This section of the County of Santa Cruz (the “County”) comprehensive annual financial report presents a discussion and analysis of the County’s financial performance during the fiscal year ended June 30, 2003. Please read it in conjunction with the transmittal letter at the front of this report and the County’s basic financial statements following this section.
FINANCIAL HIGHLIGHTS
OVERVIEW OF THE FINANCIAL
STATEMENTS
This discussion and analysis are intended to serve
as an introduction to the County’s basic financial statements. The County’s basic financial statements
comprise three components: (1) Government-wide financial statements, (2)
Fund financial statements, and (3) Notes to the basic financial
statements. Required Supplementary
Information is included in addition to the basic financial statements.
Government-wide Financial Statements
The government-wide financial statements are
designed to provide readers with a broad overview of the County’s finances, in
a manner similar to a private-sector business.
The statement of net assets presents
information on all County assets and liabilities, with the difference between
the two reported as net assets. Over
time, increases or decreases in net assets may serve as a useful indicator of
whether or not the financial position of the County is improving or
deteriorating.
The statement of activities presents
information showing how the County’s net assets changed during the most recent
fiscal year. All changes in net assets
are reported as soon as the underlying event giving rise to the change occurs,
regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for
some items that will only result in cash flows in future fiscal periods, such
as revenues pertaining to uncollected taxes and expenses pertaining to earned
but unused vacation and sick leave.
Both of these government-wide financial statements
distinguish functions of the County that are principally supported by taxes and
intergovernmental revenues (governmental activities) from other functions
that are intended to recover all or a significant portion of their costs
through user fees and charges (business-type activities). The governmental activities of the County
include general government, public protection, health and sanitation, public
assistance, education, recreation and culture, and public ways and
facilities. The business-type
activities of the County include the County Disposal Sites CSA 9, Boulder Creek
CSA 7, Rolling Woods CSA 10, Septic Tank Maintenance CSA 12, Freedom County
Sanitation District, Davenport Sanitation District, Place de Mer CSA 2, Sand
Dollar Beach CSA 5, Trestle Beach CSA 20, Summit West CSA 54, and Graham Hill
CSA 57 operations.
Component units are included in our basic financial
statements and consist of legally separate entities for which the County is
financially accountable and that have substantially the same board as the
County or provide services entirely to the County. The Santa Cruz County Sanitation District is reported as a
discretely presented component unit of the County. The District is managed by the County Department of Public Works
and provides sanitation services to the unincorporated areas of the County.
Fund Financial Statements
The fund financial statements are designed to report
information about groupings of related accounts which are used to maintain
control over resources that have been segregated for specific activities or
objectives. The County, like other
state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements. All of the funds of the County can be divided into three
categories: governmental funds,
proprietary funds, and fiduciary funds.
Governmental funds are used to account for
essentially the same functions reported as governmental activities in the
government-wide financial statements—i.e. most of the County’s basic services
are reported in governmental funds.
These statements, however, focus on (1) how cash and other financial
assets can readily be converted to available resources and (2) the balances
left at year-end that are available for spending. Such information may be useful in determining what financial
resources are available in the near future to finance the County’s programs.
Because the focus of governmental funds is narrower
than that of the government-wide financial statements, it is useful to compare
the information presented for governmental funds with similar information
presented for governmental activities in the government-wide financial
statements. By doing so, readers may
better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental funds
balance sheet and the governmental funds statement of revenues, expenditures,
and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
The County maintains several individual governmental
funds organized according to their type (general, special revenue, debt
service, and capital projects).
Information is presented separately in the governmental funds balance
sheet and in the governmental funds statement of revenues, expenditures, and
changes in fund balances for the general fund and the Redevelopment Agency,
which are considered to be major funds.
Data from the remaining governmental funds are combined into a single,
aggregated presentation. Individual
fund data for each of the non-major governmental funds is provided in the form
of combining statements elsewhere in this report.
The County adopts an annual appropriated budget. The budget is a compilation of operating budgets from individual functional units within the General Fund, Special Revenue Funds, Capital Projects Funds, and Proprietary Funds (operating plans). Budgets are adopted for all funds except for Debt Service Funds and certain special revenue funds, namely, Public Finance Authority, Health Services, and Health and Sanitation Funds. A budgetary comparison schedule has been provided for the General Fund and Special Revenue-Redevelopment Agency to demonstrate compliance with these budgets.
Proprietary funds are generally used to
account for services for which the County charges customers—either outside
customers, or internal units or departments of the County. Proprietary funds provide the same type of
information as shown in the government-wide financial statements, only in more
detail. The County maintains the
following two types of proprietary funds:
Fiduciary funds are used to account for resources held for
the benefit of parties outside the County.
Fiduciary funds are not reflected in the government-wide financial
statements because the resources of those funds are not available to support
the County’s own programs. The
fiduciary funds the County maintains are agency funds. Since agency funds are custodial in nature
(i.e., assets equal liabilities), they do not involve the measurement of
results of operations.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide
additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements.
Required Supplementary Information (other than
MD&A)
In addition to the basic financial statements and
accompanying notes, this report presents certain required supplementary
information concerning the County’s general fund budgetary comparison schedule
and progress in funding its obligation to provide pension benefits to its
employees.
Combining Statements and Schedules
The combining and individual fund statements and
schedules referred to earlier in connection with non-major governmental funds,
enterprise and internal service funds, and fiduciary funds are presented
immediately following the required supplementary information.
GOVERNMENT-WIDE FINANCIAL
ANALYSIS
Net Assets
|
|
Governmental Activities |
Business-type Activities |
Total .
|
|||||
|
|
2003 |
2002 |
2003 |
2002 |
2003 |
2002 |
Variance (%) |
|
|
Assets: |
|
|
|
|
|
|
|
|
|
Current and other assets |
$254,297,579 |
$253,925,889 |
$23,763,717 |
$26,396,080 |
$278,061,296 |
$280,321,969 |
( 0.81) |
|
|
Capital assets |
97,331,950 |
93,506,619 |
22,342,521 |
22,117,405 |
119,674,471 |
115,624,024 |
3.50 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
351,629,529 |
347,432,508 |
46,106,238 |
48,513,485 |
397,735,767 |
395,945,993 |
0.45 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
Current and other
liabilities |
113,760,969 |
94,562,277 |
1,817,410 |
1,587,194 |
115,578,379 |
96,149,471 |
20.21 |
|
|
Long-term liabilities |
174,174,014 |
179,264,844 |
4,678,669 |
5,000,852 |
178,852,683 |
184,265,696 |
( 2.94) |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
287,934,983 |
273,827,121 |
6,496,079 |
6,588,046 |
294,431,062 |
280,415,167 |
5.00 |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets: |
|
|
|
|
|
|
|
|
|
Invested in capital assets, net of
related debt |
43,068,978 |
14,260,350 |
20,301,446 |
19,419,459 |
63,370,424 |
33,679,809 |
88.16 |
|
|
Restricted net assets |
19,585,321 |
28,822,444 |
277,013 |
290,581 |
19,862,334 |
29,113,025 |
(31.78) |
|
|
Unrestricted net assets |
1,040,247 |
30,522,593 |
19,031,700 |
22,215,399 |
20,071,947 |
52,737,992 |
(61.94) |
|
|
|
|
|
|
|
|
|
|
|
|
Total
net assets |
$ 63,694,546 |
$ 73,605,387 |
$39,610,159 |
$41,925,439 |
$103,304,705 |
$115,530,826 |
(10.58) |
|
As noted earlier, net assets may serve over time as
a useful indicator of a government’s financial position. For the County, assets exceeded liabilities
by $103,304,705 at the close of the current fiscal year.
The largest portion of the County’s net assets
$63,370,424 (61%) reflects its investment in capital assets (e.g. land,
building and structures, and equipment), less any related debt used to acquire
those assets that is still outstanding.
The County uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the County’s investment in its
capital assets is reported net of related debt, it should be noted that the
resources needed to repay this debt must be provided from other sources, since
the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of the County’s net assets,
$19,862,334 (19%) represents resources that are subject to external
restrictions on how they may be used.
The remaining (20%) represents the unrestricted net
assets, $20,071,947 which may be used to meet the government’s ongoing
obligations to citizens and creditors.
At the end of the current fiscal year, the County
reported positive balances in all three categories of net assets, both for the
County as a whole, as well as for its separate governmental activities.
Changes in Net Assets
|
|
Governmental Activities
|
Business-type Activities
|
Total
.
|
|||||
|
|
2003 |
2002 |
2003 |
2002 |
2003 |
2002 |
Variance (%) |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
Program revenues: |
|
|
|
|
|
|
|
|
|
Charges
for services |
$ 57,282,985 |
$ 54,793,723 |
$10,923,487 |
$10,947,617 |
$ 68,206,472 |
$ 65,741,340 |
3.75 |
|
|
Operating
grants and contri. |
188,238,700 |
187,809,995 |
389,260 |
534,212 |
188,627,960 |
188,344,207 |
0.15 |
|
|
Capital
grants and contri. |
- . |
- . |
9,224 |
6,524 |
9,224 |
6,524 |
41.39 |
|
|
General revenues: |
|
|
|
|
|
|
|
|
|
Property
taxes |
58,190,576 |
55,625,116 |
- . |
- . |
58,190,576 |
55,625,116 |
4.61 |
|
|
Other
taxes |
13,069,921 |
19,800,407 |
- . |
- . |
13,069,921 |
19,800,407 |
( 33.99) |
|
|
Interest
and investment income |
5,423,752 |
7,682,370 |
517,153 |
856,389 |
5,940,905 |
8,538,759 |
( 30.42) |
|
|
Miscellaneous |
9,775,877 |
11,268,371 |
512,796 |
86,640 |
10,288,673 |
11,355,011 |
( 9.39) |
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
331,981,811 |
336,979,982 |
12,351,920 |
12,431,382 |
344,333,731 |
349,411,364 |
( 1.45) |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
General
government |
23,334,622 |
24,700,704 |
- . |
- . |
23,334,622 |
24,700,704 |
( 5.53) |
|
|
Public
protection |
106,222,864 |
100,368,360 |
- . |
- . |
106,222,864 |
100,368,360 |
5.83 |
|
|
Health
and sanitation |
75,039,192 |
76,974,991 |
- . |
- . |
75,039,192 |
76,974,991 |
( 2.51) |
|
|
Public
assistance |
86,609,599 |
87,275,868 |
- . |
- . |
86,609,599 |
87,275,868 |
( 0.76) |
|
|
Education |
3,469,990 |
3,132,635 |
- . |
- . |
3,469,990 |
3,132,635 |
10.77 |
|
|
Recreation and culture |
8,125,177 |
7,552,638 |
- . |
- . |
8,125,177 |
7,552,638 |
7.58 |
|
|
Public
ways and facilities |
31,029,943 |
32,544,591 |
- . |
- . |
31,029,943 |
32,544,591 |
( 4.65) |
|
|
Interest
on long-term debt |
8,742,496 |
12,837,784 |
- . |
- . |
8,742,496 |
12,837,784 |
( 31.90) |
|
|
County
Disposal Sites CSA |
- . |
- . |
12,260,297 |
9,750,973 |
12,260,297 |
9,750,973 |
25.73 |
|
|
Boulder
Creek CSA |
- . |
- . |
396,283 |
376,962 |
396,283 |
376,962 |
5.13 |
|
|
Rolling
Woods CSA |
- . |
- . |
62,643 |
79,007 |
62,643 |
79,007 |
( 20.71) |
|
|
Septic
Tank Maintenance CSA |
- . |
- . |
718,478 |
632,328 |
718,478 |
632,328 |
13.62 |
|
|
Freedom
County Sanitation Distr. |
- . |
- . |
530,424 |
346,128 |
530,424 |
346,128 |
53.25 |
|
|
Davenport
Sanitation District |
- . |
- . |
378,715 |
299,785 |
378,715 |
299,785 |
26.33 |
|
|
Place de
Mer CSA |
- . |
- . |
64,456 |
44,013 |
64,456 |
44,013 |
46.45 |
|
|
Sand
Dollar Beach CSA |
- . |
- . |
211,602 |
196,945 |
211,602 |
196,945 |
7.44 |
|
|
Trestle
Beach CSA |
- . |
- . |
33,280 |
33,170 |
33,280 |
33,170 |
0.33 |
|
|
Summit
West CSA |
- . |
- . |
3,541 |
18,924 |
3,541 |
18,924 |
( 81.29) |
|
|
Graham
Hill CSA |
- . |
- . |
7,481 |
333 |
7,481 |
333 |
2,146.55 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses |
342,573,883 |
345,387,571 |
14,667,200 |
11,778,568 |
357,241,083 |
357,166,139 |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
Change in net assets |
( 10,592,072) |
( 8,407,589) |
( 2,315,280) |
652,814 |
( 12,907,352) |
( 7,754,775) |
( 66.44) |
|
|
|
|
|
|
|
|
|
|
|
|
Restated net assets, beginning |
73,605,387 |
82,773,722 |
41,925,439 |
44,270,417 |
115,530,826 |
127,044,139 |
( 9.06) |
|
|
Prior period adjustment |
681,231. |
( 760,746) |
- . |
( 2,997,792) |
681,231 |
( 3,758,538) |
118.12 |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, ending |
$ 63,694,546 |
$ 73,605,387 |
$39,610,159 |
$41,925,439 |
$103,304,705 |
$115,530,826 |
( 10.58) |
|
Analysis of Changes in Net Assets
The County’s net assets decreased by $12,907,352
(exclusive of prior period adjustment) during the current fiscal year. These decreases are explained in the
government and business-type activities discussion below.
Governmental activities. Governmental activities decreased the County’s net
assets by $10,592,072, thereby accounting for 82% of the total decrease in net
assets of the County. Key elements of
this decrease are as follows:
Business-type activities. Business-type activities decreased the
County’s net assets by $2,315,280. Key
elements of this decrease are as follows:
FINANCIAL ANALYSIS OF THE
COUNTY’S FUNDS
As noted earlier, the County uses fund accounting to
ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds
The focus of the County’s governmental funds is to
provide information on near-term inflows, outflows, and balances of spendable
resources. Such information is useful
in assessing the County’s financing requirements. In particular, unreserved fund balance may serve as a useful
measure of a government’s net resources available for spending at the end of
the fiscal year. Types of governmental
funds reported by the County include the General Fund, Special Revenue Funds,
Debt Service Funds, and Capital Project Funds.
At June 30, 2003, the County’s governmental funds
reported combined ending fund balances of $164,645,485, a decrease of
$13,067,709 (exclusive of prior period adjustment and decrease in reserve for
inventories) in comparison with the prior year. Approximately 73% or $120,980,795 of the combined ending fund
balances constitutes unreserved fund balance, which is available to meet the
County’s current and future needs. The
remainder of fund balance is reserved to indicate that it is not available for
new spending because it has been committed: (1) to pay debt service
$10,693,693; (2) to fund fixed asset acquisition $12,712,931; (3) to liquidate
contractual commitments of the period $12,988,792; (4) for a variety of other
purposes $7,269,274.
Revenues for governmental functions totaled
$331,305,398 in fiscal year 2002-2003, which represents a decrease of
$6,200,675 or -1.84% from fiscal year ended 2001-2002. Expenditures for governmental functions,
totaling $346,953,017 increased by $1,155,535 or 0.33% from the fiscal year
2001-2002. In the fiscal year
2002-2003, expenses for governmental functions exceeded revenues by
$15,647,619.
The general fund is the primary operating fund of
the County. At June 30, 2003,
unreserved fund balance of the general fund was $28,067,547 while total fund
balance reached $31,693,524. As a
measure of the general fund’s liquidity, it may be useful to compare both
unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 10% of
total general fund expenditures of $269,973,526, while total fund balance
represents 12% of that same amount.
The following table presents the amount of revenues
from various sources as well as increases or decreases from the prior year.
Revenues Classified by
Source
Governmental Funds
|
|
FY 2003 . |
FY 2002
. |
Increase/(Decrease) |
|
|||||||||
|
Revenues
by Source |
Amount |
% of Total |
Amount |
% of Total |
Amount |
% of Change |
|||||||
|
|
|
|
|
|
|
|
|
||||||
|
Taxes |
$ 71,260,497 |
21.51 |
$ 75,425,523 |
22.35 |
($4,165,026) |
( 5.52) |
|
||||||
|
Licenses |
7,776,634 |
2.35 |
7,557,113 |
2.23 |
219,521 |
2.90 |
|
||||||
|
Fines, forfeitures and penalties |
4,312,197 |
1.30 |
4,692,668 |
1.39 |
( 380,471) |
( 8.11) |
|
||||||
|
Use of money and property |
5,423,752 |
1.64 |
7,682,370 |
2.28 |
( 2,258,618) |
(29.40) |
|
||||||
|
Aid from other governmental agencies |
187,134,942 |
56.48 |
188,342,183 |
55.80 |
( 1,207,241) |
( 0.64) |
|
||||||
|
Charges for current services |
45,194,154 |
13.64 |
42,543,942 |
12.61 |
2,650,212 |
6.23 |
|
||||||
|
Other revenues |
10,203,222 |
3.08 |
11,262,274 |
3.34 |
( 1,059,052) |
( 9.40) |
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
Totals |
$331,305,398 |
100.00 |
$337,506,073 |
100.00 |
($6,200,675) |
( 1.84) |
|
||||||
The following provides an explanation of revenues by source that changed
significantly from the prior year.
·
Taxes – the result is from the repeal of the
Utility Use Tax.
·
Fines,
forfeitures and penalties – the result of an audit adjustment to realign
distributions amongst participating agencies.
·
Use
of money and property – a major decline in the reinvestment rates earned on the
Treasurer’s Pooled Investments. Rates dropped from 6.276% to 3.279% from
2000-01 to 2001-02. A decrease of 2.997%. In 2002-2003 the rates decreased by
1.291% from the prior year or 1.988%
·
Charges
for current services – the result of increase street improvement fees of $1
million, increase in recordation fees, jail booking fees, and a general
increase in fees due to the loss of the utility tax.
·
Other
revenues – the result of last fiscal year where the City of Santa Cruz
purchased the County of Santa Cruz’s financial interest in the homeless shelter
for $743,288 and the County of Santa Cruz received a fire insurance settlement
of $253,499. The remainder is contributions from other funds for the mold
removal project at the new health services facility on the Emeline Street
campus.
The following table presents
expenditures by function compared to prior year amounts.
Expenditures Classified by
Function
Governmental Funds
|
|
FY 2003
. |
FY 2002
. |
Increase/(Decrease) |
||||||
|
Expenditures
by Function |
Amount |
% of Total |
Amount |
% of Total |
Amount |
% of Change |
|||
|
|
|
|
|
|
|
|
|
||
|
General government |
$ 20,886,273 |
6.02 |
$ 22,228,087 |
6.43 |
($1,341,814) |
( 6.04) |
|
||
|
Public protection |
101,844,827 |
29.35 |
96,865,192 |
28.01 |
4,979,635 |
5.14 |
|
||
|
Health and sanitation |
73,562,270 |
21.20 |
74,752,115 |
21.62 |
( 1,189,845) |
( 1.59) |
|
||
|
Public assistance |
85,112,340 |
24.53 |
85,076,011 |
24.60 |
36,329 |
0.04 |
|
||
|
Education |
3,421,184 |
0.99 |
3,067,150 |
0.89 |
354,034 |
11.54 |
|
||
|
Recreation and culture |
7,916,680 |
2.28 |
7,299,961 |
2.11 |
616,719 |
8.45 |
|
||
|
Public ways and facilities |
28,944,355 |
8.34 |
31,089,554 |
8.99 |
( 2,145,199) |
( 6.90) |
|
||
|
Capital outlay |
10,681,308 |
3.08 |
11,860,959 |
3.43 |
( 1,179,651) |
( 9.95) |
|
||
|
Debt service-bond redemption |
5,329,686 |
1.54 |
4,352,757 |
1.26 |
976,929 |
22.44 |
|
||
|
Debt service-interest and
fiscal charges |
9,254,094 |
2.67 |
9,205,696 |
2.66 |
48,398 |
0.53 |
|
||
|
|
|
|
|
|
|
|
|
||
|
Totals |
$346,953,017 |
100.00 |
$345,797,482 |
100.00 |
$1,155,535 |
0.33 |
|
||
The following provides an explanation of
expenditures by function that changed significantly from the prior year.
·
General
government – three major components included the cost associated election
equipment purchases of $209,210, a change in billing methodology affecting
Intra-fund Charges in the County Counsel Office decreasing the net county cost
by $447,040, and decrease in facilities management costs of $566,400.
·
Public
protection – increased expenditures associated with salaries and related
operating expenditures for the Sheriff ($1,712,175), Detention ($1,368,370),
and Family Support ($1,314,663).
·
Education
– the result of a prior period adjustment providing additional property taxes
which were appropriated and expended..
·
Recreation
and culture – the result of higher labor costs associated with a new contract
and capital expenditures.
·
Public
ways and facilities – the result of completion of several major infrastructure
capital projects.
·
Capital
outlay – the decrease reflects the reduction of expenditures for the road
pavement improvement program from funds appropriated in 2000-01 in the amount
of $7 million. An additional $5 million was appropriated in 2001-02 and another
$1 million in 2002-03 from one-time revenue sources to improve the
unincorporated area roadways.
·
Debt
Service bond redemption – the increase is due to the new money associated with
the refunding of the 1987 Certificates of Participation and the 1994 Series B.
Other financing sources and uses are presented below
to illustrate changes from the prior year:
Other Financing Sources
(Uses)
Governmental Funds
|
|
FY 2003
. |
FY 2002
. |
Increase/(Decrease) |
|||||||
|
|
Amount |
% of Total |
Amount |
% of Total |
Amount |
% of Change |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Proceeds from sale of capital assets |
$ 3,408 |
0.13 |
$ 6,097 |
0.05 |
($ 2,689) |
( 44.10) |
|
|||
|
Proceeds from long-term debt |
- . |
- . |
11,748,244 |
99.95 |
( 11,748,244) |
(100.00) |
|
|||
|
Debt issue cost |
( 267,107) |
( 10.35) |
- . |
- . |
( 267,107) |
- . |
|
|||
|
Premium on long-term debt |
192,196 |
7.45 |
- . |
- . |
192,196 |
- . |
|
|||
|
Proceeds from refunding bonds |
8,377,728 |
324.73 |
- . |
- . |
8,377,728 |
- . |
|
|||
|
Payments to bond refunding escrow
agent |
( 5,726,315) |
( 221.96) |
- . |
- . |
( 5,726,315) |
- . |
|
|||
|
Transfers in |
42,696,585 |
1,654.96 |
52,856,283 |
449.67 |
( 10,159,698) |
( 19.22) |
|
|||
|
Transfers out |
( 42,696,585) |
(1,654.96) |
( 52,856,283) |
(449.67) |
10,159,698 |
19.22 |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
Totals |
$ 2,579,910 |
100.00 |
$11,754,341 |
100.00 |
($40,096,660) |
( 77.33) |
|
|||
The current year excess of revenues and other
financing sources over expenditures and other financing uses is presented
below:
Statement of Revenues,
Expenditures, and Changes in Fund Balances
Governmental Funds
|
|
Major Funds |
|
Nonmajor Funds |
|
||||||||
|
|
General Fund |
Redev Agency |
Special Revenue Fund |
Debt Service Fund |
Capital Projects Funds |
Total |
||||||
|
|
|
|
|
|
|
|
||||||
|
Revenues |
$269,079,277 |
$16,657,745 |
$43,177,256 |
$ 334,193 |
$ 2,056,927 |
$331,305,398 |
||||||
|
Expenditures |
( 269,973,526) |
( 10,003,713) |
( 48,176,551) |
( 8,117,919) |
( 10,681,308) |
( 346,953,017) |
||||||
|
Net other financing Sources
(uses) |
( 4,620,058) |
( 7,771,595) |
3,330,877 |
7,771,595 |
3,869,091 |
2,579,910 |
||||||
|
|
|
|
|
|
|
|
||||||
|
Net change in fund balances |
( 5,514,307) |
( 1,117,563) |
( 1,668,418) |
( 12,131) |
( 4,755,290) |
( 13,067,709) |
||||||
|
|
|
|
|
|
|
|
||||||
|
Fund balances, beginning |
37,051,712 |
72,414,798 |
43,400,570 |
6,884,521 |
17,305,474 |
177,057,075 |
||||||
|
Prior period adjustment |
- . |
- . |
- . |
- . |
500,000 |
500,000 |
||||||
|
Restated Fund
balances, beginning |
37,051,712 |
72,414,798 |
43,400,570 |
6,884,521 |
17,805,474 |
177,557,075 |
||||||
|
|
|
|
|
|
|
|
||||||
|
Change in fund balances
reserved for inventories |
156,119 |
- . |
- . |
- . |
- . |
156,119 |
||||||
|
|
|
|
|
|
|
|
||||||
|
Fund balances, ending |
$ 31,693,524 |
$71,297,235 |
$41,732,152 |
$6,872,390 |
$13,050,184 |
$164,645,485 |
||||||
The fund balance
in the County’s general fund decrease of $5,514,307 (excluding decrease in
reserve for inventories) during the fiscal year was explained above under the
caption Analysis of Changes in Net Assets which shows the $3,000,000 operating
transfer out to fund the road management improvement capital projects, use of
the Federally Qualified Health Facilities reserve of $475,000, and the loss of
the Utility User Tax.
The County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.
The County Disposal Sites CSA had total net assets
of $29,030,506 at June 30, 2003 of which
$15,991,953 is unrestricted. The
$1,017,336 total decrease in net assets for the County Disposal Sites CSA is
discussed below.
The following table shows the Enterprise Funds’
actual revenues, expenses and results of operations for the current fiscal
year:
|
|
Major Fund |
|
|
|||
|
|
County Disposal Sites CSA |
Nonmajor Funds |
Total |
|||
|
|
|
|
|
|
||
|
Operating revenues |
$ 9,339,148 |
$2,047,341 |
$11,386,489 |
|
||
|
Operating expenses |
( 10,454,601) |
( 2,160,167) |
( 12,614,768) |
|
||
|
|
|
|
|
|
||
|
Operating loss |
( 1,115,453) |
( 112,826) |
( 1,228,279) |
|
||
|
Net non-operating revenues (expenses) |
98,117 |
122,521 |
220,638 |
|
||
|
|
|
|
|
|
||
|
Net income (loss) before contributions |
( 1,017,336) |
9,695 |
( 1,007,641) |
|
||
|
Capital contributions |
- . |
9,224 |
9,224 |
|
||
|
|
|
|
|
|
||
|
Change in net assets |
($ 1,017,336) |
$ 18,919 |
($ 998,417) |
|
||
The net loss before contributions of the enterprise
funds of $1,007,641 resulted primarily from a net loss of $1,017,336 for the
County Disposal Sites CSA. The change
in net assets for the County Disposal Sites CSA decreased by $1,982,958
compared to the prior year’s net income of $965,622. This decrease reflects reduced gate fees due to the waste
diversion program, purchase of capital equipment, and increased operating
expenditures.
The internal service funds’ activities attributable
to the enterprise funds amounts to a decrease in net assets of $1,316,863.
GENERAL FUND BUDGETARY
HIGHLIGHTS
Differences between the
original budget and the final amended budget resulted in a $15,284,693 increase
in amounts available for appropriations and a $10,571,512 increase in charges
to appropriation. This can be briefly
summarized as increased appropriations for negotiated salary and benefit
increases, purchase of new District Attorney Case Management software
($315,392), grants for bioterrorism and community access program for substance
abuse in the Health Services Agency ($854,000), increased appropriations for
adoptions ($544,444), aid for families with dependent children ($1,225,000),
substance abuse ($205,653), regional employment training ($510,000), and year end adjustment for the funding transfer
from County Service Areas 38 for extended police protection ($4,852,946).
During the year, actual
amounts available for appropriation (revenues and other financing sources) were
less than budgetary estimates by $26,058,258.
Majority of this negative variance amount, $23,103,176, represents the
negative variance of the transfers in from the other funds. Actual charges to
appropriations (expenditures and other financing uses) were less than budgetary
estimates by $19,858,399. This positive
variance is mainly due to the services and supplies positive variance of
$12,711,568 and the other charges positive variance of $5,995,246. These are due public transfer payment being
lower than anticipated and grants that are re-budgeted at year-end along with
corresponding revenues.
CAPITAL ASSETS AND DEBT
ADMINISTRATION
Capital
Assets
The County’s capital assets for its governmental and
business-type activities as of June 30, 2003, totaled $119,674,471 (net of
accumulated depreciation). This
investment in capital assets includes land, buildings and structures, and
equipment. The increase in the County’s
investment in capital assets for the current period was $4,050,447 or 3.50%.
Major capital asset events during the current fiscal
year included the following:
For government-wide financial statement
presentation, all depreciable capital assets were depreciated from acquisition
date to the end of the current fiscal year.
Fund financial statements record capital asset purchases as
expenditures.
Capital assets for the governmental and
business-type activities are presented below to illustrate changes from the
prior year:
|
|
Governmental Activities
|
Business-type Activities |
Total
. |
Increase/ (Decrease) |
||||
|
|
2003 |
2002 |
2003 |
2002 |
2003 |
2002 |
% of Change |
|
|
|
|
|
|
|
|
|
|
|
|
Land |
$ 31,780,653 |
$ 31,780,653 |
$ 1,858,849 |
$ 1,858,849 |
$ 33,639,502 |
$ 33,639,502 |
- . |
|
|
Buildings and
structures |
91,802,433 |
86,306,678 |
23,902,520 |
23,940,259 |
115,704,953 |
110,246,937 |
4.95 |
|
|
Equipment |
47,546,612 |
44,379,874 |
8,480,832 |
6,629,140 |
56,027,444 |
51,009,014 |
9.84 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$171,129,698 |
$162,467,205 |
$34,242,201 |
$32,428,248 |
$205,371,899 |
$194,895,453 |
5.38 |
|
The County’s infrastructure assets are not recorded
in the government-wide financial statements.
Additional information on the County’s capital
assets can be found in Note 5 on pages 64-65 of this report.
Long-term
debt
The County’s long-term debt for governmental and
business-type activities are presented below to illustrate changes from the
prior year:
|
|
Governmental Activities
|
Business-type Activities |
Total .
|
Increase/ (Decrease) |
|
||||
|
|
2003 |
2002 |
2003 |
2002 |
2003 |
2002 |
% of Change |
||
|
|
|
|
|
|
|
|
|
|
|
|
Refunding certificates of
participation |
$ 28,286,230 |
$ 26,550,000 |
$ - . |
$ - . |
$ 28,286,230 |
$ 26,550,000 |
6.54 |
|
|
|
Lease revenue
refunding bonds |
27,759,008 |
29,435,912 |
- . |
- . |
27,759,008 |
29,435,912 |
( 5.70) |
|
|
|
Revenue bonds |
3,870,000 |
4,160,000 |
- . |
- . |
3,870,000 |
4,160,000 |
( 6.97) |
|
|
|
CA Health Facility |
1,521,732 |
1,651,861 |
- . |
- . |
1,521,732 |
1,651,861 |
( 7.88) |
|
|
|
Tax allocation bonds |
109,050,000 |
111,070,000 |
- . |
- . |
109,050,000 |
111,070,000 |
( 1.82) |
|
|
|
Local assessment bonds |
75,000 |
110,000 |
- . |
- . |
75,000 |
110,000 |
(31.82) |
|
|
|
Loans payable |
2,027,822 |
1,271,788 |
2,041,075 |
2,612,455 |
4,068,897 |
3,884,243 |
4.75 |
|
|
|
Capital leases |
927,874 |
1,216,748 |
- . |
85,491 |
927,874 |
1,302,239 |
(28.75) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals |
$173,517,666 |
$175,466,309 |
$2,041,075 |
$2,697,946 |
$175,558,741 |
$178,164,255 |
( 1.46) |
|
|
For the governmental activities, the County had total long-term debt outstanding of $173,517,666 as compared to $175,466,309 in the prior year (excluding compensated absence and estimated claims). This amount was comprised of $28,286,230 of refunding certificates of participation, $27,759,008 of lease revenue refunding bonds, $3,780,000 of revenue bonds, California Health facilities financing authority debt of $1,521,732, Redevelopment Agency Tax Allocation Bonds of $109,050,000, loans payable of $2,027,822, local assessment bonds of $75,000 and Capital leases of $927,874. During the year, retirement of debt amounted to $11,735,198. Additions amounted to $9,786,555.
For the business-type activities, the County had
total long-term debt outstanding of $2,041,075 as compared to $2,697,946 in the
prior year (excluding postclosure liability).
This amount was all loans payable.
During the year, retirement of debt amounted to $656,871. There were no additions to long-term debt
for business-type activities.
The component unit, Santa Cruz County Sanitation District,
had total long-term debt outstanding of $31,866,741 as compared to $33,266,743
in the prior year (excluding discount).
This amount was comprised of Revenue Bonds of $4,180,000, Limited
Obligation Improvement Bonds of $1,165,000, Certificates of Participation of
$6,060,000 and loans payable of $20,461,741.
During the year, retirement of debt amounted to $1,400,002. There were no additions to long-term debt
for the component unit.
The County’s total debt decreased by $2,605,514 (or
1%) during the current fiscal year (excluding compensated absence, estimated
claims, and postclosure liability). The
key factor in this decrease resulted primarily from the scheduled principal
payments of the liabilities due to the refunding of the 1994 Series A, and the
1987 Certificates of Participation Notes.
Additional information on the County’s long-term
debt can be found in Note 9 on pages 68-78 of this report.
ECONOMIC FACTORS AND NEXT
YEAR’S BUDGET AND RATES
·
The
County financial position is presently in line with the budgetary parameters
set by the Board of Supervisors and as amended for the 2002-2003 fiscal year.
However, the General Fund’s ending undesignated year end carry-over fund
balance will be less than the prior year due to fewer vacant positions and the
salary and employee benefit increases approved by the Board of Supervisors for
the County’s General Representation Group of Employees and Public Safety
Employees.
·
Real
property assessment at January 1, 2003 showed an average increase of 6.72% from
the prior year, property tax growth is expected to continue in new fiscal year.
·
Sales
tax revenue is expected to increase slightly due to continued consumer
confidence caused by the slow economic recovery. However, our budget estimates were held flat for 2002-03 and we
anticipate achieving that estimate for the fiscal year.
·
The
financial deficits of the State of California have shifted financial
responsibilities to local agencies. The State has failed to reimburse counties
for state mandated programs for the prior and current fiscal years without any
promise of when or if these owed monies will ever be repaid. To track monies
owed to the county by the state, accounts receivables have been established
with offsetting reserves in the event that the State fails to carry out its
obligations. At yearend $2.3 million
was designated.
·
Substantial
State budget cuts are anticipated next year.
The County will address the effects of these budget cuts once the
amounts are known.
·
During
the current fiscal year, unreserved fund balance in the general fund decreased
to $33,560,911. The County has
appropriated the full amount for spending in the current fiscal year budget but
expects to have about $15-$20 million balance remaining at year end for the
2003-04 fiscal year.
·
Meanwhile,
the County is developing a proposed budget for the 2004-2005 fiscal year. Due to slow economic growth in revenues and
projected increased labor costs, departments have been asked to submit budgets
that reflect minor increases or no increase in the net cost to the county.
·
For
further discussion, please see the accompanying transmittal letter.
REQUESTS FOR INFORMATION
This financial report is designed to provide a
general overview of the County’s finances for all those with an interest in the
government’s finances. Questions
concerning any of the information provided in this report or requests for
additional financial information should be addressed to the
Auditor-Controller’s Office, County of Santa Cruz, 701 Ocean Street, Room 100,
Santa Cruz, CA 95060.