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10) 7I FINANCIAL REPORT
AGENDA ITEM 7.1. ADMINISTRATIVE SERVICES DEPARTMENT DATE: December 18, 2012 MEMORANDUM TO: The Honorable City Council FROM: Jose E. Pulido, City Manag�—r- By: Tracey L. Hause, Administrative Services Director SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) JUNE 30, 2012 RECOMMENDATION: It is recommended that the City Council receive and file the Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2012. BACKGROUND: 1. Since 1994, the City had been contracting with Conrad and Associates LLP for auditing services. 2. The City has historically produced General Purpose Financial Statements instead of a CAFR. However, for the fiscal years ending in 1996, 1997 and 1998, the City completed CAFR's. 3. Beginning in 1999, the City determined that since a CAFR was not required by State law and returned to completing Basic Financial Statements. Further, preparation of a CAFR required additional staff time and higher audit fees. 4. In 2006, Conrad and Associates LLP became Mayer Hoffman McCann PC and the City continued to have them complete the year end audits and financial statements. 5. On June 28, 2011, the City Council approved the Fiscal Year (FY) 2011-12 City Budget. With the approval of the Budget, the City Council directed City staff to issue Requests for Proposals (RFP's) for all City contracts, including auditing services. In addition a $50,000 funding appropriation for auditing services associated with the FY 2010-11 year end process was included in the FY 2010-11 adopted Budget. 6. On April 18, 2011, staff issued a RFP for the City's auditing services. City Council December 18, 2012 Page 2 7. On May 13, 2011, the RFP formally closed and the City received two proposals from Mayer Hoffman McCann PC and Vasquez & Company LLP. 8. On July 15, 2011, the City Manager/Interim Administrative Services Director and the City's Accountant conducted an interview meeting with the representatives from Vasquez & Company, LLP. It was determined after that meeting Vasquez & Company could help the City undertake a comprehensive overview of the City's finances and management practices. Further, the City would be returning to producing a CAFR and Vasquez and Company, LLP would be completing the report as part of the audit process. 9. On August 2, 2011, the City Council approved a Professional Services Agreement in the amount of $45,000 with Vasquez & Company, LLP for auditing services for three years with two one-year options. 10. On October 31, 2012, Vasquez & Company completed their field work and has prepared the CAFR and related reports for FY 2011-12. As a recipient of Federal grant funds in past years, the City has been required to be in compliance with the requirements of the Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non -Profit Organizations. The process to ensure that the City is in compliance with this Circular is commonly known as the "Single AudiC. For the FY 2011-12, the City did not receive in excess of $500,000 in Federal grant monies; therefore a Single Audit and corresponding reports were not required. ANALYSIS: A Comprehensive Annual Financial Report (CAFR) is a set of U.S. government financial statements comprising the financial report of a state, municipal or other governmental entity that complies with the accounting requirements—generally accepted accounting principles (GAAP)—promulgated by the Governmental Accounting Standards Board (GASB). The CAFR accounting structure provides standardization and example documents. All levels of government -federal, state, local and municipal—produce a CAFR to document an accurate picture of institutional funds, enterprise or financial holdings, assets and total investment incomes for those government and nongovernmental entities using the report. Beginning with FY 2010-11, the City has moved from a basic financial statement presentation to this more transparent reporting. Most governmental agencies utilize this type of reporting, providing for ease of comparing financial data from one agency to another. The CAFR presents the financial activities for both the City and Redevelopment Agency. City Council December 18, 2012 Page 3 Vasquez & Company, LLP, Certified Public Accountants have issued an unqualified ("clean") opinion on the City and Agency's financial statements for the year ended June 30, 2012. The City also provides a narrative introduction, overview and analysis of the CAFR in the form of Management's Discussion and Analysis (MD&A). It can be found immediately following the independent auditors' report (Attachment "A"). In keeping with the theme of a high performance organization, staff will be submitting the FY 2011-12 CAFR to the Government Finance Officers' Association (GFOA) for the Excellence in Financial Report Award Program by December 31, 2012. The GFOA recognizes innovative programs, contributions to the practice of government finance that exemplify outstanding financial management. The award stresses practical, documented work that offers leadership to the profession and promotes improved public finance. FISCAL IMPACT: This action of receiving and filing does not have a fiscal impact on the FY 2012-13 City Budget. However, staff has begun the mid -year budget analysis and will be incorporating the results of actual spending in the FY 2011-12, as reflected in the CAFR and the Mid - Year Budget Report, which will be first discussed with the Mid -Year Budget Ad Hoc Committee (i.e., Mayor Yu and Councilmember Blum) in early February, and then presented to the entire City Council on February 19, 2013. CONCLUSION: Staff is recommending that the City Council receive and file the Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2012. ATTACHMENTS: A. Comprehensive Annual Financial Report (CAFR) for the Year Ended June 30, 2012. Attachment A CITY OF TEMPLE CITY CALIFORNIA Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2012 VC VA,5 EZ CITY OF TEMPLE CITY, CALIFORNIA Comprehensive Annual Financial Report Year Ended June 30, 2012 Prepared by: ADMINISTRATIVE SERVICE DEPARTMENT Tracey L. Hause Administrative Services Director INTRODUCTORY SECTION Letter of Transmittal City Officials Organizational Chart FINANCIAL SECTION Report of Independent Auditors Management's Discussion and Analysis Basic Financial Statements Government -wide Financial Statements Statement of Net Assets Statement of Activities Fund Financial Statements City of Temple City Table of Contents PAGE 13 14 Description of Major Funds 15 Balance Sheet 16 Reconciliation of the Balance Sheet of Governmental Funds 60 to the Statement of Net Assets 17 Statement of Revenues, Expenditures, and Changes in Fund Balances 18 Reconciliation of the Statement of Revenues, Expenditures, and Changes 65 in Fund Balances of Governmental Funds to the Statement of Activities 19 Proprietary Fund Description of Proprietary Fund 20 Statement of Net Assets 21 Statement of Revenues, Expenses, and Changes in Net Assets 22 Statement of Cash Flows 23 Fiduciary Fund Description of Fiduciary Fund 24 Statement of Fiduciary Net Assets 25 Statement of Changes in Fiduciary Net Assets 26 Notes to Financial Statements 27 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule General Fund 60 Community Development Block Grant (CDBG) 63 Notes to Required Supplementary Information 64 Schedule of Funding Progress - California Public Retirement System 65 Schedule of Funding Progress - Other Postemployment Benefits 66 City of Temple City Table of Contents PAGE SUPPLEMENTARY SCHEDULES Nonmajor Governmental Funds Combining Balance Sheet 67 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 68 Nonmajor Special Revenue Funds Description of Nonmajor Special Revenue Funds 69 Combining Balance Sheet 72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 78 REPORT OF INDEPENDENT AUDITORS ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 84 STATISTICAL SECTION Description of Statistical Section Contents 86 Financial Trends Net Assets by Component - Last Ten Fiscal Years 87 Change in Net Assets - Expenses and Program Revenues - Last Ten Fiscal Years 88 Fund Balances of Governmental Funds - Last Ten Fiscal Years 90 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 91 Revenue Capacity Assessed Value of Taxable Property - Last Ten Fiscal Years 93 Direct and Overlapping Government Property Tax Rates - Last Ten Fiscal Years 94 General Governmental Revenues - Last Ten Fiscal Years 95 Principal Property Taxpayers - Current Fiscal Year 96 Top 25 Sales Tax Producers - Current Fiscal Year 97 Debt Capacity Direct and Overlapping Debt 98 Demographic and Economic Information Demographic and Economic Statistics - Last Ten Fiscal Years 99 Operating Information Construction Activity 100 Full -Time Equivalent City Employees by Function - Last Ten Fiscal Years 101 Operating Indicators by Function - Last Ten Fiscal Years 102 9701 LAS TUNAS DRIVE • TEMPLE CITY • CA 91780 • (626) 285-2171 December 12, 2012 To the Honorable City Council, The Comprehensive Annual Financial Report (CAFR) of the City of Temple City ("City") for the year ended June 30, 2012, is hereby submitted as mandated by applicable State of California statutes. These statutes require that the City annually issue a report on its financial position and activity, and that an independent firm of certified public accountants audit this report. Responsibilities for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures rests with the City's management. The information in this report is intended to present the reader with a comprehensive view of the City's financial position and the results of its operations for the fiscal year ended June 30, 2012, along with additional disclosures and financial information designed to enable the reader to gain an understanding of the City's financial activities. Vasquez & Company LLP, Certified Public Accountants, have issued an unqualified ("clean") opinion on the City's financial statements for the year ended June 30, 2012. The independent auditor concluded, based upon the audit, the City's financial statements for the fiscal year ended June 30, 2012 are fairly presented in conformity with generally accepted accounting principles (GAAP). The auditor's report is presented as the first component of the financial section of this report. Generally accepted accounting principles also require that management provide a narrative introduction, overview and analysis of the basic financial statements in the form of Management's discussion and analysis (MD&A). It can be found following the independent auditor's report. PROFILE OF THE GOVERNMENT The City is centrally located in the west San Gabriel Valley approximately 13 miles east of downtown Los Angeles. The City was incorporated on May 25, 1960 under the general laws of the State of California. On April 16, 1971, the City adopted Resolution No. 71-1084 declaring it a charter city. The City is approximately 3.85 square miles and is surrounded by the cities of Arcadia, San Gabriel, EI Monte, Rosemead and unincorporated portions of Los Angeles County. The 2010 U.S. Census Bureau indicates a total population of 35,558. The City is predominately a residential community with over 10,000 residential parcels. The City operates under the Council — Manager form of government and contracts for many of its public services including law enforcement. LOCALECONOMY The City has weathered the current economic environment as a result of substantial reserves and a solid property and sales tax base. The San Gabriel Valley has a varied residential, commercial and industrial base that adds to the stability of the unemployment rate. The U.S. economy continues to be weak and the recovery is persistently slow. The U.S. still faces plenty of obstacles and many economists caution that growth is still a ways off. MAJOR ACCOMPLISHMENTS Substantial progress in priorities previously identified by the City Council and staff has been made during the past fiscal year: Economic Develooment 1. Facilitated discussions and tenant terms for new additions at Temple City Marketplace including 85 Degrees (bakery) and a proposed Starbucks with a drive-through. Discussions are also underway to recruit a new restaurant (The Habit). 2. Opened discussions and negotiations with property owners of the former Alpha Beta site, which resulted in a proposed mixed-use project that could allow for a new park and joint parking opportunities under a possible public-private partnership (i.e., development agreement). A cost study—or pro forma—is underway and will determine the feasibility of different development scenarios for City Council consideration. 3. Initiated development of the City's economic development roadmap, a tangible work plan that looks to define "economic development" for Temple City by identifying initiatives that can be accomplished by the City and its stakeholders over the next three to five years. 4. Captured over $4.8 million in grant funding to help drive the design and pre -construction phases for the Rosemead Boulevard Enhancement Project. Upon completion in 2014, the project will open up access points to commercial uses, enhance the corridor's overall functionality and aesthetic, introduce protected bike lanes and set the stage for future redesign of the Las Tunas corridor. 5. Drafted a downtown parking study to provide a comprehensive review of current and future parking needs along Las Tunas Drive. The goal is to identify parking problems and potential solutions to help retain and attract businesses along the corridor, and to mitigate parking impacts to adjacent neighborhoods, while mitigating parking impacts to adjacent neighborhoods. The study was completed in October 2012. 6. Developed a public art ordinance that sets the stage for a robust public art program, adding vibrancy, aesthetics, culture and new destinations to Temple City's built environment. 7. The City made necessary improvements to the business licensing process, including making the application more user-friendly and clearly stating expectations for supplemental applicant information. Financial Solvencv and Accountabilitv 1. Completed and adopted an ordinance that safeguards the City's $21.7 million General Fund reserve. The policy, which supports the City's long history of conservative budgeting, mandates the availability of adequate reserves to hedge against economic downturns and other emergencies. It also provides resources that can be used for one-time needs such as major capital improvement and economic development projects. 2. Continued use of a zero -based approach to establish balanced City budgets that increase the level of City services while yielding operational efficiencies. 3. Outsourced fee collection services for parking tickets and administrative citations. This new arrangement allowed a collection agency to recover an estimated $50,000 in one-time revenue through use of the State Franchise Tax Board's Tax Intercept Program. 4. Revised the City's antiquated fee schedule and cost allocation plan to reflect the true cost of City services, eliminating approximately $400,000 in annual General Fund operational subsidies. Infrastructure, Maintenance and Safetv 1. Captured nearly $432,000 in Safe Routes to School funds for pedestrian safety improvements near nine Temple City schools. The planned improvements—scheduled to begin within the next year—will result in the installation of new sidewalks, crosswalks, curb ramps, flashing pedestrian crosswalk lights and speed feedback signs. 2. Upgraded traffic signals at Temple City Boulevard/Las Tunas Drive and Baldwin Avenue/Olive Street to provide critical pedestrian safety improvements including vehicular left -turn signal heads and legally compliant pedestrian curb ramps. Federal and county transportation funds covered the $206,000 cost. 3. Coordinated the timely cleanup, service delivery and the cost inventory associated with the unprecedented November 2011 windstorm. Operations transitioned to recovery mode within 24 hours, and all debris removed from City streets in three weeks. The City's cleanup efforts were one of the quickest and best coordinated in the San Gabriel Valley. 4. Reinstituted a four-year trim cycle for City -owned trees that will foster the proper growth of nearly 5,700 trees, and reduce liability from falling limbs and other unsound conditions. 5. Improved the appearance of Civic Center facilities to be more aesthetically pleasing and inviting to the public, by adding new landscaping at City Hall, and repainting the exterior of City Hall and Council Chambers. Parks and Communitv Services 1. Hosted 12 community events that promote civic engagement, increase cultural unity and strengthen community image. (e.g., summer concert series, Halloween Carnival, Fall Festival, Lights on Temple City, Lunar New Year Celebration, Arbor Day Event and Easter Egg Hunt). 2. Offered 16 new classes to meet changing customer needs, including academic courses for youth, computer instruction courses for youth and seniors, and a modified exercise program for seniors. Classes in general saw a 6% increase in attendance over the prior fiscal year. 3. Partnered with YWCA Intervale to provide seniors with case management services in five different languages. Services include advocacy, housekeeping, care giving, bill payment assistance, and vision and hearing services. 4. Made numerous facility improvements at City parks including but not limited to the resurfacing of basketball courts, replacement of tennis court screens and construction of new monument identification signs. Public Information and Enaaoement 1. Built solid relationships with English and Chinese language media through news releases and introductions. 2. Rebranded the former city newsletter into Temple City Connect Magazine, a professionally produced 32 -page quarterly magazine that has been well received by our residents. 3. Launched the first Citizen's Academy, an engagement and leadership succession program allowing citizens to understand the workings of City Hall through interaction with City officials. 4. Established the City's social media sites and user policies. User activity has grown significantly since site launches through ad campaigns, the posting of timely and relevant content, and direct dialogue with users. 5. Secured a FCC license and other clearances to launch the City's first AM radio station by October. The radio station (AM 1690) will be used to announce community events and traffic advisories (stemming primarily from Rosemead Boulevard road construction). 6. Made improvements to, and added timely postings to the City website; initiated the RFP process for the development of a new website. The contract was awarded in September 2012, with site launch by June 2013. 7. Repurposed the City's Neighborhood Watch Program for greater civic involvement. Meetings are now well attended at an average of 70 residents per meeting—up from 2 to 4 in previous years. 8. Established an outreach and messaging model (based on the Rosemead Boulevard Project community meetings) for future civic engagement efforts. 9. Made significant improvements to the annual City budget document for greater transparency and understanding. This included new presentation formats, a Budget -in -Brief discussion and performance metrics for each Budget fund. Strateoic Plannino 1. Finalized the City's first-ever bicycle master plan, which defines a network of designated bikeways and safety improvements to connect residents to recreational opportunities and alternate forms of transportation. The plan also serves as a tool for securing funding opportunities—including the $443,000 state grant for new bike lanes along Rosemead Boulevard. A $480,000 grant application for citywide bike lanes is pending notice of award. 2. Began a five-year update of the City's Housing Element, a State mandated exercise that looks to adequately plan for the housing needs of all Temple Citians, regardless of income. A draft document will be completed in August for public review and consideration by the State Department of Housing and Community Development. 3. Partnered with Southern California Edison and the San Gabriel Valley Council of Governments to prepare a communitywide Climate Action Plan. Scheduled for completion by October, the plan will project Temple City's energy usage for the next 20 years, and provide recommendations for how the community can reduce energy consumption and greenhouse gas emissions. The partnership also avails the City to the reimbursement of costs by Southern California Edison for certain energy efficiency upgrades (e.g., new street lighting and HVAC units). 4. Initiated development of a traffic calming master plan to identify street improvements that slow speed and reduce cut -through traffic through neighborhoods, and better manage circulation. Two public meetings were held to solicit input. A draft plan will be presented for the Public Safety Commission and City Council to review in fall. The finalized document will enable the City to pursue grant opportunities and consider proposed improvements (e.g., speed humps, bulb outs, and traffic circles). 5. Completed a much-needed update of the City's 1996 emergency preparedness plan. The document identifies the deployment of resources available in the event of an emergency, and iv ensures response compliance with homeland security requirements. It also makes the City eligible to request state and federal reimbursement costs for local emergency response efforts. 6. Worked with Los Angeles County Sheriffs Department (Temple Station) to complete a three- year strategic plan prioritizing the City's law enforcement goals. The plan essentially focuses staff efforts on achieving initiatives that make law enforcement more efficient and effective; and includes performance measures demonstrating year-to-year achievements, providing a basis for Temple Station's annual report card to the community. 7. Developed internal department work plans identifying each department's separate tasks and responsibilities in its special area of focus. The next phase of planning, which kicks off in January 2013, incorporates these major initiatives into one strategic plan that will capture a comprehensive big -picture vision for the City. Other Partnered with the City Prosecutor to assess and update the City's municipal code to incorporate best practices, meet legal mandates and address current conditions. This resulted in a registration program for vacant properties, and the establishment of administrative citation and errant shopping cart ordinances—all which collectively act to enhance the appearance of Temple City neighborhoods. Proposed code amendments scheduled for City Council consideration in August will address fireworks restrictions, smoking in public places, frequency of yard sales, and the required inspection of residential properties for health, safety and consumer purposes. 2. Took all necessary actions to preserve former redevelopment agency assets from being disposed to the State (per AB x1 26 and AB 1484). This included the transferring of property to the City, encumbering bond proceeds for the Rosemead Boulevard Enhancement Project, and preparing tedious recognized obligation payment schedules (ROPS) pursuant to State Department of Finance regulations. OTHER FINANCIAL INFOMRATION Internal Control Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. The internal control structure is designed to protect the City's assets from loss, theft, or misuse and to ensure that adequate accounting data is compiled for the preparation of financial statements in conformity with GAAP. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. Budaetary and Accountina Svstem The City is required to adopt a budget for the following year before the end of each fiscal year. The objective of budgetary controls is to ensure compliance with legal provision embodied in the annual appropriated budget approved by the City Council. The City's budgetary control is maintained at the individual departmental level and any change in the adopted appropriations, by department requires approval from the City Manager and/or City Council. Cash Management Cash resources of the individual funds are combined to form a pool of cash and investments. The City Council adopts an Investment Policy ("Policy') annually and all investments are managed in accordance with the Policy, which complies with all applicable California statutes and Federal regulations. It is intended to preserve and protect the investment principals, maintain sufficient liquidity and diversification to meet anticipated cash flows and avoid incurring unreasonable market risks and attain a reasonable market rate of return. MIZA , IFiFL:C: I,iSi The City is a member of the California Joint Powers Insurance Authority ("Authority'). The Authority is composed of 123 California public entities and is organized under a joint powers agreement pursuant to California Government. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance and to arrange for group purchased insurance for property and other coverage. For general liability, the first $30,000 of each occurrence is charged directly to the member's primary deposit. The protection for each member is $50,000,000 per occurrence and $50,000,000 annual aggregate. Administrative expenses are paid from the Authority's investment earnings. For Workers' Compensation, each member remits a primary deposit to cover estimated losses for a fiscal year. After the close of a fiscal year, outstanding claims are valued and a retrospective deposit computation is then made for each open claim. Again, administrative expenses are paid by the Authority's investment earnings. The protection of each member is $10,000,000 per occurrence and $10,000,000 annual aggregate. The City also purchases pollution legal liability insurance, property insurance, earthquake and flood insurance and crime insurance. Pension and Other Postemolovment Benefits The City contributes to the California Public Employees Retirement System ("CaIPERS") a cost- sharing multiple -employer public employee defined benefit pension plan. CaIPERS provides retirement, disability benefits and death benefits to plan members and beneficiaries. CaIPERS acts as a common investment and administrative agent for participating public entities within the State of California. The City also provides postemployment healthcare benefits for retirees and their dependents. With the implementation of GASB Statements 43 and 45, the City discloses the costs and liability associated with other postemployment benefits such as retiree healthcare. ACKNOWLEDGEMENTS The City's CAFR was prepared through combined efforts of City staff. Special recognition is due the Administrative Services Department staff for their effort to ensure timely and accurate reporting. I would also like to thank the City Council for their continued support and interest in planning and conducting their financial operations of the City in a responsible and progressive manner. Sincerely, JL— "a �.1-I .. ,A - Tracey L. Hause Administrative Services Director vi CITY OF TEMPLE CITY CITY OFFICIALS June 30, 2012 Citv Council Vincent Yu, Mayor Cynthia Sternquist, Mayor Pro Tempore Carl Blum, Councilmember Tom Chavez, Councilmember Fernando Vizcarra, Councilmember Administration and Denartment Heads City Manager Jose E. Pulido Economic Development Manager/ Assistant to the City Manager BrianS. Haworth City Clerk Peggy Kuo Director of Community Development Steve M. Masura Director of Parks and Recreation Cathy Burroughs Administrative Services Director Tracey Hause vii Organization Chart CityCouncil I 1 I I I Parks and I I Recreation Planning I I I I Public Safety Commission City Manager Commission CityAttorney Commission I Management 1 I Administrative I Community I Parks and Services I Services I I Development I ( Recreation I Department Department Department I Department Planning/Building Public Safety l Pubiic Department I Division ( orntenance ks/Ma Division viii ���%T � v A s Q u E z �� & C O M P A N Y L L P A D I S . W h C e a u d A , e n v c S u i t e 4 0 0 " L o s A , , Z , I , , C 4 W 1 7 4 6 4 6 . N 2 1 3 1 8 7 3 1 M 1 . 1 , . ! 2 1 3 , R 7 3 - 1 7 7 1 . w w w , n , q u c n p n e n m R E P O R T O F I N D E P E N D E N T A U D I T O R S T h e H o n o r a b l e M a y o r a n d t h e M e m b e r s o f t h e C i t y C o u n c i l C i t y o f T e m p l e C i t y , C a l i f o r n i a W e h a v e a u d i t e d t h e a c c o m p a n y i n g f i n a n c i a l s t a t e m e n t s o f t h e g o v e r n m e n t a l a c t i v i t i e s , e a c h m a j o r f u n d , a n d t h e a g g r e g a t e r e m a i n i n g f u n d i n f o r m a t i o n o f t h e C i t y o f T e m p l e C i t y , C a l i f o r n i a ( t h e C i t y ) , a s o f a n d f o r t h e y e a r e n d e d J u n e 3 0 , 2 0 1 2 , w h i c h c o l l e c t i v e l y c o m p r i s e t h e C i t y ' s b a s i c f i n a n c i a l s t a t e m e n t s , a s l i s t e d i n t h e t a b l e o f c o n t e n t s . T h e s e f i n a n c i a l s t a t e m e n t s a r e t h e r e s p o n s i b i l i t y o f t h e C i t y ' s m a n a g e m e n t . O u r r e s p o n s i b i l i t y i s t o e x p r e s s o p i n i o n s o n t h e s e f i n a n c i a l s t a t e m e n t s b a s e d o n o u r a u d i t . W e c o n d u c t e d o u r a u d i t i n a c c o r d a n c e w i t h a u d i t i n g s t a n d a r d s g e n e r a l l y a c c e p t e d i n t h e U n i t e d S t a t e s o f A m e r i c a a n d t h e s t a n d a r d s a p p l i c a b l e t o f i n a n c i a l a u d i t s c o n t a i n e d i n G o v e r n m e n t A u d i t i n g S t a n d a r d s , i s s u e d b y t h e C o m p t r o l l e r G e n e r a l o f t h e U n i t e d S t a t e s . T h o s e s t a n d a r d s r e q u i r e t h a t w e p l a n a n d p e r f o r m t h e a u d i t t o o b t a i n r e a s o n a b l e a s s u r a n c e a b o u t w h e t h e r t h e f i n a n c i a l s t a t e m e n t s a r e f r e e o f m a t e r i a l m i s s t a t e m e n t . A n a u d i t i n c l u d e s e x a m i n i n g , o n a t e s t b a s i s , e v i d e n c e s u p p o r t i n g t h e a m o u n t s a n d d i s c l o s u r e s i n t h e f i n a n c i a l s t a t e m e n t s . A n a u d i t a l s o i n c l u d e s a s s e s s i n g t h e a c c o u n t i n g p r i n c i p l e s u s e d a n d s i g n i f i c a n t e s t i m a t e s m a d e b y m a n a g e m e n t , a s w e l l a s e v a l u a t i n g t h e o v e r a l l f i n a n c i a l s t a t e m e n t s p r e s e n t a t i o n . W e b e l i e v e t h a t o u r a u d i t p r o v i d e s a r e a s o n a b l e b a s i s f o r o u r o p i n i o n s . I n o u r o p i n i o n , t h e f i n a n c i a l s t a t e m e n t s r e f e r r e d t o a b o v e p r e s e n t f a i r l y , i n a l l m a t e r i a l r e s p e c t s , t h e r e s p e c t i v e f i n a n c i a l p o s i t i o n o f t h e g o v e r n m e n t a l a c t i v i t i e s , e a c h m a j o r f u n d , a n d t h e a g g r e g a t e r e m a i n i n g f u n d i n f o r m a t i o n o f t h e C i t y o f T e m p l e C i t y , C a l i f o r n i a , a s o f J u n e 3 0 , 2 0 1 2 , a n d t h e r e s p e c t i v e c h a n g e s i n f i n a n c i a l p o s i t i o n s a n d c a s h f l o w s , w h e r e a p p l i c a b l e , t h e r e o f f o r t h e y e a r t h e n e n d e d i n c o n f o r m i t y w i t h a c c o u n t i n g p r i n c i p l e s g e n e r a l l y a c c e p t e d i n t h e U n i t e d S t a t e s o f A m e r i c a . I n a c c o r d a n c e w i t h G o v e r n m e n t A u d i t i n g S t a n d a r d s , w e h a v e a l s o i s s u e d o u r r e p o r t d a t e d D e c e m b e r 1 2 , 2 0 1 2 o n o u r c o n s i d e r a t i o n o f t h e C i t y ' s i n t e r n a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g a n d o n o u r t e s t s o f i t s c o m p l i a n c e w i t h c e r t a i n p r o v i s i o n s o f l a w s , r e g u l a t i o n s , c o n t r a c t s , a n d g r a n t a g r e e m e n t s a n d o t h e r m a t t e r s . T h e p u r p o s e o f t h a t r e p o r t i s t o d e s c r i b e t h e s c o p e o f o u r t e s t i n g o f i n t e r n a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g a n d c o m p l i a n c e a n d t h e r e s u l t o f t h a t t e s t i n g , a n d n o t t o p r o v i d e a n o p i n i o n o n t h e i n t e r n a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g o r o n c o m p l i a n c e . T h a t r e p o r t i s a n i n t e g r a l p a r t o f a n a u d i t p e r f o r m e d i n a c c o r d a n c e w i t h G o v e r n m e n t A u d i t i n g S t a n d a r d s a n d s h o u l d b e c o n s i d e r e d i n a s s e s s i n g t h e r e s u l t s o f o u r a u d i t . (This page intentionally left blank.) Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Temple City, California's financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. VLt U lLlo Los Angeles, California December 12, 2012 rd (This page intentionally left blank.) City of Temple City Management's Discussion and Analysis June 30, 2012 The following discussion and analysis of the City of Temple City's financial performance provides an overview of the financial activities for the fiscal year ended June 30, 2012. Readers are encouraged to consider the information presented here in conjunction with the accompanying basic financial statements. Financial Hiohliohts Government -wide Financial Statements • The City's net assets increased by $4.7 million from $60.5 million as of June 30, 2011 to $65.2 million as of June 30, 2012 as a result of this year's operations and the dissolution of the redevelopment agency. • The total revenue from all sources was $16.3 million. • The total cost of all City programs was $15.3 million • The City's total debt decreased by $5.7 million during the current fiscal year. The key factors in this decrease is the elimination of the former redevelopment agency's refunding bonds payable in the amount of $6.6 million, the net of the additional OPEB obligation of $927 thousand, and the increase in the compensated absences liability $11 thousand. • The assets and liabilities of the former redevelopment agency as of February 1, 2012 were transferred from the governmental funds of the City to the fiduciary funds. This resulted in an increase in net assets of the City of $3.7 million. Fund Financial Statements • As of June 30, 2012, the City's governmental funds reported combined ending fund balances of $35.9 million, an increase of $346 thousand over the prior fiscal year. Approximately $2.4 million of the $35.9 million balance is unassigned and is available for spending at the government's discretion. • As of June 30, 2012, the total fund balance of the City's General Fund was $24.1 million, a decrease of $1.2 million from the prior year level of $25.3 million. • In the General Fund, revenues exceeded expenditures by $647 thousand, before other financing sources/uses. • An extraordinary loss of $517 thousand was recognized in the governmental funds financial statements as a result of the dissolution of the former redevelopment agency. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of Temple City's basic financial statements. The City of Temple City's Comprehensive Annual Financial Report (CAFR) is comprised of three components: Introduction, Financial Section and Statistical Section. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Temple City's finances, in a manner similar to a private -sector business. The government -wide financial statements include not only the City, but also all legal entities for which the City is financially accountable. Accordingly, the financial information for the City of Temple City Housing Authority is included as an integral part of the City's financial statements and reported as a blended component unit. City of Temple City Management's Discussion and Analysis June 30, 2012 The statement of net assets presents information on all of the City of Temple City's assets and liabilities, with the difference between the two reported as total net assets. Over time, increases and decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing related to cash flows. Thus, revenues and expenditures are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes). Both of the government -wide financial statements report on functions of the City of Temple City that are principally supported by taxes and inter -governmental revenues (governmental activities). The governmental activities of the City of Temple City include general government, community development, public safety, public works and community services. Fund financial statements. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Temple City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City of Temple City are governmental funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financing decisions. Both the governmental funds balance sheet and the statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Temple City maintains two individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the statement of revenues, expenditures, and changes in fund balances for the General Fund and the Special Revenue, Community Development Block Grant Fund, both of which are considered to be major funds. The City of Temple City adopts an annual appropriated budget. A budgetary comparison statement has been provided to demonstrate compliance with this budget. Proprietary funds. The City maintains only one category of a proprietary fund, an internal service fund. The Self Insurance Fund accounts for goods and services related to insurance premiums by one department to other departments on a cost reimbursement basis. City of Temple City Management's Discussion and Analysis June 30, 2012 Agency funds. The City also maintains two Agency funds to account for assets held by the City as an agent for the Successor Agency and the resources held and administered by the City of Temple City in a fiduciary capacity acting as the Successor Agency to the former Temple City Redevelopment Agency. Notes to basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's budget comparison schedules for the General Fund and each major revenue fund and progress in funding its obligation to provide pension benefits to its employees. Government -wide Financial Analysis Our analysis focuses on the net assets and changes in net assets of the City's governmental activities for the fiscal year ended June 30, 2012 and 2011. Net assets. As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The City's net assets increased by $4.7 million during Fiscal Year 2011-12, primarily as a result of the elimination of the former redevelopment agency's bonding debt. The largest portion of the City's net assets is its investment in capital assets (e.g. land, infrastructure, building and equipment) representing 44.8% of its total net assets. The City uses these capital assets to provide services to citizens; consequently these assets are not available for future spending. A portion of the City's net assets, $11.9 million or 18.2%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets of $24.1 million or 36.9% may be used to meet the government's ongoing obligations to citizens and creditors City of Temple City Condensed Statement of Net Assets Current and other assets Capital assets Total assets Current and other liabilities Long-term liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ 65,200,232 $ 60,521,475 $ 4,678,757 Increase 2012 2011 (Decrease) 40,241,822 $ 42,174,786 $ (1,932,964) 29,208,039 28,131,357 1,076,682 69,449,861 70,306,143 (856,282) 2,163,394 3,279,790 (1,116,396) 2,086,235 6,504,878 (4,418,643) 4,249,629 9,784,668 (5,535,039) 29,208,039 28,131,357 1,076,682 11,889,013 14,736,865 (2,847,852) 24,103,180 17,653,253 6,449,927 Total net assets $ 65,200,232 $ 60,521,475 $ 4,678,757 City of Temple City Management's Discussion and Analysis June 30, 2012 Statement of Activities. Governmental activities increased the City's net assets by $4.7 million for fiscal year 2011-2012. The total revenue for the fiscal year is $16.3 million, which is a decrease of only $34 thousand from the prior year. The total expenses increased by $532 thousand to $15.3 million from the prior year total of $14.8 million. The following table presents the comparative revenue and expenditure data for fiscal years ended June 30, 2012 and 2011. City of Temple City Condensed Statement of Changes in Net Assets Increase 2012 2011 (Decrease) Revenues Program revenues Charges for services $ 2,829,927 $ 2,212,550 $ 617,377 Operating contributions and grants 4,196,009 4,603,947 (407,938) General revenues 4,818,217 4,662,120 156,097 Taxes 4,581,976 5,550,656 (968,680) Intergovernmental 3,208,513 3,238,695 (30,182) Investment income 378,269 409,097 (30,828) Other revenue 1,071,678 285,880 785,798 Total revenues Expenses General government Community development Public safety Public works Community services Interest on long-term debt Total expenses Extraordinary Item Increase in Net Assets Net Assets — Beginning of Year Net Assets — End of Year 16,266,372 16,300,825 (34,453) 3,281,194 3,072,847 208,347 1,562,859 1,657,399 (94,540) 4,818,217 4,662,120 156,097 2,162,481 1,960,629 201,852 3,357,423 3,016,957 340,466 149,503 429,238 (279,735) 15,331,677 14,799,190 532,487 3,744,062 1,786,167 1,957,895 4,678,757 3,287,802 1,390,955 60,521,475 57,233,673 3,287,802 $ 65,200,232 $ 60,521,475 $ 4,678,757 Key elements of the significant revenues in fiscal year 2011-2012 are as follows: • Taxes are comprised of sales tax, property tax, franchise and transient occupancy taxes. Total taxes decreased primarily because of a significant decrease in property taxes. Ll City of Temple City Management's Discussion and Analysis June 30, 2012 • Intergovernmental revenues which slightly decreased during the year pertain to grants and funds received from federal agencies, the state and other local governmental agencies. • Other revenue increased significantly because of certain one-time revenues generated during the year. Revenues by Source- Governmental Activities 28% ?s for serves 17% Operating Gontnbunons and Grants 26% The following chart represents the cost of each of the City's operations — general government, community development, public safety, public works, community services, and interest on long-term debt. Publimorks 14% Interest nn Innv- 32% nmunity 8opment 10% City of Temple City Management's Discussion and Analysis June 30, 2012 Expenses of the governmental activities totaled $15.3 million, which is an increase of $532 thousand or 15.9% from the prior year. Most expenses of the various governmental activities increased during the year, which include General Government ($208 thousand), Community services ($340 thousand), Public works ($201 thousand) and Public safety ($156 thousand). The increase was because of additional accrual of OPEB obligation during the year. Interest on long-term debt on the other hand, decreased by $280 thousand because of the transfer of the former redevelopment agency indebtedness to fiduciary funds. Financial Analysis of the City's Funds The City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. This section provides an analysis and discussion of individual and fund types presented in the fund financial statements. Governmental Funds. The City of Temple City's governmental funds reported a combined fund balance of $35.9 million at the end of the fiscal year. The debt service funds and the capital project funds are not yet incurring a significant contribution to the reported Governmental fund balance. The General Fund's fund balance decreased by $1.3 million during the fiscal year 2011-2012. The General Fund revenues of $11.1 million exceeded General Fund expenditures of $10.4 which provided for an excess of revenues over expenditures of $647 thousand. However after the net transfers out, primarily for capital projects, and the extraordinary item in the amount of $1.6 million, which represents the principal portion of the loan to the former redevelopment agency, the General Fund realized a net decrease in fund balance of $1.3 million. Primary revenue sources for this fund are sales tax, property tax and motor vehicle in lieu. The General Fund is responsible for general services of the City. This includes public safety, public works, community development, community services and administration. The largest expenditure is for public safety, which was $4,676,268 for fiscal year 2011-12. Proprietary Funds. As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the Proprietary Fund, assets exceeded liabilities by $582 thousand. This Fund accounts for insurance premium transactions. Since this fund has been declining without a dedicated revenue stream, management will be evaluating this fund's activities during the FY 2013-14 City Budget process. General Fund Financial and Budgetary Highlights The General Fund is the chief operating fund of the City. The fund balance reported a decrease of $1.3 million at June 30, 2012. This is primarily a result of the City writing off the loan from the former Redevelopment Agency as described above. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 22.5% of total General Fund expenditures, while total fund balance represents 230.3% of that same amount. Revenues: Actual revenue received exceeded the final budget by $112 thousand. The City maintained an operational surplus in the General Fund in FY 2011-12 of $646 thousand. Expenditures: Actual expenditures were less than the final budget by $2.2 million resulting from lower costs for most programs in FY 2011-12. 10 City of Temple City Management's Discussion and Analysis June 30, 2012 Capital Assets and Debt Administration Capital Assets. As shown in the following table, as of June 30, 2012, the City of Temple City had $29.2 million invested in capital assets, including land, buildings, improvements, furniture and equipment, vehicles and infrastructure. Capital Assets at Year -End Governmental Activities Land and land rights $ 13,574,306 Construction in progress 2,958,617 Buildings and improvements 11,513,294 Furniture and equipment 1,496,062 Vehicles 1,273,197 Infrastructure 12,403,597 Sub total 43,219,073 Less depreciation (14,011,034) Net total, capital assets $ 29,208,039 Long-term Debt. In December 1993, the Temple City Financing Authority (Authority) issued $1,400,000 of Serial Bonds and two issues of Term Bonds totaling $3,245,000 for a total amount of $4,645,000. In September 2005, the Temple City Financing Authority issued $5,780,000 of Serial Bonds and $2,220,000 of Term Bonds to be paid from tax increment revenues. The Authority issued the 2005 Refunding Revenue Bonds to refund 1993 loan and make a new loan to the Agency. With the dissolution of the Temple City Community Redevelopment Agency and the Temple City Financing Authority, the long-term debt was transferred to the Private -Purpose Trust. The outstanding principal amount on the bonds of $6,280,000 is no longer considered an obligation of the City. Other Long-term liabilities. Other long-term liabilities of the City are comprised of Compensated absences and net OPEB Obligation. The net OPEB obligation pertains to unfunded annual required contribution accrued as of June 30, 2012. Outstanding Debt Governmental Activities Net OPEB Obligation $ 1,851,623 Compensated absences 260,673 Total $ 2,112,296 11 City of Temple City Management's Discussion and Analysis June 30, 2012 Contacting the City's Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Administrative Services Department, at the City of Temple City, 9701 Las Tunas Drive, Temple City, CA. 91780, (626) 285-2171. 12 GOVERNMENT -WIDE FINANCIAL STATEMENTS ASSETS Cash and investments Accounts receivable Interest receivable Due from Successor Agency Due from government agencies Prepaid items Loans receivable Capital assets: Capital assets, not being depreciated Capital assets, being depreciated, net of accumulated depreciation LIABILITIES Accounts payable Accrued payroll Due to other governments Refundable deposits Deferred revenue Long-term liabilities: Portion due within one year: Compensated absences Portion due beyond one year: Compensated absences Net OPEB obligation NET ASSETS Invested in capital assets Restricted Unrestricted E Total assets Total liabilities Total net assets $ See notes to financial statements. 13 City of Temple City Statement of Net Assets June 30. 2012 Governmental Activities 37,536,615 281,667 29,185 8,306 925,405 1,678 1,458, 966 16,532,923 12,675,116 69,449,861 1,683,242 145,707 118,133 86,017 104,234 26,061 234,612 1,851,623 4,249,629 29,208,039 11, 889,013 24,103,180 65,200,232 C N o� f6ttYO d' (p M N 7 N N N (O (O of N O 6 ��� � � C M N N M OJ W t0 N � O 6 V M r`7'c7 0 o] O > Q p M v c- N v N N M — p� M r M a O t0 m C7 w C N O C aa m .w (D U c O C �6 U m N J N Ol C ie M > C�� O I O O N N NM 0 N N C d p M v > m> m O U N ` C L o m Co d d Marn�o rn = pm p m 'm c m y m N O CT N O N y J N O O L U L C N N W p U E V O O N m U O) m 7 U (/7 N l6 M y O h p L H w O O C C r C> m N J y E O J~tz- C C 0 L C C O m O 7 m I� M M f� m N Q a t O N@ wOE w W N O I� > N wV a N W N V 7« J tD m N vi U) F LL O f lsp C C Q Q N 4[ j m f0 t 'O ❑❑ N N m% (n N (n O N M r 7 N M L6 C~ @ lNb LX U` U w FUND FINANCIAL STATEMENTS Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements GOVERNMENTAL FUND FINANCIAL STATEMENTS City of Temple City Description of Major Funds June 30, 2012 Major Governmental Funds General Fund The General Fund has been classified as a major fund and is used to account for all of the general revenues of the City not specifically levied or collected for some special purpose, and for the expenditures related to the rendering of general services by the City. The General Fund is used to account for all resources not required to be accounted for in another fund. Special Revenue Fund CDBG The CDBG Special Revenue Fund met the criteria to be classified as a major fund and is used to account for resources in managing the different programs under the Community Development Block Grant funded by the U.S. Department of Housing and Urban Development. Nonmaior Governmental Funds Nonmajor governmental funds include the Special Revenue Funds, the Capital Projects Funds and the Permanent Fund. Since total assets, liabilities, revenues or expenditures of these funds do not exceed 10% of total governmental funds, they do not meet the criteria to be classified as major funds. 15 City of Temple City Governmental Funds Balance Sheet June 30, 2012 See notes to financial statements. 16 Special Nonmajor General Revenue Governmental Fund CDBG Funds Total ASSETS Cash and investments $ 24,514,054 - 12,321,997 36,836,051 Accounts receivable 281,667 - - 281,667 Interest receivable 28,992 - 193 29,185 Due from other funds 218,334 - - 218,334 Due from Successor Agency 8,306 - - 8,306 Due from other governments 471,568 61,408 392,429 925,405 Prepaid items 1,678 - - 1,678 Loans receivables 503,043 955,923 - 1,458,966 Advances to Successor Agency, net of allowance for uncollectible accounts of $1,586,979 2,116,826 - - 2,116,826 Total assets $ 28,144,468 1,017,331 12,714,619 41,876,418 LIABILITIES Accounts payable $ 1,118,796 - 564,446 1,683,242 Accrued payroll 145,707 - - 145,707 Due to other funds - 61,408 156,926 218,334 Refundable deposits 86,017 - - 86,017 Deferred revenue 2,739,868 955,923 104,234 3,800,025 Total liabilities 4,090,388 1,017,331 825,606 5,933,325 FUND BALANCES Nonspendable 1,678 - - 1,678 Restricted - - 11,889,013 11,889,013 Committed 4,500,000 - - 4,500,000 Assigned 17,200,000 - - 17,200,000 Unassigned 2,352,402 - - 2,352,402 Total fund balances (deficit) 24,054,080 - 11,889,013 35,943,093 Total liabilities and fund balances $ 28,144,468 1,017,331 12,714,619 41,876,418 See notes to financial statements. 16 City of Temple City Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2012 Fund balance of governmental funds Amounts reported for governmental activities in the statement of net assets are different because: Capital assets net of depreciation have not been included as financial resources in governmental fund activity. Cost of capital assets, not being depreciated Cost of capital assets, being depreciated Accumulated depreciation Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not reported as governmental fund liabilities. All liabilities (both current and long-term) are reported in the statement of net assets. Compensated absences Net OPEB liability Deferred revenue balances relating to certain loans receivable are not reported as liabilities in the statement of net assets since revenue recognition is not based upon measurable and available criteria. Allowance for doubtful accounts that is not reported in the governmental fund financial statements The Internal Service Fund is used by management to charge the costs of self-insurance activities to individual funds. The cash and investments of the Internal Service Fund are included in governmental activities in the statement of net assets because it primarily services governmental activities of the City. Net assets of governmental activities See notes to financial statements. 17 $ 35,943,093 16,532,923 26,686,150 (14,011,034) (260,673) (1,851,623) 3,695,791 (2,116,826) 582,431 $ 65,200,232 (This page intentionally left blank.) City of Temple City Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances Year ended June 30, 2012 Other financing sources (uses) Transfers in 162,824 Special Nonmajor 2,345,392 Transfers out General Revenue Governmental (2,345,392) Net other financing sources (uses) Fund CDBG Funds Total Revenues Taxes $ 4,581,975 - 1,544,365 6,126,340 Licenses and permits 1,345,183 - - 1,345,183 Intergovernmental 3,196,237 89,009 2,741,054 6,026,300 Charges for services 757,496 - 171,855 929,351 Fines 646,498 - 50,748 697,246 Investment income 378,269 - 57,534 435,802 Rental income 57,268 - - 57,268 Low income grant and loan repayments - 74,632 - 74,632 Other 128,805 - - 128,805 Total revenues 11,091,731 163,641 4,565,556 15,820,927 Expenditures Current: General government 2,317,900 - 455,877 2,773,777 Community development 1,062,516 164,705 - 1,227,221 Public safely 4,676,268 - - 4,676,268 Public works 493,122 - 1,309,903 1,803,025 Community services 1,894,969 - 1,099,546 2,994,515 Capital outlay - - 1,520,720 1,520,720 Debt service: Pass-through payment - - 10,897 10,897 Principal - - 315,000 315,000 Interest - - 153,684 153,684 Total expenditures 10,444,775 164,705 4,865,627 15,475,107 Excess (deficiency) of revenues over expenditures 646,956 (1,064) (300,071) 345,821 Other financing sources (uses) Transfers in 162,824 152,359 2,030,209 2,345,392 Transfers out (482,439) (70,306) (1,792,647) (2,345,392) Net other financing sources (uses) (319,615 82,052 237,562 - Change in fund balance before extraordinary item 327,341 80,988 (62,509) 345,821 Extraordinary items Uncollectible Accounts - Advances to the former Redevelopment Agency (1,586,979) - - (1,586,979) Redevelopment Agency dissolution transactions - - 1,069,592 1,069,592 Total extraordinary items (1,586,979) - 1,069,592 (517,387) Net change in fund balance (1,259,638) 80,988 1,007,083 (171,566) Fund balance, beginning of year 25,313,718 (80,988) 10,881,929 36,114,659 Fund balance, end of year $ 24,054,080 - 11,889,013 35,943,093 See notes to financial statements. 18 City of Temple City Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year ended June 30, 2012 Net change in fund balances - total governmental funds before extraordinary items $ 345,821 Amounts reported for governmental activities in the statement of activities are different because: When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial recourses expended, whereas net assets decreased by the amount of depreciation expenses charged for the year. Capital outlay 1,676,387 Depreciation expense (599,706) Repayment of bond principal is an expenditure in the governmental funds and, thus, has the effect of reducing fund balance because current financial resources have been used. For the City as a whole, however, the payments reduce the liability in the statement of net assets and do not result in an expense in the Statement of Activities. 315,000 Expenses in the statement of activities are increased by the City's actuarially determined annual required contribution for its other postemployment benefits whereas the governmental funds only report the actual cash payments the City made for insurance premiums on behalf of retirees and their eligible family members. Other postemployment benefits (926,651) Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (10,807) Accrued interest expenses related to long-term liabilities. This amount is the difference between the amount of interest paid and the amount of interest incurred on long-term liabilities. 4,181 Accrued but unpaid interest on loans is recorded as deferred revenue in the governmental funds but is recognized as income in the statement of activities. 284,465 The Internal Service Fund is used by management to charge the costs of self insurance activities to individual funds. The adjustments for the Internal Service Fund "close" the fund by charging additional amounts to participating governmental activities to completely cover the Internal Service Fund's costs for the year. (153,995) Change in net assets of governmental activities before extraordinary items $ 934,695 See notes to financial statements. 19 PROPRIETARY FUND FINANCIAL STATEMENTS City of Temple City Description of Proprietary Fund Year ended June 30, 2012 Internal Service Fund Self Insurance Fund To account for goods and services relating to insurance premiums provided by one department to other departments on a cost reimbursement basis. See notes to financial statements. 20 ASSETS Cash and investments Total assets LIABILITIES Due to other governments Total liabilities City of Temple City Statement of Net Assets Proprietary Funds June 30, 2012 Self Insurance Internal Service Fund Totals 700,564 700,564 118,133 118,133 NET ASSETS Unrestricted 582,431 Total net assets $ 582,431 See notes to financial statements. 21 City of Temple City Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds Year ended June 30, 2012 Operating revenues: Charges for services Total operating revenues Operating expenses: Insurance premiums Total operating expenses Change in net assets Net assets at beginning of year Net assets at end of year See notes to financial statements. 22 Self Insurance Internal Service Fund Totals $ 44,331 44,331 198,326 198,326 (153,995) 736,426 $ 582,431 City of Temple City Statement of Cash Flows Proprietary Funds Year ended June 30, 2012 Self Insurance Internal Service Fund Totals Cash flows from operating activities: Cash payments to suppliers for goods and services $ (198,326) Cash reimbursements received from City departments for insurance premiums 44,331 Net cash provided by (used for) operating activities (153,995) Net decrease in cash and cash equivalents (153,995) Cash and cash equivalents at beginning of year 854,559 Cash and cash equivalents at end of year $ 700,564 Operating loss reconciles with the net cash used for operating activities at June 30, 2012. Noncash transactions: There were no significant noncash investing, capital or financing activities during the year ended June 30, 2012. See notes to financial statements. 23 FIDUCIARY FUND FINANCIAL STATEMENTS City of Temple City Description of Fiduciary Funds Year ended June 30. 2012 Aoencv Fund To account for maintenance fees held by the City as an agent for the Successor Agency. This fund was an agency fund of the former redevelopment agency. Successor Aoencv Private-Duroose Trust Fund To account for the resources held and administered by the City of Temple City in a fiduciary capacity acting as the Successor Agency to the former Temple City Redevelopment Agency. See notes to financial statements 24 ASSETS Cash and investments Cash with fiscal agent Receivable Total assets LIABILITIES Accounts payable Interest payable Payable to the State of California Due to City of Temple City Advances from the City of Temple City Refunding Revenue Bonds, Series 2005 Total liabilities FIDUCIARY NET ASSETS (DEFICIT) Net Assets (Deficit) City of Temple City Statement of Fiduciary Net Assets June 30, 2012 Successor Agency Private -purpose Agency Trust Fund $ 1,983,100 $ 577 627,225 - 6,956 14,776 2,617,281 15,353 10,738 7,437 98,275 - 163,673 - 390 7,916 3,703,805 - 6,280,000 - 10,256,881 $ 15,353 $ (7,63900) See notes to financial statements 25 City of Temple City Statement of Changes in Fiduciary Net Assets Successor Agency to the Former Temple City Community Redevelopment Agency Private -Purpose Trust Fund Year ended June 30, 2012 Additions: Tax increment $ 1,023,398 Other 1,000 Total revenues 1,024,398 Deductions Administration 168,654 Professional fees 30,786 Community services 758,188 Debt service: Interest expense 258,503 Total expenses 1,216,131 Change in net assets before extraordinary item (191,733) Extraordinary item - Redevelopment Agency dissolution transactions (7,447,867) Change in net assets (7,639,600) Fiduciary net assets at beginning of year Fiduciary net assets (deficit) at end of year $ (7,639,600) See notes to financial statements 26 (This page intentionally left blank.) NOTES TO FINANCIAL STATEMENTS City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of the Reporting Entity The City of Temple City was incorporated on May 25, 1960 under the general laws of the State of California. On April 16, 1971 the City adopted resolution number 71- 1084 declaring itself a charter city. The City operates under the Council - Manager form of government. The City provides the following services as authorized by its general laws: Public Safety, Highways and Streets, Health and Sanitation, Cultural and Park Facilities, Public Improvements, Planning, Recreation and General Administrative Services. The accounting policies of the City conform to generally accepted accounting principles as applicable to governments. As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization's governing body and the City is able to impose its will on that organization or there is a potential for that organization to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable if an organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the name and significance of their relationship with the City are such that their exclusion would cause the City's financial statements to be misleading or incomplete. All of the City's component units are considered to be blended component units. Blended component units, although legally separate entities, are, in substance, part of the government's operations and so data from these units are reported with the interfund data of the primary government. The following organizations are considered to be component units of the City: Temole Citv Communitv Redevelooment Acencv The Temple City Community Redevelopment Agency (Agency) was established on May 16, 1972 pursuant to the State of California Health and Safety Code Section 33000 entitled "Community Redevelopment Law". Its purpose is to prepare and carry out plans for improvement, rehabilitation and redevelopment of blighted areas within the territorial limits of the City of Temple City. Pursuant to the provisions of ABX126, the Temple City Community Redevelopment Agency was dissolved effective February 1, 2012. 27 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The City of Temple City currently serves as the successor agency to the former redevelopment agency that is responsible for revenue collection, maintaining the bond reserves, disposing of excess property and fulfilling the remaining obligations of the dissolved Agency. Financial information for the Successor Agency is presented as Private -purpose Trust fund. See also Note 16. Citv of Temole Citv Public Financing Authoritv The Temple City Public Financing Authority (Authority) was established pursuant to a Joint Exercise of Powers Agreement dated November 30, 1993, between the City and the Temple City Community Redevelopment Agency (the "Members"). The Authority was created for the purpose of providing financing for public capital improvements for the Members. Even though it is legally separate, it is reported as if it were part of the City because the City Council also serves as the governing board of the Authority. No separate financial statements are issued for the Authority. Citv of Temple Citv Housino Authoritv The Temple City Housing Authority (Housing Authority) was established on November 1, 2005, pursuant to the State of California Health and Safety Code 34200 entitled, "Housing Authority Law." The purpose of the Housing Authority of Temple City is to provide safe and sanitary dwelling accommodations to persons of low income in the City. Even though it is legally separated, it is reported as if it were part of the City because the City Council also serves as the governing board of the Housing Authority. No separate financial statements are issued for the Housing Authority. Basis of Accounting and Measurement Focus The basic financial statements of the City are composed of the following: • Government -wide financial statements • Fund financial statements • Notes to basic financial statements Financial reporting is based upon all GASB pronouncements, as well as the FASB Statements and Interpretations, APB Opinions, and Accounting Research Bulletins that were issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements. FASB Pronouncements issued after November 30, 1989 are not followed in the preparation of the accompanying financial statements. K-1 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units), as well as its discretely presented component units. The City of Temple City has no business- type activities or discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the City. Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transaction are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include charges for services, operating contributions and grants, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the government -wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. Fund Financial Statements The underlying accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. 29 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund financial statements for the primary government's governmental, proprietary and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental funds. Fiduciary statements include financial information for fiduciary funds and similar component units. The Fiduciary Fund of the City primarily represents assets held by the City in a custodial capacity for other individuals or organizations. Governmental Funds In the fund financial statements, governmental funds and agency funds are presented using the modified -accrual basis of accounting. The revenues are recognized when they became measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The City generally considers revenues available if they are collected within ninety days after the fiscal year-end. Significant revenues subject to accrual under the measurable and available criteria include property taxes, sales taxes and motor vehicle in -lieu. Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government -mandated and voluntary non-exchange transactions are recognized as revenues when all applicable eligibility requirements have been met. In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. 30 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Noncurrent portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures. When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. Proorietary Funds The City's Internal Service Fund is a proprietary fund. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net assets. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses result from providing goods and services related to the funds' ongoing operations. The principal operating revenue of the City's Internal Service Fund is reimbursements relating to self-insurance. Operating expenses include the cost of insurance premiums relating to the services provided. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 31 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Amounts paid to acquire capital assets are capitalized as assets in the internal service fund financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the internal service fund financial statements, rather than as an other financing source. Amounts paid to reduce long- term indebtedness of the internal service fund are reported as a reduction of the related liability, rather than as an expenditure. Fund Types The basic accounting and reporting entity is a "fund." A fund is defined as an independent fiscal and accounting entity with a self -balancing set of accounts, recording resources, related liabilities, obligations, reserves and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The accounting records of the City are organized on the basis of the various fund types as follows: GOVERNMENTAL FUND TYPES General Fund The General Fund is the general operating fund of the City. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. Expenditures of this fund include the general operating expenses and capital improvement costs which are not paid through other funds. Special Revenue Funds The Special Revenue Funds are used to account for proceeds of specific revenue sources that are restricted by law or administrative action for specific purposes. Debt Service Fund The Debt Service Fund is used to account for resources set aside for repayment of long-term debt. Capital Proiects Funds Capital Projects Funds are used to account for financial resources to be used for the acquisition, construction or improvements of major capital facilities and infrastructure. 32 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Permanent Fund The Permanent Fund is used to account for financial resources that are legally restricted to the extent that only earnings, and not principal, may be used to support the City or its citizenry. The City reports the following major governmental funds: • General Fund - To account for all of the general revenues of the City not specifically levied or collected for some special purpose, and for the expenditures related to the rendering of general services by the City. • CDBG - To account for resources from the United States Department of Housing and Urban Development for various programs. PROPRIETARY FUND TYPE: Internal Service Fund The Internal Service Fund is used to account for goods and services provided by one department to other departments on a cost reimbursement basis. The City's Internal Service Fund is the Self -Insurance Fund. FIDUCIARY FUND TYPE: Aoencv Fund The Agency Fund is used to account for assets that the City holds for others in an agency capacity. The Fund is custodial in nature (assets equal liabilities) and does not involve measurement of results of operations. This fund was an agency fund of the former Redevelopment Agency. Successor Acencv Private-ouroose Trust Fund This fund is used to report the assets, liabilities and activities of the Successor Agency to the Dissolved Temple City Community Redevelopment Agency. Unlike the limited reporting typically utilized for Agency Fund, Private -Purpose Trust Fund reports a Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets. The City's Private -purpose Trust Fund is the Successor Agency (former Redevelopment Agency) Trust fund. Reclassification and Eliminations Interfund balances must generally be eliminated in the government -wide financial statements, except for net residual amounts due between governmental activities. Amounts involving fiduciary funds are reported as external transactions. Any allocations must reduce the expenses of the function from which the expenses are being allocated, so that expenses are reported only once - in the function in which they are allocated. 33 NOTE 1 City of Temple City Notes to Financial Statements Year ended June 30, 2012 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Loans Receivable Certain loans receivable are not expected to be collected within one year. These loans receivable are offset by deferred revenue on the balance sheet of governmental funds. Cash and Investments Investments are reported in the accompanying balance sheet at fair value, except for certain certificates of deposit that are reported at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund's share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income earned by the pooled investments is allocated to the various funds based on each fund's average cash and investment balance, except for approximately $55,759 of interest income (associated with funds not legally required to receive pooled investment income) that has been assigned to and recorded as revenue of the general fund, as provided by California Government Code Section 53647. Cash Equivalents For purposes of the statement of cash flows, cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they do not present significant risk of changes in value because of changes in interest rates. Cash equivalents also represent the proprietary funds' share in the cash and investment pool of the City of Temple City. Cash equivalents in the Permanent Fund include the fund's share in the cash and investments pool of the City of Temple City and a certificate of deposit. Employee Leave Benefits Vacation time begins to accumulate as of the first day of employment to a maximum of 240 hours. Sick leave accumulates at the rate of 8 hours per month without limit. Employees are not entitled to compensation for accrued sick time upon separation from the City. Claims and Judgments The City records a liability for material litigation, judgments, and claims (including incurred but not reported losses) when it is probable that an asset has been impaired or a material liability has been incurred prior to year end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. 34 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital assets (including infrastructure) are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated capital assets are valued at their estimated fair value on the date received. Public domain (infrastructure) capital assets consist of streets, bridges, traffic signals, street lights, bus shelters and sewers. Generally, the City capitalizes capital asset purchases in excess of $500 for general capital assets, $50,000 for sewers (infrastructure) and $10,000 for all other infrastructure. Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method in the government -wide financial statements. Provision for depreciation is charged as an expense against operations and accumulated depreciation is reported on the statement of net assets. The ranges of lives used for depreciation purposes for each capital asset class are as follows: Buildings and improvements 40 years Furniture and equipment 5-7 years Vehicles 5 years Infrastructure: Second Installment - February 1 Streets 50-80 years Bridges 50 years Traffic signals 20 years Property Tax Calendar The County of Los Angeles assesses, levies, and collects property taxes for the City. Property taxes levied for the year ended June 30, 2012 were due and payable in two installments on November 1 and February I and became delinquent on December 10 and April 10, respectively. At the date of incorporation, the City elected to be a no/low property tax city as an incentive for current and prospective residents to reside in the City. The property tax calendar is as follows: Lien Date: March 1 Levy Date: July 1 Due Date: First Installment - November 1 Second Installment - February 1 Delinquent Date: First Installment - December 10 Second Installment -April 10 35 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Taxes are collected by Los Angeles County and are remitted to the City periodically. Dates and percentages are as follows: December 10 30% Advance January 16 Collection No. 1 April 10 10% Advance May 15 Collection No. 2 July 31 Collection No. 3 Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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. Fund Balances Government Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Government Fund -type Definitions, defines fund balance as the difference between the assets and liabilities reported in the City's governmental funds. There are generally limitations on the purpose for which all or a portion of the resources of a governmental fund may be used. The force behind these limitations can vary significantly, depending upon their source. Consequently, the fund balance reported in the annual financial statements is categorized into five components whereby each component identifies the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the fund can be spent. The five components of fund balance are as follows: Nonspendable: Resources that are 1) not in spendable form, such as inventories, prepaids, long-term receivables, or non-financial assets held for resale, or 2) required to be maintained intact such as an endowment. Restricted: Resources that are subject to externally enforceable legal restrictions; these restrictions would be either 1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or 2) imposed by law through constitutional provisions or enabling legislation. Committed: Resources that are constrained to specific purposes by a formal action of the City Council such as an ordinance or resolution. The constraint remains binding unless removed in the same formal manner by the City Council. Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be determined subsequently. City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assigned: Resources that are constrained by the City's intent to be used for specific purposes, but that are neither restricted nor committed. Unassigned: Within the General Fund, the residual resources, either positive or negative, in excess of what can be properly classified in one of the other four fund balance categories. Within all other governmental funds, the negative residual resources in excess of what can be properly classified as nonspendable, restricted, or committed. On June 19, 2012, the City reaffirmed the committed and assigned fund balance classifications for the General Fund for financial statement purposes at June 30, 2012, in accordance with the City's adopted GASB 54 Fund Balance Policy, as follow: • Committed $ 4,500,000 • Assigned 17,200,000 Any remaining fund balance at the close of the fiscal year will be designated as Unassigned. Net Assets The governmental and business -type activities in the government -wide financial statements utilize a net assets presentation. Net assets are categorized as invested in capital assets (net of related debt), restricted and unrestricted. Invested in capital assets. net of related debt — This category groups all capital assets, including infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance of this category. Restricted net assets — This category presents external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted net assets — This category represents the City's net assets, which are not restricted for any project or other purpose. Statement of Cash Flows For purposes of the statement of cash flows, cash equivalents are defined as investments with original maturities of 90 days or less, which are readily convertible to known amounts of cash and not subject to significant changes in value from interest rate fluctuations. 37 City of Temple City Notes to Financial Statements Year ended June 30. 2012 NOTE CASH AND INVESTMENTS Cash and investments at June 30, 2012 are classified in the accompanying financial statements as follows: Statement of Net Assets: Cash and investments $ 37,536,614 Fiduciary Fund: Cash and investments 1,983,677 Total cash and investments $ 39,520,291 Cash and investments as of June 30, 2012 consist of the following: Cash on hand $ 2,200 Deposits with financial institutions 3,217,036 Investments 36,301,055 Total cash and investments $ 39,520,291 Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy. 0 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 2 CASH AND INVESTMENTS (CONTINUED) " No more than 30% of surplus funds may be invested in Bankers Acceptance of any one commercial banks — Commercial paper issuers must be U.S. Corporations with $500 million plus in assets. Purchases may not represent more than 10% of outstanding paper of an issuing corporation — Reverse Repurchase Agreements must be made vdlh primary dealers of the Federal Reserve Bank of New York and the securities used for the agreements rnust have been held by the issuer for at least 30 days — No more than 10% of an agency's surplus funds may be invested in any one mutual fund 'Based on state law requirements or investment policy requirements, whichever is more restrictive. N/A- Not applicable Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by fiscal agent. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk. 0 Authorized by Maximum Maximum Investment Types Investment Maximum Percentage Investment Authorized by State Law Policy Maturity" of Portfolio' In One Issuer' Local Agency Bonds Yes 5 years None None U.S. Treasury Obligations Yes 5 years None None U.S. Agency Securities Yes 5 years None None State of California Obligation Yes 5 years None None Local Agency Obligation Yes 5 years None None Banker's Acceptances' Yes 180 days 40% Fed Reserve Eligible Commercial Paper" Yes 270 days 25% A1/P1 Rating Certificates of Deposit Yes 5 years 30% None Repurchase Agreements Yes 1 year None None Reverse Repurchase Agreements— Yes 92 days 20% of base value None Medium -Term Notes Yes 5 years 30% A Rating Mutual Funds— Yes N/A 20% Multiple Money Market Mutual Funds Yes N/A 20% Multiple Collateralized Bank Deposits Yes 5 years None None Mortgage Pass -Through Securities Yes 5 years 20% AA Rating County Pooled Investment Funds Yes WA None None Local Agency Investment Fund (LAIF) Yes N/A None None Time Deposits Yes 5 years None None " No more than 30% of surplus funds may be invested in Bankers Acceptance of any one commercial banks — Commercial paper issuers must be U.S. Corporations with $500 million plus in assets. Purchases may not represent more than 10% of outstanding paper of an issuing corporation — Reverse Repurchase Agreements must be made vdlh primary dealers of the Federal Reserve Bank of New York and the securities used for the agreements rnust have been held by the issuer for at least 30 days — No more than 10% of an agency's surplus funds may be invested in any one mutual fund 'Based on state law requirements or investment policy requirements, whichever is more restrictive. N/A- Not applicable Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by fiscal agent. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk. 0 NOTE 2 Disclosures Relating to 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. One of the ways that the City manages its exposure to interest rate risk is 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 over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: Investment Type State Investment Pool (LAIF) U.S. Agency Securities Certificates of Deposit Money Market Funds Total Remaining Maturinq (in Months) 12 Months or 12 to 60 Total Less Months $ 23,814,856 23,814,856 City of Temple City - Notes to Financial Statements 4,779 $ 36,301,055 Year ended June 30, 2012 CASH AND INVESTMENTS (CONTINUED) Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity of Portfolio In One Issuer Local Agency Bonds 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None Banker's Acceptances 1 year None None Commercial Paper 1 year 25% 10% Certificates of Deposit 1 year 30% None Repurchase Agreements 30 days None None Money Market Mutual Funds N/A 20% 10% Local Agency Investment Fund N/A None None (LAIF) Investment Agreements N/A None None Time Deposits 5 years None None Disclosures Relating to 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. One of the ways that the City manages its exposure to interest rate risk is 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 over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City's investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City's investments by maturity: Investment Type State Investment Pool (LAIF) U.S. Agency Securities Certificates of Deposit Money Market Funds Total Remaining Maturinq (in Months) 12 Months or 12 to 60 Total Less Months $ 23,814,856 23,814,856 6,107,420 - 6,374,000 949,000 4,779 4,779 $ 36,301,055 24,768,635 me 6,107,420 5,425,000 11,532,420 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 2 CASH AND INVESTMENTS (CONTINUED) Disclosures Relating to Credit Risk Generally, 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 minimum rating required by (where applicable) the California Government Code, the City's investment policy, or debt agreements, and the actual rating, as reported by Standard & Poor's, as of year-end for each investment type: Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. As of June 30, 2012, the City had an investment in one issuer (other than Certificate of Deposit, money market funds, and external investment pools) that represents 5% or more of total City investments, as follows: FHLB $2,000,000 5.5% of total City investments Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that: in the event of the failure of the counterparty (e.g., 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 and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also 41 Minimum Rating as of Year End Legal Not Investment Type Amount Rating AA+ Rated State Investment Pool (LAIF) $ 23,814,856 NA $ - $ 23,814,856 U.S. Agency Securities 6,107,420 A 6,107,420 - Certificates of Deposit 6,374,000 NA - 6,374,000 Money Market Funds 4,779 NA - 4,779 Total $ 36,301,055 $ 6,107,420 $ 30,193,635 Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. As of June 30, 2012, the City had an investment in one issuer (other than Certificate of Deposit, money market funds, and external investment pools) that represents 5% or more of total City investments, as follows: FHLB $2,000,000 5.5% of total City investments Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that: in the event of the failure of the counterparty (e.g., 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 and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also 41 NOTE 2 NOTE 3 City of Temple City Notes to Financial Statements Year ended June 30, 2012 CASH AND INVESTMENTS (CONTINUED) allows financial institutions to secure District deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. For investments identified herein as held by fiscal agent, the fiscal agent selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government. Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City'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. fNTERFUND RECEIVABLES AND PAYABLES Current interfund receivables and payables balances at June 30, 2012 are as follows: Receivable Fund Payable Fund _ Amount General Fund CDBG Special Revenue Fund $ 61,408 (a) General Fund Nonmalor Governmental Funds 156,926 (a) General Fund Agency Fund 7,916 General Fund Successor Agency Private -Purpose Trust 390 Total $ 226,640 (a) As of June 30, 2012, the CDBG and the nonmajor governmental funds owed $61,408 and $156,926, respectively, to the General Fund. These interfund advances were to fund temporary cash deficits. y'� NOTE 4 NOTE 5 City of Temple City Notes to Financial Statements Year ended June 30, 2012 INTERFUND ADVANCES Noncurrent interfund advances at June 30, 2012 are as follows: Receivable Fund Payable Fund Amount General Fund Successor Agency Private Purpose Trust Fund $ 3,703,805 In 1998, the City General Fund made a loan to the former Redevelopment Agency of the City of Temple City. The loan included both new funding and the amendment and restatement of previous loans from the City to the former Agency. As of that loan, the total amount owed the City was $1,466,979. In June 2011, Assembly Bill 26 (1st extraordinary session) dissolved the former Agency, effective (after some litigation on the matter) February 1, 2012. As part of the dissolution process set forth in that bill and a later bill clarifying and modifying the terms of the dissolution (Assembly Bill 1484, adopted in June 2012), the existing loan from the City to the Agency was considered by the Department of Finance to be extinguished and of no further force and effect. The successor agency to the former redevelopment agency has sought reconsideration by the Department of Finance as to the enforceability of the loan. In addition, the loan may be reinstated (but is not required to be) under Assembly Bill 1484 following the completion of a due diligence process currently being undertaken by the successor agency. Resolution of the enforceability of the loan and the potential for the loan to be reinstated following the due diligence process is expected to be completed by June of 2013. The full amount of the loan including $2,116,826 of accrued interest has been reserved as potentially uncollectible as of June 30, 2012. INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2012 are as follows: Transfers In General Fund CDBG Fund Nonmajor Governmental Funds Transfers Out Nonmajor General CDBG Governmental Fund Fund Funds Total 70,306 92,518 162,824 - - 152,359 152,359 482,439 1,547,770 2,030,209 Total $ 482,439 70,306 1,792,647 2,345,392 The City transfers monies from various funds to its City-wide Capital Improvements Fund (a nonmajor governmental fund) and the General Fund for the payment of certain capital projects. 43 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 6 LOANS RECEIVABLE Loans receivable consist of the following at June 30, 2012: Description General Fund: Calabee's, Inc. Low and Moderate Income Housing Temple City Chamber of Commerce Community Development Block Grant: Home improvement loans Total 440,668 (a) 56,775 5,600 503,043 955,923 (b) $_ 1,458,966 (a) In August 2003, the City entered into a loan agreement with Calabee's, Inc, for up to $1,105,000 in order to facilitate the construction and operation of a certain restaurant located within the City. Interest accrues on the loan at a rate of 4.50% per year from the final disbursement date until the first payment date. The loan is payable in 132 months (11 years). Payment of the loan principal and interest, which is due monthly, commenced on the thirteenth month after the restaurant's opening date. The outstanding balance of the loan as of June 30, 2012 is $440,668. (b) The City provides deferred payment loans to low and moderate income homeowners for repairs of building and zoning code violations through its Community Development Block Grant program. The maximum amount of each loan is $25,000 with 3% interest. Loan repayment is deferred until the home is sold or changes title. 44 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 7 CAPITAL ASSETS Capital assets activity for the year ended June 30, 2012 was as follows: Less accumulated depreciation for. Buildings Improvements Furniture, fixtures and equipment Vehicles Infrastructure. Streets Traffic signals Bridges Total accumulated depreciation Net capital assets being depreciated 1,557,268 Balance 1,707,245 Balance 130,071 - July 1, 2011 Additions Deletions June 30, 2012 Capital assets, not being depreciated: 961,918 94,886 - 1,056,804 Land $ 3,268,952 $ - $ - 5 3,268,952 Land improvements 1,839,413 - - 1,839,413 Construction in progress 1,544,169 1,414,448 2,958,617 Infrastructure, Land rights relating to streets 8,465,941 - - 8,465,941 Total capital assets, not being depreciated 15,118,475 1,414,448 - 16,532,923 Capital assets, being depreciated: Buildings 6,223,122 - - 6,223,122 Improvements 5,290,172 - - 5.290,172 Furniture, fbdures and equipment 1,419,308 76,754 - 1,496,062 Vehicles 1,088,012 185,185 - 1,273,197 Infrastructure: Streets 10,255,200 - - 10,255,200 Traffic signals 1,190,394 - - 1,190,394 Bridges 958,003 - 958,003 Total capital assets, being depreciated 26,424,211 261,939 - 26,686,150 Less accumulated depreciation for. Buildings Improvements Furniture, fixtures and equipment Vehicles Infrastructure. Streets Traffic signals Bridges Total accumulated depreciation Net capital assets being depreciated 1,557,268 149,977 - 1,707,245 1,791,882 130,071 - 1,921,953 1,224,763 72,031 - 1,296,794 961,918 94,886 - 1,056,804 5,800,976 137,777 1,116,518 14,964 958,003 - 13,411,328 599,706 13,012,8833( 37,767) Governmental activities capital assets, net $ 28,131,358 $ 1,076,681 $ 45 - 5,938,753 - 1,131,482 - 958,003 14,011,034 12,675,116 $ 29,208,039 NOTE 7 NOTE 8 NOTE 9 City of Temple City Notes to Financial Statements Year ended June 30, 2012 CAPITAL ASSETS (CONTINUED) Depreciation expense is charged to operations, as follows: General Government $ 81,486 Community Development 49,229 Public Safety 38,008 Public Works 214,381 Community Services 216,602 Total $ 599,706 DEFERRED REVENUE Deferred revenue consisted of the following as of June 30, 2012: Amounts associated with long-term loans or advances: Accrued interest portion of City's advances to the Community Redevelopment Agency Loans receivable Unearned revenues LONG-TERM LIABILITIES Nonmajor General CDBG Governmental Fund Fund Funds Total $ 2,236,825 $ - $. - $ 2,236,825 503,043 955,923 - 1,458,966 104,234 104,234 $ 2,739,868 $ 955,923 $ 104,234 $ 3,800,025 Changes in long-term liabilities for the year ended June 30, 2012 were as follows: Amount Due Amount Balance at Balance at Within One Due After July 1, 2011 Additions Retirements June 30, 2012 Year One Year Net OPEB Obligation $ 924,972 $ 1,080,000 $ (153,349) $ 1,851,623 $ - $ 1,851,623 Compensated Absences 249,866 62,687 (51,880) 260,673 26,061 234,612 $ 1,174,838.$ 1,142,687 $(205,229) $ 2,112,296 $ 26,061 $ 2,086,235 46 101 IQ 0 41111 NOTE 11 City of Temple City Notes to Financial Statements Year ended June 30, 2012 FUND BALANCES Fund balances are composed of the following elements: When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City's policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City's policy is to first apply committed fund balance, then assigned fund balance, and finally unassigned fund balance. DEFINED BENEFIT PENSION PLAN (PERS) The City of Temple City contributes to the California Public Employees Retirement System (PERS), a cost-sharing multiple -employer public employee defined benefit pension plan. PERS provides retirement, disability benefits, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. PERS issues a publicly available financial report that includes financial statements and required supplementary information for the cost sharing plans that are administered by PERS. Copies of PERS' annual financial report may be obtained from its executive office at 400 "P" Street, Sacramento, California 95814. Miscellaneous participants are required to contribute 7% of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. Benefit provisions and all other requirements are established by state statute. 47 Nonmajor Governmental General Fund Funds Total Fund Balances: Nonspendable Prepaid items $ 1,678 $ - $ 1,678 Restricted for Special revenue - 11,889,013 11,889,013 Committed 4,500,000 - 4,500,000 Assigned 17,200,000 17,200,000 Unassigned 2,352,402 - 2,352,402 Total Fund Balances $ 24,054,080 $ 11,889,013 $ 35,943,093 When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City's policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City's policy is to first apply committed fund balance, then assigned fund balance, and finally unassigned fund balance. DEFINED BENEFIT PENSION PLAN (PERS) The City of Temple City contributes to the California Public Employees Retirement System (PERS), a cost-sharing multiple -employer public employee defined benefit pension plan. PERS provides retirement, disability benefits, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. PERS issues a publicly available financial report that includes financial statements and required supplementary information for the cost sharing plans that are administered by PERS. Copies of PERS' annual financial report may be obtained from its executive office at 400 "P" Street, Sacramento, California 95814. Miscellaneous participants are required to contribute 7% of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account. Benefit provisions and all other requirements are established by state statute. 47 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 11 DEFINED BENEFIT PENSION PLAN (PERS) (CONTINUED) In December 2011, the City adopted (a) Resolution No. 114781, a Resolution of the City Council of the City of Temple City reducing the amount of employer paid member contribution to the PERS for full-time employees hired before January 1, 2012 by one percent (1%) and (b) Resolution No. 11-4782, a Resolution of the City Council of the City of Temple City eliminating payment of employer paid member contributions to PERS for employees hired on or after January 1, 2012. The City has contributed at the actuarially determined rate provided by PERS' actuaries. Under GASB 27, an employer reports an annual pension cost (APC) equal to the annual required contribution (ARC) plus an adjustment for the cumulative difference between the APC and the employer's actual plan contributions for the year. The cumulative difference is called the net pension obligation (NPO). The ARC for the period July 1, 2011 to June 30, 2012 has been determined by an actuarial valuation of the plan as of June 30, 2009. The City's covered payroll for PERS was $2,417,955 for the year ended June 30, 2011, while the City's total payroll for all employees was $3,247,819 during the same period. In order to calculate the dollar value of the ARC for inclusion in financial statements prepared as of June 30, 2012, the contribution rate is multiplied by the payroll of covered employees that were paid during the period from July 1, 2011 to June 30, 2012. NOTE 12 LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION Description of Self -Insurance Pool Pursuant to Joint Powers Agreement City of Temple City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 123 California public entities and is organized under a joint powers agreement pursuant to California Government Code 6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The Authority's pool began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a 9 -member Executive Committee. Self-insurance Programs of the Authority A revised cost allocation methodology was introduced in fiscal year 2010-11, however, it retains many elements of the previous cost allocation methodology. Each member pays an annual contribution (formerly called the primary deposit) to cover estimated losses for the coverage period. This initial funding is paid at the beginning of the coverage period. After the close of the coverage period, outstanding claims are valued. A retrospective deposit computation is then conducted annually thereafter until all claims incurred during the coverage period are closed on a pool -wide basis. This subsequent cost re -allocation among members based on actual claim development can result in adjustments of either refunds or additional deposits required. M City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 12 LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION (CONTINUED) The total funding requirement for self-insurance programs is estimated using actuarial models and pre -funded through the annual contribution. Costs are allocated to individual agencies based on exposure (payroll) and experience (claims) relative to other members of the risk -sharing pool. Additional information regarding the cost allocation methodology is provided below. Liability. In the liability program, claims are pooled separately between police and non -police exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs in excess of $750,000 up to the reinsurance attachment point of $5 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $5 million to $10 million are paid under a reinsurance contract subject to a $2.5 million annual aggregate deductible. Costs of covered claims from $10 million to $15 million are paid under two reinsurance contracts subject to a combined $3 million annual aggregate deductible. On a cumulative basis for all fiscal year 2011-12 reinsurance contracts the annual aggregate deductible is $5.5 million. (6) Costs of covered claims from $15 million up to $50 million are covered through excess insurance policies. The overall coverage limit for each member including all layers of coverage is $50 million per occurrence. Costs of covered claims for subsidence losses are paid by reinsurance and excess insurance with a pooled sub -limit of $35 million per occurrence. This $35 million subsidence sub -limit is composed of (a) $5 million retained within the pool's SIR, (b) $10 million in reinsurance and (c) $20 million in excess insurance. The excess insurance layer has a $20 million annual aggregate. Workers' Compensation. In the workers' compensation program, claims are pooled separately between public safety (police and fire) and non-public safety exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs in excess of $100,000 up to the reinsurance attachment point of $2 million are distributed based on the outcome of cost allocation within the first and second loss layers. (5) Costs of covered claims from $2 million up to statutory limits are paid under a Mo City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 12 LIABILITY, PROPERTY AND WORKERS' COMPENSATION PROTECTION (CONTINUED) reinsurance policy. Protection is provided per statutory liability under California Workers' Compensation Law. Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million to $10 million are pooled among members. Purchased Insurance Pollution Leoal Liabilitv Insurance. The City of Temple City participates in the pollution legal liability insurance program (formerly called environmental insurance) which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Temple City. Coverage is on a claims -made basis. There is a $50,000 deductible. The Authority has a limit of $50 million for the 3 -year period from July 1, 2011 through July 1, 2014. Each member of the Authority has a $10 million sub - limit during the 3 -year term of the policy. Prooertv Insurance. The City of Temple City participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Temple City property is currently insured according to a schedule of covered property submitted by the City of Temple City to the Authority. City of Temple City property currently has all-risk property insurance protection in the amount of $11,383,602. There is a $5,000 deductible per occurrence except for non -emergency vehicle insurance which has a $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Earthquake and Flood Insurance. The City of Temple City purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. City of Temple City property currently has earthquake protection in the amount of $9,226,065. There is a deductible of 5% per unit of value with a minimum deductible of $100,000. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Crime Insurance. The City of Temple City purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority. Premiums are paid annually and are not subject to retrospective adjustments. Adequacy of Protection During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in fiscal year 2011-12. 50 City of Temple City Notes to Financial Statements Year ended June 30. 2012 NOTE 13 OTHER POSTEMPLOYMENT BENEFIT PLAN Employees who retire from the City are eligible to receive health care benefits covering themselves and any qualified family members. The City pays 100% of the cost of the medical insurance premiums of the retired employees and one-half of the cost of the medical insurance premiums of their family members. The City also pays 100% of the cost of dental and vision insurance premiums of the retired employees. Expenditures for post-retirement health care benefits for fiscal year 2012 amounted to $153,349 which included 25 participants. The City's annual Other Postemployment Benefits (OPEB) cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2010, 2011 and 2012 were: Fiscal Year Annual Ended OPEB Cost 6/30/2011 (1) $ 1,080,000 6/30/2012 (1) 1,080,000 Annual Percentage of Contribution Annual OPEB Cost Net OPEB Made Contributed Obligation 155,028 14.35% 924,972 153,349 14.20% 1,851,623 (t) The City had a second actuarial report prepared by Bartel Associates, LLC dated October 31, 2011 with a valuation date of June 30, 2012. The results of the report concluded a change in the City's annual required contribution amount starting at zero -based pre -funding or no OPEB accrued liability as of July 1, 2010. City's Funding Policy The plan provisions and contribution requirements of plan members and the City are established and may be amended by City Council. The contribution required to be made under City Council requirements is based on a pay-as-you-go basis (i.e., as premiums become due). On September 4, 2012, the City adopted Resolution No. 12-4845 authorizing participation in the Public Agency Retirement Services Post -Retirement Health Care Plan Trust and pre -funding of $1.0 million to the Trust. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 51 NOTE 13 City of Temple City Notes to Financial Statements Year ended June 30, 2012 OTHER POSTEMPLOYMENT BENEFIT PLAN (CONTINUED) The following table shows the components of the City's annual OPEB cost for the current fiscal year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation for these benefits: Annual Required Contribution $ 1,080,000 Interest on net OPEB obligation 36,999 Adjustment to annual required contribution (36,999) Annual OPEB cost 1,080,000 Annual Contribution Made (153,349) Increase in Net OPEB obligation 926,651 Net OPEB obligation, beginning of year 924,972 Net OPEB obligation, end of year $ 1,851,623 Actuarial Methods and Assumptions Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented in the required supplementary information section, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The actuarial cost method used for determining the benefit obligations is the Entry Age Normal Cost Method. The actuarial assumptions included a 4 percent investment rate of return, which is the assumed rate of the expected long-term investment returns on plan assets calculated based on the funded level of the plan at the valuation date, and annual cost trend rate of 9 percent for Non -Medicare and 9.4 percent for Medicare initially, reduced by decrements of 0.5 percent to 0.6 percent per year to an ultimate rate of 5 percent after the eight year. The UAAL is being amortized over 30 -year combined period using a level -percent of payroll. It is assumed the City's payroll will increase 3.25% per year and merit increases are based on the CalPERS 1997-2007 Experience Study. 52 City of Temple City Notes to Financial Statements Year ended June 30. 2012 NOTE 13 OTHER POSTEMPLOYMENT BENEFIT PLAN (CONTINUED) Refer to Required Supplementary Information Section for the Plan's Schedule of Funding Progress. NOTE 14 NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) PRONOUNCEMENTS GASB No. 61 - GASB has issued Statement No. 61, The Financial Reporting Entity: Omnibus, an amendment of GASB Statements No. 14 and No. 34. This Statement modifies existing requirements for the assessment of potential component units in determining what should be included in the financial reporting entity, and financial reporting entity display and disclosure requirements. It applies to financial reporting by primary governments and other stand-alone governments, and to the separately issued financial statements of governmental component units. In addition, this Statement should be applied to nongovernmental component units when they are included in a governmental financial reporting entity. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2012. GASB No. 62 - GASB has issued Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB and AICPA Pronouncements. This Statement establishes accounting and financial reporting standards for the financial statements of state and local governments. The requirements of this Statement apply to accounting and financial reporting for governmental activities, business -type activities, and proprietary funds. The requirements in this Statement are effective for financial statements for periods beginning after December 15, 2011. GASB No. 63 - GASB has issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources and renames the residual measure as net position, rather than net assets. The requirements of this Statement will improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position. It alleviates uncertainty about reporting those financial statement elements by providing guidance where none previously existed. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. 53 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 14 NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) PRONOUNCEMENTS (CONTINUED) GASB No. 65 - Items Previously Reported as Assets and Liabilities. This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. This Statement also provides other financial reporting guidance related to the impact of the financial statement elements deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term deferred in financial statement presentations. The requirements of this Statement will improve financial reporting by clarifying the appropriate use of the financial statement elements deferred outflows of resources and deferred inflows of resources to ensure consistency in financial reporting. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012. GASB No. 68 - Accounting and Financial Reporting for Pensions, establishes accounting and financial reporting requirements related to pensions for governments whose employees are provided with pensions through pension plans that are covered by the scope of this Statement, as well as for nonemployer governments that have a legal obligation to contribute to those plans. Statement 68 establishes a definition of a pension plan that reflects the primary activities associated with the pension arrangement—determining pensions, accumulating and managing assets dedicated for pensions, and paying benefits to plan members as they come due. For defined benefit pension plans, this Statement establishes standards of financial reporting for separately issued financial reports and specifies the required approach to measuring the pension liability of employers and nonemployer contributing entities for benefits provided through the pension plan (the net pension liability), about which information is required to be presented. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision -useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement is effective for fiscal years beginning after June 15, 2014. 54 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 15 CONTINGENT LIABILITIES The City is a defendant in various litigations arising in the normal course of operations. In the opinion of management and counsel, the outcome is not expected to materially adversely affect the financial position of the City. NOTE 16 SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY On December 29, 2011, the California Supreme Court upheld Assembly Bill IX 26 ("the Bill") that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Temple City that previously had reported a redevelopment agency within the reporting entity of the City as a blended component unit. The Bill provides that upon dissolution of a redevelopment agency, either the city or another unit of local government will agree to serve as the "successor agency" to hold the assets until they are distributed to other units of state and local government. After enactmentof the law, which occurred on June 28, 2011, redevelopment agencies in the State of California cannot enter into new projects, obligations or commitments. Subject to the control of a newly established oversight board, remaining assets can only be used to pay enforceable obligations in existence at the date of dissolution (including the completion of any unfinished projects that were subject to legally enforceable contractual commitments). In future fiscal years, successor agencies are to only be allocated revenue in the amount that is necessary to pay the estimated annual installment payments on enforceable obligations of the former redevelopment agency until all enforceable obligations of the prior redevelopment agency have been paid in full and all assets have been liquidated. The Bill directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by the Bill. 55 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 16 SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY (CONTINUED) Management believes, in consultation with legal counsel, that the obligations of the former redevelopment agency due to the City amounting to $3,703,805 are valid enforceable obligations payable by the successor agency trust under the requirements of the Bill. The City's position on this issue is not a position of settled law and there is considerable legal uncertainty regarding this issue. It is reasonably possible that a legal determination may be made at a later date by an appropriate judicial authority that would resolve this issue unfavorably to the City. As of June 30, 2012, this receivable was fully reserved through a 100% allowance for uncollectible account reported in the government -wide financial statements. The Successor Agency has elected to retain the liability in the books pending the California Department of Finance's (DOF) issuance of Finding of Completion. At that time, the DOF will review and decide on the enforceability of these obligations. In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. Prior to that date, the final seven months of the activity of the redevelopment agency continued to be reported in the governmental funds of the City. After the date of dissolution, the assets and activities of the dissolved redevelopment agency are reported in a fiduciary fund (private -purpose trust fund) in the financial statements of the City. The transfer of the assets and liabilities of the former redevelopment agency as of February 1, 2012 (effectively the same date as January 31, 2012) from governmental funds of the City to fiduciary funds was reported in the governmental funds as an extraordinary gain in the governmental fund financial statements. The receipt of these assets and liabilities as of January 31, 2012 was reported in the private -purpose trust fund as an extraordinary loss. Because of the different measurement focus of the governmental funds (current financial resources measurement focus) and the measurement focus of the trust funds (economic resources measurement focus), the extraordinary gain recognized in the governmental funds was not the same amount as the extraordinary loss that was recognized in the fiduciary fund financial statements. 56 City of Temple City Notes to Financial Statements Year ended June 30, 2012 NOTE 16 SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY (CONTINUED) The difference between the extraordinary gain recognized in the fund financial statements and the extraordinary loss recognized in the fiduciary fund financial statements is reconciled as follows: Total extraordinary gain reported in governmental funds - decrease in net assets of Successor Agency Trust Fund $ 1,069,592 Accrued bond interest reported in the government -wide financial statements - decrease in net assets of Successor Agency Trust Fund 98,275 Long-term debt reported in government -wide financial statements - decrease in net assets of Successor Agency Trust Fund 6,280,000 Net decrease to net assets of the Successor Agency as a result of initial transfers (amount of extraordinary gain reported in the Government -wide Statement of Activities of the City) $ 7,447,867 Information about the Outstanding Bonds of the Successor Agency Trust Fund REFUNDING REVENUE BONDS, SERIES 2005 In September 2005, the Temple City Community Redevelopment Agency (Agency) issued $5,780,000 of Serial Bonds and $2,220,000 of Term Bonds for a total amount of $8,000,000 to be paid from future tax increment revenues. The Series 2005 bonds were issued to refund $3,600,000 of outstanding Temple City Financing Authority (Authority) 1993 Revenue Bonds and to provide the Agency with additional funds for redevelopment activities. Interest is payable semi-annually on March 1 and September 1 of each year, commencing March 1, 2006. Interest rates range from 3.0% to 4.9% on the serial bonds and 4.875% on the term bonds in amounts ranging from $240,000 to $495,000. The bonds maturing on or after September 1, 2015 are subject to redemption prior to maturity in whole or in part at the option of the Agency in amount of 100% of the principal amount. The Term Bonds maturing on September 1, 2025 will be subject to mandatory redemption, on September 1, 2022 and each September 1 thereafter at a redemption price equal to the principal amount thereof together with accrued interest thereon to the redemption date without premium. Under terms of the issue, a minimum of $627,225 is to be set aside in reserve funds. The balance in the reserve account at June 30, 2012 was $627,225. The outstanding balance owed on the bonds as of June 30, 2012 is $6,280,000. 57 NOTE 16 IR611I:1111il7 NOTE 18 City of Temple City Notes to Financial Statements Year ended June 30, 2012 SUCCESSOR AGENCY TRUST FOR ASSETS OF FORMER REDEVELOPMENT AGENCY (CONTINUED) Annual debt service requirements to maturity for the refunding revenue bonds payable are as follows: Year Ending June 30, Principal Interest Total 2013 $ 330,000 286,575 616,575 2014 345,000 271,080 616,080 2015 360,000 256,095 616,095 2016 375,000 240,105 615,105 2017 395,000 222,968 617,968 2018-2022 2,255,000 817,658 3,072,658 2023-2026 2,220,000 223,031 2,443,031 Total $ 6,280,000 2,317,512 8,597,512 SUBSEQUENT EVENTS The City has evaluated events subsequent to June 30, 2012 to assess the need for potential recognition or disclosure in the financial statements. Such events were evaluated through December 12, 2012, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or additional disclosure in the financial statements. CALIFORNIA PUBLIC EMPLOYEES' PENSION REFORM ACT After spending close to a year exploring and debating reforms to public pension systems in California, lawmakers in Sacramento passed Assembly Bill 340 (AB 340) on August 31, 2012. AB 340 known as the California Public Employees' Pension Reform Act of 2013 (PEPRA) which amends various provisions of the Public Employees' Retirement Law (PERL) and County Employee's Retirement Law of 1937 (CERL), was signed into law by the Governor on September 12, 2012. PEPRA will take effect on January 1, 2013. Management asserts that PEPRA will not have a significant impact on the City's June 30, 2012 financial statements. b�3 REQUIRED SUPPLEMENTARY INFORMATION (This page intentionally left blank.) City of Temple City General Fund The General Fund has been classified as a major fund and is used to account for all of the general revenues of the City not specifically levied or collected for some special purpose, and for the expenditures related to the rendering of general services by the City. The General Fund is used to account for all resources not required to be accounted for in another fund. The budget -to -actual comparison for this fund has been presented in the accompanying financial statements as required supplementary information. M City of Temple City Budgetary Comparison Schedule General Fund Year ended June 30, 2012 Variance with Final Budget Budgetary Amounts Positive Original Final Actual (Negative) Revenues Taxes Real estate transfer tax $ 120,000 120,000 99,417 (20,583) Sales and use tax 1,082,870 1,157,870 1,223,440 65,570 In lieu sales tax 388,220 388,220 418,878 30,658 Franchise fees 543,250 543,250 553,598 10,348 Transient occupancy tax 31,000 31,000 32,966 1,966 Property tax allocation 2,240,250 2,240,250 2,253,676 13,426 Total taxes 4,405,590 4,480,590 4,581,975 101,385 Licenses and permits Business license fees 176,000 201,000 209,415 8,415 Building permit fees 621,100 681,100 806,396 125,296 Parking permit fees 98,800 98,800 62,770 (36,030) Animal license fees 78,900 88,900 87,438 (1,462) Vehicle impound fees 55,000 55,000 22,709 (32,291) Temp parking permit fees 80,500 105,500 117,393 11,893 Code enforcement fees 94,560 94,560 39,062 (55,498) Total licenses and permits 1,204,860 1,324,860 1,345,183 20,323 Intergovernmental Motor vehicle in lieu tax 95,000 95,000 17,757 (77,243) In lieu VLF 3,055,800 3,178,500 3,178,480 (20) Total intergovernmental 3,150,800 3,273,500 3,196,237 (77,263) Charges for services Shared maintenance charges 3,690 3,690 3,720 30 Zoning fees 199,100 199,100 159,006 (40,094) Recreation fees 509,900 509,900 528,043 18,143 Plan check fees 25,000 25,000 31,130 6,130 Facility rental fees 21,900 21,900 35,597 13,697 Total charges for services 759,590 759,590 757,496 (2,094) Fines, forfeitures and penalties Court fines 627,000 627,000 646,498 19,498 Investment income: Interest -LAIF 76,500 76,500 55,660 (20,840) Interest -Others 190,000 200,000 206,656 6,656 Interest - CD 87,100 87,100 107,374 20,274 Interest - Security - - 8,579 8,579 Total investment income 353,600 363,600 378,269 14,669 Other: Other reimbursement 90,000 90,000 48,207 (41,793) Recyclable revenue 40,300 40,300 48,477 8,177 AB939 reimbursement 8,100 8,100 12,276 4,176 Rental Income 56,700 56,700 57,268 568 CRA/LLDreimbursement 178,415 178,415 18,264 (160,151) Sundry 1,000 1,000 1,581 581 Total other income 374,515 374,515 186,073 (188,442) Total revenues $ 10,875,955 11,203,655 11,091,731 (111,924) City of Temple City Budgetary Comparison Schedule General Fund Year ended June 30, 2012 Public safety Law enforcement 3,413,310 3,638,310 3,390,205 Variance with Traffic engineering 25,480 25,480 8,840 Final Budget Animal control Budgetary Amounts 271,880 Positive 32,390 Original Final Actual (Negative) Expenditures Community Preservation 529,625 599,125 525,258 General government: Parking administration 405,315 477,255 394,022 City Council $ 189,165 194,170 113,820 80,350 City Manager 853,375 868,630 576,068 292,562 Council support 331,895 349,645 266,643 83,002 Accounting 554,600 567,285 422,560 144,725 City Attorney 250,000 250,000 248,284 1,716 Support services 168,335 171,135 87,216 83,919 Insurance/ benefits 256,790 577,890 472,563 105,327 Purchasing 122,850 122,850 130,691 (7,841) Elections - - 55 (55) Total general government 2,727,010 3,101,605 2,317,900 783,705 Community development Planning 660,985 665,125 509,789 155,336 Housing 112,285 480,675 129,207 351,468 Building 494,495 521,140 423,520 97,620 Total community development 1,267,765 1,666,940 1,062,516 604,424 Public safety Law enforcement 3,413,310 3,638,310 3,390,205 248,105 Traffic engineering 25,480 25,480 8,840 16,640 Animal control 270,670 271,880 239,490 32,390 Emergency services 101,765 141,355 118,453 22,902 Community Preservation 529,625 599,125 525,258 73,867 Parking administration 405,315 477,255 394,022 83,233 Total public safety 4,746,165 5,153,405 4,676,268 477,137 Public works Parking facilities 130,485 131,615 135,753 (4,138) Solid waste management 8,690 8,690 13,511 (4,821) General government buidlings 275,750 374,445 320,210 54,235 Graffiti abatement 55,400 55,400 23,648 31,752 Total public works 470,325 570,150 493,122 77,028 Community services: Community Relations 257,215 257,215 164,899 92,316 Recreation / human services 969,300 1,025,505 964,522 60,983 Parks - Maintenance/Facilities 756,470 834,925 765,548 69,377 1,982,985 2,117,645 1,894,969 222,676 Total expenditures $ 11,194,250 12,609,745 10,444,775 2,164,970 61 City of Temple City Budgetary Comparison Schedule General Fund Year ended June 30, 2012 Total expenditures (from previous page) $ 11,194,250 12,609,745 10,444,775 2,164,970 Other financing sources (uses) Transfers in 363,890 363,890 162,824 (201,066) Transfers out (519,000) (819,000) (482,439) 336,561 Net other financing sources (uses) (155,110) (455,110) (319,615) 135,495 Net change in fund balances before extraordinary item (473,405) (1,861,200) 327,341 2,188,541 Extraordinary item Uncollectible Advances to Successor Agency - - (1,586,979) (1,586,979) Net change in fund balances after extraordinary item (473,405) (1,861,200) (1,259,638) 601,562 Fund balance at beginning of year 25,313,718 25,313,718 25,313,718 - Fund balance at end of year $ 24,840,313 23,452,518 24,054,080 601,562 M City of Temple City Budgetary Comparison Schedule Community Development Block Grant (CDBG) Year ended June 30, 2012 63 Variance with Final Budget Budgetary Amounts Positive Oriqinal Final Actual (Negative) Revenues Intergovernmental $ 411,845 411,845 89,009 (322,836) Low income grant and loan repayments - 93,334 74,632 M702) Total revenues 411,845 505,179 163,641 (341,538) Expenditures Current: Community development - 12,347 164,705 152,358 Total expenditures - 12,347 164,705 152,358 Excess (deficiency) of revenues over expenditures 411,845 492,832 (1,064) (493,896) Other financing sources (uses) Transfers in - 152,359 152,359 Transfers out (411,845) (70,307) (70,307) - Net other financing sources (uses) - 82,052 2,052 - Net change in fund balances - 574,884 80,988 (493,896) Fund balance at beginning of year (80,988)(80,988) (80,988) - Fund balance at end of year $ (80,988) 193,896 (493,896) 63 City of Temple City Notes to Budgetary Comparison Schedule Year ended June 30, 2012 NOTE 1 BUDGETS AND BUDGETARY ACCOUNTING The City adopts an annual budget prepared on the modified accrual basis for all of its governmental funds. During the year, there were budget modifications and supplemental appropriations amounting to $1,415,920. The City Manager or his designee is authorized to transfer budgeted amounts between the accounts of any program. Revisions that alter the total appropriations of any program or fund are approved by City Council. Prior year appropriations lapse unless they are appropriated through the formal budget process. Expenditures may not legally exceed appropriations at fund level. Reserves for encumbrances are not recorded by the City of Temple City. M City of Temple City California Public Retirement System (CALPERS) Schedule of Funding Progress Year ended June 30, 2012 65 Actuarial Accrued Value of Unfunded Funded Annual Valuation Liabilities Assets Liabilities Ratio Covered UL as a % Date (AL) (AVA) (UL) (AVA/AL) Payroll of Payroll 6/30/2009 $ 1,834,424,640 $ 1,493,430,831 $ 340,993,809 81.4% $ 355,150,151 96.0% 6/30/2010 1,972,910,641 1,603,482,152 369,428,489 81.3% 352,637,380 104.8% 6/30/2011 2,135,350,204 1,724,200,585 411,149,619 80.8% 350,121,750 117.4% 65 City of Temple City Other Postemployment Benefits (OPEB) Schedule of Funding Progress Year ended June 30, 2012 Actuarial Accrued Actuarial Liability Unfunded of Covered Value of (AAL) Entry AAL 347.2% Assets Age (UAAL) Funded Date (a) (b) (b -a) Ratio 6/30/2009 $ - $ 7,850,000 $ 7,850,000 0% $ 6/30/2011 - 6,481,000 6,481,000 0% M. UAAL as a % Covered of Covered Payroll Payroll. 2,261,000 347.2% 2,335,000 277.6% (This page intentionally left blank.) SUPPLEMENTARY SCHEDULES City of Temple City Combining Balance Sheet Nonmajor Governmental Funds Year ended June 30, 2012 LIABILITIES Accounts payable $ 262,605 Capital Projects - - 564,446 Due to other funds 156,926 - - City -Wide CRA CRA Permanent - - - Special Capital Capital Debt Camellia 825.606 FUND BALANCES Revenue Project Improvements Service Trust Funds Fund Fund Fund Fund Totals ASSETS Special revenue funds 11,708,728 - 11,708,728 Total fund balances Cash and investments $ 11,840,064 301,841 - - 180,092 12,321,997 Interest receivable - - - - 193 193 Due from other governments 392,429 - - 392,429 Total assets $ 12,232,493 301,841 - 180,285 12,714,619 LIABILITIES Accounts payable $ 262,605 301,841 - - - 564,446 Due to other funds 156,926 - - - - 156,926 Deferred revenue 104,234 - - - 104,234 Total liabilities 523,765 301,841 - 825.606 FUND BALANCES Restricted. Education scholarship - - - - 180,285 180,285 Special revenue funds 11,708,728 - 11,708,728 Total fund balances 11,708,728 - 180,285 11,889,013 Total liabilities and fund balances $ 12,232,493 301,841 - - 180,285 12,714,619 67 City of Temple City Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Year ended June 30, 2012 Excess (deficiency) of revenues over expenditures 1,730,751 (1,520,720) (441,160) (67,694) (1,248) (300.071) Other financing sources (uses) Transfers in 509,489 1,520,720 Caac�het Protects (1,792,647) Net otherfinancing sources (uses) (1283,158) 1,520,720 Change in fund balance before extraordinary 1,069,592 Cdy.Wide CRA CRA Permanent Net change in fund balance (200,837) - Special Capital Capital Debt Camellia 11.889,013 Revenue Improvements Improvements Service Trust Funds Fund Fund Fund Fund Totals Revenues Taxes $ 1,193,589 - - 350,776 - 1,544,365 Intergovernmental 2,741,054 - - - 2,741,054 Charges for services 171,855 - - - - 171,855 Fines 50,748 - - - - 50,748 Investment income 41,965 13,544 2.025 57,534 Total revenues 4,199,211 13,544 350,776 2,025 4,565,556 Expenditures Current: General government 1,173 - 454,704 - - 455,877 Public works 1,309,903 - - - - 1,309,903 Community services 1,063,647 - - 32,626 3,273 1,099,546 Capital outlay - 1,520,720 - - - 1,520,720 Debt service: Pass-thru payments - - - 10,897 - 10,897 Principal 63,000 - - 252,000 - 315,000 Interest 30,737 122,947 153,684 Total expenditures 2,468,460 1,520,720 454,704 418,470 3,273 4,865,627 Excess (deficiency) of revenues over expenditures 1,730,751 (1,520,720) (441,160) (67,694) (1,248) (300.071) Other financing sources (uses) Transfers in 509,489 1,520,720 Transfers out (1,792,647) Net otherfinancing sources (uses) (1283,158) 1,520,720 Change in fund balance before extraordinary 1,069,592 item 447,593 - Extraordinary item- RDA dissolution transactions (648,430) Net change in fund balance (200,837) - Fund balance, beginning of year 11,909,564 Fund balance, end of year $ 11,708,728 W. 2,030,209 (1,792,647) 237,562 (441,160) (67,694) (1,248) (62,509) (1,573,528) 3,291,550 1,069,592 (2,014,688) 3,223,856 (1,248) 1,007,053 2,014.668 (3,223,856) 181,533 10,881,929 180,285 11.889,013 NONMAJOR GOVERNMENTAL FUNDS City of Temple City Description of Nonmajor Special Revenue Funds June 30. 2012 The following Special Revenue Funds have been classified as nonmajor funds in the accompanying financial statements: Traffic Safetv Fund - To account for the Vehicle Code fines which are expended for traffic safety enforcement. Hioh Tech Grant Fund - To account for California Law Enforcement Equipment Purchase - High Technology (CLEEP) funds distributed to the City which are used for law enforcement activities, including the development of the Los Angeles Regional Crime Information System (LARCIS). Citizens Ootion for Public Safetv (COPS) Fund - To account for the revenues received from the California Department of Justice to be used to enhance existing law enforcement services. Public Transportation - Pr000sition A Fund - To account for the City's share of additional sales tax collected in the County of Los Angeles as a result of Proposition A. The fund is used to finance public transportation projects. Public Transoortation - Pr000sition C Fund - To account for the City's share of additional sales tax collected in the County of Los Angeles as a result of Proposition C. The fund is used to finance public transportation projects. Used Oil Fund - To account for the revenues and expenditures of the Used Oil Recycling Block Grant. Traffic Safetv Grant Fund - To account for grant revenue received from the State of California Office of Traffic Safety to be used for the City's approved bicycle and pedestrian safety program. State Gas Tax Fund - To account for the revenues and expenditures of the City's proportionate share of gas tax monies collected by the State of California which are used for street construction, street maintenance and engineering, and administrative expenses. Asset Seizure Fund - To account for the revenues and expenditures from the seizure of properties. Pr000sition IB Fund - To account for revenues received from the State of California to maintain and improve local streets and roads. Justice Assistance Grant Fund - To account for revenues received from the Justice Assistance Grant Program that are to be used exclusively for law enforcement programs. Bicvcle and Pedestrian Fund - To account for the revenues received from the State of California to maintain and improve the safety and practicality of bicycling and walking for everyday travel. .• City of Temple City Description of Nonmajor Special Revenue Funds (Continued) June 30, 2012 Air Qualitv Improvement District Fund - To account for the City's share of automobile registration fees collected from the State and distributed to the City by the South Coast Air Quality Management District. The funds are used to improve transportation systems and reduce the reliance on private vehicles. Measure R Fund - These are similar to local return type funds to be used for traffic relief and transportation upgrades citywide over the next 30 years. These funds may be for projects such as pothole repairs, major street resurfacing, left -turn signals, bikeways, pedestrian improvements, streetscapes, traffic signal synchronization, local transit services and programs. Sewer Reconstruction Fund - To account for special fees collected to be used for new sewer lines and sewer line replacement. EECBG Fund - To account for Energy Efficiency and Conservation Block Grant revenues received from the federal government funded by the American Recovery & Reinvestment Act of 2009. Congestion Manaaement Fund - To account for the maintenance of specified levels of services on identified roadways of regional significance, as required by California Government Code Section 65088. HSIP Fund - The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which was signed into law on August 10, 2005, established the Highway Safety Improvement Program (HSIP) as a core Federal -aid program. The overall purpose of this program is to achieve a significant reduction in traffic fatalities and serious injuries on all public roads through the implementation of infrastructure -related highway safety improvements. 1992/1996 Park Bond Fund - To account for revenues received from the Los Angeles County Regional Park and Open Space Grant. This grant was approved November 3, 1992 and November 5, 1996 to benefit property through the improvement of neighborhood parks and recreation facilities for youth and senior citizens. State Recvclina Fund - To account for revenues received from fiscal year ended June 30, 2002 through fiscal year ended June 30, 2003 from the State Department of Conservation under Section 14581(a)(4)(a) of the California Beverage Container Recycling and Litter Reduction Act for beverage container recycling and litter cleanup activities. Disaster Fund - Separate fund created for costs associated with the emergency, existence of conditions of disaster or of extreme peril to the safety of persons and property within the territorial limits of the city, caused by such conditions as air pollution, fire, flood, storm, epidemic, riot, drought, sudden and severe energy shortage, plant or animal infestation or disease, and earthquake. Park Acquisition Fund - To account for City imposed fees from the construction of new dwellings within the City. Expenditures are for the acquisition or improvement of neighborhood or community parks in conformance with the priorities established by the General Plan. 70 City of Temple City Description of Nonmajor Special Revenue Funds (Continued) June 30, 2012 Liohtino and Landscape District Fund - To account for assessments and ad valorem which are used for the operation and maintenance of street lights, traffic signals, and trees and parkways within the city. Low and Moderate Income Housing Fund - To account for monies received and expended to assist low and moderate income households. 71 72 Traffic High Tech Safety Grant COPS ASSETS Cash and investments $ - 8,784 948 Due from other governments 5,068 - - Total assets $ 5,068 8,784 948 LIABILITIES Accounts payable $ - - - Due to other funds 4,319 Deferred revenue - Totalliabilities 4,319 - - FUND BALANCES (DEFICITS) Restricted Special revenue funds 749 8,784 948 Total fund balances (deficits) 749 8,784 948 Total liabilities and fund balances (deficits) $ 5,068 8,784 948 72 Public Transportation - Prop A 2,201,938 2,201,938 Public Transportation - Prop C 4,092,989 4,092,989 Used Oil 8,807 8,807 City of Temple City Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2012 Traffic Safety State Gas Tax 1,597,799 102,275 1,700,074 46,455 100,962 46,455 100,962 2,155,483 4,092,989 8,807 1,599,112 2,155,483 4,092,989 8,807 1,599,112 2,201,938 4,092,989 8,807 1,700,074 73 FUND BALANCES (DEFICITS) Restricted Special revenue funds 729 549,367 Total fund balances (deficits) 729 549,367 Total liabilities and fund balances (deficits) $ 729 549,367 74 Justice Asset Proposition Assistance Seizure 1B Grant ASSETS Cash and investments $ 729 549,367 Due from other governments - - Total assets $ 729 549,367 LIABILITIES Accounts payable $ - - - Due to other funds - - - Deferred revenue - - - Totalliabilities - - - FUND BALANCES (DEFICITS) Restricted Special revenue funds 729 549,367 Total fund balances (deficits) 729 549,367 Total liabilities and fund balances (deficits) $ 729 549,367 74 City of Temple City Combining Balance Sheet Nonmajor Special Revenue Funds (Continued) June 30, 2012 Air Quality 27,131 621,751 Improvement 87 Seeder SB821 District Measure R Reconstruction EECBG 86 16,086 589,923 641,056 104,234 1,474 11,045 31,828 - - 1,560 27,131 621,751 641,056 104,234 1,473 - - 104,234 1,473 104,234 87 27,131 621,751 641,056 87 27,131 621,751 641,056 - 1,560 27,131 621,751 641,056 104,234 75 FUND BALANCES (DEFICITS) Restricted Special revenue Funds 22,258 Total fund balances (deficits) 22,258 - Total liabilities and fund balances (deficits) $ 22,258 151,134 76 1992/ Congestion 1996 Management HSIP Park Bond ASSETS Cash and investments $ 22,258 - Due from other governments - 151,134 Total assets $ 22,258 151,134 LIABILITIES Accounts payable $ - _ Due to other funds - 151,134 Deferred revenue - - Totalliabilities - 151,134 FUND BALANCES (DEFICITS) Restricted Special revenue Funds 22,258 Total fund balances (deficits) 22,258 - Total liabilities and fund balances (deficits) $ 22,258 151,134 76 City of Temple City Combining Balance Sheet Nonmajor Special Revenue Funds (Continued) June 30, 2012 77 CRA Lighting and Low Mod State Disaster Park Landscape Housing Recycling Fund Acquisition District Fund Total 9,720 29,571 24,196 1,941,573 - 11,840,064 - - - 89,605 - 392,429 9,720 29,571 24,196 2,031,178 - 12,232,493 - 29,571 - 85,617 - 262,605 - - - 156,926 - - - 104,234 29,571 85,617 - 523,765 9,720 - 24,196 1,945,561 - 11,708,728 9,720 - 24,196 1,945,561 - 11,708,728 9,720 29,571 24,196 2,031,178 - 12,232,493 77 Revenues Taxes $ Intergovernmental Charges for services Fines Investment income Total revenues Expenditures Current: General government Public works Community services Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Net other financing sources (uses) Extraordinary item Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ Traffic Safety 50,748 50,748 50,748 (50,000) (50,000) 749 749 High Tech Grant COPS 100,000 239 100,239 100,239 - (100,000) - (100,000) - 239 8,784 709 8,784 948 City of Temple City Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds Year ended June 30, 2012 Public Public 15,242 Traffic - Transportation - Transportation - Used Safety State Prop A Prop C Oil Grant Gas Tax 524,488 435,435 15,242 3,855 996,913 141,107 - - - - 7,597 15,831 - 4,778 673,192 451,266 15,242 3,855 1,001,691 - 459,269 625,313 - 625,313 459,269 47,879 451,266 15,242 3,855 542,422 - - - - 97,314 (429,615) (13,511) - (108,532) (429,615) (13,511) - (11,218) 47,879 21,651 1,731 3,855 531,204 2,107,604 4,071,338 7,076 (3,855) 1,067,908 2,155,483 4,092,989 8,807 - 1,599,112 79 Revenues Taxes Intergovernmental Charges for services Fines Investment income Total revenues Expenditures Current: General government Public works Community services Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Net other financing sources (uses) Extraordinary item Net change in fund balance Fund balance, beginning of year Fund balance, end of year 1 Justice Asset Proposition Assistance Seizure 1 B Grant 3,756 3,756 33,028 33,028 3,756 (33,028) (569,786) (569,786) - (566,030) 729 1,115,397 $ 729 549,367 (33,028) 33,028 City of Temple City Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds (Continued) Year ended June 30. 2012 Air Quality Improvement Sever SB821 District Measure R Reconstruction EECBG 1 44,743 324,176 - 21,366 - - - 30,000 - 73 317 2,405 - - 74 45,060 326,581 30,000 21,366 91,845 91,845 74 (46,785) 326,581 30,000 21,366 - (199,732) - (21,366) - (199,732) - (21,366) 74 (46,785) 126,849 30,000 13 73,916 494,902 611,056 87 27,131 621,751 641,056 Evil 1992/ Congestion 1996 Management HSIP Park Bond Revenues Taxes $ - - Intergovernmental - 181,297 60,000 Charges for services 748 - - Fines - Investment income - - _ Total revenues 748 181,297 60,000 Expenditures Current: General government - - - Public works - - - Community services - - - Debt service: Principal - - - Interest - - - Total expenditures - - - Excess (deficiency) of revenues over expenditures 748 181,297 60,000 Other financing sources (uses) Transfers in - - - Transfers out - (181,297) (60,000) Net other financing sources (uses) - (181,297) (60,000) Extraordinary item - - - Net change in fund balance 748 - - Fund balance, beginning of year 21,510 - - Fund balance, end of year $ 22,258 - - RN City of Temple City Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds (Continued) Year ended June 30, 2012 f$? Lighting CRA 1,173 1,173 - and Low Mod 850,634 State Disaster Park Landscape Housing Recycling Fund Acquisition District Fund Total - - 1,105,895 87,694 1,193,589 19,538 14,000 - - 2,741,054 - - - 850,634 171,855 2,468,460 - - 50,748 - - 6,085 884 41,965 19,538 14,000 1,111,980 88,578 4,199,211 f$? - 1,173 1,173 - - 850,634 - 1,309,903 9,818 303,643 - - 1,063,647 - - 63,000 63,000 - - - 30,737 30,737 9,818 303,643 - 850,634 94,910 2,468,460 9,720 (303,643) 14,000 261,346 (6,332) 1,730,751 - 303,643 - 108,532 - 509,489 - (58,808) - - (1,792,647) 303,643 (58,808) 108,532 - (1,283,158) - 648,430 (648,430) 9,720 (44,808) 369,878 (654,762) (200,837) - 69,004 1,575,683 654,762 11,909,564 9,720 24,196 1,945,561 - 11,708,728 f$? (This page intentionally left blank.) REPORT OF INDEPENDENT AUDITORS ON INTERNAL CONTROL AR VASQU EZ UX & COMPANY LLP 801 South C,nnd Avenue SWw 400. LM AnBeM•, CA 000174000. Ph 213 87311W. 1e. 113:873-1717. ww.e vnsqurn pn mm Report of Independent Auditors on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Mayor and Members of City Council City of Temple City We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Temple City, California, as of and for the year ended June 30, 2012, and have issued our report thereon dated December 12, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the City of Temple City is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City of Temple City's internal control over financial reporting as a basis for designing our auditing procedures 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 City of Temple City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Temple City's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies, or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. 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 entity's financial statements will not be prevented, or detected and corrected on a timely basis. We noted no matters that we consider to be material weaknesses in internal control. m Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Temple City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain other matters that we reported to management of the City of Temple City in a separate letter dated December 12, 2012. This report is intended solely for the information and use of the City Council, management, federal and state awarding agencies, and pass-through entities and is not intended to be, and should not be, used by anyone other than these specified parties. Los Angeles, California December 12, 2012 EN STATISTICAL SECTION City of Temple City Description of Statistical Section Contents This part of the City of Temple City's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city's overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the city's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the city's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the city's current levels of oustanding debt and the city's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the city's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the city's financial report relates to the services the city provides and the activities it performs. sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the rel event year. 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WS61 1W755 1.00097 1W604 1W541 100450 100430 1.00400 1.00370 Total oared Plate (5) 009546 007527 0 N57 009354 009410 0 M97 009259 0W188 009197 009202 (1) M 1975. California wish, passed Pmposdon 13 veaah set the property tax ale at a 1 00% fixed amount. TMs 1 00% is shared by all laxmg agencies br mach its suged propel restde9 vamm In Walloo to the 1 004 fixed amount, pmpeny ovens a are chaged laxer as a dem mists of assessed property values for the paynment deny ester approval bonds (2) Overlapping rates am these of Ioc31 and coilly gmenanems that apply to pmpeny dames within the City Not all ovenapang ales appy to all cily pmpaly owners (3) City'S Share of 1% Levy is based on the Cu" share of the ganeal had tax foe area in the Idogesl net taxable valor, thin the city ERAF geneal lend lax shifts may ort be Included in the lax a0o figures (4) RDA ale is based on the Imi RDA lax ale does (TRA) and includes only rate(,) Win indebtedness adople l prior to 1989 per Calibmia Slate slalum RDA drecl and ovadapping rales am applied only to the incremental property values (5) Tote) Court Rale is this ,eigMed average of all individual died ales Studied by the govemmenl prommus Ind slabsteml section inbnnatom Source LA,Cunty Assessor2 03-2011712Tm Rate Table 94 City of Temple City General Governmental Revenues — Last Ten Fiscal Years Fiscal year Licensesand Charges for Fines and Inveshnent Rental Other Total ended Tases Peral Intergovernmental Services Forfeitures Income Income Revenues Taaes 2003 $ 3.434,867 1,163,070 2.070,995 434.904 151,435 543,541 30,842 246,720 8,078,374 2004 3.517,904 1,225,266 1.684.796 466,752 189,510 312,025 31,462 327.247 7,754.962 2005 3.615,329 1,144,414 2.923.061 529,768 271,007 382,601 32,005 220,834 9,119,019 2006 3.970,043 1,092.015 2,721,891 585.885 256.879 897,594 33.698 264,039 9,822,044 2007 4.359.660 1,200.311 3,068,372 621,383 254,024 1.167,407 37,413 276.738 10.985,308 2008 4,578,801 1.385.267 3,482.229 674,154 242,337 1.034,417 90,108 287,075 11,774,386 2009 4,542.514 950.216 3,051,888 662,360 287,575 694.444 80,794 305.020 10,574,811 2010 3.830.602 1.096.347 3,549,571 542.978 534.287 442,363 65.928 348,851 10.410,925 2011 4.451,470 1,028,284 3.229,851 631,355 423.041 409.097 57.442 414,145 10,644,685 2012 4,581,975 1,345,183 3.196,237 757.4% 646,498 378.269 57.268 128,805 11,091.731 SourceCity of Temple Gly Base Financial Statements 95 CL ƒ M3 City of Temple City Top 25 Sales Tax Producers — Current Fiscal Year Business Name Business Category 99 Cents Only Variety Stores AT & T Mobility Electronics/Appliance Stores Chevron Service Stations CVS Pharmacy Drug Stores Hat Restaurants No Alcohol Hometown Buffet Restaurants No Alcohol In N Out Burgers Restaurants No Alcohol Jr Fueling Service Stations K Mart Discount Department Stores McDonalds Restaurants No Alcohol Modern Lighting Plumbing/Electronics Supplies Office Depot Office Supplies/Furniture Pep Boys Automotive/Supply Stores Peters Mobil Service Service Stations Ralphs Grocery Stores Liquor Rite Aid Drug Stores Seafood Village Restaurants Beer and Wine Shell Service Stations Super A Foods Grocery Stores Liquor Super Pets Specialty Stores Temple City Gas Service Stations Temple City Powersports Boats/Motorcycles TJ Maxx Family Apparel Valu Mart Grocery Stores Liquor Zen Buffet Restaurants Beer and Wine Note: Firms listed alphabetically. Period April 2011 Thru March 2012 Source: Hinderliter, de Llamas & Associates, State Board of Equalization 97 City of Temple City Direct and Overlapping Debt Source: Hal. Coren 8 Cone, Los Angeles County Assessor Combined 2011/12 Lien Date Tax Rolls •-j Percent Grow bonded applicable Netbonded debt balance In city debt Direct debt 27001 Refunding Revenue Bonds $ 6.900.000 100 000 6,900.000 Total Direct Debt 6,90,000 Overlapping debt 33705 Metrohtan Water District (1) 94,031,705 0400 375,998 47351 El Monte City SD DS 1999 Ser A 1,510,000 10268 155,052 47353 EI Monte Dist DS 1999 Be, C 855.000 10268 87,795 47354 EI Monte School District 2004 Refunding Bonds 5,795,000 10268 595052 47355 El Monte School District 1999 Senes D 14,160.000 10268 1,454,002 47356 El Monte City SD DS 2005 Ref Bonds 18,066,265 10268 1,855.112 47357 EI Monte City SD DS 2004 Senes 6 14.434,439 10258 1,482,182 4736D El Monte School District DS 2008 Series A 9,120,000 10268 936,476 47361 El Monte School Dis120D8 Senes A-1 18,540,000 10268 1,903,757 62951 Rosemead School Distinct DS 2000 Senes B 5.275,00 2-705 142,681 62952 Rosemead School DS 2000 Senes C 6,525.00 2 705 176,492 62953 Rosemead School DS 200 Series D 9,665.00 2.705 261,424 629,54 Rosemead School DS 2008 Senes A 13,495,000 2 705 365,020 74551 EI Monte Union HS Dist 2002 Senes A 2,065.00 5.951 122.883 745.52 EI Monte Union HS Dist Senes B 3,485,000 5951 207,384 74553 EI Monte Union HS Dist 2006 Refund Bands 35,718,692 5951 2.125.535 745.54 EI Monte Un Hi DS 2002 Be, C 28,705.00 5 951 1,708,167 74555 EI Monte Union High DS 208 Set 53,225,754 5951 3,167,340 80552 L A CCD DS 2003 Senes B 68,950.000 0 019 13.015 80555 L A CCD DS 2003 Taxable Senes 20048 15,010.00 0 019 2,833 805.56 L A CCD DS 2001 Taxable Senes 2004A 74,615,00 0 019 14.084 80557 IACC US Refunding 2001 Senes 2005A 430,410.00 0,019 81,242 805,58 LA CCD DS 2001, 2006 Series B 382,57500 0 019 72,213 80559 LA CCD DS 2001, 206 Senes C 284,050.000 0 019 53,616 805,0 LACC DS 2001. 2008 Ser E-1 275,5801 0019 52,017 805 62 LACC DS 2003, 2008 Ser F-1 344,915.00 0 019 65,104 80563 LACC DS 2003, 2008 Taxable Ser F-2 3.805.00 0 019 718 805.64 LACC DS 2008. 2009 Taxable Ser A 35,000.00 0019 66,064 805 55 LACC DS 2008, 2009 Taxable Ser B 75,00.00 0,019 14,157 80566 LACC Debt 2008, 2010 Tax Senes D 175,000,00 0 019 33,032 80 67 LACC Debt 2010 Tax Ser E (BABB) 90,00.00 0,019 169.879 80568 LACC DS 2008, 2010 Senes C 125,000,00 D 019 23,594 81250 Pasadena Area CCD DS 202 S-A 980,00 5 627 55,142 81251 Pasadena CCD DS 2006 Senes B 47.560.00 5 627 2,676,05 81252 Pasadena CCD DS 2006 Refunding Bond Senes C 8,660,976 5 627 487,285 81253 Pasadena CCD DS 2002, 206 Ser D 26,615,00 5 715 1,521,123 812 54 Pasadena CCD 2002, 2009 Seres E (BARS) 25,295.00 5 627 1,423,293 817.51 Arcade Unified DS 1993 Series A 5,331,704 3 174 169,232 81753 Arcadia Unified DS 1993 Series C 1,357,666 3 174 43,093 81754 Amodio Unified DS Ref Bonds 1993 2005 Senes A 3.370.00 3174 106,966 817.55 Arcade UM DS 2006 Ser A 159,425,423 3174 5,00,263 92051 San Gabriel USD DS 2006 Senes A 1,832.60 2 576 47,210 92052 San Gabriel LED DS 2002 Senes A 5,128,892 2 576 132,127 920.53 San Gabriel USD DS 205 8 2012 Ref Bonds 26,355,000 2 576 678.942 920 54 San Gabriel USD DS 2002 Ser 2007 A 10.727.878 2 576 276,365 920 55 San Gabriel USD DS 208 Ser A 34,355709 2 576 885,077 94751 Temple Gty Umfietl DS 1998 Senes A 3,08,249 70804 2,123.956 94752 Temple Gly USD DS 1998 Senes B 4,956.501 70 604 3,499,507 94753 Temple Gty USD DS 2005 Refunding Bond 9,60,000 70 604 6,778,022 Total overlapping debt 43,747,619 Total direct and overlapping debt _ $ 50,647,619 2011-2012 Assessed Valuation $ 34,518,809,997 Debt to Assessed Valuation Ratios Direct debt 000% Overlapping debt 127% Total debt 127% (1) This fund is a portion of a larger agency, and Is responsible for debt in areas outside the Cry. (2) Debt figures include general obligation debt which Is being repaid through property taxes. ft excludes revenue, mortgage revenue, interim financing obligations, non -banded capital lease obligations, and certificates of participation Source: Hal. Coren 8 Cone, Los Angeles County Assessor Combined 2011/12 Lien Date Tax Rolls •-j City of Temple City Demographic and Economic Statistics — Last Ten Fiscal Years Notes and Data Sources PopulationCalifornia State Department of Finance Unemployment Data California Employment Development Department 2002-2010 Income, Age, and Education Data ESRI- Demographic Estimates ore based on the last available Census Projections are developed by incorporating all of the prior census data release to date Demographic Data is totalled from Census Block Groups that osedap the City's boundaries 2011 - Income. Age, Education Data- US Census Bureau, most recent American Community Survey 44 Personal Per Capita %of Pop 25+ I %of Pop 25+ Calendar Income Personal Unemployment with with Year Population (In Thousands) Income Rate Median Age High School Degre elll Bachelor's Degree 2002 34,296 $702,133 $20.473 43% 2003 34.629 $722,827 $20,873 44% 2004 35,202 $764,170 $21.708 41% 2005 35,396 $796,872 $22,513 34% 2006 35,336 $837,785 $23,709 30% 2007 35,360 $866,460 $24,504 321/. 2008 35,423 I $874,513 $24,688 4 8% 2009 35.615 $858,744 I $24,112 75% 405 871% 324% 2010 35,892 I $1,000,992 $27,889 82% 408 863% 322% 2011 35,749 $936.409 $26.194 8 0 % 406 865% I 360% Notes and Data Sources PopulationCalifornia State Department of Finance Unemployment Data California Employment Development Department 2002-2010 Income, Age, and Education Data ESRI- Demographic Estimates ore based on the last available Census Projections are developed by incorporating all of the prior census data release to date Demographic Data is totalled from Census Block Groups that osedap the City's boundaries 2011 - Income. Age, Education Data- US Census Bureau, most recent American Community Survey 44 City of Temple City Construction Activity - Last Ten Fiscal Years Source: City of Temple City Community Development Department * Available from January to November only 100 New Calendar New New value of year ended Residential Commercial Total Demolitions Construction 2003 $ 24,402,465 522,500 24,924,965 WA WA 2004 13,648,309 1,046,700 14,695,009 WA NtA 2005 22,514,787 1,916,300 24,431,087 238,100 24,192,987 2006 21,957,999 1,980,100 23,938,099 258,150 23,679,959 2007 25,630,380 3,240,390 28,870,770 209,560 28,661,210 2008 20,980,153 1,340,500 22,320,653 123,390 23,537,763 2009 19,127,998 3,892,187 23,020,185 99,000 22,921,185 2010 20,200,934 2,156,535 22,357,469 162,000 22,195,469 2011 23,754,355 1,175,540 24,929,895 139,048 24,790,847 2012* 19,536,413 2,490,427 22,026,840 144,000 21,882,840 Source: City of Temple City Community Development Department * Available from January to November only 100 City of Temple City Full -Time Equivalent City Employees by Function - Last Ten Fiscal Years Function 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 General Government Full Time 10.86 10.86 10.86 8.85 7.85 7.80 780 7.80 7.80 7.80 Part Time 0.72 1.03 0.79 0.83 0.86 0.64 0.61 0.65 0.85 3.11 11.58 11.89 11 65 9.68 8.71 844 8.41 845 865 10.91 Community Development Full Time 600 8.00 8.00 7.10 8.10 7.15 7.15 7.15 6.10 6.10 Part Time 1.14 1.20 0.00 000 0.01 0.44 0.16 0.26 0.06 1 64 7 14 9.20 8.00 7.10 8.11 759 7.31 7.41 616 7.74 Parks & Recreation Full Time 15.19 15.19 15.09 14.70 1270 11.70 11 70 11.70 12.15 12.15 Part Time 10.58 10.69 11.18 11.78 16.68 19.56 21.88 21.46 18.96 22.66 25.77 2588 26.27 26.48 2938 31.26 33.58 3316 31.11 34.81 Public Safely Full Time 5.70 570 5.60 4.40 4.40 5.40 5.40 5.40 705 7.05 Part Time 0.94 0.38 0.00 0.00 0.00 0.00 0.00 1.43 2.33 4.22 6.64 6.08 5.60 4.40 4.40 5.40 540 683 9.38 11.27 Public Works Full Time 3.25 3.25 3.45 2.95 2.95 3.95 3.95 3.95 2.90 2.90 Part Time 0.36 0.16 0.07 000 0.03 0.04 0.00 0.34 0.00 0.28 3.61 3,41 3.52 295 2.98 3.99 395 4.29 2.90 318 Full Time Total 41.00 43.00 43.00 38.00 36.00 3600 36.00 36.00 36.00 36.00 Part Time Total (1) 13.74 13.46 12.04 12.61 17.58 20.68 22.65 24.14 22.20 31.91 TOTAL 54.74 56.46 5504 50.61 53.58 56.68 58.65 60.14 58.20 67.91 Note: (1) 2,080 Fours of Part Time equals to 1 Full Time Equivalent Source: City of Temple City Admmistrabve Sermces Department 101 y V N N M O M 00 V Ci m m r a� d tll m y 0 o M Fjy o mo N M o N O) c OC � F M_ U N o v co o m J N IV r C W m O M w W M M O V N R N � 3 LL� O N C N n V m N � O r 0 N+ R V n M m N eD V o m n m C _ N l0 0 n m M m tm C z d N V M tO ? a O O M M N � n0 a O D N O Z O M r r d N � M N W n ¢ N C E E � E m E Y ry2p� c O m E 0 o .R E m m d o K T � � C E y d E � E a T0 U A c U v U E N E � E H m F O Q O �_ N TU J U U 0 O N O e