HomeMy Public PortalAboutAudit Report - District- FY95MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
AUDIT REPORT
MARCH 31, 1995
Xy Vargas and Company
certified public accountants
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT
COMBINED BALANCE SHEET
PAGE
1
2
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND 3
NOTES TO FINANCIAL STATEMENTS 4-10
Vargas and Company
certified public accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Midpeninsula Regional Open Space District
We have audited the accompanying combined balance sheet of Midpeninsula Regional Open Space
District as of March 31, 1995, and the related statement of revenues, expenditures and changes in
fund balance - budget and actual - general fund for the year then ended. These financial statements
are the responsibility of District management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in all material respects, the
financial position of Midpeninsula Regional Open Space District as of March 31, 1995, and the
results of its operations for the year then ended in conformity with generally accepted accounting
principles.
Yak?iv cud etmtbamy,
Vargas and Company
June 23, 1995
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601 North First Street / San Jose, California 95112 / (408) 298-1700 / FAX (408) 293-9598
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MIDPENINSUL A RE GIONAL OPEN SPACE DISTRICT
COMBINED B ALANCE SHEET
March 31.1995
Account Groups
Ge neral General Total
G en eral Age ncy Fixed L ong -Term (Memorandum
ASSETS Fund Fund Ash Debt Onl y)
Cash, including interest -beari ng deposits and c ash equivale nts $ 6,874,337 $ $ $ $ 6,874,337
Restricted cash and cash equivalents 4,886,199 4,886,199
Restricted investments 1,037,698 1,037,698
Property tax and other receiv ables 4,653,175 4,653,175
Prepaid expenses 17,577 17,577
Land 145,350,400 145,350,400
Structu res and impro vements 6,058,691 6,058,691
Equ ipmen t 1,312,573 1,312,573
A mount to be provided for retirement of general long-term debt 64.811 .766 64.811.766
TO TAL ASSETS $ 16.431.288 $ 1.037 .698 $ 152.721.664 $ 64 .811.766 $ 235.002 416
LIABILITIES AND FUND EQUITY
LIABILI 1ES:
Accoun ts payable $ 221,962 $
Accrued lia bilities 218,133
D eposits 25,490
Deferred reven ue 1,356,672
D eferred compen sation
Long-term debt
1,037,698
$ $ 221,962*
218,133
25,490
1,356,672
1,037,698
64.811 .766 64.811 .766
Total liabilities 1. 822.257 1.037 .698 64.811 .766 67 671 .721
FUN D EQUITY:
Inv estment in general fixed assets 152,721,664 152,721,664
Fund balan ce 14.609.031 14.609.031.
Total fun d equity 14.609. 031 152.721 .664 167 .330.695
TOTAL LIA BILITIES AND FUND EQUITY $ 16.431.288 $ 1.037. 698 $ 152.721.664 $ 64.811.766 $ 235 .002.416
See n otes to fin ancial statemen ts.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND
FOR THE YEAR ENDED MARCH 31, 1995
REVENUES:
General property tax
State grants
Aid from government agencies
Interest
Rental income and other
Total
EXPENDITURES:
Salaries and benefits
Professional services
Vehicle expenses
Rent
Site supplies and services
Utilities and communications
Other
Acquisitions:
Land
Structures and improvements
Equipment
Debt service:
Principal retirement
Interest
Total
EXCESS OF EXPENDITURES OVER REVENUES
OTHER FINANCING SOURCES (USES):
Proceeds from issuance of long-term debt, net
Proceeds from sale of land
Total other financing sources (uses)
REVENUES AND OTHER FINANCING SOURCES
OVER (UNDER) EXPENDITURES
FUND BALANCE, April 1, 1994
FUND BALANCE, March 31, 1995
Budget Actual
$ 9,960,000
81,000
180,000
390,000
473,000
11,084,000
2,952,650
407,700
145,700
10,400
154,550
162,650
491,100
7,973,500
706,000
110,200
2,463,240
3,384,760
18,962,450
(7,878,450)
4,875,000
2 500,000
7,375,000
(503,450)
13,140,473
$12 637 023
See notes to financial statements.
$10,198,973
1,351,520
249,574
618,438
651,490
13,069,995
2,868,447
310,985
141,352
11,559
135,009
158,882
432,896
8,453,728
129,244
116,433
873,573
3,195,553
16,827,661
(3,757,666)
5,216,224
10,000
5,226,224
1,468,558
13,140,473
$ 14 609 031
Variance
Favorable
(Unfavorable)
$ 238,973
1,270,520
69,574
228,438
178,490
1,985,995
84,203
96,715
4,348
(1,159)
19,541
3,768
58,204
(480,228)
576,756
(6,233)
1,589,667
189,207
2,134,789
4,120,784
341,224
(2,490,000)
(2,148,776)
1,972,008
$ 1.972.008
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 1. ORGANIZATION AND 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 portion of San
Mateo County was annexed to the District. The District annexed a small portion of the
northern tip of Santa Cruz County in 1992.
Basis of Accounting - The records of the District are maintained on the modified
accrual basis of accounting. Under this method, revenues 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.
Agency Fund - The Agency Fund accounts for the assets of the District's deferred
compensation plan which are held by the District as an agent for its employees.
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.
Long -Term Debt - The principal portion of long-term debt is recorded as a liability in
the General Long -Term Debt Account Group.
Property Tax Levy, Collection and Maximum Rates - The State of California (State)
Constitution Article XIII A provides that the combined maximum property tax rate on
any given property may not exceed one percent of its assessed value unless an additional
amount for general obligation debt has been approved by voters. Assessed value is
calculated at 100 percent of market value as defined by Article XIII A 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 other
districts.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
The District receives property tax revenues from Santa Clara and San Mateo Counties.
The Counties assess properties, bill for and collect 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
Property taxes are distributed to the District by the Counties following their collection.
Unsecured taxes are levied on personal property other than real estate, land and
buildings. These taxes are secured by liens on the property being taxed.
Compensated Absences - Vacation pay is recorded as an expenditure in the year
earned. Sick leave is recorded as an expenditure when paid. Any unused sick leave is
forfeited by the employee upon termination of service, death or retirement.
Total (Memorandum Only) - The column in the financial statements captioned "Total
(Memorandum Only)" is presented for purposes of additional analysis and is not a
required part of the basic financial statements. This information is not comparable to a
consolidation and does not present financial position in conformity with generally
accepted accounting principles.
NOTE 2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following at March 31, 1995:
Deposits:
Cash on hand and in banks $ 21,994
Short-term U.S. Government securities 4,886,199
Pooled Funds -
Cash in Santa Clara County Treasury 6,851,543
Cash balances held in banks are insured up to $100,000 by the Federal Depository
Insurance Corporation. All U.S. government securities are insured or collateralized with
securities held by the District or its agent in the District's name. The type of
investments made by the District are restricted by state law. The Santa Clara County
investment pool is subject to legal restrictions, and additional restrictions prescribed by
the County.
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 3. DEFERRED COMPENSATION INVESTMENTS
Investments of $1,037,698 with a fair market value of $1,037,698 at March 31, 1995,
included in the Agency Fund, are restricted for the District's deferred compensation
plan. The investments of the plan are held by the District's agent in the District's name.
NOTE 4. FIXED ASSETS
Changes in the General Fixed Assets Account Group for the year ended March 31, 1995
were as follows:
Land
Structures and improvements
Equipment
Balances
April I,
1994
$136,896,672
5,929,447
1,200,019
Total $J44 026 138
Balances
March 31,
Additions Retirements 1995
$8,453,728 $ $145,350,400
129,244 6,058,691
116.434 3 880 1,312,573
$ 8 699 406 $ 3 880 $152 721 664
All fixed assets additions during fiscal 1995 were acquired through general fund
expenditures.
In conjunction with the purchase of a parcel of land during 1986, the District obtained
an option exercisable through August 15, 1995 to acquire an additional 889 acres for
$6.1 million plus $1,000 per day for each day after August 15, 1989. The purchase
price as of March 31, 1995 was $8,154,000. As of March 31, ,1995, approximately
$1,160,010 has been advanced to the noteholder on the property on behalf of its owner.
Such amount is included in other receivables and deferred revenue in the accompanying
combined balance sheet.
NOTE 5. LONG-TERM DEBT
Long-term debt issued to acquire land, structures and improvements, and equipment is
recorded in the General Long -Term Debt Account Group. Changes in the account
group for the year ended March 31, 1995 were as follows:
Long-term debt, April 1, 1994 $ 60,086,533
Issuance of note payable (interest at 5.75-7%, due in 2014) 11,500,000
Principal reductions (873,574)
Defeased notes (5,901,193)
Long -teen debt, March 31, 1995 $ 64 811 766
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
Long-term debt of $53,011,766 bears interest at fixed rates from 5.0% to 7.0%, has a
weighted average interest rate of 6.4% at March 31, 1995 and is partially collateralized
by land with a cost of approximately $3,515,050. Long-term debt of $11,800,000,
bears interest at a floating rate (4.25% at March 31, 1995) which is based upon
prevailing market conditions and is redetermined every seven days. Long-term debt
totaling $62,875,000 represents limited obligations payable from, but not collateralized
by, property tax revenue of the District. Maturities of long-term debt are as follows:
Principal
Interest Total
Year Ending March 31:
1996 $ 1,483,008 $ 3,976,771 $ 5,459,779
1997 2,434,962 3,756,261 6,191,223
1998 2,600,925 3,617,445 6,218,370
1999 2,266,951 3,475,525 5,742,476
Thereafter through 2021 56,025,920 34,162,887 90,188,807
Total $ 64 811 766 $ 48 988 889 $ 113 800 655
During fiscal 1995, the District issued $11,500,000 of promissory notes bearing interest
rates from 5.75 to 7.0%. A portion of the net proceeds of the notes were used to
advance refund $5,901,194 of outstanding notes. The advance refunding met the
requirements of a legal debt defeasance. Including debt service on the $5.2 million net
proceeds, the District reduced its aggregate debt service payments by approximately
$4.7 million over the period from March 1995 through March 1997. The net result was
a long-term economic loss (difference between the present values of the old and new
debt service payments) of $320,500. At March 31, 1995, all of the 1987 notes are
considered defeased.
NOTE 6. EMPLOYEES' RETIREMENT PLAN
All regular employees are eligible to participate in the Public Employees' Retirement
Fund (the Fund) of the State of California's Public Employees Retirement System
(PERS). The Fund, an agent multiple -employer defined benefit retirement plan that acts
as a common investment and administrative agent for various local and state
governmental agencies within California, is administered by a Board of Administration
composed of individuals who are (1) elected by PERS members, (2) appointed by
elected State of California officials, and (3) specific elected State of California officials.
The Fund provides retirement, disability, and death benefits. Such benefits are based on
each employee's years of service, age and final compensation.
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ONAL 0 SPACE STRICT
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Employees vest after five years of service and are eligible to receive retirement benefits
at age 50. These benefits provisions and all other requirements are established by State
statue and District resolution.
For the year ended March 31, 1995, the District made contributions to the Fund of
$266,321. The District's payroll for employees covered by the Fund for the year ended
March 31, 1995 was $2,148,809 from a total payroll of $2,294,860. District
participation in the Fund is comprised of 52 active employees of a total of 56
employees. The District's required employer contribution rate is 5.9%. The employees'
required contribution rate is 7%, which is currently funded by the District.
Funding Status and Progress - The "pension benefit obligation" is determined for
each participating employer by the Fund's actuary and is a standardized disclosure
measure that results from applying actuarial assumptions to estimate the present value
of pension benefits, adjusted for the effects of projected salary increases and step rate
benefits, to be payable in the future as a result of employee service to date. The
measure is intended to help users assess the funding status of the District's portion of
the Fund to which contributions are made on a going -concern basis, assess progress
made in accumulating sufficient assets to pay benefits when due, and make comparisons
among employers. The measure is the actuarial present value of credited projected
benefits and is independent of the funding method used.
The pension benefit obligation was computed as part of an actuarial valuation
performed as of June 30,1993. The significant actuarial assumptions used in the 1993
valuation to compute the pension benefit obligation were an assumed rate of return on
investment assets of 8.75%, annual payroll increases of 4.5% attributable to inflation
and 2.5% attributable to merit or seniority, and no post -retirement benefit increases.
Information applicable to the District's employee group at June 30, 1993 (the latest date
for which the information is available) follows:
Net assets available for benefits, at cost
(total market value, $3,409,729) $ 2,867,728
Pension Benefit Obligation:
Retirees and beneficiaries currently receiving benefits and
terminated employees not yet receiving benefits 618,626
Current employees -
Accumulated employee contributions and allocated investment
earnings 1,016,919
Employer -financed, vested 648,347
Employer -financed, nonvested 61,012
Total pension benefit obligation 2,344,904
Unfunded pension benefit obligation 522_824
Changes in the Pension Benefit obligation from last year due to:
Changes in Benefit Provisions -0-
Changes in Actuarial Assumptions (40,376)
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MIDP IN i A REGIO •O OPEN SP/AE DISTINCT
NO ES O FINANC ST TEM) $ TS
Actuarially Determined Contributions Required and Contributions Made - The
funding policy of the Fund provides for actuarially determined periodic contributions by
the District at rates such that sufficient assets will be available to pay Fund benefits
when due. The District's contribution calculation for the year ended March 31, 1995
was made in accordance with the actuarially determined requirements computed as of
June 30, 1993. If the District had not had a surplus in the PERS asset account or
AB702 credits, the total pension funded contribution for fiscal 1995 would have
consisted of $269,402 normal cost (12.54% of current covered payroll).
The contribution rate for normal cost is determined using the credited projected benefits
actuarial funding method. The Fund uses the level percentage of payroll method to
amortize the liability over an eight -year period.
Significant actuarial assumptions used in the 1993 valuation to compute the actuarially
determined contribution requirements are the same as those used to compute the pension
benefit obligation as described above,
Historical Trend Information - Trend information gives an indication of the progress
made in accumulating sufficient assets to pay for benefits when due. System wide ten-
year trend information may be found in the California Public Employees' Retirement
System annual reports.
Trend information for the District for each of the five years in the period ended June 30,
1993 (the period for which information is available) is as follows (dollars in thousands):
1993 1992 1991 1990 1989
Net assets available for benefits $ 2,868 $2,459 $2,100 $1,771 $1,612
Pension benefit obligation 2345 2 124 l 831 1 571 1 325
Excess of net assets over the
pension benefit obligation
Percentage funded
Annual covered payroll
$ 523 $ 335 $ 269 $ 200 $ 287
122% 116% 115% 113% 122%
$ 2,013 $1,876 $1,718 $1,444 $1,416
Excess of net assets over the
pension obligation as a
percentage of covered payroll 26% 17.9% 15.7% 13.9% 20.3%
Employer contributions as a
percentage of covered payroll 12.4% 10.2% 5.4% 11.9% 10.9%
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MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 7. DEFERRED COMPENSATION PLAN
During 1988, the District established a deferred compensation plan for its employees in
accordance with California Government Code Section 53212 and Internal Revenue Code
Section 457. The plan, available to all District employees, permits them to defer a
portion of their salary until future years. The deferred compensation is not available to
employees until termination, retirement, death or unforeseeable emergency.
All amounts of compensation deferred under the plan, all property and rights purchased
with those amounts, and all income attributable to those amounts, property or rights are
(until paid or made available to the employee or other beneficiary) solely the property
and rights of the District (without being restricted to the provisions of benefits under the
Plan), subject only to the claims of the District's general creditors. Participants' rights
under the plan are equal to those of general creditors of the District in an amount equal
to the fair market value of the deferred account for each participant.
Changes in the assets (restricted investments) of the deferred compensation plan for the
year ended March 31, 1995 are as follows:
Balance, April 1, 1994 $ 837,893
Additions 204,557
Payments (4,752)
Balance, March 31, 1995 $ L037 698
NOTE 8. LEASE REVENUES
The District leases certain land and structures to others under operating leases with
terms generally on a month -to -month basis. I rase revenue received was approximately
$445,743 during the year ended March 31, 1995.
NOTE 9. LITIGATION
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.
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