Loading...
HomeMy Public PortalAboutAudit Report - District- FY89Deloitte Haskins+Sells Suite 1200 One Almaden Boulevard San Jose, California 95113-2102 (408) 998-4000 [TT Telex: 4995734 INDEPENDENT AUDITORS' REPORT Board of Directors, Midpeninsula Regional Open Space District: We have audited the accompanying balance sheet of Midpeninsula Regional Open Space District as of March 31, 1989 and the related statement of revenues, expenditures and changes in fund balance - budget and actual - of the general fund for the nine -month period then ended. These financial statements are the responsibility of the District's 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 financial statements present fairly, in all material respects, the financial position of Midpeninsula Regional Open Space District as of March 31, 1989 and the results of its operations for the nine -month period then ended, in conformity with generally accepted accounting principles. Eca_eL:t__ May 31, 1989 MIDP ENINSULA REGIONAL OPEN SPACE DISTRICT COMBINED BAL ANCE SHEET , MARCH 31, 1989 ASSETS AND OTHER DEBIT BALANCES Ca sh, including interest b earing de pos its and cash i nvestments Restr icted ca sh and ca sh i nvestm ent s Inte rest an d o ther receivabl es Pre paid expenses a nd other ass ets Lan d Stru ctures and improv ements Equipme nt Amo unt to be prov ided for retirement of gene ra l lon g-te rm de bt TOTAL LIA BILITIES AND FUND EQUITY Liabilities: Acco unts paya ble Acc rue d lia bilitie s De po sits Defe rr ed c ompe ns ation Lon g-te rm de bt Total liabilitie s Fun d Equity: Investment in gene ral fixed assets Fund balan ce Total fun d equ ity TOTAL See notes to finan cia l stateme nts. G eneral Fu nd Ag en cy Fund $10,318,935 3,677,722 $96,017 2,311,241 90,749 .ACCOUNT G eneral Fix ed A ssets $101,287,300 737,208 681,492 GROUPS... . G eneral Long -Term D ebt $45 ,915, 657 Total (Memorand um Only) $ 10,318,935 3,773,739 2,311,241 90,749 101,287,300 737,208 681,492 45,915,657 $16,398,647 $96,017 *102 .706 .000 345 .915.657 3165.116,321 $ 117,883 132,002 10,775 $96,017 260, 660 96 ,017 16,137,987 16,137, 987 $102,706,000 102,706,000 316,398.647 $96,017 3102.706,000 $45,915,657 45,915,657 )45.915.657 $ 117,883 132,002 10,775 96,017 45,915,657 46,272,334 102,706,000 16 ,137,987 118 ,843,987 $165 .116.321 MIDPENINSULA REGIONAL OPEN'SPACE DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - OF THE GENERAL FUND FOR THE NINE -MONTH PERIOD ENDED MARCH 31, 1989 REVENUES: General property tax State and Federal grants Other taxes Interest Gifts 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 REVENUES OVER EXPENDITURES OTHER FINANCING SOURCE - Net proceeds from issuance of long-term debt REVENUES AND OTHER FINANCING SOURCE OVER EXPENDITURES FUND BALANCE, JULY 1, 1988 FUND BALANCE, MARCH 31, 1989 Budget (Unaudited) $ 6,225,000 6,500,000 400,000 375,000 150,000 316,250 13,966,250 Actual $ 6,440,217 6,562,298 462,471 738,240 101,000 264,151 14,568,377 1,208,363 1,146,503 229,210 240,551 81,800 78,399 92,380 86,315 111,304 70,338 43,625 31,045 275,965 168,875 6,698,800 6,687,722 303,633 42,403 151,280 125,645 690,443 690,443 2,065,561 2,146,298 11,952,364 11,514,537 2,013,886 3,053,840 2,811,000 4,824,886 10,170,510 $14.995.396 See notes to financial statements. 2,913,637 Variance Favorable (Unfavorable) $ 215,217 62,298 62,471 363,240 (49,000) (52,099) 602,127 61,860 (11,341) 3,401 6,065 40,966 12,580 107,090 11,078 261,230 25,635 (80,737) 437,827 1,039,954 102,637 5,967,477 1,142,591 10,170,510 $16.137.987 $1,142,591 - 3 - MIDPENINSULA REGIONAL OPEN SPACE DISTRICT NOTES TO FINANCIAL STATEMENTS 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 available and measurable, and expenditures are recognized generally 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. The District has changed its year end to March 31; therefore, the current -year budget information has been revised by the District's Controller to reflect nine months of operations. 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, equipment, structures and improvements purchased by the District are stated at cost in the general fixed asset group of accounts. 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 - 4 - 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. The District receives property tax Clara and San Mateo Counties. The properties, bill for, collect, and taxes as follows: Valuation dates Lien/levy dates Due dates Delinquent as of ,Secured revenues from Santa Counties assess distribute property March 1 July 1 50% on November 1 50% on February 1 December 10 (for November) April 10 (for February) Unsecured March 1 March 1 July 1 August 31 The term "unsecured" refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Totals (Memorandum Only) - The column in the financial statements captioned "Totals (Memorandum Only)" is presented for purposes of additional analysis and is not a required part of the basic financial statements. This data is not comparable to a consolidation and does not present financial position or results of operations in conformity with generally accepted accounting principles. 2. CASH AND CASH INVESTMENTS At March 31, 1989, the book balance of the General Fund's time and demand deposits was $13,996,657 and the bank balance was $14,728,085. The bank balance consists of: Commercial bank demand deposits $ 111,243 Cash investments 4,400,079 County of Santa Clara pooled investment fund 10,216,763 TOTAL $14.7283085 - 5 - Commercial bank demand deposits are covered up to $100,000 by federal depository insurance. Investments of the commercial bank trust fund and the County of Santa Clara investment pool are restricted by State law as to the types of investments which can be made. State statutes authorize investments in obligations of the U.S Treasury, its agencies and instrumentalities, commercial paper rated A-1 by Standard & Poor's Corporation or P-1 by Moody's Commercial Paper Record, bankers' acceptances, repurchase agreements, and the State treasurer's investment pool (Local Agency Investment Fund). The District's cash investments consist of $4,400,079 of investments that are insured or registered or for which the securities are held by the District or its agent in the District's name. These investments had a market value of $4,435,124 at March 31, 1989. 3. FIXED ASSETS The changes in the general fixed assets account group for the period ended March 31, 1989 are as follows: Land Structures and improvements Equipment Balance July 1, 1988 Additions $94,599,578 $6,687,722 694,805 42,403 555,847 125.645 Balance March 31, 1989 $101,287,300 737,208 681,492 Total $95.850.230 $6.855.770 $102,706,Q0Q All fixed asset additions during fiscal 1989 were acquired through general fund expenditures. In conjunction with the purchase of a certain parcel of land during 1986, the District holds an option 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. 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. The changes in the account group for the period ended March 31, 1989 are as follows: - 6 - Long-term debt, July 1, 1988 Issuance of notes payable Principal retirements $43,692,463 2,913,637 (690,443) Long-term debt, March 31, 1989 $45.915.657 Long-term debt of $33,415,657 bears interest at fixed rates from 5% to 11% and has a weighted average interest rate of 5.75% at March 31, 1989. Long-term debt of $12,500,000 bears interest at a floating rate (7.24% at March 31, 1989) which is based upon prevailing market conditions and is redetermined every seven days. Maturities of long-term debt are as follows: Year Ending March 1990 1991 1992 1993 1994 Thereafter 31: (through 2009) Principal Interest $ 7,676,878 3,382,677 3,127,923 3,583,156 4,270,938 23.874.085 $ 2,675,806 2,204,148 2,048,870 1,844,675 1,612,592 6.515.139 Total $10,352,684 5,586,825 5,176,793 5,427,831 5,883,530 30.389,224 Total $45.915.657 $,6.901,230 $62.J16.887 Land with a cost of approximately $18,467,000 is pledged as collateral for the long-term debt. Cash of $3,677,722 is restricted by the terms of certain promissory notes; interest earned on such funds is unrestricted. Cash of $96,017 is restricted for the District's deferred compensation plan; earnings on this cash are restricted to the plan. In fiscal 1987, the District defeased certain promissory notes by placing the proceeds from new promissory notes in an irrevocable trust to provide for all future debt service payments on the old promissory notes. Accordingly, the trust account assets and the liability for the defeased promissory notes are not included in the District's financial statements. At March 31, 1989, $12.3 million of promissory notes are considered defeased. 5. LEASE OBLIGATIONS Office facilities and a telephone system are leased under five-year operating leases expiring through 1992. Minimum annual lease payments are as follows: 1990, $118,000; 1991, $77,000; 1992, $1,000. - 7 - 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 (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 the 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 period ended March 31, 1989, due to the surplus in the PERS asset account, the District made no contributions to the Fund; employee and employer contributions for the period ended March 31, 1989 have been deducted from the District's PERS account surplus. The District's payroll for employees covered by the Fund for the period ended March 31, 1989 was $925,842 out of a total payroll of $943,826. District participation in the Fund is comprised of 39 active employees out of a total 44 employees. The District's required employer contribution rate is 6.564%; 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, 1987. The significant actuarial assumptions used in the 1987 valuation to compute the pension benefit obligation were an assumed rate of return on investment assets of 8.5%, annual payroll increases of 5.75% attributable to inflation and 1.25% attributable to merit or seniority, and no post -retirement benefit increases. - 8 - Information applicable to the District's employee group at June 30, 1987 (the latest date for which the information is available) follows: Pension Benefit Obligation: Retirees and beneficiaries currently receiving benefitsandterminated employees not yet receiving benefits $ 7,114 Current employees: Accumulated employee contributions and allocated investment earnings 418,206 Employer -financed, vested 370,894 Employer -financed, nonvested 59.005 Total pension benefit obligation 855,219 Net assets available for benefits, at cost (total market value, $1,550,935) 1,238,766 Excess pension assets S 383.547 Actuarially Determined Contributions Reauired 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 period ended March 31, 1989 was made in accordance with the actuarially_ determined requirements computed as of June 30, 1987. The total pension funded contribution for the nine -month period consisted of $125,581 normal cost (13.564% 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 unfunded liability, if any, over a twelve-year period. Significant actuarial assumptions used in the 1987 valuation to compute the actuarially determined contribution requirements are the same as those used to compute the pension benefit obligation as described above. Trend information for the Fund is not available. As of June 30, 1987 available net assets were sufficient to fund 145% of the pension benefit obligation; there was no unfunded pension benefit obligation; and the District's actuarially determined funded contribution to the Fund was 6.564% of annual covered payroll. - 9 - 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 unforseeable 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 cash) of the deferred compensation plan for the period ended March 31, 1989 are as follows: Balance, July 1, 1988 Additions Reductions Balance, March 31, 1989 8. LEASE REVENUES $56,746 39,271 $96.017 The District leases certain land and structures to others under operating leases with terms varying from one to eighteen years. In addition, in connection with the fiscal 1982 acquisition of the Skyline Ridge Open Space Preserve, the District leased back to the sellers for their lifetimes (maximum term of 50 years) the structures comprising a ranch compound. Lease revenue received was approximately $200,000 during the period ended March 31, 1989. Future minimum lease revenues are not expected to be significant. - 10 - 9. GIFTS During the period ended March 31, 1989 the District received a donation of land with an approximate value of $1,000 and a cash contribution of $100,000. 10. LITIGATION The District is named in certain claims and litigation. It is the opinion of management, after consultation with counsel, that the liability, if any, resulting therefrom will not have a material effect on the District's financial position.