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CENTRAL CONTRA COSTA SANITARY DISTRICT
BASIC FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2014 AND 2013
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CENTRAL CONTRA COSTA SANITARY DISTRICT
BASIC FINANCIAL STATEMENTS
For the Years Ended June 30, 2014 and 2013
Table of Contents
INTRODUCTORY SECTION
Tableof Contents ............................................................................................ ............................... i
FINANCIAL SECTION
INDEPENDENT AUDITOR'S REPORT ............................................................. ............................... 1
MANAGEMENT'S DISCUSSION AND ANALYSIS ....................................... ............................... 3
BASIC FINANCIAL STATEMENTS
Statements of Net Position ............................................................................... ............................... 10
Statements of Revenues, Expenses and Changes in Net Position .................... .............................13
Statementsof Cash Flows ................................................................................... .............................14
NOTES TO BASIC FINANCIAL STATEMENTS ............................................ .............................17
SUPPLEMENTARY INFORMATION
Combining Schedule of Net Position
EnterpriseSub - Funds ................................................................................ .............................43
Combining Schedule of Revenues,
Expenses and Changes in Net Position — Enterprise Sub -Funds ......... ............................... 44
Schedule of Running Expenses, Comparison of Budget and Actual
Expenses by Department ......................................................................... ............................... 45
Running Expense — Schedule of
Supplemental Net Position Analysis ....................................................... ............................... 46
I
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Central Contra Costa Sanitary District
Martinez, California
Report on Financial Statements
We have audited the accompanying financial statements of the Central Contra Costa Sanitary District
(District) as of and for the years ended June 30, 2014 and 2013, and the related notes to the financial
statements, which collectively comprise the District's basic financial statements as listed in the Table of
Contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of the financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the District's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audits evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
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, 2014 and 2013, 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.
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Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that 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 about the methods of
preparing the information and comparing the information for consistency with management's responses to
our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively
comprise the District's financial statements as a whole. The Supplementary Information listed in the Table
of Contents is presented for purposes of additional analysis and is not a required part of the financial
statements.
The Supplementary Information is the responsibility of management and was derived from and relates
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 Supplementary Information is fairly stated in
all material respects in relation to the financial statements as a whole.
Pleasant Hill, California
September 18, 2014
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�l Central Contra Costa Sanitary District
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the Central Contra Costa Sanitary District's annual financial report presents an analysis
of the District's financial performance during the fiscal year ended June 30, 2014. This information is
presented in conjunction with the audited financial statements, which follow this report.
FINANCIAL HIGHLIGHTS
The District's 2013 -14 financial highlights are listed below. These results are discussed in more detail
later in the report.
• The District's total ending net position increased by $8.6 million or 1.36 % in 2013 -14. This is
mainly due to capital project asset additions.
• Total revenues in 2013 -14 increased by $5.3 million or 6.31 %. The total Sewer Service Charge
(SSC) rate was increased and a larger portion of the internal SSC allocation was shifted from
Operating Revenues to Capital Contributions.
• Total 2013 -14 expenses increased by $11.0 million or 12.11 %. This is mainly due to higher cost
of total labor, depreciation and technical services.
• Capital Contributions increased in 2013 -14 by $5.1 million or 34.20 %. The increase is mainly
due to the SSC rate increase and higher connection fees.
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. This report also contains other
supplementary information in addition to the basic financial statements.
REQUIRED FINANCIAL STATEMENTS
The District's financial statements report information utilizing methods similar to those used by private
sector companies. These statements offer short and long -term financial information about the District's
activities.
Statement of Net Position — 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 Position — reports the District's
operating and non - operating revenues by major source along with operating and non - operating
expenses and capital contributions.
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• Statement of Cash Flows — reports the District's cash flows from operating activities, non-
capital financing activities, capital and related financing activities, investing activities, and non-
cash activities.
STATEMENT OF NET POSITION
The following table shows the condensed statement of net position of the Central Contra Costa Sanitary
District for the past three fiscal years:
Condensed Statement of % Increase
Net Position Fiscal Year Ended June 30 (Decrease)
FY 13 -14 FY 13 -14
vs. vs.
2013 -14 2012 -13 2011 -12 FY 12 -13 11 -12
Current Assets
$ 79,291,642
$ 78,006,233
$ 78,506,812
1.65%
1.00%
Capital Assets
608,583,268
603,985,469
597,689,744
0.76%
1.82%
Other Non - current Assets
8,621,042
9,454,886
9,332,364
-8.82%
- 7.62%
Total Assets
696,495,952
691,446,588
685,528,920
0.73%
1.60%
Current Liabilities
12,145,509
11,704,101
11,128,540
3.77%
9.14%
Non - Current Liabilities
40,004,777
44,027,490
47,797,407
-9.14%
- 16.30%
Total Liabilities
52,150,286
55,731,591
58,925,947
-6.43%
- 11.50%
Net Investment in
Capital Assets
568,006,023
559,523,642
549,462,506
1.52%
3.37%
Restricted - Debt Service
4,809,248
4,730,837
4,663,601
1.66%
3.12%
Unrestricted
71,530,395
71,460,518
72,476,866
0.10%
-1.31%
Total Net Position
$ 644,345,666
$ 635,714,997
$ 626,602,973
1.36%
2.83%
The total net position of the District increased from $626.6 million in 2011 -12 to $635.7 million in
2012 -13 and to $644.3 million in 2013 -14. The District's total assets have increased by $5.0 million or
0.73% compared to 2012 -13, and $10.9 million or 1.6% compared to 2011 -12. The total liabilities
decreased $3.6 million or -6.43% compared to 2012 -13, and decreased $6.8 million or - 11.50%
compared to 2011 -12. The increase in net position over the three -year period totals $17.7 million or
2.83% and is the result of the combination of net income and capital contributions.
By far the largest portion of the District's net position (88.15% 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 are 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 $4.8 million restricted
for debt service. The remaining balance of $71.5 million in unrestricted net position may be used to
meet the District's ongoing obligations to its ratepayers and creditors. The unrestricted net position may
also be used for payment of long -term unfunded liabilities.
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REVIEW OF REVENUES EXPENSES AND CHANGES IN NET POSITION
The table below shows the condensed statement of revenues, expenses, and changes in net position for
the District for the past three fiscal years:
Condensed Statement of
Revenues, Expenses, and % Increase
Changes in Net Position Fiscal Year Ended June 30 (Decrease)
FY 13 -14 FY 13 -14
vs. vs.
2013 -14 2012 -13 2011 -12 FY 12 -13 11 -12
Sewer Service Charges (SSC)
$ 72,422,285
$ 67,254,405
$ 59,771,237
7.68%
21.17%
Other Service Charges and
Miscellaneous
1,579,723
1,828,281
1,845,402
- 13.60%
- 14.40%
Total Operating Revenue
74,002,008
69,082,686
61,616,639
7.12%
20.10%
Property Tax
13,093,841
13,010,477
12,047,169
0.64%
8.69%
Permit & Inspection Fees
1,575,251
1,169,809
903,810
34.66%
74.29%
Interest and All Other
11291,752
1,356,574
1,226,598
- 4.78%
5.31%
Total Non - Operating
Revenues
15,960,844
15,536,860
14,177,577
2.73%
12.58%
Total Revenues
89,962,852
84,619,546
75,794,216
6.31%
18.69%
Total Labor and Benefits
58,954,453
49,811,218
45,562,430
18.36%
29.39%
Chemicals & Utilities
6,002,514
5,420,789
6,090,408
10.73%
- 1.44%
Repairs and Maintenance
3,126,617
3,151,127
3,068,604
- 0.78%
1.89%
Professional, Legal and
Outside Services
3,995,861
2,836,638
4,099,876
40.87%
- 2.54%
Materials & Supplies
2,060,796
1,980,314
2,031,401
4.06%
1.45%
Hauling and Disposal
914,739
1,088,294
1,009,137
- 15.95%
- 9.35%
Self- Insurance Expense
858,738
2,380,466
810,849
- 63.93%
5.91%
All Other
1,702,131
472,630
1;612,482
260.14%
5.56%
Depreciation Expense
21,892,545
21,596,266
21,190,059
1.37%
3.32%
Total Operating Expenses
99,508,394
88,737,742
85,475,246
12.14%
16.42%
Non - Operating Expense -
Interest Expense
1,996,689
1,802,084
1,919,375
10.80%
4.03%
Total Expenses
101 505,083
90,539 826
87,394,621
12.11%
16.15%
Income Before Capital
Contributions
11,542,231
5,920,280
11600,405
- 94.96%
0.50%
Customer Contributions (SSC)
10,486,067
8,001,147
8,888,663
31.06%
17.97%
Contributed Sewer Lines
1,462,316
939,628
792,011
55.63%
84.63%
Capital Contributions -
Connection Fees
8,224,517
6,091,529
5,724,833
35.02%
43.66%
Total Capital Contributions
20,172,900
15,032,304
15,405,507
34.20%
30.95%
Change in Net Position
8,630,669
9,112,024
3,805,102
- 5.28%
126.82%
Beginning Net Position
635,714,997
626,602,973
622 797,871
1.45%
2.07%
Ending Net Position
$ 644,345,666
$ 635,714,997
$ 626,602 973
1.36%
2.83%
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Revenue
Total operating revenues increased from $61.6 million in 2011 -12 to $69.1 million in 2012 -13 and to
$74.0 million in 2013 -14. Operating revenues increased by $4.9 million or 7.12% compared to 2012 -13,
and increased by $12.4 million or 20.10% comparing 2013 -14 to 2011 -12.
Total non - operating revenue increased from $14.2 million in 2011 -12 to $15.5 million in 2012 -13 and to
$16.0 million in 2013 -14. An increase compared to 2012 -13 by $0.4 million or 2.73 %, and increased by
$1.8 million or 12.58% comparing 2013 -14 to 2011 -12.
Total revenues increased from $75.8 million in 2011 -12 to $84.6 million in 2012 -13 to $90.0 million in
2013 -14. The change in total revenue resulted in an increase of $5.3 million or 6.31% comparing 2013-
14 to 2012 -13, and increased by $14.2 million or 18.69% comparing 2013 -14 to 2011 -12. There was a
9.16% SSC rate increase in 2013 -14, 8.80% SSC rate increase in 2012 -13 and 9.65% increase in SSC
for 2011 -12. Property tax revenue increased by $0.1 million or 0.64% from 2013 -14 to 2012 -13, and
$1.0 million or 8.69% comparing 2013 -14 to 2011 -2012 due to the recovery of housing values and
Proposition IA monies repaid in 2013 -14.
Expenses
Total expenses increased from $87.4 million in 2011 -12 to $90.5 million in 2012 -13 and to $101.5
million in 2013 -14. In 2013 -14, total expenses increased by $11.0 million or 12.11% compared to 2012-
13. Comparing 2013 -14 to 2011 -12, total expenses were $14.1 million or 16.15% higher. Increases
were mainly due to higher labor and benefit costs along with technical services for temporary staff.
Labor costs increased due to employee benefit costs (primarily pension and healthcare costs), cost -of-
living adjustments, merit increases, and filling of vacant positions. Depreciation expense increased due
to new capital additions. Non - operating expense is mainly driven by debt service interest expense.
Total income before capital contributions went from -$11.6 million in 2011 -12, to -$5.9 million in 2012-
13, and -$11.5 million in 2013 -14.
Total capital contributions in 2013 -14 were $20.2 million compared to $15.0 million in 2012 -13 and
$15.4 million in 2011 -12. This was mainly due to higher customer contributions SSC in 2013 -14 due to
the 9.16 % rate increase, a shift of the internal SSC revenue allocation, and volatility in connection fees
due to the fluctuation of the housing and construction markets. The total change in net position
decreased by -$0.5 million or - 5.28% when comparing 2013 -14 to 2012 -13 and increased $4.8 million or
126.82% when comparing 2013 -14 to 2011 -12.
CAPITAL ASSETS
Capital assets for fiscal years 2013 -14, 2012 -13 and 2011 -12 totaled $608.6 million, $604.0 million, and
$597.7 million, respectively. 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, 2014, the District's investment in capital assets totaled $608.6 million, an increase of $4.6
million or 0.76% over the capital asset balance of $604.0 million at June 30, 2013. Capital assets
increased by $10.9 million or 1.82% comparing 2013 -14 to 2011 -12. A comparison of the District's
capital assets over the past three fiscal years is presented below:
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% Increase
Capital Assets Fiscal Year Ended June 30 (Decrease)
FY 13 -14 FY 13 -14
vs. vs.
2013 -14 2012 -13 2011 -12 FY 12 -13 11 -12
Land
$ 17,320,570
$ 17,262,249
$ 17,114,720
0.34%
1.20%
Sewage Collection System
318,206,017
311,633,989
303,693,519
2.11%
4.78%
Contributed Sewer Lines
152,297,246
150,834,930
149,895,302
0.97%
1.60%
Outfall Sewers
11,339,298
11,338,935
8,518,443
0.00%
33.11%
Sewage Treatment Plant
303,606,835
299,830,466
292,432,883
1.26%
3.82%
Recycled Water Infrastructure
17,127,656
13,515,026
13,335,295
26.73%
28.44%
Pumping Stations
54,956,574
54,412,730
54,412,730
1.00%
1.00%
Buildings
42,196,085
36,120,720
34,477,124
16.82%
22.39%
Intangible Assets
4,812,127
4,596,467
2,463,834
4.69%
95.31%
Furniture & Equipment
10,025,826
15,651,212
14,031,564
- 35.94%
- 28.55%
Motor Vehicles
6,721,031
6,558,065
6,010,773
2.48%
11.82%
Construction In Progress
27,508,158
24,533,254
22,469,694
12.13%
22.42%
Subtotal
966,117,423
946,288,043
918,855 881
2.10%
5.14%
Less Accumulated
Depreciation
357,534,155
342,302,574
321,166,137
4.45%
11.32%
Total Capital Assets (net of
depreciation)
$ 608,t83,268
$ 603,985,469
$ 597,689,744
0.76%
1.82%
The major reasons for the increase in capital assets, net of depreciation, of $4.6 million from 2012 -13 to
2013 -14 and $10.9 million from 2011 -12 to 2013 -14, are as follows:
• Sewer pipe ongoing renovations, upgrades, expansion, pumping station improvements, and
contributed sewer lines increased by $8.6 million comparing 2013 -14 to 2012 -13 and $17.5
million comparing 2013 -14 to 2011 -12.
• Treatment plant infrastructure renovations, upgrades, equipment, and improvements increased by
$3.8 million comparing 2013 -14 to 2012 -13 and $11.2 million comparing 2013 -14 to 2011 -12.
• Buildings increased by $6.1 million comparing 2013 -14 to 2012 -13 and $7.7 million comparing
2013 -14 to 2011 -12.
• All other asset categories, including construction in progress, increased by $1.4 million
comparing 2013 -14 to 2012 -13 and increased by $10.9 million comparing 2013 -14 to 2011 -12.
• Capital asset increases are offset by an increased subtraction of accumulated depreciation of
$15.2 million comparing 2013 -14 to 2012 -13 and $36.4 million comparing 2013 -14 to 2011 -12
due to increasing capital asset investment and its associated depreciation expense.
See Note 5 in the audited financial statements.
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DEBT ADMINISTRATION
The total debt obligations for fiscal years 2013 -14, 2012 -13 and 2011 -12 totaled $40.5 million, $44.5
million, and $48.2 million, respectively. As of June 30, 2014, the District's outstanding debt totaled
$40.5 million, which is a decrease of $3.9 million or -8.74% over the debt balance of $44.5 million at
June 30, 2013. Debt decreased by $7.6 million or - 15.86% comparing 2013 -14 to 2011 -12. The 2009
certificates of participation and the 1999 State Water Resources Control Board Water Reclamation Loan
principal and related interest for both decrease annually due to the scheduled principal payments. The
District did not issue any new debt this fiscal year. The source of funds for repayment of debt issued for
expansion purposes is the state property taxes received. A comparison of the District's debt service for
the past three fiscal years is presented below:
Debt Service Fiscal Year Ended June 30 % Increase (Decrease)
FY 13 -14 FY 13 -14
vs. vs.
2013 -14 2012 -13 2011 -12 FY 12 -13 11 -12
Revenue Bonds
$ 39,875,000
$ 43,595,000
$ 47,200,000
- 8.53%
- 15.52%
Water Reclamation Loan
702,245
1 866,827
1,027,238
- 18.99%
- 31.64%
Total Debt Service
$ 40,577,245
1 $ 44,461,827
$ 48,227,238
-8.74%
- 15.86%
See Note 6 in the audited financial statements.
ECONOMIC AND OTHER FACTORS
The Federal and State of California economies continue to recover from the 2008 recession. The
Federal economic challenges have resulted in budget sequestration. The State Budget Act reflects
California achieving a solid balanced budget, however, there remain a number of major risks that
threaten the state's fiscal stability, including the overhang of fiscal debts, growing long -term liabilities,
and lingering uncertainties regarding the cost of the federal Affordable Care Act. The recent agreement
between the Governor and legislative leaders to create a Rainy Day Fund will help the state minimize
future boom and bust cycles. Changes in the state budget have a significant impact on the District.
Federal and State economic challenges will continue into the future and will have a trickle -down effect
on local government.
Items impacting the District are:
• Current Employee Memorandum of Understanding contracts end as of December 17, 2017.
• Current and future legislation impacting public employee pensions is in play, also calling for
higher employee contributions and lower pensions by eliminating spiking.
• Increased cost of employee benefits, mainly due to pension costs and healthcare.
• Housing market continues to show improvement which impacts the District's property tax
revenues, and development and user fees.
• Regulatory requirements becoming more stringent, causing the District to spend more on
compliance, both for operations and maintenance costs and capital projects. This may require
debt financing for large capital projects.
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Continued low interest rates negatively impact interest earnings for District temporary
investments as well as OPEB trust and pension plan assets.
In addition to making efforts to reduce spending and improve process efficiencies, the District has the
ability to raise the SSC to meet its long -term commitments. The District has a Standard and Poor's
AAA rating, and can obtain bond financing if necessary.
FINANCIAL CONTACT
The financial report is designed to provide the District's customers and creditors with a general
overview of District 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: Finance
Manager Thea Vassallo, Central Contra Costa Sanitary District, 5019 Imhoff Place, Martinez, CA
94553.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF NET POSITION
JUNE 30, 2014 AND 2013
ASSETS
2014
2013
CURRENT ASSETS
Cash and cash equivalents (Note 2)
$47,929,530
$46,714,788
Short term investments (Note 2)
9,993,211
10,498,624
Accounts receivable, net (Note 3)
16,944,993
16,517,549
Interest receivable
31,081
65,321
Parts and supplies
2,088,885
2,005,741
Prepaid expenses
2,303,942
2,204,210
Total current assets
79,291,642
78,006,233
NON - CURRENT ASSETS
Restricted cash and equivalents (Notes I.E. and 2)
100,000
100,000
Restricted investments (Note 2)
5,474,874
5,412,500
Assessment Districts receivable (Note 4)
1,838,490
2,089,461
Net OPEB asset (Note 10)
1,207,678
1,537,638
Revenue bonds issuance costs, net of amortization (Note 1.L.)
-
315,287
Capital assets:
Nondepreciable (Note 5)
49,640,855
41,795,503
Depreciable, net of accumulated depreciation (Note 5)
558,942,413
562,189,966
Total capital assets, net
608,583,268
603,985,469
Total non - current assets
617,204,310
613,440,355
TOTAL ASSETS
$696,495,952
$691,446,588
(Continued)
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF NET POSITION
JUNE 30, 2014 AND 2013
LIABILITIES
2014
2013
CURRENT LIABILITIES
Accounts payable and accrued expenses
$5,842,430
$5,376,935
Interest payable
673,380
718,147
Refunding Water Revenue Bonds - current portion (Note 6)
3,865,000
3,720,000
Water Reclamation Loan Contract - current portion (Note 6)
168,861
164,582
Accrued compensated absences - current portion (Note 1.1.)
385,000
383,000
Provision for uninsured claims (Note 7)
1,000,000
1,000,000
Refundable deposits
210,838
341,437
Total current liabilities
12,145,509
11,704,101
NON - CURRENT LIABILITIES
Refunding Water Revenue Bonds, noncurrent portion (Note 6) 36,010,000 39,875,000
Water Reclamation Loan Contract, noncurrent portion (Note 6) 533,384 702,245
Accrued compensated absences, noncurrent portion (Note 1.I.) 3,461,393 3,450,245
Total non - current liabilities 40,004,777 44,027,490
TOTAL LIABILITIES 52,150,286 55,731,591
NET POSITION (Note 11)
Net investment in capital assets 568,006,023 559,523,642
Restricted for debt service 4,809,248 4,730,837
Unrestricted 71,530,395 71,460,518
TOTAL NET POSITION $644,345,666 $635,714,997
See accompanying notes to financial statements
11
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEARS ENDED JUNE 30, 2014 AND 2013
2014 2013
OPERATING REVENUES
Sewer service charges (SSC) $60,796,421 $56,770,984
Service charges - City of Concord (Note 8) 11,625,864 10,483,421
Other services charges 1,035,134 1,076,401
Miscellaneous charges 544,589 751,880
Total operating revenues 74,002,008 69,082,686
OPERATING EXPENSES
Sewage collection and pumping stations
16,109,927
14,327,933
Sewage treatment
27,808,819
23,035,943
Engineering
12,308,802
8,680,934
Administrative and general
21,388,301
21,096,666
Depreciation
21,892,545
21,596,266
Total operating expenses
99,508,394
88,737,742
OPERATING (LOSS)
(25,506,386)
(19,655,056)
NONOPERATING REVENUES (EXPENSES)
Taxes 13,093,841 13,010,477
Permit and inspection fees 1,575,251 1,169,809
Interest earnings 359,288 405,474
Interest expense (1,996,689) (1,802,084)
Other income (expense) 932,464 951,100
Total nonoperating revenues (expenses), net 13,964,155 13,734,776
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS (11,542,231) (5,920,280)
CAPITAL CONTRIBUTIONS
City of Concord contributions to capital costs (Note 8) 3,820,858 3,616,771
Customer contributions to capital cost (SSC) 6,665,209 4,384,376
Contributed sewer lines (Note 5) 1,462,316 939,628
Capital contributions - connection fees 8,224,517 6,091,529
Total capital contributions 20,172,900 15,032,304
CHANGE IN NET POSITION 8,630,669 9,112,024
NET POSITION, BEGINNING OF YEAR 635,714,997 626,602,973
NET POSITION, END OF YEAR $644,345,666 $635,714,997
See accompanying notes to financial statements
13
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2014 AND 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers
Payments to employees and related benefits
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Receipt of taxes
Inspection/permit fees and other non - operating income
Cash Flows from Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Capital contributions
Connection fees
Acquisition and construction of capital assets
Interest paid on long -term debt
Principal payments on long -term debt
Cash Flows (Used for) Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption and acquisition of investments, net
Interest received
Cash Flows from Investing Activities
NET INCREASE (DECREASE) IN CASH
Cash, beginning of year
Cash, end of year
2014 2013
$73,825,535 $67,716,388
(43,766,726) (36,581,237)
(33,353,995) (29,929,031)
(3,295,186) 1,206,120
13,093, 841 13,010,477
2,507,715 2,120,909
15,601,556 15,131,3 86
11,948,383
8,940,775
8,224,517
6,091,529
(26,490,344)
(27,891,991)
(1,726,169)
(1,838,134)
(3,884,582)
(3,448,341)
See accompanying notes to financial statements
14
(11,928,195) (18,146,162)
443,039 5,606,506
393,528 395,301
836,567 6,001,807
1,214,742 4,193,151
46,814,788 42,621,637
$48,029,530 $46,814,788
(Continued)
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2014 AND 2013
Reconciliation of operating (loss) to net cash provided by
operating activities:
Operating (loss) ($25,506,386) ($19,655,056)
Adjustments to reconcile operating loss to cash
flows from operating activities:
Depreciation 21,892,545 21,596,266
Change in assets and liabilities:
Receivables, net
(176,473)
(1,366,298)
Parts and supplies
(83,144)
1,704
Prepaid expenses
(99,732)
296,495
Accounts payable and accrued expenses
465,495
472,291
Accrued payroll and related expenses
13,148
122,665
Refundable deposits
(130,599)
12,149
Net OPEB asset
329,960
(274,096)
Net cash provided (used) by operating activities
($3,295,186)
$1,206,120
SCHEDULE OF NON CASH ACTIVITY
Change in fair value of investments
$393,528
$395,301
Capital asset donations
1,153,968
713,525
Total non cash activity
$1,547,496
$1,108,826
CASH AND CASH EQUIVALENTS, AS PRESENTED ON
STATEMENT OF NET POSITION:
Unrestricted cash and cash equivalents
$47,929,530
$46,714,788
Restricted cash and cash equivalents
100,000
100,000
Total cash and cash equivalents at end of year
$48,029,530
$46,814,788
See accompanying notes to financial statements
15
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 1— DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A. Reporting Entity
The Central Contra Costa Sanitary District (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 the financial statements of 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 and
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 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 (Authority) was organized solely for the purpose of providing financial assistance to the
District. The Authority does this 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 Authority
has no members and the Board of Directors of the Authority 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 Authority.
B. Basis of Accounting
The District's financial statements are prepared on the accrual basis of accounting. The District
applies all applicable Governmental Accounting Standards Board (GASB) pronouncements for
certain accounting and financial reporting guidance.
17
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 1— DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
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.
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 position, 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 term bonds and loans.
That portion of the District's net position which is allocable to each of these sub -funds has been
shown separately in the accompanying supplementary information to the 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.
18
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 1— DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
C. Investments
Investments held at June 30, 2014 and 2013 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.
D. Prepaid Expenses
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in the financial statements.
E. 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 sewage 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.
F. Parts and Supplies
Parts and supplies are valued at average cost and are used primarily for internal purposes.
G. 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.
Depreciation of exhaustible capital assets has been provided using the straight -line method over
the asset's useful life 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 5-15
19
REVEIW DRAFT 9124/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 1— DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
H. 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'h 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.
L 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 changes in compensated absences were as follows for fiscal years ended June 30:
The current portion of the liability to be used within the next year is estimated by management to
be approximately 10% of the ending balance.
20
REVEIW DRAFT 9/24/2014 10:42AM
2014
2013
Beginning Balance
$3,833,245
$3,710,580
Additions
391,927
783,906
Payments
(378,779)
(661,241)
Ending Balance
$3,846,393
$3,833,245
Current Portion
$385,000
$383,000
The current portion of the liability to be used within the next year is estimated by management to
be approximately 10% of the ending balance.
20
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For, the Years Ended 30, 2014 AND 2013
NOTE 1– DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
J. 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, 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.
K. 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.
L. Implementation of Governmental Accounting Standards Board (GASB) Pronouncements
GASB Statement No. 65 – In March 2012, the GASB issued Statement No. 65, Items Previously
Reported as Assets and Liabilities. This Statement establishes accounting and financial reporting
standards that reclassify, as deferred outflows of resources or deferred inflows of resources,
certain items that were previously reported as assets and liabilities and recognizes, as outflows of
resources or inflows of resources, certain items that were previously reported as assets and
liabilities. The provisions of this Statement are effective for financial statements for periods
beginning after December 15, 2012. This Statement required the District to remove its remaining
unamortized revenue bond issuance costs of $315,287, previously reported as a noncurrent asset
on the Statement of Net Position as of July 1, 2013. As the balance does not materially impact
the District's net position, the balance was expensed in the current fiscal year ended June 30,
2014.
GASB Statement No. 66 – In March 2012, the GASB issued Statement No. 66, Technical
Corrections-2012—an amendment of GASB Statements No. 10 and No. 62. The objective of
this Statement is to improve accounting and financial reporting for a governmental financial
reporting entity by resolving conflicting guidance that resulted from the issuance of two
pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type
Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance
Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements. The provisions of this
Statement are effective for financial statements for periods beginning after December 15, 2012,
This Statement did not have a material impact on the financial statements.
GASB Statement No. 67 – In June 2012, the GASB issued Statement No. 67, Financial
Reporting for Pension Plans —an amendment of GASB Statement No. 25. The requirements of
this Statement will improve financial reporting primarily through enhanced note disclosures and
schedules of required supplementary information that will be presented by the pension plans that
are within its scope. The provisions of this Statement are effective for financial statements for
periods beginning after June 15, 2013. This Statement did not have a material impact on the
financial statements.
21
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 1– DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
GASB Statement No. 68 – In June 2012, the GASB issued Statement No. 68, Accounting and
Financial Reporting for Pensions —an amendment of GASB Statement No. 27. The requirements
of this Statement will improve the decision - usefulness of information in employer and
governmental nonemployer contributing entity financial reports and will enhance its value for
assessing accountability and interperiod equity by requiring recognition of the entire net pension
liability and a more comprehensive measure of pension expense. The provisions of this
Statement are effective for financial statements for periods beginning after June 15, 2014,
therefore, the District will implement this Statement in fiscal year ending June 30, 2015. This
Statement will have a material effect on the financial statements.
GASB Statement No. 69 – In 2014, the GASB issued Statement No. 69,, Government
Combinations and Disposals of Government Operation. This Statement requires disclosures to be
made about government combinations and disposals of government operations to enable financial
statement users to evaluate the nature and financial effects of those transactions. The provisions
of this Statement are effective for financial statements for periods beginning after December 15,
2013, therefore, the District will implement this Statement in fiscal year ending June 30, 2016.
This Statement will not have a material impact on the financial statements.
GASB Statement No. 70 – In 2014, the GASB has issued Statement No. 70, Accounting and
Financial Reporting for Nonexchange Financial Guarantees. This Statement establishes
accounting and financial reporting standards for situations where a state or local government, as a
guarantor, agrees to indemnify a third -party obligation holder under specified conditions (i.e.,
nonexchange financial guarantees). The issuer of the guaranteed obligation can be a legally
separate entity or individual, including a blended or discretely presented component unit.
Guidance is provided for situations where a state or local government extends or receives a
nonexchange financial guarantee. The requirements of this Statement are effective for financial
statements for reporting periods beginning after June 15, 2013. This Statement did not have a
material effect on the financial statements.
GASB Statement No. 71 – In 2014, the GASB issued Statement No. 71, Pension Transition for
Contributions Made Subsequent to the Measurement Date —an amendment of GASB Statement
No. 68. The requirements of this Statement will eliminate the source of a potential significant
understatement of restated beginning net position and expense in the first year of implementation
of Statement 68 in the accrual -basis financial statements of employers and non - employer
contributing entities. This benefit will be achieved without the imposition of significant additional
costs. The provisions of this Statement are effective for financial statements for periods beginning
after June 15, 2014 therefore, the District will implement this Statement in fiscal year ending June
30, 2015.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 2 — CASH AND INVESTMENTS
A. Summary of Cash and Investments
Cash and investments as of June 30, are classified in the accompanying financial statements as
follows:
2014 2013
Cash and cash equivalents $47,929,530 $46,714,788
Short term investments 9,993,211 10,498,624
Restricted cash and cash equivalents 100,000 100,000
Restricted investments 5,474,874 5,412,500
Total Cash and Investments $63,497,615 $62,725,912
B. 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. Governments, or its agencies, commercial paper,
certificates of deposit placed with commercial banks and /or savings with 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.
C. General Authorizations
Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are
indicated in the schedules below:
District District
California State Limits Policy Policy
Maximum Maximum
Remaining Percentage
Authorized Investment Type Maturity of Portfolio
U.S. Treasury Obligations.
Banker's Acceptances
Commercial Paper (1)
Collateralized Certificates of Deposit (2)
County Pooled Investment Funds
Local Agency Investment Fund (LAIF)
Maximum
Maximum
Minimum
Investment
Percentage
Legal
In One Issuer
of Portfolio
Quality
5 years
None
None
100%
N/A
180
40%
40%
10%
N/A
270
25%
10%
10%
Aaa
5 years
30%
None
10%
Aaa
N/A
None
None
100%
N/A
N/A
None
None
100%
N/A
(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, excluding Treasury Notes an,
23
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 2 — CASH AND INVESTMENTS (Continued)
D. 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 term investments and by
timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to
maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
District policy is that investment maturities do not exceed one year, with the exception of Treasury
Notes or Local Agency Investment Fund; however, investments can be held longer with Board
approval.
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
investments by maturity, as of June 30:
2014
2013
12 Months
or less Maturity
$5,412,500 4/30/14
7,000,136
3,498,488
43,011,748
58,922,872
3,803,040
$62,725,912
7/26/13
7/26/13
Not applicable
24
REVEIW DRAFT 9/24/2014 10:42AM
12 Months
Investment Type
or less
Maturity
Certificates of Deposit - Debt Reserve
$4,856,450
4/28/15
Money Market - Debt Reserve
618,423
24 days (avg.)
Certificates of Deposit
-
Commercial Paper - Union Bank
5,000,000
7/25/14
Commercial Paper - Toyota Motor Credit
5,000,000
10/21/14
California Local Agency Investment Fund
46,500,000
Not applicable
Total Investments
61,974,873
Cash in bank
1,522,742
Total Cash and Investments
$63,497,615
2013
12 Months
or less Maturity
$5,412,500 4/30/14
7,000,136
3,498,488
43,011,748
58,922,872
3,803,040
$62,725,912
7/26/13
7/26/13
Not applicable
24
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 2 — CASH AND INVESTMENTS (Continued)
E. Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the actual rating as of the June 30, 2014 of each
investment type:
Investment Type
Certificates of Deposit
Money Market - Debt Reserve
Commercial Paper
Totals
Not rated.
California Local Agency Investment Fund
Cash in Bank
Total Cash and Investments
F. Concentration of Credit Risk
Aaa
2014 2013
Total
Aaa Total
$4,856,450 $4,856,450 $12,412,636 $12,412,636
618,423 618,423 -
10,000,000 10,000,000
$15,474,873 15,474,873
46,500,000
1,522,742
$63,497,615
3,498,488 3,498,488
$15,911,124 15,911,124
43,011,748
3,803,040
$62,725,912
The District is a voluntary participant in LAIF which is regulated by the California Government
Code under the oversight of the Treasurer of the State of California. LAIF is not registered with
the Securities and Exchange Commission. The fair value of the District's investment in this pool
is reported in the accompanying financial statements 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 are recorded on an amortized cost basis. At June 30, 2014
and 2013, these investments matured in an average of 232 and 278 days, respectively.
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
financial statements in cash and cash equivalents 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.
25
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 2 — CASH AND INVESTMENTS (Continued)
G 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.
NOTE 3 — ACCOUNTS RECEIVABLE
Accounts receivable for the years ended June 30, 2014 and 2013 are comprised of the following:
City of Concord (see Note 8)
Household Hazardous Waste Partners
All Other
Total Accounts Receivable
NOTE 4 — ASSESSMENT DISTRICTS RECEIVABLE
2014 2013
$ 15,446,722
$14,100,192
755,296
837,802
742,975
1,579,555
$16,944,993
$16,517,549
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 at an
amount equal to their share of the construction costs and connection fee. The assessments, plus
interest, are generally payable over 10 years. The CAD receivable balance at June 30, 2014 and
2013 was $353,380 and $434,396, respectively.
The District also established the Alhambra Valley Assessment District (AVAD) to provided
services to residents in the Alhambra Valley in Martinez. Residents have the choice to pay cash
or finance the construction costs and connection fees. The AVAD receivable balance at June 30,
2014 and 2013 was $1,485,110 and $1,655,065, respectively.
The total receivable balance at June 30, 2014 and 2013 for CAD and AVAD was $1,838,490 and
$2,089,461, respectively, and is shown as a non - current asset on the Statement of Net Position.
26
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 5 — CAPITAL ASSETS
Property, plant and equipment, and construction in progress are summarized below for the year
ended June 30, 2014:
Capital assets not being depreciated:
Land
Easements (intangible)
Construction in Progress
Total nondepreciated assets
Capital assets being depreciated:
Sewage collection system
Contributed sewer lines
Outfall sewers
Sewage treatment plant
Recycled water infrastructure
Pumping stations
Buildings
Intangibles
Furniture and equipment
Motor vehicles
Total depreciated assets
Less accumulated depreciation:
Sewage collection system
Contributed sewer lines
Outfall sewers
Sewage treatment plant
Recycled water infrastructure
Pumping stations
Buildings
Intangibles
Furniture and equipment
Motor vehicles
Total accumulated depreciation
Total capital assets being
depreciated, net
Capital assets, net
Balance at Transfers & Balance at
June 30, 2013 Additions Retirements Adjustments June 30, 2014
$17,262,249 $58,321 $17,320,570
4,812,127 4,812,127
24,533,254 $26,848,688 ($1,510,352) (22,363,432) 27,508,158
41,795,503 26,848,688 (1,510,352) (17,492,984) 49,640,855
311,633,989
318,206,017
150,834,930
1,153,968
11,338,935
11,339,298
299,830,466
(102,000)
13,515,026
17,127,656
54,412,730
(25,000)
36,120,720
(38,000)
4,596,467
-
15,651,212
(6,408,774)
6,558,065
(89,150)
904,492,540
1,153,968 (6,662,924)
53,103,663
51,127,280
3,012,481
180,670,824
5,898,343
24,342,929
8,059;168
135,316
11,851,588
4,100,982
342,302,574
4,244,943
2,033,949
150,962
10,289,298
628,968
2,185,564
1,137,780
(102,000)
(25,000)
(38,000)
1,028,553 (6,406,814)
327,844 (89,150)
22,027,861 (6,660,964)
6,572,028
318,206,017
308,348
152,297,246
363
11,339,298
3,878,369
303,606,835
3,612,630
17,127,656
568,844
54,956,574
6,113,365
42,196,085
(4,596,467)
-
783,388
10,025,826
252,116
6,721,031
17,492,984
916,476,568
57,348,606
53,161,229
3,163,443
190,858,122
6,527,311
26,503,493
9,158,948
(135,316) -
6,473,327
4,339,676
(135,316) 357,534,155
562,189,966 (20,873,893) (1,960) 17,628,300 558,942,413
$603,985,469 $5,974,795 ($1,512,312) $135,316 $608,583,268
During fiscal year ended June 30, 2014, the District reclassified its easements from intangibles
previously depreciated to non - depreciable assets.
27
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 6 — LONG -TERM DEBT
A. Summary of Activity
The changes in the District's long -term obligations during the year consisted of the following:
The 2009 Revenue COP debt service requirements are as follows:
Fiscal Year
Original
Amount
Issue
Balance
Ending
Balance
due within
Series B
Amount
June 30, 2013
Retirements
June 30, 2014
one year
2009 Series A Certificates of Participation
Principal
Interest
Principal
Interest
Subsidy
Wastewater Revenue
2015
$1,190,840
$3,865,000
$700,467
3.45 - 3.78 %, due 9 /1/2029
$19,635,000
$19,635,000
$5,339,513
$19,635,000
2009 Series B Certificates of Participation
2,210,000
601,033
2,210,000
1,791,873
(416,794)
Wastewater Revenue
2017
1,190,840
2,300,000
501,300
.40- 3.79 %, due 9/1/2029
34,490,000
23,960,000
$3,720,000
20,240,000
$3;865,000
1999 State Water Resources Control Board
2,405,000
424,175
2,405,000
1,615,015
(416,794)
Water Reclamation Loan
2019
1,190,840
2,480,000
329,483
2.60 1/o, due 3/31/2018
2,916,872
866,827
164,582
702,245
168,861
5,098,729
6,980,000
604,908
13,965,000
Total Long -Term Debt
(1,784,555)
44,461,827
$3,884,582
40,577,245
$4,033,861
Less current portion
(3,884,582)
2,279,321
(4,033,861)
11,801,559
2030
2,330,000
$40,577,245
$36,543,384
2,330,000
25,436
B. Debt Service Requirements
2,346,533
Total
$19,635,000
$13,357,686
$20,240,000
The 2009 Revenue COP debt service requirements are as follows:
Fiscal Year
Series A
Ending
Series
A
Series B
Total
35% Tax
Net
June 30,
Principal
Interest
Principal
Interest
Principal
Interest
Subsidy
Total
2015
$1,190,840
$3,865,000
$700,467
$3,865,000
$1,891,307
($416,794)
$5,339,513
2016
1,190,840
2,210,000
601,033
2,210,000
1,791,873
(416,794)
3,585,079
2017
1,190,840
2,300,000
501,300
2,300,000
1,692,140
(416,794)
3,575,346
2018
1,190,840
2,405,000
424,175
2,405,000
1,615,015
(416,794)
3,603,221
2019
1,190,840
2,480,000
329,483
2,480,000
1,520,323
(416,794)
3,583,529
2020-2024
$6,985,000
5,098,729
6,980,000
604,908
13,965,000
5,703,637
(1,784,555)
17,884,082
2025 -2029
10,320,000
2,279,321
10,320,000
2,279,321
(797,762)
11,801,559
2030
2,330,000
25,436
2,330,000
25,436
(8,903)
2,346,533
Total
$19,635,000
$13,357,686
$20,240,000
$3,161,366
$39,875,000
$16,519,052
($4,675,190)
$51,718,862
As part of the Federal budget sequestration, the Internal Revenue Service (IRS) has announced
that, as of March 1, 2013, credit payments claimed by issuers of certain tax credit bonds,
including Build America Bonds, may be subject to a reduction of 7.2 %.
28
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 6 — LONG -TERM DEBT (Continued)
C. 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 .40% to 3.79 %.
The two bonds total $54,125,000, and are secured by a pledge of tax and net revenues of the
wastewater system. Principal payments began 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.
D. Water Reclamation Loan Contract
The District entered into a contract with the State of California State Water Resources Control
Board (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
Ending June 30
Principal
Interest
Total
2015
$168,861
$18,258
$187,119
2016
173,251
13,868
187,119
2017
177,756
9,363
187,119
2018
182,377
4,742
187,119
Total
$702,245
$46,231
$748,476
29
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 7 — RISK MANAGEMENT
The District is exposed to various risks of loss including torts, theft of, damage to, and
destruction of assets, errors and omissions, injuries to employees, and natural disasters. To
manage these risks, 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.
A. Insurance Coverage
The District's insurance coverage is as follows:
Type of Coverage
All -Risk Property:
Special Form Property
Boiler and Machinery
(Shared Limits per Occurrence)
Crime
Liability:
Errors and Omissions
Employment Practices Liability
Employment Practices Liability
General Liability
Auto Liability
Pollution (General Aggregate)
General Liability (Occurrence)
Pollution (Legal Liability Aggregate)
Fiduciary Liability
Workers' Compensation:
Excess Workers' Compensation
Self Insured
Deductible Per
Insurer Limits Occurrence
APIP
APIP
National Union
Insurance Company of the State of
Pennsylvania
Insurance Company of the State of
Pennsylvania
Hiscox Insurance Company
Insurance Company of the State of
Pennsylvania
Insurance Company of the State of
Pennsylvania
Aspen Specialty Insurance Company
Aspen Specialty Insurance Company
Aspen Specialty Insurance Company
RLI Insurance Company
CSRMA
Safety National Casualty
$556,015,744
$250,000
100,000,000
250,000
1,000,000
2,500
15,000,000
1,000,000
15,000,000
1,000,000
1,000,000
35,000
15,000,000
1,000,000
15,000,000
10,000,000
5,000,000
10,000,000
1,000,000
750,000
Statutory
1,000,000
50,000
5,000
50,000
0
0
750,000
30
REVEW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 7 — RISK MANAGEMENT (Continued)
R Provision for Uninsured Claims
The Governmental Accounting Standard 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 fiscal years ended June 30, 2014, 2013, and 2012, settlements have not exceeded insurance
coverage. Changes in the District's estimated liability for retained losses are summarized as
follows as of June 30:
Beginning balance
Provisions for claims incurred in the current year
and changes in the liability for retained-
losses incurred in prior years
Claims paid and /or adjustments
Ending balance
2014 2013 2012
$1,000,000 $1,000,000 $1,000,000
171,806 1,659,291 72,606
(171,806) (1,659,291) (72,606)
$1,000,000 $1,000,000 $1,000,000
NOTE 8 — AGREEMENT WITH THE CITY OF CONCORD
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 and makes a contribution for its share of facilities capital costs expended. Service
charges and contributions to capital costs from the City totaled $11,625,864 and $3,820,858,
respectively, for the year ended June 30, 2014, for a total of $15,446,722. Service charges and
contributions to capital costs form the City totaled $10,483,421 and $3,616,771, respectively, for
the year ended June 30, 2013, for a total of $14,100,192.
31
REVEIW DRAFT 9124/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 9 — PENSION PLANS
A. Contra Costa County Employee's Retirement Association Plan
Plan Description
Substantially all District permanent employees are required to participate in the Contra Costa
County Employees' Retirement Association (CCCERA), a cost - sharing multiple employer public
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, 2012. 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, date of
membership and final average salary.
Subject to vested status, employees can withdraw contributions plus interests 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 majority of the employees' basic
contributions in accordance with the Memorandum of Understanding (MOU). Employees must
pay the COL portion of the employee rate. The contribution requirement and payment from the
District for the plan years ended June 30, 2014, 2013 and 2012 was as follows:
2014 2013 2012
Covered Payroll for fiscal years ended June 30 $26,373,619 $24,752,463 $24,305,548
Employer required contributions to pension 16,132,863 14,029,374 10,961,853
Employee (COL) required contributions to pension 1,370,707 1,289,095 922,520
Total required contributions $17,503,570 $15,318,469 $11,884,373
Percentage of payroll
66% 62% 49%
The District pension plan covered 258 and 251 participants as of June 30, 2014 and 2013,
respectively.
32
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 9 — PENSION PLAN (Continued)
CCCERA determines contribution requirements using a modification of the Entry Age Normal
Method. Under this method, the District's total normal benefit cost for each employee from date
of hire to date of retirement is expressed as a level percentage of the related total payroll cost.
Normal benefit cost under this method is the level amount the employer must pay annually to
fund an employee's projected retirement benefit. This level percentage of payroll method is used
to amortize any unfunded actuarial liabilities. The actuarial assumptions used to compute
contribution requirements are also used to compute the actuarially accrued liability. The District
uses the actuarially determined percentages of payroll to calculate and pay contributions to
CCCERA. This results in no net pension obligations or unpaid contributions. Annual Pension
Costs, representing the payment of all actuarially required contributions required by CCCERA,
for the last three years were as follows:
Percentage
Actual
Annual
Contribution
Pension Cost
Fiscal Year*
(APC)
12/31/2012
$11,884,373
12/31/2013
15,318,469
12/31/2014
17, 503, 570
Percentage
Actual
of APC
Contribution
Contributed
$11,884,373
100%
15,318,469
100%
17,503,570
100%
*Please note that CCCERA's fiscal year ends December 31.
The following is a summary of the actuarial assumptions and methods:
Valuation date
December 31, 2012
Actuarial cost method
Entry Age Normal Cost Method
Amortization method
Level percent of payroll for total unfunded liability
(4.00% payroll growth assumed)
Remaining amortization period
Remaining balance of December 31, 2007 UAAL is amortized over
a fixed (decreasing or closed) period with 10 years remaining as of
December 31, 2012. Any changes in UAAL after December 31, 2007
will be separately amortized over a fixed 18 -year period effective with
that valuation.
Assets valuation method
Market value of assets less unrecognized returns in each of the last
of the last nine semi - annual accounting periods. Unrecognized return
is equal to the difference between the actual market return and the
expected return on the market value, and is recognized semi - annually
over a five -year period. The Actuarial Value of Assets is reduced by
the value of the non - valuation reserves and designations.
Actuarial assumptions:
Investment rate of return
7.25%
Inflation rate
3.25%
Cost -of- living adjustments
3.00%
33
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 9 — PENSION PLANS (Continued)
The schedule of funding progress presents multi -year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability for benefits. CCCERA's latest actuarial value and funding progress for the pool
are shown below:
The CCCERA Board took a depooling action in October, 2009 which yielded 12 separate cost
groups by employer, with the exception of smaller employers (those with less than 50 active
members) who continue to be pooled with the applicable county tier. The depooling action
affected employer rates effective July 1, 2011.
Public Employees' Pension Reform Act (PEPRA)
Assembly Bill 340 (AB 340) created the Public Employees' Pension Reform Act (PEPRA) that
implemented new benefit formulas and final compensation periods, as well as new contribution
requirements for most new employees with a membership date on or after January 1, 2013, who
meet the definition of new member under PEPRA.
The table below provides the details of the new provisions.
Benefit Formula
Final Compensation Period
Employer Contribution Rate
as a percentage payroll
Member Contribution Rate as
a percentage of payroll
2.5% at Age 67
Average of last 3 years
10.19% of Reportable
Compensation
10.25% of Reportable
Compensation
The employer contribution rate listed above was in effect until June 30, 2014. In accordance with
the provisions of AB 340, the member contribution rate shown above was set at 50 percent of
expected total normal cost rate, rounded to the nearest 'A percent, for the benefits that will apply
to new members on January 1, 2013;
REVEIW DRAFT 9/24/2014 10:42AM
Unfunded
Unfunded
(Overfunded)
(Overfunded)
Actuarial Accrued
Entry Age
Actuarial
Liability as a
Actuarial
Accrued
Percentage of
Actuarial
Actuarial Asset
Accrued
Liability (B -A),
Funded
Covered
Covered Payroll
Valuation Date
Value (A)
Liability (B)
(C)
Ratio (A/B)
Payroll (D)
(C/D)
12/31/2010
$5,341,821,711
$6,654,036,801
$1,312,215,090
80.28%
$687,443,206
190.88%
12/31/2011
5,426,719,066
6,915,311,649
1,488,592,583
78.47%
666,394,146
223.38%
12/31/2012
5,482,257,062
7,761,315,535
2,279,058,473
70.64%
652,312,180
349.38%
The CCCERA Board took a depooling action in October, 2009 which yielded 12 separate cost
groups by employer, with the exception of smaller employers (those with less than 50 active
members) who continue to be pooled with the applicable county tier. The depooling action
affected employer rates effective July 1, 2011.
Public Employees' Pension Reform Act (PEPRA)
Assembly Bill 340 (AB 340) created the Public Employees' Pension Reform Act (PEPRA) that
implemented new benefit formulas and final compensation periods, as well as new contribution
requirements for most new employees with a membership date on or after January 1, 2013, who
meet the definition of new member under PEPRA.
The table below provides the details of the new provisions.
Benefit Formula
Final Compensation Period
Employer Contribution Rate
as a percentage payroll
Member Contribution Rate as
a percentage of payroll
2.5% at Age 67
Average of last 3 years
10.19% of Reportable
Compensation
10.25% of Reportable
Compensation
The employer contribution rate listed above was in effect until June 30, 2014. In accordance with
the provisions of AB 340, the member contribution rate shown above was set at 50 percent of
expected total normal cost rate, rounded to the nearest 'A percent, for the benefits that will apply
to new members on January 1, 2013;
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 9 — PENSION PLANS (Continued)
B. Deferred Compensation Plan
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. The plan
was established by the District's Board of Directors and any amendments to the plan must be
authorized by the Board of Directors. 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.
The plan's 457 assets are held in trust with ICMA Retirement Corporation for the exclusive
benefit of the participants and are not included in the District's financial statements.
C. 401(a) Defined Contribution Plan
The District also contributes to a money purchase plan created in accordance with Internal
Revenue Code section 401(a). The plan was established by the District's Board of Directors and
any amendments to the plan must be authorized by the Board. 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 District contributed $1,646,041 and $1,546,318 to
the Plan during the years ended June 30, 2014 and 2013, respectively.
The 401(a) money purchase plan assets are held in trust with ICMA Retirement Corporation for
the exclusive benefit of the participants and are not included in the District's financial statements.
NOTE 10 — POST EMPLOYMENT HEALTH CARE BENEFITS
A. 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.
35
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 10 — POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
B. Funding Policy
GASB Statement No. 45 set rules for computing the employer's expense for retiree benefits other
than pension, called OPEB. 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 (NOA); when the
contribution is less than the ARC, a net OPEB obligation (NOO) results. The District had a net
OPEB asset of $1,207,678 and $1,537,638 as of June 30, 2014 and 2013, respectively.
Because of the volatility of the investment market, the District Board voted to make monthly
installments into the OPEB Trust to take advantage of dollar- cost - averaging.
C. Annual OPEB Cost and Net OPEB Asset
For 2014, the District's annual OPEB cost (expense) was equal to the ARC of $8,103,000. The
District contributed $4,718,600 for retiree health care premiums and $2,828,400 to the PARS
trust for a total of $7,547,000. The following table summarizes the changes in the District's net
OPEB (Asset) at June 30, 2014:
Net OPEB obligation (asset) at June 30, 2012 ($1,263,542)
Annual Required Contribution (ARC)
$8,300,000
Interest on NOA
(82,000)
Adjustment to ARC
98,000
Annual OPEB Cost (AOC)
8,316,000
Contributions Made:
Health care premiums paid
(4,823,096)
Contributions to PARS trust
(3,767,000)
Increase (decrease) in net OPEB obligation
(274,096)
Net OPEB Obligation (Asset) at June 30, 2013
(1,537,638)
Annual Required Contribution (ARC)
8,103,000
Interest on NOA
(95,000)
Adjustment to ARC
120,000
Annual OPEB Cost (AOC)
8,128,000
Contributions Made:
Health care premiums paid
(4,969,640)
Contributions to PARS trust
(2,828,400)
Increase (decrease) in net OPEB obligation
329,960
Net OPEB Obligation (Asset) at June 30, 2014
($1,207,678)
36
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 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 asset for the past three years are presented below:
Unfunded
Cost Method
(Overfunded)
Actuarial
Percentage of
Current Year
Net OPEB
Liability
Annual OPEB
Actual
AOC
AOC Obligation
Obligation
Fiscal Year
Cost (AOC)
Contribution
Contributed
(Asset)
(Asset)
June 30, 2012
$8,300,000
$8,646,806
104%
($346,806)
($1,263,542)
June 30, 2013
8,316,000
8,590,096
103%
(274,096)
(1,537,638)
June 30, 2014
8,128,000
7,798,040
96%
329,960
(1,207,678)
D. Funded Status and Funding Progress
Per PARS, actuarial assets as of June 30, 2014 and 2013, including trust contributions and
interest, total $36,131,536 and $29,352,833, respectively. 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 health care 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 below 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
Actuarial Value of
Valuation Assets
Date (A)
June 30, 2009
June 30, 2010
July 1, 2012
$2,341,251
9,404,000
22,481,000
$68,769,305 ($66,428,054)
90,337,000 (80,933,000)
100,498,000 (78,017,000)
37
Covered Payroll
(Active Plan
Members)
(C)
3.40% $25,080,233
10.41% 25,080,233
22.37% 24,305,548
Unfunded
(Overfunded)
Actuarial
Liability as
Percentage of
Covered Payroll
[(A — B) /Cl
265%
323%
321%
REVEIW DRAFT 9/24/2014 10:42AM
Unfunded
Cost Method
(Overfunded)
Actuarial
Actuarial
Accrued
Accrued Funded
Liability
Liability Ratio
(B)
(A — B) UAAL (A/B)
$68,769,305 ($66,428,054)
90,337,000 (80,933,000)
100,498,000 (78,017,000)
37
Covered Payroll
(Active Plan
Members)
(C)
3.40% $25,080,233
10.41% 25,080,233
22.37% 24,305,548
Unfunded
(Overfunded)
Actuarial
Liability as
Percentage of
Covered Payroll
[(A — B) /Cl
265%
323%
321%
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 10 — POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
E. 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 District's most recent actuarial valuation was prepared as of July 1, 2012 and was finalized
on May 31, 2013. The June 30, 2012 actuarial valuation results are budgeted in fiscal years
2013 -14 and 2014 -15.
The following is a summary of the actuarial assumptions and methods:
Valuation Date
Actuarial Cost Method
Amortization Method
Average Remaining Period
Actuarial Assumptions:
Inflation Rate
Investment Rate of Return
Projected Salary Increases
Post - Retirement Benefit Increases
Health Care Cost Trend Rates
NOTE 11— NET POSITION
July 1, 2012
Entry Age Normal Cost Method
Level Dollar /Closed
25 Years fixed
3.00%
6.25%
3.25%
No planned changes
Medical - 9.4% grading to 5% in 2021 - 22
Medicare Part B - same as medical trend
Dental - 4%
Net Position is the excess of all the District's assets over all its liabilities, regardless of fund. Net
Position is divided into three captions:
Net Investment in Capital Assets describes the portion of Net Position which is represented by
the current net book value of the District's capital assets, less the outstanding balance of any debt
issued to finance these assets.
Restricted describes the portion of Net Position which is restricted as to use by the terms and
conditions of agreements with outside parties, governmental regulations, laws, or other
restrictions which the District cannot unilaterally alter.
Unrestricted describes the portion of Net Position which is not restricted as to use.
38
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2014 AND 2013
NOTE 12 — LEASE COMMITMENTS
The District leases various facilities and equipment under operating leases. Following is a
summary of operating lease commitments as of June 30, 2014:
Fiscal Year
Ending
2015
2016
Office
Equipment
$249,924
249,924
Facilities Total
$58,560 $308,484
29,712 279,636
Total $499,848 $88,272 $588,120
Total rental expense for the fiscal years ended June 30, 2014 and 2013 was $309,320 and
$306,708, respectively.
NOTE 13 — 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 a number of purchase commitments for ongoing operating and capital projects
that involve multi -year contracts. Purchase commitments related to these multi -year contracts are
approximately $13,901,807 and $11,808,184 as of June 30, 2014 and 2013, respectively.
39
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SUPPLEMENTARY INFORMATION
REVEIW DRAFT 9/24/2014 10:42AM
This Page Left Intentionally Blank
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
COMBINING SCHEDULE OF NET POSITION
ENTERPRISE SUB -FUNDS
JUNE 30, 2014
LIABILITIES
CURRENT LIABILITIES:
Running
Sewer
Self
Debt
Accounts payable and accrued expenses
Expense
Construction
Insurance
Service
Elimination
Total
ASSETS
134,569,301
123,393,825
69,884
24,376,079
(282,409,089)
-
CURRENT ASSETS:
673,380
673,380
Cash and cash equivalents
$970,733
$42,453,785
$4,505,012
3,865,000
$47,929,530
Short term investments
9,993,211
168,861
9,993,211
Accounts receivable
12,921,644
4,023,349
16,944,993
Interest receivable
20,968
2,359
$7,754
31,081
Due from other sub -funds
122,933,958
99,239,565
91,490
60,144,076
($282,409,089)
-
Parts and supplies
2,088,885
126,270,599
1,120,330
29,083,320
(282,409,089)
2,088,885
Prepaid expenses
2,303,942
2,303,942
Total current assets
141,219,162
155,730,878
4,598,861
60,151,830
(282,409,089)
79,291,642
NON - CURRENT ASSETS:
533,384
533,384
Restricted cash and equivalents
100,000
100,000
Restricted investments
3,461,393
5,474,874
5,474,874
Assessment Districts receivable
141,541,742
1,838,490
1,120,330
65,626,704
(282,409,089)
1,838,490
Net OPEB asset
1,207,678
1,207,678
CAPITAL ASSETS
608,583,268
(40,577,245)
568,006,023
Nondepreciable
49,640,855
4,809,248
49,640,855
Depreciable, net of accumulated depreciation
558,942,413
31,298,769
3,478,531
35,767,997
558,942,413
Total capital assets, net
608,583,268
$31,298,769
$3,478,531
608,583,268
Total non - current assets
609,890,946
1,838,490
5,474,874
617,204,310
TOTAL ASSETS
751,110,108
157,569,368
4,598,861
65,626,704
(282,409,089)
696,495,952
LIABILITIES
CURRENT LIABILITIES:
Accounts payable and accrued expenses
2,999,979
2,792,005
50,446
5,842,430
Due to other sub -funds
134,569,301
123,393,825
69,884
24,376,079
(282,409,089)
-
Interest payable
673,380
673,380
Refunding Water Revenue Bonds - current portion
3,865,000
3,865,000
Water Reclamation Loan Contract - current portion
168,861
168,861
Accrued compensated absences - current portion
385,000
385,000
Liability for uninsured claims
1,000,000
1,000,000
Refundable deposits
126,069
84,769
210,838
Total current liabilities
138,080,349
126,270,599
1,120,330
29,083,320
(282,409,089)
12,145,509
NON - CURRENT LIABILITIES:
Refunding Water Revenue Bonds, noncurrent portion
36,010,000
36,010,000
Water Reclamation Loan Contract, noncurrent portion
533,384
533,384
Accred compensated absences, noncurrent portion
3,461,393
3,461,393
Total noncurrent liabilities
3,461,393
36,543,384
40,004,777
TOTAL LIABILITIES
141,541,742
126,270,599
1,120,330
65,626,704
(282,409,089)
52,150,286
NET POSITION
Net investment in capital assets
608,583,268
(40,577,245)
568,006,023
Restricted for debt service
4,809,248
4,809,248
Unrestricted
985,098
31,298,769
3,478,531
35,767,997
71,530,395
TOTAL NET POSITION
$609,568,366
$31,298,769
$3,478,531
$644,345,666
43
REVEIW DRAFT 9/24/2014 10:42AM
CENTRAL CONTRA COSTA SANITARY DISTRICT
COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
ENTERPRISE SUB -FUNDS
FOR THE YEAR ENDING JUNE 30, 2014
44
REVEIW DRAFT 9/24/2014 10:42AM
Running
Sewer
Self
Debt
Expense
Construction
Insurance
Service
Elimination Total
OPERATING REVENUES
Sewer service charges (SSC)
$60,796,421
$60,796,421
Service charges - City of Concord
11,625,864
11,625,864
Other services charges
1,035,134
1,035,134
Miscellaneous charges
544,589
544,589
Total operating revenues
74,002,008
74,002,008
OPERATING EXPENSES
Sewage collection and pumping stations
16,109,927
16,109,927
Sewage treatment
27,808,819
27,808,819
Engineering
12,308,802
12,308,802
Administrative and general
21,174,011
$858,738
($644,448) 21,388,301
Depreciation
21,892,545
21,892,545
Total operating expenses
99,294,104
858,738
(644,448) 99,508,394
OPERATING INCOME (LOSS)
(25,292,096)
(858,738)
644,448 (25,506,386)
NONOPERATING REVENUES (EXPENSES)
Taxes
$7,243,464
$5,850,377
13,093,841
Permit and inspection fees
1,331,821
243,430
1,575,251
Interest earnings
172,844
145,370
10,180
30,894
359,288
Interest expense
(1,996,689)
(1,996,689)
Other income (expense)
622,135
310,329
644,448
(644,448) 932,464
Total nonoperating revenues
2,126,800
7,942,593
654,628
3,884,582
(644,448) 13,964,155
NET INCOME (LOSS) BEFORE CAPITAL
(23,165,296)
7,942,593
(204,110)
3,884,582
(11,542,231)
CONTRIBUTIONS AND TRANSFERS
CAPITAL CONTRIBUTIONS AND TRANSFERS
City of Concord contributions to capital costs
3,920,858
3,820,859
Customer contributions to capital cost (SSC)
6,665,209
6,665,209
Contributed sewer lines
1,462,316
1,462,316
Capital contributions - connection fees
8,224,517
8,224,517
Transfers In (Out)
25,338,336
(21,453,754)
(3,884,582)
Total capital contributions and transfers
26,800,652
(2,743,170)
(3,884,582)
20,172,900
CHANGE IN NET POSITION
3,635,356
5,199,423
(204,110)
8,630,669
NET POSITION, BEGINNING OF YEAR
605,933,010
26,099,346
3,682,641
635,714,997
NET POSITION, END OF YEAR
$609,568,366
$31,298,769
$3,478,531
$644,345,666
44
REVEIW DRAFT 9/24/2014 10:42AM
M
m
m_
v
D
co
N
A
N
O_
A
O
A
N
D
Salaries and Wages
Employee Benefits
Less Capitalized
Overhead and Benefits
Total Salaries and Benefits
Directors' Fees and Expense
Chemicals
Utilities
Repairs and Maintenance
Hauling and Disposal
Professional and Legal Services
Outside Services
Self Insurance
Materials and Supplies
Other
CENTRAL. CONTRA COSTA SANITARY DISTRICT
Schedule of Running Expenses
Comparison of Budget and Actual Expenses by Department
June 30, 2014
(23,353) (2,886,850) (51,463) (106,095) (11,660) (3,079,421) (4,124,238) (1,044,817)
18,001,024
Sewage
11,085,145
Variance
Sewage
Treatment
Pumping
Favorable
Administration Engineering Collection
Plant
Station Total
Budget (Unfavorable)
$4,766,009 $5,880,812 $5,313,247
$9,183,063
$935,973 $26,079,104
$26,722,021 $642,917
13,258,368 6,254,643 5,823,361
9,660,211
958,187 35,954,770
36,694,384 739,614
(23,353) (2,886,850) (51,463) (106,095) (11,660) (3,079,421) (4,124,238) (1,044,817)
18,001,024
9,248,605
11,085,145
18,737,179
1,882,500
58,954,453
59,292,167
337,714
153,735
-
-
-
-
153,735
155,637
1,902
-
-
-
1,179,041
431,145
1,610,186
1,561,000
(49,186)
42,305
179,877
132,415
3,565,132
472,599
4,392,328
4,117,650
(274,678)
417,924
180,531
549,355
1,799,815
178,992
3,126,617
3,765,527
638,910
-
371,645
111,378
423,102
8,614
914,739
1,100,500
185,761
359,130
104,689
6,214
3,060
-
473,093
477,350
4,257
1,059,531
1,780,693
41,076
514,049
127,419
3,522,768
2,801,621
(721,147)
600,000
-
-
-
-
600,000
600,000
-
131,453
240,545
829,940
807,667
51,191
2,060,796
2,016,715
(44,081)
408,909
202,215
171,242
779,784
30,700
1,592,850
1,936,785
343,935
$21,174,011
$12,308,800
$12,926,765
$27,808,829
$3,183,160
$77,401,565
$77,824,952
$423,387
CENTRAL CONTRA COSTA SANITARY DISTRICT
RUNNING EXPENSE
SCHEDULE OF SUPPLEMENTAL NET POSITION ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
Prior Year Balance $12,572,710
2013 - 2014 Revenue $76,128,808
2013 - 2014 Expense (99,294,104)
Add Back Depreciation Expense and Intangible Assets Adjustment 21,892,545 (1,272,751)
Net Position Attributed to General Operations 11,299,959
Net Position Attributed to All Other 598,268,407
Running Expense Net Position $609,568,366
46
REVEIW DRAFT 9/24/2014 10:42AM