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Home My WebLink AboutAgenda Report - December 19, 1984 (60)At WT AND MANAMINr 6/30/84 RBCEIVEi FR FILITIG ;CITY COUNCIL MEETING DECEMBER 19, 1984 Following introduction of the matter by City Manager Glaves, Council , on mn t ion of Council A'l mbe r Y i nke r t on , l l i nchman second. received :or f l i►ig the Ci t of 1,odI June 30, 1984 Audit and Nlanagemen t I!e t t er its prepared by '"'mist and Whinney. Nb N "M1.0' h y..+ri.0 ~ Ar � Ytoter i; Wim.} y �4��, �` f y6 r• 't`.Sr {",, k,.•}-yP t yt7• 'fp";'. +� d4N�'•e � n •e; ,: " � ' �F ,• c. t � Yr•'P ' i• Q�ai:�Y'". �f 'i3S��7��i�V:�3 ��%�'�1ii� i � I :.1• °` t y, �,,�7fy��y'r'=> „�q epi ih wr��.. r ,.x'�+.a,F t�✓+i»�k�•t�L vj: �,, '`. ?t,. r.�.•. `' ..�•�-t'v' - a S.M1 t'iYn "fir:a.ti�' � ..`',. Re. 'f 's. .M� a {Tr��•4'9r} e�j .;'i 'S.Y�: �_ `- � -,'�J7 .,� .. '�. b':. t i £��,� ��' y� as i`� + `` r'a ..l•.�b S'' t•`a •, v �i � 9 •� , 1 rlr' ,,,�� 1 .. , S � . � � � .. 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" �� , �, "�t�.a,• 5" �` A,;\4Y r P r s 1� y"cog. � �5. `•✓ >Z r �,cL, drP�y�h��M1,h.. ,, .d��C if � � •,, �' {. �aTY#�Nin r- ... - 4}mil .�.•f{„�1p atY� ��`. �r� 9• ��' �r .. �, .�y� A x ,a'a:. : :,any 3't Audited Financial Statements and Other Financial Information CITY OF LODI June 30, 1984 TABLE OF CONTENTS Audited Financial Statements Auditors' Report. 1 Combined Balance Sheet Ail Fund Types and Account Grow -p 2 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds . . . . . . . . . . . . . 4 Combined Statement of Revenues, Expendi-tures, and Changes in Fund Balances - Budget and Actual - General and Special Revenue Fund Types. . . . . . . . . . . . . . . . S Combined Statement of Revenues, Expenses, and Changes in Retained Earnings/Fund Balances - All Proprietary Fund < Types and Similar Trust Funds . . . . . . . . . . . . . . . . . . . . 5 Combined Statement of Changes in Financial Position - All Proprietary Fund Types and Similar Trust Funds. . . . . . . . . . . . 7 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . 8 Other Financial Information Combining Balance Sheet - All General Funds . . . . . . . . . . . . . . 17 Combining Balance Sheet - All Enterprise Funds . . . . . . . . . . . . . 18 Combining Statement of Revenues. Expenses, and Changes in Retained Earnings - All Enterprise Funds . . . . . . . 19 Ernst&Whinney The City Council City of Lodi Lodi, California 555 Capitol Mall, Suite 650 Sacramento, California 95814 916/447-3237 We have examined the combined financial statements of the City of Lodi as of and for the year ended June 30, 1984, as listed in the table of contents. Our examination was made in accordance with generally accepted auditing standards, and accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. Complete records are not maintained for general fixed assets and, therefore, the combined financial statements referred to above do not include a statement of general fixed assets, which should be included to conform with generally accepted accounting principles. The records of the enterprise funds were incomplete as to fixed assets and related depreciation. Because we were unable to satisfy ourselves by appropriate audit tests or b%• other means as a result of such incomplete records, we are unable to express an opinion on the accompanying financial statements of the enterprise funds. In our opinion, except that the omission of the financial statement described above results in an incomplete presentation, as explained in the preceding paragraph, the combined financial statements, other than the enterprise funds, referred to above present fairly the financial position of the City of Lodi at June 30, 1984 and the results of its operations and the changes in financial position of its proprietary fund types and similar trust funds for the year then ended, in conformity with generally accepted accounting principles applied on a basis consisten-t with that of the preceding year after giving retroactive effect to the changes, with which we concur, resulting from the application of Statement 4 of the National Council on Governmental Accounting as described in Note C to the financial statements. Our examination was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The combining financial statements listed in the table of contents are presented for purposes of additional analysis and are not a required part of the combined financial statements of the City of Lodi. The information has been subjected to the auditing procedures applied in the examinarion of the combined financial statements and. in our opinion, is fairly stated in al material respects in relation to the combined financial statements taken as a whole. COMBINED BALANCE SHEET - ALL FUND TYPES t. AND ACCOUNT CROUP CITY OF LODI r June 30, 1984 See notes to financial statements Governmental Fund Types Special Debt Special General Revenue Service Assessment ASSETS Cash and investments --Note E $3,301,797 $4,531,158 $212,424 $ 525,8-10 Rer�a_vables (net of allowances for u^.collectibles) e Accounts 215,858 44,797 Special assessments 1,820,785 Interest 84,960 56,407 236,884 Due from other fund or governmental agencies --Note D 631,999 3,186 Supplies inventory 71,631 Other assets 50,375 Fixed assets Accumulated depreciation Amount available in Debt Service Fund Amount to be provided for retirement of general long-term debt --Note F TOTAL ASSETS $4,356,620 $4,632,362 $215,610 $2,583L479 See notes to financial statements Fiduciary Proprietary Fund Ty Res Fund Type Account Group General Totals Internal Trust and Long -Term (Memorandum Enterprise Service Agency Debt Only) $ 7,693,102 $1,431,743 $2,263,549 959,E+01 949 167,131 23,323 2,126 $19,959,583 1,221,205 1,820,785 570,831 635,185 849,393 921,024 9,092 41,230 100,697 25,633,923 25,633,923 (8,175,968) (8,175,968) f $ 215,610 215,610 4,017p 351 4,017, 351 $27,136,274 $1,4971245 $2,265,675 $4,232,961 $46,920,226 COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUP CI i'`; DF L')DI .Tune 30, 1984 FUND EQUITY Retained earnings Fund balances: Reserved for encumbrances 296,699 811,562 380.891 Reserved for supplies inventory 71,631 Unreserved: Designated for debt service $215,610 111,160'. Designated for subsequent years' expenditures 2,853,471 2,4.24,861 Undesignated 1,17.15.37 (1 437,624', TOTAL FUND EQUITY 3,22`1,801 4,407.9630 215,610 (945,565: COMMITMENTS AND CONTINGENCIES --Note H and I TOTAL LIABILITIES AND FUND EQUITY 54,356,620 $4,632,362 $215,610 $2,583,479 -3- Governmental Fund Types Special Debt Special General Revenue Service Assessment LIABILITIES AND FUND EQUITY LIABILITIES Accounts payable and other liabilities $ 393,529 $ 62,896 $ 11,398 Accrued salaries and Wages 240,412 15,622 Payable from restricted assets --Note E Due to other funds 145,884 Accrued compensated absences --Note C 500,878 Deferred revenue 2,042,992 Accrued self-insurance claims General obligation bonds payable -- Note F :p Special assessments --bonds payable net of discount --Note F 1 447.44,654 TOTAL LIABILITIES 1,134,81922— 402 3,5`2990U FUND EQUITY Retained earnings Fund balances: Reserved for encumbrances 296,699 811,562 380.891 Reserved for supplies inventory 71,631 Unreserved: Designated for debt service $215,610 111,160'. Designated for subsequent years' expenditures 2,853,471 2,4.24,861 Undesignated 1,17.15.37 (1 437,624', TOTAL FUND EQUITY 3,22`1,801 4,407.9630 215,610 (945,565: COMMITMENTS AND CONTINGENCIES --Note H and I TOTAL LIABILITIES AND FUND EQUITY 54,356,620 $4,632,362 $215,610 $2,583,479 -3- Fiduciary oprietary Fund Types Fund Type Account Group General Totals Internal Trust and Long -Term (Memorandum terprise Serviceenc Debt Only) 1,072,799 $ 10,649 $ 1,551,271 51,590 307,624 1,900,380 1,900,380 486,115 631,999 204,140 $ 467,961 1,172,979 2,042,992 $ 900,003 900,003 3,765,000 3,765,000 1,128,329 —90-0,�0 2, 97,14 1,474,654 4,232,361 13,746,902 25,807,745 25,807,745 1,489,160 71,631 326,770 5,278,332 597,242 (131,469) 199,686 25,807,745 597,242 131,469) 33,173,324 7,136,274 $1,497,245 $2,265,675 $4,232,961 $46,920,226 COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND EXPBND4BLE TRUST FUNDS CITY OF LODI Year Ended June 30, 1984 Fiduciary Governmental Fund Types Fund Type Totals Special Dent Special Expendable (Memorandum e:eneral Revenue Service Assessment Trust Only) REVENUES Taxes S 5.569.665 $1,846.511 S 426,946 S 7,843,122 Licenses and permits 241,281 241.281 Int-er-governmental revenues 333,102 1,138,613 1.471.715 Charges for services 1.939.107 37,082 1,976,189 Fires, forfeits and penalties 222,910 31,2.27 254.137 Use of money and property. 402,964 353,133 223.914 $ 9,382 989,393 Miscellaneous revenues 571>,296 377,568 (180.7253 r 4,3.79 7,72 518 TOTAL REVENUES 9.280,325 3.7&4.134 470,135 13,761 13,548,355 EXPENDITURES Current: General government 1.315.126 392.198 1,707.324 Public protection 4.558,856 4,,558,856 Public works 1,442.522 440,245 1,882,767 Sanitation 1.522.548 1.522,548 Library 474,040 474,040 Parka and recreation 1.20-1.874 27,986 1,229,P60 Ca-p:ita'l outlay 439.773 2.857.182 313.600 3,6.10.555 Debt service: Princi-pal retirement $ 300.000 300,000 Interest and fiscal charges 1.54„384 154,384 TOTAL EXPENDITURES 10,480.699 4,191,651 4 54, 38 4 313,600 15,440,334 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (1.200.374) (407,517) (454,384) 156.535 13,761 (1,89i,979) OTHER FINANCING SOURCES (USES) Operating transfers in 2.263,802 14.442 457,570 2.735,8=14 Operating transfers out ( 175,523) (13,,189) (19 - 712) TOTAL OTHER FINANCING SOURCES (USES) 2,088,279 1,253 457,570 2,54?,:102 EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 687,905 (406.264) 3,18E 156.535 13,761 655.123 Fund balances - July 1, 1983 as originally reported 2.809,552 4,814.224 212,424 (1.102.100) 91.,000 6,825,100 Cumulative effect of change in accounting principle --Note C (475,656) (475,656) As restated 2,333,896 4,814,224 212,424 1.102,1'00) 91,000 6,349,444 FUND BALANCES - JUNE 30, 1984 $ 3,221,801 $4,407.960 $ 215,610 $ (945,565) $1104,761 $ 7,004,567 See notes to financial statements -4- COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL - GENERAL AND SPECIAL REVENUE FUND TYPES CITY OF LODI Year Ended June 30, 1984 REVENUES Tgxes Licenses and permits Intergovernmental revenues Charges for services Fines, forfeits and penalties Use of money and property Miscellaneous revenues EXPENDITURES Current: General government Public protection Public works Sanitation Library Parks and recreation Capital outlay TOTAL REVENUES General Fund Variance Favorable Budget Actual (Unfavorable) S 5,055,035 268,650 323,265 1,770,950 263,950 355,620 238,425 8,275,895 1,231,678 4,365,392 1,523,390 1,417,505 S 5,569,665 241,281 333,102 1,939,107 222,910 402,964 571,296 9,180,325 1,315,126 4,558,856 1,442,522 1.522,548 1,164,117 1,201,874 1,147,858 439,773 TOTAL EXPENDITURES 1'1,849,940 10,480,699 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (2,574,045) (1,200,374) $ 514,630 (27,369) 9,837 168,157 (41,040) 47,344 332,871 !,004,430 (83, 448) (193,464) 80,868 (105,043) ( 37,757) 708,085 369,241 1,373,671 OTHER FINANCING SOURCES (USES) Operating transfers in 1,828,685 2,263,802 435,117 Operating transfers out ( 152,960) (175,523) (22 563) TOTAL OTHER FINANCING SOURCES (USES) 1x,675,725 2,088,279 412,;—;WF EXCESS OF REVENUES AND OTHER SOURCES i OVER (UNDER) EXPENDITURES AND OTHER USES (898,320) 887,905 1,786,225 Fund balances - July 1, 1983 as originally reported 2,809,552 Cumulative effect of change in accounting principle --Note C (4751656) As restated 2033,896 FUND BALANCES - JUNE 311, 1984 $ 1 , 435, 576 See notes to financial statements -S- 2,809,552 (475,656) 2,333,896 $ 3,221,801 $1,786,225 394,923 392,198 2,725 1,626,601 Totals (80,723) Special Revenue Fund (Memorandum Only) 4,558,856 (193,464) 442,591 Variance 2,346 1,965,981 Variance 83,214 Favorable 1,417,505 Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) 19,270 111,905 $ 1,136,980 $1,846,511 $ 709,531 $ 6,192,015 $ 7,416,176 $1,2.24,161 2,857,182 3,185,537 7,790,577 268,650 241,281 (27,369) 1,090, 350 1,138,613 48,263 1,413,615 1,471, 715 58,100 31,495 37,082 5,587 1,802,445 1,976,189 173,744 14,442 31,227 31,227 263,950 254,137 (9,813) 281,175 353,133 71,958 636,795 756,097 119.302 149,000 377,568 228,568 387,425 948,864 561,439 2,689,000 30784.134 1,09 5,134 10,964,395 13,064,459 2,099 ,564 394,923 392,198 2,725 1,626,601 1,707,324 (80,723) 4,365,392 4,558,856 (193,464) 442,591 440,245 2,346 1,965,981 1,882,767 83,214 1,417,505 1,522,548 X105,043) 493,310 474,040 19,270 493,310 474,040 19,270 111,905 27,986 83,919 1,276,022 1,229,860 46.,162 6,642,719 2,857,182 3,185,537 7,790,577 3,296,,955 4,493,622 8,085,448 4,191,651 3,89 3,797 118,935,388 14,672,350 4,263,038 (5,39 ,448) (407,517) 4,988,931 (7,970,493) (1,607,891) 6,362,602 14,442 14,442 1,828,685 2,278,244 449,559 (13,189) (13,189) (152,960) (188,712) (35,752) 1,253 _ 1,253 1,675,725 2,089,532 413,807 (5,396,448) 4,814,224 •,814,224 S (582,224) (406,264) 4,990,184 (6,294,768) 481,641 4,814,224 7,623,776 7,623,776 (475,656) _ (475,656) 4L814,224 7048,120 7,148,120 $44407,960 $4,990,194 S 1,853,352 $ 7,629,761 6,776,409 $6,776,409 COHBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS/FUND BALANCES = ALL PROPRIETARY FUND TYPES AND SIMILAR TRUST FUNDS CITY OF LODI Year Ended June 30, 1984 Proprietary Fund Types Internal Enterprise Service Fiduciary Fund Type Non- Totals Expendable (Memorandum Trust Only) OPERATING REVENUES Charges for services $16,488.267 X16,488.267 Contributions $ 161,402 $ 59,000 220,402 TOTAL OPERATING R.EVENLFS 16.488.267 i61.402 59,000 16.708.669 OPERATING EXPENSES Personal aurviccs 1,510,478 Supplies, materials, and services 491.091 Electric, sever. and water 12,993,010 Depreciation 903.221 Benefit payments Refunds 467,.40: TOTAL OPERATING EXPENSES 16.365.201 NFT OPERATING INCOME (LOSS) 123,066 NONOPERATING REVENUES Taxes -bond redemption 289,102 Interest revenue 770,106 Rent 105,741 Other (32,204) TOTAL. NONOPERATING REVENUES (EXPENSES) 1.133,345 INCOME (LOSS) BEFORE OPERATING rRANSFERS 1.2:6.411 133,624 1,644,102 491,091 12,993,010 903, 221 505.395 505.395 467,401 505,395 133,624 17,004.220 (343.993) (74,624) - (295,551; Operatiag transfers in (out) 289.102 141,625 912,331 (434,663) 10,178 115,919 (92,555) (1.24,759) 49.070 10,178 1,192,593 294.923) 64.446) 897,0Z Operatiag transfers in (out) (654,194) 200,,274 19,255 (434,663) NET INCO`IE 602.211 94,649) 45.191) 462,377 Retained earnings/fund balances -• July 1, 1983 as previously reported 25,399,558 691.891 (191,039) 25,900,410 Cumulative effect of change in accounting principle --Note C (194.030) (194,030) As restated 5,205,528 691,891 192,039) 25.706,3:30 RET11.`:FD E:AR':ItiGS.'FU':D BALANCES - JL':F. 30. 1934 S25.g07,745 S 591,242 S(236.23(-,') 526,168,757 See notes to financial statements CG,9BI4ED STATEMENT OF C"NGES IN FINANCIAL POSITION - ALL PROPRIETARY FUND TYPES AND SIMILAR TRUST FUNDS CITY OF LOD! Year Ended June 30, 1984 USE OF �:ORKING CAPITAL Acquisition of fixed assets 950.050 950,050 NET INCREASI. (DECREASE) IN WORKING CAPITAL S 555,3.94 S (94,649) S (45, 189) $ 415,550 ELEnENTS OF NET INCREASE ( DECREASE) Fiduciary 1N 40PLKLNG CAPITAL Proprietary Fund Types Fund Type Cast and investments $ 782.4$1 $ (2.303) Non- Totals Receivables (296,464) Internal Expendable (Memorandum Due from other f,.nds Enterprise Service Trust Only) SOURCE CF WORKING CAPITAL. 104,796 104,796 (Operations: 2,267 3,605 (20) 5.852 Net income $ 602,217 S (94,649) S (45,189) $ 462,379 Depreciation not requiring working (9.040) (207) (9.247) capital 903,221903,221 (101110) TOTAL SOURCES OF WORKING CAPITAL 1,505.48 (94.6'•9) _ 45,199) 1,365,600 USE OF �:ORKING CAPITAL Acquisition of fixed assets 950.050 950,050 NET INCREASI. (DECREASE) IN WORKING CAPITAL S 555,3.94 S (94,649) S (45, 189) $ 415,550 ELEnENTS OF NET INCREASE ( DECREASE) 1N 40PLKLNG CAPITAL Cast and investments $ 782.4$1 $ (2.303) S 246,691 $1,026,869 Receivables (296,464) 19,508 (276,956) Due from other f,.nds 52.735 52,735 Supplies inventory 104,796 104,796 Other assets 2,267 3,605 (20) 5.852 Accounts payable and other liabilities (71,277) 1,007 352 (69,918) Accrued salaries and wages (9.040) (207) (9.247) Arccued compensated absences (10.110) (101110) Due to other funds (282,000) (282,000) Accrued self-insurance claims (116,466) (116.466) Contracts payable (10,005) (_ 10.003) NET INCREASE (DECREASE) IN WORKING CAPITAL S 555.388 S (94,649) S (45,Ii39) $ 415,550 See notes to financial statements -7- NOTES TO FINANCIAL STATEMENTS CITY OF LODI June 30, 1994 NOTE A --FINANCIAL REPORTING ENTITY For financial reporting purposes, in conformance with NCGA Statement 3, the City includes all tunds. account groups, agencies, boards. commissions, and authorities that are controlled by or dependent on the City's executive or legislative branches (the Mayor or the Council. respectively). Control by or dependence on the City was determined on the basis of budget adoption , [axing authority, outstanding, debt secured by revenues or general obligation of the City, obligations of the City to finance any deficits Lilat may occur, or receipt of significant subsidies from the City. Based on the foregoing criteria, all funds and account groups of the City. except for the general fixed asset group of accounts for which complete records are not maintained, are included in the City's financial statements. NOTi' H --SIGNIFICANT ACCOIINTING POLICIES The accounting policies of the City summarized below conform to generally accepted accounting policies for governmental entities. except that complete records are not maintained for fixed assets. Basis of Presentation: The financial transactions of the City are recorded in individual funds and account group. The various funds and account group are reported by type in the financial statements. Amoaints in the "Totals (Memorandum only)" columns in the financial statements represent a summation of the combined financial statement line items of the fund types and account group and are presented only for analytical purposes. The summation includes fund types and the account group that use different bases of accounting, both restricted and unrestricted amounts, interfund transactions that have not been eliminated. and the caption "amount to be provided," which is not an asset in the usual sense. Consequently, amounts shown in the "Totals (Memorandum Only)" columns are not comparable to a consolidation and do not represent the total resources available or total revenues and expenditures/expenses of the City. The City uses the following fund categories, fund types, and account group: General Fund: To account for all financial resources except those required to be accounted for in another fund. NOTES TO FINANCIAL SrATEMEM':S (Continued) CITY OF LODI June 30, 1984 NOTE B --SIGNIFICANT ACCOUNTING POLICIES (Continued) Special Revenue Funds: To account for the proceeds of specific revenue sources, other than special assessments, expendable trusts, or capital projects, that are legally restricted to expenditure for specific purposes. Debt Service Funds: To account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Special Assessment Funds: To account for the financing of public improvements deemed to benefit the properties against which special assessments are levied. Enterprise Funds: To account for operations that are financed and operated in a manner similar to private businese; enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing services to the general public on a continuing basis be financed or recovered primarily through user charges. Internal Services Funds: To account for the financing of services provided by one department to other departments of the governmental unit on a cost -reimbursement basis. Trust and Agency Funds: To account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. These include expendable trust funds and nonexpendable trust funds. General Long -Term Debt Account Group: To account for unmatured general long-term liabilities of the City. Basis of Accounting: Governmental, expendable trust, and agency finds are accounted for on the modified accrual basis of accounting. Governmental and expendable trust fund revenues are recognized when received in cash except those accruable, which are recorded as receivables when measurable and available to pay current -period liabilities. Expenditures are recognized on the accrual basis, except for principal :and interest of general and special assessment lona;-term debt, which is recognized when financial resources are provided. NOTES TO FINANCIAL STATEMENTS (Continued) CITY OF LODI June 30, 1984 NOTE B --SIGNIFICANT ACCOUNTING POLICIES (Continued) Proprietary and nonexpendable trust funds are accounted for on the accrual basis of accounting. Their revenues are recognized in the period earned and expenses are recognized in the period incurred. Budgetary Accounting: An operating budget is adopted each fiscal year for the general and special revenue funds on the same modified accrual basis u,;ed to reflect actual revenues and expenditures. Btidgetary control is exercised at the department level. The City Manager is authorized to transfer budget amounts between departments within any fund; however, any supplemental appropriations that amend the total expenditures of any fund require City Council resolution. Reported budget amounts are as originally adopted or as amended by City Council resolution. Unencumbered appropriations lapse at year-end. Pooled Cash and Investments: Cash balances of most City funds are pooled and invested. Interest earned from investments purchased with pooled cash was allocated to each of the funds based on the fund's average cash balance. Investments are stated at cost which approximates market. Inventories: Inventory -type items are considered expenditures at the time of issuance of supplies. Inventories of supplies are stated at the lower of cost (generally determined or. a weighted average basis) or market. Fixed Assets: Complete fixed -assets records for the enterprise funds are not maintained. As a result, records are also Incomplete for depreciation. Encumbrances: Encumbrances are established in the general, special revenue, and special assessment funds to recognize future abligations of the City. They cease to be encumbrances when paid or when the actual liability is recorded. Fund Equity: Amounts reported as designated for subsequent year's expenditures in unreserved fund equity relate to unused appropria-tions for which there are no purchase orders or contracts, but are expected to be expended during; the next fiscal year. Special Assessment Fund [deficit: The fund balance deficit of the special assessment fund arises because of the application of generally accepted accounting principles to the financial reporting for such funds. Bond proceeds used to finance construction of special assessment projects are not -1O- NOTES TO FINANCIAL STATEMENTS (Continued) CITY OF LODI June 30, 1984 NOTE B --SIGNIFICANT ACCOUNTING POLICIES (Continued) recognized as an "other financing source." Liabilities for special assessment bonds payable are accounted for in the special assessment fund. Special assessments are recognized as revenue only to the extent that Individual inscallments are considered current assets. The deficits of both funds will be reduced and eliminated as deferred special assessment installments become current assets. Property and Special Assessment Taxes: The City receives property tax revenues based on an allocation factor calculated by the County of San Joaquin under the provisions of Proposition 13. Property taxes are received from the County throughout the year and are recognized when received. There was no receivable at year-end. Collections in 1984 were $3.045,250. Special assessments are levied and collected by the County and are recognized when received. Special assessments receivable consist of deferred revenue si-nce the amounts are not considered available under generally accepted accounting principles. Sales and Ilse Taxes: The City receives an allocation of sales and use taxes from the State of California monthly and recognizes the revenues when received. The City receives 1% of the 6% sales tax assessed within City limits. Grants and Other Governmental Revenues: On j;rants, where expenditure of ands is the prime factor for determining earnings of grant funds, the receivable and revenue are recognized when the expenditures have been incurred. Amounts due from other governmental agencies and the related revenue thereon are recorded when earned. Interfund Transactions: During the course of normal operations the City has rumerous transactions between funds, including expenditures and transfers of re-ources to provide services, construct assets, and servile debt. The accompanying financial statements generally reflect such transactions as operating transfers. Operating subsidies are also recorded as operating transfers. The classification of amounts recorded as subsidies, advances, or equity contributions is determined by City Council. Internal service funds :,re used to record charges for services to all City departments and funds as operating, revenue. The enterprise funds record these payments to the internal service find as operating expenses, and the other funds record the payment as transfers out. NOTES TO FINANCIAL STATEMENTS (Continued) CITY OF LODI June 30, 1984 MUTE B --SIGNIFICANT ACCOUNTING POLICIES (Continued) The general fund provides administrative services to enterprise funds. Amounts charged to a fund for these services are based on the City's central service cost allocation pian and are treated as a reduction of expenditures in the general fund and as operating, expenses in the enterprise funds. Self -Insurance: The City provides workers' compensation benefits and public liability and damage benefits under self-insured plans. Estimated liabilities for benefit pa^menLs related to outstanding claims are recorded at year-end. NOTE C --CHANGE. IN ACCOUNTING PRINCIPLE In accordance with the provisions of NCGA Statement 4, the City has recorded liabilities for future compensated absences (sick leave and vacation pay) earned but unused as of June 30, 1984. Fund balances and retained earnings as of July 1, 1983 in the Gei,eral Fund and Enterprise Fund have been restated to conform to generally accepted accounting principles. Amounts classified as current have been included in current year operations. Amounts determined to be noncurrent for the General Fund have been recorded as liabilities of the General Long -Term Debt Account Group. NOTE 1) --;RANTS The total amount of grants available was approximately $792.000 with $709,000 of revenues earned through Jung= 30, 1984. Grants receivable at year-end accounted to S37,000. The amount of grants available for future use at June 30, 1984 was S83,000. NOTE E--E%LPLOYEE BENEFIT PLANS The City participates In the State of California's Public dmployees' Retirement System (PERS), which covers substantially all employees, except elected officials and those compensated on an hourly basis who were hired after May 31, 1966. The City's total co:itributions to PERS for the year were approximately S1,2I4,000. lnf-rmation is riot available is to the excess, if any, of the actuarially-conputed value of vested benefits over the total assets of the reLirement fund. NOTES TO FINANCIAL STATEMENTS (Continued) CITY OF LODI June 30, 1984 NOTE E --EMPLOYEE BENEFIT PLANS (Continued) The City's deferred compensation plan has assets and liabilities totaling $1,900,380 as of June 30, 1984 recorded in an expendable trust fund. The deferred compensation plan is a contributory deferred contribution plan that covers substantially all eligible employees and provides retirement and death benefits. NOTE F --LONG-TERM DEBT Bonds payable at June 30, 1984 were comprised of the following individual issues: General obligation bonds: $5,500,000 Series A serial bonds, issued in 1965, due in annual instali►ments of $185,000 to $290,000 through October 1, 1995; interest at 6% $2,890,000 $740,000 Series B serial bonds, issued in 1969, due in annual installments of $3,0,000 to $55,000 through May 1, 1994; interest at 6% 415,000 $960,200 Series C serial bonds, issued in 1975, due in annual installments of $70,000 to S105,000 through November 1, 1988; interest at 6% 460,000 $31,765,000 Special assessment bonds: $1,588,000 Turner Road/Cluff Avenue serial bonds, issued in 1981, due in annual installments of $103,000 to $135,000 through July 2, 1994; interest at 10%; net of discount of $251.433 resulting in an effective interest rate of 12.64% $1,098,567 $388,720 United Downtown Assessment District Beautification Project, Series 1984-1, Serial Bonds, issued in 1984, due in annual installments of $44,000 to $54,000 commencing on July 2, 1986 through Ji!ly 2, 1999; interest from 6.50% to 9.90%; less discount of $12,633 376,087 $1,474,654 -13- NOTES TO FINANCIAL STATEMENTS (Continued) CITY OF LODI June 30, 1984 NOTE F--LONG-TERIA4 DEBT ( Continued) The following is a summary of bond transactions of the City for the year ended June 30, 1984: General Special Obligation Assessment Total Bonds payable at July 1, 1983 $4,065,000 $1.,485,000 $5,550,000 Bonds retired (300,000) (135,000) (435,000) New issuances 388,720 388,720 Bonds payable at June 30, 1984 $3,765,000 Sx,738,720 $5,503,720 Debt service requirements are as follows: 1985 $ 450,000 1986 464,000 1987 485,000 1988 505,000 1989 525,000 1994-1996 3,076,7,20 S5,503,720 Series A bonds maturing by their terms on and after October 1, 1988 and all Series B bond: are subject to call and redemption at the option of the City. No bonds were called during the year. The City is required to, and has set aside, 7% and 5% of the principal of ttie Turner Road/Cluff Avenue and the United Downtown Assessment District Beautification Project special assessment bonds, respectively, in case of any delinquent assessment levied for retirement of the borids. -14- NOTES TO FINANCIAL STATEMENTS (Continued) CITY OF LODI June 30, 1984 NOTE G --SEGMENT INFORMATION FOR ENTERPRISE FUNDS The City maintains three enterprise funds which provide electric, sewer, and water services. Segment information for the year ended June 30, 1984 wa►s as follows: Electricity service sales to a single customer were approximately 1O% of total operating revenues of the electric utility fund in 1984. No other single customer accounted for more than 10% of total operating revenues in the electric utility fund or in any of the other enterprise funds. NOTE H --MEMBERSHIP IN THE: NORTHERN CALIFORNIA POWER AGENCY In 1973, the City. along with various other public agencies, formed the Northern California Power Agency (NCPA) for the purpose of esercising their common power to purchase, generate, sell, or interchange electric energy and capacity through the acquisition and use of electrical generation and transmission facilities. The City, under its contractual obligations, jointly funds the operations and construction and development programs of NCPA. During the year ended June 30, 1984, total payments for these purposes made to NCPA amounted to $144,000. -15 - Electric Sewer Water Tocal Utility Utility Utility Enterprise Fund Fund Fund Fund Operating Revenues $13,987,605 $1,194,036 $1,306,,626 $16,488,267 Depreciation Expense 412,760 352.135 138,826 903,221 Operating Income (Loss) (339.128) (70,126) 532,320 123,066 Operating Transfers: In 2,633,524 100,000 450,000 3,183,524 Out 2,620,315 132,768 1,084,635 3,837.718 Tax Revenues 289:,102 289,102 Net Income (Loss) 804,479 (194,970) (7,292) 602,217 Property, Plant, and Equipment Additions 507,063 205,176 237,811 950,050 Net Working Capit,ii 6,345,571 1.021.687 1,186,673 8,553,931 Total Assets 14,962,820 8,810,203 3,363,251 27,136,274 Total Equity 13,778,400 8,707.413 3.321,932 25,807,745 Electricity service sales to a single customer were approximately 1O% of total operating revenues of the electric utility fund in 1984. No other single customer accounted for more than 10% of total operating revenues in the electric utility fund or in any of the other enterprise funds. NOTE H --MEMBERSHIP IN THE: NORTHERN CALIFORNIA POWER AGENCY In 1973, the City. along with various other public agencies, formed the Northern California Power Agency (NCPA) for the purpose of esercising their common power to purchase, generate, sell, or interchange electric energy and capacity through the acquisition and use of electrical generation and transmission facilities. The City, under its contractual obligations, jointly funds the operations and construction and development programs of NCPA. During the year ended June 30, 1984, total payments for these purposes made to NCPA amounted to $144,000. -15 - NOTES TO FINANCIAL STATEMENTS (Continued) CITY OF LODI June 30, 1984 NOTE N --MEMBERSHIP IN THE NORTHERN CALIFOKNIA POWER AGENCY (Continued) The City has committed, if necessary, to advance certain annual amounts to NCPA in the future for the continuance of construction and development programs. The contemplated funding of these futu-re advances is $186,000 for 1985. NOTE I --COMMITMENTS AND CONTINGENCIES The City is involved in various other litigation which arose during the normal course of operation. The amount of possible loss cannot be reasonably estimated, but management believes that any loss incurred as a result of current litigation will have an immaterial effect on the City's financial position. -16- OTHER FINANCIAL INFOR4ATION COMBINING BALANCE SHEET - ALL GENERAL FUNDS CITY OF LODI June 30, 1984 Stores Capital Work for General Inventory Equipment Outlaw Others Totals ASSETS Cash and investments $2,006,612 5!10.791) $109.845 S1,210.752 $(14.621) S3. 301,797 Receivables (net of allowances for uncollectibles): Refuse 8.186 85,186 Miscellaneous bulla collectible 101,4-7 23.265 130.672 Interest 84.960 84,960 Due from other funds or governmental agenctes 594.615 37.384 631.999 Supplie> taventory 71.631 71.631 Other assets 50,315 60 50,375 TOT:1L ASSETS 52,33».4.40 S 60,900 S109.84S 51,905_167 S 4-,;.028 54.358.520 LIABILITIES !SSD FUND BALANCES LIABILITIES Accn.,uts payable and other liabilities S 355,909 S 12.703 $ 2.712 S 18.390 S 3.815 S 393.529 Accrued salaries and wages 22?.988 231 11.193 240.412 Accrued .:ompensated ahsence• 500,818 500,978 TOTAL LIABILITIES 1,085.775 12.703 2.712 18.621 15.008 1.134,919 FUND BALANCES Reserved for encumbrances 16.032 581 280.086 296,699 Reserved for suppl!es inventory 71.631 71,.631 Unreser,•ed: Designated fot- subsequent years' expenditures 1,232.673 (23,434) 106,552 1,506,660 31,020 2,.853,471 TOTAL FUND BALANCES 1,24b,70 48.14? 167,133 1,786,746 31.320 3,22.11801 TOTAL 1,IABILITIES AND FUND BALA.`NCES $2,3�34�.4900 5 60,900 5109,845 S1,805s67 S 46.029 S4.356.620 - 17 - COMBINING BALANCE SHEET - ALL ENTERPRISE FUNDS CITY OF LODI .June 30, 1984 RETAINED EARNINGS 13,778,400 8,707.413 3,321,932 25,807,745 TOTAL LIABILITIES AND RETAIyF.D EARNINGS 514.962.820 S 8,810.203 $ 3. 3,63 527,136,274 -18- Electric Sewer Water Totals ASSETS Cash and investments $ 5,772,5!5 S 969,705 $ 950.782 S 7,693,102 Receivables (net of allowances for ,uncollectibles): utility 828,100 45,310 66,031 939,441 "iiscellanous bills collectible 12,865 3,680 3,615 20,160 Interest 119,125 19,906 28.1C" 117.131 Supplies inventory 680.958 7,253 161,182 849.393 Other assets 653 8.435 4 9.092 Fixed assets 11.605.485 10,117,150 1,911.288 25.633.923 Acetimulated depreciation (4,056,981) (2,361,236) (1,757,751) (8.175,968) TOTAL ASSETS $14,962,820 S 8,a1n.203 $ 3,363.251 S27.136.274 LIABILirIES AND RETAINED EARNINGS LIABILITIES Accounts payable and other liabilities $ 1,04:,255 S 15,837 $ 15,707 S 1,072,799 Accrued salaries and wages 27,490 :5,765 7,335 51,590 Accrued compensated absences 115,675 70,188 18,277 204,140 TOTAL LIABILITIES 1,184.420 7.02.790 41,319 1,328.529 RETAINED EARNINGS 13,778,400 8,707.413 3,321,932 25,807,745 TOTAL LIABILITIES AND RETAIyF.D EARNINGS 514.962.820 S 8,810.203 $ 3. 3,63 527,136,274 -18- COMB1.1ING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS - ALL ENTERPRISE FUNDS CITY OF LODI Year Ended June 30, 1984 Electric Sever Water Totals OPERATING REVENUES Charges for services $13,98/,605 $1.194,036 $1.306.626 S16.488.267 OPERATING EXPENSES Personal services 869,142 424.938 216.398 1,510,478 Supplies, materials, and services 213,962 178.270 98.859 491,091 Electric, sever, and water 12,363,968 308,819 320.223 12,993.010 Depreciation 412.260 352.135 138,826 903,221 Refunds 467_.401 58,707,413 $3,321,932 4671401 TOTAL OPERATING EXPENSES 14,326.733 1.264.162 774,306 16,365 201 NET OPERATING INCOME (LOSS) (339.128) 0.126) 532.320 123,066 NONOPERATING REVENUES (EXPENSES) Taxes -bond redemption 289,102 289.102 Interest revenue 548,135 90.753 131.818 770,706 Rent 14,918 70.873 19,950 105,741 Other 567,345 (54,2,804) {56,745) (32.,204) TOTAL NONC`PERATING REVENUE -3 (EXPENSES) 1,130,398 (92,076) 95,023 1,133.,345 INCOME (LOSS) BEFORE OPERAr1NG TRANSFERS 791.270 (162.202) 627,343 1,256.411 Operating transfers in 2,633.524 100.000 450,000 3,183,524 Operating transfers out in (2,620,315) 13,209 (132,768) (1 084,635) 634 635) ( 3183 718) 654,:194) Net operating tranbfe-rs (out) (32,768) NET INCOME (LOSS) 804.479 194.970) 7.292) 602.217 Retained earnings - Judy 1. 1983 as originally reported 13.079.486 8.972.571 3,347,501 25.399.558 Cumulative effect of change in accounting principle --Note C (105,565) (70,188) (18,277) (1.94,030) As restated 12,973,921 8,902,3833� 29,2242 ,20 5,328 RETAINED EARNINGS - JUNE 30. 1984 SI3,778,400 58,707,413 $3,321,932 $25,807,745 See notes to financial statements -19- Ernst &Whinney The City Council City of Lodi Lodi, California 555 C'apitul hall, Suite 650 Sacramento. (�aliliunia 95814 916/447-3237 We have examined the financial statements of the City of Lodi for the year ended June 30, 1984 and have issued our report thereon dated October 23. 1984. As part of our examination. we made a study and evaluation of the system of internal accounting control only to the extent we considered necessary to determine the nature, timing. and extent of our auditing pr,)cedures. Our study and evaluation made for the limited purpose described above would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the City of Lodi taken as a whole. However, our study and evaluation disclosed no condition that we believed to be a material weakness at June 30. 1984. The following suggestions are stibmitted to assist in improving procedures and controls. "This report is intended solely for the use of the City Council. Sacramento, California October 23, 1984 Prior Year Items Ln previous management letters, we commented upon areas in which we believed internal accounting controls-•.,uid be strengthened. Upon considering the City's response to our management letters, we believe that these items have been adequately add-ressed. except for the item below, and would like to commend the City on their effort: to improve internal controls. Of all assets held by the City, cash is the most liquid and susceptible to loss from employee error or misappropriation. Therefore, the City's system of internal controls must be particularly strong in this area. We believe controls over cash receipts could be strengthened by implementing the following procedures in the collection department. We recon=end that the City use cash registers to record all cash receipts, whether remitted through the mail or directly from customers. Each day, the cash register total should be agreed to the daily deposit by an employee who does not handle the cash receipts. This will establish segregation of duties, control and accountibility over the receipts. We believe that with the City's growth, these procedures will result in improved operational efficiency and stronger internal controls over cash. Computer Applications We commend the City for their efforts as to utilizing the compsiter system. We have roted one additional area in which the City should consider automating. Presently rec.,.ds of subdivision deposits from developers are kept on individual file cards. Automating this process would provide increased aLcounting efficiency and safeguarding of records. -1- Investments The Director of ;i.:ance has both physical custody over investments and authorization to initiate transactions. We recommend that the City implement procedures to ensure that there is an appropriate segregation of duties for investment activities, especially with respect to negotiable instruments. We understand that the Director of Finance has been in contact with the California Municipal Treasurers Association in an effort to address the problem. -2- 1 • CITY COUNCIL JOHN R (Randy) SNIDER. Mayor DAVID M H1-14CHMAN Mayor Pro Tempore EVE LYN M OtSON JAMES W PINKERTON_ it FRED M RE 1O Ernst & Whinney 555 Capitol gull Suite 650 Sacramento. CA 95814 Gent 1 ernen CITY OF LODI CITY HALL, 221 WEST PINE STREET POST OFFICE BOX 320 LODI, CALIFORNIA 95241 (209) 334-5634 January 2. 1985 HENRY A_ CLAVES, Jr. City Manager ALICE M. REIMCHE City Clerk RONALD M STEIN City Attomey Ibis letter will confirm the action taken by the Lodi City Council at its regular meeting of December 19, 1984 whereby the Council, by oration action, received for filing the City of Lodi June 1984 Audit and Mnnagemetnt Letter- as prepared by yotir f i rrn. Should you have any questions regarding this matter, please do not hesitate to call this office. Very truly you-rs, &jj (/)(- &xe4-, Alice M. Rei&, -he City Clerk AM jj Enc.