City Council
259 N. Wilma Avenue
Ripon, CA 95366
MEMO
To: Honorable City Council
From: Lisa Roos, City Clerk & Finance Director
Date: 11/08/2022
Subject: Audited financial statements
RECOMMENDED ACTION:
No action is required at this time. Resolutions will be presented in December for acceptance of the City of Ripon Financial Statements and the Money Purchase Thrift Pension Plan Financial Statements and the Independent Auditors Reports for the fiscal year end June 30, 2022.
BACKGROUND:
The City utilizes a number of funds to track revenue and expenses used to conduct the business of the various City departments. These funds are classified by three categories - “Operating Funds”, “Capital Funds”, and “Restricted Funds”. Attached is a flowchart showing each of these fund categories along with the breakdown of the different funds within each of these categories.
The City of Ripon’s Financial Statements and Independent Auditor’s Report as of June 30, 2022 has specific requirements and verbiage that must be used based upon auditing standards, which does not necessarily match the City’s day-to-day terminology. The terms used within the audit to refer to our funds are Governmental Funds, Proprietary Funds (also referred to as BusinessLike Activities) and Fiduciary Funds. Below is a description of these funds and how they relate to our flowchart of fund categories.
Governmental Funds – Most of the City’s basic services are reported in governmental funds that focus on how money flows in and out of those funds and the balances left at year end that are available for spending. These funds are noted on our flowchart as General Fund Operating Funds, Capital Funds and also the Restricted Funds except for Redevelopment.
Proprietary Funds – The City charges customers for the services it provides.
Sometimes throughout the audit these funds are also noted as Business-Type Activities.
These funds are noted on our flowchart as Enterprise Operating Funds.
November Staff Report
Fiduciary Funds – These funds are established to serve as the custodian for assets held in a trustee or agency capacity for others and, therefore, cannot be used to support the City’s own programs. These funds are our Successor Redevelopment Agency Funds noted on our flowchart under Restricted funds.
The term “restricted” on our fund category flowchart and within the audit have different meanings. On our fund category flowchart, restricted funds are funds that we have restricted internally for different needs, as noted. In the audit, restricted funds are restricted because of constraints placed on the resources either externally imposed by creditors, grantors, contributors or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation. This may be because of grants or different funding sources that have not yet been expended.
DISCUSSION/ANALYSIS:
The audits for the City of Ripon and for the Money Purchase Thrift Pension Plan for the fiscal year ending June 30, 2022 were completed by Price Paige & Company. As noted in the audit communication letters, there were no significant audit findings, no difficulties encountered between the auditors and staff, and no disagreements between management and the auditors.
The audit communication letters also have verbiage that is required by new auditing standards.
These new standards require the auditors to disclose to the Governing Council areas they have identified as significant risks in the City. These areas were a point of focus for the auditors this year. As noted in the letter, the identification of such risks of material misstatements does not necessarily indicate that there were instances of error or omission.
This memorandum is to serve as a narrative overview and analysis of the financial activities of the City of Ripon for the fiscal year ending June 30, 2022. We encourage readers to consider the information presented here in conjunction with the information that is included in the financial audit.
Financial Highlights:
General Fund:
General fund operating revenue increased by $2,441,663 (or 19%) as compared to the previous fiscal year.
General fund operating expenses increased by $1,879,443 (or 16%) as compared to the previous fiscal year.
During the fiscal year ending June 30, 2022, a total of $237,245 was transferred from the General Fund to Landscape Districts ($63,798), CNG Capital Reserve ($15,878), and CalPERS Contingency Fund ($157,569).
The City’s share of CalPERS unfunded liability decreased significantly due to the larger than normal returns during the prior fiscal year. Fortunately, not all employees of the City of Ripon participate in PERS, so the City’s unfunded liability is much less than other municipalities ($3,257,160 as of June 30, 2021 PERS Valuation Report). Since fiscal year 2017-2018, $1,339,369 has been transferred to a CalPERS Contingency fund and a $250,000 prepayment towards the City’s unfunded accrued liability has been made.
November Staff Report
Street & Road Funds:
At the end of the fiscal year ending June 30, 2022, the fund balances of the Street & Road Operating fund was $3,389,430 and the Street & Road Reserve fund was $2,461,384.
The Street & Road Operating fund balance increased by $454,701 during fiscal year 21/22.
SJCOG changed the policy for FY 21/22 regarding the use of LTF revenue that impacts the City of Ripon. The City must allocate 25% of this revenue to transit related expenses.
Based upon the timing of receiving these funds, the City of Ripon will have lower funds available by 25% in FY 22/23.
The following table is a summary of the Street & Road Operating fund revenue and expenses for the fiscal year ending June 30, 2022 as compared to the previous fiscal year:
FY 2020-21 FY 2021-22
Operating Revenue $1,827,882 $4,954,583
Highway User Tax Account 358,310 361,781
Local Transportation Fund 745,833 799,211
Measure K Local Streets 319,277 392,101
Senate Bill 1 287,692 326,350
Street & Road Misc. Revenue1 116,770 3,075,140
Operating Expenses $573,665 $767,064
Street & Road Maintenance 241,433 373,307
Landscape Maintenance 319,514 371,945
Administration 12,156 18,015
Engineering 562 3,797
Capital Projects $775,553 $3,732,818
Street & Road Operating Fund Ending
Balance $2,934,729 $3,389,430
The following is a summary of major Street & Road capital expenses during the year ending June 30, 2022:
o $7,392 for the Ripona and Parkview Safe Route to School Project o $3,677,074 for the Stockton Avenue Rehabilitation Phase 2 Project o $21,573 for the Lower Stanislaus River Multi-Use Trail Project o $26,779 for the Utility Maintenance Asphalt Project
1 Includes grant income in FY 2020-21 for the Stockton Rehabilitation, Doak Boulevard Shared Use Path, Lower Stanislaus River Multi-Use Trail, and 2nd Street Safe Route to School Improvements projects and in FY 2021-22 for the Stockton Rehabilitation and Lower Stanislaus River Multi-Use Trail projects.
November Staff Report
Enterprise Operating Funds:
At the end of the fiscal year ending June 30, 2022, the Enterprise Operating funds had the following activity by source:
FY 2020-21 FY 2021-22
Fund Ending
Balance Income Expenses
Balance
Prior to
Transfer
Transfer
Final Ending
Balance
Water $926,514 $3,816,116 ($2,509,104) $2,233,526 ($1,307,012) $926,514 Sewer $763,709 $1,927,363 ($1,335,463) $1,355,609 ($645,000) $710,609 Garbage $211,230 $2,403,992 ($2,309,685) $305,537 ($94,307) $211,230 During fiscal year 2021-2022, the Water and Sewer enterprise operating funds were able to transfer to their respective enterprise capital funds the recommended amount made by Tom Pavletic from Municipal Financial Services for future capital replacement.
However, the garbage fund was only able to transfer the current year’s cash flow and not the recommended amount of $280,000.
Enterprise Capital Funds:
The following is a summary of the fund balance of each enterprise capital account for fiscal year ending June 30, 2022, as compared to the previous fiscal year:
FY 2020-21 FY 2021-22
Fund Ending
Balance Income Expenses
Balance
Prior to
Transfer
Transfer
Final Ending
Balance
Water $7,368,413 $242,092 ($1,684,122) $5,926,383 $1,307,012 $7,233,395 Sewer $1,875,486 $11,341 ($554,124) $1,332,703 $355,000 $1,687,703 Sewer WWTP Reserve $864,885 $6,240 ($0) $871,125 $290,000 $1,161,125 Garbage $988,842 $12,324 ($28,338) $972,828 $94,307 $1,067,135 Storm Drain $465,229 $3,130 ($97,337) $371,022 $0 $371,022 The following is a summary of major Enterprise Capital expenses during the year ending June 30, 2022:
Water Enterprise Capital Summary:
o $902,000 for drilling of Well #19
o $25,000 for design of Well #3
o $580,000 for Stockton Avenue Rehabilitation Project
o $28,000 for Utility Maintenance Asphalt Patch Project o $14,000 for a radio study
o $8,000 for new equipment
o $127,000 for the purchase of new endpoints
November Staff Report
Sewer Enterprise Capital Summary:
o $532,000 for Stockton Avenue Rehabilitation Project
o $14,000 for a radio study
o $8,000 for new equipment
Garbage Enterprise Capital Summary:
o $28,000 for replacement garbage cans
Storm Drain Enterprise Capital Summary:
o $97,000 for Stockton Avenue Rehabilitation Project
PFFP Capital Funds:
The following is a summary of the fund balance of each PFFP Capital Fund for fiscal year ending June 30, 2022, as compared to the previous fiscal year:
FY 2020-21 FY 2021-22
Fund Ending
Balance Income Expenses Final Ending Balance
Water $2,639,214 $155,147 $0 $2,794,361
SSJID Connection Reserve $774,052 $44,332 $0 $818,384
Garbage ($668,185) $14,395 ($9,817) ($663,607)
Wastewater $5,133,141 $247,328 $0 $5,380,469
Storm Drain $2,167,143 $112,916 $0 $2,280,059
Transportation $717,616 $507,311 $0 $1,224,927
RTIF $1,246,220 $64,461 $0 $1,310,681
Parks & Recreation $1,104,351 $98,445 $0 $1,202,796
Parks & Rec loan repayment funds $548,250 -$8,727 $0 $539,523 Police ($1,198,258) $9,372 ($8,632) ($1,197,518)
City Hall ($3,786,868) $19,612 ($27,296) ($3,794,552)
Corporation Yard $589,479 $31,139 ($175,555) $445,063
Library ($605,307) $2,540 ($4,365) ($607,132)
TOTAL $8,660,848 $9,733,454
The following is a summary of major PFFP capital expenses during the year ending June 30, 2022:
o $175,000 for the Corporation Yard design
The City advanced construction for the City Hall and Library buildings and constructed each to a size that accommodates the future growth of the General Plan, which resulted in negative balances to these funds since fees from future growth have not yet been collected. With that, the revenue from this growth over the term of the buildout of the City’s general plan is necessary to relieve these negative balances. Goodwin & Associates re-evaluated the negative fund balances in early 2021 to ensure that the PFFP development fees for these funds are sufficient to ensure that enough revenue is collected from the future growth within the City’s general plan.
November Staff Report
In 2011, the Ripon Redevelopment Agency loaned the Parks and Recreation PFFP Fund $3.3 million to construct the Mistlin Softball Fields. The loan repayment was made with half the Parks and Recreation PFFP fees collected since the loan was made. As of March 30, 2020, the total loan amount has been collected, of which $1,689,238 will remain with the City and $539,523 will be returned to the State to be distributed to the various taxing entities at some point in the future. Until the funds are returned, this amount will continue to show as a liability in the table below.
Debt Obligations:
At the end of the fiscal year ending June 30, 2022, the City’s total debt obligation was $29,089,374. This balance is summarized in the table below:
Debt Balance @
6/30/21
Additions in
FY 21/22
Paid in
FY 21/22
Ending Balance
@ 6/30/22
2011 Sewer Bonds $880,000 $160,000 $720,000
2006 Water Revenue Bonds $4,670,000 $300,000 $4,370,000 2012 Water Revenue Bonds $1,710,000 $225,000 $1,485,000 2020 Redevelopment Bonds $20,005,512 $224,707 $19,780,805 Parks & Recreation loan to
City and Redevelopment
Agency
$548,250 -$8,727 $0 $539,523
Water Surcharge Installation
Project; repaid by surcharges
collected until 2025
$826,841 $192,716 $634,125
Mistlin Indoor Facility
Parking Lot; repaid by facility
lease
$1,642,721 $82,800 $1,559,921
TOTAL $30,283,324 ($8,727) $1,185,223 $29,089,374
Economic Development Incentive Program:
In May 2017, through Resolution 17-22, the City Council adopted an Economic Development Incentive Program to stimulate private sector investment in sales tax producing development in Ripon with the goal of retaining and growing the tax structure and jobs that are essential to maintaining a high quality of life for Ripon residents. At the end of the fiscal year ending June 30, 2022, the City’s outstanding Economic Incentives were $2,296,465. This balance is summarized in the table below:
Business Original
Incentive
Balance @
6/30/21
Tax received to offset
incentive in FT 21/22
Ending
Balance @
6/30/22
Boat Country $66,944 $0 $0 $0
JKB Living $655,417 $612,823 $44,530 $568,293
Happy Daze RV $1,311,746 $1,311,746 $0 $1,311,746
TownePlace Suites by
Marriott (added in FY 21/22)
$416,426 $0 $0 $416,426
TOTAL $1,924,569 $44,530 $2,296,465
November Staff Report
Money Purchase Thrift Pension Plan (Non-PERS Retirement Plan):
The audit for the Money Purchase Thrift Pension Plan Financial Statements is also attached for review. The net position available for benefits decreased $1,205,709 during fiscal year ending June 30, 2022. During fiscal year ending June 30, 2022, the Plan had a significant depreciation in the fair value of investments especially compared to the prior year, which had significant appreciation due to the returns in the market. In addition, in fiscal year ending 2021, there was a large amount of benefits paid to participants due to rollovers or distributions of 9 employees compared to 2 in fiscal year ending June 30, 2022.
Attachments:
1. Budget Category Reporting Summary
2. Fund Balances 2022.06.30
3. 2022.06.30 City of Ripon - Audit Communication Letter
4. 2022.06.30 City of Ripon - Financial Statements with Independent Auditor's Report
5. 2022.06.30 City of Ripon - Single-Audit Report
6. 2022.06.30 City of Ripon Money Purchase Thrift Pension Plan - Audit Communication Letter
7. 2022.06.30 City of Ripon Money Purchase Thrift Pension Plan - Financial Statements November Staff Report
Budget Category Reporting Summary
Fund Description
Beginning Balance
7/1/2021 YTD Income YTD Expenditures YTD Transfers
Ending Balance
6/30/2022
OPERATING FUNDS
General Funds
General Fund 5,215,340.02 $15,220,108.59 (13,697,018.36) ($237,245.49) 6,501,184.76 Sick Leave Contingency 353,947.24 $1,599.80 $0.00 $0.00 355,547.04 PERS Contingency 972,997.66 $4,830.02 $0.00 $157,568.97 1,135,396.65 Healthcare Contingency 208,135.65 $889.20 $0.00 $0.00 209,024.85 Liability SIR Contingency 624,406.97 $2,667.60 $0.00 $0.00 627,074.57 Litigation/Natural Disaster Contingency 505,514.03 $1,970,472.94 $0.00 $0.00 2,475,986.97 Asset/Liability adjustments 46,075.42 $54,342.88 $0.00 $0.00 100,418.30 Street & Road Funds
Street & Roads $2,934,729.30 $4,954,583.01 ($4,499,881.92) $0.00 $3,389,430.39 Street & Road Reserve 2,451,594.00 $9,790.26 $0.00 $0.00 2,461,384.26 Transit funds $22,504.86 $55,449.05 ($55,926.28) $0.00 $22,027.63 Enterprise Operating Funds
Water Operating 926,513.59 $3,816,116.28 ($2,509,104.61) ($1,307,011.67) 926,513.59 Sewer Operating 763,708.89 $1,927,363.07 ($1,335,462.69) ($645,000.00) 710,609.27 Garbage Operating 211,230.50 $2,403,992.23 ($2,309,684.88) ($94,307.35) 211,230.50 $ 15,236,698.13 $ 30,422,204.93 $ (24,407,078.74) $ (2,125,995.54) $ 19,125,828.78 CAPITAL FUNDS
General Capital Funds
Parks & Recreation 930,684.27 $89,359.57 ($138,615.05) $0.00 881,428.79 Jack Tone Golf Course Capital Reserve 401,758.25 $71,223.18 $0.00 $0.00 472,981.43 CNG Station Capital Reserve 202,066.30 $1,458.00 ($23,419.80) $15,878.35 195,982.85 Department Funds $1,547,067.66 $90,677.73 ($578,131.14) $0.00 $1,059,614.25 Underground Utilties $10,124.77 $73.05 $0.00 $0.00 $10,197.82 Mitigation Fees 7,922,809.43 $115,633.92 $0.00 $0.00 8,038,443.35 Enterprise Capital Funds
Water Enterprise Capital 7,368,413.00 $242,091.98 ($1,684,122.19) $1,307,011.67 7,233,394.46 Sewer Enterprise Capital 1,875,485.96 $11,340.61 ($554,123.94) $355,000.00 1,687,702.63 Sewer WWTP Reserve 864,884.96 $6,240.53 $0.00 $290,000.00 1,161,125.49 Garbage Enterprise Capital 988,842.10 $12,323.62 ($28,338.21) $94,307.35 1,067,134.86 Storm Drain Enterprise Capital 465,228.99 $3,130.12 ($97,336.81) $0.00 371,022.30 PFFP Capital Funds
Water 2,639,213.83 $155,147.46 $0.00 $0.00 2,794,361.29 SSJID Connection Reserve 774,052.44 $44,332.20 $0.00 $0.00 818,384.64 Garbage (668,185.11) $14,395.27 ($9,816.51) $0.00 (663,606.35) Wastewater 5,133,140.77 $247,327.76 $0.00 $0.00 5,380,468.53 Storm Drainage 2,167,143.66 $112,916.05 $0.00 $0.00 2,280,059.71 Transportation $717,616.41 $507,310.99 $0.00 $0.00 $1,224,927.40 Regional Transportation Impact Fee $1,246,219.84 $64,461.10 $0.00 $0.00 $1,310,680.94 Parks & Recreation $1,107,552.14 $95,244.05 $0.00 $0.00 $1,202,796.19 Parks & Recreation loan repayment funds 545,049.46 ($5,526.82) $0.00 539,522.64 Police ($1,198,258.28) $9,371.56 ($8,632.14) $0.00 ($1,197,518.86) City Hall (3,786,867.64) $19,611.53 ($27,295.88) $0.00 (3,794,551.99) Corporation Yard 589,479.31 $31,138.98 ($175,554.85) $0.00 445,063.44 Library (605,307.31) $2,539.69 ($4,364.90) $0.00 (607,132.52) $ 31,238,215.21 $ 1,941,822.13 $ (3,329,751.42) $ 2,062,197.37 $ 31,912,483.29 RESTRICTED FUNDS
Special Revenue/Restricted Funds
Benefit Assessment Districts 278,846.70 $161,937.54 $0.00 $0.00 440,784.24 NPSP Assessment District 802,039.47 $5,787.08 $0.00 $0.00 807,826.55 Landscape & Lighting Districts 206,850.55 $443,558.52 ($464,954.41) $63,798.17 249,252.83 Redevelopment ‐ Housing $4,124,336.69 $971,260.70 $0.00 $0.00 $5,095,597.39 Redevelopment ‐ City $1,718,980.83 $12,403.24 $0.00 $0.00 $1,731,384.07 Redevelopment ‐ State $1,231,349.62 $785,744.85 ($1,132,279.69) $0.00 $884,814.78 Housing Fund 1,467,634.54 $283,758.16 $52,446.85 $0.00 1,803,839.55 CDBG 0.00 $35,836.96 ($35,836.96) $0.00 ‐ $ 9,830,038.40 $ 2,700,287.05 $ (1,580,624.21) $ 63,798.17 $ 11,013,499.41 GRAND TOTAL $ 56,304,951.74 $ 35,064,314.11 $ (29,317,454.37) $ 0.00 $ 62,051,811.48 Bank Accounts‐Balances 5/31/2022 Bank Accounts
B of Stkn ‐Gen 2,367,206.40 B of Stkn ‐Gen 26,441.41 Petty Cash Petty Cash 700.00 700.00 Police ‐ petty cash Police ‐ petty cash 400.00 400.00 Petty Cash ‐ A/C Petty Cash ‐ A/C 200.00 200.00 B of Stkn.‐PR B of Stkn.‐PR 5,999.99 6,000.00 B of Stkn.‐Rec 18,376.80 B of Stkn.‐Rec 36,192.43 B of Stkn.‐PD Voucher Pr B of Stkn.‐PD Voucher Pr 1,984.40 o 1,984.40 B of America‐Prkg Cit. 11,345.88 B of America‐Prkg Cit. 14,757.88 LAIF 32,519,941.09 LAIF 35,519,941.09 Bk of New York 26,364,893.84 Bk of New York 26,445,097.53 Redev. Debt ‐ 2020 Redev. Debt ‐ 2020 0.45 0.50 Water Bonds‐2006 Water Bonds‐2006 94.06 94.11 Water Bonds‐2012 Water Bonds‐2012 2.13 2.13 BANK TOTALS 61,291,145.04 $ BANK TOTALS 62,051,811.48 $ TOTAL RESTRICTED FUNDS
CITY OF RIPON
FUND BALANCES SUMMARY
TOTAL CAPITAL FUNDS
TOTAL OPERATING FUNDS
2021‐2022
June‐22 FINAL
C:\Users\lroos\Documents\Month End\06.2022\11. cash June 2022 FINAL.xls - Summary Fund Balances 2022.06.30