HomeMy WebLinkAbout10/07/2008 08 State Auditor's Report - 2007 Financial Statements BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
11110 AGENDA STATEMENT
Item No.
' • For Meeting Of: October 7, 2008
ITEM TITLE: State Auditor's Report — City's 2007 Financial Statements
SUBMITTED BY: Finance Department .
CONTACT: Rita M. DeBord, Finance Director; 575 -607 _
Cindy Epperson, Deputy Director Accountin / Budgeting; 575 -6070 (
SUMMARY EXPLANATION:
Introduction: Attached for Council review is the Washington State Auditor's Office (SAO) report
regarding their examination of the City of Yakima for the period January 1 through December 31, 2007.
Note: The Auditor's examination (audit) included three areas of review, as noted below:
1. Financial Reporting, with respect to: .
(a) Evaluation of internal controls
(b) Compliance with laws and regulations
. 2. Federal Regulations, with respect to:
. (c) Compliance with Taws and regulations
(d) Evaluation of internal controls
. 3. Financial Statements (and related disclosures and internal controls)
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Overview: As stated in the enclosed auditor's reports, the City received the top ratings in all areas
(noted above) examined by the State Auditors; there were no reportable findings and the Auditors
gave the City's Financial Statements an Unqualified Opinion (i.e.: a clean opinion with no .
qualifications — the highest possible rating). Note: a final accountability report from the State
Auditor's is scheduled for submission to the City in the near future. That will complete the auditor's
work and reporting to the City regarding fiscal year 2007.
A full copy of the audit report has.been included in the agenda package provided to City Council
Members and Department Heads. Due to the size and complexity of these documents, only the .
auditors written reports and comments have been included for general distribution, (i.e.: the financial
statements themselves and the related footnotes, Management Discussion and Analysis and
supplemental information are not included in the general distribution). However, anyone interested may
request a full copy of the report through the City Clerk's Office. (Additionally, the Comprehensive Annual
Financial Report (CAFR) is posted on the City's website. To access the CAFR on -line, go to
"www.ci.yakima.wa.us "; then go to "Services" and click on "Finance "; then click on "$ ", and then "2007
Comprehensive Annual Financial Report". )
Continued on next page .
Resolution Ordinance Other (Specify) Report - 2007 State Audit
. Contract Mail to (name and address): Phone: . Funding
Source N/A
APPROVED FOR SUBMITTAL: 4:::: ^-2 >-X
City Manager
' RECOMMENDATION: Accept Report
P P
BOARD /COMMISSION RECOMMENDATION:
COUNCIL ACTION:
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Audit Results Summary:
1(a) Financial Reporting - Internal Controls: The auditors reviewed the City's internal controls over •
financial reporting to the extent the Auditor's considered necessary for the purpose of designing
their auditing procedures for the purpose of expressing their opinion on the financial statements.
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The audit states (pg. 2): ... "we did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses "...
1 (b) Financial Reporting - Compliance: As part of their review to assure that the City's financial
statements are free of material misstatements, the State Auditors test for compliance with certain
• provisions of laws and regulations, contracts and grant agreements. The auditor needs to obtain
reasonable assurance that compliance with laws, regulations, contracts and grants has occurred,
but they do not express an opinion on overall compliance.
The audit states (pg. 3): ... "the results of our tests disclosed no instances of non - compliance or
other matters that are required to be reported under Government Auditing Standards ".
2 (a) Federal Program Regulations - Compliance: The auditors audited and expressed an opinion on
the City of Yakima's compliance with the requirements of laws, regulations, contracts and grants
applicable to each of the City's major federal programs (i.e.: Highway Planning and Construction and
Transit Cluster — Federal Transit Formula Grants).
4 CDBG Grants /Entitlement Grants, HOME Investment Partnerships Program ??
The audit states (pg. 4):... "In our opinion, the City complied, in all material respects, with the
requirements...that are applicable to its major federal programs for the year ended Dec 31, 2007.'0
2 (b) Federal Regulations - Internal Controls over Compliance: The auditors perform procedures
to test internal controls over compliance requirements that could have a direct and material effect
on major federal programs for the purpose of expressing an opinion on compliance and to test
and report on internal control over compliance in accordance with OMB Circular A -133.
The audit states (pci. 5): ..."We did not identify any deficiencies in internal control over compliance
that we consider to be material weaknesses "...
3) Financial Statements: The auditors audited - and expressed an opinion on - the City's Financial
Statements for the period January 1 through December 31, 2007. The auditors gave the City an
unqualified opinion - the highest rating possible. The auditors stated (pg. 6): "In our opinion,
the financial statements...present fairly, in all material respects, the respective financial position of
the governmental activities, the business -type activities, each major fund, and the aggregate
remaining fund information of the City of Yakima, as of December 31, 2007, and the respective
changes in financial position and cash flows, where applicable, thereof, and the respective
budgetary comparisons for the General and Community Development Funds for the year then
ended, in conformity with accounting principles generally accepted in the United States of America."
Page 2 of 2
§* Washington State Auditor's Office
Ka Financial Statements and Federal Single Audit Report
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Washington State Auditor
Brian Sonntag
September 29, 2008 _
Council
City of Yakima
Yakima, Washington
Report on Financial Statements and Federal Single Audit
Please find attached our report on the City of Yakima's financial statements and compliance with federal
laws and regulations.
We are issuing this report in order to provide information on the City's financial condition.
In addition to this work, we look at other areas of our audit client's operations for compliance with state
laws and. regulations. The results of that audit will be included in a separately issued accountability
report.
Sincerely,
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( 17410 .--) ? „4.
BRIAN SONNTAG, CGFM
STATE AUDITOR
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Insurance Building, P.O. Box 40021 • Olympia, Washington 98504 -0021 • (360) 902 -0370 • TDD Relay (800) 833 -6388
FAX (360) 753 -0646 • http: / /www.sao.wa.gov
Table of Contents
City of Yakima -
Yakima County
January 1, 2007 through December 31, 2007
Federal Summary 1 -
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance
and Other Matters in Accordance with Govemment Auditing Standards 2
Independent Auditor's Report on Compliance with Requirements Applicable to each Major
Program and Internal Control over Compliance in Accordance with OMB Circular A -133 4
Independent Auditor's Report on Financial Statements 6
Financial Section 8
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Federal Summary
City of Yakima
Yakima County
January 1, 2007 through December 31, 2007
The results of our audit of the City of Yakima are summarized below in accordance. with U.S. Office of
Management and Budget Circular A -133.
FINANCIAL STATEMENTS
An unqualified opinion was issued on the financial statements of the governmental activities, the
business -type activities, each major fund and the aggregate remaining fund information.
Internal Control Over Financial Reporting:
• Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over financial reporting that we consider to be significant deficiencies.
• Material Weaknesses: We identified no significant deficiencies that we consider to be material
weaknesses.
We noted no instances of noncompliance that were material to the financial statements of the City.
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FEDERAL AWARDS
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Internal Control Over Major Programs:
• Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over major federal programs that we consider to be significant deficiencies.
• • Material Weaknesses: We identified no significant deficiencies that we consider to be material
weaknesses.
We issued an unqualified opinion on the City's compliance with requirements applicable to its major
federal programs.
We reported no findings that are required to be disclosed under. OMB Circular A -133.
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Identification,of Major Programs:
The following were major programs during the period under audit:
CFDA No. Program Title
20.205 Highway Planning and Construction
20.507 Transit Cluster — Federal Transit Formula Grants
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by OMB
• Circular A -133, was $300,000.
The City qualify did not as a low -risk auditee under OMB Circular A -133.•
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Washington State Auditor's Office
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Independent Auditor's Report on Internal
Control over Financial Reporting and on
Compliance and Other Matters in Accordance
with Government Auditing Standards
City of Yakima
Yakima County
January 1, 2007 through December 31, 2007
Council
City of Yakima
Yakima, Washington
We have audited the financial statements of the govemmental activities, the business -type activities, each
major fund and the aggregate remaining fund information of the City of Yakima, Yakima County,
Washington, as of and for the year ended December 31, 2007, which collectively comprise the City's
basic financial statements, and have issued our report thereon dated September 12, 2008. The prior year
summarized comparative information has been derived from the City's 2006 basic financial statements
that we issued our report thereon dated September 25, 2007.
We conducted our audit in accordance with auditing standards generally accepted in the'United States of
America and the standards applicable to the financial audits contained in Govemment Auditing
Standards, issued by the Comptroller General of the United States.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit, we considered the City's intemal control over financial reporting as
a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal
control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the
• City's internal control over financial reporting.
A control deficiency 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
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control
deficiencies, that adversely affects the City's ability to initiate, authorize, record, process . or report
financial data reliably in accordance with generally accepted accounting principles such that there is more
than a remote likelihood that a misstatement of the City's financial statements that is more than
inconsequential will not be prevented or detected by the City's intemal control. •
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
more than a remote likelihood that a material misstatement of the financial statements will not be
prevented or detected by the entity's intemal control.
Our consideration of intemal control over financial reporting was for the limited purpose described in the
first paragraph of this section and would not necessarily identify all deficiencies in intemal control that
might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal
control over financial reporting that we consider to be material weaknesses, as defined above.
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COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City's financial statements are free of
material misstatement, we performed tests of the City's 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.
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The results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
This report is intended for the information and use of management, the Council, federal awarding
agencies and pass- through entities. However, this report is a matter of public record and its distribution is
not limited. It also serves to disseminate information to the public as a reporting tool to help citizens
assess government operations.
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BRIAN SONNTAG, CGFM
• STATE AUDITOR
September 12, 2008
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Washington State Auditor's Office
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Independent Auditor's Report on Compliance
with Requirements Applicable to each Major
Program and Internal Control over Compliance
in Accordance with OMB Circular A -133
City of Yakima
Yakima County
January 1, 2007 through December 31, 2007
Council •
City of Yakima
Yakima, Washington . .
COMPLIANCE
We have audited the compliance of the City of Yakima, Yakima County, Washington, . with the types of
compliance requirements described in the U.S. Office of Management and Budget (OMB) CircularA -133
Compliance Supplement that are applicable to its major federal programs for the year ended
December 31, 2007. The City's major federal programs are identified in the Federal Summary.
Compliance with the requirements of laws, regulations, contracts and grants applicable to its major
federal programs is the responsibility of the City's management. Our responsibility is to express an
opinion on the City's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to the financial audits contained in Govemment
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133,
Audits of States, Local Governments, and Non - Profit Organizations. Those standards and OMB Circular
A =133 require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a direct and
material effect on a major federal program occurred. An audit includes examining, on a test basis,
evidence about the City's compliance with those requirements and performing such other procedures as
we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion. Our audit does not provide a legal determination on the City's compliance with those
requirements.
In our opinion, the City complied, in all material respects, with the requirements referred to above that are
applicable to its major federal programs for the year ended December 31, 2007.
INTERNAL CONTROL OVER COMPLIANCE
The management of the City is responsible for establishing and maintaining effective internal control over
compliance with requirements of laws, regulations, contracts and grants applicable to federal programs.
In planning and performing our audit, we considered the City's internal control over compliance with the
requirements that could have a direct and material effect on a major federal program in order to
determine our auditing procedures for the purpose of expressing our opinion on compliance and to test
and report on intemal control over compliance, but not for the purpose of expressing an opinion on the
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effectiveness of intemal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of the City's internal control over compliance.
A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program
on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,
that adversely affects the entity's ability to administer a federal program such that there is a more than
remote likelihood that noncompliance with a type of compliance requirement of a federal program that is
more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a' significant deficiency, or combination of significant deficiencies, that results in a
more than remote likelihood that material noncompliance with a type of compliance requirement of 'a
federal program will not be prevented or detected by the entity's intemal control.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section . and would not necessarily identify all deficiencies in internal control that might
be significant deficiencies or material weaknesses. We did not identify any deficiencies in intemal control
over compliance that we consider to be material weaknesses, as defined above.
This report is intended for the information of management, the Council, federal awarding agencies and
pass- through entities. However, this report is a matter of public record and its distribution is not limited. It
also serves to disseminate information to the public as a reporting tool to help citizens assess
government operations. -
BRIAN SONNTAG, CGFM .
STATE AUDITOR
September 12, 2008
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Washington State Auditor's Office
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Independent Auditor's Report on Financial
Statements
City of Yakima •
Yakima County
January 1, 2007 through December 31, 2007
Council
City of Yakima
Yakima, Washington
We have audited the accompanying financial statements of the govemmental activities, the business -type
activities, each major fund and the aggregate remaining fund information of the City of Yakima, Yakima
County, Washington, as of and for the year ended December 31, 2007, which collectively comprise the
City's basic financial statements as listed on page 8. These financial statements are the responsibility of
the City's management. Our responsibility is to express opinions on these financial statements based on
our audit. The prior year summarized comparative information has been derived from the City's 2006
financial statements and, in our report dated September 25, 2007, we expressed unqualified opinions on
the respective financial statements of the governmental activities, the business -type activities, each major
fund and the aggregate remaining fund information.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Govemment Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we. plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business -type activities, each major fund
and the aggregate remaining fund information of the City of Yakima, as of December 31, 2007, and the
respective changes in financial position and, where applicable, cash flows thereof, and the respective
budgetary comparison for the General and Community Development funds, for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
The financial statements include summarized prior year comparative information. Such information does
not include all of the information required for a presentation in conformity with accounting principles
generally accepted in the United States of America. Accordingly, such information should be read in
conjunction with the City's financial statements for the year ended December 31, 2006, from which such
summarized information was derived.
In accordance with Govemment Auditing Standards, we have also issued our report on our consideration
of the City's intemal 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 intemal control over financial reporting
or on compliance. That report is an integral part of an audit performed in accordance with Govemment
Auditing Standards and should be considered in assessing the results of our audit.
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The management's discussion and analysis on pages 9 through 25 and pension trust fund information on
page 89 are not a required part of the basic financial statements but are supplementary information
required by the Govemmental Accounting Standards Board. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was performed for the purpose of forming an opinion. on the financial statements that
collectively comprise the City's basic financial statements. The accompanying Schedule of Expenditures
of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of
Management and Budget Circular A -133, Audits of States, Local Govemments, and Non -Profit
Organizations. This schedule is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as
a whole.
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BRIAN SONNTAG, CGFM
STATE AUDITOR
• September 12, 2008
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Washington State Auditor's Office
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Financial Section
City of Yakima
Yakima County
January 1, 2007 through December 31, 2007
REQUIRED SUPPLEMENTAL INFORMATION
Management's Discussion and Analysis — 2007
BASIC FINANCIAL STATEMENTS
Statement of Net Assets — 2007
Statement of Activities — 2007
Balance Sheet — Governmental Funds — 2007
Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds —
2007
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of
Governmental Funds to the Statement of Activities — 2007
Statement of Revenues, Expenditures and Changes in Fund Balances — Budget to Actual =
General Fund — 2007
Statement of Revenues, Expenditures and Changes in Fund Balances — Budget to Actual —
Community Development Fund — 2007
Statement of Net Assets — Proprietary Funds — 2007
Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds — 2007
Statement of Cash Flows - Proprietary Funds - 2007
Statement of Fiduciary Net Assets — Fiduciary Funds — 2007.
Statement of Changes in Fiduciary Net Assets — Fiduciary Funds — 2007
Notes to the Financial Statements — 2007
REQUIRED SUPPLEMENTAL INFORMATION
Police and Fire Pension Schedule of Employer Contributions — 2007
SUPPLEMENTAL INFORMATION
Schedule of Expenditures of Federal Awards — 2007
Notes to the Schedule of Expenditures of Federal Awards — 2007
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Washington State Auditor's Office
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MANAGEMENT'S DISCUSSION AND ANALYSIS
The City of Yakima's discussion and analysis offers readers of the City's financial statements
a narrative overview and analysis of the City's financial activities for the fiscal year ended
December 31, 2007. We encourage readers to consider the information presented here in
conjunction with additional information that we have furnished in our letter of transmittal and
in the financial statements and notes to the financial statements (which immediately follow this
d iscussion).
FINANCIAL HIGHLIGHTS
> The total assets of the City of Yakima exceeded its liabilities at December 31, 2007, by $261
million dollars. Net assets invested in capital (net of depreciation and related debt) account
for 81% of this amount, with a value of about $212 million. Of the remaining net assets, $35.6
million may be used to meet the government's ongoing obligations to citizens and creditors,
without legal restriction.
> The City's total net assets increased by $16.3 million. Most of the increase was the result of
capital grants and donations.
> As of December 31, 2007, the City of Yakima's governmental activities reported combined
ending net assets of over $147.2 million, an increase of $11.2 million in comparison with
the prior year. Of that amount, $122 million was invested in capital assets, $11 million
was legally restricted for specific projects or programs, and $14.3 million was available for
spending at the government's discretion.
> Unreserved fund balance for the General Fund was $10 million dollars at December 31, 2007.
This balance represents 24% of total General Fund expenditures.
> The City of Yakima's total long -term debt at December 31, 2007, was nearly $67.8 million
(about $33.9 million in Governmental Activities and $34 million in Business Type Activities),
with a remaining capacity for non -voted General Obligation debt at $58 million. Total debt
increased by $1.9 million during the current fiscal year. There were $6.2 million of new long-
" term debt issued in 2007. "
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City of Yakima's
basic financial statements. The basic financial statements are comprised of three components: 1)
Government -wide financial statements, 2) Fund financial statements, and 3) Notes to the financial
statements.
GOVERNMENT -WIDE FINANCIAL STATEMENTS
There are two government -wide financial statements, the statement of net assets and the statement
of activities, which are designed to provide readers with a broad overview of the City of Yakima's
finances in a manner similar to a private- sector business. Both of the government -wide financial
statements distinguish functions of the City of Yakima that are principally supported by taxes
and intergovernmental revenues (referred to as "governmental activities ") from functions that
• are intended to recover all or a signification portion of their costs through user fees and charges
(referred to as "business -type activities "). The governmental activities of the City of Yakima
include a full range of local governmental services provided to the public, such as public safety
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(police, municipal court, fire, and building); public improvements (streets, traffic signals); parks •
and recreation; community development; and general administrative services. The business -type
activities of the City of Yakima include sanitation (solid waste disposal and wastewater treatment);
potable and irrigation water systems; and transit..
THE STATEMENT OF NET ASSETS presents information on all of the City of Yakima's assets and liabilities,
with the difference between the two reported as net assets. This statement serves a purpose similar 1
to that of the balance sheet of a private- sector business. Over time, increases or decreases in net
assets may serve as a useful indicator of changes in the City's financial ,position. However, this is
just one indicator of financial health of the City. Other indicators include the condition of the City's
infrastructure systems (roads, drainage systems, bridges, etc.), changes in property tax base, and
general economic conditions within the City.
THE STATEMENT OF ACTIVITIES (CHANGES U4 NET ASSETS) presents information showing how the government's net
assets changed during 2007. Because it separates program revenue (revenue generated by specific
programs through charges for services, grants, and contributions) from general revenue (revenue
provided by taxes and other sources not tied to a particular program), it shows to what extent each
program has to rely on taxes for funding. All changes in net assets are reported using the accrual
basis of accounting which requires that revenue be reported when earned and expenses be reported
when the goods and services are received, regardless of the timing of the cash flow. Items such
as uncollected taxes, unpaid vendor invoices for items received in 2007, and earned but unused
vacation leave will be included in the statement of activities as revenue and expense, even though
the cash associated with these items may not be received or distributed in 2007.
FUND FINANCIAL STATEMENTS
A fund is a grouping of related accounts that is used to maintain control over resources that have
been segregated for specific activities or objectives. The City of Yakima, 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 City of Yakima can be divided into three categories:
Governmental Funds, Proprietary Funds, and Fiduciary Funds. Governmental Funds are used to
account for most, if not all, of a government's tax - supported activities. Proprietary Funds are us ed
to account for a government's business type activities, where all or part of the costs of activities
are supported by fees and charges that are paid directly by those who benefit from the activities.
Fiduciary Funds are used to account for resources that are held by the government as a trustee or
agent for parties outside of the government. The resources of fiduciary funds cannot be used to
support the government's own programs.
GOVERNMENTAL FUNDS
The Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues,
Expenditures, and Changes in Fund Balances present separate columns of financial data for the •
General Fund and the Community Development Fund, which are considered to be major funds,
based on criteria established by GASB Statement #34. Data from the remaining governmental funds
are combined into a single, aggregated presentation. The governmental fund financial statements
can be found immediately following the government -wide financial statements. Individual fund
data for each of the nonmajor governmental funds is provided in the form of combining statements,
outside of the basic financial statements.
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Washington State Auditors Office •
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Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government -wide financial statements. However, unlike
government -wide financial statements which use accrual accounting, governmental fund financial
statements focus on near -term inflows and outflows of spendable resources and on balances of
- spendable resources available at the end of the fiscal year. Such information is useful in evaluating
a government's near -term financing requirements in comparison to near -term resources available.
Because the focus of governmental fund financial statements is narrower than that of government-
wide financial statements, it is useful to compare 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 fund balance sheet and the governmental
fund statement of revenues, expenditures, and changes in fund balances provide reconciliation to
the governmental activities column in the government -wide statements, in order to facilitate this
comparison.
The City maintains budgetary controls over its operating funds. The objective of budgetary
controls is to ensure compliance with legal provisions embodied in the annual appropriated
budget: Budgets for governmental funds are established in accordance with state law and are
adopted on a fund level. Capital outlays are approved on an item -by -item basis or project basis. A
budgetary comparison statement is provided for the General Fund and all special revenue funds to
demonstrate compliance with the budget.
PROPRIETARY FUNDS
There are two types of proprietary funds: Enterprise and Internal Service. Enterprise Funds
are used to report the same functions presented as business -type activities in the government-
wide financial statements. The City uses enterprise funds to account for its Solid Waste (Refuse);
Wastewater; Domestic Water; Irrigation; and Transit functions. Internal Service Funds (the second
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type of proprietary funds) accumulate and allocate costs internally among the City's various
functions. The revenues and expenses of the internal service funds that are duplicated in other
funds through allocations are eliminated in'the government -wide statements, with the remaining
balances included in the governmental activities column.
Proprietary fund statements follow the governmental fund statements in this report. They provide
the same type of information as the government -wide financial statements, only in more detail,
since both apply the accrual basis of accounting. In comparing the Proprietary Fund Statement of
• Net Assets to the business -type column on the Government -Wide Statement of Net Assets, you will
notice that the total net assets agree and, therefore, need no reconciliation. In comparing the total
assets and total liabilities between the two statements, you will notice slightly different amounts.
This is because the "internal balances" line on the government -wide statement combines the "due
from other funds" (asset) and the "due to other funds" (liabilities) from the proprietary fund
statement in a single line in the asset section of the government -wide statement.
Individual fund data for each of the nonmajor proprietary funds is provided in the form of
combining statements. The proprietary fund combining statements follow the governmental fund
combining statements in this report.
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Washington State Auditors Office
• 11
•
FIDUCIARY FUNDS
Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government -wide financial statement because
the resources of those funds are not available to support the City of Yakima's own programs. The
accounting used for fiduciary funds is much like that used for proprietary funds.
The City of Yakima has one fiduciary fund for Firefighter pensions. The basic fiduciary fund •
financial statements can be found following the proprietary fund financial statements, in the Basic
Financial Statements section.
•
NOTES TO THE FINANCIAL STATEMENTS
The notes provide additional information that is essential to a full understanding of the data
provided in the government -wide and fund financial statements. The notes to the financial
statements can be found immediately following the basic financial statements in this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
STATEMENT OF NET ASSETS
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. The City of Yakima's net assets total $261 million at December 31, 2007. The following table
reflects the condensed Government -Wide Statement of. Net Assets with comparative totals for 2006.
NET ASSETS
GOVERNMENTAL BUSINESS -TYPE
ACTIVITIES ACTIVITIES TOTAL
2007 2006 2007 2006 2007 2006
Assets:
Current and Other Assets $46,785,316 $40,992,073 $29,604,125 $33,805,359 $76,389,441 $74,797,432
Capital Assets 143,512,143 92,016,437 124,399,393 115,903,561 267,911,536 207,919,998
Total Assets 190,297,459 133,008,510 154,003,518 149,708,920 344,300,977 282,717,430
Liabilities:
Payables and Other Liabilities 9,172,053 15,350,402 5,932,631 5,728,054 15,104,684 21,078,456
Long -term Liabilities Outstanding 33,881,796 30,910,167 33,960,709 34,995,745 67,842,505 65,905,912
Total Liabilities 43,053,849 46,260,569 39,893,340 40,723,799 82,947,189 86,984,368
Net Assets:
Inv. in Cap. Assets, Net of Rel. Debt 121,924,861 72,841,667 90,616,703 89,124,179 212,541,564 161,965,846
Restricted 10,991,307. 4,407,375 2,722,150 2,705,125 13,713,457 7,112,500
Unrestricted 14,32Z442 9,498,899 20,771,325 17,155,818 35,098,767 26,654,716
Total Net Assets $14Z243,610 $86,747,941 $114,110,178 $108,985,122 $261,353,788 $195,733,062
The City of Yakima's total assets stand at $344 million as of December 31, 2007. Of this amount,
almost $268 million is accounted for by capital assets, which includes some infrastructure and
construction in progress. Prior to 2003, infrastructure (roads, bridges, drainage systems, etc.) was
not included in capital asset reporting for governmental activities. The new GASB Statement
•
#34, implemented with the City's December 31, 2003, Financial Statements, requires that all
capital assets, including infrastructure, be reported. Out of $143.5 million in capital assets
Washington State Auditor's Office
12
reported in Governmental activities at December 31, 2007, $69.4 million (48 %) is accounted for by
infrastructure acquisitions (including the right -of -way land associated with these projects and
land under the road). It should be noted that a prior period adjustment in the amount of $42.5
million was made that represents full implementation of accounting for infrastructure (see Note
12 - Accounting and Reporting Changes).
Of the remaining City assets, approximately $56.1 million were accounted for in cash, cash
equivalents, and investments, $14 million in accounts receivable, $5.3 million in notes receivable,
and $1 million spread among miscellaneous assets.
At December 31, 2007, the City had outstanding liabilities of $83 million, with $68 million in long-
term liabilities. Of the long -term liabilities, $5 million was due within a year, with the remainder
due over an extended period of time. Refer to the notes -to the financial statements (Note 7) for a
more in depth discussion of long -term debt.
Included in "Payables and Other Liabilities'; for total Governmental and Business -Type activities
in the table on the previous page, are $9.5 million in accounts. payable, $5.4 million in accrued
liabilities and $0.2 million in liabilities payable from restricted assets.
The largest portion of the City's net assets (81.3 %) reflects its investment in capital, less any
outstanding related debt used to acquire those assets. The City's capital assets, which are used to
• provide services to citizens, are investments in capital and are not available for future spending.
Although the City's investment in 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.
Approximately 5.2% of the City's net assets are subject to external restrictions on how they may
be used (restricted by the Revised Code of the State of Washington or . by contractual agreements
with parties outside of the primary government). The remaining balance of $35.1 million
(unrestricted net assets) represents the amount that may be used to meet the City's ongoing
obligations.
At December 31, 2007, the City of Yakima reports positive balances in all three categories of net
assets, for the government as a whole, as well as for governmental activities and Business -type
activities.
THE STATEMENT OF ACTIVITIES (CHANGES IN NET ASSETS)
The City of Yakima's total net assets increased by $16.3 million in 2007. Net assets for governmental
activities increased by $11.2 million while business -type activities increased by $5.1 million.
Total revenues for the City of Yakima were $112.9 million in 2007. Governmental activities provided
$74.7 million (66.2 %), while business -type activities added about $38.2 million (33.8 %).
Expenses for the year totaled almost $95.3 million, with Governmental Activities accounting for
about $65.7 million or 69% and business -type activities accounting for $29.6 million or 31 %. Key
elements in changes in n et assets are shown in the following table.
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Washington State Auditor's Office
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•
• ,
CHANGES IN NET ASSETS
•
GOVERNMENTAL BUSINESS -TYPE
ACTIVITIES ACTIVITIES TOTAL
2007 2006 2007 2006 2007 2006
REVENUES
• Program Revenues:
Charges for Services $6,925,333 $5,726,691 $27,809,396 $2Z566,558 $34,734,729 $33,293,249
Operating Grants and Contributions 4,640,511 5,235,180 2,385,638 2,800,648 7,026,149 8,035,828
Capital Grants and Contributions 14,595,534 9,300,451 2,789,449 1,912,037 17,384,983 11,212,488
General Revenues:
Property Tax 13,070,702 13,264,660 0 0 13,070,702 13,264,660
Sales Tax 18,392,834 17,113,489 4,789,003 • 4,510,944 23,181,837 21,624,433
• Other Taxes 12,505,007 12,137,042 0 0 12,505,007 12,137,042
• State Entitlements 3,790,225 3,496,905 0 0 3,790,225 3,496,905
Other 875,244 972,051 380,310 656,397 1,255,554 1,628,448
Total Revenues 74,795,390 67,246,469 38,153,796 37,446,584 112,949,186 104,693,053
I
EXPENSES: .
General Government 7,866,992 7,336,009 0 0 Z866,992 7,336,009
Security of Persons and Property 33,705,798 ,32,058,638 0 0 .33,705,798 32,058,638
ID
Physical Environment 872,312 1,339,013 0 0 872,312 1;339,013
Transportation 11,515,790 6,820,836 0 0 11,515,790 6,820,836
Economic Environment 4,007,007 3,937,207 0 0 4,007,007 3,937,207
Mental & Physical Health 19,606 17,569 0 0 19,606 17,569
Cultural & Recreational Environment 6,807,512 7,819,643 0 0 6,807,512 7,819,643 ,
Interest on Long -term Debt ' 871,270 814,870 0 0 871,270 814,870
Transit 0 0' 7,317,467 6,768,564 7,317,467 6,768,564
Refuse 0 0 3,520,694 3,175,948 3,520,694 3,175,948
Wastewater 0 0 11,793,815 11,545,165 11,793,815 11,545,165
Water 0 0 5,394,745 5,044,091 5,394,745 5,044,091
Irrigation 0 0 1,567,861 1,571,861 1,567,861 1,571,861 •
Total Expenses 65,666,287 60,143,785 29,594,582 28,105,629 95,260,869 88,249,414
Increases in Net Assets Before ,
Non- operating Sources (Uses) 9,129,103 7,102,684 8,559,214 9,340,955 17,688,317 16,443,639
Gain /Loss on Sale of Capital Assets (552,646) 222,218 (226,709) 100,254 (779,355) 322,472
Transfers 2,623,500 2,166,461 (3,207,438) (3,315,205) (583,938) (1,148,744)
Change in Net Assets 11,199,957 9,491,363 5,125,067 6,126,004 16,325,024 15,617,367
Net Assets - Beginning • 86,747,945 77,256,582 108,985,107 102,859,105 195,733,052 , 180,115,687
Prior Period Adjustment 6,781,020 0 0 0 6,781,020 0
Change in Accounting Principle 42,514,682 0 0, 0 42,514,682 0
Net Assets - Ending $147,243,604 $86,747,945 $114,110,174 $108,985,109 $261,353,778 $195,733,054
..
Washington State Auditor's Office
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1
•
GOVERNMENTAL ACTIVITIES
Within governmental activities, tax revenue accounted for 58.8% of total revenue sources, with
grants and contributions accounting for 25.7 %. The remaining 15.5% of revenue was provided by
charges for services, interest income, and miscellaneous revenues. (Note: the revenue indicators in
the following charts do not include one -time only financing sources, such as proceeds from new
debt or the sale of assets.)
Governmental activities increased net assets by $11.1 million or 8:2 %. Significant fluctuations in
revenue are as follows:
> Capital Grants &Contributions increased $5.3 million from 2006 to 2007. In the spring
of 2007, the City annexed a 1.6 square mile area, known as the Occidental Annexation.
Infrastructure obtained by this annexation of about $5.8 million is included as a capital
contribution. Other arterial street projects make up the= majority of the balance of the total
$14.6 million in this account.
➢ Property tax decreased by $0.2 million. In 2006, City voters approved annexing into the
Yakima County Rural Library District, to be effective January 2007. Therefore, the Library
levied property taxes directly in 2007 and the related contract expense of about $1.3 million
previously included in the "Cultural and Recreational Environment" expense category was
eliminated. Other annexations completed in 2006 were added to the City's 2007 property tax
rolls. These changes, along with the base property tax increase capped by state law at 1%
and about a 1% increase in new construction, netted to the slight overall decrease in the tax.
> Sales tax increased $1.3 million or 7.5% during the year. A large portion of the increase
was generated by new construction and - sales of durable goods, which were precipitated by
the low interest rate environ recent annexations that are experiencing infill; and the
City's designation as a Federal Renewal Community, which provides tax benefits for capital
improvement for job creation.
The largest program expenses consist of Security of Persons and Property (public safety),
Transportation and General Government, respectively. These programs accounted for 80.9% of total
governmental expenses.
For the most part, changes in expenses corresponded with inflation. However, security of Persons
and Property demonstrated an increase of $1.6 million or 5.1% because of the need to serve new
annexation areas, and a new program to establish police emphasis patrols. Transportation increased
by $4.7 million "or 40:8% primarily because of higher depreciation of infrastructure from the full
implementation of GASB 34 (about $3.3 million); newly annexed areas; and major capital grant-
funded projects.
Following are graphs which illustrate revenue by source and expenditures by program for
governmental funds in 2007.
• ••,
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Washington State Auditor's Office
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REVENUES BY SOURCE — GOVERNMENTAL ACTIVITIES
Other Revenues
State Entitlements 1%
5 % Property Tax
• ?i ; °W 173li
Capital Grants and j $
•
Contributions
a 1 r v
"
F ._ C
Operating Grants
and Contributions Sales Tax
6% 7_5%
•
Charges for Services -
9
Other Taxes
17%
EXPENSES AND PROGRAM REVENUES - GOVERNMENTAL ACTIVITIES flIl
40,000,000 - ® Expenses
• Program Revenues
35,000,000
30,000,000
g :a
25,000,000
20,000,000 x . ry
15,000,000 1 `' =
10,000000 -'
•
5,000,000 <.
2 _> e I_ a . e
t
1
t,
General Security of Physical Transportation Economic Mental & Physical Cultural & Interest on Long -
Government Persons and Environment Environment Health Recreational Term Debt
Property Environment
BUSINESS -TYPE ACTIVITIES
Of the $38.2 million in business -type revenues, 72.9% was provided by charges for services, with the
remaining amount provided by grants, contributions, transit sales tax and interest income. Overall,
business -type revenues demonstrated an increase of $0.7 million or 1.9% over 2006.
Business type revenues and expenses experienced the following fluctuations:
Washington State Auditor's Office
16
•
➢ Charges for Services increased by $0.2 million or 0.9 %. Even though there was a rate increase
of 3.5% for Water, the total revenue was rather flat because the prior year experienced some
revenue spikes that were not sustained into the current year, such as strong waste charges.
➢ Transit expenses demonstrated an increase of $549,000 or 8.1% primarily because of
additional services provided to neighboring communities and annexation areas.
Of the $29.6 million in business -type expenses, 39.9% are associated with the wastewater program and
24.7% with transit, domestic water programs represent about 18.2 %, refuse 11.9% and irrigation 5.3 %.
The following charts depict the expenses and program revenues, with a breakdown of revenues by
source for the business -type activities.
REVENUES BY SOURCE — BUSINESS -TYPE ACTIVITIES
Operating Grants
- .e. and Contributions
6%
Capital Grants and
, �� Contributions
7%
Charges for Unrestricted
• Services` x ` Investment
73% ' c Earnings
1%
•
Sales Tax
13%
EXPENSES AND PROGRAM REVENUES — BUSINESS -TYPE ACTIVITIES
18,000,000 - D Expenses
■Program Revenues
16,000,000
14,000,000
12,000,000 ,
10,000,000�r
-41
8,000,000
Cr
6,000,000 �,.. ; �..
a 1
4,000,000n ? ,
2,000,000 fit a
0 s�.'a ?5
Transit - Refuse Wastewater Water Irrigation
Washington State Auditor's Office
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Charges for services represent the majority (72.9 %) of revenue in these funds. The only fund that
does not rely heavily on charges for service is the Transit fund, which is subsidized by a voter -
approved local option sales tax of 0.3% and a federal operating grant. •
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City of Yakima uses fund accounting to ensure and demonstrate compliance
with finance - related legal and regulatory requirements. Following is a financial analysis of the
City's governmental and proprietary funds.
GOVERNMENTAL FUNDS ANALYSIS
The General Fund and the Community Development Fund (which administers the City's
Community Development Block Grants) are the City's major funds (as defined in GASB #34) in
2007. Together these funds account for 55.1% of total governmental fund assets and 45.5% of total
governmental fund balances.
The focus of the City of Yakima's governmental funds is to provide information on near -term •
inflows, outflows, and balances of spendable resources. In particular, unreserved fund balance
may serve as a useful measure of a government'snet resources available for spending at the end of
the fiscal year. As of December 31, 2007, the City's governmental funds reported combined - fund
balances of about $26.1 million. Of this total amount, about$20.4 million (78.4 %) is unreserved and
available for spending within these funds. Reserved fund balance of $5.6 million is not available
for new spending because it was previously committed to liquidate contracts and purchase
orders of the prior period ($3.7 million); pay debt service ($9 million); generate income to pay for
the perpetual care of the municipal cemetery ($.56 million); and for a variety of other restricted
purposes ($.5 million).
The General Fund is the chief operating fund of the City of Yakima. At the end of the 2007 fiscal
year, unreserved fund balance of the General Fund was $10 million, while total fund balance is
about $10.5 million. Unreserved fund balance is about 24% of total general fund expenditures
(which represents about a 3.5 month reserve). Total assets in the General Fund amounted to $16.1
million, accounting for 40.5% of total governmental fund assets.
•
The fund balance of the City of Yakima's General Fund increased by $979,724 during the current
fiscal year. Inflationary increases in insurance rates, including medical, property and liability;
equipment; utilities; jail costs; state retirement system rates and fuel were slightly more than offset
by growth in sales tax (as described above) and other revenues.
The General Fund accounts for 58.9% of, all governmental fund revenue and 55% of all expenditures.
The Community Development fund performed as expected, showing a $130,619 gain in fund
balance in 2007.
Other governmental funds ended with a net increase in fund balances of $3.5 million. While most
funds had modest changes in fund balance, much of this increase can be attributed to the balance
of proceeds of a $4.07 million'Councilmanic General Obligation bond for the continuation of the
downtown revitalization project; a fire station expansion /improvement project; and a major street
improvement project. Additionally, the Real Estate Excise Tax came in much stronger than prior
years, thus building a balance for future eligible projects.
Washington State Auditor's Office
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• •
ENTERPRISE FUNDS ANALYSIS
All of the enterprise funds of the City of Yakima, including Transit, Wastewater, Domestic (potable)
Water, Irrigation Water and Refuse are considered major funds in the City's 2007 (GASB 34)
Financial Statements. These business -type activities demonstrated an increase in net assets from
$100.9 million to $106.2 million, for a difference of $5.3 million, due primarily to capital grants/
donations of about $2.8 million and an increase in capital reserves.
As.of December 31, 2007, the City's enterprise funds (including their allocation of internal service fund
balances) reported combined net assets of $114.1 million, with $52.6 million or approximately 46%
being contributed by the Wastewater fund. Of the $1141 million, over $90.6 million (79%) of net assets
is accounted for by investment in capital assets, net of related debt, $2.7 million is restricted for debt
service and $20.8 million is unrestricted. The Notes to the Financial Statements (Note 9) present segment
information that is grouped according to revenue bond requirements for these business -type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS •
GENERAL FUND CHANGES IN BUDGET
The following table shows the 2007 General Fund Adopted (original) Budget, the amended (final) Budget,
Actual revenue and expenditure amounts and the variance of Actuals compared to the Final budget
• CHANGE IN GENERAL FUND BALANCE
VARIANCE W/
FINAL BUDGET
BUDGETED AMOUNTS ACTUAL POSITIVE
ORIGINAL FINAL AMOUNTS (NEGATIVE)
REVENUES
Taxes and Special Assessments • $34,001,600 $34,134,167 $34,820,613 $686,446
Licenses and Permits 648,000 788,000 982,084 194,084
Intergovernmental Revenues 2,188,165 2,195,399 2,500,346 304,947
Charges for Services 4,301,008 4,301,008 4,422,803 121,795
Fines and Forfeits 1,294,000 1,294,000 1,420,275 126,275
Interest 700,000 700,000 913,446 • 213,446
Other Revenues 82,700 82,700 60,794 (21,906)
Total Revenues 43,215,473 43,495,274 45,120,361 1,625,087
EXPENDITURES
Current
General Government 11,051,629 11,318,664 10,663,820 654,844
Security of Persons and Property 28,329,440 28,888,074 28,715,181 172,893
•
Physical Environment 1,418,691 1,443,803 1,323,713 120,090
Economic Environment 749,898 821,798 797,452 24,346
Mental & Physical Health 18,600 18,600 19,606 (1,006)
• Cultural & Recreational Environment 6,333 6,333 6,333 0
Capital Outlay - General Government 27,001 273,477 107,942 165,535
Debt Service:
Principal Retirement 309,177 309,177 281,307 27,870
Interest 44,672 44,672 42,105 2,567
Total Expenditures 41,955,441 43,124,598 41,95Z459 1,167,139
Excess (Deficiency) of Revenues
• Over (Under) Expenditures $1,260,032 $370,676 $3,162,902 $2,792,226
Cnntinned on next nave...
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Washington State Auditor's Office
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VARIANCE W/
FINAL BUDGET
BUDGETED AMOUNTS ACTUAL POSITIVE
• ORIGINAL FINAL AMOUNTS (NEGATIVE)
OTHER FINANCING SOURCES (USES)
Proceeds from Capital Lease Financing $0 $0 $38,293 $38,293
Transfers In 40,000 40,000 40,000 0
Transfers (Out) (2,14Z000) (2,154,500) (2,195,322) (40,822)
Intergovernmental Agreements (39,095) (81,095) (81,095) 0
Sale of Capital Assets 0 0 9,438 9,438
Comp. for Loss of Gen. Capital Assets " 1,000 1,000 5,508 4,508
Total Other Financing Sources (Uses) (2,145,095) (2,194,595) (2,183,178) 11,417
Net Change in Fund Balances (885,063) (1,823,919) 979,724 2,803,643
Fund Balances - January 1 4,762,995 4,762,995 9,521,879 4,758,884
Change in Reserve for Inventory 0 0 (9,919) (9,919)
Fund Balances - December 31 $3,877,932 $2,939,076 $10,491,684 $7,552,608
During the year, the 2007 General Fund budget was increased from $42 million to $43 million, or by
$1 million. The increases in appropriations -are summarized as follows:
> $417,500 in outstanding encumbrances /commitments which were re- budgeted from the prior
year.
Y $182,000 to serve the new Occidental annexation area.
> $185,000 for negotiated wages and benefits for YPPA (the police union). The union did not
reach a settlement for 2006-2008 until the middle of 2007, thereby creating a retroactive
adjustment that was not fully budgeted.
> $312,000 for Yakima County jail costs. Because of additional police officers authorized in
2005 by voter approval of a 0.3% county -wide criminal justice sales tax, along with growth
in the City from annexations, the jail population grew more than anticipated. Escalating
medical costs for prisoners, coupled with the higher inmate population pushed up jail costs. •
> $160,000 to buy back pension credits for reserved police and pension benefits resulting from
the negotiated wages and benefits for YPPA.
> $41,500 for fuel costs.
The increases related to the annexation were funded by a corresponding increase in revenue, while
the balance of adjustments were to be funded from the General Fund reserves and /or current year
revenue growth.
GENERAL FUND BUDGET TO ACTUAL
Total General Fund revenues were budgeted at about $43.5 million. Actual revenue of $45.1 million
resulted in a positive variance of $1.6 million, a gain of 3.7% over the amended budget. Sales tax
contributed about $0.7 million to this variance — fueled by new construction and durable goods
sales precipitated by the low interest rate environment, and the designation of the City as a Federal
Renewal Community, which provides tax incentives for "Commercial Revitalization" projects.
(Another $0.19 million was gained in the related area of Licenses and Permits.) Intergovernmental
Washington State Auditor's Office
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revenue was about $0.3 million greater than budget, primarily the result of the City remaining in a
distribution formula for certain State shared revenue.
General Fund expenditures, including other financing uses, totaled $44.2 million compared to the
final budget of $45.4 million — resulting in a positive variance of $1.1 million or 2.5%. Most of this
variance is in the area of General Government, and is the result primarily of position vacancies and
the timing of project expenses in Information Systems.
The General Fund budget is built assuming positive variances in both revenue and expenditures.
Revenue is conservatively estimated, while expenditure estimates utilize highest probable costs.
Historically, actual amounts have been close to "break even ", and 2007 is not an exception, with a
net increase in fund balance of not quite $1 million (about 2.1% of the total General Fund budget).
CAPITAL ASSET AND DEBT ADMINISTRATION
CAPITAL ASSETS
The City of Yakima's total investment in capital assets, including construction in progress, for its
governmental and business type activities as of December 31, 200Z amounts to over $268 million
(net of accumulated depreciation). This investment in capital assets includes land, buildings,
system improvements, machinery and equipment, park facilities, infrastructure, and construction in
progress on buildings and systems.
Major capital asset events during the 2007 fiscal year included'the following:
➢ A variety of projects for street expansion /repair were ongoing during the year. $7.4 million
was spent on infrastructure projects in 2007, while the 2008 budget includes over $16.4
million in planned projects, funded primarily by state and federal grants, matched by fuel
tax and real estate excise tax. The major projects in 2007 and continuing into 2008 include
the widening and improvement of an arterial street serving an industrial area (funded
partially by a LTGO issued in May, 2007) and a railroad grade separation project.
➢ The City has obtained State and Federal grants of $Z6 million to date for pedestrian safety
and lighting improvements in the downtown corridor, and anticipate an additional $1
million. The total project is estimated to cost $10.5 million, with $9 million funded from
existing resources, and $1.5 million by a Councilmanic LTGO bondissue (completed in
May, 2007). Phase I of Downtown revitalization project is complete with a total cost of $5.2
million. Phase II is well under its way and $2.6 million was spent in 2007; projected total
cost for Phase II is $3.4 million: About $1.4 million is budgeted in 2008 for Phase III.
• Vehieles, street equipment, and trucks were added to the fleet as either additional equipment
or replacements during the year, at a cost of $1.2 million.
➢ In the area of Public Safety, major capital asset investments include the completion of the
remodeling project at the West Valley Fire Station; total cost is $0.95 million and about $0.4
million was spent in 2007. The Fire Department acquired a brush firefighting vehicle and Fire
Engine /pumper for about $0.7 million. The 2008 budget includes $1 million for a ladder truck
and the proposed funding is a Councilmanic General Obligation bond and cash reserves.
Washington State Auditor's Office
21
•
➢ Wastewater capital improvements include $2.8 million for new interceptor and trunk line
extensions and $6 million in treatment plant projects. The 2008 budget includes about $7.9
million to continue upgrades at the plant, and $2.1 million for interceptor and trunk line
extensions funded by a revenue bond issue, intergovernmental loans, capital reserves and
current capital transfers from the operating fund.
> The Domestic Water Treatment plant capital program completed the Phase I of the 2nd Level
Reservoir Pipe line improvement; total cost is $1.1 million and $.2 million was spent in 2007.
Phase II of this capital program is underway and will be completed in 2008; the estimated
cost is about $.8 million. The 2008 budget includes a $1 million for a new well project at
Gardner Park and will be partly funded by Public Works Trust Fund Loan.
> In 2003, the City Council approved the re -build of the irrigation delivery system, which was
estimated to cost approximately $14 million and be completed over an eight -year period. The
City issued revenue bonds for approximately $5.2 million to help accomplish the rebuilding
of the irrigation system. The Phase II of the General System Rebuild project was completed
in 2007; the total cost is $3.9 million and $1.2 million was spent in 2007. The Phase III of this
project was also started in 2007 and will continue on to 2010. The 2008 budget includes
about $2.6 million for Phase III, funded by utility rates and reserves.
CAPITAL ASSETS (NET OF DEPRECIATION) .
GOVERNMENTAL BUSINESS -TYPE
ACTIVITIES ACTIVITIES TOTAL
2007 2006 2007 2006 2007 2006
CAPITAL ASSETS
Land $10,812,032 $8,764,562, $2,181,515 $2,181,516 $12,993,547 $10,946,078
Building 34,582,296 34,891,020 25,214,751 27,263,194 59,797047 62,154,214
Improvements Other Than Buildings 5,834,109 5,903,138 61,055,504 56,686,917 66,889,613 62,590,055
Machinery and Equipment 7,242,895 6,808,457 12,333,965 13,629,144 19,576,860 20,437,601
Infrastructure. 66,598,154 21,950,665 0 0 66,598,154 21,950,665
Intangibles 0 0 115,659 115,659 115,659 115,659
Construction in Progress 18,442,657 13,698,595 23,497999 16,027,132 41,940,656 29,725,727
Total Capital Assets $143,512,143 $92,016,437 $124,399,393 $115,903,562 $267,911,536 $207,919,999 , •
Additional information on the City of Yakima's capital assets can be found in Note 4 of this report.
LONG -TERM DEBT
On December 31, 2007, the City of Yakima had total bonded debt outstanding of almost $45.5
million. Of this amount, $20.1 million is classified as governmental activity and backed by the full
faith and credit of the City. The remaining $24.7 million represents bonds secured solely by specific
revenue sources (i.e. revenue bonds).
The City of Yakima's total bonded debt had a net decrease of $1 million during 2007.
The City participates in a loan program administered by the State's Department of Community
Development, which are included. as Intergovernmental loans in the . long -term debt schedules.
Infrastructure improvements, such as street, bridge, water, or sewage projects, are eligible to
compete for loan awards. This type of funding is preferred because the interest rates for new loans
range from 0.5% to 1.5% based on the percentage of local match available for the project. (i.e. the
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higher the match, the lower the interest rate). In 2007, the City borrowed $1.6 million for Water and
Wastewater projects utilizing this State program.
The City's remaining capacity for non -voted debt on December 31, 2007 was approximately $58
million in comparison to the total legal limit of $127.6 million. The City has a general guideline of
retaining 50% of its non -voted capacity for emergencies. The City of Yakima maintains an "A3"
rating from Moody's and an "A" rating from Standard & Poor's for general obligation debt. A
summary of the City's bonded debt follows. Additional information on the City's long -term debt
can be found in Note 7.
In June 2008, the City issued $8.84 million par value in Water /Wastewater Revenue Bonds - -$5.5
million will be used to finance various Wastewater projects, and $3.4 million of the proceeds are
being used to refund $3.34 million of the 1998 Water /Wastewater bonds maturing in 2018.
The City currently plans to issue about $3 million in Councilmanic General Obligation bonds in
the summer of 2008 to make various street improvements and purchase a replacement fire ladder
truck. Debt service is proposed to be provided by Real Estate Excise Tax for the street projects, and
property tax for the fire truck.
OUTSTANDING DEBT
GOVERNMENTAL BUSINESS -TYPE
ACTIVITIES ACTIVITIES TOTAL
2007 2006 2007 2006 2007 2006
OUTSTANDING DEBT
General Obligation Bonds $20,837,482 $18,040,097 $0 $0 $20,837,482 $18,040,097
Revenue Bonds 0 0 24,661,317 26,450,000 24,661,317 26,450,000
Intergovernmental Loans 1,686,538 2,087,928 9,198,575 8,460,541 10,885,113 10,548,469
Special Assessment Debt 370,700 564,500 0 . 0 370,700 564,500
Unfunded Pension Liability 4,800,753 4,309,741 0 0 4,800,753 4,309,741
Compensated Absences 5,732,001 5,134,446 0 0 5,732,001 .5,134,446
Other Debt 454,322 773,455 100,816 85,204 555,138 858,659
Total Outstanding Debt $33,881,796 $30,910,167 $33,960,708 $34 ,995,745 $67,842,504 $65,905,912
ECONOMIC FACTORS
There are a number of factors that have a fiscal impact on various revenues of the City, including
voter approved initiatives over the last few years, as well as changes in State and Federal
regulations. Following is a list of significant factors, . which have an impact on the City's revenues.
The City is committed to the continued application of sound fiscal management practices to ensure
balanced budgets are maintained and critical core services are provided to our citizens.
➢ In 2001 state voters approved Initiative 747, which capped property tax levy growth each
year at a maximum of 1 %, plus any additions for annexations and new construction. This
initiative represents a severe restriction on•local government revenue growth, which makes
budget balancing more difficult because actual inflation rates are growing at an average of 3
times the 1% limitation.
➢ The Downtown area is in transition from a retail center to a central business district. The
City is actively participating in several projects to upgrade the downtown as follows:
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• The City was recently awarded State and Federal grants of about $8.6 million for
infrastructure and pedestrian improvements in the downtown core; construction began
in mid 2006.
• The City owned Capitol Theatre, located in the center of the downtown area, is gearing
up for a major upgrade /expansion project. In 2007, the state legislature approved a sales
tax credit for performing arts centers of .025 %, which started flowing to the Yakima
Regional Public Facilities District in the spring of 2008. A phased capital plan has been
developed which includes new LTGO debt currently proposed to be issued by the City in
2009 and serviced by the tax credit.
• Section 108 loans of almost $7 million were awarded by HUD to the City in 2003
and 2004. A majority of this funding was slated for downtown projects, including
improvements to a section of the former mall to include a new hotel and related retail
facilities, which opened in the spring of 2006.
• Due to a state - allowed property tax exemption for new residential development in
downtown, another portion of the closed mall is being dedicated to the construction of a
suite of luxury condominiums, which are currently under construction.
> The non - agricultural unemployment rate (7.0% as of April, 2008) in the County continues
to be higher than the State average. The County's predominant industry is agriculture and
food related. This industry has a history of high unemployment rates, seasonal employment,
and low median income (Yakima is about 75% of the state average). However, the local
economy is improving in recent years —April 2007 set a record low unemployment rate at
6.1 %, and April 2008 rate is the 2nd lowest in recent history. 2007 was a record year for the
City in building permit activity, and this category is continuing to be strong.
> Efforts to diversify our economic base include expansion of the current community college
to offer four -year degree programs through major state institutions, including Washington
State University and University of Washington. Additionally, a new medical school has
almost finished construction in the urban area, and will begin instruction soon.
> The City is continuing to annex property within the Urban Growth Boundary that is being
sewered. In the spring of 2007, a residential area with assessed value (AV) of $88.7 million
and population of 725 was annexed into the City.
> The Refuse, Wastewater. and Water utilities had rate increases for the 2008 budget year
of 5 %, 3.5% and 5.5% respectively. These rate adjustments were necessary to support the
capital improvement requirements and inflationary increases in operating expenses (i.e.
fuel, utilities,labor settlements /benefit increases, etc.) It should be noted that prior to the
issuance of the revenue bonds in June, 2008, Standard and Poor's upgraded the credit rating
of the Wastewater /Water utility two steps —from single A (A) to double A minus (AA -) with
a stable outlook. The analyst's press release indicates that this upgrade is primarily due to
the combination of:
- 1. Good fiscal management of the utilities - providing strong, sustained debt service coverage
2. Strong operating oversight - the analysts were positively impressed with the focus on •
and planning for long -term capital and operational requirements;
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3. The local market /economy remaining relatively strong (in the midst of downturns nationally)
4. Strong executive management - council's willingness to authorize multiple year rate
increases - thus, allowing for long -term plani{ing
➢ In response to Department of Ecology requirements, the City established a stormwater
utility in 2008, and set a billing rate of $22 per Equivalent Residential Unit (ERU) annually in
the start -up year of 2008 (a total budget �f about $1 million), going up to $35 per ERU in 2009.
The 2008 budget is balanced for all funds, within guidelines established by city management, to
accomplish municipal service levels and priorities set by City Council. To date, overall budget
results are performing . as expected.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Yakima'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: City of Yakima - Finance Director, 129 North Second Street, Yakima, WA 98901.
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CITY OF ! r('Li &
STATEMENT OF NET ASSETS , Page 1 of 1
December 31; 2007
With comparative totals for December 31, 2006
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GOVERNMENTAL BUSINESS -TYPE TOTAL
ACTIVITIES ACTIVITIES 2007 2006
ASSETS '
Cash and Cash Equivalents $17,530,965 $5,281,572 $22,812,537 $28,049,056
Investments at Amortized Cost 14,663,133 15,948,297 30,611,430 23,882,345
Receivables (Net) 7,303,230 3,246,566 10,549,796 9,043,454
Due from Other Government Units 1,562,426 1,856,993 3,419,419 4,154,659
Notes Receivable 5,321,739 0 5,321,739 6,055,526
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Inventories 168,576 409,255 57Z831 748,329
Unamortized Debt Issue Cost 0 136,588 136,588 147,793
Restricted Assets:
Cash and Cash Equivalents 227,331 2,722,150 2,949,481 2,705,125 i
Fiscal Agent Z916 2,704 10,620 11,145
Capital Assets (Net of Accumulated Depreciation): • J . .
Land 10,812,032 2,181,515 12993,547 10,946,077 ,
Buildings 34,582,296 25,214,751 59,797,047. 62,154,214
Improvements Other Than Buildings 5,834,109 61,055,504 • 66,889,613 62,590,055
Machinery & Equipment Z242,895 12,333,965 19,576,860 20,43Z601
Construction in Process 18,442,657 23,497,999 41,940,656 29,725,727 •
Intangibles 0 115,659 115,659 115,659
Infrastructure 66,598,154 0 66,598,154 21,950,665
Total Assets 190,297,459 154,003,518 344,300,977 282,717,430
LIABILITIES
Accounts Payable and Other Current Liabilities 6,572,191 2,915,367 9,487,558 - 9,392,963
i
Accrued Liabilities 2,306,324 3,017,264 5,323,588 4,835,286
Due to Other Government Units 66,207 0 66,207 69,187
Deferred Revenue 0 0 0 6,781,020
Liabilities Payable from Restricted Assets 227,331 0 227,331 0
Noncurrent Liabilities: • .
Due Within One Year 2,534,879 2,506,777 5,041,656 4,451,269
Due in More than One Year 31,346,917 31,453,932 62,800,849 61,454,643
Total Liabilities 43,053,849 39,893,340 82 86,984,368
NET ASSETS
Invested in Capital Assets, Net of Related Debt 121,924,861 90,616,703 212,541,564 161,965,846
Restricted for:
Debt Service 879,543 2,722,150 3,601,693 3,582,474
Capital Projects 3,300,960 0 3,300,960 2,544,048
Other Purposes 1,046,208 0 1,046,208 985,978
Notes Receivable 5,764,596 0 5,764,596 0
Unrestricted 14,327,442 20,771325 35,098,767 26,654,716
Total Net Assets $147,243,610 $114,110,178 $261,353,788 $195,733,062
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF / ILa&
STATEMENT OF ACTIVITIES Page 1 of 1
. For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
NET (EXPENSE) REVENUE
PROGRAM REVENUES AND CHANGES IN NET ASSETS
CHARGES OPERATING CAPITAL BUSINESS-
FOR . GRANTS & GRANTS & GOV'T TYPE TOTAL
FUNCTIONS /PROGRAMS EXPENSES SERVICES CONT'S CONT'S ACTIVITIES ACTIVITIES 2007 2006
Governmental Activities:
General Government $7,866,992 $144,503. $0 $0 ($7,722,489) $0 ($7,722,489) ($7,166,020)
Security of Persons & Property 33,705,798 1,624,522 3,822,122 551,912 (27,707,242) 0 (27,707,242) • (27,040,058)
Physical Environment 872,312 901,505 0 0 29,193 0 29,193 (205,772)
Transportation 11,515,790 261,348 14,396 11,545,158 305,112 0 305,112 (3,252,804) •
Economic Environment • 4,007,007 2,071,621 656,802 2,261,000 982,416 0 982,416 (834,766)
• Mental & Physical Health 19,606 0 0 0 (19,606) . 0 (19,606) (17,569)
Cultural &Recreational Envt 6,807,512 1,921,834 147,191 237,464 (4,501,023) 0 (4,501,023) (549,604)
Interest on Long -term Debt 871,270 0 0 0 (871,270) 0 (871,270) (814,870)
Total Governmental Activities 65,666,287 6,925,333 4,640,511 14,595,534 (39,504,909) 0 . (39,504,909) (39,881,463)
Business -Type Activities:
Transit 7,317,467 578,442 1,987,368 • 0 0 (4,751,657) (4,751,657) (4,310,560)
Refuse 3,520,694 3,951,615 0 0 0 430,921 430,921 685,271
Wastewater 11,793,815 14,433,360 387,284 2,244,826 0 5,271,655 5,271,655 5,417,071
Water 5,394,745 '6,359,826 10,986 544,623 0 1,520,690 1,520,690 1,504,558
Irrigation 1,567,861 • 2,486,153 0 0 0 918,292 918,292 877,274
Total Business -Type Activities 29,594,582 27,809,396 .2,385,638 2,789,449 0 3,389,901 3,389,901 4,173,614
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Total - $95,260,869 $34,734,729 $7,026,149 $17,384,983 (39,504,909) 3,389,901 (36,115,008) (35,707,849)
GENERAL REVENUES
•
Taxes:
Property Taxes • 13,070,702 0 13,070,702 13,264,660
Sales and Use Taxes
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18,392,834 4,789,003 23,181,837 21,624,433 •
Franchise and Utility Taxes 9,025,616 0 9,025,616 9,045,058
Excise Taxes 3,469,555 - 0 3,469,555 3,080,877
Penalties and Interest . 9,836 0 9,836 11,107
State Entitlements . 3,790,225 0 3,790,225 3,496,905
Unrestricted Investment Earnings 913,446 380,310 1,293,756 1,351,007
Miscellaneous (38,202) 0 (38,202) 277,441
Gain /Loss on Sale of Capital Assets (552,646) (226,709) (779,355) 322,472
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Transfers 2,623,500 (3,207,438) (583,938) (1,148,744)
Total General Revenues, Transfers and Special Item 50,704,866 1,735,166 52,440,032 51,325,216
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Change in Net Assets 11,199,957 5,125,067 16,325,024 15,617,367
Net Assets - Beginning 86,747,945 108,985,107. 195,733,054 180,115,687
Prior Period Adjustment 6,781,020 0 6,781,020 0
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Change in Accounting Principle 42,514,682 0 42,514,682 0
Net Assets - Ending $147,243,604 $114,110,174 $261,353,778 195,733,054
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF / !futl t •
• BALANCE SHEET - GOVERNMENTAL FUNDS • Page 1 of 2 •
December 31, 2007
With comparative totals for December 31, 2006
#000 #124 OTHER TOTAL �
GENERAL COMMUNITY GOV'T GOVERNMENTAL FUNDS
FUND DEVELOPMENT FUNDS 2007 2006 •
ASSETS .
Cash & Equity in Pooled Investments $1,574,650 $431,182 $12,242,160 $14,247,992 - $13,288,011
Deposits w/ Fiscal Agent /Trustee 227,331 0 0 227,331 100
Receivables:
Taxes 4,327,048 0 238,637 4,565,685 4,320,176
Accounts 1,227,093 0 298,563 1,525,656 247,430
Special Assessments 0 0 7,287 7,287 1,535
LID Assessments - Delinquent 0 0 20,078. 20,078 11,855
LID Assessments - Deferred 0 0 422,779 422,779 607,954
Notes /Contracts 0 5,301,953 19,786 5,321,739 6,050,152
Interest /Penalties 217,503 0 18,094 235,597 153,314
Other Receivables 0 0 2,000 2,000 5,156
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Due from Other Funds 19,908 0 0 19,908 369,881
Due from Other Government Units 117,513 93,035 1,351,878 1,562,426 2,517,018
Inventories 40,262 0 0 40,262 50,181
Investments, at Amortized Cost 8,355,164 0 3,253,898 11,609,062 7,142,051
Total Assets $16,106,472 $5,826,170 $17,875,160 $39,807,802 $34,764,814
LIABILITIES AND FUND BALANCES •
Liabilities:
• Warrants /Accounts Payable ' $658,404 $69,397 $1,133,571 $1,861,372 $1,640,827 1
Wages /Benefits Payable 3,091,787 58,139 - 689,007 3,838,933 4,092,388
Contracts Payable 0 0 205,920 205,920 123,569
Due to Other Funds 0 0 • 19,908 19,908 199,237
Due to Other Government Units 55,463 0 10,744 66,207 69,187
Deposits Payable 258,861 250 114,295 373,406 336,025
Deferred Revenue 1,322,942 5,301,953 518,408 7,143,303 6,781,020
Custodial Accounts 227,331 0 0 227,331 0
Total Liabilities $5,614,788 $5,429,739 $2,691,853 $13,736,380 $13,242,253
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The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF YLKus1et •
BALANCE SHEET - GOVERNMENTAL FUNDS Page 2 of 2
December 31, 2007
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With comparative totals for December 31, 2006 •
#000 #124 OTHER TOTAL
GENERAL COMMUNITY GOV'T GOVERNMENTAL FUNDS
FUND DEVELOPMENT FUNDS 2007 2006
Fund Balances
Reserved for:
Inventory • $40,262 • $0 $0 $40,262 $50,181
Encumbrances 41Z501 0 - 1,021,513 1,439,014 2,018,049
Continuing Appropriations 0 0 426,282 426,282 683,982
Debt Service 0 0 879,543 879,543 877,349
Endowment 0 0 555,681 555,681 544,526 • •
Parking and Business Improvement 0 0 26,050 26,050 64,704
Unreserved:
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General Fund 10,033,921 0 0 10,033,921 9,144,374
Special Revenue Funds 0 396,431 5,961,973 6,358,404 4,157,933
Capital Projects Funds 0 0 6,312,265 6,312,265 3,981,463
Total Fund Balances 10,491,684 • 396,431 15,183,307 26,071,422 21,522,561
Total Liabilities and Fund Balances $16,106,472 $5,826,170 $17,875,160
Amounts reported for governmental activities in the statement of net assets are different because:
• Capital assets used in governmental activities are not financial resources and, therefore, are not 139,953,663 88,866,086
reported in the funds.
Other Long -term assets are not available to pay for current - period expenditures and, therefore, 7,143,303 0
are deferred in the •funds (as restated).
Internal service funds are used by management to charge the costs of services to individual funds.
8,072722 7,346,232
The assets and liabilities of the intemal service funds are included in government activities in
the statement of net assets.
Long -term liabilities, including bonds payable, are not due and payable in the current period (33,881,796) (30,910,167)
and, therefore, are not reported in the funds.
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Accrued interest payable on General Obligation Debt (115,711) (76,767)
Net assets of governmental activities $147,243,603 $86,747,945
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The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF YLL UIti
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES Page 1 of 2
IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
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#000 #I24 OTHER TOTAL
GENERAL COMMUNITY GOV'T GOVERNMENTAL FUNDS
FUND DEVELOPMENT FUNDS 2007 2006
REVENUES
Taxes and Special Assessments $34,820,613 $0 $12,240,044 $47,060,657 $45,600,517
Licenses and Permits • 982,084 0 0 982,084 741,492
• Intergovernmental Revenues 2,500,346 616,302 13,639,141 16,755,789 ' 17,345,695
Charges for Services 4,422,803 1,342,972 1,230,540 6,996,315 5,543,284
Fines and Forfeits . 1,420,275 0 0 1,420,275 1,309,431
Interest 913,446 64,384 717,950 1,695,780 1,167,773 1
Other Revenues 60,794 243,343 1,343,434 1,647,571 1,851,850
Total Revenues 45,120,361 2,26Z001 29,171,109 76,558,471 73,560,042 ,
EXPENDITURES .
Current:
General Government 10,663,820 0 93,327 10,75Z147 10,451,632
Security of Persons and Property 28,715,181 0 3,975,943 32,691,124 30,929,077
• Physical Environment .1,323,713 0 351,031 1,674,744 1,703,792
Transportation 0 0 5,128,557 . 5,128,557 5,128,605
Economic Environment 797,452 1,905,588 1,166,234 3,869,274 3,975,658
Mental & Physical Health .19,606 0 0 . 19,606 17,569
Cultural & Recreational Environment 6,333 0 5,706,167 5,712,500 6,951,181 •
Capital Outlay:
General Government 107,942 • 0 . 143,564 251,506 259,753
Security of Persons. and Property 0 0 1,105,290 1,105,290 864,402
Physical Environment 0 230,794 60,274 291,068 23,784
• Transportation • 0 0 7,462,636 Z462,636 4,391,527
Economic Environment 0 0 2,636,504 2,636,504 5,270,361
Cultural & Recreational Environment 0 0 1,006,609 1;006,609 1,343,850
Debt Service:
Principal Retirement 281,307 0 2,608,925 2,890,232 2,351,112
Interest 42,105 .0 790,221 832,326 822,296
Total Expenditures 41,957,459 2,136,382 32,235,282 76,329,123 74,484,599
Excess (Deficiency) of Revenues ,
Over (Under) Expenditures $3,162,902 $130,619 ($3,064,173) $229,348 ($924,557)
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The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF Ya 2Mza
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES • Page 2 of 2
IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
With comparative totals for December31, 2006
#000 #I24 OTHER TOTAL
GENERAL COMMUNITY GOV'T GOVERNMENTAL FUNDS
FUND DEVELOPMENT FUNDS 2007 2006
OTHER FINANCING SOURCES (USES)
Proceeds from Capital Lease Financing $38,293 $0 $0 $38,293 $0 •
Proceeds from L.T. Debt - G.O. Bonds 0 • - 0 • 4,686,005 4,686,005 0 •
Proceeds from Intergovernmental Loans 0 0 0 0 50,000
Other Note Proceeds 0 . 0 0 0 546,252
Transfers In 40,000 0 5,155,797 5,195,797 5,048,727
Transfers (Out) (2,195,322) 0 (3,469,089) (5,664,411)
(5,050,265)
Intergovernmental Agreements (81,095) 0 0 . (81,095) (39,095)
Sale of Capital Assets 9,438 0 16,737 26,175 109,087
Comp. for Loss of Gen. Capital Assets 5,508 0 123,160 , 128,668 89,973
Total Other Financing Sources (Uses) (2,183,178) 0 6,512,610 4,329,432 754,679
Net Change in Fund Balances 979,724 130,619
3,448,437
4 558 780
(169,878)
Fund Balances - January 1 9,521,879 265,812 11,734,870 21,522,561 21,690,929
Change in Reserve for Inventory (9,919) 0 0 (9,919) 1,510
Fund Balances - December 31 $10,491,684 $396,431. $15,183,307 $26,071,422 $21,522,561
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The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF / ! Lad.
RECONCILIATION OF THE STATEMENT OF REVENUES, Page 1 of 1
EXPENDITURES AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
2007 2006
Net change in fund balances as shown on Governmental Funds Statement of Revenues, $4,558,780 ($169,878) •
Expenditures, and Changes in Fund Balance:
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Governmental funds report capital outlays as expenditures. However, in the statement 4,666,797 8,115,055
of activities the cost of those assets is allocated over their estimated useful lives and
reported as depreciation expense. This is the amount by which capital outlays exceeded
depreciation in the current period.
In the statement of activities, only the gain on the sale of fund assets is reported, whereas 5,094,597 (742,804)
in the governmental funds, the proceeds from the sale increase financial resources. Thus,
the change in net assets differs from the change in fund balance by the cost of the fund
assets. This reconciling item. also includes donations of capital assets and infrastructure
obtained by annexation.
Revenues in the statement of activities that do not provide current financial resources are (826,215) 0
not reported as revenues in the funds.
Bond proceeds provide current financial resources to governmental funds, but issuing (1,883,062) 1,894,769
debt increases long -term liabilities in the statement of net assets. Repayments of the bond
principal is an expenditure in the governmental funds, but the repayment reduces the
long -term liabilities in the statement of net assets. A credit balance means debt issuance
proceeds exceeded repayments.
Some expenses reported in the statement of activities do not require the use of current fi- (1,137,430) (646,658)
nancial resources and, therefore, are not reported as expenditures in governmental funds
(compensated absences, inventory).
Internal service funds are used by management to charge the costs of services to indi- 726,490 1,040,879
vidual funds. The net revenue (expenses) of certain internal service funds is reported
• with governmental activities.
Change in net assets, as reflected on the Statement of Activities $11,199,957 $9,491,363
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The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF YaL/1!G
GENERAL FUND Page 1 of 1
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
For the Year Ended December 31, 2007
VARIANCE WITH .
FINAL BUDGET -
• •
BUDGETED AMOUNTS ACTUAL POSITIVE
ORIGINAL FINAL AMOUNTS (NEGATIVE)
REVENUES ■
Taxes and Special Assessments • $34,001,600 $34,134,167 $34,820,613 $686,446
Licenses and Permits 648,000 788,000 982,084 194,084
Intergovernmental Revenues 2,188,165 2,195,399 2,500,346 • 304,947
Charges for Services 4,301,008 4,301,008 4,422,803 121,795
Fines and Forfeits - 1,294,000 1,294,000 1,420,275 126,275 .
Interest 700,000 700,000 913,446 213,446
. Other Revenues 82,700 82,700 60,794 (21,906)
Total Revenues • 43,215,473 43,495,274 45,120,361 1,625,087
EXPENDITURES
Current:
General Government 11,051,629 11,318,664 10,663,820 654,844 •
Security of Persons and Property 28,329,440 28,888,074 28,715,181 172,893
Physical Environment . 1,418,691 1,443,803 1,323,713 120,090
Economic Environment 749,898 821,798 797,452 24,346
Mental & Physical Health 18,600 18,600 19,606 (1,006)
Cultural & Recreational Environment 6,333 6,333 6,333 0
Capital Outlay:
General Government 27,001 273,477 107,942 165,535
•
Debt Service:
Principal Retirement 309,177 309,177 281,307 27,870
Interest 44,672 44,672 42,105 2,567
Total Expenditures 41,955,441 43,124,598 41,957,459 1,167,139
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,260,032 370,676 3,162,902 2,792,226'
OTHER FINANCING SOURCES (USES)
Proceeds from Capital Lease Financing 0 0 38,293 38,293
Transfers In 40,000 40,000 40,000 0
Transfers (Out) (2,14Z000) (2,154,500) (2,195,322) (40,822)
Intergovernmental Agreements (39,095) (81,095) (81,095) • 0
Sale of Capital Assets 0 0 9,438 9,438
Comp. for Loss of Gen. Capital Assets 1,000 1,000 5,508 4,508
Total Other Financing Sources (Uses) (2,145,095) (2,194,595) (2,183,178) 11,417
Net Change in Fund Balances (885,063) (1,823,919) 979,724 2,803,643
Fund Balances - January 1 4,762,995 4,762,995 9,521,879 4,758,884
0 . Change in Reserve for Inventory 0 0 (9,919) (9,919)
Fund Balances - December 31 $3,877,932 $2,939,076 $10,491,684 $7,552,608
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditors Office
33.
CITY OF / A'lcutl2
COMMUNITY DEVELOPMENT FUND Page 1 of 1
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL •
For the Year Ended December 31, 2007
VARIANCE WITH
FINAL BUDGET.-
BUDGETED AMOUNTS ACTUAL POSITIVE
ORIGINAL FINAL AMOUNTS (NEGATIVE)
REVENUES - •
Intergovernmental Revenues $1,850,000 $2,894,747 $616,302 ($2,278,445)
Charges for Services 612,000 744,000 1,342,972 598,972
Interest . 30,250 30,250 64,384 34,134
Other Revenues 1,000 240,866 243,343 2,477
Total Revenues 2,493,250 3,909,863 2,267,001 (1,642,862)
EXPENDITURES
Current:
Economic Environment 2,513,162 3,172,775 1,905,588 1,267,187
Capital Outlay:
• Physical Environment 0 239,866 230,794 9,072
Transportation • 0 505,134 0 505,134
Economic Environment 0 12,000 0 12,000
Total Expenditures 2,513,162 3,929,775 2,136,382 1,793,393
•
Excess (Deficiency) of Revenues
Over (Under) Expenditures (19,912) (19,912) 130,619 150,531
Fund Balances - January 1 535,584 535,584 265,812 (269,772)
Fund Balances - December 31 $515,672 $515,672 $396,431 ($119,241)
•
•
•
•
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditors Office
34
•
•
CITY OF / lC/Cut16G
STATEMENT OF NET ASSETS - PROPRIETARY FUNDS Page 1 of 4
December 31, 2007
With comparative totals for December 31, 2006
BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS
#462 & #364 #47I #973
TRANSIT REFUSE WASTEWATER
ASSETS
Current Assets:
• Cash & Equity in Pooled Investments $917,823 $410,404 $532,427
Deposits w/ Fiscal Agent /Trustee 0 0 0
Receivables:
Accounts /Taxes (Net) 849,535 256,975 1,710,516
Notes /Contracts 0 0 0
Interest /Penalties 5,666 0 1,428
Other Receivables 0 0 9,750
Due from Other Government Units 1,856,993 0 0
Inventories 0 0 • 14,501
Investments, at Amortized Cost 500,057 0 4,563,778
Total Current Assets 4,130,074 667,379 6,832,400
•
Noncurrent Assets:
Restricted Assets:
Cash 0 0 2,327,579
Land 1,307,989 0 583,270
Buildings 7,363,248 0 51,159,320
Other Improvements 97,645 0 42,770,035
Machinery & Equipment 6,988,367 0 5,593,788
•
Accumulated Depreciation (5,995,836) 0 (52,113,682)
Construction in Progress 14,751 • 0 20,839,261
Intangibles 0 0 0
Unamortized Debt Issue Costs 0 0 84,384
Total Noncurrent Assets • 9,776,164 0 71,243,955
Total Assets $13,906,238 $667,379 $78,076,355 •
•
fa
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
•
Washington State Auditor's Office
35
•'
. CITY OF YetLI (Q '
STATEMENT OF NET ASSETS - PROPRIETARY FUNDS Page 2 of 4
December 31, 2007
With comparative totals for December 31, 2006
BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS I
#974 #975 TOTAL INTERNAL
WATER IRRIGATION 2007 2006 SERVICE FUNDS .
•
$553,302 $498,492 $2,912,448 $11,749,710 $5,652,097
0 0 0 425 10,620
3,647 199,653 3,020,326 2,929,490 641,749
0 0 0 5,374 0
0 0 . 7,094 63,347 91,795 i
0 0 9,750 9,750 0 •
•
0 0 1,856,993 1,637,641 • 0
232,503 • 0 247,004 250,638 290,565
3,500,000 5,000,000 13,563,835 9,511,432 5,438,533
4,289,452 5,698,145 21,617,450 26,15Z807 12,125,359 el,
359,136 35,435 2,722,150 2,705,125 0
191,756 98,500 2,181,515 2,181,515 0
3,777,980 0 62,300,548 66,364,089 37,397
42,656,365- 11,097,190 96,621,235 90,432,431 Z251
3,078,302 67,761 15,728,218 16,014,140 18,08Z965 i
(19,869,946) (2,653,899) (80,633,363) (80,22Z200) (10,092,724)
1,179,328 1,464,658 23,49Z998 16,027,132 0
221,830 0 221,830 221,830 0
8,667 43,537 136,588 147,793 0 '
31,603,418 10,153,182 122,776,719 113,866,855 8,039,889
$35,892,870. $15,851,327 $144,394,169 $140,024,662 $20,165,248
•
111
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditor's Office
36
CITY OF / 11lCu�12
•
STATEMENT OF NET ASSETS - PROPRIETARY FUNDS Page 3 of 4
December 31, 2007
With comparative totals for December 31, 2006
BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS
#462 & #364 ##47I #973
TRANSIT REFUSE WASTEWATER
LIABILITIES
Current Liabilities:
Warrants /Accounts Payable $86,211 $90,571 $482,682
Wages /Benefits Payable 282,794 106,496 409,694
Compensated Absences Payable 319,539 132,344 574,433
Claims and Judgments Payable 0 0 0
Accrued Payables 0 0 160,578
Deposits Payable 6,100 0 4,500
• Current Portion Long -term Debt 0 0 586,422
Restricted Payables:
Current Portion L.T. Debt • 0 0 1,457,050
Total Current Liabilities 694,644 329,411 3,675,359
•
Noncurrent Liabilities:
Bonds Payable 0 0 16,061,742
Unamortized Bond Discount /Premium 0 0 297,153
Deferred Amount On Debt Refunding 0 0 (100,038)
Loans Payable - Long -term 0 0 5,579,999
Total•Noncurrent Liabilities 0 0 21,838,856
Total Liabilities 694,644 329,411 25,514,215
•
NET ASSETS
Invested in Capital Assets, Net of Related Debt (as restated) 9,776,164 • 0 49,573,470
Restricted for Debt Service 0 0 2,327,579
Unrestricted 3,435,430 337,968 661,091
Total Net Assets $13,211,594 $337,968 $52,562,140
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.
Net assets of business -type activities
The notes to the financial statements are an integral part of this statement
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
• Washington State Auditors Office .
37
•
CITY OF YaLitli , ,
• , STATEMENT OF NET ASSETS - PROPRIETARY FUNDS Page 4 of 4
December 31, 2007
• With comparative totals for December 31, 2006
•
#974 #975 TOTAL INTERNAL
WATER IRRIGATION 2007 2006 SERVICE FUNDS
$89,990 $775,716 $1,525,170 $1,394,706 $665,782
187,833 51,379 1,038,196 987,031 184,699
168,753 47,152 1,242,221. 1,178,926 225,964
0 0 0 0 3,080,203
41,369 71,423 273,370 289,067 0
169,599 • 0 180,199 231,504 0
170,355 0 756,777 748,213 0
187,950 105,000 1,750,000 1,695,000 0
. 1,015,849 1,050,670 6,765,933 6,524,447 4,156,648
•
2,044,575 4,805,000 22,911,317 24,755,000 0
(18,988) (125,101) 153,064 160,077 0
(14,690) 0 (114,728) (150,081) • 0
•
• 2,924,280 0 . 8,504,279 Z787,536 0
4,935,177 4,679,899 31,453,932 32,552,532 0
5,951,026 5,730,569 38,219,865 39,076,979 4,156,648
25,909,431 5,725,393 90,984,458 84,093,280 8,039,889
359,136 35,435 2,722,150 2,705,125 0 •
3,673,277 4,359,930 12,467,696 14,149,278 7,968,711
$29,941,844 $10,120,758 106,174,304 100,947,683 $16,008,600
7,935,871 8,037,424
$114,110,175 $108,985,107
•
•
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditors Office
38
•
•
•
•
•
•
• CITY OF / �C1C lit
• STATEMENT OF REVENUES, EXPENSES AND CHANGES Page 1 of 2
IN FUND NET ASSETS - PROPRIETARY FUNDS
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS
•
#462 & #364 # 471 #973
TRANSIT REFUSE WASTEWATER
OPERATING REVENUES
Charges for Services s $567,432 $3,950,719 $14,373,481
Charges for Insurance 0 0 0
Employer Contributions 0 0 0
•
Employee Contributions 0
•
0 0
Other Operating Revenues 11,010 896 59,879
Total Operating Revenues 578,442 3,951,615 14,433,360
•
•
OPERATING EXPENSES -
Operations and Maintenance 5,727,254 3,419,547 6,260,642
Administration /Overhead 754,882 436,314 1,306,552
•
410 Taxes 0 0 2,474,798
Depreciation /Amortization 822,440 0 3,030,658
Other Benefits 0 0 0
Total Operating Expenses Z304,576 3,855,861 13,072,650
•
Operating Income (Loss) (6,726,134) 95,754 1,360,710
•
NON- OPERATING REVENUES (EXPENSES)
Operating Grants and Subsidies 6,755,376 0 0
Interest Revenue 33,343 4,000 193,996
Other Non - Operating Revenues 20,995 0 387,284
Interest Expenses 0 0 (508,381)
Amortization of Bond Payment Discount 0 0 (25,519)
Gain (Loss) on Capital Assets Disposition 0 0 (226,709)
Non - Operating Revenue Net of Expenses 6,809,714 • 4,000 (179,329)
Income (Loss) Before Contributions and Transfers 83,580 99,754 1,181,381
Capital Contributions 0 0 2,244,826
. Transfers In 0 0 32,939
Transfers (Out) 0 0 (42,516)
Change in Net Assets 83,580 99,754 . 3,416,630
Total Net Assets - January 1 13,128,014 238,214 49,145,510
Total Net Assets - December 31 $13,211,594 $337,968 $52,562,140
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.
Change in net assets of business -type activities.
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
•
•
•
•
Washington State Auditor's Office
39
•
•
41110
CITY OF YGCKGac1G
•
STATEMENT OF REVENUES, EXPENSES AND CHANGES Page 2 of 2
IN FUND NET ASSETS - PROPRIETARY FUNDS •
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
•
#974 #975 TOTAL INTERNAL
WATER . IRRIGATION 2007 2006 SERVICE FUNDS
$6,357,217 $2,482,386. $27,731,235 $27,535,559 $5,741,798
0 0 0 0 2,257,383 •
0 0 0 0 8,048,075
0 0 0 0 1,693,673
2,609 3,767 78,161 '30,999 27Z744
6,359,826 2,486,153 27,809,396 27,566,558 18,018,673
2,116,726 1,143,941 18,668,110 18,168,034 5,832,305 , •
1,595,373 159,732 4,252,853 4,080,724 2,086,267 1
1,308,419 • 46,128 3,829,345 3,818,701 0
III
1,103,129 102,583 5,058,810 4,510,575 1,189,712
0 0 0 0 9,536,357
6,123,647 1,452,384 31,809,118 30,578,034 18,644,641
236,179 1,033,769 (3,999,722) (3,011,476) (625,968)
0 0 6,755,376 6,484,430 0
39,839 109,132 380,310 ' 656,397 666,735
10,986 0 419,265 827,162 5,760
(124,261) (103,841) (736,483) (1,131,495) 0
(6,359) (7,665) (39,543) (39,543) 0
0 0 ' (226,709) 100,254 (30,366)
(79,795) (2,374) 6,552,216 6,897,205 642,129 . '
156,384 1,031,395 2,552,494 3,885,729 16,161
544,623 0 2,789,449 1,912,037 608,776
0 0 32,939 32,939 0
(71,997) (33,750) (148,263) (262,818) 0
629,010 997,645 5,226,619 5,567,887 624,937
' 29,312,834 9,123,113 15,383,663
$29,941,844 $10,120,758 $16,008,600
• (101,553) 558,117
• $5,125,066 $6,126,004
•
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditors Office
40
• .
® .
•
•
.,
CITY OF YlLI1. 1.(1,
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Page 1 of 4
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS
#462 & #364 #47I #973
' • TRANSIT REFUSE WASTEWATER
CASH FLOWS FROM OPERATING ACTIVITIES •
Cash Received from Customers $567,432 $3,984,423 $14,165,903
Contributions Received - Employer and Employee
Cash Paid to Suppliers for Goods and Services (3,373,765) (2,456,196) (3,125,105) •
Cash Paid for Salaries and Benefits (3,028,211) (1,126,026) (4,959,384)
Other Operating Revenues Collected 11,010 896, 59,879 .
Cash Paid to Claimants and Beneficiaries .
Cash Paid in Lieu of Taxes 0 (355,130) (1,864,131)
Net Cash Provided by Operating Activities (5,823,534) 47,967 • 4,277,162
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating Grants Received /Sales Tax 6,459,254 0 • 0
Transfers Out to Other Funds 0 0 0
0 Net Cash Provided by Noncapital Financing Activities 6,459,254 0 0
•
CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES
Proceeds from Public Works Trust /SIED Loan /Revenue Bonds 0 . 0 1,613,500
Cash Received for Debt Service from Other Governments • 0 0 381,583
Cash Received from Disposal �f Capital Assets . 0 0 4,900
Cash Contributions in Aid of Construction 0 0 1,014,269
Principal Paid on Revenue Bonds 0 0 (1,502,383)
• Principal Paid on Public Works Trust /SIED Loan 0 0 (671,208)
Capital Expenditures Paid (14,751) 0 (9,705,792)
Interest and Other Debt Service Paid 0 0 (517,034)
Capital Grants Received 0 0 25,000
• Other Non - Operating Capital Revenue . 20,994 _ 0 5,701
Transfer In 0 0 32,939
Transfer Out 0 0 (42,516)
Net Cash Used for Capital Financing Activities 6,243 0 (9,361,041)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Investment Securities 461 0 . • 4,447,136
Interest Received on Investments • 33,343 4,000 241,221
Purchase of Investment Securities 0 • 0 (4,000,000)
Net Cash Provided by Investing Activities 33,804 4,000 688,357
Net Increase (Decrease) in Cash and Cash Equivalents 675,767 51,967 (4,395,522)
Cash and Cash Equivalents at Beginning of Year 242,056 358,437 7,255,528
• ' Cash and Cash Equivalents at End of Year $917,823 $410,404 $2,860,006
•
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
• Washington State Auditor's Office
•
41
•
•
CITY OF / lCKlut12
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Page 2 of 4
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
•
#974 #975 TOTAL INTERNAL
WATER IRRIGATION 2007 2006 SERVICE FUNDS
$6,419,856 $2,508,624 $27,646,238 $26,681,547 $5,897,709
11,833,685
(2,133,263) (738,305) (11,826,634) (11,391,166) (6,065,500)
(2,006,521) (645,115) (11,765,257) (11,124,602) (1,724,430)
2,609 3,767 78,161 30,999 277,777
(9,399,488)
(872,853) 0 (3,092,114) (3,085,326) 0
1,409,828 1,128,971 1,040,394 1,111,452 819,753
0 0 6,459,254 6,300,751 0
•
0 0 0 (30,000) 0 ID
0 0 6,459,254 6,,270,,7751 1 0
0 0 1,613,500 239,138 0
0 0 381,583 665,475 0
0 0 4,900 105,849 62,932
242,742 0 1,257,011 1,413,536 0 •
(181,300) - (105,000) (1,788,683) (1,645,000) 0
(216,983) 0 (888,191) (757,690) 0
(844,846) (1,914,378) (12,479,767) (13,435,325) (1,252,329) I
(130,514) (104,632) (752,180) (1,151,442) 0
0 0 25,000 (25,000) 0
11,411 0 38,106 161,687 583,937
0 0 32,939 32,939 0
(71,997) (33,750) (148,263) (232,818) 0
(1,191,487) (2,157,760) (12,704,045) (14,628,651) (605,460)
1,000,000 3,000,000 8,447,597 14,505,332 1,790,329
48,867 109,132 • 436,563 648,731 636,140
(3,500,000) (5,000,000) . (12,500,000) (5,000,000) 0
(2,451,133) (1,890,868) (3,615,840) 10,154,063 2,426,469
(2,232,792) (2,919,657) (8,820,237) 2,907,615 2,640,762 -
. 3,145,230 _3,453,584 14,454,835 11,547,219 3,011,335
$912,438 . $533,927 $5,634,598 $14,454,834 $5,652,097
III
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditors'Office
42
•
•
CITY OF Ytt/CL�itii
STATEMENT OF CASH FLOWS — PROPRIETARY FUNDS Page 3 of 4
For the Year Ended December 31, 2007
• With comparative totals for December 31, 2006
•
•
BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS
• #462 & #364 #47I • #973
TRANSIT . REFUSE WASTEWATER
CASH AT THE END OF THE YEAR
Operating Fund Cash $917,823 - $410,404 $532,427
Revenue Bond Reserve Account Cash, 0 0 2,061,417
Revenue Bond Redemption Account Cash 0 0 266,162
Total Cash at the End of the Year $917,823 $410,404 $2,860,006
RECONCILIATION OF NET OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES •
Net Operating Income (Loss) ($6,726,134) $95,754 $1,360,710
Adjustments to Reconcile Operating Income (Loss) to Net .
Cash Provided by Operating Activities:
•
Depreciation 822,440 0 3,030,658
Change in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 0 33,704 (243,801)
Increase in Allowance for Uncollectibles 0 0 36,223
(Increase) Decrease in Inventory 0 0 4,159
Increase (Decrease) in Warrants /Accounts Payable 13,664 (95,827) 41,867
Increase (Decrease) in Wages /Benefits Payable 19,177 7,150 8,874
Increase (Decrease) in Compensated Absences Payable 47,319 7,186 38,472
Increase (Decrease) iri Claims and Judgments Payable 0 0 0
• Increase (Decrease) in Due to Other Funds 0 0 0
Total Adjustments ' 902,600 (47,787) 2,916,452
Net Cash Provided by Operating Activities ($5,823,534) $47,967 $4,277,162
•
SCHEDULE OF NONCASH CAPITAL AND •
•
RELATED FINANCING ACTIVITIES
Capital Assets Acquired by Noncash Contributions $0 $0 $1,230,557 •
•
•
•
•
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditor's Office .
•
43
I I
CITY OF Yid/VG
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Page 4 of 4
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
I
#974 #975 TOTAL INTERNAL
WATER IRRIGATION 2007 2006 SERVICE FUNDS
$553,302 $498,492 $2,912,448 $11,749,710 $5,652,097
345,667 0 2,407,084 2,390,983 0
13,469 35,435 315,066 314,142 0
$912,438 $533,927 $5,634,598 $14,454,835 $5,652,097
I •
$236,179 $1,033,769 ($3,999,722) ($3,011,476) ($625,968)
I
1,103,129 102,583 5,058,810 4,510,575 1,189,713 • .
50,258 26,238 (133,601) (474,331) (9,502)
12,381 0 48,604 22,669 0
(525) 0 3,634 (28,351) 156,945
375 (11,871) (51,792) (64,761) (119,736)
14,454 1,511 51,166 30,724 28,231
(6,423) (23,259) 63,295 126,403 29,996
•
0 0 0 0 340,718
0 0 0 0 (170,644)
1,173,649 95,202 5,040,116 . 4,122,928 1,445,721 .
$1,409,828 $1,128,971 $1,040,394 $1,111,452 $819,753
•
I
• $301,881 $0 $1,532,438 $498,501 $0
II
The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
Washington State Auditors Office
44
•
•
CITY OF YC td/
STATEMENT OF FIDUCIARY NET ASSETS - FIDUCIARY FUNDS Page 1 of 1
December 31, 2007
With comparative totals for December 31, 2006
7l
i •
FIREMEN'S RELIEF AND PENSION
„ 2007 2006
ri4i .
' ASSETS
' ‘.: ,.."'; -.
Cash & Equity in Pooled Investments $131,968 $524,140
Interest /Penalties 13,947 0
Investments, at Amortized Cost 499,938 0
524,140
Total Assets 645,853
LIABILITIES
Warrants /Accounts Payable 0 127
f t 1
Net Assets ,
Held in Trust for Pension Benefits and Other Purposes $645,853 $524,013 '
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The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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CITY OF Yedl
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. STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS Page 1 of 1
FIDUCIARY FUNDS
For the Year Ended December 31, 2007
With comparative totals for December 31, 2006
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FIREMEN'S RELIEF AND PENSION
2007 2006
f
• ADDITIONS
Employer Contributions $1,603,774 $1,558,186 .
Interest Revenue 15,151 3,000
Total Additions 1,618,925 1,561,186
DEDUCTIONS
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Administration /Overhead 39,437 35,806
Pension Benefits 682,691 767,724 •
Other Benefits 774,957 779,472
Total Deductions 1,497,085 1,583 ;002
Change In Net Assets 121,840 (21,816)
Total Net Assets, January 1 524,013 545,829
Total Net Assets, December 31 $645,853 $524,013
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The Notes to the Financial Statements, found in the Basic Financial section, are an integral part of this statement.
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NOTES TO THE FINANCIAL STATEMENTS
Year ended December 31, 2007
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the City of Yakima, Washington, conform to Generally Accepted
Accounting Principles (GAAP) as applicable to governmental units. The City has adopted the
pronouncements of the Governmental Accounting Standards Board (GASB) which is the accepted
standard - setting body for establishing governmental accounting and financial reporting principles
nationally. The following is a summary of the more significant policies. The policies should be
reviewed as an integral part of the financial statements and are presented to assist the reader in
interpreting the financial statements and other data in this report.
REPORTING ENTITY
The City of Yakima was incorporated in 1886 and operates under a Council / Manager form of
government with a full -time City Manager. The City of Yakima provides a full range of municipal
S services, which include: police, fire, engineering, parks, cemetery, street, and administrative ser-
vices. Included in the City's Enterprise Fund financial reports are: water, irrigation, sanitary
wastewater, solid waste, and transit. The Yakima Air Terminal is operated under a joint venture
agreement with Yakima County (see Note 10).
The City's financial statements include all funds, agencies and boards which are financially
accountable to the City. Financial accountability is manifest when the primary government appoints
the majority of an organization's governing body and is able to impose its will on that organization
or there is a potential for the organization to provide specific financial burdens on the primary
government. The primary government may be financially accountable if an organization is fiscally
dependent on the primary government regardless of whether the organization has a separately
elected governing board, a governing board appointed by a higher level of government, or a jointly
appointed board. An organization is fiscally dependent if it is unable to determine its budget without
another government having the substantive authority to approve or modify the budget, to levy taxes
or set rates or charges without substantive approval by another government, or to issue bonded debt
without substantive approval by another government. Applying these criteria, the combined financial
statements do not include the financial position or results of operations of the following:
YAKIMA SCHOOL DISTRICT No. 7; WEST VALLEY SCHOOL DISTRICT No. 208; UNION GAP SCHOOL DISTRICT No. 2 — These school
districts are municipal corporations empowered by the state to educate the children of the City of
Yakima. These school districts have independently elected boards of directors, adopt and control
their own budgets and have their own taxing authority.
YAKIMA COUNTY — The County of Yakima was incorporated in 1865 under the authority of the Revised
Code of Washington. The County has an elected board of commissioners, adopts and controls its
• own budget, and has its own taxing authority. The City has no legal interest in or responsibility for
the assets or liabilities of the County.
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YAKIMA VauEr REGIONAL LIBRARY - The Yakima Valley Regional Library is a separate county -wide
municipal corporation with its own taxing authority. It provides library services for the City of
Yakima, Yakima County and its other cities. The City has no legal interest in or responsibility for
the assets or liabilities of the Library.
YAKIMA HEALTH DISTRICT - The Yakima Health District has its own board of directors and adopts and
controls its own budget. The City has no legal interest in or responsibility for the assets or liabilities
of the Yakima Health District.
YAKIMA CONFERENCE OF GOVERNMENTS - The Yakima Conference of Governments is an agency comprised of
the County, cities, and other boards which assists in long range planning for the member entities.
The City has no legal interest in or responsibility for its assets or liabilities.
RELATED ORGANIZATION - The City's officials are also responsible for appointing the members of the
boards of another organization, but the City's accountability for this organization does not extend
beyond making the appointments.
YAKIMA HOUSING AUTHORITY - The Yakima Housing Authority was created by Resolution No. D -1575, in
1971, and, under certain conditions, can be dissolved by the. City. Yet, it is an independent entity
with distinct governmental character and organization. The City of Yakima created the Housing
Authority per Washington State Revised Code Chapter 35.82 which provides that liabilities incurred
by the Housing Authority will be satisfied from its assets, and that no person shall have any right
of action against the City on account of its debts, obligations, and liabilities, except for a Contingent
Loan Agreement dated October 1, 1998, for a single bond issue of $2.6 million.
YAKIMA REGIONAL PUBLIC FACIUTIES DISTRICT - Although a separate legal entity, the City has elected to account
for the operations of the Public Facilities District in a Nonmajor Special Revenue Fund. The cities of
Yakima, Selah and Union Gap formed a Public Facilities District (PFD) for the purpose of expanding
the Yakima Convention Center. The City appoints a majority of the board members and must
approve the annual budget. The financial agreement stipulates that all revenue derived by the PFD
(primarily a state sales tax credit) be transferred to the City and the City will use these funds for
Center debt service and operations, and reimbursement of administrative costs of the PFD.
GOVERNMENT AND FUND FINANCIAL STATEMENTS
The government -wide financial statements consist of the statement of net assets and the statement
of activities. These statements report information on all of the nonfiduciary activities of the primary
government. For the most part, the effect of interfund activity has been removed from these
statements. Governmental activities, which normally are supported by taxes and intergovernmental
revenues, are reported separately from business -type activities, which rely to a significant extent on
fees and charges for support. '
The statement of activities demonstrates the degree to which the direct expenses of a given function
or segment are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific function or segment. The City's policy is to allocate indirect costs to individual
functions, if they are non -tax supported.
Program revenues include: 1) charges to customers or applicants who purchase, use, or directly
benefit from goods, services, or privileges provided by a given function or segment; and 2) grants
and contributions that are restricted to meeting the operational or capital requirements or a
particular function or segment.
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Taxes and other items not properly included among program revenues are reported instead as
general revenues.
Separate fund financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government -wide financial statements.
Major individual governmental funds and major individual enterprise funds are reported as
separate columns in the fund financial statements.
MEASUREMENT FOCUS, BASIS OF ACCOUNTING, & FINANCIAL STATEMENT PRESENTATION
The government -wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary
fund financial statements. Under this measurement focus, revenues are recorded when earned
and expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows. Property taxes are recognized as revenues in the year for which they are levied. Grants
and similar items are recognized as revenue as soon as all eligibility requirements imposed by
the provider have been met.
All governmental fund financial statements are reported using the "current financial resources"
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the City considers revenues to be available if they are collected within
sixty days of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgments, are recorded only when
payment is due.
Certain charges for service, sales based taxes, and interest associated within the current period
are considered to be susceptible to accrual and so have been recognized as revenues of the
current fiscal period. Only the portion of special assessment receivable due within the current
fiscal period is considered to be susceptible to accrual as revenue of the current period. Grants
are considered measurable and available to the extent that expenditures have been rnade. Other
intergovernmental revenues are considered measurable and available when earned. Other
revenues such as state shared revenue, licenses, fines and fees are not considered susceptible
to accrual since they are not generally measurable until received. Expenditures are generally
recognized when the related fund . liability is incurred, as under accrual accounting. All other
revenue items are considered to be measurable and available only when cash is received by the
City.
The City of Yakima reports the following major governmental funds:
➢ The General Fund is the City's primary operating fund. It accounts for all financial resources
of the general government, except those required to be accounted for in another fund.
➢ The Community Development Fund accounts for the Office of Neighborhood Development,
which is the focus of the City's effort to improve economic opportunities and housing
conditions in Yakima. Federal Housing and Urban Development grants are the major
revenue source for this program.
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The City reports all enterprise funds as major funds:
➢ The Transit Fund accounts for the operation of the City Transit System, funded primarily by
0.03% sales tax, federal grants and fares.
➢ The Refuse Fund accounts for the provision of garbage collection and disposal service of the City.
➢ The Water and Wastewater Funds account for the provision of water and wastewater services
to the residents of the City and other outside utility agreements.
➢ The Irrigation Utility Fund is responsible for the operation, maintenance and reconstruction of
the existing irrigation system.
Additionally, the government reports the following fund types:
➢ Internal Service Funds account for fleet management services, liability insurance, employee
benefit reserves, and public works administration services provided to other departments or
agencies of the government, or to other governments, on a cost reimbursement basis.
➢ Pension Trust Funds are used to account for the operations of trust established for employee
retirement benefits. They are accounted for in essentially the same manner as proprietary
funds because of the need for determining the periodic income of the trust.
Private- sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government -wide and proprietary fund financial statements to
the extent that .those standards do not conflict with or contradict guidance of the Governmental.
Accounting Standards Boards. Governments also have the option of the following subsequent
private- sector guidance for their business -type activities and enterprise funds, subject to this same
limitation. The City has elected not to follow subsequent private- sector guidance.
As a general rule the effect of interfund activity has been eliminated from the government -wide .
financial statements. Exceptions to this general rule are charges between the City's utility functions
and various other functions of the government. Elimination of these charges would distort the
direct costs and program revenues reported for the various' functions concerned.
Amounts reported as program revenues include: 1) charges to customers or applicants for goods,
services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as general
revenues rather than as program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non - operating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with proprietary funds' principal ongoing operations. The principal
operating revenues of the water, wastewater, refuse and irrigation enterprise funds and of the
government's internal service funds are charges to customers for sales and services. Operating
expenses for enterprise funds and internal service funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting
this definition are reported as non - operating revenues and expenses.
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When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
ASSETS, LIABILITIES AND EQUITIES
CASH AND INVESTMENTS
Cash and investments are managed under the guidance of the City's Investment Policy adopted by
Resolution No. R98 -07 of the City Council. The policy was based on the Model Investment Policy
prepared by the Association of Public Treasurers of the United States and Canada and applies to all
financial assets of the City of Yakima.
Investments are made using the "prudent person" standard with primary objectives being safety of
principal, liquidity enabling the City to meet all operating requirements and a return on investment
objective of attaining a market rate of return through budgetary and economic cycles.
Investments of City funds except those of the Firemen's Relief and Pension Fund are limited to:
> Investment deposits, including certificates of deposit with qualified public depositories as
defined in Chapter 39.58 Revised Code of Washington.
• Certificates, notes or bonds of the United States, or other obligations of the United States,
or its agencies, or of any corporation wholly owned by the government of the United
States (such as the Government National Mortgage Association). •
• Obligations of government- sponsored corporations which are eligible as collateral for
advances to member banks as determined by the Board of Governors of the Federal
Reserve System. (These include but are not limited to Federal Home Loan Bank notes
and bonds, Federal Farm Credit Bank consolidated notes and bonds; Federal National
Mortgage Association notes, debentures, and guaranteed certificates of participation).
• Bankers Acceptances and Commercial Paper purchased on the secondary market.
• Washington State Local Government Investment Pool.
• General obligation bonds of any state or local government in the United States and
revenue bonds from jurisdictions in Washington state having a. long -term credit rating of
no less than A3 as rated by Moody's or A- by Standard and Poor's.
➢ Repurchase and reverse repurchase agreements are excluded as eligible investments.
➢ Resources of the Firemen's Relief and Pension Fund may be invested in high quality
corporate bonds in addition to instruments listed above.
➢ The City purchases investments from SEC registered security broker- dealers and banks
having offices within Washington State.
The City's Treasury Services Officer, under the direction of the Director of Finance and Budget,
invests or deposits all temporary cash. These investments and time deposits do not result in
reductions to the cash balances of the various funds and are considered to be cash equivalents to
the funds under the definition promulgated in GASB Statement #31, which states that investments
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410
purchased within thirty days of maturity are considered to be cash equivalents. These amounts are
reported on the Combined Balance Sheet as part of "Cash and Cash Equivalents ."
RECEIVABLES
Taxes receivable consist of property and other taxes including related interest and penalties (See
Note 4 - Receivables). Accrued interest receivable consists of amounts earned on investments, notes,
and contracts as of year -end.
Special assessments are recorded when levied. Special assessments receivable consists of current
and delinquent assessments. Deferred assessments consist of unbilled special assessments that
are liens against the property benefited. As of December 31, 2007, $20,078 of special assessments
receivables were delinquent. Customer accounts receivable consist of amounts due from private
individuals or organizations for goods and services. Notes and contracts receivable consist of
amounts owed on open account from private individuals or organizations for goods and services
rendered. The major component of the notes receivable category is in the Community Development
fund and represents a revolving home ownership assistance program.
AMOUNTS DUE To AND FROM OTHER FUNDS; INTERFUND LOANS AND ADVANCES RECEIVABLE
These accounts include all interfund receivables and payables. A separate schedule of interfund loans
receivable and payable is furnished in Note 4 - Interfund Receivables. Long -term interfund loans are
separately identified as "Advances" — at December 31, 2007, there were no interfund advances.
AMOUNTS DUE To AND FROM OTHER GOVERNMENTAL UNITS
These accounts include amounts due to or from other governments for grants, entitlements,
temporary loans, taxes and charges for services, except amounts billed for utility usage which is
included in customer receivables.
I NVENTORIES
Inventories in governmental funds consist of expendable supplies held for consumption. The cost
is recorded as an expenditure at the time individual inventory items are purchased. The reserve for
inventory is equal to the ending amount of inventory to indicate that a portion of the fund balance i
is not available for future expenditure.
Inventories in the General Fund, Enterprise Funds and Internal Service Funds are valued at cost on
a moving average method.
RESTRICTED ASSETS AND LIABILITIES
These accounts contain resources for debt service reserve /redemption in the enterprise funds. The
current portion of related liabilities is shown as Payables from Restricted Assets. Specific debt
service reserve requirements are described in Note 7. .
The restricted assets of the enterprise funds are composed of the following:
Cash - Debt Service $2,722,150
CAPITAL ASSETS (SEE NOTE 4 - CAPITAL ASSETS)
Capital assets, which include property, plant, equipment, and infrastructure assets (i.e., roads, bridges, •
sidewalks, and similar items) are reported in the applicable governmental or business -type columns
in the government -wide financial statements. Capital assets are defined by the City as assets with an
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initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such
assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated
capital assets are recorded at estimated fair market value at the date of donation.
Infrastructure assets are long -lived assets that normally are stationary in nature and normally can be
preserved for a significantly greater number of years than most capital assets. Examples of infrastructure
include roads, bridges, drainage systems, water and wastewater systems, and lighting systems.
When capital assets are purchased, they are capitalized and depreciated in the government -
wide financial statements and the proprietary fund statements. Capital assets are recorded as
expenditures of the current period in the governmental fund financial statements.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets' lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of the capital assets of business -type activities is
included as part of the capitalized value of the assets constructed.
Property, plant, and equipment of the City is depreciated using the straight -line method over the
following estimated useful lives:
Buildings • 25 - 40 Years
Improvements Other than Buildings 7 - 50 Years
Utility Plant 33 - 50 Years
Equipment 2 - 25 Years
Intangibles (Organization Costs and Goodwill) 75 - 100 Years
Infrastructure 15 - 50 Years
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CUSTODIAL ACCOUNTS
These accounts reflect the liability for net monetary assets being held by the City in its trustee or
agency capacity.
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ACCRUED LIABILITIES
Other accrued liabilities include primarily interest payable on long -term debt, Public Works Trust
Loans and small miscellaneous payables not classified in other categories in Enterprise Funds.
DEFERRED REVENUES
This account includes amounts recognized as receivables but not as revenue in governmental funds
because the revenue recognition criteria has not been met. (See Note 1 - Measurement Focus)
NONCURRENT LIABILITIES
The contracts with employees call for the accumulation of vacation and sick leave. At termination
of employment, employees may receive cash payment for all accumulated vacation up to a certain
number of hours and a percentage of sick leave, depending on employee group. The payment is
based on current wage at termination.
The amounts of unpaid vacation and sick leave accumulated by City employees are accrued as
expenses when incurred in proprietary funds, which use the accrual basis of accounting. In
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the governmental funds, only the amounts that normally would be liquidated with expendable
available financial resources are accrued as current -year expenditures. The City uses the last -in,
first -out method of recognizing the hours used of compensated absences. Employees are charged
for the last day of vacation or sick leave earned when the leave is used. Thus, unless it is anticipated
that compensated absences will be used in excess of a normal year's accumulation, no additional
expenditures are accrued. Therefore, the entire unpaid liability for the governmental funds is a
reconciling item between the fund and government -wide presentations. For additional information
on long -term debt see Note 7.
FUND EQuln
Fund equity is recognized as fund balance in governmental fund types and as net assets in
proprietary fund types. Certain fund equity may be reserved for a specific future use or to denote
unavailability for current operations. Designations of fund balance represent tentative management
plans that are subject to change. Unless otherwise noted, fund balances and retained earnings
(deficits) are unreserved and undesignated.
NOTE 2 — RECONCILIATION OF GOV'T -WIDE & FUND FINANCIAL STATEMENTS
EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET
The governmental fund balance sheet includes a reconciliation between fund balance -total government
funds and net assets - governmental activities as reported in the government -wide statement of net
assets. One element of that reconciliation explains that "long -term liabilities, including bonds
payable, are not due and payable in the current period and, therefore, are not reported in the funds."
The details of this $33,881,796 difference are as follows:
Bonds Payable $20,83Z482
Intergovernmental Loans 1,686,538
Contractual Agreements — Yakima County 166,976
Special Assessments — Notes 370,700
Lease Purchase Agreements 287,346
Unfit Pension Liability 4,800,753
Compensated Absences - 5,732,001
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Net adjustments to reduce fund balance — total governmental
funds to arrive at net assets — governmental activities $33,881,796
EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENTS
The governmental . fund statement of revenues, expenditures, and changes in fund balances includes
a reconciliation between net changes in fund balances -total governmental funds and changes
in net assets of governmental activities as reported in the government -wide statement of activities.
One element of that reconciliation explains that "Governmental funds report capital outlays as
expenditures. However, in the statement of activities the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense." The details of this $4,666,797
difference are as follows:
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Capital Outlay $12,753,613
Depreciation Expense (8,086,816)
Net adjustment to increase net changes in fund balances —
total governmental funds to arrive at changes in net assets
of governmental activities $4,666,797
Another element of that reconciliation states that "The net effect of various miscellaneous
transactions involving capital assets (i.e., sales, trade -ins, and donations) is to increase net assets."
The details of this $5,094,597 difference are as follows:
In the statement of activities, only the gain on the sale of
capital assets is reported. However, in the governmental
funds, the proceeds from the sale increase financial
resources. Thus, the change in net assets differs from the
change in fund balance by the cost of the capital assets sold. ($70Z489)
Donations of capital assets increase net assets in the
statement of activities, but do not appear in the
governmental funds because they are not financial
• resources. 5,802,086
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net assets
of governmental activities $5,094,597
Another element of that reconciliation states that "The issuance of long -term debt (e.g., bonds, leases)
provides current financial resources to governmental funds, while the repayment of the principal
of long -term debt consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds report the effect of
issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these
amounts are deferred and amortized in the statement of activities." The details of this ($1,883,062)
difference are as follows:
Debt Issued or Incurred:
Issuance of General Obligation Bonds ($9,480,000)
Lease Purchase Agreements (38,293)
Principal Repayments:
General Obligation Debt • 6,682,615
Intergovernmental Loans 401,390
Contractual Agreement — Yakima County 157,524
Special Assessment Notes 193,800
Lease Purchase Agreements 199,902
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net assets
of governmental activities ($1,883,062)
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Another element of that reconciliation states that "Some expenses reported in the statement of
activities do not require the use of current financial resources and, therefore, are not reported as
expenditures in governmental funds." The details of this ($1,137,430) difference are as follows:
Compensated Absences ($597,555)
Change in Unfunded Pension Liability (491,012)
Change in Reserve for Inventory (9,919)
Accrued Interest Payable (38,944)
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net assets
of governmental activities ($1,137,430)
NOTE 3 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
BUDGETS AND BUDGETARY ACCOUNTING
SCOPE OF BUDGET
The City Council annually approves the City's operating budget. The operating budget is designed
to allocate annually available resources among the City's services and programs and to provide for
associated financing decisions.
Annual appropriated budgets are adopted on the modified accrual basis of accounting. For governmental
funds, there are no differences between budgetary basis and generally accepted accounting principles.
Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements
include budgetary comparisons for the General Fund and Special Revenue Funds only. Budgets for debt
service and capital projects are adopted at the level of the individual debt issue or project and for fiscal
periods that correspond to the lines of debt issues or projects. Budgetary comparisons for proprietary
funds, although not legally required, may be requested from the Department of Finance and Budget.
Annual appropriated budgets are adopted at the fund level. Subsidiary revenue and expenditure
ledgers are used to compare the budgeted amounts with actual revenues and expenditures. As a
management control device, the subsidiary ledgers monitor expenditures for individual functions
and activities by object class.
Appropriations for general and special revenue funds lapse at year-end. -
PROCEDURES FOR ADOPTING THE ORIGINAL BUDGET
The City's budget procedures are mandated by Washington State Law. The steps in the budget
process are as follows:
1. Prior to November 1, the City Manager submits a proposed budget to the City Council. This
budget is based on priorities established by the Council and estimates provided by City
departments during the preceding months and balanced with revenue estimates.
2. The Council conducts public hearings on the proposed budget in November to obtain
taxpayer comments.
3. During mid - December, the budget is legally enacted through passage of an ordinance.
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AMENDING THE BUDGET
The City Manager is authorized to transfer budgeted appropriations between departments within
any fund; however, any revisions that alter the total expenditures of a fund, or that affect the
number of permanently authorized employee positions, salary ranges, or other conditions of
employment must be approved by the City Council.
When the City Council determines that it is in the best interest of the City to increase or decrease
the appropriation for a particular fund, it may do so by an ordinance approved by a one more than
simple majority of those present after holding two public hearings.
The budget amounts shown in the financial statements represent the original adopted budget and
all supplemental appropriations. City -wide, supplemental appropriations totaled $13.4 million. The
principal four amendments were to re- appropriate 2006 outstanding encumbrances in the amount
of $2.6 million; the appropriation for the South Airport - Ahtanum Sewer extension in the amount
of $530,450; the appropriation due to the newly annexed Occidental area in the amount of $381,534;
and non - lapsing appropriations for various projects in capital funds (Arterial Street, Capital, Parks,
Water, Wastewater and Irrigation) in the amount of $7.3 million.
ENCUMBRANCES
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is
0 employed as an extension of formal budgetary integration in the governmental funds. Encumbrances
are reported as reservations of fund balances since they do not constitute expenditures- or liabilities.
The City reappropriates outstanding encumbrances in the subsequent year.
FUND EQUITY .
DEFICIT FUND EQUITIES
Temporary deficits of the Local Improvement Construction Fund arise because long -term financing
has not been issued. During the construction phase, the Local Improvement District issues
warrants, which accrue interest and are held as an investment internally, shown on the balance '
sheet as. Warrants Payable, resulting in a deficit fund balance. When the LID is completed, bonds or
notes are issued and the Warrants Outstanding are redeemed eliminating the deficit.
The Risk Management Reserve Internal Service fund had a deficit fund balance of $97,466 at
December 31, 2007. Even though the fund has approximately $1.2 million in assets, the claims
• manager's estimate of outstanding claims and judgments payable is over $1.3 million. The interfund
contribution charged to operating funds was increased by 10% in the 2007 budget which reduced
this deficit from $304,163 at December 31, 2006.
DESIGNATED FUND BALANCES
This category is used to set aside governmental fund balances when city management has plans
or tentative commitments to expend resources for certain purposes in future periods. Further
legal action will be required to authorize the actual expenditures. Special Revenue Funds have
a designated fund balance of $575,070 for the Capitol Theatre Reserve Fund for modifications to
III the Capitol Theatre. The Capital Project Funds have a designated fund balance of $1,044,551 for
replacement of equipment and other capital improvements.
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RESERVED FUND BALANCE IN PERMANENT FUNDS
The reserve of $555,681 in the Cemetery Trust Fund represents a portion of the amounts paid
for cemetery plots. Provisions of these sales require $120 of the sales price be held in trust and
that the income on the investment of these amounts be used to maintain the plots. The Reserve
for Endowments represents an endowment for cemetery beautification. The provisions of the
endowment stipulate that income from the endowment be used only for grounds improvements.
FIDUCIARY FUND NET ASSETS
The Firemen's Relief and Pension Fund has Net Assets held in Trust for Pension Benefits and other
purposes of $645,853, which represents the accumulated contributions made by the government
through property taxes (see Note 4) plus interest earnings and state fire insurance premium tax
proceeds.
NOTE 4 - DETAILED NOTES ON ALL FUNDS
DEPOSITS AND INVESTMENTS
In its 2005 Notes to the Financial Statements, the City of Yakima implemented GASB Statement
No. 40, Deposit and Investment Risk Disclosures - an amendment of GASB Statement No. 3, issued
in March, 2003. The provisions of this Statement are effective for financial statements for periods
beginning after June 15, 2004. This statement addresses common deposit and investment risks
related to credit risk,_ concentration of credit risk, interest rate risk, and foreign currency risk. As an
element of interest rate risk, this Statement requires certain disclosures of investments that have fair
values that are highly sensitive to changes in interest rates. The City holds no such investments as
of the Statement of Net Assets Date.
As required by state law, all deposits and investments of the City's funds are direct or indirect
obligations of the U.S. Government, high quality Municipal Bonds, Bankers' Acceptances, high
quality Commercial Paper or deposits with Washington State banks and savings and loan
institutions or the Washington State Local Government Investment Pool. Investments of trust funds
are not subject to the preceding limitations.
DEPOSITS
The City of Yakima maintains deposit relationships with several. Washington State commercial
banks and savings and loan institutions.
The Public Deposit Protection Commission of the State of Washington (PDPC) covers all deposits
not covered by the Federal Depository Insurance Corporation (FDIC). The PDPC is a statutory
authority established under RCW 39.58. It constitutes a multiple financial institution collateral pool
that insures public deposits. In such a pool, a group of financial institutions holding public funds •
pledge collateral to a common pool. The PDPC provides protection by maintaining strict standards
as to the amount of public deposits financial institutions can accept and by monitoring the financial
condition of all public depositaries and optimizing collateralization requirements. The City's agent
in the name of the City holds all deposits.
The City of Yakima had the following bank balances on hand on December 31, 2007:
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Banks and Savings and Loan Institutions $1,559,846
Petty Cash and Other Imprest Funds 14,355
Local Government Investment Pool (LGIP) 24,692,192
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. Total $26,266,393
CUSTODIAL CREDIT RISK: DEPOSITS — The custodial credit risk for deposits is the risk that, in the event of
a depository financial institution failure, the City's deposits with banks and savings and loan
associations may not be recovered. Because of the PDPC, the City's deposits are not subject to this risk.
The LGIP is an unrated 2a -7 like pool, as defined by GASB 31. Accordingly, participants' balances in
the LGIP are not subject to interest rate risk, as the weighted average maturity of the portfolio will
not exceed 90 days. Per GASB 40 guidelines, the balances are also not subject to custodial credit risk. •
The credit risk of the LGIP is limited as most investments are either obligations of the US government,
government sponsored enterprises, or insured demand deposit accounts and certificates of deposit
Investments or deposits held by the LGIP are all classified as category 1 risk level investments. They
are either insured or held by a third -party custody provider in the LGIP's name.
FOREIGN CURRENCY RISK: DEPOSITS — Foreign currency risk is the risk that changes in exchange rates will
adversely affect,the fair value of an investment or a deposit. The City of Yakima does not participate
in making deposits or investments that are exposed to this type of risk.
110 I NVESTMENTS •
As of December 31, 2007, the City of Yakima had the following investments:
• INVESTMENT PORTFOLIO •
CARRYING FAIR WEIGHTED AVERAGE .
INVESTMENT TYPES VALUE VALUE • MATURITY v
• Federal Agency Coupon Securities $7,175,015 $7,214,181 .571
Federal Agency Callable Securities 21,503,005 21,624,575 1.783
Treasury Securities 999,995 .1,000,120 .130 •
Municipal Securities 1,025,240 1,030,421 1.266 •
Local Assessment Notes 408,113 408,113 N/A -
Total Portfolio $31,111,368 $31,27Z410
Weighted Average Maturity .792
(1) Macaualy modified duration, which approximates Weighted Average Maturity, is used for this purpose.
Note: Investments are reported at Carrying Value on the Statement of Net Assets as the Weighted
Average Maturity of the portfolio is less than one year and the difference between Carrying Value
and Fair Value is considered immaterial.
INTEREST RATE RISK
In accordance with its adopted investment policy, the City manages its exposure to declines in fair
value due to rising interest by limiting the weighted average maturity of the portfolio as a
whole to not more than 2.5 years and has a five -year maximum investment limitation. Additionally,
the City does not use derivatives, pass- through obligations or other extremely interest rate sensitive
instruments in its portfolio. Weighted average maturity on callable securities is.calculated using the
final maturity date rather than the call date for conservatism.
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INVESTMENT MANAGEMENT
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FAIR/ CARRYING/ LESS THAN 2 - 5
INVESTMENT TYPES VALUE VALUE I YEAR YEARS
Federal Agency Coupon Securities $7,214,181 $7,175,015 $6,174,759 $1,000,256
• Federal Agency Callable Securities 21,624,575 21,503,005 16,003,005 5,500,000
Treasury Securities 1,000,120 999,995 999,995 0
Municipal Securities 1,030,421 1,025,240 528,167 497,073
Local Assessment Notes t' 408,113 408,113 0 408,113
Total Portfolio $31,277,410 $31,111,368 $23;705,926 $7,405,442
(1) Represents 10 -year LID Notes the City is holding. All other investments in this category are under five -year final maturity.
Callable securities are stated at their final maturity •
CREDIT. RISK
State law under RCW sections 35.39 and 39.59 limit investments that a Washington class 1 City
may hold to Direct and Indirect obligations of the US Government, high quality Municipal Bonds
of Washington State or Cities and Towns within the State, high quality General Obligation bonds
of another State or City and, by Washington Administrative Code permission, not in the RCW's,
Bankers Acceptances and high quality Commercial Paper, holding one of the 2 highest Credit
ratings issued by at least two nationally recognized rating agencies and the State Treasurer's Local
Government Investment Pool (LGIP.). The LGIP is a 2(a)7 like pool and investments in the pool are
reported at the share price of 100% of dollars invested. The City's own adopted Investment Policy 40 •
adheres to the RCW's and also allows for investment in high quality Commercial Paper, Banker's
Acceptances_and the LGIP (see Deposit Note for information on the LGIP).
. CUSTODIAL CREDIT RISK
The City's investment Policy does not include Repurchase, Reverse - Repurchase agreements or
securities lending as allowable investment activity; therefore, no custodial credit risk exists. All
investments are held in the City's name by a third party custodian through a Trust Agreement
and are considered Category 1 investments, with the exception of the LGIP (see Deposit note for
custodial risk details).
PROPERTY TAXES •
The County Treasurer acts as an agent t� collect property taxes levied within the county for all
taxing authorities. Collections are distributed after the end of each month, on the tenth day of the
following month.
PROPERTY TAX CALENDAR
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January 1 Taxes are levied and become an enforceable lien against properties.
February 14 Tax bills are mailed.
April 30 First of two equal installment payments is due.
May 31 Assessed value of property is established for next year's levy at 100- percent of market value.
October 31 Second installment is due.
During the year, property tax revenues are recognized when cash is collected. At year -end,
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property tax revenues are recognized for collections in the hands of the County Treasurer at
December 31st. No allowance for uncollectible taxes is established•because delinquent taxes are
considered fully collectable.
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The City is permitted by law to levy up to $3.60 per $1,000 of assessed valuation for general
government services, less a maximum levy of $.50/1,000 for the Library District, beginning in 2007.
This amount may be reduced for either of the following reasons: •
➢ The Washington State Constitution limits total regular property tax levies to one - percent
of assessed valuation or $10 per $1,000 of value. If the tax levies of all districts exceed this
amount, each is proportionately reduced until the total is at or below the one - percent limit.
Washington State law, RCW 84.55.010, limits the total dollar amount of regular property
taxes that may be levied annually to 101% of the highest levy in the three previous years
(excluding new construction, annexations and state assessed property.)
Special levies approved by the voters are not subject to the above limitations.
For 2007, the City's regular tax levy was $3.1165 per $1,000 on a total assessed valuation of
$4,586,923,853, for a total regular Levy of $14,294,963. Included in the City's regular levy is an
authorization to levy for the Firemen's Relief and Pension Fund (see Note 5). This levy is subject to
the same limitations as the levy for general government services. The Firemen's Relief and Pension
portion of the regular tax levy for 2007 was $.3349 per $1,000, or $1,536,367. Additionally, special
levies for G.O. Bond obligations totaled $294,000
• RECEIVABLES
Receivables as of year -end for the City's individual major funds, nonmajor, internal service and
agency funds in the aggregate, including applicable allowance for uncollectible accounts are shown
in the following chart.
ACCOUNTS RECEIVABLE
SPECIAL DUE FROM INTEREST &
TAXES ACCOUNTS ASMTS OTHER GVTS PENALTIES OTHER TOTAL
General Fund $4,327,048 $1,227,093 $0 $117,513 $217,503 $0 $5,889,157'
Com & Econ Development 0 5,301,953 0 93,035 0 0 5,394,988
Nonmajor Governmental 238,637 318,349 450,144 1,351,878 18,094 2,000 2,379,102
Transit 849,535 0 0 1,856,993 5,666 0 2,712,194
Refuse 0 256,975 0 0 0 0 256,975
Wastewater 0 1,710,516 0 0 1,428 9,750 1,721,694
Water 0 3,647 0 0 0 0 3,647
Irrigation 0 199,653 0 0 0 0 199,653
Internal Service Funds 0 641,749 0 0 91,795 0 733,544
Total $5,415,220 $9,659,935 $450,144 $3,419,419 $334,486 $11,750 $19,290,954
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Revenues of the Water, Wastewater, Refuse and Irrigation funds are reported net of uncollectible
amounts. Total uncollectible amounts related to revenues of the current period of approximately 1%
of billed revenue are as follows:
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Refuse $39,459
Wastewater 130,205
Water 63,171
Irrigation 24,824
Total $257,659
Governmental funds report deferred revenue in connection with receivables for revenues that are
not considered to be available to liquidate liabilities of the current period. Governmental funds also
defer revenue recognition in connection with resources that have been received, but not yet earned.
At the end of the current fiscal year, the various components of deferred revenue and unearned
revenue reported in the governmental funds were as follows:
. DEFERRED REVENUES
UNAVAILABLE
General Fund:
Court Receivables $1,212,580
WA St Office Public Defense 110,000
Miscellaneous 362 •
Community Economic Development 5,301,953
Special Revenue Funds:
Parks & Recreation - Pool / Field Rentals 19,278
Streets / Sidewalk Repairs 16,310
Arterial Street - Debt Service Assessment 19,786 ,
Cemetery - Lot Sales 14,390
Public Safety Comm - Site Lease 6,305
Parking & Bus Impr - Assessment Levied on Businesses 6,417
Front St Bus Imp - Assessment Levied on Businesses w /in the Boundaries 870
Debt Service Funds:
LID Fund - Special Assessments Not Yet Due 422,779
Capital Project Funds:
Parks & Recreation Capital - Private Contributions 10,871
Fire Capital - Fire Training Services 1,402
Total Deferred / Unearned Revenue for Governmental Funds • $7,143,303
INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
CLASSIFICATION OF INTERFUND TRANSACTIONS
Interfund transactions are classified as follows:
1. Transactions that would be treated as revenues, expenditures or expenses if they involved
external organizations, such as buying goods and services, are similarly treated when they
involve other funds of the City.
2. Transfers to support the operations of other funds are recorded as "Transfers" and classified
with "Other Financing Sources or Uses."
3. Contributions to the capital of enterprise or internal service funds (transfers between those
funds and the general capital assets account group), transfers to establish or reduce working
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capital in other funds, and transfers of remaining balances when funds are closed are
classified as transfers and reported as non - operating revenues.
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4. Loans between funds are classified as interfund loans receivable and payable or as advances
to and from other funds on the combined balance sheet depending on the time period for
which the loan was made. Interfund loans do not affect total fund equity, but advances to
other funds are offset by a reservation of fund equity. As of December 31, 2007, there were
no advances to /from any funds.
INTERFUND LOANS AND RECEIVABLES •
The following table depicts the temporary cash overdrafts in individual funds as of December 31,
2007 — caused by timing of cash flow related to grant reimbursements.
INTERFUND LOANS
DUE FROM DUE TO
OTHER FUNDS OTHER FUNDS •
General Fund $19,908 $0
• Special Revenue Funds:
Community Development 0 15,450
Trolley 0 4,458
Total $19,908 $19,908 .
INTERFUND TRANSFERS •
Interfund transfers represent subsidies and contributions provided to other funds with no
corresponding debt or promise to repay. General Fund transfers are primarily used to: 1) allocate
the portion of utility taxes that are designated to support Parks and Recreation and Law and Justice
Capital programs; 2) support the Public Safety dispatch operation with a portion of the telephone
tax; and 3) contribute to the Contingency Fund. The Internal Service transfer in represents capital
contributions from other funds to purchase new vehicle additions to the rolling stock fleet. Other
transfers generally represent debt service and capital project funding.
The following table depicts interfund operating transfer activity during 2007.
• OPERATING TRANSFERS
• TRANSFER IN
GENERAL NONMAJOR WASTE- INTERNAL
TRANSFER OUT FUND GOV'T WATER SERVICE TOTAL
General Fund $0 $2,157,216 $0 $38,106 $2,195,322
Nonmajor Governmental 40,000 2,883,258 0 545,831 3,469,089
Wastewater 0 42,516 0 0 42,516
Water Operating Fund 0 39,058 32,939 0 71,997
Irrigation 0 33,750 0 0 33,750
Total $40,000 $5,155,798 $32,929 $583,937 $5,812,674
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CAPITAL ASSETS
CAPITAL ASSET ACTIVITY .
BALANCE BALANCE
I /1/07 ADDITIONS ADJUSTMENTS DELETIONS 12/31/07
GOVERNMENTAL ACTIVITIES
Capital Assets (not being depreciated): •
Land (as restated) $9,862,947 $26,881 $1,087,411 ($165,207) $10,812,032
Construction in Progress 13,698,595 11,614,066 (6,870,004) 0 18,442,657
Total Capital Assets (not being depreciated) 23,561,542 11,640,947 (5,782,593) (165,207) 29,254,689
Capital Assets (being depreciated):
Buildings & Structures 48,059,928 324,274 952,634 (783,516) 48,553,320
Other Improvements 9,446,750 160,926 256,475 (9,010) 9,855,141
Equipment & Machinery Z673,922 654,346 0 (223,059) 8,105,209
Infrastructures (as restated) 181,304,198 5,775,205 4,573,484 0 191,652,887
Capitalized Leases 1,320,869 - 0 0 (53,249) 1,267,620
Total Capital Assets'(being depreciated): 247,805,667 6,914,751 5,782,593 (1,068,834) 259,434,177
Less Accumulated Depreciation for:
Buildings & Structures (13,181,842) (1,059,666) • 0 258,560 (13,982,948)
Other Improvements (3,547,330) (488,411) 2,132 9,010 (4,024,599) 1
Equipment & Machinery (4,753,942) (494,243) 0 205,662 (5,042,523)
Infrastructures (as restated) (119,125,734) (5,926,938) (2,132) 71 (125,054,733)
Capitalized Leases (566,091) (117,558) 0 53,249 (630,400)
Total Accumulated Depreciation (141,174,939) (8,086,816) 0 526,552 (148,735,203)
• Total Capital Assets (being depreciated net) 106,630,728 (1,172,065) 5,782,593 (542,282) 110,698,974
Govemmental Activities Capital Assets (net) 130,192,270 10,468,882 0 (707,489) 139,953,663
INTERNAL SERVICE FUNDS • .
Capital Assets (being depreciated):
Buildings 20,733 0 288 0 21,021
Other Improvements 4,020 0 56 0 • 4,076
Machinery 7,053,637 567,907 908,574 (531,718) 7,998,400
Total Capital Assets (being depreciated) 7,078,390 567,907 908,918 (531,718) 8,023,497
Less Accumulated Depreciation for:
Buildings (7,799) (1,192) (106) 0 (9,097)
Other Improvements (302) (204) (3) 0 (509)
Machinery (3,919,938) (525,381) (503,153) 493,061 (4,455,411)
Total Accumulated Depreciation (3,928,039) (526,777) (503,262) 493,061 (4,465,017)
Total Capital Assets (being depreciated net) 3,150,351 •41,130 405,656 (38,657) 3,558,480
Total Capital Assets - Governmental Activities $133,342,621 $10,510,012 $405,656 ($746,146) • $143,512,143
Continued on next page....
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BALANCE BALANCE
I /1/07 ADDITIONS ADJUSTMENTS DELETIONS 12/31/07
BUSINESS -TYPE ACTIVITIES
Capital Assets (not being depreciated): u .
Land $2,181,516 $0 $0 $0 $2,181,516
Construction in Progress 16,027,132 .12,321,443 (4,850,576) 0 23,497,999
• Total Capital Assets (not being depreciated) 18,208,648 12,321,443 • (4,850,576) 0 25,679,515
Capital Assets (being depreciated): '
Buildings & Structures 66,364,089 0 • 0 (4,063,541) 62,300,548
Other Improvements 90,432,431 1,853,523 4,813,066 (47Z785) 96,621,235
equipment & Machinery 16,014,140 19,498 37,510 (342,930) 15,728,218
Completed Construction - Not Classified 0 0 0 • 0 0
Intangibles 221,830 0 0 0 . 221,830 •
Total Capital Assets (being depreciated) • 173,032,490 1,873,021 4,850,576 (4,884,256) 174,871,831 .
Less Accumulated Depreciation for:
Buildings & Structures (39,111,294) (1,867,111) 0 • 3,883,319 (37,095,086)
Other Improvements (33,748,503) (2,246,405) 0 426,399 (35,568,509)
Equipment & Machinery (Z261,230) (945,295) 0 342,930 (7,863,595)
Intangibles (106,171) 0 0 0 (106,171) ..
Total Accumulated Depreciation (80,227,198) (5,058,811) 0 4,652,648 (80,633,361)
• Total Capital Assets (being depreciated net) 92,805,292 (3,185,790) 4,850,576 (231,608) 94,238,470
® Business-Type Activities Capital Assets (net) 111,013,940 9,135,653 0 (231,608) 119,917,985
INTERNAL SERVICE FUNDS .
Capital Assets Being Depreciated: •
Buildings 16,664 0 (288) 0 16,376 •
Other Improvements 3,231 • 0 (56) 0 3,175
• Machinery 10,950,010 709,260 (908,575) (661,130) 10,089,565
Total Capital Assets Being Depreciated • • 10,969,905 709,260 (908,919) (661,130) • 10,109,116
Less Accumulated Depreciation for: •
Buildings (6,265) (929) 107 0 (7,087)
Other Improvements (242) . (159) 4 0 (397)
• Machinery • (6,073,776) (661,847) 503,151 612,249 (5,620,223) •
Total Accumulated Depreciation (6,080,283) (662,935) 503,262 612,249 (5,627,707)
• Total Capital Assets (being depreciated net) 4,889,622 46,325 (405,657) (48,881) 4,481,409
Total Capital Assets - BusinessType Activities • $115,903,562 $9,181,978 ($405,657) ($280,489) $124,399,394
NOTE: The 2007 adjustment column represents (a) construction works in progress that were completed and classified into the appropriate capital
asset category, (b) minor reclassification corrections and (c) transfers of equipment between governmental and business -type activities.
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Depreciation expense was charged to functions /programs as follows:
GOVERNMENTAL ACTIVITIES
General Government $222,366
Security of Persons and Property 836,372
Physical Environment 11,876
Transportation 5,943,519
Economic Environment 75,005
Cultural and Recreational Environment 997,678
Capital assets held by the City's internal service
funds are charged to the various functions
based on their usage of the assets 526,777
Total Depreciation - Governmental Activities $8,613,593
BUSINESS -TYPE ACTIVITIES
Transit $822,440
Wastewater 3,030,658
Water 1,103,129
Irrigation 102,583
Capital assets held by the City's internal service
funds are charged to the various functions
based on their usage of the assets 662,935
Total Depreciation - Business Type Activities $5,721,745
COMMITMENTS
CONSTRUCTION COMMITMENTS
The City has active construction projects as of December 31, 2007 The projects include widening
and construction of existing streets; improvements to the Wastewater facility and collection
system, and the rebuilding of the Irrigation system.
CURRENT CONSTRUCTION PROJECTS
CONTRACT SPENT REMAINING
PROJECT AMOUNT TO DATE COMMITMENT
Street Construction $2,181,813 $119,116 _ $2,062,697
Wastewater Treatment Plant & Collection Sys 4,758,000 3,582,698 1,175,302
Total $6,939,813 $3,701,814 • $3,237,999
Street constructions are being financed by gas tax and federal, state or local grants. Wastewater
improvements are being financed by State Public Works Trust Fund loans and wastewater utility
revenues /capital reserves.
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NOTE 5 — PENSION PLANS
Substantially all City full -time and qualifying part -time employees participate in one of the
following statewide retirement systems administered by the. Washington State Department of
Retirement Systems, under cost - sharing multiple - employer public employee defined benefit
and defined contribution retirement plans. The Department of Retirement Systems (DRS), a
department within the primary government of the State of Washington, issues a publicly available
Comprehensive Annual Financial Report (CAFR) that includes financial statements and required
supplementary information for each plan. The DRS CAFR may be obtained by writing to:
Department of Retirement Systems
Communications Unit
P.O. Box 48380
Olympia, WA 98504 -8380
The following disclosures are made pursuant to GASB Statement 27, Accounting for Pensions by State
and Local Government Employers.
PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS) PLANS I, 2 & 3
PLAN 'DESCRIPTION
PERS is a cost - sharing multiple employer retirement system comprised of three separate plans for
membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan
with a defined contribution component.
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Membership in the system includes: elected officials; state employees; employees of the Supreme,
Appeals, and Superior courts (other than judges in a judicial retirement system); employees of
legislative committees; community and technical colleges, college and university employees not
participating in national higher education retirement programs; judges of district and municipal
courts; and employees of local governments.
PERS participants who joined the system by September 30, 1977, are Plan 1 members. Those who joined
on or after October 1, 1977 and by either, February 28, 2002, for state and higher education employees, or
August 31, 2002, for local government employees, are Plan 2 members unless they exercise an option to
transfer their membership to Plan 3. PERS participants joining the system on or after March 1, 2002, for
state and higher education employees, or September 1, 2002, for local government employees have the
irrevocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The option must be
exercised within ninety days of employment. An employee is reported in Plan 2 until a choice is made.
Employees who fail to choose within ninety days default to PERS Plan 3.
PERS defined benefit retirement benefits are financed from a combination of investment earnings
and employer and employee contributions. PERS retirement benefit provisions are established in
state statute and may be amended only by the State Legislature.
Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are
eligible for retirement at any age after thirty years of service, or at the age of sixty with five years of
service, or at the age of 55 with 25 years of service. The annual benefit is two - percent of the average
• final compensation per year of service, capped at sixty - percent. The average final compensation
is based on the greatest compensation during any 24 eligible con compensation months.
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Plan 1 retirements from inactive status prior to the age of 65 may receive actuarially reduced
benefits. The benefit is actuarially reduced to reflect the choice of a survivor option. A cost of
living allowance (COLA) is granted at age 66 based upon years of service times the COLA amount,
increased by three percent annually. Plan 1 members may also elect to receive an additional COLA
amount (indexed to the Seattle Consumer Price Index), capped at three percent annually. To offset
the cost of this annual adjustment, the benefit is reduced.
Plan members are vested after the completion of five years of eligible service. Plan 2 members
may retire at the age of 65 with five years of service, or at age 55 with twenty -years of service, with
an allowance of two- percent of the average final compensation per year of service. The average final
compensation is based on the greatest compensation during any eligible consecutive sixty -month
period. Plan 2 retirements prior to the age of 65 receive reduced benefits. If retirement is at age 55
or older with at least thirty -years of service, a three - percent per year reduction applies; otherwise
an actuarial reduction will apply. The benefit is also actuarially reduced to reflect the choice of a
survivor option. There is no cap on years of service credit; and a cost of living allowance is granted
(indexed to the Seattle Consumer Price Index), capped at three - percent annually.
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Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component,
and member contributions finance a defined contribution component. The defined benefit portion
provides a benefit calculated at one percent of the average final compensation per year of service. The
average final compensation is based on the greatest compensation during any eligible consecutive
60 -month period. Effective June 7, 2006, Plan 3 members are vested in the defined benefit portion
of their plan after ten years of service; or after five years of service, if twelve months of that service
are earned after age 44; or after five service credit years earned in PERS Plan 2 prior to June 1, 2003.
Plan 3 members are immediately vested in the defined contribution portion of their plan. Vested
Plan 3 members are eligible to retire with full benefits at age 65, or at age 55 with 10 years of service.
Retirements prior to the age of 65 receive reduced benefits. If retirement is at age 55 or older with at
least 30 years of service, a three percent per year reduction applies; otherwise an actuarial reduction
will apply. The benefit is also actuarially reduced to reflect the choice of a survivor option. There is no
cap on years of service credit, and Plan 3 provides the same cost -of- living allowance as Plan 2.
The defined contribution portion can be distributed in accordance with an option selected by the member,
either as a lump sum or pursuant to other options authorized by the Employee Retirement Benefits Board.
JUDICIAL BENEFIT MULTIPLIER
Beginning January 1, 2007 through December 31, 2007, judicial members of PERS may choose to
participate in the Judicial Benefit Multiplier (JBM) Program. Current justices or judges in PERS
Plan 1 and 2 may make a one -time irrevocable election to pay increased contributions that would
fund a retirement benefit with a 3.5 percent multiplier. The benefit would be capped at 75 percent
of average financial compensation. Judges in PERS Plan 3 can elect a 1.6 percent of pay per year of
service benefit, capped at 37.5 percent of average compensation.
Members who choose to participate in JBM will accrue service credit at the higher multiplier
beginning with the date of their election, pay higher contributions, stop contributing to the Judicial
Retirement Account (JRA), and be given the option to increase the multiplier on past judicial service.
Members who do not choose to participate will: continue to accrue service credit at the regular
multiplier; continue to participate in JRA, if applicable; never be a participant in the JBM Program;
and continue to pay contributions at the regular PERS rate.
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Justices and judges who are newly elected or appointed to judicial service and choose to become
PERS members on or after January 1, 2007, or who have not previously opted into PERS membership,
are required to participated in the JBM Program.
Justices and judges who are newly elected or appointed to judicial service will: return to prior PERS
Plan if membership had previously been established; be mandated into Plan 2 and not have a Plan
3 transfer choice, if a new PERS member; accrue the higher multiplier for all judicial service; not
contribute to JRA; and not have the option to increase the multiplier for past judicial service.
• There are 1,188 participating employers in PERS. Membership in PERS consisted of the following as
of the latest actuarial valuation date for the plans of September 30, 2006:
Retirees and beneficiaries receiving benefits • 70,201
Terminated plan members entitled to
but not yet receiving benefits 25,610
Active plan members vested 105,215
Active plan members nonvested 49,812
•
Total 250,838
•
FUNDING POLICY
Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates, Plan
2 employer and employee contribution rates, and Plan 3 employer contribution rates. Employee
•
contribution rates for Plan 1 are established by statute at 6 percent for state agencies and local
government unit employees, and at 7.5 percent for state government elected officials. The employer
•
- and employee contribution rates for Plan 2 and the employer contribution rate for Plan 3 are
developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of
Plan 3. All employers are required to contribute at the level established by the Legislature. Under
PERS Plan 3, employer contributions finance the defined benefit portion of the plait, and Plan 3
employee contribution rates. Six rate options are available ranging from 5 to 15 percent; two of the
options are graduated rates dependent on the employee's age. As a result of the implementation of
the Judicial Benefit Multiplier, Program in January 2007, a second tier of employer and employee rates
was developed to fund, along with investment earnings, the increased retirement benefits of those
justices and judges that participate in the program. The methods used to determine the contribution
requirements are established under state statute in accordance with chapters 41.40 and 41.45 RCW.
The required contribution rates expressed as a percentage of current year covered payroll, as of
December 31, 2007, were as follows:
MEMBERS NOT PARTICIPATING IN JBM
PERS PLAN 1 PERS PLAN 2 PERS PLAN 3
• Employe 6.13 % 6.13% 6.13 % (3)
Employee 6.00 %t'I 4.15 °0 (5)
(1) The employer rates include the employer administrative expense fee currently set at 0.16 %.
(2) The employer rate for state elected officials is 9.12% for Plan 1 and 6.13% for Plan 2 and Plan 3.
• (3) Plan 3 defined benefit portion only.
(4) The employee rate for state elected offidals is 7.50% for Plan 1 and 4.15% for Plan 2.
(5) Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member.
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•
' MEMBERS PARTICIPATING IN JBM
PERS PLAN 1 PERS PLAN 2 PERS PLAN 3
Employer -State Agencynl 8.63% 8.63% 8.63 %
Employer -Local Gov No 6.13% . 6.13% 6.13 %m _
Employee -State Agency 9.76% 7.88% 7.50%m
Employee -Local Gov't 12.26% 10.38% 7.50 %
(1) The employer rates include the employer administrative expense fee currently set at 0.16 %.
(2) Plan 3 defined benefit portion only.
(3) Minimum rate.
' I
Both the City and the employees made the required contributions. The City's required contributions
for the years ended December 31 were as follows:
•
CITY CONTRIBUTIONS •
PERS PLAN 1 PERS PLAN 2 PERS PLAN 3
2007 $133,956 $1,087,755 $171, 842 .
2006 83,761 569,572 82,908
2005 5Z836 345,207 48,343
LAW ENFORCEMENT OFFICERS' AND FIRE FIGHTERS' RETIREMENT SYSTEM (LEOFF) PLANS 1 AND 2
PLAN DESCRIPTION
LEOFF is a cost - sharing multiple- employer retirement system comprised of two separate defined
benefit plans. LEOFF participants who joined the system by September 30, 1977, are Plan 1
members. Those who joined on or•after October 1, 1977, are Plan 2 members. Membership in the
system includes all full -time, fully compensated, local law enforcement officers and firefighters.
LEOFF membership is comprised primarily of non -state employees, with Department of Fish and
Wildlife enforcement officers, who were first included prospectively effective July 27, 2003, being an
exception. In addition, effective July 24, 2005, current members of PERS who are emergency medical
technicians can elect to become members of LEOFF Plan 2.
Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established to provide governance of
LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending policy
changes to the Legislature for the LEOFF Plan 2 retirement plan.
LEOFF defined benefit retirement benefits are financed from a combination of investment earnings,
employer and employee contributions, and a special funding situation in which the state pays
through state legislative appropriations. LEOFF retirement benefit provisions are established in
state statute and may be amended by the State Legislature.
•
Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members
• are eligible for retirement with five years of service at the age of 50. The benefit per year of service
calculated as a percent of final average salary is as follows:
•
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11,
BENEFIT PERCENTAGE
TERM OF SERVICE PERCENT OF FINAL AVERAGE
Twenty or More Years 2.0%
Ten years, less than twenty years 1.5%
Five years, less than ten years 1.0%
The final average salary is the basic monthly 'salary received at the time of retirement, provided
a member has held the same position or rank for 12 months preceding the date of retirement.
Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years
of service. If membership was established in LEOFF after February 18, 1974, the service retirement
benefit is capped at 60 percent of final average salary. A cost -of- living allowance is granted (indexed
to the Seattle Consumer Price Index).
Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members
may retire at the age of 50 with 20 years of service, or at the age of 53 with five years of service,
with an allowance of two percent of the final average salary per year of service. The final average
salary is based on the highest consecutive 60 months. Plan 2 retirements prior to the age of 53
are actuarially reduced for each year that the benefit commences prior to age 53 and to reflect
the choice of a survivor option. If the member has at least 20 years of service and is age 50, the
reduction is three percent for each year prior to age 53. There is no cap on years of service credit
. 0 and a cost -of- living allowance is granted (indexed to the Seattle Consumer Price Index), capped at
three percent annually.
There are 383 participating employers in LEOFF. Membership in LEOFF consisted of the following
as of the latest actuarial valuation date for the plans of September 30, 2006:
Retirees and beneficiaries receiving benefits 8,951
Terminated plan members entitled to
but not yet receiving benefits 602
Active plan members vested 12,711
Active plan members nonvested 3,603
Total 25,867
FUNDING POLICY
Starting on July 1, 2000, Plan 1 employers and employees contribute zero percent as long as the plan
remains fully funded. Employer and employee contribution rates are developed by the Office of
the State Actuary to fully fund the plan. Plan 2 employers and employees are required to pay at
the level adopted by the LEOFF Plan 2 Retirement Board. All employers are required to contribute .
at the level required by state law. The Legislature, by means of a special funding arrangement,
appropriated money from the state General Fund to supplement the current service liability and
fund the prior service costs of Plan 2 in accordance with the requirements of the Pension Funding
Council and the LEOFF Plan 2 Retirement Board. However, this special funding situation is
not mandated by the state constitution and this funding requirement could be returned to the
employers by a change of statute.
• The required contribution rates expressed as a percentage of current year covered payroll, as of
December 31, 2007, were as follows:
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•
•
CONTRIBUTION RATES
LEOFF PLAN 1 LEOFF.PLAN 2 •
Employe/ 0.16% 5.35 %m
Employee 0.00% 8.64%
State N/A 3.45%
(1) The employer rates include the employer administrative expense fee currently set at 0.16%.
(2) The employer rate for ports and universities is 8.80 %.
Both the City and the employees made the required contributions. The City's required contributions
for the years ending December 31 were as follows:
CITY CONTRIBUTIONS
LEOFF PLAN 1 LEOFF PLAN 2 •
2007 $708 .$784,226
2006 1,086 672,425 •
2005 1,594 528,585
OTHER RETIREMENT SYSTEMS — VOLUNTEER FIREFIGHTERS' RELIEF AND PENSION FUND
The Volunteer Firefighters' Relief and Pension Fund System is a cost- sharing multiple- employer
retirement system which was created by the Legislature in 1945 under Chapter 41.16 RCW. It
.provides pension, disability and survivor benefits. Membership in the system requires service with
a fire department of an electing municipality of Washington State except those covered by LEOFF.
The system is funded through member contributions of $30 per year, employer contributions of $30
per year, forty - percent of the Fire Insurance Premium Tax, and earnings from the investment of
moneys by the Washington State Investment Board. However, members may elect to withdraw their .
contribution upon termination. .
FIREMEN'S PENSION
The City has a single employer, defined benefit pension plan for Firefighters employed prior
:.l
to March 1, 1970, and governed by Washington State Law RCW 41.26. Under the terms of the
governing law, the pension member is entitled to payment from the City's pension plan for those
benefits in excess of those calculated under the LEOFF plan.
The City's Firemen's PensionFund is a closed group. No new members are permitted. Employees
attaining the age of fifty who have completed 25 or more years of service . are entitled to annual
benefits of fifty - percent of their salary plus an additional two - percent for each year of service in
excess of 25 years -- up to a maximum of sixty - percent of salary. The pension plan also provides
death and disability pension benefits plus sick benefits for eligible active and retired employees.
If the employee terminates his employment with the Fire Department and is not eligible for any
other benefit under the Firemen's Pension, the employee is entitled to the following:
➢ Return of accumulated contributions less any benefits paid.
> When a Firefighter would have had 25 -years of service, two - percent of salary for each
•
year of service.
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i
Firefighters are no longer required to contribute to the Firemen's Pension. The City is required
to contribute the amount necessary to fund the Firemen's Pension, using the aggregate projected
benefit method. Under state law, partial funding of the Firemen's Pension Fund may be provided by
an annual tax levy of up to $.45 per $1,000 of assessed valuation of all taxable property of the City.
The Firemen's Pension Fund also receives a proportionate share of the 25 percent of the tax on fire
insurance premiums set aside by the state for all paid firemen in the state. Additional funding is
provided by investment interest earnings.
During the year ended December 31, 2007, there were no plan amendments.
CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE
The City's funding policy is to provide for periodic employer contributions at actuarially
determined rates that, expressed as percentages of annual covered payroll, are designed to
accumulate sufficient assets to pay benefits when due. The required contributions are determined
using an aggregate projected benefit funding method with the annual cost increasing six - percent
per year over the period ending December 31, 2012.
Under this method, the normal cost is a portion of the actuarial present value of benefits allocated to
a valuation year. The actuarial accrued liability is equal to the actuarial value of assets. (Thus, there
is no unfunded actuarial accrued liability under this method.)
.0 Significant actuarial assumptions used to compute contribution requirements were the same as
those used to compute the standardized measure of the pension benefit obligation.
•
POLICE PENSION
The City has a single employer, defined benefit pension plan for Police Officers employed prior to
March 1, 1970, and governed by Washington State Law RCW 41.20 and 41.26. Under the governing
law, the pension member is entitled to payment from the City's pension plan for those benefits in
excess of those calculated under the LEOFF plan. The City also covers four members who were
ineligible under the State Law Enforcement Officers and Firefighters (LEOFF) Program.
The City's Police Pension Fund is a closed group. No new members are permitted. Employees who
have completed 25 years or more of service are entitled to annual benefits of 50% of their salary plus
an additional 2% for each year of service in excess of 25 years — up to a maximum of 60% of salary.
The plan provides death and disability pension benefits plus sick benefits for eligible active and
retired employees.
If the employee terminates his employment with the Police Department and is not eligible for any
other benefit under the Police Pension, the employee is entitled to the following:
> Return of 75% of contributions made after June 8, 1955, less any benefits paid.
When Police Officer would have had 25 years of service, 2% of salary for each year of service.
Plan members are no longer required to contribute to the Police Pension. The City is operating on a
pay -as- you -go basis.
During the year ended December 31, 2007, there were no plan amendments.
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CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE
The Police Pension is a department within the General Fund. The City engaged Milliman U.S.A.,
Consultant & Actuaries, to perform the pension's actuarial study. They issued a valuation dated
January 1, 2003. The valuation provided actuarially determined rates to accumulate sufficient assets
to pay benefits when due rather than the current pay -as- you -go basis. The required contributions
are determined using an aggregate projected benefit method with the annual cost increasing six-
percent per year over the period ending December 31, 2012.
SUMMARY OF FIREMEN'S PENSION AND POLICE PENSION
SCHEDULE OF FUNDING PROGRESS
UNFUNDED
ACTUARIAL UAAL AS A
ACTUARIAL ACTUARIAL ACCRUED PERCENTAGE
VALUATION VALUE ACCRUED LIABILITIES FUNDED COVERED COVERED
DATE OF ASSETS LIABILITIES (UAAL) RATIO PAYROLL PAYROLL
Fire Pension 1/1/98 $69,599 $10,445,000 $10,375;401 0.67% $270,000 3842.74%
1/1/03 657,889 8,520,000 7,862,111 772% 0 0.00%
Police Pension 1/1/98 0 8,277,000 8,277,000 0.00% 264,000 3135.23%
1/1/03 0 8,154,000 8,154,000 0.00% 0 0.00%
NOTE 6 - SELF - INSURANCE FUNDS
The City maintains Reserve Funds to provide for self- insurance coverage in the areas of
Unemployment Compensation, Medical /Dental coverage, and Workers' Compensation. In addition,
the City maintains a Risk Management Fund to provide for property, liability, and other coverage.
UNEMPLOYMENT COMPENSATION
In 1978, the City of Yakima established an Unemployment Compensation Reserve Fund to provide
unemployment compensation coverage for its employees, and thereby elected to participate with the
State of Washington in a cost- reimbursement instead of monthly premium program. In doing so,
the City retained its right to appeal awards and determinations made by the State Department of
Employment Security.
•
The City has contracted with Talx Corporation UCeXpress to represent the City in appeal hearings
and to provide audits of state awards. -
The State of Washington invoices the City on a quarterly basis for reimbursement of claims which
represent payment of unemployment compensation and related administrative costs. Resources
accrue to the Unemployment Compensation Reserve Fund through monthly charges made to each
Operating Fund based on employee earnings. Normal accrual rates have been between .5 and
.75 percent of gross payroll, while costs under the monthly premium program would have been
approximately three- percent of payroll. The City has achieved considerable savings. Interfund
premiums are based primarily upon the insured funds claims experience and are reported as
quasi - external interfund transactions, a total for 2007 of $159,269. Incurred but not reported claims
of $26,376 have been accrued as a liability.
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SELF- INSURED MEDICAUDENTAL PROGRAM
The City, in August, 1979, self - insured its medical and dental programs for all eligible employees
(temporary employees and employees hired to work less than half -time are not eligible to participate
in the plan). The City's Human Resources Office administers the self- insured program and claims
payment services are provided by Healthcare Management Administrators, Inc.
•
Each Operating Fund is charged an accrual amount per covered employee which would otherwise
have been paid to an insurance carrier. These amounts are determined by the City based upon
recommendations made by Fisher Consulting. Factors considered by Fisher Consulting include
the amount of claims paid the previous year, increases over prior years, claims administration
costs, projected insurance industry inflation rates and the status of the Fund's Reserve. Interfund
premiums to the Employee Health Benefit Reserve Fund for 2007 were $6,712,844. Incurred but not
reported claims of $1,161,993 have been accrued as a liability.
In order to avoid catastrophic losses, the City reinsures the program by purchasing insurance known
as "stop -loss insurance." Two types of "stop- loss" insurance are purchased: 1) individual stop -loss;
and, 2) aggregate stop -loss, with both provided through Sunlife Insurance Co. Under the individual
stop -loss insurance, the City pays the first $150,000 of claims for an individual employee or dependent.
Any charges accrued by an individual in excess of $150,000 in a calendar year are thereafter reim-
bursed by Sunlife, up to a lifetime maximum benefit of $1 million per person. The aggregate stop -loss
is designed to protect the City from multiple large claims which may not reach the individual stop -loss
attachment point ($150,000). The aggregate stop -loss attachment point is calculated by determining
1111 the projected amount of claims for the year and adding an additional 25% of that amount (125% of
projected claims.) For 2008, the individual stop -loss was increased to $175,000.
WORKERS' COMPENSATION PROGRAM
• The City self- insured its workers' compensation program for all employees except those covered by
the LEOFF 1 Retirement System in July, 1984. This workers' compensation program provides cov-
erage identical to the state administered workers' compensation program; however, the City pays
only the direct injury- related costs and certain administrative fees. The program is administered
by the City's Human Resources Office with claims administration and safety services provided by
Nova Pro Risk Solutions (formerly Ward North America).
Each Operating Fund is charged an appropriate accrual amount, per employee, based on rate
requirements prescribed by the State of Washington. Each year the Reserve Fund is reviewed to
determine a contribution rate which provides for an appropriate reserve. Interfund premiums to
the Workers' Compensation Fund for 2007 were $1,054,278. Based on the claims manager's estimate,
the City has accrued incurred but not reported claims of $791,834 at December'31, 2007.
In order to avoid catastrophic losses, the City "reinsures" the program by purchasing insurance
known as "stop- loss" insurance. This insurance is provided through Wells Fargo Insurance
Services under a policy purchased from Employers Reinsurance Corporation. Under the individual
stop -loss coverage, the City pays the first $550,000 of a claim and the insurance company pays (a) the
balance up to $1 million for an individual claim or (b) the balance up to a maximum of $25 million
for multiple claims arising from a single incident.
• RISK MANAGEMENT PROGRAM
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; and natural disasters. The Risk Management Fund was established in
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1986 to account for its risk management program. Resources accrue to the fund through interfund
premiums to operating funds for appropriate insurance coverage and the replenishment and
building of reserves for potential liability claims. City contributions-to the Risk Management
Reserve Fund for 2007 were $2,101,439. The fund provides for administration, legal services, and
claims adjustment and for the purchase of property, general liability, and other insurance coverage.
Liabilities of the fund are reported when it is probable that a loss has occurred and the amount
of the loss can-be reasonably estimated. Liabilities include an amount for claims that has been
incurred but not reported. The result of the process to estimate the claims liability is not an exact
amount as it depends on many complex factors, such as inflation, changes in legal doctrines, •
and damage awards. Accordingly, claims are reevaluated periodically to consider recent claim
settlement trends, inflation, and other economic or social factors. The estimate of the claims
liability also includes amounts for incremental claim adjustment expenses related to specific claims.
Estimated recoveries, for example from subrogation, are another component of the claims liability
estimate. Based on these factors, the claims manager's estimate of claims liability at December 31,
2007, is $1,100,000.
The City of Yakima is an associate member of the Cities Insurance Association of Washington
(CIAW). Chapter 48.62 RCW authorizes the governing body of any one or more governmental
entities to form together into or join a pool or organization for the joint purchasing of insurance,
and /or joint self- insuring, and /or joint hiring or contracting for risk management services to the
same extent that they may individually purchase insurance, self- insure, or hire or contract for
risk management'services. An agreement to form a pooling arrangement was made pursuant to
the provisions of Chapter 39.34 RCW, the Interlocal Cooperation Act. The pool was formed on
September 1, 1988, when 32 cities in the State of Washington joined together by signing an Interlocal
Governmental Agreement to pool their self - insured Losses and jointly purchase insurance and
administrative services. Currently, the CIAW has approximately 300 members.
The pool allows members to jointly purchase insurance coverage and provide related services,
such as administration, risk management, claims administration, etc. Coverage for Public Officials
Liability is on a "claims made basis ". All other coverages are on an "occurrence basis ". The pool 1
provides the following forms of group purchased insurance coverage for its members: property,
general liability, law enforcement liability, automobile liability, employment practices liability, boiler = j
and machinery, bonds of various types, and public officials liability. The City of Yakima participates
in the liability coverages provided by the CIAW.
The pool acquires liability insurance from unrelated underwriters that are subject to a per
occurrence deductible of $100,000. Insurance carriers cover insured losses over $100,000 to the limits
of each policy. The pool also purchases a Stop Loss Policy in the amount of $5,500,000 to eliminate
any risk to members and funds the stop loss in the budget.
The pool is fully funded by its member participants. Claims are filed by members with Canfield &
Associates (CIAW), which has been contracted to perform pool administration, claims adjustment
and administration and loss prevention for the pool. Per CIAW, fees paid to the third party
administrator by all members under this arrangement for the years ended August 31, 2006 and 2007
was $1,153,031 and $1,242,382 respectively.
A overnin board is selected by the membership and is responsible for conducting the business
g g Y p P g
affairs of the pool. The Board of Directors has contracted. with Canfield & Associates to perform
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•
•
•
day -to -day administration of the pool. This pool has no employees. Copies of the pool's annual
report may be obtained by writing to 451 Diamond Drive, Ephrata, WA 98823.
Changes in the balance of claims liability during 2007 follows:
•
2007 2006
Unpaid Claims, January 1 - $1,100,000 $1,200,000
Incurred Claims (including incurred but not reported) 1,097,202 1,133,956
Claim Payments (including direct legal costs) (1,097,202) (1,233,956)
Unpaid Claims, December 31 $1,100,000 $1,100,000
NOTE 7 — LONG -TERM DEBT AND CAPITAL LEASES
The State law provides that debt cannot be incurred in excess of the following percentages of the
value of the taxable property of the City.
•
LEGAL DEBT PERCENTAGE
LIMIT CUMULATIVE
BY SECTION • LIMIT
410 I. General Purpose:
Without a Vote (includes capital leases) 1.50%
With a Vote 1.00% 2.50% 2.50%
I1. Utilities Purpose 2.50% 5.00%
III. Open Space and Parks Facilities 2.50% 7.50% •
Total Legal Limit • 7.50%
The basic percentages for Section I are the maximum levels of indebtedness those - sections may
incur.. However, utility or parks indebtedness may each exceed 2.50% and reduce the general
• indebtedness margin. The percentages are applied to the taxable assessed value (regular levies) of ,
$5,104,315,771 resulting in the debt limits, as of December 31, 2007, for the City as follows:
• DEBT LIMITS
WITHOUT A VOTE WITH A VOTE
• GENERAL GENERAL UTILITIES OPEN SPACE
PURPOSE 1.5 % PURPOSE 2.5% • 5.0% & PARKS 7.5%
Legal Limit / $76,564,737 $127,60Z895 $255,215,789 $382,823,685
Net Outstanding Indebtedness* 18,545,958 20,119,206 20,119,206 20,119,206
Margin Available $58,018,779 $107,488,689 $235,096,583 $362,704,479
" Indebtedness is the outstanding debt less cash, investments, and tax receivables available to redeem debt.
There have been no material violations of finance - related legal or contractual provisions in any
of the funds of the City. All bonded debt of the City is tax - exempt. We believe the City to be in
compliance with applicable IRS & SEC regulations.
410 The accompanying schedule of long -term debt provides a listing of the outstanding debt of the City
and summarizes the City's debt transactions for 2007.
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•
•
LONG -TERM LIABILITIES
AMOUNTS
BALANCE PAYMENTS/ BALANCE DUE WITHIN
1/1/2007 ADDITIONS RETIREMENTS 12/31/2007 ONE YEAR
GOVERNMENTAL ACTIVITIES
General Obligation Debt
Line of Credit $44,569 $500,000. $520,000 $24,569 $20,000
Bonds 17,995,528 8,980,000 6,162,615 20,812,913 1,734,861
Total General Obligation Debt: 18,040,097 9,480,000 6,682,615 20,837,482 1,754,861
.
Intergovernmental Loans 2,087,928 0 401,390 1,686,538 392,211
Contractual Agreement - Yakima County 324,500 0 157,524 166,976 109,570 .
Special Assessment - Notes 564,500 0 193,800 370,700 62,597
•
Lease Purchase Agreements 448,955 38,293 199,902 287,346 215,640 •
• Unfunded Pension Liability 4,309,741 491,012 0 4,800,753 0
Vacation /Sick Leave Accrual 5,134,446 597,555 0 5,732,001 0
Total Governmental Activities Long -term Debt $30,910,167 $10,606,860 $7,635,231 $33,881,796 $2,534,879
BUSINESS - TYPE ACTIVITIES
Revenue Debt Payable:
Revenue Bonds $26,450,000 $0 $1,788,683 $24,661,317 $1,750,000
Intergovernmental Loans 8,460,541 1,613,500 875,466 9,198,575 743,398
SIED Loans - Yakima County 75,207 0 12,726 62,481 13,379
Unamortized Debt Issue Cost /Prem /Disc /Def Amt 9,997 0 (28,338) 38,335 0
Total Revenue Debt Payable $34,995,745 $1,613,500 , $2,648,537 $33,960,708 $2,506,777
Total Long -term Debt $65,905,912 $12,220,360 $10,283,768 $67,842,504 $5,041,656
GENERAL OBLIGATION DEBT
General obligation bonds consist of serial and term bonds, to be retired through the fiscal year
ending December 31, 2026. The City levies a special property tax; collects motel /hotel taxes,
Business License fees, utility taxes, and receives State sales tax credits for the principal and interest
payments due within a fiscal year and provides the amounts in the respective Debt Service Fund. •
NEW MONEY AND REFUNDING GENERAL OBLIGATION DEBT
New Money Portion - In 2007 the City issued new money Limited Tax General Obligation Bonds.
The par amount of the new money portion of the bonds totaled $4,070,000, and funded three
projects: modifications to the City's infrastructure in the amount of $1,765,000, maturing in May,
2017, having an approximate annual average debt service of $220,000, and intended to be paid from
Gas Tax; $1,490,000 maturing in May, 2022, to fund Phase II of the Downtown Futures Initiative,
with approximate average annual debt service of $135,000, and intended to be paid from Real Estate
Excise Tax II; and $815,000 to pay a portion of the costs associated with the upgrade of a fire station
acquired by the City in an annexation. These bonds mature in May, 2022, have an approximate
average annual debt service of $74,000 and are intended to be paid from Real.Estate Excise Tax.
The total interest rate on the new money and refunding bonds, including underwriting, legal and
insurance costs was 4.17 %.
Refunding Portion - The City issued $4,910,000 of Limited Tax General Obligation refunding bonds
10
to provide resources to purchase US Government and State and Local Government Series securities
Washington State Auditor's Office
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•
•
that were placed in an irrevocable trust for the purposes of generating resources for all future
- debt service on $4,745,000 of refunded debt. As a result, the refunded bonds are considered to be
defeased and the liability removed from the governmental activities column of the statement of net
assets. The advanced refunding was undertaken to reduce total debt service payments over the
next 19 years by. $256,258 and resulted in an economic gain of $166,372.
•
GENERAL OBLIGATION BONDS
• AVERAGE
DATE OF ANNUAL
FINAL INTEREST ORIGINAL OUTSTANDING DEBT
• MATURITY RATE ISSUE 12/31/07 SERVICE
Special Property Tax Levy:
2004 Fire Improvement Bonds Ref 1995 12/01/2014 2.0% - 3.5% $2,300,000 $1,780,000 290,609
Regular Property Tax Levy: .
G.O. Line of Credit - Chesterley Pk Parking Lot 12/19/2008 Variable 104,569 24,569 24,569
2005 Parks Capital Projects 12/01/2015 4.0% - 4.5% 755,000 630,000 94,691
Total Regular Property Tax Levy 859,569 654,569
Reg Prop Tax Levy /Real Estate Excise Tax /Gas Tax:
1998 Street Overlay Program Bonds 06/01/2008 4.0 % -4.5% 1,430,000 $175,000 178,938 •
2007 River Road Street Project Bond 05/01/2017 4.0% -5.0% 1,765,000 .1,765,000 219,618
2007 Fire Station West Valley Rehab Bond 4.0 % -5.0% 815,000 815;000 73,341
2007 Downtown Revitalization Project Bond 05/01/2022 4.0 % -4.5% 1,490,000 1,490,000 13335
Total Reg Prop Tax Levy /Real Estate Excise Tax /Gas Tax 5,500,000 4,245,000
Motel /Hotel Tax: .
2004 Cony Center Expansion Bonds Ref 1996 11/01/2019 2.0% - 4.2% 4,175,000 4,000,000 421,820
Public Facilities District (State Sales Tax Credit):
2002 Convention Ctr Addition 06/01/2026 3.0% -5.0% 6,735,000 1,085,000 240,835
2007 Convention Ctr Addition Refunding 2002 05/01/2026 4.0 % -5.0% 4,910,000 4,910,000 394,163
Total Public Facilities District 11,645,000 5,995,000
Business Licenses & Real Estate Excise Tax:
2003 Sundome Expansion 12/01/2023 2.34 % - 4.72% 1,430,528 1,362,913 144,046
Utility Tax:
2003 Criminal Justice /I -82 Bonds ref 1994 12/01/2013 4.35 % - 5.25% 4,155,000 2,800,000 515,473
$30,065,097 $20,837,482
REVENUE BONDS •
Water /Wastewater /Irrigation revenue bonds consist of serial and term bonds,.to be retired through
the fiscal year ending December 31, 2034, with the exception of the Apple Tree Bond which will
mature September 1; 2041. The Apple Tree Bonds are subordinated debentures and the City shall
have no obligation to make any payment into this Apple Tree Bond from any source other than the
Ahtanum connection charges. If the bonds are not fully retired by 2041, the system's obligation to
pay dissolves. The Apple Tree Bonds are not parity bonds. The Apple Tree Bonds do not have a
lien on System Revenue beyond connection charges from inside the project area. The principal and
interest for the water /wastewater parity revenue bonds are provided by the results of operations.
Principal and interest on Irrigation System Bonds are provided by capital rates. •
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UTILITY REVENUE BONDS
• AVERAGE
• DATE OF ANNUAL
FINAL INTEREST ORIGINAL OUTSTANDING DEBT
MATURITY RATE ISSUE • 12/31/2007 SERVICE
1996 Water /Wastewater Revenue Bonds -
(Refund of 1978 Issue) 12/01/08 4.0 % -5.2% $3,320,000 $350,000 $368,200
1998 Water /Wastewater Revenue Bonds
(Refund of 1991 Issue) 9/01/11 4.0% -4.3% 4,715,000 1,970,000 546,948
1998 Water Revenue Bonds 9/01/18 4.0°f0- 5.0 °!° 3,195,000 2,070,000 242,806
2001 Apple Tree Bond 6/01/41 6.00% 600,000 506,317 N/A •
2003 Wastewater Revenue Bonds 11/01/23 • 2.0 % -5.0% 17,545,000 14,855,000 1,347,270
2005 Irrigation Revenue Bonds 9/01/34 2.0% - 4.8% 5,215,000 4,910,000 320,155
$34,590,000 $24,661,317
• The following Schedule sets forth revenue debt service requirements to maturity (in thousands) and
depicts both bond and intergovernmental loans and contracts.
REVENUE DEBT SERVICE •
BONDED NOTES AND
DEBT INTEREST CONTRACTS INTEREST
2008 $1,750 $1,073 $875 $60
2009 1,455 1,003 819 52 •
2010 1,505 952 792 46
2011 1,560 898 792 40
2012 • 1,075 838 792 33
2013 - 2017 6,060 3,489 2,497 91
2018 - 2022 6,595 1,985 1,642 38
2023 - 2027 2,290 659 530 4
2028 - 2032 1,270 331 0 0
2033 - 2034 595 44 0 0
$24,155 $11,272 $8,739 $364
At December. 31, 2007, the City had $2,722,150 in reserved net assets for debt service for the
enterprise funds. These represent reserve requirements as contained in the various indentures. . •
•
INTERGOVERNMENTAL LOANS AND CONTRACTUAL AGREEMENTS
The City participated in a program administered by the State's Department of Community
Development on behalf of the Public Works Board. The program provides financial assistance for
general government activities, such as street / bridge improvements, or proprietary activities, such
as water or sewage projects. The City has 20 loans through the Washington State Loan Programs as
described in the following chart.
•
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PUBLIC WORKS TRUST FUND LOANS
•
•
MATURITY MAXIMUM OUTSTANDING
INTEREST DATE AUTHORIZED 12/31/2007
REAL ESTATE TRANSFER TAX
• PW -5 -89- 962 -0056
Resignalization and Lighting 1% 07/01/2009 $765,000 $84,302
•
PW -5 -89- 962 -0057
Fruitvale Canal Wasteway Piping 3% 07/01/2009 174,879 12,754
PW -5 -91- 280 -071 •
Fruitvale Canal Wasteway 3% 07/01/2011 1,188,000 242,675
ARTERIAL STREET GAS TAX
PW -5 -90- 280 -050
Tieton Drive, 5th Ave. to 16th Ave. 3% 07/01/2010 803,157 95,268
PW -5 -91- 280 -070
N. 1st Avenue, Yakima Ave. to "I" St. 1% 07/01/2011 1,155,000 • 199,884
PW -5 -95- 791 -052 .
Fair Avenue Improvements 1% 07/01/2015 1,000,000 426,006
PW -00- 691 -062
Downtown Yakima Rehab Project 1% 06/10/2010 1,180,000 378,142
GENERAL FUND SALES TAX
CERB Loan #C95 -107
.Utilities- Madison Ave. & 8th,
"J" St. & 8th 6% 07/01/2016 425,448 247,507
• Sub Total — General Long -term Debt $1,686,538
•
WASTEWATER OPERATING REVENUE
PW -88- 962 -54
Treatment Plant Rehabilitation • 1% 07/01/2008 945,000 55,579
PW -5 -92- 280 -046
Wastewater Collection System Impr. 1% 07/01/2012 1,120,000 308,655
PW -5 -93- 280 -054
Wastewater Facility Rehabilitation 1% 07/01/2013 3,221,708 1,023,033
PW -5 -94- 784 -049
Wastewater Collection System Impr. 1% 07/01/2014 1,481,000 286,293
PW -5 -95- 791 -053
Headwork /Digester Rehabilitation 1% 07/01/2015 3,030,558 1,306,996
PW -5 -95- 791 -054
Wastewater Impr. King St Collector 1% 07/0I/2015 209,367 93,481
PW -01- 691 -071
Fruitvale Neighborhood
•
Wastewater -Water Project Phase I .5% 07/01/2021 1,466,250 1,086,750
PW -05- 691 -064
Fruitvale Neighborhood
Wastewater -Water Project Phase II .5% 07/01/2025 2,30Z000 1,529,905
PW -07- 962 -019
Ultra Violet Disinfection .5% 07/01/2027 2,300,000 460,000
•
•
WATER OPERATING REVENUE
PW -5 -89- 962 -0058 -
Domestic Well and Pump house 3% 07/01/2009 495,000 54,547
PW -03 -027
Naches River Water Trtmnt Plant Impr • .5% 07/01/2023 2,694,500 2,155,600
SRF -04 -65104 -037
Naches River Water Trtmnt Filter Rehab .5% 10/01/2025 966,772 837,735
Sub Total — Revenue Debt • 9,198,574
Total Intergovernmental Loans $10,885,112
•
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•
•
The Public Works Trust Fund loans have a term not to exceed twenty years and require 1 /19th of the
original principal plus interest to be paid each July 1st. These are subordinate to utility systems'
parity debt and do not require a full -faith and credit pledge.
The City has entered into contractual agreements with Yakima County for the financing of an
agricultural trade and convention facility, the SunDome, and Supporting Investments in Economic
Development (SIED) Loans for several different projects, the detail of which follows.
CONTRACTUAL AGREEMENTS
OUTSTANDING
FUNDING SOURCE / USE ISSUE DATE MATURITY DATE ORIGINAL ISSUE 12/31/2007
Real Estate Excise Taxes /Business Licenses 1989 Issue 11/1/2008 781,518 $65,046
Sundome (City of Yakima's share)
Contracted Assessment 2001 Issue 06/1/2011 44,000 19,786
Public Infrastructure Impr - Cascade
Hotel /Motel Tax 2003 Issue 06/1/2010 75,000 32,142
Visitor's Center Information Project
Contracted Assessment 2005 Issue 06/01/2010 25,000 15,729
Washington Ave Sewer Main
Contracted Assessment 2006 Issue 06/01/2011 50,000 46,752
Public Infrastructure Impr -Nob Hill Ave
Contracted Assessment 2006 Issue 06/01/2012 64,500 50,000
•
Yakima Airport Water Improvements
$1,920,018 $229,455
The following schedule sets forth the general obligation debt and intergovernmental loans and
contracts, debt service requirements including interest, to maturity (in thousands).
GENERAL OBLIGATION DEBT SERVICE
BONDED NOTES AND
DEBT INTEREST CONTRACTS INTEREST
2008 $1,735 $744 $392 $35
2009 1,644 710 393 28
2010 1,698 667 346 20
2011 1,747 616 190 14
2012 1,802. 564 80 10
2013 -2017 6,697 2,009 285 20 •
2018 -2022 3,757 1,072 0 0
2023 -2026 1,733 234 0 0
$20,813 $6,616 $1,686 $127 •
At December 31, 2007, the City had $780,438 available in debt service funds to service the General
Obligation Bonds and notes.
There are a number of other limitations and restrictions contained in the various bond indentures.
The City is in compliance with all significant limitations and restrictions.
SPECIAL ASSESSMENT DEBT WITH GOVERNMENTAL COMMITMENT
Debt service requirements for special assessment notes are met by assessments levied against property
•
owners. The special assessment debt are notes that are due as moneys become available from payments
on individual assessments. Special assessment debts currently outstanding are as follows:
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LID #1055; 02/10/07 Wastewater
Alpine Court Installment Note; 9.25% Interest $9,000
LID #1056; 10/01/07 Wastewater
South 70th Avenue & Lindgren Dr Installment Note; 9.25% Interest 140,900
LID #1057; 06/05/10 Wastewater
North 85th Avenue Wastewater Installment Note; 10.75% Interest 105,600
LID #1058; 12/17/02 Wastewater
South 7th, 8th, & 9th Avenue Installment Note, 8.75% Interest 115,200
Total $370,700
Debt service requirements for special assessment notes /bonds are met by assessments levied
against property owners. Pursuant to RCW 35.54, the City maintains a Local Improvement
Guarantee Fund for the purpose of guaranteeing, to the extent of the fund, the payments of its LID
bonds. The fund balance at December 31, 2007, of the LID Guarantee' Fund totaled $79,682.
LEASE PURCHASE AGREEMENTS
GENERAL CAPITAL ASSETS
As part of the City's capital equipment budgeting program, selected items are obtained via lease
purchase and municipal lease / deferred purchase plans. Since the leases are financing agreements
• which transfer ownership to the City at the end of the lease term, the City records the present
value of future lease payments as a capital outlay expenditure and as an offset to other financial
sources in the year that the asset is received. The present value of payments due in future periods is
shown as a liability in the financial statements and the cost of the asset is recorded in the financial
statements. A summary of the leased equipment is detailed below:
Police In -Car Video System $104,068
Printer /Copier 24,789
Mobile Wireless Data Network 102,977 .
Printer /Copier - 20,219
Chevrolet Trucks 35,294
Total $287,347
The following is a schedule of the future minimum lease payments under the above capital lease
and the present value of net minimum lease payments at December 31, 2007, for the fiscal year listed:
2008 $223,162
2009 63,096
2010 10,286
Less: Amount Representing Interest (9,197)
Present Value of Net Minimum Lease Payments $287,347
• UNFUNDED PENSION LIABILITIES
The City maintains two single employer defined benefit pension plans, Firemen's Pension and Police
Pension, which are closed systems covering Firemen and Police Officers hired prior to March 1,1970. Both
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plans had their first annual actuarial valuation as of March 31,1989. The required contributions identified
in this and subsequent studies were the basis for recording the unfunded pension liability since 1989, with
the most recent study performed as of January 1, 2003.
The Police Pension is a department in the General Fund and is operating on a pay -as- you -go basis.
The unfunded pension liability will be adjusted annually by comparing actual expenditures for
pension benefits to the actuarially determined contribution. The City intends to maintain this plan
on a pay -as- you -go basis. The liability incurred is $491,012 in 2007 and the outstanding balance at
December 31, 2007, is $4,800,754.
The Firemen's Pension is.a trust fund and has as its funding sources a portion of local property
taxes, a state tax on fire insurance premiums, and interest income. This fund has an unfunded
pension liability of $1,453,254 at December 31, 2007.
See Note 5 for additional information on the pension funds.
NOTE 8 — CONTINGENCIES
The City participates in a number of federal and state assisted programs. These grants are
subject to audit by the grantors or their representatives. Such audits could result in requests for
reimbursement to grantor agencies for expenditures disallowed under the terms of the grants. City
management believes that such disallowances, if any, will be immaterial.
SECTION 108 LOAN PROGRAM
In 2003, the City was authorized to administer a Housing and Urban Development (HUD) Section
108 Loan program. HUD has authorized the City to lend up to a maximum of $6.945 million in two
separate loan pools ($4 million in 2003 and $2.945 million in 2006). These federal loans are available for
the purpose of funding property rehabilitation for economic development activities that will create new
jobs within the target area. As of December 31, 2007, the City has approved all its authorized maximum
Section 108 loans of $6.945 million. The nature of this program is the City approves qualified
for the loan within HUD guidelines and acts as a conduit for HUD funds. The loan proceeds flow
directly to the ultimate Corporate Borrower. Payments flow from the Corporate Borrower to the City's
Custodian and then to. HUD. The loans are on an amortization schedule from 10 years to 25 years. The
HUD contract specifically provides that the loans are not full faith and credit obligations of the City,
but instead, future Community Development Block Grant (CDBG) allocations are pledged on these
loans. The City has entered into agreements to collateralize their position within HUD underwriting
guidelines. In 2005, one of the loans was defeased. Additionally, the City has been awarded a $1 million
Economic Development Initiative (EDI) grant from HUD as a protection in case of a default. As of
December 31, 2007, all of the loans were current. (The EDI grant can be utilized for past due payments).
POTENTIAL LITIGATION
On February 15, 2005, Congdon Orchards, Inc. and Congdon Development Company, LLC
(Congdon) filed a damage claim with the City alleging Congdon has been wrongfully damaged by
Yakima's breaches of contract, negligence, tortious conduct, breaches of duties, errors and omissions,
and other wrongful conduct. Congdon alleged its damages exceeded $21 million . and continue. The
City entered into letter agreements extending a 2005 tolling agreement, and the tolling agreement
will now expire on October 1, 2009. Congdon has not filed a lawsuit, and it is not known whether it
will do so. The City believes the chances of recovery are low.
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• ..
Because of its activities, the-City is subject to certain pending legal actions which arise in the
ordinary course of business. The City believes, based on the information presently known, that the
ultimate liability for any such legal actions will not be material to the financial position of the City.
NOTE 9 - SEGMENT INFORMATION
WATER AND WASTEWATER UTILITIES •
For the purposes of revenue bond debt issuance, the water and wastewater utilities are combined
in a single segment (i.e., the System). Therefore, investors in the revenue bonds rely on the
revenue generated by both activities for repayment. In 2004, the City issued the first $5 million
of $10 million revenue bonds authorized for the Irrigation system. The balance will be issued -
in 2009 or 2010. Investors in these revenue bonds rely solely on the revenue generated from the
irrigation utility for repayment. Summary financial information for the System and irrigation
utility follows.
SYSTEM INFORMATION
• WATER / •
WASTEWATER IRRIGATION TOTAL-
CONDENSED STATEMENT OF NET ASSETS
Assets:
S Current Assets $11,121,852 $5,698,145 $16,819,997
Restricted Assets 2,686,715 35,435 2,722,150
Capital Assets 100,160,658 10,117,747 110,278,405 •
Total Assets 113,969,225 15,851,327 129,820,552 •
•
Liabilities:
•
Current Liabilities 4,691,208 $1,050,670 5,741,878
Noncurrent Liabilities 26,774,033 4,679,899 31,453,932
Total Liabilities 31,465,241 5,730,569 37,195,810
Net Assets:
Invested in Capital Assets, Net of Related Debt 75,482,901 $5,725,393 81,208,294 •
•
Restricted 2,686,715 35,435 2,722,150
Unrestricted 4,334,368 4,359,930 8,694,298
Total Net Assets $82,503,984 $10,120,758 $92,624,742
CONDENSED STATEMENT OF REVENUES, EXPENSES,
AND CHANGES IN NET ASSETS
Operating Revenues: •
Charges for Services $20,730,698 $2,482,386 $23,213,084
Other Operating. Revenues • 62,488 3,767 66,255
Total Operating Revenues 20,793,186 2,486,153 23,279,339
Operating Expenses:
Operations and Maintenance 15,062,510 1,349,801 16,412,311
Depreciation 4,133,787 102,583 4,236,370
Total Operating Expenses 19,196,297 1,452,384 20,648,681
•
41 Operating Income (Loss) 1,596,889 1,033,769 2,630,658
Continued next page....
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Non- Operating Revenues (Expenses);
Miscellaneous Interest (Net) (430,685) (2,374) (433,059)
Other Non - Operating (Net) 171,561 0 171,561
Total Non - Operating Revenues (Expenses) (259,124) . (2,374) (261,498)
Income (Loss) Before Contributions and Transfers 1,337765 1,031,395 2,369,160
Capital Contributions 2,789,449 0 2,789,449
Operating Transfers (Net) (81,574) (33,750) (115,324)
Change in Net Assets 4,045,640 997,645 5,043,285
Total Net Assets - January 1 78,458,344 9,123,113 87581,457
Total Net Assets - December 31 $82,503,984 . $10,120,758 $92,624,742
CONDENSED STATEMENT OF CASH FLOWS
Net cash Provided (Used) by:
Operating Activities $5,686,990 $1,128,971 $6,815,961
• Capital and Related Financing Activities (10,552,528) (2,157760) (12,710,288) 1
Investing Activities (1,762,776) (1,890,868) (3,653,644)
Net Increase (Decrease) (6,628,314) (2,919,657) (9,547,971)
Beginning Cash and Cash Equivalents $10,400,758 $3,453,584 $13,854,342 1
Ending Cash and Cash Equivalents $3,772,444 $533,927 $4,306,371 0
NOTE 10 — JOINT VENTURES
YAKIMA AIR TERMINAL
The City and the County of Yakima entered into a joint venture for operation of the Yakima Air
Terminal on July 1, 1982. The Yakima Air Terminal Board is comprised of five individuals: two •
appointed by the City, two by the County, and one selected by the four appointees. Annually,
the governing bodies of the City and County each designate one of its members as an advisory
ex- officio member of the Air Terminal Board.
The City and the County contribute equally to the joint venture and own jointly, in equal shares, all
properties or facilities; however, annual profits and losses are retained by the Airport. The Yakima
Air Terminal is presently self - sustaining. We have considered disclosure requirements promulgated
in GASB 39 and have elected to continue to disclose the joint venture in a manner consistent with
prior years. We feel the effects of the joint venture on the combined Financial statements taken as a
whole is immaterial.
The Air Terminal budget is approved, amended and /or supplemented by joint resolution of the
City and County. Real property acquisition and sale in excess of $50,000 must be approved by both
the City and County. Issuance of bonds for'Airport purposes by the City or County requires both
party's approval. Unaudited key financial data for the year ended December 31, 2007, is as follows:
0
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YAKIMA AIR TERMINAL FINANCIAL DATA
Assets:
Current Assets $761,556 •
Property, Plant and Equipment, Net 7,878,527
Intangible Assets, Net 123,146
Construction in Progress 541,941
Total Assets 9,305,170
Liabilities:
Current Liabilities 123,106
Other Liabilities - Long -term Debt 38,841
Total Liabilities 161,947
Net Assets:
Restricted Net Assets 8,500,547
Unrestricted Net Assets 642,676
•
Total Net Assets $9,143,223
REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
Operating Revenues $1,024,743
Operating Expenses:
Operations /Maintenance 1,004,666
Depreciation 955,765
Total Operating Expenses
• 1,960,431
Total Operating Income (Loss) ($935,688)
Non - operating Revenues (Expenses):
Miscellaneous Interest Revenue • $20,500
Operating Subsidies. 334,987
Other • 213,823
Total Non - operating Revenues (Expenses) 569,310
Total Net Income (Loss) ($366,378)
Total Net Assets, January 1 $9,509,603
Total Net Assets, December 31 $9,143,225
•
Complete financial statements for the Airport can be obtained from the Yakima Air Terminal at
2400 West Washington Avenue, Yakima, WA, 98903.
NOTE 11 — OTHER POSTEMPLOYMENT BENEFIT PLANS
BENEFITS OTHER THAN PENSION BENEFIT -
In addition to providing pension benefits, the City provides certain health care (100% of medically
necessary costs) and life insurance benefits for retired employees under the City's Firemen's and
Police Pensions as prescribed by state statutes. Current employees under these two pensions
become eligible for those benefits if they reach normal retirement age while working for the City.
The cost of retiree health care insurance and life insurance benefits is recognized as an expenditure
• as claims are paid. Both plans are being funded 100% by the City on a pay -as- you -go basis. For
. 2007, the costs totaled $774,957 for the Firemen's Pension which has a total of 79 participants
currently eligible to receive benefits and $762,951 for the Police Pension which has a total of 72
participants currently eligible to receive benefits.
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NOTE 12 — OTHER DISCLOSURES
PRIOR PERIOD ADJUSTMENT
The City had long -term assets not available to pay for current period expenditures, which had been
reported as deferred revenue at the fund level, but not converted to Net Assets on the City wide
Statement of Net Assets. Correction of this error resulted in a prior period adjustment of $6,781,020
added to Beginning Net Assets for Governmental Activities.
ACCOUNTING AND REPORTING CHANGES
The City implemented GASB 34 "Basic Financial Statement's and Management's Discussion and
•
Analysis for States and Local in 2003. However, this GASB allowed a government
up to 4 years to summarize and cost all infrastructure. The 2006 Financial Statements included
only historical cost for major street projects from 1980 through 2006. For 2007, the GASB was fully
implemented, which created a change in accounting principle. This resulted in the addition of
infrastructure in the amount of $135.7 million with an accumulated depreciation of $95.4 million for
a net increase in Governmental Net Assets of $41.3 million including land of $1.1 million.
The City recently received guidance from the State Administrative Office of the Courts relating
to the methodology of estimating municipal Court receivables from fines and forfeitures, and an
adjustment of $1.2 million was made to the receivables line on the Statement of Net Assets. This
change in estimate is presented prospectively both on the General Fund balance sheet and the
Statement of Net Assets.
SUBSEQUENT EVENTS
On June 6th, 2008, the City issued $8,840,000 par value in Water /Wastewater Revenue Bonds to
finance $5.5 million in various Wastewater projects. $3.4 million of the proceeds were used to
refund $3,340,000 of 1998 Water /Wastewater bonds maturing in 2018. This was a current refunding,
resulting in an accounting gain of $30,000 and an economic gain of just over $94,000 in future debt
service payments, at, present value. The All -In Total interest cost of the total issue, including the
refunding was 4.01 %, and the final maturity of the bonds is November, 2027.
On August 28th, 2008, the City issued $2,950,000 in Limited Tax General Obligation Bonds to fund
certain infrastructure projects and partially fund the purchase of fire apparatus. The infrastructure
bonds will be retired in December, 2019, have an average annual debt service of $240,000 and are
intended to be paid from Real Estate Excise Taxes. The bonds paying for the fire apparatus will
retire in December, 2021, have an approximate annual debt service of $75,000, and are intended to
be paid from regular Property Tax Levies. The total interest cost on both components of the issue,
including legal, underwriting and insurance costs, was 3.8 %. In conjunction with issuance of the
bonds the City received a credit rating upgrade from "A" to "A+" on all the City's outstanding
General Obligation Debt by Standard and Poor's Inc.
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REQUIRED SUPPLEMENTARY INFORMATION
POLICE AND FIRE PENSION
SCHEDULE OF EMPLOYER CONTRIBUTIONS
December 31,2007
POLICE
MEDICAL
ACTUAL BENEFIT ANNUAL
FISCAL EMPLOYER PAYMENTS & NET REQUIRED PERCENTAGE
. YEAR CONTRIBUTIONS ADMINISTRATIVE EMPLOYER CONTRIBUTION OF ARC
ENDING TAXES EXPENSES CONTRIBUTION (ARC) CONTRIBUTED
12/31/01 933,831 442,878 490,953 671,522 7311%
12/31/02 991,009 478,769 512,240 671,522 76.28%
12/31/03 1,133,242 561,692 571,550 65Z086 86.98%
12/31/04 1,28Z904 702,241 585,663 657,086 89.13%
• 12/31/05 1,204,159 644,225 559,934 657,086 85.21%
12/31/06 1,235,437 701,306 534,131 657,086 106.50%
12/31/07 , 1,384,894 765,906 618,988 657,086 116.56%
' FIRE
ACTUAL .
EMPLOYER MEDICAL
' CONTRIBUTIONS BENEFIT ANNUAL
FISCAL TAXES & PAYMENTS & NET REQUIRED PERCENTAGE • .
•
YEAR FIRE INSURANCE ADMINISTRATIVE EMPLOYER CONTRIBUTION ' . OF ARC
ENDING PREMIUMS EXPENSES • CONTRIBUTION (ARC) CONTRIBUTED
12/31/01 1,332,816 481,554 851,262 836,095 , 101.81% .
12/31/02 1,325,372 530,732 794,640 836,095 95.04%
12/31/03 - 1,406,347 639,871 766,476 633,545. 120.98%
12/31/04 1,425,048 769,426 655,622 633,545 103.48%
12/31/05 • 1,460,423 706,947 753,476 • 633,545 118.93%
12/31/06 1,558,187 815,278 742,909 633,545 117.26%
12/31/07 1,603,774 814,394 789,380 633,545 124.60%
• .
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CITY OF Y�'.�C�ial2 . ,
SCHEDULE #16 - EXPENDITURES OF FEDERAL AWARDS Page 1 of 2
For the Year Ended December 31, 2007
FEDERAL FROM PASS- FROM
GRANTOR /PASS - THROUGH GRANTOR CFDA PROJECT OTHER THROUGH DIRECT ■
PROGRAM TITLE NO. NO. IDENTIFICATION NO. AWARDS AWARDS '
i
U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT DIRECT PROGRAMS ,
Community Development ,
Block Grant 14.218 B 07 -MC -53 -0008 $51,144
Block Grant 14.218 B 06-MC-53-0008 161,841
Block Grant 14.218 Block Grant Program Income 657,058
Home Investment Partnership Program 14.239 M07-MC53-0203 98,198
Home Investment Partnership Program 14.239 M06- MC53-0203 305,119
Home Investment Partnership Program 14.239 Home Program Income 532,996
EDI Special Projects 14.246 Capitol Theatre 182,731
Total Department of Housing and Urban Development 1,989,087
U. S. DEPARTMENT OF JUSTICE DIRECT PROGRAMS
Justice Assistance Grant 16.738 Jag Grant 15.917
State Criminal Alien Assistant Program 16.606 SCAAP 41,641
Bullet Proof Vest Partnership Program 16.607 20,580
Gang Resistance Education & Training 16.737 Great Grant 174,591
Total U.S. Department of Justice 252,729
U. S. DEPARTMENT OF TRANSPORTATION DIRECT PROGRAMS
Federal Transit Formula Grant 20.507 WA-90X392 1,646,047
ti
PASSED THROUGH WASHINGTON STATE DEPARTMENT OF TRANSPORTATION
Highway Planning & Construction 1
CMAQ Grant 20.205 $179,000
S. 1st St @ Mead 20.205 2044 CM- 4579(010) 113,520
WA Ave. Median Removal 20.205 2124 STPUS- 4558(007) 82,582
8th/6th Street 9B' /Lincoln 20.205 2126 STPH 000S(173) 401
E. Nob Hill & Fair Ave 20.205 2143 STPUS-4566(007) 12,610
Trolley Restoration 20.205 2153 S t'YE- 1485(019) 12,241
Wm Douglas Trail-6th Ave 20.205 2166 STPE- 1485(020) 16,783
Wm Douglas Trail-Bridge 20.205 2167 STPE 1485(020) 2,329
Railroad Grade Separation 20.205 1818 STPX -000S (062) 1,395,489
Nob Hill & 6th St Signal , 20.205 1829 SIPUS- 4566(006) 130,313
Total WSDOT Passed- through 1 ,945 ,268
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SCHEDULE #16 - EXPENDITURES OF FEDERAL AWARDS Page 2 of 2
For the Year Ended December 31, 2007
FEDERAL FROM PASS- FROM
GRANTOR /PASS- THROUGH GRANTOR CFDA PROJECT OTHER THROUGH DIRECT
PROGRAM TITLE NO. NO. IDENTIFICATION NO. AWARDS AWARDS
U. S. DEPARTMENT OF THE INTERIOR
Passed- through Dept of Archaeology & Historic Preservation:
Historic Preservation Fund Grants -in -Aid 15.904 FY08- 61018-002 $8,000
U. S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Passed- through Yakima County:
Transportation Paratransit 93.043 558
Special Programs for the Aging Title III Part D 93.043 17,806
Special Programs for the Aging Title III Part B 93.044 Day care 12,525
Passed - through DSHS DCS:
Healthy Marriage & Fatherhood 93.086 69 ,955
Total U.S. Department Health Passed - through 100,844
CORPORATION FOR. NATIONAL AND COMMUNITY SERVICE
Passed- through WA State Empl Security
AmeriCorp 94.006 81,784
HOMELAND SECURITY
SAFER Grant 97083 $89,186
Passed - through Yakima Valley OEM:
Homeland Security 97.067 22,062
Homeland Security 97.067 Fire -332 135,600
Law Enforcement Terrorism Prevention 97074 182,870
Total Homeland Security 340,532 89,186
Total Federal Assistance $2,476,428 $3,977,049
Total FederalAssistance Direct & Pass - Through Awards $ 6 , 453 , 4
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SCHEDULE #16 - NOTES TO THE SCHEDULE OP EXPENDITURES Page 1 of 1
For the Year Ended December 31, 2007
NOTE I - BASIS OF ACCOUNTING
The Schedule of Expenditures of Federal Award is prepared on the same basis of accounting as the City of Yakima financial
statements The City of Yakima uses modified accrual system for all governmental funds; full accrual system for proprietary,
nonexpendable and pension trust funds.
NOTE 2 - PROGRAM COSTS
The amounts shown as current year expenditures represent only federal portion of the program costs. Actual program costs,
including the City of Yakima's portion may be more than shown.
NOTE 3 - PROGRAM INCOME
The City of Yakima has a revolving loan program for low income housing. Under this federal grant, repayments to the City of
Yakima are considered program revenues (income) and loans of such funds to eligible recipients are considered expenditures.
NOTE 4 - FEDERAL LOANS
In 2003, the City of Yakima was authorized to administer a Section 108 Loan program. As there were no new loans issued in
2007, there are no expenditures relating to this program included on this schedule.. Since the City is only contingently liable, this
amount is not included in the Schedule of Long -term Debt. See Note 8 - Contingencies in the Basic Financial Statements section
for details of the entire program.
NOTE 5 - NONCASH AWARDS
Not Applicable.
NOTE 6 - AMOUNT PAID TO SUBRECIPIENTS
The City of Yakima paid the following amounts to subrecipients:
CDBG - 14218 $75,000
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i ii • . ,
' o "^ - f ‘ ‘ . . . .',: I ,/,' I CI . ot; v - 1 5. 1 : 7
ABOUT THE S TATE AUDITORS OFFICE ��
V
r The State Auditor's Office is established in the state's Constitution and is part of the executive
branch of state government. The State Auditor is elected by the citizens of. Washington and serves
< four -year terms.
ii , Our mission is to work in cooperation with our audit clients and citizens as an advocate for .
government accountability. As an elected agency, the. State Auditor's Office has the independence
4 - necessary to objectively perform audits and investigations. Our audits are designed to comply with
r professional standards as well as to satisfy the - requirements of federal, state, and, local laws.
The State Auditor's Office has 300 employees who are located around the state to deliver our
r services effectively and efficiently. Approximately 65 percent of our staff are certified public -
6. accountants or hold other certifications and advanced degrees.
I
_ ` Our regular audits look at financial information and compliance with state, federal and local laws on
the part of all local governments, including schools, and all state agencies, including institutions of
P.
1 higher education.. We also perform fraud and whistleblower investigations. In addition, we have the
authority to conduct performance audits of state agencies and local governments.
- The results of our audits are widely distributed through a variety of reports, which are available on
our Web site. We continue to refine our reporting efforts to ensure the results of our audits are
useful and understandable. '
i,
.., We take . our role as partners in accountability seriously. We provide training and technical
, assistance to governments and have an . extensive program to coordinate audit efficiency and to
ensure high - quality audits.
t "
State Auditor _ Brian Sonntag, CGFM
W r Chief of Staff Ted Ruff .
Chief Policy Advisor Jerry Pugnetti
W Director of Administration Doug Cochran -
Director of State and Local Audits Chuck Pfeil, CPA
Director of Performance Audit Linda Long, CPA, CGFM
k, Director of Special Investigations Jim Brittain, CPA
, r , Director for Legal, Affairs Jan Jutte
.
Local Government Liaison Mike Murphy
- Communications Director Mindy Chambers
tP Public. Records Officer Mary Leider
" Main number (360) 902 -0370
Toll -free hotline for government efficiency (866) 902 -3900
• Web Site wwwsao.wa.gov
(SAO FACTS.DOC - Rev. 05/08) - .