1993 City Compliance ReportsL
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CITY OF ROSEMEAD, CALIFORNIA
COMPLIANCE AND FINANCIAL REPORT
JUNE 30, 1993
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I CONTENTS
GENERAL PURPOSE FINANCIAL STATEMENTS
SECTIO
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INDEPENDENT AUDITORS' REPORT
ON THE GENERAL PURPOSE FINANCIAL STATEMENTS
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GENERAL PURPOSE FINANCIAL STATEMENTS
Combined balance sheet, all fund types and account groups
2
Combined statement of revenues, expenditures and changes in fund balances,
all governmental fund types
3
Combined statement of revenues, expenditures and changes in fund balances
- budget and actual - general, special revenue and debt service fund types
4
Statement of revenues, expenses and changes in fund balance, pension trust fund
5
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Statement of cash flows, pension trust fund
6
Notes to financial statements
7-25
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REPORT
INDEPENDENT AUDITORS
ON THE SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
26
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
27
SECTION 11 - COMPLIANCE MATTERS AND INTERNAL
ACCOUNTING AND ADMINISTRATIVE CONTROLS
I REPORTS REQUIRED BY GOVERNMENT AUDITING
STANDARDS
Independent auditors' report on compliance based on an audit
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of the general purpose financial statements
28 and 29
Independent auditors' report on internal control structure
30 - 32
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REPORTS REQUIRED BY THE SINGLE AUDIT ACT AND
OMB CIRCULAR A-128
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Independent auditors' report on:
Compliance requirements applicable to major federal financial assistance
programs
33 and 34
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Compliance with the general requirements applicable to federal financial
assistance programs
35 and 36
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The internal control structure used in administering federal financial
assistance programs
37 - 39
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SECTION I
GENERAL PURPOSE FINANCIAL STATEMENTS
MCGLADREY & PULLEN
Certified Public Accountants and Consultants
' INDEPENDENT AUDITORS' REPORT
ON THE GENERAL PURPOSE FINANCIAL STATEMENTS
To the Honorable Mayor
' and Members of the City Council
City of Rosemead
Rosemead, California
We have audited the accompanying general purpose financial statements of the City of
Rosemead, California, as of and for the year ended June 30, 1993, as listed in the table of
' contents. 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. 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 respects, the financial position of the City of Rosemead, California, as of
' June 30, 1993, and the results of its operations and cash flows of its pension trust fund for
the year then ended in conformity with generally accepted accounting principles.
' Pasadena, California
September 21, 1993, except for Note 12, as to which the date is November 2, 1993.
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CITY OF ROSEMEAD, CALIFORNIA
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
June 30, 1993
Governmental Fund Tvocs
ASSETS AND OTHER DEBITS
Cash and cash investments
Cash and investments with fiscal agent
other investments
Investments in deferred compensation plans
Investments in annuity contracts
Receivables
Due from other funds
Prepaid expenses
Properly and equipment
Amount available in debt service fund
Amount to be provided for retirement of general long-term debt
Total assets and other debits
LIABILITIES, MUNICIPAL EQUITY AND OTHER CREDITS
LIABILITIES
Accounts payable and accrued liabilities
Arbitrage rebate payable
Due to other funds
Due to other governmental agencies
Refundable deposits
Deferred compensation
Deferred revenue
Tax allocation notes
Accrued vacation pay and compensatory time
Estimated litigation settlement
California Trailer Bill SB1135
Total liabilities
MUNICIPAL EQUITY AND OTHER CREDITS
Investment in general fixed assets
Fund balance:
Reserved:
Long-term receivable
Prepaid expenses
Debt service
Low-moderate income housing
Employees retirement
Unreserved:
Designated for:
Capital projects
Building and equipment replacement
Litigation settlements
Self-insurance
Undesignated
Total municipal equity and other credits
Total liabilities, municipal equity and other credits
See Notes to Financial Statements.
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General
Special
Revenue
Debt
Service
$ 10,121
$ 5,620,435
$ -
-
-
3,889,464
5,266,675
3,618,590
-
1,691,190
519,563
33,374
156,093
882,287
-
$ 7,124,079
$10,640,875
$ 3,922,838
$ 1,170,547 $ 396,293 $
94,992
152,208
,
-
237,331
150,000
,
4,684
$ 1.,420,223
$ 785,832 $
$
$ $
'
760,954
3,922,838
7,633,478 _
969,000
'
500,000
-
280,000
3,193,902
2,221,565
'
$ 5,703,856
$ 9355,043 $ 3,922,838
$ 7,12079
$ 10,640,875 $ 3,922,838
,
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Governmental
Fund Types
Fiduciary
Fund Types
Account Groups
Total
(Memorandum Only)
Trust
General
General
Capital
and
Fixed
Long-Term
Projects
Agency
Assets
Debt
1993
1992
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$
$ 116,332
$
$ -
$ 5,746,888
$ 5,352,636
5,716,371
3,889,464
14,601,636
4,006,652
15,847,848
240,236
-
240,236
190,141
-
249,552
-
249,552
1,073,989
439,682
-
_
_
2,683,809
2,666,890
'
970
1,039,350
1,041,963
-
173,786
8,627,668
-
8,627,668
8,652,669
-
3,922,838
3,922,838
4,112,679
15,756,855
15,756,855
16,328373
$ 6,157,023
$ 606,120
$ 8,627,668 $19,679,693
$ 56,758,296
$ 59,448.126
$ 38,548
$ -
$ - $ -
$ 1,605,388
$ 1,987,735
213,721
-
- -
213,721
-
'
792,150
1,039,350
1,041,963
237,331
237,488
98,473
- -
98,473
79,805
258,095
- _
258,095
211,448
'
150,000
-
-
- 18,430,240
18,430,240
20,330,240
-
-
- 124,165
128,849
120,424
'
_
-
- 950,000
950,000
_
175,288
175,288
$ 1,044,419
$ 356,568
$ $ 19,679,693
$ 23,286,735
$24,009,103
$ $ $ 8,627,668 $ - $ 8,627,668 $ 8,652,669
_ - 760,954 605,863
173,786
- - 3,922,838 4,112,679
_ _ 7,633,478 7,401,410
249,552 249,552 1,073,989
' 5,112,604 _ _ 5,112,604 6,755,082
969,000
- 500,000
- 280,000 -
5,415,467 6,663,545
$ 5,112,604 $ 249,552 $ 8,627-668 $ $33,471,561 $35,439,023
' $ 6 157.023 $ 606,120 $ 8,627,668 $19,679,693 $ 56,758,296 $ 59,448,126
CITY OF ROSEMEAD, CALIFORNIA
,D STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
Year Ended June 30, 1993
Governmental Fund Types
Special Debt
General Revenue Service
REVENUE
Property tax increment and special assessments
Other taxes
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
Intergovernmental
Capital outlay
Debt service:
Principal
Interest
Arbitrage rebate expense
Revenue over (under) expenditures
OTHER FINANCING SOURCES (USES)
Proceeds from sale of bonds, net of discounts
of $156,884
Operating transfers:
From other funds
(To) other funds
$ - $ 395,646 $
3,866,690 -
579,124 -
2,372,483 2,801,953
346,859 403
216,215 97,765
338,453 446,967 130,502
88.823 109,678 1.683
$ 7.808.647 $ 3,852,412 $ 132,185
$ 1,952,089 $ 427,575 $
3,916,602
347,764
81,578
2,078,291
1,677
-
1,858,238
-
1,002,917
408,550
7,300
23,914
-
-
-
1,900,000
-
-
669,813
$ 8,820,401
$ 3,286,094
$ 2,569,813
$ (1,011,754)
$ 566,318
$ (2,437,628)
1,097,300 417,548 2,247,787
(40.019) (527.529) -
$ 1,057.281 $ (109.981) $ 2.247.787
Revenue and other financing sources over
(under) expenditures and other fmancing uses
$ 45,527 $ 456,337 $ (189,841)
FUND BALANCE, BEGINNING
5,445,898 9,398,706 4,112,679
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RESIDUAL EQUITY TRANSFER (Note 4)
212,431 -
FUND BALANCE, ENDING
$ 5.703.856 $ 9,855.043 $ 3,922.838
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See Notes to Financial Statements.
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Governmental Total
Fund Types (Memorandum Only)
Capital
Projects 1993 1992
$ 3,379,446
$ 3,775,092
$ 4,130,434
'
3,866,690
3,787,547
579,124
554,935
5,174,436
4,824,498
'
347,262
366,345
313,980
278,253
342,905
1,258,827
1,625,706
118,419
318,603
391,194
'
$ 3,840,770
$ 15,634,014
$ 15,958,912
' $ 49,661 $ 2,429325
- 4,264,366
' 1,438,818 3,598,687
1,677
1,858,238
1,411,467
$ 2,710,801
4,268,763
8,757,535
95,495
1,959,686
1,592,156
580,791
580,791
-
'
5,170
36,384
144,180
-
1,900,000
1,760,000
'
-
669,813
828,617
213,721
213,721
$ 2288,161
$16964,469
$22,117233
1,552,609
$ (1330,455)
$ (6,158,321)
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$
$
$ 11,568,356
3,762,635
12,007,219
(3,195,087)
(3,762,635)
(12,007,219)
$(3,195,087)
$ -
$11,568356
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$ (1,642,478)
$ (1,330,455)
$ 5,410,035
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6,755,082
25,712,365
20,284,586
212,431
17344
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$ 5,112,604
$24,594341
$25,712,365
CITY OF ROSEMEAD, CALIFORNIA
COMBINED STATEMENT OF REVENUE, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUND TYPES
Year Ended June 30, 1993
REVENUE
Property taxes and special assessments
Other taxes
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:
From other funds
(To) other funds
Revenue and other financing sources over
(under) expenditures
FUND BALANCE, BEGINNING
RESIDUAL EQUITY TRANSFER
FUND BALANCE, ENDING
See Notes to Financial Statements.
General Fund
Over
(Under)
Budget Actual Budget
4,154,800
3,866,690
(288,110)
559,700
579,124
19,424
2,230,954
2,372,483
141,529
212,850
346,859
134,009
253,500
216,215
(37,285)
430,800
338,453
(92,347)
29,150
88,823
59.673
$ 7,871754
$ 7,808,647
$ (63,107)
$ 2,196,493 $ 1,952,089 $ (244,404)
4,305,390
3,916,602
(388,788)
467,900
81,578
(386,322)
5,000
1,677
(3,323)
1,988,140
1,858,238
(129,902)
1,050,190
1,002,917
(47,273)
3,000
7,300
4,300
$ 10,016,113 $ 8,820,401 $ (1.195,712)
$(2,144,359) $ (1,011754) $ 1,132,605
$ 947,300 $ 1,097,300 $ 150,000
(40,019) (40,019)
$ 947.300 $ 1,057,281 $ 109.981
$ (1,197.0591 $ 45,527 $ 1.242,586
5,445,898
212.431
$ 5.703,856
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Special Revenue
Debt Service
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Over
(Under)
Over
(Under)
Budget
Actual
Budget
Budget
Actual
Budget
'
$ 375,000
$ 395,646
$ 20,646
$
$ _
$
4,832,740
2,801,953
(2,030,787)
'
403
403
90,000
97,765
7,765
34,435
446,967
412,532
156,000
130,502
(25,498)
-
109,678
109,678
-
1,683
1,683
'
$ 5,332,175
$ 3,852,412
$ (1,479,763)
$ 156,000
$ 132,185
$ (23,815)
$ 307,190
$ 427,575
$ 120,385
$ -
$ -
$
371,650
347,764
(23,886)
-
-
3,595,980
2,078,291
(1,517,689)
-
-
'
130,480
(130,480)
1,317,905
408,550
(909,355)
326,000
23,914
(302,086)
-
-
-
1,900,000
1,900,000
669,813
669,813
$ 6,049,205
$ 3,286.094
$ (2,763,111)
$ 2569,813
$ 2,569313
$ -
'
$ (717,030)
$ 566318
$ 1,283,348
$ (2,413,813)
$ (2,437,628)
$ (23,815)
' $ 251,300 $ 417,548 $ 164,348 $ 2,569,813 $ 2,247,787 $ (322,026)
(251,300) (527,529) (274,329) - -
' $ $ (109,981) $ (109,981) $ 2,569.813 $ 2,247,787 $ (322,026)
(717.0301 $ 456,337 $ 1,173,367 $ 156,000 $ (189,841) $ (345,841)
' 9,398,706 4,112,679
' $ 9,855,043 $ 3922,838
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CITY OF ROSEMEAD, CALIFORNIA
STATEMENT OF REVENUE, EXPENSES AND CHANGES
IN FUND BALANCE
PENSION TRUST FUND
Year Ended June 30, 1993
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.
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$ 33,827
$ 5,405
852.859
$ 858.264
$ (824,437)
1.073.989
$ 249.552
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CITY OF ROSEMEAD, CALIFORNIA
STATEMENT OF CASH FLOWS
PENSION TRUST FUND
Year Ended June 30, 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)
Adjustment to reconcile net (loss) to net cash
(used in) operating activities, unrealized
loss on sale of annuity contracts
Interest income
Administrative expenses
Net cash (used in) operating activities
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES,
proceeds from the sale and maturity of annuity contracts
Net increase in cash and cash equivalents
CASH, BEGINNING
CASH, ENDING
See Notes to Financial Statements.
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$ (824,437)
33,146
(66,973)
5.405
$ (852.859)
$ 852.859
CITY OF ROSEMEAD, CALIFORNIA
i NOTES TO FINANCIAL STATEMENTS
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Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups,
' and Significant Accounting Policies
Reporting entity
The criteria of oversight responsibility, special financing relationships and scope of public
service was used in determining the agencies or entities which comprise the City of
Rosemead, California (the City) for financial reporting purposes. Oversight responsibility
is determined by the extent of financial interdependency, control over the selection of the
governing authority and management, ability to significantly influence operations, and
' accountability for fiscal matters. Based on these criteria, the Rosemead Redevelopment
Agency (the Agency) is included in the combined financial statements of the City, and the
Rosemead Housing Development Corporation is included in the combined financial
t statements of the Agency. The Agency has the same fiscal year as the City.
' After due consideration of each criteria, especially the substance of the City's relationship
with these organizations/entities and using professional judgment, management has decided
to exclude certain organizations and activities from the City's combined financial statements
' because significant oversight responsibility does not exist. The organizations excluded from
the City's reporting entity are the Fire Protection District, the Library District and the
County Flood Control District.
Nature of operations
' City of Rosemead
The City is a no property tax City which 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.
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' NOTES TO FINANCIAL STATEMENTS
' Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups,
and Significant Accounting Policies, Continued
' Rosemead Housing Development Corporation
The Corporation accounts for the construction and financing of low and moderate income
' housing. It is a California nonprofit benefit corporation organized under Section 501(c)(3)
of the Internal Revenue Code of 1986.
' Description of funds and account groups
The accounts of the reporting entity are organized on the basis of funds or account groups,
' each of which is considered to be a separate accounting entity. The operations of each fund
are accounted for by providing a separate set of self-balancing accounts which comprise its
assets, liabilities, equity, revenue and expenditures. The various funds and account groups
are presented as follows:
1 Governmental Fund Types
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 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 the reliance on private
vehicles.
' The Local Transportation Fund accounts for state grants used to finance the construction
of bikeways and sidewalks.
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NOTES TO FINANCIAL STATEMENTS
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1 Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups,
and Significant Accounting Policies, Continued
1 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.
1 The Community Development Block Grant Fund accounts for Community Development
Block Grants received from the United States Department of Housing and Urban
1 Development.
The 1976 Community Parklands Grant Fund accounts for funds to be used for park
projects.
1 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
1 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.
1 The California Wildlife Grant Fund accounts for a state grant for preapproved specified
park projects.
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
1 the replacing or rehabilitation of low and moderate income housing within City limits.
The Rosemead Housing Development Corporation accounts for the construction and
1 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 of 1986.
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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 acquisition or construction of major capital facilities within the Rosemead Redevelop-
ment Agency.
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t NOTES TO FINANCIAL STATEMENTS
Note I. Reporting Entity, Nature of Operations, Description of Funds and Account Groups,
and Significant Accounting Policies, Continued
' Fiduciary Fund Types
The Pension Trust Fund accounts for the activity of the retirement plan for employees of
' the City.
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 and deferred compensation plans for qualified employees.
Account Groups
The General Fixed Assets Account Group accounts for all property and equipment except for
public domain fixed assets (e.g., streets, bridges, sidewalks, curbs, gutters and storm drainage
systems).
' The General Long-Term Debt Account Group accounts for the outstanding principal balances
of all long-term debt expected to be financed from governmental fund types.
Significant accounting policies
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Basis of accounting
Governmental fund types, Pension Trust Fund and agency funds are accounted for using the
modified accrual basis of accounting. Revenue is recognized in the accounting period in
which it becomes both available and measurable. Available means collectible within the
current period or soon enough thereafter to pay current liabilities.
Property taxes that have been levied and are due on or before year end are recognized as
revenue if they have been collected within 60 days after year end. Sales taxes are
considered to be measurable when they have been collected by the City and are recognized
as revenue at that time. Special assessments are recognized as revenue at the time
individual installments come due.
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I on insurance claims are charged to expense in the period the loss is determinable.
NOTES TO FINANCIAL STATEMENTS
Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups,
and Significant Accounting Policies, Continued
In determining when to recognize intergovernmental revenues (grants, subsidies and shared
revenues), 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,
monies must be expended on the specific purpose or project before any amounts will be
paid to the City; therefore, revenues are recognized based upon the expenditures recorded.
In the other, monies 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
revenues at the time of receipt or earlier if they meet the criterion of availability. Other
major revenues that are determined to be susceptible to accrual include taxes and interest.
Major revenues that are determined to not be susceptible to accrual because they are either
not available soon enough to pay liabilities of the current period or are not objectively
measurable include hotel occupancy taxes, 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
The accrual basis of accounting is used for the Pension Trust Fund. Under the accrual basis
of accounting, revenues are recognized when earned and expenses are recorded when
incurred. Investment earnings are accrued.
Cash investments and other investments
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.
All investments are stated at cost or amortized cost except those of the Deferred
Compensation Plan and Pension Trust Fund which are stated at market value. No loss is
recognized when market values decline below costs since it is generally the policy of the City
' to hold such investments until they mature. Investment earnings are allocated based on the
source of funds.
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' NOTES TO FINANCIAL STATEMENTS
Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups,
and Significant Accounting Policies, Continued
' Receivables
Property taxes receivable represent the portion of the March 1, 1992 levy which was
' collected after June 30, 1993 and before August 31, 1993. Property taxes attach as an
enforceable lien on property as of March 1 and are due and payable in two equal
installments on the following November 1 and February 1. Unpaid taxes become delinquent
' on December 10 and April 10. An allowance based on historical collection experience is
provided for uncollectible taxes.
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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 improve-
ments 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 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.
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NOTES TO FINANCIAL STATEMENTS
Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups,
and Significant Accounting Policies, Continued
The vested portion of vacation and sick leave by employees at June 30, 1993 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 repaid within one year is included in the General
Long-Term Debt Account Group.
Memorandum totals
Total columns on the combined financial statements are captioned "Memorandum Only" to
indicate that they are presented only to facilitate financial analysis. Data in these columns
do not present financial position or results of operations in conformity with generally
accepted accounting principles. Interfund transactions have not been eliminated in arriving
at these amounts.
Note 2. Budget Matters
The annual budget adopted by the City Council provides for the general operation of the
City. It includes proposed expenditures and estimated revenues for all governmental fund
types except the Capital Projects Fund. Actual expenditures may not exceed appropriations
at the department level.
Budgets presented in this report for comparison to actual amounts are presented in
accordance with generally accepted accounting principles. The modified accrual basis of
accounting is employed in the preparation of the budget. Reported budget amounts
represent the original adopted budget as amended. Budget amendments were nominal for
the year.
The City Manager is authorized to transfer budgeted amounts between funds within the
same department.
Budget-to-actual comparisons are not presented for the Capital Projects Fund since the
budget relates to all future appropriations as well as current appropriations.
In all funds, except the Capital Projects Fund, unexpended budgeted amounts lapse at the
end of the budget year.
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NOTES TO FINANCIAL STATEMENTS
The components of cash and cash investments at June 30, 1993 are as follows:
Note 3. Cash and Investments
' Cash in bank
Time certificates of deposit
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At year end, the carrying amount of the City and the Agency's deposits were $5,746,888
(cash and cash investments, above) and the bank balance was $5,872,892.
' 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 consider-
ation each fund's average investment in the pool.
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A summary of collateralization of the bank balances is presented below:
Insured or collateralized with securities held by
the City or its agent in the City's name
Uncollateralized (in accordance with GASB 3), this
category includes any bank balance that is
collateralized with securities held by the
pledging financial institution or by its trust
department or agent, but not in the City's name,
although balances so collateralized meet the
requirements of state law
$ 1,927,628
3.819.260
$ 5.746.888
$ 1,008,677
4,864,215
$ 5.872.892
State statutes authorize the City and the Agency 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, repurchase agreements, commercial paper and bonds,
registered warrants or treasury notes of the State of California and its local agencies.
Cash and investments with fiscal agent as of June 30, 1993 consisted of $1,254,512 of money
market funds (of which $106,501 were insured or collateralized with securities held by the
City or its agent in the City's name) and $2,634,952 of U.S. government and government
agency securities (with a market value of $2,663,202).
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NOTES TO FINANCIAL STATEMENTS
Note 3. Cash and Investments, Continued
Other investments are categorized in the following schedule to give an indication of the
level of risk assumed by the entity at year end.
Investment Type
Carrying Market
U.S. government and
government agency
securities $ - $ $ 3,533,937 $ 3,533,937 $ 3,624,953
State and municipal bonds - 1,147,504 1,147,504 1,142,971
Corporate bonds - 1.685.571 1,685.571 1,699,408
$ - $ $ 6,367,012 $ 6,367,012 $ 6,467,332
Investment in State
Treasurer's Investment
Pool 8,234,624 8,234,624
Total other investments $14,601,636--111701 ..956
Annuity contracts and cash in bank include $240,236 and $17,859, respectively, in the City's
deferred compensation plan as of June 30, 1993. The annuity contracts are recorded at
market value and would be included in Category #3.
The three preceding risk description categories are defined as follows:
Cateeorv
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 counterparty'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 counterparty's trust department (if a bank) or agent but not in
the City's name.
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NOTES TO FINANCIAL STATEMENTS
Receivables as of June 30, 1993 consist of the following:
Note 4. Receivables
Special
Debt Capital
General
Revenue
Service Proiects
Total
Property tax increment
$ -
$ -
$ - $ 382,366
$ 382,366
Accrued interest
68,835
76,983
33,374 57,316
236,508
Due from local utility
companies
760,954
-
- -
760,954
Due from other
governmental agencies
547,000
442,580
- -
989,580
Transient occupancy tax
183,793
-
- -
183,793
Other
130,608
- -
130,608
$ 1,691,190 $ 519,563 $ 33,374 $ 439,682 $ 203,809
" During the year ended June 30, 1990, the Agency approved a reimbursement agreement
with a local utility company, advancing the utility company funds required to replace
various water mains. The total amount advanced under this agreement was $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.
During the year ended June 30, 1987, the Agency approved a similar 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
$493,801. 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, 1993, the Agency approved an additional reimburse-
ment 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.
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NOTES TO FINANCIAL STATEMENTS
Note 5. Interfund Receivables and Payables
Interfund receivables and payables as of June 30, 1993 are as follows:
General Fund
Special Revenue Funds:
Traffic Safety
State Gas Tax
Local Transportation Fund
Community Development Block Grant
Community Parkland Grant Fund
Low-Moderate Income Housing Set-Aside Fund
Capital Projects Fund
Interfund
Receivables Payables
$ 156,093 $ 94,992
$ -
$ 3,489
110,014
-
76,398
47,862
-
100,857
3,489
-
692,386
$ 882,287
$ 152,208
$ 970
$ 792,150
1,039,350
$ 1,039,350
Note 6. Property and Equipment
Changes in property and equipment during the year ended June 30, 1993 were as follows:
Balance
Balance
June 30,
June 30,
1992
Acquisitions Disposals
1993
Land
$ 2,893,234
$ - $
$ 2,893,234
Buildings and
improvements
3,442,655
28,252
3,470,907
Vehicles
308,248
21,287 98,947
230,588
Furniture and
office equipment
770,977
22,705 -
7931682
Special equipment
and machinery
489,063
1,702
490,765
Other improvements
748,492
- -
748,492
8,652,669
$ 73,946 $ 98,947
$ 8,627,668
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NOTES TO FINANCIAL STATEMENTS
Note 7. Employee Pension Plans
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 contributions to this
plan for the fiscal year ended June 30, 1993. 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 (PERS). The value of the annuity contract
was $249,552 as of June 30, 1993.
Effective November 1, 1992, the City became a member of PERS, an agent multiple-
employer public employee retirement system that acts as a common investment and
administrative agent for cities in the State. The City's payroll for employees covered by
PERS for the year ended June 30, 1993 was approximately $855,000 and total payroll was
approximately $1,231,000.
All full-time City employees are eligible to participate in PERS. Benefits vest after five
years of service. City employees who retire at or after age 50 with five years of credited
service are entitled to an annual retirement benefit, payable monthly for life. Retirement
benefits are calculated using a formula which multiplies years of credited service by a sliding
scale (based on age) by the employee's highest annual salary during service.
PERS also provides death and disability benefits to participating employees.
Benefit provisions and all other requirements are established by state statute and City
ordinance.
Employees are required to contribute 7% of their salary to the plan. The City contributes
the employee's portion as well as the remaining contribution requirement required to fund
the plan.
PERS has in its investments no securities in the form of bonds, notes, leases receivable,
loans or any other instrument representing debt of the City or any of the other governments
included as part of the City's reporting entity, or any parties related to the City or the other
governments included as part of the City's reporting entity.
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NOTES TO FINANCIAL STATEMENTS
Funding status and progress
Note 7. Employee Pension Plans, Continued
Starting with the fiscal year 1993-94 (the next fiscal year), the City will show the "pension
benefit obligation" as a standardized disclosure measure of the present value of pension
benefits, adjusted for the effects of projected salary increases and step-rate benefits,
estimated to be payable in the future as a result of employee service to date. The measure
will be intended to help users assess the funding status of PERS on a going-concern basis,
assess progress made in accumulating sufficient assets to pay benefits when due, and make
comparisons among employers. The measure will represent the actuarial present value of
credited projected benefits, and will be independent of the funding method used to
determine contributions to PERS.
Since the City started contributing to PERS in November 1992, funding status information
is not presently available.
Actuarially determined contribution requirements and contributions made
PERS' funding policy provides for actuarially determined periodic contributions at rates that,
for individual employees, increase gradually over time so that sufficient assets will be
available to pay benefits when due. The contribution rate for normal cost is determined
using the Entry Age Normal Actuarial Cost method. PERS uses the level percentage of
payroll method to amortize the unfunded liability by June 30, 2000.
The City's calculated contributions to PERS for fiscal year ended June 30, 1993 were
$291,598. The contributions consisted of:
Normal cost $ 131,598
Deposit 160.000
$ 291.598
Amounts of calculated contributions by the City:
City's portion (8.491% of current covered payroll) $ 72,132
Employees' portion (7.0% of current covered payroll) 59.466
$ 131.598
Trend information
Since the City entered PERS in November 1992, trend information is not applicable.
- 19 -
NOTES TO FINANCIAL STATEMENTS
1
I Note 8. Deferred Compensation Agreements
The City has a deferred compensation plan which is organized under Internal Revenue
' Code 457. The plan allows eligible employees to tax defer a portion of their gross income
to future years not to exceed the lesser of $7,500 or 25% of the participant's includible
compensation. The deferred compensation is not available to employees until termination,
' retirement, death or unforeseeable emergency. The deferred compensation and accumulat-
ed earnings thereon totalled $258,095 at June 30, 1993.
' The deferred compensation plan is fully funded by the City as the deferred compensation
is earned by the employees. Plan assets and the related liability to employees are accounted
for in an agency fund at the current market value of the annuity contracts and time
' certificates of deposit.
All amounts of compensation deferred under the plan, all property and rights purchased
' with those amounts, and all income attributable to those amounts, property or rights are
(until paid or made available to the employee or other beneficiary) solely the property and
rights of the City (without being restricted to the provisions of benefits under the plan),
subject only to the claims of the City's general creditors. Participants' rights under the plan
are equal to those of general creditors of the City in an amount equal to the fair market
value of the deferred account for each participant.
The City has no liability for losses under the plan but does have the duty of due care that
' would be required of any ordinary prudent investor. The administrative and reporting
functions of the plan are being handled by an insurance company.
I Note 9. Self-Insurance Obligation
The City of Rosemead is a member of the Southern California Joint Powers Insurance
Authority (a joint powers authority of 68 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 the 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.
For Workers' Compensation claims, the City of Rosemead, through the Authority, has a self-
insured retention of $50,000. The amount exceeding the self-insured retention level will be
shared proratably among the pool up to a maximum of $500,000. Any losses above $500,000
are covered by excess insurance. 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.
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NOTES TO FINANCIAL STATEMENTS
Note 9. Self-Insurance Obligation, Continued
A summary of financial information for the Southern California Joint Powers Insurance
Authority for fiscal year ended June 30, 1992 (1993 information not available) follows:
Total assets
Accounts payable and accrued expenses
Unearned deposits
Unpaid claim liabilities
Total liabilities
Retained earnings
Total liabilities and retained earnings
Other items:
Total revenue
Claims paid
All other expenditures
Net income
Note 10. Long-Tenn Debt
Tax Allocation Notes, Series 1987
$ 70.844.475
$ 193,337
17,588,838
46.034.730
$ 63,816,905
7.027.570
70.844.475
$ 26,962,103
$ 22,565,284
3.575.150 26.140.434
$ 821.669
In August 1987, $14,930,000 of bonds were issued by the Agency to finance public
improvements within the Agency's Project Area No. 1. The bonds outstanding bear interest
from 7.75% to 9.20% with interest payable semiannually on September 1 and March 1.
Principal matures annually on September 1 through 1995. Payment of the bonds is
collateralized by a pledge of tax revenues to be received by the Agency.
Subordinate Lien Tax Allocation Bonds, Series 1991
In October 1991, the Agency issued $11,725,240 of bonds to finance public improvements
within the Agency's Project Area No. 1. The bonds outstanding bear interest ranging from
5.80% to 6.75% with interest compounded on each October 1 and April 1 and payable at
maturity. Principal matures annually on October 1, 1996 through 2002. Payment of the
bonds is collateralized by a pledge of tax revenues to be received by the Agency.
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NOTES TO FINANCIAL STATEMENTS
Compensated absences
Note 10. Long-Term Debt, Continued
That portion of the liability for the vested compensated absences totalling $124,165 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 group of accounts for an estimated
litigation settlement and amounts owed the State of California, which were a result of the
state budget (see Note 13).
The following is a summary of the general long-term debt transactions for the year ended
June 30, 1993.
Balance,
June 30, 1992
(Payments) of
principal
Increase
Balance,
June 30, 1993
Accrued
Tax
Tax
Vacation
California
Allocation
Allocation
and
Budget
Estimated
Bonds
Notes
Compensatory
Trailer
Litigation
Series 1991
Series 1987
Time
Bill SB1135
Settlement Total
$ 11,725,240 $ 8,605,000 $ 111,312 $ - $ - $20,441,552
- (1,900,000) (1,900,000)
12.853 175,288 950.000 1,138,141
$11,725240 $ 6,705,000 $ 124,165 $ 175,288 $ 950,000 $ 19,679,693
The annual requirements, principal and interest, to amortize the outstanding debt as of
June 30, 1993, are as follows:
Tax
Tax
California
Allocation
Allocation
Budget
Years Ending
Bonds
Notes
Trailer
June 30,
Series 1991
Series 1987
Bill SB1135
Interest
Total
1994
$ -
$ 2,055,000
$ 175,288
$ 496,781
$ 2,727,069
1995
-
2,230,000
-
309,312
2,539,312
1996
-
2,420,000
-
105,875
2,525,875
1997
2,065,091
-
-
679,909
2,745,000
1998
1,927,813
-
817,187
2,745,000
Thereafter
7.732336
-
5.992.664
13.725.000
$ 11,725,240 $ 6,705,000 $ 175,288 $ 8,401328 $27,007,256
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' NOTES TO FINANCIAL STATEMENTS
Note 11. Low-Moderate Income Housing Set-Aside Fund
In October 1991, the Agency funded its Low-Moderate Income Housing Set-Aside Fund
' with $6,813,850 of proceeds from the Tax Allocation Notes, Series 1987. This amount was
deposited in the Low-Moderate Income Housing Fund to satisfy set-aside requirements, at
a rate of $870,700 per year, for fiscal years 1991-1992 through 2002-2003. While the law in
' California is not specific on the issue, the Agency takes the position that the Housing Fund
set-aside requirement may be prepaid in this manner.
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As a result of the $6,813,850 deposit described above, the $870,700, otherwise required to
be deposited in the Low-Moderate Income Housing Fund in each such year, will be made
available as tax revenues. On November 2, 1993, the $6,813,850 deposit was restructured
(see Note 14).
Note 12. Tax Increment Shift to Fund Education in California
In September 1992, the State of California passed its annual budget for the period July 1,
1992 through June 30, 1993. Included in the budget were substantial cuts in funding to
cities, including Redevelopment Agencies, to help offset the cost of education in California.
The funding cuts equated to $580,791 for the Agency. This amount was paid on May 10,
1993.
Of this amount ($580,791), $423,574 was borrowed for the 20% Low-Moderate Income
Housing Fund. On November 2, 1993, the Agency paid back the 20% Low-Moderate
Income Housing Fund with a portion of the reallocation of the $6,813,850 which was
prefunded in October 1991 (see Note 14).
Low-Moderate Income Housing Set-Aside Fund
Note 13. Commitments and Contingencies
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
year ended June 30, 1991, it was allowed to defer funding of the set-aside. As of June 30,
1993 (no additional deferrals after June 30, 1991), the accumulated set-aside amount not yet
funded was approximately $3,982,000. The law requires the Agency to devise a plan to fund
the accumulating amount and to begin funding it by 1996.
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NOTES TO FINANCIAL STATEMENTS
Litigation
Note 13. Commitments and Contingencies, Continued
The City is a defendant in a lawsuit along with 13 other cities, the County of Los Angeles,
five county garbage collection districts and the State of California, for reimbursement of
landfill cleanup costs of hazardous waste dumped between 1948 and 1984. The plaintiffs
claim that the cities either accepted for transport or arranged for disposal or treatment of
municipal waste which contained hazardous materials. The plaintiffs also claim that these
materials have been released from the landfill into the environment. The trial has been
divided into several phases. On October 29, 1992, the court issued its ruling against the
defendant cities on the issue of liability. No trial dates have been set for the remaining
phases of the trial which will determine the allocation of liability between the defendants.
The parties have engaged in settlement negotiations and a tentative agreement has been
reached. The City estimates that its total settlement in this matter is approximately
$950,000. This amount is included in the City's long-term group of accounts as of June 30,
1993. In addition, the City enacted a user fee, imposed on residential and commercial
refuse bills, that would also help offset any recovery against the City.
State of California Budget Trailer Bill SB1135
In June 1993, the State of California adopted budget Trailer Bill SB1135 requiring
Redevelopment Agencies to help offset the cost of education in California. The Trailer Bill
affected cities by 5.675% of net property tax increment of the 1990-1991 fiscal year, which
equates to $175,288 for the Agency. This amount will be paid May 10, 1994 from the Low-
Moderate Income Housing Set-Aside Fund, and will reduce the amount of property tax
revenue that the Agency will record for the fiscal year ending June 30, 1994.
Note 14. Subsequent Events
Tar Allocation Bonds Series 1993
On November 2, 1993, the Agency issued tax allocation bonds amounting to $34,275,000
(Series 1993A) and taxable tax allocation refunding bonds amounting to $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
1993 A and B, respectively.
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NOTES TO FINANCIAL STATEMENTS
' Note 14. Subsequent Events, Continued
The notes will be repaid with tax increment revenues of the project area and are scheduled
' to mature as follows:
During the
Year Ending Series 1993A Bonds Series 19938 Bonds
June 30, Principal Interest Principal Interest Total
1994 $ $ 1,892,193 $ 260,000 $ 133,720 $ 2,285,913
' 1995 1,892,193 265,000 120,200 2,277,393
1996 1,892,193 280,000 106,420 2,278,613
1997 1,892,193 295,000 91,860 2,279,053
' 1998 1,892,193 310,000 76,520 2,278,713
Years thereafter 34,275,000 45,521163 1,025,000 120,780 80,943,943
' Total $34,275,000 $54,984,128 $ 2,435,000 $ 649,500 $92,343,628
In addition, the $6,813,850 deposited in the Low-Moderate Income Housing Set-Aside Fund
' in October 1991 (see Note 8) was reallocated as follows:
• Satisfied the Housing Set-Aside requirements for the fiscal years ended June 30, 1992
and 1993 totalling $812,342 and $847,147, respectively,
• Repayment of the ERAF loan from the Housing Fund in the amount of $423,574,
' which is payable on June 30, 2003 (assuming a present value factor equal to the
Agency's Series 1993A Bonds),
' • The fiscal year ending June 30, 1994, 1995 and 1996 obligation is deferred until the
fiscal year ending June 30, 2023, as provided by the Agency's adoption of a housing
deficit repayment plan, and
' • Satisfies the Housing Set-Aside requirements for the fiscal years ending June 30, 1997
through June 30, 2022 at a rate of $451,187 per year.
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Pasadena, California
September 21, 1993
LNNIS
McGLADREY & PULLEN
Certified Public Accountants and ConsukaMs
INDEPENDENT AUDITORS' REPORT
ON THE SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
To the Honorable Mayor
and Members of the City Council
City of Rosemead
Rosemead, California
We have audited the general purpose financial statements of the City of Rosemead,
California,. as of and for the year ended June 30, 1993 and have issued our report thereon
dated September 21, 1993. 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
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 relation to the general purpose financial statements taken as a whole.
Our audit was made for the purpose of forming an opinion on the general purpose financial
statements of the City of Rosemead, California, taken as a whole. The accompanying
schedule of federal financial assistance is presented for purposes of additional analysis and
is not a required part of the general purpose financial statements. The information in that
schedule 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
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CITY OF ROSEMEAD, CALIFORNIA
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
Year Ended June 30, 1993
Catalog of
Federal
Domestic
Assistance
Federal Grantor/Pass-Through Grantor /Program Title Number Expenditures
U.S. Department of Housing and Urban Development:
Passed through Los Angeles County Community
Development Commission - Community
Development Block Grant Program - Small Cities
Grants 14.219 L_-2 6 195
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' SECTION II
COMPLIANCE MATTERS AND INTERNAL ACCOUNTING AND
ADMINISTRATIVE CONTROLS
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1 McGLADREY & PULLEN
Certified Public Accountants and Consultants
1
1 INDEPENDENT AUDITORS' STANDARDS REPORT
ON COMPLIANCE BASED ON AN AUDIT OF THE
GENERAL PURPOSE FINANCIAL STATEMENTS
1
1 To the Honorable Mayor
and Members of the City Council
City of Rosemead
1 Rosemead, California
We have audited the general purpose financial statements of the City of Rosemead,
1 California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated September 21, 1993.
1 We conducted our audit in accordance with generally accepted auditing standards and
Government Auditing Standards, issued by the Comptroller General of the United States.
1 Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
1 Compliance with laws, regulations, contracts, and grants applicable to the City of Rosemead,
California, is the responsibility of the City's management. As part of obtaining reasonable
assurance about whether the financial statements are free of material misstatement, we
1 performed tests of the City's compliance with certain provisions of laws, regulations,
contracts and grants. However, the objective of our audit of the financial statements was
not to provide an opinion on overall compliance with such provisions. Accordingly, we do"
1 not express such an opinion.
The results of our tests indicate that, with respect to the items tested, the City of Rosemead,
1 California, complied, in all material respects, with the provisions referred to in the preceding
paragraph. With respect to items not tested, nothing came to our attention that caused us
to believe that the City had not complied, in all material respects, with those provisions.
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1 Pasadena, California
September 21, 1993
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This report is intended for the information of management of the City of Rosemead,
California, the United States Department of Housing and Urban Development via the Los
Angeles County Community Development Commission and California State Controller's
Office (Division of Audits and Division of Local Government Fiscal Affairs). However, this
report is a matter of public record and its distribution is not limited.
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McGLADREY & PULLEN
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' REPORT
ON INTERNAL CONTROL STRUCTURE
To the Honorable Mayor
and Members of the City Council
City of Rosemead
Rosemead, California
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We have audited the general purpose financial statements of the City of Rosemead,
California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated September 21, 1993.
We conducted our audit in accordance with generally accepted auditing standards and
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.
In planning and performing our audit of the financial statements of the City of Rosemead,
California, for the year ended June 30, 1993, we considered its internal control structure in
order to determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and not to provide assurance on the internal control structure.
The management of the City of Rosemead, California, is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected benefits and related costs
of internal control structure policies and procedures. The objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition, and that transactions are
executed in accordance with management's authorization and recorded properly to permit
the preparation of financial statements in accordance with generally accepted accounting
principles. Because of inherent limitations in any internal control structure, errors or
irregularities may nevertheless occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that procedures may become
inadequate because of changes in conditions or that the effectiveness of the design and
operation of policies and procedures may deteriorate.
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For the purpose of this report, we have classified the significant internal control structure
policies and procedures in the following categories:
• Revenue
Fee
Service
Miscellaneous sources
• Receipts
• Expenditures/expenses
Purchasing
Acquisition and disposal of fixed assets
Cash disbursements
Payroll
• Financing
Investments
Debt issuance
• Financial reporting
General requirements:
• Political activity
• Davis-Bacon Act
• Civil rights enforcement and administration
• Cash management
• Real property acquisition and management
• Federal financial reports
• Allowable costs/cost principles
• Drug-free workplace
• Administrative requirements
Special requirements:
• Types of services allowed and unallowed
• Reporting
• Cost allocation
• Timing of expenditures
• Environmental reviews
• Program income
For all of the internal control structure categories listed above, we obtained an
understanding of the design of relevant policies and procedures and whether they have been
placed in operation, and we assessed control risk.
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' Our consideration of the internal control structure would not necessarily disclose all matters
in the internal control structure that might be material weaknesses under standards
' established by the American Institute of Certified Public Accountants. A material weakness
is a reportable condition in which the design or operation of one or more of the internal
control structure elements does not reduce to a relatively low level the risk that errors or
' irregularities in amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. We noted no matters involving the internal
' control structure and its operation that we consider to be material weaknesses as defined
above.
' This report is intended for the information of management of the City of Rosemead,
California, the United States Department of Housing and Urban Development via the Los
Angeles County Community Development Commission and California State Controller's
' Office (Division of Audits and Division of Local Government Fiscal Affairs). However, this
report is a matter of public record and its distribution is not limited.
' Pasadena, California
September 21, 1993
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II McGLADREY & PULLEN
Certified Public Accountants and Consultants
' INDEPENDENT AUDITORS' REPORT
ON COMPLIANCE REQUIREMENTS APPLICABLE TO
MAJOR FEDERAL FINANCIAL ASSISTANCE PROGRAMS
' To the Honorable Mayor
and Members of the City Council
City of Rosemead
' Rosemead, California
We have audited the general purpose financial statements of the City of Rosemead,
' California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated September 21, 1993.
' We have also audited the City of Rosemead, California's compliance with the requirements
governing:
'
types of services allowed or not allowed;
• reporting;
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timing of expenditures;
• environmental reviews; and
• program income;
'
and have determined whether
• federal financial reports and claims for advances and reimbursements contain
information that is supported by the books and records from which the basic financial
statements have been prepared; and
' amounts claimed were determined in accordance with OMB Circular A-87 and OMB's
Common Rule
that are applicable to its major federal financial assistance program, which is identified in
the accompanying schedule of federal financial assistance, for the year ended June 30, 1993.
The management of the City is responsible for the City's compliance with those
requirements. Our responsibility is to express an opinion on compliance with those
requirements based on our audit.
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We conducted our audit of compliance with those requirements in accordance with generally
accepted auditing standards; Government Auditing Standards, issued by the Comptroller
General of the United States; and OMB Circular A-128, Audits of State and Local
Governments. Those standards and OMB Circular A-128 require that we plan and perform
the audit to obtain reasonable assurance about whether material noncompliance with the
requirements referred to above occurred. An audit includes examining, on a test basis,
evidence about the City's compliance with those requirements. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the City of Rosemead, California, complied in all material respects with the
requirements governing:
• types of services allowed or not allowed;
• reporting;
• timing of expenditures;
• environmental reviews;
• program income;
• preparation of federal financial reports and claims for advances and reimbursements
from information that is supported by the books and records from which the basic
financial statements have been prepared; and
• calculation and determination of amounts claimed in accordance with the requirements
of OMB Circular A-87 and OMB's Common Rule
that are applicable to each of its major federal financial assistance programs for the year
ended June 30, 1993.
This report is intended for the information of management of the City of Rosemead,
California, the United States Department of Housing and Urban Development via the Los
Angeles County Community Development Commission and California State Controller's
Office (Division of Audits and Division of Local Government Fiscal Affairs). However, this
report is a matter of public record and its distribution is not limited.
Pasadena, California
September 21, 1993
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McGLADREY & PULLEN
Certified Public Accountants and Consultants
' INDEPENDENT AUDITORS' REPORT
ON COMPLIANCE WITH THE GENERAL REQUIREMENTS
APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS
' To the Honorable Mayor
and Members of the City Council
City of Rosemead
' Rosemead, California
We have audited the general purpose financial statements of the City of Rosemead,
' California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated September 21, 1993.
' We have applied procedures to test the City's compliance with the following requirements
applicable to its federal financial assistance programs, which are identified in the schedule
' of federal financial assistance, for the year ended June 30, 1993:
• Political activity
' Davis-Bacon Act
• Civil rights
• Cash management
' Real property acquisition
• Federal financial reports
• Allowable costs/costs principles
' • Drug-free workplace
• Administrative requirements
' Our procedures were limited to the applicable procedures described in the Office of
Management and Budget's Compliance Supplement for Single Audits of State and Local
Governments. Our procedures were substantially less in scope than an audit, the objective
of which is the expression of an opinion on the City's compliance with the requirements
listed in the preceding paragraph. Accordingly, we do not express such an opinion.
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With respect to the items tested, the results of those procedures disclosed no material
instances of noncompliance with the requirements listed in the second paragraph of this
' report. With respect to items not tested, nothing came to our attention that caused us to
believe that the City had not complied, in all material respects, with those requirements.
' This report is intended for the information of management of the City of Rosemead,
California, the United States Department of Housing and Urban Development via the Los
Angeles County Community Development Commission and California State Controller's
' Office (Division of Audits and Division of Local Government Fiscal Affairs). However, this
report is a matter of public record and its distribution is not limited.
' Pasadena, California
September 21, 1993
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McGLADREY & PULLEN
Certified Public Accountants and Consultants
' INDEPENDENT AUDITORS' REPORT
ON THE INTERNAL CONTROL STRUCTURE USED IN
ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS
' To the Honorable Mayor
and Members of the City Council
City of Rosemead
' Rosemead, California
We have audited the general purpose financial statements of the City of Rosemead,
' California, as of and for the year ended June 30, 1993, and have issued our report thereon
dated September 21, 1993. We have also audited the City's compliance with requirements
applicable to its major federal financial assistance program and have issued our report
' thereon dated September 21, 1993.
' We conducted our audits in accordance with generally accepted auditing standards;
Government Auditing Standards, issued by the Comptroller General of the United States; and
Office of Management and Budget (OMB) Circular A-128, Audits of State and Local
Governments. Those standards and OMB Circular A-128 require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement and about whether the City complied with laws and regulations,
' noncompliance with which would be material to the major federal financial assistance
program.
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In planning and performing our audits for the year ended June 30, 1993, we considered the
City's internal control structure in order to determine our auditing procedures for the
purpose of expressing our opinions on the City's financial statements and on its compliance
with requirements applicable to its major federal financial assistance program, and to report
on the internal control structure in accordance with OMB Circular A-128. This report
addresses our consideration of internal control structure policies and procedures relevant
to compliance with requirements applicable to federal financial assistance programs. We
have addressed internal control structure policies and procedures relevant to our audit of
the financial statements in a separate report dated September 21, 1993.
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The management of the City is responsible for establishing and maintaining an internal
control structure. In fulfilling this responsibility, estimates and judgements by management
are required to assess the expected benefits and related costs of internal control structure
policies and procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, that transactions are executed in accordance with
management's authorization and recorded properly to permit the preparation of financial
statements in accordance with generally accepted accounting principles, and that federal
financial assistance programs are managed in compliance with applicable laws and
regulations. Because of inherent limitations in any internal control structure, errors,
irregularities or instances of noncompliance may nevertheless occur and not be detected.
Also, projection of any evaluation of the structure to future periods is subject to the risk that
procedures may become inadequate because of changes in conditions or that the
effectiveness of the design and operation of policies and procedures may deteriorate.
For the purpose of this report, we have classified the significant internal control structure
policies and procedures used in administering federal financial assistance programs in the
following categories:
General requirements:
• Political activity
• Davis-Bacon Act
• Civil rights enforcement and administration
• Cash management
• Real property acquisition and management
• Federal financial reports
• Allowable costs/cost principles
• Drug-free workplace
• Administrative requirements
Specific requirements:
• Types of services allowed and unallowed
• Reporting
• Cost allocation
• Timing of expenditures
• Environmental reviews
• Program income
For all of the internal control structure categories listed above, we obtained an
understanding of the design of relevant policies and procedures and determined whether
they have been placed in operation, and we assessed control risk.
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During the year ended June 30, 1993, the City expended 100 percent of its total federal
financial assistance under one major federal financial assistance program.
e We performed tests of controls, as required by OMB Circular A-128, to evaluate the
effectiveness of the design and operation of internal control structure policies and
procedures that we considered relevant to preventing or detecting material noncompliance
with specific requirements, general requirements, and requirements governing claims for
advances and reimbursements and amounts claimed or used for matching that are applicable
to the City's major federal financial assistance program, which is identified in the
accompanying schedule of federal financial assistance. Our procedures were less in scope
than would be necessary to render an opinion on these internal control structure policies
and procedures. Accordingly, we do not express such an opinion.
Our consideration of the internal control structure policies and procedures used in
administering federal financial assistance would not necessarily disclose all matters in the
internal control structure that might constitute material weaknesses under standards
established by the American Institute of Certified Public Accountants. A material weakness
is a condition in which the design or operation of one or more of the internal control
structure elements does not reduce to a relatively low level the risk that noncompliance with
laws and regulations that would be material to a federal financial assistance program may
occur and not be detected within a timely period by employees in the normal course of
performing their assigned functions. We noted no matters involving the internal control
' structure and its operation that we consider to be material weaknesses as defined above.
This report is intended for the information of management of the City of Rosemead,
California, the United States Department of Housing and Urban Development via the Los
Angeles County Community Development Commission, and California State Controller's
Office (Division of Audits and Division of Local Government Fiscal Affairs). However, this
' report is a matter of public record and its distribution is not limited.
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' Pasadena, California
September 21, 1993
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