HomeMy WebLinkAbout2014-09-18 - Finance-Accounting Committee Meeting Agenda PacketYorba Linda
'"Water District
AGENDA
YORBA LINDA WATER DISTRICT
FINANCE - ACCOUNTING COMMITTEE MEETING
Thursday, September 18, 2014, 4:00 PM
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
2. ROLL CALL
COMMITTEE
Director Phil Hawkins, Chair
Director Michael J. Beverage
STAFF
Marc Marcantonio, General Manager
Steve Conklin, Engineering Manager
Delia Lugo, Finance Manager
3. PUBLIC COMMENTS
Any individual wishing to address the committee is requested to identify themselves and state the matter on
which they wish to comment. If the matter is on this agenda, the committee Chair will recognize the individual for
their comment when the item is considered. No action will be taken on matters not listed on this agenda.
Comments are limited to matters of public interest and matters within the jurisdiction of the Water District.
Comments are limited to five minutes.
4. ACTION CALENDAR
This portion of the agenda is for items where staff presentations and committee discussions are needed prior to
formal committee action.
4.1. Submission of 2014 Audit Reports
Recommendation: That the Committee recommend the Board of Directors receive
and file the FY 2013114 Comprehensive Annual Financial Report, the Report on
Internal Control and the Communication to Those In Governance Letter.
5. DISCUSSION ITEMS
This portion of the agenda is for matters such as technical presentations, drafts of proposed policies, or similar
items for which staff is seeking the advice and counsel of the Committee members. This portion of the agenda
may also include items for information only.
5.1. Investment Report for Period Ending August 31, 2014
5.2. Budget to Actual Results for August 2014
5.3. Future Agenda Items and Staff Tasks
6. ADJOURNMENT
6.1. The next Finance - Accounting Committee meeting is scheduled to be held Monday,
October 27, 2014 at 4:00 p.m.
Items Distributed to the Committee Less Than 72 Hours Prior to the Meeting
Pursuant to Government Code section 54957.5, non - exempt public records that relate to open session agenda items
and are distributed to a majority of the Committee less than seventy -two (72) hours prior to the meeting will be available
for public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA
92870, during regular business hours. When practical, these public records will also be made available on the District's
internet website accessible at http: / /www.ylwd.com /.
Accommodations for the Disabled
Any person may make a request for a disability - related modification or accommodation needed for that person to be
able to participate in the public meeting by telephoning the Executive Secretary at 714 - 701 -3020, or writing to Yorba
Linda Water District, P.O. Box 309, Yorba Linda, CA 92885 -0309. Requests must specify the nature of the disability and
the type of accommodation requested. A telephone number or other contact information should be included so the
District staff may discuss appropriate arrangements. Persons requesting a disability - related accommodation should
make the request with adequate time before the meeting for the District to provide the requested accommodation.
ITEM NO. 4.1
AGENDA REPORT
Meeting Date: September 18, 2014
To: Finance - Accounting Committee
From: Marc Marcantonio, General
Manager
Presented By: Delia Lugo, Finance Manager Dept: Finance
Prepared By: Delia Lugo, Finance Manager
Subject: Submission of 2014 Audit Reports
STAFF RECOMMENDATION:
That the Committee recommend the Board of Directors receive and file the FY 2013/14
Comprehensive Annual Financial Report, the Report on Internal Control and the Communication to
Those In Governance Letter.
DISCUSSION:
The final drafts of Yorba Linda Water District's Comprehensive Annual Financial Report (CAFR) for
the Fiscal Year ending June 30, 2014, Report on Internal Controls and Communication to Those in
Governance Letter will be submitted as hand -outs at our scheduled Committee meeting.
ATTACHMENTS:
Name: Description: Type:
YLWD 2014 CAFR.pdf Backup Material Backup Material
YLWD 2014 ACL.pdf Backup Material Backup Material
YLWD 2014 GAS.pdf Backup Material Backup Material
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YORBA LINDA WATER DISTRICT
of Yorba Linda, California
Comprehensive Annual Financial Report
.............................................................................................................. ...............................
WITH REPORT ON AUDIT BY
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
For the Fiscal Year Ending June 30, 2014
Prepared by:
The Yorba Linda Water District Finance Department
Delia Lugo, Finance Manager
Kelly McCann, Senior Accountant
Maria Trujillo, Accounting Assistant II
Richard Cabadas, Accounting Assistant I
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Cindy Botts, Management Analyst
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YORBA LINDA WATER DISTRICT
TABLE OF CONTENTS
For the year ended June 30, 2014
INTRODUCTORY SECTION:
Page
Letter of Transmittal
i
Board of Directors and Executive Staff
xii
Organization Chart
xiii
District Boundaries
xiv
Certificate of Achievement for Excellence in Financial Reporting
xv
FINANCIAL SECTION:
Independent Auditors' Report
1
Management's Discussion and Analysis
(Required Supplementary Information)
5
Basic Financial Statements:
13
Statements of Net Position
14
Statements of Revenues, Expenses
and Changes in Net Position
16
Statements of Cash Flows
17
Notes to Basic Financial Statements
19
Required Supplementary Information:
47
Other Post - Employment Benefit Plan - Schedule
of Funding Progress
48
Supplementary Information:
49
Combining Schedule of Net Position
50
Combining Schedule of Revenues, Expenses and
Changes in Net Position
52
Combining Schedule of Cash Flows
53
Schedule of Operating Expenses by Cost Center and
Nature of Expenses for Water and Sewer
55
Schedule of Capital Assets
56
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YORBA LINDA WATER DISTRICT
TABLE OF CONTENTS
(CONTINUED)
For the year ended June 30, 2014
Page
Nnmhar
STATISTICAL SECTION: 57
Description of Statistical Section 59
Financial Trends:
Changes in Net Position 60
Revenue Capacity:
Number of Connections 62
Ten Largest Customers 63
Debt Capacity:
Ratio of Outstanding Debt 64
Debt Coverage 65
Demographic and Economic Information:
Demographics 66
Ten Largest Employers 67
Operating Information:
Number of Employees 68
Operating and Capacity Indicators 69
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INTRODUCTORY SECTION
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Yorba Linda
Water District
September 12, 2014
Members of the Board of Directors
Yorba Linda Water District
Introduction
It is our pleasure to submit Yorba Linda Water District's Comprehensive Annual
Financial Report (CAFR) for the fiscal year ending June 30, 2014. This report was
prepared pursuant to the guidelines set forth by the Governmental Accounting
Standards Board (GASB).
District staff prepared this financial report in conjunction with an unqualified opinion
issued by the independent audit firm White, Nelson, Diehl, Evans LLP. The independent
auditor's report is located at the front of the financial section of this document.
Management's discussion and analysis (MD &A) immediately follows the independent
auditor's report and provides a narrative introduction, overview and analysis of the basic
financial statements. MD &A complements this letter of transmittal and should be read in
conjunction with it.
This report consists of management's representations concerning the finances of Yorba
Linda Water District. Consequently, management assumes full responsibility for the
completeness and reliability of the information presented in this report. To provide a
reasonable basis for making these representations, the District has established a
comprehensive internal control framework that is designed both to protect the District's
assets from loss, theft or misuse, and to compile sufficient reliable information for the
preparation of the District's financial statements in conformity with Generally Accepted
Accounting Principles (GAAP). Because the cost of internal control should not outweigh
its benefits, the District's comprehensive framework of internal controls has been
designed to provide reasonable, rather than absolute, assurance that the financial
statements will be free from material misstatement. Management asserts that to the
best of our knowledge and belief this financial report is complete and reliable in all
material aspects.
The Government Finance Officers Association of the United States and Canada
(GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to
the Yorba Linda Water District for its comprehensive annual financial report for the fiscal
year ended June 30, 2013. In order to be awarded a Certificate of Achievement, a
governmental entity must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted
accounting principles and applicable legal requirements.
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A Certificate of Achievement is valid for a period of one year only. We believe that our
current comprehensive annual financial report continues to meet the Certificate of
Achievement Program requirements and we are submitting it to the GFOA to determine
its eligibility for certificate again this year.
District Structure and Leadership
The Yorba Linda Water District is an independent special district, which operates under
the authority of Division 12 of the California Water Code. The Yorba Linda Water District
has provided water and sewer services to the residents of the City of Yorba Linda,
portions of Placentia, Brea, Anaheim, and nearby unincorporated areas since 1959, the
year it was formed to take over the assets and water service responsibilities of the
Yorba Linda Water Company, a mutual formed in 1909. The District is governed by a
five - member Board of Directors, elected at large from within the District's service area.
The General Manager administers the day -to -day operations of the District in
accordance with policies and procedures established by the Board of Directors. The
Yorba Linda Water District employs a full -time staff of 77 employees. The District's
Board of Directors meets on the second and fourth Thursday of each month. Meetings
are publicly noticed and citizens are encouraged to attend.
The District provides water, sewer or a combination of both services to residents and
businesses within its service area, which includes approximately 14,475 acres of land
comprising 22.6 square miles. The District serves a population of approximately 72,000
and currently provides water service through approximately 24,554 residential,
commercial, and light industrial connections.
District Services
Residential customers make up approximately 92% of the District's customer base and
consume approximately 72% of the water provided annually by the District. The District
obtains about half of its water supply from the Metropolitan Water District (MWD)
through the Municipal Water District of Orange County (MWDOC) and the other half
from groundwater wells within the area. In FY 2013/14 the District provided 22,614 acre -
feet of water to its customers.
The District's service area is known for having larger than average residential lots and a
network of horse trails spanning over 100 miles in length. In CNN Money's "Best Places
to Live for 2012 ", Yorba Linda was one of four Southern California cities listed. Similarly,
the City of Yorba Linda's median income is 48% greater than the overall median income
for Orange County, as reported by 2010 Census data.
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Economic Condition and Outlook
The District's administrative offices are located in the City of Placentia in Orange
County. The economic outlook for the area shows moderate growth, which is projected
to continue with new commercial business and a steadily improving housing market.
District expenses have increased approximately $900,000 per year over the past four
fiscal years, with the fiscal year 2014/15 budget expected to increase an additional
$1,000,000. A primary factor of the increase in these expenses is the cost of water
YLWD pays to the Municipal Water District of Orange County (MWDOC) for import
water and assessments. MWDOC's cost is primarily based on the cost of water they
must pay to the Metropolitan Water District of Southern California (MWD). Impacting the
fiscal year 2013/14 budget was an average 4.8 rate increase from MWD, effective
January 1, 2014. An additional 3.7% increase was also adopted and will take effect
January 1, 2015. These rate increases are part of an overall 24% rate increase since
January 1, 2010. As the cost of import water has continued to increase, the cost of
groundwater, purchased from the Orange County Water District (OCWD), has kept
pace. Over the FY 2010/11, FY 2011/12 and FY 2012/13 years, the District averaged
annual sales of 19,907 acre -feet. However, during the 2013/14 fiscal year, the District
sold approximately 2,000 acre -feet more water than anticipated. This amounts to an
increase in water sales revenue of $1.8 million. This increase was the result of calendar
year 2013 being the driest year on record for most of California since 1850. In response
to this and to the California Department of Water Resources snowmelt runoff report for
2014, Governor Brown has announced a Drought State of Emergency for California.
For FY 2014/15 the District's water sales are estimated to be greater than 21,000 acre -
feet, even with 5% voluntary conservation efforts from the District's customer base
being taken into consideration.
As of May 2014, the District was granted annexation of the remaining 26% of its service
area into Orange County Water District (OCWD). It is anticipated that with full
annexation the District will be able to pump the maximum groundwater allowable each
year, at a lower cost than purchasing the same amount of imported water from MWD.
However, the District will not be able to take advantage of full annexation for FY
2014/15 due to the 2003 Conjunctive Use Program (CUP) Agreement and due to the
need to complete construction of capital facilities. The CUP Agreement requires the
District to withdraw 2,193 acre -feet over and above OCWD's Basin Production
Percentage (BPP) for the upcoming fiscal year and pay for the water at current import
water rates, after subtracting power and operations and the maintenance charges of
$132 per acre -foot.
Had the District been able to access the entirety of OCWD's Basin Production
Percentage (BPP) for the fiscal year 2014/15, the District would have been able to lower
its variable water costs by approximately $1.0 million. As variable water costs comprise
approximately 53% of the District's operating expenses, ensuring these costs are held
as low as possible is a top priority each and every fiscal year.
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California's water supply continues to be a concern due to projected population
increases, cyclical drought conditions, and environmental and regulatory restrictions
that threaten the State's water supply and conveyance system through the Sacramento -
San Joaquin Delta —all of which lead to increasing supply costs. Within the District's
boundaries, population growth is expected to increase only minimally in the next 5 -10
years, as more than 50% of the current households have children under the age of 18
who are not expected to add to this growth via newborns. Additionally, the District's area
is primarily "built out ", and an influx of residents from outside the area is expected to
remain fairly low. The State of California, however, is expected to grow by 20 million
people over the next 40 years.
Mission /Vision Statement and Maior Initiatives
The activities of the Board and staff of the District are driven by its Mission Statement:
"Yorba Linda Water District will provide reliable, high quality water and sewer services in
an environmentally responsible manner, while maintaining an economical cost and
unparalleled customer service to our community," and its Vision Statement: "Yorba
Linda Water District will become the leading, innovative and efficient source for high
quality reliable services." The Mission and Vision Statements dictate the following five
core values of the District.
1. Integrity– We demonstrate integrity every day by practicing the highest ethical
standards and by ensuring that our actions follow our words.
2. Accountability– We acknowledge that both the Board and the staff of the
District are accountable to the public that we serve, as well as to each other.
3. Responsibility– We take full responsibility for our actions- both our successes
and our opportunities for growth. We maintain a commitment of courtesy,
assessment and resolution with all customer concerns.
4. Transparency – We promote a culture where we actively listen to our customers
and communicate openly about our policies, processes, and plans for the future.
5. Teamwork – Success centers on all departments working together and sharing
information and resources to achieve common goals. We are dedicated to
ensuring that every voice of the District, from the Board to each individual
employee is treated with dignity and respect, and that differences are valued and
individual abilities and contributions are recognized.
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Major Accomplishments during FY 2013/14
Previously, the Board of Directors approved the FY 2007 -2012 five -year capital
improvement plan totaling $57.7 million. The projects in this plan were identified for
funding with the 2003 and 2008 Series Certificates of Participation (Revenue Bonds), in
combination with annexation funds and other reserves held by the District. These
projects are completed or underway as of the time of preparation of this report.
For fiscal years 2011 through 2015, staff identified projects totaling $37.4 million.
Included in that amount, $4.3 million was spent through the end of fiscal year 2010/11.
The remaining $33.1 million is therefore proposed for consideration by the Board for
Capital Improvement Projects /Capital Replacement Projects (CIP /CRP) that will extend
through fiscal year 2015/16. Approximately $8.5 million of the $33.1 million was spent in
fiscal year 2011/12, $5.8 million in fiscal year 2012/13, and $3.9 million in fiscal year
2013/14 for projects in planning, design and construction. Fiscal year 2013/14 projects
included the following:
Yorba Linda Blvd Booster Pump Station Project
Total Project Budget: $1,898,000 Proposed FY 14/15 Budget: $100,000
The project consists of replacing the existing Palm Avenue Booster Pump Station with a
three -pump 5,000 -gpm capacity new pump station at Gun Club Road and Yorba Linda
Blvd. The project will make it possible to deliver more groundwater to the easterly
portion of the District's service area. Construction of the new pump station began in
FY12/13 and will be complete in FY 14/15. Incurred costs through FY 13/14 and
projected costs in FY 14/15 are estimated to be $1,798,000 and $100,000, respectively.
Well #21 Project
Total Project Budget: $2,307,000 Proposed FY 14/15 Budget: $940,000
Work began in FY 12/13 on plans for the drilling of the new well. In FY13/14, a test well
was drilled to confirm the quantity and quality of water for the well. Thereafter, the well
was drilled out and completed with a steel casing and pump- tested. Project costs in FY
13/14 and FY 14/15 are estimated to be $1,086,000 and $940,000, respectively. Work
planned for FY 14/15 includes construction of wellhead facilities and a discharge
pipeline.
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Well #22 Project
Total Project Budget: $2,500,000 Proposed FY 14/15 Budget: $445,000
Reconnaissance field investigation and site evaluations started in FY 13/14. In FY14/15,
a site is expected to be determined and the property acquired, at a budgeted cost of
$445,000. Budgeted for FY15/16 is the drilling of the well and the preparation of plans
for well equipping at an estimated cost of $800,000. Budgeted for FY 16/17 is
construction of wellhead facilities and a discharge pipeline at an estimated cost of
$1,247,000.
Fairmont Pump Station Upgrade Project
Total Project Budget: $6,300,000 Proposed FY 14/15 Budget: $2,500,000
The project is the refurbishment and upgrading of the Fairmont Booster Station. The
existing 37 -year old booster station will be demolished and its two booster pumps will be
replaced by six, pumping to two different pressure zones. A new building will be
constructed to house the pumps, as well as disinfection, electrical and back -up
generation facilities. The project will also include refurbishment of elements of the
Fairmont Reservoir. Planned for FY14/15 is completion of design plans and the
beginning of construction at an estimated cost of $2.5 million. Construction will continue
in FY 15/16 at an estimated cost of $2.9 million. Part of the cost of the improvements
will be offset by developer - provided funding.
Lakeview Grade Separation Project
Total Project Budget: $600,000 Proposed FY 14/15 Budget: $265,000
The Orange County Transportation Authority (OCTA) is the lead agency for a planned
Lakeview Avenue bridge over Orangethorpe Avenue and the adjacent BNSF Railroad
tracks. As part of the project, it will be necessary to replace and relocate the District's
water line currently in Lakeview Avenue through the project area. The District's share of
the pipeline relocation will be $250,000. Construction of the pipeline relocation work is
anticipated to begin mid -2014, with a mid -2015 completion for all utility relocations.
OCTA's bridge construction will follow.
Yorba Linda High School Park Pipeline Relocation Project
Total Project Budget: $370,000 Proposed FY 14/15 Budget: $325,000
The proposed Yorba Linda High School Park, within Placentia - Yorba Linda Unified
School District's (PYLUSD) property located south of Yorba Linda High School, includes
proposed grading with nearly 18 -feet of fill over our existing 39 -inch diameter Bryant
Cross Feeder (BCF) pipeline. The BCF pipeline will be unable to support the additional
fill, and must be relocated. Per the Pre - Annexation Agreement with PYLUSD, the
District is responsible for design and construction costs for relocating approximately 530
lineal feet of the BCF pipeline, at an estimated cost of $370,000. This work is
anticipated to start late summer 2014 and be completed by late 2014.
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Future Pipeline Replacement Project
Total Project Budget: $2,690,000 Proposed FY 14/15 Budget: $660,000
In accordance with the District's Asset Management Plan, the District is replacing older
water pipelines as part of an ongoing program. Staff will design approximately 2,000
feet of the more critical pipeline replacement reaches during FY 14/15, with pipeline
construction in late FY 14/15 to early FY15/16. Additional waterline replacement work
+will be designed and installed during subsequent fiscal years.
Deville Drive Waterline Extension
Total Project Budget: $50,000 Proposed FY 14/15 Budget: $25,000
The District will design and install approximately 130 -feet of 6 -inch diameter pipeline in
Deville Drive in accordance with a previous Agreement and payment made by a Deville
Drive property owner. Staff completed the design in -house during FY 13/14. Installation
is anticipated to be complete during FY 14/15.
Timber Ridge Booster Station Rehabilitation
Total Project Budget: $250,000 Proposed FY 14/15 Budget: $240,000
Timber Ridge Booster Station is undersized and needs additional emergency pumping
capacity. Staff will evaluate the least cost method to install a new gas engine enclosed
with a new building, or install a new electric generator and possibly upsizing one or
more of the existing pumps.
Future PRS Rehabilitation
Total Project Budget: $1,430,000 Proposed FY 14/15 Budget: $100,000
The District will solicit proposals for design and rehabilitation upgrades of the existing
Pressure Reducing Stations (PRS) that require frequent maintenance, and do not meet
current District standards. Design work will be completed during FY 14/15 and
construction is anticipated to be complete during FY 15/16.
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Other major accomplishments in fiscal year 2013/14 include the following:
• Completed Construction of 2012 Waterline Project
• Completed Construction of Elk Mountain Booster Surge Tank
• Completed Construction of Yorba Linda Boulevard Pipeline Project
• Commenced Construction of Yorba Linda Booster Station Project
• Commenced Construction of Well #21
• Commenced Design of Fairmont Booster Pump Station Replacement Project
• Received Positive Auditors Letter for FY 2012/13
• Received State and National Recognition for CAFR
• Received State and National Recognition for FY 2013/14 Budget document
• Executed Multi -Year Memorandum of Understanding (MOU)
• Annexation to OCWD Approved
Future Years
Amidst the national economic conditions and the Governor's state declaration of
Drought Water Emergency, our region continues to face water supply issues due to
extended drought seasons, as well as judicial, environmental and regulatory restrictions.
First and foremost, we continue to monitor the State's mandated water conservation
restrictions and potential shift of our property tax revenues. Secondly, with water
conservation and reduced water sales, our ability to maintain a high level of services
while holding costs down, has been seriously challenged.
Water Rate & Increases
In FY 2013/14, YLWD charged a uniform commodity rate of $2.64 per unit and a
monthly fixed charge based on the size of the meter. Meters sized 5/8 and 3/4 inch
were charged $8.08, 1 inch meters were charged $14.67, 1 '/2 inch meters were
charged $29.34, 2 inch meters were charged $46.94, 3 inch meters were charged
$102.67, 4 inch meters were charged $187.80 and 6 inch meters were charged
$410.67. One unit of water equals 748 gallons, equating one gallon of water to a cost of
approximately $0.0035 (one third of a cent). At an average of 30 units of water per
month (approximately 22,500 gallons), a typical 1 inch metered YLWD customer would
pay about $ 93.87 on the average for their monthly water bill. YLWD also provided
wastewater service to all 24,796 of the District's water customer base in fiscal year
2013/14, at a charge of $5.50 per month. The District also provided sewer service to
approximately 1,400 customers that it does not provide water to. These customers, in
the "Locke Ranch" area of Yorba Linda, are served by a private water company —
Golden State Water Company.
These rates are the result of a Cost of Service Analysis and Alternative Water Rate
Feasibility Study in fiscal year 2011/12, which addressed the impacts of implementing a
tiered water conservation rate structure and /or a budget -based water rate structure for
customers of the District. The result of this study was a three -year rate increase to
customers on the Monthly Service Charge, approved by the Yorba Linda Water District
Board of Directors. The approved rate increase is a percentage on the District's overall
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revenue and consists of a 1.5% revenue increase beginning on July 1, 2012, a 2.5%
increase beginning on July 1, 2013, and a 2.5% increase beginning on July 1, 2014.
These increases will assist in covering the costs associated with operating, maintaining
and replacing the District's water facilities. The District will also be passing through to
customers any future increases on the commodity charge from its water suppliers as
these charges are based on the amount of water sold.
In conjunction with this rate increase, the Board of Directors recommended that staff
pursue a line of credit with Wells Fargo for $7 million with a 3 -year renewable term and
an interest rate based on 1 month London Inter -Bank Offered Rate (LIBOR), currently
calculated at 1.10 %. The line of credit will allow the District to pursue future capital
improvement projects with a minimal borrowing cost and a lowered financial burden to
our customers.
The District also issued Refunding Revenue Bonds, Series 2012A, which advance
refunded the 2003 Certificates of Participation (COP) Bonds. This is estimated to save
approximately $80,000 annually.
In FY 2014/15, Yorba Linda Water District faces many challenges related to water
supply and demand. The District's water supply is currently derived from both
groundwater and import water, approximately 50% from each source. Both import and
groundwater prices have dramatically increased over the past four fiscal years, and it is
anticipated that costs will continue to increase as supplies become more strained from
projected population increases, cyclical drought conditions, and environmental and
regulatory restrictions.
Enhanced Outreach & Communications
The District continues to enhance its communications with and presence within the
community. Within the FY 2013/14 Budget, the District funded a Public Information
Officer position and one part -time Public Affairs Intern positions. The Public Affairs
division of the Administration department develops and disseminates information to the
public and supports water conservation programs with the overall goal of developing a
more transparent image of the District to the community.
The District's Citizens Advisory Committee, made up of local residents, who serve as
ambassadors to the community, meet with District staff on a monthly basis to discuss
and provide recommendations on various pending District issues. The committee has
been actively involved with issues such as the water rate increase, the water
conservation ordinance, continuing conservation outreach, public information, and
various other matters as they arise. In November 2010, three Citizens Advisory
Committee members ran for, and won election to seats on the District Board of
Directors. Those three seats will be up for re- election in November 2014.
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Technological Advancements in Progress
Technological advancements include the incorporation of a Computerized Maintenance
& Management System (CMMS), which automates and tracks field work orders and
provide actual costs to perform work -order related functions. In planning is an
Automated Purchase Requisitioning System, which will provide better workflow and
approvals for purchasing items, as well as have direct integration with the new financial
software.
Internal Control Structure
District management is responsible for the establishment and maintenance of the
internal control structure that ensures the assets of the District are protected from loss,
theft or misuse. The internal control structure also ensures adequate accounting data is
compiled to allow for the preparation of financial statements in conformity with generally
accepted accounting principles. The District's internal control structure is designed to
provide reasonable assurance that these objectives are met. The concept of reasonable
assurance recognizes that (1) the cost of a control should not exceed the benefits likely
to be derived, and (2) the valuation of costs and benefits requires estimates and
judgments by management.
Budgetary Control
The District Board of Directors adopts an operating and capital budget every year. The
budget authorizes and provides the basis for reporting and control of financial
operations and accountability for the District's enterprise operations and capital projects.
The budget and reporting treatment applied to the District is consistent with the accrual
basis of accounting and the financial statement basis.
Cash and Investment Management
In order of priority, the District's objectives when investing, reinvesting, purchasing,
acquiring, selling and managing public funds are as follows:
1. Safety: Safety of principal is the foremost objective of the investment program.
Investments made by the District are undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio. To attain this objective,
diversification is required to prevent any potential loss on any individual security
or depository from exceeding the income generated from the remainder of the
portfolio.
2. Liquidity: The investment portfolio will remain sufficiently liquid to enable the
District to meet all operating requirements that might be reasonably anticipated.
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3. Return on Investments: The investment portfolio shall be designed with the
objective of attaining a market rate of return throughout budgetary and economic
cycles, taking into account the investment risk constraints and the cash flow
characteristics of the portfolio.
Audit and Financial Reporting
State Law and Bond covenants require the District to obtain an annual audit of its
financial statements by an independent certified public accountant. The accounting firm
of White, Nelson, Diehl, Evans LLP has conducted the audit of the District's financial
statements. Their unqualified (clean) Independent Auditor's Report appears in the
Financial Section.
Other References
More information is contained in the Management's Discussion and Analysis and the
Notes to the Basic Financial Statements found in the Financial Section of the report.
Acknowledgements
Preparation of this report was accomplished by the combined efforts of District staff.
We appreciate the dedicated efforts and professionalism that these staff members
contribute to the District. We would also like to thank the members of the Board of
Directors and especially the Finance - Accounting Committee members for their
continued support in planning and implementation of the Yorba Linda Water District's
fiscal policies.
Respectfully submitted,
Marc Marcantonio
General Manager
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D Lug
Finance Manager
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Yorba Linda Water District
Board of Directors and Executive Staff
Robert R. Kiley, President
Michael J. Beverage
Director
Marc Marcantonio
General Manager
Gina Knight
HR & Risk Manager
Ric Collett, Vice President
Phil Hawkins
Director
Steve Conklin
Engineering Manager
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Delia Lugo
Finance Manager
W
Gary T. Melton
Director
John DeCriscio
Operations Manager
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Art Vega
Acting IT Manager
a
Yorba Linda
Water District
S.C.A.D.A. Into. 5vstems
Administrator Administrator
InsTec n iciation Into. 5vstems Systems Analyst/
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Management
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IIR & Risk
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Public IMormation
Officer
7Assistant t Customer Svc. Meter Services
Supervisor Lead
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Specialist
Customer Srv. Meter Reader
1 Rep. l /II /III 1/11
4 FTE 3 FTE
Organization Chart
FY 2014/15
Total: 77 FTE positions budgeted
1 part -time position (non- benefited)
Executive
Secretary
Records
Management
Specialist
Engineering
Manager
Sr. Project Water Quality Construction
Manager Engineer Project
Supervisor
WO Technician
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4 FTE
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4 PTE S FTE 9 FTE 3 FTE
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IIJ
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Yorba Linda Water District
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2013
Executive Director /CEO
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FINANCIAL SECTION
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INDEPENDENT AUDITORS' REPORT
Board of Directors
Yorba Linda Water District
Placentia, California
Report on the Financial Statements
We have audited the accompanying financial statements of Yorba Linda Water District (the District),
as of and for the year ended June 30, 2014, and the related notes to the financial statements, which
collectively comprise the District's financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America, the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, and the State Controller's Minimum Audit
Requirements for California Special Districts. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditors consider internal control relevant to the District's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the District's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
-1-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
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Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of Yorba Linda Water District, as of June 30, 2014, and the respective
changes in financial position and cash flows thereof for the year then ended in accordance with
accounting principles generally accepted in the United States of America, as well as the accounting
systems prescribed by the State Controller's Office and State regulations governing Special Districts.
Other Matters
Partial Summarized Comparative Information
The financial statements include partial year comparative information. Such information does not
include all of the information required to constitute a presentation in accordance with accounting
principles generally accepted in the United States of America. Accordingly, such information should
be read in conjunction with the District's financial statements for the year ended June 30, 2013 from
which such partial information was derived.
Report on Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis and other post - employment benefit plan - schedule of funding
progress, as identified in the accompanying table of contents as required supplementary information,
be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic or historical context. We have applied certain limited procedures to
the required supplementary information in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during the
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the District's financial statements. The introductory section, supplementary
information consisting of combining schedules, schedule of operating expenses by cost center and
nature of expenses for water and sewer, schedule of capital assets and statistical section, as listed in the
table of contents, are presented for purposes of additional analysis and are not a required part of the
basic financial statements.
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Other Matters (Continued)
Other Information (Continued)
The combining schedules, schedule of operating expenses by cost center and nature of expenses for
water and sewer and schedule of capital assets, as listed in the table of contents, are the responsibility
of management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the combining schedules, schedule of operating expenses by cost center and
nature of expenses for water and sewer and schedule of capital assets are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
The introductory section and statistical section have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion or
provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
September 12, 2014 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 grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering
the District's internal control over financial reporting and compliance.
Irvine, California
September 12, 2014
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2014
The following Management's Discussion and Analysis ( "MD &A ") of activities and financial
performance of the Yorba Linda Water District ( "District ") provides an introduction to the financial
statements of the District for the fiscal year ended June 30, 2014. We encourage readers to consider the
information presented here in conjunction with the transmittal letter in the Introductory Section and
with the basic financial statements and related notes, which follow this section.
Financial Highlights
• The District's net position increased by $6 million, or a 3.7% increase in net position.
a During the year the District's revenues were $34.1 million, up 10.1%.
• During the year, the District's expenses were $35.1 million, up 3.8 %.
Required Financial Statements
This annual report consists of a series of financial statements. The Statement of Net Position,
Statement of Revenues, Expenses and Changes in Net Position and Statement of Cash Flows provide
information about the activities and performance of the District using accounting methods similar to
those used by private sector companies.
The District's statements consist of two funds; the Water Fund and the Sewer Fund. The District's
records are maintained on an enterprise basis, as it is the intent of the Board of Directors that the costs
of providing water and sewer to the customer of the District are financed primarily through user
charges.
The Statement of Net Position includes all of the District's investments in resources (assets), deferred
outflows of resources, obligations to creditors (liabilities) and deferred inflow of resources. It also
provides the basis for computing a rate of return, evaluating the capital structure of the District and
assessing the liquidity and financial flexibility of the District. All of the current year's revenue and
expenses are accounted for in the Statement of Revenues, Expenses and Changes in Net Position. This
statement measures the success of the District's operations over the past year and can be used to
determine if the District has successfully recovered all of its costs through its rates and other charges.
This statement can also be used to evaluate profitability and credit worthiness. The final required
financial statement is the Statement of Cash Flows, which provides information about the District's
cash receipts and cash payments during the reporting period. The Statement of Cash Flows reports cash
receipts, cash payments and net changes in cash resulting from operations, investing, non - capital
financing, and capital and related financing activities and provides answers to such questions as where
did cash come from, what was cash used for, and what was the change in cash balance during the
reporting period.
See independent auditors' report.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2014
Financial Analysis of the District
One of the most important questions asked about the District's finances is, "Is the District better off or
worse off as a result of this year's activities ?" The Statement of Net Position and the Statement of
Revenues, Expenses and Changes in Net Position report information about the District in a way that
helps answer this question. These statements include all assets, deferred outflows of resources,
liabilities, and deferred inflows of resources using the accrual basis of accounting, which is similar to
the accounting used by most private sector companies. All of the current year's revenues and expenses
are taken into account regardless of when the cash is received or paid.
These two statements report the District's net position and changes in them. You can think of the
District's net position (the difference between assets, deferred outflows of resources, liabilities, and
deferred inflows of resources), as one way to measure the District's financial health, or financial
position. Over time, increases or decreases in the District's net position is one indicator of whether its
financial health is improving or deteriorating. However, one will need to consider other non - financial
factors such as changes in economic conditions, population growth, zoning and new or changed
government legislation, such as changes in Federal and State water quality standards.
Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the basic financial statements. The notes to the basic financial statements can be found on pages 19
through 46.
See independent auditors' report.
9 Me
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
Statement of Net Position
Assets:
Current assets
Restricted assets
Capital assets, net
Total assets
Deferred Outflows of Resources:
Deferred amount on refunding
Liabilities:
For the Year Ended June 30, 2014
2014
2013
Change
$ 31,772,410 $ 21,994,679 $ 9,777,731
2,229,419 2,171,030 58,389
199,641,820 200,985,168 (1,343,348)
233,643,649 225,150,877 8,492,772
474,939 498,686 (23,747)
Liabilities payable from unrestricted current assets
6,390,185
6,157,781
232,404
Liabilities payable from restricted assets
1,087,095
975,640
111,455
Non - current liabilities
58,864,439
56,789,561
2,074,878
Total liabilities
66,341,719
63,922,982
2,418,737
Net position:
Net investment in capital assets
161,159,541
161,494,158
(334,617)
Unrestricted
6,617,328
232,423
6,384,905
Total net position $
167,776,869 $
161,726,581 $
6,050,288
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. In the case of the District, assets and deferred outflows of resources of the District exceeded
liabilities by $167.8 million and $161.7 million as of June 30, 2014 and 2013, respectively.
By far the largest portion of the District's net position (96% and 100% as of June 30, 2014 and 2013,
respectively) reflects the District's investment in capital assets (net of accumulated depreciation) less
any related debt used to acquire those assets that is still outstanding. The District uses these capital
assets to provide services to customers within the District's service area; consequently, these assets are
not available for future spending.
For the year ended June 30, 2014, the District showed a positive balance in its unrestricted net position
of $6.6 million, which indicates that there are reserves to be utilized in future years, which is a
significant improvement from the stated balance of $232 thousand for the year ended June 30, 2013.
See independent auditors' report.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2014
Statement of Revenues, Expenses and Changes in Net Position
Revenues:
Operating revenues:
Water sales
Sewer revenue
Other operating revenue
Total operating revenues
Non - operating revenues:
Investment income
Property taxes
Other non - operating income
Total non - operating revenue
Total revenues
Expenses:
Operating expenses:
Variable costs
Pesonnel services
Supplies and services
Depreciation
Total operating expenses
Non - operating expenses:
Interest expense
Bond issuance cost
Other non - operating expense
Total non - operating expenses
Total expenses
2014
$ 28,376,082
1,762,816
1,047,625
31,186,523
145,048
1,394,722
1,325,685
2,865,455
34,051,978
14,673,144
7,529,481
3,849,183
7,315,084
33,366,892
1,715,429
47,948
1,763,377
35,130,269
Net income(loss) before capital contributions (1,078,291)
and extraordinary item
Capital contributions 2,128,579
Extraordinary item 5,000,000
2013
$ 26,369,940
1,762,039
723,577
28,855,556
137,569
1,340,916
588,854
2,067,339
30,922,895
13,509,336
7,225,729
4,222,398
6,884,213
31,841,676
1,781,416
192,410
35,954
2,009,780
33,851,456
(2,928,561)
1,174,673
Change
$ 2,006,142
777
324,048
2,330,967
7,479
53,806
736,831
798,116
3,129,083
1,163,808
303,752
(373,215)
430,871
1,525,216
(65,987)
(192,410)
11,994
(246,403)
1,278,813
1,850,270
953,906
5,000,000
Change in net position
6,050,288
(1,753,888)
7,804,176
Net position, beginning of year
161,726,581
163,480,469
(1,753,888)
Net position, end of year
$ 167,776,869 $
161,726,581 $
6,050,288
See independent auditors' report.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2014
The statement of revenues, expenses and changes of net position shows how the District's net position
changed during the fiscal years. In the case of the District, net position increased by $6 million and
decreased by $1.8 million for the fiscal years ended June 30, 2014 and 2013, respectively.
A closer examination of the sources of changes in net position reveals that:
In 2014, the District's total revenues increased by $3.1 million, primarily due to an increase in water
sales of $2.0 million as a result of a warm weather patterns and the lack of rain over the course of the
year and an increase in non - operating other income of $736 thousand due to recorded gains for the sale
of assets. Total expenses increased by $1.3 million primarily due to increased variable water costs of
$2.0 million due to increased water purchases. In addition, the District recorded a receipt of funds from
the resolution of a claim as an Extraordinary Item in the amount of $5 million.
In 2013, the District's total revenues increased by $933 thousand, primarily due to an increase in water
sales of $1.3 million as a result of a warmer summer than the two previous years and an improving
economy. In addition, total expenses increased by $2.6 million primarily due to increased variable
water costs of $1.2 million due to increased water purchases and an overall increase of $950 thousand
in the remaining operating expense categories.
See independent auditors' report.
M
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2014
Capital Assets
Changes in capital asset amounts for 2014 were as follows:
Balance Transfers/ Balance
2013 Additions Deletions 2014
Capital assets:
Capital assets, not being depreciated
$
5,835,304
$ 5,658,198
$ (4,596,188) $
6,897,314
Capital assets, being depreciated
264,004,834
4,915,408
(1,073,446)
267,846,796
Less accumulated depreciation
(68,995,334)
(7,315,084)
1,069,185
(75,241,233)
Total capital assets, net
$
200,844,804
$ 3,258,522
$ (4,600,449) $
199,502,877
Changes in capital asset amounts for 2013 were as follows:
Balance
Transfers/
Balance
2012
Additions
Deletions
2013
Capital assets:
Capital assets, not being depreciated
$
10,886,493
$ 6,191,597
$ (11,242,786) $
5,835,304
Capital assets, being depreciated
252,375,491
11,736,626
(107,283)
264,004,834
Less accumulated depreciation
(62,212,128)
(6,884,213)
101,007
(68,995,334)
Total capital assets, net
$
201,049,856
$ 11,044,010
$ (11,249,062) $
200,844,804
At the end of fiscal year 2014 and 2013, the District's investment in capital assets amounted to $199.5
million and $200.8 million, respectively (net of accumulated depreciation). This investment in capital
assets includes land, transmission and distribution systems, reservoirs, tanks, pumps, buildings and
structures, equipment, vehicles and construction -in- process, etc. Major capital assets projects in fiscal
year 2013 -14 include Yorba Linda Boulevard Pipeline project, construction of various water and sewer
mains for development, and the purchase of various district vehicles.
Additional information regarding capital assets can be found in note 4 in Notes to Basic Financial
Statements.
See independent auditors' report.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2014
Long -Term Liabilities
Changes in long -term debt amounts for the year ended June 30, 2014 were as follows:
Additional information regarding long -term liabilities can be found in note 5 in Notes to Basic
Financial Statements.
See independent auditors' report.
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Beginning
Ending
Balance
Additions
Reductions
Balance
2008 Revenue Certificates
of Participation
$ 32,070,000 $
$
(705,000) $
31,365,000
2012A Refuding Certificate
of Participation
8,330,000
(260,000)
8,070,000
Subtotal
40,400,000
(965,000)
39,435,000
Add (Less):
2008 Pemium
651,695
(26,420)
625,275
2012A Premium
958,027
(47,703)
910,324
Total Certificates
42,009,722
(1,039,123)
40,970,599
Line of Credit
1,171,131
3,471,525
4,642,656
Compensated Balances
1,000,383
623,735
(576,776)
1,047,342
Total
$ 44,181,236 $
4,095;260 $
(1,615,899) $
46,660,597
Changes in long -term liabilities amounts for the year ended June 30, 2013 were as follows:
Beginning
Ending
Balance
Additions
Reductions
Balance
2003 Revenue Certificates
of Participation
$ 8,965,000 $
$ (8,965,000) $
-
2008 Revenue Certificates
of Participation
32,750,000
(680,000)
32,070,000
2012A Refuding Certificate
of Participation
-
8,330,000
-
8,330,000
Subtotal
41,715,000
8,330,000
(9,645,000)
40,400,000
Add (Less):
2003 Discount
(114,986)
-
114,986
-
2008 Pemiuin
678,115
-
(26,420)
651,695
2012A Premium
-
1,001,754
(43,727)
958,027
Total Certificates
42,278,129
9,331,754
(9,600,161)
42,009,722
Line of Credit
1,171,131
1,171,131
Compensated Balances
1,063,572
624,669
(687,858)
1,000,383
Total
$ 43,341,701 $
11,127,554
$ (10,288,019) $
44,181,236
Additional information regarding long -term liabilities can be found in note 5 in Notes to Basic
Financial Statements.
See independent auditors' report.
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YORBA LINDA WATER DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
For the Year Ended June 30, 2014
Requests for Information
This financial report is designed to provide the District's funding sources, customers, stakeholders and
other interested parties with an overview of the District's financial operations and financial condition.
Should the reader have questions regarding the information included in this report or wish to request
additional financial information, please contact the District at 1717 E. Miraloma Avenue, Placentia,
California 92807 or the Finance Department at (714) 701 -3040.
See independent auditors' report.
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BASIC FINANCIAL STATEMENTS
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YORBA LINDA WATER DISTRICT
STATEMENTS OF NET POSITION
June 30, 2014
(With prior year data for comparison only)
ASSETS AND DEFERRED OUTFLOWS 2014 2013
OF RESOURCES
14181a3=41111 :`Y.yX11I I
UNRESTRICTED ASSETS:
Cash and cash equivalents (Note 2)
$ 20,111,912
$ 10,354,438
Investments (Note 2)
7,141,791
7,051,042
Accounts receivable - water and sewer services
3,976,655
4,063,578
Accounts receivable - property taxes
24,597
16,885
Accrued interest receivable
11,991
8,205
Prepaid expenses and deposits
267,261
259,329
Inventory
238,203
241,202
TOTAL UNRESTRICTED ASSETS
31,772,410
21,994,679
RESTRICTED ASSETS:
Cash and cash equivalents (Note 2)
114,334
33,886
Investments (Note 2)
2,115,085
2,137,144
TOTAL RESTRICTED ASSETS
2,229,419
2,171,030
TOTAL CURRENT ASSETS
34,001,829
24,165,709
NONCURRENT ASSETS:
Capital assets (Note 4):
Non - depreciable
6,897,314
5,835,304
Depreciable, net of accumulated depreciation
192,605,563
195,009,500
Other post - employment benefit (OPEB) asset (Note 6)
138,943
140,364
TOTAL NONCURRENT ASSETS
199,641,820
200,985,168
TOTAL ASSETS
233,643,649
225,150,877
DEFERRED OUTFLOWS OF RESOURCES:
Deferred amount on refunding
474,939
498,686
TOTAL DEFERRED OUTFLOWS OF RESOURCES
474,939
498,686
See independent auditors' report and notes to basic financial statements. (Continued)
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YORBA LINDA WATER DISTRICT
STATEMENTS OF NET POSITION
(CONTINUED)
June 30, 2014
(With prior year data for comparison only)
LIABILITIES
CURRENT LIABILITIES:
PAYABLE FROM UNRESTRICTED CURRENT ASSETS:
Accounts payable
Accrued expenses
Compensated absences payable - current portion (Note 5)
Customer and construction deposits
Unearned revenue
Accrued interest payable
TOTAL PAYABLE FROM UNRESTRICTED CURRENT ASSETS
PAYABLE FROM RESTRICTED ASSETS:
Retention payable
Certificates of Participation - current portion (Note 5)
TOTAL PAYABLE FROM RESTRICTED ASSETS
TOTAL CURRENT LIABILITIES
LONG -TERM LIABILITIES (LESS CURRENT PORTION):
Unearned annexation revenue
Compensated absences (Note 5)
Payable on line of credit (Note 5)
Certificates of Participation (Note 5)
TOTAL LONG -TERM LIABILITIES (LESS CURRENT PORTION)
TOTAL LIABILITIES
NET POSITION:
Net investment in capital assets (Note 8)
Unrestricted
TOTAL NET POSITION
See independent auditors' report and notes to basic financial statements.
-15-
2014 2013
$ 4,748,341
$ 4,594,253
263,178
197,033
261,836
250,096
309,734
277,799
374,356
397,522
432,740
441,078
6,390,185 6,157,781
77,095 10,640
1,010,000 965,000
1,087,095 975,640
7,477,280 7,133,421
13,475,678
13,823,421
785,506
750,287
4,642,656
1,171,131
39,960,599
41,044,722
58,864,439 56,789,561
66,341,719 63,922,982
161,159,541 161,494,158
6,617,328 232,423
$ 167,776,869 $ 161,726,581
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
For the year ended June 30, 2014
(With prior year data for comparison only)
OPERATING REVENUES:
Water sales
Sewer revenues
Other operating revenues
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Variable water costs
Personnel services
Supplies and services
Depreciation
TOTAL OPERATING EXPENSES
OPERATING LOSS
NONOPERATING REVENUES (EXPENSES):
Property taxes
Investment income
Interest expense
Bond issuance costs
Other nonoperating revenues
Other nonoperating expenses
TOTAL NONOPERATING REVENUES (EXPENSES)
NET LOSS BEFORE CAPITAL CONTRIBUTIONS
AND EXTRAORDINARY ITEM
CAPITAL CONTRIBUTIONS
EXTRAORDINARY ITEM (NOTE 11)
CHANGES IN NET POSITION
NET POSITION - BEGINNING OF YEAR
NET POSITION - END OF YEAR
See independent auditors' report and notes to basic financial statements.
-16-
2014 2013
$ 28,376,082 $ 26,369,940
1,762,816 1,762,039
1,047,625 723,577
31,186,523 28,855,556
14,673,144
13,509,336
7,529,481
7,225,729
3,849,183
4,222,398
7,315,084
6,884,213
33,366,892 31,841,676
(2,180,369) (2,986,120)
1,394,722
1,340,916
145,048
137,569
(1,715,429)
(1,781,416)
-
(192,410)
1,325,685
588,854
(47,948)
(35,954)
1,102,078 57,559
(1,078,291) (2,928,561)
2,128,579
5,000,000
1,174,673
6,050,288 (1,753,888)
161,726,581 163,480,469
$ 167,776,869 $ 161,726,581
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
STATEMENTS OF CASH FLOWS
For the year ended June 30, 2014
(With prior year data for comparison only)
2014
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers
$ 31,243,814
$ 28,610,921
Cash payments to employees for salaries and wages
(7,414,956)
(8,188,469)
Cash payments to suppliers of goods and services
(18,245,150)
(17,945,308)
Otherrevenues
271,192
359,936
Other expenses
(24,201)
(1,219)
NET CASH PROVIDED BY OPERATING ACTIVITIES
5,830,699
2,835,861
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Cash received for extraordinary item
5,000,000
-
Proceeds from line of credit
3,471,525
1,171,131
Proceeds from property taxes and assessments
1,386,865
1,452,375
NET CASH PROVIDED BY
NONCAPITAL FINANCING ACTIVITIES
9,858,390
2,623,506
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Proceeds from annexation fees and capital contributions
200,942
180,772
Acquisition and construction of capital assets
(4,022,245)
(5,510,763)
Proceeds from sales of capital assets
615,655
10,502
Proceeds from long -term debt issuance
-
9,331,754
Repayment of certificates of participation
-
(9,127,367)
Bond issuance costs
-
(204,383)
Principal paid on long -term liability
(965,000)
(925,000)
Interest paid on long -term liability
(1,813,252)
(1,884,903)
NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES
(5,983,900)
(8,129,388)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale /purchase of investments, net
3,340
(7,242,582)
Interest and investment earnings
129,393
148,345
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES
132,733
(7,094,237)
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS
9,837,922
(9,764,258)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
10,388,324
20,152,582
CASH AND CASH EQUIVALENTS - END OF YEAR
$ 20,226,246
$ 10,388,324
See independent auditors' report and notes to basic financial statements.
(Continued)
-17-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
STATEMENTS OF CASH FLOWS
(CONTINUED)
For the year ended June 30, 2014
(With prior year data for comparison only)
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating loss
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Depreciation
Otherrevenues
Other expenses
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable
Inventory
Prepaid expenses and deposits
Other post - employment benefits (OPEB) asset
Increase (decrease) in liabilities:
Accounts payable and accrued expenses
Accrued salaries and wages
Pension related debt
Accrued compensated absences
Customer and construction deposits
Total adjustments
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION:
Unrestricted
Restricted
TOTAL CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION
NONCASH INVESTING, CAPITAL AND
RELATED FINANCING ACTIVITIES:
Amortization related to long -term debt
Capital contributions
Write -off bond discount for defeased bonds
See independent auditors' report and notes to basic financial statements.
-18-
2014 2013
$ (2,180,369) $ (2,986,120)
7,315,084 6,884,213
271,192 359,936
(24,201) (1,219)
86,923
(208,252)
2,999
43,079
(7,932)
(15,558)
1,421
(107,734)
220,543
(287,381)
66,145
44,126
-
(835,943)
46,959
(63,189)
31,935
9,903
8,011,068 5,821,981
$ 5,830,699 $ 2,835,861
$ 20,111,912 $ 10,354,438
114,334 33,886
$ 20,226,246 $ 10,388,324
$ 74,123 $ 70,147
$ 1,943,658 $ 1,174,673
$ - $ 114,986
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
NOTES TO BASIC FINANCIAL STATEMENTS
-19-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Organization and Description of the Reporting Entity:
The Yorba Linda Water District (the District) is an independent special district established
in 1959, which operates under the authority of Division 12 of the California Water Code for the
purpose of providing water and sewer services to the properties within the District. The
District is governed by a five member board of Directors elected by the voters in the area to
four -year terms. The District provides two services which include Water and Sewer. Water is
provided to the entire service area. Sewer is provided to about two - thirds of the service area.
The District's service area includes Yorba Linda and portions of Placentia, Anaheim, Brea, and
areas of unincorporated Orange County. The District provides water service to approximately
73,990 residents and sewer service to approximately 72,498 residents.
The financial statements present the District and its component units. The District is the
primary government unit. Component units are those entities which are financially
accountable to the primary government, either because the District appoints a voting majority
or the component unit's board, or because the component unit will provide a financial benefit
or impose a financial burden on the District.
The District's reporting entity includes the Yorba Linda Water District Public Financing
Corporation, a California nonprofit public benefit corporation, formed in July 2003 for the
purpose of providing assistance to the District and other public agencies in the State of
California of which the District is a member, or is otherwise engaged with in the financing,
refinancing, acquiring, constructing and rehabilitating of facilities, land and equipment, in the
sale or leasing of facilities, land and equipment for the use, benefit and enjoyment of the public
served by such agencies and any other purpose incidental thereto). Although the District and
the Public Facilities Corporation are legally separate entities, the District's Board of Directors
is financially responsible for the Public Financing Corporation and, therefore, the
accompanying financial statements include the accounts and records of the Public Financing
Corporation using the blending method as required by accounting principles generally accepted
in the United States of America. There are no separate financial statements for the Public
Financing Corporation.
b. Basic Financial Statements:
The basic financial statements are comprised of the Statements of Net Position, the Statements
of Revenues, Expenses and Changes in Net Position, the Statements of Cash Flows and the
notes to the basic financial statements.
See independent auditors' report.
-20-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c. Basis of Presentation:
The accounts of the District are an enterprise fund. An enterprise fund is a Proprietary type
fund used to account for operations (a) that are financed and operated in a manner similar to
private business enterprises - where the intent of the governing body is that the costs (expenses,
including depreciation) of providing goods or services to the general public on a continuing
basis be financed or recovered primarily through user charges; or (b) where the governing body
has decided that periodic determination of revenues earned, expenses incurred, and/or net
income is appropriate for capital maintenance, public policy, management control,
accountability or other purposes.
d. Measurement Focus and Basis of Accounting:
Measurement focus is a term used to describe "which" transactions are recorded within the
various financial statements. Basis of accounting refers to "when" transactions are recorded
regardless of the measurement focus applied. The accompanying financial statements are
reported using the economic resources measurement focus, and the accrual basis of accounting.
Under the economic measurement focus all assets, deferred outflows of resources, liabilities
and deferred inflows of resources (whether current or noncurrent) associated with these
activities are included on the Statement of Net Position. The Statement of Revenues, Expenses
and Changes in Net Position present increases (revenues) and decreases (expenses) in total net
position. Under the accrual basis of accounting, revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows.
e. New Accounting Pronouncements:
Current Year Standards:
GASB 66 - "Technical Corrections, an amendment of GASB Statement No. 10 and Statement
No. 62 ", required to be implemented in the current fiscal year did not impact the District.
GASB 70 - "Accounting and Financial Reporting for Nonexchange Financial Guarantees",
required to be implemented in the current fiscal year did not impact the District.
See independent auditors' report.
-21-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. New Accounting Pronouncements (Continued):
Pending Accounting Standards:
GASB has issued the following statements which may impact the District's financial reporting
requirements in the future:
• GASB 68 - "Accounting and Financial Reporting for Pensions, an amendment of GASB
Statement No. 27 ", effective for the fiscal years beginning after June 15, 2014.
• GASB 69 - "Government Combinations and Disposals of Government Operations
effective for periods beginning after December 15, 2013.
• GASB 71 - "Pension Transition for Contributions Made Subsequent to the Measurement
Date, an Amendment of GASB Statement No. 68", effective for periods beginning after
June 15, 2014.
f. Cash and Cash Equivalents:
The District considers all highly liquid investments with a maturity of three months or less at
the time of purchase to be cash equivalents.
g. Investments and Investment Policy:
The District has adopted an investment policy directing the District's General Manager or
Finance Manager to invest, reinvest, sell or exchange securities.
Investments are stated at fair value which represents the quoted or stated market value.
Changes in fair value that occur during a fiscal year are recognized as investment income
reported for that fiscal year. Investment income includes interest earnings, changes in fair
value, and any gains or losses realized upon the liquidation or sale of investments.
h. Accounts Receivable:
The District extends credit to customers in the normal course of operations. Management has
evaluated the accounts and believes they are all collectible. Management evaluates all
accounts receivable and if it is determined that they are uncollectible they are written off as a
bad debt expense. A charge of $29,632 was made to bad debt expense for the fiscal year ended
June 30, 2014.
See independent auditors' report.
-22-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
i. Prepaid Expenses:
Certain payments to vendors reflects costs or deposits applicable to future accounting periods
and are recorded as prepaid items in the basic financial statements.
j. Inventory:
Inventory consists primarily of materials and supplies used in the construction and
maintenance of the water and sewer systems and are stated at cost using the average -cost
method on a first in, first out basis.
k. Capital Assets:
Capital assets acquired and/or constructed are capitalized at historical cost. District policy has
set the capitalization threshold for reporting capital assets at $5,000. Contributed assets are
recorded at estimated fair market value at the date of contribution. Upon retirement or other
disposition of capital assets, the cost and related accumulated depreciation are removed from
the respective balances and any gains or losses are recognized.
Depreciation is recorded on the straight -line basis over the estimated useful lives of the assets
as follows:
Source of Supply
30 to 75 years
Pumping Plant
20 to 40 years
Water Treatment Plant
12 to 40 years
Sewer Plant
5 to 60 years
Transmission and Distribution Plant
10 to 40 years
General Plant
3 to 40 years
1. Interest Expense:
The District incurs interest charges on the Line of Credit and Certificates of Participation.
Interest expense of $15,362 has been capitalized as an addition to the cost of construction for
the year ended June 30, 2014.
See independent auditors' report.
-23-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
m. Deferred Outflows /Inflows of Resources:
In addition to assets, the statement of net position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element, deferred ou flows of
resources, represents a consumption of net position that applies to future periods and so will
not be recognized as an outflow of resources (expense) until then. The District has one item
that qualifies for reporting in this category. It is the deferred loss on refunding reported in the
Statement of Net Position. A deferred loss on refunding results from the difference in the
carrying value of refunded debt and its reacquisition price. This amount is deferred and
amortized over the shorter of the life of the refunded or refunding debt.
In addition to liabilities, the statement of net position will sometimes report a separate section
for deferred inflows of resources. This separate financial statement element, deferred inflows
of resources, represents an acquisition of net position that applies to future periods and will not
be recognized as an inflow of resources (revenue) until that time. The District does not have
any applicable deferred inflows of resources.
n. Compensated Absences:
The District's policy is to permit employees to accumulate earned vacation and sick leave. The
liability for vested vacation and sick leave is recorded as an expense when earned. Employees
may carry forward up to one and one -half years of earned vacation days and an unlimited
number of sick leave days.
Upon termination or retirement, permanent employees are entitled to receive compensation at
their current base salary for all unused vacation leave except for those employees that have not
completed the probationary period.
Permanent employees that retire in accordance with the Public Employee's Retirement System
qualifications are entitled to receive cash compensation at their current base salary for
three - eighths of all unused sick leave and the remaining five- eighths of the unused sick leave is
contributed to the employee's PERS account. The District has accrued 100% of the unused
sick leave as a liability as it expects most employees to meet the PERS requirements when
retiring or leaving the District.
o. Construction Advances and Deposits:
Construction deposits are collected by the District to cover the cost of construction projects
within the District. Funds in excess of project costs are refunded to the customer.
See independent auditors' report.
-24-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
p. Construction Bonding Deposits:
The District's policy is to maintain certain bonding requirements for water and sewer
construction projects performed within District boundaries to ensure the proper completion of
the project. Deposited amounts are refunded upon final approval of the project.
q. Unearned Revenue:
Unearned revenue consists of customer refunds that have not been cashed and prepaid
connection fees. Connection fees are collected by the District to cover the cost of service
connections within the District. Funds in excess of connection costs are refunded to the
customer.
r. Unearned Annexation Revenue:
The District collects a fee from newly annexed developments for all residential and
commercial properties. This fee is in -lieu of the District's share of the I% property tax revenue
which the District no longer received post- Proposition 13. The fee is a present worth value
required to generate a forty year revenue stream equivalent to the lost property tax revenue. It
is calculated based on the fair market value estimate of the improved property at the time the
fee is collected and based on the current rate of return on the District's investments. The
deposit balance accrues interest and provides a source of operational revenue for the District.
This unearned revenue source may be used for capital facilities in the future if approved by the
Board.
s. Net Position:
In the Statement of Net Position, net position is classified in the following categories:
• Net investment in capital assets - This amount consists of capital assets net of accumulated
depreciation and reduced by outstanding debt that is attributed to the acquisition,
construction, or improvement of the assets.
• Restricted net position - This amount is restricted by external creditors, grantors,
contributors, or laws or regulations of other governments.
• Unrestricted net position - This amount is all net position that does not meet the definition
of "net investment in capital assets" or "restricted net position ".
See independent auditors' report.
-25-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
t. Net Position Flow Assumptions:
Sometimes the District will fund outlays for a particular purpose from both restricted
(e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the
amounts to report as restricted - net position and unrestricted - net position in the Statement of
Net Position, a flow assumption must be made about the order in which the resources are
considered to be applied.
It is the District's practice to consider restricted - net position to have been depleted before
unrestricted - net position is applied.
u. Operating Revenues and Expenses:
Operating revenues, such as charges for services (water sales and sewer service charges) result
from exchange transactions associated with the principal activity of the District. Nonoperating
revenues, such as property taxes and assessments, and investment income, result from
nonexchange transactions or ancillary activities in which the District receives value without
directly giving equal value in exchange.
Operating expenses include the cost of sales and services, administrative expenses and
depreciation on capital assets. All expenses not meeting this definition are reported as
nonoperating expenses.
v. Property Taxes and Assessments:
The Orange County Assessor's Office assesses all real and personal property within the County
each year. The Orange County Tax Collector's Office bills and collects the District's share of
property taxes and assessments. The Orange County Treasurer's Office remits current and
delinquent property tax collections to the District throughout the year. Property taxes in
California are levied in accordance with Article XIIIA of the State Constitution at 1% of
countywide assessed valuations. This levy is allocated pursuant to state law to the appropriate
units of local governments.
See independent auditors' report.
-26-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
v. Property Taxes and Assessments (Continued):
Property taxes receivable at year -end are related to property taxes collected by the Orange
County Tax Collector which have not been credited to the District's cash balance as of June 30.
The property tax calendar is as follows:
Lien Date:
Levy Date:
Due Dates:
Collection Dates:
w. Water and Sewer Sales:
January 1
July 1
First Installment - November 1
Second Installment - March 1
First Installment - December 10
Second Installment -April 10
The District recognizes water and sewer service charges based on cycle billings rendered to the
customers each month.
x. Capital Contributions:
Capital contributions represent cash and capital asset additions contributed to the District by
property owners or real estate developers desiring services that require capital expenditures or
capacity commitment.
y. Budgetary Policies:
The District adopts annual nonappropriated budget for planning, control and evaluation
purposes. Budgetary control and evaluation are affected by comparisons of actual revenues
and expenses with planned revenues and expenses for the period. Encumbrance accounting is
not used to account for commitments related to unperformed contracts for construction and
services.
z. Use of Estimates:
The financial statements are prepared in accordance with accounting principles generally
accepted in the United States of America and, accordingly, include amounts that are based on
management's best estimates and judgments. Accordingly, actual results could differ from the
estimates.
See independent auditors' report.
-27-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
2. CASH AND INVESTMENTS:
Cash and Investments:
Cash and investments as of June 30, 2014 are reported in the accompanying statement of net
position as follows:
Unrestricted Current Assets:
Cash and cash equivalents $ 20,111,912
Investments 7,141,791
Restricted Assets:
Cash and cash equivalents 114,334
Investments 2,115,085
Total Cash and Investments 29.483,122
Cash and investments as of June 30, 2014 consisted of the following:
Cash on hand $ 1,250
Deposits with financial institutions 4,999,634
Escrow deposits 77,095
Investments 24,405,143
Total Cash and Investments $ 29,483,122
Investments Authorized by the California Government Code and the District's Investment
Policy:
The table below identifies the investment types that are authorized for the District by the California
Government Code (or the District's investment policy, where more restrictive). The table also
identifies certain provisions of the California Government Code (or the District's investment
policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit
risk.
See independent auditors' report.
Me
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
2. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by the California Government Code and the District's Investment
Policy (Continued):
This table does not address investments of debt proceeds held by bond trustees that are governed
by the provisions of debt agreements of the District, rather than the general provisions of the
California Government Code or the District's investment policy.
Authorized Investment Type
Bank or Savings and Loans
Negotiable Certificates of Deposit
Local Agency Investment Fund (LAIF)
Orange County Commingled
Investment Pool
California Asset Management Program
United States Treasury Bills, Notes
and Bonds
United States Government Sponsored
Agency Securities
Corporate Bonds
Bankers Acceptances
Commercial Paper
CalTRUST Investment Pool
Money Market Funds
Maximum Maximum
* Excluding amounts held by bond trustee that are not subject to California Government Code
restrictions.
(1) Limited to bond proceeds held by the District.
N/A - Not Applicable
See independent auditors' report.
-29-
Percentage
Investment
Minimum
Maximum
of
in One
Credit
Maturity
Portfolio *
Issuer
Rating_
5 years
None
None
FDIC or
FSLIC
5 years
30%
None
A and FDIC/
collateralized
N/A
None
None
N/A
N/A
None
None
N/A
N/A
(1)
None
N/A
5 years
None
None
N/A
5 years
None
None
N/A
5 years
30%
None
A
180 days
10%
5%
A -1
270 days
25%
5%
A -1
N/A
None
None
N/A
N/A
20%
10%
N/A
* Excluding amounts held by bond trustee that are not subject to California Government Code
restrictions.
(1) Limited to bond proceeds held by the District.
N/A - Not Applicable
See independent auditors' report.
-29-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
2. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by Debt Agreements:
Investments of debt proceeds held by bond trustees are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the District's
investment policy. The table below identifies the investment types that are authorized for
investments held by bond trustees. The table also identifies certain provisions of these debt
agreements that address interest rate risk and concentration of risk.
Disclosures Relating to Interest Rate Risk:
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the District manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity as necessary to provide the cash flow and liquidity needed for
operations.
See independent auditors' report.
-30-
Maximum
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maturity_
Allowed
in One Issuer
Cash
None
None
None
United States Treasury Bills, Notes
and Bonds
None
None
None
United States Treasury Obligations
None
None
None
Resolution Funding Corp. (REFCORP)
None
None
None
Prefunded Municipal Bonds
None
None
None
United States Government Sponsored
Agency Securities
None
None
None
Commercial Paper
None
None
None
Money Market Funds
None
None
None
Certificates of Deposits
None
None
None
Guaranteed Investment Contracts
None
None
None
Bankers Acceptance
1 year
None
None
Repurchase Agreements
30 days
None
None
Local Agency Investment Fund
None
None
None
Disclosures Relating to Interest Rate Risk:
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the District manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity as necessary to provide the cash flow and liquidity needed for
operations.
See independent auditors' report.
-30-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
2. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Interest Rate Risk (Continued):
Information about the sensitivity of the fair values of the District's investments (including
investments held by bond trustee) to market interest rate fluctuations is provided by the following
table that shows the distribution of the District's investments by maturity as of June 30, 2014.
Disclosures Relating to Credit Risk:
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. Presented in the following table are the minimum rating
required by (where applicable) the California Government Code, the District's investment policy,
or debt agreements, and the actual Standard and Poor's credit rating as of June 30, 2014 for each
investment type.
Minimum
Legal
Remaining
Maturity (in Months)
Investment Type
12 Months
13 to 24
25 to 36
37 to 48 48 to 60
Ca1TRUST Investment Pool
Investment Type
or Less
Months
Months
Months Months
Totals
Ca1TRUST Investment Pool
$ 9,395,888
$ -
$ -
$ - $
- $ 9,395,888
LAIF
5,752,379
-
-
-
- 5,752,379
United States Government
Negotiable Certificates of Deposit
N/A
4,672,466
4,672,466
-
Sponsored Agency Securities
-
-
-
2,469,325
- 2,469,325
Negotiable Certificates of Deposit
-
249,281
496,776
3,926,409
- 4,672,466
Held by bond trustee:
-
2,115,085
United States Government
Sponsored Agency Securities
-
-
2,115,085
-
- 2,115,085
$ 15,148,267
$ 249,281
$ 2,611,861
$-5 7N4 $
- $24,405,143
Disclosures Relating to Credit Risk:
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. Presented in the following table are the minimum rating
required by (where applicable) the California Government Code, the District's investment policy,
or debt agreements, and the actual Standard and Poor's credit rating as of June 30, 2014 for each
investment type.
Minimum
See independent auditors' report.
-31-
24.405.143 19.819.293 4.585.850
Legal
Not
Investment Type
Rating
Total
Rated
AA+
Ca1TRUST Investment Pool
N/A
$ 9,395,888
$ 9,394,448
$ 1,440
LAIF
N/A
5,752,379
5,752,379
-
United States Government
Sponsored Agency Securities
N/A
2,469,325
-
2,469,325
Negotiable Certificates of Deposit
N/A
4,672,466
4,672,466
-
Held by bond trustee:
United States Government
Sponsored Agency Securities
N/A
2,115,085
-
2,115,085
See independent auditors' report.
-31-
24.405.143 19.819.293 4.585.850
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
2. CASH AND INVESTMENTS (CONTINUED):
Concentration of Credit Risk:
The investment policy of the District contains no limitations on the amount that can be invested in
any one issuer beyond that stipulated by the California Government Code with the exception of
banker's acceptances, commercial paper and money market funds which are limited to an
investment in any one issuer of 5 %, 5% and 10 %, respectively.
Custodial Credit Risk:
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, the District will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker - dealer) to a
transaction, the District will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. With respect to investments, custodial credit
risk generally applies only to direct investments in marketable securities. Custodial credit risk does
not apply to a local government's indirect investment in securities through the use of mutual funds
or government investment pools (such as LAIF and Ca1TRUST Investment Pool).
The California Government Code and the District's investment policy do not contain legal or
policy requirements that would limit the exposure to custodial credit risk for deposits or
investments, other than the following provision for deposits: The California Government Code
requires that a financial institution secure deposits made by state or local governmental units by
pledging securities in an undivided collateral pool held by a depository regulated under state law
(unless so waived by the governmental unit). The market value of the pledged securities in the
collateral pool must equal at least 110% of the total amount deposited by the public agencies.
California law also allows financial institutions to secure District deposits by pledging first trust
deed mortgage notes having a value of 150% of the secured public deposits.
As of June 30, 2014, all of the District's deposits with financial institutions were covered by
federal depository insurance limits or were held in collateralized accounts.
Investment in State Investment Pool:
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is
regulated by California Government Code Section 16429 under the oversight of the Treasurer of
the State of California. The fair value of the District's investment in this pool is reported in the
accompanying financial statements at amounts based upon the District's prorate share of the fair
value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that
portfolio). The balance available for withdrawal is based on the accounting records maintained by
LAIF, which are recorded on an amortized cost basis.
See independent auditors' report.
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Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
2. CASH AND INVESTMENTS (CONTINUED):
Investment in Ca1TRUST Investment Pool:
Ca1TRUST is a Joint Powers Agency Authority created by local public agencies to provide a
convenient method for local public agencies to pool their assets for investment purposes.
Ca1TRUST is governed by a Board of Trustees made up of experienced local agency treasurers and
investment officers. The Board sets overall policies for the program and selects and supervises the
activities of the investment manager and other agents. Ca1TRUST maintains and administers four
pooled accounts within the program: Money Market, Short-Term, Medium -Term and Long -Term.
The Money Market account permits daily transactions, with same -day liquidity (provided
redemption requests are received by 1:00 p.m. Pacific time), with no limit on the amount of funds
that may be invested. The Short-Term account permits an unlimited number of transactions per
month (with prior day notice), with no limit on the amount of funds that may be invested. The
Medium- and Long -Term accounts permit investments, withdrawals and transfers once per month,
with five days advance notice. All Ca1TRUST accounts comply with the limits and restrictions
placed on local agency investments by the California Government Code. CalTRUST imposes a
$250,000 minimum investment; however, there is no maximum limit. The fair value of the
District's investment in this pool is reported in the accompanying financial statements at amounts
based upon the District's percentage interest of the fair value provided by Ca1TRUST for the
Ca1TRUST accounts (in relation to the amortized cost of that portfolio). The balance available for
withdrawal is based on the accounting records maintained by Ca1TRUST.
3. RESTRICTED ASSETS:
Restricted assets were provided by, and are to be used for the following as of June 30, 2014:
Source Use 2014
Bond proceeds Repayment of debt 2,152,324
See independent auditors' report.
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Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
4. CAPITALASSETS:
Changes in capital assets for the year ended June 30, 2014 is as follows:
Capital assets, not being depreciated:
Land, mineral and water rights
Construction in progress
Total capital assets, not
being depreciated
Capital assets, being depreciated:
Source of supply
Pumping plant
Water treatment plant
Transmission and distribution plant
General plant
Total capital assets,
being depreciated
Less accumulated depreciation for:
Source of supply
Pumping plant
Water treatment plant
Transmission and distribution plant
General plant
Total accumulated depreciation
Total capital assets,
being depreciated, net
Total capital assets, net
Balance Balance
June 30, 2013 Additions Deletions June 30, 2014
$ 347,490 $ - $ (60,071) $ 287,419
5,487,814 5,658,198 (4,536,117) 6,609,895
5,835,304 5,658,198 (4,596,188) 6,897,314
6,096,155 - - 6,096,155
24,303,259 9,438 - 24,312,697
3,130,572 - - 3,130,572
209,226,145 4,621,435 - 213,847,580
21,248,703 284,535 (1,073,446) 20,459,792
264,004,834 4,915,408 (1,073,446) 267,846,796
(1,978,263)
(168,655) -
(2,146,918)
(5,733,159)
(906,913) -
(6,640,072)
(1,159,062)
(197,192) -
(1,356,254)
(52,111,243)
(4,880,941) -
(56,992,184)
(81013,607) (1,161,383) 1,069,185
(8,105,805)
(68,995,334) (7,315,084) 1,069,185 (75,241,233)
195,009,500 (2,399,676) (4,261) 192,605,563
200.844.804 3.258.522 $ (4.600.449) 199.502.877
Depreciation expense for the depreciable capital assets was $7,315,084 in 2014.
The District has been involved in various construction projects throughout the year. The balance of
construction in progress at June 30, 2014 is $6,609,895.
See independent auditors' report.
-34-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
5. LONG -TERM LIABILITIES:
Changes in long -term liabilities for the year ended June 30, 2014 were as follows:
Certificates of Participation:
2008 Revenue Certificates
of Participation
2012A Refunding Certificates
of Participation
Subtotal
Add (Less):
2008 Premium
2012A Premium
Total Certificates
of Participation
Line of credit
Compensated absences
Total
Balance
Balance Due Within
June 30, 2013 Additions Reductions June 30, 2014 One Year
$ 32,070,000 $
8,330,000
40,400,000
- $ (705,000) $ 31,365,000 $ 735,000
(260,000) 8,070,000 275,000
- (965,000) 39,435,000 1,010,000
651,695 - (26,420) 625,275 -
958,027 - (47,703) 910,324 -
42,009,722 - (1,039,123) 40,970,599 1,010,000
1,171,131 3,471,525 - 4,642,656 -
1,000,383 623,735 (576,776) 1,047,342 261,836
44.181.236 4.095.260 S (1.615.899) 46.660.597 1.271.836
2008 Revenue Certificates of Participation:
In February 2008, the District issued $34,995,000 2008 Revenue Certificates of Participation for
the purpose of financing the 2008 Capital Improvement Projects. The Certificates bear interest
ranging from 4% to 5 %, payable semiannually on April 1 and October 1. The Term Certificates of
$10,885,000 are due on October 1, 2038. The legal reserve requirement is $2,147,096. At
June 30, 2014 the reserve fund had a balance of $2,152,324. At June 30, 2014 the
2008 Certificates outstanding balance was $31,365,000.
The Certificates are obligations of the Corporation payable solely from payments received from
the District pursuant to the Installment Purchase Agreement, by and between the District and the
Corporation. The Installment Purchase Agreement requires the District to fix, prescribe and collect
rates and charges for the water service which will be at least sufficient to yield during each fiscal
year net revenues equal to 110% of the debt service for such fiscal year. For fiscal year 2014, the
net revenues equal to 230% of the debt service.
The Certificates of Participation are subject to federal arbitrage regulations. The District calculated
no arbitrage rebate due as of March 2013.
See independent auditors' report.
-35-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
5. LONG -TERM LIABILITIES (CONTINUED):
2008 Revenue Certificates of Participation (Continued):
The annual debt service requirements for the 2008 Revenue Certificates of Participation
outstanding at June 30, 2014 are as follows:
Year Ending
2015
2016
2017
2018
2019
2020-2024
2025-2029
2030-2034
2035-2039
Subtotal
Principal
$ 735,000
765,000
795,000
825,000
860,000
4,845,000
5,920,000
7,335,000
9,285,000
31,365,000
2012A Refunding Certificates of Participation:
Interest
$ 1,394,596
1,364,596
1,333,396
1,300,996
1,267,296
5,780,980
4,674,645
3,211,690
1,205,625
21,533,820
Total
$ 2,129,596
2,129,596
2,128,396
2,125,996
2,127,296
10,625,980
10,594,645
10,546,690
10,490,625
52,898,820
In September 2012, the District issued $8,330,000 of Revenue Refunding Certificates of
Participation, Series 2012A. The 2012A Certificates were issued to provide funds (1) to advance
refund all of the currently outstanding District Certificates of Participation Series 2003 and (2) to
pay costs of issuance of the 2012A Bonds. The District completed the refunding to reduce its total
debt service payments over the next 21 years by over $1.72 million, resulting in an economic gain
(difference between the present value of the old and new debt service payments) of over
$1.32 million. The 2003 Certificates were paid off in October 2012.
The Certificates bear interest ranging from 2% to 5 %, payable semiannually on April 1 and
October 1.
The Certificates are obligations of the Corporation payable solely from payments received from
the District pursuant to the Installment Purchase Agreement, by and between the District and the
Corporation. The Installment Purchase Agreement requires the District to fix, prescribe and collect
rates and charges for the water service which will be at least sufficient to yield during each fiscal
year net revenues equal to 110% of the debt service for such fiscal year. For fiscal year 2014, the
net revenues equal to 230% of the debt service.
The Certificates of Participation are subject to federal arbitrage regulations. The District has no
arbitrage calculation due until September 2017.
See independent auditors' report.
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Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
5. LONG -TERM LIABILITIES (CONTINUED):
2012A Refunding Certificates of Participation (Continued):
The annual debt service requirements for the 2012A Revenue Refunding Certificates of
Participation outstanding at June 30, 2014 are as follows:
Year Ending
2015
2016
2017
2018
2019
2020-2024
2025-2029
2030-2033
Subtotal
Line of Credit:
Principal
$ 275,000
280,000
285,000
295,000
310,000
1,730,000
2,190,000
2,705,000
8,070.000
Interest
$ 318,912
311,962
303,487
293,312
281,212
1,199,275
729,680
222,021
3,659.861
Total
$ 593,912
591,962
588,487
588,312
591,212
2,929,275
2,919,680
2,927,021
11,729.861
On September 24, 2012, the District established a $7,000,000 Line of Credit ( "Line ") pursuant to a
line of credit agreement ( "Credit Agreement ") with Wells Fargo Bank, NA. The Line is
subordinate to the 2008 Revenue Certificates of Participation and the Revenue Refunding Bonds,
Series 2012A and borrowings from it are due and payable by September 30, 2016, though the
maturity date can be extended by request of the District and agreement by the bank. The Line has
an interest rate equal to One -Month LIBOR + 0.90 %, with an annual unused commitment fee of
0.35 %. As of June 30, 2014, the District has drawn down $4,642,656 of the available line and has
incurred $41,845 of interest expense and fees.
The Credit Agreement requires the District to fix, prescribe and collect rates and charges for the
water service which will be at least sufficient to yield during each fiscal year net revenues equal to
110% of the debt service for such fiscal year. For fiscal year 2014, the net revenues equal to 230%
of the debt service.
Compensated Absences:
Compensated absences are comprised of unpaid vacation leave, sick leave and compensating time
off which are accrued as earned. (See Note In).
See independent auditors' report.
-37-
6
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
OTHER POST EMPLOYMENT BENEFITS (OPEB):
a. Plan Description:
The District, through a single employer defined benefit plan, provides post - employment health
care benefits. Specifically, the District provides health (medical, dental and vision) insurance
for its retired employees and directors, their dependent spouses (if married and covered on the
District's plan at time of retirement), or survivors in accordance with Board resolutions.
Medical coverage is provided for retired employees who are age 50 or over and who have a
minimum of 5 years service with the District. The District pays 100% of the premium for the
retiree and two- thirds of the premium amount for eligible dependents accrued at a rate of one
year for every three years of service. Two - thirds of the premium amount of medical coverage
is provided for the surviving spouse of retired employees for the remaining vested period. The
plan does not provide a publicly available financial report.
b. Funding Policy:
The contribution requirements of plan members and the District are established and may be
amended by the District, District's Board of Directors, and/or the employee associations.
Currently, contributions are not required from plan members. The District has established a
trust to fund future OBEP benefits. For the year ended June 30, 2014, the District made a
contribution of $187,756 to the OPEB trust.
c. Annual OPEB Cost and Net OPEB Asset:
The District's annual OPEB cost (expense) is calculated based on the annual required
contribution of the employer (ARC), an amount actuarially determined in accordance with
parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an
ongoing basis, is projected to cover normal cost each year and to amortize any unfunded
liabilities of the plan over a period not to exceed thirty years.
The following table shows the components of the District's annual OPEB cost for the year, the
amount actually contributed to the plan, and changes in the District's net OPEB obligation to
the Retiree Health Plan:
Annual required contribution
Interest on net OPEB asset
Adjustment to annual required contribution
Annual OPEB cost (expense)
Actual contributions made
Decrease in net OPEB asset
Net OPEB asset - beginning of year
Net OPEB asset - end of year
See independent auditors' report.
$ 187,756
(10,176)
11,597
189,177
(187,756)
1,421
140,364)
(138.943)
6
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED):
c. Annual OPEB Cost and Net OPEB Asset (Continued):
The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan,
and the net OPEB obligation (asset) for the years ended June 30, 2014, 2013 and 2012 were as
follows:
Fiscal
Year
Ended
6/30/12
6/30/13
6/30/14
Annual
OPEB
Cost
$ 164,390
170,501
189,177
d. Funded Status and Funding Progress:
Percentage
of Annual
OPEB Costs
Contributed
194.10%
163.87%
99.25%
Net
OPEB
Obligation
(Asset)
$ (32,630)
(140,364)
(13 8,943)
As of July 1, 2013, the most recent actuarial valuation date, the plan was 28.36 percent funded.
The actuarial accrued liability for benefits was $1,896,791, and the actuarial value of assets was
$537,913, resulting in an unfunded actuarial accrued liability (UAAL) of $1,358,878. Assets
were valued using a five year smoothing formula with a 20% corridor around market value.
The covered payroll (annual payroll of active employees covered by the plan) was $5,200,000
and the ratio of the UAAL to the covered payroll was 26.13 %.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about rates of employee turnover, retirement, mortality, as well as economic
assumptions regarding claim costs per retiree, healthcare inflation and interest rates. Amounts
determined regarding the funded status of the plan and the annual required contributions of the
employer are subject to continual revision as actual results are compared with past expectations
and new estimates are made about the future. The schedule of funding progress, presented as
required supplementary information following the notes to the financial statements, presents
multi -year trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for benefits.
See independent auditors' report.
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Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
6. OTHER POST EMPLOYMENT BENEFITS (OPEB) (CONTINUED):
e. Actuarial Methods and Assumptions:
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and the plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and plan members to that point. The actuarial methods and assumptions
used include techniques that are designed to reduce the effects of short-term volatility in
actuarial accrued liabilities and the actuarial value of assets, consistent with the long -term
perspective of the calculations. In the July 1, 2013 actuarial valuation, the entry age normal
cost method was used. The actuarial assumptions included an inflation rate of 2.75% per
annum, an investment return of 7.25% per annum, a projected salary increase of 2.75% per
annum and a health inflation rate of 4.0% per annum. The District is using the level
percentage of payroll method to allocate amortization cost by year and a closed 30 year period
for the initial unfunded actuarial accrued liability and an open 30 year amortization for any
residual unfunded actuarial accrued liabilities.
7. DEFINED BENEFIT PENSION PLAN:
a. Plan Description:
The District participates in the 2.0% at 55, 2.0% at 60 (effective for new hires after
December 22, 2011) and 2.0% at 62 Risk Pools of the California Employees Retirement System
(Ca1PERS), a cost sharing multiple - employer defined benefit pension plan. Ca1PERS provides
retirement and disability benefits, annual cost -of- living adjustments, and death benefits to plan
members and beneficiaries. Ca1PERS acts as a common investment and administrative agent
for participating public entities within the State of California. Benefit provisions and all other
requirements are established by State statute and District ordinance. Copies of Ca1PERS'
annual financial report may be obtained from their Executive Office located at, 400 P Street,
Sacramento, CA 95814.
b. Funding Policy:
The contribution rate for plan members in the CalPERS 2.0% at 55, and 2.0% at 60 Risk Pool
Retirement Plans is 7% of their annual covered salary. Management, supervisory and
confidential employees pay 5% of the required 7% contribution. The District contributes the
remaining 2% on their behalf and for their account. Bargaining unit employees pay 4% of the
required contribution. The District contributes the remaining 3% on behalf and for their
account. As of July 1, 2014, all employees will contribute the full 7% of the employee
contribution. Also, the District is required to contribute the actuarially determined remaining
amounts necessary to fund the benefits for its members. The required employer contribution
rates are equal to the annual pension cost (APC) percentage of payroll for fiscal year 2014,
2013 and 2012.
See independent auditors' report.
-40-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
7. DEFINED BENEFIT PENSION PLAN:
b. Funding Policy (Continued):
Upon the implementation of the California Employees' Pension Reform Act (PEPRA) on
January 1, 2013, the 2.0% at 62 Risk Pool Retirement Plan was created and is open to all new
employees who do not qualify for the 2.0% at 60 Risk Pool Retirement Plan. Active plan
members are required to contribute 6.25% of their annual covered salary, which is paid by the
employees and is equal to the required employer contribution rates. The required employer
contribution rates are equal to the annual pension cost (APC) percentage of payroll for fiscal
year 2014.
The contribution requirements of the plan members are established by State statute, and the
employer contribution rate is established and may be amended by Ca1PERS.
For fiscal years 2014, 2013 and 2012 the District's annual employer's contributions for
Ca1PERS were equal to the District's required and actual contributions for each year as follows:
2% at 55 Risk Pool
Fiscal
Annual
Percentage
APC
Year
Pension
of APC
Percentage
Ended
Cost (APC
Contributed
of Payroll
6/30/12
$ 548,528
100.00 %
11.507 %
6/30/13
491,326
100.00 %
10.238 %
6/30/14
492,950
100.00 %
10.781 %
2% at 60 Risk Pool
Fiscal
Annual
Percentage
APC
Year
Pension
of APC
Percentage
Ended
Cost (APC
Contributed
of Payroll
6/30/12
$ 780
100.00 %
8.197 %
6/30/13
12,996
100.00 %
8.311 %
6/30/14
20,632
100.00 %
8.486 %
2% at 62 Risk Pool
Fiscal
Annual
Percentage
APC
Year
Pension
of APC
Percentage
Ended
Cost (APQ
Contributed
of Pgffoll
6/30/12
N/A
N/A
N/A
6/30/13
$ 921
100.00 %
6.250 %
6/30/14
24,261
100.00 %
6.250 %
See independent auditors' report.
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Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
8. NET INVESTMENT IN CAPITAL ASSETS:
The balance of net investment in capital assets consisted of the following as of June 30, 2014:
2014
Capital assets, net of accumulated depreciation $ 199,502,877
Certificates of participation - current (1,010,000)
Certificates of participation - long -term (39,960,599)
Unspent debt proceeds 2,152,324
Deferred amount on refunding 474,939
Net investment in capital assets 161,159.541
9. RISK MANAGEMENT:
The District is exposed to various risks of loss related to torts, theft of, damage to and destruction
of assets, errors and omissions, injuries to employees and natural disasters. In an effort to manage
its risk exposure, the District is a member of the Association of California Water Agencies Joint
Powers Insurance Authority (the Authority).
The Authority is a risk - pooling self - insurance authority, created under provisions of California
Government Code Sections 6500 et. seq. The purpose of the Authority is to arrange and administer
programs of insurance for the pooling of self - insured losses and to purchase excess insurance
coverage.
At June 30, 2014, as a member of the Authority, the District participated in the insurance programs
as follows:
• General and auto liability, public officials and employee's error and omissions: Total risk
financing self - insurance limits of $2,000,000, combined single limit at $2,000,000 per
occurrence. The Authority purchases additional excess coverage layers: $58 million for
general, auto and public officials liability, which increases the limits on the insurance
coverage noted above.
• Employee dishonesty coverage up to $100,000 per loss includes public employee
dishonesty, forgery or alteration and theft, disappearance and destruction coverages, subject
to a $1,000 deductible per occurrence.
• Property loss is paid at the replacement cost for property on file, if replaced within two
years after the loss, otherwise paid on an actual cash value basis. The District's
Retrospective Allocation Point (deductible) is $25,000 per occurrence. The Authority is
self - insured for the first $100,000, and purchases excess coverage up to $100 million
limited to insurable value, subject to a $1,000 deductible, except for a $500 deductible on
vehicles.
See independent auditors' report.
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YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
9. RISK MANAGEMENT (CONTINUED):
• Boiler and machinery coverage for the replacement cost up to $100 million per occurrence
limited to insurable value, subject to various deductibles depending on the type of
equipment.
• Workers' compensation insurance up to California statutory limits for all work related
injuries /illnesses covered by California law. The Authority is self - insured to $2,000,000
and has purchased excess insurance to the statutory limit.
Settled claims have not exceeded any of the coverage amounts in any of the last three fiscal years
and there were no reductions in the District's insurance coverage during the years ended 2014,
2013 and 2012. Liabilities are recorded when it is probable that a loss has been incurred and the
amount of the loss can be reasonably estimated net of the respective insurance coverage.
Liabilities include an amount for claims that have been incurred but not reported (IBNR). There
were no claims payable as of June 30, 2014, 2013 and 2012.
10. PRE - ANNEXATION AGREEMENT:
In June 2008, the District entered into a pre - annexation agreement with Placentia Yorba Linda
Unified School District (PYLUSD) whereby the District intends to provide access to water and
sewer service to the PYLUSD for the benefit of a property that PYLUSD wishes to develop for
public high school use. Per the agreement, PYLUSD agreed to fund additional District reservoir
improvements equal to the cost of constructing additional 450,000 gallons of reservoir storage.
The cost for the additional water storage was estimated to be approximately $1.50 per gallon,
resulting in a total approximate cost of $675,000. PYLUSD paid the District $32,500 within
30 days of execution of the agreement. The remaining balance is payable over a nine -year period
at an annual interest rate of 4 %. Annual payments of $81,704, which include principal and interest,
started in the fiscal year ended June 30, 2010. The remaining outstanding balance at June 30, 2014
was $296,581. As of June 30, 2014 the District reservoir improvements are still in progress. The
District has not yet completed its obligation in its entirety and has not earned the rights to the entire
amount. Therefore, the outstanding balance is not recorded in the District's books.
See independent auditors' report.
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YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
11. COMMITMENTS AND CONTINGENCIES:
Construction Contracts:
The District has a variety of agreements with private parties relating to the installation,
improvement or modification of water facilities and distribution systems within its service area.
The financing of such construction contracts is being provided primarily from the District's
replacement reserves and advances for construction. The District has committed to approximately
$1,118,823 of open construction contracts as of June 30, 2014. Construction contracts include:
Project Name
YL Blvd BPS
YL Blvd BPS
Well No. 21
Lakeview Grade Separation
YLWD - Fairmont /Zone 5 BPS Project
2010 Waterline Project - Phase II
DeVille Dr. Waterline Extension
Pascal & Ludwig
Yorba Lind High School Park
Litigation:
Total
Approved
Contract
$ 1,581,179
263,813
863,345
250,000
549,584
61,388
44,539
80,200
345,780
Construction
Costs
to Date
$ 1,526,484
221,139
669,712
455,440
48,230
Balance
to
Complete
$ 54,695
42,674
193,633
250,000
94,144
13,158
44,539
80,200
345,780
4.039.828 2.921.005 1.118.823
In 2008, a firestorm known as the Freeway Complex Fire, the largest wildfire in the County in half
a century, resulted in the destruction of several homes served by the District. Certain homeowners
sued the District, alleging that the water system failed to provide sufficient water for fire protection
purposes. The District's excess liability insurers denied coverage for the Freeway Complex Fire
lawsuit.
In June 2012, with no admission of liability, the District and ACWA JPIA paid $10,000,000 (the
"Settlement Amount ") as part of a settlement with the plaintiff - homeowners. The District's
portion of the settlement amount was $5,000,000, which was paid from District reserves. As part
of the settlement, the lawsuit was referred to a third -party neutral who awarded damages in favor of
some plaintiff - homeowners. Under the settlement, the successful plaintiff - homeowners will
attempt to recover their awards in a separate lawsuit against the District's excess liability insurers,
but will not pursue further recovery from the District.
See independent auditors' report.
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2014
11. COMMITMENTS AND CONTINGENCIES (CONTINUED):
Litigation (Continued):
In fiscal year 2013 -2014, the District recovered the Settlement Amount of $5,000,000 from the
District's excess liability insurance that is shown as an extraordinary item in the Statement of
Revenues, Expenses and Changes in Net Position.
12. SUBSEQUENT EVENTS:
In preparing these financial statements, the District has evaluated events and transactions for
potential recognition or disclosure through September 12, 2014, the date the financial statements
were available to be issued.
See independent auditors' report.
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REQUIRED SUPPLEMENTARY INFORMATION
OTHER POST-EMPLOYMENT BENEFIT PLAN
SCHEDULE OF FUNDING PROGRESS
-47-
Retiree Health Plan
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
REQUIRED SUPPLEMENTARY INFORMATION
For the year ended June 30, 2014
OTHER POST - EMPLOYMENT BENEFIT PLAN
SCHEDULE OF FUNDING PROGRESS
Unfunded
See independent auditors' report and notes to basic financial statements.
-48-
Actuarial
Actuarial
UAAL as a
Accrued
Actuarial Value
Accrued
Annual
Percentage
Actuarial
Liability
of Assets
Liability
Funded
Covered
of Covered
Valuation
(AAL)
(AVA)
(UAAL)
Ratio
Payroll
Payroll
Date
(a)
(b)
(a) - (b)
(b) /(a)
(c)
[(a)-(b)] /(c)
03/01/2011
$ 1,594,667
$ -
$ 1,594,667
0.00%
$ 5,044,860
31.61%
06/30/2011
$ 1,597,488
$ 164,291
$ 1,433,197
10.28%
$ 4,773,686
30.02%
07/01/2013
$ 1,896,791
$ 537,913
$ 1,358,878
28.36%
$ 5,200,000
26.13%
See independent auditors' report and notes to basic financial statements.
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SUPPLEMENTARY INFORMATION
BELIE
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YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF NET POSITION
June 30, 2014
ASSETS AND DEFERRED OUTFLOWS
OF RESOURCES
141816113=41111 :`Y.yX11 11
UNRESTRICTED ASSETS:
Cash and cash equivalents
Investments
Accounts receivable - water and sewer services
Accounts receivable - property taxes
Accrued interest receivable
Prepaid expenses and deposits
Inventory
TOTAL UNRESTRICTED ASSETS
RESTRICTED ASSETS:
Cash and cash equivalents
Investments
TOTAL RESTRICTED ASSETS
TOTAL CURRENT ASSETS
NONCURRENT ASSETS:
Capital assets:
Non - depreciable
Depreciable, net of accumulated depreciation
Other post - employment benefit (OPEB) asset
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
DEFERRED OUTFLOWS OF RESOURCES:
Deferred amount on refunding
TOTAL DEFERRED OUTFLOWS OF RESOURCES
See independent auditors' report.
-50-
Water Sewer Totals
$ 17,009,506
$ 3,102,406
$ 20,111,912
6,946,248
195,543
7,141,791
3,791,258
185,397
3,976,655
22,837
1,760
24,597
10,336
1,655
11,991
267,261
-
267,261
238,203
-
238,203
28,285,649
3,486,761
31,772,410
114,334
-
114,334
2,115,085
-
2,115,085
2,229,419
-
2,229,419
30,515,068
3,486,761
34,001,829
6,681,561
215,753
6,897,314
153,251,766
39,353,797
192,605,563
129,217
9,726
138,943
160,062,544
39,579,276
199,641,820
190,577,612
43,066,037
233,643,649
474,939
474,939
474,939
474,939
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YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF NET POSITION
(CONTINUED)
June 30, 2014
LIABILITIES Water Sewer Totals
CURRENT LIABILITIES:
PAYABLE FROM UNRESTRICTED CURRENT ASSETS:
Accounts payable
Accrued expenses
Compensated absences payable - current portion
Customer and construction deposits
Unearned revenue
Accrued interest payable
TOTAL PAYABLE FROM
UNRESTRICTED CURRENT ASSETS
PAYABLE FROM RESTRICTED ASSETS:
Retention payable
Certificates of Participation - current portion
TOTAL PAYABLE FROM RESTRICTED ASSETS
TOTAL CURRENT LIABILITIES
LONG -TERM LIABILITIES (LESS CURRENT PORTION):
Unearned annexation revenue
Compensated absences
Payable on line of credit
Certificates of Participation
TOTAL LONG -TERM
LIABILITIES (LESS CURRENT PORTION)
TOTAL LIABILITIES
NET POSITION:
Net investment in capital assets
Unrestricted
TOTAL NET POSITION
See independent auditors' report.
-51-
$ 4,673,127
$ 75,214
$ 4,748,341
263,178
-
263,178
261,836
-
261,836
270,038
39,696
309,734
373,356
1,000
374,356
432,740
-
432,740
6,274,275
115,910
6,390,185
77,095
-
77,095
1,010,000
-
1,010,000
1,087,095
-
1,087,095
7,361,370
115,910
7,477,280
13,475,678
-
13,475,678
785,506
-
785,506
4,642,656
-
4,642,656
39,960,599
-
39,960,599
58,864,439
-
58,864,439
66,225,809
115,910
66,341,719
121,589,991
39,569,550
161,159,541
3,236,751
3,380,577
6,617,328
$ 124,826,742
$ 42,950,127
$ 167,776,869
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
For the year ended June 30, 2014
OPERATING REVENUES:
Water sales
Sewer revenues
Other operating revenues
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Variable water costs
Personnel services
Supplies and services
Depreciation
TOTAL OPERATING EXPENSES
OPERATING LOSS
NONOPERATING REVENUES (EXPENSES):
Property taxes
Investment income
Interest expense
Other nonoperating revenues
Other nonoperating expenses
TOTAL NONOPERATING
REVENUES (EXPENSES)
NET LOSS BEFORE CAPITAL CONTRIBUTIONS
AND EXTRAORDINARY ITEM
CAPITAL CONTRIBUTIONS
EXTRAORDINARY ITEM
CHANGES IN NET POSITION
NET POSITION - BEGINNING OF YEAR
NET POSITION - END OF YEAR
See independent auditors' report.
-52-
Water
Sewer
Totals
$ 28,372,296
$ 3,786
$ 28,376,082
-
1,762,816
1,762,816
936,977
110,648
1,047,625
29,309,273
1,877,250
31,186,523
14,673,144
-
14,673,144
6,728,455
801,026
7,529,481
3,451,602
397,581
3,849,183
5,982,770
1,332,314
7,315,084
30,835,971
2,530,921
33,366,892
(1,526,698)
(653,671)
(2,180,369)
1,394,722
-
1,394,722
131,833
13,215
145,048
(1,715,429)
-
(1,715,429)
1,255,176
70,509
1,325,685
(47,948)
-
(47,948)
1,018,354
83,724
1,102,078
(508,344)
(569,947)
(1,078,291)
1,235,502
893,077
2,128,579
5,000,000
-
5,000,000
5,727,158
323,130
6,050,288
119,099,584
42,626,997
161,726,581
$ 124,826,742
$ 42,950,127
$ 167,776,869
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF CASH FLOWS
For the year ended June 30, 2014
NET CASH PROVIDED BY
NONCAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Proceeds from annexation fees and capital contributions
Acquisition and construction of capital assets
Proceeds from sales of capital assets
Principal paid on long -term liability
Interest paid on long -term liability
NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale /purchase of investments, net
Interest and investment earnings
NET CASH PROVIDED BY
INVESTING ACTIVITIES
NET INCREASE IN
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF YEAR
See independent auditors' report.
-53-
9,858,390 - 9,858,390
153,950
Water
Sewer
Totals
CASH FLOWS FROM OPERATING ACTIVITIES:
(4,022,245)
615,655
-
Cash received from customers
$ 29,319,788
$ 1,924,026
$ 31,243,814
Cash payments to employees for salaries and wages
(6,614,029)
(800,927)
(7,414,956)
Cash payments to suppliers of goods and services
(17,905,874)
(339,276)
(18,245,150)
Other revenues
207,144
64,048
271,192
Other expenses
(24,201)
-
(24,201)
NET CASH PROVIDED BY OPERATING ACTIVITIES
4,982,828
847,871
5,830,699
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
9,837,922
8,073,213
2,315,111
Cash received for extraordinary item
5,000,000
-
5,000,000
Proceeds from line of credit
3,471,525
-
3,471,525
Proceeds from property taxes and assessments
1,386,865
-
1,386,865
NET CASH PROVIDED BY
NONCAPITAL FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Proceeds from annexation fees and capital contributions
Acquisition and construction of capital assets
Proceeds from sales of capital assets
Principal paid on long -term liability
Interest paid on long -term liability
NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale /purchase of investments, net
Interest and investment earnings
NET CASH PROVIDED BY
INVESTING ACTIVITIES
NET INCREASE IN
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF YEAR
See independent auditors' report.
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9,858,390 - 9,858,390
153,950
46,992
200,942
(3,900,317)
(121,928)
(4,022,245)
615,655
-
615,655
(965,000)
-
(965,000)
(1,813,252)
-
(1,813,252)
(5,908,964)
(74,936)
(5,983,900)
1,191
2,149
3,340
117,182
12,211
129,393
118,373
14,360
132,733
9,050,627
787,295
9,837,922
8,073,213
2,315,111
10,388,324
$ 17,123,840 $ 3,102,406 $ 20,226,246
(Continued)
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YORBA LINDA WATER DISTRICT
COMBINING SCHEDULE OF CASH FLOWS
(CONTINUED)
For the year ended June 30, 2014
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating loss
Adjustments to reconcile operating loss to
net cash provided by operating activities:
Depreciation
Otherrevenues
Other expenses
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable
Inventory
Prepaid expenses and deposits
Other post - employment benefits (OPEB) asset
Increase (decrease) in liabilities:
Accounts payable and accrued expenses
Accrued salaries and wages
Accrued compensated absences
Customer and construction deposits
Total adjustments
Water
Sewer
Totals
$ (1,526,698)
$ (653,671)
$ (2,180,369)
5,982,770
1,332,314
7,315,084
207,144
64,048
271,192
(24,201)
-
(24,201)
36,631
50,292
86,923
2,999
-
2,999
(7,932)
-
(7,932)
1,322
99
1,421
159,989
60,554
220,543
66,145
-
66,145
46,959
-
46,959
37,700
(5,765)
31,935
6,509,526
1,501,542
8,011,068
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 4,982,828 $ 847,871 $ 5,830,699
CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION:
Unrestricted $ 17,009,506 $ 3,102,406 $ 20,111,912
Restricted 114,334 - 114,334
TOTAL CASH AND CASH EQUIVALENTS -
FINANCIAL STATEMENT CLASSIFICATION $ 17,123,840 $ 3,102,406 $ 20,226,246
NONCASH INVESTING, CAPITAL AND
RELATED FINANCING ACTIVITIES:
Amortization related to long -term debt
Capital contributions
See independent auditors' report.
-54-
$ 74,123 $ - $ 74,123
$ 1,153,798 $ 789,860 $ 1,943,658
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
SCHEDULE OF OPERATING EXPENSES BY COST CENTER
AND NATURE OF EXPENSES FOR WATER AND SEWER
OPERATING EXPENSES:
Variable Water Costs:
Imported water
OCWD replenishment assessment
Continuous use program
MWD connection charge
Fuel and power /pumping
Total Variable Water Costs
Personnel Services:
Unit salaries
Fringe benefits
Director's fees
Total Personnel Services
Supplies and Services:
Communications
Contractual services
Data processing
District activities
Dues and memberships
Fees and permits
Insurance
Maintenance
Materials
Noncapital equipment
Office expense
Professional services
Training
Travel and conferences
Uncollectible accounts
Utilities
Vehicle expense
Total Supplies and Services
TOTAL OPERATING EXPENSES
See independent auditors' report.
For the year ended June 30, 2014
-55-
Water
Sewer
Totals
$ 8,543,129
$ -
$ 8,543,129
3,313,606
-
3,313,606
681,471
-
681,471
977,043
-
977,043
1,157,895
-
1,157,895
14,673,144
-
14,673,144
4,799,883
607,856
5,407,739
1,857,403
187,689
2,045,092
71,169
5,481
76,650
6,728,455
801,026
7,529,481
199,790
14,873
214,663
528,149
38,982
567,131
146,497
11,605
158,102
14,931
1,087
16,018
62,930
4,601
67,531
170,327
12,968
183,295
249,605
21,512
271,117
317,247
79,991
397,238
634,634
85,807
720,441
120,883
17,560
138,443
34,729
6,736
41,465
508,378
24,521
532,899
28,293
5,778
34,071
27,639
1,814
29,453
26,116
3,516
29,632
35,103
3,098
38,201
346,351
63,132
409,483
3,451,602
397,581
3,849,183
$ 24,853,201 $ 1,198,607 $ 26,051,808
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
YORBA LINDA WATER DISTRICT
SCHEDULE OF CAPITAL ASSETS
For the year ended June 30, 2014
Water Sewer Totals
Land, Mineral and Water Rights:
Land $ 78,558 $ - $ 78,558
Water rights 86,300 - 86,300
Mineral rights 63,650 - 63,650
Land rights and easements 385 58,526 58,911
Total Land, Mineral and Water Rights 228,893 58,526 287,419
Source of Supply:
Wells
5,531,787
-
5,531,787
MWD connection
564,368
-
564,368
Total Source of Supply
6,096,155
-
6,096,155
Pumping Plant:
Structures and improvements
12,865,109
-
12,865,109
Equipment
11,016,013
431,575
11,447,588
Total Pumping Plant
23,881,122
431,575
24,312,697
Water Treatment Plant:
Structures and improvements
1,302,811
-
1,302,811
Equipment
1,827,761
-
1,827,761
Total Water Treatment Plant
3,130,572
-
3,130,572
Transmission and Distribution Plant:
Mains
75,638,459
46,818,335
122,456,794
Reservoirs and tanks
61,484,568
-
61,484,568
Service and meter installation
5,971,232
2,668,246
8,639,478
Fire hydrants
6,756,453
-
6,756,453
Meters
9,141,505
-
9,141,505
Fire mains
717,746
-
717,746
Structures and improvements
2,599,123
-
2,599,123
Control system
2,018,428
33,485
2,051,913
Total Transmission and Distribution Plant
164,327,514
49,520,066
213,847,580
General Plant:
Structures and improvements
13,154,085
-
13,154,085
Transportation equipment
1,728,783
1,182,655
2,911,438
Power operated equipment
549,710
-
549,710
Communication equipment
511,269
-
511,269
Computer equipment
1,848,902
238,071
2,086,973
Office furniture
1,098,711
-
1,098,711
Tools, shops and garage equipment
82,715
-
82,715
Other
4,650
-
4,650
Store equipment
60,241
-
60,241
Total General Plant
19,039,066
1,420,726
20,459,792
Construction in Progress
6,452,668
157,227
6,609,895
Total Capital Assets
$ 223,155,990
$ 51,588,120
$ 274,744,110
See independent auditors' report.
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STATISTICAL SECTION
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YORBA LINDA WATER DISTRICT
DESCRIPTION OF STATISTICAL SECTION CONTENTS
June 30, 2014
This part of the District's comprehensive annual financial report presents detailed information as a
context for understanding what the information in the financial statements and the note disclosures say
about the government's overall financial health.
Contents:
Pages
Financial Trends these schedules contain trend information to help the reader
understand how the District's financial performance and well -being have
changed over time. 60
Revenue Capacity these schedules contain information to help the reader
assess the District's most significant local revenue source, water sales. 62
Debt Capacity these schedules present information to help the reader assess
the affordability of the District's current levels of outstanding debt and the
District's ability to issue additional debt in the future. 64
Demographic and Economic Information these schedules offer demographic
and economic indicators to help the reader understand the environment within
which the District's financial activities take place. 66
Operating Information these schedules contain service and infrastructure data
to help the reader understand how the information in the District's financial
report relates to the services the District provides and the activities it
performs. 68
-59-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Changes in Net Position
Last Ten Fiscal Years
Operating Expenses
Variable Water Costs
14,673,144
Fiscal Year
12,275,853
11,268,306
Changes in Net Position:
2014
2013
2012
2011
Operating Revenues
3,849,183
4,222,398
3,811,125
3,686,333
Water Sales
$ 28,376,082
$ 26,369,940 $
24,998,673
$ 22,686,251
Sewer Revenues
1,762,816
1,762,039
1,785,804
1,274,579
Other Operating Revenues
1,047,625
723,577
848,238
1,035,545
Operating Expenses
Variable Water Costs
14,673,144
13,509,336
12,275,853
11,268,306
Personnel Services
7,529,481
7,225,729
6,979,088
6,902,995
Supplies and Services
3,849,183
4,222,398
3,811,125
3,686,333
Depreciation
7,315,084
6,884,213
6,595,720
5,279,860
Operating Loss
(2,180,369)
(2,986,120)
(2,029,071)
(2,141,119)
Nonoperating Revenues (Expenses)
Property Taxes
1,394,722
1,340,916
1,273,855
1,258,769
Investment Income
145,048
137,569
277,137
274,152
Interest Expense
(1,715,429)
(1,781,416)
(1,626,190)
(1,172,503)
Bond Issuance Costs
-
(192,410)
-
-
Other Nonoperating Revenues
1,325,685
588,854
805,654
739,062
Other Nonoperating Expenses
(47,948)
(35,954)
(108,984)
(406,575)
Total Nonoperating
Revenues (Expenses)
1,102,078
57,559
621,472
692,905
Net Income (Loss) Before
Capital Contributions and
Extraordinary Items
(1,078,291)
(2,928,561)
(1,407,599)
(1,448,214)
Capital Contributions
2,128,579
1,174,673
17,214,138
706,319
Extraordinary Items
5,000,000
-
(5,000,000)
-
Changes in Net Position
$ 6,050,288
$ (1,753,888)
$ 10,806,539
$ (741,895)
Net Position by Component:
Net Investment in Capital Assets
$ 161,494,158
$ 161,494,158
$ 161,672,565
$ 146,235,362
Restricted
-
-
9,598,420
12,620,256
Unrestricted
6,617,328
232,423
(6,228,771)
(4,619,943)
Total Net Assets
$ 168,111,486
$ 161,726,581
$ 165,042,214
$ 154,235,675
Source: YLWD Audited Financial Statements
-60-
(Continued)
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Fiscal Year
2010 2009 2008 2007 2006 2005
$ 21,806,164
$ 19,626,738
$ 19,470,109
$ 18,944,233
$ 17,017,275
$ 14,533,021
1,275,980
1,259,723
1,247,907
806,897
778,275
750,771
1,102,143
439,302
380,175
393,285
382,917
427,430
10,688,318
10,859,328
10,516,507
10,703,037
8,930,535
7,920,218
6,677,757
6,498,959
5,751,384
5,276,878
4,635,464
4,294,020
3,576,147
4,151,058
4,361,512
3,395,303
2,877,288
2,699,842
5,153,891
4,167,958
3,572,726
3,445,868
2,923,288
2,578,420
(1,911,826)
(4,351,540)
(3,103,938)
(2,676,671)
(1,188,108)
(1,781,278)
1,269,441
1,283,521
1,263,656
1,186,441
335,075
252,663
244,857
689,108
1,508,193
2,180,067
1,425,663
638,235
(1,170,498)
(1,469,925)
(824,387)
(468,087)
(472,163)
(565,581)
589,201
479,911
270,429
455,067
534,385
416,778
(151,300)
(177,553)
(133,604)
(138,501)
(336,649)
(179,526)
781,701
805,062
2,084,287
3,214,987
1,486,311
562,569
(1,130,125)
(3,546,478)
(1,019,651)
538,316
298,203
(1,218,709)
6,278,135
4,363,527
4,100,051
6,913,095
26,026,524
6,701,629
$ 5,148,010
$ 817,049
$ 3,080,400
$ 7,451,411
$ 26,324,727
$ 5,482,920
$ 146,877,122
$ 141,514,024
$ 139,677,663
$ 121,317,296
$ 106,376,683
$ 84,000,773
15,797,432
14,063,802
14,523,549
23,089,201
22,274,814
23,196,485
(7,696,984)
(6,158,513)
(4,898,647)
1,815,668
10,119,257
5,248,769
$ 154,977,570
$ 149,419,313
$ 149,302,565
$ 146,222,165
$ 138,770,754
$ 112,446,027
-61-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Number of Connections
Last Ten Fiscal Years
NOTE: * $1.48 was approved January 1, 2005
Single Family
Multi- Family
Commercial/
Fiscal Year
Residential
Residential
Industrial
2005
20,773
217
842
2006
21,300
217
847
2007
21,451
228
792
2008
21,580
228
840
2009
21,672
228
831
2010
21,846
228
837
2011
21,701
231
833
2012
22,064
240
829
2013
22,480
158
908
2014
22,586
230
892
NOTE: * $1.48 was approved January 1, 2005
25,000
20,000 — —
15,000 ■ Irrigation
■ Industrial
10,000 ■ Residential
■ Residential
5,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: YLWD Billing System
-62-
Direct Rate
Irrigation
(Billing Unit)
803
$ 1.48
838
1.57
868
1.57
857
1.79
855
2.52
877
2.52
879
2.52
846
2.52
933
2.64
876
2.70
25,000
20,000 — —
15,000 ■ Irrigation
■ Industrial
10,000 ■ Residential
■ Residential
5,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: YLWD Billing System
-62-
FY 2014
1
2
3
4
5
6
7
8
9
10
FY 2004*
1
2
3
4
5
7
6
8
9
10
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Ten Largest Customers
Current and Ten Years Ago
Customer Name
City of Yorba Linda
Placentia -Yorba Linda USD
Fairmont Hill Community Assoc.
Archstone Apartments
Yorba Linda Villages
The Hills at Yorba, Linda
Lake Park Mobil Home Community
Woodgate Condominiums
Kerrigan Ranch I1 Community Assoc.
Aspetic Tech
Customer Name
City of Yorba, Linda
Saba Petroleum
Tac West Inc
St Francis of Assissi
Shigemi Muranaka
Sunset Tropicals
Placentia -Yorba Linda USD
Costco
Excell Circuits
Yorba Linda Country Club
NOTE: * Last available data
Source: YLWD Billing Department
Business Type
Government
Government
Homeowners' Assoc.
Apartment Complex
Homeowners' Assoc.
Homeowners' Assoc.
Homeowners' Assoc.
Homeowners' Assoc.
Homeowners' Assoc.
Manufacturing
Business Type
Government
Manufacturer
Manufacturer
Private School
Nursery Retail
Government
Nursery Retail
Warehouse Retail
Manufacturer
Private Club
-63-
Annual Revenues
$ 1,860,227.00
267,442.00
110,976.00
108,023.00
99,849.00
94,025.00
53,825.00
59,401.00
59,149.00
55,728.00
$ 2,768,645.00
Annual Revenues
$ 1,162,249.51
27,162.94
18,409.96
13,001.84
12,303.44
9,493.13
9,381.26
8,933.78
8,893.10
8,453.53
$ 1,278,282.49
% of Total
5.96%
0.86%
0.36%
0.35%
0.32%
0.30%
0.17%
0.19%
0.19%
0.18%
8.88%
% of Total
7.60%
0.18%
0.12%
0.09%
0.08%
0.06%
0.06 %
0.06%
0.06%
0.06%
8.36%
Fiscal
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
General
Obligation
Bonds
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Ratio of Outstanding Debt
Last Ten Fiscal Years
Certificates
of
OCWD Loan Participation
Debt
$ - $ 10,000,078
$ 10,000,078
- 9,873,717
9,873,717
- 10,540,139
10,540,139
- 45,502,080
45,502,080
- 44,911,092
44,911,092
- 44,065,104
44,065,104
- 43,189,117
43,189,117
- 42,278,129
42,278,129
- 42,009,722
42,009,722
- 40,970,599
40,970,599
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$2,500
$2,000
$1,500
$1,50000
$500
Total
As a Share of
Per Per Personal
Connection Capita Income
Composition of Debt
Debt per Connection
441 $ 142
426 139
451 148
1,932 637
1,900 628
1,848 611
1,827 604
1,764 583
1,753 648
1,668 554
Partic
OCWI
Bond
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: YLWD Audited Financial Statements
-64-
0.14%
0.14%
0.56%
0.55%
0.54%
0.52%
0.49%
0.52%
0.43%
Fiscal
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Debt Coverage
Last Ten Fiscal Years
Operating &
Revenues _Maint. Costs
$ 16,178 $
19,563
23,036
22,822
22,514
24,417
25,912
27,818
27,055
29,309
14,230 $
16,009
18,703
19,829
20,604
19,928
20,845
21,950
23,790
24,853
Debt Service
Interest
Net
Revenues
Principal
1,948
_
$ 1,760 $
3,554
200
4,333
205
2,993
210
1,910
570
4,489
825
5,067
855
5,868
890
3,265
925
4,456
965
NOTE: Excludes depreciation and debt service payments
Source: YLWD Audited Financial Statements
-65-
299 $
473
469
919
2,051
1,951
1,949
1,915
1,985
1,813
Total
2,059
673
674
1,129
2,621
2,776
2,804
2,805
2,910
2,778
Coverage
Ratio
0.95
5.28
6.43
2.65
0.73
1.62
1.81
2.09
1.12
1.60
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Demographics
Last Ten Fiscal Years
YLWD
Year Population * City of YL Population
Personal Income
Personal Income
per Capita
2005
70,364
65,382 $
6,699,301,248 $
95,209
2006
70,935
66,797
7,150,485,256
100,803
2007
71,258
67,904
7,623,582,080
106,986
2008
71,428
68,312
8,179,815,504
114,518
2009
71,507
68,852
8,239,633,400
115,228
2010
72,083
69,816
8,095,032,402
112,302
2011
71,520
70,681
8,233,404,978
115,120
2012
72,498
72,706
8,660,636,569
119,460
2013
64,861
65,777
8,040,383,024
123,963
2014
73,990
67,069
9,517,881,804
128,637
County of Orange
Personal Income
Year Population Unemployment Rate Personal Income per Capita
2005
3,047,054
4.3%
$ 135,070,503 $
44,328
2006
3,072,336
3.2%
145,435,581
47,337
2007
3,098,121
3.9%
150,214,330
48,486
2008^
3,121,251
5.2%
157,828,108
50,566
2009^
3,139,017
9.0%
159,710,562
50,879
2010 #^
3,170,721
9.8%
150,467,328
47,455
2011 #^
3,192,916
8.7%
155,323,766
48,646
2012^
3,182,171
7.9%
160,637,055
50,480
2013^
3,055,792
8.5%
160,072,905
52,383
2014
3,081,804
6.2%
168,966,068
54,827
NOTES: ^ No personal income data available for County of Orange, used State of California data.
# No population data available for County of Orange, used State of California data.
Sources: City of Yorba Linda CAFR
County of Orange CAFR
State of California, Employment Development Department
State of California, Department of Finance
-66-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
^
Yorba Linda Water District
Ten Largest Employers
Current and Eight Years Ago
2014* 2006+
% of Total % of Total
Labor Force Employees I Labor Force
Viasys Respiratory Care, Inc.
389
1.19%
359
1.02 %
Nobel Biocare USA, Inc.
328
0.93 %
323
0.92 %
Costco Wholesale Corp.
276
0.78 %
204
0.58 %
City of Yorba Linda
194
0.55 %
180
0.51 %
Vons
165
0.47 %
167
0.48 %
Kohl's Inc.
158
0.45 %
145
0.41 %
Best Buy
129
0.37 %
135
0.38 %
Sunrise Retirement Homes
126
0.36%
120
0.34 %
Office Solutions
92
0.26%
98
0.28 %
Cobra Engineering
80
0.23 %
0
0.00 %
Total
1,937
5.6 %
1,731
4.9%
NOTES: * Most current available data
+ Oldest available data
^ The Placentia- Yorba Linda Unified School District has 2,500 employees and
serves the entire communities of Yorba Linda and Placentia, and also serves
parts of the Cities of Brea, Anaheim and Fullerton. YLWD cannot provide the
number of employees working within the boundaries of Yorba Linda.
Source: City of Yorba Linda CAFR
-67-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Number of Employees
Last Ten Fiscal Years
Full Time Equivalent Employees by Department *
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
NOTE: * Number of employees in each department are authorized and funded positions.
Source: YLWD Human Resources Department
-68-
Operations
IT
0 Resources
Finance
Engineering
Department
Fiscal
Human
Year
Administration
Engineering
Finance Resources
IT
Operations
Total
2005
3.0
13.0
11.0 1.0
3.0
31.0
62.0
2006
4.0
14.0
13.0 3.0
3.0
28.0
65.0
2007
4.0
13.0
15.0 3.0
3.0
32.0
70.0
2008
4.0
13.0
16.0 3.0
6.0
32.0
74.0
2009
4.0
13.0
16.0 3.0
6.0
33.0
75.0
2010
4.5
12.0
15.0 3.0
6.0
35.5
76.0
2011
5.5
11.0
14.0 3.0
7.0
37.0
77.5
2012
5.0
11.0
14.0 3.0
7.5
37.0
77.5
2013
5.0
11.0
14.0 4.5
7.5
37.0
79.0
2014
5.5
10.0
13.0 4.0
7.0
38.0
77.5
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
NOTE: * Number of employees in each department are authorized and funded positions.
Source: YLWD Human Resources Department
-68-
Operations
IT
0 Resources
Finance
Engineering
Fiscal
Year
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Yorba Linda Water District
Operating and Capacity Indicators
Last Ten Fiscal Years
Miles of Water
Mains Installed*
Yearly Water
Production (MG)
Average
Production (MGD)
Number of
Field Service Calls
2005
3.64
7,042
19.3
1,460
2006
2.52
7,505
20.6
1,484
2007
9.72
8,360
22.9
1,565
2008
9.72
8,027
22.0
1,943
2009
9.72
7,590
20.8
1,674
2010
9.72
6,569
18.0
1,640
2011
2.00
6,282
17.2
1,924
2012
2.02
6,780
18.6
1,693
2013
1.10
7,099
18.6
1,561
2014
0.77
7,329
20.1
1,500
Fiscal
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Number of
Booster Pumps
MG - Millions of Gallons
MGD - Millions of Gallons per Day
GPM - Gallon per Minute
11
11
11
11
11
11
12
12
12
12
NOTE: * Miles of Water Main estimated
Sources: YLWD Asset Management Plan 2010
YLWD Operations Department
Capacity by Booster
Pump (GPM)
43,025
43,025
43,025
43,025
43,025
43,025
46,525
46,525
46,525
46,525
-69-
Number of
Reservoirs
11
11
11
11
12
12
14
14
14
14
Capacity by
Reservoir (MG)
37
41
41
41
49
49
57
57
57
57
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
This page intentionally left blank
-70-
Board of Directors
Yorba Linda Water District
Placentia, California
We have audited the financial statements of the Yorba Linda Water District for the year ended
June 30, 2014, and have issued our report thereon dated September 12, 2014. Professional standards
require that we provide you with information about our responsibilities under generally accepted
auditing standards and Government Auditing Standards, as well as certain information related to the
planned scope and timing of our audit. We have communicated such information in our engagement
letter dated April 22, 2014 and our meeting on planning matters on July 29, 2014. Professional
standards also require that we communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the Yorba Linda Water District are described in Note 1 to the
financial statements. No new accounting policies were adopted and the application of existing policies
was not changed during the year. We noted no transactions entered into by the District during the year
for which there is a lack of authoritative guidance or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected.
The most sensitive estimates affecting the financial statements were:
a. Management's estimate of the fair market value of investments which is based on market
values provided by outside sources.
b. The estimated useful lives of capital assets for depreciation purposes which are based on
industry standards.
c. The value of the capital assets received as a contribution from developers was based on the
developer's acquisition cost.
d. The annual required contribution for the District's Other Post - Employment Benefits was
prepared by an outside consultant.
-1-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Significant Audit Findings (Continued)
Qualitative Aspects of Accounting Practices (Continued)
We evaluated the key factors and assumptions used to develop these estimates in determining that they
were reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were
reported in Note 6 to the financial statements regarding the annual required contribution and the
actuarial liability for the District's Other Post - Employment Benefits, Note 7 regarding the defined
benefit pension plan, and Note 11 regarding the settlement of the Freeway Complex Fire case.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. The following material misstatements
detected as a result of audit procedures were corrected by management:
a. The accounts payable balance was adjusted to reflect the balance in the detail schedule.
b. The unbilled receivable balance was adjusted to correct the calculation of the amount.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that
could be significant to the financial statements or the auditors' report. We are pleased to report that no
such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated September 12, 2014.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the District's financial statements or a determination
of the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
-2-
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Significant Audit Findings (Continued)
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the District's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
Other Matters
We applied certain limited procedures to management's discussion and analysis and OPEB schedule of
funding progress, which are required supplementary information (RSI) that supplement the financial
statements. Our procedures consisted of inquiries of management regarding the methods of preparing
the information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We did not audit the RSI and do not express an opinion or provide any assurance
on the RSI.
We were engaged to report on combining schedule of net position, combining schedule of revenues,
expenses and changes in net position, combining schedule of cash flows, schedule of operating
expenses by cost center and nature of expenses for water and sewer, and schedule of capital assets,
which accompany the financial statements but are not RSI. With respect to this supplementary
information, we made certain inquiries of management and evaluated the form, content, and methods
of preparing the information to determine that the information complies with accounting principles
generally accepted in the United States of America, the method of preparing it has not changed from
the prior period, and the information is appropriate and complete in relation to our audit of the
financial statements. We compared and reconciled the supplementary information to the underlying
accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory and statistical sections, which accompany the
financial statements but are not RSI. We did not audit or perform other procedures on this other
information and we do not express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the use of the Board of Directors and management of the Yorba
Linda Water District and is not intended to be and should not be used by anyone other than these
specified parties.
Z�� � tLV,1) &,°
Irvine, California
September 12, 2014
-3-
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS
The Board of Directors
Yorba Linda Water District
Placentia, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the Yorba Linda
Water District (the District) as of and for the year ended June 30, 2014, and the related notes to the
financial statements, which collectively comprise the District's financial statements and have issued
our report thereon dated September 12, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District's internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate
in the circumstances for the purpose of expressing our opinion on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the District's internal control.
Accordingly, we do not express an opinion on the effectiveness of the District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the District's financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in
internal control that is less severe than a material weakness, yet important enough to merit attention by
those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
-1-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
Backup Material Distributed Less Than 72 Hours Prior to the Meeting
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
District's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the District's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
September 12, 2014
-2-
Meeting Date;
To:
From:
Presented By
Prepared By:
Subject:
SUMMARY:
ITEM NO. 5.1
AGENDA REPORT
September 18, 2014
Finance - Accounting Committee
Marc Marcantonio, General
Manager
Delia Lugo, Finance Manager Dept: Finance
Kelly McCann, Senior
Accountant
Investment Report for Period Ending August 31, 2014
Staff is submitting the Investment Reports for the Month Ending August 31, 2014 for the
Committee's review.
DISCUSSION:
The Investment Portfolio Report presents the market value and percent yield for all District
investments by institution. The Investment Report Summary includes budget and actual interest and
average term portfolio information as well as market value broken out by reserve categories.
The total yield for the month ending August 31, 2014 is 0.63 %.
The overall increase in the investment balance from the previous month is approximately
$1,036,000. A couple of large balance changes include an increase in the Water Operating Reserve
Fund of $472,167 due to a positive net effect between operating revenues and expenses through
the reporting month of the Fiscal Year. An increase in Water Reserve for Debt Services Fund of
$589,528 is due to a Debt Service principal and interest payment required in September 2014.
STRATEGIC PLAN:
FR 1 -F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a
Timely and Transparent Manner to the Board of Directors and Member Agencies
ATTACHMENTS:
Name:
Invst Rpt 08- 14.xlsx
Description:
Investment Report for Period Ending August 2014
Type:
Backup Material
Invst Agenda Backup - August 2014.xlsx Agenda Backup Backup Material
Yorba Linda Water District
Investment Portfolio Report
August 31, 2014
Market % Date of Percent
Value Par of Total Institution Maturity Yield
Checking Account.
$ 84,391 $ 84,391 Wells Fargo Bank
77,041 77,041 Pershing
$ 161,432 $ 161,432 0.56% Total 0.00%
Money Market Accounts:
$ 54,975 $ 54,975
37,241 37,241
4,117,601 $ 4,117,601 14.26%
Federal Agency Securities:
Wells Fargo Money Market 0.03%
US Bank (Revenue Bonds) 0.03%
Bank of the West 0.24%
Total 0.24%
$ 493,550 $
500,000
Fannie Mae
05/25/18
1.13%
492,980
500,000
Federal Home Loan Bank
06/12/18
1.01%
498,740
500,000
Fannie Mae
06/12/18
0.85%
494,195
500,000
Federal Home Loan Bank
06/13/18
1.11%
494,430
500,000
Federal Home Loan Bank
06/20/18
1.13 %
2,111,130
2,124,676
Federal Home Loan Bank
05/24/17
0.88 %
$ 4,585,025 $
4,624,676 15.88%
Total
05/14/18
0.97%
Certificates of Deposits:
$ 245,748
$ 248,000
Crf Bank, Salt Lake
05/22/18
1.21%
245,572
248,000
Discover
05/22/18
1.21%
245,991
248,000
Goldman Sachs Bank
05/22/18
1.20%
245,818
248,000
Beal Bank
05/23/18
1.00%
247,306
248,000
Wells Fargo
04/27/18
0.90%
244,639
247,000
Barclays Bank
04/30/18
0.70%
246,457
248,000
State Bank of India
05/14/18
1.15%
247,538
249,000
Webster Bank
05/03/18
0.90%
245,738
248,000
American Express Centurion Bank
05/23/18
1.21%
243,799
248,000
GE Capital Bank
05/24/18
1.11%
249,000
249,000
Merrick Bank
05/24/17
0.75%
248,000
248,000
BMW Bank
05/24/17
0.90%
249,396
249,000
Firstbank Puerto Rico
05/24/16
0.74%
246,724
249,000
Oriental Bank & Trust
05/29/18
1.05%
246,801
249,000
Silvergate Bank
05/30/18
1.00%
246,724
249,000
Enterprise Bank & TR Co Lowell
05/30/18
1.00%
246,704
249,000
Safm National Bank
05/31/18
1.00%
245,728
248,000
Townebank Portsmouth
05/31/18
1.00%
246,722
249,000
Mascoma Savings Bank
05/29/18
1.00 %
$ 4,684,406
$ 4,719,000 16.22%
Total
1.00%
Pooled Investment Accounts:
$ 5,934,001
$ 5,934,001
Local Agency Investment Fund
0.26 %
3,073
3,072
CalTRUST Short Term
0.39%
9,393,117
9,403,156
Ca1TRUST Medium Term
0.70%
$ 15,330,190
$ 15,340,229 53.08%
0.53%
$ 28,878,654
$ 28,9629938 100%
Total Investments
0.63%
Per Government Code requirements, the Investment Report is in compliance with the Yorba
Linda Water District's Investment Policy, and there are adequate funds available to meet
budgeted and actual expenditures for the next six months.
/A;—�
Kelly D. McCann, Senior Accountant
8/31/14
Investment Summary Report
Below is a chart summarizing the yields as well as terms and maturities for the month of August 2014:
Average
# of
Month Portfolio
Days to
of 2014 Yield
Maturity
August 0.63%
413
Below is are charts comparing operating fund interest for current and prior fiscal years.
Actual Interest
4.73%
8/31/2013
3.68%
8/31/2014
Monthly - August
$
7,775
$
11,523
Year -to -Date
$
17,063
$
18,689
Budget
1,009,253
2013/2014
2,125,861
2014/2015
Interest Budget, August YTD
$
14,500
$
18,667
Interest Budget, Annual
$
87,000
$
112,000
Interest earned on investments is recorded in the fund that owns the investment.
Investment Summary Comparison Between Current and Previous Month
The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds
is as follows:
July 2014 % Alloc August 2014 % Alloc
Fund Description Balance 7/31/2014 Balance 8/31/2014
Water Operating Reserve
Water Emergency Reserve
Water Capital Project Reserve
Water Reserve for Debt Service
Maintenance Reserve
Employee Liability Reserve
COP Revenue Bond 2008 - Reserve
Sewer Operating
Sewer Emergency Reserve
Sewer Capital Project Reserve
Water Operating
Sewer Operating
$ 1,300,815
4.73%
1,010,584
3.68%
16,665,947
60.65%
2,730,550
9.94%
200,091
0.73%
200,114
0.73%
2,143,759
7.80%
92,869
0.34%
1,009,253
3.67%
2,125,861
7.74%
$ 27,479,843
100.00%
Wells Fargo Bank Checking
223,554
139,754
363,308
$ 2,035,776
7.07%
1,013,152
3.52%
16,694,667
57.98%
3,320,078
11.53%
150,335
0.52%
200,153
0.70%
2,148,371
7.46%
92,904
0.32%
1,011,092
3.51%
2,127,735
7.39%
$ 28,794,263
100.00%
(39,240)
123,631
84,391
Totals $ 27,843,151 $ 28,878,654
Meeting Date:
To:
From:
Presented By
Prepared By:
Subject:
DISCUSSION:
ITEM NO. 5.2
AGENDA REPORT
September 18, 2014
Finance - Accounting Committee
Marc Marcantonio, General
Manager
Delia Lugo, Finance Manager Dept: Finance
Kelly McCann, Senior
Accountant
Budget to Actual Results for August 2014
Attached are the District's budget to actual summary results for the Water Fund, Sewer Fund and a
combined statement for both funds pertaining to the reporting month of August 2014. For the month
of August 2014, the District water revenue is 20.85% of annual budget, which is 2.55% lower than
the historical trend for this point in the year.
The majority of the Water Fund's Individual Supplies and Services expenses are below budget, with
the exceptions of Dues & Memberships and Maintenance due to the previous month reported
reasons. In addition, materials is presented at 20.92% of annual budget due to purchases pertaining
to replacement meters, water service repair parts and hydrant repair parts, and Vehicle Equipment
is presented at 22.10% of annual budget due to costs related to vehicle maintenance costs.
Overall, Sewer Supplies and Services expenses are trending below budget, with the same
exceptions noted in the water fund.
STRATEGIC PLAN:
FR 1 -F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a
Timely and Transparent Manner to the Board of Directors and Member Agencies
ATTACHMENTS:
Name:
August 2014 consolidated stmt.xlsx
August 2014 Water Stmt.xlsx
August 2014 Sewer Stmt.xlsx
Description:
Aug 2014 Consolidated Stmt
August 2014 Water Stmt
August 2014 Sewer Statement
Type:
Backup Material
Backup Material
Backup Material
Revenue (Operating):
Water Revenue (Residential)
Water Revenue (Commercial & Fire Det.)
Water Revenue (Landscape /Irrigation)
Water Revenue (Service Charge)
Sewer Charge Revenue
Locke Ranch Assessments
Other Operating Revenue
Total Operating Revenue:
Revenue (Non- Operating):
Interest
Property Tax
Other Non - Operating Revenue
Total Non - Operating Revenue:
Total Revenue
Expenses (Operating)
Yorba Linda Water District
Summary Financial Report
Water & Sewer Funds
For Two Months Ending August 31, 2014
Annual YTD Aug YTD YTD YTD
Budget Budget Actual Actual Under(Over) % of
FY 2015 FY 2015 FY 2015 FY 2015 Budget Budget
$17,154,552 $2,859,092 $1,627,633 $3,643,709 $13,510,843 21.24%
2,074,097
345,683
176,004
392,583
1,681,514
18.93%
4,792,995
798,833
505,116
1,095,932
3,697,063
22.87%
4,478,000
746,333
420,484
790,022
3,687,978
17.64%
1,605,292
267,549
133,342
270,059
1,335,233
16.82%
201,000
33,500
116
116
200,884
0.06%
719,777
119,963
90,047
180,961
538,816
25.14%
31,025,713 5,170,952 2,952,742 6,373,382 24,652,331 20.54%
112,000
18,667
11,523
18,689
93,311
16.69%
1,283,642
213,940
8,026
8,026
1,275,616
0.63%
533,525
88,921
74,963
90,931
442,594
17.04%
1,929,167
321,528
94,512
117,646
1,811,521
6.10%
32,954,880 5,492,480 3,047,254 6,491,028 26,463,852 19.70%
Variable Water Costs (G.W., Import & Power)
14,928,972
2,488,162
1,539,229
3,233,429
11,695,543
21.66%
Salary Related Expenses
8,224,812
1,370,802
806,409
1,242,971
6,981,841
15.11%
Supplies & Services
4,389,840
731,640
261,794
577,592
3,812,248
13.16%
Total Operating Expenses
27,543,624
4,590,604
2,607,432
5,053,992
22,489,632
18.35%
Expenses (Non- Operating):
7,337,500
1,222,917
613,426
1,226,852
6,110,648
16.72%
Interest on Long Term Debt
1,780,793
296,799
141,791
283,582
1,497,211
15.92%
Other Expense
72,000
12,000
573
(8,352)
80,352 - 11.60%
Total Non- Operating Expenses:
1,852,793
308,799
142,364
275,230
1,577,563
14.85%
Total Expenses
29,396,416
4,899,403
2,749,796
5,329,222
24,067,194
18.13%
Net Income (Loss) Before Capital Contributions
3,558,464
593,077
297,458
1,161,806
2,396,658
32.65%
Capital Contributions
-
-
-
1,177
1,177
0.00%
Net Income (Loss) Before Depreciation
3,558,464
593,077
297,458
1,162,983
2,397,835
32.68%
Depreciation & Amortization
7,337,500
1,222,917
613,426
1,226,852
6,110,648
16.72%
Total Net Income (Loss)
($3,779,036)
($629,839)
($315,968)
($63,869)
($3,715,167)
1.69%
Yorba Linda Water District
Water Fund
For Two Months Ending August 31, 2014
Annual YTD Aug YTD YTD YTD
Budget Budget Actual Actual Under(Over) % of Annual
FY 2015 FY 2015 FY 2015 FY 2015 FY Budget Budget
Revenue (Operating)
Water Revenue (Residential)
$17,154,552
$2,859,092
$1,627,633
$3,643,709
$13,510,843
21.24%
Water Revenue (Commercial & Fire Det.)
2,074,097
345,683
176,004
392,583
1,681,514
18.93%
Water Revenue (Landscape /Irrigation)
4,792,995
798,833
505,116
1,095,932
3,697,063
22.87%
Water Revenue (Service Charge)
4,478,000
746,333
420,484
790,022
3,687,978
17.64%
Other Operating Revenue
670,003
111,667
85,895
160,738
509,265
23.99%
Total Operating Revenue:
29,169,647
4,861,608
2,815,132
6,082,984
23,086,663
20.85%
Revenue (Non- Operating):
3,015,880
502,647
285,858
1,057,644
1,958,236
35.07%
Interest
100,000
16,667
10,319
17,475
82,525
17.48%
Property Tax
1,283,642
213,940
8,026
8,026
1,275,616
0.63%
Other Non - Operating Revenue
521,600
86,933
72,965
92,927
428,673
17.82%
Total Non - Operating Revenue:
1,905,242
317,540
91,310
118,428
1,786,814
6.22%
Total Revenue
31,074,889
5,179,148
2,906,442
6,201,412
24,873,477
19.96%
Expenses (Operating):
Variable Water Costs (G.W., Import & Power)
14,928,972
2,488,162
1,539,229
3,233,429
11,695,543
21.66%
Salary Related Expenses
7,363,472
1,227,245
696,431
1,099,907
6,263,565
15.71%
Supplies & Services:
Communications
273,786
45,631
15,480
29,992
243,794
10.95%
Contractual Services
521,451
86,909
41,092
72,218
449,233
13.85%
Data Processing
173,752
28,959
5,086
5,124
168,628
2.95%
Dues & Memberships
72,321
12,054
1,082
23,413
48,908
32.37%
Fees & Permits
169,437
28,240
9,079
10,747
158,690
6.34%
Board Election
69,750
11,625
-
-
69,750
0.00%
Insurance
291,406
48,568
91
91
291,315
0.03%
Materials
579,369
96,562
75,413
121,226
458,143
20.92%
District Activities, Emp Recognition
22,980
3,830
249
407
22,573
1.77%
Maintenance
394,416
65,736
19,991
110,691
283,725
28.06%
Non - Capital Equipment
132,525
22,088
18,176
26,355
106,170
19.89%
Office Expense
37,642
6,274
3,382
4,753
32,889
12.63%
Professional Services
672,197
112,033
14,570
47,537
624,660
7.07%
Training
58,571
9,762
4,398
7,505
51,066
12.81%
Travel & Conferences
42,129
7,022
1,063
2,420
39,709
5.74%
Uncollectible Accounts
37,200
6,200
(83)
(78)
37,278
-0.21%
Utilities
83,700
13,950
4,741
10,673
73,027
12.75%
Vehicle Equipment
281,139
46,857
28,750
62,128
219,011
22.10%
Supplies & Services Sub -Total
3,913,772
652,295
242,560
535,202
3,378,570
13.67%
Total Operating Expenses
26,206,216
4,367,703
2,478,220
4,868,538
21,337,678
18.58%
Expenses (Non- Operating):
Interest on Long Term Debt
1,780,793
296,799
141,791
283,582
1,497,211
15.92%
Other Expense
72,000
12,000
573
(8,352)
80,352
- 11.60%
Total Non - Operating Expenses:
1,852,793
308,799
142,364
275,230
1,577,563
14.85%
Total Expenses
28,059,009
4,676,501
2,620,584
5,143,768
22,915,241
18.33%
Net Income (Loss) Before Capital Contributions
3,015,880
502,647
285,858
1,057,644
1,958,236
35.07%
Capital Contributions
-
-
-
-
-
0.00%
Net Income (Loss) Before Depreciation
3,015,880
502,647
285,858
1,057,644
1,958,236
35.07%
Depreciation & Amortization
5,992,500
998,750
501,503
1,003,006
4,989,494
16.74%
Total Net Income (Loss)
($2,976,620)
($496,103)
($215,645)
$54,638
($3,031,258)
-1.84%
Capital - Direct Labor
(30,882)
(57,184)
Yorba Linda Water District
Sewer Fund
For Two Months Ending August 31, 2014
Annual YTD Aug YTD YTD YTD
Budget Budget Actual Actual Under(Over) % of Annual
FY 2015 FY 2015 FY 2015 FY 2015 Budget Budget
Revenue (Operating)
Sewer Charge Revenue
$1,605,292
$267,549
$133,342
$270,059
$1,335,233
16.82%
Locke Ranch Assessments
201,000
33,500
116
116
200,884
0.06%
Other Operating Revenue
49,774
8,296
4,152
20,223
29,551
40.63%
Total Operating Revenue:
1,856,066
309,344
137,610
290,398
1,565,668
15.65%
Revenue (Non- Operating):
542,585
90,431
11,597
104,162
438,423
19.20%
Interest
12,000
2,000
1,205
1,215
10,785
10.13%
Other Non - Operating Revenue
11,925
1,988
1,998
(1,996)
13,921
- 16.74%
Total Non - Operating Revenue:
23,925
3,988
3,203
(781)
24,706
-3.26%
Total Revenue
1,879,991
($133,736)
($100,326)
($118,508)
($683,907)
14.77%
313,332
140,813
289,617
1,590,374
15.41%
Expenses (Operating):
Salary Related Expenses
861,340
143,557
109,978
143,064
718,276
16.68%
Supplies & Services:
Communications
21,108
3,518
1,165
2,257
18,851
10.69%
Contractual Services
39,249
6,542
3,088
5,436
33,813
13.85%
Data Processing
13,078
2,180
383
386
12,692
2.95%
Dues & Memberships
5,744
957
81
1,762
3,982
30.68%
Fees & Permits
16,753
2,792
468
724
16,029
4.32%
Board Election
5,250
875
-
-
5,250
0.00%
Insurance
21,934
3,656
7
7
21,927
0.03%
Materials
78,756
13,126
2,108
7,185
71,571
9.12%
District Activities, Emp Recognition
1,730
288
19
24
1,706
1.39%
Maintenance
112,605
18,768
1,641
1,970
110,635
1.75%
Non - Capital Equipment
19,475
3,246
2,136
6,413
13,062
32.93%
Office Expense
2,833
472
255
358
2,475
12.64%
Professional Services
39,413
6,569
1,097
3,567
35,846
9.05%
Training
6,609
1,101
319
1,421
5,188
21.50%
Travel & Conferences
4,371
728
80
182
4,189
4.16%
Uncollectible Accounts
2,800
467
(17)
(12)
2,812
-0.43%
Utilities
7,100
1,183
421
934
6,166
13.15%
Vehicle Equipment
77,261
12,877
5,987
9,777
67,484
12.65%
Supplies & Services Sub -Total
476,066
79,344
19,238
42,391
433,675
8.90%
Total Operating Expenses
1,337,406
222,901
129,216
185,455
1,151,951
13.87%
Expenses (Non- Operating)
Interest Expense
-
0.00%
Other Expense
-
-
-
0.00%
Total Non - Operating Expenses:
-
-
-
-
-
0.00%
Total Expenses
1,337,406
222,901
129,216
185,455
1,151,951
13.87%
Net Income (Loss) Before Capital Contributions
542,585
90,431
11,597
104,162
438,423
19.20%
Capital Contributions
-
-
-
1,176
1,176
0.00%
Net Income (Loss) Before Depreciation
542,585
90,431
11,597
105,338
439,599
19.41%
Depreciation & Amortization
1,345,000
224,167
111,923
223,846
1,121,154
16.64%
Total Net Income (Loss)
($802,415)
($133,736)
($100,326)
($118,508)
($683,907)
14.77%
Capital - Direct Labor
(596)