Agenda packet — Shasta Lake City Council, March 7, 2023

CITY COUNCIL MEETING AGENDA March 7, 2023

CITY COUNCIL MEETING AGENDA
City Council Chambers
4488 Red Bluff Street
Shasta Lake. CA 96019
Tuesday, March 7, 2023, at 6:00 PM
Mayor: Greg Watkins
Vice Mayor: Janice Powell
Council Members: Justin Jones, Pamelyn Morgan

OTHER WAYS TO PARTICIPATE IN THE MEETING
• Watch a livestream of the meeting online or view the recording any time after the meeting concludes at the following: cityofshastalake.org/meetings
• Submit public comment by mail or email addressed to City Clerk, City of Shasta Lake, PO Box 777, Shasta Lake, CA 96019 or [email protected]. Mailed and emailed comments must be received one day prior to the meeting to be included.
6:00 PM CALL TO ORDER – REGULAR MEETING:

Call to order (please place electronic devices on silent) Statement for the record of Council Members present or absent Pledge of Allegiance
Invocation
AWARDS & RECOGNITIONS:

Proclamation for Women’s History Month, March 2023.

The Brown Act prohibits the Council from taking action on any item not placed on the Agenda in most cases. The Brown Act requires any non-confidential documents or writings distributed to a majority of the City Council less than 72 hours before a regular meeting to be made available to members of the public at the same time they are distributed.

Should supplemental materials to be evaluated in the decision-making process be made available to the members of the legislative body at the meeting, seven (7) copies must be provided to the City Clerk who will distribute them.

Councilmembers are encouraged to contact the City Manager prior to the meeting with questions or concerns regarding any item on the Agenda so that their questions and concerns can be adequately addressed at the meeting.

Agenda packets are available for public review at City Hall, 4477 Main Street, Shasta Lake, CA during normal business hours of 7:00 a.m. to 4:00 p.m. weekdays, excluding holidays.

In Compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please call (530) 275-7407. Notification 48 hours prior to the meeting is requested to enable the City to make reasonable arrangements to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II).

CITY COUNCIL MEETING AGENDA March 7, 2023
PRESENTATIONS:

James Takehara, Electric Utility Director – Electric Industry Update.

Tony Thomasy, Water Utility Specialist – 2023 Water Supply Update.

COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:

Travis Humphrey, President of Shasta Dam Area Little League – Outside Agency Funding Report.

PUBLIC COMMENT:

This time is set aside for citizens to address the City Council on matters listed on the Consent Agenda as well as other items not included on the Regular Agenda. If your comments concern an item noted on the regular agenda, please address the Council when that item is open for public comment. Each speaker is allocated three (3) minutes to speak. Speakers may not cede their time. Comments should be limited to matters within the jurisdiction of the City. Council discussion or action cannot be taken on items not listed on the agenda other than to receive comments. Speaker forms are available from the City Clerk, 4477 Main Street, Shasta Lake, on the City’s website, or at the back of the meeting hall. If you have documents to present to members of Council, please provide a minimum of seven copies.

CONSENT AGENDA:

The items listed under the Consent Agenda are considered routine business and will be voted on together by one motion unless a Council Member requests a specific item to be removed and discussed separately.

1. Acceptance of the Minutes of the February 21, 2023 regular meeting.

2. Information item:

Checks, E-payments, and wires:
01/26/2023 $227,525.58
02/03/2023 $183,713.99
02/09/2023 $1,579.897.36
Payrolls:
02/24/2023 $177,802.52
PUBLIC HEARINGS: None
REGULAR AGENDA:

3. Discussion and possible action to approve a supplemental appropriation in the amount of $5,716.00 and authorizing the City Manager to reimburse the Shasta Lake Gateway Library for the ADA improvements at 1650 Stanton Drive.

CITY COUNCIL MEETING AGENDA March 7, 2023

4. Discussion and possible action to accept the Audited Financial Statements, Single Audit Act Report, Management Letter, and Auditor’s Letter to Council for fiscal year ending June 30-2021.

5. STAFF COMMENTS:

6. CITY COUNCIL COMMENTS AND REPORTS:

This is the time set aside for Council Members, who may so desire, to give brief comments or reports concerning City matters. The City Council may not enter into discussion on matters reported.

Statements made by individual Council Members should not be interpreted as a statement of the City Council. The City Council only takes action by majority vote. • Brief reports by members of the Council regarding correspondence, events and/or meetings attended, and upcoming meetings/events.
• Suggestions/motions for future agenda items.
• In compliance with Assembly Bill 1234, Council will report on attendance at conferences/meetings/events where expenses are reimbursed by the City.

ADJOURNMENT:

Meetings are broadcast on the Wednesday following the meeting at 6:00 PM and the following Friday at 2:00 PM on Charter Channel 181. Videos of meetings are also available through the City website: www.cityofshastalake.org

PROCLAMATION
MAYOR’S PROCLAMATION OF THE CITY OF SHASTA LAKE DECLARING THE MONTH OF MARCH 2023 AS WOMEN’S HISTORY MONTH
WHEREAS, women of every race, class, and ethnic background have made historic contributions to the growth and strength of our Nation in countless recorded and unrecorded ways; and
WHEREAS, American women have played and continue to play a critical economic, cultural, and social role in every sphere of the life of the Nation by constituting a significant portion of the labor force working inside and outside of the home; and WHEREAS, American women have played a unique role throughout the history of the Nation by providing the majority of the volunteer labor force of the Nation; and WHEREAS, American women were particularly important in the establishment of early charitable, philanthropic, and cultural institutions in our Nation; and WHEREAS, American women of every race, class, and ethnic background served as early leaders in the forefront of every major progressive social change movement; and WHEREAS, American women have been leaders, not only in securing their own rights of suffrage and equal opportunity, but also in the abolitionist movement, the emancipation movement, the industrial labor movement, the civil rights movement, and other movements, especially the peace movement, which create a more fair and just society for all.

NOW THEREFORE, BE IT PROCLAIMED by the Mayor of the City of Shasta Lake that March 2023 is declared as Women's History Month.

Dated this 7th day of March, 2023
GREG WATKINS, Mayor
1 MEETING OF THE CITY OF SHASTA LAKE CITY COUNCIL

MINUTES OF THE REGULAR MEETING
HELD TUESDAY, FEBRUARY 21, 2023 AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA

66:00 PM CALL TO ORDER - Regular Session
Mayor Watkins convened the regular meeting at 6:00 PM
Council Members present: Jones, Morgan, Powell, Watkins Council Members absent: none
Pledge & invocation

AWARDS AND RECOGNITIONS
Proclamation for March 2023 as ACES, Resilience and Hope Awareness Month.

COMMUNICATIONS
Brody Wilburn with the Shasta Lake Chamber of Commerce gave an update on recent chamber activity.

Ann Morningstar gave a report on the Mosquito & Vector Control District.

Presentations:

Public Comment:

Amanda Keefer gave an update on Head Start’s progress on the remodel of the old City Hall.

Jim Mark spoke regarding getting the State of California off our backs and spoke regarding body-cams.

CONSENT AGENDA

1. Acceptance of the Minutes of the February 7, 2023 regular meeting.

2. Acceptance of the Minutes of the February 14, 2023 special joint meeting with the Shasta Lake Fire Protection District.

3. Information item:

Checks, e-payments, and wires:
1/12/2023 $1,480,786.54
1/19/2023 $905,920.07
Payrolls:
2/10/2023 $178,941.05

Motion/Vote:

By motion made/seconded (Morgan/Powell), and carried, the consent agenda was approved.

PUBLIC HEARINGS None
2 REGULAR AGENDA

4. Discussion and possible action to ratify the re-appointment of Lieutenant Caleb MacGregor and the appointment of Sergeant Tom Fleming as Abatement and Administrative Hearing Officers for the City of Shasta Lake.

Motion/Vote:

By motion made/seconded (Morgan/Jones), and carried, Resolution CC-2023-08 was approved.

5. Discussion and possible action to oppose Initiative No. 21-0042A1 “The Taxpayer Protection and Government Accountability Act.”
Motion/Vote:

By motion made/seconded (Powell/Morgan), and carried, Resolution CC-2023-09 was approved. Mayor Watkins voted no.

COMMUNICATIONS
Staff Comments
City Council Comments

ADJOURNMENT
With no further business, Mayor Watkins adjourned the meeting at 7:23 pm.

_____________________________
TONI M. COATES, CMC, City Clerk
3 4
5 6
7 8
9 10
11 12
13 14
15 16
Report and Recommendations 3
Reviewed and Approved

City Manager

AGENDA ITEM
City Council
TO: Mayor and City Council Members
FROM: Jessaca Lugo, City Manager

DATE: February 21, 2023
SUBJECT: Shasta Gateway Library Request for Reimbursement of ADA Upgrades at Former City Hall Building (1650 Stanton Drive)
FILE NO.: L-125-125-000
RECOMMENDATION:

It is recommended that the City Council Approve a Resolution and supplemental appropriation authorizing the reimbursement of American Disability Act upgrades at the former City Hall location on Stanton Drive. not to exceed $5,716.00 payable to Shasta Lake Gateway Library (“SLGL”).

BACKGROUND
Update:

Shasta Head Start reconstruction at 1650 Stanton Drive is currently underway. The buildings are completely torn down to wood studs. The previous SLGL door was not usable for the new floor plan, and therefore removed.

Original Staff Report Narrative:

At the September 3, 2019, City Council meeting, City Council asked staff to reach out to Head Start, the potential purchaser of the old City Hall facility, and ask if they would consider returning the entrance door in question to the Shasta Lake Gateway Library (SLGL). Head start was contacted, and they indicated that if their plans for remodel of the facility involved removing the doors, they would return them to the SLGL.

The City received the attached letter dated August 22, 2019, from the Shasta Lake Gateway Library (SLGL) regarding reimbursement of American Disability Act (ADA) improvements costs to upgrade the City Hall building on Stanton Drive. As part of the project for the SLGL to move into 17 the former City Hall facility on Stanton Drive, they were required to complete bathroom improvements and install an ADA compliant front door.

Subsequent to the SLGL installing the improvements and relocating to the former City Hall location, the City embarked on a $7,600,000 construction project to build a new City Hall and Community Center. As part of the project, the City sold the former Incubator Building at the Shasta Gateway Industrial Park that housed the Shasta Lake Historical and Heritage Society (SLHHS).

With the SLGL and now the SLHHS requiring new locations, the City completed a major remodel of the former John Beaudet Center. The building now houses the Shasta Lake Chamber of Commerce, SLHHS, and the SLGL. The City charges $1 annually for the lease of space and provides the utilities for the three entities now residing there.

The City has had a close connection over the years with several non-profits within the City contributing annually to several. From fiscal year 2009-10 to 2017-18 the City contributed $10,000 annually to SLGL. $6,000 was contributed in subsequent consecutive years.

The City Council can choose one of the following actions:

1. Direct staff to reimburse SLGL $5,716.00 as requested.

2. Deny SLGL’s request as presented.

3. Provide alternative direction to staff.

FISCAL IMPACT
General Fund Supplemental Appropriation of $5,716.00

ATTACHMENTS
Resolution CC-2023-XX
September 26, 2019 – Staff Report and Original request

DISTRIBUTION
City Council
Finance Director
18 RESOLUTION CC-2023-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE APPROVING A SUPPLEMENTAL APPROPRIATION IN THE AMOUNT OF $5,716.00 AND AUTHORIZING

THE CITY MANAGER TO REIMBURSE THE SHASTA LAKE GATEWAY LIBRARY FOR THE DOOR EXPENDITURE AND OTHER ADA IMPROVEMENTS AT 1650 STANTON DRIVE WHEREAS, on October 1, 2019, City Council received a reimbursement request from Shasta Lake Gateway Library (“SLGL”) for the ADA improvements made to Stanton Drive City Hall building; and
WHEREAS, City Council directed staff to bring back the item once escrow closed; and WHEREAS, escrow closed on 1650 Stanton Drive, Shasta Lake, CA in October 2021; and WHEREAS, SLGL is requesting the City Council review the request and approve reimbursement not to exceed $5,716.00.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Shasta Lake hereby:

1. Approves a supplemental appropriation in the amount of $5,716.00 (General Fund Account 110-108-5363)

2. Authorize the City Manager to proceed with issuing the funding request to the Shasta Lake Gateway Library.

PASSED, APPROVED, AND ADOPTED this 7th day of March 2023, by the following vote:

AYES:

NOES:

ABSENT:

GREG WATKINS, Mayor
ATTEST:

TONI M. COATES, CMC
City Clerk
19 Report and Recommendations 6.2 Reviewed and Approved

City Manager

AGENDA ITEM
City Council Meeting
TO: Mayor and City Council Members
FROM: John N. Duckett, Jr., City Manager
DATE: September 26, 2019
SUBJECT: Shasta Lake Gateway Library Request for Reimbursement of American Disability Act Upgrades at the Former City Hall building on Stanton Drive
RECOMMENDATION:

It is recommended the City Council consider and provide direction to staff regarding the attached request from the Shasta Lake Gateway Library for reimbursement of American Disability Act upgrades at the former City Hall location on Stanton Drive in the amount of $5,716.25.

BACKGROUND:

Update:

Original Staff Report Narrative:

The City received the attached letter dated August 22, 2019, from the Shasta Lake Gateway Library (SLGL) regarding reimbursement of American Disability Act (ADA) improvements costs to upgrade the City Hall building on Stanton Drive. As part of the project for the SLGL to move into the former City Hall facility on Stanton Drive, they were required to complete bathroom improvements and install an ADA compliant front door.

As a reminder, at the time, the SLGL lost their rented location on Shasta Dam Blvd. near the Fire Hall. Since the Law Enforcement Center on Red Bluff Street was now completed the Sheriff’s staff were moving out of the former City Hall location. The City offered the Sheriff’s vacated space at City Hall to SLGL rent free and covered the cost of utilities. 20 Subsequent to the SLGL installing the improvements and relocating to the former City Hall location, the City embarked on a $7,600,000 construction project to build a new City Hall and Community Center. As part of the project, the City sold the former Incubator Building at the Shasta Gateway Industrial Park that housed the Shasta Lake Historical and Heritage Society (SLHHS). With the SLGL and now the SLHHS requiring new locations, the City completed a major remodel of the former John Beaudet Center. The building now houses the Shasta Lake Chamber of Commerce, SLHHS, and the SLGL. The City charges $1 annually for the lease of space and provides the utilities for the three entities now residing there.

Representatives from SLGL should be available at the City Council meeting to answer questions.

Staff requests direction in how to proceed with the attached request. The City Council can choose one of the following actions:

1. Direct staff to reimburse SLGL $5,716.25 as requested.

2. Deny SLGL’s request as presented.

3. Provide alternative direction to staff.

FISCAL IMPACTS:

Possible Supplemental Appropriation of $5,716.25 within the City’s General Fund.

ATTACHMENTS:

August 22, 2019, letter from the Shasta Lake Gateway Library.

DISTRIBUTION:

City Council
City File
21 22
23 Report and Recommendations 4
Reviewed and Approved

City Manager

AGENDA ITEM
City Council Meeting

TO: Jessaca Lugo, City Manager
FROM: Wendy Howard, Finance Director
DATE: February 28, 2023
SUBJECT: Resolution Accepting the Financial Statements, Single Audit Act Reports, Management Letter and Auditor’s Letter to Council for the Fiscal Year Ending June 30, 2021
FILE NO: F-200-050-012

RECOMMENDATION:

Staff recommends approval of a Resolution by the Shasta Lake City Council accepting the Financial Statements, Single Audit Act Report, Management Letter, and Auditor’s Letter to Council for the Fiscal Year Ending June 30, 2021 for the City of Shasta Lake.

BACKGROUND:

The financial report is an accumulation of information relating to the activities directed and approved by the City Council, along with the actions necessary by Management to carry out the desires of the City Council. This year, as in prior years, the staff records these transactions and works diligently to ensure that everything is proceeding within the guidance given by the City Council.

FISCAL IMPACTS:

None.

ATTACHMENTS:
• Resolution accepting the Audited Financial Statements for the Fiscal Year Ending June 30, 2021
• Financial Statements for the Fiscal Year Ending June 30, 2021 • Single Audit Act Reports and Schedules for the Fiscal Year Ending June 30, 2021 • Independent Auditor’s Management Letter
24 • Auditor’s Letter to Council
DISTRIBUTION:

City of Shasta Lake City Council
25 RESOLUTION CC-2023-XX

A SHASTA LAKE CITY COUNCIL RESOLUTION ACCEPTING THE AUDITED FINANCIAL STATEMENTS, SINGLE AUDIT ACT REPORT, MANAGEMENT LETTER, AND AUDITOR’S LETTER TO COUNCIL FOR FISCAL YEAR ENDING JUNE 30, 2021
WHEREAS, the Shasta Lake City Council is required by Government Code to have an Annual Audit; and
WHEREAS, the audit has been completed by Smith & Newell, Certified Public Accountants.

NOW, THEREFORE, BE IT RESOLVED that the Financial Statements, Single Audit Act Report, Management Letter, and Auditor’s Letter to Council for the fiscal year ending June 30, 2021 is hereby accepted; and
BE IT FURTHER RESOLVED that the Finance Director is hereby authorized and directed to disseminate that audited report to the appropriate recipients.

PASSED, APPROVED, AND ADOPTED this 7th day of March, 2023, by the following vote:

AYES:

NOES:

ABSENT:

GREG WATKINS, Mayor
ATTEST:

TONI M. COATES, CMC
City Clerk
26 CITY OF SHASTA LAKE,

CALIFORNIA

FINANCIAL STATEMENTS

TOGETHER WITH
INDEPENDENT AUDITOR’S REPORT

FOR THE YEAR ENDED
JUNE 30, 2021
27 THIS PAGE INTENTIONALLY LEFT BLANK
28 CITY OF SHASTA LAKE
Annual Financial Report
For the Year Ended June 30, 2021
Table of Contents
Page

INTRODUCTORY SECTION
List of Officials.............................................................................................................................................. i

FINANCIAL SECTION
Independent Auditor’s Report....................................................................................................................1-3 Basic Financial Statements:

Government-Wide Financial Statements:

Statement of Net Position .............................................................................................................4-5 Statement of Activities..................................................................................................................... 6 Fund Financial Statements:

Governmental Funds:

Balance Sheet ............................................................................................................................ 7 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position – Governmental Activities ............................ 8 Statement of Revenues, Expenditures and Changes in Fund Balances..................................... 9 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities – Governmental Activities .............................................................................. 10 Proprietary Funds:

Statement of Net Position...................................................................................................11-12 Statement of Revenues, Expenses and Changes in Net Position............................................. 13 Statement of Cash Flows....................................................................................................14-15 Fiduciary Funds:

Statement of Fiduciary Net Position........................................................................................ 16 Statement of Changes in Fiduciary Net Position..................................................................... 17 Notes to Basic Financial Statements ...............................................................................................18-56 Required Supplementary Information (Unaudited):

City Pension Plan – Schedule of Proportionate Share of the Net Pension Liability ............................ 57 City Pension Plan – Schedule of Contributions ................................................................................... 58 City Pension Plan – Notes to City Pension Plan .................................................................................. 59 City OPEB Plan – Schedule of Changes in the Net OPEB Liability and Related Ratios .................... 60 City OPEB Plan – Schedule of Contributions...................................................................................... 61 City OPEB Plan – Notes to City OPEB Plan ....................................................................................... 62 Budgetary Comparison Schedule – General Fund ............................................................................... 63 Budgetary Comparison Schedule – State Trafficway........................................................................... 64 Budgetary Comparison Schedule – CDBG Project.............................................................................. 65 Note to Budgetary Comparison Schedule ............................................................................................ 66 Combining and Individual Fund Financial Statements:

Nonmajor Governmental Funds:

Combining Balance Sheet.............................................................................................................. 67 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....................... 68 29 CITY OF SHASTA LAKE
Annual Financial Report
For the Year Ended June 30, 2021
Table of Contents
Page

FINANCIAL SECTION (CONTINUED)
Combining and Individual Fund Financial Statements: (Continued) Nonmajor Governmental Funds: (Continued)
Special Revenue Funds:

Combining Balance Sheet ....................................................................................................... 69 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 70 Debt Service Funds:

Combining Balance Sheet ....................................................................................................... 71 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 72 Internal Service Funds:

Combining Statement of Net Position ........................................................................................... 73 Combining Statement of Revenues, Expenses and Changes in Net Position ................................ 74 Combining Statement of Cash Flows........................................................................................75-76 30 INTRODUCTORY SECTION
• List of Officials
31 THIS PAGE INTENTIONALLY LEFT BLANK
32 CITY OF SHASTA LAKE
List of Officials
For the Year Ended June 30, 2021
-iElected Officials
Janice Powell Mayor
Pamelyn Morgan Vice-Mayor
Greg Watkins Member
Richard Kern Member
Matt Doyle Member
Administrative Personnel
Jessaca Lugo City Manager
Vacant Assistant City Manager
John Kenny City Attorney
Wendy Howard Finance Director
Jason Peterson Finance and General Services Manager
James Takehara Electric Utility Director
Jeff Tedder City Engineer
Tony Thomasy Water Treatment Superintendent
Tom Chism Wastewater Treatment Superintendent
Tom Campbell Sheriff’s Captain
Toni Coates City Clerk
33 THIS PAGE INTENTIONALLY LEFT BLANK
34 FINANCIAL SECTION
• Independent Auditor’s Report
• Basic Financial Statements
• Required Supplementary Information
• Combining and Individual Fund Financial Statements
35 THIS PAGE INTENTIONALLY LEFT BLANK
36 CERTIFIED PUBLIC ACCOUNTANTS
-1-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Shasta Lake, California (City), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
37 -2-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the City Pension Plan information, City OPEB Plan information and budgetary comparison information as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

Our opinion on the basic financial statements is not affected by this missing information.

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

The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements are fairly stated in all material respects in relation to the basic financial statements as a whole.

The introductory section 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. 38 -3-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 11, 2023, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Smith & Newell CPAs
Yuba City, California
February 11, 2023
39 THIS PAGE INTENTIONALLY LEFT BLANK
40 Basic Financial Statements
• Government-Wide Financial Statements
41 THIS PAGE INTENTIONALLY LEFT BLANK
42 THIS PAGE INTENTIONALLY LEFT BLANK
43 CITY OF SHASTA LAKE
Statement of Net Position
June 30, 2021
Governmental Business-Type
Activities Activities Totals
ASSETS
Cash and investments $ 11,719,546 $ 38,145,302 $ 49,864,848 Cash with fiscal agent 677,316 - 677,316
Receivables:

Accounts, net 149,768 4,627,058 4,776,826
Interest 9,386 24,856 34,242
Taxes 538,736 - 538,736
Intergovernmental 1,933,353 - 1,933,353
Assessments 2,402,000 600,002 3,002,002
Deposits 4,428 538,978 543,406
Prepaid costs - 112,252 112,252
Inventory - 486,715 486,715
Internal balances 368,072 (368,072) -
Restricted cash and investments 382,772 - 382,772
Loans receivable 4,279,123 - 4,279,123
Land held for resale 534,984 - 534,984
Net OPEB asset/(liability) 314,347 (74,701) 239,646
Capital assets:

Non-depreciable 6,719,122 4,179,846 10,898,968
Depreciable, net 48,408,321 46,794,101 95,202,422
Total capital assets 55,127,443 50,973,947 106,101,390
Total Assets 78,441,274 95,066,337 173,507,611

DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 2,141,664 4,242,600 6,384,264 Deferred OPEB adjustments 278,615 412,738 691,353
Total Deferred Outflows of Resources 2,420,279 4,655,338 7,075,617

LIABILITIES
Accounts payable 3,506,037 607,566 4,113,603
Retentions payable 159,413 10,364 169,777
Salaries and benefits payable 103,433 193,772 297,205
Due to other governments 727,078 1,013,431 1,740,509
Deposits payable 667,269 8,266 675,535
Interest payable 295,660 109,931 405,591
Unearned revenues 22,263 - 22,263
Long-term liabilities:

Due within one year 604,793 771,610 1,376,403
Due in more than one year 13,326,389 17,499,215 30,825,604 Net pension liability 145,731 84,952 230,683
Total Liabilities 19,558,066 20,299,107 39,857,173

DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 1,950,221 3,693,165 5,643,386 Deferred OPEB adjustments 776,858 1,150,829 1,927,687
Total Deferred Inflows of Resources 2,727,079 4,843,994 7,571,073 The notes to the basic financial statements are an integral part of this statement. -4-
Continued (Page 1 of 2)
44 CITY OF SHASTA LAKE
Statement of Net Position
June 30, 2021
Governmental Business-Type
Activities Activities Totals

NET POSITION
Net investment in capital assets 50,320,668 33,044,326 83,364,994 Restricted for:

General government 2,410,407 - 2,410,407
Public safety 11,534 - 11,534
Public ways and facilities 3,350,659 - 3,350,659
Community development 5,753,630 - 5,753,630
Debt service 3,976,769 - 3,976,769
Unrestricted (7,247,259) 41,534,248 34,286,989
Total Net Position $ 58,576,408 $ 74,578,574 $133,154,982 The notes to the basic financial statements are an integral part of this statement. -5-
Continued (Page 2 of 2)
45 CITY OF SHASTA LAKE
Statement of Activities
For the Year Ended June 30, 2021
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Governmental activities:

General government $ 3,699,754 $ 3,730,498 $ 394,349 $ - Public safety 3,967,013 275,412 85,602 -
Public ways and facilities 2,509,585 296,710 2,239,952 234,607 Planning 811,950 - - -
Culture and recreation 378,023 2,435 - -
Community development 281,855 - 831,345 -
Interest on long-term debt 579,898 - - -
Total Governmental Activities 12,228,078 4,305,055 3,551,248 234,607 Business-type activities:

Water 3,876,237 4,316,630 - -
Electric 21,386,568 24,140,048 - -
Wastewater 4,128,161 3,320,563 - -
Industrial park 49,473 34,799 - -
Total Business-Type Activities 29,440,439 31,812,040 - - Total $ 41,668,517 $ 36,117,095 $ 3,551,248 $ 234,607
General revenues:

Taxes:

Property taxes
Sales and use taxes
Transient occupancy taxes
Franchise taxes
Other taxes
Unrestricted grants and contributions
Interest and investment earnings
Miscellaneous
Transfers
Total General Revenues and Transfers
Change in Net Position
Net Position - Beginning
Prior Period Adjustment
Net Position - Beginning, Restated
Net Position - Ending
The notes to the basic financial statements are an integral part of this statement. -6-
46 Net (Expense) Revenue and
Changes in Net Position
Governmental Business-Type
Activities Activities Totals
$ 425,093 $ - $ 425,093
(3,605,999) - (3,605,999)
261,684 - 261,684
(811,950) - (811,950)
(375,588) - (375,588)
549,490 - 549,490
(579,898) - (579,898)
(4,137,168) - (4,137,168)
- 440,393 440,393
- 2,753,480 2,753,480
- (807,598) (807,598)
- (14,674) (14,674)
- 2,371,601 2,371,601
(4,137,168) 2,371,601 (1,765,567)
1,404,389 - 1,404,389
781,374 - 781,374
10,107 - 10,107
213,012 - 213,012
997,313 - 997,313
981,923 - 981,923
36,269 170,210 206,479
179,907 373,595 553,502
(271,606) 271,606 -
4,332,688 815,411 5,148,099
195,520 3,187,012 3,382,532
55,572,355 65,816,204 121,388,559
2,808,533 5,575,358 8,383,891
58,380,888 71,391,562 129,772,450
$ 58,576,408 $ 74,578,574 $ 133,154,982
The notes to the basic financial statements are an integral part of this statement. -6-
47 THIS PAGE INTENTIONALLY LEFT BLANK
48 Basic Financial Statements
• Fund Financial Statements
49 THIS PAGE INTENTIONALLY LEFT BLANK
50 CITY OF SHASTA LAKE
Balance Sheet
Governmental Funds
June 30, 2021
Other
State CDBG Governmental
General Trafficway Project Funds Totals
ASSETS
Cash and investments $ 6,971,834 $ 1,988,195 $ - $ 2,759,517 $11,719,546 Cash with fiscal agent 677,316 - - - 677,316
Receivables:

Accounts, net 149,768 - - 149,768
Interest 4,912 1,829 34 2,611 9,386
Taxes 377,848 157,940 - 2,948 538,736
Intergovernmental 48,226 63,781 1,821,346 - 1,933,353
Assessments - - - 2,402,000 2,402,000
Deposits 4,428 - - - 4,428
Due from other funds 197,860 - - - 197,860
Restricted cash and investments 112,020 - - 270,752 382,772 Loans receivable - - 148,831 4,130,292 4,279,123
Land held for resale - - - 534,984 534,984
Total Assets $ 8,544,212 $ 2,211,745 $ 1,970,211 $10,103,104 $22,829,272

LIABILITIES
Accounts payable $ 860,910 $ 159,002 2,486,125 $ - $ 3,506,037 Retentions payable - 28,769 130,644 - 159,413
Salaries and benefits payable 103,433 - - - 103,433
Due to other governments 710,411 - - 16,667 727,078
Deposits payable 667,269 - - - 667,269
Due to other funds - - 131,491 - 131,491
Advances from other funds 230,770 - - - 230,770
Unearned revenues 22,263 - - - 22,263
Total Liabilities 2,595,056 187,771 2,748,260 16,667 5,547,754

DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 107,178 - 1,735,744 - 1,842,922
Total Deferred Inflows of Resources 107,178 - 1,735,744 - 1,842,922

FUND BALANCES
Restricted 733,825 2,023,974 - 10,086,437 12,844,236
Unassigned 5,108,153 - (2,513,793) - 2,594,360
Total Fund Balances 5,841,978 2,023,974 (2,513,793) 10,086,437 15,438,596 Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 8,544,212 $ 2,211,745 $ 1,970,211 $10,103,104 $22,829,272 The notes to the basic financial statements are an integral part of this statement. -7-
51 CITY OF SHASTA LAKE
Reconciliation of the Governmental Funds Balance
Sheet to the Government-Wide Statement of
Net Position - Governmental Activities
June 30, 2021
Total Fund Balance - Total Governmental Funds $ 15,438,596 Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds balance sheet. 55,127,443 Other long-term assets are not available to pay for current period expenditures and therefore are reported as unavailable revenues in the governmental funds. 1,842,922 Interest payable on long-term debt does not require the use of current financial resources and therefore is not accrued as a liability in the governmental funds balance sheet. (295,660) Deferred outflows of resources related to pension and OPEB are not reported in the governmental funds. 2,420,279 Deferred inflows of resources related to pension and OPEB are not reported in the governmental funds. (2,727,079) Certain liabilities are not due and payable in the current period and therefore are not reported in the governmental funds.

Revenue bonds payable (2,376,775)
Special assessment bonds payable (26,000)
Certificates of participation, less unamortized discount of $269,554 (11,354,446) Compensated absences (173,961)
Net pension liability (145,731)
Net OPEB asset/(liability) 314,347
Internal service funds are used by management to charge the cost of certain activities, such as equipment maintenance and operations, to individual funds. The assets and liabilities of the internal service funds must be added to the statement of net position. 532,473 Net Position of Governmental Activities $ 58,576,408
The notes to the basic financial statements are an integral part of this statement. -8-
52 CITY OF SHASTA LAKE
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2021
Other
State CDBG Governmental
General Trafficway Project Funds Totals

REVENUES
Taxes and assessments $ 3,297,672 $ 448,641 $ - $ 75,250 $ 3,821,563 Licenses and permits 289,917 - - - 289,917
Fines and forfeitures 5,562 - - - 5,562
Use of money and property 21,808 4,921 187 9,353 36,269 Intergovernmental 1,296,828 1,378,272 85,602 178,450 2,939,152 Charges for services 3,848,113 15,128 - 146,335 4,009,576 Other revenues 32,536 147,173 - 198 179,907
Total Revenues 8,792,436 1,994,135 85,789 409,586 11,281,946

EXPENDITURES
Current:

General government 3,427,574 - - 26,107 3,453,681
Public safety 3,825,125 - - 100,000 3,925,125
Public ways and facilities 138,445 1,060,539 - - 1,198,984 Planning 706,800 - - - 706,800
Culture and recreation 283,411 - - - 283,411
Community development - - 169,582 112,273 281,855
Debt service:

Principal 313,000 - - 179,442 492,442
Interest and other charges 464,752 - - 117,035 581,787
Capital outlay 408,118 251,217 2,612,885 - 3,272,220
Total Expenditures 9,567,225 1,311,756 2,782,467 534,857 14,196,305 Excess of Revenues Over (Under)
Expenditures (774,789) 682,379 (2,696,678) (125,271) (2,914,359)

OTHER FINANCING SOURCES (USES)
Transfers out - - - (271,606) (271,606)
Total Other Financing Sources (Uses) - - - (271,606) (271,606) Net Change in Fund Balances (774,789) 682,379 (2,696,678) (396,877) (3,185,965) Fund Balances - Beginning 6,616,767 1,341,595 182,885 10,483,314 18,624,561 Fund Balances - Ending $ 5,841,978 $ 2,023,974 $ (2,513,793) $10,086,437 $15,438,596 The notes to the basic financial statements are an integral part of this statement. -9-
53 CITY OF SHASTA LAKE
Net Change in Fund Balances - Total Governmental Funds $ (3,185,965) Amounts reported for governmental activities in the Statement of Activities are different because:

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

Expenditures for capital outlay 3,272,220
Less current year depreciation (1,564,811)
Various adjustments affecting capital assets (1,900)
Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.

Principal retirements 492,442
Amortization of bond issue costs (14,187)
Some revenues reported in the Statement of Activities will not be collected for several months after the City's year end and do not provide current financial resources and therefore are not reported as revenues in the governmental funds.

Change in unavailable revenues 1,413,258
Certain changes in deferred outflows and deferred inflows of resources reported in the Statement of Activities relate to long-term liabilities and are not reported in the governmental funds.

Change in deferred outflows of resources related to pension (1,452,212) Change in deferred inflows of resources related to pension (1,678,731) Change in deferred outflows of resources related to OPEB (1,778) Change in deferred inflows of resources related to OPEB 194,386 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds.

Change in compensated absences payable 1,947
Change in net pension liability 2,737,042
Change in net OPEB liability (31,738)
Change in accrued interest on long-term debt 1,889
Internal service funds are used by management to charge the cost of certain activities, such as equipment maintenance and operations, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. 13,658 Change in Net Position of Governmental Activities $ 195,520 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the For the Year Ended June 30, 2021
Government-Wide Statement of Activities - Governmental Activities The notes to the basic financial statements are an integral part of this statement. -10-
54 THIS PAGE INTENTIONALLY LEFT BLANK
55 CITY OF SHASTA LAKE
Statement of Net Position
Proprietary Funds
June 30, 2021
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
ASSETS
Current Assets:

Cash and investments $ 5,048,422 $ 25,183,602 $ 5,817,684 $ - Receivables:

Accounts, net 751,267 3,354,766 519,656 -
Interest 4,562 11,309 7,117 -
Assessments - - - 600,002
Deposits - 538,978 - -
Prepaid costs 39,832 72,420 - -
Inventory 4,108 482,607 - -
Total Current Assets 5,848,191 29,643,682 6,344,457 600,002 Noncurrent Assets:

Advances to other funds - 441,237 - -
Net OPEB asset/(liability) 3,837 (17,637) 2,365 -
Capital assets:

Non-depreciable 769,523 1,370,868 646,759 1,392,696
Depreciable, net 10,471,910 6,742,741 28,621,303 -
Total Noncurrent Assets 11,245,270 8,537,209 29,270,427 1,392,696 Total Assets 17,093,461 38,180,891 35,614,884 1,992,698

DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 395,683 2,095,704 418,420 - Deferred OPEB adjustments 58,074 127,900 38,716 -
Total Deferred Outflows of Resources 453,757 2,223,604 457,136 - The notes to the basic financial statements are an integral part of this statement. -11-
Continued (Page 1 of 2)
56 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ 36,049,708 $ 2,095,594
4,625,689 1,369
22,988 1,868
600,002 -
538,978 -
112,252 -
486,715 -
42,436,332 2,098,831
441,237 -
(11,435) (63,266)
4,179,846 -
45,835,954 958,147
50,445,602 894,881
92,881,934 2,993,712
2,909,807 1,332,793
224,690 188,048
3,134,497 1,520,841
The notes to the basic financial statements are an integral part of this statement. -11-
Continued (Page 1 of 2)
57 CITY OF SHASTA LAKE
Statement of Net Position
Proprietary Funds
June 30, 2021
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park

LIABILITIES
Current Liabilities:

Accounts payable 198,416 347,548 10,394 -
Retentions payable 10,364 - - -
Salaries and benefits payable 18,683 83,957 22,596 -
Due to other governments 32,345 977,987 114 -
Deposits payable 8,266 - - -
Due to other funds - - - 66,369
Interest payable 38,063 - 60,668 11,200
Compensated absences payable 16,660 74,239 23,681 -
Loans payable 176,093 - 384,915 -
Bonds payable - - - 40,000
Total Current Liabilities 498,890 1,483,731 502,368 117,569 Noncurrent Liabilities:

Compensated absences payable 16,660 74,239 23,681 -
Advances from other funds 38,023 - 38,286 -
Loans payable 2,838,811 - 13,889,802 -
Bonds payable - - - 600,000
Net pension liability (asset) (15,199) 197,668 (48,412) - Total Noncurrent Liabilities 2,878,295 271,907 13,903,357 600,000 Total Liabilities 3,377,185 1,755,638 14,405,725 717,569

DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 391,010 1,726,895 418,954 - Deferred OPEB adjustments 161,926 356,622 107,950 -
Total Deferred Inflows of Resources 552,936 2,083,517 526,904 -

NET POSITION
Net investment in capital assets 8,226,529 8,113,609 14,993,345 752,696 Restricted - - 627,586 -
Unrestricted 5,390,568 28,451,731 5,518,460 522,433
Total Net Position $ 13,617,097 $ 36,565,340 $ 21,139,391 $ 1,275,129 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net Position of Business-Type Activities
The notes to the basic financial statements are an integral part of this statement. -12-
Continued (Page 2 of 2)
58 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
556,358 51,208
10,364 -
125,236 68,536
1,010,446 2,985
8,266 -
66,369 -
109,931 -
114,580 56,022
561,008 -
40,000 -
2,602,558 178,751
114,580 56,022
76,309 134,158
16,728,613 -
600,000 -
134,057 (49,105)
17,653,559 141,075
20,256,117 319,826
2,536,859 1,156,306
626,498 524,331
3,163,357 1,680,637
32,086,179 958,147
627,586 -
39,883,192 1,555,943
72,596,957 $ 2,514,090
1,981,617
$ 74,578,574
The notes to the basic financial statements are an integral part of this statement. -12-
Continued (Page 2 of 2)
59 CITY OF SHASTA LAKE
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2021
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park

OPERATING REVENUES
Charges for services $ 4,316,630 $ 24,140,048 $ 3,320,563 $ - Other revenues 56,703 316,892 - -
Total Operating Revenues 4,373,333 24,456,940 3,320,563 -

OPERATING EXPENSES
Salaries and benefits 1,448,927 2,256,866 1,362,382 -
Administration 1,272,677 3,539,274 561,099 6,812
Power and water 384,021 12,891,719 333,511 103
Insurance 47,009 149,722 51,209 8,357
Supplies 72,425 798,268 76,144 -
Repair and maintenance 67,789 1,049,614 161,035 -
Professional services 31,556 112,680 106,856 252
Depreciation 587,351 644,533 1,297,814 -
Other expense (17,723) (51,991) (20,697) -
Total Operating Expenses 3,894,032 21,390,685 3,929,353 15,524 Operating Income (Loss) 479,301 3,066,255 (608,790) (15,524)

NON-OPERATING REVENUES (EXPENSES)
Assessment revenue - - - 34,799
Intergovernmental - - - -
Interest income 22,044 109,400 34,301 (2)
Interest expense (102,146) - (303,251) (33,949)
Total Non-Operating Revenues (Expenses) (80,102) 109,400 (268,950) 848 Income (Loss) Before Capital Contributions
and Transfers 399,199 3,175,655 (877,740) (14,676)
Transfers in 40,862 - 230,744 -
Change in Net Position 440,061 3,175,655 (646,996) (14,676) Total Net Position - Beginning 12,633,538 30,721,189 21,198,860 1,289,805 Prior Period Adjustment 543,498 2,668,496 587,527 -
Total Net Position - Beginning, Restated 13,177,036 33,389,685 21,786,387 1,289,805 Total Net Position - Ending $ 13,617,097 $ 36,565,340 $ 21,139,391 $ 1,275,129 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in Net Position of Business-Type Activities
The notes to the basic financial statements are an integral part of this statement. -13-
60 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ 31,777,241 $ 3,281,757
373,595 1,509
32,150,836 3,283,266
5,068,175 1,771,616
5,379,862 702,290
13,609,354 -
256,297 17,263
946,837 27,794
1,278,438 206,555
251,344 20,050
2,529,698 292,697
(90,411) -
29,229,594 3,038,265
2,921,242 245,001
34,799 -
- -
165,743 4,467
(439,346) (2,842)
(238,804) 1,625
2,682,438 246,626
271,606 -
2,954,044 246,626
491,627
1,775,837
2,267,464
$ 2,514,090
232,968
$ 3,187,012
The notes to the basic financial statements are an integral part of this statement. -13-
61 CITY OF SHASTA LAKE
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2021
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 4,184,586 $ 24,210,432 $ 3,183,421 $ - Receipts from interfund services - - - -
Payments to suppliers (1,906,865) (18,376,927) (1,296,043) (15,524) Payments to employees (1,396,003) (1,958,542) (1,295,481) - Net Cash Provided by Operating Activities 881,718 3,874,963 591,897 (15,524)

CASH FLOWS FROM NON-CAPITAL FINANCING

ACTIVITIES
Transfers from other funds 40,862 - 230,744 -
Interfund loans received - - - 66,369
Interfund loans repaid (11,944) - (12,027) (50,993)
Interfund loans repayments received - 138,605 - -
Grants, assessments, and other receipts - - - 74,799
Net Cash Provided (Used) by Non-Capital
Financing Activities 28,918 138,605 218,717 90,175

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of capital assets (645,006) (659,997) - -
Principal paid on debt (170,914) - (385,813) (40,000)
Interest paid on debt (104,304) - (242,583) (34,649)
Net Cash Provided (Used) by Capital and Related
Financing Activities (920,224) (659,997) (628,396) (74,649)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 30,095 142,785 36,492 (2)
Net Cash Provided by Investing Activities 30,095 142,785 36,492 (2) Net Increase (Decrease) in Cash and Cash
Equivalents 20,507 3,496,356 218,710 -
Balances - Beginning 5,027,915 21,687,246 5,598,974 -
Balances - Ending $ 5,048,422 $ 25,183,602 $ 5,817,684 $ - The notes to the basic financial statements are an integral part of this statement. -14-
Continued (Page 1 of 2)
62 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ 31,578,439 $ 1,509
- 3,280,388
(21,595,359) (955,047)
(4,650,026) (1,624,071)
5,333,054 702,779
271,606 -
66,369 -
(74,964) (42,143)
138,605 -
74,799 -
476,415 (42,143)
(1,305,003) (309,687)
(596,727) -
(381,536) (2,842)
(2,283,266) (312,529)
209,370 8,596
209,370 8,596
3,735,573 356,703
32,314,135 1,738,891
$ 36,049,708 $ 2,095,594
The notes to the basic financial statements are an integral part of this statement. -14-
Continued (Page 1 of 2)
63 CITY OF SHASTA LAKE
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2021
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park

RECONCILIATION OF OPERATING INCOME (LOSS)

TO NET CASH PROVIDED BY OPERATING

ACTIVITIES
Operating income (loss) $ 479,301 $ 3,066,255 $ (608,790) $ (15,524) Adjustments to reconcile operating income (loss) to net cash provided by operating activities:

Depreciation 587,351 644,533 1,297,814 -
Decrease (increase) in:

Accounts receivable (190,513) (246,508) (137,142) -
Deposits - (114,557) - -
Prepaid costs (31,517) 14,086 - -
Inventory - (48,821) - -
Pension adjustment - deferred outflows 294,288 1,280,992 317,568 - OPEB adjustment - deferred outflows 370 816 247 -
Increase (decrease) in:

Accounts payable 94,737 78,823 (25,398) -
Retentions payable 857 - - -
Salaries and benefits payable 2,890 12,471 3,598 -
Due to other governments (113,188) 182,828 (1,488) -
Deposits payable 1,766 - - -
Compensated absences 3,741 12,241 (480) -
Net pension liability (554,655) (2,414,336) (598,533) - Net OPEB asset/(liability) 6,616 14,570 4,410 -
Pension adjustment - deferred inflows 340,191 1,480,804 367,103 - OPEB adjustment - deferred inflows (40,517) (89,234) (27,012) - Net Cash Provided by Operating Activities $ 881,718 $ 3,874,963 $ 591,897 $ (15,524) The notes to the basic financial statements are an integral part of this statement. -15-
Continued (Page 2 of 2)
64 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ 2,921,242 $ 245,001
2,529,698 292,697
(574,163) (1,369)
(114,557) -
(17,431) -
(48,821) -
1,892,848 870,464
1,433 1,200
148,162 22,804
857 -
18,959 13,303
68,152 (3,899)
1,766 -
15,502 6,712
(3,567,524) (1,640,598)
25,596 21,421
2,188,098 1,006,241
(156,763) (131,198)
$ 5,333,054 $ 702,779
The notes to the basic financial statements are an integral part of this statement. -15-
Continued (Page 2 of 2)
65 CITY OF SHASTA LAKE
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2021
Private Custodial
Purpose Fund
Trust Fund (Community Total
(Successor Facilities Fiduciary
ASSETS Agency) District) Funds
Current Assets:

Cash and investments $ 536,453 $ 411,316 $ 947,769
Receivables:

Interest 123 448 571
Taxes - 930 930
Total Current Assets 536,576 412,694 949,270
Noncurrent Assets:

Land held for resale 484 - 484
Total Noncurrent Assets 484 - 484
Total Assets 537,060 412,694 949,754

LIABILITIES
Current Liabilities:

Accounts payable - 3,825 3,825
Interest payable 7,471 - 7,471
Unearned revenues 372,828 - 372,828
Loans payable 325,000 - 325,000
Total Current Liabilities 705,299 3,825 709,124
Noncurrent Liabilities:

Loans payable 1,865,000 - 1,865,000
Total Noncurrent Liabilities 1,865,000 - 1,865,000
Total Liabilities 2,570,299 3,825 2,574,124

NET POSITION
Restricted for:

Successor Agency to the Redevelopment Agency (2,033,239) - (2,033,239) Individuals, organizations, and other governments - 408,869 408,869 Total Net Position $ (2,033,239) $ 408,869 $ (1,624,370) The notes to the basic financial statements are an integral part of this statement. -16-
66 CITY OF SHASTA LAKE
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2021
Private Custodial
Purpose Fund
Trust Fund (Community Total
(Successor Facilities Fiduciary
Agency) District) Funds

ADDITIONS
Taxes and assessments $ 362,881 $ 68,272 $ 431,153
Interest income (3,481) 1,365 (2,116)
Total Additions 359,400 69,637 429,037

DEDUCTIONS
Administrative expenses 2,475 - 2,475
Distribution of funds held for others - 37,967 37,967
Interest expense 94,816 - 94,816
Total Deductions 97,291 37,967 135,258
Net Increase (Decrease) in Fiduciary Net Position 262,109 31,670 293,779 Total Net Position - Beginning (2,295,348) 377,199 (1,918,149) Total Net Position - Ending $ (2,033,239) $ 408,869 $ (1,624,370) The notes to the basic financial statements are an integral part of this statement. -17-
67 THIS PAGE INTENTIONALLY LEFT BLANK
68 Basic Financial Statements
• Notes to Basic Financial Statements
69 THIS PAGE INTENTIONALLY LEFT BLANK
70 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-18-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City operates under a Council form of government and provides the following services: sanitation, electric, water and wastewater services; the construction and maintenance of highways, streets and infrastructure; recreational activities and cultural events.

Generally accepted accounting principles require government financial statements to include the primary government and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading. The primary government is considered to be financially accountable if it appoints a majority of an organization’s governing body and is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on the primary government.

Reporting for component units on the City’s financial statements can be blended or discretely presented.

Blended component units are, although legally separate entities, in substance part of the City’s operations and, therefore, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, would be reported in a separate column in the governmentwide financial statements to emphasize it is legally separate from the government.

For financial reporting purposes, the City’s basic financial statements include all financial activities that are controlled by or are dependent upon actions taken by the City Council. The financial statements of the individual component units may be obtained by writing to the City of Shasta Lake, 4477 Main Street, Shasta Lake, CA 96019.

Blended Component Units
Shasta Lake Public Financing Authority (PFA) - The Authority, established in 1994, was created for the purpose of financing public capital improvements. The City is financially accountable for this entity.

Financial accountability is primarily demonstrated by the City Council acting as the governing board for the PFA and its ability to impose its will. The financing activity of the PFA has been included in the City’s financial statements in the major debt service fund, Wastewater Treatment Debt.

The City of Shasta Lake Housing Authority - The Authority, established in 1994, was created for the purpose of administering housing programs. The housing programs and services are clustered in two broad categories: affordable housing and special projects. Because of the nature of the programs and their intended outcomes, the categories will often overlap. The City is financially accountable for this entity.

Financial accountability is primarily demonstrated by the City Council acting as the governing board for the Authority and its ability to impose its will. As an integral part of the City, the Authority is reported as a nonmajor special revenue fund of the City.

Discretely Presented Component Units
There are no component units of the City which meet the criteria for discrete presentation. 71 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-19-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Reporting Entity (Continued)
Joint Agencies
The City is a participant in Small Cities Organized Risk Effort (SCORE), the purpose of which is for member cities to share in the administrative costs of providing liability and workers’ compensation insurance. SCORE is composed of 18 member cities and is governed by a board of directors appointed by the member cities. Complete financial information can be obtained from the SCORE offices at 2180 Harvard Street, Suite 460, Sacramento, CA 95815. The City is not financially accountable for this organization and therefore it is not a component unit under Statement Nos. 14, 39 and 61 of the Governmental Accounting Standards Board.

The City is a participant in the Redding Area Bus Authority (RABA), the purpose of which is to provide a public transit system to the City of Redding, City of Anderson, City of Shasta Lake, and adjacent urbanized areas in unincorporated areas of Shasta County. The governing board of RABA is comprised of eight members, five appointed by the City of Redding and one member by the City of Anderson, City of Shasta Lake, and Shasta County. Complete financial statements for RABA can be obtained from the City of Redding Finance Division, 777 Cypress Avenue, Redding, CA 96001. The City is not financially accountable for this organization and therefore it is not a component unit under Statement Nos. 14, 39 and 61 of the Governmental Accounting Standards Board.

B. Basis of Presentation
Government-Wide Financial Statements
The Statement of Net Position and Statement of Activities display information on all of the nonfiduciary activities of the City and its blended component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. Interfund services provided and used are not eliminated in the process of consolidation. These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent, on fees charged to external parties.

The Statement of Activities presents a comparison between direct expenses and program revenues for each different identifiable activity of the City’s business-type activities and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and; therefore, are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods and services offered by the program, 2) operating grants and contributions, and 3) capital grants and contributions. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Fund Financial Statements
The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component units. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories; each is displayed in a separate column. All remaining governmental and proprietary funds are separately aggregated and reported as nonmajor funds.
72 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-20-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued)
Fund Financial Statements (Continued)
The City reports the following major governmental funds:
• The General fund is used to account for all revenues and expenditures necessary to carry out basic governmental activities of the City that are not accounted for through other funds. For the City, the General fund includes such activities as general government, public protection, community development, public ways and facilities, planning, and culture and recreation services. • The State Trafficway fund is a special revenue fund used to account for transportation revenues and expenditures.
• The CDBG Project fund is a special revenue fund used to account for the CDBG program. Funding comes primarily from grant revenues.

The City reports the following major proprietary funds:
• The Water fund is an enterprise fund used to account for activity related to providing customers with water service and billing for water service provided by the City. • The Electric fund is an enterprise fund used to account for activity related to providing customers with electric service and billing for electric service provided by the City. • The Wastewater fund is an enterprise fund used to account for activity related to providing customers with wastewater service and billing for wastewater service provided by the City.

The City reports the following additional fund types:
• Internal Service funds (ISF) account for the City’s motor pool and public works departments, which provide services to other departments on a cost reimbursement basis. • Private-purpose trust funds are used to report all fiduciary activities that (a) are not required to be reported in pension (and other employee benefit) trust funds or investment trust funds and (b) are held in a trust in which the assets are (a) administered through a trust in which the government itself is not a beneficiary, (b) dedicated to providing benefits to recipients in accordance with the benefit terms, and (c) legally protected from the creditors of the government. • Custodial funds are used to report fiduciary activities that are not required to be reported in pension (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.

These include unapportioned property taxes and other custodial funds. 73 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-21-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting and Measurement Focus
The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales tax, grants, entitlements, and donations. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied.

Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied.

Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available.

Property and sales taxes, interest, certain state and federal grants and charges for services are considered susceptible to accrual and are accrued when their receipt occurs within sixty days after the end of the fiscal year. Expenditures are generally recorded when a liability is incurred, as under accrual accounting.

However, debt service expenditures as well as expenditures related to claims and judgments are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in the various functions of the governmental funds. Proceeds of governmental long-term debt and acquisitions under capital leases are reported as other financing sources.

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

Fiduciary funds include private-purpose trust funds and custodial funds. The fiduciary funds are reported using the economic resources measurement focus and the accrual basis of accounting.

D. Non-Current Governmental Assets/Liabilities
Non-current governmental assets and liabilities, such as capital assets and long-term liabilities, are reported in the governmental activities column in the government-wide Statement of Net Position.

E. Cash and Cash Equivalents
For purposes of the accompanying Statement of Cash Flows, the City considers all highly liquid investments, including restricted cash and investments, with an original maturity of three months or less and amounts held in the City’s investment pool to be cash and cash equivalents.

F. Investments
The City pools cash and investments of all funds. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments. 74 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-22-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Investments (Continued)
Investment transactions are recorded on the trade date. The fair value of investments is determined monthly.

Investments in nonparticipating interest-earning investment contracts are reported at cost; short term investments are reported at amortized cost, investments in the State of California Local Agency Investment Fund, an external pool, are reported at amortized cost which approximates fair value, and the fair value of all other investments are obtained by using quotations obtained from independent published sources or by the safekeeping institution. The fair value represents the amount the City could reasonably expect to receive for an investment in a current sale between a willing buyer and seller.

Income from pooled investments is allocated to the individual funds based on the fund or participant’s average daily cash balance at quarter end in relation to the total pool investments. Income from non-pooled investments is recorded based on the specific investments held by the fund. The interest income is recorded in the fund that earned the interest.

G. Restricted Cash and Investments
Restricted assets in the governmental funds represent cash and investments held in the General fund for customer utility deposits of $112,020 and in the Wastewater Treatment Debt fund for debt service of $270,752.

H. Receivables
Receivables for governmental activities consist mainly of accounts, interest, taxes, intergovernmental revenues, and special assessments. Management records an allowance for doubtful accounts based on historical trends and the periodic aging of receivables. At June 30, 2021, the allowance for doubtful accounts was $2,610.

Receivables for business-type activities consist mainly of user fees, interest, taxes, intergovernmental revenues and special assessments. Management records an allowance for doubtful accounts based on historical trends and the periodic aging of receivables. At June 30, 2021, the allowance for doubtful accounts was $24,409.

I. Other Assets
Deposits
The City has recorded deposits in several funds. The General fund made payments during the year to various other agencies and the Electric fund of the City made payments during the year to Western Area Power Administration for future construction projects.

Inventory
Governmental fund inventories are recorded as expenditures at the time inventory is purchased rather than when consumed. Records are not maintained of inventory and supplies on hand, although these amounts are not considered material.
75 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-23-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Other Assets (Continued)
Inventory (Continued)
Inventories are stated at cost using the first-in, first-out method for proprietary funds. Inventory recorded by the proprietary funds includes electric power equipment. Proprietary fund inventories are recorded as expenses when consumed.

Prepaid Items
Payments made for services that will benefit periods beyond June 30, 2021, are recorded as prepaid costs under both the accrual and modified accrual basis of accounting. The cost of prepaid items is recorded as an expense when consumed rather than when purchased.

J. Loans Receivable
A total of $4,279,123 was recorded as loans receivable at June 30, 2021. These represent low interest notes and related accrued interest to finance multi-family and single-family construction and rehabilitation projects and homebuyer assistance for low-income families. Loan terms are 15 to 55 years with an interest rate at 0 to 5 percent. The primary source of funding for these loans comes from grants from the Federal Community Development Block Grant (CDBG) program and Home Investment Partnerships (HOME) program and the State CalHome program. The CDBG, HOME and CalHome grants contain monitoring requirements to ensure grant compliance. These requirements are reflected in the loan agreements.

K. Land Held for Resale
Land held for resale is generally acquired under Developer Disposition Agreements in the normal course of Low and Moderate Fund activity. The Developer Disposition Agreements provide for transfer of property to developers after certain obligations have been fulfilled. This property is carried at cost until an event occurs to indicate a net realizable value.

L. Capital Assets
Capital assets, including public domain (infrastructure such as roads, bridges, sidewalks, sewer, and similar items) are defined by the City as assets with a cost greater than $5,000 for equipment, $25,000 for buildings and improvements, and $50,000 for infrastructure assets. Capital assets are recorded at historical cost or estimated historical cost if actual historical cost is unavailable. Contributed capital assets are recorded at their acquisition value at the date of donation.

Capital assets used in operations are depreciated or amortized using the straight-line method over the assets’ estimated useful lives in the government-wide financial statements. The range of estimated useful lives by type of asset is as follows:

Depreciable Asset Estimated Lives
Electric, water and wastewater system assets 20 to 50 years Other system assets 20 to 33 years
Buildings 33 years
Equipment 5 to 10 years
Infrastructure 20 to 50 years
76 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-24-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Capital Assets (Continued)
Maintenance and repairs are charged to operations when incurred. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.

M. Property Tax
Shasta County assesses properties, bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties.

Property taxes are levied on a fiscal year (July 1 - June 30). The secured property tax assessments are due on November 1 and February 1 and become delinquent after December 10 and April 10, respectively. The unsecured property tax assessments are due on August 1, and become delinquent after August 31. Property taxes become a lien on the property effective January 1 of the preceding year.

The City recognizes property taxes when the individual installments are due provided they are collected within 60 days after year-end.

N. Interfund Transactions
Interfund transactions are reflected as either loans, services provided or used, reimbursements or transfers.

Loans reported as receivables and payables are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans) as appropriate and are subject to elimination upon consolidation. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fund balance account in applicable governmental funds to indicate that they are not in spendable form.

Services provided or used, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. These services provide information on the net cost of each government function and therefore are not eliminated in the process of preparing the government-wide statement of activities.

Reimbursements occur when the funds responsible for particular expenditures or expenses repay the funds that initially paid for them. Such reimbursements are reflected as expenditures or expenses in the reimbursing fund and reductions to expenditures or expenses in the reimbursed fund.

All other interfund transactions are treated as transfers. Transfers between funds are netted as part of the reconciliation to the government-wide presentation.

O. Unearned Revenue
Under the accrual and modified accrual basis of accounting, revenue may be recognized only when it is earned. When assets are recognized in connection with a transaction before the earnings process is complete, those assets are offset by a corresponding liability for unearned revenue. 77 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-25-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) P. Due to Other Governments
Accrued liabilities payable to other governmental entities are recorded in both the government-wide and fund financial statements as due to other governments.

Q. Compensated Absences
In the government-wide financial statements, vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is recorded as an expense and related liability with the current portion estimated based on historical trends. In the governmental fund financial statements the expenditures and liabilities related to those obligations are recognized only when they mature. Vested or accumulated vacation leave of proprietary funds and in the government-wide financial statements is recorded as an expense and liability of those funds as the benefits accrue to employees.

Sick leave, however, does not vest to the employees and is payable only when sick leave is taken or when an individual has been employed by the City for ten years or longer. These employees receive twenty-five percent of their accrued sick pay, up to 100 hours, as additional termination pay.

In accordance with GASB Statement No. 16, no liability is recorded for non-vesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulated sick leave benefits that is estimated to be taken as additional termination pay.

All vacation and sick leave is accrued when incurred in the government-wide and proprietary fund financial statements. In governmental funds, the cost of vacation and sick leave benefits is recognized when payments are made to employees.

R. Pension
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pension, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plan (Plan) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when 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 asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Measurement Period July 1, 2019 to June 30, 2020
S. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows/inflows of resources of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. 78 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-26-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) S. Other Postemployment Benefits (OPEB) (Continued)
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2019
Measurement Date June 30, 2020
Measurement Period June 30, 2019 to June 30, 2020
T. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items which qualify for reporting in this category. These items relate to the outflows from changes in the net pension liability and the net OPEB liability and are reportable on the statement of net position.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The government has three types of items which qualify for reporting in this category. One item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues for receivables that have not been received within the modified accrual period. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The second and third items relate to the inflows from changes in the net pension liability and the net OPEB liability and are reportable on the statement of net position.

U. Estimates
The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

V. Implementation of Governmental Accounting Standards Board (GASB) Statements The following Governmental Accounting Standards Board (GASB) Statements have been implemented, if applicable, in the current financial statements.

Statement No. 84, Fiduciary Activities. This statement enhances consistency and comparability by (1) establishing specific criteria for identifying activities that should be reported as fiduciary activities and (2) clarifying whether and how business-type activities should report their fiduciary activities. Greater consistency and comparability enhance the value provided by the information reported in financial statements for assessing government accountability and stewardship. 79 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-27-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) V. Implementation of Governmental Accounting Standards Board (GASB) Statements (Continued) Statement No. 90, Majority Equity Interests. This statement improves financial reporting by providing users of financial statements with essential information related to presentation of majority equity interests in legally separate organizations that previously was reported inconsistently. In addition, requiring reporting of information about component units if the government acquires a 100 percent equity interest provides information about the cost of services to be provided by the component unit in relation to the consideration provided to acquire the component unit.

W. Future Accounting Pronouncements
The following GASB Statements will be implemented, if applicable, in future financial statements:

Statement No. 87 “Leases” The requirements of this statement are effective for periods beginning after June 15, 2021. (FY 21/22)
Statement No. 89 “Accounting for Interest Cost Incurred Before the End of a Construction Period” The requirements of this statement are effective for periods beginning after December 15, 2020. (FY 21/22)
Statement No. 91 “Conduit Debt Obligations” The requirements of this statement are effective for periods beginning after December 15, 2021. (FY 22/23)
Statement No. 92 “Omnibus 2020” The requirements of this statement are effective for periods beginning after June 15, 2021. (FY 21/22)
Statement No. 93 “Replacement of Interbank Offered Rates” The requirements of this statement are effective for periods beginning after June 15, 2021. (FY 21/22) Statement No. 94 “Public-Private and Public-Public Partnerships and Availability Payment Arrangements” The requirements of this statement are effective for periods beginning after June 15, 2022. (FY 22/23)
Statement No. 96 “Subscription-Based Information Technology Arrangements” The requirements of this statement are effective for periods beginning after June 15, 2022. (FY 22/23) Statement No. 97 “Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans” The requirements of this statement are effective for periods beginning after June 15, 2021. (FY 21/22) NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Restatement of Net Position
Adjustments resulting from errors or a change to comply with provisions of the accounting standards are treated as adjustments to prior periods. Accordingly, the City reports these changes a restatements of beginning net position. During the current year the City reported a prior period adjustment to correct a prior year understatement of deferred outflows related to pension. 80 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-28-
NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED) A. Restatement of Net Position (Continued)
The impact of the restatement on the net position of the government-wide financial statements as previously reported is presented below:

Governmental
Activities
Business-Type
Activities
Net Position, June 30, 2020 as previously reported $ 55,572,355 $ 65,816,204 Adjustment associated with:

Correction of prior year understatement of deferred outflows related to pension 2,808,533 5,575,358
Total Adjustments 2,808,533 5,575,358
Net Position, July 1, 2020 as restated $ 58,380,888 $ 71,391,562 The impact of the restatement on the net position of the fund financial statements as previously reported is presented below:

Water Electric Sewer
Net Position, June 30, 2020 as previously reported $ 12,633,538 $ 30,721,189 $ 21,198,860 Adjustment associated with:

Correction of prior year understatement of
deferred outflows related to pension 543,498 2,668,496 587,527 Total Adjustments 543,498 2,668,496 587,527
Net Position, July 1, 2020 as restated $ 13,177,036 $ 33,389,685 $ 21,786,387 B. Deficit Fund Balance
The following major special revenue fund had a deficit fund balance:
• The CDBG Project fund had a fund balance deficit of $2,513,793, which is expected to be eliminated in future years through intergovernmental revenues.

C. Rebatable Arbitrage
The Tax Reform Act of 1986 instituted certain arbitrage restrictions with respect to the issuance of taxexempt bonds after August 31, 1986. Arbitrage regulations deal with the investment of all tax-exempt bond proceeds at an interest yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered taxable if applicable rebates are not reported and paid to the Internal Revenue Service (IRS) at least every five years. During the current year, the City performed calculations of excess investment earnings on various bonds and financing and at June 30, 2021, does not expect to incur a liability.
81 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-29-
NOTE 3: CASH AND INVESTMENTS
A. Financial Statement Presentation
As of June 30, 2021, the City’s cash and investments are reported in the financial statements as follows:

Governmental activities $ 12,779,634
Business-type activities 38,145,302
Fiduciary funds 947,769
Total Cash and Investments $ 51,872,705
As of June 30, 2021, the City’s cash and investments consisted of the following:

Cash:

Cash on hand $ 2,072
Deposits (less outstanding checks) 2,112,479
Cash with fiscal agent 112,020
Total Cash 2,226,571
Investments:

In City’s pool 49,646,134
Total Investments 49,646,134
Total Cash and Investments $ 51,872,705
B. Cash
At year end, the carrying amount of the City’s cash deposits (including amounts in checking accounts and money market accounts) was $2,224,499 and the bank balance was $4,331,527. The difference between the bank balance and the carrying amount represents outstanding checks and deposits in transit. In addition, the City had cash on hand of $2,072.

Custodial Credit Risk for Deposits - Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or collateral securities that are in the possession of an outside party. The City’s investment policy requires that deposits in banks must meet the requirements of the California Government Code. Under this code, interest bearing deposits of more than $250,000 must be collateralized at 105 percent to 150 percent of the value of the deposit to guarantee the safety of the public funds. The first $250,000 of the City’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Deposits of more than the $250,000 insured amount are collateralized.

C. Investments
Pursuant to Section 53646 of the Government Code, the City prepares an investment policy annually and presents it to the City Council for review and approval. The investment policy provides the basis for the management of a prudent, conservative investment program. Funds are invested to provide the maximum security of principal with secondary emphasis on achieving the highest return, while meeting daily cash flow needs. All investments are made in accordance with the Government Code and, in general, the investment policy is more restrictive than state law.
82 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-30-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
Under the provisions of the City’s investment policy the City may invest or deposit in the following:

Municipal Securities
U.S. Treasuries
Federal Agencies
Bankers’ Acceptances
Federally Insured Time Deposits
Collateralized Time Deposits
Certificate of Deposit Placement Service (CDARS)
Negotiable Certificates of Deposit
Repurchase Agreement
Commercial Paper
State of California Local Agency Investment Fund (LAIF) Corporate Medium-Term Notes
Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations
Money Market Mutual Funds
Fair Value of Investments - The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognize a threetiered fair value hierarchy as follows:

Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs
The City’s position in external investment pools is in itself regarded as a type of investment and looking through to the underlying investments of the pool is not appropriate. Therefore, the City’s investments in external investment pools are not recognized in the three-tiered fair value hierarchy described above.

At June 30, 2021, the City had the following recurring fair value measurements:

Fair Value Measurements Using
Investment Type Fair Value Level 1 Level 2 Level 3
Investments by Fair Value Level
Federal Agencies $ 10,070,226 $10,070,226 $ - $ -
U.S. Treasuries 6,671,638 6,671,638 - -
Corporate Medium-Term Notes 4,596,198 4,596,198 - -
Asset-Backed Securities 1,107,338 1,107,338 - -
Certificates of Deposit 750,100 750,100 - -
Commercial paper 499,226 499,226 - -
Total Investments Measured at Fair Value 23,694,726 $23,694,726 $ - $ - Investments in External Investment Pools
Shasta County Investment Pool 270,752
LAIF 25,680,656
Total Investments $ 49,646,134
83 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-31-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
Interest Rate Risk - Interest rate risk is the risk of loss due to the fair value of an investment falling due to interest rates rising. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. To limit the exposure to fair value losses resulting from increases in interest rates, the City’s investment policy limits investment maturities to a term appropriate to the need for funds so as to permit the City to meet all projected obligations. Any investments that mature more than five years from the date of purchase cannot occur without prior approval of the City Council.

As of June 30, 2021, the City had the following investments, all of which had a maturity of 5 years or less:

Maturities Weighted
Average
Interest Fair Maturity
Investment Type Rates 0-1 year 1-5 years Value (Years)
Federal Agencies 0.250-3.125% $ 1,545,097 $ 8,525,129 $10,070,226 1.86 U.S. Treasuries 0.500-2.250% 1,005,942 5,665,696 6,671,638 2.27 Corporate Notes 1.650-3.375% 1,162,997 3,433,201 4,596,198 2.12 Asset-Backed Securities 1.100-2.950% - 1,107,338 1,107,338 3.22 Commercial Paper Variable 750,100 - 750,100 -
Negotiable Certificates of Deposit 1.000% 499,226 - 499,226 0.04 Shasta County Investment Pool Variable 270,752 - 270,752 - LAIF Variable 25,680,656 - 25,680,656 -
Total Investments $30,914,770 $18,731,364 $49,646,134 9.84 Credit Risk - Credit risk is the risk that an 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. The City’s investment policy sets specific parameters by type of investment to be met at the time of purchase. Presented below is the minimum rating required (where applicable) by the California Government Code or the City’s investment policy, and the actual rating as of year-end for each investment type.
84 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-32-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
C. Investments (Continued)
Minimum Standard &
Legal Poor’s Moody’s % of
Investment Type Rating Rating Rating Portfolio
Federal National Mortgage Association - - - 4.04%
Federal Farm Credit Bank - - - 5.27%
Federal Home Loan Bank - - - 8.19%
Federal Home Loan Mortgage Corporation - - - 2.77%
U.S. Treasuries - - - 13.44%
Corporate Medium-Term Notes A A A1 0.52%
Corporate Medium-Term Notes A A+ A1 2.09%
Corporate Medium-Term Notes A A A1 0.38%
Corporate Medium-Term Notes A A A2 3.35%
Corporate Medium-Term Notes A A- A2 0.82%
Corporate Medium-Term Notes A AA AA 0.52%
Corporate Medium-Term Notes A AA- AAA3 0.52%
Corporate Medium-Term Notes A AA+ AA+ 0.52%
Corporate Medium-Term Notes A A Aa3 0.53%
Asset-Backed Securities A AAA AAA 0.29%
Asset-Backed Securities A NR AAA 1.71%
Asset-Backed Securities A AAA NR 0.23%
Commercial Paper - A-1 P-1 1.02%
Certificate of Deposit A NR NR 1.51%
Shasta County Investment Pool N/A NR NR 0.55%
LAIF N/A NR NR 51.73%
Total 100.00%
Custodial Credit Risk - Custodial credit risk for investments is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or collateral securities that are in the possession of an outside party. To mitigate the custodial credit risk the City’s investment policy requires that all of its managed investments be held in the name of the City in safekeeping by a third party bank trust department.

Concentration of Credit Risk - Concentration of credit risk is the risk of loss attributed to the magnitude of the City’s investment in a single issuer of securities. When investments are concentrated in one issuer, this concentration presents a heightened risk of potential loss. The City’s investment policy contains limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) at June 30, 2021, that represent 5 percent or more of total City investments are as follows:

Percentage of
Investment Type Amount Invested Investments
Federal Farm Credit Bank $ 2,618,643 5.27%
Federal Home Loan Bank 4,068,247 8.19%
85 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-33-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
D. Investment in External Investment Pools
The Shasta County Pooled Investment Fund is a pooled investment fund program governed by the County which monitors and reviews the management of public funds maintained in the investment pool in accordance with the County investment policy and the California Government Code. The Board of Supervisors review and approve the investment policy annually. The County Treasurer prepares and submits a comprehensive investment report to the Board of Supervisors every month. The report covers the type of investments in the pool, maturity dates, par value, actual cost and fair value. Investments in the Shasta County Pooled Investment Fund are regarded as highly liquid as deposits and withdrawals can be made at any time without penalty. The Pool does not impose a maximum investment limit. Required disclosure information regarding categorization of investments and other deposit and investment risk disclosures can be found in the County’s financial statements. The County of Shasta’s financial statements may be obtained by contacting the County of Shasta Auditor-Controller’s office at 1450 Court Street, Suite 238, Redding, CA 96001.

The City of Shasta Lake maintains an investment in the State of California Local Agency Investment Fund (LAIF), managed by the State Treasurer. This fund is not registered with the Securities and Exchange Commission as an investment company, but is required to invest according to California State Code. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. At June 30, 2021, the City’s investment in LAIF valued at amortized cost was $25,680,656 and is the same as the value of the pool shares. There are no restrictions on withdrawal of funds. The total amount invested by all public agencies in LAIF on that day was $193.5 billion. Of that amount, 97.69 percent is invested in non-derivative financial products and 2.31 percent in structured notes and asset-backed securities.
86 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-34-
NOTE 4: CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2021, was as follows:

Balance Adjustments/ Balance
July 1, 2020 Additions Retirements June 30, 2021
Governmental Activities
Capital Assets, Not Being Depreciated:

Land, easements, and right of way $ 3,826,936 $ - $ - $ 3,826,936 Construction in progress 204,677 2,687,509 - 2,892,186
Total Capital Assets, Not Being Depreciated 4,031,613 2,687,509 - 6,719,122 Capital Assets, Being Depreciated:

Infrastructure and land improvements 53,042,111 575,378 552,372 54,169,861 Buildings and improvements 17,370,718 - ( 554,272) 16,816,446 Machinery and equipment 737,933 9,333 - 747,266
Vehicles 34,571 - - 34,571
Total Capital Assets, Being Depreciated 71,185,333 584,711 ( 1,900) 71,768,144 Less Accumulated Depreciation For:

Infrastructure and land improvements ( 18,499,276) ( 1,070,038) - ( 19,569,314) Buildings and improvements ( 2,713,362) ( 450,262) - ( 3,163,624) Machinery and equipment ( 547,803) ( 44,511) - ( 592,314) Vehicles ( 34,571) - - ( 34,571)
Total Accumulated Depreciation ( 21,795,012) ( 1,564,811) - ( 23,359,823) Total Capital Assets, Being Depreciated, Net 49,390,321 ( 980,100) ( 1,900) 48,408,321 Governmental Activities Capital Assets, Net $53,421,934 $ 1,707,409 ($ 1,900) $ 55,127,443 Balance Transfers/ Balance
July 1, 2020 Additions Retirements June 30, 2021
Business-Type Activities
Capital Assets, Not Being Depreciated:

Land $ 1,837,377 $ - $ - $ 1,837,377
Construction in progress 1,280,159 1,207,400 ( 145,090) 2,342,469 Total Capital Assets, Not Being Depreciated 3,117,536 1,207,400 ( 145,090) 4,179,846 Capital Assets, Being Depreciated:

General and utility plant 93,666,436 89,547 - 93,755,983 Buildings and improvements 1,317,699 - 145,090 1,462,789 Equipment and vehicles 4,149,596 317,743 - 4,467,339
Total Capital Assets, Being Depreciated 99,133,731 407,290 145,090 99,686,111 Less Accumulated Depreciation For:

General and utility plant ( 45,950,714) ( 2,477,331) - ( 48,428,045) Buildings and improvements ( 729,199) ( 42,546) - ( 771,745) Equipment and vehicles ( 3,389,702) ( 302,518) - ( 3,692,220) Total Accumulated Depreciation ( 50,069,615) ( 2,822,395) - ( 52,892,010) Total Capital Assets, Being Depreciated, Net 49,064,116 ( 2,415,105) 145,090 46,794,101 Business-Type Activities Capital Assets, Net $ 52,181,652 ($ 1,207,705) $ - $ 50,973,947 87 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-35-
NOTE 4: CAPITAL ASSETS (CONTINUED)
Depreciation
Depreciation expense was charged to governmental activities as follows:

General government $ 189,591
Public safety 7,139
Public ways and facilities 1,286,118
Planning 3,214
Culture and recreation 78,749
Total Depreciation and Expense – Governmental Activities $ 1,564,811 Depreciation expense was charged to business-type activities as follows:

Water $ 587,351
Electric 644,533
Wastewater 1,297,814
Internal Service Funds 292,697
Total Depreciation Expense – Business-Type Activities $ 2,822,395 Construction in Progress
Construction in progress for governmental activities relates primarily to work performed on road and bridge projects. Construction in progress for business-type activities relates primarily to work performed on water projects, electric projects, and the wastewater treatment plant.

NOTE 5: INTERFUND TRANSACTIONS
Due From/To Other Funds
During the course of operations, transactions occur between funds to account for goods received or services rendered. These receivables and payables are classified as due from or due to other funds. In addition, when funds overdraw their share of pooled cash, the receivables and payables are also classified as due from or due to other funds.

The following are due to and due from balances as of June 30, 2021:

Due From Due To
Other funds Other funds
General fund $ 197,860 $ -
Nonmajor governmental funds - 131,491
Nonmajor enterprise funds - 66,369
Total $ 197,860 $ 197,860
Advances To/From Other Funds
Advances to/from other funds are non-current interfund loans and are offset by a nonspendable fund balance account in applicable governmental funds to indicate they are not in spendable form. 88 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-36-
NOTE 5: INTERFUND TRANSACTIONS (CONTINUED)
Advances To/From Other Funds (Continued)
The following are advances to/from other funds as of June 30, 2021:

Advances To Advances From
Other Funds Other Funds
General fund $ - $ 230,770
Water - 38,023
Electric 441,237 -
Wastewater - 38,286
Internal service funds - 134,158
Total $ 441,237 $ 441,237
Transfers
Transfers are indicative of funding for capital projects, lease payments or debt service, subsidies of various City operations and re-allocations of special revenues.

The following are the interfund transfers for fiscal year ended June 30, 2021:

Transfers Transfers
In Out
Nonmajor governmental funds $ - $ 271,606
Water 40,862 -
Wastewater 230,744 -
Total $ 271,606 $ 271,606
NOTE 6: UNEARNED/UNAVAILABLE REVENUES
At June 30, 2021, components of unearned and unavailable revenues were as follows:

Unearned Unavailable Totals
General Fund
Utility bill prepayments $ 22,263 $ - $ 22,263
Taxes receivable - 48,226 48,226
Grants receivable - 58,952 58,952
Nonmajor Governmental Funds
Grants receivable - 1,735,744 1,735,744
Total $ 22,263 $ 1,842,922 $ 1,865,185
89 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-37-
NOTE 7: LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities for the year ended June 30, 2021:

Amounts
Balance Adjustments/ Balance Due Within
Type of Indebtedness July 1, 2020 Additions Retirements June 30, 2021 One Year Governmental Activities
Loans $ 59,442 $ - ($ 59,442) $ - $ -
Revenue Bonds 2,494,775 - ( 118,000) 2,376,775 126,000
Special Assessment Bonds 28,000 - ( 2,000) 26,000 2,000 Certificates of Participation 11,937,000 - ( 313,000) 11,624,000 404,000 Less Deferred Amounts:

Unamortized Discount ( 283,741) - 14,187 ( 269,554) ( 14,187) Certificates of Participation, Net 11,653,259 - ( 298,813) 11,354,446 389,813 Compensated Absences 175,908 136,727 ( 138,674) 173,961 86,980 Total Governmental Activities $ 14,411,384 $ 136,727 ($ 616,929) $ 13,931,182 $ 604,793 Business-Type Activities
Loans $ 17,846,348 $ - ($ 556,727) $ 17,289,621 $ 561,009 Special Assessment Bonds 680,000 - ( 40,000) 640,000 40,000 Compensated Absences 318,990 305,309 ( 283,095) 341,204 170,601 Total Business-Type Activities $ 18,845,338 $ 305,309 ($ 879,822) $ 18,270,825 $ 771,610 Internal service funds predominately serve the enterprise funds. Accordingly, long-term liabilities for these funds are included as part of the above totals for business-type activities.

Compensated absences for the governmental activities are generally liquidated by the fund where the accrued liability occurred, which is primarily the General fund. Principal and interest payments for the governmental activities are generally paid by a debt service fund.

For the business-type activities, all debt is accounted for in the proprietary fund where the liability occurred.

Individual issues of debt payable outstanding at June 30, 2021, are as follows:

Governmental Activities
Revenue Bonds:
1995 Wastewater Revenue Bonds - Series A issued by the Shasta Lake Public Financing Authority to finance construction of the Wastewater Treatment Plant expansion. Principal payments, ranging from $49,000 to $210,000, are due annually on September 2, and mature September 2, 2034. Interest payments at 4.50% are due semi-annually. The bonds are secured by property assessment payments.
1995 Wastewater Revenue Bonds - Series B issued by the Shasta Lake Public Financing Authority to finance construction of the Wastewater Treatment Plant expansion. Principal payments, ranging from $6,000 to $27,000, are due annually on September 2, and mature September 2, 2034. Interest payments at 4.50% are due semi-annually. The bonds are secured by property assessment payments.

Total Revenue Bonds
2,113,000
263,775
2,376,775
90 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-38-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Special Assessment Bonds:

Riddle Road Assessment Bonds transferred from Shasta Dam Area Public Utility District - voter approved 1989. $64,932 issue of bonds (Farmers’ Home Administration) for the assessment district share of construction costs for the Riddle Road water system. Principal payments, ranging from $900 to $4,000, plus interest at 5%, are due annually on September 2. Final maturity of the issue is scheduled for 2029. The bonds are secured by property assessment payments.

Total Special Assessment Bonds
26,000
26,000
Certificates of Participation:
2018 Certificates of Participation issued February 15, 2018, in the amount of $2,500,000, payable in annual installments of $31,000 to $114,000, with an interest rate of 3.25% and maturity on January 1, 2058. The certificates were used to finance construction of certain improvements to the City Hall/Community Center Project and are secured by lease payments pursuant to a lease-leaseback arrangement, as well as a lien on the property. 2,404,000
2019 Certificates of Participation issued October 8, 2019, in the amount of $9,500,000, payable in annual installments of $280,000 to $645,000 with an interest rate of 2.05 to 3.70% and maturity on July 15, 2039. The certificates were used to refinance a portion of the City’s unfunded actuarial accrued liability (UAAL) with respect to its payments to CalPERS and are secured by lease payments pursuant to a lease-leaseback arrangement, as well as a lien on the property. 9,220,000 Total Certificates of Participation 11,624,000
Total Governmental Activities $ 14,026,775
Business-Type Activities
Loans:

State of California Infrastructure Bank Water Loan used to finance the Reservoir and Water System Improvement Project (Project), issued in the amount of $5,000,000, payable in annual principal payments ranging from $115,944 to $259,579 with interest payable semi-annually at an annual rate of 3.03%. The loan also consists of an annual fee ranging from $779 to $15,000. The loan is amortized over 30 years with the final payment due in 2034. The loan is secured by a lien on and pledge of the net system of revenues.

California State Water Resources Control Board Small Community Wastewater Loan, issued in the amount of $15,000,000, payable in annual installments of $249,617 with an interest rate of 1.70%. Principal payments are due annually on March 30 beginning 2021 with the final payment due March 30, 2050. The loan is being used to finance wastewater treatment plant facility upgrades. The loan is secured by a lien on and pledge of net revenues and a reserve fund.

Total Loans
$ 3,014,904
14,274,717
17,289,621
91 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-39-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Special Assessment Bonds:

Shasta Gateway Industrial Park Assessment Bonds transferred from Shasta Dam Area Public Utility District - voter approved 1989. $64,932 issue of bonds (Farmers’ Home Administration) for the assessment district share of construction costs for the Shasta Gateway Industrial Park water system. Principal payments, ranging from $900 to $4,000, plus interest at 5%, are due annually on September 2. Final maturity of the issue is scheduled for 2029. The bonds are secured by property assessment payments.

Total Special Assessment Bonds

Total Business-Type Activities
640,000
640,000
$ 17,929,621
Following is a schedule of debt payment requirements of governmental activities and business-type activities to maturity for long-term debt, excluding compensated absences that have indefinite maturities.

Governmental Activities
Revenue Bonds
Year Ended
June 30 Principal Interest Total
2022 $ 126,000 $ 104,130 $ 230,130
2023 130,000 98,370 228,370
2024 139,000 92,318 231,318
2025 143,000 85,973 228,973
2026 152,000 79,335 231,335
2027-2031 853,000 286,898 1,139,898
2032-2035 833,775 77,355 911,130
Total $ 2,376,775 $ 824,379 $ 3,201,154
Special Assessment Bonds
Year Ended
June 30 Principal Interest Total
2022 $ 2,000 $ 1,150 $ 3,150
2023 2,000 1,050 3,050
2024 2,000 925 2,925
2025 3,000 775 3,775
2026 3,000 625 3,625
2027-2030 14,000 775 14,775
Total $ 26,000 $ 5,300 $ 31,300
92 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-40-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
Certificates of Participation
Year Ended
June 30 Principal Interest Total
2022 $ 404,000 $ 370,723 $ 774,723
2023 416,000 361,360 777,360
2024 427,000 350,948 777,948
2025 438,000 339,768 777,768
2026 449,000 327,849 776,849
2027-2031 2,435,000 1,434,001 3,869,001
2032-2036 2,858,000 999,208 3,857,208
2037-2041 2,741,000 450,953 3,191,953
2042-2046 348,000 214,727 562,727
2047-2051 409,000 154,277 563,277
2052-2056 480,000 83,362 563,362
2057-2058 219,000 10,822 229,822
Total $ 11,624,000 $ 5,097,998 $ 16,721,998
Business-Type Activities
Loans
Year Ended
June 30 Principal Interest Total
2022 $ 561,008 $ 331,354 $ 892,362
2023 572,888 319,394 892,282
2024 585,040 307,159 892,199
2025 597,471 294,641 892,112
2026 610,190 281,834 892,024
2027-2031 3,252,271 1,206,426 4,458,697
2032-2036 3,350,137 842,519 4,192,656
2037-2041 2,563,982 573,946 3,137,928
2042-2046 2,789,457 348,471 3,137,928
2047-2050 2,407,177 103,167 2,510,344
Total $ 17,289,621 $ 4,608,911 $ 21,898,532
Special Assessment Bonds
Year Ended
June 30 Principal Interest Total
2022 $ 40,000 $ 32,550 $ 72,550
2023 40,000 30,450 70,450
2024 45,000 28,219 73,219
2025 45,000 25,857 70,857
2026 50,000 23,363 73,363
2027-2031 285,000 74,683 359,683
2032 135,000 7,220 142,220
Total $ 640,000 $ 222,342 $ 862,342
93 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-41-
NOTE 8: NET POSITION
The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted. • Net investment in capital assets - consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets.
• Restricted net position - consists of net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. • Unrestricted net position - all other net position that does not meet the definition of “restricted” or “net investment in capital assets”.

Net Position Restricted by Enabling Legislation
The government-wide Statement of Net Position reports $15,502,999 of restricted net position, of which $4,425,974 is restricted by enabling legislation.

Net Position Flow Assumption
When a government funds outlays for a particular purpose from both restricted and unrestricted resources, a flow assumption must be made about the order in which the resources are considered to be applied. When both restricted and unrestricted net position are available, it is considered that restricted resources are used first, followed by the unrestricted resources.

NOTE 9: FUND BALANCES
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. Fund balances for governmental funds can be made up of the following:
• Nonspendable fund balance - amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example:
inventories and prepaid amounts.
• Restricted fund balance - amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Restrictions may effectively be changed or lifted with the consent of resource providers. • Committed fund balance - amounts that can only be used for the specific purposes determined by formal action of the City’s highest level of decision-making authority. The City Council is the highest level of decision-making authority for the City that can, by adoption of an ordinance commit fund balance. Once adopted, the limitation imposed remains in place until a similar action is taken to remove or revise the limitation. The underlying action that imposed the limitation needs to occur no later than the close of the reporting period. 94 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-42-
NOTE 9: FUND BALANCES (CONTINUED)
• Assigned fund balance - amounts that are constrained by the City’s intent to be used for specific purposes. The intent can be established by the City Council or official or body to whom the Council has delegated its authority.
• Unassigned fund balance - the residual classification for the City’s General fund that includes all amounts not contained in the other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes.

The fund balances for all major and nonmajor governmental funds as of June 30, 2021, were distributed as follows:

Other
General State CDBG Project Governmental
Fund Trafficway Fund Funds Totals
Restricted for:

Information technology $ 45,110 $ - $ - $ - $ 45,110
HOME - - - 4,498,123 4,498,123
Wastewater treatment debt - - - 3,253,551 3,253,551
Law enforcement fund (COPS) - - - 11,534 11,534
Water P&FCC charges - - - 397,036 397,036
State trafficway - 2,023,974 - - 2,023,974
Electric P&FCC charges - - - 334,360 334,360
CDBG housing rehabilitation - - - 140,483 140,483
Wastewater P&FCC charges - - - 16,386 16,386
Parks P&FCC charges - - - 285,437 285,437
Former RDA low/mod housing - - - 1,115,024 1,115,024
Debt service 688,715 - - 34,503 723,218
Subtotal 733,825 2,023,974 - 10,086,437 12,844,236
Unassigned 5,108,153 - ( 2,513,793) - 2,594,360
Total $ 5,841,978 $ 2,023,974 ($ 2,513,793) $ 10,086,437 $ 15,438,596 Fund Balance Flow Assumptions
When a government funds outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance), a flow assumption must be made about the order in which the resources are considered to be applied. When both restricted and unrestricted fund balance are available, it is considered that restricted fund balance is depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance.

Unassigned fund balance is applied last.

Fund Balance Policy
The City Council adopted the City of Shasta Lake Fund Balance Policy in 2011. The policy establishes procedures for reporting fund balance classifications, establishes prudent reserve requirements, and establishes a hierarchy of fund balance expenditures. The policy also provides for a measure of financial protection for the City against unforeseen circumstances and to comply with GASB Statement No. 54. 95 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-43-
NOTE 10: PENSION PLAN
A. General Information about the Pension Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous Employee Pension Plan, a cost-sharing multiple employer-defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Effective January 1, 2013, the City added retirement tiers for the Miscellaneous Rate Tiers for new employees as required under the Public Employee Pension Reform Act (PEPRA). Classic employees are generally defined as employees who have been a member of any public retirement system who have had less than a six-month break in service. Applicable new hires to the City defined as classic employees as determined by PERS will be subject to the non-PEPRA plan. New non-classic employees hired on or after January 1, 2013 will be subject to new, lower pension formulas, caps on pensionable income levels and new definitions of pensionable income. In addition, new non-classic employees will be required to contribute half of the total normal cost of the pension benefit unless impaired by an existing Memorandum of Understanding. The cumulative effect of these PEPRA changes will ultimately reduce the City’s retirement costs.

Summary of Rate of Tiers and Eligible Participants
Open for New Enrollment
Miscellaneous PEPRA Miscellaneous members hired on or after January 1, 2013 Closed to New Enrollment
Miscellaneous First Tier Miscellaneous employees hired before January 1, 2013 Miscellaneous Second Tier Miscellaneous employees hired before January 1, 2013 Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 (age 52 for Miscellaneous Plan members if membership date is on or after January 1, 2013) with statutorily reduced benefits. Retirement benefits are paid monthly for life. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following:
the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The costof-living adjustments for the plan are applied as specified by the Public Employees’ Retirement Law.

Each Rate Tier’s specific provisions and benefits in effect at June 30, 2021, are summarized as follows:

Monthly Benefits
Benefit Retirement as a % of
Formula Age Eligible Compensation
Miscellaneous First Tier 3.0% @ 60 50-60 2.000% - 3.000% Miscellaneous Second Tier 2.0% @ 60 50-60 1.092% - 2.418% Miscellaneous PEPRA 2.0% @ 62 52-62 1.000% - 2.500%
96 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-44-
NOTE 10: PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for all Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

Employer Employee Employer Paid
Contribution Contribution Member
Rates Rates Contribution Rates
Miscellaneous First Tier 15.445% 8.000% 0.000%
Miscellaneous Second Tier 9.281% 7.000% 0.000%
Miscellaneous PEPRA 7.732% 6.250% 0.000%
For the year ended June 30, 2021, the contributions recognized as part of pension expense were as follows:

Contributions-Employee
Contributions-Employer (Paid by Employer)
Miscellaneous $ 9,341,569 $ -
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension
As of June 30, 2021, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan as follows:

Proportionate
Share of Net
Pension Liability
Miscellaneous $ 230,682
Total Net Pension Liability $ 230,682
The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2020, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability as of the June 30, 2020 and 2021 measurement dates was as follows:

Proportion Proportion Change-
June 30, 2020 June 30, 2021 Increase (Decrease)
Miscellaneous 0.20417% 0.00547% -0.19870%
97 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-45-
NOTE 10: PENSION PLAN (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
For the year ended June 30, 2021, the City recognized pension credit of $499,511. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to the measurement date $ 563,348 $ - Changes of assumptions - ( 1,646)
Difference between expected and actual experience 11,888 - Difference between projected and actual earnings on
pension plan investments 6,853 -
Difference between City contributions and proportionate share of contributions. 5,640,514 ( 223,440)
Amortization due to differences in proportions 161,661 ( 5,418,300) Total $ 6,384,264 ($ 5,643,386)
$563,348 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Fiscal
Year Ended
June 30
2022 $ 40,086
2023 65,718
2024 68,442
2025 3,287
Thereafter -
Total $ 177,533
Actuarial Assumptions
The total pension liability in the June 30, 2019 actuarial valuation was determined using the following actuarial assumptions:

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

Discount Rate 7.15%
Investment Rate of Return 7.15%
Inflation 2.50%
Salary Increases Varies by entry-age and service
Mortality Rate Table Derived using CalPERS’ membership data for all funds Post-Retirement Benefit Increase Contract COLA up to 2.50% until Purchasing Power Protection Allowance Floor on Purchasing Power
applies
98 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-46-
NOTE 10: PENSION PLAN (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
Actuarial Assumptions (Continued)
The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using Society of Actuaries Scale 90 percent of scale MP 2016. For more details on this table, please refer to the December 2017 Experience Study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

Discount Rate
The discount rate used to measure the total pension liability was 7.15 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Long-Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and longterm market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. 99 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-47-
NOTE 10: PENSION PLAN (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
Long-Term Expected Rate of Return (Continued)
The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation.

These rates of return are net of administrative expenses.

Assumed
Asset Real Return Real Return
Asset Class Allocation Years 1 – 10(a) Years 11+(b)
Global Equity 50.0% 4.80% 5.98%
Fixed Income 28.0% 1.00% 2.62%
Inflation Assets 0.0% 0.77% 1.81%
Private Equity 8.0% 6.30% 7.23%
Real Assets 13.0% 3.75% 4.93%
Liquidity 1.0% 0.00% -0.92%
Total 100.0%
(a) An expected inflation of 2.00% used for this period (b) An expected inflation of 2.92% used for this period Sensitivity of Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability as of the measurement date, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using as discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
1% Decrease Discount Rate 1% Increase

6.15% 7.15% 8.15%
Miscellaneous $ 5,284,759 $ 230,682 ($ 3,945,343)
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB)
A. General Information about the OPEB Plan
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

Plan Description
The City’s defined benefit OPEB plan (Plan) provides OPEB for all permanent full-time employees of the City. The Plan is an agent multiple-employer defined benefit OPEB plan administered by the California Public Employees’ Retirement System (CalPERS). The City Council has the authority to establish and amend the benefit terms of the Plan.
100

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-48-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB)
A. General Information about the OPEB Plan (Continued)
Plan Description (Continued)
The City provides medical, dental and vision coverage for qualifying retirees. Retirees eligible for medical coverage can also elect dental and vision coverage, but the dental and vision coverage is entirely at the retiree’s own expense. Medical coverage is provided through CalPERS as permitted under the Public Employees’ Medical and Hospital Care Act (PEMHCA). This coverage requires the employee to satisfy the requirements for retirement under CalPERS, which requires attainment of age 50 (age 52, if a miscellaneous employee new to PERS on or after January 1, 2013) with 5 years of State or public agency service or approved disability retirement.

Unless covered by a PEMHCA Vesting resolution, the employee must begin his or her retirement warrant within 120 days of terminating employment with the City to be eligible to continue medical coverage through the City and be entitled to the employer subsidy.

If an eligible employee is not already enrolled in the medical plan, he or she may enroll within 60 days of retirement or during any future open enrollment period. Coverage may be continued at the retiree’s option for his or her lifetime. A surviving spouse and other eligible dependents may also continue coverage.

Retirees eligible for medical coverage can also elect dental and vision coverage at their own expense.

Employees Covered by Benefit Terms
At the OPEB liability measurement date of June 30, 2019, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefit payments 27 Inactive employees entitled to but not yet receiving benefit payments 9 Active employees 50
Total 86
Contributions
The City Council has the authority to establish and amend the contribution requirements of the Plan.

As a condition of participation in the CalPERS medical program, the City is obligated to contribute toward the cost of retiree medical coverage for the retiree’s lifetime or until coverage is discontinued. A spouse and other eligible dependents may also continue coverage and receive the City contribution. 101

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-49-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Contributions (Continued)
The City currently maintains two different types of resolutions with CalPERS defining the level of the City’s contribution. The resolutions apply to those eligible for coverages, based on the employee’s hire date and/or irrevocable election:
• Retirees hired before June 1, 2010 are covered by ‘unequal contribution’ resolutions, initially adopted in 1994. For active employees, the City contributes 100 percent of the premium for the employee and his or her dependents, subject to a maximum monthly amount. The following chart shows the maximum monthly amounts (“City Non-Vesting Caps”) for active employee medical costs for 2020:

City Non – Vesting Caps
Group Ee Only Ee + Sp Ee + Fam
Management $ 520.29 $ 1,040.58 $ 1,352.75
Teamsters 520.29 1,040.58 1,352.75
IBEW 520.29 1,040.58 1,352.75
The City’s contribution for retirees covered by these unequal contribution resolutions is determined by multiplying: (a) 5 percent times (b) the number of years the employer has been contracted with PEMHCA times (c) the contribution the employer makes towards active employee health benefits, as described above.

The maximum increase in the dollar amount of the monthly retiree contribution for anyone fiscal year is $100. In no event will the City’s total subsidy for retiree medical expenses exceed the retiree’s actual premium.

Employees hired prior to June 1, 2010 were given the option to have their benefits calculated using the vesting resolution (described below) if they so desired. All current active employees hired prior to June 1, 2010 have chosen that option.
• Retirees hired on or after June 1, 2010 are covered by PEMHCA ‘Vesting’ resolutions. Under these resolutions, the City’s contribution toward retiree medical benefits is determined as the lesser of:
• 100 percent of the medical plan premiums for the retiree and his or her eligible dependents; and • The “100/90” formula maximum benefits (caps) multiplied by the vesting percent. 102

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-50-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Contributions (Continued)
The cap amounts vary by coverage level and are adjusted annually. For 2019, the caps are $767 (employee), $1,461 (employee plus one) and $1,868 (employee plus family).

The vested percent is based on the retiree’s years of CalPERS membership, as shown in the table below, though a minimum of 5 years of City service is required to be vested.

Employees who retire on approved disability retirement are 100 percent vested regardless of service.

Years of
Qualifying
Service Vested Percent
Years of
Qualifying
Service Vested Percent
Less than 10
10 11
12 13
14 0%
50%
55%
60%
65%
70%
15 16
17 18
19 20 or more
75%
80%
85%
90%
95%
100%
Note: Employees covered by the PEMHCA vesting resolution who complete at least 20 years of service with the City are entitled to these subsidized medical benefits from the City once they commence their CalPERS retirement warrant, even if they terminate employment prior to reaching age 50.

Current premium rates: The 2020 CalPERS monthly medical plan rates in the Region 1 area rate group are shown in the table below, though other regional rates were also applied. The CalPERS administration fee is assumed to be expensed each year and has not been projected as an OPEB liability in this valuation.

Region 1 2020 Health Plan Rates
Activities and Pre-Med Retirees Medicare Eligible Retirees Plan Ee Only Ee & 1 Ee & 2+ Ee Only Ee & 1 Ee & 2+
PERS Choice PPO

$ 861.18 $ 1,722.36 $ 2,239.07 $ 351.39 $ 702.78 $ 1,219.49 Kiaser HMO 768.49 1,536.98 1, 998.07 339.43 678.86 1,139.95 PERS Select PPO 520.29 1,040.58 1, 352.75 351.89 702.78 1,014.95 PERS Care PPO 1,133.14 2,266.28 2,946.16 384.78 769.565 1,449.44 United Healthcare HMO 899.94 1,799.88 2,339.84 327.03 654.06 1,194.02 103

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-51-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Net OPEB Liability (Asset)
The City’s net OPEB asset of ($239,646) was measured as of June 30, 2020, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2019.

Actuarial Assumptions and Other Inputs
The total OPEB liability in the June 30, 2019 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Valuation Date June 30, 2019
Funding Method Entry Age Normal Cost, level of percent of pay Asset Valuation Method Market value of assets
Long Term Return on Assets 6.45% as of June 30, 2019 and 6.40% as of June 30, 2018 Discount Rates 6.45% as of June 30, 2019 and 6.40% as of June 30, 2018 Participants Valued Only current active employees and retired participants and covered dependents are valued. No future entrants are considered in this valuation.

Salary Increase 3.00% per year; since benefits do not depend on salary, this is used only to allocate the cost of benefits between service years General Inflation Rate 2.50% per year
Healthcare cost trend rates 6.5% for 2020, decreasing 0.5% per year to an ultimate rate of 5.0% for 2076 and later years
Mortality rates CalPERS 2017 experience study
The demographic actuarial assumptions used in the June 30, 2019 valuation are based on the 2017 experience study of the California Public Employees Retirement System using data from 1997 to 2015, except for basis used to project future mortality improvements.

Discount Rate
The discount rate used to measure the total OPEB liability was 6.45 percent. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees. 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.

C. Changes in the Net OPEB Liability (Asset)
The table below shows the changes in the total OPEB liability, the Plan fiduciary net position (i.e. fair value of the Plan assets), and the net OPEB liability (asset) during the measurement period ending on June 30, 2020 for the City’s proportionate share.
104

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-52-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) C. Changes in the Net OPEB Liability (Asset) (Continued) Increases (Decreases)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
Balances at Fiscal Year Ending June 30, 2020 $ 7,347,138 $ 7,665,539 ($ 318,401) Changes for the year:

Service cost 333,816 - 333,816
Interest 484,815 - 484,815
Differences between expected and actual experience - - - Change of assumptions - - -
Contributions – employer - 328,882 ( 328,882)
Net investment income - 414,776 ( 414,776)
Benefit payments, ( 328,882) ( 328,882) -
Administrative expense - ( 3,782) 3,782
Net Changes 489,749 410,994 78,755
Balances at Fiscal Year Ending June 30, 2021 $ 7,836,887 $ 8,076,533 ($ 239,646) Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate The following presents the net OPEB asset of the City, as well as what the City’s net OPEB asset would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate:
1% Decrease Discount Rate 1% Increase

5.45% 6.45% 7.45%
Net OPEB liability (asset) $ 895,440 ($ 239,646) ($ 1,165,240) Sensitivity of the Net OPEB Liability (Asset) to Changes in the Healthcare Cost Trend Rates The following presents the net OPEB asset of the City, as well as what the City’s net OPEB asset would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentagepoint higher than the current healthcare cost trend rates:

Healthcare Cost
1% Decrease Trend Rates 1% Increase
(5.5% decreasing (6.5% decreasing (7.5% decreasing
to 4.0%) to 5.0%) to 6.0%)
Net OPEB liability (asset) ($ 1,254,244) ($ 239,646) $ 1,024,645 OPEB Plan Fiduciary Net Position
Detailed information about the OPEB plan’s fiduciary net position is available in the separately issued CalPERS financial report.
105

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-53-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended June 30, 2021, the City recognized OPEB income of $26,861. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows
of Resources of Resources
Contributions made subsequent to the measurement date $ 372,321 $ - Changes of assumptions 272,085 ( 216,194)
Difference between expected and actual experience - ( 1,711,493) Net differences between projected and actual earnings
on OPEB plan investments 46,947 -
Total $ 691,353 ($ 1,927,687)
$372,321 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 (asset) in the year ended June 30, 2022.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Fiscal
Year Ended
June 30
2022 ($ 354,967)
2023 ( 349,497)
2024 ( 265,728)
2025 ( 261,021)
2026 ( 292,593)
Thereafter ( 84,849)
Total ($ 1,608,655)
Payable to the OPEB Plan
At June 30, 2021, the City reported a payable of $0 for the outstanding amount of contributions to the Plan required for the year.

NOTE 12: RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disaster. The City maintains insurance coverage from a commercial carrier for its medical, short-term and long-term disability, and dental and vision plan.

There is no claims liability to be reported based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.

There are no significant reductions in insurance coverage from prior years and there have been no settlements exceeding the insurance coverages for each of the past three fiscal years. 106

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-54-
NOTE 12: RISK MANAGEMENT (CONTINUED)
The City is a member of the Small Cities Organized Risk Effort joint powers authority (SCORE), which provides the City with liability coverage with limits of $40,000,000 for each occurrence, workers’ compensation coverage with limits to $5,000,000 for each occurrence and property coverage for replacement. SCORE provides these limits and coverage by participating in the California Joint Powers Risk Management Authority (CJPRMA) for excess liability and Local City Workers’ Compensation Excess Liability joint powers authority (LAWCX) for excess workers’ compensation. Property coverage is obtained by a group purchase from insurance companies with the City’s deductible being $10,000 each claim for vehicles and property.

NOTE 13: JOINT VENTURES
A. NCPA
Northern California Power Agency
The City is a member of Northern California Power Agency (NCPA), a joint powers agency which operates under a joint powers agreement among sixteen public agencies. NCPA Commission is the agency’s governing board with each member appointing one Commission Representative. The purpose of NCPA is to provide its members cost effective wholesale power, energy-related services, and advocacy on behalf of public power consumers through joint action. NCPA provides services to its members through a set of programs, such as the Legislative & Regulatory Program and Power Management Program. NCPA owns generation projects and its Generation Services division operates and maintains these resources on behalf of participating members. Member are only obligated for agency costs related to programs and services expressly selected by members. Members are empowered to opt in to programs and projects and agree to fund a pro rata share allocation associated with selected programs and projects. As a member of NCPA, the City participates in the Legislative & Regulatory Affairs Program.

NCPA’s Legislative & Regulatory Affairs Program is primarily focused on advocacy efforts at Federal and State levels dealing with matters of legislation and regulation that affect electric ratepayers. NCPA engages in policy discussions in forums that include but are not limited to Congress, California State Legislature, Federal Energy Regulatory Commission, California Energy Commission, and California Air Resources Board. The Legislative & Regulatory Affairs Program allows NCPA members to interact with key policy makers with a single coordinated voice. The L&R team also assists NCPA members in addressing numerous energy and environmental reporting obligations and developing capabilities in marketing customer-oriented energy-saving programs.

B. Balancing Authority of Northern California
The Balancing Authority of Northern California (BANC) is a joint powers agency consisting of the Sacramento Municipal Utility District (SMUD), Modesto Irrigation District (MID), City of Roseville, City of Redding (REU) and the City of Shasta Lake as its founding members. On June 26, 2013, BANC members voted to accept Trinity Public Utilities District (TPUD) as a new member. BANC assumed the balancing authority responsibilities from SMUD on May 1, 2011, and is responsible for the matching of generation to load and coordinating system operations with neighboring Balancing Authorities. The resources within the BANC footprint include but are not limited to the Central Valley project (CVP) generation, owned by the Bureau of Reclamation; the CVP transmission network, owned by the Western Area Power Administration (WAPA); and the 500-kV California Oregon Transmission Project (COTP), which is jointly owned by several parties including WAPA and the Transmission Agency of Northern California (TANC). BANC members contract for about 40 percent of the CVP hydroelectric resource. 107

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-55-
NOTE 13: JOINT VENTURES (CONTINUED)
B. Balancing Authority of Northern California (Continued) BANC offers its members cost savings and greater influence through joint action. BANC is engaged in several external policy forums focused on balancing authority matters and allows its members to speak with a unified voice. BANC’s structure provides flexibility to jointly develop and expand operational capabilities at significant cost savings relative to individual development costs. BANC is governed by its members and clarifies roles and responsibilities of the members regarding reliability standard compliance.

The members’ rights and expense-sharing are based on the participation percentages in most BANC activities. BANC members’ participation percentages are based on each members’ retail sales, which are approximately 68.8 percent, 16.5 percent, 7.8 percent, 5.0 percent, 1.2 percent and 0.7 percent for SMUD, MID, Roseville, REU, Shasta Lake and TPUD respectively. These participation percentages can be updated as the need requires.

Complete separate financial statements for each of the joint ventures in which the City participants may be obtained from the City of Shasta Lake Finance Department, 447 Main Street, Shasta Lake, California 96019.

NOTE 14: OTHER INFORMATION
A. Commitments and Contingencies
At June 30, 2021, the City had construction commitments outstanding of approximately $74,408.

The City is a defendant in various lawsuits. Management and Counsel believe the suits will not have a material adverse effect on the City’s financial condition.

B. Successor Agency Trust for Assets of Former Redevelopment Agency In accordance with Assembly Bill 1X26 and Assembly Bill 1434, all redevelopment agencies in the State of California were dissolved and ceased to operate as legal entities as of February 1, 2012. The activity of the Successor Agency Trust for Assets of Former Redevelopment Agency (Successor Agency) is recorded in a private purpose trust.

The following is a summary of changes in long-term liabilities for the year ended June 30, 2021:

Amounts
Balance Additions/ Balance Due Within
Type of Indebtedness July 1, 2020 Adjustments Retirements June 30, 2021 One Year Tax Allocation Bonds $ 2,500,000 $ - ($ 310,000) $ 2,190,000 $ 325,000 Total $ 2,500,000 $ - ($ 310,000) $ 2,190,000 $ 325,000 108

CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2021
-56-
NOTE 14: OTHER INFORMATION (CONTINUED)
B. Successor Agency Trust for Assets of Former Redevelopment Agency (Continued) Individual issues of debt payable outstanding at June 30, 2021, are as follows:

Tax Allocation Bonds:

Tax Allocation Revenue Refunding Bonds, Series 2014, issued by the Shasta Lake Public Financing Authority in the amount of $3,900,000 and payable in annual installments of $265,000 to $400,000, with an interest rate of 2.00% to 5.00% and maturity on December 1, 2026. The bonds were used to refund the 2006 Tax Allocation Revenue Bonds.

Total Tax Allocation Bonds
$ 2,190,000
$ 2,190,000
Following is a schedule of debt payment requirements to maturity for long-term debt:

Tax Allocation Bonds
Year Ended
June 30 Principal Interest Total
2022 $ 325,000 $ 81,531 $ 406,531
2023 345,000 64,781 409,781
2024 360,000 47,156 407,156
2025 375,000 33,703 408,703
2026 385,000 19,625 404,625
2027 400,000 5,000 405,000
Total $ 2,190,000 $ 251,796 $ 2,441,796
C. Subsequent Events
Management has evaluated events subsequent to June 30, 2021 through February 11, 2023, the date on which the financial statements were available for issuance and has determined no other subsequent events requiring disclosure have occurred.
109

THIS PAGE INTENTIONALLY LEFT BLANK
110
Required Supplementary Information
(Unaudited)
111

THIS PAGE INTENTIONALLY LEFT BLANK
112

THIS PAGE INTENTIONALLY LEFT BLANK
113

CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Schedule of Proportionate Share of the Net Pension Liability For the Year Ended June 30, 2021
Last 10 Years*
Measurement Date 2013/2014 2014/2015 2015/2016 2016/2017 Miscellaneous Plan
Proportion of the net pension liability 0.17774% 0.17492% 0.18668% 0.19250% Proportionate share of the net pension
liability $ 4,392,836 $ 4,798,851 $ 6,485,096 $ 7,588,576 Covered payroll 3,288,389 3,191,503 3,310,634 3,655,228 Proportionate share of the net pension
liability as a percentage of covered payroll 133.59% 150.36% 195.89% 207.61% Plan fiduciary net position as a percentage
of the total pension liability 83.80% 82.80% 78.07% 76.44% * The City implemented GASB 68 for the fiscal year June 30, 2015, therefore only seven years are shown. -57-
114
2017/2018 2018/2019 2019/2020

0.19678% 0.20417% 0.00547%
$ 7,416,000 $ 8,175,847 $ 230,682
3,897,624 3,931,301 4,292,114
190.27% 207.97% 5.37%

78.08% 77.37% 99.39%
-57-
115

CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Schedule of Contributions
For the Year Ended June 30, 2021
Last 10 Years*
Fiscal Year 2014/2015 2015/2016 2016/2017 2017/2018
Miscellaneous Plan
Contractually required contribution
(actuarially determined) $ 539,884 $ 373,644 $ 405,356 $ 414,691 Contributions in relation to the actuarially
determined contributions (2,502,238) (604,944) (670,799) (723,724) Contribution deficiency (excess) $ (1,962,354) $ (231,300) $ (265,443) $ (309,033) Covered payroll $ 3,191,503 $ 3,310,634 $ 3,655,228 $ 3,897,624 Contributions as a percentage of covered
payroll 78.40% 18.27% 18.35% 18.57%
* The City implemented GASB 68 for the fiscal year June 30, 2015, therefore only seven years are shown. -58-
116
2018/2019 2019/2020 2020/2021
$ 425,624 $ 472,300 $ 563,348
(817,880) (9,341,569) (563,348)
$ (392,256) $ (8,869,269) $ -
$ 3,931,301 $ 4,292,114 $ 4,698,897

20.80% 217.64% 11.99%
-58-
117

CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Notes to City Pension Plan
For the Year Ended June 30, 2021
-59-
NOTE 1: SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Change of Assumptions and Methods
Benefit Changes: None
Changes of Assumptions: None
NOTE 2: SCHEDULE OF CONTRIBUTIONS
Methods and assumptions used to determine the contribution rates were as follows:

Valuation Date June 30, 2018
Actuarial cost method Individual Entry Age Normal
Amortization method Level Percentage of Payroll and Direct Rate Smoothing Remaining Amortization Period Differs by employer rate plan but no more than 30 years Asset valuation method Fair value
Discount Rate 7.00%
Payroll Growth 2.75%
Inflation 2.50%
Salary increases Varies based on entry age and service
Investment rate of return 7.00%
118

CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Schedule of Changes in the Net OPEB Liability and Related Ratios For the Year Ended June 30, 2021
Last 10 Year Fiscal Years*
2017/2018 2018/2019 2019/2020 2020/2021
Total OPEB Liability
Service cost $ 291,008 $ 326,791 $ 361,837 $ 333,816
Interest 566,870 551,780 582,324 484,815
Differences between expected and actual experience (1,046,313) - (1,835,068) - Changes of assumptions 244,005 351,325 (297,932) -
Benefit payments (303,321) (327,846) (402,009) (328,882) Net Change in Total OPEB Liability (247,751) 902,050 (1,590,848) 489,749 Total OPEB Liability - Beginning 8,283,687 8,035,936 8,937,986 7,347,138 Total OPEB Liability - Ending (a) $ 8,035,936 $ 8,937,986 $ 7,347,138 $ 7,836,887 Plan Fiduciary Net Position
Contributions - employer $ 473,437 $ 472,498 $ 445,979 $ 328,882 Net investment income 435,349 406,313 503,091 414,776
Benefit payments (303,321) (327,846) (402,009) (328,882) Administrative expenses (3,167) (3,480) (1,535) (3,782) Other expenses - (8,704) - -
Net Change in Plan Fiduciary Net Position 602,298 538,781 545,526 410,994 Plan Fiduciary Net Position - Beginning 5,978,934 6,581,232 7,120,013 7,665,539 Plan Fiduciary Net Position - Ending (b) $ 6,581,232 $ 7,120,013 $ 7,665,539 $ 8,076,533 Net OPEB Liability (Asset) - Ending (a) - (b) $ 1,454,704 $ 1,817,973 $ (318,401) $ (239,646) Plan fiduciary net position as a percentage of the total OPEB liability 81.90% 79.66% 104.33% 103.06%
Covered employee payroll $ 3,655,228 $ 3,897,624 $ 3,928,111 $ 4,292,114 Net OPEB liability as a percentage of covered employee payroll 39.80% 46.64% -8.11% -5.58% * The City implemented GASB 75 for the fiscal year June 30, 2018, therefore only four years are shown. -60-
119

CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Schedule of Contributions
For the Year Ended June 30, 2021
Last 10 Fiscal Years*
2017/2018 2018/2019 2019/2020 2020/2021
Actuarially determined contribution $ 505,772 $ 487,373 $ 346,279 $ 358,770 Contributions in relation to the actuarially determined contribution (472,498) (445,979) (328,882) (372,321) Contribution deficiency (excess) $ 33,274 $ 41,394 $ 17,397 $ (13,551) Covered employee payroll $ 3,897,624 $ 3,928,111 $ 4,292,114 $ 4,420,877 Contributions as a percentage of covered employee payroll 12.12% 11.35% 7.66% 8.42% * The City implemented GASB 75 for the fiscal year June 30, 2018, therefore only four years are shown. -61-
120

CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Notes to City OPEB Plan
For the Year Ended June 30, 2021
-62-
NOTE 1: SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
There were no changes reflected during the current measurement period.

NOTE 2: SCHEDULE OF CONTRIBUTIONS
The actuarially determined contribution (ADC) developed for the City’s fiscal year ending June 30, 2021 was determined and presented in the June 30, 2019 Actuarial Valuation report.

Methods and Assumptions Used to Determine Contributions:

Actuarial cost method Entry Age Normal Cost, Level % of Pay Amortization method Level dollar; closed 30-year period Amortization period 30 years
Asset valuation method Market value
Inflation 2.50%
Healthcare cost trend rates 6.5% in 2021, stepping down gradually to 4.0% in 2076 Salary increases 3.00%
Investment rate of return 6.35%
Retirement age From 50 to 75
Mortality CalPERS 2017 Experience Study
121

CITY OF SHASTA LAKE
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
For the Year Ended June 30, 2021
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)

REVENUES
Taxes and assessments $ 3,428,536 $ 3,428,536 $ 3,297,672 $ (130,864) Licenses and permits 275,900 275,900 289,917 14,017
Fines and forfeitures 9,250 9,250 5,562 (3,688)
Use of money and property 60,000 60,000 21,808 (38,192) Intergovernmental 1,194,500 1,326,083 1,296,828 (29,255) Charges for services 3,937,002 3,937,002 3,848,113 (88,889) Other revenues 20,000 38,054 32,536 (5,518)
Total Revenues 8,925,188 9,074,825 8,792,436 (282,389)

EXPENDITURES
Current:

General government 3,244,689 3,488,037 3,427,574 60,463 Public safety 3,793,815 3,803,915 3,825,125 (21,210)
Public ways and facilities 300,013 302,013 138,445 163,568 Planning 848,765 858,765 706,800 151,965
Culture and recreation 394,659 396,659 283,411 113,248
Debt service:

Principal 33,000 313,000 313,000 -
Interest 79,203 236,547 464,752 (228,205)
Capital outlay 957,000 1,246,950 408,118 838,832
Total Expenditures 9,651,144 10,645,886 9,567,225 1,078,661 Excess of Revenues Over (Under) Expenditures (725,956) (1,571,061) (774,789) 796,272

OTHER FINANCING SOURCES (USES)
Transfers in - 437,344 - (437,344)
Total Other Financing Sources (Uses) - 437,344 - (437,344) Net Change in Fund Balances (725,956) (1,133,717) (774,789) 358,928 Fund Balances - Beginning 6,616,767 6,616,767 6,616,767 - Fund Balances - Ending $ 5,890,811 $ 5,483,050 $ 5,841,978 $ 358,928 -63-
122

CITY OF SHASTA LAKE
Required Supplementary Information
Budgetary Comparison Schedule
State Trafficway
For the Year Ended June 30, 2021
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)

REVENUES
Taxes and assessments $ - $ - $ 448,641 $ 448,641
Use of money and property - - 4,921 4,921
Intergovernmental 1,699,415 1,699,415 1,378,272 (321,143) Charges for services 50,000 50,000 15,128 (34,872)
Other revenues - 147,173 147,173
Total Revenues 1,749,415 1,749,415 1,994,135 244,720

EXPENDITURES
Current:

Public ways and facilities 1,244,676 1,244,676 1,060,539 184,137 Capital outlay 1,153,000 1,153,000 251,217 901,783
Total Expenditures 2,397,676 2,397,676 1,311,756 1,085,920 Net Change in Fund Balances (648,261) (648,261) 682,379 1,330,640 Fund Balances - Beginning 1,341,595 1,341,595 1,341,595 - Fund Balances - Ending $ 693,334 $ 693,334 $ 2,023,974 $ 1,330,640 -64-
123

CITY OF SHASTA LAKE
Required Supplementary Information
Budgetary Comparison Schedule
CDBG Project
For the Year Ended June 30, 2021
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)

REVENUES
Use of money and property $ - $ - $ 187 $ 187
Intergovernmental 150,000 275,600 85,602 (189,998)
Total Revenues 150,000 275,600 85,789 (189,811)

EXPENDITURES
Current:

Community development 150,000 235,600 169,582 66,018
Capital outlay - 3,350,000 2,612,885 737,115
Total Expenditures 150,000 3,585,600 2,782,467 803,133
Net Change in Fund Balances - (3,310,000) (2,696,678) 613,322 Fund Balances - Beginning 182,885 182,885 182,885 -
Fund Balances - Ending $ 182,885 $ (3,127,115) $ (2,513,793) $ 613,322 -65-
124

CITY OF SHASTA LAKE
Required Supplementary Information
Note to Budgetary Comparison Schedule
For the Year Ended June 30, 2021
-66-
NOTE 1: BUDGETARY BASIS OF ACCOUNTING
Formal budgetary integration is employed as a management control device during the year for the General fund, Special Revenue funds, and Debt Service funds and is controlled at the department level for the City.

Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).

Accordingly, actual revenues and expenditures can be compared with related budgeted amounts without any significant adjustments.

The following procedures are performed by the City in establishing the budgetary data reflected in the financial statements:
(1) The two-year operating budget of the City is adopted by the City of Shasta Lake City Council prior to July 1 on even numbered years, primarily on the cash basis. (2) The City manager is authorized to transfer budget amounts between departments within any fund; however, any revisions that alter the total expenditures of any fund requires City Council resolution
The City does not use encumbrance accounting under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation.
125

THIS PAGE INTENTIONALLY LEFT BLANK
126
Combining and Individual Fund Financial Statements
127

THIS PAGE INTENTIONALLY LEFT BLANK
128
Nonmajor Governmental Funds
129

THIS PAGE INTENTIONALLY LEFT BLANK
130

CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2021
Special Debt
Revenue Service
Funds Funds Totals
ASSETS
Cash and investments $ 2,146,977 $ 612,540 $ 2,759,517
Receivables:

Interest 2,797 (186) 2,611
Taxes - 2,948 2,948
Assessments - 2,402,000 2,402,000
Restricted cash and investments - 270,752 270,752
Loans receivable 4,130,292 - 4,130,292
Land held for resale 534,984 - 534,984
Total Assets $ 6,815,050 $ 3,288,054 $10,103,104

LIABILITIES
Due to other governments $ 16,667 $ - $ 16,667
Total Liabilities 16,667 - 16,667

FUND BALANCES
Restricted 6,798,383 3,288,054 10,086,437
Unassigned - - -
Total Fund Balances 6,798,383 3,288,054 10,086,437
Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 6,815,050 $ 3,288,054 $10,103,104 -67-
131

CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2021
Special Debt
Revenue Service
Funds Funds Totals

REVENUES
Taxes and assessments $ - $ 75,250 $ 75,250
Use of money and property 8,513 840 9,353
Intergovernmental 178,450 - 178,450
Charges for services 146,335 - 146,335
Other revenues 198 - 198
Total Revenues 333,496 76,090 409,586

EXPENDITURES
Current:

General government 26,107 - 26,107
Public safety 100,000 - 100,000
Community development 104,455 7,818 112,273
Debt service:

Principal - 179,442 179,442
Interest - 117,035 117,035
Total Expenditures 230,562 304,295 534,857
Excess of Revenus Over (Under) Expenditures 102,934 (228,205) (125,271)

OTHER FINANCING SOURCES (USES)
Transfers out (230,744) (40,862) (271,606)
Total Other Financing Sources (Uses) (230,744) (40,862) (271,606) Net Change in Fund Balances (127,810) (269,067) (396,877) Fund Balances - Beginning 6,926,193 3,557,121 10,483,314 Fund Balances - Ending $ 6,798,383 $ 3,288,054 $10,086,437 -68-
132
Nonmajor Governmental Funds
• Special Revenue Funds
133

THIS PAGE INTENTIONALLY LEFT BLANK
134

THIS PAGE INTENTIONALLY LEFT BLANK
135

CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2021
Law Water Electric CDBG
Enforcement P&FCC P&FCC Housing
(COPS) Charges Charges HOME Rehabilitation
ASSETS
Cash and investments $ 28,162 $ 396,516 $ 333,974 $ 978,157 $ 34,845 Receivables:

Interest 39 520 386 1,063 67
Loans receivable - - - 3,518,903 105,571
Land held for resale - - - - -
Total Assets $ 28,201 $ 397,036 $ 334,360 $ 4,498,123 $ 140,483

LIABILITIES
Due to other governments $ 16,667 $ - $ - $ - $ -
Total Liabilities 16,667 - - - -

FUND BALANCES (DEFICIT)
Restricted 11,534 397,036 334,360 4,498,123 140,483
Total Fund Balances 11,534 397,036 334,360 4,498,123 140,483 Total Liabilities, Deferred Inflows
of Resources and Fund Balances $ 28,201 $ 397,036 $ 334,360 $ 4,498,123 $ 140,483 -69-
136
Wastewater Parks
P&FCC P&FCC Housing
Charges Charges Authority Totals
$ 16,106 $ 285,096 $ 74,121 $ 2,146,977
280 341 101 2,797
- - 505,818 4,130,292
- - 534,984 534,984
$ 16,386 $ 285,437 $ 1,115,024 $ 6,815,050
$ - $ - $ - $ 16,667
- - - 16,667
16,386 285,437 1,115,024 6,798,383
16,386 285,437 1,115,024 6,798,383
$ 16,386 $ 285,437 $ 1,115,024 $ 6,815,050
-69-
137

CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Year Ended June 30, 2021
Law Water Electric CDBG
Enforcement P&FCC P&FCC Housing
(COPS) Charges Charges HOME Rehabilitation

REVENUES
Use of money and property $ 151 $ 2,026 $ 1,207 $ 3,975 $ 173 Intergovernmental 100,000 - - 78,450 -
Charges for services - 50,400 35,245 - -
Other revenues - - - - 198
Total Revenues 100,151 52,426 36,452 82,425 371

EXPENDITURES
Current:

General government - 9,082 1,845 - -
Public safety 100,000 - - - -
Community development - - - 67,828 30,540
Total Expenditures 100,000 9,082 1,845 67,828 30,540
Income (Loss) Before Transfers 151 43,344 34,607 14,597 (30,169) Transfers out - - - - -
Change in Net Position 151 43,344 34,607 14,597 (30,169) Fund Balances (Deficit) - Beginning 11,383 353,692 299,753 4,483,526 170,652 Fund Balances - Ending $ 11,534 $ 397,036 $ 334,360 $ 4,498,123 $ 140,483 -70-
138
Wastewater Parks
P&FCC P&FCC Housing
Charges Charges Authority Totals
$ (508) $ 1,113 $ 376 $ 8,513
- - - 178,450
44,800 15,890 - 146,335
- - - 198
44,292 17,003 376 333,496
12,126 3,054 - 26,107
- - - 100,000
- - 6,087 104,455
12,126 3,054 6,087 230,562
32,166 13,949 (5,711) 102,934
(230,744) - - (230,744)
(198,578) 13,949 (5,711) (127,810)
214,964 271,488 1,120,735 6,926,193
$ 16,386 $ 285,437 $ 1,115,024 $ 6,798,383
-70-
139

THIS PAGE INTENTIONALLY LEFT BLANK
140
Nonmajor Governmental Funds
• Debt Service Funds
141

THIS PAGE INTENTIONALLY LEFT BLANK
142

CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Debt Service Funds
June 30, 2021
Wastewater Riddle Davis
Treatment Road Grunsky
Debt Water Bond Loan Act Totals
ASSETS
Cash and investments $ 604,653 $ 7,887 $ - $ 612,540
Receivables:

Interest (242) 6 50 (186)
Taxes 2,388 560 - 2,948
Assessments 2,376,000 26,000 - 2,402,000
Restricted cash and investments 270,752 - - 270,752
Total Assets $ 3,253,551 $ 34,453 $ 50 $ 3,288,054

LIABILITIES
Accounts payable $ - $ - $ - $ -
Total Liabilities - - - -

FUND BALANCES
Restricted 3,253,551 34,453 50 3,288,054
Total Fund Balances 3,253,551 34,453 50 3,288,054
Total Liabilities and Fund Balances $ 3,253,551 $ 34,453 $ 50 $ 3,288,054 -71-
143

CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Debt Service Funds
For the Year Ended June 30, 2021
Wastewater Riddle Davis
Treatment Road Grunsky
Debt Water Bond Loan Act Totals

REVENUES
Taxes and assessments $ 73,856 $ 1,379 $ 15 $ 75,250
Use of money and property 1,112 8 (280) 840
Total Revenues 74,968 1,387 (265) 76,090

EXPENDITURES
Community development
Debt service: 7,818 - - 7,818
Principal 118,000 2,000 59,442 179,442
Interest 109,610 700 6,725 117,035
Total Expenditures 235,428 2,700 66,167 304,295
Excess of Revenues Over
(Under) Expenditures (160,460) (1,313) (66,432) (228,205)

OTHER FINANCING SOURCES (USES)
Transfers out - - (40,862) (40,862)
Total Other Financing Sources (Uses) - - (40,862) (40,862) Net Change in Fund Balances (160,460) (1,313) (107,294) (269,067) Fund Balances - Beginning 3,414,011 35,766 107,344 3,557,121 Fund Balances - Ending $ 3,253,551 $ 34,453 $ 50 $ 3,288,054 -72-
144
Internal Service Funds
145

THIS PAGE INTENTIONALLY LEFT BLANK
146

CITY OF SHASTA LAKE
Combining Statement of Net Position
Internal Service Funds
June 30, 2021

Motor Public
Pool Works Totals
ASSETS
Current Assets:

Cash and investments $ 599,784 $ 1,495,810 $ 2,095,594
Receivables:

Accounts - 1,369 1,369
Interest - 1,868 1,868
Total Current Assets 599,784 1,499,047 2,098,831
Noncurrent Assets:

Net OPEB liability (19,774) (43,492) (63,266)
Capital assets:

Depreciable, net 782,633 175,514 958,147
Total Noncurrent Assets 762,859 132,022 894,881
Total Assets 1,362,643 1,631,069 2,993,712

DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 97,417 1,235,376 1,332,793 Deferred OPEB adjustments 21,432 166,616 188,048
Total Deferred Outflows of Resources 118,849 1,401,992 1,520,841

LIABILITIES
Current Liabilities:

Accounts payable 43,791 7,417 51,208
Salaries and benefits payable 8,399 60,137 68,536
Due to other governments 57 2,928 2,985
Compensated absences payable 8,925 47,097 56,022
Total Current Liabilities 61,172 117,579 178,751
Noncurrent Liabilities:

Compensated absences payable 8,925 47,097 56,022
Advances from other funds 10,530 123,628 134,158
Net pension liability (45,470) (3,635) (49,105)
Total Noncurrent Liabilities (26,015) 167,090 141,075
Total Liabilities 35,157 284,669 319,826

DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 143,335 1,012,971 1,156,306 Deferred OPEB adjustments 59,758 464,573 524,331
Total Deferred Inflows of Resources 203,093 1,477,544 1,680,637

NET POSITION
Investment in capital assets 782,633 175,514 958,147
Unrestricted 460,609 1,095,334 1,555,943
Total Net Position $ 1,243,242 $ 1,270,848 $ 2,514,090
-73-
147

CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2021
Motor Public
Pool Works Totals

OPERATING REVENUES
Charges for services $ 932,835 $ 2,348,922 $ 3,281,757
Other revenue 24 1,485 1,509
Total Operating Revenues 932,859 2,350,407 3,283,266

OPERATING EXPENSES
Salaries and benefits 185,870 1,585,746 1,771,616
Administration 208,007 494,283 702,290
Insurance 5,257 12,006 17,263
Supplies 5,523 22,271 27,794
Repair and maintenance 184,041 22,514 206,555
Professional services 2,868 17,182 20,050
Depreciation 285,038 7,659 292,697
Total Operating Expenses 876,604 2,161,661 3,038,265
Operating Income (Loss) 56,255 188,746 245,001

NON-OPERATING REVENUES (EXPENSES)
Interest income (1,478) 5,945 4,467
Interest expense (223) (2,619) (2,842)
Total Non-Operating Revenues (Expenses) (1,701) 3,326 1,625 Change in Net Position 54,554 192,072 246,626
Total Net Position - Beginning 1,024,894 (533,267) 491,627 Prior Period Adjustment 163,794 1,612,043 1,775,837
Total Net Position - Beginning, Restated 1,188,688 1,078,776 2,267,464 Total Net Position - Ending $ 1,243,242 $ 1,270,848 $ 2,514,090 -74-
148

THIS PAGE INTENTIONALLY LEFT BLANK
149

CITY OF SHASTA LAKE
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2021
Motor Public
Pool Works Totals

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 24 $ 1,485 $ 1,509
Receipts from interfund services 932,835 2,347,553 3,280,388 Payments to suppliers (385,460) (569,587) (955,047)
Payments to employees (161,249) (1,462,822) (1,624,071) Net Cash Provided (Used) by Operating Activities 386,150 316,629 702,779

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Interfund loans repaid (3,308) (38,835) (42,143)
Net Cash Provided (Used) by Non-Capital Financing Activities (3,308) (38,835) (42,143)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING

ACTIVITIES
Acquisition of capital assets (309,687) - (309,687)
Interest paid on debt (223) (2,619) (2,842)
Net Cash Provided (Used) by Capital and Related Financing Activities (309,910) (2,619) (312,529)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 2 8,594 8,596
Net Cash Provided by Investing Activities 2 8,594 8,596 Net Increase (Decrease) in Cash and Cash Equivalents 72,934 283,769 356,703 Balances - Beginning 526,850 1,212,041 1,738,891
Balances - Ending $ 599,784 $ 1,495,810 $ 2,095,594
-75-
Continued (Page 1 of 2)
150

CITY OF SHASTA LAKE
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2021
Motor Public
Pool Works Totals

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss) $ 56,255 $ 188,746 $ 245,001
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:

Depreciation 285,038 7,659 292,697
Decrease (increase) in:

Accounts receivable - (1,369) (1,369)
Pension adjustment - deferred outflows 110,697 759,767 870,464 OPEB adjustment - deferred outflows 137 1,063 1,200
Increase (decrease) in:

Accounts payable 20,613 2,191 22,804
Salaries and benefits payable 4,570 8,733 13,303
Due to other governments (377) (3,522) (3,899)
Compensated absences 2,399 4,313 6,712
Net pension liability (208,635) (1,431,963) (1,640,598) Net OPEB liability 2,442 18,979 21,421
Pension adjustment - deferred inflows 127,964 878,277 1,006,241 OPEB adjustment - deferred inflows (14,953) (116,245) (131,198) Net Cash Provided (Used) by Operating Activities $ 386,150 $ 316,629 $ 702,779 -76-
Continued (Page 2 of 2)
151

THIS PAGE INTENTIONALLY LEFT BLANK
152

CERTIFIED PUBLIC ACCOUNTANTS
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT AUDITOR’S MANAGEMENT LETTER
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
In planning and performing our audit of the financial statements of the City of Shasta Lake, (City) as of and for the year ended June 30, 2021, 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, we considered the City’s internal control over financial reporting (internal control) as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control.

Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

The appendix that accompanies this letter summarizes our prior year comments and suggestions and provides the status regarding those matters. This letter does not affect our report dated February 11, 2023, on the financial statements of the City.

This communication is intended solely for the information and use of management, the City Council, and others within the City and is not intended to be, and should not be, used by anyone other than these specified parties.

Smith & Newell CPAs
Yuba City, California
February 11, 2023
153

THIS PAGE INTENTIONALLY LEFT BLANK
154

CITY OF SHASTA LAKE
Appendix A: Status of Prior Year Recommendations
For the Year Ended June 30, 2021

STATUS OF PRIOR YEAR RECOMMENDATIONS
Accountability of Inventory
Prior Year Recommendation
We recommend that a physical count of all inventory on hand be completed and compared to the inventory records.

Status
Implemented
Debt Reserve Requirement
Prior Year Recommendation
We recommend that the City record the debt reserve amounts on the general ledger.

Status
Implemented
155

THIS PAGE INTENTIONALLY LEFT BLANK
156

CITY OF SHASTA LAKE,

CALIFORNIA

SINGLE AUDIT ACT

REPORTS AND SCHEDULES

FOR THE YEAR ENDED
JUNE 30, 2021
157

THIS PAGE INTENTIONALLY LEFT BLANK
158

CITY OF SHASTA LAKE
Single Audit Act
For the Year Ended June 30, 2021
Table of Contents
Page
Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards............................................................................1-2 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance.................................................3-5 Schedule of Expenditures of Federal Awards for the Year Ended June 30, 2021 ........................................ 6 Notes to Schedule of Expenditures of Federal Awards .............................................................................7-8 Schedule of Findings and Questioned Costs............................................................................................9-11 Management’s Corrective Action Plan ....................................................................................................... 12 159

THIS PAGE INTENTIONALLY LEFT BLANK
160

CERTIFIED PUBLIC ACCOUNTANTS
-1-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, 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 governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Shasta Lake, California, (City) as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated February 11, 2023.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for 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 City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying schedule of findings and questioned costs, we did identify a certain deficiency in internal control that we consider to be material weaknesses and significant deficiencies.

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 misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2021-001 to be a material weakness.

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. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2021-002 to be a significant deficiency. 161
-2-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City'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 direct and material effect on the financial statements. However, providing an opinion on compliance with those 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.

City’s Response to Findings
City of Shasta Lake’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. City of Shasta Lake’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report
The purpose of this report is solely to describe the scope 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 entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Smith & Newell CPAs
Yuba City, California
February 11, 2023
162

CERTIFIED PUBLIC ACCOUNTANTS
-3-
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]

SMITH & NEWELL
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM

AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY

THE UNIFORM GUIDANCE
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on Compliance for Each Major Federal Program
We have audited the City of Shasta Lake, California's (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2021. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. 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 in Government 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). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City's compliance.

Opinion on Each Major Federal Program
In our opinion, the City 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, 2021.
163
-4-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on Internal Control Over Compliance
Management of the City, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal 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.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 164
-5-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Shasta Lake, California, (City) as of and for the year ended June 30, 2021 and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated February 11, 2023, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards 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 responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Smith & Newell CPAs
Yuba City, California
February 11, 2023
165

THIS PAGE INTENTIONALLY LEFT BLANK
166

CITY OF SHASTA LAKE
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2021
Pass-Through
Assistance Entity Passed Total
Federal Grantor/Pass-Through Listing Identifying Through to Federal Grantor/Program Title Number Number Subrecipients Expenditures U.S. Department of Housing and Urban Development
State Department of Housing and Community Development:

Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 20-CDBG-CV1-00021 $ - $ 85,602 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 20-CDBG-CV2-3-00109 - 80,097 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 20-CDBG-12060 - 2,482,241 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 - - 20,000
Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 - - 292,464 Subtotal 14.228 - 2,960,404
Home Investment Partnerships Program 14.239 16-HOME-11374 - 79,650 Home Investment Partnerships Program 14.239 - - 5,211
Home Investment Partnerships Program 14.239 - - 2,980,372 Subtotal 14.239 - 3,065,233
Total U.S. Department of Housing and Urban Development - 6,025,637 U.S. Department of Transportation
State Department of Transportation:

Highway Planning and Construction 20.205 BRLS-5474 (015) - 66,065 Subtotal 20.205 - Highway Planning and Construction Cluster - 66,065 Total U.S. Department of Transportation - 66,065
U.S. Department of the Treasury
State Department of Finance
Coronavirus Relief Fund 21.019 - - 131,583
Subtotal 21.019 - 131,583
Total U.S. Department of the Treasury - 131,583
Total $ - $ 6,223,285
See the accompanying Notes to Schedule of Expenditures of Federal Awards -6-
167

THIS PAGE INTENTIONALLY LEFT BLANK
168

CITY OF SHASTA LAKE
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2021
-7-

1. REPORTING ENTITY
The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal financial assistance programs of the City of Shasta Lake, California (City). The City’s reporting entity is defined in Note 1 to the City’s basic financial statements. All federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included on the Schedule of Expenditures of Federal Awards. The information in this Schedule is presented in accordance with the 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). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the City.

2. BASIS OF ACCOUNTING
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus applied. The accompanying Schedule of Expenditures of Federal Awards, is presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in the notes to the City financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowed or are limited as to reimbursements. In addition, the outstanding balance of prior years’ loans that have significant continuing compliance requirements have been included in total federal expenditures.

3. INDIRECT COST RATE
The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

4. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS
The amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree or can be reconciled with amounts reported in the related federal financial assistance reports.

5. RELATIONSHIP TO BASIC FINANCIAL STATEMENTS
The amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree or can be reconciled with amounts reported in the City’s basic financial statements.

6. PASS-THROUGH ENTITIES’ IDENTIFYING NUMBER
When federal awards were received from a pass-through entity, the Schedule of Expenditures of Federal Awards shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity. 169

CITY OF SHASTA LAKE
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2021
-8-

7. LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS
The City participates in certain federal award programs that sponsor revolving loan programs, which are administered by the City. These programs require servicing arrangements with the City. The funds are returned to the programs upon repayment of the principal and interest. In accordance with Section 200.510 of the Uniform Guidance, the City has reported the outstanding balance of loans from previous years that have significant continuing compliance requirements as of June 30, 2021, along with the value of total outstanding and new loans made during the current year.

The programs listed below had the following aggregate, federally funded loans outstanding at June 30, 2021:

Assistance Amount Outstanding
Listing
Number Program Title July 1, 2020 June 30, 2021

14.228 Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii $ 292,464 $ 254,204

14.239 Home Investment Partnerships Program 2,980,372 2,744,192 Total Loans Outstanding $ 3,272,836 $ 2,998,396
170

CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2021
-9-
SECTION I - SUMMARY OF AUDITOR’S RESULTS
Financial Statements Status

1. Type of auditor’s report issued Unmodified

2. Internal controls over financial reporting:
a. Material weaknesses identified? Yes
b. Significant deficiencies identified and not considered to be material weaknesses? Yes

3. Noncompliance material to financial statements noted? No Federal Awards

1. Internal control over major programs:
a. Material weaknesses identified? No
b. Significant deficiencies identified and not considered to be material weaknesses? No

2. Type of auditor’s report issued on compliance for major programs: Unmodified

3. Any audit findings disclosed that are required to be reported in accordance with 2 CFR Section 200.516(a)? No

4. Identification of major programs:

14.239 Home Investment Partnerships Program

5. Dollar threshold used to distinguish between Type A and Type B programs? $750,000

6. Auditee qualified as a low-risk auditee under 2 CFR Section 200.520? No

SECTION II - FINANCIAL STATEMENT FINDINGS
Reconciliation of Cash and Investments of the City 2021-001 Reconciliation of Financial Statement Accounts 2021-002

SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS None
171

CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2021
-10-
2021-001 Reconciliation of Cash and Investments of the City (Material Weakness) Criteria
Governmental Accounting Principles require that the cash and investments accounts be reconciled to the cash held in the various bank accounts.

Condition
We noted that there was a difference of approximately $95,000 between the cash reported on the general ledger and the bank reconciliation. We also noted several cash accounts on the general ledger had not been reconciled to the cash bank account statements.

Cause
The City changed the accounting software for the year 2020-21, which resulted in a unidentified difference in the cash balance between the prior year and the current year. Additionally, the City had not reconciled several cash accounts held in the bank.

Effect
There is an unidentified difference of approximately $95,000 between the cash balance on the general ledger and the cash reconciliation of the City. Additionally, there were other accounts in which the cash on the general ledger had not been reconciled to the cash in the bank.

Questioned Cost
No questioned costs were identified as a result of our procedures.

Context
We examined the year-end bank reconciliations of the City.

Repeat Finding
This is not a repeat finding.

Recommendation
We recommend that all cash and investment accounts on the City’s records be reconciled to the cash in the bank in a timely manner.

Views of Responsible Officials and Planned Corrective Action Refer to separate Management’s Corrective Action Plan for views of responsible officials and management’s responses.
172

CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2021
-11-
2021-002 Reconciliation of Financial Statement Accounts (Significant Deficiency) Criteria
Government Auditing Standards require independent auditors to evaluate all unadjusted misstatements of the financial statements. Also, producing timely audited financial statements is more difficult when adjustments are not recorded prior to the start of the annual audit.

Condition
At the time of our audit, we noted that the financial statements as presented to us for audit contained misstatements in accounts receivable, inventory, payroll liabilities and capital assets that required adjustment.

Cause
The City had not reconciled and adjusted all accounts on the general ledger prior to the start of the annual audit.

Effect
The financial statements as presented to us contained misstatements and required adjustment.

Questioned Cost
No questioned costs were identified as a result of our procedures.

Context
Not applicable.

Repeat Finding
This is not a repeat finding.

Recommendation
We recommend that the City reconcile all accounts in a timely manner so that required adjustments can be recorded prior to the start of the annual audit.

Views of Responsible Officials and Planned Corrective Action Refer to separate Management’s Corrective Action Plan for views of responsible officials and management’s responses.
173

THIS PAGE INTENTIONALLY LEFT BLANK
174
PO BOX 777 | 4477 Main Street
Shasta Lake, CA 96019
(530) 275-7400
www.cityofshastalake.org

CITY OF SHASTA LAKE, CALIFORNIA
Corrective Action Plan
For the Year Ended June 30, 2021
Compiled by: Wendy Howard, Finance Director
175

THIS PAGE INTENTIONALLY LEFT BLANK
176

CITY OF SHASTA LAKE
Management’s Corrective Action Plan
For the Year Ended June 30, 2021
-12-
2021-001 Reconciliation of Cash and Investments of the City (Material Weakness) We recommend that all cash and investment accounts on the City’s records be reconciled to the cash in the bank in a timely manner.

Management’s Response: The City agrees, and all cash and investment accounts will be reconciled in a timely manner.

Responsible Individual: Wendy Howard, Finance Director
Corrective Action Plan: Bank reconciliations will be completed by the end of the following month.

Anticipated Completion Date: 3/31/2023
2021-002 Reconciliation of Financial Statement Accounts (Significant Deficiency) We recommend that the City reconcile all accounts in a timely manner so that required adjustments can be recorded prior to the start of the annual audit.

Management’s Response: The City agrees, and will have all accounts reconciled in a timely manner, prior to the start of the annual audit.

Responsible Individual: Wendy Howard, Finance Director
Corrective Action Plan: All accounts will be reconciled and adjustments recorded in a timely manner, prior to the start of the annual audit.

Anticipated Completion Date: 3/31/2023
177

THIS PAGE INTENTIONALLY LEFT BLANK
178
179
180
181
182

Shasta Lake City CouncilMarch 7, 2023

Shasta Lake City Council
March 7, 2023