HomeMy WebLinkAbout04.c. Review draft Position Paper to accept (1) the comparative audited Financial Statements for the fiscal years ended June 30, 2019 and 2018 performed by Maze & Associates, and (2) the independent auditors' memorandum on internal control and required c Page 1 of 79
Item 4.c.
BOARD OF DIRECTORS
' POSITION PAPER
DRAFT
MEETING DATE: DECEMBER 18, 2019
SUBJECT: REVIEW DRAFT POSITION PAPER TO ACCEPT (1) THE COMPARATIVE
AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED
JUNE 30, 2019 AND 2018 PERFORMED BY MAZE &ASSOCIATES,AND (2)
THE INDEPENDENT AUDITORS' MEMORANDUM ON INTERNAL CONTROL
AND REQUIRED COMMUNICATIONS FOR THE FISCAL YEAR ENDED
JUNE 30, 2019 - INVITED GUEST DAVID ALVEY, AUDIT PARTNER OF
MAZE &ASSOCIATES
SUBMITTED BY: INITIATING DEPARTMENT:
KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION-FINANCE
REVIEWED BY: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ANN SASAKI, DEPUTY GENERAL MANAGER
ROGER S. BAILEY GENERAL MANAGER
ISSUE
The comparative audited financial statements of the District for the fiscal years ended June 30, 2019 and
2018, and the independent auditors' memorandum on internal control and required communications for the
year ended June 30, 2019 are being submitted to the Board.
BACKGROUND
Independent Audit Results
The independent audit firm of Maze &Associates has completed their sixth consecutive audit of Central
San's annual financial statements for the fiscal years ended June 30, 2019, and 2018, and has issued
their audit opinion thereon. The objective of this annually required independent 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 (GAAP) 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 (GAAS).
GAAS require the independent auditor to plan and perform the audit to obtain reasonable, but not
absolute, assurance about whether the financial statements are free from material misstatement.
Procedures performed necessary to gather sufficient audit evidence supporting their opinion are based on
a comprehensive assessment of Central San's financial risks, and incorporate an element of both internal
control risks and inherent business risks. Management is pleased to announce Central San's independent
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auditor's report for the fiscal years ending June 30, 2019 and 2018 expresses an unmodified (clean)
opinion. As always, the Independent Auditors' Report including the audit opinion is included on page 1 of
the attached financial statements (Attachment 1).
In accordance with California Government Code Section 53891, information from the audit is also used
to prepare an annual report filed with the State Controller's Office (SCO). This report is referred to as the
Financial Transactions Report (FTR), and is prepared following strict reporting guidelines published by
the SCO annually. Now that the annual independent audit has been completed, the FTR for the FY ended
June 30, 2019 will be remitted electronically by the January 31, 2020 reporting deadline. The audited
financial statements will also be sent to the Contra Costa County County Auditor-Controller's Office, the
Contra Costa County Board of Supervisors, the Bond Rating Agencies, and posted to the Electronic
Municipal Market Access (EMMA) website as required by the 2018 bond's continuing disclosure
requirements.
In accordance with GAAS, in the performance of their audit of the annual financial statements, the
independent auditors evaluated Central San's internal controls over financial reporting. Based on their
observations during the course of the audit, the independent auditors advise management of any
significant deficiencies or material misstatements and any recommendations to improve the system of
internal accounting controls. The independent auditors report any identified internal control findings in their
"Memorandum on Internal Control and Required Communications" (Attachment 2). In addition to the
clean audit opinion, Management is also pleased to report there were no significant deficiencies or
material misstatements identified by the auditors as part of this year's audit.
Financial Summary
Pursuant to GAAP, as a stand-alone business-type governmental entity, the District uses an enterprise
fund format to report its activities for financial statement purposes. Under this enterprise fund format, all
non-fiduciary sub-funds of the District (i.e. Running Expense, Sewer Construction, Self-Insurance, Debt
Service) are consolidated into a single reporting unit and reported in a Statement of Net Position;
Statement of Revenues, Expenses and Changes in Net Position; and a Statement of Cash Flows. This
consolidated reporting unit is considered an "opinion unit" and is what District's independent auditors have
rendered their (clean) opinion on. Accordingly, the emphasis of the annual audited financial statements is
at the District-wide level pursuant to GAAP, and not at the sub-fund level.
Overall, at the audited entity-wide level, the District's net position improved significantly, increasing by
$83.1 million (13.4%) to a total of $704.1 million as of June 30, 2019. By far the largest portion of the
District's net position (93.1%) reflects its investment in capital assets (i.e. land, buildings, machinery,
equipment, infrastructure, etc.), which are critical in the collection, treatment, disposal, and recycling of
wastewater helping to achieve its mission to protect public health and the environment. Of this total net
position, $48.8 million (6.9%) was reported as unrestricted, which represents a sizable increase of $55.6
million over the prior year's deficit unrestricted net position of nearly -$6.8 million. This large increase in
unrestricted net position resulted primarily from significant reductions to the net OPEB liability following the
District's transition to CalPERS Healthcare for active and retired participants as well as favorable
operating and non-operating revenue results. A more detailed analysis of the financial statements is
included in the Management's Discussion and Analysis on page 3 of the attached basic financial
statements.
ALT ERNAT IVES/CONSIDERAT IONS
None.
FINANCIAL IMPACTS
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The acceptance of the audited basic financial statements for the comparative fiscal years ending June 30,
2019 and 2018 does not have direct fiscal impact on the District.
COMMITTEE RECOMMENDATION
The audited financial statements and the auditors' memorandum on internal control and required
communications were presented by David Alvey, Partner of the independent audit firm Maze &
Associates, at the Finance Committee meeting on December 18, 2019. The Committee's
recommendation will be announced at the Board meeting.
RECOMMENDED BOARD ACTION
Accept the basic audited financial statements for the fiscal years ended June 30, 2019 and 2018, and the
auditors' memorandum on internal control and required communications for the fiscal year ended June 30,
2019.
Strategic Plan Tie-In
GOAL THREE:Be a Fiscally Sound and Effective Water Sector Utility
Strategy 1 - Conduct long-range financial planning, Strategy 2- Manage costs
ATTACHMENTS:
1.Audited Basic Financial Statements (FY 2018-19)
2. Memo on Internal Controls (FY 2018-19)
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ATTACHMENT 1
CENTRAL CONTRA COSTA SANITARY DISTRICT
BASIC FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2019 AND 2018
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CENTRAL CONTRA COSTA SANITARY DISTRICT
BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
Table of Contents
INTRODUCTORY SECTION
Tableof Contents..........................................................................................................................i
FINANCIAL SECTION
INDEPENDENT AUDITORS' REPORT...........................................................................................1
MANAGEMENT'S DISCUSSION AND ANALYSIS......................................................................5
BASIC FINANCIAL STATEMENTS
Statements of Net Position..............................................................................................................12
Statements of Revenues, Expenses and Changes in Net Position.................................................14
Statementsof Cash Flows...............................................................................................................15
Statement of Fiduciary Net Position—Fiduciary Fund...................................................................17
Statement of Changes in Fiduciary Net Position—Fiduciary Fund................................................18
NOTES TO BASIC FINANCIAL STATEMENTS........................................................................19
REQUIRED SUPPLEMENTARY INFORMATION
Cost-Sharing Multiple Employer Defined Benefit Retirement Plan-
Schedule of Proportionate Share of the Net Pension Liability......................................... 50
Schedule of Contributions................................................................................................. 51
Post-Retirement Health Care Defined Benefit Plan—
Schedule of Changes in the Net OPEB Liability and Related Ratios............................... 52
Schedule of Investment Return Rate................................................................................. 52
Schedule of Contributions................................................................................................. 53
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CENTRAL CONTRA COSTA SANITARY DISTRICT
BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
Table of Contents
SUPPLEMENTARY INFORMATION
Combining Schedule of Net Position—
EnterpriseSub-Funds............................................................................................................56
Combining Schedule of Revenues,
Expenses and Changes in Net Position—Enterprise Sub-Funds.........................................57
ii
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U1. MAZE
INDEPENDENT AUDITORS'REPORT
To the Board of Directors
Central Contra Costa Sanitary District
Martinez,California
We have audited the accompanying financial statements of the business-type activities and the fiduciary
fund, of the Central Contra Costa Sanitary District(District)as of and for the years ended June 30,2019 and
2018, 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 opinions 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.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial positions of the business-type activities and the fiduciary fund of the Central Contra
Costa Sanitary District as of June 30, 2019 and 2018, and the respective changes in financial positions and
cash flows, where applicable, for the years then ended in accordance with accounting principles generally
accepted in the United States of America.
T 925.930.0902
Accountancy Corporation F 925.930.0135
3478 Buskirk Avenue,Suite 215 e maze9mazeassociates.com
Pleasant Hill,CA 94523 1 w mazeassociates.com
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Emphasis of Matter
Management adopted the provisions of the following Governmental Accounting Standards Board
Statements, which became effective during the year ended June 30, 2019 as discussed in Note 1 to the
financial statements:
Governmental Accounting Standards Board Statement 88 — Certain Disclosures Related to Debt
including Direct Borrowings and Direct Placements. See Note 6 to the financial statements for
relevant disclosures.
The emphasis of this matter does not constitute a modification of our opinion.
Report on Summarized Comparative Information
We have previously audited the District's June 30, 2018 financial statements, and we expressed an
unmodified audit opinion on those audited financial statements in our report dated December 4,2018. In our
opinion, the summarized comparative information presented herein as of and for the year ended June 30,
2018 is consistent, in all material respects, with the audited financial statements from which it has been
derived.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management's
Discussion and Analysis and other Required Supplementary Information, as listed in the table of contents,
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.
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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 thefinancialstatements as a whole.
14*s, �' X,v&e.,�
Pleasant Hill,California
December 9,2019
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Central Contra Costa Sanitary District
Protecting public 5019 Imhoff Place,Martinez, CA 94553-43
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the Central Contra Costa Sanitary District's (District) annual financial report presents an
analysis of the District's financial performance during the fiscal year ended June 30,2019(2018-19). This
information is presented in conjunction with the audited financial statements,which follow this report.
FINANCIAL HIGHLIGHTS
The District's 2018-19 financial highlights are listed below. These results are discussed in more detail
later in the report.
• The District's total ending net position increased by $83.2 million or 13.39% in 2018-19. This
increase is primarily a result of the negative Other Post Employment Benefits (OPEB) expense
adjustment recognized as a result of the transition to CalPERS Healthcare, reducing medical
premium rates for current and retired participants, as well as increases in capital contributions.
• Total revenues in 2018-19 decreased by $4.5 million or 3.88%. The total annual sewer service
charge rate increased for single family homes by 6.53%to$567 and 6.56%for multi-family homes
to $549. Increased property values in the service area led to an increase in property taxes.
• Total 2018-19 expenses decreased by$36.6 million or 33.01%. This is mainly due the combination
of the negative OPEB expense adjustment that was recognized as a result of the District
transitioning to CalPERS healthcare administration significantly reducing current and retiree
medical premiums as well as interest savings arising from the 2018 debt refinancing.
• Capital Contributions increased in 2018-19 by $15.1 million or 47.63%. The increase is mainly
due to an increase in contributions from the City of Concord and a higher allocation of SSC to
customer contributions to capital costs.
OVERVIEW OF THE FINANCIAL STATEMENTS
The District operates as a utility enterprise and presents its financial statements using the economic
resources measurement focus and the full accrual basis of accounting. As an enterprise fund,the District's
basic financial statements are comprised of two components:financial statements and notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial
statements themselves.
In accordance with the GASB Codification of Governmental Accounting and Financial Reporting
Standards, the District's annual financial balances and transactions are summarized and reported in the
following financial statements:
• 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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• 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:
Table 1 - Condensed Statement of Net Position
Year Ending June 30 2019 vs.2018 2019 vs.2017
$Increase %Increase $Increase %Increase
2019 2018 2017 (Decrease) (Decrease) (Decrease) (Decrease)
Assets
Current assets $138,987,589 $119,043,984 $105,876,117 $19,943,605 16.75% $33,111,472 31.27%
Capital assets,net 677,392,935 652,402,342 632,452,631 24,990,593 3.83% 44,940,304 7.11%
Other non-current assets 9,752,616 11,462,838 10,057,548 (1,710,222) -14.92% (304,932) -3.03%
Total assets 826,133,140 782,909,164 748,386,296 43,223,976 5.52% 77,746,844 10.39%
Deferred outflows
Pension related 46,715,613 21,503,021 29,078,203 25,212,592 117.25% 17,637,410 60.66%
OPEB related 2,836,089 30,400 - 2,805,689 9229.24% 2,836,089 0.00%
Total deferred outflows 49,551,702 21,533,421 29,078,203 28,018,281 130.12% 20,473,499 70.41%
Liabihtie s
Current liabilities 14,404,545 14,441,630 13,720,331 (37,085) -0.26% 684,214 4.99%
Long-term liabilities 126,547,399 140,952,831 121,055,247 (14,405,432) -10.22% 5,492,152 4.54%
Total liabilities 140,951,944 155,394,461 134,775,578 (14,442,517) -9.29% 6,176,366 4.58%
Deferred inflows
Pension related 23,736,976 28,076,634 16,051,905 (4,339,658) -15.46% 7,685,071 47.88%
OPEB related 6,864,360 - - 6,864,360 100.00% 6,864,360 0.00%
Total deferred inflows 30,601,336 28,076,634 16,051,905 2,524,702 8.99% 14,549,431 90.64%
Net position
Net investment in capital assets 655,586,304 623,307,342 600,770,254 32,278,962 5.18% 54,816,050 9.12%
Restricted (271,370) 4,421,504 4,449,437 (4,692,874) -106.14% (4,720,807) -106.10%
Unrestricted 48,816,628 (6,757,356) 21,417,325 55,573,984 -822.42% 27,399,303 127.93%
Total net position $704,131,562 $620,971,490 $626,637,016 $83,160,072 13.39% $77,494,546 12.37%
The total net position of the District decreased from$626.6 million in 2016-17 to $621.0 million in 2017-
18 and increased to $704.1 million in 2018-19. The District's total assets have increased by$43.2 million
or 5.52% compared to 2017-18, and $77.7 million or 10.39% compared to 2016-17. Total liabilities
decreased$14.4 million or 9.29% compared to 2017-18 and increased$6.2 million or 4.58% compared to
2016-17. The increase in net position over the three-year period totals $77.5 million, or 12.37%,resulting
primarily from the District's transition to Ca1PERS for healthcare administration, creating short and long-
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term savings through more affordable health premiums active and retired employee participants, (2) a
significant increase in capital contributions, and(3)the 2018 bond refunding.
By far the largest portion of the District's net position(93.1%)reflects its investment in capital assets(e.g.
land, buildings, machinery, equipment, intangible assets, and sewer line infrastructure), less any related
debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide
services to its ratepayers; consequently, these assets are not available for future spending. Although the
District's investment in its capital assets is reported net of related 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 discharge these liabilities. The balance of$48.8 million in unrestricted net position increased
by $55.6 million from 2017-18 and increased by $27.4 million from 2016-17. As noted previously, this
increase was primarily a result of the District transitioning to a more economical healthcare administrator,
reducing current healthcare premiums for active and retired employee participants as well as significant
reductions to the net OPEB 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:
Table 2 - Condensed Statement of Revenues, Expenses, and Changes in Net Position
Year Ending June 30 2019 vs.2018 2019 vs.2017
$Increase %Increase $Increase %Increase
2019 2018 2017 (Decrease) (Decrease) (Decrease) (Decrease)
Revenues:
Operating revenues
Sewer service charges $ 83,862,200 $ 91,876,438 $ 88,018,988 $(8,014,238) -8.72% $(4,156,788) -4.72%
Other 1,815,966 619,997 606,453 1,195,969 192.90% 1,209,513 199.44%
Total operating revenue 85,678,166 92,496,435 88,625,441 (6,818,269) -7.37% (2,947,275) -3.33%
Non-operating revenues
Property taxes 18,251,794 17,650,741 16,318,874 601,053 3.41% 1,932,920 11.84%
Permit and inspection fees 2,648,708 2,592,137 2,600,888 56,571 2.18% 47,820 1.84%
Investment earnings 2,573,964 1,223,649 761,838 1,350,315 110.35% 1,812,126 237.86%
Other 1,424,520 1,075,838 966,244 348,682 32.41% 458,276 47.43%
Total non-operating revenue 24,898,986 22,542,365 20,647,844 2,356,621 10.45% 4,251,142 20.59%
Total revenues 110,577,152 115,038,800 109,273,285 (4,461,648) -3.88% 1,303,867 1.19%
Expenses
Operating expense other than depreciation 52,295,571 88,119,374 78,572,632 (35,823,803) -40.65% (26,277,061) -33.44%
Depreciation 20,983,353 21,561,704 22,892,153 (578,351) -2.68% (1,908,800) -8.34%
Non-operating expenses 1,025,006 1,230,680 1,313,398 (205,674) -16.71% (288,392) -21.96%
Total expenses 74,303,930 110,911,758 102,778,183 (36,607,828) -33.01% (28,474,253) -27.70%
Income before capital contributions 36,273,222 4,127,042 6,495,102 32,146,180 778.92% 29,778,120 458.47%
Capital contributions 46,886,850 31,760,548 26,571,487 15,126,302 47.63% 20,315,363 76.46%
Increase in net position 83,160,072 35,887,590 33,066,589 47,272,482 131.72% 50,093,483 151.49%
Beginning net position,as restated 620,971,490 585,084200 * 593,570,427 35,887,290 6.13% 27,401,063 4.62%
Ending net position $704,131,562 $620,971,790 $626,637,016 $83,159,772 13.39% $77,494,546 12.37%
*Net position as of June 30,2018 was restated due to the implementation of Governmental Accounting Standards Board(GASB)Statement No.75.
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Revenue
Total operating revenues increased from $88.6 million in 2016-17 to $92.5 million in 2017-18 and
decreased to $85.7 million in 2018-19. Operating revenues decreased by$6.8 million or 7.37% compared
to 2017-18, and by $2.9 million or 3.33% comparing 2018-19 to 2016-17. The reduction in operating
revenues is largely attributable to a sizable and planned increase in the proportion of sewer service charges
allocated to the capital improvement program, which is reported as non-operating capital contributions.
Total non-operating revenue increased from $20.6 million in 2016-17 to $22.5 million in 2017-18 and to
$24.9 million in 2018-19. Total non-operating revenues in 2018-19 increased compared to 2017-18 by
$2.4 million or 10.46% and increased by $4.3 million or 20.59% comparing 2018-19 to 2016-17.
Total revenues increased from $109.3 million in 2016-17 to $115.0 million in 2017-18 and decreased to
$110.6 million in 2018-19. The change in total revenue represented a decrease of$4.5 million or 3.88%
comparing 2018-19 to 2017-18 and an increase of$1.3 million or 1.19% comparing 2018-19 to 2016-17.
There was a 6.53%rate increase for single family homes and a 6.56%rate increase for multi-family homes
in 2018-19, a 5.37% rate increase for single family homes and a 5.34% rate increase for multi-family
homes in 2017-18, and a 6.79%rate increase for single family homes and a 5.18%rate increase for multi-
family homes in 2016-17. The sewer service charge allocation to cover capital costs increased to 29.40%
in 2018-19 from 15.60% in 2017-18 and 14.25% in 2016-17. Property tax revenue increased by $0.6
million or 3.41%from 2017-18 to 2018-19, and$1.9 million or 11.84%comparing 2018-19 to 2016-2017
due to the continued increase in property values, a healthy real estate market, and development of
residential and commercial real estate in the region.
Expenses
Total expenses increased from $102.8 million in 2016-17 to $110.9 million in 2017-18 and decreased to
$74.3 million in 2018-19. In 2018-19, total expenses decreased by $36.6 million or 33.01% compared to
2017-18. Comparing 2018-19 to 2016-17, total expenses were $28.5 million or 27.70% lower. The
decrease from 2017-18 to 2018-19 is mainly attributable to the negative OPEB expense adjustment
recognized as a result of the District transitioning to Ca1PERS Healthcare, reducing medical premium
rates for active and retired employee participants. Non-operating expenses are mainly driven by interest
expense.
Total income before capital contributions went from $6.5 million in 2016-17, to $4.1 million in 2017-18,
spiking even further to $36.3 million in 2018-19 as result of the healthcare transition noted previously.
Total capital contributions in 2018-19 were$46.9 million compared to$31.8 million in 2017-18 and$26.6
million in 2016-17. This increase was mainly derived from three factors: (1) a shift of the internal sewer
service charge revenue allocation from operating to capital, (2) a 5.25% increase in the sewer service
charge rate, and (3) more connection fee revenue arising from robust housing and construction
development markets.
CAPITAL ASSETS
Net capital assets for fiscal years 2018-19, 2017-18 and 2016-17 totaled $677.4 million, $652.4 million,
and $632.5 million, respectively. Net 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, less depreciation.
As of June 30,2019,the District's investment in capital assets totaled$677.4 million, an increase of$25.0
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million or 3.83% over the net capital asset balance of$652.4 million at June 30, 2018. Net capital assets
increased by $44.9 million or 7.11% comparing 2018-19 to 2016-17. A comparison of the District's
capital assets, net of depreciation, over the past three fiscal years is presented below:
Table 3 — Net Capital Assets
Year Ending June 30 2019 vs.2018 2019 vs.2017
$Increase %Increase $Increase %Increase
2019 2018 2017 (Decrease) Decrease (Decrease) (Decrease)
Structures,buildings,and
equipment $609,205,177 $594,311,630 $576,801,783 $14,893,547 2.5% $32,403,394 5.6%
Land and rights of way 22,270,077 22,270,077 22,262,277 - 0.0% 7,800 0.0%
Construction in progress 45,917,681 35,820,635 33,388,571 10,097,046 28.2% 12,529,110 37.5%
Total 677,392,935 652,402,342 632,452,631 24,990,593 30.7% 44,940,304 7.1%
The increase in capital assets, net of depreciation, of$25.0 million from 2017-18 to 2016-17 and $45.0
million from 2016-17 to 2018-19 is a result of an expanding capital improvement program over these
years. This year's major addition to construction-in-progress includes the following:
Project Description Capital Outlay
Solids handling facility improvements (7348) $ 4,727,501
Mechanical and concrete renovations (7351) 4,280,650
North Orinda sewer renovation(8445) 3,535,938
Plant operations building seismic upgrades (7362) 2,714,844
Piping renovations phase 9(7330) 2,613,403
Walnut Creek sewer renovation phase 13(8455) 2,604,854
Lafayette sewer renovation phase 12(8446) 2,499,090
Moraga/Crossroads pump station project(8436) 2,080,508
Total $ 25,056,788
Refer to Note 5 in the audited financial statements for additional details on the District's capital assets.
DEBT ADMINISTRATION
The total debt obligations for fiscal years 2018-19, 2017-18 and 2016-17 totaled $21.8 million, $29.1
million, and$31.7 million,respectively. As of June 30,2019,the District's outstanding debt totaled$21.8
million, which is a decrease of$7.3 million or 25.05% over the debt balance of$29.1 million at June 30,
2018. Debt decreased by $9.7 million or 30.77% comparing 2018-19 to 2016-17. The reduction in debt
obligations is due to the refinancing of the 2009 certificates of participation during 2018-19, see Note 6
for detailed information. The source of funds primarily securing repayment of debt issued for capital
improvement purposes is secured ad valorem property taxes.
ECONOMIC FACTORS,NEXT YEAR'S BUDGET, AND RATES
The District operates as an enterprise fund primarily funded by fees charged to external customers for
services. The District charges rates and fees to customers to cover the costs of operation and maintenance
of the sewage collection and treatment system as well as costs associated with its capital improvement
program. External factors that may affect the District's financial position include, but are not limited to
the following:
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• Regulatory requirements becoming more stringent, causing the District to spend more
on compliance, both for operations and maintenance costs as well as capital
improvement and replacement projects. This may require debt financing for large
capital projects in the foreseeable future.
• Legislation impacting public employee pension obligations is still being litigated, the
results of which could adversely impact future employer pension obligations.
• The economic cycle, creating volatility with capacity/connection fee revenues as new
development projects are highly sensitive to the economic cycle. The economic cycle
also impacts the Federal and State budgets and legislation, which could affect the
District's ability to secure grant funding and low interest loans.
• Interest rate and/or investment return, which directly impacts investment earnings,
borrowing costs, and which has an adverse relationship to employer pension and OPEB
contribution requirements.
• The consumer price index (CPI), which is a measure of inflation. The CPI for the San
Francisco-Oakland-Hayward area directly impacts the cost of living adjustments
provided in the employee MOUS. Various cost pressures also affect spending for
contracted services as well as materials and supplies.
• Changes in assessed property values, which affect the District's non-operating ad
valorem property tax revenue. When the housing market improves, overall assessed
property values increase, thereby increasing the District's property tax receipts.
Conversely, any decline in the housing market will decrease property values and
correspondingly decrease ad valorem property tax receipts for the District.
These factors, to the extent known, were considered in preparing the District's budget. In June 2019, the
District's Board of Directors adopted an operating and maintenance budget of$87.6 million and sewer
construction capital budget of $66.2 million for the year ending June 30, 2020. Following customer
outreach,public noticing, and a Public Hearing stipulated by Proposition 218, in April 2019 the District's
Board of Directors approved new sewer service charges for the four-year timeframe spanning July 1,2019
to June 30, 2023 with the condition that each year the District shall re-assess whether the increase is still
justified and necessary.
The sewer service charges for the year ending June 30, 2020 incorporates an average rate increase of
5.25%, essential to help address an expanded capital improvement program as well as increases in
operating and maintenance costs. Over the next four fiscal years the District is planning for a greatly
expanded capital improvement program to modernize the District's ageing infrastructure, expand the
capacity and redundancy of existing facilities, address ever-growing regulatory requirements regarding
the protection of public health and the environment and to ensure the sustainability of infrastructure. To
help finance these greatly expanded capital improvement and replacement initiatives,the District currently
plans to seek debt financing in an amount up to $154 million over the next three fiscal years, although this
amount may be further reduced through positive year-end budgetary variances and other unanticipated
factors.
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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: Kevin Mizuno, Finance
Manager, Central Contra Costa Sanitary District, 5019 Imhoff Place, Martinez, CA 94553.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF NET POSITION
JUNE 30,2019 AND 2018
ASSETS 2019 2018
CURRENT ASSETS
Cash and cash equivalents(Note 2) $57,648,783 $57,137,987
Short term investments(Note 2) 53,000,000 34,000,000
Accounts receivable,net(Note 3) 24,736,062 22,951,186
Employee computer loans receivable(Note 3) 15,736 10,614
Interest receivable - 99,384
Parts and supplies 2,185,998 2,245,055
Prepaid expenses 1,401,010 2,599,758
Total current assets 138,987,589 119,043,984
NON-CURRENT ASSETS
Restricted cash and cash equivalents(Notes I.F. and 2) 8,537,951 5,497,153
Restricted investments(Note 2) - 4,856,450
Assessment Districts receivable(Note 4) 1,214,665 1,109,235
Capital assets:
Nondepreciable(Note 5) 68,187,758 58,090,712
Depreciable,net of accumulated depreciation(Note 5) 609,205,177 594,311,630
Total capital assets,net 677,392,935 652,402,342
Total non-current assets 687,145,551 663,865,180
TOTAL ASSETS 826,133,140 782,909,164
DEFERRED OUTFLOWS OF RESOURCES
Pension related(Note 9) 46,715,613 21,503,021
OPEB related(Note 10) 2,836,089 30,400
Total deferred outflows of resources 49,551,702 21,533,421
(Continued)
See accompanying notes to financial statements
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF NET POSITION
JUNE 30,2019 AND 2018
LIABILITIES 2019 2018
CURRENT LIABILITIES
Accounts payable and accrued expenses $9,956,746 $9,664,738
Interest payable 288,505 534,330
Refunding Water Revenue Bonds-current portion(Note 6) 2,145,000 2,480,000
Accrued compensated absences-current portion(Note 1.J.) 504,700 464,500
Provision for uninsured claims(Note 7) 1,157,797 882,230
Refundable deposits 351,797 415,832
Total current liabilities 14,404,545 14,441,630
NON-CURRENT LIABILITIES
Refunding Water Revenue Bonds,noncurrent portion(Note 6) 19,661,631 26,615,000
Accrued compensated absences,noncurrent portion(Note LJ.) 4,542,903 4,181,377
Net pension liability(Note 9) 90,430,104 63,806,000
Net OPEB liability(Note 10) 11,912,761 46,350,454
Total non-current liabilities 126,547,399 140,952,831
TOTAL LIABILITIES 140,951,944 155,394,461
DEFERRED INFLOWS OF RESOURCES
Pension related(Note 9) 23,736,976 28,076,634
OPEB related(Note 10) 6,864,360 -
Total deferred inflows of resources 30,601,336 28,076,634
NET POSITION(Note 11)
Net investment in capital assets 655,586,304 623,307,342
Restricted for debt service (271,370) 4,421,504
Unrestricted 48,816,628 (6,757,356)
TOTAL NET POSITION $704,131,562 $620,971,490
See accompanying notes to financial statements
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF REVENUES,EXPENSES AND CHANGES IN NET POSITION
FOR THE YEARS ENDED JUNE 30,2019 AND 2018
2019 2018
OPERATING REVENUES
Sewer service charges(SSC) $68,656,908 $75,824,221
Service charges-City of Concord(Note 8) 15,205,292 14,973,623
Other services charges 1,126,239 1,078,594
Miscellaneous charges 689,727 619,997
Total operating revenues 85,678,166 92,496,435
OPERATING EXPENSES
Sewage collection and pumping stations 17,213,848 15,954,881
Sewage treatment 26,342,221 26,050,876
Engineering 16,334,241 16,472,501
Recycled water 1,189,921 1,023,757
Administrative and general 24,522,508 27,513,001
Pension expense adjustments(Note 9) (2,928,146) (4,441,205)
OPEB expense adjustments(Note 10) (30,379,022) 5,545,563
Depreciation(Note 5) 20,983,353 21,561,704
Total operating expenses 73,278,924 109,681,078
OPERATING(LOSSES) 12,399,242 (17,184,643)
NONOPERATING REVENUES(EXPENSES)
Taxes 18,251,794 17,650,741
Permit and inspection fees 2,648,708 2,592,137
Interest earnings 2,573,964 1,223,349
Interest expense (1,025,006) (1,230,680)
Other income(expense),net 1,424,520 1,075,838
Total nonoperating revenues(expenses),net 23,873,980 21,311,385
INCOME BEFORE CAPITAL CONTRIBUTIONS 36,273,222 4,126,742
CAPITAL CONTRIBUTIONS
City of Concord contributions to capital costs(Note 8) 7,973,516 6,364,725
Customer contributions to capital cost(SSC) 28,588,625 14,060,789
Contributed sewer lines 2,179,641 2,003,614
Capital contributions-connection fees 8,145,068 9,331,420
Total capital contributions 46,886,850 31,760,548
CHANGE IN NET POSITION 83,160,072 35,887,290
NET POSITION,BEGINNING OF YEAR 620,971,490 626,637,016
Prior period adjustment for implementation of GASB Statement 75 - (41,552,816)
NET POSITION,END OF YEAR $704,131,562 $620,971,490
See accompanying notes to financial statements
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,2019 AND 2018
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $83,782,738 $89,703,121
Payments to suppliers (43,260,212) (41,555,023)
Payments to employees and related benefits (40,179,456) (41,035,510)
Net cash provided by operating activities 343,070 7,112,588
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Receipt of taxes 18,251,794 17,650,741
Inspection/permit fees and other non-operating income 4,073,228 3,667,975
Net cash provided by noncapital financing activities 22,325,022 21,318,716
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Capital contributions 36,562,141 20,425,514
Connection fees 8,145,068 9,331,420
Acquisition and construction of capital assets (43,794,305) (39,507,801)
Interest paid on long-term debt (1,270,831) (1,254,730)
Principal payments on long-term debt (7,288,369) (2,587,377)
Net cash used for capital and related financing activities (7,646,296) (13,592,974)
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption of investments 98,856,450 72,075,151
Acquisition of investments (113,000,000) (67,000,000)
Interest received 2,673,348 1,138,630
Net csh provided by investing activities (11,470,202) 6,213,781
NET INCREASE(DECREASE)IN CASH 3,551,594 21,052,111
Cash,beginning of year 62,635,140 41,583,029
Cash,end of year $66,186,734 $62,635,140
(Continued)
See accompanying notes to financial statements
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CENTRAL CONTRA COSTA SANITARY DISTRICT
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,2019 AND 2018
2019 2018
Reconciliation of operating(loss)to net cash provided by
operating activities:
Operating income(losses) $12,399,242 ($17,184,643)
Adjustments to reconcile operating losses to cash
flows from operating activities:
Depreciation 20,983,353 21,561,704
Changes in assets and liabilities:
Receivables,net (1,895,428) (2,793,314)
Parts and supplies 59,057 (155,290)
Prepaid expenses 1,198,748 859,706
Net OPEB asset - 3,652,571
Accounts payable and accrued expenses 292,008 756,605
Accrued payroll and related expenses 401,726 75,746
Refundable deposits (64,035) 13,470
Claims 275,567
Net pension liability (2,928,146) (4,441,205)
Net OPEB liability (30,379,022) 4,767,238
Net cash provided(used)by operating activities $343,070 $7,112,588
SCHEDULE OF NON CASH ACTIVITY
Change in fair value of investments $2,673,348 $1,138,630
Capital asset donations 2,179,641 2,003,614
Total non cash activity $4,852,989 $3,142,244
CASH AND CASH EQUIVALENTS,AS PRESENTED ON
STATEMENT OF NET POSITION:
Unrestricted cash and cash equivalents $57,648,783 $57,137,987
Restricted cash and cash equivalents 8,537,951 5,497,153
Total cash and cash equivalents at end of year $66,186,734 $62,635,140
See accompanying notes to financial statements
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CENTRAL CONTRA COUNTY SANITARY DISTRICT
STATEMENTS OF FIDUCIARY NET POSITION
FIDUCIARY FUND
OTHER POST-EMPLOYMENT BENEFIT TRUST FUND
JUNE 30,2019 AND 2018
2019 2018
ASSETS
Investments with Trustees:
Cash equivalents(Note 2) $1,570,229 $1,635,346
Equity securities 17,716,355 15,961,335
Equity mutual funds 46,639,520 41,999,998
Total investments 65,926,104 59,596,679
Total Assets $65,926,104 $59,596,679
NET POSITION
Net position held in trust for OPEB benefits $65,926,104 $59,596,679
See accompanying notes to basic financial statements
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CENTRAL CONTRA COUNTY SANITARY DISTRICT
STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUND
OTHER POST-EMPLOYMENT BENEFIT TRUST FUND
FOR THE YEARS ENDED JUNE 30,2019 AND 2018
2019 2018
ADDITIONS
Contributions:
District $1,582,800 $3,946,500
Total contributions 1,582,800 3,946,500
Investment income:
Net appreciation in fair value of investments 4,920,923 2,500,297
Interest,dividends and other 959,972
Less:investment expenses (174,298) (138,457)
Total net investment income 4,746,625 3,321,812
Total additions 6,329,425 7,268,312
Change in net position 6,329,425 7,268,312
NET POSITION
Beginning of year 59,596,679 52,328,367
End of year $65,926,104 $59,596,679
See accompanying notes to basic financial statements
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
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 of Accounting
The District's financial statements are prepared on the accrual basis of accounting. The District
applies all applicable Governmental Accounting Standards Board (GASB) pronouncements for
accounting and financial reporting guidance.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
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.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 1 —DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
The District reports its Other Post-Employment Benefit Trust Fund as a fiduciary fund. The
Fund consists of the Public Agencies Post-Retirement Health Care Plan,which was established in
2005, amended and restated in 2007. The fundamental purpose of the trust is to fund post-
employment benefits (other than pension benefits), such as medical, dental, vision, life insurance,
long-term care and similar benefits.
C. Investments
Investments held at June 30, 2019 and 2018 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. Fair Value Measurements
Fair value is defined as 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. The
District categorizes its fair value measurements within the fair value hierarchy established by
generally accepted accounting principles. The fair value hierarchy categorizes the inputs to
valuation techniques used to measure fair value into three levels based on the extent to which
inputs used in measuring fair value are observable in the market.
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 an asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for an asset or liability.
If the fair value of an asset or liability is measured using inputs from more than one level of the
fair value hierarchy, the measurement is considered to be based on the lowest priority level input
that is significant to the entire measurement.
E. Prepaid Expenses
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in the financial statements.
F. 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.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 1 —DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
G. Parts and Supplies
Parts and supplies are valued at average cost and are used primarily for internal purposes.
H. Property,Plant, and Equipment
Purchased capital assets are stated at historical cost. Capital assets contributed to the District are
reported at acquisition value. 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
L 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 11/2 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.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 1—DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
J. 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 (one employee hired prior
to this date remains on the plan). 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 time
may be applied towards pension service time and/or cashed out upon retirement.
The changes in compensated absences were as follows for fiscal years ended June 30:
2019 2018
Beginning Balance $4,645,877 $4,570,131
Additions 661,215 326,791
Payments (259,489) (251,045)
Ending Balance $5,047,603 $4,645,877
Current Portion $504,700 $464,500
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.
K. 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.
L. 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.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 1 —DESCRIPTION OF DISTRICT AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
M. Implementation of Governmental Accounting Standards Board(GASB)Pronouncements
GASB Statement No. 83, Certain Asset Retirement Obligations (GASB Statement No. 83),
addresses accounting and financial reporting for certain assets retirement obligations (AROs). An
ARO is a legally enforceable liability associated with the retirement of a tangible capital asset.
GASB Statement No. 83 statement requires the current value of a government's AROs to
annually be adjusted for the effects of general inflation or deflation, and relevant factors that may
significantly change the estimated asset retirement outlays. This statement also requires
disclosure of information about the nature of a government's AROs, the methods and
assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the
associated tangible capital assets. GASB Statement No. 83 is effective for the District's fiscal
year ending June 30,2019. This Statement had no significant effect on the financial statements.
GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings
and Direct Placements(GASB Statement No. 88), to improve the information that is disclosed in
noted to government financial statements related to debt, including direct borrowings and direct
placements. It also clarifies which liabilities governments should include when disclosing
information related to debt. It requires that additional essential information related to debt be
disclosed in noted to financial statements, including unused lines of credit; assets pledged as
collateral for the debt; and terms specified in debt agreements related to significant events of
default with finance-related consequences, significant termination events with finance-related
consequences, and significant subjective acceleration clauses. This statement had no significant
effect on the financial statements.
N. Reclassification
For the year ended June 30,2019,certain classifications have been changed to improve financial
statement presentation. For comparative purposes,prior year balances have been reclassified to
conform with the fiscal year 2019 presentation.
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:
2019 2018
Cash and cash equivalents $57,648,783 $57,137,987
Short term investments 53,000,000 34,000,000
Restricted cash and cash equivalents 117,135 100,000
Restricted investments - 4,856,450
Total District Cash and Investments 110,765,918 96,094,437
Cash and investments held with Pension trust 8,420,816 5,397,153
Cash and investments held with OPEB trust 65,926,104 59,596,679
Total Cash and Investments $185,112,838 $161,088,269
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 2—CASH AND INVESTMENTS(Continued)
B. Policies and Practices
The District is authorized under California Government Code to make direct investments in local
agency bonds, notes, or warrants within the State: U.S. Treasury instruments, registered State
warrants or treasury notes, securities of the U.S. Governments, or its agencies, commercial paper,
certificates of deposit placed with commercial banks and/or savings with loan companies, and
certificates of participation. State code and the District's investment policy prohibit the District
from investing in investments with a rating of less than A or equivalent.
Investments purchases and sales are coordinated by the District's Treasurer, Contra Costa
County, at the request of the District.
C. General Authorizations
Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are
indicated in the schedules below:
District District
California State Limits Policy Policy
Maximum
Maximum Maxirmtm Maximum Percentage Minimum
Remaining Percentage Investment of Portfolio Credit
Authorized Investment Type Maturity of Portfolio In One Issuer (Per Issuer) Quality
U.S.Treasury Obligations 5 years None None 100% N/A
U.S.Government Agency Issues 5 years None None 100% N/A
Money Market Funds N/A 200/6 100/o 100/. A
Negotiable Certificates of Deposit 5 years 300/. 300/a 30% AA
Banker's Acceptances 180 401% 40% 5% N/A
Commercial Paper(1) 270 25% 100/o 5% A-1
Medium Term Notes 5years 30% 5% 5% AA
Collateralized Certificates of Deposit(2) 5 years 30% None 30% Aaa
Supranationals 5 years 30% 5% 5% AA
County Pooled Investment Funds N/A None None 100% N/A
Local Agency Investment Fund(LAIF) N/A None $65 million 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 LAIR
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 2—CASH AND INVESTMENTS (Continued)
D. Fair Value Hierarchy
The District categorizes its fair value measurements within the fair value hierarchy established by
generally accepted accounting principles. The hierarchy is based on the valuation inputs used to
measure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical
assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant
unobservable inputs.
The following is a summary of the fair value hierarchy of the fair value of investments of the
District as of June 30,2019:
2019
Investment Type Level 1 Level Total
Investments Reported at Fair Value:
Treasury Bill $13,000,000 $13,000,000
U.S.Federal Agency Securities-FHLB $30,000,000 30,000,000
U.S.Federal Agency Securities-FHLMC 10,000,000 10,000,000
Total Investments $13,000,000 $40,000,000 53,000,000
Investments lrempt from Fair Value Hierarchy:
California Local Agency Investment Fund 43,200,000
Total Investments 96,200,000
Cash and investments held with Pension trust 8,420,816
Cash and investments held with OPEB trust 65,926,104
Cash in bank 14,565,918
Total Cash and Investments $185,112,838
U.S. Treasury Notes totaling $13 million, classified in Level 1 of the fair value hierarchy are
valued using a quoted price in an active market for an identical asset. U.S. Federal Agency
Securities totaling $40 million classified in Level 2 of the fair value hierarchy, is valued using
matrix pricing techniques maintained by various pricing vendors. Matrix pricing is used to value
securities based on the securities' relationship to benchmark quoted prices.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 2—CASH AND INVESTMENTS (Continued)
The following is a summary of the fair value hierarchy of the fair value of investments of the
District as of June 30,2018:
2018
Investment Type Level 2 Total
Inves tments Reported at Fair Value:
U.S.Federal Agency Securities -FHLB $19,000,000 $19,000,000
Commercial Paper-General Electric 7,500,000 7,500,000
Commercial Paper-Mitsubishi UFG Union Bank 2,500,000 2,500,000
Commercial Paper-Chevron 5,000,000 5,000,000
Total Investments $34,000,000 34,000,000
Investments Measured at Cost:
Certificates of Deposit-Non-Negotiable 4,856,450
Investments&empt from Fair Value Hierarchy:
California Local Agency Investment Fund 52,000,000
Total Investments 90,856,450
Cash and investments held with Pension trust 5,397,153
Cash and investments held with OPEB trust 59,596,679
Cash in bank 5,237,987
Total Cash and Investments $161,088,269
U.S. Federal Agency Securities and Commercial paper totaling to $19 million and $15 million,
respectively, classified in Level 2 of the fair value hierarchy, is valued using matrix pricing
techniques maintained by various pricing vendors. Matrix pricing is used to value securities
based on the securities' relationship to benchmark quoted prices.
E. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment; generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. It is the District's policy to manage exposure to
interest rate risk by purchasing a combination of shorter term and longer term investments and by
timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to
maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
District policy is that investment maturities do not exceed one year, with the exception of Treasury
Notes or Local Agency Investment Fund; however, investments can be held longer with Board
approval.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 2—CASH AND INVESTMENTS (Continued)
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:
2019
12 Months
Investment Type or less Maturity
United States Treasury Bill $8,000,000 8/29/19
United States Treasury Bill 5,000,000 9/19/19
U.S Federal Agency Securities -FHLB 5,000,000 7/22/19
U.S Federal Agency Securities -FHLB 10,000,000 7/23/19
U.S Federal Agency Securities -FHLB 5,000,000 10/1/19
U.S Federal Agency Securities -FHLB 5,000,000 11/18/19
U.S Federal Agency Securities -FHLB 5,000,000 12/11/19
U.S.Federal Agency Securities-FHLMC 5,000,000 7/23/19
U.S.Federal Agency Securities-FHLMC 5,000,000 11/12/19
California Local Agency Investment Fund 43,200,000
Total Investments 96,200,000
Cash and investments held with Pension trust 8,420,816
Cash and investments held with OPEB trust 65,926,104
Cash in bank 14,565,918
Total Cash and Investments $185,112,838
2018
12 Months More than
Investment Type or less 12 Months Maturity
Certificates of Deposit-Debt Reserve $4,856,450 4/28/20
Commercial Paper-General Electric $2,500,000 7/25/18
Commercial Paper-Mitsubishi UFGUnion Bank 2,500,000 7/27/18
Commercial Paper-General Electric 5,000,000 9/6/18
Commercial Paper-Chevron 5,000,000 9/6/18
U.S Federal Agency Securities-FHLB 4,000,000 7/18/18
U.S Federal Agency Securities-FHLB 5,000,000 7/25/18
U.S Federal Agency Securities-FHLB 5,000,000 12/5/18
U.S Federal Agency Securities-FHLB 5,000,000 5/25/19
California Local Agency Investment Fund 52,000,000
Total Investments 86,000,000 4,856,450
Cash and investments held with Pension trust 5,397,153
Cash and investments held with OPEB trust 59,596,679
Cash in bank 5,237,987
Total Cash and Investments $156,231,819 S4,856,450
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 2—CASH AND INVESTMENTS (Continued)
Investment in LAIF — 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,
2019 and 2018,these investments matured in an average of 173 and 193 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 mounts 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
F. Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. Presented below is the actual rating as of June 30, of each
investment type as provided by Moody's investment rating system, of which a P -1 rating is the
top rating for short term investments.
Totals
Investment Type 2019 2018
Rated P-1:
U.S.Federal Agency Securities -FHLB $30,000,000 $19,000,000
U.S.Federal Agency Securities -FHLMC 10,000,000
Commercial Paper-General Electric 7,500,000
Commercial Paper-Mitsubishi UFGUnion Bank 2,500,000
Commercial Paper-Chevron 5,000,000
Total Rated Investments 40,000,000 34,000,000
Not rated:
Certificates of Deposit-non-negotiable 4,856,450
California Local Agency Investment Fund 43,200,000 52,000,000
U.S.Treasury Notes 13,000,000
Cash and investments held with Pension trust 8,420,816 5,397,153
Cash and investments held with OPEB trust 65,926,104 59,596,679
Cash in Bank 14,565,918 5,237,987
Total Cash and Investments $185,112,838 $161,088,269
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 2—CASH AND INVESTMENTS(Continued)
G. Custodial Credit Risk-Investments
Custodial risk for investments is the risk that, in the event of the failure of the counterparty (e.g.
the broker-dealer) to a transaction, a government will not be able to recover the value of its
investment or collateral securities that are in the possession of another party. The California
Government Code does not contain legal or policy requirements that would limit the exposure to
custodial credit risk. The District's policy is to use the services of the Treasurer's Office of the
County of Contra Costa, which will transact the District's investment decisions in compliance
with the requirements of the District's policy. The County Treasurer's Office will execute the
District's investments through such broker-dealers and financial institutions as are approved by
the County Treasurer, and through the State Treasurer's Office for investment in the Local
Agency Investment Fund.
NOTE 3—ACCOUNTS RECEIVABLE
Accounts receivable for the years ended June 30 are comprised of the following:
2019 2018
City of Concord(see Note 8) $23,178,808 $21,338,348
Household Hazardous Waste Partners 831,653 821,874
All Other 725,601 801,578
Total Accounts Receivable $24,736,062 $22,961,800
Employee Computer Loans Receivable:
The District provides loans to its employees for the purchase of personal computers. These loans
are payable through payroll deductions of $100 until the loan is paid off. The interest rate
associated with the loan is based of the most current Local Agency Investment Fund(LAIF)rate.
The maximum amount each employee may borrow is $2,000. The loans receivable balances were
as follows as of June 30:
2019 2018
Employee Computer Loans $10,614 $10,294
Additions 18,141 14,954
Payments (13,019) (14,634)
Long-term Portion $15,736 $10,614
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
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, 2019 and
2018 was $394,662 and$162,781,respectively.
The District also established the Alhambra Valley Assessment District (AVAD) to provide
services to residents in the Alhambra Valley in Martinez. Residents have the choice to pay cash
or finance the construction costs and connection fees. The AVAD receivable balance at June 30,
2019 and 2018 was$820,003 and$946,454,respectively.
The total receivable balance at June 30, 2019 and 2018 for CAD and AVAD was $1,214,665 and
$1,109,235,respectively,and is shown as a non-current asset on the Statement of Net Position.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 5—CAPITAL ASSETS
Property, plant and equipment, and construction in progress are summarized below for the year
ended June 30,2019:
Balance at Transfers& Balance at
June 30,2018 Additions Retirements Adjustments June 30,2019
Capital assets not being depreciated:
Land $17,320,570 $17,320,570
Easements(intangible) 4,949,507 4,949,507
Construction in Progress 35,820,635 $43,794,305 ($33,697,259) 45,917,681
Total nondepreciated assets 58,090,712 43,794,305 (33,697,259) 68,187,758
Capital assets being depreciated:
Sewage collection system 379,247,498 ($1,000) 14,838,354 394,084,852
Contributed sewer lines 159,795,333 2,179,641 369,807 162,344,781
Outfall sewers 11,371,574 11,371,574
Sewage treatment plant 341,675,108 (775,000) 14,076,185 354,976,293
Recycled water infrastructure 20,292,366 20,292,366
Pumping stations 57,327,020 57,327,020
Buildings 44,238,508 140,971 44,379,479
Furniture and equipment 13,841,424 (49,736) 788,250 14,579,938
Motor vehicles 7,695,424 (322,498) 118,034 7,490,960
Enterprise software 3,365,658 3,365,658
Total depreciated assets 1,035,484,255 2,179,641 (1,148,234) 33,697,259 1,070,212,921
Less accumulated depreciation:
Sewage collection system 73,525,809 5,233,352 (1,000) 78,758,161
Contributed sewer lines 61,491,489 2,160,843 63,652,332
Outfall sewers 3,768,376 151,394 3,919,770
Sewage treatment plant 228,809,775 7,669,380 (775,000) 235,704,155
Recycled water infrastructure 9,680,325 675,337 10,355,662
Pumping stations 35,288,443 2,020,755 37,309,198
Buildings 14,154,661 1,273,070 15,427,731
Furniture and equipment 9,236,015 1,229,242 (49,736) 10,415,521
Motor vehicles 5,217,732 401,697 (322,498) 5,296,931
Enterprise software 168,283 168,283
Total accumulated depreciation 441,172,625 20,983,353 (1,148,234) 461,007,744
Total capital assets being
depreciated,net 594,311,630 (18,803,712) 33,697,259 609,205,177
Capital assets,net $652,402,342 $24,990,593 $677,392,935
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 5—CAPITAL ASSETS(Continued)
Property, plant and equipment, and construction in progress are summarized below for the year
ended June 30,2018:
Balance at Transfers& Balance at
June 30,2017 Additions Retirements Adjustments June 30,2018
Capital assets not being depreciated:
Land $17,320,570 $17,320,570
Easements(intangible) 4,941,707 $7,800 4,949,507
Construction in Progress 33,388,571 $39,507,801 (37,075,737) 35,820,635
Total nondepreciated assets 55,650,848 39,507,801 (37,067,937) 58,090,712
Capital assets being depreciated:
Sewage collection system 351,503,806 ($364,004) 28,107,696 379,247,498
Contributed sewer lines 157,791,719 2,003,614 159,795,333
Outfall sewers 11,371,574 11,371,574
Sewage treatment plant 333,962,356 7,712,752 341,675,108
Recycled water infrastructure 20,292,366 20,292,366
Pumping stations 57,278,141 48,879 57,327,020
Buildings 44,238,508 44,238,508
Furniture and equipment 14,012,837 (1,264,023) 1,092,610 13,841,424
Motor vehicles 7,614,982 (25,558) 106,000 7,695,424
Total depreciated assets 998,066,289 2,003,614 (1,653,585) 37,067,937 1,035,484,255
Less accumulated depreciation:
Sewage collection system 68,942,762 4,947,051 (364,004) 73,525,809
Contributed sewer lines 59,361,001 2,130,488 61,491,489
Outfall sewers 3,616,981 151,395 3,768,376
Sewage treatment plant 220,382,147 8,427,628 228,809,775
Recycled water infrastructure 8,866,352 813,973 9,680,325
Pumping stations 33,104,637 2,183,806 35,288,443
Buildings 12,876,506 1,278,155 14,154,661
Furniture and equipment 9,260,262 1,239,776 (1,264,023) 9,236,015
Motor vehicles 4,853,858 389,432 (25,558) 5,217,732
Total accumulated depreciation 421,264,506 21,561,704 (1,653,585) 441,172,625
Total capital assets being
depreciated,net 576,801,783 (19,558,090) 37,067,937 594,311,630
Capital assets,net $632,452,631 $19,949,711 $652,402,342
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 6—LONG-TERM DEBT
A. Summary of Activity
The changes in the District's long-term obligations during the year ended June 30,2019 consisted
of the following:
Original Amount
Issue Balance Balance due within
Amount June 30,2018 Additions Retirements June 30,2019 one year
2018 Series A Wastewater Revenue
Refunding Bonds
1.39-2.34%,due 9/1/2029 $15,135,000 $15,135,000 $15,135,000
2018 Series B Wastewater Revenue
Refunding Bonds
2.62-3.12%,due 9/1/2023 4,315,000 4,315,000 4,315,000 $2,145,000
2009 Series A Certificates of Participation
Wastewater Revenue
3.45-3.78°/x,due 9/1/2029 19,635,000 $19,635,000 $19,635,000
2009 Series B Certificates of Participation
Wastewater Revenue
.40-3.79%,due 9/1/2029 34,490,000 9,460,000 9,460,000
Total long-term debt 29,095,000 19,450,000 29,095,000 19,450,000 $2,145,000
Add:Unamortized premium
Wastewater Revneue Bonds 2,777,190 420,559 2,356,631
Total Long-Term Debt,net 29,095,000 $22,227,190 $29,515,559 21,806,631 $2,145,000
Less Current Portion (2,480,000) (2,145,000)
Long Tenn Portion $26,615,000 $19,661,631
The changes in the District's long-term obligations during the year ended June 30,2018 consisted
of the following:
Original Amount
Issue Balance Balance due within
Amount June 30,2017 Retirements June 30,2018 one year
2009 Series A Certificates of Participation
Wastewater Revenue
3.45-3.78%,due 9/1/2029 $19,635,000 $19,635,000 $19,635,000
2009 Series B Certificates of Participation
Wastewater Revenue
.40-3.79%,due 9/1/2029 34,490,000 11,865,000 $2,405,000 9,460,000 $2,480,000
1999 State Water Resources Control Board
Water Reclamation Loan
2.60%,due 3/31/2018 2,916,872 182,377 182,377
Total Long-Term Debt 31,682,377 $2,587,377 29,095,000 $2,480,000
Less current portion (2,587,377) (2,480,000)
$29,095,000 $26,615,000
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 6—LONG-TERM DEBT (Continued)
B. Debt Service Requirements
The 2018 Wastewater Revenue Refunding debt service requirements are as follows:
Fiscal Year
Ending Series A Series B Total
June 30, Principal Interest Principal Interest Principal Interest
2020 $744,500 $2,145,000 $92,915 $2,145,000 $837,415
2021 $1,225,000 720,000 515,000 57,605 1,740,000 777,605
2022 1,270,000 663,750 535,000 42,477 1,805,000 706,227
2023 1,335,000 598,625 550,000 26,172 1,885,000 624,797
2024 1,395,000 530,375 570,000 8,892 1,965,000 539,267
2025-2029 8,060,000 1,507,500 8,060,000 1,507,500
2030 1,850,000 46,250 1,850,000 46,250
Total $15,135,000 $4,811,000 $4,315,000 $228,061 $19,450,000 $5,039,061
As part of the Federal budget sequestration, the Internal Revenue Service (IRS) has announced
that, as of March 1, 2018, credit payments claimed by issuers of certain tax credit bonds,
including Build America Bonds,may be subject to a reduction of 6.6%.
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 were 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 were 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 would fully amortized as of
September 1, 2029. As of June 30, 2019,the outstanding amount of$29,095,000 in principal and
$9,528,717 of interest was fully refunded by the 2018 Wastewater Revenue Refunding Bonds,
Series A&B.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 6—LONG-TERM DEBT(Continued)
D. 2018 Series A and B Wastewater Revenue Refunding Bonds
On September 13, 2018 the District issued two Wastewater Revenue Refunding Bonds (Bonds).
The 2018 Wastewater Revenue Refunding Bonds, Series A (tax-exempt) and B (federally
taxable) were issued for $15,135,000 and $4,315,000, respectively. The Bonds were issued to
defease and refund all of the District's outstanding obligations with respect to the $19,635,000
original principal amount of 2009 Wastewater Revenue Certificates of Participation, Series A and
all of the District's outstanding obligations with respect to the $34,490,000 original principal
amount of 2009 Wastewater Revenue Certificates of Participation, Series B, and pay costs issuing
the Bonds.
The two bonds total $19,450,000 and are secured by a pledge of tax and net revenues of the
wastewater system. The outstanding bonds from direct borrowings related to business-type
activities of$19,450,000 contain a provision that in an event of default, the U.S. Bank National
Association (Trustee) has the right to accelerate the total unpaid principal amounts of the bonds.
The official statement contains an event of default clause that changes the timing of the
repayments of outstanding amounts to become immediately due if the District is unbale to make
payment. Principal payments begin annually on September 1, 2020 and 2021 for the Series B and
A Bonds, respectively, with semi-annual interest payments due on September 1 and March 1 of
each year. Yields range from 1.39% to 2.34% and 2.62% to 3.12% for the Series A and Series B
Bonds,respectively.
The refunding resulted in an overall debt service savings of$7,455,312. The net present value of
the debt service savings is called an economic gain and amounted to $2,603,897.
NOTE 7—RISK MANAGEMENT
The District is exposed to various risks of loss including torts, theft of, damage to, and
destruction of assets, errors and omissions, injuries to employees, and natural disasters. To
manage these risks, the District joined with other entities to form the California Sanitation Risk
Management Authority(CSRMA), a public entity risk pool currently operating as a common risk
management and insurance program for the member entities. The purpose of CSRMA is to
spread the adverse effects of losses among the member entities and to purchase excess insurance
as a group, thereby reducing its cost. Through CSRMA, the District purchases property
insurance and workers' compensation insurance.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 7—RISK MANAGEMENT (Continued)
A. Insurance Coverage
The District's insurance coverage is as follows:
Self Insured
Deductible Per
Type of Coverage Insurer Limits Occurrence
All-Risk Property:
Special Form Property Alliant Property Insurance Program $602,045,193 $250,000
Crime National Union Fire Ins.Company 1,000,000 2,500
Liability:
Fiduciary Liability Insurance RLI Insurance Company 1,000,000 -
Pollution-General Liability Aspen Specialty Ins.Company 10,000,000 50,000
Commercial Environment Excess Aspen Specialty Ins.Company 1,000,000 5,000
Special Excess Liability Coverage-ANML Security National Ins.Company 10,000,000 500,000
Excess Following Form Liability Policy Allied World Assurance Company(U.S),1 5,000,000 10,000,000
Employment Practice Liability Hiscox Insurance Company(Bermuda)Ltd. 1,000,000 35,000
Workers'Compensation:
Excess Workers'Compensation Safety National Casualty Corporation Statutory -
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 policy is to
maintain a reserve for claims of$1,500,000 which is equivalent to three claims at $500,000 per
occurrence. The District's actuary has calculated its potential liability as of June 30, 2019 to be
$1,157,797.
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, 2019, 2018, and 2017, settlements have not exceeded insurance
coverage. Changes in the District's estimated liability for retained losses are summarized as
follows as of June 30:
2019 2018 2017
Beginning balance $882,230 $807,079 $1,000,000
Provisions for claims incurred in the current year
and changes in the liability for retained-
losses incurred in prior years 623,961 243,897 (127,214)
Claims paid and/or adjustments (348,394) (168,746) (65,707)
Ending balance $1,157,797 $882,230 $807,079
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
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 capital costs expended. Service charges and contributions to capital costs from the City
totaled $15,205,292 and $7,973,516 respectively, for the year ended June 30, 2019, for a total of
$23,178,808. Service charges and contributions to capital costs from the City totaled
$14,973,623 and $6,364,725, respectively, for the year ended June 30, 2018, for a total of
$21,338,348.
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, 2018. 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 on their website at www.cecera.org.
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 30,2019,are summarized as follows:
Mscellaneous
Membership date Prior to January 1,2013 On or after January 1,2013
Benefit vesting schedule 10 years service 5 years service
Benefit payments monthly for life monthly for life
Leave cash out pensionable? Yes No
Benefit%per year of service 2% 2%
Final pensionable salary formula Highest 12 consecutive Annual average of highest
months 36 consecutive months
Annual benefit cap Hired before 1/1/1996-None $145,666
Hired 1/1/1996-12/31/2012-
$275,000
Minimum Retirement age(with benefit reductions) 50 52
Required employee contribution rates 11.96% 11.20%
Required employer contribution rates 51.83% 45.67%
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 9—PENSION PLANS(Continued)
Contributions—The Plan requires employees to pay a portion of the basic retirement benefit and
a portion of future COL costs. For the year ended June 30, 2019, the District's contributions to
the Plan were $17,282,356.
Pension Liabilities,Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions-The District reported net pension liabilities for its proportionate share of the net
pension liability of the Plan as follows as of June 30:
Proportionate Share of Net Pension Liability
2019 2018
Miscellaneous $90,430,104 $63,806,000
Total Net Pension Liability $90,430,104 $63,806,000
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, 2018, 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, 2017 rolled forward to December 31, 2018 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, 2017, 2018, and
2019 were as follows:
Proportionate share of the Plan Fiduciary Net
Reporting Date for Proportion of the Proportionate share Net Pension Liability as a Pension as a
Employer under GASB 68 Net Pension of Net Pension Covered percentage of its covered percentage of the Total
as of December 31 Liability Liability Payroll payroll Pension Liability
2017 6.273% $87,847,116 $31,584,169 278.14% 76.44%
2018 7.863% 63,806,000 33,306,938 191.57% 83.58%
2019 6.332% 90,430,104 33,793,159 267.60% 77.86%
For the year ended June 30, 2019, the District recognized pension expense of$14,899,558. At
June 30, 2019, the District reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $8,840,759
Differences between expected and actual experience 2,612,669 $1,965,766
Changes of assumptions or other inputs 530,124 4,606,404
Change in proportion and differences between employer
contributions and proportionate share of contributions 7,636,777 17,164,806
Net difference between projected and actual earnings
on pension plan investments 27,095,284
Total $46,715,613 $23,736,976
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 9—PENSION PLANS(Continued)
The $8,840,759 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 30,2020.
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 Annual
June 30 Amortization
2020 $5,124,501
2021 1,403,504
2022 475,439
2023 7,134,434
Total $14,137,878
At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to measurement date $8,533,670
Differences between expected and actual experience $6,290,561
Changes of assumptions or other inputs 1,924,151 782
Change in proportion and differences between employer
contributions and proportionate share of contributions 11,045,200 5,334,713
Net difference between projected and actual earnings
on pension plan investments 16,450,578
Total $21,503,021 $28,076,634
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 9—PENSION PLANS(Continued)
Actuarial Assumptions — The total pension liabilities in the December 31, 2017 actuarial
valuations were determined using the following actuarial assumptions:
Miscellaneous
Valuation Date December 31,2017
Measurement Date December 31,2018
Actuarial Cost Method Entry Age Actuarial Cost Method
Amortization Method Level percent of payroll
Actuarial Assumptions:
Discount Rate 7.00%
Inflation Rate 2.75%
Payroll Growth 2.75%(1)
Projected Salary Increase 3.75%- 15.25%
Cost of Living Adjustments 2.75%
Investment Rate of Return 7.00%
Mortality RP-2014 Healthy Annuitant Mortality Table
(1) Plus"across the board"real salary increases of 0.5%per year
Discount Rate — The discount rate used to measure the total pension liability was 7.0% 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 31,2018.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 9—PENSION PLANS(Continued)
The long-term expected rate of return on pension plan investments was determined in 2019 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
Expected Real
Target Rate of
Asset Class Allocation Return
Large Cap U.S.Equity 5% 5.44%
Developed International Equity 13% 6.54%
Emerging Markets Equity 11% 8.73%
Short-Term Govt/Credit 23% 0.84%
U.S.Treasury 3% 1.05%
Private Equity 8% 9.27%
Risk Diversifying Strategies 7% 3.53%
Global Infrastructure 3% 7.90%
Private Credit 12% 5.80%
REIT 1% 6.80%
Value add Real Estate 5% 8.80%
Opportunistic Real Estate 4% 12.00%
Risk Parity 5% 5.80%
Total 100%
A change in the discount rate would affect the measurement of the Total Pension Liability(TPL).
A 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 6.00%
Net Pension Liability $145,193,990
Current Discount Rate 7.00%
Net Pension Liability $90,430,104
1%Increase 8.00%
Net Pension Liability $45,564,431
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 9—PENSION PLANS(Continued)
B. 457(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 (b). 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 (b) 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 $2,123,939 and $2,034,759 to
the Plan during the years ended June 30, 2019 and 2018,respectively.
The 401(a) money purchase plan assets are held in trust with ICMA Retirement Corporation for
the exclusive benefit of the participants and are not included in the District's financial statements.
NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS
A. General Information about the District's Other Post Employment Benefit(OPEB)Plan
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 through PARS, which acts as a common investment agent for participating public
employees within the State of California. The District is the plan administrator. 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.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
Benefit Terms — Post-employment healthcare and similar benefit allowances are provided to
eligible employees who retire from the District or to their surviving spouses.
Employees Covered by Benefit Terms—Membership in the plan consisted of the following at the
measurement date of June 30,2019:
Active employees 274
Inactive employees or beneficiaries currently
receiving benefit payments 268
Inactive employees entitled to but not yet
receiving benefit payments 3
Total 545
B. Net OPEB Liability
Actuarial Methods and Assumptions—The District's net OPEB liability was measured as of June
30,2019 and the total OPEB liability used to calculate the net OPEB liability was determined by an
actuarial valuation dated July 1, 2018 that was rolled forward using standard update procedures to
determine the $77,838,865 total OPEB liability as of June 30, 2019, based on the following
actuarial methods and assumptions:
Actuarial As sumptions
Valuation Date July 1,2018
Measurement Date June 30,2019
Actuarial Cost Method Entry Age Normal,Level Dollar
Actuarial Assumptions:
Contribution and Funding District contributes full ADC less benefit payments to PARS trust
Benefits payments paid outside the trust
PARS portfolio:Moderate
Long-Term Expected Rate of Return on 6.25%at June 30,2018
Discount Rate 5.75%at June 30,2019
General Inflation 2.75%per annum
Mortality,Disability,Termination, CCCERA 2012-2014 Experience Study
Mortality Improvement Mortality improvement projected generationally with Scale MP-15
Medical Trend Non-Medicare-7.5%for 2019/20,decreasing to 4.0%for 2075/76 and later
Medicare-6.5%for 2019/20,decreasing to 4.0%for 2075/76 and later
Dental Trend 3.75%annually
Healthcare Participation for future Currently Covered:100%
Currently Waived Coverage:95%
Self-Pay Board Members:50%
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
The underlying mortality assumptions were based on the mortality improvement projected
generationally with Scale MP-15 and all other actuarial assumptions used in the July 1, 2018
valuation were based on the results of a July 1, 2018 actuarial experience study for the period of
July 1,2018 to June 30, 2019.
The long-term expected rate of return on OPEB plan investments was determined using a building-
block method in which expected future real rates of return (expected returns, net of OPEB plan
investment expense and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighting the expected future real
rates of return by the target asset allocation percentage and by adding expected inflation. The target
allocation and best estimates of arithmetic real rates of return for each major asset class are
summarized in the following table:
Long-Term
Target Expected Real
Asset Class Component Allocation Rate of Return
Global Equity 48.0% 4.82%
Fixed Income 45.0% 1.47%
REIT's 2.0% 3.76%
Cash 5.0% 0.06%
Total 100.0%
Discount Rate — The discount rate used to measure the total OPEB liability was 5.75%. The
projection of cash flows used to determine the discount rate assumed that District contributions will
be made at rates equal to the actuarially determined contribution rates. Based on those assumptions,
the OPEB plan's fiduciary net position was projected to be available to make all projected OPEB
payments for current active and inactive employees and beneficiaries. Therefore, the long-term
expected rate of return on OPEB plan investments was applied to all periods of projected benefit
payments to determine the total OPEB liability.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
C. Changes in Net OPEB Liability
The changes in the net OPEB liability follows:
Increase (Decrease)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability/(Asset)
(a) (b) (a)-(b)
Balance at June 30,2018 $105,947,197 $59,596,743 $46,350,454
Changes Recognized for the Measurement Period:
Service Cost 2,447,310 2,447,310
Interest on the total OPEB liability 6,596,612 6,596,612
Changes in benefit terms (27,603,524) (27,603,524)
Differences between expected and actual experience (7,346,935) (7,346,935)
Changes of assumptions 3,495,645 3,495,645
Contributions from the employer 7,280,240 (7,280,240)
Contributions from the employee
Net investment income 4,920,923 (4,920,923)
Benefit payments (5,697,440) (5,697,440)
Administrative expenses (174,362) 174,362
Net changes (28,108,332) 6,329,361 (34,437,693)
Balance at June 30,2019 $77,838,865 $65,926,104 $11,912,761
D. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate and Healthcare Cost
Trend Rates
The following presents the net OPEB liability of the District at June 30, 2019, as well as what the
District's net OPEB liability would be if it were calculated using a discount rate that is 1-
percentage-point lower(4.75%)or 1-percentage-point higher(6.75%)than the current discount rate:
Net OPEB Liability/(Asset)
Discount Rate-1% Discount Rate Discount Rate+1%
(4.75%) (5.75%) (6.75%)
$21,919,793 $11,912,761 $3,680,123
The following presents the net OPEB liability of the District, as well as what the District's net
OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-
point lower or 1-percentage-point higher than the current healthcare cost trend rates:
Net OPEB Liability/(Asset)
Current Healthcare Cost
1%Decrease Trend Rates 1%Increase
$2,521,940 $11,912,761 $23,463,943
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 10—POST EMPLOYMENT HEALTH CARE BENEFITS (Continued)
E. OPEB Expense and Deferred OutflowsJnflows of Resources Related to OPEB
For the year ended June 30, 2019, the District recognized negative OPEB expense of$23,098,782.
At June 30, 2019, the District reported deferred outflows and inflows of resources related to OPEB
from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Employer contributions made subsequent to the measurement date
Differences between actual and expected experience $5,960,721
Changes of assumptions $2,836,089
Net differences between projected and actual earnings on 903,639
plan investments
Total $2,836,089 $6,864,360
Amounts reported as deferred outflows and (inflows) of resources related to OPEB will be
recognized as part of OPEB expense as follows:
Year Annual
Ended June 30 Amortization
2020 ($950,668)
2021 (950,668)
2022 (950,668)
2023 (958,267)
2024 (218,000)
Total ($4,028,271)
OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to
OPEB — For purposes of measuring the net OPEB liability, deferred outflows of resources and
deferred inflows of resources related to OPEB, and OPEB expense, information about the
fiduciary net position of the District's OPEB Plan and additions to/deductions from the OPEB
Plan's fiduciary net position have been determined on the same basis as they are reported by the
District's defined benefit post employment healthcare plan (DPHP). For this purpose, benefit
payments are recognized when currently due and payable in accordance with the benefit terms.
Investments are reported at fair value.
F. Annual Money-Weighted Rate of Return on Investments
For the years ended June 30, 2019 and 2018, the annual money-weighted rate of return on
investments,net of investment expense,were 7.20%and 5.96%. The money-weighted rate of return
expresses investment performance net of investment expense, adjusted for the changing amounts
actually invested.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
NOTES TO THE BASIC FINANCIAL STATEMENTS
For the Years Ended June 30,2019 and 2018
NOTE 11—NET POSITION
A. Net Position
Net Position is the excess of all the District's assets and deferred outflows of resources over all its
liabilities and deferred inflows of resources,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 30,2019:
Fis cal Year Office
Ending June 30, Equipment Facilities Total
2020 $342,106 $130,873 $472,979
Total $342,106 $130,873 $472,979
Total rental expense for both the fiscal years ended June 30,2019 and 2018 was $313,492.
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$29,402,558 and$17,997,738 as of June 30,2019 and 2018,respectively.
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REQUIRED SUPPLEMENTARY INFORMATION
December 18, 2019 Regular FINANCE Committee Meeting Agenda Packet- Page 130 of 248
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CENTRAL CONTRA COSTA SANITARY DISTRICT
Cost-Sharing Multiple Employer Defined Benefit Retirement Plan
As of fiscal year ending June 30,2019
PROPORTIONATE SHARE OF NET PENSION LIABILITY
Last 10 Fiscal Years'
December 31,
Measurement date 2018 2017 2016 2015 2014
Proportion of the net pension
liability 6.33% 7.86% 6.27% 6.09% 7.49%
Proportionate share of the net
pension liability $ 90,430,104 $ 63,806,000 $ 87,847,116 $ 91,746,888 $ 89,535,510
Covered Payrod $ 37,088,954 $ 36,405,155 $ 33,825,261 $ 31,149,979 $ 29,647,993
Proportionate share of the net
pension liability as a percentage
of covered payroll 243.82% 175.27% 259.71% 294.53% 302.00%
Fiduciary net position as a
percentage of the total pension
liability 77.86% 83.58% 76.44% 74.14% 73.86%
1 The fiscal year ending June 30,2015 was the first year of implementation. Accordingly only five years are shown.
Z Covered payroll represents compensation earnable and pensionable compensation for the measurement period ended
December 31st. Only compensation earnable and pensionable compensation that would possibly go into the
determination of retirement benefits are included.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
Cost-Sharing Multiple Employer Defined Benefit Retirement Plan
As of fiscal year ending June 30,2019
SCHEDULE OF CONTRIBUTIONS
Last 10 Years*
2019 2018 2017 2016 2015
Actuarially determined contribution $ 17,520,615 $ 17,880,152 $ 18,043,391 $ 22,752,611 $ 24,451,234
Contributions in relation to the actuarially determined
contributions 17,520,615 17,880,152 18,043,391 22,752,611 24,451,234
Contribution deficiency(excess) - - - - -
Covered payroll $ 38,479,260 $ 36,638,935 $ 35,178,106 $ 32,675,243 $ 30,093,339
Contributions as a percentage of covered-employee payroll 45.53% 48.80% 51.29% 69.63% 81.25%
Notes to Schedule
Measurement Date: 12/31/2018
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age
Amortization method Level percentage of payroll,closed
Remaining amortization period 5 years**
Asset valuation method 5-year semi-annually
Inflation 2.75%
Salary increases 3.75%-15.25%
Investment rate ofretum 7.0%,net ofpension plan investment expense,including inflation
Retirement age 50 years Classic,52 years PEPRA
Mortality RP-2014 Healthy Annuitant Mortality Table
with setbacks and forwards
*Fiscal year 2015 was the 1st year of implementation,therefore only five years are shown.
**Remaining balance ofDecember 31,2007 UAAL is amortized over a fixed(decreasing or closed)period
with 5 years remaining as of December 31,2017. 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.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
Single Employer
Last 10 fiscal years*
Measurement Date June 30, 2019 June 30,2018 June 30, 2017
Total OPEB Liability
Service Cost $2,447,310 $2,370,276 $2,295,667
Interest 6,596,612 6,396,063 6,203,230
Changes in benefit terms (27,603,524)
Differences between expected and actual experience (7,346,935)
Changes of assumptions 3,495,645
Benefit payments (5,697,440) (5,571,750) (5,404,627)
Net change in total OPEB liability (28,108,332) 3,194,589 3,094,270
Total OPEB liability-beginning 105,947,197 102,752,608 99,658,338
Total OPEB liability-ending(a) $77,838,865 $105,947,197 $102,752,608
Plan fiduciary net position
Contributions-employer $7,280,240 $9,649,750 $10,433,327
Contributions-employee
Net investment income 4,920,923 3,354,822 4,735,576
Administrative expense (174,362) (164,446) (5,404,627)
Benefit payments (5,697,440) (5,571,750) (139,063)
Net change in plan fiduciary net position 6,329,361 7,268,376 9,625,213
Plan fiduciary net position-beginning 59,596,743 52,328,367 42,703,154
Plan fiduciary net position-ending(b) $65,926,104 $59,596,743 $52,328,367
Net OPEB liability-ending(a)-(b) $11,912,761 $46,350,454 $50,424,241
Plan fiduciary net position as a percentage of the total OPEB liability 84.70% 56.25% 50.93%
Covered payroll $38,479,260 $36,638,935 $35,178,106
Net OPEB liability as a percentage of covered-employee payroll 30.96% 126.51% 143.34%
Notes to schedule:
*Fiscal year 2017 was the first year of implementation,therefore only three years are shown.
CENTRAL CONTRA COSTA SANITARY DISTRICT
POST-RETIREMENT HEALTH CARE DEFINED BENEFIT PLAN
SCHEDULE OF INVESTMENT RETURN RATE
2019 2018 2017
Annual money weighted rate of return,
net of investment expense 7.20% 5.96% 6.25%
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SCHEDULE OF CONTRIBUTIONS
Single Employer
Last 10 fiscal years*
Fiscal Year Ended June 30, 2019 2018 2017
Actuarially determined contribution $7,524,000 $7,866,000 $7,866,000
Contributions in relation to the
actuarially determined contribution 7,280,240 10,433,327 10,433,327
Contribution deficiency(excess) $243,760 ($2,567,327) ($2,567,327)
Covered payroll $38,479,260 $36,638,935 $35,178,106
Contributions as a percentage of
covered payroll 18.92% 28.48% 29.66%
Notes to Schedule
Methods and assumptions used to determine contribution rates:
Valuation Date 7/1/2016
Actuarial Cost Method: Entry Age Normal,Level Dollar
Amortization Method: Level dollar over closed 17 year period
Asset Valuation Method: Investment gains and losses spread over 5-year rolling
Actuarial Assumptions:
Discount Rate 6.25%
General Inflation 3.00%
Medical Trend Pre-Medicare- 7.0% for 2017/18, decreasing to 5.0%for
2021/22 and later
Medicare -7.2%for 2017/18,decreasing to 5.0% for
2021/22
and later
Dental Trend 3.75%
Mortality Rate CCCERA 2012-2014 Experience Study
Mortality Improvement Mortality improvement projected generationally with
Scale MP-15
* Fiscal year 2017 was the first year of implementation,therefore only three years are shown.
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SUPPLEMENTARY INFORMATION
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CENTRAL CONTRA COSTA SANITARY DISTRICT
COMBINING SCHEDULE OF NET POSITION
ENTERPRISE SUB-FUNDS
JUNE 30,2019
Running Sewer Self Debt
Expense Construction Insurance Service Elimination Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $27,150,115 $23,115,187 $7,383,481 $57,648,783
Short term investments 20,000,000 33,000,000 53,000,000
Accounts receivable 16,696,326 8,039,736 24,736,062
Employee computer loans receivable 15,736 15,736
Parts and supplies 2,185,998 2,185,998
Prepaid expenses 1,401,010 1,401,010
Total current assets 67,449,185 64,154,923 7,383,481 138,987,589
NON-CURRENT ASSETS:
Restricted cash and equivalents 8,520,816 $17,135 8,537,951
Assessment Districts receivable 1,214,665 1,214,665
CAPITAL ASSETS
Nondepreciable 68,187,758 68,187,758
Depreciable,net of accumulated depreciation 609,205,177 609,205,177
Total capital assets,net 677,392,935 677,392,935
Total non-current assets 685,913,751 1,214,665 17,135 687,145,551
TOTAL ASSETS 753,362,936 65,369,588 7,383,481 17,135 826,133,140
DEFERRED OUTFLOWS OF RESOURCES
Pension related 46,715,613 46,715,613
OPEB related 2,836,089 2,836,089
Total deferred outflows 49,551,702 49,551,702
LIABILITIES
CURRENT LIABILITIES:
Accounts payable and accrued expenses 3,126,190 6,783,894 46,662 9,956,746
Interest payable 288,505 288,505
Refunding Water Revenue Bonds-current portion 2,145,000 2,145,000
Accrued compensated absences-current portion 504,700 504,700
Liability for uninsured claims 1,157,797 1,157,797
Refundable deposits 181,011 170,786 351,797
Total current liabilities 3,811,901 6,954,680 1,204,459 2,433,505 14,404,545
NON-CURRENT LIABILITIES:
Refunding Water Revenue Bonds,noncurrent portion 19,661,631 19,661,631
Accrued compensated absences,noncurrent portion 4,542,903 4,542,903
Net pension liability 90,430,104 90,430,104
Net OPEB liability 11,912,761 11,912,761
Total noncurrent liabilities 106,885,768 19,661,631 126,547,399
TOTAL LIABILITIES 110,697,669 6,954,680 1,204,459 22,095,136 140,951,944
DEFERRED INFLOWS OF RESOURCES
Pension related 23,736,976 23,736,976
OPEB related 6,864,360 6,864,360
Total deferred inflows 30,601,336 30,601,336
NET POSITION
Net investment in capital assets 677,392,935 (21,806,631) 655,586,304
Restricted for debt service (271,370) (271,370)
Unrestricted (15,777,302) 58,414,908 6,179,022 48,816,628
TOTAL NET POSITION $661,615,633 $58,414,908 $6,179,022 ($22,078,001) $704,131,562
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CENTRAL CONTRA COSTA SANITARY DISTRICT
COMBINING SCHEDULE OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION
ENTERPRISE SUB-FUNDS
FOR THE YEAR ENDING JUNE 30,2019
Running Sewer Self Debt
Expense Construction Insurance Service Elimination Total
OPERATING REVENUES
Sewer service charges(SSC) $68,656,908 $68,656,908
Service charges-City of Concord 15,205,292 15,205,292
Other services charges 1,126,239 1,126,239
Miscellaneous charges 689,727 689,727
Total operating revenues 85,678,166 85,678,166
OPERATING EXPENSES
Sewage collection and pumping stations 17,213,848 17,213,848
Sewage treatment 26,342,221 26,342,221
Engineering 16,334,241 16,334,241
Recycled water 1,189,921 1,189,921
Administrative and general 24,262,569 $1,125,404 ($865,465) 24,522,508
Pension expense (2,928,146) (2,928,146)
OPEB expense (30,379,022) (30,379,022)
Depreciation 20,983,353 20,983,353
Total operating expenses 73,018,985 1,125,404 (865,465) 73,278,924
OPERATING INCOME(LOSS) 12,659,181 (1,125,404) 865,465 12,399,242
NONOPERATING REVENUES(EXPENSES)
Taxes $14,749,226 $3,502,568 18,251,794
Permit and inspection fees 2,362,622 286,086 2,648,708
Interest earnings 1,279,132 1,121,528 170,867 2,437 2,573,964
Interest expense (1,025,006) (1,025,006)
Other income(expense),net 1,388,847 35,673 865,465 (865,465) 1,424,520
Total nonoperating revenues 5,030,601 16,192,513 1,036,332 2,479,999 (865,465) 23,873,980
NET INCOME(LOSS)BEFORE CAPITAL 17,689,782 16,192,513 (89,072) 2,479,999 36,273,222
CONTRIBUTIONS AND TRANSFERS
CAPITAL CONTRIBUTIONS AND TRANSFERS
City of Concord contributions to capital costs 7,973,516 7,973,516
Customer contributions to capital cost(SSC) 28,588,625 28,588,625
Contributed sewer lines 2,179,641 2,179,641
Capital contributions-connection fees 8,145,068 8,145,068
Transfers In(Out) 43,387,573 (43,491,116) (11,953) 115,496
Total capital contributions and transfers 45,567,214 1,216,093 (11,953) 115,496 46,886,850
CHANGE IN NET POSITION 63,256,996 17,408,606 (101,025) 2,595,495 83,160,072
NET POSITION,BEGINNING OF YEAR 598,358,637 41,006,302 6,280,047 (24,673,496) 620,971,490
NET POSITION,END OF YEAR $661,615,633 $58,414,908 $6,179,022 ($22,078,001) $704,131,562
57
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ATTACHMENT 2
CENTRAL CONTRA COSTA SANITARY DISTRICT
MEMORANDUM ON INTERNAL CONTROL
AND
REQUIRED COMMUNICATIONS
FOR THE YEAR ENDED
JUNE 30,2019
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CENTRAL CONTRA COSTA SANITARY DISTRICT
MEMORANDUM ON INTERNAL CONTROL
AND
REQUIRED COMMUNICATIONS
For the Year Ended June 30,2019
Table of Contents
Page
Memorandum on Internal Control...................................................................................................l
Scheduleof Other Matters.......................................................................................................3
RequiredCommunications...............................................................................................................7
SignificantAudit Findings..........................................................................................................7
AccountingPolicies................................................................................................................7
Unusual Transactions, Controversial or Emerging Areas.....................................................7
AccountingEstimates.............................................................................................................8
Disclosures..............................................................................................................................8
Difficulties Encountered in Performing the Audit................................................................8
Corrected and Uncorrected Misstatements............................................................................8
Disagreements with Management..........................................................................................8
Management Representations.................................................................................................8
Management Consultations with Other Independent Accountants......................................9
Other Audit Findings or Issues...............................................................................................9
Other Information Accompanying the Financial Statements................................................9
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Fl. M ACZTE
MEMORANDUM ON INTERNAL CONTROL
To the Board of Directors
Central Contra Costa Sanitary District
Martinez, California
In planning and performing our audit of the basic financial statements of the Central Contra Costa Sanitary
District (District) as of and for the year ended June 30, 2019, 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.
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 material weaknesses. 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 material
weaknesses. 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.
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 and is not intended to be and should not be used
by anyone other than these specified parties.
Pleasant Hill, California
December 9, 2019
T 925.930.0902
Accountancy Corporation F 925.930.0135
3478 Buskirk Avenue,Suite 215 a maze@mazeassociates.com
Pleasant Hill,CA 94523 w mazeassociates.com
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CENTRAL CONTRA COSTA SANITARY DISTRICT
SCHEDULE OF OTHER MATTERS
FOR THE YEAR ENDED JUNE 30,2019
2019-01 New GASB Pronouncements Not Yet Effective
The following comment represents new pronouncements taking effect in the next few years. We have cited
them here to keep you abreast of developments:
EFFECTIVE FISCAL YEAR 2019/20:
GASB 84—Fiduciary Activities
The objective of this Statement is to improve guidance regarding the identification of fiduciary activities
for accounting and financial reporting purposes and how those activities should be reported.
This Statement establishes criteria for identifying fiduciary activities of all state and local governments.
The focus of the criteria generally is on (1) whether a government is controlling the assets of the
fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria
are included to identify fiduciary component units and postemployment benefit arrangements that are
fiduciary activities.
An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements.
Governments with activities meeting the criteria should present a statement of fiduciary net position and
a statement of changes in fiduciary net position. An exception to that requirement is provided for a
business-type activity that normally expects to hold custodial assets for three months or less.
This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and
other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4)
custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust or
equivalent arrangement that meets specific criteria.
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary
government, should combine its information with its component units that are fiduciary component units
and aggregate that combined information with the primary government's fiduciary funds.
This Statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when
an event has occurred that compels the government to disburse fiduciary resources. Events that compel a
government to disburse fiduciary resources occur when a demand for the resources has been made or
when no further action, approval, or condition is required to be taken or met by the beneficiary to
release the assets.
3
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CENTRAL CONTRA COSTA SANITARY DISTRICT
SCHEDULE OF OTHER MATTERS
FOR THE YEAR ENDED JUNE 30,2019
GASB 90–Maiority Equity Interests—an amendment of GASB Statements No. 14 and No. 61)
The primary objectives of this Statement are to improve the consistency and comparability of reporting
a government's majority equity interest in a legally separate organization and to improve the relevance
of financial statement information for certain component units. It defines a majority equity interest and
specifies that a majority equity interest in a legally separate organization should be reported as an
investment if a government's holding of the equity interest meets the definition of an investment. A
majority equity interest that meets the definition of an investment should be measured using the equity
method, unless it is held by a special-purpose government engaged only in fiduciary activities, a
fiduciary fund, or an endowment (including permanent and term endowments) or permanent fund.
Those governments and funds should measure the majority equity interest at fair value.
For all other holdings of a majority equity interest in a legally separate organization, a government
should report the legally separate organization as a component unit, and the government or fund that
holds the equity interest should report an asset related to the majority equity interest using the equity
method. This Statement establishes that ownership of a majority equity interest in a legally separate
organization results in the government being financially accountable for the legally separate
organization and,therefore,the government should report that organization as a component unit.
This Statement also requires that a component unit in which a government has a 100 percent equity
interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of
resources at acquisition value at the date the government acquired a 100 percent equity interest in the
component unit. Transactions presented in flows statements of the component unit in that circumstance
should include only transactions that occurred subsequent to the acquisition.
The requirements of this Statement are effective for reporting periods beginning after December 15,
2018. Earlier application is encouraged. The requirements should be applied retroactively, except for the
provisions related to (1) reporting a majority equity interest in a component unit and (2) reporting a
component unit if the government acquires a 100 percent equity interest. Those provisions should be
applied on a prospective basis.
EFFECTIVE FISCAL YEAR 2020/21:
GASB 87–Leases
The objective of this Statement is to better meet the information needs of financial statement users by
improving accounting and financial reporting for leases by governments. This Statement increases the
usefulness of governments' financial statements by requiring recognition of certain lease assets and
liabilities for leases that previously were classified as operating leases and recognized as inflows of
resources or outflows of resources based on the payment provisions of the contract. It establishes a
single model for lease accounting based on the foundational principle that leases are financings of the
right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability
and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a
deferred inflow of resources, thereby enhancing the relevance and consistency of information about
governments' leasing activities.
4
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CENTRAL CONTRA COSTA SANITARY DISTRICT
SCHEDULE OF OTHER MATTERS
FOR THE YEAR ENDED JUNE 30,2019
GASB 87—Leases(Continued)
A lease is defined as a contract that conveys control of the right to use another entity's nonfinancial
asset(the underlying asset) as specified in the contract for a period of time in an exchange or exchange-
like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any
contract that meets this definition should be accounted for under the leases guidance,unless specifically
excluded in this Statement.
GASB 89—Accountin-for Interest Cost Incurred before the End of a Construction Period
The objectives of this Statement are (1) to enhance the relevance and comparability of information
about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for
interest cost incurred before the end of a construction period.
This Statement establishes accounting requirements for interest cost incurred before the end of a
construction period. Such interest cost includes all interest that previously was accounted for in
accordance with the requirements of paragraphs 5-22 of Statement No. 62, Codification of Accounting
and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
Pronouncements, which are superseded by this Statement. This Statement requires that interest cost
incurred before the end of a construction period be recognized as an expense in the period in which the
cost is incurred for financial statements prepared using the economic resources measurement focus. As a
result, interest cost incurred before the end of a construction period will not be included in the historical
cost of a capital asset reported in a business-type activity or enterprise fund.
This Statement also reiterates that in financial statements prepared using the current financial resources
measurement focus, interest cost incurred before the end of a construction period should be recognized
as an expenditure on a basis consistent with governmental fund accounting principles.
5
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U1. M ACZTE
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, 2019. 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 described in Note 1 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 83 — Certain Asset Retirement Obli atg ions - This Statement addresses accounting and financial
reporting for certain asserts retirement obligations (AROs). An ARO is a legally enforceable liability
associated with the retirement of a tangible capital asset. This Statement requires the current value of a
government's AROs to annually be adjusted for the effects of general inflation or deflation, and relevant
factors that may significantly change the estimated asset retirement outlays. This statement also requires
disclosure of information about the nature of a government's AROs, the methods and assumptions used for
the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital
assets.
This pronouncement became effective,but did not have a material effect on the financial statements.
GASB 88— Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements - The
objective of this Statement is to improve the information that is disclosed in notes to government financial
statements related to debt, including direct borrowings and direct placements. It also clarifies which
liabilities governments should include when disclosing information related to debt. It requires that additional
essential information related to debt be disclosed in notes to financial statements, including unused lines of
credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant
events of default with finance-related consequences, significant termination events with finance-related
consequences, and significant subjective acceleration clauses.
This pronouncement became effective, but did not have a material effect on the financial statements. See
Note 6D for additional information.
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.
T 925.930.0902
Accountancy Corporation F 925.930.0135
3478 Buskirk Avenue,Suite 215 a maze@mazeassociates.com
Pleasant Hill,CA 94523 w mazeassociates.com
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Accounting 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 net
other post-employment benefits liability.
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, 2019. The value
of the District's net pension liability was obtained from an actuarial valuation provided by CCCERA.
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 30,2019. 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.
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. We did
not propose any audit adjustments that, in our judgement, could have a significant effect, either individually or
in the aggregate, on the District's financial reporting process.
Professional standards require us to accumulate all known and likely uncorrected misstatements identified
during the audit, other than those that are trivial, and communicate them to the appropriate level of management.
We have no such misstatements to report to the Board of Directors.
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 December 9,2019.
8
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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 District's auditors. However, these discussions
occurred in the normal course of our professional relationship and our responses were not a condition to our
retention.
Other Information Accompanying the Financial Statements
We applied certain limited procedures to the required supplementary information that accompanies and
supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 audit the required supplementary information and do not express an
opinion or provide any assurance on the required supplementary information.
We were engaged to report on the supplementary information,which accompany the financial statements but are
not required supplementary information. With respect to this supplemental information, 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 audit of the financial statements. We compared and reconciled the supplemental
information to the underlying accounting records used to prepare the financial statements or to the financial
statements themselves.
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
December 9,2019
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