City Council
259 N. Wilma Avenue
Ripon, CA 95366
MEMO
To: Honorable City Council
From: Lisa Roos, City Clerk & Finance Director
Date: 11/14/2023
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, 2023.
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, 2023 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. 22-23 Audited Financial Statements Council packet copied from November 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:
We have received drafts of the City of Ripon and for the Money Purchase Thrift Pension Plan audits for the fiscal year ending June 30, 2023. Final copies will be available for the December Council meeting.
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, 2023. 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 $1,688,947 (or 11%) as compared to the previous fiscal year.
General fund operating expenses increased by $1,258,115 (or 9%) as compared to the previous fiscal year.
During the fiscal year ending June 30, 2023, a total of $1,910,324 was transferred from the General Fund. Transfers were made to the Street and Road Reserve Fund ($424,328), Sick Leave Contingency Fund ($45,000), Department Capital Fund ($1,036,517), Parks Capital Fund ($85,000), Landscape Districts ($44,119), CNG Capital Reserve ($113,499), and CalPERS Contingency Fund ($161,861).
The City’s share of CalPERS unfunded liability increased significantly due to the smaller 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 ($6,549,253 as of June 30, 2022 PERS Valuation Report). Since fiscal year 2017-2018, $1,501,230 has been transferred to a CalPERS Contingency fund and a $250,000 prepayment towards the City’s unfunded accrued liability has been made.
During fiscal year 22/23, the City transferred the CalPERS Contingency fund balance into a Section 115 Trust. The Trust balance at June 30, 2023 was $1,204,096. 22-23 Audited Financial Statements Council packet copied from November Street & Road Funds:
At the end of the fiscal year ending June 30, 2023, the fund balances of the Street & Road Operating fund was $4,554,836 and the Street & Road Reserve fund was $2,915,287.
During the fiscal year ending June 30, 2023, a Street & Road Reconstruction Fund was created and had an ending balance of $546,643. The City will continue to deposit funds into this Fund annually for reconstruction projects. The Street & Road Operating fund balance increased by $1,165,407 during fiscal year 22/23. 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 future years, beginning 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, 2023 as compared to the previous fiscal year:
FY 2021-22 FY 2022-23
Operating Revenue $4,954,583 $2,728,028
Highway User Tax Account 361,781 415,660
Local Transportation Fund 799,211 626,942
Measure K Local Streets 392,101 409,643
Senate Bill 1 326,350 356,191
Street & Road Misc. Revenue1 3,075,140 919,592
Operating Expenses $767,064 $656,892
Street & Road Maintenance 373,307 302,096
Landscape Maintenance 371,945 325,316
Administration 18,015 25,617
Engineering 3,797 3,863
Capital Projects $3,732,818 $359,087
Transfer to Street & Road
Reconstruction Fund $546,643
Street & Road Operating Fund Ending
Balance $3,389,430 $4,554,836
1 Includes grant income in FY 2021-22 for the Stockton Rehabilitation and Lower Stanislaus River Multi-Use Trail projects and in FY 2022-23 for the Stockton Rehabilitation.
The following is a summary of major Street & Road capital expenses during the year ending June 30, 2023:
o $291,134 for the Stockton Avenue Rehabilitation Phase 2 Project o $10,098 for the Lower Stanislaus River Multi-Use Trail Project o $31,305 for the South of Main Cape Seal design
o $26,550 for the Utility Maintenance Asphalt Project
22-23 Audited Financial Statements Council packet copied from November Enterprise Operating Funds:
At the end of the fiscal year ending June 30, 2023, the Enterprise Operating funds had the following activity by source:
FY 2021-22 FY 2022-23
Fund Ending
Balance Income Expenses
Balance
Prior to
Transfer
Transfer
Final Ending
Balance
Water $926,514 $3,825,116 ($2,678,581) $2,073,049 ($1,146,535) $926,514 Sewer $710,609 $2,015,969 ($1,355,152) $1,371,426 ($674,000) $697,426 Garbage $211,230 $2,526,054 ($2,300,398) $436,886 ($225,656) $211,230 During fiscal year 2022-2023, 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, 2023, as compared to the previous fiscal year:
FY 2021-22 FY 2022-23
Fund Ending
Balance Income Expenses
Balance
Prior to
Transfer
Transfer
Final Ending
Balance
Water $7,233,395 $288,009 ($1,347,064) $6,174,340 $1,146,535 $7,320,875 Sewer $1,687,703 $85,911 ($579,777) $1,193,837 $355,000 $1,548,837 Sewer WWTP Reserve $1,161,125 $17,510 ($0) $1,178,635 $319,000 $1,497,635 Garbage $1,067,135 $11,921 ($436,012) $643,044 $225,656 $868,700 Storm Drain $371,022 $5,595 ($35,017) $341,600 $0 $341,600 The following is a summary of major Enterprise Capital expenses during the year ending June 30, 2023:
Water Enterprise Capital Summary:
o $1,116,000 for drilling of Well #19
o $9,000 for design of Well #3
o $31,000 for Well #12 Impact Analysis
o $27,000 for Utility Maintenance Asphalt Patch Project o $67,000 related to the Corporation Yard
o $12,000 for 1/3 of a forklift (paid by Water, Sewer & Garbage Enterprise Capital Funds)
o $85,000 for the purchase of new endpoints
22-23 Audited Financial Statements Council packet copied from November Sewer Enterprise Capital Summary:
o $2,000 for Stockton Avenue Rehabilitation Project
o $343,000 related to the Corporation Yard
o $235,000 for a generator, trailer mounted pump & hose, 2 aerators and 1/3 of a forklift (paid by Water, Sewer & Garbage Enterprise Capital Funds) Garbage Enterprise Capital Summary:
o $411,000 for a CNG garbage truck and 1/3 of a forklift (paid by Water, Sewer & Garbage Enterprise Capital Funds)
o $25,000 for replacement garbage cans
Storm Drain Enterprise Capital Summary:
o $35,000 related to the Corporation Yard
PFFP Capital Funds:
The following is a summary of the fund balance of each PFFP Capital Fund for fiscal year ending June 30, 2023, as compared to the previous fiscal year:
FY 2021-22 FY 2022-23
Fund Ending
Balance Income Expenses Transfers Final Ending Balance
Water $2,794,361 $186,686 $0 $2,981,047
SSJID Connection Reserve $818,384 $53,492 $0 $871,876
Garbage ($663,607) $14,370 ($106,204) ($755,441)
Wastewater $5,380,469 $305,277 $0 $5,685,746
Storm Drain $2,280,059 $135,789 $0 $2,415,848
Transportation $1,224,927 $637,618 ($18,757) $1,843,788 RTIF $1,310,681 $304,122 $0 $1,614,803
Parks & Recreation $1,202,796 $42,855 $0 ($1,200,000) $45,651 Police ($1,197,518) $22,424 ($17,940) ($1,193,034)
City Hall ($3,794,552) $46,833 ($56,974) ($3,804,693)
Corporation Yard $445,063 $124,439 ($751,448) $7,428,300 $7,246,3541 Library ($607,132) $1,076 ($9,146) ($615,202)
TOTAL $9,193,931 $16,336,743
1Balance differs from audited financial statements because audit refers to City’s transfers or balances as advances to and/or from other funds.
The following is a summary of major PFFP capital expenses during the year ending June 30, 2023:
o $95,000 for new garbage cans
o $751,000 for the Corporation Yard design and construction 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 & 22-23 Audited Financial Statements Council packet copied from November 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.
Debt Obligations:
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 $550,028 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.
At the end of the fiscal year ending June 30, 2023, the City’s total debt obligation was $26,408,259. This balance is summarized in the table below:
Debt Balance @
6/30/22
Additions in
FY 22/23
Paid in
FY 22/23
Ending Balance
@ 6/30/23
2011 Sewer Bonds $720,000 $170,000 $550,000
2006 Water Revenue Bonds $4,370,000 $315,000 $4,055,000 2012 Water Revenue Bonds $1,485,000 $230,000 $1,255,000 2020 Redevelopment Bonds $19,780,805 $224,707 $19,556,098 Parks & Recreation loan to
City and Redevelopment
Agency
$539,523 $10,505 $0 $550,028
Water Surcharge Installation
Project; repaid by surcharges
collected until 2025
$634,125 $191,992 $442,133
Mistlin Indoor Facility
Parking Lot; repaid by facility
lease; loan paid down by
AB1600 funds of $1,200,000
in FY 22/23; remainder
forgiven
$1,559,921 $113,250
+$1,200,000
+$246,671
$ 0
TOTAL $29,089,374 $10,505 $2,691,620 $26,408,259
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, 2023, the City’s outstanding Economic Incentives were $2,246,354. This balance is summarized in the table below:
Business Original
Incentive
Balance @
6/30/22
Tax received to
offset incentive in
FY 22/23
Ending
Balance @
6/30/23
Boat Country $66,944 $0 $0 $0
JKB Living $655,417 $568,293 $42,467 $525,826
Happy Daze RV $1,311,746 $1,311,746 $7,644 $1,304,102
TownePlace Suites by Marriott1 $416,426
TOTAL $1,880,039 $50,111 $1,829,928
22-23 Audited Financial Statements Council packet copied from November 1 In 2021/2022, the City Council approved this incentive plan, but TownePlace Suites by Marriott has not taken advantage of it yet.
Money Purchase Thrift Pension Plan (Non-PERS Retirement Plan):
The draft audit for the Money Purchase Thrift Pension Plan Financial Statements is also attached for review. The net position available for benefits increased $1,135,432 during fiscal year ending June 30, 2023.
Attachments:
1. Budget Category Reporting Summary
2. Fund Balances 2023.06.30
3. City of Ripon - Draft Financial Statements - 2023 (11-9-2023)
4. City of Ripon - Money Purchase Thrift Pension Plan - Financial Statement Draft - 11-7-2023 22-23 Audited Financial Statements Council packet copied from November Budget Category Reporting Summary
22-23 Audited Financial Statements Council packet copied from November Fund Description
Beginning Balance
7/1/2022 YTD Income YTD Expenditures YTD Transfers
Ending Balance
June 2023 ‐ FINAL
OPERATING FUNDS
General Funds
General Fund 6,501,184.76 $16,909,055.41 (14,955,133.70) (1,910,324.15) 6,544,782.32 Sick Leave Contingency 355,547.04 18,728.73 ‐ 45,000.00 419,275.77 PERS Contingency 1,135,396.65 73,277.18 ‐ 161,861.23 1,370,535.06 Healthcare Contingency 209,024.85 8,207.92 ‐ ‐ 217,232.77 Liability SIR Contingency 627,074.57 24,623.76 ‐ ‐ 651,698.33 Litigation/Natural Disaster Contingency 2,475,986.97 1,980,203.97 ‐ (3,919,880.00) 536,310.94 Asset/Liability adjustments 100,418.30 64,084.76 ‐ ‐ 164,503.06 Street & Road Funds
Street & Roads 3,389,430.39 2,728,028.88 (1,015,979.01) (546,642.74) 4,554,837.52 Street & Road Reconstruction Fund ‐ ‐ ‐ 546,642.74 546,642.74 Street & Road Reserve 2,461,384.26 29,574.67 ‐ 424,328.00 2,915,286.93 Transit funds 22,027.63 60,588.80 (60,496.65) ‐ 22,119.78 LTF Transit funds ‐ 169,761.00 ‐ ‐ 169,761.00 Enterprise Operating Funds
Water Operating 926,513.59 3,825,116.66 (2,678,581.33) (1,146,535.33) 926,513.59 Sewer Operating 710,609.27 2,015,969.03 (1,355,152.59) (674,000.00) 697,425.71 Garbage Operating 211,230.50 2,526,053.94 (2,300,398.33) (225,655.61) 211,230.50 $ 19,125,828.78 $ 30,433,274.71 $ (22,365,741.61) $ (7,245,205.86) $ 19,948,156.02
CAPITAL FUNDS
General Capital Funds
Parks & Recreation 881,428.79 137,136.99 (88,651.88) 2,247,000.00 3,176,913.90 Jack Tone Golf Course Capital Reserve 472,981.43 60,674.77 ‐ ‐ 533,656.20 CNG Station Capital Reserve 195,982.85 2,115.45 (95,148.82) 113,499.00 216,448.48 Department Funds 1,059,614.25 147,831.94 (673,141.53) 1,857,155.00 2,391,459.66 Underground Utilties 10,197.82 153.80 ‐ ‐ 10,351.62
Mitigation Fees 8,038,443.35 188,671.12 ‐ (5,687,300.00) 2,539,814.47 Corporation Yard ‐ ‐ (254,535.66) 2,137,241.00 1,882,705.34 Enterprise Capital Funds
Water Enterprise Capital 7,233,394.46 288,008.72 (1,347,063.53) 1,146,535.33 7,320,874.98 Sewer Enterprise Capital 1,687,702.63 85,911.85 (579,777.22) 355,000.00 1,548,837.26 Sewer WWTP Reserve 1,161,125.49 17,510.03 ‐ 319,000.00 1,497,635.52 Garbage Enterprise Capital 1,067,134.86 11,921.39 (436,012.54) 225,655.61 868,699.32 Storm Drain Enterprise Capital 371,022.30 5,595.09 (35,017.33) ‐ 341,600.06 PFFP Capital Funds
Water 2,794,361.29 186,685.66 ‐ ‐ 2,981,046.95 SSJID Connection Reserve 818,384.64 53,491.77 ‐ ‐ 871,876.41 Garbage (663,606.35) 14,370.14 (106,204.39) ‐ (755,440.60) Wastewater 5,380,468.53 305,277.84 ‐ ‐ 5,685,746.37 Storm Drainage 2,280,059.71 135,788.27 ‐ ‐ 2,415,847.98 Transportation 1,224,927.40 637,617.79 (18,757.23) ‐ 1,843,787.96 Regional Transportation Impact Fee 1,310,680.94 304,121.97 ‐ ‐ 1,614,802.91 Parks & Recreation 1,202,796.19 42,854.74 (0.00) (1,200,000.00) 45,650.93 Parks & Recreation loan repayment funds 539,522.64 10,505.84 550,028.48 Police (1,197,518.86) 22,424.21 (17,939.80) ‐ (1,193,034.45) City Hall (3,794,551.99) 46,832.96 (56,973.85) ‐ (3,804,692.88) Corporation Yard 445,063.44 124,439.23 (751,448.46) 7,428,300.00 7,246,354.21 Library (607,132.52) 1,076.29 (9,146.35) ‐ (615,202.58) $ 31,912,483.29 $ 2,831,017.86 $ (4,469,818.59) $ 8,942,085.94 $ 39,215,768.50
RESTRICTED FUNDS
Special Revenue/Restricted Funds
Benefit Assessment Districts 440,784.24 25,305.23 ‐ ‐ 466,089.47 NPSP Assessment District 807,826.55 12,182.20 ‐ ‐ 820,008.75 Landscape & Lighting Districts 249,252.83 468,710.22 (424,668.13) 44,119.92 337,414.84 Redevelopment ‐ Housing 5,095,597.39 160,802.76 ‐ ‐ 5,256,400.15 Redevelopment ‐ City 1,731,384.07 26,109.64 ‐ (1,741,000.00) 16,493.71 Redevelopment ‐ State 884,814.78 1,027,918.00 (1,154,602.14) ‐ 758,130.64 Housing Fund 1,803,839.55 28,693.94 (12,904.38) ‐ 1,819,629.11 CDBG ‐ 52,423.95 (52,423.95) ‐ ‐
$ 11,013,499.41 $ 1,802,145.94 $ (1,644,598.60) $ (1,696,880.08) $ 9,474,166.67 GRAND TOTAL 62,051,811.48 $ $ 35,066,438.51 $ ‐ (28,480,158.80) $ $ 68,638,091.19 Bank Accounts‐Balances 5/31/2023 Bank Accounts
B of Stkn ‐Gen 129,560.44 B of Stkn ‐Gen 75,802.15
Petty Cash 700.00 Petty Cash 700.00
Police ‐ petty cash 400.00 Police ‐ petty cash 400.00
Petty Cash ‐ A/C 200.00 Petty Cash ‐ A/C 200.00
B of Stkn.‐PR 368,371.40 B of Stkn.‐PR 6,000.00
B of Stkn.‐Rec 3,211.08 B of Stkn.‐Rec 11,315.67
B of Stkn.‐PD Voucher Pr 1,242.00 B of Stkn.‐PD Voucher Pro 1,242.00 B of America‐Prkg Cit. 50,409.23 B of America‐Prkg Cit. 4,639.23 LAIF 19,575,782.52 LAIF 5,425,782.52 Bk of New York 31,761,664.79 Bk of New York 31,896,619.87 CAMP 15,000,000.00 CAMP 30,010,802.95 US Bank Sec 115 Trust 1,177,929.49 US Bank Sec 115 Trust 1,204,095.65 Redev. Debt ‐ 2020 0.32 Redev. Debt ‐ 2020 0.32
Water Bonds‐2006 299.35 Water Bonds‐2006 300.61
Water Bonds‐2012 189.43 Water Bonds‐2012 190.22
BANK TOTALS 68,069,960.05 $ BANK TOTALS 68,638,091.19 $
TOTAL RESTRICTED FUNDS
CITY OF RIPON
FUND BALANCES SUMMARY
TOTAL CAPITAL FUNDS
TOTAL OPERATING FUNDS
2022‐2023
June 2023 ‐ FINAL
\\rcityfs2\users\lroos\My Documents\Month End\06.2023\11. cash June 2023 FINAL 2.xls - Summary Fund Balances 2023.06.30
22-23 Audited Financial Statements Council packet copied from November