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Home My Public Portal AboutAudit Report - District- FY92Deloitte & Touche U MIDPENINSULA REGIONAL OPEN SPACE DISTRICT Financial Statements for the Year Ended March 31, 1992 and Independent Auditors' Report rn f' L. rL� L, Deloitte & Touche Suite 800 Telephone: (408) 998-4000 60 South Market Street San Jose, California 95113-2303 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, 1992 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, such fmancial statements present fairly, in all material respects, the financial position of Midpeninsula Regional Open Space District as of March 31, 1992 and the results of its operations for the year then ended in conformity with generally accepted accounting principles. Oa . e e May 22, 1992 Member n� Dr:International P L MIDPENINSULA REGIO NAL OPEN SPAC E DISTRICT COMBINED BALA NCE SHEE T MAR CH 31, 1992 Account Groups ASSETS Cash, inclu ding interest -bearing deposits and cash investmen ts Restricted cash and cash in vestments Interest and o ther receivables Prepaid ex pen ses and other assets Land Struc tures and improv emen ts Equipmen t A moun t to be provided for retiremen t of general long-term debt TOT AL LIA BILITIES A ND FUN D EQUITY LIABILITIES: Accounts payable Accr ued habilities Deposits Deferred revenu e D eferred compensatio n Lo ng-term debt Total liabilities FUND EQUITY: Inv estme nt in general fixe d assets Fund balance To tal fu nd equity TOTAL See notes to financial statemen ts. Ge neral Fund Age ncy Fund Ge neral Fixed Assets General Long -Term Debt Total (M emoran dum O nly) $ 4,999,214 $ 4,999,214 4,925,923 $ 275,869 5,201,792 3,639,591 3,639,591 2,030,537 2,030,537 $120,345,875 120,345 ,875 4,505 ,110 4,505,110 969,936 969,936 $ 48,982,584 48,982,584 $ 15,595,265 $ 275 ,869 $125,820,921 $ 48,982,584 $190,674,639 $ 194,340 242,172 24,920 545,236 $ 275,869 1,006,668 275,869 14,588,597 14,588,597 $125,820,921 125,820,921 $ 194340 242,172 24,920 545,236 275,869 $ 48,982,584 48,982,584 48,982 ,584 50,265,121 125,820,921 14,588,597 140,409,518 $ 15,595,265 $ 275,869 $125,820,921 $ 48 ,982,584 $ 190,674,639 r1 L r L:. MIDPENINSULA REGIONAL OPEN SPACE DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL -GENERAL FUND YEAR ENDED MARCH 31, 1992 REVENUES: General property tax State grants Other taxes Interest Rental income and other Budget $ 9,115,000 1,030,000 170,000 900,000 915,000 Total 12,130,000 EXPENDITURES: Salaries and benefits 2,401,300 Professional services 294,450 Vehicle expenses 123,500 Rent 66,450 Site supplies and services 189,199 Utilities and communications 94,751 Other 444,300 Acquisitions: Land 14,631,000 Structures and improvements 1,235,250 Equipment 146,050 Debt service: Principal retirement 1,601 89 Interest 3,339 432 Total 24,566,971 EXCESS OF EXPENDITURES OVER REVENUES (12,436,971) OTHER FINANCING SOURCES: Proceeds from sale of land 3,100,000 Proceeds from issuance of long-term debt TOTAL OTHER FINANCING SOURCES 3,100,000 EXC'FC.0 OF EXPENDITURES OVER REVENUES AND OTHER FINANCING SOURCES FUND BALANCE, April 1, 1991 FUND BALANCE, March 31, 1992 See notes to financial statements. (9336,971) 15,765,414 $ 6,428,443 Actual $ 9,434,455 712,564 110,592 839,775 1,042,402 12,139,788 2,270,481 312,436 145,422 123,807 159,888 97,145 374,683 4,467,061 593,112 170,944 1,666,282 3,070,344 13,451,605 (1311,817) 135,000 135,000 Variance Favorable (Unfavorable) $ 319,455 (317,436) (59,408) (60,225) 127,402 9,788 130,819 (17,986) (21,922) (57357) 29,311 (2,394) 69,617 10,163,939 642,138 (24,894) (64,993) 269,088 11,115366 11,125,154 (3,100,000) 135,000 (2,965,000) (1,176,817) 8,160,154 15,765,414 $14,588,597 $ 8,160,154 -3- La MIDPENINSULA REGIONAL OPEN SPACE DISTRICT NOTES TO FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 1992 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization - The Midpeninsula Regional Open Space District (the District) was formed in 1972 to acquire and preserve land and open space in the northern and western portions of Santa Clara County. In June 1976, the southern portion of San Mateo County was annexed to the District. 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 and improvements, and equipment purchased by the District are stated at cost in the General Fixed Asset 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. -4- L. The District receives property tax revenues from Santa Clam 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. 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. 2. CASH AND CASH INVESTMENTS At March 31, 1992, the carrying value of the General Fund's deposits in cash and cash investments was $9,925,137 and the balance reported by the respective financial institution and County of Santa Clara was $10,156,190, consisting of the following: Commercial bank demand deposits $ 178,701 Cash investments including U.S. Treasury notes, commercial paper, bankers acceptances and repurchase agreements 4,831,621 County of Santa Clara pooled investment fund 5,145,868 Total $10,156,190 Cash held in commercial bank demand deposit accounts are insured up to $100,000 by federal depository insurance. The District's cash investments are insured, registered or collateralized by securities held by the District or its agent in the District's name. These investments had a market value of $4,836,319 at March 31,1992. Investments made with District funds are restricted by State law. The County investment pool is subject to these restrictions and additional restrictions prescn'bed by the County. State statutes authorize investments in obligations of the U.S Treasury, its agencies and instrumentalities, commercial paper rated A-1 or better by Standard & Poor's Corporation or P-1 or better by Moody's Commercial Paper Record, bankers' acceptances, repurchase agreements, and the State Treasurer's Investment Pool (I Deal Agency Investment Fund). -5- Cash investments of $4,925,923 are restricted by the terms of certain promissory notes. Interest earned on such funds is unrestricted. Cash investments of $275,869 are restricted for the District's deferred compensation plan. Earnings on this cash are restricted to the plan. Cash investments of the plan are held by the District's agent in the District's name and are subject to State statutes as described above. 3. FDOD ASSETS Changes in the General Fixed Assets Account Group for the year ended March 31, 1992 were as follows: Balances Balances April 1, March 31, 1991 Additions Retirements 1992 Land $115,878,814 $4,467,061 $120,345,875 Structures and improvements 3,911,998 593,112 4,505,110 Equipment 858,815 170,944 $59,823 969,936 Total $120,649,627 $5,231,117 $59,823 $125,820,921 All fixed asset additions during fiscal 1992 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, 1992 was $7,058,000. 4. 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, 1992 were as follows: Long-term debt, April 1, 1991 $50,513,866 Issuance of note payable (interest at 6%, due in 1997) 135,000 Principal reductions (1,666,282) Long-term debt, March 31, 1992 $48,982,584 -6- L Long-term debt of $36,482,584 bears interest at fixed rates from 5.5% to 11%, has a weighted average interest rate of 7% at March 31, 1992 and is collateralized by land with a cost of approximately $4,445,984. Long-term debt of $12,500,000, to be repaid in annual installments beginning in 1994, bears interest at a floating rate (3.35% at March 31, 1992) which is based upon prevailing market conditions and is redetermined every seven days. Long-term debt totalling $46,408,146 represents limited obligations payable from, but not collateralized by, property tax revenue of the District. Maturities of long-term debt are as follows: Year Ending March 31: 1993 1994 1995 1996 1997 Thereafter through 2021 Total Principal $ 1,864,881 2,556,040 2,638,179 3,166,995 4,878,523 33,877,966 $ 48,982,584 Interest $ 3,254,714 3,150,373 2,998,974 2,821,575 2,646,517 22,594,457 $ 37,466,610 Total $ 5,119,595 5,706,413 5,637,153 5,988,570 7,525,040 56,472,423 $ 86,449,194 The District has defeased certain promissory notes by placing funds in irrevocable trusts to provide for all future debt service payments on the old promissory notes. Accordingly, the trust account assets and the liability for defeased promissory notes are not included in the District's financial statements. At March 31, 1992, $8,996,854 of promissory notes are considered defeased. 5. 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. 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 statute and District resolution. For the year ended March 31, 1992, the District made contributions to the Fund of $190,897. The District's payroll for employees covered by the Fund for the year ended March 31, 1992 was $1,604,709 from a total payroll of $1,753,034. District participation in the Fund is comprised of 46 active employees of a total of 51 employees. The District's required employer contribution rate is 6.7%. The employees' required contribution rate is 7%, which is currently funded by the District -7- L r- 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, 1990. The significant actuarial assumptions used in the 1990 valuation to compute the pension benefit obligation were an assumed rate of return on investment assets of 8.5%, annual payroll increases of 5.0% attributable to inflation and 2.0% attributable to merit or seniority, and no post -retirement benefit increases. Information applicable to the District's employee group at June 30, 1990 (the latest date for which the information is available) follows: Net assets available for benefits, at cost (total market value, $2,008,723) $ 1,771,361 Pension Benefit Obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits 150,623 Current employees - Accumulated employee contributions and allocated investment earnings 696,732 Employer -financed, vested 669,920 Employer -financed, nonvested 53,747 Total pension benefit obligation 1,571,022 Excess pension assets $ 200,339 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, 1992 was made in accordance with the actuarially determined requirements computed as of June 30, 1990. If the District had not had a surplus in the PERS asset account, the total pension funded contribution for fiscal 1992 would have consisted of $219,845 normal cost (13.7% 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 a 12 -year period. -8- r,L Significant actuarial assumptions used in the 1990 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 four years in the period ended June 30, 1990 (the period for which information is available) is as follows (dollars in thousands): 1990 1989 1988 1987 Net assets available for benefits $1,771 $ 1,612 $ 1,425 $ 1,239 Pension benefit obligation $ 1,571 $ 1,325 $ 1,023 $ 855 Excess of net assets over the pension benefit obligation $ 200 $ 287 $ 402 $ 384 Percentage funded 113% 122% 139% 145% Annual covered payroll $1,444 $ 1,416 $ 1,195 $1,048 Excess of net assets over the pension obligation as a percentage of covered payroll 13.9% 20.3% 33.7% 36.6% Employer contributions as a percentage of covered payroll 11.9% 10.9% 7.0% 6. 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. -9- L. r r' Changes in the assets (restricted cash and cash investments) of the deferred compensation plan for the year ended March 31, 1992 are as follows: Balance, April 1, 1991 $205,114 Additions 70,755 Balance, March 31, 1992 $275,869 7. LEASE REVENUES The District leases certain land and structures to others under operating leases with terms generally on a month -to -month basis. I nse revenue received was approximately $398,000 during the year ended March 31, 1992. 8. 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. - 10 - e Lb rr L I,