COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
The net change in fund balances for governmental funds, $(211,140), differs from the change in net assets for governmental activities, $(187,438) reported in the
Statement of Revenues, Expenditures and Changes in Fund Balances/Statement of Activities
Tota l Ca pita l- L ong–ter m In ter n al Re cla ssifi cat ions
G ov er nm en ta l Rel ated Revenues, Se rv ic e and St atem e n t of
Fund s Ite m s (3) E xp en se s (4 ) Fu n ds ( 5 ) Eli mi n atio n s Ac tivities
Revenue s:
Taxes:
Property $ 475,629 475,629
Sal es / use 69,225 69,225
Transie nt oc cu p an c y 5,311 5,311
Use of m o ne y a n d pr o p ert y 4 9 ,10 8 696 49,804
Li censes and permit s 41,762 (41,762)
In te rg o ve rn m en ta l 1,419,783 10,682 1,069 (1,431,534)
Charges for sales and se rvic es 197,378 (9,219) 74,452 80,790 343,401
General government 171,945 2,132 2,146 9,740 185,963
Public a ssistance 689,891 362 4,279 9,884 704,416
Pu blic p r o tec tio n 683,099 13,302 16,631 31,040 744,072
He alth a nd sa n itati on 681,774 26,347 7,605 8,940 724,666
Public ways and facilities 102,254 10,056 (1,531) 13,220 123,999
Transf er s i n 174,740 263 (174,767) 236
Transf er s o u t (156,475) (11,014) 174,767 7,278
Issuance of debt 80,006 (80,006)
Refunding debt issued 49,760 (49,760)
Swap, Lehmen termination payment (23,019) 23,019
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
(b) Explanation of certain differences between the governmental funds statement of revenues, expenditures, and changes in fund balances and the government-wide
statement of activities.
(3)
When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as
expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and
re
p
orted as de
p
reciation ex
p
ense. As a result, fund balance decreases b
y
the amount of financial resources ex
p
ended, whereas net assets decrease b
y
the
de
This is the amount amortized during the year. $ (934)
Bond issuance costs are expended in governmental funds when paid, and are capitalized and amortized over the life of the corresponding bonds for
purposes of the statement of activities. This amount is the net between bond issuance costs ($335) incurred and amortization for the year $1,059 . (724)
Repayment of bond principal is reported as an expenditure in the governmental funds and, thus, has the effect of reducing fund balance because current
53
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
Bon
which are expended within the funds statements. (71,735)
Change in compensated absences
Change in Other post employment benefits (OPEB)
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.
(5,628)
(872)
communications and office of communications and technology to individual funds. The adjustments for internal service funds close those funds by
charging additional amounts to participating governmental activities to completely cover the internal service funds‘ costs for the year. $ (8,420)
54
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
NOTE 3 – BUDGETARY PRINCIPLES
As required by the laws of the State of California, the County prepares and legally adopts a final balanced operating budget on or before August 30 of each fiscal year.
The Board may, by resolution, extend on a permanent basis or for a limited period, the date from August 30 to October 2. Due to the uncertainty of State budget
impacts, on September 3, 2008 the Board of Supervisors approved by resolution to extend the date of the final adoption of the County’s Fiscal Year 2008-2009 Budget
Resolutions until sixty days after the adoption of the California State Budget, which occurred on September 23, 2008. The final budget for fiscal year 2008-09 was
adopted on November 12, 2008. Until the adoption of a final balanced budget, operations were governed by the proposed budget approved by the Board of Supervisors
on June 10, 2008. Public hearings were conducted on the proposed final budget to review all appropriations and the sources of financing. Because the final budget must
be balanced, any shortfall in revenue requires an equal reduction in financing requirements.
Operating budgets are adopted for the General Fund, special revenue funds, debt service funds, and capital projects funds on the modified accrual basis of accounting.
Budgetary control and the legal level of control are at the budget unit and object level, which classifies expenditures by organizational unit, and by type of goods
purchased and services obtained. The statement/schedules of revenues and expenditures – budget and actual presents revenues at the source level and expenditures at
the function level.
modified accrual basis of accounting.
NOTE 4 – CASH, INVESTMENTS, AND RESTRICTED ASSETS
All investments are reported on the statement of net assets/balance sheet in accordance with GASB Statement No. 31, at fair value, except for the investment
agreement(s) which are carried at cost. The County maintains two cash and investment pools. The primary cash and investment pool (Treasurer’s Pool) is available for
use by all funds. The portion of this pool applicable to each fund type is displayed on the statements of net assets/balance sheets as “cash and investments.” The share
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
in the Treasurer’s Pool. (A separately issued report of County Treasurer’s Internal and External Pools is available at
http://www.finance.saccounty.net/Investments/RptQuarterly.asp
Cash and investments held by fiscal agents are restricted as to its use. It includes funds for the construction/acquisition of plant and equipment and funds designated by
b. Credit risk
c. Custodial credit risk
d. Concentration of credit risk
Specific restrictions of investment are noted below:
Section 53601 lists the investments in which the Treasurer may purchase. These include bonds issued by the County; United States Treasury notes, bonds, bills or
receivable backed bonds, not to exceed maturity of five years, subject to the credit rating of the issuer and not to exceed 20% of the portfolio; shares of beneficial
interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized previously.
56
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
In addition to the restrictions and guidelines cited in the Government Code, the County Board of Supervisors annually adopts an “Annual Investment Policy for the
Pooled Investment Fund” (The Policy). The Policy is prepared by the Department of Finance and is based on criteria cited in the Government Code. The Policy adds
further specificity to investments permitted, reducing concentration within most permitted investment types and reducing concentration of investments with any broker,
dealer or issuer.
Credit Risk – This is the risk that an issuer or other counterparty to a debt instrument will not fulfill its obligations. The County is permitted to hold investments of
issuers with a short term rating of superior capacity and a minimum long term rating of upper medium grade by the top two nationally recognized statistical rating
organizations (rating agencies). For short-term rating, the issuers’ rating must be A-1 and P-1, and the long-term rating must be A- and A3, respectively by Standard &
Poor’s and Moody’s rating agencies. In addition, the County is permitted to invest in the State’s Local Agency Investment Fund, collateralized certificates of deposits
55.5% of total investments at year-end are in U.S. Government and Agency securities, there is no limitation on amounts invested in these types of issues, and 18.6% of
the portfolio is invested in commercial paper or guaranteed investment contracts. As of June 30, 2009, more than 5% of the portfolio is invested as shown below:
Federal Farm Credit Bank/FFCB Discount notes $ 221,723
Federal Home Loan Banks/FHLB Discount notes 868,822
Federal National Mortgage Association/FNMA Discount notes 707,081
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
The following schedule indicates the credit and interest rate risk at June 30, 2009. For purposes of this schedule, NR is defined as not rated. The credit ratings listed
are for Standard and Poor’s and Moody’s Investor Services, respectively. Guaranteed investment contracts are subject to the credit rating disclosure requirements but
Imprest cash
are normally unrated.
Credit
Rat ing
Under 30
Days
31-180
Days
181-365
Days
Maturity
1-5
Years
Over 5
Years
$
Fair Value
337
Cash in banks 837
Federal National Mortgage Association Discount Notes
FHLB Discount Notes
FHLMC Discount Notes
FHLMC
Commercial paper
Negotiable certificates of deposit
P-1/A-1+
P-1/A-1+
P-1/A-1+
Aaa/AAA
P-1/A-1+
P-1/A-1+
394,000
183,142
167,170
4,999
25,003
137,934
244,923
167,709
3,885
122,944
141,223
2,662
10,069
20,359
40,200
109,238
534,596
438,134
334,879
133,482
127,943
Total investments held by fiscal agents 39,567 39,567
T otal investments 1$ ,670,898 1,498,993 261,792 644,602 53,352
T otal cash, investments, and rest ricted asset s
58
4,156,628 $
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
The County did not participate in any security lending transactions or enter into any reverse repurchase agreements during FY 2008-09. The County’s investment with
the State’s Local Agency Investment Fund (LAIF) is $76,104; this investment is included in the State’s Pooled Money Investment Account (a separately issued report of
LAIF is available at http://www.treasurer.ca.gov/pmia-laif/index.asp). As of June 30, 2009 the total amount invested by all public agencies in the State’s Pooled Money
Investment Account is $51.0 billion. Of that $51.0 billion managed by the State Treasurer, 100 percent is invested in non-derivative financial products. The Pooled
Money Investment Accrual Portfolio has not invested in, nor will it invest in Derivative Products as defined in FASB 133. The average maturity of PMIA investments
was 235 days as of June 30, 2009. The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as
designated by state statute. The value of the pool shares in LAIF, which may be withdrawn, is determined on an amortized cost basis, which is different than the fair
value of the County’s portion in the pool.
Cash, investments, and restricted assets as shown on the basic financial statements at June 30, 2009, are as follows:
Government–wide statement of net assets:
Cash and investments
Restricted assets, included in current assets
$ 1,502,636
57,612
394,172
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
The following are condensed statements of net assets and changes in net assets for the Treasurer’s Pool and Fiscal Agent Pool at June 30, 2009:
Statement of net assets Treasurer’s Fiscal Agent
Interest
Rate Maturity
Fair Value Cost Range (%) Range
Government securities $ 2,268,982 $ 2,249,392 .13-7.4 7/09-5/14
Commercial paper 127,944 127,949 .19-.45 7/09-8/09
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
NOTE 5 – LONG-TERM RECEIVABLES
Governmental funds report deferred revenues in connection with receivables for revenues not expected to be collected within one year per GASB 33. Governmental
and enterprise funds also defer revenue recognition in connection with resources that have been received as of year-end, but not yet earned.
Nonmajor T otal
$ 23,306 23,306
Deferred revenue and unearned revenue reported were as follows:
Unavailable Unearned T otal
Governmental Activities:
Gen eral Fun d
Internal Service Funds 2,923 2,923
Swap premiums 26,234 26,234
T otal Governmental Activities 60,065 60,065
Business-type act ivit ies:
Airport 1,053 1,053
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
NOTE 6 – CAPITAL ASSETS
Capital assets activity for the year ended June 30, 2009, is as follows:
Restated
Balance Balance
June 30, 2008 Additions Deletions June 30, 2009
Gove rn m e n tal a cti vi ti e s :
Capital assets, not being depreciated:
Land $ 110,377 2,950 (214) 113,113
Equipment (198,073) (23,289) 17,878 (203,484)
Total accumulated depreciation (2,316,770) (90,093) 18,978 (2,387,885)
Total capital assets, being depreciated, net 1,438,490 64,913 (2,252) 1,501,151
Sub-total governmental activities $ 1,760,980 123,428 (71,580) 1,812,828
Business–type activities:
Less accumulated depreciation for:
Buildings and improvements (273,516) (31,085) 170 (304,431)
Water facility rights (1,494) (308) (1,802)
Infrastructure (13,775) (2,441) (16,216)
Equipment (52,289) (7,730) 3,673 (56,346)
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
Depreciation expense and amortization was charged to functions/programs of the primary government as follows:
Governmental activities:
Depreciation
Expense
General government $8,405
Public assistance 525
Public protection 13,237
Health and sanitation 3,269
Water Agency 8,316
County Transit
Total depreciation expense – business–type activities $
134
41,564
63
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
NOTE 7 – INTERFUND TRANSACTIONS
The following summarizes interfund receivables and payables, advances to / from other funds, and transfers as of and for the year ended June 30, 2009:
Due From / To Other Funds
Receivable Fund Payable Fund Amount Receivable Fund Payable Fund Amount
General Nonmajor governmental
Airport
Solid Waste
$ 13,378
949
4,708
Nonmajor enterprise General
Nonmajor governmental
Internal service
36
3
8
Water Agency
Nonmajor enterprise
1
12
47
Internal service 7,152
26,200
Nonmajor governmental General 14,106 Internal service General 36,279
Airport 321
Solid Was te Internal service 215 Solid Waste 1
215 Water Agency 11
Nonmajor enterprise 10
Water Agency Nonmajor governmental 2
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
Amounts due the General Fund are related to: 1) Principal and interest due from Public Facilities Fixed Asset Financing Program (nonmajor governmental), 2) To
fund community services activities pending reimbursement from federal, state and local government, 3) Sheriff security & Department of Environmental Review
and Assessment services provided to the Airports, and 4) Reimbursement due from Liability/Property Internal Service Fund for the final quarter of the fiscal year
ending June 30, 2009.
Amounts due the nonmajor governmental funds are a result of: 1) Transactions to repay the Public Facilities Fixed Asset Financing Program for year end
purchases, 2) Teeter excess, net penalty and interest revenue remaining after debt service interest costs are paid.
Total $ 59,166
Amounts advanced from nonmajor governmental funds are related to the Fixed Asset Financing Program which has financed $19,014 for major capital projects
(General Fund), major bulk automobile purchases (internal service and enterprise funds) and $4,292 were advances to the general fund. Amounts advanced from
internal service funds, $38,860 related to General fund advances. The advances were needed due to the decrease in revenues attributed to the economic recession.
The advances will be repaid within five years by the General Fund beginning in fiscal year 2010/11.
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
Transfers From / To Other Funds
Between funds within governmental activities:
Transfer From Transfer To
General Nonmajor governmental
Nonmajor governmental General
$
Amount
82,549
32,909
Transfer to cover debt service payments, economic
development and community development programs
Transfers for Transient Occupancy Taxand Teeter Property
Tax
Nonmajor governmental Nonmajor governmental
40,754
Transfer to cover debt service payments and capital project
Total $ 175,003
66
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
NOTE 8 – LEASES
Lease Obligations
During the year ended June 30, 2008, the County entered into the following capital lease agreements:
For energy conservation improvements and replacement of obsolete mechanical equipment at various county buildings entered into a 15 year lease in the amount of
$1,240, interest rate of 4.66 percent and annual lease payments of $115 through 2022.
For energy conservation improvements and replacement of obsolete mechanical equipment at various county buildings entered into a 15 year lease in the amount of
$1,088, interest rate of 4.66 percent and annual lease payments of $101 through 2022; lease was cancelled December 2008.
For energy conservation improvements and replacement of obsolete mechanical equipment at various county buildings entered into a 15 year lease in the amount of
2010.
Sunrise Recreation and Park District for an office trailer in the amount of $131 with an interest rate of 10.0 percent and annual lease payments of $30 through
November 2010.
67
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
During the year ended June 30, 2006, the County of Sacramento entered into a capital lease agreement for an energy conservation retro fit project in the amount of $837
with an interest rate of 4.30 percent per annum and semi-annual lease payments of $22 through September 2017.
As of June 30, 2009, the future minimum lease payments under capital leases are as follows:
Capital Lease Agreements
Year ending June 30 County
2010 $ 1,756
2011 1,756
2012 1,274
2013 1,274
2014 1,201
Structures and improvements 12,779
Equipment 1,539
14,991
Less: Accumulated depreciation
Structures and improvements $ (1,856)
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
The County also leases buildings and equipment under operating leases, some of which contain escalation clauses. Future minimum non-cancelable operating lease
payments for governmental and proprietary fund types as of June 30, 2009, are as follows:
Operating Leases Commitment
Year Ending June 30 Governmental Proprietary
2010 $ 35,491 1,615
2011 32,531 912
2012 29,582 862
The Airport System derives a substantial portion of its revenues from charges to air carriers and concessionaires. Substantially all of the assets classified under capital
assets in the Statement of Net Assets for the Airport are held for the purpose of rental or related use.
The Airport System, as lessor, leases land, buildings and terminal space to air carriers and concessionaires on a fixed fee as well as a contingent basis. All leases of the
Airport System are treated as operating leases for accounting purposes. Most of the leases provide for an annual review and re-determination of the rental amounts.
In fiscal year 2009 the Airport System received approximately $3,241, for contingent rental payments in excess of stated minimums. The following is a schedule of
future minimum rentals receivable on non-cancelable operating leases as of June 30, 2009.
2025-2029 3,160
2030-2034 1,368
2035-2039 410
Total future minimum rentals receivable $ 86,315
69
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
NOTE 9 – SHORT–TERM DEBT ACTIVITY
The County issues tax and revenue anticipation notes in advance of property tax and other revenue collections. The notes are issued to supplement County cash flows
until taxes and other revenues are collected.
Short-term debt activity for the year ended June 30, 2009 was as follows:
70
COUNTY OF SACRAMENTO
NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2009
(amounts expressed in thousands)
Amounts
Balance Balance Due Within
July 1, 2008 Additions Retirements June 30, 2009 One Year
Governmental activities:
Compens ated absences $ 100,197 94,117 (88,215) 106,099 6,498
Certificates of participation 340,480 (15,305) 325,175 16,885
Teeter notes 51,335 80,006 (81,541) 49,800 11,635
Pension obligation bonds 960,926 49,760 (66,048) 944,638 13,185
Revenue bonds 350,627 (5,485) 345,142 1,620
Accreted Interest 5,801 1,929 7,730
OPEB Liablility 4,370 964 5,334
Other long-term debt 3,615 1,475 5,090 5,090
Capital leas e obligations 13,933 (2,747) 11,186 1,213
Certificates of participation 26,900 (1,895) 25,005 1,960
Reimburs ement agreements 92 4,932 (3,159) 1,865 1,116
Us age fee – City 561 9,569 (1,380) 8,750 847
OPEB Liablility 225 181 406
Water rights – Smud assignment 4,000 4,000
NOTE 10 – LONG-TERM OBLIGATIONS
The following is a summary of long-term obligation transactions for the year ended June 30, 2009: