Tuesday, May 10, 2022
4:00 PM
City of Salinas
200 Lincoln Ave., Salinas, CA 93901
www.cityofsalinas.org
SALINAS ROTUNDA
City Council
Mayor Kimbley Craig
Councilmembers:
Carla Viviana González, District 1 - Tony Barrera, District 2 Steve McShane, District 3 - Orlando Osornio, District 4 Christie Cromeenes, District 5 - Anthony Rocha, District 6 Steven S. Carrigan, City Manager
Christopher A. Callihan, City Attorney
City Clerk’s Office: (831) 758-7381
Meeting Agenda - Final
May 10, 2022City Council Meeting Agenda - Final
PUBLIC NOTICE
This meeting is being conducted consistent with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19 pandemic. The public may view the meeting on television and/or online and may participate in-person in the Council Chamber.
PLEDGE OF ALLEGIANCE
ROLL CALL
PROCLAMATION
National Public Works Week, May 15-21, 2022
National Police Week, May 15-21, 2022
PUBLIC COMMENT PROCEDURES
If you wish to make a general public comment or comment on a specific agenda item, you are encouraged to attended the City Council meeting in person. Public comment may also be submitted via email at [email protected] and will be entered into the record.
PUBLIC COMMENT TIME RESTRICTIONS
Public comments generally are limited to two minutes per speaker; the Mayor may further limit the time for public comments depending on the agenda schedule.
GENERAL PUBLIC COMMENTS
Receive public communications on items that are not on the agenda and that are in the City of Salinas’ subject matter jurisdiction. Comments on Consent, Consideration, and Closed session items should be held until the items are reached. The public may request that the legislative body consider adding an item for consideration on a future agenda. The public may comment on scheduled agenda items, including closed session items, as they are considered.
PRESENTATION
Councilmember comments on presentations are generally limited to three minutes.
California Rodeo Salinas
CONSIDERATION
ID#22-255 City Council District 5 Recreation Center
Recommendation: Approve a Resolution allocating $8.1 million dollars from available fund balance to build a recreation center in City Council District 5.
ID#22-266 Audited Basic Financial Statements and Single Audit Report on Federal Funded Programs for the Year Ended June 30, 2021
May 10, 2022City Council Meeting Agenda - Final
Recommendation: Accept the audited Basic Financial Statements and Single Audit Report on federal funded programs for fiscal year ended June 30, 2021.
ADMINISTRATIVE REPORTS
ID#22-251 Alisal Vibrancy Plan (AVP) Implementation
Recommendation: No action required. This report presents information to the City Council regarding the 2021-2022 AVP Implementation Plan.
ID#22-252 Alisal Vibrancy Plan (AVP) Economic Development Pilot Programs Recommendation: No action required. This report presents information to the City Council regarding the AVP Economic Development Pilot Programs.
CONSENT AGENDA
All matters listed under Consent Agenda may be enacted by one motion unless a member of the Council or the public requests discussion or a separate vote.
ID#22-228 Minutes
Recommendation: Approve minutes of April 12, 2022.
ID#22-260 Minutes
Recommendation: Approve the minutes of April 26, 2022.
ID#22-267 Financial Claims
Recommendation: Approve financial claims report.
ID#22-208 Zoning Code Amendment 2022-002; An Ordinance Amending Various Sections of Chapter 37 of The Municipal Code (Zoning Code) to Allow a School District or Community College District to Acquire, Construct, Rehabilitate, or Preserve Affordable Housing Consistent with the Teacher Housing Act of 2016
Recommendation: Consider finding Zoning Code Amendment 2022-002 (ZCA 2022-002) categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15305 and adopt an Ordinance amending Chapter 37 of the Salinas Municipal Code (Zoning Code) to allow a school district or community college district to acquire, construct, rehabilitate, or preserve affordable rental housing for its staff or public consistent with the Teacher Housing Act of 2016.
2nd Reading
ID#22-200 Direct Purchase of one 2023 Altec AT41M and one F-250 Utitlity Body with Post Puller
Recommendation: Approve a Resolution authorizing the direct purchase of one Altec AT41M at a cost of $190,831.11, one F-250 utility body at a cost of $47,055.80, and one Post Puller at a cost of $6,535.00 for the Street Maintenance Division for a total cost of $244,421.91.
ID#22-231 East Bolivar Street Traffic Calming Plan
May 10, 2022City Council Meeting Agenda - Final
Recommendation: Approve a Resolution to implement the East Bolivar Street neighborhood traffic calming plan supported by residents.
ID#22-232 20-Minute Green Zone Designations and “No Stopping” Red Zone at 349 Williams Road
Recommendation: Approve a Resolution establishing 85 feet of 20-minute green zones designations and 15 feet of "No Stopping" red zone located at 349 Williams Road.
ID#22-233 “No Stopping” Red Zones at the Intersection of Eucalyptus Drive at Circle Drive
Recommendation: Approve a Resolution establishing a total of 140 feet "No Stopping" red zones at the intersection of Eucalyptus Drive at Circle Drive.
ID#22-241 Master Service Agreement with Underline
Recommendation: Approve a Resolution supporting the provision of public Wi-Fi on City-owned properties throughout the city and to enter into a Master Service Agreement with Underline Monterey, Inc for the provision of broadband services.
ID#22-246 November 8, 2022 General Municipal Election
Recommendation: Approve a Resolution ordering an election, requesting the Monterey County Elections Department to conduct the election, and requesting consolidation of the November 8, 2022 election.
COUNCILMEMBERS’ REPORTS, APPOINTMENTS AND FUTURE AGENDA ITEMS Receive communication from Councilmembers on reports, appointments and future agenda items. Councilmember comments are generally limited to three minutes.
CLOSED SESSION
Receive public communications from the audience on Closed session items.
The City Council will recess to closed session pursuant to:
ID#22-257 a. Anticipated Litigation - California Government Code Section 54956.9(e)(3), conference with legal counsel regarding significant exposure to litigation (one case).
b. Anticipated Litigation - California Government Code Section 54956.9(e)(1), conference with legal counsel regarding significant exposure to litigation (one case).
ADJOURNMENT
_____________________________
Patricia M. Barajas, City Clerk
AGENDA MATERIAL / ADDENDUM
Any addendums will be posted within 72 hours of regular meetings or 24 hours of special meetings and in accordance with Californian Government Code Section 54954.2, unless otherwise allowed under the Brown Act. City Council agenda item reports may be viewed
May 10, 2022City Council Meeting Agenda - Final
at the Salinas City Clerk’s Office, 200 Lincoln Avenue, Salinas, and are posted on the City’s website at www.cityofsalinas.org via the hyperlinks provided on the agenda. The City Council may take action that is different than the proposed action reflected on the agenda.
Disability-related modification or accommodation, including auxiliary aids or services, may be requested by any person with a disability who requires a modification or accommodation in order to participate in the meeting. Requests should be referred to the City Clerk’s Office At 200 Lincoln Avenue, Salinas, 758-7381, as soon as possible but by no later than 5 p.m. of the last business day prior to the meeting. Hearing impaired or TTY/TDD text telephone users may contact the city by dialing 711 for the California Relay Service (CRS) or by telephoning any other service providers’ CRS telephone number.
PUBLIC NOTIFICATION
This agenda was posted on Wednesday, May 4, 2022 at the City Clerk’s Office, in the Council Rotunda, and the City's website.
Meetings are streamed live at https://salinas.legistar.com/Calendar.aspx and televised live on Channel 25 at 4 p.m. on the date of the regularly scheduled meeting and will be broadcast throughout the day on the Wednesday, Friday, Saturday and Monday following the meeting. For the most up-to-the-minute Broadcast Schedule for The Salinas Channel on Comcast 25, please visit or subscribe to our Google Calendar located at http://tinyurl.com/salinas25. Recent City Council meetings may also be viewed on the Salinas Channel on YouTube at http://www.youtube.com/thesalinaschannel.
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#22-255, Version: 1
City Council District 5 Recreation Center
Approve a Resolution allocating $8.1 million dollars from available fund balance to build a recreation center in City Council District 5.
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CITY OF SALINAS
LIBRARY & COMMUNITY SERVICES STAFF REPORT
DATE: MAY 10, 2022
DEPARTMENT: ADMINISTRATION
LIBRARY & COMMUNITY SERVICES
FROM: STEVEN S. CARRIGAN, CITY MANAGER
BY: KRISTAN LUNDQUIST, LCS DIRECTOR
TITLE: CITY COUNCIL DISTRICT 5 RECREATION CENTER
RECOMMENDED MOTION:
A motion to approve a Resolution allocating $8.1 Million Dollars from available fund balance to build a recreation center in City Council District 5.
RECOMMENDATION:
Staff recommends the City Council a pprove a Resolution allocating $8 .1 Million Dollars from available fund balance in the City’s general fund (s) to build a recreation center in City Council District 5.
BACKGROUND:
The Library & Community Services Department and the Fire Department have been collaborating on a potential shared use of a site for a new fire station and recreation center in City Council District 5. Laurel Park was selected based on the Fire Department’s level of service and response time goals and objectives. Moving the Fire Station to the park also increases safety by getting the station away from the intersection of Laurel and N. Main Street. In February of this year, a request was submitted to Assemblymember Rivas’ Office in the amount of $20 million for consideration of State funding for the Fire Station and park improvements portion of the project. This request is contingent upon the City funding the recreation center portion of the project , at the approximate $8 million dollars.
By repurposing the existing City -owned Laurel Park property, the City could combine the construction of a new fire station with that of a recreation center, athletic field, and neighborhood park, to better serve the residents of City Council District 5.
The City currently has (7) Recreation Centers including:
Facility Address City Council District
Bread Box Rec Center 740 N. Sanborn District 1
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Central Park 420 Central Ave. District 3
Closter Park 401 Towt St. District 2
El Dorado Park 1655 El Dorado Dr. District 6
Firehouse Rec Center 1330 E. Alisal St. District 2
Hebbron Family Center 683 Fremont St. District 4
Recreation Center 320 Lincoln Ave. District 3
The only City Council District that does not have a recreation center located within its boundaries is District 5. The allocation of $8 .1 Million for a future recreation center in District 5 would increase access and create additional recreational opportunities for the community.
If the City does n ot receive State funding for the Fire Station and park improvements portion of the project, staff recommends that the City Council continue to fund the $8 .1 Million Dollar Recreation Center in City Council District 5 however, additional community outreach and engagement will be necessary in order to determine the best location for the recreation center.
This item was presented to the Library & Community Services Commission for informational purposes on May 4, 2022. The Commission will be provided periodic updates on the status of this project.
CEQA CONSIDERATION:
Not a Project . The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).
STRATEGIC PLAN INITIATIVE:
The allocation supports the City Council Goals of:
Infrastructure and Environmental Sustainability
Public Safety
Youth and Seniors
DEPARTMENTAL COORDINATION
Staff from the Library & Community Services, Fire and the City Manager’s Office are collaborating on this project.
FISCAL AND SUSTAINABILITY IMPACT:
This action would dedicate $8.1 Million Dollars from current available fund balanc e for a Recreation Center in City Council District 5. Upon further development of this project, staff will return to Council to request approval of specific appropriations to complete the project.
ATTACHMENTS:
Resolution
RESOLUTION NO. _____________________(N.C.S.)
A RESOLUTION AUTHORIZING THE ALLOCATION OF $8.1 MILLION DOLLARS FROM
AVAILABLE FUND BALANCE TO BUILD A RECREATION CENTER IN CITY COUNCIL DISTRICT 5.
WHEREAS, City Council District 5 has no recreation center in its boundaries; and
WHEREAS, the Library & Community Services and Fire Department have identified a potential
joint project in Laurel Park; and
WHEREAS, a request for State funding in the amount of $20 million dollars has been submitted
for a new fire station and park improvements; and
WHEREAS, the allocation of $8.1 million dollars for a future recreation center in City Council
District 5 will increase access and create additional recreational opportunities for the community.
NOW THEREFORE, BE IT RESOLVED BY THE SALINAS CITY COUNCIL that $8.1 million dollars be allocated from available fund balance to build a recreation center in City Council District 5.
PASSED AND APPROVED this 10th day of May by the following vote:
AYES:
NOES:
ABSENT:
APPROVED:
________________________________
Kimbley Craig, Mayor
ATTEST:
_________________________
Patricia M. Barajas, City Clerk
City of Salinas
Legislation Text
200 Lincoln Ave., Salinas,
CA 93901
www.cityofsalinas.org
File #: ID#22-266, Version: 1
Audited Basic Financial Statements and Single Audit Report on Federal Funded Programs for the Year Ended June 30, 2021
Accept the audited Basic Financial Statements and Single Audit Report on federal funded programs for fiscal year ended June 30, 2021.
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CITY OF SALINAS
COUNCIL STAFF REPORT
DATE: MAY 4, 2022
DEPARTMENT: FINANCE DEPARTMENT
FROM: MARK ROBERTS, DIRECTOR OF FINANCE
TITLE: AUDITED BASIC FINANC IAL STATEMENTS AND S INGLE AUDIT
REPORT ON FEDERAL FUNDED PROGRAMS FOR THE YEAR ENDED
JUNE 30, 2021
RECOMMENDED MOTION:
A motion to accept the audited Basic Financial Statements and Single Audit Report on federal funded programs for fiscal year ended June 30, 2021.
RECOMMENDATION:
Staff recommends that City Council accept the audited Basic Financial Statements and Single Audit Report on federal funded programs for fiscal year ended June 30, 2021.
DISCUSSION:
Audited Basic Financial Statements
The Finance Department is pleased to present the audited financial statements for the fiscal year ended June 30, 2021. The transmittal letter in the Basic Financial Statements beginning on page “i” and the Management Discussion and Analysis beginning on page F-5 provide an overview of the City’s financial activities for the fiscal year.
McGilloway, Ray, Brown & Kaufman, the City Council's independent auditor, has completed its annual audit of City affairs. Its Independent Auditors Opinion Report is included in the Basic Financial Statements on page F -1 and is a unmodified (“clean”) audit opinion stating, “In our opinion, the financial statements... 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.”
Single Audit Report on Federal Funded Programs
The Finance Department is also pleased to present the Single Audit Report of federal funded programs for the fiscal year ended June 30, 2021. The report includes a summary of the federal financial awards, internal control, compliance and schedule of findings and questioned costs for the fiscal year ending June 30, 2021.
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McGilloway, Ray, Brown & Kaufman has completed its annual audit of City of Salinas compliance requirements. During the audit, they noted it noted four instances of non-compliance which are explained in the single audit report, beginning on page 13.
CEQA CONSIDERATION:
Not a Project . The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).
DEPARTMENTAL COORDINATION:
The audited financial statements and single audit represent the work of all departments of the City.
FISCAL AND SUSTAINABILITY IMPACT:
Costs associated with the audit are included in the City’s fiscal year 2022 budget.
ATTACHMENTS:
Basic Financial Statements
Single Audit Report on Federal Funded Programs
CITY OF SALINAS
SINGLE AUDIT
of
FEDERALLY ASSISTED GRANT PROGRAMS
JUNE 30, 2021
McGILLOWAY, RAY, BROWN & KAUFMAN
ACCOUNTANTS & CONSULTANTS
TABLE OF CONTENTS
Page
Independent Auditor’s Report
on Internal Control over Financial Reporting and on
Compliance and Other Ma tters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards 1
Independent Auditor’s Report
on Compliance for Each Major Federal Program; and
on Internal Control Over C ompliance Required by the
Uniform Guidance; and on the Schedule of Expenditures
of Federal Awards 3
Schedule of Expenditures of Federal Awards 6
Notes to Schedule of Expenditures of Federal Awards 9
Schedule of Findings and Questioned Costs 12
INDEPENDENT AUDITOR’S REPORT
ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
The Honorable Mayor and
Members of City Council
of the City of Salinas
Salinas, California
We have audited, in accordance with the auditing standards gene rally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller Genera l of the United States, the financial statements of the governmental a ctivities, the bu siness-type activities, each major fund and the aggregate remaining fund informa tion of the City of Salinas, Ca lifornia (the 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 and have issued our report thereon dated May XX, 2022.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statement s, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of express ing our opinions on the financial statements, but not for the pur pose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allo w management or employees, in the normal course of performing the ir assigned functions, to prevent, or detect and correct, misstatements on a timely basis . A material weakness i s a deficiency, or a combination of d eficiencies, in internal contr ol, such that there is a reasonable possibility that a material misstatement of the entity’s financ ial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less s evere than a material weakness, yet important enough to merit attention by those charged with governance.
2 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not desig ned to identify all deficienci es in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did id entify certain deficiencies in internal control, described in the accompanying schedule of fin dings and questioned costs as item 2021-001 that we consider to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable a ssurance about whether the Cit y’s financial statements are free from material misstatement, we performed tests of its complianc e with certain provisions of laws, regulations, contracts, a nd grant agreements, noncomplian ce with which could have a direct and material effect on the financial statements. However , providing an opinion on compliance with those provisions was not an objective of our au dit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Audit ing Standards and which are described in the accompanying schedule of findings and question ed costs as items 2021-002, 2021-003, 2021-004, and 2021-005.
City’s Response to Findings
The City’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the auditing procedures applied in the audit of t h e f i n a n c i a l s t a t e m e n t s a n d, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of o ur testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communicatio n is not suitable for any other purpose.
McGilloway, Ray, Brown & Kaufman
Salinas, California
May XX, 2022
3 INDEPENDENT AUDITOR’S REPORT
ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED
BY THE UNIFORM GUIDANCE AND ON THE SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS
The Honorable Mayor and
Members of City Council
of the City of Salinas
Salinas, California
Report on Compliance for Each Major Federal Program
We have audited the City of Salinas, California’s (the City) co mpliance with the types of compliance requirements described in the OMB Compliance Supplement that could have direct and material effect on each of the City’s major federal programs for the fiscal year ended June 30, 2021. The City's major federal p rograms are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for the compliance with federal statu tes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for e ach of the City’s major federal programs based on our audit of the types of compliance requirem ents referred to above. We conducted our audit of compliance in accordance with auditing s tandards generally accepted in the United States of America; the standards applicable to finan cial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and t he audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about wheth er noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidenc e about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our o pinion on compliance for each major federal program. Howeve r, our audit does not provide a l egal determination of the City’s compliance.
4 Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, wi th the types of compliance requirements referred to above that could have a direct and mat erial effect on each of its major federal programs for the year ended June 30, 2021.
Other Matter
The results of our auditing procedures disclosed instances of n oncompliance which are required to be reported in accordance with the Uniform Guidance and whic h are described in the accompanying schedules of findings and questions costs as item 2021-001. Our opinion on each major federal program is not modified with respect to this matter.
The City’s response to the noncompliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The Cit y’s response was not subjected to the auditing procedures applied in the audit of compliance, and accordingly, we express no opinion on the response.
Report on Internal Control over Compliance
Management of the City is responsible for establishing and main taining effective internal control over compliance with the types of compliance requirements refer red to above. In planning and performing our audit of complianc e, we considered the City's in ternal control over compliance with the types of requirements t hat could have a direct and mat erial effect on each major federal program to determine the auditing procedures that are appropria te in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of in ternal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, no ncompliance with a type of compliance requirement of a fede ral program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal c ontrol over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in inter nal control over compliance is a deficiency, or a combination of deficiencies, in internal control over complianc e with a type of compliance requirement of a federal program that is less severe than a mat erial weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal c ontrol over compliance was for t he limited purpose described in the first paragraph of this section and was not designed to ide ntify all deficiencies in internal control over compliance that might be material weaknesses or si gnificant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified.
We did identify certain deficiencies in internal control over c ompliance, as described in the accompanying schedule of findings and questioned costs as items 2021-002, 2021-003, 2021- 004, and 2021-005 that we consider to be material weaknesses.
The City’s response to the internal control over compliance fin dings identified in our audit is described
in the accompanying schedule of findings and question ed costs. The City’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
5 The purpose of this report on in ternal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental ac tivities, business-type activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 2021, and the related notes to the financial sta tements, which collectively comprise the City’s basic financial statements. We issued our r eport thereon dated May 6, 2022, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements tha t collectively comprise the City’s basic financial statements. Th e accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by th e Uniform Guidance and is not a required part of the basic financ ial statements. Such informati on is the responsibility of management and was derived from and relates directly to the und erlying accounting and other records used to prepare the basic financial statements. The inf ormation has been subjected to the auditing procedures applied in t he audit of the f inancial state ments and certain additional procedures, including comparing and reconciling such informatio n directly to the underlying accounting and other records used to prepare the basic financial s t a t e m e n t s o r t o t h e b a s i c financial statements themselves, and other additional procedure s i n a c c o r d a n c e w i t h a u d i t i n g standards generally accepted in the United States of America. I n our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole.
McGilloway, Ray, Brown & Kaufman
Salinas, California
May XX, 2022
See accompanying notes to schedule of expenditures of federal awards 6 Assistance
Listing Number
Grant or Pass-Through
Number
Federal
Expenditures
Amount
Provided to
Subrecipients
U.S. Department of Housing and Urban Development
Office of Community Planning and Development
CDBG - Entitlement Grant Cluster*
CDBG Entitlement Grant 14.218 B-15-MC-06-0005 28,545 $
CDBG Entitlement Grant B-16-MC-06-0005 93,648
CDBG Entitlement Grant B-17-MC-06-0005 1,247
CDBG Entitlement Grant B-18-MC-06-0005 20,904
CDBG Entitlement Grant B-19-MC-06-0005 8,255
CDBG Entitlement Grant B-20-MC-06-005 382,887
CDBG Entitlement Grant Program Income 151,028
COVID-19 CDBG Entitlement Grant B-20-MW-06-0005 996,947 Total CDBG - Entitlement Grant Cluster - CFDA No. 14.218 1,683,461 963,767 $ Emergency Solutions Grant Program 14.231 E-19-MC-06-0005 44,159 Emergency Solutions Grant Program 19-ESG-12331 269,086
Emergency Solutions Grant Program E-20-MC-06-0005 23,731 COVID-19 Emergency Solutions Grant Program E-20-MW-06-0005 2,964, 963 COVID-19 Emergency Solutions Grant Program 20-ESGCV1-0002 749,400 Total Emergency Solutions Grant Program - CFDA No. 14.231 4,051, 339 2,568,791 Home Investment Partnerships Program 14.239 M19-MC-06-0212 35,110 M20-MC-06-0212 470,626
Program Income 601,576
Total Home Investment Partnerships Program - CFDA No. 14.239 1,1 07,312 973,499 U.S. Department of Justice
COVID-19 Coronavirus Emergency Supplemental Funding Program 16.0 34 2020-VD-BX-0511 146,839 Crime Victim Assistance/Discretionary Grants
Victim Specialist Program Investigation Unit 16.582 2019-V3-GX-00 57 104,990 - Office of Community Oriented Policing Services
Public Safety Partnership and Community Policing Grant
Cops Hiring Program - Eight School Resource Officers 16.710 201 4-UL-WX-0022 118,063 - Bureau of Justice, Office of Justice Programs - JAG Program Edward Byrne Memorial Justice Assistance Grant Program* 16.738 20 17-DJ-BX-0918 74,976 2018-DJ-BX-0822 56,941
2019-DJ-BX-0694 88,542
Total Bureau of Justice, Office of Justice Program - JAG Program2 2 0 , 4 5 9 22,615 Federal Reimbursements UNKNOWN UNKNOWN 31,042 - *Denotes major program
CITY OF SALINAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2021
Federal Grantor, Pass Through Grantor, Cluster, Program Title Direct Federal Awards
See accompanying notes to schedule of expenditures of federal awards 7 Assistance
Listing Number
Grant or Pass-Through
Number
Federal
Expenditures
Amount
Provided to
Subrecipients
U.S. Department of Transportation
Federal Aviation Administration
Airport Improvement Program 20.106 AIP 3-06-0206-27 1
AIP 3-06-0206-28 9,968
AIP 3-06-0206-29 441,827
Total Airport Improvement Program - CFDA No. 20.106 451,796 - U.S. Department of Treasury
COVID-19 Coronavirus Relief Fund* 21.019 Unknown 2,002,977 - U.S. Department of Homeland Security
Federal Emergency Management Agency
Emergency Food and Shelter National Program 97.024 LRO#077600036 2 4,998 - Federal Emergency Management Agency
COVID-19 California COVID-19 Pandemic 97.036 FEMA-4482-DR-CA 75,74 0 - Federal Emergency Management Agency
Assistance to Firefighters Grant (AFG) 97.044 EMW-2017-FR-40462 50 ,434 - Federal Emergency Management Agency
Homeland Security Grant Program 97.067 UASI-2019-0035 195,199 - Federal Emergency Management Agency
Staffing for Adequate Fire and Emergency Response 97.083 EMW-2013 6FH-00524 176,465 - Total Direct Federal Awards 10,441,114 4,528,672
Indirect Federal Awards
U.S. Department of Justice
Missing Children's Assistance
Passed through City of San Jose
CA Gov Office of Emergency Services Internet Crimes Against Children 15.543 IC18-10-7928 208,000 - U.S. Department of Transportation
Highway Planning and Construction Cluster
Passed through Federal Highway Administration
HSIP Pedestrian Crossing Enhancement, Sanborn Road Improvements 20.205 HSIPL 5045 (027) 119,547 HSIP North Main Intersection HSIPL 5045 (033) 216,142
Passed through Federal Highway Administration - Caltrans Active Transportation Program, Alvin-Linwood, Chaparral, Maryal 20.205 ATPL-5045 (030) 1,984,476 Active Transportation Program, Bardin Road Safe Routes ATPL-5045 (031) 602,919 Active Transportation Program, Downtown Complete Street ATPL-5045 (032) 1,616,256 Total Highway Planning and Construction Cluster - CFDA No. 20.205 4,539,340 - *Denotes major program
CITY OF SALINAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2021
Federal Grantor, Pass Through Grantor, Cluster, Program Title Direct Federal Awards, continued
See accompanying notes to schedule of expenditures of federal awards 8 Assistance
Listing Number
Grant or Pass-Through
Number
Federal
Expenditures
Amount
Provided to
Subrecipients
Indirect Federal Awards, continued
Highway Safety Cluster
Passed through State and Community Highway Safety
Selective Traffic Enforcement Program 20.600 PS20029 121,347 PT120149 8,139
PT21047 46,703
Total Highway Safety Cluster - CFDA No. 20.600 176,189 - Selective Traffic Enforcement Program 20.608 21-OTS-12 8,228 PS21012 50,714
Total Selective Traffic Enforcement Program - CFDA No. 20.608 58,942 - U.S. Department of Treasury
Emergency Rental Assistance Program
Passed through United Way Monterey County
COVID-19 Emergency Rental Assistance Program (ERAP)* 21.023 Unknown 816,245 - Total Indirect Federal Awards 5,798,716 -
Total Direct and Indirect Federal Awards 16,239,830$ 4,528,672$ *Denotes major program
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2021
Federal Grantor, Pass Through Grantor, Cluster, Program Title
CITY OF SALINAS
CITY OF SALINAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2021
9 1. Reporting Entity
The Schedule of Expenditures of Federal Awards (the Schedule) includes expenditures of federal awards for the City of Salinas, California (City).
2. Summary of Significant Accounting Policies Applicable to the Sc hedule of Expenditures of Federal Awards
A. Scope of Presentation
The accompanying Schedule presents the expenditures incurred by t h e C i t y t h a t a r e reimbursable under programs of federal agencies providing federal awards. For the purpose of this schedule, federal awards include both federal financial assistance received directly from a federal agency, as well as federal funds received indire ctly by the City from a nonfederal agency or other organization. Only the portion of program expenditures reimbursable with such federal fu nds is reported in the accompa nying schedule. Program expenditures in excess of the max imum federal reimbursement aut horized or the portion of the program expenditures that was funded with other state, loca l or other nonfederal funds are excluded.
B. Basis of Accounting
The accompanying schedule of expenditures of federal awards is presented using the modified accrual basis of accounting for governmental funds, which is described in Note 1 of the City’s basic financial statements. Such expenditures, as th e federal awards were both awarded prior to and after December 24, 2014, are recognized fo llowing the cost principles contained in the Uniform Guidanc e and OMB A-87, Cost Principles for State, Local, and Indian Tribal Governments, where in certain types of expenditures are not allowable or are limited as to reimbursement.
C. Direct and Indirect (Pass-Through) Federal Awards
Federal awards may be granted di rectly to the City by a federal granting agency or may be granted to other government agencies which pass-through federal a w a r d s t o t h e C i t y . T h e Schedule includes both of these types of Federal awards programs when they occur.
D. Indirect Cost Rate
The City has elected not to use the 10% de minimis indirect cos t rate as allowed under the Uniform Guidance.
E. Relationship to Federal Financial Reports
Grant expenditure reports for the year ended June 30, 2021, whi ch have been submitted to grantor agencies, will, in some cases, differ from amounts disc losed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of the year-end accruals. The reports will agree at t ermination of the grant as the discrepancies, if any, are for timing differences.
CITY OF SALINAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2021
10 3. Sub-recipients
The City provided federal awards to sub-recipients as follows:
Federal CFDA Amount
Number Provided
U.S. Department of Housing and Urban Development
Office of Community Planning and Development
Community Development Entitlement Grant Program 14.218
Special Programs
Girl Scouts of Monterey Bay 35,000 $
Grow Salinas Fund 400,000
Methodist Church 36,261
Partners for Peace 8,207
Food Bank 310,957
Eden Council Hope & Opportunity 84,000
Salvation Army 58,035
Downtown Street Team 31,307
Total CFDA No. 14.218 963,767
U.S. Department of Housing and Urban Development
Emergency Solutions Grants Program 14.231
Special Programs
Central Coast Center for Independent Living 513,260
Community Homeless Solutions 906,451
San Benito County 141,892
Coalition of Homeless Services Providers 87,665
Step Up on Second Street 8,400
CSUMB - University Corporation at Monterey Bay 65,737
Interim Inc. 100,000
Salvation Army 78,098
YWCA Monterey County 4,424
Downtown Street Team 238,633
Community Human Services 160,508
Franciscan Workers of Junipero Serra 19,459
Housing Resource Center of Monterey County 244,264
Total for CFDA No. 14.231 2,568,791
Home Investments Partnership Program 14.239
Special Programs
Multi Family Housing - Parkside Apartments 973,499
Total for CFDA No. 14.239 973,499
Total sub-recipients for U.S. Department of Housing
and Urban Development 4,506,057
U.S. Department of Justice
Bureau of Justice Assistance 16.738
Edward Bryne Memorial Justice Assistance Grant Program
Monterey County Probation Department 22,615
Total for CFDA No. 16.812 22,615
Total all sub-recipient awards 4,528,672$
Program Title
CITY OF SALINAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2021
11 4. Contingencies
Under the terms of federal and state grants, additional audits may be requested by the grantor agencies, and certain costs may be questioned as not being appropriate expenditures under the terms of the grants. Such audits could lead to a request fo r reimbursement to the grantor agencies.
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
12 Section I - Summary of Auditor's Results
Financial Statements
Type of auditor's report issued on whether the financial statements audited were prepared in accordance with GAAP Unmodifie d
Internal control over financial reporting:
Material weakness(es) identified? X Yes No
Significant deficiency(ies) identified? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal Awards
Internal control over major federal programs:
Material weakness(es) identified? X Yes
Significant deficiency(ies) identified? Yes X None reported Type of auditor's report issued on compliance for major federal programs: Unmodified Any audit finding disclosed that are required to be reported in accordance with 2 CFR Section 500.516(a)? X Yes No
Identification of Major Federal Programs
U.S. Department of Housing, Community Development Block Grant Entitlement Grant Cluster U.S. Department of Justice, Edward Bryne Memorial Justice Assistance Grant Program U.S. Department of Treasury, Coronavirus Relief Fund
U.S. Department of Treasury, Emergency Rental Assistance Program Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee? X Yes No
CFDA Number
14.218
16.738
21.019
21.023
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
13 Section II – Financial Statement Findings
Finding Number: 2021-001 Material Weakness – Internal Controls Over the Financi al Close and Reporting Process
Criteria or Specific Requirement: Internal controls over performing the accounting period close that is designated by the City’s governing body, manageme nt, and personnel to address risks and to provide reasonable a ssurance that the trial balanc es used in the financial statement preparation process are final, contain all valid journal entries made, and are in balance.
Condition: Such internal control is an integral process in the financial c lose and reporting process that should be continuously adapted to staffing challen ges the City is facing. The City did not fill the vacancies in critical positions and these posi tions remained unfilled for several months.
Cause: While the City has controls in place to perform the accounting period close, staffing shortages led to a delay in applying the year-end closing procedures that had previously been applied consistently.
Effect or potential effect: Incomplete and inaccurate trial balances that did not match management prepared reconciliations.
Context: Certain audit schedules and journal entries were provided to th e auditor after the scheduled timing of the audit, and there was no evidence to support management’s timely review of the year-end process before the trial balances were deemed f inal by management. Therefore, management's reconciliation of trial balances was significantly delayed, resulting in the need for twelve material audit adjustments.
Recommendation: We recommend that management evaluate the causes of the deficie ncies noted above and incorporate necessary processes to ensure that the controls in place to perform the accounting period close are consistently applied, including during times when staffing shortages exist.
View of Responsible Officials: Management agrees with this comment and recognizes that staffing shortages and management changes contributed to a dela y in the production of the financial statement footnotes and related reconciliation reports.
During fiscal year 2021, the Department of Finance had an overw helming number of changes in key management personnel including the hiring of a new Director of Finance, the vacancy of the Assistant Director of Finance pos ition during the entire fiscal year, and the promotion of senior accounting staff to fill the Acc ounting Manager position (the i ncumbent having vacated the position prior to fiscal year-end June 30, 2021). In addition, a Senior Accountant position and a Finance Management Analyst position had been vacant during most of the audit process, and a Senior Accounting Technician was on medical leave during the entire closing of the fiscal year.
The City addressed staffing shortages by filling the following management vacancies: Director of Finance (July 2021), Accounting Manager (September 2021), an d Assistant Director of Finance (January 2022). Additiona lly, the vacant Finance Manage ment Analyst position was filled in April 2022 and the remaining Senior Accountant position is expected to be filled prior to the end of the cur
rent fiscal year.
No findings had been discovered/ reported by the City’s auditors for several consecutive years, indicating the Department of Finance already has effective inte rnal controls in place to perform the accounting fiscal year-end closing. To ensure these controls are applied consistently, the City will promote cross-training amongst the senior accounting team. This will ensure that, in the
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
14 occurrence of another major staffing shortage, staff will still be able to effectively adhere to year- end internal controls.
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
15 Section III – Federal Award Findings and Questioned Costs Finding Number: 2021-002 Material Weakness – All owable Costs and Activities, Eligibility Compliance and Control Finding
Federal Award: No. 21.023 Emergency Rental Assistance Program – COVID 19 Federal Agency: U.S. Department of Treasury
Pass-Through Entity: United Way of Monterey County
Criteria or Specific Requirement: 2 CFR section 200.303a,d states the non-Federal entity must: (a) Establish and maintain effective internal control ove r the Federal award that provides reasonable assurance that the non-Federal entity is managing th e Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award; (d) Take prompt action when instances of noncompliance are identified in cluding noncompliance identified in audit findings. 2 CFR sections 200.400 through 200.401 provide the general provisions for cost principle s. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering Federal funds in a manner consistent with underlying agreements, program objectives and terms and conditions of the Federal award.
Condition: During the fiscal year ended June 30, 2021, improper rental ass istance payments were identified, and related checks were not voided timely.
Cause: The short period of time required to make awards available and the presence of new requirements for the program were burdensome for management to disburse in compliance with Federal guidelines and may have resulted in exposure to errors and irregularities. Ineffective communication between the Housing Department and Finance Depart ment caused checks to not be voided timely.
Effect or potential effect: It is reasonably possible that the City would provide funding t o ineligible recipients.
Questioned costs: $33,939 in known questioned costs and $16,511 in likely questioned federal costs related to ineligible recipients and checks not voided ti mely. $10,903 of known questioned costs related to checks not voided timely.
Context: A nonstatistical sample of 37 recipients were selected for test ing. We noted one instance of an ineligible recipient passing eligibility determi nations and extr apolated the questioned costs over the total population. Four additional che cks were not appropriately voided and were the result of isolated incidents.
Recommendation: We recommend that management implement procedures and control processes to ensure checks are only issued when eligibility of a recipient is certain and to implement more effective internal communications between departments.
View of Responsible Officials: Management concurs with this recommendation to implement procedures and control processes to ensure checks are only issued when the eligibility of a recipient is certain and to implement more effective internal c ommunications between departments to timely void related check.
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
16 The following procedure has been implemented to ensure recipient’s eligibility before issuing checks:
In addition to the above procedures, the Housing Division and t he Finance Department are working together to timely void checks. The Finance department daily monitors disbursement transactions and keeps communicat ion with bank representatives to stop payment or to void checks due to suspicious activity or alterations.
Additionally, the Finance departme nt has implemented mechanisms to mitigate any potential questioned cost; including, sending to Housing a monthly report for all outstanding checks related the Emergency Rental Assistant Program (ERAP), Housing reviews the list to identify a reason why checks are outstanding and provides timely instructi ons to Finance for checks no longer needed and to stop payment or to void checks.
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
17 Finding Number: 2021-003 Material Weakness - Special Tests – Compliance and Control Finding
Federal Award: No. 21.023 Emergency Rental Assistance Program – COVID 19 Federal Agency: U.S. Department of Treasury
Pass-Through Entity: United Way of Monterey County
Criteria or Specific Requirement: 2 CFR section 200.303e states the non-Federal entity must:
take reasonable measures to safe guard protected personally iden tifiable information and other information the Federal awarding agency or pass-through agency designates as sensitive or the non-Federal entity considered sensitive consistent with state, l o c a l , a n d t r i a l l a w s r e g a r d i n g privacy and responsibility over confidentiality.
Condition: Protected personally identifiable information related to recipi ents was not appropriately safeguarded.
Cause: Protected personally information was saved in an electronic loc ation accessible by all Community Development employees, including those who did not wo rk directly on the Emergency Rental Assistance federal award, as well as one emplo yee who works outside of the Community Development department.
Effect or potential effect: Potential inappropriate use or disclosure of personally protec ted identifiable information.
Questioned costs: None.
Context: We noted all documents related to eligibility determination, in cluding demographic and financial information, were saved in an electronic location accessible by employees who did not work directly on the Emergency Rental Assistance Program.
Recommendation: The eligibility files should be accessible only to those employ ees who work directly on the grant. Upon ente ring in a grant agreement, the Housing Department should coordinate with the Information Technology department to create private electronic folders accessible by only employees who need access, rather than providing department wide access.
View of Responsible Officials: Management understands these comments. The City’s Emergency Rental Assistance Program (ERAP) Team resorted to usi ng the City’s internal I- Drive as an emergency measure to store applicant’s documents after the grantor’s software, Smart Referral Network (SRN), fa iled to meet the program’s need s. In order to process timely payments to reduce eviction risks and meet the expenditures dea dlines, the City had to improvise its process.
The ERAP Program Manager has ide ntified a safer electronic loca tion to store information, which is only accessible to employees working directly on ERAP. As of December 2021, the ERAP team stores documents electronically in the City’s One Dri ve, and the Program Manager is the authorized individual to grant access to ERAP staff only.
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
18 Finding Number: 2021-004 Material Weakness - Subrecipients – Compliance and Con trol Finding
Federal Award:
(1) No. 14.218 U.S. Department of Hous ing Community Development Ent itlement Grant Program
(2) No. 14.231 U.S. Department of Housing Emergency Solutions Grant Program (3) No. 16.738 U.S. Department of Justice, Edward Bryne Memorial Justice Assistance Grant Program
Federal Agency: U.S. Department of Housing and U.S. Department of Justice Pass-Through Entity: Not applicable
Criteria or Specific Requirement: 2 CFR section 200.303a state s the non-Federal must establish and maintain effective internal control over the Fede ral award that provides reasonable assurance that the non-Federal en tity is managing the Federal a ward in compliance with Federal statues, regulations, and the terms and conditions of the feder al award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptr oller General of the United Sta t e s o r t h e “ I n t e r n a l C o n t r o l Integrated Framework”, issued by the Committee of Sponsoring Or ganizations of the Treadway Commission (COSO).
Condition: Adjustments were made to the expenditures of the Schedule of Fe deral Award Expenditures Subrecipient Listing.
Cause: Ineffective internal communication.
Effect or potential effect: Incomplete or inaccurate reported amounts of funding provided to subrecipients.
Questioned costs: None.
Context: On the original listing provided to the auditors, two federal a wards subrecipient expenditures were overstated and one federal award with subreci pient expenditures was not included. The listing was updated by the City.
Recommendation: Effective information and communication are vital for an entity to achieve its objectives. Management should obtain relevant data from rel iable internal sources in a timely manner and ensure provided data are reasonably free from error.
View of Responsible Officials: Management agrees with this c omment and acknowledges that the City presented numbers to the auditors from City Data Servi ces (CDS) instead of numbers from New World System in error.
NWS is the main financial management system that tracks the rei mbursement of funds in real- time. The City has added input fields to CDS which will be use d to create reports and assist to reconcile expenditures with NWS. This feature added to the Eme rgency Solutions Grant (ESG) programs in January 2022, will be extended to other grants admi nistered by the Housing and Community Development Division. This new feature will facilita te the communication between CDS and NWS systems.
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
19 The initial list of sub-recipients provided included programs o perated by City Staff and allowed by the Community Development Block Grant (CDBG) and ESG guideli nes. These programs were removed from the first list submitted and will not be included in future list of subrecipient.
CITY OF SALINAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2021
20 Finding Number: 2021-005 Material Weakness – Subrecipient Monitoring – Complian ce and Control Finding
Federal Award: No. 16.738 U.S. Department of Justice, Edward Bryne Memorial Ju stice Assistance Grant Program (JAG Grant)
Federal Agency: U.S. Department of Justice
Pass-Through Entity: Not applicable
Criteria or Specific Requirement: 2 CFR section 200.332 states that all pass-through entities must ensure that every subaward is clearly identified to the su brecipient as a subaward and includes specific information as per 2 CFR section 200.332(1), including, but not limited to:
Federal award identification, Federal award identification number, Federal award date, subaward period of performance start and end date, amount of obligated Federal Funds, Assistance Listing number and title, and all requirements imposed by the pass-thro ugh entity on the subrecipient so that the Federal award is used in compliance with statues, regu lations, and terms and conditions.
Additionally, 2 CFR section 200.332(d) states all pass-through entities must monitor the activities of the subrecipient a s necessary to ensure that the subaward is used for authorized purposes, in compliance with Fed eral statues, regulations, and terms and conditions of the subaward.
Condition: The agreement between the City and the subrecipient does not co ntain the information required by Uniform Guidance. Formal subrecipient m onitoring was not conducted during the year.
Cause: It was an oversight by the responsible personnel that appropria te information was not communicated to the subrecipient. The City lacked adequate inte rnal controls to ensure compliance with subrecipient monitoring requirements.
Effect or potential effect: Incomplete subawards and failure to perform the required monitoring activities resulted in non-compliance with the requirement.
Questioned costs: None.
Context: The JAG Grant had one subrecipient during the audited period. T h e C i t y h a s a n approved agreement with the subr ecipient, but the agreement doe s not contain information required by Uniform Guidance. While the City did thoroughly rev iew all expenditures submitted for reimbursement by the subrecipient before processing reimbur sements and regularly communicates with the subrecipient regarding expenditures and g rant activities, formal subrecipient monitoring was not performed.
Recommendation: We recommend the City Police Department ensure all subawards ar e made in accordance with Uniform Guidance and implement subrecipient monitoring policies and procedures in accordance with Uniform Guidance.
View of Responsible Officials: The Salinas Police Department modified the JAG Grant MOU template with the subrecipient to clearly identify Federal awar d information and applicable compliance requirements, including special conditions, as ident ified in the DOJ Financial Guide “Post-award Requirements 3.14 Subrecipient Management and Monitoring.” The Salinas Police Department also
implemented more formal sub-recipient monitorin g policies and procedures, specifically the required submission of written quarterly reports from the subrecipient.
City of Salinas
California
Basic Financial Statements
Fiscal Year Ended June 30, 2021
Basic Financial Statements
Fiscal Year Ended June 30, 2021
PREPARED BY
THE DEPARTMENT OF FINANCE
Mark Roberts
Director of Finance
Mary Lagasca, Assistant Finance Director
Juan Hernandez, Accounting Manager
AUDITORS
McGilloway, Ray, Brown & Kaufman
Accountants and Consultants
379 West Market Street
Salinas, CA 93901
CITY OF SALINAS
Basic Financial Statements
Table of Contents
Page
INTRODUCTORY SECTION:
Transmittal Letter....................................................................................................................... i Organizational Chart ........................................................................................................... xxvii List of Principal Officials................................................................................................... xxviii
FINANCIAL SECTION:
Independent Auditors’ Report.................................................................................................. F-1
Management’s Discussion and Analysis
(Required Supplementary Information) ................................................................................. F-5
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position .............................................................................................. F-21 Statement of Activities ................................................................................................... F-22 Fund Financial Statements:
Governmental Funds: ..................................................................................................... F-25 Balance Sheet ........................................................................................................... F-27 Reconciliation of the Balance Sheet to Statement of Net Position .......................... F-28 Statement of Revenues, Expenditures and Changes in Fund Balance ..................... F-29 Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities ....................................................... F-30 Proprietary Funds: .......................................................................................................... F-31 Statement of Fund Net Position (Deficit) ................................................................ F-33 Statement of Revenues, Expenses and Changes in Fund Net Position (Deficits) ... F-35 Statement of Cash Flows ......................................................................................... F-37 Fiduciary Funds: ............................................................................................................ F-41 Statement of Fiduciary Net Position ........................................................................ F-43 Statement of Changes in Fiduciary Net Position ..................................................... F-44 Notes to Basic Financial Statements:
#1. Description of the Reporting Entity
and Significant Accounting Policies ....................................................... F-47 #2. Stewardship, Compliance and Accountability ............................................. F-62 #3. Debt Compliance ......................................................................................... F-64 #4. Cash and Investments .................................................................................. F-64 #5. Restricted Assets .......................................................................................... F-70 #6. Taxes Receivable ......................................................................................... F-70 #7. Assessment Receivable ................................................................................ F-71 #8. Due From Outside Agencies ........................................................................ F-71 #9. Interfund Transactions ................................................................................. F-72 #10. Loans Receivable, Net of Allowance ........................................................... F-75 #11. Capital Assets............................................................................................... F-76
CITY OF SALINAS
Basic Financial Statements
Table of Contents
Page
#12. Land and Properties Held for Resale ........................................................... F-77 #13. Deferred Compensation Plan ....................................................................... F-78 #14. Retirement Programs ................................................................................... F-80 #15. Post Employment Benefits Other Than Pensions (OPEB) .......................... F-99 #16. Risk Management ...................................................................................... F-105 #17. Lease Obligations....................................................................................... F-106 #18. Long Term Debt ......................................................................................... F-107 #19. Unearned Revenues and Deferred Inflow of Resources, net of allowance F-127 #20. Restricted Net Position .............................................................................. F-128 #21. Fund Balance ............................................................................................. F-129 #22. Encumbrance.............................................................................................. F-130 #23. Joint Venture – Salinas Valley Solid Waste Authority .............................. F-130 #24. Contingent Liabilities................................................................................. F-131 #25. Successor Agency to The Salinas Redevelopment Agency ....................... F-131 #26. COVID 19 .................................................................................................. F-135 #27. Subsequent Events ..................................................................................... F-135
Required Supplementary Information ....................................................................................R-1 Budgetary Policy and Control:...............................................................................................R-3 Budgetary Comparison Schedule – General Fund, Measure E, & Measure G ................R-9 Budgetary Comparison Schedule – Measure E....… .........................................………R-10 Budgetary Comparison Schedule – Measure G....… .........................................………R-11 Claims Development for Internal Service Funds
General Liability Insurance......................................................................................R-12 Claims Development for Internal Service Funds
Workers Compensation Insurance ...........................................................................R-13 Agent Multiple-Employer Defined Benefit Pension Plan - Miscellaneous Plan Schedule of City’s Net Pension Liability and Related Ratios .................................R-14 Agent Multiple-Employer Defined Benefit Pension Plan - Miscellaneous Plan Schedule of the City’s Pension Plan Contributions and Notes ................................R-15 Agent Multiple-Employer Defined Benefit Pension Plan - Police Plan Schedule of City’s Net Pension Liability and Related Ratios .................................R-16 Agent Multiple-Employer Defined Benefit Pension Plan - Police Plan Schedule of the City’s Pension Plan Contributions and Notes ................................R-17 Cost-sharing Safety Multiple-Employer Defined Benefit Pension Plan Schedule of the City’s Proportionate Share of the Plan’s (PERF C) Net Pension Liability and Related Ratios ................................................................R-18 Cost-sharing Safety Multiple-Employer Defined Benefit Pension Plan Schedule of the City’s Pension Plan Contributions and Notes ................................R-19 Single - Employer Defined Benefit Pension Plan
Schedule of the City’s Net Pension Liability and Related Ratios ...........................R-20 Single - Employer Defined Benefit Pension Plan
Schedule of the City’s Pension Plan Contributions and Notes ................................R-21
CITY OF SALINAS
Basic Financial Statements
Table of Contents
Page
Schedule of Changes in the City’s Net OPEB Liability and Related Ratios as of The Measurement Date ............................................................................................R-22 Schedule of Employer OPEB Contributions..................................................................R-23 Supplementary Information .................................................................................................... O-1 Non-Major Governmental Funds:
Special Revenue Funds ................................................................................................... O-3 Combining Balance Sheet ......................................................................................... O-5 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances .................................................................................. O-8 Debt Service Funds ....................................................................................................... O-11 Combining Balance Sheet ....................................................................................... O-13 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ................................................................................ O-15 Capital Projects Funds .................................................................................................. O-17 Combining Balance Sheet ....................................................................................... O-19 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ................................................................................ O-20 Internal Service Funds: ....................................................................................................... O-21 Combining Statement of Net Position (Deficits) .......................................................... O-23 Combining Statement of Revenues, Expenses and Changes in Net Position (Deficits) ............................................................................................ O-24 Combining Statement of Cash Flows ........................................................................... O-25 Fiduciary Funds:
Private Purpose Trust Funds ......................................................................................... O-27 Combining Statement of Fiduciary Net Position (Deficit) ..................................... O-29 Combining Statement of Changes in Fiduciary Net Position (Deficit) .................. O-30 Custodial Funds ............................................................................................................ O-31 Combining Statement of Net Position ................................................................... O-33 Combining Statement of Changes in Net Position ................................................ O-34 General, Measure E, & Measure G Funds: ......................................................................... O-35 Combining Balance Sheet ............................................................................................. O-37 Combining Statement of Revenues, Expenditures and
Changes in Fund Balance ....................................................................................... O-38 This page is intentionally left blank.
i
Honorable Mayor and Members of the City Council
City of Salinas, California
We are pleased to submit the City of Salinas (City) Basic Financial Statements for the fiscal year ended June 30, 20 21. The financial statements are presented in conformity w ith generally accepted accounting principles (GAAP) and are audited in accordance with generally accepted auditing standards.
Responsibility for the accuracy of the data and the fairness of presentation, including all notes and disclosures, rests with the City. We believe the data presented in this report is accurate in all material respects and all statements and disclosures necessary for the reader to obtain a thorough understanding of the City’s financial activities have been included. Management of the City has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements.
While traditionally addressed to the governing body of the City, this report is intended to provide relevant financial information to the residents of the City of Salinas, City staff, creditors, investors and other concerned readers. We encourage all readers to contact the Finance Department with any questions or comments concerning this report.
McGilloway, Ray, Brown & Kaufman, a firm of certified public accountants, have audited the City’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 20 21, are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the ov erall financial statement presentation. Based upon the audit, the independent auditors concluded that there was reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 20 21, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report.
ii
The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grant or agencies. The standards governing Single Audit engagements require the independent auditor to report not only on fair presentation of the financial statements, but also on the government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration o f federal awards. These reports are available in the City’s separately issued Single Audit Report.
GAAP requires that management p rovide a narrative introduction, ov erview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors.
This report is divided into two sections:
• The Introductory Section includes this letter of transmittal and an organizational overview of the City government.
• The Financial Section consists of the independent auditors’ report, Management’s Discussion and Analysis, Basic Financial Statements; which include the Government-Wide Financial Statements, Fund Financial Statements, Notes to Financial Statements, Required Supplementary Information and other Supplementary Information.
The Reporting Entity and Its Services
In defining the reporting entity, there are no other governmental units over which the City Council has financial accountability. Under state law, the Salinas Redevelopment Agency, which was a component unit of the City, ceased to exist as of February 1, 2012, and therefore the assets and activities of the dissolved redevelopment agency are reported in a Fiduciary Fund (private purpose trust fund) in the financial statements of the City.
The City of Salinas was incorporated as a charter City on March 4, 1874 and operates under the Council-Manager form of government. The City is governed by a six-member Council elected by districts for four-year alternating terms and a Mayor elected at large for a two-year term. The Council appoints the City Attorney and the City Manager who is responsible for day-to-day administration of the City under the policy direction of the Council.
The City of Salinas is the “county seat” of Monterey County, and is located in the Central Coast region of California, 17 miles inland from the Monterey Bay, 325 miles north of Los Angeles and 106 miles south of San Francisco. Salinas is a charter City providing all typical City services:
Public safety - police and f ire, Public Works - maintenance services (streets, lighting, signals, facilities, parks and trees), development and permit services, current and advanced planning and traffic and facilities engineering, Library, Recreation and General administrative servic es.
Business-type City services include: a Municipal Airport, Industrial Waste system, two municipal golf courses, Sanitary Sewer and Storm Drain systems, Water Utility and a Parking District. The iii
State Department of Finance reports the City’s population at 162,222 as of January 1, 20 20. The City FY 2020-21 budget includes 606.50 positions authorized on a full-time equivalent basis.
Three elementary school districts, a unified high school district and several private schools at both the primary and secondary level operate in the City of Salinas. Hartnell College, a State Community College, offers two-year degrees and occupational certificate programs. California State University Monterey Bay is located less than 15 miles away on the former Fort Ord site.
Graduate studies through Golden Gate University, Monterey Institute of International Studies and Chapman College are available nearby. Also in the area are Moss Landing Marine Laboratory, Monterey College of Law, Stanford University’s Hopkins Marine Station and San Jose State University.
Salinas has extensive health and medical services with two of Monterey County's four hospitals located within the City. Salinas also offers skilled nursing and convalescent homes and residential retirement facilities for seniors, as well as over 220 practicing physicians.
Fire protection and basic and advanced life support are provided by the City's full-service Fire Department. Advanced life support services are provided by the Fire Department’s paramedic program. The City of Salinas has a Police Department and receives additional support, as required, from the Monterey County Sheriff's Office and other regional, state and federal agencies.
The City's moderate climate encourages year-round use of its 550 plus acres of municipal parks, which include golf courses, tennis courts and swimming pools. The Salinas Community Center regularly hosts symphonies, ballets, concerts and conventions. Salinas is host to the annual Steinbeck Festival, the California Rodeo, and the California International Airshow. Salinas has a modern California Sports Complex and the National Steinbeck Center. Surrounding Salinas are diverse recreational opportunities including beautiful beaches and the world famed golf courses of the Monterey Bay Peninsula.
As the retail hub of the Central Coast, Salinas enjoys a wide selection and diversity in its stores.
Northridge Shopping Center contains over 120 specialty shops and four major department stores – Macy’s, Best Buy and J.C. Penney. Harden Ranch Plaza includes Wal-Mart, Target, Safeway, specialty stores, restaurants, and banking institutions. The Westridge Shopping Center is home to Costco, Wal-Mart, Office Max, Dick’s Sporting Goods and a variety of national chain restaurants.
The Salinas Auto Center houses nine local dealers and its retail area hosts Home Depot, Beverages and More (BevMo), Kohl’s, and other specialty stores. Additionally, Salinas' location allows quick access to the Monterey Peninsula, as well as the San Jose area.
The City utilizes various Boards and Commissions in the conduct of its affairs. Commissions and Committees established by City Ordinance are:
• Airport Commission
• Library and Community Services Commission
• Traffic and Transportation Commission
• Planning Commission
• Measure G Oversight Committee
• Measure E Oversight Committee
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Boards and Committees established by Resolution of the City Council are:
• Police Community Advisory Committee
• Animal Services Committee
• Design Review Board
• Board of Appeals
• Grievance Advisory Board
• Finance Committee
• Historical Resources Board
FINANCIAL INFORMATION
The City’s management staff is responsible for establishing and maintaining internal controls that safeguard the assets of the government from loss, theft, or misuse and allow the compilation of adequate accounting data for the preparation of financial statements in conformity w ith Generally Accepted Accounting Principles (GAAP). Internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed its likely benefits and that the evaluation of costs and benefits is subject to management estimates and judgments.
Single Audit
As a recipient of Federal, State and County financial assistance, the City is responsible for providing assurance that adequate internal controls are in place to ensure compliance w ith applicable laws and regulations relating to these award programs. Internal controls are subject to periodic evaluation by management, the Finance Department staff, and the City's outside independent auditors.
As part of the City's single audit procedures, tests are performed to determine the effectiveness of the internal controls over major Federal award programs and the City’s compliance w ith applicable laws and regulations related to these award programs. v
Accounting System and Budgetary Control
The City's accounting and budgeting records for general governmental operations are maintained on a modified accrual basis, with the revenues being recorded when available and measurable.
Expenditures are recorded when the services or goods are received or the liabilities incurred.
Accounting and budgeting for the City's proprietary funds are maintained on the accrual basis.
The City also uses encumbrance accounting as another technique for accomplishing budgetary control. An encumbrance is a commitment of a future expenditure earmarked for a particular purpose that reduces the amount of budgetary authority available for general spending. At the end of the fiscal year, encumbered appropriations are carried forward and become part of the following year's budget while appropriations that have not been encumbered lapse and are available to be appropriated through the following fiscal year’s budget process.
The City Council approves operating appropriations at the department and fund level prior to July 1, each year and may amend the budget during the fiscal year. Please refer to Required Supplementary Information to the financial statemen ts for a more detailed discussion of budget policy and control. The City continues to meet its responsibility for sound financial management as demonstrated by the statements and schedules included in the financial section of this report.
Annual Financial Report
The purpose of the City's Annual Financial Report is to summarize the administrative and operational performance of the City during the previous fiscal year. The report is intended to highlight significant accomplishments that were achieved durin g the fiscal year ended June 30, 2021 and to provide a financial analysis of City performance.
Capital Assets and Depreciation
As of June 30, 2021, capital assets, including infrastructure assets, of the City of Salinas totaled $855.3 million; accumulated depreciation totaled $439.4 million, with the difference providing net capital assets of $415.9 million. Net capital assets of the City’s governmental act ivities (general government) are $ 305.5 million and net capital assets for the City’s business -type activities (enterprise funds) are $110.4 million.
Capital assets include buildings, infrastructure (streets, curbs, gutters, sidewalks, bridges, streetlights, traffic signals, etc.), improvements other than buildings (park improvements, etc.), and machinery and equipment.
During FY 2020-21, depreciation expense on capital assets of the City’s governmental activities (general government) was $ 10.6 million and depreciation expense on capital assets of the City’s business-type activities (enterprise funds) was $6.3 million. Depreciation expense represents the amount at which assets are being used -up annually. Due to budget constraints over the years, the City has been unable to invest in the maintenance of capital assets at anywhere near the annual depreciation amount.
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Please refer to the Notes to Basic Financial Statements , Note 12 for a complete discussion of the City’s Capital Assets.
Long-term Debt Payable
At June 30, 20 21, the City had $449.5 million in long-term debt. Long-term debt includes liabilities for annual leave, long-term portion of Worker’s Compensation claims payable, capital leases and notes and bonds payable, and net pension liability. While the General Fund guarantees most of the City’s long- term debt, other funds, agencies or property owners make the majority of principal and interest payments. Examples of other funds, agencies or property owners include, the Industrial Waste Fund, Golf Courses Fund, the Sanitary Sewer Fund, Successor Agency to the former Salinas Redevelopment Agency property tax increments, and payments from property owners who are included in the City’s various assessment districts.
Please refer to the Notes to Basic Financial Statements, Note 18, for a complete discussion of the City’s Long-term Debt.
Fund Financial Statements-General Governmental Revenues The current governmental operations of the City are accounted for in the General, Special Revenue, Debt Service, and Capital Project Funds. For the fiscal year ended June 30, 2021, total revenues for general governmental functions totaled $191.3 million, an increase of 11.3% over the previous fiscal year.
Sales Tax
The City has a well-diversified economy and sales tax base. The sales and transaction and use tax increased $10.6 million, or 15.2% from FY 2019-20. The increase can be attributed to the recovery from the COVID-19 pandemic and the effects it had on the economy. Sales tax was the largest single category of revenue this fiscal year producing 18.5% of the combined governmental fund type revenues. Transactions and Use Tax (Measures E and G) represents 23.8% of the combined governmental fund type revenues. Measures E and G transactions and use tax is a general tax and is reported as part of the General Fund. Combined, sales tax and transactions and use tax revenue total $80.3 million or 42.3% of the combined governmental fund type revenues.
On November 8, 2005, the voters of Salinas approved Measure V, a 0.50% transactions and use tax. On November 6, 2012, the voters of Salinas approved to extend the 0.50% transaction and use tax with no sunset (Measure E). Measure E is a general tax and is reported as part of the General Fund, although the tax is accounted for in a separate sub-fund of the General Fund.
On November 4, 2014, the voters of Salinas approved Measure G, an ordinance imposing a one - cent general transactions and use tax. Measure G has a fifteen -year term and requires the City Council to establish an Oversight Committee. Measure G is a general tax and is reported as part of the General Fund, although the tax is accounted for in a separate sub-fund of the General Fund. vii
Property Tax
Property tax revenue was the second largest source of revenue during this fiscal year, producing
17.5% of the combined governmental fund type revenues. Property tax revenue includes Property tax-in-lieu of vehicle license fees (2/3 of VLF) of $14.4 million that is now determined by the City’s growth in assessed property values. Property tax experienced a low in 201 2 of $21.5 million and is now $33.2 million.
-
10 20
30 40
50 60
2013 2014 2015 2016 2017 2018 2019 2020 2021
$34.0 $35.4
$42.0
$62.0 $64.6 $64.9 $72.9 $69.7 $80.3
Millions
Fiscal Year
Sales and Measures V & G Tax
-
10 20
30 40
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
$21.5 $21.7 $23.1 $24.4 $25.9 $27.0 $28.5 $30.1 $31.1 $33.2 Millions
Fiscal Year
Property Tax
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Intergovernmental
Intergovernmental revenue was the third largest single category of revenue during the fiscal year producing 1 6.5% of the combined governmental fund revenues. Intergovernmental revenues consist of vehicle licenses fees (1/3 of VLF), Federal and State Public Safety Funds, Federal Block Grants, State Gas Taxes and Federal an d State Construction Grants. Intergovernmental revenue recovered from a 10 -year low eight years ago. Intergovernmental revenue had a n increase from the prior ye ar of $10.1 million, or 47.5%, mainly from increased Federal funding for the pandemic.
Utility User’s Tax and Other Taxes
Utility user’s tax and o ther taxes produced 16.5 % of the combined governmental fund type revenues. Other taxes include business license tax and franchise fees, among others. Utility user’s tax remained unchanged from the prior year at $11.7 million, as do Other taxes at $19.8 million.
Assessment District Taxes
The Assessment District Debt Service Fund taxes increased by 10.1% to $2.7 million.
Charges for Services
The Charges for Services revenue increased by $ 0.6 million, or 10.1% as a result of service s returning to the pre-COVID-19 pandemic levels.
-
10 20
30 40
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
$15.4 $14.8
$20.1
$17.2 $17.2 $17.4
$24.5
$19.1 $21.3
$31.4
Millions
Fiscal Year
Intergovernmental
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Revenues from various sources and the resulting changes over the last year are shown below. 2021 Percent 2020
Source of Revenues Amounts of Total Amounts Dollars Percent Assessment districts:
Taxes 2,774,645$ 1.4% 2,521,100$ 253,545$ 10.1% Property tax 33,234,237 17.4% 31,148,765 2,085,472 6.7% Sales/transaction & use tax 80,275,160 42.1% 69,670,899 10,604,261 15.2% Utility user's tax 11,664,913 6.1% 11,654,328 10,585 0.1% Other taxes 19,869,125 10.4% 19,831,691 37,434 0.2% License & permits 812,083 0.4% 824,569 (12,486) -1.5% Intergovernmental 31,404,757 16.4% 21,287,712 10,117,045 47.5% Charges for service 6,854,066 3.6% 6,224,883 629,183 10.1% Interest 673,582 0.4% 2,989,595 (2,316,013) -77.5% Rental income 927,623 0.5% 545,137 382,486 70.2%
Fines/forfeitures 623,400 0.3% 640,262 (16,862) -2.6% Contributions - 0.0% 159,169 (159,169) -100.0% Miscellaneous 2,243,489 1.2% 4,354,449 (2,110,960) -48.5% TOTAL 191,357,080$ 100.2% 171,852,559$ 19,504,521$ 11.3% 2021 vs. 2020
Increase/(decrease)
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Fund Financial Statements-General Governmental Expenditures Expenditures for governmental operations during the fiscal year ended June 30, 20 21 were $191.0 million, a net increase of 20.7% in total expenditures over the previous year.
Changes in expenditures by major function are as follows:
Operating expenditures increased by $15.5 million or 11.6% from $133.5 million in FY 2019- 20 to $149.0 million in FY 2020-21.
Percent
of
Function 2021 Total 2020 Dollars Percent
General government 38,927,305$ 20.5% 29,432,887$ 9,494,418$ 32.3% Public safety 82,842,431 43.6% 78,580,637 4,261,794 5.4% Public works 18,892,966 9.9% 17,231,621 1,661,345 9.6% Recreation 2,935,550 1.5% 3,493,581 (558,031) -16.0% Library 4,363,997 2.3% 4,781,223 (417,226) -8.7% Subtotal operations 147,962,249 77.9% 133,519,949 14,442,300 10.8% Capital outlay 29,525,238 15.5% 10,658,987 18,866,251 177.0% Debt service:
Principal 6,465,528 3.4% 9,905,582 (3,440,054) -34.7% Interest 5,951,232 3.1% 4,102,067 1,849,165 45.1% Total 189,904,247$ 100.0% 158,186,585$ 31,717,662$ 20.1% 2021 vs. 2020
Increase/(decrease)
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General Government increased by $ 10.6 million, or 35.9%. This increase was due to the City making an $4.9 million New York Life Employer Pension contribution, $1.5 million CalPERS UAL payment , and about $3 million in crease in accruals to cover for future obligations, per Corvel’s estimates. Recreation decreased by $ 0.6 million, or 16.0%, Public Safety increased by $4.3 million, or 5.4%, Public Works increased by $1.7 million, or 9.6%, and Library expenditures decreased by $0.4 million, or 8.7%.
Principal payments decreased by $3.4 million while interest payments increased by $1.8 million mostly due to less a large pay down of the El Gabilan Library debt in the previous year.
Capital Outlay (Project) expenditures increased $18.9 million or 177.0% from $10.7 million in FY 2019-20 to $29.5 million in FY 2020-21. During the year, there were 185 capital projects worked on. The largest project was the Vibrancy Plan Infrastructure project with $ 7.8 million spent in 20 21. The second largest project was $ 7.2 million spent on the Downtown Complete Streets. The third and fourth largest projects were $ 2.7 and $ 2.2 million on the East Alvin/Linwood/Maryal Routes and the East Laurel Dr. Sidewalk and Lights projects, respectively.
Business-type Activities-Enterprise Funds
Enterprise Funds are the City’s business-type activities (activities supported, at least in part, by fees or charges) and include the Salinas Municipal Airport, the Industrial Waste Facility, the Municipal Go lf Courses (Fairways and Twin Creeks), the Storm Sewer System, the Sanitary Sewer System, the Hitchcock Road Water Utility, the Parking District, Permit Services and the Landfill Garbage Surcharge Fund (which is used to account for the proceeds of the installment sale of the Crazy Horse Landfill to the Salinas Valley Solid Waste Authority).
The Enterprise Fund’s net position totaled $84.9 million at June 30, 2021.
Internal Service Funds
Internal Service Funds are used to account for the City’s fleet maintenance program and risk management program which administers employee benefits and the City’s insurance programs including; 1) General Insurances-employee assistance program, unemployment claims, biennial physical exams and property insurance; 2) Workers’ Compensation self-insurance program; and 3) General Liability self-insurance program.
At June 30, 20 21, the Internal Service Funds liabilities for estimated claims payable totaled $28.0 million, with $24.9 million representing Workers’ Compensation and $3.1 million representing General Liability.
Total Workers’ Compensation insurance claims liabilities are $26.7 million at June 30, 20 21. A portion of the liability is reported in the Internal Service Fund ($24.9 million) and a portion is treated as long-term debt ($1.8 million). The long-term debt portion represents future obligations of the Workers’ Compensation Plan.
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Fiduciary Funds
Fiduciary Funds are used to account for assets held in trust for others and cannot be used for general government purposes. The City maintains the following Fiduciary Funds: Private Purpose Trust Funds, Pension Trust Funds and Custodial Funds.
Private Purpose Trust Funds include a net position of $1.0 million held by the City, which increased by $0.6 million from the prior year. Of the net position, $0. 1 million is held by the City for the dissolved Redevelopment Agency, which is accounted for in the Successor Agency Trust, and a net position of $0. 6 million held by the City for Community Center and Sherwood Hall activities, Monterey One Water Fees, Sales Tax, Payroll Taxes, Deposits, Construction Bonds and other trust arrangements not properly reported in a pension trust.
Pension Trust Funds held by the City of $18.5 million are employee deferred compensation funds and amounts with New York Life Single Employer Defined Benefit Plan.
Custodial Funds are assets held by the City for, Economic Development, Salinas Valley Enterprise Zone, Employee Cafeteria Plan and Retired Employees Health Insurance Program. Agency assets held by the City total $0.2 million.
Cash Management
In accordance with the provisions of California Government Code Section 53600 et. seq., the City is restricted to certain types of legal investments. These investments are included in the City’s investment policy and are approved by City Council annually. In addition, the City’s investment activity is reported to the City Council monthly pu rsuant to the California Government Code.
The City invests all idle funds daily. The cash management system of the City is designed to monitor revenues and expenditures to ensure the investment of monies to the fullest extent possible. The criteria, in order of priority, for selecting investments are safety, liquidity, and yield.
The majority of City funds (68.9% of investment at FMV) are invested in the State’s Local Agency Investment Fund (LAIF). LAIF yielded average returns of 0.5% for fiscal year ended June 30, 20 21 and decreased from 1.22% to 0.26% during the fiscal year .
The City’s investment in certificates of deposit and investment contracts are reported at cost, which is fair value. While recorded at fair market value in the financial statements, the City’s investments are redeemable at 100% of cost.
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The City’s investment in the State Local Agency Investment Fund at June 30, 20 21 is as follows:
Please refer to Note 4 for a complete discussion of the City’s Cash and Investments.
Property Assessment
Assessed valuation of citywide taxable properties increased $555.4 million to $12,636 million representing an increase of 4.6% over FY 2019-20.
The following table summarizes the growth and declines in assessed valuation.
Balance at cost - June 30, 2021 149,140,484$
Unrealized gain 730,370
Balance at fair value - June 30, 2021 149,870,854$
Before Redevelopment After Redevelopment Percent
Increment Increment Change
12,636,068,210$ 11,642,994,299$ 4.60%
12,080,694,193 11,149,838,970 5.41%
11,460,172,316 10,577,591,282 5.02%
10,912,115,449 10,071,741,861 4.70%
10,422,521,577 9,614,776,155 4.60%
9,963,782,622 9,195,146,472 6.49%
9,356,177,997 8,629,207,052 8.82%
8,597,836,189 7,904,316,402 2.72%
8,370,116,351 7,693,329,440 0.72%
8,310,478,479 7,628,550,860 -0.61%
8,361,701,633 7,473,844,928 -6.75%
8,966,761,801 7,981,760,147 -11.25%
10,102,973,741 9,158,540,984 -5.10%
10,645,974,648 9,750,295,032 7.25%
9,926,023,729 9,107,918,547 12.72%
8,806,009,783 8,305,434,488 12.90%
7,799,653,100 7,373,407,370 10.70%
7,045,521,979 6,643,698,145 6.90%
2010-11
2011-12
2012-13
2020-21
Fiscal year
2019-20
2003-04
2004-05
2005-06
2014-15
2018-19
2017-18
2016-17
2015-16
2013-14
2006-07
2007-08
2008-09
2009-10
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Significant Events and Accomplishments
Through the leadership of the City Council and the City Manager, the city continues to produce amazing accomplishments. The City Council is committed to four strategic goals, which guide the initiatives and activities of each City department . The following is a list of accomplishments during the year for each of the four strategic 2020-2023 goals adopted in January 2020:
❖ Investment Strategies / Risk Management
City Attorney’s Department
➢ Workers Compensation. Continued management of the City’s Workers Compensation program with resolution of cases through compromise and release in order to bring down the City’s long-term liability.
✓ Continued to identify workers compensation cases which are eligible for early resolution; brought forward cases to the City Council for completion to reduce the City’s overall long-term exposure.
✓ Identified employees who were eligible for return -to-work for industrial and non-industrial injuries.
Community Development Department
➢ Entitled the Central Area Specific Plan and certified the Final Environmental Impact Report to allow approximately 4,000 units and 200,000 square feet of mixed -use commercial, as well as schools, parks and open space in the North of Boronda Future Growth Area.
➢ Completed construction of the Sprung structure at the Chinatown Navigation Center to expand availability of emergency shelter beds under a “housing first” best practices model.
➢ Successfully partnered with Step Up and Shangri -La to secure Homekey f unding to purchase the former Good Nite Inn and provide 101 permanent supportive housing units at 545 Work Street.
➢ Partnered and collaborated with the County of Monterey and Coalition of Homeless Services Providers to complete construction and fund opera tions of the new SHARE Center at 845 E. Laurel Drive.
➢ Added 107 new affordable housing units, surpassing the FY 20-21 projected goal (20) by 535%.
➢ Facilitated processing of new housing development applications: 37 single family dwellings (SFD) at 11 Hill Circle and 67 SFD at Monte Bella, and 18 units of multi - family housing at 229 Pajaro Street.
➢ Adopted the Interim Vehicle Miles Traveled Policy as the basis in determining transportation impacts.
➢ Launched the General Plan Update – Visión Salinas 2040, including development of a community engagement framework, internal and external advisory committees, and selection of key consultants.
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➢ Established a Small Business Economic Taskforce to assist businesses impacted by the pandemic, hired a Small Business Navig ator, and launched a small business website and hotline number to help businesses access technical assistance resources and grants and loans.
➢ Secured a fourth year AmeriCorps VISTA grant and successfully filled all five VISTA positions.
➢ Conducted homeless outreach and provided food assistance, sanitation, hygiene items, and housing resources; Assisted the Salinas Police and Public Works Departments during clean-up efforts.
➢ Facilitated Accessory Dwelling Units (ADU) by establishing ADU hotline (123 inquiries), webpage, and creating a process for delay of enforcement and proof of construction for garage conversions.
Library and Community Services Department
➢ Develop and maintain reopening/ongoing operating standards for our libraries and recreation centers that mitigate the risk posed by the ongoing COVID-19 pandemic. ➢ Monitor and implement guidance outlined in the State of California Blueprint for a Safer Economy.
➢ Acquired a new, state -of-the-art, and grant -funded bookmobile to improve library outreach and remote programming. This includes further augmenting the Kinder mobile program which reaches every kindergarten classroom in Salinas.
Police Department
➢ Fully occupied the new Police Service of Salinas building at 312 E. Alisal Street which emphasized a community -based design and incorporated positive, community -based features such as the community meeting space.
➢ Consolidated vehicle maintenance services in par tnership with Public Works Fleet Services. Consolidated services have reduced outside vehicle maintenance costs, improved vehicle efficiency via reduced down -times, and improved vehicle maintenance and safety.
Public Works Department
➢ Downtown Vibrancy Plan Implementation:
✓ Complete construction of Main Street for 100, 200 and 300 block. ✓ Complete construction of Downtown Complete streets, on West Alisal from Front Street to Blanco Road.
➢ Support development of Salinas Travel Center project, Airport Lease Project, Unikool (John Street) project and Sywest Project.
➢ Complete the Mitigated Negative Declaration for Boronda Road Congestion Relief Project (future growth area).
➢ Complete 75% design for Boronda Road and Mc Kinnon roundabout. xvi
➢ Submit 90% plans of Willi ams Road to PG&E for the kickoff of the Utility Undergrounding design project.
➢ Technical Support for the West Area and Central Area Specific Plans approval process. ➢ Provide engineering and street maintenance support for various City special events. ➢ Complete construction for Sanitary and Storm line installation for Lincoln Ave Extension into the Train Station.
➢ Completed 90% Design for the Williams Road Improvements. ➢ Continuing work to develop sustainable parking enterprises which help support the city’s economic sectors.
➢ Project closeout for the Sanborn/Elvee/HWY 101.
➢ Completed the fiberoptic backbone for the Downtown Fiber Optic Network plan. ➢ Complete Installation of new metal roof at Fire Station no. 1. ➢ Support regional plan to extend commuter ra il service to Salinas that will provide access to jobs in the Bay Area and Silicon Valley.
➢ Development complete streets, multi-modal corridors, and a sustainable transportation to support responsible future growth area and mitigate vehicle miles travelled (VMT). ➢ Supported the Airport Lease Project MND and began coordination with Caltrans as part of mitigation program to improve Airport Blvd/US 101 Ramps. ➢ Traffic Calming Improvements at Chaparral Street, Cherokee Street, Nacional Street, First Avenue, and Kittery/Snug Harbor neighborhoods.
➢ Complete design of restroom remodel at Natividad Creek Park. ➢ Complete design of tennis court improvements at Central Park. ➢ Begin construction of Tennis courts improvements at Claremont Park. ❖ New Revenue
City Attorney’s Department
➢ Supported/Worked on Future Growth Area Project. Worked with Community Development staff to complete and bring forward the Central Area Specific Plan for approval and certification of the EIR. Will defend the litigation brought against the City under CEQA so the project may move forward.
➢ Supported Efforts to Fund Storm Water Program and Additional Taxes and Fees.
Advised on and supported efforts to establish new and additional fees and taxes the fund the City’s stormwater management progr am and maintenance of City parks and recreation facilities.
Community Development Department
➢ Secured $4,950,000 grant to provide State and Federal Emergency Rental Assistance Funding to City residents negatively impacted by COVID-19. ➢ Received $12,814,428 in additional State and Federal funding to prevent, prepare and respond to the COVID-19 pandemic.
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➢ Obtained $1,006,847 in new funding from State Permanent Local Housing Allocation to fund additional affordable senior housing units.
➢ Secured $1,280,000 in state grants to fund environmental and technical studies to prepare the General Plan Update including the Climate Action Plan, Environmental Impact Report, and Traffic and Transportation Analysis. ➢ Facilitated permitting of cannabis businesses that provided $1.8 million in tax revenue last year.
➢ Responded to 607 hotline calls and connected businesses and entrepreneurs to COVID response and recovery resources.
➢ Awarded $600,000 to 44 businesses through the Grow Salinas Small Business Support Program; Assisted 41 businesses in applying for the CA Relief Grant with 19 awards totaling $90,000 to date.
➢ Conducted 30 Census outreach events (a total of 110 through the entire Census process) and coordinated the monthly meetings of the Census Salinas Action Team. ➢ Opened 117 weed abatement cases, but through proactive communication, notices and citations, only one (1) property was abated and $5,855 in citations collected.
Fire Department
➢ Grants- The City completed and closed the Staffing for Adequate Fire and Emergency Response (SAFER) grant with a total value of $1,399,409. This grant funded six firefighter positions for three years starting February 2018 and ending in February 2021. Personnel savings to the city after matching funds are contributed is $1,066,918.
The six firefighters funded by the grant continue to be part of daily staffing. The department has submitted for additional funding for Fiscal Year 2021-2022. ➢ Assistance to Firefighters Grant (AFG) - The fire department’s 3 AFG funded paramedics are now working on the streets of Salinas and are credited with six (6) field saves since becoming accredited. The three firefighters recognized by the Federal Emergency Management Agency (FEMA) as a highlight to this new nationwide program. Based o n the success of this endeavor the department submitted for additional funding for Fiscal Year 2021-2022.
Library and Community Services Department
➢ Submitted two applications for Prop 68 funding. One for $8 Million Dollars to build a new Hebbron Family Center and one for $6.8 Million Dollars to renovate Closter Park. ➢ Awarded a $1.5 Million Dollar California Violence Prevention grant to fund job training and mentorship programs for violence and systems impacted youth in Salinas. ➢ Earned an additional $60,000 grant from the California Endowment to further the advancement of Governing for Race Equity work over three years for the City of Salinas. Th is is an addition to the $120,000 awarded in FY 19 -20 for a total of $180,000.
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Police Department
➢ Continued to secure new grants and supplemental funding to support police operations and expand services to the community.
❖ Operational Efficiencies
Administration Department
➢ Continued dialogue with City leaders, site selectors and major business corporations in preparation and planning for future Forbes AgTech Summit. ➢ Continued Council and community engagement regarding City services, fiscal management, and completion of the strategic plan objectives. ➢ Continue to work with local service providers and County officials to mitigate homeless encampments, construction of a permanent shelter, and solidify housing and commercial development in the Ch inatown area other identified areas city - wide.
➢ Continued oversight and implementation of the Housing Element, Downtown Vibrancy, Chinatown Vibrancy, the Alisal Vibrancy, Parks, Recreation and Libraries Master Plan and the General Plan.
➢ Continues to lead the efforts between the City and County consolidated services. ➢ Participating in multijurisdictional efforts toward the development of clean energy. ➢ Ongoing management of the City Council, Measure E, and Measure G Oversight Committees.
➢ Ongoing management and implement of records and contact management systems. ➢ Continues to process Republic Services low-income senior discounts.
City Attorney’s Department
➢ Municipal Code Update. Continued work on a comprehensive update to the Municipal Code to identify and to update self -imposed regulations that hinder operational efficiencies.
➢ Employee Relations. Continued working with other City departments to resolve labor relations matters. Assisted with labor negotiations. Defended PERB unfair practice charges and any litigation. Responded to request for information. Directed investigations and advised re grievances and meet/confer matters. ➢ Personnel Policies. Ensured legal compliance with employment laws to prevent liability: continue work on personnel policy updates; a ssisted with review and revision of department policies; continued to advise on employment situations; investigated employee complaints.
➢ Civil Litigation. Continued to handle the majority of civil litigation in-house, at less expense to the City. Included are at least two employment related litigation matters which were handled in-house and resolved with a minimum of cost to the City. xix
➢ Insurance Joint Powers Agency. Continued participation in the ACCEL joint powers authority; improved the City’s insurance coverages with better policies. ➢ Workers Compensation. Continued management of the City’s Workers Compensation program with resolution of cases through compromise and release in order to bring down the City’s long-term liability.
Community Development Department
➢ Shifted permitting to digital platform and managed to maintain output despite staffing losses due to the pandemic:
✓ Issued 2,464 permits with a valuation nearly $51,000,000. ✓ Completed 855 planning reviews, 93% on time, and 1,864 building plan reviews with an average review time of 12 days.
✓ Completed 13,837 building inspections, of which approximately 95% were conducted on time.
✓ Responded to 4,459 calls for planning and 15,255 calls for permitting. ➢ Offered virtual customer meetings through the Development Review Com mittee to facilitate continued economic development and promote enhanced communication. ➢ Created a dedicated email for planning inquiries resulting in 1,620 responses. ➢ Established a fast track permitting process to facilitate 69 legal outdoor business operations in accordance with state and local guidelines and dedicated one full -time staff to ensure expediency.
➢ Piloted a virtual inspection process for building inspections. ➢ Coordinated compliance inspections between Code Enforcement and Fire Prevention to provide the best customer service possible and limit the number of onsite inspections. ➢ Increased weekend and evening COVID -19 enforcement in 2021, resulting in $7,750 in citations.
➢ Funded the expansion of Downtown Streets Team to a second team focused on encampment cleanups and homeless services in Cesar Chavez and Natividad Creek Parks.
➢ Hired an additional Limited Term Community Development Analyst to support and expand Fair Housing and Homeless Preservation initiatives and services. ➢ Processed a 400% increase in grant applications through the RFP process and a 1,000% increase in the processing of payments and reports from subcontracted service providers.
➢ Hired two Management Analysts to provide administrative, financial and grant management and complianc e support in September 2020 in an effort to improve organizational efficiency.
Finance Department
➢ Strategically and collaboratively worked with departments and City Manager to balance the FY 2020-21-year budget.
➢ Coordinated Monte Bella CFD Financing for Phase III.
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➢ Refinanced $14.6 million of Sewer Revenue Bonds achieving a reduced interest rate from 4.15% to 2.92% and $2 million in total savings.
➢ Issued $31.3 million in 2020A -1, A-2, and B-1 Series bonds to refund the remaining bonds that needed refinancing, achieving 1.75% all-in true interest cost, affirmed rating of AA- and total savings of $1.5 million.
➢ Supported SPOA labor negotiations with financial costing and fiscal updates. ➢ Upgraded Wi-Fi across City locations.
➢ Improved internal training and educational opportunities for all IT staff while beginning the Technology Master Plan.
➢ Migrate from Citrix VDI to Horizon VDI and improve data center technology for a better, more reliable Windows 10 experiences for users - began to develop re fined training strategies for Windows 10 and Cybersecurity education. ➢ Continue to manage, facilitate and support the Measure E and G Committee and the Finance Committee.
➢ Completed the annual financial statements and audit with a clean audit opinion.
Human Resources Department
➢ Human Resources Division conducted approximately 60 recruitments and processed over 1300 applications. Staff conducted over 60 new employee intakes for regular and temporary hires.
➢ Human Resources continues to meet biweekly with the Police Department to discuss/implement recruitment strategies and processing of sworn and non -sworn public safety positions.
➢ Human Resources issued City Guidelines related to COVID -19 in accordance with County, State, and CDC guidelines. Administered Fami lies First Coronavirus Response Act leave benefits; Coordinated COVID -19 testing; Procured PPE for Departments Citywide.
➢ Human Resources assumed payroll administration for Police Service, approximately 200 positions, to include preparation of Personnel Ac tion Forms, Certification Reimbursements, and Performance Evaluation Tracking. Processed employee payroll time entry for approximately 300 positions to include Police, Fire, and Administration. ➢ Human Resources actively participated in labor negotiations wi th various bargaining units and participated in monthly labor managements meetings with various units. ➢ Participated and coordinated interactive process meetings/accommodation for personnel.
➢ Worked directly with Directors, Managers, Supervisors to address p ersonnel performance.
➢ Coordinated job protected leave to include implementation of the federal Families First Coronavirus Response Act which included processing of 152 leave requests. ➢ Coordinated SB1343 Sexual Harassment Prevention Training for all non -supervisory staff.
➢ Coordinated Mandated Reporter training for all mandated reporter classifications. xxi
➢ Completed Department of Justice Live Scan site approval in order to allow Human Resources to Live Scan City employment candidates and City volunteers. ➢ Human R esources continues to participate on the Blue Zones Project Worksite Committee in order to achieve “approved” Blue Zone Project Worksite designation.
This remains work in progress.
Library and Community Services Department
➢ Provided community service opportunities for youth and adults to strengthen skill development and workforce readiness. Residents performed nearly 1,500 volunteer service hours.
➢ Conducted 4 community clean ups at the Madison Lane Transfer Station adapting to COVID-19 restrictions.
➢ Improved virtual communication with residents by launching Recreation & Park social media channels on Facebook, YouTube, and Instagram, resulting in a combined 1,500 followers and subscribers, and have made hundreds of engaging posts. ➢ Created and published over 150 videos of virtual recreation programs on YouTube to continue to engage residents and youth.
➢ Created and distributed 4,900 take home recreation kits (5 different activities per kit) with a total of 24,000 activities for youth ages 4-12.
➢ Provided virtual and remote adult learner instruction to 440 students and over 12,000 hours of attendance (including computer literacy, basic literacy, or high school equivalency).
➢ Distributed over 1,200 preschool take -home activity kits aimed at increasing Kindergarten readiness. These kits were complimented with over 200 minutes of follow-along video instruction for parents and youth. Additionally, other ongoing story time and early literacy virtual programs reached nearly 130 parents and children on a weekly basis.
➢ Distributed over 7,000 fun, interactive, and engaging STEAM take -home activity kits to children, teens, and adults. A majority of the kits were complimented with on - demand or live video instruction created by library staff and/or community partners. ➢ Partnered with small business and workforce development organizations such as Small Business Development Center to offer a series of workshops and information sessions for Salinas small business owners, entrepreneurs, and residents impacted by COVI D- 19 closures.
➢ Expanded SMART Card program to all Salinas City Elementary School District students, which allow instant access to library digital resources to more than 8000 students, using their student identification.
➢ The library expanded its digital l ibrary services to include virtual programming and more accessible digital resources such as adding Encyclopedia Britannica, ProQuest Research Databases, and Teaching Books to the digital library to support students and teachers in virtual classrooms, as well as Job Now & Vet Now digital platform to assist job seekers and veterans in the community.
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➢ Completed a Department re -organization that realigned recreation services and incorporated the park maintenance function into the Recreation-Park Division. ➢ Innovated implementation of digital library and curbside services for continued library services to the community, including issuing more than 2000 digital library cards and providing more than 3000 additional digital books, during COVID-19 closure. ➢ Expanded self-service options, which includes self -check-out, e-commerce payment system, and self -service holds pickup at all locations. Implementation of new self - return system for the new El Gabilan Library. Virtual and curbside services to continue services to the community.
➢ Collaborated with the Monterey County Elections to allow library book return box to serve as secure election ballot return boxes in East Salinas area. This effort resulted in the increase of civic participation and more than 2900 ballots return ed through the library.
➢ Increased community engagement through various social media platforms (YouTube, Facebook, Instagram) by an average of 25% across platforms, including creating more than 180 recorded videos with more than 42,000 total views.
Police Department
➢ Worked collaboratively with Code Enforcement and the City Attorney’s Office to address quality of life issues.
➢ Completed a workload analysis and implemented a new Patrol Schedule with the goal of increasing efficiency and decreasing response times.
Public Works Department
➢ Developing Sustainable Citywide Parking Management Program:
✓ Created Parking Enterprises to better manage parking programs. ✓ Demonstrated successful implementation of Parking Enforcement Enterprise; improving services while continuing to cover costs at the same time supporting the City’s economic and safety objectives. Expanded parking enforcement services to weekends and early evenings.
✓ Adjusted rates in the Downtown Parking District for the first time in a decade to reduce dependence of the enterprise on the City General Fund. Although suspended temporarily during the pandemic, staff developed recommendations to ensure sustainable pricing for implementation in future years. ➢ Utilized Geographic Information Systems (GIS) for spatial analysis. Spatial analysis lets staff evaluate suitability and capability, estimate, predict, interpret, and understand data. This capability is delivered to all City Departments to provide new perspectives to data driven decision-making.
➢ Implemented innovative and emerging technology solutions to increase efficiency and effectiveness of City services.
➢ Plan of EV stations transformer for the ITC center.
➢ Embarked upon the development of a Community -Based Public/Private Partnership (P3) process to potentially fund green infrastructure projects throughout the City. xxiii
➢ Developing Proposition 26 fees to fund the costs of NPDES inspection and plan review activities.
➢ Continuing Implementation of the City Traffic Fee Ordinance. ➢ Secured grant funds for the Boronda Road Congestion Relief Project, Pedestrian Crossing Enhancements Project, and the Sherwood/Front St Adaptive T raffic Signal System Project.
➢ Completed Mitigated Negative Declaration for Boronda Road Improvements which provides increase capacity to four lanes and 5 new roundabouts at key intersections. ➢ Begin construction of 2021 Chip Seal project City Wide. ➢ Complete 80% design of San Juan Grade Road rehabilitation. ➢ Continuing Development of City’s Active Transportation Plan. ➢ Continue identifying funding for improvements for implementation of the East Alisal Corridor Plan.
➢ Secured grant funding to stretch transportation dollars. ➢ Hired consultant to update City Standard Plans and Specifications. ➢ Updated Pavement Management System for future road maintenance. ➢ Applied for HSIP Grants to fund a part of Williams Road Improvements. ➢ Refreshed over 17,000 linear feet of crosswalks.
➢ Complete Design of 2021 Slurry Seal Project City Wide. ➢ Complete Design of Montebella Subdivision Slurry Seal project. ➢ Complete installation of traffic signal at North Main Street and Navajo. ➢ Complete Design of traffic signal at Alisal Street and Murphy Street. ➢ Secured funding for pedestrian safety enhancements throughout the City. ➢ Secured funding for development of Vision Zero Plan to reduce severe injuries and fatalities on city streets.
❖ Public Safety
City Attorney’s Department
➢ City/County GSA MOU Update. Worked with Community Development staff to begin updating the GSA MOU to allow for development on the north boundary of the City’s limits.
Community Development Department
➢ Promoted mask guidelines, business education and safe operation protocols through focused outreach.
➢ Initiated 4 receivership cases to correct issues deemed hazardous and allow for cost recovery.
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Fire Department
➢ Recruitment and Hiring - The Fire Departme nt successfully hired and completed an academy of lateral firefighter transfers from neighboring fire departments. This effort prevented layoffs of local firefighters from neighboring agencies and resulted in a streamlined recruitment and training process. Based on the success of this endeavor we are currently hiring additional personnel using this process. ➢ We are forging partnerships with the South Bay Regional Training Consortium, Hartnell College, and the Mission Trails Regional Occupational Program (R OP) to attract and train local youth for a career of service with the City of Salinas. This will also reduce fiscal impacts as highlighted in the Salinas Plan. ➢ Emergency Medical Services – Amidst the global pandemic Salinas firefighters responded to several thousand COVID-19 related emergency responses without drastic impacts to continuity of services. The division took a lead role in establishing city - wide COVID guidelines and best practices for all City departments, and participated in local and State efforts to provide vaccinations and education. The division engaged the services of a local physician medical director to provide overall program guidance and quality assurance.
➢ Promotional Exams –The Fire Department has completed numerous internal promotions to fill vacancies in various ranks, including Fire Chief, Deputy Fire Chief, Battalion Chief, Fire Captain, and Fire Engineer. Additionally, the Fire Department’s Administrative Division successfully hired a Management Analyst. ➢ Fire Prevention Divisi on – The division was able to maintain 2 of 3 full -time Fire Inspector positions and is currently recruiting to fill vacancies. The division successfully reclassified an Office Technician to Administrative Analyst with an internal promotion and is moving forward with re-classification/re-organization plans for inspection personnel to further improve the efficiency and accountability of inspections and help with recruitment and retention of staff. The division successfully deployed a software solution to s treamline the inspection process to help assure ongoing compliance and improve customer service.
➢ Wellness/Safety – The Department begun addressing significant issues of deferred maintenance at various City fire stations and has taken several measures to re duce COVID related exposures to staff and the public. Fire department fitness equipment that had surpassed its useable lifespan was replaced in all fire stations to promote the health and wellness of our firefighters.
Library and Community Services Department
➢ Continue to convene the Community Alliance for Safety and Peace virtually, improving meeting attendance to an average of 50 participants. ➢ Provided over 7,400 meals to youth and seniors at four locations through the Summer Lunch/Snack Program and the Firehouse Senior Program.
➢ Provided over 9,000 households with Emergency Food Assistance at three recreation centers.
➢ Partnered with Monterey County to allow Sherwood Hall to be used as an alternative housing site for patients who needed to isolate/quarantine as a result of COVID-19. xxv
➢ The partnership with Monterey County was further expanded to house evacuees who were displaced by the Salinas River Fire and provided a location for a drive thru COVID-19 testing site at Sherwood Hall.
➢ Partnered with Monterey County to allow the Cesar Chavez Library to be used as a COVID-19 testing site to help support community health and safety measures. ➢ Adapted the Healthy Living Series for Spanish speaking adults at the Bread Box Recreation Center to a weekly virtual format serving 14 residents. Topics included yoga, healthy cooking and dance instruction.
➢ Started hotspot lending program with 50 loanable devices to alleviate digital divide in the community. This program also addressed community safety due to unsafe situations that were being created for students looking for broadband connection in public spaces for their online learning.
➢ Engaged over 550 children and adults who took part in the Summer Reading Challenge and hosted over 700 participants through live, virtual Summer Learning programs.
Additionally, over 800 take -home activity kits were distributed during the summer months.
Police Department
➢ Fully implemented the multi-year Victim Advocate Grant to enhance a victim-centered approach within the department and provide increased services to victims and their families.
➢ Maintained the Red -Light Camera Program at designated locations to address traffic safety issues and focus on the reduction of collisions and pedestrian fatalities. ➢ Evaluated and implemented 97% the Department of Justice’s Collaborative Reform Initiative recommendations.
➢ Continued to implement and expand the community policing concept to increase communication and transparency with the community.
Public Works Department
➢ Continuing work with Monterey County Health Department, TAMC, and Blue Zones to develop Traffic Safety education programs.
➢ Continued homeless encampment cleanups, and responded to health concerns related to the spread of Hepatitis A.
➢ Continued the re-forestation program following the storms of 2017. ➢ Begin construction of East Laurel Drive Pedestrian Improvements and Street Lighting. ➢ Completed construction of Old Muni Pool phase 1, 2 and 3. ➢ Begin construction of the Bardin Road Safe Routes to School Improvements. ➢ Completed construction of the Alvin Drive Safe Routes to School Project. ➢ Completed construction of three new traffic signals (Alvin Drive/Linwood and the Alvin Drive/El Dorado Intersections; and at North Main/Street/Navajo Drive in support of the El Gabilan Library Extension.
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➢ Completed Council approved Traffic Calming Projects at First Avenue, Kittery/Snug Harbor, and Nacional Street.
➢ Completed sidewalk repairs at District 3, District 4 and District 2 in the amount of $900K through the Job Order Contract (JOC) Sidewalk Improvement Program. ➢ Completed Phase 1 of Safe Routes to School Plan with the Transportation Agency for Monterey County, Monterey County Health Department engaging schools in the Santa Rita elementary and Salinas Elementary school districts. Began Phase 2 focusing on engagement of schools in the Alisal Elementary a nd Salinas Union High School District. Plan with recommendations to be completed in 2022. ➢ Completed new sidewalks and eliminated the “missing” pedestrian link on Maryal Drive serving Sherwood Park, Tatum’s Garden, the Rodeo Grounds and Boys and Girls Club.
Labor Relations
The City is currently in labor negotiations with the Police Manager’s Association (PMA). PMA’s MOU expired December 31, 2021. All other units have approved MOUs or Compensation Plans.
The Salinas Police Officers Association (SPOA) r eached an agreement in March 2021. The Confidential Units and Fire Units MOUs expire in December 2022. All other united expire mid to late 2023.
Acknowledgements
The preparation of this Annual Financial Report could not have been accomplished without t he professional, efficient, and dedicated service of the staff of the Department of Finance. In particular, I would like to acknowledge and give a very special thanks to Assistant Finance Director Mary Lagasca and Accounting Manager, Juan Hernandez, who both are dedicated to the sound fiscal management of the City. I also would like to express my appreciation to our professional senior accountant: Alma Gonzalez-Delgado, and our Financial Management Analyst, Abe Pedroza. The entire Finance staff deserves a special word of thanks for another year of hard work and quality performance. I also wish to thank our auditors, McGilloway, Ray, Brown & Kaufman, Accountants & Consultants, for their diligence, cooperation and assistance.
Sincere appreciation is also expressed to the City Manager and members of the City Council for their support in planning and conducting the financial operations of the City in a responsible, sustainable and progressive manner.
Respectfully submitted,
Mark Roberts
Director of Finance
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City of Salinas
Organization Chart
xxviii
City of Salinas
List of Principal Officials
Carla Viviana Gonzalez Orlando Osornio
Councilmember Councilmember
District 1 District 4
Tony Barrera Christie Cromeenes
Councilmember Councilmember
District 2 District 5
Steve McShane Anthony Rocha
Councilmember Councilmember
District 3 District 6
Jim Pia David Jacobs
Assistant City Manager Public Works Director
Kristan Lundquist Megan Hunter
Library and Community Community
Services Director Development Director
Roberto Filice Michele Vaughn
Chief of Police Fire Chief
Mark Roberts
Director of Finance
Kimbley Craig
Mayor
Steven S. Carrigan
City Manager
Christopher A. Callihan
City Attorney
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-5
This analysis of the City of Salinas (City) financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 20 21. Please read it in conjunction with the accompanying transmittal letter, the basic financial statements and the accompanying notes to the financial statements.
A. FINANCIAL HIGHLIGHTS
• At June 30, 2021, the City’s net position (excess of assets over liabilities) was $201.1 million.
Of this amount, $245.2 million are invested in capital assets and restricted assets, which is offset by a deficit of $124.8 million classified as unrestricted assets. • During the fiscal year ended June 30, 2021, the City’s total net position increased by $15.3 million. Mainly, this change resulted from increased sales tax and transient occupancy tax. • During the fiscal year, fund balances decreased $5.4 million to $138.4 million for governmental funds, of which $109.3 million is either nonspendable, restricted, committed, or assigned and thus unavailable.
• During the fiscal year the General Fund, Measure E, and Measure G fund balance increased $9.1 million to $64.5 million of which $34.6 million is either nonspendable, restricted, committed, or assigned. Unassigned General Fund, Measure E & Measure G fund balance was $30.0 million.
• The City’s total liabilities increased by $ 30.9 million during the current fiscal year .
Governmental Activities increased by $ 42.0 million, and Business-type Activities decreased by $11.1 million. The long-term debt decreased $3.1 million as a result of annual debt service payments and the refinancing of Certificates of Participation and Sewer Revenue Bonds. The Net Pension Liability increased $4.9 million and the Net OPEB Liability increased $5.8 million.
• The City’s capital assets, net of depreciation, increased $17.3 million to $415.9 million.
B. OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which are comprised of three components: 1) Government-Wide Financial Statements, 2) Fund Financial Statements and 3) Notes to the Basic Financial Statements.
The basic financial statements include the City (primary government) and all legally separate entities (component units) for which the government is financially accountable.
This report also contains other supplementary information in addition to the basic financial statements for further information and analysis.
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-6
Government-Wide Financial Statements
The Government-Wide Financial Statements present the financial picture of the City and provide readers with a broad view of the City’s finances. These statements present governmental activities and business-type activities separately and include all assets of the City (including infrastructure) as well as all liabilities (including long-term debt). Additionally, certain interfund receivables, payables and other interfund activity have been eliminated as prescribed by GASB Statement No.
34. The Statement of Net Position and the Statement of Activities and Changes in Net Position report information about the City as a whole and about its activities. These statements include all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account, regardless of when cash is received or paid.
The Statement of Net Position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Over time, changes in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities and Changes in Net Position presents information showing how the City’s net position changed during the year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of timing of related cash flows.
In the Statement of Net Position and the Statement of Activities and Changes in Net Position, we separate the City activities as follows:
Governmental Activities—All of the City’s basic services are reported in this category, including general government, public safety, community d evelopment, public works, recreation, and library. Property taxes, sales taxes, user fees, interest income, franchise fees, state grants and federal grants finance these activities. The City’s insurance programs (health, worker’s compensation, liability and property damage) are accounted for in internal service funds, but are reported as part of governmental activities since these programs are used primarily for governmental activities.
Business-Type Activities—The City charges a fee to customers to cover all or most of the costs of certain services it provides. The City’s Industrial Wastewater System, Airport, Golf Courses, Sanitary Sewer, Hitchcock Water Utility, Storm Sewer, Permit Service, Landfill and Parking District activities are reported as business-type activities.
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-7
Fund Financial Statements
The Fund Financial Statements provide detailed information about the City’s major funds — not the City as a whole. Some funds are required to be established by State law and by bond covenants .
However, management establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other money.
The Fund Financial Statements include statements for each of the three categories of activities – governmental, proprietary and fiduciary. The governmental funds are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The proprietary funds are prepared using the economic resources measurement focus and the accrual basis of accounting. The fiduciary funds are agency funds, pension trust fund and private purpose trust funds, which only report assets and liabilities and do not have a measurement focus.
Governmental Funds - The Governmental Funds are used to account for essentially the same functions reported as governmental activities in the Government-Wide Financial Statements. However, unlike the Government-Wide Financial Statements, Governmental Funds Financial Statements focus on current financial resources, which emphasize near-term inflows and outflows of expendable resources as well as balances of expendable resources at the end of the fiscal year. This information is essential in evaluating the City’s near-term financial requirements.
In order to better understand the City’s long-term and short-term requirements, it is useful to compare the City’s Governmental Funds Statements with the governmental activities in the Government-Wide Financial Statements. A reconciliation is provided for the Governmental Fund Balance Sheet and the Statement of Revenues, Expenditures and Changes in Fund Balances to facilitate this comparison.
The major governmental funds include the General, Measure E and Measure G Funds, Development Fees Special Revenue Fund, and the Special Construction Assistance Special Revenue Fund, which are reported in detail in the Governmental Fund Financial Statements. All other funds are shown in the aggregate as other non-major governmental funds.
Individual fund data for other non -major governmental funds is provided in the form of supplementary information elsewhere in the report.
Proprietary Funds - The City maintains two types of proprietary funds, enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business -type activities in the Government-Wide Financial Statements. The City uses enterprise funds to account for its Airport, Industrial Wastewater System, Golf Courses, Sanitary Sewer, Parking, Hitchcock Water Well Utility, Storm S ewer, Permit Services and Landfill activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its general city insurance operations.
Because these services predominantly benefit the governmental rather than business -type activities, they have been included within governmental activities in the Government -Wide Financial Statements.
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-8
Proprietary funds provide the same type of information as the Govern ment-Wide Financial Statements, only in more detail . All enterprise funds are presented in detail as major enterprise funds. The internal service funds are combined into a single aggregated presentation in the proprietary fund financial statements . Individual fund data for the internal service funds is provided in the form of supplementary information elsewhere in the report.
Fiduciary Funds - The City is the trustee, or fiduciary, for certain funds held on behalf of external parties. The City’s fiducia ry activities are reported in separate Statements of Fiduciary Net Position. These activities are excluded from the City’s other financial statements because the resources of these funds are not available to support the City’s own programs . The City is responsible for ensuring that these funds are used for their intended purpose.
Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the Government-Wide and Fund Financial Statements.
Required Supplementary Information
In addition to the basic financial statements, this report also presents certain Required Supplementary Information including the City’s budgetary comparison schedules for the General, Measure E and Measure G Funds and the Development Fees major special revenue fund, and information concerning the progress in funding its obligation to provide pension benefits to its employees.
Other Supplementary Information
Combining statemen ts for the other non -major governmental funds, Internal Service Funds, Fiduciary Funds and General, Measure E and Measure G Funds are presented immediately following the Required Supplementary Information as supplementary information.
C. GOVERNMENT-WIDE FINANCIAL ANALYSIS
The Management Discussion and Analysis (MD&A) includes comparative data for analysis.
Statement of Net Position
Net position is a good indicator of the City’s financial position . During this fiscal year, the net position of the City increased $15.3 million (8.2%) over the prior year from $ 185.8 to $201.1 million.
At June 30, 2021, the largest portion of net position ( 122%) consists of the City’s investment in capital assets net of related debt . This component portrays the total amount of funds required to acquire those assets less any related outstanding debt used for such acquisition . The City uses these capital assets to provide services to residents. The capital assets of the City are not sources of income for repayment of d ebt as most assets are not revenue generating and generally are not liquidated to repay debt. Debt service payments are funded from other resources available to the City.
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-9
The following is the Condensed Statement of Net Position for the fiscal years ended June 30, 2021 and 2020:
Percent
2021 2020 2021 2020 2021 2020 of Total
Assets:
Current assets 196,752,296 $ 167,074,197 $ 12,424,184 $ 14,167,788 $ 209,176,480 $ 181,241,985 $ 31.9 % Other assets 31,380,413 27,927,666 139,120 2,069,306 31,519,533 29,996,972 4.8 % Capital assets, net 305,549,059 284,681,958 110,385,369 113,916,612 415,934,428 398,598,570 63.3 % Total assets 533,681,768 479,683,821 122,948,673 130,153,706 656,630,441 609,837,527 100.0 % Deferred outflow s of resources
Related to pension and OPEB 50,927,609 50,803,788 1,414,097 1,881,948 52,341,706 52,685,736 97.6 % Loss on refunding of debt 554,334 238,177 722,009 229,271 1,276,343 467,448 2.4 % Total deferred outflow s of resources 51,481,943 51,041,965 2,136,106 2,111,219 53,618,049 53,153,184 100.0 % Liabilities:
Current liabilities 13,772,217 9,931,570 1,024,177 2,871,844 14,796,394 12,803,414 3.0 % Other liabilities 34,814,156 6,987,464 - - 34,814,156 6,987,464 7.0 % LTD - due in one year 10,022,245 9,636,252 2,270,794 2,157,635 12,293,039 11,793,887 2.5 % Long-term liabilities 400,600,059 390,667,048 36,604,855 39,439,888 437,204,914 430,106,936 87.6 % Total liabilities 459,208,677 417,222,334 39,899,826 44,469,367 499,108,503 461,691,701 100.0 % Deferred inflow s of resources
Related to pension and OPEB 9,688,905 15,029,697 314,451 450,762 10,003,356 15,480,459 99.9 % G ain on refunding of debt 13,862 17,256 - - 13,862 17,256 0.1 % Total deferred inflow s of resources 9,702,767 15,046,953 314,451 450,762 10,017,218 15,497,715 100.0 % Net Position:
Net investment in Capital Assets 167,726,772 143,281,912 77,467,957 76,397,363 245,194,729 219,679,275 122.0 % Restricted 80,741,294 89,496,097 6,807 1,949,081 80,748,101 91,445,178 40.1 % Unrestricted (132,215,799) (134,321,510) 7,395,738 8,998,352 (124,820,061) (125,323,158) (62.1)% Total Net Position 116,252,267 $ 98,456,499 $ 84,870,502 $ 87,344,796 $ 201,122,769 $ 185,801,295 $ 100.0 % City of Salinas
Condensed Statements of Net Position
June 30, 2021
G overnmental Activities Business-type Activities Total
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-10
Statement of Activities
The following is the Condensed Statement of Activities and Changes in Net Position for the fiscal years ended June 30, 2021 and 2020:
Total revenues increased from the prior year by $ 24.3 million, or 13.2% and total expenses increased by $ 7.7 million from prior year, or 4.2%. Further analysis is provided within the governmental and business-type activities sections.
2021 2020 2021 2020 2021 2020
Revenues
Program Revenues:
Charges for Services 9,531,993$ 8,234,855$ 12,364,295$ 12,407,425$ 21,896,288$ 20,642,280$ Operating Grants & Contributions 28,601,755 18,378,134 901 740 28,602,656 18,378,874 Capital Grants & Contributions 8,984,014 5,026,633 947,593 952,402 9,931,607 5,979,035 General Revenues:
Taxes 144,501,118 133,081,125 - - 144,501,118 133,081,125 Unrestricted Investment Earnings 777,268 2,753,098 87,962 328,265 865,230 3,081,363 Gain on Disposal of Assets 10,926 - 26,200 4,501 37,126 4,501 Housing loan repayment from/to
Successor Agency 1,335 - - - 1,335 Miscellaneous 1,834,421 2,230,446 - - 1,834,421 2,230,446 Total Revenues 194,241,495 169,705,626 13,426,951 13,693,333 207,668,446 183,398,959 Expenses
General Government 32,620,008 26,385,378 2,289,202 2,189,803 34,909,210 28,575,181 Public Safety 100,731,223 103,263,005 - - 100,731,223 103,263,005 Public Works 25,350,203 22,655,778 16,639,681 16,049,136 41,989,884 38,704,914 Recreation 4,185,382 4,669,202 496,722 387,772 4,682,104 5,056,974 Library 5,079,784 5,239,452 - - 5,079,784 5,239,452 Interest 4,954,767 3,807,469 - - 4,954,767 3,807,469 Total Expenses 172,921,367 166,020,284 19,425,605 18,626,711 192,346,972 184,646,995 Increase (decrease) in Net Position
before Contributions and
Transfers 21,320,128 3,685,342 (5,998,654) (4,933,378) 15,321,474 (1,248,036) Transfers (3,524,360) (4,063,306) 3,524,360 4,063,306 - - (3,524,360) (4,063,306) 3,524,360 4,063,306 - - Increase (decrease) in Net Position 17,795,768 (377,964) (2,474,294) (870,072) 15,321,474 (1,248,036) Net Position - Beginning of Year 98,456,499 98,834,463 87,344,796 88,757,932 185,801,295 187,592,395 Prior Period Adjustment - - - (543,064) - (543,064) Net Position -
Beginning of Year as restated 98,456,499 98,834,463 87,344,796 88,214,868 185,801,295 187,049,331 Net Position - Ending 116,252,267$ 98,456,499$ 84,870,502$ 87,344,796$ 201,122,769$ 185,801,295$ Governmental Activities Business-type Activities Total
City of Salinas
Condensed Statement of Activities and Changes in Net Position For the Fiscal Year Ended June 30, 2021
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-11
Governmental Activities
Governmental activities resources total $ 194.2 million. The City’s governmental a ctivities increased net position by $ 17.8 million. The following charts highlight the sources of revenues and purpose of expenses:
Total expenses for governmental activities, excluding transfers and contributions, were $172.9 million including interest on long-term debt of $5.0 million. Total expenditures that were funded by tax revenues, investment income and other general revenues were $125.8 million.
Taxes
74%
Charges for
Services
5%
Operating
Grants and
Contributions
15%
Capital Grants
and Contributions
5% Investment
Income
0%
Other
1%
Governmental Activities
Revenues by Source
June 30, 2021
Public Works
15%Public Safety
58%
General
Government
19%
Recreation
2%
Library
3%
Interest
3%
Governmental Activities
Expenses by Function/Program
June 30, 2021
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-12
Functional expenses for the year ended June 30, 20 21 were as follows:
Public safety continues to be the single highest expense for the City followed by general government. Net cost of services, after subtracting fees and grant revenues total $125.8 million.
Business-Type Activities
The City’s business-type activities net position was $84.9 million, a decrease of $2.47 million from the prior fiscal year. Total revenues for business-type activities were $13.4 million. The largest program revenues were charges for services of $ 12.4 million. Other program revenues included operating/capital grants and contributions of $ 0.9 million. Total expenses for the business -type activities were $19.4 million during FY 2020-21.
Total Cost of
Services Percent
Net Cost of
Services Percentage
General government 32,620,008$ 18.9 % (6,262,338)$ (5.0)% Public safety 100,731,223 58.3 % 95,334,628 75.8 % Public works 25,350,203 14.7 % 23,081,474 18.3 % Recreation 4,185,382 2.4 % 3,932,796 3.1 % Library 5,079,784 2.9 % 4,762,278 3.8 % Interest 4,954,767 2.9 % 4,954,767 3.9 % Total 172,921,367$ 100 % 125,803,605$ 100 % Airport Industrial
Waste
Golf
Courses
Sanitary
Sewer
Storm
Sewer
Landfill
Garbage
Surcharg
e
Water
Utility
Downto
wn
Parking
Revenues $2.20 $2.95 $0.16 $4.65 $3.43 $0.00 $0.01 $2.17 Expenses $2.40 $1.99 $0.50 $4.88 $5.43 $0.69 $0.02 $2.41 $0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
$5.5
$6.0
Business -Type Activities
Revenues, Expenses (in millions)
June 30, 2021
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-13
D. FUND FINANCIAL STATEMENT ANALYSIS
The City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on short -term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $ 138.4 million. Of the total fund balance, $ 9.7 million was nonspendable and indicates the resources are nonspendable loans, notes, land and property held for resale and are not anticipated to be liquidated in the near-term. Of the total fund balance, $70.3 million was restricted fund balance and indicates the use of resources is constrained by external parties, resource providers, constitutions or enabling legislations. Fund balance of $16.6 million was restricted for future development, $ 8.2 million for maintenance districts, $ 17.0 million for street repairs and improvements, $4.8 million for debt service, $3.5 million for grants, $ 3.1 million for housing, $15.1 for capital projects, and $ 1.3 million for public safety purposes . The remainder of the restrictions are listed in the Fund Balance footnote. Committed fund balance totaled $4.3 million and are limited to specific purposes as defined in the City Charter or through a formal budgetary action of the City Council occurring through adoption of an ordinance or resolution . The $4.3 million committed fund balance is committed for capital projects. Assigned fund balance totaled $25.1 million and represents informal assignments made by the City. The remaining fund balance of $29.1 million is unassigned and mainly includes the unassigned fund balance of the General Fund, Measure E, and Measure G Fund.
The General Fund is the chief operating fund of the City . The General, Measure E and Measure G Funds’ fund balance increased by $9.1 million in FY 2020-21 to $64.5 million, of which $ 7.1 million was nonspendable and indicates the resources are nonspendable advances and are not anticipated to be liquidated in the near -term. The $ 2.3 million committed fund balance is committed for capital projects and is limited to specific purposes as defined in the City Charter or through a formal budgetary action of the City Council occurring through adoption of an ordinance or resolution. Assigned fund balance totaled $ 25.1 million and ha s been allocated by the City Council for specific capital and operational needs . The remaining fund balance of $ 30.0 million is unassigned.
Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial statements but in more detail. Factors concerning these funds have been addressed in the discussion of Government-Wide Financial Analysis.
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-14
E. GENERAL FUND BUDGETARY HIGHLIGHTS
The final amended General, Measure E, and Measure G Fund revenue budget, including transfers in, totaled $ 138.7 million and the expenditure budget totaled $ 164.4 million including transfers out. Transfers out are budgeted mostly for capital projects and the funds are already on -hand.
Transfers out to the Capital Projects Fund will occur over multiple years.
Significant Appropriations Increases/Decreases
Appropriations during the year were adjusted upward by $ 30.3 million, of which $ 24.2 million were related to transfers for capital projects and $ 6.1 million in operational changes . Estimated revenue were not adjusted upward by $8.6 million primarily for tax revenue.
F. CAPITAL ASSETS AND LONG-TERM OBLIGATIONS
Capital Assets Including Infrastructure
The following is a summary of the City’s capital assets as of June 30, 20 21 and 2020:
Capital assets, including infrastructure assets of the City , are those assets which are used in the performance of the City’s functions . At June 30, 20 21, net capital assets of the Governmental Activities totaled $305.5 million and the net capital assets of the Business -type Activities totaled $110.4 million. During FY 2002 -03, American Appraisal Associates were hired to conduct an inventory and valuation of all the City’s capital assets . Finance Department staff maintains and updates the Capital Assets inventory by recording all assets acquired or retired at the end of every fiscal year and performs rotating spot inventories each year . The City has ele cted to report and depreciate all infrastructures.
Governmental activities acquired $31.5 million of capital assets during the year. The acquisitions include $25.9 million in construction in progress, $4.0 million in infrastructure improvements, and $1.6 million in machinery.
Overall, Business-type Activities had a net decline in capital assets by $ 3.5 million. The City acquired $2.8 million of capital assets during the year, however depreciation exceeded the cost of the new assets.
2021 2020 2021 2020 2021 2020
Land 25,899,986$ 25,899,986$ 3,632,339$ 3,632,339$ 29,532,325$ 29,532,325$ Buildings 46,337,340 46,337,340 27,523,054 27,523,054 73,860,394 73,860,394 Improvements 15,766,022 15,766,022 26,708,254 26,708,254 42,474,276 42,474,276 Equipment 42,133,934 40,737,724 9,332,629 8,433,051 51,466,563 49,170,775 Infrastructure 255,168,975 248,460,395 237,688,120 237,130,928 492,857,095 485,591,323 Construction in Progress 159,896,482 136,718,778 5,259,442 4,467,942 165,155,924 141,186,720 545,202,739 513,920,245 310,143,838 307,895,568 855,346,577 821,815,813 Accumulated Depreciation (239,653,680) (229,238,287) (199,758,469) (193,978,956) (439,412,149) (423,217,243) 305,549,059$ 284,681,958$ 110,385,369$ 113,916,612$ 415,934,428$ 398,598,570$ City of Salinas' Capital Assets
Governmental Activities Business-type Activities Totals
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-15
Long-Term Obligations
As of June 30, 20 21, the City had $449.5 million in long-term debt.
Further details on the City of Salinas’ long -term debt can be found in Note 18 to the financial statements.
G. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
Despite the significant drop in revenue in prior FY 2020-21; the City has taken into consideration a recovery in revenues for Property tax, sales tax, and business licenses. Overall, the FY 2021-22 budget is $202 million showing an increase of $13 million from prior year budget.
The Salinas Plan and Fiscal Sustainability
The Salinas Plan is a Ten-Year Plan designed to provide the City with a path toward maintaining a long-term balanced budget while preserving City services and addressing the affordable housing crisis. The plan provides 32 recommended initiatives . The 32 recommended initiatives are now in various stages of progress an d are described in more detail in the Salinas Plan section of this budget.
2021 2020 2021 2021 2021 2020
Annual Leave 12,375,926$ 11,424,225$ 607,904$ 557,043$ 12,983,830$ 11,981,268$ Insurance Claims 29,813,871 28,210,396 - - 29,813,871 28,210,396 Capital Leases 65,977,431 88,522,299 9,703,167 10,396,766 75,680,598 98,919,065 Loans and Notes - - 1,953,000 2,395,000 1,953,000 2,395,000 Revenue Bonds - - 14,425,000 15,065,000 14,425,000 15,065,000 Certificates of
Participation 55,620,000 41,665,000 6,260,000 7,220,000 61,880,000 48,885,000 Assessment District
Bonds 8,970,000 6,905,000 - - 8,970,000 6,905,000 Unamortized Bond
Premium 7,548,231 4,209,023 272,085 95,646 7,820,316 4,304,669 Unamortized Bond
Discount (344,239) (357,479) - - (344,239) (357,479) Subtotal 179,961,220 180,578,464 33,221,156 35,729,455 213,182,376 216,307,919 Net OPEB Liability 23,275,132 17,847,775 1,486,473 1,119,042 24,761,605 18,966,817 Net Pension Liability 207,385,952 201,877,061 4,168,020 4,749,026 211,553,972 206,626,087 Total outstanding debt 410,622,304$ 400,303,300$ 38,875,649$ 41,597,523$ 449,497,953$ 441,900,823$ Governmental Activities Business-type Activities Totals City of Salinas' Outstanding Debt
CITY OF SALINAS
Management’s Discussion and Analysis
Fiscal Year ended June 30, 2021
F-16
Major Projects and Funding
On March 11, 2021, President Biden signed the American Rescue Plan Act, which provided the City with a total of $51.6 million in relief funds. The City has received the first half of these funds, with the second half coming in May/June 2022 . Additionally, the City was awarded grant funds to mitigate the negative effects of the COVID -19 Pa ndemic including a second phase of the Emergency Rental Assistant Program (ERAP). The purpose of this grant is to distribute funding to provide rental and utility assistance to low -income eligible households located in Monterey County that are facing hous ing instability because of loss or reduction in income due to the COVID-19 crisis.
H. REQUEST FOR INFORMATION
This financial report is designed to provide our residents, taxpayers, customers, and investors and creditors with a general overview of the City ’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City of Salinas Finance Department, 200 Lincoln Avenue, Salinas, California 93901.
F-17
BASIC FINANCIAL STATEMENTS
F-18
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F-19
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
F-20
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Governmental Business-type
Activities Activities Total
ASSETS
Cash and investments 171,095,305$ 20,452,624$ 191,547,929$ Receivables, net of allowance
Taxes 19,873,524 - 19,873,524 Accounts 583,716 1,492,085 2,075,801 Accrued interest 830,211 12,967 843,178 Due from outside agencies 13,081,293 - 13,081,293 Internal balances
Due from other funds 2,548,492 (2,548,492) -
Advances to other funds 6,985,000 (6,985,000) - Restricted cash and investments 1,387,761 6,807 1,394,568 Prepaid bond insurance 71,752 132,313 204,065 Assessments receivable 8,970,000 - 8,970,000 Loan receivables, net of allowance 205,382 - 205,382 Land and properties held for resale 2,507,553 - 2,507,553 Capital assets
Land and nondepreciable assets 185,796,468 8,891,781 194,688,249 Depreciable assets, net of accumulated depreciation 119,752,591 101,493,588 221,246,179 Total assets 533,689,048 122,948,673 656,637,721
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 44,999,041 1,035,467 46,034,508
Related to OPEB 5,928,568 378,630 6,307,198
Loss on refunding of debt 554,334 722,009 1,276,343
Total deferred outflows of resources 51,481,943 2,136,106 53,618,049 Total assets and deferred outflows 585,170,991 125,084,779 710,255,770
LIABILITIES
Accounts payable 13,105,553 680,472 13,786,025
Accrued interest payable 663,088 304,160 967,248 Prepaid deposits 10,856 39,545 50,401 Unearned revenues 34,814,156 - 34,814,156 Long term liabilities
Debt due within one year 10,022,245 2,270,794 12,293,039 Debt due in more than one year 169,938,975 30,950,362 200,889,337 Net pension liability 207,385,952 4,168,020 211,553,972 Net OPEB liability 23,275,132 1,486,473 24,761,605 Total liabilities 459,215,957 39,899,826 499,115,783
DEFERRED INFLOWS OF RESOURCES
Related to pensions 5,311,717 34,900 5,346,617
Related to OPEB 4,377,188 279,551 4,656,739
Gain on refunding of debt 13,862 - 13,862 Total deferred inflows of resources 9,702,767 314,451 10,017,218
NET POSITION
Net investment in capital assets 167,726,772 77,467,957 245,194,729 Restricted for:
Housing 7,186,610 - 7,186,610 Capital projects 15,099,803 - 15,099,803 Highways and streets 41,854,496 - 41,854,496 Debt service 4,839,533 6,807 4,846,340 Special programs 11,760,852 - 11,760,852 Total restricted assets 80,741,294 6,807 80,748,101 Unrestricted net position (deficit) (132,215,799) 7,395,738 (124,820,061) Total net position 116,252,267$ 84,870,502$ 201,122,769$ Primary Government
CITY OF SALINAS
STATEMENT OF NET POSITION
JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-21
Operating Capital
Charges for Grants and Grants and Governmental Business-type FUNCTION/PROGRAM ACTIVITIES Expenses Services Contributions Contributions Activities Activities Total Primary government:
Governmental activities:
General government 32,620,008$ 6,963,114$ 24,541,746$ 7,377,486$ 6,262,338$ -$ 6,262,338$ Public safety 100,731,223 1,682,263 3,500,412 213,920 (95,334,628) - (95,334,628) Public works 25,350,203 848,877 77,244 1,342,608 (23,081,474) - (23,081,474) Recreation 4,185,382 29,537 223,049 - (3,932,796) - (3,932,796) Library 5,079,784 8,202 259,304 50,000 (4,762,278) - (4,762,278) Interest on long-term debt 4,954,767 - - - (4,954,767) - (4,954,767) Total governmental activities 172,921,367 9,531,993 28,601,755 8,984,014 (125,803,605) - (125,803,605) Business-type activities:
Airport 2,351,123 1,745,856 901 - - (604,366) (604,366) Industrial waste 1,919,872 2,825,240 - - - 905,368 905,368 Municipal golf courses 496,722 160,000 - - - (336,722) (336,722) Sanitary sewer 4,534,248 3,672,624 - - - (861,624) (861,624) Storm sewer 5,427,135 215 - - - (5,426,920) (5,426,920) Landfill garbage surcharge - - - - - - - Water utility 19,730 7,153 - - - (12,577) (12,577) Downtown parking 2,387,573 1,219,706 - 947,593 - (220,274) (220,274) Permit services 2,289,202 2,733,501 - - - 444,299 444,299 Total business-type activities 19,425,605 12,364,295 901 947,593 - (6,112,816) (6,112,816) Total primary government 192,346,972$ 21,896,288$ 28,602,656$ 9,931,607$ (125,803,605) (6,112,816) (131,916,421) General revenues and transfers:
Property taxes 33,087,471 - 33,087,471 Sales taxes 80,811,345 - 80,811,345 Utility user tax 21,229,236 - 21,229,236 Business tax 7,034,664 - 7,034,664 Transient occupancy tax 2,338,402 - 2,338,402 Unrestricted investment earnings 777,268 87,962 865,230 Miscellaneous 1,834,421 - 1,834,421 Gain on disposal of assets 10,926 26,200 37,126 Transfers (3,524,360) 3,524,360 - Total general revenues and transfers 143,599,373 3,638,522 147,237,895 Change in net position 17,795,768 (2,474,294) 15,321,474 Net position - beginning of year 98,456,499 87,344,796 185,801,295 Net position - end of year 116,252,267$ 84,870,502$ 201,122,769$
CITY OF SALINAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2021
Program Revenues Net (Expense) Revenue and Changes in Net Position The accompanying notes are an integral part of this statement.
F-22
F-23
FUND FINANCIAL STATEMENTS
F-24
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F-25
GOVERNMENTAL FUNDS
GENERAL, MEASURE E, & MEASURE G FUND
The General, Measure E, & Measure G Funds are always classified as a major fund. They account for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. The General, Measure E, & Measure G Funds support essential City services such as police and fire protection, street maintenance, libraries, and parks and open space maintenance.
SPECIAL REVENUE FUNDS
Debt Service Funds are used to account for specific revenues t hat are legally restricted to expenditures for specified purposes. The following fund has been classified as a major special revenue fund:
American Rescue Plan (ARPA) – On March 11, 2021, President Biden signed the American Rescue Plan Act, which will provide the City with $51,567,313 in relief funds. This fund accounts for the first half of the American Rescue Plan relief funds
DEBT SERVICE FUNDS
Debt Service Funds are used for the accumulation and disbursement of financial resources that will be used to make principal and interest payments on general long -term debt. The following fund has been classified as a major debt service fund:
Assessment District Debt Service – This fund is used to accumulate monies for payment of the City’s Assessment Districts Improvement Bonds. Debt service is financed with special assessments levied against property owners within the respective improvement districts.
CAPITAL PROJECT FUNDS
Capital Projects Funds are used to account for major capital acquisition and construction activities.
The following fund has been classified as a major capital project fund:
Special Construction Assistance – This fund accounts for proceeds of long -term borrowings resulting from the sale of Certificates of Participation to finance the acquis ition and construction of capital projects.
F-26
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General, American Assessment Special Non-Major
Measure E, Rescue Plan District Debt Construction
Non-major
Governmental
& Mesure G Act (ARPA) Service Assistance Funds Total
ASSETS
Cash and investments 52,626,670$ 25,783,657$ 430,977$ 19,343,541$ 56,578,844$ 154,763,689$ Receivables, net:
Taxes 19,528,443 - - - - 19,528,443 Accounts 304,226 - - 279,490 - 583,716 Accrued interest 73,450 - - - 749,270 822,720 Assessments - - 8,970,000 - - 8,970,000 Due from outside agencies 75,000 - - 5,018,032 7,988,261 13,081,293 Due from other funds 7,076,357 - - - 2,080,093 9,156,450 Restricted cash and investments - - 136,669 - 857,001 993,670 Loan receivables - - - - 205,382 205,382 Advances to other funds 6,985,000 - - - - 6,985,000 Land and properties held for resale - - - - 2,507,553 2,507,553 Total assets 86,669,146$ 25,783,657$ 9,537,646$ 24,641,063$ 70,966,404$ 217,597,916$
LIABILITIES
Accounts payable 4,902,945$ -$ -$ 4,451,136$ 3,620,458$ 12,974,539$ Deposits 10,856 - - - - 10,856 Due to other funds 17,259,806 - - 1,559,892 4,619,723 23,439,421 Unearned revenues - 25,783,657 - - 60,499 25,844,156 Total liabilities 22,173,607 25,783,657 - 6,011,028 8,300,680 62,268,972
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - special assessments - - 8,970,000 - - 8,970,000 Unavailable revenues - grants - - - 4,843,789 2,197,980 7,041,769 Unavailable revenues - accrued interest - - - - 696,810 696,810 Unavailable revenues - housing loans - - - - 205,382 205,382 Total deferred inflows of resources - - 8,970,000 4,843,789 3,100,172 16,913,961
FUND BALANCE
Nonspendable 7,060,000 - - - 2,524,124 9,584,124 Restricted - - 567,646 13,786,246 55,919,317 70,273,209 Committed 2,345,602 - - - 2,000,000 4,345,602 Assigned 25,079,875 - - - - 25,079,875 Unassigned 30,010,062 - - - (877,889) 29,132,173 Total fund balance 64,495,539 - 567,646 13,786,246 59,565,552 138,414,983 Total liabilities, deferred inflows, and fund balance 86,669,146$ 25,783,657$ 9,537,646$ 24,641,063$ 70,966,404$ 217,597,916$
CITY OF SALINAS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-27
Total fund balances - total governmental funds (page F-27) 138,414,983$ Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental funds are not current financial resources and therefore are not reported in the governmental funds balance sheet. 305,549,059 Deferred inflows resulting from revenues that are not available to pay for current period expenditures are labeled unavailable in the governmental funds balance sheet. 7,943,961 Taxes receivable not collectible within sixty days are not available to pay current period expenditures and, therefore, are not reported in the funds. 345,081
Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in governmental funds balance sheet. (663,088) Long-term liabilities are not due and payable in the current period and, therefore, they are not reported in the governmental funds balance sheet as follows:
Annual leave (12,234,703)$
Estimated insurance claims (1,782,230)
Net pension liability (206,075,725)
Net OPEB liability (22,876,869)
Capital leases (65,977,431)
Certificates of participation (55,620,000)
Assessment bonds (8,970,000) (373,536,958)
Governmental funds report the effects of premiums, discounts, refundings, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities for the following:
Premium on bonds (7,548,231)
Discount on bond 344,239
Deferred gain and loss on refundings 540,472
Prepaid bond insurance 71,752 (6,591,768)
Differences between expected and actual experience, assumption changes, net differences between projected and actual earnings and contributions subsequent to the measurement date are recognized as deferred outflows and deferred inflows of resources in the statement of net position.
Pension and OPEB deferred outflows 50,500,664
Pension and OPEB deferred inflows (9,603,035) 40,897,629 Internal service funds are used by management to charge the costs of insurance programs to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the government-wide statement of net position. 3,893,368 Net position of governmental activities (page F-21) 116,252,267$
CITY OF SALINAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE GOVERNMENT WIDE STATEMENT OF NET POSITION - GOVERNMENTAL ACTIVITIES JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-28
General American Assessment Special Non-Major
Measure E, Rescue Plan District Debt Construction Governmental & Measure G Act (ARPA) Service Assistance Funds Total
REVENUES
Taxes 144,300,725$ -$ -$ -$ 742,710$ 145,043,435$ Taxes - special assessments - - 478,941 - 2,295,704 2,774,645 Licenses and permits 812,083 - - - - 812,083 Intergovernmental 1,557,920 - - 5,114,286 24,732,551 31,404,757 Charges for services 4,833,230 - - 635,030 1,385,806 6,854,066 Interest 416,580 - 27 - 256,975 673,582 Rental income 418,772 - - 270,091 238,760 927,623 Fines and forfeits 275,938 - - - 347,462 623,400 Miscellaneous 890,277 - - 206,122 1,147,090 2,243,489 Total revenues 153,505,525 - 478,968 6,225,529 31,147,058 191,357,080
EXPENDITURES
Current:
General government 28,416,370 - - 1,065,281 10,510,935 39,992,586 Public safety 79,299,704 - - - 3,542,727 82,842,431 Public works 11,702,609 - - - 7,190,357 18,892,966 Recreation 2,647,436 - - - 288,114 2,935,550 Library 4,166,610 - - - 197,387 4,363,997 Capital outlay 599,877 - - 25,084,860 3,840,501 29,525,238 Debt service:
Principal retirement - - 580,000 - 5,885,528 6,465,528 Interest and fiscal charges - - 50,414 - 5,316,091 5,366,505 Bond issuance cost - - - - 584,727 584,727 Total expenditures 126,832,606 - 630,414 26,150,141 37,356,367 190,969,528
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 26,672,919 - (151,446) (19,924,612) (6,209,309) 387,552
OTHER FINANCING SOURCES (USES)
Loan proceeds - - - - 2,937,947 2,937,947 Refunding bond proceeds - - - - 20,630,000 20,630,000 Premium on refunding bonds issued - - - - 3,791,371 3,791,371 Payment to refunded bond escrow agent - - - - (23,988,060) (23,988,060) Operating transfers in 6,096,486 - - - 20,804,094 26,900,580 Operating transfers out (23,684,887) - - - (12,396,753) (36,081,640) Total other financing sources (uses) (17,588,401) - - - 11,778,599 (5,809,802) NET CHANGE IN FUND BALANCE 9,084,518 - (151,446) (19,924,612) 5,569,290 (5,422,250) FUND BALANCE, BEGINNING OF YEAR 55,411,021 - 719,092 33,710,858 53,996,262 143,837,233 FUND BALANCE, END OF YEAR 64,495,539$ -$ 567,646$ 13,786,246$ 59,565,552$ 138,414,983$
CITY OF SALINAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-29
Net change in fund balance - total governmental funds (page F-29) (5,422,250)$ Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives and reported as depreciation expense. This amount represents capital outlays, net of depreciation.
Capital outlay 31,486,966$
Depreciation (10,619,864) 20,867,102
Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds.
Earned but unavailable intergovernmental revenues 4,471,648 Earned but unavailable other revenues 314,819
Earned but unavailable business taxes (440,047)
Interest 68,678
Property taxes (102,271) 4,312,827
Issuance of housing loans are reported in the statement of net position. 1,719,220 Principal payments on housing loans are reported in the statement of net position. (398,142) (1,391,481)
Issuance of long-term debt including capital advances, compensating absences, and leases provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources in governmental funds. Neither transaction has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Following is the net effect of these differences in the treatment of long-term debt and related items:
Increase in compensated absences (915,508)
Increase in insurance claims payable (123,724)
Issuance of assessment district bonds (2,937,946)
Issuance of refunding bonds (20,630,000)
Premium on refunding bonds (3,791,371)
Payment to refunded bond escrow agent 23,988,060
Amortiation of bond premium and discount 681,870
Principal paid on capital leases 4,005,528
Principal paid on certificates of participation 1,830,000 Principal paid on assessment district bonds 630,000 2,736,909 Pension expense and OPEB expense do not require the use of current financial resources and therefore are not presented as an expenditure in the governmental funds. (5,133,652) Governmental funds report the effect of bond insurance costs when debt is issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net current period change in unamortized bond insurance cost. (212,416) Interest payable expense on long-term debt is reported in the government-wide statement of activities, but they do not require the use of current financial resources. Therefore, interest payable expense is not reported as expenditures in governmental funds. This amount is the current year net change in interest payable. 14,036
Internal service funds are used by management to charge the costs of activities involved in rendering services to departments within the City. The assets and liabilities of the internal service funds are included in the statement of net position. 703,615
Change in net position of governmental activities (page F-22) 17,795,768$ Reporting of loan receivables at realizable value requires an allowance to be made.
CITY OF SALINAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE OF THE GOVERNMENTAL FUNDS TO THE
GOVERNMENT WIDE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-30
F-31
PROPRIETARY FUNDS
Proprietary Funds are used to account for a government’s business -type activities (activities supported, at least in part, by fees or charges). Proprietary funds are segregated into Enterprise Funds and Internal Service Funds. Enterprise Funds are used to report business-type activities for which a fee is charged to external users for goods or services. Internal Service Funds on the other hand are used primarily for services provided to internal users (other departments or agencies).
The City has the following Enterprise Funds:
Airport Fund - This fund is used to account for the enterprise operations of the City-owned airport.
Industrial Waste Fund - This fund is used to account for enterprise operations of the City-operated Industrial Wastewater treatment facility.
Municipal Golf Courses Fund - This fund is used to account for the enterprise operations of the Fairways and Twin Creeks golf courses.
Sanitary Sewer Fund - This fund is used to account for the maintenance of the City’s sanitary sewer collecti on system, which is funded by user fees and by the Monterey Regional Water Pollution Control Agency sewer user fees.
Storm Sewer Fund - This fund is used to account for the maintenance of the City’s storm drainage system and the street sweeping program. This program was funded with a storm sewer fee that was declared by the Court as invalid under Proposition 218. Until alternative fun ding is secured, the program is funded with a combination of general funds and gas tax funds. In addition, the program is funded with a street sweeping surcharge on garbage collection billings.
Landfill Garbage Surcharge Fund - This fund is used to accoun t for the installment sale of the Crazy Horse landfill site to the Salinas Valley Solid Waste Authority.
Water Utility Fund – This fund is used to account for the repairs and maintenance of the water well located at Hitchcock Road. Water users fund the cos ts of the water well repairs and annual operating costs.
Downtown Parking District Fund - This fund was established to account for revenues, operating expenses and debt service associated with the City’s parking facilities. The City’s paid parking facilities include the Monterey Street Parking Structure, the Salinas Street Garage and four parking lots.
Permit Services Fund – This fund is used to account for the revenues and expenditures associated with providing permitting services to the community.
F-32
This page is intentionally left blank.
Landfill
Industrial Municipal Sanitary Storm Garbage
Airport Waste Golf Courses Sewer Sewer Surcharge
ASSETS
Current Assets:
Cash and cash equivalents 1,451,509$ 8,023,451$ 457,448$ 5,707,270$ 1,491,637$ 282,641$ Receivables, net
Accounts 91,657 356,540 - 755,166 - - Accrued interest 1,008 5,582 - 3,765 504 517 Prepaid bond insurance - - 1,546 - - - Due from general fund - - - - - - Total current assets 1,544,174 8,385,573 458,994 6,466,201 1,492,141 283,158 Noncurrent assets:
Restricted cash and investments - - - 6,807 - - Prepaid bond insurance, long term - - 19,129 - - - Capital assets
Land and nondepreciable assets 2,918,329 1,630,149 - 2,657,167 1,667,378 - Depreciable assets, net accumulated depreciation 14,647,687 13,948,916 989,935 31,908,480 32,150,408 - Total noncurrent assets 17,566,016 15,579,065 1,009,064 34,572,454 33,817,786 - Total assets 19,110,190 23,964,638 1,468,058 41,038,655 35,309,927 283,158
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 147,808 88,847 - 355,387 147,809 - Related to OPEB 49,541 38,434 - 93,560 75,613 - Loss on refunding of debt - - 10,730 711,279 - - Total deferred outflows of resources 197,349 127,281 10,730 1,160,226 223,422 - Total assets and deferred outflows 19,307,539 24,091,919 1,478,788 42,198,881 35,533,349 283,158
LIABILITIES
Current Liabilities:
Accounts payable 56,744 104,646 - 119,274 134,515 - Deposits 39,545 - - - - - Due to other funds - 2,653 281,839 717,981 - - Insurance claims payable - - - - - - Interest payable - 21,074 30,902 124,747 677 - Long term debt - due within one year 18,664 472,800 500,347 576,748 78,502 - Total current liabilities 114,953 601,173 813,088 1,538,750 213,694 - Noncurrent Liabilities:
Advance from general fund - - 4,200,000 - - - Long term debt - due in more than one year 74,656 1,544,202 6,031,738 13,956,991 147,843 - Net pension liability 594,967 357,632 - 1,430,520 594,968 - Net OPEB liability 194,493 150,890 - 367,309 296,850 - Total noncurrent liabilities 864,116 2,052,724 10,231,738 15,754,820 1,039,661 - Total liabilities 979,069 2,653,897 11,044,826 17,293,570 1,253,355 -
DEFERRED INFLOWS OF RESOURCES
Related to pensions 4,983 2,994 - 11,978 4,982 - Related to OPEB 36,577 28,377 - 69,077 55,826 - Total deferred inflows 41,560 31,371 - 81,055 60,808 -
NET POSITION (DEFICIT)
Invested in capital assets 17,566,016 13,604,991 (5,573,052) 20,015,900 33,703,942 - Restricted for debt service - - - 6,807 - - Unrestricted 720,894 7,801,660 (3,992,986) 4,801,549 515,244 283,158 Total net position (deficit) 18,286,910$ 21,406,651$ (9,566,038)$ 24,824,256$ 34,219,186$ 283,158$ Business-type Activity - Enterprise Funds
CITY OF SALINAS
STATEMENT OF FUND NET POSITION (DEFICIT)
PROPRIETARY FUNDS
JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-33
Governmental
Activity
Downtown Internal
Water Parking Permit Service
Utility District Services Total Funds
ASSETS
Current Assets:
Cash and cash equivalents 24,980$ 671,150$ 2,342,538$ 20,452,624$ 16,331,616$ Receivables, net
Accounts 9,687 278,737 298 1,492,085 - Accrued interest - - 1,591 12,967 7,492 Prepaid bond insurance - 8,587 - 10,133 - Due from general fund - - - - 16,831,462 Total current assets 34,667 958,474 2,344,427 21,967,809 33,170,570 Noncurrent assets:
Restricted cash and investments - - - 6,807 394,091 Prepaid bond insurance, long term - 103,051 - 122,180 - Capital assets
Land and nondepreciable assets - 18,758 - 8,891,781 - Depreciable assets, net accumulated depreciation 26,785 7,788,298 33,079 101,493,588 - Total noncurrent assets 26,785 7,910,107 33,079 110,514,356 394,091 Total assets 61,452 8,868,581 2,377,506 132,482,165 33,564,661
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions - - 295,616 1,035,467 325,501 Related to OPEB - 6,976 114,506 378,630 101,444 Loss on refunding of debt - - - 722,009 - Total deferred outflows of resources - 6,976 410,122 2,136,106 426,945 Total assets and deferred outflows 61,452 8,875,557 2,787,628 134,618,271 33,991,606
LIABILITIES
Current Liabilities:
Accounts payable 938 168,068 96,287 680,472 131,014 Deposits - - - 39,545 - Due to other funds - 1,535,178 10,841 2,548,492 - Insurance claims payable - - - - 28,031,641 Interest payable - 126,760 - 304,160 - Long term debt - due within one year - 579,078 44,655 2,270,794 28,245 Total current liabilities 938 2,409,084 151,783 5,843,463 28,190,900 Noncurrent Liabilities:
Advance from general fund - 2,785,000 - 6,985,000 - Long term debt - due in more than one year - 9,016,310 178,622 30,950,362 112,978 Net pension liability - - 1,189,933 4,168,020 1,310,227 Net OPEB liability - 27,389 449,542 1,486,473 398,263 Total noncurrent liabilities - 11,828,699 1,818,097 43,589,855 1,821,468 Total liabilities 938 14,237,783 1,969,880 49,433,318 30,012,368
DEFERRED INFLOWS OF RESOURCES
Related to pensions - - 9,963 34,900 10,972 Related to OPEB - 5,152 84,542 279,551 74,898 Total deferred inflows - 5,152 94,505 314,451 85,870
NET POSITION (DEFICIT)
Invested in capital assets 26,785 (1,909,704) 33,079 77,467,957 - Restricted for debt service - - - 6,807 - Unrestricted 33,729 (3,457,674) 690,164 7,395,738 3,893,368 Total net position (deficit) 60,514$ (5,367,378)$ 723,243$ 84,870,502$ 3,893,368$ Business-type Activity - Enterprise Funds
CITY OF SALINAS
STATEMENT OF FUND NET POSITION (DEFICIT)
PROPRIETARY FUNDS
JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-34
Landfill
Industrial Municipal Sanitary Storm Garbage
Airport Waste Golf Courses Sewer Sewer Surcharge
OPERATING REVENUES:
Charges for services
Fees 56,400$ 2,825,240$ -$ 3,672,624$ 215$ -$ Licenses and permits 103,675 - - - - - Rental income 1,585,781 - 160,000 - - - Total operating revenues 1,745,856 2,825,240 160,000 3,672,624 215 - OPERATING EXPENSES:
Personnel services 802,995 612,565 - 1,457,630 1,136,743 - Administration 177,404 179,551 - 292,583 353,932 - Contractual services 144,500 265,594 9,374 178,668 964,036 - Supplies 99,354 39,483 - 146,118 213,938 - Insurance 18,912 19,959 - 45,623 32,734 - Insurance claims - - - - - - Fees and permits (taxes) 57,086 11,748 - 247 45,257 - Utilities 111,531 205,378 - 99,242 5,719 - Depreciation 979,574 522,166 49,905 1,490,721 2,659,500 - Amortization - - - - - - Other (40,642) 11,483 - 20,937 9,805 - Total operating expenses 2,350,714 1,867,927 59,279 3,731,769 5,421,664 - Operating income (loss) (604,858) 957,313 100,721 (59,145) (5,421,449) -
NONOPERATING REVENUES (EXPENSES)
Investment income 7,377 35,752 113 26,241 4,273 3,376 Interest expense (409) (51,945) (329,683) (587,458) (5,471) - Bond issuance cost - - (107,760) (215,021) - - Gain (loss) on disposition of fixed assets - - - 26,200 - - Other nonoperating revenues (expenses) 901 - - - - - Total nonoperating revenues (expenses) 7,869 (16,193) (437,330) (750,038) (1,198) 3,376
INCOME (LOSS) BEFORE
CONTRIBUTIONS AND TRANSFERS (596,989) 941,120 (336,609) (809,183) (5,422,647) 3,376 Contribution for parking structure debt - - - - - - Transfers in 448,021 90,546 - 929,501 3,428,048 - Transfers out (51,062) (69,646) - (342,156) - (692,835) CHANGE IN NET POSITION (DEFICIT) (200,030) 962,020 (336,609) (221,838) (1,994,599) (689,459)
NET POSITION (DEFICIT)
BEGINNING OF YEAR 18,486,940 20,444,631 (9,229,429) 25,046,094 36,213,785 972,617 END OF YEAR 18,286,910$ 21,406,651$ (9,566,038)$ 24,824,256$ 34,219,186$ 283,158$ Business-type Activity - Enterprise Fund
CITY OF SALINAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION (DEFICIT)
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-35
Governmental
Activity
Downtown Internal
Water Parking Permit Service
Utility District Services Total Funds
OPERATING REVENUES:
Charges for services
Fees 7,153$ 991,948$ 1,421,141$ 8,974,721$ 9,215,641$ Licenses and permits - 227,758 1,312,360 1,643,793 - Rental income - - - 1,745,781 - Total operating revenues 7,153 1,219,706 2,733,501 12,364,295 9,215,641 OPERATING EXPENSES:
Personnel services - 104,335 1,557,749 5,672,017 1,900,630 Administration 1,271 180,654 295,889 1,481,284 - Contractual services 8,415 1,039,875 325,459 2,935,921 560,849 Supplies - 6,624 12,899 518,416 691,171 Insurance - 14,742 66,002 197,972 1,749,511 Insurance claims - - - - 8,750,941 Fees and permits (taxes) - 30,063 2 144,403 - Utilities - 37,518 5,116 464,504 - Depreciation 10,044 575,865 11,573 6,299,348 - Amortization - 8,587 - 8,587 - Other - - 14,513 16,096 567,203 Total operating expenses 19,730 1,998,263 2,289,202 17,738,548 14,220,305 Operating income (loss) (12,577) (778,557) 444,299 (5,374,253) (5,004,664)
NONOPERATING REVENUES (EXPENSES)
Investment income - - 10,830 87,962 51,579 Interest expense - (389,310) - (1,364,276) - Bond issuance cost - - - (322,781) - Gain (loss) on disposition of fixed assets - - - 26,200 - Other nonoperating revenues (expenses) - - - 901 - Total nonoperating revenues (expenses) - (389,310) 10,830 (1,571,994) 51,579
INCOME (LOSS) BEFORE
CONTRIBUTIONS AND TRANSFERS (12,577) (1,167,867) 455,129 (6,946,247) (4,953,085) Contribution for parking structure debt - 947,593 - 947,593 - Transfers in - - - 4,896,116 5,656,700 Transfers out - (21,608) (194,449) (1,371,756) - CHANGE IN NET POSITION (DEFICIT) (12,577) (241,882) 260,680 (2,474,294) 703,615
NET POSITION (DEFICIT)
BEGINNING OF YEAR 73,091 (5,125,496) 462,563 87,344,796 3,189,753 END OF YEAREND OF YEAR 60,514$ (5,367,378)$ 723,243$ 84,870,502$ 3,893,368$ Business-type Activity - Enterprise Fund
CITY OF SALINAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION (DEFICIT)
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-36
Landfill
Industrial Municipal Sanitary Storm Garbage
Airport Waste Golf Courses Sewer Sewer Surcharge
Cash flows from operating activities:
Receipts from customers and users 1,796,170$ 2,870,477$ 176,667$ 5,025,847$ 215$ -$ Receipts from interfund services provided - - - - - - Payments to suppliers (563,849) (703,641) (9,374) (788,371) (1,597,061) - Payments to employees (748,407) (539,328) - (1,455,718) (1,116,415) - Payments to claimants - - - - - - Net cash provided (used) by operating activities 483,914 1,627,508 167,293 2,781,758 (2,713,261) - Cash flows from non-capital financing activities:
Advances received from general fund - - 450,000 - - - Operating transfers in - 90,546 55,541 - 3,176,000 - Operating transfers out (51,062) (47,802) - (63,703) - (692,835) Net cash provided by (used for)
Non-capital financing activities (51,062) 42,744 505,541 (63,703) 3,176,000 (692,835) Cash flows from capital and related financing activities:
Acquisition of capital assets (496,353) (385,915) - (1,601,965) (252,048) - Proceeds from sale of assets - - - 26,200 - - Refunding bonds issued - - 7,072,432 14,425,000 - - Advance refunding of bond - - (7,357,203) (15,768,557) - - Contribution from Sucessor Agency - - - - - - Capital related transfers in 448,021 - - 1,635,748 252,048 - Capital related transfers out (285) (31,028) - (278,453) - - Principal paid on capital debt (30,238) (442,000) (495,000) (420,000) (112,361) - Interest paid on capital debt (611) (55,576) (175,479) (570,847) (5,970) - Net cash provided (used) by capital and
related financing activities (79,466) (914,519) (955,250) (2,552,874) (118,331) - Cash flows from investing activities:
Interest received 8,492 48,800 113 30,559 3,933 6,536 Poceeds from sale of investments - - - 250,000 - - Increase in fair value of LAIF investments 1,145 2,204 - 3,815 1,113 (971) Net cash provided by investing activities 9,637 51,004 113 284,374 5,046 5,565 Net increase (decrease) in cash and cash equivalents 363,023 806,737 (282,303) 449,555 349,454 (687,270) Cash and cash equivalents at beginning of year 1,088,486 7,216,714 739,751 5,264,522 1,142,183 969,911 Cash and cash equivalents at end of year 1,451,509$ 8,023,451$ 457,448$ 5,714,077$ 1,491,637$ 282,641$ Business-type Activities - Enterprise Funds
CITY OF SALINAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENEDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
F-37
Governmental
Activities
Downtown Internal
Water Parking Permit Service
Utility District Services Total Funds
Cash flows from operating activities:
Receipts from customers and users 5,299$ 1,160,105$ 2,733,759$ 13,768,539$ -$ Receipts from interfund services provided - - - - 9,215,641 Payments to suppliers (9,745) (1,297,934) (704,107) (5,674,082) (3,545,743) Payments to employees - (87,071) (1,532,589) (5,479,528) (1,515,245) Payments to claimants - - - - (7,271,191) Net cash provided (used) by operating activities (4,446) (224,900) 497,063 2,614,929 (3,116,538) Cash flows from non-capital financing activities:
Advances received from general fund - - - 450,000 - Operating transfers in - - - 3,322,087 2,206,801 Operating transfers out - (45,894) - (901,296) - Net cash provided by (used for)
Non-capital financing activities - (45,894) - 2,870,791 2,206,801 Cash flows from capital and related financing activities:
Acquisition of capital assets - - (31,824) (2,768,105) - Proceeds from sale of assets - - - 26,200 - Refunding bonds issued - - - 21,497,432 - Advance refunding of bond - - - (23,125,760) - Contribution from Sucessor Agency - 1,151,427 - 1,151,427 - Capital related transfers in - - - 2,335,817 - Capital related transfers out - - (192,233) (501,999) - Principal paid on capital debt - (551,000) - (2,050,599) - Interest paid on capital debt - (396,593) - (1,205,076) - Net cash provided (used) by capital and
related financing activities - 203,834 (224,057) (4,640,663) - Cash flows from investing activities:
Interest received - - 14,897 113,330 51,579 Poceeds from sale of investments - - - 250,000 - Increase in fair value of LAIF investments - - 419 7,725 20,952 Net cash provided by investing activities - - 15,316 371,055 72,531 Net increase (decrease) in cash and cash equivalents (4,446) (66,960) 288,322 1,216,112 (837,206) Cash and cash equivalents at beginning of year 29,426 738,110 2,054,216 19,243,319 17,562,913 Cash and cash equivalents at end of year 24,980$ 671,150$ 2,342,538$ 20,459,431$ 16,725,707$ Business-type Activities - Enterprise Funds
CITY OF SALINAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENEDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
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Landfill
Industrial Municipal Sanitary Storm Garbage
Airport Waste Golf Courses Sewer Sewer Surcharge
Reconciliation of cash and cash equivalents
to the Statement of Net Position
Ending cash and cash equivalents - statement of cash flows 1,451,509$ 8,023,451$ 457,448$ 5,714,077$ 1,491,637$ 282,641$ Less amounts reported in restricted cash and investments - - - (6,807) - - Cash and cash equivalents - statement of net position 1,451,509$ 8,023,451$ 457,448$ 5,707,270$ 1,491,637$ 282,641$ Reconciliation of operating income to net cash
provided (used) by operating activities:
Operating income (loss) (603,957)$ 957,313$ 100,721$ (59,145)$ (5,421,449)$ -$ Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 979,574 522,166 49,905 1,490,721 2,659,500 - Amortization - - - - - - Changes in assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
(Increase) decrease in accounts receivable 54,052 45,237 16,667 1,353,223 - - (Increase) decrease in deferred outflows - pension 102,149 36,132 - 269,506 102,149 - (Increase) decrease in deferred outflows - OPEB (33,178) (25,209) - (60,835) (49,612) - Increase (decrease) in accounts payable 8,465 32,283 - 2,780 33,196 - Increase (decrease) in deposits (4,639) - - - - - Increase (decrease) in insurance claims - - - - - - Increase (decrease) in accrued leave 25,630 12,099 - 5,722 (9,734) - Increase (decrease) in net pension liability (83,465) 18,414 - (265,559) (83,465) - Increase (decrease) in net OPEB liability 56,035 38,986 - 90,393 76,835 - Increase (decrease) in deferred inflows - pension (13,981) (6,488) - (35,429) (13,981) - Increase (decrease) in deferred inflows - OPEB (2,771) (3,425) - (9,619) (6,700) - Total adjustments to net income 1,087,871 670,195 66,572 2,840,903 2,708,188 - Net cash provided (used) by operating activities 483,914$ 1,627,508$ 167,293$ 2,781,758$ (2,713,261)$ -$ Business-type Activities - Enterprise Funds
CITY OF SALINAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENEDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
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Governmental
Activities
Downtown Internal
Water Parking Permit Service
Utility District Services Total Funds
Reconciliation of cash and cash equivalents
to the Statement of Net Position
Ending cash and cash equivalents - statement of cash flows 24,980$ 671,150$ 2,342,538$ 20,459,431$ 16,725,707$ Less amounts reported in restricted cash and investments - - - (6,807) (394,091) Cash and cash equivalents - statement of net position 24,980$ 671,150$ 2,342,538$ 20,452,624$ 16,331,616$ Reconciliation of operating income to net cash
provided (used) by operating activities:
Operating income (loss) (12,577)$ (778,557)$ 444,299$ (5,373,352)$ (5,004,664)$ Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 10,044 575,865 11,573 6,299,348 - Amortization - 8,587 - 8,587 - Changes in assets, deferred outflows of resources,
liabilities, and deferred inflows of resources:
(Increase) decrease in accounts receivable (1,854) (59,601) 258 1,407,982 - (Increase) decrease in deferred outflows - pension - - 204,298 714,234 49,433 (Increase) decrease in deferred outflows - OPEB - (5,855) (71,694) (246,383) (65,132) Increase (decrease) in accounts payable (59) 11,185 20,327 108,177 34,202 Increase (decrease) in deposits - - - (4,639) - Increase (decrease) in insurance claims - - - - 1,479,750 Increase (decrease) in accrued leave - 3,114 14,030 50,861 36,191 Increase (decrease) in net pension liability - - (166,931) (581,006) 292,579 Increase (decrease) in net OPEB liability - 17,906 87,276 367,431 91,001 Increase (decrease) in deferred inflows - pension - - (27,963) (97,842) (17,474) Increase (decrease) in deferred inflows - OPEB - 2,456 (18,410) (38,469) (12,424) Total adjustments to net income 8,131 553,657 52,764 7,988,281 1,888,126 Net cash provided (used) by operating activities (4,446)$ (224,900)$ 497,063$ 2,614,929$ (3,116,538)$ Business-type Activities - Enterprise Funds
CITY OF SALINAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENEDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
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FIDUCIARY FUNDS
Fiduciary Funds are used to account for assets held in a trustee or agency capacity for others and therefore cannot be used to support the government’s own programs. The City maintains the following Fiduciary Funds:
Private Purpose Trust Funds - These funds are used to account for any trust arrangement not properly reported in a pension trust fund under which principal and income benefit individuals, private organizations, or other governments. This fund also accounts for the Successor Agency of the former Redevelopment Agency which was dissolved on January 31, 2012 pursuant to state law.
Pension Trust Funds – These funds are used to account for resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, or other employee benefit plans. The City’s only pension trust fund is the Deferred Compensation Fund; which allows City employees to invest in trust deeds that are managed by the City with the oversight of an investment committee that is made up of representatives from each of the bargaining units.
Custodial Funds - These funds are used to account for assets held in an agent capacity by the City for individuals, private organizations, other governments and/or other fund s that are not required to be reported in pension trust funds, investment trust funds, or private-purpose trust funds.
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Private Purpose Pension
Trust Trust Custodial
Fund Fund Funds
ASSETS
Cash and investments 4,205,579$ 18,453,766$ 137,541$ Cash and investments held by fiscal agent 1,640,648 - - Receivables
Accounts 7,653 - 140,461 Interest 1,127 1,657 - Loans and notes receivable 173,900 - - Capital assets 149,270 - - Total assets 6,178,177 18,455,423 278,002
LIABILITIES
Accounts payable 201,774 - 200,429 Interest payable 703,145 - - Deposits 55,186 - - Long-term liabilities
Due within one year 293,487 - - Due in more than one year 1,795,798 - - Total liabilities 3,049,390 - 200,429
DEFERRED INFLOWS OF RESOURCES
Future ROPS 2,177,683 - - Total deferred inflows of resources 2,177,683 - -
NET POSITION
Restricted for:
Pensions - 18,455,423 - Individuals and organizations 951,104 - 77,573 Total net postion 951,104$ 18,455,423$ 77,573$
CITY OF SALINAS
STATEMENT OF NET POSITION
JUNE 30, 2021
FIDUCIARY FUNDS
The accompanying notes are an integral part of this statement.
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Private Purpose Pension
Trust Trust Custodial
Fund Fund Funds
ADDITIONS
Taxes 5,003,062$ -$ -$
Miscellaneous - 607,657 - Total taxes, rental, and miscellaneous income 5,003,062 607,657 - Contributions
Plan members - 58,286 289,782 Employers - 10,212,240 - Private donations 1,062,508 - - Total contributions 1,062,508 10,270,526 289,782 Investment earnings
Interest 74,953 463,672 - Less investment expense - (121,799) - Net investment earnings 74,953 341,873 - Assessments collected for other governments - - 464,599 Total additions 6,140,523 11,220,056 754,381
DEDUCTIONS
Expenses 1,415,490 - 7,500 Benefit payments - 4,397,164 290,946 Payments on behalf of trustees 651,826 - - Contribution to other agencies 3,427,846 - - Assessments disbursed to other governments - - 464,111 Total deductions 5,495,162 4,397,164 762,557 CHANGE IN NET POSITION 645,361 6,822,892 (8,176)
NET POSITION
BEGINNING OF YEAR 305,743 11,632,531 85,749 END OF YEAR 951,104$ 18,455,423$ 77,573$
CITY OF SALINAS
STATEMENT OF CHANGES IN NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
The accompanying notes are an integral part of this statement.
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NOTES TO
BASIC FINANCIAL STATEMENTS
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CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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1. Description of the Reporting Entity and Significant Accounting Policies:
A. Reporting Entity
The City of Salinas (City) was incorporated as a charter City on March 4, 1874. The City operates under a Council-Manager form of government and provides the following services as authorized:
Public Safety, Public Works, Recreation-Parks, Library and General Government Administrative Services. The City also operates an Airport, a Downtown Parking District, a Sanitary Sewer System, a Water Utility, a Storm Sewer System and an Industrial Waste Facility.
The financial statements and accounting policies of the City conform with genera lly accepted accounting principles applicable to governments in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standard -setting body for establishing governmental accounting and financial reporting principl es. Significant accounting policies are summarized below:
The basic financial statements of the City of Salinas, California (City), include the financial activities of the City (the primary government) and its component unit. The component uni t discussed below is included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. The blended component unit, although a legally separate entity, is, in substance, part of the City’s operations and so data from this unit is combined with data of the primary government. The City has no discretely presented component units. The City and its blended component unit have June 30 year ends.
Blended Component Unit
The Salinas Public Financing Authority ( Authority) – The Authority was established October 6, 1992 pursuant to a Joint Exercise of Powers Agreement by and between the City and the City of Salinas Redevelopment Agency, which is now the Salinas Successor Agency to the former Redevelopment Agency. It was established to refund Central City Revitalization Project tax allocation bonds. The Authority’s purpose is to assist with financing or refinancing of certain public capital facilities within the City.
The Authority was used on the following dates for the following purposes:
● April 19, 1994 - to issue a site lease to finance the expansion of the industrial waste facility. ● September 17, 1996 - to issue Central City Revitalization Project Tax Allocation Bonds, Series A 1996.
● March 25, 1997 - issue Variable Rate Lease Revenue Bonds, Series A and B 1997. ● October 24, 1997 - to issue Certificates of Participation, Series A 1997. ● February 25, 1999 - to issue Certificates of Participation, Series A 1999. ● December 17, 2003 - to issue Certificates of Participation, Series A 2004. ● September 1, 2005 - issue Refunding Certificates of Participation, Series 2005 A and B.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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● August 21, 2008 - to issue variable rate taxable refunding Certificates of Participation Series 2008.
● January 29, 2014 – to refinance Certificates of Participation, Series A 2004 & Series A 1999 (Animal Shelter) with a lease purchase agreement (2014) with a bank. ● September 1, 2015 – to issue Refunding Certificates of Participation Series 2015 A and B for refunding of Certificates of Participation Series 2005 A and B. ● July 28, 2016 – to refinance Assessment District bonds through a direct private placement. ● February 29, 2019 – to issue Special Tax Bonds, CFD Monte Bella 2019. ● December 12, 2019 – to issue Special Tax Bonds, CFD Monte Bella 2019 #2. ● December 20, 2020 – to issue Special Tax Bonds, CFD Monte Bella 2019 #3.
The Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative functions for the Authority. The financial activities of the Authority are included in the City’s Debt Service and Enterprise Funds. A financial report is not issued by the Authority.
B. Financial Statement Presentation
In recent years, the City’s General Fund has been managed carefully in order to balance its revenues and expenditures. The City has achieved adequate liquidity through the passage of an additional transaction and sales tax initiative (Measure G and Measure E) coupled with an increase in property taxes resulting from the recovery of the local real estate market values from the decline experienced in 2009.
The City’s Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United St ates of America. The Go vernmental Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.
Government-Wide Financial Statements – The gov ernment-wide financial statements, i.e. the statement of net position and the statement of activities, display information about the primary government (City) and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. These statements distinguish between the governmental and business-type activities of the City. As a general rule, the effect of inter -fund activity has been eliminated from the government-wide financial statements. All internal balances in the statement of net assets have been eliminated, with the exception of those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total government column. In the statement of activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business -type activities have not been eliminated. Governmental activities, which are normally supported by taxes and inter-governmental revenues and other non-exchange transactions, are reported separately from business -type activities, which rely to a significant extent on fees charged to external parties.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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The statement of activities presents a comparison between direct expenses and program revenues for each business -type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a business -type activity or governmental function and; therefore, are clearly identifiable to a particular activity or function.
Program revenues include 1) fines, fees and charges paid by the recipients of goods or services offered by the programs and 2) grants and contribut ions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues.
Fund Financial Statements – The fund financial statements provide information about the City’s funds, including fiduciary funds. Separate stat ements for each fund category are presented (Governmental, Proprietary and Fiduciary). The emphasis of the fund financial statements are on major gov ernmental and enterprise funds of the City and are reported separately in the accompanying financial statements. All remaining governmental funds are separately aggregated and reported as non-major funds in the accompanying financial statements.
Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.
The City reports the following major governmental funds:
● General, Measure E, & Measure G – This fund is the primary operating fund of the City.
It accounts for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for in another fund. The General, Measu re E, & Measure G Fund supports essential City services such as police and fire protection, street maintenance, libraries, and parks and open space maintenance. ● American Rescue Plan (ARPA) - On March 11, 2021, President Biden signed the American Rescue Plan Act, which will provide the City with $51,567,313 in relief funds. The City has received the first half of these funds. Although the legislation provides broad guidance related to the eligible use of the funds, guidance and restrictions from the U.S. Treasury are very important. The information below shows the general language used in the Senate- approved version of the legislation.
1) Respond to or mitigate the public health emergency with respect to COVID-19 or its negative economic impacts.
2) Cover costs incurred as a result of the public health emergency. 3) Replace revenue that was lost, delayed, or decreased (as determined based on revenue projections for the metropolitan city, non -entitlement un it of local government, or county as of Jan. 27, 2020) as a result of the pandemic. 4) Address the negative economic impacts of the pandemic. 5) Make necessary investments in water, sewer, or broadband infrastructure.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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● Assessment District Debt Service - This fund is used to accumulate monies for payment of the City’s Assessment Districts Improvement Bonds. Debt service is financed with special assessments levied against property owners within the respective improvement districts. ● Special Construction Assistanc e – This fund accounts for proceeds of long -term borrowings resulting from the sale of Certificates of Participation to finance the acquisition and construction of capital projects.
The City reports the following major enterprise funds:
● Airport Fund - This fund accounts for the operations of the City owned airport. The activities necessary to provide such service are accounted for in the fund, including, but not limited to, operations, maintenance, financing and related debt service, and billing and collection. ● Industrial Waste Fund - This fund accounts for the operations of the City operated Industrial Waste Water treatment facility.
● Municipal Golf Courses Fund - This fund accounts for the operations of Fairways and Twin Creek golf courses.
● Sanitary Sewer Fund - This fund accounts for the maintenance of the City’s sanitary sewer collection system, which is funded from a surcharge on the Monterey Regional Water Pollution Control Agency sewer user fees.
● Storm Sewer Fund - This fund accounts for the maintenance of the City’s storm drainage system and the street sweeping program. This program was funded with a storm sewer fee that was declared by the Court as invalid under Proposition 218. Until alternative funding is secured, the program is funded with a combination of general funds and gas tax funds. The program is also funded with a street sweeping surcharge on garbage collection billings. ● Landfill Garbage Surcharge Fund -This fund accounts for the installment sale of the Crazy Horse landfill site to the Salinas Valley Solid Waste Authority. ● Water Utility Fund - This fund accounts for the repairs and maintenance of the water well located at Hitchcock Road. Water users fund the costs of the water well repairs and annual operating costs.
● Downtown Parking District Fund - This fund accounts for the operations of the City’s parking facilities. The activities necessary to provide such services are accounted for in the fund, including, but not limited to, operations, maintenance, financing and related debt service, and billing and collection.
● Permit Services Fund - This fund is used to account for the revenues and expenditures associated with providing permitting services to the community.
The City reports the following additional fund types:
● Internal Service Fund (a proprietary fund type) accounts for the services provided to internal users (other departments or agencies).
● Fiduciary Fund accounts for the assets hel d in a trustee or agent capacity for others and therefore cannot be used to support the government’s own programs. The private -purpose
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-51
trust funds accounts for assets and activities of the dissolved Redevelopment Agency, which is accounted for in the Successor Agency Trust, and other trust arrangements not reported in a pension trust. The pension trust funds account for resources that are required to be held in trust for members and beneficiaries of defined benefit pension plans, defined contribution plan, and other employee benefit plans. The custodial funds are used to account for assets held in an agent capacity by the City for individuals, private organizations, other governments and other funds.
C. Measurement Focus and Basis of Accounting
Measurement focus and basis of accounting refers to when revenue and expenditures or expenses are recognized in the accounts and reported in the basic financial statements. The accounting and financial reporting treatment applied to a fund is determined b y its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus.
With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current position. When both restricted and unrestricted net positions are available, unrestricted resources are used only after the restricted resources are depleted.
The government-wide financial statements and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability 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 reve nue as soon as all eligibility requirements imposed by the provider have been met.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
Governmental funds are re ported using the current financial resources measurement focus. This focus is on the determination of, and changes in financial resources, and generally only current assets and current liabilities are included in the balance sheet. These funds use the modified accrual basis of accounting, whereby revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the fiscal period. For this purpose, the City considers revenues as available if they are collected within sixty days of the end of the current fiscal period. Expenditures are generally recorded when a liability is incurred.
However, principal and interest on long -term debt and certain estimated liabilities, such as compensated absences, and self-insurance claims, are recorded only when payment is due.
In the governmental funds, revenues from taxes, franchise fees, investment income, state and federal grants and charges for services associated with the current fiscal period are all considere d to be susceptible to accruals. Such accruals have been recognized as revenues in the current period.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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All other revenue items are considered to be measurable and available only when cash is received by the City.
Proprietary funds distinguish operating re venues and expenses from non -operating items.
Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fun d’s principal ongoing operation . The principal operating revenues of the City's enterprise funds and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses.
Under the terms of grant agreements, the City funds certain programs by a combination of specific cost reimbursement grants, cate gorical block grants and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net position available to finance the program. It is the City's policy to first apply restricted cost reimbursement grant resour ces to such programs, followed by restricted categorical block grants, and then by unrestricted general revenues.
D. New Accounting Pronouncements
The following Governmental Accounting Standards Board (GASB) Statement ha s been implemented in the current financial statements:
GASB Statement No. 90 – In April 2018, GASB issued Statement No. 90, Majority Equity Interests - an amendment of GASB Statements No. 14 and No. 61 . The primary objectives of this Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. The requirements of this Statement were effective for reporting periods beginning after December 15, 2019. This statement had no significant effect on these financial statements.
The City has not determined the effects on the financial statements for the following GASB Statements, and is currently analyzing its accounting and financial reporting practices to determine the potential impact:
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 a ccounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting
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Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right -to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the r elevance and consistency of information about governments’ leasing activities. The requirements of this Statement are effective for reporting periods beginning after December 15, 2021.
GASB Statement No. 91 – In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations. The primary objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. The requirements of this Statement are effective for reporting periods beginning after December 15, 2021.
GASB Statement No. 92 – In January 2020, GASB issued Statement No. 9 2, 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 addressing practice issues that have been identified during implementation and application of certain GASB Statements . The requirements related to the effective date of Statement 87 and Implementation Guide 2019 -3, reinsurance recoveries, and terminology used to refer to derivative instruments are effective upon issuance. The requirements related to intra-entity transfers of assets and those related to the applicability of Statements 73 and 74 are effective for fiscal years beginning after June 15, 2021. The requirements related to application of Statement 84 to postemployment benefit arrangements and those related to nonrecurring fair value measurements of assets or liabilities are effective for reporting periods beginning after June 15, 2021. The requirements related to the measurement of liabilities (and assets, if any) associated with asset retirement obligations in a government acquisition are effective for government acquisitions occurring in reporting periods beginning after June 15, 2021.
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 accounting and financial reporting implications that result from the replacement of an IBOR . The requirements of this Statement, except for paragraphs 11b, 13, and 1 4 are effective for reporting periods beginning after June 15, 2020. The requirement in paragraph 11b is effective for reporting periods ending after December 31, 2021. The requirements in paragraphs 13 and 14 are effective for fiscal years periods beginning after June 15, 2021.
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 (PPPs). The requirements of this Statement are effective for fiscal years beginning after June 15, 2022.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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GASB Statement No. 96 – In May 20 20, GASB issued S tatement No. 9 6, Subscription- Based Information Technology Arrangements . This Statement provides guidance on the accounting and financial reporting for subscription -based information technology arrangements (SBITAs) for government end users (governments). The requirements of this Statement are effective for fiscal years beginning after June 15, 2022.
GASB Statement No. 97 – In June 2020, GASB issued Statement No. 9 7, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Reven ue 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 governing board typically would perform; (2) mitigate costs associated with the repo rting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pen sion plan and for benefits provided through those plans. The requirements in (1) paragraph 4 of this Statement as it applies to defined contribution pension plans, defined contribution OPEB plans, and other employee benefit plans and (2) paragraph 5 of this Statement are effective immediately. The requirements in paragraphs 6–9 of this Statement are effective for fiscal years beginning after June 15, 2021. All other requirements of this Statement are effective for reporting periods beginning after June 15, 2021.
E. Fair Value Measurement
Investments are accounted for in accordance with the provisions of GASB Statement No. 72, Fair Value Measurement and Application for determining a fair value measurement for reporting purposes and applying fair value to certain investments and disclosures related to all fair value measurements. The City categorizes the fair value measurements of its investments 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.
F. Interest Earnings
Interest received on time deposits and investments is prorated quarterly to the following funds generally based on an average of three-month ending cash balances. Interest earned by other funds under this method is allocated to the General Fund.
● General, Measure E & G
● Development Fees
● Emergency Medical Services
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Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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● Asset Seizure
● Lighting, Landscape and Maintenance District
● Municipal Art
● Measure X
● SB1
● Local Public Safety
● Gas Tax
● SRA Public Improvement Grant
● Affordable Housing
● COP 1999 & COP 2004 Consolidation (2014)
● Energy Improvement Lease
● COP 2005 A & B 2015 Refunding
● Assessment District Reserve
● Special Aviation
● Assessment District Project
● Airport
● Industrial Waste
● Municipal Golf Courses
● Sanitary Sewer
● Storm Sewer
● Permit Services
● Landfill Garbage Surcharge
● Internal Service Funds
● Pension Trust Fund
● Successor Agency Trust Fund
G. Cash and Investments
Cash and Cash Equivalents - Cash and cash equivalents are considered to be amounts in demand deposits, and short-term investments with original, maturity of three months or less from the date of acquisition. For purposes of both the balance sheet and statements of cash flows, cash and cash equivalents include not only currency on hand, but deposits in the City’s cash and investment pool.
These deposits ha ve the same characteristics for the participating funds as demand deposit accounts, in that the funds may deposit additional cash at any time and also effectively withdraw cash at any time without prior notice or penalty. Cash and cash equivalents also include restricted cash and money market funds held by fiscal agents. For purposes of cash flows, the City considers all liquid market investments with maturities of one year or less at time of purchase to be cash equivalents. All other investments are stat ed at fair value. Market value is used as fair value for those securities for which market quotations are readily available.
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Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-56
Investment held in Local Agency Investment Fund - The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed by the State of California. LAIF has invested portion s of the pool funds in structured notes and asset -backed securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes and asset -backed securities are subject to market risk as a result of changes in interest rates.
LAIF determines fair value on its investments portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available.
The City valued its investments in LAIF as of June 30, 2021, by multiplying its account balance with LAIF times a fair value factor determined by LAIF for all LAIF participants by total aggregate amortized cost.
Other Investments - Investments in nonparticipating interest earning contracts (certificate of deposits) are reported at cost, and all other investments are reported at fair value. Fair value is defined as the amount the City could reasonably expect to receive for an investment in a current sale between a willing buyer and seller and is generally measured by quoted market prices.
Deferred Compensation - The Deferred Compensation Plan is invested in deeds of trust secured by real or personal property and in real estate holdings. The trust deeds are considered nonparticipating interest earning investments and are reported at fair market value. See Note 1 3 for additional information on the various deferred compensation plans.
H. Restricted Cash and Investment with Fiscal Agents
Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and for acquisition and construction of capital projects.
I. Receivables
All receivables are reported at their gross value and, where appr opriate, are reduced by the estimated portion that is expected to be uncollectible. Invoices that remain unpaid after 90 days may be referred to collections. An invoice sent to collection is written off.
J. Prepaid Bond Insurance, Original Issue Discounts and Premiums, and Refundings Prepaid bond insurance costs are amortized using the straight -line method over the life of the bonds. Amortization of these balances are recorded as a component of operating expenses.
In the government-wide, proprietary fund and fiduciary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, proprietary fund and fiduciary fund financial statements. Bond premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Original issue premiums are amortized using the straight-line method over the life of the bonds. Gains or losses from refunding of debt are reported as deferred inflows or outflows of resources and amortized over the shorter of the life of the
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Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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refunded debt or new refunding debt. Amortization of these balances are recorded as a component of interest expense.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
K. Special Assessment Districts
Special assessments are recorded as receivables when they become a lien on property. Special assessments not considered available are recorded as receivables and offset by unearned revenues.
In general, special assessments and special tax bonds are fully secured by liens against the privately owned properties benefited by the improvement for which the bonds were issued. There is no reserve for delinquent receivables since priority liens exist against the related properties and hence the City’s management believes value will ultimately be received by the City.
L. Interfund-fund Transactions
Interfund transactions are reflected as loans, services provided, reimbursements a nd/or transfers.
Loans and balances related to unsettled service transactions are reported as receivables and payables as appropriate, are subject to elimination upon consolidation of similar fund types, and are referred to as either “due to/from other fun ds,” i.e., the current portion of interfund loans and unsettled service transactions, or “advances to/from other funds,” i.e., the noncurrent portion of interfund loans. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government -wide financial statements as “internal balances.”
Services provided are deemed to be at market or near market rates and are treated as revenues and expenditures/expenses. Reimbursements are defined as when o ne fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation.
M. Land Held for Resale
Land held for resale is being carried at cost, but no greater than the net realizable value. In the fund financial statements, this amount is recorded as a restricted portion of fund balance due to externally imposed grantor restrictions.
N. Restricted Assets
Assets that are restricted for specific uses by bonded debt requirements, grant provisions or other requirements are classified as restricted because their use is limited by applicable bond covenants or agreements.
O. Capital Assets
Capital assets include land, buildings, improvements, vehicles and equipment, infrastructure, and all other tangible and intangible assets that are used in operations and that have initial useful lives in excess of one year. Capital assets are reported in the applicable governmental or business -type
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Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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activity columns in the government-wide financial statements, the proprietary funds' statement of net position, and the private-purpose trust fund. Capital assets are defined as assets with an initial individual cost of more than $ 10,000 for general capital assets and $100,000 for major infrastructure assets, and an estimated useful life in excess of one year. Such assets are recorded at historical cost if purchas ed or constructed. Donated capital assets are recorded at acquisition value, market based entry price at the time of contribution . Capital outlay is recorded as expenditures of the governmental funds and as assets in the government-wide financial statements to the extent the City's capitalization threshold is met. Amortization of assets acquired under capital leases is based on the shorter of the lease term or the estimated useful life of the asset and is included in depreciation and amortization.
Buildings, improvements, infrastructure, vehicles and equipment, and furniture and fixtures are depreciated using the straight -line method ( depreciation is calculated starting with the month following the date the asset was placed in service) over the following estimated useful lives:
Buildings 20-50 years
Other improvements 15-45 years
Infrastructure 10-50 years
Equipment 5-20 years
P. Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General, Special Revenue, and Capital Projects Funds. Encumbrances outstanding at year-end are reported as reservations of fund balance since they do not constitute expenditures or liabilities.
Q. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.
The City reports the following items as deferred outflow of resources:
• Losses on refunding of debt in the government-wide financial statements. • Deferred outflows of resources related to pensions are reported in the government -wide financial statements as described further in Note 14.
• Deferred outflows of resources related to OPEB are reported in the government -wide financial statements as described further in Note 15.
In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
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The City reports the following items as deferred inflows of resources:
• Unavailable revenues are reported only in the governmental fund balance sheet. The governmental funds report unavailable revenues from grants , taxes, and assessment receivable, and long-term notes receivable. These amounts are reported as unavailable and recognized as an inflow of resources in the period that the amounts become available. • Gains on refunding of debt are reported in the government-wide financial statements. • Deferred inflows of resources related to pensions are reported in the government wide financial statements as described further in Note 14.
• Deferred inflows of resources related to OPEB are reported in the government wide financial statements as described further in Note 15.
R. Compensated Absences
Vacation, compensatory time, and related benefits are accrued as determined by the agreement between the City and the respective employees' collective barga ining group. For governmental funds, compensated absence obligations are recorded in the appropriate governmental funds when due. The portion not currently due is recorded in the government -wide financial statements. For proprietary funds, compensated abse nces are expensed when earned by employees. At year -end, the accrued but unpaid compensated absence obligations are recorded as current and non -current liabilities in the appropriate proprietary funds.
Eligible employees may accrue a maximum of 600 annual leave hours (75 days). Any hours accumulated in excess of 600 hours are paid at the employee’s adjusted hourly rate of pay. For the Firefighter group the maximum is 840 hours for 56 hour shift employe es and 600 for 40 hour shift employees. Employees with fewer than 20 years of service may request pay in lieu of annual leave up to a maximum of 10 days. Employees with more than 20 years of service may request a maximum of 15 days pay in lieu of annual leave.
S. Public Employees Retirement System (CalPERS)
Pensions - For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported by the City of Salinas. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accor dance with the benefit terms. Investments are reported at fair value.
T. Unearned Revenue
Governmental funds report unearned revenue in connection with revenues that are not considered earned as of year-end. For additional information on unearned revenues, see Note 19.
U. Claims and Judgments
Claims and judgments are recognized as expenditures when it is probable that the liability has been incurred and the amount of the loss can be reasonably estimated. This liability is recorded in the internal service fund that accounts for the City’s self insurance activities.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-60
V. Long-Term Debt
In the Government-wide Financial Statements and the proprietary fund types in the Fund Financial Statements, long -term debt and other obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund statement of net positions.
Bond premiums and discounts are deferred and amortized over the life of the bonds using effective interest methods. Bonds payable are reported net of the applicable bond premium or discount. In the governmental funds statement of revenue, expenditures and changes in fund balance, issuance of debt is recorded as another financing source (use) in the respective fund. Issuance costs and payment of principal are reported as debt service expenditures.
W. Net Position
Net position represents total assets and deferred outflows of resources less liabilities and deferred inflows of resources. Net position invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets, excluding unspent debt proceeds. Net position are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.
The City first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available.
The government-wide and proprietary fund financial statements utilize a net position presentation.
Net position is categorized as follows:
● Net Investment In Capital Assets - This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category. ● Restricted Net Position - This category represents net position that have extemal restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.
● Unrestricted Net Position - This category represents net amounts that do not meet the criteria for “restricted” or “net investment in capital assets.”
X. Fund Balance
Under GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the financial statements reporting for governmental funds classify fund balances based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which those funds can be spent. Fund balance for the City's governmental funds consists of the following categories:
● Nonspendable Fund Balance - includes amounts that are not in a spendable form, such as inventories, prepaid items, and long -term loans and notes receivables. It also includes
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Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-61
amounts that are legally or contractually required to be maintained intact or required to be retained in perpetuity, such as the principal of an endowment fund. ● Restricted Fund Balance - includes amounts reported as restricted when constraints placed on the use of resources are either (1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or (2) imposed by law through constitutional provisions or enabling legislation. ● Committed Fund Balance - includes amounts that have been limited to specific purposes as defined in the City Charter or through adoption of an ordinance by the City Council, the highest level of decision making authority of the City. These commitments may be changed or lifted, but only by the same formal action that was used to impose the constraint originally. City Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be subsequently determined. ● Assigned Fund Balance - includes amounts that are intended to be used by the City for specific purposes through City Council budgetary action, which include the approval of appropriations and revenue so urces pertaining to the next fiscal year's budget. Intent is expressed by (a) the City Council or (b) a body or official to which the City Council has delegated the authority to assign amounts to be used for specific purpose. ● Unassigned Fund Balance - includes amounts within the General, Measure E, & Measure G Funds , the residual resources, either positive or negative, in excess of what can be properly classified in one of the other four fund balance categories, unassigned amounts are technically available for any purpose. Other governmental funds may only report a negative unassigned balance that was created after classification in nonspendable, restricted, and committed fund balance.
In circumstances when an expenditure is made for a purpose for which amo unts are available in multiple fund balance categories, fund balance is depleted in the order of restricted, committed, assigned, and unassigned.
Y. Property Taxes
Property taxes are collected on behalf of and remitted to the City by the County of Monterey ( the “County”). The amount of property tax levies is restricted by Article 13A of the California State Constitution (commonly referred to as Proposition 13).
The County assesses property values, levies, bills, and collects the related property taxes as follows:
Secured Unsecured
Valuation/lien dates January 1 January 1
Levy dates January 1 January 1
Due dates (delinquent after) 50% on November 1 (December 10) July 1 (August 31) 50% on February 1 (April 10)
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-62
The City has not elected to participate in th e “Teeter Plan” offered by the County whereby cities receive 100% of secured property and supplemental property taxes levied in exchange for foregoing any interest and penalties collected on the related delinquent taxes. The City retains the right to any interest and penalties collected on the related delinquent taxes. Accordingly, property tax revenues are recognized in the fiscal period for which they are levied and collected, adjusted for any amounts deemed uncollectible and amounts expected to be collec ted more than 60 days after the fiscal year.
General property taxes are based on either a flat 1% rate applied to the fiscal year 1976 full value of the property or on 1% of the sales price of the property on sales transactions and construction that occur after the fiscal year 1976 valuation. Assessed values on properties (exclusive of increases related to sales and construction) can rise at a maximum of 2% per year depending on increases in the consumer price index.
Z. Self-Insurance
The City is self -insured for workers’ compensation, general, automobile, and public liability claims. The City’s estimated liability for claims as of June 30, 2021 is based on the claim manager’s estimate of probable losses plus an amount estimated for incurred but not reported claims. An Internal Service Fund is used to account for the collection of premiums from various City departments related to workers’ compensation claims and general claims liabilities. Premiums are established based on historical claims experience. Additionally, the City cont racts with third party administrators for claims management.
AA. Use of Estimates
A number of estimates and assumptions relating to the reporting of revenues, expenditures/ expenses, assets, deferred outflows of resources, liabilities, deferred inflows of resources, and the disclosure of contingent liabilities were used to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates.
2. Stewardship, Compliance and Accountability:
A. Budgeting
The Budget is prepared by the City Manager and adopted by City Council. Formal budgetary integration was employed as a management control device during the fiscal year for the General , Measure E & Measure G Fund, Special Revenue Funds and Capital Projects Funds.
The City Manager may transfer budget appropriations between departments and Department Directors may transfer appropriations between prog rams and accounts within their individual departments and divisions, but only the Council by resolution may appropriate funds from reserves or fund balances.
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Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-63
Budgets for General, Special Revenue and Capital Projects Funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Reserves for future lease commitments have been established for accounting purposes and the fund balance is reserved for the total lease commitment consistent with budget policies.
Budget policy excludes taxes, interest, and accounts receivable assets, which are not currently available resources for budget purposes, and condemnation deposits which are returned upon right of way acquisition.
Expenditures may not legally exceed budgeted appropriations at the government level. Budgeted amounts shown are as originally adopted or as amended by the City Council during the year.
Additional supplementary appropriations were adopted during the mid-year review.
Appropriations lapse at fiscal year e nd and then are re -budgeted for the coming year. Project - length financial plans are adopted for all capital projects funds and appropriations are carried forward until project completion. Grant funds are carried forward until the grant expires.
Encumbrances represent commitments related to unperformed contracts for goods or services.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the governmental funds.
Encumbrances outstanding at year -end are recorded as reservations of fund balance and do not constitute expenditures or liabilities because the c ommitments will be honored during the subsequent year.
For additional information on budgetary policy and control see Required Supplementary Information.
B. Deficit Fund Balance
At June 30, 2021, the following funds had a deficit fund balance or deficit net position:
Major Funds
Business-type Activities
Municipal Golf Courses Fund 9,566,038$
Downtown Parking District Fund 5,367,378$
Non-Major Funds
Governmental Activities
Special Revenue Funds
Housing and Urban Development Grant 875,711$
Debt Service Funds
Assessment District Administration 2,178$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-64
Enterprise Funds – Municipal Golf Courses Fund
The deficit net asset balance of $9,566,038 is a result of the interest on long-term bonds amounting to $6,260,000, that also exceed the related assets. This deficit will continue to decline over time as the bonds are paid back.
Enterprise Funds – Downtown Parking District Fund
The deficit net position in the Downtown Parking District Fund of $ 5,367,378 is a result of operating cost in excess of operating revenues and the long -term lease payable amounting to $9,590,000. This deficit will continue to decline over time as the lease payable is collected.
Non-Major Special Revenue Funds
The deficit fund balance in the Non -Major Special Revenue Funds is a result of Community Development and related Housing reimbursable grants increase during year 2021, as a result of COVID mitigation programs and related expenditures. This deficit will decline as claims are submitted for reimbursement to state and federal agencies and unavailable funds become available.
Non-Major Debt Service Funds
The deficit net position in the non-major debt service funds is the result of timing of transfers from other funds to cover deb t service payments . This deficit will decline as transfers are made to reimburse the non-major debt service funds.
3. Debt Compliance:
There are a number of limitations and restrictions contained in the various bond indentures. The City believes it is in compliance with all significant limitations and restrictions.
4. Cash and Investments:
The City’s cash and investments at June 30, 2021 are included in the accompanying basic financial statements as follows:
Fund Financials
Fiduciary Funds
Governmental Business-Type Statement of
Activities Activities Total Net Position Total
Cash and Investments 171,095,305$ 20,452,624$ 191,547,929$ 22,796,886$ 214,344,815$ Restricted Cash
and Investments 1,387,761 6,807 1,394,568 1,640,648 3,035,216 Total Cash and
Investments 172,483,066$ 20,459,431$ 192,942,497$ 24,437,534$ 217,380,031$ Government-Wide Statement of Net Position
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-65
Cash and investments at June 30, 2021 consisted of the following:
Cash and cash equivalents
Demand accounts at banks 8,028,797$
Money market 3,571,123
Deposits held in trust by fiscal agent 270,847
Money market held in trust by fiscal agent 27,077,842
State local agency investment fund (LAIF) 149,870,854
Petty cash and revolving fund 25,000
188,844,463
Investments
Investments held in trust by fiscal agent 22,636,967
Deferred compensation
Investment in trust deeds and properties 5,898,601
28,535,568
Total cash and investments 217,380,031$
Deposits
At June 30, 2021, the carrying amount of the City’s deposits was $8,028,797. The bank balance was $9,945,506. The difference is due to outstanding checks and deposits in transit. All bank balances are insured or collateralized.
Investments
Investments permitted by the City’s investment policy include the following:
• Certificates of Deposit
• Repurchase Agreements
• Bankers Acceptances
• Guaranteed Investment Contracts
• U.S. Treasury Bills and Notes
• State of California Local Agency Investment Fund
• Government Agency Securities
• Passbook Savings Accounts
• Mutual Funds
• Interest Bearing Checking Accounts
• Commercial Paper
The Deferred Compensation Plan is permitted by City resolution to invest in deeds of trust secured by real or personal property.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-66
Investment income from cash and investment s held by fiscal agents are credited directly to the related funds.
The City participates in the California Local Agency Investment Fund (LAIF), an investment pool managed by the State of California. The LAIF is a special fund of the California State Treasury through which local governments may pool investments. At June 30, 2021, the total fair value amount invested by all public agencies in LAIF was $193.3 billion managed by the State Treasurer.
Of that amount, 2.31% is invested in medium-term and short-term structured notes and asset‐back securities. No amounts were invested in derivative financial products. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. The fair value of the Authority’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City ’s pro‐rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.
As of June 30, 2021, the City had the following investment and maturities:
0-12 months 1-5 years over 5 years Total
Investment Agreements 11,384,002$ 11,252,965$ -$ 22,636,967$ Trust Deeds-Def Comp - 5,898,601 - 5,898,601 Total 11,384,002$ 17,151,566$ -$ 28,535,568$ Maturities
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. As a means of limiting exposure to fair value losses from rising interest rates, the City’s investment policy limits the maturity of investments in accordance with Government Code Sections 53601(a)-(n) and 53636(a)-(m). It is the City’s policy to ladder investments so that there are always investments coming due to meet cash flow requirements. Because the Local Agency Investment Fund as of June 30, 2021 had an average life of 291 days, it was presented as an investment with a maturity of 0 -12 months. However, LAIF allows the City to make withdrawals of any amount within 24 hours. Information about the sensitivity of the fair values of the City investments to market interest rate fluctuations is provided by the preceding table that shows the distribution of the City’s investment by maturity.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-67
Summarized below are the ratings of the City’s cash and investments:
Fair Value S&P Moodys % of Total
Demand accounts at banks 8,028,797$ NR NR 3.69%
Money Market at Rabobank 3,571,123 NR NR 1.64%
Deposits held in trust by fiscal agent 270,847 NR NR 0.12% Money Market held in trust by fiscal agent
Fidelity Investment MM Gov 801,802 AAAm Aaa-mf 0.37% Dreyfus Gov Cash Management 376,977 NR NR 0.17% Capital GTY 1 NR NR 0.00%
Insurance Reserve 391,091 NR NR 0.18%
Wells Fargo & Co 57 BBB+ A1 0.00%
Westdeutsche Landesbank 975,467 NR NR 0.45%
Wilmington Trust, NA 23,625,602 A- A2 10.87%
New York Life Fixed Dollar Account 906,845 NR NR 0.42% Petty cash and revolving fund 25,000 NR NR 0.01% Local Agency Investment Fund 149,870,854 NR NR 68.96% Investment Agreements
Municipal bonds 254,775 AA NR 0.12%
Corporate bonds 991,810 NR Aaa 0.46%
8,997,890 AA+ Aaa 4.14%
1,008,490 AA+ Aaa 0.46%
Certificates of deposit 2,067,759 NR NR 0.95%
New York Life 9,316,243 NR NR 4.29%
Trust Deeds-Def Comp 5,898,601 NR NR 2.71%
Total 217,380,031$ 100.01%
Concentration of Credit Risk
The City places no limit on the amount the City may invest in any one issuer. However, the City’s investment policy calls for portfolio diversification by avoiding over concentration in a specific maturity sector or specific investments. The City’s portfolio is detailed in the preceding table (see above).
Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s investment policy limits safekeeping of investments to third-party custody.
All of the City’s deposits are either insure d by the Federal Depository Insurance Corporation (FDIC) up to $250,000 or collateralized with pledge securities held in the trust department of the financial institution in the City’s name.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-68
Fair Value Measurement and Application
The City categorizes its f air value measurements 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 priority to unadjust ed 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 has 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 prices that are observable for the asset or liability; and • Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk).
Unobservable inputs are developed based on the best information available in the circumstances and may include the City’s 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 requires judgment by the City’s management. City manageme nt considers 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 value measurement and does not necessarily correspond to City 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 are categorized based on the lowest level input that is significant to the valuation. The City’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
Deposits and withdrawals in governmental investment pools, such as LAIF, are made on the basis of $1 and not fair value. Accordingly, the City’s measured fair value of its proportionate share in these types of investments is based on uncategorized inputs not defined as a Level 1, Level 2, or Level 3 input. Non-negotiable FDIC-insured bank certificates of deposit are priced at par.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-69
The City had the following recurring fair value measurements as of June 30, 2021:
Total Level 1 Level 2 Level 3
Investment Agreements
Bonds 20,569,208$ 20,569,208$ -$ -$
Certificates of deposit 2,067,759 - 2,067,759 - Trust Deeds-Def Comp 5,898,601 - - 5,898,601 28,535,568 20,569,208$ 2,067,759$ 5,898,601$
Demand accounts at banks 8,028,797
Money Market at Rabobank 3,571,123
Deposits held in trust by fiscal agent 270,847
Money Market Funds
Fidelity Investment MM Gov 801,802
Dreyfus Gov Cash Management 376,977
Capital GTY 1
Wells Fargo & Co 57
Westdeutsche Landesbank 975,467
Insurance Reserve 391,091
Wilmington Trust, NA 23,625,602
New York Life Fixed Dollar Account 906,845
Petty cash and revolving fund 25,000
Local Agency Investment Fund 149,870,854
Total Investments 217,380,031$
Investment Type
Investments Not Measured at Fair Value
The following is a description of the valuation methods and assumptions used by the City to estimate the fair value of its investments:
• Investments classified within Level 1 of the fair value hierarchy are valued using quoted prices in active markets when available.
• The City held one type of investment that is measured using Level 3 inputs , Trust Deeds.
The City administers a Trust Deposit Fund that includes a Deferred Compensation Plan funded solely by the voluntary salary reductions. Trust Deed notes secured by property taken bac k in foreclosure and held for resale , are valued by independent real estate professionals (market approach) , and trust deed notes are valued at their present value (income approach). The valuations are considered Level 3. The value of properties held for resale are reduced for cost of sales. The notes (loans) are valued based on amounts investors would likely pay for notes with interest rates ranging from 6% to 11% discounted to provide loan to values ranging from 70% to 50% depending on property type and condition, borrowers payment history , and term remaining on note.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-70
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 indicative of net realizable value or reflective of future fair values. City management believes its valuation 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.
5. Restricted Assets:
Cash and investments of $1,394,568 are recorded as restricted assets at June 30, 2021 as follows:
Governmental Funds:
Assessment District Debt Service - restricted to cover expenses of debt service 136,669$ Debt service funds - restricted for debt service payments 619,329 Capital project funds - restricted for debt service payments 237,672 Enterprise Funds:
Sanitary Sewer - restricted to cover expenses of debt service 6,807 Internal Service Fund:
Restricted for insurance claims 394,091
Total Restricted Assets 1,394,568$
6. Taxes Receivable:
Taxes receivable recorded in the General, Measure G & E Fund of $19,528,443 represent amounts due for the quarter ended June 30, 2021 for the following taxes:
Sales Tax 6,867,679$
Measure E Transaction and Use Tax 3,073,632
Measure G Transaction and Use Tax 6,158,362
Utility Users Tax 1,189,454
Franchise Tax 900,207
Transient Occupancy Tax 711,553
Other Taxes 577,356
Property Transfer Tax 50,200
Total 19,528,443$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-71
7. Assessment Receivable:
Debt Service Fund – Assessments receivable recorded in the Assessment District Debt Service Fund of $8,970,000 at June 30, 2021, will be collected from property owners to retire outstanding bond principal issued for improvements in special assessment districts. Cash and investments at June 30, 2021 of $2,409,999 are available to make bond and interest payments of $850,929 that are due on September 1, 2021.
Assessment receivables in the amount of $8,290,000 are not expected to be collected within the subsequent year.
8. Due From Outside Agencies:
Due from outside agencies consists of the following:
Federal State Other Total
Governmental Activities:
General Fund:
Welcome Center -$ -$ 75,000$ 75,000$ Special Revenue Funds:
CDBG Improvement Program 1,025,206 - - 1,025,206 HOME Investment Program 516,170 - - 516,170 Emergency Shelter Grant 1,474,847 - - 1,474,847 Cable Franchise - - 44,797 44,797 CA Emergency Solutions & Housing - 468,475 - 468,475 CA Highway Users Tax - 379,844 - 379,844 CA STEP Grant - 14,257 - 14,257 City of Pacific Grove - - 125,158 125,158 County of Monterey - 29,766 1,781,849 1,811,615 Community Foundation of Monterey County - - 40,000 40,000 Department of Parks & Recreation - 5,036 - 5,036 Department of Alcoholic Beverage Control - - 5,583 5,583 Office of Traffic Safety 77,287 - - 77,287 Federal Drug Enforcement 16,083 - - 16,083 SB1 Road Maintenance & Rehab - 548,027 - 548,027 SB2 Permanent Local Housing Allocation - 758,173 - 758,173 U.S. Department of Justice 53,806 - - 53,806 U.S. Department of Treasury 203,485 - - 203,485 3,366,884 2,203,578 1,997,387 7,567,849
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-72
Federal State Other Total
Capital Projects Funds:
CA Department of Transportation - 39,032 - 39,032 CA Office of Emergency Services - 8,850 - 8,850 Developers - - 1,702,180 1,702,180 Federal ATP Grant 2,424,537 - - 2,424,537 Federal Aviation Administration 420,412 - - 420,412 Federal HSIP 181,208 - - 181,208 Homeland Security-FEMA 121,794 - - 121,794 Monterey County - RSTP - 454,402 - 454,402 Monterey Bay Air Resource District - 3,322 - 3,322 State Water Grant - 74,701 - 74,701 Transportation Agency for Monterey County - 8,006 - 8,006 3,147,951 588,313 1,702,180 5,438,444
Primary Government Totals 6,514,835$ 2,791,891$ 3,774,567$ 13,081,293$
9. Interfund Transactions:
Internal Balances
The composition of interfund balances (Due To/From) as of June 30, 2021 was as follows:
Due From: General Capital Projects Internal Service Total Governmental Activities:
Major Funds:
General, Measure G & E -$ 428,343$ 16,831,462$ 17,259,805$ Special Construction Assistance 1,559,892 - - 1,559,892 Non-Major Funds:
Special revenue
Lighting, Landscape & Maintenance 51,188 93 - 51,281 Development Fee 269 121,942 - 122,211 Gas Tax - 1,295 - 1,295 Emergency Medical Services - - - - Traffic Safety 15,133 - - 15,133 Measure X Transport Safety & Inv Plan - 783,795 - 783,795 SB1 Road Maintenance & Rehab - - - - Comm Dev Act of 1974 3,038,264 13,150 - 3,051,414 Grants 372,826 - - 372,826 Debt Service
Assessment District Administration 2,178 - - 2,178 2019 Spec Tax Bond Monte Bella 5,280 - - 5,280 Capital Projects
2019 Spec Tax Bond Monte Bella 214,310 - - 214,310 Total Governmental Activities 5,259,340 1,348,618 16,831,462 23,439,420 Due to Governmental Activities
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-73
Due From: General Capital Projects Internal Service Total Business Type Activities:
Industrial Waste - 2,653 - 2,653 Municipal Golf Courses 281,839 - - 281,839 Sanitary Sewer - 717,981 - 717,981 Downtown Parking District 1,535,178 - - 1,535,178 Permit Services - 10,841 - 10,841 Total Business Type Activities 1,817,017 731,475 - 2,548,492 Total Primary Government 7,076,357$ 2,080,093$ 16,831,462$ 25,987,912$ Due to Governmental Activities
The composition of long-term advances to/from other funds as of June 30, 2021 was as follows:
Advances Due To
Governmental Activities
Advances Due From: General Fund
Business Type Activities:
Golf Course 4,200,000$
Downtown Parking 2,785,000
Total Business Type Activities 6,985,000
Total Primary Government 6,985,000$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-74
Interfund Transfers – Interfund transfers are legally authorized transfers between funds in which one fund is responsible for the initial receipt of funds and another fund is responsible for the actual disbursements. The composition of interfund balances as of June 30, 2021 was as follows:
Operating Operating
Transfers In Transfers Out Transfers For:
Capital projects, debt service,
General Fund 6,096,486$ 23,684,887$ & other operating costs Special Revenue Funds:
Lighting, Landscape & Maintenance - 25,652 Capital projects & debt service Local Public Safety - 311,973 Capital projects Development Fee - 619,898 Capital projects Gas Tax - 2,694,733 Capital projects & street maintenance Emergency Medical Services 1,015,300 8,112 Capital projects & operating costs Traffic Safety - 250,000 Operating costs Vehicle Abatement Program 50,000 - Operating costs Contributions & Donations - 2,185 Operating costs Measue X Transport Safety & Inv Plan - 4,380,893 Capital projects SB1 Road Maintenance & Rehab - 542,377 Capital projects Affordable Housing - 229,492 Operating costs Housing and Urban Development 13,271 365,383 Grant projects Grants 29,048 3,016 Grant projects
CARES Act - 2,002,977 Operating costs 1,107,619 11,436,691
Debt Service Funds:
2018 Lease-PS Building Police 4,739,701 - Debt Service COP 2018B T.R.I.P 2,338,575 - Debt Service 2018 Lease-El Gabilan Library 792,443 - Debt Service 2019 Spec Tax Bond Monte Bella 2 402,870 - Debt Service Refund Bonds Series 2020A-Energy 995,905 - Debt Service Refund Bonds Series 2020A-SVSWA 692,835 - Debt Service 9,962,329 -
Capital Projects Funds:
2019 Spec Tax Bond Monte Bella - 960,062 Capital projects Capital Project 9,734,146 - Capital projects 9,734,146 960,062
Internal Service Funds:
Workers Compensation-Self Insurance 1,000,000 - Operating costs General Liability-Self Insurance 2,661,300 - Operating costs Fleet Maintenance 1,995,400 - Operating costs 5,656,700 -
Total Governmental Activities 32,557,280 36,081,640
Enterprise Funds:
Airport 448,021 51,062 Capital projects & debt service Industrial Waste 90,546 69,646 Capital projects, operating & debt service Sanitary Sewer 929,501 342,156 Capital projects Storm Sewer 3,428,048 - Capital projects & operating costs Landfill Garbage Surcharge - 692,835 Debt Service Downtown Parking District - 21,608 Debt Service Permit Services - 194,449 Capital projects Total Business Type Activities 4,896,116 1,371,756
Total Governmental & Business Activities 37,453,396$ 37,453,396$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-75
10. Loans Receivable, Net of Allowance:
At June 30, 2021, receivables of the City's major individual funds and non -major funds taken in aggregate, including the applicable allowance for uncollectible accounts are as follows:
Low
& Moderate Total
Income Governmental Fiduciary
Type of Loan CDBG Housing Asset Activities Funds
Loans funded by federal grants 22,723,286$ -$ 22,723,286$ -$ Economic development real estate developer
and other loans - 10,075,821 10,075,821 173,900 Less: Allowance for Uncollectibles (22,534,475) (10,059,250) (32,593,725) - Total loans, net 188,811$ 16,571$ 205,382$ 173,900$
The City uses funds generated from the former Agency Housing Loans as well as other state and federal funding sources to offer financial assistance to qualified developers, individuals and families by providing loans at “below market” interest rates.
Typical loans and related terms are summarized as follows:
Loan Type Interest Rates Due
Affordable Housing 0 - 4% up to 55 years
Multi-unit rental rehabilitation 3% 5 or more years
First time home buyer 3% 7 to 40 years
Home Improvement 3 - 6% 1 to 30 years
Loans are secured by first or second in lien-property deeds of trust except for first time homebuyer loans, which are all secured by second deeds of trust. Interest and principal are typically due in installments, except for first time homebuyer, which do not require payments until thei r maturity dates.
The City has also invested in multi-family rental housing projects serving low to moderate income individuals through subordinate loans with terms of up to 55 years. Generally, these loans are to be repaid through fixed payments or net cash flow payments from project operations and the term and potential risk of each loan varies. Because of the net cash flow feature of these subordinate loans, there is greater risk of variability in the timing of payments and, potentially, a lower probability of eventual repayment on these subordinate loans than on other loan types.
Accordingly, for financial statement purposes, the City has established an allowance account for these loans receivable due to the contingent nature of the repayment schedules of these loans.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-76
11. Capital Assets:
Capital asset activity for the fiscal year ended June 30, 2021 was as follows:
Balance Adjustments/ Balance
June 30, 2020 Additions Retirements June 30, 2021
Governmental Activities
Capital assets, not being depreciated:
Land 25,899,986$ -$ -$ 25,899,986$ Construction in progress 136,718,778 25,874,968 (2,697,264) 159,896,482 Total assets not being depreciated 162,618,764 25,874,968 (2,697,264) 185,796,468 Capital assets, being depreciated:
Buildings and improvements 46,337,340 - - 46,337,340 Improvements other than buildings 15,766,022 - - 15,766,022 Machinery and equipment 40,737,724 1,600,682 (204,472) 42,133,934 Infrastructure 248,460,395 4,011,316 2,697,264 255,168,975 Total assets being depreciated 351,301,481 5,611,998 2,492,792 359,406,271 Less accumulated depreciation (229,238,287) (10,619,865) 204,472 (239,653,680) Total capital assets
being depreciated, net 122,063,194 (5,007,867) 2,697,264 119,752,591 Governmental Activities
Capital assets, net 284,681,958$ 20,867,101$ -$ 305,549,059$ Business-type Activities
Capital assets, not being depreciated:
Land 3,632,339$ -$ -$ 3,632,339$ Construction in progress 4,467,942 791,500 - 5,259,442 Total assets not being depreciated 8,100,281 791,500 - 8,891,781 Capital assets, being depreciated:
Buildings and improvements 27,523,054 - - 27,523,054 Improvements other than buildings 26,708,254 - - 26,708,254 Machinery and equipment 8,433,051 1,419,413 (519,835) 9,332,629 Infrastructure 237,130,928 557,192 - 237,688,120 Total assets being depreciated 299,795,287 1,976,605 (519,835) 301,252,057 Less accumulated depreciation (193,978,956) (6,299,348) 519,835 (199,758,469) Total capital assets
being depreciated, net 105,816,331 (4,322,743) - 101,493,588 Business-type Activities
Capital assets, net 113,916,612$ (3,531,243)$ -$ 110,385,369$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-77
Depreciation expense was charged to functions of the primary government as follows:
Governmental activities:
General government 550,366$
Police 1,764,645
Fire 1,213,262
Public works, including infrastructure assets 6,070,184 Recreation and parks 890,634
Library 130,774
Total depreciation expense - governmental activities 10,619,865$ Business-type activities:
Airport 979,574$
Industrial waste 522,166
Municipal golf courses 49,905
Sanitary sewer 1,490,721
Storm sewer 2,659,500
Water utility 10,044
Downtown parking 575,865
Permit Services 11,573
Total depreciation expense - business-type activities 6,299,348$
12. Land and Properties Held for Resale:
Land and properties held for resale consisted of the following at June 30, 2021:
Special Revenue Fund
137, 145 & 151 Division Street 850,000$
Affordable Housing Fund - Central City Housing
17 & 19 Soledad Street 370,693
9 & 11 Soledad Street 129,738
500,431
Affordable Housing Fund -Sunset Avenue Merged Housing
115 Division Street 335,947
123 Division Street 300,000
923 E. Market Street 521,175
1,157,122
Total Land and Properties Held for Resale 2,507,553$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-78
13. Deferred Compensation Plans:
The City has four deferred compensation plans created in accordance with Internal Revenue Code Section 457. The Small Business Job Protection Act of 1996 requires the establishment of a trust or similar vehicle to ensure that the assets of Deferred Compensation Plans under the Internal Revenue Code Section 457 are protected and used exclusively for the benefit o f Plan participants and/or their beneficiaries. According to these laws the City established Employer Trust arrangements for each of the Plans before January 1, 1999.
The City has established Employer Trust agreements with ICMA Retirement Corporation, Ma ss Mutual Financial Group, and Central Coast Credit Union. In 1998, the City Council adopted a Resolution amending the City administered deferred compensation plans to conform to the new law protecting the plan participant assets from any claim against th e City. Under the Trust arrangement, individual accounts maintained by the record-keeper used for receiving contributions and paying distributions must be subject to the Trust. The existence of the Trust does little to change the Plan structure except to add a layer of protection for money set aside for the employee against claims of the Employer’s creditors. The law also allows an increase in the amount a participant may contribute to differ each year, based on changes in the consumer price index.
International City Manager’s Association (ICMA) Retirement Corporation
As of June 2021, the International City Manager’s Association Retirement, Inc., (ICMA -RC), is now MissionSquare Retirement and the Plan had 406 participants and a balance of $60,304,589 at June 30, 2021. All employees are eligible to participate through voluntary salary deduction. Some management employees participated in lieu of participation in the New York Life Retirement Program until June 19, 1995 when a qualified 401(a) retirement pr ogram was established. These assets are not reported on the City’s financial statements at June 30,2021 pursuant to the Employer Trust established by the City with ICMA Retirement Corporation during November 1997.
Trust Deed Program
The City administers a Trust Deposit Fund that includes a deferred compensation plan funded solely by the voluntary salary reductions. The goal of the Trust Deed program is to invest participants’ funds in short -term deeds of trust (notes). This investment option i s administered within the City of Salinas by the City’s appointed administrator of the Deferred Compensation Plan. Loans are based on equity after obtaining a fee appraisal. All property is physically inspected and the loan package is reviewed and approved /disapproved by a Deferred Compensation Committee. All employees are eligible to participate. The Plan had 216 participants and a balance of $6,316,759 in net assets at June 30, 2021. The balance in these plans is available to employees only upon terminat ion, retirement, death or unforeseen emergency. While the Employer Trust established by the City on December 15, 1998 protects these funds from creditors of the City, because the City administers the plan assets, they are included in the City’s financial statements at June 30, 2021.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-79
The Trust Deed Program is managed on a cash basis with interest posted when received and expenditures posted when paid. Interest and expenditures are allocated to participants based on month end cash balances. Trust deed note s secured by property taken back in foreclosure, are reevaluated based on the current market value of the property. When the value of property taken back in foreclosure is less than the note secured by that property, the note is written-down to current market value (less foreclosure and sales expenses) of the property. Gains are recognized only when properties are sold. Gains or losses are allocated to plan participants based on month end cash balances.
As of June 30, 2021, pursuant to GASB 72, properties held for resale were valued by independent real estate professionals (market approach) and trust deed notes were valued at their present value (income approach). The valuations are considered Level 3. The value of properties held for resale are reduced for cost of sales. The notes (loans) are valued based on amounts investors would likely pay for notes with interest rates ranging from 6% for all current loans discounted to provide loan to values ranging from 70% to 50% depending on property type and condition, borrowers payment history and term remaining on note. The change in net realizable values are reflected in the Statement of Changes in Fiduciary Net Assets.
Central Coast Federal Credit Union (CCFCU)
This third deferred compensation plan was established in August 1993. The plan funds are backed by the full faith and credit of the U.S. Government and are also insured by the National Credit Union Administration (NCUA), an agency of the federal government for up to $250,000. Central Coast collateralizes any amounts invested in their savings accounts in excess of NCUA insurance limits in accordance with applicable law. As of December 31, 2020, CCFCU became the service provider for the plan and the City keeps the employees’ enrollment and send their payroll elective deduction to CCFCU.
There were 85 participants with a balance at June 30, 2021 is $6,510,420. All employees are eligible to participate through voluntary salary deductions. The assets for this plan are not reported on the City’s financial statements.
Mass Mutual Financial Group (Empower Retirement)
The fourth Deferred Compensation plan was established in September 2000. This retirement savings plan enables employees to defer a portion of their current compensation for payment at later date, ge nerally retirement. Salary deferrals (or contributions) are voluntary and are made through the ease of payroll deduction. Empower Retirement former Mass Mutual offers a variety of investment vehicles that vary in risks, term and return to the investment. T hese investment options are offered through a group variable annuity contract. There were 32 participants with a balance of $3,973,785 at June 30, 2021. All employees are eligible to participate through voluntary salary deductions. The assets for this plan are not reported on the City’s financial statements.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-80
14. Retirement Programs:
I. Defined Benefit Pension Plans
The City of Salinas provides defined benefit retirement program benefits through the California Public Employees’ Retirement System (CalPERS) and New York Life . As of June 30, 2021, the City was contributing to agent multiple-employer defined benefit pension plans and cost -sharing multiple-employer defined benefit pension plans thr ough CalPERS, and was also contributing to a single-employer defined benefit pension plan through New York Life.
The City’s net pension liability as of June 30, 2021 is as follows (recorded as of the measurement date of June 30, 2020 and August 31, 2020):
Governmental Business-type Total Net Pension
Net Pension Liability Activities Activities Liability
CalPERS pension plans:
Agent Multiple-Employer Miscellaneous 28,343,820$ 4,168,020$ 32,511,840$ Agent Multiple-Employer Safety-Police 118,427,421 - 118,427,421 Cost Sharing Multiple-Employer
Safety - Fire (Tier 1 & Tier 2) 52,635,552 - 52,635,552 New York Life - Single Employer 7,979,159 - 7,979,159 Total net pension liability 207,385,952$ 4,168,020$ 211,553,972$
The City’s deferred outflows of resources related to pensions as of June 30, 2021 is as follows (recorded as of the measurement date of June 30, 2020 and August 31, 2020):
Governmental Business-type Total Deferred
Deferred Outflows of Resources Activities Activities Outflows CalPERS pension plans:
Agent Multiple-Employer Miscellaneous 7,041,487$ 1,035,467$ 8,076,954$ Agent Multiple-Employer Safety-Police 18,026,642 - 18,026,642 Cost Sharing Multiple-Employer
Safety - Fire (Tier 1 & Tier 2) 14,280,924 - 14,280,924 New York Life - Single Employer 5,649,988 - 5,649,988 Total deferred outflows of resources 44,999,041$ 1,035,467$ 46,034,508$
The City’s deferred inflows of resources related to pensions as of June 30, 2021 is as follows (recorded as of the measurement date of June 30, 2020 and August 31, 2020):
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-81
Governmental Business-type Total Deferred
Deferred Inflows of Resources Activities Activities Inflows CalPERS pension plans:
Agent Multiple-Employer Miscellaneous 237,320$ 34,900$ 272,220$ Agent Multiple-Employer Safety-Police 186,762 - 186,762 Cost Sharing Multiple-Employer
Safety - Fire (Tier 1 & Tier 2) 4,675,815 - 4,675,815 New York Life - Single Employer 211,820 - 211,820 Total deferred inflows of resources 5,311,717$ 34,900$ 5,346,617$
The City’s total pension expenses for the fiscal year 2020-2021, including employee contributions, normal costs and annual amortization of prior service is as follows:
Governmental Business-type Total Pension
Pension Expense Activities Activities Expense
CalPERS pension plans:
Agent Multiple-Employer Miscellaneous 5,761,878$ 847,296$ 6,609,174$ Agent Multiple-Employer Safety-Police 19,081,616 - 19,081,616 Cost Sharing Multiple-Employer
Safety - Fire (Tier 1 & Tier 2) 9,090,818 - 9,090,818 New York Life - Single Employer 1,636,569 - 1,636,569 Total pension expense 35,570,881$ 847,296$ 36,418,177$
A. California Public Employees Retirement System
Agent Multiple -Employer Defined Benefit Pension Plan
Plan Description – All qualified permanent and probationary employees are eligible to participate in the City of Salinas’ separate Safety (police) and Miscellaneous (all other) Plans, agent multiple- employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and Local Government resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
Benefits Provided - CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-82
The City’s provisions and benefits in effect at June 30, 2021, are summarized as follows:
*Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit formula 2.0% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit Payments monthly for life monthly for life
Retirement age 50-55 52-67
Monthly benefits, as a % of eligible compensation 2.0% to 2.45% 1.0% to 2.5% Required employee contribution rates 7.00% 7.00%
Required employer contribution rates 9.05% 9.04%
Miscellaneous
*Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit formula 3.0% @ 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 52-57
Monthly benefits, as a % of eligible compensation 3.00% 2.0% to 2.7% Required employee contribution rates 9.00% 13.50%
Required employer contribution rates 23.21% 23.21%
Police
*Plan is closed to new members. Miscellaneous and Safety (Police) members that were CalPERS participants before January 1, 2013, with no break in service over six months, may continue in the plan.
Employees Covered – As of June 30, 2019 (valuation date), the following employees were covered by the benefit terms for each Plan:
Miscellaneous Police
Inactive employees or beneficiaries currently receiving benefits 176 266 Inactive employees entitled to, but not yet receiving benefits 264 111 Active employees 285 155
Contribution Description - Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the City to satisfy contribution requirements that are identified by the pension plan terms as plan member contribution requirements are classified as plan member contributions.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-83
Actuarial Methods and Assumptions used to determine Total Pension Liability - The June 30, 2019 valuation was rolled forward to determine the June 30, 2020 total pension liability, based on the following actuarial methods and assumptions:
Valuation Date ▪ June 30, 2019
Measurement Date ▪ June 30, 2020
Actuarial Cost Method ▪ Entry Age Normal
Actuarial Assumptions
Discount Rate ▪ 7.15%
Inflation ▪ 2.50%
Salary Increases ▪ Varies by Entry Age and Service
Mortality (1) ▪ Derived using CalPERS’ Membership Data for all Funds Contract COLA up to 2.50% untilPurchasing
Power
Post Retirement Benefit Increase ▪ Protection Allowance Floor on Purchasing Power applies
(1) The mortality table used was developed based on CalPERS -specific data. The table includes 15 years of mortality improvement using Society of Actuaries 90% of Scale MP 2016. For more details on this table, please refer to the December 2017 Experience Study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.
Long-term Expected Rate of Return - The long -term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short -term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all of 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 rounded single equiv alent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long -term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-84
The expected real rates of return by asset class are as followed:
New Strategic Real Return Real Return
Allocation Years 1-10(b) Years 11+(c)
Global Equity 50.0% 4.80% 5.98%
Fixed income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Estate 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100.0%
(b) An expected inflation of 2.00% used for this period Asset class (a)
(c) An expected inflation of 2.92% used for this period (a) In the System's ACFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-Term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
Discount Rate - The discount rate used to measure the total pension liability was 7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Amortization of Deferred Outflows and Deferred Inflows of Resources - Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.
The first amortized amounts are recognized in pension expense for the year the gain or loss occurs.
The remaining amounts are cate gorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.
The amortization period differs depending on the source of the gain or loss:
Difference between projected and actual earnings on pension plan investement ▪
All other amounts
▪
5 years straight-line amortization
Straight-lineamortizationover the average expected remainingservice lives (EARLS) of all members that are providedwith benefits (active, inactive,and retired) as of the beginningof the measurement period.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-85
Deferred outflows of resources and deferred inflows of resources relating to Differences between Expected and Actual Experience, Changes of Assumptions and employer-specific amounts should be amortized over the EARSL of members provided with pensions through the Plan. The EARSL for the miscellaneous and safety (police) plans for the June 30, 2020 measurement date are 4.3 and
3.5 years, respectively, which was obtained by dividing the total service years by the total number of participants (active, in active, and retired) in the Plan. Inactive employees and retirees have remaining service lifetimes equal to zero. Total future service is based on the members' probability of decrementing due to an event other than receiving a cash refund.
Changes in Net Pension Liability – The following tables show the changes in the net pension liability for each of the City’s agent multiple -employer defined benefit pension plans recognized over the measurement period:
Agent Multiple-Employer Defined Benefit Plan - Miscellaneous Plan:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at: 6/30/2019 (MD) 125,694,950$ 91,773,349$ 33,921,601$ Changes Recognized for the
Measurement Period:
Service Cost 3,162,904 - 3,162,904 Interest on Total Pension Liability 8,959,786 - 8,959,786 Differences between Expected
and Actual Experience 588,822 - 588,822 Net Plan to Plan Resource Movement - 383,290 (383,290) Contributions - Employer - 7,793,322 (7,793,322) Contributions - Employees - 1,411,627 (1,411,627) Net Investment Income - 4,662,415 (4,662,415) Benefit Payments, including
Refunds of Employee Contributions (5,107,076) (5,107,076) - Administrative Expense - (129,381) 129,381 Net Changes during 2019-20 7,604,436 9,014,197 (1,409,761) Balance at: 6/30/2020 (MD) 133,299,386$ 100,787,546$ 32,511,840$ Increase (Decrease)
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-86
Agent Multiple-Employer Defined Benefit Plan - Safety (Police) Plan:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at: 6/30/2019 (MD) 310,996,624$ 200,863,252$ 110,133,372$ Changes Recognized for the
Measurement Period:
Service Cost 6,156,433 - 6,156,433 Interest on Total Pension Liability 22,017,085 - 22,017,085 Differences between Expected
and Actual Experience 1,696,481 - 1,696,481 Net Plan to Plan Resource Movement - (383,290) 383,290 Contributions - Employer - 10,297,024 (10,297,024) Contributions - Employees - 1,946,146 (1,946,146) Net Investment Income - 9,999,235 (9,999,235) Benefit Payments, including
Refunds of Employee Contributions (15,680,099) (15,680,099) - Adminstrative Expense - (283,165) 283,165 Other Miscellaneous Income/Expense - - - Net Changes during 2019-20 14,189,900 5,895,851 8,294,049 Balance at: 6/30/2020 (MD) 325,186,524$ 206,759,103$ 118,427,421$ Totals of Both Miscellaneous and
Safety Plans 458,485,910$ 307,546,649$ 150,939,261$ Increase (Decrease)
Pension Plan Fiduciary Net Position- Detailed information about each plan’s fiduciary net position is available in the separately issued CalPERS financial report.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-87
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percent age-point lower ( 6.15 percent) or 1 percentage -point higher (8 .15 percent) than the current rate:
Miscellaneous Police Total
1% Decrease 6.15% 6.15% 6.15%
Net Pension Liability 51,095,337$ 163,241,614$ 214,336,951$ Current Discount Rate 7.15% 7.15% 7.15%
Net Pension Liability 32,511,840$ 118,427,421$ 150,939,261$ 1% Increase 8.15% 8.15% 8.15%
Net Pension Liability 17,173,853$ 81,770,975$ 98,944,828$
Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions
For the measure ment period ending June 30, 2020 (the measurement date), the City of Salinas recognized a pension expense of $25,690,790 for the miscellaneous and safety (police) plans.
For the measurement period ending June 30, 2020 (the measurement date), the City of Salinas reports other amounts for the miscellaneous and safety (police) plans as deferred outflow and deferred inflow of resources related to pensions as follows:
Deferred Outflows Deferred Inflows
of Resources of Resources
Plan Contributions Subsequent to Measurement Date 15,903,861$ -$ Differences between Expected and Actual Experience 7,012,833 - Changes of Assumptions 709,787 458,982 Net Difference between Projected and Actual
Earnings on Pension Plan Investments 2,477,115 - 26,103,596$ 458,982$
$15,903,861 reported as deferred outflows of resources to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2022.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-88
Amounts reported as deferred outflows of resources and defe rred inflows of resources related to pensions will be recognized as pension expenses as follows:
Deferred
Measurement Period (Inflows)
Ended June 30: of Resources
2022 3,501,530$
2023 2,736,998
2024 2,209,688
2025 1,292,537
2026 -
Thereafter -
Total 9,740,753$
Cost-Sharing Multiple Employer Defined Benefit Pension Plan Plan Description – All qualified permanent and probationary employees are eligible to participate in the City’s separate Safety risk pool (Fire Tier 1 & Tier 2), cost -sharing multiple -employer defined benefit pension plans administered by CalPERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plans are established by State statute and Local Government resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.
Benefits Provided - CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on y ears of credited service, equal to one year of full time employment.
The City’s plans provisions and benefits in effect at June 30, 2021, are summarized as follows:
*Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit formula 3.0% @ 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 52-57
Monthly benefits, as a % of eligible compensation 3.00% 2.0% to 2.7% Required employee contribution rates 9.00% 13.75%
Required employer contribution rates 25.54% 13.89%
Fire Tier 1
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-89
*Prior to On or after
Hire Date January 1, 2013 January 1, 2013
Benefit formula 3.0% @ 55 2.5% @ 57
Benefit vesting schedule 5 years of service 5 years of service Benefit Payments monthly for life monthly for life
Retirement age 55 52-57
Monthly benefits, as a % of eligible compensation 3.00% 2.0% to 2.7% Required employee contribution rates 9.00% 13.25%
Required employer contribution rates 22.40% 13.20%
Fire Tier 2
*Plan is closed to new members. Safety (Fire Tier 1 & Tier 2) members that were CalPERS participants before January 1, 2013, with no break in service over six months, may continue in the plan.
Contribution Description - Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial valuati on process. 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 employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
The City’s contribution for the safety plan were as follows:
Measurement Date 6/30/2020
Fiscal Year 2020/21
Safety Plan (Fire) 5,708,092$
Total Contributions 5,708,092$
Pension Liabilities, Pension Expense and Deferred Outflows/Deferred Inflows of Resources Related to Pensions – As of June 30, 2021, the City reported net pension liabilities for its proportionate share of the net pension liability as of June 30, 2021 and 2020 were as follows:
Proportionate Share of
Net Pension
Liability/(Asset)
Fiscal Year Ending June 30, 2021
Safety Plan (Fire) 52,635,552$
Total Net Pension Liability 52,635,552$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-90
The City of Salinas’ net pension liability is measured as the proportionate share of the net pension liability. The net pension liability is measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using the standard update p rocedures. The City of Salina s’ proportion of the net pension liability was based on a projection of the City’s long -term share of contributions to the pension plans relative to the projected contributions for all participating employers actuarially determined.
The City’s proportionate share of the net pension liability as of June 30, 2021 and 2020 were as follows:
Change:
Fiscal Year 6/30/2021 6/30/2020 Increase/(Decrease)
Measurement Date 6/30/2020 6/30/2019
Percentage of Plan (PERF C) NPL 0.483764% 0.467722% 0.016042% Percentage Share of Risk Pool
For the year ended June 30, 2021 (measurement date June 30, 2020), the City of Salinas recognized a pension expense of $9,090,818 for the Safety Plan (Fire).
As of June 30, 2021 the City of Salinas reports deferred outflow and deferred inflow of resources related to pensions as follows:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between Expected and Actual Experience 4,081,621$ -$ Changes of Assumptions - 175,330 Net Difference between Projected and Actual
Earnings on Pension Plan Investments 1,143,992 - Change in Employer's Proportion 958,807 2,422,119 Differences between the Employer's
Contributions and the Employer's
Proportionate Share of Contributions 2,388,412 2,078,366 Pension Contributions Subsequent to
Measurement Date 5,708,092 -
Total 14,280,924$ 4,675,815$
$5,708,092 reported as deferred outflows of resources for contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2022.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-91
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expenses as follows:
Deferred
Measurement Period (Inflows)
Ended June 30: of Resources
2022 699,435$
2023 1,423,119
2024 1,201,258
2025 573,205
2026 -
Thereafter -
Total 3,897,017$
Actuarial Methods and Assumptions used to determine Total Pension Liability - The June 30, 2019 valuation was rolled forward to determine the June 30, 2020 total pension liability, based o n the following actuarial methods and assumptions:
Actuarial Cost Method ▪ Entry Age Normal in accordance with the requirements of GASB Statement No. 68
Actuarial Assumptions
Discount Rate ▪ 7.15%
Inflation ▪ 2.50%
Salary Increases ▪ Varies by Entry Age and Service
Mortality Rate ▪ Derived using CalPERS’ Membership Data for all Funds. The mortality table used was developed
based on CalPERSspecific data. The table includes
15 years of mortalityimprovementsusing Society of
Actuaries Scale 90% of Scale MP 2016. For more
details on this table, please refer to the December
2017 experience study report (based on CalPERS
demographic data from 1997 to 2015) that can be
found on the CalPERS website.
Post Retirement Benefit Increase ▪ Contract COLA up to 2.50% until Purchasing Power Protection Allowance Floor on Purchasing
Power applies
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-92
Discount Rate - The discount rate used to measure the total pension liability for PERF C was
7.15%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Long-term Expected Rate of Return - The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short -term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all of the funds’ asset class es, 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 rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The expected real rates of return by asset class are as followed:
New Strategic Real Return Real Return
Allocation Years 1-10(b) Years 11+(c)
Global Equity 50.0% 4.80% 5.98%
Fixed income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Estate 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100.0%
(b) An expected inflation of 2.00% used for this period Asset class (a)
(c) An expected inflation of 2.92% used for this period (a) In the System's ACFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-Term Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-93
Amortization of Deferred Outflows and Deferred Inflows of Resources – The Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments is amortized over a five-year period on a straight -line basis. One-fifth is recognized in pension expense during the measurement period, and the remaining Net Difference Between Projected and Actual Investment Earnings on Pension Plan Investments is amortized over the remaining amortization periods. The Net Difference Between Projected and Actual Investment Ea rnings on Pension Plan Investments in the Schedule of Collective Pension Amounts represents the unamortized balance relating to the current measurement period and the prior measurement periods on a net basis.
Deferred Outflows of Resources and Deferred In flows of Resources relating to Differences Between Expected and Actual Experience and Changes of Assumptions are amortized over the Expected Average Remaining Service Lifetime (EARSL) of members provided with pensions through the Plan determined as of the beginning of the related measurement period. The EARSL for PERF C for the measurement date ending June 30, 2020 is 3.8 years, which was obtained by dividing the total service years of 548,581 (the sum of remaining service lifetimes of the active employees) by 145,663 (the total number of participants: active, inactive, and retired) in PERF C.
Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund.
Sensitivity of Proportionate Share of Net Pension Liability (Asset) to Changes in the Dis count Rate – The following presents the proportionate share of the net pension liability of the City’s Plan as of the Measurement Date, calculated using the discount rate of 7.15 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (6.15 percent) or 1 percentage-point higher (8.15) than the current rate:
6.15% 7.15% 8.15%
(1% Decrease) (Current Rate) (1% Increase)
Net Pension Liability 78,079,817$ 52,635,552$ 31,756,125$ Discount Rate
Measurement Date June 30, 2020
Safety Plan (Fire)
Pension Plan Fiduciary Net Positions – Detailed information about each plan’s fiduciary net position is available in the separately issued CalPERS financial report.
B. New York Life Retirement Plan
Single- Employer Defined Benefit Pension Plan
Plan Description – The New York Life retirement plan is a closed single-employer defined benefit pension plan that cover s Non-Public Safety Employees. The plan’s benefits offers a formula of 2% @ 60 for vested employees. The Plan was established on September 1, 1954 and has been amended and restated from time to time since that date. Prior Plan amendments eliminated the six- month service requirement for entry into the plan and credited participants with up to six -months of service from hire to plan ent ry prior to time change. The Plan was amended and restated effective September 1, 1996 to bring the Plan into compliance with the Internal Revenue Code and
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-94
Regulations promulgated thereby to provide for the City’s pick -up of employee eligible participants equal to the present value of vested accrued benefits. Effective June 1, 2001, the Plan amended its benefit formula to one th at uses an average salary computed from the twelve -month period, replacing the old formula that used an average salary computed from a thirty six month period. As of June 19, 1995, all new regular non-public safety employees are enrolled in CalPERS.
The City has an agreement with New York Life to hold and invest plan assets of the Retirement Plan, which covers employees othe r than Police and Fire. New York Life holds assets in NYL Fixed Dollar Account, NYL Mainstay Total Return Bond Fund, and NYL Guarante ed Annuity Contracts.
New York Life Guaranteed Annuity Contracts in the amount of $5,470,346 are allocated insurance contracts set up to pay benefits and accordingly are excluded from the total pension liability, and are not reported in the City’s financial statements.
Employees Covered – As of September 1, 2019 (valuation date), the following employees were covered by the benefit terms for the single-employer defined benefit pension plan:
Inactive employees or beneficiaries currently receiving benefits 44 Inactive employees entitled to but not yet receiving benefits 7 Active employees 9
Total 60
Benefits - Non-Public Safety personnel benefits vest after five years of service. The vested benefit would be in the form of a pension beginning after attaining age 60 equal to the benefits accrued at time of termination, or for a reduced amount if an election is made to ha ve payments commence before attaining the normal retirement age of 60. City employees who retire at or after age of 60 with five years of credited service are entitled to an annual retirement benefit payable monthly, as a straight line annuity, as a ten year certain and life annuity, or as a lump sum, in an amount equal to 2% of the average earnings paid to the employee during the twelve consecutive months of service with the City during which their earnings were highest, multiplied by the number of years and completed months of plan participation.
The plan allows early retirement after reaching age 55 and completing five years of plan participation. The plan also provides death and survivor benefits.
Funding Policy – The contribution requirements of Plan members and the City are established and may be amended by the City Council. Prior to January 1, 1979, participants were required to make specified levels of contributions to the plan in order to accrue benefits un der the Plan. For the period commencing January 1, 1979 through December 31, 1993, there were no participants’ contributions under this Plan. Since January 1, 1994, participants are required to contribute 4.5% of their compensation to the Plan. Since September 1, 1996, participant contributions are made by the City under the employee pretax pick -up provision for government -sponsored plans allowed under the Internal Revenue Code. As established in their Memorandum of Understanding
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-95
document for personnel of the SEIU Blue Collar bargaining group, the City will contribute (pick- up) four and one-half percent of the employee retirement contribution.
Pension Liabilities, Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions – As of Jun e 30, 2021 (Measurement Date - August 31, 2020), the City reported net pension liability as follows:
Measurement Date 8/31/2020
Total Pension Liability (TPL) 13,890,599$
Fiduciary Net Position (FNP) 5,911,440
Net Pension Liability (NPL) 7,979,159$
Funded Status (FNP/TPL) 42.6%
The City’s net pension liability is measured as of August 31, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of September 1, 2019.
Changes in Net Pension Liability – The following tables show the changes in the net pension liability for the City’s Single-Employer Pension Plan recognized over the measurement period:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (c) = (a) - (b)
Balance at: 8/31/19 (MD) 21,277,868$ 6,634,458$ 14,643,410$ Changes Recognized for the
Measurement Period:
Service Cost 325,385 - 325,385 Interest 506,095 - 506,095
Assumption changes 907,299 - 907,299 Contributions - Employer - 8,030,028 (8,030,028) Contributions - Employees - 52,751 (52,751) Net Investment Income - 338,833 (338,833) Benefit Payments, including refunds (9,126,048) (9,126,048) - Administrative Expense - (18,582) 18,582 Net Changes (7,387,269) (723,018) (6,664,251) Balance at: 8/31/20 (MD) 13,890,599$ 5,911,440$ 7,979,159$ Increase (Decrease)
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-96
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 2.20 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage -point lower ( 1.20 percent) or 1 percentage -point higher (3.20 percent) than the current rate:
1.20% 2.20% 3.20%
(1% Decrease) (Current Rate) (1% Increase)
Net Pension Liability 9,398,583$ 7,979,159$ 6,827,406$ Discount
Measurement Date August 31, 2020
For the year ended June 30, 2021 (measurement date August 31, 2020), the City of Salinas recognized a pension expense of $1,636,569.
As of June 30, 2021 the City of Salinas reports deferred outflow and deferred inflow of resources related to pensions as follows:
Deferred Outflows Deferred Inflows
of Resources of Resources
Net Difference between Projected and Actual
Earnings on Pension Plan Investments -$ 211,820$ Plan Contributions Subsequent to Measurement Date 5,649,988 - 5,649,988$ 211,820$
$5,649,988 reported as deferred outflows of resources for contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2022.
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expenses as follows:
Fiscal Year Ended
June 30:
Deferred Outflow/(Inflows)
of Resources
2022 42,470$
2023 (99,529)
2024 (111,495)
2025 (43,266)
Total (211,820)$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-97
Actuarial Methods and Assumptions used to determine Total Pen sion Liability - For the measurement period ended August 31, 2020 (measurement date), the total pension liability was determined by using the following actuarial assumptions, applied to all periods included in the measurement:
Valuation Date ▪ September 1, 2019
Measurement Date ▪ August 31, 2020
Contribution Policy ▪ City contributes full ADC
Actuarial Assumptions
Discount Rate and ▪ 2.20% at August 31, 2020
long-term expected ▪ 2.97% at August 31, 2019
rate of return on assets ▪ Discount rate lower of (1) expected long-term rate of returnon investments,and (2) Bond Buyer20- Bond GO
Index as of the Measurement Date
Long-Term Expected Rate of ▪ 3.40%
Return on Investments
General Inflation ▪ 2.25%
Mortality ▪ CalPERS 1997-2015 Experience Study
Mortality Improvement
▪ Post-retirementmortalityprojected fullygenerationalwith Scale MP-2019
Salary Increases ▪ Aggregate - 2.5% annually
▪ Merit - CalPERS 1997-2015 Experience Study
Retirement ▪ 100% retire once the retirementbenefitreaches 70% of the Average Monthly Compensation
Disability, termination ▪ None
Benefit form for current actives▪ Disability - Annuity for all particiapants ▪ Lump sum for all other particiapants,valued usingUP-
1984 Mortality Table with 1% interest rate
▪ Value of paymentsexpected to be made under contract
excluded from TPL (contract assets not included in
Fiduciary Net Position)
New York Life Guaranteed
Annuity Contract
Significat Actuarial Assumptions Used
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-98
Changes Since Prior Measurement Date – The following changes were applied since the prior measurement date of August 31, 2020.
Changes of assumptions ▪ Discountrate was updated based on municpalbond rate as of the measurement date
Changes of benefit terms ▪ None
Discount Rate – The discount rate used to measure the total pension liability was 2. 20%. The discount rate is based on the expected rate of return which is lower than the 20 year municipal bond rate. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at current contribution rates and City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the employee rate.
Based on those assumptions, the pensio n plan’s fiduciary net position was not projected to be available to make all projected future benefit payments of current active and inactive employees.
The City’s annual contributions will be adjusted to keep the plan solvent.
Investments are with New York Life. Expected rate of return is as follows:
Asset Class Component Target Allocation
Expected Rate
of Return
Fixed Income 100.00% 1.47%
Assumed Long-Term Rate of Inflation 2.25%
Expected Long-Term Rate of Return, Rounded 3.40%
Pension Plan Fiduciary Net Position- Detailed information about the pension plan’s fiduciary net position as of August 31, 2020 is as follows:
Assets
New York Life Fixed Dollar Account 634,129$
New York Life Main Stay Total Return Bond Fund 5,291,013 Total investments 5,925,142
Liabilities
Accrued expenses 13,702
Fiduciary Net Positon 5,911,440$
New York Life
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-99
II. Defined Contribution Pension Plans
A. ICMA Retirement Corporation Defined Contribution Plan
Plan Description – On June 19, 1995, the City established a qualified retirement program in accordance with Internal Revenue Code Section 401(a). This defined contribution 401(a) Money Purchase Retirement Plan was established with International City Managers Association Retirement Corporation (ICMA). Non-Public Safety Mid -Management employees that were participating in the ICMA 457 non -qualified deferred compensation plan in -lieu of participation in the New York Life Retirement Program, were required to transfer to one of the other City’s three qualified retirement plans. The City’s annual contribution to this plan is determined by the employer required contribution to the New York Life Plan Retirement Plan in accordance with Internal Revenue contribution limits.
Significant Accounting Policies
Basis of Accounting – Financial statements are prepared using the cash basis of accounting.
Employer contributions are recognized in the period that the contributions are made.
Method Used to Value Investments – Participants direct their investments, without restriction, among various investments options available under the ICMA 401(a) Plan.
Retirement Buyback Program
During Fiscal Year 1995 -96, the City established a deferred compensation retirement buybac k program for Department Directors where the City contributes a flat dollar amount based on tenure with the City. The 401(a) Money Purchase Retirement Plan is administered by the ICMA Retirement Corporation. The program requires employee-matching contributions for every dollar contributed by the City. At June 30, 2021, there were 10 participants receiving a total of $124,717 in this form of benefit while there were 2 participants in the ICMA 401(a) money Purchase Pla n with a City annual contribution was $ 25,128 while the employees had an equal mandatory matching contribution of $20,128.
15. Post Employment Benefits Other Than Pensions (OPEB):
A. General Information about the OPEB Plan
For purposes of measuring the net OPEB liability, deferred outflows of resources, and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions f rom the OPEB Plan’s fiduciary net position have been determined on the same basis.
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-100
For this report, the following timeframes are used:
Valuation Date June 30, 2019 Measurement Date June 30, 2020 Measurement Period July 1, 2019 to June 30, 2020 Fiscal Year End June 30, 2021
Plan Description: The City joined the Public Employees' Medical & Hospital Care Act (PEMHCA) in 2000 for Police and Miscellaneous employees, offered through the California Public Employees’ Retirement System (CalPERS). It is an agent multiple-employer plan administered by California Public Employees’ Retirement System (CalPERS). The healthcare plan which provides medical insurance benefits to active and eligible retirees and their families i n accordance with various labor agreements. Fire employees receive healthcare benefits for active and retiree members from a union sponsored plan.
OPEB Trust: The City joined The California Employers’ Retiree Benefit Trust (CERBT) in 2011 to prefund it’s OPEB liability. CERBT is an agent multiple employer defined plan for other post- employment benefits administered by CalPERS. The Plan includes participating employers of the State of California and public agencies. CalPERS is governed by a 13 -member Board of Administration (the Board); two elected by CalPERS members, one elected by retired members of CalPERS, two appointed by the Governor, one public representa tive appointed jointly by the Speaker of the Assembly and Senate Rules Committee, and four ex -officio members: State Treasurer, State Controller, Director of California Department of Human Resources, and Designee of the State Personal Board. The Board is responsible for the management and control of CalPERS, including the exclusive control of the administration and investments of the Plan.
The plan information is as follows:
Fiscal Year End June 30, 2021
Plan type Agent Multiple Employer
OPEB trust Yes
Special funding situations No
Nonemployer contributing entities No
Post-Employment Benefits Eligibility : The City provides post -retirement healthcare benefits to eligible employ ees who retire directly from the City after the age of 50 years (Age 52 for Miscellaneous PEPRA employees) and with five years of service or disability retirement. For Police and Fire Supervisors, the City pays 25% of retiree and spouse health insurance premium up to $100 per month plus PEMHCA AB2544 “unequal method” monthly benefit to retirees ($ 139 per month in 2021). The payment is made until Medicare eligibility, but no more than 10 years for non-supervisory Polic e retirees. For Miscellaneous employees, the City pays the PEMHCA “unequal method” monthly benefit to retirees ($ 143 per month in 2021). For IAFF (Fire employee), the City pays 25% of retiree and spouse health insura nce premium up to $100 per month. The payment is made until Medicare eligibility.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-101
Employees Covered: As of the June 30, 2019 actuarial valuation, the following current and former employees were covered by the benefit terms under the PEMHCA and Union Sponsor Plans:
June 30, 2021 Fiscal Year End
June 30, 2020 Measurement Date
Number of Covered
Participants
Inactive employees currently receiving benefits 144
Inactive employees entitled to, but not yet receiving benefits 352 Actives employees 501
Total employees 997
Contributions: The City intends to contribute to the Trust the actuarially determined contribution (ADC) net of the pay-as-you-go benefits paid annually directly from employer resources. For the fiscal year ended June 30, 2021, the City’s cash contributions were $288,749 in premium payments made on behalf of retirees, $250,000 payments to the trust, implied subsidy payments of $416,000, and administrative expenses of $4,369, resulting in total payments of $959,007.
Discount Rate: The discount rate used to measure the total OPEB liability was 3.04%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investmen ts was applied to all periods of projected benefit payments to determine the total OPEB liability.
Expected Long Rate of Return: The long-term expected rate of return on OPEB plan investments was determined using a building block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Asset Class/Strategy
Target Allocation*
CERBT-Strategy 1
Expected Real Rate
of Return
Measurement Date 6/30/20 6/30/20
Global equity 59% 4.82%
Fixed income 25% 1.47%
TIPS 5% 1.29%
Commodities 3% 0.84%
REITs 8% 3.76%
Assumed long-term rate of inflation 2.75%
Expected long-term net rate of return, rounded 6.75%
* Policy target effective October 1, 2018
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-102
B. Net OPEB Liabilities, Expense, and Deferred Outflows/Inflows of Resources
Net OPEB Liability: As of the June 30, 2020 measurement date, was as follows:
Fiscal Year Ended 6/30/2021
Measurement Date 6/30/2020
Total OPEB liability (TOL) 27,819,852$
Fiduciary net position (FNP) 3,058,247
Net OPEB liability (NOL) 24,761,605$
Funded status (FNP/TOL) 11.0%
Changes in the OPEB Liability : The changes in the net OPEB liability for the City Plan are as follows:
Changes in Net OPEB Liability
Total OPEB
Liability (a)
Fiduciary Net
Position (b)
Net OPEB
Liability
(a) - (b)
Balance at June 30, 2020
(Measurement Date June 30, 2019) 21,673,870$ 2,707,053$ 18,966,817$ Changes for the year:
Service Cost 1,169,996 - 1,169,996
Interest 974,493 - 974,493
Changes of benefit terms - - - Actual vs. expected experience - - - Assumption changes 4,678,007 - 4,678,007 Contributions - employer* - 931,063 (931,063) Contributions - employee - - - Net investment income - 102,633 (102,633) Benefit payments and refunds* (676,514) (676,514) - Administrative Expenses - (5,988) 5,988
Net Changes 6,145,982 351,194 5,794,788
Balance at June 30, 2021
(Measure Date June 30, 2020) 27,819,852$ 3,058,247$ 24,761,605$ * Includes $250,000 City contribution to trust, and $297,514 cash benefit payments and $379,000 Implied Subsidy benefit payments (both paid outside of trust).
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-103
Discount Rate Sensitivity Analysis: The following schedule shows the impact of the Net OPEB Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (3.04%) in measuring the Net OPEB Liability.
2.04% 3.04% 4.04%
(1% Decrease) (Current Rate) (1% Increase)
Net OPEB liability 29,472,179$ 24,761,605$ 21,023,102$
Discount Rate
Healthcare Trend Sensitivity Analysis: The following presents the net OPEB liability of the City if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2020:
(1% Decrease) (Current Trend) (1% Increase)
Net OPEB liability 20,272,993$ 24,761,605$ 30,637,638$
Healthcare Trend Rate
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB: For the fiscal year ended June 30, 2019, the City recognized OPEB expense of $1,954,628.
As of fiscal year ended June 30, 2021, the City reported deferred outflows of resources and inflows of resources related to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Differences between expected and actual experience -$ 3,218,456$ Changes of assumptions 5,280,644 1,438,280
Net differences between projected and actual earnings
on plan investment 67,548 -
Employer contributions after measurement date* 959,007 - Total 6,307,199$ 4,656,736$
expenses, and $416,000 implied subsidy benefit payments. * Includes $250,000 contributions to trust, $288,749 cash benefit payments, $4,258 administrative
Deferred outflows of resources in the amount of $ 959,007 related to contributions subsequent to the measurement date and will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2022.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-104
Other amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB expenses as follows:
Deferred
Fiscal Year ended
June 30:
Deferred (Inflows)
of Resources
2022 (964,035)$
2023 (16,027)
2024 (20,573)
2025 (17,024)
2026 2,224
Thereafter (635,028)
Total (1,650,463)$
Recognition of Deferred Out flows and Deferred Inflows of Resources : To smooth market volatility, gains and losses related to changes in total OPEB liability and fiduciary net position are recognized over nine and half years. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense.
Actuarial Methods and Assumptions Used to Determine the OPEB Liability: The City’s net OPEB liability was measured as of June 30, 2020. The total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2019 based on the following significant actuarial methods and assumptions:
Acturial Assumptions
Actuarial valuation ▪ June 30, 2019
Contribution policy ▪ Citycontributes$250,000 annually,and pays benefitpayments outside of trust.
Discount rate ▪ 3.04% at June 30, 2020
▪ 4.33% at June 30, 2019
Municipal Bond Rate ▪ 3.04% at June 30, 2020 (Bond Buyer 20-bond Index) ▪ 3.50% at June 30, 2019 (Bond Buyer 20-bond Index)
Expected long-term rate of
return on investment
▪ 6.75%
General inflation ▪ 2.75% per annum
Measurement Date 06/30/2020
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-105
Acturial Assumptions
Mortality, retirement,
disability, termination
▪ CalPERS 1997-2015 experience study
Mortality Improvement ▪ Mortality projected fully generational with Scale MP-2019 Salary increases ▪ Aggregate - 3% annually
▪ Merit - CalPERS 1997-2015 experience study
Medical trend ▪ Non-Medicare - 7.25% for 2021, decreasingto an ultimate rate of 4.0% in 2076
▪ Medicare - 6.3% for 2021, decreasingto an ultimaterate of
4.0% in 2076
PEMHCA minimum
increases
▪ 4.25% annualy
Cap increases ▪ None
Healthcare participation ▪ 100% for Safety $100 benefit ▪ 50% for PEMHCA benefit if covered as active
▪ 5% for PEMHCA benefit if waived as active
Measurement Date 06/30/2020
Changes Since Prior Measurement Date – The following changes were applied since the prior measurement date of August 31, 2020.
Change in assumptions ▪ Discountrate was updatedbased on municipalbond rate as of the measurement date and crossover test
Change in benefit terms ▪ None
16. Risk Management:
The City has a self -insurance program and carries excess insurance for catastrophic losses.
National Casualty Company combined with Berkley National Insurance Company provides General Liability coverage up to a maximum of $15,000,000 after the self -insured retention of $1,000,000 per occurrence met. Safety National Casualty Corporation provides Worker’s Compensation excess coverage with statutory coverage (pursuant to California Worker’s Compensation Act) after the self-insurance retention of $1,000,000 for Public Safety and $750,000 for non Public Safety is met.
Liabilities for estimated claims payable for the self -insurance programs represent settled claims, claims incurred but not paid and claims incurred but not reported based upon past experience, modified for current trends and information. While the ultimate amount of losses incurred through June 30, 2021 is dependent on future developments, City management has determined the desired reserve level for each self -insurance program as follows and believes the estimates are adequate to cover such losses.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-106
● Worker’s Compensation insurance liability of $ 26,656,171 includes $21,324,937 for claims incurred but not paid and $5,331,234 for claims incurred but not reported which is based on ex pected claims and past claims history. At June 30, 2021, Worker’s Compensation Insurance liability of $ 26,656,171 is reported on the statement of net position. The worker’s compensation fund was established as an Internal Service Fund on July 1, 1991. The portion of the worker’s compensation insurance liability since July 1, 1991, at June 30, 2021 is $24,873,941 and is reported in the Internal Service Fund and $1,782,230 is treated as general long-term debt.
● General liability insurance liability at June 30, 2021 of $3,157,700 that is reported in the Internal Service Fund includes $2,081,480 for claims incurred but not paid and $1,076,220 for claims incurred but not reported which is based on expected claims and past claims history. A deficit is reported with the internal service funds of $2,497,985 at June 30, 2021 and is short the City’s goal of reserving three times the self -insured retention plus full funding of all past claims history. The City’s self-insured retention is $1,000,000. At June 30, 2021.
Changes to the claims liability for fiscal year ended June 30, 2021 are as follows:
Workers General
Compensation Liability
Beginning balance of claims liability 21,666,852$ 6,543,544$ Less beginning provision for incurred but not
reported claims (4,333,370) (907,540)
Beginning provisions for incurred but not paid claims 17,333,482 5,636,004 Increase (decrease) in claims incurred and reported 10,195,115 (326,109) Claims expenses paid (6,203,660) (3,228,415)
Ending balance provision for incurred but not
paid claims 21,324,937 2,081,480
Provisions for incurred but not reported claims 5,331,234 1,076,220 Ending balance of claims liability 26,656,171$ 3,157,700$
17. Lease Obligations:
Operating Leases as Lessee – The City has commitments under various long-term operating lease agreements requiring annual rental payments, which are described as follows:
Governmental Activities – The City has ongoing commitments under operating lease agreements for business equipment, and office facilities necessary for City operations, which expire at various dates through 202 6. Each governmental fund includes the expenditures related to such lease agreements. There are both cancelable and non-cancelable lease agreements. Rental expenditures reported by the General Fund and other governmental funds under these operating lease agreements for the fiscal year ended June 30, 2021 amounted to $379,432.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-107
The future minimum lease payments anticipated under the existing lease commitments as of June 30, 2021 are as follows:
Year Ended June 30,
2022 169,399$
2023 159,353
2024 119,300
2025 90,548
2026 82,548
621,148$
18. Long Term Debt:
The following is a summary of Long-Term Debt transactions for the fiscal year ended June 30, 2021:
Due Within
June 30, 2020 Increases Decreases June 30, 2021 One Year Governmental Activities:
Direct Placement and Borrowing
Capital Leases 88,522,299$ -$ 22,544,868$ 65,977,431$ 4,067,280$ Certificates of Participation
Series B-2015 4,845,000 - 4,845,000 - - TRIP 2018B 36,820,000 - 710,000 36,110,000 740,000 Series 2020A-Energy (2014) - 16,190,000 540,000 15,650,000 865,000 Series 2020A-SVSWA (2015B) - 4,440,000 580,000 3,860,000 525,000 Bond Premium/(Discount)
TRIP 2018B 3,930,169 - 373,986 3,556,183 354,864 TRIP 2018B (357,479) - (13,240) (344,239) (13,240) Series 2020A-Energy (2014) - 3,230,127 248,471 2,981,656 248,471 Series 2020A-SVSWA (2015B) - 561,244 70,155 491,089 70,155 Total Certificates of Particpation 45,237,690 24,421,371 7,354,372 62,304,689 2,790,250 Assessment District Bonds
Assessment District 2017 Act Bonds 2,140,000 - 580,000 1,560,000 590,000 CFD Monte Bella-2019 #1 2,675,000 - 50,000 2,625,000 50,000 CFD Monte Bella-2019 #2 2,090,000 - - 2,090,000 40,000 CFD Monte Bella-2019 #3 - 2,695,000 - 2,695,000 - Bond Premium
CFD Monte Bella-2019 #1 74,934 - 2,498 72,436 2,498 CFD Monte Bella-2019 #2 203,920 - - 203,920 7,032 CFD Monte Bella-2019 #3 - 242,947 - 242,947 - Total Assessment District Bonds 7,183,854 2,937,947 632,498 9,489,303 689,530 Annual Leave 11,424,225 974,934 23,233 12,375,926 2,475,185 Insurance claims 28,210,396 29,813,871 28,210,396 29,813,871 - Total Governmental Activities 180,578,464 58,148,123 58,765,367 179,961,220 10,022,245
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-108
Due Within
June 30, 2020 Increases Decreases June 30, 2021 One Year Business-type Activities
Direct Placement and Borrowing
Capital Leases:
Monterey Parking Garage 2014 10,141,000 - 551,000 9,590,000 578,000 Street Sweeper 225,528 - 112,361 113,167 55,866 Fire Engine 30,238 - 30,238 - - Total Capital Leases 10,396,766 - 693,599 9,703,167 633,866 HUD Section 108 Loan 2,395,000 - 442,000 1,953,000 460,000 Total Direct Placement and Borrowing 12,791,766 - 1,135,599 11,656,167 1,093,866 Bonds Payable:
Certificates of Participation
Series A-2015 2,940,000 - 2,940,000 - - Series A-2008 4,280,000 - 4,280,000 - - Series 2020A-Twin Creeks (2015A) - 2,715,000 385,000 2,330,000 355,000 Series 2020B (Fairways 2008) - 4,040,000 110,000 3,930,000 100,000 Bond Premium - 2020A-Twin Creeks - 317,432 45,347 272,085 45,347 Total Certificates of Participation 7,220,000 7,072,432 7,760,347 6,532,085 500,347 Sanitary Sewer Revenue Bonds - 2012 15,065,000 - 15,065,000 - - Wastewater Revenue Bonds - 2020A - 14,425,000 - 14,425,000 555,000 Bond Premium - Sanitary Sewer 95,646 - 95,646 - - Total Revenue Bonds 15,160,646 14,425,000 15,160,646 14,425,000 555,000 Annual Leave 557,043 60,595 9,734 607,904 121,581 Total Business-type Activities 35,729,455 21,558,027 24,066,326 33,221,156 2,270,794 Total Long-Term Liability 216,307,919$ 79,706,150$ 82,831,693$ 213,182,376$ 12,293,039$
The annual requirements to amortize capital leases, loans and notes, certificates of participation and bonds outstanding as of June 30, 2021 by activity are as follows:
Year Ended
June 30, Principal Interest Principal Interest
2022 6,877,280$ 5,302,448$ 2,103,866$ 906,939$ 2023 6,956,222 5,013,161 2,169,301 853,362 2024 7,323,921 4,707,698 2,187,000 795,690 2025 6,996,766 4,391,462 2,259,000 734,816 2026 7,218,242 4,074,909 1,804,000 677,613 2027 - 2031 36,123,000 15,527,849 8,198,000 2,655,710 2032 - 2036 25,032,000 8,758,915 7,275,000 1,406,505 2037 - 2041 12,335,000 5,390,215 4,700,000 566,736 2042 - 2046 15,290,000 2,516,782 1,645,000 48,747 2047 - 2051 6,415,000 279,106 - - 130,567,431$ 55,962,545$ 32,341,167$ 8,646,118$ Governmental-Wide Activities Business-Type Activities
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-109
The debt for annual leave and estimated insurance claims do not have amortization schedules and are therefore not included in the preceding schedule.
Accrued Annual Leave – Accrued leave is reported on the Government -Wide Statements for Governmental Activities and Business-type Activities in Long-Term Debt. At June 30, 2021 the liability for all compensated absences totaled $12,983,830.
Accrued annual leave are reported on the financial statements in the following funds:
Due Within
June 30, 2020 Increases Decreases June 30, 2021 One Year Governmental Activities
General Fund 8,666,481$ 881,624$ -$ 9,548,105$ 1,909,621$ Measure E 948,600 57,118 - 1,005,718 201,144 Measure G 1,379,304 - 7,113 1,372,191 274,438 Special Revenue Funds 324,807 - 16,120 308,687 61,737 Internal Service Funds 105,033 36,192 - 141,225 28,245 Total Governmental
Activities 11,424,225$ 974,934$ 23,233$ 12,375,926$ 2,475,185$ Business-type Activities
Enterprise Funds 557,043$ 60,595$ 9,734$ 607,904$ 121,581$ Total Primary
Government 11,981,268$ 1,035,529$ 32,967$ 12,983,830$ 2,596,766$
Insurance Claims – At June 30, 2021, the insurance claims liability recorded in the Internal Service Funds is as follows:
ISF Funds General LTD June 30, 2021
Worker's Compensation 24,873,941$ 1,782,230$ 26,656,171$ General Liability 3,157,700 - 3,157,700 Total 28,031,641$ 1,782,230$ 29,813,871$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-110
Governmental Type Activities
Direct Borrowing
Capital Leases – Annual debt service requirements to maturity for the capital lease is as follows:
Year Ended June 30, Principal Interest Total
2022 4,067,280$ 2,711,469$ 6,778,749$
2023 4,151,222 2,528,047 6,679,269
2024 4,348,921 2,336,009 6,684,930
2025 4,281,766 2,134,930 6,416,696
2026 4,363,242 1,931,001 6,294,243
2027 - 2031 22,058,000 6,552,999 28,610,999 2032 - 2036 13,997,000 2,704,334 16,701,334 2037 - 2041 2,850,000 1,433,484 4,283,484 2042 - 2046 3,450,000 826,369 4,276,369 2047 - 2051 2,410,000 145,031 2,555,031 65,977,431$ 23,303,673$ 89,281,104$
Quantum Tiller Ladder Truck
On January 21, 2014, the City, using lease purchase financing, purchased a Quantum Tiller Ladder Truck for a total of $1,087,053. The City will make ten annual payments of $124,848, beginning on March 17, 2015 and ending March 1 7, 2024 at 2.60% interest. Debt payable of $355,880 is recorded as Governmental Activities at June 30, 2021.
Debt service requirements to maturity for the Quantum Tiller Ladder Truck are as follows:
Year Ended June 30, Principal Interest Total
2022 115,595$ 9,253$ 124,848$
2023 118,601 6,247 124,848
2024 121,684 3,164 124,848
355,880$ 18,664$ 374,544$
Pierce Pumper & Tiller
On March 6, 2015, the City, using lease purchase financing, purchased a Pierce Pumper and Tiller for a total of $ 1,628,839. The City will make ten annual payments of $ 209,261, beginning on March 6, 2016 and ending March 6, 2025 at 2.51% interest. Debt payable of $552,769 is recorded as Governmental Activities at June 30, 2021.
If any event of default occurs, and if the lessee agrees to pay, the lessor may require the lessee to pay all amounts currently due and all remaining rent payments due during the fiscal year in effect when the default occurs with interest at the highest lawful rate from the date of the lessor’s demand
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-111
for such payment. Also included in this scenario are additional out-of-pocket expenses incurred by the lessor including attorney fees, repossession, safekeeping, storage, repair, reconditioning, and disposition costs. Alternatively, the lessor can require the lessee to return all equipment for the purpose of lease, sale, or otherwise disposition by the lessor.
Debt service requirements to maturity for the Pierce Pumper & Tiller are as follows:
Year Ended June 30, Principal Interest Total
2022 195,405$ 13,856$ 209,261$
2023 116,185 8,958 125,143
2024 119,097 6,046 125,143
2025 122,082 3,060 125,142
552,769$ 31,920$ 584,689$
2014 Lease/Purchase Agreement
The City of Salinas 2014 Lease/Purchase Agreement was issued by the Salinas Facilities Financing Authority on January 29, 2014. The financing was issued to refund the Animal Shelter COP Series A-1999 ($2,812,000) and the Monterey Street Parking Structure COP Series A -2004 ($13,253,000). The Animal Shelter portion of the financing was issued for 19 years (ending September 1, 2032), at an average interest rate of 4.02%. Maximu m annual debt service is $278,646. Debt payable of $1,805,000 is recorded as Governmental Activities at June 30, 2021.
Upon the occurrence of an event of default, the trustee may pursue any available remedy by law or pursuant to the lease agreement to enforce payment of the outstanding amounts. However, there shall be no right under any circumstance to accelerate the lease payments or otherwise declare any lease payments not then in default to be immediately due and payable. After the occurrence of an event of default, the City will surrender possession of the property to the financing authority, if requested to do so.
Debt service requirements to maturity for 2014 Lease/Purchase Agreement are as follows:
Year Ended June 30, Principal Interest Total
2022 161,000$ 69,325$ 230,325$
2023 163,000 62,813 225,813
2024 171,000 56,099 227,099
2025 179,000 49,064 228,064
2026 191,000 41,627 232,627
2027 - 2031 643,000 126,168 769,168 2032 - 2036 297,000 12,080 309,080 1,805,000$ 417,176$ 2,222,176$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-112
Pierce Enforcer Pumper
On October 18, 2017, the City, using lease purchase financing, purchased a Pierce Enforcer Pumper fire engine for a total of $561,605. The City will make six annual payments of $101,822, beginning on October 18, 2018 and ending October 18, 2023 at 2.40% interest. Debt payable of $291,034 is recorded as Governmental Activities on June 30, 2021.
If any event of default occurs, and if the lessee agrees to pay, the lessor may require the lessee to pay all amounts currently due and all remaining rent payments due during the fiscal year in effect when the default occurs with interest at the highest lawful rate from the date of the lessor’s demand for such payment. Also included in this scenario are additional out -of-pocket expenses incurred by the lessor including attorney fees, repossession, safekeeping, storage, repair, reconditioning, and disposition costs. Alternatively, the lessor can require the lessee to return all equipment for the purpose of lease, sale, or otherwise disposition by the lessor.
Debt service requirements to maturity for Pierce Enforcer Pumper are as follows:
Year Ended June 30, Principal Interest Total
2022 94,664$ 7,158$ 101,822$
2023 96,992 4,830 101,822
2024 99,378 2,444 101,822
291,034$ 14,432$ 305,466$
Altec Aerial Lift
On December 19, 2017, the City, using lease purchase financing, purchased an Altec Aerial Lift Truck for a total of $157,983. The City will make six annual payments of $28,903, beginning on December 19, 2018 and ending December 19, 2023. Debt payable of $ 82,181 is recorded as Governmental Activities on June 30, 2021.
If any event of default occurs, and if the lessee agrees to pay, the l essor may require the lessee to pay all amounts currently due and all remaining rent payments due during the fiscal year in effect when the default occurs with interest at the highest lawful rate from the date of the lessor’s demand for such payment. Also included in this scenario are additional out -of-pocket expenses incurred by the lessor including attorney fees, repossession, safekeeping, storage, repair, reconditioning, and disposition costs. Alternatively, the lessor can require the lessee to return all equipment for the purpose of lease, sale, or otherwise disposition by the lessor.
Debt service requirements to maturity for Altec Aerial Lift are as follows:
Year Ended June 30, Principal Interest Total
2022 26,659$ 2,244$ 28,903$
2023 27,387 1,516 28,903
2024 28,135 768 28,903
82,181$ 4,528$ 86,709$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-113
Public Safety Building 2018A
The City of Salinas 2018A Capital Lease was issued by Salinas Public Facilities, Inc. in the amount of $48,825,000 on June 28, 2018. The purpose of this financing was to raise funds for the construction of a new Public Safety Building (Police Department) within City limits. The City started making semi-annual payments beginning on December 1, 2018 and ending December 1, 2034 at an average interest rate of 3.375%. Maximum annual debt service is $4,799,181. Debt payable of $46,185,000 is recorded as Governmental Activities on June 30, 2021.
In the event of an event of default, the trustee shall be entitled to declare the principal of all the bonds then outstanding, and the interest accrued thereon, to be due and payable immediately. Upon such declaration, any thing in the indenture or in the bonds contained to the contrary notwithstanding, shall also be due and payable immediately, and interest on the bonds shall cease to accrue on the date of such declaration.
Debt service requirements to maturity for Public Safety Building 2018A are as follows:
Year Ended June 30, Principal Interest Total
2022 2,775,000$ 1,958,181$ 4,733,181$
2023 2,910,000 1,816,056 4,726,056
2024 3,060,000 1,666,806 4,726,806
2025 3,210,000 1,510,056 4,720,056
2026 3,370,000 1,345,556 4,715,556
2027 - 2031 19,520,000 4,040,581 23,560,581 2032 - 2036 11,340,000 763,891 12,103,891 46,185,000$ 13,101,127$ 59,286,127$
El Gabilan Library 2018B
The City of Salinas 2018B Capital Lease was issued by Salinas Public Facilities, Inc. in the amount of $19,830,000 on June 28, 2018. The purpose of this financing was to raise funds for the construction of a new Public Library (El Gabilan) within City limits. The City started making semi-annual payments beginning on December 1, 2018 and ending December 1, 2048 at an average interest rate of 3.900%. Maximum annual debt service is $1,152,781. Debt payable of $14,130,000 is recorded as Governmental Activities on June 30, 2021.
In the event of an event of default, the trustee shall be entitled to declare the principal of all the bonds then outstanding, and the interest accrued thereon, to be due and payable immediately. Upon such declaration, anything in the indenture or in the bonds contained to the contrary notwithstanding, shall also be due and payable immediately, and interest on the bonds shall cease to accrue on the date of such declaration.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-114
Debt service requirements to maturity for El Gabilan Library 2018B are as follows:
Year Ended June 30, Principal Interest Total
2022 215,000$ 571,094$ 786,094$
2023 220,000 562,369 782,369
2024 235,000 550,994 785,994
2025 240,000 539,119 779,119
2026 255,000 526,744 781,744
2027 - 2031 1,895,000 2,386,250 4,281,250 2032 - 2036 2,360,000 1,928,363 4,288,363 2037 - 2041 2,850,000 1,433,484 4,283,484 2042 - 2046 3,450,000 826,369 4,276,369 2047 - 2051 2,410,000 145,031 2,555,031 14,130,000$ 9,469,817$ 23,599,817$
Police/Fire Radios & PW Equipment
The City of Salinas Motorola Radios and Public Work Equipment was issued by Banc of America Public Capital Corporation in the amount of $3,500,000 on August 17, 2018. This equipment replaces old manufactured models and will make Police, Fi re, and Public Work oper ations more efficient. The lease consists of 84 payments, beginning on August 17, 2019 and ending on August 17, 2025 at an average interest rate of 3.120%. Debt payable of $ 2,575,567 is recorded as Governmental Activities on June 30, 2021.
Upon the occurrence of an event of default, legal title and physical position of the equipment shall pass to the Lessor, and the City shall have no further interest therein.
Debt service requirements to maturity for Police/Fire Radios & PW Equipment are as follows:
Year Ended June 30, Principal Interest Total
2022 483,957$ 80,358$ 564,315$
2023 499,057 65,258 564,315
2024 514,627 49,688 564,315
2025 530,684 33,631 564,315
2026 547,242 17,074 564,316
2,575,567$ 246,009$ 2,821,576$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-115
Certificates of Participation Bonds
Series 2018B - TRIP
On July 18, 2108, the California Statewide Communities Development Authority Transportation Revenue issued City of Salinas Certificates of Participation, Series 2018B totaling $37,500,000 at various interest rates plus premium and discounts . The purpose of this financing was to provide expedited funding for the design, acquisition, and construction of local roadway and street improvement projects within the jurisdiction of the C ity. Debt payable of $ 36,110,000 plus premiums and discounts of $3,211,944 are recorded as Governmental Activities at June 30, 2021.
In the event of an event of default, the trustee shall be entitled to exercise the remedies provided under the agreement to collect the outstanding payments in full, with no grace period permitted.
The annual debt service requirements to maturity for the certificates are as follows:
Year Ended June 30, Principal Interest Total
2022 740,000$ 1,595,125$ 2,335,125$
2023 750,000 1,561,575 2,311,575
2024 800,000 1,522,825 2,322,825
2025 850,000 1,481,575 2,331,575
2026 890,000 1,442,525 2,332,525
2027 - 2031 5,055,000 6,562,925 11,617,925 2032 - 2036 6,390,000 5,194,125 11,584,125 2037 - 2041 8,155,000 3,384,750 11,539,750 2042 - 2046 10,210,000 1,331,013 11,541,013 2047 - 2051 2,270,000 39,725 2,309,725 36,110,000$ 24,116,163$ 60,226,163$
Series 2020A Energy (2014)
On November 1, 2014, the City entered into a lease agreement fund ed through private placement in the amount of $21,908,000. The project will install LED lighting on streetlights and parking lots in addition to building solar PV installations at the Hitchcock Road Animal Shelter, the Industrial Waste Treatment Plant, the Salinas Municipal Airport, the Permit Center, Sherwood Hall, and the Sewer Lift Station site off Work Street. The Debt Service repayment were set to be over a 17-year period at 3.03% interest beginning May 1, 2016 and ending November 1, 2032. Maximum annual debt service is $2,005,124.
On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Series 2020A totaling $16,190,000. The Advance Refunding Certificates were issued to refund the 2014 Energy Imp rovement Lease. Bond started November 1, 2020 and will end after 12 years on November 1, 2032. The advanced refunding of the 2014 Energy Lease reduced total debt service payments over the next 12 years by $1,513,227. This results is an economic gain (difference between the present values of the debt service payments on the old and
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-116
new debt) of $1,425,483. Debt payable of $15,650,000 is recorded as Governmental Activities at June 30, 2021.
In the event of an event of default, the Trustee may and, at the direction of the owners of not less than a majority of the aggregate principal amount of bonds then outstanding, and upon being indemnified to its reasonable satisfaction therefore, shall, up on notice in writing to the City and the Salinas Financing Authority, exercise any of the remedies granted to the Salinas Financing Authority under the lease agreement and, in addition, take whatever action at law or in equity may appear necessary or desir able to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the owners, either at law or in equity bankruptcy or otherwise, whether for specific enforcement of any covenan t or agreement or for the enforcement of any other legal or equitable right.
The annual debt service requirements to maturity for the certificates are as follows:
Year Ended June 30, Principal Interest Total
2022 865,000$ 625,750$ 1,490,750$
2023 935,000 589,750 1,524,750
2024 1,005,000 550,950 1,555,950
2025 1,080,000 509,250 1,589,250
2026 1,155,000 464,550 1,619,550
2027 - 2031 7,075,000 1,536,750 8,611,750 2032 - 2036 3,535,000 152,425 3,687,425 15,650,000$ 4,429,425$ 20,079,425$
Series 2020A SVSWA (2015B)
On October 24, 1997, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation (Certificates) Series A -1997 totaling $11,960,000. The purpose of this financing was to raise money for capital improvement projects and to refund the Author ity’s Variable Rate Lease Revenue Bonds, which were issued to purchase the 65 W. Alisal Building. The Variable Rate Lease Revenue Bonds Series A-1997 and Series B-1997 were fully retired on November 20, 1997. The outstanding Certificates were secured by liens on City owned assets that included City Hall; Public Safety Building; Steinbeck Library, and 65 W. Alisal Building.
On September 14, 2005, the Salinas Public Financing Authority issued City of Salinas Refunding Certificates of Participation Series 20 05B (1997 Capital Improvement Projects). The Refunding Certificates were issued to refund Series A-1997 Certificates. Series 2005B Refunding Certificates were issued in the amount of $11,705,000 for 24 years at 4.22%. The Refunding Certificates were secured by a lien on the Salinas Community Center with an appraised value of $13,415,000. With these refunding, liens were removed from the City’s Public Safety Building, 65 West Alisal Building and Steinbeck Library.
On September 1, 2015, the City issued Refunding Certificates of Participation Series 2015, in the amount of $11,440,000 at a 2.53% interest rate, to refund the outstanding portion of the 2005A
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-117
Certificates of Participation (Twin Creeks) and the 2005B Certificates of Participation (Capital Improvements). Bond started September 1, 2015 and will end after 12 years on September 1, 2027.
On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Series 2020A totaling $4,440,000. The Advance Refunding Certificates were issued to refund the 2015B Salinas Valley Solid Waste Authority Bonds. Bond started November 1, 2020 and will end after 7 years on November 1, 2027. The advance refunding of the 2015B Salinas Valley Solid Waste Authority advance refunding reduced total debt service payments over the next 7 years by $241,953. This results is an economic gain (difference between the present values of the debt service payments on the old and new debt) of $244,664. Debt payable of $ 3,860,000 is recorded as Governmental Activities at June 30, 2021.
In the event of an event of default, the Trustee may and, at the direction of the owners of not less than a majority of the aggregate principal amount of bonds then outstanding, and upon being indemnified to its r easonable satisfaction therefore, shall, upon notice in writing to the City and the Salinas Financing Authority, exercise any of the remedies granted to the Salinas Financing Authority under the lease agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the owners, either at law or in equity bankruptcy or otherwise, whet her for specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right.
The annual debt service requirements to maturity for the certificates are as follows:
Year Ended June 30, Principal Interest Total
2022 525,000$ 143,900$ 668,900$
2023 545,000 122,500 667,500
2024 565,000 100,300 665,300
2025 585,000 77,300 662,300
2026 610,000 53,400 663,400
2027 - 2031 1,030,000 36,600 1,066,600 3,860,000$ 534,000$ 4,394,000$
Assessment Districts Bonds
At June 30, 2021, outstanding Assessment District Bonds totaled $8,970,000 plus bond premiums of $519,303. Bonds issued for improvements in special assessment districts are liabilities of the property owners and are secured by liens against the assessed property. In the case of default, the City has the authority to advance bonds payments from the special reserve fund and to foreclosure on delinquent property. The bonds are secured by a pledge of the net revenue of the Assessment District and may not be used for any other purpose. The total Assessment District Reserve Fund balance was $1,843,626 at June 30, 2021.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-118
Assessment District 2017 Act Bonds
On July 28, 2017 the City issued $4,555,000 in bonds to refinance the following special assessment district debt:
• 1998 AD 98-1 – Bella Vista III Refunding ($2,665,000) • 2000 AD 96-2 – Acacia Park Refunding ($340,000)
• 2002 RADA – Bella Vista Refunding ($1,365,000)
• 2002 RADB – Bella Vista Refunding ($185,000)
The refunding of the assessment districts debt reduced total debt service payments over 9 years by $937,889. This results was an economic gain (difference between the present values of the debt service payments on the old and new debt) of $318,303. Maximum debt service is $882,065, including interest ranging from 2.3% to 2.7% for 9 years.
Upon the occurrence of an event of default, the trustee shall be entitled to exercise the remedies provided under the agreement to compel t he City to perform and carry out their duties under the 1913 Act, the 1915 Act, or the 1984 Act and their agreements with the owners provided in the Bond agreement.
Annual debt service requirements to maturity for Assessment District 2017 Act Bonds are as follows:
Year Ended June 30, Principal Interest Total
2022 590,000$ 31,835$ 621,835$
2023 430,000 19,170 449,170
2024 450,000 8,095 458,095
2025 45,000 1,823 46,823
2026 45,000 608 45,608
1,560,000$ 61,531$ 1,621,531$
CFD Monte Bella-2019 - Community Facilities District No. 2016 -1 (Monte Bella) of the City of Salinas 2019 Special Tax Bonds (Improvement Area No. 1) On February 21, 2019, the Bond Purchase Agreement was signed in the amount of $2,675,000 at various interest rates to finance the acquisition and/or construction of certain public facilities and improvements within Community Facilities District (CFD) No. 2016 -1 Improvement Area No. 1 of the district. Debt payable net of premiums of $2,697,436 is recorded as Governmental Activities at June 30, 2021.
Upon the occurrence of an event of default, the trustee may pursue any available remedy by law to enforce the payment of principal, premium and interest on the outstanding bonds.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-119
Annual debt service requirements to maturity CFD Monte Bella-2019 #1 bonds are as follows:
Year Ended June 30, Principal Interest Total
2022 50,000$ 105,819$ 155,819$
2023 55,000 104,769 159,769
2024 55,000 103,669 158,669
2025 55,000 102,534 157,534
2026 55,000 100,575 155,575
2027 - 2031 325,000 457,225 782,225 2032 - 2036 395,000 383,931 778,931 2037 - 2041 475,000 306,056 781,056 2042 - 2046 590,000 185,150 775,150 2047 - 2051 570,000 46,600 616,600 2,625,000$ 1,896,328$ 4,521,328$
CFD Monte Bella-2019 #2 - Community Facilities District No. 2016 -1 (Monte Bella) of the City of Salinas 2019 Special Tax Bonds (Improvement Area No. 2) On December 1, 2019, the Bond Purchase Agreement was signed in the amount of $2,090,000 at various interest rates to finance the acquisition and/or construction of certain public facilities and improvements within Community Facilities District (CFD) No. 2016- Improvement Area 2 of the district. Debt payable net of premiums of $2, 293,920 is recorded as Governmental Activities at June 30, 2021.
Upon the occurrence of an event of default, the trustee may pursue any available remedy by law to enforce the payment of principal, premium and interest on the outstanding bonds.
Annual debt service requirements to maturity CFD Monte Bella-2019 #2 bonds are as follows:
Year Ended June 30, Principal Interest Total
2022 40,000$ 88,550$ 128,550$
2023 40,000 87,350 127,350
2024 45,000 85,850 130,850
2025 45,000 84,050 129,050
2026 45,000 82,250 127,250
2027 - 2031 260,000 381,350 641,350 2032 - 2036 320,000 324,100 644,100 2037 - 2041 375,000 265,925 640,925 2042 - 2046 460,000 174,250 634,250 2047 - 2051 460,000 47,750 507,750 2,090,000$ 1,621,425$ 3,711,425$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-120
CFD Monte Bella-2019 #3 - Community Facilities District No. 2016 -1 (Monte Bella) of the City of Salinas 2019 Special Tax Bonds (Improvement Area No. 3) On December 20, 2020, the Bond Purchase Agreement was signed in the amount of $2,695,000 at various interest rates to finance the acquisition and/or construction of certain public facilities and improvements within Community Facilities District (CFD) No. 2016- Improvement Area 3 of the district.
Upon the occurrence of an event of default, the trustee may pursue any available remedy by law to enforce the payment of principal, premium and interest on the outstanding bonds.
Annual debt service requirements to maturity CFD Monte Bella-2019 #3 bonds are as follows:
Year Ended June 30, Principal Interest Total
2022 -$ 107,300$ 107,300$
2023 50,000 106,550 156,550
2024 55,000 104,700 159,700
2025 55,000 102,500 157,500
2026 55,000 100,300 155,300
2027 - 2031 320,000 465,000 785,000 2032 - 2036 395,000 393,500 788,500 2037 - 2041 480,000 306,600 786,600 2042 - 2046 580,000 200,600 780,600 2047 - 2051 705,000 72,900 777,900 2,695,000$ 1,959,950$ 4,654,950$
Business-Type Activities
Direct Borrowing
Capital Leases – Annual debt service requirements to maturity for the capital lease for Business- Type Activities are as follows:
Principal Interest Total
633,866$ 376,808$ 1,010,674$
656,301 351,716 1,008,017
625,000 325,640 950,640
646,000 300,093 946,093
674,000 273,561 947,561
3,798,000 930,469 4,728,469
2,670,000 163,735 2,833,735
9,703,167$ 2,722,022$ 12,425,189$
2032 - 2036
Year Ended June 30,
2022
2023
2024
2025
2026
2027 - 2031
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-121
2014 Lease/Purchase Agreement
The 2014 Lease/Purchase Agreement was issued by the Salinas Facilities Financing Authority on January 29, 2014. The financing was issued to refund the Animal Shelter COP Series A -1999 ($2,812,000) and the Monterey Street Parking Structure COP Series A -2004 ($13,253,000). The Monterey Street Parking Structure portion of the financing was issued for 20 years (ending September 1, 2033), at an average interest rate of 4.02%. Maximum annual debt service is $963,518. Debt payable of $ 9,590,000 is recorded in the Downtown Parking District Enterprise Fund at June 30, 2021 and reported is reported as business-type activities.
Upon the occurrence of an event of default, the trustee may pursue any available remedy by law or pursuant to the lease agreement to enforce payment of the outstanding amounts. However, there shall be no right under any circumstance to accelerate the lease payments or otherwise declare any lease payments not then in default to be immediately due and payable. After the occurrence of an event of default, the City will surrender possession of the property to the financing authority, if requested to do so.
Debt service requirements to maturity is as follows:
Year Ended June 30, Principal Interest Total
2022 578,000$ 373,900$ 951,900$
2023 599,000 350,243 949,243
2024 625,000 325,640 950,640
2025 646,000 300,093 946,093
2026 674,000 273,561 947,561
2027 - 2031 3,798,000 930,469 4,728,469 2032 - 2036 2,670,000 163,735 2,833,735 9,590,000$ 2,717,641$ 12,307,641$
Street Sweepers
On April 6, 2017 the City, using lease purchase financing, purchased a second street sweeper. The City will make six annual payments of $58,774 at 2.57% interest. Debt payable of $ 113,167 is recorded in the Storm Sewer Enterprise Fund at June 30, 2021 and is reported as business -type activities.
Upon the occurrence of an event of default, the trustee may pursue any available remedy by law or pursuant to the lease agreement to enforce payment of the outstanding amounts. However, there shall be no right under any circumstance to accelerate the lease payments or otherwise declare any lease payments not then in default to be immediately due and payable. The financing authority may also elect to terminate the lease, with the City liable for all costs, losses, or damages incurred by the financing authority.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-122
Debt service requirements to maturity are as follows:
Year Ended June 30, Principal Interest Total
2022 55,866$ 2,908$ 58,774$
2023 57,301 1,473 58,774
113,167$ 4,381$ 117,548$
Direct Placement Debt
HUD Section 108 Loan
On March 28, 2015, the City entered into a contract for Loan Guarantee Assistance with the Housing and Urban Development Department (HUD), pursuant to which the City will derive funds for the purposes permitted under the agreement, and will execute one or more City Notes in the maximum aggregate principal amount of up to $9,390,000. The City executed a note numbered as B-12-MC-06-0005 (Community and Economic Development Fund – Industrial Waste Water Conveyance System Project) in the principal amount of $4,000,000. The City of Salinas has pledged current and future Community Development Block Grants (CDBG) funds as principal security fo r the loan. The loan carries a variable interest rate of 20 points (0.2%) above the applicable LIBOR rate. Debt payable of $1,953,000 is recorded in the Industrial Waste Enterprise Fund at June 30, 2021 and is reported as business-type activities.
Upon the event of default, the custodian may take any action available by law, subject to the sections of the agreement, to pursue payment of the outstanding amount, including any additional fees, costs, and expenses incurred by the custodian in connection therewith.
Debt service requirements to maturity is as follows:
Year Ended June 30, Principal Interest Total
2022 460,000$ 45,795$ 505,795$
2023 478,000 34,535 512,535
2024 497,000 21,721 518,721
2025 518,000 7,382 525,382
1,953,000$ 109,433$ 2,062,433$
Bonds Payable
Certificates of Participation, Series 2020A-Twin Creeks (2015A) On March 16, 1999, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation (Certificates) Series A-1999 totaling $14,315,000. A portion of the Certificates was allocated for the construction of an animal shelter, $1,250,338, and the balance of the Certificates, $13,064,662 was allocated for construction of the new Twin Creeks (9-hole) Golf Course.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-123
On August 24, 2004, the City entered into a sublease agreement with the Monterey Penin sula Foundation and its related foundation, Future Citizens Foundation, dba the First Tee of Monterey County providing for the lease of Twin Creeks golf course to Future Citizens Foundation. As a condition of the lease, the City repaid the portion of the 1999 Certificates attributable to the Twin Creeks golf course facility (about 57.5% of the lease payments of $575,000) and refinanced that golf course portion with a new Refunding issue of Certificate of Participation.
On September 14, 2005, the Salinas Public Financing Authority issued City of Salinas Refunding Certificates of Participation Series 2005A, in the amount of $8,005,000, to refund the portion of the 1999 Certificates attributed to Twin Creeks. Refunding Certificates Series 2005A were issued for 24 years at 4.22%, and were secured by a lien on Twin Creeks golf course. The net value expense of the funding was $117,298. The refunding was completed to issue qualified 501 (c) 3 bonds to provide for the operation of Twin Creeks golf course by First Tee of Monterey County.
Annual debt service for the 2005A Certificates ($572,308) was paid by the annual lease payments ($575,000) from Future Citizens Foundation and guaranteed by the Monterey Peninsula Foundation. At the request of First Tee of Monterey County, on December 6, 2011, the City approved a sublease payment reduction from $575,000 to $125,000 (an annual reduction of $450,000). This request was the result of First Tee’s significant golf course operating losses.
With the goal of maintaining a quality of level of service to the thousands of golf youth participants and as the most cost effective alternative, the City Council approved the General Fund support through fiscal year 2015 -16 to offset the reduced amou nt of the sublease to the First Tee of Monterey County.
On September 1, 2015, the City issued Refunding Certificates of Participation Series 2015, in the amount of $11,440,000 at a 2.53% interest rate, to refund the outstanding portion of the 2005A Certificates of Participation (Twin Creeks) and the 2005B Certificates of Participation (Capital Improvements). Bond started September 1, 2015 and will end after 12 years on September 1, 2027.
On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Series 2020A totaling $2,715,000. The Advance Refunding Certificates were issued to refund the 2015A Twin Creeks Golf Project. Bond started November 1, 2020 and will end after 6 years on November 1, 2026. The advance refunding of the 2015A Twin Creeks Golf Project reduced total debt service payments over the next 6 years by $134,501. This results is an economic gain (difference between the present values of the debt service payments on the old and new debt) of $222,408. Debt payable of $2,330,000 is recorded as Business-type Activities at June 30, 2021.
In the event of an event of default, the Trustee may and, at the direction of the owners of not less than a majority of the aggregate principal amount of bonds then outstanding, and upon being indemnified to its reasonable satisfaction therefore, shall, upon notice in writing to the City and the Salinas Financing Authority, exercise any of the remedies granted to the Salinas Financing Authority under the lease agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the owners, either at
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-124
law or in equity bankruptcy or otherwise, whether for specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right.
Debt service requirements to maturity is as follows:
Year Ended June 30, Principal Interest Total
2022 355,000$ 86,100$ 441,100$
2023 365,000 71,700 436,700
2024 380,000 56,800 436,800
2025 395,000 41,300 436,300
2026 410,000 25,200 435,200
2027 - 2031 425,000 8,500 433,500 2,330,000$ 289,600$ 2,619,600$
Certificates of Participation, Series 2020B (Fairways 2008) On August 2008, the City of Salinas was issued Refunding Certificates of Participation Series 2008, in the amount of $4,660,000 at a variable interest rate, to refund the outstanding portion of the 1999 Certificate pertaining to the Fairways Golf Project. Bond started September 1, 2008 and will end after 30 years on September 1, 2038. Following the execution and delivery of the Certificates of Participation Series 2008, the 1999 Certificates, attributed to the animal shelter, will remain outstanding.
On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Series 2020B totaling $4,040,000. The Advance Refunding Certificates were issued to refund the 2008 COP Fairways Golf Project. Bond started November 1, 2020 and will end after 18 years on November 1, 2038. The advance refunding of the 2008 COP Fairways Golf Project reduced total debt service payments over the next 18 years by $1,311,557. This results is an economic loss (difference between the present values of the debt service payments on the old and new debt) of $222,581. Debt payable of $3,930,000 is recorded as Business-type Activities at June 30, 2021.
In the event of an event of default, the Trustee may and, at the direction of the owners of not l ess than a majority of the aggregate principal amount of bonds then outstanding, and upon being indemnified to its reasonable satisfaction therefore, shall, upon notice in writing to the City and the Salinas Financing Authority, exercise any of the remedie s granted to the Salinas Financing Authority under the lease agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the owners, either at law or in equity bankruptcy or otherwise, whether for specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-125
Debt service requirements to maturity is as follows:
Year Ended June 30, Principal Interest Total
2022 100,000$ 95,973$ 195,973$
2023 110,000 95,118 205,118
2024 120,000 93,997 213,997
2025 135,000 92,537 227,537
2026 155,000 90,619 245,619
2027 - 2031 1,000,000 403,474 1,403,474 2032 - 2036 1,330,000 250,950 1,580,950 2037 - 2041 980,000 45,150 1,025,150 3,930,000$ 1,167,818$ 5,097,818$
2020A Wastewater Revenue Refunding Bonds – Series 2020A On February 8, 2012, the City of Salinas issued Sanitary Sewer System Revenue Bonds, Series 2012 in the amount of $17,995,000 to provide funds for the current refunding of the City’s Sanitary Sewer System Revenue Bonds, Series 1998 and to finance capital replacement of existing sewer mains and other sewer related capital replacement. Maximum annual debt service is $1,022,406, including interest ranging from 1.0% to 4.4% for 30 years. The City is authorized under Chapter 36, Article II, Division 5 of the Salinas City Code, to levy a sewer fee for the purpose of paying sanitary sewer related expenses of the City. On January 10, 2012, the City Council approved adjustments to wastewater collection fees effective February 1, 2012 to reflect the cost of wastewater conveyance through the Enterprise and an amount to cover debt service. The fee is billed by the Monterey Regional Water Pollution Control Agency.
On December 20, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Series 2020A totaling $14,425,000. The Advance Refunding Certificates were issued to refund the 2012 Sewer Bonds. Bond started August 1, 2021 and will end after 21 years on August 1, 2 042. The advance refunding of the 2012 Sewer Bonds reduced total debt service payments over the next 21 years by $3,764,601 . This results is an economic gain (difference between the present values of the debt service payments on the old and new debt) of $1,346,741.
Debt payable of $14,425,000 is recorded as Business-type Activities at June 30, 2021.
In the event of an event of default, the trustee shall, at written direction of the owners of not less than a majority in aggregate principal amount of the b onds at the time outstanding, in each case, upon written notice to the City, declare the principal of all the bonds then outstanding, and the interest accrued thereon, to be due and payable immediately.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-126
Debt service requirements and maturity are as follows:
Year Ended June 30, Principal Interest Total
2022 555,000$ 302,263$ 857,263$
2023 560,000 300,293 860,293
2024 565,000 297,532 862,532
2025 565,000 293,504 858,504
2026 565,000 288,233 853,233
2027 - 2031 2,975,000 1,313,267 4,288,267 2032 - 2036 3,275,000 991,820 4,266,820 2037 - 2041 3,720,000 521,586 4,241,586 2042 - 2046 1,645,000 48,747 1,693,747 14,425,000$ 4,357,245$ 18,782,245$
Conduit Debt
In June 1999, the City of Salinas issued Multifamily Housing Revenue Bonds, Series 1999A ($5,310,000 tax-exempt) and 1999A-T ($390,000 taxable) for the construction of a 132-unit senior apartment project. Twenty percent (20%) of the project is designated t o be affordable to seniors.
As of June 30, 2021, the total conduit debt outstanding related to these bonds is $3,310,000.
On June 2007, the City of Salinas issued Economics Development Revenue Bonds, Series 2007A ($18,655,000 tax-exempt) and 2007B ($1,570,000 taxable) for the acquisition of a building located at 1000 Main Street in Salinas. The building is currently leased in part to the County of Monterey Department of Social Services. The project intends to provide monthly rental at below the market value rates to the County of Monterey, a one -million-dollar premise improvement allowance to the Department of Social Services to renovate and upgrade its space in the building and to generate charitable support for the County’s residents. The debt was refinanced in 2016 as series 2016A and 2016B. As of June 30, 2021, total conduit debt outstanding related to the Economic Development Revenue Bonds is $14,980,000.
Pursuant to the bond purchase agreements, the City of Salinas has no obligation related to the repayment of these bonds. Accordingly, the bonds are not reported as liabilities in the City’s financial statements.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-127
19. Unearned Revenues and Deferred Inflows of Resources, Net of Allowance:
Governmental funds report unearned revenues in connection with funds received, in advance for which assets recognition criteria have been met, but for which revenue recognition criteria have not been met. R eceivables for revenues not considered available to liquidate liabilities of the current period are considered unavailable revenues and reported as deferred inflows of resources on the governmental funds. Unearned revenues are stated at $6,987,464, in the Government-Wide Statements. Governmental funds report $82,464 of unearned revenues and $10,504,265 of deferred inflows of resources that are not available resources.
Unearned revenues of the governmental activities at June 30, 2021 consist of the following:
Major funds:
American Rescue Plan Act (ARPA) unearned revenue 25,783,657$ Non-major funds:
Special Revenue
KDF Los Padres Dev Social Services
Unearned revenue 20,472
Grants
Unearned revenue 40,027
Total governmental activities 25,844,156$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-128
Unavailable revenues, net of allowance of the governmental activities at June 30, 2021 consist of the following:
Major funds:
Assessment district debt service unavailable assessments receivable 8,970,000$ Special Construction Assistance unavailable grants receivable 4,843,789 Non-major funds:
Special Revenue
Vehicle Abatement
Unavailable grants receivable 35,329
Affordable Housing unavailable housing loans
Low & moderate incoming housing loans 10,075,821
Less: allowance for doubtful accounts (10,059,250)
Net affordable housing loans 16,571
Unavailable other revenues 696,810
Total affordable housing 713,381
Housing and urban development unavailable housing loans Housing rehab loans 1,982,357
First time homebuyers loans 1,197,232
CDBG/home program 19,543,697
Subtotal 22,723,286
Less: allowance for doubtful accounts (22,534,475)
Net housing and urban development loans 188,811
Unavailable grants receivable 1,546,601
Total housing and urban development 1,735,412
Grants
Unavailable grants receivable 227,321
Capital Project
Special aviation
Unavailable grants receivable 388,729
Total governmental activities 16,913,961$
20. Restricted Net Position:
The government-wide statement of net position reports $89,496,097 of restricted net position, of which enabling legislation restricts $1,610,130 represented by the net position held at the Sanitary Sewer Fund.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-129
21. Fund Balance:
It is the policy of the City to maintain a minimum reserve for a reasonable level of assurance that the City’s day -to-day operations will be able to continue even if circumstances occur where revenues are insufficient to cover expenditures. The minimum reserve of the General Fund is 5% of the next ye ar’s General Fund annual budgeted operating expenditures, as calculated by the Finance Director. The minimum fund balance is shown as unassigned in the General Fund.
Fund balance for governmental funds as of June 30, 2021 consists of the following:
Other
General, Assessment Special Nonmajor
Measure E, District Construction Governmental
& Measure G Debt Service Assistance Funds Total
Nonspendable:
Loans & Notes Receivable -$ -$ -$ 16,571$ 16,571$ Due from outside agencies 75,000 - - - 75,000 Advances 6,985,000 - - - 6,985,000 Land Held for Resale - - - 2,507,553 2,507,553 7,060,000 - - 2,524,124 9,584,124 Restricted for:
Public Safety - - - 1,346,649 1,346,649 Future Development - - - 16,619,826 16,619,826 Maintenance District - - - 8,179,020 8,179,020 Recreation Parks - - - 71,498 71,498 Franchise-Cable - - - 480,323 480,323 Street Repairs - - - 17,014,593 17,014,593 Municipal Arts - - - 10,911 10,911 Grants/Special Projects - - - 3,547,360 3,547,360 Low/Moderate Housing - - - 3,063,693 3,063,693 Capital Projects - - 13,786,246 1,313,557 15,099,803 Debt Service - 567,646 - 4,271,887 4,839,533 - 567,646 13,786,246 55,919,317 70,273,209 Committed for:
Capital Projects 2,345,602 - - 2,000,000 4,345,602 Assigned for:
Other Purposes 6,800,000 - - - 6,800,000 Carryover Appropriations 18,279,875 - - - 18,279,875 25,079,875 - - - 25,079,875 Unassigned:
Operations-Reserve 9,552,000 - - - 9,552,000 Other Unassigned 20,458,062 - - (877,889) 19,580,173 30,010,062 - - (877,889) 29,132,173 Total Fund Balances 64,495,539$ 567,646$ 13,786,246$ 59,565,552$ 138,414,983$
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-130
22. Encumbrance:
The City uses encumbrances to control expenditure commitments for the year and to enhance cash management. Encumbrances represent commitments related to contracts not yet performed and purchase orders not yet filled (executor contracts; and open purchase orders). Commitments for such expenditures of monies are encumbered to reserve a portion of applicable appropriations.
Encumbrances still open at year end are not accounted for as expenditures and liabilities but, rather, as restricted, committed, or assigned governmental fund balance.
As of June 30, 2021, total governmental fund encumbrance balances for the City are as follows:
General Fund, Measure E, & Measure G 2,345,602$
Special Construction Assistance 12,664,834
Nonmajor governmental funds 101,527
15,111,963$
23. Joint Venture – Salinas Valley Solid Waste Authority (Authority):
The Authority is a joint exercise of powers authority, created pursuant to an agreement dated as of January 1, 1997 (the “Authority Agreement) among the County of Monterey, and the cities of Salinas, Gonzales, Greenfield, Soledad, and King City (the “Members”). The Authority was established to acquire a nd manage the landfill assets of each member, ensure long -term landfill capacity of the Authority service area and provide a unified and coordinated solid waste management for the members.
The Authority is governed by a nine member governing board, consisting of three members of the Salinas City Council, two members of the Monterey County Board of Supervisors, and one member from each patriating city. Pursuant to the Authority Agreement, while the City of Salinas does not have unilateral control over the activities of the Authority, the affirmative vote of at least one member of the Authority Board who is a member of the Salinas City Council is required to approve Board actions.
With the formation of the Authority, each participating jurisdiction contractu ally agreed to its responsibilities. In addition, the Authority adopted waste delivery agreements with each Member of the Authority. Each member has committed to deliver waste generated within its boundaries to the Authority’s solid waste facilities, to direct its franchise/permitted solid waste haulers to dispose of waste at these facilities, and to pay tipping fees set by the Authority to cover all Authority - related costs.
The agreement may be terminated under specific terms of withdrawal, which includes a majority vote of the City Council, repayment of all outstanding debt and funding of closure, post closure and site remediation costs upon withdrawal from or termination of the Authority. The members have made no equity contributions, or have sold their interest in their assets to the Authority, and there is no explicit, measurable equity interest in this joint venture.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-131
The City had no measurable equity interest in the Authority and does not receive a share of operating results. The Authority is currently funding the closure, post closure and site remediation costs based on estimates of these future costs.
The Annual Financial Report of the Salinas Valley Solid Waste Authority is published and available from the Authority Treasurer at the Authority’s Finance Department located at 128 Sun Street, Suite 101, Salinas, CA 93901.
On December 6, 2018, the City issued a notice of intention to withdraw from the Joint Powers Agreement (the “Agreement”) Pursuant to Section 19 of the Joint Powers Agreement, the notice serves as a one-year notice. The City’s notice of intent to withdraw as a member of the Authority merely served as notice to the Authority and its remaining members. The one-year term has passed without any further action from the Cit y or the Authority. However, the City and Authority representatives are working on finding a resolution to the notice.
The City understands and acknowledges its obligation to continue paying its share of the 2014 Bonds as regularly scheduled and agrees t o continue paying its share of the obligation after withdrawal from the Authority, should withdrawal occur. In addition, the City understands and acknowledges its obligation to pay its share of financial liability for closure and post-closure and site remediation costs as further described in Section 19(a) of the Agreement. If the City withdraws from the Authority arrangements must be made to meet this obligation.
24. Contingent Liabilities:
Various claims and lawsuits are pending against the City. Although the outcome of those claims and lawsuits are not presently determinable, in the opinion of the City Attorney the resolution of these matters are within the self -insured retention and are not likely to have a material adverse effect on the financial condition of the City.
25. Successor Agency to the Salinas Redevelopment Agency:
Cash and Investments – Cash and investments at June 30, 2021 consisted of the following:
Cash and investments 3,107,464$
Restricted cash and investments 1,640,648
Total Cash and Investments 4,748,112$
Cash and investments of $ 1,640,648 recorded as restricted assets are restricted to cover debt service. These funds are held by the City’s fiscal agent.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-132
Capital Assets – The following is a summary of the Agency’s capital assets at June 30, 2021:
Balance Adjustments/ Balance
June 30, 2020 Additions Retirements June 30, 2021
Capital assets, not being depreciated
Land 149,270$ -$ -$ 149,270$ Total capital assets 149,270$ -$ -$ 149,270$
Long Term Debt – The following is a summary of the long term debt at June 30, 2021:
Due Within
June 30, 2020 Increases Decreases June 30, 2021 One Year Fiduciary-type Activities
Loans and Notes Payable:
Homeless Shelter 157,500$ -$ -$ 157,500$ -$ Total Loans & Notes Payable 157,500 - - 157,500 - Tax Allocation Refunding Bonds:
Series A-1996 1,750,000 - (125,000) 1,625,000 130,000 Series A-1992 517,881 - (184,342) 333,539 172,406 Total Bonds Payable 2,267,881 - (309,342) 1,958,539 302,406 Subtotal 2,425,381 - (309,342) 2,116,039 302,406 Unamortized Bond Discount (35,673) - 8,919 (26,754) (8,919) Fiduciary-type Activities 2,389,708$ -$ (300,423)$ 2,089,285$ 293,487$
The annual requirements to amortize loans and notes and bo nds outstanding as of J une 30, 2021 by activity are as follows:
Principal Interest Total
302,406$ 1,128,660$ 1,431,066$
296,133 1,132,380 1,428,513
1,360,000 37,400 1,397,400
157,500 - 157,500
2,116,039$ 2,298,440$ 4,414,479$
Year Ended
June 30,
2029-2041
2022
2023
2024
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-133
Loans and Notes Payable
Homeless Shelter Loan – Green Gold Inn
On March 7, 1995, the Salinas Redevelopment Agency – Central Agency Revitalization Project entered into a funding agreement and received a loan from the City of Salinas Community Development Block Grant Fund for the acquisition of property, Green Gold Inn at 28-32 Soledad Street, to establish a homeless center/shelter. The Agency agreed that the property would be used solely for a homeless center/shelter for a period not less than ten years. If the Agency or the organization holding title to the property disposes of the property or alters the use of the property prior to expiration of the ten year period, the Agency will reimburse the City the full amount of the current fair market value less improvement costs.
Upon completion of the ten -year period, one half of the debt, $157,500 , was forgiven. Upon cessation of the homeless center/shelter operations, the City will be reimbursed the fair market value of the property less the portion of the loan paid and improvement costs.
Debt service requirements for G reen Gold Inn homeless center/shelter no interest loan is as follows:
Principal Interest Total
157,500$ -$ 157,500$
June 30,
2029-2041
Year Ended
Tax Allocation Bonds
On August 28, 1996, the former Salinas Redevelopment Agency issued $11,145,000 of Tax Allocation Bonds Series A-1996. On October 27, 1992, the former Redevelopment Agency issued $6,541,178 of Refunding Tax Allocation Bonds Series A -1992. The bonds were issued to complete project improvements in the Central Agency Revitalization Project area. The bonds were repaid from property taxes levied within the Salinas Redevelopment Agency Central City Revitalization Project through January 31, 2012, the dissolution date. This debt is now being paid with taxes received from the Redevelopment Property Tax Trust Fund in accordance with the Recognized Obligation Payments Schedule submitted by the Successor Agency and approved by the State Department of Finance.
The annual debt service requirements for the bonds at June 30, 2021 are as follows:
Principal Interest Principal Interest
130,000$ 85,800$ 172,406$ 1,042,860$ 135,000 78,513 161,133 1,053,867 1,360,000 37,400 - - 1,625,000$ 201,713$ 333,539$ 2,096,727$ 2022
2023
2024
TAB Series A-1992
June 30,
TAB Series A-1996Year Ended
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-134
The Series A-1996 bond issue has a term bond of $4,510,000 that matures on November 1, 2023.
Debt service payments beginning in fiscal year 2011 -2012 are deposits into a sinking fund. The term bonds are subject to redemption prior to maturity from the sinking fund installments on each November 1 on and after November 1, 2011 without premium according to a specified schedule, which is used in these debt service requirements. The outstanding balance at June 30, 2021 was $1,625,000.
The Series A-1992 bond issue has a term bond of $2,638,475 that matures on November 1, 2022.
Debt service payments beginning in fiscal year 2009-2010 are deposits into a sinking fund. The term bonds are subject to redemption prior to maturity from the sinking fund installments on each November 1 on and after November 1, 2009 without premium according to a specified schedule that is used in these debt service requirements. The outstanding balance at June 30, 2021 was $333,539.
Unamortized Bond Discount
The Statement of Net Position includes an unamortized bond discount of $35,673 in Debt Payable- Due in More than One Year-Net of Discounts. The 1996 Tax Allocation Revenue Bonds were sold at a discount of $249,729. The discount is being amortized over the life of the bond issue (28 years) at an annual rate of $8,919.
At June 30, 2021 the 1996 Tax Allocation Revenue Bonds unamortized discount was as followed:
June 30, 2020 Increases Decreases June 30, 2021
Tax Allocation Bond, Series A-1996 35,673$ -$ (8,919)$ 26,754$
Commitment to Monterey Street Parking Structure – In November 2001, the City Council and the Agency entered into a Disposition and Development Agreement (DDA) with Maya Cinema Holding Company LLC for the development of a 14 -Screen, 2,916-seat multiplex movie theater complex on the 100 block of Main Street. To serve this and other developments within the 100 blocks, the DDA committed the City/Agency to construct a five -level, 435-space public parking structure on the corner of Monterey Street and Market Street adjacent to the National S teinbeck Center and the Maya Cineplex Theater. The public parking garage opened in June 2005, while the Maya Cinemas Multiplex was completed and opened during July 2005. During FY 2013 -14 the Certificates of Participation 2004 that funded the constructio n of the Monterey Street Parking Structure with a balance of $13,870,000 at January 2014, was refinanced through the Salinas Facilities Financing Authority by a direct private lease placement with Western Alliance Bancorporation. Because the debt service f or the 2004 Certificates was reimbursed to the City from redevelopment tax increment, the savings from the 2004 Certificates was distributed to affected taxing entities as apportioned by the County of Monterey, including a portion for the City, due to the dissolution of the City’s Redevelopment Agency. With this refinancing, the average annual debt service requirement was reduced by approximately $123,000.
CITY OF SALINAS
Notes to Basic Financial Statements
For the Fiscal Year Ended June 30, 2021
F-135
26. COVID 19
On Tuesday, March 17, 2020, the City of Salinas declared a local emergency in efforts to limit the impacts and exposure of the COVID-19 Pandemic. Since that time, the City’s top priority has been to mitigate the risks to our residents’ health and safety during the pandemic.
On March 11, 2021, President Biden signed the American Rescue Plan A ct, which will provide the City with a total of $51,567,313 in relief funds. The City has received the first half of these funds, with the second half coming in May/June 2022.
On November 16, 2021, a resolution was approved by City Council to authorize establishment of the American Rescue Plan Act (ARPA) Fund and appropriations totaling $51,567,313, this in accordance with the Salinas Recovery Plan under the American Rescue Plan Act (ARPA) of 2021.
Also, subsequent to the fiscal year end, the City was a warded additional grant funds to mitigate the negative effects of the COVID-19 Pandemic including a second phase of the Emergency Rental Assistant Program (ERAP). The purpose of this grant is to distribute funding to provide rental and utility assistance t o low-income eligible households located in Monterey County that are facing housing instability because of loss or reduction in income due to the COVID-19 crisis.
On October 26, 2021, a resolution was approved by City Council to accept up to $10 million of additional round-two ERAP program funds from the United Way of Monterey County.
27. Subsequent Events:
The City has evaluated subsequent events through May XX, 20 22, the date these financial statements were available to be issued.
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REQUIRED
SUPPLEMENTARY
INFORMATION
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CITY OF SALINAS
Required Supplementary Information
Budgetary Policy and Control
Budgetary Information
Fiscal Year June 30, 2021
R-3
BUDGETING
The budget is prepared by the City Manager and adopted by the City Council. The City Council approves operating appropriations at the department and fund level prior to July 1, each year and may amend the budget during the fiscal year. Budgetary control is maintained at the program level. Formal budgetary integration was employed as a management control device during the fiscal year for the General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, Enterprise Funds and Internal Service Funds.
Budgets are legally adopted for all Governmental and Proprietary Fund Types. Fiduciary Funds and Agency Funds have no adopted budgets because the City is only required to make payments to the extent funds are available. Agency Fund bu dgets that are approved by their respective governing boards are recorded in the City’s accounting system.
The City Manager may transfer budget appropriations between departments and Department Directors may transfer appropriations between programs and accounts within th eir individual departments and divisions, but only the Council may appropriate funds from reserves or fund balances.
Budget policy excludes the use of taxes, accounts receivable, interest receivable assets and long- term advances that are not currently available resources for budget purposes. Condemnation deposits, are also excluded because they are returned upon right of way acquisition.
Expenditures may not legally exceed budgeted appropriations at the department level. Budgeted amounts shown are as originally adopted and as amended by the City Council during the year.
During the year, Council amends the budget with the approval of supplemental appropriations and reviews and amends the budget at mid-year and at year-end.
Appropriations lapse at fiscal year end to the extent they have not been expended. New budget appropriations are approved for the coming year. Project-length financial plans are adopted for all capital projects funds and appropriations are carried forward until project completion. Grant funds are carried forward until the grant expires.
Encumbrances represent commitments related to unperformed contracts for goods or services.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the governmental funds. Encumbrances outstanding at year-end are recorded as reservations of fund balance and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year.
CITY OF SALINAS
Required Supplementary Information
Budgetary Policy and Control
Budgetary Information
Fiscal Year June 30, 2021
R-4
On November 8, 2005, the voters of Salinas approved Measure V, a 0.50% transactions and use tax. Measure V is a general tax and is reported as part of the General Fund. The tax was effective April 1, 2005 and had an original sunset of ten (10) years. Measure V was revised by the voters on November 6, 2012 eliminating a termination date on the imposition of the tax through Measure E. The Measure E Ov ersight Committee is a fundamental provision of the voter-approved tax.
The Mayor and City Council each annually appoints one member of the public to serve on the Oversight Committee. The committee is responsible for and overseeing the use of Measure E funds to assure consistency with the voter approved tax and the appropriated use of Measure E funds.
On November 4, 2014, the voters of Salinas approved Measure G (For a Safer Better Salinas) , a
1.00% transactions and use tax. Measure G is a general tax and is reported as part of the General Fund. The tax was effective April 1, 2015 and had a sunset date of fifteen (15) years. The Measure G Oversight Committee is a fundamental provision of the voter-approved tax. The Mayor and City Council each annually appoints one member of the public to serve on the Ov ersight Committee. The committees’ main responsibilities include the review of the auditor’s report of the specific uses of Measure G funds and to issue a public report to the City Council regarding the use of revenue and such other matters as the City Council may assign.
BUDGETARY INFORMATION
The adopted FY 2020-21 budget represents the financial and organizational plan by which the policies and programs approved by the City Council will be implemented. It includes: (1) the programs, projects, services and activities to be provided during the fiscal year; (2) estimated revenues available to finance the operating plan; and (3) the estimated spending requirements of the operating plan. The City’s goals and objectives identified by the City Council in the Strategic Plan thru 2025 was approved on March 8, 2022, following a strategic planning session on December 4, 2021 and are as follows:
• Economic Development
• Affordable Housing
• Infrastructure and Environmental Sustainability
• Excellent Infrastructure
• Public Safety
• Youth and Seniors
• Effective and Culturally Responsive Government
CITY OF SALINAS
Required Supplementary Information
Budgetary Policy and Control
Budgetary Information
Fiscal Year June 30, 2021
R-5
On May 25, 2020, the City Council was introduced and reviewed the proposed operating budget for the City of Salinas and Successor Agency. The Salinas City Council adopted FY 20 20-21 Annual Operating Budgets on June 8, 2020. Capital project budget is updated annually.
Annual budgets are prepared for General Governmental Funds, Internal Service, Enterprise Operations, Assessment and maintenance Districts, Block Grant and Home program s, certain Grant and City Agencies, Deferred Compensation and Retirement, Debt Service, Successor Agency and Capital Project Funds.
The annual appropriation resolution adopts the budget at an appropriation level by fund, with detail expenditure by departments and programs included in the budget document.
GENERAL FUND
The General Fund fund balance increased $1,409,093 to $28,739,032, of which $7,060,000 is Non- spendable, $1,149,699 is Committed, $12,023848 is Assigned and $8,505,485 is Unassigned.
General Fund reserves have been set-aside by Council for specific purposes. Under the Reserved fund balance category, the General Fund Non-spendable fund balance of $7,060,000 includes Due from outside agencies ($75,000) and Advances ($ 6,985,000). Committed funds balance of $1,149,699 is designated for future encumbrances. Carryover Appropriations of $ 5,223,848, $2,500,000 assigned t o fund the New York Life retirement account, and other purposes of $4,300,000 are under the $12,023,848 Assigned fund balance category.
The General Fund unassigned fund balance is made up of $6,830,000 reserved for operations , coupled with $1,675,485 of unassigned fund balance at June 30, 2021.
MEASURE E
Measure E is a general tax (discretionary) and is reported as part of the General Fund. The Measure E fund balance increased $4,168,887 to $9,600,987, of which $ 248,454 is committed for future encumbrances, $309,259 is assigned and $9,043,274 is unassigned.
CITY OF SALINAS
Required Supplementary Information
Budgetary Policy and Control
Budgetary Information
Fiscal Year June 30, 2021
R-6
MEASURE G
Measure G is a general tax (discretionary) and is reported as part of the General Fund. The Measure G fund balance increased $3,506,538 to $26,155,520, of which $947,449 is Committed for future encumbrances, $12,746,768 is Assigned and $12,461,303 is Unassigned.
BUDGETARY RESULTS RECONCILED TO GAAP
The budgetary process is based upon accounting for certain transactions on a basis other than the accounting principles generally accepted in the United States (GAAP) basis. The results of operations are presented in the accompanying budget and actual comparison schedules in accordance with the budgetary process (budgetary basis) to provide a meaningful comparison with the budget. The major differences between the budgetary basis actual and GAAP basis are as follows:
• Year-end encumbrances are recognized as the equivalent of expenditures in the budgetary basis financial statements, while encumbered amounts are not recognized as expenditures on the GAAP basis until the equipment, supplies, or services are received. • Certain loan transactions are recognized as expenditures for the budgetary basis but not for the GAAP basis. When these loans are m ade, they are recorded as receivables for the GAAP basis and as expenditures for the budgetary basis. When loan repayments are received, they are recorded as reductions to receivables for the GAAP basis, but are recognized as revenues for the budgetary basis.
• Certain accounts such as the change in fair market value of investments included in the City’s GAAP basis amounts, for which no formal budgets are prepared, are excluded from the budgetary basis financial statements.
• Certain grant revenues received in advance are recognized on the budgetary basis financial statements, but are deferred and not recognized as revenue on the GAAP basis financial statements. This process normally creates a variance in recognized revenue from the prior year to the current year.
CITY OF SALINAS
Required Supplementary Information
Budgetary Policy and Control
Budgetary Information
Fiscal Year June 30, 2021
R-7
BUDGET REVISIONS
The following is a summary of the actions taken after the approval on March 8, 2022 of the mid- year adjustments to the fiscal year 2020-21 budget:
• Operating budget increased by $2.5 million. The Capital Project budget increased in the same mid-year council action by $1.8 million for a variety of projects.
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Final Variance
Original Amended with
Budget Budget Actual Final Budget
Fund Balance, July 1, 2020 55,411,021$ 55,411,021$ 55,411,021$ -$ Resources (inflows):
Taxes 117,473,000 125,463,000 144,300,725 18,837,725 Licenses and Permits 772,650 772,650 812,083 39,433 Intergovernmental 362,600 1,272,600 1,557,920 285,320 Charges for Services 4,597,200 4,597,200 4,833,230 236,030 Interest 214,000 214,000 416,580 202,580 Rental Income 362,000 362,000 418,772 56,772 Fines and forfeits 340,000 340,000 275,938 (64,062) Miscellaneous 1,860,000 1,560,000 890,277 (669,723) Operating Transfers In 4,088,300 4,088,300 6,096,486 2,008,186 Total Resources 130,069,750 138,669,750 159,602,011 20,932,261 Charges to Appropriations (outflows):
General Government 18,417,526 19,823,494 28,416,370 (8,592,876) Public Safety 76,519,513 80,189,658 79,299,704 889,954 Public Works 12,039,069 12,878,804 11,702,609 1,176,195 Recreation 4,123,152 4,026,596 2,647,436 1,379,160 Library 5,140,656 5,202,751 4,166,610 1,036,141 Capital Outlay 525,267 797,200 599,877 197,323 Transfers Out 17,344,496 41,509,152 23,684,887 17,824,265 Total Charges to Appropriations 134,109,679 164,427,655 150,517,493 13,910,162 Excess of Resources Over (Under)
Charges to Appropriations (4,039,929) (25,757,905) 9,084,518 34,842,423 Fund Balance, June 30, 2021 51,371,092$ 29,653,116$ 64,495,539$ 34,842,423$ FISCAL YEAR ENDED JUNE 30, 2021
GENERAL FUND, MEASURE E, & MEASURE G
BUDGETARY COMPARISON SCHEDULE
BUDGETARY POLICY AND CONTROL
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
R-9
Final Variance
Original Amended with
Budget Budget Actual Final Budget
Fund Balance, July 1, 2020 5,432,100$ 5,432,100$ 5,432,100$ -$ Resources (inflows):
Taxes 10,562,000 12,033,000 15,042,746 3,009,746 Interest 60,000 60,000 17,417 (42,583) Miscellaneous - - 24,563 24,563 Transfers In 700,000 700,000 700,000 - Total Resources 11,322,000 12,793,000 15,784,726 2,991,726 Charges to Appropriations (outflows):
General Government 415,766 424,266 402,146 22,120 Public Safety 4,367,715 4,475,720 4,164,403 311,317 Public Works 947,294 952,594 773,718 178,876 Recreation 1,451,588 1,432,378 1,040,353 392,025 Library 5,140,656 5,202,751 4,166,610 1,036,141 Capital Outlay 83,000 77,210 77,264 (54) Transfers Out 1,218,700 1,750,151 991,345 758,806 Total Charges to Appropriations 13,624,719 14,315,070 11,615,839 2,699,231 Excess of Resources Over (Under)
Charges to Appropriations (2,302,719) (1,522,070) 4,168,887 5,690,957 Fund Balance, June 30, 2021 3,129,381$ 3,910,030$ 9,600,987$ 5,690,957$ FISCAL YEAR ENDED JUNE 30, 2021
MEASURE E FUND
BUDGETARY POLICY AND CONTROL
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
R-10
Final Variance
Original Amended with
Budget Budget Actual Final Budget
Fund Balance, July 1, 2020 22,648,982$ 22,648,982$ 22,648,982$ -$ Resources (inflows):
Taxes 20,878,000 23,820,000 30,232,358 6,412,358 Interest 150,000 150,000 95,788 (54,212) Total Resources 21,028,000 23,970,000 30,328,146 6,358,146 Charges to Appropriations (outflows):
General Government 1,354,090 1,358,859 1,344,574 14,285 Public Safety 11,694,818 11,842,027 12,108,276 (266,249) Public Works 1,243,080 1,328,020 1,058,249 269,771 Recreation 1,168,731 1,142,831 824,280 318,551 Capital Outlay 108,300 131,262 173,063 (41,801) Transfers Out 9,201,444 24,185,225 11,313,166 12,872,059 Total Charges to Appropriations 24,770,463 39,988,224 26,821,608 13,166,616 Excess of Resources Over (Under)
Charges to Appropriations (3,742,463) (16,018,224) 3,506,538 19,524,762 Fund Balance, June 30, 2021 18,906,519$ 6,630,758$ 26,155,520$ 19,524,762$ FISCAL YEAR ENDED JUNE 30, 2021
MEASURE G FUND
BUDGETARY COMPARISON SCHEDULE
BUDGETARY POLICY AND CONTROL
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
R-11
Net earned required contribution
and investment revenues $ 910,555 $ 952,735 $ 971,785 $ 1,892,297 $ 1,019,378 $ 1,074,526 $ 863,563 $ 342,324 $ 263,104 $ 276,393 Unallocated expenses 350,753 338,630 353,537 334,291 339,171 314,127 374,303 651,645 748,046 1,090,415 Estimated incurred claims and expenses,
end of policy year 83,079 522,131 161,668 965,536 234,565 36,271 7,532 892,986 4,006 53,317 Paid Claims as of:
End of policy year 7,665 30,214 18,140 55,188 116,262 15,603 6,310 75,401 3,618 2,999 One year later 245,112 172,798 635,352 282,538 20,991 227,379 22,088 387,594 7,635 Two years later 466,599 375,290 842,560 570,687 64,153 846,232 285,818 2,660,599 Three years later 983,571 1,021,746 1,345,021 679,871 65,043 947,734 340,771 Four years later 1,081,157 1,133,620 1,635,636 732,404 66,412 1,019,825 Five years later 935,894 1,135,208 1,676,450 779,178 835,586 Six years later 935,894 1,217,035 1,926,852 788,081 Seven years later 935,894 1,332,414 1,926,852
Eight years later 935,894 1,375,687
Nine years later 935,894
Reestimated incurred claims and expenses:
End of policy year 83,079 522,131 161,668 965,536 234,565 36,271 7,532 892,986 4,006 53,317 One year later 870,512 638,797 2,233,535 1,390,213 194,433 357,416 796,619 1,583,466 42,411 Two years later 942,962 1,085,173 2,280,849 1,554,039 79,955 1,714,261 327,418 3,952,801 Three years later 1,371,990 1,046,887 1,960,665 730,656 94,678 949,419 666,518 Four years later 1,439,018 1,549,402 1,748,340 1,296,507 80,580 1,041,511 Five years later 935,894 1,697,321 1,742,087 1,091,507 835,586 Six years later 934,894 9,802,320 1,930,214 1,121,507 Seven years later 935,894 5,399,014 1,926,852
Eight years later 935,894 1,399,014
Nine years later 935,894
Increase/(Decrease) in estimated incurred claims and expenses End of policy year 852,815 876,883 1,765,184 155,971 601,021 1,005,241 658,986 3,059,815 38,405 - 20182014 20152013 2019 2020 2021
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
CLAIMS DEVELOPMENT
INTERNAL SERVICE FUNDS-GENERAL LIABILITY INSURANCE
LAST TEN FISCAL YEARS
2012 2016 2017
R-12
Net earned required contribution
and investment revenues $ 9,173,838 $ 7,472,705 $ 4,377,425 $ 6,130,921 $ 13,748,053 $ 4,743,276 $ 4,922,253 $ 6,079,547 $ 10,151,619 $ 8,119,793 Unallocated expenses 292,754 323,122 360,203 335,408 471,472 334,542 1,056,134 210,341 436,618 323,042 Estimated incurred claims and
expenses, end of policy year 1,720,157 2,243,630 1,666,909 1,432,029 813,874 953,545 1,284,514 1,222,180 1,638,983 4,366,805 Paid claims (cumulative) as of:
End of policy year 533,708 646,857 950,284 334,254 333,561 357,390 346,475 722,652 567,497 1,420,172 One year later 1,864,818 1,634,364 1,371,978 1,597,521 1,061,264 1,070,983 1,177,834 1,580,493 1,844,018 Two years later 2,854,520 1,959,739 1,927,023 2,162,775 1,602,857 1,997,607 1,617,945 1,987,948 Three years later 3,136,125 2,340,805 2,409,062 2,554,090 1,895,742 2,329,308 1,937,327 Four years later 3,456,515 2,907,257 2,621,000 2,706,246 2,014,757 2,558,332 Five years later 3,656,404 3,137,059 2,699,388 2,878,566 2,044,352 Six years later 3,941,332 4,169,602 2,783,374 2,985,635 Seven years later 4,403,885 4,208,586 3,670,222
Eight years later 5,146,241 4,235,413
Nine years later 5,375,751
Reestimated incurred claims and expenses:
End of policy year 1,720,157 2,243,630 1,666,909 1,432,029 813,874 953,545 1,284,514 1,222,180 1,638,983 4,366,805 One year later 4,335,777 3,285,111 2,218,693 2,641,671 1,711,199 1,934,390 1,833,783 2,488,357 3,759,255 Two years later 4,746,128 3,764,688 3,204,843 3,520,776 2,433,616 2,924,696 2,290,339 3,269,045 Three years later 4,801,869 4,196,279 3,674,042 3,793,217 2,406,924 2,932,147 3,249,184 Four years later 4,995,945 4,760,993 3,643,183 3,694,285 2,505,621 3,111,763 Five years later 4,894,789 4,849,355 3,745,001 3,718,134 2,618,375 Six years later 5,124,129 5,004,810 4,104,444 3,971,493 Seven years later 5,937,210 4,612,669 3,971,493
Eight years later 5,912,693 4,625,068
Nine years later 6,036,306
Increase/(Decrease) in estimated incurred claims and expenses End of policy year 4,316,149 2,381,438 2,304,584 2,539,464 1,804,501 2,158,218 1,964,670 2,046,865 2,120,272 - 2017 2018 2019 2020 2021
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
CLAIMS DEVELOPMENT
INTERNAL SERVICE FUNDS-WORKERS COMPENSATION INSURANCE
LAST TEN FISCAL YEARS
2012 2013 2014 2015 2016
R-13
Fiscal Year 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Miscellaneous Miscellaneous Miscellaneous Miscellaneous Miscellaneous Miscellaneous Miscellaneous
TOTAL PENSION LIABILITY
Service Cost 3,162,904$ 3,157,247$ 3,099,429$ 2,873,548$ 2,135,480$ 2,197,484$ 2,331,545$ Interest on Total Pension Liability 8,959,786 8,430,817 7,806,166 7,282,974 6,801,939 6,445,778 6,154,034 Changes of Benefit Terms - - - - - - - Difference between Expected and
Actual Experience 588,822 2,005,995 1,457,261 489,759 (996,921) (1,789,044) - Changes of Assumptions - - (752,607) 6,388,079 - (1,686,636) - Benefit Payments, Including Refunds of
Employee Contributions (5,107,076) (4,456,008) (3,952,236) (3,361,268) (3,116,204) (2,803,130) (2,673,091) Net Change in Total Pension Liability 7,604,436 9,138,051 7,658,013 13,673,092 4,824,294 2,364,452 5,812,488 Total Pension Liability - Beginning 125,694,950 116,556,899 108,898,886 95,225,794 90,401,500 88,037,048 82,224,560 Total Pension Liability - Ending (a) 133,299,386 125,694,950 116,556,899 108,898,886 95,225,794 90,401,500 88,037,048
PLAN FIDUCIARY NET POSITION
Contributions - Employer 7,793,322 3,511,716 3,133,948 3,232,477 2,635,818 2,037,528 2,010,590 Contributions - Employee 1,411,627 1,501,635 1,403,836 1,331,850 1,339,737 987,786 959,420 Net Investment Income 4,662,415 5,681,706 6,712,207 7,844,830 375,028 1,500,373 9,911,526 Benefit Payments, Including Refunds
of Employee Contributions (5,107,076) (4,456,008) (3,952,236) (3,361,268) (3,116,204) (2,803,130) (2,673,091) Net Plan to Plan Resource Movement 383,290 - (199) - 365 - - Administrative Expense (129,381) (61,083) (122,563) (102,919) (41,756) (77,059) - Other Miscellaneous Income/(Expense) - 199 (232,749) - - - - Net Change in Fiduciary Net Position 9,014,197 6,178,165 6,942,244 8,944,970 1,192,988 1,645,498 10,208,445 Plan Fiduciary Net Position - Beginning 91,773,349 85,595,184 78,652,940 69,707,970 68,514,982 66,869,484 56,661,039 Plan Fiduciary Net Position - Ending (b) 100,787,546 91,773,349 85,595,184 78,652,940 69,707,970 68,514,982 66,869,484 Plan Net Pension Liability/(Asset) - Ending
(a)-(b) 32,511,840$ 33,921,601$ 30,961,715$ 30,245,946$ 25,517,824$ 21,886,518$ 21,167,564$ Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 75.61% 73.01% 73.44% 72.23% 73.20% 75.79% 75.96% Covered Employee Payroll* 20,946,385$ 20,634,254$ 20,051,944$ 18,618,295$ 15,300,421$ 15,513,480$ 15,831,777$ Plan Net Pension Liability/(Asset) as a
Percentage of Covered-Employee
Payroll 155.21% 164.39% 154.41% 162.45% 166.78% 141.08% 133.70% * For the year ending on the measurement date
^ Fiscal year 2015 was the 1st year of implementation
SCHEDULE OF CITY'S NET PENSION LIABILITY AND RELATED RATIOS
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN - MISCELLANEOUS PLAN LAST 10 FISCAL YEARS^
Notes to Schedule of Changes in Net Pension Liability and Related Ratios:
Benefit Changes: The figures above include any liability impact that may have resulted from voluntary benefit changes that occurred after the June 30, 2019 valuation. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the June 30, 2019 valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.
Changes of Assumptions: None in 2019 or 2020. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
R-14
Fiscal Year 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Miscellanous Miscellanous Miscellanous Miscellanous Miscellanous Miscellanous Miscellanous Actuarially Determined Contribution 4,273,977$ 3,857,093$ 3,511,716$ 3,133,731$ 3,231,650$ 2,635,818$ 2,037,528$ Contributions in Relation to the
Actuarially Determined Contribution 4,273,977 7,788,891 3,511,716 3,133,731 3,231,650 2,635,818 2,037,528 Contribution Deficiency (Excess) -$ (3,931,798)$ -$ -$ -$ -$ -$ Covered Employee Payroll* 20,882,844$ 20,508,948$ 21,485,315$ 20,577,688$ 19,120,162$ 16,519,247$ 13,444,769$ Contributions as a Percentage of
Covered-Employee Payroll 20.47% 37.98% 16.34% 15.23% 16.90% 15.96% 15.15% ^Fiscal year 2015 was the 1st year of implementation
*For the fiscal year ending on the date shown
Notes to Schedules
Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details, see June 30, 2018 Funding Valuation Report Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2018 Funding Valuation Report Inflation 2.625%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.875%
Investment Rate of Return 7.25% Net of Pension Plan Investment and Administrative Expenses; includes inflation.
Retirement Age The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.
Mortality
For changes to previous year’s information, refer to prior year financial statement schedules.
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN
The actuarial methods and assumptions used to set the actuarilly determined contributions for the fiscal year 2020-21 were from the June 30, 2018 Valuations.
The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.
SCHEDULE OF THE CITY'S PENSION PLAN CONTRIBUTIONS AND NOTES - MISCELLANEOUS PLAN FOR THE FISCAL YEAR ENDED JUNE 30, 2021
LAST 10 FISCAL YEARS^
R-15
Fiscal Year 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Police Police Police Police Police Police Police
TOTAL PENSION LIABILITY
Service Cost 6,156,433$ 6,076,786$ 5,603,486$ 5,171,913$ 4,462,598$ 4,440,981$ 4,932,982$ Interest on Total Pension Liability 22,017,085 21,051,415 19,772,458 18,658,643 17,933,618 17,475,350 17,097,550 Changes of Benefit Terms - - - - - - - Difference between Expected and
Actual Experience 1,696,481 6,664,829 6,096,574 (2,807) (4,299,665) (5,739,808) - Changes of Assumptions - - (1,307,343) 16,117,523 - (4,436,648) - Benefit Payments, Including Refunds of
Employee Contributions (15,680,099) (15,037,162) (13,742,608) (12,772,896) (11,890,953) (11,383,179) (10,895,705) Net Change in Total Pension Liability 14,189,900 18,755,868 16,422,567 27,172,376 6,205,598 356,696 11,134,827 Total Pension Liability - Beginning 310,996,624 292,240,756 275,818,189 248,645,813 242,440,215 242,083,519 230,948,692 Total Pension Liability - Ending (a) 325,186,524 310,996,624 292,240,756 275,818,189 248,645,813 242,440,215 242,083,519
PLAN FIDUCIARY NET POSITION
Contributions - Employer 10,297,024 9,485,870 8,260,458 7,798,560 6,462,584 5,540,793 5,285,903 Contributions - Employee 1,946,146 1,993,713 1,816,971 1,625,541 1,512,655 1,350,215 1,375,826 Net Investment Income 9,999,235 12,630,434 15,347,329 18,439,075 800,238 3,733,737 25,664,291 Benefit Payments, Including Refunds
of Employee Contributions (15,680,099) (15,037,162) (13,742,608) (12,772,896) (11,890,953) (11,383,179) (10,895,705) Net Plan to Plan Resource Movement (383,290) - (447) - 19,216 - - Administrative Expense (283,165) (136,963) (282,146) (245,410) (103,251) (190,690) - Other Miscellaneous Income/(Expense) - 444 (535,801) - - - - Net Change in Fiduciary Net Position 5,895,851 8,936,336 10,863,756 14,844,870 (3,199,511) (949,124) 21,430,315 Plan Fiduciary Net Position - Beginning 200,863,252 191,926,916 181,063,160 166,218,290 169,417,801 170,366,925 148,936,610 Plan Fiduciary Net Position - Ending (b) 206,759,103 200,863,252 191,926,916 181,063,160 166,218,290 169,417,801 170,366,925 Plan Net Pension Liability/(Asset) - Ending
(a)-(b) 118,427,421$ 110,133,372$ 100,313,840$ 94,755,029$ 82,427,523$ 73,022,414$ 71,716,594$ Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 63.58% 64.59% 65.67% 65.65% 66.85% 69.88% 70.38% Covered Employee Payroll* 19,776,528$ 19,051,278$ 17,967,376$ 16,214,420$ 15,715,033$ 15,494,316$ 16,589,818$ Plan Net Pension Liability/(Asset) as a
Percentage of Covered-Employee
Payroll 598.83% 578.09% 558.31% 584.39% 524.51% 471.29% 432.29% * For the year ending on the measurement date
^ Fiscal year 2015 was the 1st year of implementation
LAST 10 FISCAL YEARS^
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN - POLICE PLAN
SCHEDULE OF CITY'S NET PENSION LIABILITY AND RELATED RATIOS FOR THE FISCAL YEAR ENDED JUNE 30, 2021
Benefit Changes: The figures above include any liability impact that may have resulted from voluntary benefit changes that occurred after the June 30, 2019 valuation. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the June 30, 2019 valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.
Notes to Schedule of Changes in Net Pension Liability and Related Ratios:
Changes of Assumptions: None in 2019 or 2020. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate.
R-16
Fiscal Year 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Police Police Police Police Police Police Police
Actuarially Determined Contribution 11,629,887$ 10,297,024$ 9,481,034$ 8,260,675$ 7,799,085$ 6,462,584$ 5,540,793$ Contributions in Relation to the
Actuarially Determined Contribution 11,629,887 10,296,552 9,481,034 8,260,675 7,799,085 6,462,584 5,540,793 Contribution Deficiency (Excess) -$ 472$ -$ -$ -$ -$ -$ Covered Employee Payroll* 20,148,949$ 19,396,047$ 19,620,883$ 18,758,911$ 17,091,655$ 16,062,098$ 14,664,280$ Contributions as a Percentage of
Covered-Employee Payroll 57.72% 53.09% 48.32% 44.04% 45.63% 40.23% 37.78% ^Fiscal year 2015 was the 1st year of implementation
*For the fiscal year ending on the date shown
Notes to Schedules
Actuarial Cost Method Entry Age Normal
Amortization Method/Period For details, see June 30, 2018 Funding Valuation Report Asset Valuation Method Actuarial Value of Assets. For details, see June 30, 2018 Funding Valuation Report Inflation 2.625%
Salary Increases Varies by Entry Age and Service
Payroll Growth 2.875%
Investment Rate of Return 7.25% Net of Pension Plan Investment and Administrative Expenses; includes inflation.
Retirement Age The probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.
Mortality
For changes to previous year’s information, refer to prior year financial statement schedules.
The actuarial methods and assumptions used to set the actuarilly determined contributions for the fiscal year 2020-21 were from the June 30, 2018 Valuations.
The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries.
CITY OF SALINAS
SCHEDULE OF THE CITY'S PENSION PLAN CONTRIBUTIONS AND NOTES - POLICE PLAN FOR THE FISCAL YEAR ENDED JUNE 30, 2021
LAST 10 FISCAL YEARS^
REQUIRED SUPPLEMENTARY INFORMATION
AGENT MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN
R-17
Fiscal Year 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Measurement Date 06/30/2020 06/30/2019 06/30/2018 06/30/2017 06/30/2016 06/30/2015 06/30/2014 City's Proportion of the Net Pension Liability 0.483764% 0.467722% 0.469674% 0.580096% 0.600385% 0.643619% 0.641945% City's Proportionate Share of the Net Pension Liability 52,635,552$ 47,927,704$ 45,259,034$ 57,529,594$ 51,951,899$ 44,177,449$ 39,944,785$ City's Covered - Employee Payroll* 11,013,870 10,748,465 9,763,022 9,636,368 9,436,688 9,158,594 9,531,935 City's Proportionate Share of the Net Pension Liability as a percentage of Covered Payroll 477.90% 445.90% 463.58% 597.00% 550.53% 482.36% 419.06% Plan's Fiduciary Net Position as a percentage of the Plan's 75.10% 75.26% 75.26% 73.31% 74.06% 78.40% 79.82% Total Pension Liability
^Fiscal year 2015 was the 1st year of implementation
* For the year ending on the measurement date
Fire (Tier 1 & Tier 2)
CITY OF SALINAS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE PLAN'S (PERF C)
COST -SHARING SAFETY MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLAN LAST 10 FISCAL YEARS^
NET PENSION LIABILITY AND RELATED RATIOS
REQUIRED SUPPLEMENTARY INFORMATION
R-18
Fiscal Year 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Actuarially Determined Contribution 5,708,093$ 5,058,738$ 4,369,284$ 5,440,481$ 5,132,440$ 4,732,759$ 3,811,507$ Contributions in Relation to the Actuarially Determined Contribution 5,708,093 5,058,738 4,369,284 16,741,091 5,132,440 4,732,759 3,811,507 Contribution Deficiency (Excess) -$ -$ -$ (11,300,610)$ -$ -$ -$ City's Covered-Employee Payroll* 11,387,448$ 11,013,870$ 10,748,465$ 9,763,022$ 9,636,368$ 9,436,688$ 9,158,594$ Contributions as a Percentage of Covered-Employee Payroll 50.13% 45.93% 40.65% 171.47% 53.26% 50.15% 41.62% ^Fiscal year 2015 was the 1st year of implementation
*For the fiscal year ending on the date shown
Fire (Tier 1 & Tier 2)
CITY OF SALINAS
SCHEDULE OF THE CITY'S PENSION PLAN CONTRIBUTIONS AND NOTES FOR THE FISCAL YEAR ENDED JUNE 30, 2021
LAST 10 FISCAL YEARS^
REQUIRED SUPPLEMENTARY INFORMATION
COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PLAN
R-19
Fiscal Year 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16
CHANGE IN TOTAL PENSION LIABILITY
Service Cost 325,385$ 232,193$ 302,184$ 279,000$ 336,000$ 436,000$ Interest 506,095 684,730 679,330 537,000 655,000 676,000 Changes of Benefit Terms - - - - 531,000 - Actual vs. expected experience - 889,365 - 2,172,000 - - Assumption changes 907,299 217,496 - (106,000) - - Benefit Payments, Including Refunds of
Employee Contributions (9,126,048) (1,305,661) (199,769) (3,508,000) (87,000) (3,139,000) Net Change in Total Pension Liability (7,387,269) 718,123 781,745 (626,000) 1,435,000 (2,027,000) Total Pension Liability - Beginning 21,277,868 20,559,745 19,778,000 20,404,000 18,969,000 20,996,000 Total Pension Liability - Ending (a) 13,890,599 21,277,868 20,559,745 19,778,000 20,404,000 18,969,000
CHANGE IN PLAN FIDUCIARY NET POSITION
Contributions - Employer 8,030,028 2,919,589 1,927,686 1,654,000 1,483,000 1,340,000 Contributions - Employee 52,751 71,806 70,043 69,000 82,000 77,000 Net Investment Income 338,833 503,893 60,254 (506,000) 84,000 (85,000) Benefit Payments, Including Refunds
of Employee Contributions (9,126,048) (1,305,661) (199,769) (3,508,000) (87,000) (3,139,000) Administrative Expense (18,582) (19,188) (54,195) (75,000) (83,000) (100,000) Net Change in Fiduciary Net Position (723,018) 2,170,439 1,804,019 (2,366,000) 1,479,000 (1,907,000) Plan Fiduciary Net Position - Beginning 6,634,458 4,464,019 2,660,000 5,026,000 3,547,000 5,454,000 Plan Fiduciary Net Position - Ending (b) 5,911,440 6,634,458 4,464,019 2,660,000 5,026,000 3,547,000 Plan Net Pension Liability/(Asset) - Ending
(a)-(b) 7,979,159$ 14,643,410$ 16,095,726$ 17,118,000$ 15,378,000$ 15,422,000$ Plan Fiduciary Net Position as a Percentage
of the Total Pension Liability 42.56% 31.18% 21.71% 13.45% 24.63% 18.70% Covered Employee Payroll* 1,176,879$ 1,628,432$ 1,610,679$ 1,649,359$ 1,461,000$ 1,738,432$ Plan Net Pension Liability/(Asset) as a
Percentage of Covered-Employee Payroll 677.99% 899.23% 999.31% 1037.86% 1052.57% 887.12% * For the 12 month period ended on August 31 of the measurement date year ^ Fiscal year 2016 was the 1st year of implementation
LAST 10 FISCAL YEARS^
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
SINGLE - EMPLOYER DEFINED BENEFIT PENSION PLAN
SCHEDULE OF CITY'S NET PENSION LIABILITY AND RELATED RATIOS FOR THE FISCAL YEAR ENDED JUNE 30, 2021
R-20
Fiscal Year 2020-21 2019-20 2018-19 2017-18* 2016-17* 2015-16* Actuarially Determined Contribution 4,252,000$ 4,114,000$ 2,000,000$ 1,932,000$ 1,583,000$ 1,520,000$ Contributions in Relation to the
Actuarially Determined Contribution 10,212,240 5,573,828 2,135,107 1,614,000 1,571,000 1,107,000 Contribution Deficiency (Excess) (5,960,240)$ (1,459,828)$ (135,107)$ 318,000$ 12,000$ 413,000$ City's Covered-Employee Payroll** 804,977$ 1,273,326$ 1,664,538$ 1,693,493$ 1,796,000$ 1,872,000$ Contributions as a Percentage of
Covered-Employee Payroll 1268.64% 437.74% 128.27% 95.31% 87.47% 59.13% ^Fiscal year 2016 was the 1st year of implementation
*Rounded to the nearest thousand of a dollar
**For the fiscal year ending on the date shown
Notes to Schedule of Employer Contributions
Valuation Date ▪
Actuarial Cost Method ▪
Amortization Method/Period ▪
Asset Valuation Method ▪
Discount Rate ▪
General Inflation ▪
Salary Increases ▪
▪
Mortality ▪
Mortality Improvement ▪
3.40%
Aggregate - 2.5% annually
CalPERS 1997-2015 Expereince Study
Mortality projected fully generational with Scale MP-2019 Cash value as reported by New York Life Investment Management LLC
2.25%
Merit - CalPERS 1997-2015 Experience Study
September 1, 2019
Individual Aggregate Cost Method
N/A
LAST 10 FISCAL YEARS^
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLAN
SCHEDULE OF THE CITY'S PENSION PLAN CONTRIBUTIONS AND NOTES FOR THE FISCAL YEAR ENDED JUNE 30, 2021
Methods and assumptions for 2020-21 Actuarially Determined Contribution R-21
Fiscal Year End Fiscal Year End Fiscal Year End Fiscal Year End 06/30/21 06/30/20 06/30/19 06/30/18
06/30/20 06/30/19 06/30/18 06/30/17
Changes in total OPEB liability
Service cost 1,169,996$ 1,065,470$ 1,085,475$ 1,209,000$ Interest 974,493 1,143,094 1,064,391 951,000 Changes in benefits terms - 574,467 - - Actual vs expected experience - (4,138,016) - - Assumption changes 4,678,007 1,474,189 (609,871) (1,765,000) Benefit payments including refunds (676,514) (945,329) (915,000) (861,000) Net changes in total OPEB liability 6,145,982 (826,125) 624,995 (466,000) Total OPEB liability - beginning of year 21,673,870 22,499,995 21,875,000 22,341,000 Total OPEB liability - end of year 27,819,852$ 21,673,870$ 22,499,995$ 21,875,000$ Changes in plan fiduciary net position
Contributions - employer 931,063$ 1,195,329$ 1,165,000$ 1,111,000$ Contributions - employee - - - - Net investment income 102,633 152,998 159,215 171,000 Benefit payments and refunds (676,514) (945,329) (915,000) (861,000) Administrative expenses (5,988) (541) (3,619) (1,000) Other changes - - - - Net changes in plan fiduciary net position 351,194 402,457 405,596 420,000 Plan fiduciary net position - beginning of year 2,707,053 2,304,596 1,899,000 1,479,000 Plan fiduciary net position - end of year 3,058,247$ 2,707,053$ 2,304,596$ 1,899,000$ Net OPEB liability
Total OPEB liability 27,819,852$ 21,673,870$ 22,499,995$ 21,875,000$ Plan fiduciary net position 3,058,247 2,707,053 2,304,596 1,899,000 Net OPEB liability 24,761,605$ 18,966,817$ 20,195,399$ 19,976,000$ Net OPEB liability funded percentage 11.0% 12.5% 10.2% 8.7% Covered employee payroll * 64,146,096$ 64,026,542$ 62,965,263$ 48,821,000$ Net OPEB liability as a percent of covered-employee payroll 38.6% 29.6% 32.1% 40.9% ^ Fiscal year 2018 was the 1st year of implementation.
* For the year ending on the measurement date.
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY
AND RELATED RATIOS AS OF MEASUREMENT DATE
Measurement Date
LAST 10 YEARS^
CITY OF SALINAS
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Contributions for the fiscal year ended: 06/30/21 06/30/20 06/30/19 06/30/18 Actuarially determined contribution (ADC) 1,997,000$ 1,938,000$ 2,322,000$ 2,188,000$ Contributions in relation to the actuarially
determined contribution 959,007 931,063 1,195,329 1,165,000 Contribution deficiency (excess) 1,037,993$ 1,006,937$ 1,126,671$ 1,023,000$ City's covered-employee payroll * 64,469,561$ 64,146,096$ 64,026,452$ 51,530,000$ Contributions as a percentage of
covered-employee payroll 1.5% 1.5% 1.9% 2.3%
* For the fiscal year ended on the date shown.
Valuation date ▪
Actuarial cost method ▪
Amortization method ▪
Amortization period ▪
Assets valuation method ▪
Discount rate ▪
General inflation ▪
Medical trend ▪
▪
Mortality ▪ CalPERS 1997-2015 experience studyCalPERS 1997-2015 experience study Mortality Improvement ▪ Mortality projected fully generational with Scale MP-2019Mortality projected fully generational with Scale MP-2019
6.75%
2.75%
Non-Medicare - 7.25% for 2021, decreasing to an ultimate rate of 4.0% in 2076 Medicare - 6.3% for 2021, decreasing to an ultimate rate of 4.0% in 2076 June 30, 2019
Entry age normal, level percentage of pay
Level percentage of pay
14 years remaining as of June 30, 2020
Investment gains and losses spread over 5-year rolling period
CITY OF SALINAS
REQUIRED SUPPLEMENTARY INFORMATION
Notes to Schedule of Employer OPEB Contributions
Methods and Assumptions for 2019/20 Actuarially Determined Contribution LAST 10 YEARS^
^ Fiscal year 2018 was the 1st year of implementation.
SCHEDULE OF EMPLOYER OPEB CONTRIBUTIONS
AS OF JUNE 30, 2021
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SUPPLEMENTARY
INFORMATION
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NON-MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for specified purposes. The Special Revenue Funds used by the City in this report are as follows:
Lighting, Landscape and Maintenance District - This fund accounts for monies received from the various maintenance districts throughout the City. Funds are used to pay for the lighting and landscape maintenance of the respective districts.
Local Public Safety Fund - This fund accounts for monies received from federal and state grants, which are expended to enhance law enforcement services.
Development Fees - This fund accounts for the fees that subdividers and developers of property are required to pay, by Resolution 3823 (N.C.S.), covering traffic impact, annexation, use of existing or new sewers, storm drains, park facilities, library facilities and street trees.
Gas Tax - This fund accounts for gas tax revenues received from State apportionments of gasoline taxes. Expenditures are restricted to street maintenance and street improvements. No expenditures are made directly from this fund, but transfers are made to the General Fund for street maintenance and engineering salaries and to the Capital Projects Fund for street improvements based on actual expenditures.
Emergency Medical Services Fund - This fund accounts for monies received from County Service Area (CSA) 74. Funds are used to purchase emergency medical and safety equipment under the capital improvement program.
Asset Seizure - This fund accounts for the proceeds from sale of assets seized primarily from illegal narcotics activity. These funds are used for law enforcement.
Traffic Safety - This fund accounts for revenues derived from traffic violations whose use is restricted by State statute for traffic safety and street maintenance purposes. No expenditures are made directly from this fund, but transfers are made to the General Fund for traffic safety expenditures and street maintenance.
Vehicle Abatement - This fund accounts for monies allocated by the State to fund the vehicle abatement program.
Recreation Parks Fund - This fund accounts for revenues received from an admission fee charge that is imposed to events held at the Salinas Sports Complex (Rodeo Grounds stadium). Funds are designated for Parks and Recreation activities.
Cable - This funds accounts for revenues received for public, educational and governmental (PEG) fees from video service providers . Its use is restricted to provide non -commercial public, educational and government channels.
Municipal Art - This fund accounts for revenues received from a 0.5% charge on certain City capital improvement projects. Funds are designated for spending on public art to be located in public places throughout the City.
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Contributions and Donations - This fund accounts for contributions and donations from different individuals and agencies to the Library, Rec -Park, Fire and Police Department. Use of the funds are restricted for use of the appropriate Department.
KDF Los Padres Dev Social Services - This fund accounts for social services provided by the City of Salinas to lower income residents of the Development. On June 1, 2003, the Salinas Redevelopment Agency, the City of Salinas and the KDF Los Padres, L.P. entered into a loan agreement where loan payments will be collected annually by the City and used to provide recreational and social services to lower income residents of the Development. Term of the loan is 55 years commencing in 2006. Payment will increase by 3% annually.
Measure X Transport Safety & Inv Plan Fund - This fund accounts for revenues allocated by TAMC from the transportation sales and use tax. Expenditures are restricted to road improvements, pothole repairs, street and road maintenance, traffic deduction and re gional safety, mobility and walkability.
SB1 Road Maintenance & Rehab & SB1 Traffic Congestion Relief - This fund accounts for gas tax revenues received from State apportionments of an increased tax on gasoline and a new vehicle license fee from Senate Bil l 1 (SB 1), the Road Repair and Accountability Act of 2017.
Expenditures are restricted to street maintenance and street improvements including facilities for bicycles and pedestrians. No expenditures are made directly from this fund, but transfers are made to the General Fund for street maintenance and engineering salaries and to the Capital Projects Fund for street improvements based on actual expenditures.
SRA Public Improvement Grant - This fund accounts for the use of monies received from proceeds of the land sale located in Main Street where the “Taylor Farms” headquarters is constructed and other properties held for re-sale.
Affordable Housing Fund - These funds are used to improve and increase the supply of low income housing within the City.
Housing and Urban Development Grant - This fund accounts for the use of community development block grant funds received from the federal government. Other revenues in this fund include repayments of commercial and residential loans and rental income from City property.
Funds are used for programs or projects that increase affordable housing and benefit people with special needs such as senior and handicapped citizens.
Grants Fund - This fund accounts for various minor grants received for purposes ranging from library to police operations.
Coronavirus Aid, Relief, and Economic Security Act (“ CARES Act”) - This fund accounts for monies awarded through the state’s Coronavirus Relief Funds (CRF) and funded entirely through the federal stimulus funding under the CARES Act provided by the U.S. Department of Treasury (US Treasury) to the Governor via the Office of Financial Management (OFM). The City of Salinas allocation was determined by the OFM. The Coronavirus Relief Funds may only be used for costs incurred by local governments in response to the COVID -19 public health emergency during the period of March 1, 2020, thru October 31, 2020.
Lighting,
Landscape
and Local Emergency
Maintenance Public Development Gas Medical Asset Traffic District Safety Fees Tax Services Seizure Safety
ASSETS
Cash and investments 8,313,499$ 633,694$ 16,730,463$ 1,838,922$ 103,571$ 127,945$ -$ Receivables, net:
Accrued interest 5,820 40 11,574 1,551 - 252 - Due from outside agencies - 106,859 - 379,844 - - 66,063 Advances to other agency - - - - - - - Loan receivables - - - - - - - Land and properties held for resale - - - - - - - Total assets 8,319,319$ 740,593$ 16,742,037$ 2,220,317$ 103,571$ 128,197$ 66,063$
LIABILITIES
Accounts payable 89,018$ 165$ -$ -$ 43,169$ 4,015$ 9,873$ Due to other funds 51,281 - 122,211 1,295 - - 15,133 Unearned revenues - - - - - - - Total liabilities 140,299 165 122,211 1,295 43,169 4,015 25,006
DEFERRED INFLOWS
OF RESOURCES
Unavailable revenues - housing loans - - - - - - - Unavailable revenues - accrued interest - - - - - - - Unavailable revenues - grants - - - - - - - Total deferred inflows
of resources - - - - - - -
FUND BALANCE
Nonspendable - - - - - - - Restricted 8,179,020 740,428 16,619,826 2,219,022 60,402 124,182 41,057 Unassigned - - - - - - - Total fund balances 8,179,020 740,428 16,619,826 2,219,022 60,402 124,182 41,057 Total liabilities, deferred inflows,
and fund balances 8,319,319$ 740,593$ 16,742,037$ 2,220,317$ 103,571$ 128,197$ 66,063$
CITY OF SALINAS
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS
JUNE 30, 2021
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KDF Measure X
Los Padres Transport
Vehicle Recreation Municipal Contributions Dev Social Safety & Abatement Parks Cable Art & Donations Services Inv Plan ASSETS
Cash and investments 355,765$ 72,597$ 481,385$ 10,911$ 186,287$ 293,697$ 8,498,579$ Receivables, net:
Accrued interest - - - - - 199 5,396 Due from outside agencies 68,818 - 44,797 - - - 1,415,896 Advances to other agency - - - - - - - Loan receivables - - - - - - - Land and properties held for resale - - - - - - - Total assets 424,583$ 72,597$ 526,182$ 10,911$ 186,287$ 293,896$ 9,919,871$
LIABILITIES
Accounts payable 8,674$ 1,099$ 45,859$ -$ -$ 105$ -$ Due to other funds - - - - - - 783,795 Unearned revenues - - - - - 20,472 - Total liabilities 8,674 1,099 45,859 - - 20,577 783,795
DEFERRED INFLOWS
OF RESOURCES
Unavailable revenues - housing loans - - - - - - - Unavailable revenues - accrued interest - - - - - - - Unavailable revenues - grants 35,329 - - - - - - Total deferred inflows
of resources 35,329 - - - - - -
FUND BALANCE
Nonspendable - - - - - - - Restricted 380,580 71,498 480,323 10,911 186,287 273,319 9,136,076 Unassigned - - - - - - - Total fund balances 380,580 71,498 480,323 10,911 186,287 273,319 9,136,076 Total liabilities, deferred inflows,
and fund balances 424,583$ 72,597$ 526,182$ 10,911$ 186,287$ 293,896$ 9,919,871$
CITY OF SALINAS
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS
JUNE 30, 2021
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Housing
SB1 Road SB1 Traffic SRA and Urban
Maintenance & Congestion Public Impvt Affordable Development CARES Rehab Relief Grant Housing Grant Grants Act Total
ASSETS
Cash and investments 4,541,619$ 566,482$ 1,623,341$ 3,062,870$ 288,017$ 1,528,795$ -$ 49,258,439$ Receivables, net:
Accrued interest 2,983 384 1,114 715,502 106 - - 744,921 Due from outside agencies 548,027 - - - 4,272,638 664,907 - 7,567,849 Advances to other agency - - - - - - - - Loan receivables - - - 16,571 188,811 - - 205,382 Land and properties held for resale - - 850,000 1,657,553 - - - 2,507,553 Total assets 5,092,629$ 566,866$ 2,474,455$ 5,452,496$ 4,749,572$ 2,193,702$ -$ 60,284,144$
LIABILITIES
Accounts payable -$ -$ -$ 1,298$ 838,457$ 90,229$ -$ 1,131,961$ Due to other funds - - - - 3,051,414 372,826 - 4,397,955 Unearned revenues - - - - - 40,027 - 60,499 Total liabilities - - - 1,298 3,889,871 503,082 - 5,590,415
DEFERRED INFLOWS
OF RESOURCES
Unavailable revenues - housing loans - - - 16,571 188,811 - - 205,382 Unavailable revenues - accrued interest - - - 696,810 - - - 696,810 Unavailable revenues - grants - - - - 1,546,601 227,321 - 1,809,251 Total deferred inflows
of resources - - - 713,381 1,735,412 227,321 - 2,711,443
FUND BALANCE
Nonspendable - - 850,000 1,674,124 - - - 2,524,124 Restricted 5,092,629 566,866 1,624,455 3,063,693 - 1,463,299 - 50,333,873 Unassigned - - - - (875,711) - - (875,711) Total fund balances 5,092,629 566,866 2,474,455 4,737,817 (875,711) 1,463,299 - 51,982,286 Total liabilities, deferred inflows,
and fund balances 5,092,629$ 566,866$ 2,474,455$ 5,452,496$ 4,749,572$ 2,193,702$ -$ 60,284,144$
CITY OF SALINAS
COMBINING BALANCE SHEET
SPECIAL REVENUE FUNDS
JUNE 30, 2021
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Lighting,
Landscape
and Local Emergency
Maintenance Public Development Gas Medical Asset Traffic District Safety Fees Tax Services Seizure Safety
REVENUES
Taxes -$ 562,280$ -$ -$ -$ -$ -$ Taxes - special assessments 1,956,092 - - - - - - Intergovernmental - 534,611 - 3,465,446 138,815 10,812 - Charges for services - - 1,375,537 - - - - Interest 38,602 55 80,652 11,436 (466) 1,599 - Rental income - - - 188,936 - - - Fines and forfeits - - - - - - 347,462 Miscellaneous (20,322) - - - - - - Total revenues 1,974,372 1,096,946 1,456,189 3,665,818 138,349 12,411 347,462
EXPENDITURES
Current:
General government 18,971 - - - - - 79,165 Public safety - 600,000 - - 1,236,890 6,670 - Public works 1,027,877 - - - - - - Recreation - - - - - - - Library - - - - - - - Capital outlay 12,179 - - - 669 - - Total expenditures 1,059,027 600,000 - - 1,237,559 6,670 79,165
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 915,345 496,946 1,456,189 3,665,818 (1,099,210) 5,741 268,297
OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - 1,015,300 - - Operating transfers out (25,652) (311,973) (619,898) (2,694,733) (8,112) - (250,000) Total other financing sources (uses) (25,652) (311,973) (619,898) (2,694,733) 1,007,188 - (250,000) NET CHANGE IN FUND BALANCE 889,693 184,973 836,291 971,085 (92,022) 5,741 18,297 FUND BALANCES, BEGINNING OF YEAR 7,289,327 555,455 15,783,535 1,247,937 152,424 118,441 22,760 FUND BALANCE, END OF YEAR 8,179,020$ 740,428$ 16,619,826$ 2,219,022$ 60,402$ 124,182$ 41,057$
CITY OF SALINAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
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KDF Measure X
Los Padres Transport
Vehicle Recreation Municipal Contributions Dev Social Safety & Abatement Parks Cable Art & Donations Services Inv Plan
REVENUES
Taxes -$ -$ 180,430$ -$ -$ -$ -$ Taxes - special assessments - - - - - - - Intergovernmental 182,903 - - - 140 - 4,865,845 Charges for services - - - 5,941 - - - Interest - - - - (898) 1,527 35,987 Rental income - - - - - - - Fines and forfeits - - - - - - - Miscellaneous - - - - 66,569 40,282 - Total revenues 182,903 - 180,430 5,941 65,811 41,809 4,901,832
EXPENDITURES
Current:
General government - - 125,001 - - - - Public safety 228,856 - - - 10,025 - - Public works - - - - - - - Recreation - 16,736 - - 140 3,828 - Library - - - - 5,000 - - Capital outlay - - 61,201 - - - - Total expenditures 228,856 16,736 186,202 - 15,165 3,828 -
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (45,953) (16,736) (5,772) 5,941 50,646 37,981 4,901,832
OTHER FINANCING SOURCES (USES)
Operating transfers in 50,000 - - - - - - Operating transfers out - - - - (2,185) - (4,380,893) Total other financing sources (uses) 50,000 - - - (2,185) - (4,380,893) NET CHANGE IN FUND BALANCE 4,047 (16,736) (5,772) 5,941 48,461 37,981 520,939 FUND BALANCES, BEGINNING OF YEAR 376,533 88,234 486,095 4,970 137,826 235,338 8,615,137 FUND BALANCE, END OF YEAR 380,580$ 71,498$ 480,323$ 10,911$ 186,287$ 273,319$ 9,136,076$
CITY OF SALINAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
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SRA Housing
SB1 Road SB1 Traffic Public and Urban
Maintenance & Congestion Improvement Affordable Development CARES Rehab Relief Grant Housing Grant Grants Act Total
REVENUES
Taxes -$ -$ -$ -$ -$ -$ -$ 742,710$ Taxes - special assessments - - - - - - - 1,956,092 Intergovernmental 3,007,359 - - - 6,137,593 3,855,007 2,002,977 24,201,508 Charges for services - - - - - 4,328 - 1,385,806 Interest 23,229 2,521 7,393 13,720 931 - - 216,288 Rental income - - - - - 49,824 - 238,760 Fines and forfeits - - - - - - - 347,462 Miscellaneous - - - 111,995 888,566 60,000 - 1,147,090 Total revenues 3,030,588 2,521 7,393 125,715 7,027,090 3,969,159 2,002,977 30,235,716
EXPENDITURES
Current:
General government - - - 22,815 7,769,125 1,037,723 - 9,052,800 Public safety - - - - - 866,298 - 2,948,739 Public works - - - - - 10,723 - 1,038,600 Recreation - - - - - 250,928 - 271,632 Library - - - - - 33,746 - 38,746 Capital outlay - - - - 140,498 908,956 - 1,123,503 Total expenditures - - - 22,815 7,909,623 3,108,374 - 14,474,020
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 3,030,588 2,521 7,393 102,900 (882,533) 860,785 2,002,977 15,761,696
OTHER FINANCING SOURCES (USES)
Operating transfers in - - - - 13,271 29,048 - 1,107,619 Operating transfers out (542,377) - - (229,492) (365,383) (3,016) (2,002,977) (11,436,691) Total other financing sources (uses) (542,377) - - (229,492) (352,112) 26,032 (2,002,977) (10,329,072) NET CHANGE IN FUND BALANCE 2,488,211 2,521 7,393 (126,592) (1,234,645) 886,817 - 5,432,624 FUND BALANCES, BEGINNING OF YEAR 2,604,418 564,345 2,467,062 4,864,409 358,934 576,482 - 46,549,662 FUND BALANCE, END OF YEAR 5,092,629$ 566,866$ 2,474,455$ 4,737,817$ (875,711)$ 1,463,299$ -$ 51,982,286$ FOR THE YEAR ENDED JUNE 30, 2021
CITY OF SALINAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SPECIAL REVENUE FUNDS
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NON-MAJOR GOVERNMENTAL FUNDS
DEBT SERVICE FUNDS
Debt Service Funds are used for the accumulation and disbursement of financial resources that will be used to make principal and interest payments on general long-term debt. The debt service funds include the following debt issuances:
COP 1999 & COP 2004 Consolidation (2014) - This fund is used to accumulate funds for the payment of principal and interest on the 2014 Lease Purchase/Agreement that was issued on January 29, 2014 to refinance the portion of the 1999 Certificates of Participation that were used to finance the construction of the City Animal Shelter. Debt service for the Animal Shelter is used to finance the City’s General Fund.
2018 Lease -PS Building Police - This fund is used to accumulate monie s for the designing, permitting, constructing and equipping the new public safety building, including ancillary parking and related facilities, located at 312 E Alisal Street in Salinas. Salinas Public Safety Facilities Inc. (SPF) issued lease revenue bonds to finance the construction of the new building. Lease payments are made from the City’s Measure G Funds.
COP 2018B T.R.I.P. Total Rd Impv - This fund is used to accumulate monies for the principal and interest payments for the Transportation Revenue COP Certificates issued to finance large scale street improvement projects. COPs will be secured by Measure X Revenues the City receives from the Transportation Agency of Monterey County (TAMC).
Energy Improvement Lease Fund - This fund is used to account for lease payments on debt incurred in fiscal year 2014-15 that funds the City’s ongoing efforts to reduce energy consumption and to develop long-term cost savings through increased energy efficiency. The project will install LED lighting on street lights and parking lots in addition to building solar PV installations at the Hitchcock R oad Animal Shelter, the Industrial Waste Treatment Plant, the Salinas Municipal Airport, the Permit Center, Sherwood Hall, and the Sewer Lift Station site off Work Street. The Funding came through a private placement in the amount of $21,908,000. The Debt Service repayment will be over a 17 year period at an interest rate of 3.03%.
Certificates of Participation (2005 A & B) 2015 Refunding Fund - This fund is used to accumulate funds for the payment of principal and interest on the 2005B Certificates of Participation. Proceeds were used to refund the Certificates of Participation 1997. The proceeds from the Certificates of Participation 1997 were used for capital improvements and to refund the Salinas Public Financing Authority’s Variable Rate Lease Revenue Bonds that were used to purchase the 65 W. Alisal building. Debt service is financed from installment payments from the Salinas Valley Solid Waste Authority (SVSWA) for the purchase of Crazy Horse Landfill and a lease on the 65 W. Alisal Building.
2018 Lease -El Gabilan Library - This fund is used to accumulate monies for the designing, permitting, constructing and equipping the El Gabilan Li brary expansion, including ancillary parking, located at 1400 N Main Street in Salinas. Salinas Public Safety Facilities, Inc. (SPF) issued lease revenue bonds to facilitate the construction of the El Gabilan Library. Lease payments are made from the City’s Measure E Funds.
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2020A Refunding Energy - This fund is used to account for the refunding of the 2014 Energy Improvement Lease and accumulate monies for the payment of principal and interest. 2020A Refunding SVSWA - for the refunding of the outstanding portion of the Certificates of Participation Series 2015B (1997 Capital Improvement Projects) and accumulate monies for the payment of principal and interest.
Assessment District Administration Fund - This fund accounts for the c ost of administering the City’s assessment district bonds used to finance improvements within those districts. Funding is provided by an assessment equal to 5% of the assessment amount with a maximum $16 levy per parcel per bond.
Assessment District Reserve Fund - This fund accounts for the reserves on outstanding assessment districts bonds.
2019 Special Tax Bond Monte Bella - This fund is used to accumulate monies for the principal and interest payments for the 2019 Special Tax Bonds to finance the acquisition and/or construction of certain public facilities and improvements within the Community Facilities District No. 2016-1 (Monte Bella) Area No. 1 -3. The annual levy of special taxes on that area would be used to pay for principal and interest payments on the bonds.
COP 1999 & 2004 2018 COP 2018B Energy 2018
Consolidation Lease-PS T.R.I.P. Improvement COP 2005 A & B Lease-El (2014) Building Police Total Rd Impv Lease 2015 Refunding Gabilan Library ASSETS
Cash and investments 398,661$ 2,055$ 1,140,966$ 36,090$ 87,234$ 2,155$ Receivables:
Accrued interest 278 - 968 27 66 - Restricted cash and investments - - - - - - Total assets 398,939$ 2,055$ 1,141,934$ 36,117$ 87,300$ 2,155$
LIABILITIES
Accounts payable -$ 2,055$ -$ -$ -$ 2,155$ Due to other funds - - - - - - Total liabilities - 2,055 - - - 2,155
FUND BALANCE
Restricted 398,939 - 1,141,934 36,117 87,300 - Unassigned - - - - - - Total fund balance 398,939 - 1,141,934 36,117 87,300 - Total liabilities and fund balances 398,939$ 2,055$ 1,141,934$ 36,117$ 87,300$ 2,155$
CITY OF SALINAS
COMBINING BALANCE SHEET
DEBT SERVICE FUNDS
JUNE 30, 2021
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2020A 2020A Assessment Assessment 2019
Refunding Refunding District District Special Tax Bond Energy SVSWA Administration Reserve Monte Bella Total
ASSETS
Cash and investments 3,867$ 5,234$ -$ 1,842,353$ 152,162$ 3,670,777$ Receivables:
Accrued interest - - - 1,273 - 2,612 Restricted cash and investments - - - - 619,329 619,329 Total assets 3,867$ 5,234$ -$ 1,843,626$ 771,491$ 4,292,718$
LIABILITIES
Accounts payable -$ -$ -$ -$ 11,341$ 15,551$ Due to other funds - - 2,178 - 5,280 7,458 Total liabilities - - 2,178 - 16,621 23,009
FUND BALANCE
Restricted 3,867 5,234 - 1,843,626 754,870 4,271,887 Unassigned - - (2,178) - - (2,178) Total fund balance 3,867 5,234 (2,178) 1,843,626 754,870 4,269,709 Total liabilities and fund balances 3,867$ 5,234$ -$ 1,843,626$ 771,491$ 4,292,718$
CITY OF SALINAS
COMBINING BALANCE SHEET
DEBT SERVICE FUNDS
JUNE 30, 2021
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COP 1999 & 2004 2018 COP 2018B Energy 2018
Consolidation Lease-PS T.R.I.P. Improvement COP 2005 A & B Lease-El (2014) Building Police Total Rd Impv Lease 2015 Refunding Gabilan Library
REVENUES
Taxes - special assessments -$ -$ -$ -$ -$ -$ Interest 1,111 - 15,255 311 434 - Total revenues 1,111 - 15,255 311 434 -
EXPENDITURES
Current:
General government - - - - - - Debt service:
Principal retirement 153,000 2,640,000 710,000 - - 210,000 Interest and fiscal charges 75,636 2,097,436 1,628,575 - 288 579,973 Bond issuance cost - - - - - - Total expenditures 228,636 4,737,436 2,338,575 - 288 789,973
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (227,525) (4,737,436) (2,323,320) 311 146 (789,973)
OTHER FINANCING SOURCES
Refunding bond proceeds - - - - - - Premium on refunding bonds issued - - - - - - Payment to refunded bond escrow agent - - - - - - Operating transfers in - 4,739,701 2,338,575 - - 792,443 Total other financing sources - 4,739,701 2,338,575 - - 792,443 NET CHANGE IN FUND BALANCES (227,525) 2,265 15,255 311 146 2,470 FUND BALANCES, BEGINNING OF YEAR 626,464 (2,265) 1,126,679 35,806 87,154 (2,470) FUND BALANCES, END OF YEAR 398,939$ -$ 1,141,934$ 36,117$ 87,300$ -$
CITY OF SALINAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
DEBT SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
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2020A 2020A Assessment Assessment 2019
Refunding Refunding District District Special Tax Bond Energy SVSWA Administration Reserve Monte Bella Total
REVENUES
Taxes - special assessments -$ -$ -$ -$ 339,612$ 339,612$ Interest - - - 8,465 68 25,644 Total revenues - - - 8,465 339,680 365,256
EXPENDITURES
Current:
General government - - - - 54,659 54,659 Debt service:
Principal retirement 540,000 580,000 - - 50,000 4,883,000 Interest and fiscal charges 455,906 112,836 - - 224,987 5,175,637 Bond issuance cost 334,488 89,720 - - 160,519 584,727 Total expenditures 1,330,394 782,556 - - 490,165 10,698,023
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,330,394) (782,556) - 8,465 (150,485) (10,332,767)
OTHER FINANCING SOURCES
Refunding bond proceeds 16,190,000 4,440,000 - - - 20,630,000 Premium on refunding bonds issued 3,230,127 561,244 - - - 3,791,371 Payment to refunded bond escrow agent (19,081,771) (4,906,289) - - - (23,988,060) Operating transfers in 995,905 692,835 - - 402,870 9,962,329 Total other financing sources 1,334,261 787,790 - - 402,870 10,395,640 NET CHANGE IN FUND BALANCES 3,867 5,234 - 8,465 252,385 62,873 FUND BALANCES, BEGINNING OF YEAR - - (2,178) 1,835,161 502,485 4,206,836 FUND BALANCES, END OF YEAR 3,867$ 5,234$ (2,178)$ 1,843,626$ 754,870$ 4,269,709$
CITY OF SALINAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
DEBT SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
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NON-MAJOR GOVERNMENTAL FUNDS
CAPITAL PROJECT FUNDS
Capital Projects Funds are used to account for major capital acquisition and construction activities.
The Capital Projects Funds used by the City in this report are as follows:
Special Aviation Fund - This fund accounts for federal and state airport grants. Funds are used to reimburse the Capital Projects Fund for airport capital expenditures.
Assessment District Projects Fund - This fund accounts for bond proceeds from assessment districts used for capital improvements. Funds are used to reimburse the Capital Projects Fund for assessment district capital project expenditures.
2019 Spec Tax Bond Monte Bella - This fund accounts for bond proceeds from assessments from the Monte Bella District for Capital Improvements. Funds are used to reimburse the Capital Projects Fund for Monte Bella District Capital Project Expenditures.
Capital Projects - This fund accounts for all capital project expenditures. Funds are transferred in from various other funds after expenditures are made. This revolving fund was established with $2,000,000 and is used to advance capital project expenditures prior to reimbursement of Federal, State, and other construction grants and bond financing.
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Assessment 2019 Spec Tax
Special District Bond Monte Capital
Aviation Project Bella Projects Total
ASSETS
Cash and investments 1,227,358$ 416,288$ 5,982$ 2,000,000$ 3,649,628$ Receivables, net:
Accrued interest 849 292 596 - 1,737 Due from outside agencies 420,412 - - - 420,412 Due from other funds - - - 2,080,093 2,080,093 Restricted cash and investments - - 237,672 - 237,672 Total assets 1,648,619$ 416,580$ 244,250$ 4,080,093$ 6,389,542$
LIABILITIES
Accounts payable 392,853$ -$ -$ 2,080,093$ 2,472,946$ Due to other funds - - 214,310 - 214,310 Total liabilities 392,853 - 214,310 2,080,093 2,687,256
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - grants 388,729 - - - 388,729 Total deferred inflows of resources 388,729 - - - 388,729
FUND BALANCE
Restricted 867,037 416,580 29,940 - 1,313,557 Committed - - - 2,000,000 2,000,000 Total fund balance 867,037 416,580 29,940 2,000,000 3,313,557 Total liabilities, deferred inflows, and fund balance 1,648,619$ 416,580$ 244,250$ 4,080,093$ 6,389,542$
CITY OF SALINAS
COMBINING BALANCE SHEET
CAPITAL PROJECTS FUNDS
JUNE 30, 2021
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Assessment 2019 Spec Tax
Special District Bond Monte
Aviation Project Bella Capital Projects Total
REVENUES
Intergovernmental 531,043$ -$ -$ -$ 531,043$ Interest 6,461 1,972 6,610 - 15,043 Total revenues 537,504 1,972 6,610 - 546,086
EXPENDITURES
Current:
General government - - - 1,403,476 1,403,476 Public safety - - - 593,988 593,988 Public works - - - 6,151,757 6,151,757 Recreation - - - 16,482 16,482 Library - - - 158,641 158,641 Capital outlay 472,293 - 1,977,885 266,820 2,716,998 Debt service:
Principal retirement - - - 1,002,528 1,002,528 Interest and fiscal charges - - - 140,454 140,454 Total expenditures 472,293 - 1,977,885 9,734,146 12,184,324
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 65,211 1,972 (1,971,275) (9,734,146) (11,638,238)
OTHER FINANCING SOURCES (USES)
Loan proceeds - - 2,937,947 - 2,937,947 Operating transfers in - - - 9,734,146 9,734,146 Operating transfers out - - (960,062) - (960,062) Total other financing sources (uses) - - 1,977,885 9,734,146 11,712,031 NET CHANGE IN FUND BALANCE 65,211 1,972 6,610 - 73,793 FUND BALANCE, BEGINNING OF YEAR 801,826 414,608 23,330 2,000,000 3,239,764 FUND BALANCE, END OF YEAR 867,037$ 416,580$ 29,940$ 2,000,000$ 3,313,557$
CITY OF SALINAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
CAPITAL PROJECTS FUNDS
FOR THE YEAR ENDED JUNE 30, 2021
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INTERNAL SERVICE FUNDS
Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis.
Risk Management Fund - This fund is used to account for the City’s risk management program which administers employee benefits and the Internal Service Funds insurance programs.
General Insurance Fund - This fund is used to account for city -wide safety programs, employee assistance programs, unemployment claims, biennial physical exams, and insurance for property, fine arts, and reimbursable damages.
Workers Compensation Fund - This fund is used to account for the City’s self -insured workers compensation program.
General Liability Fund - This fund is used to account for the City’s self -insured general liability insurance program.
Fleet Maintenance Fund - This fund is used to account for the inspection, maintenance, and repair of all the City’s vehicles and equipment.
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Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total ASSETS
Current Assets:
Cash and cash equivalents 1,942,516$ 2,839,252$ 7,825,367$ 2,490,564$ 1,233,917$ 16,331,616$ Receivables, net
Excess insurance receivable - - - - - - Accrued interest - - 5,530 1,962 - 7,492 Due from general fund - - 16,831,462 - - 16,831,462 Total current assets 1,942,516 2,839,252 24,662,359 2,492,526 1,233,917 33,170,570 Noncurrent Assets:
Restricted cash and investments - - 264,632 129,459 - 394,091 Total noncurrent assets - - 264,632 129,459 - 394,091 Total assets 1,942,516 2,839,252 24,926,991 2,621,985 1,233,917 33,564,661
DEFERRED OUTFLOWS OF RESOURCES
Related to pensions - - 29,885 58,962 236,654 325,501 Related to OPEB - - 12,121 30,222 59,101 101,444 Total deferred outflows of resources - - 42,006 89,184 295,755 426,945 Total assets and deferred outflows 1,942,516 2,839,252 24,968,997 2,711,169 1,529,672 33,991,606
LIABILITIES
Current Liabilities:
Accounts payable - 23,369 7,305 17,134 83,206 131,014 Insurance claims payable - - 24,873,941 3,157,700 - 28,031,641 Long term debt - due within one year - - 745 7,733 19,767 28,245 Total current liabilities - 23,369 24,881,991 3,182,567 102,973 28,190,900 Noncurrent Liabilities:
Long term debt - due in more than one year - - 2,978 30,932 79,068 112,978 Net pension liability - - 120,294 237,336 952,597 1,310,227 Net OPEB liability - - 47,587 118,650 232,026 398,263 Total noncurrent liabilities - - 170,859 386,918 1,263,691 1,821,468 Total liabilities - 23,369 25,052,850 3,569,485 1,366,664 30,012,368
DEFERRED INFLOWS OF RESOURCES
Related to pensions - - 1,008 1,988 7,976 10,972 Related to OPEB - - 8,949 22,314 43,635 74,898 Total deferred inflows - - 9,957 24,302 51,611 85,870
NET POSITION (DEFICIT)
Restricted - - - - - - Unrestricted 1,942,516 2,815,883 (93,810) (882,618) 111,397 3,893,368 Total net position (deficit) 1,942,516$ 2,815,883$ (93,810)$ (882,618)$ 111,397$ 3,893,368$
CITY OF SALINAS
COMBINING STATEMENT OF FUND NET POSITION (DEFICIT)
INTERNAL SERVICE FUNDS
JUNE 30, 2021
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CITY OF SALINAS
COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION (DEFICIT)
INTERNAL SERVICE FUNDS
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total
OPERATING REVENUES
Charges for services 500$ 276,946$ 8,673,931$ 262,552$ 1,712$ 9,215,641$ - Total operating revenues 500 276,946 8,673,931 262,552 1,712 9,215,641
OPERATING EXPENSES
Personnel services - - 253,332 389,341 1,257,957 1,900,630 Contractual services - 11,456 323,041 87,361 138,991 560,849 Supplies - - - - 691,171 691,171 Insurance - 441,347 305,109 1,003,055 - 1,749,511 Insurance claims - - 8,908,373 (157,432) - 8,750,941 Other - 541,347 - - 25,856 567,203 Total operating expenses - 994,150 9,789,855 1,322,325 2,113,975 14,220,305 OPERATING INCOME (LOSS) 500 (717,204) (1,115,924) (1,059,773) (2,112,263) (5,004,664)
NONOPERATING REVENUES (EXPENSES)
Investment income - - 37,739 13,840 - 51,579 Total nonoperating revenues (expenses) - - 37,739 13,840 - 51,579
INCOME (LOSS) BEFORE
CONTRIBUTIONS AND TRANSFERS 500 (717,204) (1,078,185) (1,045,933) (2,112,263) (4,953,085) Transfers in - - 1,000,000 2,661,300 1,995,400 5,656,700 CHANGE IN NET POSITION 500 (717,204) (78,185) 1,615,367 (116,863) 703,615 NET POSITION (DEFICIT), BEGINNING OF YEAR 1,942,016 3,533,087 (15,625) (2,497,985) 228,260 3,189,753 NET POSITION (DEFICIT), END OF YEAR 1,942,516$ 2,815,883$ (93,810)$ (882,618)$ 111,397$ 3,893,368$ FOR THE YEAR ENDED JUNE 30, 2021
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CITY OF SALINAS
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Fund Fund Fund Fund Fund Total
Cash Flows from Operating Activities:
Receipts from interfund services provided 500$ 276,946$ 8,673,931$ 262,552$ 1,712$ 9,215,641$ Payments to Suppliers - (977,783) (628,150) (1,090,416) (849,394) (3,545,743) Payments to Employees - - (157,194) (401,785) (956,266) (1,515,245) Payments to Claimants - - (4,042,778) (3,228,413) - (7,271,191) Net Cash Provided (Used) by Operating Activities 500 (700,837) 3,845,809 (4,458,062) (1,803,948) (3,116,538) Cash Flows from Non-Capital Financing Activities:
Operating Transfers In - - (2,449,899) 2,661,300 1,995,400 2,206,801 Net Cash Provided by
Non-capital Financing Activities - - (2,449,899) 2,661,300 1,995,400 2,206,801 Cash Flows from Investing Activities:
Interest received - - 37,739 13,840 - 51,579 Increase in fair value of LAIF investments - - 12,854 8,098 - 20,952 Net Cash Provided by Investing Activities - - 50,593 21,938 - 72,531 Cash and Cash Equivalents Net increase (decrease) in cash and cash equivalents 500 (700,837) 1,446,503 (1,774,824) 191,452 (837,206) Cash and cash equivalents at beginning of year 1,942,016 3,540,089 6,643,496 4,394,847 1,042,465 17,562,913 Cash and cash equivalents at end of year 1,942,516$ 2,839,252$ 8,089,999$ 2,620,023$ 1,233,917$ 16,725,707$ FOR THE FISCAL YEAR ENDED JUNE 30, 2021
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CITY OF SALINAS
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Fund Fund Fund Fund Fund Total
Reconciliation of cash and cash equivalents
to the Statement of Net Position
Ending cash and cash equivalents - statement of cash flows 1,942,516$ 2,839,252$ 8,089,999$ 2,620,023$ 1,233,917$ 16,725,707$ Less amounts reported in restricted cash and investments - - (264,632) (129,459) - (394,091) Cash and cash equivalents - statement of net position 1,942,516$ 2,839,252$ 7,825,367$ 2,490,564$ 1,233,917$ 16,331,616$ Reconciliation of operating income to net cash
provided (used) by operating activities:
Operating income (loss) 500$ (717,204)$ (1,115,924)$ (1,059,773)$ (2,112,263)$ (5,004,664)$ Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
(Increase) decrease in deferred outflows - pension - - (29,885) 66,016 13,302 49,433 (Increase) decrease in deferred outflows - OPEB - - (7,862) (19,911) (37,359) (65,132) Increase (decrease) in accounts payable - 16,367 1,175 2,577 14,083 34,202 Increase (decrease) in insurance claims - - 4,865,595 (3,385,845) - 1,479,750 Increase (decrease) in accrued leave - - 1,151 19,327 15,713 36,191 Increase (decrease) in net pension liability - - 120,294 (101,880) 274,165 292,579 Increase (decrease) in net OPEB liability - - 11,550 31,403 48,048 91,001 Increase (decrease) in deferred inflows - pension - - 1,008 (7,495) (10,987) (17,474) Increase (decrease) in deferred inflows - OPEB - - (1,293) (2,481) (8,650) (12,424) Total Adjustments to Net Income - 16,367 4,961,733 (3,398,289) 308,315 1,888,126 Net Cash Provided (Used) by Operating Activities 500$ (700,837)$ 3,845,809$ (4,458,062)$ (1,803,948)$ (3,116,538)$ O-26