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1998 City Financial ReportI I I I I I I 1 I I I I 1 I I CITY OF ROSEMEAD, CALIFORNIA FINANCIAL REPORT JUNE 30, 1998 I I I I 11 CONTENTS INDEPENDENT AUDITOR'S REPORT I GENERAL PURPOSE FINANCIAL STATEMENTS Combined balance sheet — all fund types and account groups 2 and 3 Combined statement of revenue, expenditures and changes in fund balances — all governmental fund types 4 and 5 Combined statement of revenue, expenditures and changes in fund balances — budget and actual — general, special revenue, debt service and capital project funds 6-8 Statement of revenue, expenses and changes in plan assets — pension trust fund 9 ' Statement of cash flows — pension trust fund 10 Notes to financial statements 11 —27 SUPPLEMENTARY INFORMATION General Fund: Revenue detail — budget and actual — general fund 28 Expenditure detail — budget and actual — general fund 29 Special Revenue Funds: Combining balance sheet — special revenue funds 30 and 31 Combining statement of revenue, expenditures and changes in fund balances — special revenue funds 32 and 33 Combining balance sheet — fiduciary funds 34 Statement of changes in assets and liabilities — agency fund 35 I 11 `I MCGLADREY &PULLEN, LLP RSM e Certified Public Accountants and Consultants international I I i 1 To the Honorable Mayor and Members of the City Council City of Rosemead Rosemead, California INDEPENDENT AUDITOR'S REPORT We have audited the accompanying general purpose financial statements of the City of Rosemead, California, as of and for the year ended June 30, 1998. These general purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material t respects, the financial position of the City of Rosemead, California, as of June 30, 1998, and the results of its operations and the cash flows of its pension trust fund for the year then ended in conformity with generally accepted accounting principles. In accordance with Govemment Auditing Standards, we have also issued a report dated September 18, 1998 on our consideration of the City of Rosemead's internal control over financial reporting and our ' tests of its compliance with certain provisions of laws, regulations, contracts and grants I I i I Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining and individual fund statements and schedules listed in the table of contents as supplementary information are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Rosemead, California. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. Pasadena, California September 18, 1998 Suite 300 140 South Lake Avenue Pasadena, California 91101 -2651 (626) 795 -7950 FAX (626) 795 -9820 /l-/ Worldwide Services Through RSM International CITY OF ROSEMEAD, CALIFORNIA ' COMBINED BALANCE SHEET — ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1998 11 Assets and Other Debits Cash and investments Receivables Due from other funds Property and equipment Prepaid items Other Debits ' Amount available in debt service fund Amount to be provided for retirement of general long -term debt Total assets and other debits Governmental Fund Special Debt General Revenue Service $ 11,454,939 $ 7,059,810 1,234,137 698,441 205,393 - Capital $ 2,322,681 $ 18,394,832 30,593 287,784 $ 12,894,469 $ 7,758,251 $ 2,353,274 $ 18,682,616 ' Liabilities, Municipal Equity and Other Credits Liabilities Accounts payable and accrued liabilities $ 1,067,246 $ 344,841 $ $ 309,914 Due to other funds 198,399 6,994 Deferred revenue 126,729 246,682 - Refundable deposits _ - ' Deferred compensation Tax allocation notes and bonds - Accrued vacation pay and compensatory time 6,999 Accrued litigation settlement = Total liabilities 1,200,974 789,922 316,908 1 Municipal Equity and Other Credits Investment in general fixed assets Fund balance: ' Reserved: Long -term receivable Debt service Low - moderate income housing ' Employees retirement Unreserved: Designated for: ' Capital projects Building and equipment replacement Litigation settlements Selfinsurance Contingencies Undesignated Total municipal equity and other credits Total liabilities, municipal equity and other credits 606,932 4,565,862 1,720,000 - 1,000,000 - 300,000 - 3,000,000 - 18,365,708 18,365, - /U8 $ 12,894,469 $ 7,758,251 $ 2,353,274 $ 18,682,616 I See Notes to Financial Statements. I 2 2,353,274 D D Fiduciary Fund Types Account Groups Trust and General General Long -term Total (Memorandum Only) Agency Fixed Assets Debt 1998 1997 $ 305,449 $ $ - $ 39,537,711 $ 38,184,774 _ 2,250,955 2,201,748 - 205,393 31,370 13,553,017 - 13,553,017 13,256,131 = 920 - 2,353,274 2,353,274 2,355,613 - 33,633,441 33,633,441 33,923,171 $ 305,449 $ 13,553,017 $ 35,986,715 $ 91,533,791 $ 89,953,727 $ $ $ $ 1,722,001 $ 2,074,853 _ _ 205,393 31,370 - - - 373,411 246,682 102,008 - - 102,008 95,568 1 517,848 - - 35,610,000 35,610,000 35,905,000 ' - - 339,794 36,921 346,793 36,921 304,714 76,773 102,008 - 35,986,715 38,396,527 39,252,808 13,553,017 - 13,553,017 13,256,131 - ' _ _ 606,932 717,796 2,353,274 2,355,613 - - - 4,565,862 4,251,917 ' 203,441 - - 203,441 212,176 - 18,365,708 19,039,364 ' _ _ 1,720,000 1,720,000 - - - 1,000,000 1,000,000 _ _ - 300,000 3,000,000 300,000 3,000,000 - - - 7,469,030 4,847,922 203,441 13,553,017 - 53,137,264 50,700,919 $ 305,449 $ 13,553,017 $ 35,986,715 $ 91,533,791 $ 89,953,727 ' 3 CPI'Y OF ROSEMEAD, CALIFORNIA ' COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES ' Year Ended June 30, 1998 I 1 I Ll Property taxes and special assessments Olhertaxes Licenses and permits Intergovernmental Charges for'services Fines, forfeitures and penalties Use of money and property Other Expenditures Current. General government Public safety Public works Public health Public recreation Community service Capital outlay Debt service: Principal Interest ' Revenue over (under) expenditures Other Financing Sources (Uses) Operating transfers: 1 From other funds (To) other funds ' Revenue and other financing sources over (under) expenditures and other financing (uses) Fund Balance, beginning Fund Balance, ending See Notes to Financial Statements. I Governmental Fund Types Special Debt Capital General Revenue Service Projects $ - $ 418,502 $ $ 2,770,865 4,134,533 - - 739,162 - 3,479,407 3,278,819 489,792 9,700 279,104 70,218 - 643,925 498,701 141,574 1,213,094 26,613 160 - 44,855 9 797 516 4 276. 100 141.574 4.028.814 1,631,462 121,052 47,566 4,309,219 346,724 - 189,453 1,747,433 1,350,424 45,381 - - 1,906,179 - 1,011,882 1,048,819 56,182 $ 6,968,329 295,000 oaa n5a 642,778 1,012,072 (2,137,480) 2,630,824 1,097,300 564,573 2,135,141 1,694,750 1,129,439 (2,339) (673,656) 9,998,745 5,838,890 2,355,613 19,039,364 $ 11,693,495 $ 6,968,329 $ 2,353,274 $ 18,365,708 1 4 I I ' Total (Memorandum Only) 1998 1997 ' $ 3,189,367 $ 3,228,384 4,134,533 3,952.511 739,162 760,037 6,758,226 7,532,960 ' 499,492 584,033 349,322 363,938 2,497,294 2,415,335 ' 71,628 63,262 18,239,024 18,900,460 1,800,080 2,053,607 3,797,014 3,676,741 (3,797,014) (3,676,741) ' 2,148,194 2,089,071 ' 37,232,612 35,143,541 $ 39,380,806 $ 37,232,612 1 5 4,655,943 4,922,197 3,287,310 3,349,572 ' 45,381 45,966 1,906,179 2,144,066 2,060,701 1,976,965 ' 56,182 47,683 295,000 280,000 1,984,054 1,991,333 ' 16, 090,830 16,81 I, 3 8 9 ' 2,148,194 2,089,071 3,797,014 3,676,741 (3,797,014) (3,676,741) ' 2,148,194 2,089,071 ' 37,232,612 35,143,541 $ 39,380,806 $ 37,232,612 1 5 I CITY OF ROSEMEAD, CALIFORNIA ' COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL, SPECIAL REVENUE, DEBT SERVICE AND CAPITAL ' PROJECT FUNDS Year Ended June 30, 1998 General { Revenue Expenditures Current: General government Public safety Public works Public health Public recreation Community service Appropriations reserves Capital outlay Debt service: Principal Interest ' Revenue over (under) expenditures Other Financing Sources (Uses) ' Operating transfers: From other funds (To) other funds Revenue and other financing ' sources over (under) expendi- tures and other financing (uses) ' Fund Balance, beginning Fund Balance, ending ' See Notes to Financial Statements. I 1,788,790 1,631,462 (157,328) Over (Under) 121,052 4,524,770 4,309,219 Budget Actual Budget Budget Actual Revenue 5,206,620 1,747,433 59,000 45,381 (13,619) Property taxes and special assessments $ - $ - $ - $ 360,000 $ 418,502 Othertaxes 3,854,500 4,134,533 280,033 - - Licenses and permits 743,900 739,162 (4,738) - - Intergovernmental 3,142,870 3,479,407 336,537 6,172,824 3,278,819 Charges for services 526,200 489,792 (36,408) 8,100 9,700 Fines, forfeitures and penalties 281,500 279,104 (2,396) 60,000 70,218 Use of money and property 418,200 643,925 225,725 309,350 498,701 Other 48,600 26,613 (21,987) 5,150 160 9,015,770 9,792,536 776,766 6,915,424 4,276,100 Expenditures Current: General government Public safety Public works Public health Public recreation Community service Appropriations reserves Capital outlay Debt service: Principal Interest ' Revenue over (under) expenditures Other Financing Sources (Uses) ' Operating transfers: From other funds (To) other funds Revenue and other financing ' sources over (under) expendi- tures and other financing (uses) ' Fund Balance, beginning Fund Balance, ending ' See Notes to Financial Statements. I 1,788,790 1,631,462 (157,328) 1,238,750 121,052 4,524,770 4,309,219 (215,551) 559,350 346,724 112,640 189,453 76,813 5,206,620 1,747,433 59,000 45,381 (13,619) - - 2,101,650 1,906,179 (195,471) 1,017,980 1,011,882 (6,098) 1,766,424 1,048,819 100,000 - (100,000) - - 59,550 56,182 (3,368) 9,764,380 9,149,758 (614,622) 8,771,144 3,264,028 (748,610) 642,778 1,391,388 (1,855,720) 1,012,072 1,097,300 1,097,300 - 1,492,550 564,573 (242,550) (45,328) 197,222 (1,400,000) (447,206) 854,750 1,051,972 197,222 92,550 117,367 $ 106,140 1,694,750 $ 1,588,610 $ (1,763,170) 9,998,745 $ 11,693,495 6 1,129,439 5,838,890 $ 6,968,329 ' Special Revenue Debt Service Capital Projects Over (Under) Over (Under) Over (Under) ' Budget Budget Actual Budget Budget Actual Budget $ 58,502 $ $ $ $ 2,700,000 $ 2,770,865 $ 70,865 (2,894,005) 1,600 _ _ - ' 10,218 189,351 130,000 141,574 11,574 345,000 1,213,094 868,094 (4,990) - - - - 44,855 44,855 ' (2,639,324) 130,000 141,574 11,574 3,045,000 4,028,814 983,814 (1,117,698) - - - 44,900 47,566 2,666 (212,626) (3,459,187) 6,682,250 1,350,424 (5,331,826) (717,605) 295,000 295,000 - 1,984,053 1,984,054 1 - - ' (5,507,116) 2,279,053 2,279,054 1 6,727,150 1,397,990 (5,329,160) 2,867,792 (2,149,053) (2,137,480) 11,573 (3,682,150) 2,630,824 6,312,974 (927,977) 2,279,050 2,135,141 (143,909) - - 952,794 - - (3,226,350) (3,304,480) (78,130) 24,817 2,279,050 2,135,141 (143,909) (3,226,350) (3,304,480) (78,130) ' $ 2,892,609 $ 129,997 (2,339) $ (132,336) $ (6,908,500) (673,656) $ 6,234,844 2,355,613 19,039,364 $ 2,353,274 $ 18,365,708 7 I CITY OF ROSEMEAD, CALIFORNIA ' COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES— BUDGET AND ACTUAL — GENERAL, SPECIAL REVENUE, DEBT SERVICE AND CAPITAL ' PROJECT FUNDS, CONTINUED June 30, 1998 ' 1 Total (Memorandum Only) Over (Under) Budget Actual Budget Revenue Property taxes and special assessments $ 3,060,000 $ 3,189,367 $ 129,367 Othertaxes 3,854,500 4,134,533 280,033 Licenses and permits 743,900 739,162 (4,738) Intergovernmental 9,315,694 6,758,226 (2,557,468) for services 534,300 499,492 (34,808) ' Charges Fines, forfeitures and penalties 341,500 349,322 7,822 Use of money and property 1,202,550 2,497,294 1,294,744 Other 53,750 71,628 17,878 ' 19,106,194 18,239,024 (867,170) Expenditures Current: General government 3,072,440 1,800,080 (1,272,360) ' Public safety 5,084,120 4,655,943 (428,177) Public works 12,001,510 3,287,310 (8,714,200) Public health 59,000 45,381 (13,619) Public recreation 2,101,650 1,906,179 (195,471) Community service 2,784,404 2,060,701 (723,703) Appropriations reserve 100,000 - (100,000) Capital outlay 59,550 56,182 (3,368) Debt service: Principal 295,000 295,000 Interest 1,984,053 1,984.054 1 ' 27,541,727 16,090,830 (11,450,897) Revenue over (under) ' expenditures (8,435,533) 2,148,194 10,583,727 Other Financing Sources (Uses) ' Operating transfers: From other funds 4,868,900 3,797,014 (1,071,886) (To) other funds (4,868,900) (3,797,014) 1,071,886 Revenue and other financing sources over (under) expendi- tures and other financing (uses) $ (8,435,533) 2,148,194 $ 10,583,727 ' Fund Balance, beginning Residual equity transfer 37,232,612 Fund Balance, ending $ 39,380,806 See Notes to Financial Statements. ' 8 CITY OF ROSEMEAD, CALIFORNIA ' STATEMENT OF REVENUE, EXPENSES AND CHANGES IN PLAN ASSETS — PENSION TRUST FUND Year Ended June 30, 1998 ' Operating revenue, interest and other investment income ' Operating expenses: Administrative fees Pension benefits ' Net (loss) ' Fund balance, beginning ' Fund balance, ending See Notes to Financial Statements. P 1 C A O 3,659 ,Alin (8,735) 212,176 $ 203,441 9 CITY OF ROSEMEAD, CALIFORNIA ' STATEMENT OF CASH FLOWS — PENSION TRUST FUND Year Ended June 30, 1998 Cash Flows from Operating Activities Net (loss) $ (8,735) Adjustments to reconcile net (loss) to net cash (used in) operating activities: ' Administrative expenses payable 3,659 ' Net cash (used in) operating activities (5,076) Cash Flows Provided by Investing Activities Proceeds from the sale and maturity of annuity contracts 20,719 ' Unrealized interest and investment income (15,643) ' Net cash provided by investing activities 5,076 Cash, beginning - ' Cash, ending $ ' See Notes to Financial Statements. ' 10 I CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS ' Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and Significant Accounting Policies ' Reporting Entity ' As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the ' government's operations and are controlled by common governing boards; therefore, data from these units is combined with data of the primary government. The blended component units included in the City of Rosemead (the City) reporting entity are the Rosemead Redevelopment Agency (the Agency) and ' the Rosemead Housing Development Corporation (the Corporation) which is a component unit of the Agency. The component units have the same fiscal year as the City. The component unit financial statements can be obtained from the City Clerk. ' Nature of operations City of Rosemead ' The City provides a broad range of services to its citizens, including general government, public safety, streets, sanitation and health, cultural and park facilities, and social services. Many of the functions often provided by municipal government are, in the City, provided by special districts. Examples of some of these special districts, which usually encompass areas larger than the City ' itself, are the Fire Protection District, the Library District and the County Flood Control District. Certain other governmental functions are paid for by the City, but performed by Los Angeles County departments under contract. Some of the contracts now in effect are for police, street maintenance and ' animal control. Rosemead Redevelopment Agency The Agency finances street, park and utility improvements. It also acquires and constructs major capital facilities, all within the Rosemead Project Area No. 1. ' Rosemead Housing Development Corporation ' The Corporation accounts for the construction, financing and operations of low and moderate income housing. It is a Cal ifomia nonprofit benefit corporation organized under Section 501(c)(3) of the Internal Revenue Code. ' 11 [J 1 H CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and Significant Accounting Policies, Continued Measurement focus, basis of accounting and basis of presentation The accounts of the City and its component units are organized and operated on the basis of funds and account groups. A fund is an independent fiscal and accounting entity with a self - balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance- related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The government has the following fund types and account groups: Governmental Funds are used to account for the general government activities. Governmental fund types use the flow of current financial resources measurement focus and the modified- accrual basis of accounting. Under the modified- accrual basis of accounting, revenue is recognized when susceptible to accrual (i.e., when they are measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The government considers all revenue available if it is collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long -term debt, which is recognized when due, and certain compensated absences and claims andjudgments, which are recognized when the obligations are expected to be liquidated with expendable available financial resources. In determining when to recognize intergovernmental revenue (grants, subsidies and shared revenue), the legal and contractual requirements of the individual programs are used as guidance. There are, however, essentially two bases for this revenue recognition. In one, moneys must be expended on the specific purpose or project before any amounts will be paid to the City; therefore, revenue is recognized based upon the expenditures recorded. In the other, moneys are virtually unrestricted as to purpose of expenditure and nearly irrevocable, i.e., revocable only for failure to comply with prescribed compliance requirements, e.g., equal employment opportunity. These resources are reflected as revenue at the time of receipt, or earlier if they meet the criterion of availability. Other major revenue that is determined to be susceptible to accrual includes taxes and interest. Major revenue that is determined not to be susceptible to accrual because it is either not available soon enough to pay liabilities of the current period or not objectively measurable include licenses, permits, fines and forfeitures. Expenditures are recorded when the liability is incurred, except for interest on long -term debt and sick pay, which are recorded when paid. Vacation pay is recorded as an expenditure in the year it is earned, to the extent it is paid in that year or within 90 days after year end; otherwise, it is recorded as an expenditure when it is paid. Estimated losses on insurance claims are charged to expense in the period the loss is determinable. 12 CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS ' Note]. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and Significant Accounting Policies, Continued The Agency funds are custodial in nature and do not present results of operations or have a measurement focus. ' The accrual basis of accounting is used for the Pension Trust Fund utilizing the flow of economic resources measurement focus. Under the accrual basis of accounting, revenue is recognized when earned ' and expenses are recorded when incurred. The Pension Trust Fund applies applicable FASB pronouncements issued prior to November 1989 to its financial accounting and reporting. Governmental Fund Types t The General Fund accounts for all financial resources except those required to be accounted for in another fund. These resources are devoted to financing the general services that the City performs for its ' citizens. Special Revenue Funds account for the proceeds of specific revenue sources (other than special ' assessments, expendable trusts and major capital projects) that are legally restricted to expenditures for specified purposes. The Special Revenue Funds and their purposes are as follows: ' The Traffic Safety Fund accounts for the receipt of vehicle code fines which are expended for traffic safety enforcement. The State Gas Tax Fund accounts for funds collected from the state of California which are used for street construction, street maintenance, engineering and administrative costs. ' The Air Quality Management District Fund accounts for the City's share of automobile registration fees collected from the state by the South Coast Air Quality Management District. The funds are used in improving transportation systems and to reduce reliance on private vehicles. ' The Local Transportation Fund accounts for state grants used to finance the construction of bikeways and sidewalks. ' The Public Transportation Funds account for the City's share of additional sales tax collected in the County of Los Angeles as a result of Propositions A and C. The funds are used to finance public transportation projects. The Community Development Block Grant Fund accounts for Community Development Block ' Grants received from the United States Department of Housing and Urban Development. The 1976 Community Parklands Grant Fund accounts for funds to be used for park projects. t The Street Lighting Fund accounts for the operation of street lights within the City. ' The Narcotics Seizure Fund accounts for the funds received from the County of Los Angeles from the confiscation of cash and other valuables seized during drug related police raids. The funds are used to further enhance the City's drug related crime prevention and detection programs. ' 13 I LJ U I I CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and Significant Accounting Policies, Continued The Low- Moderate Income Housing Set -Aside Fund accounts for the 20% of gross property tax increment revenue received by the Agency to fund future projects involving the replacing or rehabilitation of low and moderate income housing within City limits. The Rosemead Housing Development Corporation accounts for the construction and financing of low and moderate income housing. It is a California nonprofit public benefit corporation organized under Section 501(c)(3) of the Internal Revenue Code. The California Wildlife Grant Fund accounts for a state grant for preapproved specified park projects. The Debt Service Fund accounts for the accumulation of resources for the payment of general long -term debt principal, interest and related costs. Capital Projects Fund (Redevelopment Fund) accounts for financial resources to be used for the improvement and rehabilitation of the community redevelopment project areas and acquisition or construction of major capital facilities within the Agency. Fiduciary Fund Types Fiduciary Funds account for assets held by the government in a trustee capacity or as an agent on behalf of others. Trust funds account for assets held by the government under the terms of a formal trust agreement. The City's Fiduciary Fund Types are as follows: 1 1 1 The Pension Trust Fund, a nonexpendable trust fund, accounts for the activity of the retirement plan for employees of the City using the accrual basis of accounting. The Agency Fund accounts for the assets held in a trustee capacity or as an agent. The cash being held primarily represents amounts placed on deposit for refundable permits and performance bonds. The Agency fund is custodial in nature and does not present results of operations or have a measurement focus. Account Groups The General Fixed Assets Account Group is used to account for the City's fixed assets. The General Long -term Debt Account Group is used to account for general long -term debt and certain other liabilities that are not specific liabilities of proprietary or trust funds. 1 14 I I I I I I I I I H I CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and Significant Accounting Policies, Continued The following is a summary of significant accounting policies: Changes in Accounting Principle As of July 1, 1997, the City of Rosemead adopted Government Accounting Standards Board (GASB) Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. GASB Statement No. 31 requires that investments be reported at their fair value and that all changes in fair value be reflected in income for the period in which they occur. The adoption of this Statement had no material effect on the financial statements for fiscal year ended June 30, 1998. As of July 1, 1997, the City of Rosemead adopted GASB Statement 27, Accounting for Pensions by State and Local Governmental Employers. This Statement establishes standards for measurement, recognition and display of pension expense and related liabilities, assets and disclosures in the financial statements of state and local government employers. The adoption of this Statement had no material effect on the financial statements for fiscal year ended June 30, 1998. The City of Rosemead has also adopted GASB No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. This Statement establishes accounting and financial reporting standards for Internal Revenue Code Section 457 deferred compensation plans of state and local governmental employers. The effect of this Statement was to eliminate the asset and corresponding liability from the City's books for the year ended June 30, 1998. Also, because the Board was unaware of any additional risks to plan sponsors, under the revised Internal Revenue Code provision, any related financial statement disclosures for the deferred compensation plan have been omitted for the fiscal year ended June 30, 1998. Management has the ultimate responsibility for the appropriateness of the accounting policies and procedures used by the City. Cash investments and other investments ' As of July 1, 1997, the City of Rosemead adopted GASB No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. GASB No. 31 requires that investments be reported at their fair value and that all changes in fair value be reflected in income for the period in ' which they occur. The City records all investments at fair value, with the exception of Government Investment Contracts and Commercial Paper and Bonds which are carried at cost. The City has identified these investments as either being nonnegotiable, having a maturity of one year or less, having a ' redemption value that was fixed and not linked to some sort of index or other market - determined factor, and the investments are with reputable organizations with good credit standing so that the value of the investments was not significantly impaired as of year end. ' The City pools cash and investment resources of some of its funds in order to facilitate the management of cash. Cash applicable to a particular fund is readily identifiable. The balance in the pooled cash accounts is available to meet current operating requirements. Investment earnings are allocated based on ' the source of funds. 15 1 � CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and n Significant Accounting Policies, Continued .I Receivables Property taxes attach as an enforceable lien on property as of March 1. Taxes are levied on July 1 and are payable in two installments on December 10 and April 10. The County of Los Angeles bills and collects the property taxes and remits them to the City in installments during the year. Property taxes received within 60 days after the City's fiscal year end are considered "measurable" and "available" and are accrued in the City's financial statements. All other receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Property and equipment All property and equipment of the City are accounted for in the general fixed assets account group. Public domain (infrastructure) general fixed assets, consisting of certain improvements other than buildings, such as roads, sidewalks and bridges, are not capitalized. Property and equipment acquired or constructed for general governmental operations are recorded as expenditures in the fund making the expenditure and capitalized in the general fixed assets account group. All general fixed assets which were purchased or constructed are stated at cost. Assets acquired by gift or bequest are recorded at their fair market value at the date of transfer. No depreciation is recorded on n general fixed assets. Fund balances The reserved portion of the fund balances represents that amount which has been legally identified for the specific purpose or it represents that amount which is not available to liquidate current liabilities. The unreserved portion represents the amount available for budgeting future operations. Vacation pay and compensatory time City employees accumulate vacation hours which may be paid upon termination, death or retirement. Employees can accumulate up to three weeks of accrued vacation per year depending on the length of employment. Employees can accumulate up to 160 hours of sick leave. Any hours in excess of 160 are considered to be vested and are paid to the employee based on a vesting schedule. In addition, employees can accrue compensatory time. The vested portion of vacation and sick leave by employees at June 30, 1998 that is expected to be paid within 90 days after year end is included in accrued liabilities in the General Fund. The amount not expected to be paid within 90 days is included in the General Long -term Debt Account Group. 16 f� I CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and Significant Accounting Policies, Continued "Memorandum Only" total columns Included on the combined financial statements are total columns captioned "Memorandum Only" to indicate that they are presented only for informational purposes. Adjustments to eliminate interfund transactions have not been recorded in arriving at such amounts and the memorandum totals are not intended to fairly present the financial position or results of operations of the reporting entity taken as a whole. Additionally, the 1997 totals presented in the "Memorandum Only" columns are included to provide a summarized comparison with comparable 1998 amounts and are not intended to present all information necessary for a fair presentation of financial position and results of operations in accordance with generally accepted accounting principles. ' Note Z Budget Matters ' The annual budget adopted by the City Council provides for the general operation of the City. It includes proposed expenditures and estimated revenue for all governmental fund types. 1 I lJ 1 I Budgets presented in this report for comparison to actual amounts are presented in accordance with generally accepted accounting principles. Reported budget amounts represent the original adopted budget as amended. The City Manager is authorized to make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the governing council. The legal level of budgetary control is the department level. The governing council made several supplemental budgetary appropriations throughout the year, none considered to be material. In all funds, unexpended budgeted amounts lapse at the end of the budget year. 17 CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 3. Cash and Investments ' The components of cash and investments at June 30, 1998 are as follows: Cash in bank $ 2,782,353 1 Time certificates of deposit 2,987,350 Cash total 5,769,703 ' Other investments 4,768,750 Cash with fiscal agent 2,322,683 ' Guaranteed investment contracts 6,134,383 Investment in State Treasurer's Investment Pool 20,338,751 Investment in annuity contracts 203,441 Investments total 33,768,008 Cash and investments total $ 39,537,711 Cash At year end, the carrying amount of the City's and Agency's deposits (i.e., cash in bank and time certificates of deposit) was $5,769,703 and the bank balance was $5,761,994. Of the $5,761,994 bank ' balance, $729,801 was covered by federal depository insurance and $5,032,193 was collateralized by depository collateral pools as described in the following paragraph. 1 In accordance with state statutes, the City and Agency maintains deposits at those depository institutions insured by the Federal Depository Insurance Corporation. The California Government Code requires California banks and savings and loan associations to collateralize governmental entities' deposits by pledging government securities as collateral. The market value of pledged securities must equal at least 110% of a city's deposits. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a collateral value of 150% of an the entity's total deposits. ' The City and the Agency maintain cash and investment pools that are available for use by all funds. Each fund's or fund type's share of the pool balance is reported in the financial statements as cash and ' cash investments. Earnings from the pooled investments are allocated monthly to each participating fund based on a formula that takes into consideration each fund's average investment in the pool. Investments State statutes authorize the City to invest any available funds in securities issued or guaranteed by the United States Treasury or agencies of the United States, bank certificates of deposit, bankers acceptances, negotiable certificates of deposit, the State Treasurer's Investment Pool (LAIF), repurchase agreements, commercial paper and bonds, registered warrants or treasury notes of the State of California ' and its local agencies. An advistory board has been established to monitor the LAIF's compliance with regulations and investment alternatives established by the state. 18 I CITY OF ROSEMEAD, CALIFORNIA ' NOTES TO FINANCIAL STATEMENTS ' Note 3. Cash and Investments, Continued Investments include cash with a fiscal agent for $2,322,683, which is invested in a guaranteed investment contract accruing interest monthly at an interest rate of 5.8 %, maturing October I, 2013. Investments in annuity contracts included $203,441 invested in the Pension Trust Fund. This investment was carried at market value. Investments also included $6,134,383 of amounts invested in various guaranteed investment contracts which accrue interest quarterly at interest rates ranging from 7.18% to 7.41 %, maturing through October 1, 1999. The management of the state of California Pooled Money Investment Account (referred to as LAIF) has indicated to the City that as of June 30, 1998 the amortized cost value of the pool was $31,920,000,841 ' and the estimated fair value of the pool was $31,932,227,970. The City's share of the fair value is $20,338,751. Included in the state of California Pool is 95.63% invested in certain derivatives or similar products and 4.37% invested in nonderivative financial products. The City's share of LAIF is not subject to custodial credit risk categorization. Other investments are categorized in the following schedule to give an indication of the level of risk ' assumed by the entity at year end. Category Carrying Fair ' Investment Type 1 2 3 Amount Value U.S. government and government agency 1 securities $ $ $ 3,940,498 $ 3,940,498 $ 3,940,498 State and municipal bonds 499,595 499,595 499,595 Commercial paper and bonds 328,657 328,657 328,657 $ $ $ 4,768,750 4,768,750 4,768,750 Cash with fiscal agent 2,322,683 2,322,683 Guaranteed investment contracts 6,134,383 6,297,612 Investment in State Treasurer's Investment Pool 20,338,751 20,338,751 Investment in annuity contracts 203,441 203,441 Total other investments $ 33,768,008 $ 33,931,237 I I 19 I I Cl I I I 11 1 CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 3. Cash and Investments, Continued The three preceding risk description categories are defined as follows: Category Description I Investments that are insured, registered or for which the securities are held by the City or its agent in the City's name. 2 Uninsured and unregistered investments for which the securities are held by counter - party's Trust Department (if a bank) or agent in the City's name. 3 Uninsured and unregistered investments for which the securities are held by counter - party's Trust Department (if a bank) or agent, but not in the City's name. Note 4. Receivables Receivables as of June 30, 1998 consist of the following: $ 1,234,137 $ 698,441 $ 30,593 $ 287,784 $ 2,250,955 During the year ended June 30, 1987, the Agency approved a reimbursement agreement with a local utility company, advancing the utility company funds required to install a water line and a water main extension. The total amount advanced was $493,807. The Agency then contributed the receivable to the City at the present valued amount. The City is to collect this receivable from the utility company in 40 annual installments of $12,345, with the final installment due June 30, 2027. During the year ended June 30, 1990, the Agency approved a similar reimbursement agreement with a local utility company, advancing the utility company funds required to replace various water mains. The total amounts advanced under this agreement were $334,705 during the year ended June 30, 1990 and $29,372 during the year ended June 30, 1992. The Agency then contributed the receivables to the City. The City is to collect the receivables from the utility company in 15 noninterest- bearing annual installments of $35,987 and $1,958, with the final installments due June 30, 2005 and September 30, 2006. 20 Special Capital General Revenue Debt Service Projects Total Property tax increment $ - $ - $ - $ 43,747 $ 43,747 Accrued interest 137,571 71,703 30,593 244,037 483,904 Due from local utility companies (A) 606,932 - - - 606,932 Due from other governmental agencies 224,132 626,738 - - 850,870 Transient occupancy tax 206,595 - - - 206,595 Other 58,907 - - 58,907 $ 1,234,137 $ 698,441 $ 30,593 $ 287,784 $ 2,250,955 During the year ended June 30, 1987, the Agency approved a reimbursement agreement with a local utility company, advancing the utility company funds required to install a water line and a water main extension. The total amount advanced was $493,807. The Agency then contributed the receivable to the City at the present valued amount. The City is to collect this receivable from the utility company in 40 annual installments of $12,345, with the final installment due June 30, 2027. During the year ended June 30, 1990, the Agency approved a similar reimbursement agreement with a local utility company, advancing the utility company funds required to replace various water mains. The total amounts advanced under this agreement were $334,705 during the year ended June 30, 1990 and $29,372 during the year ended June 30, 1992. The Agency then contributed the receivables to the City. The City is to collect the receivables from the utility company in 15 noninterest- bearing annual installments of $35,987 and $1,958, with the final installments due June 30, 2005 and September 30, 2006. 20 I CITY OF ROSEMEAD, CALIFORNIA r NOTES TO FINANCIAL STATEMENTS Note 4. Receivables, Continued ' During the year ended June 30, 1994, the Agency approved an additional reimbursement agreement with a local utility company, advancing the utility company funds required to install a water main and fire service improvements. The total amount advanced was $311,600. The Agency then contributed the receivable to the City at the present valued amount of $212,431. The City is to collect this receivable from the utility company in 15 annual installments of $20,773, with the final installment due June 30, 2006. Note S. Interfund Receivables and Payables Interfund receivables and payables as of June 30, 1998 are as follows: I Funds Interfund Receivables Payables $ 205,393 $ ' General Fund Special Revenue Funds: Traffic Safety ' California Wildlife Grant Community Development Block Grant 'I EJ Capital Projects Fund Note 6. Property and Equipment - 8,548 - 1,400 - 188,451 - 198,399 $ 205,393 $ 205,393 Changes in property and equipment during the year ended June 30, 1998 were as follows: 21 Balance, Balance, June 30, 1997 Acquisitions Disposals June 30, 1998 Land $ 4,730,565 $ - $ - $ 4,730,565 Buildings and improvements 5,641,692 143,622 - 5,785,314 Vehicles 252,264 29,026 22,417 258,873 Furniture and office equipment 1,198,734 115,562 - 1,314,296 Special equipment and machinery 566,205 29,281 595,486 Other improvements 866,671 1,812 - 868,483 $ 13,256,131 $ 319,303 $ 22,417 $ 13,553,017 21 CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 7. Employee Pension Plans ' Defined contribution pension plan The City had a defined contribution pension plan which covered substantially all retired employees and was funded by a group annuity contract. Plan participants became vested upon the dissolution of the plan on September 8, 1992. There were no subsequent contributions to this plan. On September 8, 1992, participants of the plan who were current employees had their share of the annuity contract transferred to the California Public Employee Retirement System (CAPERS). The value of the annuity contract for retired employees was $203,441 as of June 30, 1998. Plan description The City's defined benefit pension plan, PERS, provides retirement and disability benefits, annual cost -of- living adjustments, and death benefits to plan members and beneficiaries. The PERS is part of the Public Agency portion of the California Public Employees Retirement System (CaIPERS), an agent multiple - employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the state of California. A menu of benefit ' provisions as well as other requirements are established by state statutes within the Public Empoyees' Retirement Law. The City of Rosemead selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of CalPERS' annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814. 1 Funding policy Active plan members in the PERS are required to contribute 7% of their annual covered salary. The City ' of Rosemead is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The required employer contribution rate for fiscal 1995 -1996 was 5% to 6 %. The contribution requirements of plan members are established by state statute and the employer contribution rate is established and may be amended by CaIPERS. � Annual pension cost For fiscal year 1995 -1996, the City of Rosemead's annual pension cost was $94,186 and the City of Rosemead actually contributed $94,186. The required contribution for fiscal year 1995 -1996 was determined as part of the June 30, 1995 actuarial valuation using the entry age normal actuarial cost method with the contributions determined as a percent of pay. The actuarial assumptions included (a) 8.5% investment rate of return (net of administrative expenses); (b) projected salary increases that vary by duration of service ranging from 4.5% to 14.95% and (c) 4.5% cost -of- living adjustment. Both (a) and (b) include an inflation component of 4.5 %. The actuarial value of PERS 's assets was determined using a technique that smoothes the effect of short-term volatility in the market value of investments over a two- to five -year period depending on the size of investment gains and /or losses. PERS's unfunded actuarial accrued liability (or excess assets) is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 1996 was 27 years. 22 I I CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS ' Note 7. Employee Pension Plans, Continued The City had no transition pension liability resulting from the adoption of GASB Opinion No. 27, Accounting for Pension of State and Local Governmental Employers, on July I, 1997. ' Annual Pension Cost Percentage of APC Net Pension Fiscal Year Ended June 30, (APC) Contributed Obligation ' 1994 $ 97,850 100 % $ 1995 106,135 100 _ 1996 94,186 100 Required Supplementary Information Funded Status of Plan Entry Age Unfunded/ ' Normal Actuarial (Over- Annual UAAL Valuation Accrued Value of funded) Funded Covered as a % of Date Liability Assets Liability Ratio Payroll Payroll ' 6/30/94 $ 2,227,244 $ 1,580,229 $ 647,015 70.9 % $ 1,298,022 49.846 % 6/30/95 2,449,214 1,882,392 566,822 76.9 1,311,860 43.208 6/30/96 2,765,067 2,302,007 463,060 833 1,218,455 38.004 ' Note 8. Deferred Compensation Plan The City has adopted a deferred compensation plan in accordance with Section 457 of the Internal Revenue Code. Generally, ail eligible employees may defer receipt of a portion of their salary until future years. The employees are not liable for income taxes on amounts deferred until the funds are withdrawn. At June 30, 1998 and 1997, assets of the plan totaled approximately $652,000 and $518,000 respectively. In prior years, all of the plan assets until paid or made available to the employee on their beneficiary, were the sole property of the Authority, subject to the claims of the Authority's general creditors. The plan was amended during the year ended June 30, 1998, in accordance with recent changes in the Internal Revenue Code, so that all assets are now held for exclusive benefit of the participants and their beneficiaries. Therefore, the plan assets and corresponding liability to the participants are no longer ' recognized in the accompanying financial statements. I I 23 CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note 9. Self- insurance Program ' The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and injuries to employees. The City carries commercial liability insurance and bonds its employees. The City carries no insurance coverage for natural disasters. Beginning in 1977, t the City became a member of the Southern California Joint Powers Insurance Authority (the Authority) (a joint powers authority of 77 California cities) for the purpose of pooling their losses and claims of workers' compensation and general liability with those of other member cities. The Authority is governed by a Board of Directors which is composed of one representative and an alternate selected by the City Council of each city. Each Board member has one vote regarding control of all budgeting, financial and management issues coming before the Board of Directors. The City, through the Authority, has a self - insured retention of $20,000. The amount exceeding the self - insured retention level, excluding costs for "property damage only" occurrences which have a total incurred value of $2,000 or less, will be shared pro ratably among the pool based upon each member's share of cost under $30,000 up to a maximum of $500,000. Any losses above $500,000, including claims adjusting costs and administrative expenses, are shared pro rata based upon each member's share of aggregate payroll. The City has employers' liability insurance up to $5,000,000 per occurrence. The ' coverage under this arrangement includes statutory liability under California Workers' Compensation Law and any liability under law for damages arising from employment. ' Settled claims have not exceeded coverage for these risks in any of the last three fiscal years. Note 10. Long -term Debt Tax allocation bonds, Series 1993 A and B In November 1993, the Rosemead Redevelopment Agency issued tax allocation bonds in the amount of $34,275,000 (Series 1993A) and taxable tax allocation refunding bonds in the amount of $2,435,000 ' (Series 1993B) to finance a portion of the cost of the redevelopment area known as Project Area No. 1. The bonds bear interest ranging from 4.6% to 5.6% and 5.2% to 5.9% for Series 1993A and B, respectively. From the proceeds, $14,652,398 of Series A and $2,382,551 of Series B, along with the ' existing reserve amount of $2,651,000 on deposit with the fiscal agent, were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1987 and 1991 tax allocation bonds which are, therefore, considered defeased. Series 1993A bonds mature after October 1, 2001 and before October 1, 2033, and Series 1993B bonds mature on or before October 1, 2001. ' In addition, the 1993 bond issue reallocated the $6,813,850 of the proceeds from the 1991 bond issue deposited in the Low- Moderate Income Housing Fund in October 1991. The reallocation had the effect of satisfying the $423,574 borrowed from the ERAF in fiscal year ended June 30, 1993 and satisfying the ' set -aside requirements as follows: $812,342 for fiscal year ended June 30, 1992, $847,147 for fiscal year ended June 30, 1993 and $469,142 for each of the fiscal years ended June 30, 1997 through June 30, 2022. i 24 CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS ' Note 10. Long -term Debt, Continued Compensated absences That portion of the liability for the vested compensated absences totaling $339,794 which is not expected ' to be paid from available resources is reported in the General Long -term Debt Account Group. Other long -term debt The City has included amounts in the long -term debt account groups for a litigation settlement. The following is a summary of the general long -term debt transactions for the year ended June 30, 1998: Accrued Tax Allocation Tax Allocation Vacation and ' Bonds Series Bonds Series Litigation Compensatory 1993A 1993B Settlement Time Total Balance, June 30, 1997 $ 34,275,000 $ 1,630,000 $ 76,773 $ 297,011 $ 36,278,784 ' Payments of principal - ( 295,000) (39,852) - (334,852) Additions 42,783 42,783 ' Balance, June 30, 1998 $ 34,275,000 $ 1,335,000 $ 36,921 $ 339,794 $ 35,986,715 The annual requirements, principal and interest to amortize the outstanding debt as of June 30, 1998 are as follows: Accrued During the Year Series 1993 A and B Litigation Vacation and Compensa- Ending June 30, Bonds Settlement tory Time Interest Total 1999 $ 310,000 $ 36,921 $ 339,794 $ 1,962,034 $ 2,648,749 2000 330,000 1,942,258 2,272,258 2001 345,000 - - 1,922,848 2,267,848 2002 370,000 - - 1,902,518 2,272,518 2003 425,000 1,891,273 2,316,273 Years thereafter 33,830,000 - - 37,955,315 71,785,315 $ 35,610,000 $ 36,921 $ 339,794 $ 47,576,246 $ 83,562,961 ' Defeasance of prior debt The Agency has advance refunded prior bond issues which are considered defeased and, accordingly, the long -term debt liability has been removed from the General Long -term Debt Account Group. The ' Agency is, however, contingently liable if, for any reason, the funds on deposit are not sufficient to retire the defeased debt. On June 30, 1998, $7,732,335 of outstanding bonds are considered defeased. I 25 I I �J I i [1 i I I 1 CITY OF ROSEMEAD, CALIFORNIA NOTES TO FINANCIAL STATEMENTS Note]]. Budget Overexpenditures and Deficit Expenditures exceeded appropriations for the year ended June 30, 1998 in the following departments: Note 12. Commitments and Contingent Liabilities Low - Moderate Income Housing Set -Aside Fund Under state law, the Agency is required to set aside a portion of its property tax increment revenue for low- and moderate - income housing. The Agency has made findings that, for the years ended June 30, 1986 through 1991, it was allowed to defer funding of the set - aside. The set -aside amounts incurred during the fiscal years ended June 30, 1994, 1995, 1996 and 1997 were also deferred until the fiscal year ending June 30, 2023, as provided by the Agency's adoption of the housing deficit repayment plan. As of June 30, 1998, the accumulated set -aside amount not yet funded was approximately $4,947,000. As required by law, the Agency devised a plan to fund the accumulating amount. Litigation The City is a member of the "LA County Liability Trust Fund" which was set up to pay for litigation involving the Los Angeles County Sheriffs' Department within any of the 41 cities that are serviced by the LA County Sheriffs. The Trust Fund was and is being funded by the 41 cities based upon an additional 6% charge on the amount paid to Los Angeles County for the use of its deputies within the City. Based upon the agreement signed by all of the 41 cities at the time the Trust Fund originated, the cities will be jointly liable for any and all claims filed against an Los Angeles Sheriffs' Deputy, no matter which of the 41 cities that claim arose from. 26 Amount of Over - Appropriations Expenditures expenditures General Fund Travel and meetings $ 23,000 $ 28,178 $ 5,178 City administration 492,100 514,411 22,311 Animal regulation 50,000 57,138 7,138 Parking control 125,200 146,358 21,158 Narcotics forfeiture - 42 42 Street and highway construction 76,000 146,310 70,310 Traffic signs and striping maintenance - 9,989 9,989 Building regulation 444,800 488,156 43,356 Community improvements 93,120 106,016 12,896 Traffic Safety Fund Public safety 60,000 70,218 10,218 Air Quality Management District Fund Public works 24,500 51,289 26,789 Note 12. Commitments and Contingent Liabilities Low - Moderate Income Housing Set -Aside Fund Under state law, the Agency is required to set aside a portion of its property tax increment revenue for low- and moderate - income housing. The Agency has made findings that, for the years ended June 30, 1986 through 1991, it was allowed to defer funding of the set - aside. The set -aside amounts incurred during the fiscal years ended June 30, 1994, 1995, 1996 and 1997 were also deferred until the fiscal year ending June 30, 2023, as provided by the Agency's adoption of the housing deficit repayment plan. As of June 30, 1998, the accumulated set -aside amount not yet funded was approximately $4,947,000. As required by law, the Agency devised a plan to fund the accumulating amount. Litigation The City is a member of the "LA County Liability Trust Fund" which was set up to pay for litigation involving the Los Angeles County Sheriffs' Department within any of the 41 cities that are serviced by the LA County Sheriffs. The Trust Fund was and is being funded by the 41 cities based upon an additional 6% charge on the amount paid to Los Angeles County for the use of its deputies within the City. Based upon the agreement signed by all of the 41 cities at the time the Trust Fund originated, the cities will be jointly liable for any and all claims filed against an Los Angeles Sheriffs' Deputy, no matter which of the 41 cities that claim arose from. 26 I CITY OF ROSEMEAD, CALIFORNIA ' NOTES TO FINANCIAL STATEMENTS ' Note 11. Commitments and Contingent Liabilities, Continued In 1998 the County of Los Angeles lost a litigation matter which resulted in a $25,000,0000 judgment against the Los Angeles County Sheriffs' Department which Los Angeles County has since paid. Now Los Angeles County is looking to collect this money back from the 41 cities which were members of the trust fund. At this time it is too early for the City to predict the financial impact of its share of the settlement which must be paid to the County of Los Angeles, nor do they know what length of time the settlement payments, if any, will be spread over. As a result, the City has not recorded any liability relating to this matter in its June 30, 1998 financial statements. ' Advance agreement In February 1995, the Agency approved an agreement with a local utility company to advance the utility company $117,600 required to install water distribution mains within the Agency redevelopment area. The agreement was put on hold by the Agency and, as of September 18, 1998, the agreement continues to remain on hold. Note 13. Year 2000 Issue The Year 2000 issue is the result of shortcomings in many electronic data processing systems and other electronic equipment that may adversely affect the government's operations as early as fiscal year ending June 30, 1999. The City of Rosemead has completed an inventory of its in -house computer systems and other electronic ' equipment (i.e., irrigation systems, traffic signals, etc.) within City limits that may be affected by the Year 2000 issue and that are necessary to conducting the City's operations. Currently, the City is in the remediation stage in that bid specifications have been drawn up to purchase, from outside vendors, ' hardware and software believed to be Year 2000 compliant for the financial reporting systems. the City has budgeted $50,000 to obtain and implement a complete Year 2000 financial reporting system during the fiscal year ending June 30, 1999. Testing and validation of the systems will need to be completed ' after the hardware and software are installed. I 1 i 27 ' I I L I I I 1 F� L u CITY OF ROSEMEAD, CALIFORNIA REVENUE DETAIL - BUDGET AND ACTUAL - GENERAL FUND Year Ended June 30, 1998 28 Budget 1998 Actual Over (Under) Budget 1997 Actual Taxes Maintenance district $ 1,500 $ 1,366 $ (134) $ 1,575 Real estate transfer tax 40,000 46,600 6,600 47,904 Sales and use tax 2,500,000 2,658,370 158,370 2,550,967 Franchise fees 578,000 605,586 27,586 574,497 Transient occupancy tax 735,000 822,611 87,611 777,568 3,854,500 4,134,533 280,033 3,952,511 Licenses and Permits Business license fees 35,000 39,149 4,149 34,578 Building permit fees 525,000 529,417 4,417 511,039 Public work permit 56,000 46,792 (9,208) 76,133 Tentative map fees 7,500 6,940 (560) 5,975 Development review fees 5,500 1,499 (4,001) 17,260 Final map fees 25,000 16,775 (8,225) 25,365 Occupancy permit fees 56,000 58,656 2,656 58,490 Sewer connection 30,000 37,544 7,544 28,624 Strong motion fees 2,300 2,390 90 2,573 Rehabilitation permit fees 1,600 - (1,600) - 743,900 739,162 (4,738) 760,037 Intergovernmental Financial aid to local agencies 900,000 1,054,459 154,459 1,017,845 Motor vehicle in lieu tax 2,000,000 2,372,031 372,031 2,192,695 Other vehicle taxes 11,800 857 (10,943) 856 COPS grant 69,070 52,060 (17,010) 352,029 Other state grants (county) 162,000 - (162,000) 297,351 3,142,870 3,479,407 336,537 3,860,776 Charges for Services Filing and certification fees 50,000 50,005 5 54,503 Other current charges 224,600 214,363 (10,237) 249,735 Recreation fees 224,500 185,528 (38,972) 226,876 Assessments 3,000 16,784 13,784 25,586 Special community events 24,100 23,112 (988) 19,333 526,200 489,792 (36,408) 576,033 Fines, Forfeitures and Penalties, court fines and forfeitures 281,500 279,104 (2,396) 276,281 Use of Money and Property Interest earned on investments 360,000 582,970 222,970 505,143 Rental income 58,200 60,955 2,755 63,267 418,200 643,925 225,725 568,410 Other SANE program 32,500 12,500 (20,000) 12,500 Repairs to and sale of City property 1,100 1,040 (60) 3,552 Miscellaneous 15,000 13,073 (1,927) 14,869 48,600 26,613 (21,987) 30,921 $ 9,015,770 $ 9,792,536 $ 776,766 $ 10,024,969 28 I 1 1] CITY OF ROSEMEAD, CALIFORNIA EXPENDITURE DETAIL - BUDGET AND ACTUAL - GENERAL FUND Year Ended June 30, 1998 1998 Over (Under) 1997 Budget Actual Budget Actual General Government Travel and meeting $ 23,000 $ 28,178 $ 5,178 S 27,841 City council City administration City clerk Finance City treasurer City attorney General government buildings Community promotion City garage Public Safety Law enforcement Animal regulation Parking control Crossing guard Emergency services Narcotics forfeiture Street lighting Dinsmoor Heritage House Public Works ' Engineering and administration 492,100 Street and highway construction 22,311 Traffic signs and striping maintenance ' Aquatics (10,013) Public Health Services Dinsmoor Heritage House Public Recreation ' Administration 492,100 Parks 22,311 Recreation ' Aquatics Dinsmoor Heritage House 66,300 Community Service (953) Planning 492,100 Building regulation 22,311 Engineering ' Community improvements (10,013) Appropriations Reserves Capital Outlay 66,300 65,347 (953) 64,767 492,100 514,411 22,311 554,615 91,330 81,317 (10,013) 109,869 246,800 223,128 (23,672) 231,670 12,000 11,757 (243) 12,059 124,100 98,037 (26,063) 124,482 417,500 323,785 (93,715) 366,414 273,110 250,287 (22,823) 275,837 42,550 35,215 (7,335) 45,055 1,788,790 1,631,462 (157,328) 1,812,609 4,227,270 4,007,316 (219,954) 4,276,631 50,000 57,138 7,138 67,934 125,200 146,358 21,158 117,359 102,900 91,688 (11,212) 90,867 19,400 6,677 (12,723) 8,993 - 42 42 110 4,524,770 4,309,219 (215,551) 4,561,894 36,640 33,154 (3,486) 36,452 76,000 146,310 70,310 8,939 - 9,989 9,989 1,616 112,640 189,453 76,813 47,007 59,000 45,381 (13,619) 45,966 194,900 192,834 (2,066) 187,735 982,650 847,260 (135,390) 1,104,630 610,300 592,582 (17,718) 594,279 309,800 270,130 (39,670) 253,630 4,000 3,373 (627) 3,792 2,101,650 1,906,179 (195,471) 2,144,066 208,460 195,248 (13,212) 204,899 444,800 488,156 43,356 458,867 271,600 222,462 (49,138) 244,505 93,120 106,016 12,896 105,809 1,017,980 1,011,882 (6,098) 1,014,080 100,000 (100,000) 59,550 56,182 (3,368) 47,683 $ 9,764,380 $ 9,149,758 $ (614,622) $ 9,673,305 29 CITY OF ROSEMEAD, CALIFORNIA COMBINING BALANCE SHEET - SPECIAL REVENUE FUNDS June 30, 1998 1 and Municipal Equity Community Liabilities Air Quality Local Public Development ' $ 2,535 $ Traffic State Gas Management Transporta- Transporta- Block Grant _ Assets Safety Fund Tax Fund District Fund tion Fund tion Funds Funds ' Cash and investments $ - $ 704,996 $ 95,353 $ 7 S 1,046,078 $ 128,847 Receivables 8,548 8,856 15,556 100,354 458,126 Reserved for low- moderate Total Assets $ 8,548 S 713,852 $ 110,909 $ 7 $ 1,146,432 $ 586,973 1 and Municipal Equity ' Liabilities Liabilities Accounts payable $ $ 70,014 $ 2,535 $ S 85,096 $ 151,840 Due to other funds Deferred revenue 8,548 - _ - 188,451 246,682 Total liabilities 8,548 70,014 2,535 85,096 586,973 Municipal Equity Reserved for low- moderate income housing - - - - - Unreserved, undesignated 643,838 108,374 7 1,061,336 Total municipal equity - 643,838 108,374 7 1,061,336 - Total liabilities and municipal equity $ 8,548 $ 713,852 $ 110,909 $ 7 $ 1,146,432 $ 586,973 1 30 i I i 1976 Low- Moderate Rosemead Community Parklands Street Lighting Narcotics Seizure Income Set- Aside Housing Housing Development California Wildlife Totals Grant Fund Fund Fund Fund Corporation Grant 1998 1997 $ 45,876 $ 428,687 $ 10,025 $ 4,494,159 $ 104,346 $ 1,436 $ 7,059,810 $ 6,119,855 ' 35,298 71,703 698,441 421,198 ' $ 45,876 $ 463,985 $ 10,025 $ 4,565,862 $ 104,346 $ 1,436 $ 7,758,251 $ 6,541,053 ' $ - $ 9,624 $ 10,025 $ - $ 15,707 $ - S 344,841 $ 424,111 - - - 1,400 198,399 31,370 - - - - 246,682 246,682 9,624 10,025 - 15,707 1,400 789,922 702,163 ' - 45,876 - 454,361 - 4,565,862 - 88,639 - 36 4,565,862 2,402,467 4,251,917 1,586,973 45,876 454,361 - 4,565,862 88,639 36 6,968,329 5,838,890 $ 45,876 $ 463,985 $ 10,025 $ 4,565,862 $ 104,346 $ 1,436 $ 7,758,251 $ 6,541,053 1 1 31 ' Other Financing Sources (Uses) CITY OF ROSEMEAD, CALIFORNIA From other funds 2,473 COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES - (To) other funds SPECIAL REVENUE FUNDS (147,206) 2,473 ' Revenue and other financ- June 30, 1998 ing sources over (under) ' expenditures and other financing (uses) 210,145 4,573 7 368,902 Fund Balance, beginning 433,693 103,801 692,434 Community Fund Balance, $ $ 643,838 $ 108,374 $ 7 Traffic Air Quality Local Public Development Safety State Gas Management Transporta- Transporta- Block Grant ' Fund Tax Fund District Fund tion Fund tion Funds Funds Revenue Special assessments $ $ - $ - $ - $ - $ - Intergovernmental 991,722 59,719 1,103,705 1,120,833 ' Charges for services 9,700 Fines, forfeitures and penalties 70,218 - - - - - Use of money and property - 36,167 7 55,553 ' Other 70,218 1,037,589 59,719 7 1,159,258 1,120,833 Expenditures Current: General government - - - - - - Public safety 70,218 - - - - - ' Public works 827,444 51,289 2,473 790,356 75,871 Community services - - 3,857 - - 1,044,962 ' 70,218 827,444 55,146 2,473 790,356 1,120,833 Revenue over (under) expenditures - 210,145 4,573 (2,466) 368,902 - ' Other Financing Sources (Uses) Operating transfers: From other funds 2,473 147,206 (To) other funds = _ (147,206) 2,473 ' Revenue and other financ- ing sources over (under) ' expenditures and other financing (uses) 210,145 4,573 7 368,902 Fund Balance, beginning 433,693 103,801 692,434 ' Fund Balance, $ $ 643,838 $ 108,374 $ 7 $ 1,061,336 $ ending 32 ' 1976 Low- Moderate Rosemead Community Street Narcotics Income Set- Housing California Parklands Lighting Seizure Aside Housing Development Wildlife Totals ' Grant Fund Fund Fund Fund Corporation Grant 19 1997 $ $ 418,502 S - S $ S - $ 418,502 $ 382,609 2,840 3,278,819 3,672,184 ' = - 9,700 8,000 - 70,218 87,657 2,468 = 241,906 162,600 - 498,701 422,877 ' 160 160 3,398 2,468 418,502 2,840 241,906 162,760 - 4,276,100 4,576,725 - - - - 121,052 - 121,052 190,748 230,811 45,695 - 346,724 360,303 = _ 1,747,433 2,543,754 - - - - 1,048,819 962,885 - 230,811 45,695 - 121,052 - 3,264,028 4,057,690 2,468 187,691 (42,855) 241,906 41,708 - 1,012,072 519,035 ' 42,855 222,039 150,000 - 564,573 443,439 (150,000) (150,000) (447,206) (300,000) - - 42,855 72,039 - - 117,367 143,439 ' 2,468 187,691 - 313,945 41,708 - 1,129,439 662,474 43,408 266,670 4,251,917 46,931 36 5,838,890 5,176,416 ' $ 45,876 $ 454,361 S $ 4,565,862 $ 88,639 S 36 $ 6,968,329 $ 5,838,890 1 33 ' CITY OF ROSEMEAD, CALIFORNIA ' COMBINING BALANCE SHEET — FIDUCIARY FUNDS June 30, 1998 ' Assets Cash and cash investments ' Total assets ' Liabilities and Municipal Equity Liabilities Refundable deposits ' Deferred compensation Total liabilities Municipal Equity Fund balance, reserved for employees' retirement Total liabilities and municipal equity 1 1 1 34 1 Pension Refundable Totals Trust Fund Deposits 1998 1997 $ 203,441 $ 102,008 $ 305,449 $ 825,592 $ 203,441 $ 102,008 $ 305,449 $ 825,592 $ - $ 102,008 $ 102,008 $ 95,568 - - - 517,848 102,008 102,008 613,416 203,441 - 203,441 212,176 $ 203,441 $ 102,008 $ 305,449 $ 825,592 ' 1 1 1 CITY OF ROSEMEAD, CALIFORNIA ' STATEMENT OF CHANGES IN ASSETS AND LIABILITIES — AGENCY FUND Year Ended June 30, 1998 35 1 Balance, June 30, ' Balance, Refundable Deposit Fund July I, 1997 Additions Deletions 1998 Assets Cash and cash investments $ 95,568 $ 14,058 $ 7,618 $ 102,008 ' Total assets $ 95,568 $ 14,058 $ 7,618 $ 102,008 ' Liabilities Refundable deposits $ 95,568 $ 14,058 $ 7,618 $ 102,008 1 1 1 1 1 1 35 1