HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 10-04-10Central
Sanitary District
REGULAR MEETING OF THE
CENTRAL CONTRA COSTA BOARD OF DIRECTORS:
SANITARY DISTRICT MICHAEL McG
Presidnu "a
BUDGET AND FINANCE COMMITTEE BARBARAD.DOGRE7T
Precidenl Pro Tun
GERALD R. WCEY
Chair Nejedly MARIO AL A M EJ
JAMES A. NEIF.'UL
Member McGill (Alt)
PHONE: (925) 228 -9500
FAX: (925)676 -7211
Monday, October 4, 2010 wwmcealralsan.org
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
Anyone wishing to address the Committee on an item listed on the agenda will be heard when the
Committee Chair 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 stale 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 he
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.
AMERICANS 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.
Budget and Finance Committee
October 4, 2010
Page 2
1. Call Meeting to Order
2. Public Comments
3. Old Business
4. Claims Management
'a. Review new and outstanding claims
b. Review Position Paper denying claim for damages submitted by Rae Lynn
Fiscalini (Item 3.f. in Board Binder)
C. Review Position Paper denying claim for damages submitted by Hess
Rouhafza (Item 3.g. in Board Binder)
5. Reports and Announcements
'a. June 30, 2010 Audited Financial Statements (Presentation by John
Cropper)
b. Receive report on September 29, 2010 Contra Costa County Employees'
Retirement Association (CCCERA) Board meeting (Item 5.a.1) in Board
.Binder)
6. Review Expenditures
a. Review expenditures (Item 3.a. in Board Binder)
*b. Review P -Card expenditures
7. Review August 2010 Financial Statements (Item 3.b. in Board Binder)
8. Adjournment
* Attachment
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I
CENTRAL CONTRA COSTA SANITARY DISTRICT
FINANCIAL STATEMENTS
JUNE 30, 2010
i
TABLE OF CONTENTS
Independent Auditors' Report
Management's Discussion and Analysis
Statement of Net Assets
Statement of Revenues, Expenses, and Changes in Net Assets
Statement of Cash Flows
Notes to Financial Statements
Supplementary Information:
Combining Statement of Net Assets
Combining Statement of Revenues, Expenses, and Changes in Net Assets
Schedule of Running Expense — Comparison of Budget and Actual
Expenses by Department
Running Expense — Schedule of Supplemental Net Assets Analysis
Page No.
1 -2
3 -8
G:
10
11
12-33
34
35
36
37
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Central Contra Costa Sanitary District
Martinez, California
We have audited the accompanying financial statements of the Central Contra Costa Sanitary District as of
and for the year ended June 30, 2010 and 2009, as listed in the table of contents. These 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 audits in accordance with auditing standards generally accepted in the United States
of America and the State Controller's Audit Requirements for California Special Districts. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the 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, 2010 and 2009, and the
changes in financial position and cash flows thereof 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 California State Controller's office for Special Districts.
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis be presented to supplement the basic financial statements. Such information,
although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management's responses to our responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise Central Contra Costa Sanitary District's financial statements as a whole. Management's
Discussion and Analysis and the budgetary comparison information are presented for purposes of
additional analysis and are not a required part of the financial statements. Management's Discussion and
Analysis and the budgetary comparison information are the responsibility of management and were
derived from- and relate directly to the underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the auditing procedures applied in the audit of
the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the information is
fairly stated in all material respects in relation to the financial statements as a whole.
®�1) � f��4 � 1
CROPPER ACCOUNTANCY CORPORATION
September 10, 2010
2
MANAGEMENT'S DISCUSSION AND ANALYSIS
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, 2010. This information is presented in conjunction
with the audited financial statements, which follow this report.
FINANCIAL HIGHLIGHTS
The District's 2009 -10 financial highlights are listed below. These results are discussed in more detail
later in the report.
a The District's total ending net assets increased by $9.8 million or 1.60% in 2009 -10 when
compared to fiscal year 2008 -09; when comparing 2009 -10 to 2007 -08, net assets have increased
by $19.8 million or 3.3 %. This is mainly due to capital improvements and new long -term
receivables that allow customers to connect to the system and pay over time (See Note 5).
o Total revenues in 2009 -10 decreased by $2.4 million or-2.90% when compared to 2008 -09;
when comparing 2009 -10 to 2007 -08, total revenue has decreased by $2.0 million or -2.41 %
over the 2 -year period. This is mainly due to no Sewer Service Charge (SSC) rate increase in
2009 -10 along with reduced non - operating revenue.
o Total 2009 -10 expenses decreased by $0.6 million or 0.71% compared to 2008 -09 due to a
concerted effort to reduce or defer non- critical expenses. When comparing 2009 -10 to 2007 -08,
total expenses increased by $4.3 million or 5.78% over the 2 -year period.
C Capital Contributions were $8.9 million in 2009 -10, $6.3 million in 2008 -09, and $10.7 million
in 2007 -08; the year -to -year variances reflect the volatile housing market.
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.
REQUIRED 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.
e Statement of Net Assets — reports the District's current financial resources (short-tern
spendable resources) with capital assets and long -tern obligations
C 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
C Statement of Cash Flows — reports the District's cash flows from operating activities, investing,
capital and non- capital financing activities
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
1) nno_1nto 2009 -2009 2007 -2008
Current Assets
$ 77,968,736
$ 73,083,764
$ 86,373,020
Capital Assets
586,785,155
578,889,989
560,288,889
Other Non - current Assets
27,196,507
5,361,834
5,219,183
Total Assets
691,950398
657,335,587
651,881092
Current Liabilities
11,255,377
15,098,030
13,270,194
Non - Current Liabilities
59,243.809
30,557,514
37,000,803
Total Liabilities
70,499186
45,655,544
50270,997
Invested in Capital Assets,
Net of Related Debt
531,324,187
552,165,498
531,119,639
Restricted - Debt Service
4,565,970
3,163,956
3,185,416
Unrestricted
85,561,055
56,350,589
67,305,040
Total Net Assets
$ 621,451 212
$ 611,680,043
$ 607 610 095
The total net assets of the District increased from $601.6 million in 2007 -08 to $621.5 million in 2009-
10. This increase in net assets of $19.9 million is the result of both net income and capital contributions
totaling $9.8 million in 2009 -10 and $10.1 million in 2008 -09 (shown in the next table).
By far the largest portion of the District's net assets (85.5% percent) reflects its investment in capital
assets (e.g. land, buildings, machinery, equipment, intangible assets, 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 funds 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 $4.6 million restricted
for debt service and is higher than in prior years due to the District refinancing current debt in addition
to raising $30 million in new proceeds. The remaining balance of $85.6 million in unrestricted net
assets may be used to meet the District's ongoing obligations to its ratepayers and creditors. These
unrestricted net assets may also be used for payment of long -term unfunded liabilities, the 2 largest
being Other Post Employment Benefits and Pension Plan.
4
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:
Condensed Statement of Revenues, Expenses, and Changes in Net Assets
Fiscal Year Fiscal Year Fiscal Year
2009 -2010 2008 -2009 2007 -2008
Sewer Service Charges (SSC)
$ 57,357,188
S 51,843,311
S 48,414,017
Other Service Charges and misc.
1,474,898
L540
1,465,569
Total Operating Revenue
58,832,086
53,384 144
49,879,586
Customer Contributions (SSC)
6,793,040
13,938,421
14,970,637
Property Tax
12,260,123
12,539,375
12,254,168
Permit & Inspection Fees
776,348
1,093,756
1,335,160
Interest and All Other
1,568,235
1,672,618
3,771,438
Total Non-Operating Revenues
21,397,746
29,244,170
32 331,403
Total Revenues
80,229 832
82 628,314
82,210,989
Total Labor and Benefits
39,986,763
39,440,034
37,312,472
Chemicals & Utilities
6,268,343
7,414,467
7,223,877
Repairs and Maintenance
2,868,675
3,057,540
2,985,670
Professional, Legal and Outside Services
2,129,552
2,832,001
2,613,658
Materials & Supplies
1,705,649
1,954 288
1,728,963
Hauling and Disposal
939,960
880,589
877,885
Self- Insurance F,x ense
746,612
958,906
916,639
All Other
1,223,191
1
1,247,298
Depreciation Expense___
20,969,429
19,417,941
18,615,747
Total Operating Expenses
76,838,174
77,393 195
73,522,209
Non-Operating Expense - Interest Expense
2,539,383
1,421 686
1,518,142
Total Expenses
79,377
78,814 881
75,040,351
Income Before Capital Contributions
852 .
3,813,433
7 170 638
Contributed Sewer Lines
1,840,259
1,231,022
1,444,420
Capital Contributions - Connection Fees
7,078,635
5,025,493
9,259,160
Total Capital Contributions
8,918,894
6,256,515
10 703 580
Chan a in Net Assets
9,771 169
10,069 948
17,874,218
Be n Net Assets
611,680,043
601,610 095
583,735,877
Ending Net Assets
$ 621,451,212
$ 611,680,043
S 601 610,095
In 2009 -10, operating revenues increased by $5.4 million or 10.21 %; however, non- operating revenue
decreased by -$7.8 million or - 26.83% when comparing 2009 -10 to 2008 -09. The change in total
revenue resulted in a decrease of 42.4 million or -2.90% when comparing 2009 -10 to 2008 -09. There
was no SSC rate increase in 2009 -10 and a portion of SSC revenue was shifted from non - operating to
operating revenue. Property Tax revenue has remained flat for the 3 -year period due to slight growth to
the tax base, in spite of the sub -prime mortgage crisis and recession. Permit fees have decreased in the
3 -year period reflecting the slower housing market. Interest and all other revenue continue to drop,
mainly due to lower investment rates on District investments. Comparing 2009 -10 to 2007 -08, total
revenue decreased by $2.0 million over the 2 -year period.
5
In 2009 -10, total expenses decreased by $0.6 million or -0.71% compared to 2008 -09. This is mainly
due to planned efforts to reduce spending. Comparing 2009 -10 to 2007 -08, total expenses were $4.3
million or 5.78% higher, mainly due to increases in total labor and depreciation expense, offset by
savings to all other line items. Labor and Benefits increased due to cost -of- living adjustments, merit
increases, filling of vacant positions, and increased benefit costs in general. Depreciation expense
increased due to new capital additions. Non - Operating Expense is made up of debt service interest
expense and in 2009 -10, bad debt expense of almost $1.0 million. This bad debt expense assumes there
is a strong possibility that the State will not be able to pay back the Proposition IA loan by June 30,
2013 (See Note 3). Total income before capital contributions decreased from $7.2 million in 2007 -08 to
$3.8 million in 2008 -09, and to $0.9 million in 2009 -10 for a net decrease of -$6.3 million or - 88.11%
comparing 2007 -08 to 2009 -10.
Capital contributions in 2009 -10 Nvere $8.9 million compared to $6.3 million in 2008 -2009 and $10.7
million in 2007 -08. This was mainly due to less contributed sewer lines and connection fees due to the
construction and housing slowdown, except for one large complex connection that was delayed but then
paid early in 2009 -10. The total change in net assets decreased from $17.9 million in 2007 -08 to $9.8
million in 2009 -10.
CAPITAL ASSETS
Capital assets include the District's entire major infrastructure including wastewater treatment facilities,
sewers, land, buildings, pumping stations, vehicles, intangible assets and furniture and equipment
exceeding our capitalization policy limit of $5,000, net of depreciation. As of June 30, 2010, the
District's investment in capital assets totaled $586.8 million, which is an increase of $7.9 million or
1.36% over the capital asset balance of $578.9 million at June 30, 2009. Capital Assets increased by
$26.5 million or 4.73% comparing 2009 -10 to 2007 -08. A comparison of the District's capital assets
over the past 3 fiscal years is presented below:
Fiscal Year Fiscal Year Fiscal Year
Inno_Inin 2nnu_znno 2007-200R
Land —
S 17,114,720
S 17,114,720
S 17,114,720
Sewage Collection System
286,351,576
273,333,617
242,706,977
Contributed Sewer Lines
148,580,734
146,757,520
145,596,316
Outfall Sewers
8,518,443
8,518,443
8,518,443
Sewage Treatment Plant
275,413,411
268,399,708
264,327,208
Recycled Water Infrastructure
12,281,480
1 1,936,662
11,936,662
Pumping Stations
53,750,940
52,404,387
51,632,331
Buildings
21,206,981
19,997,044
19,987,656
Intangible Assets
1,806,272
1,521,424
-
Furniture & E ui ment
13,756,662
14,523,054
13,730,782
Motor Vehicles
5,759 209
5,983,539
5,224,941
Construction In Progress
26,735,297
24,645,390
28,515,814
Subtotal
871,275,725
845,135,508
809,291,850
Less Accumulated De reciation
284,490,570
266,245,519
249,002,961
Total Capital Assets (net of depreciation)
S 586,785,155
S 578,889,989
S 560,288,889
6
The major reasons for the increase in capital assets, net of depreciation, of $7.9 million from 2009 -10 to
2008 -09 and $26.5 million from 2009 -10 to 2007 -08, are:
o Sewer pipe ongoing renovations, pumping station improvements, and contributed sewer lines
(increase of $16.2 million comparing 2009 -10 to 2008 -09 and $48.7 million comparing 2009 -10
to 2007 -08)
o Treatment plant infrastructure renovations, upgrades, equipment, and improvements (increase of
$7.0 million comparing 2009 -10 to 2008 -09 and $11.1 million comparing 2009 -10 to 2007 -08)
C All other asset categories, including construction in progress, increased slightly ($2.9 million
comparing 2009 -10 to 2008 -09 and $2.2 million comparing 2009 -10 to 2007 -08)
Y Capital Asset increases are offset by an increased subtraction of accumulated depreciation of
$18.2 million comparing 2009 -10 to 2008 -09 and $35.5.million comparing 2009 -10 to 2007 -08
due to our increasing capital asset value and its associated depreciation expense.
See Note #4 in the audited financial statements.
DEBT ADMINISTRATION
The District has the following outstanding debt as of June 30, 2010:
Revenue Bonds
Water Reclamation Loan
$ 54,125,000
1,335,968
$ 55,460,968
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 -05 and 2005 -06. The tax shift ended in 2006 -07, and
the voters passed Proposition IA that mandates the State repay any future property tax that it borrows in
an effort to curtail local government tax raids.
The Governor and legislature voted to suspend Proposition IA, and the District lost almost $1.0 million
in property tax proceeds in 2009 -10. 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 and the financials show this
to be a doubtful account. The State's problems will continue into future budgets and will have a trickle-
down effect on local governments (See Note 3).
Some of the other factors the District faces in the future are:
0 The recession, recovery, and the future state of the economy
C Large market losses in 2008 and 2009 and slow economic recovery will likely increase the cost
of retirement benefits
o Current and future legislation impacting public employee pensions
o Other Post - Employment benefit required contributions based on actuarial analyses using lower
interest rates
C Possibility of continued reduced new connections and connection fees
C Regulatory requirements becoming more stringent, causing the District to spend more on
compliance, both for operations and maintenance costs and capital projects
C Continued 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.
8
FINANCIAL STATEMENTS
CENTRAL CONTRA COSTA SANITARY DISTRICT
Statement of Net Assets
June 30, 2010 and 2009
ASSETS
Current Assets
Cash and cash equivalents
Short tern investments
Accounts receivable, net
Interest receivable
Parts and supplies
Prepaid expenses
Total Current Assets
Noncurrent Assets
Restricted cash and equivalents
Restricted investments
Land, property, plant and equipment, net
Construction in progress
Contractual and Alhambra Valley assessment districts receivable
Revenue bond issuance costs, net
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, net 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
2010
$ 49,299.833
11,500,340
14,248.079
92,375
1,733,312
1,094,797
77,968,736
18,835,592
5,318,908
560,049,858
26,735,297
2,667,605
374,402
613,981,662
691,950,398
4,978,208
848,600
3,460,000
152,384
572,500
1,000,000
243,685
11.255,377
50,665,000
2,243,041
5.152,184
1,183,584
59.243,809
70,499,186
531,324,187
4,565,970
85,561,055
$ 621,451,212
The accompanying notes are an integral part of the financial statements
2009
$ 41,484,847
13,495,124
15,665,972
143,522
1,636.566
657,733
T,083,764
3,644,092
554,244,599
24,645,390
1,520,345
197,397
584,251,823
657,335,587
5,688,477
4,966,336
382,229
2,390,000
148,523
529,000
750,000
243,465
15,098,030
22,015,277
1,61 1,622
5,594,647
1,335,968
30,557,514
45,655,544
551165,498
1163,956
56,350,589
$ 611.680,043
9
CENTRAL CONTRA COSTA SANITARY DISTRICT
Statement of Revenues, Expenses, and Changes in Net Assets
Years Ended June 30, 2010 and 2009
2010
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
Provision for bad debt
Other income (expense)
Total non - operating revenues (expenses)
Income before contributions and transfers
Contributed sewer lines
Capital contributions - connection fees
CHANGE IN NET ASSETS
Total Net Assets - Beginning
Total Net Assets - Ending
$ 48,692,520
8,664,668
824,022
650,876
58,832,086
11,722,925
21,467,827
6,898,357
15,779,636
20,969,429
76, 83 8,174
(18,006,088)
12,260,123
3,628,949
3,164,091
776,348
570,024
(1,553,467)
(985,916)
998,211
18,858,363
852,275
1,840,259
7,078,635
9,771 ,169
611,680,043
$ 621,451,212
The accompanying notes are an integral part of the financial statements
2009
$ 43,087,454
8,755
872,978
667,855
53,384,144
11,817,621
22,927,971
6,834,321
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
$ 6I 1,680,043
E
CENTRAL CONTRA COSTA SANITARY DISTRICT
Statement of Cash Flows
Years Ended June 30, 2010 and 2009
2010
2009
Cash Flows From Operating Activities:
Receipts from customers and users
S 58.116.803
$
55,395.420
Payments to suppliers
(105.039,239)
(I 8.306J94)
Payments to employees and related benefits
43.441433
(42,824.881)
Net cash used in operating activities
(1479.003)
(5.736.055)
Cash Flows From Noncapital Financing Activities:
Receipt of taxes
12,260,123
11539,375
Inspection/permit fees and other non - operating income
1,774,557
1,733.280
Interest paid on reimbursements payable
-
(6.206)
Net cash provided by non capital and related financing activities
14.034.680
14.266,449
Cash Flows From Capital And Related Financing Activities:
Capital contributions
8,633,299
13.938
Connection fees
7,078
5,025,493
Acquisition and construction of capital assets
(28.865,271)
(3088,271)
Proceeds from bond issuance
53.730,892
Principal paid on bonds
(24,336,697)
(2
Interest paid on bonds
(1.087.096)
(1.229.600)
Net cash provided by (used in) capital and related financing activities
15.153,762
(21.498.716)
Cash Flows From Investing Activities
Purchases of short term investments
(3.324,124)
(13,495,124)
Interest received
62 L 171
1229.846
Net cash provided by (used in) investing activities
(2,702,953)
(12,265,278)
Net increase (decrease) in cash and cash equivalents
23,006,486
(25,233,600)
Cash and cash equivalents. July 1
45.128.939
70362,539
Cash and Cash equivalents, June 30
S 68.135,425
$
45,128,939'
Reconciliation of operating loss to net cash provided
(used) by operating activities
Operating gain (loss)
(18.006,088)
(24,009,051)
Adjustments to reconcile operating income to net cash used
in operating activities:
-
Depreciation expense
20.969,429
19.417,941
Net book value on capital assets retired
676
253
Bad debt expense
(985.916)
-
(lnerease) decrease in:
Accounts receivable
270.633
1,210.259
Parts and supplies
(96.746)
(24,507)
Prepaid expenses
(437,064)
(5.054)
Increase (decrease) in:
- Accounts payable and accrued expenses
(701123)
(2.992.249)
Refundable deposits
220
(68.912)
Liability for uninsured claims
250.000
120,180
OPEB obligation
(4,342,061)
594,289
Accrued compensated absences
(398,963)
20,796
Net cash provided by (used in) operating activities
$ (3.479.003)
5
(5.736.055)
Noncash investing, capital, and financing activities
Contributions of capital assets
5 1.840259
$
1,231.022
End of Period:
Unrestricted cash and equivalents
$ 49.299,833
$
41,484,847
Restricted cash and equivalents
18,835592
3.644,092
S 68.135.425
$
45,128,939
The accompanying notes are an integral part
of the financial statements
NOTES TO THE FINANCIAL STATEMENTS
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
I
i
POLICIES
Reoortine Entit
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
itsjurisdiction. A Board of Directors comprised of five eIlected members governs the District.
As required by accounting principles generally accepted in the United States of America, these basic
financial statements present the financial statements oflCentral 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 leasing or selling certain facilities, land and equipment for the use, benefit and enjoyment 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 ACCOUntln
The District's financial statements are prepared on the accrual basis in accordance with accounting
principles generally accepted in the United States oflAmerica as promulgated by the Government
Accounting Standards Board (GASB). In addition, l the District applies all applicable Financial
Accounting Standards Board (FASB) pronouncements issued on or before November 30, 1 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.
12
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
(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, all 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.
All 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.
Self Insurance
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 tern 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.
13
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
1. DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Investments
Investments held at June 30, 2010, 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 listed as restricted cash in the financial statements. See note
2.
Parts and Supplies
Parts and supplies are 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 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
14
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
(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 general creditors. The District amended its plan during the fiscal year ended
June 30, 1999 to meet this requirement. Consequently, at June 30, 2010, 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 Social Security. The
assets are held in trust and are not recorded on the books of the District. The District contributed
$1,565,483 to the plan during the year ended June 30, 2010.
Property Taxes
Property tax revenue is recognized in the fiscal 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 Plan as
provided in Section 4701 at seq. of the State of Revenue and Taxation Code establishes a mechanism
for the county to advance the full 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 V
percent per month. Unsecured property tax is due on July 1 and becomes delinquent on August 31.
The penalty percentage rates are the same as secured property tax.
15
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
1. DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Compensated 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 decreased to $5,724,684 from $6,123,647, a decrease of
$398,963 in fiscal 2010. The current portion of the liability to be used within the next year is
estimated by management to be approximately $572,500. The change of $398,963 consists of
increases of $437,087 and decreases of $836,050.
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, Ca1TRUST and the State of California Local 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 snake 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 June of 2007, GASB issued GASBS No. 51 Accounting and Financial Reporting 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 may be considered intangible assets, including easements, water rights, patents, trademarks,
and computer software. Intangible assets, and more specifically easements, are referred to in the
description of capital assets in Statement No. 34, Basic Financial Statements — and Management's
Discussion 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 has
formally implemented this Statement in fiscal year ending June 30, 2010. The implementation of the
provisions of this standard did not 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, 2010 and 2009
1. DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
New Accounting Pronouncements (continued)
In June of 2008, GASB issued GASBS No. 53. Accounting and Financial Reporting for Derivative
Instruments. 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. 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 CaITRUST.
In March of 2009, GASB issued GASBS No. 54 , Fund Balance Reporting and Governmental Fund
Type Definitions. 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 govemment -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 standard will not have an effect on the financial
statements of the District.
In March of 2009, GASB issued GASBS No. 55 , The Hierarchy of Generally Accepted Accounting
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
goveamtent 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.
17
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
1. DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
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.
In December of 2009, GASB issued GASBS No. 57, OPEB Measurements by Agent Employers and
Agent Multiple- Employer Plans. This Statement amends Statement No. 45, Accounting and
Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, to permit an
agent employer that has an individual- employer OPEB plan with fewer than 100 total plan members
to use the alternative measurement method, at its option, regardless of the number of total plan
members in the agent multiple- employer OPEB plan in which it participates. Consistent with this
change to the employer - reporting requirements, this Statement also amends a Statement No. 43,
Financial Reporting fir Postemployment Benefit Plans Other Than Pension Plans, requirement that
a defined benefit OPEB plan obtain an actuarial valuation. The amendment permits the requirement
to be satisfied for an agent multiple - employer OPEB plan by reporting an aggregation of results of
actuarial valuations of the individual - employer OPEB plans or measurements resulting from use of
the alternative measurement method for individual - employer OPEB plans that are eligible. The
District is required to implement the provisions of the Statement for the year ended June 30, 2012
(effective for periods beginning after June 15, 2011). This Statement will not result in a change in
current practice, since the District does not use the alternative measurement method.
In December of 2009, GASB issued GASBS No. 58 Accounting and Reporting for Chapter 9
Bankruptcies. This Statement will improve financial reporting by providing more consistent
recognition, measurement, display, and disclosure guidance for governments that file for Chapter 9
bankruptcy. In addition, these requirements will provide financial statement users with better
information regarding the effects of bankruptcy upon governments that file for Chapter 9 protection.
The District is required to implement the provisions of the Statement for current fiscal year (effective
for periods beginning after June 15, 2009). This Statement will not result in a change in current
practice, or have a material effect on the financial statements of the District.
In June of 2010, GASB issued GASBS No. 59, Financial Instruments Onmibus. This Statement
provides for the following amendments, to be effective for the year ended June 30, 2011 (effective for
periods beginning after June 15, 2010): ,
18
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
1. DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
New Accounting Pronouncements ( continued
• National Council on Governmental Accounting Statement 4, Accounting and Financial
Reporting Principles for Claims and Judgments and Compensated Absences, is updated to be
consistent with the amendments to GASB Statement No. 53, Accounting and Financial
Reportingfor Derivative Instruments, regarding certain financial guarantees.
• Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures
for Defined Contribution Plans, and No. 43, Financial Reporting for Postemployment Benefit
Plans Other Than Pension Plans, are amended to remove the fair value exemption for
unallocated insurance contracts. The effect of this amendment is that investments in unallocated
insurance contracts should be reported as interest - earning investment contracts according to the
provisions of paragraph 8 of Statement No. 31, Accounting and Financial Reporting far Certain
Investments and for External Investment Pools.
• Statement 31 is clarified to indicate that a 2a7 -like pool, as described in Statement 31, is an
external investment pool that operates in conformity with the Securities and Exchange
Commission's (SEC) Rule 2a7 as promulgated under the Investment Company Act of 1940, as
amended.
• Statement No. 40, Deposit and Investment Risk Disclosures, is amended to indicate that interest
rate risk information should be disclosed only for debt investment pools —such as bond mutual
funds and external bond investment pools —that do not meet the requirements to be reported as a
2a7 -like pool.
• Statement 53 is amended to:
Clarify that the net settlement characteristic of Statement 53 that defines a derivative
instrument is not met by a contract provision for a penalty payment for nonperformance
Provide that financial guarantee contracts included in the scope of Statement 53 are limited to
financial guarantee contracts that are considered to be investment derivative instruments
entered into primarily for the purpose of obtaining income or profit
Clarify that certain contracts based on specific volumes of sales or service revenues are
excluded from the scope of Statement 53
Provide that one of the `leveraged yield" criteria of Statement 53 is met if the initial rate of
return on the companion instrument has the potential for at least a doubled yield.
This statement will not result in a change on current practice, or have a material effect on the financial
statements of the District.
19
CENTRAL CONTRA COSTA SANITARY DISTRICT
. Notes to Financial Statements
Years Ended June 30, 2010 and 2009
1. DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
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 Investments
Investments as of ,Tune 30, 2010 are classified in the accompanying financial statements as follows:
Cash and cash equivalents $ 49,299,833
Short term investments 11,500,340
Restricted cash and investments 24,154,500
Total Cash and Investments $ 84,954,673
* Includes $100,000 bank escrow deposit- see note 1.
Policies and Practices
The District is authorized under California Government Code to make direct investments in local
agency bonds, notes, or warrants within the State; U.S. Treasury instruments; registered State
warrants or treasury notes; securities of the U.S. Government, or its agencies; commercial paper;
certificates of deposit placed with commercial banks and /or savings and loan companies; and
certificates of participation. State code and the District's investment policy prohibit the District
from investing in investments with a rating of less than A or equivalent. District policy limits
investments in commercial paper to prime quality with corporate assets over $500,000,000.
20
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
2. CASH AND CASH EQUIVALENTS (continued)
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
Percentage
Remaining
Percentage
Authorized Investment Type
Maturity
of Portfolio
U.S. Treasury Obligations
5 years
None
Banker's Acceptance
180
40%
Commercial Paper (1)
270
25%
Collateralized Certificates of Deposit (2)
5 years
30%
County Pooled Investment Funds
N/A
None
Local Agency Investment Fund (LAIF)
N/A
None
Maximum
Maximum
Investment
Percentage
In One Issuer
of Portfolio
None
100%
30%
15%
10%
15%
None
15%
None
100%
None
100%
(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
Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of
an investment; generally, the longer the maturity of an investment, the greater the sensitivity of its
fair value to changes in market interest rates. It is the District's policy to manage exposure to
interest rate. risk by purchasing a combination of shorter term and longer tetra investments and by
timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to
maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
District policy is that investment maturities do not exceed one year, with the exception of Treasury
Notes, Local Agency Investment Fund, or CalTRUST, however investments can be held longer with
Board approval.
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 Tvne
Treasury Bills
Treasury Bills
Treasury Bills
Total
District
California State Limit Policy
Fair Value
Maturity
$ 3,499,757
07/22/10
3,996,313
10/21/10
4,004,270
04/07/11
$ 11,500,340
21
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
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 minimum rating required by the California Government
Code, the District's investment policy, and the actual rating as of the year -end for each investment
type.
Not
Minimum
Total ��4 454 (z73
Concentration of Credit Risk
Required
Fair
Legal
Investment Type
Value
Ra t in
Cash
$ 1,287,025
N/A
Money Markets
5,525,308
Aaa
Treasuries
11,500,340
Aaa
State Investment Pool
66.642.000
N/A
Total ��4 454 (z73
Concentration of Credit Risk
Required
Rating at Year -End
To Be
Rated
Aaa Unrated
$ 1,287,025
$ - $ -
-
5,525,308
-
11,500,340 -
66.642.000
1 �Q5
$17,025,648 $_66- 6429
The investment policy of the District contains the limitation that no more that 15% of the District's
investment portfolio will be invested in a single issuer. During the current fiscal year the District
invested 78% of its monies in the State Investment Pool (LAIF) which is 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.
Investment 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 cost basis.
22
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
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 Government 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, 2010, accounts receivable are comprised of the following:
City of Concord (see Note 8)
$ 12,414,353
Household Hazardous Waste Partners
728,415
Proposition lA loan
985,916
Connection fees
618,449
All other
486.862
Total Accounts Receivable
15,233,995
Allowance for Doubtful Accounts
(985.916)
Net Accounts Receivable
Proposition IA Loan Receivable
Under the provisions of Proposition ]A, and as part of the 2009 -10 budget package passed by the
California state legislature on July 28, 2009, the State of California borrowed 8% of the amount of
property tax revenue, including those property taxes associated with the supplemental property tax
apportioned to special districts. The state is required to repay this borrowing, plus interest, by June 30,
2013. After repayment of this initial borrowing, the California legislature may consider only one
additional borrowing within a ten -year period. The amount of this borrowing pertaining to the District
was $ 985,916.
The borrowing by the State of California was recognized as a receivable in the accompanying financial
statements, with an equal amount set up as an allowance for doubtful accounts. In the Statement of Net
Assets and Statement of Revenues, Expenses and Changes in Net Assets, the tax revenues were
recognized in the fiscal year for which they were levied (fiscal year 2010).
Due to the current economic climate, and the current budget difficulties of the State of California,
District management has decided to reserve the entire Proposition I A loan of $985,916. This amount is
tracked as a loan receivable on the books, with a corresponding contra account on the Statement of Net
Assets, which effectively eliminates the receivable. The Statement of Revenues, Expenses, and Changes
in Net Assets also includes the property tax revenue connected to the receivable. The revenue is offset
by the provision for losses.
23
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
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, 2010:
Total accumulated depreciation
Total capital assets being
depreciated, net
Capital assets, net
266,245,519 20,969,429 (2,724,378) - 284,490,570
537,129.879 (19,116 (676) 24,922,610 542,935,138
$ 578,889,989 $ 7.895,842 $ (676) $ - S 586,785,155
24
Balance
Beginning
Transfer
Balance
of Year
Additions
Retirements
from CUP
End of Year
At Cost
Capital assets not being depreciated
Land
$ 17,114,720
$ -
$
$
$ 17,114,720
Construction in progress
24,645,390
27,012,517
(24,922
26,735,297
Total nondepreciated assets
41,760,110
27,012,517
(24
43,850,017
Capital assets being depreciated
Sewage collection system
273,333,617
-
(80,000)
13,097,959
286,351,576
Contributed sewer lines
146,757,520
1,840,259
(17,045)
-
148,580,734
Outfall sewers
8,518,443
-
-
8,518,443
Sewage treatment plant
268,399,708
-
(495,000)
7,508,703
275,413,411
Recycled water infrastructure
11,936,662
-
(150,000)
494,818
12,281,480
Pumping stations
52,404,387
-
(100,000)
1,446
53,750,940
Buildings
19,997,044
-
(32,000)
1,241,937
21,206,981
Intangibles
1,521,424
- .
284,848
1,806,272
Furniture and equipment
14,523,054
-
(1,614,184)
847,792
13,756,662
Motor vehicles
5,983,539
12,495 _
(236,825)
-
5,759,209
Total depreciated assets
803,375,398
1.852,754
(2,725,054)
24,922,610
827,425,708
Less accumulated depreciation
Sewage collection system
37,368,734
3,776,626
(80,000)
-
41,065,360
Contributed sewer lines
43,15,2,893
1,981,714
(17,045)
45,117,562
Outfall sewers
2,540,266
113,353
2,653,619
Sewage treatment plant
144
9,337,779
(495,000)
153,113,414
Recycled water infrastructure
4,022,722
481,605
(150,000)
4,354,327
Pumping stations
15,986,380
2,193,433
(100,000)
18,079,813
Buildings
5,949,709
647,477
(32,000)
6,565,186
Intangibles
10,142
21185
-
32,327
Furniture and equipment
9,544,235
2,056,981
(1,613,508)
9,987,708
Motor vehicles
3.399,803
358,276
(236,825)
3,521,254
Total accumulated depreciation
Total capital assets being
depreciated, net
Capital assets, net
266,245,519 20,969,429 (2,724,378) - 284,490,570
537,129.879 (19,116 (676) 24,922,610 542,935,138
$ 578,889,989 $ 7.895,842 $ (676) $ - S 586,785,155
24
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
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 depreciated. 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 CAD receivable balance was $877,420.
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 AVAD receivable balance was
$1,790,185.
The total receivable balance for the CAD and AVAD is $2,667,605, and is shown as a non - current
asset on the Statement of Net Assets.
6. LONG -TERM DEBT
2009 Wastewater Revenue Certificates of Participation
On November 12, 2009 and December 3, 2009 the District issued two Certificates of Participation
(COP).
The 2009 Wastewater Revenue Certificates of Participation, Series A and Series B were issued for
$19,635,000 and $34,490,000, respectively. The Series A COP are federally taxable `Build America
Bonds" which have a direct 35% interest rate subsidy from the Federal Government. Yields on this
series range from 3.45% to 3.78% net of the subsidy. The Series B COP are tax exempt bonds that
were used to refund the 1998 and 2002 bond issues and raise an additional $30 million in new
proceeds with yields ranging from .4% to 3.79 %.
The two bonds total $54,125,000, and are secured by a pledge of revenue. Principal payments begin
annually on September 1,.2010 with semi - annual payments due on September 1 and March 1 of each
year. Both bonds will be fully amortized as of September 1, 2029. The refunded portion of the
original bonds will be paid off based on the original amortization schedule.
Summary
The changes in the District's long -term obligations during the year consisted of the following:
Revenue bonds
Water Reclamation Loan
Balance
July 1 2009 Deductions
$ 24,405,277 $ 24,405,277
1,484A91 148,523
$ 5. TC8 $?4 j
Balance Due in
Additions June 30, 2010 One Year
$ 54,125,000 $ 54,125,000 $3,460,000
1,335,968 152,384
%_54J25 $ 55 , U 612.384
25
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
6. LONG -TERM DEBT (continued)
Debt Service Requirements
In 2009, the District issued Certificates of Participation (COP), which retired the 2002 and 1998
debt. The 2009 Revenue COP debt service requirements are as follows:
Fiscal Year
Ending June 30,
2011
2012
2013
2014
2015
2016-2020
2021 —2025
2026 - 2030
Total
Amount representing
interest
Principal outstanding
Short-term portion of
revenue bonds
Long -term portion of
revenue bonds
Series A
Series B
Ending June 30,
Series A
2011
Debt Service
Debt Service
Gross
35 % Tax
Net
Requirement
Requirement
Total
Subsidv
Total
$ 1,190
$ 4,693,417
$ 5,884,257
$ (416,794)
$ 5,467,463
1,190,840
4,559,850
5,750,690
(416,794)
5,333,896
1,190,840
4,586,625
5;777,465
(416,794)
5,360,671
1,190,840
4,571,683
5,762,523
(416,794)
5,345,729
1,190,840
4,565,467
5,756,307
(416,794)
5,339,513
5,954,200
14,057,942
20,012,142
(2,083,970)
17,928,172
13,916,731
4,381,011
18,297,742
(1,620,424)
16,677,318
12,327,862
-
12,327,862
(554,002)
11;773,860
38,152,993
41,415,995
79,568,988
(6,342,366)
73,226,622
(18,517,993)
(6,925,995)
(25,443,988)
(25,443,988)
19,635,000
34,490,000
54,125,000
(6,342,366)
47,782,634
(3,460,000)
(3,460,000)
416,794
(3,043,206)
$ 19,635,000
S 31,030,000
S 50,665,000
$(5,925,572)
$ 44,739,428
Water Reclamation Loan Contract
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.
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:
Fiscal Year
Debt Service
Ending June 30,
Requirements
2011
$ 187,119
2012
187,119
2013
187,119
2014
187,119
2015
187,119
2016-2018
561359
Total
1,496
Amount representing interest
(160,986)
1,335,968
Less: Current portion of Water Reclamation Loan Contract
(152,384)
Long term portion of Water Reclamation Loan Contract $ 1,183,584
26
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
6. LONG -TERM DEBT (continued)
Local Improvement District Bonds
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 collections to bondholders, and initiating
foreclosure procedures, if appropriate. The outstanding balance on these bonds was $55,000 at June
30, 2010.
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 losses 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.
Insurance Coverage
The District's insurance coverage is as follows:
Type of Insurance Coverage
All -Risk Property
Fire
Boiler & Machinery
(Shared Limits per Occurrence)
Crime
Public Entity Property Insurance
Program ( PEPIP)
PEPIP
Travelers
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)
Fiduciary Liability
Workers' Compensation
Excess Workers' Compensation
Insurance Company of the State of
Pennsylvania (AIG)
AIG
Admiral Insurance Company
AIG
AIG
American International Specialty
Lines Insurance Co.
American International Specialty
Lines Insurance Co
RLI Insurance Company
CSRMA
National Union Fire Insurance
Company
Limits
$528,621,210
$100
$ 1,000,000
S 15,000,000
$ 15,000,000
$ 1,000,000
S 15,000,000
$ 15,000,000
$ 5,000,000
$ 10,000,000
S 1,000,000
S 750,000
Statutory
Self Insured
Deductible Per
Occurrence
S 250,000
$ 50,000 to
S 250
$ 25,000
1,000,000
1,000,000
15,000
1,000,000
1,000,000
5,000
$ 50,000
$ 750,000
27
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
7. RISK MANAGEMENT (continued)
Liability for Uninsured Claims
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.
For the fiscal years ended June 30, 2010, 2009, and 2008, settlements have not exceeded insurance
coverage. Changes in the District's estimated liability for uninsured claims for fiscal years 2010,
2009, and 2008 are summarized as follows:
Beginning balance
Provisions for claims incurred in the current y ear
and changes in the liability for uninsured —
claims incurred in prior years
Claims and claim adjustment expenses paid
2010 2009 2008
$ 750,000 $ 629,820 $ 629,820
295,348 286,220 387,095
(45,348) (166,040) (387,095)
Ending balance
8. AGREEMENT WITH THE CITY OF CONCORD
$1,000,000 $ 750,000 $ 629,820
In 1974, the District and the City of Concord (the City) entered into a cost - 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 $8,664,668 and $3,628,949
respectively, for the year ended June 30, 2010. Additionally, there was a receivable of $120,736 for
reimbursement of A -line work, increasing the accounts receivable from the City to $12,414,353.
28
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 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), a cost - sharing multiple - employer public employee
defined benefit retirement plan (Plan), governed by the County Employee's Retirement Law of
1937, as amended. The latest available actuarial and financial information for the Plan is for the
year ended December 31, 2008. 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.
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 a portion of the basic retirement benefit and a portion of 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, 2010, 2009 and 2008 was as follows:
2010 2009 2008
Covered payroll for fiscal years ended June 30 $ 25,080,233
Employer required contributions to pension 8,804,127
Employee required contributions to pension 939,388
Total required contributions $ 9,743,515
Percentage of payroll 39%
The District pension plan covered 253 participants during the year.
$ 24,202,098 $ 22,503,704
9,084,809
913,027
$ 9,997,836
8,757,705
892,488
$ 9,650,193
41%
43%
29
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
10. 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 is 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, 4350 Von
Karman Ave., Suite 100, Newport Beach, CA 92660; by calling 1(800) 540 -6369; or by emailing
info @pars.org.
Funding Policy
Statement No. 45 sets rules for. computing the employer's expense for retiree benefits other than
pension, called OPEBs. The expense, called the annual OPEB Cost (AOC), is determined similarly
to pensions. The annual required contribution (ARC) of the employer, 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. When an
agency contributes more than the ARC, there is a net OPEB asset; when the contribution is less, a
net OPEB obligation results. There is a net OPEB obligation of $1,611,622 as of June 30, 2009 and
a net OPEB asset of $746,931 as of June A 2010.
Because of the volatility of the investment market, the District opted to make monthly installments
into the OPEB Trust to take advantage of dollar- cost - averaging. On November 6, 2008, the Board
approved payments into the Trust of $560,000 per month for 20 months; contributions commenced
in March 2009.
Annual OPEB Cost
For. 2010, the District's annual OPEB cost (expense) was equal to the ARC of $6,976,634. The
District contributed $9,334,917; $2,614,917 for retiree health care premiums (an implied subsidy),
and $6,720,000 to the PARS trust. The following table shows the components of the District's
annual OPEB costs for the years 2010 and 2009, the amount actually contributed to the plan, and
changes in the District's net OPEB obligation:
30
2010
2009
Net OPEB Obligation (Asset) — Beginning of Year
$ 1,611,622
$
Annual Required Contribution
6,976
6,224,478
Contributions Made:
Health care premiums paid
(1614,917)
(2,372,856)
Contributions to PARS trust
(6,720,000)
(2,240.000)
Net OPEB Obligation (Asset) — End of Year
$ (746,931)
$ 1,611,622
30
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
10. POST EMPLOYMENT HEALTH CARE BENEFITS (continued)
The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and
the OPEB obligation for 2010 and the preceding year are presented below:
Annual
Cost Method
(Underfunded)
Current
OPEB
Annual
Percentage
Year AOC
Cost
Employer
of AOC
Obligation
Fiscal Year (AOC)
Contribution
Contributed
(Asset)
Covered Payroll
a % of
June 30, 2010 $6,976,364
$ 9,334,917
134%
$(2,358,553)
June 30, 2009 $6,224,478
$ 4,612,856
74%
$ 1,611,622
Funding Status and Funding Progress
The funded status of the plan as of July 1, 2009 was as follows:
Overfunded
Net OPEB
Obligation
(Asset)
$ (746,931)
$ 1,611,622
June 30, 2009 $2,341,251 $ 68,769,305 $ (66,428,054) 3.40% $ 25,080,233 283%
June 30, 2007 $2,341,251 $ 68,447,956 $ (66,106,705) 3.42% $ 22,648,230 292%
Per PARS, actuarial assets as of June 30, 2010, including trust contributions and interest, total
$9,305,798 ($2,341,251 at June 30, 2009). 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 compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented as required
supplementary information, 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 -terns perspective of the calculations. The next actuarial valuation is
scheduled to be performed in October 2011.
31
Cost Method
(Underfunded)
Actuarial
Actuarial
Actuarial
UAAL as
Actuarial Valuation
Accrued
Accrued
Funding
Covered Payroll
a % of
Valuation of Assets
Liability
Liability
Ratio
(Active Plan
Covered
Date (A)
(B)
(A -B) UAAL
(A/B)
Members)
Payroll
June 30, 2009 $2,341,251 $ 68,769,305 $ (66,428,054) 3.40% $ 25,080,233 283%
June 30, 2007 $2,341,251 $ 68,447,956 $ (66,106,705) 3.42% $ 22,648,230 292%
Per PARS, actuarial assets as of June 30, 2010, including trust contributions and interest, total
$9,305,798 ($2,341,251 at June 30, 2009). 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 compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented as required
supplementary information, 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 -terns perspective of the calculations. The next actuarial valuation is
scheduled to be performed in October 2011.
31
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
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
Actuarial Assumptions:
Investment Rate of Return
Inflation
Financial Statements
July 1, 2009
Entry Age Normal Cost Method
Level Dollar
30 Years as of the Valuation Date
8%
Medical — 9% grading to 5% in 2017
Medicare Part B — 5%
Dental — 5%
The District has deposited monies to the PARS trust in excess of the actuarial determined annual
required contribution (ARC), therefore, under the provisions of GASB 45, the District has an OPEB
asset of $746,931 for reporting purposes.
In addition, the District Board has set aside an additional $2,989,972, which are not yet deposited to
the PARS trust at June 30, 2010. The net of the GASB 45 asset and GASB 45 Board commitment is
$2,243,041, which is shown in the noncurrent liability section of the Statement of Net Assets. The
actuarial determined liability, which is being paid over the next 30 years, is $68,769,305 at July 1,
2009.
11. LEASE COMMITMENTS
The District leases various facilities and equipment under operating leases. Following is a summary
of operating lease commitments as of June 30, 2010:
Fiscal Year
Ending
2011
2012
Office
Equipment
$ 271,849
Facilities
$ 52,050
26,400
Total
$ 323,899
26,400
Total $ 271,849 $ 78,450 $ 350,299
Total rental expense for the fiscal years ended June 30, 2010 and 2009 were $431,661 and $520,941,
respectively.
32
CENTRAL CONTRA COSTA SANITARY DISTRICT
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
12. COMMITMENTS AND CONTINGENCIES
Commitments and contingencies, undeterminable in amount, include normal recurring 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, 2010 of
$23,645,690.
13. SUBSEQUENT EVENTS
Management has evaluated subsequent events through September 10, 2010, the date on which the
financial statements were available to be issued.
33
SUPPLEMENTARY INFORMATION
CENTRAL CONTRA COSTA SANITARY DISTRICT
Combining Statement of Net Assets
for the Year Ended June 30, 2010
ASSETS
Current Assets
Cash and cash equivalents
Short term investments
Accounts receivable, net of allowance for
Sewer Construction Fund of
Interest receivable
Due from other sub -funds
Parts and supplies
Prepaid expenses
Total Current Assets
Noncurrent Assets
Restricted cash and equivalents
Restricted investments
Land, property, plant and equipment, net
Construction in progress
Contractual assessment district and Alhambra
Valley Assessment District receivable
Revenue bond issuance costs
net of amortization
LIABILITIES
Current Liabilities
Accounts payable and accrued expenses
Due to other sub -funds
Interest payable
Current portion of refunding water revenue bonds
Current portion of water reclamation
loan contract
Liability for uninsured claims
Accrued compensation absences
Refundable deposits
Total Current Liabilities
NONCURRENT LIABILITIES
Revenue bonds. net of current portion
OPEN liability- medical insurance premiums
Accrued compensated absences
Water reclamation loan contract
net of current portion
Total Liabilities
Running Sewer Self
Expense Construction Insurance
S 690.468 $ 44,896,557 S 3.693.101 S
- 11500340 -
9,716.437
4.527.887
3.755
-
87.544
4.831
101,458,659
86.695,245
1.551.163
1,733.312
-
-
1.094.797
(4.446.039) 35, 274.709
-
114.693.673
147.707.573
5,252.850
100,000 18.642,000 -
560,049,858 - -
26.735297 - -
2,667,605
Debt
Service Elimination Total
19.707 $ - $ 49.299,833
- - 11,500.340
- 14,248.079
92,375
69,166.776 (258,871,843) -
- - 1.733,312
1.094.797
69,186,483 (258,871,843) 77.968,736
93,592 - 18,835.592
5,318.908 5.318.908
- - 560.049,858
26,735,297
2.667,605
374.402 374.402
701,578.828 169.017.178 5. 252,850 74.973.385 (258.871.843) 691.950398
2.764,696 2.202.669 10.843
108.369296 13 1.432.040 404,620
2.070 - -
- 1.000.000
572,500 -
135,925 107,760
11 L844,487 133,742,469
2,243,041
5.152.184
18.665.887 (258,871,843)
846,530
3.460.000
152.384
1.415.463 23.124,801 (258.871.843)
- 50.665.000
4,978,208
848.600
3.460,000
152,384
1,000,000
572.500
243.685
11,255,377
50,665,000
2.243.041
5,152,184
1.183.584 - 1.183584
1 19,239,712 133,742,469 1.415463 74.973385 (258.871.843) 70.499,186
NET ASSETS
Invested in capital assets, act of related debt
586,785.155 -
- (55,460,968)
- 531324.187
Restricted fix debt service
- -
- 4,565,970
- 4.565.970
Unrestricted
(4.446.039) 35, 274.709
3.837.387 50.894,998
85,561,055
Total Net Assets
$ 582339, 116 S 35.274.709
S 3.837.387 $ - $
- $ 621,451.212
The accompanying notes are an integral part of the financial statements
34
CENTRAL CONTRA COSTA SANITARY DISTRICT
Combining Statement of Revenues, Expenses and Changes in Net Assets
for the Year Ended June 30, 2010
The accompanying notes are an integral part of the financial statements
35
Running
Sewer
Self
Debt
Expense
Construction
Insurance
Service
Elimination Total
Operating Revenues
Sewer Service Charges (SSC)
$ 48,692.520
$ -
S -
S -
$ - $ 48.692.520
Service charges - City of Concord
8,664.668
-
-
-
- 8,664.668
Other service charges
824,022
-
-
-
- 824 -022
Miscellaneous charges
650,876
-
-
-
- 650.876
'total operating revenues
58.832,086
-
-
-
- 58.832,086
Operating Expenses
Sewage collection and pumping stations
11.722925
-
-
-
- 11,722.925
Sewage treatment
21.467.827
-
-
-
- 21.467 -827
Engineering
6,898,357
-
-
-
- 6,898,357
Administrative and eeneral
16, 468,495
-
746,612
-
(1.435.471) 15.779.636
Depreciation
20,969,429
-
-
-
- 20,969,429
Total operating expenses
77.527,033
-
746,612
-
(1.435,471) 76.838,174
Operating Loss
(18.694.947)
-
(746,612)
-
1.435,471 (18,006,088)
.Non - Operating Revenues (Expenses):
'Faxes
-
8,200.970
-
4,059,153
- 12,260,123
of Concord cash contributions to capital
) City
costs
-
3.628.949
-
-
- _ 3,628,949
Customer cash contributions to capital cost
(SSC)
-
3.164,091
-
-
- 1164,091
Permit and inspection fees
712357
56,991
-
-
- 776,348
Interest earnings
140.111
367,262
29,815
32,836
- 570.024
Interest expense
-
-
-
(1,553,467)
- (1,553,467)
Bad debt expense
-
(985.916)
-
-
- (985,916)
Other income (expense)
565.119
433.092
1,435.471
-
(1,435.471) 998.211
Total non-operating revenues (expenses)
1,424,587
14.865.439
1.465.286
2,538,522
(1,435,471) 18.858363
Income (loss) before contributions and
transfers
(I T270.360)
14,865A39
718,674
2.538522
- 852,275
Contributed sewer lines
1,640.259
-
-
-
- 1,840,259
Capital contributions - connection fees
-
7.078,635
-
-
- 7.078.635
Transfers
28,748.694
(26.210,172)
(2,538522)
- -
Change in Net Assets
13,318,593
(4,266.098)
718,674
-
- 9.771.169
Total Net Assets - Beginning
569,020523
39,540.807
3,118,713
-
- 611.680.043
Total Net Assets - Ending
$ 582339.116
$ 35.274.709
37
S 3.8.387
$ -
$ - $ 621.451.212
The accompanying notes are an integral part of the financial statements
35
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CENTRAL CONTRA COSTA SANITARY DISTRICT.
Running Expense
Schedule of Supplemental Net Assets Analysis
June 30, 2010
Prior Year Balance
2009 -2010 Revenue
2009 - 2010 Expense
Add Back Depreciation Expense
Net Assets Attributed to General Operations
All Other Net Assets
Running Expense Net Assets
The accompanying notes are an integral part of the financial statements
$ 4,156,516
S 60,256,673
(77,527,033)
20,969,429 3,699,069
7,855,585
574,483,531
$ 582,339,116
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