CITY COUNCIL MEETING AGENDA April 2, 2024
CITY OF SHASTA LAKE
CITY COUNCIL
MEETING AGENDA
April 2, 2024
6:00 P.M.
Shasta Lake City Council Chambers
4488 Red Bluff Street Shasta Lake, CA 96019
Mayor: Janice Powell
Vice Mayor: Tena Eisenbeisz
Council Members: Justin Jones, Pamelyn Morgan, Greg Watkins
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 electronically before the meeting to:
[email protected]. Public comment by email will be read into the record during consideration of the item the comment addresses. Each public comment will be limited to three minutes of reading. Include the item number you are commenting on in the subject line of the email. Once the vote has taken place on an item, no additional public comments will beaccepted.
• Submit public comment by mail addressed to City Clerk, City of Shasta Lake, PO Box 777, Shasta Lake, CA 96019. Mailed comments must be received one day prior to the meeting to be included.
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Call to order (please place electronic devices on silent)
1.2 Statement for the record of Council Members present or absent
1.3 Pledge of Allegiance
1.4 Invocation
2.0 AWARDS & RECOGNITIONS:
2.1 Proclamation: Child Abuse Prevention Awareness Month
3.0 PRESENTATIONS:
3.1 None
1 CITY COUNCIL MEETING AGENDA April 2, 2024
4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:
5.0 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. Pursuant to The Brown Act, the City Council cannot take action on Public Comment Items.
6.0 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.
6.1 Minutes of the 9:30 AM Special Meeting of March 19, 2024. (pg. 7)
6.2 Minutes of the 5:30 PM Special Meeting of March 19, 2024. (pg. 8)
6.3 Minutes of the Regular Meeting of March 19, 2024. (pg. 9)
6.4 Payrolls: (pg. 13)
PE 3/16/2024 PD 3/22/2024 $157,566.64
6.5 Checks, E-payments, and wires: (pg. 15)
3/07/2024 $131,597.30
3/14/2024 $1,044,999.31
6.6 Second reading of an Ordinance amending Title 2 (Administration and Personnel), by adding Section 2.10 (City Engineer) relating to codifying the Authority of the City Engineer. (pg. 25)
7.0 PUBLIC HEARINGS:
7.1 None
8.0 REGULAR AGENDA:
2 CITY COUNCIL MEETING AGENDA April 2, 2024
8.1 Discussion and possible action to approve a Letter of Opposition, as requested by Shasta County CEO David Rickert, on the Fountain Wind Project. (pg. 29)
8.2 Discussion and possible action to approve a resolution accepting the financial statements, Single Audit Act reports, and Auditor’s Letter to Council for the Fiscal Year ending June 30, 2023. (pg. 31)
9.0 STAFF COMMENTS:
10.0 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 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). 3 4
April 2024
“CHILD ABUSE PREVENTION AWARENESS MONTH”
WHEREAS, as a society, we have a responsibility to nurture and protect our children and help ensure they become healthy and productive adults; and WHEREAS, the Centers for Disease Control and Prevention ranks child abuse among America’s top public health crisis. In Shasta County substantiated cases of child abuse are three times the state average; and
WHEREAS, Adverse Childhood Experiences (ACEs) have a significant impact on a child’s future that include physical, emotional, and sexual abuse, neglect, and parental illness or stress; and
WHEREAS, scientific studies confirm a direct link between child abuse and a significantly greater risk later in life for substance abuse, criminal behavior, suicide, eating disorders, smoking, and premature death from chronic disease, cancer and other serious illnesses; and WHEREAS, everyone in the community should become more aware of the prevention of child abuse and neglect and engage in providing pathways to hope and healing for parents and caregivers so they can raise their children in a safe, nurturing environment; and WHEREAS, Pathways to Hope for Children (Shasta County’s Child Abuse Prevention Coordinating Council) strengthens families in our community by focusing on hope and building protective factors to ensure children are valued and supported by providing parents and caregivers opportunities to receive social connections, knowledge and concrete support in times of needs, ensure all children will grow to their full potential; and WHEREAS, in the City of Shasta Lake there are numerous committed agencies, schools, parents, relatives, community volunteers, public policymakers and professionals who are collaborating their efforts to increase hope in our community and eliminate child abuse and neglect to provide pathways to hope and healing for children and families; NOW, THEREFORE, as Mayor of the City of Shasta Lake, I do hereby proclaim April 2024, as Child Abuse Prevention Awareness Month in the City of Shasta Lake and urge all citizens to join the important efforts of all partners serving children and families to work together to prevent child abuse and neglect and build healthy, safe, and nurturing families and communities.
Dated this 2nd day of April, 2024
JANICE POWELL, Mayor
5 6
CITY OF SHASTA LAKE
CITY COUNCIL MEETING MINUTES
MINUTES OF THE SPECIAL MEETING
HELD TUESDAY, MARCH 19, 2024, AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Mayor Powell convened the special meeting at 9:30 AM
1.2 Council Members present: Eisenbeisz, Jones, Morgan, Powell It was announced that Councilman Watkins would meet the Council on-site at the Water Treatment Plant.
2.0 CLOSED SESSION
PUBLIC COMMENT for agendized items only, the City Council will allocate up to a maximum of three minutes per speaker for each agenda item.
There was no public comment.
The City Council recessed to Closed Session to discuss the following item(s).
Reportable action, if any, will be announced at the next regular meeting.
2.1 Pursuant to California Government Code Section 54957(a) Threat to Essential City Services.
Tour of pumping facilities within Shasta Dam and City water treatment facilities to consider potential threats to and vulnerability essential to water service to city customers.
Attendees: City Council, essential City staff members, and security personnel.
Motion/Vote:
No action was taken on this item.
ADJOURNMENT:
Mayor Powell adjourned the closed session meeting at 11:06 AM. ________________________________
CHARITY TATLOW, Deputy City Clerk
7 CITY OF SHASTA LAKE
CITY COUNCIL MEETING MINUTES
MINUTES OF THE SPECIAL MEETING
HELD TUESDAY, MARCH 19, 2024, AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Mayor Powell convened the special meeting at 5:30 PM
1.2 Council Members present: Eisenbeisz, Jones, Morgan, Powell, Watkins
2.0 CLOSED SESSION
PUBLIC COMMENT for agendized items only, the City Council will allocate up to a maximum of three minutes per speaker for each agenda item.
There was no public comment.
The City Council recessed to Closed Session to discuss the following item(s).
Reportable action, if any, will be announced at the next regular meeting.
2.1 Pursuant to California Government Code Section 54957.6, Conference with Labor Negotiators.
Agency Designated Representatives: City Manager Jessaca Lugo; Finance and Personnel Staff: Wendy Howard, Jason Peterson, and Kristi Davis; Employee Organizations: IBEW, and Teamsters.
2.2 Pursuant to California Government Code Section 54956.9, Conference with Legal Counsel. One Case: Timothy Wright, Tim and Mike Enterprises, LLC, SGCC Management LLC vs. City of Shasta Lake, John Duckett Jr., Jessaca Lugo, Farhad Mortazavi, and James Takehara.
Motion/Vote:
No action was taken on these items.
ADJOURNMENT:
Mayor Powell adjourned the closed session meeting at 5:48 PM. _________________________________
CHARITY TATLOW , Deputy City Clerk
8 CITY OF SHASTA LAKE
CITY COUNCIL MEETING MINUTES
MINUTES OF THE REGULAR MEETING
HELD TUESDAY, MARCH 19, 2024, AT THE
CITY COUNCIL CHAMBERS, 4488 RED BLUFF ST, SHASTA LAKE, CALIFORNIA
1.0 CALL TO ORDER – REGULAR MEETING:
1.1 Mayor Powell convened the regular meeting at 6:00 PM
1.2 Mayor Powell announced that the City Council had a Special Meeting at 9:30 AM on March 19, 2024, and at 5:30 PM on March 19, 2024. There was no action taken at either of the Special Meetings.
1.3 Council Members present: Eisenbeisz, Jones, Morgan, Powell, Watkins
1.4 Pledge of Allegiance was led by Mayor Powell
1.5 Invocation
2.0 AWARDS & RECOGNITIONS:
2.1 Proclamation: Week of the Young Child April 6-13, 2024
2.2 Proclamation: March 2024 ACES, Resilience and Hope Awareness Month
3.0 PRESENTATIONS:
3.1 Shasta Damboree Pet Mayor Contest Winner Presentation
4.0 COMMISSION, COMMITTEE, AND OUTSIDE AGENCY REPORTS:
4.1 Ann Morningstar, SLFPD/Shasta Mosquito Vector
5.0 PUBLIC COMMENT:
Lorna Ramsey, Upstate California Film Commission
Darcy Roberts, City of Shasta Lake resident
Leslie Murdza, City of Shasta Lake resident
Jim Mark, City of Shasta Lake resident
Joyce Ide, Shasta Lake Lions Club
6.0 CONSENT AGENDA:
6.1 Minutes of the Regular Meeting of March 5, 2024.
6.2 Payrolls:
PE 3/02/2024 PD 3/08/2024 $154,479.53
6.3 Checks, E-payments, and wires:
2/15/2024 $298,607.54
9 2/22/2024 $3,433,740.79
2/29/2024 $129,351.93
6.4 Monthly Report of Investment Transactions:
LAIF:
February $14,882,477.94
Chandler:
February $34,897,411.45
6.5 Resolution CC-2024-18 approving the review of the 2023 Annual General Plan and Housing Element Progress Reports and directing submission to the California Department of Housing and Community Development (HCD) and the California Department of Planning and Research (OPR).
6.6 Resolution CC-2024-19 authorizing the City Manager to execute and submit planning grant and loan applications and related documents to the State Water Resources Control Board Clean Water State Revolving Fund (CWSRF) for the design of the Summit City Septic to Sewer Project
6.7 Amendment to Resolution CC-2024-16 approving an application for funding not to not to exceed $6,7500,000 and the execution of a grant agreement from the Community Development Block Grant Mitigation Resilience Infrastructure Program for the design, environmental, and construction of a raw water storage tank.
Motion/Vote:
Mayor Powell items 6.6 and 6.7 were removed from the Consent Agenda, to be discussed separately.
By motion made/seconded (Morgan/Watkins), and carried, the Consent Agenda was approved.
Motion/Vote:
City Council discussed item 6.6 of the Consent Agenda separately.
By motion made/seconded (Morgan/Eisenbeisz), and carried, item 6.6 on the Consent Agenda was approved.
Motion/Vote:
City Council discussed item 6.7 of the Consent Agenda separately.
By motion made/seconded (Morgan/Eisenbeisz), and carried, item 6.7 on the Consent Agenda was approved.
10 7.0 PUBLIC HEARINGS:
7.1 Discussion and possible action on the first reading of an Ordinance amending Title 2 (Administration and Personnel), by adding Section 2.10 (City Engineer) relating to codifying the Authority of the City Engineer.
There was no public comments on this item.
Motion/Vote:
By motion made/seconded (Eisenbeisz/Morgan), and carried, the Ordinance was read in short title only, and moved for its second reading to the next meeting.
7.2 Public Hearing for property owner protest balloting, approve the formation of the Shasta Gateway Industrial Park Landscape and Lighting Maintenance District, confirm the Engineer’s report, assessment diagram and order of the levy and collection of assessments.
There was no public comments on this item.
The ballots were opened, read, and recorded into the record.
Property Owner voting outcome:
The formation of the Shasta Gateway Industrial Park Landscape and Lighting Maintenance District was approved by a majority vote of the property owners.
Discussion and Possible Action to Approve the Following:
1. Resolution CC-2024-20 Declaring the Results of the Property Owner Protest Ballot Proceeding Conducted for the Levy of Assessments Related to the Formation of the Shasta Gateway Industrial Park Landscape and Lighting Maintenance District, Commencing in Fiscal Year 2023/2024
Motion/Vote:
By motion made/seconded (Eisenbeisz/Morgan), and carried, the resolution was approved.
2. Resolution CC-2024-21 Approving the Formation of the Shasta Gateway Industrial Park Landscape and Lighting Maintenance District, Confirming the Engineer’s Report, the Assessment Diagram, and Ordering the Levy and Collection of Assessments Commencing in Fiscal Year 2023/2024.
Motion/Vote:
By motion made/seconded (Eisenbeisz/Morgan), and carried, the resolution was approved.
11 8.0 REGULAR AGENDA:
8.1 Resolution CC-2024-22 approving and adopting the Fiscal Year 2023-2024 MidYear Budget.
There was no public comments on this item.
Motion/Vote:
By motion made/seconded (Watkins/Morgan), and carried, item 8.1 was approved.
9.0 STAFF COMMENTS:
10.0 CITY COUNCIL COMMENTS AND REPORTS:
ADJOURNMENT:
With no further business, Mayor Powell adjourned the meeting at 8:06 pm. ____________________________
CHARITY TATLOW
Deputy City Clerk
12 13
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16 17
18 19
20 21
22 23
24 Report and Recommendations 6.6
Reviewed and Approved
City Manager
AGENDA ITEM
City Council
______________________________________________________________________ TO: Mayor and City Council Members
FROM: Jessaca Lugo, City Manager
DATE: April 2, 2024
SUBJECT: ESTABLISHMENT OF CHAPTER 2.10, “CITY ENGINEER” OF THE
CITY OF SHASTA LAKE MUNICIPAL CODE
FILE NO.:
RECOMMENDATION
Staff recommends the City Council conduct a second reading authorizing an Ordinance adding Shasta Lake Municipal Code Title 2 (Administration and Personnel), Chapter 2.10 “City Engineer.”
BACKGROUND
The City of Shasta Lake is a member of the Small Cities Organized Risk Effort (SCORE), a joint powers authority that acts as the City’s insurance pool and provides risk and claims management services.
The City is subject to claims and lawsuits where individuals can allege the presence of hazardous conditions on public property. For allegations and legal actions where harm is potentially attributed to a flawed or deficient design of a public infrastructure, the California Legislature has established a protection called "Design Immunity." This defense is codified in Government Code section 830.6, offering immunity in relevant circumstances, outlined as follows:
Neither a public entity nor a public employee is liable … for an injury caused by the plan or design of a construction of, or an improvement to, public property where such plan or design has been approved in advance of the construction or improvement by the legislative body of the public entity or by some other body or employee exercising discretionary authority to give such approval.
25 In January 2024, SCORE recommended that member cities review their ordinances to ensure that there is clear delegation of authority for the approval of plans, specifications, and designs to the proper public officer to exercise this discretionary authority for approval and preserve design immunity.
At the City of Shasta Lake, this public officer is the City Engineer. However, the Municipal Code does not currently clearly delegate this authority to that position. Therefore, it is recommended that Chapter 2.10, “City Engineer”, be added to Title 2 of the Shasta Lake.
The proposed ordinance is intentionally drafted for the purpose of permitting the City Engineer to exercise the authority to approve changes in plans, specifications or design in a multitude of ways. It permits the exercise of discretion by the City Engineer both in the office and in the field.
It further eliminates any argument that the exercise of authority to approve certain plans, specifications or designs could only be exercised by some formal act (i.e., stamping, signature).
Adoption of the ordinance will improve the City Attorney’s ability to advance the “design immunity” defense should a claim or lawsuit regarding public property arise.
FISCAL IMPACTS:
None
ATTACHMENTS
Ordinance ORD-2024-XX
DISTRIBUTION
City Council
City Attorney
City Engineer
26 ORDINANCE CC-2024-XX
AN ORDINANCE OF THE CITY OF SHASTA LAKE AMENDING TITLE 2 (ADMINISTRATION AND PERSONNEL), BY ADDING SECTION 2.10 (CITY ENGINEER)
RELATING TO CODIFYING THE AUTHORITY OF THE CITY ENGINEER WHEREAS, staff has prepared Title 2, Chapter 2.10, “City Engineer” and recommends inclusion of the Chapter in the Shasta Lake Municipal Code in order to codify existing authority in the City Engineer to exercise all discretion in the approval of plans, specifications and design of all public improvements. It is intended that this ordinance will conclusively establish the affirmative defense of design immunity, as set forth in Government Code section 830.6.
NOW, THEREFORE, THE CITY OF SHASTA LAKE DOES ORDAIN AS FOLLOWS:
SECTION I: The Shasta Lake Municipal Code is hereby amended as follows:
Chapter 2.10 CITY ENGINEER
2.10.010 Appointment.
The City Engineer shall be a State of California-licensed Civil Engineer appointed by the City Manager to act directly or through authorized agents.
2.10.020 Duties generally.
The responsibilities of the City Engineer will be detailed in the authorized job description accessible via the City of Shasta Lake website or the Human Resource Department.
2.10.030 - Delegation of design approval authority.
In accordance with Government Code section 830.6, as it may be amended from time to time, the City Council hereby delegates authority to the City Engineer, or designee, to approve plans, specifications, and designs and all amendments and addenda thereto.
This authority includes, but is not limited to, the adoption of field changes through the change order process, and/or approval of as-built plans for all public works contracts and improvements, however established.
The City Engineer is not required to affix a signature, stamp or other indication of approval in order to exercise the discretion vested herein. The adoption of any plan, specification or design, as set forth in the above paragraph, whether individually tailored to a specific improvement or as a standard form to be applied generally, shall itself evidence the City Engineer’s exercise of discretion.
SECTION 2: Severability: If any provision of this ordinance or the applications thereof to any person or circumstances is held invalid, the remainder of the ordinance and the applications of such provision will remain in effect to the extent permitted by law.
SECTION 3: Effective Date: This ordinance shall be effective thirty (30) days following its second reading and posting as provided for by City Code. 27 I HEREBY CERTIFY that the foregoing Ordinance was introduced and read at a regular meeting of the City Council of the City of Shasta Lake held on the 19th day of March, 2024, and a second reading on April 2, 2024.
PASSED, APPROVED, AND ADOPTED this 2nd day of April 2024, by the following vote:
AYES:
NOES:
ABSENT:
_____
JANICE POWELL, Mayor
ATTEST:
_______________________________
CHARITY TATLOW, Deputy City Clerk
28 PO BOX 777 | 4477 Main Street
Shasta Lake, CA 96019
(530) 275-7400
www.cityofshastalake.org
March 27, 2024 VIA ELECTRONIC MAIL ONLY
California Energy Commission [email protected] 715 P Street
Sacramento, CA 95814
Re: Fountain Wind Project (Docket Number 23-OPT-01)
The City of Shasta Lake appreciates the opportunity to provide input regarding the denied Fountain Wind Project. Core principles of the City of Shasta Lake include respecting public comments and opinion and local control. To that end, the City of Shasta Lake supports the County of Shasta in its decision to deny permits related to the subject proposed project and strongly opposes the State of California's effort, exercised through the California Energy Commission (CEC), to circumvent local authority.
Situated uniquely in far northern California, Shasta County boasts abundant natural resources, including water, power, timber, and agricultural assets, which are frequently shared statewide.
There are also several hundred thousand residents who call Shasta County their home and ultimately have a right to determine projects that will affect their quality of life. Shasta County has spent countless hours discussing the Fountain Wind Project, and through significant public input, both the local planning commission and Board of Supervisors opted to reject the project. The City of Shasta Lake did not take a position on the Fountain Wind Project during these deliberations.
However, the City of Shasta Lake provides these comments to support Shasta County, its public process, and the will of the Shasta County residents and businesses who did express their positions.
We question what is the purpose of having a public process, to engage the community, and to do so in open forums if the outcome of that extensive and time-consuming process is simply overrun by an additional party? We believe the public process works, particularly when the level of engagement is so extensive that additional meetings, larger meeting forums, and marathon sessions are necessary to fully engage with the public. We encourage the State and CEC to respect the work that has already be completed.
The City of Shasta Lake supports the local decision-making process and feels this decision should be final. Through the local process, the County analyzed issues including environmental impacts, elevated fire risk in a high fire severity zone, cultural impacts, and compliance with local regulations. It is not the place of the State of California and California Energy Commission to bypass local decisions for projects that are to be decided through the process required by law at a local level.
While we understand the State of California and CEC have an interest in projects such as the Fountain Wind Project, the City of Shasta Lake fully supports local control and transparency.
Therefore, Shasta County’s denial of the Fountain Wind Project should be upheld. If you have 29 any questions regarding this letter, please contact City Manager, Jessaca Lugo at (530) 275-7411 or [email protected].
Very truly yours,
CITY OF SHASTA LAKE
JANICE POWELL
Mayor
Cc: Shasa County Board of Supervisors
Attn: Kevin Crye, Board Chair
1450 Court St #308B
Redding, CA 96001
[email protected]
Governor Gavin Newsom
1021 O Street, Suite 9000
Sacramento, CA 95814
[email protected]
30 Report and Recommendations 8.2
Reviewed and Approved
City Manager
AGENDA ITEM
City Council
______________________________________________________________________ TO: Mayor and City Council Members
FROM: Wendy Howard, Finance Director
DATE: April 2, 2024
SUBJECT: RESOLUTION ACCEPTING THE FINANCIAL STATEMENTS, SINGLE AUDIT ACT REPORTS, AND AUDITOR’S LETTER TO COUNCIL FOR
THE FISCAL YEAR ENDING JUNE 30, 2023
FILE NO:
RECOMMENDATION:
Staff recommends approval of a Resolution by the Shasta Lake City Council accepting the Financial Statements, Single Audit Act Report, and Auditor’s Letter to Council for the Fiscal Year Ending June 30, 2023 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:
No Fiscal Impact
ATTACHMENTS:
• Resolution accepting the Audited Financial Statements for the Fiscal Year Ending June 30, 2023
• Financial Statements Together with Independent Auditor’s Report for the Fiscal Year Ended June 30, 2023
31 • Single Audit Act Reports and Schedules for the Year Ended June 30, 2023 • Auditor’s Letter to Council
DISTRIBUTION:
City of Shasta Lake City Council
City Manager
32 RESOLUTION CC-2024-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHASTA LAKE
ACCEPTING THE AUDITED FINANCIAL STATEMENTS, SINGLE AUDIT ACT REPORT, MANAGEMENT LETTER, AND AUDITOR’S LETTER TO COUNCIL FOR FISCAL YEAR ENDING JUNE 30, 2023.
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, 2023 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 2nd day of April, 2024, by the following vote:
AYES:
NOES:
ABSENT:
JANICE POWELL, Mayor
ATTEST:
CHARITY TATLOW, Deputy City Clerk
33 34
CITY OF SHASTA LAKE,
CALIFORNIA
FINANCIAL STATEMENTS
TOGETHER WITH
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED
JUNE 30, 2023
35 THIS PAGE INTENTIONALLY LEFT BLANK
36 CITY OF SHASTA LAKE
Annual Financial Report
For the Year Ended June 30, 2023
Table of Contents
Page
INTRODUCTORY SECTION
List of Officials..............................................................................................................................................i
FINANCIAL SECTION
Independent Auditor’s Report....................................................................................................................1-4 Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position .............................................................................................................5-6 Statement of Activities..................................................................................................................... 7 Fund Financial Statements:
Governmental Funds:
Balance Sheet ............................................................................................................................ 8 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position – Governmental Activities ............................ 9 Statement of Revenues, Expenditures and Changes in Fund Balances................................... 10 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities – Governmental Activities............................................................................... 11 Proprietary Funds:
Statement of Net Position...................................................................................................12-13 Statement of Revenues, Expenses and Changes in Net Position............................................. 14 Statement of Cash Flows....................................................................................................15-16 Fiduciary Funds:
Statement of Fiduciary Net Position........................................................................................ 17 Statement of Changes in Fiduciary Net Position..................................................................... 18 Notes to Basic Financial Statements ...............................................................................................19-56 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 – Grant Fund................................................................................... 64 Note to Budgetary Comparison Schedules........................................................................................... 65 Combining and Individual Fund Financial Statements:
Nonmajor Governmental Funds:
Combining Balance Sheet.............................................................................................................. 66 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....................... 67 37 CITY OF SHASTA LAKE
Annual Financial Report
For the Year Ended June 30, 2023
Table of Contents
Page
FINANCIAL SECTION (CONTINUED)
Combining and Individual Fund Financial Statements: (Continued) Nonmajor Governmental Funds: (Continued)
Special Revenue Funds:
Combining Balance Sheet ....................................................................................................... 68 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 69 Debt Service Funds:
Combining Balance Sheet ....................................................................................................... 70 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 71 Internal Service Funds:
Combining Statement of Net Position ........................................................................................... 72 Combining Statement of Revenues, Expenses and Changes in Net Position ................................ 73 Combining Statement of Cash Flows .......................................................................................74-75 38 INTRODUCTORY SECTION
• List of Officials
39 THIS PAGE INTENTIONALLY LEFT BLANK
40 CITY OF SHASTA LAKE
List of Officials
For the Year Ended June 30, 2023
-iElected Officials
Greg Watkins Mayor
Janice Powell Vice-Mayor
Justin Jones Member
Tena Eisenbeisz Member
Pamelyn Morgan 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
William Bond City Engineer
Tony Thomasy Water Utility Specialist
Chris Carr Chief Water Treatment Plant Operator
Tom Chism Wastewater Treatment Superintendent
Caleb MacGregor Sheriff’s Lieutenant
Toni Coates City Clerk
41 THIS PAGE INTENTIONALLY LEFT BLANK
42 FINANCIAL SECTION
• Independent Auditor’s Report
• Basic Financial Statements
• Required Supplementary Information
• Combining and Individual Fund Financial Statements
43 THIS PAGE INTENTIONALLY LEFT BLANK
44 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 Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Shasta Lake, California (City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 45 -2-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgement made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgement and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgement, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
46 -3-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, 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 is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquires, the basic financial statements, and other knowledge we obtain 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.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
47 -4-
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 March 13, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
Smith & Newell CPAs
Yuba City, California
March 13, 2024
48 Basic Financial Statements
• Government-Wide Financial Statements
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51 CITY OF SHASTA LAKE
Statement of Net Position
June 30, 2023
Governmental Business-Type
Activities Activities Totals
ASSETS
Cash and investments $ 13,173,405 $ 40,013,254 $ 53,186,659 Cash with fiscal agent 1,214,427 - 1,214,427
Receivables:
Accounts, net 46,119 6,023,443 6,069,562
Interest 52,964 212,038 265,002
Taxes 552,145 2,480 554,625
Intergovernmental 424,589 - 424,589
Assessments 2,142,000 560,001 2,702,001
Deposits 4,428 853,738 858,166
Prepaid costs - 86,798 86,798
Inventory - 476,200 476,200
Internal balances 594,315 (594,315) -
Restricted cash and investments 278,557 - 278,557
Loans receivable 3,821,418 - 3,821,418
Land held for resale 534,984 - 534,984
Capital assets:
Non-depreciable 4,324,116 7,525,997 11,850,113
Depreciable, net 50,412,257 44,392,935 94,805,192
Total capital assets 54,736,373 51,918,932 106,655,305
Total Assets 77,575,724 99,552,569 177,128,293
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 2,515,646 5,284,577 7,800,223 Deferred OPEB adjustments 762,850 780,443 1,543,293
Total Deferred Outflows of Resources 3,278,496 6,065,020 9,343,516
LIABILITIES
Accounts payable 907,825 4,731,559 5,639,384
Retentions payable - 93,373 93,373
Salaries and benefits payable 260,588 75,181 335,769
Deposits payable 646,955 8,280 655,235
Interest payable 198,395 100,717 299,112
Unearned revenues 2,649,133 - 2,649,133
Long-term liabilities:
Due within one year 640,392 825,235 1,465,627
Due in more than one year 12,239,362 16,280,880 28,520,242 Net pension liability 563,789 1,184,342 1,748,131
Net OPEB liability 306,935 314,013 620,948
Total Liabilities 18,413,374 23,613,580 42,026,954
DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 1,063,500 2,234,078 3,297,578 Deferred OPEB adjustments 563,861 576,865 1,140,726
Total Deferred Inflows of Resources 1,627,361 2,810,943 4,438,304 The notes to the basic financial statements are an integral part of this statement. -5-
Continued (Page 1 of 2)
52 CITY OF SHASTA LAKE
Statement of Net Position
June 30, 2023
Governmental Business-Type
Activities Activities Totals
NET POSITION
Net investment in capital assets 50,258,598 35,203,207 85,461,805 Restricted for:
General government 1,019,314 - 1,019,314
Public safety 11,491 - 11,491
Public ways and facilities 2,160,444 - 2,160,444
Community development 5,931,954 - 5,931,954
Debt service 3,586,246 627,586 4,213,832
Unrestricted (2,154,562) 43,362,273 41,207,711
Total Net Position $ 60,813,485 $ 79,193,066 $140,006,551 The notes to the basic financial statements are an integral part of this statement. -6-
Continued (Page 2 of 2)
53 CITY OF SHASTA LAKE
Statement of Activities
For the Year Ended June 30, 2023
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Governmental activities:
General government $ 6,061,177 $ 4,358,264 $ 171,803 $ - Public safety 4,663,790 258,737 - -
Public ways and facilities 2,342,671 249,122 1,009,091 92,086 Planning 886,698 - - -
Culture and recreation 528,435 2,356 - -
Community development 216,869 - 856,707 -
Interest on long-term debt 456,170 - - -
Total Governmental Activities 15,155,810 4,868,479 2,037,601 92,086 Business-type activities:
Water 5,471,360 3,856,737 - -
Electric 39,055,855 36,860,009 - -
Wastewater 5,767,880 3,649,271 - -
Industrial park 37,695 75,940 - -
Total Business-Type Activities 50,332,790 44,441,957 - - Total $ 65,488,600 $ 49,310,436 $ 2,037,601 $ 92,086
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
Net Position - Ending
The notes to the basic financial statements are an integral part of this statement. -7-
54 Net (Expense) Revenue and
Changes in Net Position
Governmental Business-Type
Activities Activities Totals
$ (1,531,110) $ - $ (1,531,110)
(4,405,053) - (4,405,053)
(992,372) - (992,372)
(886,698) - (886,698)
(526,079) - (526,079)
639,838 - 639,838
(456,170) - (456,170)
(8,157,644) - (8,157,644)
- (1,614,623) (1,614,623)
- (2,195,846) (2,195,846)
- (2,118,609) (2,118,609)
- 38,245 38,245
- (5,890,833) (5,890,833)
(8,157,644) (5,890,833) (14,048,477)
1,602,636 - 1,602,636
797,932 - 797,932
42,235 - 42,235
240,283 - 240,283
721,574 - 721,574
1,098,908 41,466 1,140,374
203,469 577,189 780,658
122,270 566,375 688,645
(35,000) 35,000 -
4,794,307 1,220,030 6,014,337
(3,363,337) (4,670,803) (8,034,140)
64,176,822 83,863,869 148,040,691
$ 60,813,485 $ 79,193,066 $ 140,006,551
The notes to the basic financial statements are an integral part of this statement. -7-
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56 Basic Financial Statements
• Fund Financial Statements
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58 CITY OF SHASTA LAKE
Balance Sheet
Governmental Funds
June 30, 2023
Other
Governmental
General Grant Funds Totals
ASSETS
Cash and investments $ 6,133,505 $ 1,553,474 $ 5,486,426 $13,173,405 Cash with fiscal agent 1,214,427 - - 1,214,427
Receivables:
Accounts, net 46,119 - - 46,119
Interest 16,975 10,609 25,380 52,964
Taxes 419,114 - 133,031 552,145
Intergovernmental 27,931 329,223 67,435 424,589
Assessments - - 2,142,000 2,142,000
Deposits 4,428 - - 4,428
Due from other funds 269,746 - - 269,746
Restricted cash and investments - - 278,557 278,557
Loans receivable - - 3,821,418 3,821,418
Land held for resale - - 534,984 534,984
Total Assets $ 8,132,245 $ 1,893,306 $12,489,231 $22,514,782
LIABILITIES
Accounts payable $ 802,518 $ 79,334 $ 25,973 $ 907,825
Salaries and benefits payable 260,588 - - 260,588
Deposits payable 646,955 - - 646,955
Due to other funds - - 178,450 178,450
Advances from other funds 78,081 - - 78,081
Unearned revenues 61,037 2,588,096 - 2,649,133
Total Liabilities 1,849,179 2,667,430 204,423 4,721,032
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 19,339 259,644 67,435 346,418
Total Deferred Inflows of Resources 19,339 259,644 67,435 346,418
FUND BALANCES
Restricted 688,715 - 12,229,813 12,918,528
Unassigned 5,575,012 (1,033,768) (12,440) 4,528,804
Total Fund Balances 6,263,727 (1,033,768) 12,217,373 17,447,332 Total Liabilities, Deferred Inflows of
Resources and Fund Balances $ 8,132,245 $ 1,893,306 $12,489,231 $22,514,782 The notes to the basic financial statements are an integral part of this statement. -8-
59 CITY OF SHASTA LAKE
Reconciliation of the Governmental Funds Balance
Sheet to the Government-Wide Statement of
Net Position - Governmental Activities
June 30, 2023
Total Fund Balance - Total Governmental Funds $ 17,447,332 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. 54,736,373 Other long-term assets are not available to pay for current period expenditures and therefore are reported as unavailable revenues in the governmental funds. 346,418 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. (198,395) Deferred outflows of resources related to pension and OPEB are not reported in the governmental funds. 3,278,496 Deferred inflows of resources related to pension and OPEB are not reported in the governmental funds. (1,627,361) Certain liabilities are not due and payable in the current period and therefore are not reported in the governmental funds.
Revenue bonds payable (2,121,775)
Special assessment bonds payable (22,000)
Certificates of participation, less unamortized discount of $241,180 (10,562,820) Compensated absences (173,159)
Net pension liability (563,789)
Net OPEB liability (306,935)
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. 581,100 Net Position of Governmental Activities $ 60,813,485
The notes to the basic financial statements are an integral part of this statement. -9-
60 CITY OF SHASTA LAKE
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2023
Other
Governmental
General Grant Funds Totals
REVENUES
Taxes and assessments $ 3,296,558 $ - $ 35,225 $ 3,331,783 Licenses and permits 268,650 - - 268,650
Fines and forfeitures 12,171 - - 12,171
Use of money and property 97,331 28,697 77,441 203,469
Intergovernmental 1,125,482 270,979 2,114,090 3,510,551 Charges for services 4,480,406 - 107,252 4,587,658
Other revenues 111,842 - 10,428 122,270
Total Revenues 9,392,440 299,676 2,344,436 12,036,552
EXPENDITURES
Current:
General government 2,909,134 1,276,557 27,697 4,213,388 Public safety 3,949,577 - 100,000 4,049,577
Public ways and facilities 130,967 - 901,881 1,032,848
Planning 714,753 - - 714,753
Culture and recreation 352,461 - - 352,461
Community development - - 216,869 216,869
Debt service:
Principal 416,000 - 132,000 548,000
Interest and other charges 363,276 - 99,555 462,831
Capital outlay 83,103 2,127 90,113 175,343
Total Expenditures 8,919,271 1,278,684 1,568,115 11,766,070 Excess of Revenues Over (Under)
Expenditures 473,169 (979,008) 776,321 270,482
OTHER FINANCING SOURCES (USES)
Transfers in 25,721 - 187,140 212,861
Transfers out - - (247,861) (247,861)
Total Other Financing Sources (Uses) 25,721 - (60,721) (35,000) Net Change in Fund Balances 498,890 (979,008) 715,600 235,482 Fund Balances - Beginning 5,764,837 (54,760) 11,501,773 17,211,850 Fund Balances - Ending $ 6,263,727 $ (1,033,768) $12,217,373 $17,447,332 The notes to the basic financial statements are an integral part of this statement. -10-
61 CITY OF SHASTA LAKE
Net Change in Fund Balances - Total Governmental Funds $ 235,482 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 175,343
Less current year depreciation (1,483,095)
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 548,000
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 (209,079)
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 (568,165) Change in deferred inflows of resources related to pension 365,161 Change in deferred outflows of resources related to OPEB 424,019 Change in deferred inflows of resources related to OPEB 363,274 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 (14,198)
Change in net pension liability (2,376,540)
Change in net OPEB liability (733,797)
Change in accrued interest on long-term debt 6,661
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. (82,216) Change in Net Position of Governmental Activities $ (3,363,337) Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the For the Year Ended June 30, 2023
Government-Wide Statement of Activities - Governmental Activities The notes to the basic financial statements are an integral part of this statement. -11-
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63 CITY OF SHASTA LAKE
Statement of Net Position
Proprietary Funds
June 30, 2023
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
ASSETS
Current Assets:
Cash and investments $ 4,890,050 $ 27,128,145 $ 5,941,011 $ - Receivables:
Accounts, net 545,927 5,027,903 435,180 -
Interest 27,045 143,955 31,638 -
Taxes - - - 2,480
Assessments - - - 560,001
Deposits - 853,738 - -
Prepaid costs 11,140 75,658 - -
Inventory 4,108 472,092 - -
Total Current Assets 5,478,270 33,701,491 6,407,829 562,481 Noncurrent Assets:
Advances to other funds - 149,294 - -
Capital assets:
Non-depreciable 676,909 4,809,633 646,759 1,392,696
Depreciable, net 10,616,344 6,642,370 26,102,387 -
Total Noncurrent Assets 11,293,253 11,601,297 26,749,146 1,392,696 Total Assets 16,771,523 45,302,788 33,156,975 1,955,177
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 675,634 2,475,308 633,620 - Deferred OPEB adjustments 109,728 243,377 120,994 -
Total Deferred Outflows of Resources 785,362 2,718,685 754,614 - The notes to the basic financial statements are an integral part of this statement. -12-
Continued (Page 1 of 2)
64 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ 37,959,206 $ 2,054,048
6,009,010 14,433
202,638 9,400
2,480 -
560,001 -
853,738 -
86,798 -
476,200 -
46,150,071 2,077,881
149,294 -
7,525,997 -
43,361,101 1,031,834
51,036,392 1,031,834
97,186,463 3,109,715
3,784,562 1,500,015
474,099 306,344
4,258,661 1,806,359
The notes to the basic financial statements are an integral part of this statement. -12-
Continued (Page 1 of 2)
65 CITY OF SHASTA LAKE
Statement of Net Position
Proprietary Funds
June 30, 2023
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
LIABILITIES
Current Liabilities:
Accounts payable 484,050 4,173,463 43,449 -
Retentions payable 29,185 64,188 - -
Salaries and benefits payable 9,161 31,278 8,505 -
Deposits payable 8,280 - - -
Due to other funds - - - 91,296
Interest payable 33,549 - 57,368 9,800
Compensated absences payable 20,633 84,071 30,855 -
Loans payable 186,926 - 398,114 -
Bonds payable - - - 45,000
Total Current Liabilities 771,784 4,353,000 538,291 146,096 Noncurrent Liabilities:
Compensated absences payable 20,633 84,071 30,855 -
Advances from other funds 12,865 - 12,954 -
Loans payable 2,470,457 - 13,100,228 -
Bonds payable - - - 515,000
Net pension liability 151,418 554,749 142,002 -
Net OPEB liability 44,149 97,923 48,682 -
Total Noncurrent Liabilities 2,699,522 736,743 13,334,721 515,000 Total Liabilities 3,471,306 5,089,743 13,873,012 661,096
DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 285,627 1,046,447 267,866 - Deferred OPEB adjustments 81,106 179,892 89,433 -
Total Deferred Inflows of Resources 366,733 1,226,339 357,299 -
NET POSITION
Net investment in capital assets 8,635,870 11,452,003 13,250,804 832,696 Restricted - - 627,586 -
Unrestricted 5,082,976 30,253,388 5,802,888 461,385
Total Net Position $ 13,718,846 $ 41,705,391 $ 19,681,278 $ 1,294,081 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. -13-
Continued (Page 2 of 2)
66 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
4,700,962 30,597
93,373 -
48,944 26,237
8,280 -
91,296 -
100,717 -
135,559 59,636
585,040 -
45,000 -
5,809,171 116,470
135,559 59,636
25,819 45,394
15,570,685 -
515,000 -
848,169 336,173
190,754 123,259
17,285,986 564,462
23,095,157 680,932
1,599,940 634,138
350,431 226,434
1,950,371 860,572
34,171,373 1,031,834
627,586 -
41,600,637 2,342,736
76,399,596 $ 3,374,570
2,006,973
$ 78,406,569
The notes to the basic financial statements are an integral part of this statement. -13-
Continued (Page 2 of 2)
67 CITY OF SHASTA LAKE
Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds
For the Year Ended June 30, 2023
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
OPERATING REVENUES
Charges for services $ 3,856,737 $ 36,860,009 $ 3,649,271 $ - Other revenues 54,767 511,608 - -
Total Operating Revenues 3,911,504 37,371,617 3,649,271 -
OPERATING EXPENSES
Salaries and benefits 2,248,738 4,830,283 2,137,182 -
Administration 646,063 3,421,543 635,883 7,226
Power and water 391,565 27,623,390 361,114 -
Insurance 84,571 182,352 94,299 319
Supplies 77,874 81,567 24,081 -
Repair and maintenance 491,116 1,158,335 266,911 -
Professional services 77,336 55,300 98,171 400
Depreciation 631,818 633,103 1,280,761 -
Other expense 10,451 1,045,200 5,975 -
Total Operating Expenses 4,659,532 39,031,073 4,904,377 7,945 Operating Income (Loss) (748,028) (1,659,456) (1,255,106) (7,945)
NON-OPERATING REVENUES (EXPENSES)
Assessment revenue - - - 75,940
Intergovernmental - 38,130 - -
Interest income 73,154 393,031 85,574 -
Interest expense (89,810) - (234,781) (29,750)
Total Non-Operating Revenues (Expenses) (16,656) 431,161 (149,207) 46,190 Income (Loss) Before Capital Contributions
and Transfers (764,684) (1,228,295) (1,404,313) 38,245
Transfers in - - 35,000 -
Change in Net Position (764,684) (1,228,295) (1,369,313) 38,245 Total Net Position - Beginning 14,483,530 42,933,686 21,050,591 1,255,836 Total Net Position - Ending $ 13,718,846 $ 41,705,391 $ 19,681,278 $ 1,294,081 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. -14-
68 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ 44,366,017 $ 3,437,978
566,375 24,586
44,932,392 3,462,564
9,216,203 3,648,768
4,710,715 738,804
28,376,069 -
361,541 24,693
183,522 45,978
1,916,362 195,861
231,207 22,555
2,545,682 242,530
1,061,626 -
48,602,927 4,919,189
(3,670,535) (1,456,625)
75,940 -
38,130 3,336
551,759 25,430
(354,341) (1,113)
311,488 27,653
(3,359,047) (1,428,972)
35,000 -
(3,324,047) (1,428,972)
4,803,542
$ 3,374,570
25,356
$ (3,298,691)
The notes to the basic financial statements are an integral part of this statement. -14-
69 CITY OF SHASTA LAKE
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2023
Business-Type Activities - Enterprise Funds
Major Funds Nonmajor
Industrial
Water Electric Wastewater Park
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 3,876,657 $ 34,854,759 $ 3,653,638 $ - Receipts from interfund services - - - -
Payments to suppliers (1,516,264) (30,132,287) (1,529,950) (7,945) Payments to employees (1,721,681) (2,360,864) (1,495,193) - Net Cash Provided by Operating Activities 638,712 2,361,608 628,495 (7,945)
CASH FLOWS FROM NON-CAPITAL FINANCING
ACTIVITIES
Transfers from other funds - - 35,000 -
Interfund loans received - - - 91,296
Interfund loans repaid (12,613) - (12,701) (96,791)
Interfund loans repayments received - 146,367 - -
Grants, assessments, and other receipts - 38,130 - 83,890 Net Cash Provided (Used) by Non-Capital
Financing Activities (12,613) 184,497 22,299 78,395
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets (683,182) (1,661,761) (54,990) - Principal paid on debt (181,429) - (391,459) (40,000)
Interest paid on debt (92,101) - (236,445) (30,450)
Net Cash Provided (Used) by Capital and Related
Financing Activities (956,712) (1,661,761) (682,894) (70,450)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 66,297 356,676 77,685 -
Net Cash Provided by Investing Activities 66,297 356,676 77,685 - Net Increase (Decrease) in Cash and Cash
Equivalents (264,316) 1,241,020 45,585 -
Balances - Beginning 5,154,366 25,887,125 5,895,426 -
Balances - Ending $ 4,890,050 $ 27,128,145 $ 5,941,011 $ - The notes to the basic financial statements are an integral part of this statement. -15-
Continued (Page 1 of 2)
70 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ 42,385,054 $ 24,586
- 3,424,555
(33,186,446) (1,034,492)
(5,577,738) (2,082,458)
3,620,870 332,191
35,000 -
91,296 -
(122,105) (44,502)
146,367 -
122,020 3,336
272,578 (41,166)
(2,399,933) (377,155)
(612,888) -
(358,996) (1,113)
(3,371,817) (378,268)
500,658 23,536
500,658 23,536
1,022,289 (63,707)
36,936,917 2,117,755
$ 37,959,206 $ 2,054,048
The notes to the basic financial statements are an integral part of this statement. -15-
Continued (Page 1 of 2)
71 CITY OF SHASTA LAKE
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2023
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) $ (748,028) $ (1,659,456) $ (1,255,106) $ (7,945) Adjustments to reconcile operating income (loss) to net cash provided by operating activities:
Depreciation 631,818 633,103 1,280,761 -
Decrease (increase) in:
Accounts receivable (32,247) (2,516,858) 4,367 -
Deposits - 601,495 - -
Prepaid costs 1,420 931 - -
Inventory - (6,122) - -
Pension adjustment - deferred outflows 42,332 585,633 126,531 - OPEB adjustment - deferred outflows (8,132) (81,269) (120,994) - Increase (decrease) in:
Accounts payable 388,568 3,473,612 (41,894) -
Salaries and benefits payable (13,531) (60,422) (15,033) - Due to other governments (127,276) (634,516) (1,622) -
Deposits payable (2,600) - - -
Compensated absences 4,668 4,570 8,824 -
Net pension liability 573,459 2,354,058 588,841 -
Net OPEB liability 172,140 302,147 48,682 -
Pension adjustment - deferred inflows (46,991) (371,619) (84,295) - OPEB adjustment - deferred inflows (196,888) (263,679) 89,433 - Net Cash Provided by Operating Activities $ 638,712 $ 2,361,608 $ 628,495 $ (7,945) The notes to the basic financial statements are an integral part of this statement. -16-
Continued (Page 2 of 2)
72 Governmental/
Business-Type
Funds Activities
Internal
Service
Totals Funds
$ (3,670,535) $ (1,456,625)
2,545,682 242,530
(2,544,738) (13,423)
601,495 -
2,351 -
(6,122) -
754,496 477,964
(210,395) (17,686)
3,820,286 328
(88,986) (45,384)
(763,414) (6,929)
(2,600) -
18,062 11,246
3,516,358 1,498,886
522,969 486,910
(502,905) (282,216)
(371,134) (563,410)
$ 3,620,870 $ 332,191
The notes to the basic financial statements are an integral part of this statement. -16-
Continued (Page 2 of 2)
73 CITY OF SHASTA LAKE
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2023
Private Custodial
Purpose Fund
Trust Fund (Community Total
(Successor Facilities Fiduciary
ASSETS Agency) District) Funds
Current Assets:
Cash and investments $ 549,338 $ 465,480 $ 1,014,818
Receivables:
Interest 1,450 2,121 3,571
Taxes - 593 593
Total Current Assets 550,788 468,194 1,018,982
Noncurrent Assets:
Land held for resale 484 - 484
Total Noncurrent Assets 484 - 484
Total Assets 551,272 468,194 1,019,466
LIABILITIES
Current Liabilities:
Interest payable 4,680 - 4,680
Unearned revenues 391,078 - 391,078
Loans payable 360,000 - 360,000
Total Current Liabilities 755,758 - 755,758
Noncurrent Liabilities:
Loans payable 1,160,000 - 1,160,000
Total Noncurrent Liabilities 1,160,000 - 1,160,000
Total Liabilities 1,915,758 - 1,915,758
NET POSITION
Restricted for:
Successor Agency to the Redevelopment Agency (1,364,486) - (1,364,486) Individuals, organizations, and other governments - 468,194 468,194 Total Net Position $ (1,364,486) $ 468,194 $ (896,292)
The notes to the basic financial statements are an integral part of this statement. -17-
74 CITY OF SHASTA LAKE
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2023
Private Custodial
Purpose Fund
Trust Fund (Community Total
(Successor Facilities Fiduciary
Agency) District) Funds
ADDITIONS
Taxes and assessments $ 412,781 $ 72,769 $ 485,550
Interest income 3,921 5,737 9,658
Total Additions 416,702 78,506 495,208
DEDUCTIONS
Administrative expenses 4,486 - 4,486
Distribution of funds held for others - 43,318 43,318
Interest expense 63,344 - 63,344
Total Deductions 67,830 43,318 111,148
Net Increase (Decrease) in Fiduciary Net Position 348,872 35,188 384,060 Total Net Position - Beginning (1,713,358) 433,006 (1,280,352) Total Net Position - Ending $ (1,364,486) $ 468,194 $ (896,292) The notes to the basic financial statements are an integral part of this statement. -18-
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76 Basic Financial Statements
• Notes to Basic Financial Statements
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78 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-19-
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.
Component Units
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. 79 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-20-
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.
80 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-21-
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 Grant fund is a special revenue fund used to account for the various grant programs of the City.
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 trust funds, investment trust funds, or private-purpose trust funds.
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.
81 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-22-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting and Measurement Focus (Continued) 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 accrual basis of accounting to recognize receivables and payables.
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.
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. 82 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-23-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Investments (Continued)
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 Wastewater Treatment Debt fund for debt service of $278,557.
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, 2023, the allowance for doubtful accounts was $7,874.
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, 2023, the allowance for doubtful accounts was $70,865.
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.
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, 2023, are recorded as prepaid costs in both the government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. 83 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-24-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Loans Receivable
A total of $3,821,418 was recorded as loans receivable at June 30, 2023. 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
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. 84 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-25-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. Property Tax (Continued)
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.
P. 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. 85 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-26-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) P. Compensated Absences (Continued)
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 25 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.
Q. 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, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
R. Other Postemployment Benefits (OPEB)
For purposes of measuring the net OPEB liability, deferred outflows of resources of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan (OPEB Plan) and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined on the same basis. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period June 30, 2021 to June 30, 2022
86 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-27-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) S. 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 City 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.
T. 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.
U. 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. 91, Conduit Debt Obligations. This statement improves the comparability of financial reporting for issuers by eliminating the option to recognize a liability for a conduit debt obligation.
Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements.
This statement will improve financial reporting by establishing the definitions of PPPs and APAs and providing uniform guidance on accounting and financial reporting for transactions that meet those definitions.
Statement No. 96, Subscription-Based Information Technology Arrangements. This statement will improve financial reporting by establishing a definition for SBITAs and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. The definition and uniform guidance will result in greater consistency in practice.
Statement No. 99, Omnibus 2022. This statement will enhance comparability in the application of accounting and financial reporting requirements and will improve the consistency of authoritative literature.
Consistent authoritative literature enables governments and other stakeholders to more easily locate and apply the correct accounting and financial reporting provisions, which improves the consistency with which such provisions are applied. The comparability of financial statements also will improve as a result of this Statement. Better consistency and comparability improve the usefulness of information for users of state and local government financial statements.
87 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-28-
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) V. Future Accounting Pronouncements
The following GASB Statements will be implemented, if applicable, in future financial statements:
Statement No. 99 “Omnibus 2022” The requirements of this statement related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement 53 are effective for fiscal years beginning after June 15, 2023. (FY 23/24) Statement No. 100 “Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62” The requirements of this statement are effective for fiscal years beginning after June 15, 2023. (FY 23/24)
Statement No. 101 “Compensated Absences” The requirements of this statement are effective for fiscal years beginning after December 15, 2023. (FY 24/25)
NOTE 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Deficit Fund Balance
The following major special revenue fund had a deficit fund balance:
• The Grant fund had a fund balance deficit of $1,033,768, which is expected to be eliminated in future years through intergovernmental revenues.
The following nonmajor special revenue funds had deficit fund balances:
• The Wastewater P & FCC Charges fund had a fund balance deficit of $12,440, which is expected to be eliminated in future years through increased charges for services.
B. 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, 2023, does not expect to incur a liability.
NOTE 3: CASH AND INVESTMENTS
A. Financial Statement Presentation
As of June 30, 2023, the City’s cash and investments are reported in the financial statements as follows:
Governmental activities $ 14,666,389
Business-type activities 40,013,254
Fiduciary funds 1,014,818
Total Cash and Investments $ 55,694,461
88 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-29-
NOTE 3: CASH AND INVESTMENTS (CONTINUED)
A. Financial Statement Presentation (Continued)
As of June 30, 2023, the City’s cash and investments consisted of the following:
Cash:
Cash on hand $ 2,072
Deposits (less outstanding checks) 1,766,845
Cash with fiscal agent 1,214,427
Total Cash 2,983,344
Investments:
In City’s pool 52,711,117
Total Investments 52,711,117
Total Cash and Investments $ 55,694,461
B. Cash
At year end, the carrying amount of the City’s cash deposits (including amounts in checking accounts and money market accounts) was $2,981,272 and the bank balance was $2,931,993. 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, 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.
89 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-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, 2023, 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 $ 7,055,858 $ 7,055,858 $ - $ -
U.S. Treasuries 13,254,829 13,254,829 - -
Collateralized Mortgage Obligations 1,998,549 1,998,549 - - Corporate Medium-Term Notes 8,260,512 8,260,512 - -
Asset-Backed Securities 2,088,156 2,088,156 - -
Supranationals 353,306 353,306 - -
Total Investments Measured at Fair Value 33,011,210 $33,011,210 $ - $ - Investments in External Investment Pools
Shasta County Investment Pool 278,557
LAIF 19,421,350
Total Investments $ 52,711,117
90 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-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, 2023, 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 0.125-4.500% $ 3,759,962 $ 3,295,896 $ 7,055,858 1.32 U.S. Treasury 0.125-3.250% 2,678,489 10,576,340 13,254,829 1.84 Collateralized Mortgage Obligations 2.745-3.850% 289,747 1,708,802 1,998,549 3.38 Corporate Medium-Term Notes 0.350-4.600% 1,989,440 6,271,072 8,260,512 1.82 Asset-Backed Securities 0.260-3.390% 1,366 2,086,790 2,088,156 3.12 Supranationals 0.500% 353,306 - 353,306 1.24
Shasta County Investment Pool Variable 278,557 - 278,557 - LAIF Variable 19,421,350 - 19,421,350 -
Total Investments $28,772,217 $23,938,900 $52,711,117 1.18 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.
91 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-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 - - - 2.22%
Federal Farm Credit Bank - - - 3.25%
Federal Home Loan Bank - - - 5.44%
Federal Home Loan Mortgage Corporation - - - 2.48%
U.S. Treasury - - - 25.15%
Collateralized Mortgage Obligations - - - 3.79%
Corporate Medium-Term Notes A A A1 2.36%
Corporate Medium-Term Notes A A+ A1 1.26%
Corporate Medium-Term Notes A A- A1 0.67%
Corporate Medium-Term Notes A AA A1 0.76%
Corporate Medium-Term Notes A A A2 3.55%
Corporate Medium-Term Notes A A- A2 2.44%
Corporate Medium-Term Notes A A+ A2 0.73%
Corporate Medium-Term Notes A A A3 0.64%
Corporate Medium-Term Notes A A+ A3 0.73%
Corporate Medium-Term Notes A A+ AA2 0.56%
Corporate Medium-Term Notes A AA AA2 0.63%
Corporate Medium-Term Notes A A AA3 0.45%
Corporate Medium-Term Notes A A+ AA3 0.45%
Corporate Medium-Term Notes A AA+ AAA 0.44%
Asset-Backed Securities A AAA AAA 1.00%
Asset-Backed Securities A NR AAA 0.96%
Asset-Backed Securities A AAA NR 2.00%
Supranationals A AAA Aaa 0.67%
Shasta County Investment Pool N/A NR NR 0.53%
LAIF N/A NR NR 36.84%
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, 2023, that represent 5 percent or more of total City investments are as follows:
Percentage of
Investment Type Amount Invested Investments
Federal Home Loan Bank $ 2,868,786 5.44%
92 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-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, 2023, the City’s investment in LAIF valued at amortized cost was $19,421,350 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 $176.4 billion. Of that amount, 97.22 percent is invested in non-derivative financial products and 2.78 percent in structured notes and asset-backed securities.
93 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-34-
NOTE 4: CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2023, was as follows:
Balance Transfers/ Balance
July 1, 2022 Additions Retirements Adjustments June 30, 2023 Governmental Activities
Capital Assets, Not Being Depreciated
Land, easements, and right of way $ 3,808,336 $ - $ - $ - $ 3,808,336 Construction in progress 2,172,941 175,343 - ( 1,832,504) 515,780 Total Capital Assets, Not Being
Depreciated
5,981,277 175,343
- ( 1,832,504) 4,324,116
Capital Assets, Being Depreciated
Infrastructure and land improvements 57,472,641 - - 1,832,504 59,305,145 Buildings and improvements 16,153,862 - - - 16,153,862
Machinery and equipment 758,063 - - - 758,063
Vehicles 34,571 - - - 34,571
Total Capital Assets, Being Depreciated 74,419,137 - - 1,832,504 76,251,641 Less Accumulated Depreciation For:
Infrastructure and land improvements ( 20,492,971) ( 1,002,664) - 3,215 ( 21,492,420) Building and improvements ( 3,205,804) ( 434,192) - ( 3,215) ( 3,643,211) Machinery and equipment ( 622,943) ( 46,239) - - ( 669,182) Vehicles ( 34,571) - - - ( 34,571)
Total Accumulated Depreciation ( 24,356,289) ( 1,483,095) - - ( 25,839,384) Total Capital Assets, Being Depreciated,
Net 50,062,848 ( 1,483,095) - 1,832,504 50,412,257
Governmental Activities Capital Assets,
Net $ 56,044,125 ($1,307,752) $ - $ - $ 54,736,373
94 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-35-
NOTE 4: CAPITAL ASSETS (CONTINUED)
Balance Transfers/ Balance
July 1, 2022 Additions Retirements Adjustments June 30, 2023 Business-Type Activities
Capital Assets, Not Being Depreciated
Land $ 1,837,377 $ - $ - $ - $ 1,837,377
Construction in progress 4,721,738 2,508,083 ( 106,456) ( 1,434,745) 5,688,620 Total Capital Assets, Not Being
Depreciated
6,559,115 2,508,083
( 106,456) ( 1,434,745) 7,525,997
Capital Assets, Being Depreciated
General and utility plant 94,812,869 77,400 - 1,379,754 96,270,023 Buildings and improvements 1,518,124 - - 54,991 1,573,115 Equipment and vehicles 4,274,290 383,577 - - 4,657,867
Total Capital Assets,
Being Depreciated $100,605,283 460,977 - 1,434,745 102,501,005 Less Accumulated Depreciation For:
General and utility plant ( 50,944,062) ( 2,496,705) - - ( 53,440,767) Building and improvements ( 815,880) ( 46,076) - - ( 861,956) Equipment and vehicles ( 3,559,916) ( 245,431) - - ( 3,805,347) Total Accumulated Depreciation ( 55,319,858) ( 2,788,212) - - ( 58,108,070) Total Capital Assets,
Being Depreciated, Net 45,285,425 ( 2,327,235) - 1,434,745 44,392,935 Governmental Activities
Capital Assets, Net $ 51,844,540 $ 180,848 ($ 106,456) $ - $ 51,918,932 Depreciation
Depreciation expense was charged to governmental activities as follows:
General government $ 180,017
Public safety 7,917
Public ways and facilities 1,212,825
Culture and recreation 82,336
Total Depreciation and Expense – Governmental Activities $ 1,483,095 Depreciation expense was charged to business-type activities as follows:
Water $ 631,818
Electric 633,103
Wastewater 1,280,761
Internal Service Funds 242,530
Total Depreciation Expense – Business-Type Activities $ 2,788,212 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. 95 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-36-
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 from and due to balances as of June 30, 2023:
Due From Due To
Other Funds Other Funds
General fund $ 269,746 $ -
Nonmajor governmental funds - 178,450
Nonmajor enterprise funds - 91,296
Total $ 269,746 $ 269,746
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.
The following are advances to/from other funds as of June 30, 2023:
Advances To Advances From
Other Funds Other Funds
General fund $ - $ 78,081
Water - 12,865
Electric 149,294 -
Wastewater - 12,954
Internal service funds - 45,394
Total $ 149,294 $ 149,294
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, 2023:
Transfers Transfers
In Out
General fund $ 25,721 $ -
Nonmajor governmental funds 187,140 247,861
Wastewater 35,000 -
Total $ 247,861 $ 247,861
96 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-37-
NOTE 6: UNEARNED/UNAVAILABLE REVENUES
At June 30, 2023, components of unearned and unavailable revenues were as follows:
Unearned Unavailable Totals
General Fund
Utility overpayments and deposit refunds $ 61,037 $ - $ 61,037 Grants receivable - 19,339 19,339
Grant Fund
Grants Receivable - 259,644 259,644
Nonmajor Governmental Funds
ARPA Funds 2,393,097 - 2,393,097
Grants received in advance 194,999 - 194,999
Grants receivable - 67,435 67,435
Total $ 2,649,133 $ 346,418 $ 2,995,551
NOTE 7: LONG-TERM LIABILITIES
The following is a summary of changes in long-term liabilities for the year ended June 30, 2023:
Amounts
Balance Adjustments/ Balance Due Within
Type of Indebtedness July 1, 2022 Additions Retirements June 30, 2023 One Year Governmental Activities
Revenue Bonds $ 2,251,775 $ - ($ 130,000) $ 2,121,775 $ 139,000 Special Assessment Bonds 24,000 - ( 2,000) 22,000 2,000 Certificates of Participation 11,220,000 - ( 416,000) 10,804,000 427,000 Unamortized Discount ( 255,367) - 14,187 ( 241,180) ( 14,187) Certificates of Participation, Net 10,964,633 - ( 401,813) 10,562,820 412,813 Compensated Absences 158,961 130,326 ( 116,128) 173,159 86,579 Total Governmental Activities $ 13,399,369 $ 130,326 ($ 649,941) $ 12,879,754 $ 640,392 Business-Type Activities
Loans $ 16,728,613 $ - ($ 572,888) $ 16,155,725 $ 585,040 Special Assessment Bonds 600,000 - ( 40,000) 560,000 45,000 Compensated Absences 361,082 326,865 ( 297,557) 390,390 195,195 Total Business-Type Activities $ 17,689,695 $ 326,865 ($ 910,445) $ 17,106,115 $ 825,235 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. 97 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-38-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Individual issues of debt payable outstanding at June 30, 2023, 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
1,885,000
236,775
2,121,775
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
22,000
22,000
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. 2,334,000
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. 8,470,000 Total Certificates of Participation 10,804,000
Total Governmental Activities $ 12,947,775
98 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-39-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
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
$ 2,657,382
13,498,343
16,155,725
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
560,000
560,000
$ 16,715,725
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
2024 $ 139,000 $ 92,318 $ 231,318
2025 143,000 85,972 228,972
2026 152,000 79,335 231,335
2027 155,000 72,428 227,428
2028 164,000 65,250 229,250
2029-2033 930,000 206,685 1,136,685
2034-2035 438,775 19,890 458,665
Total $ 2,121,775 $ 621,878 $ 2,743,653
99 CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-40-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Governmental Activities (Continued)
Special Assessment Bonds
Year Ended
June 30 Principal Interest Total
2024 $ 2,000 $ 925 $ 2,925
2025 3,000 775 3,775
2026 3,000 625 3,625
2027 3,000 450 3,450
2028 4,000 250 4,250
2029-2030 7,000 75 7,075
Total $ 22,000 $ 3,100 $ 25,100
Certificates of Participation
Year Ended
June 30 Principal Interest Total
2024 $ 427,000 $ 350,948 $ 777,948
2025 438,000 339,768 777,768
2026 449,000 327,849 776,849
2027 460,000 315,218 775,218
2028 472,000 301,803 773,803
2029-2033 2,589,000 1,275,419 3,864,419
2034-2038 3,065,000 790,470 3,855,470
2039-2043 1,580,000 361,598 1,941,598
2044-2048 372,000 191,717 563,717
2049-2053 436,000 127,269 563,269
2054-2058 516,000 51,674 567,674
Total $ 10,804,000 $ 4,433,733 $ 15,237,733
Business-Type Activities
Loans
Year Ended
June 30 Principal Interest Total
2024 $ 585,040 $ 307,159 $ 892,199
2025 597,471 294,641 892,112
2026 610,190 281,834 892,024
2027 623,202 268,731 891,933
2028 636,516 255,323 891,839
2029-2033 3,393,360 1,064,325 4,457,685
2034-2038 2,949,067 716,001 3,665,068
2039-2043 2,651,898 486,030 3,137,928
2044-2048 2,885,104 252,823 3,137,927
2049-2050 1,223,877 31,296 1,255,173
Total $ 16,155,725 $ 3,958,163 $ 20,113,888
100
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-41-
NOTE 7: LONG-TERM LIABILITIES (CONTINUED)
Business-Type Activities (Continued)
Special Assessment Bonds
Year Ended
June 30 Principal Interest Total
2024 $ 45,000 $ 28,219 $ 73,219
2025 45,000 25,857 70,857
2026 50,000 23,363 73,363
2027 50,000 20,738 70,738
2028 55,000 17,982 72,982
2028-2032 315,000 43,183 358,183
Total $ 560,000 $ 159,342 $ 719,342
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 $13,337,035 of restricted net position, of which $4,392,636 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.
101
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
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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. • 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.
102
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-43-
NOTE 9: FUND BALANCES (CONTINUED)
The fund balances for all major and nonmajor governmental funds as of June 30, 2023, were distributed as follows:
Other
General Grant Governmental
Fund Fund Funds Totals
Restricted for:
HOME $ - $ - $ 4,498,318 $ 4,498,318
Wastewater treatment debt - - 2,867,554 2,867,554
Law enforcement fund (COPS) - - 11,491 11,491
Water P&FCC charges - - 477,512 477,512
State trafficway - - 2,250,636 2,250,636
Electric P&FCC charges - - 332,717 332,717
CDBG housing rehabilitation - - 177,842 177,842
CDBG projects - - 156,669 156,669
Parks P&FCC charges - - 327,972 327,972
Former RDA low/moderate - - 1,099,125 1,099,125
Debt service 688,715 - 29,977 718,692
Subtotal 688,715 - 12,229,813 12,918,528
Unassigned 5,575,012 ( 1,033,768) ( 12,440) 4,528,804
Total $ 6,263,727 ($ 1,033,768) $ 12,217,373 $ 17,447,332 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.
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.
103
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
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NOTE 10: PENSION PLAN (CONTINUED)
A. General Information about the Pension Plan (Continued) Plan Description (Continued)
Effective January 1, 2013, the City added retirement tiers for the Miscellaneous Rate Plan 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 tier (i.e., Miscellaneous). 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, 2023, 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%
104
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-45-
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 15.250% 8.000% 0.000%
Miscellaneous Second Tier 9.120% 7.000% 0.000%
Miscellaneous PEPRA 7.470% 6.750% 0.000%
For the year ended June 30, 2022, the contributions recognized as part of pension expense were as follows:
Contributions-Employee
Contributions-Employer (Paid by Employer)
Miscellaneous $ 571,058 $ -
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension
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, 2022, 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, 2021 rolled forward to June 30, 2022 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, 2022 and 2023 measurement dates was as follows:
Proportion Proportion Change-
June 30, 2022 June 30, 2023 Increase (Decrease)
Miscellaneous -0.29722% 0.03736% 0.33458%
As of June 30, 2023, 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 $ 1,748,131
Total Net Pension Liability (Asset) $ 1,748,131
105
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-46-
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, 2023, the City recognized pension expense of $8,659,876. At June 30, 2023, 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 $ 617,749 $ - Change in assumptions 179,133 -
Difference between expected and actual experience 35,106 ( 23,512) Difference between projected and actual earnings on
pension plan investments 320,211 -
Difference between City contributions and proportionate share of contributions. 1,611,576 ( 1,725,980)
Amortization due to differences in proportions 5,036,448 ( 1,548,086) Total $ 7,800,223 ($ 3,297,578)
$617,749 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, 2024. 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
2024 $ 1,445,506
2025 1,347,167
2026 896,372
2027 195,851
Thereafter -
Total $ 3,884,896
Actuarial Assumptions
The total pension liability in the June 30, 2021 actuarial valuation was determined using the following actuarial assumptions:
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 6.90%
Investment Rate of Return 6.90%
Inflation 2.30%
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 2.30% until Purchasing Power Protection Allowance Floor on Purchasing Power
applies
106
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-47-
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 rates incorporate Generational Mortality to capture ongoing mortality improvement using 80 percent of Scale MP-2020 published by the Society of Actuaries. For more details, please refer to the CalPERS 2021 experience study that can be found on the CalPERS website.
Discount Rate
The discount rate used to measure the total pension liability for PERFC was 6.90 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
In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations, as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long-term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return.
The expected real rates of return by asset class are as follows:
Assumed Real Return
Asset Years 1-10
Asset Class Allocation (1, 2)
Global Equity – Cap-Weighted 30.0% 4.54%
Global Equity – Non-Cap-Weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage ( 5.0%) ( 0.59%)
Total 100.0%
(1) An expected price inflation of 2.30% used for this period (2) Figures are based on the 2021 Asset Liability Management Study 107
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-48-
NOTE 10: PENSION PLAN (CONTINUED)
B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pension (Continued)
Sensitivity of Proportionate Share of the Net Pension Liability (Asset) 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 (asset) 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
5.90% 6.90% 7.90%
Miscellaneous $ 7,678,019 $ 1,748,131 ($ 3,130,696)
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.
The City provides medical 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 currently 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. 108
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-49-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Employees Covered by Benefit Terms
At the OPEB liability measurement date of June 30, 2022, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefit payments 29 Inactive employees entitled to but not yet receiving benefit payments 11 Active employees 52
Total 92
Contributions
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.
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 2022:
City Non – Vesting Caps
Group Ee Only Ee + Sp Ee + Fam
Management $ 701.23 $ 1,402.46 $ 1,823.20
Teamsters 701.23 1,402.46 1,823.20
IBEW 701.23 1,402.46 1,823.20
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.
109
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-50-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Contributions (Continued)
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.
The cap amounts vary by coverage level and are adjusted annually. For 2022, the caps are $816 (employee), $1,548 (employee plus one) and $1,983 (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%
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. 110
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-51-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) A. General Information about the OPEB Plan (Continued)
Contributions (Continued)
Current premium rates: The 2022 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+
Kaiser HMO $ 857.06 $ 1,714.12 $ 2,228.36 $ 302.53 $ 605.06 $ 1,119.30 PERS Platinum PPO 1,057.01 2,114.02 2,748.23 381.94 763.88 1,398.09 PERS Gold PPO 701.23 1,402,46 1,823.20 377.41 754.82 1,175.56 B. Net OPEB Liability
The City’s net OPEB Liability of $620,948 was measured as of June 30, 2022, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of that date.
Actuarial Assumptions and Other Inputs
The total OPEB liability in the June 30, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Valuation Date June 30, 2021
Funding Method Entry Age Normal Cost, level of percent of pay Asset Valuation Method Market value of assets
Discount Rates 5.65% as of June 30, 2022 and 5.65% as of June 30, 2021 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 and to determine the amortization payment component of the Actuarially Determined Contributions
General Inflation Rate 2.50% per year
Healthcare cost trend rates 5.80% for 2023, decreasing 0.20% or 0.10% per year to an ultimate rate of 3.90% for 2076 and later years
Mortality rates CalPERS 2017 experience study
Demographic actuarial assumptions used in the June 30, 2021 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. The representative mortality rates were those published by CalPERS adjusted to back out 15 years of Scale MP-2016 to central year 2015. 111
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-52-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) B. Net OPEB Liability (Continued)
Discount Rate
The discount rate used to measure the total OPEB liability was 5.65 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, 2022 for the City’s proportionate share.
Increases (Decreases)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
Balances at Fiscal Year Ending June 30, 2022 $ 8,598,257 $ 9,720,985 ($ 1,122,728) Changes for the year:
Service cost 395,738 - 395,738
Interest 497,581 - 497,581
Contributions – employer - 374,514 ( 374,514)
Net investment income - ( 1,222,414) 1,222,414
Benefit payments, ( 374,514) ( 374,514) -
Administrative expense - ( 2,457) 2,457
Net Changes 518,805 ( 1,224,871) 1,743,676
Balances at Fiscal Year Ending June 30, 2023 $ 9,117,062 $ 8,496,114 $ 620,948 Sensitivity of the Net Pension Liability 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
4.65% 5.65% 6.65%
Net OPEB liability (asset) $ 1,987,315 $ 620,948 ($ 490,113) 112
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-53-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) C. Changes in the Net OPEB Liability (Asset) (Continued) Sensitivity of the Net OPEB Liability 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
(4.8% decreasing (5.8% decreasing (6.8% decreasing
to 4.0%) to 5.0%) to 6.0%)
Net OPEB liability (asset) ($ 617,617) $ 620,948 $ 1,555,938 OPEB Plan Fiduciary Net Position
Detailed information about the OPEB plan’s fiduciary net position is available in the separately issued CalPERS financial report.
D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
For the year ended June 30, 2023, the City recognized OPEB income of $167,270. At June 30, 2023, 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 $ 373,513 $ - Changes of assumptions 368,685 ( 134,456)
Difference between expected and actual experience - ( 1,006,270) Net differences between projected and actual earnings
on OPEB plan investments 801,095 -
Total $ 1,543,293 ($ 1,140,726)
$373,513 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability (asset) in the year ended June 30, 2023.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:
Fiscal
Year Ended
June 30
2024 ($ 95,571)
2025 ( 90,864)
2026 ( 122,435)
2027 298,231
2028 28,764
Thereafter 10,929
Total $ 29,054
113
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-54-
NOTE 11: OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) D. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued)
Payable to the OPEB Plan
At June 30, 2023, 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.
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. Members 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. 114
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
-55-
NOTE 13: JOINT VENTURES (CONTINUED)
A. NCPA (Continued)
Northern California Power Agency (Continued)
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.
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, 2023, the City had construction commitments outstanding of approximately $2,744,148. 115
CITY OF SHASTA LAKE
Notes to Basic Financial Statements
For the Year Ended June 30, 2023
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NOTE 14: OTHER INFORMATION (CONTINUED)
A. Commitments and Contingencies (Continued)
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, 2023:
Amounts
Balance Additions/ Balance Due Within
Type of Indebtedness July 1, 2022 Adjustments Retirements June 30, 2023 One Year Tax Allocation Bonds $ 1,865,000 $ - ($ 345,000) $ 1,520,000 $ 360,000 Total $ 1,865,000 $ - ($ 345,000) $ 1,520,000 $ 360,000 Individual issues of debt payable outstanding at June 30, 2023, 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
$ 1,520,000
$ 1,520,000
Following is a schedule of debt payment requirements to maturity for long-term debt:
Tax Allocation Bonds
Year Ended
June 30 Principal Interest Total
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 $ 1,520,000 $ 105,484 $ 1,625,484
C. Subsequent Events
Management has evaluated events subsequent to June 30, 2023 through March 13, 2024, the date on which the financial statements were available for issuance and has determined no other subsequent events requiring disclosure have occurred.
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Required Supplementary Information
(Unaudited)
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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, 2023
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 nine years are shown. -57-
120
2017/2018 2018/2019 2019/2020 2020/2021 2021/2022
0.19678% 0.20417% 0.00547% -0.29722% 0.03736%
$ 7,416,000 $ 8,175,847 $ 230,682 $ (5,643,653) $ 1,748,131 3,897,624 3,931,301 4,292,114 4,698,897 4,874,966
190.27% 207.97% 5.37% -120.11% 35.86%
78.08% 77.37% 99.39% 114.18% 95.98%
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CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Schedule of Contributions
For the Year Ended June 30, 2023
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 nine years are shown. -58-
122
2018/2019 2019/2020 2020/2021 2021/2022 2022/2023
$ 425,624 $ 472,300 $ 563,348 $ 571,048 $ 617,749
(817,880) (9,341,569) (563,348) (571,048) (617,749)
$ (392,256) $ (8,869,269) $ - $ - $ -
$ 3,931,301 $ 4,292,114 $ 4,698,897 $ 4,874,966 $ 5,166,506
20.80% 217.64% 11.99% 11.71% 11.96%
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CITY OF SHASTA LAKE
Required Supplementary Information
City Pension Plan
Notes to City Pension Plan
For the Year Ended June 30, 2023
-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, 2021
Actuarial cost method Individual Entry Age Normal
Amortization method Level Percentage of Payroll (Pre-2019), Level Dollar 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%
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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, 2023
Last 10 Year Fiscal Years*
Measurement Date 2016/2017 2017/2018 2018/2019 2019/2020 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 six years are shown. -60-
126
2020/2021 2021/2022
$ 343,830 $ 395,738
517,584 497,581
(180,309) -
392,586 -
(312,321) (374,514)
761,370 518,805
7,836,887 8,598,257
$ 8,598,257 $ 9,117,062
$ 372,321 $ 374,514
1,587,391 (1,222,414)
(312,321) (374,514)
(2,940) (2,456)
- -
1,644,451 (1,224,870)
8,076,533 9,720,984
$ 9,720,984 $ 8,496,114
$ (1,122,727) $ 620,948
113.06% 93.19%
$ 4,420,877 $ 4,766,358
-25.40% 13.03%
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CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Schedule of Contributions
For the Year Ended June 30, 2023
Last 10 Fiscal Years*
Fiscal Year 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 six years are shown. -61-
128
2021/2022 2022/2023
$ 367,955 $ 342,178
(374,514) (373,513)
$ (6,559) $ (31,335)
$ 4,766,358 $ 5,154,429
7.86% 7.25%
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CITY OF SHASTA LAKE
Required Supplementary Information
City OPEB Plan
Notes to City OPEB Plan
For the Year Ended June 30, 2023
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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, 2023 was determined and presented in the June 30, 2022 Actuarial Valuation report.
Methods and Assumptions Used to Determine Contributions:
Actuarial cost method Entry Age Normal Level % of Pay
Amortization method Level dollar Open 30 years
Amortization period 30 years
Asset valuation method Market value
Inflation 2.50%
Healthcare cost trend rates 5.80% in 2023, stepping down gradually to 4.00% in 2076 Salary increases 3.00%
Investment rate of return 5.65%
Retirement age From 50 to 75
Mortality CalPERS 2017 Experience Study
Mortality improvement MW Scale 2020 generationally
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CITY OF SHASTA LAKE
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
For the Year Ended June 30, 2023
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)
REVENUES
Taxes and assessments $ 2,942,724 $ 2,942,724 $ 3,296,558 $ 353,834 Licenses and permits 217,600 217,600 268,650 51,050
Fines and forfeitures 9,250 9,250 12,171 2,921
Use of money and property 75,000 75,000 97,331 22,331
Intergovernmental 1,150,500 1,166,100 1,125,482 (40,618) Charges for services 4,512,664 4,512,664 4,480,406 (32,258) Other revenues 447,830 447,830 111,842 (335,988)
Total Revenues 9,355,568 9,371,168 9,392,440 21,272
EXPENDITURES
Current:
General government 4,297,866 4,516,866 2,909,134 1,607,732 Public safety 4,523,068 4,527,068 3,949,577 577,491
Public ways and facilities 249,657 249,657 130,967 118,690 Planning 816,325 823,325 714,753 108,572
Culture and recreation 442,712 442,712 352,461 90,251
Debt service:
Principal 36,000 36,000 416,000 (380,000)
Interest 77,025 77,025 363,276 (286,251)
Capital outlay 253,750 269,350 83,103 186,247
Total Expenditures 10,696,403 10,942,003 8,919,271 2,022,732 Excess of Revenues Over (Under) Expenditures (1,340,835) (1,570,835) 473,169 2,044,004
OTHER FINANCING SOURCES (USES)
Transfers in - - 25,721 25,721
Total Other Financing Sources (Uses) - - 25,721 25,721
Net Change in Fund Balances (1,340,835) (1,570,835) 498,890 2,069,725 Fund Balances - Beginning 5,764,837 5,764,837 5,764,837 - Fund Balances - Ending $ 4,424,002 $ 4,194,002 $ 6,263,727 $ 2,069,725 -63-
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CITY OF SHASTA LAKE
Required Supplementary Information
Budgetary Comparison Schedule
Grant Fund
For the Year Ended June 30, 2023
Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Negative)
REVENUES
Use of money and property $ - $ - $ 28,697 $ 28,697
Intergovernmental 1,873,457 2,096,457 270,979 (1,825,478) Total Revenues 1,873,457 2,096,457 299,676 (1,796,781)
EXPENDITURES
Current:
General government 1,245,505 1,245,505 1,276,557 (31,052) Capital outlay 627,952 850,952 2,127 848,825
Total Expenditures 1,873,457 2,096,457 1,278,684 817,773 Net Change in Fund Balances - - (979,008) (979,008)
Fund Balances - Beginning (54,760) (54,760) (54,760) -
Fund Balances - Ending $ (54,760) $ (54,760) $ (1,033,768) $ (979,008) -64-
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CITY OF SHASTA LAKE
Required Supplementary Information
Note to Budgetary Comparison Schedule
For the Year Ended June 30, 2023
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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.
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Combining and Individual Fund Financial Statements
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Nonmajor Governmental Funds
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CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
Special Debt
Revenue Service
Funds Funds Totals
ASSETS
Cash and investments $ 5,013,839 $ 472,587 $ 5,486,426
Receivables:
Interest 23,419 1,961 25,380
Taxes 130,605 2,426 133,031
Intergovernmental 67,435 - 67,435
Assessments - 2,142,000 2,142,000
Restricted cash and investments - 278,557 278,557
Loans receivable 3,821,418 - 3,821,418
Land held for resale 534,984 - 534,984
Total Assets $ 9,591,700 $ 2,897,531 $12,489,231
LIABILITIES
Accounts payable $ 25,973 $ - $ 25,973
Due to other governments - - -
Due to other funds 178,450 - 178,450
Unearned revenue - - -
Total Liabilities 204,423 - 204,423
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues 67,435 - 67,435
Total Deferred Inflows of Resources 67,435 - 67,435
FUND BALANCES
Restricted 9,332,282 2,897,531 12,229,813
Unassigned (12,440) - (12,440)
Total Fund Balances 9,319,842 2,897,531 12,217,373
Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 9,591,700 $ 2,897,531 $12,489,231 -66-
139
CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Governmental Funds
For the Year Ended June 30, 2023
Special Debt
Revenue Service
Funds Funds Totals
REVENUES
Taxes and assessments $ - $ 35,225 $ 35,225
Use of money and property 67,388 10,053 77,441
Intergovernmental 2,114,090 - 2,114,090
Charges for services 107,252 - 107,252
Other revenues 10,428 - 10,428
Total Revenues 2,299,158 45,278 2,344,436
EXPENDITURES
Current:
General government 27,697 - 27,697
Public safety 100,000 - 100,000
Public ways and facilities 901,881 - 901,881
Community development 208,703 8,166 216,869
Debt service:
Principal - 132,000 132,000
Interest - 99,555 99,555
Capital outlay 90,113 - 90,113
Total Expenditures 1,328,394 239,721 1,568,115
Excess of Revenues Over (Under) Expenditures 970,764 (194,443) 776,321
OTHER FINANCING SOURCES (USES)
Transfers in 187,140 - 187,140
Transfers out (247,861) - (247,861)
Total Other Financing Sources (Uses) (60,721) - (60,721) Net Change in Fund Balances 910,043 (194,443) 715,600
Fund Balances - Beginning 8,409,799 3,091,974 11,501,773 Fund Balances - Ending $ 9,319,842 $ 2,897,531 $12,217,373 -67-
140
Nonmajor Governmental Funds
• Special Revenue Funds
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CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2023
Law Water Electric CDBG
Enforcement P&FCC P&FCC Housing
(COPS) Charges Charges HOME Rehabilitation
ASSETS
Cash and investments $ 36,303 $ 475,175 $ 331,079 $ 1,575,336 $ 100,115 Receivables:
Interest 188 2,337 1,638 7,359 322
Taxes - - - - -
Intergovernmental - - - - -
Loans receivable - - - 2,915,623 77,405
Land held for resale - - - - -
Total Assets $ 36,491 $ 477,512 $ 332,717 $ 4,498,318 $ 177,842
LIABILITIES
Accounts payable $ 25,000 $ - $ - $ - $ -
Due to other funds - - - - -
Total Liabilities 25,000 - - - -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - -
Total Deferred Inflows of Resources - - - - -
FUND BALANCES (DEFICIT)
Restricted 11,491 477,512 332,717 4,498,318 177,842
Unassigned - - - - -
Total Fund Balances (Deficit) 11,491 477,512 332,717 4,498,318 177,842 Total Liabilities, Deferred Inflows
of Resources and Fund Balances $ 36,491 $ 477,512 $ 332,717 $ 4,498,318 $ 177,842 -68-
144
Wastewater Parks
CDBG P&FCC P&FCC Housing State
Project Charges Charges Authority Trafficway Totals
$ - $ - $ 326,387 $ 58,028 $ 2,111,416 $ 5,013,839
- 107 1,585 295 9,588 23,419
- - - - 130,605 130,605
66,851 - - - 584 67,435
322,572 - - 505,818 - 3,821,418
- - - 534,984 - 534,984
$ 389,423 $ 107 $ 327,972 $ 1,099,125 $ 2,252,193 $ 9,591,700 $ - $ - $ - $ - $ 973 $ 25,973
165,903 12,547 - - - 178,450
165,903 12,547 - - 973 204,423
66,851 - - - 584 67,435
66,851 - - - 584 67,435
156,669 - 327,972 1,099,125 2,250,636 9,332,282
- (12,440) - - - (12,440)
156,669 (12,440) 327,972 1,099,125 2,250,636 9,319,842
$ 389,423 $ 107 $ 327,972 $ 1,099,125 $ 2,252,193 $ 9,591,700 -68-
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CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Year Ended June 30, 2023
Law Water Electric CDBG
Enforcement P&FCC P&FCC Housing
(COPS) Charges Charges HOME Rehabilitation
REVENUES
Use of money and property $ 509 $ 6,320 $ 4,431 $ 19,905 $ 872 Intergovernmental 100,000 - - - -
Charges for services - 40,669 - - -
Other revenues - - - - -
Total Revenues 100,509 46,989 4,431 19,905 872
EXPENDITURES
Current:
General government - 9,635 1,957 - -
Public safety 100,000 - - - -
Public ways and facilities - - - - -
Community development - - - 1,100 -
Capital outlay - - - - -
Total Expenditures 100,000 9,635 1,957 1,100 -
Excess of Revenues Over (Under)
Expenditures 509 37,354 2,474 18,805 872
OTHER FINANCING SOURCES (USES)
Transfers in - - - - 187,140
Transfers out - - - - (150,080)
Change in Net Position 509 37,354 2,474 18,805 37,932
Fund Balances (Deficit) - Beginning 10,982 440,158 330,243 4,479,513 139,910 Fund Balances (Deficit) - Ending $ 11,491 $ 477,512 $ 332,717 $ 4,498,318 $ 177,842 -69-
146
Wastewater Parks
CDBG P&FCC P&FCC Housing State
Project Charges Charges Authority Trafficway Totals
$ 4,042 $ 289 $ 4,287 $ 799 $ 25,934 $ 67,388
574,309 - - - 1,439,781 2,114,090
- 35,722 20,625 - 10,236 107,252
- - - 10,428 - 10,428
578,351 36,011 24,912 11,227 1,475,951 2,299,158
- 12,865 3,240 - - 27,697
- - - - - 100,000
- - - - 901,881 901,881
192,978 - - 14,625 - 208,703
41,657 - - - 48,456 90,113
234,635 12,865 3,240 14,625 950,337 1,328,394
343,716 23,146 21,672 (3,398) 525,614 970,764
- - - - - 187,140
(62,781) (35,000) - - - (247,861)
280,935 (11,854) 21,672 (3,398) 525,614 910,043
(124,266) (586) 306,300 1,102,523 1,725,022 8,409,799
$ 156,669 $ (12,440) $ 327,972 $ 1,099,125 $ 2,250,636 $ 9,319,842 -69-
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Nonmajor Governmental Funds
• Debt Service Funds
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CITY OF SHASTA LAKE
Combining Balance Sheet
Nonmajor Debt Service Funds
June 30, 2023
Wastewater Riddle
Treatment Road
Debt Water Bond Totals
ASSETS
Cash and investments $ 465,158 $ 7,429 $ 472,587
Receivables:
Interest 1,934 27 1,961
Taxes 1,905 521 2,426
Assessments 2,120,000 22,000 2,142,000
Restricted cash and investments 278,557 - 278,557
Total Assets $ 2,867,554 $ 29,977 $ 2,897,531
LIABILITIES
Accounts payable $ - $ - $ -
Total Liabilities - - -
FUND BALANCES
Restricted 2,867,554 29,977 2,897,531
Total Fund Balances 2,867,554 29,977 2,897,531
Total Liabilities and Fund Balances $ 2,867,554 $ 29,977 $ 2,897,531 -70-
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CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Nonmajor Debt Service Funds
For the Year Ended June 30, 2023
Wastewater Riddle
Treatment Road
Debt Water Bond Totals
REVENUES
Taxes and assessments $ 33,986 $ 1,239 $ 35,225
Use of money and property 9,980 73 10,053
Total Revenues 43,966 1,312 45,278
EXPENDITURES
Community development
Debt service: 8,166 - 8,166
Principal 130,000 2,000 132,000
Interest 98,405 1,150 99,555
Total Expenditures 236,571 3,150 239,721
Net Change in Fund Balances (192,605) (1,838) (194,443) Fund Balances - Beginning 3,060,159 31,815 3,091,974
Fund Balances - Ending $ 2,867,554 $ 29,977 $ 2,897,531 -71-
152
Internal Service Funds
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CITY OF SHASTA LAKE
Combining Statement of Net Position
Internal Service Funds
June 30, 2023
Motor Public
Pool Works Totals
ASSETS
Current Assets:
Cash and investments $ 533,724 $ 1,520,324 $ 2,054,048
Receivables:
Accounts 14,433 - 14,433
Interest 1,155 8,245 9,400
Total Current Assets 549,312 1,528,569 2,077,881
Noncurrent Assets:
Capital assets:
Depreciable, net 855,614 176,220 1,031,834
Total Noncurrent Assets 855,614 176,220 1,031,834
Total Assets 1,404,926 1,704,789 3,109,715
DEFERRED OUTFLOWS OF RESOURCES
Deferred pension adjustments 248,799 1,251,216 1,500,015 Deferred OPEB adjustments 51,546 254,798 306,344
Total Deferred Outflows of Resources 300,345 1,506,014 1,806,359
LIABILITIES
Current Liabilities:
Accounts payable 19,005 11,592 30,597
Salaries and benefits payable 3,280 22,957 26,237
Compensated absences payable 9,254 50,382 59,636
Total Current Liabilities 31,539 84,931 116,470
Noncurrent Liabilities:
Compensated absences payable 9,254 50,382 59,636
Advances from other funds 3,564 41,830 45,394
Net pension liability 55,759 280,414 336,173
Net OPEB liability 20,740 102,519 123,259
Total Noncurrent Liabilities 89,317 475,145 564,462
Total Liabilities 120,856 560,076 680,932
DEFERRED INFLOWS OF RESOURCES
Deferred pension adjustments 105,181 528,957 634,138
Deferred OPEB adjustments 38,100 188,334 226,434
Total Deferred Inflows of Resources 143,281 717,291 860,572
NET POSITION
Investment in capital assets 855,614 176,220 1,031,834
Unrestricted 585,520 1,757,216 2,342,736
Total Net Position $ 1,441,134 $ 1,933,436 $ 3,374,570
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CITY OF SHASTA LAKE
Combining Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds
For the Year Ended June 30, 2023
Motor Public
Pool Works Totals
OPERATING REVENUES
Charges for services $ 883,764 $ 2,554,214 $ 3,437,978
Other revenue 22,688 1,898 24,586
Total Operating Revenues 906,452 2,556,112 3,462,564
OPERATING EXPENSES
Salaries and benefits 498,127 3,150,641 3,648,768
Administration 241,899 496,905 738,804
Insurance 9,128 15,565 24,693
Supplies 4,467 41,511 45,978
Repair and maintenance 172,714 23,147 195,861
Professional services 11,695 10,860 22,555
Depreciation 238,895 3,635 242,530
Total Operating Expenses 1,176,925 3,742,264 4,919,189
Operating Income (Loss) (270,473) (1,186,152) (1,456,625)
NON-OPERATING REVENUES (EXPENSES)
Intergovernmental - 3,336 3,336
Interest income 3,125 22,305 25,430
Interest expense (87) (1,026) (1,113)
Total Non-Operating Revenues (Expenses) 3,038 24,615 27,653 Change in Net Position (267,435) (1,161,537) (1,428,972) Total Net Position - Beginning 1,708,569 3,094,973 4,803,542 Total Net Position - Ending $ 1,441,134 $ 1,933,436 $ 3,374,570 -73-
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CITY OF SHASTA LAKE
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2023
Motor Public
Pool Works Totals
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 22,688 $ 1,898 $ 24,586
Receipts from interfund services 869,331 2,555,224 3,424,555 Payments to suppliers (448,119) (586,373) (1,034,492)
Payments to employees (263,664) (1,818,794) (2,082,458) Net Cash Provided (Used) by Operating Activities 180,236 151,955 332,191
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Interfund loans repaid (3,492) (41,010) (44,502)
Grants, assessments, and other receipts - 3,336 3,336
Net Cash Provided (Used) by Non-Capital Financing Activities (3,492) (37,674) (41,166)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES
Acquisition of capital assets (360,859) (16,296) (377,155) Interest paid on debt (87) (1,026) (1,113)
Net Cash Provided (Used) by Capital and Related Financing Activities (360,946) (17,322) (378,268)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 2,971 20,565 23,536
Net Cash Provided by Investing Activities 2,971 20,565 23,536 Net Increase (Decrease) in Cash and Cash Equivalents (181,231) 117,524 (63,707) Balances - Beginning 714,955 1,402,800 2,117,755
Balances - Ending $ 533,724 $ 1,520,324 $ 2,054,048
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CITY OF SHASTA LAKE
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended June 30, 2023
Motor Public
Pool Works Totals
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Operating income (loss) $ (270,473) $ (1,186,152) $ (1,456,625) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities:
Depreciation 238,895 3,635 242,530
Decrease (increase) in:
Accounts receivable (14,433) 1,010 (13,423)
Pension adjustment - deferred outflows 47,150 430,814 477,964 OPEB adjustment - deferred outflows (22,760) 5,074 (17,686) Increase (decrease) in:
Accounts payable (7,587) 7,915 328
Salaries and benefits payable (5,337) (40,047) (45,384) Due to other governments (629) (6,300) (6,929)
Compensated absences 1,270 9,976 11,246
Net pension liability 229,727 1,269,159 1,498,886
Net OPEB liability 57,004 429,906 486,910
Pension adjustment - deferred inflows (31,926) (250,290) (282,216) OPEB adjustment - deferred inflows (40,665) (522,745) (563,410) Net Cash Provided (Used) by Operating Activities $ 180,236 $ 151,955 $ 332,191 -75-
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CITY OF SHASTA LAKE,
CALIFORNIA
SINGLE AUDIT ACT
REPORTS AND SCHEDULES
FOR THE YEAR ENDED
JUNE 30, 2023
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CITY OF SHASTA LAKE
Single Audit Act
For the Year Ended June 30, 2023
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, 2023 ........................................ 6 Notes to Schedule of Expenditures of Federal Awards .............................................................................7-8 Schedule of Findings and Questioned Costs............................................................................................9-10 Schedule of Prior Year Findings and Questioned Costs............................................................................. 11 Management’s Corrective Action Plan ....................................................................................................... 12 163
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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, (City) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated March 13, 2024.
Report on 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.
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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We identified certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as item 2023-001 that we consider to be a material weakness.
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To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on 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 the Finding
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the accompanying management’s corrective action plan. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
Purpose of this Report
The 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
March 13, 2024
166
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
Opinion on Each Major Federal Program
We have audited the City of Shasta Lake, California's (City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2023. 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.
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, 2023.
Basis for Opinion on Each Major Federal Program
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). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.
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To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgement and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures, including examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances 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 the City’s internal control over compliance.
Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. 168
-5-
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Report on 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 Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
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.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, 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, 2023 and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated March 13, 2024, which contained unmodified opinions on those financial statements. Our audit was performed 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
March 13, 2024
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CITY OF SHASTA LAKE
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2023
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 18-CDBG-12918 $ - $ 95,567 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 18-DRINFRA-18008 - 41,657 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0004 - 45,000 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0006 - 45,000 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0008 - 45,000 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-CDBG-CV-TRIB-0010 - 45,000 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 21-DR-MHP-21002 - 1,415 Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 - - 341,694 Subtotal 14.228 - 660,333
Home Investment Partnerships Program 14.239 - - 1,100
Home Investment Partnerships Program 14.239 - - 2,584,162 Subtotal 14.239 - 2,585,262
Total U.S. Department of Housing and Urban Development - 3,245,595 U.S. Department of Transportation
State Department of Transportation:
Highway Planning and Construction (Federal-Aid
Highway Program) 20.205 BRLS-5474 (015) - 42,898
Highway Planning and Construction (Federal-Aid
Highway Program) 20.205 HSISPL-5474 (020) - 3,785
Subtotal 20.205 - 46,683
Total U.S. Department of Transportation - 46,683
U.S. Department of the Treasury
State Department of Finance:
Coronavirus State and Local Fiscal Recovery Funds 21.027 - - 22,704 Total U.S. Department of the Treasury - 22,704
Total $ - $ 3,314,982
See the accompanying Notes to Schedule of Expenditures of Federal Awards -6-
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CITY OF SHASTA LAKE
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2023
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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. 173
CITY OF SHASTA LAKE
Notes to Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2023
-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, 2023, 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, 2023:
Assistance Amount Outstanding
Listing
Number Program Title July 1, 2022 June 30, 2023
14.228 Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii $ 341,694 $ 399,997
14.239 Home Investment Partnerships Program 2,584,162 2,275,732 Total Loans Outstanding $ 2,925,856 $ 2,675,729
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CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2023
-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? No
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 2023-001
SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS None
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CITY OF SHASTA LAKE
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2023
-10-
2023-001 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.
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.
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.
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 a repeat finding of prior year finding 2022-002.
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.
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PO BOX 777 | 4477 Main Street
Shasta Lake, CA 96019
(530) 275-7400
www.cityofshastalake.org
CITY OF SHASTA LAKE, CALIFORNIA
Schedule of Prior Year Findings and Questioned Costs
And
Corrective Action Plan
For the Year Ended June 30, 2023
Compiled by: Wendy Howard, Finance Director
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CITY OF SHASTA LAKE
Schedule of Prior Year Findings and Questioned Costs
For the Year Ended June 30, 2023
-11-
Audit Reference
2022-001
2022-002
2022-003
Status of Prior Year Recommendations
Prior Period Adjustment
Recommendation
We recommend that all year-end balances be reviewed for accuracy.
Status
Implemented
Reconciliation of Cash and Investments of the City
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.
Status
Not Implemented
Timeliness of Financial Statement Audit
Recommendation
We recommend that the City make every effort to have the financial statement audit conducted timely.
Status
Implemented
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CITY OF SHASTA LAKE
Management’s Corrective Action Plan
For the Year Ended June 30, 2023
-12-
2023-001 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: The $95,000 difference from prior year will be identified. All subsequent bank reconciliations have been completed in a timely manner and are currently up-to-date. Going forward, they will continue to be completed by the end of the following month.
Anticipated Completion Date: 6/30/2024
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CERTIFIED PUBLIC ACCOUNTANTS
950 THARP ROAD, SUITE 502 YUBA CITY, CA 95993 TEL: (530) 673-9790 FAX: (530) 673-1305 [email protected]
SMITH & NEWELL
COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE AT THE CONCLUSION
OF THE AUDIT
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
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 (City) for the year ended June 30, 2023. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you during the planning of our audit. Professional standards also require that we communicate to you the following information related to our audit.
SIGNIFICANT AUDIT MATTERS
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in the notes to the financial statements. In 2022-23, the City implemented, if applicable, Governmental Accounting Standards Board (GASB) Statement Nos. 91, 94, 96 and 99. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements are depreciation of capital assets, net pension liability and net OPEB liability.
Management’s estimate of depreciation is based on actual or estimated historical costs and the estimated useful lives of such assets. Management’s estimates for the net pension liability and net OPEB liability are based on actuarial reports. We evaluated the methods, assumptions, and data used to develop the City’s estimates in determining that they are reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
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To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Items identified as material weaknesses and significant deficiencies are identified in the schedule of findings and questioned costs of the Single Audit report.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
OTHER MATTERS
We applied certain limited procedures to the Management’s Discussion and Analysis, City Pension Plan information, City OPEB Plan information and the budgetary comparison information, which are required supplementary information (RSI) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. 182
To the Honorable Mayor and Members of the City Council
City of Shasta Lake
Shasta Lake, California
We were engaged to report on the combining fund financial statements, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section, which accompanies the financial statements but is not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
RESTRICTION ON USE
This information is intended solely for the information and use of the City Council and management of 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
March 13, 2024
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