Sacramento City Council
February 8, 2022

Susana Alcala Wood, City Attorney Jorge Oseguera, City Auditor Mindy Cuppy, City Clerk Howard Chan, City Manager John Colville, City Treasurer City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org

File ID: 2022-00109 February 8, 2022 Consent Item 04

Title: Fiscal Year 2020/21 Annual Comprehensive Financial Report (ACFR)

Location: Citywide

Recommendation: Adopt a Resolution 1) accepting the Fiscal Year 2020/21 Annual Comprehensive Financial Report, and 2) accepting the auditor's letter to the City Council.

Contact: Osvaldo Lopez, Finance Manager, (916) 808-4740, [email protected]; Emily Combs, Director, (916) 808-7914, [email protected], Department of Finance

Presenter: Osvaldo Lopez, Finance Manager, (916) 808-4740, [email protected], Department of Finance

Attachments:
1-Description/Analysis
2-Resolution
3-FY2020/21 ACFR
4-FY2020/21 Auditor’s Letter on ACFR
5-FY2020/21 Auditor’s Report on Internal Control Over Financial Reporting

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February 8, 2022
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City of Sacramento

Description/Analysis

Issue Detail: The City’s Fiscal Year (FY) 2020/21 Annual Comprehensive Financial Report (ACFR) presents the City’s financial condition and the results of activities for the fiscal year that ended June 30, 2021. An independent public accounting firm, Macias, Gini & O’Connell LLP, has audited the ACFR financial statements, as required by the City Charter.

Overview of Report

· The City has prepared the ACFR to present financial information in a standard format prescribed by the Government Finance Officers Association.

· The ACFR is organized as follows:

o An Introductory Section with a transmittal letter summarizing economic conditions, budget initiatives and other information.

o A Financial Section which begins with Management’s Discussion and Analysis (MD&A), a narrative overview, analysis of the financial statements, and comments on the City’s financial outlook. The basic financial statements follow the MD&A and report the financial position and the results of the operations of the City as a whole, and the financial performance of the City’s major funds. Footnotes to the financial statements are included to provide additional information. Finally, combining fund financial statements are presented to provide additional financial details of the City’s activities.

o A Statistical Section with selected financial, demographic, and operating trend information.

· In FY2020/21, the City implemented three new accounting and financial reporting standard issued by the Governmental Accounting Standards Board (GASB) in the ACFR:

• Statement No. 84, Fiduciary Activities.
• Statement No. 90, Majority Equity Interests – an amendment of GASB Statement No. 14 and No. 61.
• Statement No. 98, The Annual Comprehensive Financial Report.

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City of Sacramento

General Fund FY2020/21 Financial Results

· Net Results
The following schedule summarizes the FY2020/21 net budgetary results which resulted in $30 million in resources above budget:

FY2020/21 General Fund Summary $ in 000s
Major Tax Revenues
Property 4,276$
Sales 9,553
Utility user 876
Real property transfer 1,504
Other taxes (BOT/TOT) 7,269
Subtotal Major Tax Revenue 23,478
Department operations 11,573
Other Citywide revenue/expenditure results (4,906)
Unassigned Fund Balance 1 30,145$

1 FY2020/21 Unassigned Fund Balance as represented in this chart reflects the General Fund activities/results for the current fiscal year and does not include unassigned fund balance from prior fiscal year.

The total unassigned fund balance for General fund as of 6/30/2021, including new and previous resources, was approximately $30.315 million (see page 24 of the ACFR for additional information).

· Revenue
The impact to the City’s General Fund revenue sources were not as impacted by the COVID-19 pandemic (pandemic) as anticipated during the development of the budget. Total General Fund revenue exceeded the FY2020/21 Approved Budget as amended by $21.8 million. Tax revenue was $23.5 million higher than the budget projections, a variance of 6%. The variance was due to property taxes, which ended higher than projected by $4.3 million, the result of increases in market value and activity. Other taxes, including sales and use tax, property transfer, utility user, business operations, and transient occupancy taxes ended higher than projected by $19.2 million. Intergovernmental revenue was $5.8 million lower than the budget projection mainly due to less federal reimbursement for fire emergency medical services. Charges for services were $5.9 million lower than the budget projection mainly due to a reduction in culture and leisure revenue due to the pandemic restrictions. Please refer to page 32 of the ACFR for the budget to actual comparison.

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City of Sacramento

General Fund Economic Uncertainty Reserve (EUR) for the General Fund increased from $55.2 million to $58.9 million as of June 30, 2021.

· Expenditures
With the exception of the Police Department, departments ended FY2020/21 within their budgeted operating expenditure authority. Details on department year-end results are provided in the chart below.

· Operating Department Results
Most General Fund departments achieved positive budgetary results during FY2020/21 as reflected below:

Department
Results
($ in 000s)
Mayor/Council 1 $
City Auditor 61
City Manager 699
City Attorney 73
City Clerk 372
City Treasurer 1,016
Community Development 4,020
Convention and Cultural Services 198
Finance 744
Fire 2,468
Human Resources -
Information Technology 479
Youth, Parks, and Community Enrichment 1,128
Police (1,752)
Public Works 2,014
Utilities 52
Total Results 11,573 $

Departments that had significant variances between budget and year-end results have provided the following explanations:

Treasurer - Positive results are primarily due to a combination of additional revenue generated for managing more cash related to Measure U, Coronavirus Aid, Relief, and Economic Security Act (CARES) and American

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City of Sacramento

Rescue Plan Act (ARPA) money as well as labor savings from vacant positions, and service and supply savings.

Community Development - Positive results are primarily due to a combination of labor savings from vacant positions and service and supply savings.

Fire - Positive results are primarily due to higher-than-expected revenue related to fire suppression and the Emergency Medical Response Program.

Youth, Parks, and Community Enrichment - Positive results are primarily due to a combination of labor savings from vacant positions, and service and supply savings because of summer program modifications required to comply with county health orders due to the pandemic.

Police - Negative results are primarily due to unexpected overtime.

Public Works - Positive results are primarily due to labor savings associated with parking enforcement and facility maintenance due to the pandemic.

Measure U Fund FY2020/21 Financial Results
The FY2020/21 ACFR presents the eighth full year of activity in the Measure U Fund. Revenue recognized in the fund was $117 million, compared to the $102 million amended revenue budget. Measure U operating expenditures totaled $85 million compared to an operating budget of $99 million. These results in addition to other budgetary commitments in FY2020/21, including commitments for City’s Housing Trust Fund, resulted in an available fund balance of $15.7 million as of June 30, 2021. Additional information regarding the Measure U spending plan is included in the FY2021/22 Midyear Budget Report.

Auditor’s Letter to the City Council
The auditor’s letter to the City Council is additional communication required by audit standards which conveys that there were no difficulties encountered performing the audit or disagreements between the auditors and City staff. The letter also includes information about significant estimates and footnote disclosures included in the financial statements.

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City of Sacramento

Policy Considerations: This report is required by the City Charter, federal and state grant requirements and bond covenants.

Economic Impacts: None.

Environmental Considerations: Not applicable.

California Environmental Quality Act (CEQA): This action is not a project subject to CEQA because it involves only organizational or administrative activities that will not result in direct or indirect physical changes in the environment (CEQA Guidelines §15378(b)(5)).

Sustainability: Not applicable.

Commission/Committee Action: None.

Rationale for Recommendation: It is in the best interest of the City to accept the FY2020/21 ACFR and the auditor’s letter to the City Council for the following reasons:

· The annual audit is required by the City Charter, federal and state grant requirements, and bond covenants.

· The public accounting firm of Macias Gini & O’Connell LLP has audited the City’s FY2020/21 financial statements and has rendered its unmodified opinion that the financial statements are fairly presented in accordance with generally accepted accounting principles.

· The auditor’s letter to the City Council reflects no significant audit issues or disagreements with management in connection with this audit.

Financial Considerations: General Fund and Measure U budgetary results for the fiscal year that ended June 30, 2021, provide one-time resources in the amount of approximately $46 million. Recommendations for the use of these resources are outlined in the FY2021/22 Midyear Budget Report.

Local Business Enterprise (LBE): No goods or services are being purchased under this report.

RESOLUTION NO.

Adopted by the Sacramento City Council

FISCAL YEAR 2020/21 ANNUAL COMPREHENSIVE FINANCIAL REPORT

BACKGROUND
A. The City’s Fiscal Year (FY) 2020/21 Annual Comprehensive Financial Report (ACFR) was prepared to present the City’s financial condition and the results of its activities for the fiscal year ended June 30, 2021. The ACFR financial statements were audited, as required by the City Charter, by an independent public accounting firm.

B. The public accounting firm of Macias Gini & O’Connell LLP audited the City’s FY2020/21 financial statements and rendered its unmodified opinion that the financial statements are fairly presented in accordance with generally accepted accounting principles.

C. The General Fund’s budgetary results for the fiscal year ended June 30, 2021, provided $30 million in new one-time resources. Recommendations for the use of these resources will be outlined in the FY2021/22 Midyear Report.

D. The auditor’s letter to the City Council reflects no significant audit issues or disagreements with management in connection with this year’s audit.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:

Section 1. The City Council accepts the FY2020/21 Annual Comprehensive Financial Report, attached hereto as Exhibit A.

Section 2. The City Council accepts the auditor’s letter to the City Council dated, December 15, 2021, attached hereto as Exhibit B.

Section 3. Exhibit A and B are part of this resolution.

Table of Contents:

Exhibit A Annual Comprehensive Financial Report
Exhibit B Auditor’s letter to City Council

CityofSacramento.org
Annual Comprehensive
Financial Report
FISCAL YEAR ENDED JUNE 30, 2021

CITY OF SACRAMENTO FACTS
The City of Sacramento was founded in 1849 and
is the oldest incorporated city in California.

In 1920, city voters adopted a Charter (municipal
constitution) and a City Council/City Manager form
of government.

The City is divided into eight districts.

Elected members of the City Council serve a four-
year term.

The Mayor is elected by all voters in the City. In
2002, voters approved a measure for the Mayor
to serve full-time. All other Councilmembers are
elected by district and serve part-time.

The Mayor and other Councilmembers have an
equal vote in all matters.

The City of Sacramento currently encompasses
approximately 100 square miles.

The current estimated population is 515,673, from
the State of California, Department of Finance as of
January 2021.

DARRELL STEINBERG

Mayor

ANGELIQUE ASHBY
Mayor Pro Tempore, District 1

SEAN LOLOEE
Councilmember, District 2

JEFF HARRIS

Councilmember, District 3

KATIE VALENZUELA
Councilmember, District 4

JAY SCHENIRER

Vice Mayor , District 5

ERIC GUERRA
Councilmember, District 6

RICK JENNINGS, II

Councilmember, District 7

MAI VANG

Councilmember, District 8
CITY OF SACRAMENTO, CALIFORNIA | 2021 ANNUAL COMPREHENSIVE FINANCIAL REPORT

CITY OF SACRAMENTO, CALIFORNIA

City of Sacramento

California

Annual Comprehensive
Financial Report

Fiscal Year Ended June 30, 2021

Prepared by the Department of Finance,
Accounting Division

Dawn Holm, Finance Director
Osvaldo Lopez, Finance Manager

Principal/Senior Accountant Auditors

Sharina Bali Emily Hsia Susan Nazari
Doreen Chia
Svetlana Donkova
Thomas Keegan
Bilal Malik
Ray Tang
Juliana Won
g
Jennifer Gilbertson Rona Mao

CITY OF SACRAMENTO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2021

TABLE OF CONTENTS

INTRODUCTORY SECTION (Unaudited) PAGE

Letter of Transmittal .............................................................................................................................................. i Organization Chart ............................................................................................................................................... v Directory of City Officials ..................................................................................................................................... vi GFOA Certificate ................................................................................................................................................. vii

FINANCIAL SECTION

Independent Auditor’s Report .............................................................................................................................. 1 Management’s Discussion and Analysis (Required Supplementary Information - Unaudited) ........................ 5

BASIC FINANCIAL STATEMENTS

Government-wide Financial Statements:

Statement of Net Position ............................................................................................................................. 19 Statement of Activities ................................................................................................................................... 20 Fund Financial Statements:

Balance Sheet - Governmental Funds ......................................................................................................... 24 Reconciliation of the Balance Sheet to the Statement of Net Position – Government al Funds ............................................................................................................................... 26 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ............. 28 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities – Governmental Funds ............................................... 30 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis) with Budget to GAAP Reconciliation – General Fund .......................................................................................................................................... 32 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Non-GAAP Budgetary Basis) with Budget to GAAP Reconciliation – Measure U Fund ...................................................................................................................................... 33 Statement of Net Position – Proprietary Funds ............................................................................................ 34 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds ............................ 38 Statement of Cash Flows – Proprietary Funds ............................................................................................ 40 Statement of Fiduciary Net Position – Fiduciary Funds ............................................................................... 44 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ........................................................... 45 Notes to the Basic Financial Statements ........................................................................................................... 47

REQUIRED SUPPLEMENTARY INFORMATION (Unaudited)

Schedule of Changes in Net Pension Liability and Related Ratios – CalPERS Miscellaneous Plan ........... 113 Schedule of Contributions – CalPERS Miscellaneous Plan ........................................................................... 114 Schedule of Changes in Net Pension Liability and Related Ratios – CalPERS Safety Plan ........................ 115 Schedule of Contributions – CalPERS Safety Plan ........................................................................................ 116 Schedule of Changes in Net Pension Liability and Related Ratios – SCERS ............................................... 117 Schedule of Contributions – SCERS ............................................................................................................... 118 Schedule of Changes in Net OPEB Liability and Related Ratios ................................................................... 119 Schedule of Contributions – OPEB ................................................................................................................. 120

CITY OF SACRAMENTO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2021

TABLE OF CONTENTS, Continued

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES PAGE

Other Governmental Funds

Combining Balance Sheet .............................................................................................................................. 121 Combining Statement of Revenues, Expenditures and Changes in Fund Balances………….……………..122

Other Special Revenue Funds:

Combining Ba lance Sheet .................................................................................................... 124 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 126 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Transportation and Development Special Revenue Fund ..... 128 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Culture and Leisure Special Revenue Fund .......................... 129 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Parks and Recreation Special Revenue Fund ....................... 130 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, CCOMWP Special Revenue Fund ......................................... 131 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Special Districts Special Revenue Fund ................................ 132 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual, Cal EPA Special Revenue Fund ............................................. 133

Other Debt Service Funds:

Combining Ba lance Sheet .................................................................................................... 136 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 138

Other Capital Projects Funds:

Combining Ba lance Sheet .................................................................................................... 142 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 144

Permanent Funds:

Combining Balance Sheet .................................................................................................... 147 Combining Statement of Revenues, Expendi tures and Changes in Fund Balances ......... 148

Other Proprietary Funds

Other Enterprise Funds:

Combining Statement of Net Position .................................................................................. 152 Combining Statement of Revenues, Exp enses and Changes in Net Position ................... 155 Combining Statemen t of Cash Flows ................................................................................... 156

Water Fund:

Combining Schedule of Net Position .................................................................................... 160 Combining Schedule of Revenues, Expens es and Changes in Net Position .................... 164 Combining Schedule of Cash Flows .................................................................................... 166

Wastewater Fund:

Combining Schedule of Net Position .................................................................................... 172 Combining Schedule of Revenues, Expens es and Changes in Net Position .................... 176 Combining Schedule of Cash Flows .................................................................................... 178

CITY OF SACRAMENTO, CALIFORNIA

ANNUAL COMPREHENSIVE FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2021

TABLE OF CONTENTS, Continued

Other Proprietary Funds P A G E

Community Center Fund:

Combining Statement of Net Position .................................................................................. 184 Combining Statement of Revenues, Exp enses and Changes in Net Position ................... 186 Combining Statemen t of Cash Flows ................................................................................... 188

Internal Service Funds:

Combining Statement of Net Position .................................................................................. 194 Combining Statement of Revenues, Exp enses and Changes in Net Position ................... 197 Combining Statemen t of Cash Flows ................................................................................... 198

Custodial Funds:

Combining Statement of Fiduciary Net Position .................................................................. 201 Combining Statement of Changes in Fiduciary Net Position .............................................. 202

STATISTICAL SECTION (Unaudited)

Net Position by Component – Last Ten Fiscal Years........................................................................ 204 Changes in Net Position – Last Ten Fiscal Years ............................................................................. 206 Fund Balances, Governmental F unds – Last Ten Fiscal Years ....................................................... 212 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years ................................... 214 Tax Revenues by Source, Governmental Funds – Last T en Fiscal Years ...................................... 216 Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years .......... 217 Direct and Overlapping Property Ta x Rates – Last Ten Fiscal Years .............................................. 218 Principal Property Taxpayers – Curr ent Fiscal Year and Nine Years Ago ....................................... 219 Property Tax Levies and Collections – Last Ten Fiscal Years ......................................................... 220 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years .......................................................... 222 Ratios of Net General Bonded Debt Outstanding – Last Ten Fiscal Years ..................................... 224 Direct and Overlapping Governmental Activities Debt – As of June 30, 2021 ................................. 225 Legal Debt Margin – Last Ten Fiscal Years ...................................................................................... 226 Pledged-Revenue Coverage – Last Ten Fiscal Years ...................................................................... 228 Demographic and Economic Statistics for Sacramento County – Last Ten Years .......................... 230 Principal Employers – Current Fiscal Year and Nine Years Ago ...................................................... 231 Successor Agency Trust Fund – Assessed Value of Taxable Property – Last Ten Fisc al Years .......................................................................................................... 232 Successor Agency Trust Fund – Top 10 Parcels Appealing Assessed Valuation - At Risk of Reduction - As of June 30, 2021 ........................................................................ 236 Successor Agency Trust Fund – Principal Property Taxpayers – Current Fiscal Year and Nine Years Ago ............................................................................ 247 Successor Agency Trust Fund – Debt Coverage Analysis –
Last Ten Fisc al Years .......................................................................................................... 258 Full-time Equivalent Employees by F unction/Program – Last Ten Fiscal Years ............................. 263 Operating Indicators by Function/Program – Last Ten Fiscal Years ............................................... 264 Capital Asset Statistics by Function/Program – Last
Ten Fiscal Years ........................................... 265 Miscellaneous Statistics - Current Fiscal Year and Nine Years Ago ................................................ 266

Introductory
Section

Howard Chan
City Manager
City Hall
915 I Street, Fifth Floor
Sacramento, CA 95814-2604
916-808-5704

December 17, 2021

Honorable Mayor and City Council
City of Sacramento, California

Dear Mayor and Members of the City Council:

We are pleased to present the Annual Comprehensive Financial Report (ACFR) for the City of Sacramento, California (City) for the fiscal year ended June 30, 2021. Article IX of the City Charter and federal and state law requires that the City issue an annual report on its financial position and activity, and that the report be audited by an independent firm of certified public accountants.

Macias Gini & O’Connell LLP, a national certified public accounting firm, performed the audit for the fiscal year ended June 30, 2021. Their unmodified (“clean”) opinion has been included as the first component of the financial section of the ACFR.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that have been established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements.

Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this transmittal letter and should be read in conjunction with it.

PROFILE OF THE CITY

The City of Sacramento, capital of the State of California, was established in 1849. The sixth largest city in California based on population, Sacramento also serves as the seat of Sacramento County government. The State of California Department of Finance estimated the population on January 1, 2021, at 515,673 for the City and 1,561,014 for the County. Encompassing approximately 100 square miles, the City is located in the northern section of California’s Central Valley at the confluence of the Sacramento and American rivers.

Sacramento is a charter city operating under a Council-Manager form of government. The City provides a full range of municipal services in cluding police, fire, emergency medical response, water, wastewater, storm drainage, solid waste, construction and maintenance of streets and parks, community development, recreational and cultural activities, economic development, and administrative services.

REPORTING ENTITY

This ACFR presents the financial status of the City and its component units. Component units are separate legal entities included in this report due to significant operational or financial relationships with the City as defined below:

 Sacramento City Financing Authority (SCFA) and Sacramento Public Financing Authority (SPFA) are entities created to issue debt to finance City projects.

The financials for these entities are reported on a blended basis as part of the primary government because the boards are composed of all City Councilmembers.

 Sacramento City Employees’ Retirement System (SCERS) , a single employer pension plan for certain City employees and retirees, is reported as a fiduciary-type component unit. The SCERS pension plan was closed to new enrollment of employees in 1977.

 Successor Agency to the Redevelopment Agency of the City of Sacramento (RASA) was created to serve as the custodian for the assets and to wind down the affairs of the former Redevelopment Agency of the City of Sacramento. RASA is reported as a fiduciary-type component unit.

BUDGET INFORMATION

The City Charter requires that the City Manager submit a proposed budget to the City Council at least 60 days prior to the start of each fiscal year. Once approved by City Council, the annual budget serves as the foundation for the City‘s financial planning, control and reporting. Budgetary control is maintained at the department level by fund. Budgetary control for multi-year projects is maintained at the individual project level by fund. Additional budgetary information can be found in Note 1 to the financial statements and on the City’s website.

LOCAL ECONOMY

The regional economy and employment base continue its long-term transition from a state government concentration to a diverse economic base including health care providers, high-tech manufacturers, software development companies, biotechnology and medical research laboratories, food processors, and medical equipment manufacturers. The region is also a transportation hub served by air cargo airports, an international airport, a deep-water shipping port, two major interstate freeways, freight and passenger rail lines, and an extensive regional commuter bus and light-rail system. These key industries interface with Sacramento’s service, hospitality and government employers.

While the recent public heath emergency related to the global Coronavirus 2019 (COVID-19) pandemic has presented unprecedented challenges, our local government and healthcare-based economy is expected to continue its economic recovery in 2022. As of June 2021, unemployment for the Sacramento metropolitan area was 6.9% compared to 12.8% a year earlier. In March 2020, the County of Sacramento issued a directive ordering all individuals living in the county to stay-at-home (SAH), except for essential activities, to help prevent the spread of COVID-19.

Since then, the SAH order has been extended multiple times and continues to limit indoor activities of certain business sectors of the economy. These necessary actions to curb the transmission of the virus will continue to have a negative impact on the City’s FY2021/22 revenues.

BUDGET INITIATIVES AND LONG-TERM FINANCIAL PLANNING

Along with other state and local agencies across the country, the City of Sacramento faced extraordinary budget challenges due to the public health emergency related to COVID-19. The unprecedented event continued to have a negative effect on the City’s FY21 revenues. While sales tax revenue did better than anticipated, the TOT, parking and some Department revenues are not expected to recover as quickly. The FY2021/22 Operating and Capital Improvement Program (CIP) Budgets were approved on June 15, 2021 and represent a status quo budget, with the exception of a limited number of mission-critical augmentations. The Approved Budget includes funding to provide year-round respite centers, expand youth initiatives support the City’s Creative Edge (Arts) Program and information technology needs, launch a participatory budgeting pilot program and address Department operations. It also includes adjustments needed to realize efficiencies and funding necessary to deliver programs and services (e.g., labor, debt, insurance) in the coming fiscal year.

The financial forecasts presented in the FY2021/22 Budget are based on in-depth analysis and review of Department revenues to ensure that the forecast is based on the most current information available relative to the pandemic and the impacts on operations.

RELEVANT FINANCIAL POLICIES

The City maintains a General Fund Economic Uncertainty Reserve (EUR) for the purpose of bridging a gap between projected revenue and expenditures during periods of significant revenue declines and/or expenditure growth and to ensure the City has adequate resources in case of emergency or unforeseen events. Pursuant to Counc il’s adopted policy, the City w ill maintain an EUR at a minimum of 10% of budgeted General Fund revenues and will seek to achieve and maintain a General Fund EUR equal to two months of regular on-going General Fund expenditures, including transfers (i.e., 17% of General Fund expenditures).

On June 12, 2019, the EUR Policy was amended to include Measure U resources in determining the annual set aside amount necessary to maintain a minimum General Fund/Measure U Fund (G/MU) reserve level of 10%. Further, the policy includes a goal of achieving and maintaining the value of two months of regular ongoing G/MU expenditures in the reserve. The current EUR balance is $58.5 million, which is approximately 8.94% of FY2021/22 General/MU revenues. The EUR is reported in the ACFR as committed fund balance in the General Fund.

AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its ACFR for the fiscal year ended June 30, 2020. This marks the 33rd consecutive year the City has received this award. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.

In order to receive this award, the City published an easily readable and efficiently organized ACFR. The report satisfied accounting principles generally accepted in the United States of America and applicable legal requirements. We believe this ACFR also meets the requirements of the program, and we will be submitting it to the GFOA to determine its eligibility for the certificate.

The Department of Finance, Accounting Division in particular, takes great pride in the preparation of the ACFR. The professionalism, commitment, and effort of each employee o f the Accounting Division have made this report possible. We also want to thank the other employees in the Finance Department and other City Departments who contributed to the preparation of this report.

Finally, we thank the Mayor and City Council for their continuing interest and support in planning and conducting the City's financial operations in a responsible manner, consistent with the City's mission to protect, preserve and enhance the quality of life for present and future generations.

R spectfully submitted,
Dawn Holm
Finance Director
O�u
lc} Osvaldo Lopez
Finance Manager

Mayor/Council
City Treasurer
John Colville
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Susana Alcala Wood
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Mindy Cuppy
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Jorge Oseguera
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LaTesha Watson
City Manager
Howard Chan
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Mario Lara
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Neighborhood Code Enforcement
Planning
Innovation & Economic Development
Organization Chart as of June 30, 2021
Center for Sacramento History
Crocker Art Museum
Discovery Science & Space Center
Fairytale Town
Metropolitan Arts Commission
Old Sacramento Historic District
Sacramento Convention Center
Sacramento History Museum
Sacramento Zoo
Assistant to the City Manager
Amy Williams
Chief of Staff
Office of Media &
Communications
Diversity & Inclusion

Cannabis

Office of Emergency Management

Governmental
Affairs
Performance
Measures
Youth Development

City Manager
Office or Program
Human Resources
Shelley Banks‐Robinson
Mayor/Council
Charter Office
Mayor/Council
Office or Program
Community Response
Bridgette Dean
Unsheltered Population Coordination
Violence Prevention

City of Sacramento
Directory of City Officials
June 30, 2021

Darrell Steinberg
Mayor

Angelique Ashby
Mayor Pro Tempore, District 1
Jay Schenirer
Vice Mayor, District 5

Sean Loloee
Councilmember, District 2
Eric Guerra
Councilmember, District 6

Jeff Harris
Councilmember, District 3
Rick Jennings, II
Councilmember, District 7

Katie Valenzuela
Councilmember, District 4
Mai Vang
Councilmember, District 8

Howard Chan
City Manager

Susana Alcala Wood
City Attorney
Mindy Cuppy
City Clerk
John Colville
City Treasurer

Government Finance Officers Association
Certificate of

Achievement
for Excellence
in Financial
Reporting
Presented to
City of Sacramento
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June
30, 2020
Executive Director/CEO

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Financial
Section

www.mgocpa.com
Macias Gini & O’Connell LLP
500 Capitol Mall, Suite 2200
Sacramento, CA 95814

Independent Auditor’s Report
To th
e Honorable Mayor and Members of the
City Council of the City of Sacramento, California
Report
on the Financial Statements
We have au
dited 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 Sacramento, California (City), as of and for the fiscal year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Manage
ment’s Responsibility for the Financial Statements
The Ci
ty’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Audit
or’s Responsibility
Our res
ponsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits con tained in Government Auditing Standards , issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit i
nvolves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control . Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe t
hat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions
In our opi
nion, 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, as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons for the Gener al Fund and the Measure U Special Revenue Fund for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Ma
tters
Requir
ed Supplementary Information
Accoun
ting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedule of changes in net pension liability and related ratios – CalPERS Miscellaneous Plan, the schedule of contributions – CalPERS Miscellaneous Plan, th e schedule of changes in net pension liability and related ratios – CalPERS Safety Plan, the schedule of contributions – CalPERS Safety Plan, the schedule of changes in net pension liability and related ratios – SCERS, the schedule of contributions – SCERS, the schedule of changes in net OPEB liability and related ratios, and the schedule of contributions – OPEB, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. 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.

Other
Information
Our aud
it was conducted for the purpose of forming opinions on the financial statem ents that collectively comprise of the City’s basic financial statements. The combining and individual nonmajor fund financial statements and schedules, and the introductory and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The com
bining and individual fund financial statements and schedules are the responsibility of management and w ere derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such 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 directl y 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 fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The in
troductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accor
dance with Government Auditing Standards , we have also issued our report dated December 15, 2021, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regul ations, 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.

Sacramen
to, California
December 15, 2021

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City of Sacramento
Management’s Discussion and Analysis
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

This section of the City’s Annual Comprehensive Financial Report presents a narrativ e overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2021. City management recommends this information be read in conjunction with the transmittal letter located in the introductory section, and with the City’s financial statements which follow this discussion.

FINANCIAL HIGHLIGHTS
 The City’s General Fund revenue and other financing sources (uses) exceeded expenditures by $15 million in fiscal year 2021. This is primarily attributable to tax and intergovernmental revenues in excess of expectation for the year.
 The City’s General Fund budgetary expenditures were $93 million lower than final budgeted amounts. Most of the General Fund departments reported favorable operating expenditure budget variances and capital outlay expenditures were less than budgeted amounts by $20 million due to the multi-year nature of capital projects.

Unspent multi-year project budgets are carried over to the subsequent fiscal year.  The City’s total government-wide net position increased by $134 million in fiscal year 2021, a 6.1 percent increase.
 The City issued the Wastewater Revenue Refunding B onds, Series 2020, in the amount of $28 million to defease and refund $25 million of the outstanding Wastewater Revenue Bonds, Series 2013. The 2020 Refunding reduced total debt service payments by $5 million and resulted in an economic gain of $3 million.  The City received $56 million of American Rescue Plan Act (ARPA) funding. No expenses were incurred using ARPA funds during the fiscal year and the balance will be app lied to eligible expenses in future fiscal years through December 31, 2024. The City is expecting to receive another $56 million of ARPA funding in fiscal year 2022.

OVERVIEW OF THE FINANCIAL STATEMENTS
The City’s Annual Comprehensive Financial Report co nsists of four main components: (1) management’s discussion and analysis, (2) the basic financial statement s, (3) required supplementary information, and (4) combining non-major fund financial statements. The basic financial statements incl ude two kinds of statements that present different views of the City, the government-wide and the fund financial statements.  The government-wide financial statements provide both long-term and short-term information about the City’s overall financial status.
 The fund financial statements focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide statements.

The basic financial statements also include notes that provide additional information essential to understanding the data contained in the government-wide and fund financial statements. The statements and notes are followed by the Schedules of Changes in Net Pension Liability and Related Ratios and Schedules of Contributions for the City’s pension plans along with the Schedule of Changes in Net Other Postemployment Benefits (OPEB) Liability and Related Ratios and Schedule of Contributions for the City’s OPEB pl an, which are requi red supplementary information. In addition to these required elements, we have included combining statements and schedules that provide details about the City’s other governmental funds, other enterprise funds, the Water enterprise fund, the Wastewater enterprise fund, the Community Center enterprise fund, internal service funds, and custodial funds, each of which is presented in a column in the basic financial statements.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Government-wide Financial Statements

The government-wide statements report information about the City using accounting methods like those used by private-sector companies. The statement of net position includes all the City’s assets and liabilities, as well as any deferred outflows or inflows of resources. The statement of activities in cludes all current year revenues and expenses regardless of when cash is received or paid. These government-wide stat ements report the City’s net position and how the City’s net position has changed during the fiscal year. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial health of the City is improving or deteriorating.

The government-wide financial statements of the City are divided as follows:

 Governmental activities - Most of the City’s basic services are included here, such as police; fire; public works; community development; youth, parks, and community enrichment; and general government. Taxes and state and federal grants finance most of these activities.

 Business-type activities - Certain services provided by the City are funded by customer fees. Among these are the City’s utility services, convention center, and off-street parking facilities.

Fund Financial Statements

A fund is a group of related accounts that is used to main tain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide more detailed information about the City’s largest funds, not the City as a whole.

The City has three types of fund financial statements:

 Governmental funds - Governmental fund statements tell how general government services such as police, fire, and public works, among others, were financed in t he short-term as well as what remains for future spending. Most of the City’s basic services are included in governmental funds, which focus on (1) short-term inflows and outflows of spendable resources, and (2) the remaining year-end balances available for spending.

Because this information does not encompass the additional long-term focus of the government-wide statements, reconciliations that explain the relationship (or di fferences) between governmental funds and governmental activities follow the governmental fund statements.

 Proprietary funds - Services for which customer fees are inte nded to finance the costs of operations are generally reported in proprietary funds. Proprietary fund statements, like the gov ernment-wide statements, provide short-term and long-term financial information about the activities the City operates like businesses, such as utility services, parking facilities, convention center, etc.

 Fiduciary funds - Fiduciary fund statements provide information about the financial relationships in which the City acts solely as a trustee or custodian for the benef it of others, to whom the resources belong. The City is the trustee, or fiduciary, for a closed pension plan. It is also responsible for other assets held for bonded assessment and community facilities di stricts and investment trust fund s, reported as custodial funds.

Investment trust funds can only be used for the trust benef iciaries in accordance with trust agreements. The City elected to serve as the successor agency for its former redevelopment agency, which was dissolved by state law. The successor agency activity is accounted for in a private-purpose trust fund. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All the City’s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the City’s governm ent-wide financial statements because the City cannot use these resources to finance its operations.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS

This section provides analysis of the government-wide financial statements including long-term and short-term information about the City’s overall financial condition. The following table addresses the financial results of the City as a whole.

Total
Percent
2021 2020 2021 2020* 2021 2020* Change
Current and other assets 1,196 $ 1,169 $ 574$ 684 $ 1,770 $ 1,853 $ -4.5% Capital assets 1,841 1,807 1,821 1,647 3,662 3,454 6.0% Total assets 3,037 2,976 2,395 2,331 5,432 5,307 2.4%
Deferred outflows of resources 210 211 30 28 240 239 0.4% Long-term liabilities 1,836 1,809 1,132 1,095 2,968 2,904 2.2% Other liabilities 140 178 51 77 191 255 -25.1%
Total liabilities 1,976 1,987 1,183 1,172 3,159 3,159 0.0% Deferred inflows of resources 141 155 28 22 169 177 -4.5% Net position
Net investment in
capital assets 1,361 1,319 1,167 1,167 2,528 2,486 1.7% Restricted 366 339 46 51 412 390 5.6%
Unrestricted (597) (613) 1 (53) (596) (666) -10.5%
Total net position 1,130$ 1,045 $ 1,214$ 1,165 $ 2,344 $ 2,210 $ 6.1% Activities Activities Government
City of Sacramento
Summary of Net Position
As of June 30, 2021 and 2020
(in millions)
Governmental Business-type Total Primary

*Other liabilities and unrestr icted net position of busines s-type activities and the to tal primary government have been restated from previously reported amounts. More detailed information about the restatement is presented in Note 17 to the financial statements.

Analysis of net position

As noted in the financial highlights, total net position of the primary government increased by $134 million in fiscal year 2021. Total assets increased $125 million and total li abilities remained consistent with the prior fiscal year.

Deferred outflows of resources increased $1 million and deferred inflows of resources decreased $8 million.

The following analysis of governmental and business-type ac tivities provides more detailed information for these changes.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Governmental activities

Current and other assets increased $27 million primarily due to an increase in cash in the governmental funds from higher-than-expected tax revenue, receipts from the excess insurance carrier, and unspent ARPA funding received from the U.S. Treasury. This was offset partially by the spending down of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding received in the previous year.

Capital assets of governmental activities increased $34 million primarily due to continuing development and improvements in the area. Capital asset additions include the Greenbriar Community Facilities District project, North Natomas Community Center and Aquatics Complex, Meadowview Road project, Rio Linda and Main Bridge project, and the Airfield Park Phase I project. More detailed information about the City’s capital assets is presented in Note 4 to the financial statements.

Long-term liabilities increased $27 million primarily due to a $33 million increase in net pension liability and $11 increase in accrued claims and judgements related to the City’s Risk Management Internal Service Fund. This was offset partially by $19 million of principal payments on existing debt obligations and amortization of bond premiums.

More detailed information about long-term liabilities is presented in Note 7 to the financial statements.

Other liabilities decreased $38 million primarily due to recognition of $82 million of revenue related to CARES funding that was previously unearned. This was offset by the establis hment of $56 million of unearned revenue related to unspent ARPA funding.

Deferred inflows of resources decreased $14 million primarily due to a $22 million decrease in deferred inflows related to OPEB. The decrease in deferred inflows related to OPEB was mainly driven by a decrease in deferred inflows for changes of assumptions. The decrease was offset by an $9 million increase in deferred inflows related to pensions, mainly driven by an increase in deferred in flows for net differences between projected and actual earnings. More detailed information about pension and OPEB plans is presented in Notes 8 and 9 to the financial statements.

Restricted net position, representing amounts that must be used in accordance with external restrictions, increased $27 million primarily due to increases in restrictions for capital projects.

Business-type activities

Current and other assets of business-type activities decreased $110 million primarily due to spending down of 2018 Transient Occupancy Tax (TOT) revenue bond and 2019 Sacramento Tourism Infrastructure District (STID) revenue bond proceeds received in previous years.

Capital assets increased $174 million due to capital asse t additions including the Convention Center expansion, Community Center Theater Renovation, River Park project, 3 rd Street Relief Sewer project, and McKinley Park Combined Sewer System Storage project, offset by curr ent year depreciation. More detailed capital asset information is presented in Note 4 to the financial statements.

Long-term liabilities increased $37 million primarily due to the issuance of $28 million of bonds and an increase of $71 million of the Drinking Water State Revolving Fund Note Payable, offset by refunding of $25 million of bonds and $43 million of principal payments on existing debt ob ligations and net amortization of bond discounts and premiums. More detailed information is presented in Note 7 to the financial statements.

Deferred inflows of resources increased $6 million primarily due to a $9 million increase in deferred inflows related to pensions. The increase in deferred inflows related to pensions was mainly driven by an increase in deferred inflows for net differences between projected and actual earnings. More detailed information about pension plans is presented in Note 8 to the financial statements.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Total
Percent
2021 2020 2021 2020 2021 2020 Change
Revenues
Program revenues:

Charges for services 181 $ 197 $ 313 $ 320$ 494$ 517$ -4.4% Operating grants and contributions 186 76 1 2 187 78 139.7% Capital grants and contributions 142 160 18 33 160 193 -17.1% General revenues:

Property taxes 198 184 - - 198 184 7.6% Utility users tax 62 60 - - 62 60 3.3% Local sales taxes 117 104 - - 117 104 12.5% Other taxes 55 45 16 21 71 66 7.6% Unrestricted:

Sales taxes shared state revenue 99 91 - - 99 91 8.8% Investment earnings 5 19 - 17 5 36 -86.1% Miscellaneous 12 16 - - 12 16 -25.0% Total revenues 1,057 952 348 393 1,405 1,345 4.5% Expenses
General government 260 153 - - 260 153 69.9% Police 234 234 - - 234 234 0.0% Fire 192 180 - - 1 92 180 6.7%
Public works 116 125 - - 116 125 -7.2% Convention and cultural services 18 21 - - 18 21 -14.3% Youth, parks, community enrichment 57 66 - - 57 66 -13.6% Community development 71 74 - - 71 74 -4.1% Library 22 20 - - 22 20 10.0% Interest on long-term debt 21 24 - - 21 24 -12.5% Water - - 103 105 103 105 -1.9% Wastewater - - 32 32 32 32 0.0% Storm drainage - - 41 45 41 45 -8.9% Solid waste - - 64 59 64 59 8.5% Community center - - 25 31 25 31 -19.4% Parking - - 12 14 12 14 -14.3% Child development - - 3 6 3 6 -50.0% Total expenses 991 897 280 292 1,271 1,189 6.9% Revenue
over (under) expenses 66 55 68 101 134 156 -14.1% Transfers 19 35 (19) (35) - - - Change in net position 85 90 49 66 134 156 -14.1% Net position, beginning of year 1,045 955 1,165 1,107 2,210 2,062 7.2% Prior period restatement - - - (8) - (8) 100.0% Net position, end of year 1,130$ 1,045$ 1,214 $ 1,165$ 2,344$ 2,210 $ 6.1% Activities Activities Government
City of Sacramento
Changes in Net Position
For the Fiscal Years Ended June 30, 2021 and 2020
(in millions)
Governmental Business-type Total Primary

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Analysis of the changes in net position

Total government-wide revenues of the primary gove rnment increased $60 million, a 4.5 percent increase compared to the prior fiscal year, and total expenses incr eased $82 million, a 6.9 percent increase compared to the prior fiscal year. These changes are discussed in more detail below.

Governmental activities

Total revenues for governmental activities increased $105 million, a 11 percent increase compared to the prior fiscal year. Total expenses increased $94 million, a 10.5 percent increase compared to the prior fiscal year.

Transfers in primarily consist of in-lieu taxes paid by t he business-type activities to the General Fund. Transfers out primarily consist of capital assets transferred from governmental activities to business-type activities.

Revenue

Charges for services revenue decreased by $16 million during fiscal year 2021 compared to fiscal year 2020. $8 million is related to a decrease in on-street parking meter revenues and related parking citations and penalties as the City observed decreased parking within the Downtown area due to the COVID-19 pandemic. Another $2 million relates to the decrease in facility use fees and communi ty service fees within youth, parks, and community enrichment due to COVID-19.

Operating grants and contributions revenue increased $110 million primarily due to funding the City received for
the CARES Act program, Sacramento Emergency Rental Assistance program, Whole Person Care program, and the Great Plates Delivery program.

Capital grants and contributions decreased by $18 million during fiscal year 2021 compared to fiscal year 2020.

Property tax revenue increased $14 million due to cont inued increases in Sacramento area commercial and residential real estate property assessed valuations.

Sales taxes, net of increase in state shared sales tax revenue, increased $21 million due to a rise in local spending.

The increase in revenue is offset by a net decrease of $6 million in invest ment earnings, utility users tax, other taxes, and unrestricted miscellaneous revenues.

Expenses

Total governmental activities expenses increased $94 million primarily due to increases in department functional expenses. General government expenses increased $107 million related to costs for the City’s response to COVID-

19. Fire expenses increased $12 million due to growing labor, overtime, OPEB, and pension cost. Library expenses increased $2 million. These increases were offset by a $9 million decrease in public works expense due to decreased non-capitalizable project costs and a $9 million decrease in youth, parks, and community enrichment expense from facility closures due to COVID-19 restrictions. Additional decreases included $3 million in convention cultural services, $3 million in community development, and $3 million in interest on long term debt.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Business-type activities

Total revenues for business-type activities decreased $45 million, a 11.5 percent decrease compared to the prior fiscal year. Total expenses for business-type activities decreased $12 million, a 4 percent decrease. Transfers out primarily consist of in-lieu taxes paid by the business-type activities to the General Fund. Transfers in primarily consist of capital assets transferred from governmental activities to business-type activities.

Revenue

Charges for services decreased $7 million primarily due to a decrease in parkin g fees received as a result of the economic shutdown.

Capital grants and contribution revenue decreased by $15 million due to a $7 million decrease in water, $6 million decrease in wastewater, and $2 million decrease in st orm drainage resulting from decreased infrastructure dedications by developers.

Other tax revenue decr eased $5 million due to a decrease in TOT revenue caused by a decrease in hotel occupancy as a direct result of COVID-19.

Expenses

Water Fund expenses decreased $2 million primarily due to a $5 million decrease in labor and pension expenses The decrease in pension expense is based on the current year adjustment to the City’s actuarially determined Net Pension Liability and associated deferred inflows and outflows of resources. Additionally, there was a $4 million increase in services and supplies mainly due to an increase in consulting fees and additional land and water right purchases for water transfers that occurred in fiscal year 2021.

Storm Drainage expenses decreased $4 million due to a $1 million decrease in labor and pension expenses and $1 million decrease in services and supplies primarily due to less costs resulting from COVID-19 policies as well as a $2 million decrease in loss on disposition of capital assets from prior year.

Community Center expenses decreased $6 million primarily due to a combined $3 million decrease in services and supplies expense and labor and pension expense. The decreases resulted from the closure of the Convention Center due to renovations as well as cancellations of various events due to COVID-19. There was also a reduction in funds provided for community support programs due to the uncertainty of revenues for the Community Center Fund with the ongoing pandemic. Also, in the prior year the Community Center recognized a loss of $2 million related to disposal of capital assets. There was no gain or loss on disposal of capital assets in fiscal year 2021.

FINANCIAL ANALYSIS OF THE FUND STATEMENTS

Funds are accounting devices the City uses to keep track of specific sources of funding and spending for particular purposes. The fund financial statements focus on individual parts of City government, reporting City operations in more detail than the government-wide statements.

Governmental Funds

The City’s governmental funds provide info rmation on near-term inflows, outflows, and balances of spendable resources. Total revenues for governmental f unds increased $157 million compared to the prior fiscal year. Total expenditures increased $1 53 million compared to the prior fiscal year. Net other financing sources decreased $5 million compared to the prior fiscal year. These changes are discussed in more detail below.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

General Fund

Total General Fund revenue increased $20 million compared to the prior fiscal year. Tax revenues increased by $32 million primarily due to an increase in property taxes associated with an increase in the assessed value of properties and the rapid growth in cannabis dispensary and distribution businesses. Intergovernmental revenue increased by $4 million due to reimbursements the City received for the establishment of mobile COVID-19 testing throughout Sacramento County. These increases are offset by decreases in charges for services of $6 million, fines, forfeits, and penalties of $6 million, and interest, r ents, and concessions of $5 million. The decreases were driven by COVID-19, as the pandemic led to a loss in parking revenue due to the closure of non-essential businesses and reduction of vehicle traffic, rent reductions, and temporary easing of the financial burden of fines and penalties.

Total General Fund expenditures increased $15 million compared to prior fiscal year. Expenditures in Police and Fire departments increased $7 million in total, General Government increased $5 million, capital outlay increased $5 million, and library $2 million. These increases are pr imarily due to labor, OPEB and pension cost increases, as well as funding for the Mental Health and Impact Team, dedicated mental health and homeless outreach units compassionate to the needs of the most vulnerable members of our community. Capital outlay increased $5 million mainly due to the construction of the North Natomas Community Center and Aquatics Complex and expenditures for Fire Station #14 and fire apparatus.

General Fund Budgetary Highlights

The City Council revised the budget throughout the fi scal year with midyear revenue and appropriation adjustments, changes made to appropriations for the use of committed fund balanc e, and other revenue and appropriation adjustments after the original budget was adopted.

After accounting for these budget adjustments, General Fund revenues were $22 million higher than final budgeted amounts. Collection of various taxes exceeded the budget by $23 million primarily due to increases in property taxes and cannabis dispensary and business operation taxes. Intergovernmental revenue exceeded budget by $6 million due to federal reimbursements for Fire Emergency Me dical Services. These positive variances with final budget amounts are offset by charges for services coming in lower than final budgeted amounts by $6 million due to loss in parking revenue as a result of COVID-19 and closure of non-essential services and large events.

General Fund budgetary expenditures were $93 million lo wer than final budgeted amounts. Most of the General Fund departments reported favorable operating expenditure budget variances primarily due to labor savings and labor reimbursements from grants and other funds. Capital outlay expenditures were less than budgeted amounts by $20 million due to the multi-year nature of capital projects. Unspent multi-year project budgets, as well as other unspent City Council approved program budgets, are carried over to the subsequent fiscal year.

Measure U Fund

Measure U Fund revenue and expenditures increased by $12 million and $2 million, respectively. Revenue increased due to retail sales growth. During the fiscal year the Measure U Fund transferred $6 million to the Economic Development Special Revenue Fund to provide resources for the Wong Center Senior Housing project and Stockton Boulevard Housing Development project. Use of Measure U resources included police, fire, library, animal care, youth, parks, and community enrichment services.

2015 Golden 1 Center Lease Revenue Bond Fund

2015 Golden 1 Center Lease Revenue Bond Fund revenue and expenditures were consistent with the previous fiscal year. Both revenues and expenditures decreased by less than $1 million. Transfers in increased by $5 million due to a one-time transfer of $5 million from the General Fund to increase the liquidity reserve for the 2015 Golden 1 Center Lease Revenue Bond Fund.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Operating Grants Fund

Operating Grants Fund revenue and expenditures increased by $105 million and $112 million, respectively. The increase in revenue is primarily due to a $74 million incr ease in CARES Act revenue, $20 million increase in Sacramento Emergency Rental Assistance Program, $12 million increase in the Whole Person Care program, $5 million increase for the Great Plates Delivery program, and $3 million increase in Urban Search and Rescue program, offset partially by a $8 million decrease in Homeless Emergency and Prevention program revenue. The increase in expenditures is primarily due to $74 million in expenditures related to COVID-19 response, $15 million related to the Sacramento Emergency Rental Assistance program, a $14 million increase in expenditures for the Great Plates Delivery program, and $9 million increase for the Whole Person Care program.

Other Governmental Funds

Other governmental fund revenues increased by $20 million primarily due to an increase of $22 million in revenues for capital projects funds. The increase in capital projects funds revenue is primarily due to the following:

 $31 million increase in the Special Districts Fund due to the issuance of Greenbriar CFD 2018-03 Improvement Area No. 1, Special Tax Bonds, Series 2021.  $6 million decrease in Transportation and Development Fund primarily due to a decrease in reimbursement revenues as the Intermodal Transport Facility is near completion and the old Measure A program winds down. There was also a decrease in commercial excise tax during the fiscal year.

Other governmental fund expenditures increased by $24 million primarily due to an increase of $25 million in expenditures for capital projects funds. The increase in capital projects funds expenditures is primarily due to the following:

 $9 million increase in the Financing Plans Fund primarily due to increases in expenditures for parks and community development and the redemption of North Natomas and Railyards financing plan fee credits.  $21 million increase in the Special Districts Fund primarily due to acquisition and construction costs for Greenbriar CFD 2018-03 Improvement Area No. 1.
 $7 million decrease in the Capital Grants Fund primar ily due to decreased project costs for the Rio Linda and Main Bridge, Highway Safety Improvement Program, I Street Bridge Replacement, Federal Downtown Controller, Railyards Green Street Urban Grant, and Meadowview Navigation Center.

Enterprise Funds

The City’s enterprise fund financial statements provide the same type of information as the government-wide financial statements but in greater detail. Total operating revenues decreased $6 million and operating expenses decreased $6 million compared to the prior fiscal year. Net nonoperating expenses increased $18 million and capital contributions decreased $11 million compared to the prior fiscal year. These changes are discussed in more detail below.

Water Fund

Water Fund operating revenues increased $2 million primarily due to an increase of $4 million in water sales from groundwater transfers in fiscal year 2021 that did not occur in the prior year. There was also a decrease of $2 million in utility service charges, resu lting in an overall increa se of $2 million. Operatin g expenses decreased $1 million primarily due to $5 million decrease in pension expense that fluctuates due to a variety of actuarial factors and an increase of $4 million in services and supplies related to management consulting and land and water rights for water transfers. Net nonoperating expenses increased $3 million primarily due to a decrease in interest and investment revenue and an increase in interest expense during fiscal year 2021. Capital contributions decreased $5 million primarily due to a decrease of $2 million from water development impact fees and $3 million associated with South Sacramento Water Meter Retrofit and Fairbairn Water Treatment Plant Filter Improvements.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Wastewater Fund

Wastewater net nonoperating expenses decreased $2 milli on primarily due to a decrease in interest and investment revenue as a result of a less favorable return on investment in fiscal year 2021 compared to prior year.

Capital contributions decreased $5 milli on. Additionally, there was an increa se of $2 million in wastewater development impact fees.

Storm Drainage Fund

Storm Drainage Fund operating expenses decreased $2 million primarily due to a decrease in pension expenses which is adjusted based on actuarially determined Net Pension Liability and associated deferred inflows and outflows of resources. Net nonoperating expenses decreased by $1 million in the current year due to a loss of $2 million on the disposition of capital assets in the prior year and a decrease in interest and investment revenue of $1 million in the current year.

Solid Waste Fund

Solid Waste Fund operating revenues increased $6 million primarily due to an increase in service accounts and a rate adjustment of 7.47 percent in fiscal year 2021. Operating expenses increased $5 million primarily due to the budgeted addition of new vehicles and higher costs asso ciated with green waste disposal, household hazardous materials disposal, and residential collections. These costs are expected to continue to rise due to more stringent state and federal regulations.

Community Center Fund

Community Center Fund operating revenues decreased $2 million and operating expenses decreased by $4 million. Operations were hea vily impacted by the tem porary closure of the Convention Center Complex for renovations and cancellations of various events due to COVID-19. Net nonoperating revenue decreased by $13 million primarily due to a decrease in interest and investment revenue of $9 million and TOT revenue of $6 million.

The decrease in interest and investment revenue is due to a combination of dec reases in the fair value of Pool A investment holdings from the prior year, overall Pool A investment rate of return, and average cash balance throughout the year as bond proceeds were spent down. The decrease in TOT revenue is a result of decreased hotel stays and travel due to the ongoing pandemic.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

As of June 30, 2021, the City had invested $3.7 billion in a broad range of capital assets, including land, buildings, vehicles, parks and park improvements, roads, bridges, and water, wastewater and storm drainage transmission and distribution systems. Current year capital asset additions, net of deletions, of $338 million were offset by current year depreciation expense of $130 million, resulting in a net increase in capital assets of $208 million.

2021 2020 2021 2020 2021 2020
Capital assets not being depreciated
Land 203 $ 201 $ 48 $ 48 $ 251 $ 249 $ Easements 2 1 - - 2 1 Construction in progress 224 164 665 551 889 715 Depreciable capital assets:

Buildings and improvements 418 429 165 130 583 559 Equipment 15 17 24 24 39 41 Software 2 2 10 11 12 13 Vehicles 90 82 - - 90 82 Transmission and distribution system 4 4 909 883 913 887 Road network 572 600 - - 572 600 Streetlight network 169 164 - - 169 164 Parks and park improvements 142 143 - - 142 143 Total capital assets 1,841$ 1,807 $ 1,821 $ 1,647 $ 3,662 $ 3,454 $ Activities Activities
Total Primary
City of Sacramento
Capital Assets
As of June 30, 2021 and 2020
(net of depreciation, in millions)
Governmental Business-T ype
Government

This year's major capital asset additions include:

 $101 million for the Convention Center Expansion Project,  $40 million for the Community Center Theater Renovation Project,  $20 million for the North Natomas Community Cent er and Aquatics Center Construction Project,  $18 million for the River Park Water Meter Replacement Project,  $14 million for the Greenbriar Area 1 Project,
 $10 million for the 3 rd St Relief Sewer Project,
 $9 million for the McKinley Park Comb ined Sewer System Storage Project,  Other capital project additions in progress including the Broadway/Alhambra Navigation Center Project, Fire Station #14 Project, Street Seals Project, Meadowvi ew Road Complete Street Project, and Rio Linda and Main Bridge Project. Many other capital projects were completed during the year and transferred from construction in progress to the appropriate capital asset categories.

The City has $128 million in commitments for contracts awarded but not completed as of June 30, 2021. The major contracts outstanding are $13 million for renovation of the Convention Center Complex; $10 for renovation of the Community Center Theater; $7 million for the development of River Park, Oak Park and North 12th St.; $7 million for North Natomas Aquatic Center construction; $4 million for the McKinley Park Combined Sewer System Storage project to reduce area flooding; $4 m illion for the construction of Fire Stati on #14; $3 million for residential water meter installations, pipeline replacements and retrofit projects; and $17 million for the purchase of vehicles, primarily for the replacement refuse trucks and garbage trucks.

More detailed information about the City's capital assets is presented in Note 4 to the financial statements.

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

Long-term Debt

The following table summarizes the City’s outstanding debt (excluding other long-term liabilities):

2021 2020 2021 2020 2021 2020
Revenue and other bonds, net 475$ 494 $ 822 $ 859 $ 1,297 $ 1,353 $ Notes payable 17 17 124 57 141 74 Capital lease obligations - - - 1 - 1 Total outstanding debt 492$ 511 $ 946 $ 917 $ 1,438 $ 1,428 $ City of Sacramento
Outstanding Debt
As of June 30, 2021 and 2020
(in millions)
Activities Activities Government
Governmental Business-Type Total Primary

Total outstanding debt for governmental activities decr eased $19 million due to principal payments on existing obligations and net amortization of bond premiums.

Total outstanding debt for business-type activities increased $29 million ma inly due to the issuance of the Wastewater Refunding Revenue Bonds, Series 2020 at par of $28 million and the addition of $71 million to the Drinking Water State Revolving Fund Note. These increases were offset partially by $43 million in principal payments on existing obligations and net amortization of bond discounts and premiums and refunding of $25 million of the outstanding Wastewater Revenue Bonds, Series 2013.

Final principal payments for the 1993 Refunded Revenue B onds, Series A and B were made in November 2020.

The final payments totaled $5 million from governmental activities and $10 million from business-type activities.

More detailed information about the City’s long-term liabilities is presented in Note 7 to the financial statements.

Credit rating

The following table summarizes the City’s bonded debt rati ngs (nr designates not rated) at June 30, 2021, as determined by S&P Global Ratings (S & P), Moody’s Investors Service, Inc. (Moody’s), and Fitch Ratings (Fitch):

Bond issues: S & P Moody’s Fitch

 2006 Capital Improvement Revenue Bonds, Series B AA- Aa3 nr  2006 Capital Improvement Revenue Bonds, Series E AA- Aa3 nr  2013 Water Revenue Bonds AA nr AA-  2013 Wastewater Revenue Bonds AA nr AA  2015 Refunding Revenue Bonds AA-/AA Aa3 nr  2015 Lease Revenue Bonds (Golden 1 Center) AA- nr A  2017 Water Revenue Bonds AA nr AA-  2018 TOT Revenue Bonds, Senior Series A&B nr A1 nr  2018 TOT Revenue Bonds, Subordinate Series C nr A2 nr  2019 Wastewater Revenue Bonds AA nr AA  2019 STID Assessment Revenue Bonds nr A2 nr  2020 Water Revenue Refunding Bonds AA nr AA-  2020 Wastewater Revenue Refunding Bonds AA nr AA

City of Sacramento
Management’s Discussion and Analysis (Continued)
(Required Supplementary Information - Unaudited)
For the Fiscal Year Ended June 30, 2021

The City’s issuer credit rating as of June 30, 2021, is AA with a stable outlook from S&P, Aa2 with a stable outlook from Moody’s, and AA- with a stable outlook from Fitch. T he issuer credit rating is an assessment of the City’s creditworthiness and capacity to meet financial commitment s as they come due without regard to the terms of a specific debt instrument. The ratings and stable outlook determination are based on a multitude of factors for each of the rating agencies. Highlights include: the City’s strong budgetary flexibility, with small surpluses projected over the next few years; the City’s continued growth despite a pandemic-driven slowdown in the regional economy; and the City’s adequate expenditure control, moderate long-term liabilities, and strong reserves relative to the City’s moderate revenue volatility.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

Economic Factors

The full impact of the COVID-19 pandemic has continued to create economic uncertainty for the foreseeable future.

With restrictions loosening and an increase in vaccination rates, the City remains cautiously optimistic about an impending economic recovery. However, in this transition to post-pandemic life, the City still faces significant financial challenges. Housing demand remains higher than supply in the region as Bay Area residents continue to look for cheaper housing alternatives. Homelessness and the need to increase services, shelter capacity, and housing is one of the biggest issues the City faces.

As of June 30, 2021, the City allocated and spent its entire $89 million of CARES Act funding. In fiscal year 2021, the City received its first installment of ARPA funding for $56 million to further assist the City’s economic recovery.

The second installment is expected in May 2022.

Next Year’s Budget

General Fund budget appropriations for fiscal year 2022 are $562.3 million, an increase of 5 percent compared to the fiscal year 2021 approved budget. In addition to the alloca tion of resources for several priority initiatives, the approved budget appropriations include a contribution to the City’s Economic Uncertainty Reserve.

City Council adopted a balanced budget for fiscal year 202 2 based on strategic use of one-time, fiscal year 2022 department savings, and available fund balance.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens , taxpayers, customers, investors, and creditors with a general overview of the City’s finances, and to demonstrate the City’s accountability for the money it receives. If you have questions about this report, need additional financial information, or would like to obtain component unit financial statements, contact the City of Sacramento Depa rtment of Finance, Accounting Division, 915 I Street, Fourth Floor, Sacramento, CA, 95814, or visit the City’s web page at http://www.cityofsacramento.org.

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Government-wide
Financial
Statements

City of Sacramento
Statement of Net Position
June 30, 2021
(in thousands)
Governmental Business-typ e
Activities Activities Total
ASSETS
Cash and investments 837,956$ 365,564$ 1,203,520$ Receivables, net 304,097 61,908 366,005 Internal balances 5,244 (5,244) -
Inventories - 1,228 1,228
Prepaid items 13,818 266 14,084
Restricted cash and investments 35,322 150,612 185,934 Intangible assets - 120 120
Land and other capital assets not being depreciated 428,868 713,213 1,142,081 Other capital assets, net of depreciation 1,411,671 1,107,946 2,519,617 Total assets 3,036,976 2,395,613 5,432,589

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt 2,637 10,543 13,180 Deferred outflows related to pensions 187,270 16,295 203,565 Deferred outflows related to OPEB 20,354 2,823 23,177 Total deferred outflows of resources 210,261 29,661 239,922

LIABILITIES
Payables 76,900 47,596 124,496 Unearned revenue 63,013 3,848 66,861
Long-term liabilities:

Due within one year 49,642 30,215 79,857 Due in more than one year 1,786,916 1,101,634 2,888,550 Total liabilities 1,976,471 1,183,293 3,159,764

DEFERRED INFLOWS OF RESOURCES
Service concession arrangement 7,203 - 7,203
Gain on refunding of debt - 403 403
Deferred inflows related to pensions 39,588 12,027 51,615 Deferred inflows related to OPEB 94,231 15,411 109,642 Total deferred inflows of resources 141,022 27,841 168,863

NET POSITION
Net investment in capital assets 1,360,966 1,167,408 2,528,374 Restricted for:

Capital projects 214,188 43,253 257,441 Debt service 401 - 401
Public works programs 29,598 - 29,598
Economic development programs 49,537 - 49,537 Other programs 61,142 2,200 63,342
Trust and endowments:

Expendable 9,934 - 9,934
Nonexpendable 878 - 878
Unrestricted (596,900) 1,279 (595,621)
Total net position 1,129,744$ 1,214,140$ 2,343,884$ Primary Government
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Statement of Activities
For the Fiscal Year Ended June 30, 2021
(in thousands)
Functions/Programs
Primary government:

Governmental activities:

General government 278,871 $ (19,342) $ 28,247 $ 151,867 $ 159 $ (79,256) $ Police 233,883 - 10,468 5,568 - (217,847)
Fire 191,814 - 46,867 2,538 - (142,409)
Public works 115,565 - 43,245 15,154 62,681 5,515 Convention and cultural services 18,398 - 8,823 274 22 (9,279) Youth, parks, and community enrichment 57,345 - 8,952 1,086 13,272 (34,035) Community development 71,473 - 34,287 708 65,626 29,148 Library 22,173 - - 8,446 - (13,727)
Interest on long-term debt 20,635 - - - - (20,635) Total governmental activities 1,010,157 (19,342) 180,889 185,641 141,760 (482,525) Business-type activities:

Water 94,688 7,850 144,070 185 6,836 48,553
Wastewater 29,903 2,533 43,829 5 6,548 17,946
Storm drainage 38,710 2,232 40,848 123 5,061 5,090 Solid waste 60,165 3,895 73,465 175 - 9,580
Community center 23,749 1,508 196 - - (25,061)
Parking 10,130 1,324 10,403 - - (1,051)
Child development 3,422 - 552 13 - (2,857)
Total business-type activities 260,767 19,342 313,363 501 18,445 52,200 Total primary government 1,270,924 $ - $ 494,252 $ 186,142 $ 160,205 $ (430,325) $ Program Revenues
Operating
Grants and
Contributions
Capital
Charges for
ServicesExpenses
Operating Grants and
Contributions
Net (Expense)
Revenue
Indirect
Allocation
Expenses
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Statement of Activities
For the Fiscal Year Ended June 30, 2021
(in thousands)
Changes in net position:

Net (expense) revenue (482,525) $ 52,200 $ (430,325) $ General revenues:

Taxes:

Property taxes 198,380 - 198,380
Utility user taxes 62,164 - 62,164
Local sales tax 116,845 - 116,845
Property transfer tax 15,570 - 15,570
Business operations tax 33,922 - 33,922
Transient occupancy tax 3,101 15,545 18,646
Other taxes 2,370 - 2,370
Unrestricted sales taxes shared state revenue 99,325 - 99,325 Unrestricted investment earnings 4,618 5 4,623
Unrestricted miscellaneous 12,064 - 12,064
Gain on sale of capital asset - 27 27
Transfers 18,647 (18,647) -
Total general revenues and transfers 567,006 (3,070) 563,936 Changes in net position 84,481 49,130 133,611
Net position, beginning of year 1,045,263 1,172,792 2,218,055 Restatement - (7,782) (7,782)
Net position, beginning of year, as restated 1,045,263 1,165,010 2,210,273 Net position, end of year 1,129,744 $ 1,214,140 $ 2,343,884 $ Primary Government
Total
Governmental
Activities
Business-type
Activities
The notes to the basic financial statements are an integral part of this statement.

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Fund Financial
Statements

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City of Sacramento
Governmental Funds
Balance Sheet
June 30, 2021
(in thousands)
2015 Golden 1 Center
Measure U Lease Revenue
Fund Bond Fund
ASSETS
Cash and investments held by City 224,398$ 50,823$ 9,333$ Cash and investments held by fiscal agent - - 303
Receivables, net:

Taxes 31,956 22,654 -
Accounts 27,412 - 832
Loans 1,931 - 136,935
Intergovernmental 2,354 - -
Interest 627 141 24
Prepaid items 1,084 - -
Restricted assets:

Cash and investments held by City - - -
Cash and investments held by fiscal agent - - 18,379
Total assets 289,762$ 73,618$ 165,806$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities:

Accounts payable 17,832$ 2,480$ -$
Accrued payroll 21,059 - -
Accrued claims and judgments 92 - -
Due to other funds - - -
Deposits 25 - -
Unearned revenue 479 - -
Advances from other funds 1,931 - -
Total liabilities 41,418 2,480 -
Deferred inflows of resources:

Unavailable revenue 8,351 136,935
Fund balances:

Nonspendable:

Prepaid items 1,084 - -
Permanent fund principal - - -
Restricted:

Capital projects - - -
Debt service - - 18,379
Public works programs - - -
Economic development programs - - -
Other programs - - -
Committed:

Economic uncertainty 58,499 449 -
Capital projects 57,417 22,656 -
Debt service - - 10,165
Fire programs 7,438 - -
Housing trust fund - 15,000 -
OPEB 6,828 - -
Set-aside for FY22 Budget 5,500 - -
Other programs 72,809 3
3,010 -
Assigned:

Debt service - - 299
Unrealized investment gains 103 23 28
Other programs - - -
Unassigned 30,315 - -
Total fund balances 239,993 71,138 28,871
Total liabilities, deferred inflows of resources
and fund balances 289,762$ 73,618$ 165,806$
Fund
General
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Governmental Funds
Balance Sheet
June 30, 2021
(in thousands)
Operating Other Total
Grants Governmental Governmental
Fund Funds Funds
ASSETS
Cash and investments held by City 73,154$ 346,437$ 704,145$ Cash and investments held by fiscal agent 53 356 Receivables, net:

Taxes - 5,632 60,242 Accounts 626 10,408 39,278 Loans - 950 139,816 Intergovernmental 25,533 27,994 55,881 Interest 156 299 1,247 Prepaid items 8,782 1 9,867 Restricted assets:

Cash and investments held by City - 12,760 12,760 Cash and investments held by fiscal agent - 4,183 22,562 Total assets 108,251$ 408,717$ 1,046,154$

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities:

Accounts payable 10,218$ 13,891$ 44,421$ Accrued payroll - 39 21,098 Accrued claims and judgments - - 92 Due to other funds - 3,455 3,455 Deposits 135 2,234 2,394 Unearned revenue 56,342 5,934 62,755 Advances from other funds - 6,424 8,355 Total liabilities 66,695 31,977 142,570 Deferred inflows of resources:

Unavailable revenue 20,459 27,520 193,265 Fund balances:

Nonspendable:

Prepaid items 8,782 1 9,867 Permanent fund principal - 578 578 Restricted:

Capital projects - 230,323 230,323 Debt service - 4,343 22,722 Public works programs - 21,141 21,141 Economic development programs - 49,537 49,537 Other programs 32,693 27,824 60,517 Committed:

Economic uncertainty - - 58,948 Capital projects - 867 80,940 Debt service - 1,992 12,157 Fire programs - - 7,438 Housing trust fund - - 15,000 OPEB - - 6,82 8 Set-aside for FY22 Budget - - 5,500 Other programs - 22,662 128,481 Assigned:

Debt service - 1,971 2,270 Unrealized investment gains - - 154 Other programs - 63 63 Unassigned (20,378) (12,082) (2,145) Total fund balances 21,097 349,220 710,319 Total liabilities, deferred inflows of resources
and fund balances 108,251$ 408,717$ 1,046,154$ The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Governmental Funds
Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2021
(in thousands)
Fund balances - total governmental funds 710,319$
Amounts reported for governmental activities in the statement of net position are different because:

Revenue and other resources not available to liquidate
liabilities of the current period are not recognized in the funds. 193,265 Prepaid bond insurance represents costs associated with the issuance of long-term debt which are amortized over the period the debt is outstanding.

The costs are reported as expenditures of the current period in the governmental funds. 205
Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds:

Governmental capital assets 3,444,326
Less: accumulated depreciation (1,693,155)
1,751,171
Certain current liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of the following:

Interest payable (5,153)
Deferred outflows and inflows of resources are not recognized in the current period and therefore not reported in the governmental funds.

Deferred outflows related to pensions 185,461
Deferred outflows related to OPEB 19,978
Deferred inflows related to pensions (39,583)
Deferred inflows related to OPEB (92,231)
Loss on refunding of debt 2,637
76,262
Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.

Accrued compensated absences (42,414)
Accrued claims and judgments (3,733)
Financing plan fee credits (37,626)
Net pension liability (936,885)
Net OPEB liability (197,809)
Pollution remediation obligations (573)
Revenue and other bonds payable, net (474,866)
Capital lease obligations payable (199)
Notes payable (16,909)
(1,711,014)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet, to individual funds.

The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 114,689 Net position of governmental activities 1,129,744$
The notes to the basic financial statements are an integral part of this statement.

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City of Sacramento
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended June 30, 2021
(in thousands)
2015 Golden 1 Center
General Measure U Lease Revenue
Fund Fund Bond Fund
Revenues:

Taxes 403,390$ 116,845$ -$
Intergovernmental 20,193 - -
Charges for services 99,212 - -
Fines, forfeits, and penalties 7,284 - -
Interest, rents, and concessions 887 250 1,334
Community service fees - - -
Assessment levies 588 - -
Contributions and donations 30 - -
Miscellaneous 1,250 - -
Total revenues 532,834 117,095 1,334
Expenditures:

Current:

General government 60,257 6,746 -
Police 162,136 42,931 -
Fire 143,358 21,652 -
Public works 13,249 940 -
Convention and cultural services 5,462 1,171 -
Youth, parks, and community enrichment 21,538 11,026 - Community development 34,623 504 -
Library 12,266 506 -
Utilities 3,670 - -
Citywide and community support 51,632 - -
Capital outlay 22,592 8,783 -
Debt service:

Principal - - 3,810
Interest and fiscal charges - - 10,042
Total expenditures 530,783 94,259 13,852
Excess (deficiency) of revenues over
(under) expenditures 2,051 22,836 (12,518)
Other financing sources (uses):

Transfers in 55,636 - 12,700
Transfers out (43,133) (5,704)
-
Issuance of long-term debt - - -
Total other financing sources (uses) 12,503 (5,704) 12,700 Changes in fund balances 14,554 17,132 182
Fund balances, beginning of year 225,439 54,006 28,689 Fund balances, end of year 239,993$ 71,138$ 28,871$
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended June 30, 2021
(in thousands)
Operating Other Total
Grants Governmental Governmental
Fund Funds Funds
Revenues:

Taxes -$ 13,576$ 533,811$
Intergovernmental 147,794 69,441 237,428
Charges for services 1,555 19,701 120,468
Fines, forfeits, and penalties - 346 7,630
Interest, rents, and concessions (7) 7,637 10,101
Community service fees - 27,217 27,217
Assessment levies - 51,412 52,000
Contributions and donations 5,238 47,609 52,877
Miscellaneous - - 1,250
Total revenues 154,580 236,939 1,042,782
Expenditures:

Current:

General government 139,716 15,872 222,591
Police 6,240 - 211,307
Fire 3,093 - 168,103
Public works 920 35,931 51,040
Convention and cultural services 152 5,630 12,415
Youth, parks, and community enrichment 373 8,941 41,878 Community development 393 32,884 68,404
Library - 8,446 21,218
Utilities - 212 3,882
Citywide and community support - - 51,632
Capital outlay 3,167 95,884 130,426
Debt service:

Principal - 22,418 26,228
Interest and fiscal charges - 11,619 21,661
Total expenditures 154,054 237,837 1,030,785
Excess (deficiency) of revenues over
(under) expenditures 526 (898) 11,997
Other financing sources (uses):

Transfers in 5,044 33,234
106,614
Transfers out (6,242) (25,472) (80,551)
Issuance of long-term debt - 11,255 11,255
Total other financing sources (uses) (1,198) 19,017 37,318 Changes in fund balances (672) 18,119 49,315
Fund balances, beginning of year 21,769 331,101 661,004 Fund balances, end of year 21,097$ 349,220$ 710,319$
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities
For the Fiscal Year Ended June 30, 2021
(in thousands)
Changes in fund balances - total governmental funds 49,315$ Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlay as expenditures. In the statement of activities, however, the cost of those assets is allocated over their estimated useful lives as depreciation expense.

Capital outlay 92,659
Depreciation expense (72,869)
19,790
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds:

Infrastructure dedications 11,920
Long-term debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liab ilities in the statement of net position.

Issuance of long-term debt (11,255)
Principal repayments on long-term debt 26,228
14,973
Revenue and other resources not available to liquidate
liabilities of the current period are not recognized in governmental funds.

Revenue in the statement of activities is not limited by availability, so certain revenues need to be reduced by the amounts that were unavailable at the beginning of the year and increased by the amounts that were unavailable at the end of the year. This adjustment records a net increase in revenues - unavailable revenues at the end of the year were greater than beginning unavailable revenues by this amount. 476
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.

Compensated absences (4,087)
Accrued claims and judgments (253)
Pension expense (40,296)
Other postemployment benefits 24,773
Pollution remediation (34)
Interest 115
Amortization of prepaid bond insurance (17)
Amortization of bond premium 1,147
Amortization of gain/loss on refunding (220)
(18,872)
Capital assets transferred from governmental activities to business-type activities are reported as transfers in the statement of activities. The transfers are not reported in the governmental funds as the amount did not involve the transfer of financial resources. (5,424)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet, to individual funds. The net expense of the internal service funds is reported with the governmental activities. 12,303
Change in net position of governmental activities 84,481$ The notes to the basic financial statements are an integral part of this statement.

THIS PA

GE INTENTIONALLY LEFT BLANK

City of Sacramento
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)
with Budget to GAAP Reconciliation
For the Fiscal Year Ended June 30, 2021
(in thousands)
Actual Actual
Amounts - Budget Amounts -
Budgetary Variance with to GAAP GAAP
Final Basis Final Budget Reconciliation Basis
Revenues:

Taxes 350,084 $ 379,912$ 403,390 $ 23,478$ -$ 403,390$ Intergovernmental 11,044 14,393 20,193 5,800 - 20,193 Charges for services 103,085 105,076 99,212 (5,864) - 99,212 Fines, forfeits and penalties 8,991 8,936 7,284 (1,652) - 7,284 Interest, rents, and concessions 784 2,298 887 (1,411) - 887 Assessment levies 74 74 588 514 - 588
Contributions and donations - 3 30 27 - 30
Miscellaneous 510 318 1,250 932 - 1,250
Total revenues 474,572 511,010 532,834 21,824 - 532,834 Expenditures:

Current:

Mayor/Council 5,185 6,879 5,249 1,630 (118) 5,131 City Auditor 1,078 1,112 1,046 66 (2) 1,044
City Manager 25,390 62,682 18,529 44,153 (1,963) 16,566 City Attorney 9,714 11,483 8,939 2,544 (155) 8,784 City Clerk 2,095 2,028 1,668 360 - 1,668
City Treasurer 2,233 2,377 1,960 417 - 1,960 Finance 7,532 7,774 7,688 86 (293) 7,395
Information technology 15,067 15,567 14,226 1,341 (22) 14,204 Human resources 4,584 5,642 3,508 2,134 (3) 3,505 Subtotal - General government 72,878 115,544 62,813 52,731 (2,556) 60,257 Police 157,246 165,005 162,170 2,835 (34) 162,136 Fire 137,453 143,317 143,358 (41) - 143,358
Public works 14,405 16,225 13,303 2,922 (54) 13,249 Convention and cultural services 6,446 6,914 5,715 1,199 (253) 5,462 Youth, parks, and community enrichment 25,653 24,182 21,701 2,481 (163) 21,538 Community development 40,432 42,507 34,936 7,571 (313) 34,623 Library 12,266 12,266 12,266 - - 12,266
Utilities 797 3,992 3,670 322 - 3,670 Citywide and community support 79,027 54,991 51,914 3,077 (282) 51,632 Capital outlay 45,268 59,442 39,109 20,333 (16,517) 22,592 Total expenditures 591,871 644,385 550,955 93,430 (20,172) 530,783 Excess (deficiency) of revenues over
(under) expenditures (117,299) (133,375) (18,121) 115,254 20,172 2,051 Other financing sources (uses):

Transfers in 55,218 55,005 55,636 631 - 55,636
Transfers out (16,690) (43,226) (43,133) 93 - (43,133) Total other financing sources (uses) 38,528 11,779 12,503 724 - 12,503 Changes in fund balance (78,771) (121,596) (5,618) 115,978 20,172 14,554 Fund balance, beginning of year 225,439 225,439 225,439 - - 225,439 Fund balance, end of year 146,668 $ 103,843$ 219,821 $ 115,978 20,172$ 239,993$ Budgeted Amounts
Original
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Measure U Fund
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)
with Budget to GAAP Reconciliation
For the Fiscal Year Ended June 30, 2021
(in thousands)
Actual Actual
Amounts - Budget Amounts -
Budgetary Variance with to GAAP GAAP
Final Basis Final Budget Reconciliation Basis
Revenues:

Taxes 80,179$ 101,605$ 116,845 $ 15,240$ -$ 116,845$ Interest, rents, and concessions - - 250 250 - 250 Total revenues 80,179 101,605 117,095 15,490 - 117,095 Expenditures:

Current:

General government 8,243 16,237 8,465 7,772 (1,719) 6,746 Police 42,882 43,460 42,934 526 (3) 42,931
Fire 21,642 21,642 21,716 (74) (64) 21,652
Public works 1,000 940 953 (13) (13) 940
Convention and cultural services - 1,171 1,171 - - 1,171 Youth, parks, and community enrichment 14,492 14,713 11,210 3,503 (184) 11,026 Community development 1,235 916 530 386 (26) 504
Library 506 506 506 - - 506
Capital outlay 17,669 29,460 10,486 18,974 (1,703) 8,783 Total expenditures 107,669 129,045 97,971 31,074 (3,712) 94,259 Excess (deficiency) of revenues over
(under) expenditures (27,490) (27,440) 19,124 46,564 3,712 22,836 Other financing uses:

Transfers out - (5,704) (5,704) - - (5,704)
Changes in fund balance (27,490) (33,144) 13,420 46,564 3,712 17,132 Fund balance, beginning of year 54,006 54,006 54,006 - - 54,006 Fund balance, end of year 26,516$ 20,862 $ 67,426 $ 46,564$ 3,712$ 71,138$ Budgeted Amounts
Original
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2021
(in thousands)
Solid Waste
Fund
ASSETS
Current assets:

Cash and investments held by City 164,345 $ 50,344 $ 47,396 $ 49,726 $ Cash and investments held by fiscal agent 4 1 - -
Receivables, net:

Taxes - - - -
Accounts 23,798 13,478 6,646 10,140 Loans - - 46 -
Intergovernmental 333 293 1,471 -
Interest 655 198 141 140
Due from other funds - - - -
Inventories 772 47 409 -
Prepaid items 236 - 17 -
Intangible asset, current portion - - - -
Total current assets 190,143 64,361 56,126 60,006 Noncurrent assets:

Restricted assets:

Cash and investments held by City 71,081 21,080 3,240 789 Cash and investments held by fiscal agent 3,424 412 - - Advances to other funds - - - -
Loans receivable - - 969 -
Intangible assets - - - -
Capital assets:

Land 1,754 1,138 17,885 1,133 Buildings and improvements 64,824 53,110 11,407 32,153 Machinery and equipment 29,409 5,423 17,687 12,437 Vehicles - - - -
Transmi
ssion and distribution system 858,547 201,214 431,693 - Construction in progress 285,609 33,722 2,593 316 Software 3,491 3,447 3,747 2,772 Easements 134 - 157 -
Less: accumulated depreciation/amortization (341,875) (92,986) (226,570) (34,598) Total noncurrent assets 976,398 226,560 262,808 15,002 Total assets 1,166,541 290,921 318,934 75,008

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt 8,090 2,453 - - Deferred outflows related to pensions 7,565 1,752 1,603 2,832 Deferred outflows related to OPEB 896 307 437 662
Total deferred outflows of resources 16,551 4,512 2,040 3,494 Drainage
Fund
Business-type Activities - Enterprise Funds
Fund Fund
Storm
Water Wastewater
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2021
(in thousands)
ASSETS
Current assets:

Cash and investments held by City
Cash and investments held by fiscal agent
Receivables, net:

Taxes
Accounts
Loans
Intergovernmental
Interest
Due from other funds
Inventories
Prepaid items
Intangible asset, current portion
Total current assets
Noncurrent assets:

Restricted assets:

Cash and investments held by City
Cash and investments held by fiscal agent
Advances to other funds
Loans receivable
Intangible assets
Capital assets:

Land
Buildings and improvements
Machinery and equipment
Vehicles
Transmission and distribution system
Construction in progress
Software
Easements
Less: accumulated depreciation/amortization
Total noncurrent assets
Total assets

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt
Deferred outflows related to pensions
Deferred outflows related to OPEB
Total deferred outflows of resources
Community Other
Center Enterprise
Fund Funds
28,835$ 24,913 $ 365,559 $ 133,023 $ - - 5 432

2,677 - 2,677 - 1 720 54,783 174 - - 46 - - - 2,097 - 202 - 1,336 256 - - - 3,705 - - 1,228 - - 13 266 3,746 - 8 8 - 31,715 25,654 428,005 141,336 45,238 - 141,428 -
5,348 - 9,184 - - - - 13,349 - - 969 - - 112 112 - 20,071 5,825 47,806 -
113,040 63,442 337,976 7,454
4,913 6,235 76,104 543 - - - 193,039 - - 1,491,454 -
338,345 4,531 665,116 81
46 32 13,535 256 - - 291 -

(71,234) (43,860) (811,123) (112,005) 455,767 36,317 1,972,852 102,717 487,482 61,971 2,400,857 244,053 - - 10,543 -
1,159 1,384 16,295 1,809 295 226 2,823 376 1,454 1,610 29,661 2,185 Funds
Activities -
Internal
Service
Business-type Activities - Enterprise Funds
Governmental
Total
The notes to the basic financial statements are an integral part of this statement. (continued)

City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2021
(in thousands)
Solid Waste
Fund

LIABILITIES
Current liabilities:

Accounts payable 6,398 15,945 2,012 1,410 Due to other funds - - - - Accrued payroll 988 241 343 505 Accrued compensated absences 196 59 108 87 Interest payable 4,157 669 32 44 Liability for landfill closure - - - 298 Deposits 6 - 502 3 Unearned revenue 2,881 - - - Accrued claims and judgments 84 130 130 280 Revenue and other bonds payable, net 16,181 2,239 - 1,216 Notes payable 483 - 92 - Total current liabilities 31,374 19,283 3,219 3,843 Noncurrent liabilities:

Accrued compensated absences 3,254 822 1,181 1,450 Advances from other funds - - - - Water fee credits 531 - - - Wastewater fee credits - 13,912 - - Net OPEB liability 12,072 4,568 5,366 16,262 Accrued claims and judgments - - - - Liability for landfill closure - - - 4,038 Revenue and other bonds payable, net 358,008 58,928 - 11,608 Notes pay
able 121,559 - 1,939 - Net pension liability 41,073 13,007 28,031 15,699 Total noncurrent liabilities 536,497 91,237 36,517 49,057 Total liabilities 567,871 110,520 39,736 52,900

DEFERRED INFLOWS OF RESOURCES
Gain on refunding of debt - - - 209 Deferred inflows related to pensions 3,416 1,102 1,877 4,775 Deferred inflows related to OPEB 5,122 1,602 2,308 4,593 Total deferred inflows of resources 8,538 2,704 4,185 9,577

NET POSITION
Net investment in capital assets 606,947 184,906 256,568 1,369 Restricted for:

Capital projects 43,253 - - - Other programs - - 1,411 789 Unrestricted (43,517) (2,697) 19,074 13,867 Total net position 606,683$ 182,209$ 277,053$ 16,025$ Business-type Activities - Enterprise Funds
Drainage
Fund Fund Fund
Water Wastewater
Storm
(continued) The notes to the basic financial statem ents are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Net Position
June 30, 2021
(in thousands)

LIABILITIES
Current liabilities:

Accounts payable
Due to other funds
Accrued payroll
Accrued compensated absences
Interest payable
Liability for landfill closure
Deposits
Unearned revenue
Accrued claims and judgments
Revenue and other bonds payable, net
Notes payable
Total current liabilities
Noncurrent liabilities:

Accrued compensated absences
Advances from other funds
Water fee credits
Wastewater fee credits
Net OPEB liability
Accrued claims and judgments
Liability for landfill closure
Revenue and other bonds payable, net
Notes payable
Net pension liability
Total noncurrent liabilities
Total liabilities

DEFERRED INFLOWS OF RESOURCES
Gain on refunding of debt
Deferred inflows related to pensions
Deferred inflows related to OPEB
Total deferred inflows of resources

NET POSITION
Net investment in capital assets
Restricted for:

Capital projects
Other programs
Unrestricted
Total net position
Community Other
Center Enterprise
Fund Funds
10,600 1,540 37,905 3,387 250 - 250 -
110 218 2,405 348
41 30 521 68
1,297 42 6,241 2
- - 298 -
- 534 1,045 5
551 416 3,848 258
5 6 635 24,329
7,409 1,141 28,186 5
- - 575 -
20,263 3,927 81,909 28,402 378 619 7,704 1,088
4,994 - 4,994 -
- - 531 -
- - 13,912 -
820 1,842 40,930 5,510
- - - 78,124
- - 4,038 -
354,667 11,000 794,211 411
- - 123,498 -
8,198 10,802 116,810 16,009
369,057 24,263 1,106,628 101,142 389,320 28,190 1,188,537 129,544 - 194 403 -
519 338 12,027 5
744 1,042 15,411 2,000
1,263 1,574 27,841 2,005 93,758 23,860 1,167,408 88,952 - - 43,253 -

- - 2,200 -
4,595 9,957 1,279 25,737 98,353$ 33,817$ 1,214,140$ 114,689$
Govern
mental
Business-type Activities - Enterprise Funds
Funds
Activities -
Internal
Service
Total
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Revenues, Expenses
and Changes in Net Position
For the Fiscal Year Ended June 30, 2021
(in thousands)
Storm
Wastewater Drainage Solid Waste
Fund Fund Fund
Operating revenues:

Charges for services:

User fees and charges 144,030$ 42,637$ 38,929$ 72,838$ Rents and concessions - - 21 192
Charge to other agencies for contract services - 1,192 1,898 - Miscellaneous 40 - - 435
Total operating revenues 144,070 43,829 40,848 73,465 Operating expenses:

Employee services 39,345 10,941 13,604 15,713
Services and supplies 26,605 15,224 15,985 46,613
Depreciation/amortization 23,540 4,376 11,098 1,252
Insurance premiums - - - -
Claims and judgments 71 176 143 114
Total operating expenses 89,561 30,717 40,830 63,692 Operating income (loss) 54,509 13,112 18 9,773
Nonoperating revenues (expenses):

Interest and investment revenue 259 318 123 43
Transient occupancy taxes - - - -
Revenue from other agencies 185 5 123 175
Insurance and other claim recoveries - - - -
Interest expense (12,953) (1,719) (112) (368)
Amortization of bond prepaid insurance (24) - - -
Gain on disposition of capital assets - 22 4 -
Total nonoperating revenues (expenses) (12,533) (1,374) 138 (150) Income (loss) before capital contributions and transfers 41,976 11,738 156 9,623
Capital contributions 9,340 6,848 7,681 -
Transfers in 78 63 118 1,570
Transfers out (15,429) (4,712) (4,308) (8,079)
Changes in net position 35,965 13,937 3,647 3,114
Total net position, beginning of year, as restated 570,718 168,272 273,406 12,911 Total net position, end of year 606,683$ 182,209$ 277,053$ 16,025$ Business-type Activities - Enterprise Funds
Fund
Water
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Revenues, Expenses
and Changes in Net Position
For the Fiscal Year Ended June 30, 2021
(in thousands)
Governmental
Activities -
Other Internal
Enterprise Service
Funds Total Funds
Operating revenues:

Charges for services:

User fees and charges - $ 10,562 $ 308,996 $ 103,264 $ Rents and concessions 196 353 762 - Charge to other agencies for contract services - - 3,090 - Miscellaneous - 40 515 591 Total operating revenues 196 10,955 313,363 103,855 Operating expenses:

Employee services 3,866 6,822 90,291 12,550 Services and supplies 5,200 6,197 115,824 29,922 Depreciation/amortization 1,488 1,465 43,219 13,637 Insurance premiums - - - 9,177 Claims and judgments - - 504 25,875 Total operating expenses 10,554 14,484 249,838 91,161 Operating income (loss) (10,358) (3,529) 63,525 12,694 Nonoperating revenues (expenses):

Interest and investment revenue (968) 230 5 798 Transient occupancy taxes 15,545 - 15,545 - Revenue from other agencies - 13 501 20 Insurance and other claim recoveries - - - 653 Interest expense (14,703) (392) (30,247) (16) Amortization of bond prepaid insurance - - (24) - Gain on disposition of capital assets - 1 27 146 Total nonoperating revenues (expenses) (126) (148) (14,193) 1,601
Income (loss) before capital contributions and transfers (10,484) (3,677) 49,332 14,295 Capital contributions - - 23,869 - Transfers in 2,908 13,200 17,937 22 Transfers out (763) (8,717) (42,008) (2,014) Changes in net position (8,339) 806 49,130 12,303 Total net position, beginning of year, as restated 106,692 33,011 1,165,010 102,386 Total net position, end of year 98,353$ 33,817$ 1,214,140$ 114,689$ Community
Center
Fund
Business-type Activities - Enterprise Funds
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2021
(in thousands)
Storm
Water Wastewater Drainage Solid Waste
Fund Fund Fund Fund
Cash flows from operating activities:

Receipts from customers and users 142,972 $ 44,592 $ 41,032 $ 73,608 $ Receipts from interfund services provided - - - -
Payments to suppliers (27,981) (15,151) (14,698) (44,318) Payments to employees (40,136) (11,478) (14,500) (17,972) Claims and judgments paid (80) (143) (127) (159)
Net cash provided by (used for) operating activities 74,775 17,820 11,707 11,159 Cash flows from noncapital financing activities:

Transient occupancy taxes - - - -
Transfers in from other funds 78 63 118 1,570 Transfers out to other funds (14,907) (4,667) (4,308) (7,970) Collections on interfund loans - - - -
Loans made to other funds - - - -
Interfund loan repayments - - - -
Intergovernmental revenue received 409 5 123 50 Claim and judgement recoveries - - - -
Net cash provided by (used for) noncapital financing activities (14,420) (4,599) (4,067) (6,350) Cash flows from capital and related financing activities:

Acquisition and construction of capital assets (33,090) (26,717) (2,104) (242) Proceeds from sale of capital assets - 22 4 -
Proceeds from issuance of debt 70,784 3 - -
Principal payments on capital debt (15,250) (2,516) (3,025) (1,020) Interest payments on capital debt (13,970) (1,842) (141) (558) T
ransfers in from other funds - - - -
Transfers out to other funds (522) (45) - (109)
Capital contributions received 3,415 3,375 - - Loan repayments received - 142 472 -
Net cash provided by (used for) capital and related financing activities 11,367 (27,578) (4,794) (1,929) Cash flows from investing activities:

Collection of interest and investment revenue 278 172 180 100 Net increase (decrease) in cash and cash equivalents 72,000 (14,185) 3,026 2,980 Cash and cash equivalents, beginning of year 166,854 86,022 47,610 47,535 Cash and cash equivalents, end of year 238,854$ 71,837$ 50,636$ 50,515$ Business-type Activities - Enterprise Funds
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2021
(in thousands)
Cash flows from operating activities:

Receipts from customers and users
Receipts from interfund services provided
Payments to suppliers
Payments to employees
Claims and judgments paid
Net cash provided by (used for) operating activities
Cash flows from noncapital financing activities:

Transient occupancy taxes
Transfers in from other funds
Transfers out to other funds
Collections on interfund loans
Loans made to other funds
Interfund loan repayments
Intergovernmental revenue received
Claim and judgement recoveries
Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities:

Acquisition and construction of capital assets
Proceeds from sale of capital assets
Proceeds from issuance of debt
Principal payments on capital debt
Interest payments on capital debt
Transfers in from other funds
Transfers out to other funds
Capital contributions received
Loan repayments received
Net cash provided by (used for) capital and related financing activities Cash flows from investing activities:

Collection of interest and investment revenue
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of
year
Community Other
Center Enterprise
Fund Funds Total
139$ 11,618 $ 313,961 $ - $
- - - 176,784
(3,817) (6,765) (112,730) (113,545) (4,174) (6,950) (95,210) (12,406) (2) (4) (515) (15,357)
(7,854) (2,101) 105,506 35,476
14,085 - 14,085 -
2 13,200 15,031 -
(763) (1,160) (33,775) (1,968)
- - - 3,569
- - - (3,455)
(250) - (250) -
- 13 600 20
- - - 9,581
13,074 12,053 (4,309) 7,747
(149,779) (97) (212,029) (22,673)
- 1 27 602
- - 70,787 -
(13,616) (3,763) (39,190) -
(15,993) (589) (33,093) (22)
2,906 - 2,906 22
- (7,557) (8,233) (46)
- - 6,790 -
- - 614 -
(
176,482) (12,005) (211,421) (22,117)
(195) 230 765 869
(171,457) (1,823) (109,459) 21,975
250,878 26,736 625,635 111,480
79,421$ 24,913$ 516,176$ 133,455$
Governmental
Activities -
Internal
Service
Funds
Business-type Activities - Enterprise Funds
The notes to the basic financial statements are an integral part of this statement. (continued)

City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2021
(in thousands)
Reconciliation of cash and cash equivalents
to the Statement of Net Position:

Cash and investments held by City 164,345 $ 50,344 $ 47,396 $ 49,726 $ Cash and investments held by fiscal agent 4 1 - -
Restricted cash and investments held by City 71,081 21,080 3,240 789 Restricted cash and investments held by fiscal agent 3,424 412 - - Total cash and cash equivalents, end of year 238,854$ 71,837$ 50,636$ 50,515$ Reconciliation of operating income (loss) to net
cash provided by (used for) operating activities:

Operating income (loss) 54,509$ 13,112$ 18$ 9,773$ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities:

Depreciation/amortization expense 23,251 4,116 10,820 1,056 Amortization of intangible assets 289 260 278 196
Changes in assets, liabilities, and deferred outflows and inflows of resources:

Accounts receivable, net (298) 763 124 143 Intergovernmental receivables - - 60 -
Inventories 163 4 (12) -
Prepaid items - - - -
Accounts payable (1,539) 69 812 12
Accrued payroll (425) (39) (80) (84)
Accrued compensated absences 38 179 66 94
Accrued claims and judgments (9) 33 16 (45)
Liability for landfill closure - - - 2,280
Deposits (2) - 487 3
Unearned revenue (798) - - -
Net pension liability and related deferred outflows/inflows of resources 713 (295) (338) (1,428) Net OPEB liability and related deferred outflows/inflows of resources (1,117) (382) (544) (841) Net cash provided by (used for) operating activities 74,775$ 17,820$ 11,707$ 11,159$ Noncash investing, capital and financing activities:

Contributions of capital assets 2,263$ 1,996$ 5,061$ -$ Transfer of capital assets from governmental funds, net of depreciation 2,504 300 2,620 - Amortization of bond premium and discount 2,374 340 (2) 160 Amortization of bond loss on refunding (523) (116) - - Amortization of bond gain on refunding 191 - - - Amortization of bond prepaid insurance (24) - - -
Decrease in prepaid items for capital assets - - - -
Capital asset acquisitions on accounts payable 3,550 3,886 511 36 Refunding bond proceeds deposited into escrow account - 27,967 - - Defeasance of capital debt with bond proceeds in escrow - (27,967) - - Water
Fund
Wastewater Drainage Solid Waste
Fund Fund Fund
Storm
Business-type Activities - Enterprise Funds
(continued) The notes to the basic financial statem ents are an integral part of this statement.

City of Sacramento
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2021
(in thousands)
Reconciliation of cash and cash equivalents
to the Statement of Net Position:

Cash and investments held by City
Cash and investments held by fiscal agent
Restricted cash and investments held by City
Restricted cash and investments held by fiscal agent
Total cash and cash equivalents, end of year
Reconciliation of operating income (loss) to net
cash provided by
(used for) operating activities:

Operating income (loss)
Adjustments to reconcile operating income (loss) to net cash provided by (used for)
operating activities:

Depreciation/amortization expense
Amortization of intangible assets
Chan
ges in assets, liabilities, and deferred outflows and inflows of resources:

Accounts receivable, net
Intergovernmental receivables
Inventories
Prepaid items
Accounts payable
Accrued payroll
Accrued compensated absences
Accrued claims and judgments
Liability for landfill closure
Deposits
Unearned revenue
Net pension liability and related deferred outflows/inflows of resources Net OPEB liability and related deferred outflows/inflows of resources Net cash provided b
y (used for) operating activities
Noncash investing, capital and financing activities:

Contributions of capital assets
Transfer of capital assets from governmental funds, net of depreciation Amortization of bond premium and discount
Amortization of bond loss on refunding
Amortization of bond gain on refunding
Amortization of bond prepaid insurance
Decrease in prepaid items for capital assets
Capital asset acquisitions on accounts payable
Refunding bond proceeds deposited into escrow account
Defeasance of capital debt with bond proceeds in escrow 28,835$ 24,913 $ 365,559 $ 133,023 $
- - 5 432
45,238 - 141,428 -
5,348 - 9,184 -
79,421$ 24,913$ 516,176$ 133,455$
(10,358)$ (3,529)$ 63,525$ 12,694$
1,488 1,456 42,187 13,637
- 9 1,032 -
51 60 843 (31)
- - 60 -
- - 155 -
- 1 1 (391)
1,383 (569) 168 (1,026)
(46) (92) (766) (78)
37 (3) 411 166
(2) (4) (11) 10,518
- - 2,280 -
- 513 1,001 2
(108) 90 (816) (71)
62 247 (1,039) 527
(361) (280) (3,525) (471)
(7,854)$ (2,101)$ 105,506$ 35,476$
-$ -$ 9,320$ -$
- - 5,424 -
1,255 147 4,274 5
- - (639) -
- 25 216 -
- - (24) -
- - - 812
(3,749) 10 4,244 206
- - 27,967 -
- - (27,967) -
Internal
Governmental
Activities -Business-type Activities - Enterprise Funds Service
Total
Center Enterprise
Fund Funds Funds
Community Other
The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2021
(in thousands)
Pension Private-Purpose
Trust Trust Custodial
Fund Fund Funds
ASSETS
Cash and investments held by City 13,416$ 11,490$ 305,775$ Cash and investments held by fiscal agent - 20,734 1,706 Prepaid items - 173 -
Receivables, net:

Interest 849 - 475
Intergovernmental - 770 -
Special assessments - - 177
Investments, at fair value:

Corporate bonds/notes 39,181 - -
Equity securities 30,236 - -
Exchange traded funds 187,545 - -
Mortgage loans 824 - -
Municipal bonds/notes 38,438 - -
U.S. government obligations 1,004 - -
U.S. Treasury bonds/notes 1,958 - -
Restricted assets:

Cash and investments held by City - - 3,771
Cash and investments held by fiscal agent - - 21,853 Loans receivable - 4,815 -
Capital assets:

Land - 4,969 -
Buildings and improvements - 141 -
Less: accumulated depreciation/amortization - (44) - Total assets 313,451 43,048 333,757

DEFERRED OUTFLOWS OF RESOURCES
Loss on refunding of debt - 1,139 -

LIABILITIES
Accounts payable 6 637 7
Benefits payable 2,312 - -
Due to bondholders - - 41,553
Interest payable - 282 -
Contracts payable - 16,629 -
Pollution remediation obligations - - -
Bonds payable - 36,911 -
Notes payable - 171,055 -
Total liabilities 2,318 225,514 41,560

NET POSITION
Held in trust for:

Net position restricted for pensions 311,133 - - Redevelopment dissolution - (181,327) -
Held for external pool participants - - 292,197
Total net position (deficit) 311,133$ (181,327)$ 292,197$ The notes to the basic financial statements are an integral part of this statement.

City of Sacramento
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
For the Fiscal Year Ended June 30, 2021
(in thousands)
Pension Private-Purpose
Trust Trust Custodial
Fund Fund Funds
Additions:

Deposits - $ -$ 165,781$
Property taxes - 28,505 -
Special assessments - - 17,802
Fines, forfeits, and penalties - - 6
Capital contributions - - 12,186
Miscellaneous - - 9
Contributions:

Employer 3,822 - -
Employees 16 - -
Total contributions 3,838 - -
Investment income:

From investment activities:

Net appreciation (depreciation) in fair value of investments 67,367 - (1,716) Interest 3,238 290 2,781
Dividends 3,674 - -
Total investment income 74,279 290 1,065
Investment expenses:

Banking, interest, and fiscal agent expenses 26 - 274 Professional services 1,103 - -
Total investment expenses 1,129 - 274
Net income from investment activities 73,150 290 791
Total additions 76,988 28,795 196,575
Deductions:

Benefits 28,992 - -
Withdrawals - - 65,774
Interest expense - 10,603 -
Other enforceable obligation payments - 4,967 -
Loan forgiveness - 185 -
Paid to bondholders - - 27,980
Administrative expenses - - 2,177
Developer reimbursements -
- 19
Depreciation expense - 3 -
Total deductions 28,992 15,758 95,950
Changes in net position 47,996 13,037 100,625
Net position (deficit), beginning of year 263,137 (194,364) 191,572 Net position (deficit), end of year 311,133$ (181,327)$ 292,197$ The notes to the basic financial statements are an integral part of this statement.

THIS PA

GE INTENTIONALLY LEFT BLANK

Notes to the Basic
Financial
Statements

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)
NOTE 1 – SUMMARY OF SIGNIFICAN

T ACCOUNTING POLICIES

DEFINITION OF REPORTING ENTITY
The City of Sacramento (City) was incorporated in 1849 under the laws of the St ate of California. Sacramento is a charter city and operates under a City Council – City Manager form of government. The City provides a full range of municipal services including police, fire, water, wa stewater, storm drainage, so lid waste, construction and maintenance of streets, planning and zoning, code enforcement, parks, recreation programs, and cultural activities.

These basic financial statements present the financial status of the City and its component units, which are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City.

Blended Component Units
The Sacramento City Financing Authority (SCFA) is a joint exercise of po we rs entity created by the City and the former Redevelopment Agency of the City of Sacramento to facilitate the financing and refinancing of public capital facilities. Most of the debt of the SC FA is backed by the City’s General Fund. The SCFA is governed by the City Council.

The Sacramento Public Fin
ancing Authority (SPFA) is a joint exercise of powers entity created by the City and the Sacramento City Housing Authority to facilitate the financing and refinancing of public capital facilities. Most of the debt of the SPFA is backed by the City. The SPFA is governed by the City Council.

Fiduciary-type Component Units
Sacramento City Employees’ Retirement System (SCERS) is a single employer pension plan sponsored and administered by the City for City employees, except p ublic safety employees, hired before January 29, 1977 and public safety employees who retired with SCERS benefits before December 30, 1989. Under provisions of the City Charter, SCERS is managed by the Administration, Investment and Fiscal Management Board (the Board), consisting of the City Manager, City Director of Finance, City Treasurer and two residents of the City appointed by the City Council. Duties of the Board include the adoption of investment standards for SCERS, the establishment of contribution rates, the administration and investment of funds, the selection of investment advisors, the crediting of interest, and any action relating to the fiscal management of SCERS. Complete stand-alone financial statements may be obtained at https://www.cityofsacramento.org/Finance/Accounting/Reporting.

The Successor Agency to the Rede
velopment Agency of the City of Sacramento (Successor Agency) was created to serve as a custodian for the assets and to wind down the affairs of the former Redevelopment Agency of the City of Sacramento. The City was designated to serve as the Successor Agency subject to control of a County Oversight Board. The Oversight Board is comprised of seven members; two of which will be appointed by the Oversight Board: a Board member or County staff person, member of the publ ic, member appointed by the city selection committee, representative from a special district as appointed by the independent special district selection committee, representative appointed by the County Board of Education, representative appointed by the Chancellor of the California Community Colleges, and a representative of the largest number of successor agency employees in the County appointed by the recognized em ployee organization. Based upon the nature of the Successor Agency’s custodial role, it is reported as a fiduciary fund (private-purpose trust fund).

ACCOUN

TING POLICIES
The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America as applie d to governm ental agencies. The Governmental Accounting
Standards Board (GASB) is the accept ed standard-setting body for establishing govern mental accounting and financial reporting principles. The more significant accounting policies of the City are described below.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)
NOTE 1 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Governmental Accounting Standards Implemented During the Fiscal Year Ended June 30, 2021 GASB Statement No. 84 – In January 2017, GASB issued Statement No. 84, Fiduciary Activities. The objective o f this statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources. The provisions in Statement 84 ar e effective for fiscal years beginning after December 15, 2019. The applicable provisions were implemented July 1, 2020, and only affected presentation of fiduciary activities. It did not have an impact on the City’s net position. In previous years, fiduciary Investment Trust Funds and Assessment Districts and Community Facilities Districts Agency Funds were presented as separate columns in the Fiduciary Funds Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position.

Investment Trust Funds and Assess ment Districts and Community Facilit ies Districts Agency Funds are now presented as combined Custodial Funds in the Fiduciary Funds Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position. Combining financ ial statements for the Custodial Funds can be found on pages 199 and 200.

GASB Statement No. 90 – In August 2018, the GASB issued Statement No. 90, Majority Equity Interests - an amendment of GASB Statements No. 14 and No. 61. The objectives of this statement are to improve consistency in the measurement and comparability of the financial statement presentation of majority equity interests in legally separate organizations and to improve the relevance of financial statement information for certain component units.

The provisions in Statement 90 are effective for fiscal years beginning after December 15, 2019. The applicable provisions were implemented July 1, 2020 and did not have a material impact to the financial statements.

GASB Statement No. 98 – In October 2021, GASB issued Statement No. 98, The Annual Comprehensive Financial Report. This statement establishes the term annual compr ehensive financial report and its acronym ACFR. That new term and acronym replace instances of comprehensive annual financial report and its acronym in generally accepted accounting principles for state and local governm ents. The provisions in Statement 98 are effective for fiscal years ending after December 15, 2021. The applicab le provisions were implemented July 1, 2020 and did not have a material impact to the financial statements.

Upcoming Governmental Accounting Standards Implementation The City is currently analyzing its accounting and financial reporting practices to determine the potential impact on the financial statements of the following GASB Statements:

GASB Statement No. 87 – In June 2017, GASB issued Statement No. 87, Leases. The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases; enhancing the comparability of financial statements between governme nts; and enhancing the relevance, reliability (representational faithfulness), and consistency of information about the leasing activities of governments. The provisions in Statement 87 are effective for fiscal years beginning after June 15, 2021. The City has not determined the effect of implementing this statement.

GASB Statement No. 91 – In May 2019, the GASB issued Statement No. 91, Conduit Debt Obligations . The 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. The provisions in Statement 91 are effective for fiscal years beginning after December 15, 2021. The City has not determined the effect of implementing this statement.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)
NOTE 1 – SUMMARY OF SIGNIFICAN
T ACCOUNTING POLICIES (Continued)
Upcoming Governmental Accounting Standards Implementation (Continued) GASB Statement No. 92 – In January 2020, GASB issued Statement No. 92, Omnibus 2020. The objectives of this statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressi ng practice issues that have been identified during implementation and application of certain GASB Statements. The provisions in Statement 92 are effective for fiscal years beginning after June 15, 2021. The City has not determined the effect of implementing this statement.

GASB Statement No. 93 – In March 2020, GASB issued Statement No. 93, Replacement of Interbank Offered Rates. The objective of this statement is to address those and other accounting and financial reporting implications that result from the replacement of an interbank offered rate. The provisions in Statement 93 are effective for fiscal years beginning after June 15, 2021. The City has not determined the effect of implementing this statement.

GASB 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. The provisions in Statement 94 are effective for fiscal years beginning after June 15, 2022. The City has not determined the effect of implementing this statement.

GASB Statement No. 96 – In May 2 020, 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 for government end users. The provisions in Statement 96 are effective for fiscal years beginning after June 15, 2022. The City has not determined the effect of implementing this statement.

GASB Statement No. 97 – In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. The primary objectives of this statement are to (1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a govern ing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code Section 457 deferred compensation plan s that meet the definition of a pen sion plan and for benefits provided through those plans. The provisions in Statement 97 ar e effective for fiscal years beginning after June 15, 2021.

The City has not determined the effect of implementing this statement.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all the non-fiduciary activities of the pr imary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely significantly on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the City is financially accountable.

The statement of activities demonstrates the degree to whic h the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Certain indirect costs are allocated to expens es and capital assets of governmental and business-type activities. At the government-wide level, citywide and community support expenses/expenditures within the General Fund are allocated to City departments. Utilities expenditures within the General Fund is allocated to public works. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital r equirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

As a general rule the effect of interfund activity has been removed from the government-wide financial statements.

Internal service fund activity has been eliminated from the statement of activities. The effect of interfund services provided and used between functions, such as the sale of water from the Water Fund to the General Fund, has not been eliminated in the statement of activities. The City’s payments in lieu of taxes from its enterprise funds to the General Fund are reported as interfund transfers.

The accounts of the City are organi zed on the basis of funds. A fund is a separate accounting entity with a self- balancing set of accounts. Each fund was established for the purpose of accounting for specific activities in accordance with applicable regulations, restrictions, or limitations. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary f unds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liab ility is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accountin g. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fisc al period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, sales taxes, utility user taxes, interg overnmental revenue, special assessments, charges for services, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fisc al period. All other revenue items are considered to be measurable and available only when cash is received by the City.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund and accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Measure U Fund was established to account for t he temporary half-cent sales tax approved by voters on November 6, 2012. On November 6, 2018, Sacramento voters approved a new version of the City’s Measure U sales and use tax eliminating the sunset provision and raising it from half-cent to one cent. The one cent sales and use tax was effective April 1, 2019.

The 2015 Golden 1 Center Lease Revenue Bond Fund accounts for debt service activities related to financing a portion of construction costs of a multi-purpose entertainment and sports complex located in the downtown area of Sacramento.

The Operating Grants Fund accounts for federal, state, and other agency grants received for various specific purposes.

The City reports the following major enterprise funds:

The Water Fund accounts for the operation and maint enance of the City’s water treatment and water transmission and distribution systems.

The Wastewater Fund accounts for the operation and maintenance of the City’s wastewater system.

The Storm Drainage Fund accounts for the operation and maintenance of the City’s surface drainage system.

The Solid Waste Fund accounts for the collection and disposal of refuse throughout the City and for landfill closure.

The Community Center Fund accounts for the operation and maintenance of the City’s Community Center, including the theater and exhibit halls.

Additionally, the City reports the following fund types:

Internal Service Funds account for the financing of fl eet and risk management services to other departments on a cost reimbursement basis.

The Pension Trust Fund accounts for the assets held on behalf of the Sacramento City Employees’ Retirement System (SCERS) for pension benefit payments to qualified employees.

The Private-Purpose Trust Fund accounts for the assets received by the Successor Agency from the City’s former redevelopment agency in order to liquidate its enforceable obligations, pursuant to Assembly Bill X1 26 which dissolved redevelopment agencies in California.

Custodial Funds account for assets held by the City as a custodian for individuals, private organizations, and other governments. The City's Custodial Funds include assets held by the City for bonded assessment and community facilities districts and Investment Trust Funds. Investment Trust Funds account for the net position held on behalf of investors, in the City's investment pool and individual accounts, who are not part of the City's financial reporting entity.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

Amounts reported as program revenues include 1) charge s to customers or applicants for goods, services, or privileges provided, including fees, fines, and forfeitures, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Program revenues also include earnings on investments that are legally restricted for a specific program. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenues include all taxes.

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 ongoing operations. The principal operating revenues of the City’s enterprise funds and internal service funds are charges to customers for sa les and services. Operating expenses for enterprise funds and internal service funds include the cost of sales a nd 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 net position are available for use, it is the City’s practice to use restricted resources first followed by unrestricted resources as they are needed. When all fund balance types are available, it is the City’s practice to use restricted resources first, followed by committed, assigned, and unassigned resources as they are needed.

Permanent funds, commonly referred to as endowment f unds, are governmental funds used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support City programs. The City has received endowments for va rious programs, a list of which can be found in the Permanent Funds section of the Combining and Individual Fund Financial Statements and Schedules. The investments of donor-restricted endowments have $6,102 of net appreciation that is available for authorization for expenditures by the governing board. The corpus of permanent funds is reported as Nonspendable Fund Balance and investment earnings available for expenditure are reported as Restricted Fund Balance in the fund level financial statements, and as Restri cted for Nonexpendable Trust and E ndowments in the Statement of Net Position. Funds are spent in accordance with legal trus t agreements and the City budget, subject to State law governing the spending of endowment fund investment earnings in California Probate Code Section 18504.

Budget Information

The City Manager submits a proposed budget to the City Council no later than 60 days prior to the commencement of the fiscal year. The City Council holds public hearings, modifies the City Manager’s recommendations, and adopts a final budget in June. The budget adoption resolution specifies that budgets will be controlled at the department level (e.g., police, fire, public works, parks and recreation etc.) by fund.

Annual budgets are adopted for the General Fund, Measure U Fund, the City/County Office of Metropolitan Water Planning (CCOMWP) Fund, the Cal EPA Fund, as well as certain activities within the Transportation and Development Fund, the Culture and Leisure Fund, the Parks and Recreation Fund, and the Special Districts Fund.

Annual budgets are also adopted for the enterprise and internal service funds, although they are not legally required. Multi-year project-length budgets are adopted for the General Fund, capital projects funds, and the Operating Grants Fund where appropriations remain authorized for each project until closed, irrespective of fiscal year. Expenditures are appropriated on a modified accr ual basis, except that co mmitments related to purchase orders are treated as expenditures in the year of commitment.

Budgets are modified throughout the year when the tax bas e changes, fees are modified, new revenue sources are identified, or programs are changed. The City Manager is authorized to administratively amend the budget during the year for transactions up to $250 without City Council approval. All other appropriation adjustments during the year require City Council approval. Unencumbered annual budget appropriations lapse at fiscal year-end. The City honors contracts represented by year-end encumbrances and the appropriations carried over provide authority to complete these transactions in future years. Multi- year project-length budget approp riations are automatically carried over into the next fiscal year.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statements Elements

Fair Value Measurement – The City categorizes the fair value m easurements of its inve stments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is 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, and Level 3 inputs are significant unobservable inputs.

Property Taxes - Article XIII of the California Constitution (Proposition 13) limits ad valorem taxes on real property to one percent of value plus taxes necessary to pay indebt edness approved by voters prior to July 1, 1978. The Article also established the 1975/76 as sessed valuation as the base and limit s annual increases to the cost-of- living, not to exceed two percent, for each year thereafte r. Property may also be reassessed to full market value after a sale, transfer of ownership, or completion of new construction. The State is prohibited under the Article from imposing new ad valorem, sales, or transactions taxes on real property. Local governments may impose special taxes (except on real property) with the approval of two-thirds of the qualified electors.

Property taxes are levied annually by the Sacramento County Assessor on July 1 and become a lien on property on the preceding January 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively.

The City participates in an alternative method of distribution of property tax levies and assessments known as the “Teeter Plan”. The State Revenue and Taxation Code allows counties to distribute secured real property, assessment and supplemental property taxes on an accrual ba sis resulting in full payment to cities each fiscal year. Any subsequent delinquent payments and related penalties and interest during a fiscal year will revert to the County of Sacramento (County). The Teeter Plan paym ent, which includes 95% of the outstanding accumulated delinquency, is included in property tax revenue. Under the Teeter Plan code, 5% of the delinquency must remain with the County as a reserve for Teeter Plan funding.

Receivables and Payables – Property taxes, sales taxes, utility user taxes, and other taxes, related to the current fiscal year are accrued as revenue and accounts receivable and considered available if received within 60 days of year end.

Federal and State grants are considered receivable and accrued as revenue when all eligibility requirements have been met under the accrual basis of accounting in the government-wide statement of net position. The amount recognized as revenue under the modified accrual basis of accounting is limited to the amount that is deemed measurable and available as described above.

Long-term loans receivable reported in the governmental fund statements are recorded with offsetting unavailable revenue because the amounts will not be received within 60 days after fiscal year-end. Long-term loans receivable reported in the proprietary fund statements, as well as long-term loans reported in the government-wide statements, are not offset by unava ilable revenue. Unbilled utility revenue earned is recognized as revenue and accounts receivable in the enterprise funds.

Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is 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 non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Inventories and Prepaid Items
- Inventories in the proprietary funds are stated at cost and consist of expendable materials and supplies. Inventories are expensed when consumed using the first-in, first-out (FIFO) method.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items, using the consumption method, in both government-wide and fund financial statements.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statements Elements (Continued)

Restricted Assets - Certain proceeds of debt issues, as well as ce rtain resources set aside for their repayment, are classified as restricted assets on the statements of net position and balance sheets because their use is limited by applicable bond covenants. Unspent developer impact fees are classified as restricted assets on the statements of net position for the Water and Wastewater enterprise funds.

Capital Assets - Capital assets are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are recorded at the lower of actual historical cost or acquisition value (as of the date donated for contribut ed assets) although for certain older assets estimated historical costs are used.

Capital assets are depreciated using the straight-line method over the following estimated useful lives :

Building and improvements Primarily 15 to 70 years
Transmission and distribution system Primarily 15 to 100 years Machinery, vehicles and equipment Primarily 5 to 30 years Software Primarily 5 to 20 years
Roadway network Primarily 20 to 70 years
Streetlight network Primarily 40 to 50 years
Park and park improvements Primarily 15 to 30 years

It is the policy of the City to capitalize all land, buildings and improvements, equipment, and infrastructure assets, except assets costing less than $20, unless a federal funding source is utilized. All capital assets in excess of $5 financed by a federal funding source are capitalized. The City also capitalizes all intangible capital assets, primarily easements and software, except assets costing less than $100, unless a federal funding source is utilized. Costs of capital assets sold or retired (and related amounts of accumulated depreciation/am ortization) are eliminated from the accounts in the year of sale or retirement and the resulting gain or loss is included in the operating statement of the related proprietary fund, governmental activities, and business-type activities. In governmental funds, the sale of general capital assets is included in the statement of revenues, expenditures and changes in fund balances as proceeds from sale.

The Crocker Art Museum’s collection of works of art, hel d in trust by the City, has not been reported in these financial statements. The City has elected not to report the collection because it meets the three criteria for waiving capitalization: the collection is held for reasons other than financial gain; the collection is protected, kept unencumbered, cared for, and preserved; and the collection is subject to an organizational policy requiring that the proceeds from sales of collection items be used to acquire other items for the collection.

Deferred Outflows/Inflows of Resources - In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period(s) and so will not be recognized as an expense/expenditure until then.

The City has three items, loss on refunding of debt and deferred outflows related to pensions and OPEB, which qualifies for reporting in this category.

In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources.

This separate financial statement element represents an acquisition of net position and fund balance that applies to a future period(s) and so will not be recognized as revenue until then. The City has four items recognized in the statement of net position: gain on ref unding of debt, deferred service concession arrangement revenue, deferred inflows related to pensions, and OPEB. In addition, ther e is one item recognized in the governmental funds, unavailable revenue, which qualifies for reporting in this category.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statement Elements (Continued)

Compensated Absences - Benefit qualified employees accrue vaca tion, sick, and holiday benefits. A full-time employee may accumulate up to sixty days of vacation. Sick leave vests and may be accumulated until retirement.

An employee with sixty or more days of accumulated sick leave at the end of a calendar year may elect to receive a 25% payment of any unused sick leave earned in the pr evious calendar year. The amount of sick leave paid is deducted from the employee’s total accumulation. Upon retirement, employees with a minimum of 20 years of City service, excluding SCERS employees, have the option of converting their sick leave accumulation into CalPERS service credit hours, or receiving a cash payment of one- third of the accumulated sick leave. The City accrues expected cash payments of accumulated sick leave at fiscal year-end. Employees who leave the City and are not retiring forfeit any remaining sick leave.

Employees receive 14 holidays per calendar year. Employees accrue all or a portion of these 14 days during the year depending on their job classification. Classifications that accrue all 14 days get pai d in cash throughout the year whenever their holiday leave balances exceed the 14 days total. All other employees accrue one or two days of “floating” holiday time, depending on the bargaining unit, throughout the year in conjunction with their remaining twelve holidays. Employees who accrue “floating” holiday time get paid annually in January for any calendar year- end balance greater than eight hours.

All hourly employees have the option of being compensated for their overtime pay with compensatory time off (CTO). Depending on the employee’s CTO plan, the employee may accrue a maximum of 80, 120 or 160 hours of CTO. The employee’s applicable labor agreement or the City Council’s resolution for unrepresented employees determines the maximum accruable number of CTO hours.

All compensated absences are accr ued when earned in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements.

Unearned Revenue - Unearned revenue in accrual-based statements arises when resources are received by the City before it has a legal claim to them (i.e., when grant monies are received prior to incurring qualified expenditures).

Long-term Obligations - In the government-wide and proprietary and fiduciary fund financial statements, long- term debt and other long-term obligations are reported as liabilities in the applicable st atement of net position.

Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Gains and losses on debt refunding are deferred and amortized over the shorter of the remaining life of the old debt or the life of the new debt using the straight-line method. B onds payable are reported net of bond premium or discount. Bond issuance costs are reported as expenditures when incurred.

In the fund financial statements, governmental fund ty pes recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are report ed as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statement Elements (Continued)

Fund Balance - In the fund financial statements, governmental funds report fund classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Nonspendable fund balances include amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Amounts that are restricted to specific purposes, either by a) constraints placed on the use of resources by creditors, grantors, contributors, or laws or regulati ons of other governments or b) imposed by law through constitutional provisions or enabling legislation, are classified as restricted fund balances. Amounts that can only be used for specific purposes pursuant to constraints impos ed by the City Council through a resolution, which is the highest form of decision authority, are classified as committed fund balances. Amounts that are constrained by the City Council’s intent to be used for specific purpos es through a resolution, but are neither restricted nor committed, are classified as assigned fund balances. Negati ve fund balance in governmental funds and residual fund balance in the General Fund, after determining the fund balance classifications described above, is reported as unassigned fund balance. The General Fund is the only fund that can report a positive unassigned fund balance amount.

The City’s Economic Uncertainty Reserve (Reserve) is a stabilization arrangement in the General Fund and Measure U Fund reported as committed fund balance. The adopted Reserve goal is to achieve a reserve equal to 10% of annual General Fund and Measure U revenues and a target reserve equal to two months of regular ongoing General Fund and Measure U expenditures, including transfers. The City Manager may recommend a release from the Reserve when the gap between projected revenue and expenditures is greater than $1,000 in the proposed budget. Additions and releases from the Reserve must be approved by City Council by resolution.

Statement of Cash Flows - For purposes of the statement of cash flows, cash equivalents are defined as investments with original maturities of 90 days or less, which are readily convertible to known amounts of cash.

The City considers all pooled cash and investments (consisting of cash and investments and restricted cash and investments) held by the City as cash and cash equiva lents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (consisting of cash with fiscal agent and restricted cash and investments held by fiscal agent) as cash and cash equivalents because investments meet the criteria for cash equivalents defined above.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires manag ement to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

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) and Sacramento Employees’ Retirement System (SCERS) Plans and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS and SCERS, respectively. 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.

Other Postemployment Benefits (OPEB) - For purposes of measuring the net OPEB liability and deferred outflows/inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s CalPERS 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 are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS

The following is a summary of cash and investments at June 30, 2021:

Government-wide
Statement of
Net Position
Fiduciary Funds
Statement of
Net Position Total
Cash and investments 1,203,520 $ 652,307 $ 1,855,827 $ Restricted cash and investments 185,934 25,624 211,558 Total 1,389,454$ 677,931$ 2,067,385$

Under the authority of the Sacramento City Charter, the Sacramento City Council, by Resolution 2020-0236, has delegated its investment authority to the City Treasurer. The City Treasurer manages th e City’s investments in accordance with the City’s investment policy, which was last reaffirmed by the City Council on July 28, 2020. The City’s investment policy requires compliance with the California Government Code for investments of public funds.

The City’s investment policy also provides limits on rate anticipation, arbitrage, and other swap investments.

SCERS pension trust fund investments are managed by the Administration, Investment and Fiscal Management (AIFM) Board pursuant to an investment policy adopted by the Board and approved by the City Council by Resolution 2020-0237. Investment standards adopted by the SCERS Board were last approved by the City Council on July 28, 2020. The investment policy allows the Board to invest in fixed income and equity securities deemed prudent by the Board. Pursuant to the investment policy, the Board annually allocates the funds to different investment groups. For fiscal year 2021, the asset allocations consisted of the following: 30% Fixed Income securities, 35% Large Cap Growth stocks, 27.5% Equity Income stocks and 7.5% International stocks. The investment policy allows for up to 5% variance from these approved allocation levels to provide flexibility to investment activities without altering the risk profile of the SCERS portfolio.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

The table below identifies the investment types that are authorized for public funds of the City by the California Government Code. The table also identifies certain prov isions of the California Government Code that address interest rate risk, credit risk, and concentration of credit risk.

Authorized Investment Type Maximum
Maturity
Maximum
Percentage of
Portfolio
Maximum
Investment
in One
Issuer
Minimum
Rating
Local agency bonds 5 years* None None None
U.S. Treasury obligations 5 years* None None None
U.S. agency securities 5 years* None None None
Supranational securities 5 years 30% None AA
Bankers acceptance 180 days 40% 30% None
Commercial paper 270 days 25% 10% A1/P1
Negotiable certificates of deposit 5 years 30% None None Repurchase agreements 1 year None None None
Reverse repurchase and 92 days 20% of base value None None securities lending agreements
Medium term notes (bank notes and 5 years* 30% None A
corporate bonds)
Mutual funds N/A 20% 10% Aaa
Money market mutual funds N/A 20% 10% Aaa
Collateralized bank deposits 5 years None None None
Mortgage pass-through securities 5 years 20% None AA
Joint Powers Authority pool N/A None None None
County pooled investment N/A None None None
Local Agency Investment Fund (LAIF) N/A None None None

*The City investment policy allows these investments to have maximum maturities of 5 years, plus not more than 30 days. Such approved maturity extensions are authorized by California Government Code section 53601.

The table above does not address the investments held by the SCERS pension trust fund. The SCERS AIFM Board was established by the City Charter to maintain and manage investments of this system, including but not limited to the adoption of investment standards and the administration and investment of the funds. The statutory authority for the SCERS AIFM Board is created in Sacramento City Charter Section 383. Allowable investments are governed by the SCERS investment policy and are diffe rent than those prescribed by the City’s investment policy.

The table above also does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City or other trust funds.

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 its fair value is to changes in market interest rates. The City’s investment policy limits interest rate risk by requiring compliance with the California Government Code for investments of public funds, as described in detail above. One of the ways that the City and SCERS manages its exposure to interest rate risk 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 maturing evenly over time as necessary to provide the cash flow and liquidity needed for operations.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Interest Rate Risk (Continued)

Information about the sensitivity of the fair values of the City’s and SCERS’ investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following tables that show the distribution of the investments by maturity. The remaining maturity of the City’s and SCERS’ investments included in the tables below are based on the stated maturity dates of the individual investments, except in the case of variable rate investments where the maturity date is the next reset date. Variable rate securities are investments with terms that provide for the adjustment of interest rates on specified dates based on predefined mathematical formulas. The fair value of such investments can reasonably be expected to be affected at each interest rate reset date.

The City’s cash and investments by maturities as of June 30, 2021 are as follows:

Cash and Investment Type No Maturity Under 1 1-5 Over 5 Total Bank deposits 81,886$ -$ -$ -$ 81,886$ Commercial paper - 59,980 - - 59,980 Corporate bonds/notes - 111,004 375,504 767 487,275 Equities 5,311 - - - 5,311 Exchange traded funds 2,670 - - - 2,670 Investment Trust of California (CalTRUST) - 166,292 116,104 - 282,396 Local Agency Investment Fund (LAIF) - 75,000 - - 75,000 Municipal bonds/notes - 19,763 85,671 - 105,434 Money market mutual funds - 88,501 - - 88,501 Negotiable certificates of deposit - 71,122 65,527 - 136,649 Supranational securities - 5,044 15,286 - 20,330 U.S. agency securities - 32,940 356,471 - 389,411 U.S. Treasury notes - - 19,940 - 19,940 Total Cash and Investments 89,867$ 629,646$ 1,034,503$ 767$ 1,754,783$

Remaining Maturity in Years

The $767 of corporate bonds/notes with remaining maturities longer than five years are held by other trust funds. The $5,311 of equities and $2,670 of exchange traded funds are also held by other trust funds. Allowable investments of these other trust funds are not governed by the City’s investment policy. Investment discretion is given to the City Treasurer and funds are invested to meet objectives based on the agreements in place for these other trust funds.

SCERS’ cash and investments by maturities as of June 30, 2021 are as follows:

Cash and Investment Type No Maturity Under 1 1-5 Over 5 Total City of Sacramento Investment Pool -$ 13,416$ -$ -$ 13,416$ Corporate bonds/notes - - 1,034 38,147 39,181 Equities 30,236 - - - 30,236 Exchange traded funds 187,545 - - - 187,545 Mortgage loan - - 824 - 824 Municipal bonds/notes - - - 38,438 38,438 U.S. agency securities - 2 2 1,000 1,004 U.S. Treasury bonds - - - 1,958 1,958 Total Cash and Investments 217,781$ 13,418$ 1,860$ 79,543$ 312,602$

Remaining Maturity in Years

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Interest Rate Risk (Continued)

Investments in callable securities are investments tha t, although having clearly defined maturities, allow for the issuer to redeem or call such securities earlier than their respective maturity dates. The investor must then replace the called securities with investments that may have lower yield than the original securities. The fair values of the callable securities held by the City and SCERS at June 30, 2021, by investment type, are as follows:

Investment Type City SCERS
Corporate bonds/notes 104,089$ 15,304$
Municipal bonds/notes 4,281 8,864
Negotiable certificates of deposit 21,484 -
Supranational securities 4,935 -
U.S. agency securities 372,765 478
507,554$ 24,646$

As of June 30, 2021, the City held notes issued by the Bank of Montreal that are not rated by S & P but are rated Aa2 by Moody’s Investors Service. The notes have a fair value of $7,027 as of June 30, 2021.

As of June 30, 2021, SCERS held a bond that is currently in default of the semi-annual interest payments. The bond issuer Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. The bond has a maturity date of December 29, 2099 and a fair value of $18 as of June 30, 2021.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)
Credit Risk

Generally, credit risk is the risk that an issuer of an inve stment 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.

The City’s investment policy limits credit risk by requiring compliance with the California Government Code for the purchase of investments with public funds, as described in detail above. The Standard & Poor’s (S & P) credit ratings of the City and SCERS investments subject to credit risk as of June 30, 2021 are as follows:

Investment Type S & P City SCERS
City of Sacramento Investment Pool not rated -$ 13,416$ Commercial paper A 59,980 -
Corporate bonds/notes A 340,780 7,734 AA 98,972 5,365
AAA 11,037 -
BBB 29,459 26,064
not rated 7,027 18
Investment Trust of California (CalTRUST) not rated 282,396 - Local Agency Investment Fund (LAIF) not rated 75,000 - Municipal bonds/notes A 4,963 - AA 84,717 26,005
AAA 6,749 -
BBB - 5,796
not rated 9,005 6,637
Money market mutual funds AAA 88,501 - Negotiable certificates of deposit A 107,793 - not rated 28,856 -
Supranational securities AAA 20,330 - U.S. agency securities AA 371,773 478 AAA - 44
not rated 17,638 -
Total 1,644,976$ 91,557$

$27,022 of the $29,459 in corporate bonds/notes rated BBB are investments that were purchased at the minimum A rating but were subsequently downgraded due to negative economic impact caused by the Coronavirus pandemic.

The City’s investment policy allows for holding assets purchased at the minimum rating that were subsequently downgraded. The other $2,437 of corporate bonds/notes rated BBB are held by other trust funds.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)
NOTE 2 – CASH AND INVESTMENTS (Continued)
Concentratio
n of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in an y one issuer beyond that stipulated by the California Government Code. As of June 30, 2021, the City held the following investment in an individual issuer exceeding 5% of total investments (other than U.S. Treasury securities, mutual funds, and external investment pools):

Federal Home Loan Bank 158,986$
As of June 3
0, 2021, SCERS held the following investm ents in individual issuers exceeding 5% of total SCERS investments and net position (other than U.S. Treasury securities, mutual funds, and external investment pools):
iShares Russell 1000 Value ETF 41,987$
Technology Select Sector SPDR Fund (ETF) 22,926
iShares MSCI ACWI ETF 17,828
Custodial Credit Risk
Cu
stodial credit risk for deposits is the risk that, in the ev ent of the failure of a depo sitory financial institution, the City or SCERS will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code has provisions for financial institutions that limit custodial credit risk for deposits. Financial institutions are required to secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law. The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The City’s financial institutions also have insurance through the Federal Depository Insurance Corporation (FDIC). The City’s investment policy has no additional provisions for limiting custodial credit risk for deposits. All SCERS cash and cash equivalents are held with the City of Sacramento Investment Pool and SCERS is not exposed to custodial credit risk for deposits.

The custodial credit risk for investments is the risk tha t, in the event of the failure of the counterparty to a transaction, the City or SCERS will not be able to recover the value of its investment or collater al securities that are in the possession of another part y. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for investments; however, it is the practice of the City Treasurer that all City investments are insured, registered or held by the Treasurer’s custodial agent in the City’s name. All SCERS investment s registered or held with the custodial agent are in SCERS’ name.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application

The City and SCERS categorizes its fair value measur ements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The hierarchy gives the highest priori ty to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the City and SCERS have the ability to access.

Level 2 – Inputs to the valuation methodology include:

 Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in inactive markets;  Inputs other than quoted pric es that are observable for the asset or liability; and  Inputs that are derived principally from or corrob orated by observable market data by correlation or other means.

Level 3 – Inputs to the valuation me thodology are unobservable and significant to the fair value measurement.

Unobservable inputs reflect the City’s and SCERS’ own assumptions about the inputs market participants would use in pricing the asset or liability (including assumpti ons about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the City’s and SCERS’ own data.

The asset’s level within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques used, need to maximize the use of observable inputs and minimize the use of unobservable inputs. The determination of what constitutes observable re quires judgment by management. City and SCERS management consider observable data to be that market data, which is readily available, regularly distributed or updated, reliable, and verifiable, not proprietary, and provided by multiple independent sources that are actively involved in the relevant market. The categorization of an investment within the hierarchy is based upon the relative observability of the inputs to its fair val ue measurement and does not necessarily correspond to City and SCERS management’s perceived risk of that investment.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety ar e categorized based on the lowest level input that is significant to the valuation. Assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

The money market mutual funds held by the City pool and outside the City pool are at $1 net asset value per share.

The total net asset value of these at June 30, 2021 was $44,507 and $43,994, respectively, with $0 unfunded commitments. The redemption frequently is daily and redemption notice period of intra-daily. This type of investment primarily invests in short-term U.S. Treasury and government agency securities (including repurchase agreements collateralized by U.S. Treasury and government agency securities).

Deposits and withdrawals in governmental investment pools, such as LAIF and CALTRUST for the City and the City of Sacramento Investment Pool for SCERS, are made on the basis of $1 and not fair value. Accordingly, the City’s measured fair value of its proportionate share in these types of investments is based on uncategorized inputs not defined as a Level 1, Level 2, or Level 3 input.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application (Continued)

The City’s treasury pools asset market prices are derived from closing bid prices as of the end of business day as supplied by ICE Data Services, Inc. Where prices are not available from generally recognized sources, the securities are priced using a yield-based matrix system to arrive at an estimated fair value. Prices that fall between data points are interpolated. Non-negotiable FDIC-insured bank certificates of deposit are priced at par.

The following is a description of the valuation methods and assumptions used by the City and SCERS to estimate the fair value of its investments:

 When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy.  For investments classified within Level 2 of the fair value hierarchy, the City’s and SCERS’ custodians generally use a multi-dimensional relational mode l. Inputs to their pricing models are based on observable market inputs in active markets. The inputs to the pricing models are typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others.  SCERS holds one investment measured using Level 3 inputs, a Mortgage Loan. The Mortgage Loan is reported using the income approach. The value of the Mortgage Loan is materially close to the Discounted Cash Flow, therefore the book value is reported.

There have been no changes in the methods and assumptions used at June 30, 2021. The methods described may produce a fair value calculation that may not be indicati ve of net realizable value or reflective of future fair values. City and SCERS management believe its valuati on methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application (Continued)

The City has the following recurring fair value measurements as of June 30, 2021:

Investments by Fair Value Level
Balance at
June 30, 2021
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Commercial paper 59,980$ -$ 59,980$ -$ Corporate bonds/notes 483,940 - 483,940 - Equities 5,311 5,311 - - Exchange traded funds 2,670 2,670 - - Municipal bonds/notes 105,434 - 105,434 - Negotiable certificates of deposit 121,703 - 121,703 - Supranational securities 20,330 - 20,330 - U.S. agency securities 375,790 - 375,790 - U.S. Treasury notes 19,672 19,672 - - Total Investments by Fair Value Level 1,194,830 27,653$ 1,167,177$ -$ Investments Measured at Net Asset Value
Money market mutual funds 44,507
Investments Uncategorized
Investment Trust of California (CalTRUST) 282,396
Local Agency Investment Fund (LAIF) 75,000
Total Investments Uncategorized 357,396
Total Investments Held by City 1,596,733
Investments Held by Fiscal Agent by Fair Value Level
Corporate bonds/notes 3,335 -$ 3,335$ -$ Negotiable certificates of deposit 14,946 - 14,946 - U.S. agency secur
ities 13,621 - 13,621 - U.S. Treasury notes 268 268 - - Total Investments Held by Fiscal Agent by
Fair Value Level 32,170 268$ 31,902$ - Investments Held by Fiscal Agent Measured at Net Asset
Value
Money market mutual funds 43,994
Total Investments Held by Fiscal Agent 76,164
Total Investments 1,672,897
Total Bank Deposits 81,886
Total Cash and Investments 1,754,783$
Fair Value Measurements on a Recurring Basis Using

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Fair Value Measurement and Application (Continued)

SCERS has the following recurring fair value measurements as of June 30, 2021:

Investments by Fair Value Level
Balance at
June 30, 2021
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Corporate bonds/notes $ 39,181 -$ 39,181$ - $ Equities 30,236 30,236 - - Exchange traded funds 187,545 187,545 - - Mortgage loans 824 - - 824 Municipal bonds/notes 38,438 - 38,438 - U.S. agency securities 1,004 - 1,004 - U.S. Treasury bonds 1,958 1,958 - - Total Investments by Fair Value Level 299,186 $ 219,739 $ 78,623 $ 824 Investments at Fair Value not Subject to
Fair Value Hierarchy
City of Sacramento Investment Pool 13,416
Total Cash and Investments 312,602 $
Fair Value Measurements on a Recurring Basis Using

City Sponsored Investment Pool

As part of the City’s total cash and investments portfolio, the City Treasurer manages an investment pool, which includes both internal and external investors. The pool is not registered with the Securities and Exchange Commission as an investment company. The City Treasure r is granted authority for managing the pool by City Charter Section 73 and City Council ordinances and resolution s. Monthly, the City Trea surer reports investment activity to the Council for review.

The fair value of investments is det ermined monthly. Participants’ shares sold and redeemed are determined by the daily cash balance deposited in the pool (the value of its pool shares). The value of the pool shares is based upon amortized cost in day-to-day operations but is adjust ed to the fair value at year-end. The investments are reported at fair value. The value of the shares is supported by the value of the unde rlying investments. External participants, including various joint powers agencies, co mprise 8.08% of pool participation. The City Sponsored Investment Pool excludes activities of the pension trust fund, the Sacramento Housing and Redevelopment Agency (SHRA), and funds held by fiscal agents.

The City Treasurer also manages external individual in vestment accounts for SHRA and the Sacramento Public Library Authority Hurst Trust.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

City Sponsored Investment Pool (Continued)

The following represents a condensed statement of net position and changes in net position for the City Sponsored Investment Pool and external individual investment accounts as of June 30, 2021:

Fair Value
Adjusted
Cost
Interest
Rates
Maturity
Dates
Commercial paper 59,980$ 59,970$ 0.20-0.25% 07/21-12/21 Corporate bonds/notes 483,104 481,184 0.30-3.62% 07/21-06/26 Deposits 93,016 93,016 0.00-0.33% N/A Investment Trust of California (CalTRUST) 282,396 282,396 0.02-0.35% N/A Local Agency Investment Fund (LAIF) 75,000 75,000 2.60% N/A Municipal bonds/notes 105,434 103,877 0.37-6.09% 08/21-03/26 Money market mutual funds 44,507 44,507 0.01% N/A Negotiable certificates of deposit 121,703 121,500 0.15-2.40% 07/21-06/26 Supranational securities 20,330 20,456 0.37-1.62% 02/22-02/26 U.S. agency securities 375,790 378,688 0.20-2.01% 12/21-06/26 U.S. Treasury notes 19,672 19,771 0.37-0.50% 01/26-02/26 Total cash and investments in City sponsored investment pool and external individual investment accounts 1,680,932$ 1,680,365$

A summary of cash and investments as of June 30, 2021 is as follows:

External
City Sponsored Individual Investment
Investment Pool Accounts Total
Statement of Net Position:

Cash and investments at fair value 1,511,371 $ 169,561 $ 1,680,932 $ Interest receivables 3,086 226 3,312 Net Position 1,514,457$ 169,787$ 1,684,244$ Equity of internal pool participants 1,392,047$ -$ 1,392,047$ Equity of external pool participants 122,410 169,787 292,197 Total equity 1,514,457$ 169,787$ 1,684,244$ Statement of Changes in Net Position:

Net position at July 1, 2020 1,515,785$ 116,608$ 1,632,393$ Net change in investments by pool participants (1,328) 53,179 51,851 Net position at June 30, 2021 1,514,457$ 169,787$ 1,684,244$

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 2 – CASH AND INVESTMENTS (Continued)

Participation in External Investment Pools

The City is a voluntary participant in the California Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Local Investment Advisory Board (Board). The Board consists of five members as designated by state stat ute. The balance available fo r withdrawal is based on the accounting records maintained by the LAIF, which are recorded on an amortized cost basis, which is different from the fair value of the City’s position in the LAIF pool. As of June 30, 2021, the City’s investment in LAIF is $75,000.

The total amount invested by all public agencies in LAIF at that date is $37,066,593. LAIF is part of the California Pooled Money Investment Account (PMIA), which at June 30, 2021 had a balance of $193,321,016. Of that amount,

97.69% is invested in non-derivative financial products, and 2.31% is invested in derivative financial products.

The City is also a voluntary participant in the Investment Trust of California (CalTRUST), which is a Joint Powers Authority governed by a Board of Trustees made up of local treasurers and investment officers. The Board of Trustees sets overall policy for CalTRUST and selects and supervises the activities of the Investment Manager and other agents. As of June 30, 2021 , the City’s investment in CalTRUST is $282,396, of which $12,221 was invested in the Liquidity funds pool, $106,885 in the Short-term pool, $116,203 in the Medium-term pool, and $47,087 in the BlackRock federal funds pool. Amounts that may be withdrawn from CalTRUST are based upon the fund’s assets valued using the amortized cost method. Amounts that ma y be withdrawn from the Short-term and Medium-term pools are based on the net asset value per share and the number of shares held by participants in each pool.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 3 – RECEIVABLES

Receivables as of June 30, 2021, were as follows:

Taxes Accounts Loans
Inter-
govern-
mental Interest Total
Governmental activities
General Fund 31,956$ 27,412$ 1,931$ 2,354$ 627$ 64,280$ Measure U Fund 22,654 - - - 141 22,795 2015 Golden 1 Center
Lease Revenue Bond Fund - 832 136,935 - 24 137,791 Operating Grants Fund - 626 - 25,533 156 26,315 Other governmental funds 5,632 10,408 8,153 27,994 299 52,486 Internal service funds - 174 - - 256 430 60,242$ 39,452$ 147,019 $ 55,881$ 1,503$ 304,097$ Amounts not scheduled for
collection during the
subsequent year -$ -$ 136,028$ 11,804$ -$ 147,832$ Business-type activities
Water Fund -$ 23,798$ -$ 333$ 655$ 24,786$ Wastewater Fund - 13,478 - 293 198 13,969 Storm Drainage Fund - 6,646 1,015 1,471 141 9,273 Solid Waste Fund - 10,140 - - 140 10,280 Community Center Fund 2,677 1 - - 202 2,880 Ot
her enterprise funds - 720 - - - 720 2,677$ 54,783$ 1,015$ 2,097$ 1,336$ 61,908$

Included in the Accounts Receivable amounts above ar e allowances for doubtful accounts of $43,044 in governmental activities and $1,747 in business-type activities.

Included in the Loans Receivable amount related to other governmental funds above is the present value of the installment payments under the golf service concession arrangement of $7,203, repo rted with the associated deferred inflows of resources in the government-wide statement of net position.

The Golden 1 Center was sold to the Sacramento Kings under the terms of the Arena Management, Operations and Lease Agreement during the fiscal year ended June 30, 2017. The agreed-upon minimum lease payments to be received from the Kings was $389,414 over 35 year s. Total minimum lease payments have since gone up to $397,990 over 35 years in accordance with the agreement ’s annual fee escalation tied to the Consumer Price Index. The present value of these minimum lease paym ents discounted at 5.674% is $143,649 and the current loan receivable balance as of June 30, 2021 is $136,935. Payments from the Sacramento Kings will be used to reduce interest expense related to the Golden 1 Center 2015 lease revenue bonds.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 4 – CAPITAL ASSETS

Summary

The following is a summary of capital assets as of June 30, 2021:

Business-
Governmental type
Activities Activities Total
Capital assets not being depreciated/amortized
Land 202,628 $ 47,806 $ 250,434 $ Easements 2,348 291 2,639 Construction in progress 223,892 665,116 889,008 Total capital assets not being depreciated/amortized 428,868 713,213 1,142,081 Depreciable/amortizable capital assets
Buildings and improvements 708,379 337,976 1,046,355 Equipment 80,565 76,104 156,669 Software 6,413 13,535 19,948 Vehicles 195,817 - 195,817 Transmission and distribution system 4,777 1,491,454 1,496,231 Roadway network 1,713,981 - 1,713,981 Streetlight network 276,613 - 276,613 Parks and park improvements 230,286 - 230,286 Total depreciable/amortizable capital assets 3,216,831 1,919,069 5,135,900 Less accumulated depreciation/amortization for:

Buildings and improvements (290,089) (173,197) (463,286) Equipment (65,690) (52,420) (118,110) Software (4,627) (3,853) (8,480) Vehicles (106,324) - (106,324) Transmission and distribution system (1,184) (581,653) (582,837) Roadway network (1,141,544) - (1,141,544) Streetlight network (107,916) - (107,916) Parks and park improvements (87,786) - (87,786) Total accumulated depreciation/amortization (1,805,160) (811,123) (2,616,283) Depreciable/amortizable capital assets, net 1,411,671 1,107,946 2,519,617 Total capital assets, net 1,840,539$ 1,821,159$ 3,661,698$

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 4 – CAPITAL ASSETS (Continued)

Governmental Activities

Governmental capital asset activity for the fiscal year ended June 30, 2021 was as follows:

Beginning
Balance Increases Decreases
Transfers
In/Out
Ending
Balance
Capital assets not being depreciated/amortized
Land 201,237 $ 1,391 $ -$ -$ 202,628$ Easements 928 1,420 - - 2,348 Construction in progress 163,926 92,519 (32,553) - 223,892 366,091 95,330 (32,553) - 428,868 Depreciable/amortizable capital assets
Buildings and improvements 705,263 3,116 - - 708,379 Equipment 80,154 411 - - 80,565 Software 6,413 - - - 6,413 Vehicles 180,498 21,120 (5,801) - 195,817 Transmission and distribution system 4,777 5,424 - (5,424) 4,777 Roadway network 1,705,519 14,219 (5,757) - 1,713,981 Streetlight network 265,211 11,402 - - 276,613 Parks and park improvements 222,989 7,297 - - 230,286 Total depreciable/amortizable capital assets 3,170,824 62,989 (11,558) (5,424) 3,216,831 Less accumulated depreciation/amortization for:

Buildings and improvements (276,352) (13,737) - - (290,089) Equipment (63,129) (2,561) - - (65,690) Software (3,993) (634) - - (4,627) Vehicles (98,158) (13,605) 5,439 - (106,324) Transmission and distribution system (1,095) (89) - - (1,184) Roadway network (1,105,683) (41,618) 5,757 - (1,141,544) Streetlight network (101,499) (6,417) - - (107,916) Parks and park improvements (79,941) (7,845) - - (87,786) Total accumulated depreciation/amortization (1,729,850) (86,506) 11,196 - (1,805,160) Depreciable/amortizable capital assets, net 1,440,974 (23,517) (362) (5,424) 1,411,671 Governmental activities capital assets, net 1,807,065$ 71,813$ (32,915)$ (5,424)$ 1,840,539$ Depreciation/amortization expense was charged to functions as follows:

General government 5,272$
Police 900
Fire 809
Public works 50,440
Convention and cultural services 4,212
Youth, parks, and community enrichment 10,121
Community development 160
Library 955
Capital assets held by the City's internal service funds are charged to the functions based on their usage of assets 13,637 Total governmental activities depreciation/amortization expense 86,506$ Total capital assets not being
depreciated/amortized

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)
NOTE 4 – CAPITAL ASSETS (Continued)
Business-ty
pe Activities
Business-type capital asset activity for the fiscal year ended June 30, 2021 was as follows:

Beginning
Balance Increases Decreases
Transfers
In/Out
Ending
Balance
Capital assets not being depreciated/amortized
Land 47,806 $ - $ - $ -$ 47,806$
Easements 291 - - - 291
Construction in progress 550,605 203,115 (88,604) - 665,116 598,702 203,115 (88,604) - 713,213
Depreciable/amortizable capital assets
Buildings and improvements 297,094 40,882 - - 337,976 Equipment 74,126 1,978 - - 76,104 Software 13,535 - - - 13,535 Transmission and distribution system 1,430,967 55,063 - 5,424 1,491,454 Total depreciable/amortizable capital assets 1,815,722 97,923 - 5,424 1,919,069 Less accumulated depreciation/amortization for:

Buildings and improvements (166,871) (6,326) - - (173,197) Equipment (50,205) (2,215) - - (52,420) Software (2,844) (1,009) - - (3,853) Transmission and distribution system (547,993) (33,660) - - (581,653) Total accumulated depreciation/amortization (767,913) (43,210) - - (811,123) Depreciable/amortizable capital assets, net 1,047,809 54,713 - 5,424 1,107,946 Business-type activities capital assets, net 1,646,511$ 257,828$ (88,604)$ 5,424$ 1,821,159$ Depreciation/amortization
expense was charged to functions as follows:

Water 23,540$
Wastewater 4,376
Storm drainage 11,098
Solid waste 1,252
Community center 1,488
Parking 1,386
Child development 70 (1)
Total business-type activities depreciation/amortization expense 43,210$ (1) Varies $9 from amount reported in Other Enterprise Funds Financials as it is related to the amortization of the Regency Park joint-use agreement.

Total capital assets not being
depreciated/amortized

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 5 – PAYABLES

Payables as of June 30, 2021, were as follows:

Vendors Employees Interest Deposits Total
Governmental activities
General Fund 17,832$ 21,151$ - $ 25$ 39,008$ Measure U Fund 2,480 - - - 2,480 - - 3,609 - 3,609 Operating Grants Fund 10,218 - - 135 10,353 Other governmental funds 13,891 39 1,544 2,234 17,708 Internal service funds 3,387 348 2 5 3,742 Total governmental activities 47,808$ 21,538$ 5,155$ 2,399$ 76,900$ Business-type activities
Water Fund 6,398$ 988$ 4,157$ 6$ 11,549$ Wastewater Fund 15,945 241 669 - 16,855 Storm Drainage Fund 2,012 343 32 502 2,889 Solid Waste Fund 1,410 505 44 3 1,962 Community Center Fund 10,600 110 1,297 - 12,007 Other enterprise funds 1,540 218 42 534 2,334 Total business-type activities 37,905$ 2,405$ 6,241$ 1,045$ 47,596$ 2015 Golden 1 Center Lease
Revenue Bond Fund

Included in the Interest Payable amount related to 2015 Golden 1 Center Lease Revenue Bond Fund above is the interest payable accrual of $3,609, reported in the government-wide statement of net position.

Included in the Interest Payable amount related to other governmental funds above is the interest payable accrual for other debt service funds of $1,544, reported in the government-wide statement of net position.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 6 – OPERATING LEASES

City as Lessee

The City is obligated under various operating leases fo r the use of land, buildings, office space, and equipment.

Lease expenditures, primarily for governmental funds, for the fiscal year ended June 30, 2021, were $764.

Sublease rental income for the fiscal year ended June 30, 2021 was $208. The total amount of minimum rentals to be received in the future under non-cancelable subleases is $1,134.

Future minimum lease payments required by non-cancellabl e lease agreements that have initial lease terms in excess of one year are as follows:

Fiscal Year Ending June 30, Payments
2022 756$
2023 590
2024 382
2025 355
2026 358
2027-2031 1,557
2032-2036 1,579
2037-2041 1,414
2042-2046 1,254
2047-2051 1,277
2052-2056 803
Total future minimum lease payments 10,325$

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES

Activity

The following is a summary of changes in long-term liabilities at June 30, 2021. Certain long-term liabilities provide financing to both governmental and business-type activities.

Beginning Ending Due Within
GOVERNMENTAL ACTIVITIES: Balance Additions Reductions Balance One Year Revenue and Other Bonds, Direct Placements:
2016 Lease Financing 7,030$ -$ (475)$ 6,555$ 490$ Revenue and Other Bonds, Public Offerings:
1993 Refunded Revenue Bonds, Series A 1,730 - (1,730) - - 1993 Refunded Revenue Bonds, Series B 2,901 - (2,901) - - 2006 Capital Improvement Revenue Bonds, Series B 41,865 - (1,485) 40,380 1,575 2006 Capital Improvement Revenue Bonds, Series E 79,822 - - 79,822 1,760 2015 Refunding Revenue Bonds 81,875 - (7,485) 74,390 6,375 2015 Lease Revenue Bonds - Golden 1 Center 262,320 - (3,810) 258,510 3,945 Subtotal, revenue and other bonds, public offerings 470,513 - (17,411) 453,102 13,655 Direct Borrowing Notes Payable:
1985 Marina Phase I 1,292 - (58) 1,234 59 1985 Marina Phase II 2,034 - (75) 1,959 79 2008 Sacramento Marina South Basin 13,589 127 - 13,716 69 Subtotal, direct borrowing notes payable 16,915 127 (133) 16,909 207 Direct Borrowing Capital Lease Obligations:

Bank of America - Marina South Basin 325 - (126) 199 132 Plus deferred amounts:

For issuance premiums 16,777 - (1,152) 15,625 1,141 Subtotal, debt governmental activities 511,560 127 (19,297) 492,390 15,625

Other Long-term Liabilities:

Accrued claims and judgments 95,415 26,053 (15,282) 106,186 28,062 Compensated absences 39,317 41,047 (36,794) 43,570 2,833 Net OPEB liability 207,641 - (4,322) 203,319 - Net pension liability 920,262 170,854 (138,222) 952,894 - Pollution remediation obligations 539 226 (192) 573 198 Financing plan fee credits:

Jacinto Creek 795 183 - 978 23 North Natomas 31,905 1,418 (6,714) 26,609 2,564 Park Development 1,881 4 - 1,885 337 Railyards - 9,393 (1,369) 8,024 - Willowcreek - 130 - 130 - Subtotal, other long-term liabilities 1,297,755 249,308 (202,895) 1,344,168 34,017 Total governmental activities 1,809,315$ 249,435$ (222,192)$ 1,836,558$ 49,642$

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Activity (Continued)

Beginning
Balance, Ending Due Within
BUSINESS-TYPE ACTIVITIES: As Restated Additions Reductions Balance One Year Revenue and Other Bonds, Public Offerings:
1993 Refunded Revenue Bonds, Series A 7,145$ -$ (7,145)$ -$ - $ 1993 Refunded Revenue Bonds, Series B 3,169 - (3,169) - - 2006 Capital Improvement Revenue Bonds, Series E 92,277 - - 92,277 - Water Revenue Bonds, Series 2013 25,355 - (4,580) 20,775 4,815 Water Revenue Bonds, Series 2017 50,999 - (869) 50,130 915 Water Revenue Refunding Bonds, Series 2020 188,390 - (2,890) 185,500 2,015 Wastewater Revenue Bonds, Series 2013 27,820 - (25,525) 2,295 725 Wastewater Revenue Bonds, Series 2019 25,960 - - 25,960 840 Wastewater Revenue Refunding Bonds, Series 2020 - 27,970 (530) 27,440 335 2015 Refunding Revenue Bonds 37,599 - (8,413) 29,186 8,760 2018 TOT Revenue Bonds, Senior Series A 195,815 - - 195,815 - 2018 TOT Revenue Bonds, Senior Series B 20,610 - (3,930) 16,680 4,070 2018 TOT Revenue Bonds, Subordinate Series C 66,890 - (1,150) 65,740 1,200 2019 STID Assessment Revenue Bonds 50,465 - (845) 49,620 880 Subtotal, revenue and other bonds, public offerings 792,494 27,970 (59,046) 761,418 24,555 Direct Borrowing Notes Payable:

State Water Resources Control Board C06-4441-120 2,316 - (2,316) - - State Water Res
ources Control Board C06-4653-110 387 - (387) - - State Water Resources Control Board C06-4685-110 161 - (161) - - California Department of Public Health 6,818 - (471) 6,347 483 California Infrastructure and Economic
Development Bank (I-Bank) 2,120 - (89) 2,031 92 Drinking Water State Revolving Fund 44,911 70,784 - 115,695 - Subtotal, direct borrowing notes payable 56,713 70,784 (3,424) 124,073 575 Direct Borrowing Capital Lease Obligations:

Parking Equipment - Schedule 19 413 - (413) - - Parking Equipment - Schedule 20 560 - (560) - - Subtotal, direct borrowing capital lease obligations 973 - (973) - - Less deferred amounts:

For issuance discounts (10) - 10 - - For issuance premiums 66,407 - (5,428) 60,979 3,631 Subtotal, deferred amounts 66,397 - (5,418) 60,979 3,631 Subtotal, debt, business type activities 916,577 98,754 (68,861) 946,470 28,761 Other Long-term Liabilities:

Compensated absences 7,814 8,240 (7,829) 8,225 521 Net OPEB liability 41,263 - (333) 40,930 - Net pension liability 126,679 20,156 (30,025) 116,810 - Accrued claims and judgments 646 -
(11) 635 635
Water fee credits 214 362 (45) 531 - Wastewater fee credits 14,558 - (646) 13,912 - Liability for landfill closure 2,056 2,280 - 4,336 298 Subtotal, other long-term liabilities 193,230 31,038 (38,889) 185,379 1,454 Total business-type activities 1,109,807 129,792 (107,750) 1,131,849 30,215 Total long-term liabilities 2,919,122$ 379,227$ (329,942)$ 2,968,407$ 79,857$

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

The following is a list of long-term debt issues outstanding at June 30, 2021, including the amount of original debt issuance, a description of the debt issue, and disclosure of pledged revenue.

Revenue and Other Bonds

Issued Amount

$55,235

$186,950

$215,195

$30,855
2006 Capital Improvement Revenue Bonds, Series B (Taxable) Authorized and issued June 15, 2006, due in annual installments of $720 to $3,760 through December 1, 2036, bearing interest rates of 5. 4% to 5.8%. Net proceeds of $50,692 are being utilized for the purpose of financing certain publ ic capital improvements and redevelopment projects including an arts rehearsal building, Pocket Area Library and other capital projects within the City of Sacramento. Secured by collateral of real property situated in the City of Sacramento, the indenture contains a provision that in the event of a default and upon written request of the bond holders, the outstanding principal and any accrued interest may be due and payable immediately.

2006 Capital Improvement Revenue Bonds, Series E (Refunding) Authorized and issued December 12, 2006, due in annual installments of $402 to $8,570 through December 1, 2033, bearing interest rates of 4% to 5.25%. Net proceeds of $216,661 plus cash of $13,441 have been utilized for the purpose of establishing an irrevocable escrow to defease $218,000 principal amount of the outstanding 2001 Capital Improvement Revenue Bonds and a portion of the outstanding 2002 and 2003 Capital Improvement Revenue Bonds, and the associated liabilities have been removed from t he governmental and business-type activities columns of the statement of net position. Secured by collateral of real property situated in the City of Sacramento, the indenture contains a prov ision that in the event of a default and upon written request of the bond holders, the outstandi ng principal and any accrued interest may be due and payable immediately.

2013 Water Revenue Bonds
Authorized and issued March 2013, due in annual installments of $9,731 to $14,018 through fiscal year 2043, bearing interest rates of 1% to 5%, for the purpose of financing the costs of improvements to the City’s municipal water system. In May 2020, the City issued 2020 Water Revenue Refunding Bonds to defease and refund $166,405 of the outstanding 2013 Water Revenue Bonds. Remaining amount due in annual installments of $5,717 to $ 5,720 through fiscal year 2025, bearing interest rate of 5%. The debt service on the bonds is secured by the pledge of, and payable solely from, the Trust Estate , which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $22,876 as of June 30, 2021. Current year principal and interest paid was $5,717 and water fee revenue was $144,070.

2013 Wastewater Revenue Bonds
Authorized and issued June 2013, due in annual installments of $951 to $1,958 through fiscal year 2043, bearing interest rates of 3% to 5%, for the purpose of financing the costs of improvements to the City’s wastewater system. In July 2020, the City issued 2020 Wastewater Revenue Refunding Bonds to defease and refund $24,835 of the outstanding 2013 Wastewater Revenue Bonds. Remaining amount due in annual installments of $822 to $ 825 through fiscal year 2024, bearing interest rate of 5%. The debt service on the bonds is secured by a pledge of, and payable solely from, the Trust Estate, which c onsists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $2,471 as of June 30, 2021. Current year principal and interest paid was $822 and wastewater fee revenue was $43,829.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Revenue and Other Bonds (Continued)

Issued Amount

$183,380

$272,870

$9,115

$52,610

$195,815
2015 Refunding Revenue Bonds
Authorized and issued October 1, 2015, due in annual installments of $5,120 to $24,773 through December 1, 2037, bearing interest rates of 3% to 5%. Net proceeds of $205,778 plus cash of $28,165, together with certain proceeds of the Tax Allocation Bonds, were utilized to establish an irrevocable escrow to defease $257,630 pr incipal amount of outstanding 2002 Capital Improvement Revenue Bonds, 2003 Capital Improvement Revenue Bonds, 2005 Refunding Revenue Bonds, 2006 Capital Improvement Revenue Bonds, Series A, 2006 Capital Improvement Revenue Bonds, Series C, and pay cost of issuance. The refunded liabilities have been removed from the associated fund and gove rnment-wide financial statements. Secured by collateral of real property situated in the City of Sacramento. The indenture contains a provision that in the event of a default and upon written request of the bond holders, the outstanding principal and any accrued interest may be due and payable immediately.

2015 Lease Revenue Bonds – Golden 1 Center
The bonds were originally issued on August 13, 2015, in the aggregate principal amount of $299,995, to pay for a portion of the acquisi tion and construction of the multi-purpose entertainment and sports center (the Golden 1 Center) in downtown Sacramento. On the fixed rate conversion date, October 6, 2015, $27,125 principal amount of the bonds were cancelled.

The bonds are due in annual installments of $7,229 to $18,379 through fiscal year 2050, bearing interest of 2.5% to 5.6%. Secured by collateral of the Golden 1 Center and other improvements made to the associated parcel of land.

2016 Lease Financing – H Street Theater Complex (Direct Placement) The City delivered its 2016 Lease Financing on January 26, 2016, due in annual installments of $668 to $1,010 through fiscal year 2033, bearing interest at 2.8%. Bond proceeds of $9,115, together with cash of $3,471 were utilized to establish a prepayment fund to refund $12,010 aggregate principal, plus interest, and pay the cost of issuance of the outstanding Sacramento Regional Arts Facilities 2002 Certificates of Pa rticipation. Secured by lease rental payments from the California Musical Theatre.

2017 Water Revenue Bonds
Authorized and issued June 2017, due in annual installments of $1,805 to 3,379 through fiscal year 2048, bearing interest rate of 4% to 5%, for the purpose of financing the costs of improvements to the City’s municipal water system. The debt service on the bonds is secured by the pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $91,177 as of June 30, 2021. Current year principal and interest paid was $3,378 and water fee revenue was $144,070.

2018 Transient Occupancy Tax (TOT) Revenue Bonds, Senior Series A Authorized September 2018, issued November 2018, due in annual installments of $5,711 to $14,482 through fiscal year 2048, bearing an interest rate of 5%, for the purpose of financing the costs of renovating the City’s Convention Center, Community Center Theater, and Memorial Auditorium, as well as other projects eligible for TOT funding. The debt service on the bonds is secured by the pledge of, and payable solely from, TOT revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $372,700 as of June 30, 2021. Current year interest paid was $9,791 and TOT revenue was $15,545.

Principal pa
yments begin June 2025.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Revenue and Other Bonds (Continued)

Issued Amount

$20,610

$66,890

$25,960

$50,465

2018 Transient Occupancy Tax (TOT) Revenue Bonds, Senior Series B (Taxable) Authorized September 2018, issued November 2018, due in annual installments of $441 to $4,690 through fiscal year 2025, bearing interest rates of 3.5% to 3.9%, for the purpose of financing the costs of renovating the City’s Convention Center, Community Center Theater, and Memorial Auditorium, as well as other projects eligible for TOT funding. The debt service on the bonds is secured by the pledge of, and payable solely from, TOT revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $18,249 as of June 30, 2021. Current year principal and interest paid was $4,686 and TOT revenue was $15,545.

2018 Transient Occupancy Tax (TOT) Revenue Bonds, Subordinate Series C Authorized September 2018, issued November 2018, due in annual installments of $1,951 to $4,495 through fiscal year 2048, bearing an interest rate of 5%, for the purpose of financing the costs of renovating the City’s Convention Ce nter, Community Center Theater, and Memorial Auditorium, as well as other projects eligible for TOT funding. The debt service on the bonds is secured by the pledge of, and payable solely from, TOT revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $121,216 as of June 30, 2021. Current year principal and interest paid was $4,495 and TOT revenue was $15,545.

2019 Wastewater Revenue Bonds
Authorized March 2019, issued April 2019, due in annual installments of $1,157 to $2,119 through fiscal year 2040, bearing an interest rate of 5%, for the purpose of financing the costs of improvements to the City’s wastewater system. The debt service on the bonds is secured by a pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $40,212 as of June 30, 2021. Current year interest paid was $1,298 and wastewater fee revenue was $43,829. Principal payments begin September 2021.

2019 Sacramento Tourism Infrastructure District (STID) Assessment Revenue Bonds Authorized July 2019, issued August 2019, due in annual installments of $1,469 to $2,744 through fiscal year 2050, bearing interest rates of 4% to 5%, for the purpose of financing an additional Ballroom in the Sacramento Conv ention Center and other capital improvement projects. The debt service on the bonds is secured by the pledge of, and payable solely from, STID revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $79,487 as of June 30, 2021. Current year principal and interest paid was $2,740 and STID fee revenue was $1,899.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Revenue and Other Bonds (Continued)

Issued Amount

$188,390

$27,970

2020 Water Refunding Revenue Bonds
Authorized April 2020, issued May 2020, due in annual installments of $6,976 to $12,701 through fiscal year 2043, bearing interest rates of 1% to 3%. Net proceeds of $188,390, together with City contribution of $1,005 and bond reserve fund release of $4,248, were utilized to establish an irrevocable escrow to defease $166,405 principal amount of outstanding 2013 Water Revenue Bonds and pay cost of issuance. The refunded liabilities have been removed from the Water Fund and government-wide financial statements. The debt service on the bonds is secured by the pledge of, and payable solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture. Total principal and interest remaining to be paid on the bonds is $256,479 as of June 30, 2021. Current year principal and interest paid was $6,980 and water fee revenue was $144,070.

2020 Wastewater Refunding Revenue Bonds
Authorized April 2020, issued July 2020, due in annual installments of $925 to $1,752 through fiscal year 2043, bearing interest rates of .5% to 2.5%. Net proceeds of $27,970, together with City contribution of $401 and bond reserve fund release of $580, were utilized to establish an irrevocable escrow to defease $24,835 princi pal amount of outstanding 2013 Wastewater Revenue Bonds and pay cost of issuance. The refunded liabilities have been removed from the Wastewater Fund and government-wide financial statements. The reacquisition price exceeded the net carrying value of the old debt by $2,568. The 2020 Refunding reduced total debt service payments by $4,766 and resulted in an economic gain of $2,677. The debt service on the bonds is secured by the pledge of, and payab le solely from, the Trust Estate, which consists primarily of all system net revenues and trustee accounts held under the indenture.

Total principal and interest remaining to be paid on the bonds is $35,986 as of June 30, 2021.

Current year principal and interest paid was $925 and wastewater fee revenue was $43,829.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Notes Payable

Issued Amount

$2,220

$3,229

$10,477

$10,000

$2,975

$173,142

1985 Sacramento Marina Note Payable, Phase I
Authorized July 1985, issued November 1985, refinanced August 1998, to the California Department of Boating and Waterways, due in annual installments of $20 to $82 through August 2030, bearing an interest rate of 4.5%, for the purpose of financing the expansion of the Sacramento Marina. Secured by collateral of the Sacramento Marina.

1985 Sacramento Marina Note Payable, Phase II
Authorized July 1985, issued September 1987, refinanced August 1998, to the California Department of Boating and Waterways, due in annual installments of $27 to $150 through August 2037, bearing an interest rate of 4.5%, for the purpose of financing the expansion of the Sacramento Marina. Secured by collateral of the Sacramento Marina.

2008 Sacramento Marina Note Payable, South Basin
Authorized February 2005, the City had made loan draws of $9,000 plus accrued interest of $1,477 through June 30, 2013, from the California Department of Boating and Waterways (DB&W), for the purpose of constructing the South Basin Improvements at the Sacramento Marina. Principal and interest was due in 30 annual installments of $204 to $662, through August 2041, bearing an interest rate of 4.6%. The City had made no principal payments and only a portion of interest payments on this loan since 2013, and had been working with the DB&W on a loan restructure. Effective August 2019, the DB&W and the City executed a formal agreement to restructure this loan. After restructuring, the maturity dates of previously matured principal and interest amounts have been extended and are no longer past due. The note still bears an interest rate of 4.6% and principal and interest are due in annual installments of $500 to $1,698, through August 2041. Secured by collateral of the Sacramento Marina.

California Department of Public Health
Authorized September 2009 for the installati on of approximately 13,000 water meters. The note, with a 2.5% interest rate, will be repaid over 20 years, through 2033, with annual principal and interest payments of approximately $639. The City pledged future Water Enterprise Fund revenue to repay the note. Current year water fee revenue was $144,070.

California Infrastructure and Economic Development (I-Bank) Authorized in December 2007, due in annual principal and interest installments from $163 to $155 through August 2038, bearing an interest rate of 3.17%, for the purpose of financing the purchase and construction of the Basin 31 Det ention Basin. The City pledged future storm drainage fee revenue to repay the note. The not e is payable solely from the storm drainage fee revenue through August 2038. Total principal and interest remaining to be paid on the note is $2,685. Current year principal and interest paid was $161 and storm drainage fee revenue was $40,848. The loan agreement contains a prov ision that in the event of a default, the principal of the loan and accrued interest on all unpaid installments would be due immediately.

Drinking Water State Revolving Fund (DWSRF)
Authorized in May 2017, the DWSRF has agreed to fund the City’s Accelerated Meter Installation and Pipe Replacement Program. Under the agreement, the City is to pay for project costs upfront and the DWSRF is to reimburse the City with loan amounts not to exceed $173,142. Construction began in October 2017 with a projected end date of June 2022. The final reimbursement request deadline is December 2022. The note will be repaid over a 20- year period beginning July 2022, bearing an interest rate of 1.7%. Annual principal and interest payments will be appro x
imately $10,248. The City has pledged future water fee revenues to repay the note. Current year water fee rev enues were $144,070. The amount claimed and reimbursed by the City as of June 30, 2021 was $115,695.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)
NOTE 7 – LONG-TERM LI
ABILITIES (Continued)
Capital Lease Obligations
The City entered into a long-term lease to finance the acquisition of building and improvements. The capital lease obligation is from a dire ct
borrowing and is secured by collateral of the asset being financed: buildings and improvements located at the Sacramento Marina South Basin. The lease qualifies as a capital lease for accounting purposes as defined under GASB Statem ent No. 62 and has been re corded at the present value of the future minimum lease payments. The capital lease obligation falls under governmental activities and will be paid by the City’s Culture and Leisure Fund. Minimum lease payments are as follows:

Fiscal Year Ending June 30,
2022 139 $
2023 69
Total minimum lease payments 208
Less amounts representing interest (9)
Net present value of minimum lease payments 199$
Property under outstanding capital leases for governmental activities at June 30, 2021 is as follows:

Buildings and improvements 1,523$
Less: accumulated depreciation (380)
Total 1,143$
The lease purcha
se agreement contains a provision that in the event of a default, the lessor may declare all rental payments payable to the end of the current term be due immediately.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Other Long-term Liabilities

Accrued claims and judgments – Estimated liabilities of the City’s workers’ compensation, auto, and general liability self-insurance programs administered through the Risk Management Internal Service Fund. The first year of salary continuation in the City’s workers’ compensation progr am is accrued and paid by the City’s General Fund, enterprise funds, and internal service funds.

Compensated absences – Estimated amounts due to employees for earned, but unused, compensated absence accounts, including leave balances for vacation, sick, holiday and compensated time off. Compensated absences are generally liquidated by the City’s General Fund, enterprise funds, and internal service funds.

Net OPEB liability (other post-employment benefits) – Net liability for retiree medical benefits accounted for and reported in accordance with G ASB Statement No. 75. The net OPEB liability is $203,319 and $40,930 for governmental activities and business-type activities, respectively, at June 30, 2021. The net liability is liquidated by the fund that has recorded the liabili ty. Governmental activities net OPEB liability is liquidated primarily by the General Fund and business-type activities net OPEB liability is liquidated by the respective enterprise fund. Refer to Note 9 for more detailed information.

Pollution remediation obligations – Estimated liabilities to address the current or potenti al detrimental effects of existing pollution by participating in pollution remediation activities.

Financing plan fee credits – Issued to developers as consideration for infrastructure and other capital improvements constructed on behalf of the City within the scope of the North Natomas, Jacinto Creek and other development impact fee programs. Credits are redeemable from or against future impact fees assessed within the geographic boundaries of the finance plan.

Water fee credits – Issued to developers as consideratio n for infrastructure constructed on behalf of the City.

Credits are redeemable from or against future water development impact fees.

Wastewater fee credits – Issued to developers as consideration for infrastructure constructed on behalf of the City.

Credits are redeemable from or against future wastewater development impact fees.

Liability for landfill closure – Estimated post-closure maintenance and monitoring costs for the closed landfill sites.

Net Pension Liability – The net pension liability is $952,894 and $116,810 for governmental activities and business- type activities, respectively, at June 30, 2021. The net liability is liquidated by the fund that has recorded the liability.

Governmental activities net pension liability is liquidated primarily by the General Fund and business-type activities net pension liability is liquidated by the respective enterprise fund. Refer to Note 8 for more detailed information.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Future Debt Service Requirements

The following tables disclose the annual debt service requirements for the City’s long-term debt outstanding as of June 30, 2021.

Annual debt service requirements of governmental activities to maturity are as follows :

Fiscal Year
Ending June 30, Principal Interest Principal Interest
2022 490$ 183$ 13,655$ 24,316$ 2023 505 169 14,959 23,652 2024 515 154 15,235 22,911 2025 535 140 15,971 22,079 2026 545 124 16,847 21,203 2027-2031 2,990 377 98,357 91,326 2032-2036 975 28 95,524 64,189 2037-2041 - - 56,265 44,131 2042-2046 - - 62,445 28,940 2047-2051 - - 63,844 9,244 Subtotals 6,555 1,175 453,102 351,991 Plus: Issuance premiums - - 15,625 - Totals 6,555$ 1,175$ 468,727$ 351,991$ Revenue and Other Bonds,
Direct Placements
Revenue and Other Bonds,
Public Offerings

Fiscal Year
Ending June 30, Principal Interest
2022 207 $ 775 $
2023 317 766
2024 431 751
2025 474 733
2026 547 710
2027-2031 3,213 3,148
2032-2036 4,156 2,335
2037-2041 5,941 1,257
2042-2046 1,623 75
Totals 16,909 $ 10,550 $
Direct Borrowing
Notes Payable

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 7 – LONG-TERM LIABILITIES (Continued)

Future Debt Service Requirements (Continued)

Annual debt service requirements of business-type activities to maturity are as follows:

Fiscal Year
Ending June 30, Principal Interest Principal Interest
2022 24,555$ 31,835$ 575$ 2,192$ 2023 25,006 30,783 5,499 2,114 2024 26,130 29,644 5,591 2,013 2025 27,309 28,460 5,692 1,911 2026 28,443 27,309 5,794 1,807 2027-2031 157,623 117,890 30,583 7,409 2032-2036 144,661 85,545 31,137 4,590 2037-2041 148,800 57,338 32,440 1,834 2042-2046 127,025 27,288 6,762 29 2047-2051 51,866 3,784 - - Subtotals 761,418 439,876 124,073 23,899 Plus: Issuance premiums 60,979 - - - Totals 822,397$ 439,876$ 124,073$ 23,899$ Revenue and Other Bonds,
Public Offerings
Direct Borrowing
Notes Payable

Arbitrage

The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of all tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the U.S. Department of Treasury at least every five years. During the current year, the City performed calculations of excess investment earnings on various bonds and determined the liability to be zero at June 30, 2021.

Special Assessment Debt

Total matured and unmatured bonds outstanding related to special assessment and special tax districts are $208,620 at June 30, 2021. The City acts as an agent for t he property owners in collecting special assessments, forwarding the collections to bondholders and initiating foreclosure proceedings, when appropriate. The City is not liable for repayment of the special district bonds, and accordingly, they are not reflected in the accompanying basic financial statements. Cash held on deposit and corresponding amounts payable for the districts are reported in the Custodial Funds.

Conduit Debt

Outstanding obligations related to special facility and redevelopment agency revenue bonds total $169,565 at June 30, 2021. Special facility revenue bonds were issued to provide administrative and service facilities for four non- profit organizations and for offices leased to the State of California Department of General Services (State). The bonds issued are special limited obligations of the City, payable solely from and secured by a pledge of revenue to be received from loan or lease agreements between the City and the non-profit organizations or the State. The redevelopment agency bonds were issued by the Sacramento City Financing Authority to finance redevelopment activities and to refund certain other obligations of the redevelopment agency. The City is not liable for repayment of these bonds, and accordingly, they are not reflected in the accompanying basic financial statements.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS

Defined Benefit Plan Description

The City of Sacramento provides defined benefit retireme nt benefits through the Calif ornia Public Employees’ Retirement System (CalPERS) and the Sacramento City Employees’ Retirement System (SCERS). CalPERS is an agent multiple-employer public employee defined benefit pension plan. SCERS is a single-employer defined benefit pension plan.

As of June 30, 2021, the City reported total net pension liability, deferred outflows of resources and deferred inflows of resources for CalPERS (Miscellaneous and Safety Plans) and SCERS plans as follows:

Net Pension
Liability (Asset)
Deferred Outflows
of Resources
Deferred Inflows
of Resources

Miscellaneous Plan 404,912$ 58,550 $ - $ Safety Plan 693,566 145,015 11,183 SCERS (28,774) - 40,432 Total 1,069,704 $ 203,565 $ 51,615 $

For the fiscal year ended June 30, 2021, the City recognized total pension expense of $146,220 for CalPERS and SCERS plans.

CalPERS

All full-time and certain part-time City employees hir ed after January 28, 1977 and City safety employees, regardless of date of hire, are eligible to participate in CalPERS. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and their beneficiaries. Copies of CalPERS’ annual financial report may be obtained from the CalPERS Executive Office at 400 Q Street, Sacramento, CA 95814. A separate report for the City’s plan within CalPERS is not available.

General Information about the Pension Plan

Plan Description – All qualified permanent and probationary employee s are eligible to participate in the City’s separate Safety (police and fire) and Miscellaneous (all other) Plans, agent multiple-employer defined benefit pension plans administered by the CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Safety and Miscellaneous Plans (the Plans) are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisio ns, assumptions and membership information that can be found on the CalPERS website at http://www.calpers.ca.gov.

Benefits Provided – CalPERS provides 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 or 52, depending on the pl an, with statutorily reduced benefits. All members are eligible for non- duty disability benefits after 10 years of service. The death benefit is one of the following: 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.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

General Information about the Pension Plan (Continued)

The Plans’ provisions and benefits in effect at June 30, 2021, are summarized as follows:

Classic PEPRA
Hire Date
Prior to
January 1, 2013
On or after
January 1, 2013
Formula 2% @ 55 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50-63 52-67
Monthly benefits, as a % of annual salary 1.4% to 2.4% 1.0% to 2.5% Required employee contribution rates 6.82% 7.50%
Required employer contribution rates 23.03% 23.03%
Classic PEPRA
Hire Date
Prior to
January 1, 2013
On or after
January 1, 2013
Formula 3% @ 50 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50 50-57
Monthly benefits, as a % of annual salary 3.0% 2.0% to 2.7% Required employee contribution rates 9.61% 13.00%
Required employer contribution rates 50.45% 50.45%
Miscellaneous
Safety

Employees Covered – At June 30, 2019, the most recent valuation date, the following employees were covered by the benefit terms for each Plan:

Miscellaneous Safety
Inactive employees or beneficiaries currently receiving benefits 2,886 1,304 Inactive employees entitled to but not yet receiving benefits 4,438 478 Active employees 2,669 1,263
Total 9,993 3,045

Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on July 1 following notice of a change in rate. Funding contributions for both Plans 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 rates of employees. For the fisc al year ended June 30, 2021, the contributions for the miscellaneous and safety plans were $43,941and $66,915, respectively.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability

The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2020, using an annual actuarial valuation as of June 30, 2019, roll ed forward to June 30, 2020. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Actuarial Assumptions – The total pension liabilities in the June 30, 2019 actuarial valuations were determined using the following actuarial assumptions:

Miscellaneous Safety
Valuation Date June 30, 2019 June 30, 2019
Measurement Date June 30, 2020 June 30, 2020
Actuarial Cost Method
Entry-Age Normal
Cost Method
Entry-Age Normal
Cost Method
Actuarial Assumptions:

Discount Rate 7.15% 7.15%
Inflation 2.50% 2.50%
Payroll Growth 2.75% 2.75%
Projected Salary Increase 3.3% - 14.2% (1) 3.3% - 14.2% (1) Investment Rate of Return 7.25% (2) 7.25% (2)
Mortality 2017 CalPERS
Experience Study
2017 CalPERS
Experience Study
(1) Depending on age, service and type of employment
(2) Net of pension plan investment expenses, including inflation

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2019 valuation were based on the results of a December 2017 actuarial experience study for the period of 1997 to 2015. Further details of the Experience Study c an be found on the CalPERS website at https://www.c alpers.ca.gov/docs/forms- publications/calpers-experience-study-2017.pdf.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability (Continued)

Discount Rate – The discount rate used to measure the total pension liability was 7.15% for each Plan. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that the City’s contributions will be made at rates equal to the difference between actuarially determined contribution rates and the employee rate. Based on those assumptions, each pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

The long-term expected rate of return on pension plan investments was determined using a building block method in which best-estimate ranges of 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 staff considered both short-term and long-term market return expectations as well as the expected pen sion fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach.

Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated and adjusted to account for assumed administrative expenses.

The table below reflects long-term expected real rate of re turn by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

Asset Class
Assumed Asset
Allocation
Real Return
Years 1 - 10 (1)
Real Return
Years 11+ (2)
Global Equity 50% 4.80% 5.98%
Fixed Income 28% 1.00% 2.62%
Inflation Assets - 0.77% 1.81% Private Equity 8% 6.30% 7.23%
Real Estate 13% 3.75% 4.93%
Liquidity 1% - -0.92%
Total 100%
(1) An expected inflation of 2% used for this period.
(2) An expected inflation of 2.92% used for this period.

City of Sacramento
Notes to the Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
(dollar amounts expressed in thousands)

NOTE 8 – PENSION PLANS (Continued)

Net Pension Liability (Continued)

Changes in the Net Pension Liability – The changes in the Net Pension Liability for each Plan for the measurement date of June 30, 2020 are as follows:

Miscellaneous Plan:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2020 1,407,757 $ 1,031,177 $ 376,580 $ Changes in the year:

Service cost 30,236 - 30,236 Interest on the total pension liability 99,810 - 99,810 2,600 - 2,600
Contribution - employer - 39,118 (39,118) Contribution - employee - 15,018 (15,018) Net investment income - 51,632 (51,632) (59,069) (59,069) -
Administrative expense - (1,454) 1,454 Net changes 73,577 45,245 28,332 Balance at June 30, 2021 1,481,334 $ 1,076,422 $ 404,912 $ Safety Plan:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2020 2,018,702$ 1,381,871$ 636,831$ Changes in the year:

Service cost 42,306 - 42,306 Interest on the total pension liability 143,878 - 143,878 20,246 - 20,246
Contribution - employer - 58,584 (58,584) Contribution - employee - 23,832 (23,832) Net investment income - 69,226 (69,226) (95,642) (95,642) -
Administrative expense - (1,947) 1,947 Net changes 110,788 54,053 56,735
Balance at June 30, 2021 2,129,490$ 1,435,924$ 693,566$ Totals of both Miscellaneous and Safety Plans 3,610,824$ 2,512,346$ 1,098,478$ Increase (Decrease)
Benefit payments, including refunds
of employee contributions
Increase (Decrease)
Benefit payments, including refunds
of employee contributions
Difference between expected and
actual experience
Difference between expected and
actual experience