HomeMy WebLinkAbout03. Draft audited Financial Statements for Fiscal Years ended June 30, 2014 and 2015 & MOICCentral Contra Costa Sanitary District
October 27, 2015
TO: FINANCE COMMITTEE
VIA: ROGER BAILEY, GENERAL MANAGER -
DAVID HEATH, DIRECTOR OF ADMINISTRATION
FROM: THEA VASSALLO, FINANCE MANAGER
('N � �
SUBJECT: GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB)
STATEMENT NO. 68 AND 71
Below is information regarding implementation of significant pension reporting changes
included in Footnote 9 and the Required Supplementary Information section of the basic
audited Financial Statements for Fiscal Years ended June 30, 2014 and 2015 performed by
Maze & Associates. The new GASBs that affect the District this audit cycle are as follows:
GASB Statement No. 68 — Accounting and Financial Reporting for Pensions
Requires recognition of the entire net pension liability and a more comprehensive measure
of pension expense.
GASB Statement No. 71 — Pension Transition for Contributions Made Subsequent to
the Measurement Date
Requirement eliminates the source of a potential significant understatement of restated
beginning net position and expense in the first year of implementation of GASB 68 in the
accrual basis financial statements of employer contributing entities.
Additional information related to GASB 68 and 71 are provided in Footnote 9 - Pension
Plans — Pension Liabilities, Pension Expenses and Deferred Outflows /Inflows of Resources
Related to Pensions, starting on page 34 through 37. Additionally, the Required
Supplementary Information includes new schedules on changes in net pension liability,
ratios, and contributions and are on pages 44 and 45.
Vikki Rodriguez, CPA, from Maze and Associates will be attending the Finance Committee
meeting to summarize the reporting changes and address any questions the Committee
may have.
Attachment
Central Contra Costa Sanitary District
' BOARD OF DIRECTORS
POSITION PAPER nD
o112
Board Meeting Date: November 5, 2015
Subject: ACCEPT THE COMPARITIVE AUDITED FINANCIAL STATEMENTS FOR
THE FISCAL YEARS ENDED JUNE 30, 2014 AND 2015, AND THE
AUDITOR'S MEMORANDUM ON INTERNAL CONTROL AND REQUIRED
COMMUNICATIONS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
Submitted By: Initiating Dept. /Div.:
Thea Vassallo, CPA, CMA Administrative / Finance & Accounting
Finance Manager
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
Roger S. Bailey
General Manager
ISSUE: The comparative audited financial statements of the Central Contra Costa
Sanitary District for the Fiscal Years (FY) ended June 30, 2014 and 2015, and the
auditor's memorandum on internal control and required communications for the year
ended June 30, 2015 are being submitted to the Board of Directors.
BACKGROUND: The firm of Maze & Associates has completed its third examination of
the District's financial statements for the FY ended June 30, 2014, and 2015, and has
submitted the audited financial statements and auditor's opinion thereon.
The objective of the audit is the expression of an opinion as to whether the basic
financial statements are fairly presented, in all material respects, in conformity with
United States generally accepted accounting principles and to report on the fairness of
the supplementary information in relation to the financial statements taken as a whole.
The audit is conducted in accordance with auditing standards generally accepted in the
United States of America and the standards for financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United
States, and includes tests of the accounting records of the District and other procedures
considered necessary to express such an opinion. The independent auditor's report for
the FY ending June 30, 2014 and 2015 expresses an unqualified (clean) opinion.
In accordance with Government Code Section 53891, information from the audit is used
to prepare a report to the State Controller's office. The report was sent electronically by
the annual deadline of October 19, 2015. The audited financial statements are also
sent to the County Auditor - Controller, Contra Costa County Board of Supervisors, and
the Bond Rating Agencies.
In the performance of their examination of the financial statements, the auditors
evaluate the District's internal accounting controls related to the financial statements in
compliance with laws, regulations, and the provisions or grant agreements,
Page 1 of 2
NE:1
POSITION PAPER
Board Meeting Date: October 15, 2015.
subject: ACCEPT THE COMPARITIVE AUDITED FINANCIAL STATEMENTS FOR
THE FISCAL YEARS ENDED JUNE 30, 2014 AND 2015, AND THE
AUDITOR'S MEMORANDUM ON INTERNAL CONTROL AND REQUIRED
COMMUNICATIONS FOR THE FISCAL YEAR ENDED JUNE 30, 2015
noncompliance with which could have a material effect on the financial statements as
required by Government Auditing Standards. Based on their observations during the
course of the examination, the auditors advise District management of any significant
deficiencies or material misstatements and any recommendations to improve the
system of internal accounting controls. See attached "Memorandum on Internal Control
and Required Communications."
The original contract with Maze & Associates is for a four -year term with a one year
extension.
ALTERNATIVES /CONSIDERATIONS: None.
FINANCIAL IMPACTS: None.
COMMITTEE RECOMMENDATION: The audited financial statements and the
auditor's memorandum on internal control and required communications were reviewed
by Vikki Rodriguez from Maze & Associates at the Finance Committee meeting on
October 27, 2015. The Committee recommends Board acceptance.
RECOMMENDED BOARD ACTION: Accept the basic audited financial statements for
the FY ended June 30, 2014 and 2015, and the auditor's memorandum on internal
control and required communications for the FY ended June 30, 2015.
Attached Supportinq Documents:
1. Basic Financial Statements for the Years Ended June 30, 2015 and 2014
2. Memorandum on Internal Control and Required Communications for the
Year Ended June 30, 2015
Page 2 of 2
ATTACHMENT
DRAFT
CENTRAL CONTRA COSTA SANITARY DISTRICT
BASIC FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
BASIC FINANCIAL STATEMENTS
For the Years Ended June 30, 2015 and 2014
Table of Contents
INTRODUCTORY SECTION
Tableof Contents ............................................................................................. ..............................i
I FINANCIAL SECTION
INDEPENDENT AUDITOR'S REPORT .............................................................. ..............................1
MANAGEMENT'S DISCUSSION AND ANALYSIS ........................................ ..............................3
BASIC FINANCIAL STATEMENTS
Statementsof Net Position ................................................................................. .............................10
Statements of Revenues, Expenses and Changes in Net Position .................... .............................13
Statementsof Cash Flows ................................................................................... .............................14
NOTES TO BASIC FINANCIAL STATEMENTS ............................................ .............................17
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the Net Pension Liability and Related Ratios ......... .............................40
Scheduleof Contributions ............................................................................. .............................41
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
Expensesby Department ......................................................................... ............................... 45
Running Expense — Schedule of
Supplemental Net Position Analysis ....................................................... ............................... 46
REVIEW DRAFT September 23, 2015 2:36 PM
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, 2015 and 2014, 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 audit 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, 2015 and 2014, 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.
REVIEW DRAFT September 23, 2015 2:36 PM
l.J
Emphasis of a Matter
Management adopted the provisions of the following Governmental Accounting Standards Board
Statements, which became effective during the year ended June 30, 2015 and required the restatement of
net position as discussed in Note 9 to the financial statements:
Statement No. 68 — Accounting and Financial Reportingfor Pensions
Statement No. 71 — Pension Transition for Contributions Made Subsequent to the Measurement
Date
The emphasis of this matter does not constitute a modification to our opinion.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management's
Discussion and Analysis and pension and OPEB related tables 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
DATE
REVIEW DRAFT September 23, 2015 2:36 PM
2 0
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, 2015. This information is
presented in conjunction with the audited financial statements, which follow this report.
FINANCIAL HIGHLIGHTS
The District's 2014 -15 financial highlights are listed below. These results are discussed in more detail
later in the report.
• The District's total ending net position decreased by $80.7 million or - 12.53% in 2014 -15. This
is mainly due to the implementation of GASB 68 and GASB 71 which required the District to
record the Collective Net Pension Liability.
• Total revenues in 2014 -15 increased by $12.6 million or 14.04 %. The total Sewer Service
Charge (SSC) rate for the year was $439 which was an increase of 8.40% for fiscal year 2014-
15.
• Total 2014 -15 expenses increased by $4.4 million or 4.30 %. This is mainly due to higher cost
of total labor, depreciation, repairs and maintenance, and offset by a negative pension expense as
a result of the implementation of GASB 68 and 71.
• Capital Contributions decreased in 2014 -15 by $5.9 million or - 29.42 %. The decrease is
mainly due to a decrease in capital contributions from Concord and fewer new connections.
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, deferred outflows of resources, long -term obligations,
and deferred inflows of resources.
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t
• 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.
• 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 14 -15 FY 14 -15
vs. vs.
2014 -15 2013 -14 2012 -13 FY 13 -14 FY 12 -13
Current Assets
$ 82,554,355
$ 79,291,642
$ 78,006,233
4.18%
5.83%
Capital Assets
609,718,479
608,583,268
603,985,469
0.19%
0.95%
Other Non - current Assets
7,832,901
8,621,042
9,454,886
-8.34%
- 17.15%
Total Assets
700,105,735
696,495,952
691,446,588
0.52%
1.25%
Deferred Outflows of
Resources -
Pension Related
12,420,138
-
-
100.00%
100.00%
Current Liabilities
10,029,487
12,145,509
11,704,101
- 18.08%
- 14.31%
Non - Current Liabilities
127,324,915
40,004,777
44,027;490
198.33%
189.19%
Total Liabilities
137,354,402
52,150,286
55,731,591
152.88%
146.46%
Deferred Inflows of
Resources -
Pension related
11,564,393
-
-
100.00%
100.00%
Net Investment in
Capital Assets
573,175,094
568,006,023
559,523,642
0.92%
2.44%
Restricted - Debt Service
4,288,008
4,809,248
4,730,837
- 11.02%
-9.36%
Unrestricted
13,856,024
71,530,395
71,460,518
- 119.49%
119.39%
Total Net Position
$ 563,607,078
$ 644,345,666
$ 635,714,997
- 12.70%
r-11.34%
The total net position of the District increased from $635.7 million in 2012 -13 to $644.3 million in
2013 -14 and decreased to $563.6 million in 2014 -15. The District's total assets have increased by $3.6
million or 0.52% compared to 2013 -14, and $8.7 million or 1.25% compared to 2012 -13. The total
liabilities increased $85.2 million or 152.88% compared to 2013 -14, and increased $81.6 million or
146.46% compared to 2012 -13. The decrease in net position over the three -year period totals $72.1
million or - 11.34% and is the result of the combination of net income, expenses, capital contributions,
and the implementation of GASB 68 and GASB 71 which required the District to record the Net Pension
Liability in 2014 -15.
By far the largest portion of the District's net position (101.70% 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
l�l
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 $4.3 million
restricted for debt service. The remaining balance of -$13.9 million in unrestricted net position
decreased by $85.4 million from 2013 -14 and $85.3 million from 2012 -13 due to the implementation of
GASB 68 and 71 which required the District to record its Collective Net Pension Liability.
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 14 -15 FY 14 -15
vs. vs.
2014 -15 2013 -14 2012 -13 FY 13 -14 FY 12 -13
Sewer Service Charges (SSC)
$ 82,916,457
$ 72,422,285
$ 67,254,405
14.49%
23.29%
Other Service Charges and
Miscellaneous
1,599,997
1,579,723
1,828,281
1.28%
- 12.49%
Total Operating Revenue
84,516,434
74,002,008
69,082,686
14.21%
22.34%
Property Tax
14,083,331
13,093,841
13,010,477
7.56%
8.25%
Permit & Inspection Fees
1,843,922
1,575,251
1,169,809
17.06%
57.63%
Interest and All Other
2,147, 005
1,291,752
1,356,574
66.21%
58.27%
Total Non - Operating
Revenues
18,074,278
15,960,844
15,536,860
13.24%
16.33%
Total Revenues
102,590,712
89,962,852
84,619,546
14.04%
21.24%
Total Labor and Benefits
66,104,630
58,954,453
49,811,218
12.13%
32.71%
Chemicals & Utilities
5,532,237
6,002,514
5,420,789
-7.83%
2.06%
Repairs and Maintenance
3,873,557
3,126,617
3,151,127
23.89%
22.93%
Professional, Legal and
Outside Services
3,322,881
3,995,861
2,836,638
- 16.84%
17.14%
Materials & Supplies
1,934,253
2,060,796
1,980,314
-6.14%
- 2.33%
Hauling and Disposal
884,703
914,739
1,088,294
-3.28%
- 18.71%
Self- insurance Expense
1,333,518
858,738
2,380,466
55.29%
- 43.98%
Pension Expense
3,012,757
-
-
100.00%
100.00%
All Other
1,636,826
1,702,131
472,630
-3.84%
246.32%
Depreciation Expense
22,740,942
21,892,545
21,596,266
3.88%
5.30%
Total Operating Expenses
104,350,790
99,508,394
88,737,742
4.87%
17.59%
Non- Operating Expense -
Interest Expense
1,523,127
1,996,689
1,802,084
- 23.72%
- 15.48%
Total Expenses
105,873,917
101,505,083
90,539,826
4.30%
16.94%
Income Before Capital
Contributions
3,283,205
11,542,231
5,920,280
- 71.55%
- 44.54%
Customer Contributions (SSC)
6,769,623
10,486,067
8,001,147
- 35.44%
- 15.39%
Contributed Sewer Lines
794,218
1,462,316
939,628
- 45.69%
- 15.48%
C
Capital Contributions -
Connection Fees
6,673,298
8,224,517
6,091,529
- 18.86%
9.55%
Total Capital Contributions
14,237,139
20,172,900
15,032,304
- 29.42%
-5.29%
Change in Net Position
10,953,934
8,630,669
9,112,024
26.92%
20.21%
Beginning Net Position
644,345,666
635,714,997
626,602,973
1.36%
2.83%
Restatement -
Implementation of GASB 68
and GASB 71
91,692,522
-
-
100.00%
100.00%
Ending Net Position
$ 563,607,078
$ 644,345,666
$ 635,714,997
- 12.53%
- 11.34%
Revenue
Total operating revenues increased from $69.1 million in 2012 -13 to $74.0 million in 2013 -14 and to
$84.5 million in 2014 -15. Operating revenues increased by $10.5 million or 14.21% compared to 2013-
14, and increased by $15.4 million or 22.34% comparing 2014 -15 to 2012 -13.
Total non - operating revenue increased from $15.5 million in 2012 -13 to $16.0 million in 2013 -14 and to
$18.1 million in 2014 -15. An increase compared to 2013 -14 by $2.1 million or 13.24 %, and increased
by $2.5 million or 16.33% comparing 2014 -15 to 2012 -13.
Total revenues increased from $84.6 million in 2012 -13 to $90.0 million in 2013 -14 to $102.6 million in
2014 -15. The change in total revenue resulted in an increase of $12.6 million or 14.04% comparing
2014 -15 to 2013 -14, and increased by $18.0 million or 21.24% comparing 2014 -15 to 2012 -13. There
was an 8.40% SSC rate increase in 2014 -15, 9.16% SSC rate increase in 2013 -14 and 8.80% increase in
SSC for 2012 -13. Property tax revenue increased by $1.0 million or 7.56% from 2014 -15 to 2013 -14,
and $1.1 million or 8.25% comparing 2014 -15 to 2012 -13.
Expenses
Total expenses increased from $90.5 million in 2012 -13 to $101.5 million in 2013 -14 and to $105.9
million in 2014 -15. In 2014 -15, total expenses increased by $4.4 million or 4.30% compared to 2013-
14. Comparing 2014 -15 to 2012 -13, total expenses were $15.3 million or 16.94 % higher. Increases
were mainly due to higher labor and benefit costs along with technical services for temporary staff.
Labor costs increased due to the filling of vacant positions, cost -of- living adjustments, merit increases,
and additional payment of the unfunded actuarial accrued liability (UAAL). 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 -$5.9 million in 2012 -13, to -$11.5 million in 2013-
14, and -$3.3 million in 2014 -15.
Total capital contributions in 2014 -15 were $14.2 million compared to $20.2 million in 2013 -14 and
$15.0 million in 2012 -13. This was mainly due to changes in customer contributions SSC due to annual
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 increased by $2.3
million or 26.92% when comparing 2014 -15 to 2013 -14 and increased $1.8 million or 20.21% when
comparing 2014 -15 to 2012 -13.
CAPITAL ASSETS
Capital assets for fiscal years 2014 -15, 2013 -14 and 2012 -13 totaled $609.7 million, $608.6 million, and
$604.0 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, 2015, the District's investment in capital assets totaled $609.7 million, an increase of $1.1
million or 0.19% over the capital asset balance of $608.6 million at June 30, 2014. Capital assets
increased by $5.7 million or 0.95% comparing 2014 -15 to 2012 -13. A comparison of the District's
capital assets over the past three fiscal years is presented below:
% Increase
Capital Assets Fiscal Year Ended June 30 (Decrease)
FY 14 -15 FY 14 -15
vs. vs.
2014 -15 2013 -14 2012 -13 FY 13 -14 FY 12 -13
Land
$ 17,320,570
$ 17,320,570
$ 17,262,249
0.00%
0.34%
Sewage Collection System
331,167,382
318,206,017
311,633,989
4.07%
6.27%
Contributed Sewer Lines
153,091,464
152,297,246
150,834,930
0.52%
1.50%
Outfall Sewers
11,339,298
11,339,298
11,338,935
0.00%
0.00%
Sewage Treatment Plant
320,717,418
303,606,835
299,830,466
5.64%
6.97%
Recycled Water Infrastructure
19,065,139
17,127,656
13,515,026
11.31%
41.07%
Pumping Stations
56,046,563
54,956,574
54,412,730
1.98%
3.00%
Buildings
42,412,648
42,196,085
36,120,720
0.51%
17.42%
Intangible Assets
4,875,507
4,812,127
4,596,467
1.32%
6.07%
Furniture & Equipment
10,886,007
10,025,826
15,651,212
8.58%
- 30.45%
Motor Vehicles
6,883,134
6,721,031
6,558,065
2.41%
4.96%
Construction In Progress
13,958,646
27,508,158
24,533,254
- 49.26%
- 43.10%
Subtotal
987,763,776
966,117,423
946,288,043
2.24%
4.38%
Less Accumulated
Depreciation
378,045,297
357,534,155
342,302,574
5.74%
10.44%
Total Capital Assets (net of
depreciation)
$ 609,718,479
$ 608,583,268
$ 603,985,469
0.19%
0.95%
The major reasons for the increase in capital assets, net of depreciation, of $1.1 million from 2013 -14 to
2014 -15 and $5.7 million from 2012 -13 to 2014 -15, are as follows:
• Treatment plant infrastructure renovations, upgrades, equipment, and improvements increased by
$17.1 million comparing 2014 -15 to 2013 -14 and $20.9 million comparing 2014 -15 to 2012 -13.
Sewer pipe ongoing renovations, upgrades, expansion, pumping station improvements, and
contributed sewer lines increased by $14.8 million comparing 2014 -15 to 2013 -14 and $23.4
million comparing 2014 -15 to 2012 -13.
• Buildings increased by $0.2 million comparing 2014 -15 to 2013 -14 and $6.3 million comparing
2014 -15 to 2012 -13.
V
• All other asset categories, including construction in progress, decreased by $10.5 million
comparing 2014 -15 to 2013 -14 and decreased by $9.1 million comparing 2014 -15 to 2012 -13.
• Capital asset increases are offset by an increased subtraction of accumulated depreciation of
$20.5 million comparing 2014 -15 to 2013 -14 and $35.7 million comparing 2014 -15 to 2012 -13
due to increasing capital asset investment and its associated depreciation expense.
See Note 5 in the audited financial statements.
DEBT ADMINISTRATION
The total debt obligations for fiscal years 2014 -15, 2013 -14 and 2012 -13 totaled $36.5 million, $40.6
million, and $44.5 million, respectively. As of June 30, 2015, the District's outstanding debt totaled
$36.5 million, which is a decrease of $4.0 million or -9.94% over the debt balance of $40.6 million at
June 30, 2014. Debt decreased by $7.9 million or - 17.81% comparing 2014 -15 to 2012 -13. 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 14 -15 FY 14 -15
vs. vs.
9n14 -1 S gn13 -14 2n12 -13 FY 13 -14 12 -13
Revenue Bonds
$ 36,010,000
$ 39,875,000
$ 43,595,000
- 9.69%
- 17.40%
Water Reclamation Loan
533,385
702,245
866,827
- 24.05%
- 38.47%
Total Debt Service
$ 36,543,385
$ 40,577,245
$ 44,461,827
-9.94%
- 17.81%
See Note 6 in the audited financial statements.
ECONOMIC AND OTHER FACTORS
The Federal and State of California economies have experienced higher revenue projections and
spending increases as a result of the recovery from the 2008 recession. These higher revenue
projections result in a multibillion - dollar influx of new funds for schools and community colleges under
Proposition 98 minimum funding guarantee. The Governor's priorities are to continue to reduce the
retiree health liabilities and continue to build up reserves to 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.
• Continued low interest rates negatively impact interest earnings for District temporary
investments as well as OPEB trust and pension plan assets.
• Increased demand for recycled water from District customers as a result of the mandatory water
restrictions due to the current severe drought conditions in the state.
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.
C61)
0
Insert MD &A
REVIEW DRAFT September 23, 2015 2:36 PM
00
CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF NET POSITION
JUNE 30, 2015 AND 2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 2)
Short term investments (Note 2)
Accounts receivable, net (Note 3)
Interest receivable
Parts and supplies
Prepaid expenses
Total current assets
NON - CURRENT ASSETS
Restricted cash and cash equivalents (Notes I.E. and 2)
Restricted investments (Note 2)
Assessment Districts receivable (Note 4)
Net OPEB asset (Note 10)
Capital assets:
Nondepreciable (Note 5)
Depreciable, net of accumulated depreciation (Note 5)
Total capital assets, net
Total non - current assets
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES
Pension related (Note 9)
2015 2014
$45,218,013
$47,929,530
15,498,572
9,993,211
17,141,474
16,944,993
60,067
31,081
2,079,435
2,088,885
2,556,794
2,303,942
82,554,355 79,291,642
100,000
100,000
4,856,450
5,474,874
1,669,686
1,838,490
1,206,765
1,207,678
36,154,723
49,640,855
573,563,756
558,942,413
609,718,479
608,583,268
617,551,380
617,204,310
700,105,735 696,495,952
$12,420,138
(Continued)
REVEIW DRAFT 9/2y2,015 2:39 PM
Q J2-
CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF NET POSITION
JUNE 30, 2015 AND 2014
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses
Interest payable
Refunding Water Revenue Bonds - current portion (Note 6)
Water Reclamation Loan Contract - current portion (Note 6)
Accrued compensated absences - current portion (Note I .I.)
Provision for uninsured claims (Note 7)
Refundable deposits
Total current liabilities
NON - CURRENT LIABILITIES
Refunding Water Revenue Bonds, noncurrent portion (Note 6)
Water Reclamation Loan Contract, noncurrent portion (Note 6)
Accrued compensated absences, noncurrent portion (Note 1.I.)
Collective net pension liability (Note 9)
Total non - current liabilities
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Pension related (Note 9)
NET POSITION (Note 11)
Net investment in capital assets
Restricted for debt service
Unrestricted
TOTAL NET POSITION
See accompanying notes to financial statements
2015 2014
$5,374,441
$5,842,430
621,847
673,380
2,210,000
3,865,000
173,251
168,861
403,000
385,000
1,000,000
1,000,000
246,948
210,838
10,029,487 12,145,509
33,800,000 36,010,000
360,134 533,384
3,629,271 3,461,393
89,535,510 -
127,324,915 40,004,777
137,354,402 52,150,286
11,564,393 -
573,175,094
568,006,023
4,288,008
4,809,248
(13,856,024)
71,530,395
$563,607,078
$644,345,666
REVEIW DRAFT 9/2 015 2:39 PM
0-
CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
2015 2014
OPERATING REVENUES
Sewer service charges (SSC)
$70,023,512
$60,796,421
Service charges - City of Concord (Note 8)
12,892,945
11,625,864
Other services charges
1,006,197
1,035,134
Miscellaneous charges
593,780
544,589
Total operating revenues
84,516,434
74,002,008
OPERATING EXPENSES
Sewage collection and pumping stations
18,200,513
16,109,927
Sewage treatment
29,507,722
27,808,819
Engineering
13,200,972
12,308,802
Administrative and general
23,713,398
21,388,301
Pension expense
(3,012,757)
-
Depreciation
22,740,942
21,892,545
Total operating expenses
104,350,790
99,508,394
OPERATING (LOSS)
(19,834,356)
(25,506,386)
NONOPERATING REVENUES (EXPENSES)
Taxes
14,083,331
13,093,841
Permit and inspection fees
1,843,942
1,575,251
Interest earnings
318,475
359,288
Interest expense
(1,523,127)
(1,996,689)
Other income (expense), net
1,828,530
932,464
Total nonoperating revenues (expenses), net 16,551,151 13,964,155
INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS (3,283,205) (11,542,231)
CAPITAL CONTRIBUTIONS
City of Concord contributions to capital costs (Note 8) 2,897,491 3,820,858
Customer contributions to capital cost (SSC) 3,872,132 6,665,209
Contributed sewer lines 794,218 1,462,316
Capital contributions - connection fees 6,673,298 812241517
Total capital contributions 14,237,139 20,172,900
CHANGE IN NET POSITION 10,953,934 8,630,669
NET POSITION, BEGINNING OF YEAR
644,345,666 635,714,997
Prior period adjustment for implementation of GASB Statements 68 and 71 (Note 9) (91,692,522) -
NET POSITION, END OF YEAR $563,607,078 $644,345,666
See accompanying notes to financial statements
REVIEW DRAFT 9/ 15 2:39 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $84,488,757 $73,825,535
Payments to suppliers (48,383,516) (43,766,726)
Payments to employees and related benefits (36,727,579) (33,353,995)
Net Cash Provided (Used) by Operating Activities (622,338) (3,295,186)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Receipt of taxes 14,083,331 13,093,841
Inspection/permit fees and other non - operating income 3,672,472 2,507,715
Cash Flows from Noncapital Financing Activities 17,755,803 15,601,556
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Capital contributions 7,563,841 11,948,383
Connection fees 6,673,298 8,224,517
Acquisition and construction of capital assets (23,876,153) (26,490,344)
Interest paid on long -term debt (1,574,660) (1,726,169)
Principal payments on long -term debt (4,033,860) (3,884,582)
Cash Flows (Used for) Capital and Related Financing Activities (15,247,534) (11,928,195)
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption and acquisition of investments, net (4,886,937) 443,039
Interest received 289,489 393,528
Cash Flows from Investing Activities (4,597,448) 836,567
NET INCREASE (DECREASE) IN CASH (2,711,517) 1,214,742
Cash, beginning of year 48,029,530 46,814,788
Cash, end of year $45,318,013 $48,029,530
(Continued)
See accompanying notes to financial statements
REVIEW DRAFT 9OM 5 239 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
SCHEDULE OF NON CASH ACTIVITY
Change in fair value of investments $289,489 $393,528
Capital asset donations 633,208 1,153,968
Total non cash activity $922,697 $1,547,496
CASH AND CASH EQUIVALENTS, AS PRESENTED ON
STATEMENT OF NET POSITION:
Unrestricted cash and cash equivalents $45,218,013 $47,929,530
Restricted cash and cash equivalents 100,000 100,000
Total cash and cash equivalents at end of year $45,318,013 $48,029,530
See accompanying notes to financial statements
REVIEW DRAFT 9/ (0) O 2:39 PM
2015
2014
Reconciliation of operating (loss) to net cash provided by
operating activities:
Operating (loss)
($19,834,356)
($25,506,386)
Adjustments to reconcile operating loss to cash
flows from operating activities:
Depreciation
22,740,942
21,892,545
Change in assets and liabilities:
Receivables, net
(27,677)
(176,473)
Parts and supplies
9,450
(83,144)
Prepaid expenses
(252,852)
(99,732)
Net OPEB asset
913
329,960
Accounts payable and accrued expenses
(467,989)
465,495
Accrued payroll and related expenses
185,878
13,148
Refundable deposits
36,110
(130,599)
Net pension liability
(3,012,757)
-
Net cash provided (used) by operating activities
($622,338)
($3,295,186)
SCHEDULE OF NON CASH ACTIVITY
Change in fair value of investments $289,489 $393,528
Capital asset donations 633,208 1,153,968
Total non cash activity $922,697 $1,547,496
CASH AND CASH EQUIVALENTS, AS PRESENTED ON
STATEMENT OF NET POSITION:
Unrestricted cash and cash equivalents $45,218,013 $47,929,530
Restricted cash and cash equivalents 100,000 100,000
Total cash and cash equivalents at end of year $45,318,013 $48,029,530
See accompanying notes to financial statements
REVIEW DRAFT 9/ (0) O 2:39 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
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 employees 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 ofAccounting
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.
REVIEW DRAFT Septe7b23,2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
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.
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 1— DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
C. Investments
Investments held at June 30, 2015 and 2014 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 7-15
REVIEW DRAFT September 23, 2015 2:36 PM
9
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
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 %2 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.
I. 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.
REVIEW DRAFT September 23, 2015 2:36 PM
9
2015
2014
Beginning Balance
$3,846,393
$3,833,245
Additions
413,745
391,927
Payments
(227,867)
(378,779)
Ending Balance
$4,032,271
$3,846,393
Current Portion
$403,000
$385,000
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.
REVIEW DRAFT September 23, 2015 2:36 PM
9
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
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. 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 implemented this Statement in fiscal year ending June 30, 2015, which
required a restatement to the District's financial statements. The financial statements for fiscal
year ended June 30, 2014 could not be restated as the information required to do so was not
readily available. See Note 9 for additional information.
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, 2015.
This Statement did not have any impact on the financial statements.
GASB Statement No. 70 — In 2013, the GASB issued Statement No. 70, Accounting and
Financial Reporting for Nonexchange Finance Guarantees. This Statement requires a
government that extends a nonexchange financial guarantee to recognize a liability when
qualitative factors and historical data, if any, indicate that it is more than likely than not the
government will be required to make a payment on that guarantee. The provisions of this
Statement are effective for reporting periods beginning after June 15, 2013, therefore, the District
implemented this statement for fiscal year ended June 30, 2015, and had no impact on the
financial statements.
REVIEW DRAFT Septem 23, 2015 2:36 PM .
2�
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 1– DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
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 implemented this Statement in fiscal year ending June
30, 2015, along with GASB 68 as discussed above.
GASB Statement No. 72 – In 2015, the GASB issued Statement No. 72, Fair Value
Measurement and Application. This Statement addresses accounting and financial reporting
issues related to fair value measurements. The Statement provides guidance for determining a
fair value measurement for financial reporting purposes. This Statement also provides guidance
for applying fair value to certain investments and disclosures related to all fair value
measurements. The requirements of this Statement are effective for financial statements for
period beginning after June 15, 2015, therefore, the District will implement this Statement in
fiscal year ending June 30, 2016.
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:
Cash and cash equivalents
Short term investments
Restricted cash and cash equivalents
Restricted investments
Total Cash and Investments
B. Policies and Practices
2015 2014
$45,218,013
$47,929,530
15,498,572
9,993,211
100,000
100,000
4,856,450 5,474,874
$65,673,035 $63,497,615
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.
REVIEW DRAFT September 23, 2015 2:36 PM
(/))-2-
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 2 — CASH AND INVESTMENTS (Continued)
C. GeneralAuthorizations
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
D. hrterest 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:
REVIEW DRAFT September 23, 2015 3:24 PM
1 011
Maximum
Maximum
Maximum
Maximum
Percentage
Minimum
Remaining
Percentage
Investment
of Portfolio
Legal
Authorized Investment Type
Maturity
of Portfolio
In One Issuer
(Per Issuer)
Quality
U.S. Treasury Obligations
5 years
None
None
100%
N/A
Banker's Acceptances
180
40%
40%
10%
N/A
Commercial Paper (1)
270
25%
10%
10%
Aaa
Collateralized Certificates of Deposit (2)
5 years
30%
None
10%
Aaa
County Pooled Investment Funds
N/A
None
None
100%
N/A
Local Agency Investment Fund (LAIF)
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 and LAIF.
D. hrterest 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:
REVIEW DRAFT September 23, 2015 3:24 PM
1 011
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 2 — CASH AND INVESTMENTS (Continued)
Investment Type
Certificates of Deposit - Debt Reserve
Money Market - Debt Reserve
Certificates of Deposit
Commercial Paper - Union Bank
Commercial Paper - Toyota Motor Credit
Commercial Paper - Toyota Motor Corp
Commercial Paper - General Electric
U.S Federal Agency Securities - FHLB
U.S Federal Agency Securities - FNMA
California Local Agency Investment Fund
Total Investments
Cash in bank
Total Cash and Investments
E. Credit Risk
2015
12 Months
or less Maturity
$4,856,450 4/28/17
2,250,000 7/24/15
5,000,000
2,250,000
2,500,000
2,500,000
1,000,000
43,000,000
63,356,450
2,316,585
$65,673,035
7/24/15
7/24/15
7/24/15
7/22/15
8/12/15
Not applicable
46,500,000
61,974,873
1,522,742
$63,497,615
Not applicable
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 June 30, of each
investment type:
Investment
Rated Aaa:
Certificates of Deposit
Money Market - Debt Reserve
U.S. Federal Agency Securities
Commercial Paper
Totals
Not rated:
California Local Agency Investment Fund
Cash,in Bank
Total Cash and Investments
Totals
2015 2014
$7,106,450
3,500,000
9,750,000
20,356,450
43,000,000
2,316,585
$65,673,035
$4,856,450
618,423
10,000,000
15,474,873
46,500,000
1,522,742
$63,497,615
REVIEW DRAFT September 23, 2015 3:25 PM
2014
12 Months
or less
Maturity
$4,856,450
4/28/15
618,423
24 days (avg.)
5,000,000
7/25/14
5,000,000
10/21/14
46,500,000
61,974,873
1,522,742
$63,497,615
Not applicable
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 June 30, of each
investment type:
Investment
Rated Aaa:
Certificates of Deposit
Money Market - Debt Reserve
U.S. Federal Agency Securities
Commercial Paper
Totals
Not rated:
California Local Agency Investment Fund
Cash,in Bank
Total Cash and Investments
Totals
2015 2014
$7,106,450
3,500,000
9,750,000
20,356,450
43,000,000
2,316,585
$65,673,035
$4,856,450
618,423
10,000,000
15,474,873
46,500,000
1,522,742
$63,497,615
REVIEW DRAFT September 23, 2015 3:25 PM
CENTRAL CONTRA, COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 2 — CASH AND INVESTMENTS (Continued)
F. Concentration of Credit Risk
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, 2015
and 2014, these investments matured in an average of 191 and 232 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.
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, 2015 and 2014 are comprised of the following:
City of Concord (see Note 8)
Household Hazardous Waste Partners
All Other
Total Accounts Receivable
REVIEW DRAFT Septem��2015
r�
2015
$15,790,436
749,827
2014
$15,446,722
755,296
601,211 742,975
$17,141,474 $16,944,993
2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 4 — ASSESSMENT DISTRICTS RECEIVABLE
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, 2015 and
2014 was $289,505 and $353,380, 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,
2015 and 2014 was $1,380,181 and $1,485,110, respectively.
The total receivable balance at June 30, 2015 and 2014 for CAD and AVAD was $1,669,686 and
$1,838,490, and is shown as a non - current asset on the Statement of Net Position.
REVIEW DRAFT September 23, 2015 2:36 PM
OU
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 5 — CAPITAL ASSETS
Property, plant and equipment, and construction in progress are summarized below for the year
ended June 30, 2015:
57,348,606
4,379,033
(580,000)
61,147,639
Contributed sewer lines
53,161,229
Balance at
55,204,677
Transfers &
Balance at
150,964
June 30, 2014
Additions
Retirements
Adjustments
June 30, 2015
Capital assets not being depreciated:
200,602,861
Recycled water infrastructure
6,527,311
749,676
Land
$17,320,570
26,503,493
2,219,770
(80,000)
$17,320,570
Easements (intangible)
4,812,127
1,228,278
$63,380
4,875,507
Construction in Progress
27,508,158
$23,254,156
($5,629)
(36,798,039)
13,958,646
Total nondepreciated assets
49,640,855
23,254,156
(5,629)
(36,734,659)
36,154,723
Capital assets being depreciated:
378,045,297
Total capital assets being
Sewage collection system
318,206,017
558,942,413
(580,000)
13,541,365
331,167,382
Contributed senor lines
152,297,246
633,208
(5,582)
166,592
153,091,464
Out fall severs
11,339,298
11,339,298
Sewage treatment plant
303,606,835
(850,000)
17,960,583
320,717,418
Recycled water infrastructure
17,127,656
1,937,483
19,065,139
Pumping stations
54,956,574
(80,000)
1,169,989
56,046,563
Buildings
42,196,085
216,563
42,412,648
Furniture and equipment
10,025,826
(450,000)
1,310,181
10,886,007
Motor vehicles
6,721,031
(269,800)
431,903
6,883,134
Total depreciated assets
916,476,568
633,208
(2,235,382)
36,734,659
951,609,053
Less accumulated deprecialion:
Sewage collection system
57,348,606
4,379,033
(580,000)
61,147,639
Contributed sewer lines
53,161,229
2,043,448
55,204,677
Out fall sewers
3,163,443
150,964
3,314,407
Sewage treatment plant
190,858,122
10,594,739
(850,000)
200,602,861
Recycled water infrastructure
6,527,311
749,676
7,276,987
Pumping stations
26,503,493
2,219,770
(80,000)
28,643,263
Buildings
9,158,948
1,228,278
10,387,226
Furniture and equipment
6,473,327
1,026,524
(450,000)
7,049,851
Motor vehicles
4,339,676
348,510
(269,800)
4,418,386
Total accumulated depreciation
357,534,155
22,740,942
(2,229,800)
378,045,297
Total capital assets being
depreciated, net
558,942,413
(22,107,734)
(5,582) 36,734,659
573,563,756
Capital assets, net
$608,583,268
$1,146,422
($11,211)
$609,718,479
REVIEW DRAFT September a 2015 8:07 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
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
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
6,572,028
318,206,017
150,834,930
1,153,968
308,348
152,297,246
11,338,935
363
11,339,298
299,830,466
(102,000)
3,878,369
303,606,835
13,515,026
3,612,630
17,127,656
54,412,730
(25,000)
568,844
54,956,574
36,120,720
(38,000)
6,113,365
42,196,085
4,596,467
(4,596,467)
15,651,212
(6,408,774)
783,388
10,025,826
6,558,065
(89,150)
252,116
6,721,031
904,492,540
1,153,968
(6,662,924)
17,492,984
916,476,568
53,103,663
4,244,943
57,348,606
51,127,280
2,033,949
53,161,229
3,012,481
150,962
3,163,443
180,670,824
10,289,298
(102,000)
190,858,122
5,898,343
628,968
6,527,311
24,342,929
2,185,564
(25,000)
26,503,493
8,059,168
1,137,780
(38,000)
9,158,948
135,316
(135,316)
11,851,588
1,028,553
(6,406,814)
6,473,327
4,100,982
327,844
(89,150)
4,339,676
Total accumulated depreciation 342,302,574 22,027,861 (6,660,964) (135,316) 357,534,155
Total capital assets being
depreciated, net
Capital assets, net
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
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 6 — LONG -TERM DEBT
A. Summary of Activity
The changes in the District's long -term obligations during the year ended June 30, 2015 consisted
of the following:
2009 Series A Certificates of Participation
Wastewater Revenue
3.45- 3.78 %, due 9/1/2029
2009 Series B Certificates of Participation
Wastewater Revenue
.40- 3.79°/x, due 9/1/2029
1999 State Water Resources Control Board
Water Reclamation Loan
2.60 %, due 3/31/2018
Total Long -Term Debt
Less current portion
Original Amount
Issue Balance Balance due within
Amount June 30, 2014 Retirements June 30, 2015 one year
$19,635,000 $19,635,000
$19,635,000
34,490,000 20,240,000 $3,865,000 16,375,000 $2,210,000
2,916,872 702,245
168,860 533,385 173,251
40,577,245
$4,033,860 36,543,385 $2,383,251
(4,033,861)
(2,383,251)
$36,543,384
$34,160,134
The changes in the District's long -term obligations during the year ended June 30, 2014 consisted
of the following:
2009 Series A Certificates of Participation
Wastewater Revenue
3.45 - 3.78 %, due 9/1/2029
2009 Series B Certificates of Participation
Wastewater Revenue
.40- 3.79 %, due 9/1/2029
1999 State Water Resources Control Board
Water Reclamation Loan
2.60 %, due 3/31/2018
Total Long -Tenn Debt
Less current portion
Original Amount
Issue Balance Balance due within
Amount June 30, 2013 Retirements June 30, 2014 one year
$19,635,000 $19,635,000
$19,635,000
34,490,000 23,960,000 $3,720,000 20,240,000 $3,865,000
2,916,872 866,827 164,582 702,245 168,861
44,461,827 $3,884,582 40,577,245 $4,033,861
(3,884,582) (4,033,861)
$40,577,245 $36,543,384
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 6 — LONG -TERM DEBT (Continued)
B. Debt Service Requirements
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
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)
32575,346
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
1,190,840
2,580,000
226,950
2,580,000
1,417,790
(416,794)
3,580,996
2021-2025
$8,890,000
4,629,784
4,400,000
377,958
13,290,000
5,007,742
(1,620,424)
16,677,318
2026-2030
10,745,000
1,582,862
10,745,000
1,582,862
(554,002)
11,773,860
Total
$19,635,000
$12,166,846
$16,375,000
$2,460,899
$36,010,000
$14,627,745
($4,258,39
$46,379,349
As part of the Federal budget sequestration, the Internal Revenue Service (IRS) has announced
that, as of March 1, 2015, credit payments claimed by issuers of certain tax credit bonds,
including Build America Bonds, may be subject to a reduction of 7.3 %.
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.
REVIEW DRAFT September 23, 2015 2:36 PM
&v
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 6 — LONG -TERM DEBT (Continued)
The District must repay advances from the Board over a 20 -year period beginning March 31,
1999, with an interest rate of 2.60 %. Debt service requirements are as follows:
Fiscal Year
Ending June 30
2016
2017
2018
Total
NOTE 7 — RISK MANAGEMENT
Principal
Interest
Total
$173,251
$13,867
$187,118
177,756
9,363
187,119
182,378
4,742
187,120
$533,385
$27,972
$561,357
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
Chartis Specialty Insurance Co.
15,000,000
1,000,000
The District's insurance coverage is as follows:
Chartis Specialty Insurance Co.
15,000,000
1,000,000
Employment Practices Liability
Hiscox Insurance Company
Self Insured
35,000
General Liability
Chartis Specialty Insurance Co.
Deductible Per
Type of Coverage
Insurer
Limits
Occurrence
All -Risk Property:
Pollution (General Aggregate)
Aspen Specialty Insurance Company
9,000,000
Special Form Property
Public Entity Property Insurance
Aspen Specialty Insurance Company
1,000,000
5,000
Program (PEPIP)
$552,288,290
$250,000
Boiler and Machinery
Public Entity Property Insurance
RLI Insurance Company
1,000,000
(Shared Limits per Occurrence)
Program (PEP1P)
100,000,000
250,000
Crime
Alliant
1,000,000
2,500
Liability:
Errors and Omissions
Chartis Specialty Insurance Co.
15,000,000
1,000,000
Employment Practices Liability
Chartis Specialty Insurance Co.
15,000,000
1,000,000
Employment Practices Liability
Hiscox Insurance Company
1,000,000
35,000
General Liability
Chartis Specialty Insurance Co.
15,000,000
1,000,000
Auto Liability
Chartis Specialty Insurance Co.
15,000,000
1,000,000
Pollution (General Aggregate)
Aspen Specialty Insurance Company
9,000,000
50,000
General Liability (Occurrence)
Aspen Specialty Insurance Company
1,000,000
5,000
Pollution (Legal Liability Aggregate)
Aspen Specialty Insurance Company
9,000,000
50,000
Fiduciary Liability
RLI Insurance Company
1,000,000
0
Workers' Compensation:
Excess Workers' Compensation
CSRMA
Statutory
0
REVIEW DRAFT September-Z3,2015 2:36 PM
bi
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 7 — RISK MANAGEMENT (Continued)
B. 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, 2015, 2014, and 2013, settlements have not exceeded insurance
coverage. Changes in the District's estimated liability for retained losses are summarized as
follows as of June 30:
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 $12,892,945 and $2,897,491,
respectively, for the year ended June 30, 2015, for a total of $15,790,436. 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.
REVIEW DRAFT September 23, 2015 2:36 PM
(9
2015
2014
2013
Beginning balance
$1,000,000
$1,000,000
$1,000,000
Provisions for claims incurred in the current year
and changes in the liability for retained-
losses incurred in prior years
499,956
171,806
1,659,291
Claims paid and/or adjustments
(499,956)
(171,806)
(1,659,291)
Ending balance
$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 $12,892,945 and $2,897,491,
respectively, for the year ended June 30, 2015, for a total of $15,790,436. 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.
REVIEW DRAFT September 23, 2015 2:36 PM
(9
CENTRAL CONTRA. COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 9 — PENSION PLANS
A. Contra Costa County Employees' Retirement Association Pension Plan
Plan Descriptions — 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, and the California Public Employees' Pension Reform Act
of 2013 (PEPRA). The latest available actuarial and financial information for the Plan is for the
year ended December 31, 2014. CCCERA 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.
Benefits Provided — 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.
The Plans' provisions and benefits in effect at June 30, 2015, are summarized as follows:
Miscellaneous
on or7 er
Hire date Prior to January 1, 2013 January 1, 2013
Benefit formula 2% at 55 2.5% at 67
Benefit vesting schedule
10 years service
5 years service
Benefit payments
monthly for life
monthly for life
Retirement age
50
52
Monthly benefits, as a % of eligible compensation
0% to 100%
No limit
Required employee contribution rates
7.93% - 8.22%
6,72%
Required employer contribution rates
74.93% - 77.24%
66.77%
Contributions — 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. For the year ended June 30, 2015, the
contributions recognized as part of pension expense for the Plan were $20,795,609.
REVIEW DRAFT September 23, 2015 2:36 PM
3
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 9 — PENSION PLANS (continued)
Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions - As of June 30, 2015, the District reported net pension liabilities for its proportionate
share of the net pension liability of the Plan as follows:
Miscellaneous
Total Net Pension Liability
Proportionate Share
of Net Pension Liability
$89,535,510
$89,535,510
The District's net pension liability for the Plan is measured as the proportionate share of the net
pension liability. The net pension liability of the Plan is measured as of December 31, 2014, and
the total pension liability for the Plan used to calculate the net pension liability was determined by
an actuarial valuation as of December 31, 2013 rolled forward to December 31, 2014 using
standard update procedures. The District's proportion of the net pension liability was based on a
projection of the District's long -term share of contributions to the pension plan relative to the
projected contributions of all participating employers, actuarially determined. The District's
proportionate share of the net pension liability for the Plan as of December 31, 2013 and 2014
was as follows:
For the year ended June 30, 2015, the District recognized pension expense of $20,795,609. At
June 30, 2015, the District reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Pension contributions subsequent to measurement date
Differences between expected and actual experience
Changes of assumptions
Change in proportion and differences between employer
contributions and proportionate share of contributions
Net difference between projected and actual earnings
on pension plan investments
Total
Deferred Outflows Deferred Inflows
of Resources of Resources
$10,499,528
$10,759,725
4,431
1,920,610
800,237
$12,420,138 $11,564,393
REVIEW DRAFT September 23, 2015 2 :36 PM
4
Proportionate share of the Net
Plan Fiduciary Net
Reporting Date for
Proportion of the
Covered-
Pension Liability as a
Pension as a percentage
Employer under GASB 68
Net Pension
Proportionate share of
employee
percentage of its covered-
of the Total Pension
as of June 30
Liability
Net Pension Liability
payroll
employee payroll
Liability
2014
7.488%
$1I0,183,830
$25,791,346
427.21%
67.22%
2015
7.488%
89,535,510
26,906,131
332.77%
73.86%
For the year ended June 30, 2015, the District recognized pension expense of $20,795,609. At
June 30, 2015, the District reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Pension contributions subsequent to measurement date
Differences between expected and actual experience
Changes of assumptions
Change in proportion and differences between employer
contributions and proportionate share of contributions
Net difference between projected and actual earnings
on pension plan investments
Total
Deferred Outflows Deferred Inflows
of Resources of Resources
$10,499,528
$10,759,725
4,431
1,920,610
800,237
$12,420,138 $11,564,393
REVIEW DRAFT September 23, 2015 2 :36 PM
4
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 9 — PENSION PLANS (continued)
The $10,499,528 reported as deferred outflows of resources related to contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year
ended June 30, 2016.
Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized as pension expense as follows:
Year Ended
June 30
Deferred Outflows
of Resources
2016
$529,076
2017
529,076
2018
529,076
2019
333,383
2020
-
Deferred Inflows
of Resources
$3,185,676
3,185,676
3,185,676
2,007,366
Actuarial Assumptions — The total pension liabilities in the December 31, 2013 actuarial
valuations were determined using the following actuarial assumptions:
Valuation Date
Measurement Date
Actuarial Cost Method
Amortization Method
Actuarial Assumptions:
Discount Rate
Inflation Rate
Payroll Growth
Projected Salary Increase
Cost of Living Adjustments
Investment Rate of Return
Mortality
Miscellaneous
December 31, 2013
December 31, 2014
Entry Age Actuarial Cost Method
Level percent of payroll for total unfunded liability
7.25%
3.25%
4.00%
4.75% - 13.50% (1)
3.00%
7.25%(2)
RP -2000 Combined Healthy Mortality Table
(1) Vary by service, including inflation
(2) Net of pension plan investment expenses, including inflation
REVIEW DRAFT September 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 9 — PENSION PLANS (continued)
Discount Rate — The discount rate used to measure the total pension liability was 7.25% for the
Plan. The projection of cash flows used to determine the discount rate assumed plan member
contributions will be made at the current contribution rate and that employer contributions will be
made at rates equal to the actuarially determined contribution rates. For this purpose, only
employee and employer contributions that are intended to fund benefits for current plan members
and their beneficiaries are included. Projected employer contributions that are intended to fund
the service costs for future plan members and their beneficiaries, as well as projected
contributions from future plan members, are not included. Based on those assumptions, the
pension plan's fiduciary net position was projected to be available to make all projected future
benefit payments for current plan members. Therefore, the long -term expected rate of return on
pension plan investments was applied to all periods of projected benefit payments to determine
the total pension liability as December 31, 2014.
The long -term expected rate of return on pension plan investments was determined in 2013 using
a building -block method in which expected future real rates of return (expected returns, net of
inflation) are developed for each major asset class. The target allocation and projected arithmetic
real rates of return for each major asset class, after deducting inflation, but before investment
expenses, used in the derivation of the long -term expected investment rate of return assumption
are summarized in the following table:
Long -Term
Target Expected Real
Asset Class Allocation Rate of Return
Large Cap U.S. Equity
13.60%
6.09%
Small Cap U.S. Equity
5.80%
6.79%
Developed International Equity
17.60%
6.66%
Emerging Markets Equity
5.60%
8.02%
U.S. Core Fixed Income
16.10%
0.83%
International Bonds
3.30%
0.69%
High Yield Bonds
5.00%
3.32%
Inflation- Indexed Bonds
1.66%
0.73%
Long Duratino Fixed Income
5.00%
1.45%
Real Estate
12.50%
4.83%
Commodities
1.67%
4.71%
Private Equity
10.00%
8.95%
Alternative Investment (Timber)
1.67%
4.20%
Cash & Equivalents
0.50%
0.25%
Total
100%
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 9 — PENSION PLANS (continued)
• change in the discount rate would affect the measurement of the Total Pension Liability (TPL).
• lower discount rate results in a higher TPL and higher discount rates results in a lower TPL.
Because the discount rate does not affect the measurement of assets, the percentage change in the
Net Pension Liability (NPL) can be very significant for a relatively small change in the discount
rate. The table below shows the sensitivity of the NPL to a one percent decrease and a one percent
increase in the discount rate:
Miscellaneous
1% Decrease 6.25%
Net Pension Liability $133,403,317
Current Discount Rate 7.25%
Net Pension Liability $89,535,510
1% Increase 8.25%
Net Pension Liability $53,123,397
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 $1,740,604 and $1,646,041 to
the Plan during the years ended June 30, 2015 and 2014, 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.
REVIEW DRAFT September 23, 2015 2:36 PM
01
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
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.
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 $1,206,765 and $1,207,678 as of June 30, 2015 and 2014, 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 2015, the District's annual OPEB cost (expense) was equal to the ARC of $8,128,000. The
District contributed $5,314,087 for retiree health care premiums and $2,810,000 to the PARS
trust for a total of $8,124,087. The following table summarizes the changes in the District's net
OPEB (Asset) at June 30, 2015:
REVIEW DRAFT September 2 015 2:36 PM
C130
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 10 — POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
Net OPEB Obligation (Asset) at June 30, 2013 ($1,537,638)
Annual Required Contribution (ARC)
$8,103,000
Interest on Net OPEB Asset
(95,000)
Adjustment to ARC
120,000
Annual OPEB Cost (AOC)
8,128,000
Contributions Made:
8,128,000
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)
Annual Required Contribution (ARC) 8,103,000
Interest on Net OPEB Asset (75,000)
Adjustment to ARC 97,000
Annual OPEB Cost (AOC) 8,125,000
Contributions Made;
Health care premiums paid (5,314,087)
Contributions to PARS trust (2,810,000)
Increase (decrease) in net OPEB obligation 913
Net OPEB Obligation (Asset) at June 30, 2015 ($1,206,765)
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:
Actual
C ontrihution
$8,590,096
7,798,040
8,124,087
Percentage of
AOC
Contributed
103%
96%
100%
Annual
Current
OPEB Cost
Fiscal Year
(AOC)
June 30, 2013
$8,316,000
June 30, 2014
8,128,000
June 30, 2015
8,125,000
Actual
C ontrihution
$8,590,096
7,798,040
8,124,087
Percentage of
AOC
Contributed
103%
96%
100%
REVIEW DRAFT September 23, 2015 4:20 PM
(9
Net OPEB
Current
Obligation
Year AOC
(Asset)
($274,096)
($1,537,638)
329,960
(1,207,678)
913
(1,206,765)
REVIEW DRAFT September 23, 2015 4:20 PM
(9
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 10 — POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
D. Funded Status and Funding Progress
Per PARS, trust assets as of June 30, 2015 and 2014, including trust contributions and interest,
total $39,917,736 and $36,131,536, 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 information below and the required supplementary information immediately following
the notes to the financial statements 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. Trend data from the most recent actuarial study is presented below:
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, 2014 and was finalized
on April 6, 2015. The July 1, 2012 actuarial valuation results are budgeted in fiscal year 2014-
15.
REVIEW DRAFT September 23, 2015 3:52 PM
0
Unfunded
Unfunded
(Overfunded)
Cost Method
(Overfunded)
Actuarial
Actuarial
Actuarial
Actuarial
Covered Payroll
Liability as
Actuarial
Value of
Accrued
Accrued
Funded
(Active Plan
Percentage of
Valuation
Assets
Liability
Liability
Ratio
Members)
Covered Payroll
Date
(A)
(B)
(A — B) UAAL
(A/B)
(C)
l(A — B) /C1
July 1, 2014
$33,695,000
$103,904,000
($70,209,000)
32.43%
$27,930,233
251%
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, 2014 and was finalized
on April 6, 2015. The July 1, 2012 actuarial valuation results are budgeted in fiscal year 2014-
15.
REVIEW DRAFT September 23, 2015 3:52 PM
0
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
NOTE 10 — POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
The following is a summary of the actuarial assumptions and methods:
Valuation Date
Actuarial Cost Method
Amortization Method
Average Remaining Period
Actuarial Assumptions:
Inflation Rate
Investment Rate of Return
Projected Salary Increases
Post - Retirement Benefit Increases
Health Care Cost Trend Rates
NOTE 11— NET POSITION
July 1, 2014
Entry Age Normal Cost Method
Level Dollar /Closed
25 Years fixed
3.00%
6.25%
3.25%
No planned changes
Medical - 8.3% 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.
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, 2015:
Fiscal Year
Ending
2016
Total
Office
Equipment
$249,924
Facilities
Total
$29,712 $279,636
$249,924 $29,712 $279,636
Total rental expense for the fiscal years ended June 30, 2015 and 2014 was $308,484 and
$309,320, respectively.
REVIEW DRAFT September 23, 2015 3:53 PM
om
CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended 30, 2015 AND 2014
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 $9,493,695 and $13,901,807 as of June 30, 2015 and 2014, respectively.
REVIEW DRAFT September 23, 2015 2:36 PM
0+-2-
REQUIRED SUPPLEMENTARY INFORMATION
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
Cost - Sharing Multiple Employer Defined Benefit Retirement Plan
As of fiscal year ended June 30, 2015
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Years*
Reconcilitation of Net Pension Liability
Beginning Net Pension Liability $ 110,183,830
Pension expense 13,446,697
Employer contributions (24,451,234)
New net deferred inflows/outlfows (11,564,393)
New net deferred outflows to change in proportion 1,920,610
Net pension liability - ending $ 89,535,510
Plan fiduciary net position as a percentage of the total pension liability 85.25%
Covered - employee payroll $ 26,906,131
Net pension liability as percentage of covered - employee payroll 332.77%
Notes to Schedule:
Changes in assumptions - In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages of
general employees.
* Fiscal year 2015 was the 1st year of implementation, therefore only one year is shown.
REVIEW DRAFT September 23, 2015 2:36 PM
2015
Net Change in Total Pension Liability
Service Cost $
14,396,402
Interest on the Total Pension Liability
42,024,521
Expensed portion of current -period changes in proportion and difference
between employer's contributions and proportionate share of
contributions
533,503
Expensed portion of current -period benefit changes
-
Expensed portion of current -period difference between expected and
actual experience in the Total Pension Liability
(2,988,813)
Expensed portion of current -period changes of assumptions or other
inputs
(1,231)
Member contributions
(5,860,025)
Projected earnings on plan investments
(34,980,271)
Expensed portion of current -period differences between actual and
projected earnings on plan investments
(200,059)
Administrative expense
522,670
Other
-
Recognition of beginning of year deferred outflows of resources as
pension expense
-
Recognition of beginning of year deferred inflows of resources as
pension expense
-
Net amortization of deferred amounts from changes in proportion and
differences between employer's contributions and proportionate share of
contributions
-
Net change in total pension liability $
13,446,697
Reconcilitation of Net Pension Liability
Beginning Net Pension Liability $ 110,183,830
Pension expense 13,446,697
Employer contributions (24,451,234)
New net deferred inflows/outlfows (11,564,393)
New net deferred outflows to change in proportion 1,920,610
Net pension liability - ending $ 89,535,510
Plan fiduciary net position as a percentage of the total pension liability 85.25%
Covered - employee payroll $ 26,906,131
Net pension liability as percentage of covered - employee payroll 332.77%
Notes to Schedule:
Changes in assumptions - In 2015, amounts reported as changes in assumptions resulted primarily from adjustments to expected retirement ages of
general employees.
* Fiscal year 2015 was the 1st year of implementation, therefore only one year is shown.
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
Cost - Sharing Multiple Employer Defined Benefit Retirement Plan
As of fiscal year ending June 30, 2015
SCHEDULE OF CONTRIBUTIONS
Last 10 Years*
Actuarially determined contribution
Contributions in relation to the actuarially
determined contributions
Contribution deficiency (excess)
Covered - employee payroll
Contributions as a percentage of covered -
employee payroll
Notes to Schedule
Valuation date:
2015
$ 24,451,234
24,451,234
$ 26,906,131
Methods and assumptions used to determine contribution rates:
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Inflation
Salary increases
90.88%
12/31/2013
Entry age
Level percentage of payroll, closed
9 years **
5 -year semi - annually
3.25%
4.75% - 13.50%
Investment rate of return 7.25 %, net of pension plan investment expense, including inflation
Retirement age 50 years Classic, 52 years PEPRA
Mortality RP -2000 Combined Healthy Mortality Table
with setbacks and forwards
* Fiscal year 2015 was the 1 st year of implementation, therefore only one year is shown.
** Remaining balance of December 31, 2007 UAAL is amortized over a fixed (decreasing or closed) period
with 9 years remaining as of December 31, 2013. Any changes in UAAL after December 31, 2007 will be
separately amortized over a fixed 18 -year period effective with that valuation. Any changes in UAAL due
to plan amendments will be amortized over a 10 -year fixed period effective with that valuation.
REVIEW DRAFT September 23, 2015 2:36 PM
8
Actuarial
Valuation
Date
June 30, 2010
July 1, 2012
July 1, 2014
CENTRAL CONTRA COSTA SANITARY DISTRICT
Post Retirement Health Care Defined Benefit Plan
Schedule of Funding Progress
As of fiscal year ended June 30, 2015
Last Three Valuations
REVIEW DRAFT September 23, 2015 2:36 PM
Unfunded
Unfunded
(Overfunded)
Cost Method
(Overfunded)
Actuarial
Actuarial
Actuarial
Actuarial
Covered Payroll
Liability as
Value of
Accrued
Accrued
Funded
(Active Plan
Percentage of
Assets
Liability
Liability
Ratio
Members)
Covered Payroll
(A)
(B)
(A — B) UAAL
(AB)
(C)
[(A — B) /Cl
$9,404,000
$90,337,000
($80,933,000)
10.41%
$25,080,233
323%
22,481,000
100,498,000
(78,017,000)
22.37%
24,305,548
321%
33,695,000
103,904,000
(70,209,000)
32.43%
27,930,233
251%
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SUPPLEMENTARY INFORMATION
REVIEW DRAFT September 23, 2015 2:36 PM
CENTRAL CONTRA COSTA SANITARY DISTRICT
COMBINING SCHEDULE OF NET POSITION
ENTERPRISE SUB -FUNDS
JUNE 30, 2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Short term investments
Accounts receivable
Interest receivable
Parts and supplies
Prepaid expenses
Total current assets
NON- CURRENT ASSETS:
Restricted cash and equivalents
Restricted investments
Assessment Districts receivable
Net OPEB asset
CAPITAL ASSETS
Nondepreciable
Depreciable, net of accumulated depreciation
Total capital assets, net
Total non - current assets
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES
Pension related
LIABILITIES
CURRENT LIABILITIES:
Accounts payable and accrued expenses
Interest payable
Refunding Water Revenue Bonds - current portion
Water Reclamation Loan Contract - current portion
Accrued compensated absences - current portion
Liability for uninsured claims
Refundable deposits
Total current liabilities
NON - CURRENT LIABILITIES:
Refunding Water Revenue Bonds, noncurrent portion
Water Reclamation Loan Contract, noncurrent portion
Accrued compensated absences, noncurrent portion
Net pension liability
Total noncurrent liabilities
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Pension related
NET POSITION
Net investment in capital assets
Restricted for debt service
Unrestricted
TOTAL NET POSITION
Running
Sewer
Self
Debt
Expense
Construction
Insurance
Service
$36,519,705
$2,170,462
$6,527,846
15,498,572
2,210,000
14,014,359
3,127,115
173,251
173,251
403,000
6,662
$53,405
2,079,435
1,000,000
2,556,794
1,000,000
134,969
111,979
55,170,293
20,802,811
6,527,846
53,405
100,000
1,669,686
1,206,765
4,856,450
Elimination Total
$45,218,013
15,498,572
17,141,474
60,067
2,079,435
2,556,794
82,554,355
100,000
4,856,450
1,669,686
1,206,765
36,154,723
36,154,723
573,563,756
573,563,756
609,718,479 - - -
609,718,479
611,025,244 1,669,686 - 4,856,450
617,551,380
666,195,537 22,472,497 6,527,846 4,909,855
700,105,735
12,420,138 - - - 12,420,138
2,883,250
2,372,067
119,124
5,374,441
621,847
621,847
2,210,000
2,210,000
173,251
173,251
403,000
403,000
1,000,000
1,000,000
134,969
111,979
246,948
3,421,219
2,484,046
1,119,124
3,005,098
- 10,029,487
33,800,000
33,800,000
360,134
360,134
3,629,271
3,629,271
89,535,510
89,535,510
93,164,781
-
-
34,160,134
- 127,324,915
96,586,000
2,484,046
1,119,124
37,165,232
- 137,354,402
11,564,393
11,564,393
609,718,479
(36,543,385)
573,175,094
4,288,008
4,288,008
(39,253,197)
19,988,451
5,408,722
(13,856,024)
$570,465,282
$19,988,451
$5,408,722
($32,255,377)
- $563,607,078
2
CENTRAL CONTRA COSTA SANITARY DISTRICT
COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
ENTERPRISE SUB -FUNDS
FOR THE YEAR ENDING JUNE 30, 2015
OPERATING REVENUES
Sewer service charges (SSC)
Service charges - City of Concord
Other services charges
Miscellaneous charges
Total operating revenues
OPERATING EXPENSES
Sewage collection and pumping stations
Sewage treatment
Engineering
Administrative and general
Pension expense
Depreciation
Total operating expenses
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Taxes
Permit and inspection fees
Interest earnings
Interest expense
Other income (expense), net
Total nonoperating revenues
NET INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS
Running
Sewer
Self
Debt
Expense
Construction
Insurance
Service
Elimination
Total
$70,023,512
$70,023,512
12,892,945
12,892,945
1,006,197
1,006,197
593,780
593,780
84,516,434
84,516,434
18,200,513
18,200,513
29,507,722
29,507,722
13,200,972
13,200,972
23,217,017
$1,333,518
($837,137)
23,713,398
(3,012,757)
(3,012,757)
22,740,942
22,740,942
103,854,409
1,333,518
(837,137)
104,350,790
(19,337,975)
(1,333,518)
837,137
(19,834,356)
$8,568,942
$5,514,389
14,083,331
1,529,282
314,660
1,843,942
166,213
98,829
10,832
42,601
318,475
(1,523,127)
(1,523,127)
681,523
1,147,007
837,137
(837,137)
1,828,530
2,377,018
10,129,438
847,969
4,033,863
(837,137)
16,551,151
(16,960,957)
10,129,438
(485,549)
4,033,863
-
(3,283,205)
CAPITAL CONTRIBUTIONS AND TRANSFERS
City of Concord contributions to capital costs
Customer contributions to capital cost (SSC)
Contributed sewer lines
Capital contributions - connection fees
Transfers In (Out)
Total capital contributions and transfers
2,897,491 2,897,491
3,872,132 3,872,132
794,218 794,218
6,673,298 6,673,298
68,756,177 (34,882,677) 2,415,740 (36,289,240)
69,550,395 (21,439,756) 2,415,740 (36,289,240) 14,237,139
CHANGE IN NET POSITION 52,589,438 (11,310,318) 1,930,191 (32,255,377) 10,953,934
NET POSITION, BEGINNING OF YEAR 609,568,366 31,298,769 3,478,531 644,345,666
Prior period adjustment due to implementation of
GASB Statements 68 and 71 (91,692,522) (91,692,522)
NET POSITION, END OF YEAR $570,465,282 $19,988,451 $5,408,722 ($32,255,377) $563,607,078
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, 2015
Sewage
Sewage Treatment Pumping
Administration Engineering Collection Plant Station
Variance
Favorable
Total Budget _ (Unfavorable)
$5,102,955 $6,297,739 $5,579,510 $9,664,530 $1,000,360 $27,645,094 $28,618,169 $973,075
14,401,040 7,321,071 6,793,803 11,500,843 1,121,003 41,137,760 41,833,388 695,628
(14,802) (2,506,166) (38,429) (117,410) (1,417) (2,678,224) (3,806,958) (1,128,734)
19,489,193
11,112,644
12,334,884
21,047,963
2,119,946
66,104,630
66,644,599
539,969
148,449
-
-
-
-
148,449
199,800
51,351
-
-
-
1,066,497
434,704
1,501,201
1,605,000
103,799
73,114
181,086
140,127
3,126,373
510,336
4,031,036
4,861,350
830,314
503,221
177,385
1,171,342
1,764,762
256,847
3,873,557
4,911,762
1,038,205
-
409,489
121,421
344,967
8,826
884,703
1,040,200
155,497
311,348
109,298
5,765
91233
-
435,644
539,400
103,756
1,446,640
826,917
44,388
508,815
60,477
2,887,237
3,303,021
415,784
650,000
-
-
-
-
650,000
650,000
-
118,096
195,221
786,832
807,153
26,951
1,934,253
2,024,315
90,062
476,961
188,928
143,073
831,957
34,595
1,675,514
2,419,448
743,934
$23,217,022
$13,200,968
$14,747,832
$29,507,720
$3,452,682
$84,126,224
$88,198,895
$4,072,671
0(50
CENTRAL CONTRA COSTA SANITARY DISTRICT
RUNNING EXPENSE
SCHEDULE OF SUPPLEMENTAL NET POSITION ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
Prior Year Balance
2014 -2015 Revenue
2014 - 2015 Expense
Add Back Depreciation Expense and Intangible Assets Adjustment
Net Position Attributed to General Operations
Net Position Attributed to All Other
Running Expense Net Position
$11,299,959
$86,893,452
(103,854,409)
22,740,942 5,779,985
17,079,944
553,385,338
$570,465,282
ATTACHMENT 2
DRAFT
CENTRAL CONTRA COSTA SANITARY DISTRICT
MEMORANDUM ON INTERNAL CONTROL
AND
REQUIRED COMMUNICATIONS
FOR THE YEAR ENDED
JUNE 30, 2015
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CENTRAL CONTRA COSTA SANITARY DISTRICT
MEMORANDUM ON INTERNAL CONTROL
AND
REQUIRED COMMUNICATIONS
For the Year Ended June 30, 2015
Table of Contents
Page
Memorandumon Internal Control ..................................................................... ............................... l
Scheduleof Other Matters ......................................................................... ............................... 3
Required Communications ................................................................................. ............................... 5
SignificantAudit Findings ............................................................................ ............................... 5
AccountingPolicies .................................................................................. ............................... 5
Unusual Transactions, Controversial or Emerging Areas ....................... ..............................6
Estimates.................................................................................................... ............................... 6
Disclosures..........................................:...................................................... ..............................7
Difficulties Encountered in Performing the Audit ................................... ..............................7
Corrected and Uncorrected Misstatements ............................................... ..............................7
Disagreements with Management ............................................................ ............................... 7
Management Representations .................................................................. ............................... 7
Management Consultations with Other Independent Accountants ........ ............................... 7
Other Audit Findings or Issues ................................................................ ............................... 7
Other Information Presented in the Financial Statements ..................... ..............................8
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MEMORANDUM ON INTERNAL CONTROL
To the Board of Directors
Central Contra Costa Sanitary District
Martinez, California
We have audited the financial statements of the Central Contra Costa Sanitary District (District) for the year
ended June 30, 2015, and have issued our report thereon dated DATE. In planning and performing our audit of
the financial statements of the District as of and for the year ended June 30, 2015, in accordance with auditing
standards generally accepted in the United States of America, we considered the District's internal control over
financial reporting (internal control) as a basis for designing our auditing procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an
opinion on the effectiveness of the District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the District's financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph and was not
designed to identify all deficiencies in internal control that might be significant deficiencies or material
weaknesses-and, therefore, there can be no assurance that all such deficiencies have been identified. In addition,
because of inherent limitations in internal control, including the possibility of management override of controls,
misstatements due to error or fraud may occur and not be detected by such controls. Given these limitations,
during our audit we did not identify any deficiencies in internal control that we consider to be a material
weakness. However, material weaknesses may exist that have not been identified.
Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we
believe to be of potential benefit to the District.
The District's written responses included in this report have not been subjected to the audit procedures applied
in the audit of the financial statements and, accordingly, we express no opinion on them.
This communication is intended solely for the information and use of management, Board of Directors, others
within the organization, and agencies and pass- through entities requiring compliance with Government Auditing
Standards, and is not intended to be and should not be used by anyone other than these specified parties.
Pleasant Hill, California
DATE
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CENTRAL CONTRA COSTA SANITARY DISTRICT
SCHEDULE OF OTHER MATTERS
FOR THE YEAR ENDED JUNE 30, 2015
2015 -01: UPCOMING GASB
There are a number of new accounting and financial reporting pronouncements that have been issued by the
Governmental Accounting Standards Board, the authoritative standard setting body in the United States. We
have included the one that will have an impact on the District's financial statements, effective in fiscal year
ending June 30, 2016, to keep you informed about these developments on a proactive basis.
The following pronouncement is effective in fiscal year 2015/16:
GASB 72 — Fair Value Measurement and Application
This Statement addresses accounting and financial reporting issues related to fair value measurements. The
definition offair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. This Statement provides guidance for
determining a fair value measurement for financial reporting purposes. This Statement also provides guidance
for applying fair value to certain investments and disclosures related to all fair value measurements.
Fair Value Measurement
Fair value is described as an exit price. Fair value measurements assume a transaction takes place in a
government's principal market, or a government's most advantageous market in the absence of a principal
market. The fair value also should be measured assuming that general market participants would act in their
economic best interest. Fair value should not be adjusted for transaction costs.
To determine a fair value measurement, a government should consider the unit of account of the asset or
liability. The unit of account refers to the level at which an asset or a liability is aggregated or disaggregated for
measurement, recognition, or disclosure purposes as provided by the accounting standards. For example, the unit
of account for investments held in a brokerage account is each individual security, whereas the unit of account
for an investment in a mutual fund is each share in the mutual fund held by a government.
This Statement requires a government to use valuation techniques that are appropriate under the circumstances
and for which sufficient data are available to measure fair value. The techniques should be consistent with one
or more of the following approaches: the market approach, the cost approach, or the income approach. The
market approach uses prices and other relevant information generated by market transactions involving identical
or comparable assets, liabilities, or a group of assets and liabilities. The cost approach reflects the amount that
would be required to replace the present service capacity of an asset. The income approach converts future
amounts (such as cash flows or income and expenses) to a single current (discounted) amount. Valuation
techniques should be applied consistently, though a change may be appropriate in certain circumstances.
Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable
inputs.
This Statement establishes a hierarchy of inputs to valuation techniques used to measure fair value. That
hierarchy has three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities. Level 2 inputs are inputs —other than quoted prices — included within Level 1 that are observable for
the asset or liability, either directly or indirectly. Finally, Level 3 inputs are unobservable inputs, such as
management's assumption of the default rate among underlying mortgages of a mortgage- backed security..
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CENTRAL CONTRA COSTA SANITARY DISTRICT
SCHEDULE OF OTHER MATTERS
FOR THE YEAR ENDED JUNE 30, 2015
A fair value measurement takes into account the highest and best use for a nonfinancial asset. A fair value
measurement of a liability assumes that the liability would be transferred to a market participant and not settled
with the counterparty. In the absence of a quoted price for the transfer of an identical or similar liability and if
another party holds an identical item as an asset, a government should be able to use the fair value of that asset
to measure the fair value of the liability.
This Statement requires additional analysis of fair value if the volume or level of activity for an asset or liability
has significantly decreased. It also requires identification of transactions that are not orderly. Quoted prices
provided by third parties are permitted, as long as a government determines that those quoted prices are
developed in accordance with the provisions of this Statement.
Fair Value Application
This Statement generally requires investments to be measured at fair value. An investment is defined as a
security or other asset that (a) a government holds primarily for the purpose of income or profit and (b) has a
present service capacity based solely on its ability to generate cash or to be sold to generate cash. Investments
not measured at fair value continue to include, for example, money market investments, 2a7 -like external
investment pools, investments in life insurance contracts, common stock meeting the criteria for applying the
equity method, unallocated insurance contracts, and synthetic guaranteed investment contracts. A government is
permitted in certain circumstances to establish the fair value of an investment that does not have a readily
determinable fair value by using the net asset value per share (or its equivalent) of the investment.
This Statement requires measurement at acquisition value (an entry price) for donated capital assets, donated
works of art, historical treasures, and similar assets and capital assets received in a service concession
arrangement. These assets were previously required to be measured at fair value.
Fair Value Disclosures
This Statement requires disclosures to be made about fair value measurements, the level of fair value hierarchy,
and valuation techniques. Governments should organize these disclosures by type of asset or liability reported at
fair value. It also requires additional disclosures regarding investments in certain entities that calculate net asset
value per share (or its equivalent).
How the Changes in This Statement Improve Financial Reporting
The requirements of this Statement will enhance comparability of financial statements among governments by
requiring measurement of certain assets and liabilities at fair value using a consistent and more detailed
definition of fair value and accepted valuation techniques. This Statement also will enhance fair value
application guidance and related disclosures in order to provide information to financial statement users about
the impact of fair value measurements on a government's financial position.
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REQUIRED COMMUNICATIONS
To the Board of Directors
Central Contra Costa Sanitary District
Martinez, California
We have audited the basic financial statements of the Central Contra Costa Sanitary District (District) for
the year ended June 30, 2015. Professional standards require that we communicate to you the following
information related to our audit under generally accepted auditing standards.
Significant Audit Findings
Accounting Policies
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the District are included in Note I to the financial statements. No new
accounting policies were adopted and the application of existing policies was not changed during the year,
except as follows:
GASB Statement No. 68 — Accounting and Financial Reporting fin- Pensions, an Amendment
of GASB Statement No. 27
The primary objective of this Statement is to improve accounting and financial reporting by state
and local governments for pensions. This Statement replaces the requirements of Statement No.
27, Accounting for Pensions by State and Local Governmental Employers, as well as the
requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are
provided through pension plans administered as trusts or equivalent arrangements that meet
certain criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are
not covered by the scope of this Statement.
This Statement establishes standards for measuring and recognizing liabilities, deferred outflows
of resources, and deferred inflows of resources, and expense /expenditures. For defined benefit
pensions, this Statement identifies the methods and assumptions that should be used to project
benefit payments, discount projected benefit payments to their actuarial present value, and
attribute that present value to periods of employee service.
Note disclosure and required supplementary information requirements about pensions also are
addressed. Distinctions are made regarding the particular requirements for employers based on
the number of employers whose employees are provided with pensions through the pension plan
and whether pension obligations and pension plan assets are shared.
In addition, this Statement details the recognition and disclosure requirements for employers with
liabilities (payables) to a defined benefit pension plan and for employers whose employees are
provided with defined contribution pensions. This Statement also addresses circumstances in
which a nonemployer entity has a legal requirement to make contributions directly to a pension
plan.
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GASB Statement No. 71 — Pension Transition for Contributions Made Subsequent to the
Measurement Date, an Amendment of GASB Statement No. 68
The objective of this Statement is to address an issue regarding application of the transition
provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue
relates to amounts associated with contributions, if any, made by a state or local government
employer or nonemployer contributing entity to a defined benefit pension plan after the
measurement date of the government's beginning net pension liability.
This Statement amends paragraph 137 of Statement 68 to require that, at transition, a government
recognize a beginning deferred outflow of resources for its pension contributions, if any, made
subsequent to the measurement date of the beginning net pension liability. Statement 68, as
amended, continues to require that beginning balances for other deferred outflows of resources
and deferred inflows of resources related to pensions be reported at transition only if it is practical
to determine all such amounts.
The provisions of this Statement are required to be applied simultaneously with the provisions of
Statement 68.
The above pronouncements became effective, and as disclosed in Note 9 to the financial
statements required a prior period restatement for the cumulative effect on the financial
statements.
Unusual Transactions, Controversial or Emerging Areas
We noted no transactions entered into by District during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the
proper period.
Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's current judgments. Those judgments are normally based on knowledge and
experience about past and current events and assumptions about future events. Certain accounting
estimates are particularly sensitive because of their significance to the financial statements and because of
the possibility that future events affecting them may differ significantly from those expected. The most
sensitive estimates affecting the District's financial statements are depreciation, claims liability and
actuarial estimates for net pension liability and other post- employment benefits.
Management's estimate of depreciation is based on the estimated useful lives of the capital assets, and its
estimate of claims is based on the District Attorney's estimates of current and potential litigation, as well
as actuary studies provided for the District as of June 30, 2015. We evaluated the key factors and
assumptions used to develop the depreciation expense and claims liability and reviewed the current
actuary study and determined that they are reasonable in relation to the basic financial statements taken as
a whole.
The value of the assets, liability and assumptions used to determine annual required contributions for
other post - employment benefits is determined by an actuary study provided to the District as of June 30,
2014. The value of the District's net pension liability was obtained from an actuarial valuation provided
by CCCERA.
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Disclosures
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. Management has corrected all/certain such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management were material, either
individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor's report. We are pleased to report that no such disagreements arose during the
course of our audit.
Management Representations
We have requested certain representations from management that are included in a management
representation letter dated DATE.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves
application of an accounting principle to the governmental unit's financial statements or a determination
of the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the governmental unit's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses were
not a condition to our retention.
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Other Information Accompanying the Financial Statements
With respect to the supplementary information accompanying the financial statements, we made certain
inquiries of management and evaluated the form, content, and methods of preparing the information to
determine that the information complies with accounting principles generally accepted in the United
States of America, the method of preparing it has not changed from the prior period, and the information
is appropriate and complete in relation to our Adit of the financial statements. We compared and
reconciled the supplementary information to the' `underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
With respect to the required supplementary information accompanying the financial statements, we
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 did not express an opinion nor 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.
The Introductory and Statistical Sections included as part of the Comprehensive Annual Financial Report
have not been subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we did not express an opinion nor provide any assurance on them.
This information is intended solely for the use of the Board of Directors and management and is not
intended to be, and should not be, used by anyone other than these specified parties.
Pleasant Hill, California
DATE
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