Attachment B
Victorville Water District Basic Financial Statements
for Fiscal Year ended June 30, 2024
Victorville, California
Financial Statements and
Independent Auditor’s Report
For the year ended June 30, 2024
DRAFT
DRAFT
Victorville Water District
Table of Contents
For the year ended June 30, 2024
Page
i
Independent Auditor’s Report ................................................................................................................................... 1 Basic Financial Statements:
Statement of Net Position .................................................................................................. ................................. 7 Statement of Revenues, Expenses and Changes in Fund Net Position ........................................................ 8 Statement of Cash Flows .................................................................................................... ............................... 10 Notes to Basic Financial Statements ................................................................................................................ 15 Required Supplementary Information (Unaudited):
Schedule of the Proportionate Share of the Net Pension Liability ............................................................ ..... 42 Schedule of Pension Plan Contributions ...................................................................................... ...................... 44 Schedule of Changes in Total OPEB Liability and Related Ratios ................................................................. 46 Supplementary Information:
Combining Statement of Net Position ......................................................................................... ....................... 50 Combining Statement of Revenues, Expenses, and Change in Net Position ................................................ 52 DRAFT
ii
This page intentionally left blank
DRAFT
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors
of the Victorville Water District
Victorville, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the Victorville Water District (District), a component unit of the City of Victorville, California, as of and for the ye ar ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Di strict’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the District, as of June 30, 2024, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with a ccounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing st andards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the Un ited 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 indepe ndent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethica l 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 The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accoun ting 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 substant ial doubt about the District’s ability to continue as a going concern for twelve months beyond the financ ial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
DRAFT
To the Board of Directors
of the Southern California Logistics Airport Authority
Victorville, 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 GAAS 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 in volve 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 aggr egate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x 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 rega rding the amounts and disclosures in the financial statements.
x 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 District’s internal control. Accordingly, no such opinion is expressed. x 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.
x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’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.
2 DRAFT
To the Board of Directors
of the Southern California Logistics Airport Authority
Victorville, California
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the required pension schedules and other post-employment benefit plan schedules 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 Govern mental Accounting Standards Board who considers it to be an essential part of financial reporting for pl acing 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 accept ed in the United States of America, which consisted of inquiries of manage ment about the methods of preparing the information and comparing the information for consistency with ma nagement’s responses to our inquiries, the basic financial statements, and other knowle dge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a pa rt of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of the financial reporting for placing the basic financ ial statements in an appropriate op erational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Supplementary Information
Our audit was conducted for the purpose of forming opin ions on the financial statements that collectively comprise the District’s basic financial statements. The combining statements of the District are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining statements of the District are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlyi ng 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 Unit ed States of America. In our opinion, the combining statements of the District are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Report on Summarized Comparative Information
The prior year summarized comparative information ha s been derived from the District’s June 30, 2023 financial statements. The prior year financial statements of the District as of and for the year ended June 30, 2023, were audited by other auditors whose report da ted June 10, 2024, expressed an unmodified opinion on those statements.
3 DRAFT
To the Board of Directors
of the Southern California Logistics Airport Authority
Victorville, California
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April XX, 2025 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, cont racts, and grant agreements and other matters. The p u r p o s e o f t h a t r e p o r t i s s o l e l y t o d e s c r i b e t h e s cope 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 o f i n t e r n a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g o r o n c o m p l i a n c e . T h a t r e p o r t i s a n i n t e g r a l p a r t o f a n a u d i t performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance.
Badawi & Associates, CPAs
Berkeley, California
April XX, 2025
4 DRAFT
BASIC
FINANCIAL STATEMENTS
5 DRAFT
This page intentionally left blank
6 DRAFT
Victorville Water District
Statement of Net Position
June 30, 2024
(With Comparative Data for June 30, 2023)
2024 2023
ASSETS
Current Assets:
Cash and investments 85,120,299$ 78,986,58 1$
Cash with fiscal agent 836,588 836,639
Accounts receivable 5,640,186 5,176,781
Interest receivable 371,279 248,870
Due from other governments 28,707 19,946
Inventory 1,604,610 866,934
Total current assets 93,601,669 86,135,751
Noncurrent:
Deposits and prepaid items 51,763 28,306
Capital assets:
Nondepreciable 37,054,907 40,643,195
Depreciable or amortizable, net 120,138,363 119,672,824 Total noncurrent assets 157,245,033 160,344,325
Total assets 250,846,702 246,480,076
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - OPEB related 2,287,149 2,707,614
Deferred outflow - pension related 6,305,417 6,095,478
Total deferred outflows of resources 8,592,566 8,803,092
LIABILITIES
Current liabilities:
Accounts payable 2,857,836 4,376,617
Interest payable 153,385 161,029
Prepaid water connection fees - 217,489
Deposits payable 1,748,554 1,700,469
Compensated absences - due within one year 561,302 527,666 Total OPEB liability - due within one year 338,738 273,537 Long-term liabilities - due within one year 454,620 434,428 Total current liabilities 6,114,435 7,691,235
Noncurrent liabilities:
Total OPEB liability 11,690,747 11,388,426
Net pension liability 17,610,716 16,156,738
Long-term debt 7,329,311 7,790,160
Compensated absences 154,792 145,516
Total noncurrent liabilities 36,785,566 35,480,840
Total liabilities 42,900,001 43,172,075
DEFERRED INFLOWS OF RESOURCES
Deferred inflows - OPEB related 3,234,388 3,985,338
Deferred inflows - pension related 851,599 1,029,801
Total deferred inflows of resources 4,085,987 5,015,139
NET POSITION
Net investment in capital assets 149,171,073 151,942,967 Unrestricted 63,282,207 55,152,987
Total net position 212,453,280$ 207,095,954$
See accompanying Notes to Basic Financial Statements.
7 DRAFT
Victorville Water District
Statement of Revenues, Expenses and Changes in Net Position For the year ended June 30, 2024
(With Comparative Data for the year ended June 30, 2023) 2024 2023
OPERATING REVENUES:
Utility sales 29,871,480$ 30,269,489 $
Meter and service fees 11,326,765 9,801,678
Pass-thru charges for services 1,149,312 1,211,013
Fines and forfeitures 386,446 485,824
Arsenic surcharge 301,506 285,035
Other 243,233 242,429
Total operating revenues 43,278,742 42,295,468
OPERATING EXPENSES:
Personnel services 12,737,893 11,648,542
Maintenance and operations 19,532,107 19,228,008
Production costs 6,411,631 5,434,263
Pass-thru production costs 1,178,512 1,211,013
Depreciation and amortization 6,570,505 6,524,962
Total operating expenses 46,430,648 44,046,788
Operating income (loss) (3,151,906) (1,751,320)
NONOPERATING REVENUES (EXPENSES):
Taxes 1,567,817 1,335,019
Investment income 5,013,463 1,898,079
Interest expense (1,387,860) (381,764)
Gain on disposal of assets - 338,923
Other nonoperating expenses (2,024,057) (220,750)
Total nonoperating revenues (expenses) 3,169,363 2,969,507 Income before contributions and transfers 17,457 1,218,187 CONTRIBUTIONS AND TRANSFERS:
Connection fees 4,242,660 3,749,915
Alternate water source fees 484,220 528,412
Capital restricted use fees 587,276 586,681
Capital contributions - 10,000
Transfers in 25,713 -
Contributions to the City of Victorville -( 7 3 , 1 2 5 ) Total contributions and transfers 5,339,869 4,801,883
Change in net position 5,357,326 6,020,070
NET POSITION:
Beginning of year 207,095,954 201,075,884
End of year 212,453,280$ 207,095,954 $
See accompanying Notes to Basic Financial Statements.
8 DRAFT
This page intentionally left blank
9 DRAFT
Victorville Water District
Statement of Cash Flows
For the year ended June 30, 2024
(With Comparative Data for the Year Ended June 30, 2023) 2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users 41,075,670$ 41,565,129$ Receipts from other operating activities 5,069,090 - Cash payments to employees for services (11,592,107) (11,108,779) Cash payments to suppliers for goods and services (29,619,653) (19,431,426) Net cash provided by (used in) operating activities 4,933,000 11,024,924 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Cash received from other governments 1,567,817 1,335,019 Transfers in 25,713 -
Net cash provided by (used in) noncapital financing activities 1,593,530 1,335,019 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Cash received from the sale of capital assets - 614,109 Cash payments to the City of Victorville for acquisition of capital assets -( 73,125) Cash payments to acquire capital assets and other assets (3,447,756) (8,983,075) SBITA principal payments (9,464) (9,888)
Principal paid on capital-related debt (431,193) (410,000) Interest paid on capital-related debt (1,395,504) (395,388) Net cash provided by (used in) capital and related financing activities (5,283,917) (9,257,367) CASH FLOWS FROM INVESTING ACTIVITIES:
Investment Purchase
s --
Interest received 4,891,105 1,705,536
Net cash provided by (used in) investing activities 4,891,105 1,705,536 Net cash flows 6,133,718 4,808,112
CASH AND INVESTMENTS - Beginning of year 78,986,581 74,178,469 CASH AND INVESTMENTS - End of year 85,120,299$ 78,986,581$ See accompanying Notes to Basic Financial Statements.
10 DRAFT
Victorville Water District
Statement of Cash Flows (Continued)
For the year ended June 30, 2024
(With Comparative Data for the Year Ended June 30, 2023) 2024 2023
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Operating income (loss) (3,151,906)$ (1,751,320)$
Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Depreciation 6,570,505 6,524,962
Nonoperating miscellaneous revenue (expense) and capital contributions 3,290,099 4,644,258 (Increase) decrease in assets and deferred outflows:
Accounts receivable (463,405) 1,163,723
Due from other governments (8,761) 14,706
Prepaid expense --
Inventories (737,676) 81,339
Prepaid deposits (23,457) (6,783)
Deferred outflows - OPEB 420,465 (600,946)
Deferred outflows - pension (209,939) (3,218,593)
Increase (decrease) in liabilities and deferred inflows:
Accounts payable (1,518,781) (216,222)
Prepaid water connection fees (217,489) -
Deposits payable 48,085 30,498
Compensated absences 42,912 122,244
Total OPEB liabilty 367,522 (866,269)
Net pension liability 1,453,978 6,893,711
Deferred inflows - OPEB (750,950) 1,565,151
Deferred inflows - pension (178,202) (3,355,535)
Net cash provided by (used in) operating activities 4,933,000$ 11,024,924$ NONCASH TRANSACTIONS:
Developer/tenant contributed capital assets -$ 10,000$ SBITA acquisition - 30,652
11 DRAFT
This page intentionally left blank
12 DRAFT
NOTES TO BASIC
FINANCIAL STATEMENTS
13 DRAFT
This page intentionally left blank
14 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the Victorville Water District, California (City) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting princi ples. The more significant of the City’s accounting policies are described below.
A. Description of the Reporting Entity
On August 15, 2007, the Victor Valley Water District and the Baldy Mesa Water District were consolidated into a subsidiary district of the City of Victorville (t he City), known as the Victorville Water District (the District), per Resolution No. 2977 of the Executiv e Officer of the Local Agency Formation Commission (LAFCO) of San Bernardino County, which adopted a change of organization without election. All of the liabilities including debt obligations of the Victor Valley Water District and the Baldy Mesa Water District were assumed by this subsidiary district and the City upon consolidation. Upon consolidation of the two districts, the City consolidated the operations and activities of its Water Department and Water Funds into the District to serve all of the water customers of the City under this District. The basic operations of the District are financed by user charges plus capital contributions to finance growth of the water delivery system. The District is governed by a five-member Board of Directors (the City Council), each holding staggered four-year terms.
The District is an integral part of the reporting entity of the City of Victorville (the City) and is reflected as a blended component unit within the City of Vict orville. Blended component units are, in substance, part of the primary government’s operations, even though they are legally separate entities. The District fund has been included within the scope of the basic financial statements of the City because the City Council is the governing board and has financial accoun tability over the operations of the District. Only the District fund is included herein and these financial statements, therefore, do not purport to represent the financial position or results of operations of the City of Victorville, California.
B. Basic Financial Statements
The basic financial statements are comprised of the statement of net position, the statement of revenues, expenses, and changes in net position, the statement of cash flows, and the notes to the basic financial statements.
C. Basis of Accounting, Measurement Focus, and Financial Statement Presentation The District reports its activities as an enterprise fu nd (proprietary fund type), which is used to account for operations that are financed and operated in a manner similar to a private business enterprise, where the intent of the District is that the costs of providing water to its customers on a continuing basis be financed or recovered primarily through user charges (water sales and services), capital grants and similar funding.
15 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Basis of Accounting, Measurement Focus, and Financial Statement Presentation, Continued The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements.
Proprietary funds are presented using the economic resources measurement focus. This means that all assets, deferred outflows of resources, liabilities, and deferred inflows of resour ces (whether current or noncurrent) associated with their activity are included on their statement of net position.
Proprietary funds are presented using the accrual ba sis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered, regardless of when the related cash flows take place. Amounts paid to acquire capital assets are capitalized as assets.
Proceeds of long-term debt and acquisitions under leases and SBITAs are recorded as a liability. Amounts paid to reduce long-term indebtedness are reported as a reduction of the related liability. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenses.
The District distinguishes operating revenues and expenses from nonoperating items. Operating revenues, such as water sales and service charges that include utility sales, meter and service fees, pass- thru charges, fines and forfeitures, arsenic surcharge, and other reimbursements, result from exchange transactions associated with the principal activities of the District. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as taxes and investment income, result from nonexchange transactions, in which, the District gives (receives) value without directly receiving (giving) value in exchange.
Operating expenses, such as the cost or providing water, include the personnel services, maintenance and operations, productions costs, pass-thru production co sts, and depreciation and amortization on capital assets. All expenses not meeting this definition, such as interest expense, are reported as nonoperating expenses.
D. Cash and Investments
Investments are reported in the accompanying statement of net position at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Changes in fair value that occur during a fiscal year are recognized as investment income re ported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments.
16 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued E. Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments with original maturities of three months or less from the date of acquisition that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in intere st rates. Cash equivalents include the cash and investments held by a fiscal agent.
F. Accounts Receivable, Net
The District extends credit to customers in the normal course of operations. When management deems customer accounts uncollectible, the District uses the allowance method for the reservation and directly write-off of those accounts.
G. Inventory
The District uses the consumption method of accounting for inventories. Inventory consists primarily of water meters, pipe and pipe fittings for construction, and repair to the District’s water transmission and distribution system. Materials and supplies are valued at cost using a weighted average method.
H. Prepaid Deposits
Certain payments to vendors reflect costs or deposits applicable to future accounting periods and are recorded as prepaid items in the basic financial statements utilizing the consumption method.
I. Capital Assets
Tangible capital assets are valued at cost where hi storical records are available and at an estimated historical cost where no historical records exist. Donated tangible capital assets are recorded at estimated acquisition value at the date of donation. SBITA assets are initially measured as the sum of the present value of payments expected to be made during th e subscription term, payments associated with the SBITA contract made to the SBITA vendor at the commencement of the subscription term, when applicable, and capitalizable implementation costs, less any SBITA vendor incentives received form the SBITA vendor at the commencement of the SBITA term. SBITA assets are amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT assets.
The District capitalizes all assets with an initial indi vidual cost of more than $5,000 and a useful life in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend the life are not capitalized.
17 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued I. Capital Assets, Continued
Depreciation is computed utilizing the straight-line method over the following useful lives:
J. Customer Deposits
Based on a customer’s credit, the District may require a deposit deemed reasonable by the District. These deposits are held to pay off close out bills or to cover delinquent payments.
K. Compensated Absences
A liability is recorded for unused vacation and similar compensatory leave balances since the employees’ entitlement to these balances is attributable to servic es already rendered and it is probable that virtually all of these balances will be liquidated by either paid time off or payments upon termination or retirement.
A liability is recorded for unused sick leave balances only to the extent that it is probable that the unused balances will result in termination payments. This is estimated by including in the liability the unused balances of employees currently entitled to receiv e termination payment, as well as those who are expected to become eligible to re ceive termination benefits as a result of continuing their employment with the District. Other amounts of unused sick leave are excluded from the liability since their payment is contingent solely upon the occurrence of a future event (illness), which is outside the control of the District and the employee.
The balance of unpaid vacation and vested sick leave at year-end is recorded as a long- term liability in the financial statements.
Buildings and Improvements 10 to 50 Years
Computer and Communications 5 Years
Furniture and Equipment 3 to 7 Years
Infrastructure:
Transmission and Distribution Systems 40 Years
Source of Supply – Wells 10 to 40 Years
Water Treatment Systems 5 to 10 Years
Intangibles 5 to 25 Years
Vehicles 8 to 15 Years
18 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued L. Deferred Outflows and Deferred Inflows of Resources
In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future peri ods and so will not be recognized as an outflow of resources (expense) until that time. The category of deferred outflow of resources reported in the statement of net position is related to pension and other postemployment benefits, which are more fully discussed in Notes 6 and 5, respectively.
In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The District’s deferred infl ows of resources reported on the statement of net position relate to pension and other postemployment benefits, which are more fully discussed in Notes 6 and 5, respectively.
M. Prepaid Water Connection Fees
Prepaid connection fees were received before year-end but will not be earned until the properties are developed and connected to the District’s system.
N. Capital Contributions
Capital contributions represent cash and capital asset additions contributed to the District through the collection of AB-1600 connection fees, by property owners, granting agencies, or real estate developers desiring services that require capital expenditures or capacity commitment.
O. Net Position
Net Position is classified in the following categories:
Net Investment in Capital Assets – This amount consists or capital assets net of accumulated depreciation and reduced by outstanding debt (including premiums and discounts) that attributed to the acquisition, construction, or improvement of the assets.
Restricted Net Position – This amount is restricted by enabling legislation (such as external creditors, grantors, contributors, laws, or regulations of other governments).
Unrestricted Net Position – This amount is all of the net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Distri ct’s practice to consider restricted net position to have been depleted before unrestricted net position is applied, unless otherwise directed by Council. 19 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued P. Pensions
For purposes of measuring the net pension liability, deferred outflows and inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District’s California Public Employees’ Retirement System (CalPERS) pl ans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by the CalPERS.
For this purpose, benefit payments (including refund s of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
CalPERS audited financial statements are publicly av ailable reports that can be obtained at CalPERS’ website under Forms and Publications.
Q. Prior Year Data
Selected information regarding the prior year ha d been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the District’s prior year financial statements, from which this selected financial data was derived.
R. Estimates
The presentation 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 the reported amounts of assets, deferred outflo ws of resources, liabilities, and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
20 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
2. CASH AND INVESTMENTS
Cash and investments as of June 30, 2024, are classified in the accompanying financial statements The following is a summary of the cash and investments at June 30, 2024:
A. Investments Pool of the City of Victorville
The District’s equity in the cash and investment City pool is managed by the City of Victorville. The District is a voluntary participant in that pool. Th is pool is governed by and under the regulatory oversight of the Investment Policy adopted by the City Council of the City of Victorville. The District has not adopted an investment policy separate from that of the City of Victorville. The fair value of the District’s investment in this pool is reported in the accompanying financial statements at amounts based upon the District’s pro-rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City, which are recorded on an original cost basis.
B. Investments Authorized by the California Gove rnment Code and the City’s Investment Policy The City adopts the investment policy for the Distri ct. The table on the following page identifies the investment types that are authorized for the District by the California Government Code and the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy. 21 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
2. CASH AND INVESTMENTS, Continued
B. Investments Authorized by the California Governme nt Code and the City’s Investment Policy, Continued C. Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the District’s investment policy.
The following table identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.
22 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
2. CASH AND INVESTMENTS, Continued
D. Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the District manages its exposure to interest rate risk is by purchasing a combination of shorter- term and longer-term investments and by timing cash flows from maturities so that a portion of the portfo lio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensit ivity of the fair values of the District’s investments (including investments held by bond trustee) to market interest rate fluctu ations is provided by the following table that shows the distribution of these investments by maturity:
23 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
2. CASH AND INVESTMENTS, Continued
E. Disclosures Relating to Credit Risk
Generally, 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. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual Standard & Poor’s rating as of year-end for each investment type.
* The District's GIC is with Financial Security Assurance (FSA). The contract required FSA to deposit cash, governmental securities, or governmental bonds as collateral with Bank of New York, at a value of at least 100%, 104%, or 105%, respectfully, of the investment balance. the termination of the investment contract and release of collateral would occur in the event of default by FSA. As of June 30, 2024, FSA was not in default and the value of the collateral met the requirements.
The investment policy of the District contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. The District has no investments in any one issuer (other than LAIF and money market mutual funds) that represent 5% or more of the City’s investments.
24 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
2. CASH AND INVESTMENTS, Continued
F. Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside pa rty. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit).
The market value of the pledged securities in the co llateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure District deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. At June 30, 2024, the District’s deposits (bank balances) were insured by the federal depository insurance limits or collateralized as required under California Law.
For investments identified herein as held by bond trustee, the bond trustee selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government.
G. Investment in State Investment Pool
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the state of California. The fair value of the District’s investment in this pool is reported in the a ccompanying financial statements at amounts based upon the District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF.
25 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
2. CASH AND INVESTMENTS, Continued
H. Fair Value Measurements
The District categorizes its fair value measurement within the fair value hierarchy established by accounting principles generally ac cepted in the United States of America. The fair value framework provides a hierarchy that prioritizes the inputs to va luation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:
Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2 – Inputs other than quoted prices included within the Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies including:
Quoted prices for similar assets or liabilities in active markets.
Quoted prices for identical or similar assets or liabilities in markets that are inactive.
Inputs other than quoted prices that are observable for the asset or liability.
Inputs that are derived principally from or corroborated by observable market data by correlation of other items.
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurements. These unobservable inputs reflect the District’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk).
These unobservable inputs are developed base d on the best information available in the circumstances and may include the District’s own data.
The District’s investments in LAIF and money market mutual funds (held by bond trustee) are not subject to the fair value measurement hierarchy. The District’s investment in the GIC are included in Level 3 since they are not actively traded. To value the GIC, the District verified the collateral required was held at a minimum of 100% of the value reported above and recorded the investment at that amount. 26 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
3. CAPITAL ASSETS
For the year ended June 30, 2024 the City’s capital asset activity was as follows:
Depreciation and amortization expense for the District was $6,570,505 for the year ended June 30, 2024. 27 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
4. LONG-TERM LIABILITIES
A summary of changes in long-term liabilities for the year ended June 30, 2024, is noted below:
A. SBITAs
The District has entered into subscription based- information technology ar rangements (SBITAs) for various software licenses. The SBITA arrangements expire at various dates through 2025 and do not provide for renewal options. The interest rates vary from 2.4% to 2.7% and there are no variable payments.
The future subscription payments under SBITA agreements are as follows:
Right-to-use assets acquired through SBITAs, net of accumulated amortization, are reported in Note 3, Capital Assets.
B. 2006 Certificates of Participation
On March 1, 2006, the City of Victorville’s Baldy Mesa Water District issued 2006 Certificates of Participation. The proceeds were used to finance public improvements within the Baldy Mesa Water District service area.
The Certificates of Participation had a stated interest rates ranging from 3.20% to 5.00%. The annual debt service is a special limited obligation of the District payable from and secured by a pledge of and lien on the net revenues of the District - see end of note. Pr incipal and interest payments are due each August 1 and interest only payments are due each February 1. The amount of Certificates of Participation outstanding at June 30, 2024 is $7,700,000.
28 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
4. LONG-TERM LIABILITIES, Continued
B. 2006 Certificates of Participation, Continued
The annual requirements to amortize outstanding debt of the District as of June 30, 2024, are as follows for each fiscal year ending June 30:
C. Rate Covenant
The 2006 Certificates of Participation require that the Baldy Mesa Water District to generate sufficient net revenues which are at least equal to 110% of the amount of the installment payments and Parity Obligation coming due and payable in each fiscal year. The 2006 Certificates of Participation were issued before Baldy Mesa and Victor Valley Water District were consolidated into Victorville Water District. The City performed the calculation that demonstrated compliance with rate covenant for the fiscal year ended June 30, 2024. The calculation was prepared using revenues and the proportionate expenses applicable to the Baldy Mesa Water District.
D. Pledged Revenues
The District has a debt issuance outstanding that is collateralized by the pledging of certain revenues. The amount and term of the remainder of this commitment is indicated in the debt service to maturity table presented previously. The purpose for which the procee ds of the related debt issuance was utilized are disclosed in the debt description noted previously.
For the current year, pledged gross revenue (or net of certain expenses where so required by the debt agreement) as a percentage of the debt service payments are indicated in the table below:
29 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
5. OTHER POST EMPLOYMENT BENEFITS (OPEB)
A. Plan Description
The District Plan provides medical benefits to eligible retired Water District employees and beneficiaries in accordance with various labor agreements. The plan covers employees who retire directly from the District with five years of service. The District Plan also provides Dental and Vision benefits to eligible former Water District employees with 15 years of service. The District also pays life insurance premium for eight Water District retirees and no benefit is av ailable for future retirees. The District provides a contribution up to a certain amount (a portion of the Health Net HMO single premium). The percentage varies based on years of service.
B. Funding Policy
The contribution requirements of plan members and the District are established and may be amended by City Council. The contribution required to be made under City Council and labor agreement requirements is based on a pay-as-you-go basis (i.e., as medical insurance premiums become due). The District has not established a trust for the purpose of holding assets accumulated for plan benefits.
C. Employees Covered
As of the June 30, 2023 measurement date, the following current and former employees were covered by the benefit terms under the Plan:
D. Contributions
The District Plan and its contribution requirements are established by Memoranda of Understanding with the applicable employee bargaining units and may be amended by agreements between the District and the bargaining units.
The annual contribution is based on the year’s retiree medical premiums (pay-as-you-go basis). For the fiscal year ended June 30, 2024, the District’s cash contributions were $251,494 for current premiums, administrative costs of $938, and the estimated implied subsidy was $69,000 resulting in total payments of $321,432.
30 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
E. OPEB Liability
The District’s total OPEB liability was measured as of June 30, 2023 and was determined by an actuarial valuation dated June 30, 2023.
F. Discount Rate
The discount rate used to measure the total OPEB li ability was 3.65%. The discount rate is determined based on the Bond Buyer 20-Bond Index since the District has not established a trust.
G. Change in Actu arial Assumptions
The following actuarial assumption changes occurred form the measurement periods ended June 30, 2023 to 2024:
The discount rate changed from 3.54% to 3.65% based on changes in the index.
Inflation was same as prior year at 2.50%.
The healthcare trend rate remained unchanged as follows: Non-Medicare rate is 8.5%, Medicare (Non-Kaiser) is 7.5%, and Medicare (Kaiser) is 6.25%.
Demographic assumptions were updated from the CalPERS 1997-2015 Experience Study to the CalPERS 2000-2019 Experience Study.
Mortality improvement was updated from Scale MP-2020 to Scale MP-2021. 31 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
H. Changes in the Total OPEB Liability
The changes in the total OPEB liability for the District Plan are as follows:
I. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the District if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
J. Sensitivity of the Total OPEB Liability to Changes in Health Care Cost Trend Rates The following presents the total OPEB liability of the District if it were calculated using health care cost trend rates that are one percentage point lower (Non-Medicare: 7.5% for 2024 decreasing to 2.45% in 2076; Medicare (Non-Kaiser): 6.5% for 2024, decreasing to an ultimate rate of 2.45% in 2076; Medicare (Kaiser): 5.25% for 2024, decreasing to an ultimate rate of 2.45% in 2076) or one percentage point higher (Non-Medicare: 9.5% for 2024 decreasing to 4.45% in 2076; Medicare (Non-Kaiser): 8.5% for 2024, decreasing to an ultimate rate of 4.45% in 2076; Medicare (Kaiser): 7.25% for 2024, decreasing to an ultimate rate of 4.45% in 2076) than the current rate:
32 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
K. Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in the total OPEB liability are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as defe rred outflows and deferred inflows of resources related to OPEB and are recognized in future OPEB expense.
The recognition period differs depending on the source of the gain or loss:
L. OPEB Expense and Deferred Outflows/In flows of Resources Related to OPEB For the fiscal year ended June 30, 2024, the District recognized OPEB expense of $358,469. As of the fiscal year ended June 30, 2024, the District reported deferred outflows/inflows of resources related to OPEB from the following sources:
The $321,432 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB liability during the fiscal year ending June 30, 2025. Other amounts reported as deferred outflows/inflows of resources related to OPEB will be recognized as expense as follows:
33 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
5. OTHER POST EMPLOYMENT BENEFITS (OPEB), Continued
M. Payable to the Pension Plan
At June 30, 2024, the District had no outstanding amount of contributions to the OPEB plan required for the year ended June 30, 2024.
6. PENSION PLAN
A. General Information about the Pension Plans
Plan Description
All qualified permanent and probationary employee s are eligible to participate in the City’s Miscellaneous Plan, agent multiple-employer defi ned benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. The District’s share of the net pension liability is reported as a cost-sharing plan in these financial statements. Benefit provisions under the Plan are established by State statute and Local Governme nt 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.
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members, who must be public employ ees 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 to 62 with statutorily reduced benefits. For employees hired into a plan with the 1.5% at 65 formula, eligibility for service retirement is age 55 with at least five years of services. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 52 with at least five years of service. All members are eligible for nonduty disability benefits after fi ve 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 cost-of-living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
The Plan’s provisions and benefits in effect as of the measurement period ended June 30, 2024, are summarized as follows:
34 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
6. PENSION PLAN, Continued
A. General Information about the Pension Plans, Continued Contributions
Section 20814(c) of the California Public Employee s’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The Authority is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Authority contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by the pension plan terms as plan member contributions requirements are classified as plan member contributions. For the fiscal year ended June 30, 2024, the District made contributions of $1,827,835 to the plan.
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions Actuarial Assumptions
The total pension liability for the Miscellaneous Plan for the June 30, 2023 measurement period was determined by an actuarial valuation as of June 30, 2022, with standard update procedures used to roll forward the total pension liability to June 30, 2023. The total pension liability for the Miscellaneous Plan was based on the following assumptions:
35 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expen ses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Long-Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building- block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short- term and long-term market return expectations. Using historical returns all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach.
The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:
Discount Rate
The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions fr om 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 l o n g -t e r m e xp e c t e d r at e o f r e t ur n o n pl a n in v e s t me nt s w a s ap p l i ed t o a ll p e r i o d s o f p r o je c t e d b e n e fi t payments to determine the total pension liability.
36 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Proportionate Share of Net Pension Liability – City’s Miscellaneous Agent Multiple-Employer Plan Allocation to the District
The District’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The District’s proportionate share of the net pension liability was based on a projection of the District’s long-term share of contributions to the Miscellaneous Plan relative to the projected contributions of the City, actuarially determined.
The District’s proportionate share of the net pensio n liability for the Miscellaneous Plan as of the measurement date ended June 30, 2022 and 2023, was as follows:
Pension Expense and Deferred Outflows and Inflows of Resources For the year ended June 30, 2024, the District recognized pension expense of $3,287,393 for the Miscellaneous Plan. At June 30, 2024, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources for the Miscellaneous Plan:
$1,827,835 reported as deferred outflows of reso urces related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2025. Differences between projected and actual investment earnings are amortized on a five-year straight-line basis and all other amounts are amortized over the expected average remaining service lives of all members that are provided with benefits
37 DRAFT
Victorville Water District
Notes to Basic Financial Statements
For the Year Ended June 30, 2024
6. PENSION PLAN, Continued
B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions, Continued
Pension Expense and Deferred Outflows and Inflows of Resources, Continued Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the District’s proportion ate share of the net pe nsion liability for the Miscellaneous Plan, calculated using the discount rate for the Plan, as well as what the District’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separate issued CalPERS financial reports.
Payable to the Pension Plan
At June 30, 2024, the District had no outstanding amount of contributions to the Miscellaneous Plan required for the year ended June 30, 2024.
Deferred
Measurement Period Inflows of
Ended June 30, Resources
2024 1,272,794 $
2025 594,414
2026 1,701,930
2027 56,846
2028 -
Thereafter -
38 DRAFT
REQUIRED
SUPPLEMENTARY INFORMATION
39 DRAFT
This page intentionally left blank
40 DRAFT
This page intentionally left blank
41 DRAFT
Victorville Water District
Required Supplementary Information
For the year ended June 30, 2024
CalPERS Cost Sharing Plan
Schedule of the Proportionate
Share of the Net Pension Liability - Last Ten Fiscal Years Reporting Fiscal Year 2015 2016 2017 2018
Measurement Date 6/30/2014 6/30/2015 6/30/2016 6/30/2017 Plan's proportion of the net pension liability 24.28% 24.40% 24.63% 24.87% Plan's proportionate share of
the net pension liability 6,754,806$ 7,425,085$ 9,777,304$ 11,480,941$ Plan's covered payroll 4,707,026$ 4,824,221$ 4,860,190$ 5,506,946$ Plan's proportionate share of
the net pension liability as percentage
of its covered payroll 143.50% 153.91% 201.17% 208.48%
Fiduciary net position as a percentage of the
total pension liability 19.73% 19.55% 18.59% 18.52%
Notes to the schedule:
From fiscal year June 30, 2015 to June 30, 2016:
From fiscal year June 30, 2016 to June 30, 2017:
There were no changes in assumptions.
From fiscal year June 30, 2017 to June 30, 2018:
The discount rate was reduced from 7.65% to 7.15%.
From fiscal year June 30, 2018 to June 30, 2022:
There were no significant changes in assumptions.
From fiscal year June 30, 2022 to June 30, 2023:
From fiscal year June 30, 2022 to June 30, 2023:
The discount rate and long-term rate of return remain the same as the prior year at 6.90%, and the inflation rate is also unchanged from the prior year at 2.30%
The discount rate and long-term rate of return decreased from 7.15% to 6.90% and the inflation rate decreased from 2.50% to 2.30%.
Benefit Changes:
There were no changes to benefit terms that applied to all members of the Public Agency Pool. However, individual employers in the Plan may have provided a benefit improvement to their employees by granting Two Years Additional Service Credit to members retiring during a specified time period (a.k.a. Golden Handshakes).
Changes in Assumptions:
GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014 measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015 measurement date is without reduction of pension plan administrative expense. 42 DRAFT
2019 2020 2021 2022 2023 2024
6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023
24.95% 25.15% 25.07% 25.57% 23.60% 23.26%
11,526,434$ 12,996,097$ 12,569,004$ 9,263,027$ 16,156,738$ 17,610,719$ 5,598,545$ 5,546,115$ 6,177,914$ 6,148,247$ 6,657,109$ 205.88% 234.33% 203.45% 150.66% 242.70% #DIV/0!
18.88% 18.74% 18.47% 21.49% 16.97%
43 DRAFT
Victorville Water District
Required Supplementary Information
For the year ended June 30, 2024
CalPERS Cost Sharing Plan
Schedule of Pensio
n Plan Contributions - Last 10 Fiscal Years
Fiscal Year Ended 2015 2016 2017 2018
Actuarially determined contribution 709,786$ 827,951$ 916,742$ 1,026,643$ Contributions in relation to actuarially
deemed contributions (709,786) ( 827,951) (916,742) (1,026,643) Contribution deficiency (excess) -$ -$ -$ -$
Covered payroll 4,824,221$ 4,860,190$ 5,506,946$ 5,598,545$ Contributions as a percentage of
covered payroll 14.71% 17.04% 16.65% 18.34%
Notes to Schedule:
Valuation Date 6/30/2012 6/30/2013 6/30/2014 6/30/2015
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age
Amortization method Level percentage of payroll, closed Asset valuation method Fair Value except for 2015 is Market Value of Assets Discount Rate 6.90%
Inflation 2.75% to 2.30%
Salary increases
Retirement age 50 and up
Annual increase vary by category, entry age and duration of service
44 DRAFT
2019 2020 2021 2022 2023 2024
1,221,074$ 1,459,333$ 1,520,299$ 1,591,527$ 1,773,330$ 1,827,835$ (1,221,074) (1,459,333) (1,520,299) (1,591,527) (1,773,330) (1,827,835) -$ -$ -$ -$ -$ -$ 5,546,115$ 6,177,914$ 6,148,247$ 6,657,109$ 7,424,195$
22.02% 23.62% 24.73% 23.91% 23.89% #DIV/0!
6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020
45 DRAFT
Victorville Water District
Required Supplementary Information
For the year ended June 30, 2024
Schedule of Changes in the Total OPEB Liability and Related Ratios - Last 10 Fiscal Years* Reporting Fiscal Year 2018 2019 2020 2021 2022 2023 2024 Measurement Date 6/30/2017 6/30/2018 6/30/2019 6/30/2020 6/30/2021 6/30/2022 6/30/2023 Total OPEB Liability
Service cost 583,831$ 494,095 $ 417,399 $ 474,890 $ 600,360 $ 626,941$ 455,359$ Interest 345,325 404,923 364,950 372,802 271,338 281,198 423,401 Changes of assumptions (1,452,630) (509,085) 601,978 1,795,864 105,768 (2,488,667) (197,575) Differences between expected
and actual experience - (1,985,311) - (904,000) - 987,796 - Benefit payments (185,817) (199,802) (216,889) (224,298) (253,227) (273,537) (313,663) Net change in the total OPEB
liability (709,291) (1,795,180) 1,167,438 1,515,258 724,239 (866,269) 367,522 Total OPEB liability - beginning 11,625,768 10,916,477 9,121,297 10,288,735 11,803,993 12,528,232 11,661,963 Total OPEB liabilty - ending (a) 10,916,477 9,121,297 10,288,735 11,803,993 12,528,232 11,661,963 12,029,485 Covered-employee payroll 4,577,527$ 6,818,328 $ 7,078,295 $ 7,618,996 $ 7,710,052 $ 7,778,497 $ Net OPEB liability as a
percentage of covered -
employee payroll 238.48% 133.78% 145.36% 154.93% 162.49% 149.93% #DIV/0! Notes to Schedule:
Changes in Assumptions:
Discount Rate 3.58% 3.87% 3.50% 2.21% 2.16% 3.54% 3.65% Mortality Improvement Rates
Scale MP-2016 Scale MP-2018 Scale MP-2018 Scale MP-2020 Scale MP-2020 Scale MP-2021 Scale MP-2021 In the June 30, 2018 measurement period, the pre-65 waived retiree re-election was updated to be 10% after age 65. * Fiscal year 2018 was the 1st year of implementation.
The mortality, retirement, disability, and termination rates for the measurement periods ended June 30, 2017 and 2018 were based on the CalPERS 1997-2011 Experience Study and CalPERS 1997-2015 Experience Study, respectively.
In the June 30, 2022 measurement period, the following medical trend rates changed: Non-Medicare increased from 7.0% to 8.5%; Medicare increased from 6.1% to 7.5%; and Kaiser increased from 7.0% to 6.25%.
In the June 30, 2023 measurement period, the following medical trend rates remained unchanged: Non-Medicare increased by 8.5%, Medicare increased by 7.5%, and Kaiser increased by 6.25%.
In the June 30, 2020 measurement period, the medical trend rate for Kaiser Senior Advantage plans decreased from 6.5% to 5.0%.
46 DRAFT
SUPPLEMENTARY INFORMATION
47 DRAFT
This page intentionally left blank
48 DRAFT
This page intentionally left blank
49 DRAFT
Victorville Water District
Combining Statement of Net Position
For the year ended June 30, 2024
(With Comparative Data for June 30, 2023)
Victorville
Wastewater
Reclamation Reclaimed
Water Facility Water Eliminations
ASSETS
Current Assets:
Cash and investments 69,640,396$ 11,951,308 $ 3,528,595 $ - $ Cash with fiscal agent 836,588 - - -
Accounts receivable 3,905,373 1,708,021 26,792 -
Interest receivable 371,279 - - -
Due from other governments 28,707 - - -
Inventory and other assets 1,604,610 - - -
Total current assets 76,386,953 13,659,329 3,555,387 -
Noncurrent:
Prepaid deposits 18,675 33,088 - -
Advances to other funds 23,713,443 - - (23,713,443 )
Capital assets:
Nondepreciable 35,813,652 942,051 299,204 -
Depreciable or amortizable, net 105,369,090 10,721,445 4,047,828 - Total noncurrent assets 164,914,860 11,696,584 4,347,032 (23,713,443 ) Total assets 241,301,813 25,355,913 7,902,419 (23,713,443)
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows - OPEB related 2,221,178 65,97 1 --
Deferred outflow - pension related 6,157,662 147,755 - - Total deferred outflows of resources 8,378,840 213,726 - -
LIABILITIES
Current liabilities:
Accounts payable 2,156,491 650,089 51,256 -
Interest payable 153,385 - - -
Prepaid water connection fees ----
Deposits payable 1,748,554 - - -
Compensated absences - due within one year 561,302
Total OPEB liability - due within one year 338,738 - - - Long-term liabilities - due within one year 454,620 - - - Total current liabilities 5,413,090 650,089 51,256 -
Noncurrent liabilities:
Advances from other funds - 23,713,443 - (23,713,443 )
Total OPEB liability 11,444,716 246,031 --
Net pension liability 17,320,116 290,600 - -
Long-term debt 7,329,311 ---
Compensated absences 154,792 - - -
Total noncurrent liabilities 36,248,935 24,250,074 - (23,713,443 ) Total liabilities 41,662,025 24,900,163 51,256 (23,713,443)
DEFERRED INFLOWS OF RESOURCES
Deferred inflows - OPEB related 3,165,532 68,856 - -
Deferred inflows - pension related 806,554 45,045 - -
Total deferred inflows of resources 3,972,086 113,901 - -
NET POSITION
Net investment in capital assets 133,160,545 11,663,496 4,347,032 - Unrestricted 70,885,997 (11,107,921) 3,504,131 - Total net position 204,046,542$ 555,575$ 7,851,163$ -$ 50 DRAFT
2024 2023
85,120,299$ 78,986,581$
836,588 836,639
5,640,186 5,176,78 1
371,279 248,870
28,707 19,946
1,604,610 866,934
93,601,669 86,135,751
51,763 28,306
--
37,054,907 40,643,195
120,138,363 119,672,824
157,245,033 160,344,325
250,846,702 246,480,076
2,287,149 2,707,614
6,305,417 6,095,478
8,592,566 8,803,092
2,857,836 4,376,617
153,385 161,029
- 217,489
1,748,554 1,700,469
561,302 527,666
338,738 273,537
454,620 434,428
6,114,435 7,691,235
--
11,690,747 11,388,426
17,610,716 16,156,738
7,329,311 7,790,160
154,792 145,516
36,785,566 35,480,840
42,900,001 43,172,075
3,234,388 3,985,338
851,599 1,029,80 1
4,085,987 5,015,139
149,171,073 151,942,967
63,282,207 55,152,987
212,453,280$ 207,095,954 $
51 DRAFT
Victorville Water District
Combining Statement of Revenues, Expenses and Changes in Net Position For the year ended June 30, 2024
(With Comparative Data for the Year Ended June 30, 2023) Victorville
Wastewater
Reclamation Reclaimed
Water Facility Water Eliminations
OPERATING REVENUES:
Utility sales 20,801,733$ 8,737,426 $ 332,32 1$ -$ Meter and service fees 11,326,765 - - -
Pass-thru charges for services 1,149,312 - - -
Fines and forfeitures 386,446 - - -
Arsenic surcharge 301,506 - - -
Other 243,233 - - -
Total operating revenues 34,208,995 8,737,426 332,321 - OPERATING EXPENSES:
Personnel services 12,262,415 270,709 204,769 - Maintenance and operations 10,779,044 8,582,566 170,497 - Production costs and pass-thru production costs 6,405,146 - 6,485 - Pass-thru production costs 1,178,512 - - -
Depreciation and amortization 6,071,690 337,751 161,064 - Total operating expenses 36,696,807 9,191,026 542,815 - Operating income (loss) (2,487,812) (453,600) (210,494) - NONOPERATING REVENUES (EXPENSES):
Taxes 1,567,817 - - -
Investment income 4,272,348 583,426 157,689 -
Interest expense (363,799) (1,024,061) --
Gain on disposal of assets ----
Other nonoperating expenses (2,180,570) 156,513 - -
Total nonoperating revenues (expenses) 3,295,796 (284,122) 157,689 - Income before contributions and transfers 807,984 (737,722) (52,805) - CONTRIBUTIONS AND TRANSFERS:
Connection fees 1,904,448 2,338,212 - -
Alternate water source fees 484,220 - - -
Capital restricted use fees - 587,276 - -
Capital contributions ----
Transfers in 25,713 - - -
Contributions to the City of Victorville ----
Total contributions and transfers 2,414,381 2,925,488 - - Change in net position 3,222,365 2,187,766 (52,805) - NET POSITION:
Beginning of year 200,824,177 (1,632,191) 7,903,968 -
End of year 204,046,542$ 555,575$ 7,851,163$ -$ 52 DRAFT
2024 2023
29,871,480$ 30,269,489$
11,326,765 9,801,678
1,149,312 1,211,013
386,446 485,824
301,506 285,035
243,233 242,429
43,278,742 42,295,468
12,737,893 11,648,542
19,532,107 19,228,008
6,411,631 5,434,263
1,178,512 1,211,013
6,570,505 6,524,962
46,430,648 44,046,788
(3,151,906) (1,751,320)
1,567,817 1,335,019
5,013,463 1,898,079
(1,387,860) (381,764)
- 338,923
(2,024,057) (220,750)
3,169,363 2,969,507
17,457 1,218,187
4,242,660 3,749,915
484,220 528,412
587,276 586,68
1 - 10,000
25,713 -
-( 73,125)
5,339,869 4,801,883
5,357,326 6,020,070
207,095,954 201,075,884
212,453,280$ 207,095,954 $
53 DRAFT
This page intentionally left blank
54 DRAFT