HomeMy Public PortalAboutAudit Report - District- FY01MIDPENINSULA REGIONAL
OPEN SPACE DISTRICT
Independent Auditor's Reports and
General -Purpose Financial Statements
For the Year Ended March 31, 2001
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
FOR THE YEAR ENDED MARCH 31, 2001
Table of Contents
Page(s)
Independent Auditor's Report 1
General -Purpose Financial Statements:
Combined Balance Sheet 2
Statement of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual — General Fund 3
Notes to General -Purpose Financial Statements 4 - 11
Other Report:
Independent Auditor's Report on Compliance and on
Internal Control Over Financial Reporting Based on an
Audit of General -Purpose Financial Statements Performed
in Accordance with Government Auditing Standards 12
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Macias, Gini & Company u
Cal -titled Pub41c Accountants and
Management Consultants
Board of Directors
Midpeninsula Regional Open Space District
P4711105
Kenneth A. Macias, Managing Partner
Ernest J. Gini
Kevin J. O'Connell
Richard A. Green
Jan A. Rosati
James Godsey
INDEPENDENT AUDITOR'S REPORT
Mt. Diablo Plaza
2175 N. California Boulevard
Suite 620
Walnut Creek, CA 9459(-3565
925.274.0190
925.274.3819 rax
www.maciasgini.cant
We have audited the accompanying combined balance sheet of Midpeninsula Regional Open Space District (the
District), as of March 31, 2001, and the related statement of revenues, expenditures and changes in fund balance —
budget and actual for the year then ended. These general-purpose financial statements are the responsibility of the
District's management. Our responsibility is to express an opinion on these general-purpose financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
general-purpose financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the general-purpose financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation_ We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the general-purpose financial statements referred to above present fairly, in all material respects, the
financial position of the District as of March 31, 2001, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated May 18, 2001 on our
consideration of the District's internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction with this report in considering
the results of our audit.
ivIACIAS, GI I & COMPANY LLP
C cw•. ✓r•
L 1.
T: e �d Accountants
Walnut Creek, California
May 18, 2001
OFFICE LOCATIONS
Sacramento • Los Angeles • Fresno • San Francisco Bay Area
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M DPENINSULA REGIONAL OPEN SPACE DISTRICT
COMBINED BALANCE SHEET
March 31, 2001
Account Groups
General General Total
General Fixed Long -Term (Memorandum
Fund Assets Debt Only)
ASSETS
Cash and investments $ 29,791,784 $ - $ $ 29,791,784
Restricted cash and investments 3,949,275 - - 3,949,275
Receivables:
Taxes 4,251,654 - - 4,251,654
Interest 386,891 - - 386,891
Note 279,077 - 279,077
Prepaid items 27,332 - 27,332
Land 200,921,609 - 200,921,609
Structures and improvements 9,503,957 9,503,957
Equipment - 2,147,939 2,147,939
Amount available in General Fund - 3,949,275 3,949,275
Amount to be provided for retirement
of general long-term debt 113,642,058 113,642,058
TOTAL ASSETS $ 38,686,013 $ 212,573,505 $ 117,591,333 $ 368,850,851
LIABILTUES AND FUND EQUITY
Liabilities:
Accounts payable $ 260,502 $ - $ $ 260,502
Accrued liabilities 290,196 - - 290,196
Deposits 31,775 - - 31,775
Deferred revenue 690,518 - 690,518
Promissory notes - 11,863,108 11,863,108
Certificates of participation - 15,645,000 15,645,000
Revenue bonds - 90,083,225 90,083,225
Total liabilities 1,272,991
Fund Equity:
Investment in general fixed assets
Fund balances:
Reserved for debt service 3,949,275
Reserved for prepaid items 27,332
Unreserved, undesignated 33,436,415
117,591,333 118,864,324
212,573,505 - 212,573,505
3,949,275
27,332
33,436,415
Total fund equity 37,413,022
212,573,505 - 249,986,527
TOTAL LIABILITIES
AND FUND EQUITY $ 38,686,013 $ 212,573,505 $ 117,591,333 $ 368,850,851
See accompanying notes to general-purpose financial statements.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - GENERAL FUND
YEAR ENDED MARCH 31, 2001
Revenue:
General property tax
Other property taxes
Investment income
Grants and donations
Rental income and other
Total revenue
Expenditures:
Salaries and benefits
Professional services
Vehicle expenditures
Insurance
Communications and publications
Site supplies and services
Utilities and communication
Other
Capital outlay:
Land
Structures and improvements
Equipment
Debt service:
Principal retirement
Interest and fiscal charges
Total expenditures
EXCESS OF REVENUE UNDER EXPENDITURES
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
Budget Actual
$ 14,809,000
190,000
1,750,000
857,000
1,158,000"'
18,764,000
Variance
$ 15,840,840 $ 1,031,840
200,233 10,233
2,828,377 1,078,377
472,827 (384,173)
2,381,959 1,773,959
21,724,236 2,960,236
4,644,782
603,875
197,200
185,050
150,375
286,950
151,230
411,740
20,125,000
697,150
266,900
1,644,449
4,434,362
33,799,063
4,339,325
605,133
174,318
200,172
135,045
285,449
145,777
370,931
13,656,628
212,852
250,456
1,619,450
4,434,363
26,429,344
305,457
(1,258)
22,882
(15,122)
15,330
1,501
6,008
40,809
6,468,372
484,298
16,444
24,999
(1)
7,369,719
$ (15,035,063)
(4,705,108)
42,118,130
$ 37,413,022
See accompanying notes to general-purpose financial statements.
$ 10,329,955
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GENERAL-PURPOSE FINANCIAL STATEMENTS
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS
YEAR ENDED MARCH 31, 2001
NOTE A: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Midpeninsula Regional Open Space District (the District) was formed in 1972 to acquire and preserve open
space land in the northern and western portions of Santa Clara County. In June 1976, the southern and eastern
portions of San Mateo County were annexed to the District. The District annexed a small portion of the northern tip
of Santa Cruz County in 1992.
The District and the County of Santa Clara entered into a joint exercise of powers agreement dated May 1, 1996
creating the Midpeninsula Regional Open Space District Financing Authority (the Authority), pursuant to the
California Government Code. The District is financially accountable for the Authority, as it appoints a voting
majority; is able to impose its will on the Authority; and the Authority provides specific financial benefits to, and
imposes specific financial burdens on, the District. The Authority was formed for the sole purpose of providing
financing assistance to the District to fund the acquisition of land to preserve and use as open space. As such, the
Authority is an integral part of the District, and accordingly, all of the Authority's activity is blended within the
accompanying general-purpose financial statements.
Fund Accounting
The accounts of the District are organized on the basis of one fund and account groups, each of which is considered a
separate accounting entity. All resources and operations of the District, including the Authority, are reported in the
General Fund. The District reports its fixed assets in the General Fixed Assets Account Group and reports its long-
term liabilities in the General Long -Term Debt Account Group.
Basis of Accounting
The records of the District are maintained on the modified accrual basis of accounting. Under this method, revenues,
including property taxes, are generally recognized in the period they become measurable and available, and
expenditures are generally recognized when the obligation is incurred, except for interest on long-term debt, which is
recognized as an expenditure when due. Substantially all revenues are susceptible to accrual.
Budgets and Budgetary Accounting
The Board of Directors of the District adopts an annual operating budget on or before March 31 for the ensuing
fiscal year. The Board of Directors may amend the budget by resolution during the fiscal year. All appropriations
lapse at the end of the fiscal year. The budget is presented on a basis consistent with generally accepted accounting
principles.
Investments
The District records investment transactions on the trade date. Investments are reported at fair value. Fair value is
defined as the amount that the Authority could reasonably expect to receive for an investment in a current sale
between a willing buyer and seller and is generally measured by quoted market prices.
General Fixed Assets
Land, structures, improvements and equipment purchased by the District are stated at cost in the General Fixed
Assets Account Group. Assets donated to the District are stated at their estimated fair market value as of the date
received. Depreciation is not recorded for fixed assets.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2001
Property Tax Levy, Collection and Maximum Rates
The State of California (State) Constitution Article XIIIA provides that the combined maximum property tax rate on
any given property may not exceed one percent of its assessed value unless voters have approved an additional
amount for general obligation debt. Assessed value is calculated at 100 percent of market value as defined by
Article XIIIA and may be increased by no more than two percent per year unless the property is sold or transferred.
The State Legislature has determined the method of distribution of receipts from the one percent tax levy among the
counties, cities, school districts and special districts.
The District receives property tax revenues from Santa Clara and San Mateo Counties. The Counties assess
properties and bill for the collection of property taxes as follows:
Secured Unsecured
Valuation dates
Lien/Levy dates
Due dates
Delinquent as of
March 1
July 1
50% on November 1
50% on February 1
December 10 (for November)
April 10 (for February)
March 1
March 1
July 1
August 31
Taxes are secured by liens on the property being taxed. The term "unsecured" refers to taxes on personal property
other than land and buildings. Supplemental property taxes are levied based on changes in assessed values between
the date of real property sales and construction and the next normal assessment date.
Property tax revenue is recognized in accordance with GASB Interpretation 5, Property Tax Revenue Recognition in
Governmental Funds, which states that such revenue be recorded when it becomes measurable and available.
Available means collected within the current period or expected to be collected soon thereafter to be used to pay
liabilities of the current period (not to exceed 60 days).
Compensated Absences
Vacation pay is accrued when earned and is included in the General Fund as accrued liabilities. Sick leave is
recorded as an expenditure when paid.
Use of Estimates
The preparation of the general-purpose 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 general-purpose financial statements, as
well as revenues and expenses during the reporting period. Actual results could differ from those estimates.
Total (Memorandum Only) Column
The total column in the combined balance sheet is captioned as "Total (Memorandum Only)" because it does not
represent consolidated financial information and is presented only to facilitate financial analysis. The column does
not represent information that reflects financial position or results of operations in accordance with generally
accepted accounting principles.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2001
NOTE B: CASH AND INVESTMENTS
The District's cash and investments consist of the following at March 31 2001:
Unrestricted $ 29,791,784
Restricted 3,949,275
Total cash and investments $ 33,741,059
Deposits
At March 31, 2001, the carrying amount of the District's deposits was $3,952,495 and the bank balance was
$4,202,924. The difference between the bank balance and the carrying amount represents outstanding checks and
deposits in transit. Of the bank balance, $100,000 was covered by federal depository insurance and $4,102,924 was
collateralized by the pledging financial institutions as required by Section 53652 of the California Government Code.
Under the California Government Code, a financial institution is required to secure deposits in excess of those
covered by federal depository insurance made by state or local governmental units by pledging securities held in the
form of an undivided collateral pool. 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 allows financial institutions to
secure public deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public
deposits. The collateral must be held at the pledging financial institution's trust department or other bank, acting as
the pledging financial institution's agent, in the District's name.
Investments
Statutes authorize the District to invest in the County of Santa Clara Treasurer's investment pool, obligations of the
U.S. Treasury or its agencies, certificates of deposit, bankers' acceptances, commercial paper and mutual funds
invested in U.S. Government securities. The District did not enter into any reverse repurchase agreements during the
year ended March 31, 2001.
Information is not available on whether the various mutual funds and the County of Santa Clara Treasurer's
investment pool in which the District has invested used, held or wrote derivative financial products during the year
ended March 31, 2001. The County of Santa Clara Treasurer's investment pool is subject to regulatory oversight by
the Treasury Oversight Committee, as required by California Government Code Section 27134. The fair value of the
District's position in the pool is the same as the value of the pool shares.
Provisions of the District's bond trust agreements require that certain restricted accounts be established. These
accounts are held by trustees for the repayment of debt and as reserves. These funds have been invested only as
permitted by specific state statutes and applicable resolutions or bond indentures. The cash equivalents and
investments held by trustees have been classified as restricted on the balance sheet because their use is limited by
bond covenants.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2001
Custodial Credit Risk
The District's investments are categorized below to give an indication of the level of custodial credit risk assumed by
the District at March 31, 2001. Category 1 includes investments that are insured or registered, or with securities held
by the District or its agent in the District's name. Category 2 includes uninsured and unregistered investments, with
securities held by the Counterparty's trust department or agent in the District's name. Category 3 includes uninsured
and unregistered investments, with securities held by the counterparty, or by its trust department or agent, but not in
the District's name. There were no Category 1 or 3 investments at March 31,2001.
The District's investments were classified as follows at March 31, 2001:
Fair Value
Category 2 Investments:
U.S. Government securities
Investments not subject to categorization:
County of Santa Clara Treasurer's investment pool
Mutual funds
$ 3,416,083
26,295,374
77,107
Total $ 29,788,564
NOTE C: NOTE RECEIVABLE
On December 17, 1997, the District sold title to and possession of a 50 -year fee determinable estate 10 -acre parcel
near the Skyline Ridge Open Space Preserve. The District financed the purchaser in the amount of $288,800 over 25
years at a rate of 10% per annum. Monthly principal and interest payments of $2,624 are due on the 1s` of each
month and late if not paid by the 10a', with the final payment scheduled on December 1, 2022. The outstanding
balance at March 31, 2001 is $279,077.
NOTED: FIXED ASSETS
Changes in the General Fixed Assets Account Group for the year ended March 31, 2001, were as follows:
Balances Balances
April 1, 2000 Additions Retirements March 31, 2001
Land $ 187,264,981 $ 13,656,628 $ - $ 200,921,609
Structures & improvements 9,291,105 212,852 - 9,503,957
Equipment 1,937,135 250,456 39,652 2,147,939
$ 198,493,221 $ 14,119,936 $ 39,652 $ 212,573,505
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2001
NOTE E: LONG-TERM DEBT
Changes in long-term debt for the year ended March 31, 2001 is presented below.
Balance Additions Balance
April 1, 2000 and Accretion Retirements March 31, 2001
Promissory Notes:
1995 $ 11,300,000 $ $ 100,000 $ 11,200,000
Hosking Property 500,000 - - 500,000
Aine Property 118,058 - 9,861 108,197
Lazenby Property 59,301 5,160 54,141
Corn Property 5,199 4,429 770
11,982,558 119,450 11, 863,108
1993 Certificates of Participation 16,105,000 460,000 15,645,000
Revenue Bonds:
1996 30,118,014 484,991 665,000 29,938,005
1999 30,535,490 788,798 375,000 30,949,288
1999, Second Issue 28,484,335 711,597 29,195,932
89,137,839 1,985,386 1,040,000 90,083,225
Total $ 117,225,397 $ 1,985,386 $ 1,619,450 $ 117,591,333
The following is a detail of the long-term debt of the District as of March 31, 2001:
Promissory Notes
• 1995 Notes, principal balance of $11,200,000, comprised of $1,055,000 of Serial Notes, bearing interest at
rates ranging from 6.15% to 7%, maturing annually from September 1, 2001 through September I, 2009,
and $10,145,000 of 7% term notes due on September 1, 2014.
• Four land contract promissory notes, aggregating debt of $663,108 bearing interest at fixed rates from 6%
to 7%, maturing at different intervals through August 31, 2008, and are collateralized by land.
1993 Certificates of Participation
• 1993 Certificates of Participation, includes serial certificates with a principal balance of $5,390,000,
bearing interest at rates ranging from 4.75% to 5.6%, maturing annually from September 1, 2001 through
September 1, 2009. These certificates also include $4,345,000 of 5.70% term certificates due on September
1, 2014 and $5,910,000 of 5.75% term certificates due on September 1, 2001.
Revenue Bonds
• 1996 Bonds, principal balance of $29,938,005, comprised of $16,760,000 in current interest bonds, bearing
interest at rates ranging from 4.6% to 5.75% maturing annually from September 1, 2001 through September
1, 2012, This issue also includes $4,900,000 of current interest term bonds, bearing interest at 5.9% due
September 1, 2014 and $8,278,005 of capital appreciation bonds, bearing interest at rates ranging from
6.2% to 6.3%, maturing annually from September 1, 2015 through September 1, 2026. Accretion on the
capital appreciation bonds as of March 31, 2001 is $484,991.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2001
• 1999 Bonds of $30,949,288, comprised of $15,400,000 of current interest bonds, bearing interest at rates
ranging from 3.75% to 4.625%, maturing annually from September 1, 2001 through September 1, 2014.
This issue also includes $15,549,288 capital appreciation bonds, bearing interest at rates ranging from 5.2%
to 5,4%, maturing annually from September 1, 2015 through September 1, 2030. A portion of the proceeds
were used to advance refund the 1992 Promissory Notes. On March 31, 2001, the 1992 Promissory Notes
considered defeased have an outstanding balance of $6,530,000. Accretion on the capital appreciation
bonds as of March 31, 2001 is $788,798.
• On August 30, 1999, the Authority on behalf of the District issued $28,366,961 of 1999 Revenue Bonds,
second issue. Of these proceeds, $12,083,145 was used to repay the 1990 Promissory Notes. These bonds
comprised of $10,935,000 current interest bonds, beginning interest at rates ranging from 4.25% to 5.2%
maturing annually from August 1, 2002 through August 1, 2012. This issue also includes $6,185,000 of
current interest term bonds, bearing interest at 5.25% due August 1, 2013 through August 1, 2017 and
$12,075,932 capital appreciation bonds, bearing interest at rates ranging from 6.2% to 6.35%, maturing
annually from August 1, 2018 through August 1, 2031. Accretion on the capital appreciation bonds for the
year ended March 31, 2001 was $711,597.
All debt is payable from limited ad valorem property taxes levied on all taxable property within the District. The
District has not pledged its full faith and credit of taxing power for payment of the debt, nor is the debt collateralized
by any District property, except for the four notes totaling $663,108 described above.
Maturities of long-term debt are as follows:
Year ending March 31,
2002 $ 6,155,802
2003 7,264,981
2004 6,890,276
2005 7,062,651
2006 7,237,144
Thereafter 195,395,825
Total debt service 230,006,679
Less interest (20,463,574)
Less future accretion ( 91,951,772)
Total outstanding long-term debt $ 117,591,333
NOTE F: RENTAL INCOME
The District leases certain land and structures to others under operating leases with terms generally on a month -to -
month basis. Rental income of $700,293 was received during the year ended March 31, 2001.
NOTE G: EMPLOYEES' RETIREMENT PLAN
Plan Description — The District's defined benefits pension plan, Public Employee Retirement System (PERS)
provides retirement and disability benefits, annual cost -of -living adjustments, and death benefits to plan members
and beneficiaries. The PERS is part of the Miscellaneous portion of the California Public Employee Retirement
System (CalPERS), an agent multiple employer plan administered by CalPERS, which acts as a common investment
and administrative agent for participating public employers within the State of California. A menu of benefit
provisions as well as other requirements are established by State statutes within the Public Employees' Retirement
Law. The District selects optional benefit provisions from the benefit menu by contracts with CalPERS and adopts
those benefits through District resolution. CaIPERS issues a separate comprehensive annual financial report. Copies
of the CalPERS' annual financial report may be obtained from the CalPERS Executive Office — 400 P Street —
Sacramento, CA 95814.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2001
Funding Policy — Active plan members in the PERS are required to contribute 7% of their annual covered salary,
which is currently paid by the District on behalf of its employees. The District is required to contribute the
actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and
assumptions used are those adopted by the CaIPERS Board of Administration. The required employer contribution
rate for the period from April 1, 2000 to June 30, 2000 was 3.1% and for the period from July 1, 2000 to March 31,
2001 was 0.0%. The contribution requirements of the plan are established by State statute and the employer
contribution rate is established and may be amended by CaIPERS.
Annual Pension Cost — For fiscal year ended March 31, 2001, the District's annual pension cost was $261,223 and
the District actually contributed $261,223. The required contribution for fiscal year ended March 31, 2001 was
determined as part of the June 30, 1998 actuarial valuation using the entry age normal actuarial cost method with the
contributions determined as a percent of pay. The actuarial assumptions included (a) 8.25% investment rate of return
(net of administrative expenses); (b) projected -salary increases that vary by duration of service; and (c) 2% cost -of -
living adjustment. Both (a) and (b) include an inflation component of 3.5%. The actuarial value of the District's
assets was determined using a technique that smoothes the effect of short-term volatility in the market value of
investments over a three-year period. The District's unfunded actuarial excess assets are being amortized as a level
of percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 1998 was 16
years.
Three -Year Trend Information for the Fund
Fiscal Year ending March 31,
1999
2000
2001
Requ
(A)
Entry Age (B)
Actuarial Actuarial Actuarial
Valuation Accrued Asset
Date * Liability Value
Annual
Pension
Cost (APC)
$ 338,599
335,404
261,223
Percentage
Of APC
Contributed
ed Supplementary Information
(C)
Unfunded
Actuarial
Accrued
Liability
(Excess Assets)
[(A) — (B)]
6/30/96 $ 4,715,902 $ 4,705,140
6/30/97 5,078,750 5,676,800
6/30/98 5,578,369 7,009,702
(D)
Funded
Ratio
[(B) / (A)]
$ 10,762 99.8%
(598,050) 111.8%
(1,431,333) 125.7%
100%
100%
100%
(E)
Covered
Payroll
$ 2,361,398
2,413,032
2,508,891
* There were no changes in actuarial assumptions since the prior year's actuarial valuation.
NOTE Ii: EXPENDITURES IN EXCESS OF APPROPRIATIONS
Net
Pension
Obligation
(F)
Unfunded
Actuarial
Liability as a
Percentage of
Covered Payroll
[(C) / (E)]
0.456%
(24.784%)
(57.050%)
The professional service expenditures exceeded the budget by $1,258 due to the hire of a planning consultant for an
unexpected improvements need at Kobcenell Driveway. Insurance expenditures exceeded the budget by $15,122
due mostly to the additional insurance premium for directors and officers.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO GENERAL-PURPOSE FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED MARCH 31, 2001
NOTE I: RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries
to employees; and natural disasters. The District manages and finances these risks by purchasing commercial
insurance. There have been no significant reductions in insurance coverage from the previous year, nor have settled
claims exceeded the District's commercial insurance coverage in any of the past three years.
NOTE J: CONTINGENCIES
The District is named in certain claims and litigation. In the opinion of management, after consultation with counsel,
the liability, if any, resulting therefrom will not have a material effect on the District's financial position.
During the year, the District was contacted by federal and State regulatory agencies, in a cooperative effort, to
participate in the remediation of mercury in the Guadalupe River Watershed. The District is one of many
participants in this effort. The responsibility for the District's portion of the remediation resulted from the purchase
of property in 1995. At the time of purchase, the seller discounted the selling price in consideration of potential
remediation costs associated with mercury contamination and other property defects discovered by the District
during the due -diligence period. The regulatory agencies are in the process of evaluating the remediation costs and
then must determine the allocation of those costs among the participants. The cost of remediation cannot be
reasonably estimated at this time, and accordingly, the general-purpose financial statements do not reflect a loss for
the cost of remediation.
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OTHER REPORT
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Macias, Gini & Company it,
Ceriilied Public Accountanis and
Managernenl Cenaultanls.
Board of Directors
Midpeninsula Regional Open Space District
Pill lrrr5 Mt. Diablo Plaza
Kenneth A. Macias, Managing Partner 2175 N. California Boulevard
Ernest J. Gini Suite 620
Kevin J. O'Connell Walnut Creek, CA 94596-3565
Richard A, Green
Jan A. Rosati
James V. Godsey
925.274.0190
925.274.3819 FAX
www.maciasgini.com
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON
INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN
AUDIT OF GENERAL-PURPOSE FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
We have audited the general-purpose financial statements of Midpeninsula Regional Open Space District (the
District) as of and for the year ended March 31, 2001, and have issued our report thereon dated May 18, 2001. We
conducted our audit in accordance with generally accepted auditing standards and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States.
Compliance
As part of obtaining reasonable assurance about whether the District's general-purpose financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts
and grants, noncompliance with which could have a direct and material effect an the determination of general-
purpose 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 that are required to be reported under Government Auditing Standards.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the District's internal control over financial reporting in order
to determine our auditing procedures for the purpose of expressing our opinion on the general-purpose financial
statements and not to provide assurance on the internal control over financial reporting. Our consideration of the
internal control over financial reporting would not necessarily disclose all matters in the internal control over
financial reporting that might be material weaknesses. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not reduce to a relatively low level the risk that
misstatements in amounts that would be material in relation to the general-purpose financial statements being audited
may occur and not be detected within a timely period by employees in the normal course of performing their
assigned functions. We noted no matters involving the internal control over financial reporting and its operation that
we consider to be material weaknesses.
This report is intended solely for the information and use of management and the District's Board of Directors and is
not intended to be and should not be used by anyone other than these specified parties.
MACIAS, GINI & COMPANY LLP
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Certified Public Accountants
Walnut Creek, California
May 18, 2001
OFFICE LOCATIONS
Sacramento • Los Angeles • Fresno • San Francisco Bay Area
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