HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 09-28-09Central Contra
BUDGET AND FINANCE COMMITTEE
Chair Lucey
Member Nejedly
Monday, September 28, 2009
3:00 p.m.
Executive Conference Room
5019 Imhoff Place
Martinez, California
INFORMATION FOR THE PUBLIC
ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA
District
80.9RD OF DIRECTORS
JAMES A. ,VEJEDLY
President
,44/CHAEL R. McGILL
Pretidenl Pro Tem
BARBARA D. NOCKE7T
GERALD R. LUCEY
S1ARlO A4. AIENES/N/
PHONE. (925)118-9500
FAX: (915) 676-7211
www.cwrtralsan.org
Anyone wishing to address the Committee on an item listed on the agenda will be heard when the
Committee Cha4r calls for comments from the audience. The Chair may specify the number of minutes
each person will be permitted to speak based on the number of persons wishing to speak and the time
available. After the public has commented, the item is closed to further public comment and brought to the
Committee for discussion. There is no further comment permitted from the audience unless invited by the
Committee.
ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA
In accordance with state law, the Committee is prohibited from discussing items not calendared on the
agenda. You may address the Committee on any items not listed on the agenda, and which are within their
jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be
referred to staff for action or calendared on a future agenda.
AGENDA REPORTS
Supporting materials on Committee agenda items are available for public review at the Reception, 5019
Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the
meeting to a majority of the Committee are also available for public inspection at the Reception. During
the meeting, information and supporting materials are available in the Conference Room.
A/~IERICANS WITH DISABILITIES ACT
In accordance with the Americans With Disabilities Act and California Law, it is the policy of the Central
Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to
everyone, including those with disabilities. If you are disabled and require special accommodations to
participate, please contact the Secretary of the District at least 48 hours in advance of the meeting at (925)
229-7303.
® Recycled Paper
Budget and Finance Committee
September 28, 2009
Page 2
1. Call Meeting to Order
2. Public Comments
3. Old Business
*a. Review outstanding questions
4. Claims Management
"a. Review new and outstanding claims
5. Reports and Announcements
'a. Draft Audited Financial Statements June 30, 2009 (John Cropper,
Cropper Accountancy Corp.)
b. Memo Regarding Prop 1A Securitization Program (Item 6.a.3) in Board
Binder)
'c. Report on CCCERA's request to study "depooling" non-active liabilities
d. White Paper on Refinancing Existing Debt and Issuing New Debt (Items
6.a.1) and 6.a.2) in Board Binder)
`e. District 2009-2010 Insurance Coverage.
6. Review Expenditures
a. Review expenditures (Item 4.a. in Board Binder)
*b. Review P-Card expenditures
7. Review August 2009 Financial Statements (Item 4.b. in Board Binder)
8. Adjournment
* Attachment
3.a.
Central Contra Costa Sanitary District
September 25, 2009
TO: BOARD BUDGET AND FINANCE COMMITTEE
FROM: RANDALL MUSGRAVES
DEBBIE RATCLIFF
SUBJECT: SEPTEMBER 14, 2009 COMMITTEE MEETING
There were two outstanding questions from the last Board Budget and Finance
Committee meeting which required additional staff research. The questions and
answers are provided below:
1. 177207 Safety Center, Inc. -What was this $450 expense for?
The $450 check paid to Safety Center was to send Diane Hinson, Safety Officer,
to a confined space training class held at another sanitary district. Ms. Hinson is
researching ways to improve the District's training program and was evaluating
how this class was customized to the wastewater industry.
2. 177252 East Bay Truck Center - Was service provided prior to the
Committee direction to use a different mechanic shop?
On August 13, one of the CSO trucks was sent to East Bay Truck Center to
diagnose an "engine light on" condition. This service was paid for on September
3, 2009. There is also a pending invoice for work done on August 31. This will
come through on a future expenditure report and will be the last invoice: Both
service dates occurred prior to the Committee directing staff to use another
mechanic shop.
3. The Committee has requested a review of the District's vehicle fleet. A response
will be coming to the Committee. Staff has been busy with debt financing
research. In addition, the request requires a review of usage, workload and
-- priorities of vehicle usage in order to assess the appropriateness of the number
of vehicles.
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Cropper Accountancy Corporation
C'erliJied Public Accountcurts
2977Y~,nacio Valley Road, N460
Walnut Creek, California 9498
Tcl: (925) 932-3h6~
Pas: (92i) 932-3862
September 23, 2009
To the Board of Directors of
Central Contra Costa Sanitary District
Martinez, California
We have audited the financial statements of Central Contra Costa Sanitary District for the year ended
June 30, 2009, and have issued our report thereon dated September 22, 2009. Professional standards
require that we provide you with the following information related fo our audit.
Compliance with CCCSD Investment Policy Performance Evaluation
We have completed a performance evaluation of the District.'s investment objective for the fiscal year
ended June 30, 2009, and have verified that the objective ofachieving amarket-average rate of return is
being realized.
The fiscal 2009 targeted return on 90-day T-Bills was 0.54%. The actual rate of return for the District
was 2.01 %. Based on this comparison, the Board's desired objective has been realized.
Our Responsibility under U.S. Generally Accepted Auditing Standards
As stated in our engagement letter dated December 2, 2008, our responsibility, as described by
professional standards, is to express opinions about whether the financial statements prepared by
management with your oversight are fairly presented, in all material respects, in conformity with U:S.
generally accepted accounting principles. Our audit of the ,financial statements does.not relieve you or
management of your responsibilities.
Other Information in Documents Containing Audited Financial. Statements
The auditor's responsibility for other information in documents cohtaining the Cer:tral Contra Costa
Sanitary District financial statements does not extend beyond the financial information. As such, the
auditor does not have the obligation to perfonn any procedures to coordinate other information in these
documents. However, the auditor reserves the right to read and comment on the other information in the
documents.
Planned Scope acid Timint? of the Audit ,
We performed the audit according to the planned scope and timing previously communicated to you in
our meeting about planning matters.
During our interim audit work, our computer specialist performed a Level I review of the IT system. It is
noteworthy that our specialist stated the District physical plant assessment was well above average and
the operational policies and procedures were also above average.
Significant Audit Findings,
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. In accordance
with the terms of our engagement letter, we will advise management about the appropriateness of
accounting policies and their application. The significant accounting policies used by'Central Contra
Costa Sanitary District are described in Note 1 to the financial statements.
This year the District joined an OPEB trust to comply with GASBS 43, Financial Reporting for•
Postemployment Benefit Plmts Other Than Pension Plans. In addition, the District was formally
required to adopt GASBS No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions. The District was well prepared for the implementation
of these two pronouncements since it has been preparing for the past couple yeat•s. Note 10 in the
financial statements conforms to the disclosure requirements of GASBS No.43 and GASBS No.45.
Also, the District formally implemented GASBS No. 49, Accounting and Financial Reporting Pollution
Renrediation Obligations, which did not have a material effect on the District's financial statements.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected.
The most sensitive estimate affecting the financial statements was Note 10 -Other Postemployment
Benefits. The District is in compliance with the actuarial requirements stated in GASBS No. 45;
however, the assumptions used in the actuarial report (dated July 1, 2007) will need to be updated for
fiscal year 2010. Also, the District performs an actuarial study every couple years to determine its
estimated insurance liability. The estimate for allowance for doubtful accounts is immaterial.
We noted no transactions entered into by the governmental unit during the year for which there is a lack
of authoritative guidance or consensus.. There are no significant transactions that have been recognized
in the financial statements in a different period than when the transaction occurred. ,
Difficetlties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely.misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Management has. corrected all such misstatemeits. In addition, "none of the misstatements detected as a
result of audit procedures and corrected by management were material, either individually or in the
aggregate, to the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the. auditor's report. We are pleased to report that no such
disagreements arose during the course of our audit:
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated September 22, 2009.
Management Consultations with Other Independent Accotnttants
Iti some cases, management may decide to consult with other accountants ab""out auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves
z
application of an accounting principle to the governmental unit's financial statements or a determination
of the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to deterniine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the governmental unit's auditors.
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition to our retention.
This information is intended solely for the use of the Board of Directors and management of Central
Contra Costa Sanitary District and is not intended to be and should not be used by anyone other than
these specified parties.
Very duly yours,
~~-- /4t~our~'~ana~ CGY~FXa,~la,
CROPPER ACCOUNTANCY CORPORATION
3
C.'ertified Public ~1cc•otrtttmztr
TABLE OF CONTENTS
Page No.
Independent Auditors' Report 1
Management's Discussion and Analysis 2 - 6
Statement of Net Assets 7
Statement of Revenues, Expenses, and Changes in Net Assets 8
Statement of Cash Flows 9
Notes to Financial Statements 10 - 30
Supplementary Information:
Combining Schedule of Statement of Net Assets 31
Combining Schedule of Statement of Reveuues, Expenses, and Changes in 32
Net Assets
Schedule of Running Expense -Comparison of Budget and Actual 33
Expenses by Department
Running Expense -Schedule of Supplemental Net Assets Analysis . 34
Cropper Accountancy Corporation
Cortilied Public Accoimlcrnls
?977 Yenacio Vallev Road. u~t6O
Walnut Creek. Culifi~mia 945y8
Tel: 1~)-i) 932-3860 INDEPENDENT AUDITORS' REPORT
ra.: t~)zs~ 93z-3862
To the Board of Directors of
Central Contra Costa Sanitary District
Martinez, Califomia
We have audited the accompanying financial statements of the Central Contra Costa Sanitary District as
of and for the years ended June 30, 2009 and 2008, as listed in the table of contents. These basic
financial statements are the responsibility of the District's management. Our responsibility is to express
an opinion 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 State Controller's Audit Requirements for Califomia Special Districts. Those
standards require that we plan and perform the audit to obtain a reasonable assurance about whether the
financial statements arc free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Central Contra Costa Sanitary District as of June 30, 2009 and 2008, and the
changes in financial position and cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America, as well as accounting systems prescribed
by the State Controller's office for special districts.
The Management's Discussion and Analysis is not a required part of the basic financial statements but is
supplemental information required by accounting principles generally accepted in the United States of
America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit this information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the District's basic fmancial statements. The combining fund financial statements
and schedules are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The combining fund financial statements and schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly
stated in ail material respects in relation to the basic financial statements taken as a whole.
CROPPER ACCOUNTANCY CORPORATION
September 23, 2009
This section of the District's annual financial report presents an analysis of the District's financial
performance during the fiscal year ended June 30, 2009. This inforration is presented in conjunction
with the audited financial statements, which follow this report. Three years of comparative data is
required; however, variance explanations are for differences between 2008-09 and 2007-08.
FINANCIAL HIGHLIGHTS
The District's 2008-09 financial highlights are listed below. These results are discussed in more detail
later in the report.
• The District's total ending net assets increased by $10.1 million or i.67% in 2008-09 when
compared to fiscal year 2007-08
• Total revenues were $82.6 million in 2008-09 compared to $82.2 million in 2007-08
• Toia12008-09 expenses were $78.8 million compared to $75.0 million in 2007-08
• Capital Contributions decreased from $10.7 million in 2007-08 to $6.3 million in 2008-09
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report includes the management's discussion and analysis report, the independent auditor's
report and the basic financial statements of the District. The financial statements also include notes that
explain information in the financial statements in more detail.
REQIJIRED FINANCIAL STATEMENTS
The Financial Statements of the District report information utilizing methods similar to those used by
private sector companies. These statements offer short and long-term financial information about its
activities.
• Statement of net assets -reports the District's current financial resources (short-term spendable
resources) with capital assets and long-term obligations
• Statement of revenues, expenses and changes in net assets -reports the District's operating
and non-operating revenues by major source along with operating and non-operating expenses
and capital contributions
• Statement of cash flows -reports the District's cash flows from operating activities, investing,
capital and noncapital financing activities
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2
MANAGEMENT'S DISCUSSION AND ANALYSIS
STATEMENT OF NET ASSETS
The following table shows the condensed statement of net assets of the Central Contra Costa Sanitary
District for the past three years:
Condensed Statement of Net
Assets Fiscal Year Fiscal Year Fiscal Year
2008-2009 2007_2ooa 2nna_2nn~
Current Assets $ 73481,194 $ 86,373,020 $ 80,148,191
Ca ital Assets 578,889,989 560,288,889 543,622,261
Other Non-current Assets 4,964,404 5,219,183 5,506,090
Total Assets 657,335,587 651,881,092 629,276,542
Current Liabilities 15,098,030 13 270,194 9,120,863
Non-Current Liabilities 30,557,514 37 000 803 36,419,802
Total Liabilities 45,655,544 50,270,997 45,540,665
Invested in Capital Assets,
Net of Related Debt
552 165,498
531 119 639
512,101 920
Restricted -Debt Service 3,163,956 3,185,416 3,216,163
Unrestricted ~ 56,350,589 67,305,040 68,417,794
Total Net Assets $ 611,680,043 $ 601,610,095 $ 583,735,877
The total net assets of the District increased to $611.7 million in 2008-09, a $10.1 million increase from
2007-2008. The increase in net assets is the result of net income of $3.8 million and capital
contributions of $6.3 million (shown in the next table}.
By far the largest portion of the District's net assets (90.3% percent) reflects its investment in capital
assets (e.g. land, buildings, machinery, equipment, and sewer line infrastructure), less any related debt
used to acquire those assets that is still outstanding. The District uses these capital assets to provide
services to its ratepayers; consequently, these assets are not available for future spending. Although the
District's investment in its capital assets is reported net of 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. There is currently $3.2 million restricted for debt service.
The remaining balance of $56.4 million in unrestricted net assets may be used to meet the District's
ongoing obligations to its ratepayers and creditors.
REVIEW OF REVENUES. EXPENSES. AND CHANGES IN NET ASSETS
The table on the following page shows the condensed statement of revenues, expenses, and changes in
net assets for the Central Contra Costa Sanitary District for the past 3 years:
3
Revenues, Expenses, and Changes in Fiscal Year Fiscal Year Fiscal Year
Net Assets 2008-2009 2007-2008 2006.2007
Sewer Service Char es SSC $ 51,843,311 $ 48,414,017 $ 44,100,883
Other Service Char es and misc. .1,540,833 1,465,569 1,657,238
Total O eratln Revenue 53,384,144 49,879,586 45,758,121
Customer Contributions SSC 13,938,421 14,970,637 15,945,915
Pro ert Tax 12,539,375 12,254,168 11,762,731
Permit & Ins ection Fees 1,093,756 1,335,160 1,615,308
Interest and All Other 1,672,618 3,771,438 4,574,156
Total Non-O eratln Revenues 29,244,170 32,331,403 33,896,110
Total Revenues 82,628,314 82 210,989 79,656,231
Total Labor and Benefits 39,440,034 37,312,472 34,678,665
Chemicals & Utilities 7,414,467 7,223,877 7,024,986
Re airs and Maintenance 13,057,540 2,985,670 3,254,643
Professional, Le al and Outside Services 2,832,001 2,613,658 2,298,712
Materials & Su lies 1,954,288 1,728,963 1,734,504
Haulin and Dis osal 880,589 877,885 850,439
Self-Insurance Ex ense 958,906 916,639 519,284
All Other 1,437,429 1,247,298 1,444,082
De reciation Ex ense 19,417,941 18 615,747 17,714,714
Total O eratln Ex enses 77,393,195 73,522,209 69,520,029
Non-Operating Expense -Interest
Ex ense.
1,421,686
1,518,142
1,609,104
Total Ex enses 78,814,881 75,040,351 71,129,133
Income Before Ca ital Contributions 3,813,433 7,170,638 8,527 098
Contributed Sewer Lines 1,231,022 1,444,420 3,521,704
Ca ital Contributions -Connection Fees 5,025,493 9,259 160 8,917,658
Total Ca itai Contributions 6 256 515 10,703,580 12,439,362
Chan a in Net Assets 10,069,948 17,874,218 20,966,460
Be innin Net Assets 601,610,095 583,735,877 562,769,417
Endin Net Assets $ 611,680,043 $ 601,610,095 $ 583,735,877
In 2008-09, operating revenues increased by $3.5 million or 7.03%; non-operating revenue decreased by
-$3.l million or -9.55%. The change in total revenue resulted in a small increase of $0.4 million or
O.SI%. The SSC rate increased in 2008-09 by 3.7% and there were new connections to the system.
Additionally, a portion of SSC revenue was shifted from non-operating to operating revenue. The total
impact of these changes results in a $3.4 million increase in SSC operating revenue, and a decrease of
-$1.0 million in SSC non-operating revenue. Property Tax revenue had a modest $0.3 million increase
due to a 2.33% growth to the tax base, in spite of the sub-prime mortgage crisis and recession. In 2008-
09, pem~it and inspection fees decreased by -$0.2 million, or -] 8.08%, in the struggling economy.
Interest and All Other revenue decreased by -$2.1 million, or -55.65%. This'is mostly due to lower
interest earnings on District investments due to lower investment rates and investment balances.
In 2008-09, operating expenses increased by $3.9 million or 5.27%. This is mainly due to increases in
total labor, depreciation expense, increased self-insurance claims, technical services, chemical, and
utility costs. Labor and Benefits increased by $2.1 million or 5.70% due to cost-of-living adjustments,
merit increases, filling of vacant positions, and increased benefit costs in general. Depreciation expense
increased by $0.8 million, which reflects new capital additions. Non-Operating Expense, which is made
4
up of debt service interest expense decreased slightly as more principal was paid off. Total 2008-09
income before capital contributions decreased from $7.2 million in 2007-08 to $3.8 million in 2008-09
or a net decrease of -$3.4 million or -46.82 %.
Capital contributions in 2008-09 were $6.3 million compared to $10.7 million in 2007-2008, resulting in
a decrease of $4.4 million or -41.55%. This was mainly due to less contributed sewer lines and
connection fees due to the construction and housing slowdown. The total change in net assets decreased
from $17.9 million in 2007-08 to $10.1 million in 2008-09.
CAPITAL ASSETS
As of Tune 30, 2009, the District's investment in capital assets totaled $578.9 million, which is an
increase of $18.6 million or 3.32% over the capital asset balance of $560.3 million at June 30, 2008.
Capital assets include the District's entire major infrastructure including wastewater treatment facilities,
sewers, land, buildings, pumping stations, vehicles, and furniture and equipment exceeding our
capitalization policy limit of $5,000, net of depreciation. A comparison of the District's capital assets
over the past 3 fiscal years is presented below:
Fiscal Year Fiscal Year Fiscal Year
Capital Assets 2008.2009 2007-2008 2006-2007
Land $ 17,114,720 $ .17,114,720 $ 17,114,720
Sewa a Collection S stem 273 333,617 242,706,977 226,796,748
Contributed Sewer Lines 146,757,520 145,596,316 144,151,897
Outfall Sewers 8,518,443 8,518,443 8,518,443
Sewa a Treatment Plant 268,399,708 264,327,208 255,008,296
Rec cled Water Infrastructure 11,936,662 11,936,662 11,726,507
Pum in Stations 52,404,387 51,632,331 .50,082,876
Buildin s 19,997,044 19,987,656 19,537,601
Intan ible Assets 1,521,424 - -
Furniture 8 E ui ment 14,523,054 13,730,782 12,951,529
Motor Vehicles 5,983,539 5,224,941 4,575,910
Construction In Pro ress 24,645,390 28,515,614 24,536,196
Subtotal 645,135,508 809,291,850 775,000,723
Less Accumulated De reciation 266,245,519 249,002,961 231,378,462
Total Capital Assets (net of
de reciation
$ 576,889,989
$ 560,288,669
$ 543,622,261
The major reasons for the increase of $18.6 million in capital assets, net of depreciation, are:
• Sewer pipe ongoing renovations, pumping station improvements, and contributed sewer lines
($32.6 million)
• Treatment plant infrastructure renovations, upgrades, equipment, and improvements ($4.1
million)
• All other asset categories, including construction in progress, decreased slightly ($0.8 million)
• Capita] Asset increases are offset by an increase of $17.2 million in accumulated depreciation
due to our increasing capital asset value and its associated depreciation expense.
See Note #4 in the audited financial statements.
5
DEBT ADMINISTRATION
The District has the following outstanding debt as of June 30; 2009:
1998 Revenue Refunding Bonds S 10,820,277
2002 Revenue Bonds 13,585,000
Water Reclamation Loan Contract 1,484,491
$ 25,889,768
See Note #6 in the audited financial statements.
ECONOMIC AND OTHER FACTORS
Changes in the state budget have a significant impact on the District. The State currently faces an
unprecedented budget deficit. Previous California budget deficits were partially remedied by shifting a
portion of local property tax to the state in 2004-OS and 2005-06. The tax shift ended in 2006-07, and
the voters passed Proposition I A that mandates the State repay any future property tax that it borrows in
an effort to curtail focal government tax raids.
The Governor and legislature voted to suspend Proposition lA, and the District will lose a portion of
property tax revenue in 2009-10. The amount is estimated to be approximately S1.2 million. The State
is obligated to pay back local governments, plus interest, in 3 years. It is uncertain if the State will have
the resources for repayment. The State's problems will continue into future budgets and will have a
trickle-down effect on local governments.
Some of the other factors the District faces in the future are:
• The recession, recovery, and the future state of the economy
• Large market losses in 2008 and 2009 will increase the cost of retirement benefits
• Other Post-Employment benefit required contributions based on actuarial analyses using lower
interest rates
• Reduced new connections and connection fees
• Regulatory requirements becoming more stringent, causing the District to spend more on
compliance, both for operations and maintenance costs and capital projects
• Low interest rates negatively impact interest earnings
In addition to making efforts to reduce spending and improve process efficiencies, the District has the
ability to raise the Sewer Service Charge to meet our long-term commitments. The District has a
Standard and Poors AAA rating, and can obtain bond financing if necessary.
FINANCIAL CONTACT
The financial report is designed to provide our customers and creditors with a general overview of the
District's finances and to demonstrate the District's accountability for the money it receives. If you
have questions about this report or need additional financial information, contact: Controller, Central
Contra Costa.Sanitary District, 5019 Imhoff Place, Martinez, CA 94553.
6
FINANCIAL STATEMENTS
CENTRAL CONTRA COSTA SANITARY DISTRICT
Statement of Nef Assets
June 30, 2009 and 2008
ASSETS
Current Assets
Cash and cash equivalents
Short term investments
Accounts receivable
Interest receivable
Paris and supplies
Prepaid expenses
Total Current Assets
2009
$ 41,484,847
13,495,124
16,063,402
143,522
1,636,566
657,733
73,481,194
2008
$ 66,665,766
17,002,243
340,273
I ,612,059
652,679
86,273,020
Noncurrent Assets
Restricted cash and investments
Land, property, plant and equipment, net of accumulated depreciation
Construction in progress
Contractual assessment district receivable ,
Revenue bond issuance costs, net of amortization
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities
Accounts payable and accrued expenses
OPEB transition payable
Interest payable
Current portion of refunding revenue bonds
Current portion of water reclamation loan contract
Current portion of accrued compensated absences
Liability for uninsured claims
Refundable deposits
Total Current Liabilities
Noncurrent Liabilities
Revenue bonds, net of current portion
OPEB obligation
Accrued compensated absences, nei of current portion
Water reclamation loan contract, net of Current portion
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for debt service
Unrestricted
Total Net Assets
3,644,092
554,244,599
24,645,390
1,122,915
197,397
583,854,393
3,696,773
531,773,075
28,515,814
1,394,333
228,077
565,608,072
657,335,587 651;881,092
5,688,477
4,966,336
382,229
2,390,000
148,523
529,000
750,000
243,465
15,098,030
8,673,582
419,656
2,300,000
144,759
740,000
629,820
312,377
13,270,194
22,015,277
1,611,622
5,594,647
1,335,968
30,557,514
45,655,544
552,165,498
3,163,956
56,350,589
$ 61],680,043
The accompanying notes are an integral part of the financial statements
24,212,648
5,990,813
5,312,851
1,484,491
37,000,803
50,270,997
531,119,639
3,185,416
67;305,040
$ 601,610,095
7
CENTRAL CONTRA COSTA SANITARY DISTRICT
Statement of Revenues, Expenses, and Changes in Net Assets
Years Ended June 30, 2009 and 2008
OPERATING REVENUE
Sewer service charges (SSC)
Service charges -City of Concord
Other service charges
Miscellaneous charges
Total operating revenue
OPERATING EXPENSES
Sewage collection and pumping stations
Sewage treatment
Engineering
Administrative and general
Depreciation
Total operating expenses
OPERATING LOSS
NON-OPERATING REVENUES (EXPENSES)
Taxes
City of Concord cash contributions to capital costs
Customer cash contributions to capital cost (SSC)
Permit and inspection fees
Interest earnings
Interest expense
Other income (expense)
Total non-operating revenues (expenses)
Income before contributions and transfers
Contributed sewer lines
Capital contributions -connection fees
CHANGE W NET ASSETS
Total Net Assets -Beginning
Total Net Assets :Ending
2009
$ 43,087,454
8,755,857
872,978
667,855
53,384,144
11,817,621
22,927,471
6,834,32]
16,395,341
19,417,941
77,393,195
(24,009,051 }
12,539,375
5,485,858
8,452,563
1,093,756
1,033,095
(1,421,686)
639,523
27,822,484
3,813,433
1,231,022
5,025,493
10,069,948
601,610,095
$ 611,6$0,043
The accompanying notes are an integral part of the financial statements
2008
$ 40,207, i 57
8,206,860
869,589
595,980
49,879,586
10,905,468
22,054,203
6,332,830
15,613,961
18,615,747
73,522,209
(23,642,623)
] 2,254,168
5,336,273
9,634,364
1,335,160
2,527,621
(1,5 18,142)
1.243,817
30,813,261
7,170,638
1,444,420
9,259,160
17,874,218
583,735,877
$ 601,610,095
8
CENTRAL CONTRA COSTA SANITARY DISTRJCT
Statement of Cash Flows
Yeats Ended June 30, 2009 and 2008
2009 2008
Cash Flows From Operating Activities:
Receipts from customers and users $ 55,395,420 $ 46,825,663
Payments to suppliers (18,306,594) (7,360,135)
Payments to employees and related benefits (42,824,881) (40,326,309)
Net cash used in operating activities (5,736,055) (860,781)
Cash Flows From Noncapital Financing Activities:
Receipt of taxes 12,539,375 12,254,168
Inspection/petmit fees and other non-operating income 1,733,280 2,578,977
Interest paid on reimbursements payable (6,206) -
Net cash provided by non capital and related financing activities 14,266,449 14,533,145
Cash Flows From Capital And Related Financing Activities:
Capital contributions 13,938,421 14,970,637
Connection fees 5,025,493 9,259,160
Acquisition and construction of capital assets (36,788,271) (33,855,254)
Principal paid on bonds (2,444,759) (2,158,462)
Interest paid on bonds (1,229,600) (1,508,630)
Net cash used in capital and related financing activities (21,498,716) (13,292,549)
Cash Flows From Investing Activities
Purchase of short term investments (13,495,124) -
Interest received 1,229,846 2,248,555
Net cash provided {used) in investing activities (12,265,278) 2,248,555
Net decrease in cash and cash equivalents (25,233,600) 2,928,370
Cash and cash equivalents, July 1 70,362,539 67.434,!69
Cash and Cash equivalents, June 30 $ 45,128,939 $ 70,362,539
Reconciliation of operating loss to net cash provided
(used) by operating activities
Operating gain (loss) (24,009,051) (23,642,623)
Adjustmenu to reconcile operating income to net cash used
in operating activities:
Depreciation expense 19,417,941 18,615,747
Net book value on capital assets retired 253 17,299
(Increase) decrease in:
Accounts receivable 1,210,259 (2,811,019)
Parts and supplies (24,507) (69,041)
Prepaid expenses (5,054) 118,895
]ncrease (decrease) in:
Accounts payable and accrued expenses (2,992,249) 3,529,733
Refundable deposits (68,912) (242,904)
Liability for uninsured claims 120,180 -
OPGB obligation 594,289 2,832,926
Accrued compensated absences 20,796 790,206
Net cash used in operating activities $ (5,736,055) $ (860,781)
Noneash investing, capital, and financing activities
Contributions of capital assets $ 1.231,022 $ 1,444,420
End of Period:
Unrestricted cash and equivalents S 41,484,847 $ 66,665,766
Restricted cash and equivalents 3,644,092 3,696,773
S 45,128,939 $ 70,362.539
The accompanying notes are an integral part of the financial statements
9
NOTES TO THE FINANCIAL STATEMENTS
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTWG POLICIES
Reportin Eg ntity
The Central Contra Costa Sanitary District, a special district and a public entity established under the
Sanitary District Act of 1923, provides sewer service for the incorporated and unincorporated areas under
its jurisdiction. A Board of Directors comprised of five elected members governs the District.
As required by accounting principles generally accepted in the United States of America, these basic
financial statements present Central Contra Costa Sanitary District and its component unit. The
component unit discussed in the following paragraph is blended in the District's reporting entity because
of the significance of its operational or financial relationship with the District.
Blended Component Unit -Component units are legally separate organizations for which the District is
financially accountable. Component units may also include organizations that are fiscally dependent on
the District, in that the District approves their budget, the issuance of their debt or the levying of their
taxes. In addition, component units are other legally separate organizations for which the District is not
financially accountable but the nature and significance of the organization's relationship with the District
is such that exclusion would cause the District's financial statements to be misleading or incomplete. For
financial reporting purposes, the component unit discussed below is reported in the District's financial
statements because of the significance of its relationship with the District. The component unit, although
a legally separate entity, is reported in the financial statements using the blended presentation method as
if it were part of the District's operations because the Governing Board of. the component unit is
essentially the same as of governing board of the District and because its purpose is to finance facilities
to be used for the direct benefit of the District. The Central Contra Costa Sanitary District Facilities
Financing Authority. was organized solely for the purpose of providing financial assistance to the District
by acquiring, constructing, improving and financing various facilities, land and equipment purchases,
and by ]easing or selling certain facilities, land and equipment for the use, benefit and erijoyment of the
public served by the District. The Corporation has no members and the Board of Directors of the
Corporation consists of the same persons who are serving as the Board of Directors of the District. There
are no separate basic financial statements prepared for the Corporation.
Basis of Accounting
The District's financial statements are prepared on the accrual basis in accordance with accounting
principles generally accepted in the United States of America as promulgated by the Government
Accounting Standards Board (GASB). In addition, the District applies all applicable Financial
Accounting Standards Board (FASB) pronouncements issued on or before November 30, 1989, unless
those pronouncements conflict with or contradict GASB pronouncements.
The District is a proprietary entity; it uses an enterprise fund format to report its activities for financial
statement purposes. Enterprise funds are used to account for operations that are financed and operated in
a manner similar to private business enterprises, where the intent of the governing body is that the cost
and expenses, including depreciation, of providing goods or services to its customers be financed or
recovered primarily through user charges; or where the governing body has decided that periodic
determination of revenues earned, expense incurred, and net income is appropriate for capital
maintenance, public policy, management control, accountability, or other purposes.
10
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Enterprise funds are used to account for activities similar to those in the private sector, where the
proper matching of revenues and costs is important and the full accrual basis of accounting is
required. With this measurement focus, al] assets and liabilities of the enterprise are recorded on its
statement of net assets, all revenues are recognized when earned and all expenses, including
depreciation, are recognized when incurred.
Enterprise funds distinguish operating revenues and expenses from non-operating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods
in connection with an enterprise fund's principal ongoing operations. The principal operating
revenues of the District are charges to customers for services. Operating expenses for the District
include the costs of sales and services, administrative expenses, and depreciation on capital assets.
A]] revenues and expenses not meeting this definition are reported as non-operating revenues and
expenses.
For internal operating purposes, the District's Board of Directors has established four separate sub-
funds, each of which includes a separate self-balancing set of accounts and a separate Board
approved budget for revenues and expenses. These sub-funds are combined into the single
enterprise fund presented in the accompanying financial statements. The nature and purpose of these
sub-funds are as follows:
Running Expense
Running expense accounts for the general operations of the District. Substantially all operating
revenues and expenses are accounted for in this sub-fund.
Sewer Construction
Sewer construction accounts for non-operating revenues, which are to be used for acquisition or
construction of plant, property and equipment.
Selflnsurmice
Self insurance accounts for interest earnings on cash balances in this sub-fund and cash
allocations from other sub-funds, as well as for costs of insurance premiums and claims not
covered by the District's insurance coverage.
Debt Service
Debt service accounts for activity associated with the payment of the District's long term bonds
and loans.
That portion of the District's net assets which is allocable to each of these sub-funds has been shown
separately in the accompanying financial statements.
The District's Board of Directors adopts annual budgets on a basis consistent with accounting
principles generally accepted in the United States of America.
11
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {continued)
Investments
Investments held at June 30, 2009, with original maturities greater than one year, are stated at fair
value. Fair value is estimated based on quoted market prices at year-end. All investments not
required to be reported at fair value are stated at cost or amortized cost.
Prepaids
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in the financial statements.
Bank Escrow Deposit
An escrow agreement was formed between the District and the National Park Service for the Right
of Way through the John Muir National Historic Site, in lieu of issuing a performance bond. The
current Right of Way Permit is 10 years, but is renewable and must remain in effect so long as there
is sewerage running through the area; therefore, it is unlikely that the escrow funds will ever be
released to the District. These funds are restricted cash in the financial statements. See note 2.
Parts and Supplies
Parts and supplies aze valued at average cost and are used primarily for internal purposes.
Property. Plant, and Equipment
Purchased capital assets are stated at historical cost. Capital assets contributed to the District are
stated at estimated fair value at the time of contribution. The capitalization threshold for capital
assets is $5,000. Expenditures, which materially increase the value or life of a capital assets are
capitalized and depreciated over the remaining useful life of the asset. The term depreciation
includes amortization of intangible assets.
Depreciation of exhaustible capital assets has been provided using the straight-line method as
follows:
Years
Sewage Collection Facilities 75
Intangible Assets 75
Sewage Treatment Plant and Pumping Plants 40
Buildings 50
Furniture and Equipment 5 - 15
Motor Vehicles 6 - 15
12
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. SUD'IMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Defined Contribution Retirement Plans
District employees may defer a portion of their compensation under a District sponsored Deferred
Compensation Plan created in accordance with Internal Revenue Code Section 457. Under this Plan,
participants are not taxed on the deferred portion of their compensation until it is distributed to them;
distributions may be made only at termination, retirement, death, or in an emergency as defined by
the Plan. The District does not make contributions to the plan.
On August 20, 1997, the provisions of the Internal Revenue Code covering section 457 were
amended to require existing plans to establish trusts for assets of plans so that they would not be
subject to the right of genera] creditors. The District amended its plan during the fiscal year ended
June 30, 1999 to meet this requirement. Consequently, at June 30, 2009, the plan's assets are held in
trust for the exclusive benefit of the participants and are not included in the District's financial
statements.
The District also contributes to a money purchase plan created in accordance with Internal Revenue
Code section 401(a). Contributions to the plan are made in accordance with a memorandum'of
understanding stating that in lieu of making payments to Social Security, the District contributes to
the 401 (a) Plan an amount equal to that which would have been contributed to Social Security on
behalf of its employees as long as the District is not required to participate in Socia] Security. The
assets are held in trust and are not recorded on the books of the District. The District contributed
$1,521,718 to the plan during the year ended June 30, 2009.
Pronertv Taxes
Property tax revenue is recognized in the fscal year for which the tax is levied. The County of
Contra Costa levies, bills and collects property taxes for the District; all material amounts are
collected by June 30.
General County taxes collected are the same as the amount levied since the County participates in
California's alternative method of apportionment called the Teeter Plan. The Teeter Pian as
provided in Section 4701 at seq. of the State of Revenue and Taxation Code establishes a mechanism
for the county to advance the fiill amount of property tax and other levies to taxing agencies based
on the tax levy, rather than on the basis of actual tax collections. Although this system is a simpler
method to administer, the County assumes the risk of delinquencies. The County in return retains
the penalties and accrued interest thereon.
Secured Property tax bills are mailed once a year during the month of October on the current secured
tax roll, to the owner of the property as of the lien date (January 1). Payments can be made in two
installments, and are due on November 1 and February 1. Delinquent accounts are assessed a
penalty of 10 percent. Accounts, which remain unpaid on June 30, are charged an additional 1
percent per month. Unsecured property tax is due on July 1 and becomes delinquent on August 3 I.
The penalty percentage rates are the same as secured property tax.
13
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. SUi44MARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Comaensated Absences
The liability for vested vacation, compensatory time, and sick pay is recorded as an expense when
earned. District employees have a vested interest in 100 percent of accrued vacation time and 85
percent of accrued sick time for employees hired before May 1, 1985. Employees hired after May 1,
1985 have a vested interest in up to 40 percent of their sick time, based upon length of employment
with the District.
The accrued compensated absences increased to $6,123,647 from $6,102,851 or $20,796 in fiscal
2009. The current portion of the liability to be used within the next year is estimated by management
to be approximately $529,000. The change of $20,796 consists of increases of $529,043 and
decreases of $508,247.
Statement of Cash Flows
For purposes of the statement of cash flows, all highly liquid investments, including restricted assets,
with maturities of three months or less when purchased, are considered to be cash equivalents.
Included therein are petty cash, bank accounts, Ca] Trust and the State of California Loca] Agency
Investment Fund (LAIF). Restricted assets are debt service amounts maintained by fiduciaries and
not available for general expenses.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
New Accounting Pronouncements
in April 2004, GASB issued GASB No. 43, Financial Reporting for Postemploy»ient Be~iefit Pla~:s
Other Than Pension Plans. This Statement provides guidance on how to report OPEB plans that
qualify as a trust or agency funds or as fiduciary component units of either a participating employer,.
a plan sponsor, a public employee retirement system (CaIPERS, or other administering entity). The
requirements for this statement are effective for fiscal periods beginning after December 15, 2006
provided GASB 45 is also implemented. The District implemented this standard in conjunction with
GASB 45 in fiscal 2009.
)n July 2004, GASB issued GASBS No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions. This Statement requires local governmental
employers who provide other postemployment benefits (OPEB) as part of the total compensation
offered to employees to recognize the expense and related liabilities (assets) in the Financial
Statements. This Statement establishes standards for the measurement, recognition, and display of
OPEB expense/expenditures and related liabilities (assets), note disclosures, and, if applicable,
required supplementary information (RSI) in the financial reports of State and local governmental
employers. ,
14
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. Descriation of District and Summary of Significant Accounting Policies (continued)
New Accounting Pronouncements (continued}
The District implemented the provisions of this Statement for the fiscal year ended June 30, 2009
(effective for fiscal years beginning after December 31, 2007). See note 10 for additional
information.
In November of 2006, GASB issued GASBS No. 49, Accounting and Fiita~rcial Reporting Pollution
Ren:ediatio~i Obligations. The District is required to implement the provisions of this Statement for
the fiscal year ended June 30, 2009 (effective for periods beginning after December 15, 2007). This
standard addresses current or potential detrimental effects of existing pollution by participating in
pollution remediation activities such as site assessments and cleanups. The scope of the document
excludes pollution prevention or co~itrol obligations with respect to current operations, and future
pollution remediation activities that are required upon retirement of an asset, such as a landfill closure.
This statement was formally implemented in the current fiscal year.
In June of 2007, GASB issued GASBS No. 51, Accounti~tg and Financlal Reporting for Intangible
Assets. The District is required to implement the provisions of this Statement for the fiscal year ended
June 30, 2010 (effective for periods beginning after June 15, 2009; for governments classified as phase
2 under GASBS No. 34, retroactive reporting is required for intangible assets acquired in fiscal years
ended after June 30, 1980). This Statement requires that all intangible assets not specifically excluded
by its scope provisions be classified as capital assets. Governments possess many different types of
assets that maybe considered intangible assets, including easements, water rights, patents, trademarks,
and computer software. Intangible assets, and more specifically easements, aze referred to in the
description of capital assets in Statement No. 34, Basic Financial Statements -and Management's
Discussio~e and Analysis -for State and Local Governments. This reference has created questions as
to whether and when intangible assets should be considered capital assets for financial reporting
purposes. The District recorded intangible assets acquired in fiscal year ended June 30, 2009 and will
formally implement this Statement in fiscal year ending June 30, 2010. The implementation of the
provisions of this standard may have a material effect on the financial statements of the District.
In November of 2007, GASB issued GASBS No. 52, Land and Other Real Estate Held as hvestments
by Endowments. The provisions of this Statement apply to entities' financial statements ended June
30, 2009 (effective for periods beginning after June 15, 2008). This Statement requires endowments to
report their land and other real estate investments at fair value and governments to report the changes
in fair value as investment income and to disclose the methods and significant assumptions
employed to determine fair value, and other information that they currently present for other
investments reported at fair value. Endowments exist to invest resources for the purpose of
generating income. Other entities that exist for similar purposes-pension and other postemployment
benefit plans, external investment pools, and Internal Revenue Code Section 457 deferred
compensation plans-however, report land and other real estate held as investments at their fair
value. This standard does not apply to the District.
IS
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. Description of District and Summary of Significant Accounting Policies (continued)
New Accountine Pronouncements !continued
In June of 2008, GASB issued GASBS No. 53, Accounting and Financial Reporting for Derivative
Lstruments. This Statement requires governments to measure derivative instruments at fair value in
their economic resources measurement focus financial statements. Derivative instruments are often
complex financial arrangements used by governments to manage specific risks or to make
investments. By entering into these arrangements, governments receive and make payments based
on market prices without actually entering into the related financial or commodity transactions.
Derivative instruments associated with changing financial and commodity prices result in changing
cash flows and fair values that can be used as effective risk management or investment tools.
Derivative instruments, however, can also expose governments to significant risks and liabilities.
Common types of derivative instruments used by governments inciude interest rate and commodity
swaps, interest rate locks, options (caps, floors, and collars), forward contracts, and future contracts.
The District is required to implement the provisions of the Statement for the fiscal year ending June
30, 2010 (effective for periods beginning after June 15, 2009), which should allow users of the
financial statements to more fully understand the District's resources available to provide services.
The District does not currently hold such instruments which would be classified as derivatives other
than a minor amount held through the State Investment Pool and Cal Trust.
In March of 2009, GASB issued GASBS No. 54, Find Balance Reporting and Governmental Fund
Type- Defnitions. This Statement will improve financial reporting by providing fund balance
categories and classifications that will be more easily understood. Elimination of the reserved
component of fund balance in favor of a restricted classification will enhance the consistency between
information reported in the government-wide statements and information in the governmental fund
financial statements and avoid confusion about the relationship between reserved fund balance and
restricted net assets. The fund balance classification approach in this Statement will require
governments to classify amounts consistently, regardless of the fund type or column in which they are
presented. As a result, an amount cannot be classified as restricted in one fund but unrestricted in
another. The fund balance disclosures will give users information necessary to understand the
processes under which constraints are imposed upon the use of resources and how those constraints
may be modified or eliminated. The clarifications of the governmental fund type definitions will
reduce uncertainty about which resources can or should be reported in the respective fund types. The
provisions of the Statement are effective for fiscal years beginning after June 30, 2010. Fund balance
reclassifications made to conform to the provisions of this Statement should be applied retroactively by
restating fund balance for all prior periods presented. The District is classified as an Enterprise Fund
and not a Governmental Fund Type. As such, this standazd does not directly apply to the District.
In March of 2009, GASB issued GASBS No. 55, The Hierarchy ojGenera/ly Accepted Accou~itirig
Principles for State and Local Governments. This Statement will improve financial reporting by
contributing to the GASB's efforts to codify all GAAP for state and local governments so that they
derive from a single source. This Statement will make it easier for preparers of state and local
government financial statements to identify and apply all relevant guidance. This Statement will not
result in a change in current practice or have a material effect on the financial statements of the
District.
16
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
1. Descri lion of District and Summa of Si 'ficant Accountin Policies (continued)
New Accounting Pronouncements (continued)
in March of 2009, GASB issued GASBS No. 56, Codification of Accounting and Financial Reporting
Guidance Contained in the AICPA Statements on Auditing Standards. This Statement will improve
financial reporting by contributing to the GASB's efforts to codify all sources of generally accepted
accounting principles for state and local governments so that they derive from a single source. This
effort is important from the perspective of bringing the authoritative accounting and financial reporting
literature together in one place, with that guidance modified as necessary to appropriately recognize
the governmental environment and the needs of governmental financial statement users. This
Statement will not result in a change in current practice or have a material effect on the financial
statements of the District.
Reclassifications
Certain items in the prior year financial statements have been reclassified to match their presentation
in the current year financial statements.
2. CASH AND CASH EQUIVALENTS
Summary of Cash and ]nvestments
Investments as of June 30, 2009 are classified in the accompanying financial statements as follows:
Cash and cash equivalents $ 41,484,847
Short term investments 13,495,124
Restricted cash and investments 3,644,092 *
Total Cash and Investments ~ $ 58,624,063
* Includes $100,000 bank escrow deposit- see note l
General Authorizations
Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are
indicated in the schedules below:
Maximum Maximum Maximum
Remaining Percentage Investment
Authorized Investment "fype Maturity of Portfolio In One Issuer
U.S. Treasury Obligations 1 year None None
Banker's Acceptance 180 40% 15%
Commercial Paper (l) 270 25% 15%
Collateralized Certificates of Deposit 1 year (2) 30% I S%
County Pooled Investment Funds N/A None None
Local Agency Investment Fund (LAIF) NIA None None
(1) Prime quality; limited to corporations with assets over $500,000,000
(2) Prior approval of the Board of Directors must be obtained to acquire maturities beyond one year
17
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
2. CASH AND CASH EQUIVALENTS (continued)
Authorized Under Debt Agreements
Authorized Investment
Federal Securities
Direct or indirect obligations of the following agencies of the
USA:
Export-Import Bank
Farmers Home Administration
Participation Certificates issued by the GSA
Mortgage-backed bonds or pass-t}uough obligations issued by
GNMA, FNMA, FHLMC, or FHA
Project notes issued by the US Department of HUD
Public housing notes and bonds guaranteed by the USA
Certificates of Deposit (fully insured by FDIC)
Commercial Paper - US Corporations (l)
Bankers acceptances (1)
State Investment Pool (LAIF)
Money Market Funds (1)
(1) Rated highest short-term rating by S&P and Moody's
Interest Rate Risk
Maximum Maximum Maximum
Remaining Percentage Investment
Maturity of Portfolio In One Issuer
None None None
None None None
None None None
None None None
None None None
None None None
None None None
None None None
None None None
270 Days None None
180 Days None None
None None None
None None None
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. The District manages exposure to interest rate risk by
purchasing a combination of shorter term and longer term investmen#s 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.
The District's investments at year end with the exception of the U.S Treasuries and Commercial
Paper below are held in external investment pools which are liquid investments.
Information about the sensitivity of the fair values of the District's investments to market interest
rate fluctuation is provided by the following schedule that shows the distribution of the District's
investment by maturity:
Investment Tyoe
Treasury Bills
Commercial Paper- GE Capital
Commercia! Paper- GE Capital
Commercial Paper - Citi Group
Total
Fair Value Maturity
$ 4,995,763 10/22/09
2,000,000 8/21/09
1,500,000 9!11/09
4,999,361 7!21/09
$ 13,495,124
18
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
2. CASH AND CASH EQUIVALENTS (continued)
Credit Risk
Credit risk is the risk that an issue 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 actual rating as of the year-end for each investment type.
Investment Type
Cash
Money Markets
CDs
Commercial Paper
Treasuries
CalTrust .
State Investment
Poo]
Total
Not
Requrred Rating as of Year End
Fair To Be
Value Rated AAA A-I Unrated
$ 1,684,847 $1,684,847
3,544,092 $3,544,092
10,000,000 10,000,000
8,499,361 - $4,999,361 $3,500,000
4,995,763 4,995,763
2,200,000 2,200,000
27,700,000
27,700,000
$58,624,063 $11,684,847 $8,539,855 $4,999,361 $33,400,000
Concentration of Credit Risk
During the current fiscal year the District invested 51% of its monies in the State ]nvestment Pool
(LAIF) and CalTrust (a County Joint Powers Agency Authority), which are not limited by the
California Government Code or District Investment Policy.
Investments in County Treasury -The District is considered to be a voluntary participant in an
external investment pool. The fair value of the District's investment in the pool is reported in the
accounting financial statements at amounts based upon the District's pro-rata share of the fair value
provided by the County Treasurer for the entire portfolio {in relation to amortized cost of that
portfolio}. The balance available for withdrawal is based on the accounting records maintained by
the County Treasurer, which is recorded on the amortized cost basis.
Im~estment in the State Investment Pool -The District is a voluntary participant in the Local Agency
Investment Fund (LAIF) that is regulated by. California government code Section 16429 under the
oversight of the Treasurer of the State of California. The fair value of the District's investment in
the pool is reported in the accompanying financial statement at amounts based upon the District'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 is recorded on the amortized costs basis.
19
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
2. CASH AND CASH EQUIVALENTS (continued)
Custodial Credit Risk -Investments
Custodial risk for investments is the risk that, in the event of the failure of the counterparty (e.g. the
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 Govemment Code
does not contain legal or policy requirements that would limit the exposure to custodial credit risk.
The District's policy is to use the services of the Treasurer's Office of the County of Contra Costa,
which will transact the District's investment decisions in compliance with the requirements of the
District's policy. The County Treasurer's Office will execute the District's investments through
such broker-dealers and financial institutions as are approved by the County Treasurer, and through
the State Treasurer's Office for investment in the Local Agency Investment Fund.
3. ACCOUNTS RECEIVABLE
At June 30, 2009, accounts receivable are comprised of the following:
City of Concord (see Note S) S 14,626,2] 7
Household Hazardous Waste Partners 681,415
All other 755,770
Total accounts receivable S 16.063.402
This space intentio~eally left bla~ik.
20
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
4. LAND, PROPERTY, PLANT AND EQUIPMENT, AND CONSTRUCTION IN PROGRESS
Property, plant and equipment, and construction in progress are summarized below for the year
ended June 30, 2009:
Balance
Beginning Transfer Balance
of Year Additions Retirements from CIP End of Yeaz
At Cost
Capital assets not being depreciated
Land $ 17,114,720 $ - $ - $ - $ 17,114,720
Construction in progress 28,515,814 35,734,500 - (39,604,924) 24,645,390
Total nondepreciated assets 45,630,534 35,734,500 - (39,604,924) 41,760,110
Capital assets being depreciated
Sewage collection system 242,706,977 - (100,000) 30,726,640 273,333,617
Contributed sewer lines 145,596,31b 1,231,022 (69,818) - 146,757,520
Outfall sewers 8,518,443 - - - - 8,518,443
Sewage treatment plant 264,327,208 - (1,405,000) 5,477,500 268,399,708
Recycled water infrastructure 11,936,662 - - - 11,936,662
Pumping stations 51,632,331 - (300,000) 1,072,056 52,404,387
Buildings 19,987,656 - - 9,388 19,997,044
intangibles - - - 1,521,424 1,521,424
Furniture and equipment 13,730,782 - (5,644) 797,916 14,523,054
Motor vehicles 5,224,941 1,053,772 (295,174) - 5,983,539
Total depreciated assets 763,661,316 2,284,794 2,175,636 39,604,924 803,375,398
Less accumulated depreciation
Sewage collection system 33,984,272 3,484,462 (100,000) - 37,368,734
Contributed sewer lines 41,261,472 1,961,239 (69,818) - 43,152,893
OuiCall sewers 2,426,913 113,353 - - 2,540,266
Sewage treatment plant 136,502,000 9,173,635 (1,405,000) - 144,270,635
Recycled water infrastructure 3,553,488 469,234 - - 4,022,722
Pumping stations 14,133,442 2,152,938 {300,000) - 15,986,380
Buildings 5,318,314 631,390 - - 5,949,709
Intangibles - 10,142 - - 10,142
Furniture and equipment 8,499,236 1,050,390 (5,391) - 9,544,235
Motor vehicles 3,323,819 371,158 (295,]74) - 3,399,803
Total accumulated depreciation 249,002,461 19,417,941 2,175,383 - 266,245,519
Total capital assets being
depreciated, net 514,653,355 (17,133,147) (253) 39,604,924 537,129,879
Capital assets, net $ 560,288,889 $ 18,601,353 $ 253 $ - $ 578,869,989
21
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
.Years Ended June 30, 2009 and 2008
5. ASSESSMENT DISTRICTS
The District established the Contractual Assessment District (CAD) program to help homeowners
finance the cost of connecting to the District. The construction costs associated with the project
within the program are capitalized and depreciate""d. Individual homeowners are assessed an amount
equal to their share of the construction costs and connection fee. The assessments plus interest are
generally payable over 10 years. At year-end, the receivable balance was $1,122,915.
The District also established the Alhambra Valley Assessment District (AVAD) to provide services
to residents in the Alhambra Valley in Martinez. Residents have the choice to pay cash or finance
the construction costs and connection fees. At'year-end the receivable balance was $397,430.
6. LONGTERM DEBT
Revenue Bonds - 2002
In May 2002, the District issued $16,565,000 of Revenue Installment Certificates for Wastewater
Facilities Improvements, with interest rates ranging from 4.0 to 5.0%. The bonds are secured by a
pledge of revenue. Principal payments are due annually on September 1, commencing in fiscal year
2005, and interest is payable semi-annually on September 1 and March 1 of each year.
Refunding Revenue Bonds - 1998 & 1994 Defeased Debt
In September 1998, the District issued $25,335,000 of Refunding Revenue Bonds with interest rates
ranging from 3.5 and 4.7%. The Bonds are secured by a pledge of revenue. Principal payments are
due annually on September 1, and interest is payable semi-annually on September 1 and March 1.
The District issued the 1998 Refunding Revenue Bonds to advance refund the .1994 Revenue
Installment Certificates, which had interest rates of 5.25 to 6.25%. The net proceeds were deposited
in an escrow fund to service and redeem the 1994 debt. As a result, the advance refunding met the
requirements of an in-substance debt defeasance, and the outstanding balance of the 1994 debt was
removed from the District's accounts. The 1944 issue no longer has an outstanding balance.
The excess of the amount required to be deposited into the escrow fund over the net carrying amount
of the 1994 debt resulted in a deferred loss. The deferred loss is reported as reduction of the new
debt and is being amortized over the 15-year term of the new debt.
Summary
The changes in the District's long-term obligations during the year consisted of the following:
Balance Deferred Balance Due in
July 1, 2008 Cost Deductions June 30, 2009 One Year
Revenue bonds $26,512,648 $ 192,629 $ 2,300,000 $ 24,405,277 $ 2,390,000
Water Reclamation Loan 1.624,250 144,759 1,484,491 148,523
X28 141 898 ~_l.9_2,.~22 $_2 -444.Z~9 ~ 25.889 768 $~.~3_$.~2~
22
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
6. LONG-TERM DEBT {continued)
Debt Service Requirements
The 2002 and ] 998 Revenue Bonds debt service requirements are as follows:
2002 1998
Fiscal Year .Debt Service Debt Service
Ending June 30, Requirement Requirement Total
2010 1,265,261 2,216,478 3,481,739
2011 1,263,561
2012 1,265,762
2013 1,266,391
2014
2015 - 2019
2020 - 2024
Total
Amount representing interest
Principal outstanding
Less: Unamortized deferred loss on refunding year end
Short-term portion of revenue bonds
Long-term portion of revenue bonds
Water Reclamation Loan Contract
1,265,437
6,334,686
6,350,1 i 6
19,011,214
(5,426,214)
13,585,000
13,585,000
(655,400)
$ 12,930,060
2,222,341
2,217,429
2,2 t 6,648
2,219,600
2,220,945
13,313,491
(1,658,491)
11,655,000
(834,723)
10,820,277
(1,735,000
$ 9,085,277
3,485,902
3,483,191
3,483,039
3,485,037
8,555,681
6,350,1 lb
32,324,705
(7,084,705)
25,240,000
(834,723)
24,405,277
(2,390,000)
$ 22,015,277
The District has entered into a contract with the State of California State Water Resources Control
Board (the Board), which advanced the District $2;916,872 for design and construction costs. for
projects related to recycled water treatment programs.
23
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
6. LONG-TERM DEBT (continued)
Water Reclamation Loan Contract (continued)
The District must repay advances from the Board over a 20-year period beginning March 31, 1999,
with an interest rate of 2.60%. Debt service requirements are as follows:
Years
2010
2011
20]2
2013
2014
2015 - 2018
Total
Amount representing interest
Less: Current portion of Water Reclamation Loan Contract
Long term portion of Water Reclamation Loan Contract
Local Improvement District Bonds
Debt
Service
Requirements
$ 187,119
187,119
187,1]9
187,119
187,119
748,479
1,684,074
(199,583)
1,484,491
(148,523)
$ 1,335,968
Within the District's boundaries, there exist several Improvement Districts, which were formed for
the sole purpose of financing sewer system improvements. The District has no oversight
responsibility for these Districts and is not liable for repayment of any bonds issued to finance
these local improvement districts. Contra Costa County acts as the agent for the property owners
in these districts in collecting assessments, forwarding col]ections to bondholders, and initiating
foreclosure procedures, if appropriate. The outstanding balance on these bonds was $80,000 at June
30, 2009.
7. RISK MANAGEMENT
The District is exposed to various risks of loss related to torts: theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disaster, The District joined with
other entities to form the California Sanitation Risk Management Authority (CSRMA}, a public
entity risk pool currently operating as a common risk management and insurance program for the
member entities. The purpose of CSRMA is to spread the adverse effects of tosses among the
member entities and to purchase excess insurance as a group, thereby reducing its cost. Through
CSRMA, the District purchases property insurance and workers' compensation insurance.
24
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
7. RISK MANAGEMENT (continued)
Insurance Coveraee
The District's insurance coverage is as follows:
Type of Insurance Coverage
All-Risk Property
Fire
Boiler & Machinery
(shared Limits per Occurrence)
Liability
Errors and Omissions
Employment Practices Liability
Employment Practices Liability
General Liability
Auto Liability
Pollution (General Aggregate)
General Liability
(Occurrence)
Pollution (Legal Liability
Aggregate) (Claims Made)
Insurer
Public Entity Property Insurance
Selflnsured
Deductible Per
Limits Occurrence
Program(PEP[P) $505,541,991 $ 250,000
PEPiP $ 50,000-
$100,000,000 S 250,000
Insurance Company of the State of
Pennsylvania (AIG) $ 15,000,000 $ 1,000,000
AIG $ 15,000,000 $ 1,000,000
Admiral Insurance Company S 1,000,000 $ 15,000
AIG. S 15,000,000 $ 1,000,000
AIG $ 15,000,000 $ 1,000,000
American International Specialty $ 5,000,000 $ 5,000
Lines Insurance Co.
American Intemational Specialty
Lines Insurance Co
Workers' Compensation
Excess Workers' Compensation
Fiduciary Liability
Liability for Uninsured Claims
CSRMA
National Union Fire Insurance
Company (statutory)
Nation Union Fire Ins. Com
$ 10,000,000 $ 50,000
$ 750,000 -
$ 50,000,000 $ 750,000
$ l,ooa,ooo $ s,ooo
The Governmental Accounting Standards Board (GASB) requires state and local governments to
record their liability for uninsured claims in their financial statements.
The District's uninsured claims activity and exposure relates primarily to its general and automobile
liability program. The District records its estimated liability for uninsured claims in this area based
on the results of periodic actuarial evaluations. The actuarial evaluations are typically performed .
every two years. For intervening years, the liability for uninsured claims is reviewed for adequacy
based on claims activity during the intervening period.
25
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
7. RISK MANAGEMENT (continued)
Liability for Uninsured Claims (continued)
For the fiscal year ended June 30, 2009, 2008, and 2007, settlements have not exceeded insurance
coverage. Changes in the District's estimated liability for uninsured claims for fiscal years 2009,
2008, and 2007 are summarized as follows:
Beginning balance
Provisions for claims incurred in the current year
and changes in the liability for uninsured -
claims incurred in prior years
Claims and claim adjustment expenses paid
2009 2008 2007
$ 629,820 $ 629,820 $ 881,500
286,220 387,095 (208,667)
(166,040) (387,095) (43,013
Ending balance
8. AGREEMENT WITH THE CITY OF CONCORD
$ 750,000 $ 629,820 $ 629,820
In 1974, the District and the City of Concord (the City) entered into acost-sharing agreement under
which the District became responsible for providing sewage treatment facilities and services to the
City. Under this agreement, the City pays a service charge for its share of operating, maintenance
and administrative costs and makes a contribution for its share of facilities capital costs expended.
Service charges and contributions to capital costs from the City totaled $8,755,857 and $5,485,858
respectively; for the year ended June 30, 2009.
9. PENSION PLAN
Plan Description
Substantially all District full-time employees are required to participate in the Contra Costa County
Employees' Retirement Association (CCCERA), acost-sharing multiple-employer public employee
deferred benefit retirement plan (Plan), governed by the County Employee's Retirement La~v of
1937, as amended. The latest available actuarial and financial information for the Plan is for the
year ended December 31, 2007. The Contra Costa Employees' Retirement Association issues a
publicly available financial report that includes financial statements and supplemental information of
the Plan. That report is available by writing to Contra Costa County Employees' Retirement
Association, 1355 Willow Way, Suite 221, Concord, CA 94520-5728 or by calling (925) 521-3960.
The Plan provides for retirement, disability, and death and survivor benefits. Annual cost of living
(COL) adjustments to retirement allowances can be granted by the Retirement Board as provided by.
State statutes. Retirement benefits are based on age, length of service and final average salary.
26
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended .Tune 30, 2009 and 2008
9. PENSION PLAN (continued)
Plan Description (continued)
Subject to vested status, employees can withdraw contributions plus interest credited, or leave them
as a deferred retirement when they terminate, or transfer to a reciprocal retirement system.
Plan Contribution Requirement
The Plan requires employees to pay one-half of the basic retirement benefit and one-half future COL
costs. However, the,District has paid the employee's basic contributions in accordance with the
Memorandum of Understanding (MOU). The contribution requirement and payment from the
District for the plan years ended June 30, 2009, 2008 and 2007 was as follows:
2009 2008 2007
Covered payroll for fiscal years ended June 30
Employer required contributions to pension
Employee required contributions to pension
Total required contributions
$ 24,202,098 $ 22,503,704 $ 21,504,951
9,084,809 8,757,705 8,045,860
913,027 892,488 861,387
$ 9,997,836 $ 9,650,193 $ 8,907,247
Percentage of payroll
41% 43% 41%
The District pension plan covered 265 participants during the year.
This spt~ce intentionally left blank.
27
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
0. POST EMPLOYMENT HEALTH CARE BENEFITS
Plan Description
The District's defined benefit.post employment healthcare plan, (DPHP), provides medical benefits
to eligible retired District employees and beneficiaries. DPHP is part of the Public Agency portion
of the Public Agency Retirement System (PARS), an agent multiple-employer plan administered by
PARS, which acts as a common investment and administrative agent for participating public
employees within the State of California. A menu of benefit provisions as well as other
requirements as established by the State statute with the Public Employees' Retirement Law. DPHP
selects optional benefit provisions from the benefit menu by contract with PARS and adopts those
benefits through District resolution. PARS issues a separate Comprehensive Annual Financial
Report. Copies of the PARS annual financial report may be obtained from. PARS, P.O. Box 12919,
Newport Beach, CA 92658; by calling 1(800) 540-6469; or by emailing info@pars.org.
Funding Policy
The District is required to contribute the annual required contribution (ARC) of the employer, an
amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC
represents a level of funding that, if paid on an ongoing basis, is projected to cover normal annual
costs each year and amortize any unfunded' actuarial liabilities (or funding excess) over a period not
to exceed 30 years. Trust amounts funded above or below the ARC are recorded on the books as an
OPEB asset or liability/obligation, respectively.
Because of the volatility of the economy, the District opted to make monthly installments into the
OPEB Trust to take advantage ofdollar-cost-averaging. On November 6, 2008, the Board approved
payments into the Trust of $560,000 per month for 20 months.
Annual OPEB Cost
For 2009, the District's annual OPEB cost (expense) was $4,612,856, which is comprised of
$2,372,856 in medical premiums to retirees (an implied subsidy} as well as $2,240,000 in actual
contributions to the PARS Trust, which is less than the ARC of-$6,224,478 by $1,611,622. The
District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
OPEB obligation for 2009 and the preceding year are presented below:
Annual
Fiscal Year OPEB Cost
Percentage of
OPEB Cost Contributed
Net OPEB
Obligation
6/30/09 $ 4,612,856 74% $ 1,611,622
Two actuarial studies have been performed by the District. The first study was as of June 30, 2005
and the last was as of June 30, 2007. Based on these studies, the Board set aside funds in a liability
account for the three years, 2009, 2008 and 2007, while investigating Trust options. The amount in
excess of the net OPEB obligation ($4,966,336) was aone-tune transitional liability reclassified to
current liabilities for payment to the OPEB Trust. `
28
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
10. POST EMPLOYMENT HEALTH CARE BENEFITS (continued)
The following table shows the components of the District's annual OPEB costs for the year 2009,
the amount actually contributed to the plan, and changes in the District's net OPEB obligation:
Annual required contribution (ARC)
Trust contributions
Contributions for medical premiums paid (implied subsidy)
Total ARC contributions
Net increase in net OPEB obligation
Net OPEB obligation-beginning 7/1/2008
Net OPEB obligation -ending 6/30/2009
Board designated funds -reclassified to accounts payable
Total OPEB obligation and provision
Funding Status and Funding Progress
S 6,224,478
(2,240,004)
(2,372,856)
_(4,612,856)
1,611,622
0
1,611,622
4,966,336
$ 6,577,958
The funded status of the plan as of July 1, 2007 (most recent actuarial evaluation) was as follows:
Actuarial Accrued Liability (AAL) $ 68,447,956
Actuarial Value ofPlan Assets (2,341,251)
Unfunded Actuarial Accrued Liability (UAAL) $ 66.106.705
Funded Ratio (Actuarial Value of Plan Assets/AAL) 3.4%
Covered Payroll (Active Plan Members) S 22.648.230
UAAL as a Percentage of Covered Payroll 292%
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. The funded status of
the plan and the annual required contributions of the employer are subject to continual revision, as
actual results are compazed with past expectations and new estimates are made about the future. The
schedule of funding progress, presented as required supplementary infom~ation, presents multiyear
trend information that shows whether the actuarial value of the plan assets is increasing or
decreasing over time, relative to the actuarial liabilities for benefits.
Actuarial Methods and Assumptions
Projections for benefits for financial reporting purposes are based on the substantive plan (the plan
as understood by the employer and plan members) and include the types of benefits provided at the
time of each valuation as well as the historical pattern of sharing benefit costs between the employer
and plan members. The actuarial methods and assumptions used include techniques that are
designed to reduce short-term volatility in actuarial accrued liabilities and actuarial value of assets,
consistent with the long-term perspective of the calculations. The next actuarial valuation will be
performed in October 2009.
29
CENTRAL CONTRA COSTA SANITARY D157'RIC'I'
Notes to Financial Statements
Years Ended June 30, 2009 and 2008
10. POST EMPLOYMENT HEALTH CARE BENEFITS (continued)
The following is a summary of the actuarial assumptions and methods:
Valuation Date
Actuarial Cost Method
Amortization Method
Average Remaining Period
July 1, 2007
Entry Age Normal Cost Method
Level Over Service
30 Years as of the Valuation Date
Actuarial Assumptions:
Investment Rate of Return
Inflation
11. LEASE COMMITMENTS
5%
11% down to 4% over a 7-year period
The District leases various facilities and equipment under operating leases. Following is a summary
of operating lease commitments as of June 30, 2009:
Fiscal Year Office
Endin Equipment Facilities Total
2010 $ 271,849 $ 50,550 $ 322,399
2011 271,849 52,050 323,899
2012 - 26,400 26,400
Total ~ 4~ 1$~ x_7.2
Total rental expense for the fiscal years ended June 30, 2009 and 2008 was $520,941 and $481,673,
respectively.
12. COMMITMENTS AND CONTINGENCIES
Commitments and contingencies, undeterminable in amount, include normal recumng pending
claims and litigation. In the opinion of management, based upon discussion with legal counsel, there
is no pending litigation which is likely to have a material adverse effect on the financial position of
the District.
Claims and losses are recorded when they are reasonably probable of being incurred and the amount
is estimable. Insurance proceeds and settlements are recorded when received.
The District has purchase commitments relating to construction projects at June 30, 2009 of
$20,610,541.
30
S UPPLEMENTAR Y INFORMA TION
CENTRAL CONTRA COSTA SANITARY DISTRICT
COMBINING SCHEDULE OF STATEMENT OF NET ASSETS
AS OF NNE 30, 2009
Running Sewer Self Debt
Expense Conswction Insurance Service Elimination Total
ASSETS
Curtrnt Assets
Cash and cash equivalents S 919,151 S 36,821,330 S 3,744,366 5 - 5 - S 41,484,847
Short terminvestmrnts - 13,495,124 - - - 13,495,124
Accounts receivable 9,781,709 6,273,938 7,755 - - 16,063,402
Interest receivable - 129,671 13,851 - - 143,522
Due from other sub-funds 99,872,633 83,767,272 902,622 35,086,798 (219,629,325) -
Pans and supplies 1,636,566 - - - - !,636,566
Prepaid expenses 657,733 - - - 657,733
Total Current Assets 112,867,792 140,487,735 4,668,594 .35,086,798 (219,624,325) 73,481,194
Noncurrent Assets
Restricted cash end investmrnts 100,000 - - 3,544,092 - 3,644,092
Lartd, property, Plant end equipment, net
of accumulative depreciation 554,244,599 - - - 554,244599
Constmction in progress 24,645,390 - - - - 24,645,390
Contractual asscssmrnt district receivable - 1,122,915 - - - 1,122,915
Rearnue bond issuance costs
net of ertartizalion - - 197,397 - 197,397
691,857,781 141,610,250 4,668,594 38,828,287 (2!9,629,325) 657,335,587
LIABILITIES
Current Liabilities
AccounLS payable and accrued expenses 2,707,229 2,974,299 6,949 - - 5,688,477
OPEB transition payable 4,966,336 - - - 4,966,336
Due to other sub-funds 107,286,236 98,991,774 792,932 12,558,383 (219,629,325) -
Imerestpayeble 2,093 - - 380,136 - 382,229
Current portion of refunding water revenue bond: ~ - - - 2,390,000 2,390,000
Curtmt portion Of water reclamation
loan conlracl - - - 148,523 - 148,523
Liability for uninsured claims - - 750,000 - - 750,000
Accrued compensation absence 529,000 - - - ~ - 529,000
Re(undabledtposils 140,095 103,370 - - - 243,465
Total Current Liabilities 115,630,989 102,069,443 1.549,881 15,477,042 (219,629,325) 15,096A30
NONCURRENT LIABILITIES
Revrnue bonds, net of currrnt portion - - - 22,015,277 - 22,015,277
OPEB obligation 1,611,622 - - - - 1,611,622
Accrued compensated absences 5,594,647 - - - - 5,594,647
Water reclamation loan cantracl
net ofcurtentportion - - 1,335,968 1,335,968
Total Liabilities 122,837,258 102,069,443 1,549,881 38,828,287 (219,629,321) 45,655,544
NET ASSETS
lnvestexl is capital assets, net of related debt 578,889,989 - - {26,724,4911 - 552,165,498
Restricted for debt service - - 3,163,956 - 3,163,456
Unrestricted (9,869,466) 39,540,807 3,118,713 23,560,535 - 56,350,589
Tole! Net Assets S 569,020,523 S 39,540,807 S 3, 118,713 S - S - 5 611,680,043
The accompanying notes are an integral part of the financial statements
31
CENTRAL CONTRA COSTA SANITARX DISTRICT
COMBINING SCHEDULE OF STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2009
Running Sewer Self .Debt
Expertse Construction Insurance Service Elimination Total
Operating Revenues
Sewer Service Charges (SSC) $ 43,087,434 5 - $ - $ - 5 - $ 43,087,434
Service charges - City of Concord 8,735,837 - - - - 8,733,837
Other service charges 872,978 - - - - 872,978
Miscellaneous charges 667,833 - - - - 667,833
Total operating revenues 33,384,144 - - - - 33,384,144
Operating Expenses
Sewage collection and pumping stations 11,817,621 - - - - 11,817,621
Sewage treatmrnt 22,927,971 - - - - 22,927,971
Engineering 6,834,321 - - - - 6,834,321
Administrative and general 16,304,463 - 938,906 - (868,030) 16,393,341
Depreciation 19,417,941 - - - - 19,417,941
Total operating expenses 77,302,319 - 938,906 - 8( 68,030) 77,393,193
Operating Loss (23,918,175) - (938,9061 - 868,030 (24,009,031)
Non-Operating Revenues (Expenses): •
Taxes - 8,688,847 - 3,830,328 - 12,339,373
Ciry of Concord cash contributions to capital
costs - 3;483,838 - - - 3,483,838
Customer cash contributions to capital cost
(SSC) - 8,452,363 - - - 8,432,363
Permit and inspection Fees 893,561 200,193 - - - 1,093,736
Interesteamings 409,270 120,602 87,106 13,917 - 1,033,093
Interest expense - - - (1,421,686) - (1,421,686)
Other income(expense) 570,814 68,709 868,030 - (868,030). 639,323
Totalnon-operating revenues (expenses) 1,873,643 23,416,974 933,136 2,444,759 (868,030) 27,822,484
tncome (loss) before contnbutians and
ttansf'crs (22,044,330) 23,416,974 (3,770) 2,444,759 - - 3,813,433
Contributed sewer lines 1,231,022 - - - - 1,231,022
Capital contributions -connection fees - 3,023,493 - - - 5,023,493
Transfers 36,788,272 (34,343,313) (2,444,759) - -
Change in Net Assets 13,974,764 (3,901,046) (3,770) - - 10,069,948
Total Nct Assets -Beginning 353,043,739 43,441,833 3,122,483 - - 601,610,093
Total Net Assets -Ending S 369,020,523 5 39,340,807 $ 3,118,713 5 - S - $ 61 1,680,043
The accompanying notes are an integral part of the financial statements
32
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CENTRAL CONTRA COSTA SANITARY DISTRICT
Running Expense
Schedule of Supplemental Net Assets Analysis
June 30, 2009
Prior Year Balance
2008 - 2009 Revenue
2008 - 2009 Expense
Add Back Depreciation Expense
Net Assets Attributed to General Operations
All Other Net Assets
Running Expense Net Assets
$ 55,257,789
(77,302,319)
19,417,941
The accompanying notes are an integral part o£ the financial statements
S 6,783,105
(2,626,589}
4,156,516
564,864,007
S 569;020,523
34
S,G,
Central Contra Costa Sanitary District
September 27, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES KELLY, GENERAL MANAGER
FROM: RANDALL MUSGRAVES, DIRECTOR OF A MINISTRATION /QMM
DEBBIE RATCLIFF, CONTROLLER ,G~~
SUBJECT: CONTRA COSTA COUNTY RETIREMENT EMPLOYEE'S
ASSOCIATION (CCCERA) POTENTIAL "DEPOOLING" OF NON-ACTIVE
LIABILITIES
On September 2, 2009 the CCCERA Actuary, Mr. Paul Angelo with the Segal
Company, made a presentation regarding the CCCERA cost sharing structure. For the
first time, District staff came to understand that all retirees (non-actives), safety and
general, are combined for calculation of future normal costs (liabilities).
On September 9"' the CCCERA Board authorized the Actuary to study "depooling"
between general and safety and authorized the Actuary to also study "depooling"
between employers.
Attached is the letter from Mr. Angelo to the CCCERA Board for consideration at the
September 9th meeting.
The CCCERA Board will be discussing "depooling" again at their October 14th meeting,
but the numbers to be provided by Segal will not be ready until the December 9, 2009
CCCERA Board meeting.
Staff will be attending the CCCERA,Board meetings and monitoring the discussions,
reports and proposals by the CCCERA staff or the Actuary. Staff will keep the Budget
and Finance Committee informed of these meetings and discussions.
H:\Retirement\Depooling memo 9 27 09.doc
'~SEGAL
THE SEGAL COMPANY
120 Montgomery Street, Suite 500 San Francisco, CA 94104-4308
T 415.263.8200 F 415.263.8290 www.segalco.com
September 8, 2009
Ms. Marilyn Leedom
Chief Executive Officer
Contra Costa County Employees' Retirement Association
1355 Willow Way, Suite 221
Concord, CA 94520
Paul Angelo, FSA
Senior Vice President 8 Actuary
pangelo@segalco.com
Re: Contra Costa County Employees' Retirement Association
Potential "Depooling" of Nonactive Liabilities
Proposed Project Plan and Fee Quote
Dear Marilyn:
This letter provides a proposal for a study that involves a potential "depooling" of the nonactive
liabilities of CCCERA.
Background
As discussed with the Board on September 2, the nonactive liabilities of CCCERA are
currently assumed to be fully funded and pooled across all employers. This means in particular
that General and Safety nonactives are pooled. Any gains or losses that occur at retirement and
termination - or thereafter -are shared across all employers for all members (General and
Safety) through Unfunded Actuarial Accrued Liability (UAAL) rates. These gains or losses at
retirement and termination can occur because of retirement, disability, terminal pay and sick
leave cashout experience, etc. Any gains or losses that occur after retirement and termination
(i.e. mortality) are also shared across all employers for all members.
This is different from the methodology used for determining UAAL contribution rates related
to active members. For active members, the Actuarial Accrued Liability (AAL), assets and the
UAAL are pooled for the following four rate groups:
> Nonehanced General (Tier 1 Only)
> Nonenhanced Safety (Tier A Only)
> Enhanced General (Tier 1 and Tier 3)
> Enhanced Safety (Tier A and C)
BenBftS, COmpenSation and HR ConSUlting ATLANTA BOSTON CALGARY CHICAGO CLEVELAND DENVER HARTFORD HOUSTON LOS ANGELES
MINNEAPOLIS NEW ORLEANS NEW YORK PHILADELPHIA PHOENIX PRINCETON RALEIGH SAN FRANCISCO TORONTO WASHINGTON, DC
M G
Multinational Group of ACtuafle5 and COnSUltent5 BARCELONA BRUSSELS DUBLIN GENEVA HAMBURG JOHANNESBURG LONDON MELBOURNE
~ C MEXICO CITY OSLO PARIS
Ms. Marilyn Leedom
September 8, 2009
Page 2
Proposed Project Plan
The most reasonable first step toward depooling would be to pool CCCERA's nonactive
liabilities by the same four groups for which the AAL, assets and UAAL are pooled for active
members (shown above). If that approach were to be taken then any gains or losses that occur
at or after retirement would be pooled only amongst employers in each of the four groups. This
would cause Safety experience that occurs on or after retirement to be tracked and funded
separately from General experience. However, experience for different employers within each
of those four groups would still be shared. Experience due to any one employer's nonactives in
a group would be pooled across all employers in that particular group.
If this approach is taken, then it would have to be determined whether or not this "depooling"
of General and Safety nonactive members would be done on a prospective or retroactive basis.
If it were to be done prospectively from the December 31, 2008 valuation, then we would
determine nonactive member liabilities as of that same date for each of the four groups, based
on a group identifying code for each nonactive member. Assets would be then allocated on that
same date based on those liabilities. This procedure would result in the same contribution rates
as were already determined in the December 31, 2008 valuation. It would not account for the
effects of nonactive member experience that occurred through that date any differently than the
current methodology has accounted for that experience.
In future valuations, those assets that were allocated to each of the four asset groups would be
"rolled forward" by adding in contributions and investment income and subtracting benefit
payments. This would require that contribution and benefit payment information be tracked by
the Retirement Association separately for each of the four asset groups. Liabilities for
nonactive members would also be calculated separately by each of the four groups. Therefore,
any nonactive member experience that occurs after December 31, 2008 would be shared only
by the employers within each of the four groups.
If it is decided to apply this approach so as to reflect separate experience retroactively to the
December 31, 2005 valuation (for example) then we would start by following a similar
approach as described above, but the allocation of assets to each of the four asset groups would
occur on December 31, 2005 based on a separation of the nonactive members into the four
groups at that time.
We would then need to obtain contribution and benefit payment information from the
Retirement Association for the 2006, 2007 and 2008 calendar years. That information, along
with CCCERA's actual investment returns during those years would be used to "roll forward"
the assets allocated at December 31, 2005 to December 31, 2008. Those assets, along with
nonactive member liabilities at December 31, 2008 separated into the four groups would be
used to recalculate the employer contribution rates as of December 31, 2008.
5049647v1l05337.001
Ms. Marilyn Leedom
September 8, 2009
Page 3
Note that this "retroactive" approach would not require recalculation of employer rates prior to
December 31, 2008. Only future employer contribution rates would be affected, but now those
future rates would now reflect the separate experience of the four groups back to (in this
example) December 31, 2005.
The fees to complete the calculations under the prospective approach for the "depooling" of
nonactive members are estimated to be $5,000. This would include preparing a short letter that
shows the assets as of December 31, 2008 for each of the four asset groups. Recall, that no
contribution rates as of December 31, 2008 would change under this approach.
The fees to complete calculations under the retroactive approach back to the December 31,
2005 valuation are estimated to be $15,000. This would include preparing a letter that shows
the assets for each of the four asset groups along with a comparison of the employer
contribution rates in the December 31, 2008 valuation to the rates under this approach.
Fees for any presentations to the Board (including both preparation and attendance) are
estimated to be around $5,000.
Actual fees will be billed on a time and charge basis according to actual hours worked. An
invoice will be prepared once the results are completed.
if there is any additional information you require, please let us know.
Sincerely,
~~~~
Paul Angelo
JZM: j c
5049647v1 /05337.001
S.e.
Central Contra Costa Sanitary District
September 24, 2009
TO: Budget & Finance Committee
VIA: Randall Musgraves, Director of Administration
FROM: Shari Deutsch, Safety & Risk Management Administrator~j
SUBJECT: 2009-10 Insurance Coverage Chart
The attached chart shows the District's insurance coverage in place as of the latest
policy renewal on 8/30/09. There are two notable changes to this chart from those in
prior years.
First, staff has purchased a crime policy effective 7/1/09. Among other protections, this
policy provides coverage up to $1 million for loss of funds resulting from computer fraud.
The annual premium for this policy was $3,173.
Second, staff amended the renewal date of the District's Fiduciary Liability policy from
8/30 to 7/1. This policy covers losses to funds managed by the District but held intrust
for others. Funds covered by this policy include the money purchase plan, the deferred
compensation plan and the post-employment benefits trust.
This change will allow the Budget & Finance Committee and the full Board to review
and evaluate the District's entire insurance program as part of the annual budget
process.
Please feet free to contact me if you have any questions or would like any additional
information.
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