CC - Item 5C - Transmittal of Fiscal Year 2016/17 City of Rosemead and Housing Corporation Annial Financial Reports E M F
p te, ROSEMEAD CITY COUNCIL
STAFF REPORT
"tORI
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: GLORIA MOLLEDA, CITY MANAGER
DATE: JANUARY 23. 2018 Lt
SUBJECT: TRANSMITTAL OF FISCAL YEAR 2016/17 CITY OF ROSEMEAD AND
ROSEMEAD HOUSING CORPORATION ANNUAL FINANCIAL
REPORTS
SUMMARY
This report provides the Fiscal Year (FY) 2016/17 annual financial reports for the City of
Rosemead and the Rosemead Housing Development Corporation to the City Council. The City
of Rosemead Comprehensive Annual Financial Report (CAFR) (Attachment A) and Rosemead
Housing Development Corporation Financial and Compliance Report (Attachment B) provide a
complete presentation of the finances of each of the above-mentioned organizations.
DISCUSSION
After the close of each fiscal year, the Finance Department is responsible for the preparation and
publication of the City's CAFR following an independent, certified audit. The goal of the
financial audit and report is to provide users with a reasonable assurance that the information
presented in the statements is accurate and timely.
The CAFR presents information on the status of the City's financial affairs, first on a citywide
basis (Government-Wide Financial Statements) in which all City activities are reported as
governmental activities. A second set of statements (Fund Financial Statements) report
separately, the activities of all City funds.
The CAFR is organized into three primary sections:
1. Introductory Section — which includes the Finance Director's Letter of Transmittal, List
of Principal Officials, and the Organizational Chart.
2. Financial Section — which includes the Independent Auditor's Report, Management's
Discussion and Analysis, and the general purpose financial statements consisting of the
combined financial statements, notes to the financial statements, and supplemental
statements.
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January 23,2018
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3. Statistical Section — which includes comparative information on pertinent City data such
as expenditures, revenues, assessed valuations, tax levies, demographic data, and
performance measurements.
The CAFR is utilized by the investment community, including bond buyers, underwriters, bond
issuers, and credit rating agencies. The CAFR serves as a public information tool in the form of
a comprehensive presentation of all the City's financial activities.
ANALYSIS
For FY 2016/17, the accounting firm of Rogers, Anderson, Malody & Scott, LLP performed an
independent audit to determine the financial statements are fairly presented and free from
material misstatement. The independent auditor concluded there was a reasonable basis for
rendering an unmodified opinion, and that the City's financial statements are fairly presented in
conformity with Generally Accepted Accounting Principles (GAAP). An unmodified opinion
provides a high level of assurance that a professional, independent examination of financial
statements has not revealed any actual or possible material misstatements in those financial
statements.
Listed below are the financial highlights for FY 2016/17:
• General Fund fund balance at the end of Fiscal Year 2016/17 increased $566 thousand.
This increase is largely due to an increase in sales tax and transient occupancy tax
revenues.
• At the end of the current fiscal year, unassigned fund balance for the General Fund was
$11.3 million or 54% of total General Fund expenditures. $6.9 million or 31% is set aside
to meet the City's reserve policy.
• The assets related to Governmental Activities has increased by approximately $2.8
million, which is largely due to an increase in both cash and investments and capital
assets.
There are two primary citywide financial statements: the Statement of Net Position and the
Statement of Activities. Like a balance sheet in private sector accounting, the Statement of Net
Position presents the City's overall financial position at a specific point in time — in the City's
Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2017 case, this is as of
the last day of the fiscal year (i.e., June 30). The Statement of Activities is similar to the income
statement, presenting the City's results of operations over a period of time.
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January 23,2018
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City of Rosemead's Net Position
As of June 30, 2017 and 2016
(thousands)
Current and other assets 27,620 26,130
Capital assets 52,806 51,542
Total assets 80,426 77,672
Deferred outflows of resources 5,018 2,937
Long-term liabilities outstanding 8,876 8,826
Other liabilities 2,652 2,216
Total liabilities 11,528 11,042
Deferred inflows of resources 1,033 910
Net assets:
Invested in capital assets, net of related debt 52,806 51,542
Restricted 4,387 4,006
Unrestricted 15,690 13,109
Total net position $ 72,883 $ 68,657
As noted earlier, net position may serve over time as a useful indicator of a government's
financial position. In the case of the City of Rosemead, assets exceeded liabilities (net position)
by $72.9 million at the close of the most recent fiscal year.
A significant portion of the City of Rosemead's net position (72%) reflects its investment in
capital assets (e.g. land, buildings, machinery, and equipment); less any related outstanding debt
used to acquire those assets. The City of Rosemead uses these capital assets to provide services
to the citizens; consequently, these assets are not available for future spending.
Although the City of Rosemead's investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other
sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of the City of Rosemead's net position (6%) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted
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January 23, 2018
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net position ($15.7 million) may he used to meet the government's ongoing obligations to
citizens and creditors.
At the end of the current fiscal year, the City of Rosemead is able to report positive net position
balances. The situation also held true for the prior fiscal year.
City of Rosemead's Changes in Net Position
Years Ended June 30, 2017 and 2016
(thousands)
Program revenues:
Chargesforservices $ 4,646 $ 4,400
Operating grants and contributions 5,636 5,848
Capital grants and contributions 1,019 973
General revenues:
Property taxes 8,643 9,158
Other taxes 8,804 7,333
Investment income 20 349
Other 738 945
Total revenues 29,506 29,006
Expenses:
General government 3,706 3,217
Public safety 8935 8,382
Public works 7,324 8739
Community development 3,161 3,246
Parks and recreation 2,154 2,073
Interest on long-term debt - 1
Total expenses 25,280 25,658
Change in net position 4,226 3,348
Net position -lune 30,2016 68657 65,309
Net position -June 30, 2017 $ 72,883 $ 68,657
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January 23,2018
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Governmental activities increased the City of Rosemead's net position by $4.2 million. General
revenue and program revenue exceeded expenses by this amount. The expenses increased in
General Government and Public Safety; however, the total Program and General Revenues offset
these increases. These expense increases are largely due to salary and benefit costs as well as
law enforcement increases.
General Fund
The General Fund is the chief operating fund of the City of Rosemead. At the end of the current
fiscal year, the unassigned fund balance of the general fund was $11.3 million, while total fund
balance reached $19 million. As a measure of the General Fund's liquidity, it may be useful to
compare both unassigned fund balance and total fund balance to total fund expenditures.
Unassigned fund balance represents 54% of total General Fund expenditures, while total fund
balance represents 91% of that same amount.
The fund balance of the City of Rosemead's General Fund increased by $566 thousand during
the current year. Highlights of the change in fund balance are presented below:
• The General Fund revenues exceeded expenditures and; therefore, fund balance had an
increase of $566 thousand. Several revenues had large increases including Sales Tax,
transient occupancy tax (TOT), and Licenses and Permits. Additional highlights of the
change in fund balance are presented below.
• General Fund revenues increased $816 thousand in FY 2016/17 over the prior year. The
largest revenue categories were: property tax increased $130 thousand, sales tax
increased $1.2 million, TOT increased $214 thousand and building permits and public
works permits increased $189 thousand. The substantial increase in both building
permits and public works permits is a result of increased development projects in the
City. The TOT increase is a result of the improved economy and tourism activity within
California on the rise. Sales tax growth is attributed to growth in the overall economy
and in consumer spending. In the prior year, the City no longer received property tax in
lieu. This attributed to a$912 thousand decrease in property tax in lieu: therefore, causing
the net increase in the general fund to be only $816 thousand for the current year.
• General Fund expenditures increased $2.2 million over the prior year due to an increase
in legal fees of $146 thousand as a result of attorney fee increases and litigations, IIR
consultant fees of $42 thousand, and general liability and worker's comp insurance
increase of$149 thousand relating to retrospective deposits billed from CJPIA.
• Sales tax consultant fees increased $60 thousand. As a result of the sales tax audits
conducted, the City saw an increase in sales tax revenues.
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January 23,2018
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• Community development expenditures increased $134 thousand due to an increase in
building and planning costs; however, these costs were offset by building permit and plan
check revenues.
• Public safety expenditures is one of the City's largest area of expenditures. The Los
Angeles County's Sheriffs Department contract increased by 3.8% over the previous
year and the Liability Trust Fund increased as well. This attributed to an increase in
public safety expenditures of$485 thousand.
• Public works expenditures increased $318 thousand primarily due to $200 thousand
increase in engineering costs, $58 thousand in tree maintenance costs, and $49 thousand
in water costs. In the prior year, the City had turnover in the Public Works department
causing a backlog in capital improvement projects. In the current year, the City was able
to complete some of the capital improvement projects that were delayed in the prior year,
which attributed to increased engineering costs and tree maintenance costs. The increase
in water costs is a result of new parks and facilities in the City.
• Parks and recreation expenditures increased primarily due to additional staffing in FY
2016/17. The department hired a new Parks and Recreation Manager and converted a'/,
part-time staff into a full-time staff. This attributed to the increase of $134 thousand in
parks and recreation expenditures.
• The City was also faced with an increase in retirement costs as a result of the discount
rate and assumption changes approved by the CaIPERS board, which impacted the
actuarial valuation performed and this caused an increase to participants' retirement
contributions.
Rosemead Housing Development Corporation(RI-MCI
The RHDC Fund receives its funding from tenant rents and subsidies from the Successor
Agency. As operational costs have continued to increase and tenant rents have remained
relatively constant, the reliance on the subsidy from the Successor Agency has become more
important. Through the elimination of redevelopment, this obligation was submitted and
subsequently approved by the Department of Finance as an enforceable obligation, which will
ensure ongoing funding for the RHDC into the future. As such, revenues and expenditures in
this fund will typically balance out at the end of each fiscal year with just a minimal balance
remaining due to timing issues.
In conclusion, the City continues to remain in satisfactory financial condition thanks to a
relatively diverse and stable revenue base including sales tax, property tax, TOT, and various
licenses and permits. Property tax is the City's largest tax source at $8.6 million, sales tax as the
second largest revenue source at $5.4 million, and "f0T at $2.2 million. The aggregate debt
service payments are reduced by $3.1 million due to the City's prudent decision to refinance the
Series 2006A and 2006B Tax Allocation Bonds. This resulted in a present value economic gain
City Council Meeting
January 23,2018
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of$2.3 million. The City is ending its fiscal year 2016/17 with a healthy General Fund Balance
of$19 million.
The preparation and publication of this report is made possible through the dedication of the
entire Finance Department staff The department coordinated the closing of the books for the
fiscal year, ensuring timely and accurate reporting. This report would also not have been
possible without the leadership of the City Manager and continued commitment from the Mayor
and City Council in conducting the financial operations and corresponding financial disclosures
of the City in an open, public and transparent manner.
STAFF RECOMMENDATION
It is recommended that the City Council receive and file the City of Rosemead Comprehensive
Annual Financial Report (CAFR) and the Rosemead Housing Development Corporation
(RHDC) Annual Financial and Compliance Report for the Fiscal Year ending June 30, 2017.
FISCAL IMPACT
There is no fiscal impact as this is a receive and file item.
STRATEGIC PLAN IMPACT
This item relates to the Strategic Plan's Strategy 5: Finance, Action Item A; to improve
transparency and communication with the public regarding continuous monitoring and internal
controls of City finances.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Prepared
ep _ by:
Pearl Lieu, Finance Director
Attachment A:City of Rosemead Comprehensive Annual Report
Attachment B:Rosemead Housing Development Corporation Financial and Compliance Report
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City of Rosemead Comprehensive Annual Report
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CITY OF ROSEMEAD
Rosemead, California
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2017
4
Prepared by the Finance Department
Pearl Lieu
Director of Finance
(This page intentionally left blank)
CITY OF ROSEMEAD
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2017
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal
Directory of Officials vi
Organizational Chart vii
FINANCIAL SECTION
Independent Auditor's Report 1
Management's Discussion and Analysis (Required Supplementary Information) 4
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position 15
Statement of Activities 16
Fund Financial Statements:
Governmental Funds:
Balance Sheet 17
Reconciliation of the Governmental Funds Balance Sheet to the
Government Wide Statement of Net Position 19
Statement of Revenues, Expenditures, and Changes in Fund Balances 20
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balance to the Government
Wide Statement of Activities 22
Internal Service Funds:
Statement of Net Position 23
Statement of Revenues, Expenses, and Changes in Net Position 24
Statement of Cash Flows 25
Fiduciary Funds:
Statement of Fiduciary Net Position 26
Statement of Changes in Fiduciary Net Position 27
Notes to the Basic Financial Statements 28
REQUIRED SUPPLEMENTARY INFORMATION:
Notes to the Required Supplementary Information 73
Budgetary Comparison Schedule:
General Fund 74
Rosemead Housing Development Corporation —Special Revenue Fund 75
City Capital Project— Capital Projects Fund 76
Other Post-Employment Benefits Plan - Schedule of Funding Progress 77
Schedule of the City's Proportionate Share of the Plan's Net Pension Liability
And Related Ratios as of the Measurement Date—Last 10 Years* 78
Schedule of Plan Contributions—Last 10 Years 79
Schedule of Changes in Net Pension Liability and Related Ratios -
Last 10 Years— Retirement Enhancement Plan 80
Schedule of Plan Contributions— Last 10 Years— Retirement Enhancement 81
Plan
CITY OF ROSEMEAD
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2017
TABLE OF CONTENTS, (continued)
Page
FINANCIAL SECTION, (continued)
OTHER SUPPLEMENTARY INFORMATION
Combining Balance Sheet— Nonmajor Governmental Funds 84
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances— Nonmajor Governmental Funds 88
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual— Community Development Block Grant 92
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — Proposition A 93
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — Proposition C 94
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual —State Gas Tax 95
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual —Air Quality Management District 96
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual— Street Lighting 97
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual— HOME Program 98
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — Measure R 99
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — Development Impact Traffic 100
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — Development Impact Public Safety 101
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — Development Impact General Government 102
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — Development Impact Parks 103
Combining Statement of Net Position — Internal Service Funds 105
Combining Statement of Revenues, Expenses, and Changes in Fund
Net Position — Internal Service Funds 106
Combining Statement of Cash Flows 107
Statement of Changes in Fiduciary Assets and Liabilities—Agency Fund 108
CITY OF ROSEMEAD
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2017
TABLE OF CONTENTS, (continued)
Page
STATISTICAL SECTION
Net Position by Component 109
Changes in Net Position 111
Fund Balances of Governmental Funds 113
Changes in Fund Balances of Governmental Funds 115
Assessed Value and Estimated Actual Value of Taxable Property 117
Direct and Overlapping Property Tax Rates 118
Principal Property Taxpayers 119
Property Tax Levies and Collections 120
Ratios of Outstanding Debt by Type 121
Ratio of General Bonded Debt Outstanding 122
Direct and Overlapping Governmental Activities Debt 123
Legal Debt Margin 124
Pledged-Revenue Coverage 126
Demographic and Economic Statistics 127
Principal Employers 128
Full-time and Part-time City Employees by Function 129
Operating Indicators by Function 130
Capital Assets Statistics by Function 131
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December 28, 2017
To the Honorable Mayor, Members of the City Council, and Citizens of the City of Rosemead:
We proudly present to you the City of Rosemead's Comprehensive Annual Financial Report
(CAFR). This report consists of management's representations concerning the finances of the
City of Rosemead. It was prepared by the Finance Department in accordance with Generally
Accepted Accounting Principles (GAAP) as promulgated by the Government Accounting
Standards Board (GASB). Management assumes full responsibility for the completeness and
reliability of all of the information presented in this report. We believe that the data presented is
complete and reliable in all material respects; that it is presented in a manner designed to fairly
set forth the financial activity of the City's various funds; and that all disclosures necessary to
enable the reader to gain a good understanding of the City's financial activity have been
included.
The City of Rosemead's financial statements have been audited by Rogers, Anderson, Malody
& Scott, LLP ("RAMS"), a firm of licensed certified public accountants. The goal of the
independent audit was to provide reasonable assurance that the financial statements of the City
of Rosemead for the fiscal year ended June 30, 2017, are free of material misstatement. The
independent audit involved examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements; assessing the accounting principles used and significant
estimates made by management; and evaluating the overall financial statement presentation.
The independent auditor concluded, based upon the audit, that there was a reasonable basis for
rendering an unmodified opinion that the City of Rosemead's financial statements for the fiscal
year ended June 30, 2017, are fairly presented in conformity with GAAP. The independent
auditor's report is presented as the first component of the financial section of this report.
The independent audit of the financial statements of the City of Rosemead was part of a
broader, federally mandated "Single Audit" designed to meet the special needs of federal
grantor agencies. The standards governing Single Audit engagements require the independent
auditor to report not only on the fair presentation of the financial statements, but also on the
audited government's internal controls and compliance with legal requirements, with special
emphasis on internal controls and legal requirements involving the administration of federal
awards. These reports are available in the City of Rosemead's separately issued Single Audit
Report. GAAP requires that management provide a narrative introduction, overview, and
analysis to accompany the basic financial statements in the form of Management's Discussion
and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and
should be read in conjunction with it. The City of Rosemead's MD&A can be found immediately
following the report of the independent auditors.
Profile of the Government
The City of Rosemead, incorporated in 1959, is located in the southwestern part of the state.
The City occupies a land area of 5.5 square miles and serves a population of more than 55,000.
The City has operated under the council-manager form of government since 1959. Policy-
making and legislative authority are vested in a governing council consisting of the Mayor and
four other members. The governing council is responsible, among other things, for passing
ordinances, adopting the budget, appointing committees and commissioners, and hiring the
government's manager, attorney and clerk. The government's manager is responsible for
carrying out the policies and ordinances of the governing council, for overseeing the day-to-day
operations of the government, and for appointing the heads of the various departments. The
council is elected on a non-partisan basis. The City Council consists of five members elected to
four-year staggered terms of office. The Mayor is selected from among the City Council
members and serves a one year term.
Many of the functions often provided by municipal government are provided by special districts.
Examples of some of Rosemead's 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 a
variety of other public and private agencies under contract. Some of the contracts in effect
during the fiscal year were for police and street maintenance. The City also has two blended
component units: 1) the Rosemead Financing Authority (the Authority) and 2) the Rosemead
Housing Development Corporation (RHDC). The City of Rosemead also provides a full range of
services, including recreational activities and cultural events. Additional information on all three
of these legally separate entities can be found in Note 1(a) in the notes to the financial
statements.
The annual budget serves as the foundation for the City of Rosemead and its component unit's
financial planning and control. All business units and component units of the City of Rosemead
are required to submit requests for appropriation to the City Manager in mid-March of each year.
The City Manager uses these requests as the starting point for developing a proposed budget.
The City Manager then presents this proposed budget to the City Council for review prior to
June 30. The City Council is required to hold public hearings on the proposed budget and to
adopt a final budget no later than June 30, the close of the City of Rosemead's fiscal year. The
appropriated budget is prepared by fund and department (e.g., public safety). Department
heads, with City Manager approval, may make transfers of appropriations within a department.
Transfers of appropriations between departments, however, require the approval of the City
Council. Budget-to-actual comparisons are provided in this report for each individual
governmental fund for which an appropriated annual budget has been adopted. For the general
fund and major special revenue funds, these comparison schedules are presented as part of the
required supplementary information in the accompanying financial statements. For
governmental funds that have appropriated annual budgets, other than the general fund, and
major special revenue funds, these comparison schedules are presented in the other
supplementary section of the accompanying financial statements.
Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the City of
Rosemead operates.
Local Economy
The City of Rosemead continues to remain in satisfactory financial condition thanks to a
relatively diverse and stable revenue base including sales tax, property tax, transient occupancy
tax, and various licenses and permits. The region has a varied retail and industrial base
including two national general merchandise stores that continues to perform well along with
some new restaurants and retail businesses have helped the City's sales tax to show modest
growth.
Property tax is the City's largest tax source at $8.6 million and make up approximately 38% of
the General Fund revenues. The City experienced a net taxable value increase of 4% for the
2017/18 tax roll, while Los Angeles County experienced an increase in assessed values of 6%
over the prior year due to an increase in residential real estate values. In the City of Rosemead,
assessed values increased by $170 million over FY 2016/17. The housing market has fully
recovered from the recent recession. Current median home prices are at or above the pre-
recession peak values. Inventory constraints are the main contributor to increases in home
prices over the last year. Lack of significant new home construction is one of the main factors
affecting supply. The median sale price of a detached single family residential home in
Rosemead from January through September 2017 was $553,500, which represents a 10.7%
increase in median sale price from 2016. Rosemead's assessed values and property taxes are
expected to continue performing strongly as the general economy improves. Data also show
that Rosemead retains $0.0668 for every dollar of property tax collected within the City.
Sales tax is the second largest revenue source for the General Fund, at $5.4 million and make
up approximately 24% of the General Fund revenues. Our City receives only one cent for every
dollar of sales tax collected within the City. The City has three large general consumer goods
businesses, Walmart, Target and Macy's, who generate 40% of sales tax revenues to the City's
General Fund.
Long-term Financial Planning
In 2009, the City Council embraced the strategic plan process, which enabled us to identify our
threats and opportunities as well as develop strategies and action items to accomplish key
organizational goals. In the summer of 2016, the City Council held several community
workshops that resulted in an updated two-year strategic plan that was adopted by the City
Council. The updated strategic plan serves as a "roadmap' to help City staff navigate the goals
of the community through June 2018. Through the development and refinement of this vital
document, the City Council has affirmed three Key Organizational Goals: 1) Ensure the City's
continued financial viability by actively pursuing quality economic development. 2) Beautify
residential neighborhoods and commercial corridors. 3) Enhance public safety and quality of
life. Many action items designed to meet these goals include pursuing economic development,
combating crime, enhancing the City's public infrastructure and public right-of-way, exploring
parks facilities, and maintaining a structurally balanced General Fund budget. The City's five-
year financial plan is used annually as part of the budget development process to identify capital
and operating needs over the next five years.
iii
Cash management policies and practices
Cash, temporarily idle during the year, was invested in federally insured certificates of deposit,
medium term notes, Federal agency debt issuances, and the State Treasurer's Local Agency
Investment Fund (LAIF). In accordance with State law and the City's more conservative
investment policy, all City investments strictly adhere to the priorities in order of importance, of:
1) safety, 2) liquidity and 3) yield.
Risk Management
The City is a member of the California Joint Powers Insurance Authority (the Authority). The
Authority is composed of over 120 California public entities and is organized under a joint
powers agreement pursuant to California Government Code §6500 et seq. The purpose of the
Authority is to arrange and administer programs for the pooling of self-insured losses, to
purchase excess insurance and reinsurance, and to arrange for group-purchased insurance for
property and other coverage. Additional information can be found in Note 10 in the notes to the
Basic Financial Statements.
Pension and other postemployment benefits
The City of Rosemead is contracted with the California Public Employees Retirement System
(CaIPERS)for retirement benefits for full-time employees. Supplemental retirement benefits are
offered to qualified full-time employees, retirees and part-time employees through Public
Agency Retirement Services (PARS). The City also provides health insurance benefits for
certain qualified retirees. In accordance with GASB Statement No.45, additional information on
the City of Rosemead's pension arrangements and postemployment benefits can be found in
Note 11 in the notes to the Basic Financial Statements.
Debt Administration
The City has no outstanding general obligation bonds as of June 30, 2017. Debt outstanding of
the Successor Agency to the Rosemead Community Development Commission includes the
2016 Tax Allocation Bonds for$24,730,000 and 2010A Tax Allocation Bonds for$7,045,000.
Major Accomplishments
Substantial progress has been made during the past fiscal year toward responding to priorities
previously identified by City Council and staff. Some of those accomplishments include
implementing the Quality of Life Team, completion of the Rosemead Skate Plaza, City
Maintenance Yard, and Temple City Resurfacing project, and improvements to various
roadways, sidewalks, parks, storm water, and traffic signal upgrades. Way Finding signs were
installed throughout the community during fiscal year 2016/17.
iv
Future Initiatives
The City anticipates an increase in TOT due to the opening of the Hartford Hotel in July 2017.
The City anticipates the opening of the Starbucks Drive-Thru and Lucille's Smokehouse BBQ
restaurant. Future projects include Ross, Panda Express, and Hampton Inn and Suites. There
are several mixed-use projects under construction that will be completed in FY 2017/18. All of
these are expected to increase our revenues in the upcoming year. During fiscal year 2017/18,
the City will continue to work on the Garvey Specific Plan which will help revitalize Garvey
Avenue and bring more economic development to the area.
Acknowledgements
The preparation and publication of this report is made possible through the dedication of the
entire Finance Department staff, and especially from Colleen Ishibashi, Finance Services
Supervisor. The department coordinated the closing of the books for the fiscal year, ensuring
timely and accurate reporting. This report would also not have been possible without the
leadership of the City Manager, Bill R. Manis, and continued commitment from the Mayor and
City Council in conducting the financial operations and corresponding financial disclosures of
the City in an open, public and transparent manner. Finally, thanks are extended to the firm of
Rogers, Anderson, Melody & Scott, LLP for their contributions towards improving our financial
reporting.
Respectfully submitted,
Pearl Lieu
Director of Finance
v
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CITY OF ROSEMEAD
Directory of Officials
June 30, 2017
CITY COUNCIL
Polly Low, Mayor
Steven Ly, Mayor Pro Tern
William Alarcon, Council Member
Sandra Armenta, Council Member
Margaret Clark, Council Member
CITY MANAGEMENT
William R. Manis, City Manager
Brad McKinney, Assistant City Manager
Lt. Robert Hahnlein, Chief of Police
Jason C. Chacon, Parks and Recreation Director
Pearl Lieu, Finance Director
Michelle Ramirez, Community Development Director
Vacant, Public Works Director
Marc Donohue, City Clerk
Rachel H. Richman, City Attorney
vi
CITY OF ROSEMEAD
Function Based Organizational Chart
The People
IPlanning � Traffic
Commission Commission
—1 11 City Clerk I City Attorney
I
l
I
L—I Assistant City Manager J
City Manager
—technology& Public Safety
I-- Business Support
Human Community
r_—1 ROSOUralS Development
L—— Finance C Public Works I
IRisk Parks&
L-- Management I Recreation
VII
FINANCIAL SECTION
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RA ROGERS, ANDERSON. MALOOY& SCOTT, LLP
MCERTIFIED PUBLIC ACCOUNTANTS.SINCE 1948
S
735 E.Carnegie Dr. Suite 100
San Bernardino,CA 92408
909 889 0871 T
909 889 5361 F The Honorable Mayor and City Council
ramscpa net City of Rosemead
Rosemead, California
PARTNERS
Brenda L.Odle,CPA MST
Terry P.Shea,CPA Independent Auditor's Report
Kirk A.Franks,CPA
Scott W. Manno.CPA.CGMA
Leena Shanbhag,CPA MST.CGMA
Bradlerd A.Welehir,CPA.MBA.CGMA Report on the Financial Statements
lay H.Zercher,CPA(Partner Emeritus)
Phillip H.Waller,CPA(Partner Emeritus)
We have audited the accompanying financial statements of the
MANAGERS/STAFF governmental activities, each major fund, and the aggregate remaining
Jenny Lill,CPA.MST fund information of City of Rosemead (City), as of and for the year ended
Senng-Hyea Lee CPA,MBA June 30, 2017, and the related notes to the financial statements, which
Charles De Samoni,CPA
Nathan Statham.CPA MBA collectively comprise the City's basic financial statements as listed in the
Gardenya Duran,CPA table of contents.
erianna Schultz,CPA
Lisa Dongsue Guo.CPA.MSA
Management's Responsibility for the Financial Statements
The City's management is responsible for the preparation and fair
presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements
based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those
standards require that we plan and perform the audit to obtain reasonable
MEMBERS assurance about whether the financial statements are free from material
American Institute of
Certified Public Accountants misstatement.
PCPS the AICPA Affiance
for CPA Firers
Go. enol Audi
Quality Censer
California Society of
Corn fled Public Accountants
1
STABILITY. ACCURACY. TRUST.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the City's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the City's internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund, and the
aggregate remaining fund information of City of Rosemead, as of June 30, 2017, and the
respective changes in financial position and, where applicable, cash flows thereof for the year
then ended in accordance with accounting principles generally accepted in the United States of
America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis, Budgetary Comparison Schedules, Other Post-
Employment Benefits Plan-Schedule of Funding Progress, Schedule of the City's Proportionate
Share of the Plan's Net Pension Liability and Related Ratios as of the Measurement Date-Last
10 Years, Schedule of Plan Contributions-Last 10 Years, Schedule of Changes in Net Pension
Liability and Related Ratios-Last 10 Years-Retirement Enhancement Plan, Schedule of Plan
Contributions-Last 10 Years-Retirement Enhancement Plan, as listed in the table of contents,
be presented to supplement the basic financial statements. Such information, although not a
part of the basic financial statements, is required by the Governmental Accounting Standards
Board who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
2
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise City's basic financial statements. The introductory section, combining and
individual nonmajor fund financial statements, nonmajor fund budgetary comparison schedules,
and statistical section are presented for purposes of additional analysis and are not a required
part of the basic financial statements.
The combining and individual nonmajor fund financial statements and nonmajor fund budgetary
comparison schedules are the responsibility of management and were derived from and relate
directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the
United States of America. In our opinion, the combining and individual nonmajor fund financial
statements and nonmajor fund budgetary comparison schedules are fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements, and accordingly, we do not express an
opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 28, 2017 on our consideration of the City's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City's internal control over financial reporting and compliance.
titacetttoa, Mw4m4� z Jceit/ LLP.
SanBernardino, California l/
December 28, 2017
3
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Management's Discussion and Analysis
As management of the City of Rosemead, we offer readers of the City of Rosemead's financial
statements this narrative overview and analysis of the financial activities of the City of
Rosemead for the fiscal year ended June 30, 2017. We encourage readers to consider the
information presented here in conjunction with additional information that we have furnished in
our letter of transmittal and the City's financial statements.
Financial Highlights
• General Fund fund balance at the end of Fiscal Year 2016/17 increased $566 thousand.
This increase is largely due to an increase in sales tax and transient occupancy tax
revenues.
• At the end of the current fiscal year, unassigned fund balance for the General Fund was
$11.3 million or 54% of total General Fund expenditures. $6.9 million or 31% is set aside
to meet the City's reserve policy.
• The assets related to Governmental Activities has increased by approximately $2.8
million which is largely due to an increase in both cash and investments and capital
assets.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City of Rosemead's
basic financial statements. The City of Rosemead's basic financial statements comprise three
components: 1) government-wide financial statements, 2) fund financial statements, and 3)
notes to the financial statements. This report also contains other supplemental information in
addition to the basic financial statements themselves.
Government-wide Financial Statements. The government-wide financial statements are
designed to provide readers with a broad overview of the City of Rosemead's finances, in a
manner similar to private-sector business.
The statement of net position presents information on all of the City of Rosemead's assets,
deferred outflows of resources and liabilities, deferred inflows of resources with the difference
between them reported as net position. Over time, increases or decreases in net position may
serve as a useful indicator of whether the financial position of the City of Rosemead is improving
or deteriorating.
The statement of activities presents information showing how the government's net position
changed during the most recent fiscal year. All changes in net position are reported as soon as
the underlying event giving rise to the change occurs, regardless of the timing of related cash
flows. Thus, revenues and expenses are reported in this statement for some items that will only
result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused
vacation leave).
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Both of the government-wide financial statements distinguish functions of the City of Rosemead
that are principally supported by taxes and intergovernmental revenues (governmental
activities) from other functions that are intended to recover all or a significant portion of their
costs through user fees and charges (business-type activities). The City of Rosemead does not
have any business-type activities. The governmental activities of the City of Rosemead include
general government, public safety, public works, community development, and parks and
recreation.
The government-wide financial statements include not only the City of Rosemead itself (known
as the primary government), but also a legally separate Successor Agency, for which the City of
Rosemead is financially accountable. Financial information for the component units is reported
separately from the financial information presented for the primary government itself.
The government-wide financial statements can be found on pages 15-16 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The City
of Rosemead, like other state and local governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the City of
Rosemead can be divided into three categories: governmental funds, internal service funds and
fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information may
be useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the government's near-term
financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures, and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The City of Rosemead and its component units maintain 16 active governmental funds.
Information is presented separately in the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures, and changes in fund balances for the
General Fund, Rosemead Housing Development Corporation and Capital Project Fund, all three
of which are considered to be major funds. Data from the other 13 governmental funds are
combined into a single, aggregated presentation. Individual fund data for each of these non-
major governmental funds is provided in the form of combining statements elsewhere in this
report.
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The City of Rosemead adopts an annual appropriated budget for all its funds. A budgetary
comparison statement has been provided for the General Fund, Rosemead Housing
Development Corporation Fund, City Capital Projects Fund, Community Development Block
Grant Fund, Proposition A Fund, Proposition C Fund, Measure R, State Gas Tax Fund, Air
Quality Management District Fund, Street Lighting Fund, HOME Program Fund, DIF Traffic
Fund, DIF Public Safety Fund, DIF General Government Fund, and DIF Parks Fund and to
demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 17-22 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of
parties outside the government. Fiduciary funds are not reflected in the government-wide
financial statement because the resources of those funds are not available to support the City of
Rosemead's own programs. The accounting used for fiduciary funds is much like that used for
proprietary funds. The basic fiduciary fund financial statements can be found on page 26-27 of
this report.
Notes to the financial statements. The notes provide additional information that is
essential to a full understanding of the data provided in the government-wide and fund financial
statements. The notes to the Basic Financial Statements can be found on pages 28-72 of this
report.
Other information. In addition to the basic financial statements and accompanying notes,
this report also presents certain required supplementary information concerning the City of
Rosemead's progress in funding its obligation to provide pension benefits to its employees.
Required supplementary information and notes can be found beginning on pages 73-81 of this
report.
The combining statements referred to earlier in connection with non-major governmental funds
and internal service funds are presented immediately following the required supplementary
information on pensions. Combining and individual fund statements and schedules can be
found on pages 84-108 of this report.
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's
financial position. In the case of the City of Rosemead, assets exceeded liabilities (net position)
by $72.9 million at the close of the most recent fiscal year.
A significant portion of the City of Rosemead's net position (72%) reflects its investment in
capital assets (e.g. land, buildings, machinery, and equipment); less any related outstanding
debt used to acquire those assets. The City of Rosemead uses these capital assets to provide
services to the citizens; consequently, these assets are not available for future spending.
Although the City of Rosemead's investment in its capital assets is reported net of related debt,
it should be noted that the resources needed to repay this debt must be provided from other
sources, since the capital assets themselves cannot be used to liquidate these liabilities.
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City of Rosemead's Summarized Statement of Net Position
As of June 30, 2017 and 2016
(thousands)
Current and other assets $ 27,620 $ 26,130
Capital assets 52,806 51,542
Total assets 80,426 77,672
Deferred outflows of resources 5,018 2,937
Long-term liabilities outstanding 8,876 8,826
Other liabilities 2,652 2,216
Total liabilities 11,528 11,042
Deferred inflows of resources 1,033 910
Net position:
Net investment in capital assets 52,806 51,542
Restricted 4,387 4,006
Unrestricted 15,690 13,109
Total net position $ 72,883 $ 68,657
An additional portion of the City of Rosemead's net position (6%) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted
net position ($15.7 million) may be used to meet the government's ongoing obligations to
citizens and creditors.
At the end of the current fiscal year, the City of Rosemead is able to report positive net position
balances. The situation also held true for the prior fiscal year.
Governmental activities. Governmental activities increased the City of Rosemead's net
position by $4.2 million. General revenue and program revenue exceeded expenses by this
amount. The expenses increased in General Government and Public Safety; however, the total
Program and General Revenues offset these increases. These expense increases are largely
due to salary and benefit costs as well as law enforcement increases.
7
City of Rosemead's Sumarized Statement of Activities
Years Ended June 30, 2017 and 2016
(thousands)
ill.11/11
Program revenues:
Charges for services $ 4,646 $ 4,400
Operating grants and contributions 5,636 5,848
Capital grants and contributions 1,019 973
General revenues:
Property taxes 8,643 9,158
Other taxes 8,804 7,333
Investment income 20 349
Other 738 945
Total revenues 29,506 29,006
Expenses:
General government 3,706 3,217
Public safety 8,935 8,382
Public works 7,324 8,739
Community development 3,161 3,246
Parks and recreation 2,154 2,073
Interest on long-term debt - 1
Total expenses 25,280 25,658
Change in net position 4,226 3,348
Net position-June 30, 2016 68,657 65,309
Net position-June 30, 2017 $ 72,883 $ 68,657
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Revenues by Source
Governmental Activities
Investment income Other revenues
Other taxes 1% 4%
1%
Franchisetaxes_ ,
7%
Transient
occupancy taxes
10%
Property taxes
55%
Sales and use taxes
22%
Expenses and Program Revenues
Governmental Activities
10,000,000 -
8,000,000
6,000,000
■expenses
4,000,000 ®revenues
2,000,000
General Public Public Community Parks and
government safety works development recreation
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Financial Analysis of the Government's Funds
The focus of the City of Rosemead's governmental funds is to provide information on the near-
term inflows, and balances of spendable resources. Such information is useful in assessing the
City of Rosemead's financing requirements. In particular. unassigned fund balance may serve
as a useful measure of a government's net resources available for spending at the end of the
fiscal year.
As of the end of the current fiscal year, the City of Rosemead's governmental funds reported
combined fund balances of$22.8 million, an increase of$1.1 million in comparison with the prior
year. Approximately 47% of this total amount, $10.6 million constitutes unassigned fund
balance, which is available for spending at the government's discretion. The remainder of the
fund balance is segregated into nonspendable fund balance, restricted fund balance, committed
fund balance or assigned fund balance to indicate that it is not available for new spending
because it has already been committed for other purposes.
General Fund. The General Fund is the chief operating fund of the City of Rosemead. At the
end of the current fiscal year, the unassigned fund balance of the General Fund was $11.3
million, while total fund balance reached $19 million. As a measure of the General Fund's
liquidity, it may be useful to compare both unassigned fund balance and total fund balance to
total fund expenditures. Unassigned fund balance represents 54% of total General Fund
expenditures, while total fund balance represents 91% of that same amount.
The fund balance of the City of Rosemead's General Fund increased by $566 thousand during
the current year. Highlights of the change in fund balance are presented below:
• The General Fund revenues exceeded expenditures and; therefore, fund balance had an
increase of $566 thousand. Several revenues had large increases including Sales Tax,
TOT and Licenses and Permits. Additional highlights of the change in fund balance are
presented below.
• General Fund revenues increased $816 thousand in 2016/17 over the prior year. The
largest revenue categories were: property tax increased $130 thousand, sales tax
increased $1.2 million, TOT increased $214 thousand and building permits and public
works permits increased $189 thousand. The substantial increase in both building
permits and public works permits is a result of increased development projects in the
City. The TOT increase is a result of the improved economy and tourism activity within
California on the rise. Sales tax growth is attributed to growth in the overall economy
and in consumer spending. In the prior year, the City no longer received property tax in
lieu. This attributed to a $912 thousand decrease in property tax in lieu; therefore,
causing the net increase in the General Fund to be only $816 thousand for the current
year.
• General Fund expenditures increased $2.2 million over the prior year due to an increase
in legal fees of $146 thousand as a result of attorney fee increases and litigations, HR
consultant fees of $42 thousand, and general liability and worker's comp insurance
increase of$149 thousand relating to retrospective deposits billed from CJPIA.
• Sales tax consultant fees increased $60 thousand. As a result of the sales tax audits
conducted, the City saw an increase in sales tax revenues.
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• Community development expenditures increased due to building and planning costs
increased $134 thousand; however, these costs are offsetted by building permit and plan
check revenues.
• Public safety expenditures is one of the City's largest areas of expenditures. The Los
Angeles County's Sheriffs Department contract increased by 3.8% over the previous
year and the Liability Trust Fund increased as well. This attributed to an increase in
public safety expenditures of$485 thousand.
• Public works expenditures increased $318 thousand primarily due to $200 thousand
increase in engineering costs, $58 thousand in tree maintenance costs, and $49
thousand in water costs. In the prior year, the City had turnover in the Public Works
department causing a backlog in capital improvement projects. In the current year, the
City was able to complete some of the capital improvement projects that were delayed in
the prior year, which attributed to increased engineering costs and tree maintenance
costs. The increase in water costs is a result of new parks and facilities in the City.
• Parks and recreation expenditures increased primarily due to additional staffing in FY
2016/17. The department hired a new Parks and Recreation Manager and converted a
part-time staff into a full-time staff. This attributed to the increase of$134 thousand in
parks and recreation expenditures.
• The City was also faced with an increase in retirement costs as a result of the discount
rate and assumption changes approved by the CaIPERS board, which impacted the
actuarial valuation performed and this caused an increase to participants' retirement
contributions.
General Fund Budget Analysis. The City's General Fund collected revenues of slightly more
than $1.4 million in comparison to the budgeted estimates or 7% more than the budget. Sales
tax increases of$344 thousand was driven by an improving economy and the opening of some
new restaurants and businesses and the increase of $213 thousand in Transient Occupancy
Tax was due to an improving travel industry. In addition Licenses and Permit revenue
increased almost $680 thousand due to increased development and projects during FY
2016/17.
The General Fund expenditure budget to actual variance of $232 thousand was due to the City
not budgeting for unexpected litigation costs, sales tax consultant fees, and general liability and
worker's compensation insurance retrospective payments from CJPIA. Additionally, the City
budgeted conservatively for building and planning expenditures, the costs went over by $287
thousand due to more projects than anticipated and the costs were offset by revenues.
Proposition A, C. and Measure R Funds. These three funds are for transportation purposes and
they are all funded with voter approved additions to Sales Tax on gasoline. The Prop A Fund is
used mainly for public transportation services (fixed route bus service and Dial-A-Ride services);
Proposition C has some transportation elements to it but it is focused more on transportation
infrastructure maintenance purposes. Measure R mainly focuses on new transportation
infrastructure development. Expenditures for the Proposition A fund are increasing as greater
efforts are being made to increase fixed route ridership as are the operating expenditures for
Dial-A-Ride in the Proposition C Fund. The City is utilizing Measure R funds for capital
improvement projects for street improvements, paving, sidewalk installation, traffic study, and
transportation program planning.
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Rosemead Housing Development Corporation (RHDC). The RHDC Fund receives its funding
from tenant rents and subsidies from the Successor Agency. As operational costs have
continued to increase and tenant rents have remained relatively constant, the reliance on the
subsidy from the Successor Agency has become more important. Through the elimination of
redevelopment this obligation was submitted and subsequently approved by the Department of
Finance as an enforceable obligation which will ensure ongoing funding for the RHDC into the
future. As such, revenues and expenditures in this fund will typically balance out at the end of
each fiscal year with just a minimal balance remaining due to timing issues.
City Capital Protects Fund. The City Capital Projects Fund accounts for financial resources to
be used for the acquisition and construction of major capital facilities within the City. During the
fiscal year ending June 30, 2017, the City constructed a new Rosemead Skate Park Plaza,
acquired a new building for the City Maintenance Yard, purchased three new Public Safety
vehicles, and used funding on street and park improvements projects.
Vehicle Replacement and Technology Replacement Funds. These funds are utilized to cover
the costs of equipment and vehicle replacement over time. Using departments are assessed
charges for equipment used by them. The charges are accumulated in the internal service
funds for future replacement of vehicles and equipment.
Capital Asset and Debt Administration
Capital assets. The City of Rosemead's investment in capital assets for its governmental
activities as of June 30, 2017, amounts to $52.8 million (net of accumulated depreciation). This
investment in capital assets includes land, buildings and improvements, machinery and
equipment, park facilities, roads, highways, bridges and construction in progress.
Major capital asset events during the current fiscal year included the following:
• Completion of the new Rosemead Skate Park Plaza
• Completion of the new building on River Avenue for City Maintenance Yard
• Completion of the Temple City Resurfacing project
• Purchase of three new Ford F150 trucks for the Public Safety Department
• Construction in progress for Hellman/Del Mar CIP project
• Construction in progress for Rosemead Pedestrian Lighting CIP project
• Construction in progress for Zapopan Park
• Construction in progress for Jay Imperial Park
Land $ 4,417 $ 4,417
Buildings 14,897 14,795
Improvements other than buildings 995 555
Machinery and equipment 52 73
Autos and trucks 521 621
Furniture and office equipment 189 245
Infrastructure 28,725 30,271
Construction in progress 3,010 565
Total $ 52,806 $ 51,542
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Additional information on the City of Rosemead's capital assets can be found in note No. 7,
found on page 44 of the Basic Financial Statements.
Long-term debt. At the end of the current fiscal year, the Successor Agency for the Rosemead
Community Development Commission had total bonded debt outstanding of $31,775,000. Of
this amount, all of it is backed by future property tax increment revenues.
City of Rosemead's Outstanding Debt
Revenue Bonds
(thousands)
Tax Allocation Bonds $ 31,775 $ 35,970
• The Successor Agency's total bonded debt decreased by $4.2 million during the current
fiscal year due to the refinance of the Series 2006A and 20068 bonds. For more
detailed information about the Successor's Agency Long Term Debt, please refer to
Note No. 17 on page 71 of the Basic Financial Statements.
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Economic Factors and Next Year's Budgets and Rates
• The City has included in the FY 2017/18 budget, capital improvement projects that were
funded from the bond proceeds from the former redevelopment agency. The final
projects to be funded from these bond proceeds include the Zapoppan Park project,
which will be completed early in the 2017/18 fiscal year.
• As discussed throughout this Managements Discussion and Analysis report, there were
large General Fund revenue increases in FY 2016/17. Property tax revenues have
shown modest increases and are projected to continue with steady growth pattern.
Sales taxes are expected to increase significantly due to new restaurants and stores
addition to the community. License and permit revenues are expected to increase due to
an increase in growth and development in the City. Additionally, TOT revenues are
expected to increase as a result of the new Hartford Hotel opening in July 2017 and
future projects with the Hampton Inn & Suites.
• The local economy is projected to continue its modest growth in the coming year and
has been reflected in the City's FY 2017/18 Revenue budget. At the time of budget
preparation and up to its adoption, General Fund Revenue is projected to increase 6%
over the FY 2016/17 budgeted amount.
• The City adopted the General Fund FY 2017/18 budget with a projected $17.9 million
fund balance reserve. The Operating Budget for Fiscal Year 2017/18 is a well balanced
budget. In order to maintain a balanced budget, it will be essential for the City to
continue its history of conservative spending.
Requests for Information
This financial report is designed to provide a general overview of the City of Rosemead's
finances for all those with an interest in the government's finances. Questions concerning any
of the information provided in this report or requests for additional financial information should
be addressed to:
Finance Director
8838 East Valley Boulevard
Rosemead, CA 91770.
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City of Rosemead
Statement of Net Position
Government-wide Financial Statement
June 30, 2017
Governmental
Activities
ASSETS
Cash and investments (note 2) $ 21,709,010
Receivables:
Accounts 2,840,338
Interest 49,945
Loans(note 3) 369,949
Due from Successor Agency(note 6) 220,018
Prepaid expenses 765,218
OPEB asset(note 9) 1,665,840
Capital assets (note 7):
Land 4,417,104
Construction in progress 3,009,630
Other capital assets, net 45,379459
Total assets 80,426,511
DEFERRED OUTFLOWS OF RESOURCES
Pension related(note 11,12) 5,017,945
LIABILITIES
Accounts payable and accrued liabilities 1,974,805
Accrued salaries and benefits 246,114
Retentions payable 150,523
Unearned revenue 8,000
Non-current liabilities (note 8):
Due within one year 272,602
Due in more than one year 8,875,940
Total liabilities 11$27,984
DEFERRED INFLOWS OF RESOURCES
Pension related(note 11,12) 1,032,503
NET POSITION
Net investment in capital assets 52,806,193
Restricted for:
Public works 4,141,615
Community service 245,440
Unrestricted 15,690,721
Total net position $ 72,883,969
The accompanying notes are an integral part of these financial statements.
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City of Rosemead
Statement of Activities
Government-wide Financial Statement
For the year ended June 30, 2017
Net(expense)
revenue and
changes in
Program Revenues net position
Operating Capital
Charges for Contributions Contributions Governmental
Expenses Services and Grants and Grants Activities
Governmental activities'.
General government $ 3.705,685 $ 211,217 $1,980,387 $ - $ (1,514,081)
Public safety 8,935.164 560,787 - 1,004488 (7,369,889)
Public arks 7,323,865 648,141 3,584,170 - (3,091,554)
Community development 3,161,310 2.437,458 71,164 14,728 (637,960)
Parks and recreation 2.153.986 788,931 - - (1,365,055)
Total governmental activities $25,280,010 $4,646,534 $5,635,721 $ 1,019,216 (13,978,539)
General revenues:
Taxes:
Property taxes 8,643,019
Sales and use taxes 5,366,975
Transient occupancy taxes 2,213,286
Franchise taxes 1,123,383
Other taxes 100,847
Investment income 20,526
Other 737,721
Total general revenues 18,205,757
Change in net position 4.227.218
Net position, beginning of year 68R56,751
Net position, end of year $ 72,883,969
The accompanying notes are an integral part of these financial statements.
16
City of Rosemead
Balance Sheet
Governmental Funds
June 30, 2017
Special Revenue Capital Projects
Rosemead Housing
Development
General Corporation City
ASSETS
Cash and investments(note 2) $ 16.554,162 $ 266,710 $ -
Receivables:
Accounts 1,860,843 9,003 546340
Interest 49945 - -
Loans(note 3) 369,949 - -
Prepaid items 765.218 - -
Due from other funds(note 5) 1,165.392 - -
Due from Successor Agency(note 6) 12532 207,486 -
Total assets $ 26778041 $ 283199 $ 5481340
LIABILITIES,DEFERRED INFLOWS
OF RESOURCES,AND FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities $ 1,230,572 $ 51,130 $ 258,243
Accrued salaries and benefits 210,238 - 3,332
Retention payable - - 133101
Due to other funds(note 5) - 204.800 639,653
Unearned revenue - - -
Total liabilities 1,440,810 255.930 1.034,429
Deferred inflows of resources:
Unavailable revenues 302,955 - -
Total deferred inflows of resources 302,955 - -
Fund balances:
Nonspendable 765,218 - -
Restricted for:
Public works - - -
Community services - - -
Low and moderate income housing - 227,269 -
Committed 6,935,969 - -
Assigned 63,298 - -
Unassigned 11,269,791 - (486089)
Total fund balances(deficit) 19634176 227,269 (486,089)
Total liabilities,deferred inflows of
resources and fund balances $ 20 778,041 $ 483,199 $ 548.340
The accompanying notes are an integral part of these financial statements.
17
Total Nonmajor Total
Governmental Governmental
Funds Funds
$ 4,387770 $ 21,208,642
422,152 2,840,338
49,945
369,949
765,218
1,165,392
220,018
$ 4,809,922 $ 26619,502
$ 434,827 $ 1,974,772
32,544 246,114
17,322 150,523
32Q939 1,165,392
8,000 8,000
813,632 3,544,801
302,955
302,955
765,218
4,141,615 4,141,615
18,171 18,171
227,269
6,935,969
63,298
(163.496) 10,620,206
3,996,290 22,771,746
$ 4.809,922 $ 26.619.502
18
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City of Rosemead
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Position
Government Funds
June 30, 2017
Fund balances of governmental funds $ 22,771,746
Amounts reported for governmental activities in the statement of net position are
different because:
Capital assets, net of depreciation, have not been included as financial
resources in the governmental fund activity.
Capital assets (net of Internal Service Funds) 102,121,595
Accumulated depreciation (net of Internal Service Funds) (49,471,113)
Long-term assets that are not available for current use.Amounts are not
reported in the governmental funds.
OPEB asset 1665,840
Long term liabilities and compensated absences that have not been included
in the governmental fund activity.
Compensated absences (633,958)
Retrospective deposits payable (231,905)
Net pension liability (8,282,679)
Long-term notes receivable are not current financial resources and, therefore,
are deferred in the governmental funds. 302,955
Deferred inflows and outflows of resources related to pensions
are not reported in the governmental funds.
Net deferred inflows of resources (1,032,503)
Net deferred outflows of resources 5,017,945
Internal service funds are used by management to charge the costs of certain
activities, such as equipment management, to individual funds. The net
positon of the internal service funds must be added to the statement of net
position. 656,046
Net position of governmental activities $ 72,883,969
The accompanying notes are an integral part of these financial statements.
19
City of Rosemead
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2017
Special Revenue Capital Projects
Rosemead Housing
Development
General Corporation City
REVENUES
Taxes $ 17447,510 $ - $ -
Intergovernmental 209,332 412,286 589,523
Licenses and permits 2.754,881 - -
Chargesforservices 923,412 - 1,240
Fines,forfeitures and penalties 607,754 - -
Special assessments - - -
Investment income 229,378 433,130 -
Other 201,825 5,767 23,953
Total revenues 22,374,092 851,183 614,716
EXPENDITURES
Current:
General government 4,104,242 - -
Public safety 8,868,713 - -
Public works 3,718525 - 159,013
Community development 2834,505 810,847 -
Parks and recreation 2,284,393 - -
Capital outlay - - 2,790,493
Total expenditures 21,010,378 810847 2,949,506
Excess(deficiency)of revenues
over(under)expenditures 1,363714 40,336 (2,334,790)
OTHER FINANCING SOURCES(USES)
Transfers in(note 5) - - 2,421.611
Transfers out(note 5) (797,587) - -
Total other financing sources (uses) (797,587) - 2,421,611
Net change in fund balances 566,127 40,336 86,821
Fund balances (deficit), beginning of year 18,468,149 186,933 (572,910)
Fund balances (deficit),end of year $ 19,034,276 $ 227,269 $ (486,089)
The accompanying notes are an integral part of these financial statements.
20
Total Nonmajor Total
Governmental Governmental
Funds Funds
$ - $ 17,447,510
4,512,899 5,724,040
2,754,881
87,905 1,012557
607,754
1,002,239 1,002,239
4,460 666,968
231,545
5,607,503 29,447,494
176,583 4,280,825
192127 9,060,840
2621,682 6,499,220
540,103 3,385,455
16,513 2,300,906
2,790,493
3,547,008 28,317,739
2,060,495 1,129,755
2Q 830 2,442,441
(1,644,854) (2,442,441)
(1,624,024) -
436,471 1,129,755
3,559,819 21,641,991
$ 3,996,290 $ 22771 746
21
City of Rosemead
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and
Changes in Fund Balance to the Government Wide Statement of Activities
Government Funds
For the year ended June 30, 2017
Net change in fund balances-total governmental funds $ 1,129,755
Amounts reported for governmental activities in the statement of activities differ from the
amounts reported in the statement of activities because:
Governmental funds report capital outlays as expenditures. However, in the statement
of activities,the costs of those assets is allocated over their estimated useful lives as
depreciation expense. This is the amount by which depreciation expense exceeded
capital outlays in the current year.This activity is reconciled as follows:
Cost of assets capitalized,less disposals
at net book value(net of Internal Service Funds) 3,992,351
Depreciation expense(net of Internal Service Funds) (2,696,700)
Some expenses reported in the statement of activities do not require the use of current
financial resources and,therefore,are not reported as expenditures in governmental
funds.
Increase in OPER asset 59,851
Pension related adjustments 1530,823
Compensated absences and retrospective deposits payable expenses reported in the
statement of activities do not require the use of current financial resources and,
therefore, are not reported as expenditures in governmental funds.
Decrease in retrospective deposits payable 137,600
Increase in compensated absences payable (31,960)
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds. 59,734
Internal service funds used by management to charge the costs of certain activities,
such as equipment management,to individual funds.The net revenues(expenses)of
the internal service funds are reported with governmental activities. 45 764
Change in net position of governmental activities $ 4,227218
The accompanying notes are an integral part of these financial statements.
22
City of Rosemead
Statement of Net Position
Internal Service Funds
June 30, 2017
Governmental
Activities
Internal Service
Funds
ASSETS
Current assets:
Cash and investments (note 2) $ 500,368
Total current assets 500,368
Non-current assets:
Capital assets:
Other capital assets, net(note 7) 155,711
Total non-current assets 155,711
Total assets 656,079
LIABILITIES
Current liabilities:
Accounts payable 33
Total current liabilities 33
Total non-current liabilities -
Total liabilities 33
NET POSITION
Net investment in capital assets 155,711
Unrestricted 500,335
Total net position $ 656,046
The accompanying notes are an integral part of these financial statements.
23
City of Rosemead
Statement of Revenues, Expenses, and Changes in Net Position
Internal Service Funds
For the year ended June 30, 2017
Governmental
Activities
Internal Service
Funds
OPERATING REVENUES
Charges for services $ 269,400
Total operating revenues 269,400
OPERATING EXPENSES
Contractual services 118.329
Depreciation 104,307
Total operating expenses 223,636
Change in net position 45,764
Net position, beginning of year 610,282
Net position, end of year $ 656,046
The accompanying notes are an integral part of these financial statements.
24
City of Rosemead
Statement of Cash Flows
Internal Service Funds
For the year ended June 30, 2017
Governmental
Activities
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users departments $ 269,400
Cash payments to suppliers for goods and services (122,915)
Net cash provided by operating activities 146,485
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Cash paid to purchase capital asset (72,819)
Net cash used for capital and related financing activities (72,819)
Net increase in cash and investments 73,666
Cash and investments, beginning of year 426,702
Cash and investments, end of year $ 500,368
Reconciliation of operating income to net cash
provided by operating activities:
Operating income $ 45,764
Adjustments to reconcile operating income to net
cash provided by operating activities:
Depreciation 104,307
Increase (decrease) in accounts payable (3,586)
Total adjustments 100,721
Net cash provided by operating activities $ 146,485
The accompanying notes are an integral part of these financial statements.
25
City of Rosemead
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2017
Successor Agency
Private-purpose Agency
Trust Fund Fund
ASSETS
Cash and investments (note 2) $ 7,240,319 $ 399,361
Receivables:
Notes 201,314 -
Prepaid 172,278 -
Total assets 7,613,911 $ 399,361
LIABILITIES
Accounts payable 3,507 $ -
Deposits payable - 399,361
Accrued interest payable 299,366 -
Due to City of Rosemead(note 6) 220,018 -
Long-term debt(note 17):
Due within one year 2,412,014 -
Due in more than one year 30,979,320 -
Total liabilities 33,914,225 $ 399,361
NET POSITION (DEFICIT)
Held in trust for the Successor Agency (26,300,314)
Total net position (deficit) $ (26,300,314)
The accompanying notes are an integral part of these financial statements.
26
City of Rosemead
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the year ended June 30, 2017
Successor Agency
Private-purpose
Trust Fund
ADDITIONS
Property taxes $ 4,711,788
Investment earnings 59,874
Total additions 4,771,662
DEDUCTIONS
Administrative expenses 2,033,687
Interest expense 1,155,821
Debt financing 544,754
Total deductions 3,734,262
Change in net position 1,037,400
Net position (deficit), beginning of year (27,337,714)
Net position (deficit), end of year $ (26,300,314)
The accompanying notes are an integral part of these financial statements.
27
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City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies
(a) Reporting Entity
The City of Rosemead, California, ("the City") was incorporated in August 1959 under the
general laws of the State of California. The City operates under an elected Council/City
Manager form of government. It 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 a variety of other public and private agencies under contract. Some of the
contracts now in effect are for police, solid waste disposal, and building and safety.
The accounting policies of the City conform to generally accepted accounting principles as
applicable to governments. As required by generally accepted accounting principles, these
financial statements present the government and its component units, which are entities for
which the government is considered to be financially accountable. The City is considered to
be financially accountable for an organization if the City appoints a voting majority of that
organization's governing body and the City is able to impose its will on that organization or
there is a potential for that organization to provide specific financial benefits to or impose
specific financial burdens on the City. The City is also considered to be financially
accountable if an organization is fiscally dependent (i.e., it is unable to adopt its budget,
levy taxes, set rates or charges, or issue bonded debt without approval from the City). In
certain cases, other organizations are included as component units if the nature and
significance of their relationship with the City are such that their exclusion would cause the
City's financial statements to be misleading or incomplete.
Based upon the above criteria, the blended component units of the City are the Rosemead
Financing Authority (the Authority) and the Rosemead Housing Development Corporation
(the Corporation).
Rosemead Financing Authority
The Authority provides for the financing or refinancing of public capital improvements and
working capital requirements of local agencies that enter into contractual arrangements with
the Authority.
28
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies, (continued)
(a) Reporting Entity, (continued)
Rosemead Housing Development Corporation
The Corporation accounts for the construction, financing and operations of low and
moderate-income housing. It is a California nonprofit benefit corporation organized under
Section 501(c)(3) of the Internal Revenue Code. The activities of the Corporation are
recorded in the RHDC special revenue fund. Separately issued financial statements of the
Corporation can be obtained from the Finance Department.
Since the City Council and/or other City officials serve as the Governing Board for these
component units, all of the City's component units are considered to be blended component
units. Blended component units, although legally separate entities, are, in substance, part
of the City's operations. Therefore, data from these units are reported with the funds of the
primary government, the City.
(b) Basis of Accounting and Measurement Focus
The basic financial statements of the City are composed of the following:
• Government-wide financial statements
• Fund financial statements
• Notes to the basic financial statements
Financial reporting is based upon all Governmental Accounting Standards Board
pronouncements.
Government-wide Financial Statements
Government-wide financial statements display information about the reporting government
as a whole, except for its fiduciary activities. These statements include separate columns
for the governmental and business-type activities of the primary government (including its
blended component units), as well as its discretely presented component units. The City of
Rosemead has no business-type activities and no discretely presented component units.
Eliminations have been made in the Statement of Activities so that certain allocated
expenses are recorded only once (by function to which they were allocated). However,
general governmental expenses have not been allocated as indirect expenses to the
various functions of the City.
29
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies, (continued)
(b) Basis of Accounting and Measurement Focus, (continued)
Government-wide financial statements are presented using the economic resources
measurement focus and the accrual basis of accounting. Under the economic resources
measurement focus, all (both current and long-term) economic resources and obligations of
the reporting government are reported in the government-wide financial statements. Basis
of accounting refers to when revenues and expenditures are recognized in the accounts
and reported in the financial statements. Under the accrual basis of accounting, revenues,
expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like
transactions are recognized when the exchange takes place. Revenues, expenses, gains,
losses, assets, and liabilities resulting from nonexchange transactions are recognized in
accordance with generally accepted accounting principles.
Program revenues include charges for services, special assessments, and payments made
by parties outside of the reporting governments citizenry if that money is restricted to a
particular program. Program revenues are netted with program expenses in the statement
of activities to present the net cost of each program.
Amounts paid to acquire capital assets are capitalized as assets in the government-wide
financial statements, rather than reported as an expenditure. Proceeds of long-term debt
are recorded as a liability in the government-wide financial statements, rather than as other
financing source. Amounts paid to reduce long-term indebtedness of the reporting
government are reported as a reduction of the related liability, rather than as an
expenditure.
Fund Financial Statements
The underlying accounting system of the City is organized and operated on the basis of
separate funds, each of which is considered to be a separate accounting entity. The
operations of each fund are accounted for with a separate set of self-balancing accounts
that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as
appropriate. Governmental resources are allocated to and accounted for in individual funds
based upon the purposes for which they are to be spent and the means by which spending
activities are controlled.
Fund financial statements for the primary government's governmental, proprietary, and
fiduciary funds are presented after the government-wide financial statements. These
statements display information about major funds individually and non major funds in the
aggregate for governmental and enterprise funds. Fiduciary statements include financial
information for fiduciary funds and similar component units. Fiduciary funds of the City
primarily represent assets held by the City in custodial capacity for other individuals or
organizations.
30
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies, (continued)
(b) Basis of Accounting and Measurement Focus, (continued)
Governmental Funds
In the fund financial statements, governmental funds are presented using the modified-
accrual basis of accounting. Their revenues are recognized when they become measurable
and available as net current assets. Measurable means that the amounts can be estimated,
or otherwise determined. Available means that the amounts were collected during the
reporting period or soon enough thereafter to be available to finance the expenditures
accrued for the reporting period. The City uses a sixty day availability period.
Revenue recognition is subject to the measurable and available criteria for the government
funds in the fund financial statements. Exchange transactions are recognized as revenues
in the period in which they are earned (i.e., the related goods or services are provided).
Locally imposed derived tax revenues are recognized as revenues in the period in which
the underlying exchange transaction on which they are based takes place. Imposed non-
exchange transactions are recognized as revenues in the period for which they were
imposed. If the period of use is not specified, they are recognized as revenues when an
enforceable legal claim to the revenues arises or when they are received, whichever occurs
first. Government-mandated and voluntary non-exchange transactions are recognized as
revenues when all applicable eligibility requirements have been met.
In the fund financial statements, governmental funds are presented using the current
financial resources measurement focus. This means that only current assets and current
liabilities are generally included on their balance sheets. The reported fund balance (net
current assets) is considered to be a measure of "available spendable resources."
Governmental fund operating statements present increases (revenues and other financing
sources) and decreases (expenditures and other financing uses) in net current assets.
Accordingly, they are said to present a summary of sources and uses of "available
spendable resources" during a period.
Non-current portions of long-term receivables due to governmental funds are reported on
their balance sheets in spite of their spending measurement focus. However, special
reporting treatments are used to indicate that they should not be considered "available
spendable resources," since they do not represent net current assets. Recognition of
governmental fund type revenues represented by noncurrent receivables are deferred until
they become current receivables.
Because of their spending measurement focus, expenditure recognition for governmental
fund types excludes amounts represented by noncurrent liabilities. Since they do not affect
net current assets, such long-term amounts are not recognized as governmental fund type
expenditures or fund liabilities.
31
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies, (continued)
(b) Basis of Accounting and Measurement Focus, (continued)
Amounts expended to acquire capital assets are recorded as expenditures in the year that
resources were expended, rather than as fund assets. The proceeds of long-term debt are
recorded as other financing sources rather than as a fund liability. Amounts paid to reduce
long-term indebtedness are reported as fund expenditures.
When both restricted and unrestricted resources are combined in a fund, expenditures are
considered to be paid first from restricted resources, and then from unrestricted resources.
Fiduciary Funds
The City maintains two fiduciary fund types. The first is a private-purpose trust fund which
uses the economic resources measurement focus and the accrual basis of accounting. The
second is an agency fund which has no measurement focus. The agency fund is custodial
in nature (assets equal liabilities) and does not involve the recording of City revenues and
expenses.
(c) Major and Fiduciary Fund Types
The City's major governmental funds are as follows:
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.
Rosemead Housing Development Corporation Special Revenue Fund. Accounts for the
construction, financing and operations of low and moderate income housing. The
Corporation is a blended component unit of the City of Rosemead.
City Capital Projects Fund - Accounts for financial resources to be used for the acquisition
and construction of major capital facilities within the City.
The City's Fiduciary Funds are as follows:
Private-purpose Trust Fund - Accounts for the activity of the Successor Agency to the
Community Development Commission of the City of Rosemead.
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.
32
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies, (continued)
(d) Investments
For financial reporting purposes, investments are adjusted to their fair value whenever the
difference between fair value and the carrying amount is material.
Changes in fair value that occur during a fiscal year are recognized as investment income
reported for that fiscal year. Investment income includes interest earnings, changes in fair
value, and any gains or losses realized upon the liquidation or sale of investments.
The City pools cash and investments of all funds, except for assets held by fiscal agents.
Each fund's share in this pool is displayed in the accompanying financial statements as
cash and investments. Investment income earned by the pooled investments is allocated to
the various funds based on each fund's average cash and investment balance.
(e) Cash Equivalents
For purposes of the statement of cash flows, cash equivalents are defined as short-term,
highly liquid investments that are both readily convertible to known amounts of cash or so
near their maturity that they present insignificant risk of changes in value because of
changes in interest rates. Cash equivalents also represent the proprietary funds' share in
the cash and investment pool of the City of Rosemead. Cash equivalents have an original
maturity date of three months or less from the date of purchase. For purposes of the
statement of cash flows, the entire balance of cash and investments on the combined
balance sheet for the internal service fund is considered cash and cash equivalents.
(f) Capital Assets
Capital assets (including infrastructure) are recorded at cost where historical records are
available and at an estimated historical cost where no historical records exist. Contributed
capital assets are valued at their estimated fair market value at the date of the contribution.
Generally, capital asset purchases in excess of $10,000 are capitalized if they have an
expected useful life of one or more years.
Capital assets include public domain (infrastructure) general capital assets consisting of
certain improvements including roads, streets, sidewalks, medians, and storm drains.
33
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies, (continued)
(f) Capital Assets, (continued)
Capital assets used in operations are depreciated over their estimated useful lives using the
straight-line method in the government-wide financial statements and in the fund financial
statements of the internal service funds. Depreciation is charged as an expense against
operations and accumulated depreciation is reported on the respective balance sheet.
The following schedule summarizes capital asset useful lives:
Buildings 50 years
Improvements other than buildings 15 years
Machinery and equipment 7 years
Autos and trucks 5 years
Furniture and office equipment 7 years
Infrastructure:
Bridges 50 years
Sewer system and storm drain system 50-100 years
Medians and sidewalks 40 years
Traffic signals 30 years
Streets 20 years
(g) Compensated Absences
Vacation is payable to employees at the time used or upon termination of employment. All
vacation is accrued when incurred in the government-wide level financial statements.
The sick leave liability is estimated based on the City's past experience of making
termination payments from sick leave, adjusted for the effect of changes in its termination
payment policy and other current factors. A liability for these amounts is reported in
governmental funds only if it has matured or will be paid from available resources of the
current period. City employees accumulate vacation hours that may be paid upon
termination, death or retirement. Full-time employees can accumulate up to four weeks of
accrued vacation per year depending on the length of employment.
The City allows full-time employees who have earned vacation time an opportunity to have
the City buy back up to 40 hours of vacation time per year.
34
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017 ._.
Note 1: Summary of Significant Accounting Policies, (continued)
(h) Prepaid Items
Prepaid items are reported in the governmental funds under the consumption method and
are offset by a nonspendable designation in fund balance to indicate that they are not
available for appropriation and are not expendable financial resources.
(i) Fund Balance
The following classifications describe the relative strength of the spending constraints
placed on the purposes for which resources can be used:
• Nonspendable — amounts that are not in a spendable form (such as inventory) or
are required to be maintained intact.
• Restricted — amounts constrained to specific purposes by their providers (such as
grantors, bondholders and higher levels of government), through constitutional
provisions or by enabling legislation.
• Committed — amounts constrained to specific purposes by a government itself,
using the highest level of decision-making authority; to be reported as committed,
amounts cannot be used for any other purpose unless the government takes the
same highest level action to remove or change the constraint.
• Assigned — amounts a government intends to use for a specific purpose; intent can
be expressed by the governing body or by an official or body to which the governing
body delegates the authority.
• Unassigned — amounts that are for any purpose; positive amounts are reported only
in a general fund.
The City Council establishes (and modifies or rescinds) fund balance commitments by
passage of an ordinance or resolution. The City Council has designated the Finance
Committee and City Manager as the City officials to determine, define, and make the
necessary account or fund transfers for the amounts to those components of fund balance
that are classified as "Assigned Fund Balance."
When both restricted and unrestricted resources are available for use when an expenditure
is incurred, it is the City's policy to use restricted resources first, then unrestricted resources
as they are needed. It is the City's policy to consider committed amounts as being reduced
first, followed by assigned amounts, and then unassigned amounts when expenditures are
incurred for purposes for which amounts in any of those unrestricted fund balance
classifications could be used.
35
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 1: Summary of Significant Accounting Policies, (continued)
(j) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from those
estimates.
(k) Pension plans
For purposes of measuring the net pension liability, deferred outflows and inflows of
resources related to pensions, and pension expense, information about the fiduciary net
position and additions to/deductions from the fiduciary net position have been determined
on the same basis as they are reported by the Plan Administrators. For this purpose,
benefit payments (including refunds of employee contributions) are recognized when
currently due and payable in accordance with the benefit terms. Investments are reported at
fair value. CaIPERS audited financial statements are publicly available reports that can be
obtained at CaIPERS'website, at www.calpers.ca.gov. Copies of the PARS annual financial
report may be obtained from PARS, 4350 Von Karman Avenue, Suite 100, Newport Beach,
CA 92660.
GASB 68 requires that the reported results must pertain to liability and asset information
within certain defined timeframes. For this report, the following timeframes are used.
PERS-Cost sharing Multiple-Employer Plan:
Valuation Date (VD) June 30, 2015
Measurement Date (MD) June 30, 2016
Measurement Period (MP) July 1, 2015 to June 30, 2016
PARS-Single Employer Agent Plan:
Valuation Date (VD) June 30, 2016
Measurement Date (MD) June 30, 2017
Measurement Period (MP) July 1, 2016 to June 30, 2017
36
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 2: Cash and Investments
Cash and investments as of June 30, 2017, are classified in the accompanying financial
statements as follows:
Statement of Net Position:
Cash and investments $ 21,709,010
Statement of Fiduciary Net Position:
Cash and investments 7,639,680
Total cash and investments $ 29,348,690
Cash and investments as of June 30, 2017, consist of the following:
Deposits with financial institutions $ 11,679,533
Investments 17,669,157
Total cash and investments $ 29,348,690
Investments Authorized by the California Government Code and the City's Investment Policy
The table below identifies the investment types that are authorized for the City by the California
Government Code and the City's investment policy. The table also identifies certain provisions of
the California Government Code (or the City's investment policy, if more restrictive) that address
interest rate risk, credit risk, and concentration of credit risk. This table does not address
investments of debt proceeds held by bond trustee that are governed by the provisions of debt
agreements of the City, rather than the general provisions of the California Government Code or
the City's investment policy.
Authorized
by Maximum Maximum
Investment Types Investment Maximum Percentage Investment in
Authorized by State Law Policy Maturity* of Portfolio` One Issuer*
U.S. Treasury Obligations Yes 5 years None None
U.S. Agency Securities Yes 5 years 70% 35%
Banker's Acceptances Yes 180 days 20% 30%
Commercial Paper Yes 180 days 15% 10%
Negotiable Certificates of Deposit Yes 5 years 30% None
Medium-Term Notes Yes 5 years 30% None
Money Market Mutual Funds Yes N/A 20% 10%
Local Agency Investment Funds (LAIF) Yes N/A None 565M
Based on state law requirements or investment policy requirements, whichever is more
restrictive.
37
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 2: Cash and Investments, (continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the City's
investment policy. The table below identifies the investment types that are authorized for
investments held by bond trustees. The table also identifies certain provisions of these debt
agreements that address interest rate risk, credit risk, and concentration of credit risk.
Maximum Maximum
Maximum Percentage of Investment in
Authorized Investment Type Maturity Portfolio One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptances 180 days 40% 10%
Commercial Paper 180 days 10% 10%
Money Market Portfolios 1 year None None
Investment Agreements None None None
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the City manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or
coming close to maturity evenly over time as necessary to provide the cash flow and liquidity
needed for operations.
Information about the sensitivity of the fair values of the City's investments (including investments
held by bond trustee) to market interest rate fluctuations is provided by the following table that
shows the distribution of the City's investments by maturity:
Remaining Maturity
12 months 13 to 24 25 to 60
Investment Type Total or less months months
State investment pool $ 6,070,651 $ 6,070,651 $ - $ -
Certificates of deposits 5,186,402 - - 5,186,402
U.S. agency securities 2,105,960 - - 2,105,960
Medium-term notes 2,008,629 - 226,498 1,782,131
Held by bond trustee:
Money market mutual funds 1,149,079 1,149,079 - -
Certificatesofdeposit 1,148,436 - - 1,148,436
Total $ 17,669,157 $ 7,219,730 $ 226,498 $10,222,929
38
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 2: Cash and Investments, (continued)
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the minimum rating required by (where
applicable) the California Government Code, the City's investment policy, or debt agreements, and
the actual rating as of year end for each investment type.
Mnim,m
Legal Rating as of Year End
hvestnent Type Total Rating AAA AA+ A+ A A- Not Rated
State investment pool $ 6070651 N/A $ - 5 - $ 5 - $ 8 6,074651
Certflcates of deposes 5.186,402 WA - - - - - 5,186,402
U.S.agency securities 2.105,960 WA - 2,105,960 - - -
Medlumtermnotes 2008,629 A - - 251480 1,261.916 495,233 -
14d by bond trustee: - - -
Moneyrrerketrutualfunds 1.149,079 Multiple 1,143058 - - - - 5021
Certdicates of depose 1.148,436 WA - - - - - 1,148436
Total $ 17.669,157 81,143 058 52,105960 $ 251480 $1261916 $ 495.233 $ 12411510
Concentration of Credit Risk
The investment policy of the City contains certain limitations on the amount that can be invested in
any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds,
and external investment pools)that represent 5% or more of total City investments are as follows:
Investment Reported
Issuer Type Amount
Federal National Mortgage Association US Agency Securities $ 1,618,775
39
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 2: Cash and Investments, (continued)
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a
transaction, a government will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. The California Government Code and the
City's investment policy do not contain legal or policy requirements that would limit the exposure to
custodial credit risk for deposits or investments, other than the following provision for deposits: The
California Government Code requires that a financial institution secure deposits made by state or
local governmental units by pledging securities in an undivided collateral pool held by a depository
regulated under state law (unless so waived by the governmental unit). The fair value of the
pledged securities in the collateral pool must equal at least 110% of the total amount deposited by
the public agencies. California law also allows financial institutions to secure City deposits by
pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As
of June 30, 2017, the City had deposits with financial institutions in excess of federal depository
insurance limits by $7,348,034 that were held in collateralized accounts. As of June 30, 2017, the
Successor Agency had deposits with financial institutions in excess of federal depository insurance
limits by $5,828,269 that were held in collateralized accounts.
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
the California Government Code under the oversight of the Treasurer of the State of California.
The fair value of the City's investment in this pool is reported in the accompanying financial
statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for
the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available
for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an
amortized cost basis.
40
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 2: Cash and Investments, (continued)
Fair Value Measurements
Generally accepted accounting principles, establishes a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad
levels: Level 1 inputs consist of quoted prices (unadjusted) for identical assets and liabilities in
active markets that a government can access at the measurement date, Level 2 inputs that are
observable for an asset or liability, either directly or indirectly, and Level 3 inputs have the lowest
priority and consist of unobservable inputs for an asset or liability.
The District has the following fair value measurements as of June 30, 2017:
Investments by Total Level 1 Level 2 Level 3
Fair Value Level
Certificates of deposits $ 6,334,838 $ - $ 6,334,838 $ -
U.S. agency securities 2,105,960 - 2,105,960 -
Medium-term notes 2.008,629 - 2,008,629 -
Total investments by
fair value 10,449,427 $ - $ 10,449,427 $ -
Investments measured at
the Net Asset Value(NAV)
State investment pool 6,070,651
Money market mutual funds 1,149,079
Total $ 17,669,157
Note 3: Loans receivable
Loans receivable consisted of the following at June 30, 2017:
Balance Balance
June 30, 2016 Additions Deletions June 30, 2017
Computer Loans $ 9,218 $ 11,106 $ (9,312) $ 11,012
San Gabriel Valley Water Co.Loan-Phase I 90,530 - (8,230) 82,300
San Gabriel Valley Water Co.Loan-Phase II 45,266 - (4,115) 41,151
Rio Hondo Community Development Co. Loan 227,086 - - 227,086
El Monte Cemetery Association Loan 9,600 - (1,200) 8,400
Total $ 381,700 $ 11,106 $(22,857) $ 369,949
41
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 4: Property Taxes
Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing
they become available. Available means due, or past due and receivable within the current period
and collected within the current period or expected to be collected soon enough thereafter (not to
exceed 60 days) to be used to pay liabilities in the current period.
Under California law, property taxes are assessed and collected by the counties up to 1% of
assessed value, plus other increases approved by the voters. The property taxes are recorded
initially in a pool, and are then allocated to the cities based on complex formulas. Accordingly, the
City of Rosemead accrues only those taxes that are received from the County within sixty days
after year-end.
Lien date January 1
Levy date July 1
Due dates November 1 and February 1
Collection dates December 10 and April 10
Note 5: Interfund Transactions
Due to/due from other funds for the year ending June 30, 2017, consisted of the following:
Receivable Funds Payable Funds Amount
General Fund RHDC $ 204,800
Capital Projects - City 639,653
Nonmajor Governmental Funds 320,939
Total $1,165,392
The due to General Fund from various funds was a result of temporary deficit cash balances in
those funds.
42
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 5: Interfund Transactions, (continued)
Transfers
Interfund transfers for the year ending June 30, 2017, consisted of the following:
Transfers In
City Capital Non- Major
Transfers out Governmental
Projects Fund
Funds Total
General Fund $ 797,587 $ - $ 797,587
Nonmajor Governmental Funds 1,624,024 20,830 1,644,854
Total $ 2,421,611 $ 20,830 $ 2,442,441
Transfers were made to subsidize various programs and capital projects.
Note 6: Intergovernmental Transactions
Due to/Due from Successor Agency
Current intergovernmental receivables and payables balances at June 30, 2017, are as follows:
Due to City Due from Successor Agency Amount
Successor Agency RHDC $ 207,486
General Fund 12,532
Total $ 220,018
Intergovernmental amounts between the Successor Agency and the City are for reimbursement of
payroll expenses and short-term loans to cover operations.
43
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 7: Capital Assets
Capital asset activity was as follows for the year ended June 30, 2017:
Beginning Ending
Governmental activities balance Additions Deletions Reclassifications balance
Capital assets, not being depreciated:
Land $ 4,417,104 $ - $ - $ - $ 4,417.104
Construction in progress 564,500 2,916386 (473,256) - 3,006630
Total capital assets, not being depreciated 4,981,604 2,918,386 (473,256) - 7,426734
Capital assets, being depreciated:
Buildings 23,423,486 588,075 - - 24,011,561
Improvements other than buildings 1,732,805 932,413 - (452,986) 2,212,232
Machinery and equipment 582,225 - - - 582,225
Autos and trucks 1.686131 72,819 - - 1,757,950
Furniture and office equipment 1.465,125 - - - 1485,125
Infrastructure 64.851,063 26,733 - 452,966 65,330,782
Total capital assets, being depreciated 93,759,835 1,620,040 - - 95.379,875
Less accumulated depreciation for:
Buildings (8,628,581) (486,002) - - (9.114,583)
Improwments other than buildings (1,177,369) (99,621) - 59,703 (1,217,287)
Machinery and equipment (509,546) (20,559) - - (530,105)
Autos and trucks (1,063,845) (173,216) - - (1,237,061)
Furniture and office equipment (1,239.761) (55,991) - - (1,295,752)
Infrastructure (34.580,307) (1,965,618) - (59,703) (36,605,628)
Total accumulated depreciation (47,199,409) (2,801,007) - - (50,000,416)
Total capital assets, being depreciated, net 46.560,426 (1,180,967) - - 45,379,459
Go emmental activities capital assets, net
of accumulated depreciation $51,542,030 $ 1,737,419 $ (473.256) $ - $52,806,193
44
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 7: Capital Assets, (continued)
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities:
General government $ 39,180
Public safety 39,744
Public works 2,568,968
Community development 14,352
Parks and recreation 138,763
Total depreciation expense $ 2,801,007
Note 8: Changes in Long-Term Liabilities
Long-term debt consists of the following at June 30, 2017:
Beginning Ending Due in
Governmental activities Balance Additions Deletions Balance One Year
Net pension liability(see Note 11,12) $ 7,854,302 $ 1,542,252 $ 1,113,875 $ 8,282,679 $
Retrospective deposit 369,505 451,479 589,079 231,905
Compensated absences 601,998 299,529 267,569 633,958 272,602
Total long-term debt $ 8,825,805 $ 2,293260 $ 1,970523 $ 9,148,542 $ 272,602
The City records expenditures related to compensated absences through the City's General Fund.
JPIA Retrospective Deposit
Liability and workers' compensation coverage are pooled self-insurance programs administered by
the California JPIA. Since its inception, the California JPIA, "Authority," has operated under a
retrospective funding model for its liability and workers' compensation programs. Retrospective
adjustments are based on the ongoing claim development of past coverage periods, and can result
in either an additional deposit or a refund. As of June 30, 2017, the City's retrospective deposit
payable for the Worker's compensation portion is $231,905.
45
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 9: Post Employment Benefit Plan
Plan Description: The City administers a single-employer defined benefit plan which provides
medical benefits to eligible retirees and their spouses in accordance with various labor
agreements.
Eligibility: Employees are eligible for retiree health benefits if they retire from the City on or after
age 50 with at least 5 years of service, and are eligible for a PERS pension. After age 65, Medicare
automatically becomes the primary provider of health coverage. The City's defined benefit plan
becomes the secondary provider. Eligible retirees will have no noticeable change in health benefits
or plan administration; however, there is a reduction in the City's cost of health coverage as the
secondary provider. The City's defined benefit plan administrator establishes the cost of secondary
provider rates annually. The City will pay 100% for eligible retirees' health coverage. Membership
of the plan consisted of the following at January 1, 2014, the date of the latest actuarial valuation:
Retirees and beneficiaries receiving benefits 18
Active plan members 56
Total 74
Funding Policy: The contribution requirements of plan members and the City are established and
may be amended by City Council. On May 26, 2009, the City Council passed a resolution to
participate in the PARS Public Agencies Post-Retirement Health Care Plan Trust, an irrevocable
trust established to fund post-employment benefits for its employees. The purpose of the trust is to
accumulate, hold, and distribute medical benefit plan assets for the exclusive benefit of retirees
and beneficiaries within the IRS Code Section 115 and in conformance with the accounting
standard. The trust is administered by Public Agency Retirement Services (PARS). PARS issues a
separate Comprehensive Annual Financial Report. Copies of the PARS annual financial report
may be obtained from PARS, 4350 Von Karman Avenue, Suite 100, Newport Beach, CA 92660.
The contribution required to be made under City Council and labor agreement requirements is
based on a pay-as-you-go basis (i.e., as medical insurance premiums become due). For fiscal year
2016-17, the City contributed $145,293.
46
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 9: Post Employment Benefit Plan, (continued)
Annual OPEB Cost and Net OPEB Obligation: The City's annual other postemployment benefit
(OPEB) cost (expense) is calculated based on the annual required contribution of the employer
(ARC), an amount actuarially determined in accordance with the parameters of GASB Statement
No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess)
over a period not to exceed thirty years. The following table shows the components of the City's
annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the
City's net OPEB obligation for these benefits:
Annual required contribution $ 48,431
Interest on net OPEB obligation (96,359)
Adjustment to annual required contribution 133,370
Annual OPEB cost(expense) 85,442
Contributions made (145,293)
Increase in net OPEB obligation (59,851)
Net OPEB obligation (asset)
beginning of year (1,605,989)
Net OPEB obligation (asset) - end of year $ (1,665,840)
The net OPEB asset is reported in the government-wide statements as a separate line item.
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB obligation for 2017, and the two preceding years were as follows:
Percentage Net
of Annual OPEB
Fiscal Annual OPEB OPEB Cost Obligation
Year Cost Contributed (Asset)
6/30/2015 $ 83,336 0% $(1,690,389)
6/30/2016 $ 84,400 0% $(1,605,989)
6/30/2017 $ 85,442 170% $(1,665,840)
47
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 9: Post Employment Benefit Plan, (continued)
Annual OPEB Cost and Net OPEB Obligation: Actuarial valuations of an ongoing plan involve
estimates of the value of reported amounts and assumptions about the probability of occurrence of
events far into the future. Examples include assumptions about future employment, mortality, and
the healthcare cost trend. Amounts determined regarding the funded status of the plan and the
annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of
funding progress, presented as required supplementary information following the notes to the
financial statements, presents multi-year trend information about whether the actuarial value of
plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the
benefits.
Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are
based on the substantive plan (the plan as understood by the employer and the plan members)
and include the types of benefits provided at the time of each valuation and the historical pattern of
sharing of benefit costs between employer and plan members to that point. The actuarial methods
and assumptions used include techniques that are designed to reduce the effects of short-term
volatility in actuarial accrued liabilities and the actuarial assets, consistent with the long-term
perspective of the calculations.
The ARC for the plan for the current fiscal year ended June 30, 2017, was determined as part of
the January 1, 2014 actuarial valuation. The actuarial cost method used for determining the benefit
obligations is the Entry Age Normal Actuarial Cost Method. The actuarial assumptions included a
6.0% investment rate of return, which is the assumed rate of the expected long-term investment
returns on plan assets calculated based on the funded level of the plan at the valuation date, and
an annual healthcare cost trend rate of 6.8% initially, reduced by decrements of 0.3%-0.4% per
year to an ultimate rate of 5% after the fifth year. The UAAL is being amortized on a level dollar
approach over 30 years on a closed basis. It is assumed the City's payroll will increase 3.25% per
year.
Note 10: Risk Management
Description of Self-Insurance Pool Pursuant to Joint Powers Agreement
The City of Rosemead is a member of the California Joint Powers Insurance Authority (Authority).
The Authority is composed of 116 California public entities and is organized under a joint powers
agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is
to arrange and administer programs for the pooling of self-insured losses, to purchase excess
insurance or reinsurance, and to arrange for group purchased insurance for property and other
lines of coverage. The California JPIA began covering claims of its members in 1978. Each
member government has an elected official as its representative on the Board of Directors. The
Board operates through a nine-member Executive Committee.
48
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 10: Risk Management, (continued)
Self-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A
retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and
prior. Retrospective adjustments are scheduled to continue indefinitely on coverage years 2012-13
and prior, until all claims incurred during those coverage years are closed, on a pool-wide basis.
This subsequent cost re-allocation among members, based on actual claim development, can
result in adjustments of either refunds or additional deposits required. Coverage years 2013A4
and forward are not subject to routine annual retrospective adjustment.
The total funding requirement for self-insurance programs is estimated using actuarial models and
pre-funded through the annual contribution. Costs are allocated to individual agencies based on
exposure (payroll) and experience (claims) relative to other members of the risk-sharing pool.
Additional information regarding the cost allocation methodology is provided below.
Liability
In the liability program claims are pooled separately between police and general government
exposures. (1) The payroll of each member is evaluated relative to the payroll of other members.
A variable credibility factor is determined for each member, which establishes the weight applied to
payroll and the weight applied to losses within the formula. (2) The first layer of losses includes
incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's
total incurred costs within the first layer. (3) The second layer of losses includes incurred costs
from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool's total
incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are
distributed based on the outcome of cost allocation within the first and second loss layers.
For 2016-17 the Authority's pooled retention is $2 million per occurrence, with reinsurance to $20
million, and excess insurance to $50 million. The Authority's reinsurance contracts are subject to
the following additional pooled retentions: (a) $2.5 million annual aggregate deductible in the $3
million xis $2 million layer, and (b) $3 million annual aggregate deductible in the $5 million xis $10
million layer. There is a third annual aggregate deductible in the amount of $2.5 million in the $5
million xis $5 million layer, however it is fully covered under a separate policy and therefore not
retained by the Authority.
The overall coverage limit for each member, including all layers of coverage, is $50 million per
occurrence. Costs of covered claims for subsidence losses have a sub-limit of $30 million per
occurrence.
49
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 10: Risk Management, (continued)
Self-Insurance Programs of the Authority, (continued)
Workers'Compensation
In the workers' compensation program claims are pooled separately between public safety (police
and fire) and general government exposures. (1) The payroll of each member is evaluated relative
to the payroll of other members. A variable credibility factor is determined for each member, which
establishes the weight applied to payroll and the weight applied to losses within the formula. (2)
The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated
as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of
losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as
a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from
$100,000 to statutory limits are distributed based on the outcome of cost allocation within the first
and second loss layers.
For 2016-17 the Authority's pooled retention is $2 million per occurrence, with reinsurance to
statutory limits under California Workers' Compensation Law.
Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to
$5 million is purchased as part of a reinsurance policy, and Employer's Liability losses from $5
million to $10 million are pooled among members.
Purchased Insurance
Pollution Legal Liability Insurance
The City of Rosemead participates in the pollution legal liability insurance program which is
available through the Authority. The policy covers sudden and gradual pollution of scheduled
property, streets, and storm drains owned by the City of Rosemead. Coverage is on a claims-
made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3-year
period from July 1, 2014 through July 1, 2017. Each member of the Authority has a $10 million
sub-limit during the 3-year term of the policy.
50
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 10: Risk Management, (continued)
Purchased Insurance, (continued)
Property Insurance
The City of Rosemead participates in the all-risk property protection program of the Authority. This
insurance protection is underwritten by several insurance companies. City of Rosemead property is
currently insured according to a schedule of covered property submitted by the City of Rosemead
to the Authority. City of Rosemead property currently has all-risk property insurance protection in
the amount of $25,000,000. There is a $5,000 deductible per occurrence except for non-
emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid
annually and are not subject to retrospective adjustments.
Crime Insurance
The City of Rosemead purchases crime insurance coverage in the amount of $1,000,000 with a
$2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid
annually and are not subject to retrospective adjustments.
Special Event Tenant User Liability Insurance
The City of Rosemead further protects against liability damages by requiring tenant users of certain
property to purchase low-cost tenant user liability insurance for certain activities on agency
property. The insurance premium is paid by the tenant user and is paid to the City of Rosemead
according to a schedule. The City of Rosemead then pays for the insurance. The insurance is
arranged by the Authority.
Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced
settlements or judgments that exceeded pooled or insured coverage. There were also no
significant reductions in pooled or insured liability coverage in 2016-17.
As of June 30, 2017, the City had retrospective deposits payable to the Authority in the amount of
$231,905. The deposit will be repaid through adjustments to premiums over the next three years.
The retrospective deposit payable has been included in noncurrent liabilities on the Statement of
Net Position.
51
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS
A. General Information about the Pension Plan
Plan Description
All qualified permanent and probationary employees are eligible to participate in the Public Agency
Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the
California Public Employees' Retirement System (CaIPERS.) The Plan consists of individual rate
plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all
other). Plan assets may be used to pay benefits for any employer rate plan of the safety and
miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not
separate plans under GASB Statement No. 68. Individual employers may sponsor more than one
rate plan in the miscellaneous or safety risk pools. The City sponsors three miscellaneous rate
plans. Benefit provisions under the Plan are established by State statute and City resolution.
CaIPERS issues publicly available reports that include a full description of the pension plan
regarding benefit provisions, assumptions and membership information that can be found on the
CaIPERS' website, at www.calpers.ca.gov.
Benefits Provided
CaIPERS provides service retirement and disability benefits, annual cost of living adjustments and
death benefits to plan members, who must be public employees and beneficiaries. Benefits are
based on years of credited service, equal to one year of full time employment. Members with five
years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members
are eligible for non-duty disability benefits after 5 years of service. The death benefit is one of the
following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death
Benefit. The cost of living adjustments for each plan are applied as specified by the Public
Employees' Retirement Law.
The Plans operate under the provisions of the California Public Employees' Retirement Law
(PERL), the California Public Employees' Pension Reform Act of 2013 (PEPRA), and the
regulations, procedures and policies adopted by the CaIPERS Board of Administration. The Plan's
authority to establish and amend the benefit terms are set by the PERL and PEPRA, and may be
amended by the California state legislature and in some cases require approval by the CaIPERS
Board.
The Plan's provisions and benefits in effect at June 30, 2017, are summarized as follows:
Miscellaneous Tier I Miscellaneous Tler II Miscellaneous PEPRA
Prior to From July 1,2010 to On or after
Hire date July 1,2010 December 31. 2012 January 1,2013
Benefit formula 2.7%@ 55 2%@ 55 2%@ 62
Benefit resting schedule 5 years sensce 5 years serace 5 years serce
Benefit payments monthly for if monthly for life monthly for life
Retirement age 50 to 55883 5010 638 up 52 to 678up
Monthly benefits,as a%of eligible compensation 2.0%to 2.7% 1.426 to 2.418 1.0%to 2.5%
Required employee contnbution rates 8.000% 7.000% 6250%
Required employer contribution rates 10 958% 8.512% 6.237%
52
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS, (continued)
A. General Information about the Pension Plan, (continued)
Contributions
Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that the
employer contribution rates for all public employers be determined on an annual basis by the
actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan
contributions are determined through CaIPERS' annual actuarial valuation process. For public
agency cost-sharing plans covered by either the Miscellaneous or Safety risk pools, the Plan's
actuarially determined rate is based on the estimated amount necessary to pay the Plan's
allocated share of the risk pool's costs of benefits earned by employees during the year, and any
unfunded accrued liability. The employer is required to contribute the difference between the
actuarially determined rate and the contribution rate of employees. Employer contribution rates
may change if plan contracts are amended. Payments made by the employer to satisfy contribution
requirements that are identified by the pension plan terms as plan member contribution
requirements are classified as plan member contributions. Employer Contributions to the Plan for
the fiscal year ended June 30, 2017 were $1,204,223. The actual employer payments of
$1,113,875 made to CaIPERS by the City during the measurement period ended June 30, 2016
differed from the City's proportionate share of the employer's contributions of $673,753 by
$440,122 which is being amortized over the expected average remaining service lifetime in the
Public Agency Cost-Sharing Multiple Employer Plan.
B. Net Pension Liability
The City's net pension liability for the Plan is measured as the total pension liability, less the
pension plan's fiduciary net position. The net pension liability of the Plan is measured as of
June 30, 2016, using an annual actuarial valuation as of June 30, 2015 rolled forward to June 30,
2016 using standard update procedures. A summary of principal assumptions and methods used
to determine the net pension liability is as follows.
53
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS, (continued)
B. Net Pension Liability, (continued)
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
Miscellaneous Plans
Valuation Date June 30, 2015
Measurement Date June 30, 2016
Actuarial Cost Method Entry Age Normal
Asset Valuation Method Market Value
Actuarial Assumptions'.
Discount Rate(2) 765%
Inflation 2.75%
Salary Increasesl1' 3.3%-14.2%
lnwstment Rate of Return 121 7.65%
Deriwd using CALPERS'membership data for all
Mortality Rate Table(31 Funds
Post Retirement Benefit Increase Contract COLA up to 2 75% until purchasing power
protection allowance floor on purchasing power applies,
2.75%thereafter
)1)Annual increases vary by category,entry age,and duration of service
(2)Net of pension plan invesNents and administrative expenses,Includes Inflation
(3)The mortality table used w as developed based on CaIPERs specnic data.The
table includes 20 years of mortality improvements using Socety of Actuaries Scale
BB.For more details on this table,please refer to the 2014 experience study report
All other actuarial assumptions used in the June 30, 2014, valuation were based on the results of
an actuarial experience study for the period from 1997 to 2011, including updates to salary
increase, mortality and retirement rates. The Experience Study report can be obtained at
CaIPERS' website under Forms and Publications.
Change of Assumptions
There were no changes of assumptions.
54
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS, (continued)
B. Net Pension Liability, (continued)
Discount Rate
The discount rate used to measure the total pension liability was 7.65 percent. To determine
whether the municipal bond rate should be used in the calculation of the discount rate for each
plan, CaIPERS stress tested plans that would most likely result in a discount rate that would be
different from the actuarially assumed discount rate. The tests revealed the assets would not run
out. Therefore, the current 7.65 percent discount rate is appropriate and the use of the municipal
bond rate calculation is not deemed necessary. The long-term expected discount rate of 7.65
percent is applied to all plans in the Public Employees Retirement Fund (PERE). The cash flows
used in the testing were developed assuming that both members and employers will make their
required contributions on time and as scheduled in all future years. The stress test results are
presented in a detailed report called "GASB Crossover Testing Report" that can be obtained at
CaIPERS' website under the GASB 68 section.
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CaIPERS took into account both short-term
and long-term market return expectations as well as the expected pension fund (PERF) cash flows.
Taking into account historical returns of all the PERF asset classes (which includes the agent plan
and two cost-sharing plans or PERF A, B and C funds), expected compound (geometric) returns
were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a
building-block approach. Using the expected nominal returns for both short-term and long-term, the
present value of benefits was calculated for each fund. The expected rate of return was set by
calculating the single equivalent expected return that arrived at the same present value of benefits
for cash flows as the one calculated using both short-term and long-term returns. The expected
rate of return was then set equal to the single equivalent rate calculated above and rounded down
to the nearest one quarter of one percent.
55
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS, (continued)
B. Net Pension Liability, (continued)
The following table reflects long-term expected real rate of return by asset class. The rate of return
was calculated using the capital market assumptions applied to determine the discount rate and
asset allocation. The target allocation shown was adopted by the CaIPERS Board effective on
July 1, 2015.
New Strategic Real Return Real Return
Asset Class Allocation Years 1 -101 Years 11+2
Global Equity 51.0% 5.25% 5.71%
Global Fixed Income 20.0% 0.99% 2.43%
Inflation Sensitive 6.0% 0.45% 3.36%
Private Equity 10.0% 6.83% 6.95%
Real Estate 10.0% 4.50% 5.13%
Infrastructure and Forestland 2.0% 4.50% 5.09%
Liquidity 1.0% (0.55%) (1.05%)
Total 100%
' An expected inflation of 2.5% used for this period
2 An expected inflation of 3.0% used for this period
Pension Plan Fiduciary Net Position
Information about the pension plan's assets, deferred outflows of resources, liabilities, deferred
inflows of resources, and fiduciary net position are presented in CaIPERS' audited financial
statements, which are publicly available reports that can be obtained at CaIPERS' website, at
www.calpers.ca.gov. The plan's fiduciary net position and additions to/deductions from the plan's
fiduciary net position have been determined on the same basis used by the pension plan, which is
the economic resources measurement focus and the accrual basis of accounting. Benefits and
refunds are recognized when due and payable in accordance with the terms of the plan.
Investments are reported at fair value.
The plan fiduciary net position disclosed in the GASB 68 accounting valuation report may differ
from the plan assets reported in the funding actuarial valuation report due to several reasons. First,
for the accounting valuations, CaIPERS must keep items such as deficiency reserves, fiduciary
self-insurance and Other Post-Employment Benefits (OPEB) expense included as assets. These
amounts are excluded for rate setting purposes in the funding actuarial valuation. In addition,
differences may result from early Comprehensive Annual Financial Report closing and final
reconciled reserves.
56
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS, (continued)
C. Proportionate Share of Net Pension Liability
The following table shows the Plan's proportionate share of the net pension liability over the
measurement period.
Increase(Decrease)
Plan Total Plan Net
Miscellaneous Plans Pension Plan Fiduciary Pension
Liability Net Position Liability
(a) (b) (c ) = (a)- (b)
Balance at: 6/30/2015(VD) $ 25,183,842 $ 17,545,778 $ 7,638,064
Balance at 6/30/2016(MD) 26,709,970 18,092,554 8,617,416
Net changes during 2015-16 $ 1,526,128 $ 546,776 $ 979,352
Valuation Date (VD), Measurement Date (MD).
The City's net pension liability for the Plan is measured as the proportionate share of the net
pension liability. The net pension liability of the Plan is measured as of June 30, 2016, and the total
pension liability for the Plan used to calculate the net pension liability was determined by an
actuarial valuation as of June 30, 2015 rolled forward to June 30, 2016 using standard update
procedures. The City's proportion of the net pension liability was determined by CaIPERS using the
output from the Actuarial Valuation System and the fiduciary net position, as provided in the
CaIPERS Public Agency Cost-Sharing Allocation Methodology Report, which is a publicly available
report that can be obtained at CaIPERS' website, at www.calpers.ca.gov. The City's proportionate
share of the net pension liability for the Plan as of the June 30, 2015 and 2016 measurement dates
was as follows:
Plans
Proportionate Share - June 30, 2015 0.27841%
Proportionate Share- June 30, 2016 0.24806%
Change- Increase (Decrease) -0.03035%
57
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans - CaIPERS, (continued)
C. Proportionate Share of Net Pension Liability, (continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the
Discount Rate
The following presents the City's proportionate share of the net pension liability of the Plan as of
the measurement date, calculated using the discount rate of 7.65 percent, as well as what the net
pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower
(6.65 percent)or 1 percentage-point higher(8.65 percent)than the current rate:
Discount Current Discount
Plans Rate - 1% Discount Rate + 1%
(6.65%) Rate (7.65%) (8.65%)
Net Pension Liability $12,213,411 $ 8,617,416 $ 5,645,506
Subsequent Events
There were no subsequent events that would materially affect the results presented in this
disclosure.
Recognition of Gains and Losses
Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net
position are recognized in pension expense systematically over time.
The first amortized amounts are recognized in pension expense for the year the gain or loss
occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of
resources related to pensions and are to be recognized in future pension expense.
The amortization period differs depending on the source of the gain or loss:
Difference between projected 5 year straight-line amortization
and actual earnings
All other amounts Straight-line amortization over the average expected
remaining service lives of all members that are
provided with benefits (active, inactive and retired) as
of the beginning of the measurement period
58
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS, (continued)
C. Proportionate Share of Net Pension Liability, (continued)
The expected average remaining service lifetime (EARSL) is calculated by dividing the total future
service years by the total number of plan participants (active, inactive, and retired) in the Public
Agency Cost-Sharing Multiple-Employer Plan (PERF C).
The EARSL for the Plan for the 2014-15 measurement period is 3.7 years, which was obtained by
dividing the total service years of 475,689 (the sum of remaining service lifetimes of the active
employees) by 127,009 (the total number of participants: active, inactive, and retired). Note that
inactive employees and retirees have remaining service lifetimes equal to 0. Also note that total
future service is based on the members' probability of decrementing due to an event other than
receiving a cash refund.
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to
Pensions
As of the start of the measurement period (July 1, 2015), the City's net pension liability was
$7,638,064. For the measurement period ending June 30, 2016 (the measurement date), the City
incurred a pension expense of$739,402.
As of June 30, 2017, the City has deferred outflows and deferred inflows of resources related to
pensions as follows:
Miscellaneous Plans Deferred Outflows of Deferred Inflows of
Resources Resources
Differences between Expected and
Actual Experience $ 41,201 $ 9,020
Changes of Assumptions - 389,803
Net Difference between Projected and
Actual Earnings on Pension Plan
Investments 2,407,830 -
Adjustment due to Differences in
Proportions - 26,488
Change in Employees Proprotion 703,319 305,640
Difference in Actual vs Projected
Contributions 573,771 -
Pension Contributions Subsequent to
Measurement Date 1,204,223 -
Total $ 4,930,344 $ 730,951
59
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 11: Defined Benefit Pension Plans -CaIPERS, (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to
Pensions, (continued)
These amounts above are net of outflows and inflows recognized in the 2015-16 measurement
period expense. Contributions subsequent to the measurement date of $1,204,223 reported with
deferred outflows of resources will be recognized as a reduction of the net pension liability in the
upcoming fiscal year. Other amounts reported as deferred outflows and deferred inflows of
resources related to pensions will be recognized in future pension expense as follows:
Deferred
Measurement Period Ended Outflowsf(Inflows) of
June 30: Resources
2017 $ 850,393
2018 750,364
2019 892,328
2020 502,085
2021 -
Thereafter -
E. Payable to the Pension Plan
At June 30, 2017, the City reported a payable of $0 for the outstanding amount of contributions to
the pension plan required for the year ended June 30, 2017.
60
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans—Retirement Enhancement Plan
A. General Information about the Pension Plan
Plan Description
The Plan is a single-employer, agent, supplemental employee defined benefit pension plan (the
plan II) administered by the Public Agency Retirement Services (PARS) Phase II Systems. A full
description of the pension plan regarding number of employees covered, benefit provisions,
assumptions (for funding, but not account purposes), and membership information are listed in the
July 1, 2015 Annual Actuarial Valuation Report. Details of the benefits provided can be obtained
from the actuarial valuation reports. PARS issues a publicly available financial report that includes
financial statement and required supplementary information for the plan II. That report may be
obtained writing to PARS, 3961 MacArthur Boulevard, Suite 200, Newport Beach, California,
92660.
Benefits Provided
The Retirement Enhancement Plan provides a benefit equal to the PARS "3.0% at 55" plan factor
(formula is a static 3.0% at age 55 and older), less the CaIPERS "2.7% at 55" plan factors (a static
2.7% at age 55 and older) for all years of full-time continuous City service. The benefit from this
plan when added to the CaIPERS benefit may not exceed 90% of final compensation.
The Plan includes a pre-retirement death benefit for those eligible employees who die while
actively employed with the City and meet the age and service eligibility requirements for a
supplemental retirement benefit. The benefit will be paid to a surviving spouse or domestic partner
as a life annuity equal to the employee's supplemental retirement benefit actuarially reduced as if
the employee had elected a 100%joint-and-survivor annuity.
The Plan is closed to all employees in the eligible classes hired on or after July 1, 2010 ("soft-
freeze").
61
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued)
A. General Information about the Pension Plan, (continued)
Benefits Provided, continued
The Plan's provisions and benefits in effect at June 30, 2017, (measurement date) are summarized
as follows:
Supplemental
On or after September 25, 2007
Hire date On or before June 30, 2010
Benefit formula 3% @ 55 less CaIPERS 2.7% @55
Benefit vesting schedule from date of hire
Benefit payments life only annuity
Retirement age 55
Monthly benefits, as a % of eligible compensation 0.576%
Required employee contribution rates none
Required employer contribution rates 3.790%
Employees Covered
At June 30, 2017, the following employees were covered by the benefit terms:
Supplemental
Inactive employees or beneficiaries
currently receiving benefits 12
Active employees 41
53
Contributions
Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that the
employer contribution rates for all public employers be determined on an annual basis by the
actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan
contributions are determined through PARS' annual actuarial valuation process. The actuarially
determined rate is the estimated amount necessary to finance the costs of benefits earned by
employees during the year, with an additional amount to finance any unfunded accrued liability. For
the measurement period ended June 30, 2017 (the measurement date), the employer's
contribution rate is 8.41 percent of annual payroll. Employer contribution rates may change if plan
contracts are amended. Employer Contributions for the measurement period ended June 30, 2017
are $164,389.
62
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued)
B. Net Pension Liability
The City's net pension liability for the Retirement Enhancement Plan is measured as the total
pension liability, less the pension plan's fiduciary net position. The net pension liability of the Plan
is measured as of June 30, 2017, using an annual actuarial valuation as of June 30, 2016. A
summary of principal assumptions and methods used to determine the net pension liability is as
follows.
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
Supplemental
Valuation Date June 30, 2016
Measurement Date June 30, 2017
Actuarial Cost Method Entry Age Normal
Asset Valuation Method None
Actuarial Assumptions:
Discount Rate 6.50%
Inflation 2.75%
Salary Increases (1) 3.5% - 12.2%
Investment Rate of Return 6.50%
Cost of Living Adjustment 2.00%
Mortality Rate Table Pre-retirement:
CaIPERS Miscellaneous
Non-Industrial Rates.
Post-retirement:
CaIPERS 1997-2011
Healthy Retiree
Tables(sex distinct)
projected using Scale
AA and base year of
2008.
(1) Includes inflation.Graded based on years of service,3.50%after 30 years of service.
Discount rate
GASB 67 and 68 generally require that a blended discount rate be used to measure the Total
Pension Liability (the Actuarial Accrued Liability calculated using the Individual Entry Age Normal
Cost Method). The long-term expected return on plan investments may be used to discount
liabilities to the extent that the plan's Fiduciary Net Position (fair market value of assets) is
projected to cover benefit payments and administrative expenses. A 20-year high quality (ANAa or
higher) municipal bond rate must be used for periods where the Fiduciary Net Position is not
projected to cover benefit payments and administrative expenses. Determining the discount rate
under GASB 67 and 68 will often require that the actuary perform complex projections of future
benefit payments and asset values.
63
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued)
B. Net Pension Liability, (continued)
Discount rate, continued
GASB 67 and 68 (paragraph 29) do allow for alternative evaluations of projected solvency, if such
evaluation can reliably be made. GASB does not contemplate a specific method for making an
alternative evaluation of sufficiency; it is left to professional judgment.
The following circumstances justify an alternative evaluation of sufficiency for the City of
Rosemead:
• The City of Rosemead has at least a 5-year history of generally paying at least 100% of the
Actuarially Determined Contribution (previously termed the Annual Required Contribution).
• The Actuarially Determined Contribution is based on a closed amortization period, which
means that payment of the Actuarially Determined Contribution each year will bring the plan
to a 100% funded position by the end of the amortization period.
• GASB 67 and 68 specify that the projections regarding future solvency assume that plan
assets earn the assumed rate of return and there are no future changes in the plan
provisions or actuarial methods and assumptions, which means that the projections would
not reflect any adverse future experience which might impact the plan's funded position.
Based on these circumstances, the City believes that the detailed depletion date projections
outlined in GASB 67 and 68 will show that the Fiduciary Net Position is always projected to be
sufficient to cover benefit payments and administrative expenses.
June 30,2016 June 30,2017
Discount rate 6.50% 6.50%
Long-term expected rate of return, net of investment expense 6.50% 6.50%
Municipal bond rate N/A WA
The plan's fiduciary net position was projected to be available to make all projected future benefit
payments of current active and inactive employees. Therefore, the discount rate for calculating the
total pension liability is equal to the long-term expected rate of return.
64
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans —Retirement Enhancement Plan, (continued)
B. Net Pension Liability, (continued)
Pension Plan Fiduciary Net Position
Information about the pension plan's assets, deferred outflows of resources, liabilities, deferred
inflows of resources, and fiduciary net position are presented in the City's GASB 68 Employer
Accounting Information report. The plan's fiduciary net position and additions to/deductions from
the plan's fiduciary net position have been determined on the same basis used by the pension
plan, which is the economic resources measurement focus and the accrual basis of accounting.
Benefits and refunds are recognized when due and payable in accordance with the terms of each
plan. Investments are reported at fair value.
C. Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the measurement
period.
Increase (Decrease)
Total Plan Net Pension
Pension Fiduciary Liability
Liability Net Position (Asset)
(a) (b) (c)= (a)-(b)
Balances as of June 30, 2016 $ 3,022,967 $ 2,806,729 $ 216,238
Changes for the year:
• Service Cast 36.410 - 36,410
• Interest on the Total
Pension Liability 192,440 - 192,440
• Effect of plan changes - - -
• Effect of economic
Demographic gains or
Losses (355,400) - (355,400)
• Effect of assumptions
Changes or inputs - - -
• Benefit Payments (200,693) (204693) -
• Employer contributions - 164,389 (164,389)
• Member contributions - - -
• Net Investment Income - 266,884 (266,884)
• Administrative expenses - (6,848) 6,848
Net Changes during 2016-17 $ (327,243) $ 223,732 $ (550,975)
Balance as of June 30, 2017 $ 2,695,724 $ 3,030,461 $ (334,737)
65
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued)
C. Changes in the Net Pension Liability, (continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability (asset) of the City of Rosemead Retirement
Enhancement Plan, calculated using the discount rate of 6.50%, as well as what the City of
Rosemead Retirement Enhancement Plan's net pension liability would be if it were calculated
using a discount rate that is 1 percentage point lower(5.50%) or 1 percentage point higher (7.50%)
than the current rate.
Discount Rate -1% Current Discount Discount Rate + 1%
(5.50%) Rate (6.50%) (7.50%)
Net Pension Liability/(Asset) $ (22,815) $ (334,737) $ (600,185)
Subsequent Events
There were no subsequent events that would materially affect the results presented in this
disclosure.
Recognition of Gains and Losses
Investment gains/losses are recognized in pension expense over a period of five years;
economic/demographic gains/losses and assumption changes or inputs are recognized over the
average remaining service life for all active and inactive members.
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related
to Pensions
As of the start of the measurement period (July 1, 2016), the net pension liability is $216,238.
For the measurement period ending June 30, 2017 (the measurement date), the City incurred a
pension expense of $43,412 for the Plan. A complete breakdown of the pension expense is as
follows:
66
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related
to Pensions, (continued)
Description Amount
Service Cost $ 36,410
Interest on the Total Pension Liability 192,440
Administrative expenses 6,848
Expected investment return net of investment expenses (181,057)
Recognition of Deferred Inflows/Outflows of Resources:
Recognition of economic/demographic gains or losses (53,848)
Recognition of investment gains or losses 42,619
Total Pension Expense $ 43,412
As of June 30, 2017, the City has deferred outflows and deferred inflows of resources related to
pensions as follows:
Deferred Outflows • Deferred Inflows of
of Resources Resources
Differences between Expected and
Actual Experience $ - $ 301,552
Net Difference between Projected and
Actual Earnings on Pension Plan 87,601 _ -
Total $ 87,601 $ 301,552
67
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 12: Defined Benefit Pension Plans— Retirement Enhancement Plan, (continued)
D. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related
to Pensions, (continued)
Amounts reported as deferred outflows and deferred inflows of resources related to pensions will
be recognized in future pension expense as follows:
Measurement Deferred
Period Ended Outflows/(Inflows) of
June 30: Resources
2018 $ (11,229)
2019 (11,229)
2020 (34,318)
2021 (71,015)
2022 (53,848)
Thereafter* (32,312)
E. Payable to the Pension Plan
At June 30, 2017, the City reported a payable of$6,289 for the outstanding amount of contributions
to the pension plan required for the year ended June 30, 2017.
Note 13: Employees Retirement Plan
PARS Alternate Retirement System (ARS) (Plan)
The City currently offers an alternative plan for employees classified as part-time, seasonal or
temporary (PST). The plan is administered by the Public Agency Retirement Services (PARS) and
is a qualified deferred compensation plan created in accordance with Internal Revenue Code
Section 457(b). All amounts of compensation deferred under the plan, all property, or rights are
solely the property and rights of the employee and beneficiaries of the plan. Deferred
compensation funds are not subject to claims of the City's general creditor; consequently the
assets and related liabilities of the plan are not included within the City's financial statements. The
City contributes 3.75% percent of the employee's compensation. In addition, each participant is
required to contribute 3.75% of their salary. During the current fiscal year, the City contributed
$26,265 to the plan.
68
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 14: Commitments and Contingencies
The City is a member of the Los Angeles County Liability Trust Fund (the Trust Fund), which was
set up to pay for litigation involving the Los Angeles County Sheriffs' Department within any of the
40 cities that are served by the Los Angeles County Sheriffs' Department. The Trust Fund was and
is being funded by the 40 cities based upon each city's allocated surcharge, calculated as a
percentage of each city's contribution to the total contracted amount with the County paid to Los
Angeles County for the use of its deputies. Based upon the agreement signed by all of the 40 cities
at the time the Trust Fund originated, the cities will be jointly liable for any and all claims filed
against the Los Angeles County Sheriffs' Department, regardless of the location within the 40
cities.
The City is a defendant in certain legal actions arising in the normal course of operations. In the
opinion of management, any liability resulting from such actions will not have a material adverse
effect on the City's financial position.
Note 15: Fund Deficits
The following funds had deficit balances as of June 30, 2017:
Major Governmental Fund:
City Capital Projects Fund $ (486,089)
Nonmajor Governmental Funds:
HOME Program (163,496)
69
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 16: Expenditures in Excess of Appropriations
Expenditures exceeded appropriations in the following funds:
Fund Budget Actual Variance
Major Governmental Fund:
General Fund
General Government $ 3,974,800 $ 4,104,242 $ (129,442)
Community Development 1,747,700 2,034,505 (286,805)
Note 17: Successor Agency
Successor Agency Long-Term Debt
The debt of the Successor Agency as of June 30, 2017, is as follows:
Beginning Ending Due in
Successor Agency: Balance Additions Deletions Balance One Year
Bonds:
Tax Allocation Bonds.
Series 2006A $ 4,780000 $ - $ 4,780000 $ - $ -
Tax Allocation Bonds,
Series 2006B 23,295,000 - 23,295,000 - -
Tax Allocation Bonds,
Series 2010A 7,895,000 - 850,000 7,045000 885,000
Tax Allocation Bonds,
Series 2016 - 24,730000 - 24,730,000 1,435000
Subtotal bonds 35970,000 24,730000 28,925,000 31,775.000 2,320000
Deferred amounts.
Unamodized bond
premiums 118,811 1,815,502 225,605 1,708,708 106,794
Discount on issuance (107,154) - (14,780) (92,374) (14,780)
Total bonds 35981,657 26,545,502 29,135825 33,391,334 2,412,014
Total long-term debt $ 35,981.657 $ 26,545,502 $ 29,135825 $ 33,391,334 $ 2,412,014
70
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 17: Successor Agency, (continued)
Future debt service requirements are as follows:
Fiscal years ending
June 30, • Principal Interest
2018 $ 2,320,000 $ 1,386,038
2019 2,160,000 1,314,191
2020 2,205,000 1,229,000
2021 2,295,000 1,126,375
2022 2,405,000 1,010,125
2023-2027 8,770,000 3,487,000
2028-2032 7,930,000 1,664,900
2033 3,690,000 149,000
Totals $ 31,775,000 $ 11,366,629
Tax Allocation Bonds, Series 2006A
On March 9, 2006, the Commission issued tax allocation bonds in the amount of $14,005,000
(Series 2006A) to: (1) refund a portion of the Commission's outstanding Series 1993A bonds and
(2) to finance redevelopment activity in Redevelopment Project Area No.1. The bonds bear interest
ranging from 3.25% to 5.00% and mature in annual installments of $780,000 to $1,250,000 on
various dates through October 1, 2022. The Commission purchased a surety bond in lieu of cash
reserve in the amount of$1,323,238. Portions of the bonds are subject to early redemption, at the
option of the Commission, beginning October 1, 2017. Bond premiums are amortized over the life
of the bonds. As of June 30, 2017, the Tax Allocation Bonds, Series 2006A were refinanced with
proceeds from the 2016 Subordinate Tax Allocation Refunding Bonds.
Tax Allocation Bonds, Series 2006B
In December 2006, the Commission issued $24,230,000 in Project Area No.1 Tax Allocation
Bonds. The bonds mature in amounts ranging from $70,000 to $1,430,000 with interest rates
ranging from 3.25% to 4.25% through October 1, 2033. The net proceeds were used to refund the
remaining $23,095,000 amount outstanding on the 1993 Tax Allocation Bonds. The securities were
deposited in an irrevocable trust with an escrow agent to provide for all future debt service
payments on the 1993 Bonds. As a result, the entire 1993 Bonds are considered to be deceased
and the liability for those bonds has been removed from the government-wide financial statements.
As of June 30, 2017, the Tax Allocation Bonds, Series 2006B were refinanced with proceeds from
the 2016 Subordinate Tax Allocation Refunding Bonds.
71
City of Rosemead
Notes to the Basic Financial Statements
For the year ended June 30, 2017
Note 17: Successor Agency, (continued)
Tax Allocation Bonds, Series 2010,4
In July 2010, the Commission issued $11,230,000 in Merged Project Area Tax Allocation Bonds.
The bonds mature in amounts ranging from $200,000 to $1,135,000 with interest rates ranging
from 3.00% to 5.00% through December 1, 2023. The bonds were issued to provide funds to
finance the costs of certain redevelopment projects within the Merged Project Area including
infrastructure improvements and the acquisition of land. Principal is payable annually on December
1, beginning on December 1, 2011. Interest is payable semi-annually on June 1 and December 1.
Per the bond indenture, a reserve is required to be maintained. At June 30, 2017, the balance held
in the reserve account was $1,125,671. As of June 30, 2017 the outstanding balance was
$7,045,000.
2016 Subordinate Tax Allocation Refunding Bonds
In October 2016, the Successor Agency to the Rosemead Redevelopment Agency (Successor
Agency) issued the 2016 Subordinate Tax Allocation Refunding Bonds in the amount of
$24,230,000 for the purpose of refunding, on a current basis, all of the outstanding Rosemead
Community Development Commission Redevelopment Project Area No. 1 Tax Allocation Bonds,
Series 2006A, initially issued in the principal amount of $14,005,000, and the Rosemead
Community Development Commission Redevelopment Project Area No. 1 Tax Allocation
Refunding Bonds, Series 20068, initially issued in the principal amount of$24,230,000. Interest is
payable semi-annually on April 1 and October 1. As of June 30, 2017 the outstanding balance was
$24,730,000. The Successor Agency reduced its aggregate debt service payments by $3,102,962,
which resulted in an economic gain of$2,308,787.
72
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Required Supplementary Information
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City of Rosemead
Notes to the Required Supplementary Information
Fiscal Year Ended June 30, 2017
Note 1: Budgetary Information
Annual budgets are legally adopted on a basis consistent with accounting principles generally
accepted in the United States of America for all governmental funds. All annual appropriations
lapse at fiscal year end.
On or before the last day in March of each year, all business units and component units of the
government submit requests for appropriations to the City Manager so that a budget may be
prepared. Before the first Thursday of June, the proposed budget is presented to the City
Council for review. The Council holds public hearings and a final budget must be prepared and
adopted no later than June 30.
The appropriated budget is prepared by fund and department. The City's Department Heads,
with approval of the Finance Director and City Manager, may make transfers of appropriations
within a department and between departments within a fund. Transfers of appropriations
between funds must be approved by the City Council. The legal level of budgetary control (i.e.,
the level at which expenditures may not legally exceed appropriations) is the fund level. The
Council made several supplemental budgetary appropriations throughout the year. The
supplemental budgetary appropriations made in the various governmental funds are detailed in
the required supplementary information. Budgets were legally adopted for all governmental
funds with the exception of the Narcotics Seizure Fund.
Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase
orders, and contracts) outstanding at year end do not constitute expenditures or liabilities
because the commitments will be appropriated and honored during the subsequent year.
73
City of Rosemead
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
Fiscal Year Ended June 30, 2017
Variance
Original Final Positive
Budget Budget Actual (Negative)
REVENUES
Taxes $ 16,554,500 $ 16754,500 $ 17,447,510 $ 693010
Intergovernmental 239,600 239,600 209,332 (30,268)
Licenses and permits 1,919,700 2,075,000 2,754,881 679,881
Charges for services 846,600 846,600 923,412 76,812
Fines,forfeitures and penalties 634,300 634,300 607,754 (26,546)
Investment income 288,300 288,300 229,378 (58,922)
Other 156,200 156,200 201,825 45,625
Total revenues 20,639,200 20,994,500 22,374092 1,379,592
EXPENDITURES
Current:
General government 3.674,300 3,974800 4.104,242 (129,442)
Public safety 8,940,700 8,941,900 8,868,713 73,187
Public works 3,613200 3,761,200 3,718,525 42,675
Community development 1,639,000 1,747,700 2,034,505 (286,805)
Park and recreation 2,352,100 2,352,100 2,284,393 67,707
Total expenditures 20,219,300 20777,700 21,010,378 (232,678)
Excess (deficiency)of revenues
over(under)expenditures 419,900 216,800 1,363714 1,146,914
Other financing sources (uses):
Transfers out (835000) (835,000) (797,587) 37,413
Total other financing sources (uses) (835,000) (835,000) (797,587) 37413
Net change in fund balance (415,100) (618,200) 566127 1,184,327
Fund balance, beginning of year 18,468,149 18,468,149 18468,149 -
Fund balance,end of year $ 18,053,049 $ 17,849,949 $ 19,034,276 $ 1,184,327
74
City of Rosemead
Required Supplementary Information
Budgetary Comparison Schedule
Rosemead Housing Development Corporation -Special Revenue Fund
Fiscal Year Ended June 30, 2017
Variance
Original Final Positive
Budget Budget Actual (Negative)
REVENUES
Intergovernmental $ - $ - $ 412,286 $ 412286
Investment income 437,400 437,400 433,130 (4,270)
Other 8,100 8100 5,767 (2333)
Total revenues 445,500 445,500 851,183 405,683
EXPENDITURES
Current:
Community development 643,600 843,600 810,847 32,753
Total expenditures 843,600 843,600 810,847 32,753
Net change in fund balance (398,100) (398,100) 40,336 438,436
Fund balance, beginning of year 186,933 186,933 186,933 -
Fund balance,end of year $ (211,167) $ (211,167) $ 227269 $ 438,436
75
City of Rosemead
Required Supplementary Information
Budgetary Comparison Schedule
City Capital Project—Capital Projects Fund
Fiscal Year Ended June 30, 2017
Variance
Original Final Positive
Budget Budget Actual (Negative)
REVENUES
Intergovernmental $ - $ - $ 589,523 $ 589,523
Charges for services - - 1,240 1 240
Other - - 23,953 23.953
Total revenues - - 614,716 614,716
EXPENDITURES
Current:
Public works 226,800 226,800 159,013 67,787
Capital outlay 3,955,000 3,955,000 2,790.493 1,164,507
Total expenditures 4,181,800 4,181,800 2,949,506 1232,294
Excess(deficiency)of revenues
over(under)expenditures (4,181,800) (4,181,800) (2,334,790) 1847,010
Other financing sources(uses):
Transfers in 3,754,300 3,754,300 2,421,611 (1,332,689)
Total other financing sources(uses) 3254,300 3,754,300 2421,611 (1232,689)
Net change in fund balance (427,500) (427,500) 86,821 514,321
Fund balance(deficit),beginning of year (572,910) (572,910) (572,910) -
Fund balance(deficit),end of year $ (1,000410) $ (1,000410) $ (480089) $ 514,321
76
City of Rosemead
Required Supplementary Information
Other Post-Employment Benefits Plan
Schedule of Funding Progress
Entry Age Actuarial Unfunded UAAL as a
Actuarial Actuarial Accrued Value of AAL Funded Covered %of Covered
Valuation Liability (AAL) Assets (UAAL) Ratio Payroll Payroll
Date (a) (b) (a-b) (b/a) (c) ((a-b)/c)
1/1/2008 $ 3,548,605 $ - $ 3,548,605 0% $ 1,682,985 211%
1/1/2011 3,378,875 615,576 2,763,299 18% 3,876,698 71%
1/1/2014 2,920,067 3,361,427 (441,360) 115% 3,248,298 -14%
77
City of Rosemead
Required Supplementary Information
Schedule of the City's Proportionate Share of the Plan's Net Pension Liability
And Related Ratios as of the Measurement Date—Last 10 Years*
CaIPERS
Measurement Date
6/30/2014 6/30/2015 6/30/2016
Employers Proportion of the Net Pension Liability' 0.10996% 027841% 0.24806%
Employers Proportionate Share of the Net Pension Liability $6,841230 $ 7,638,064 $ 8,617,416
Employees Covered payroll $3,543.958 $3.388.767 $ 3,690780
Employees Proportionate Share of the Net Pension Liability as a percentage of
its Employer's Covered Payroll 193.07% 225.39% 233.48%
Pension Plan's Fiduciary Net Position as a percentage of
the Total Pension Liability 155.32% 69.67% 67.74%
'Proportion of the Net Pension Liability represents the plan's proportion of PERF C,which
includes both the Miscellaneous and Safety Risk Pools excluding the 1959 SuMwrs Risk
'Measurement date 6/30/2014(fiscal year 2015)was the 1st year of implementation.
therefore,only three years are shown.
78
City of Rosemead
Required Supplementary Information
Schedule of Plan Contributions - Last 10 Years*
CalPers
Fiscal Year
2014-2015 2015-2016 2016-2017
Actuarially Determined Contribution $ 1,183,855 $ 1,276,087 $ 1,113,875
Contributions in Relation to the Actuarially
Determined Contribution (1,183,855) _ (1,276,087) (1,113,875)
Contribution Deficiency (Excess)
Covered Payroll $ 3,543,958 $ 3,388,767 $ 3,690,780
Contributions as a Percentage of Covered
Payroll 33.40% 37.66% 30.18%
* Fiscal year 2014-15 was the 1st year of implementation,
therefore, only three years are shown.
Notes to Schedule:
Change in Benefit Terms: None
Change in Assumptions: None
79
City of Rosemead
Required Supplementary Information
Schedule of Changes in Net Pension Liability and Related Ratios—Last 10 Years*
Retirement Enhancement Plan
Measurement Penod 2014-15 2015-16 2016-17
TOTAL PENSION LIABILITY
Service Cost $ 44,112 $ 45435 $ 36410
Interest on total pension liability 190.667 191.270 192,440
Effect of plan changes - - -
Effect ofeconomic/demographic gains or losses - - (355,400)
Effect of assumptions changes or inputs - -
Benefit payments (234.960) (218.411) (200,693)
Net Change in Total Pen>on Liability (181) 18,294 (337,243)
Total Pension Liability-Beginning 3.004,854 3,004,673 3,022,967
Total Pension Liability-Ending(a) 33,004,673 $3,022,967 $2,695,724
PLAN FIDUCIARY NET POSITION
Contnbutions-Employer $ 273711 $ 265,241 5 164.389
ContdbNwns-Employee Paid Member Contributions - -
Contdbuticns-Employee - - -
NetlmestmentIncome 59,329 (2345) 266.884
Benefit Payments (234,960) (218.411) (200.693)
Administrative expenses (5,864) (2624) (6.848)
Net Change in Fiduciary Net Position 92,216 41,861 223,732
Plan Fiduciary Net Position-Beginning 2,672,652 2,764,868 2,806,739
Plan Fiduciary Net Position-Ending(b) $ 2,764,868 52,806,739 $3,030,461
Plan Net Position Liability-Ending(a)-(b) S 239,805 $ 216,238 $ (334,737)
Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 92.02% 92 11242%
Covered Payroll $ 3,049,663 $2,678,466 $3,376,888
Plan Net Pension Liability as a Percentage of Covered Payroll 7.86% 8.07% -14.08%
Measurement date 6/3 012 01 5(fiscal year 2015)was the 1st year of implementation,
therefore,only three years are shown.
Notes to Schedule:
Changes in Benefit Terms:The figures above do not include any liability impact that may have resulted
from plan changes which occurred after June 30.2015.This applies for voluntary benefit changes as well
as any offers of Two Years Additional Service Credit(ak a Golden Handshakes).
Changes in Assumptions There were no changes in assumptions.
80
City of Rosemead
Required Supplementary Information
Schedule of Plan Contributions— Last 10 Years*
Retirement Enhancement Plan
Fiscal Year Ending
613012015 6/3012016 6/30/2017
Actuarially Determined Contribution $ 133,267 $ 116,244 $ 88,845
Contributions in Relation to the Actuarially Determined Contribution (273.711) (265.241) (164,389)
Contribution Deficiency(Excess) $ (140444) $ (148,997) $ (75,544)
Covered Payroll 53049,663 $2,678466 $2,376888
Contributions as a Percentage of Colered Payroll 437% 4.34% 374%
'Fiscal year 2015 was the 1st year of implementation,therefore. only three years are shown.
Notes to Schedule:
The actuarial methods and assumptions used to set the actuarially determined contributions for
Fiscal Year 2014-15 were from the July 1,2014 public agency valuations.
Actuarial Cost Method Entry Age Normal
Amortization Method/Penod Lerel dollar, closed periods,
8 years amortization period 0.00%growth rate
Asset Valuation Method The actuarial value of assets is the market value of assets as
prodded by Public Agency Retirement Serces.
Inflation 2.75%
Salary Increases Varies by years of Serce
Cost of Lldng Adjustments 2.00%
Investment Rate of Return 6 50%
Retirement Age For miscellaneous employees and the contract City Attorney.
Retirement rate of 20% at ages 60 and older with between 10
and 20 years of seMce, and retirement rate of 30%at ages 55
and older with more than 20 years of seMce.
For City Council members'. Retirement rates of 30% per year
staffing at age 55.
Modality Pre-Retirement. Consistent with the Non-Industrial rates used
to value the Miscellaneous CaIPERS Pension Plans.
Post-Retirement CaIPERS 1997-2001 Healthy Retiree
Mortality Tables (sex-distinct) with an assumed base year of
2008 and full generational improvements using Scale AA.
81
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Other Supplementary Information
City of Rosemead
Nonmajor Governmental Funds
June 30, 2017
Special Revenue Funds:
Community Development Block Grant (CDBG) Fund - Accounts for Community Development
Block Grants received from the U.S. Department of Housing and Urban Development.
Proposition A Fund - This fund is used to finance public transportation projects. Effective July 1,
1982, this fund accounts for the City's share of additional sales tax collected in the County of
Los Angeles as a result of Proposition A.
Proposition C Fund -This fund is to be used by the cities for public transit to increase safety and
improve road conditions by repairing and maintaining streets heavily used by public transit.
State Gas Tax Fund - This fund is used to account for monies that are collected by the State
under the title of Motor Vehicle Fuel License Tax and represent an additional + or - $.10 per
gallon of gas sold.
Air Quality Management District Fund - This fund accounts for the receipt of monies from the Air
Quality Maintenance District. These funds shall be used to implement programs to reduce air
pollution from mobile sources pursuant to the California Clean Air Act.
Street Lighting Fund - This fund is used to account for monies collected by ad valorem property
tax based on $0.2495 per $1000 of assessed property value to provide for energy cost and
maintenance of the Rosemead Lighting District, whose boundaries, with the exception of the
Southern California Edison company property, coincide with the City's boundaries. Proposition
13 has limited the ad valorem tax that can be collected.
HOME Program Fund - This fund is used to account for HOME Investment Partnerships
Program monies received to create and retain affordable housing.
Narcotics Seizure Fund - This fund is used to account for funds received from the County of Los
Angeles for monies forfeited, and the proceeds from the sale of assets seized from illegal
narcotic activities within the City of Rosemead. The forfeited funds must be used by the law
enforcement and prosecutorial agencies exclusively to support law enforcement and
prosecutorial efforts. No budget has been adopted for this fund.
Measure R Fund - A county-wide one half percent sales tax to fund transportation projects.
Receipts can be used to synchronize traffic signals, repair potholes, keep senior, student, and
disabled bus fares low and provide community traffic relief. The tax receipts will be used
primarily to improve public transit and street maintenance projects.
Development Impact Fee Traffic Fund - This fund is used to account for monies received by
development projects for the purpose of mitigating the impact of the development on the ability
of the City to provide specified public improvements and service, specifically for Traffic.
82
City of Rosemead
Nonmajor Governmental Funds
June 30, 2017
Special Revenue Funds, continued:
Development Impact Fee Public Safety Fund - This fund is used to account for monies received
by development projects for the purpose of mitigating the impact of the development on the
ability of the City to provide specified public improvements and service, specifically for Public
Safety.
Development Impact Fee General Government Fund - This fund is used to account for monies
received by development projects for the purpose of mitigating the impact of the development
on the ability of the City to provide specified public improvements and service, specifically for
General Government.
Development Impact Fee Parks Fund - This fund is used to account for monies received by
development projects for the purpose of mitigating the impact of the development on the ability
of the City to provide specified public improvements and service, specifically for Parks.
83
City of Rosemead
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2017
Special Revenue Funds
CDBG Proposition Proposition
Grant A C
ASSETS
Cash and investments $ - $ 251,588 $ 697,931
Receivables:
Accounts 157,483 76,413 -
Total assets $ 157,483 $ 328,001 $ 697,931
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities $ 10,113 $ - $ 143,259
Accrued salaries and benefits 12,782 6,592 3,301
Retentions payable - - -
Due to other funds 128,782 - -
Unearned revenue - - -
Total liabilities 151,677 6,592 146,560
Fund balances:
Restricted for:
Public works - 321,409 551,371
Community services 5,806 - -
Unassigned - - -
Total fund balances (deficit) 5,806 321,409 551,371
Total liabilities and fund balances $ 157483 $ 328,001 $ 697,931
84
Special Revenue Funds
Air Quality
State Gas Management Street HOME
Tax District Lighting Program
$ 890,829 $ 197,151 $ 1,131,020 $ -
81,146 17,929 33,230 55,951
$ 971,975 $ 215,080 $ 1,164,250 $ 55,951
$ 121,407 $ - $ 148,899 $ 9,514
3,265 - 4,181 454
17,322
- - - 192,157
8,000 - - -
132,672 - 153,080 219,447
839,303 215,080 1,011,170 -
(163,496)
839,303 215,080 1,011,170 (163,496)
$ 971,975 $ 215,080 $ 1,164,250 $ 55,951
85
City of Rosemead
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2017
Special Revenue Funds
Narcotics Measure DIF
Seizure R Traffic
ASSETS
Cash and investments $ - $ 1,204,523 $ 1,951
Receivables:
Accounts - - -
Total assets $ - $ 1,204,523 $ 1,951
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities $ - $ 1,635 $ -
Accrued salaries and benefits - 1,969 -
Retentions payable - - -
Duetootherfunds - - -
Unearned revenue - - -
Total liabilities - 3,604 -
Fund balances:
Restricted for:
Public works - 1,200,919
Community services - - 1,951
Unassigned - - -
Total fund balances - 1,200,919 1,951
Total liabilities and fund balances $ - $1 204,523 $1 951
86
Special Revenue Funds
DIF
DIF General DIF
Public Safety Government Parks Totals
$ 339 $ 2,363 $ 10,075 $ 4,387,770
- - - 422,152
$ 339 $ 2,363 $ 10,075 $ 4,809,922
$ - $ - $ - $ 434,827
32,544
17,322
320,939
8,000
- - - 813,632
- 2,363 - 4,141,615
339 - 10,075 18,171
- - (163,496)
339 2,363 10,075 3,996,290
$ 339 $ 2,363 $ 10,075 $ 4,809,922
87
City of Rosemead
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
For the year ended June 30, 2017
Special Revenue Funds
CDBG Proposition Proposition
Grant A C
REVENUES
Intergovernmental $ 470,492 $ 1,080,328 $ 834,641
Charges for services 13,819 21,485 37,873
Special assessments - - -
Investment income - 232 692
Total revenues 484,311 1,102,045 873,206
EXPENDITURES
Current:
General government 7,289 116,050 -
Public safety 156,253 - 25,424
Public works - 832,242 295,333
Community development 321775 - -
Parks and recreation 16,513 - -
Total expenditures 501,830 948,292 320757
Excess (deficiency)of revenues
over(under)expenditures (17,519) 153,753 552,449
Other financing sources(uses):
Transfers in - - -
Transfers out - - (388,362)
Total other financing sources (uses) - - (388,362)
Net change in fund balances (17,519) 153,753 164,087
Fund balances (deficit), beginning of year 23,325 167,656 387,284
Fund balances (deficit), end of year $ 506 $ 321,409 $ 551,371
88
Special Revenue Funds
Air Quality
State Gas Management Street HOME
Tax District Lighting Program
$ 1,117,655 $ 71,164 $ - $ 313,927
- - 1,002,239 -
826 149 1,635 -
1,118,481 71,313 1,003,874 313,927
2,168 - 16,867 -
719,026 - 736,465 -
- - 218,328
721,194 - 753,332 218,328
397,287 71,313 250,542 95599
(160,668) - (1,031,381) -
(160,668) - (1,031,381) -
236,619 71,313 (780,839) 95599
602,684 143,767 1,792,009 (259,095)
$ 839303 $ 215,080 $1011)70 $ (163,496)
89
City of Rosemead
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
For the year ended June 30, 2017
Special Revenue Funds
Narcotics Measure DIF DIF
Seizure R Traffic Public Safety
REVENUES
Intergovernmental $ - $ 624,692 $ - $ -
Chargesforservices - - 1,951 339
Special assessments - - - -
Investment income - 926 - -
Total revenues - 625,618 1,951 339
EXPENDITURES
Current:
General government - 34,209 - -
Public safety 10,450 - - -
Public works - 38,616 - -
Community development - - - -
Parks and recreation - - - -
Total expenditures 10,450 72,825 - -
Excess (deficiency)of revenues
over(under)expenditures (10,450) 552,793 1,951 339
Other financing sources (uses):
Transfers in - 20,830 - -
Transfers out - (64443) -
Total other financing sources(uses) - (43,613) - -
Net change in fund balances (10,450) 509,180 1,951 339
Fund balances(deficit), beginning of year 10,450 691739 - -
Fund balances(deficit),end of year $ - $ 1,200,919 $ 1,951 $ 339
90
Special Revenue Funds
DIF
General DIF
Government Parks Totals
$ - $ - $ 4,512,899
2,363 10,075 ' 87,905
- - 1,002,239
4,460
2,363 10,075 5,607,503
176,583
192,127
2,621,682
540,103
16,513
- - 3,547,008
2,363 10,075 2,060495
20,830
(1,644,854)
(1,624,024)
2,363 10,075 436,471
3,559,819
$ 2,363 $ 10075 $ 3,996,290
91
City of Rosemead
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
Community Development Block Grant (CDBG) Fund
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental $ 667,700 $ 470,492 $ (197,208)
Charges for services 14,000 13,819 (181)
Total revenues 681,700 484,311 (197,389)
EXPENDITURES
Current:
General government 6,600 7,289 (689)
Public safety 156,100 156,253 (153)
Community development 493,600 321,775 171,825
Parks and recreation 25,400 16,513 8,887
Total expenditures 681,700 501,830 179,870
Net change in fund balance - (17,519) (17,519)
Fund balance, beginning of year 23,325 23,325 -
Fund balance, end of year $ 23,325 $ 5,806 $ (17,519)
92
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Proposition A
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental $ 1,078,000 $ 1,080,328 $ 2,328
Charges for services 28,000 21,485 (6,515)
Investment income - 232 232
Total revenues 1,106,000 1,102,045 (3,955)
EXPENDITURES
Current:
General government 146,000 116,050 29,950
Public works 911,000 832242 78,758
Total expenditures 1,057,000 948,292 108,708
Net change in fund balance 49.000 153,753 104,753
Fund balance, beginning of year 167,656 167,656 -
Fund balance, end of year $ 216,656 $ 321,409 $ 104,753
93
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Proposition C
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental $ 836,100 $ 834,641 $ (1,459)
Charges for services 41,500 37,873 (3,627)
Investment income - 692 692
Total revenues 877,600 873,206 (4,394)
EXPENDITURES
Current:
Public safety 18,300 25,424 (7,124)
Public works 314,000 295,333 18,667
Total expenditures 332,300 320,757 11,543
Excess (deficiency) of revenues
over(under) expenditures 545,300 552,449 7,149
Other financing sources (uses):
Transfers out (60,000) (388,362) (328,362)
Total other financing sources (uses) (60,000) (388,362) (328,362)
Net change in fund balance 485,300 164,087 (321,213)
Fund balance, beginning of year 387,284 387,284 -
Fund balance, end of year $ 872,584 $ 551,371 $ (321,213)
94
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
State Gas Tax
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental $ 2,081,900 $ 1,117,655 $ (964,245)
Investment income - 826 826
Total revenues 2,081,900 1,118,481 (963,419)
EXPENDITURES
Current:
General government 2,000 2,168 (168)
Public works 814,700 719,026 95,674
Total expenditures 816,700 721,194 95,506
Excess (deficiency) of revenues
over(under) expenditures 1,265,200 397,287 (867,913)
Other financing sources (uses):
Transfers out (1,253,300) (160,668) 1,092,632
Total other financing sources (uses) (1,253,300) (160,668) 1,092,632
Net change in fund balance 11,900 236,619 224,719
Fund balance, beginning of year 602,684 602,684 -
Fund balance, end of year $ 614,584 $ 839,303 $ 224,719
95
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Air Quality Management District
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental $ 67,000 $ 71,164 $ 4,164
Investment income - 149 149
Total revenues 67,000 71,313 4,313
EXPENDITURES
Current:
Capital outlay 16,000 - 16,000
Total expenditures 16,000 - 16,000
Net change in fund balance 51,000 71,313 20,313
Fund balance, beginning of year 143,767 143,767 -
Fund balance, end of year $ 194,767 $ 215,080 $ 20,313
96
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Street Lighting
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Special assessments $ 849,000 $ 1,002,239 $ 153,239
Investment income - 1,635 1,635
Total revenues 849,000 1,003,874 154,874
EXPENDITURES
Current:
General government 15,500 16,867 (1,367)
Public works 762,400 736,465 25,935
Total expenditures 777,900 753,332 24,568
Excess (deficiency) of revenues
over (under) expenditures 71,100 250,542 179,442
Other financing sources (uses):
Transfers out (1,105,000) (1,031,381) 73,619
Total other financing sources (uses) (1,105,000) (1,031,381) 73,619
Net change in fund balance (1,033,900) (780,839) 253,061
Fund balance, beginning of year 1,792,009 1,792,009 -
Fund balance, end of year $ 758,109 $ 1,011,170 $ 253,061
97
City of Rosemead
Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual
HOME Program
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental $ 752,200 $ 313,927 $ (438,273)
Total revenues 752,200 313,927 (438,273)
EXPENDITURES
Current:
Community development 752,200 218,328 533,872
Total expenditures 752,200 218,328 533,872
Net change in fund balance - 95,599 95,599
Fund balance (deficit), beginning of year (259,095) (259,095) -
Fund balance (deficit), end of year $ (259,095) $ (163,496) $ 95,599
98
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Measure R
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Intergovernmental $ 627,000 $ 624,692 $ (2,308)
Investment income - 926 926
Total revenues 627,000 625,618 (1,382)
EXPENDITURES
Current:
General government 45.500 34,209 11,291
Public works 442,600 38,616 403,984
Total expenditures 488,100 72,825 415,275
Excess (deficiency) of revenues
over(under)expenditures 138,900 552,793 413,893
Other financing sources (uses):
Transfers in - 20,830 20,830
Transfers out (501,000) (64,443) 436,557
Total other financing sources (uses) (501,000) (43,613) 436,557
Net change in fund balance (362,100) 509,180 850,450
Fund balance, beginning of year 691,739 691,739 -
Fund balance, end of year $ 329,639 $ 1,200,919 $ 850,450
99
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Development Impact Traffic
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Charges for services $ 44,900 $ 1,951 $ (42,949)
Total revenues 44,900 1,951 (42,949)
EXPENDITURES
Current:
General government 44,900 - 44,900
Total expenditures 44,900 - 44,900
Net change in fund balance - 1,951 1,951
Fund balance, beginning of year - - -
Fund balance, end of year $ - $ 1,951 $ 1,951
100
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Development Impact Public Safety
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Charges for services $ 3,400 $ 339 $ (3,061)
Total revenues 3,400 339 (3,061)
EXPENDITURES
Current:
General government - - -
Total expenditures - - -
Net change in fund balance 3,400 339 (3,061)
Fund balance, beginning of year - - -
Fund balance, end of year $ 3,400 $ 339 $ (3,061)
101
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Development Impact General Government
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Charges for services $ 24,000 $ 2,363 $ (21,637)
Total revenues 24,000 2,363 (21,637)
EXPENDITURES
Current:
General government - - -
Total expenditures - - -
Net change in fund balance 24,000 2,363 (21,637)
Fund balance, beginning of year - - -
Fund balance, end of year $ 24,000 $ 2,363 $ (21,637)
102
City of Rosemead
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
Development Impact Parks
For the year ended June 30, 2017
Variance
Final Positive
Budget Actual (Negative)
REVENUES
Charges for services $ 80,900 $ 10,075 $ (70,825)
Total revenues 80,900 10,075 (70,825)
EXPENDITURES
Current:
General government - - -
Total expenditures - - -
Net change in fund balance 80,900 10,075 (70,825)
Fund balance, beginning of year - - -
Fund balance, end of year $ 80,900 $ 10,075 $ (70,825)
103
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City of Rosemead
Internal Service Funds
June 30, 2017
INTERNAL SERVICE FUNDS
The internal service funds are used to account for goods and services provided by one City
department to other City departments on a cost reimbursements basis.
The City of Rosemead has the following Internal Service Funds:
Equipment Replacement - To account for the accumulation and allocation of costs associated
with the repair and maintenance of the City's equipment.
Technology Replacement - To account for the accumulation and allocation of costs associated
with the repair and maintenance of the City's technological equipment.
104
City of Rosemead
Combining Statement of Net Position
Internal Service Funds
June 30, 2017
Equipment Technology
Replacement Replacement Total
ASSETS
Current assets:
Cash and investments $ 424,620 $ 75,748 $ 500,368
Total current assets 424,620 75,748 500,368
Non-current assets:
Capital assets:
Other capital assets, net 155,709 2 155,711
Total non-current assets 155,709 2 155,711
Total assets 580,329 75,750 656,079
LIABILITIES
Current liabilities:
Accounts payable - 33 33
Total current liabilities - 33 33
Total liabilities - 33 33
NET POSITION
Net investment in capital assets 155,709 2 155,711
Unrestricted 424,620 75,715 500,335
Total net position $ 580,329 $ 75,717 $ 656,046
105
City of Rosemead
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position
Internal Service Funds
For the year ended June 30, 2017
Equipment Technology
Replacement Replacement Total
OPERATING REVENUES
Charges for services $ 110,400 $ 159,000 $ 269,400
Total operating revenues 110,400 159,000 269,400
OPERATING EXPENSES
Contractual services - 119,329 119,329
Depreciation 65,718 38,589 104,307
Total operating expenses 65,718 157,918 223,636
Operating income 44,682 1,082 45,764
Changes in net position 44,682 1,082 45,764
Net position, beginning of year 535,647 74,635 610,282
Net position, end of year $ 580,329 $ 75,717 $ 656,046
106
City of Rosemead
Combining Statement of Cash Flows
Internal Service Funds
For the year ended June 30, 2017
Equipment Technology
Replacement Replacement Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from users departments $ 110,400 $ 159,000 $ 269,400
Cash payments to suppliers for goods and services - (122,915) (122,915)
Net cash provided by operating activities 110,400 36,085 146,485
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Cash paid to purchase capital asset (72,819) - (72,819)
Net cash(used for)capital and related financing activities (72,819) - (72,819)
Net increase in cash and investments 37,581 36,085 73,666
Cash and investments, beginning of year 387,039 39,663 426,702
Cash and investments,end of year $ 424,620 $ 75,748 $ 500,368
Reconciliation of operating income to net cash
provided by operating activities:
Operating income $ 44,682 $ 1,082 $ 45,764
Adjustments to reconcile operating income to net
cash provided by operating activities:
Depreciation 65,718 38,589 104,307
Increase(decrease)in accounts payable - (3,586) (3,586)
Total adjustments 65,718 35,003 100,721
Net cash provided by operating activities $ 110,400 $ 36,085 $ 146,485
107
City of Rosemead
Statement of Changes in Fiduciary Assets and Liabilities
Agency Fund
For the year ended June 30, 2017
Balance Balance
July 1, 2016 Additions Deductions June 30, 2017
Assets
Cash and investments $ 355,426 $ 304,296 $ (260,361) $ 399,361
Total assets $ 355,426 $ 304,296 $ (260,361) $ 399,361
Liabilities
Deposits payable $ 355,426 $ 304,296 $ (260,361) $ 399,361
Total liabilities $ 355,426 $ 304,296 $ (260,361) $ 399,361
108
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STATISTICAL SECTION
This part of the City of Rosemead's Comprehensive Annual Financial Report presents detailed
information as a context for understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the government's overall
financial health.
Contents Page
Financial Trends 109
These schedules contain trend information to help the reader
understand how the government's financial performance and well-
being have changed over time.
Revenue Capacity 117
These schedules contain trend information to help the reader assess
the government's most significant revenue source, property tax.
Debt Capacity 121
These schedules present information to help the reader assess the
affordability of the government's current levels of outstanding debt and
the government's ability to issue additional debt in the future.
Demographic and Economic Information 127
These schedules offer demographic and economic indicators to help
the reader understand the environment within which the government's
financial activities take place.
Operating Information 130
These schedules contain service and infrastructure data to help the
reader understand how the information in the government's financial
report relates to the services the government provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive Annual Financial Reports for the relevant year.
CITY OF ROSEMEAD
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
2008 2009 2010 2011
Governmental activities:
Net investment in capital assets,
net of related debt $ 12,981,537 $ 11,828,993 $ 12,712,242 $ 14,760,940
Restricted 11,443,583 13,361,249 13,199,438 24,806,402
Unrestricted 27,705,715 24,882,730 20,489,721 10,748,249
Total governmental activities net position $ 52,130,835 $ 50,072,972 $46,401,401 $ 50,315,591
109
Fiscal Year
2012 2013 2014 2015 2016 2017
$54,010,031 $ 51,132,854 $50,042,631 $ 52,038,429 $ 51,542,030 $ 52,806,193
10,870,747 2,829,147 3,110,688 3,419,068 4,005,847 4,387,055
13,688,078 17,724,709 17,367,841 11,018,153 13,108,874 15,690,721
$ 78,568,856 $ 71,686,710 $ 70,521,160 $ 66,475,650 $ 68,656,751 $ 72,883,969
110
CITY OF ROSEMEAD
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
2008 2009 2010 2011
Expenses:
Governmental activities:
General government $ 7,259,587 $12,176,877 $ 5,991,796 $ 3,160,306
Public safety 8,043,771 9,081719 8.879,854 8,881,926
Public works 13.550,042 6,465,355 11,469,614 11,907,245
Community services 669,827 773,374 589,650 595,904
Community development 3,645,207 1,290,108 2,141,218 3,969,502
Parks and recreation 4,078.631 2,030,698 2,733,885 2,362,860
Interest and other charges 1790.348 1,523,391 1A91717 1,681,875
Total governmental activities expenses 39,037 413 33,341,522 33,297,734 32,559,618
Program revenues:
Governmental activities:
General government 642,716 547,577 1,573,695 1,048,727
Public safety 1,547,182 1,512 475 1,293,677 1,293,524
Public works 11,729,725 7,581,801 8,052,011 9,143,311
Community services 166,118 858,809 186,283 450,004
Community development 1,484,065 621,375 597,402 3,753,612
Parks and recreation 36,800 36,000 20,800 654,437
Total governmental activities
program revenues 15,606,606 11.158,037 11,723,868 16,343,615
Net revenues(expenses):
Governmental activities
Total net revenues(expenses) (23,430,807) (22,183,485) (21,573,866) (16,216,003)
General revenues and other changes in net position:
Governmental activities:
Taxes:
Property taxes 13,181,837 12,288,177 12,328,634 13,656,347
Sales and use taxes 3,747,416 4,589,998 4,408,367 3,737,363
Transient occupancy taxes 1,411,421 1,272,092 1,129,146 1,219,977
Other taxes 949,007 761,410 562,317 576,904
Intergovernmental/in-lieu VLF - - - -
Investment income 1.678,791 884,847 389,310 367,961
Motor vehicle in-lieu, unrestricted 254,527 195,273 169,042 263,983
Other general revenues 143.748 133,825 336.668 307,658
Loss on sale of capital assets - - - -
Transfer to Successor Agency - - - -
Extraordinary item:
Gain on dissolution of redevelopment agency - - - -
Total governmental activities 21,366,747 20,125,622 19,323,484 20,130,193
Changes in net position
Governmental activities
Total primary government $(2,064,060) $(2,057,863) $(2,250,382) $ 3,914,190
111
2012 2013 2014 2015 2016 2017
$ 3,989,359 $ 3,381,686 $ 4,271,354 $ 2,739,281 $ 3218,363 $ 3,705,685
7,517,101 7,791573 7,923,316 7,747,949 8,381,588 8.935,164
11,588,278 11,717,276 10,072,081 8,703,817 8,738,495 7,323,865
4,080,294 2,616,531 2,853,472 2,879,028 3,246,081 3,161,310
2,532,665 2,594,863 2,274,920 2,049,540 2.073,145 2,153,986
569545 7,827 5561 3,198 787 -
30,276,742 28,109,256 27,400,704 24,122,813 25,658,459 25280,010
130,450 2,408,362 2,030,063 2,725291 2,203,233 2,191,604
1.454,759 1,622,911 1,586,557 1,573,532 1,563,652 1,565,275
4.033,874 3,869,285 4,356,486 4,627,331 4,360,908 4,232,311
3,501,082 1,896,876 1532,508 1.915.557 2,352,137 2,523,350
704,D29 785,611 724,197 713,484 741,171 788,931
9,824,194 10,583,045 10,329,811 11.555,195 11,221,101 11,301,471
(20,452,548) (17,526211) (17,070,893) (12,567,618) (14,437,358) (13,978539)
10,567,509 8,900,228 8,667,709 9,034,141 9,158,499 8,643,019
3,200,911 3,215,897 3,504,285 3,452,605 4,124,745 5.366,975
1,323,886 1,447,820 1,593,640 1,575,401 1.998,954 2,213,286
633,393 2 275,986 1,307,280 1,247,941 1209,249 1,224,230
195,165 28,202 216,499 97,589 348,651 20,526
853,956 1,180,688 604.053 793,680 945,372 737,721
(2,340,090) - - - - -
- (6,392,878) - - - -
34,271,082 - - - - -
48..705,812 10,655,943 15,893,466 16.201,357 17 785,470 18,205,757
$ 28,253,264 J6,870,268) $(1,177,427) $ 3,633,739 $ 3,348,112 $ 4,227,218
112
CITY OF ROSEMEAD
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
2008 2009 2010 2011
General fund:
Reserved $ 3,074,496 $ 3,106,917 $ 3,327,182 $ -
Unreserved 18,633,154 16,135,102 13,626,774 -
Nonspendable - - - 2,034
Restricted - - - -
Committed - - - 5,107,963
Assigned - - -
Unassigned - - - 10,209,075
Total general fund $ 21,707,650 $ 19,242,019 $ 16,953,956 $ 15,319,072
All other governmental funds:
Reserved $ 9,000,561 $ 9,000,561 $ 8,944,112 $ -
Unreserved, reported in:
Special revenue funds 6,140,289 9,023,487 8,763,359 -
Debt service funds 692,475 2,803,910 2,803,910 -
Capital projects funds 2,490,553 (54,323) (1,405,770) -
Nonspendable - - - -
Restricted - - - 27,476,081
Committed - - - -
Assigned - - -
-
Unassigned - - - (4,402,964)
Total all other governmental funds $ 18,323,878 $ 20,773,635 $ 19,105,611 $ 23,073,117
The City implemented GASB 54 for the fiscal year ended
June 30, 2(114.
The categories of fund balanceforovernmentalfunds have
been changed as described more fully in the notes to the
basic financial statements. Prior vear fund balances reflect
the gaidance in effect when those"financial statements were
prepared.
113
2012 2013 2014 2015 2016 2017
$ - $ - $ - $ - $ - $ _
2,034 2,034 140,893 143,560 187,247 765,218
5,294,253 6,415,416 5,883,235 6,120,361 6,682,495 6,935,969
5,712 5,712 65,343 78,280 83,513 63,298
9,519,173 11,194,278 11,607,595 10,128,160 11514,894 11,269,791
$ 14,821,172 $ 17,617,440 $ 17,697,066 $ 16,470,361 $ 18,468,149 $ 19,034276
$ - $ - $ - $ - $ - $ _
10,870,747 2,829,147 3,110,688 3,419,068 4,005,847 4,387,055
(1,292,405) (788,224) (1,192,926) (1,643,527) (832,005) (649,585)
$ 9,578342 $ 2,040,923 $ 1,917,762 $ 1775,541 $ 3,173,842 $ 3,737,470
114
CITY OF ROSEMEAD
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
2008 2009 2010 2011
Revenues:
Taxes $ 17,841,792 $17,153,625 $ 18,508,896 $ 19,313,094
Intergovernmental 15,716,610 10,992,235 7,856,792 9,383,256
Licenses and permits 1,503,659 1,178,362 1,079,429 1,764,162
Charges for services 537,430 638,244 708,434 677,861
Fines, forfeitures and penalties 641,566 565,643 491,574 462,389
Special assessments 687,568 736,213 680,288 741,382
Investment income 1,678,791 884,847 389,310 367,956
Other 141,930 381,429 254,610 253,379
Total revenues 38,749,346 32,530,598 29,969,333 32,963,479
Expenditures
Current:
General government 7,356,665 11,956,179 5,903,926 3,801486
Public safety 6,043,771 9,114,009 8,863,234 8,882,915
Public works 12,116,508 4,964,867 11,264,220 19,402,924
Community services 669,827 783,452 584,463 595,904
Community development 3,408,691 1,047,529 1,940,641 3,397,072
Parks and recreation 4,078,631 2,030,698 2,733,885 2,362,860
Capital outlay 1,647,673 202,752 290,885 93,121
Debt service:
Principal 1,105,000 915,000 945,000 975,000
Interest and fiscal charges 1,567,849 1,531,986 1,501,667 1,882,092
Bond issuance costs - - - 275,344
Total expenditures 39,994,615 32,546,472 34,027,921 41,668,718
Excess (deficiency)of
revenues over(under)
expenditures (1,245,269) (15,874) (4,058,588) (8,705,239)
Other financing sources (uses):
Transfers in 2,962,087 4,078,483 4,133,554 4,824,919
Transfers out (2,962,087) (4,078,483) (4,133,554) (4,824,919)
Transfer to Successor Agency - - -
Issuance of long-term debt - - - 11,230,000
Discount on bonds - - - (192,139)
Proceeds of capital lease - - 102,501 -
Total other financing
sources (uses) - - 102,501 11,037,861
Extraordinary item:
Gain (loss)on dissolution of redevelopment
agency - - - -
Net change in fund balances $ (1,245,269) $ (15,874) $ (3,956,087) $ 2,332,622
Debt service as a percentage of
noncapital expenditures 7.0% 7.6% 7.4% 8.8%
115
2012 2013 2014 2015 2016 2017
$ 15,960,662 $ 16,602,329 $ 15,320,806 $ 15,537,262 $ 16,491,447 $ 17,447,510
9,561,918 6,435,473 6566,936 6,168,603 6,765,125 5,724,040
1,156,719 1,156,968 1,308,482 1,846,997 2,520,937 2,754,881
1,055,391 1,036,563 1,087,091 1,138,731 1,191,275 1,012,557
619,397 691,548 700,126 676,830 597,373 607,754
768,997 937,405 881,543 923,538 969,870 1,002,239
582,176 474,970 873,631 754,865 1,002,835 666,968
658,670 928,596 61590 114,074 71,152 231,545
30,363,930 28,263,852 26,300,305 27,160,900 29,610514 29,447,494
4,203,302 3,988,156 3,973,364 3,879,122 3564,633 4,280,825
7,517,101 7,773,611 7,913,659 8,156,485 8,452,932 9,060,840
6,417,803 6,909,471 6,184,890 6,348,101 6,346,179 5499,220
- - - - 3,323,933 3,385,455
3,681,903 2,605,654 2,846,112 3,150,240 2,123,274 2,300,906
2,532,665 2,208,564 2,157,424 2,071,443 2,302,974 2,790 493
9,090,076 3,126,669 3,268,391 4,924435 - -
1,210,000 - - - - -
961,506 - - - - -
35,614,356 26,612,125 26,343,840 28,529,826 26,213,925 28,317,739
(5,250,426) 1,651,727 (43,535) (1,368,926) 3,396,089 1,129,755
6,431,374 2,772,415 3,053,605 2,433,974 1,386471 2,442,441
(6,554,374) (2,772,415) (3,053,605) (2,433,974) (1,386,471) (2,442,441)
- (6,392578) - - - -
(123,000) (6,392,878) - - - -
(8,619,249) - - - - -
$ (13,992,675) $ (4,741,151) $ (43,535) $ (1368,926) $ 3,396,089 $ 1,129,755
6.8% 0.0% 0.0% 0.0% 0.0% 0.0%
116
CITY OF ROSEMEAD
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
(in thousands of dollars)
City
Fiscal Year Taxable
Ended SBE Assessed Total Direct
June 30 Secured Unsecured Non-Unitary Value Tax Rate
2008 $3,085,354,513 $61,564,235 $18,883,761 $ 3,165,802,509 21.85%
2009 3,277,256,282 66,506,103 18,883,761 3,362,646,146 22.61%
2010 3,333,876,047 62,148,114 3,307,527 3,399,331,688 22.27%
2011 3,364,287,629 64,231,062 3,301,527 3,431,820,218 22.41%
2012 3,458,570,185 71,320,472 3,301,527 3,533,192,184 22.35%
2013 3,531,097,436 68,996,223 3,301,527 3,603,395,186 22.11%
2014 3,654,495,783 68,912,542 1,901,995 3,725,310,320 9.27%
2015 3,806,028,086 71,498,360 1,901,995 3,879,428,441 9.27%
2016 4,012,426,717 62,768,733 1,901,995 4,077,097,445 9.27%
2017 4,202,108,491 63,820,415 2,051,995 4,267,980,901 9.27%
' Beginning with the fiscal year ended June 30, 2002, exemptions are netted directly against the
individual property categories.
NOTE:
In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a
total maximum rate of 1% based upon the assessed value of the property being taxed. Each year,
the assessed value of property may be increased by an "inflation factor" (United to a maximum
increase of 2%). With few exceptions, property is only re-assessed as a result of new construction
activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon
the added value of the construction or at the purchase price (market value) or economic value of the
property sold. The assessed valuation data shown above represents the only data currently available
with respect to the actual market value of taxable property and is subject to the limitations described
above.
Source: L.A. County Assessor 2007/08 -2016/17 Combined Tax Rolls and HDL Goren & Cone
117
Cm OF ROSEMEAD
Direct and Overlapping Properly Tax Rales
(Rale per 00 M Taxable Value)
Las'Ten Fiscal Years
Agency 2007108 2008109 2009110 2010/11 2011112 2012/13 2013114 2014,15 201518 2016/17
Basic Levi '00000 100000 1 0000 100000 Im0N 100000 '00000 100000 100000 '00000
County Detention Facilities 1981 Debt 000000 000000 000000 0.00000 000008 000000 000000 000000 000000 000000
El Monte CaySchool Dtstnc1 008000 000080 0000.'U 0.08008 000008 000000 000000 011822 014842 014682
El Monte Union High School 002820 005159 009654 008475 009591 008992 009799 008418 009155 008469
Garvey SNool Drstnct 005060 004953 0.05378 005733 005606 008037 005970 005947 005074 00606]
Garvey-Alhambra0000.00 007458 002770 002718 002795 0.03154 002912 002906 002806
Los Angeles Community College Oislnct 000879 0.02217 002311 004031 003530 004875 004451 004017 003575 003596
L A.Co.Flood Conlml 0.00000 0 CA000 0 00000 000000 000000 000008 000010 0.08008 008000 0.00308
Metropolitan Water District 002000 001600 001800 001800 001800 001800 0.01800 001800 0.01000 002300
Montebello Unified School District 006081 008055 009673 009792 010001 009630 009457 008750 008715 014705
Pasadena Community College District 0 01572 001741 002300 001986 001956 0.02056 001899 001032 000872 0 0085
Rio Hondo Communed College Dislritl 000000 000000 0.00000 000000 0.08000 000000 000000 002821 002712 002808
Rosemead School District 008283 006075 011358 0.10743 010507 010240 010314 009886 009997 008533
San Gabriel Unified School District 0 05742 009294 0.10070 010190 008454 010523 0.10082 0 11444 010684 0 10534
Total Direct 6 OverlappInga Tax Rates 1.3343? 1.41961 1,55082 1.55520 154143 1.56904 1.56937 1.6.9549 1.]0992 2.]5]85
Gaya Share of 1%Lary Per Prop 13' 009388 0.09388 009388 008388 009388 009388 009388 009388 0,09388 009385
Voter Approved City Debt Rare
Redevelopment Rab' 100450 100430 I 00430 100370 1 00370
Total Direct Rates 021850 072614 022270 022407 022351 022113 009271 009271 0.09273 009274
No
n11970.calitoma voters passed Proposition 13 which set the property tax rale al a 100%fixed amount This 100°%15 shared by all taxing agencies for which the subject property
sides within In addition to the 1.OM fixed amount,property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds.
'Overlapping rales are those of local and county governments.thal apply to properly owners within the Oily. Not all overlapping rates apply to all city property owners
3City's share of 1%Levy is based on the City share of the general fund lax rate area with the largest net taxable value within the city ERA F general fund tax shits may not be
included in tax ratio figures.
r RDA rate is based on the largest RDA tax rate area(TRA(and incudes only rate(s)from indebtedness adopted prior to 1999 per Ca libmia Stale statute RDA direct and overlapping
ales are applied only to The incremental property values The approval of As%125 eliminated Redevelopment Imre the State of California for fiscal year 017-13 and years thereafter.
Total Direct Rateis the we i9hted average or allindividual direct rates applied by the government prepaing thset or information andexcludes r nes dewed from aircraft
Beginning In 2013/14 the Total Direct Rate no longer includes revenue generated from the bone r redevelopment tax rate areas Challenges ges to recognized enforceable obligations are
assumed to have been resolved during 2012)13. For the purposes of this report residual revenue b ass timed to be distnbutej to the Oily in the same proportions as general fund revenue.
Source L A County Assessor 2007/08-7016/17 Tax Rate Table and HDL Doren 8 Cone
118
CITY OF ROSEMEAD
Principal Property Tax Payers
Current Year and Nine Years Ago
2016/17 2007/08
Percent of Percent of
Total City Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Rosemead Place, LLC $ 48,976,049 1 1.15%
Walmart Stores, Inc 38,364,014 2 0.90%
Rosemead Hwang, LLC 35,030,575 3 0.82%
Sunshine Inn 28,827,809 4 0.68%
AFG Investment Fund 5 LLC 26,030,793 5 0.61%
Meodo Investments LLC 19,627,334 6 0.46%
420 Boyd Street LLC 18,398,441 7 0.43%
MHI Rosemead LP 16,423,576 8 0.38%
Panda Express Inc 14,935,557 9 0.35°/
Macy's California Inc 14,793,740 10 0.35%
Rosemead Place, LLC $ 43,358,557 1 1.37%
Walmart Real Estate Business Trust 40,245,414 2 1.27%
Rosemead Hwang LLC 30,951,900 3 0.98%
AFG Investment Fund 5 LLC 23,000,000 4 0.73%
General Electric Cred Auto Auctions Inc 20,963,078 5 0.66%
Macy's California Inc 15,738,600 6 0.50%
Southern California Edison 15,628,091 7 0.49%
California Federal Savings and Loan Assoc 12,896,573 8 0.41%
Sunshine Inn 9,906,049 9 0.31%
Rosemead Assisted LLP 9,521,505 10 0.30%
Source: Hdl Coren & Cone, Los Angeles County Assessor 2016/17 Combined Tax Rolls.
119
CITY OF ROSEMEAD
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the
Fiscal Taxes Levied Fiscal Year of Levy Collections in Total Collections to Date
Year Ended for the Percent Subsequent Percent
June 30 Fiscal Year Amount of Levy Years Amount of Levy
2008 $ 2,442,009 $2,406,199 98.53% - $ 2,406,199 98.53%
2009 2,569,429 2,435,807 94.80% - 2,435,807 94.80%
2010 2,609,456 1,898,973 72.77% - 1,898,973 72.77%
2011 2,633,288 2,595,289 98.56% - 2,595,289 98.56%
2012 2,711,546 2,699,377 99.55% - 2,699,377 99.55%
2013 2,771,913 2,710,893 97.80% - 2,710,893 97.80%
2014 2,865,651 2,850,674 99.48% - 2,850,674 99.48%
2015 2,981,810 2,935,129 98.43% - 2,935,129 98.43%
2016 3,134,303 3,114,233 99.36% - 3,114,233 99.36%
2017 3,187,187 2,632,109 82.58% - 2,632,109 82.58%
* Information not available.
** Note: For these years the information was not available so an estimate was made to reduce the
total collections to date to 100%.
Source: HDL Coren & Cone and Los Angeles County Auditor Controller's Office
120
CITY OF ROSEMEAD
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Tax Percentage Debt
Allocation of Personal Per
Fiscal Year Bonds 2 Income Capita 1
2007/08 $ 36,350,000 4.44% $ 639
2008/09 35,435,000 4.28% 622
2009/10 34,490,000 4.25% 601
2010/11 44,745,000 4.76% 775
2011/12 43,535,000 4.57% 804
2012/13 41,740,000 4.35% 766
2013/14 39,885,000 4.22% 728
2014/15 37,965,000 3.97% 693
2015/16 35,970,000 3.86% 651
2016/17 31,775,000 3.31% 578
Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
These ratios are calculated using personal income and population for the prior calendar year.
2 The Rosemead Community Development Commission was dissolved on February 1, 2012.
As a result, the tax allocation bonds are not debt of the primary government.
121
CITY OF ROSEMEAD
Ratio of General Bonded Debt Outstanding
Last Ten Fiscal Years
(In Thousands, except Per Capita)
Tax Percent of
Allocation Assessed Per
Fiscal Year Bonds Value Capita
2007/08 $ 36,350 1.15% $ 639
2008/09 35,435 1.05% 622
2009/10 34,490 1.01% 601
2010/11 44,745 1.30% 775
2011/12 43,535 1.23% 804
2012/13 41,740 1.16% 766
2013/14 39,885 1.07% 728
2014/15 37,965 0.98% 693
2015/16 35,970 0.88% 651
2016/17 31,775 0.74% 578
General bonded debt is debt payable with governmental fund
resources and general obligation bonds recorded in enterprise
funds (of which, City has none).
' Assessed value has been used because the actual value of
taxable property is not readily available in the State of
California.
2 The Rosemead Community Development Commission was
dissolved on February 1, 2012. As a result, the tax allocation
bonds are not debt of the primary government.
122
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CITY OF ROSEMEAD
Direct and Overlapping Governmental Activities Debt
June 30,2017
Percentage
Gross Bonded Applicable Net Bonded
Debt Balance To City Debt
Overlapping Debt
'Metropolitan Water District $ 36.281974 0.327% 118.641
Garvey SD DS 2004 Series 2006 13,567423 50.797% 6,891.844
Garvey SD DS 2004 Series C 8612,964 50797% 4375,127
Garvey SD DS 2011 Refund Bonds 3960,000 50797% 2.011.561
Garvey SD DS 2013 Ref Bonds 1,725,000 50 797% 876.248
Garvey SD DS 2014 Ref Bonds 14.850,000 50797% 7,543.355
Rosemead SD DS 2007 Series D 335.000 69 656% 233.348
Rosemead SD DS 2008 Series A 615.000 69 656% 428.384
Rosemead SD DS 2011 Ref Bond 7.335.000 69.656% 5,109.268
Rosemead SD DS 2012 Ref Bond 5.250,000 69.656% 3,658940
Rosemead SD DS 2008 Series T 1 8.041.503 69 656% 5,601 389
Rosemead SD DS 2014 Ref Bonds 5,975,000 69656% 4,161.946
Rosemead SD DS 2016 Ref Bonds 12,550,000 69.656% 8741.828
El Monte Union HSD DS 2008 Series A 1,209,213 14.832% 179.350
EI Monte Union HSD DS 2008 Series B 30,187,623 14.832% 4477.428
El Monte Union HSD DS 2015 Ref Bonds 26325.000 14.832% 9904 524
El Monte Union HSD DS 2016 Ref Olyd Dlvr 22,950,000 14.832% 3,403 944
LA CCD DS 2003,Taxable Series 20048 33,670,000 0308% 103.704
to CCD DS 2001,2006 Series B 4,880,000 0.308% 15.030
LA CCD DS 2001,2008 Ser E-1 14440 000 0 308% 44.475
LA COD DS 2003,2008 Ser F-1 14,320 000 0.308% 44.106
LA CCD DS 2008,2009 Taxable Ser B 75,000.000 0308% 231.000
to CCD DS 2008.2010 Tax Ser D 125,000.000 0.308% 385.000
LA CCD Debt 2008,2010 Tax Ser E(BASS) 908000000 0.308% 2,772,000
LA CCD DS 2013 Ref Bonds 254,505000 0308% 783,875
LA CCD DS 2008 Series G 224,160,000 0.308% 699413
LA CCD DS 2015 Ref Series A 1459309000 0.308% 4,494,644
LA COD DS 2015 Ref Series B 37,655000 0.308% 115,977
LA COD DS 2015 Ref Senes C 289,955000 0.308% 893,061
LA CCD DS 2008 Ser J 414,995,000 0308% 1,278,185
Pasadena CCD DS 2002,2006 Series O 5,265,000 2 494% 131,309
Pasadena CCD DS 2002,2009 Series E(DABS) 25,295,000 2 494% 630,857
Pasadena CCD DS 2014 Ref Series A 16,680,000 2494% 415.999
Pasadena CCD DS 2016 Ref Series A 33,399000 2494% 832.747
Montebello USD DS 1998 Series 1998 5.165,072 1 586% 81.918
Montebello USD DS 1998 Series 1999 7421,320 1 586% 117,702
Montebello USD DS 1998 Series 2002 13,557,028 1586% 215,014
Montebello USD DS 2004 Series 2008 1,540,000 1.586% 24,424
Montebello USD DS 2004 Series 2009-1 2,560,000 1.586% 40,602
Montebello USD DS 2004 Series 2O09A-2 GABS 12640 000 1.586% 200,470
Montebello USD DS 2010 Ref Bonds 5,500,000 1 586% 87,230
Montebello USD OS 2004 Series 2013A 19,310,000 1.586% 306,257
Montebello USD CS Ref Bond Series 2015 28 215,000 1.586% 447,490
Montebello USD DS Ref Bonds 2016 Series A 14,935,000 1.586% 236,869
Montebello USD DS 2016 Series A 100 000,000 1.586% 1.586,000
San Gabriel USD DS 2002 Ser 2007 C 8,604,370 1.217% 104,715
San Gabriel USD DS 2008 Series A 1,608.245 1.217% 19.572
San Gabriel USD DS 2010 Ref Bonds 5,235.000 1.217% 75.880
San Gabriel USD DS 2012 Ref Bond Series B 37,571 424 1.217% 457,244
San Gabriel USD DS 2015 Ref Bond Series A 32,680,000 1.217% 397,716
San Gabriel USD DS 2015 Ref Bond Series B 2,000,000 1.217% 24340
Total Overlapping Debt 80.O00,952I
2016117 Assessed Valuation.$3,540.381060 After Deducting$727,598941 Incremental Value.
Debt to Assessed Valutation Ratios.
Direct Debt 0 90%
Overlapping Debt 2.26%
Total Debt 3.16%
This fund is a portion of a larger agency,and is repsonsible tor debt in areas outside the city
This report reflects debt which is being repaid through voter-approved property tax indebtedness. It excludes
mortgage revenue,tax allocation bonds,interim financing obligations,non-bonded capital lease obligations,ant
certificates of participation,unless provided by the city.
Overlapping governments are those that coincide,at least in part,with the geographic boundaries of the city. The percentage
of overlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated 9
determining the portion of another governmental units taxable assessd value that is within the city's boundaries and
dividing it by each units total taxable assessed value.
Source. Hdl Goren 8 Cone,L A.County Assessor and Auditor Combined 2016/17 Lien Date Tax Rolls.
123
CITY OF ROSEMEAD
Legal Debt Margin Information
Last Ten Fiscal Years
2007/08 2008109 2009/10 2010/11
Assessed valuation $ 3,165,802,509 $ 3,362,646,146 $ 3,399,331,688 $ 3431,820,218
Conversion percentage 25% 25% 25% 25%
Adjusted assessed valuation 791,459627 840,661,537 849,832922 857,955,055
Debt limit percentage 15% 15% 15% 15%
Debt limit 118,717,594 126.099,230 127 474,938 128,693258
Total net debt applicable to limit:
General obligation bonds - - - -
Legal debt margin $ 118,717,594 $ 126,099,230 $ 127474,938 $ 128,693,258
Total debt applicable to the limit
as a percentage of debt limit 00% 00% 0.0% 0.0%
The Government Code of the State of California provides for a legal debt limit of
15%of gross assessed valuation. However,this provision was enacted when
assessed valuation was based upon 25%of market value. Effective with the 1981-82
fiscal year,each parcel is now assessed at 100%of market value(as of the most
recent change in ownership for that parcel).The computations shown above reflect
a conversion of assessed valuation data for each fiscal year from the current full
valuation perspective to the 25%level that was in effect at the time that the legal
debt margin was enacted by the State of California for local governments located
within the state.
Source: Rosemead Finance Department
Los Angeles County Tax Assessor's Office
124
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
$ 3,533,192,184 $ 3,603,395,186 $ 3,725,310,320 $ 3,879,248441 $ 4,077,097,445 $ 4,267,980,901
25% 25% 25% 25% 25% 25%
883,298,046 900,848,797 931,327,580 969,812,110 1,019,274,361 1,066,995,225
15% 15% 15% 15% 15% 15%
132,494,707 135,127,319 139,699,137 145 471,817 152,891,154 160,049,284
$ 132,494,707 $ 135,127,319 $ 139,699,137 $ 145,471,817 $ 152,891.154 $ 160,049,284
0.0% 0.0% 0.0% 0.0% 0 0% 0.0%
125
CITY OF ROSEMEAD
Pledged-Revenue Coverage
Last Ten Fiscal Years
(In Thousands)
Tax Allocation Bonds
Fiscal Year
Ended Tax Debt Service
June 30 Increment Principal Interest Coverage
2008 $ 6,219,884 $ 1,105,000 $ 1,567,849 2.33
2009 5,649,896 915,000 1,531,987 2.31
2010 6,243,948 945,000 1,501,667 2.55
2011 6,893,575 975,000 1,882,092 2.41
2012 2,601,979 1,210,000 961,506 1.20
2013 5,439,677 1,795,000 1,852,123 1.49
2014 5,517,943 1,855,000 1,790,511 1.51
2015 5,521,038 1,920,000 1,718,573 1.52
2016 5,724,292 1,995,000 1,635,578 1.58
2017 4,711,788 850,000 1,635,578 1.90
Note: Details regarding the City's outstanding debt can be found in the notes to the financial
statements. Operating expenses do not include interest or depreciation expenses.
126
CITY OF ROSEMEAD
Demographic and Economic Statistics
Last Ten Calendar Years
Per
Personal Capita Unemployment
Fiscal Population Income Personal Rate
Year (1) (in thousands) (2) Income (2) (3)
2007/08 56,876 $ 819,088 $ 14,401 4.40%
2008/09 57,003 827,444 14,516 6.50%
2009/10 57,381 812,343 14,157 10.20%
2010/11 57,756 939,575 16,268 11.20%
2011/12 54,172 952,560 17,584 10.80%
2012/13 54,464 959,982 17,626 8.10%
2013/14 54,762 944,918 17,255 6.70%
2014/15 54,786 956,180 17,453 9.50%
2015/16 55,231 932,800 16,889 7.70%
2016/17 54,984 960,740 17,473 6.10%
Sources: (1) California State Department of Finance
(2) HDL Goren & Cone and based on the last available census.
(3) State of California Employment Development Department
127
CITY OF ROSEMEAD
Principal Employers
Current Year and Nine Years Ago
2017 2007*
Percent of Percent of
Number of Total Number of Total
Employer Employees Employment ' Employees Employment
Southern California Edison 1 4,100 16.73% - 0.00%
Garvey School District 2 837 3.42% - 0.00%
Panda Restaurant Group, Inc. 3 500 2.04% - 0.00%
Wal-Mart 4 468 1.91°% - 0.00%
Rosemead School District 5 450 1.84% - 0.00%
Target 6 220 0.90% - 0.00%
Hemetic Seal Corporation 7 150 0.61% - 0.00%
Olive Garden 8 130 0.53% - 0.00%
Double Tree 9 120 0.49% - 0.00%
Don Bosco Tech 10 90 0.37% - 0.00%
128
CITY OF ROSEMEAD
Full-time and Part-time City Employees
by Function
Last Ten Fiscal Years
Function 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
General government 19 16 22 19 15 13 12 12 11 13
Public safety ' 34 39 42 42 33 15 20 18 20 21
Community
development 23 18 23 23 7 8 8 7 8 8
Public Works n/a n/a n/a n/a 26 22 23 23 21 24
Parks and recreation 103 135 112 99 68 81 86 80 83 109
Total 179 208 199 183 149 139 149 140 143 175
The City of Rosemead contracts with the Los Angeles County Sheriffs Department for all police services
with the exception of parking control and crossing guards which are provided by City personnel.
The City of Rosemead is part of the Los Angeles County Fire Protection District which provides fire fighting,
fire prevention, and plan check services for the City.
Source: City Finance Department
129
CITY OF ROSEMEAD
Operating Indicators
by Function
Last Ten Fiscal Years
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Police:
Arrests 1,506 1,478 1,733 1,888 1,842 1,186 1,356 1,585 1,339 1,046
Parking citations issued 11,766 10,517 8,450 7,515 7,797 8,765 16,110 7,863 8,047 7,676
Fire:
Number of emergency calls 2,846 2,959 2,853 2,745 2,928 2,785 2,823 3,212 3,352 3,206
Inspections 2,518 2,093 2,137 1,845 2,066 2,012 2,026 2,793 2,564 2311
Public works:
Street resurfacing (miles) 1.1 2.8 3.5 35 3.6 0.9 1.6 0.6 1.0 0.7
Parks and recreation:
Number of recreation classes 484 397 727 617 519 638 724 839 871 873
Number of facility rentals 540 453 236 1,786 3,261 3,124 4,005 2,607 3,070 6,226
Source: City of Rosemead
130
CITY OF ROSEMEAD
Capital Asset Statistics
by Function
Last Ten Fiscal Years
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Public Safety:
Sheriff stations 1 1 1 1 1 1 1 1 1 1
Fire:
Fire stations 2 2 2 2 2 2 2 2 2 2
Public works:
Streets(miles) 0.75 77.55 77.55 77.55 77.55 77.55 77.55 77.55 81.90 81.90
Streetlights 6 2,712 2,712 2,712 2,712 2,712 2,712 2.712 2,712 2,712
Traffic signals 1 42 42 42 42 42 42 42 41 42
Parks and recreation:
Parks 10 10 10 10 10 10 10 10 10 10
Community centers 2 2 2 2 2 2 2 2 2 2
131
E M
AS
O
CIVIC PRIDE
41411117;t1
/4CORPORATED 9h9
Attachment B
Rosemead Housing Development Corporation Financial
and Compliance Report
ROSEMEAD HOUSING
DEVELOPMENT CORPORATION
FINANCIAL AND COMPLIANCE REPORT
Fiscal Year Ended June 30, 2017
RA ROGERS, ANDERSON, MALODY & SCOTT, LLP
MCERTIFIED PUBLIC ACCOUNTANTS, SINCE 1948
ROSEMEAD HOUSING DEVELOPMENT CORPORATION
FINANCIAL AND COMPLIANCE REPORT
Fiscal Year Ended June 30, 2017
• TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement of Net Position 4
Statement of Activities 5
Fund Financial Statements
Balance Sheet 6
Reconciliation of the Balance Sheet of Governmental Fund to the
Statement of Net Position 7
Statement of Revenues, Expenditures, and Changes in Fund Balance 8
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balance of Governmental Fund to the Statement of Activities 9
Notes to the Basic Financial Statements 10
REQUIRED SUPPLEMENTARY INFORMATION
Notes to Required Supplementary Information 19
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual — General Fund 20
Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 21
RA ROGERS, ANDERSON. MALODY& SCOTT. LLP
MCERTIFIFfl PUBLIC ACCOUNTANTS,SINCE 1948
735 E. Carnegie Dr.Suite 100 Board of Directors
San Bernardino.CA 92408 Rosemead Housing Development Corporation
909 889 0871 T City of Rosemead, California
909 889 5361 F
ramscpa.net
INDEPENDENT AUDITOR'S REPORT
PARTNERS
Brenda L.Odle.CPA.MST Report on the Financial Statements
Terry P Shea.CPA
Kirk A.Franks,CPA
Scott W. Manno.CPA,CGMA We have audited the accompanying financial statements of the
Leena Shanbhag.CPA,MST,CGMA governmental activities and the major fund of the Rosemead Housing
Bradferd A.Welebir,CPA.MBA,CGMA Development Corporation (the Corporation), a component unit of the City of
Jay H.Zercher,CPA(Partner Emeritus)
Philp H Waller.CPA;PartnerEmentus) Rosemead, California, as of and for the year ended June 30, 2017, and the
related notes to the financial statements, which collectively comprise the
MANAGERS/STAFF Corporation's basic financial statements as listed in the table of contents.
Jenny Liu.CPA MST
Seong-Hyea Lee.CPA,MBA
Charles De Simon',CPA Management's Responsibility for the Financial Statements
Nathan Statham,CPA.MBA
Garoenya Duran,CPA Management is responsible for the preparation and fair presentation of these
Bnanna Schultz,CPA
Lisa Dongxue Gua,CPA.MSA financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based
on our audit. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures
MEMBERS selected depend on the auditor's judgment, includingthe assessment of the
American Institute of p g
Certified Public Accountants risks of material misstatement of the financial statements, whether due to
POPS the AICPA Adiance fraud or error. In making those risk assessments, the auditor considers
for CPA Firms internal control relevant to the entity's preparation and fair presentation of
Governmental Audit the financial statements in order to design audit procedures that are
Quality Center appropriate in the circumstances, but not for the purpose of expressing an
California Society of opinion on the effectiveness of the entity's internal control. Accordingly, we
Certified Public Accountants express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
- 1 -
STABILITY. ACCURACY. TRUST.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities and the major fund of the
Corporation, as of June 30, 2017, and the respective changes in financial position thereof for
the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Rosemead Housing
Development Corporation and do not purport to, and do not present fairly the financial position
of the City of Rosemead, California, as of June 30, 2017, the changes in its financial position,
or, where applicable, its cash flows for the year then ended in accordance with accounting
principles generally accepted in the United States of America. Our opinion is not modified with
respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
budgetary comparison information as listed on the table of contents, be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Management has omitted Management's Discussion and Analysis that accounting principles
generally accepted in the United States of America require to be presented to supplement the
basic financial statements. Such missing information, although not a part of the basic financial
statements is required by the Governmental Accounting Standards Board. who considers it to
be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. Our opinion on the basic financial
statements is not affected by this missing information.
- 2 -
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 28. 2017 on our consideration of the Corporation's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on internal control over financial reporting or on
compliance.That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the Corporation's internal control over financial reporting and
compliance.
kit.te t.t-o u-, M �t ,ec o 1t LLP.
San Bernardino, California
December 28, 2017
- 3-
1
FINANCIAL STATEMENTS
Rosemead Housing Development Corporation
Statement of Net Position
June 30, 2017
Governmental
Activities
ASSETS
Cash and investments (note 2) $ 266,710
Accounts receivable 9,003
Capital assets, net (note 4) 7,330,536
Due from City 207,486
Total assets 7.813,735
LIABILITIES
Refundable deposits 51,130
Due to City 204,800
Total liabilities 255,930
NET POSITION
Net investment in capital assets 7,330,536
Unrestricted 227,269
Total net position $ 7,557,805
I
The accompanying notes are an integral part of these financial statements.
-4 -
Rosemead Housing Development Corporation
Statement of Activities
For the Year Ended June 30, 2017
Program Revenues
Operating Capital
Charges for Contributions Contributions Governmental
Expenses Services and Grants and Grants Activities
Governmental activities:
General government $ 1,033.621 $ 433.118 $ 412,286 $ - $ (188,217)
Total governmental
activities $ 1,033.621 $ 433,118 $ 412,286 $ - (188,217)
General revenues:
Investment income 12
Other general revenues 5,767
Total general revenues 5,779
Change in net position (182,438)
Net position. beginning of year 7,740,243
Net position, end of year $ 7,557.805
The accompanying notes are an integral part of these financial statements.
- 5 -
r
Rosemead Housing Development Corporation
Balance Sheet
Governmental Fund
June 30, 2017
General
Fund
ASSETS
Cash and investments $ 266,710
Accounts receivable 9,003
Due from City 207,486
Total assets $ 483.199
LIABILITIES AND FUND BALANCE
Liabilities:
Refundable deposits $ 51.130
Due to City 204.800
Total liabilities 255,930
Fund balance:
Restricted for:
Low and moderate income housing 227,269
Total fund balance 227,269
Total liabilities and fund balance $ 483,199
The accompanying notes are an integral part of these financial statements.
- 6 -
Rosemead Housing Development Corporation
Reconciliation of the Balance Sheet of Governmental Fund
to the Statement of Net Position
June 30, 2017
Fund balance of governmental fund S 227.269
Amounts reported for governmental activities in the statement of net position are
different because:
Capital assets, net of depreciation, have not been included as financial
resources in the governmental fund activity.
Capital assets 11,171.141
Accumulated depreciation (3,840.605)
Net position of governmental activities S 7,557.805
The accompanying notes are an integral part of these financial statements.
- 7 -
Rosemead Housing Development Corporation
Statement of Revenues, Expenditures, and Changes in Fund Balance
Governmental Fund
For the Year Ended June 30, 2017
General
Fund
REVENUES
Rental income $ 433,118
Intergovernmental 412,286
Investment income 12
Other 5,767
Total revenues 851,183
EXPENDITURES
Operating 401,247
Administrative services paid to City of Rosemead 226,200
Facility rent paid to City of Rosemead 183,400
Total expenditures 810,847
Net change in fund balance 40,336
Fund balance, beginning of year 186,933
Fund balance, end of year $ 227.269
The accompanying notes are an integral part of these financial statements.
- 8 -
firomor vrrrr
Rosemead Housing Development Corporation
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balance of Governmental Fund to the
Statement of Activities
For the Year Ended June 30, 2017
Net change in fund balance -total governmental fund $ 40,336
Amounts reported for governmental activities in the statement of activities
are different because:
Governmental funds report capital outlays as expenditures. However, in
the statement of activities. the costs of those assets are allocated over their
estimated useful lives as depreciation expense. Therefore. depreciation
expense is not reported as an expenditure in the governmental funds.
Depreciation expense (222.774)
Change in net position of governmental activities $ (182.438)
The accompanying notes are an integral part of these financial statements.
- 9 -
wistrammosse
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(1) Summary of Significant Accounting Policies
(a) Reporting Entity
The Rosemead Housing Development Corporation (the Corporation) is a
nonprofit corporation whose purpose is to provide assistance to the Rosemead
Community Development Commission (the Commission) to account for the
construction, financing and operations of low and moderate income housing for
the benefit of the City of Rosemead (the City). The Corporation currently
maintains the Angelus and Garvey Senior Housing facilities. The Corporation is
exempt from income taxes under Section 501 (c)(3) of the Internal Revenue
Code (IRC) and applicable state statutes.
Governmental Accounting Standards Board (GASB) Statement No. 14, The
Financial Reporting Entity, defines the reporting entity as the primary government
and those component units for which the primary government is financially
accountable. Financial accountability is defined as appointment of a voting
majority of the component unit's Board and either (a) the primary government has
the ability to impose its will or (b) the possibility exists that the component unit will
provide a financial benefit to or impose a financial burden on the primary
government. Since the Board of Directors of the Commission and the Council
members also serve as the Board of Directors of the Corporation, the
Commission and the City, in effect, have the ability to influence and control
operations. Therefore, the City has oversight responsibility for the Corporation.
Accordingly, in applying the criteria of GASB Statement No. 14, the financial
statements of the Corporation are included in the City's financial reports.
The Corporation has the same fiscal year as the City. These financial statements
contain information for the Corporation only. The City's financial report may be
obtained by contacting the Financial Department of the City.
As a result of the Assembly Bill X1 26 signed into law as part of the State of
California's budget package on June 29, 2011, the Rosemead Community
Development Commission ceased to exist as of February 1, 2012. On January
10, 2012, the City Council elected to serve as the successor agency to the
Commission, and retain the housing assets and functions previously held and
performed by the Commission.
(b) Basis of Accounting and Measurement Focus
The basic financial statements of the Corporation are composed of the following:
• Government-wide financial statements
• Fund financial statements
• Notes to the basic financial statements
- 10 -
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(1) Summary of Significant Accounting Policies, (continued)
(b) Basis of Accounting and Measurement Focus, (continued)
Government-wide Financial Statements
Government-wide financial statements display information about the reporting
government as a whole, except for its fiduciary activities. These statements
include separate columns for the governmental and business-type activities of
the primary government (including its blended component units), as well as its
discretely presented component units. The Corporation has no business-type
activities or discretely presented component units.
Government-wide financial statements are presented using the economic
resources measurement focus and the accrual basis of accounting. Under the
economic resources measurement focus, all (both current and long-term)
economic resources and obligations of the reporting government are reported in
the government-wide financial statements. Basis of accounting refers to when
revenues and expenditures are recognized in the accounts and reported in the
financial statements. Under the accrual basis of accounting, revenues, expenses,
gains, losses, assets. and liabilities resulting from exchange and exchange-like
transactions are recognized when the exchange takes place. Revenues,
expenses, gains, losses, assets, and liabilities resulting from nonexchange
transactions are recognized in accordance with the requirements of GASB
Statement No. 33.
Program revenues include charges for services and payments made by parties
outside of the reporting government's citizenry if that money is restricted to a
particular program. Program revenues are netted with program expenses in the
statement of activities to present the net cost of each program.
Amounts paid to acquire capital assets are capitalized as assets in the
government-wide financial statements, rather than reported as expenditures.
Proceeds of long-term debt are recorded as a liability in the government-wide
financial statements, rather than as an other financing source. Amounts paid to
reduce long-term indebtedness of the reporting government are reported as a
reduction of the related liability, rather than as an expenditure.
- 11 -
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(1) Summary of Significant Accounting Policies, (continued)
(b) Basis of Accounting and Measurement Focus, (continued)
Fund Financial Statements
The underlying accounting system of the Corporation is organized and operated
on the basis of separate funds, each of which is considered to be a separate
accounting entity. The operations of each fund are accounted for with a separate
set of self-balancing accounts that comprise its assets, liabilities, fund balance,
revenues and expenditures or expenses, as appropriate. Governmental
resources are allocated to and accounted for in individual funds based upon the
purposes for which they are to be spent and the means by which spending
activities are controlled.
Fund financial statements for the primary government's governmental,
proprietary. and fiduciary funds are presented after the government-wide
financial statements. These statements display information about major funds
individually and nonmajor funds in the aggregate for governmental and enterprise
funds. Fiduciary statements include financial information for fiduciary funds and
similar component units. Fiduciary funds primarily represent assets held by the
Corporation in a custodial capacity for other individuals or organizations. The
Corporation has no enterprise funds or fiduciary funds.
Governmental Funds
In the fund financial statements, governmental funds and agency funds are
presented using the modified-accrual basis of accounting. Their revenues are
recognized when they become measurable and available. Measurable means
that the amounts can be estimated, or otherwise determined. Available means
that the amounts were collected during the reporting period or soon enough
thereafter to be available to finance the expenditures accrued for the reporting
period. The Corporation uses a sixty day availability period.
Revenue recognition is subject to the measurable and available criteria for the
governmental funds in the fund financial statements. Exchange transactions are
recognized as revenues in the period in which they are earned (i.e., when the
related goods or services are provided). Locally imposed derived tax revenues
are recognized as revenues in the period in which the underlying exchange
transaction upon which they are based takes place. Imposed non-exchange
transactions are recognized as revenues in the period for which they were
imposed. If the period of use is not specified, they are recognized as revenues
when an enforceable legal claim to the revenues arises or when they are
received, whichever occurs first. Government-mandated and voluntary
nonexchange transactions are recognized as revenues when all applicable
eligibility requirements have been met.
- 12 -
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(1) Summary of Significant Accounting Policies, (continued)
(b) Basis of Accounting and Measurement Focus, (continued)
Governmental Funds (continued)
In the fund financial statements, governmental funds are presented using the
current financial resources measurement focus. This means that only current
assets and current liabilities are generally included on their balance sheets. The
reported fund balance (net current assets) is considered to be a measure of
"available spendable resources." Governmental fund operating statements
present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets. Accordingly, they
are said to present a summary of sources and uses of "available spendable
resources" during a period.
Non-current portions of long-term receivables due to governmental funds are
reported on their balance sheets in spite of their spending measurement focus.
Special reporting treatments are used to indicate, however, that they should not
be considered "available spendable resources." since they do not represent net
current assets. Recognition of governmental fund type revenues represented by
noncurrent receivables are deferred until they become current receivables.
Because of their spending measurement focus, expenditure recognition for
governmental fund types excludes amounts represented by noncurrent liabilities.
Since they do not affect net current assets, such long-term amounts are not
recognized as governmental fund type expenditures or fund liabilities.
Amounts expended to acquire capital assets are recorded as expenditures in the
year that resources were expended, rather than as fund assets. The proceeds of
long-term debt are recorded as an other financing source rather than as a fund
liability. Amounts paid to reduce long-term indebtedness are reported as fund
expenditures.
When both restricted and unrestricted resources are combined in a fund,
expenses are considered to be paid first from restricted resources, and then from
unrestricted resources.
(c) Major Fund
The Corporation reports the General Fund as its only major fund.
- 13 -
V
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(1) Summary of Significant Accounting Policies, (continued)
(d) Cash and Investments
Cash includes amounts in demand and time deposits. Investments, if any, are
reported in the accompanying balance sheet at fair value, except for certain
money market and investment contracts that are reported at cost because they
are not transferable and they have terms that are not affected by changes in
market interest rates.
Changes in fair value that occur during a fiscal year are recognized as income
from property and investments reported for that fiscal year. Income from property
and investments includes interest earnings, changes in fair value, any gains or
losses realized upon the liquidation. maturity or sale of investments, property
rentals, and the sale of City-owned property.
(e) Capital Assets
Capital assets, which include buildings and improvements, and furniture and
equipment, are reported as part of governmental activities in the government-
wide financial statements. Capital assets are defined by the Corporation as
assets with an initial, individual cost of more than $10,000 and an estimated
useful life in excess of one year. Such assets are recorded at historical cost, or
estimated historical cost if purchased or constructed. Donated capital assets are
recorded at estimated fair market value at the date of donation.
The cost of normal maintenance and repairs that do not add to the value of an
asset or materially extend an asset's useful life are not capitalized.
Costs associated with construction in progress are recorded in their respective
capital assets category upon approval by the Corporation's governing board,
which approximates the completion date.
Depreciation is charged to operations using the straight-line method based on
the estimated useful life of an asset. The estimated useful lives of depreciable
assets are as follows:
Buildings 50 years
Improvement 15 years
Furniture and equipment 7 years
(f) Income Taxes
The Corporation is exempt from federal income taxes under Section 501(c)(3) of
the IRC and a similar exemption under state law.
- 14 -
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(1) Summary of Significant Accounting Policies, (continued)
(g) Fund Balance
The Corporation reports fund balance in classifications that describe the relative
strength of the spending constraints placed on the purposes for which resources
can be used:
• Nonspendable — amounts that are not in a spendable form (such as
inventory) or are required to be maintained intact.
• Restricted — amounts constrained to specific purposes by their providers
(such as grantors. bondholders and higher levels of government), through
constitutional provisions or by enabling legislation.
• Committed — amounts constrained to specific purposes by a government
itself, using the highest level of decision-making authority; to be reported as
committed, amounts cannot be used for any other purpose unless the
government takes the same highest level action to remove or change the
constraint.
• Assigned — amounts a government intends to use for a specific purpose;
intent can be expressed by the governing body or by an official or body to
which the governing body delegates the authority.
• Unassigned — amounts that are for any purpose; positive amounts are
reported only in a general fund.
The Board of Directors establishes (and modifies or rescinds) fund balance
commitments by passage of an ordinance or resolution. The Board designates
the Finance Committee and City Manager as the Corporation officials to
determine. define, and make the necessary account or fund transfers for the
amounts to those components of fund balance that are classified as `Assigned
Fund Balance."
When both restricted and unrestricted resources are available for use when an
expenditure is incurred, it is the Corporation's policy to use restricted resources
first, then unrestricted resources as they are needed. It is the Corporation's
policy to consider committed amounts as being reduced first. followed by
assigned amounts. and then unassigned amounts when expenditures are
incurred for purposes for which amounts in any of those unrestricted fund
balance classifications could be used.
- 15 -
1011.11_
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(1) Summary of Significant Accounting Policies, (continued)
(h) Rental Income
A management company collects rent payments on the first day of the month and
the corporation recognizes revenue in the month due. Monthly rental income per
unit ranges from $250 to $450 and is approved by the annual budget.
(i) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
(2) Cash and Investments
Cash and investments at June 30. 2017 consisted of deposits with financial institutions.
The carrying amount of the Corporation's deposits was $266,710.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be
able to recover collateral securities that are in the possession of an outside party. The
Corporation maintains its bank accounts at financial institutions that are collateralized
with securities held by the pledging financial institution, or by its Trust Department or
agent, but not in the Corporation's name. The primary difference between the carrying
amount and the bank balance are deposits in transit and outstanding checks. In
accordance with state statutes, the Corporation maintains deposits at those depository
institutions insured by the FDIC. The California Government Code (the Code) requires
California banks and savings and loan associations to collateralize the deposits of
governmental entities by pledging government securities as collateral. The market value
of pledge securities must equal at least 110% of those deposits. California law also
allows financial institutions to secure the deposits of governmental entities by pledging
first trust deed mortgage notes having a collateral value of 150% of a corporation's total
deposits. As of June 30, 2017, the Corporation had no deposits with financial institutions
in excess of federal depository insurance limits.
(3) Reimbursement Agreements and Related-party Transactions
The Corporation has entered into a reimbursement agreement with the City for the
Corporation's administrative services. The Corporation paid $226,200 for administrative
services to the City during the year ended June 30, 2017. The Corporation is funded, in
part, by advances from the Commission.
- 16 -
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(3) Reimbursement Agreements and Related-party Transactions, (continued)
The Corporation has also entered into a 55-year lease agreement with the City for the
Angelus Senior Housing facility at $60.000 annually, expiring June 2047. Total lease
commitments remaining are $1,613,104 for the Angelus Senior Housing facility at June
30, 2017. The Corporation has also entered into a 55-year lease agreement with the City
for the Garvey Senior Housing facility at $72,000 annually, expiring November 2057.
Total lease commitments remaining are $2,789,107 for the Garvey Senior Housing
facility at June 30, 2017. The Corporation paid $91,200 and $92.200 in lease payments
to the City during the year ended June 30, 2017 for the Angelus and Garvey Senior
Housing facilities, respectively.
(4) Capital Assets
During the year ended June 30, 2017, the changes in capital assets were as follows:
Balance at Balance at
June 30. 2016 Additions Deletions June 30, 2017
Government activities:
Capital assets being depreciated:
Buildings and improvements $11,042,597 $ - $ - $ 11.042,597
Furniture and equipment 128,544 - - 128,544
Total capital assets being
depreciated 11,171,141 - - 11,171,141
Less accumulated depreciation:
Buildings and improvements (3.489,287) (222,774) - (3,712.061)
Furniture and equipment (128,544) - - (128.544)
Total accumulated
depreciation (3.617,831) (222,774) - (3.840.605)
Governmental activities
capital assets, net $ 7.553,310 S (222,774) $ - $ 7.330.536
Depreciation expense is allocated to the general government function in the statement of
activities.
- 17 -
Rosemead Housing Development Corporation
Notes to the Basic Financial Statements
June 30, 2017
(5) Risk Management
The Corporation is exposed to various risks of loss related to torts, thefts of, damage to
and destruction of assets, errors and omissions, and natural disasters. The Corporation,
through the City, carries commercial liability insurance coverage. The Corporation
carries no insurance coverage for natural disasters. Since the Corporation does not have
any employees (it uses employees from the City), it is not liable for injury to employees,
workers' compensation, or employee health and accident insurance. The City has had
no reduction in insurance coverage, nor did the City have any settlements that were in
excess of insurance coverage in any of the three preceding years.
(6) Property Management and Operations
The Corporation has two agreements with a management company. dated July 1994
and April 2002, to operate the development housing. These agreements are
automatically renewed for successive periods of one year, unless terminated by the
Corporation. The management company is responsible for collecting rents and receipts,
employing an on-site manager and maintaining financial records. Total fees paid to the
management company were $25,092 for the Angelus Senior Housing facility and
$35,424 for the Garvey Senior Housing facility during fiscal year ended June 30. 2017.
- 18 -
REQUIRED SUPPLEMENTARY INFORMATION
Rosemead Housing Development Corporation
Notes to Required Supplementary Information
June 30, 2017
Budgetary Information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted
in the United States of America for the governmental fund. All annual appropriations lapse at
fiscal year end.
On or before the last day in March of each year, all agencies of the government submit requests
for appropriations to the government's manager so that a budget may be prepared. Before the
first Thursday of June, the proposed budget is presented to the Corporation's governing board
for review. The governing board holds public hearings and a final budget must be prepared and
adopted no later than June 30.
The appropriated budget is prepared by fund, function and department. The Corporation's
department heads, with approval of the Finance Director and City Manager, may make transfers
of appropriations within a department and between departments within a fund. Transfers of
appropriations between funds must be approved by the governing board. The legal level of
budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is
the fund level.
Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase
orders, contracts) outstanding at year end do not constitute expenditures or liabilities because
the commitments will be re-appropriated and honored during the subsequent year.
- 19-
Rosemead Housing Development Corporation
Schedule of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual - General Fund
For the Year Ended June 30, 2017
Variance
Original Final with Final
Budget Budget Actual Budget
REVENUES
Rental income $ 437,400 $ 437,400 $433.118 $ (4,282)
Intergovernmental - - 412,286 412,286
Investment income - - 12 12
Other 8,100 8,100 5.767 (2,333)
Total revenues 445,500 445,500 851,183 405,683
EXPENDITURES
Operating 434,000 434,000 401,247 32.753
Administrative services paid to
City of Rosemead 226,200 226,200 226,200 -
Facility rent paid to City of Rosemead 183,400 183,400 183,400 -
Total expenditures 843,600 843,600 810,847 32,753
Net change in fund balance (398,100) (398;100) 40,336 438,436
Fund balance, beginning of year 186,933 186.933 186,933 -
Fund balance, end of year $ (211,167) $ (211,167) $227,269 $ 438,436
-20-
RA . ROGERS. ANDERSON. MALODY&SCOTT. LLP
MCERTIFIED PUBLIC ACCOUNTANTS.SINCE 1948
735 E. Carnegie Dr.Suite :00
San Bernardino.CA 92408
909 889 0871 T
909 889 5361 F Board of Directors
ramscpa.net
Rosemead Housing Development Corporation
City of Rosemead, California
PARTNERS
Brenda L.Odle.CPA.MST
Terry P.Shea.CPA REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
Kirk A.Franks,CPA
Scott W. Manno,CPA.CGMA ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
Leena Shanbhag,CPA.MST.CGMA FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
Bradferd A.Welebir,CPA.MBA.CGMA GOVERNMENT AUDITING STANDARDS
Jay H. Zercher,CPA(Partner Emeritus)
Phillip H.Waller.CPA(Partner Emeritus)
INDEPENDENT AUDITOR'S REPORT
MANAGERS/STAFF
Jenny Liu,CPA.MST
Seong-Hyea Lee.CPA.MBA
Charles De Simoni,CPA We have audited, in accordance with auditing standards generally accepted
Nathan Statham.CPA.MBA in the United States of America and the standards applicable to financial
Gardenya Duran,CPA audits contained in Government Auditing Standards issued by the
Brianna Schultz,CPA
Lisa Dongxue Guo,CPA,MSA Comptroller General of the United States, the financial statements of the
governmental activities and the major fund of the Rosemead Housing
Development Corporation (the Corporation), a component unit of the City of
Rosemead, California, as of and for the year ended June 30, 2017, and the
related notes to the financial statements, which collectively comprise the
Corporation's basic financial statements, and have issued our report thereon
dated December 28, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we
considered the Corporation's internal control over financial reporting (internal
control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the
effectiveness of the Corporation's internal control. Accordingly, we do not
express an opinion on the effectiveness of the Corporation's internal control.
MEMBERS
American Institute of designoperation deficiencyin internal control exists when the or o eration of a
Certified Public Accountants control does not allow management or employees in the normal course of
PCPS The AICPA Allimue performing their assigned functions, to prevent, or detect and correct
for CPA Finns misstatements on a timely basis. A material weakness is a deficiency, or a
Gaver:n,entut Audit combination of deficiencies, in internal control, such that there is a
Quality Center reasonable possibility that a material misstatement of the entity's financial
California Society of statements will not be prevented, or detected and corrected on a timely
Certifies Public Accountants basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those charged with governance.
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STABILITY. ACCURACY. TRUST.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies
in internal control over financial reporting that might be material weaknesses or significant
deficiencies. Given these limitations, during our audit we did not identify any deficiencies in
internal control over financial reporting that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Corporation's financial statements
are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts.
I However providing an opinion on compliance with those provisions was not an objective of our
audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the Corporation's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the Corporation's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
43€4.s, i itekt cou,, ls'f ift, LLP.a,�o
San Bernardino, California
December 28, 2017
I
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