Salinas City Council
October 22, 2024

City of Salinas
California

Annual Comprehensive Financial Report
Fiscal Year Ended June 30, 2023

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Annual Comprehensive Financial Report
Fiscal Year Ended June 30, 2023

PREPARED BY

THE FINANCE DEPARTMENT

Selina Andrews
Finance Director

AUDITORS

The Pun Group, LLP
Accountants & Advisors
200 E. Sandpointe Avenue, Suite 600
Santa Ana, CA 92707

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City of Salinas
Basic Financial Statements
For the Year Ended June 30, 2023

Table of Contents

Page

INTRODUCTORY SECTION

Letter of Transmittal ................................................................................................................................................... i Organizational Chart ................................................................................................................................................ vii List of City Officials ............................................................................................................................................... viii

FINANCIAL SECTION

Independent Auditors’ Report ................................................................................................................................ 1

Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ....................... 5

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position .......................................................................................................................... 20 Statement of Activities .............................................................................................................................. 22

Fund Financial Statements:

Governmental Funds:

Balance Sheet ...................................................................................................................................... 28 Reconciliation of the Governmental Funds Balance Sheet to the Government- Wide Statement of Net Position ................................................................................................... 31 Statement of Revenues, Expenditures, and Changes in Fund Balances .............................................. 32 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Position ........................................................................................ 34

Proprietary Funds:

Statement of Net Position ................................................................................................................... 36 Statement of Revenues, Expenses, and Changes in Fund Net Position .............................................. 38 Statement of Cash Flows .................................................................................................................... 40

Fiduciary Funds:

Statement of Fiduciary Net Position ................................................................................................... 47 Statement of Changes in Fiduciary Net Position ................................................................................ 48

Notes to the Basic Financial Statements ............................................................................................................... 55

City of Salinas
Basic Financial Statements
For the Year Ended June 30, 2023

Table of Contents (Continued)

Page
FINANCIAL SECTION (Continued)

Required Supplementary Information (Unaudited):

Budgetary Information ................................................................................................................................... 139 Budgetary Comparison Schedules
General Fund ........................................................................................................................................... 142 American Rescue Plan Act Special Revenue Fund ................................................................................. 143 Housing and Urban Development Grants Special Revenue Fund ........................................................... 144 Schedule of Changes in Net Pension Liability and Related Ratios – Miscellaneous Plans ........................... 145 Schedule of Pension Plan Contributions – Miscellaneous Plan ..................................................................... 146 Schedule of Changes in Net Pension Liability and Related Ratios – City Police Plans ................................ 147 Schedule of Pension Plan Contributions – City Police Plans ........................................................................ 148 Schedule of Changes in Net Pension Liability and Related Ratios – City Fire Plans .................................... 149 Schedule of Pension Plan Contributions – City Fire Plans ............................................................................ 150 Schedule of Changes in Net Pension Liability and Related Ratios – Single Employer Plan......................... 151 Schedule of Pension Plan Contributions – Single Employer Plan ................................................................. 152 Schedule of Changes in Net OPEB Liability and Related Ratios .................................................................. 153 Schedule of OPEB Contributions .................................................................................................................. 154

Supplementary Information:

Combining and Individual Fund Statements and Schedules:

Nonmajor Governmental Funds:

Combining Balance Sheet Nonmajor Governmental Funds ............................................................. 157 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds .......................................................................... 158

Nonmajor Special Revenue Funds:

Special Revenue Funds Header
Combining Balance Sheet Special Revenue Funds .......................................................................... 161 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Special Revenue Funds ....................................................................................... 165

Nonmajor Debt Service Funds:

Debt Service Funds Header
Combining Balance Sheet Debt Service Funds ................................................................................ 170 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Debt Service Funds ............................................................................................. 172

Nonmajor Capital Projects Funds:

Capital Projects Funds Header
Combining Balance Sheet Capital Projects Funds ............................................................................ 177 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Capital Projects Funds ......................................................................................... 178 City of Salinas
Basic Financial Statements
For the Year Ended June 30, 2023

Table of Contents (Continued)

Page

FINANCIAL SECTION (Continued)

Supplementary Information (Continued):

Internal Service Funds:

Description of Internal Service Funds ............................................................................................... 179 Combining Statement of Net Position ............................................................................................... 181 Combining Statement of Revenues, Expenses, and
Changes in Net Position ............................................................................................................... 183 Combining Statement of Cash Flows ................................................................................................ 184

Fiduciary Funds:

Description of Fiduciary Funds ......................................................................................................... 187 Private Purpose Trust Funds:

Combining Statement of Fiduciary Net Position........................................................................ 189 Combining Statement of Changes in Fiduciary Net Position ..................................................... 190

Custodial Funds:

Description of Custodial Funds ......................................................................................................... 191 Combining Statement of Fiduciary Net Position ............................................................................... 193 Combining Statement of Changes in Fiduciary Net Position ............................................................ 194

General Fund:

Combining Balance Sheet – General, Measure E, & Measure G Funds ........................................... 195 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – General, Measure E, & Measure G Funds .................................................................................................. 196 Budgetary Comparison Schedule - Measure E .................................................................................. 197 Budgetary Comparison Schedule - Measure G ................................................................................. 198

Other Information (Unaudited):

Claims Development – Internal Service Funds – General Liability Insurance ........................................ 200 Claims Development – Internal Service Funds – Workers Compensation Insurance ............................. 202

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October 4, 2024

Honorable Mayor and Members of the City Council
City of Salinas, California

We are pleased to present the City of Salinas ’s (City) Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2023. Although formally submitted to the Mayor and City Council (Council), the ACFR is also intended to provide relevant financial information to the residents of Salinas, taxpayers, creditors, investors, and other interested parties.

This letter of transm ittal provides a non-technical summar y of City fina nces, services, achievements, and economic prospects. We ask that readers who wish a more detailed discussion of the City’s financial results refer to the Mana gement’s Discussion & Analysis contained in the Financial Section of the ACFR.

City Administration is responsible for the accuracy of the information contained in this report, the adequacy of its disclosures, and the fairness of its presentation. We believe this ACFR to be complete and reliable in all ma terial respects. To provide a reasonable basis for making this representation, we have establis hed a comprehensive sy stem of internal co ntrols designed to protect City assets from loss, to identify and record transactions accurately, and to compile the information necessary to produce financial statem ents in conformity with generally accepted accounting principles.

The City contracted with The Pun Group, LLP, a firm of Certified Public Accountants licensed to practice in the State of California, to perform the annual independent audit. The auditors expressed an opinion that the City’s fina ncial statements for Fiscal Y ear 2022-2023 (FY 22-23) are fairly stated in conformity with accounting principles generally accepted in the United States. This is the most favorable conclusion and is commonly known as an “unmodi fied” or “clean” opinion. The independent auditors’ report is included in the Financial Section of this report.

In addition, The Pun Group LLP performs an audit of the City’s major program expenditures of federal funds for compliance with the requirement s described in the U.S. Office of Management and Budget’s OMB Compliance Supplement, and the standards applicable to financial audits contained in Government Auditing Standards is sued by the Comptroller General of the United States. The report of the Single Audit is pub lished separately from this ACFR and, when completed, can be obtained from the City of Salinas’ website at https://www.cityofsalinas.org/Your-Government/Departments/Finance/Annual-Comprehensive- Financial-Reports-ACFR.

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This ACFR is organized into two sections:

I. The Introductory Section includes the table of contents, letter of transmittal, listing of elected officials, C ity administrative personnel, and an organization chart delineating organizational structure.

II. The Financial Section includes the Independe nt Auditors’ opinion, the MD&A, the basic financial statements, notes to the financial statements, combining statements of non-major funds, and required supplemental 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 new 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 was incorporated as a charter City on March 4, 1874 and opera tes 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 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 fire, Public Works - maintenance serv ices (streets, lighting, signals, facilities, parks and trees), development and perm it services, current and adva nced planning and traffic and facilities engineering, Library, Recreation and General administrative servi ces. Business-type City services include: a Municipal Airport, Industrial Waste system, Sanitary Sewer, Water Utility and a Parking District. The State Department of Finance reports the City’s population at 159,475 as of January 1, 2023. The City FY 2022-23 budget includes 633.50 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. The City also offe rs skilled nursing and convalescent homes and residential retirement facilities for seniors, as well as over 220 practicing physicians.

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Fire protection and basic and adva nced 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 a nd 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 Comp lex and the National Steinbeck Center. Surrounding Salinas are diverse recreational opportunities including beauti ful beaches and the world famed golf courses of the Monterey Bay Peninsula.

As the retail hub of the Central Co ast, 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, Sears, Best Buy and J.C. Penney. Harden Ranch Plaza includes Wal-Mart, Target, Safeway, specialty stores, restaurants, and bank ing 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

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

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ECONOMIC CONDITIONS AND FISCAL OUTLOOK
While Salinas Valley continues to show overall positive economic performance, several potential indicators of a future economic weakening have begun. These economic indicators include a slow- down in the local real estate market and raisi ng unemployment rates. While employment figures continue to be relative ly strong in Salinas, layoffs have begun impacting unemployment rates in its surrounding areas.

The unemployment rate for the county and Salinas Metropolitan 1 area for June 2024 was 5.7%, which was lower than the 9.2% in May 2024 and higher than the prior year unemployment rate of

5.5%. However, the June 2024 Salinas Metropolitan Statistical Area unemployment rate continued to be higher than the unadjusted unemployment rate for the State (4.8%) and the nation (3.8%)2.

The City closed FY 22-23 with a net $15.4 million General Fund surplus due to a variety of factors discussed in the MD&A. General Fund revenues (not including transfers in) increased 5.0% from the prior year. Sales tax revenues remain the la rgest and most consiste nt source of support for General Fund operations, comprising approximate ly 54.4% of General Fund revenues in FY 22-

23. For FY 22-23, sales tax receipts of $91.6 million were $2.7 million higher than the prior year’s collection. The City’s Measures E and G Sales and Use Tax continued to perform well as the economy rebounds from the effects of COVID-19.

The City also relies heavily on property ta x revenues to support General Fund operations, comprising approximately 22.0% of General Fund revenues in FY 22-23. For FY 22-23, property tax receipts of $37.1 million were $1.4 million higher than the prior year’s collection. Property tax revenues were supported by the continued desirability of the City, its environment, and culture.

In addition to the City’s revenue sources, the Ci ty benefited from the Federal American Rescue Plan Act (ARPA). The Act allocated $51,567,313 to the City over a two-year period. The City has received both payments.

As with most municipalities, serv ices are provided directly by employees to the City’s residents, businesses, and visitors. As a serv ice delivery enterprise, the cost of salaries and benefits are a significant portion of the City’s expenditures. Sa laries are largely dictat ed by regional market forces as evidenced by fierce competition for workforce in the San Francisco Bay Area, and inflationary pressures nationwide. During FY 22-23, the City successfully completed negotiations with six labor groups. While important for consistent delivery of high-quality services for the City, these actions further contribute to the structural deficit between revenues and expenditures.

The City also continues to adjust and prepare for pension employer costs to continue to be a primary expense in conjunction with salaries. Th e City’s pension plans over the past several decades, like all other CalPERS participants, have experienced changes in actuarial assumptions, demographic changes, and volatile investment returns which have outweighed any positive plan experiences. The outcome of these unfavorable economic and demogra phic conditions is the creation of unfunded pension and Other Post-Empl oyment Benefits (OPEB) obligations for the City.

1 State of California, Employment Development Department, Labor Market Information Division 2 Monthly EDD Press Release

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According to the 2022 CalPERS actuarial valuations , the unfunded accrued liability for pensions was $234 million and $15.5 million for OPEB as of June 30, 2022.

To address the escalation in OPEB costs, current and previous Councils have worked to curb cost escalation in Other Post-Employment Benefits (O PEB). In 2020, the City initiated prefunding of retiree healthcare benefits and has since establis hed approximately $7 million in OPEB assets as of June 30, 2023.

For detailed information about the City employees’ retirement plan, please refer to Note 17 of the Notes to Basic Financial Statem ents Section. For detailed info rmation about the City OPEB obligations please refer to Note 18 of the Notes to Basic Financial Statements Section.

Despite revenue constraints a nd increasing costs associated with unfunded federal and state mandates, the City has managed to maintain hi gh service levels and ba lanced budgets through prudent fiscal management.

MAJOR CAPITAL PROJECT INITIATIVES
The City maintains a multi-yea r forecasting model for operating revenues and expenditures and also produces a six-year capital plan. The multi-year forecast is regularly updated to reflect current revenue and expenditure assumptions and is presented to the City Council during the budget process for the next fiscal year.

Major capital asset and infrastructure initiatives we re once again the priority for the fiscal year.

Approximately $16.2 million in City infrastructur e and other capital asset improvements and contributions were invested in FY 22-23, in cluding $7.1 million in land acquisition and $3.9 million in equipment. In addition, $4.8 million was invested in construction in progress including, roads, storm drains, park, building improvements, and City revitalization efforts.

Additional infrastructure improvements are schedul ed in accordance with the City’s approved Capital Improvement Plan and will continue into future years. All of these improvements are funded either through gr ants, appropriations car ried over from prio r years, and/or new appropriations during the budget development process as approved by City Council policy

Single Audit

As a recipient of federal, state and county funding, the City is responsible for providing assurance that adequate internal controls are in place to ensure compliance with applicable laws and regulations relating to these awar d programs. Internal controls ar e subject to periodic evaluation by management and the City’s external independent auditors.

As part of the City’s single audit procedures, tests are performed to assess the effectiveness of its internal controls over major fe deral award programs and the City ’s compliance with applicable laws and regulations related to these award programs.

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City of Salinas
Organization Chart

viii
City of Salinas
List of Principal Officials

FINANCIAL SECTION

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200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707

INDEPENDENT AUDITORS’ REPORT

To the Honorable Mayor and Members
of the City Council of the City of Salinas
Salinas, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Salinas, California (the “City”), as of and for the year ended June 30, 2023, and the related notes to the basic financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“GAAS”) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matters

Implementation of GASB Statement No. 96

As described in Notes 1I, 11, and 13 to the financial st atements, the City implemented GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs). The implementation of GASB Statement No. 96 requires the City to record intangible “right-to-use” assets and corresponding liabilities for SBITAs in excess of one year. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

To the Honorable Mayor and Members
of the City Council of the City of Salinas
Salinas, California

2 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
 Exerc
ise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a tes
t basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and ti
ming of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Ana
lysis, Budgetary Comparison Schedules, Schedules of Changes in Net Pension Liability and Related Ratios, Schedules of Proportionate Share of the Net Pension Liability and Related Ratios, Schedules of Pension Contributions, Schedule of Changes in Net OPEB Liability and Related Ratios, and Schedule of OPEB Contributions be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

To the Honorable Mayor and Members
of the City Council of the City of Salinas
Salinas, California

3 Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Combining and Individual Fund Statements and Schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Statements and Schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and the Claims Development for In ternal Service Funds Schedules but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our report dated October 4, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Santa A
na, California
October 4, 2024

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CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited)
Fiscal Year Ended June 30, 2023

5 This section of the City of Salinas (City) A nnual Comprehensive Financial Report provides an overview of the City’s financial activities for th e fiscal year ended June 30, 2023. Readers are encouraged to consider the information presented here in conjunction with the accompanying letter of transmittal, the basic financial statements, and the accompanying notes to the financial statements.

A. FINANCIAL HIGHLIGHTS
 On June 30, 2023, the City’s net position (excess of assets and deferred outflows of resources over liabilities and deferred inflows of resources) was $245.7 million. Of this amount, $341.9 million is invested in capital assets and restricted assets, which is offset by a deficit of $96.3 million of unrestricted assets.
 During the fiscal year ended June 30, 2023, the City ’s total net position increased by $19.6 million from $226.1 million to 245.7 million.
 During the fiscal year, fund balances i n creased $22.9 million to $166.2 million for governmental funds, of which $148.2 million is either nonspendable, restricted, committed, or assigned, leaving $18.0 million as unassigned.
 During the fiscal year the General Fund, Measure E, and Measure G fund balance increased by $15.4 million to $85.4 million of which $63.3 million is either nonspendable, restricted, committed, or assigned. Unassigned General Fund, Measure E & Measure G fund balance was $22.1 million.
 The City’s total capital assets decreased $4.7 million from $407.2 million to $402.5 million.

B. OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements, which is 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 gove rnment is financially accountable.

This report also contains othe r supplementary information in addition to the basic financial statements for further information and analysis.

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year Ended June 30, 2023
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 (includi ng 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 accr ual 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 ne t 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 development, public works, recreation, and library. Property ta xes, 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 pa rt 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, Sanitary Sewer, Permit Service, and Parki ng District are reported as business-type activities.

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year Ended June 30, 2023

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 govern mental funds are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The proprietary funds are prepared using the economic resource s measurement focus and the accrual basis of accounting. The fiduciary funds are agency funds, pension trust funds 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 govern mental 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 repor t 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, Sanitary Sewer, Per mit Services and Parking 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 busine ss-type activities, they have b een included within governmental activities in the Government-Wide Financial Statements.

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year Ended June 30, 2023

8 Proprietary funds provide the sa me type of information as the Government-Wide Financial Statements, only in more detail. All enterprise f unds are presented in detail as major enterprise funds. The internal service funds are combined into a single aggregated presentation in the proprietary fund financial statem ents. 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 fiduciary activities are reported in separate Statements of Fiduciary Net Position. These activities are excluded from the City ’s other financial st atements 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 Devel opment Fees major special revenue fund, and information concerning the progre ss in funding its obligation to pr ovide pension benefits to its employees.

Other Supplementary Information
Combining statements for the other non-major governmental funds, Internal Service Funds, Fiduciary Funds and General, Measure E a nd 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 $19.6 million (8.7%) over the prior year from $226.1 to $245.7 million.

At June 30, 2023, the largest portion of net position consists of the City’s net investment in capital assets. This component is the total amount of funds required to acquire those assets less any related outstanding debt used for such ac quisition. The City uses these capita l assets to provide services to residents. The capital assets of the City are not sources of income for repayment of debt as most assets are not revenue generati ng and generally are not liquidate d to repay debt. Debt service payments are funded from other resources available to the City.

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year Ended June 30, 2023

9 A condensed Statement of Net Position shown below totals $245,668,327 as of June 30, 2023.

Percent
2023 2022 2023 2022 2023 2022 of Total
Assets:

Current assets 270,896,188 $ 263,740,852 $ 13,490,935 $ 13,770,688 $ 284,387,123 $ 277,511,540 $ 40.7 % Other assets 6,683,630 8,025,010 4,732,209 5,161,303 11,415,839 13,186,313 1.6 % Capital assets, net 334,557,660 334,963,510 67,974,348 72,245,474 402,532,008 407,208,984 57.7 % Total assets 612,137,478 606,729,372 86,197,492 91,177,465 698,334,970 697,906,837 100.0 % Deferred outflows of resources
Related to pension and OPEB 81,956,802 38,677,100 2,111,334 924,257 84,068,136 39,601,357 99.3 % Loss on refunding of debt 486,668 513,705 94,464 103,051 581,132 616,756 0.7 % Total deferred outflow s of resources 82,443,470 39,190,805 2,205,798 1,027,308 84,649,268 40,218,113 100.0 % Liabilities:

Current liabilities 13,246,052 10,338,086 1,484,650 1,040,506 14,730,702 11,378,592 2.9 % Other liabilities 53,124,477 63,428,897 - - 53,124,477 63,428,897 10.5 % LTD - due in one year 18,315,045 17,738,848 1,796,577 1,746,577 20,111,622 19,485,425 4.0 % Long-term liabilities 391,904,153 308,075,303 26,814,267 25,896,303 418,718,420 333,971,606 82.6 % T otal liabilities 476,589,727 399,581,134 30,095,494 28,683,386 506,685,221 428,264,520 100. 0 % Deferred inflows of resources
Related to pension, OPEB and leases 24,758,990 76,477,688 5,871,700 7,302,468 30,630,690 83,780,156 100.0 % Total deferred inflow s of resources 24,758,990 76,477,688 5,871,700 7,302,468 30,630,690 83,780,156 100.0 % Net Position:

Net investment in capital assets 212,511,725 204,559,079 45,330,812 47,973,525 257,842,537 252,532,604 105.0 % Restricted 84,106,986 76,573,216 - - 84,106,986 76,573,216 34.2 % Unrestricted (103,386,480) (111,270,940) 7,105,284 8,245,394 (96,281,196) (103,025,546) (39.2)% Total Net Position 193,232,231$ 169,861,355$ 52,436,096$ 56,218,919$ 245,668,327$ 226,080,274$ 100.0 % G overnmental Activities Business-type Activities Total

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year ended June 30, 2023
10 Statement of Activities
Below is a table of the current and prior fiscal year recap of the changes in net position. The entire Statement of Activities can be reviewed on pages 22-23.

Total revenues decreased from the prior year by $0.1 million, or 0.0% and total expenses increased by $5.8 million from prior year, or 2.9%. Further analysis is provided within the governmental and business-type activities sections.
2023 2022 2023 2022 2023 2022
Rev enues
Program Revenues:

Charges for S ervices 12,222,052$ 12,087,995$ 11,454,936$ 13,657,537$ 23,676,988$ 25,745,532$ Operating G rants & Contributions 26,805,202 28,921,586 - - 26,805,202 28,921,586 Capital G rants & Contributions 10,065,411 14,445,606 - - 10,065,411 14,445,606 G eneral Revenues:

Taxes 161,520,871 157,348,620 - - 161,520,871 157,348,620 Unrestricted Investment Earnings 6,345,564 (1,572,611) 503,455 (37,810) 6,849,019 (1,610,421) G ain on Disposal of Assets (47,200) (34,879) (2,402,411) - (2,449,611) (
34,879)
Payment from Fiduciary Fund - - 949,242 951,900 949,242 951, 900
Miscellaneous 262,753 1,220,103 866,357 1,662,671 1,129,110 2,882,774 Total Revenues 217,174,653 212,416,420 11,371,579 16,234,298 228,546,232 228,650,718 Ex p e n s e s
G eneral G overnment 26,298,588 43,209,427 3,250,011 3,386,841 29,548,599 46,596,268 Public S afety 101,997,548 91,246,533 - - 101,997,548 91,246,533 Public Works 43,345,510 34,883,172 11,733,626 11,549,620 55,079,136 46,432,792 Recreation 11,112,292 8,022,645 - - 11,112,292 8,022,645 Library 6,177,286 5,377,321 - - 6,177,286 5,377,321 Interest 4,371,939 4,808,025 671,380 709,198 5,043,319 5,517,223 Total Expenses 193,303,163 187,547,123 15,655,017 15,645,659 208,958,180 203,192,782 Increase (decrease) in Net Position
before Contributions and
Transfers 23,871,490 24,869,297 (4,283,438) 588,639 19,588,052 25,457,936 Transfers (500,615) 4,243,402 500,615 (4,243,402) - - (500,615 ) 4 ,243,402 500,615 (4,243,402 ) - -
Increase (decrease) in Net Position 23,370,875 29,112,699 (3,782,823) (3,654,763) 19,588,052 25,457,936 Net Position - Beginning of Year 169,861,355 116,252,267 56,218,919 84,870,502 226,080,274 201,122,769 Prior Period Ad ju stment - 24,496,389 -
(24,996,820) -
(500,431)
Net Position -
Beginning of Year as restated 169,861,355 140,748,656 56,218,919 59,873,682 226,080,274 200,622,338 Net Position - Ending 193,232,230$ 169,861,355 $ 52,436,096 $ 56,218,919$ 245,668,326$ 226,080,274 $ G overnmental Activities Business-type Activities Total

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year ended June 30, 2023

11 Governmental Activities
Governmental activities resour ces total $217.2 million. The City’s governmental activities increased net position by $23.4 million. The followi ng charts highlight the sources of revenues and purpose of expenses:

Total expenses for governmental activities, excl uding transfers and cont ributions, were $193.3 million including interest on long-term debt of $4.4 million.

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year ended June 30, 2023
12 The below table represents the total cost of each of the City’s governmental and business-type activities as well as each activity’s net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost shows the financial commitment that was placed on the City’s taxpayers by each of these functions.

Public safety continues to be the single highest expense fo r the City followed by public works.

Net cost of services, after subtracting fees and grant revenues, total $144.2 million.

Business-Type Activities
The City’s business-type activities net position was $52.4 million, a decrease of $3.8 million for the fiscal year. Total revenues for business-type activities were $11.4 million. Total expenses for the business-type activities were $15.7 million during FY 2022-23.

Total Cost of
Services Percent
Net Cost of
Services Percentage
General government 26,298,588$ 13.6 % 2,980,124$ 2.1 % Public safety 101,997,548 52.8 % 97,734,106 67.8 %
Public works 43,345,510 22.4 % 23,146,312 16.1 %
Recreation 11,112,292 5.7 % 10,157,949 7.0 %
Library 6,177,286 3.2 % 5,820,068 4.0 %
Interest 4,371,939 2.3 % 4,371,939 3.0 %
Total 193,303,163$ 100 % 144,210,498$ 100 %
Airport Industrial
Waste
Sanitary
Sewer
Downtown
Parking
Permit
Services
Revenue $1.98 $2.19 $3.69 $0.72 $2.88
Expense $2.54 $2.56 $4.48 $2.16 $3.25
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
Business -Type Activities
Revenues, Expenses (in millions)
June 30, 2023

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year ended June 30, 2023

13 D. FUND FINANCIAL STATEMENT ANALYSIS
The City uses fund accounting to ensure and de monstrate 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 $166.2 million. Of the total fund balance, $4.2 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, $87.3 million was restricted fund balance, the use of which is constrained by external parties, resource providers, or enabling legislations. Fund balance of $38.2 million was committed by City Council for specific purposes.

The remainder of the restrictions are listed in the Fund Balance footnote.

The General Fund is the chief operating fund of the City. The General, Measure E and Measure G Funds’ fund balance increased by $15.4 million in FY 2022-23 to $85.4 million, of which $2.8 million was nonspendable and indicates the resour ces are nonspendable advances and are not anticipated to be liquidated in the near -term. The $36.1 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 $18.4 million has been allocated by the City Council for specific capital and operational needs while $6.0 million is categorized as restricted. The remaining fund balance of $22.1 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 (Unaudited) (Continued) Fiscal Year ended June 30, 2023
14 E. GENERAL FUND BUDGETARY HIGHLIGHTS
The final amended General, Measure E, and Measure G Fund revenue budget, including transfers in, totaled $167.7 million and th e expenditure budget totaled $199.9 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 adju sted upward by $34.4 million, of which $24.8 million were related to transfers for capital project s and $9.6 million in operatio nal changes. Estimated revenues were not adjusted.

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, 2023 and 2022:

Capital assets, including infrastructure assets of the City, are those assets which are used in the performance of the City’s functi ons. At June 30, 2023, net capital assets of the Governmental Activities totaled $334.6 million and the net capital a ssets of the Business-type Activities totaled $68.0 million. Finance Departme nt staff maintains and updates th e Capital Assets inventory by recording all assets acquired or retired at the e nd of every fiscal year and performs rotating spot inventories each year. The City has elected to report and depreciate all infrastructures.

Further details on the City’s capital assets can be found in Note 11 to the financial statements. 2023 2022 2023 2022 2023 2022
Land 32,983,126$ 25,899,986$ 3,630,695$ 3,632,339$ 36,613,821$ 29,532,325$ Buildings 135,129,108 135,129,108 25,888,821 25,888,821 161,017,929 161,017,929 Improvements 50,677,352 50,677,352 15,970,700 15,461,105 66,648,052 66,138,457 Equipment 49,191,952 45,951,417 7,796,234 7,779,509 56,988,186 53,730,926 Infrastructure 422,055,987 421,150,155 102,709,198 102,709,198 524,765,185 523,859,353 Right-to-u se assets 960,749 539,511 - - 960,749 539,511 Construction in Progress 28,032,297 24,424,091 1,621,929 2,947,566 29,654,226 27,371,657 719,030,571 703,771,620 157,617,577 158,418,538 876,648,148 862,190,158 Accumulated
depreciation/amortizatio (384,472,911) (368,808,110) (89,643,229) (86,173,064) (474,116,140) (454,981,174) 334,557,660$ 334,963,510 $ 67,974,348 $ 72,245,474$ 402,532,008$ 407,208,984 $ City of Salinas' Capital Assets
G overnmental Activities Business-type Activities Totals

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year ended June 30, 2023

15 Long-Term Obligations
As of June 30, 2023, the City had $438.8 million in long-term debt.

Further details on the City’s long-term debt can be found in Note 13 to the financial statements.

G. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The City’s underlying structural deficit reported last year has improved. The main reason for the structural deficit, where the expenditure growth exceeds the revenue growth continually each year, is a result of the compensation costs growing fa ster than the projected revenue. Controlling the main cost drivers of wages, pension, health insurance, and workers’ compensation continues to be the key to managing this projected problem. Additionally, the position of the nation, state and local economy, and any recessionary factors, will influence future budgets. The City continues to work on the Salinas Plan and hopes to achieve savings in those recommendations that have been implemented or are in progress.

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 and are described in more detail in the Salinas Plan.

2023 2022 2023 2022 2023 2022
Annual leave 11,945,666$ 11,624,942$ 517,316$ 547,887$ 12,462,982$ 12,172,829$ Ins urance claims 31,977,619 31,290,195 - - 31,977,619 31,290,195 Leas e liability 51,414,419 56,058,302 8,413,000 9,012,000 59,827,419 65,070,302 Subs criptions 270,804 - - - 270,804 - Loans and notes - - 1,015,000 1,493,000 1,015,000 1,493,000 Revenue bonds - - 13,310,000 13,870,000 13,310,000 13,870,000 Certificates of
Participation 56,590,000 59,295,000 - - 56,590,000 59,295,000 Assessm ent Di stri ct
Bonds 7,715,000 8,290,000 - - 7,715,000 8,290,000 Unam ortized bond
premium 6,373,471 7,092,128 - - 6,373,471 7,092,128 Unam ortized bond
discount (317,759) (330,999) - - (317,759) (330,999) Subtotal 165,969,220 173,319,568 23,255,316 24,922,887 189,224,536 198,242,455 Net OPEB liability 14,555,540 16,238,956 974,677 819,308 15,530,217 17,058,264 Net pens ion liability 229,694,438 136,255,627 4,380,851 1,900,685 234,075,289 138,156,312 Total outstanding debt 410,219,198$ 325,814,151$ 28,610,844$ 27,642,880$ 438,830,042$ 353,457,031$ G
overnm ental Activities Business-type Activities Totals City of Salinas Outstanding Debt

CITY OF SALINAS
Management’s Discussion and Analysis (Unaudited) (Continued) Fiscal Year ended June 30, 2023
16 Major Projects and Funding
Amid challenges, the City continues deploying funds for various projects City-wide. The City appropriated $51.6 million in American Rescue Plan Act (ARPA) funds for 19 projects in the following four areas: public facility improvements, public infrastructure, investments in water and sewer, and to address homelessness and housing issues.

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 Sa linas Finance Departme nt, 200 Lincoln Avenue, Salinas, California 93901.

BASIC FINANCIAL STATEMENTS
17 This page intentionally left blank.
18 GOVERNMENT-WIDE FINANCIAL STATEMENTS
19 Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:

Cash and investments 231,490,842 $ 16,186,214 $ 247,677,056 $ Receivables, net of allowance:

Accounts receivable, net 482,206 1,530,352 2,012,558 Taxes receivable 18,380,898 - 18,380,898 Assessments receivable 7,715,000 - 7,715,000 Due from outside agencies 4,963,504 - 4,963,504 Leases receivable 514,671 429,084 943,755 Interest receivable 2,561,445 132,907 2,694,352 Internal balances:

Due from (to) other funds 2,002,622 (2,002,622) - Advances to (from) other funds 2,785,000 (2,785,000) - Total current assets 270,896,188 13,490,935 284,387,123 Noncurrent assets:

Restricted cash and investments 263,442 6,977 270,419 Receivables, net of allowance:

Loans receivable 70,526 - 70,526 Leases receivable 4,969,662 4,725,232 9,694,894 Land and properties held for resale 1,380,000 - 1,380,000 Capital assets:

Non-depreciable 61,015,423 5,252,624 66,268,047 Depreciable, net 273,542,237 62,721,724 336,263,961 Total capital assets 334,557,660 67,974,348 402,532,008 Total noncurrent assets 341,241,290 72,706,557 413,947,847 Total assets 612,137,478 86,197,492 698,334,970

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 77,084,124 1,785,046 78,869,170 Related to OPEB 4,872,678 326,288 5,198,966 Loss on refunding of debt 486,668 94,464 581,132 Total deferred outflows of resources 82,443,470 2,205,798 84,649,268 June 30, 2023
Statement of Net Position
City of Salinas
Primary Government
See accompanying Notes to the Basic Financial Statements. 20 Governmental Business-Type
Activities Activities Total

LIABILITIES
Current liabilities:

Accounts payable 12,615,804 1,183,964 13,799,768 Interest payable 600,895 246,131 847,026 Deposits payable 29,353 54,555 83,908 Unearned revenue 53,124,477 - 53,124,477 Long-term debt - due within one year 8,341,358 1,687,000 10,028,358 Compensated absences - due within one year 2,389,880 109,577 2,499,457 Insurance claims payable - due within one year 7,583,807 - 7,583,807 Total current liabilities 84,685,574 3,281,227 87,966,801 Noncurrent liabilities:

Long-term debt - due in more than one year 113,704,577 21,051,000 134,755,577 Compensated absences - due in more than one year 9,555,786 407,739 9,963,525 Insurance claims payable - due in more than one year 24,393,812 - 24,393,812 Net pension liability 229,694,438 4,380,851 234,075,289 Net OPEB liability 14,555,540 974,677 15,530,217 Total noncurrent liabilities 391,904,153 26,814,267 418,718,420 Total liabilities 476,589,727 30,095,494 506,685,221

DEFERRED INFLOWS OF RESOURCES
Related to pensions 7,869,794 172,757 8,042,551 Related to OPEB 11,590,136 776,106 12,366,242 Related to leases 5,299,060 4,922,837 10,221,897 Total deferred inflows of resources 24,758,990 5,871,700 30,630,690

NET POSITION
Net investment in capital assets 212,511,725 45,330,812 257,842,537 Restricted for:

Housing 4,078,249 - 4,078,249 Capital projects 10,177,262 - 10,177,262 Public safety 2,353,498 - 2,353,498

Highways and streets 30,225,805 - 30,225,805 Debt service 4,715,120 - 4,715,120 Special programs 32,557,052 - 32,557,052 Total restricted 84,106,986 - 84,106,986 Unrestricted (deficit) (103,386,480) 7,105,284 (96,281,196) 193,232,231$ 52,436,096$ 245,668,327$ Total net position Primary Government
City of Salinas
Statement of Net Position (Continued)
June 30, 2023
See accompanying Notes to the Basic Financial Statements. 21 Operating Capital
Charges for Grants an d Grants and
Functions/Programs Expenses Services Contributions Contributions Total Primary government:

Governmental activities:

General government 26,298,588$ 4,917,588 $ 16,944,474 $ 1,456,402 $ 23,318,464 $ Public safety 101,997,548 2,180,226 2,083,216 - 4,263,442 Public works 43,345,510 4,505,747 7,084,442 8,609,009 20,199,198 Recreation 11,112,292 595,507 358,836 - 954,343
Library 6,177,286 22,984 334,234 - 357,218
Interest on long-term debt 4,371,939 - - - -
Total governmental activities 193,303,163 12,222,052 26,805,202 10,065,411 49,092,665 Business-type activities:

Airport 2,535,920 1,977,729 - - 1,977,729
Industrial Waste 2,556,385 2,186,214 - - 2,186,214
Sanitary Sewer 4,484,055 3,686,248 - - 3,686,248
Downtown Parking District 2,157,266 724,955 - - 724,955 Permit Services 3,250,011 2,879,790 - - 2,879,790
Total business-type activities 14,983,637 11,454,936 - - 11,454,936 Total primary government 208,286,800$ 23,676,988 $ 26,805,202 $ 10,065,411 $ 60,547,601 $ City of Salinas
Statement of Activities
For the Year Ended June 30, 2023
Program Revenues
See accompanying Notes to the Basic Financial Statements. 22 Governmental Business-Type
Functions/Programs Activities Activities Total
Primary government:

Governmental activities:

General government (2,980,124)$ - $ (2,980,124)$ Public safety (97,734,106) - (97,734,106) Public works (23,146,312) - (23,146,312) Recreation (10,157,949) - (10,157,949) Library (5,820,068) - (5,820,068) Interest on long-term debt (4,371,939) (671,380) (5,043,319) Total governmental activities (144,210,498) (671,380) (144,881,878) Business-type activities:

Airport - (558,191) (558,191) Industrial Waste - (370,171) (370,171) Sanitary Sewer - (797,807) (797,807) Downtown Parking District - (1,432,311) (1,432,311) Permit Services - (370,221) (370,221) Total business-type activities - (3,528,701) (3,528,701) Total primary government (144,210,498) (4,200,081) (148,410,579) General Revenues and Transfers:

General revenues:

Taxes:

Sales taxes 91,620,947 - 91,620,947 Property taxes 37,124,386 - 37,124,386 Motor vehicle in lieu 165,620 - 165,620 Utility user tax 12,766,039 - 12,766,039 Franchise tax 9,717,168 - 9,717,168 Business tax 6,902,315 - 6,902,315 Transient occupancy tax 3,224,396 - 3,224,396 Other taxes - - - Total taxes 161,520,871 - 161,520,871 Revenue from Fiduciary Funds - 949,242 949,242 Investment earnings 6,345,564 503,455 6,849,019 Gain (loss) on sale of capital assets (47,200) (2,402,411) (2,449,611) Miscellaneous revenue 262,754 866,357 1,129,111 Transfers (500,615) 500,615 -
Total general revenues and transfers 167,581,374 417,258 167,998,632 Change in net position 23,370,876 (3,782,823) 19,588,053 Net Position:

Beginning of year 169,861,355 56,218,919 226,080,274 End of year 193,232,231$ 52,436,096 $ 245,668,327 $ For the Year Ended June 30, 2023
Statement of Activities (Continued)
City of Salinas
Net (Expense) Revenue
and Changes in Net Position
See accompanying Notes to the Basic Financial Statements. 23 This page intentionally left blank.
24 FUND FINANCIAL STATEMENTS
25 This page intentionally left blank.
26 GOVERNMENTAL FUNDS FINANCIAL STATEMENTS
General Fund - This fund accounts for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. This fund supports essential City services such as police and fire protection, street maintenance, libraries, parks, and open space maintenance.

SPECIAL REVENUE FUNDS
Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for specified purposes. The following funds have been classified as major special revenue funds:

American Rescue Plan Act (ARPA) Special Revenue Fund - On March 11, 2021, President Biden signed the American Rescue Plan Act, which will provide the City with approximately $51 million in relief funds. This fund accounts for the revenues and expenditures of ARPA proceeds.

Housing and Urban Development Grant Special Revenue Fund - 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.

CAPITAL PROJECTS FUNDS
Capital Projects Fund - 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.

DEBT SERVICE FUNDS
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. 27 American Housing 2019 Special
Rescue Plan Act and Urban Tax Bond
(ARPA) Development Grant Capital Monte Bella
General Special Revenue Special Revenue Projects Debt Service Fund Fund Fund Fund Fund
ASSETS
Cash and investments 79,058,186$ 43,959,341$ 6,049,056$ 2,000,000$ 895,849$ Receivables, net:

Accounts 399,512 - - - -
Taxes 18,380,898 - - - -
Interest 1,087,380 - 18,115 - -
Due from outside agencies - - 1,587,644 - -
Assessments - - - - 7,175,000
Leases 1,676,984 - - - -
Due from other funds 8,403,525 - - 1,387,453 -
Advances to other funds 2,785,000 - - - -
Loans and notes receivable, net of allowance - - 53,956 - - Land and properties held for resale - - - - -
Total assets 111,791,485$ 43,959,341$ 7,708,771$ 3,387,453$ 8,070,849$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 7,691,371$ 1,776,476$ 421,969$ 1,387,453$ -$ Due to other funds 17,086,094 - 3,097,712 - -
Deposits payable 29,353 - - - -
Unearned revenues -
42,182,865 3,226,612 - 7,175,000
Total liabilities 24,806,818 43,959,341 6,746,293 1,387,453 7,175,000

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 566,865 - -
Lease-related deferred inflows 1,625,905 - - - -
Total deferred inflows of resources 1,625,905 - 566,865 - - Fund Balances (Deficit):

Nonspendable 2,785,000 - 53,956 - -
Restricted 6,000,000 - - - 895,849
Committed 36,101,009 - - 2,000,000 -
Assigned 18,387,565 - - - -
Unassigned (deficit) 22,085,188 - 341,657 - -
Total fund balances (deficit) 85,358,762 - 395,613 2,000,000 895,849 Total liabilities, deferred inflows of
resources, and fund balances 111,791,485$ 43,959,341$ 7,708,771$ 3,387,453$ 8,070,849$ Major Funds
City of Salinas
Balance Sheet
Governmental Funds
June 30, 2023
See accompanying Notes to the Basic Financial Statements. 28 Nonmajor Total
Governmental Governmental
Funds Funds
ASSETS
Cash and investments 77,390,838$ 209,353,270 $
Receivables, net:

Accounts 82,694 482,206
Taxes - 18,380,898
Interest 1,390,594 2,496,089
Due from outside agencies 3,375,860 4,963,504
Assessments 540,000 7,715,000
Leases 3,807,349 5,484,333
Due from other funds - 9,790,978
Advances to other funds - 2,785,000 Loans and notes receivable, net of allowance 16,570 70,526 Land and properties held for resale 1,380,000 1,380,000 Total assets 87,983,905$ 262,901,804 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 1,121,822$ 12,399,091 $
Due to other funds 3,654,175 23,837,981
Deposits payable - 29,353
Unearned revenues 540,000 53,124,477
Total liabilities 5,315,997 89,390,902

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 1,432,140 1,999,005
Lease-related deferred inflows 3,673,155 5,299,060 Total deferred inflows of resources 5,105,295 7,298,065

Fund Balances (Deficit):

Nonspendable 1,396,570 4,235,526
Restricted 80,661,495 87,557,344
Committed 141,985 38,242,994
Assigned - 18,387,565
Unassigned (deficit) (4,637,437) 17,789,408
Total fund balances (deficit) 77,562,613 166,212,837 Total liabilities, deferred inflows of
resources, and fund balances 87,983,905$ 262,901,804$ City of Salinas
Balance Sheet (Continued)
Governmental Funds
June 30, 2023
See accompanying Notes to the Basic Financial Statements. 29 This page intentionally left blank.
30 Total Fund Balances - Total Governmental Funds 166,212,837$ Capital assets used in the governmental activities were not financial resources and therefore were not reported in the Governmental Funds Balance Sheet.

Non-depreciable/amortizable 61,015,423
Depreciable/amortizable, net 273,542,237
Total capital assets 334,557,660
Deferred inflows resulting from revenues that are not available to pay for current period expenditures are reported as unavailable in the Governmental Funds Balance Sheet. 1,999,005 Long-ter
m liabilities are not due and payable in the current period and therefore were not reported in the Governmental Funds Balance Sheet.

Compensated absences - due within one year, net of $22,078 reported in the Internal Service Funds (2,359,883) Compensated absences - due in more than one year, net of $124,164 reported in the Internal Service Funds (9,439,541) Insurance claims payable - due in more than one year, net of $30,776,011 reported in the Internal Service Funds (1,201,608)
Long-term
debt - due within one year (8,341,358)
Long-term debt - due in more than one year (113,704,577) Total long-term liabilities (135,046,967)
Governmental funds report the effects of debt refundings and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities for the following:

De
ferred loss on refunding of debt 486,668
Total 486,668
Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in the governmental funds. (600,895)

Net pension liability and total OPEB liability used in the governmental activities were not financial resources and therefore were not re
ported in the Governmental Funds Balance Sheet.

Net pension liability, net of $1,460,410 reported in the Internal Service Funds (228,234,028) Net OPEB liability, net of $298,025 reported in the Internal Service Funds (14,257,515) Total net pension liability and net OPEB liability (242,491,543) Deferred outflows of resources related to OPEB and pensions are not available for current period and, therefore, are deferred in the governmental funds or not recorded in the governmental funds.

Deferred outflows of resources related to pensions, net of $595,067 reported in the Internal Service Funds 76,489,057 Deferred outflows of resources related to OPEB, net of $99,768 reported in the Internal Service Funds 4,772,910 Total deferred outflows of resources 81,261,967
Deferred inflows of resources related to OPEB and pensions are not available for current period and, therefore, are deferred in the governmental funds or not recorded in the governmental funds.

De
ferred inflows of resources related to pensions, net of $57,590 reported in the Internal Service Funds (7,812,204) Deferred inflows of resources related to OPEB, net of $237,308 reported in the Internal Service Funds (11,352,828) Total deferred inflows of resources (19,165,032)
Internal service funds are used by management to charge the cost of information technology, vehicle replacement, fleet management and infrastructure to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. 6,018,531 Net Position of Governmental Activitie
s 193,232,231$
Amounts reported for Governmental Activities in the Statement of Net Position were different because:

City of Salinas
Reconciliation of the Governmental Funds Balance Sheet
To the Government-Wide Statement of Net Position
June 30, 2023
See accompanying Notes to the Basic Financial Statements. 31 American Housing 2019 Special
Rescue Plan Act and Urban Tax Bond
(ARPA) Development Grant Capital Monte Bella
General Special Revenue Special Revenue Projects Debt Service Fund Fund Fund Fund Fund
REVENUES:

Taxes 150,598,921$ - $ -$ -$ -$
Taxes - special assessments - - - - 519,190
Licenses and permits 10,568,223 - - - -
Intergovernmental 908,898 8,693,064 11,494,933 - - Charges for services 5,296,314 - - - -
Investment income (loss) 3,485,836 - 31,747 - 11,371 Rental income 330,717 - - - -
Fines and forfeitures 203,463 - - - -
Miscellaneous 955,765 - 227,453 - -
Total revenues 172,348,137 8,693,064 11,754,133 - 530,561 EXPENDITURES:

Current:

General government 21,640,139 4,529,148 8,098,577 2,029,412 7,125 Public safety 87,579,791 14,205 9,890 266,122 - Public works 13,861,038 2,322,369 82,285 7,669,366 - Recreation 6,940,329 715,564 - 690,697 -
Library 5,055,324 - - 209 -
Capital outlay 811,956 1,111,778
8,231 9,849,168 -
Debt service:

Principal 811,119 - - 1,154,173 145,000 Interest and fiscal charges 173,380 - - 109,168 311,270 Total expenditures 136,873,076 8,693,064 8,198,983 21,768,315 463,395 REVENUES OVER (UNDER) EXPENDITURES 35,475,061 - 3,555,150 (21,768,315) 67,166 OTHER FINANCING SOURCES (USES):

Proceeds from issuance of long-term debt 410,213 - - - - Transfers in 2,917,795 - - 21,768,315 -
Transfers out (23,428,977) - (387,350) - -
Total other financing sources (uses) (20,100,969) - (387,350) 21,768,315 - NET CHANGE IN FUND BALANCES 15,374,092 - 3,167,800 - 67,166 FUND BALANCES (DEFICIT):

Beginning of year 69,984,670 - (2,772,187) 2,000,000 828,683 End of year 85,358,762$ -$ 395,613$ 2,000,000$ 895,849$ Major Funds
City of Salinas
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 32 Nonmajor Total
Governmental Governmental
Funds Funds
REVENUES:

Taxes 668,442$ 151,267,363$
Taxes - special assessments 42,792 561,982
Licenses and permits 123,639 10,691,862
Intergovernmental 21,670,736 42,767,631
Charges for services 2,818,038 8,114,352
Investment income (loss) 1,976,452 5,505,406
Rental income 311,076 641,793
Fines and forfeitures 339,672 543,135
Miscellaneous 1,933,926 3,117,144
Total revenues 29,884,773 223,210,668

EXPENDITURES:

Current:

General government 2,752,118 39,056,519
Public safety 2,500,199 90,370,207
Public works 1,457,249 25,392,307
Recreation 741,989 9,088,579
Library 315,316 5,370,849
Capital outlay 655,430 12,436,563
Debt service:

Principal 5,953,000 8,063,292
Interest and fiscal charges 4,502,921 5,096,739
Total expenditures 18,878,222 194,875,055

REVENUES OVER (UNDER) EXPENDITURES 11,006,551 28,335,613 OTHER FINANCING SOURCES (USES):

Proceeds from issuance of long-term debt - 410,213 Transfers in 11,230,872 35,916,982
Transfers out (17,961,070) (41,777,397)

Total other financing sources (uses) (6,730,198) (5,450,202) NET CHANGE IN FUND BALANCES 4,276,353 22,885,411 FUND BALANCES (DEFICIT):

Beginning of year 73,286,260 143,327,426
End of year 77,562,613$ 166,212,837$
City of Salinas
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Governmental Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 33 Net Change in Fund Balances - Total Governmental Funds 22,885,411$ Governmental funds reported capital outlay as expenditures. However, in the Government-Wide Statement of Activities and Changes in Net Position the cost of those assets was allocated over their estimated useful lives as depreciation expenses. This is the amount of capital assets recorded in the current period. 16,166,656 Depreciation and amortization expense on capital assets was reported in the Government-Wide Statement of Activities and Changes in Net Position, but they did not require the use of current financial resources. Therefore, depreciation expense was not reported as expenditures in the Governmental Funds. (16,525,306) Retirement of capital assets created a loss on the Government-Wide Statement of Activities and Changes in Net Position. (47,200)
Repayment of long-term liabilities was an expenditures in governmental funds, but the repayment reduced long-term liabilities in the Government-Wide Statement of Net Position.

Principal payment of long-term debt 8,063,292
Amortization of bond premiu
m (705,417)
GASB 87 activity for did not require the use of current financial resources. 973,584 Interest expense on long-term debt was reported in the Government-Wide Statement of Activities, but it did not require the use of current financial resources. This amount represented the changes in accrued interest from prior year. 46,420 Compensated absences expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. (305,168) Claims payable expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. 436,877 Revenues in the Government-Wide Statement of Activities that do not provide current financial resources and are not reported as revenue in the governmental funds. (6,231,632) Certain pension credits reported in the Government-Wide Statement of Activities do not provide current financial resources and therefore, are not reported as expenditures in governmental funds. 1,559,169 Certain OPEB expenses reported in the Government-Wide Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. 1,027,887 The internal service funds are used by management to charge the costs of fleet maintenance, facilities maintenance, and technology to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. (3,973,697)
Chan
ge in Net Position of Governmental Activities 23,370,876$ Amounts reported for Governmental Activities in the Statement of Net Position were different because:

City of Salinas
Reconciliation of the Governmental Funds Statement of Revenues, Statement of Activities and Changes in Net Position
For the Year Ended June 30, 2023
Expenditures, and Changes in Fund Balances to the Government-Wide See accompanying Notes to the Basic Financial Statements. 34 PROPRIETARY FUNDS FINANCIAL STATEMENTS
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.

The City reports 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 the enterprise operations of the City-operated Industrial Wastewater Treatment Facility.

Sanitary Sewer Fund - This fund is used to account for the maintenance of the City's sanitary sewer collection system, which is funded by user fees and by the Monterey Regional Water Pollution Control Agency sewer user fees.

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.

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.
35 Downtown
Industrial Sanitary Parking
Airport Waste Sewer District
ASSETS
Current assets:

Cash and cash equivalents 2,319,962$ 9,212,999$ 1,018,755$ 537,996$ Receivables, net:

Accounts 228,903 261,116 767,119 272,712
Accrued interest 33,985 68,020 7,992 -
Due from other funds - - - -
Total current assets 3,011,934 9,542,135 1,793,866 810,708 Noncurrent assets:

Restricted cash and investments - - 6,977 -
Leases receivable, long term 4,725,232 - - -
Capital assets:

Non-depreciable 1,976,275 2,298,256 959,335 18,758 Depreciable, net 13,760,237 12,955,219 29,217,748 6,674,067 Total capital assets 15,736,512 15,253,475 30,177,083 6,692,825 Total noncurrent assets 20,461,744 15,253,475 30,184,060 6,692,825 Total assets 23,473,678 24,795,610 31,977,926 7,503,533

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 297,456 148,805 644,566 -
Related to OPEB 41,852 41,332 108,294 4,472
Loss on refunding of debt - - - 94,464
Total deferred outflows of resources 339,308 190,137 752,860 98,936

LIABILITIES
Current liabilities:

Accounts payable 75,442 677,290 129,286 186,967
Interest payable - 11,804 123,125 111,202
Due to other funds 28,535 143,394 33,776 1,793,617
Deposits payable 54,555 - - -
Compensated absences - due within one year 18,357 10,612 31,561 790 Long-term debt - due within one year - 497,000 565,000 625,000 Total current liabilities 176,889 1,340,100 882,748 2,717,576 Noncurrent liabilities:

Advances from other funds - - - 2,785,000
Compensated absences - due in more than one year 83,474 44,789 112,572 8,567 Long term debt - due in more than one year - 518,000 12,745,000 7,788,000 Insurance claims payable - due in more than one year - - - - Net pension liability 730,016 365,197 1,581,890 - Net OPEB liability 125,018 123,465 323,494 13,357
Total noncurrent liabilities 938,508 1,051,451 14,762,956 10,594,924 Total liabilities 1,115,397 2,391,551 15,645,704 13,312,500

DEFERRED INFLOWS OF RESOURCES
Related to pensions 28,788 14,401 62,381 -
Related to OPEB 99,548 98,312 257,589 10,635
Related to leases 4,922,837 - - -
Total deferred inflows of resources 5,051,173 112,713 319,970 10,635

NET POSITION (DEFICIT)
Net investment in capital assets 15,736,512 14,238,475 16,867,083 (1,625,711) Unrestricted
1,909,904 8,243,008 (101,971) (4,094,955) Total net position (deficit) 17,646,416$ 22,481,483$ 16,765,112$ (5,720,666)$ Major Enterprise Funds
City of Salinas
Statement of Net Position
Proprietary Funds
June 30, 2023
See accompanying Notes to the Basic Financial Statements. 36 Governmental
Non-Major Activities
Permit Internal
Services Total Service Funds
ASSETS
Current assets:

Cash and cash equivalents 3,096,502$ 16,186,214$ 22,137,572$ Receivables, net:

Accounts 502 1,530,352 - Accrued interest 22,910 132,907 65,356 Due from other funds - - 16,831,462 Total current assets 3,119,914 18,278,557 39,034,390 Noncurrent assets:

Restricted cash and investments - 6,977 263,442 Leases receivable, long term - 4,725,232 - Capital assets:

Non-depreciable - 5,252,624 - Depreciable, net 114,453 62,721,724 - Total capital assets 114,453 67,974,348 - Total noncurrent assets 114,453 72,706,557 263,442 Total assets 3,234,367 90,985,114 39,297,832

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 694,219 1,785,046 595,067 Related to OPEB 130,338 326,288 99,768 Loss on refunding of debt - 94,464 - Total deferred outflows of resources 824,557 2,205,798 694,835

LIABILITIES
Current liabilities:

Accounts payable 114,979 1,183,964 216,713 Interest payable - 246,131 - Due to other funds 3,300 2,002,622 781,837 Deposits payable - 54,555 - Compensated absences - due within one year 48,257 109,577 29,997 Long-term debt - due within one year - 1,687,000 - Total current liabilities 166,536 5,283,849 8,612,354 Noncurrent liabilities:

Advances from other funds - 2,785,000 - Compensated absences - due in more than one year 158,337 407,739 116,245 Long term debt - due in more than one year - 21,051,000 - Insurance claims payable - due in more than one year - - 23,192,204 Net pension liability 1,703,748 4,380,851 1,460,410 Net OPEB liability 389,343 974,677 298,025 Total noncurrent liabilities 2,251,428 29,599,267 25,066,884 Total liabilities 2,417,964 34,883,116 33,679,238

DEFERRED INFLOWS OF RESOURCES
Related to pensions 67,187 172,757 57,590 Related to OPEB 310,022 776,106 237,308 Related to leases - 4,922,837 - Total deferred inflows of resources 377,209 5,871,700 294,898

NET POSITION (DEFICIT)
Net investment in capital assets 114,453 45,330,812 - Unrestricted 1,149,298 7,105,284 6,018,531 Total net position (deficit) 1,263,751$ 52,436,096 $ 6,018,531 $

City of Salinas
Statement of Net Position (Continued)
Proprietary Funds
June 30, 2023
See accompanying Notes to the Basic Financial Statements. 37 Downtown
Industrial Sanitary Parking
Airport Waste Sewer District
OPERATING REVENUES:

Fees 17,415 $ 2,186,214 $ 3,686,248 $ - $ Licenses and permits - - - 724,955
Rental income 1,960,314 - - -
Total operating revenues 1,977,729 2,186,214 3,686,248 724,955 OPERATING EXPENSES:

Personnel services 836,520 521,413 1,980,478 78,014 Administration 206,533 206,627 373,030 200,307
Contractual services 320,441 1,176,945 297,747 1,254,125 Supplies 121,335 85,979 193,131 11,458
Insurance 19,161 19,003 70,820 14,306
Insurance claims - - - -
Depreciation 942,091 497,096 1,573,044 555,845 Other 89,839 49,322 (4,195) 43,211
Total operating expenses 2,535,920 2,556,385 4,484,055 2,157,266 OPERATING INCOME (558,191) (370,171) (797,807) (1,432,311) NONOPERATING REVENUES (EXPENSES):

Investment income (loss) 170,410 222,287 22,038 -
Interest expense - (29,714) (299,341) (342,325)
Other nonoperating revenues (expenses) 91,869 (1,150) 3,663 602,088 Total nonoperating revenues (expenses) 262,279 (698,195) (1,786,433) 259,763 INCOME (LOSS) BEFORE TRANSFERS (295,912) (1,068,366) (2,584,240) (1,172,548) TRANSFERS:

Transfers in - 1,661,100 - 30,000
Transfers out (100,604) (301,897) (385,207) (33,130) Transfers from fiduciary funds - - - 949,242
Total transfers (100,604) 1,359,203 (385,207) 946,112 Changes in net position (396,516) 290,837 (2,969,447) (226,436) NET POSITION (DEFICIT):

Beginning of year 18,042,932 22,190,646 19,734,559 (5,494,230) End of year 17,646,416$ 22,481,483$ 16,765,112$ (5,720,666)$ Major Funds
City of Salinas
Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 38 Governmental
Non-Major Activities
Permit Internal
Services Total Service Funds
OPERATING REVENUES:

Fees 1,521,588$ 7,411,465$ 6,154,920$ Licenses and permits 1,358,202 2,083,157 - Rental income - 1,960,314 - Total operating revenues 2,879,790 11,454,936 6,154,920 OPERATING EXPENSES:

Personnel services 2,557,980 5,974,405 1,949,828 Administration 403,472 1,389,969 - Contractual services 190,866 3,240,124 200,141 Supplies 35,660 447,563 878,126 Insurance 101,048 224,338 6,961,224 Insurance claims - - 5,455,924 Depreciation 17,508 3,585,584 - Other (56,523) 121,654 196,016 Total operating expenses 3,250,011 14,983,637 15,641,259

OPERATING INCOME (370,221) (3,528,701) (9,486,339) NONOPERATING REVENUES (EXPENSES):

Investment income (loss) 88,720 503,455 242,818 Interest expense - (671,380) - Other nonoperating revenues (expenses) 169,887 866,357 (89,976) Total nonoperating revenues (expenses) 258,607 (1,703,979) 152,842 INCOME (LOSS) BEFORE TRANSFERS (111,614) (5,232,680) (9,333,497) TRANSFERS:

Transfers in - 1,691,100 5,359,800 Transfers out (369,647)
(1,190,485) -
Transfers from fiduciary funds - 949,242 - Total transfers (369,647) 1,449,857 5,359,800 Changes in net position (481,261) (3,782,823) (3,973,697) NET POSITION (DEFICIT):

Beginning of year 1,745,012 56,218,919 9,992,228 End of year 1,263,751$ 52,436,096$ 6,018,531$ City of Salinas
Statement of Revenues, Expenses, and Changes in Fund Net Position (Continued) Proprietary Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 39 Downtown
Industrial Sanitary Parking
Airport Waste Sewer District
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users 1,872,931 $ 2,272,970 $ 3,738,087 $ 601,009 $ Payments to suppliers (697,884) (1,033,996) (978,325) (1,401,500) Payments to employees for services (783,482) (500,674) (1,870,356) (79,025) Payments to claimants - - - -
Other (89,839) (49,322) 4,195 (43,211) Net cash provided (used) by operating activities 301,726 688,978 893,601 (922,727)

CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:

Borrowing from other funds 28,535 117,174 - 88,409 Repayment to other funds - - 21,653 -
Other 91,869 (1,150) 3,663 602,088
Transfers from other funds - 1,661,100 - 979,242
Transfers to other funds (100,604) (301,897) (385,207) (33,130) Net cash provided by (used in) noncapital financing
activities 19,800 1,475,227 (359,891) 1,636,609

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (49,256) (1,539,072) (52,302) - Payment on capital debt and loans payable - (478,000) (560,000) (599,000) Interest paid on capital debt and borrowings - (34,535) (296,693) (341,654) Net cash (used in) capital and related financing activities (49,256) (2,051,607) (908,995) (940,654) CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income (loss) 158,788 167,337 16,558 - Proceeds from leases (118,199) - - -
Net cash provided by (used in) investing activities 40,589 167,337 16,558 - Net change in cash and cash equivalents 312,859 279,935 (358,727) (226,772) CASH AND CASH EQUIVALENTS:

Beginning of year 2,007,103 8,933,064 1,384,459 764,768 End of year 2,319,962$ 9,212,999$ 1,025,732$ 537,996$

RECONCILIATION OF CASH AND CASH
EQUIVALENTS TO STATEMENT OF NET POSITION:

Cash and cash investments 2,319,962$ 9,212,999$ 1,018,755$ 537,996$ Restricted cash and investments - - 6,977 -
Total cash and cash equivalents 2,319,962$ 9,212,999$ 1,025,732$ 537,996$ City of Salinas
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2023
Major Funds
See accompanying Notes to the Basic Financial Statements. 40 Governmental
Non-Major Activities
Permit Internal
Services Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users 2,879,586$ 11,364,583$ 6,154,920$ Payments to suppliers (738,124) (4,849,829) (2,420,227) Payments to employees for services (2,206,079) (5,439,616) (1,870,009) Payments to claimants - - (9,897,111) Other 56,523 (121,654) (196,016) Net cash provided (used) by operating activities (8,094) 953,484 (8,228,443)

CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:

Borrowing from other funds (8,772) 225,346 781,837 Repayment to other funds - 21,653 - Other 169,887 866,357 (89,976) Transfers from other funds - 2,640,342 5,359,800 Transfers to other funds (369,647) (1,190,485) - Net cash provided by (used in) noncapital financing
activities (208,532) 2,563,213 6,051,661

CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES:

Acquisition of capital assets (79,841) (1,720,471) - Payment on capital debt and loans payable - (1,637,000) - Interest paid on capital debt and borrowings - (672,882) - Net cash (used in) capital and related financing activities (79,841) (4,030,353) - CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income (loss) 71,926 414,609 194,500 Proceeds from leases - (118,199) - Net cash provided by (used in) investing activities 71,926 296,410 194,500 Net change in cash and cash equivalents (224,541) (217,246) (1,982,282) CASH AND CASH EQUIVALENTS:

Beginning of year 3,321,043 16,410,437 24,383,296 End of year 3,096,502$ 16,193,191$ 22,401,014$

RECONCILIATION OF CASH AND CASH
EQUIVALENTS TO STATEMENT OF NET POSITION:

Cash and cash investments 3,096,502$ 16,186,214$ 22,137,572$ Restricted cash and investments - 6,977 263,442 Total cash and cash equivalents 3,096,502$ 16,193,191$ 22,401,014$ City of Salinas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 41 Downtown
Industrial Sanitary Parking
Airport Waste Sewer District

RECONCILIATION OF OPERATING INCOME TO

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:

Operating income (558,191) $ (370,171) $ (797,807) $ (1,432,311) $ Adjustments to reconcile operating income to net
cash provided by (used in) operating activities:

Depreciation 942,091 497,096 1,573,044 555,845 Amortization - - - -
Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Accounts receivable, net (110,468) 86,756 51,839 (123,946) Deferred outflows - related to pensions (187,524) (82,858) (380,778) - Deferred outflows - related to OPEB 1,425 (7,758) (26,537) 1,647 Accounts payable (30,414) 454,558 (43,597) 78,696 Deposits payable 5,670 - - -
Insurance claims payable - - - -
Compensated absences 10,047 2,339 (13,670) 5,403 Net pension liability 413,177 175,128 821,616 - Net OPEB liability (8,889) 19,580 70,520 (5,578)
Deferred inflows - related to pensions (181,976) (112,034) (443,360) - Deferred inflows - related to OPEB 6,778 26,342 82,331 (2,483) Total adjustments 859,917 1,059,149 1,691,408 509,584 Net cash provided by (used in) operating activities 301,726$ 688,978$ 893,601$ (922,727)$ Major Funds
City of Salinas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 42 Governmental
Non-Major Activities
Permit Internal
Services Total Service Funds

RECONCILIATION OF OPERATING INCOME TO

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:

Operating income (370,221)$ (3,528,701)$ (9,486,339)$ Adjustments to reconcile operating income to net
cash provided by (used in) operating activities:

Depreciation 17,508 3,585,584 -
Amortization - - -
Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Accounts receivable, net (204) (96,023) -
Deferred outflows - related to pensions (474,416) (1,125,576) (353,301) Deferred outflows - related to OPEB (30,278) (61,501) (11,120) Accounts payable (7,078) 452,165 53,776
Deposits payable - 5,670 -
Insurance claims payable - - 1,124,301
Compensated absences (34,690) (30,571) 15,556 Net pension liability 1,070,245 2,480,166 763,607 Net OPEB liability 79,736 155,369 23,728
Deferred inflows - related to pensions (354,225) (1,091,595) (405,929) Deferred inflows - related to OPEB 95,529 208,497 47,278 Total adjustments 362,127 4,482,185 1,257,896 Net cash provided by (used in) operating activities (8,094)$ 953,484$ (8,228,443)$ City of Salinas
Statement of Cash Flows (Continued)
Proprietary Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 43 This page intentionally left blank.
44 Fiduciary Funds Financial Statements
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 funds that are not required to be reported in pension trust funds, investment trust funds, or private-purpose trust funds.
45 This page intentionally left blank.
46 Fiduciary
Private Purpose Pension Trust Custodial Funds
Trust Funds Fund Funds Total
ASSETS
Cash and investments 3,414,200 $ 12,899,687$ 128,537$ 16,442,424$ Restricted cash and investments held by fiscal agent 1,438,695 - 67,728 1,506,423 Receivables, net:

Accounts 7,618 - - 7,618 Interest 11,011 19,535 - 30,546 Loans and notes receivable 163,900 - - 163,900 Total assets 5,035,424 12,919,222 196,265 18,150,911

LIABILITIES
Accounts payable 354,006 - 290,124 644,130 Interest payable 12,196 - - 12,196 Deposits payable 234,995 - - 234,995 Unearned revenue 806,621 - - 806,621 Long-term debt:

Due in one year 1,360,000 - - 1,360,000 Due in more than one year 148,584 - - 148,584 Total liabilities 2,916,402 - 290,124 3,206,526

NET POSITION (DEFICIT)
Restricted for:

Pensions - 12,919,222 - 12,919,222 Individuals and organizations 2,119,022 - (93,859) 2,025,163 Total net position (deficit) 2,119,022$ 12,919,222$ (93,859)$ 14,944,385$ City of Salinas
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2023
See accompanying Notes to the Basic Financial Statements. 47 Total
Private Purpose Pension Custodial Fiduciary
Trust Funds Trust Fund Funds Funds
ADDITIONS:

Taxes 5,416,716 $ -$ 456,530$ 5,873,246$ Miscellaneous - 281,660 - 281,660
Contributions:

Plan members - - 316,212 316,212
Employer - 1,198,675 - 1,198,675
Private donations 2,947,456 - - 2,947,456
Investment earnings (loss) 132,561 (933,204) - (800,643) Total additions 8,496,733 547,131 772,742 9,816,606 DEDUCTIONS:

Expenses 622,227 - 411,755 1,033,982
Benefit payments - 1,264,445 19,780 1,284,225
Payments on behalf of trustees 2,894,084 - - 2,894,084 Contributions to other agencies 2,948,785 - - 2,948,785 Payments to City 949,243 - - 949,243
Assessments disbursed to other governments - - 457,078 457,078 Total deductions 7,414,339 1,264,445 888,613 9,567,397 Change in net position 1,082,394 (717,314) (115,871) 249,209 NET POSITION (DEFICIT):

Beginning of year 1,036,628 13,636,536 22,012 14,695,176 End of year 2,119,022$ 12,919,222$ (93,859)$ 14,944,385$ City of Salinas
Statement of Change in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2023
See accompanying Notes to the Basic Financial Statements. 48 49

NOTES TO THE BASIC FINANCIAL STATEMENTS
50 This page intentionally left blank.

City of Salinas
Index to the Notes of the Basic Financial Statements
For the Year Ended June 30, 2023

51 Note 1 – Summary of Significant Accounting Policies ............................................................................................. 55

A. Financial Reporting Entity ......................................................................................................................... 55 B. Basis of Presentation, Accounting and Measurement Focus ..................................................................... 56 C. Cash, Cash Equivalents, and Investments .................................................................................................. 60 D. Restricted Cash and Investments ............................................................................................................... 61 E. Fair Value Measurement ............................................................................................................................ 61 F. Interfund Transactions ............................................................................................................................... 61 G. Receivables ................................................................................................................................................ 62 H. Leases ......................................................................................................................................................... 62 I. Subscription-Based Information Technology Arrangements (SBITAs) .................................................... 62 J. Special Assessment Districts ..................................................................................................................... 63 K. Prepaid Bond Insurance, Original Issue Discounts and Premiums, Gain/Loss on Refunding ................... 63 L. Capital Assets ............................................................................................................................................. 64 M. Land Held for Resale ................................................................................................................................. 64 N. Restricted Assets ........................................................................................................................................ 65 O. Claims Payable ........................................................................................................................................... 65 P. Compensated Absences .............................................................................................................................. 65 Q. Long-Term Debt and Other Long-Term Obligations ................................................................................. 65 R. Unearned Revenue ..................................................................................................................................... 66 S. Deferred Outflows and Inflows of Resources ............................................................................................ 66 T. Net Position and Fund Balance .................................................................................................................. 66 U. Property Taxes ........................................................................................................................................... 67 V. Pensions ..................................................................................................................................................... 68 W. Other Postemployment Benefits (OPEB) .................................................................................................. 69 X. Encumbran
ces ............................................................................................................................................ 69 Y. Use of Accounting Estimates ..................................................................................................................... 69 Z. Self-Insurance ............................................................................................................................................ 69 AA. Implementation of New GASB Pronouncements For the Year Ended June 30, 2023 ............................. 70 BB. Upcoming GASB Pronouncements ........................................................................................................... 71

Note 2 – Stewardship, Compliance, and Accountability .......................................................................................... 71

A. Budgeting ................................................................................................................................................... 71 B. Deficit Fund Balances and Net Position .................................................................................................... 72 C. Debt Compliance........................................................................................................................................ 73

Note 3 – Cash and Investments................................................................................................................................... 73

A. Demand Deposits ....................................................................................................................................... 74 B. Investments ................................................................................................................................................ 74 C. Risk Disclosures ......................................................................................................................................... 75 D. Fair Value Measurement ............................................................................................................................ 76

Note 4 – Restricted Assets ........................................................................................................................................... 79

Note 5 – Taxes Receivable ........................................................................................................................................... 79

Note 6 – Assessments Receivable ................................................................................................................................ 79

Note 7 – Due from Other Agencies ............................................................................................................................. 80 City of Salinas
Index to the Notes of the Basic Financial Statements (Continued) For the Year Ended June 30, 2023
52 Note 8 – Leases Receivable ......................................................................................................................................... 80 Note 9 – Loans and Notes Receivable ........................................................................................................................ 81 Note 10 – Interfund Receivables, Payables, and Transfers ...................................................................................... 82 A. Due From and To Other Funds .................................................................................................................. 82 B. Long-Term Advances ................................................................................................................................ 83 C. Transfers .................................................................................................................................................... 84 Note 11 – Capital Assets .............................................................................................................................................. 85 A. Governmental Activities ............................................................................................................................ 85 B. Business-Type Activities ........................................................................................................................... 86 Note 12 – Land and Properties Held for Resale ........................................................................................................ 86 Note 13 – Long-Term Debt ......................................................................................................................................... 87 A. Governmental Activities ............................................................................................................................ 87 B. Business-Type Activities ......................................................................................................................... 101 C. Conduit Debt ............................................................................................................................................ 103 D. Fiduciary Activities .................................................................................................................................. 104 Note 14 – Compensated Absences ............................................................................................................................ 106 Note 15 – Risk Management ..................................................................................................................................... 106 Note 16 – Unearned Revenue and Deferred Inflows of Resources ........................................................................ 107 Note 17 – Retirement Programs ............................................................................................................................... 108 A. Summary .................................................................................................................................................. 108 B. California Public Employees Retirement System Agent Multiple-Employer Plans ................................ 109 C. California Public Employees Retirement System Cost-Sharing Multiple-Employer Plan ...................... 115 D. New York Life Single Employer Retirement Plan................................................................................... 120 E. ICMA Retirement Corporation Defined Contribution Plan ..................................................................... 124 F. Deferred Compensation Plans .................................................................................................................. 125 Note 18 – Other Postemployment Benefits .............................................................................................................. 127 A. General In
formation about the OPEB Plan .............................................................................................. 127 B. Net OPEB Liability, OPEB Expense, and Deferred Outflows/Inflows of Reso
urces Related to OPEB ....................................................................................................... 129 Note 19 – Net Position and Fund Balances .............................................................................................................. 132 A. Government-Wide Financial Statements ................................................................................................. 132 B. Fund Financial Statements ....................................................................................................................... 132 C. Encumbrances .......................................................................................................................................... 133 City of Salinas
Index to the Notes of the Basic Financial Statements (Continued) For the Year Ended June 30, 2023
53 Note 20 – Other Required Disclosures ..................................................................................................................... 134 A. Expenditures Exceeding Appropriations.................................................................................................. 134 B. Net Position Deficit and Restrictions ....................................................................................................... 134 Note 21 – Joint Venture – Salinas Valley Solid Waste Authority ......................................................................... 134 Note 22 – Commitments and Contingencies ............................................................................................................ 135 54 This page intentionally left blank
City of Salinas
Notes to the Basic Financial Statements
For the Year Ended June 30, 2023

55 Note 1 – Summary of Significant Accounting Policies

The basic financial statements of the City of Salinas, California (City) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The most significant of the City’s accounting policies are described below:

A. Financial Reporting Entity

The City was incorporated as a chapter City on March 4, 1874. The City operates under a Council Manager form of government and proves the following services as authorized: Public Safety, Public Works, Recreation Parks, Library and General Government Administrative Services. The City also operates as Airport, a Downtown Parking District, a Sanitary Sewer System, a Water Utility, a Storm Sewer System, and an Industrial Waste Facility.

The basic financial statements of the City, include the financial activities of the City (the primary government) and its component unit. The component unit 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 financial reporting entity consists of the primary government, the City, and its component unit. Component units are legally separate entities for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government is accountable and their exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.

Blended component units, although legally separate entities, are, in substance part of the government’s operation and so data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the government.

Although the following are legally separate from the City, they have been “blended” as though they are part of the City because the component unit’s governing body is substantially the same as the City’s and there is a financial benefit or burden relationship between the City and the component unit; management of the City has operational responsibilities for the component units; and/or the component units provide services entirely, or almost entirely, to the City or otherwise exclusively, or almost exclusively, benefits the City, even though it does not provide services directly to it.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
56 Note 1 – Summary of Significant Accounting Policies (Continued) A. Financial Reporting Entity (Continued)
Blended Component Units (Continued)
The Sa
linas 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 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. Basis of Presentation, Accounting and Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues and expenditures or expenses, as appropriate. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions.

The minimum number of funds is maintained in accordance with legal and managerial requirements.

Government-Wide Financial Statements
T
he City’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present summaries of governmental and business-type activities for the City accompanied by a total column. Fiduc iary activities of the City are not included in these statements.

These
financial statements are presented on an “economic resources” measurement focus and the accrual basis of accoun
ting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in Net Position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities and deferred inflows of resources resulting from non-exchange transactions are recognized in accordance with the requirements of U.S. GAA
P.

Progr
am revenues include charges for services, special assessments, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Program revenues for the City are classified in three categories:
 Charges for services
 Operating grants and contributions
 Capital grants and contributions
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

57 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation, Accounting and Measurement Focus (Continued)

Government-Wide Financial Statements (Continued)

Certain eliminations have been made to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presen ted as internal balances and eliminated in the total primary government column. In the Statement of Activities and Changes in Net Position, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The following interfund activities have been eliminated:

 Due to/from other funds
 Advances to/from other funds
 Transfers in/out

Governmental Fund Financial Statements

Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances. An accompanying schedule is presented to reconcile and explain the differences in Net Position as presented in these statements to the net position presented in the Government-Wide Financial Statements. The City has presented all major funds that met the applicable criteria.

All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City uses an availability period of 60 days for all revenues except grants, which use a six-month availability period.

Sales taxes, property taxes, franchise taxes, gas taxes, motor vehicle in-lieu, transient occupancy taxes, grants and interest associated with the current fiscal period are all co nsidered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period to the extent normally collected within the availability period.

Other revenue items are considered to be measurable and available when cash is received by the government.

Revenue recognition is subject to the measurable and available criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place.

Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government-mandated and voluntary non-exchange transactions have been recognized as revenues when all applicable eligibility requirements have been met.

The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

58 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation, Accounting and Measurement Focus (Continued)

Governmental Fund Financial Statements (Continued)

The City reports the following major governmental funds:

 General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in any other funds.

 American Rescue Plan Act (ARPA)Special Revenue Fund On March 11, 2021, President Biden signed the American Rescue Plan Act, which will provide the City with approximately $51 million in relief funds. This fund accounts for the revenues and expenditures of ARPA proceeds.

 Housing and Urban Development Grant Special Revenue Fund accounts for the use of Community Development Block Grant funds received from the fede ral 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.

 Capital Project 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.

 2019 Special Tax Bond Monte Bella Debt Service 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.

Proprietary Fund Financial Statements

Proprietary funds are accounted for using the “ economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The princi pal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for the proprietary funds include the costs of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

A separate column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities and business-type activities in the Government-Wide Financial Statements.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

59 Note 1 – Summary of Significant Accounting Policies (Continued)

B. Basis of Presentation, Accounting and Measurement Focus (Continued)

Proprietary Fund Financial Statements (Continued)

The City reports the following major enterprise funds:

 Airport Fund is used to account for the enterprise operations of the City-owned airport.

 Industrial Waste Fund is used to account for the enterprise operations of the City-operated Industrial Wastewater Treatment Facility.

 Sanitary Sewer Fund is used to account for the maintenance of the City's sanitary sewer collection system, which is funded by user fees and by the Monterey Regional Water Pollution Control Agency sewer user fees.

 Downtown Parking District Fund – is used 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.

The City’s internal service funds include five individual funds which provide services directly to other City funds.

These areas of service include risk management, general insurance, workers’ compensation, general liability, and fleet maintenance. The Internal Service Funds account for financing of goods and services provided by one department to other departments of the City on a cost-reimbursement basis.

Fiduciary Fund Financial Statements

Fiduciary fund financial statements include a Statement of Net Position and a Statement of Changes in Fiduciary Net Position. The City’s fiduciary funds represent private purpose trust funds, pension trust funds, and custodial funds. These funds are accounted for on the full accrual basis of accounting.

Fiduciary fund types are accounted for according to the nature of the fund.

Private Purpose Trust Funds are a fiduciary fund type used to account for resources held and administrated under trust or similar arrangement for the benefits of individu als, private organizations, or other governments. The City reports the following private purpose trust funds:

 Successor Agency Redevelopment Obligation Retirement Fund was created to serve as a custodian for the assets and to wind down the affairs of the RDA on Febr uary 1, 2012, pursuant to Assembly Bill x1 26. Its purpose is to expeditiously wind down the affairs of the dissolved Community Development Commission of the City of Rohnert Park (Commission) subject to the direction of a seven-member Oversight Board. This fund accounts for the receipt of property tax revenues pursuant to the Redevelopment Dissolution Act and the assets transferred from the Commission. The Successor Agency’s assets can only be used to pay enforceable obligations in existence at the date of dissolution pursuant to the Recognized Obligation Payment Schedules approved by the California Department of Finance (DOF) under the Redevelopment Dissolution Act.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
60 Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Presentation, Accounting and Measurement Focus (Continued) Fiduciary Fund Financial Statements (Continued)
 Successor Agency Administration – This fund accounts for the administrative activities of the Successor Agency to the former Salinas Redevelopment Agency which was dissolved on February 1, 2012 in accordance with AB 1x26 (enacted June 28, 2011).
 Other Private Purpose Trust Funds – These funds are used to account for other trust arrangements not properly reported in a pension trust fund under which principal and income benefit individuals, private organizations, or other governments. The City accounts for the following trust funds: Community Center, Monterey Regional Water Pollution Control Agency (MRWPCA) Fees, Sales Tax, Payroll Taxes, Developer Deposits, Evidence Room, Construction Bonds, Monterey County Tourism Improvement District, Leadership Salinas, and miscellaneous.

Pension Trust Fund is 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 are used to account for assets held in an agen t capacity by the City for individuals, private organizations, other governments and/or other funds that are not required to be reported in pension trust funds, investment trust funds, or private-purpose trust funds.

C. C ash, Cash Equivalents, 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 have 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 othe r
inves
tments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.

The City pools cash resources from all funds in order to facilitate and maximize the management of cash. The balance in the pooled cash account is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and other fixed income investments with varying terms. Interest earned on investments is allocated to all funds based on average cash and investment balances.

Investments are presented at fair value except as noted below. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Money market investments (such as short–term, highly liquid debt instruments including bankers’ acceptances) and securities (notes, bills, and obligations of the U.S. government and its agencies), and participating interest-earning investment contracts (such as negotiable certificates of deposit and repurchase agreements) that have a remaining maturity at the time of purchase of one year or less, are reported at amortized cost, which approximates fair valu
e.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

61 Note 1 – Summary of Significant Accounting Policies (Continued)

C. Cash, Cash Equivalents, and Investments (Continued)

For purposes of the statement of cash flows, amounts reported as cash and cash equivalents, include amounts on deposit in the City pool and any short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

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 portions 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, 2023, 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.

D. Restricted Cash and Investments

Certain restricted cash and investments are held by fiscal agents or the City for the redemption of bonded debt and for acquisition and construction of certain capital projects.

E. Fair Value Measurement

U.S. GAAP establishes a framework for measuring fair value, and establishes disclosures about fair value measurement. Investments, unless otherwise specified, recorded at fair value in the Statements of Net Position, are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

F. Interfund Transactions

Interfund transactions are reflected as loans, services provided, reimbursements and/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 funds,” 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.”

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
62 Note 1 – Summary of Significant Accounting Policies (Continued) F. Interfund Transactions (Continued)
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 one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation.

G. Receivables
All receivables are reported at their gross value and, where appropriate, 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.

H. Leases
The City is a lessor for leases of land and recognizes leas es receivable and deferred inflows of resources in the financial statements. Variable payments based on future performance or usage of the underlying asset are not included in the measurement of the lease receivable.

At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflows of resources are initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflows of resources are recognized as revenue over the life of the lease term in a systematic and rational method.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.  The City uses the average of the LAIF rate and the incremental borrowing rate (IBR) provided by the City’s financial institution at July 1, 2021 for existing leases or the current rate at the time a new lease is executed.  The lease term includes the noncancelable period of the lease plus any option periods that are likely to be exercised.
 Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

I. Subscription-Based Information Technology Arrangements (SBITAs) The City has a policy to recognize a SBITA liability and a right ‐to‐use subscription asset (SBITA asset) in our
fina
ncial statements with an initial, individual value of $5,000 or more with a subscription term greater than one year.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

63 Note 1 – Summary of Significant Accounting Policies (Continued)

I. Subscription-Based Information Technology Arrangements (SBITAs) (Continued)

At the commencement of a subscription, when the subscription asset is placed into service, the SBITA liability is measured at the present value of payments expected to be made during the subscription term. Future subscription payments are discounted using the City's incremental borrowing rate and the City recognizes amortization of the discount on the subscription liability as interest expense in subsequent financial reporting periods.

SBITA assets are measured as the sum of the initial subscription liability, payments made to the SBITA vendor before the commencement of the lease term, and capitalizable implementation costs less any incentives received from the SBITA vendor at or before the commencement of the subscription term. Subscription assets are amortized using the straight-line method over the subscription term.

Key estimates and judgments related to SBITAs include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments.

 The City uses the interest rate charged by the SBITA vendor as the discount rate. When the interest rate charged by the SBITA vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for SBITAs.

 The subscription term includes the period during which the City has a noncancelable right to use the underlying IT asset. The subscription term also includes periods covered by an option to extend if it is reasonably certain to be exercised.

 Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option years that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a remeasurement of a subscription and will remeasure any subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

Right-to-use subscription assets are reported along with other capital assets and subscription liabilities are reported as long-term debt on the statement of net position.

J. 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.

K. Prepaid Bond Insurance, Original Issue Discounts and Premiums, Gain/Loss on Refunding

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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

64 Note 1 – Summary of Significant Accounting Policies (Continued)

K. Prepaid Bond Insurance, Original Issue Discounts and Premiums, Gain/Loss on Refunding (Continued)

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 outfl ows of resources and amortized over the shorter of the life of the 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.

L. 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 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 purchased 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:

Asset Type Years
Buildings and improvements 20-50
Other improvements 15-45
Infrastructure 10-50
M achinery and equipment 5-20

M. Land and Properties Held for Resale

Land and properties 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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

65 Note 1 – Summary of Significant Accounting Policies (Continued)

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. Claims Payable

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.

P. Compensated Absences

Vacation, compensatory time, and related benefits are accrued as determined by the agreement between the City and the respective employees' collective bargaining 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 absences 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 employees 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.

Government-Wide Financial Statements

For governmental and business-type activities, compensated absences are recorded as expenses when earned.

Governmental Fund Financial Statements

For governmental funds, compensated absences are recorded as expenditures in the year paid. The General Fund is typically used to liquidate compensated absences. In proprietary funds, compensated absences are expensed to the various funds in the period they are earned, and such fund’s share of the unpaid liability is recorded as a long-term liability of the fund.

Q. Long-Term Debt and Other Long-Term Obligations

Government-Wide Financial Statements and Proprietary Fund Financial Statements

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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
66 Note 1 – Summary of Significant Accounting Policies (Continued) Q. Long-Term Debt and Other Long-Term Obligations (Continued) Governmental Fund Financial Statements
The gove
rnmental fund financial statements do not present long-term debt but are shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position. Governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Debt issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

R. Unearned Revenue
Unearned revenues arise when the City receives resources before it has a legal claim to them, as when grant monies are received prior to incurring qualifying expenditures or when monies are received before the related services are performed. In subsequent periods, when both revenue recognition criteria are met or when the City has a legal claim to the resources, the liability for unearned revenue is removed from the balance sheet and revenue is recognized.

S. Deferred Outflows and Inflows of Resources
The Statement of Net Position and Balance Sheet – Governmental Funds reports separate sections for Deferred Out
flows of Resources, and Deferred Inflows of Resources, when applicable.

Deferred Outflows of Resources – re present a consumption of net position that applies to a future period(s) an d s
o will not be recognized as an outflow of resources (expense/ expenditure) until then .

Deferred Inflows of Resources – represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

T. Net Pos ition and Fund Bal ance
Net Position Classifications
In the government-wide financial statements, net position is classified in three categories:

Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and amortization, outstanding balances of debt and any debt- related deferred outflows and inflows of resources that are attributable to the acquisition, construction, or improvement of these assets reduce the balance of this category.

Restricted Net Position
– This category consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Enabling legislation authorizes the City to assess, levy, charge, or otherwise mandate payment of resources and includes a legally enforceable requirement that those resources be used only for the
specific purposes stipulated in the legislation.

Unrestricted Net Position – This category represents net position of the City that is not restricted for any project or purpose and does not meet the criteria for “net investment in capital assets.” The City first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

67 Note 1 – Summary of Significant Accounting Policies (Continued)

T. Net Position and Fund Balance (Continued)

Fund Balances Classifications

As prescribed by U.S. GAAP, governmental funds report f und balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. Fund balances for governmental funds are made up of the following:

Nonspendable Fund Balance – includes amounts that cannot be spent because they are either (a) not in a spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: prepaid items and long-term loans and notes receivable.

Restricted Fund Balance – includes amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers.

Committed Fund Balance – includes amounts that can only be used for the specific purposes determined by a formal action of the City’s highest level of decision-making authority. The City Council is the highest level of decision- making authority for the City that can, by adoption of an ordinance, commit fund balances. Commitments may be changed or lifted only by the City Council taking the sa me formal actions that imposed the original constraint occurring no later than the close of the reporting period.

Assigned Fund Balance – includes amounts intended to be used by the City for specific purposes through budgetary actions or delegation of authority by the City Council. Intent is expressed by the City Council or an official to whom the City Council has delegated the authority (generally, the City Manager) to assign amounts to be used for specific purposes. This is also the classification for residual funds in the governmental funds other than General Fund.

Unassigned Fund Balance – includes amounts that have not been restricted, committed, or assigned. This includes the residual fund balance of General Fund and residual fund deficits of other governmental funds.

In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance categories, fund balance is depleted in the order of restricted, committed, assigned, and unassigned.

U. 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
Lien Dates January 1 January 1
Levy Dates January 1 January 1
Due Dates 50% on November 1 July 1
50% on February 1
Delinquent after December 10 (for November) August 31
April 10 (for February)
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
68 Note 1 – Summary of Significant Accounting Policies (Continued) U. Property Taxes (Continued)
The City does not have the ability to control the levy rate or the amount of property taxes remitted by the County because these are governed by State law.

The City has not elected to participate in the “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 collected 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.

V. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair valu e.

The fo
llowing timeframes are used for pension reporting:

CalPERS Pension Plans
Valuation date June 30, 2021
Measurement date June 30, 2022
Measurement period July 1, 2021 to June 30, 2022
NY Life Pension Plan
Valuation date September 1, 2021
Measurement date August 31, 2022
Measurement period September 1, 2021 to August 31, 2022 G
ains 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 categorized 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. The difference between projected and actual earnings is amortized straight-line over 5 years. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
69 Note 1 – Summary of Significant Accounting Policies (Continued) W. Other Postemployment Benefits (“OPEB”)
For the purpose 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 OPEB
Plan
and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments, which are reported at amortized cost.

The following timeframes are reported OPEB reporting:

OPEB
Valuation date June 30, 2021
Measurement date June 30, 2022
Measurement period July 1, 2021 to June 30, 2022
Gains
and losses related to changes in total OPEB liab ility and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are 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. The amortization period differs depending on the sources of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.

X. 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.

Y. Use of Accounting Estimates
The preparation of the basic financial statements in c onformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of revenues and expenses. Actual results could differ from these estimates and assumptions.

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, 2023 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 contracts with third party administrators for claims management.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
70 Note 1 – Summary of Significant Accounting Policies (Continued) AA. Implementation of New GASB Pronouncements For the Year Ended June 30, 2023 During fiscal year ended June 30, 2023, the City implemented the following new GASB Pronouncements:

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. This Statement achieves those objectives by clarifying the existing definition of a conduit debt obligati on; establishing that a conduit debt obligation is not a liability of the issuer; establishing standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improving required note disclosures. Implementation of this Statement did not have a significant effect on the City's financial statements for the fiscal year ended June 30, 2023.

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 publ ic-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Implementation of this statement did not have a significant effect on the City's financial statements for the fiscal year ended June 30, 2023.

GASB Statement No. 96 - In May 2020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. Implementation of this Statement had a moderate effect on the City's financial statements for the fiscal year ended June 30, 2023.

GASB Statement No. 99 - In April 2022, GASB issued Statement No. 99, Omnibus 2022. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees.

Implementation of this Statement did not have a significant effect on the City's financial statements for the fiscal year ended June 30, 2023.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

71 Note 1 – Summary of Significant Accounting Policies (Continued)

BB. Upcoming GASB Pronouncements

In the next two years, the City will implement the following GASB Pronouncements:

GASB Statement No. 100 – In June 2022, GASB issued Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62 . The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. Application of this statement is effective for the City’s fiscal year ending June 30, 2024.

GASB Statement No. 101 – In June 2022, GASB issued Statement No. 101, Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. Application of this statement is effective for the City’s fiscal year ending June 30, 2025.

GASB Statement No. 102 - In December 2023, GASB issued Statement No. 102, Certain Risk Disclosures. This Statement requires a government to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. Additionally, this Statement requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of th e date the financial statements are issued. Application of this statement is effective for the City’s fiscal year ending June 30, 2025.

Note 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 Fund, Special Revenue Funds, and Capital Projects Funds. The City Manager may transfer budget appropriations between departments and Department Directors may transfer appropriations between programs and accounts within their individual departments and divisions, but only the Council by resolution may appropriate funds from reserves or fund balances.

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 C ity Council during the year. Additional supplementary appropriations were adopted during the mid-year review.

Appropriations lapse at fiscal year end and then are re-budgeted for the coming year. Project-length financial plans are adopted for all capital projects funds and appropriat ions are carried forward until project completion. Grant funds are carried forward until the grant expires.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
72 Note 2 – Stewardship, Compliance, and Accountability (Continued) A. Budgeting (Continued)
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.

For additional information on budgetary policy and control see Required Supplementary Information.

B. Deficit Fund Balances and Net Position
At June 30, 2023, the following funds had a deficit fund balance or deficit net position:

Fund TypeF und Deficit
Governmental Emergency M edical Services (370,045) $
Governmental Traffic Safety (13,721)
Governmental Assessment District Debt Service (210,237) Governmental Assessment District Administration (2,178) Enterprise Downtown Parking District Fund (5,720,666)
Internal Service Fund Workers Compensation (1,133,188)
Internal Service Fund General Liability (4,701,340)
Custodial Fund Flexible Spending (93,859)
Nonm
ajor Funds
The deficit fund balances in the Special Revenue Funds Emergency Medical Services fund of $370,045 is due to increased expenditures in emergency equipment and supplies. The deficit fund balance in the Traffic Safety Special Revenue Fund of $13,721 is a result of increased services in vehicle code violations provided by Monterey County.

These deficits will decline as claims are submitted for reimbursement to state and federal agencies and unavailable funds become available. The deficit fund balance in the Debt Service Funds Assessment District Debt Service fund of $210,237 is due to amounts owed to the General Fund. The deficit fund balance in the Debt Service Funds Assessment District Administration fund of $2,178 is due to amounts owed to the General Fund. This will be cleared in fiscal year 2024 and the fund will be closed out.

Enterprise Funds – Downtown Parking District Fund
The deficit net position in the Downtown Parking District Fund of $5,720,666 is a result of operating cost in excess of operating revenues and the long-term lease payable amounting to $8,413,000. This deficit will continue to decline over time as the lease payable is collected.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

73 Note 2 – Stewardship, Compliance, and Accountability (Continued)

B. Deficit Fund Balances and Net Position (Continued)

Internal Service Funds
The deficit net position in the General Liability and Workers Compensation internal service funds of $4,701,340 and $1,133,188, respectively, are the result of insurance costs exceeding charges for services in the funds. The City is reevaluating their internal service fund allocations in order to ensure that charges for services in internal service funds are sufficient to cover the costs of providing services moving forward.

Custodial Funds
The deficit net position in the custodial Flexible Spending fund is the result of expenses exceeding plan member contributions during the fiscal year. The deficit is expected to be made up through future member contributions.

C. 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.

Note 3 – Cash and Investments

Cash and investments are presented in the accompanying financial statements at June 30, 2023 as follows:

Fiduciary Funds
Governmental Business-Type Statement of
Activities Activities Total Net Position Total
Cash and investments 231,490,842 $ 16,186,214 $ 247,677,056 $ 16,442,424 $ 264,119,480 $ Restricted cash and investments 263,442 6,977 270,419 1,506,423 1,776,842 Total cash and inv estments 231,754,284$ 16,193,191 $ 247,947,475 $ 17,948,847 $ 265,896,322 $ Government-Wide Statement of Net Position

Cash and investments at June 30, 2023, consisted of the following:

Cash and Cash Equivalents:

Cash on hand 35,000 $
Demand accounts at banks 5,478,408
Money market 49,625,397
Deposits held in trust by fiscal agent 6,201,845
Money market held in trust by fiscal agent 2,127,961
Local Agency Investment Fund 8,175,975
Total cash and cash e quivalents 71,644,586
Investments:

Investments held by fiscal agent 190,434,031
Deferred compensation 3,817,705
Total inv estments 194,251,736
Total cash and inv estments 265,896,322$

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
74 Note 3 – Cash and Investments (Continued)
A. Demand Deposits
The carrying amounts of the City’s demand deposits were $5,478,408 at June 30, 2023. Bank balances were $10,280,938 at that date. The total amount of which was collateralized or insured with securities held by th e
p
ledging financial institutions in the City’s name is discussed below.

The California Government Code requires California banks and savings and loan associations to secure the City’s c
ash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner sh all hav
e the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.

The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits; however, the City has not waived the collateralization requirements.

The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances.

Interest income from cash and investments with fiscal agents is credited directly to the related fund.

B. Investments
The tab
le below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code that address interest rate risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provision of the California Government Code or the City’s investment policy:

Ma x i m um Ma x i m um
Ma x i m um Percentage Investment in
Authorized Investment Types Maturity of Portfolio One Issuer* Certificates of deposit 5 years None None
Repurchase agreements 5 years None None
Bankers' acceptances 5 years None None
Guaranteed investment contracts 5 years None None
U.S. Treasury bills and notes 5 years None None
State of California Local Agency Investment Fund N/A None None Government agency securities 5 years None None
Passbook savings accounts 5 years None None
Mutual funds 5 years None None
Interest bearing checking accounts N/A None None
Commercial pape
r 5 years None None
* B
ased on state law requirements or City investment policy requirements, whichever is more restrictive.

T
he 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 the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

75 Note 3 – Cash and Investments (Continued)

B. Investments (Continued)

In accordance with Section 53651 of the California Government Code, the City cannot invest in inverse floaters, range notes, or interest-only strips that are derived from a pool of mortgages, or in any security that could result in zero interest accrual if held to maturity. The limitation does not apply to investments in shares of beneficial interest issued under the Investment Company Act of 1940 that are authorized investments under Section 53601 of the California Government Code. A five-year maximum maturity for each investment is allowed unless approved by the City Council.

Investment income from cash and investments held by fiscal agents are credited directly to the related funds.

The City is a participant in LAIF which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2023, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities:

Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities: generally, mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2023, the City had $8,175,975 invested in LAIF, which had invested 0.20% of the pool investment funds in structured notes and asset-backed securities. The fair value of the City’s portion in the pool is the same as the value of the pool shares and reported at amortized cost.

C. Risk Disclosures

Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.

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, 2023 had an average life of 290 days, it was presented as a cash equivalent with a maturity of 0-12 months. However, LAIF allows the City to make withdrawals of any amount within 24 hours.

At June 30, 2023, the City had the following investment maturities:

Investment Type Total 1 year or fewer 1 to 5 years Over 5 years Investment agreements - BNY 184,076,146$ 114,198,571$ 69,877,575$ -$ New York Life Pension 6,357,885 6,357,885 - - Trust deeds - deferred compensation 3,817,705 - 3,817,705 - Total inv estments 194,251,736$ 120,556,456$ 73,695,280$ -$ Investment Maturities

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
76 Note 3 – Cash and Investments (Continued)
C. Risk Disclosures (Continued)
Disclosures Relating to Interest Rate Risk (Continued)
F
or deposits, custodial credit risk is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer), 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 insured by the Federal Depository Insurance Cor poration (“FDIC”) up to $250,000 or collateralized with pledge securities held in the trust department of the financial institution in the City’s name.

Disclosures Relating to Concentration of Credit Risk
T
he 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 below:

Investment Type Value S&P Moody's % of Total
Investment agreements:

US Treasuries 119,426,037$ A Aaa 61.48%
FHLB 13,174,946 AA+ Aaa 6.78%
FHLMC 2,182,087 AA+ Aaa 1.12%
FNMA 2,972,432 AA+ Aaa 1.53%
FFCB 7,924,374 AA+ Aaa 4.08%
Corporate bonds 28,920,765 A+ to A2 A1 to A2 14.89% Trust deeds - deferred compensation 3,817,705 NR NR 1.97% Money market funds: 0.00%
Investment agreements 294,930 AAAm Aaa-mf 0.15%
Wilmington Trust, NA 9,180,575 A- A2 4.73%
New York Life Fixed Dollar Account 6,357,885 NR NR 3.27% Total inv estments 194,251,736$ 100.00%
D. Fai
r Value Measurement
The City categorizes its fair 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 unadjusted quoted prices in active markets for identical asset s or
lia
bilities (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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
77 Note 3 – Cash and Investments (Continued)
D. Fair Value Measurement (Continued)
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 corrobo rated 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 management 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 the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
78 Note 3 – Cash and Investments (Continued)
D. Fair Value Measurement (Continued)
The City had the following recurring fair value measurements as of June 30, 2023:

Inve stme nts me asure d by fai r val ue l e ve l : June 30, 2023 Level 1 Level 2 Level 3 Investment agreements:

US Treasuries 119,426,037 $ 119,426,037 $ - $
-$
FHLB 13,174,946 13,174,946 -
-
FHLMC 2,182,087 2,182,087 -
-
FNMA 2,972,432 2,972,432 -
-
FFCB 7,924,374 7,924,374 -
-
Corporate bonds 28,920,765 28,920,765 -
-
Trust deeds - deferred compensation 3,817,705 - - 3,817,705 Total inv estments b y fair v alue lev el 178,418,346 174,600,641$ -$ 3,817,705$
Investments not subject to the fair value hierarchy:

Money market at Rabobank
Money market funds:

Fidelity Investment MM Gov 294,930
Wilmington Trust, NA 9,180,575
New York Life Fixed Dollar Account 6,357,885
Total investments not subject to the fair value hierarchy 15,833,390 Total inv estments 194,251,736$
The fo
llowing 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 back 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 50% to 70% depending on property type and condition, borrowers payment history, and term remaining on note.

There have been no changes in the methods and assumptions used at June 30, 2023. 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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

79 Note 4 – Restricted Assets

Certain cash and investments are reported as restricted assets at June 30, 2023 as follows:

Ente rprise Funds:

Sanitary Sewer Fund - restricted for debt service 6,977 $ Internal S ervice Funds:

Workers Compensation Internal Service Fund 263,442
General Liability Internal Service Fund -
Total restricted assets - primary gov ernment 270,419$
Fiduciary Funds:

Private Purpose Trust Funds 1,438,695 $
Custodial Funds 67,728
Total restricted assets - fiduciar y funds 1,506,423$

Note 5 – Taxes Receivable

Taxes receivable recorded in the General Fund of $18,380,898 represent amounts due for the quarter ended June 30, 2023 for the following taxes:

Sales tax 6,515,584$
Measure E transaction and use tax 3,075,093
M easure G transaction and use tax 6,171,975
Utility users tax 470,714
Transient occupancy tax 847,168
Franchise tax 777,583
Cannabis tax 285,804
Other taxes 48,480
Property transfer tax 188,497
18,380,898$

Note 6 – Assessments Receivable

Debt Service Funds – Assessments receivable recorded in the 2019 Special Tax Bond Monte Bella Debt Service Fund and Assessment District Debt Service Fund in the amounts of $7,175,000 and $540,000, respectively, at June 30, 2023, will be collected from property owners to retire outsta nding bond principal issued for improvements in special assessment districts.

Assessment receivables in the amount of $7,175,000 are not expected to be collected within the subsequent year.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
80 Note 7 – Due From Other Agencies
At June 30, 2023, amounts due from other agencies consisted of the following:

Federal S tate Other Total
Governmental Activities:

Special Revenue Funds:

Association of M onterey Bay Area Govts. -$ -$ 2
5,502$ 25,502$
CA Emergency Solutions & Housing - 8
1,444 - 81,444
C
A Highway Users Tax - 426,
545 - 426,545
CD
BG Improvement Program 605,801 - - 605,801
Count
y of M onterey - - 863,133 863,133
E
mergency Shelter Grant 153,602 - - 153,602
H
OM E Investment Program 97,743 - - 97,743
S
B1 Road Maintenance & Rehab - 323,
622 - 323,622
ST
EP Grant St ate of California - 2
4,248 - 24,248
T
ransportation Agency for Monterey County - - 1
,521,546 1,521,546
U.S. Department of Justic e 8,333 - - 8,333
Capital Projects Funds:

CA Dept. of Transportation - 283,
866 - 283,866
F
ederal HSIP 849 - - 849
M
onterey Bay Air Resource District - - 188,449 188,449 M
onterey Bay Unified Air Pollution Control Dist. - - 242,844 242,844 M
onterey County - - 25,769 25,769
M
onterey County - RSTP - - 90,208 90,208
Pri
mary government total 866,328$ 1,139,725$ 2,957,451$ 4,963,504$ Note 8 – Le
ases Receivable
The City leases land and easements to third parties. Leases receivable consist of agreements with third parties for the “right-to-use” the underlying assets owned by the City. The remaining terms of the agreements range from one to 28 years. The calculated interest rates used match the City’s incremental borrowing rate at July 1, 2021.

For fiscal year ended June 30, 2023, the City recognized $1,267,881 in lease revenue and $396,542 in interest revenue, and the outstanding receivable amount at June 30, 2023 is $10,638,649.

A summary of changes in the leases receivable for the fiscal year ended June 30, 2023 is as follows:

Amounts Amounts
B
alance Balance due within due in more
July 1, 2022 Additions Reductions June 30, 2023 one year than one year Governmental activities 6,046,059$ -$ (561,726)$ 5,484,333$ 514,671$ 4,969,662$ Business-type activities 5,583,787 - (429,471) 5,154,316 429,084 4,725,232 Total 11,629,846$ -$ (991,197)$ 10,638,649$ 943,755$ 9,694,894$ City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

81 Note 8 – Leases Receivable (Continued)

Future lease payments are as follows as of June 30, 2023:

Year Ending Lease
June 30 Receivable Interest Total
2024 943,755$ 363,066$ 1,306,821$ 2025 813,685 334,209 1,147,894 2026 711,687 307,723 1,019,410 2027 587,282 284,785 872,067 2028 609,890 263,951 873,841 2029-2033 2,741,553 1,033,453 3,775,006 2034-2038 2,705,458 498,575 3,204,033 2039-2043 1,007,741 164,187 1,171,928 2044-2048 420,418 55,152 475,570 2049-2050 97,180 2,366 99,546 Total 10,638,649$ 3,307,467$ 13,946,116$

As of June 30, 2023, the amounts reported as deferred inflow s of resources will be recognized as lease revenue as follows:

Year Ending
June 30 Total
2024 1,162,821$
2025 990,183
2026 842,795
2027 728,387
2028 699,114
2029-2033 2,713,514
2034-2038 2,031,695
2039-2043 690,863
2044-2048 300,105
2049-2050 62,420
Total 10,221,897$

Note 9 – Loans and Notes Receivable

At June 30, 2023, loans and notes receivable of the City's major individual funds and nonmajor funds taken in aggregate, including the applicable allowance for uncollectible accounts are as follows:

Low
& Moderate Total
Income Governmental Fiduciary
CDBG Housing Asset Activ ities Funds
Loans funded by federal grants: 20,808,456$ - $ 20,808,456$ - $ Economic development real estate
developer and other loans - 10,445,107 10,445,107 163,900 Less: allowance for uncollectibles (20,754,500) (10,428,537) (31,183,037) - Total loans, net 53,956$ 16,570$ 70,526$ 163,900$

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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
82 Note 9 – Loans and Notes Receivable (Continued)
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 their 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.

Note 10 – Interfund Receivables, Payable, and Transfers A. Due From and To Other Funds
At June 30, 2023, the balances of due from and to other funds were as follows:

Receiv able Fund Payable Fund Amount Purpose
General Fund Grants Special Revenue Fund 971,750$ Cash overdraft General Fund Housing and Urban Development Special Revenue Fund 3,067,129 Cash overdraft General Fund Downtown Parking District Enterprise Fund 1,793,617 Cash overdraft General Fund Emergency M edical Services Special Revenue Fund 303,924 Cash overdraft General Fund Development Fees Special Revenue Fund 269 Cash overdraft General Fund Lighting, Landscape, and Maintenance Dist Special Revenue Fund 51,188 Cash overdraft General Fund Special Construction Assistance Capital Projects Fund 1,158,151 Cash overdraft General Fund Traffic Safety Special Revenue Fund 64,245 Cash overdraft General Fund Assessment District Debt Service Debt Service Fund 209,237 Cash overdraft General Fund Assessment District Administration Debt Service Fund 2,178 Cash overdraft General Fund General Liability Internal Service Fund 781,837 Cash overdraft 8,403,525
Capital Projects Capital Projects Fund General Fund 254,632 Capital projects Capital Projects Capital Projects Fund Lighting, Landscape and M aintenance Special Revenue Fund 385 Capital projects Capital Projects Capital Projects Fund Special Construction Assistance Capital Projects Fund 426,821 Capital projects Capital Projects Capital Projects Fund Special Aviation Cap ital Projects Fund 58,095 Capital projects Capital Projects Capital Projects Fund Housing and Urban Development Special Revenue Fund 30,583 Capital projects Capital Projects Capital Projects Fund Gas Tax Special Revenue Fund 237,116 Capital projects Capital Projects Capital Projects Fund Development Fees Sp ecial Revenue Fund 35,642 Capital projects Capital Projects Capital Projects Fund M easure X Special Revenue Fund 113,423 Capital projects Capital Projects Capital Projects Fund Industrial Waste Enterprise Fund 143,394 Capital projects Capital Projects Capital Projects Fund Airport Enterprise Fund 28,535 Capital projects Capital Projects Capital Projects Fund Permit Services Enterp rise Fund 3,300 Capital projects Capital Projects Capital Projects Fund S anitary Sewer Enterprise Fund 33,776 Capital projects Capital Projects Capital Projects Fund SB1 Road Maintenance & Rehab Special Revenue Fund 21,751 Capital projects 1,387,453
Workers Compensation Internal Service Fund General Fund 16,831,462 Claims Total 26,622,440$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
83 Note 10 – Interfund Receivables, Payable, and Transfers B. Long-Term Advances
At June 30, 2023, the balances of long-term advances were as follows:

Advances Due To
Governmental
Activities
General Fund
Advances Due From
Business-Type Activities:

Downtown Parking 2,785,000 $
Total business-type activities 2,785,000
Total primary government 2,785,000$
Advance
s from the General Fund to the Downtown Parking District Fund total $2,785,000 at June 30, 2023. The advances helped subsidize operations in the Downtown Parking District Fund as program needs, including sources and uses, were established. As the Downtown Parking District becomes fully self-sufficient, a plan will be established to pay back the advance from the General Fund over time.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
84 Note 10 – Interfund Receivables, Payable, and Transfers (Continued) C. Transfers
Interfund transfers during the year ended June 30, 2023, consisted of the following:

Transfers In Transfers Out Amount Purpose
General Fund Gas Tax Special Revenue Fund 1,800,000$ Capital projects/debt service General Fund Traffic Safety Special Revenue Fund 200,000 Capital projects/debt service General Fund Special Construction Assistance Capital Projects Fund 917,795 Operating costs Subtotal General Fund 2,917,795
Capital Projects Capital Projects Fund General Fund 7,745,616 Capital projects Capital Projects Capital Projects Fund Lighting, Landscape and M aintenance Special Revenue Fund 137,735 Capital projects Capital Projects Capital Projects Fund Development Fees Sp ecial Revenue Fund 403,473 Capital projects Capital Projects Capital Projects Fund Gas Tax Special Revenue Fund 1,155,423 Capital projects Capital Projects Capital Projects Fund Emergency M edical Services Special Revenue Fund 18,170 Capital projects Capital Projects Capital Projects Fund M easure X Special Revenue Fund 1,451,388 Capital projects Capital Projects Capital Projects Fund SB1 Road Maintenance & Rehab Special Revenue Fund 1,754,856 Capital projects Capital Projects Capital Projects Fund Affordable Housing Special Revenue Fund 5,995 Capital projects Capital Projects Capital Projects Fund Housing and Urban Development Special Revenue Fund 387,350 Capital projects Capital Projects Capital Projects Fund Special Aviation Cap ital Projects Fund 637,450 Capital projects Capital Projects Capital Projects Fund Special Construction Assistance Capital Projects Fund 7,162,760 Capital projects Capital Projects Capital Projects Fund Airport Enterprise Fund 22,313 Capital projects Capital Projects Capital Projects Fund Industrial Waste Enterprise Fund 228,605 Capital projects Capital Projects Capital Projects Fund Sanitary Sewer Enterprise Fund 287,534 Capital projects Capital Projects Capital Projects Fund Permit Services Enterp rise Fund 369,647 Capital projects Subtotal Capital Projects Capital Projects Fund 21,768,315 COP 2018B T.R.I.P. Debt Service Fund Measure X Special Revenue Fund 2,316,025 Debt service 2018 Lease El Gabilan Library Debt Service Fund General Fund 783,718 Debt service 2018 Lease-PS Building Police Debt Service Fund General Fund 4,469,926 Debt service COP 1999 & 2004 Debt Service Fund General Fund 58,245 Debt service 2020A Refunding SVSWA Debt Service Fund General Fund 668,735 Debt service Industrial Waste Enterprise Fund General Fund 1,661,100 Capital projects/debt service Downtown Parking District Enterprise Fund General Fund 30,000 Debt service Emergency Medical Services Enterprise Fund General Fund 1,357,500 Operating subsidy Vehicle Abatement Special Revenue Fund General Fund 50,000 Operating subsidy 2020A Refunding Energy Debt Service Fund General Fund 1,244,337 Debt service 2020A Refunding Energy Debt Service Fund Airport Enterprise Fund 78,291 Debt service 2020A Refunding Energy Debt Service Fund Industrial Waste Enterprise Fund 73,292 Debt service 2020A Refunding Energy Debt Service Fund Sanitary Sewer Enterprise Fund 97,673 Debt service 2020A Refunding Energy Debt Service Fund Downtown Parking District Enterprise Fund 33,130 Debt service Subtotal 2020A Refunding Energy Debt Service Fund 1,526,723 General Insurance Internal Service Fund General Fund 500,000 Operating subsidy General Liabiilty Internal Service Fund General Fund 2,700,000 Operating subsidy Workers' Comp Self Insurance Internal Service Fund General Fund 39,800 Operating subsidy Fleet Internal Service Fund General Fund 2,120,000 Operating subsidy Total 42,967,882$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
85 Note 11 – Capital Assets
A. Governmental Activities
The summary of changes in governmental activities capital assets for the year ended June 30, 2023, is as follows:

Balance Balance
Gove rnme ntal Acti vi ti e s: July 1, 2022 Additions Retirements Transfers June 30, 2023 Non-depreciable/amortizable assets:

Land 25,899,986$ 7,087,547$ -$ (
4,407)$ 32,983,126$
Construction in progress 24,424,091 4,755,112 - (1,146,906) 28,032,297
Total non-depreciable/amortizable assets 50,324,077 11,842,659 - (1,151,313) 61,015,423
Depreciable/amortizable assets
Buildings and improvements 135,129,108 - - - 135,129,108 Improvements other than buildings 50,677,352 - - - 50,677,352 M achinery and equipment 45,951,417 3,902,759 (907,705) 245,481 49,191,952 Infrastructure 421,150,155 - - 905,832 422,055,987 Rig ht-to-use assets - leases 539,511 11,025 - - 550,536 Right-to-use assets - subscriptions - 410,213 -
- 410,213
Total depreciable/amortizable assets 653,447,543 4,323,997 (907,705) 1,151,313 658,015,148 Accumulated depreciation/amortization
Buildings and improvements (24,145,777) (2,723,692) - - (26,869,469) Improvements other than buildings (23,288,171) (1,700,009) - - (24,988,180) M achinery and equipment (35,378,865) (3,200,827) 860,505 - (37,719,187)
Infrastructure (285,790,384) (8,704,363) - - (294,494,747) R
ig ht-to-use assets - leases (204,913) (169,207) - - (374,120) Right-to-use assets - subscriptions - (27,208) -
- (27,208)
Total accumulated depreciation/amortization (368,808,110) (16,525,306) 860,505 - (384,472,911)
T
otal depreciable/amortizable assets, net 284,639,433 (12,201,309) (47,200) 1,151,313 273,542,237 Governmental activities
capital assets, net 334,963,510$ (358,650)$ (47,200)$ -$ 334,557,660$
Deprec
iation and amortization expense was charged to the functions/programs of the governmental activities as follows:

Gove rnme ntal Acti vi tie s:

General government 431,241$
Police 2,440,357
Fire 1,016,253
Public works, including infrastructure 11,647,369
Recreation and parks 792,263
Library 197,823
Total depreciation/amortization expense - governmental activities 16,525,306$ City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
86 Note 11 – Capital Assets (Continued)
B. Business-Type Activities
The summary of changes in business-type activities capital assets for the year ended June 30, 2023, is as follows:

Balance Balance
Business-Type Activities: July 1, 2022 Additions Retirements Transfers June 30, 2023 Nondepreciable assets:

Land 3,632,339$ -$ (
1,644)$ -$
3,630,695$
Construction in progress 2,947,566 1,589,967 (2,406,009) (509,595) 1,621,929 Total nondepreciable assets 6,579,905 1,589,967 (2,407,653) (509,595) 5,252,624 Depreciable assets
Buildings and improvements 25,888,821 - - - 25,888,821 Improvements other than buildings 15,461,105 - - 509,595 15,970,700 Machinery and equipment 7,779,509 132,144 (115,419) - 7,796,234 Infrastructure 102,709,198 - - - 102,709,198 Total depreciable assets 151,838,633 132,144 (115,419) 509,595 152,364,953 Accumulated depreciation:

Buildings and improvements (15,901,506) (693,457) - - (16,594,963) Improvements other than buildings (5,904,045) (741,696) - - (6,645,741) Machinery and equipment (5,262,311) (315,271) 115,419 - (5,462,163)
I
nfrastructure (59,105,202) (1,835,160) - - (60,940,362) T
otal accumulated depreciation (86,173,064) (3,585,584) 115,419 - (89,643,229)
T
otal depreciable assets, net 65,665,569 (3,453,440) - 50 9,595 62,721,72
4 Business-type activities
capital assets, net 72,245,474$ (1,863,473)$ (2,407,653)$ -$ 67,974,348$ Deprec
iation expense was charged to the functions/programs of the business-type activities as follows:

Business-type Activities:

Airport 942,091 $
Industrial Waste 497,096
Sanitary Sewer 1,573,044
Downtown Parking 555,845
Permit Services 17,508
Total depreciation expense - business-type activities 3,585,584$ Note 12 – La
nd and Properties Held For Resale
Land and properties held for resale at June 30, 2023 consisted of the following:

Special Revenue Fund
137, 145, & 151 Division Street 584,419$
Affordable Housing Fund - Sunset Avenue Merged Housing
115 Division Street 230,981
123 Division Street 206,265
923 E. Market Street 358,335
795,581
Total land and properties held for resale 1,380,000$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

87 Note 13 – Long-Term Debt

A. Governmental Activities

A summary of changes in long-term debt for governmental activities for the year ended June 30, 2023 is as follows:

Amount due Amount due in
Balance Balance within one more than one
July 1, 2022 Additions Retirements June 30, 2023 year year Governmental Activities
Direct borrowings - leases 56,058,302 $ - $ (4,643,883)$ 51,414,419 $ 4,732,630 $ 46,681,789 $ Direct borrowings - subscriptions - 410,213 (139,409) 270,804 133,728 137,076 total direct borrowings 56,058,302 410,213 (4,783,292) 51,685,223 4,866,358 46,818,865 Certificates of Participation:

TRIP 2018B 35,370,000 - (750,000) 34,620,000 800,000 33,820,000 Series 2020A-Twin Creeks 1,975,000 - (365,000) 1,610,000 380,000 1,230,000 Series 2020B Fairways 3,830,000 - (110,000) 3,720,000 120,000 3,600,000 Series 2020A-Energy (2014) 14,785,000 - (935,000) 13,850,000 1,005,000 12,845,000 Series 2020A-SVSWA (2015B) 3,335,000 - (545,000) 2,790,000 565,000 2,225,000 Bond premium/(discount):

TRIP 2018B 3,201,501 - (336,774) 2,864,727 - 2,864,727 TRIP 2018B (330,999) - 13,240 (317,759) - (317,759) Series 2020A-Twin Creeks 226,737 - (45,348) 181,389 - 181,389 Series 2020A-Energy (2014) 2,733,184 - (248,472) 2,484,712 - 2,484,712 Series 2020A-SVSWA (2015B) 420,933 - (70,156) 350,777 - 350,777 Total Certificates of Participation: 65,546,356 - (3,392,510) 62,153,846 2,870,000 59 ,283,846 Assessment District Bonds:

Assessment District 2017 Act Bonds 970,000 - (430,000) 540,000 450,000 90,000 CFD Monte Bella-2019 #1 2,575,000 - (55,000) 2,520,000 55,000 2,465,000 CFD Monte Bella-2019 #2 2,050,000 - (40,000) 2,010,000 45,000 1,965,000 CFD Monte Bella-2019 #3 2,695,000 - (50,000) 2,645,000 55,000 2,590,000 Bond premium/(discount):

CFD Monte Bella-2019 #1 69,938 - (2,498) 67,440 - 67,440 CFD Monte Bella-2019 #2 196,888 - (7,032) 189,856 - 189,856 CFD Monte Bella-2019 #3 242,947 - (8,377) 234,570 - 234,570 Total Assessment District Bonds 8,799,773 - (592,907) 8,206,866 605,000 7,601,866 Total governmental activities 130,404,431$ 410,213 $ (8,768,709)$ 122,045,935$ 8,341,358 $ 113,704,577$

Direct Borrowing – Leases

Annual debt service requirements to maturity for the City’s leases are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 4,732,630$ 2,110,407 $ 6,843,037 $
2025 4,642,843 1,899,896 6,542,739
2026 4,633,821 1,688,306 6,322,127
2027 4,280,125 1,473,155 5,753,280
2028 4,199,000 1,265,597 5,464,597
2029-2033 18,050,000 3,417,478 21,467,478 2034-2038 3,246,000 1,808,650 5,054,650 2039-2043 3,070,000 1,210,303 4,280,303 2044-2048 3,725,000 543,325 4,268,325 2049-2051 835,000 16,475 851,475 Total 51,414,419$ 15,433,592 $ 66,848,011 $
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
88 Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Direct Borrowing – Leases (Continued)
Quantum Ti
ller 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 paymen ts of $124,848, beginning on March 17, 2015 and ending March 17, 2024 at 2.60% interest. Debt payable of $121,684 is recorded as Governmental Activities at June 30, 2023.

Debt service requirements to maturity for the Quantum Tiller Ladder Truck are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 121,684 $ 3,164$ 124,848$
Total 121,684$ 3,164$ 124,848$
P
ierce 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 begi nning on March 6, 2016 and ending March 6, 2025 at

2.51% interest. Debt payable of $241,179 is recorded as Governmental Activities at June 30, 2023.

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 the Pierce Pumper & Tiller are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 119,097 $ 6,046$ 125,143$
2025 122,082 3,060 125,142
Total 241,179$ 9,106$ 250,285$
2014 Lea
se/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%. Maximum annual debt service is $278,646. Debt payable of $1,481,000 is recorded as Governmental Activities at June 30, 2023.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

89 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Direct Borrowing – Leases (Continued)

2014 Lease/Purchase Agreement (Continued)

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:

Fiscal Year
Ending June 30: Principal Interest Total
2024 171,000 $ 56,099 $ 227,099 $
2025 179,000 49,064 228,064
2026 191,000 41,627 232,627
2027 120,000 35,376 155,376
2028 124,000 30,472 154,472
2029-2033 696,000 72,400 768,400 Total 1,481,000$ 285,038$ 1,766,038$

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 $99,378 is recorded as Governmental Activities at June 30, 2023.

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:

Fiscal Year
Ending June 30: Principal Interest Total
2024 99,378 $ 2,444 $ 101,822 $ Total 99,378 $ 2,444 $ 101,822 $

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
90 Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Direct Borrowing – Leases (Continued)
A
ltec 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 $28,135 is recorded as Governmental Activities at June 30, 2023.

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 Altec Aerial Lift are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 28,135 $ 768$ 28,903$
Total 28,135$ 768$ 28,903$
Publi
c 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 $32,865,000 is recorded as Governmental Activities at June 30, 2023.

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 cont rary 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:

Fiscal Year
Ending June 30: Principal Interest Total
2024 3,060,000$ 1,414,944 $ 4,474,944$
2025 3,210,000 1,258,194 4,468,194
2026 3,370,000 1,093,694 4,463,694
2027 3,540,000 920,944 4,460,944
2028 3,715,000 739,569 4,454,569
2029-2033 15,970,000 1,212,103 17,182,103
Total 32,865,000$ 6,639,448$ 39,504,448$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
91 Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Direct Borrowing – Leases (Continued)
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 Jun
e 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 payab
le of $13,695,000 is recorded as Governmental Activities at June 30, 2023.

In the event of an event of default, the trustee shall be entitled to declare the principal of all the bonds then outs
tanding, 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 cont rary 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 El Gabilan Library 2018B are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 235,000 $ 550,994$ 785,994$
2025 240,000 539,119 779,119
2026 255,000 526,744 781,744
2027 345,000 512,213 857,213
2028 360,000 495,556 855,556
2029-2033 2,080,000 2,205,375 4,285,375
2034-2038 2,550,000 1,736,250 4,286,250
2039-2043 3,070,000 1,210,303 4,280,303
2044-2048 3,725,000 543,325 4,268,325
2049 835,000 16,475 851,475
Total 13,695,000$ 8,336,354$ 22,031,354$
Police/Fire Radios & PW Equipment
The City of Salinas Motorola Radios and Public Work Equipment was issued by Banc of America Public Capital Corpor
ation in the amount of $3,500,000 on August 17, 2018. Th is equipment replaces old manufactured models and will make Police, Fire, and Public Work operations more efficient. The lease consists of 84 payments, beginning on August 17, 2019 and ending on August 17, 2025 at an aver age interest rate of 3.120%. Debt payable of $1,592,553 is recorded as Governmental Activities at June 30, 2023.

Upon the occurrence of an event of default, legal title and physical position of the equipment shall pass to the Lesso
r, and the City shall have no further interest therein.

Debt service requirements to maturity for Police/Fire Radios & PW Equipment are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 514,627 $ 49,688$ 564,315$
2025 530,684 33,631 564,315
2026 547,242 17,073 564,315
Total 1,592,553$ 100,392$ 1,692,945$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
92 Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Direct Borrowing – Leases (Continued)
2021 Pi
erce Enforcer Pumpers
In fiscal year 2022, the City, using lease purchase financing, purchased a Pierce Enforcer Pumper fire engine for a total of $1,330,913. The City will make six annual payments of $279,747, beginning on December 17, 2021 and ending December 17, 2026 at 1.68% interest. Debt payable of $1,073,525 is recorded as Governmental Activities at June 30, 2023.

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 the 2021 Pierce Enforcer Pumper are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 261,712 $ 18,035$ 279,747$
2025 266,109 13,638 279,747
2026 270,579 9,168 279,747
2027 275,125 4,622 279,747
Total 1,073,525$ 45,463$ 1,118,988$
Minor Leases
The City has entered into various minor leases for equipmen t such as copiers, etc. that were subject to GASB 87 Leases implementation in fiscal year 2023.

Debt service requirements to maturity for these leases are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 121,997 $ 8,225$ 130,222$
2025 94,968 3,190 98,158
Total 216,965$ 11,415$ 228,380$
Ce
rtificates of Participation Bonds
Series 2018B – TRIP
On July 18, 2108, the California Statewide Communities Dev elopment 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 City. Debt payable of $34,620,000 plus premiums and discounts of $2,864,727 and ($317,759), respectively, are recorded as Governmental Activities at June 30, 2023.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

93 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds

Series 2018B – TRIP

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:

Fiscal Year
Ending June 30: Principal Interest Total
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 925,000 1,406,225 2,331,225
2028 950,000 1,363,975 2,313,975
2029-2033 5,550,000 6,060,375 11,610,375 2034-2038 7,045,000 4,522,750 11,567,750 2039-2043 8,990,000 2,542,688 11,532,688 2044-2047 8,620,000 616,525 9,236,525 Total 34,620,000$ 20,959,463$ 55,579,463$

Series 2020A Twin Creeks

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. On August 24, 2004, the City entered into a sublease agreement with the Monterey Peninsula 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 refina nced 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 C ounty, 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 amount of the sublease to the First Tee of Monterey County.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
94 Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Certificates of Participation Bonds (Continued)
Seri
es 2020A Twin Creeks (Continued)
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 Augus
t 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Series 2020A totaling $2,715,000. The Advance Refunding Cert ificates 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 $1,610,000 is recorded in the governmental activities at June 30, 2023.

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 ther
efore, 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 equ
ity may appear necessary or desirable to en force 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.

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 380,000 $ 56,800$ 436,800$
2025 395,000 41,300 436,300
2026 410,000 25,200 435,200
2027 425,000 8,500 433,500
Total 1,610,000$ 131,800$ 1,741,800$
Seri
es 2020B Fairways
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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

95 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds (Continued)

Series 2020B Fairways (Continued)

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 $3,720,000 is recorded in the governmental activities at June 30, 2023.

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 en force 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.

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 120,000 $ 93,997 $ 213,997 $
2025 135,000 92,537 227,537
2026 155,000 90,619 245,619
2027 165,000 88,184 253,184
2028 185,000 85,126 270,126
2029-2033 1,140,000 354,213 1,494,213 2034-2038 1,475,000 166,875 1,641,875 2039 345,000 5,175 350,175
Total 3,720,000$ 976,726$ 4,696,726$

Series 2020A Energy (2014)

On November 1, 2014, the City entered into a lease agreement funded 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 was $2,005,124.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
96 Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Certificates of Participation Bonds (Continued)
Series 2020A Energy (2014) (Continued)
On August 19, 2020, the Salinas Public Financing Authority issued City of Salinas Certificates of Participation, Seri
es 2020A totaling $16,190,000. The Advance Refunding Certificates were issued to refund the 2014 Energy Improvement 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 new debt) of $1,425,483. Debt payable of $13,850,000 is recorded as Governmental Activities at June 30, 2023.

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 ther
efore, 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 equ
ity may appear necessary or desirable to en force 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.

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
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 1,235,000 416,750 1,651,750
2028 1,320,000 365,650 1,685,650
2029-2033 8,055,000 906,775 8,961,775
Total 13,850,000$ 3,213,925$ 17,063,925$
Series 2020A SVSWA (2015B)
On October 24, 1997, the Salinas Public Financing Authority is sued 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 Authority’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 Authorit y is sued City of Salinas Refunding Certificates of
Participation Series 2005B (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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

97 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Certificates of Participation Bonds (Continued)

Series 2020A SVSWA (2015B) (Continued)

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 $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 $2,790,000 is recorded as Governmental Activities at June 30, 2023.

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 en force 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.

The annual debt service requirements to maturity for the certificates are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 565,000 $ 100,300 $ 665,300 $
2025 585,000 77,300 662,300
2026 610,000 53,400 663,400
2027 630,000 28,600 658,600
2028 400,000 8,000 408,000
Total 2,790,000$ 267,600$ 3,057,600$

Assessment District Bonds

At June 30, 2023, outstanding Assessment District Bonds totaled $7,715,000 plus bond premiums of $491,866.

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 $1,868,574 at June 30, 2023.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
98 Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Assessment District Bonds (Continued)
Asses
sment 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 – Bel
la 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. Debt payable of $540,000 is recorded in Governmental Activities at June 30, 2023.

Upon the occurrence of an event of default, the trustee shall be entitled to exercise the remedies provided under the agreement to compel the 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:

Fiscal Year
Ending June 30: Principal Interest Total
2024 450,000 $ 8,095$ 458,095$
2025 45,000 1,823 46,823
2026 45,000 608 45,608
Total 540,000$ 10,526$ 550,526$
CFD Mon
te 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 $2,587,440 is recorded as Governmental Activities at June 30, 2023.

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 the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

99 Note 13 – Long-Term Debt (Continued)

A. Governmental Activities (Continued)

Assessment District Bonds (Continued)

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) (Continued)

Annual debt service requirements to maturity CFD Monte Bella-2019 #1 bonds are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 55,000 $ 103,669 $ 158,669 $
2025 55,000 102,534 157,534
2026 55,000 100,575 155,575
2027 60,000 97,700 157,700
2028 60,000 94,700 154,700
2029-2033 355,000 426,406 781,406 2034-2038 425,000 355,500 780,500 2039-2043 510,000 264,281 774,281 2044-2048 650,000 128,475 778,475 2049-2051 295,000 11,900 306,900 Total 2,520,000$ 1,685,740$ 4,205,740$

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 $2,199,856 is recorded as Governmental Activities at June 30, 2023.

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:

Fiscal Year
Ending June 30: Principal Interest Total
2024 45,000 $ 85,850 $ 130,850 $
2025 45,000 84,050 129,050
2026 45,000 82,250 127,250
2027 50,000 80,350 130,350
2028 50,000 78,350 128,350
2029-2033 280,000 359,750 639,750 2034-2038 345,000 300,425 645,425 2039-2043 405,000 235,875 640,875 2044-2048 500,000 126,250 626,250 2049-2051 245,000 12,375 257,375 Total 2,010,000$ 1,445,525$ 3,455,525$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
100
Note 13 – Long-Term Debt (Continued)
A. Governmental Activities (Continued)
Assessment District Bonds (Continued)
CFD Monte B
ella-2019 #3 – Community Facilities District No. 2016-1 (Monte Bella) of the City of Salinas 2 019 Speci
al 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. Debt payable net of premiums of $2,879,570 is recorded as Governmental Activities at June 30, 2023.

Upon the occurrence of an event of default, the trustee may pursue any available remedy by law to enforce th e paym
ent of principal, premium and interest on the outstanding bonds.

Annual d
ebt service requirements to maturity CFD Monte Bella-2019 #3 bonds are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 55,000 $ 104,700$ 159,700$
2025 55,000 102,500 157,500
2026 55,000 100,300 155,300
2027 60,000 98,000 158,000
2028 60,000 95,600 155,600
2029-2033 350,000 438,200 788,200
2034-2038 425,000 360,700 785,700
2039-2043 520,000 266,600 786,600
2044-2048 625,000 152,500 777,500
2049-2051 440,000 27,000 467,000
Total 2,645,000$ 1,746,100$ 4,391,100$
Subscr
iption-Based Information Technology Arrangements – SBITAs The Ci
ty has contracted for the “right-to-use” certain subscription-based information technology software in the governmental activities. The arrangements have interest rates between 2.75% and 3.5%. The value of the right-to- use subscription assets as of the end of the current fiscal year was $383,005. Subscriptions payable outstanding at June 30, 2023 were $270,804.

Annual debt service requirements to maturity on subscription liabilities are as follows:

Fiscal Year Principal Interest Total
2024 133,728$ 6,778$ 140,506$
2025 137,076 3,431 140,507
Total 270,804$ 10,209$ 281,013$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

101
Note 13 – Long-Term Debt (Continued)

B. Business-Type Activities

A summary of changes in long-term debt for business-type activities for the year ended June 30, 2023 is as follows:

Amount due Amount due in
Balance Balance within one more than one
July 1, 2022 Additions Retirements June 30, 2023 year year Business-type Activities
Direct borrowings and placements:

Monterey Parking Garage 2014 lease 9,012,000$ -$ (599,000)$ 8,413,000$ 625,000$ 7,788,000$ HUD Section 108 loan 1,493,000 (478,000) 1,015,000 497,000 518,000 Total direct borrowings and placements 10,505,000 - (1,077,000) 9,428,000 1,122,000 8,306,000 Revenue Bonds:

Wastewater 2020A 13,870,000 - (560,000) 13,310,000 565,000 12,745,000 Total Revenue Bonds 13,870,000 - (560,000) 13,310,000 565,000 12,745,000 Total business-type activities 24,375,000$ -$ (1,637,000)$ 22,738,000$ 1,687,000$ 21,051,000$

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 Shelte r COP Series A-1999 ($2,812,000) and the Monterey Street Parking Structure COP Series A-2004 ($13,253,000). The Mo nterey 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 $8,413,000 is recorded in the Downtown Parking District Enterprise Fund at June 30, 2023 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:

Fiscal Year
Ending June 30: Principal Interest Total
2024 625,000 $ 325,640 $ 950,640 $
2025 646,000 300,093 946,093
2026 674,000 273,561 947,561
2027 700,000 245,944 945,944
2028 731,000 217,181 948,181
2029-2033 4,113,000 612,507 4,725,507 2034-2036 924,000 18,572 942,572 Total 8,413,000$ 1,993,498$ 10,406,498$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
102
Note 13 – Long-Term Debt (Continued)
B. Business-Type Activities (Continued)
Direct Placement Debt
HUD Sect
ion 108 Loan
On March 28, 2015, the City entered into a contract for Loan Guarantee Assistance w ith the Housing and Urban Development Department (HUD), pursuant to which the City will derive funds for the purposes permitted und er 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 for the loan. The loan carries a variable interest rate of 20 points (0.2%) above the applicable LIBOR rate. Debt payable of $1,015,000 is recorded in the Industrial Waste Enterprise Fund at June 30, 2023 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:

Fiscal Year
Ending June 30: Principal Interest Total
2024 497,000 $ 21,721$ 518,721$
2025 518,000 7,382 525,382
Total 1,015,000$ 29,103$ 1,044,103$
2020A W
astewater 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, 2042. The advance refunding of the 2012 Sewer Bonds reduced total debt service payments over the next 21 years by $3,764,601. This resulted 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 $13,310,000 is recorded as Business-type Activities at June 30, 2023.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

103
Note 13 – Long-Term Debt (Continued)

B. Business-Type Activities (Continued)

Direct Placement Debt

2020A Wastewater Revenue Refunding Bonds – Series 2020A (Continued)

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 bonds 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.

Debt service requirements and maturity are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 565,000 $ 297,532 $ 862,532 $
2025 565,000 293,504 858,504
2026 565,000 288,233 853,233
2027 580,000 281,693 861,693
2028 585,000 273,693 858,693
2029-2033 3,080,000 1,200,510 4,280,510 2034-2038 3,430,000 823,218 4,253,218 2039-2043 3,940,000 296,306 4,236,306 Total 13,310,000$ 3,754,689$ 17,064,689$

C. Conduit Debt

In June 1999, the City of Salinas issued Multifamil y Housing Revenue Bonds, Series 1999A ($5,310,000 tax- exempt) and 1999A-T ($390,000 taxable) for the constructi on of a 132-unit senior apartment project. Twenty percent (20%) of the project is designated to be affordable to seniors. As of June 30, 2023, the total conduit debt outstanding related to these bonds is $2,830,000.

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, 2023, total conduit debt outstanding related to the Economic Development Revenue Bonds is $12,450,000.

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 the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
104
Note 13 – Long-Term Debt (Continued)
D. Fiduciary Activities
A summary of changes in long-term debt for fiduciary activities for the year ended June 30, 2023 is as follows:

Amount due Amount due in
Balance Balance within one more than one
July 1, 2022 Additions Retirements June 30, 2023 year year Fiduciary Activities
Direct borrowings and placements:

Homeless Shelter loan payable 157,500$ - $ -$ 157,500$ -$
157,500$
Total direct borrowings and placements 157,500 - - 157,500 - 157,500
T
ax Allocation Refunding Bonds:
1996 Series A 1,495,000 -
(135,000) 1,
360,000 1,360,000 -
1992 Series A 161,133 -
(161,133) -
- -
Bond premium/(discount):
1996 Series A (17,835) -
8,919 (
8,916) -
(8,916)
T
otal Tax Allocation Refunding Bonds 1,638,298 -
(287,214) 1,
351,084 1,360,000 (8,916)
Total fiduciary activities 1,795,798$ -$
(287,214)$ 1,508,584$ 1,360,000$ 148,584$
Loans and Not
es Payable
Homeles
s 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 Green Gold Inn homeless center/shelter no interest loan are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 - $
-$
-$

2025 -
- -
2026 -
- -
2027 -
- -
2028 -
- -
2029-2033 - -
-
2034-2038 - -
-
2039-2041 157,500 - 1
57,500
Total 157,500$ -$ 1
57,500$

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

105
Note 13 – Long-Term Debt (Continued)

D. Fiduciary Activities (Continued)

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 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, 2023 was $1,360,000.

The annual debt service requirements for the 1996 Series A bonds at June 30, 2023 are as follows:

Fiscal Year
Ending June 30: Principal Interest Total
2024 1,360,000$ 37,400 $ 1,397,400 $
Total 1,360,000 $ 37,400 $ 1,397,400 $

The Series A-1992 bond issue has a term bond of $2,638,475 that matured on November 1, 2022. Debt service payments beginning in fiscal year 2009-2010 were deposited into a sinking fund. The term bonds were 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, 2023 was $0.

Commitment to Monterey Street Parking Structure

In November 2001, the City Council and the Agency ente red 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 Steinbeck 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 construction 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 for 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 the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
106
Note 14 – Compensated Absences
Compensated absences are reported on the Government-Wide Statements for Governmental Activities and Business- type Activities in Long-Term Debt. At June 30, 2023 the liability for all compensated absences totaled $12,462,982.

Compensated absences are reported on the financial statements in the following funds:

Due within Due in more than
July 1, 2022 Increases Decreases June 30, 2023 one year one year Governmental activities:

General Fund 8,663,191$ 370,608$ -$ 9,0 33,799$ 1,806,759$ 7,227,040$
Measure E 1,091,033 - (259
,966) 831,067 166,213 664,854
Measure G 1,484,957 153,994 - 1,6
38,951 327,
790 1,311,161
Special revenue funds 255,075 40,532 - 2
95,607 59,
121 236,486
Internal service funds 130,686 15,556 - 1
46,242 29,
997 116,245
Total governmental activities 11,624,942 580,690 (259,966) 11,945,666 2,389,880 9,555,786 Business-type activities
Enterprise funds 547,887 - (30
,571) 5
17,316 109,577 407,739
Total business-type activities 547,887 - (30
,571) 5
17,316 109,577 407,739
Total primary government 12,172,829$ 580,690$ (290,537)$ 12,462,982$ 2,499,457$ 9,963,525$ Note 15 – R
isk 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, 2023 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.

Worker’s Compensation insurance liability of $28,187,000 includes $26,349,759 for claims incurred but not paid and $1,837,241 for claims incurred but not reported which is based on expected claims and past claims history. At June 30, 2023, Worker’s Compensation Insurance liability 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, 2023 is $26,985,392 and is reported in the Internal Service Fund and $1,201,608 is treated as general long-term debt.

General liability insurance liability at June 30, 2023 of $3,790,619 that is reported in the Internal Service Fund includes $2,585,637 for claims incurred but not paid and $1,204,982 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 $4,701,340 at June 30, 2023 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, 2023.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
107
Note 15 – Risk Management (Continued)
At June 30, 2023, the City’s insurance claims liability is recorded as follows:

Internal S ervice General
Funds Long-term Debt Total
Worker's compensation 26,985,392$ 1,201,608$ 28,187,000$ General liability 3,790,619 - 3
,790,619
To
tal 30,776,011$ 1,201,608$ 31,977,619$
Changes to the claims liability for fiscal year ended June 30, 2023 are as follows:

Worke r's Ge ne ral
Compensation L iability Total
Beginning balance of claims liability 26,950,000$ 4,340,195$ 31,290,195$ Less beginning provisions for incurred
but not reported claims (4,618,964) (1,078,758) (5,697,722) Beginning provisions for incurred but
not paid claims 22,331,036 3,261,437 25,592,473
Increase (decrease) in claims incurred
and reported 11,508,705 1,160,828 12,669,533
Claims expenses paid (7,489,982) (1,836,627) (9,326,609) Ending balance provision for incurred
but not paid claims 26,349,759 2,585,638 28,935,397 Provisions for incurred but not
reported claims 1,837,241 1,204,981 3,042,222
Ending balance of claims liability 28,187,000$ 3,790,619$ 31,977,619$ Amount due within one year 4,903,000$ 2,680,807$ 7,583,807$ Amount due in more than one year 23,284,000 1,109,812 24,393,812 Total 28,187,000$ 3,790,619 $ 31,977,619 $
Note 16 – Un
earned Revenues and Deferred Inflows of Resources
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. Receivables 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 $53,124,477, in the Government-Wide Statements. Governmental f unds report $53,124,477 of unearned revenues and $1,974,555 of unavailable revenues as deferred inflows of resources that are not available resources.

Unearned revenues of the governmental activities at June 30, 2023 consist of the following:

Gove rnme ntal Acti vi ti e s:

Major funds:

American Rescue Plan Act (ARPA) Fund 42,182,865$
2019 Special Tax Montebella 7,175,000
Nonmajor funds:

Debt service funds:

Assessment District Debt Service 540,000
Total governmental activities 53,124,477$
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
108
Note 16 – Unearned Revenues and Deferred Inflows of Resources (Continued) Unavailable revenues of the governmental activities at June 30, 2023 consist of the following:

Gove rnme ntal Acti vi ti e s: Type
Major funds:

Housing and Urban Development Fund 566,865$ Housing loans Special revenue funds:

Affordable Housing Fund 781,469 Housing loans
Grants Fund 86,740 Unavailable grants receivable
Capital projects funds:

Special Construction Assistance Fund 563,931 Unavailable grants receivable Total governmental activities 1,999,005$
Note 17 – R
etirement Programs
A. Summary
The Ci
ty of Salinas provides defined benefit retirement program benefits through the California Public Employees’ Retirement System (“CalPERS”) and New York Life. As of June 30, 2023, the City was contributing to agent multiple-employer defined benefit pension plans and cost-sharing multiple-employer defined benefit pension plans through CalPERS, and was also contributing to a single-employer defined benefit pension plan through New York Life.

Net pension liabilities are reported in the financial statements as follows:

Governmental Business-Type
Net Pension L iability A ctiv ities Activ ities Total
Cal PE RS pension plans:

Agent multiple-employer - M iscellaneous 33,463,411$ 4,380,851 $ 37,844,262$ Agent multiple-employer - Safety Police 131,233,603 -
131,233,603
Cost sharing multiple-employer - Safety Fire 61,288,496 - 61,288,496
New York Life - single employer 3,708,928 -
3,708,928
Total net pension liability 229,694,438$ 4,380,851$ 234,075,289$ Defer
red outflows of resources related to pensions are reported in the financial statements as follows:

Governmental Business-Type
Deferred Outflows of Resources Activities Activities Total Cal PE RS pension plans:

Agent multiple-employer - M iscellaneous 13,635,191$ 1,785,046 $ 15,420,237$ Agent multiple-employer - Safety Police 34,516,151 -

34,516,151
Cost sharing multiple-employer - Safety Fire 28,786,817 - 28,786,817
New York Life - single employer 145,965 -
145,965
Total deferred outflows of resources 77,084,124$ 1,785,046$ 78,869,170$ City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

109
Note 17 – Retirement Programs (Continued)

A. Summary (Continued)

Deferred inflows of resources related to pensions are reported in the financial statements as follows:

Governmental Business-Type
Deferred Inflows of Resources Activities Activities Total Cal PE RS pension plans:

Agent multiple-employer - M iscellaneous 1,319,622$ 172,757 $ 1,492,379 $ Agent multiple-employer - Safety Police 2,108,937 - 2,108,937 Cost sharing multiple-employer - Safety Fire 4,431,181 - 4,431,181 New York Life - single employer 10,054 - 10,054 Total deferred inflows of resources 7,869,794 $ 172,757 $ 8,042,551 $

Pension expense reported in the financial statements as follows:

Governmental Business-Type
Pension Expense Activities Activities Total
Cal PE RS pension plans:

Agent multiple-employer - M iscellaneous 5,100,623$ 731,393 $ 5,832,016 $ Agent multiple-employer - Safety Police 16,605,503 - 16,605,503 Cost sharing multiple-employer - Safety Fire 1,692,787 - 1,692,787 New York Life - single employer (442,184) - (442,184) Total pension expense 22,956,729 $ 731,393 $ 23,688,122 $

B. California Public Employees Retirement System Agent Multiple-Employer Plans

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.

Employees Covered

At June 30, 2022, the measurement date, the following employees were covered by the benefit terms for the Plan:

M iscellaneous Safety - Police
Inactive employees or beneficiaries currently receiving benefits 229 292 Inactive employees entitled to, but not yet receiving benefits 282 124 Active employees 306 140
Total 817 556

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
110
Note 17 – Retirement Programs (Continued)
B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued) Benefits Provided
CalPERS prov
ides 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.

The Cit
y’s provisions and benefits in effect at June 30, 2023 are summarized as follows:

Prior to On or After
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 2.0% to 2.45% 1.0% to 2.5% Required employee contribution rates 7.00% 7.00%
Required employer contribution rates 8.57% 8.57%
Miscellaneous
Hire date
Prior to On or After
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 3.00% 2.0% to 2.7% Required employee contribution rates 9.00% 13.50%
Required employer contribution rates 21.18% 21.18%
Safety - Police
Hire date
Contr
ibution 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.

The contributions made by the City were as follows:

Employer Contributions
Miscellaneous 4,714,221$
Safety - Police 13,151,466
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

111
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

Actuarial Methods and Assumptions used to determine Total Pension Liability - The June 30, 2021 valuation was rolled forward to determine the June 30, 2021 total pension liability, based on the following actuarial methods and assumptions:

Valuation Date
M easurement Date
Actuarial Cost M ethod
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
Morta l ity Ra te Ta bl e
Post Retirement Benefit Increase
June 30, 2021
June 30, 2022
Entry Ag e Actuarial Cost Method

6.90%

2.50%
Varies by Entry Age and Service
Derived using CalPERS’ Membership Data for all Funds. The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational M ortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

Contract COLA up to 2.30% until Purchasing Power 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.

Change in Assumptions

The discount rate lowered from 7.15% in 2022 to 6.90% in 2023. The inflation rate lowered from 2.50% in 2022 to

2.30% in 2023. The payroll growth increased from 2.75% in 2022 to 2.80% in 2023. The investment rate of return lowered from 7.15% in 2022 to 6.90% in 2023. In the prior year, the actuarial report did not have any changes in assumptions.

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 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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
112
Note 17 – Retirement Programs (Continued)
B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued) Benefits Provided (Continued)
The exp
ected rates of return by asset class are as follows:

Asset Class Assumed Asset Allocation Real Return Years 1 - 10 1,2
Global equity - cap-weighted 30.00% 4.45%
Global equity non-cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 27.00%
M ortgage-backed Securities 5.00% 50.00%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real assets 15.00% 3.21%
Leverage -5.00% -59.00%
Total 100.00%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021-22 Asset Liability M anagement study.

Discount Rate - The discount rate used to measure the total pension liability was 6.90%. 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 em ployers 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 categorized 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 investments:
 5 years straight-line amortizatio
n
A
ll other amounts:
 Straight-line amortization over the average expected remaining service lives (EARLS) of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

113
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

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, 2022 measurement date are 4.1 and 3.4 years, respectively, which was obtained by dividing the total service years by the total number of participants (active, inactive, 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:

Total Pension Liability
Plan Fiduciary Net
Position Net Pension Liability
Balance at June 30, 2021 (Valuation Date) 141,174,194 $ 123,879,515 $ 17,294,679 $ Changes in the y ear:

Service cost 3,581,707 - 3,581,707 Interest on the total pension liabilities 9,882,781 - 9,882,781 Changes in assumptions 5,420,045 - 5,420,045 Differences between expected and actual experience (1,973,792) - (1,973,792) Benefit payments, including refunds of members contributions (6,365,156) (6,365,156) - Plan to plan resource movement - - - Contributions - employer - 4,193,288 (4,193,288) Contributions - employee - 1,584,132 (1,584,132) Net investment income - (9,339,092) 9,339,092 Administrative expenses - (77,170) 77,170 Net changes 10,545,585 (10,003,998) 20,549,583 Balance at June 30, 2022 (Measurement Date) 151,719,779 $ 113,875,517 $ 37,844,262 $ Miscellaneous Plan

Total Pension Liability
Plan Fiduciary Net
Position Net Pension Liability
Balance at June 30, 2021 (Valuation Date) 335,307,524 $ 251,151,937 $ 84,155,587 $ Changes in the y ear:

Service cost 6,757,790 - 6,757,790 Interest on the total pension liabilities 23,595,755 - 23,595,755 Changes in assumptions 13,527,486 - 13,527,486 Differences between expected and actual experience (1,552,114) - (1,552,114) Benefit payments, including refunds of members contributions (17,388,668) (17,388,668) - Plan to plan resource movement - - - Contributions - employer - 12,406,841 (12,406,841) Contributions - employee - 2,127,269 (2,127,269) Net investment income - (19,126,756) 19,126,756 Administrative expenses - (156,453) 156,453 Net changes 24,940,249 (22,137,767) 47,078,016 Balance at June 30, 2022 (Measurement Date) 360,247,773 $ 229,014,170 $ 131,233,603 $ Safety - Police

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
114
Note 17 – Retirement Programs (Continued)
B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued) Benefits Provided (Continued)
Pension Plan Fiduciary Net Position - Detailed information about each plan’s fiduciary net position is available in the separately issued CalPERS financial report.

Sensitivity of the Net Pension Liability to Changes in th e Disc ount Rate – The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 6.90 percent, as well as what the net pension liability would be if it were calculated us ing a discount rate that is 1 percentage-point lower (5.90 percent) or 1 percentage-point higher (7.90 percent) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(5.90%) Rate (6.90%) (7.90%)
Miscellaneous 59,518,251$ 37,844,262$ 20,035,281$ Safety - Police 181,671,837$ 131,233,603$ 90,150,480$ Plan's Aggregate Net Pension L iability/(Asset)
Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions For the measurement period ending June 30, 2022 (the measurement date), the City of Salinas recognized a pension expense of $5,832,016 and $16,605,503 for the miscellaneous and safety (police) plans, respectively.

For the measurement period ending June 30, 2022 (the measurement date), the City of Salinas reports other amounts for the
miscellaneous and safety (police) plans as deferr ed outflow and deferred inflow of resources related to pensions as follows:

Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 4,714,221$ -$
Difference between p rojected and actual
earning on pension plan investments 5,758,715 -
Changes in assumptions 4,098,083 -
Differences between expected and actual experience 849,218 (1,492,379) Total 15,420,237$ (1,492,379)$
Miscellaneous
Deferred outflows Deferred inflows
of Resources of Resources
Pension contributions made subsequent
to measurement date 13,151,466$ -$
Difference between p rojected and actual
earning on pension plan investments 11,573,517
Changes in assumptions 9,548,814 -
Differences between expected and actual experience 242,354 (2,108,937) Total 34,516,151$ (2,108,937)$
Safety - Police
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

115
Note 17 – Retirement Programs (Continued)

B. California Public Employees Retirement System Agent Multiple-Employer Plans (Continued)

Benefits Provided (Continued)

$4,714,221and $13,151,466 reported as deferred outflows of resources to contributions subsequent to the measurement date for the miscellaneous and safety police plans, respectively, will be recognized as a reduction of the net pension liability in the year ending June 30, 2024.

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Miscellaneous Safety - Police
Year Ended June 30,
2024 2,378,965$ 4,931,214$ 2025 1,894,567 4,836,236 2026 1,284,235 2,218,898 2027 3,655,870 7,269,400 2028 - - Thereafter - - 9,213,637$ 19,255,748$ Deferred Outflows/
(Inflows) of Resources
Deferred Outflows/
(Inflows) of Resources

C. California Public Employees Retirement System Cost-Sharing Multiple-Employer 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.

Employees Covered – As of June 30, 2022 (measurement date), the following employees were covered by the benefit terms for the plan:

Safety - Fire
Inactive employees or beneficiaries currently receiving benefits 190 Inactive employees entitled to, but not yet receiving benefits 59 Active employees 98
Total 347

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 the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
116
Note 17 – Retirement Programs (Continued)
C. California Public Employees Retirement System Cost-Sharing Multiple-Employer Plan (Continued) The City’s plans provisions and benefits in effect at June 30, 2023, are summarized as follows:

Prior to On or After Prior to On or After
January 1, 2013* January 1, 2013 January 1, 2013* January 1, 2013 Benefit formula 3.0% @ 50 2.7% @ 57 3.0% @ 55 2.5% @ 57 Benefit vesting schedule 5 years of service 5 years of service 5 years of service 5 years of service Benefit payments Monthly for life Monthly for life Monthly for life Monthly for life Retirement age 50 52-57 55 52-57
Monthly benefits, as a % of eligible 3.00% 2.0% to 2.7% 3.00% 2.0% to 2.7% Required employee contribution rates 9.00% 13.75% 9.00% 13.75% Required employer contribution rates 25.64% 13.75% 22.48% 13.75% Hire date
S afety - Fire
Tier 1 Tier 2
Contr
ibution Description - Section 20814(c) of the Cali fornia 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 fire plan were as follows:

Employer Contributions
Safety - Fire 6,940,599 $
Pensi
on Liabilities, Pension Expense and Deferred Outflows/Deferred Inflows of Resources Related to Pensions – As of June 30, 2023, the City reported net pension liabilities for its proportionate share of the net pension liability as of June 30, 2023 and 2022 were as follows:

Plan Total Pension Plan Fiduciary Net Plan Net Pension
L iability Position L iability/(Asset)
Balance at: 6/30/21 (Measurement date) 193,123,087 $
159,977,517$
33,145,570$
Balance at: 6/30/22 (Measurement date) 205,362,463 144,073,967 61,288,496 Net changes during 2021-2022 12,239,376$
(15,903,550)$
28,142,926$
Increase (Decrease)
The Ci
ty’s net pension liability is measured as the proportionate share of the net pension liability. The net pension liability is measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using the standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long- term share of contributions to the pension plans relative to the projected contributions for all participating employers actuarially determined.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

117
Note 17 – Retirement Programs (Continued)

C. California Public Employees Retirement System Cost-Sharing Multiple-Employer Plan (Continued)

The City’s proportionate share of the net pension liability as of the June 30, 2022 and 2021 measurement dates were as follows:

Proportion June 30, 2021 0.612870%
Proportion June 30, 2022 0.530600%
Change - Increase (Decrease) -0.082270%
Percentage Share of Net Pension L iability/(Asset)

For the year ended June 30, 2023 (measurement date June 30, 2022), the City of Salinas recognized a pension expense of $1,692,787 for the Safety Plan (Fire).

As of June 30, 2023 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
Pension contributions made subsequent
to measurement date 6,940,599 $ - $ Difference between projected and actual earning on
pension plan investments 9,678,310
Adjustment due to differences in proportions
Changes in assumptions 6,179,736 - Difference between actual and expected experience 2,536,509 (665,545) Difference between employer's actual contributions
and proportionate share of contributions 3,451,663 (3,765,636) Total 28,786,817 $ (4,431,181) $
Safety - Fire

$6,940,599 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, 2024.

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expenses as follows:

Year Ende d June 30,
Deferred Outflows/
(Inflows) of Resources
2024 5,044,893 $
2025 4,122,245
2026 2,344,005
2027 5,903,894
2028 -
Thereafter -
17,415,037$

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
118
Note 17 – Retirement Programs (Continued)
C. California Public Employees Retirement System Cost-Sharing Multiple-Employer Plan (Continued) Actuarial Methods and Assumptions used to determine Total Pension Liability - The June 30, 2021 valuation was rolled forward to determine the June 30, 2022 total pension liability, based on the following actuarial methods and assumptions:

Actuarial Cost M ethod
Actuarial Assumptions:

Discount Rate
Inflation
Salary Increases
M ortality Rate Table
Post Retirement Benefit Increase
Entry Age Actuarial Cost M ethod

6.90%

2.50%
Varies by Entry Age and Service
Derived using CalPERS’ Membership Data for all Funds. The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.

Contract COLA up to 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power applies.

Discoun
t Rate - The discount rate used to measure the total pension liability for PERF C was 6.90%. 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 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 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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
119
Note 17 – Retirement Programs (Continued)
C. California Public Employees Retirement System Cost-Sharing Multiple-Employer Plan (Continued) The expected real rates of return by asset class are as follows:

Asset Class
Assumed
Asset
Al location
Real Return
Years 1 -
10 1,2
Global equity - cap-weighted 30.00% 4.45%
Global equity non-cap-weighted 12.00% 3.84%
Private Equity 13.00% 7.28%
Treasury 5.00% 27.00%
Mortgage-backed Securities 5.00% 50.00%
Investment Grade Corporates 10.00% 1.56%
High Yield 5.00% 2.27%
Emerging Market Debt 5.00% 2.48%
Private Debt 5.00% 3.57%
Real assets 15.00% 3.21%
Leverage -5.00% -0.59%
Total 100.00%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021-22 Asset Liability Management study.

A
mortization 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 Projec ted and Actual Investment Earnings 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 Inflows 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, 2022 is 3.7 years, which was obtained by dividing the total service years of 574,665 (the sum of remaining service lifetimes of the active employees) by 153,587 (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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
120
Note 17 – Retirement Programs (Continued)
C. California Public Employees Retirement System Cost-Sharing Multiple-Employer Plan (Continued) Sensitivity of Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount 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 6.90 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 (5.90 percent) or 1 percentage-point higher (7.90 percent) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(5.90%) Rate (6.90%) (7.90%)
89,648,731$ 61,288,496$ 38,110,411$
Plan's Aggregate Net Pension L iability/(Asset)
Pensi
on Plan Fiduciary Net Position – Detailed information about each plan’s fiduciary net position is available in the separately issued CalPERS financial report.

D. New York Life Single Employer Retirement Plan
Plan Description – The New York Life retirement plan is a closed single-employer defined benefit pension plan that covers 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 se rvice requirement for entry into the plan and credited participants with up to six-months of service from hire to plan entry 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 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 that uses an average salary computed from the twelve-month pe riod, replacing the old formula that used an averag e sala
ry 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 other than Police and Fire. New York Life holds assets in NYL Fixed Dollar Account, NYL Mainstay Total Return Bond Fund, and NYL Guaranteed Annuity Contracts.

New York Life Guaranteed Annuity Contracts in the amount of $6,012,298 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.

Empl
oyees Covered – As of September 1, 2022 (valuation date), the following employees were covered by the benefit terms for the single-employer defined benefit pension plan:

NY Life Plan
Inactive employees or beneficiaries currently receiving benefits 40 Inactive employees entitled to, but not yet receiving benefits 6 Active employees 5
Total 51
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
121
Note 17 – Retirement Programs (Continued)
D. New York Life Single Employer Retirement Plan (Continued) 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 have payments commence before attaining the normal retirement age of

60. City
employees who retire at or after age of 60 with fi ve 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 participatio
n.

The pl
an 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 under 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 document for personnel of the SEIU Blue Collar bargaining group, the City will contribute four and one-half percent of the employee retirement contribution.

Pension Liabilities, Pension Expense and Deferred Outflo ws/Inflows of Resources Related to Pensions – As of June 30, 2023 (Measurement Date - August 31, 2022) and June 30, 2022, (Measurement Date – August 31, 2021), the City reported net pension liability as follows:

Plan Total Pension Plan Fiduciary Net Plan Net Pension
L iability Position L iability/(Asset)
Balance at: 8/31/21 (measurement date) 13,422,823$ 9,862,347$ 3,560,476$ Balance at: 8/31/22 (measurement date) 10,058,747 6,349,819 3,708,928 Net changes during 2021-2022 (3,364,076)$ (3,512,528)$ 148,452$ Funded Status @ 8/31/22 measurement date 63.13%
Increase (Decrease)
The Ci
ty’s net pension liability is measured as of August 31, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of September 1, 2022.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
122
Note 17 – Retirement Programs (Continued)
D. New York Life Single Employer Retirement Plan (Continued) 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
L iability
Plan Fiduciary
Net Position
Net Pension
L iability
Balance at 6/30/2022 (8/31/21 measurement date) 13,422,823 $ 9,862,347$ 3,560,476$ Changes in the year:

Service cost 131,853 - 131
,853
Interest on the total pension liabilities 255,632 - 255 ,632
Changes in assumptions (533,090) - (533
,090)
D
ifferences between expected and actual experience - -
Be
nefit payments, including refunds of members contributions (3,218,471) (3,218,471) - Plan to plan resource movement - - -
Contributions - employer - 1
90,126 (190,126)
Contributions - employee - 19,0
12 (19,012)
Net investment income - (4
86,138) 486
,138
Administrative expenses - (
17,057) 17
,057
Net changes (3,364,076) (3,512,528) 148,452
Balance at June 30, 2023 (8/31/22 measurement date) 10,058,747$ 6,349,819$ 3,708,928$ New York Life Plan
Sensi
tivity of the Net Pension Liability to Changes in th e Discount Rate – The following presents the net pension liability of the Plan as of the Measurement Date, calculated using the discount rate of 2.75 percent, as well as what the net pension liability would be if it were calculated us ing a discount rate that is 1 percentage-point lower (1.75 percent) or 1 percentage-point higher (3.75 percent) than the current rate:

Discount Rate - 1% Current Discount Discount Rate + 1%
(1.75%) Rate (2.75%) (3.75%)
4,625,417$ 3,708,928$ 2,974,803$
Sensitiv ity of Net Pension L iability/(Asset)
As of Jun
e 30, 2023, the City reports deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred outflow s Deferred inflow s
of Re sources of Re source s
Pension contributions made subsequent
to measurement date 145,965 $ -$
Difference between projected and actual earning on pension plan investments -
(10,054)
Total 145,965$ (10,054)$
Ne w York Life Plan
$145,965
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, 2024.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
123
Note 17 – Retirement Programs (Continued)
D. New York Life Single Employer Retirement Plan (Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expenses as follows:

Year Ended June 30,
Deferred Outflows/
(Inflows) of Resources
2024 (108,852)$
2025 (40,623)
2026 2,645
2027 136,776
2028 -
Thereafter -
(10,054)$
Actuarial Methods and Assumptions used to Determine Total Pension Liability - For the measurement period ended August 31, 2022 (measurement date), the total pension liab ility was determined by using the following actuarial assumptions, applied to all periods included in the measurement:

Valuation date
M easurement date
Contribution policy
Actuarial cost method
Actuarial assumptions:

Discount rate
Long-term expected rate of return on
assets
-2.75% at August 31, 2022
-2.75% at August 31, 2021
Inflation
M ortality
M ortality improvement
Salary Increases
Retirement
Disability, termination
Benefit form for current actives
NY Life guaranteed annuity contract
September 1, 2021
Value of p ay ments exp ected to be made under contract excluded from TPL (contract assets not included in FNP)
August 31, 2022
Individual Aggregate Cost M ethod
-2.75% at August 31, 2022
-2.14% at August 31, 2021
-Discount rate lower of (1) expected long-term rate of return on investments, and (2) Bond Buyer 20- Bond GO Index as of the M easurement Date

2.25%
Aggregate - 2.5% annually; merit - CalPERS 2000-2019 Experience Study 100% retire once the retirement benefit reaches 70% of the average monthly compensation None
City contributes full ADC
CalPERS 2000-2019 Experience Study
Post-retirement mortality p rojected fully generational with Scale M P-2021. -Disability - n/a
-Service retirement - Lump sum for all participants, valued using UP-1984 Mortality Table with 1% interest rate without COLA
Changes Since Prior Measurement Date – The following changes were applied since the prior measurement date of August 31, 2022:

Changes of assumptions - discount rate was updated based on municipal bond rate as of the measurement date.

Changes of benefit terms - none
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
124
Note 17 – Retirement Programs (Continued)
D. New York Life Single Employer Retirement Plan (Continued) Discount Rate – The discount rate used to measure the total pension liability was 2.75%. 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 pension 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.

E. ICMA Ret
irement Corporation Defined Contribution Plan
Investments are with New York Life. Expected rate of return is as follows:

Target Expected R ate
Asset Class Allocation of Return
Fixed income 100.00% 0.78%
Assumed long-term rate of inflation 2.25%
Expected long-term rate of return, rounded 2.75%
Pensi
on Plan Fiduciary Net Position - Detailed information about the pension plan’s fiduciary net position as of August 31, 2022 is as follows:

New York
Li fe
Assets:

Investments:

New York Life Mainstay Total Return Bond Fund 6,349,819 Total investments 6,349,819
Fiduciary net position 6,349,819$
Plan Desc
ription – 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 Reti rement 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 contributio n 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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

125
Note 17 – Retirement Programs (Continued)

E. ICMA Retirement Corporation Defined Contribution Plan (Continued)

Significant Accounting Policies (Continued)

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 buyback 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, 2023, there were four participants receiving a total of $336,302 in this form of benefit while there was one participant in the ICMA 401(a) money Purchase Plan with a City annual contribution was $17,343 while the employee had an equal mandatory matching contribution of $17,343.

F. 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 of 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, Mass 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 the 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 Asso ciation Retirement, Inc., (ICMA-RC), is now Mission Square Retirement and the Plan had 418 participants and a balance of $61,771,444 at June 30, 2023. 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 program was established. These assets are not reported on the City’s financial statements at June 30, 2023 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 is 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 pa rticipate. The Plan had 228 participants and a balance of $6,524,283 in net assets at June 30, 2023. The balance in these plans is available to employees only upon termination, retirement, death or unforeseen emergenc y. 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, 2023.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
126
Note 17 – Retirement Programs (Continued)
F. Deferred Compensation Plans (Continued)
Trust Deed Program (Continued)
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 notes 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, 2023, 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 th e City keeps the employees’ enrollment and send their payroll elective deduction to
CCFCU.

This p
lan was discontinued as of December 21, 2022. The assets for this plan are not reported on the City’s financial statements.

Mass
Mutual Financial Group (Empower Retirement)
The fou
rth Deferred Compensation plan was established in September 2000. This retirement savings plan enables emp
loyees to defer a portion of their current compensation for payment at later date, generally 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.

These investment options are offered through a group variable annuity contract. There were 28 participants with a balance of $2,928,326 at June 30, 2023. 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 the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

127
Note 18 – Other Postemployment Benefits

Items related to other postemployment benefits are recorded in the financial statements as follow:

Governmental Business-Type
Activities Activities Total
Net OPEB Liability 14,555,540 $ 974,677 $ 15,530,217 $ Deferred outflows of resources 4,872,678 326,288 5,198,966 Deferred inflows of resources 11,590,136 776,106 12,366,242 OPEB expense 309,825 20,747 330,572

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 from 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.

For this report, the following timeframes are used:

Valuation date June 30, 2021
Measurement date June 30, 2022
Measurement period July 1, 2021 to June 30, 2022
Fiscal year end June 30, 2023

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 in 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 postemployment 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 Govern or, one public representative 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, 2023
Plan type Agent multiple-employer
OPEB trust Yes
Special funding situations No
Nonemployer contributing entities No
City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
128
Note 18 – Other Postemployment Benefits (Continued)
A. General Information About the OPEB Plan (Continued)
Post-Employment Benefits Eligibility: The City provides post-retirement healthcare benefits to eligible employees 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 2022). The payment is made until Medicare eligibility, but no more than 10 years for non-supervisory Police retirees. For Miscellaneous employees, the City pays the PEMHCA “unequal method” monthly benefit to retirees ($143 per month in 2022). For IAFF (Fire employee), the City pays 25% of retiree and spouse health insurance premium up to $100 per month. The payment is made until Medicare eligibility.

Employees Covered: As of the June 30, 2022 actuarial valuation, the following current and former employees were covered by the benefit terms under the PEMHCA and Union Sponsor Plans:

Number of
Covered
Participants
Inactive employees currently receiving benefits 160
Inactive employees entitled to, but not yet receiving benefits 311 Active employees 540
Total 1,011
C
ontributions: The City intends to contribute to the Trus t 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, 2023, the City’s cash contributions were $388,295 in premium payments made on behalf of retirees, $250,000 payments to the trust, implied subsidy payments of $351,000, and administrative expenses of $6,913, resulting in total payments of $996,208.

Discount Rate: The discount rate used to measure the total OPEB liability was 4.95%. 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 investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

129
Note 18 – Other Postemployment Benefits (Continued)

A. General Information About the OPEB Plan (Continued)

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
Target
Allocation*
CERBT-Strategy
Expe cte d Re al
Rate of Return
Global equity 49.00% 4.56%
Fixed income 23.00% 1.56%
TIPS 5.00% -0.08%
Commodities 3.00% 1.22%
REITs 20.00% 4.06%
100.00%
Assumed long-term rate of inflation 2.50%
Expected long-term rate of return, rounde
d 6.25%

B. Net OPEB Liability, OPEB Expense, and Deferred Outflows/Inflows of Resources Related to OPEB

Changes in the OPEB Liability: The changes in the net OPEB liability for the City Plan are as follows:

Total Plan Net
OPEB Fiduciary OPEB
Liability Net Position Liability
Balance at June 30, 2022 21,262,486$ 4,204,222$ 17,058,264$ Changes Recognized for the M easurement Period:

Service Cost 1,043,749 - 1,043,749 Interest on the total OPEB liability 849,992 - 849,992 Chang es in benefit terms - - - Difference between expected and actual experience - - - Changes in assumptions (3,086,884) - (3,086,884) Contribution from the employer - 940,051 (940,051) Net investment income - (599,182) 599,182 Administrative expenses - (5,965) 5,965 Benefit payments (685,206) (685,206) - Net changes during July 1, 2022 to June 30, 2023 (1,878,349) (350,302) (1,528,047) Balance at June 30, 2023 19,384,137$ 3,853,920$ 15,530,217$

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
130
Note 18 – Other Postemployment Benefits (Continued)
B. Net OPEB Liability, OPEB Expense, and Deferred Outflows/Inflows of Resources Related to OPEB (Continued) 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 (3.87%) in measuring the Net OPEB Liability.

Discount Rate -1% Current Discount Rate Discount Rate +1% (3.95%) (4.95%) (5.95%)
18,363,329$ 15,530,217$ 13,220,489$
Plan's Total OPEB Liabiltiy
He
althcare 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, 2022:

Healthcare Cost
-1% Trend Rate +1%
12,801,690$ 15,530,217$ 18,994,888$
Plan's Total OPEB Liabiltiy
OPEB Expense
and Deferred Outflows/Inflows of Resources Related to OPEB:

For th
e fiscal year ended June 30, 2023, the City recognized OPEB expense of $330,572.

As of fiscal year ended June 30, 2023, the City reported deferred outflows of resources and inflows of resources related to OPEB from the following sources:

Deferred Deferred
O
utflows of Inflows of
Resources Resources
Contributions made after measurement date 996,208$ -$ Differences between expected and actual experience -
(5,447,852)
C
hanges in assumptions 3,865,138 (6,918,390)
N
et difference between projected and actual
earnings of OPEB Plan investments 337,620 -
5,198,966$ (12,366,242)$
Defer
red outflows of resources in the amount of $996,208 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, 2024.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

131
Note 18 – Other Postemployment Benefits (Continued)

B. Net OPEB Liability, OPEB Expense, and Deferred Outflows/Inflows of Resources Related to OPEB (Continued)

Other amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB expenses as follows:

Year Ending
June 30 Amount
2024 (1,287,953)$
2025 (1,291,502)
2026 (1,310,748)
2027 (1,080,721)
2028 (1,132,785)
Thereafter (2,059,775)
Total (8,163,484)$

Recognition of Deferred Outflows 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, 2021 based on the following significant actuarial methods and assumptions:

Actuarial valuation date June 30, 2021
Contribution policy City contributes $250,000 annually and pays benefit outside of trust Discount rate 4.95%
Municipal bond rate 3.54% (Bond Buyer 20-bond Index)s
Expected long-term rate of return on investment 6.25%
General inflation 2.50%
Mortality, retirement, disability, termination CalPERS 2000-2019 experience study Mortality improvement Mortality projected fully generational with Scale MP-2021 Salary increases Aggregate - 2.75% annually; merit - CalPERS 2000-2019 experience study M edical trend
PEM HCA minimum increases 4.00% annually
Cap increases None
Healthcare participation
Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076
Medicare - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076 100% for Safety $100 benefit
50% for PEMHCA benefit if covered is active
50% for PEMHCA benefit if waived is active

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
132
Note 19 – Net Position and Fund Balances
A. Government-Wide Financial Statements
Net Investment in Capital Assets
The
following is the calculation of net investment in capital assets at June 30, 2023:

Governmental Business-type
Activities Activities Total
Capital assets, net of accumulated depreciation
and amortization 334,557,660 $ 67,974,348 $ 402,532,008$ Less: outstanding principal on capital related debt, net (122,045,935) (22,738,000) (144,783,935) Add: loss on refunding of debt - 94,464 94,464
Net investment in capital assets 212,511,725$ 45,330,812$ 257,842,537$ B. Fund Fi
nancial Statements
Fund Bal
ance Classification
I
t 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 year’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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

133
Note 19 – Net Position and Fund Balances (Continued)

B. Fund Financial Statements (Continued)

At June 30, 2023, fund balances are classified in the governmental funds as follows:

American Housing and 2019 Special
Rescue Plan Act Urban Develop ment Tax Bond
(ARPA) Grant Capital Monte Bella Nonmajor Total
General Special Revenue Special Revenue Projects Debt Service Governmental Governmental Fund Fund Fund Fund Fund Funds Funds
Nonspendable
Loans and notes receivable -$ -$ 53,956$ -$ -$ 16,570$ 70,526$ Advances (long-term portion) 2,785,000 - - - - - 2,785,000 Land held for resale - - - - - 1,380,000 1,380,000 Total nonspendable 2,785,000 - 53,956 - - 1,396,570 4,235,526 Restricted
Public safety - - - - - 2,798,651 2,798,651 Future development - - - - - 19,438,508 19,438,508 Maintenance districts - - - - - 9,593,377 9,593,377 Street repairs - - - - - 28,859,859 28,859,859 Grants/sp ecial p rojects - - - - - 1,593,291 1,593,291 Low/moderate income housing - - - - - 2,887,055 2,887,055 115 trust reserve 6,000,000 - - - - - 6,000,000 Ca pital projec ts - - - - - 12,059,963 12,059,963 De
bt service - - - - 895,849 3,430,791 4,326,640 Total restricted 6,000,000 - - - 895,849 80,661,495 87,557,344 Committed
Capital projects 5,055,009 - - 2,000,000 - 141,985 7,196,994 Economic contingency reserve 16,685,000 - - - - - 16,685,000 Infrastructure maintenance reserve 3,684,000 - - - - - 3,684,000 OPEB reserve 1,000,000 - - - - - 1,000,000 Facilities maintenance reserve 1,577,000 - - - - - 1,577,000 Community Center reserve 8,100,000 - - - - - 8,100,000 Total committed 36,101,009 - - 2,000,000 - 141,985 38,242,994 Assigned
Carryover appropriations 18,387,565 - - - - - 18,387,565 Total assigned 18,387,565 - - - - - 18,387,565 Unassigned (deficit) 22,085,188 - 341,657 - - (4,637,437) 17,789,408 Total fund balances 85,358,762$ -$ 395,613$ 2,000,000$ 895,849$ 77,562,613$ 166,212,837$

C. Encumbrances

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, 2023, total governmental fund encumbrance balances for the City are as follows:

General Fund 5,055,009$
Nonmajor governmental funds 21,136,358
Total encumbrances 26,191,367$

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
134
Note 20 – Other Required Disclosures
A.

Expenditures Exceeding Appropriations
For the year ended June 30, 2023, the following funds had excess expenditures over appropriations, which are expected to be covered with existing fund balance or had sufficient available revenue:

Exce ss Expe n di tu re s
Fund Function over Appropriations
General Fund Capital outlay (449,946)$
Measure E Public works (4,982)
Measure G Public safety (1,095,933)
B.

Net Position Deficit and Restrictions
The government-wide statement of net position reports an unrestricted deficit of $(103,410,930) and $81,932,042 of restricted net position.

Note 21 – Joint Venture – Salinas Valley Solid Waste Authority The Salinas Valley Solid Waste Authority (“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 and 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 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 juri sdiction contractually 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 member s 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.

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.

City of Salinas
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023

135
Note 21 – Joint Venture – Salinas Valley Solid Waste Authority (Continued)

On December 6, 2018, the City issued a notice of intenti on 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 City 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 c ontinue paying its share of the 2014 Bonds as regularly scheduled and agrees to 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.

Note 22 – Commitments and Contingencies

Claims and Litigation

The City is directly and indirectly involved in various suits relating principally to claims arising from construction contracts, personal injury, and property damage. In the opinion of the City Attorney and City’s management, potential claims against the City resulting from such litigation, not covered by insurance, would not materially affect the basic financial statements of the City. As a result, no liability ha s been accrued by the City relating to these matters as of June 30, 2023.

136
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137

REQUIRED SUPPLEMENTARY INFORMATION
138
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City of Salinas
Budgetary Information
For the Year Ended June 30, 2023

139
Budgetary Information

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 le vel. 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 budgets that are approved by their respective governing boards are recorded in the City’s accounting system.

The City Manager may transfer budget appropriations betw een departments and Department Directors may transfer appropriations between programs and accounts within their 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 th ey 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.

On November 8, 2005, the voters of Salinas approved Measur e 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 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 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 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 committees’ main responsibilities include th e 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.

City of Salinas
Budgetary Information (Continued)
For the Year Ended June 30, 2023
140

BUDGETARY INFORMATION
The ad
opted FY 2023 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:
• Econom
ic Development
• Affor
dable Housing
• I
nfrastructure and Environmental Sustainability
•E
xcellent Infrastructure
• Publi
c Safety
• Youth an
d Seniors
• Effe
ctive and Culturally Responsive Government
On May 25, 2021, 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 2023 Annual Operating Budgets on June 8, 2022. 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 programs, 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 Gene
ral Fund fund balance increased $7,352,746 to $36,155,366, of which $2,785,000 is nonspendable, $20,960,197 is committed, $7,321,952 is assigned and $(911,783) 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 $2,785,000 includes advances ($2,785,000). Committed funds balance of $20,960,197 are committed for capital projects, reserves, and future encumbrances. Carryover appropriations of $15,266,804 are under the assigned fund balance category.

MEASURE E
Meas
ure E is a general tax (discretionary) and is reported as part of the General Fund. The Measure E fund balance increased $4,704,508 to $19,079,298, of which $9,205,721 is committed for future encumbrances, $863,153 is assigned and $9,010,424 is unassigned.

City of Salinas
Budgetary Information (Continued)
For the Year Ended June 30, 2023
141

MEASURE G
Meas
ure G is a general tax (discretionary) and is reported as part of the General Fund. The Measure G fund balance increased $3,316,838 to $30,124,098, of which $6,199,405 is committed for future encumbrances, $7,081,699 is assigned and $16,842,994 is unassigned.

BUDGETARY RESULTS RECONCILED TO GAAP
The budge
tary 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 expenditu res for the budgetary basis but not for the GAAP basis.

When these loans are made, they are recorded as receivables for the GAAP basis and as expenditures for th e budget
ary 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. • Ce
rtain 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. • Certa
in 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 vari
ance in recognized revenue from the prior year to the current year.

City of Salinas
Budgetary Comparison Schedules – General Fund
For the Year Ended June 30, 2023
142
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Taxes 145,731,585 $ 145,731,585 $ 150,598,921$ 4,867,336$ Licenses and permits 10,497,000 10,497,000 10,568,223 71,223 Intergovernmental 1,116,200 1,116,200 908,898 (207,302) Charges for services 4,997,200 4,988,200 5,296,314 308,114 Investment income (loss) 1,158,000 1,158,000 3,485,836 2,327,836 Rental income 329,000 329,000 330,717 1,717
Fines and forfeitures 240,000 240,000 203,463 (36,537) Miscellaneous 880,200 880,200 955,765 75,565
Total revenues 164,949,185 164,940,185 172,348,137 7,407,952 EXPENDITURES:

Current:

General government 23,534,999 28,735,113 21,640,139 7,094,974 Public safety 86,922,130 88,330,151 87,579,791 750,360 Public works 16,117,846 17,234,834 13,861,038 3,373,796 Recreation 7,981,454 8,196,454 6,940,329 1,256,125 Library 5,701,471 5,757,193 5,055,324 701,869
Capital outlay 63,900 361,173 811,956 (449,946) Debt Service:

Principal 532,400 532,400 811,119 532,400
Interest and fiscal charges 174,400 174,400 173,380 1,020 Total expenditures 141,028,600 149,321,718 136,873,076 13,260,598 REVEN
UES O VER (UN DER) EXPENDITURES 23,920,585 15,618,467 35,475,061 (5,852,646) OTH E R F I NA NCI NG SOU R CE S (U SE S):

Proceeds from sale of capital assets 1,000 1,000 - (1 ,000)
Proceeds from issuance of long-term debt - - 410,213 410,213 Transfers in 6,100,000 8,793,127 2,917,795 (5,875,332) Transfers out (31,776,020) (60,200,228) (23,428,977) 36,771,251 Total other financing sources (uses) (25,675,020) (51,406,101) (20,100,969) 31,305,132 Net change in fund balance (1,754,435)$ (35,787,634)$ 15,374,092 51,161,726$ FUND BALANCE:

Beginning of year 69,984,670
End of year 85,358,762$
Budgeted Amounts
City of Salinas
Budgetary Comparison Schedules – ARPA Fund
Special Revenue Fund
For the Year Ended June 30, 2023

143
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES :

Intergovernmental - $ - $ 8,693,064$ 8,693,064 $ Total revenues - - 8,693,064 8,693,064 EXPENDITURES:

Current:

General government - 12,184,237 4,529,148 7,655,089 Public safety - 387,015 14,205 372,810 Public works - 11,970,479 2,322,369 9,648,110 Recreation - 2,308,985 715,564 1,593,421 Capital outlay - 23,960,466 1,111,778 23,960,466 Total expenditures - 50,811,182 8,693,064 43,229,896 Net change in fund balance -$ (50,811,182)$ - 50,811,182$ FUND BALANCE:

Beginning of year -
End of year -$
Budgeted Amounts

City of Salinas
Budgetary Comparison Schedules – HUD Fund
Special Revenue Fund
For the Year Ended June 30, 2023
144
Variance with
Final Budget
Actual Favorable/
Original Final A mounts (Unfavorable)
REVENUES :

Intergovernmental 16,863,836$ 22,979,508$ 11,494,933$ (11,484,575)$ Interest 2,000 2,000 31,747 29,747
M iscellaneous 100,000 104,013 227,453 123,440 Total revenues 16,965,836 23,085,521 11,754,133 (11,331,388) EXPENDITURES :

Current:

General government 6,840,724 16,767,129 8,098,577 8,668,552 Public safety -
54 ,911 9
,890 45,021
Public works - 993
,200 82
,285 910,915
Capital outlay 7,000 8,231 8,231 8,231
Total expenditures 6,847,724 17,823,471 8,198,983 9,632,719 REVENUES O VER (UNDER) EXPENDITURES 10,118,112 5,262,050 3,555,150 1,706,900 OTHER FINANCING SOURCES (USES):

Transfers out - (1,
381,577) (3
87,350) 994,227
Total other financing sources (uses) - (1,
381,577) (3
87,350) 994,227
Net change in fund balance 10,118,112$ 3,880,473$ 3,167,800 (712,673)$ FUND BALANCE (DE FICIT):

Beginning of y ear (2,772,187)
End of year 395,613$
Budgeted Amounts
City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios – Miscellaneous Plan

145
2023 2022 2021 2020 2019 2018 2017 2016 2015
Measurement Period, Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 2015 2014 1 T otal Pension L iability
Serv ice Co st 3,581,707$ 3,130,339$ 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 9,882,781 9,498,842 8,959,786 8,430,817 7,806,166 7,282,974 6,801,939 6,445,778 6,154,034 Changes in benefit t erms - - - - - - - - - Differences between expected and actual
experience (1,973,792) 727,132 588,822 2,005,995 1,457,261 489,759 (996,921) (1,789,044) - Changes in assumptions 5,420,045 - - - (752,607) 6,388,079 - (1,686,636) - Benefit payments, including refunds of
employee contributions (6,365,156) (5,481,505) (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 10,545,585 7,874,808 7,604,436 9,138,051 7,658,013 13,673,092 4,824,294 2,364,452 5,812,488 T otal pension liability - beginning 141,174,194 133,299,386 125,694,950 116,556,899 108,898,886 95,225,794 90,401,500 88,037,048 82,224,560 T otal pension liability - ending (a) 151,719,779$ 141,174,194$ 133,299,386$ 125,694,950$ 116,556,899$ 108,898,886$ 95,225,794$ 90,401,500$ 88,037,048$ Pl
an fiduciary net position
Contributions - employer 4,193,288$ 4,273,977$ 7,793,322$ 3,511,716$ 3,133,948$ 3,232,477$ 2,635,818$ 2,037,528$ 2,010,590$ Contributions - employee 1,584,132 1,464,611 1,411,627 1,501,635 1,403,836 1,331,850 1,339,737 987,786 959,420 Net investment income (9,339,092) 22,935,564 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 (6,365,156) (5,481,505) (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 (77,170) (100,678) (129,381) (61,083) (122,563) (102,919) (41,756) (77,059) - Other miscellaneous income/expense - - - 199 (232,749) - - - - Net change in plan fiduciary net
position (10,003,998) 23,091,969 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 123,879,515 100,787,546 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) 113,875,517$ 123,879,515$ 100,787,546$ 91,773,349$ 85,595,184$ 78,652,940$ 69,707,970$ 68,514,982$ 66,869,484$ Net pension liability - ending (a) - (b) 37,844,262$ 17,294,679$ 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 75.06% 87.75% 75.61% 73.01% 73.44% 72.23% 73.20% 75.79% 75.96% Covered payroll 21,667,920$ 20,799,596$ 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 as a percentage of
covered payroll 174.66% 83.15% 155.21% 164.39% 154.41% 162.45% 166.78% 141.08% 133.70% 1Information only presented from the implementation year City Miscellaneous Plans

City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
Miscellaneous Plan
146
Fiscal Year Ended June 30: 2 0232 0222 0212 0202 0192 0182 0172 0162 0152 014 Actuarially determined
contribution 4,714,221$ 4,193,288$ 4,273,977$ 3,857,093$ 3,511,716$ 3,133,731$ 3,231,650$ 2,635,818$ 2,037,528$ 2,010,590$ Contributions in relation to
the actu arially determined
contribution (4,714,221) (4,193,288) (4,273,977) (7,788,891) (3,511,716) (3,133,731) (3,231,650) (2,635,818) (2,037,528) (2,010,590) Contribution deficiency
(excess) -$ -$ -$ (3,931,798)$ -$ -$ -$ -$ -$ -$ Covered payroll 21,667,920$ 21,509,329$ 20,799,596$ 20,946,385$ 20,634,254$ 20,051,944$ 18,618,295$ 15,300,421$ 15,513,480$ 15,831,777$ Contributions as a percentage
of covered payroll 21.76% 19.50% 20.55% 37.18% 17.02% 15.63% 17.36% 17.23% 13.13% 12.70% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method
Amortization method/period For details, see June 30, 2021 Funding V aluation Report.

Asset valuation method
Inflation
Salary increases Varies based on entry age and service Payroll growth
Investment rate of return
Retirement age
Mortality
Other Information:

City Miscellaneous Plans
The probabilities of retirement are based on the 2017 CalPERS Experience S tudy for the period from 1997 to 2015.

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-20 16 published by the Society of Actuaries.

For changes to previous years’ information, refer to past G ASB 68 reports.

2.50%

2.75%

7.00% net of pension plan investment and administrative expenses T he actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2023 were derived fro m the June 30, 2021 funding valuation report.

Entry Ag e Actu arial C ost Method
Fair Value of Assets. For details, see June 30, 2021 Funding Valuation City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios – City Police Plans

147
2023 2022 2021 2020 2019 2018 2017 2016 2015
Measurement Period, Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 2015 2014 T otal Pension L iability
Ser v ice Co st 6,757,790$ 6,086,593 $ 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 23,595,755 22,716,035 22,017,085 21,051,415 19,772,458 18,658,643 17,933,618 17,475,350 17,097,550 Changes in benefit t erms - - - - - - - - - Differences between expected and actual
experience (1,552,114) (2,364,429) 1,696,481 6,664,829 6,096,574 (2,807) (4,299,665) (5,739,808) - Changes in assumptions 13,527,486 - - - (1,307,343) 16,117,523 - (4,436,648) - Benefit payments, including refunds of
employee contributions (17,388,668) (16,317,199) (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 24,940,249 10,121,000 14,189,900 18,755,868 16,422,567 27,172,376 6,205,598 356,696 11,134,827 T otal pension liability - beginning 335,307,524 325,186,524 310,996,624 292,240,756 275,818,189 248,645,813 242,440,215 242,083,519 230,948,692 T otal pension liability - ending (a) 360,247,773$ 335,307,524$ 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 12,406,841$ 11,629,887$ 10,297,024$ 9,485,870$ 8,260,458$ 7,798,560$ 6,462,584$ 5,540,793$ 5,285,903$ Contributions - employee 2,127,269 2,305,151 1,946,146 1,993,713 1,816,971 1,625,541 1,512,655 1,350,215 1,375,826 Net investment income (19,126,756) 46,981,535 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 (17,388,668) (16,317,199) (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 (156,453) (206,540) (283,165) (136,963) (282,146) (245,410) (103,251) (190,690) - Other miscellaneous income/expense1 - - - 444 (535,801) - - - - Net change in plan fiduciary net
position (22,137,767) 44,392,834 5,895,851 8,936,336 10,863,756 14,844,870 (3,199,511) (949,124) 21,430,315 Plan fiduciary net position - beginning2 251,151,937 206,759,103 200,863,252 191,926,916 181,063,160 166,218,290 169,417,801 170,366,925 148,936,610 Plan fiduciary net position - ending (b) 229,014,170$ 251,151,937$ 206,759,103$ 200,863,252$ 191,926,916$ 181,063,160$ 166,218,290$ 169,417,801$ 170,366,925$ Net pension liability - ending (a) - (b) 131,233,603$ 84,155,587$ 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 63.57% 74.90% 63.58% 64.59% 65.67% 65.65% 66.85% 69.88% 70.38% Covered payroll3 20,251,095$ 19,916,863$ 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 as a percentage of
covered payroll 648.03% 422.53% 598.83% 578.09% 558.31% 584.39% 524.51% 471.29% 432.29% 2Includes any beginning of year adjustment.

City Police Plans
1During Fiscal Year 2017-18, as a result of G overnmental Accounting S tandards Board S tatement (G AS B) No. 75, Accounting and Fina ncial Reporting for Postemployment Benefit Plans Other than Pensions (G AS B 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the S tate of Calif ornia’s agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of G AS B 75.

Additionally, CalPERS employees participate in various S tate of California agent pension plans and during Fiscal Year 2017-18, CalPERS recorded a correction to previously reported financial statements to properly reflect its proportionate share of activity related to pensions in accordance with G ASB Statement No. 68, Accounting and Financial Reportin g for Pensions (G AS B 68). 3 Includes one year’s payroll grow th using 2.80% payroll grow th assumption for fiscal year ended June 30, 2022; 2.75% payroll grow th assumption for fiscal years ended June 30, 2018-21; 3.00% payroll grow th assumption for f

City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
City Police Plans
148
Fiscal Year Ended June 30: 2 0222 0222 0212 0202 0192 0182 0172 0162 0152 014 Actuarially determined
contribution 13,151,466$ 12,406,841$ 11,629,887$ 10,297,024$ 9,485,870$ 8,260,458$ 7,798,560$ 6,462,584$ 5,540,793$ 5,285,903$ Contributions in relation to
the actu arially determined
contribution (13,151,466) (12,406,841) (11,629,887) (10,296,552) (9,485,870) (8,260,458) (7,798,560) (6,462,584) (5,540,793) (5,285,903) Contribution deficiency
(excess) -$ -$ -$ 472$ -$ -$ -$ -$ -$ -$ Covered payroll 20,251,095$ 20,514,369$ 19,916,863$ 19,776,528$ 19,051,278$ 17,967,376$ 16,214,420$ 15,715,033$ 15,494,316$ 16,589,818$ Contributions as a percentage
of covered payroll 64.94% 60.48% 58.39% 52.06% 49.79% 45.97% 48.10% 41.12% 35.76% 31.86% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method
Amortization method/period For details, see June 30, 2021 Funding V aluation Report.

Asset valuation method
Inflation
Salary increases Varies based on entry age and service Payroll growth
Investment rate of return
Retirement age
Mortality
City Police Plans

7.00% net of pension plan investment and administrative expenses The probabilities of retirement are based on the 2017 CalPERS Experience S tudy for the period from 1997 to 2015.

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-20 16 published by the Society of Actuaries.

T he actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2023 were derived fro m the June 30, 2021 funding valuation report.

2.50%

2.75%
Entry Ag e Actu arial C ost Method
Fair Value of Assets. For details, see June 30, 2021 Funding Valuation City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios – City Fire Plans

149
2023 2022 2021 2020 2019 2018 2017 2016 2015
Measurement Period, Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 2015 2014 Proportion of the net pension liability 0.53060% 0.61287% 0.48376% 0.46772% 0.46967% 0.58010% 0.60039% 0.64362% 0.64195% Proportionate share of the net pension
liability 61,288,496$ 33,145,570 $ 52,635,552 $ 47,927,704 $ 45,259,034 $ 57,529,594 $ 51,951,899 $ 44,177,449 $ 39,944,785 $ Covered payroll* 11,615,639$ 11,387,448 $ 11,013,870 $ 10,748,465 $ 9,763,022 $ 9,636,368$ 9,436,688$ 9,158,594$ 9,531,935$ Proportionate share of the net pension
liability as percentage of covered payroll 527.64% 291.07% 477.90% 445.90% 463.58% 597.00% 550.53% 482.36% 419.06% Plan's fiduciary net position as percentage
of the total pension liability 76.68% 88.29% 75.10% 75.26% 75.26% 73.31% 74.06% 78.40% 79.82% * For the year ending on the measurement date.

City Fire Plans

City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
City Fire Plans
150
Fiscal Year Ended June 30: 2023 2022 2021 2020 2019 2018 2017 2016 2015 Actu arially d etermined
contribution 6,940,599 $ 6,791,444 $ 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
cont ribut ion (6,940,599) (6,791,444) (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)$ -$ -$ -$
Covered payroll 12,823,623$ 11,615,639$ 11,387,448$ 11,013,870$ 10,748,465$ 9,763,022$ 9,636,368$ 9,436,668$ 9,158,594$ Contributions as a percentage
of covered payroll 54.12% 58.47% 50.13% 45.93% 40.65% 171.47% 53.26% 50.15% 41.62% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actu arial cos t method
Amortization method/period For details, see June 30, 2021 Funding V aluation Report.

Asset valuation method
Inflation
Salary increases Varies based on entry age and service Payroll grow th
Investment rate of return
Retirement age
Mortality
The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2023 were derived fro m the June 30, 2021 funding valuation report.

City Fire Plans
The probabilities of retirement are based on the 2017 CalPERS Experience S tudy for the period from 1997 to 2015.

The probabilities of mortality are based on the 2017 CalPERS Experience S tudy for the period from 1997 to 2015.

Pre-retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of S cale MP-20 16 published by the Society of Actuaries.

Entry Age Actuarial Cost Method
Fair Value of Assets. For details, see June 30, 2021 Funding Valuation Report.

2.50%

2.75%

7.00% net of pension plan investment and administrative expenses City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in Net Pension Liability and Related Ratios Single Employer Plan

151
2023 2022 2021 2020 2019 2018 2017 2016
Measurement Period, Year Ended June 30: 2022 2021 2020 2019 2018 2017 2016 2015 1 T otal Pension Liability
Service Cost 131,853$ 345,756 $ 325,385 $ 232,193 $ 302,184 $ 279,000 $ 336,000 $ 436,000 $ Interest on total pension liability 255,632 283,983 506,095 684,730 679,330 537,000 655,000 676,000 Changes in benefit t erms - - - - - - 531,000 - Differences between expected and actual
experience - 1,595,858 - 889,365 - 2,172,000 - - Changes in assumptions (533,090) (37,244) 907,299 217,496 - (106,000) - - Benefit payments, including refunds of
employee contributions (3,218,471) (2,656,129) (9,123,048) (1,305,661) (199,769) (3,508,000) (87,000) (3,139,000) Net change in total pension liab ility (3,364,076) (467,776) (7,384,269) 718,123 781,745 (626,000) 1,435,000 (2,027,000) T otal pension liability - beginning 13,422,823 13,893,599 21,277,868 20,559,745 19,778,000 20,404,000 18,969,000 20,996,000 T otal p ension liability - ending (a) 10,058,747$ 13,425,823 $ 13,893,599 $ 21,277,868 $ 20,559,745 $ 19,778,000 $ 20,404,000 $ 18,969,000 $ Plan fiduciary net position
Contributions - employer 190,126$ 5,695,926 $ 8,030,028 $ 2,919,589 $ 1,927,686 $ 1,654,000 $ 1,483,000$ 1, 340,000$
Contributions - employee 19,012 34,635 52,751 71,806 70,043 69,000 82,000 77,000 Net investment income (486,138) 894,536 338,833 503,893 60,254 (506,000) 84,000 (85,000) Benefit payments, including refunds of
employee contributions (3,218,471) (2,656,129) (9,123,048) (1,305,661) (199,769) (3,508,000) (87,000) (3,139,000) Administrative expense (17,057) (18,061) (18,582) (19,188) (54,195) (75,000) (83,000) (100,000) Net change in plan fiduciary net
position (3,512,528) 3,950,907 (720,018) 2,170,439 1,804,019 (2,366,000) 1,479,000 (1,907,000) Plan fiduciary net position - beginning 9,862,347 5,914,440 6,634,458 4,464,019 2,660,000 5,026,000 3,547,000 5,454,000 Plan fiduciary net position - ending (b) 6,349,819$ 9,865,347$ 5,914,440$ 6,634,458$ 4,464,019$ 2,660,000$ 5,026,000$ 3,547,000$ Net pension liability - ending (a) - (b) 3,708,928$ 3,560,476$ 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 63.13% 73.48% 42.57% 31.18% 21.71% 13.45% 24.63% 18.70% Covered payroll 437,872$ 768,725$ 1,176,879$ 1,628,432$ 1,610,679$ 1,649,359$ 1,461,000$ 1,738,432$ Plan net pension liability as a percentage of
covered payroll 847.03% 463.17% 677.99% 899.23% 999.31% 1037.86% 1052.57% 887.12% 1Information only presented from the implementation year Single-Employer Plan

City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Pension Plan Contributions
Single Employer Plan
152
Fiscal Year Ended June 30: 2023 2022 2021 2020 2019 2018 2017 2016 Actuarially determined
contribution 697,000$ 2,963,000$ 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
cont ribut ion (145,965) (208,396) (10,212,240) (5,573,828) (2,135,107) (1,614,000) (1,571,000) (1,107,000) Contribution deficiency
(excess) 551,035$ 2,754,604$ (5,960,240)$ (1,459,828)$ (135,107)$ 318,000$ 12,000$ 413,000$ Covered payroll 401,365$ 463,101$ 804,977$ 1,273,326$ 1,664,538$ 1,693,493$ 1,796,000$ 1,872,000$ Contributions as a percentage
of covered payroll 36.37% 45.00% 1268.64% 437.74% 128.27% 95.31% 87.47% 59.13% Notes to Schedule:

Methods and assumptions used to determine contribution rates:

Actuarial cost method
Amortization method /period
Asset valuation method
Discount rate
Inflation
S alary increases 2.5% annually
Payroll grow th 2.875%
Mortality
1Information only presented from the implementation year

2.75%
Single-E mployer Plan
The actuarial methods and assumption used to set the actuarially determined contributions for Fiscal Year 2023 were derived fro m the S eptember 1, 2021 funding valuation report.

Individual aggregate cost method
N/A
Cash value as reported by New York Life Investment Management, LLC

2.25%
The probabilities of mortality are based on the CalPERS Experience S tudy for the period from 2000 to 2019. Pre-retirement and p os t-retirement mortality rates include 20 years of projected mortality improvement using S cale BB published by the Actuaries.

City of Salinas
Required Supplemental Information (Unaudited)
Schedule of Changes in the City’s Net OPEB Liability

153
2023 2022 2021 2020 2019 2018
For the Measurement Period: 2021-2022 2020-2021 2019-2020 2018-2019 2017-2018 2016-20171 Total O PEB Li abi l i ty:

Service Cost 1,043,749 $ 1,639,274 $ 1,169,996 $ 1,065,470 $ 1,085,475 $ 1,209,000 $ Interest on the total OPEB liability 849,992 884,846 974,493 1,143,094 1,064,391 951,000 Changes in benefit terms - - - 574,467 - - Difference between expected and actual experience - (4,117,866) - (4,138,016) - - Changes in assumptions (3,086,884) (4,258,871) 4,678,007 1,474,189 (609,871) (1,765,000) Benefit payments (685,206) (704,749) (676,514) (945,329) (915,000) (861,000) Net changes in Total OPE B L iability (1,878,349) (6,557,366) 6,145,982 (826,125) 624,995 (466,000) Beginning of Year 21,262,486 27,819,852 21,673,870 22,499,995 21,875,000 22,341,000 End of Year 19,384,137$ 21,262,486 $ 27,819,852 $ 21,673,870 $ 22,499,995 $ 21,875,000 $ Plan Fiduciary Net Position:

Employer contribution 940,051 $ 959,007 $ 931,063 $ 1,195,329 $ 1,165,000 $ 1,111,000 $ Employee contributions - - - - - - Net investment income (loss) (599,182) 897,217 102,633 152,998 159,215 171,000 Benefit payments (685,206) (704,749) (676,514) (945,329) (915,000) (861,000) Administrative expenses (5,965) (5,500) (5,988) (541) (3,619) (1,000) Net changes in Fiduciary Net Position (350,302) 1,145,975 351,194 402,457 405,596 420,000 Beginning of Year 4,204,222 3,058,247 2,707,053 2,304,596 1,899,000 1,479,000 End of Year 3,853,920$ 4,204,222$ 3,058,247$ 2,707,053$ 2,304,596$ 1,899,000$ Ne t O PEB Li abi l i ty 15,530,217$ 17,058,264$ 24,761,605$ 18,966,817$ 20,195,399$ 19,976,000$ Fiduciary Net Position as a % of Total OPEB Liability 19.88% 19.77% 10.99% 12.49% 10.24% 8.68% Covered Payroll 69,854,034$ 64,469,561$ 64,146,096$ 64,026,542$ 62,965,263$ 48,821,000$ Net OPEB Liability as a % of Payroll 22.23% 26.46% 38.60% 29.62% 32.07% 40.92% Notes to Schedule:
1 Information only presented from the implementation year Change of assumptions: For the measure period ended June 30, 2020, the ACA excise tax was removed. Tax was repealed in December 2019.

Sched ule of Changes in the City's Net OPE B Liab ility

City of Salinas
Required Supplemental Information (Unaudited)
Schedule of OPEB Contributions
154
2022-23 2021-22 2020-21 2019-20 2018-19 2017-18
Actuarially determined contribution 1,733,000$ 1,687,000$ 1,997,000$ 1,938,000$ 2,322,000$ 2,188,000$ Contributions in relation to the
actuarially determined contributions (996,208) (940,051) (959,007) (931,063) (1,195,329) (1,165,000) Contribution deficiency (excess) 736,792$ 746,949$ 1,037,993$ 1,006,937$ 1,126,671$ 1,023,000$ Covered payroll 69,854,034$ 67,797,683$ 64,469,561$ 64,146,096$ 64,026,452$ 51,530,000$ Contributions as a percentage of
covered payroll 1.43% 1.39% 1.49% 1.45% 1.87% 2.26%
Notes to Schedule:

Methods and assumptions used to determine contribution rates:

ADC for fiscal year 6/30/2022
Actuarial valuation date 6/30/2021
Actuarial cost method Entry-Ag e Normal Cost Method
Asset valuation method Actuarial value of assets
Inflation 2.50%
Investment rate of return 6.25%
Healthcare cost trend rate Non-Medicare - 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076; Medicare - 5.65% for 2023, decreasing to an ultimate rate of 3.75% in 2076; Projected salary growth and increase Not applicable
M ortality CalPERS 2000-2019 Experience Study
1 Information only presented from the implementation year The actuarial methods and assumptions used to set the actuarially determined contributions for the fiscal year ended June 30, 2021 were as follows:

Schedule of OPEB Contributions

SUPPLEMENTARY INFORMATION
155
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156
Nonmajor Nonmajor Nonmajor Total
Special Debt Capital Nonmajor
Revenue Service Projects Governmental
Funds Funds Funds Funds
ASSETS
Cash and investments 64,706,773$ 3,408,490$ 9,275,575$ 77,390,838$ Receivables, net:

Interest 1,208,790 28,771 153,033 1,390,594 Due from outside agencies 2,543,876 - 831,984 3,375,860 Assessments - 540,000 - 540,000
Leases 174,790 - 3,632,559 3,807,349
Loans and notes receivable, net of allowance 16,570 - - 16,570 Land and properties held for resale 1,380,000 - - 1,380,000 Total assets 70,113,493$ 3,977,261$ 13,893,151$ 87,983,905$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 1,114,352$ 7,470$ -$ 1,121,822$ Due to other funds 1,799,693 211,415 1,643,067 3,654,175 Unearned revenues - 540,000 - 540,000
Total liabilities 2,914,045 758,885 1,643,067 5,315,997

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 868,209 - 563,931 1,432,140
Related to leases 164,264 - 3,508,891 3,673,155
Total deferred inflows of resources 1,032,473 - 4,072,822 5,105,295 Fund Balances:

Nonspendable 1,380,000 - - 1,380,000
Restricted 65,170,741 3,430,791 12,059,963 80,661,495 Committed - - 141,985 141,985
Unassigned (383,766) (212,415) (4,024,686) (4,620,867) Total fund balances 66,166,975 3,218,376 8,177,262 77,562,613 Total liabilities, deferred inflows of
resources, and fund balances 70,113,493$ 3,977,261$ 13,893,151$ 87,983,905$ June 30, 2023
City of Salinas
Combing Balance Sheet
Nonmajor Governmental Funds
157
Non-major Non-major Non-major Total
Special Debt Capital Non-Major
Revenue Service Projects Governmental
Funds Funds Funds Funds
REVENUES:

Taxes 668,442$ -$ -$ 668,442$
Taxes - special assessments - 42,792 - 42,792
Licenses and permits 123,639 - - 123,639
Intergovernmental 18,140,499 - 3,530,237 21,670,736 Charges for services 2,498,571 - 319,467 2,818,038 Investment income (loss) 1,369,100 427,921 179,431 1,976,452 Rental income 311,076 - - 311,076
Fines and forfeitures 339,672 - - 339,672
Miscellaneous 1,746,193 - 187,733 1,933,926 Total revenues 25,197,192 470,713 4,216,868 29,884,773 EXPENDITURES:

Current:

General government 2,752,118 - - 2,752,118 Public safety 2,500,199 - - 2,500,199
Public works 1,457,249 - - 1,457,249
Recreation 741,989 - - 741,989
Library 315,316 - - 315,316
Capital outlay 655,430 - - 655,430
Debt service:

Principal - 5,953,000 - 5,953,000
Interest and fiscal charges - 4,502,921 - 4,502,921
Total expenditures 8,422,301 10,455,921 - 18,878,222
REVENUES OVER (UNDER) EXPENDITURES 16,774,891 (9,985,208) 4,216,868 11,006,551 OTHER FINANCING SOURCES (USES):

Proceeds from issuance of long-term debt - - - -
Transfers in 1,407,500 9,823,372 - 11,230,872 Transfers out (9,243,065) - (8,718,005) (17,961,070) Total other financing sources (uses) (7,835,565) 9,823,372 (8,718,005) (6,730,198) NET CHANGE IN FUND BALANCES 8,939,326 (161,836) (4,501,137) 4,276,353 FUND BALANCES:

Beginning of year 57,227,649 3,380,212 12,678,399 73,286,260 End of year 66,166,975$ 3,218,376$ 8,177,262$ 77,562,613$ For the Year Ended June 30, 2023
City of Salinas
Combing Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds
158
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 - 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 - 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.

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.

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.

Nonmajor Governmental Funds
159
Special Revenue Funds (Continued)
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 - 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 regional 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 Bill 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 Housin
g - These funds are used to improve an d increase the supply of low income housing within the City.

Grants - This fund accounts for various minor grants received for purposes ranging from library to police operations.

Non-Major Governmental Funds (Continued)
160
Lighting,
Landscape,
and Local Emergency
Maintenance Public Development Gas Medical
District Safety Fees Tax Services
ASSETS
Cash and investments 9,656,832$ 2,173,750$ 19,338,024$ 4,462,644$ -$ Receivables, net:

Interest 68,197 7,637 136,395 35,494 - Due from outside agencies - 117,389 - 426,546 - Leases - - - 49,387 - Loans and notes receivable, net of allowance - - - - - Land and properties held for resale - - - - - Total assets 9,725,029$ 2,298,776$ 19,474,419$ 4,978,269$ -$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 80,079$ 110,021$ -$ -$ 66,121$ Due to other funds 51,573 - 35,911 237,116 303,924 Total liabilities 131,652 110,021 35,911 237,116 370,045

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - - Related to leases - - - 46,849 - Total deferred inflows of resources - - - 46,849 -

Fund Balances:

Nonspendable - - - - - Restricted 9,593,377
2,188,755 19,438,508 4,694,304 - Unassigned - - - - (370,045) Total fund balance (deficit) 9,593,377 2,188,755 19,438,508 4,694,304 (370,045) Total liabilities, deferred inflows of
resources, and fund balances 9,725,029$ 2,298,776$ 19,474,419$ 4,978,269$ -$ (Continued)
City of Salinas
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2023
161
Asset Traffic Vehicle Contributions &
Seizure Safety
Abatement Cable Donations
ASSETS
Cash and investments 232,225$ -$ 345,509$ 557,928$ 499,109$ Receivables, net:

Interest 3,197 - - - -
Due from outside agencies - 57,260 38,228 - -
Leases - - - - -
Loans and notes receivable, net of allowance - - - - - Land and properties held for resale - - - - -
Total assets 235,422$ 57,260$ 383,737$ 557,928$ 499,109$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable -$ 6,736$ 9,263$ 31,250$ -$ Due to other funds - 64,245 - - -
Total liabilities - 70,981 9,263 31,250 -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - -
Related to leases - - - - -
Total deferred inflows of resources - - - - -
Fund Balances:

Nonspendable - - - - -
Restricted 235,422 -
374,474 526,678 499,109
Unassigned - (13,721) - - -
Total fund balance (deficit) 235,422 (13,721) 374,474 526,678 499,109 Total liabilities, deferred inflows of
resources, and fund balances 235,422$ 57,260$ 383,737$ 557,928$ 499,109$ (Continued)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Special Revenue Funds
June 30, 2023
162
KDF Measure X SRA
Los Padres Transport SB1 Road SB1 Traffic Public
Dev Social Safety & Maintenance & Congestion Improvement Services Inv Plan Rehab Relief Grant
ASSETS
Cash and investments 269,509$ 12,037,508$ 8,059,078$ 570,607$ 1,635,102$ Receivables, net:

Interest - 81,517 55,943 4,085 11,721 Due from outside agencies - 1,521,546 323,622 - - Leases - - - - - Loans and notes receivable, net of allowance - - - - - Land and properties held for resale - - - - 584,419 Total assets 269,509$ 13,640,571$ 8,438,643$ 574,692$ 2,231,242$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 1,371$ -$ -$ -$ -$ Due to other funds - 113,423 21,751 - - Total liabilities 1,371 113,423 21,751 - -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - - Related to leases - - - - - Total deferred inflows of resources - - - - -

Fund Balances:

Nonspendable - - - - 584,419 Restricted 268,138 13,527,148 8,416,892 574,692 1,646,823 Unassigned - - - - - Total fund balance (deficit) 268,138 13,527,148 8,416,892 574,692 2,231,242 Total liabilities, deferred inflows of
resources, and fund balances 269,509$ 13,640,571$ 8,438,643$ 574,692$ 2,231,242$ (Continued)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Special Revenue Funds
June 30, 2023
163
Affordable
Housing Grants Total
ASSETS
Cash and investments 2,849,395 $ 2,019,553 $ 64,706,773 $ Receivables, net:

Interest 802,958 1,646 1,208,790 Due from outside agencies - 59,285 2,543,876 Leases - 125,403 174,790
Loans and notes receivable, net of allowance 16,570 - 16,570 Land and properties held for resale 795,581 - 1,380,000 Total assets 4,464,504$ 2,284,383 $ 70,113,493 $

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 399$ 809,112$ 1,114,352 Due to other funds - 971,750 1,799,693 Total liabilities 399 1,780,862 2,914,045

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 781,469 86,740 868,209 Related to leases - 117,415 164,264 Total deferred inflows of resources 781,469 204,155 1,032,473

Fund Balances:

Nonspendable 795,581 - 1,380,000 Restricted 2,887,055 299,366 65,170,741 Unassigned - - (383,766) Total fund balance (deficit) 3,682,636 299,366 66,166,975 Total liabilities, deferred inflows of
resources, and fund balances 4,464,504$ 2,284,383 $ 70,113,493 $ (Concluded)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Special Revenue Funds
June 30, 2023
164
Lighting,
Landscape,
and Local Emergency
Maintenance Public Development Gas Medical
District Safety Fees Tax Services
REVENUES:

Taxes -$ 668,442$ -$ -$ -$ Licenses and permits - - - - - Intergovernmental - 379,557 - 3,638,932 137,124 Charges for services - - 2,498,571 - - Investment income (loss) 230,371 19,178 447,314 99,635 - Rental income - - - 258,856 - Fines and forfeitures - - - - - Miscellaneous 1,987,121 - - - - Total revenues 2,217,492 1,067,177 2,945,885 3,997,423 137,124

EXPENDITURES:

Current:

General government - - - - - Public safety - - - - 1,467,690 Public works 1,383,538 - - - - Recreation - - - - - Library - - - - - Capital outlay - - - - 327 Total expenditures 1,383,538 -
- - 1,468,017

REVENUES OVER (UNDER) EXPENDITURES 833,954 1,067,177 2,945,885 3,997,423 (1,330,893) OTHER FINANCING SOURCES (USES):

Transfers in - - - - 1,357,500 Transfers out (137,735) - (403,473) (2,955,423) (18,170) Total other financing sources (uses) (137,735) - (403,473) (2,955,423) 1,339,330 NET CHANGE IN FUND BALANCES 696,219 1,067,177 2,542,412 1,042,000 8,437 FUND BALANCES (DEFICIT):

Beginning of year 8,897,158 1,121,578 16,896,096 3,652,304 (378,482) End of year 9,593,377$ 2,188,755$ 19,438,508$ 4,694,304$ (370,045)$ (Continued)
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds
For the Year Ended June 30, 2023
165
Asset Traffic Vehicle Contributions &
Seizure Safety Abatement Cable Donations
REVENUES:

Taxes -$ -$ -$ -$ -$
Licenses and permits - - - 123,639 -
Intergovernmental 79,798 - 160,299 - -
Charges for services - - - - -
Investment income (loss) 8,890 - - - -
Rental income - - - - -
Fines and forfeitures - 339,679 (7) - -
Miscellaneous - - - - 12,840
Total revenues 88,688 339,679 160,292 123,639 12,840 EXPENDITURES:

Current:

General government - 126,265 - 125,001 -
Public safety 5,044 - 190,849 - -
Public works - - - - -
Recreation - - - - 420
Library - - - - 7,676
Capital outlay - - - - -
Total expenditures 5,044 126,265 190,849 125,001 8,096 REVENUES OVER (UNDER) EXPENDITURES 83,644 213,414 (30,557) (1,362) 4,744 OTHER FINANCING SOURCES (USES):

Transfers in - - 50,000 - -
Transfers out - (200,000) - - -
Total other financing sources (uses) - (200,000) 50,000 - - NET CHANGE IN FUND BALANCES 83,644 13,414 19,443 (1,362) 4,744 FUND BALANCES (DEFICIT):

Beginning of year 151,778 (27,135) 355,031 528,040 494,365 End of year 235,422$ (13,721)$ 374,474$ 526,678$ 499,109$ (Continued)
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Special Revenue Funds
For the Year Ended June 30, 2023
166
KDF Measure X SRA
Los Padres Transport SB1 Road SB1 Traffic Public
Dev Social Safety & Maintenance & Congestion Improvement Services Inv Plan Rehab Relief Grant
REVENUES:

Taxes -$ -$ -$ -$ -$ Licenses and permits - - - - - Intergovernmental - 5,855,296 3,297,741 - - Charges for services - - - - - Investment income (loss) - 252,556 167,706 14,270 40,829 Rental income - - - - - Fines and forfeitures - - - - - Miscellaneous - - - - - Total revenues - 6,107,852 3,465,447 14,270 40,829

EXPENDITURES:

Current:

General government - - - - - Public safety - - - - - Public works - - - - - Recreation 13,236 - - - - Library - - - - - Capital outlay - - - - - Total expenditures 13,236 - - - -

REVENUES OVER (UNDER) EXPENDITURES (13,236) 6,107,852 3,465,447 14,270 40,829 OTHER FINANCING SOURCES (USES):

Transfers in - - - - - Transfers out - (3,767,413) (1,754,856) - - Total other financing sources (uses) - (3,767,413) (1,754,856) - - NET CHANGE IN FUND BALANCES (13,236) 2,340,439 1,710,591 14,270 40,829 FUND BALANCES (DEFICIT):

Beginning of year 281,374 11,186,709 6,706,301 560,422 2,190,413 End of year 268,138$ 13,527,148$ 8,416,892$ 574,692$ 2,231,242$ (Continued)
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Special Revenue Funds
For the Year Ended June 30, 2023
167
Affordable
Housing Grants Total
REVENUES:

Taxes -$ -$ 668,442$
Licenses and permits - - 123,639
Intergovernmental - 4,591,752 18,140,499
Charges for services - - 2,498,571
Investment income (loss) 81,414 6,937 1,369,100
Rental income - 52,220 311,076
Fines and forfeitures - - 339,672
Miscellaneous (328,517) 74,749 1,746,193
Total revenues (247,103) 4,725,658 25,197,192 EXPENDITURES:

Current:

General government 5,498 2,495,354 2,752,118
Public safety - 836,616 2,500,199
Public works - 73,711 1,457,249
Recreation - 728,333 741,989
Library - 307,640 315,316
Capital outlay - 655,103 655,430
Total expenditures 5,498 5,096,757 8,422,301
REVENUES OVER (UNDER) EXPENDITURES (252,601) (371,099) 16,774,891 OTHER FINANCING SOURCES (USES):

Transfers in - - 1,407,500
Transfers out (5,995) - (9,243,065)
Total other financing sources (uses) (5,995) - (7,835,565) NET CHANGE IN FUND BALANCES (258,596) (371,099) 8,939,326 FUND BALANCES (DEFICIT):

Beginning of year 3,941,232 670,465 57,227,649
End of year 3,682,636$ 299,366$ 66,166,975$ (Concluded)
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Nonmajor Special Revenue Funds
For the Year Ended June 30, 2023
168
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 nonmajor debt service funds include the following debt issuances:

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.

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 monies 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 Road Improvement - 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).
2018 Lease-El Gabilan Library - This fund is used to accumulate monies for the designing, permitting, constructing and equipping the El Gabilan Library 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. 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 - This fund accounts for the cost 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 - This fund accounts for the reserves on outstanding assessment districts bonds.

Nonmajor Governmental Funds
169
COP 1999 & 2018 COP 2018B 2018
Assessment 2004 Lease-PS T.R.I.P. Lease
District Consolidation Building Total Road El Gabilan
Debt Service (2014) Police Improvement Library
ASSETS
Cash and investments -$ -$ 1,021$ 1,526,511$ 1,492$ Receivables, net:

Interest - - 2,131 12,254 888
Assessments 540,000 - - - -
Total assets 540,000$ -$ 3,152$ 1,538,765$ 2,380$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 1,000$ -$ 2,020$ 2,500$ 1,950$ Due to other funds 209,237 - - - -
Unearned revenues 540,000 - - - -
Total liabilities 750,237 - 2,020 2,500 1,950 Fund Balances:

Restricted - - 1,132 1,536,265 430
Unassigned (deficit) (210,237) - - - -
Total fund balances (210,237) - 1,132 1,536,265 430 Total liabilities, deferred inflows of
resources, and fund balances 540,000$ -$ 3,152$ 1,538,765$ 2,380$ (Continued)
City of Salinas
Combining Balance Sheet
Nonmajor Debt Service Funds
June 30, 2023
170
2020A 2020A Assessment Assessment
Refunding Refunding District District
Energy SVSWA Administration Reserve Total
ASSETS
Cash and investments 494$ 23,718$ -$ 1,855,254$ 3,408,490$ Receivables, net:

Interest - 178 - 13,320 28,771 Assessments - - - - 540,000 Total assets 494$ 23,896$ -$ 1,868,574$ 3,977,261$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable -$ -$ -$ -$ 7,470$ Due to other funds - - 2,178 - 211,415 Unearned revenues - - - - 540,000 Total liabilities - - 2,178 - 758,885

Fund Balances:

Restricted 494 23,896 - 1,868,574 3,430,791 Unassigned (deficit) - - (2,178) - (212,415) Total fund balances 494 23,896 (2,178) 1,868,574 3,218,376 Total liabilities, deferred inflows of
resources, and fund balances 494$ 23,896$ -$ 1,868,574$ 3,977,261$ (Concluded)
City of Salinas
Combining Balance Sheet (Continued)
Nonmajor Debt Service Funds
June 30, 2023
171
COP 1999 & 2018 COP 2018B 2018
Assessment 2004 Lease-PS T.R.I.P. Lease
District Consolidation Building Total Road El Gabilan
Debt Service (2014) Police Improvement Library
REVENUES:

Taxes - special assessments 42,792$ -$ -$ -$ -$ Investment income (loss) 4,191 1,804 7,903 366,189 1,381 Total revenues 46,983 1,804 7,903 366,189 1,381
EXPENDITURES:

Debt service:

Principal 430,000 163,000 2,910,000 750,000 220,000 Interest and fiscal charges 23,370 62,813 1,568,088 1,568,525 564,669 Total expenditures 453,370 225,813 4,478,088 2,318,525 784,669 REVENUES OVER (UNDER) EXPENDITURES (406,387) (224,009) (4,470,185) (1,952,336) (783,288) OTHER FINANCING SOURCES (USES):

Transfers in - 58,245 4,469,926 2,316,025 783,718
Total other financing sources (uses) - 58,245 4,469,926 2,316,025 783,718 NET CHANGE IN FUND BALANCES (406,387) (165,764) (259) 363,689 430 FUND BALANCES (DEFICIT):

Beginning of year 196,150 165,764 1,391 1,172,576 - End of year (210,237)$ -$ 1,132$ 1,536,265$ 430$ (Continued)
For the Year Ended June 30, 2023
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Debt Service Funds
172
2020A 2020A Assessment Assessment
Refunding Refunding District District
Energy SVSWA Administration Reserve Total
REVENUES:

Taxes - special assessments - $ - $ - $ - $ 42,792$ Investment income (loss) 494 176 - 45,783 427,921 Total revenues 494 176 - 45,783 470,713

EXPENDITURES:

Debt service:

Principal 935,000 545,000 - - 5,953,000 Interest and fiscal charges 591,723 123,733 - - 4,502,921 Total expenditures 1,526,723 668,733 - - 10,455,921

REVENUES OVER (UNDER) EXPENDITURES (1,526,229) (668,557) - 45,783 (9,985,208) OTHER FINANCING SOURCES (USES):

Transfers in 1,526,723 668,735 - - 9,823,372 Total other financing sources (uses) 1,526,723 668,735 - - 9,823,372 NET CHANGE IN FUND BALANCES 494 178 - 45,783 (161,836) FUND BALANCES (DEFICIT):

Beginning of year - 23,718 (2,178) 1,822,791 3,380,212 End of year 494 $ 23,896 $ (2,178) $ 1,868,574 $ 3,218,376 $ (Concluded)
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance (Continued) Nonmajor Debt Service Funds
For the Year Ended June 30, 2023
173
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174
Capital Projects Funds
Capital Projects Funds are used to account for major capital acquisition and construction activities. The nonmajor Capital Projects Funds used by the City in this report are as follows:

Special Construction Assistance Capital Projects - 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.

Special Aviation - 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 - 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 Special 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.

Nonmajor Governmental Funds
175
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176
Special Assessment 2019 Special
Construction Special District Tax Bond
Assistance Aviation Project Monte Bella Total
ASSETS
Cash and investments 8,180,976 $ 648,400 $ 419,310 $ 26,889 $ 9,275,575 $ Receivables, net:

Interest 145,041 4,795 3,019 178 153,033 Due from outside agencies 831,984 - - - 831,984 Leases 3,632,559 - - - 3,632,559 Total assets 12,790,560$ 653,195 $ 422,329 $ 27,067 $ 13,893,151$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Due to other funds 1,584,972 $ 58,095 $ - $ - $ 1,643,067$ Total liabilities 1,584,972 58,095 - - 1,643,067

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 563,931 - - - 563,931 Related to leases 3,508,891 - - - 3,508,891 Total deferred inflows of resources 4,072,822 - - - 4,072,822

Fund Balances:

Restricted 11,015,467 595,100 422,329 27,067 12,059,963 Committed 141,985 - - - 141,985 Total fund balances 7,132,766 595,100 422,329 27,067 8,177,262 Total liabilities, deferred inflows of
resources, and fund balances 12,790,560$ 653,195 $ 422,329 $ 27,067$ 13,893,151$ June 30, 2023
City of Salinas
Combining Balance Sheet
Nonmajor Capital Projects Funds
177
Special Assessment 2019 Special
Construction Special District Tax Bond
Assistance Aviation Project Monte Bella Total
REVENUES:

Intergovernmental 3,403,628$ 126,609$ -$ -$ 3,530,237$ Charges for services 319,467 - - - 319,467 Investment income (loss) 145,041 22,937 10,512 941 179,431 Miscellaneous 187,733 - - - 187,733 Total revenues 4,055,869 149,546 10,512 941 4,216,868

REVENUES OVER (UNDER) EXPENDITURES 4,055,869 149,546 10,512 941 4,216,868 OTHER FINANCING SOURCES (USES):

Transfers out (8,080,555) (637,450) - - (8,718,005) Total other financing sources (uses) (8,080,555) (637,450) - - (8,718,005) NET CHANGE IN FUND BALANCES (4,024,686) (487,904) 10,512 941 (4,501,137) FUND BALANCES:

Beginning of year 11,157,452 1,083,004 411,817 26,126 12,678,399 End of year 7,132,766$ 595,100$ 422,329$ 27,067$ 8,177,262$ For the Year Ended June 30, 2023
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Funds
178
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 - 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 - 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 - This fund is used to account for the City’s self-insured workers compensation program.

General Liability - This fund is used to account for the City’s self-insured general liability insurance program.

Fleet Maintenance - This fund is used to account for the inspection, maintenance, and repair of all the City’s vehicles and equipment.
179
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180
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total ASSETS
Current assets:

Cash and cash equivalents 1,944,257 $ 1,074,097 $ 9,043,896 $ - $ 10,075,322 $ 22,137,572 $ Due from other funds - - 16,831,462 - - 16,831,462
Accrued interest - - 65,356 - - 65,356
Total current assets 1,944,257 1,074,097 25,940,714 - 10,075,322 39,034,390 Noncurrent assets:

Restricted cash and investments - - 263,442 - - 263,442 Total noncurrent assets - - 263,442 - - 263,442 Total assets 1,944,257 1,074,097 26,204,156 - 10,075,322 39,297,832

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions - - 148,805 - 446,262 595,067 Related to OPEB - - 10,138 24,591 65,039 99,768 Total deferred outflows of resources - - 158,943 24,591 511,301 694,835

LIABILITIES
Current liabilities:

Accounts payable - 57,662 49,813 9,014 100,224 216,713 Due to other funds - - - 781,837 - 781,837
Insurance claims payable - due within one year - - 4,903,000 2,680,807 - 7,583,807 Compensated absences - due within one year -
- 5,417 2,502 22,078 29,997 Total current liabilities - 57,662 4,958,230 3,474,160 122,302 8,612,354 Noncurrent liabilities:

Insurance claims payable - due in more than one year - - 22,082,392 1,109,812 - 23,192,204 Compensated absences - due in more than one year - - 21,669 10,009 84,567 116,245 Net pension liability - - 365,197 - 1,095,213 1,460,410 Net OPEB liability - - 30,284 73,458 194,283 298,025 Total noncurrent liabilities - - 22,499,542 1,193,279 1,374,063 25,066,884 Total liabilities - 57,662 27,457,772 4,667,439 1,496,365 33,679,238

DEFERRED INFLOWS OF RESOURCES
Related to pensions - - 14,401 - 43,189 57,590 Related to OPEB - - 24,114 58,492 154,702 237,308 Total deferred inflows of resources - - 38,515 58,492 197,891 294,898

NET POSITION
Unrestricted (deficit) 1,944,257 1,016,435 (1,133,188) (4,701,340) 8,892,367 6,018,531 Total net position 1,944,257$ 1,016,435 $ (1,133,188) $ (4,701,340) $ 8,892,367 $ 6,018,531 $ June 30, 2023
All Internal Service Funds
Combining Statement of Net Position
City of Salinas
181
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182
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total OPERATING REVENUES:

Charges for services - $ 316,772 $ 5,579,660$ 258,488$ - $ 6,154,920$ Total operating revenues - 316,772 5,579,660 258,488 - 6,154,920 OPERATING EXPENSES:

Personnel services - - 585,695 80,986 1,283,147 1,949,828 Contractual services - 39,015 - - 161,126 200,141 Supplies - - - - 878,126 878,126 Insurance - 1,395,736 436,325 5,129,163 - 6,961,224 Insurance claims - - 6,005,500 (549,576) - 5,455,924 Other 150 174,667 - - 21,199 196,016 Total operating expenses 150 1,609,418 7,027,520 4,660,573 2,343,598 15,641,259 OPERATING INCOME (LOSS) (150) (1,292,646) (1,447,860) (4,402,085) (2,343,598) (9,486,339) NONOPERATING REVENUES (EXPENSES):

Investment income (loss) - - 228,005 14,813 - 242,818 Other non-operating revenue (expense) - - (18,163) - (71,813) (89,976) Total nonoperating revenues (expenses) - - 209,842 14,813 (71,813) 152,842 INCOME (LOSS) BEFORE TRANSFERS (150) (1,292,646) (1,238,018) (4,387,272) (2,415,411) (9,333,497) TRANSFERS:

Transfers in - 500,000 39,800 2,700,000 2,120,000 5,359,800 Total transfers - 500,000 39,800 2,700,000 2,120,000 5,359,800 Changes in net position (150) (792,646) (1,198,218) (1,687,272) (295,411) (3,973,697) NET POSITION (DEFICIT):

Beginning of year 1,944,407 1,809,081 65,030 (3,014,068) 9,187,778 9,992,228 End of year 1,944,257$ 1,016,435 $ (1,133,188)$ (4,701,340) $ 8,892,367 $ 6,018,531 $ For the Year Ended June 30, 2023
All Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position City of Salinas
183
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers - $ 316,772 $ 5,579,660$ 258,488 $ - $ 6,154,920 $ Payments to suppliers for goods and services - (1,426,893) 23,654 909 (1,017,897) (2,420,227) Payments to employees for services - - (422,006) (250,287) (1,197,716) (1,870,009) Payments to claimants - - (4,767,948) (5,129,163) - (9,897,111) Other (150) (174,667) - - (21,199) (196,016)
Net cash provided by (used in)
operating activities (150) (1,284,788) 413,360 (5,120,053) (2,236,812) (8,228,443)

CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:

Borrowing from (to) other funds - - - 781,837 - 781,837 Other expenses - - (18,163) - (71,813) (89,976) Transfers from other funds - 500,000 39,800 2,700,000 2,120,000 5,359,800 Net cash provided by noncapital financing
activities - 500,000 21,637 3,481,837 2,048,187 6,051,661 CASH FLOWS FROM INVESTING ACTIVITIES:

Investment income (loss) - - 177,102 17,398 - 194,500 Net cash provided by investing activities - - 177,102 17,398 - 194,500 Net change in cash and cash equivalents (150) (784,788) 612,099 (1,620,818) (188,625) (1,982,282)

CASH AND CASH EQUIVALENTS:

Beginning of year 1,944,407 1,858,885 8,695,239 1,620,818 10,263,947 24,383,296 End of year 1,944,257$ 1,074,097 $ 9,307,338 $ -$ 10,075,322 $ 22,401,014 $

RECONCILIATION OF CASH AND

CASH EQUIVALENTS TO
STATEMENT OF NET POSITION:

Cash and cash investments 1,944,257$ 1,074,097 $ 9,043,896 $ -$ 10,075,322 $ 22,137,572 $ Restricted cash and investments - - 263,442 - - 263,442 Total cash and cash equivalents 1,944,257$ 1,074,097 $ 9,307,338 $ -$ 10,075,322 $ 22,401,014 $ City of Salinas
For the Year Ended June 30, 2023
All Internal Service Funds
Combining Statement of Cash Flows
184
Risk General Workers General Fleet
Management Insurance Compensation Liability Maintenance Total

RECONCILIATION OF OPERATING INCOME
(LOSS) TO NET CASH PROVIDED BY (USED
IN) OPERATING ACTIVITIES:

Operating income (loss) (150) $ (1,292,646)$ (1,447,860) $ (4,402,085) $ (2,343,598) $ (9,486,339) $ Adjustments to reconcile operating (loss) to net
cash provided by (used in) operating activities:

Changes in operating assets and liabilities, and
deferred outflows and inflows of resources:

Deferred outflows - related to pensions - - (126,843) 43,985 (270,443) (353,301) Deferred outflows - related to OPEB - - 447 1,816 (13,383) (11,120) Accounts payable - 7,858 23,654 909 21,355 53,776 Accrued liabilities - - - - - - Deposits payable - - - - - - Unearned revenue - - - - - - Insurance claims payable - - 1,673,877 (549,576) - 1,124,301 Compensated absences - - 16,937 2,362 (3,743) 15,556 Net pension liability - - 301,898 (126,770) 588,479 763,607 Net OPEB liability - - (2,468) (8,251) 34,447 23,728 Deferred inflows - related to pensions - - (27,706) (84,328) (293,895) (405,929) Deferred inflows - related to OPEB - - 1,424 1,885 43,969 47,278 Total adjustments - 7,858 1,861,220 (717,968) 106,786 1,257,896
Net cash provided by (used in)
operating activities (150)$ (1,284,788)$ 413,360 $ (5,120,053)$ (2,236,812) $ (8,228,443) $ For the Year Ended June 30, 2023
All Internal Service Funds
Combining Statement of Cash Flows (Continued)
City of Salinas
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186

PRIVATE PURPOSE TRUST FUNDS
The private-purpose trust funds accounts for assets and activities of the dissolved Redevelopment Agency, which is accounted for in the Successor Agency Trust, and other trust arrangement not otherwise reported in a pension trust.

Successor Agency Redevelopment Obligation Retirement - This fund accounts for all the financial activities of the Redevelopment Obligation Retirement Fund (RORF) related to the former Redevelopment Project Area in accordance with AB 1x26 and AB 1484 which unwind the Redevelopment Agency of the City of Salinas.

Successor Agency Administration – This fund accounts for the administrative activities of the Successor Agency to the former Salinas Redevelopment Agency which was dissolved on February 1, 2012 in accordance with AB 1x26 (enacted June 28, 2011).

Other Private Purpose Trust Funds – These funds are used to account for other trust arrangements not properly reported in a pension trust fund under which principal and income benefit individuals, private organizations, or other governments. The City accounts for the following trust funds: Community Center, Monterey Regional Water Pollution Control Agency (MRWPCA) Fees, Sales Tax, Payroll Taxes, Developer Deposits, Evidence Room, Construction Bonds, Monterey County Tourism Improvement District, Leadership Salinas, and miscellaneous.

Fiduciary Funds
187
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188
Redevelopment Total Other Total
Obligation Successor Agency Private Purpose Private Purpose Retirement Fund Administration Trust Trust Fund Trust Funds ASSETS
Cash and investments 2,049,936$ 24,745$ 2,074,681$ 1,339,519$ 3,414,200$ Cash and investments held by fiscal agent 1,438,695 - 1,438,695 - 1,438,695 Receivables:

Accounts - - - 7,618 7,618 Interest 11,011 - 11,011 - 11,011 Loans and notes 163,900 - 163,900 - 163,900 Total assets 3,663,542 24,745 3,688,287 1,347,137 5,035,424

LIABILITIES
Accounts payable - 150 150 353,856 354,006 Interest payable 12,196 - 12,196 - 12,196 Deposits payable - - - 234,995 234,995 Unearned revenue 796,621 10,000 806,621 - 806,621 Long-term debt:

Due in one year 1,360,000 - 1,360,000 - 1,360,000 Due in more than one year 148,584 - 148,584 - 148,584 Total liabilities 2,317,401 10,150 2,327,551 588,851 2,916,402

NET POSITION
Restricted for individuals and organizations 1,346,141 14,595 1,360,736 758,286 2,119,022 Total net position 1,346,141$ 14,595$ 1,360,736$ 758,286$ 2,119,022$ Combining Statement of Fiduciary Net Position
Successor Agency Trust
City of Salinas
Private Purpose Trust Funds
June 30, 2023
189
Redevelopment Total Other Total
Obligation Successor Agency Private Purpose Private Purpose Retirement Fund Administration Trust Trust Fund Trust Funds ADDITIONS:

Taxes 5,406,716$ 10,000$ 5,416,716$ -$ 5,416,716$ Private contributions - - - 2,947,456 2,947,456
Interest 132,561 - 132,561 - 132,561
Total additions 5,539,277 10,000 5,549,277 2,947,456 8,496,733 DEDUCTIONS:

Expenses 571,406 736 572,142 50,085 622,227
Payments on behalf of trustees - 3,927 3,927 2,890,157 2,894,084 Contributions to other agencies 2,948,785 - 2,948,785 - 2,948,785 Payments to City 949,243 - 949,243 - 949,243
Total deductions 4,469,434 4,663 4,474,097 2,940,242 7,414,339 Change in net position 1,069,843 5,337 1,075,180 7,214 1,082,394 NET POSITION:

Beginning of year 276,298 9,258 285,556 751,072 1,036,628 End of period 1,346,141$ 14,595$ 1,360,736$ 758,286$ 2,119,022$ City of Salinas
Combining Statement of Changes in Fiduciary Net Position Successor Agency Trust
Private Purpose Trust Funds
For the Year Ended June 30, 2023
190
Custodial Funds
Custodial Funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments and/or other funds. Agency Funds operate as a clearing mechanism. Cash resources are collected, held for a brief period and then distributed to the proper recipients. The City has a fiduciary responsibility for the assets, which it does not own outright.

SUBA Business Improvement District - This fund accounts for the business license surcharged assessment imposed on Alisal businesses, and are used to promote and revitalize the business district. Expenditures are determined by the districts’ Board of Directors and approved by the City Council.

Flexible Spending - This fund is used to account for revenues resulting of employee concessions contributions used to reduce the cost of medical, vision and dental health insurance premiums.

Downtown Community Benefit District - This fund accounts for the property assessment generated revenues imposed on the Downtown Community Benefit District. The concept is that eventually the Downtown Community Benefit District will grow and receive revenues from multiple sources within a defined boundary that can among other things, including entrepreneurial activities, special mandate, are not be excluded, and no exemptions for not-for-profit entities are being considered. It can be governed by a 501(c)3 non-profit corporation, merging the existing energies in Downtown into just one organization, rather than the 501(c)6 BID and the OSA Foundation. It can receive grants and donations, and merge these with more assessments that are powerful.

Fiduciary Funds
191
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192
SUBA Business Downtown Total
Improvement Flexible Community Custodial
District Spending Benefit District Funds
ASSETS
Cash and investments - $ -$ 128,537$ 128,537$
Cash and investments held by fiscal agent - 67,728 - 67,728 Total assets - 67,728 128,537 196,265

LIABILITIES
Accounts payable - 161,587 128,537 290,124
Total liabilities - 161,587 128,537 290,124

NET POSITION (DEFICIT)
Restricted for individuals and organizations - (93,859) - (93,859) Total net position (deficit) -$ (93,859)$ -$ (93,859)$ Combining Statement of Fiduciary Net Position
City of Salinas
Custodial Funds
June 30, 2023
193
SUBA Business Downtown Total
Improvement Flexible Community Custodial
District Spending Benefit District Funds
ADDITIONS:

Taxes -$ -$ 456,530$ 456,530$
Plan member contributions - 316,212 - 316,212
Total additions - 316,212 456,530 772,742
DEDUCTIONS:

Expenses - 411,755 - 411,755
Benefit payments - 19,780 - 19,780
Assessments disbursed to other governments 548 - 456,530 457,078 Total deductions 548 431,535 456,530 888,613
Change in net position (548) (115,323) - (115,871)
NET POSITION (DEFICIT):

Beginning of year 548 21,464 - 22,012
End of period -$ (93,859)$ -$ (93,859)$
City of Salinas
Combining Statement of Changes of Fiduciary Net Position Custodial Funds
For the Year Ended June 30, 2023
194
General Measure E Measure G
Fund Fund Fund Total
ASSETS
Cash and investments 37,660,412$ 16,421,241$ 24,976,533$ 79,058,186$ Receivables, net:

Accounts 399,364 148 - 399,512
Taxes 9,133,830 3,075,093 6,171,975 18,380,898 Interest 798,429 113,485 175,466 1,087,380
Leases 1,676,984 - - 1,676,984
Due from other funds 8,403,525 - - 8,403,525 Advances to other funds 2,785,000 - - 2,785,000 Total assets 60,857,544$ 19,609,967$ 31,323,974$ 111,791,485$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES, AND FUND BALANCES
Liabilities:

Accounts payable 6,059,994$ 530,669$ 1,100,708$ 7,691,371$ Due to other funds 16,986,926 - 99,168 17,086,094 Deposits payable 29,353 - - 29,353
Total liabilities 23,076,273 530,669 1,199,876 24,806,818

DEFERRED INFLOWS OF RESOURCES
Related to leases 1,625,905 - - 1,625,905
Total deferred inflows of resources 1,625,905 - - 1,625,905 Fund Balances (deficit):

Nonspendable 2,785,000 - - 2,785,000
Restricted 6,000,000 - - 6,000,000
Committed 20,695,883 9,205,721 6,199,405 36,101,009 Assigned 10,442,713 863,153 7,081,699 18,387,565 Unassigned (3,768,230) 9,010,424 16,842,994 22,085,188 Total fund balances (deficit) 36,155,366 19,079,298 30,124,098 85,358,762 Total liabilities, deferred inflows of
resources, and fund balances 60,857,544$ 19,609,967$ 31,323,974$ 111,791,485$ June 30, 2023
City of Salinas
Combining Balance Sheet
General, Measure E, & Measure G Funds
195
General Measure E Measure G Intrafund
Fund Fund Fund Eliminations Total
REVENUES:

Taxes 98,998,161$ 17,163,587$ 34,437,173$ -$ 150,598,921$ Licenses and permits 10,568,223 - - - 10,568,223
Intergovernmental 908,898 - - - 908,898
Charges for services 5,296,314 - - - 5,296,314
Interest (loss) 2,579,895 333,063 572,878 - 3,485,836 Rental income 330,717 - - - 330,717
Fines and forfeitures 203,463 - - - 203,463
Miscellaneous 953,482 2,283 - - 955,765 Total revenues 119,839,153 17,498,933 35,010,051 - 172,348,137 EXPENDITURES:

Current:

General government 18,213,027 114,232 3,312,880 - 21,640,139 Public safety 74,738,008 3,883,839 8,957,944 - 87,579,791 Public works 9,282,487 4,982 4,573,569 - 13,861,038 Recreation 182,487 2,446,786 4,311,056 - 6,940,329
Library - 5,055,324 - - 5,055,324
Capital outlay 565,973 3,184 242,799 - 811,956
Debt service:

Principal 811,119 - - - 811,119
Interest and fiscal charges 173,380 - - - 173,380
Total expenditures 103,966,481 11,508,347 21,398,248 - 136,873,076 REVENUES OVER (UNDER) EXPENDITURES 15,872,672 5,990,586 13,611,803 - 35,475,061 OTHER FINANCING SOURCES (USES):

Proceeds from issuance of long-term debt 410,213 - - - 410,213 Transfers in 7,993,127 350,000 - (5,425,332) 2,917,795 Transfers out (16,923,266) (1,636,078) (10,294,965) 5,425,332 (23,428,977) Total other financing sources (uses) (8,519,926) (1,286,078) (10,294,965) - (20,100,969) NET CHANGE IN FUND BALANCES 7,352,746 4,704,508 3,316,838 - 15,374,092 FUND BALANCES:

Beginning of year 28,802,620 14,374,790 26,807,260 - 69,984,670 End of year 36,155,366$ 19,079,298$ 30,124,098$ -$ 85,358,762$ For the Year Ended June 30, 2023
City of Salinas
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances General, Measure E, & Measure G Funds
196
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES:

Taxes 16,423,000 $ 16,423,000 $ 17,163,587 $ 740,587 $ Interest 45,000 45,000 333,063 288,063
Miscellaneous - - 2,283 2,283
Total revenues 16,468,000 16,468,000 17,498,933 1,030,933 EXPENDITURES:

Current:

General government 130,500 131,969 114,232 17,737
Public safety 4,523,779 4,734,176 3,883,839 850,337 Public works - - 4,982 (4,982)
Recreation 2,703,682 2,524,312 2,446,786 77,526 Library 5,701,471 5,757,193 5,055,324 701,869 Capital outlay 3,000 3,623 3,184 3,623
Total expenditures 13,062,432 13,151,273 11,508,347 1,646,110 REVENUES OVER (UNDER) EXPENDITURES 3,405,568 3,316,727 5,990,586 (2,673,859) OTHER FINANCING SOURCES (USES):

Transfers in 350,000 350,000 350,000 -
Transfers out (2,233,600) (3,096,753) (1,636,078) (1,460,675) Total other financing sources (uses) (1,883,600) (2,746,753) (1,286,078) (1,460,675) Net change in fund balance 1,521,968$ 569,974$ 4,704,508 4,134,534$ FUND BALANCE:

Beginning of year 14,374,790
End of year 19,079,298$
City of Salinas
Budgetary Comparison Schedule
Measure E
For the Year Ended June 30, 2023
Budgeted Amounts
197
Variance with
Final Budget
Actual Favorable/
Original Final Amounts (Unfavorable)
REVENUES:

Taxes 32,846,000 $ 32,846,000 $ 34,437,173 $ 1,591,173 $ Interest 108,000 108,000 572,878 464,878
Total revenues 32,954,000 32,954,000 35,010,051 2,056,051 EXPENDITURES:

Current:

General government 2,652,766 3,650,361 3,312,880 337,481 Public safety 7,773,564 7,862,011 8,957,944 (1,095,933) Public works 5,606,186 5,668,557 4,573,569 1,094,988 Recreation 5,254,872 5,464,357 4,311,056 1,153,301 Capital outlay 59,700 200,927 242,799 200,927
Total expenditures 21,347,088 22,846,213 21,398,248 1,690,764 REVENUES OVER (UNDER) EXPENDITURES 11,606,912 10,107,787 13,611,803 (3,504,016) OTHER FINANCING SOURCES (USES):

Transfers out (12,082,710) (27,948,124) (10,294,965) (17,653,159) Total other financing sources (uses) (12,082,710) (27,948,124) (10,294,965) (17,653,159) Net change in fund balance (475,798)$ (17,840,337)$ 3,316,838 21,157,175$ FUND BALANCE:

Beginning of year 26,807,260
End of year 30,124,098$
City of Salinas
Budgetary Comparison Schedule
Measure G
For the Year Ended June 30, 2023
Budgeted Amounts
198

OTHER INFORMATION
199
2014 2015 2016 2017 2018
Net earned required contribution
and investment revenues 971,785$ 1,892,297$ 1,019,378$ 1,074,526$ 863,563$ Unallocated expenses 353,537 334,291 339,171 314,127 374,303 Estimated incurred claims and expenses,
end of policy year 161,668 965,536 534,565 36,271 7,532 Paid claims as of:

End of policy year 18,140 55,188 116,262 15,603 6,310 One year later 635,352 282,538 20,991 227,379 22,088 Two years later 842,560 570,687 64,153 846,232 285,818 Three years later 1,345,021 679,871 65,043 947,734 340,771 Four years later 1,635,636 732,404 66,412 1,019,825 1,072,628 Five years later 1,676,450 779,178 835,586 1,721,882 438,723 Six years later 1,926,852 788,081 588,263 90,970
Seven years later 1,926,852 1,195,953 563,125
Eight years later 1,549,519 518,672
Nine years later 416,531
Reestimated incurred claims and expenses:

End of policy year 161,668 965,536 234,565 36,271 7,532 One year later 2,233,535 1,390,213 194,433 357,416 796,619 Two years later 2,280,849 1,554,039 79,955 1,714,261 327,418 Three years later 1,960,665 730,656 94,678 949,419 666,518 Four years later 1,748,340 1,296,507 80,580 1,041,511 1,144,430 Five years later 1,742,087 1,091,507
835,586 1,721,882 8,760
Six years later 1,930,214 1,121,507 1,234,203 131,016 Seven years later 1,926,852 1,195,953 26,455
Eight years later 1,549,519 50,398
Nine years later 456,096
Increase/(decrease) in estimated incurred
claims and expenses 1,765,184 155,971 601,021 1,005,241 658,986 City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - General Liability Insurance
Last Ten Fiscal Years
200
2019 2020 2021 2022 2023
Net earned required contribution
and investment revenues 342,324$ 263,104$ 276,393$ 1,228,577$ 273,301$ Unallocated expenses 651,645 748,046 1,090,415 1,860,605 2,140,090 Estimated incurred claims and expenses,
end of policy year 892,986 4,006 53,317 603,165 19,883 Paid claims as of:

End of policy year 75,401 3,618 2,999 233,121 120 One year later 387,594 7,635 33,435 47,068 Two years later 2,660,599 312,080 428,518 Three years later 2,723,293 225,494
Four years later 895,990
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Reestimated incurred claims and expenses:

End of policy year 892,986 4,006 53,317 603,165 19,883 One year later 1,583,466 42,411 778,790 66,288 Two years later 3,952,801 468,435 11,615 Three years later 3,936,716 51,124
Four years later 17,475
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Increase/(decrease) in estimated incurred
claims and expenses 3,059,815 38,405 - - - City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - General Liability Insurance (Continued) Last Ten Fiscal Years
201
2014 2015 2016 2017 2018
Net earned required contribution
and investment revenues 4,377,426$ 6,130,921$ 13,748,053$ 4,743,276$ 4,922,253$ Unallocated expenses 360,203 335,408 471,472 334,542 1,056,134 Estimated incurred claims and expenses,
end of policy year 1,666,909 1,432,032 813,874 953,545 1,284,514 Paid claims as of:

End of policy year 950,284 334,257 333,561 357,390 346,475 One year later 1,371,978 1,597,521 1,061,264 1,070,983 1,177,834 Two years later 1,927,023 2,162,775 1,602,857 1,997,607 1,617,945 Three years later 2,409,062 2,554,090 1,895,742 2,329,308 1,937,327 Four years later 2,621,000 2,706,246 2,014,757 2,558,332 2,010,366 Five years later 2,699,388 2,878,566 2,044,352 270,304 2,133,667 Six years later 2,783,374 2,985,635 2,064,349 2,846,811 Seven years later 3,670,222 3,140,217 2,105,316
Eight years later 3,705,820 3,794,745
Nine years later 3,745,577
Reestimated incurred claims and expenses:

End of policy year 1,666,909 1,432,032 813,874 953,545 1,284,514 One year later 2,218,693 2,641,671 1,711,199 1,934,390 1,833,783 Two years later 3,204,843 3,520,776 2,433,616 2,924,696 2,290,339 Three years later 3,674,042 3,793,217 2,406,924 2,932,147 3,249,184 Four years later 3,643,183 3,694,285 2,505,621 3,111,763 3,195,733 Five years later 3,745,001 3,718,134
2,618,375 3,804,982 135,620
Six years later 4,104,444 3,779,664 2,636,313 1,104,685 Seven years later 3,971,493 4,108,102 576,053
Eight years later 4,015,971 325,231
Nine years later 280,585
Increase/(decrease) in estimated incurred
claims and expenses - - - - -
City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - Workers Compensation Insurance Last Ten Fiscal Years
202
2019 2020 2021 2022 2023
Net earned required contribution
and investment revenues 6,079,547$ 10,151,619$ 8,119,793$ 5,176,801$ 5,807,667$ Unallocated expenses 210,341 436,618 323,042 216,651 216,651 Estimated incurred claims and expenses,
end of policy year 1,222,180 1,638,983 4,366,805 2,233,467 2,515,012 Paid claims as of:

End of policy year 725,652 567,497 1,420,172 930,895 1,518,668 One year later 1,580,493 1,844,018 2,372,771 3,271,499 Two years later 1,987,948 2,550,102 3,310,505 Three years later 2,763,247 3,996,808
Four years later 2,941,966
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Reestimated incurred claims and expenses:

End of policy year 1,222,180 1,638,983 4,366,805 2,223,467 2,515,012 One year later 2,488,357 3,759,255 5,391,076 4,145,263 Two years later 3,269,045 4,558,744 3,959,616 Three years later 4,060,647 2,012,955
Four years later 1,061,645
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Increase/(decrease) in estimated incurred
claims and expenses - - - - - City of Salinas
Other Information (Unaudited)
Claims Development
Internal Service Funds - Workers Compensation Insurance (Continued) Last Ten Fiscal Years
203
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