MUN OPAELLP
Attachment C Agenda Report Page 126
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, 2023, and the related notes to the financial statements, which collectively comprise Fund’s basic financial statements and have issued our report thereon dated December 13, 2023.
Report on 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.
Report on 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.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Sacramento, California
December 13, 2023
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
MUNCPAsLLP
Attachment C Agenda Report Page 127
____________________________________________________________________________________________
CITY OF PIEDMONT
MEASURE BB FUND
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED JUNE 30, 2023
____________________________________________________________________________________________ MUN, CPAs, LLP
1760 CREEKSIDE OAKS DRIVE, SUITE 160
SACRAMENTO, CA 95833
Attachment D Agenda Report Page 128
CITY OF PIEDMONT
MEASURE BB FUND
FOR THE YEAR ENDED JUNE 30, 2023
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
Attachment D Agenda Report Page 129
INDEPENDENT AUDITOR'S REPORT
To the City Council
City of Piedmont
Piedmont, California
Opinion
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, 2023 and the related notes to the financial statements, as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Measure BB Fund of the City of Piedmont, as of June 30, 2023, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Piedmont, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 2, the financial statements present only the Measure BB Fund and do not purport to, and do not present fairly the financial position of the City of Piedmont as of June 30, 2023, the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Management has omitted a management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Piedmont's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
Attachment D Agenda Report Page 130
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Goverment Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Piedmont's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Piedmont’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2023, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.
Sacramento, California
December 13, 2023
MUNCPALLP
Attachment D Agenda Report Page 131
CITY OF PIEDMONT
MEASURE BB FUND
BALANCE SHEET
JUNE 30, 2023
Streets and
Roads
Bike and
Pedestrian Total
ASSETS
Cash and investments (Note 3) $ 543,870 $ - $ 543,870
Due from Bike & Pedestrian 9,122 - 9,122
Other receivables 222,541 13,419 235,960
Accrued interest receivable 1,874 19 1,893
TOTAL ASSETS $ 777,407 $ 13,438 $ 790,845
LIABILITIES
Accounts payable $ 42,542 $ - $ 42,542
Due to Streets & Roads - 9,122 9,122
TOTAL LIABILITIES 42,542 9,122 51,664
FUND BALANCE
Restricted for Measure BB capital projects 734,865 4,316 739,181 TOTAL FUND BALANCE 734,865 4,316 739,181
TOTAL LIABILITIES FUND BALANCE $ 777,407 $ 13,438 $ 790,845 See accompanying notes to the basic financial statements. 3 Attachment D Agenda Report Page 132
CITY OF PIEDMONT
MEASURE BB FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2023
Streets and
Roads
Bike and
Pedestrian Total
REVENUES
Measure BB pass-through revenue
Pass-through allocation $ 1,255,023 $ 75,678 $ 1,330,701 Interest income 3,528 36 3,564
Total Revenues 1,258,551 75,714 1,334,265
EXPENDITURES
Public works 946,072 71,916 1,017,988
Total Expenditures 946,072 71,916 1,017,988
NET CHANGE IN FUND BALANCE 312,479 3,798 316,277
FUND BALANCE - BEGINNING OF YEAR 422,386 518 422,904
FUND BALANCE - END OF YEAR $ 734,865 $ 4,316 $ 739,181
See accompanying notes to the basic financial statements. 4 Attachment D Agenda Report Page 133
CITY OF PIEDMONT
MEASURE BB FUND
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2023
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 134
CITY OF PIEDMONT
MEASURE BB FUND
NOTES TO THE FINANCIAL STATEMENTS (continued)
JUNE 30, 2023
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, 2023. 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.
6 Attachment D Agenda Report Page 135
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
Opinion on Measure BB Fund
We have audited the Measure BB Fund of the City of Piedmont's (the City) compliance with the types of 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 Fund for the year ended June 30, 2023.
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 the Measure BB Fund for the year ended June 30, 2023.
Basis for Opinion on Measure BB Fund
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 the requirements specified in the Master Programs Funding Agreement between the City and ACTC. Our responsibilities under those standards and the requirements specified in the Master Programs Funding Agreement are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City of Piedmont and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of City of Piedmont’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements as specified in the Master Programs Funding Agreement between the City and the ACTC.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Master Programs Funding Agreement between the City and the ACTC will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of the Measure BB Fund.
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
Attachment D Agenda Report Page 136
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Master Programs Funding Agreement between the City and the ACTC, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Master Programs Funding Agreement between the City and the ACTC, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.
Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.
A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Master Programs Funding Agreement. Accordingly, this report is not suitable for any other purpose.
Sacramento, California
December 13, 2023
MUNCPAs LLP
Attachment D Agenda Report Page 137
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, 2023, and the related notes to the financial statements, which collectively comprise Fund’s basic financial statements and have issued our report thereon dated December 13, 2023.
Report on 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.
Report on 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.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Sacramento, California
December 13, 2023
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
MUN CPALLP
Attachment D Agenda Report Page 138
____________________________________________________________________________________________
CITY OF PIEDMONT
MEASURE F FUND
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED JUNE 30, 2023
____________________________________________________________________________________________ MUN, CPAs, LLP
1760 CREEKSIDE OAKS DRIVE, SUITE 160
SACRAMENTO, CA 95833
Attachment E Agenda Report Page 139
CITY OF PIEDMONT
MEASURE F FUND
FOR THE YEAR ENDED JUNE 30, 2023
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
Attachment E Agenda Report Page 140
INDEPENDENT AUDITOR'S REPORT
To the City Council
City of Piedmont
Piedmont, California
Opinion
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, 2023 and the related notes to the financial statements, as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Measure F Fund of the City of Piedmont, as of June 30, 2023, and the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Piedmont, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 2, the financial statements present only the Measure F Fund and do not purport to, and do not present fairly the financial position of the City of Piedmont as of June 30, 2023, the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Our opinion is not modified with respect to this matter.
Management has omitted a management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Piedmont's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
Attachment E Agenda Report Page 141
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Piedmont's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Piedmont's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2023, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance.
Sacramento, California
December 13, 2023
MUN CPAsLLP
Attachment E Agenda Report Page 142
CITY OF PIEDMONT
MEASURE F FUND
BALANCE SHEET
JUNE 30, 2023
Local Road
Improvement
and Repair
Program
ASSETS
Cash and investments (Note 3) $ 47,638
Other receivables 8,178
Accrued interest receivable 248
TOTAL ASSETS $ 56,064
FUND BALANCE
Restricted for Measure F capital projects $ 56,064
TOTAL FUND BALANCE 56,064
TOTAL LIABILITIES AND FUND BALANCE $ 56,064
See accompanying notes to the basic financial statements. 3 Attachment E Agenda Report Page 143
CITY OF PIEDMONT
MEASURE F FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2023
Local Road
Improvement
and Repair
Program
REVENUES
Measure F pass-through revenue
Pass-through allocation $ 44,582
Interest income 359
Total Revenues 44,941
EXPENDITURES
Public works 104,963
Total Expenditures 104,963
CHANGE IN FUND BALANCE (60,022)
FUND BALANCE - BEGINNING OF YEAR 116,086
FUND BALANCE - END OF YEAR $ 56,064
See accompanying notes to the basic financial statements. 4 Attachment E Agenda Report Page 144
CITY OF PIEDMONT
MEASURE F FUND
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2023
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 145
CITY OF PIEDMONT
MEASURE F FUND
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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, 2023. 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.
6 Attachment E Agenda Report Page 146
INDEPENDENT AUDITOR'S REPORT ON MEASURE F COMPLIANCE
AND ON INTERNAL CONTROL OVER COMPLIANCE
To the City Council
City of Piedmont
Piedmont, California
Report on Compliance for Measure F Fund
Opinion on Measure F Fund
We have audited the Measure F Fund of the City of Piedmont's (the City) compliance with the types of 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 F Fund for the year ended June 30, 2023.
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 the Measure F Fund for the year ended June 30, 2023.
Basis for Opinion on Measure F Fund
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 the requirements specified in the Master Programs Funding Agreement between the City and ACTC. Our responsibilities under those standards and the requirements specified in the Master Programs Funding Agreement are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City of Piedmont and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of City of Piedmont’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements as specified in the Master Programs Funding Agreement between the City and the ACTC.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Master Programs Funding Agreement between the City and the ACTC will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of the Measure F Fund.
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
Attachment E Agenda Report Page 147
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Master Programs Funding Agreement between the City and the ACTC, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Master Programs Funding Agreement between the City and the ACTC, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.
Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.
A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Master Programs Funding Agreement. Accordingly, this report is not suitable for any other purpose.
Sacramento, California
December 13, 2023
MUN CPAsLLP
Attachment E Agenda Report Page 148
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 F Fund of the City of Piedmont (the “Fund”), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise Fund’s basic financial statements and have issued our report thereon dated December 13, 2023.
Report on 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.
Report on 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.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Sacramento, California
December 13, 2023
U
1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE •ROSEVILLE •SACRAMENTO•SOUTH LAKE TAHOE•KAUAI
NNN CPALip
Attachment E Agenda Report Page 149
CITY OF PIEDMONT
APPROPRIATIONS LIMIT CALCULATION
AS OF JUNE 30, 2024
____________________________________________________________________________________________ MUN CPAs, LLP
1760 CREEKSIDE OAKS DRIVE, SUITE 160
SACRAMENTO, CALIFORNIA 95833
Attachment F Agenda Report Page 150
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 accompanying Appropriations Limit Calculation of the City of Piedmont (the City) as of June 30, 2024. 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. This 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, 2023 appropriation limit to the annual permitted adjustments and agreed the resulting amount to the June 30, 2024 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, 2023 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.
U
MUN CPAs, LLP 1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE•ROSEVILLE•SACRAMENTO•ZEPHYR COVE•KAUAI
Attachment F Agenda Report Page 151
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
No procedures have been performed with respect to the determination of the appropriations limit for the base year, as defined by Article XIIIB of the California Constitution.
This report is intended solely for the information and use of the specified users listed above and is not intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of public record and its distribution is not limited.
Sacramento, California
February 28, 2024
TRUNCPAsLLP
Attachment F Agenda Report Page 152
CITY OF PIEDMONT
APPROPRIATIONS LIMIT CALCULATION
JUNE 30, 2024
Amount Source
Total revised prior year's appropriation limit (at June 30, 2023) $ 30,278,160 Revised prior year's Measure Y voter approved increase (2,522,000) A. Revised prior year's appropriations limit (at June 30, 2023) 27,756,160 B. Adjustment factors for the current fiscal year:
1. Population change 0.9953 * State Finance
2. Inflation (per capita personal income change) 1.0444 * State Finance Total adjustment 1.0395 * (B1 x B2)
C. Annual adjustment 1,096,369 A x (B - 1)
D. Other Adjustments
Lost responsibility (-) -
Transfer to fees (-) -
Voter Approved Increase (+) 2,622,000
Assumed Responsibility (+) -
2,622,000
E. Total adjustments 3,718,369 C+D
F. Current year's appropriations limit (at June 30, 2024) $ 31,474,529 A+E * Rounded to the nearest ten thousandth
Attachment F Agenda Report Page 153
February 28, 2024
To the City Council and Management
City of Piedmont
120 Vista Avenue
Piedmont, CA 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, 2023.
Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, 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 May 23, 2023. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. As described in Note 1 to the financial statements, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 91, Conduit Debt Obligations; No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements; and No. 96, Subscription-Based Information Technology Arrangements in 2023. 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.
Lease receivable and deferred inflows of resources – based on the present value of payments to be received.
Right-of-use subscription assets and subscription liabilities – based on the present value of payments to be made.
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. Attachment A summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to each opinion unit’s financial statements taken as a whole. The material misstatements in attachment B were detected as a result of audit procedures and were corrected by management.
U
MUN CPAs, LLP 1760 Creekside Oaks Drive, Suite 160, Sacramento, CA 95833 www.muncpas.com GLENDALE•ROSEVILLE•SACRAMENTO•ZEPHYR COVE•KAUAI
Agenda Report Page 154
Attachment G
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated February 28, 2024.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the management’s discussion and analysis; budgetary comparison schedules for the general fund and major special revenue fund; and the required GASB pension and OPEB schedules, which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the 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 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,
MUN CPAs, LLP
MUN CPAsLLP
Attachment G Agenda Report Page 155
Description
Assets &
Deferred
Outflows
Liabilities &
Deferred
Inflows Equity Revenue Expenses
Current Year Differences
To correct interest accrual related to
GO bonds $ - $ 7,086 $ - $ - $ 7,086
To move current year revenue to prior
period adjustment - - 18,821 (18,821) -
Total Income Statement Effect $ (18,821) $ 7,086
Balance Sheet Effect $ - $ 7,086 $ 18,821
Effect - Increase (Decrease)
Attachment A
CITY OF PIEDMONT
SUMMARY OF PASSED AUDIT ADJUSTMENTS
June 30, 2023
Attachment G Agenda Report Page 156
Description
Assets &
Deferred
Outflows
Liabilities &
Deferred
Inflows Equity Revenue Expense
Current Year Differences
To apply CY OPEB contributions to
the liability $ - $ (888,950) $ - $ - $ (888,950)
OPEB: To record implicit subsidy to
retirees and apply contribution to
liability. - (222,846) - - (222,846)
OPEB: To record CY change in
deferred outflows & inflows (767,828) (1,542,739) - (774,911) To adjust transfer balance. - - - 690,000 690,000
To record GASB 96 adjustment 607,765 527,023 - - (80,742) Total Income Statement Effect $ 690,000 $ (1,277,449)
Balance Sheet Effect $ (160,063) $ (2,127,512) $ -
Effect - Increase (Decrease)
Attachment B
CITY OF PIEDMONT
SUMMARY OF AUDIT ADJUSTMENTS
June 30, 2023
Attachment G Agenda Report Page 157