Agenda packet — Mayor and City Council, February 5, 2025 (part 4 of 4)

December 2, 2024
Subject: PRESENTATION OF THE RESULTS OF THE FISCAL YEAR 2023-24 AUDIT, ANNUAL

COMPREHENSIVE FINANCIAL REPORT, SINGLE AUDIT REPORT ON FEDERAL AWARDS RECOMMENDATION:

It
is recommended that the Water Board make the following motions:
• Appr
ove the Annual Comprehensive Financial Report for the City of San Bernardino Municipal Water Department for the fiscal year ending June 30, 2024. • Di
rect staff to file the annual audit and Annual Comprehensive Financial Report with the Mayor and City Council.

Re
spectfully submitted,
Cy
nthia Mouser
Director of Finance
At
tachments:
• Annual Comprehensive Financial Report, Fiscal Year Ended June 30, 2024 • Single Audit
• Audit Communications Letter
• Report on Internal Controls
• Annual Comprehensive Financial Report PowerPoint
• LSL Audit Presentation
Packet Page. 820

OF THE CITY OF SAN

BERNARDINO WATER

DEPARTMENT

A COMPONENT UNIT OF

THE CITY OF SAN

BERNARDINO
San Bernardino,
CA
ANNUAL

COMPREHENSIVE

FINANCIAL
REPORT
for the Fiscal Year
Ended June 30, 2024
Packet Page. 821

CITY OF SAN BERNARDINO

MUNICIPAL WATER DEPARTMENT

A COMPONENT UNIT OF THE CITY OF SAN BERNARDINO

Annual Comprehensive Financial Report

For Fiscal Year Ended June 30, 2024

PREPARED BY:

THE FINANCE AND ACCOUNTING DIVISION
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CITY OF SAN BERNARDINO

MUNICIPAL WATER DEPARTMENT

A COMPONENT UNIT OF THE CITY OF SAN BERNARDINO

Annual Comprehensive Financial Report

For Fiscal Year Ended June 30, 2024

Table of Contents

Page(s)

INTRODUCTORY SECTION

Letter of Transmittal ..................................................................................................................................................... i Organizational Chart ................................................................................................................................................. vii List of Elected and Appointed Officials .................................................................................................................... viii

FINANCIAL SECTION

Independent Auditors’ Report ..................................................................................................................................... 1 Management’s Discussion and Analysis .................................................................................................................... 5 Basic Financial Statements:

Statement of Net Position .................................................................................................................................. 13 Statement of Revenues, Expenses and Changes in Net Position ..................................................................... 14 Statement of Cash Flows ................................................................................................................................... 15 Notes to the Basic Financial Statements ........................................................................................................... 17

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Proportionate Share of the Net Pension Liability ........................................................................... 45 Schedule of Changes in Net OPEB Li ability/(Asset) and Related Ratios .......................................................... 46 Schedules of Pl an Contributions ........................................................................................................................ 48

STATISTICAL SECTION

Changes in Net Position – Combined Funds ........................................................................................................... 53 Changes in Net Position – Water Fund .................................................................................................................... 54 Changes in Net Position – Sewer Fund ................................................................................................................... 55 Changes in Net Position – Sewer Collection Fund ................................................................................................... 56 Net Position by Component – Combined ................................................................................................................. 57 Net Position by Component – Water Fund ............................................................................................................... 58 Net Position by Component – Sewer Fund .............................................................................................................. 59 Net Position by Component – Sewer Collection Fund ............................................................................................. 60 Water Fund Revenue by Type .................................................................................................................................. 61 Sewer Fund Revenue by Type ................................................................................................................................. 62 Sewer Collection Fund Revenue by Type ................................................................................................................ 63 Water Fund Expenses by Type ................................................................................................................................ 64 Sewer Fund Expenses by Type ................................................................................................................................ 65 Sewer Collection Fund Expenses by Type ............................................................................................................... 66 Water Fund Debt Service Coverage ......................................................................................................................... 69 Sewer Fund Debt Service Coverage ........................................................................................................................ 70 Ratios of Outstanding Debt by Type ......................................................................................................................... 71 Demographic Statistics ............................................................................................................................................. 75 Major Employers ....................................................................................................................................................... 76 Packet Page. 824

CITY OF SAN BERNARDINO

MUNICIPAL WATER DEPARTMENT

A COMPONENT UNIT OF THE CITY OF SAN BERNARDINO

Annual Comprehensive Financial Report

For Fiscal Year Ended June 30, 2024

Table of Contents

Page(s)

STATISTICAL SECTION (CONTINUED)

Authorized Positions History ..................................................................................................................................... 77 Water Rates: Minimum Monthly Charge................................................................................................................... 81 Water Rates: Commodity Charges ........................................................................................................................... 82 Water Rates – Elevation Charges per $ HCF .......................................................................................................... 83 Water Connections and Revenues by User Type .................................................................................................... 84 Top Ten Water Consumers ...................................................................................................................................... 85 Sewer Treatment Rate History ................................................................................................................................. 86 Sewer Treatment Connections and Revenue by User Type .................................................................................... 88 Top Ten Sewer Treatment Customers ..................................................................................................................... 89 Sewer Collection Rate History .................................................................................................................................. 90 Sewer Collection Connections and Revenue by User Type .................................................................................... 91

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RATE PAYERS

CITY COUNCIL

WATER BOARD

GENERAL MANAGER
MIGUEL J. GUERRERO, P.E.

DEPUTY GENERAL MANAGER
ROBIN L. OHAMA

WATER UTILITY
STEVE R. MILLER

FINANCE AND ACCOUNTING
CYNTHIA J. MOUSER

ENVIRONMENTAL AND REGULATORY
JENNIFER L. SHEPARDSON

DISTRIBUTION

OPERATIONS

MAINTENANCE

ENGINEERING

FINANCE

PURCHASING

PAYROLL

HUMAN RESOURCES

CONSERVATION

CUSTOMER SERVICE

FIELD AND METER SERVICES
FLEET

INFORMATION TECHNOLOGY

WATER RECLAMATION
KEVIN T. STEWART, P.E.

TREATMENT

MAINTENANCE

ELECTRICAL/SCADA

RIX FACILITY

SEWER COLLECTION

ENVIRONMENTAL AND REGULATORY

COMPLIANCE
SAFETY

RISK MANAGEMENT

ENVIRONMENTAL CONTROL

WATER QUALITY
vii
Packet Page. 832
City of San Bernardino Municipal Water Department
Mayor the City of San Bernardino
Helen Tran
Water Board
Toni Callicott, President
Wayne Hendrix, P.E., Vice President
David E. Mlynarski, Commissioner
Rikke V. Johnson, Commissioner
Thomas Brickley, Commissioner
Administration
Miguel J. Guerrero, P.E., General Manager
Robin L. Ohama, Deputy General Manager
Steve R. Miller, Director of Water Utility
Kevin T. Stewart, P.E., Director of Water Reclamation
Cynthia J. Mouser, Director of Finance
Jennifer L. Shepardson, Director of Environmental & Regulatory Compliance Mission Statement
To meet the needs of the community by pr oviding sustainable, high quality water supply and wastewater services in the most professional, environmentally responsible, and cost-effective manner possible.

Organization
The City of San Bernardino Municipal Wate r Department was formed in 1905 under the Charter of the City of San Bernardino and is governed by the Water Board who are appointed by the Mayor of the City of San Bernardino. The most recent Charter, approved by voters in November 2016, gave the Wa ter Board “Responsibility to oversee and manage the City’s water supply, recycled water, wastewater collection and treatment functions in accordance with State Law.” The Department operated three enterprise funds: the Water Utility Enterprise Fund, the Sewer Utility Enterprise Fund and the Sewer Collection Utility Enterprise Fund. Wate r service encompasses the City, with the exception of the east end, which is served by East Valley Water District. Sewer treatment service encompasses all of the City of San Bernardino, the City of Loma Linda, the former Norton Air Force Base, Patton State Hospit al, and portions of the City of Highland serviced by East Valley Water District. Se wer collection service is provided within the City of San Bernardino boundaries.
viii
Packet Page. 833

LSLCPAS.COM
INDEPENDENT AUDITORS’ REPORT
To the Wate
r Board
City of San Bernardino Municipal Water Department
San Bernardino, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of City of San Bernardino Municipal Water Department (the “Department”)a component unit of the San Bernardino, Californi a (the “Ci ty”), as of and for the year ended
June 30, 2024, and the related notes to the 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 financial position of the Department of the City, as of June 30, 2024, and the changes in its financial position and cash flows 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 and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Our responsibilit ies under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our repo rt. We are required to be independent of the Department 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 Matter
As discussed in Note 1, the financial statements pres ent only the Department and do not purport to, and do not, present fairly the financial position of the City , as of June 30, 2024, the changes in its financial position, or, where applicable, its cash flows for the year then ended in acco rdance with accounting principles generally accepted in the United States of America. 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.

Packet Page. 834
To the Water Board
City of San Berna
rdino Municipal Water Department
San Bernardino, California
Auditor’s 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 auditor’s 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 wi th 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 generally accepted auditing standards and Government Auditing Standards, we:
 Exercise 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 test 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 op inion on the effectiveness of the Department’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies us ed and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

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

Required Supplementary Information
Accounting pr
inciples generally accepted in the United States of America require that the management’s discussion and analysis and required pension and other postemployment benefits schedules, as listed on the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statemen ts, 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. 2 Packet Page. 835
To the Water Board
City of San Bernar
dino Municipal Water Department
San Bernardino, California
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s 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 November 27, 2024, on our consideration of the Depa rtment’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 Department’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 department’s internal control over financial reporting and compliance.

Irvine, California
November 27, 2024
3 Packet Page. 836
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MANAGEMENT’S DISCUSSION AND ANALYSIS
The City of San Bernardino Municipal Water Departm ent (Department) is a water, sewer collection and treatment utility responsible for delivering high quality, economically priced water, sewer treatment and sewer collections services to a quarter of a million customers in and around the City of San Bernardino, California. This section of the Department’s annual financial report presents management’s analysis of the Department’s financial performance during the fiscal year that ended on June 30, 2024. Please read it in conjunction with the basic financial statements which follow this section.

All amounts in the Management’s Discussion and Analysis within text areas are in thousands unless otherwise noted.

Financial Highlights:
 The Department’s overall net position increased by $4.8 million or 1.4%.  Operating revenues increased $3.7 million or 4.2% from the prior fiscal year. Water consumption was moderately down approximately 1.8% in FY24 from FY23 which lead to only a modest increase in Water revenues, despite a rate increase on July 1, 2023. Sewer revenues increased due to a rate increase effective July 1, 2023.
 Operating expenses increased $16.0 million, 18.2% increase from the prior fiscal year. The most significant increases were noted in the categories of depreciation, pension expense, and personnel increases. The department revised its capital asset categories which accelerated depreciation on several asset categories drastically increasing depreciation expense. Personnel expenses continue to increase due to inflation, rising costs in benefits, and salary adjustments per Department MOU’s.  Net loss before capital contributions was $3.1 million.  The Department’s current ratio (the ability to pay short-term obligations) was 4.4.  Cash available (the ability to cover current expenses with cash) was 558 days.

Overview of the Financial Statements
The discussion and analysis are intended to serve as an introduction to the Department’s basic financial statements. The Department’s basic financial statements are comprised of two components: the Financial Statements and the Notes to the Basic Financial Statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Information providing citywide financial results is available in the City’s Comprehensive Annual Financial Report.

Required Financial Statements
The financial statements of the Department report in formation about the Department using accounting methods similar to those used by private sector companies. These statements offer short-term and long-term financial information about its activities. The Statement of Net Position (page 13) includes all of the Department’s investments in resources (assets) and the obligations to creditors (liabilities). It also provides the basis for evaluating the capital structure of the Department and assessing the liquidity and financial flexibility of the Department. All of the current year’s revenues and expenses are accounted for in the Statement of Revenues, Expenses and Changes in Net Position. (page 14) This statement measures the success of the Department’s operations over the past year and can be used to determine whether the Department has successfully recovered all its costs through its user fees and other charges, 5 Packet Page. 838
profitability, and credit worthiness. The final required financial statement is the Statement of Cash Flows (pages 15-16). The primary purpose of this statement is to provide information about the Department’s cash receipts and cash payments during the reporting period. The statement reports cash receipts, cash payments, and net changes in cash resulting from operations, investing, and financing activities and provides answers to questions such as “where did cash come from, what was cash used for, and what was the change in cash balance during the reporting period?” Financial Analysis of the Department
Our analysis of the Department begins on page 5 of the financial statements. One of the most important questions to ask about the Department’s finances is “Whether the Department, as a whole, is better off or worse off as a result of the year’s activities?” The Statement of Net Position, and the Statement of Revenues, Expenses and Changes in Net Position report information about the Department’s activities in a way that will help answer this question. These two statements report the net position of the Department and changes in them. Measuring the change in the Department’s net position - the difference between assets and liabilities - is one way to measure financial health or financial position. Over time, increases or decreases in the Department’s net postion are indications of whether its financial health is improving or deteriorating. However, one will need to consider other non-financial factors such as changes in economic conditions, population growth, and zoning and new or changed government legislation.

Water Utility Fund
To begin our analysis, a summary of the Water Utility Fund’s Statement of Net Position is presented in Table A-1.

The table hi
ghlights, the Water Utility total net position increased 2.2% or $4.1 million in fiscal year 2024.

The favorable increase in net position is primarily related to the increase in total capital assets ($6.4 million).
2024 2023 $ Change % Change
Current and noncurrent assets 119,269$ 118,112$ 1,157$ 1.0% Capital assets 213,546 207,158 6,388 3 .1%
Total assets 332,815 325,270 7,545 2 .3%
Deferred outflows of resources 10,266 11,981 (1,715) - 14.3% Current liabilities 16,031 14,898 1,133 7 .6%
Noncurrent liabilities 129,021 126,673 2,348 1 .9% Total liabilities 145,052 141,571 3,481 2 .5%
Deferred inflows of resources 7,471 9,220 (1,749) - 19.0% Net investment in capital assets 180,169 172,417 7,752 4 .5% Restricted 2,414 1,152 1,262 1 09.5%
Unrestricted 7,975 12,891 (4,916) 3 8.1%
Total net position 190,558$ 186,460$ 4,098$ 2.2% TABLE A-1
Condensed Statement of Net Position - Water Utility
(amounts expressed in thousands of dollars)
6 Packet Page. 839
Total revenues in
creased by 12.4% or $6.6 million. Capital grant revenue increased from the prior year due the FEMA grant monies being used for projects as intended. Investment income outperformed the prior year due to better market performance resulting in an increase in investment revenue. Water operating revenues also reflect a modest increase due to a rate increase effective July 1, 2023. Total expenses increased 14.9% or $7.2 million. Significant variances were due to increased depreciation expense. The department revised its capital asset categories which accelerated depreciation drastically increasing depreciation expense.

Total capital assets, net increased by 3.1% or $6.4 million in fiscal year 2024. The Water fund capitalized $4.3 million in various capital projects completed and placed in service during FY2024. The increase is also attributed to an increase in Construction in progress (CIP) expenditures related to Reservoir Seismic upgrades ($3.3 million), SBMWD Administration Facility ($2.8 million), and the Mountain Pressure Zone Main Replacement project ($2.1 million). The departm ent Additional information on capital assets is presented in Note 3 of the Notes to the Basic Financial Statements. 2024 2023 $ Change % Change
Operating revenue 45,985$ 44,092$ 1,893$ 4.3% Capital contributions 5,130 5,976 (846) -14.2%
Other nonoperating revenue 8,764 3,222 5 ,542 172.0% Total revenues 59,879 53,290 6,589 1 2.4%
Operating expenses 53,997$ 46,711$ 7,286 1 5.6% Nonoperating expenses 1,784 1,842 ( 58) -3
.1%
Total expenses 55,781 48,553 7,228 1 4.9%
Change in net position 4,098 4,737 (639) 13
.5%
Net position at the Beginning of the Year 186,460 181,723 4 ,737 2.6% Total net position 190,558$ 186,460$ 4,098$ 2.2% TABLE A-2
Condensed Statement of Revenues, Expenses and Changes in Net Position - Water Utility (amounts expressed in thousands of dollars)
2024 2023 $ Change % Change
Land and easements 5,860$ 5,989$ (129)$ -2.2%
Construction in progress 25,803 14,799 11,004 74.4%
Wells and pumping 105,767 102,740 3,027 2.9% Distribution 185,239 166,022 19,217 11.6% Right -of-use assets 402 402 - 100.0%
Plant and facilities 6,943 8,627 (1,684) -19.5%
Other capital assets 11,377 43,996 (32,619) -74.1% Total capital assets 341,391 342,575 (1,184) -0.3% Less: accumulated depreciation (127,846) (135,417) 7,571 -5.6% Total capital assets, net 213,545$ 207,158$ 6,387$ 3.1% TABLE A-3
Capital Assets - Water Utility
(amounts expressed in thousands of dollars)
7 Packet Page. 840
Total long-term debt decreased by 2.3% or $1.1
million due to annual debt service payments. Additional information on long-term debt is presented in Note 4-6 of the Notes to Basic Financial Statements.

Sewer Utility Fund
The table above highlights, the Sewer Utility net position increased 0.4% or $0.7 million in fiscal year 2024. The total net position slightly increased as a result of current year operations. There was an increase Capital Assets due to the completion of the Blower Decentralization project totaling $15 million but an offsetting increase to current liabilities for several large payments relating to current construction projects.
2024 2023 $ Change % Change
Bonds Payable 42,125$ 43,120$ (995)$ -2.3% Bond Premium 4,414 4,612 (198) -4.3%
Leases and subscriptions 12 183 (171) -93.4%
Compensated Absences 1,545 1,338 207 15.5%
Total long-term debt 48,096$ 49,253$ (1,157)$ -2.3% TABLE A-4
Long-term Debt - Water Ut ility
(amounts expressed in thousands of dollars)
2024 2023 $ Change % Change
Current and noncurrent assets 111,716$ 118,392$ (6,676)$ -5.6% Capital assets 118,822 103,118 15,704 1 5.2%
Total assets 230,538 221,510 9,028 4 .1%
Deferred outflow of resources 9,653 11,468 (1,815) - 15.8% Current liabilities 14,302 6,374 7,928 1 24.4%
Noncurrent liabilities 64,543 64,433 110 0 .2%
Total liabilities 78,845 70,807 8,038 1 1.4%
Deferred inflow of resources 3,742 5,272 (1,530) - 29.0% Net investment in capital assets 95,673 79,192 16,481 2 0.8% Restricted 2,152 1,069 1,083 1 01.3%
Unrestricted 59,779 76,638 (16,859) - 22.0%
Total net position 157,604$ 156,899$ 705$ 0.4% TABLE B-1
Condensed Statement of Net Position - Sewer Utility
(amounts expressed in thousands of dollars)
8 Packet Page. 841
During fiscal year 2024, total revenue
s for the Sewer Utility increased 5.7% or $2.8 million, from the prior year, primarily due to a sewer rate increase as approved by the Board effective July 1, 2023. This increase was offset by increased operating expenditures due to increased depreciation expense. The department revised its capital asset categories which accelerated depreciation drastically increasing depreciation expense.

Total capital assets increased by 15.2% or $15.7 million in fiscal year 2024, primarily due to the capitalization of the Blower Decentralization project totaling $15 million and expenditures for various sewer capital projects. More information relating to capital assets can be found in Note 3 of the Notes to the Basic Financial Statements.
2024 2023 $ Change % Change
Operating revenue 47,385$ 45,544$ 1,841$ 4.0% Capital contributions 2,725 2,637 88 3 .3%
Other nonoperating revenue 2,121 1,251 870 - 69.5% Total revenues 52,231 49,432 2,799 5 .7%
Operating expenses 50,351 41,597 8,754 2 1.0%
Nonoperating expenses 1,175 1,234 ( 59) -4
.8%
Total expenses 51,526 42,831 8,695 2 0.3%
Change in net position 705 6,601 (5,896) -89.3%
Net position at the Beginning of the Year 156,899 150,298 6,601 4 .4% Total net position 157,604$ 156,899$ 705$ 0.4% TABLE B-2
Condens ed Statement of Revenues , Expens es and Changes in Net Pos ition - Sewer Utility (amounts expressed in thousands of dollars)
2024 2023 $ Change % Change
Land and easements 17,603$ 17,603$ -$ 0.0% Construction in progress 31,343 34,558 (3,215) -9.3%
Pumping 3,958 4,065 (107) -2.6%
Buildings, plants and stores 181,029 160,649 20,380 12.7% Field and office equipment 13,510 17,799 (4,289) -24.1% Pipelines 27,019 22,921 4,098 17.9%
Total capital assets 274,462 257,595 16,867 6.5% Less: accumulated depreciation (155,640) (154,477) (1,163) 0.8% Total net assets 118,822$ 103,118$ 15,704$ 15.2% TABLE B-3
Capital Assets - Sewer Utility
(amounts expressed in thousands of dollars)
9 Packet Page. 842
During the year, the Sewer Utility’s long-term debt decreased 2.4% or $0.7 million which can be attributed to the annual debt service payments. Additional information on long-term debt is presented in Note 4-6 of the Notes to Basic Financial Statements.

Economic Factors and Next Year’s Budgets and Rates
The Service Area (Service Area) economy served by the Department continues to grow and develop.

Development in the City has increased as San Bernardino is one of the remaining affordable areas in the Inland Empire. The City has also received funds from the American Recovery Act that will help stimulate economic growth in the area. The City has encumbered for the Department, approximately $5 million from the American Recovery Act funds, to fund the Department’s Lead Service Lateral capital project.

Additionally, the Department was approved for a State Revolving Funds loan from the State Water Resource Control Board in May of 2022 and a federal grant from the Bureau of Reclamation and FEMA for designated capital projects. Development within the City continues, which has resulted in several new projects for the Department.

The Department adopted a balanced budget for Fiscal Year 2023-2024. The Fiscal Year 2023-2024 budget takes into consideration rising operational expenses, inflation, and funding our capital program to address aging infrastructure. Additional details regarding the Department’s budget can be found on the Department’s website. Questions or requests for information regarding the Adopted Budget should be directed to the Finance Department.

The Department completed a rate study and a cost-of-service study for the water, sewer treatment, and sewer collection utilities. As a result of the study the water Board adopted a four-year rate increase for the water and sewer funds effective April 1, 2022. The remaining increases are effective annually starting July 1, 2022, through July 1, 2025. These newly adopted rate structures and increases will allow for better revenue stability for the Department as costs increase and drought is a major concern for the State.

Contacting the Department’s Director of Finance
This financial report is designed to provide our customers and creditors with a general overview of the Department’s finances and to demonstrate the Department’s accountability for the money it receives. If you have questions about this report or need additional financial information, please contact the Department’s finance department at (909) 453-6009.
2024 2023 $ Change % Change
Bonds Payable 29,740 30,510 (770) -2.5%
Bond Premium 144 150 (6) -4.0%
Compensated absences 617 586 31 5.3%
Total long-term debt 30,501$ 31,246$ (745)$ -2.4% TABLE B-4
Long-term Debt - Sewer Ut ility
(amounts expressed in thousands of dollars)
10 Packet Page. 843
%$6,&),1$1&,$/67$7(0(176
11 7+,63$*(,17(17,21$//</()7%/$1.
12 Packet Page. 845

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Statement of Net Position
June 30, 2024
Total
ASSETS
Current assets:

Cash and investments 48,160,342$ 75,368,083$ 123,528,425$ Receivables:

Accounts, net 6,244,581 5,768,588 12,013,169 Accrued interest 291,396 420,761 712,157
Leases 211,681 - 211,681
Due from other entities 3,364,521 163,653 3,528,174 Inventories 1,539,878 - 1,539,878
Prepaid expenses 400,305 609,278 1,009,583
Total current assets 60,212,704 82,330,363 142,543,067 Noncurrent:

Leases Receivable, Noncurrent 3,266,445 - 3,266,445 Investment in joint venture - RIX - 20,499,132 20,499,132 Restricted assets:

Net OPEB asset 2,414,089 2,151,996 4,566,085 Cash and cash equivalents:

Restricted for capital 13,174,240 6,734,909 19,909,149 Investments:

Restricted for consent decree 24,448,652 - 24,448,652 Accrued interest - consent decree 154,306 - 154,306
Prepaid Insurance - consent decree 15,598,893 - 15,598,893 Capital Assets:

Land and easements 5,869,462 17,603,413 23,472,875 Construction in progress 25,803,315 31,343,003 57,146,318 Capital assets - being depreciated/amortized, net 181,872,892 69,875,533 251,748,425 Total noncurrent assets 272,602,294 148,207,986 420,810,280 Total assets 332,814,998 230,538,349 563,353,347

DEFERRED OUTFLOWS OF RESOURCES
Pension-related 8,605,096 8,172,240 16,777,336 OPEB-related 1,660,608 1,480,319 3,140,927 Total deferred outflows of resources 10,265,704 9,652,559 19,918,263

LIABILITIES
Current liabilities:

Accounts payable 7,287,693 9,166,781 16,454,474 Related parties payable - 1,618,820 1,618,820
Accrued compensation 682,914 644,533 1,327,447
Claims payable 5,986,529 1,103,624 7,090,153
Due to other governments 1,267,358 - 1,267,358
Current portion of compensated absences 1,235,913 468,521 1,704,434 Current portion of bonds, leases, and subscriptions 1,061,994 810,000 1,871,994 Accrued interest 822,516 489,591 1,312,107
Total current liabilities 18,344,917 14,301,870 32,646,787 Noncurrent liabilities:

Consumer deposits 3,516,927 - 3,516,927
Compensated absences 308,978 149,156 458,134
Unearned revenue - consent decree 40,201,851 - 40,201,851 Bonds, leases and subscription payable 45,488,919 29,073,537 74,562,456 Net pension liability 37,190,712 35,319,937 72,510,649 Total noncurrent liabilities 126,707,387 64,542,630 191,250,017 Total liabilities 145,052,304 78,844,500 223,896,804

DEFERRED INFLOWS OF RESOURCES
Pension-related 40,752 38,702 79,454
OPEB-related 4,154,415 3,703,413 7,857,828 Lease-related 3,275,876 - 3,275,876
Total deferred inflows of resources 7,471,043 3,742,115 11,213,158

NET POSITION
Net investment in capital assets 180,168,996 95,673,321 275,842,317 Restricted for postemployment benefits 2,414,089 2,151,996 4,566,085 Unrestricted 7,974,270 59,778,976 67,753,246 Total net position 190,557,355$ 157,604,293$ 348,161,648$ Water Sewer
See accompanying notes to financial statements.
13 Packet Page. 846

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Statement of Revenues, Expenses and Changes in Net Position For the Year Ended June 30, 2024
Interfund
Eliminations Total

OPERATING REVENUES
Sales and service charges 45,656,974$ 46,224,150$ (644,713)$ 91,236,411$ Other operating revenues 328,116 1,161,283 - 1,489,399 Total operating revenues 45,985,090 47,385,433 (644,713) 92,725,810

OPERATING EXPENSES
Administration and customer service 9,038,195 6,828,593 (193,790) 15,672,998 Utility administration 1,706,977 670,292 (5,513) 2,371,756 Sewer collection and lift stations - 2,827,657 - 2,827,657 Plant operations 11,385,172 13,804,430 (311,989) 24,877,613 Maintenance 3,330,387 4,845,501 (106,841) 8,069,047 Environmental control - 892,576 - 892,576
Distribution 6,444,793 - - 6,444,793
Engineering and water quality 3,074,606 2,030,808 (26,580) 5,078,834 General, administration and overhead 6,884,987 7,040,440 - 13,925,427 Depreciation and amortization 12,131,463 11,411,059 - 23,542,522 Total operating expenses 53,996,580 50,351,356 (644,713) 103,703,223 Operating income (loss) (8,011,490) (2,965,923) - (10,977,413)

NONOPERATING REVENUES (EXPENSES)
Investment income 2,544,768 1,521,068 - 4,065,836 Rental income 358,472 - - 358,472
Noncapital grant funds 5,566,773 - - 5,566,773
Interest expense and fiscal charges (1,783,831) (1,175,040) - (2,958,871) Gain (loss) on disposal of capital assets 85,041 599,981 - 685,022 Other 206,697 - - 206,697
Total nonoperating revenues (expenses) 6,977,920 946,009 - 7,923,929 Income (loss) before capital contributions (1,033,570) (2,019,914) - (3,053,484)

CAPITAL CONTRIBUTIONS
Acquistion fees 2,152,064 - - 2,152,064
Capacity fees 2,063,310 2,012,611 - 4,075,921 Capital contributions 914,811 712,553 - 1,627,364
Total capital contributions 5,130,185 2,725,164 - 7,855,349 Change in net position 4,096,615 705,250 - 4,801,865 Net position-beginning 186,460,740 156,899,043 - 343,359,783 Net position-ending 190,557,355$ 157,604,293$ -$ 348,161,648$ Water Sewer
See accompanying notes to financial statements.
14 Packet Page. 847

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Statement of Cash Flows
For the Year Ended June 30, 2024
Total

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 46,693,240$ 47,059,249$ 93,752,489$ Payments to suppliers and service providers (20,293,287) (16,330,373) (36,623,660) Payments to employees for salaries and benefits (17,119,600) (14,646,995) (31,766,595) Net cash provided by (used for)
operating activities 9,280,353 16,081,881 25,362,234

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Consent Decree Insurance Drawdowns 953,693 - 953,693
Operating grants and contributions 2,178,256 - 2,178,256 Net cash provided by (used for)
noncapital financing activities 3,131,949 - 3,131,949

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Capital contributions 4,215,374 2,012,611 6,227,985 Acquisition and construction of capital assets (18,211,579) (37,392,635) (55,604,214) Principal paid on capital debt (1,165,862) (770,000) (1,935,862) Interest paid on capital debt (2,002,197) (1,197,491) (3,199,688) Proceeds from sales of assets 692,452 9,498,161 10,190,613 Net cash provided by (used for)
capital and related financing activities (16,471,812) (27,849,354) (44,321,166)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 2,380,585 2,100,552 4,481,137 Leasing activities 281,211 - 281,211
Purchase of investments (882,942) - (882,942)
Net cash provided by (used for)
investing activities 1,778,854 2,100,552 3,879,406 Net increase (decrease) in
cash and cash equivalents (2,280,656) (9,666,921) (11,947,577) Cash and cash equivalents-beginning 63,615,238 89,678,112 153,293,350 Cash and cash equivalents-ending 61,334,582$ 80,011,191$ 141,345,773$

RECONCILIATION OF CASH AND CASH EQUIVALENTS

TO THE STATEMENT OF NET POSITION
Cash and investments 48,160,342$ 75,368,083$ 123,528,425$ Restricted cash and investments 13,174,240 6,734,909 19,909,149 Less: amounts not meeting definition of cash equivalents - (2,091,801) (2,091,801) Total cash and cash equivalents 61,334,582$ 80,011,191$ 141,345,773$ Water Sewer
See accompanying notes to financial statements.
15 Packet Page. 848

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Statement of Cash Flows
For the Year Ended June 30, 2024
Total Water Sewer

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED BY (USED FOR)

OPERATING ACTIVITIES
Operating income (loss) (8,011,490)$ (2,965,923)$ (10,977,413)$ Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:

Depreciation/amortization expense 12,131,463 11,411,059 23,542,522 Residual nonoperating revenue and expenses 206,697 - 206,697 (Increase) decrease in accounts receivable 550,067 (326,184) 223,883 (Increase) decrease in inventories (93,455) - (93,455)
(Increase) decrease in prepaid items (80,281) (69,470) (149,751) (Increase) decrease in net OPEB asset (1,676,307) (1,558,218) (3,234,525) Increase (decrease) in accounts payable 4,961,106 7,619,651 12,580,757 Increase (decrease) in accrued liabilities 57,523 75,494 133,017 Increase (decrease) in deposits payable (48,614) 415,302 366,688 Increase (decrease) in compensated absences 206,653 32,025 238,678 Increase (decrease) in claims and judgments (1,064,922) (200,602) (1,265,524) Increase (decrease) in net pension liability 2,141,913 1,648,747 3,790,660 Total adjustments 17,291,843 19,047,804 36,339,647 Net cash provided by (used for)
operating activities 9,280,353$ 16,081,881$ 25,362,234$

SCHEDULE OF NON-CASH NONCAPITAL, CAPITAL,

AND INVESTING ACTIVITIES
Unrealized gain/(loss) on fair value of investments 392,014$ 1,019,113$ 1,411,127$ Unrealized gain/(loss) on investments in joint ventures - 709,450 709,450 C
ontributions of capital assets 914,811 712,553 1, 627,364 Amortization on bond discount/(premium) (197,638) (6,404) (204,042) See accompanying notes to financial statements.
16 Packet Page. 849

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 1: REPORTING ENTITY AND SUMMAR Y OF SIGNIFICANT ACCOUNTING POLICIES A. Organization and Operations of the Reporting Entity
The San Berna
rdino Municipal Water Department (D epartment) is governed under the Charter of the City of San Bernardino (City). A Water Board appointed by the Mayor and approved by City Council, has Charter defined powers, with full authority for administration of the water utility and delegated authority for the sewer treatment utility. The Department has served the community since 1905.

B. Basis of Accounting and Measurement Focus
The Departm
ent reports its activities as enterprise funds, which are used to account for operations that are financed and operated in a manner similar to a private business enterp rise, where the intent of the Department is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Revenues and expenses are recognized on an accrual basis.

Revenues are recognized in the accounting period in which they are earned, and expenses are recognized in the period incurred, regardless of when the related cash flow takes place.

Operating revenues, such as charges for services (water sales, sewer services and water services) result from exchange transactions associated with the principal activity of the Department. Exchange transactions are those in which each party receives and gives up equal values. Nonoperating revenues, such as property taxes and investment income, result from nonexchange transactions or ancillary activities in which the Department gives (receives) value without directly receiving (giving) equal value in exchange.

When both restricted and unrestricted resources are availabl e for use, the Department uses restricted resources and then unrestricted resources.

The major funds of the Department are described below:
 Water Utility Fund – The Water Utility Enterprise Fund (Water Utility) is used to account for the operations of the Department’s water system and related revenues.
 Sewer Utility Fund – The Sewer Utility Enterprise Fund (Sewer Utility) is used to account for the operations of the City’s wastewater treatment system and collection system and related revenues.

Administrative and engineering services are provided by the Water Utility to the Sewer.

C. Financial Reporting
The Depart
ment’s basic financial statements are presented in confor mance with the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34, “Basic Financial Statements – and Management’s Discussion and Analysis – for State and Lo cal Governments” (GASB No. 34). This statement established revised financial reporting requirem ents for state and local governments throughout the United States for the purpose of enhancing the understandability and usefulness of financial reports.

GASB Statement No. 34 and its related GASB pronouncements provide for a revised view of financial information and restructure the format of financial information provided prior to its adoption. A statement of net position replaces the balance sheet and reports assets, liabilities, and the difference between them as net position, not equity. A statement of revenues, expenses and changes in net position replaces both the income statement and the statement of changes in retained earnings and contributed capital. GASB Statement No. 34 also requires that the statement of cash flows be prepared using the direct method. Under the direct method, cash flows from operating activities are presented by major categories.
17 Packet Page. 850

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 1: REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities and Net Position

1. Use o
f Estimates
The preparation of the basic financia l statements in conformity with gener ally accepted accounting principles requires management to make estimates and assumptions t hat affect the reported amount s of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported changes in net position during the reporting period. Actual results could differ from those estimates.

2. Cash and Investments
For the purpose of the statement of cash flows, cash and cash equivalents include highly liquid investments (including restricted assets) with a maturity of three months or less when purchased.

Investments are reported in the accompanying balance sheet at fair value, except for certain certificates of deposit and investment contracts that are reported at cost as they are not transferable and have terms that are not affected by changes in market interest rates.

Changes in fair value that occur during a fiscal year ar e recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value and any gains or losses realized upon the liquidation of investments.

3. Fair Value Measurements
Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identica l assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of 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.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and fair value is determined th rough the use of models or other valuation methodologies including:
 Quoted prices for similar assets or liabilities in active markets.  Quoted prices for identical or similar assets or liabilities in markets that are inactive.  Inputs other than quoted prices that are observable for the asset or liability.  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect the Department’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include the Department’s own data.

4. Accounts Receivable
Customer or trade receivables are shown net of an allowa nce for uncollectible accounts based on historical and management estimates. Transactions between funds that are representative of lending or borrowing arrangements outstanding at the end of the fiscal year are referred to as “interfund receivables / payables” or “advances to/from” other funds. All interfund transactions are eliminated for financial reporting. 18 Packet Page. 851

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 1: REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

5. Inventory
Materials and supplies inventory consist primarily of water meters, pipes and pipefittings for construction and repair to the Department’s water transmission and distribution system and items necessary for maintenance at the sewer treatment facilities. Inventory is valued at cost using a weighted average method. Inventory items are charged to expense at the time that individual items are withdrawn from inventory or consumed.

Water inventory is stated at its pur chase cost using the first in, first out method. Inventory is recorded when purchased and expensed at the time the inventory is consumed.

6. Prepaid Expense and Deposit
Certain payments to vendors reflect costs or deposits applicable to future accounting periods and are recorded as prepaid items in the basic financial statements.

7. Capital Assets and Intangible Right-to-Use Assets
Capital assets acquired or constructed are capitalized at historic cost. Department policy has set the capitalization threshold for reporting capital assets at $5,000 and a life expectancy of at least 3 years. Overhead is capitalized at the rate of 28.9% of labor and benefits, 10% of ma terial and supplies and 2% of significant contracts.

Intangible right-to-use assets are defined by the Department as assets with an estimated useful life in excess of 3 years and with an initial, individual value of $5,000 or more. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives of the assets as follows:

Source of supply plant 8 to 50 years
Disposal plant and interceptor lines 35 to 50 years
Other facilities (shops, leasehold & yards) 5 to 25 years Tools, office equipment & communications 4 to 20 years
Computer equipment 3 to 5 years
Automotiv e and fleet equipment 3 to 15 years
Intangible right-to-use assets Shorter of the useful life of the underlying asset or the term
of the arrangement

8. Compensated Absences
Department policy is to permit employees to accumulate a limited amount of earned vacation and sick leave. Various negotiation groups have different sell-back and cash out options. Additionally, cash out options upon retirement or death of the employee vary based on the negotiation group. Employees’ vacation and sick leave benefits are recognized as a liability of the Department.

9. Restricted Assets and Amounts Payable from Restricted Assets Amounts shown as restricted assets have been restricted by bond indentures or are to be used for specified purposes based on contract provisions, such as bonded debt service. Certain liabilities which are currently payable have been classified as current liabilities payable from restricted assets since assets have been restricted for their payment.
19 Packet Page. 852

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 1: REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

10. 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 and additions to/deductions from the fiduciary net position have been determined on t he same basis as they are reported by the Department.

For this purpose, benefit payments (including refunds of employee contributions) ar e recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

GASB 68 requires that the reported results must pertain to liability and asset information within certain defined time limits. For this report, the following periods are used:

Valuation Date (VD) June 30, 2022
Measurement Date (MD) June 30, 2023
Measurement Period (MP) July 1, 2022 to June 30, 2023

11. Othe
r Post-Employment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, info rmation about the fiduciary net position of the Department’s plan (OPEB Plan), the assets of which are held by US Bank in an irrevocable trust, and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined by an independent ac tuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.

Generally accepted accounting principles require that the reported results must pertain to liability and fiduciary net position information within certain defined time limits. For this report, the following timeframes are used:

Valuation Date June 30, 2022
Measurement Date June 30, 2023
Measurement Period July 1, 2022 to June 30, 2023

12. Deferred Outflows/Inflows
In addition to assets, the St
atement of Net Position will sometimes report a separate section of deferred outflows of resources. This separate financial statement element, def erred outflows of resources, represents consumption of net assets that applies to a future period and so will not be recognized as an outflow of resources (expenses/expenditures) until then. The Department has two items that qualify for reporting in this category: the deferred outflows related to pensions and OPEB.

In addition to liabilities, the statement of financial positi on will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and will not be recognized as inflow of resources (revenue) until that time. The Department has thr ee items that qualify for reporting in this category, of which two relate to deferred inflows related to pensions and OPEB. Lastly, leases related items for the amount of the lease receivable plus any lease payments related to future periods, less an y lease incentives paid to, or on behalf of, the lessee at or before the commencement of the lease term.

13. Interfund Eliminations
The interfund eliminations column represents entries made to eliminate interfund income and expenditure transactions between the water utility fund and the sewe r utility fund for the purposes of consolidated financial statements.
20 Packet Page. 853

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 1: REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

14. Net Position
The financial statements utilize a net position presentation. Net position is categorized as follows:
 Net Investment in Capital Assets – This component of net position consists of capital assets, net of accumulated depreciation and reduced by any debt out standing against the acquisition, construction, or improvement of those assets.
 Restricted Net Position – This component of net position consists of constraints placed on net position use through external constraints imposed by creditors, grant ors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.  Unrestricted Net Position – This component of net position consists of net position that does not meet the definition of restricted or net investment in capital assets.

15. Capital Con
tributions
Contributions in aid of construction represent cash and utility plant additions contribu ted to the Department by property owners or developers desiring services that require capital expenditures or capacity commitment. In accordance with Governmental Accounting Standards Board Statement No. 33, the capital contributions are recorded on the Statement of Revenues, Expenses and Changes in Net position.

16. Budgetary Policies
The Department adopts an annual budget for planning, c ontrol, and evaluation purpo ses. Budgetary control and evaluation are affected by comparisons of actual revenues and expenses with planned revenues and expenses for the period. Encumbrance accounting is not used to account for commitments related to outstanding contracts for construction and services.

17. Leases
Lessee: The Department is a lessee for a noncancellable le ase of a building. The Department recognizes a lease liability and an intangible right -to-use lease asset (lease asset) in the statement of net position. The Department recognizes lease liabilities with an initial, individual value of $5,000 or more.

At the commencement of a lease, the Department initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs.

Subsequently, the lease asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to leases include how the Depa rtment determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.  The Department uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the Department uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the non-cancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase optio n price that th e Department is reasonably certain to exercise.
21 Packet Page. 854

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 1: REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Department monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease assets and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position.

Lessor: The Department is a lessor for various noncancellable leases of land. The Department recognizes a lease receivable and a deferred inflow of resources in the statement of net position.

At the commencement of a lease, the De partment initially measures the lease receivable 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 inflow of resources is init ially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date.

Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the Department determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.  The Department uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the non-cancellable period of the lease. Lease receipts included in the measurement of the lease receivable are composed of fixed payments from the lessee.

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

18. Subscription-Based Information Technology Arrangements The Department is a subscriber for a noncancellable subscription of information technology services. The Department recognizes subscription liability and an intangible right-to-use subscription asset (subscription asset) in the government -wide financial statements. The Department recognizes subscription liabilities with an initial, individual value of $5,000 or more.

At the commencement of a subscription, the Department init ially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at or before the subscription commencement date, plus certain init ial direct costs. Subsequently, the subscription asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to subscriptions include how the Department determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments.  The Department uses the interest rate charged by t he vendor as the discount rate. When the interest rate charged by the vendor is not provided, the Department uses its estimated incremental borrowing rate as the discount rate for subscriptions.
 The subscription term includes the noncancellable period of the subscription. Subscription payments included in the measurement of the subscription liability are composed of fixed payments that the Department is reasonably certain to exercise.
22 Packet Page. 855

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 1: REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Department monitors changes in circu mstances that would require a re measurement of its subscriptions and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

Subscription assets are reported with ot her capital assets and subscription liabilities are report ed with long-term debt on the statement of net position.

NOTE 2: CASH AND INVESTMENTS
Cash and investments are reported in the accompan ying statement of net position as follows:

Cash and investments at June 30, 2024, consisted of the following:

A. Investme
nts Authorized by the California Government Code and the Department’s Investment Policy The table below identifies the investm
ent types that are authorized by the Department and Consent Decree (see note 12) in accordance with the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Due to its long-term nature, the Consent Decree has been explicitly exempted from maximum maturity requirements of the California Government Code, which limits maturity of most investments to five years. All other aspects of the Consent Decree investment policy are consistent with the City’s investment policy.

Investment Type* Department
Consent
Decree
Maximum %
of Portfolio
Maximum %
of Portfolio
US treasury 5 years 5 years None None
US agency 5 years 5 years None None
Bankers acceptances 180 days 180 days 40% 40%
Commercial paper 270 days 270 days 25% 25%
Negotiable CDs 5 years 5 years 30% 30%
Medium-term notes 5 years 5 years 30% 30%
Money market mutual funds N/A N/A 20% 20%
Mortgage pass through 5 years 5 years 20% 20%
Local Agency Investment Fund N/A N/A $40,000,000 $40,000,000 Guaranteed investment N/A N/A None None
Maximum Maturity
Water Utility Sewer Utility Total
Cash and investments 48,160,342$ 75,368,083$ 123,528,425$ Restricted investments:

Restricted for Consent Decree 24,448,652 - 24,448,652 Proceeds from bond issuances 13,174,240 6,734,909 19,909,149 Total cash and investments 85,783,234$ 82,102,992$ 167,886,226$ Water Utility Sewer Utility Total
Cash on hand 7,000$ -$ 7,000$
Deposits with financial institutions 23,038,529 23,057,394 46,095,923 Investments 25,114,813 52,310,689 77,425,502
Restricted investments 37,622,892 6,734,909 44,357,801 Total cash and investments 85,783,234$ 82,102,992$ 167,886,226$ 23 Packet Page. 856

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 2: CASH AND INVESTMENTS (CONTINUED)
B. Investments Authorized by Debt Agreements
Investment
s of debt proceeds held by bond trustees are governed by provisi ons of the debt agreements, rather than the general provisions of the California Government Code or the City ’s investment policy. Investments authorized for funds held by bond trustee include, U.S. Treasury Obligations, U.S. Government Sponsored Enterprise Securities, the California Local Agency Investment Fund, Guaranteed Investment Contracts, Commercial Paper, Local Agency Bonds, Banker’s Acceptance and Money Market Mutual Funds. There are no limitations on the maximum amount that can be invested in one issuer, maximum percentage allowed or the maximum maturity of an investment, except for the maturity of Banker’s Acceptance which are limited to one year.

C. Custodial Credit Risk
Custodial
credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be abl e to recover the value of its investment or collateral securities that are in the possession of another party. T he California Government Code requires that a financial institution secure deposit made by a state or local governmental unit by pledging securities in an undivided collateral pool held by a depository regulated under state law.

The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure the Department’s deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

For investment identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investmen t, and holds the investment on behalf of the reporting government.

D. Investment in State Investment Pool
The Departm
ent is a voluntary participant in the Local Ag ency Investment Fund (LAIF) that is regulated by the California Government Code under the oversi ght of the Treasurer of the State of California. The fair value of the Department’s investment in this pool is reported in the accompanying financial statements at amounts based upon the Department’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. LAIF is not rated by a nati onally recognized statistical rating organization, but as stated previously, it is regu lated by the California Govern ment Code, and is therefore exempt from rating requirements.

E. Interest Rate Risk
Interest rate risk i
s the possibility that fluctuations in market interest rates w ill adversely affect the fair value of an investment. The longer the maturity of an investment, the greater the sensitivity of its fair value will be to changes in market interest rates. One method that the Department uses to manage its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio matures or comes close to maturity evenly over time as necessary to provide requirements for cash flow and liquidity needed for operations. 24 Packet Page. 857

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 2: CASH AND INVESTMENTS (CONTINUED)
Information about the sensitivity of the fair values of the Department’s investments to market interest rate fluctuations
is provided by the following table that shows the distribution of the Department’s investments by maturity date:

F. Credit Risk
Credit risk is the possibility that the issuer of an investment will not fulfill its obligation to the holder of the investment.

This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the Department’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type.

Less than 12 13-24 25-60 More than
Investment Type months months months 60 months Total
U.S. Agency Securities 2,564,975$ 4,678,498$ 597,987$ -$ 7,841,460$ U.S. Treasuries - 4,295,766 19,115,084 - 23,410,850 Medium Term Corporate Notes - 193,586 4,175,743 - 4,369,329 Non - U.S. Government and Supranational Bonds 1,471,803 1,380,820 817,159 - 3,669,782 Asset Backed Securities 13,363 235,516 1,626,917 - 1,875,796 Money Market Funds 320,597 - - - 320,597 Local Agency Investment Fund 35,937,688 - - - 35,937,688 Consent Decree:

U.S. Treasuries - - 11,453,594 - 11,453,594
U.S. Agency Asset Backed Securities 144,538 144,736 3,532,939 156,845 3,979,058 U.S. Agency Collateralized Mortgage Obligations - - - 4 7,925 47,925 U.S. Agency Securities - 969,594 - -
969,594
Corporate Notes 1,438,117 1,045,097 2,089,552 - 4,572,766 Certificates of Deposit - 701,397 - - 701,397 Bank Note - - 352,471 - 352,471
Asset Backed Securities - 265,351 2,106,496 - 2,371,847 Investments with Fiscal Agent:

Money Market Funds 19,909,149 - - - 19,909,149 Total Investments 61,800,230$ 13,910,361$ 45, 867,942$ 204,770$ 121,783,303$ Maturities
Minimum
Inv estment Type Rating Rating Total
U.S. Agency Securities None AA+ 7,841,460 $
U.S. Treasuries Exempt Exempt 23,410,850
Medium Term Corporate Notes AA- AA+ 4,369,329
Non - U.S. Government and Supranational Bonds AA AAA 3,669,782 Asset Backed Securities AA- AAA 1,875,796
Money Market Funds None AAA 320,597
Local Agency Investment Fund Not Rated Not Rated 35,937,688 Consent Decree:

U.S. Treasuries No Limit Exempt 11,453,594
U.S. Agency Asset Backed Securities No Limit AA+ 3,979,058 U.S. Agency Collateralized Mortgage Obligations AA AA+ 47,925 U.S. Agency Securities No Limit AA+ 969,594
Corporate Notes A+ AAA 4,572,766
Certificates of Deposit A AA- 701,397
Bank Note A A+ 352,471
Asset Backed Securities AA AAA 2,371,847
Inv estments with Fiscal Agent:

Money Market Funds AA+ AA+ 19,909,149
Total Investments 121,783,303$
25 Packet Page. 858

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 2: CASH AND INVESTMENTS (CONTINUED)
G. Fair Value Measurement
The Depa
rtment categorizes its fair value investments wi thin the fair value hierarchy established by generally accepted accounting principles. The Department has th e following recurring fair value measurements as of June 30, 2024:

NOTE 3: CAPITAL ASSETS
A. Water Utility Fund
Capital as
set activity for the water utility for the fiscal year ended June 30, 2024:
* During the year, certain adjustments were made to corr ec t beginning balance classifications. The net effect on total capital balance reclassifications was $0.

Investment Type Level 1 Level 2 Total
U.S. Agency Securities -$ 7,841,460$ 7,841,460$
U.S. Treasuries - 23,410,850 23,410,850
Medium Term Corporate Notes - 4,369,329 4,369,329
Non - U.S. Government and Supranational Bonds - 3,669,782 3,669,782 Asset Backed Securities - 1,875,796 1,875,796
Consent Decree:

U.S. Treasuries 11,453,594 - 11,453,594
U.S. Agency Asset Backed Securities - 3,979,058 3,979,058 U.S. Agency Collateralized Mortgage Obligations - 47,925 47,925 U.S. Agency Securities - 969,594 969,594
Corporate Notes - 4,572,766 4,572,766
Bank Note - 352,471 352,471
Asset Backed Securities - 2,371,847 2,371,847
Subtotal - investments subject to fair value 11,453,594$ 53,460,878$ 64,914,472 Investments not subject to fair value 56,868,831
Total investments 121,783,303$
Balance Balance
July 1, 2023 Adjustments Additions Deletions Transfers June 30, 2024 Capital assets, not being depreciated or amortized:

Land and easements 5,989,563 $ - $ -$ (120,101)$ -$ 5,869,462 $ Construction-in-progress 14,799,410 - 15,286,659 - (4,282,754) 25,803,315 Total capital assets, not being depreciated or amortized: 20,788,973 - 15,286,659 (120,101) ( 4,282,754) 31,672,777 Capital assets, being depreciated or amortized:

Water rights, wells, and pumping 102,739,627 8,531,901 651,756 ( 6,165,875) - 105,757,409 Di
stribution system 166,022,296 18,739,814 1,746,360 (5,552,058) 4,282,754 185,239,166 Buildings, plants, and stores 8,626,939 (686,829) - (997,497) - 6,942,613 Field and office equipment 43,995,713 (26,594,071) 1,441,615 (7,465,951) - 11,377,306 Lease assets 155,243 - - - - 155,243
Su
bscription assets 246,706 - - - - 246,706 To
tal capital assets, being depreciated or amortized: 321,786,524 (9,185) 3 ,839,731 (20,181,381) 4,282,754 309,718,443 Less: accumulated depreciation and amortization:

Water rights, wells, and pumping (50,904,993) (3,866,004) (5,142,327) 5,808,038 - (54,105,286) Distribution system (62,374,262) (233,875) (5,807,450) 5,550,618 - (62,864,969) Buildings, plants, and stores (3,140,038) 89,648 (256,415) 983,423 - (2,323,382) Field and office equipment (18,816,711) 4,010,231 (767,410) 7 ,361,173 - ( 8,212,717) Lease assets (95,534) - (47,768) - - (143,302) S
ubscription assets (85,802) - (110,093) -
- (195,895)
Total accumulated depreciation and amortization: (135,417,340) - (12,131,463) 19,703,252 - (127,845,551) Total capital assets, being depreciated or amortized, net 186,369,184 (9,185) ( 8,291,732) (478,129) 4 ,282,754 181,872,892 Total accumulated depreciation and amortization: 207,158,157$ (9,185)$ 6,994,927$ (598,230)$ -$ 213,545,669 $ 26 Packet Page. 859

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 3: CAPITAL ASSETS (CONTINUED)
* During the year, certain adjustments were made to corr ect beginning balance classifications. The net effect on total capital balance reclassifications was $0.

B. Sewer Utility Fund
Capital as
set activity for the sewer utility for the fiscal year ended June 30, 2024:
* During the year, certain adjustments were made to corr ect beginning balance classifications. The net effect on total capital balance reclassifications was $0.

NOTE 4: LONG-TERM LIABILITIES
Changes in long-term liabilities for the year ended June 30, 2024, are as follows:

Balance Balance
July 1, 2023 Adjustments* Additions Deletions Transfers June 30, 2024 Capital assets, not being depreciated or amortized:

Land and easements 17,603,413 $ - $ -$ -$ -$ 17,603,413$ Construction-in-progress 34,557,818 - 26,071,255 - (29,286,070) 31,343,003 Total capital assets, not being depreciated or amortized: 52,161,231 - 26,071,255 - (29,286,070) 48,946,416 Capital assets, being depreciated or amortized:

Pumping 4,065,094 9,768,993 - (9,876,030) - 3,958,057 Piplines 21,319,336 3,045,033 1,683,924 - 970,302 2 7,018,595 Buildings, plants, and stores 160,649,219 (8,418,302) 7,869,675 (7,387,277) 28,315,768 181,029,083 Field and office equipment 19,399,679 (4,395,724) 2,480,334 (3,973,991) - 13,510,298 Total capital assets, being depreciated or amortized: 205,433,328 - 12,033,933 (21,237,298) 29,286,070 225,516,033 Less: accumulated depreciation and amortization:

Pumping (4,402,604) 1,529,612 (55,446) 17,673 - (2,910,765) Piplines (10,020,136) (311,716) (508,765) - - (10,840,617) Buildings, plants, and stores (128,956,168) (588,912) (9,734,590) 7,342,221 - (131,937,449) Field and office equipment (11,097,850) (628,984) (1,112,258) 2,887,423 - (9,951,669) Total accumulated depreciation and amortization: (154,476,758) - (11,411,059) 10,247,317 - (155,640,500) Total capital assets, being depreciated or amortized, net 50,956,570 - 622,874 ( 10,989,981) 29,286,070 6 9,875,533
Total accumulated depreciation and amortization: 103,117,801$ -$ 26,694,129$ (10,989,981)$ -$ 118,821,949$ Balance Balance Long-term
July 1, 2023 Additions Deletions June 30, 2024 Current Portion Portion Water Utility
Bonds payable
2016 Water Revenue Bond 43,120,000$ -$ 995,000 $ 42,125,000$ 1,050,000$ 41,075,000$ Premium 4,611,557 - 197,638 4,413,919 - 4,413,919
Total bonds payable 47,731,557 - 1,192,638 46,538,919 1,050,000 45,488,919 Leases 59,878 - 47,884 11,994 11,994 -
Subscriptions 122,978 - 122,978 - - -
Total Water Utility 47,914,413$ -$ 1,363,500 $ 46,550,913$ 1,061,994$ 45,488,919$ Sewer Utility
Bonds payable
2016 Sewer Revenue Bond 30,510,000$ -$ 770,000 $ 29, 740,000$ 810,000$ 28,930,000$
Premium 149,941 - 6,404 143,537 - 143,537
Total Sewer Utility 30,659,941$ -$ 776,404 $ 29,883,537$ 810,000$ 29,073,537$ 27 Packet Page. 860

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 4: LONG-TERM LIABILITIES (CONTINUED)
A. 2016 Water Revenue Bonds
On Nove
mber 3, 2016, the Water Utility issued $48,225,000 Water Revenue Bonds to finance the acquisition and construction of certain water system capital improv ements and to refund outstanding obligations. The Water Revenue Bonds have interest rates ranging from 3% to 5% with maturities through August 2046. The bonds are secured by revenues pledged for the payment of debt servic e. In addition, a provision that in the event of default, the bond trustee may take whatever action, at law or in equity, as may appear necessary or desirable to collect the payments of the debt.

Debt service requirements on the 2016 Water Revenue Bond are as follows:

The Water Utility Fund is required to maintain net revenues adequate to cover 110% of annual debt service.

Net Revenues means the Revenues for the Fiscal Year less Operation and Maintenance Costs for such Fiscal Year. Debt service coverage for the Water Utility Fund for the year ended June 30, 2024, was as follows:

B. 2016 Sewer Revenue Bonds
On Decembe
r 8, 2016, the Sewer Utility issued $34,445, 000 of Sewer Treatment Revenue Bonds to finance the acquisition and construction of additional capital improvements to the sewer utility. The Sewer Treatment Revenue Bonds have interest rates ranging from 3% to 5% with maturities through August 2046. The bonds are secured by revenues pledged for the payment of debt service. In addition, a provision t hat in the event of default, the bond trustee may take whatever action, at law or in equity, as may appear necessary or desirable to collect the payments of the debt.

Year Ending
June 30 Principal Interest Total
2025 1,050,000$ 1,944,388$ 2,994,388$
2026 1,100,000 1,890,638 2,990,638
2027 1,160,000 1,834,138 2,994,138
2028 1,215,000 1,774,763 2,989,763
2029 1,280,000 1,712,388 2,992,388
2030-2034 7,300,000 7,659,688 14,959,688 2035-2039 9,055,000 5,901,106 14,956,106 2040-2044 11,585,000 3,366,900 14,951,900 2045-2047 8,380,000 593,763 8,973,763 Totals 42,125,000$ 26,677,772$ 68,802,772$
Gross revenue 45,985,090$
Operating expenses (53,996,580)
Add back: depreciation/amortization expense 12,131,463
Non-operating income 8,761,751
Less: gain on disposal (85,041)
Net revenues 12,796,683$
Annual debt service 2,990,513$
Actual cov erage ratio 4.28
28 Packet Page. 861

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 4: LONG-TERM LIABILITIES (CONTINUED)
Debt service requirements on the 2016 Sewer Revenue Bond are as follows:

The Sewer Utility Fund is required to maintain net revenues adequate to cover 110% of annual debt service. Gross revenue is defined as Operating Revenue combined with non-operating revenue. Debt service coverage for the Sewer Utility Fund for the year ended June 30, 2024, was as follows:

NOTE 5: LEASES AND SUBSCRIPTION-BA SED INFORMATION TECHNOLOGY ARRANGEMENTS A. Leases Receivable and Deferred Inflows of Resources
The Departm
ent leases land to various companies for installation of cellular towers and fiberoptic communications.

The terms range from 27 months to 268 months as of the contract commencement dat e. The Department also leases land to Little League International to operate a sports complex. The term is 231 months as of the contract commencement date. Some leases have extension options ranging from 6 months to 20 years. As of June 30, 2024, the value of the lease receivable is $3,478,126. The value of the deferred inflow of resources as of June 30, 2024, was $3,275,876, and the Department recognized lease revenue of $279,500 during the fiscal year.

The amount of revenues recognized during the fiscal year for variable and other payments not previously included in the measurement of the lease receivable was $78,972.

Year Ending
June 30 Principal Interest Total
2025 810,000$ 1,154,775$ 1,964,775$
2026 855,000 1,113,150 1,968,150
2027 895,000 1,069,400 1,964,400
2028 935,000 1,033,000 1,968,000
2029 965,000 1,003,897 1,968,897
2030-2034 5,345,000 4,488,641 9,833,641 2035-2039 6,470,000 3,360,600 9,830,600 2040-2044 7,905,000 1,928,100 9,833,100 2045-2047 5,560,000 339,600 5,899,600 Totals 29,740,000$ 15,491,163$ 45,231,163$
Gross revenue 47,385,433$
Operating expenses (50,351,356)
Add back: depreciation/amortization expense 11,411,059
Non-operating income 2,121,049
Less: gain on disposal (599,981)
Net revenues 9,966,204$
Annual debt service 1,964,275$
Actual cov erage ratio 5.07
29 Packet Page. 862

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 5: LEASES AND SUBSCRIPTION-BA SED INFORMATION TECHNOLOGY ARRANGEMENTS (CONTINUED)
The principal and interest payments that are expected to maturity are as follows:

B. Leases Payable and Lease Assets
On July
1, 2021, the Department entered into a 39-month lease as lessee for the use of a 397 Modular office. An initial lease liability was recorded in the amount of $155,243. As of June 30, 2024, the value of the lease liability is $11,994. The Department is required to make monthly fixed payments of $4,000. The lease has an interest rate of

0.3080%. The value of the lease asset as of June 30, 2024 is $155,243 with accumulated amortization of $143,302.

Future principal and interest requirements to maturity for each lease liability are as follows:

C. Subscription
-Based Information Technology Arrangements
The Dep
artment had entered into various subscriptions as th e subscriber for the use of software as a service. An initial subscription liability was recorded in the amount of $240,706 during the prior fiscal year. The terms of these subscriptions ranged from 21 to 33 months. As of June 30, 2024, the total value of the subscription liability was paid in full. The value of the subscription assets as of June 30, 2024 is $246,706, with an accumulated amortization of $195,093.

Year Ending
June 30 Principal Interest Total
2025 211,681$ 52,942$ 264,623$
2026 220,658 49,755 270,413
2027 231,942 46,412 278,354
2028 243,636 42,896 286,532
2029 253,024 39,202 292,226
2030-2034 1,384,886 134,768 1,519,654 2035-2039 613,849 52,257 666,106
2040-2044 318,450 9,856 328,306
Totals 3,478,126$ 428,088$ 3,906,214$
Year Ending
June 30 Principal Interest Total
2025 211,681$ 52,942$ 264,623$
30 Packet Page. 863

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 6: COMPENSATED ABSENCES
Compensated absences represent the amount of the accumulated vacation, which is expected to be liquidated with future resources. The water utility fund, sewer utility fund and sewer collection fund liquidate 100 percent of the compensated absences for business-type activities. There is no fixed payment schedule for unpaid compensated absences; see Note 1 for additional information.

NOTE 7: PENSION PLAN
The Department is considered to be part of the City of San Bernardino PERS pension plan, therefore all related information included in this note refers to the City as a whole unless specifically indicating otherwise. All qualified permanent and probationary employees are eligible to participate in the Department’s Miscellaneous Plan, an agent multiple-employer defined benefit pension plan administer ed 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 Plan are estab lished by State statute and Local Government resolution.

CalPERS issues publicly available reports that incl ude a full description of the pension plans regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Additional disclosures and required supplementary information regarding the City’s plan can be found in the City’s audited financial statements.

A. Benefits Provided
CalPERS prov
ides service retirement and disability be nefits, 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 Plans’ provisions and benefits in effect at the measurement date, are summarized as follows:

Hire date
Prior to
October 3, 2011
On or after
October 4, 2011
On or after
January 1, 2013
Benefit formula 2.7% @ 55 2% @ 55 2% @ 60
Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 50-55 50-55 52-67
Monthly benefits, as a % of eligible
compensation 2.0% to 2.7% 2.0% to 2.7% 1.0% to 2.5%
Required employee contribution rates 10% 10% 10%
Required employer contribution rates 35% 35% 35%
Miscellaneous
Balance Balance Long-term
July 1, 2023 Net Change June 30, 2024 Current Portion Portion Water Utility Fund 1,338,238$ 206,653$ 1,544,891$ 1,235,913$ 308,978$ Sewer Utility Fund 585,652 32,025 617,677 468,521 149,156 Total 1,923,890$ 238,678$ 2,162,568$ 1,704,434$ 458,134$ 31 Packet Page. 864

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 7: PENSION PLAN (CONTINUED)
B. Employees Covered
As of the June
30, 2022 valuation date, the following employees were covered by the benefit terms of the Plan:

C. Contribution Description
Section 208
14(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 determ ined 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. Employer contribution rates may change if plan contracts are amended.

Payments made by the employer to satisfy contribution requirements that are identifi ed by the pension plan terms as plan member contribution requirements are classified as plan member contributions. Plan contributions for the year equaled $7,744,386.

D. Actuarial Methods and A ssumptions used to determine Total Pension Liability The June 30,
2022 valuation was rolled forward to determine the June 30, 2023 total pension liability, based on the following actuarial methods and assumptions:

Actuarial Cost Method Entry Age Normal Cost Method
Actuarial Assumptions
Discount rate 6.90%
Inflation 2.30%
Salary increases Varies by entry age and services
Mortality rate table Derived using CalPERS’ membership data for all funds Post-retirement benefit increase The lesser of contract COLA or 2.30% until purchasing power protection allowance floor on purchasing power applies,

2.30% thereafter
The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions . Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experienc e study report from November 2021 that can be found on the CalPERS website.

E. Long-Term Expected Rate of Return
The long-term expe
cted 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.

City-Wide Department
Inactive employees or beneficiaries currently receiving benefits 1,567 172 Inactive employees entitled to but not yet receiving benefits 1,096 36 Active employees 671 259
Total 3,334 467
32 Packet Page. 865

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 7: PENSION PLAN (CONTINUED)
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administra tive expenses of 10 Basis points. The expected real rates of return by asset class are as follows:

F. Discount Rate
The disco
unt rate used to measure the total pension liab ility was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan me mbers 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.

Assumed
Asset
Asset Class Allocation Real Return 1, 2
Global equity-cap-weighted 30.00% 4.54%
Global equity-non-cap-weighted 12.00% 3.84%
Private equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed securities 5.00% 0.50%
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%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study 33 Packet Page. 866

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 7: PENSION PLAN (CONTINUED)
G. Amortization of Deferred Outflows and Deferred Inflows of Resources Under GASB
Statement No. 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:

Net difference between projected 5-year straight-line amortization and actual earnings on pension
plan investments
All other amounts Straight-line amortization over the expected average remaining service lifetime (EARSL) of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.

The EARSL for the plan for the measurement period endi ng June 30, 2023 is 2.2 years, which was obtained by dividing the total service years of 7,412 (the sum of remaining service lifetimes of the active employees) by 3,334 (the total number of participants: active, inactive, and re tired). Inactive employees and retirees have remaining service lifetimes equal to 0. Total future service is based on the members’ probabilit y of decrementing due to an event other than receiving a cash refund.

H. Changes in Net Pension Liability
The following table shows the Department’s proportionate share of the net pensi on liability of the City’s plan over
the measurement period:

The net pension liability of the plan is measured as of June 30, 2023, and the total pension liability for the plan used to calculate the net pension liability was determined by an actuarial valuation of June 30, 2022 rolled forward to June 30, 2023, using standard update procedures. The pr oportion of the net pension lability was based on a projection of the Department’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The Department’s proportionate share of the net pension lability for the plan as of June 30, 2024 and 2023 was 36 percent.

Net Pension
Total Pension Plan Fiduciary Liability
Liability (a) Net Position (b) (c) = (a) - (b)
Balance at 6/30/2023 (Measurement Date 6/30/2022) 234,951,657$ 164,809,826 $ 70,141,831 $ Balance at 6/30/2024 (Measurement Date 6/30/2023) 242,663,139 170,152,490 72,510,649 Net changes during 2023-2024 7,711,482 $ 5,342,664 $ 2,368,818 $ Increase (Decrease)
34 Packet Page. 867

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 7: PENSION PLAN (CONTINUED)
I. Sensitivity of the Net Pension Liab ility to Changes in the Discount Rate The following
presents the net pension liability of the Pl an as of the Measurement Da te, 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:

J. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions For the fiscal yea
r ended June 30, 2024, the Department recognized pension expense of $11,783,510.

As of June 30, 2024, the Department reports other amounts for the Plan as deferred outflow and deferred inflow of resources related to pensions as follows:

The $7,744,386 reported as deferred outflows of resources related to employer contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2025.

That and other amounts reported as deferred outflows of re sources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Discount Rate Current Discount Discount Rate
-1% (5.90%) Rate (6.90%) +1% (7.90%)
Plan's Net Pension Liability
-Department Allocation
(36%) 46,943,027$ 72,510,649$ 103,521,332$
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to
the measurement date 7,744,386 $ - $
Differences between expected and actual
experience 985,694 79,454
Changes in assumptions 319,405 -
Net difference between projected and actual
earnings on pension plan investments 7,727,851 - Total 16,777,336$ 79,454$
Deferred Outflows/
Year Ended (Deferred Inflows)
June 30, of Resources
2025 2,395,482$
2026 872,803
2027 5,478,790
2028 206,421
Total 8,953,496$
35 Packet Page. 868

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
NOTE 7: PENSION PLAN (CONTINUED)
K. Pension Plan Fiduciary Net Position
The plan fiduciary
net position disclosed in the GASB 68 accounting valuation report may differ from the plan assets reported in the funding actuarial valuation report due to several reasons. First, for the accounting valuations, CalPERS must keep items such as deficiency reserves , fiduciary self-insurance and OPEB expense included as assets. These amounts are excluded for rate setting purposes in the funding actuarial valuation. In addition, differences may result from early Annual Comprehensive Financial Report closing and final reconciled reserves.

NOTE 8: OTHER POST-EMPLOYMENT BENEFITS (OPEB)
A. Plan Description
The Depart
ment provides health benefits to all qualif ying retirees and their spouses in accordance with Memorandums of Understanding under various labor agree ments. The other post-employment benefits plan is a single-employer plan administered by the Department.

B. Employees Covered
Employees are eligible
for retiree health benefits if they retire from the Department on or after age 50 with at least 10, 12, or 15 years of service, depending on bargaining unit, and are eligible for a PERS pension. As of the June 30, 2022 valuation date, the following current and former employees were covered by the benefit terms under the OPEB Plan:

C. Contributions
The contributi
on requirements of plan members and the Department are established and may be amended by the Board. The required contribution is based on projected pay-as-you-go financing requirements, with an additional amount to prefund benefits as may be determined annually by the Board. The Department has established an irrevocable trust to which pre-funding contributions are made. For the fiscal year ended June 30, 2024, the Department’s contributions were $1,783,630, which include the implicit subsidy of $580,575.

D. Net OPEB Liability/(Asset)
The Department’s net OPEB liability/(ass
et) was measured as of June 30, 202 3, and the total OPEB liability used to calculate the net OPEB liability/(asset) was determined by an actuarial valuation dated June 30, 2022 that was rolled forward to determine the June 30, 2023 total OPEB liability, based on the following actuarial methods and assumptions:

Actuarial Cost Method: Entry Age Normal
Discount Rate 6.25%
Inflation 2.50%
Mortality Based on assumptions for Public Agency Miscellaneous members published in the 2021 CalPERS Experience Study. These tables include generational mortality improvement using 80% of scale MP- 2020.

Healthcare Trend Rate 6.8% for not Medicare eligible and 5.4% for Medicare eligible for FY 2023, gradually decreasing over several decades to an ultimate rate of

3.9% in FY 2076 and later years.

Active employees electing medical coverage 221
Active employees waiving medical coverage 35
Retirees electing medical coverage 132
Retirees with only non-medical OPEB coverage 25
Total 413
36 Packet Page. 869

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 8: OTHER POST-EMPLOYMEN T BENEFITS (OPEB) (CONTINUED) 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 re turn (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 weighing 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
Expected Real
Rate of Return
Fixed income 40% 1.47%
Global Equity 60% 4.82%
Assumed long-term rate of inflation - 2.75%
Expected long-term net rate of return - 6.25%
Total 100%
E. Discoun
t Rate
The discount rate used to measure the total OPEB liability was 6.25 percent. The projection of cash flows used to
determine the discount rate assumed t hat the Department’s 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.

F. Changes in the Net OPEB Liability/(Asset)
The changes in the net OPEB liability/(asset) are as f
ollows:

Net OPEB
Total OPEB Plan Fiduciary Liability (Asset)
Liability (a) Net Position (b) (c) = (a) - (b)
Balance at 6/30/2023 (Measurement Date 6/30/2022) 33,106,372$ 35,328,118 $ (2,221,746) $ Changes for the year
Service cost 809,659 - 809,659
Interest 2,066,543 - 2,066,543
Differences between expected and actual experience 71,864 - 71,864 Employer contributions - 2,331,720 (2,331,720)
Net inv estment income - 2,970,846 (2,970,846)
Benefit payments (1,702,700) (1,702,700) -
A
dministrative expense - (10,161) 10,161
N
et changes 1,245,366 3,589,705 (2,344,339)
Balance at 6/30/2024 (Measurement Date 6/30/2023) 34,351,738$ 38,917,823 $ (4,566,085) $ Increase (Decrease)
37 Packet Page. 870

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 8: OTHER POST-EMPLOYMEN T BENEFITS (OPEB) (CONTINUED) G. Sensitivity of the Net OPEB Liability/ (Asset) to Changes in the Discount Rate The following presents the net OPEB li
ability/(asset) of the Department if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the cu rrent rate, for measurement period ended June 30, 2023:

H. Sensitivity of the Net OPEB Liability to Ch anges in the Health Care Cost Trend Rates The following presents the net OPEB li
ability of the Department if it were calc ulated using health care cost trend rates that are one percentage point lower or one percenta ge point higher than the current rate, for measurement period ended June 30, 2023:

I. Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses rela ted
to changes in total OPEB liability and fiduciary net posit ion are recognized in OPEB expense systematically over time.

Amounts are first recognized in OPEB expe nse for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources relate d to OPEB and are to be recognized in future OPEB expenses.

The recognition period differs depending on the source of the gain or loss. The net difference between projected and actual earnings on OPEB plan investments are amortiz ed over 5 years, while all other deferred outflows and inflows are amortized over the average expected remaining service life of plan participants.

J. OPEB Income and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2024, the Department recogni zed OPEB income of $1,446,918. As of fiscal year
ended June 30, 2024, the Department reported deferred outflows of resources related to OPEB from the following sources:

Discount Rate Current Discount Discount Rate
-1% (5.25%) Rate (6.25%) +1% (7.25%)
Net OPEB Liability/(Asset) 177,681$ (4,566,085)$ (8,468,502)$ 1% Decrease Current Rate 1% Increase
Net OPEB Liability/(Asset) (9,044,973)$ (4,566,085)$ 1,014,604$ Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB contributions subsequent to
the measurement date 1,783,630$ -$
Differences between expected and actual
experience 94,664 5,156,242
Changes in assumptions - 2,701,586
Net difference between projected and actual
earnings on OPEB plan investments 1,262,633 - Total 3,140,927$ 7,857,828$
38 Packet Page. 871

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024
NOTE 8: OTHER POST-EMPLOYMEN T BENEFITS (OPEB) (CONTINUED) The $1,783,630 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability for the su bsequent fiscal year. Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows:

NOTE 9: JOINT VENTURES
A. Colton/San Bernardino Regional Tertiary Treatment and Water Reclamation Authority On August 2, 1994, the City of San Bernardi
no, through the Department form ed a joint powers authority with the City of Colton to construct, operate, use, and mainta in tertiary wastewater treatment, disposal, and water reclamations systems, incl uding the Regional Rapid Infiltration and Extraction Facility (RIX). This authority is governed by a separate board consisting of four members: two appointed by the City of San Bernardino through the Department’s BOWC and two appointed by the City Coun cil of the City of Colton. Construction of RIX was administered by the Santa Ana Watershed Project Author ity and was completed during 1996. Administration and operation were turned over at that time. The cities of San Bernardino and Colton each have a measurable equity interest in the net position of RIX in proportion to its contributions, which are based on an 80% / 20% split, respectively. Substantially all of the assets of RIX are in the form of capital assets. Annual revenues (in the form of contributions from the two member citi es) are equal to annual expenses. The Department's equity interest in this joint venture has been reported as an investment in joint venture in the accompanying statement of net position. Below are the most currently availabl e condensed audited financial statements of RIX as of June 30, 2024. The RIX complete financial statements may be obtained at City of San Bernardino Municipal Water Department at: 1350 South E. Street, San Bernardino, California 92418.

Deferred Outflows/
Year Ended (Deferred Inflows)
June 30, of Resources
2025 (1,957,124)$
2026 (1,970,133)
2027 (783,069)
2028 (1,092,921)
2029 (709,508)
Thereafter 12,224
Total (6,500,531)$
Assets 27,455,218$
Liabilities 1,780,085
Net position 25,675,133$
Revenues 6,835,578$
Expenses 7,691,075
Change in net position (855,497)
Net position-beginning 26,530,630
Net position-ending 25,675,133$
39 Packet Page. 872

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 9: JOINT VENTURES (CONTINUED)
B. West End Water Development, Treatment and Conservation Joint Powers Authority On August 1
5, 1990, the City of San Bernardino jo ined the West End Water Development, Treatment and Conservation Joint Powers Authority (WEJPA) as a financing vehicle for construction of water facilities. A three-member board consisting of one representative fr om each agency’s governing body governs the WEJPA.

This joint venture was formed to provide a financing vehicl e for the three member agencies. This joint venture is currently inactive.

NOTE 10: COMMITMENTS AND CONTINGENCIES
A. Risk Management
Risk manage
ment activities are recorded in all utility funds. Significant losses are covered by insurance for all major events except workers’ compensation, for which the Department retains risk of loss in conjunction with the City of San Bernardino’s risk management program for workers compensation. Settlement amounts have not exceeded insurance coverage for the current year or the prior three years. Insurance coverage has been increased over the past several years.

The Department records an estimated liability for workers’ compensation. Claims liabilities are based on estimates of the ultimate cost of reported claims and an estimate for claims incurred but not reported based upon historical experience. Workers’ compensation claims liability is not discounted.

The following are the changes in approximate aggregate liabilities for the years ended June 30, 2023 and June 30, 2024. During the past three fiscal (claims) ye ars, the Department had no settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in fiscal year 2024.

B. Litigation
In the ordinary co
urse of operations, the Department is su bject to claims and litigation from outside parties. After consultation with legal counsel, the Department believes t he ultimate outcome of such matters, if any, will not materially affect its financial condition.

Claims Liabilities Water Utility Sewer Utility Total
Balance, June 30, 2022 3,855,876$ 1,085,903$ 4,941,779$ Claims and changes in estimates 3,195,575 218,323 3,413,898 Balance, June 30, 2023 7,051,451 1,304,226 8,355,677 Claims and changes in estimates (1,064,922) (200,602) (1,265,524) Balance, June 30, 2024 5,986,529$ 1,103,624$ 7,090,153$ 40 Packet Page. 873

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 10: COMMITMENTS AND CONTINGENCIES (CONTINUED)
C. Construction Commitments
The following schedule summarizes the major contractual commitments as of June 30, 2024:

NOTE 11: FEDERAL AND STATE GRANTS
Grant funds received by the Department are subject to audit by the grantor agencies. Such an audit could lead to request
s for reimbursements to the grantor agencies for expenditures disallowed under the terms of the grant. The management of the Department believes that such disallowances, if any, would not be significant. The Department produces a Single Audit that details the use of grant and Consent Decree funds (see note 12 for information on the Consent Decree).

NOTE 12: CONSENT DECREE
In 1996, the City of San Bernardino filed a complaint against the United States of America, Departme nt of the Army to recover damages, response costs and other available remedies relating to contamination alleged to have originated at a World War II army installation known as Camp Ono. In March 2005, the United States District Court, Central Division entered judgment, in the form of a consent decree, in the matter of City of San Bernardino v. United States of America. The Consent Decree settl es the City’s and the State’s claims arising from the groundwater contamination allegedly caused by the Army. The Consent Decree contains a number of provisions obligating the City (through the Department) to operate and maintain the Newmark Groundwater Superfund Site (Site). The Site consists of two operable units, the Newmark Operable Unit, and the Muscoy Operable Unit. The Newmark Operable Unit was declared operational and functional in 1998. The Muscoy Operable unit was declared operational and functional in 2007.

The Consent Decree provided for a payment of $69 million from the Army to the City for performance of the work outlined in the Consent Decree. Upon ac ceptance of the Consent Decree, th e Department received title to all facilities constructed by the United States Environmental Protection Agency (EPA) of the Site and agreed to operate and maintain the groundwater extraction and treatment syst em for a period of 50 years. The $69 million payment consisted of $59 million for operations and maintenance and $10 million for the construction of certain capital facilities that would be required in t he future; the funds are subject to st rict limitations, contained in the Consent Decree, as to how the money may be spent.

Pursuant to the Consent Decree, $10 million, including inte rest earne d, has been set aside to be used only for (i) funding construction of treatment and directly related transmission systems that expand the Department’s capacity to deliver potable water and (ii) funding work performed by the Department to complete construction of the Muscoy Operable Unit extraction system. These capital facility funds may not be used for costs incurred to operate, maintain, repair, or retrofit components of the site extraction of treatment systems constructed by EPA.

CIP Project Name/Description CIP Project #
PO/Contract
Amount
Expenditures
to date
Remaining
Commitments
SBMWD Water Facilities Relocation Phase I C1410589/C1700196 24,002,728 4,882,643 19,120,085 Tertiary Treatment System C1700194 14,083,357 6,622,994 7,460,363 East Influent Siphon - Phases I and II C2450071 12,237,650 5,857,395 6,380,255 Reservoir Seismic Upgrades Phase III for Devore C2311098 11,232,000 3,041,427 8,190,573 Verdemont 2300 Pz. East Water Facilities C1710828 10,115,361 1,699,847 8,415,514 Emergency Drying Beds Lining C2300286 6,750,433 4,934,576 1,815,857 2021/2022 Consultant CM and Inspection Svcs C1410689/C1700196 2,154,843 204,444 1,950,399 Long-term Biosolids Handling and Disposal Svc Cont 1,868,000 912,799 955,201 3rd Party CM and Inspection Services C1700194 1,718,368 984,132 734,236 CM and Inspection Services for Verdemont 2300 PZ Svc Cont 1,437,311 236,864 1,200,447 GPA Agreement with Itron, Inc. for AMI C2211020 1,289,363 - 1,289,363 Interactive O&M Manual M2300295/M2300296 1,250,000 733,272 516,728 Inspection Services for Four Steel Reservoirs C2311098 1,174,799 263,758 911,041 Eng. Dsgn. Multiple CIP Water Pipeline Replacements C1700194 1,056,319 270,321 785,998 Digester B Replacement C2100254 972,429 178,964 793,465 41 Packet Page. 874

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes to the Basic Financial Statements
For the Year Ended June 30, 2024

NOTE 12: CONSENT DECREE (COTNINUED)
In March 2006, the Department entered into a Guar anteed Investment Contract with AIG Match Funding Corporation. The Department invested $16,482,039 of excess Consent Decr ee funds into an interest-bearing Escrow Fund investment with an interest rate of 4. 95% per annum. These funds were invested to pay costs associated with the water facilities defined in the Consent Decree for the years 2035-2056. An additional $50 million was used to purchase a blended insurance policy to provide a financial vehicle that provides cost gap coverage for the first 30 years of expenses.

The terms of the Guaranteed Investment Contract only provided the Department with the position of a secured creditor with respect to an AIG bankruptcy. As concerns arose regarding AIG’s financial credibility, in October 2009, the Department negotiated and accepted a “payout” in the amount of $18,661,876 which represented the principal and accrued interest as of that date. These funds are cu rrently invested in a diversified portfolio managed by PFM Asset Management and are presented in more detail in Note 3.

NOTE 13: SUBSEQUENT EVENTS
The Department evaluated subsequent events for recognition and disclosure through November 27, 2024, the date on which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2024, th at required recognition or disclosure in these financial statements.
42 Packet Page. 875
5(48,5('6833/(0(17$5<,1)250$7,21
43 7+,63$*(,17(17,21$//</()7%/$1.
44 Packet Page. 877

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Schedule of Proportationate Share of Net Pension Liability As of June 30, for the Last Ten Fiscal Years
Proportionate Share Plan's Fiduciary
Proportion of the Proportionate of the Net Pension Net Position as a Reporting Date 1 Net Pension Share of Net Liability as a % of % of the Total as of June 30, Liability Pension Liability Covered Payroll Covered Payroll Pension Liability 2024 36% 72,510,649$ 22,022,839$ 329% 70%
2023 36% 70,141,831 20,821,422 337% 70%
2022 36% 40,743,630 20,103,974 203% 82%
2021 36% 64,101,577 18,770,894 341% 71%
2020 36% 60,531,689 17,169,126 353% 72%
2019 36% 56,856,346 15,357,635 370% 72%
2018 36% 58,595,075 14,876,739 394% 71%
2017 36% 53,652,216 14,177,779 378% 72%
2016 36% 44,917,863 14,087,004 319% 76%
2015 36% 40,932,398 14,017,065 292% 78%
Notes to Schedule of Proportionate Share of the Net Pension Liability:
1 The proportions and proportionate share of the net pension liability are measured as of one year behind the reporting date. Refer to notes to basic financial statements.

Benefit Changes : None
Changes of Assumptions : None
45 Packet Page. 878

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios As of June 30, for the Last Ten Fiscal Years 1
2024 2023 2022
Measurement Date 6/30/2023 6/30/2022 6/30/2021

TOTAL OPEB LIABILITY
Service cost 809,659$ 984,915$ 956,228$ Interest on total pension liability 2,066,543 2,336,141 2,240,570 Changes of benefit terms - - -
Changes of assumptions - (2,619,432) -
Difference between expected and actual experience 71,864 (3,119,394) - Benefit payments, including refunds of employee
contributions (1,702,700) (1,738,412) (1,654,270) Net change in total OPEB liability 1,245,366 (4,156,182) 1,542,528 Total OPEB liability-beginning 33,106,372 37,262,554 35,720,026 Total OPEB liability-ending (a) 34,351,738 33,106,372 37,262,554

PLAN FIDUCIARY NET POSITION
Contributions-employer 2,331,720 1,738,412 2,737,270 Net investment income 2,970,846 (4,469,586) 7,886,756 Benefit payments, including refunds of employee
contributions (1,702,700) (1,738,412) (1,654,270) Administrative expense (10,161) (11,068) (10,052)
Net change in fiduciary net position 3,589,705 (4,480,654) 8,959,704 Plan fiduciary net position-beginning 35,328,118 39,808,772 30,849,068 Plan fiduciary net position-ending (b) 38,917,823 35,328,118 39,808,772 Net OPEB liability/(asset) (a) - (b) (4,566,085)$ (2,221,746)$ (2,546,218)$ Plan fiduciary net position as a percentage of the
total OPEB liability 113% 107% 107%
Covered-employee payroll 28,172,331$ 25,597,944$ 21,203,035$ Plan net OPEB liability/(asset) as a percentage of
covered-employee payroll -16% -9% -12%
Notes to Schedule of Changes in the Net OPEB Liability and Related Ratios:

Benefit Changes : None
Changes of Assumptions : None
1 Fiscal year 2018 was the first year of GASB Statement No. 75 implementation; therefore only seven years are shown.
46 Packet Page. 879
2021 2020 2019 2018
6/30/2020 6/30/2019 6/30/2018 6/30/2017
1,352,161$ 1,312,778$ 1,067,080$ 1,036,000$ 2,651,878 2,512,269 2,449,681 2,322,000 - - (640,849) -
(1,784,735) - (1,065,369) -
(6,747,960) - 523,834 -
(1,658,421) (1,602,932) (1,554,389) (1,118,000) (6,187,077) 2,222,115 779,988 2,240,000
41,907,103 39,684,988 38,905,000 36,665,000 35,720,026 41,907,103 39,684,988 38,905,000 2,602,421 2,615,932 2,673,389 2,602,000 1,564,423 2,036,956 1,848,262 2,204,000 (1,658,421) (1,602,932) (1,554,389) (1,118,000) (8,657) (8,061) (7,855) (7,000)
2,499,766 3,041,895 2,959,407 3,681,000 28,349,302 25,307,407 22,348,000 18,667,000 30,849,068 28,349,302 25,307,407 22,348,000 4,870,958$ 13,557,801$ 14,377,581$ 16,557,000$ 86% 68% 64% 57%
19,691,462$ 17,981,957$ 16,768,495$ 19,132,000$ 25% 75% 86% 87%
Benefit Changes : None
Changes of Assumptions : None
47 Packet Page. 880

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Schedules of Plan Contributions
As of June 30, for the Last Ten Fiscal Years 1
Covered/ Contribution as a
Fiscal Year Actuarially Actual Contribution Covered- % of Covered/ Ending Determined Employer Deficiency Employee Covered Employee June 30, Contribution Contributions (Excess) Payroll Payroll 2024 7,744,386$ 7,744,386$ -$ 24,086,933$ 32%
2023 7,304,613 7,304,613 - 22,022,839 33%
2022 6,656,656 6,656,656 - 20,821,422 32%
2021 6,492,199 6,492,199 - 20,103,974 32%
2020 5,814,288 5,814,288 - 18,770,894 31%
2019 5,251,737 5,251,737 - 17,169,126 31%
2018 4,467,847 4,467,847 - 15,357,635 29%
2017 3,886,888 3,886,888 - 14,876,739 26%
2016 3,607,950 3,607,950 - 14,177,779 25%
2015 2,979,160 2,979,160 - 14,087,004 21%
2024 898,426$ 1,783,630$ (885,204)$ 26,706,880$ 7% 2023 1,559,000 2,327,743 (768,743) 28,172,331 8%
2022 1,572,000 1,738,412 (166,412) 25,597,944 7%
2021 1,652,000 2,737,270 (1,085,270) 21,203,035 13%
2020 2,728,000 2,602,421 125,579 19,691,462 13%
2019 2,760,000 2,615,932 144,068 17,981,957 15%
2018 2,592,000 2,673,000 (81,000) 16,768,495 16%
Notes to Schedule of Plan Contributions:

Valuation Date: June 30, 2021 (pension plan); June 30, 2022 (OPEB plan) Actuarial Cost Method: Entry Age Normal
Asset Valuation Method: Fair Value of Assets
Inflation: 2.3% (pension plan); 2.5% (OPEB plan)
Salary Increases: Varies by entry age and service
Payroll Growth: 2.8% (pension plan)
Investment Rate of Return: 6.8% (pension plan); 6.25% (OPEB plan) Retirement Age: Based on 2017 CalPERS Experience Study, available at CalPERS website (pension) Mortality: 2017 CalPERS Experience Study (pension); 2021 CalPERS Experience Study (OPEB) Mortality Improvement (OPEB): 80% of Scale MP-2020
The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2023-24 were derived from the following:

Medical Trend (OPEB): 6.8% for Non-Medicare and 5.4% for Medicare decreasing to an ultimate rate of 3.9% in 2076 and later years.
1 Fiscal year 2018 was the first year of GASB Statement No. 75 implementation; therefore only seven years for the Other Post- Employment Benefits Plan are shown.

Other Post-Employment Benefits Plan
Pension Plan
48 Packet Page. 881
67$7,67,&$/6(&7,21
49 7+,63$*(,17(17,21$//</()7%/$1.
50 Packet Page. 883

FINANCIAL TRENDS
These schedules contain trend informaton to help the
reader understand how the Department's financial performance and well-being have changed over time.
51 Packet Page. 884
7+,63$*(,17(17,21$//</()7%/$1.
52 Packet Page. 885
City of San Bernardino Municipal Water Department
Changes in Net Position
Last Ten Fiscal Years
Fiscal Year
Ended
Total
Operating
Revenue
Total
Operating
Expense
Operating
Income
Total Non-
Operating
Income
(Expense)
Total
Contributed
Capital
Changes in
Net Position
6/30/2015 57,805,304 55,074,661 2,730,643 3,801,830 4,977,945 11,510,418 6/30/2016 55,376,650 53,529,824 1,846,826 2,059,111 4,271,325 8,177,262 6/30/2017 * 64,488,587 61,895,872 2,592,715 8,431,207 21,995,016 33,018,938 6/30/2018 76,620,620 68,734,958 7,885,662 (1,872,712) 4,854,784 10,867,734 6/30/2019 77,094,723 66,921,125 10,173,598 (7,553,171) 10,121,344 12,741,771 6/30/2020 78,184,698 70,778,987 7,405,711 748,213 4,604,699 12,758,623 6/30/2021 80,831,467 77,247,428 3,584,039 (1,980,043) 6,605,556 8,209,552 6/30/2022 83,517,341 72,109,935 11,407,406 (2,315,279) 8,071,944 17,164,071 6/30/2023 89,113,376 87,785,516 1,327,860 1,397,918 8,613,085 11,338,863 6/30/2024 92,725,810 103,703,223 (10,977,413) 7,923,929 7,855,349 4,801,865 Source: Department's annual reports
*Fiscal Years 2014-2016 contain only the Sewer Treatment and Water Utility Funds. The Sewer Collections Fund was transferred to the Department on May 1, 2017.
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

THOUSANDS
Changes in Net Position - Combined Funds
Changes in Net Position
53 Packet Page. 886
City of San Bernardino Municipal Water Department
Water Fund
Changes in Net Position
Last Ten Fiscal Years
Fiscal Year
Ended
Total
Operating
Revenue
Total
Operating
Expense
Operating
Income
Total Non-
Operating
Income
(Expense)
Total
Contributed
Capital
Changes in
Net Position
6/30/2015 33,121,128 35,504,582 (2,383,454) 2,702,953 3,905,104 4,224,603 6/30/2016 30,001,871 34,834,362 (4,832,491) 2,283,230 2,812,192 262,931 6/30/2017 33,358,907 37,074,670 (3,715,763) (546,280) 2,194,093 (2,067,950) 6/30/2018 38,280,016 34,446,105 3,833,911 1,198,161 3,323,031 8,355,103 6/30/2019 39,099,960 33,995,037 5,104,923 1,829,448 2,737,031 9,671,402 6/30/2020 40,267,376 38,626,151 1,641,225 1,655,628 2,002,637 5,299,490 6/30/2021 42,758,192 42,480,855 277,337 791,527 3,861,010 4,929,874 6/30/2022 43,150,124 37,626,046 5,524,078 483,961 4,718,864 10,726,903 6/30/2023 44,091,833 46,710,892 (2,619,059) 1,380,979 5,976,186 4,738,106 6/30/2024 45,985,090 53,996,580 (8,011,490) 6,977,920 5,130,185 4,096,615 Source: Department's annual reports
(3,000)
(1,000)
1,000
3,000
5,000
7,000
9,000
11,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

THOUSANDS
Changes in Net Position -Water Fund
Changes in Net Position
54 Packet Page. 887
City of San Bernardino Municipal Water Department
Sewer Fund
Changes in Net Position
Last Ten Fiscal Years
Fiscal Year
Ended
Total
Operating
Revenue
Total
Operating
Expense
Operating
Income
Total Non-
Operating
Income
(Expense)
Total
Contributed
Capital
Changes in
Net Position
6/30/2015 24,734,425 19,620,328 5,114,097 1,098,877 1,072,841 7,285,815 6/30/2016 25,410,740 18,731,423 6,679,317 (224,119) 1,459,133 7,914,331 6/30/2017 28,612,019 24,139,878 4,472,141 (3,624,658) 1,355,494 2,202,977 6/30/2018 30,733,453 22,697,491 8,035,962 (3,275,704) 1,280,280 6,040,538 6/30/2019 30,546,181 24,866,681 5,679,500 (9,967,309) 7,092,785 2,804,976 6/30/2020 30,397,092 24,648,411 5,748,681 (1,537,179) 2,257,330 6,468,832 6/30/2021 30,361,116 26,986,385 3,374,731 (2,782,481) 2,502,263 3,094,513 6/30/2022 34,171,160 26,794,390 7,376,770 (2,288,006) 2,294,541 7,383,305 6/30/2023 * 45,544,260 41,597,341 3,946,919 16,939 2,636,899 6,600,757 6/30/2024 * 47,385,433 50,351,356 (2,965,923) 946,009 2,725,164 705,250 Source: Department's annual reports
* The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund.
(2,000)
-
2,000
4,000
6,000
8,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

THOUSANDS
Changes in Net Position -Sewer Fund
Changes in Net Position
55 Packet Page. 888
City of San Bernardino Municipal Water Department
Sewer Collection Fund
Changes in Net Position
Last Ten Fiscal Years
Fiscal Year
Ended
Total
Operating
Revenue
Total
Operating
Expense
Operating
Income
Total Non-
Operating
Income
(Expense)
Total
Contributed
Capital
Changes in
Net Position
6/30/2015 n/a n/a n/a n/a n/a n/a
6/30/2016 n/a n/a n/a n/a n/a n/a
6/30/2017 * 2,891,203 1,054,866 1,836,337 12,602,145 18,445,429 32,883,911 6/30/2018 7,682,946 11,667,157 (3,984,211) 204,831 251,473 (3,527,907) 6/30/2019 7,562,097 8,172,922 (610,825) 584,690 291,528 265,393 6/30/2020 7,666,309 7,650,504 15,805 629,764 344,732 990,301 6/30/2021 7,794,418 7,862,447 (68,029) 10,911 242,283 185,165 6/30/2022 6,394,623 7,888,065 (1,493,442) (511,234) 1,058,539 (946,137) 6/30/2023 ** - - - - - -
6/30/2024 - - - - - -
** The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund.

Source: Department's annual reports
* The Sewer Collection Utility was transferred to the Water Department on May 1, 2017 so prior year data is unavailable.
(5,000)
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

THOUSANDS
Changes in Net Position -Sewer Collection Fund
Changes in Net Position
56 Packet Page. 889
City of San Bernardino Municipal Water Department
Net Position by Component
Last Ten Fiscal Years
Fiscal Year
Ended
Net Investment in
Capital Assets
Restricted Net
Position
Unrestricted
Net Position
Total Net
Position
6/30/2015 223,053,269 7,633,049 12,510,969 243,197,287 6/30/2016 235,670,073 7,814,086 7,890,390 251,374,549 6/30/2017 * 250,399,481 7,944,758 26,049,248 284,393,487 6/30/2018 248,653,963 8,363,037 23,912,311 280,929,311 6/30/2019 259,671,498 - 33,999,894 293,671,392 6/30/2020 255,270,720 - 51,158,985 306,429,705 6/30/2021 253,288,732 - 61,350,525 314,639,257 6/30/2022 250,324,366 - 81,696,554 332,020,920 6/30/2023 251,609,753 2,221,746 89,528,284 343,359,783 6/30/2024 275,842,317 4,566,085 67,753,246 348,161,648 Source: Department's annual reports
* Fiscal Years 2014-2016 contain only Sewer Treatment and Water Utility Funds. The Sewer Collections Fund was transferred to the Department on May 1, 2017. -
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

THOUSANDS

NET POSITION BY COMPONENT
COMBINED (IN 1000S)
Net Investment in Capital Assets Restricted Net Position Unrestricted Net Position 57 Packet Page. 890
City of San Bernardino Municipal Water Department
Net Position by Component - Water Fund
Last Ten Fiscal Years
Fiscal Year
Ended
Net Investment in
Capital Assets
Restricted Net
Position
Unrestricted Net
Position
Total Net
Position
6/30/2015 166,963,238 n/a (15,152,937) 151,810,301 6/30/2016 169,730,998 n/a (17,657,766) 152,073,232 6/30/2017 169,569,746 n/a (19,564,464) 150,005,282 6/30/2018 171,794,031 n/a (20,699,066) 151,094,965 6/30/2019 177,158,535 n/a (16,391,858) 160,766,677 6/30/2020 168,992,121 n/a (2,926,264) 166,065,857 6/30/2021 168,553,917 n/a 2,441,814 170,995,731 6/30/2022 168,172,810 n/a 13,549,824 181,722,634 6/30/2023 172,417,321 1,152,463 12,890,956 186,460,740 6/30/2024 180,168,996 2,414,089 7,974,270 190,557,355 Source: Department's annual reports
(50,000)
-
50,000
100,000
150,000
200,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

THOUSANDS
NET POSITION BY COMPONENT:

WATER FUND (IN 1000S)
Net Investment in Capital Assets Restricted Net Position Unrestricted Net Position 58 Packet Page. 891
City of San Bernardino Municipal Water Department
Net Position by Component - Sewer Fund
Last Ten Fiscal Years
Fiscal Year
Ended
Net Investment in
Capital Assets
Restricted Net
Position
Unrestricted
Net Position
Total Net
Position
6/30/2015 56,090,031 7,633,049 27,663,906 91,386,986 6/30/2016 65,939,075 7,814,086 25,548,156 99,301,317 6/30/2017 62,633,783 7,944,758 30,925,753 101,504,294 6/30/2018 59,011,109 8,363,037 33,041,181 100,415,327 6/30/2019 63,243,033 n/a 40,040,285 103,283,318 6/30/2020 66,906,874 n/a 42,845,276 109,752,150 6/30/2021 64,650,540 n/a 48,196,123 112,846,663 6/30/2022 60,853,472 n/a 59,251,320 120,104,792 6/30/2023 * 79,192,432 1,069,283 76,637,328 156,899,043 6/30/2024 95,673,321 2,151,996 59,778,976 157,604,293 Source: Department's annual reports
* The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund. -
50,000
100,000
150,000
200,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

THOUSANDS
NET POSITION BY COMPONENT:

SEWER FUND (IN 1000S)
Net Investment in Capital Assets Restricted Net Position Unrestricted Net Position 59 Packet Page. 892
City of San Bernardino Municipal Water Department
Net Position by Component - Sewer Collection Fund
Last Ten Fiscal Years
Fiscal Year
Ended
Net Investment in
Capital Assets
Restricted Net
Position
Unrestricted
Net Position
Total Net
Position
6/30/2015 n/a n/a n/a n/a
6/30/2016 n/a n/a n/a n/a
6/30/2017 * 18,195,952 n/a 14,687,959 32,883,911 6/30/2018 17,848,823 n/a 11,507,181 29,356,004 6/30/2019 19,269,930 n/a 10,351,467 29,621,397 6/30/2020 19,371,725 n/a 11,239,973 30,611,698 6/30/2021 20,084,275 n/a 10,712,588 30,796,863 6/30/2022 21,298,084 n/a 8,895,410 30,193,494 6/30/2023 ** - - - -
6/30/2024 ** - - - -
** The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund.

Source: Department's annual reports
* The Sewer Collection Utility was transferred to the Water Department on May 1, 2017 so prior year data is unavailable.
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024

THOUSANDS
NET POSITION BY COMPONENT: SEWER
COLLECTION FUND (IN 1000S)
Net Investment in Capital Assets Restricted Net Position Unrestricted Net Position 60 Packet Page. 893
City of San Bernardino Municipal Water Department
Water Fund Revenue Type
Last Ten Fiscal Years
Fiscal Year
Ended Water Sales Service
Charges/Fees
Other
Services
Total Operating
Revenue
Interest
Income
Rental
Income Other Income Gain on asset
disposition
Noncapital
grant funds
Total Non
Operating
Income
6/30/2015 31,217,534 1,789,654 113,940 33,121,128 54,786 181,809 545,840 - 2,089,637 2,872,072 6/30/2016 28,293,790 1,604,472 103,609 30,001,871 63,566 134,845 495,298 - 1,696,219 2,389,928 6/30/2017 31,893,209 1,347,993 117,705 33,358,907 31,504 203,186 301,833 - 2,047,946 2,584,469 6/30/2018 36,825,634 1,350,623 103,753 38,280,010 975,144 208,925 206,645 46,356 1,776,883 3,213,953 6/30/2019 37,775,285 1,237,903 86,772 39,099,960 903,399 206,360 867,763 12,669 1,891,729 3,881,920 6/30/2020 39,162,485 1,020,818 84,073 40,267,376 747,477 245,784 651,031 - 1,991,747 3,636,039 6/30/2021 41,760,745 910,628 86,819 42,758,192 29,541 286,553 306,785 83,682 2,011,099 2,717,660 6/30/2022 42,175,623 905,674 68,828 43,150,124 - 347,849 530,326 28,846 1,910,435 2,817,456 6/30/2023 42,635,542 1,427,234 29,057 44,091,833 1,126,039 267,668 140,266 4,859 1,684,006 3,222,838 6/30/2024 44,697,545 1,252,884 34,661 45,985,090 2,544,768 358,472 206,697 85,041 5,566,773 8,761,751 Source: Department's annual reports
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000Thousands
Operating Revenue by Type-Water Fund
Other Services
Service Charges/Fees
Water Sales
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000Thousands
Non-Operating Revenue by Type: Water Fund
Noncapital grant funds
Gain on asset disposition
Other Income
Rental Income
Interest Income
61 Packet Page. 894
City of San Bernardino Municipal Water Department
Sewer Fund Revenue by Type
Last Ten Fiscal Years
Fiscal Year
Ended
Sewer Treatment
Revenue Industrial Waste
Other
Operating
Revenue
Total Operating
Revenue
Interest
Income
Rental
Income Other Income
Gain on Asset
Disposition
/Joint Venture
Total Non
Operating
Income
6/30/2015 24,399,415 335,010 - 24,734,425 481,211 700 498,247 345,884 1,326,042 6/30/2016 25,030,569 380,171 - 25,410,740 658,456 41,498 359,800 - 1,059,754 6 /30/2017 28,022,259 589,760 - 28,612,019 23,391 15,908 - - 3 9,299 6/30/2018 30,039,110 694,342 - 30,733,452 - 12,481 - 6,063 1 8,544 6/30/2019 29,861,192 684,989 - 30,546,181 1,361,936 - - 9,417 1 ,371,353 6/30/2020 29,712,734 684,358 - 30,397,092 1,322,367 - - - 1,322,367 6/30/2021 29,587,597 773,519 - 30,361,116 19,472 - - - 1 9,472 6/30/2022 33,347,882 823,278 - 34,171,160 - - - - - 6/30/2023 * 44,519,998 1,024,262 - 45,544,260 1,251,526 - (15,420) - 1,236,106 6 /30/2024 * 46,224,150 1,161,283 - 47,385,433 1,521,068 - - 599,981 2,121,049 S
ource: Department's annual reports
* The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund.
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000Thousands
Operating Revenue by Type-Sewer Fund
Other Operating Revenue
Industrial Waste
Sewer Treatment Revenue
(500)
-
500
1,000
1,500
2,000
2,500Thousands
Non-Operating Revenue by Type - Sewer Treatment Fund
Gain on Asset Disposition
/Joint Venture
Other Income
Rental Income
Interest Income
62 Packet Page. 895
City of San Bernardino Municipal Water Department
Sewer Collection Fund Revenue by Type
Last Ten Fiscal Years
Fiscal Year
Ended
Sewer Collection
Revenue
Service
Charges/Fees
Other
Operating
Revenue
Total Operating
Revenue
Interest
Income Rental Income Other
Income
Gain on asset
disposition/Cont
ribution from
City
Total Non
Operating
Income
6/30/2015 n/a n/a n/a n/a n/a n/a n/a n/a n/a
6/30/2016 n/a n/a n/a n/a n/a n/a n/a n/a n/a
6/30/2017 * 2,860,627 30,576 - 2,891,203 28,315 - - 12,580,781 12,609,096 6/30/2018 7,679,020 3,926 - 7,682,946 201,663 - 251,473 3,168 456,304 6/30/2019 7,555,960 6,137 - 7,562,097 584,685 - 5 - 584,690 6/30/2020 7,656,675 9,634 - 7,666,309 626,761 - - 3,003 629,764 6/30/2021 7,759,318 35,100 - 7,794,418 1,605 - 9,306 - 10,911 6/30/2022 6,306,843 87,780 - 6,394,623 - - -
6/30/2023 ** - - - - - - - - -
6/30/2024 ** - - - - - - - - -
** The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund.

Source: Department's annual reports
* The Sewer Collection Utility was transferred to the Water Department on May 1, 2017 so prior year data is unavailable.
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 Thousands
Operating Revenue by Type-Sewer Collection
Fund
Other Operating Revenue
Service Charges/Fees
Sewer Collection Revenue
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000Thousands
Non-Operating Revenue by Type - Sewer Collections Fund
Gain on asset
disposition/Contribution from
City
Other Income
Rental Income
63 Packet Page. 896
City of San Bernardino Municipal Water Department
Water Fund Expenses by Type
Last Ten Fiscal Years
Fiscal Year
Ended
Administration &
Customer Service
Plant Operations
and Distribution Engineering Maintenance
Depreciation
and
Amortization
Total Operating
Expense
Interest
Expense
Loss on asset
disposition
Other Non-
operating
expense
Total Non-
Operating
Expense
6/30/2015 13,244,552 1 2,467,017 2,439,170 1,988,719 5 ,365,124 35,504,582 169,119 - - 169,119 6/30/2016 13,313,085 1 1,406,861 2,326,551 1,978,534 5 ,809,331 34,834,362 106,698 - - 106,698 6/30/2017 13,971,106 1 2,436,501 2,329,142 1,859,871 6 ,478,050 37,074,670 3,130,749 - - 3,130,749 6/30/2018 11,300,091 1 2,337,763 1,943,659 2,292,625 6 ,571,957 34,446,095 2,015,792 - - 2,015,792 6/30/2019 9,987,198 1 2,853,400 2,253,333 2,387,889 6 ,512,907 33,994,727 1,993,624 - - 1,993,624 6/30/2020 13,418,886 1 2,472,633 2,641,641 2,528,441 7 ,564,550 38,626,151 1,955,317 25,094 - 1 ,980,411 6/30/2021 14,405,557 1 4,045,232 3,064,623 3,126,556 7 ,838,887 42,480,855 1,926,133 - - 1 ,926,133 6/30/2022 11,921,394 1 4,603,130 3,001,100 2,846,997 5 ,253,425 37,626,046 1,877,325 4 56,170 2 ,333,495 6/30/2023 17,923,515 1 5,374,571 2,976,680 3,138,031 7 ,298,095 46,710,892 1,841,859 1 ,841,859 6/30/2024 17,630,159 1 7,829,965 3,074,606 3,330,387 1 2,131,463 53,996,580 1,783,831 1,783,831 Source: Department's annual reports
-
10,000
20,000
30,000
40,000
50,000
60,000Thousands
Operating Expenses by Type-Water Fund
Depreciation and Amortization
Maintenance
Engineering
Plant Operations and Distribution
Administration & Customer Service
-
500
1,000
1,500
2,000
2,500
3,000
3,500
6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 Thousands
Non-Operating Expense by Type: Water Fund
Other Non-operating expense
Loss on asset disposition
Interest Expense
64 Packet Page. 897
City of San Bernardino Municipal Water Department
Sewer Fund Expenses by Type
Last Ten Fiscal Years
Fiscal Year
Ended
Administration &
Customer Service Plant Operations Engineering Maintenance Depreciation
and
Amortization
Total Operating
Expense
Interest
Expense
Loss on Asset
Disposition
/Joint Venture
Other Non-
operating
expense
Total Non-
Operating
Expense
6/30/2015 4,016,198 9,292,501 534,226 2,906,853 2,870,550 19,620,328 227,165 - - 227,165 6/30/2016 4,299,808 9,800,283 464,554 2,874,352 1,292,426 18,731,423 167,795 1,116,078 - 1,283,873 6/30/2017 6,799,639 9,620,639 480,951 3,135,686 4,102,963 24,139,878 1,300,263 2,321,485 42,209 3,663,957 6/30/2018 5,690,507 9,056,518 500,009 3,281,446 4,157,550 22,686,030 1,376,009 1,247,670 733,583 3,357,262 6/30/2019 6,775,552 10,118,506 617,855 3,041,620 4,313,147 24,866,681 1,367,375 1,553,261 - 2,920,635 6/30/2020 5,702,973 10,470,501 369,422 3,508,534 4,596,980 24,648,411 1,313,151 1,546,396 - 2,859,546 6/30/2021 6,292,313 11,986,858 387,932 3,811,413 4,507,869 26,986,385 1,283,861 1,479,729 38,363 2,801,953 6/30/2022 * 3,666,547 14,648,530 385,517 3,764,618 4,329,178 26,794,390 1,249,715 - * 1,038,291 2,288,006 6/30/2023 ** 12,396,331 17,749,049 1,657,022 4,434,120 5,360,819 41,597,341 1,219,167 - * - 1,219,167 6/30/2024 ** 14,539,325 17,524,663 2,030,808 4,845,501 11,411,059 50,351,356 1,175,040 - * - 1,175,040 Source: Department's annual reports
* Joint Venture expense relating to RIX operations are now classified as Operations beginning in 2022. ** The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund.
-
10,000
20,000
30,000
40,000
50,000
60,000
6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 6/30/2024 Thousands
Operating Expenses by Type-Sewer Fund
Depreciation and Amortization
Maintenance
Engineering
Plant Operations
Administration & Customer Service
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000Thousands
Non-Operating Expense by Type: Sewer Fund
Other Non-operating expense
Loss on Asset Disposition /Joint Venture
Interest Expense
65 Packet Page. 898
City of San Bernardino Municipal Water Department
Sewer Collection Fund Expenses by Type
Last Ten Fiscal Years
Fiscal Year
Ended
Administration &
Customer Service Plant Operations Engineering Maintenance Depreciation and Amortization
Total Operating
Expense
Interest
Expense
Loss on Asset
Disposition
Other Non-
operating
expense
Total Non-
Operating
Expense
6/30/2015 * - - - - - - - - - -
6/30/2016 * - - - - - - - - - -
6/30/2017 * 314,265 492,675 - - 247,926 1,054,866 - - 6,951 6,951 6/30/2018 2,211,188 354,423 8,071,891 - 1,029,648 11,667,150 - - - - 6/30/2019 1,608,074 439,660 5,051,773 - 1,073,415 8,172,922 - - - - 6/30/2020 1,898,461 483,316 4,124,631 - 1,144,096 7,650,504 - - - - 6/30/2021 3,497,969 533,619 2,549,257 - 1,281,602 7,862,447 - - - - 6/30/2022 2,535,314 590,600 3,333,804 - 1,428,347 7,888,065 - - 511,234 511,234 6/30/2023 ** - - - - - - - - - -
6/30/2024 ** - - - - - - - - - -
** The FY 2023 budget has combined the Sewer Treatment Fund and the Sewer Collection Fund into one fund. Now called the Sewer Fund.

Source: Department's annual reports
* The Sewer Collection Utility was transferred to the Water Department on May 1, 2017 so prior year data is unavailable. -
2,000
4,000
6,000
8,000
10,000
12,000
14,000Thousands
Operating Expenses by Type-Sewer Collection Fund
Depreciation and Amortization
Maintenance
Engineering
Plant Operations
Administration & Customer Service
-
100
200
300
400
500
600Thousands
Non-Operating Expense by Type: Sewer Collection Fund
Other Non-operating expense
Loss on Asset Disposition
Interest Expense
66 Packet Page. 899

DEBT CAPACITY INFORMATION
These schedules contain information to help the reader assess the affordability of the Department's current level of
outstanding debt and ability to issue debt in the future. 67 Packet Page. 900
7+,63$*(,17(17,21$//</()7%/$1.
68 Packet Page. 901
City of San Bernardino Municipal Water Department
Water Fund Debt Service Coverage
Last Ten Fiscal Years
Fiscal Year
Ended
Total
Operating
Revenue
Net Operating
Expenses
(Excluding)
Depreciation
Net Operating
Income (Loss)
Net Non-
Operating
Income/
(Expense)
Amount
Available for
Debt Service
Principal Interest Total Debt
Service
Coverage
Ratio
6/30/2015 33,121,128 30,139,458 2,981,670 2,702,953 5,684,623 1,748,054 570,434 2,318,488 2.45 6/30/2016 30,001,871 29,025,031 976,840 2,283,230 3,260,070 1,813,594 523,274 2,336,868 1.40 6/30/2017 33,358,907 30,596,620 2,762,287 2,584,468 5,346,755 246,887 218,819 465,706 11.48 6/30/2018 38,280,016 27,874,148 10,405,868 3,167,597 13,573,465 770,000 2,223,838 2,993,838 4.53 6/30/2019 39,099,960 27,482,130 11,617,830 3,810,403 15,428,233 795,000 2,196,388 2,991,388 5.16 6/30/2020 40,267,376 31,061,601 9,205,775 3,636,039 12,841,814 830,000 2,163,888 2,993,888 4.29 6/30/2021 42,758,192 34,641,968 8,116,224 2,633,978 10,750,202 860,000 2,130,088 2,990,088 3.60 6/30/2022 43,150,124 32,372,621 10,777,503 2,332,440 13,109,943 900,000 2,090,388 2,990,388 4.38 6/30/2023 44,091,833 39,412,797 4,679,036 3,217,979 7,897,015 950,000 2,044,138 2,994,138 2.64 6/30/2024 45,985,090 41,865,117 4,119,973 8,676,710 12,796,683 995,000 1,995,513 2,990,513 4.28 Source: Department's annual reports
69 Packet Page. 902
City of San Bernardino Municipal Water Department
Sewer Fund Debt Service Coverage
Last Ten Fiscal Years
Fiscal Year
Ended
Total
Operating
Revenue
Net Operating
Expenses
(Excluding)
Depreciation
Net Operating
Income (Loss)
Net Non-
Operating
Income/
(Expense)
Amount
Available for
Debt Service
Principal Interest Total Debt
Service
Coverage
Ratio
6/30/2015 25,410,740 16,749,778 8,660,962 1,098,877 9,759,839 4,629,425 568,888 5,198,313 1.88 6/30/2016 25,410,740 17,438,997 7,971,743 (224,119) 7,747,624 300,000 - 300,000 25.83 6/30/2017 28,612,019 20,036,916 8,575,103 39,299 8,614,402 300,000 132,659 432,659 19.91 6/30/2018 30,733,453 18,539,941 12,193,512 (721,103) 11,472,409 890,000 1,382,782 2,272,782 5.05 6/30/2019 30,546,181 20,841,699 9,704,482 1,361,935 11,066,417 910,000 1,356,125 2,266,125 4.88 6/30/2020 30,397,092 20,051,431 10,345,661 1,322,367 11,668,028 935,000 1,331,225 2,266,225 5.15 6/30/2021 30,361,116 22,478,516 7,882,600 19,472 7,902,072 665,000 1,301,900 1,966,900 4.02 6/30/2022 34,171,160 22,465,212 11,705,948 (1,021,981) 10,683,967 700,000 1,267,775 1,967,775 5.43 6/30/2023 45,544,260 36,236,522 9,307,738 1,251,526 10,559,264 735,000 1,231,900 1,966,900 5.37 6/30/2024 47,385,433 38,940,297 8,445,136 1,521,068 9,966,204 770,000 1,194,275 1,964,275 5.07 Source: Department's annual reports
70 Packet Page. 903
City of San Bernardino Municipal Water Department
Ratios of Outstanding Debt by Type (In Thousands of Dollars) Last Ten Fiscal Years
Fiscal Year
Ended Revenue Bonds Notes/Loans
Payable
Certificates of
Participation Capital Leases Total
Percentage of
Personal
Income
Debt Per
Capita
6/30/2015 - 22,826 6,375 - 29,201 0.4% 0.14 6/30/2016 - 20,569 - - 20,569 0.3% 0.10 6/30/2017 88,656 900 - - 89,556 1.0% 0.39 6/30/2018 87,092 600 - - 87,692 1.0% 0.37 6/30/2019 85,483 300 - - 85,783 1.0% 0.39 6/30/2020 83,814 - - - 83,814 1.0% 0.39 6/30/2021 82,085 - - - 82,085 1.1% 0.38 6/30/2022 80,221 - - - 80,221 1.7% 0.36 6/30/2023 78,391 - - 183 78,574 1.7% 0.35 6/30/2024 76,422 - - 12 76,434 1.7% 0.34 Source: Department's annual reports
71 Packet Page. 904
7+,63$*(,17(17,21$//</()7%/$1.
72 Packet Page. 905

DEMOGRAPHIC AND ECONOMIC INFORMATION
These schedules offer demographic and economic indicators to help the reader understand the environment within which the Department's financial activities take place.
73 Packet Page. 906
7+,63$*(,17(17,21$//</()7%/$1.
74 Packet Page. 907
City of San Bernardino Municipal Water Department
Demographic Statistics
Last Ten Fiscal Years
Fiscal Year
Ended
Estimated
Population (1)
Personal
Income (In
Thousands) (2)
Per Capita
Personal
Income (2)
Unemployment Rate
(3)
6/30/2015 213,933 7,645,879 35,740 6.80% 6/30/2016 215,491 7,931,577 36,807 6.30% 6/30/2017 216,972 8,459,304 38,988 5.50% 6/30/2018 221,130 8,523,677 38,546 5.70% 6/30/2019 219,233 8,509,748 38,816 4.10% 6/30/2020 217,671 8,159,289 37,485 11.30% 6/30/2021 216,291 7,723,319 35,708 8.10% 6/30/2022 220,840 4,596,122 20,812 4.80% 6/30/2023 223,230 4,608,807 20,646 6.30% 6/30/2024 226,541 5,179,860 22,865 6.30% (1) California Department of Finance
(2) U.S. Department of Commerce, Bureau of Economic Analys for 2018-2022; City of San Bernardino Economic Development Dept (3) State of California, Economic Development Department; City of San Bernardino Economic Development Dept 206,000
208,000
210,000
212,000
214,000
216,000
218,000
220,000
222,000
224,000
226,000
228,000
Population
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
Personal Income
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Per Capita Personal Income

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%
Unemployment
75 Packet Page. 908
City of San Bernardino Municipal Water Department
Major Employers
Current Year and Nine Years Ago
Fiscal Year 2024 Fiscal Year 2015
Employer Ranking Number of Employees Ranking Number of Employees* County of San Bernardino 1 25,000 1 1,000+
Stater Brothers 2 18,000 2 1,000+
San Bernardino County Human Services 3 10,000 3 1,000+
San Bernardino City Unified School District 4 8,343 4 1,000+ San Bernardino County Sheriff 5 4,200 5 1,000+
San Bernardino County Superintendent of Schools 6 2,500 6 1,000+ California State Unversity- San Bernardino 7 2,000 7 1,000+ Saint Bernadines Medical Center 8 1,708 8 1,000+
Amazon 9 1,600 9 1,000+
San Bernardino Community Hospital 10 1,556 10 1,000+
* Amazon employment figures between 1,200-1,600
Between 1,200-1,600
Source: Economic Development Department Labor Market Information, Agency Websites and City's Annual Financial Report. 76 Packet Page. 909
City of San Bernardino Municipal Water Department
Authorized Positions History
Last Ten Fiscal Years
Year End Water Fund
Sewer Treatment
Fund
Sewer Collection
Fund Total
2015 183.5 74.5 0.0 258.0
2016 188.5 83.5 0.0 272.0
2017 216.8 70.3 13.0 300.0
2018 215.0 72.0 12.0 299.0
2019 215.0 72.0 12.0 299.0
2020 215.0 72.0 12.0 299.0
2021 199.0 85.0 12.0 296.0
2022 199.0 84.5 12.0 295.5
2023 202.0 85.0 12.0 299.0
2024 205.0 85.0 12.0 302.0
Source: Department's records
Note: The Sewer Collection Utility was transferred to the Department on May 1, 2017. Prior year data is unavailable.

0.0 50.0
100.0
150.0
200.0
250.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Authorized Position History
Water Fund Sewer Treatment Fund Sewer Collection Fund
77 Packet Page. 910
7+,63$*(,17(17,21$//</()7%/$1.
78 Packet Page. 911

REVENUE CAPACITY
These schedules contain information to help the reader assess the Department's significant revenue sources.
79 Packet Page. 912
7+,63$*(,17(17,21$//</()7%/$1.
80 Packet Page. 913
City of San Bernardino Municipal Water Department
Water Rates: Minimum Monthly Charge
Last Ten Fiscal Years
Effective
Date 1/2" 5/8" 3/4" 1" 1-1/2" 2" 3" 4" 6" 8" 10" 12"
7/1/2015 12.90 12.90 16.15 22.60 38.80 58.20 103.50 168.20 330.00 524.15 750.65 * 10/1/2016 16.09 16.09 20.15 28.19 48.40 72.60 129.12 197.36 411.68 653.88 936.44 * 7/1/2017 19.58 19.58 24.51 34.30 58.88 88.32 157.06 240.07 500.78 795.40 1,139.12 * 7/1/2018 23.39 23.39 29.28 40.98 70.35 105.52 187.66 286.63 598.33 950.34 1,361.01 * 7/1/2019 23.39 23.39 29.28 40.98 70.35 105.52 187.66 286.63 598.33 950.34 1,361.01 * 7/1/2020 23.39 23.39 29.28 40.98 70.35 105.52 187.66 286.63 598.33 950.34 1,361.01 * 7/1/2021 23.39 23.39 29.28 40.98 70.35 105.52 187.66 286.63 598.33 950.34 1,361.01 * 4/1/2022 20.49 20.49 28.17 43.51 81.87 127.91 388.77 772.38 1,232.72 2,153.40 4,224.92 4,224.92 7/1/2022 21.72 21.72 29.87 46.13 86.79 135.59 412.10 818.73 1,306.69 2,282.61 4,478.42 4,478.42 7/1/2023 22.59 22.59 31.07 47.98 90.27 141.02 428.59 851.48 1,358.96 2,373.92 4,657.56 4,657.56 7/1/2024 23.27 23.27 32.01 49.42 92.98 145.26 441.45 877.03 1,399.73 2,445.14 4,797.29 4,797.29 Source: Department's Records
($/month)
* Information not reported.
81 Packet Page. 914
City of San Bernardino Municipal Water Department
Water Rates: Commodity Charges
Last Ten Fiscal Years
10/1/2015 7/1/2016 7/1/2017 7/1/2018 7/1/2019 7/1/2020 7/1/2021 4/1/2022 7/1/2022 7/1/2023 7/1/2024 Customer Class
Single Family Residential
Tier 1 (0-13 HCF) 1.35 1.37 1.40 1.43 1.43 1.43 1.43 1.35 1.44 1.50 1.55 Tier 2 (14-23 HCF) 1.35 1.37 1.40 1.43 1.43 1.43 1.43 1.83 1.94 2.02 2.09 Tier 3 (24+ HCF) 1.70 1.86 1.89 1.92 1.92 1.92 1.92 2.33 2.47 2.57 2.65 Multi-Faimly Residential 1.35 1.37 1.40 1.43 1.43 1.43 1.43 1.51 1.61 1.68 1.74 Commercial 1.35 1.37 1.40 1.43 1.43 1.43 1.43 1.65 1.75 1.82 1.88 Irrigation 1.35 1.37 1.40 1.43 1.43 1.43 1.43 2.32 2.46 2.56 2.64 Institutional 1.35 1.37 1.40 1.43 1.43 1.43 1.43 2.06 2.19 2.28 2.35 Other 1.35 1.37 1.40 1.43 1.43 1.43 1.43 3.82 4.05 4.22 4.35 * Prior years (07/01/14 - 07/01/21) commodity charges reflect rates including conservation, replenishment and elevation zone charges which were consolidated with the rates adopted on 04/01/22. 82 Packet Page. 915
City of San Bernardino Municipal Water Department
Water Rates: Elevation Charges $ per HCF
Last Ten Fiscal Years
Effective Date Zone 1 Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 07/01/15 0.11 0.19 0.17 0.14 0.23 0.23
10/01/16 0.11 0.19 0.17 0.14 0.23 0.23
07/01/17 0.11 0.19 0.17 0.14 0.23 0.23
07/01/18 0.11 0.19 0.17 0.14 0.23 0.23
07/01/19 0.11 0.19 0.17 0.14 0.23 0.23
07/01/20 0.11 0.19 0.17 0.14 0.23 0.23
07/01/21 0.11 0.19 0.17 0.14 0.23 0.23
4/1/2022* N/A N/A N/A N/A N/A N/A
7/1/2022* N/A N/A N/A N/A N/A N/A
7/1/2023* N/A N/A N/A N/A N/A N/A
7/1/2024* N/A N/A N/A N/A N/A N/A
Source: Department's records
* Elevation charge was eliminated with the rate adoption on 04/01/22. 83 Packet Page. 916
City of San Bernardino Municipal Water Department
Water Connections and Revenues by User Type
Last Ten Fiscal Years
User Type Connections Revenue Connections Revenue Connections Revenue Connections Revenue Single family 36,140 $22,210,799 36,063 $21,652,852 35,744 $23,761,145 35,995 $23,875,761 Multiple family 2,932 6,148,207 2,916 5,835,444 2,905 5,562,012 2,908 5,569,436 Commercial 3,158 8,976,290 3,164 8,454,199 3,151 6,976,893 3,154 6,579,373 Landscape 1,189 6,957,544 1,196 6,742,399 1,184 5,515,046 1,192 5,277,114 Other 2,671 1,692,251 2,574 860,736 2,296 811,219 2,241 811,833 Total all users 46,090 45,985,090 45,913 43,545,629$ 45,280 42,626,315$ 45,490 42,113,517$ Connections Revenue Connections Revenue Connections Revenue Connections Revenue Single family 36,042 $22,909,054 36,006 $21,579,693 35,824 $20,476,866 35,825 $17,346,414 Multiple family 2,907 5,222,345 2,903 5,157,997 2,904 4,944,978 2,899 4,449,204 Commercial 3,117 6,482,560 3,104 6,320,900 3,111 6,117,493 3,131 5,750,672 Landscape 1,181 4,542,108 1,150 4,256,390 1,159 4,694,704 1,121 3,789,527 Other 2,174 781,428 2,056 808,227 2,018 748,141 1,956 557,392 Total all users 45,421 39,937,495$ 45,220 38,123,207$ 45,016 36,982,182$ 44,932 31,893,209$ Connections Revenue Connections Revenue
Single family 35,729 $15,688,749 35,695 $16,775,834
Multiple family 2,873 4,225,832 2,869 4,349,601
Commercial 3,092 4,913,942 3,097 6,332,882
Landscape 1,129 3,203,907 1,130 3,079,610
Other 1,905 677,180 1,791 679,606
Total all users 44,728 28,709,610$ 44,582 31,217,533$ Source: Department's records
2015
2024 2023 2022
2016
2021
2020 2019 2018 2017
48%
13%
20%
15%
4%
Water Service Revenue by User Type FY 2024
Single family
Multiple family
Commercial
Landscape
Other
78%
6%
7%
3%
6%
Water Service Connections per Customer Type
FY 2024
Single family
Multiple family
Commercial
Landscape
Other
84 Packet Page. 917
City of San Bernardino Municipal Water Department
Top Ten Water Customers
Fiscal Year 2022
San Bernardino City Unified School District 1,540,033$
City of SB 1,500,629
City of SB Water 757,326
Cal State San Bernardino 630,755
County of San Bernardino 348,665
Housing Authority 253,118
Cott Beverages 247,890
Rialto School District 223,154
W Dean Weidner 203,151
Crest Haven Apartments 175,580
Top Ten Customers Total 5,880,302$
Total Water Revenue 45,985,090$
Top Ten Customers Percent of Total 12.79%
2024 Top 10 Customers
85 Packet Page. 918
City of San Bernardino Municipal Water Department
Sewer Treatment Rate History
Last Ten Fiscal Years
10/1/2015 7/1/2016 7/1/2017 7/1/2018 7/1/2019 7/1/2020 7/1/2021 4/1/2022* 7/1/2022* 7/1/2023* 7/1/2024* Residential (monthly per EDU)
Residential 20.65 22.38 23.10 23.10 23.10 23.10 23.10 37.83 41.99 45.35 48.98 Multi-Family (2 units) 41.31 44.76 46.20 ` 66.05 66.05 66.05 75.66 83.98 90.70 97.96 Multi-family (3 units) 61.96 67.14 69.29 99.04 99.04 99.04 99.04 113.49 125.98 136.05 146.94 All Non-Residential (including multi-family (4 or
more units) and mobile home parks) 3.18 3.42 3.52 6.62 6.62 6.62 6.62 16.56 18.38 19.85 21.44 Industrial 1.67 1.78 1.83 4.93 4.93 4.93 4.93 16.56 18.38 19.85 21.44 * The Sewer Collection rate was combined with the Sewer Treatment rate to become the sewer rate that was effective 04/01/22.

Source: Department's records
86 Packet Page. 919
City of San Bernardino Municipal Water Department
Sewer Treatment Rate History
Last Ten Fiscal Years
10/1/2015 7/1/2016 7/1/2017 7/1/2018 7/1/2019 7/1/2020 7/1/2021 4/1/2022* 7/1/2022* 7/1/2023* 7/1/2024* Commodity Charge (per HCF):

Low Strength Non-Residiential
Laundromats 1.63 1.77 1.83 1.83 1.83 1.83 1.83 2.15 2.39 2.58 2.78 Schools, churches, nursery schools 1.19 1.29 1.33 1.33 1.33 1.33 1.33 2.15 2.39 2.58 2.78 Medium Strength Non-Residiential
Multi-family, mobile home parks 1.36 1.48 1.53 1.53 1.53 1.53 1.53 2.71 3.01 3.25 3.51 Retail, commercial, light industrial 2.28 2.47 2.55 2.55 2.55 2.55 2.55 2.71 3.01 3.25 3.51 Auto repair, car wash 1.41 1.53 1.58 1.58 1.58 1.58 1.58 2.71 3.01 3.25 3.51 Offices, motels (w/o restaurants) 1.63 1.77 1.83 1.83 1.83 1.83 1.83 2.71 3.01 3.25 3.51 Hospitals, convalescent homes 1.46 1.58 1.63 1.63 1.63 1.63 1.63 2.71 3.01 3.25 3.51 High Strength Non-Residiential
Restaurants, hotels 2.93 3.18 3.28 3.28 3.28 3.28 3.28 6.42 7.13 7.7 8.31 Domecstic Liquid Waste (per gallon) 0.0430 0.0470 0.0490 0.0490 0.0490 0.0490 0.0490 0.0714 0.0793 0.0856 0.0925 Industrial:

Discharge Flow (per million gallons) 977.00 1,060.00 1,094.00 1,094.00 1,094.00 1,094.00 1,094.00 1,420.83 1,577.12 1703.29 1,839.55 Biological Oxygen demand (per 1,000 lbs) 391.00 424.00 438.00 438.00 438.00 438.00 438.00 648.28 719.59 777.16 839.33 Suspended Solids (per 1,000 lbs) 694.00 753.00 778.00 778.00 778.00 778.00 778.00 648.50 719.84 777.42 839.62 * The Sewer Collection rate was combined with the Sewer Treatment rate to become the sewer rate that was effective 04/01/22.

Source: Department's records
87 Packet Page. 920
City of San Bernardino Municipal Water Department
Sewer Treatment Connections and Revenue by User Type
Last Ten Fiscal Years
User Type Connections Revenue Connections Revenue Connections Revenue Connections Revenue San Bernardino Residential 33,398 $22,851,248 33,050 $30,834,983 33,230 $14,359,415 32,365 $10,165,765 San Bernardino Nonresidential 5,598 19,465,877 5,576 2,113,002 5,566 7,279,215 5,436 8,292,874 East Valley Residential - - 18,735 5,003,034 18,636 5,011,215 18,710 4,797,833 East Valley Nonresidential - - 1,089 3,329,085 1,106 3,805,558 1,087 3,456,827 Loma Linda Residential - 1,742,774 3,185 1,239,524 3,039 1,219,034 3,010 1,232,048 Loma Linda Nonresidential - 2,164,251 170 2,000,370 169 1,673,445 169 1,642,250 Total all users 38,996 $46,224,150 61,805 $44,519,998 61,746 $33,347,882 60,777 $29,587,596 Connections Revenue Connections Revenue Connections Revenue Connections Revenue San Bernardino Residential 31,828 $10,191,482 33,051 $10,146,660 32,945 $10,135,132 32,960 $9,756,592 San Bernardino Nonresidential 5,340 8,463,554 5,531 8,645,032 5,526 8,834,641 5,471 8,010,240 East Valley Residential 18,477 4,778,152 18,477 4,778,152 18,477 4,765,218 18,477 4,622,944 East Valley Nonresidential 1,050 3,483,724 1,050 3,550,973 1,050 3,579,348 1,050 3,083,475 Loma Linda Residential 2,856 1,163,501 2,799 1,171,706 4,824 1,167,823 4,723 1,107,201 Loma Linda Nonresidential 168 1,622,872 345 1,557,119 703 1,548,574 593 1,441,807 Total all users 59,719 $29,703,284 61,253 $29,849,643 63,525 $30,030,737 63,274 $28,022,259 Connections Revenue Connections Revenue
San Bernardino Residential 32,889 $8,746,617 32,874 $8,056,827 San Bernardino Nonresidential 5,377 7,125,053 5,344 7,240,533 East Valley Residential 18,477 4,008,039 18,480 4,093,625 East Valley Nonresidential 1,060 2,825,971 1,051 2,571,813 Loma Linda Residential 5,948 1,008,071 5,040 997,242
Loma Linda Nonresidential 591 1,308,474 588 1,294,612
Total all users 64,342 $25,022,225 63,377 $24,254,651
Source: Department's records
2021
2020 2019 2018 2017
2016 2015
2024 2023 2022
33,398, 86%
5,598, 14%
- , 0%
- , 0%
- , 0%
- , 0%
Sewer Utility Connections per Customer Type FY 2024
San Bernardino Residential
San Bernardino Nonresidential
East Valley Residential
East Valley Nonresidential
Loma Linda Residential
Loma Linda Nonresidential
49%
42%
0%
0%
4%
5%
Sewer Utility Revenue by User Type
FY 2024
San Bernardino Residential
San Bernardino Nonresidential
East Valley Residential
East Valley Nonresidential
Loma Linda Residential
Loma Linda Nonresidential
88 Packet Page. 921
City of San Bernardino Municipal Water Department
Top Ten Sewer Treatment Customers
Fiscal Year 2022
County of San Bernardino 635,350$
San Bernardino City Unified School District 405,431
Housing Authority 240,935
City of SB 223,242
Saint Bernardine Hospital 204,446
PAMA Management Co. 201,931
SB Comm Hospital Site #373 170,538
W. Dean Weidner 159,828
LIDO Condominiums 159,764
Broadstone Investors LLC 143,384
Top Ten Customers Total 2,544,849$
Total Sewer Revenue 46,224,150$
Top Ten Customers Percent of Total 5.51%
Source: Department's records
2024 Top 10 Customers
89 Packet Page. 922
City of San Bernardino Municipal Water Department
Sewer Collection Rate History
Last Ten Fiscal Years
7/1/2016 7/1/2017 7/1/2018 7/1/2019 7/1/2020 7/1/2021 4/1/2022* 7/1/2022* 7/1/2023* Residential (monthly per EDU) 9.45 9.90 9.90 9.90 9.90 9.90 N/A N/A N/A Multi-Family
Multi-family, 2 units 18.90 19.85 19.85 19.85 19.85 19.85 N/A N/A N/A Multi-family, 3 units 28.35 29.75 29.75 29.75 29.75 29.75 N/A N/A N/A Multi-family, 4 or more units, Non-res.

Monthly Charge 2.95 3.10 3.10 3.10 3.10 3.10 N/A N/A N/A Usage Charge (per HCF) 0.83 0.87 0.87 0.87 0.87 0.87 N/A N/A N/A * The Sewer Collection rate was combined with the Sewer Treatment rate to become the sewer rate that was effective 04/01/22.

Source: Department's records
The Sewer Collection Utility was transferred to the Water Department on May 1, 2017 so details for prior years is unavailable. 90 Packet Page. 923
City of San Bernardino Municipal Water Department
Sewer Collection
Connections and Revenue by User Type
Last Ten Fiscal Years
User Type Connections Consumption Revenue Connections Consumption Revenue Connections Consumption Revenue Connections Consumption Revenue Residential-Single Family - - - 42 - - 27,748 - 3,061,513 32,418 - $3,997,513 Residential-Multi Family - - - - - - 1,345 - 356,051 1,576 - 418,545 Residential- Multi Family 4 Units + - - - - - - 18 78,494 68,975 19 80,400 70,647 Comm/Land/Lt. Industrial/Non-Res. - - - 37 - - 2,670 2,594,640 2,310,986 3,138 3,051,177 2,726,198 Education-Public - - - 2 - - 43 127,279 110,588 49 124,047 109,205 Education-Private - - - - - - 124 58,932 55,859 149 72,141 68,086 Hospital/Convalescent Homes - - - - - - 29 164,836 144,462 35 197,360 172,771 Office/Motel-No Restaurant - - - 10 - - 85 76,768 57,800 93 78,338 59,307 Restaurant/ Hotel w/ Restaurant - - - 1 - - 51 43,587 39,632 51 36,181 33,232 Auto Repair/Car Wash - - - - - - 197 78,293 75,390 226 81,945 78,971 Laundromat - - - - - - 4 29,232 25,587 5 28,349 24,843 CS Irrigation - - - - - - - - - - - -
Totals IVDA - - - - - - 49 62,340 - 48 65,559 -
Total all users - - -$ 92 - -$ 32,363 3,314,401 6,306,843$ 37,806 3,815,497 7,759,318$ Connections Consumption Revenue Connections Consumption Revenue Connections Consumption Revenue Connections Consumption Revenue Residential-Single Family 31,889 - $4,054,020 33,127 - $3,927,784 32,939 - $3,916,946 32,899 - $3,719,798 Residential-Multi Family 1,555 - 412,095 1,606 - 424,665 1,607 - 424,024 1,609 - 405,007 Residential- Multi Family 4 Units + 18 63,529 5 5,921 17 50,331 44,420 16 51,092 44,945 15 45,146 41,351 Comm/Land/Lt. Industrial/Non-Res. 3,069 2 ,893,018 2,588,912 3,180 2 ,904,054 2,601,804 3,198 2 ,997,422 2,668,497 3,204 2 ,626,645 2,467,470 E
ducation-Public 37 54,207 4 8,082 27 24,293 21,700 27 29,478 2 6,118 27 29,586 2 7,420 Education-Private 150 63,715 6 0,941 152 64,643 61,858 150 72,936 6 7,985 150 61,381 6 1,779 Hospital/Convalescent Homes 35 197,787 173,367 35 190,191 166,768 35 1 94,560 170,063 35 175,241 161,182 Office/Motel-No Restaurant 92 79,321 6 1,027 94 88,632 69,280 94 85,397 6 6,015 96 71,092 5 8,587 Restaurant/ Hotel w/ Restaurant 52 38,762 3 5,480 47 41,583 37,750 41 39,909 3 5,963 37 34,788 3 2,509 Auto Repair/Car Wash 221 75,027 7 3,487 229 76,587 74,854 231 93,474 8 9,565 229 73,436 7 5,421 Laundromat 5 24,821 2 1,771 5 26,639 23,362 5 26,464 2 3,160 5 24,091 2 1,824 CS Irrigation 21 255,400 7 1,571 43 423,688 115,905 45 5 40,444 145,737 46 503,780 158,834 Totals IVDA 48 56,072 - 50 54,387 - 49 57,057 - 51 54,874 - Total all users 37,192 3,801,659 7,656,675$ 38,613 3,945,028 7,570,150$ 38,438 4,188,233 $7,679,020 38,402 3,700,060 $7,231,183 Connections Consumption Revenue Connections Consumption Revenue Residential-Single Family - - - - - -
Residential-Multi Family - - - - - -
Residential- Multi Family 4 Units + - - - - - -
Comm/Land/Lt. Industrial/Non-Res. - - - - - -
Education-Public - - - - - -
Education-Private - - - - - -
Hospital/Convalescent Homes - - - - - -
Office/Motel-No Restaurant - - - - - -
Restaurant/ Hotel w/ Restaurant - - - - - -
Auto Repair/Car Wash - - - - - -
Laundromat - - - - - -
CS Irrigation - - - - - -
Totals IVDA - - - - - -
Total all users - - - - - -
Source: Department's records
2021
2020 2019 2018 2017
2016 2015
* The Sewer Collection Utility was transferred to the Water Department on May 1, 2017 so prior year data is unavailable. Data provided for 2017 represents the entire year.
2024 2023 2022
91 Packet Page. 924
7+,63$*(,17(17,21$//</()7%/$1.
92 Packet Page. 925
CITY OF SAN BERNADINO MUNICIPAL WATER DEPARTMENT
)257+(<($5(1'('-81( 6,1*/($8',75(3257
Packet Page. 926

CITY OF SAN BERNARDINO

MUNICIPAL WATER DEPARTMENT

Single Audit Report

For the Year Ended June 30, 2024
Packet Page. 927

CITY OF SAN BERNARDINO

MUNICIPAL WATER DEPARTMENT

Single Audit Report

For the Year Ended June 30, 2024

Table of Contents

Page
Number

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .......................................................................................... 1

Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ........................................................................................................ 3

Schedule of Expenditures of Federal Awards for the
Fiscal Year Ended June 30, 2024 ....................................................................................................................... 6

Notes to the Schedule of Expenditures of Federal Awards .................................................................................... 7

Schedule of Findings and Questioned Costs for the
Fiscal Year Ended June 30, 2024 ....................................................................................................................... 8

Summary Schedule of Prior Year Findings and Questioned Costs for the Fiscal Year Ended June 30, 2023 ..................................................................................................................... 10

Packet Page. 928

LSLCPAS.COM
INDEPENDENT AUDITORS’ REPORT

ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON

COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Water Board
San Bernardino Municipal Water Department
San Bernardino, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of each major f und of the San Bernardino Municipal Water Department (the “De partment”), a component unit of the City of San Bernardino, California (the “City”), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Department’s basic financi al statements, and have issued our report thereon dated November 27, 2024.

Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial stat ements, we considered the Department’s internal control over financial reporting (internal control) as a basis fo r designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Department’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatem ent of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal co ntrol that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item 2024-001, that we consider to be a significant deficiency.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether Department’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a di rect and material effect on the financial statements.

However, providing an opinion on compliance with thos e provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Packet Page. 929
To the Water Board

San Bernardino Municipal Water Department
San Bernardino, California
Department’s Response to Findings
Government Auditing Standards requires the auditor to perform limited pr ocedures on the Department’s response to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs.

The Department’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of This Report
The pu
rpose of this report is solely to describe the sc ope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entit y’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Irvine, California
November 27, 2024
2 Packet Page. 930

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MA

JOR PROGRAM

AND ON INTERNAL CONTROL OVER COMPLIANCE AND REPORT ON SCHEDULE OF EXPENDITURES OF

FEDERAL AWARDS REQUIRED BY UNIFORM GUIDANCE
To the Water Board
San Bernardi
no Municipal Water Department
San Bernardino, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the San Bernardino Municipal Water Department (the “Department”), a component unit of the City of San Bernardino, California (the “Cit y”)’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the Department’s major federal programs for the year ended June 30, 2024. The Department’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the Department complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024.

Basis for Opinion on Each Major Federal Progra
m
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the Department and to meet our other ethical responsibilities, in accordance with 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 op inion on compliance for each major federal program. Our audit does not provide a legal determination of the Depa rtment’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal c ontrol over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the Department’s federal programs.

Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Department’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance LSLCPAS.COM
Packet Page. 931
To the Water Board
San Berna
rdino Municipal Water Department
San Bernardino, California
and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards , and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resu lting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggre gate, it would influence the judgment made by a reasonable user of the report on compliance about the Department’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompli ance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Department’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  Obtain an understanding of the Department’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in t he circumstances and to test and report on internal control over compliance in accordance with the Unif orm Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficienci es and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control over Compliance
Our consideration of internal control over comp liance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or sign ificant deficiencies may exist that were not identified.

However, as discussed below, we did identify a certain deficiency in internal control over compliance that we consider to be a significant deficiency.

A significant deficiency in inte rnal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2024-001 to be a significant deficiency.

Our audit was not designed for the purpo se of expressing an opinion on the effe ctiveness of internal control over compliance. Accordingly, no such opinion is expressed.

Government Auditing Standards requires the auditor to perform limited procedures on the Department’s response to the internal control over compliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned cost s. The Department’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. 4 Packet Page. 932
To the Water Board
San Berna
rdino Municipal Water Department
San Bernardino, California
The purpose of this report on internal control over compli ance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance.

Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the San Bernardino Municipal Water Department, a component unit of the City of San Bernardino, as of and for the year ende d June 30, 2024, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements. We issued our report thereon dated November 27, 2024, which contained unmodified opi nions on those financial statements. Our audit was performed for the purpose of forming opinions on the financ ial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal aw ards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements.

Such information is the res ponsibility of management and wa s derived from and relates directly to the underlying accounting and other records used to prepare the basic fi nancial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and cert ain 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 auditi ng standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Irvine, California
November 27, 2024
5 Packet Page. 933

SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2024
Federal
Assistance Program
Federal Grantor/Pass-Through Grantor/Program Title Listing Number Expenditures U.S. Department of Treasury
Direct Award:

Coronavirus State and Local Fiscal Recovery Funds 21.027 563,308$ Total U.S. Department of the Interior 563,308
Environmental Protection Agency
Consent Decree * 66.000
Operations and maintenance:

Newmark 1,294,116$
Muscoy 867,686
Site wide monitoring 100,045
Project management 246,382
Subtotal - Consent Decree 2,508,229
U.S. Department of Homeland Security
Direct Award:

Hazard Mitigation Grant Program * 97.039 3,041,427$
Total U.S. Department of the Interior 3,041,427
Total Federal Expenditures 6,112,964$
* Major Program
Note a: Refer to Note 1 to the schedule of expend itures of federal awards for a description of significant accounting policies used in preparing this schedule.

Note b: There was no federal awards expended in the form of noncash assistance and insurance in effect during the year.

Note c: Total amount provided to subr ecipients during the year was $0. 6 Packet Page. 934

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Notes To The Schedule Of Expenditures of Federal Awards For The Year Ended June 30, 2024

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES APPLICABLE TO THE SCHEDULE OF

EXPENDITURES OF FEDERAL AWARDS

A. Scope of Presentation

The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) includes the federal grant activity of the San Bernardino Municipal Water Department (the "Department"), a component unit of the City of San Bernardino, California (the “City”), under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requir ements of the Uniform Guid ance. Because the Schedule presents only a selected portion of the operations of the Department, it is not intended to and does not present the financial position, changes in net position or cash flows of the Department, nor does it present all federal programs of the City of San Bernardino as a whole.

B. Basis of Accounting

Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance. Under the accrual basis of accounting, expenditures are recognized when incurred. Expenditures reported include any property or equipment acquisitions incurred under the federal program. The Department did not use the 10% de minimis indirect cost rate as covered in section 200.414 of the Uniform Guidance.

NOTE 2: BACKGROUND OF THE CONSENT DECREE

In 1996, the City filed a complaint against the United States of America, Department of the Army (Army) to recover damages, response costs and other available remedies relating to contamination alleged to have originated at a World War II Army installation known as Camp Ono. In March 2005, the United States Department Court, Central Department, entered judgment, in the form of a consent decree (Consent Decree), in the matter of City of San Bernardino v. United States of America. The consent decree settles the City’s and the State’s claims arising from the groundwater contamination allegedly caused by the Army. The Consent Decree contains a number of provisions obligating the City (through the Municipal Water Department) to operate and maintain the Newmark Groundwater Superfund site (Site). The Site consists of two operable units, the Newmark Operable Unit and the Muscoy Operable Unit. The Newmark Operable Unit was declared operational and functional in 1998.

The Consent Decree provided for a payment of $69 million fr om the Army to the City for performance of the work outlined in the consent decree. Upon entry of the Consent Decree, the City, through the Department, received title to all facilities constructed by the United States Environmental Protection Agency (EPA) for the Site and agreed to operate and maintain the groundwater extraction and treatment system for a period of 50 years. The $69 million payment consisted of $59 million for operation and maintenance and $10 million for the construction of certain capital facilities that would be required in th e future. The funds are subject to strict limitations, contained in the Consent Decree, as to how they may be spent.

Pursuant to the Consent Decree, $10 million, including interest earned, has been set aside to be used only for (i) funding construction of treatment and directly related transmission systems that expanded the Department’s capacity to deliver potable water, and (ii) funding work performed by the Department to complete construction of the Muscoy Operable Unit extraction system. These “capital facility” funds may not be used for costs incurred to operate, maintain, repair or retrofit components of the Site extraction or treatment systems constructed by EPA.

In September 2007, the Muscoy Operable Unit was declared operational and functional. 7 Packet Page. 935

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2024

SECTION I - SUMMARY OF AUDITORS' RESULTS

Financial Statements

Type of auditors' report issued: Unmodified Opinion

Internal control over financial reporting:

x Material weaknesses identified? yes X no

x Significant deficiencies identified? X yes none reported

Noncompliance material to financial
statements noted? yes X no

Federal Awards

Internal control over major programs:

x Material weaknesses identified? yes X no

x Significant deficiencies identified? yes X none reported

Type of auditors' report issued on compliance for major programs: Unmodified Opinion

Any audit findings disclosed that are required to be
reported in accordance with Title 2 U.S. Code of
Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards (Uniform
Guidance)? yes X no

Identification of major programs:

Assistance Listing Number(s) Name of Federal Program or Cluster

66.000 Consent Decree

97.039 Hazard Mitigation Grant Program

Dollar threshold used to distinguish
between type A and type B program $750,000

Auditee qualified as low risk auditee? X yes no 8 Packet Page. 936

CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENT
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2024

SECTION II - FINANCIAL STATEMENT FINDINGS

Reference Number
2024-001

Evaluation of Finding
Significant Deficiency

Condition
San Bernardino Municipal Water Department personnel did not properly adhere to Department policies and procedures for verifying the authenticity of vendor requests to change bank account information. As a result, an unauthorized person was able to impersonate a legitimate vendor and submit a fraudulent request to change the bank account number associated with the vendor's invoices. The Department processed the request without verifying the identity of the requester or the validity of the new bank account information, resulting in approximately $65,000 being paid to the wrong bank account before detecting the fraud.

Criteria
Internal control standards require that organizations establish and adhere to policies and procedures to verify the authenticity of vendor requests to change bank account information. This includes contacting the vendor by phone or in person using a previously known or independently obtained contact number and confirming the request and the new bank account information with an authorized representative of the vendor.

Cause of Condition
The Department lacked a written policy and procedure for verifying vendor requests to change bank account information. Additionally, staff respon sible for processing vendor payments were not adequately trained on the importance of verifying such requests.

Effect or Potential Effect of Condition
The deficiency in internal control over vendor payments exposes the Department to the risk of financial losses, reputational damage, and legal liabilities. In this instance, the Department paid approximately $65,000 to the wrong bank account before detecting the fraud.

Recommendation
To prevent and detect similar frauds in the future, we recommend that the Department implement the following measures:

1. Establish a written policy an d procedure for verifying vendor requests to change bank account information.

This should include contacting the vendor by phone or in person using a previously known or independently obtained contact number, and confirming the request and the new bank account information with an authorized representative of the vendor.

2. Train the staff responsible for processing vendor payments on the new policy and procedure, emphasizing the importance of adhering to it.

3. Periodically review the vendor master file to identify any changes made to vendor bank account information.

Perform independent verification of these changes and investigate any discrepancies or anomalies.

4. Reconcile vendor payments with vendor statements an d bank statements on a timely basis and follow up on any outstanding or unusual items.

Client Response
The Finance division has implemented additional procedures to mitigate the risk in the future. Vendor requests for new banking information or electronic payments submitted to Finance go into a workflow to be reviewed and independently verified. Senior staff call the requesting vendor to verify all information submitted before being approved in the Financial system. Staff have been trained and advised to not pay vendors without this verification process and physically cannot without the approval in the system.

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.
9 Packet Page. 937
1350 South “E” Street, San Bernardino, California 92408 P.O. Box 710, 92402 Phone: (909) 384-5141 FACSIMILE NUMBERS: Administration: (909) 453-6399 Customer Service: (909) 453-6396 Finance: (909) 453-6383 Engineering: (909) 453-6385 Corporate Yards: (909) 453-6389 Water Reclamation Plant: (909) 453-6395 Environmental & Regulatory Compliance: (909) 453-6391 Environmental Control: (909) 453-6394

CITY OF SAN BERNARDINO

MUNICIPAL WATER DEPARTMENT

CITY OF SAN BERNARDINO

WATER BOARD

TONI CALLICOTT
President

Commissioners

WAYNE HENDRIX
DAVID E. MLYNARSKI
RIKKE V. JOHNSON

THOMAS BRICKLEY

MIGUEL J. GUERRERO, P.E.

General Manager
ROBIN L. OHAMA
Deputy General Manager
STEVE R. MILLER
Director of Water Utility
KEVIN T. STEWART, P.E.

Director of Water Reclamation
JENNIFER L. SHEPARDSON
Director of Environmental &
Regulatory Compliance
CYNTHIA J. MOUSER
Director of Finance
“Trusted, Quality Service since 1905”

SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2023

No matters were reported.

10 Packet Page. 938
LSLCPAS.COM
November 27, 2024
To the Water Board
City of San Bernardino Municipal Water Department
San Bernardino, California
We have audited the financial statements of each major fund of the City of San Bernardino Municipal Water Department (the “Department”), a department of the City of San Bernardino, California (the “City”) for the year ended June 30, 2024. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 5, 2024. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Department are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during fiscal year 2023 -2024. We noted no transactions entered into by the Department during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the fina ncial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events.

Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the Department’s financial statements were:

Management’s estimates of the pension, other postemployment benefits, and self -insured claims liabilities are based on actuarial valuations. We evaluated the methods, assumptions, and data used to develop the pension, other postemployment benefits, and self -insured claims liabilities in determining that it is reasonable in relation to the financial statements taken as a whole.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.

Packet Page. 939

To the Water Board
City of San Bernardino Municipal Water Department
San Bernardino, California

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management.

Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated November 27, 2024.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Department’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts . To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Department’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters

We applied certain limited procedures to management’s discussion and analysis, and the required pension and other postemployment benefits schedules, which are required supplementary information (“RSI”) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were not engaged to report on the introductory and statistical sections of the Annual Comprehensive Financial Report, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

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To the Water Board
City of San Bernardino Municipal Water Department
San Bernardino, California

Future GASB Pronouncements

The following Government Accounting Standards Board (GASB) pronouncements will be effective for the following fiscal years’ audits and should be reviewed for proper implementation by management:

Fiscal Year 2024-2025

GASB Statement No. 101, Compensated Absences.

GASB Statement No. 102, Certain Risk Disclosures.

Fiscal Year 2025-2026

GASB Statement No. 103, Financial Reporting Model Improvements.

GASB Statement No. 104, Disclosures of Certain Capital Assets

Future Projects

Comprehensive Project, Revenue and Expense Recognition.

Major Project, Going Concern Uncertainties and Severe Financial Stress.

Major Project, Infrastructure Assets.

Practice Issue, Classification of Nonfinancial Assets.

Practice Issue, Risks and Uncertainties Disclosures.

Practice Issue, Subsequent Events.

Restriction on Use

This information is intended solely for the information and use of the Water Board and management of the department and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,

Lance, Soll & Lunghard, LLP

Packet Page. 941

LSLCPAS.COM
INDEPENDENT AUDITORS’ REPORT

ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON

COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Water Board
City of San Bernardino Municipal Water Department
San Bernardino, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the City of San Bernardino Municipal Water Department (the “Department”), a component unit of the City of San Bernardino, California (the “City”), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements, and have issued our report thereon dated November 27, 2024.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal co ntrol that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified a certain deficiency in internal control, described in the accompanying schedule of findings and responses as item 2024-001 that we consider to be a significant deficiency.

Packet Page. 942

To the Water Board
City of San Bernardino Municipal Water Department
San Bernardino, California

Department’s Response to Findings

Government Auditing Standards requires the auditor to perform limited pr ocedures on the Department’s response to the findings identified in our audit and described in t he accompanying schedule of findings and responses. The Department’s response was not subjected to the other a uditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of This Report

The purpose of this report is solely to describe the sc ope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entit y’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Irvine, California
November 27, 2024

Packet Page. 943

To the Water Board
City of San Bernardino Municipal Water Department
San Bernardino, California

SCHEDULE OF FINDINGS AND RESPONSES

Reference Number
2024-001

Evaluation of Finding
Significant Deficiency

Condition
San Bernardino Municipal Water Department personnel did not properly adhere to Department policies and procedures for verifying the authenticity of vendor r equests to change bank account information. As a result, an unauthorized person was able to impersonate a legitimate vendor and submit a fraudulent request to change the bank account number associated with the vendor's invoices. The Departme nt processed the request without verifying the identity of the requester or the validity of the new bank account information, resulting in approximately $65,000 being paid to the wrong bank account before detecting the fraud.

Criteria
Internal control standards require that organizations est ablish and adhere to policies and procedures to verify the authenticity of vendor requests to change bank account information. This includes contacting the vendor by phone or in person using a previously known or independent ly obtained contact number and confirming the request and the new bank account information with an authorized representative of the vendor.

Cause of Condition
The Department lacked a written policy and procedure for verifying vendor requests to change bank account information. Additionally, staff responsible for proce ssing vendor payments were not adequately trained on the importance of verifying such requests.

Effect or Potential Effect of Condition
The deficiency in internal control over vendor payment s exposes the Department to the risk of financial losses, reputational damage, and legal liabilities. In this instance, the Department paid approximately $65,000 to the wrong bank account before detecting the fraud.

Recommendation
To prevent and detect similar frauds in the future, we recommend that the Department implement the following measures:

1. Establish a written policy and procedure for verifyi ng vendor requests to change bank account information.

This should include contacting the vendor by phone or in person using a previously known or independently obtained contact number, and confirming the reques t and the new bank account information with an authorized representative of the vendor.

2. Train the staff responsible for processing vendor payments on the new policy and procedure, emphasizing the importance of adhering to it.

3. Periodically review the vendor master file to ident ify any changes made to vendor bank account information.

Perform independent verification of these changes and investigate any discrepancies or anomalies.

4. Reconcile vendor payments with vendor statements and bank statements on a timely basis and follow up on any outstanding or unusual items.

Packet Page. 944

CITY OF SAN BERNARDINO

MUNICIPAL WATE R

DEPARTMENT
ANNUAL

CO MPRE HE NSIVE

FINANCIAL RE PO RT
(A C F R )
A S OF JU N E 30, 2024
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WATER FUND RESULTS-A u di t
Packet Page. 946
WATER FUND RESULTS-B u dg e t
Budget Actuals % Change
Operating Revenue 45,838,500$ 44,091,833 $ (1,746,667)$ -3.81% Operating Expenses less
Depreciation 39,176,425 39,712,797 536,372 1.37% Net Operating Income/(loss) 6,662,075 4,679,036 (1,983,039) -29.77% Non-Operating
Revenue/(Expense) 2,047,100 1,380,979 (666,121) (32.54%) Net Income before Capital
Contributions 8,709,175 6,060,015 (2,649,160) (30.42%) FY 2023 $ Increase/
(Decrease)
Budget
Actuuuuuuuuuualsalsalsalsalsalsaalssa saala saalslslsa salsalsalalsslss % Change
OperaOperappOperaperperaO aOO aOperaaOOpOpp raOperaOOperOperOperaaating tting ting tingngnting ngng ggngttt nnngting gnngngngggnnnnnggg RevenRRRevenRevenRevevenReveRe enRevenevenRevene eRevenRe eenvvvRevenRR uuuueuuuuu 45,838,500
$
44,099999999991 83318 311,833818 333118 383331 883331 833118 318 38333 $
(1 74(1,74(1 74741(1 744444(((1 7474774447777 6 6676 667666,6676 66 7667766 666 666 6676776 66767677)))))))) $$$$ $$$$$$$$
-3.81%
OOpera iting EExpen lses less
DepreDepreepDepreDepreDepreeprepreepDDDDepreDepreepreDepreeppDeprDeepreD prDepDe reDDDeeeepreDeprDeepreepreeprereeDe eD pp ciatiatiaatiatiatiatiattttittatia iaatiiaa iia iatiaaaaaaattattt onononnononononononooooonononoonnooooooo 3939939,173393933993993939393999933999 6,425

39,7139,7197 139,71139,71939,71139,71339,71139,7199 1997 139,7111111117139,717177171333 712,7922,7972,79777797722 7979799999

536,3536,35536,336,33,3635536,536 33536,36 3536,3536,36666 7272772277222772727727277222727772772227772722227722222

1.37%

Net ONNet ONet ONet ONet OONet OONN ONNNNNNNNNN OOOperatperaerateratperatperatperatperaapee ateratperateperaeraperapeep tperaaaaaa ing Iinging Iing Ingiii ginging Innginginggnnngggng Ingnngngng ncomencomenncomencomencomen ommmeenncomeomomemeen omommmn omemoncommn mmncomncomemmmm /(los(/(loslos/(los(l/(losos(l/(l(los//(losolos((llos/ los/(loos(loosos( os/(los/ llooo/// s)s)s)sss)s)s))s)))ssss))) 6666,66266666666 ,075

44 6794 6794 6794,6794 6796794 6799944 944444444 999,036036,03603,036603636036036,036336036,0360000363366036330300330003300366

((1,98(1,9(1,981,989899981(1 9981,98(1,98(1,98( 9(1,988819 8(19 81,988(1 9119,9898(1,98119 81,981,9888883,0393,0393 0393,03930 33 33 0393,0333033,0393 03033 0393 033 039330 30033,0339,03900 9993930 93 0390039039399))))))))))

-29.77%
Non-Operating
Revenue/(Expense)
2,047,100

1,380,979

(666,121)

(32.54%)

Net Income before Capital
Contributions
8,709,175

6,060,015

(2,649,160)

(30.42%)

FY 2023
$ Increase/
(Dec(D((DDecD((Dec(DecDecDecccccreasrerreareasreareasareareareaaarrrearreeaearrree e)ee)e)e)))e))e)eee)ee)eee) Packet Page. 947
SEWER FUND RESULTS-A u d i t
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SEWER FUND RESULTS-B u dg e t
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Thank Yo u
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2024 Financial Audit
Presented by:

Ryan Domino, CPA, Partner
December 10, 2024
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Your LSL Team
Ryan Domino, CPA
Partner
Riley Greenlee, CPA
Manager
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Scope of Engagement
•LSL has been engaged by SBMWD to perform the following procedures for the year ended June 30, 2024:
• Financial statement audit in accordance with generally accepted auditing standards and Government Auditing Standards
• Single audit over the federal award programs in accordance with the federal Uniform Guidance.

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•Interim Fieldwork
• Apr. 8 – Apr. 11, 2024
• Examined internal controls
• Provided feedback to
management
• Performed our audit risk
assessment
• Planned year-end audit
procedures to respond to risk
•Year-End Fieldwork
• Sep. 9 – Sep. 13, 2024
• Detailed testing of account
balances and transactions
• Compliance testing with laws,
regulations, grant agreements,
contracts
• Single Audit testing
Scope of Engagement
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Results of Audit
•We will issued an unmodified auditor’s opinion on the financial statements.
• Financial statements are accurate and reliable as of June 30, 2024. •We issued the Report on Internal Control and Compliance • One significant deficiency in internal control noted
• Related to a fraud event perpetuated by an external party that occurred during the year. • No material weaknesses in internal control noted.
• No material noncompliance with laws, regulations, grants, etc. noted.

Packet Page. 955
Results of Audit
•We issued an unmodified auditor’s opinion on SBMWD’s compliance with the requirements of major federal award programs.
• Tested the Consent Decree and Hazard Mitigation Grant Program • No compliance findings
• No control deficiencies over compliance
Packet Page. 956
Results of Audit
• We identified no going concern doubts as of June 30, 2024. • Management brought an incident of external fraud related to purchasing to our attention, and we provided recommendations to strengthen controls to prevent future occurrences of this type of fraud.
• We had no disagreements with management about application of accounting principles.
• We had no difficulties conducting our audits.
• We determined that all estimates used by management in preparing the financial statements were reasonable.

Packet Page. 957
Financial Highlights
• Net position increased $4.8M from PY to a total of $348.2M • Unrestricted net position (reserves) represented 65% of operating expenses and 19% of total net position.
• Capital assets increased $22.1M.
• Long-term debt decreased $1.9M.
• Pension liability increased $2.3M due to CalPERS returns being less than anticipated. CalPERS is 70% funded.
• OPEB asset increased $2.3M due to good investment returns, and the trust is 113% funded.

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Questions
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www.lslcpas.com
[email protected]
CALIFORNIA: Irvine | Sacramento
TEXAS: The Woodlands
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DISCUSSION
City of San Bernardino
Request for Council Action
Date: February 5, 2025
To: Honorable Mayor and City Council Members
From: Rochelle Clayton, Acting City Manager
Department: City Manager's Office
Subject: Authorization to Initiate Reorganization Proceedings with the City of Highland for a .56-acre Parcel Located at the Southeast Corner of Victoria Avenue and 5th Street (APN:
1192-551-01) (Ward 1)
Recommendation:

It is recommended that the Mayor and City Council of the City of San Bernardino, California, authorize staff to initiate reorganization proceedings with the City of Highland regarding APN: 1192-551-01, consisting of a .56-acre parcel, located at the southeast corner of Victoria Avenue and 5th Street, within the sphere of influence and boundary of the City of San Bernardino.

Executive Summary
The recommended action will initiate reorganization proceedings with the City of Highland consisting of a single parcel located at the southeast corner of Victoria Avenue and 5th Street in the City of San Bernardino. The reorganization would include detaching a .56-acre parcel from the City of San Bernardino’s sphere of influence and boundary to the City of Highland. The City of Highland has submitted the request for reorganization to accommodate a 7.2-acre industrial development consisting of multiple parcels otherwise located within the City of Highland. The proposed project will include a 173,976 square-foot warehouse which will include 12,000 square-feet of office space at build out.

Background
The City of Highland had previously requested that the City of San Bernardino consider detaching a .56-acre parcel that is generally located at the southeast terminus of Victoria Avenue and 5th Street, also known as APN: 1192-551-01, for the purpose of annexing into the City of Highland, on behalf of the property owner, Patriot USICVI 5th Street, LLC. (Exhibit A) The proposed industrial development, including this property, Packet Page. 961
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would combine with 10 other parcels, all located within the City of Highland and totaling

7.23-acres. The proposed reorganization will streamline the development of the project and adjust services and sphere of influence boundaries.

Discussion
Under the reorganization proposal, no parcels would be annexed into the City of San Bernardino, and one vacant parcel would be detached from the City of San Bernardino.

The present land use for the parcel located in the City of San Bernardino is Commercial General – 1 (CG-1). The CG-1 zoning designation is intended to provide for the continued use, enhancement, and new development of retail, personal service, entertainment, office and related commercial uses along major transportation corridors and intersections.

The detachment of the property from the City of San Bernardino’s sphere of influence would transfer the Property (APN 1192-551-01) and the corresponding services from the City of San Bernardino to the City of Highland. Should the reorganization be approved as proposed, the property tax revenue, which is estimated to be approximately $17,603 per year, would be transferred from the County of San Bernardino to the City of Highland. Additionally, the southeastern boundary line for the City of San Bernardino would be adjusted to recognize the annexation.

Staff is recommending that the Mayor and City Council authorize the initiation of reorganizing proceedings with the City of Highland. The proposed reorganization will improve the symmetrical boundary line between the two cities, will defer future costs for services (Code Enforcement, Police Department, Public Works, etc.) to the City of Highland, and reduce the costs associated of maintaining the corresponding street improvements fronting Victoria Avenue (pavement, curb, gutter and sidewalk). The potential deferred costs for services and street maintenance will be further detailed throughout the reorganization process, once approved and initiated by Council.

The formal detachment proceedings would be coordinated through the City of Highland and conducted by LAFCO, which would Include the City of Highland working directly with the Property Owner, Patriot USICVI 5th Street, LLC. These proceedings would include mailing notices to applicable property owners within the annexation area and coordinating a Public Hearing to allow for public comments. It is estimated that these proceedings would formally initiate during February or March of 2025 and conclude approximately 90 days thereafter.
2021-2025 Strategic Targets and Goals
This project is consistent with Key Target No 2b. Evaluate operations and performance, investment in resources, technology, and tools to continually improve organizational efficiency and effectiveness. The proposed reorganization will reduce the costs associated with maintenance of the public right-of-way fronting the parcel and improve the southeastern boundary line shared with the City of Highland.

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Fiscal Impact
There is no fiscal impact to the City of San Bernardino. All costs associated with proposed reorganization from the City’s sphere of influence and boundaries will be borne by the City of Highland and the Property Owner through the LAFCO application process.

Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California, authorize staff to initiate reorganization proceedings with the City of Highland regarding APN: 1192-551-01, consisting of a .56-acre parcel, located at the southeast corner of Victoria Avenue and 5th Street, within the sphere of influence and boundary of the City of San Bernardino.

Attachments
Attachment 1 – Exhibit A – Request for Reorganization
Attachment 2 – LAFCO Letter – Project Overview
Attachment 3 – Area City Border
Attachment 4 – Aerial View of Proposed Reorganization
Attachment 5 – Property Tax Revenue breakdown
Ward:

First Ward
Synopsis of Previous Council Actions:

None
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Proposed Reorganization

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Tax Collector » Bill Display
Bill Display for 240694495*5 as of 10/30/2024
Parcel Number 1192-551-01-0000
Owner Type Name Address
BILLED OWNER PATRIOT USICVI 5TH STREET
LLC
Protected per CA Govt. Code Sect. 7928.200
et seq.

CARE OF KEVIN RICE Protected per CA Govt. Code Sect. 7928.200 et seq.

SITUS
ADDRESS Protected per CA Govt. Code Sect. 7928.200
et seq.

Parcel 1192551010000 Default Date 2025-06-30 Tax Type AS - Annual Secured Bill 240694495*5 Extend Date 2024-09-17 Effective Date 2024-07-01 Corrected From Corrected To Eligibility A - ELIG EXTENDED Tax Rate Total 0.012406 Tax Rate Area 000007184 Tax Rate Year 2024 Valuation Type Assessed
Land $1,404,540.00
Personal Property $0.00
Improvement $0.00
Personal Property Penalty $0.00
Improvement Penalty $0.00
Total Value $1,404,540.00
Homeowner Exemption $0.00
Veteran Exemption $0.00
Other Exemption $0.00
Net Value $1,404,540.00
Installment 01
Due Amt $8,801.52
Delq Amt $9,681.67
Due Date 2024-12-10
Installment 02
Due Amt $8,801.49
Delq Amt $9,691.64
Due Date 2025-04-10
Total Tax $17,603.01
Pay Status NOTHING PAID
Service Agency Amount Service Agency Amount
GENERAL TAX LEVY $14,045.40 *SAN BERN VECTOR CONTROL
(800) 442 - 2283 $1.30

SAN BDNO COMM COLLEGE
BOND
(909) 388 - 6909
$519.67 SNBD UNIFIED SCHOOL BOND
(909) 381 - 1152 $1,314.64
SCHOOL STATE REPAYMENT $0.00 *SBCOFIRE FP-5 CITY SNBNDO (909) 387 - 5947 $177.01

SBV MUNI SWP IMPORTED WATR
(909) 387 - 9200 $1,544.99

10/30/24, 3:44 PM County of San Bernardino - Treasurer-Tax Collector - Bill Details https://www.mytaxcollector.com/BillDisplayPublicPrint.aspx 1/1 Packet Page. 972

Mayor and City CouncilFebruary 5, 2025

Mayor and City Council
February 5, 2025