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Home My WebLink About02/18/2020 Staff: Committee Members: Chris Huot, Assistant City Manager Councilmember, Andrae Gonzales – Chair Councilmember, Willie Rivera Councilmember, Ken Weir SPECIAL MEETING OF THE BUDGET AND FINANCE COMMITTEE of the City Council - City of Bakersfield Tuesday, February 18, 2020 12:00 p.m. City Hall North 1600 Truxtun Avenue, Bakersfield, CA 93301 First Floor, Conference Room A AGENDA 1. ROLL CALL 2. ADOPT MARCH 26, 2018 AND FEBRUARY 27, 2019 AGENDA SUMMARY REPORTS 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Discussion and Committee Recommendation Regarding Annual Audit Reports ending FY 2019 – McKeegan B. Discussion and Committee Recommendation Regarding FY 2020-21 CDBG, HOME, ESG Action Plan – Boyle C. Discussion and Committee Recommendation Regarding Adoption of the 2020 Committee Meeting Schedule – Huot 5. COMMITTEE COMMENTS 6. ADJOURNMENT B A K E R S F I E L D Committee Members Staff: Chris Huot Councilmember, Andrae Gonzales, Chair Assistant City Manager Councilmember, Willie Rivera Councilmember, Ken Weir REGULAR MEETING OF THE BUDGET AND FINANCE COMMITTEE Monday, March 26, 2018 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue, Bakersfield, CA 93301 The meeting was called to order at 12:00 p.m. 1. ROLL CALL Committee members Present: Councilmember, Andrae Gonzales, Chair Councilmember, Willie Riviera Councilmember, Ken Weir City Staff Present: Alan Tandy, City Manager Chris Huot and Steven Teglia, Assistant City Managers Brianna Carrier, Management Assistant – City Manager’s Office Virginia Gennaro, City Attorney Andy Heglund, Deputy City Attorney Nelson Smith, Finance Director Lyle Martin, Chief of Police Greg Terry, Assistant Chief of Police Mike Hale, Police Captain Jeremy Blakemore, Police Lieutenant Joe Mullins, Police Captain Uriel Pacheco, Police Sergeant Additional Attendees Present: Members of the Media 2. ADOPT FEBRUARY 16, 2018 AGENDA SUMMARY REPORT Assistant City Manager Huot stated that corrections needed to be made to reflect Committee member Ken Weir’s absence on page 1; and that Committee member Rivera made the motion on page 5. The Report was adopted with these changes. 3. PUBLIC STATEMENTS There were no public statements. /s/ Chris Huot ____________________________________________ Budget and Finance Committee Meeting Agenda Summary Report – March 26, 2018 Page 2 4. NEW BUSINESS A. Discussion and Committee Recommendation Regarding Body Worn Cameras - Martin Bakersfield Chief of Police Martin introduced Police Lieutenant Blakemore who provided a power point presentation summarizing what a body worn camera is, its purpose, characteristics of the current devices available, the technology available to support them, and the benefits and challenges of implementing a Body Worn Camera Pilot program. Lieutenant Blakemore had devices from different vendors available for inspection. Two short videos were played to show the quality of recordings; one recorded during the day and the other at night. Approximately one-third of the total nationwide law enforcement agencies currently use the devices. Committee member Rivera stated he was very supported of a pilot program. He asked how members of the public would have access to the recording and how long would the information be available. City Attorney Gennaro stated the process would be same as a public request. A written request for the recording would need to be made and filed with the City Clerk’s Office. Availability will be determined by the underlying report of the recording. Committee member Weir inquired about the selection process of the vendor and camera equipment. Chief of Police Martin stated there were several vendors who responded to the request for proposal and that a selection had not been made. Assistant Chief of Police Demestihas added that the proposals included specific terms to update the equipment every other year of the contact (i.e. new equipment – year 1, new equipment – year 3, and new equipment – year 5). A vendor will be determined at a later date if the Council decides to implement a pilot program. Committee Chair Gonzales thanked everyone for their work and efforts as well. Committee member Rivera made a motion to present the Body Ward Camera Pilot Program project to the full City Council for consideration. The motion was unanimously approved. 5. COMMITTEE COMMENTS There were no Committee comments. 6. ADJOURNMENT The meeting adjourned at 12:45 p.m. B A K E R S F I E L D Committee Members Staff: Chris Huot Councilmember, Andrae Gonzales – Chair Assistant City Manager Councilmember, Willie Rivera Councilmember, Ken Weir SPECIAL MEETING OF THE BUDGET AND FINANCE COMMITTEE Wednesday, February 27, 2019 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue, Bakersfield, CA 93301 AGENDA SUMMARY REPORT The meeting was called to order at 12:00 p.m. 1. ROLL CALL Committee members Present: Councilmember, Andrae Gonzales, Chair Councilmember, Ken Weir Councilmember, Willie Riviera City Staff Present: Alan Tandy, City Manager Chris Huot and Steve Teglia, Assistant City Managers Brianna Carrier, Administrative Analyst III – City Manager’s Office Nathan Gutierrez, Management Assistant – City Manager’s Office Joshua Rudnick, Deputy City Attorney Nelson Smith, Finance Director Randy McKeegan, Assistant Finance Director Lyle Martin, Chief of Police Mike Hale, Police Captain Nick Fidler, Public Works Director Rosanne Padley, Assistant to the Public Works Director Dianne Hoover, Recreation and Parks Director Jacqui Kitchen, Development Services Director Kevin Coyle, Development Services Planning Director Misty Easton, Development Services, Business Manager Hayward Cox, Community Development Coordinator Cecelia Griego, Community Development Principal Planner Jason Cater and Nicholas Vu, Community Development, Associate Planners Additional Attendees Present: Eric Xin, Brown Armstrong /s/ Chris Huot ____________________________________________ Budget and Finance Committee Meeting Agenda Summary Report – February 27, 2019 Page 2 2. ADOPT May 30, 2017 AGENDA SUMMARY REPORT The Report was adopted as submitted. 3. PUBLIC STATEMENTS There were no public comments. 4. NEW BUSINESS A. Discussion and Committee Recommendation Regarding Annual Audit Reports Ending FY 2018 – McKeegan Assistant Finance Director McKeegan provided a summarization of the audit reports included in the packet and presented the financial statements and associated reports ending FY 2018, noting that there were no findings and recommendations for the year. Lists of the report follow:  Comprehensive Annual Financial Report (CAFR);  Agreed Upon Conditions Report;  Auditor Communication with Those Charged with Governance (SAS 114 Letter);  Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan;  Appropriations Limit Worksheet (GANN Limit) of the City of Bakersfield;  Rabobank Arena, Theater, Convention Center, Bakersfield Ice Sports Center & Spectrum Amphitheatre; and  Single Audit Report for the fiscal year ended June 30, 2018 The Committee members unanimously approved to have the annual audit reports presented to the full City Council for acceptance. B. Discussion and Committee Recommendation Regarding FY 2019-20 CDBG, HOME, ESG Action Plan – Tandy / Kitchen Development Services Director Kitchen introduced the Community Development team who oversees the implementation of the Consolidation Action Plan. She proceeded to introduced Community Development Coordinator Cox who summarized, by way of a PowerPoint presentation, the fifth-year of annual entitlements of the current five-year Consolidation Action Plan adopted by the City Council in 2014. The Housing and Urban Development (HUD) Community Development Block Grant Program (CDBG), HOME Investment Partnership (HOME), Emergency Shelter Grant (ESG), and Housing Opportunities for Persons with AIDS (HOPWA) entitlements for FY 19-20 were not available at the time of the meeting; therefore staff based the proposed budget using last year’s entitlements. The total proposed budget for CDBG, HOME, ESG, and HOPWA for FY 2019-20 is $5,922,653. ____________________________________________ Budget and Finance Committee Meeting Agenda Summary Report – February 27, 2019 Page 3 FY 2019/20 Proposed CDBG Budget: The total resources available for FY 2019/20 are $3,646,234. This amount includes the CDBG entitlement of $3,638,234 and project program income of $8,000. Staff proposed the total resources be allocated as follows:  Total Administration – 20% Cap: $729,047  Long Term Obligations – $357,305  Public Services: $546,785. Services include Fair Housing Program Services, Bakersfield Senior Center, Bakersfield Police Department and Mission at Kern (Operations at HEAP Funded Expansion).  Public Improvements Project: $2,013,097 Services include Home Access Rehabilitation; Drainage, Curb, Gutter, Sidewalk, and Accessibility Improvements in the following areas: Union/Brundage Area, Oleander/Castro Area; Street Reconstruction of Baker/Old Town Kern Area; and Beale Park Lighting Upgrades and Restroom Replacements. FY 2019/20 Home Investment Partnership (HOME) Budget: Based on the previous year’s entitlement, the total resources available for FY 2019-20 is $1,594,389, 10% of which was set aside for administrative cost. This amount includes the HOME Entitlement of $1,494,389 and $100,000 of projected program income. Staff estimates that the total Program/Project Cost and Direct Delivery for FY 2019- 20 is $1,594,989. This Program/Project cost includes: $244,158 in HUD mandated Community House Development Organization (CHDO) Set aside and $1,210,792 for New Construction. FY 2019-20 Emergency Solutions Grant (ESG) Budget: Based on the previous year’s entitlement, the total resources available for FY 2019-20 is $293,680, 7.5% of which was set aside for administrative cost. Staff proposed the total resources be allocated as follows:  Emergency Shelter: $293,680, Services include: Flood Ministries Street Outreach ($22,500), Bakersfield Homeless Shelter ($64,550) The Mission of Kern County ($62,650) and Alliance Again Family Violence ($26,500). Homeless Prevention & Rehousing Project: Bakersfield Homeless Center – Rehousing ($95,454). FY 2019-20 Housing Opportunities for Persons with AIDS (HOPWA) Budget: Based on the previous year’s entitlement, the total resources available for FY 2018-19 is $496,350, 3% of which is set aside for administrative costs. Staff proposes allocating $481,459 to Kern County Public Health to administer the program. Staff commented that the State will be taking back the responsibility to forward funds to the Kern County Public Health; staff will be looking into the new process. Committee member Rivera requested the following information: the repayment schedule of the long-term CDBG obligations and an update summarizing the completed projects prior to the end of the fiscal year. In addition he requested ____________________________________________ Budget and Finance Committee Meeting Agenda Summary Report – February 27, 2019 Page 4 that the allocation for the Union/Brundage project be reduced by $300,000 and that it be allocated to fund the La France project. Public Works Director Fidler responded that the Union/Brundage project included installation of a storm drain collection system and a storm water basin to collect runoff water as the area experiences flooding. He stated all components of the projects must be reviewed to determine what effects, if any, reducing the funding for one to fund another may have on each project. Committee Chair Gonzales requested staff prepare a map that identifies the areas where curb, gutter and sidewalks projects have been completed as well as where new projects are beginning. The map should differentiate between projects that are fully funded and those who have secured funding. Committee member Weir made a motion to present the proposed Action Plan to the full City Council. The motion was unanimously approved. C. Discussion and Committee Recommendation Regarding Adoption of the 2019 Committee Meeting Schedule – Huot The 2019 Committee meeting scheduled was adopted as submitted. 5. COMMITTEE COMMENTS There were no comments made. 6. ADJOURNMENT The meeting adjourned at 12:40 p.m. ADMINISTRATIVE REPORT MEETING DATE: 1/8/2020 Consent – Miscellaneous ac. TO:Honorable Mayor and City Council FROM:Randy McKeegan, Finance Director DATE:12/12/2019 WARD: SUBJECT:Audit Reports to be Referred to Budget and Finance Committee: 1.Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2019. 2.Agreed Upon Conditions Report for the fiscal year ended June 30, 2019. 3.Auditor Communication with Those Charged with Governance (SAS 114 Letter) for fiscal year ended June 30, 2019. 4.Independent Auditors Report – Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan for the year ended June 30, 2019. 5.Independent Auditors Report on Appropriations Limit Worksheet (GANN Limit) of the City of Bakersfield for the fiscal year ended June 30, 2019. 6.Independent Auditors Report – Rabobank Arena, Theater, Convention Center, Valley Children's Ice Center & Brighthouse Networks Amphitheatre for the fiscal year ended June 30, 2019. 7.Agreed Upon Conditions Report (Public Safety and Vital Services Measure) for the fiscal year ended June 30, 2019. STAFF RECOMMENDATION: Staff recommends referral to the Budget and Finance Committee. BACKGROUND: Staff is recommending the following reports be received and referred to the Budget and Finance Committee for review and discussion. The reports will come back to the full Council for acceptance at a future meeting after the Committee review process is completed. 1. The City’s Comprehensive Annual Financial Report (CAFR), commonly referred to as the Annual Audit Report, for the fiscal year ended June 30, 2019 will be provided to the City Council as part of the packet prior to this meeting. A copy of the report will also be on file in the City Clerk’s office for public review. The CAFR represents the City’s financial statements as of June 30, 2019, which are audited by the accounting firm of Brown Armstrong Accountancy Corporation. The current year audit opinion issued by the outside auditors was “unqualified,” which indicates that the City complied, in all material respects, with accounting principals generally accepted in the United States of America. 2. The Agreed Upon Conditions Report is designed to increase efficiency, internal controls and/or financial reporting and includes any reportable conditions noted during the Audit. A summary of reported conditions are included in the report. The report also addresses conditions identified in the prior year which have all been resolved to the auditors’ satisfaction. 3. The SAS 114 Letter provides information about our auditors’ responsibilities under auditing standards generally accepted in the United States of America, Government Auditing Standards, and the Uniform Guidance, as well as certain information related to the planned scope and timing of the audit. 4. Contract requirements contained in City of Bakersfield Agreement 76-153 as amended by Agreements 76-153(5), 76-153(4), 77- 44, 85-197 and 92-106 apply to operations of the Bakersfield Subregional Wastewater Management Plan. The City’s compliance with contract requirements is audited on an annual basis. The current compliance report, issued by the outside auditors, is attached for your review and indicates that there were no audit findings. 5. Attached is a letter from the City’s independent auditors Brown Armstrong Accountancy Corporation indicating they have completed their annual review of the Appropriations Limit Worksheet prepared by the City in accordance with Section 1.5 of Article XIIIB of the California Constitution (GANN Limit). This annual review is performed by the auditors as part of their contract to provide auditing services to the City of Bakersfield. The agreed upon review procedures are substantially less in scope than an audit and Page 1of 2Coversheet 2/14/2020https://bakersfield.novusagenda.com/AgendaPublic/CoverSheet.aspx?ItemID=7187&MeetingID=559 � BAKERSFIELD THE SOUND OF f;�� MEMORANDUM TO: Honorable Mayor and City Council FROM: Randy McKeegan, Finance Director DATE: January 6, 2020 RE: Agenda Item 8.ac. Agreed Upon Conditions Report (Item #2) The Administrative Report for this item included the reference to a number of reports required for the completion of the annual audit for fiscal year 2018-19. This includes an Agreed Upon Conditions reports that identifies reportable conditions noted during the audit which was omitted from your agenda packets. There was a delay in completing this item as additional information was requested by the audit firm before they would issue a final report. That information was subsequently provided by City staff and the Agreed Upon Conditions Report was finalized and received from the outside auditors. That report is attached for your review and referral to the Budget & Finance Committee. cc: Alan Tandy-City Manager Virginia Gennaro -City Attorney S:\Accountlng\Admin\Admin Reports\Memo -Jan 8 2020 agenda item 8ac.docx MEMORANDUM DATE: February 18, 2020 TO: Budget & Finance Committee FROM: Christopher Boyle, Development Services Director SUBJECT: Recommended HUD Funding for FY 2020-21 Background. As an entitlement City under the U. S. Department of Housing and Urban Development (HUD), the City of Bakersfield receives annual funds to improve low-income neighborhoods in the City. Projects funded with HUD funds are intended to improve the quality of life and infrastructure for low- income persons and neighborhoods in the City of Bakersfield. Funds are distributed pursuant to the following programs: Community Development Block Grant (CDBG), Home Investment Partnership (HOME), Emergency Solutions Grant (ESG), and Housing and Opportunities for Persons with AIDS (HOPWA). Project selection is based on the needs, goals and outcomes outlined every 5 years through a community engagement process. This information is then compiled into the City of Bakersfield’s 5 Year Consolidated Plan (ConPlan) for HUD funds spanning from 2020-25. This year (2020-21) will be the first year of the five year ConPlan. Available Funds. As of the preparation of this Memo, HUD has not released the entitlement amount for FY 20-21. However, staff has used the previous 19-20 Budget as an estimate for the anticipated 20-21 HUD Budget prepared for the Committee’s review. In order to account for possible changes in the HUD Budget, staff has projected a 3% decrease in CDBG, 10% decrease in HOME funding, and a 0% decrease in ESG and HOPWA. In FY 19-20, HUD funds from all programs totaled $6,083,610 including $8,000 in program income for CDBG and $100,000 for HOME. Thus, using the projected decreases listed above, the total proposed HUD budget for FY 20-21 is $5,840,196. The following table compares the FY 19-20 HUD Budget to the projected FY 20-21 HUD Budget. Federal Program Previous HUD 2019-20 Budget Projected HUD 2020-21 Budget Community Development Block Grant (CDBG) $3,714,311 $3,610,882 Home Investment Partnership (HOME) $1,499,854 $1,359,869 Emergency Solutions Grant (ESG) $308,712 $308,712 Housing Opportunities for Persons with AIDS (HOPWA) $560,733 $560,733 Total $6,083,610 $5,840,196 Applications Received. The deadline for the submission of CDBG, HOME and ESG applications for FY 2020-21 funding was November 22, 2019. This year the City received 15 applications from non-profit and private entities totaling $6,493.304, and 9 applications from City Departments totaling $3,200,257. The total request for all grants, from both City and Non-City applicants, was $2,693,561. Recommendation. Pursuant to federal requirements, Staff conducted a comprehensive review and evaluation of all applications for funding. Staff has prepared the attached list of projects recieved and recommended budget for consideration by the Budget and Finance Committee. Staff anticipates that the 2020-25 Consolidated Plan, and the associated FY 20-21 HUD Action Plan, will be considered by the City Council on April 8, 2020. The table below provides a brief timeline for the FY 20-21 Action Plan process. Date Action Plan Process February 18, 2020 Budget and Finance Committee Meeting March 6, 2020 Draft Action Plan Notice Begins March 17-19, 2020 Action Plan Community Meeting April 8, 2020 City Council Public Hearing on Draft Action Plan May 15, 2020 Final Deadline to Submit AP to HUD – 45 days before End of Fiscal Year Attachments 1. Proposed CDBG Budget (FY 20-21) 2. Proposed HOME/ESG/HOPWA Budget (FY 20-21) 3. List of FY 20-21 HUD Applications Received Description FY 20-21 Requested FY 20-21 Recommended FY 19-20 Last Year Ward CDBG Entitlement (Projected 3% decrease for 20-21) 3,602,882 3,602,882 3,714,311 Program Income (Projected for FY 20-21) 8,000 8,000 8,000 Total Available Resources 3,610,882 3,610,882 3,722,311 Administration (not to exceed 20% or $720,576)720,576 720,576 744,462 Section 108 Loan Payment on $4.1M 308,889 308,889 301,383 Section 108 Loan Payment on $800K 56,937 56,937 55,922 Total Admin and Debt Payment 1,086,402 1,086,402 1,101,767 Total Resources minus Admin and Debt Payments 2,524,480 2,524,479 2,620,544 Fair Housing Program Services 100,000 100,000 100,000 1 Bakersfield Senior Center 90,000 90,000 90,000 1 Flood Ministries Homeless Outreach - Designated CE Team 264,508 264,479 - All Mission at Kern (Operations at new Facilities expaned by HEAP Grant)35,000 0 35,000 2 Bakersfield Police Department (Community Relations Officers)0 0 330,000 1,2,7 Total Public Service Projects 489,508 454,479 555,000 Home Access Rehabilitation 70,000 40,000 41,000 All Madison Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.385,000 350,000 0 1 Castro Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.400,000 350,000 204,000 7 Truxtun Area Curb, Gutter Sidewalk and ADA Improvements 400,000 390,000 0 2 La France Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.400,000 0 306,000 1,2 Oleander Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.300,000 200,000 357,000 2 Parkway, Sunset Avenue and San Emidio Street Lighting Imprv.555,257 0 0 2 Wilson Area: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.300,000 0 0 1 East Brundage: Curb, Gutter, Sidewalk, Drainage, Accessibility Imprv.390,000 390,000 0 1 Union Brundage: Curb, Gutter, Sidewalk, Drainage 0 0 307,544 1 Old Town Kern/Beale: Street Reconstruction 0 0 157,000 2 Beale Park Lighting Upgrade 0 0 336,000 2 Beale Park Restrooom Replacement 0 0 357,000 2 CAPK Food Bank Expansion 458,295 0 0 1 Bakersfield Senior Center New Facility 3,500,000 0 0 1 Belle Terrace Park Upgrades - County of Kern 350,000 350,000 0 1 Bakersfield Senior Center Parking Lot Imprv.43,000 0 0 1 Total Public Facilities 7,551,552 2,070,000 2,065,544 Total Requests for Public Services + Projects 8,041,060 2,524,479 2,620,544 Total Available Resources Remaining -5,516,580 0 (0.20) RECOMMENDED CDBG BUDGET FY 2020-21 RESOURCES ADMINISTRATION AND DEBT SERVICE PUBLIC SERVICES (MAX. 15% or $540,432) PUBLIC FACILITIES RECOMMENDED HOME BUDGET FY 2020-21 HOME Entitlement 1,259,869$ 1,259,869$ 1,399,854$ Program Income (Projected for FY 19/20)100,000$ 100,000$ 100,000$ Total Available Resources 1,359,869$ 1,359,869$ 1,499,854$ Administration (not to exceed 10%)135,987$ 135,987$ 139,985$ Total Resources minus Admin 1,223,882$ 1,223,882$ 1,359,869$ CHDO Set Aside (15%)188,980$ 188,980$ 209,978$ Acquisition/Construction/Rehabiltation/Downpayment 1,034,902$ 1,034,901$ 1,149,891$ CHDO Set Aside -$ 188,980$ VCCDC Downpayment Assistance Program 250,000$ 250,000$ -$ New Construction -$ 784,901$ 1,149,891$ Housing Rehab 1,000,000$ -$ Total (All Requests)1,250,000$ 1,223,882$ 1,359,869$ Total Available Resources Remaining (26,118)$ -$ (0)$ RECOMMENDED ESG BUDGET FY 2020-21 ESG Entitlement (Projected for FY 19/20)308,712$ 308,712$ 308,712$ Administration (not to exceed 7.5%)23,153$ 23,153$ 23,153$ Total Resources minus Admin 285,559$ 285,559$ 285,559$ Flood Ministries - Street Outreach 23,625$ 23,625$ 23,625$ Bakersfield Homeless Center - Shelter 99,960$ 66,719$ 67,438$ Bakersfield Homeless Center - Rapid Rehousing & Prevention 49,980$ 100,332$ 100,332$ The Mission at Kern County - Shelter 97,500$ 66,719$ 66,000$ Alliance Against Family Violence - Shelter 32,000$ 28,164$ 28,164$ Total (All Requests)303,065$ 285,559$ 285,559$ Total Available Resources Remaining (17,506)$ (0)$ (0)$ RECOMMENDED HOPWA BUDGET FY 2020-21 HOPWA Entitlement (Projected for FY 19/20)560,733$ 560,733$ 560,733$ Administration (not to exceed 3%)16,822$ 16,822$ 16,822$ Total Resources minus Admin 543,911$ 543,911$ 543,911$ Kern County Public Health 543,911$ 543,911$ 543,911$ Total (All Requests)543,911$ 543,911$ 543,911$ Total Available Resources Remaining -$ 0$ 0$ PROJECTS Description FY 20-21 Requested FY 20-21 Recommended FY 19-20 Last Year RESOURCES ADMINISTRATION AND DEBT SERVICE Description FY 20-21 Requested FY 20-21 Recommended FY 19-20 Last Year RESOURCES RESOURCES ADMINISTRATION AND DEBT SERVICE HOPWA SPONSOR/PROVIDER ADMINISTRATION PROJECTS Description FY 20-21 Requested FY 20-21 Recommended FY 19-20 Last Year HUD Category Applicant Ward Proposal Total Request FY 19-20 Request HUD Eligible Staff Rating Notes Recommended Down payment Assistance Program Ventura Community Development Corporation Citywide $25,000 down payment assistance program $250,000 None Yes 24/30 Staff recommends approval. Re-establishing a Down Payment Assistance Program. $250,000 Affordable Housing Rehab Self Help Enterprises Ward 1 80-unit rehabilitation $1,000,000 None Yes 23/30 Not recommended at this time. No new units.$0 Affordable Housing New Construction Not Applicable Unknown Set-Aside for New Construction $973,882 None Yes 23/30 Staff Recommended. Includes CHDO Set-Aside.$973,882 TOTAL(Minus Admin): Projected Funding: $1,223,882 Requested:$2,223,882 Recommended:$1,223,882 HUD Category Applicant Ward Proposal Total Request FY 19-20 Request HUD Eligible Staff Rating Notes Recommended Emergency Shelter Alliance Against Family Violence Citywide Operating expenses for emergency shelter $32,000 28,164 Yes 28/30 Staff recommends approval $28,164 Rapid Rehousing & Homeless Prevention Bakersfield Homeless Center Citywide Expenses to house homeless families and individuals. $99,960 66,719 Yes 28/30 Staff recommends approval. $100,332 Emergency Shelter Bakersfield Homeless Center Citywide Operating expenses for emergency shelter $149,416 99,960 Yes 28/30 Staff recommends approval $66,719 Emergency Shelter Mission of Kern County Citywide Operating expenses for emergency shelter $97,500 66,719 Yes 28/30 Staff recommends approval $66,719 Outreach Flood Ministries Citywide Expenses to operate outreach efforts to homeless persons. $23,625 23,625 Yes 27/30 Staff recommends approval $23,625 TOTAL(Minus Admin): Projected Funding: $285,559 Requested:$402,501 Recommended:$285,559 FY 2020-21 HOME APPLICATIONS FY 2020-21 ESG APPLICATIONS Budget & Finance Committee Meetings 12:00 p.m.3:30 p.m. Closed Session 5:15 p.m. Public Session Budget Hearing: 06/10, Budget Adoption: 6/24 Holidays - City Hall Closed 12:00 p.m. S M T W TH F S S M T W TH F S S M T W TH F S 1 2 3 4 1 1 2 3 4 5 6 7 5 6 7 8 9 10 11 2 3 4 5 6 7 8 8 9 10 11 12 13 14 12 13 14 15 16 17 18 9 10 11 12 13 14 15 15 16 17 18 19 20 21 19 20 21 22 23 24 25 16 17 18 19 20 21 22 22 23 24 25 26 27 28 26 27 28 29 30 31 23 24 25 26 27 28 29 29 30 31 S M T W TH F S S M T W TH F S S M T W TH F S 1 2 3 4 1 2 1 2 3 4 5 6 5 6 7 8 9 10 11 3 4 5 6 7 8 9 7 8 9 10 11 12 13 12 13 14 15 16 17 18 10 11 12 13 14 15 16 14 15 16 17 18 19 20 19 20 21 22 23 24 25 17 18 19 20 21 22 23 21 22 23 24 25 26 27 26 27 28 29 30 24 25 26 27 28 29 30 28 29 30 31 S M T W TH F S S M T W TH F S S M T W TH F S 1 2 3 4 1 1 2 3 4 5 5 6 7 8 9 10 11 2 3 4 5 6 7 8 6 7 8 9 10 11 12 12 13 14 15 16 17 18 9 10 11 12 13 14 15 13 14 15 16 17 18 19 19 20 21 22 23 24 25 16 17 18 19 20 21 22 20 21 22 23 24 25 26 26 27 28 29 30 31 23 24 25 26 27 28 29 27 28 29 30 30 31 S M T W TH F S S M T W TH F S S M T W TH F S 1 2 3 1 2 3 4 5 6 7 1 2 3 4 5 4 5 6 7 8 9 10 8 9 10 11 12 13 14 6 7 8 9 10 11 12 11 12 13 14 15 16 17 15 16 17 18 19 20 21 13 14 15 16 17 18 19 18 19 20 21 22 23 24 22 23 24 25 26 27 28 20 21 22 23 24 25 26 25 26 27 28 29 30 31 29 30 27 28 29 30 31 League of California Cities Mayors and Council Members Executive Forum - June 17 - 19, 2020 League of California Cities Annual Conference - October 7 - 9, 2020 Budget Departmental Workshop Budget & Finance Committee Calendar January 2020 Through December 2020 All meetings will be held at City Hall North, First Floor, Conference Room A Approved: DRAFT City Council Meetings JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER Documents Presented At The Budget and Finance Committee February 18, 2020 Meeting CITY OF BAKERSFIELD CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2019 Prepared by the Department of Finance Randy McKeegan, Finance Director On the Cover Kit Fox Mural 3200 Buck Owens Blvd Photo by Gilbert Vega CITY OF BAKERSFIELD Comprehensive Annual Financial Report Year Ended June 30, 2019 Table of Contents INTRODUCTORY SECTION Page Table of Contents................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................i Letter of Transmittal................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................iv GFOA Certificate of Achievement................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................viii Organizational Chart................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ix Elected and Administrative Officers................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................x FINANCIAL SECTION Independent Auditor's Report................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1 Management's Discussion and Analysis (Required Supplementary Information)................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3 Basic Financial Statements Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................20 Statement of Activities................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................22 Governmental Funds: Balance Sheet................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................26 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................28 Statement of Revenues, Expenditures and Changes in Fund Balances................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................30 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................32 Proprietary Funds: Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................34 Statement of Revenues, Expenses and Changes in Fund Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................36 Statements of Cash Flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................38 Fiduciary Funds: Statement of Fiduciary Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................44 Statement of Changes in Fiduciary Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................45 Notes to the Financial Statements................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................47 i CITY OF BAKERSFIELD Comprehensive Annual Financial Report Year Ended June 30, 2019 Table of Contents Required Supplementary Information: Budgetary Information ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................103 Budgetary Comparison Schedule for the General Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................104 Budgetary Comparison Schedule for the Transient Occupancy Taxes Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................105 Budgetary Comparison Schedule for the Community Development Block Grant Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................105 Budgetary Comparison Schedule for the Gas Tax & Road Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................106 Defined Pension Plan - Schedules of Changes in Net Pension Liability and Related Ratios & Schedules of Plan Contributions................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................107 Other Post-Employment Benefits (OPEB) Plan - Schedule of Changes in City's Net OPEB Liability and Related Ratios and Schedule of OPEB Contributions................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................110 Supplementary Information: Balance Sheet - General Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................116 Schedule of Revenues by Function - General Fund - Budget & Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................117 Schedule of Expenditures by Division - General Fund - Budget & Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................118 Special Revenue Funds: Combining Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................122 Debt Service Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................128 Capital Projects Funds: Combining Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................130 Internal Service Funds: Combining Statement of Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................133 Combining Statement of Activities and Changes in Net Position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................134 Combining Statement of Cash Flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................135 Fiduciary Funds: Statement of Changes in Assets and Liabilities - Fiduciary Funds Agency................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................136 Combining Statement of Fiduciary Net Position -Private Purpose Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................137 Combining Statement of Fiduciary Net Position -Pension & Other Employee Benefit Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................138 Combining Statement of Changes in Fiduciary Net Position -Private Purpose Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................139 Combining Statement of Changes in Fiduciary Net Position -Pension & Other Employee Benefit Trust Funds................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................140 Non-Major Governmental Funds: Combining Balance Sheet................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................142 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................144 Long-term Debt Recorded in Private Purpose Trust Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................146 ii CITY OF BAKERSFIELD Comprehensive Annual Financial Report Year Ended June 30, 2019 Table of Contents STATISTICAL SECTION Net Position by Component - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................150 Change in Net Position - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................152 Fund Balances of Governmental Funds - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................156 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................158 Governmental Activities Tax Revenues By Source - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................160 Principal Property Taxpayers - Current Year and Nine Years Ago................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................161 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................162 Property Tax Rates/Direct and Overlapping Governments - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................164 Property Taxes Levies and Collections - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................166 Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................167 Taxable Sales by Market Groups - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................168 Sales Tax Revenue Payers By Industry -2018 and Ten Years Ago................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................170 Ratio of General Bonded Debt Outstanding - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................172 Ratio of Outstanding Debt by Type - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................174 Direct and Overlapping Debt as of June 30, 2019................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................176 Computation of Legal Debt Margin................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................177 Pledged-Revenue Coverage - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................178 Demographic and Economic Statistics - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................179 Principal Employers - Current Year and Nine Years Ago................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................180 Full-time Equivalent City Government Employees by Function - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................182 Property Value, Construction and Bank Deposits - Last Ten Calendar Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................184 Operating Indicators by Function - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................186 Capital Asset Statistics by Function - Last Ten Fiscal Years................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................188 Schedule of Insurance in Force................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................190 iii December 20, 2019 Honorable Mayor, City Council, City Manager and Citizens of Bakersfield: I am pleased to submit the City of Bakersfield's (the "City") Comprehensive An nual Financial Report (CAF R) for the year ended June 30, 2019 in accordance with the requirements of our Municipal Code which states that a complete financial statement and report be prepared at the end of each fiscal year (Section 2.08.020F). This report was prepared by the City's Finance Department, which assumes responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. Because the cost of internal control should not exceed anticipated benefits the objective is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. To the best my knowledge and belief, the enclosed data is accurate in all material aspects and is reported in a manner that presents fairly the financial position and results of operations of the City. The accompanying financial statements of the City have been prepared in conformity with U.S. generally accepted accounting principles (GAAP ) as prescribed by the Governmental Accounting Standards Board (GASB). Brown Ar mstrong Ac counting Corporation, a firm of licensed certified public accountants, performed the annual independent audit. The goal of the audit was to provide reasonable assurance that the basic financial statements of the City are free of material misstatement. The independent auditor concluded, based upon the audit, that the City’s financial statements for the fiscal year ended June 30, 2019, are fairly stated in conformity with GAAP . The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Au dit” designed to meet the special needs of federal grantor agencies. The standards governing Single Au dit engagements require the independent auditor to report not only on the fair representation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City’s separately issued Single Audit Report and may be obtained from the City’s website. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and An alysis (M D&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Bakersfield’s MD&A can be found immediately following the report of the independent auditors, which begins at page 1 of the financial section. GENERAL BACKGROUND The City of Bakersfield is located approximately one hundred miles north of Los An geles in the southern San Joaquin Valley. The City maintains an incorporated area of 151 square mi les and has an estimated population of 389,211 as of January 1, 2019. The City of Bakersfield is a Charter City that offers a full range of City services including: • Fire and Police Protection • Streets and Infrastructure Maintenance • Planning and Community Development iv • Parks and Recreation Services • River & Agricultural Water and Domestic Water Services • Municipal Airpark - General Aviation • Refuse Collection • Wastewater Treatment As such, this report includes the financial activities of the City of Bakersfield and the Bakersfield Successor Ag ency. A more detailed discussion of the reporting entity is provided in the notes to the financial statements. MAJOR INITIATIVES The transportation projects associated with Thomas Roads Improvement Program (TRIP) continue to progress through the various phases of environmental, design, land acquisition and construction. The TRIP program uses a combination of local funds, Transportation Impact Fees, and State and Federal road funds, which includes approximately $570 million of Federal earmark funds approved by Congress in 2005. The 2018-19 capital budget included over $170 million of funding for the TRIP projects as outlined below: Centennial Corridor (Construction)$ 163,022,000 24th Street Widening (C onstruction)$ 2,500,000 Stockdale/Enos Lane Roundabout (C onstruction)$ 3,500,000 We st Beltway (R ight of Way)$ 1,675,000 The City had three major the TRIP projects under construction during the fiscal year including the 24th Street Wi dening, the Centennial Corridor Kern River Bridge Improvements, the Centennial Corridor Belle Terrace Bridge reconstruction and the Beltway Operational improvements to State Routes 58 & 99. Supplemental grant awards at both the State and Federal level have resulted in the remaining projects planned to be constructed in the TRI P program to be fully funded, requiring no additional financing or borrowing. FACTORS AFFECTING FINANCIAL CONDITION Local Economy and Local Budget Issues - The local economy for the City of Bakersfield shows signs of continued recovery in various areas, including the oil industry, but questions remain as to the sustainability of that growth. Property tax revenues grew by 5.4% in fiscal year 2018-19 and are estimated to increase by an additional 4.0% in fiscal year 2019-20. The continued uncertainty in existing revenue streams and the need for expanded services prompted the City to initiate a local sales tax measure to increase the City rate by 1 percent. The district add-on tax, called the Public Safety and Vital Services (P SVS) measure, was approved in November 2018 and went into effect Ap ril 1, 2019. Wh ile the City did not receive a full year of PSVS revenue it did result in an additional $17 million in sales tax funds over and above the standard tax (B radley -Burns). The PSVS funds are budgeted and accounted for separately within a sub-fund of the General Fund and have a special oversight committee made up of nine City residents. The funds are to be used to meet thirteen specific priorities (a s identified in the ballot measure) to address top community priorities including enhancing public safety, reducing homelessness and bolstering economic development activities. It is anticipated that this new stream of revenue will double the sales tax revenue available to the City. In addition to the increase from the PSVS sales tax, the Bradley-Burns sales tax revenues increased by 7.1% in fiscal year 2018-19 which was due to the continued growth in the local economy previously mentioned. Al so, as previously mentioned, the uncertainty of the level of growth has resulted in a slight budgeted increase of 2.0% in the 2019-20 fiscal year. With these positive trends pointing to a recovery it again needs to be emphasized that there still is a level of uncertainty in the local economy and that the PSVS fund's are designated for the specific goals identified by the voter approved measure. The City Council (t he Council) continues to support a conservative approach in adopting our budget for 2019-20. The Council has increased the City’s cash basis reserve by $13 million using the PSVS funds for a total reserve of $26.4 million. Those reserves, along with a $3.5 million facilities reserve fund, provide an improved level of protection for the City. The Council continued to fund the City’s Other Post-Employment Benefits (OPEB) costs for retiree medical benefits, maintaining the City of Bakersfield’s position as one of the few entities in California that are making serious progress toward fully funding this long-term obligation. Retirement costs continue to escalate for all employee groups and over the next several years are expected to v increase by 67% ($28.9 million) by fiscal year 2024-25. This dramatic rise is a result of California Public Employees’ Retirement System’s (CalPERS) changes to its actuarial methodology and their lower than projected earnings in previous years. These methodology changes and resulting rate increases will have a significant impact on retirement costs for the City. Ac tual CalPERS earnings over the past five years have been 2.4%, 0.6%, 11.2%, 8.6% and 6.7% respectively. While the recent improvement in returns is a positive sign, the effects of annual investment increases are smoothed over a 30-year period so significant reductions in costs are not expected in the near-term. CalPERS estimates the impact of the changes and returns will increase our annual retirement benefit costs by approximately $3.0 million to $4.0 million per year for the next five years. Long-Term Financial Planning - The City of Bakersfield continues to look forward in meeting our long-term financial and operating needs. The increasing costs of retirement are of particular concern and continue to be closely examined by the City. As the City grows both in population and in geographic area, there will be a continued need to evaluate opportunities to become more efficient and effective in our efforts to serve our community. The City Council adopted Resolution 91-19 on June 28, 2019 to create a more substantial reserve to help mitigate potential financial downturns as well as create potential avenues to address the increasing concern regarding the growing unfunded pension liabilities. This resolution created a five-year plan that would increase the General Fund reserve equal to two months of operational costs and begin to fund a Section 115 Pension Rate Stabilization Fund. This plan is subject to the availability of funds and does not lock the City into any contributions that would be detrimental to the operations necessary to serve the needs of the residents of Bakersfield. Accounting System and Internal Controls - The City's accounting system is organized and operated on a fund basis with each fund treated as a distinct self-balancing accounting entity. Various funds utilized by the City of Bakersfield are fully described in Note 1 of Notes to the Basic Financial Statements. The City's accounting records for general governmental operations are maintained on a modified accrual basis of accounting, whereby revenues are recognized when measurable and available and expenditures are recognized when materials and services are received. Ac counting records for the enterprise and internal service funds are recorded on an accrual basis of accounting, whereby revenues are recognized when earned and expenses are recognized when incurred. In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1 ) the safeguarding of assets against loss from unauthorized use or disposition and (2 ) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (a) the cost of a control should not exceed the benefits likely to be derived and (b) the evaluation of costs and benefits requires estimates and judgments by management. Al l internal control evaluations occur within the framework described previously. The City Finance department believes that these internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. However, the City recognizes that even sound internal controls have inherent limitations. Internal controls must be reviewed to ensure that the City’s operating policies and procedures are being adhered to and that the controls are adequate to assure accurate and reliable financial reporting and to safeguard the City’s assets. Budgetary Controls - The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Project length financial plans are adopted for the capital projects funds. The level of budgetary control is established at the fund level. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Unencumbered amounts lapse at year-end. However, encumbrances and certain capital projects are re- appropriated as part of the following year's budget. The 2018-19 City of Bakersfield appropriation limit established as required by state statute was $408,504,776. Cash Management - The City maintains a cash and investment pool that is available for use by all funds, except the Fire Pension Trust Fund. Each fund type's portion of this pool is displayed on the combined balance sheet as cash and short-term investments. The deposits and investments of the Fire Relief and Pension Trust Fund are held separately from other City funds. vi The City Council has adopted an investment policy in accordance with California Government Code Sections 53607 and 53646, with a goal to minimize credit and market risks while maintaining a competitive yield on its portfolio. The City is also governed by State statutes authorizing the City to invest in bonds or other evidences of indebtedness of the U.S. Government or any of its agencies and instrumentalities, repurchase agreements and bankers’ acceptances. The pension trust investments are administered separately under Municipal Code Section 2.92, which is within state guidelines. OTHER INFORMATION Independent Audit - The City Charter requires an annual audit by independent certified public accountants. The City Council also adopted a policy regarding auditor rotation that encourages competitive bidding on a five-year cycle. The accounting firm of Brown Ar mstrong Ac countancy Corporation was selected by the City Council in 2017 to perform the annual audit for the 2016-17 fiscal year. This audit year (2 018-19) is the third year of the five-year agreement with this firm. Awards - The Government Finance Officers As sociation of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Bakersfield for its Comprehensive An nual Financial Report for the fiscal year ended June 30, 2018, marking the thirty-eighth consecutive year Bakersfield has received the GFOA certificate. The Certificate of Ac hievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. A Certificate of Ac hievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Ac hievement Program requirements and we are submitting it to GFOA to determine its eligibility for another certificate. Ad ditionally, the City received the Distinguished Budget Presentation Award for the fiscal year beginning July 1, 2018 from the GFOA. The Distinguished Budget Presentation Aw ard judges a government's budget document for compliance with the guidelines established by the National Ad visory Council on State and Local Budgeting and best practices of the GFOA. Acknowledgments - The preparation of this report on a timely basis could not be accomplished without the efficient services of the entire staff of the Finance Department. I should like to express my appreciation to all members of the Department who assisted and contributed to its preparation. I would also like to thank the Mayor, City Council and the City Manager for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully, Randy McKeegan Finance Director vii viii ix CITY OF BAKERSFIELD June 30, 2019 City Council Karen K. Goh .......................................................................................................................Mayor Willie Rivera ........................................................................................................Member/Ward 1 Andrae Gonzales ...................................................................................................Member/Ward 2 Ken Weir .............................................................................................................Member/Ward 3 Bob Smith ......................................................................................................Vice Mayor/Ward 4 Bruce Freeman ....................................................................................................Member/Ward 5 Jacquie Sullivan ....................................................................................................Member/Ward 6 Chris Parlier ..........................................................................................................Member/Ward 7 Administrative Personnel Alan Tandy ............................................................................................................City Manager Virginia Gennaro ...................................................................................................City Attorney Phil Burns (Interim) .................................................................... Development Services Director Randy McKeegan ...............................................................................................Finance Director Anthony Galagaza........................................................................................................Fire Chief Lyle Martin ..............................................................................................................Police Chief Nick Fidler ..............................................................................................Public Works Director Dianne Hoover ...............................................................................Director Recreation & Parks Art Chianello ....................................................................................Water Resources Manager x 1 INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and Members of the City Council Bakersfield, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bakersfield, California, (the City) as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, as of June 30, 2019, and the respective changes in financial position and, where applicable, cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 2 Emphasis of Matter As disclosed in the Note 1 to the financial statements, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 83, Certain Asset Retirement Obligations and GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, during the fiscal year ended June 30, 2019. Our opinion is not modified with respect to the matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 3 through 18 and 105 through 107, the City’s Retirement Plans’ Schedule of Changes in the Net Pension Liability and Related Ratios and the Schedule of Pension Contributions on pages 108 through 110, and the Other Postemployment Benefit (OPEB) Plan’s Schedules of Changes in the City’s Net OPEB Liability and Related Ratios as well as its Schedule of Contributions on pages 111 and 112 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by GASB, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual major and nonmajor fund financial statements and schedules, schedules of long-term debt recorded in private purpose trust fund on pages 117 through 146, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual major and nonmajor fund financial statements and schedules as well as schedules of long-term debt recorded in private purpose trust fund on pages 117 through 146 are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual major and nonmajor fund financial statements and schedules as well as schedules of long-term debt recorded in private purpose trust fund on pages 117 through 146 are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 27, 2019, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California December 27, 2019 CITY OF BAKERSFIELD Management's Discussion and Analysis This discussion and analysis of the City of Bakersfield’s (City) financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2019. We encourage readers to consider the information presented here in conjunction with the accompanying letter of transmittal, the basic financial statements, and the accompanying notes to those financial statements. FINANCIAL HIGHLIGHTS The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $2.0 billion (net position). The City’s total net position increased by $41.4 million over the prior fiscal year. This increase is attributable to a $1.8 million decrease in restricted net position and a $6.8 million increase in unrestricted net position, offset by a $35.0 million increase in capital assets investment. Prior year information presented in this section does not take into account restatements made to fiscal year 2017-18 balances for prior period adjustments (see Note 23). As of the close of the current fiscal year, the City's Governmental Funds reported combined ending fund balances of $186.5 million, an increase of $12.7 million in comparison with the prior year. Amounts available for spending include restricted, committed, assigned and unassigned fund balances. Of this amount, $19.0 million is restricted by law or externally imposed requirements, $110.5 million is committed for specific purposes, $51.4 million is assigned and $4.7 million is unassigned and available. Available fund balance for the General Fund increased $15.6 million to $54.6 million, which equates to 26.3% of total General Fund expenditures for the year. The City's long-term debt showed a decrease of $6.7 million during the current fiscal year. 3 CITY OF BAKERSFIELD Management's Discussion and Analysis OVERVIEW OF THE FINANCIAL STATEMENTS The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statements present the financial picture of the City from the economic resources measurement focus using the accrual basis of accounting. They present governmental activities and business-type activities separately. Additionally, certain eliminations have occurred as prescribed by the Governmental Accounting Standards Board (GASB) statements in regards to interfund activity, payables and receivables. The Statement of Net Position and the Statement of Activities provide information about the City as a whole and its activities through the fiscal year. These statements include all assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account, regardless of when cash is received or paid. These two statements report the City's net position and changes in it. Net position is the difference between assets deferred outflows of resources, liabilities, and deferred inflows of resources providing a measurement of the City's financial health. Over time, increases or decreases in the City's net position can be an indicator of whether its overall financial health is improving or deteriorating. Other factors to consider are changes in the City's property tax base and sales tax base. The government-wide financial statements do not include the fiduciary funds, which comprise the private purpose trust funds, pension trust funds, and agency funds. Resources in the fiduciary funds are generally not available to support the City’s own programs. In the Statement of Net Position and the Statement of Activities, we separate the City activities as follows: Governmental activities - Most of the City's basic services are reported in this category, including the General Government, Police, Fire, Public Works, Recreation & Parks and Development Services. These activities are generally financed by property and sales taxes, user fees, interest income, franchise fees, and state and federal shared revenues and grants. Business-Type activities - The City charges a fee to customers to cover all or most of the cost of certain services it provides. The City's Water, Wastewater, and Refuse Collection systems along with the Municipal Airport and Offstreet Parking activities are reported in this category. 4 CITY OF BAKERSFIELD Management's Discussion and Analysis FUND FINANCIAL STATEMENTS A fund is a specific grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities and objectives. The fund financial statements provide detailed information about the most significant funds, not the City as a whole. Some funds are required to be established by State law and by bond covenants. Management establishes many other funds to help control and manage financial resources for particular purposes, or to show that the City is meeting legal responsibilities when using certain taxes, grants, and other revenue. These financial statements include statements for each of the three categories of activities – governmental, proprietary and fiduciary. The governmental activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The proprietary activities are prepared using the economic resources measurement focus and the accrual basis of accounting. The fiduciary activities are agency funds that also use the economic resources measurement focus but only report a balance sheet. Reconciliation of the Governmental Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences created by the integrated approach. Governmental Funds - Most of the City's basic services are reported in governmental funds, which focus on the flow of resources into and out of those funds with the balances remaining at year-end available for appropriation. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The Governmental Fund financial statements focus on near-term inflow and outflow of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial requirements. To facilitate comparisons, the differences of results in the Governmental Fund financial statements to those in the Government-Wide financial statements are explained in a reconciliation schedule following the Governmental Fund financial statement. Proprietary Funds - Proprietary Funds are used to report services the City charges for, whether to external customers or units within the City. Proprietary Funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. The City's Enterprise Funds report the same functions as the business-type activities reported in the Government-Wide financial statements, but provide mo re detail and additional information, such as cash flows. The City uses Internal Service Funds (the second component of Proprietary Funds) to report activities that provide supplies and services for the City's other programs and activities. This includes the City's Self-Insurance and Equipment Management Funds. These services primarily benefit governmental rather that business-type functions so a majority of the related operation costs are included with the governmental activities in the Government-Wide financial statements. Fiduciary Funds - The City is the trustee, or fiduciary, for certain funds held on behalf of various third parties. The City's fiduciary activities are reported in separate Statements of Fiduciary Net Position. These activities are excluded from the City's other financial statements because these resources are not available to support the City's programs or operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. NOTES TO THE FINANCIAL STATEMENTS The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the Government-Wide and Fund financial statements. The notes can be found starting on page 47 of this report. OTHER INFORMATION In addition to the basic financial statements and accompanying notes, this report also presents certain “Required Supplementary Information” concerning the City's progress in funding its obligation to provide pension benefits and other post-employment benefits (OPEB) to its employees and budgetary comparison schedules for the General Fund and Special Revenue Major Funds. This information can be found starting on page 103 of this report. 5 CITY OF BAKERSFIELD Management's Discussion and Analysis GOVERNMENT-WIDE FINANCIAL ANALYSIS As previously noted, net position may serve over time as a useful indicator of a government’s financial position. In the current year, the City's assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $2.0 billion at the close of the reporting period, which is a $39.9 million increase, or 2%, in comparison with the prior year. The largest portion of the City’s net position relates to its net investment in capital assets of $2.0 billion (e.g., land, buildings, machinery, infrastructure and equipment), less any related debt used to acquire those assets that is still outstanding. These capital assets are used to provide services to citizens; as such, these assets are not available for future expenditures. The City’s net investment in capital assets is reported net of related debt, though it should be noted that the resources needed to repay this debt must be provided from other sources as the capital assets themselves cannot be used to service this debt. A small portion of the City’s net position, $39.2 million (2.0% of the total), represents resources that are subject to external restrictions on how they may be used. As in the prior year, the City is able to report positive balances in both categories of net position, whether for the City as a whole or for its separate Governmental and Business-type activities. The following table presents the components of the government-wide Statement of Net Position at the end of the fiscal year for both 2018 and 2019. The governmental and business-type activities columns reflect amounts that have been restated in this financial report. Note 23 explains any prior period adjustments that changed net position. City of Bakersfield - Net Position (in thousands) Governmental Activities Business-Type Activities Total 2018 2019 2018 2019 2018 2019 Assets Current and other assets $308,835 $326,209 $190,148 $189,182 $498,983 $515,391 Capital assets (net)1,315,194 1,330,859 878,477 890,918 2,193,671 2,221,777 Total assets 1,624,029 1,657,068 1,068,625 1,080,100 2,692,654 2,737,168 Deferred Outflows of Resources 112,429 95,296 20,589 17,510 133,018 112,806 Liabilities Long-term liabilities outstanding 544,274 536,281 238,059 230,239 782,333 766,520 Other liabilities 44,493 49,003 19,666 15,683 64,159 64,686 Total liabilities 588,767 585,284 257,725 245,922 846,492 831,206 Deferred Inflows of Resources 26,311 25,794 2,809 3,032 29,120 28,826 Net Position Net investment in capital assets 1,301,335 1,316,113 700,725 720,818 2,002,060 2,036,931 Restricted 20,760 18,976 20,200 20,200 40,960 39,176 Unrestricted (200,715)(193,802)107,755 107,638 (92,960)(86,164) Total Net Position $1,121,380 $1,141,287 $828,680 $848,656 $1,950,060 $1,989,943 6 CITY OF BAKERSFIELD Management's Discussion and Analysis Governmental Activities – Total assets for governmental activities increased by $33.0 million, with current and other assets in governmental activities increasing by $17.4 million and a capital assets increase of $15.7 million. Total liabilities decreased by $3.5 million, with other liabilities increasing by $4.5 million and long-term liabilities decreasing by $8.0 million. Of the $19.9 million increase in governmental activities total net position, unrestricted net position increased by $6.9 million, net investment in capital assets increased by $14.8 million and restricted net position decreased by $1.8 million. The decrease in unrestricted net position stems primarily from the continued rise is pension liabilities. Business-Type Activities – Total assets for business-type activities increased by $11.5 million, with current and other assets increasing by $1.0 million and a $12.4 million increase in capital assets. Total liabilities decreased by $11.8 million, with other liabilities decreasing by $4.0 million and long-term liabilities also decreasing by $7.8 million. Total net position for business- type activities increased by $20.0 million. Of that amount, net investment in capital assets increased by $20.1 million. Restricted net position remained constant and unrestricted net position increased by only $0.1 million. The overall increase in net position is the result of completed improvement projects in the Wastewater, Refuse and Agriculture Water funds offset by the continued increases in pension related liabilities and the recording of other post-employment benefit liabilities. Change in Net Position of the City The following table presents the government-wide changes in net position for both 2018 and 2019. The City’s total revenues of $508.4 million were more than expenses of $467.0 million for an increase in net position before transfers & other items of $41.4 million. The governmental and business-type activities columns reflect amounts that have been restated in this financial report. Note 23 explains any prior period adjustments that changed net position. City of Bakersfield - Changes in Net Position (in thousands) Governmental Activities Business-Type Activities Total 2018 2019 2018 2019 2018 2019 Revenues: Program revenues: Charges for services $55,401 $57,472 $119,148 $125,940 $174,549 $183,412 Operating grants and contributions 9,166 11,411 9,047 8,407 18,213 19,818 Capital grants and contributions 85,533 78,709 4,914 11,978 90,447 90,687 Total program revenues 150,100 147,592 133,109 146,325 283,209 293,917 General revenues: Taxes: Property taxes 79,774 83,544 --79,774 83,544 Sales taxes 72,322 94,622 --72,322 94,622 Other taxes 1,309 1,525 --1,309 1,525 Intergovernmental: Intergovt, unrestricted 202 186 --202 186 Grants and contributions not restricted to specific programs 25,141 25,237 --25,141 25,237 Investment earnings 1,296 2,709 1,879 5,046 3,175 7,755 Miscellaneous 1,754 1,475 --1,754 1,475 Gain on sale of property 249 101 20 25 269 126 Total Revenues 332,147 356,991 135,008 151,396 467,155 508,387 7 CITY OF BAKERSFIELD Management's Discussion and Analysis City of Bakersfield - Changes in Net Position (in thousands) Governmental Activities Business-Type Activities Total 2018 2019 2018 2019 2018 2019 Expenses: Governmental: General government 29,731 31,112 --29,731 31,112 Public safety - Police 105,006 106,341 --105,006 106,341 Public safety - Fire 44,561 46,537 --44,561 46,537 Public works 145,530 126,436 --145,530 126,436 Recreation and parks 22,614 20,686 --22,614 20,686 Development services 8,534 8,221 --8,534 8,221 Interest on long-term debt 25 17 --25 17 Subtotal - Governmental 356,001 339,350 --356,001 339,350 Business-Type: Wastewater treatment --42,104 43,492 42,104 43,492 Refuse collection --47,971 52,077 47,971 52,077 Agricultural water --4,198 4,470 4,198 4,470 Domestic water --29,205 26,859 29,205 26,859 General aviation --671 480 671 480 Offstreet parking --234 291 234 291 Subtotal - Business-Type --124,383 127,669 124,383 127,669 Total expenses 356,001 339,350 124,383 127,669 480,384 467,019 Change in net position before transfers & other items (23,854)17,641 10,625 23,727 (13,229)41,368 Transfers 2,033 4,058 (2,033)(4,058)-- Extraordinary gain from litigation settlement --54,231 -54,231 - Changes in net position (21,821)21,699 62,823 19,669 41,002 41,368 Net Position - Beginning of Year (as restated)1,143,201 1,119,588 765,857 828,988 1,909,058 1,948,576 Net Position - End of Year $1,121,380 $1,141,287 $828,680 $848,657 $1,950,060 $1,989,944 Governmental Activities – The results in governmental activities caused an increase in the City’s net position by $21.7 million during the year. In the graph below, the difference between the program revenue and expenses by activity illustrates the amount each respective activity is supported by program revenues. Public Safety and Recreation and Parks service delivery costs exceeded program revenues by $138.0 million and $0.7 million, respectively. Public Safety programs rely heavily on taxes to support their operations whereas Recreation and Parks relies on both taxes and charges for services to support their operations. This fiscal year Public Works service delivery costs exceeded program revenues by $30.3 million because a significant portion of its services are also tax supported. 8 CITY OF BAKERSFIELD Management's Discussion and Analysis Total expenses in Governmental Activities had a net decrease of $16.7 million from the previous fiscal year for an overall 4.7% decrease. The largest increases were in Public Safety – Police and Public Safety – Fire, which increased by $1.3 million and $2.0 million, respectively, and in General Government with an increase of $1.4 million. These increases are primarily related to increases connected to California Public Employees' Retirement System (CalPERS) rates in the current year. These changes were offset by a decrease of $19.1 million in Public Works, which is primarily due to less expenditures incurred from capital improvement projects. 9 CITY OF BAKERSFIELD Management's Discussion and Analysis The taxes category is the largest revenue source for governmental activities, amounting to $179.7 million or 50.3% of total revenues. Capital grants and contributions is also a significant revenue source for the City’s governmental activities, amounting to $78.7 million or 22.0% of total revenues. The third most significant sources of revenue is charges for services, amounting to $57.5 million or 16.1% of total revenues. Governmental Activities Revenues increased $24.8 million which is a 7.5% increase compared to the previous fiscal year. This increase is due primarily to a 15.0%, or $27.4 million, increase in General Revenues, offset by a 1.7%, or $2.5 million, decrease in Program Revenues. General Revenues - Sales tax revenues increased by 30.8%, or $22.3 million, while property taxes increased by 4.7%, or $3.8 million. The primary reason for this increase is from the Public Safety and Vital Services (PSVS) district tax which is a new source of revenue that was approved by residents in November 2018. There has also been a slight recovery in general sales tax revenue related to recent improvements in the oil industry with its related impacts on the local economy and an improvement in consumer confidence. Program Revenues - Capital Grants and Contributions decreased by $6.8 million due to a reduction in special projects funded in Public Works compared to the prior year. The most significant reduction is related to the Thomas Roads Improvement Program (TRIP) projects which included less activity related to construction and property acquisition when compared to the previous year. Operating Grants and Contributions increased $2.2 million with the majority of the increase due to more entitlement funds received from the Department of Housing and Urban Development in the current year and an increase in State grants received to address the homelessness issues within the City. 10 CITY OF BAKERSFIELD Management's Discussion and Analysis Business-Type Activities – The City operates six Enterprise Funds that offer wastewater services, refuse collection, river & agricultural water, domestic water to City residents, downtown parking and a municipal airport. Business-type activities increased the City’s net position by $19.7 million during the current year. The chart above compares total program revenues and expenses. Program revenues exceeded program expenses in Wastewater Treatment by $6.9 million, Refuse Collection by $2.4 million, River & Agricultural Water by $5.3 million, and Domestic Water by $4.2 million These increases were offset slightly by program expenses exceeding program revenues in both the Airpark and Offstreet Parking funds by $156 thousand in total. Total expenses increased by $3.3 million (2.6%) over the prior year. The following chart illustrates the distribution of business-type revenues by category. The City’s business-type activities rely heavily on charges for services to fund their operations, making up 83.2% of total revenues. Capital grants and contributions is the second largest revenue source at 7.9% of total revenues. 11 CITY OF BAKERSFIELD Management's Discussion and Analysis Business-Type activities program revenues increased by $13.2 million, 9.9%, over the prior year. The majority of this can be attributed to an increase in Refuse Collection service revenue of $3.2 million which was due to rate increases and additional residential service customers. There were also increases in revenue in Domestic Water of $2.8 million, which was also connected to an increase in rates, and $2.7 million in River & Agricultural Water, for a large one-time sale of surplus water supplies. An increase in the Wastewater Treatment revenue was primarily connected to a rise in capital contributions of $5.9 million from more development in the area and consequently increases in related infrastructure added in the current year for that activity. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. A fund is created and segregated for the purpose of carrying out specific activities or attaining specific objectives in accordance with special regulations, restrictions, or limitations. Activity not required to be reported in a separate fund is included in the General Fund. Governmental Funds - The focus of the City’s Governmental Funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of the City’s available resources as it represents the portion of fund balance which is not limited to use for a particular purpose by an external party, City management or City Council. As of the end of the current fiscal year, the City’s Governmental Funds reported combined ending fund balances of $186.5 million, an increase of $12.7 million in comparison with the prior year. The components of total fund balance are as follows 12 CITY OF BAKERSFIELD Management's Discussion and Analysis (for more information see Note 14 – Fund Balances): Nonspendable fund balance, $1.0 million, are amounts that are not spendable in form, or are legally or contractually required to be maintained intact, and are made up of prepaid expenses and deposits. Restricted fund balance, $19.0 million, consists of amounts with constraints put on their use by external creditors, grantors, contributions, laws, regulations or enabling legislation. Examples of restrictions on funds are those for (1) $12.9 million for the purpose of the fund (i.e., Gas Tax and Road projects), (2) $2.2 million from the Redevelopment Successor Agency Housing Fund for projects and (3) $2.9 million for traffic safety projects. Committed fund balance, $110.5 million, are amounts for specific purposes determined by the Bakersfield City Council, such as funds collected from fees paid to mitigate the traffic impacts to the regional circulation system of $51.6 million and funds set aside by City Council in the General Fund for cash basis/emergency reserves of $26.5 million. Assigned fund balance, $51.4 million, for funds set aside by management for specific purposes. Amounts include $28.0 million set aside for capital projects and $1.0 million for the fund purposes related to transient occupancy fees, and $19.8 million for appropriations for next year’s budget. Unassigned fund balance, $4.7 million, represents the residual classification for the City’s General Fund. General Fund: The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the General Fund’s total fund balance increased by 40.0%, or $15.6 million from $39.5 million to $54.6 million. The following detail of changes from the prior year explains this change in fund balance for the year: Total operating revenues increased by $27.6 million (13.9%). Property Tax revenue increased by $4 million due to continuation of higher assessed values within the City limits. Sales Tax revenue had the most significant increase with the new PSVS district tax adding $17.1 million. The base (Bradley-Burns) sales tax revenue showed that there was some level of recovery to the local economy after successive years of declines resulting in a total increase in Sale Tax of $22.3 million. All other revenue sources within the General Fund remained fairly consistent compared to the previous fiscal year. Total expenditures increased by $9.4 million (a 4.7% increase). This was due to increases in the Public Safety costs in both Police and Fire expenditures related to filling vacancies ($8.2 million and $1.0 million, respectively). This increase was offset by a $1.8 million decrease in Public Works expenditures, specifically in the General Services division, due to a decrease in major projects within the General Fund. Overall personnel expenditures also increased throughout all General Fund departments due to increases in pension costs. Other governmental funds: As compared with the prior year, the total fund balances of the remaining governmental funds decreased by 2.2%, or $2.9 million, to $131.9 million with the following significant changes: The Gas Tax and Road Fund decreased by $2.3 million from $15.2 million to $12.9 million. Amounts in this fund are restricted by state and federal statute. The decrease is due to multiyear projects winding down and others in various stages of completion. The Capital Outlay Fund decreased by $0.5 million from $56.1 million to $55.6 million. Of this amount, $23.0 million is committed for contractual obligations and $3.6 million is committed for facility replacement. The remaining amount of $28.0 million is assigned and available for use at management’s discretion. The resulting decrease shows that expenditures were in line with projected revenues. The Park Improvement Fund decreased by $0.5 million. Of this amount, $4.8 million is committed for contractual obligations. The decrease in fund balance is from increases in expenditures for phase III of the Sports Village Complex upgrades. 13 CITY OF BAKERSFIELD Management's Discussion and Analysis The Transportation Development Fund increased by $0.7 million from $50.8 million to $51.6 million. The entire amount of $51.6 million is committed for contractual obligations and/or current projects. The resulting slight increase shows that expenditures were in line with projected revenues. Proprietary Funds - The City’s Proprietary Funds are shown in their entirety in the government-wide financial statements. All funds are being reported as major funds, so there is no need to report additional detail elsewhere in the document. The Wastewater Treatment Fund has total net position of $532.6 million at the end of the current year, an increase of $8.2 million over the prior year. Total net position includes $466.3 million net investment in capital assets and $20.2 million of restricted assets which are not available to cover current expenses. The remaining net position of $46.1 million is unrestricted and available to cover current operating and capital needs (including plant and equipment replacement) of the fund. The majority of the increase resulted from more development completed to infrastructure in the current year which was reflected in a $9.7 million addition in Capital Contributions and an overall increase in the Net Investment in Capital Assets of $5.6 million. The Refuse Collection Fund has total net position of $(0.6) million at the end of the current year, a decrease of $1.7 million from the prior year. The decrease is due to less revenue collected from residential services/rates than is necessary to cover the operating costs of the division along with the pension and OPEB costs that are being reported as part of new accounting requirements. Further review of the rates charged to customers will occur to establish a rate sufficient to cover these costs in future years and to address the deficit in net position. The River and Agricultural Water Fund has total net position of $28.9 million at the end of the current year, an increase of $4.9 million over the prior year. Total net position includes $18.0 million net investment in capital assets, which is not available to cover current expenses. The remaining net position of $10.9 million is unrestricted and available to cover current operating and capital needs of the fund. As in the prior year, revenues were more than sufficient to cover the fund costs resulting in this continued increase in net position. The Domestic Water Fund has total net position of $271.1 million at the end of the current year, an increase of $6.0 million over the prior year. Total net position includes $220.9 million net investment in capital assets, which is not available to cover current expenses. The remaining net position of $50.2 million is unrestricted and available to cover current operating and capital needs of the fund. The General Aviation Fund has total net position of $11.5 million at the end of the current year, a decrease of $2,538 compared to the prior year. Total net position includes $10.7 million net investment in capital assets, which is not available to cover current expenses. The remaining net position is unrestricted and available to cover current operating and capital needs of the fund. The Offstreet Parking Fund has total net position of $1.1 million at the end of the current year, a decrease of $83,667 compared to the prior year. Total net position includes $1.0 million net investment in capital assets, which is not available to cover current expenses. The remaining net position is unrestricted and available to cover current operating and capital needs of the fund. 14 CITY OF BAKERSFIELD Management's Discussion and Analysis CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets - The City’s investment in capital assets for its governmental and business-type activities as of June 30 of the current fiscal year amounts to $2.2 billion (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment, park facilities, roads, highways, bridges and construction in progress. The total increase in the City’s investment in capital assets for the current fiscal year was $28.1 million. Of this amount, a $15.7 million increase relates to Governmental Activities and a $12.4 million increase that relates to Business-Type Activities. Depreciation expense of $92.7 million was less than capital assets by this amount. These financial statements include infrastructure assets constructed or acquired through fiscal year 2018-19. Major capital asset events during the current fiscal year included the following: A variety of street construction projects and rehabilitation of major arterial streets. Construction in progress for governmental activities as of the end of the current fiscal year is $105.6 million. This figure includes over $103.7 million towards major street construction, traffic signals, and resurfacing projects throughout the City. The City added over $24.9 million in new streets and roads primarily due to new residential developments completed in the current year. These newly constructed right of ways are transferred over to the City by the various developers when the work is finalized. City of Bakersfield - Capital Assets (in thousands) Governmental Activities Business-Type Activities Total 2018 2019 2018 2019 2018 2019 Land and water storage rights $448,510 $449,360 $23,621 $23,630 $472,131 $472,990 Depreciable buildings, property, equipment and infrastructure, net 761,971 775,947 779,943 779,191 1,541,914 1,555,138 Construction in progress 104,713 105,552 43,436 56,621 148,149 162,173 Non-amortizable intangible assets --31,477 31,477 31,477 31,477 Total Capital Assets $1,315,194 $1,330,859 $878,477 $890,919 $2,193,671 $2,221,778 15 CITY OF BAKERSFIELD Management's Discussion and Analysis City of Bakersfield - Outstanding Debt Balance Incurred Satisfied Balance June 30, 2018 or Issued or Matured June 30, 2019 Governmental Activities Loans Payable $2,584,240 $4,136,541 $(609,305)$6,111,476 Certificates of Participation*11,275,000 -(2,640,000)8,635,000 Total governmental activities $13,859,240 $4,136,541 $(3,249,305)$14,746,476 Business-Type Activities Revenue Bonds Payable $166,998,212 $-$(6,868,638)$160,129,574 Loans Payable 2,256,378 -(752,126)1,504,252 Total business-type activities $169,254,590 $-$(7,620,764)$161,633,826 Total Debt $183,113,830 $4,136,541 $(10,870,069)$176,380,302 * Certificates of Participation in governmental activities are debt of the former Redevelopment Agency that is now reported as City debt. Long-Term Debt - At the end of the current fiscal year, the City had a total debt outstanding of $176.4 million. The City’s total debt decreased by a net amount of $6.7 million during the current fiscal year. This amount is the result of normal debt maturities. Certificates of Participation issued by the City via the former Redevelopment Agency in 2006 carry a Reserve Fund Surety from Ambac Assurance Company (Ambac). Moody’s Investor’s Service (Moody’s) rating on Ambac is currently “Baa1”. The current underlying rating on the Certificates of Participation has not been revised (currently “A1”). This rating on the Certificates of Participation reflects only the view of Moody’s, and any desired explanation of the significance of such rating should be obtained from Moody’s. There is no assurance that such rating will continue for any given period of time or that such rating will not be revised or withdrawn by Moody’s if, in the judgment of Moody’s, circumstances so warrant. The 2015 Wastewater Revenue Bonds – Series A, issued by the City in 2015, which redeemed a majority of the 2007 Wastewater Revenue Bonds – Series A, has an “Aa2” rating from Moody’s and an "AA" rating from Standard & Poors. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised or withdrawn by the rating agencies if, in their judgment, circumstances so warrant. More detailed information regarding capital asset and long-term debt activity can be found in the related notes to the financial statements. See Note 5 for capital assets and Note 11 for long-term debt. 16 CITY OF BAKERSFIELD Management's Discussion and Analysis GENERAL FUND BUDGETARY HIGHLIGHTS Differences between the original budget and the final amended budget reflect an increase in resources of $22.9 million and an increase in appropriations of $10.1 million. Significant budgetary amendments (changes) are summarized as follows: $0.9 million increase in various resources and appropriations due to revenues associated with open purchase orders at the end of the previous fiscal year. Also, $1.3 million increase in various resources due to revenues associated with prior year appropriations not spent and carried forward to this fiscal year. $17.5 million wa s added to the budget for the new PSVS district sales tax approved by the residents of the City to address needs throughout Bakersfield including public safety, economic development and homelessness. $1.2 million increase in resources and appropriations for State for the Homeless Emergency Aid Program (HEAP) specifically awarded to the the Development Services department to deal with the growing problem in the area. $0.7 million increase in resources and appropriations for grant related projects in the Police Department. The final amended revenue estimate budget figures in the General Fund were lower than actual revenue by $11.0 million and appropriations were higher than actual expenditures by $8.0 million. Significant differences between budget and actual amounts are as follows: $10.1 million positive variance in tax revenue. This is the result of an increase in property tax revenue and sales and use tax revenue. Property tax revenue was initially estimated to increase while Sales tax revenue were not expected to increase at the level experienced. Projections for tax revenue were conservative in nature because of uncertainty throughout the year on the level and sustainability of economic recovery in the area. $1.9 million less than budgeted in intergovernmental revenue which is due primarily to this source of funds being based on reimbursement of expenditures incurred. Some of the project activity for these awards had not moved forward resulting in less revenue being recognized. $1.8 million variance of appropriations over actual expenditures in Public Safety-Fire. The savings are due primarily to salary and benefit savings from unfilled positions plus some grant funded projects that were budgeted but not started. $4.9 million variance of appropriations over actual expenditures in Departments other than Fire are also due primarily to salary and benefit savings from unfilled positions. 17 CITY OF BAKERSFIELD Management's Discussion and Analysis ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The key assumptions in the General Fund revenue forecast for fiscal year 2019-20 were: 1.Property tax revenue is projected to grow at 4% which is the same level as last year’s estimate as projected by Kern County. 2.Sales and use tax revenue is projected to show a slight increase of 2% in fiscal year 2019-20, which is again the same estimate made for fiscal year 2018-19. Sales and use tax revenues are difficult to project this year because of slowdowns in previous years in the oil and gas industry, both locally and globally, and the economy as a whole. While the economy has shown growth in recent years, the City continues to take a conservative approach on the expectations of the sustainability and levels of that growth. 3.California Public Employees’ Retirement System (CalPERS) approved new policies last year which have raised rates approximately 10% for next fiscal year. Similar increases are projected for the next five fiscal years. New items specifically addressed in the 2019-20 budget include the following: Police Department – The Police Department’s operating budget has increased from fiscal year 2018-19 by 16.8%, totaling $15.7 million. This increase is primarily attributable to increased costs related to the PSVS plan to increase the number of officers and support staff in the department over the next three years. Fire Department – The Fire Department's operating budget had a 9.2% increase from fiscal year 2018-19 totaling $3.8 million. This increase is primarily due to the implementation of the PSVS driven plan to increase staffing by 11 in the upcoming year. Public Works - The Public Works Department operating budget increased by $6.7 million, or 5.4%, from fiscal year 2018-19. The budget included an addition of 7 employees (non-PSVS) as well as some operational increases related to PSVS. The increase wa s also due to the CalPERS rate escalations as we ll as an increases in staffing in areas covered by non-General fund revenue, specifically in operations for refuse and fleet services. In addition, there was a significant need for specific equipment to be replaced for non-General fund services that were well beyond their normal life cycle. Development Services – The Development Services Department’s operating budget has increased from fiscal year 2018-19 by 56.4%, totaling $6.1 million. This significant growth is due almost exclusively to PSVS related plans in the department to add rapid response teams to address homelessness and establish an economic development team to foster further growth in the City. Recreation and Parks – The Recreation and Parks Department’s operating budget has increased from fiscal year 2018-19 by 11.5%, totaling $2.4 million. This increase is in part also related to a PSVS program to establish a rapid response team in this department to address homeless issues in City Parks. It is also due to the increase in CalPERS rates resulting in higher benefit costs. CONTACTING THE CITY'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional financial information can be sent via e-mail to: finance@bakersfieldcity.us. Formal written requests should be addressed to: City of Bakersfield, Attn: Finance Department, 1600 Truxtun Avenue, Bakersfield, CA 93301. 18 Government-Wide Financial Statements 19 Statement of Net Position June 30, 2019 Governmental Activities Business-Type Activities Total Assets: Current assets: Cash and investments $205,169,958 $170,601,357 $375,771,315 Accounts receivable, net 23,506,116 11,565,786 35,071,902 Interest receivable 1,086,096 818,965 1,905,061 Notes/loans receivable - current 410,846 -410,846 Due from other governmental agencies 70,445,960 1,753,297 72,199,257 Internal balances (4,065,513)4,065,513 - Prepayments and inventories 2,065,796 -2,065,796 Total current assets 298,619,259 188,804,918 487,424,177 Noncurrent assets: Capital assets: Land 449,359,733 23,630,085 472,989,818 Depreciable capital assets, net 775,947,368 779,190,704 1,555,138,072 Construction in progress 105,552,305 56,620,687 162,172,992 Non-amortizable intangible assets -31,476,906 31,476,906 Land held for resale 1,198,744 -1,198,744 Notes/loans receivable 26,390,855 376,678 26,767,533 Total noncurrent assets 1,358,449,005 891,295,060 2,249,744,065 Total assets 1,657,068,264 1,080,099,978 2,737,168,242 Deferred Outflows of Resources: Deferred pensions (See Note 16)87,796,456 7,005,087 94,801,543 Deferred OPEB (See Note 17)7,499,485 1,300,738 8,800,223 Debt issuance -9,204,816 9,204,816 Total deferred outflows of resources 95,295,941 17,510,641 112,806,582 Liabilities: Current liabilities: Accounts payable and accrued liabilities 24,048,364 10,280,954 34,329,318 Customers' deposits -4,952,712 4,952,712 Advances from grantors and third parties 24,954,186 449,371 25,403,557 Total current liabilities 49,002,550 15,683,037 64,685,587 Noncurrent liabilities: Due within one year: Long-term debt 4,003,689 8,050,764 12,054,453 Capital leases payable -670,701 670,701 Kern River Levee District/Buena Vista -314,215 314,215 Claims and judgments payable 12,705,801 -12,705,801 Compensated absences payable 2,391,510 604,974 2,996,484 Due in more than one year: Long-term debt 10,742,787 153,583,062 164,325,849 Capital leases -17,000,597 17,000,597 Claims and judgments payable 35,821,500 -35,821,500 Net other post-employment benefits liability 65,833,893 11,418,479 77,252,372 Compensated absences payable 13,130,171 1,369,970 14,500,141 Net pension liability 391,651,392 37,226,126 428,877,518 Total noncurrent liabilities 536,280,743 230,238,888 766,519,631 Total liabilities 585,283,293 245,921,925 831,205,218 Deferred Inflows of Resources: Deferred pensions (See Note 16)19,706,478 1,976,491 21,682,969 Deferred OPEB (See Note 17)6,087,560 1,055,850 7,143,410 Total deferred inflows of resources 25,794,038 3,032,341 28,826,379 Net Position: Net investment in capital assets 1,316,112,930 720,818,075 2,036,931,005 Restricted: Capital improvements 18,975,747 20,200,000 39,175,747 Unrestricted (193,801,803)107,638,278 (86,163,525) Total net position $1,141,286,874 $848,656,353 $1,989,943,227 The accompanying notes are an integral part of these financial statements. 20 21 CITY OF BAKERSFIELD Statement of Activities For the Fiscal Year Ended June 30, 2019 Program Revenues Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Total Primary Government: Governmental activities: General government $31,112,425 $5,476,706 $621,202 $-$6,097,908 Public safety - Police 106,340,979 3,719,138 2,172,597 -5,891,735 Public safety - Fire 46,537,182 7,615,334 1,372,136 -8,987,470 Public works 126,435,754 16,970,725 3,087,617 76,050,224 96,108,566 Recreation & parks 20,685,570 17,354,482 31,454 2,554,604 19,940,540 Development services 8,221,265 6,335,650 4,126,242 103,888 10,565,780 Interest on long-term debt 17,358 ---- Total governmental activities 339,350,533 57,472,035 11,411,248 78,708,716 147,591,999 Business-type activities: Wastewater treatment 43,491,976 33,916,086 6,752,334 9,735,725 50,404,145 Refuse collection 52,077,033 54,158,105 367,407 -54,525,512 River and agricultural water 4,469,652 9,643,555 -107,132 9,750,687 Domestic water 26,859,329 27,744,037 1,249,460 2,036,287 31,029,784 General aviation 480,368 318,401 37,791 98,486 454,678 Offstreet parking 290,799 160,090 --160,090 Total business-type activities 127,669,157 125,940,274 8,406,992 11,977,630 146,324,896 Total primary government $467,019,690 $183,412,309 $19,818,240 $90,686,346 $293,916,895 General Revenues: Taxes: Property taxes Sales and use tax Other taxes Intergovernmental, unrestricted Unrestricted grants and contributions Investment earnings Miscellaneous Gain on sale of property Transfers Total general revenues and transfers Change in net position Net Position - Beginning of Year, as restated Net Position - End of Year The accompanying notes are an integral part of these financial statements. 22 Net (Expense) Revenue and Changes in Net Position Governmental Activities Business-Type Activities Total $(25,014,517)$-$(25,014,517) (100,449,244)-(100,449,244) (37,549,712)-(37,549,712) (30,327,188)-(30,327,188) (745,030)-(745,030) 2,344,515 -2,344,515 (17,358)-(17,358) (191,758,534)-(191,758,534) -6,912,169 6,912,169 -2,448,479 2,448,479 -5,281,035 5,281,035 -4,170,455 4,170,455 -(25,690)(25,690) -(130,709)(130,709) -18,655,739 18,655,739 (191,758,534)18,655,739 (173,102,795) 83,543,561 -83,543,561 94,622,228 -94,622,228 1,524,996 -1,524,996 185,685 -185,685 25,237,610 -25,237,610 2,708,894 5,045,827 7,754,721 1,474,919 -1,474,919 101,086 25,453 126,539 4,058,397 (4,058,397)- 213,457,376 1,012,883 214,470,259 21,698,842 19,668,622 41,367,464 1,119,588,032 828,987,731 1,948,575,763 $1,141,286,874 $848,656,353 $1,989,943,227 23 24 Governmental Fund Financial Statements 25 CITY OF BAKERSFIELD Balance Sheet Governmental Funds June 30, 2019 General Fund Transient Occupancy Taxes Community Development Block Grant Gas Tax & Road Fund Assets: Cash and investments $16,468,459 $23,881 $323,253 $- Accounts receivable, net 794,606 968,364 14,738,224 22,031 Interest receivable 290,105 37,329 -57,309 Due from other governmental agencies 29,187,262 -709,345 40,286,090 Due from other funds 18,649,197 --- Notes/loans receivable --3,671,422 - Prepaid items 12,755 --- Total assets $65,402,384 $1,029,574 $19,442,244 $40,365,430 Liabilities, Deferred Inflows of Resources and Fund Balances: Liabilities: Accounts payable $5,505,432 $26,745 $433,278 $8,791,445 Due to other funds ---18,649,197 Advances from grantors and third parties 2,028,323 --- Total liabilities 7,533,755 26,745 433,278 27,440,642 Deferred Inflows of Resources: Deferred revenue 3,235,695 -18,392,057 22,031 Fund Balances: Nonspendable 51,479 --- Restricted --616,909 12,902,757 Committed 27,488,388 13,470 -- Assigned 22,403,228 989,359 -- Unassigned 4,689,839 --- Total fund balances 54,632,934 1,002,829 616,909 12,902,757 Total liabilities, deferred inflows of resources, and fund balances $65,402,384 $1,029,574 $19,442,244 $40,365,430 The accompanying notes are an integral part of these financial statements. 26 Capital Outlay Park Improvement Transportation Development Other Governmental Funds Total Governmental Funds $56,139,156 $7,889,764 $52,965,027 $5,585,305 $139,394,845 644,607 --6,313,033 23,480,865 62,082 37,887 261,156 25,996 771,864 28,914 --234,350 70,445,961 ----18,649,197 ---22,719,433 26,390,855 942,965 ---955,720 $57,817,724 $7,927,651 $53,226,183 $34,878,117 $280,089,307 $2,211,547 $3,121,957 $1,674,270 $282,319 $22,046,993 ----18,649,197 ---22,925,863 24,954,186 2,211,547 3,121,957 1,674,270 23,208,182 65,650,376 46,606 --6,213,854 27,910,243 942,965 ---994,444 ---5,456,081 18,975,747 26,647,827 4,805,694 51,551,913 -110,507,292 27,968,779 ---51,361,366 ----4,689,839 55,559,571 4,805,694 51,551,913 5,456,081 186,528,688 $57,817,724 $7,927,651 $53,226,183 $34,878,117 $280,089,307 27 CITY OF BAKERSFIELD Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position June 30, 2019 Total Fund Balances - Total Governmental Funds $186,528,688 Amounts reported for Governmental Activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet. Capital assets allocated from Internal Service Funds are included in the Internal Service Funds adjustment below. Capital assets $2,550,120,319 Ending accumulated depreciation (1,219,260,913)1,330,859,406 Land held for resale is not a current financial resource and is not reported in the Governmental Funds.1,198,744 Deferred outflows of resources related to pensions are not a current financial resource and are not reported in the Governmental Funds 87,796,456 Deferred outflows of resources related to other post-employment benefits are not a current financial resource and are not reported in the Governmental Funds 7,499,485 Deferred inflows of resources related to pensions are not a current financial resource and are not reported in the Governmental Funds (19,706,478) Deferred inflows of resources related to other post-employment benefits are not a current financial resource and are not reported in the Governmental Funds (6,087,560) Interest payable on long-term debt does not require current financial resources. Therefore, interest payable is not reported as a liability in the Governmental Funds Balance Sheet.(113,308) Unearned revenue and other resources not available to liquidate liabilities of the current period are not recognized in the Governmental Funds.27,910,242 Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the Government-Wide Statement of Net Position.12,523,756 Long-term liabilities are not due and payable in the current period and therefore they are not reported in the Governmental Funds Balance Sheet. Noncurrent liabilities allocated from Internal Service Funds are included in the Internal Service Funds adjustment above. Notes/Contracts/Loans payable (14,746,476) Compensated absences payable (14,890,796) Unfunded post-employment benefits (65,833,893) Unfunded pension benefits (391,651,392)(487,122,557) Net Position of Governmental Activities $1,141,286,874 The accompanying notes are an integral part of these financial statements. 28 29 CITY OF BAKERSFIELD Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2019 General Fund Transient Occupancy Taxes Community Development Block Grant Gas Tax & Road Fund Revenues: Taxes $189,012,448 $9,943,109 $-$- Licenses and permits 3,172,269 --- Intergovernmental 4,702,162 -3,300,238 77,576,105 Charges for services 24,949,296 8,700,059 -- Fines, forfeitures and assessments 911,966 --56,499 Interest income 1,413,557 117,291 1,073 370,085 Loan payments --326,479 - Contributions and donations 123,155 1,200,000 -- Other income 1,448,179 -8,751 199 Total revenues 225,733,032 19,960,459 3,636,541 78,002,888 Expenditures: Current: General government 12,750,089 9,891,488 -- Public safety - Police 95,677,601 --- Public safety - Fire 39,033,631 --- Public works 22,867,605 --3,266,451 Recreation and parks 20,336,011 --- Development services 7,701,370 -2,407,213 - Non-departmental 9,220,222 3,136,900 -- Capital outlay --633,969 77,021,522 Debt service: Principal retirement ---- Interest and fiscal charges ---- Total expenditures 207,586,529 13,028,388 3,041,182 80,287,973 Excess (deficiency) of revenues over (under) expenditures 18,146,503 6,932,071 595,359 (2,285,085) Other financing sources (uses): Transfers in 1,200,000 --- Transfers out (3,734,670)(7,791,897)(507,545)- Total other financing sources (uses)(2,534,670)(7,791,897)(507,545)- Net change in fund balances 15,611,833 (859,826)87,814 (2,285,085) Fund balances - beginning, as restated 39,021,101 1,862,655 529,095 15,187,842 Fund balances - ending $54,632,934 $1,002,829 $616,909 $12,902,757 The accompanying notes are an integral part of these financial statements. 30 Capital Outlay Park Improvement Transportation Development Other Governmental Funds Total Governmental Funds $5,673,495 $-$-$-$204,629,052 ---311,666 3,483,935 578,024 -4,536 2,053,902 88,214,967 234,927 -50,736 1,500,963 35,435,981 80,519 2,204,604 15,219,759 1,585,189 20,058,536 884,155 148,038 1,294,736 144,093 4,373,028 ---45,983 372,462 ----1,323,155 10,311 23,305 -480,344 1,971,089 7,461,431 2,375,947 16,569,767 6,122,140 359,862,205 --208,074 -22,849,651 ---1,351,800 97,029,401 ---1,583,127 40,616,758 --780,623 395,696 27,310,375 ---22,875 20,358,886 ---307,253 10,415,836 323,877 ---12,680,999 18,908,605 2,867,633 14,839,772 818,146 115,089,647 ---635,085 635,085 ---51,545 51,545 19,232,482 2,867,633 15,828,469 5,165,527 347,038,183 (11,771,051)(491,686)741,298 956,613 12,824,022 11,238,500 --686,630 13,125,130 ---(1,230,000)(13,264,112) 11,238,500 --(543,370)(138,982) (532,551)(491,686)741,298 413,243 12,685,040 56,092,122 5,297,380 50,810,615 5,042,838 173,843,648 $55,559,571 $4,805,694 $51,551,913 $5,456,081 $186,528,688 31 CITY OF BAKERSFIELD Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities For the Fiscal Year Ended June 30, 2019 Net Change in Fund Balances - Total Governmental Funds $12,685,040 Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental Funds report capital outlay as expenditures. However, in the Government-Wide Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay expenditures are added back to fund balance.$24,857,746 Depreciation expense is deducted from fund balance (net of Internal Service Fund depreciation of $7,219,150 which has already been allocated to serviced funds).(59,834,151) Contributions of infrastructure and improvements by developers are capitalized in the Statement of Activities, but are not recorded in the Governmental Fund Financial Statements because no cash changed hands.45,841,990 10,865,585 Certain expenses are reported in the Government-Wide Statement of Activities, but they do not require the use of current financial resources. Therefore, these expenses are not reported as expenditures in Governmental Funds. Net change in long-term compensated absences (367,675) Interest expense on long-term debt 34,187 Net pension liability (12,575,866) Net other post-employment benefits liability 6,366,854 (6,542,500) Bond & loan proceeds provide current financial resources to Governmental Funds, but issuing debt increases long-term liabilities in the Government-Wide Statement of Net Position. Repayment of bond principal is an expenditure in Governmental Funds, but the repayment reduces long-term liabilities in the Government-Wide Statement of Net Position.(442,356) Unearned revenue and other resources not available to liquidate liabilities of the current period are not recognized in Governmental Funds. Revenue in the Statement of Activities is not limited by availability, so certain revenues need to be reduced by the amounts that were unavailable at the end of the year. This adjustment records a net decrease in revenues - unavailable revenues at the beginning of the year exceed ending unavailable revenues by this amount.(844,353) Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and fleet management, to individual funds. The net revenue of the Internal Service Funds is reported with Governmental Activities.6,246,746 Loss on disposal of governmental capital assets is not recorded in fund activity but is included in Governmental Activities.(269,320) Change in Net Position of Governmental Activities $21,698,842 The accompanying notes are an integral part of these financial statements. 32 Proprietary Fund Financial Statements These funds account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of net income is appropriate for accountability purposes. Wastewater Treatment Fund is used to account for the provision of sewer service to the residents of the City and some residents of Kern County. This fund also accounts for the activities related to the debt issuance which provided for the Wastewater Treatment Facilities. Refuse Collection Fund is used to account for the collection and disposal of refuse within the City. All activities necessary to provide such services are accounted for in this fund. River & Agricultural Water Fund is used to account for the provision of water service restricted primarily for agricultural purposes to users within the City and some users within Kern County (some Kern River water is exchanged for State Aqueduct water for domestic water purposes). All activities necessary to provide such services are accounted for in this fund. Domestic Water Fund is used to account for the provision of water service to some residents of the City and Kern County. All activities necessary to provide such service are accounted for in this fund. General Aviation Fund is used to account for the acquisition and operation of the Bakersfield Airpark. The majority of acquisition and improvement financing for the airport facility was provided by a grant from the Federal Aviation Administration. Offstreet Parking Fund is used to account for the operations of the parking garage at 18th and Eye Streets and various offstreet surface parking lots within the City. The parking garage was financed by the former Redevelopment Agency and the related debt was retired in August 1994. Subsequently, the title was transferred to the City. Internal Service Funds are used to provide goods and services by one department or agency to other departments or agencies of the City on a cost reimbursement basis. 33 CITY OF BAKERSFIELD Statement of Net Position Proprietary Funds June 30, 2019 Wastewater Treatment Refuse Collection River & Agricultural Water Current assets: Cash and investments $84,311,849 $20,451,492 $9,520,313 Accounts receivable, net 1,316,561 1,260,841 5,939,667 Interest receivable 404,601 98,209 45,717 Notes/loans receivable --- Due from other governmental agencies 93,744 1,632,883 350 Prepayments and inventories --- Total current assets 86,126,755 23,443,425 15,506,047 Noncurrent assets: Capital assets: Land 10,238,095 2,785,456 2,175,944 Depreciable buildings, property, equipment and infrastructure, net 600,378,023 985,806 6,984,244 Construction in progress 8,118,414 142,880 820,610 Non-amortizable intangible assets --8,032,678 Other long-term receivable 320,440 -31,777 Total noncurrent assets 619,054,972 3,914,142 18,045,253 Total assets 705,181,727 27,357,567 33,551,300 Deferred outflows of resources: Deferred pensions 2,002,157 3,863,799 550,546 Deferred other post-employment benefits 377,498 754,885 139,317 Debt issuance 9,204,816 -- Total deferred outflows of resources 11,584,471 4,618,684 689,863 Current liabilities: Accounts payable and accrued liabilities 3,687,633 2,536,213 184,349 Claims payable --- Workers' compensation claims --- Compensated absences payable 159,161 261,951 53,348 Long-term debt - due within one year 8,050,764 -- Capital leases payable - due within one year --- Advances from grantors and third parties 320,440 128,931 - Total current liabilities 12,217,998 2,927,095 237,697 Noncurrent liabilities: Long-term debt - due in more than one year 153,583,062 -- Capital leases payable - due in more than one year --- Kern River Levee District/Buena Vista --314,215 Customers' deposits 2,422,331 462,140 - Workers' compensation claims --- Compensated absences payable 457,184 679,119 114,374 Net pension liability 11,314,125 20,189,359 3,136,070 Net other post-employment benefits liability 3,313,850 6,626,727 1,222,992 Total noncurrent liabilities 171,090,552 27,957,345 4,787,651 Total liabilities 183,308,550 30,884,440 5,025,348 Deferred inflows of resources: Deferred pensions 539,401 1,102,401 166,827 Deferred other post-employment benefits 306,427 612,763 113,088 Total deferred inflows of resources 845,828 1,715,164 279,915 Net position: Net investment in capital assets 466,305,521 3,914,142 18,013,477 Restricted for: Capital improvements 20,200,000 -- Unrestricted 46,106,299 (4,537,495)10,922,423 Total net position $532,611,820 $(623,353)$28,935,900 Adjustments to reflect the consolidation of internal service fund activities related to proprietary funds Net position of business-type activities The accompanying notes are an integral part of these financial statements. 34 Domestic Water General Aviation Offstreet Parking Totals Governmental Activities Internal Service Funds $55,305,229 $907,620 $104,854 $170,601,357 $65,775,114 3,031,198 14,219 3,300 11,565,786 25,251 265,578 4,358 502 818,965 314,231 ----410,846 -26,320 -1,753,297 - ----1,110,076 58,602,005 952,517 108,656 184,739,405 67,635,518 556,336 7,464,254 410,000 23,630,085 - 167,262,134 3,032,404 548,093 779,190,704 41,999,533 47,341,942 196,841 -56,620,687 - 23,444,228 --31,476,906 - --24,461 376,678 - 238,604,640 10,693,499 982,554 891,295,060 41,999,533 297,206,645 11,646,016 1,091,210 1,076,034,465 109,635,051 550,402 38,183 -7,005,087 1,861,841 29,038 --1,300,738 296,147 ---9,204,816 - 579,440 38,183 -17,510,641 2,157,988 3,820,769 39,832 12,158 10,280,954 1,888,063 ----5,772,301 ----6,933,500 130,514 --604,974 202,176 ---8,050,764 - 670,701 --670,701 - ---449,371 - 4,621,984 39,832 12,158 20,056,764 14,796,040 ---153,583,062 - 17,000,597 --17,000,597 - ---314,215 - 2,068,241 --4,952,712 - ----35,821,500 104,705 14,588 -1,369,970 428,709 2,450,318 136,254 -37,226,126 9,950,445 254,911 --11,418,480 2,599,709 21,878,772 150,842 -225,865,162 48,800,363 26,500,756 190,674 12,158 245,921,926 63,596,403 159,626 8,236 -1,976,491 555,209 23,571 --1,055,849 240,391 183,197 8,236 -3,032,340 795,600 220,933,343 10,693,499 958,093 720,818,075 41,999,533 ---20,200,000 - 50,168,789 791,790 120,959 103,572,765 5,401,503 $271,102,132 $11,485,289 $1,079,052 844,590,840 $47,401,036 4,065,513 $848,656,353 35 CITY OF BAKERSFIELD Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2019 Wastewater Treatment Refuse Collection River & Agricultural Water Operating revenues: Intergovernmental $-$367,407 $- Charges for services 33,430,249 48,337,526 7,869,700 Cost recoveries 25,929 5,534,214 567,010 Rental income 386,862 -211,731 Other sales or services 299 66,888 810,331 Miscellaneous 72,747 219,476 - Total operating revenues 33,916,086 54,525,511 9,458,772 Operating expenses: General and administrative 17,083,802 53,262,283 4,067,904 Transmission and distribution (21,216)663,236 110,044 Workers' compensation payments --- Claims paid --- Depreciation and amortization 20,182,170 63,946 387,591 Compensated absences -10,934 11,994 Total operating expenses 37,244,756 54,000,399 4,577,533 Operating income (loss)(3,328,670)525,112 4,881,239 Nonoperating revenues (expenses): Interest income 2,375,068 680,043 281,121 Connection fees 6,752,334 -- Interest expense (6,494,654)-- Gain on sale of capital assets -15,754 - Total nonoperating revenues (expenses)2,632,748 695,797 281,121 Income (loss) before transfers and capital contributions (695,922)1,220,909 5,162,360 Capital contributions 9,735,725 -107,132 Transfers in --- Transfers out (808,447)(2,890,840)(404,110) Change in net position 8,231,356 (1,669,931)4,865,382 Total Net Position - Beginning of Year - as restated 524,380,464 1,046,578 24,070,518 Total Net Position-End of Year $532,611,820 $(623,353)$28,935,900 Adjustment to reflect the consolidation of internal service activity related to proprietary funds Change in net position of business-type activities The accompanying notes are an integral part of these financial statements. 36 Domestic Water General Aviation Offstreet Parking Totals Governmental Activities Internal Service Funds $-$37,791 $-$405,198 $281,324 25,371,385 316,114 160,090 115,485,064 39,881,612 192,925 1,687 -6,321,765 1,475,906 ---598,593 - 2,338,078 --3,215,596 - 26,432 600 -319,255 378,315 27,928,820 356,192 160,090 126,345,471 42,017,157 20,727,972 235,521 202,204 95,579,686 30,349,170 721,357 308 -1,473,729 - ----2,633,609 ----36,412 4,700,537 245,150 90,628 25,670,022 7,219,150 22,719 --45,647 52,678 26,172,585 480,979 292,832 122,769,084 40,291,019 1,756,235 (124,787)(132,742)3,576,387 1,726,138 1,681,757 23,763 4,075 5,045,827 1,664,134 1,249,460 --8,001,794 - (703,638)--(7,198,292)- 9,699 --25,453 93,414 2,237,278 23,763 4,075 5,874,782 1,757,548 3,993,513 (101,024)(128,667)9,451,169 3,483,686 2,036,287 98,486 -11,977,630 863,900 --45,000 45,000 4,346,322 ---(4,103,397)(148,943) 6,029,800 (2,538)(83,667)17,370,402 8,544,965 265,072,332 11,487,827 1,162,719 38,856,071 $271,102,132 $11,485,289 $1,079,052 $47,401,036 2,298,220 $19,668,622 37 CITY OF BAKERSFIELD Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2019 Wastewater Treatment Refuse Collection Cash flows from operating activities: Cash received from: Customers, including cash deposits $33,590,614 $54,099,093 Prior year reimbursements and cost recoveries 25,929 - Cash paid to: Suppliers (9,365,987)(38,854,338) Employees (6,590,958)(11,959,206) Cash deposits returned to customers -- Net cash provided (used) by operating activities 17,659,598 3,285,549 Cash flows from noncapital financing activities: Cash transferred from other funds -- Cash transferred to other funds (808,447)(2,890,840) County/developer project share -- Connection fees 6,752,334 - Net cash provided (used) by noncapital financing activities 5,943,887 (2,890,840) Cash flows from capital and related financing activities: Principal payments: Notes/Loans/Bonds (6,277,126)- Capital lease payments -- Capital contributions -- Interest paid (7,287,304)- Purchase of capital assets -- Proceeds from sale of capital assets -15,754 Construction in progress (9,010,680)(159,527) Net cash provided (used) by capital and related financing activities (22,575,110)(143,773) Cash flows from investing activities: Interest received 1,855,002 552,961 Net increase (decrease) in the fair value of investments 486,778 117,432 Net cash provided by investing activities 2,341,780 670,393 Net increase (decrease) in cash and investments 3,370,155 921,329 Cash and investments - Beginning of year 80,941,694 19,530,163 Cash and investments - End of year $84,311,849 $20,451,492 The accompanying notes are an integral part of these financial statements. 38 River & Agriculture Water Domestic Water General Aviation Offstreet Parking Totals Governmental Activities Internal Service Funds $3,991,934 $28,091,057 $307,994 $157,360 $120,238,052 $41,267,832 --1,687 -27,616 1,475,906 (2,466,428)(24,644,512)(227,813)(199,884)(75,758,962)(23,156,384) (1,617,308)(1,455,797)--(21,623,269)(7,966,231) -(156,613)--(156,613)- (91,802)1,834,135 81,868 (42,524)22,726,824 11,621,123 ---45,000 45,000 4,346,322 (404,110)---(4,103,397)(148,943) 107,132 ---107,132 - -803,280 --7,555,614 - (296,978)803,280 -45,000 3,604,349 4,197,379 ----(6,277,126)- -(643,995)--(643,995)- --98,486 -98,486 - -(703,638)--(7,990,942)- --(131,675)-(131,675)(10,906,098) -9,699 -11,893 37,346 203,926 (820,610)(16,366,539)--(26,357,356)- (820,610)(17,704,473)(33,189)11,893 (41,265,262)(10,702,172) 219,515 1,312,326 16,265 3,383 3,959,452 1,272,647 63,137 416,479 5,029 515 1,089,370 352,458 282,652 1,728,805 21,294 3,898 5,048,822 1,625,105 (926,738)(13,338,253)69,973 18,267 (9,885,267)6,741,435 10,447,051 68,643,482 837,647 86,587 180,486,624 59,033,679 $9,520,313 $55,305,229 $907,620 $104,854 $170,601,357 $65,775,114 39 CITY OF BAKERSFIELD Statement of Cash Flows (concluded) Proprietary Funds For the Fiscal Year Ended June 30, 2019 Wastewater Treatment Refuse Collection Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss)$(3,328,670)$525,112 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense 20,182,170 63,946 (Increase) decrease in accounts receivable (240,043)(432,938) (Increase) decrease in inventories -- (Increase) decrease in prepaid items -- Increase (decrease) in accounts payable (550,988)1,698,215 Increase in workers' compensation claims -- Increase (decrease) in unearned revenue -(1,764) Increase (decrease) in customers' deposits (59,500)8,284 Increase (decrease) in compensated absences 23,597 (43,449) Increase (decrease) in net pension liability (589,335)(995,339) Increase (decrease) in deferred outflows/inflows of resources for pensions 926,362 1,541,259 Increase (decrease) in net other post-employment benefits liability 1,257,238 1,073,874 Increase (decrease) in deferred outflows/inflows of resources for OPEB 38,767 (151,651) Net cash provided (used) by operating activities $17,659,598 $3,285,549 Noncash investing capital and financing activities: Contribution of equipment from other departments $-$- Contributions of infrastructure and improvements by developers $9,735,725 $- The accompanying notes are an integral part of these financial statements. 40 River & Agriculture Water Domestic Water General Aviation Offstreet Parking Totals Governmental Activities Internal Service Funds $4,881,239 $1,756,235 $(124,787)$(132,742)$3,576,387 $1,726,138 387,591 4,700,537 245,150 90,628 25,670,022 7,219,150 (5,412,306)(23,623)(46,511)(2,730)(6,158,151)726,581 -----(5,628) -----(15,156) 114,482 (4,737,080)1,136 2,320 (3,471,915)810,967 -----962,650 ----(1,764)- (54,532)29,247 --(76,501)- 7,139 22,719 14,204 -24,210 52,678 (129,121)(123,842)(4,975)-(1,842,612)(425,794) 200,227 203,182 (2,349)-2,868,681 656,865 (10,975)(2,165)--2,317,972 (22,472) (75,546)8,925 --(179,505)(64,856) $(91,802)$1,834,135 $81,868 $(42,524)$22,726,824 $11,621,123 $-$2,036,287 $-$-$2,036,287 $863,900 $-$-$-$-$9,735,725 $- 41 42 Fiduciary Fund Financial Statements Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individual private organizations, other governmental units and/or other funds. Detailed combining statements for Fiduciary Funds are located in the Supplementary Information section. Below are descriptions of the generic fund types within this category and specific funds within each fund type. Private Purpose Trust Funds Redevelopment Successor Agency - The Bakersfield Redevelopment Agency ceased activities in February 2012. All non- housing related assets, liabilities and activities have been transferred to the City and are accounted for in a trust fund. Planning Habitat Trust Fund - This fund is used to account for monies collected from developers to be used to purchase suitable land to provide habitat for endangered species. After the land is purchased, it is transferred to the State Fish and Game Department for maintenance. Pension and Other Employee Benefit Trust Funds Fire Relief and Pension Trust Fund - This fund is used to account for the accumulation of resources to be used for retirement annuity payments at appropriate amounts and times in the future for Fire Department personnel who retired prior to June 2, 1972. Other Post-Employment Benefits (OPEB) Irrevocable Trust Fund - This fund is used to account for the City's post-retirement medical benefit plan. The City provides medical insurance coverage through contributions to eligible retirees' insurance premiums. Agency Funds Special Deposits Fund - This fund is used to account for the collection by the City as agent for organizations operated under the auspices of the Recreation Division, security deposits for utility franchises, temporary deposits for construction permits and bid deposits. This fund is also used for the collection of police seized property, local Law Enforcement Block Grants, and other revenues held in trust pending disposition of contingencies. Improvement Districts Fund - This fund is used to account for the collection of liens for improvements benefiting private properties and payments to the holders of bonds issued pursuant to the Improvement Act of 1913 and the Improvement Bond Act of 1915. The City is in no way liable for the payment of bonded indebtedness, but the City serves as agent to collect the principal and interest installments from the owners of the benefited properties. A trustee administers the periodic payment to the bondholders. In addition, Community Service Districts created for the West Ming and Old River Ranch developments are accounted for in this section. These funds are collected to be used to pay for public safety costs in the applicable communities. 43 CITY OF BAKERSFIELD Statement of Fiduciary Net Position Fiduciary Funds June 30, 2019 Private Purpose Trust Funds Pension and Other Employee Benefit Trust Funds Agency Funds Assets: Current assets: Cash and investments $17,851,256 $73,132,751 $33,617,012 Accounts receivable --106,908 Interest receivable 83,934 4,276 31,745 Due from other governmental agencies --173,398 Total current assets 17,935,190 73,137,027 33,929,063 Noncurrent assets: Land held for resale 60,895 -- Total noncurrent assets 60,895 -- Total assets 17,996,085 73,137,027 33,929,063 Liabilities: Payables: Advances from grantors and third parties 3,504,005 -- Deposits --29,571,857 Accrued bond interest --632,206 Bonds 2,390,000 -3,725,000 Notes 15,181,840 -- Total liabilities 21,075,845 -33,929,063 Net Position: Restricted for: Individuals, organizations and other governments (3,079,760)-- Pensions & other post-employment benefits -73,137,027 - $(3,079,760)$73,137,027 $- The accompanying notes are an integral part of these financial statements. 44 CITY OF BAKERSFIELD Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Fiscal Year Ended June 30, 2019 Private Purpose Trust Funds Pension and Other Employee Benefit Trust Funds Additions Contributions to pooled investments $-$7,940,057 Developer fees 892,258 - Successor agency property tax deposits 3,496,580 - Charges for services/capital lease revenue 3,136,900 - Other income (346,994)- Interest income 291,291 4,904,196 Total additions 7,470,035 12,844,253 Deductions: Benefits -6,704,861 Purchase of uninhabited land 1,060,793 - Obligation retirement 3,796,712 - Administrative expenses -202,706 Total deductions 4,857,505 6,907,567 Change in net position 2,612,530 5,936,686 Net position - beginning of year (5,692,290)67,200,341 Net position - end of year $(3,079,760)$73,137,027 The accompanying notes are an integral part of these financial statements. 45 46 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the City of Bakersfield (the “City”) have been prepared in conformity with generally accepted accounting principles in the United States of America (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). The following summary of the City’s significant accounting policies is presented to assist the reader in interpreting the basic financial statements and other data in this report. These policies should be viewed as an integral part of the accompanying basic financial statements. A.Description of Reporting Entity The City of Bakersfield, California, is a California Charter City, incorporated on January 11, 1898, and serves as the county seat of the County of Kern, California (the “County”). The City is a full-service city and operates under a Council - Manager form of government, providing the following services as authorized by its Charter: General government; public safety; public wo rks; and development and conservation. As required by GAAP, these basic financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations and so data from these units are combined with data of the primary government. B.Basis of Presentation Government-Wide Financial Statements The Government-Wide financial statements (the statement of net position and the statement of activities) report information of all of the non-fiduciary activities of the primary government and its component units. For the most part, eliminations have been made to minimize the double counting on internal activities. Internal activities for services provided and used that are not eliminated include water, solid waste and sewer services provided to various other functions of the government. These statements distinguish between the governmental and business-type activities of the City. 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 charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Some functions include expenses that are, in essence, indirect expenses of other functions resulting from charges among funds or programs for centralized services. Program revenues include: 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues. Net position is restricted when constraints placed on it are either externally imposed or are imposed by constitutional provisions or enabling legislation. Internally imposed designations of resources are not presented as restricted net position. When both restricted and unrestricted resources are available for use, generally it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. 47 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B.Basis of Presentation (continued) Governmental Fund Financial Statements The governmental fund financial statements provide information about the City’s funds, including fiduciary funds and the blended component unit. Separate statements for each fund category - governmental, proprietary and fiduciary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are separately aggregated and reported as non-major funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Operating expenses for enterprise funds include cost of sales and services, administrative expenses, and depreciation of capital assets. As used in this section, the term depreciation can include amortization of intangible assets. All expenses not meeting this definition are reported as nonoperating expenses. The City reports the following major governmental funds: General Fund - The General Fund is the principal operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. For the City, the General Fund includes basic governmental activities, such as general government, public safety, public works, and community services. Transient Occupancy Taxes Fund - The Transient Occupancy Taxes Fund is used to account for transient occupancy tax revenues (hotel tax) and expenditures funded by this revenue source. The Rabobank Arena and Convention Center and the Bakersfield Ice Sports Center operating revenues and expenditures are recorded in this fund. This fund is also used to account for the operations of the Visit Bakersfield division of the City. Community Development Block Grant Fund – The Community Development Block Grant Fund is used to account for resources provided by the Federal Housing and Community Development Act of 1974 for the elimination of slums and blight, housing conservation and improvements of community services. Gas Tax & Road Fund - The Gas Tax & Road Fund is used to account for the City’s share, based upon population, of state gasoline taxes. State law requires these gasoline taxes to be used to maintain streets or for major street construction. This fund also accounts for other State and Federal grant revenues related to street maintenance or construction, including the Federal earmark Thomas Roads funds. Capital Outlay Fund - The Capital Outlay Fund is used to account for the cost of capital projects financed by local revenues and various grant/loan proceeds for capital expenditures. This fund also accounts for the special Utility Franchise/Surcharge Fund created by the City Council to account for the specified local road project costs funded by the selected electricity and gas franchise surcharge fees. In addition, funds contributed by the County to be used to cover a portion of the costs of the local match needed for the Thomas Roads projects are accounted for in this fund. Park Improvement Fund - The Park Improvement Fund is used to account for funds collected for residential park development (Ordinance No. 3646). Fees are collected based on the development’s share of the cost to develop, improve, construct, or enhance a neighborhood park (Ordinance No. 3327). Transportation Development Fund - The Transportation Development Fund is used to account for funds collected from fees paid to mitigate the traffic impacts to the regional circulation system caused by a development project. The fees are paid when a building permit for the development project is obtained, and are based upon the amount of traffic the development will generate. The fee schedule was adopted with Ordinance No. 3513 and will be periodically evaluated by the City Council and revised to reflect updated costs and growth projections. 48 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B.Basis of Presentation (continued) The City reports the following major proprietary (enterprise) funds: Wastewater Treatment Fund - The Wastewater Treatment Fund is used to account for the provision of sewer service to the residents of the City and some residents of the County. This fund also accounts for the activities related to the debt issuance, which provided for the Wastewater Treatment Facilities. Refuse Collection Fund - The Refuse Collection Fund is used to account for the collection and disposal of refuse within the City. All activities necessary to provide such services are accounted for in this fund. River & Agricultural Water Fund - The River & Agricultural Water Fund is used to account for the provision of water service restricted primarily for agricultural purposes to users within the City and some users within the County (some Kern River water is exchanged for State Aqueduct water for domestic water purposes). All activities necessary to provide such services are accounted for in this fund. Domestic Water Fund - The Domestic Water Fund is used to account for the provision of water service to residents of the City and County connected to the City's system. All activities necessary to provide such services are accounted for in this fund. General Aviation Fund - The General Aviation Fund is used to account for the acquisition and operation of the Bakersfield Municipal Airpark located on Union Avenue. The majority of acquisition and improvement financing for the airport facility was provided by a grant from the Federal Aviation Administration. Offstreet Parking Fund - The Offstreet Parking Fund is used to account for the operations of the parking garage at 18th and Eye Streets and various offstreet surface parking lots within the City. The parking garage was financed by the former Redevelopment Agency and the related debt was retired in August 1994, and subsequently, the title was transferred to the City. The City reports the following additional fund types: Internal Service Funds - The Internal Service Funds are used to account for the cost of goods or services provided by one department or agency to other departments or agencies of the governmental unit on a reimbursement basis. The City accounts for its self-insurance and equipment management activities as internal service funds. Private Purpose Trust Fund - The Planning Habitat Trust Fund is used to account for monies collected from developers to be used to purchase suitable land to provide habitat for endangered species. After the land is purchased, it is transferred to the State Fish and Game Department for maintenance. The City also records the assets, liabilities, and activities of the Redevelopment Successor Agency in a separate trust fund. Pension and Other Employee Benefit Trust Funds - The Fire Relief and Pension Trust Fund is used to account for the annuity payments at appropriate amounts and times in the future for Fire Department personnel who retired prior to June 26, 1972. The Other Post-Employment Benefits (OPEB) Irrevocable Trust Fund is used to account for the City’s postretirement medical benefit plan in which the City provides medical insurance coverage through contributions to eligible retirees’ insurance premiums. Agency Funds - The Agency Funds account for assets held by the City as an agent for various local governments or other entities. The Special Deposits Fund is used to account for the collection by the City as agent for organizations operated under the auspices of the Recreation Division, security deposits for utility franchises, temporary deposits for construction permits and bid deposits. This fund is also used for the collection of police seized property, local Law Enforcement Block Grants and other revenues held in trust pending disposition of contingencies. The Improvement Districts Fund is used to account for the collection of liens for improvements benefiting private properties and payments to the holders of bonds issued pursuant to the Improvement Bond Act of 1913 and the Improvement Bond Act of 1915. The City is in no way liable for the payment of bonded indebtedness, but the City serves as agent to collect the principal and interest installments from the owners of the benefited properties. A trustee provides the periodic payment to the bondholders. This fund also accounts for the special assessments and taxes collected within the boundaries of Community Service Districts within the City. 49 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B.Basis of Presentation (continued) C.Basis of Accounting The government-wide, proprietary, private purpose trust, and pension and other employee benefit trust funds are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements, and donations. On an accrual basis of accounting, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from sales tax are recognized when the underlying transactions take place. Revenues from grants, entitlements and donations are recognized in the fiscal year in which all eligible requirements have been satisfied. The agency funds utilize the accrual basis of accounting to report assets and liabilities but technically have no measurement focus. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Property and sales taxes, interest, certain State and Federal grants and charges for services are accrued when their receipt occurs within sixty days after the end of the accounting period so as to be both measurable and available. Expenditures are generally recorded when a liability is incurred, as under the accrual basis of accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and capital leases are reported as other financing sources. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary funds' principal ongoing operations. Revenues and expenses not meeting this definition are reported as nonoperating. D.Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items Cash and Investments Cash balances of each of the City's funds, except for certain Trust and Agency Funds, are pooled and invested by the City. Income earned from pooled investments is allocated to each of the funds based on average pooled cash balances during the year. Deficit cash balances are classified as due to other funds and funded by the General Fund or related operating fund. The City applies GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. This statement generally requires that investments be reported at their fair value and that all changes in fair value be reflected as income of the period in which they occur. Statutes authorize the City to invest in obligations of the United States Treasury, agencies and instrumentalities, commercial paper, bankers' acceptances, repurchase agreements, money market funds, and the State Treasurer's investment pool. The City's Pension Trust Fund is also authorized to invest in corporate bonds rated A or better by a national rating system generally recognized and used by banks and investment brokers in the United States. Investments are comprised of obligations of the United States Treasury, agencies and instrumentalities, cash, time certificates of deposit, mutual funds, bankers' acceptances, money market accounts, deposits in the State of California Local Agency Investment Fund (LAIF), and California Asset Management Program (CAMP). Investments are stated at fair value. 50 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D.Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) Interfund Transactions Interfund transactions are reflected as either loans, services provided, reimbursements or transfers. Loans are reported as receivables and payables as appropriate, are subject to elimination upon consolidation and are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statement as “internal balances.” Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation. Receivables All trade and property tax receivables are shown net of an allowance for uncollectible accounts. Trade accounts receivable in excess of 180 days comprise the trade accounts receivable allowance for uncollectible accounts. Inventory and Prepaid Items Inventory is valued at average cost applied on a first-in, first-out (FIFO) basis. The reserve for prepaid expenses relates to certain payments to vendors for costs applicable to future accounting periods. The cost of both inventories and prepaid items are recorded as expenditures/expenses when consumed rather than when purchased. Capital Assets Capital outlays are recorded as expenditures of the General, Special Revenue, and Capital Projects Funds and as assets in the government-wide financial statements to the extent the City’s capitalization thresholds are met. Capital assets, which include property, plant, equipment, infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), and intangible water rights are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an estimated useful life in excess of one year and an initial individual cost of more than $50,000 for infrastructure and $5,000 for all other capital assets. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation in the majority of instances. When assets are donated in relation to a service concession arrangement, they are reported at acquisition cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations. 51 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D.Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight- line method over the following estimated useful lives: Infrastructure 10 to 70 years Buildings, structures and improvements 5 to 40 years Transmission and distribution equipment 5 to 50 years Rolling equipment 2 to 30 years Office equipment 3 to 10 years Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type Statement of Net Position. Debt principal payments of both governmental and business-type activities are reported as decreases in the balance of the liability on the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. In the fund financial statements, however, debt principal payments of governmental funds are recognized as expenditures when paid. Governmental fund types recognize bond premiums and discounts, as we ll as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Outflows and Inflows of Resources As required by GASB Statements No. 63 and No. 65, the City recognized applicable deferred outflows and inflows of resources in the government-wide, governmental, and proprietary fund type financial statements. The Statements of Net Position and Balance Sheets will sometimes report a separate section for deferred outflows of resources, defined as a consumption of net position or fund balance by the City that is applicable to a future funding period, or deferred inflows of resources, defined as an acquisition of net position or fund balance by the City that is applicable to a future funding period. The City has items that qualify for reporting in these categories and are detailed in a separate note disclosure. 52 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D.Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) Net Position/Fund Balance The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted. Net Investment in Capital Assets - This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category. Restricted Net Position - This category presents external restrictions imposed by creditors, grantors, contributors, laws, or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position - This category represents net position of the City, not restricted for any project or other purpose. As of June 30, 2019, net position is as follows: Governmental Activities Business-Type Activities Total Net investment in capital assets $1,316,112,930 $720,818,075 $2,036,931,005 Restricted 18,975,747 20,200,000 39,175,747 Unrestricted (193,801,803)107,638,278 (86,163,525) Total net position $1,141,286,874 $848,656,353 $1,989,943,227 Fund balances of the governmental funds are report using a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported. Fund balances for governmental funds are segregated as follows: Nonspendable Fund Balance – includes net resources that cannot be spent because of their form or because of legal or contractual limitations, and therefore must remain intact. Restricted Fund Balance – includes net resources that have externally enforceable limitations on their use. These limitations can be established by creditors, grantors, or by laws and regulations. Committed Fund Balance – includes amounts with self-imposed limitations and are set in place prior to the end of the fiscal year. Commitments are set forth by the formal action of the City’s highest level of decision-making authority, the City Council, and the limitations require that same level of authority to be removed. Assigned Fund Balance – includes amounts for which the intended use results in limitations but do not meet the requirements for either the “Restricted” or “Committed” classifications. Intended use can be established by the City Council, a governing committee or board, or by a City official designated as having that authority. Unassigned Fund Balance – is the residual balance of the General Fund not included in the other classifications. 53 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D.Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) The City Council establishes, modifies or rescinds fund balance commitments though approval of contracts for services and supplies that require City Council authorization through resolution. Fund balance assignments are made by agreements entered into by department heads, and their designees, for specific purposes. The City Council also establishes fund balance assignments through the adoption of the budget and subsequent budget amendments. Assignments are generally temporary and as such, additional action is not usually needed for assignments to be removed. The City Council approved, through resolution, a Fund Balance policy that established these rules for fund balance commitments and assignments in the General Fund. It was not deemed necessary to include a policy to achieve and maintain a specific level of unrestricted fund balance in the General Fund. Fund Balance Flow Assumptions The City will sometimes fund outlays for a specific purpose from restricted and unrestricted resources (committed, assigned, and unassigned fund balance). A flow assumption must be made about the order of how these resources will be applied to properly calculate the amounts reported as restricted, committed, assigned, and unassigned. It is the City’s policy to consider restricted fund balance to be used completely before any components of unrestricted fund balance. When the components of unrestricted fund balance are used for the same purpose, the amount classified as committed is used first, followed by assigned, and unassigned is applied last. Property Taxes In 1978, a state constitutional amendment (Proposition 13) provided that the property tax rate is limited to 1% of market value. This property tax rate limitation may only be increased through voter approval. The County is the sole agency responsible for levying and collecting the property taxes and distributing them to taxing jurisdictions. Taxes are allocated and distributed based upon each taxing jurisdiction's assessed valuations and upon any voter-approved debt override on the tax rate. The property tax calendar for the City is as follows: Valuation date January 1 Lien date March 1 Levy dates July 1 through June 30 Due dates November 1; February 1 Collection dates December 10; April 10 54 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D.Assets, Liabilities, Net Position or Fund Balances, and Other Financial Statement Items (continued) Pension Plan For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City's California Public Employee's Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Post-Employment Benefits (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City's OPEB Plan (OPEB Plan) and additions to/deductions from the OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by California Public Employees' Retirement System (CalPERS). For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments and participating interest-earning investment contracts that have a maturity at the time of purchase of one year or less, are reported at cost. Cash Flow Statements For purposes of reporting cash flows, cash and cash equivalents include cash on hand, deposits, short-term investments and cash and investments with fiscal agents. Cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less meet this definition. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. E.Stewardship, Compliance, and Accountability Budgets and Budgetary Accounting The procedures established by the City Council in adopting the budgetary data reflected in the financial statements are as follows: 1.Prior to June 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. 2.Public hearings are conducted to obtain taxpayer comments. 3.The City Council legally enacts the budget by resolution before July 1. The City Manager is authorized to transfer budgeted amounts between departments within any fund and approve reductions of budgeted amounts. Since expenditures may not exceed budgeted appropriations at the fund level, any revisions that alter the total appropriations of any fund are to be approved by the City Council. Projects budgeted within the current fiscal year but not yet completed can be re-appropriated the following fiscal year with City Manager approval. All other unencumbered appropriations lapse at year-end. Encumbered amounts are re-appropriated in the ensuing fiscal year budget. 55 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E.Stewardship, Compliance, and Accountability (continued) Budgets are adopted for all governmental fund types and are prepared on a basis consistent with GAAP. Budgeted amounts are as originally adopted, or as amended by the City Council. During the fiscal year ended June 30, 2019, the City Council approved $73,254,062 of increases to the originally adopted budget, excluding carryovers of prior year encumbered balances and selected capital appropriations. Deficit Net Position The Self-Insurance Internal Service Fund reported a deficit in net position of $20,754,190 at the close of the fiscal year. The continued deficit is the result of a significant increase in the workers' compensation liability calculated in the City’s most recent actuarial study. Workers' compensation charges can fluctuate significantly from year to year and staff will continue to adjust departmental rates accordingly to maintain sufficient funding levels. Reclassification and Eliminations Interfund balances must generally be eliminated in the government-wide financial statements, except for net residual amounts due between governmental activities. Amounts involving fiduciary funds should be reported as external transactions. Any allocations must reduce the expenses of the function from which the expenses are being allocated, so that expenses are reported only once, in the function in which they are allocated. Excess of Expenditures Over Appropriations For the fiscal year ended June 30, 2019, expenditures exceeded appropriations for transfers to other funds in the Transient Occupancy Taxes Fund by $9,354. This over-expenditure relates to budgeted estimates related to anticipated loan repayment costs for lighting upgrades at the Rabobank Arena and Convention Center facilities. The actual required payment exceeded the estimate. There wa s also an over-expenditure in the amount of $19,704 in the General Fund for Public Safety. This overage is related to overtime wo rked for Police Department operations. These are technically considered budgetary violations and management will take steps to review periodic budget reports to ensure compliance in the future. F.New Accounting Pronouncements During the fiscal year ending June 30, 2019 the City implemented the following standards: GASB issued Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this statement. Upon implementation, there was no effect on the City's accounting or financial reporting. GASB issued Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The primary objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. Upon implementation, there wa s no effect on the City's accounting or financial reporting. 56 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) F.New Accounting Pronouncements (continued) Recently released standards by GASB affecting future years are as follows: In January 2017, GASB issued Statement No. 84, Fiduciary Activities. The objective of this statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The City has elected not to early implement GASB Statement No. 84 and has not determined its effects on the City’s financial statements. In June 2017, GASB issued Statement No. 87, Leases.The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financing of the right to use an underlying asset. The City has elected not to early implement GASB Statement No. 87 and has not determined its effects on the City’s financial statements. In June 2018, GASB issued Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. The objectives of this statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the end of a construction period. The City has elected not to early implement GASB Statement No. 89 and has not determined its effects on the City's financial statements. In August 2018, GASB issued Statement No. 90, Majority Equity Interests. The objectives of this statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. The City has elected not to early implement GASB Statement No. 90 and has not determined its effects on the City's financial statements. In May 2019, GASB issued Statement No. 91, Conduit Debt Obligations. The objectives of this statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with commitments extended by issuers, arrangements associated with conduit debt obligations, and related to note disclosures. The City has elected not to early implement GASB Statement No. 91 and has not determined its effects on the City's financial statements. 57 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 2 -CASH AND INVESTMENTS Cash and investments as of June 30, 2019, are classified in the accompanying financial statements as follows: Statement of net position: Cash and investments $375,771,316 Fiduciary funds: Cash and investments 124,601,019 $500,372,335 Cash and investments as of June 30, 2019, consist of the following: Cash on hand $6,039,206 Deposits with financial institutions 1,765,424 Investments 492,662,741 GASB Stmt. No. 31 Fair Value Adjustment (95,036) $500,372,335 Investment Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code, or the City’s investment policy, where more restrictive. The table also identifies the mo re restrictive provision of the California Government Code or the City’s investment policy that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investment of any debt proceeds held by bond trustee's that are governed by the provisions of the City’s debt agreements, rather than the general provisions of either the California Government Code or the City’s investment policy. Maximum Percentage Maximum Authorized Investment Types of Portfolio Maturity U.S. Treasury Bills, Notes and Bonds 0 to 100%5 Years U.S. Government Agency Obligations 20% per agency 5 Years Bankers' Acceptances 40%180 Days Commercial Paper 25%270 Days Repurchase Agreements 30%90 Days Local Agency Investment Fund 40%N/A Time Certificates of Deposit 40%5 Years Public Agency Demand Accounts 30%N/A Mutual Funds 20%N/A 58 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 2 -CASH AND INVESTMENTS (continued) Investment Authorized by Debt Agreements The City and its component units have $368,502 in investments held by bond trustees pledged to the payment or security of certain debt issues. These investments are held in direct obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States Government or an agency thereof. The California Government Code provides that monies held by a bond trustee pledged to the payment or security of debt issues, in absence of specific statutory provisions governing the issuance of the debt, may be invested in accordance with the ordinances, resolutions, or indentures specifying the types of investments the respective bond issue’s trustee may make. The obligations described above are authorized per the investment agreements with the bond trustees and include, but are not limited to, Federal Land Bank Bonds, Federal Home Loan Bank notes and bonds, Export-Import Bank notes and guaranteed participation certificates, obligations of or fully guaranteed by the Government National Mortgage Association, Federal National Mortgage Association notes, debentures and guaranteed certificates of participation, obligations of the International Bank of Reconstruction and Development and Federal Home Loan Mortgage Corporation notes. Interest Rate Risk Interest rate risk is the risk that changes in the market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As part of the City’s investment policy, one of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturing evenly over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City’s investments to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity: Remaining Maturity (In Months) Investment Type Fair Value Cost 12 Months Or Less 13 - 24 Months 25-60 Months More Than 60 Months U.S. Government Agency Obligations: Federal Farm Credit Bank $54,519,345 $54,488,200 $12,498,200 $22,000,000 $19,990,000 $- Federal Home Loan Bank 45,879,415 45,976,640 15,000,000 12,976,640 18,000,000 - Federal Home Loan Mortgage Corp.49,703,925 49,740,000 15,000,000 18,000,000 16,740,000 - Federal National Mortgage Assn.42,565,386 42,558,269 18,330,819 22,227,450 2,000,000 - PEFCO 678,402 678,402 -355,903 322,499 - Commercial Paper ------ Bankers' Acceptances ------ U.S. Treasury Bills, Notes, and Bonds ------ Local Agency Investment Fund 122,654,871 122,654,871 122,654,871 --- CAMP 84,933,751 84,933,751 84,933,751 --- Mutual Funds (1)91,264,108 91,264,106 91,264,106 --- Investment Contracts 368,502 368,502 ---368,502 Total $492,567,705 $492,662,741 $359,681,747 $75,559,993 $57,052,499 $368,502 (1) See Note 17 for Other Post-Employment Benefits 59 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 2 -CASH AND INVESTMENTS (continued) Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations Except as inherent by their nature as disclosed above, the City’s investments (including those held by a bond trustee) are not highly sensitive to interest rate fluctuations. Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligations to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year end for each investment type. On August 5, 2011, the rating agency of Standard & Poors (S&P) assigned a negative outlook to the credit rating of the United States government. On August 8, 2011, S&P then downgraded that credit rating to AA+ from AAA. Remaining as of the Year-End Investment Type Minimum Legal Rating AAA AA+ Not Rated U.S. Government Agency Obligations: Federal Farm Credit Bank $54,488,200 $-$54,488,200 $- Federal Home Loan Bank 45,976,640 -45,976,640 - Federal Home Loan Mortgage Corp.49,740,000 -49,740,000 - Federal National Mortgage Assn.42,558,269 -42,558,269 - PEFCO 678,402 -678,402 - Commercial Paper ---- Bankers' Acceptances ---- U.S. Treasury Bills, Notes, and Bonds ---- Local Agency Investment Fund 122,654,871 --122,654,871 CAMP 84,933,751 --84,933,751 Mutual Funds (1)91,264,106 91,264,106 -- Investment Contracts 368,502 --368,502 Total $492,662,741 $91,264,106 $193,441,511 $207,957,124 (1) See Note 17 for Other Post-Employment Benefits Concentration of Credit Risk The City’s investment policy does not limit the amount that can be invested in any one issuer beyond the limitations stipulated by the California Government Code. Investments in any one issuer (other than United States Treasury securities, mutual funds and external investment pools) that represent 5% or more of the City’s total investments are as follows. Issuer Investment Type Reported Amount Percentage Federal Farm Credit Bank Federal Agency Securities $54,488,200 11% Federal Home Loan Bank Federal Agency Securities 45,976,640 9% Federal Home Loan Mortgage Corp.Federal Agency Securities 49,740,000 10% Federal National Mortgage Assn.Federal Agency Securities 42,558,269 9% 60 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 2 -CASH AND INVESTMENTS (continued) Custodial Credit Risk Custodial credit risk for deposits is the risk that the City will not be able to recover its deposits or will not be able to recover collateral securities in the possession of an outside party if a depository institution fails. The custodial credit risk for investments is the risk that the City will not be able to recover the value of its investment or collateral securities held by another party if the counterparty (e.g., broker-dealer) to a transaction fails. The California Government Code and City’s investment policy do not contain legal or policy requirements that would limit exposure to custodial credit risk for deposits or investments, other than the following provision applicable to deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The fair value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2019, all of the City’s deposits with financial institutions in excess of federal depository insurance limits were held in fully collateralized accounts, as permitted by the California Government Code. As of June 30, 2019, all of the City’s investments were held by the City itself or by a broker-dealer (counterparty) other than the broker-dealer used by the City to purchase the securities in the City’s name. Investment in State Investment Pools Investments are stated at fair value. Fair value is established quarterly based on quoted market prices received from the securities custodian. Fair value of investments held fluctuates with interest rates. The fair value of participants’ position in the pool is the same as the value of the pool shares. The value of participants’ equity withdrawn is based on the book value of the participants’ percentage participation at the date of such withdrawal. The California State Treasurer’s Office operates the Local Agency Investment Fund (LAIF). The LAIF is available for investment of funds administered by California local governments and special districts and is not registered with the Securities and Exchange Commission (SEC) as an investment company. The enabling legislation for the LAIF is Section 16429.1 et seq. of the California Government Code. California Asset Management Program (CAMP) is a California Joint Powers Authority established in 1989 to provide California public agencies with professional investment services. The CAMP Pool is a permitted investment for all local agencies under California Government Code Section 53601(p). The LAIF and CAMP operate and report to participants on an amortized cost basis. For both the LAIF and CAMP, the income, gains, and losses, net of administration fees, are allocated based upon the participant’s average daily balance. Deposits in the LAIF and CAMP are not insured or otherwise guaranteed by the State of California, and participants share proportionally in any realized gains or losses on investments. The fair value of the LAIF and CAMP investment pools are approximately equal to the value of the pool shares. Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy used to measure the fair value of the asset is based on the following: Level 1 - unadjusted price quotations in active markets/exchanges for identical assets or liabilities, that each fund has the ability to access. Level 2 - other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, loss severities, credit risks and default rates) or other market-corroborated inputs). Level 3 - unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including each fund's own assumptions used in determining the fair value of investments). The City has a reported fair value of investments of $492,567,705, of which $193,346,473 are valued using Level 1 inputs. 61 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 2 -CASH AND INVESTMENTS (continued) These include all of the U.S Government Agency Obligations and Time Certificates of Deposit. The remaining investments are valued using Level 2 inputs. NOTE 3 -COMPOSITION OF ACCOUNTS RECEIVABLE AND PAYABLE BALANCES Accounts receivable at June 30, 2019 of the City's major individual funds and non-major and internal service funds in the aggregate, including the applicable allowance for uncollectible accounts, are as follows: Accounts Receivable - Governmental Funds: General Fund Transient Occupancy Taxes Fund Community Development Block Grant Fund Gas Tax & Road Fund Capital Outlay Transportation Development Non-Major Governmental Funds Internal Service Funds Total Governmental Activities Taxes $-$968,364 $-$-$-$-$-$-$968,364 Accounts 794,606 -14,738,224 22,031 644,607 -6,313,033 177,926 22,690,427 Gross Receivables 794,606 968,364 14,738,224 22,031 644,607 -6,313,033 177,926 23,658,791 Less: Allowance for Uncollectible -------(152,675)(152,675) Total Accounts Receivable - Net $794,606 $968,364 $14,738,224 $22,031 $644,607 $-$6,313,033 $25,251 $23,506,116 Accounts Receivable - Proprietary Funds: Wastewater Treatment Fund Refuse Collection Fund Agricultural Water Fund Domestic Water Fund General Aviation Fund Offstreet Parking Fund Total Business-Type Activities Accounts $1,316,561 $1,260,841 $5,939,667 $3,031,198 $14,219 $3,300 $11,565,786 Gross Receivables 1,316,561 1,260,841 5,939,667 3,031,198 14,219 3,300 11,565,786 Less: Allowances for Uncollectible ------- Total Accounts Receivable - Net $1,316,561 $1,260,841 $5,939,667 $3,031,198 $14,219 $3,300 $11,565,786 Accounts payable and accrued liabilities at June 30, 2019, are composed of the following: Accounts Payable and Accrued Liabilities General Transient Occupancy Taxes Community Development Block Grant Gas Tax & Road Capital Outlay Park Improvement Transportation Development Governmental Activities:Fund Fund Fund Fund Fund Fund Fund Accounts payable $5,505,432 $26,745 $433,278 $8,791,445 $2,211,547 $3,121,957 $1,674,270 Total Accounts Payable and Accrued Liabilities $5,505,432 $26,745 $433,278 $8,791,445 $2,211,547 $3,121,957 $1,674,270 62 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 3 -COMPOSITION OF ACCOUNTS RECEIVABLE AND PAYABLE BALANCES (continued) Accounts Payable and Accrued Liabilities Non-Major Governmental Internal Service Total Governmental Governmental Activities:Funds Funds Activities Accounts payable $282,319 $1,888,063 $23,935,056 Total Accounts Payable and Accrued Liabilities $282,319 $1,888,063 $23,935,056 Accounts Payable and Accrued Liabilities - Wastewater Treatment Refuse Collection Agricultural Water Domestic Water General Aviation Offstreet Parking Total Business-Type Business-Type Activities:Fund Fund Fund Fund Fund Fund Activities Accounts payable $1,588,008 $2,536,213 $184,349 $3,820,769 $39,832 $12,158 $8,181,329 Accrued interest 2,099,625 -----2,099,625 Total Accounts Payable and Accrued Liabilities $3,687,633 $2,536,213 $184,349 $3,820,769 $39,832 $12,158 $10,280,954 NOTE 4 -DUE FROM OTHER GOVERNMENTS Amounts due from other governments at June 30, 2019 are comprised of the following: Federal Government State of California County/City Agencies Total Governmental Activities Business-Type Activities Total Reporting Entity Senate Bill (SB) 90 Claims $-$3,045,737 $-$3,045,737 $-$3,045,737 Sales Tax -25,784,855 -25,784,855 -25,784,855 Property Tax --356,669 356,669 164,186 520,855 State Homeland Security -4,355 -4,355 -4,355 Caltrans -32,237 -32,237 300,307 332,544 SB 1 - Road Maint & Rehab -1,266,056 -1,266,056 -1,266,056 Department of Fish & Game -28,913 -28,913 -28,913 Department of Transportation 39,020,038 --39,020,038 10,000 39,030,038 Federal Aviation Administration ----16,320 16,320 Economic & Community Development 709,344 --709,344 -709,344 Kern Council of Governments --197,757 197,757 -197,757 Kern County Waste Management ----1,262,484 1,262,484 Totals $39,729,382 $30,162,153 $554,426 $70,445,961 $1,753,297 $72,199,258 63 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 5 -CAPITAL ASSETS Capital asset activities for the year ended June 30, 2019, were as follows: Balance Balance June 30, 2018 Adjustments Additions Retirements June 30, 2019 Governmental Activities Capital assets, not being depreciated Land $448,509,830 $-$849,903 $-$449,359,733 Construction in progress 104,712,586 -30,832,585 29,992,866 105,552,305 Total capital assets, not being depreciated 553,222,416 -31,682,488 29,992,866 554,912,038 Capital assets, being depreciated Buildings, structures and improvements 144,918,758 -5,021,561 -149,940,319 Infrastructure 1,658,571,537 -64,349,663 -1,722,921,200 Rolling equipment 90,470,201 47,355 11,193,335 2,919,225 98,791,666 Furniture and other equipment 23,400,364 192,461 516,126 553,850 23,555,101 Total capital assets, being depreciated 1,917,360,860 239,816 81,080,685 3,473,075 1,995,208,286 Less accumulated depreciation for Buildings, structures and improvements (75,861,675)-(3,843,552)-(79,705,227) Infrastructure (1,009,265,236)-(55,274,149)-(1,064,539,385) Rolling equipment (54,633,613)12,091 (6,728,355)(2,702,730)(58,647,147) Furniture and other equipment (15,628,838)9,140 (1,101,263)(351,802)(16,369,159) Total accumulated depreciation (1,155,389,362)21,231 (66,947,319)(3,054,532)(1,219,260,918) Total capital assets, being depreciated, net 761,971,498 261,047 14,133,366 418,543 775,947,368 Governmental activities capital assets, net $1,315,193,914 $261,047 $45,815,854 $30,411,409 $1,330,859,406 Business-Type Activities Capital assets, not being depreciated Land $23,620,851 $-$9,234 $-$23,630,085 Water rights 31,476,906 ---31,476,906 Construction in progress 43,435,606 36,015 21,594,284 8,445,218 56,620,687 Total capital assets, not being depreciated 98,533,363 36,015 21,603,518 8,445,218 111,727,678 Capital assets, being depreciated Buildings, structures and improvements 325,453,657 -2,294,540 -327,748,197 Infrastructure 811,662,757 -21,769,957 36,014 833,396,700 Equipment 77,841,015 -888,860 -78,729,875 Total capital assets being depreciated 1,214,957,429 -24,953,357 36,014 1,239,874,772 Less accumulated depreciation for Buildings, structures and improvements (121,562,714)-(8,663,115)-(130,225,829) Infrastructure (277,083,729)-(12,870,623)-(289,954,352) Equipment (36,367,603)-(4,136,284)-(40,503,887) Total accumulated depreciation (435,014,046)-(25,670,022)-(460,684,068) Total capital assets, being depreciated, net 779,943,383 -(716,665)36,014 779,190,704 Business-type activities capital assets, net $878,476,746 $36,015 $20,886,853 $8,481,232 $890,918,382 64 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 5 -CAPITAL ASSETS (continued) Depreciation and amortization expense was charged in the following functions in the Statement of Activities: Governmental functions:Depreciation General government $1,532,456 Public safety - Police 385,467 Public safety - Fire 887,043 Public works 60,898,232 Recreation and parks 2,877,763 Development services 366,358 Total $66,947,319 Business-type functions: Wastewater treatment $20,182,171 Refuse collection 63,946 River & agricultural water 387,590 Domestic water 4,700,537 General aviation 245,150 Offstreet parking 90,628 Total $25,670,022 NOTE 6 -LAND HELD FOR RESALE The City, as the Redevelopment Successor Agency, has been transferred real property to be held for a limited period that will be used for future development. The inventory for land held for resale is presented at the lower of cost or net realizable value though it is initially recorded at historical costs. Subsequently, the land could be adjusted to net realizable value if and when the City enters into agreements for development or sale of the property for less than its historical cost, when a property is impaired or when property value decreases due to market conditions. Balance at Balance at Redevelopment Successor Agency - Housing June 30, 2018 Additions Deletions June 30, 2019 Land Held for Resale $1,266,016 $-$67,272 $1,198,744 $1,266,016 $-$67,272 $1,198,744 65 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 7 -OTHER LONG-TERM RECEIVABLES Other long-term receivables consist of the following: Governmental Activities Loans receivable in the internal service funds due from the Bakersfield Redevelopment Agency's Southeast Project Area from the Mill Creek South mixed use development project. This loan has an interest rate tied to the LAIF rate (currently at .244% and an eight year payment period per Agreement 06-124).$410,846 Deferred loans receivable associated with the low and moderate income housing project. These loans bear 0-3% interest and are not due until ten years after the loan agreement date (also see deferred revenue at Note 9).3,671,422 Mercy Housing, Madison Place Apartments, 55 year term, with 1/55 to be forgiven each year of compliance to agreement.264,666 Amcal Santa Fe Apartments, 55 year term, repayment begins from residual receipts following the date that the housing project is put in service.134,691 Down payment assistance loans.1,933,899 19th Street Senior Plaza, LLC, a 55 year loan term upon recordation of Certificate of Completion.1,688,375 Park 20th Apartments, a 55 year loan term beginning upon recordation of the Certificate of Completion with an interest rate of 3.0%.2,732,783 Chelsea Investment Corp. - Mill Creek Village. 19th Street Senior Housing and Parking Structure. A 55 year loan term beginning upon recordation of the Certificate of Completion with an interest rate of 3.0%.6,506,184 Chelsea Investment Corp. - Mill Creek Village. 19th Street Senior Housing and Parking Structure. A 55 year loan term beginning upon recordation of the Certificate of Completion with an interest rate of 2.0%.4,487,149 CalHOME Downpayment Assistance for a grant from the State which provided downpayment and closing cost assistance to seventeen (17) families within the Metropolitan Bakersfield area. The assistance was provided to those families whose incomes were at or below 120% of area median income. The loans of up to $40,000 are forgiven at 1/15th per year.344,330 Golden Empire Housing, Park Place Apartments, 55 year loan term beginning July 12, 1999, ending on July 12, 2054, with the interest payment being deferred for first ten years, until year 2010, with an interest rate of 1.5%.807,356 Capital Vision Equities, City Center Senior Housing, 35 year loan term beginning on March 28, 2001, ending March 28, 2036, with an interest rate of 5.85%.990,000 Canyon Hills Assembly of God, Senior Housing Project 30 year loan term beginning July 30, 2001 ending July 30, 2031, with an interest rate of 0%.310,000 66 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 7 -OTHER LONG-TERM RECEIVABLES (continued) Mill Creek Courtyard CIC - SEPA - Senior Housing Project. A 55 year loan term beginning from the date of execution by the developer.2,520,000 Face value of loans $26,801,701 Current portion $410,846 Long-term portion 26,390,855 Total governmental activities receivable $26,801,701 Business-Type Activities Notes receivable in the River & Agricultural Water Fund are for the amounts due from various customers/vendors. These loans are non-interest bearing.$31,777 Long-term receivable under agreement 87-153(5) between the City and Dreyer's Grand Ice Cream Inc. for additional flow and and treatment capacity in Wastewater Treatment Plant #3.320,440 Long-term receivable under Agreement 14-042 between the City and a local citizen to purchase surplus land adjacent to their business. Property was held in the Offstreet Parking Fund.24,461 Total business-type noncurrent receivables $376,678 67 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 8 -INTERFUND TRANSACTIONS Interfund transactions are comprised of loans, services provided, reimbursements, or transfers. Loans are reported as amounts “due to/due from” other funds or as “advances,” as appropriate, and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental activities and business-type activities are netted as part of the consolidation required to produce the government-wide financial statements. Interfund receivable and payable balances at June 30, 2019 were: Fund Due from Other Funds Due to Other Funds Governmental Funds: Major Funds: General Fund $18,649,197 $- Gas Tax & Road Fund $-$18,649,197 These balances are a result of expenditures incurred prior to the receipt of the related special revenue source. Interfund transfers at June 30, 2019 consisted of the following: Transfers In Transfers Out Governmental Funds: Major Funds: General Fund $1,200,000 $3,734,670 Transient Occupancy Taxes Fund -7,791,897 Community Development Block Grant Fund -507,545 Capital Outlay Fund 11,238,500 - Non-Major Funds: State Safety Fund -30,000 Traffic Safety Fund -1,200,000 General Obligation Debt Fund 686,630 - Proprietary Funds: Major Funds: Wastewater Treatment Fund -808,447 Refuse Collection Fund -2,890,840 River & Agricultural Water Fund -404,110 Offstreet Parking Fund 45,000 - Internal Service Funds: Self-Insurance Fund -148,943 Equipment Management Fund 4,346,322 - $17,516,452 $17,516,452 Additional details regarding transfers in and out of various funds are provided below: The $1,200,000 transfer in to the General Fund is from the Traffic Safety Fund that subsidized the cost of the traffic division of the police department for parking fine violations. 68 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 8 -INTERFUND TRANSACTIONS (continued) The $3,734,670 transfer from the General Fund includes a transfer to the Municipal Debt Fund of $141,670 for the repayment of a loan from PG&E for lighting improvement projects downtown as well as $45,000 to the Offstreet Parking Fund for increased security, and $1,000,000 to replenish the Facility Reserve Fund. The $7,791,897 transfers from the Transient Occupancy Taxes Fund include: $7,750,000 transferred to the Capital Outlay Fund to fund a number of capital projects, $37,415 to the General Obligation Debt Fund for the repayment of a loan from PG&E for an energy efficiency retrofit at Rabobank Arena, and $4,482 to the Equipment Fund for additional funding to replace equipment. The $507,545 transfer from the Community Development Block Grant (CDBG) Fund to the General Obligation Debt Fund is for the repayment of a Section 108 loan. There were additional transfers to the Equipment Management Fund to purchase additional equipment for operations which include: the General Fund ($59,500), the Certified Unified Program Agency (CUPA) Fund ($30,000), the Transient Occupancy Tax Fund ($4,482), the Sewer Fund ($808,447), the Refuse Fund ($2,890,840), the River & Agricultural Water Fund ($404,110) and the Self-Insurance Fund ($148,943). NOTE 9 -ADVANCES FROM GRANTORS AND THIRD PARTIES The government-wide Statement of Net Position as well as governmental and enterprise funds defer revenue recognition in connection with resources that have been received as of year-end but not yet earned because under both the accrual and modified accrual basis of accounting revenue may be recognized only when earned. Assets recognized in connection with a transaction before the earnings process is complete are offset by a corresponding liability for advances from grantors and third parties. The following table summarizes Advances from Grantors and third parties for the City at June 30, 2019: Balance at June 30, 2019 Governmental Activities: General Fund Dog License $87,554 Business License 1,940,769 General Fund Total 2,028,323 Non-Major Funds: State Transportation - Grants Advanced 206,431 Redevelopment Successor Agency - Housing 22,719,433 Total Governmental Activities $24,954,187 Business-Type Activities: Wastewater Treatment $320,440 Refuse Collection 128,931 Total Business-Type Activities $449,371 69 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 10 -CAPITAL LEASE The City entered into a long-term lease agreement in September 2005 for the acquisition of water rights with the Kern County Water Agency (KCWA). The agreement entitles the City to receive 6,500 acre feet of water per year in exchange for annual payments tied to KCWA’s Water Revenue certificates of participation from 2006 and 2008, which were used for the expansion of its wa ter treatment facility. On March 1, 2016, KCWA issued Water Revenue Refunding Bonds. These new bonds refunded the previous debt that the City's lease payments were based upon. The City’s lease payments coincide with the amortization schedule for the related KCWA debt with the value of the related water rights at $17,671,298. The total lease obligation for the term of this agreement is as follows: Business-Type Activities Year ending Lease Interest Total 2020 $670,701 $679,306 $1,350,007 2021 695,723 653,095 1,348,818 2022 678,990 668,624 1,347,614 2023 712,201 636,691 1,348,892 2024 747,648 602,990 1,350,638 2025-2029 4,312,404 2,434,350 6,746,754 2030-2034 5,363,612 1,382,951 6,746,563 2035-2039 4,490,019 409,788 4,899,807 Totals $17,671,298 $7,467,795 $25,139,093 Balance at June 30, 2018 Additions Principal Retirement Balance at June 30, 2019 Business-Type Activities Capital Leases: Water rights $18,315,293 $-$643,995 $17,671,298 $18,315,293 $-$643,995 $17,671,298 70 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 11 -LONG-TERM DEBT Long-term debt transactions for the fiscal year ending June 30, 2019 are summarized below: Business-Type Activities Governmental Activities General Obligations Revenue Obligations Total Total Government Payable at June 30, 2018: Bonds $-$-$166,998,212 $166,998,212 $166,998,212 Certificates of Participation 11,275,000 ---11,275,000 Notes 2,584,240 2,256,378 -2,256,378 4,840,618 Contracts/Loans -368,746 -368,746 368,746 Claims and Judgments Payable 47,564,651 ---47,564,651 Compensated Absences 15,101,325 1,950,737 -1,950,737 17,052,062 Subtotal 76,525,216 4,575,861 166,998,212 171,574,073 248,099,289 New debt incurred: Bonds ----- Notes 4,136,541 ---4,136,541 Claims and Judgments Payable 962,650 ---962,650 Compensated Absences 8,376,358 1,036,513 -1,036,513 9,412,871 Subtotal 13,475,549 1,036,513 -1,036,513 14,512,062 Principal reductions: Bonds --6,868,638 6,868,638 6,868,638 Certificates of Participation 2,640,000 ---2,640,000 Notes 609,305 752,126 -752,126 1,361,431 Contracts/Loans -54,531 -54,531 54,531 Compensated Absences 7,956,005 1,012,305 -1,012,305 8,968,310 Subtotal 11,205,310 1,818,962 6,868,638 8,687,600 19,892,910 Payable at June 30, 2019: Bonds --160,129,574 160,129,574 160,129,574 Certificates of Participation 8,635,000 ---8,635,000 Notes 6,111,476 1,504,252 -1,504,252 7,615,728 Contracts/Loans -314,215 -314,215 314,215 Claims and Judgments Payable 48,527,301 ---48,527,301 Compensated Absences 15,521,678 1,974,945 -1,974,945 17,496,623 Total Payables $78,795,455 $3,793,412 $160,129,574 $163,922,986 $242,718,441 71 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 11 -LONG-TERM DEBT (continued) Business-Type Activities Governmental Activities General Obligations Revenue Obligations Total Total Government Due Within One Year: Bonds $-$-$7,298,638 $7,298,638 $7,298,638 Certificates of Participation 2,760,000 ---2,760,000 Notes 1,243,689 752,126 -752,126 1,995,815 Total Long-term Debt 4,003,689 752,126 7,298,638 8,050,764 12,054,453 Contracts/Loans -314,215 -314,215 314,215 Claims and Judgments Payable 12,705,801 ---12,705,801 Compensated Absences 2,391,510 604,974 -604,974 2,996,484 Total Due Within One Year $19,101,000 $1,671,315 $7,298,638 $8,969,953 $28,070,953 Due in More Than One Year: Bonds $-$-$152,830,936 $152,830,936 $152,830,936 Certificates of Participation 5,875,000 ---5,875,000 Notes 4,867,787 752,126 -752,126 5,619,913 Total Long-term Debt 10,742,787 752,126 152,830,936 153,583,062 164,325,849 Claims and Judgments Payable 35,821,500 ---35,821,500 Compensated Absences 13,130,168 1,369,971 -1,369,971 14,500,139 Total Due in More Than One Year $59,694,455 $2,122,097 $152,830,936 $154,953,033 $214,647,488 The liability for pension-related debt, OPEB debt, and compensated absences for governmental activities is primarily liquidated by the General Fund with smaller portions charged to other funds in an amount proportional to the personnel costs incurred. The pension related debt and compensated absences for business-type activities will be paid by the respective proprietary funds. Long-term debt payable at June 30, 2019, was comprised of the following individual issues: Bonds General obligation bonds serviced by business-type activities: $145,500,000 Wastewater Revenue Bonds 2015 Series A - The 2007 Series A bonds were refunded in 2015 with a partial call of the outstanding principal amount of $156,750,000 as well as payment of the issuance costs. The proceeds of the original Series 2007A refunded bonds were used to finance a portion of certain capital improvements at the City's wastewater and sewage collection treatment and disposal system; interest rate of 5.00%. (This issue is serviced by the Wastewater Treatment Fund.)$139,975,000 Unamortized Bond Premium on Wastewater Revenue Bonds 20,154,573 Total Bonds $160,129,573 Certificates of Participation: Certificates of participation serviced by Transient Occupancy Tax revenue via lease payments from the City to the Redevelopment Successor Agency: $25,335,000 - 2006 Refunding Certificates of Participation Series A assumed by the City as the successor agency of the former redevelopment agency. Certificates are due in annual principal installments of $900,000 to $2,170,000 commencing October 1, 2006 through 2022; interest ranging from 4.00% to 4.25%.$6,265,000 72 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 11 -LONG-TERM DEBT (continued) $9,470,000 - 2006 Refunding Certificates of Participation Series B assumed by the City as the successor agency of the former redevelopment agency. Certificates are due in annual principal installments of $345,000 to $830,000 commencing October 1, 2006 through 2022; interest ranging from 4.00% to 5.00%.2,370,000 Total Certificates of Participation $8,635,000 Notes/Loans: General obligation note serviced by Community Development Block Grant Fund (via the Municipal Debt Service Fund with Community Development Block Grant Entitlement): $4,100,000 Housing & Urban Development (HUD) Section 108 Loan 2003 - Due in annual principal installments of $137,000 to $320,000 commencing August 1, 2004 through August 2022; interest ranging from 1.75% to 4.76%.$1,194,000 General obligation note serviced by Community Development Block Grant Fund (via the Municipal Debt Service Fund with Community Development Block Grant Entitlement): $800,000 HUD Section 108 Loan 2003 - due in annual principal installments of $24,000 to $61,000 commencing August 1, 2005 through August 2023; interest ranging from 1.61% to 4.76%.276,000 General obligation note serviced by Community Development Block Grant Fund (via the Municipal Debt Service Fund with Community Development Block Grant Entitlement), $1,800,000 HUD Section 108 Loan 009 - due in annual principal installments of $140,000 to $230,000 commencing August 2010 through August 2021; interest ranging from 0.56% to 3.73%.426,000 General obligation loan serviced by General Fund (via the Municipal Debt Service Fund): $237,033 PG&E loan used for an energy efficient lighting upgrade at in the Downtown area of the City. The payments will be made on PG&E bills starting March 2015. This loan contains no interest charges.38,232 General obligation loan serviced by General Fund (via the Municipal Debt Service Fund): $47,636 PG&E loan used for an energy efficient lighting upgrade at Police Headquarters. The payments will be made starting September 13, 2017 in 29 monthly payments of $1,642.62. This loan contains no interest charges.11,498 General obligation loan serviced by General Fund (via the Municipal Debt Service Fund): $126,274 PG&E loan used for an energy efficient lighting upgrade at Rabobank Theater. The payments will be made starting March 12, 2018 in 54 monthly payments of $2,338.40. This loan contains no interest charges. 88,859 General obligation loan serviced by General Fund (via the Municipal Debt Service Fund ): $1,420,717 PG&E loan used for an energy efficient lighting upgrade throughout the city. The payments will be made in 80 monthly payments of $17,758.96. This loans contain no interest charges.1,385,199 General obligation loan serviced by General Fund (via the Municipal Debt Service Fund ): $1,979,307 PG&E loan used for an energy efficient lighting upgrade throughout the city. The payments will be made in 80 monthly payments of $24,137.89. This loans contain no interest charges.1,955,169 73 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 11 -LONG-TERM DEBT (continued) General obligation loan serviced by General Fund (via the Municipal Debt Service Fund ): $736,517 PG&E loan used for an energy efficient lighting upgrade throughout the city. The payments will be made in 46 monthly payments of $16,011. This loans contain no interest charges.contain no interest charges.736,517 General obligation notes serviced by Business-Type Activities: $14,263,555 note payable to California State Water Resources Control Board - Original advances of $14,954,054 payable without interest in twenty annual installments beginning in fiscal year 2004-05 by the Wastewater Treatment Fund.1,504,254 Total general obligation notes/loans payable $7,615,728 74 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 11 -LONG-TERM DEBT (continued) Compensated Absences: Government Activities $15,521,678 Business-Type Activities 1,974,945 Total Compensated Absences $17,496,623 A summary of the City's debt service requirements outstanding at June 30, 2019, is as follows: Total Government Principal: Governmental Activities $78,795,457 Business-Type Activities: General Obligations 3,793,412 Revenue Obligations 160,129,573 Subtotal - Principal 242,718,442 Less: Claims and Judgments Payable included above that bear no interest and have no schedule of repayment terms 48,527,301 Less: Kern River Levee District Payable included above that bears no interest and has no schedule of repayment terms 314,215 Less: Unamortized premium for Wastewater revenue bond 20,154,573 Less: Compensated Absences included above that bear no interest and have no schedule of repayment terms 17,496,623 Total Principal with Scheduled Repayment Terms 156,225,730 Interest on Obligations 57,329,403 Total Debt Service Requirements $213,555,133 75 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 11 -LONG-TERM DEBT (continued) The annual requirement to amortize the principal and interest on long-term debt at June 30, 2019 is as follows: Government-Type Activities Year ending Principal Interest Bonds/COP Notes/Loans Total Bonds Notes/Loans Total 2020 $2,760,000 $1,243,689 $4,003,689 $374,526 $41,791 $416,317 2021 2,875,000 1,208,959 4,083,959 256,625 30,500 287,125 2022 3,000,000 1,222,959 4,222,959 133,724 17,811 151,535 2023 -1,106,551 1,106,551 -7,193 7,193 2024 -502,763 502,763 --- 2025-2029 -826,557 826,557 --- Totals $8,635,000 $6,111,478 $14,746,478 $764,875 $97,295 $862,170 Business-Type Activities Year ending Principal Interest Bonds/COP Notes/Loans Total Bonds Notes/Loans Total 2020 $5,955,000 $752,126 $6,707,126 $6,849,875 $150,429 $7,000,304 2021 7,245,000 752,126 7,997,126 6,519,875 150,429 6,670,304 2022 7,670,000 -7,670,000 6,147,000 -6,147,000 2023 7,995,000 -7,995,000 5,755,375 -5,755,375 2024 8,450,000 -8,450,000 5,344,250 -5,344,250 2025-2029 49,605,000 -49,605,000 19,727,375 -19,727,375 2030-2034 53,055,000 -53,055,000 5,822,625 -5,822,625 Totals $139,975,000 $1,504,252 $141,479,252 $56,166,375 $300,858 $56,467,233 Total Reporting Entity Year Ending Principal Interest Bonds/COP Notes/Loans Total Bonds/COP Notes/Loans Total 2020 $8,715,000 $1,995,815 $10,710,815 $7,224,401 $192,220 $7,416,621 2021 10,120,000 1,961,085 12,081,085 6,776,500 180,929 6,957,429 2022 10,670,000 1,222,959 11,892,959 6,280,724 17,811 6,298,535 2023 7,995,000 1,106,551 9,101,551 5,755,375 7,193 5,762,568 2024 8,450,000 502,763 8,952,763 5,344,250 -5,344,250 2025-2029 49,605,000 826,557 50,431,557 19,727,375 -19,727,375 2030-2034 53,055,000 -53,055,000 5,822,625 -5,822,625 Totals $148,610,000 $7,615,730 $156,225,730 $56,931,250 $398,153 $57,329,403 76 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 12 -PLEDGED REVENUES The City has pledged net revenues generated by the Wastewater Enterprise Fund to repay a total of $151.5 million in wastewater revenue bonds series 2015A issued to finance a portion of the expansion and improvement of the City's wastewater and sewage collection and disposal system. Each fiscal year, net revenues means all revenues of the enterprise fund received during the fiscal year less operation and maintenance costs for that fiscal year. The pledge of net revenues does not constitute a lien upon any property of the City. Proceeds of the bonds provided financing for expansion and upgrade of Wastewater Treatment Plant #3, and improvements to Wastewater Treatment Plant #2. The bonds are payable through 2034 for 2015A bonds. The covenants of the ordinances authorizing the bonds include, among other things, an obligation of the City to fix, prescribe, revise, and collect rates, fees, and charges for the services and facilities of the system and revise the same whenever necessary, which will provide gross revenues in each fiscal year sufficient to pay the cost of operation and maintenance of the system; one hundred twenty five percent (125%) of the bond service requirement becoming due in such fiscal year on the outstanding bonds; plus one hundred percent (100%) of all reserve and other payments required to be made pursuant to the ordinances authorizing the bonds. NOTE 13 -DEFERRED INFLOWS OF RESOURCES Pursuant to GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, the City recognized deferred inflows of resources in the governmental fund financial statements. These items are an acquisition of net fund balance by the City that is applicable to a future reporting period. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. Under the modified accrual basis of accounting, it is not enough that revenue has been earned if it is to be recognized in the current period. Revenue must also be susceptible to accrual (i.e., measurable and available to finance expenditures of the current period). Governmental funds report deferred revenues in connection with receivables for revenues not susceptible to accrual, as deferred inflows of resources. Deferred inflows of resources balances for the year ended June 30, 2019 were as follows: Balance at June 30, 2019 General Fund California Water Receivable $180,263 Code Enforcement Receivable 9,695 State Agencies (SB90)3,045,737 General Fund Total 3,235,695 CDBG - Deferred Loans 18,392,057 Gas Tax & Road Fund 22,031 Capital Outlay Fund 46,606 Non-Major Funds Neighborhood Stabilization 6,213,854 Total Governmental Funds $27,910,243 77 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 14 -FUND BALANCES Fund balances for all major and non-major governmental funds as of June 30, 2019 are as follows (see Note 1 for description of the categories used): General Fund Transient Occupancy Taxes Fund Community Development Block Grant Fund Gas Tax & Road Fund Capital Outlay Fund Park Improvement Fund Transportation Development Fund Non-Major Governmental Funds Total Nonspendable Prepaids/Deposits $51,479 $-$-$-$942,965 $-$-$-$994,444 Subtotal 51,479 ---942,965 ---994,444 Restricted Development services grants --616,909 ----371,871 988,780 Community redevelopment projects -------2,168,569 2,168,569 Police services grants -------1,807,055 1,807,055 Fire services grants -------1,108,586 1,108,586 Assessment district projects --------- Public works grants ---12,902,757 ----12,902,757 Subtotal --616,909 12,902,757 ---5,456,081 18,975,747 Committed Legal & Professional services 58,619 ---22,528 ---81,147 City facility construction & refurbishment projects ----19,724,607 ---19,724,607 Police service contracts 178,559 ---761,725 ---940,284 Fire service contracts ----398,620 ---398,620 Public works improvement contracts ----1,355,695 -51,551,913 -52,907,608 Park improvement contracts ----359,440 4,805,694 --5,165,134 Tourism and promotional contracts -13,470 ------13,470 Development Services contracts 787,604 ---418,448 ---1,206,052 Cash basis reserve 26,463,606 -------26,463,606 Facility replacement reserve ----3,606,764 ---3,606,764 Appropriation for next year's budget --------- Subtotal 27,488,388 13,470 --26,647,827 4,805,694 51,551,913 -110,507,292 78 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 14 -FUND BALANCES (continued) General Fund Transient Occupancy Taxes Fund Community Development Block Grant Fund Gas Tax & Road Fund Capital Outlay Fund Park Improvement Fund Transportation Development Fund Non-Major Governmental Funds Total Assigned Legal & Professional services 142,870 -------142,870 Police operations 52,795 -------52,795 Fire operations 117,851 -------117,851 Public works - General Services department 58,956 -------58,956 Facility improvements ----4,436,223 ---4,436,223 Highway and road projects ----23,532,556 ---23,532,556 Tourism and promotional contracts -989,359 ------989,359 Park development projects 41,467 -------41,467 Community development projects 28,526 -------28,526 Other miscellaneous agreements 17,499 -------17,499 Petty Cash accounts 28,370 -------28,370 Compensated absences 2,164,894 -------2,164,894 Appropriation for next year's budget 19,750,000 -------19,750,000 Subtotal 22,403,228 989,359 --27,968,779 ---51,361,366 Unassigned 4,689,839 -------4,689,839 Total $54,632,934 $1,002,829 $616,909 $12,902,757 $55,559,571 $4,805,694 $51,551,913 $5,456,081 $186,528,688 NOTE 15 -REIMBURSABLE DEVELOPER COSTS Reimbursable developer costs of $1,981,430 at June 30, 2019 are included in customer deposits in the Domestic Water Fund which represent amounts due to developers for construction of water mainline extensions and certain other water facilities. For mainline extensions transferred to the City after June 30, 1982, the developers are to be reimbursed based on revenues generated from the water sales associated with these mainline extensions. The City is required to reimburse 2.5% of the cost of the extension on a yearly basis with the total amount to be reimbursed within 40 years. 79 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS General The City of Bakersfield provides pension benefits to eligible full-time employees in three separate plans: the Miscellaneous Plan, the Safety Fire Plan, and the Safety Police Plan, all of which are included in the Public Agency portion of the California Public Employees’ Retirement System (CalPERS). Miscellaneous Plan Plan Description The City’s Miscellaneous Plan is a defined benefit pension plan that provides retirement and disability benefits, annual cost-of- living adjustments (COLA), and death benefits to plan members and beneficiaries. The Miscellaneous Plan is an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions, as we ll as other requirements, is established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS' annual financial report may be obtained from their Executive Office - 400 P Street – Sacramento, CA 95814. Benefits Provided The benefits provided through the CalPERS Miscellaneous Plan include retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The City has three tiers through CalPERS under the Miscellaneous employee plan. Tier I is applicable to all employees hired before August 20, 2008 with a formula of 3% at age 60. Earliest retirement age is 50 with final compensation based on 12 months at the highest rate of pay received. Tier II is applicable to employees hired after August 20, 2008 and before January 1, 2013 with a formula of 2.7% at age 55. Earliest retirement age is 50 with final compensation based on 36 months at the highest rate of pay received. Tier III is applicable to employees hired after January 1, 2013 with a formula of 2% at age 62, which is a result of the Public Employees' Pension Reform Act of 2013 (PEPRA). PEPRA also lowered the final compensation and contribution requirements. Earliest retirement age is 52 with final compensation, subject to the PEPRA limit of $149,016, based on 36 months at the highest rate of pay received. Contributions and Employees Covered Active plan members in the CalPERS Miscellaneous Plan may be required to contribute a particular percent of their annual pay depending on the applicable plan they fall under. Tier I and Tier II employees will pay 8% of their salary while those employees under PEPRA (Tier III) will pay 5.5% of their salary. In addition, employees in Tier I and Tier II have 7.5% of their contribution picked-up by the City after five years of service. Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. It is the responsibility of the employer to make necessary accounting adjustments to reflect the impact due to any Employer Paid Member Contributions or situations where members are paying a portion of the employer contribution. As of June 30, 2018 (the measurement date), there are 947 active employees and 913 inactive employees or beneficiaries receiving benefits. For the fiscal year ended June 30, 2019, the employee contribution rate was 7.588 percent of annual pay, and the employer’s minimum contribution rate was 26.346 percent of annual payroll. Employer contribution rates may change if plan contracts are amended. 80 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Actuarial Methods and Assumptions For the measurement period ended June 30, 2018 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2017 total pension liability. The June 30, 2017 and the June 30, 2018 total pension liabilities were based on the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Asset Valuation Method Fair Value of Assets. For details, see June 30, 2015 Funding Valuation Report Inflation Rate 2.75% Salary Increases Varies by Entry Age and Service Payroll Growth 3.00% Investment Rate of Return 7.50% [a] Mortality [b] [a] Net of Pension Plan Investment and Administrative Expenses; includes inflation. [b] Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report. All other actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study dated January 2014 which was derived from data collected for the period from 1997 to 2011, including updates to salary increases, mo rtality and retirement rates. The 2014 Experience Study report can be obtained at CalPERS’ website under Forms and Publications. Discount Rate The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB Statement No. 68 section. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. 81 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the CalPERS' Board effective on July 1, 2015. Asset Class Assumed Asset Allocation Real Return Years 1-10 [a] Real Return Years 11+ [b] Global Equity 50.0%4.80%5.98% Fixed Income 28.0%1.00%2.62% Inflation Assets 0%0.77%1.81% Private Equity 8.0%6.30%7.23% Real Assets 13.0%3.75%4.93% Liquidity 1.0%0%(0.92%) [a] An expected inflation of 2.0% used for this period. [b] An expected inflation of 2.92% used for this period. Changes in Net Pension Liability The change in the Net Pension Liability recognized over the measurement period is as follows: Increase (Decrease) MISCELLANEOUS PLAN Total Pension Liability [1] Plan Fiduciary Net Position [2] Net Pension Liability/(Asset) [3]=[1] - [2] Balance at June 30, 2017 [a]$552,882,942 $383,607,306 $169,275,636 Changes Recognized for the Measurement Period: - Service Cost 9,865,219 -9,865,219 - Interest on the Total Pension Liability 38,377,062 -38,377,062 - Changes of Benefit Terms --- - Differences between Expected and Actual Experience (4,948,406)-(4,948,406) - Changes of Assumptions (3,069,067)-(3,069,067) - Plan to Plan Movement -(939)939 - Contributions - Employer -13,222,781 (13,222,781) - Contributions - Employees -4,245,043 (4,245,043) - Net Investment Income -32,008,762 (32,008,762) - Benefit Payments Including Refund of Employee Contributions (26,111,942)(26,111,942)- - Administrative Expenses -(597,766)597,766 - Other Misc Income/(Expense) [b]-(1,135,167)1,135,167 Net Changes during 2017-18 14,112,866 21,630,772 (7,517,906) Balance at June 30, 2018 [a]$566,995,808 $405,238,078 $161,757,730 [a] The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary, self-insurance and OPEB expense. This may be different from the plan assets reported in the funding actuarial valuation report. [b] During Fiscal Year 2017-18, as a result of Governmental Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefits Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. 82 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate MISCELLANEOUS PLAN Discount Rate - 1% (6.15%) Current Discount Rate (7.15 %) Discount Rate + 1% (8.15%) Plan Net Pension Liability/(Asset)$237,437,173 $161,757,730 $99,148,920 Recognition of Gains and Losses Under GASB Statement No. 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is a five year straight-line amortization. All other amounts are amortized using straight-line amortization over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period. The expected average remaining service lifetime (EARSL) for the plan for the June 30, 2018 measurement date is 3.7 years, which is obtained by dividing the total service years of 10,005 (the sum of remaining lifetimes of active employees) by 2,685 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to 0. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of the start of the measurement period (July 1, 2018), the net pension liability/(asset) is $169,275,636. For the measurement period ending June 30, 2018 (the measurement date), the City incurred a pension expense/(income) of $19,354,840 for the plan. Note that no adjustments have been made for contributions subsequent to the measurement date. Adequate treatment of any contributions made after the measurement date is the responsibility of the employer. As of June 30, 2019, the City had deferred outflows of resources related to pensions of $18,084,329 for contributions made subsequent to the measurement date, $13,333,762 for changes of assumptions, and $1,330,337 for the net difference between projected and actual earnings on pension plan investments. Deferred inflows of resources related to pensions we re $2,239,589 for changes in assumptions and $7,583,774 for differences between expected and actual experiences. Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in future pension revenue and expense amortized annually as follows: Measurement Periods Ended June 30: Deferred Outflows/(Inflows) of Resources 2019 $8,943,011 2020 $2,268,465 2021 $(5,368,575) 2022 $(1,002,165) Remaining $0 83 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Safety Fire Plan Plan Description The City’s Safety Fire Plan is a defined benefit pension plan that provides retirement and disability benefits, annual cost-of- living adjustments, and death benefits to plan members and beneficiaries. The Safety Fire Plan is an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions, as well as other requirements, is established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS' annual financial report may be obtained from their Executive Office - 400 P Street – Sacramento, CA 95814. Benefits Provided The benefits provided through the CalPERS Safety Fire Plan include retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The City has three tiers through CalPERS under the Safety Fire employee plan. Tier I is applicable to all employees hired before January 1, 2011 with a formula of 3% at age 50. Earliest retirement age is 50 with final compensation based on 12 mo nths at the highest rate of pay received. Tier II is applicable to employees hired after January 1, 2011 and before January 1, 2013 with a formula of 2.0% at age 50. Earliest retirement age is 50 with final compensation based on 36 months at the highest rate of pay received. Tier III is applicable to employees hired after January 1, 2013 with a formula of 2% at age 57, which is a result of PEPRA. PEPRA also lowered the final compensation and contribution requirements. Earliest retirement age is 50 with final compensation, subject to the PEPRA limit of $149,016, based on 36 months at the highest rate of pay received. Contributions and Employees Covered Active plan members in the CalPERS Safety Fire Plan may be required to contribute a particular percent of their annual pay depending on the applicable plan they fall under. Tier I and Tier II employees will pay 9% of their salary while those employees under PEPRA (Tier III) will pay 11% of their salary. In addition, employees in Tier I have 8% of their contribution picked-up by the City after five years of service. Section 20814(c) of the California PERL requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. It is the responsibility of the employer to make necessary accounting adjustments to reflect the impact due to any Employer Paid Member Contributions or situations where members are paying a portion of the employer contribution. As of June 30, 2018 (the measurement date), there are 171 active employees and 225 inactive employees or beneficiaries receiving benefits. For the fiscal year ended June 30, 2019, the employee contribution rate was 9.200 percent of annual pay, and the employer’s minimum contribution rate was 42.058 percent of annual payroll. Employer contribution rates may change if plan contracts are amended. 84 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Actuarial Methods and Assumptions For the measurement period ended June 30, 2018 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2017 total pension liability. The June 30, 2017 and the June 30, 2018 total pension liabilities were based on the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Asset Valuation Method Fair Value of Assets. For details, see June 30, 2015 Funding Valuation Report. Salary Increases 2.75% Salary Increases Varies by Entry Age and Service Payroll Growth 3.00% Investment Rate of Return 7.50%[a] [a] Net of Pension Plan Investment and Administrative Expenses; includes inflation. [b]Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report. All other actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study dated January 2014 which was derived from data collected for the period from 1997 to 2011, including updates to salary increases, mo rtality and retirement rates. The 2014 Experience Study report can be obtained at CalPERS’ website under Forms and Publications. Discount Rate The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB Statement No. 68 section. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. 85 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the CalPERS Board effective on July 1, 2015. Asset Class Assumed Asset Allocation Real Return Years 1-10 [a] Real Return Years 11+ [b] Global Equity 50.0%4.80%5.98% Fixed Income 28.0%1.00%2.62% Inflation Assets 0%0.77%1.81% Private Equity 8.0%6.30%7.23% Real Assets 13.0%3.75%4.93% Liquidity 1.0%0%(0.92%) [a] An expected inflation of 2.00% used for this period. [b] An expected inflation of 2.92% used for this period. Changes in Net Pension Liability The change in the Net Pension Liability recognized over the measurement period is as follows: Increase (Decrease) SAFETY FIRE PLAN Total Pension Liability [1] Plan Fiduciary Net Position [2] Net Pension Liability/(Asset) [3]=[1] - [2] Balance at June 30, 2017 [a]$284,221,668 $200,055,512 $84,166,156 Changes Recognized for the Measurement Period: - Service Cost 4,690,651 -4,690,651 - Interest on the Total Pension Liability 19,788,059 -19,788,059 - Changes of Benefit Terms --- - Differences between Expected and Actual Experience (1,205,127)-(1,205,127) - Changes of Assumptions (1,346,780)-(1,346,780) - Plan to Plan Resource Movement -(487)487 - Contributions - Employer -6,452,089 (6,452,089) - Contributions - Employees -1,612,168 (1,612,168) - Net Investment Income -16,662,233 (16,662,233) - Benefit Payments Including Refund of Employee Contributions (14,518,038)(14,518,038)- - Administrative Expenses -(311,742)311,742 - Other Misc Income/(Expense) [b]-(592,003)592,003 Net Changes during 2017-18 7,408,765 9,304,220 (1,895,455) Balance at June 30, 2018 [a]$291,630,433 $209,359,732 $82,270,701 [a] The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary, self-insurance and OPEB expense. This may be different from the plan assets reported in the funding actuarial valuation report [b] During Fiscal Year 2017-18, as a result of Governmental Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefits Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75. . 86 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate SAFETY FIRE PLAN Discount Rate - 1% (6.15%) Current Discount Rate (7.15%) Discount Rate + 1% (8.15%) Plan Net Pension Liability/(Asset)$121,546,441 $82,270,701 $49,973,302 Recognition of Gains and Losses Under GASB Statement No. 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is a five year straight-line amortization. All other amounts are amortized using straight-line amortization over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period. The expected average remaining service lifetime (EARSL) for the plan for the June 30, 2018 measurement date is 5.6 years, which is obtained by dividing the total service years of 2,414 (the sum of remaining lifetimes of active employees) by 432 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to 0. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of the start of the measurement period (July 1, 2018), the net pension liability/(asset) is $84,166,156. For the measurement period ending June 30, 2018 (the measurement date), the City incurred a pension expense/(income) of $10,302,023 for the plan. Note that no adjustments have been made for contributions subsequent to the measurement date. Adequate treatment of any contributions made after the measurement date is the responsibility of the employer. As of June 30, 2019, the City had deferred outflows of resources related to pensions of $8,410,816 for contributions made subsequent to the measurement date, $10,138,817 for changes of assumptions, $425,206 for the differences between expected and actual experiences and $882,935 for the net difference between projected and actual earnings on pension plan investments. Deferred inflows of resources related to pensions were $2,252,034 for changes in assumptions and $3,155,918 for differences between expected and actual experiences. Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in future pension revenue and expense amortized annually as follows: Measurement Periods Ended June 30: Deferred Outflows/(Inflows) of Resources 2019 $3,916,114 2020 $2,403,526 2021 $25,003 2022 $(32,215) 2023 $(273,422) Remaining $0 87 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Safety Police Plan Plan Description The City’s Safety Police Plan is a defined benefit pension plan that provides retirement and disability benefits, annual cost-of- living adjustments, and death benefits to plan members and beneficiaries. The Safety Police Plan is an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. A menu of benefit provisions, as well as other requirements, is established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS' annual financial report may be obtained from their Executive Office - 400 P Street – Sacramento, CA 95814. Benefits Provided The benefits provided through the CalPERS Safety Police Plan include retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The City has three tiers through CalPERS under the Safety Police employee plan. Tier I is applicable to all employees hired before January 1, 2011 with a formula of 3% at age 50. Earliest retirement age is 50 with final compensation based on 12 months at the highest rate of pay received. Tier II is applicable to employees hired after January 1, 2011 and before January 1, 2013 with a formula of 2.0% at age 50. Earliest retirement age is 50 with final compensation based on 36 months at the highest rate of pay received. Tier III is applicable to employees hired after January 1, 2013 with a formula of 2% at age 57, which is a result of the PEPRA. PEPRA also lowered the final compensation and contribution requirements. Earliest retirement age is 50 with final compensation, subject to the PEPRA limit of $149,016, based on 36 months at the highest rate of pay received. Contributions and Employees Covered Active plan members in the CalPERS Safety Police Plan may be required to contribute a particular percent of their annual pay depending on the applicable plan they fall under. Tier I and Tier II employees will pay 9% of their salary while those employees under PEPRA (Tier III) will pay 12.50% of their salary. In addition, employees in Tier I have 8% their contribution picked-up by the City after five years of service. Section 20814(c) of the California PERL requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. As of June 30, 2018 (the measurement date), there are 373 active employees and 432 inactive employees or beneficiaries receiving benefits. For the fiscal year ended June 30, 2019, the employee contribution rate was 9.671 percent of annual pay, and the employer’s minimum contribution rate was 46.810 percent of annual payroll. Employer contribution rates may change if plan contracts are amended. 88 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Actuarial Methods and Assumptions For the measurement period ended June 30, 2018 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2017 total pension liability. The June 30, 2017 and the June 30, 2018 total pension liabilities were based on the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Asset Valuation Method Fair Value of Assets. For details, see June 30, 2015 Funding Valuation Report Inflation Rate 2.75% Salary Increases Varies by Entry Age and Services Payroll Growth 3.00% Investment Rate of Return 7.50%[a] Mortality[b] [a] Net of Pension Plan Investment and Administrative Expenses; includes inflation. [b] Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvements using Society of Actuaries Scale BB. For more details on this table, please refer to the 2014 experience study report. All other actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study dated January 2014 which was derived from data collected for the period from 1997 to 2011, including updates to salary increases, mo rtality and retirement rates. The 2014 Experience Study report can be obtained at CalPERS’ website under Forms and Publications. Discount Rate The discount rate used to measure the total pension liability was 7.15 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the current 7.15 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary. The long-term expected discount rate of 7.15 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB Statement No. 68 section. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. 89 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the CalPERS Board effective on July 1, 2015. Asset Class Assumed Asset Allocation Real Return Years 1-10 [a] Real Return Years 11+ [b] Global Equity 50.0%4.80%5.98% Fixed Income 28.0%1.00%2.62% Inflation Assets 0%0.77%1.81% Private Equity 8.0%6.30%7.23% Real Assets 13.0%3.75%4.93% Liquidity 1.0%0%(0.92%) [a] An expected inflation of 2.00% used for this period. [b] An expected inflation of 2.92% used for this period. Changes in Net Pension Liability The change in the Net Pension Liability recognized over the measurement period is as follows: Increase (Decrease) SAFETY POLICE PLAN Total Pension Liability [1] Plan Fiduciary Net Position [2] Net Pension Liability/(Asset) [3]=[1] - [2] Balance at June 30, 2017 [a]$484,820,257 $300,752,643 $184,067,614 Changes Recognized for the Measurement Period: - Service Cost 10,220,547 -10,220,547 - Interest on the Total Pension Liability 34,128,110 -34,128,110 - Changes of Benefit Terms --- - Differences between Expected and Actual Experience 1,792,996 -1,792,996 - Changes in Assumptions (2,726,217)-(2,726,217) - Plan to Plan Resource Movement -(740)740 - Contributions - Employer -15,159,139 (15,159,139) - Contributions -Employees -3,650,956 (3,650,956) - Net Investment Income -25,183,248 (25,183,248) - Benefit Payments Including Refunds of Employee Contributions (23,362,241)(23,362,241)- - Administrative Expenses -(468,655)468,655 - Other Misc Income/(Expense) [b]-(889,985)889,985 Net Changes during 2017-18 20,053,195 19,271,722 781,473 Balance at June 30, 2018 [a]$504,873,452 $320,024,365 $184,849,087 [a] The fiduciary net position includes receivables for employee service buybacks, deficiency reserves, fiduciary self-insurance and OPEB expense. This may be different from the plan assets reported in the funding actuarial valuation report. [b] During Fiscal Year 2017-18, as a result of Governmental Standards Board Statement (GASB) No. 75, Accounting and Financial Reporting for Postemployment Benefits Plans Other than Pensions (GASB 75), CalPERS reported its proportionate share of activity related to postemployment benefits for participation in the State of California's agent OPEB plan. Accordingly, CalPERS recorded a one-time expense as a result of the adoption of GASB 75 90 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate SAFETY POLICE PLAN Discount Rate - 1% (6.15%) Current Discount Rate (7.15 %) Discount Rate + 1% (8.15%) Plan Net Pension Liability/(Asset)$258,387,155 $184,849,087 $125,209,941 Recognition of Gains and Losses Under GASB Statement No. 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is a five year straight-line amortization. All other amounts are amortized using straight-line amortization over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period. The expected average remaining service lifetime (EARSL) for the plan for the June 30, 2018 measurement date is 5.4 years, which is obtained by dividing the total service years of 4,910 (the sum of remaining lifetimes of active employees) by 907 (the total number of participants: active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to 0. Also note that total future service is based on the members’ probability of decrementing due to an event other than receiving a cash refund. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions As of the start of the measurement period (July 1, 2018), the net pension liability/(asset) is $184,067,614. For the measurement period ending June 30, 2018 (the measurement date), the City incurred a pension expense/(income) of $23,640,709 for the plan. Note that no adjustments have been made for contributions subsequent to the measurement date. Adequate treatment of any contributions made after the measurement date is the responsibility of the employer. As of June 30, 2019, the City had deferred outflows of resources related to pensions of $18,902,246 for contributions made subsequent to the measurement date, $18,750,746 for changes of assumptions, $3,696,138 for differences between expected and actual experiences and $846,211 for the net difference between projected and actual earnings on pension plan investments. Deferred inflows of resources related to pensions were $4,124,998 for changes in assumptions and $2,326,656 for differences between expected and actual experiences. 91 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 16 -EMPLOYEE RETIREMENT BENEFITS (continued) Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in future pension revenue and expense amortized annually as follows: Measurement Periods Ended June 30: Deferred Outflows/(Inflows) of Resources 2019 $7,565,079 2020 $5,541,883 2021 $2,024,246 2022 $1,779,360 2023 $(69,126) Remaining $0 CITYWIDE PENSION PLAN TOTALS Miscellaneous Plan Safety Fire Plan Safety Police Plan Citywide Total Net Pension Liability $161,757,730 $82,270,701 $184,849,087 $428,877,518 Deferred Outflows of Resources Contributions Made Subsequent to Measurement Date 18,084,329 8,410,816 18,902,246 45,397,391 Differences Between Expected and Actual Experiences -425,206 3,696,138 4,121,344 Differences Between Projected and Actual Earnings 1,330,337 882,935 846,211 3,059,483 Changes of Assumptions 13,333,762 10,138,817 18,750,746 42,223,325 Total Deferred Outflows of Resources $32,748,428 $19,857,774 $42,195,341 $94,801,543 Deferred Inflows of Resources Differences Between Expected and Actual Experience $7,583,774 $3,155,918 -$10,739,692 Differences Between Projected and Actual Earnings --2,326,656 2,326,656 Changes of Assumptions 2,239,589 2,252,034 4,124,998 8,616,621 Total Deferred Inflows of Resources $9,823,363 $5,407,952 $6,451,654 $21,682,969 92 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 17 -OTHER POST-EMPLOYMENT BENEFITS (OPEB) Single Employer OPEB Plan description: In addition to the employee retirement benefits described in Note 16, the City provides a single-employer Post-Employment Retiree Medical Benefit Plan in accordance with a resolution approved by City Council. Two primary plans exist. All employees with a retirement date prior to January 1, 1985 were eligible for benefits upon retirement. Post-1985 employees must retire with fifteen years accumulated service upon retirement to participate. The service requirement is waived for safety employees who retire with a job-related disability. Employees hired after the dates listed below will not participate in either of the retiree health subsidy programs mentioned: Miscellaneous Employees February 22, 2006 Management and Supervisory March 22, 2006 Fire Safety May 5, 2006 Police Safety May 24, 2006 Benefits provided: For employees hired prior to the dates listed above, the City provides lifetime postretirement medical benefits for eligible retirees and qualified dependents with a choice of three medical options: Blue Shield PPO, Kaiser High Deductible Health Plan, and Kaiser Permanente HMO. Mental Health benefits are carved out and provided through Optum Behavioral Health. After reaching eligibility for Medicare, retirees are offered a choice of Blue Shield PPO, Blue Shield Medicare Advantage HMO or Kaiser Senior Advantage HMO. Retirees may also elect dental coverage but must self-pay the premiums for such coverage. Vision coverage is not offered to retirees. Retiree rates are unblended from employee rates. Employees covered by benefit terms: At June 30, 2019 the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefit payments 757 Active employees 513 1,270 Contributions. The City contributes 3% of the lowest single-party rate per year of service to a maximum of 90%. If the dollar amount is greater than the premium for a retiree covered under one of the Medicare Advantage plans, the retiree receives a cash reimbursement of the difference to a maximum of $42.50 per month. The City also contributes 42% of the Blue Shield PPO for all retirees who elect the Blue Shield PPO plan, excluding Miscellaneous employees hired after April 1, 1996 and Safety employees hired after April 1, 1998. The City has approximately 513 active employees who are eligible for the same level of post-employment benefits and 757 retirees (and/or dependents) currently receiving benefits as of the actuarial dated June 30, 2019. There is not a separate, audited GAAP-basis pension report available for the Post-Employment Retiree Medical Benefit Plan. 93 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 17 -OTHER POST-EMPLOYMENT BENEFITS (OPEB) (continued) Net OPEB Liability The City's net OPEB liability was measured as of June 30, 2018, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of that date. Actuarial assumptions. The total OPEB liability as of June 30, 2018 was determined by an actuarial valuations as of June 30, 2018. The actuarial assumptions used in the June 30, 2018 valuation were based on the December 2017 experience study performed by the CalPERS actuary derived from the data collected during fiscal years 1997 to 2015. Data Detailed census data, premium data and/or claim experience, and summary plan descriptions for OPEB are provided by the City of Bakersfield Actuarial Cost Method Entry Age Normal, Level percent of pay Asset Valuation Method Market Value Measurement Date June 30, 2018 Census Date July 1, 2019 Discount Rate 5.00% Inflatioin Rate 2.50% Payroll Growth 2.75% Salary Increases Wage inflation rate (2.75%) plus merit and promotional increases of between 3.44% to 13.02% based on years of service The long-term expected rate of return on OPEB Plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of OPEB Plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage, and by adding expected inflation and subtracting expected investment expenses and a risk margin. The target allocation and projected arithmetic real rates of return, after deducting inflation, but before deducting investment expenses, used in the derivation of the long-term expected rate of return assumption are summarized in the following table: Asset Class Target Allocation Long-Term (Arithmetic) Expected Real Rate of Return Domestic Equity 24.34%6.40% Developed International Equity 4.26 7.40 Emerging Markets Equity 2.01 9.80 Core Fixed Income 65.25 1.75 Real Estate 0.83 5.10 Short Term Money Market 3.31 1.10 Total 100% 94 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 17 -OTHER POST-EMPLOYMENT BENEFITS (OPEB) (continued) Net OPEB Liability (continued) Discount rate. The discount rate used to measure the total OPEB liability was 5.00% as of June 30, 2018 and 5.00% as of June 30, 2017. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at the rates equal to the actuarially determined contribution rates. For this purpose, only City contributions that are intended to fund benefits of current plan members and their beneficiaries are included. Projected City contributions that are intended to fund the service costs of future plan members and their beneficiaries, as well as projected contributions from future plan members, are not included. Based on those assumptions, the OPEB Plan's assets were projected to be sufficient to make all projected OPEB payments for current plan members. Therefore, the long-term expected rate of return on OPEB Plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability as of both June 30, 2018 and June 30, 2017. Changes in the Net OPEB Liability Increase (Decrease) Total OPEB Liability Plan Fiduciary Net Position Net OPEB Liability (a)(b)(a) - (b) Beginning balances $140,014,779 $61,606,436 $78,408,343 Changes for the year:: Service cost 1,975,894 -1,975,894 Interest 6,986,837 -6,986,837 Differences between expected and actual experience (762,025)-(762,025) Employer contributions -7,527,447 (7,527,447) Net investment income -2,017,934 (2,017,934) Benefit payments (4,507,862)(4,507,862)- Administrative expense -(188,705)188,705 Net changes 3,692,844 4,848,814 (1,155,970) Ending balance $143,707,623 $66,455,250 $77,252,373 Sensitivity of the net OPEB liability to changes in the discount rate. The following presents the net OPEB liability of the City as of June 30, 2018, calculated using the discount rate of 5.00%, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (4.0 percent) or 1-percentage point higher (6.0 percent) than the current discount rate: 1% Decrease (4.0%) Discount Rate (5.0%) 1% Increase (6.0%) Net OPEB liability (asset) as of June 30, 2018 $100,677,637 $77,252,373 $58,533,255 Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates. The following presents the net OPEB liability of the City as of June 30, 2018, calculated using the current healthcare cost trend rates as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates: 1% Decrease* Healthcare Cost Trend Rates*1% Increase* Net OPEB liability (asset) as of June 30, 2018 $57,920,948 $77,252,373 $101,472,765 95 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 17 -OTHER POST-EMPLOYMENT BENEFITS (OPEB) (continued) Changes in the Net OPEB Liability (continued) *Current trend rates: 7.00% graded to 4.50% over 10 year for City "Years of Service" Formula subsidy, 7.00% graded to 4.50% over 10 years for Special 42% Contribution Non-Medicare subsidy, and 6.50% graded to 4.50% over 8 years for Special 42% Contribution Medicare subsidy. OPEB Plan fiduciary net position. Detailed information about the OPEB Plan's fiduciary net position is available in the separately issued actuarial report. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2019, the City recognized OPEB expense of $3,624,339. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Governmental Activities Business-type Activities Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Changes of assumptions $-$2,621,925 $-$454,757 Net difference between projected and actual earnings on OPEB Plan investments -3,465,635 -601,093 Net excess of projected over actual earnings on OPEB Plan investments 733,028 -127,139 - City contributions subsequent to the measurement date 6,766,457 -1,173,599 - Total $7,499,485 $6,087,560 $1,300,738 $1,055,850 The amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB are recognized in OPEB expenses as follows: Fiscal Year Ended: Governmental Activities Amount Business-type Activities Amount 2020 $(2,024,812)$(351,191) 2021 (2,024,812)(351,191) 2022 (1,471,569)(255,235) 2023 166,661 28,906 Thereafter $-$- 96 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 18 -SPECIAL ASSESSMENT DISTRICTS In addition to the Long-Term Obligations discussed in Note 11, the following Long-Term Obligations have been issued in the name of Special Assessment Districts or Agencies of the City. Neither the City, nor its Agencies, are obligated in any manner for the repayment of these obligations. The City acts as an agent to property owners for the collection and repayment of Special Assessment Debt. Outstanding at June 30, 2019 Assessment District 99-1*(Polo Greens/River Oaks)$235,000 Assessment District 99-2*(Seven Oaks West)440,000 Assessment District 01-1*(Ming at Allen/Mountain Vista; Hampton Place)410,000 Assessment District 01-2*(Seven Oaks West II/Riverwalk/Southern Oaks)1,425,000 Assessment District 01-3*(Mountain Vista/San Lauren)995,000 Assessment District 02-1*(Avalon/Belsera/Montara/The Woods)460,000 Assessment District 03-1*(Brighton Place/Silver Creek II)860,000 Assessment District 03-2*(Buena Vista Ranch/Belsera II/Monstera II/Olive Park II)710,000 Assessment District 03-3*(Seven Oaks West III/Brighton Place)1,915,000 Assessment District 04-1**(Countryside/The Homestead)1,355,000 Assessment District 04-2**(BL/BV/ST@Allen Com)1,595,000 Assessment District 04-3**(Solera/Rio Vista)1,090,000 Assessment District 05-1 (City in the Hills)6,710,000 Assessment District 05-3**(Liberty II/Village Green/Tesoro/Encanto)3,130,000 Assessment District 06-1**(Etcheverry/Lin II/University Park)2,600,000 Assessment District 07-2 (Sydney Harbour)1,265,000 $25,195,000 *Note: These ten districts were refinanced into a consolidated district (12-01) with the California Statewide Communities Development Authority (CSCDA). The City continues to account for the underlying obligation of each district to properly monitor the individual principal balances and various maturity dates. **Note: These five districts were refinanced into a consolidated district (15-01). The City continues to account for the underlying obligation of each district to properly monitor the individual principal balances and various maturity dates. 97 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 19 -RISK MANAGEMENT Self-Insurance The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City established a Self-Insurance Fund (an internal service fund) to account for and finance its uninsured risks of loss. Under this program, the Self-Insurance Fund provides coverage for up to $500,000 for each workers’ compensation claim and $1,000,000 for each liability claim. The City participates in a joint powers authority for workers’ compensation claims in excess of coverage provided by the fund up to statutory limits and participates in a joint powers authority for any excess liability claims. All funds of the City participate in the program and are charged for their share of claim expenditures. The claims liability of $48,527,301 at June 30, 2019 is based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. An estimate of incurred but not reported claims has been included in the liability based on the various percentages of loss reserves. Changes in the fund's claims liability over the last three fiscal years is shown below: Liability at Beginning of Year Current Year Claims and Changes in Estimates Claims Payments Liability at End of Year 2016-2017 $39,491,534 $15,750,392 $10,617,534 $44,624,392 2017-2018 44,624,392 14,674,483 11,734,224 47,564,651 2018-2019 47,564,651 14,538,671 13,576,021 48,527,301 Joint Powers Authority The City has obtained excess liability coverage through the Authority for California Cities Excess Liability (ACCEL), a joint powers authority of medium-size California municipalities. ACCEL pools catastrophic general liability, automobile liability and public officials' errors and omissions losses, or purchases excess insurance, depending on market conditions. Each member's share of pooled costs will depend on the catastrophic losses of all the members. In addition, the cost to a member city will also depend on that member's own loss experience. Entities with a consistent record of costly claims will pay more than entities with a consistent record of less serious claims activity. In order to provide funds to pay claims, or purchase excess insurance, ACCEL collects a deposit from each member. The deposits will be credited with investment income at the rate earned on ACCEL's investments. Based on information received from ACCEL as of June 30, 2019, the City had $617,875 on deposit with ACCEL out of a total of approximately $7,945,076. The following municipalities are also members of ACCEL: Palo Alto, Santa Barbara, Visalia, Modesto, Ontario, Santa Monica, Anaheim, Santa Cruz, Mountain View, Burbank, Monterey, and Gardena. A representative from each member city, appointed to the position by their respective city councils, serves on the Board of Directors (Board) of ACCEL. The Board is responsible for deciding the risks ACCEL will underwrite, monitoring the costs of large claims and arranging financial programs. Each member of the Board has an equal vote in matters concerning ACCEL. As of June 30, 2019, ACCEL had no long-term debt. Included in total liabilities is an estimated retrospectively rated refund of $11,019,607. Complete financial statements of ACCEL can be obtained at the City’s Finance Department at 1600 Truxtun Avenue, Bakersfield, CA 93301. 98 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 19 -RISK MANAGEMENT (continued) A summary of the financial information for ACCEL at June 30, 2019 is as follows: Total assets $47,057,137 Total liabilities 45,283,284 Total members' net position $1,773,853 Total revenues $19,844,921 Total expenses 22,361,616 Net change in members' net position $(2,516,695) NOTE 20 -COMMITMENTS AND CONTINGENCIES Several claims and suits have been filed against the City in the normal course of business. In the opinion of management and the City Attorney, the potential liability of the City for such claims will not have a material adverse effect on the financial statements of the City. Also, the City has certain commitments under long-term construction projects which will be funded out of future revenues. The entire capacity of the former sanitary landfill has been used. The State has required environmental closure and capping of the City's former sanitary landfill and remediation of the adjacent burn dump. Although these two waste disposal areas are adjacent to each other, the City completed the remediation of the burn dump separately, through the State's Expedited Remedial Action Program, in 1998. The cost of remediation for the burn dump of $1.8 million was funded by the City's Refuse Service Fund and was expensed in prior fiscal years. The landfill closure was completed in May 2013 at a cost of $4.8 million. The City’s net share of this joint City/County project was approximately $3 million. Kern County reimbursed the City for the remaining $1.8 million. The City will be required to perform post-closure monitoring and maintenance of the landfill after it is closed and capped. This will result in an ongoing annual cost of approximately $150,000. The City will be responsible for about $125,000 of these annual charges because mo st of these costs will be for the landfill gas management system, which is the City's responsibility. Kern County will be responsible for reimbursing the City for the remainder. City management anticipates all closure and post- closure costs being covered by annual Refuse Service Fund revenues. These estimates of cost are subject to future adjustment for inflation or deflation, technology, or applicable laws or regulations. 99 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 21 -ENCUMBRANCES Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditure of monies are recorded as encumbrances in order to reserve that portion of the applicable appropriation. Encumbrances outstanding as of June 30, 2019 consisted of the following: Governmental Funds: Major Funds: General Fund $1,484,748 Transient Occupancy Taxes Fund 13,470 Community Development Block Grant Fund 1,939,697 Gas Tax & Road Fund 104,538,142 Capital Outlay Fund 23,041,063 Park Improvement Fund 98,461 Transportation Development Fund 26,302,779 Non-Major Funds: State (TDA) Transportation Fund 19,538 State Safety Fund 141,516 Proprietary Funds: Major Funds: Wastewater Treatment Fund 2,679,711 Refuse Collection Fund 244 River & Agriculture Water Fund 424,538 Domestic Water Fund 2,146,327 General Aviation Fund 11,100 Offstreet Parking Fund 96,886 Internal Service Funds: Self-Insurance Fund 540,153 Equipment Management Fund 9,296,944 $172,775,317 100 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 22 -CONDUIT DEBT OBLIGATIONS The City has been associated with the issuance of various health care, residential care, mortgage, commercial and industrial development debt issues. These debt obligations were issued under provisions of State and Federal laws that explicitly state that they do not constitute any indebtedness of the City. The City’s sole involvement with these bonds was their issuance under the City’s name or the City Council’s authorization. As such, the following conduit debt obligations are not reflected in the accompanying basic financial statements: Authorized and Issued Current Outstanding at June 30, 2019 City of Bakersfield - Cottonwood Village Housing Bond, Series 2004 $5,000,000 $5,000,000 City of Bakersfield - Cottonwood Court Housing Bond, Series 2004 1,950,000 1,950,000 City of Bakersfield - St. John Manor Housing Bond, Series 2006 3,867,794 2,623,975 City of Bakersfield - Coventry Apartments Housing Bond, Series 2007M 5,300,000 3,457,393 City of Bakersfield - Catholic Healthcare West 501(c)(3) Nonprofit Bond, Series A thru L 676,250,000 240,000,000 City of Bakersfield - Descanso Place Housing Bond, Series TT 13,000,000 1,400,000 City of Bakersfield - Bakersfield Family Apartments Housing Bond, Series 2008R 10,971,000 1,074,615 City of Bakersfield - Camellia Place Housing Bond, Series 2009R 619,138 619,118 City of Bakersfield - Eucalyptus Village I Housing Bond, Series 2012-E1 1,295,000 1,295,000 City of Bakersfield - Eucalyptus Village II Housing Bond, Series 2012-E2 4,275,000 4,275,000 City of Bakersfield - American Baptist Homes of The West 501(c)(3) Nonprofit Bond, Series 2015 52,080,000 52,080,000 TOTAL $313,775,101 101 CITY OF BAKERSFIELD Notes to the Financial Statements NOTE 23 -PRIOR PERIOD ADJUSTMENTS During the fiscal year ended June 30, 2019, the City made the following prior period adjustments to restate the net position for governmental activities and business-type activities and related fund balance for: 1) Net Position for Governmental and Business-Type Activities we re adjusted to correct interest revenues allocated erroneously in the prior year and also was adjusted after review of capital assets by City departments, 2) Correction of Fund Balance in the General Fund, Park Improvement Fund, and the Transportation Development Fund for the interest revenue adjustment that wa s made, 3) to adjust prior year expenses in the Transportation Development Fund for expenses that we re found to no longer be eligible for federal funding, and 4) Correction of fund balance in the Equipment Fund to adjust assets that were not properly recorded. See corresponding changes in statements on p. 22, p.30, p.31, p.36, p.37, and p. 134. Net Position Accounts Activity July 1, 2018 as previously reported Adjustment July 1, 2018, as restated Net Position - Governmental Activities $1,121,379,867 $(1,791,835)$1,119,588,032 Net Position - Business-Type Activities Wastewater Treatment Fund $524,241,291 $139,173 $524,380,464 Refuse Collection Fund $1,012,997 $33,581 $1,046,578 River & Agricultural Water Fund $24,052,555 $17,963 $24,070,518 Domestic Water Fund $264,955,976 $116,356 $265,072,332 Equipment Fund $59,580,282 $171,425 $59,751,707 Self-Insurance Fund $(20,941,992)$46,356 $(20,895,636) Fund Balance Accounts July 1, 2018 as previously reported Adjustment July 1, 2018, as restated General Fund $39,498,488 $(477,387)$39,021,101 Park Improvement Fund $5,282,611 $14,769 $5,297,380 Transportation Development Fund $52,357,613 $(1,546,998)$50,810,615 102 CITY OF BAKERSFIELD Required Supplementary Information BUDGETARY INFORMATION Through the budget process, the City Council sets the direction of the City, allocates its resources and establishes its priorities. The Annual Budget assures the efficient and effective use of the City's economic resources, as well as establishing that the highest priority objectives are accomplished. Budgets are adopted for all governmental fund types and are prepared on a basis consistent with accounting principles generally accepted in the United States of America. The Annual Budget serves from July 1 to June 30, and is a vehicle that accurately and openly communicates these priorities to the community, businesses, vendors, employees and other public agencies. Additionally, it establishes the foundation of effective financial planning by providing resource planning, performance measures and controls that permit the evaluation and adjustment of the City's performance. The City's budget is prepared and based on four expenditure categories: personnel, supplies and services, minor capital outlay and capital improvement programs. The first three listed are considered operational in nature and known as recurring costs. Capital improvement projects are asset acquisitions, facilities systems, and infrastructure improvements typically over $50,000, and/or those items "outside" of the normal operational budget. These are known as one-time costs. The City collects and records revenue and expenditures within the following categories: Governmental Activities Business-Type Activities The Governmental Funds include the General Fund, Special Revenue, Debt Service and Capital Projects funds. All funding sources are kept separate for both reporting and use of the money. The General Fund is where most City services are funded that are not required to be segregated. The budget process begins as a team effort in January of each year, starting with an annual strategic planning meeting. Then the individual departments use projected revenue assumptions to prioritize and recommend the next fiscal year's objectives. The City Manager's Office and the Finance Department review all budget proposals and revenues assumptions, as well as all current financial obligations before preparing the document that is proposed to the City Council. The City Council reviews the Proposed Budget through a series of workshops, and the final adoption of the budget is normally scheduled for the second City Council meeting each June. At the beginning of each fiscal year, certain appropriations are "carried forward" from the prior budget year. These items generally relate to either open encumbrances that exist at June 30, or capital projects that were budgeted in the prior fiscal year that did not progress to the encumbrance stage as of June 30. The City Manager's Office approves all carryovers that are not encumbered as of June 30 of each year. The amounts carried forward from fiscal year ended June 30, 2018 to fiscal year ended June 30, 2019 totaled $314,050,835. 103 CITY OF BAKERSFIELD Required Supplementary Information (continued) BUDGETARY INFORMATION (continued) These following schedules represent budgetary comparisons for the General Fund and all major special revenue funds within the City. Budgetary Comparison Schedule, General Fund For the Fiscal Year Ended June 30, 2019 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund Balance, July 1 $39,021,101 $39,021,101 $39,021,101 $- Revenues: Taxes 161,414,600 178,903,100 189,012,448 10,109,348 Licenses and permits 2,908,595 2,908,595 3,172,269 263,674 Intergovernmental 1,662,582 6,633,413 4,702,162 (1,931,251) Charges for services 23,873,786 24,198,286 24,949,296 751,010 Fines, forfeitures and assessments 731,000 731,000 911,966 180,966 Interest income 327,500 327,500 1,413,557 1,086,057 Contributions and donations 45,000 111,510 123,155 11,645 Other 974,937 974,937 1,448,179 473,242 Transfers from other funds 1,200,000 1,200,000 1,200,000 - Amount available for appropriation $193,138,000 $215,988,341 $226,933,032 $10,944,691 Expenditures: General government $13,731,703 $13,871,705 $12,750,089 $1,121,616 Public safety - Police 92,277,374 95,657,897 95,677,601 (19,704) Public safety - Fire 39,428,963 40,868,398 39,033,631 1,834,767 Public works 23,349,847 24,367,343 22,867,605 1,499,738 Recreation and parks 20,727,579 20,810,286 20,336,011 474,275 Development services 7,714,423 9,475,638 7,701,370 1,774,268 Non-departmental 11,230,522 10,558,854 9,220,222 1,338,632 Contingency 25,000 24,400 -24,400 Transfers to other funds 810,589 3,734,670 3,734,670 - Total charges to appropriations 209,296,000 219,369,191 211,321,199 8,047,992 Amount of resources over (under) charges to appropriations (16,158,000)(3,380,850)15,611,833 18,992,683 Fund balance, June 30 $22,863,101 $35,640,251 $54,632,934 $18,992,683 104 CITY OF BAKERSFIELD Required Supplementary Information (continued) BUDGETARY INFORMATION (continued) Budgetary Comparison Schedule, Transient Occupancy Taxes Fund For the Fiscal Year Ended June 30, 2019 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund Balance, July 1 - as restated $1,862,655 $1,862,655 $1,862,655 $- Revenues: Taxes 9,700,000 9,700,000 9,943,109 243,109 Charges for services 9,383,558 9,383,558 8,700,059 (683,499) Interest income 30,000 30,000 117,291 87,291 Contributions and donations 1,200,000 1,200,000 1,200,000 - Amount available for appropriation $20,313,558 $20,313,558 $19,960,459 $(353,099) Expenditures: General government $10,655,080 $10,777,540 $9,891,488 $886,052 Non-departmental 3,136,900 3,136,900 3,136,900 - Transfers to other funds 7,782,543 7,782,543 7,791,897 (9,354) Total charges to appropriations 21,574,523 21,696,983 20,820,285 876,698 Amount of resources over (under) charges to appropriations (1,260,965)(1,383,425)(859,826)523,599 Fund balance, June 30 $601,690 $479,230 $1,002,829 $523,599 Budgetary Comparison Schedule, Community Development Block Grant Fund For the Fiscal Year Ended June 30, 2019 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund Balance, July 1 $529,095 $529,095 $529,095 $- Revenues: Intergovernmental 4,888,600 11,879,294 3,300,238 (8,579,056) Interest income --1,073 1,073 Loan payments 175,868 175,868 326,479 150,611 Other income --8,751 8,751 Amount available for appropriation $5,064,468 $12,055,162 $3,636,541 $(8,418,621) Expenditures: Community development $3,071,176 $8,185,922 $2,407,215 $5,778,707 Capital outlay 1,506,955 3,440,607 633,967 2,806,640 Transfers to other funds 507,546 507,546 507,545 1 Total charges to appropriations 5,085,677 12,134,075 3,548,727 8,585,348 Amount of resources over (under) charges to appropriations (21,209)(78,913)87,814 166,727 Fund balance, June 30 $507,886 $450,182 $616,909 $166,727 105 CITY OF BAKERSFIELD Required Supplementary Information (continued) BUDGETARY INFORMATION (continued) Budgetary Comparison Schedule, Gas Tax & Road Fund For the Fiscal Year Ended June 30, 2019 Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Fund Balance, July 1 $15,187,842 $15,187,842 $15,187,842 $- Revenues: Intergovernmental 194,623,552 348,813,998 77,576,105 (271,237,893) Fines, forfeitures and assessments 15,000 15,000 56,499 41,499 Interest income 125,000 130,000 370,085 240,085 Other income --199 199 Amount available for appropriation $194,763,552 $348,958,998 $78,002,888 $(270,956,110) Expenditures: Public works $3,272,463 $3,272,463 $3,266,451 $6,012 Capital outlay 167,926,130 360,885,208 77,021,522 283,863,686 Total charges to appropriations 171,198,593 364,157,671 80,287,973 283,869,698 Amount of resources over (under) charges to appropriations 23,564,959 (15,198,673)(2,285,085)12,913,588 Fund balance, June 30 $38,752,801 $(10,831)$12,902,757 $12,913,588 106 CITY OF BAKERSFIELD Required Supplementary Information (continued) DEFINED PENSION PLAN The Schedules of Changes in Net Pension Liability and Related Ratios as of the Measurement Period ending June 30, 2018 are below: MISCELLANEOUS PLAN [a][e] Measurement Period 2018 2017 2016 2015 2014 Total Pension Liability Service Costs $9,865,219 $10,121,201 $9,229,271 $9,371,317 $9,394,857 Interest on Total Pension Liability 38,377,061 37,355,571 36,457,017 34,880,633 33,174,032 Changes of Benefit Terms ----- Changes in Assumptions (3,069,067)31,112,110 -(8,541,600)- Difference Between Expected and Actual Experience (4,948,406)(8,386,592)(2,271,125)(682,929)- Benefit Payments [b](26,111,942)(23,977,515)(21,951,615)(20,655,868)(18,737,652) Net Change in Total Pension Liability $14,112,865 $46,224,775 $21,463,548 $14,371,553 $23,831,237 Total Pension Liability - Beginning 552,882,942 506,658,167 485,194,619 470,823,046 446,991,809 Total Pension Liability - Ending [1]$566,995,807 $552,882,942 $506,658,167 $485,194,599 470,823,046 Plan Fiduciary Net Position Contributions - Employer $13,222,781 $11,107,872 $10,734,470 $10,017,697 $9,220,181 Contributions - Employee 4,245,043 4,188,806 4,400,305 4,653,169 4,566,671 Net Investment Income 32,008,762 39,138,504 1,891,631 7,966,951 53,513,763 Other Miscellaneous Income ----- Benefit Payments [b](26,111,942)(23,977,515)(21,951,615)(20,655,868)(18,737,652) Plan to Plan Resource Movement (939)-(40,308)-- Administrative Expense (597,766)(522,173)(218,704)(403,815)- Other Misc Income/(Expense)(1,135,167)---- Net Change in Plan Fiduciary Net Position $21,630,772 $29,935,494 $(5,184,221)$1,578,134 $48,562,963 Plan Fiduciary Net Position - Beginning $383,607,306 $353,671,812 $358,856,033 $357,277,899 $308,714,936 Plan Fiduciary Net Position - Ending [2]405,238,078 383,607,306 353,671,812 358,856,033 357,277,899 Plan Net Pension Liability / (Asset) - [1]-[2]$161,757,729 $169,275,636 $152,986,355 $126,338,566 $113,545,147 Plan Fiduciary Net Position as a Percentage of Covered Employee Payroll %71.47 %69.38 %69.80 %73.96 %75.88 Covered Employee Payroll $55,301,410 $56,388,660 $56,837,487 $57,065,633 $53,054,308 Plan Net Pension Liability / (Asset) as a Percentage of Covered Employee Payroll %292.50 %300.19 %269.16 %221.39 %214.02 Schedules of Plan Contributions Fiscal Year End 2018 2017 2016 2015 2014 Actuarially Determined Contribution [c]$13,222,781 $11,107,872 $10,734,470 $10,017,697 $9,220,181 Contributions in Relation to the Actuarially Determined Contribution [c]$(13,222,781)$(11,107,872)$(10,734,470)$(10,017,697)$(9,220,181) Contribution Deficiency (Excess)$0 $0 $0 $0 $0 Covered Employee Payroll [d]$55,301,410 $56,388,660 $56,837,487 $57,065,623 $53,054,308 Contributions as a Percentage of Covered Employee Payroll %23.91 %19.70 %18.89 %17.55 %17.38 [a] Historical information is required only for measurement periods for which GASB Statement No. 68 is applicable. These schedules are presented to illustrate the requirement to show that information. [b] Includes refunds of employee contributions. [c] Employers are assumed to make contributions equal to the actuarially determined contribution. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contribution. [d] Payroll from prior year was assumed to increase by the 3.00 percent payroll growth assumption. [e] Additional years' information will be displayed as it becomes available. Notes to Schedule of Changes in Net Pension Liability and Related Ratios: Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2015 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). Changes of Assumptions: In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate. 107 CITY OF BAKERSFIELD Required Supplementary Information (continued) DEFINED PENSION PLAN (continued) SAFETY FIRE PLAN [a][e] Measurement Period 2018 2017 2016 2015 2014 Total Pension Liability Service Costs $4,690,651 $4,691,377 $3,982,592 $4,038,459 $4,022,753 Interest on Total Pension Liability 19,788,058 19,273,519 18,906,125 18,125,192 17,409,125 Changes of Benefit Terms ----- Changes in Assumptions (1,346,780)16,102,827 -(4,419,326)- Difference Between Expected and Actual Experience (1,205,127)(3,292,736)880,783 (357,892)- Benefit Payments [b](14,518,038)(13,914,493)(13,350,272)(12,266,190)(11,440,930) Net Change in Total Pension Liability $7,408,764 $22,860,494 $10,419,228 $5,120,243 $9,990,948 Total Pension Liability - Beginning 284,221,668 261,361,174 250,941,946 245,821,703 235,830,755 Total Pension Liability - Ending [1]$291,630,432 $284,221,668 $261,361,174 $250,941,946 $245,821,703 Plan Fiduciary Net Position Contributions - Employer $6,452,089 $5,766,115 $5,299,399 $4,717,136 $4,243,095 Contributions - Employee 1,612,168 1,585,475 1,575,291 1,496,855 1,485,484 Net Investment Income 16,662,233 20,512,738 920,604 4,369,856 29,300,590 Other Miscellaneous Income ----- Benefit Payments [b](14,518,038)(13,914,493)(13,350,272)(12,266,190)(11,440,930) Plan to Plan Resource Movement (487)--(13)- Administrative Expense (311,742)(275,179)(117,046)(216,134)- Other Misc Income/(Expense)(592,003)---- Net Change in Plan Fiduciary Net Position $9,304,220 $13,674,656 $(5,672,024)$(1,898,490)$23,588,239 Plan Fiduciary Net Position - Beginning $200,055,512 $186,380,856 $192,052,880 $193,951,370 $170,363,131 Plan Fiduciary Net Position - Ending [2]209,359,732 200,055,512 186,380,856 192,052,880 193,951,370 Plan Net Pension Liability / (Asset) - [1]-[2]$82,270,700 $84,166,156 $74,980,318 $58,889,066 $51,870,333 Plan Fiduciary Net Position as a Percentage of Covered Employee Payroll %71.79 %70.39 %71.31 %76.53 %78.90 Covered Employee Payroll $17,260,904 $17,071,347 $16,365,695 $16,338,791 $15,554,085 Plan Net Pension Liability / (Asset) as a Percentage of Covered Employee Payroll %476.63 %493.03 %458.16 %360.42 %333.48 Schedules of Plan Contributions Fiscal Year End 2018 2017 2016 2015 2014 Actuarially Determined Contribution [c]$6,452,089 $5,766,115 $5,299,399 $4,717,136 $4,243,095 Contributions in Relation to the Actuarially Determined Contribution [c]$(6,452,089)$(5,766,115)$(5,299,399)$(4,717,136)$(4,243,095) Contribution Deficiency (Excess)$0 $0 $0 $0 $0 Covered Employee Payroll [d]$17,260,904 $17,071,347 $16,365,695 $16,338,791 $15,554,085 Contributions as a Percentage of Covered Employee Payroll %37.38 %33.78 %32.38 %28.87 %27.28 [a] Historical information is required only for measurement periods for which GASB Statement No. 68 is applicable. These schedules are presented to illustrate the requirement to show that information. [b] Includes refunds of employee contributions. [c] Employers are assumed to make contributions equal to the actuarially determined contribution. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contribution. [d] Payroll from prior year was assumed to increase by the 3.00 percent payroll growth assumption. [e] Additional years' information will be displayed as it becomes available. Notes to Schedule of Changes in Net Pension Liability and Related Ratios: Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2015 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). Changes of Assumptions: In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate. 108 CITY OF BAKERSFIELD Required Supplementary Information (continued) DEFINED PENSION PLAN (continued) SAFETY POLICE PLAN [a][e] Measurement Period 2018 2017 2016 2015 2014 Total Pension Liability Service Costs $10,220,547 $10,633,847 $9,484,234 $8,534,322 $8,823,744 Interest on Total Pension Liability 34,128,107 32,733,299 31,506,218 29,736,286 28,279,962 Changes of Benefit Terms ----- Changes in Assumptions (2,726,217)29,167,825 -(7,760,962)- Difference Between Expected and Actual Experience 1,792,996 (3,619,242)4,042,528 872,107 - Benefit Payments [b](23,362,241)(22,076,716)(20,226,151)(19,077,307)(17,776,028) Net Change in Total Pension Liability $20,053,192 $46,839,013 $24,806,829 $12,304,446 $19,327,678 Total Pension Liability - Beginning 484,820,257 437,981,244 413,174,415 400,869,969 381,542,291 Total Pension Liability - Ending [1]$504,873,449 $484,820,257 $437,981,244 $413,174,415 400,869,969 Plan Fiduciary Net Position Contributions - Employer $15,159,139 $14,646,334 $13,792,487 $12,287,267 $10,750,572 Contributions - Employee 3,650,956 3,426,099 3,794,305 3,238,371 2,920,326 Net Investment Income 25,183,248 30,690,942 1,419,472 6,082,288 41,170,702 Other Miscellaneous Income ----- Benefit Payments [b](23,362,241)(22,076,716)(20,226,151)(19,077,307)(17,776,028) Plan to Plan Resource Movement (740)-40,308 -- Administrative Expense (468,655)(405,238)(168,097)(313,848)- Other Misc Income/(Expense)(889,985)---- Net Change in Plan Fiduciary Net Position $19,271,722 $26,281,421 $(1,347,676)$2,216,771 $37,065,572 Plan Fiduciary Net Position - Beginning $300,752,643 $274,471,222 $275,818,898 $273,602,127 $236,536,555 Plan Fiduciary Net Position - Ending [2]320,024,365 300,752,643 274,471,222 275,818,898 273,602,127 Plan Net Pension Liability / (Asset) - [1]-[2]$184,849,084 $184,067,614 $163,510,022 $137,355,517 $127,267,842 Plan Fiduciary Net Position as a Percentage of Covered Employee Payroll %63.39 %62.03 %62.67 %66.76 %68.25 Covered Employee Payroll $34,555,725 $35,225,410 $35,046,314 $30,842,116 $30,496,107 Plan Net Pension Liability / (Asset) as a Percentage of Covered Employee Payroll %534.93 %522.54 %466.55 %445.35 %417.32 Schedules of Plan Contributions Fiscal Year End 2018 2017 2016 2015 2014 Actuarially Determined Contribution [c]$15,159,139 $14,646,334 $13,792,487 $12,287,267 $10,750,572 Contributions in Relation to the Actuarially Determined Contribution [c]$(15,159,139)$(14,646,334)$(13,792,487)$(12,287,267)$(10,750,572) Contribution Deficiency (Excess)$0 $0 $0 $0 $0 Covered Employee Payroll [d]$34,555,725 $35,225,410 $35,046,314 $30,842,116 $30,496,107 Contributions as a Percentage of Covered Employee Payroll %43.87 %41.58 %39.36 %39.84 %35.25 [a] Historical information is required only for measurement periods for which GASB Statement No. 68 is applicable. These schedules are presented to illustrate the requirement to show that information. [b] Includes refunds of employee contributions. [c] Employers are assumed to make contributions equal to the actuarially determined contribution. However, some employers may choose to make additional contributions towards their unfunded liability. Employer contributions for such plans exceed the actuarially determined contribution. [d] Payroll from prior year was assumed to increase by the 3.00 percent payroll growth assumption. [e] Additional years' information will be displayed as it becomes available. Notes to Schedule of Changes in Net Pension Liability and Related Ratios: Benefit Changes: The figures above do not include any liability impact that may have resulted from plan changes which occurred after the June 30, 2015 valuation date. This applies for voluntary benefit changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes). Changes of Assumptions: In 2017, the accounting discount rate reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based on the 7.5 percent discount rate. 109 CITY OF BAKERSFIELD Required Supplementary Information (continued) OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN - SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS Total OPEB liability [a]20192018 Service Cost $1,975,894 $2,149,804 Interest 6,986,837 7,329,180 Difference between expected and actual experience (762,025)(6,042,345) Changes of assumptions and methods -(5,330,662) Benefit payments (4,507,862)(5,050,000) Net Change in Total OPEB Liability 3,692,844 (6,944,023) Total OPEB Liability - beginning 140,014,779 146,958,802 Total OPEB Liability - ending (a)$143,707,623 $140,014,779 Plan Fiduciary Net Position Contributions - employer $7,527,447 $5,050,000 Net investment income 2,017,934 3,011,528 Benefit payments (4,507,862)(5,050,000) Administrative expense (188,705)(180,556) Net change in Plan Fiduciary Net Position 4,848,814 2,830,972 Plan Fiduciary Net Position - beginning 61,606,436 58,775,464 Plan Fiduciary Net Position - ending (b)66,455,250 61,606,436 Plan's Net OPEB Liability - ending (a)-(b)$77,252,373 $78,408,343 Plan Fiduciary Net Position as a percentage of the Total OPEB Liability 46.24%44.00% Covered employee payroll $46,166,357 $44,930,761 Plan Net OPEB Liability as percentage of covered employee payroll 167.33%174.51% [a] additional years' information sill be dsiplayed as it becomes available 110 CITY OF BAKERSFIELD Required Supplementary Information (continued) SCHEDULE OF OPEB CONTRIBUTIONS Last Ten Fiscal Years Year Ended June 30 Actuarially Determined Contributions in Relation Contribution Deficiency Covered Contributions As a Percentage of Covered Date Contributions (ADC)To ADC (Excess)Payroll Payroll 2010 $9,495,763 $6,283,456 $3,212,307 $63,685,205 9.87% 2011 9,495,763 5,509,340 3,986,423 60,284,949 9.14% 2012 8,006,053 16,832,576 (8,826,523)60,284,949 27.92% 2013 8,006,053 10,292,900 (2,286,847)56,277,827 18.29% 2014 6,539,299 6,950,125 (410,826)53,368,986 13.02% 2015 6,539,299 8,038,622 (1,499,323)50,985,920 15.77% 2016 7,530,301 5,645,839 1,884,462 44,930,761 12.57% 2017 7,530,031 5,050,000 2,480,031 44,930,761 11.24% 2018 6,973,711 7,527,447 (553,736)46,166,357 16.31% 2019 6,973,711 7,940,057 (966,346)39,698,602 20.00% Notes to the Schedule of OPEB Contributions Methods and assumptions used to establish "actuarially determined contribution" (ADC) rates: Valuation date ADC are based on the beginning of the applicable period. Actuarial cost method Projected Unit Credit Amortization method 30-year closed, level dollar payment Remaining amortization period 19 years as of June 30, 2018 Asset valuation method Market value Actuarial assumptions:June 30, 2017 valuation Investment rate of return 5.00% Inflation rate N/A Payroll growth 3.00% Other assumptions Same as those used in the June 30, 2017 GASB 74 actuarial valuation dated May 8, 2018 111 112 CITY OF BAKERSFIELD Supplementary Information Contents Pages(s) General Fund Balance Sheet 116 Schedule of Revenues by Function - Budget and Actual 117 Schedule of Expenditures by Division - Budget and Actual 118 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Public Safety and Vital Services Funds 119 Special Revenue Funds Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 122 Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 128 Capital Projects Funds Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 130 Internal Service Funds Combining Statement of Net Position 133 Combining Statement of Activities and Changes in Net Position 134 Combining Statement of Cash Flows 135 Fiduciary Funds Statement of Changes in Assets and Liabilities - Fiduciary Funds (Agency)136 Combining Statements of Fiduciary Net Position 137 Combining Statements of Changes in Fiduciary Net Position 139 Non-Major Governmental Funds Combining Balance Sheet 142 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 144 Long-term Debt Recorded in Private Purpose Trust Fund 146 113 General Fund This fund was established to account for the revenues and expenditures to carry out basic governmental activities of the City of Bakersfield such as general government, public safety, public works and community services. Revenues are recorded by source, i.e., taxes, licenses and permits, etc. Expenditures are made primarily on current day-to-day operations and are recorded by major functional classifications and by operating departments. This fund accounts for all financial transactions not accounted for in another fund. 114 115 CITY OF BAKERSFIELD Balance Sheet General Fund June 30, 2019 General Fund Assets: Cash and investments $16,468,459 Accounts receivable, net 794,606 Interest receivable 290,105 Due from other governmental agencies 29,187,262 Due from other funds 18,649,197 Prepaid items 12,755 Total assets $65,402,384 Liabilities, Deferred Inflows of Resources and Fund Balance: Liabilities: Accounts payable $5,505,432 Advances from grantors and third parties 2,028,323 Total liabilities 7,533,755 Deferred Inflows of Resources: Deferred revenue 3,235,695 Fund Balance: Nonspendable 51,479 Committed Cash basis reserve 26,463,604 Contractual obligations 1,024,784 Appropriations for new year budget - Assigned Petty cash 28,370 Non-contractual encumbrances 459,964 Compensated absences 2,164,894 Appropriations for CalPERS increases 19,750,000 Unassigned 4,689,839 Total fund balance 54,632,934 Total liabilities, deferred inflows of resources and fund balance $65,402,384 116 CITY OF BAKERSFIELD Schedule of Revenues by Function - General Fund Budget and Actual For the Fiscal Year Ended June 30, 2019 Budget Actual Variance with Final Budget Revenues: Taxes: Property taxes $80,339,100 $83,543,561 $3,204,461 Sales and use taxes 88,144,000 94,622,228 6,478,228 Property transfer tax 1,000,000 1,524,996 524,996 Utility franchise tax 5,240,000 5,277,780 37,780 Business license tax 4,180,000 4,043,883 (136,117) Total taxes 178,903,100 189,012,448 10,109,348 Licenses and permits: Building permits 1,700,000 1,865,269 165,269 Planning permits 56,625 90,752 34,127 Public works permits 624,000 638,639 14,639 Police permits 326,700 405,038 78,338 Other licenses and permits 201,270 172,571 (28,699) Total licenses and permits 2,908,595 3,172,269 263,674 Intergovernmental: Federal grants 2,835,172 1,582,522 (1,252,650) State of California 3,207,576 2,847,139 (360,437) Other grants 590,665 272,501 (318,164) Total intergovernmental 6,633,413 4,702,162 (1,931,251) Charges for services: Building 3,172,500 3,255,143 82,643 Planning 391,236 606,570 215,334 Public works 1,870,250 1,113,556 (756,694) Police 706,000 1,056,100 350,100 Fire 5,900,000 6,149,280 249,280 Recreation and parks 860,300 949,707 89,407 Interfund charges 11,111,000 11,610,710 499,710 Other charges 187,000 208,230 21,230 Total charges for services 24,198,286 24,949,296 751,010 Fines, forfeitures, and assessments 731,000 911,966 180,966 Miscellaneous: Interest income 327,500 958,546 631,046 Net increase (decrease) in the fair value of investments -455,011 455,011 Contributions and donations 111,510 123,155 11,645 Other income 974,937 1,448,179 473,242 Total miscellaneous 1,413,947 2,984,891 1,570,944 Total revenues $214,788,341 $225,733,032 $10,944,691 117 CITY OF BAKERSFIELD Schedule of Expenditures by Division - General Fund Budget and Actual For the Fiscal Year Ended June 30, 2019 Budget Actual Variance with Final Budget General Government: Mayor & City council $406,607 $374,134 $32,473 City manager 1,177,641 1,130,645 46,996 City clerk 822,010 724,843 97,167 Human resources 1,363,281 1,177,738 185,543 Information technology 4,897,713 4,639,369 258,344 Financial services 3,097,956 2,872,044 225,912 City attorney 2,106,497 1,831,316 275,181 Total general government 13,871,705 12,750,089 1,121,616 Public Safety: Public safety - Police 95,657,897 95,677,601 (19,704) Public safety - Fire 40,868,398 39,033,631 1,834,767 Total public safety 136,526,295 134,711,232 1,815,063 Public Works: Administration 534,700 517,992 16,708 Engineering 6,185,556 5,651,360 534,196 General services 9,613,830 9,037,013 576,817 Streets and roads 8,033,257 7,661,240 372,017 Total public works 24,367,343 22,867,605 1,499,738 Recreation and Parks: Administration 1,186,435 1,142,340 44,095 Recreation 3,052,111 2,997,842 54,269 Parks 16,571,740 16,195,829 375,911 Total recreation and parks 20,810,286 20,336,011 474,275 Development Services: Planning 3,520,065 2,234,765 1,285,300 Building 5,955,573 5,466,605 488,968 Total development services 9,475,638 7,701,370 1,774,268 Non-departmental 10,558,854 9,220,222 1,338,632 Contingency 24,400 -24,400 Total General Fund Expenditures $215,634,521 $207,586,529 $8,047,992 118 CITY OF BAKERSFIELD Combining Statement of Revenues, Expenditures and Changes in Fund Balances Public Safety and Vital Services Funds (sub-fund of General Fund) PSVS Funds PSVS General Fund PSVS Capital Outlay Total PSVS Funds Revenues: Taxes 17,135,994 -17,135,994 Interest income $18,311 $-$18,311 Total revenues 17,154,305 -17,154,305 Expenditures Current: Capital outlay -1,114,556 1,114,556 Total expenditures -(1,114,556)(1,114,556) Excess (deficiency) of revenues over (under) expenditures 17,154,305 (1,114,556)16,039,749 Other financing sources (uses): Transfers in -2,488,500 2,488,500 Transfers out 2,488,500 -2,488,500 Total other financing sources (uses)2,488,500 2,488,500 4,977,000 Fund balances - July 1 --- Fund balances - June 30 $19,642,805 $1,373,944 $21,016,749 119 120 Special Revenue Funds These funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. Transient Occupancy Taxes Fund is used to account for Transient Occupancy Tax Revenues (Hotel Tax) and expenditures funded by this revenue source. The Rabobank Arena and Convention Center and Bakersfield Ice Sports Center operating revenues and expenditures are recorded in this fund. This fund is also used to account for duties performed by Visit Bakersfield. Community Development Block Grant Fund is used to account for resources provided by the Federal Housing and Community Development Act of 1974 for the elimination of slums and blight, housing conservation and improvements of community services. Neighborhood Stabilization Fund is used to account for resources provided by the Federal Housing and Economic Recovery Act of 2008 to address congressionally identified needs of abandoned and foreclosed homes in the City. These funds are used for down payment assistance, acquisition of Real Estate Owned (REO) lender assets properties that have been foreclosed upon for redevelopment, rehabilitation of acquired residential structures, and demolition of blighted structures. Gas Tax & Road Fund is used to account for the City's share, based upon population, of state gasoline taxes. State law requires these gasoline taxes be used to maintain streets or for major street construction. This fund also accounts for the resources provided by the Moving Ahead for Progress in the 21st Century Act (MAP21). Congestion Mitigation and Air Quality (CMAQ) funds are used in the metropolitan Bakersfield area to fund transportation projects in the Transportation Improvement Program. The Regional Surface Transportation Program (STP) is funded by Federal aid functionally classified higher than local road or rural minor collector routes. The Transportation Enhancement Activities (TEA) Program projects have a direct relationship to the intermodal transportation system by function, proximity, or impact. Lastly, the Highway Bridge Replacement and Rehabilitation Program (HBRR) allows each local agency two bridge replacement projects and two miscellaneous projects per year. State (TDA) Transportation Fund is used to account for three Transportation Development Act (TDA) funding sources. Article 3 funds must be used to construct facilities that specifically benefit pedestrians and/or bicyclists. Article 4 funds are Local Transportation and State Transit Assistance Funds. These resources are used to cover the City's maintenance and operation costs of the Bakersfield Amtrak Railway Station. The City is the owner of the station and leases the facility to Amtrak, who operates the transit service. Article 4 funds may also be used for various improvements at bus stops throughout the City. Article 8 funds represent the City's allocation of the 1/4% of sales tax authorized by Senate Bill (SB) 325. State law requires these sales tax dollars be used for street purposes. These funds are received and expended by the City as lead agency servicing the local road network. All three revenue resources are accounted for individually as required by the State of California but are combined for financial reporting purposes. The City currently receives only Article 3 and Article 4 money. State Safety Fund is used to account for specific revenue received for certain Police and Fire related programs. The City Police Department has a share of traffic fine resources which are transferred to the General Fund to assist in funding the cost of traffic safety and control devices and State of California monies from the Supplemental Law Enforcement Services grant. The Fire Department operates a local Certified Unified Program Agency (CUPA) which is required for state and federal environmental regulation. These revenue sources are accounted for individually as required by the State, but combined for financial reporting purposes. Redevelopment Successor Agency Housing Fund was created on February 1, 2012, pursuant to the provisions of the Redevelopment Restructuring Act. The City has chosen to assume the housing functions and take over the housing assets of the former Redevelopment Agency. 121 CITY OF BAKERSFIELD Combining Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Special Revenue Funds Year Ended June 30, 2019 Transient Occupancy Taxes Budget Actual Variance with Final Budget Revenues Taxes $9,700,000 $9,943,109 $243,109 Licenses and permits --- Intergovernmental --- Charges for services 9,383,558 8,700,059 (683,499) Fines, forfeitures, and assessments --- Interest income 30,000 117,291 87,291 Loan payments --- Contributions and donations 1,200,000 1,200,000 - Other income --- Total revenues 20,313,558 19,960,459 (353,099) Expenditures Current: General government 10,777,540 9,891,488 886,052 Public safety - Police --- Public safety - Fire --- Public works --- Recreation and parks --- Development services --- Non-departmental 3,136,900 3,136,900 - Capital outlay: Transportation: Traffic control --- Streets / Freeways --- Bridges --- Curbs, gutters and sidewalks --- Public facilities: Parks and landscaping --- Other improvements --- Total expenditures 13,914,440 13,028,388 886,052 Excess (deficiency) of revenues over (under) expenditures 6,399,118 6,932,071 532,953 Other financing sources (uses): Transfers out (7,782,543)(7,791,897)(9,354) Total other financing sources (uses)(7,782,543)(7,791,897)(9,354) Net change in fund balances (1,383,425)(859,826)523,599 Fund balances - beginning 1,862,655 1,862,655 - Fund balances - ending $479,230 $1,002,829 $523,599 122 Community Development Block Grant Neighborhood Stabilization Budget Actual Variance with Final Budget Budget Actual Variance with Final Budget $-$-$-$-$-$- ------ 11,879,294 3,300,238 (8,579,056)141,352 -(141,352) ------ ------ -1,073 1,073 --- 175,868 326,479 150,611 -45,983 45,983 ------ -8,751 8,751 --- 12,055,162 3,636,541 (8,418,621)141,352 45,983 (95,369) ------ ------ ------ ------ ------ 8,185,922 2,407,213 5,778,709 141,352 -141,352 ------ ------ ------ ------ 2,558,372 511,105 2,047,267 --- 316,000 47,823 268,177 --- 566,235 75,041 491,194 --- 11,626,529 3,041,182 8,585,347 141,352 -141,352 428,633 595,359 166,726 -45,983 45,983 (507,546)(507,545)(1)--- (507,546)(507,545)(1)--- (78,913)87,814 166,727 -45,983 45,983 529,095 529,095 -325,888 325,888 - $450,182 $616,909 $166,727 $325,888 $371,871 $45,983 123 CITY OF BAKERSFIELD Combining Schedule of Revenues, Expenditures and Changes in Fund Balances (continued) Budget and Actual - All Special Revenue Funds Year Ended June 30, 2019 Gas Tax & Road Fund Budget Actual Variance with Final Budget Revenues Taxes $-$-$- Licenses and permits --- Intergovernmental 348,813,998 77,576,105 (271,237,893) Charges for services --- Fines, forfeitures, and assessments 15,000 56,499 41,499 Interest income 130,000 370,085 240,085 Loan payments --- Contributions and donations --- Other income -199 199 Total revenues 348,958,998 78,002,888 (270,956,110) Expenditures Current: General government --- Public safety - Police --- Public safety - Fire --- Public works 3,272,463 3,266,451 6,012 Recreation and parks --- Development services --- Non-departmental --- Capital outlay: Transportation: Traffic control 1,136,024 427,314 708,710 Streets / Freeways 347,161,412 74,419,117 272,742,295 Bridges 11,295,301 2,084,695 9,210,606 Curbs, gutters and sidewalks 1,292,471 90,396 1,202,075 Public facilities: Parks and landscaping --- Other improvements --- Total expenditures 364,157,671 80,287,973 283,869,698 Excess (deficiency) of revenues over (under) expenditures (15,198,673)(2,285,085)12,913,588 Other financing sources (uses): Transfers out --- Total other financing sources (uses)--- Net change in fund balances (15,198,673)(2,285,085)12,913,588 Fund balances - beginning 15,187,842 15,187,842 - Fund balances - ending $(10,831)$12,902,757 $12,913,588 124 State (TDA) Transportation State Safety Fund Budget Actual Variance with Final Budget Budget Actual Variance with Final Budget $-$-$-$-$-$- ---318,000 311,666 (6,334) 2,455,925 1,174,306 (1,281,619)872,808 879,596 6,788 ---1,260,400 1,325,342 64,942 ---1,200,000 1,585,189 385,189 3,000 8,434 5,434 22,000 79,209 57,209 ------ ------ ------ 2,458,925 1,182,740 (1,276,185)3,673,208 4,181,002 507,794 ------ ---1,768,612 1,351,800 416,812 ---1,638,834 1,583,127 55,707 539,176 395,695 143,481 --- 45,595 22,875 22,720 --- ------ ------ ------ ------ ------ 125,000 125,000 ---- ------ 1,751,154 639,170 1,111,984 --- 2,460,925 1,182,740 1,278,185 3,407,446 2,934,927 472,519 (2,000)-2,000 265,762 1,246,075 980,313 ---(1,230,000)(1,230,000)- ---(1,230,000)(1,230,000)- (2,000)-2,000 (964,238)16,075 980,313 ---2,899,567 2,899,567 - $(2,000)$-$2,000 $1,935,329 $2,915,642 $980,313 125 CITY OF BAKERSFIELD Combining Schedule of Revenues, Expenditures and Changes in Fund Balances (continued) Budget and Actual - All Special Revenue Funds Year Ended June 30, 2019 Redevelopment Successor Agency - Housing Budget Actual Variance with Final Budget Revenues Taxes $182,007 $-$(182,007) Licenses and permits --- Intergovernmental --- Charges for services 175,577 175,621 44 Fines, forfeitures, and assessments --- Interest income 9,000 56,451 47,451 Loan payments --- Contributions and donations --- Other income 255,000 480,344 225,344 Total revenues 621,584 712,416 90,832 Expenditures Current: General government --- Public safety - Police --- Public safety - Fire --- Public works --- Recreation and parks --- Development services 648,746 307,254 341,492 Non-departmental --- Capital outlay: Transportation: Traffic control --- Streets / Freeways --- Bridges --- Curbs, gutters and sidewalks --- Public facilities: Parks and landscaping --- Other improvements 272,193 53,977 218,216 Total expenditures 920,939 361,231 559,708 Excess (deficiency) of revenues over (under) expenditures (299,355)351,185 650,540 Other financing sources (uses): Transfers out --- Total other financing sources (uses)--- Net change in fund balances (299,355)351,185 650,540 Fund balances - beginning 1,817,384 1,817,384 - Fund balances - ending $1,518,029 $2,168,569 $650,540 126 Totals Budget Actual Variance with Final Budget $9,882,007 $9,943,109 $61,102 318,000 311,666 (6,334) 364,163,377 82,930,245 (281,233,132) 10,819,535 10,201,022 (618,513) 1,215,000 1,641,688 426,688 194,000 632,543 438,543 175,868 372,462 196,594 1,200,000 1,200,000 - 255,000 489,294 234,294 388,222,787 107,722,029 (280,500,758) 10,777,540 9,891,488 886,052 1,768,612 1,351,800 416,812 1,638,834 1,583,127 55,707 3,811,639 3,662,146 149,493 45,595 22,875 22,720 8,976,020 2,714,467 6,261,553 3,136,900 3,136,900 - 1,136,024 427,314 708,710 347,161,412 74,419,117 272,742,295 11,295,301 2,084,695 9,210,606 3,975,843 726,501 3,249,342 316,000 47,823 268,177 2,589,582 768,188 1,821,394 396,629,302 100,836,441 295,792,861 (8,406,515)6,885,588 15,292,103 (9,520,089)(9,529,442)(9,353) (9,520,089)(9,529,442)(9,353) (17,926,604)(2,643,854)15,282,750 22,622,431 22,622,431 - $4,695,827 $19,978,577 $15,282,750 127 CITY OF BAKERSFIELD Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Debt Service Fund For the Fiscal Year Ended June 30, 2019 General Obligation Debt Budget Actual Variance with Final Budget Revenues: Interest income $-$-$- Total revenues --- Expenditures: Debt service: Principal retirement 1,311,650 635,085 676,565 Interest and fiscal charges 73,724 51,545 22,179 Total expenditures 1,385,374 686,630 698,744 Deficiency of revenues under expenditures (1,385,374)(686,630)698,744 Other financing sources: Transfers in (1,301,196)686,630 1,987,826 Total other financing sources (1,301,196)686,630 1,987,826 Net change in fund balance (2,686,570)-2,686,570 Fund balance - beginning (397,359)-397,359 Fund balance - ending $(3,083,929)$-$3,083,929 128 Capital Projects Funds These funds account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by Proprietary Funds and Trust Funds. Capital Outlay Fund is used to account for the cost of capital projects financed by general revenues and grant/loan proceeds for recreational facilities. Park Improvement Fund is used to account for funds collected for residential park development (Ordinance No. 3646). Fees are collected based on the development's share of the cost to develop, improve, construct or enhance a neighborhood park (Ordinance No. 3327). Transportation Development Fund is used to account for funds collected from fees paid to mitigate the traffic impacts to the regional circulation system caused by a development project. The fees are paid when a building permit for the development project is obtained, and are based upon the amount of traffic the development will generate. With these fees, the City constructs projects that have been identified as necessary to maintain the level of services required by the 2010 General Plan for the regional transportation network. This is a joint City and Kern County program which affects the entire metropolitan area. Fees are collected with the building permit and are based on the relative impact each land use has on the transportation network. The fee schedule was adopted with Ordinance No. 3513 and will be periodically evaluated by the City Council and revised to reflect updated costs and growth projections. Revenue from fees collected may also be used to service bonded debt incurred in Capital Improvement Construction. 129 CITY OF BAKERSFIELD Combining Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - All Capital Projects Funds For the Fiscal Year Ended June 30, 2019 Capital Outlay Park Improvement Fund Budget Actual Variance with Final Budget Budget Actual Variance with Final Budget Revenues: Taxes $5,685,000 $5,673,495 $(11,505)$-$-$- Intergovernmental 976,375 578,024 (398,351)--- Charges for services 77,454 234,927 157,473 --- Fines, forfeitures, and assessments 107,100 80,519 (26,581)1,475,000 2,204,604 729,604 Interest income 220,508 884,155 663,647 50,000 148,038 98,038 Other income 760,509 10,311 (750,198)-23,305 23,305 Total revenues 7,826,946 7,461,431 (365,515)1,525,000 2,375,947 850,947 Expenditures: Current: General government ------ Public works ------ Non-departmental 2,057,313 323,877 1,733,436 --- Capital outlay: Transportation: Traffic control ------ Streets 7,509,351 4,717,679 2,791,672 --- Streets / Freeways 49,760,496 9,716,470 40,044,026 --- Public facilities: Buildings 7,185,541 2,030,336 5,155,205 --- Parks and landscaping 1,719,522 1,027,985 691,537 3,849,706 2,667,137 1,182,569 Land acquisition ---1,660,825 -1,660,825 Other improvements 1,895,079 730,331 1,164,748 302,315 200,496 101,819 Equipment: Computers 142,728 94,869 47,859 --- Non-automotive 1,382,525 590,935 791,590 --- Total expenditures 71,652,555 19,232,482 52,420,073 5,812,846 2,867,633 2,945,213 Excess (deficiency) of revenues over (under) expenditures (63,825,609)(11,771,051)52,054,558 (4,287,846)(491,686)3,796,160 Other financing sources (uses): Transfers in 12,554,860 11,238,500 (1,316,360)--- Transfers out (1,316,360)-1,316,360 --- Total other financing sources (uses)11,238,500 11,238,500 ---- Net change in fund balances (52,587,109)(532,551)52,054,558 (4,287,846)(491,686)3,796,160 Fund balances - beginning 56,092,122 56,092,122 -5,297,380 5,297,380 - Fund balances - ending $3,505,013 $55,559,571 $52,054,558 $1,009,534 $4,805,694 $3,796,160 130 Transportation Development Totals Budget Actual Variance with Final Budget Budget Actual Variance with Final Budget $-$-$-$5,685,000 $5,673,495 $(11,505) 4,536 4,536 -980,911 582,560 (398,351) 39,342 50,736 11,394 116,796 285,663 168,867 11,000,000 15,219,759 4,219,759 12,582,100 17,504,882 4,922,782 519,312 1,294,736 775,424 789,820 2,326,929 1,537,109 ---760,509 33,616 (726,893) 11,563,190 16,569,767 5,006,577 20,915,136 26,407,145 5,492,009 341,500 208,074 133,426 341,500 208,074 133,426 841,537 780,623 60,914 841,537 780,623 60,914 6,052 -6,052 2,063,365 323,877 1,739,488 691,210 217,279 473,931 691,210 217,279 473,931 9,156,201 3,290,034 5,866,167 16,665,552 8,007,713 8,657,839 49,519,566 11,332,459 38,187,107 99,280,062 21,048,929 78,231,133 ---7,185,541 2,030,336 5,155,205 ---5,569,228 3,695,122 1,874,106 ---1,660,825 -1,660,825 ---2,197,394 930,827 1,266,567 ---142,728 94,869 47,859 ---1,382,525 590,935 791,590 60,556,066 15,828,469 44,727,597 138,021,467 37,928,584 100,092,883 (48,992,876)741,298 49,734,174 (117,106,331)(11,521,439)105,584,892 9,000,000 -(9,000,000)21,554,860 11,238,500 (10,316,360) (9,000,000)-9,000,000 (10,316,360)-10,316,360 ---11,238,500 11,238,500 - (48,992,876)741,298 49,734,174 (105,867,831)(282,939)105,584,892 50,810,615 50,810,615 -112,200,117 112,200,117 - $1,817,739 $51,551,913 $49,734,174 $6,332,286 $111,917,178 $105,584,892 131 Internal Service Funds These funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City on a cost-reimbursement basis. Self-Insurance Fund is used to account for the cost of operating a self-insurance program as follows: With regard to wo rkers' compensation, the City is self-insured for the first $500,000 of each injury or occurrence and is a member of California Public Entity Insurance Authority (CPEIA) which provides $5,000,000 of excess coverage to protect against catastrophic type losses. Funding for this program is provided by interdepartmental charges varying by employee classification and their industrial injury loss experience. With regard to general and auto liability, the City is self-insured for the first $1,000,000 of each accident or occurrence and is a member of the Authority for California Cities Excess Liability (ACCEL) which provides excess commercial insurance in the amount of $10,000,000. Funding for this program is provided by interdepartmental charges. Equipment Management Fund is used to account for the cost of operating and maintaining a maintenance facility for vehicular, telecommunications and computer equipment used by other City departments. Such costs are billed to other departments via established rates which are based upon actual cost. Actual costs include maintenance, repair, and replacement cost of shop and automotive equipment. 132 CITY OF BAKERSFIELD Combining Statement of Net Position All Internal Service Funds June 30, 2019 Self- Insurance Equipment Management Total Assets: Current assets: Cash and investments $28,553,487 $37,221,627 $65,775,114 Accounts receivable, net 545 24,706 25,251 Interest receivable 135,818 178,413 314,231 Notes/loans receivable 117,684 293,162 410,846 Prepayments and inventories 20,401 1,089,675 1,110,076 Total current assets 28,827,935 38,807,583 67,635,518 Noncurrent assets: Capital assets: Depreciable buildings, property, equipment and infrastructure, net -41,999,533 41,999,533 Total assets 28,827,935 80,807,116 109,635,051 Deferred Outflows of Resources: Deferred pensions 119,948 1,741,893 1,861,841 Deferred other post-employment benefits 17,401 278,746 296,147 Total deferred outflows of resources 137,349 2,020,639 2,157,988 Liabilities: Current liabilities: Accounts payable and accrued liabilities 387,817 1,500,246 1,888,063 Claims payable 5,772,301 -5,772,301 Workers' compensation claims 6,933,500 -6,933,500 Compensated absences payable -202,176 202,176 Total current liabilities 13,093,618 1,702,422 14,796,040 Noncurrent liabilities: Workers' compensation claims 35,821,500 -35,821,500 Compensated absences payable 53,868 374,841 428,709 Net pension liability 548,582 9,401,863 9,950,445 Net other post-employment benefits liability 152,752 2,446,957 2,599,709 Total noncurrent liabilities 36,576,702 12,223,661 48,800,363 Total liabilities 49,670,320 13,926,083 63,596,403 Deferred Inflows of Resources: Deferred pensions 35,029 520,180 555,209 Deferred other post-employment benefits 14,125 226,266 240,391 Total deferred inflows of resources 49,154 746,446 795,600 Net Position: Net investment in capital assets -41,999,533 41,999,533 Unrestricted (20,754,190)26,155,693 5,401,503 Total net position $(20,754,190)$68,155,226 $47,401,036 133 CITY OF BAKERSFIELD Combining Statement of Activities and Changes in Net Position All Internal Service Funds For the Fiscal Year Ended June 30, 2019 Self- Insurance Equipment Management Totals Operating revenues: Intergovernmental $-$281,324 $281,324 Charges for services 11,937,247 27,944,365 39,881,612 Cost recoveries 1,456,153 19,753 1,475,906 Miscellaneous 65,536 312,779 378,315 Total operating revenues 13,458,936 28,558,221 42,017,157 Operating expenses: General and administrative 11,217,042 19,132,128 30,349,170 Workers' compensation payments 2,633,609 -2,633,609 Claims paid 36,412 -36,412 Depreciation and amortization -7,219,150 7,219,150 Compensated absences 6,296 46,382 52,678 Total operating expenses 13,893,359 26,397,660 40,291,019 Operating income (loss)(434,423)2,160,561 1,726,138 Nonoperating revenues (expenses): Interest income 724,812 939,322 1,664,134 Gain/(loss) on sale of capital assets -93,414 93,414 Income (loss) before transfers and capital contributions 290,389 3,193,297 3,483,686 Capital contributions -863,900 863,900 Transfers in -4,346,322 4,346,322 Transfers out (148,943)-(148,943) Change in net position 141,446 8,403,519 8,544,965 Total Net Position - Beginning of Year - as Restated (20,895,636)59,751,707 38,856,071 Total Net Position - End of Year $(20,754,190)$68,155,226 $47,401,036 134 CITY OF BAKERSFIELD Combining Statement of Cash Flows All Internal Service Funds For the Fiscal Year Ended June 30, 2019 Self- Insurance Equipment Management Totals Cash flows from operating activities: Cash received from: Customers $12,260,606 $29,007,226 $41,267,832 Prior year reimbursements and cost recoveries 1,456,153 19,753 1,475,906 Cash paid to: Suppliers (9,853,198)(13,303,186)(23,156,384) Employees (2,966,352)(4,999,879)(7,966,231) Net cash provided (used) by operating activities 897,209 10,723,914 11,621,123 Cash flows from noncapital financing activities: Cash transferred from other funds -4,346,322 4,346,322 Cash transferred to other funds (148,943)-(148,943) Net cash provided (used) by noncapital financing activities (148,943)4,346,322 4,197,379 Cash flows from capital and related financing activities: Purchase of capital assets -(10,906,098)(10,906,098) Proceeds from sale of capital assets -203,926 203,926 Net cash (used) by capital and related financing activities -(10,702,172)(10,702,172) Cash flows from investing activities: Interest received 554,030 718,617 1,272,647 Net increase (decrease) in the fair value of investments 162,098 190,360 352,458 Net cash provided (used) by investing activities 716,128 908,977 1,625,105 Net increase (decrease) in cash and investments 1,464,394 5,277,041 6,741,435 Cash and investments - Beginning of year 27,089,093 31,944,586 59,033,679 Cash and investments - End of year $28,553,487 $37,221,627 $65,775,114 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss)$(434,423)$2,160,561 $1,726,138 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation expense -7,219,150 7,219,150 (Increase) decrease in accounts receivable 257,823 468,758 726,581 (Increase) decrease in inventories -(5,628)(5,628) Decrease in prepaid items (15,156)-(15,156) Increase (decrease) in accounts payable 113,378 697,589 810,967 Increase (decrease) in workers' compensation claims 962,650 -962,650 Increase (decrease) in compensated absences 6,296 46,382 52,678 Increase (decrease) in net pension liability (29,449)(396,345)(425,794) Increase (decrease) in deferred outflows/inflows of resources for pensions 44,025 612,840 656,865 Increase (decrease) in other post-employment benefits liability (1,494)(20,978)(22,472) Increase (decrease) in deferred outflows/inflows of resources for OPEB (6,441)(58,415)(64,856) Net cash provided (used) by operating activities $897,209 $10,723,914 $11,621,123 Noncash investing, capital, and financing activities: Contribution of equipment from other departments $-$863,900 $863,900 135 CITY OF BAKERSFIELD Statement of Changes in Assets and Liabilities Fiduciary Funds (Agency) For the Fiscal Year Ended June 30, 2019 Balance July 01, 2018 Additions Deletions Balance June 30, 2019 Special Deposits Fund Assets: Cash and investments $23,756,711 $107,925,648 $108,090,821 $23,591,538 Interest receivable 1,896 4,444 1,896 4,444 Accounts receivable 84,752 1,161,995 1,139,837 106,910 Due from other governmental agencies 175,787 634,857 644,547 166,097 Total assets $24,019,146 $109,726,944 $109,877,101 $23,868,989 Liabilities: Payables: Deposits $24,019,146 $109,726,944 $109,877,101 $23,868,989 Total liabilities $24,019,146 $109,726,944 $109,877,101 $23,868,989 Improvement Districts Fund Assets: Cash and investments $11,032,204 $761,681 $1,768,413 $10,025,472 Interest receivable 15,084 13,801 1,583 27,302 Due from other governmental agencies 8,358 2,920 3,978 7,300 Total assets $11,055,646 $778,402 $1,773,974 $10,060,074 Liabilities: Payables: Deposits 5,205,462 988,821 491,415 5,702,868 Accrued bond interest 775,183 632,206 775,183 632,206 Bonds 5,075,000 3,725,000 5,075,000 3,725,000 Total liabilities $11,055,645 $5,346,027 $6,341,598 $10,060,074 Total - All Agency Funds Assets: Cash and investments $34,788,915 $108,687,329 $109,859,234 $33,617,010 Interest receivable 16,980 18,245 3,479 31,746 Accounts receivable 84,752 1,161,995 1,139,837 106,910 Due from other governmental agencies 184,145 637,777 648,525 173,397 Total assets $35,074,792 $110,505,346 $111,651,075 $33,929,063 Liabilities: Payables: Deposits 29,224,608 110,715,765 110,368,516 29,571,857 Accrued bond interest 775,183 632,206 775,183 632,206 Bonds 5,075,000 3,725,000 5,075,000 3,725,000 Total liabilities $35,074,791 $115,072,971 $116,218,699 $33,929,063 136 CITY OF BAKERSFIELD Combining Statement of Fiduciary Net Position Private Purpose Trust Funds June 30, 2019 Redevelopment Successor Agency - Trust Planning Habitat Trust Total Private Purpose Trust Funds Assets: Current assets: Cash and investments $3,855,866 $13,995,390 $17,851,256 Interest receivable 16,743 67,191 83,934 Total current assets 3,872,609 14,062,581 17,935,190 Noncurrent assets: Land held for resale 60,895 -60,895 Total noncurrent assets 60,895 -60,895 Total assets 3,933,504 14,062,581 17,996,085 Liabilities: Payables: Advances from grantors and third parties 3,504,005 -3,504,005 Bonds 2,390,000 -2,390,000 Notes 15,181,840 -15,181,840 Total liabilities 21,075,845 -21,075,845 Net Position: Held in trust for: Individuals, organizations, and other governments (17,142,341)14,062,581 (3,079,760) Total Net Position $(17,142,341)$14,062,581 $(3,079,760) 137 CITY OF BAKERSFIELD Combining Statement of Fiduciary Net Position Pension and Other Employee Benefit Trust Funds June 30, 2019 OPEB Irrevocable Trust Fire Relief and Pension Trust Total Pension and Other Employee Benefit Trust Funds Assets: Cash and investments $72,477,718 $655,033 $73,132,751 Interest receivable -4,276 4,276 Total assets 72,477,718 659,309 73,137,027 Net Position: Held in trust for - Pension/other post-employment benefits 72,477,718 659,309 73,137,027 Total Net Position $72,477,718 $659,309 $73,137,027 138 CITY OF BAKERSFIELD Combining Statement of Changes in Fiduciary Net Position Private Purpose Trust Funds For the Fiscal Year Ended June 30, 2019 Redevelopment Successor Agency - Trust Planning Habitat Trust Total Private Purpose Trust Funds Additions: Developer fees $-$892,258 $892,258 Successor agency property tax deposits 3,496,580 -3,496,580 Intergovernmental --- Charges for services 3,136,900 -3,136,900 Contribution from Successor Housing Agency --- Other income (346,994)-(346,994) Interest income -291,291 291,291 Total additions 6,286,486 1,183,549 7,470,035 Deductions: Purchase of uninhabited land -1,060,793 1,060,793 Obligation retirement 3,796,712 -3,796,712 Total deductions 3,796,712 1,060,793 4,857,505 Change in net position 2,489,774 122,756 2,612,530 Net position - beginning of year (19,632,115)13,939,825 (5,692,290) Net position - end of year $(17,142,341)$14,062,581 $(3,079,760) 139 CITY OF BAKERSFIELD Combining Statement of Changes in Fiduciary Net Position Pension and Other Employee Benefit Trust Funds For the Fiscal Year Ended June 30, 2019 OPEB Irrevocable Trust Fire Relief and Pension Trust Total Pension and Other Employee Benefit Trust Funds Additions: Contributions to pooled investments $7,940,057 $-$7,940,057 Interest income 4,882,723 21,473 4,904,196 Total additions 12,822,780 21,473 12,844,253 Deductions: Benefits 6,604,006 100,854 6,704,860 Administrative expenses 196,306 6,400 202,706 Total deductions 6,800,312 107,254 6,907,566 Change in net position 6,022,468 (85,781)5,936,687 Beginning of year 66,455,250 745,091 67,200,341 End of year $72,477,718 $659,310 $73,137,028 140 141 CITY OF BAKERSFIELD Combining Balance Sheet Non-Major Governmental Funds June 30, 2019 Special Revenue Funds Neighborhood Stabilization High Speed Rail State (TDA) Transportation Assets: Cash and investments $351,871 $-$63,239 Accounts receivable, net 6,233,854 -- Interest receivable --1,168 Due from other governmental agencies --229,994 Notes/loans receivable --- Total assets $6,585,725 $-$294,401 Liabilities, Deferred Inflows of Resources, and Fund Balances: Liabilities: Accounts payable $-$-$87,970 Advances from grantors and third parties --206,431 Total liabilities --294,401 Deferred Inflows of Resources: Deferred revenue 6,213,854 -- Fund Balances: Restricted 371,871 -- Total liabilities, deferred inflows of resources, and fund balances $6,585,725 $-$294,401 142 Special Revenue Funds Debt Service Fund State Safety Redevelopment Successor Agency - Housing General Obligation Debt Total Non-Major Governmental Funds $2,960,963 $2,209,232 $-$5,585,305 78,973 206 -6,313,033 14,219 10,609 -25,996 4,356 --234,350 -22,719,433 -22,719,433 $3,058,511 $24,939,480 $-$34,878,117 $142,871 $51,478 $-$282,319 (1)22,719,433 -22,925,863 142,870 22,770,911 -23,208,182 ---6,213,854 2,915,641 2,168,569 -5,456,081 $3,058,511 $24,939,480 $-$34,878,117 143 CITY OF BAKERSFIELD Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2019 Special Revenue Funds Neighborhood Stabilization High Speed Rail State (TDA) Transportation Revenues: Licenses and permits $-$-$- Intergovernmental --1,174,306 Charges for services --- Fines, forfeitures and assessments --- Interest income --8,434 Loan payments 45,983 -- Other income --- Total revenues 45,983 -1,182,740 Expenditures Current: Public safety - Police --- Public safety - Fire --- Public works --395,696 Recreation and parks --22,875 Development services --- Capital outlay --764,169 Debt service: Principal retirement --- Interest and fiscal charges --- Total expenditures --1,182,740 Excess (deficiency) of revenues over (under) expenditures 45,983 -- Other financing sources (uses): Transfers in --- Transfers out --- Total other financing sources (uses)--- Net change in fund balances 45,983 -- Fund balances - beginning - as restated 325,888 -- Fund balances - ending $371,871 $-$- 144 Special Revenue Funds Debt Service Fund State Safety Redevelopment Successor Agency - Housing General Obligation Debt Total Non-Major Governmental Funds $311,666 $-$-$311,666 879,596 --2,053,902 1,325,342 175,621 -1,500,963 1,585,189 --1,585,189 79,209 56,450 -144,093 ---45,983 -480,344 -480,344 4,181,002 712,415 -6,122,140 1,351,800 --1,351,800 1,583,127 --1,583,127 ---395,696 ---22,875 -307,253 -307,253 -53,977 -818,146 --635,085 635,085 --51,545 51,545 2,934,927 361,230 686,630 5,165,527 1,246,075 351,185 (686,630)956,613 --686,630 686,630 (1,230,000)--(1,230,000) (1,230,000)-686,630 (543,370) 16,075 351,185 -413,243 2,899,566 1,817,384 -5,042,838 $2,915,641 $2,168,569 $-$5,456,081 145 CITY OF BAKERSFIELD Long-term Debt Recorded in Private Purpose Trust Fund REDEVELOPMENT SUCCESSOR AGENCY $2,090,000 Tax Allocation Bond to be used for construction of public improvements for new developments on 18th and 19th Streets, and improvements to the Mill Creek Linear Park. The funds were dispersed in July 2009. The interest rate is 7.5%, with payments commencing August 2010 through August 2029.$1,500,000 $1,240,000 Tax Allocation Bond to be used for infrastructure improvements for the Mill Creek Linear Park Canal at South Millcreek. The funds were dispersed in July 2009. The interest rate is 7.25%, with payments commencing August 2010 through August 2029.890,000 Total Bonds $2,390,000 Loans/Contracts: $1,000,000 HUD Section 108 Loan, 2003 (Agency Agreement #RA 03-016) - due in annual principal installments of $27,000 to $82,000 commencing August 1, 2004; interest ranging from 1.61% to 4.76%.$367,000 $1,600,000 HUD Section 108 Loan, 2005 (Agency Agreement #RA 06-020) for construction of Fire Station No. 5 - due in annual principal installments of $58,000 to $137,000 commencing August 1, 2009; interest ranging from 4.96% to 5.77%.898,000 $3,750,000 HUD Section 108 Loan, 2007 (Agency Agreement # RA 06-022) Loan proceeds are dedicated to the Mill Creek South Mixed-Use project and will go toward the acquisition and clean-up of a six acre parcel. Due in annual principal installments of $136,000 to $321,000 commencing August 1, 2008; interest ranging from 2.62% to 5.42%.2,308,000 $10,000,000 Bakersfield Redevelopment Agency Loan with I-bank to help finance the Mill Creek Linear Park and Canal Refurbishment Project. Only $6,933,445 of the loan was dispersed through fiscal year 2009. Annual principal installments of $217,383 to $512,446 commencing on August 1, 2009 through August 2037; interest rate at 3.11%.7,495,283 $2,000,000 Loan with the City of Bakersfield Equipment Fund to provide construction assistance required for the 19th Street Senior Plaza Development. Funds were disbursed June 2009. The loan has a 5% interest rate and a seven year payment period commencing July 2013.245,912 $950,000 Loan with the City of Bakersfield Equipment Fund to pre-purchase an easement to facilitate the development of the Chelsea Housing project and the Southeast Mill Creek commercial area. The loan has a 3% interest rate and a five year payment period commencing July 2013.120,540 146 CITY OF BAKERSFIELD Long-term Debt Recorded in Private Purpose Trust Fund $1,500,000 Loan with the City of Bakersfield Self-Insurance Fund to provide construction assistance required for the Courtyard Family Apartments located west of S Street, between 13th and 14th Streets at S. Mill Creek. Funds were disbursed in September 2009. The loan has a 5% interest rate and seven year payment period commencing July 2013.147,105 $17,000,000 Reimbursement to the City for (a) refunding of 1993 Tax Allocation Bonds, (b) 1987 COP Convention Improvement Project, and (c) the construction, equipping and furnishing of a multipurpose area (the Arena Project) per Agreement #97-2. Agreement is for two payments of $850,000 each year, from March 1997 to June 2022.3,600,000 Total Loans/Contracts Payable $15,181,840 Total Successor Agency $17,571,840 Annual requirements to amortize the principal and interest on long-term debt of Redevelopment Successor Agency at June 30, 2019 is as follows: Redevelopment Successor Agency (Private Purpose Trust Fund) Year ending Principal Interest Bonds Loans/Contracts Total Bonds Loans/Contracts Total 2020 $145,000 $2,366,837 $2,511,837 $171,656 $410,986 $582,642 2021 160,000 1,882,463 2,042,463 160,363 381,901 542,264 2022 170,000 1,914,932 2,084,932 148,144 351,862 500,006 2023 185,000 748,696 933,696 135,000 319,993 454,993 2024 200,000 782,762 982,762 120,744 286,280 407,024 2025-2029 1,230,000 3,393,121 4,623,121 350,757 947,011 1,297,768 2030-2034 300,000 2,134,130 2,434,130 11,112 474,603 485,715 2035-2039 -1,958,899 1,958,899 -124,175 124,175 Totals $2,390,000 $15,181,840 $17,571,840 $1,097,776 $3,296,811 $4,394,587 147 148 Statistical Section City of Bakersfield Statistical Section For the year ended June 30, 2019 The statistical section of the City of Bakersfield's (City) comprehensive annual financial report presents detailed information as a context for understanding what the information presented in the financial statements, note disclosures and required supplementary information says about the City's overall financial health. Where less than 10 years of data is presented, the information was not available. Contents Pages Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance measures have changed over time 150 - 159 Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and sales tax revenues.160 - 171 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current level of outstanding debt and the City's ability to issue additional debt in the future.172 - 178 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place.179 - 185 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 186 - 189 149 CITY OF BAKERSFIELD Net Position by Component (1) Last Ten Fiscal Years Fiscal Year 2010 2011 (2)2012 2013 Governmental Activities: Net investment in capital assets $1,403,412,018 $1,307,753,604 $1,259,429,698 $1,233,782,805 Restricted for: Capital improvements 39,139,625 19,778,178 23,252,930 16,246,571 Unrestricted 135,621,596 155,889,382 165,661,544 172,822,236 Total governmental activities net position:1,578,173,239 1,483,421,164 1,448,344,172 1,422,851,612 % change from prior year -1.0%-6.0%-2.0 -2.0% Business-type Activities: Net investment in capital assets 634,479,891 632,719,226 650,440,273 642,190,608 Restricted for: Capital improvements 29,803,093 19,571,180 20,237,839 20,216,599 Sanitation districts 4,926,779 4,008,890 2,645,932 - Unrestricted 104,096,319 115,321,423 100,529,044 107,431,948 Total business-type activities net position 773,306,082 771,620,719 773,853,088 769,839,155 % change from prior year 3.0%-0.2%0.3%-0.5% Primary Government: Net investment in capital assets 2,037,891,909 1,940,472,830 1,909,869,971 1,875,973,416 Restricted for: Capital improvements 68,942,718 39,348,358 43,490,769 36,463,170 Sanitation districts 4,926,779 4,008,890 2,645,932 - Unrestricted 239,717,915 271,210,805 266,190,588 280,254,187 Total primary government net position $2,351,479,321 $2,255,040,883 $2,222,197,260 $2,192,690,773 Total primary government % change from prior year -0.1%-4.0%-1.0%-1.0% Notes: (1) This schedule reports using the accrual basis of accounting. (2) There was a prior period adjustment in Governmental and/or Business-type Activities for the fiscal year. Numbers have been changed to reflect the restatement. (3) There was a prior period adjustment in Governmental and/or Business-type Activities for the fiscal year. Numbers have been changed to reflect the restatement. (4) The current year increase in Governmental Activities net position is primarily due to the Public Safety and Vital Services (PSVS) district tax which is new source of revenue that approved by residents in November 2018. 150 Fiscal Year 2014(3)2015(3)2016(3)2017(3)2018(3)2019(3)(4) $1,279,657,792 $1,285,115,859 $1,304,906,456 $1,305,414,611 $1,301,334,674 $1,316,112,930 21,015,837 22,112,200 21,988,624 20,626,443 20,759,775 18,975,747 213,670,245 (70,066,811)(86,460,007)(108,783,761)(200,714,582)(193,801,803) 1,514,343,874 1,237,161,248 1,240,435,073 1,217,257,293 1,121,379,867 1,141,286,874 6.0%-18.0%0.3%-1.9%-7.9%1.8% 647,105,639 648,359,633 665,588,574 670,274,189 700,725,335 720,818,075 20,209,227 20,201,556 20,201,947 20,200,000 20,200,000 20,200,000 ------ 109,292,512 78,904,795 79,243,784 85,239,027 107,755,323 107,638,278 776,607,378 747,465,984 765,034,305 775,713,216 828,680,658 848,656,353 0.8%-4.0%2.0%1.5%6.8 2.4% 1,926,763,431 1,933,475,502 1,970,495,030 1,976,138,800 2,002,060,009 2,036,931,005 41,225,064 42,313,756 42,190,571 40,826,443 40,959,775 39,175,747 ------ 322,962,757 8,837,984 (7,216,223)(23,544,734)(92,959,259)(86,163,525) $2,290,951,252 $1,984,627,242 $2,005,469,378 $1,993,420,509 $1,950,060,525 $1,989,943,227 4.0%-13.0%1.0%-0.6%-2.2%2.0% 151 CITY OF BAKERSFIELD Change in Net Position (1) Last Ten Fiscal Years Fiscal Year 2010 2011 2012 2013 Expenses Governmental activities: General government $13,169,300 $12,110,455 $12,388,099 $12,919,972 Public safety: Police 66,819,611 70,381,783 72,574,972 76,310,840 Fire 32,901,818 31,657,823 33,319,982 35,105,188 Public works 138,345,249 137,057,195 142,228,353 162,423,856 Recreation & parks 32,640,571 34,682,672 31,737,121 32,619,041 Development services 8,231,893 6,862,213 5,856,850 11,192,757 Economic/Community development (2)12,935,695 9,303,951 28,228,468 - Interest on long-term debt 201,442 233,606 215,411 467,848 Total governmental activities expenses 305,245,579 302,289,698 326,549,256 331,039,502 Business-type activities: Wastewater treatment 31,978,755 42,333,794 41,550,942 40,456,986 Refuse collection 35,237,306 38,469,544 39,340,795 44,364,406 River & agricultural water 4,901,463 4,603,236 5,727,962 5,245,266 Domestic water 21,951,835 22,068,640 22,157,529 21,131,546 General aviation 372,089 407,687 404,648 430,697 Offstreet parking 177,485 165,935 128,070 162,094 Total business-type activities expenses 94,618,933 108,048,836 109,309,946 111,790,995 Total primary government expenses 399,864,512 410,338,534 435,859,202 442,830,497 Program Revenues Governmental activities: Charges for services: General government 4,451,944 5,406,095 5,392,724 4,984,767 Public safety: Police 3,347,806 3,210,604 2,649,133 2,110,160 Fire 4,601,976 4,577,004 4,866,355 5,361,766 Public works 10,561,651 8,462,168 11,651,452 19,404,900 Recreation & parks 13,530,535 13,172,982 14,153,899 14,324,137 Development services 3,492,359 2,621,537 2,907,300 4,147,598 Economic/Community development (2)85,180 1,101 870 - Operating grants and contributions 26,063,320 22,993,743 20,178,085 19,508,063 Capital grants and contributions 76,021,617 82,831,043 68,415,443 76,471,205 Total governmental activities program revenues $142,156,388 $143,276,277 $130,215,261 $146,312,596 Notes: (1) This schedule reports using the accrual basis of accounting. (2) Economic/Community Development became a part of Development Services. 152 Fiscal Year 2014 2015 2016 2017 2018 2019 $10,274,285 $21,956,276 $24,203,337 $26,395,470 $29,731,416 $31,112,425 80,192,752 82,573,675 87,314,992 95,723,028 105,006,154 106,340,979 36,086,851 35,577,067 37,257,146 41,364,912 44,560,720 46,537,182 104,347,771 158,958,537 176,573,017 171,911,928 145,529,290 126,435,754 34,641,180 22,743,488 24,993,400 26,888,569 22,613,830 20,685,570 9,940,984 9,895,523 10,018,548 12,159,620 8,533,656 8,221,265 ------ 166,472 164,046 39,729 33,429 25,060 17,358 275,650,295 331,868,612 360,400,169 374,476,956 356,000,126 339,350,533 41,979,698 41,602,539 38,038,376 41,008,233 42,103,648 43,491,976 45,336,786 42,860,924 44,067,358 46,300,746 47,971,215 52,077,033 5,051,433 4,751,158 4,395,517 4,304,663 4,198,037 4,469,652 25,613,917 25,455,862 25,756,437 27,066,771 29,205,225 26,859,329 462,690 527,279 480,754 812,527 671,124 480,368 160,613 163,840 112,986 226,999 233,746 290,799 118,605,137 115,361,602 112,851,428 119,719,939 124,382,995 127,669,157 394,255,432 447,230,214 473,251,597 494,196,895 480,383,121 467,019,690 5,019,511 3,051,375 6,178,924 4,609,597 5,618,886 5,476,706 2,938,734 2,737,294 3,138,617 4,797,619 2,989,023 3,719,138 4,937,490 5,784,964 6,375,758 6,903,928 7,242,490 7,615,334 23,780,578 20,958,923 18,625,200 17,116,439 17,159,857 16,970,725 14,348,050 14,336,209 15,665,544 16,103,058 16,481,750 17,354,482 5,221,585 5,620,567 6,076,072 5,719,860 5,909,456 6,335,650 ------ 11,633,792 12,963,571 11,217,162 12,640,678 9,165,593 11,411,248 104,071,622 101,313,136 120,303,934 100,956,230 85,533,310 78,708,716 $171,951,362 $166,766,039 $187,581,211 $168,847,409 $150,100,365 $147,591,999 153 CITY OF BAKERSFIELD Change in Net Position (1) continued Last Ten Fiscal Years Fiscal Year 2010 2011 2012 2013 Business-type activities: Charges for services: Wastewater treatment $29,617,486 $30,752,515 $30,743,840 $30,825,384 Refuse collection 39,533,488 39,568,011 41,198,715 41,812,177 River & agricultural water 5,206,010 6,891,203 4,162,253 3,645,065 Domestic water 21,773,880 22,223,640 23,140,865 23,944,333 General aviation 258,353 253,868 285,461 304,357 Offstreet parking 63,383 63,120 72,094 54,420 Operating grants and contributions 7,121,598 4,018,963 4,935,165 6,243,441 Capital grants and contributions 10,189,981 1,599,202 5,011,908 982,577 Total business-type activities program revenues 113,764,179 105,370,522 109,550,301 107,811,754 Total primary government program revenues 255,920,567 248,646,799 239,765,562 254,124,350 Net (Expenses) Revenues: Governmental activities (163,089,191)(159,013,421)(196,333,995)(184,726,906) Business-type activities 19,145,246 (2,678,314)240,355 (3,979,241) Total primary government Net (Expenses) Revenues (143,943,945)(161,691,735)(196,093,640)(188,706,147) General Revenues and Other Changes in Net Position Governmental activities: Taxes: Property taxes 63,923,865 62,889,341 60,717,716 58,958,525 Sales and use taxes 50,664,334 55,281,897 67,642,794 70,418,028 Other taxes 1,910,719 728,715 889,373 926,701 Intergovernmental, unrestricted 1,026,116 1,144,659 876,617 181,713 Unrestricted grants and contributions 19,229,234 20,701,642 21,793,292 22,725,966 Investment earnings (loss)1,103,532 73,834 282,170 (99,546) Miscellaneous 1,776,536 1,567,489 4,223,807 5,187,294 Gain (loss) on sale of property 14,646 17,300 132,666 192,354 Transfers 150,000 1,998,260 34,000 840,000 Total Governmental Activities 139,798,982 144,403,137 156,592,435 159,331,035 Business-type activities: Investment earnings 3,012,666 2,136,427 1,988,022 778,444 Gain (loss) on sale of property --38,992 26,866 Transfers (150,000)(1,998,260)(34,000)(840,000) Total business-type activities 2,862,666 138,167 1,993,014 (34,690) Total primary government 142,661,648 144,541,304 158,585,449 159,296,345 Extraordinary gain (loss)--4,664,568 - Change in Net Position: Governmental activities (23,290,209)(14,610,284)(39,741,560)(25,395,871) Business-type activities 22,007,912 (2,540,147)2,233,369 (4,013,931) Total primary government $(1,282,297)$(17,150,431)$(37,508,191)$(29,409,802) 154 Fiscal Year 2014 2015 2016 2017 2018 2019 $31,148,327 $31,437,669 $32,809,778 $33,037,996 $34,036,372 $33,916,086 42,100,981 43,447,351 45,865,520 49,502,386 51,119,909 54,158,105 4,233,197 3,640,671 2,863,750 6,712,871 7,039,283 9,643,555 24,423,144 22,478,013 20,275,368 23,232,757 26,491,151 27,744,037 303,223 315,351 327,491 325,116 347,315 318,401 67,150 78,807 134,404 146,250 114,261 160,090 8,601,559 8,749,741 7,283,587 7,173,227 9,047,127 8,406,992 17,276,815 7,402,621 16,428,109 9,741,991 4,913,540 11,977,630 128,154,396 117,550,224 125,988,007 129,872,594 133,108,958 146,324,896 300,105,758 284,316,263 313,569,218 298,720,003 283,209,323 293,916,895 (103,698,933)(165,102,573)(172,818,958)(205,629,547)(205,899,761)(191,758,534) 9,549,259 2,188,622 13,136,579 10,152,655 8,725,963 18,655,739 (94,149,674)(162,913,951)(159,682,379)(195,476,892)(197,173,798)(173,102,795) 66,614,853 71,382,809 74,342,784 77,680,416 79,774,412 83,543,561 72,442,177 70,366,255 70,786,792 65,348,910 72,322,068 94,622,228 988,423 1,177,810 1,176,713 1,212,122 1,308,842 1,524,996 152,400 150,529 149,089 169,836 201,875 185,685 23,829,193 25,497,714 25,381,927 24,827,775 25,140,642 25,237,610 948,629 487,532 2,295,536 283,544 1,295,749 2,708,894 1,683,631 2,173,532 1,613,591 1,707,873 1,754,210 1,474,919 36,039 (8,511,599)826,990 273,364 248,579 101,086 1,489,500 3,584,925 1,352,562 152,000 2,032,654 4,058,397 168,184,845 166,309,507 177,925,984 171,655,840 184,079,031 213,457,376 2,424,676 1,968,113 1,728,927 1,112,586 1,878,973 5,045,827 (4,439,038)390,791 17,545 15,670 20,370 25,453 (1,489,500)(3,584,925)(1,352,562)(152,000)(2,032,654)(4,058,397) (3,503,862)(1,226,021)393,910 976,256 (133,311)1,012,883 164,680,983 165,083,486 178,319,894 172,632,096 183,945,720 214,470,259 (936,660)---54,231,181 - 64,485,912 1,206,934 5,107,026 (33,973,707)(21,820,730)21,698,842 6,045,397 962,601 13,530,489 11,128,911 8,592,652 19,668,622 $70,531,309 $2,169,535 $18,637,515 $(22,844,796)$(13,228,078)$41,367,464 155 CITY OF BAKERSFIELD Fund Balances of Governmental Funds Last Ten Fiscal Years (1) 2010 2011 Fiscal Year 2012 2013 General Fund Nonspendable $-$13,000 $11,975 $3,372,390 Restricted ---- Committed 28,408,926 36,613,273 37,639,359 39,972,694 Assigned 6,902,114 6,891,881 7,281,790 7,694,831 Unassigned 10,637,121 9,131,275 10,476,517 10,865,979 Subtotal general fund 45,948,161 52,649,429 55,409,641 61,905,894 All Other Governmental Funds Nonspendable ---- Restricted 8,253,366 10,051,183 23,252,930 16,246,571 Committed 61,058,527 58,304,744 57,014,597 56,799,759 Assigned 26,469,632 18,649,279 11,091,749 15,840,236 Unassigned ---- Subtotal all other governmental funds 95,781,525 87,005,206 91,359,276 88,886,566 Total governmental fund balance $141,729,686 $139,654,635 $146,768,917 $150,792,460 Notes: (1) Includes all governmental funds as shown in the Fund Financial Statements. Source: City Finance Department 156 2014 2015 2016 Fiscal Year 2017 2018 2019 $3,181 $1,000 $1,000 $1,025 $1,025 $51,479 ------ 13,464,704 33,140,376 28,995,204 32,559,429 29,505,463 27,488,388 34,586,157 7,254,726 4,042,766 3,567,936 2,914,844 22,403,228 6,502,852 383,987 8,783,314 3,115,798 7,077,156 4,689,839 54,556,894 40,780,089 41,822,284 39,244,188 39,498,488 54,632,934 -944,356 44,508 7,675,326 1,212,183 942,965 21,015,837 22,112,200 21,988,624 20,626,443 20,759,775 18,975,747 62,344,103 80,565,806 64,661,547 67,725,705 68,066,549 83,018,904 58,935,265 51,017,356 51,026,114 37,747,940 46,316,269 28,958,138 ------ 142,295,205 154,639,718 137,720,793 133,775,414 136,354,776 131,895,754 $196,852,099 $195,419,807 $179,543,077 $173,019,602 $175,853,264 $186,528,688 157 CITY OF BAKERSFIELD Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years Fiscal Year 2010 2011 2012 2013 2014 Revenues: Taxes $128,716,315 $139,250,878 $150,761,990 $159,530,114 $163,369,374 Licenses and permits 2,192,594 1,757,045 2,321,093 2,757,307 3,644,027 Intergovernmental 90,926,017 87,577,120 83,597,649 85,698,254 112,509,497 Charges for services 24,488,013 23,982,350 34,518,514 26,237,278 28,308,972 Fines, forfeitures & assessments 13,601,153 14,359,150 4,034,565 20,697,866 25,732,782 Interest income (loss)2,193,269 804,910 865,071 (266,411)1,604,668 Contributions and donations ---1,543,041 251,775 Miscellaneous 5,830,575 4,662,521 7,346,225 8,383,499 4,710,359 Total Revenues 267,947,936 272,393,974 283,445,107 304,580,948 340,131,454 Expenditures: General government 11,070,305 9,944,217 10,383,512 11,186,274 11,888,465 Police 63,789,358 65,985,764 68,489,176 72,745,830 77,504,268 Fire 30,921,380 29,450,014 31,390,736 33,528,360 34,895,073 Public works 24,023,808 21,967,831 25,849,496 25,274,629 25,744,355 Recreation and parks 22,281,910 22,620,636 23,599,669 25,277,659 26,309,603 Development services 7,811,683 6,486,573 6,229,936 11,994,604 11,321,294 Economic/Community development(1)11,322,095 8,147,683 3,646,144 -- Non-departmental 17,103,372 12,517,816 20,283,121 13,338,729 10,726,379 Capital outlay 107,556,933 97,915,227 94,567,093 105,808,610 94,992,545 Debt service: Principal 203,000 444,000 366,000 378,000 443,124 Interest and fiscal charges 204,673 221,920 219,865 208,424 195,434 Total Expenditures 296,288,517 275,701,681 285,024,748 299,741,119 294,020,540 Excess (deficiency) of revenues over (under) expenditures (28,340,581)(3,307,707)(1,579,641)4,839,829 46,110,914 Other financing sources (uses): Notes/certificate proceeds 1,800,000 ---- Transfers in 8,813,765 9,580,944 11,587,495 18,164,310 16,069,190 Transfers out (813,765)(8,358,944)(12,704,555)(18,898,910)(16,334,090) Reserve transfer to agency funds -10,656 --- Extraordinary gain --4,664,568 -- Total other financing sources (uses)9,800,000 1,232,656 3,547,508 (734,600)(264,900) Net change in fund balances $(18,540,581)$(2,075,051)$1,967,867 $4,105,229 $45,846,014 Debt service as a percentage of non-capital expenditures -.1%-4.0%-1.0%-1.0%4.0% Notes: (1) Economic/Community Development became a part of Development Services. Source: City Finance Department 158 Fiscal Year 2015 2016 2017 2018 2019 $168,047,259 $171,344,057 $168,758,632 $178,228,594 $204,629,052 3,297,396 3,216,872 3,321,133 3,268,134 3,483,935 113,170,797 129,091,459 111,232,933 93,198,441 88,214,967 29,643,496 31,225,288 31,530,433 34,404,377 35,435,981 21,984,077 20,337,463 21,325,888 18,887,330 20,058,536 1,470,902 2,823,200 591,514 1,791,980 4,373,028 10,390 153,607 294,156 259,932 372,462 9,100,338 6,377,099 3,789,687 4,342,074 3,294,244 346,724,655 364,569,045 340,844,376 334,380,862 359,862,205 19,254,079 21,404,144 21,483,266 21,883,948 22,849,651 83,484,871 85,469,207 85,303,925 89,209,119 97,029,401 36,224,449 36,956,928 37,694,398 39,299,505 40,616,758 26,828,323 26,936,064 25,826,378 25,798,786 27,310,375 18,833,884 18,145,518 18,881,782 20,215,698 20,358,886 12,231,555 12,068,546 11,861,982 9,419,106 10,415,836 ----- 12,736,007 13,348,200 10,724,880 11,699,947 12,680,999 134,748,520 164,583,100 134,231,542 113,952,709 115,089,647 454,964 489,828 503,828 502,352 635,085 252,300 57,115 65,870 59,324 51,545 345,048,952 379,458,650 346,577,851 332,040,494 347,038,183 1,675,703 (14,889,605)(5,733,475)2,340,368 12,824,022 ----- 15,963,966 10,049,932 7,686,698 7,691,676 13,125,130 (17,860,400)(10,158,904)(7,686,698)(7,956,681)(13,264,112) ----- ----- (1,896,434)(108,972)-(265,005)(138,982) $(220,731)$(14,998,577)$(5,733,475)$2,075,363 $12,685,040 -13.0%1.0%-.6%0.2%0.2% 159 CITY OF BAKERSFIELD Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (1) Fiscal Year General Property Taxes Sales and Use Taxes Transient Occupancy Taxes Business License Taxes Utility Franchise Taxes In-Lieu and Other Taxes Total Taxes 2010 $57,185,433 (2)$50,664,333 $6,493,702 $3,173,514 $9,288,614 (3)$1,910,719 $128,716,315 2011 62,889,341 (2)55,281,897 6,851,869 3,415,351 10,083,705 (3)728,715 139,250,878 2012 60,717,717 (2)67,642,795 7,827,792 3,312,485 10,371,830 (3)889,373 150,761,992 2013 65,696,957 (2)70,418,028 8,274,240 3,372,972 10,733,798 (3)1,034,119 159,530,114 2014 66,614,853 (2)72,442,178 8,826,003 3,607,558 10,890,359 (3)988,423 163,369,374 2015 71,382,809 (2)70,366,255 9,487,984 3,730,720 11,901,681 (3)1,177,810 168,047,259 2016 74,342,784 (2)70,786,793 9,450,710 3,904,569 11,682,488 (3)1,176,713 171,344,057 2017 77,680,416 (2)65,348,909 9,577,898 3,875,410 11,063,877 (3)1,212,122 168,758,632 2018 79,774,412 (2)72,322,068 9,570,855 3,826,518 11,425,899 (3)1,308,842 178,228,594 2019 83,543,561 (2)94,622,228 9,943,109 4,043,883 10,951,275 (3)1,524,996 204,629,052 Notes: (1) Includes all governmental funds as shown in the Fund Financial Statements. (2) Includes Vehicle License Fee in Lieu revenue. (3) Includes additional taxes and Utility Surcharge revenues designated by ordinance for road purposes. Source: City Finance Department 160 CITY OF BAKERSFIELD Principal Property Taxpayers Current Year and Nine Years Ago 2010 2019 Taxpayer Taxable Assessed Value Rank Percentage of Total Taxable Assessed Value Taxable Assessed Value Rank Percentage of Total Taxable Assessed Value Nestle Dreyers Ice Cream Company (formerly Nestle Holdings, Inc in 2010)$199,822,301 1 0.91%$168,340,793 2 0.58% Chevron USA Inc.154,136,791 2 0.71%177,960,357 1 0.61% Valley Plaza Mall LP (formerly Bakersfield Mall LLC in 2010)148,547,602 3 0.68%135,620,245 4 0.47% California Water Service Company 88,885,268 4 0.41%133,505,804 3 0.46% DS Properties 18 (formerly Donahue Schriber Realty Group LLP in 2010)83,272,732 5 0.38%76,810,528 8 0.26% BLC Glenwood Gardens SNF LP 80,925,397 6 0.37%52,828,359 10 0.18% Bright House Networks LLC 21,041 7 0.00%--% Kaiser Foundation Health Plan Inc.59,043,962 8 0.27%73,396,962 7 0.25% State Farm Insurance Company 57,700,000 9 0.26%--% Meany Partners 55,008,772 10 0.25%--% Walmart Stores Inc/Sam's Club --%99,381,703 5 0.34% Castle & Cook CA Inc.--%101,332,585 6 0.35% --%--% Dignity Health --%64,963,685 9 0.22% Total taxable assessed value of ten (10) largest taxpayers 927,363,866 4.24%1,084,141,021 %3.72 Total taxable assessed value of other taxpayers 20,922,946,960 95.76%28,067,500,465 %96.28 Total taxable assessed value of all taxpayers $21,850,310,826 100.00%$29,151,641,486 %100.00 Note: Related parties grouped together on the original source document (County's list of assessed valuations) are included in the total assessed valuation amount for each taxpayer cited. Unitary and operating nonunitary are excluded as valuation by parcel is no longer available. Secured values only reported. Source: HDL Coren & Cone, Kern County Assessor 2018-19 Combined Tax Rolls 161 CITY OF BAKERSFIELD Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Amounts expressed in thousands Fiscal Year Secured Less: Ended June 30 Residential Property Commercial Property Other Unsecured Tax Exempt Real Property 2010 $15,577,372 $4,030,198 $3,311,171 $878,216 $1,080,957 2011 14,950,744 4,053,184 3,134,829 834,158 1,063,302 2012 14,521,636 3,832,880 3,245,619 850,899 1,104,081 2013 14,698,137 3,904,832 3,268,227 912,300 1,097,928 2014 15,592,995 4,010,392 3,575,805 791,531 1,186,061 2015 17,297,625 4,111,192 3,607,361 819,306 1,230,972 2016 18,495,838 4,238,653 3,749,127 835,424 1,321,877 2017 19,571,365 4,497,923 3,971,042 801,607 1,414,164 2018 20,569,686 4,650,981 4,085,221 767,598 1,451,354 2019 21,611,991 4,826,400 4,206,028 769,171 1,492,778 (1) In 1978 the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. Source: HDL Coren & Cone, Kern County Assessor 2018-19 Combined Tax Rolls. 162 Total Taxable Total Estimated Actual Assessed Value Direct Rate Taxable Value (1) $22,716,000 0.1981 Unavailable 21,909,613 0.1969 Unavailable 21,346,953 0.1956 Unavailable 21,685,568 0.1924 Unavailable 22,784,662 0.1619 Unavailable 24,604,512 0.1623 Unavailable 25,997,165 0.1616 Unavailable 27,427,773 0.1613 Unavailable 28,622,132 0.1609 Unavailable 29,920,812 0.1607 Unavailable 163 CITY OF BAKERSFIELD Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years 2010 2011 2012 2013 Basic County-Wide Levy (1)1.0000 1.0000 1.0000 1.0000 Overlapping Debt Bakersfield School 0.0676 0.0663 0.0710 0.0681 Bakersfield School 2006E ---- Beardsley School 0.0548 0.0574 0.0599 0.0499 Edison School Bond -0.0720 0.0664 0.0694 Fairfax School 0.0330 0.0401 0.0688 0.0686 Fruitvale School Bonds 0.0610 0.0695 0.0759 0.0614 Greenfield School 0.0835 0.0783 0.0804 0.0826 Kern Community College District 0.0094 0.0101 0.0091 0.0085 Kern County Water Agency 0.0601 0.0553 0.0748 0.0540 Kern High School District 0.0431 0.0447 0.0363 0.0437 Lakeside School 0.0216 0.0188 0.0224 0.0227 Lamont School 0.0652 0.0694 0.0693 0.0615 Norris School 0.0330 0.0298 0.0327 0.0580 Panama Buena Vista School 0.0099 0.0116 0.0115 - Rio Bravo-Greeley 0.0690 0.0741 0.0737 0.0535 Rosedale 0.0046 --- Standard Bond ---- Standard Bond 2006A 0.0258 0.0206 0.0191 0.0185 Vineland School 07-A 0.0424 0.0414 0.0423 0.0437 Total Direct & Overlapping Tax Rates (2)1.6840 1.7594 1.8136 1.7641 City Share of 1% Levy (3)0.1846 0.1852 0.1851 0.1851 Total Direct Rate (4)0.1981 0.1969 0.1956 0.1924 (1) In 1978 the voters of the State of California passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. (2) Overlapping rates are those of local and county governments that apply to property owners within the City. Not all overlapping rates apply to all City property owners. (3) City's share of 1.00% Levy is based on the City's share of the general fund tax rate area with the largest net taxable value within the City. Educational Revenue Augmentation Fund (ERAF) general fund tax shifts are not included in tax ratio figures. The effective City rate after ERAF is 9.9%. (4) Total Direct Rate is the weighted average of all individual direct rates applied by the City of Bakersfield. Source: HDL Coren & Cone (Kern County Auditor-Controller's Office) 164 2014 2015 2016 2017 2018 2019 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 0.0360 0.0186 0.0339 0.0204 0.0522 0.0440 -----0.0009 0.0486 0.0406 0.0480 0.0723 0.0638 0.0671 0.0687 0.0678 0.0716 0.0706 0.0755 0.0738 0.0607 0.0692 0.0712 0.0631 0.1075 0.1009 0.0678 0.0595 0.0591 0.0516 0.0534 0.0731 0.0843 0.0544 0.0445 0.0438 0.0419 0.0398 0.0126 0.0105 0.0136 0.0132 0.0363 0.0337 0.0569 0.0525 0.0537 0.0585 0.0785 0.0707 0.0392 0.0361 0.0324 0.0260 0.0533 0.0512 0.0283 0.0254 0.0267 0.0236 0.0264 0.0242 0.0681 0.0630 0.0657 0.0681 0.0682 0.0639 0.0500 0.0489 0.0498 0.0565 0.0579 0.0373 0.0194 0.0294 0.0330 0.0243 0.0224 0.0288 0.0769 0.0649 0.0581 0.0629 0.0687 0.0517 ------ -0.0208 0.0219 0.0403 0.0770 0.0602 0.0152 0.0110 0.0140 --- 0.0418 0.0431 0.0456 0.0441 0.0453 0.0238 1.7745 1.7157 1.7428 1.7393 1.9283 1.8451 0.1839 0.1839 0.1839 0.1839 0.0184 0.1839 0.1619 0.1623 0.1616 0.1613 0.1609 0.1607 165 CITY OF BAKERSFIELD Property Tax Levies and Collections Last Ten Fiscal Years (1) Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal Year Ended June 30 Tax Levied for the Fiscal Year Amount Percentage of Levy Collections in Subsequent Years (2)Amount Percentage of Levy (3) 2010 $37,878,353 $36,683,727 96.85%$2,308,846 $38,992,573 102.94% 2011 38,752,737 38,136,143 98.41%437,340 38,573,483 99.54% 2012 37,333,785 36,574,775 97.97%417,383 36,992,158 99.08% 2013 38,448,465 37,544,318 97.65%159,495 37,703,813 98.06% 2014 39,887,750 39,344,783 98.64%375,679 39,720,462 99.58% 2015 42,153,405 41,301,939 97.98%166,794 41,468,733 98.38% 2016 44,309,063 43,455,549 98.07%254,923 43,710,472 98.65% 2017 47,433,693 46,803,045 98.67%4,914 46,807,959 98.68% 2018 47,385,467 46,768,741 98.70%345,147 47,113,888 99.43% 2019 49,577,578 48,864,996 98.56%696,193 49,561,189 99.97% Notes: (1) Excludes Redevelopment property tax increment. (2) Delinquent tax collections do not include interest or penalties. (3) Total collections to date may exceed 100% of annual levy. Delinquent tax collections are recorded in the current levy year as the County of Kern does not give detail as to the levy year for delinquent tax collections. This was confirmed with the County of Kern in 2014. Source: City Finance Department 166 CITY OF BAKERSFIELD Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years Year State of California Total Rate 2010 %7.25 %7.25 2011 %7.25 %7.25 2012 %7.25 %7.25 2013 %7.25 %7.25 2014 %7.25 %7.25 2015 %7.25 %7.25 2016 %7.25 %7.25 2017 %7.25 %7.25 2018 %7.25 %7.25 2019 %8.25 %8.25 Note: The City's sales tax rate may be changed with voter approval. Source: California State Board of Equalization 167 CITY OF BAKERSFIELD Taxable Sales By Market Groups Last Ten Fiscal Years 2009 2010 2011 2012 2013 Retail Trade $28,561,098 $32,280,545 $37,036,696 $38,989,918 $40,678,592 Accommodation and Food Services 4,337,209 4,984,589 5,499,894 5,804,784 5,944,612 Wholesale Trade 5,341,844 4,988,725 6,535,884 8,123,793 7,778,377 Manufacturing 1,258,875 920,291 1,446,129 1,497,904 1,538,166 Undefined 2,405,765 319,221 370,144 448,437 548,715 Other Services (except Public Administration)637,143 663,589 711,347 724,436 746,553 Real Estate and Rental and Leasing 651,871 642,417 763,850 906,225 901,585 Information 260,506 440,904 428,770 443,637 506,719 Professional, Scientific, and Technical Services 299,787 312,434 419,806 428,747 484,389 Construction 198,574 180,195 291,102 261,800 241,316 Health Care and Social Assistance 80,998 94,099 104,289 88,963 120,418 Administrative and Support and Waste Management and Remediation Services 124,704 115,922 118,599 129,550 127,768 Arts, Entertainment, and Recreation 104,259 127,399 134,174 102,882 103,518 Mining, Quarrying, and Oil and Gas Extraction 386,543 484,213 956,607 1,227,581 1,160,785 Educational Services 45,458 58,300 55,532 52,478 57,507 Transportation and Warehousing 50,606 167,351 80,427 94,195 40,089 Public Administration 17,991 38,125 44,045 35,201 33,896 Agriculture, Forestry, Fishing and Hunting 14,970 13,890 14,719 11,198 15,379 Utilities 10,408 24,063 406 6,363 8,519 Total $44,788,609 $46,856,272 $55,012,420 $59,378,092 $61,036,903 Note: 2018 data is the most recent information available. Source: Avenu Insights 168 2014 2015 2016 2017 2018 $41,517,816 $41,036,537 $39,730,476 $43,169,538 $43,237,982 6,485,452 6,805,196 6,751,056 7,702,022 7,868,895 7,987,257 6,656,416 5,445,964 5,448,683 6,333,252 1,717,717 1,604,038 1,114,789 1,220,390 1,297,343 667,295 878,316 730,457 847,955 1,054,876 785,792 829,575 802,029 802,409 873,959 767,983 751,340 707,369 642,059 677,931 677,816 682,841 523,662 565,029 561,137 442,687 299,955 316,647 292,180 365,128 498,131 397,481 308,395 226,378 303,891 127,409 135,153 136,670 171,343 217,919 172,602 170,424 163,450 147,372 155,301 115,211 128,096 122,749 138,952 148,228 721,500 91,267 78,440 43,226 88,084 49,338 43,200 47,044 65,779 69,605 38,324 57,485 39,737 53,067 31,993 31,355 34,916 32,759 20,457 30,712 14,801 13,645 10,121 13,020 15,866 12,364 24,210 15,282 7,500 6,614 $62,830,850 $60,640,091 $57,077,096 $61,577,359 $63,338,716 169 CITY OF BAKERSFIELD Sales Tax Revenue Payers By Industry 2018 and Ten Years Ago 2008 Number of Filers Percent of Total Tax Liability Paid Percent of Total $ Retail Trade 1805 %38.88 33,512,574 %62.18 Accommodation and Food Services 696 %14.98 4,823,595 %8.95 Wholesale Trade 284 %6.12 6,525,663 %12.11 Manufacturing 138 %2.98 1,524,028 %2.83 Other Services (except Public Administration)308 %6.64 717,690 %1.33 Real Estate and Rental and Leasing 146 %3.14 787,603 %1.46 Information 0 %--%- Construction 75 %1.61 254,826 %0.47 Professional, Scientific, and Technical Services 137 %2.96 356,871 %0.66 Arts, Entertainment, and Recreation 38 %0.82 110,298 %0.20 Health Care and Social Assistance 46 %1.00 89,138 %0.17 Administrative and Support and Waste Management and Remediation Services 93 %2.00 151,719 %0.28 Educational Services 21 %0.45 50,711 %0.09 All Other 855 %18.42 4,991,413 %9.27 Total 4,642 %100.00 53,896,129 %100.00 Note: Due to confidentially issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the souces of the City's revenue. The amounts shown are gross collections prior to refunds and collections of amounts due from prior year. Source: Avenu Insights 170 2018 Number of Filers Percent of Total Tax Liability Paid Percent of Total $ 4511 %48.99 $43,237,982 %68.26 1641 %17.82 7,868,895 %12.42 763 %8.29 6,333,252 %10.00 439 %4.77 1,297,343 %2.05 333 %3.62 873,959 %1.38 323 %3.51 677,931 %1.07 191 %2.07 561,137 %0.89 165 %1.79 303,891 %0.48 151 %1.64 365,128 %0.58 124 %1.35 148,228 %0.23 118 %1.28 217,919 %0.34 104 %1.13 155,301 %0.25 63 %0.69 69,605 %0.11 283 %3.05 1,228,145 %1.94 9,209 %100.00 $63,338,716 %100.00 171 CITY OF BAKERSFIELD Ratio of General Bonded Debt Outstanding Last Ten Fiscal Years Fiscal Year General Obligations Bonds Net Bonded Debt Total Ratio of Net Bonded Debt to Assessed Value Population (1) Total Debt Per Capita 2010 $-$-$-%-333,847 $- 2011 ----338,952 0.00 2012 ----354,480 0.00 2013 ----359,221 0.00 2014 ----367,315 0.00 2015 ----365,504 0.00 2016 ----379,110 0.00 2017 ----383,512 0.00 2018 ----386,839 0.00 2019 ----389,211 0.00 Notes: Includes all long-term general obligation bonded debt. (1) State Department of Finance Source: City Finance Department 172 173 CITY OF BAKERSFIELD Ratio of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Type Activities Revenue Bonds Notes Certificates of Participation Total Governmental Activities (3)Revenue Bonds Bonds 2010 $-$5,611,000 $28,465,000 $34,076,000 $241,270,507 $- 2011 -5,167,000 26,620,000 31,787,000 238,994,444 - 2012 -4,801,000 24,710,000 29,511,000 217,003,381 - 2013 -4,423,000 22,725,000 27,148,000 201,875,000 - 2014 -4,150,049 20,640,000 24,790,049 200,236,254 - 2015 -3,932,118 18,460,000 22,392,118 190,545,190 - 2016 -3,442,290 16,175,000 19,617,290 187,377,613 - 2017 -2,938,462 13,785,000 16,723,462 174,647,913 - 2018 -2,584,240 11,275,000 13,859,240 166,998,212 - 2019 -6,111,476 8,635,000 14,746,476 160,129,574 - Notes: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. (1) U.S. Department of Commerce Bureau of Economic Analysis. As available, figures and estimates should be used for general purposes only. Estimates are revised periodically to include data that may not have been available at the time. Personal income was used for the base of this calculation. Details can be found in the Demographic and Economic Statistics. (2) State Department of Finance. Estimates are revised periodically to include data that may not have been available at the time. Population was used for the base of this calculation. Details can be found in the Demographic and Economic Statistics. (3) Total Governmental Activities and Total Primary Government totals do not include Compensated Absences. (4) As restated. Source: City Finance Department 174 Business-Type Activities Deferred Bond Premium Notes Contracts/ Loans Capital Leases (4) Total Business-Type Activities Total Primary Government Percentage of Personal Income (1) (4) Per Capita (2) (4) $7,945,507 $8,991,701 $-$-$258,207,715 $292,283,715 %1.06 $778 7,614,444 7,521,262 -22,138,054 276,268,204 308,055,204 %4.02 801 7,283,381 6,769,136 -21,664,941 252,720,839 282,231,839 %3.69 796 6,621,255 6,017,009 -21,174,195 235,687,459 262,835,459 %3.34 732 -5,264,884 -20,664,937 226,166,075 250,956,124 %3.11 683 -4,512,759 246,131 20,135,757 215,439,837 237,831,955 %2.89 651 -3,760,631 292,503 19,091,567 210,522,314 230,139,604 %2.70 607 -3,008,504 319,400 18,730,478 196,706,295 213,429,757 %2.45 557 -2,256,378 368,746 18,315,293 187,938,629 201,797,869 %2.25 522 -1,504,252 314,215 17,671,298 179,619,339 194,365,815 %2.08 499 175 CITY OF BAKERSFIELD Direct and Overlapping Debt (1) As of June 30, 2019 2018 - 19 Assessed Valuation $29,912,084,134 Adjusted Assessed Valuation $29,912,084,134 Debt Outstanding (2) Estimated Percentage Applicable (3) Estimated Share of Overlapping Debt Overlapping Tax and Assessment Debt Kern Community College District Safety Repair and Improvement District $120,511,081 33.818%$40,754,437 Kern Community College District School Facilities Improvement District No. 1 94,605,000 33.613 31,799,579 Kern High School District 298,151,209 53.005 158,035,048 Bakersfield City School District 90,531,619 72.656 65,776,653 Beardsley School District 22,734,188 20.704 4,706,886 Edison School District 4,419,942 0.065 2,873 Fairfax School District 9,131,481 24.666 2,252,371 Fruitvale School District 24,208,877 76.617 18,548,115 Greenfield Union School District 10,563,406 85.816 9,065,092 Lakeside Union School District 12,448,047 40.624 5,056,895 Lamont School District 1,649,137 0.019 313 Norris School District 26,385,633 60.901 16,069,114 Panama-Buena Vista Union School District 84,925,000 97.074 82,440,095 Rio Bravo-Greeley Union School District 9,628,786 2.926 281,738 Standard School District 36,650,000 0.933 341,945 Vineland School District 3,809,069 0.0004 15 Kern Delta Water District 200,000 80.727 161,454 California Statewide Community Development Authority-Community Facilities District No. 2015-02 10,755,000 100.000 10,755,000 Greenfield Union School District CFD No. 1 & No. 3 5,750,837 100.000 5,750,837 RNR School Financing Authority 104,155,000 83.994 87,483,951 Overlapping Tax and Assessment Debt $971,213,312 $539,282,411 Overlapping General Fund Debt Kern County Certificates of Participation $91,981,119 32.650 $30,031,835 Kern County Pension Obligations 206,792,369 32.650 67,517,708 Certificates of Participation: Kern County Board of Education 36,115,000 32.650 11,791,548 Kern County Community College District 28,825,000 30.367 8,753,288 Kern County Community College District Benefit 77,810,000 30.367 23,628,563 Kern High School District 83,260,000 53.005 44,131,963 Panama-Buena Vista Union School District 53,655,000 97.074 52,085,055 Fairfax School District General Fund Obligations 2,153,119 24.666 531,088 Rio Bravo-Greeley Union School District General Fund Obligations 375,000 2.926 10,973 Rosedale Union School District General Fund Obligations 9,905,000 55.792 5,526,198 Overlapping Tax Increment Debt (Successor Agency)2,390,000 100.000 2,390,000 Overlapping General Fund Debt $593,261,607 $246,398,219 Total Overlapping Debt $1,564,474,919 $785,680,630 Direct Debt City of Bakersfield City of Bakersfield General Fund Obligations $8,635,000 Long-term notes payable $6,111,476 Total Direct and Overlapping Debt $800,427,106 Notes: (1) Excluded from this schedule are: (a) all bonds which are not general obligation bonds of the City and (b) general obligation bonds issued for water utility purposes which are payable from Water Fund revenues. (2) Direct debt is reported net of debt service monies available. Overlapping debt is reported at gross values. (3) Percentage of overlapping agency's assessed valuation located within boundaries of the City. Source: California Municipal Statistics, Inc. and City Finance Department 176 CITY OF BAKERSFIELD Computation of Legal Debt Margin June 30, 2019 Legislation does not mandate a debt limit for the City of Bakersfield. 177 CITY OF BAKERSFIELD Pledged - Revenue Coverage Last Ten Fiscal Years Wastewater Revenue Bonds Fiscal Sewer Charges and Other Less: Operating Net Available Debt Service (3) Year Revenue (1)Expenses (2)Revenue Principal Interest Coverage (4) 2009-2010 $38,115,751 $11,928,571 $26,187,180 $1,100,000 $9,597,489 2.45 2010-2011 36,073,819 14,144,051 21,929,768 1,945,000 9,597,489 1.90 2011-2012(5)36,769,858 12,913,038 23,856,820 2,930,000 (6)9,597,489 1.90 2012-2013 37,901,401 13,156,437 24,744,964 2,845,000 (7)9,451,151 2.01 2013-2014 39,610,854 14,265,421 25,345,433 3,260,000 (7)9,959,591 1.92 2014- 2015 40,386,623 14,195,887 26,190,736 4,360,000 (7)8,744,990 2.00 2015-2016(8)39,111,557 14,765,141 24,346,416 5,475,000 (7)3,694,732 2.66 2016-2017 39,078,787 14,796,170 24,282,617 6,055,000 (7)6,557,105 1.93 2017-2018(9)42,356,491 17,519,378 24,837,113 5,975,000 6,270,503 2.03 2018-2019 43,043,488 17,062,586 25,980,902 5,525,000 6,344,225 2.19 Notes: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include interest or depreciation expenses. (1) Includes amounts for connection fees, interest funded in bond issue and principal portion of lease revenues. (2) Does not include the General Obligation Bonds reported in Enterprise Funds. Operating expenses exclude depreciation expense. (3) Issued Sewer Revenue Bonds, Series 2007A and 2007B in August of 2007. (4) Minimum coverage requirement on the Wastewater Revenue bonds is 1.25. (5) Previous report included arbitrage expenses. Revenue has been corrected. (6) In addition to the normal debt service amount referenced above, there was a partial bond call of $18,730,000 approved by the City Council to reduce the principal balance of the 2007B bond down to $25 million. Sewer revenue bonds 2007B were refunded in January 2012 (Series 2012A) to change the liquidity provider from Dexia to JP Morgan Chase. (7) In addition to the normal debt service referenced above, City Council approved partial bond calls of $5 million each year to reduce the principal balance of Sewer Revenue Bonds Series 2012A. (8) Partial refunding of Sewer Revenue Bonds Series 2007A in July 2015 (Series 2015A). (9) Corrected Operating Expenses Amount entered previously entered incorrectly. Source: City Finance Department 178 CITY OF BAKERSFIELD Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year Population (1) Personal Income (2) (millions) Per Capita Personal Income (2) Median Age (3) Education Level as a % of Population having Formal Schooling (3) (4) Elementary School Enrollment Estimated Unemployment Rate (%) (5) 2009-2010 333,847 $7,034 $21,071 30.8 78.1 27,267 15.80% 2010-2011 338,952 7,007 20,675 29.5 77.8 27,590 15.30% 2011-2012 354,480 7,640 21,553 29.5 78.1 21,411 10.50% 2012-2013 359,221 7,862 21,887 29.8 77.8 23,422 8.40% 2013-2014 367,315 8,074 21,980 30.0 78.2 24,012 7.90% 2014-2015 365,504 8,228 22,512 30.1 78.5 24,232 9.30% 2015-2016 279,110 8,532 22,505 30.2 79.7 24,267 9.10% 2016-2017 383,512 8,713 22,718 30.4 79.6 24,299 9.20% 2017-2018(6)386,839 8,965 23,175 30.4 79.6 26,513 7.80% 2018-2019 389,211 9,333 23,980 30.5 80.0 26,491 5.50% Notes: (1) State Department of Finance. Estimates are revised periodically to include data that may not have been available at the time. (2) U.S. Department of Commerce Bureau of Economic Analysis. As available, figures and estimates should be used for general purposes only. Estimates are revised periodically to include data that may not have been available at the time. Information is for Bakersfield Metropolitan area. Effective 2008-2009 information now includes Delano area. (3) U.S. Census Bureau estimates as available for Bakersfield Metropolitan area. (4) This column shows the percent of the City population 25 years and older who are high school graduates or higher. (5) State of California Employment Development Department (Data shown is for Kern County). (6) Elementary School Enrollment numbers for 2017-18 restated due to new data collection techniques by the Department of Education. 179 CITY OF BAKERSFIELD Principal Employers (1) Current Year and Nine Years Ago 2010 2019 Employer Employees Rank Percent of Total City Employment Employees Rank Percent of Total City Employment County of Kern (1)N/A 7,539 1 %4.56 Kern High School District (1)4,342 2 %2.62 Bakersfield City School District 4,039 3 %2.44 Dignity Health 3,489 4 %2.11 Panama-Buena Vista Union School District 2,489 5 %1.50 Bolthouse Farms 2,110 6 %1.27 Adventist Health Bakersfield 1,973 7 %1.19 Kern Medical Center 1,800 8 %1.09 Kern County Superintendent of Schools 1,540 9 %0.93 City of Bakersfield 1,454 10 %0.88 Others 134,725 %81.41 Total N/A -165,500 %100.00 (1) Not all employees are employed within the Bakersfield City Limits. Source: City Finance Department. Total number of employed persons in Bakersfield provided by EDD Labor Force Data. Note: Only current data is available. 180 181 CITY OF BAKERSFIELD Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years 2010 2011 2012 2013 2014 2015 Function Governmental activities: General government 98 106 109 110 119 126 Public safety Police Officers 358 380 385 389 394 404 Civilians 127 123 131 137 143 148 Fire Firefighters and officers 179 176 177 177 177 177 Civilians 19 19 19 21 22 22 Public works 244 244 247 250 254 248 Community services 147 151 153 153 150 150 Community development ---65 63 65 Development services 69 57 55 --- Economic/Community dev.20 12 11 --- Business-type activities: Wastewater treatment 55 54 56 57 59 59 Refuse collection 102 102 103 106 107 107 River & Agricultural Water (1)28 28 28 28 28 28 General aviation ------ Offstreet parking ------ Total 1,446 1,452 1,474 1,493 1,516 1,534 (1) Departmental name change in FY2018-19 from Domestic & Agricultural Water to River & Agricultural Water. Source: City Finance Department 182 2016 2017 2018 2019 123 123 124 143 404 407 407 450 148 148 151 176 177 177 177 184 22 22 23 23 244 243 247 261 146 146 148 163 63 63 63 - ---79 ---- 59 59 61 62 107 108 109 111 28 29 29 30 ---- ---- 1,521 1,525 1,539 1,682 183 CITY OF BAKERSFIELD Property Value, Construction and Bank Deposits (1) Last Ten Calendar Years Commercial Construction Residential Construction Other Construction No. of Units Value No. of Units Value Value 2009 83 $62,088 1,097 $232,275 $86,668 2010 40 13,425 848 197,380 98,057 2011 40 41,482 422 92,313 81,984 2012 49 20,807 1,122 259,851 108,877 2013 69 15,710 1,336 312,569 157,024 2014 89 56,320 1,435 389,715 203,722 2015 70 49,806 1,391 384,819 377,510 2016 115 63,714 1,387 370,956 338,559 2017 59 61,034 1,132 332,652 312,316 2018 93 83,187 1,089 321,454 278,079 Notes: (1) Property value and bank deposits reported in thousands. (2) Federal Deposit Insurance Corporation (3) Construction units and values are based on a 12 month calendar year. June 30, 2019 data reflects the 2018 calendar year. Source: City Finance Department 184 Total Construction No. of Units Value Bank Deposits (2) 1,180 $381,031 $4,728,745 888 308,862 5,172,880 462 215,779 5,280,515 1,171 389,535 5,626,755 1,405 485,303 6,069,764 1,524 649,757 6,421,302 1,461 812,135 3,759,961 1,502 773,229 7,141,426 1,191 706,002 7,515,635 1,182 682,720 7,702,403 185 CITY OF BAKERSFIELD Operating Indicators by Function Last Ten Fiscal Years Fiscal Year 2010 2011 2012 2013 Function Public safety - Police Physical arrests 17,023 22,028 29,623 32,158 Parking violations 5,522 5,433 4,708 6,620 Traffic violations 12,018 10,043 9,172 11,528 Public safety - Fire Number of calls answered 26,885 27,392 28,870 31,164 Inspections 2,896 3,355 3,276 3,660 Public works Street resurfacing (lane miles)49 83 129 127 Refuse collection Refuse collected (tons/day)112,000 111,500 108,200 111,420 Recyclables collected (tons/day)42,000 47,000 48,215 53,350 Recreation & parks Athletic field permits issued 6,219 5,685 10,156 9,297 Community center, aquatics/sports admissions 379,286 440,101 473,530 475,619 River & Agricultural water (1) New connections 954 493 301 701 Water main breaks 5 7 10 14 Average daily consumption 39,370 27,008 27,568 36,730 (thousands of gallons) Wastewater treatment Average daily sewage treatment 31.49 MGD 32.30 MGD 31.28 MGD 32.13 MGD (millions of gallons) (1) Departmental name change in FY2018-19 from Domestic & Agricultural Water to River & Agricultural Water. Source: City Finance Department 186 Fiscal Year 2014 2015 2016 2017 2018 2019 37,246 24,254 19,965 13,008 9,502 9,895 10,499 6,183 4,083 3,843 2,238 10,438 15,065 24,154 26,934 24,190 16,548 24,739 32,898 35,117 35,747 38,823 40,945 42,027 4,195 4,978 5,684 6,859 5,649 8,712 116 119 79 70 75 115 110,125 102,500 102,800 103,100 102,200 175,081 55,500 78,500 79,100 79,500 82,700 87,680 9,625 9,046 8,054 7,788 8,224 7,046 502,994 527,617 553,831 518,432 534,959 542,580 1,123 1,033 945 968 500 755 4 5 4 4 3 2 39,712 34,973 29,812 33,378 36,128 35,588 30.0 MGD 29.9 MGD 28.7 MGD 29.0 MGD 29.6 MGD 28.9 MGD 187 CITY OF BAKERSFIELD Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2010 2011 2012 2013 Function Land (1) Area 144.40 149.75 149.80 150.01 Public safety Police stations/substations 4 4 4 4 Fire stations 14 14 14 14 Refuse collection Collection trucks 57 57 53 55 Public works Streets (miles) (2)1,379 1,394 1,409 1,424 Streetlights 15,923 16,092 16,160 16,602 Traffic signals 359 394 394 402 Recreation & parks Parks acreage 494 595 595 595 Parks 55 59 59 59 Swimming pools 4 4 4 4 Tennis courts 11 11 12 12 Community centers 3 3 3 3 River & Agricultural Water (3) Water mains (miles) (2)493 501 502 503 Fire hydrants (2)10,220 10,301 10,441 10,581 Wastewater treatment Sanitary sewers (miles)1,059 1,061 1,061 1,061 Storm sewers (miles)262 263 263 263 Maximum daily treatment capacity 57 MGD 57 MGD 57 MGD 57 MGD (millions of gallons) Notes: (1) Reported in square miles. (2) Corrected numbers for all years up to and including FY2011-12 with more accurate information provided. (3) Departmental name change in FY2018-19 from Domestic & Agricultural water to River & Agricultural water. Source: City Finance Department 188 Fiscal Year 2014 2015 2016 2017 2018 2019 150.18 150.18 150.97 151.10 151.10 151.14 3 3 3 3 3 3 14 14 14 14 14 14 57 57 57 57 57 67 1,441 1,441 1,553 1,596 1,505 1,506 16,388 16,486 16,781 17,042 18,632 18,635 410 419 420 426 428 431 623 769 769 776 810 810 59 59 59 59 59 59 4 4 4 4 4 4 12 12 12 12 12 12 3 3 3 3 3 3 505 515 525 535 589 592 10,723 10,853 11,117 11,130 11,396 11,467 1,063 1,072 1,076 1,077 1,077 1,086 265 268 269 270 270 274 57 MGD 57 MGD 57 MGD 57 MGD 57 MGD 57 MGD 189 CITY OF BAKERSFIELD Schedule of Insurance in Force June 30, 2019 Excess Workers' Compensation Statutory Limit with a $500,000 self-insured retention. Excess Liability $75,000,000 Limit with a $1,000,000 self-insured retention. Combination Crime $5,000,000 Coverage limit, $25,000 deductible. Airport Operations $10,000,000 Coverage limit. Aircraft $10,000,000 Coverage limit. Cyber Liability $25,000,000 Aggregate limit $50,000 self-insured retention Fiduciary Liability $5,000,000 Physical Loss: All Risk Property and Boiler $600,000,000 Coverage on buildings and contents subject to $5,000 deductible with various sublimits. Machinery Auto-Physical Damage Coverage for vehicles/equipment values up to $250,000 subject to a $10,000 deductible and vehicles/equipment values about $250,000 subject to a $100,000 deductible Life and Medical: Life and Accident $2,000 Supervisory & Management employees. Each employee (basic coverage) and additional insurance equal to annual salary to nearest $1,000. $12,000 Safety employees, each employee (basic coverage). $30,000 Miscellaneous employees, each employee (basic coverage). Medical and Dental Basic coverage plus (no lifetime maximum) extended benefits of 90% after $750 deductible for medical (Blue Shield) or Group dental ($50 deductible for United Concordia). Source: Liability and Physical Loss coverage is provided by the City's Risk Management. Department. Life and Medical coverage is provided by the City's Human Resource Department. 190 Insurance Company Policy Number Expiration Date Annual Premium CSAC-EIA WC1920 07/01/2020 $893,312 ACCEL 07/01/2020 1,134,619 National Union Fire 016060820 07/01/2020 15,176 Pik West AAPN14413352001 07/01/2020 3,175 Pik West NAC6024885 07/01/2020 12,755 Hudson SFD31211205 10/01/2019 11,583 CSAC PROPERTY1920 03/31/2020 398,910 CSAC PH1933951 07/01/2020 3,308 Voya Financial 0067794-4 12/31/2019 $3.00 per thousand dollar of salary, management & supervisory $2,000 plus annual salary maximum benefit $100,000. Voya Financial 0067794-9 12/31/2019 Safety-$27.30 each permanent employee for $12,000 coverage. Voya Financial 0067794-9 12/31/2019 Blue/White Collar Units: $68.38 each permanent employee for $30,000 coverage. Blue Shield PPO Health W0054380 12/31/2019 Bi-weekly rate range from $117.43 Blue Shield HMO Health W0054380 to $643.46 per employee for medical Blue Shield Trio Health W0054380 based upon individual's plan coverage Kaiser Permanente HMO 132733-1003 and plan combination and $7.66 to Kaiser Permanente DHMO 132733-0010 $45.52 for dental. $1.27 to $4.67 United Concordia DPPO Dental 920318-000 12/31/2019 $1.59 to $5.84 per employee for United Concordia DHMO Dental 920318-001 vision coverage. Medical Eye Service HMO Vision 16269 12/31/2019 Medical Eye Service PPO Vision 16270 191 192 HU D Ca t e g o r y Ap p l i c a n t W a r d P r o p o s a l To t a l Re q u e s t FY 19 ‐20 Re q u e s t HU D El i g i b l e St a f f Ra t i n g No t e s Recommended Fa c i l i t y Im p r o v e m e n t s C o u n t y of Ke r n Wa r d 1 Be l l e Te r r a c e Pa r k Pl a y g r o u n d Eq u i p . $3 5 0 , 0 0 0 $ 0 Y e s 2 5 / 3 0 S t a f f re c o m m e n d e d . $350,000 Fa c i l i t y Im p r o v e m e n t s Ba k e r s f i e l d Se n i o r Ce n t e r Wa r d 1 Co n s t r u c t i o n an d De m o l o t i o n fo r Ne w Fa c i l i t y $3 , 5 0 0 , 0 0 0 $ 0 Y e s 2 3 / 3 0 No t re c o m m e n d e d at th i s ti m e . $0 Pu b l i c Se r v i c e s Ba k e r s f i e l d Se n i o r Ce n t e r Wa r d 1 P u b l i c Se r v i c e s $9 0 , 0 0 0 $ 9 0 , 0 0 0 Y e s 3 0 / 3 0 $90,000 Fa c i l i t y Im p r o v e m e n t s Ba k e r s f i e l d Se n i o r Ce n t e r Wa r d 1 Re h a b of Pa r k i n g Lo t $ 4 3 , 0 0 0 $ 0 Y e s 2 8 / 3 0 No t re c o m m e n d e d at th i s ti m e $0 Fa c i l i t y Im p r o v e m e n t s C A P K Co u n t y ‐ wi d e CA P K Fo o d Ba n k Ex p a n s i o n $4 5 8 , 2 9 5 $ 0 Y e s 2 6 / 3 0 No t re c o m m e n d e d at th i s ti m e $0 Pu b l i c Se r v i c e s Fl o o d Mi n i s t r i e s C i t y w i d e Ci t y Ra p i d Re s p o n s e Te a m Su p p o r t ‐ Ou t r e a c h $2 6 4 , 5 0 8 $ 2 6 4 , 5 0 8 Y e s 2 6 / 3 0 S t a f f re c o m m e n d e d . $264,479 Pu b l i c Se r v i c e s Gr e a t e r Ba k e r s f i e l d Le g a l As s i s t a n c e Ci t y w i d e F a i r Ho u s i n g Se r v i c e s $1 0 0 , 0 0 0 $ 1 0 0 , 0 0 0 Y e s 3 0 / 3 0 S t a f f re c o m m e n d e d . $100,000 Pu b l i c Se r v i c e s Th e Mi s s i o n at Ke r n Co u n t y Wa r d 2 Ho m e l e s s Se r v i c e s fo r 40 be d Ex p a n s i o n $3 5 , 0 0 0 $3 5 , 0 0 0 Y e s 2 8 / 3 0 No t re c o m m e n d e d at th i s ti m e . $0 Pr o j e c t e d Fu n d i n g : $2 , 5 2 4 , 4 7 9 Re q u e s t e d : $4 , 8 4 0 , 8 0 3 Re c o m m e n d e d : $ 8 0 4 , 4 7 9 FY 20 2 0 ‐21 CD B G AP P L I C A T I O N S ‐ OU T S I D E PU B L I C SE R V I C E S & FA C I L I T I E S TO T A L (M i n u s Ad m i n an d Se c t i o n 10 8 ) : HU D Ca t e g o r y Ap p l i c a n t W a r d P r o p o s a l To t a l Re q u e s t FY 19 ‐20 Re q u e s t HU D El i g i b l e St a f f Ra t i n g No t e s Recommended Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 1 Ma d i s o n Ar e a Cu r b , Gu t t e r , Si d e w a l k an d AD A Im p r o v e m e n t s $3 8 5 , 0 0 0 $ 0 Y e s 2 6 / 3 0 S t a f f re c o m m e n d e d . $350,000 Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 7 Ca s t r o Ar e a Cu r b , Gu t t e r , Si d e w a l k an d AD A Im p r o v e m e n t s $4 0 0 , 0 0 0 $ 2 0 4 , 0 0 0 Y e s 2 6 / 3 0 S t a f f re c o m m e n d e d . $350,000 Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 2 Ol e a n d e r Ar e a Cu r b , Gu t t e r , Si d e w a l k an d AD A Im p r o v e m e n t s $3 0 0 , 0 0 0 $ 3 5 7 , 0 0 0 Y e s 2 6 / 3 0 S t a f f re c o m m e n d e d . $200,000 Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 2 Pa r k w a y , Su n s e t Ar e a an d Sa n Em i d i o St r e e t Li g h t i n g Im p r o v e m e n t s $5 5 5 , 2 5 7 $ 0 Y e s 2 6 / 3 0 No t re c o m m e n d e d at th i s ti m e . $0 Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 1 Wi l s o n Ar e a Cu r b , Gu t t e r , Si d e w a l k an d AD A Im p r o v e m e n t s $3 0 0 , 0 0 0 $ 0 Y e s 2 6 / 3 0 No t re c o m m e n d e d at th i s ti m e . $0 Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 1 La Fr a n c e Ar e a Cu r b , Gu t t e r , Si d e w a l k an d AD A Im p r o v e m e n t s $4 0 0 , 0 0 0 $ 3 0 6 , 0 0 0 Y e s 2 6 / 3 0 No t re c o m m e n d e d at th i s ti m e . $0 Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 2 Tr u x t u n Ar e a Cu r b , Gu t t e r , Si d e w a l k an d AD A Im p r o v e m e n t s $4 0 0 , 0 0 0 $ 0 Y e s 2 8 / 3 0 S t a f f re c o m m e n d e d . $390,000 Pu b l i c Im p r o v e m e n t s P u b l i c Wo r k s W a r d 1 Ea s t Br u n d a g e Cu r b , Gu t t e r , Si d e w a l k an d AD A Im p r o v e m e n t s $3 9 0 , 0 0 0 $ 3 9 0 , 0 0 0 Y e s 2 6 / 3 0 S t a f f re c o m m e n d e d . $390,000 Ac c e s s i b i l i t y Im p r o v e m e n t s D e v . Se r v i c e s A l l Ho m e Ac c e s s i b i l i t y Im p r o v e m e n t s $7 0 , 0 0 0 $ 4 0 , 0 0 0 Y e s 2 6 / 3 0 S t a f f re c o m m e n d e d . $40,000 Pr o j e c t e d Fu n d i n g : $2 , 5 2 4 , 4 7 9 R e q u e s t e d : $ 3 , 2 0 0 , 2 5 7 R e c o m m e n d e d : $ 1 , 7 2 0 , 0 0 0 TO T A L CI T Y & NO N CI T Y CD B G PR O J E C T E D FU N D I N G : $2 , 5 2 4 , 4 7 9 T O T A L CI T Y & NO N CI T Y CD B G RE C O M M E N D A T I O N : $ 2 , 5 2 4 , 4 7 9 FY 20 2 0 ‐21 CD B G AP P L I C A T I O N S ‐ CI T Y DE P A R T M E N T S TO T A L (M i n u s Ad m i n an d Se c t i o n 10 8 ) : 2020-21 HUD BUDGET & CONSOLIDATED PLAN OVERVIEW Budget and Finance Committee – February 18, 2020 CONSOLIDATED PLAN PROCESS Consolidated Plan (ConPlan) 5 Year framework to allocate resources to housing and community development priorities Action Plan 1 Year summary of activities to address goals identified in the ConPlan CAPER Report End of Year report on progress toward Consolidated Plan goals FEDERAL FUNDING SOURCES & Five Year Totals CDBG $18 Million HOME $6.8 Million HOPWA $2.8 Million HOME ESG $1.5 Million Community Development Block Grant HOME Investment Partnership Housing Opp. for Persons with AIDS Emergency Solutions Grant COMMUNITY ENGAGEMENT 19 community events and meetings Citywide Community Needs Survey (Eng/Sp) - 535 response 3 Community Forums 89 participants Stakeholder Meetings 13 service providers COMMUNITY GOALS •Increase and preserve affordable housing for low- and-moderate income households •Prevent and reduce homelessness. •Improve public infrastructure and facilities to promote safe and vibrant communities. •Foster community and economic development. •Enhance facilities and services for the non- homeless special needs population. 2020-21 ACTION PLAN ANTICIPATED RESOURCES 2020-21 Action Plan CDBG: $3,610,882 TOTAL HOME: TOTAL HOPWA: HOME Admin: $720,576 (Section 108 $365,826) Projects: $2,524,480 HOME: $1,359,869 Admin: $135,987 Projects: $1,223,882 HOPWA: $560,733 Admin: $16,822 Projects: $543,911 ESG: $308,712 Admin: $23,153 Projects: $285,559 2020-21 ACTION PLAN Recommended CDBG Budget Curb, Gutter, Sidewalk, ADA Park Improvements Public Services Home ADA Improvements 1,680,000 350,000 454,479 40,000 CURB, GUTTER, SIDEWALK & ADA IMPROVEMENTS •Madison Area: $350,000 (W1) •Castro Area: $350,000 (W7) •E. Truxtun Area: $390,000 (W2) •E. Brundage Area: $390,000 (W1) •Oleander Area: $200,000 (W2) MADISON AREA - Madison Street to Cottonwood Road between Casa Loma and Brooks Street CASTRO AREA - Ming Avenue to Wilson Road Benton Street to S. H Street E. TRUXTUN AREA - E. Truxtun to California Beale Avenue and Haley Street E. BRUNDAGE AREA - E. Brundage to 4th/Virginia Ave. Union Avenue to Railroad Tracks OLEANDER AREA - California Ave. to Verde St. Chester Ave. and A Street PARK IMPROVEMENTS •Belle Terrace Park •City-County •$350,000 City •Playground HOME ADA IMPROVEMENTS •City-Run Program •Low-income •$40,000 •$3,500 Grants •10 Households PUBLIC SERVICES •Flood Outreach: $264,479 •GBLA Fair Housing: $100,000 •Bakersfield Senior Center: $90,000 2020-21 ACTION PLAN Recommended HOME Budget CHDO Set-Aside New Construction Set-Aside Down Payment Assistance 784,901 188,980 250,000 2020-21 ACTION PLAN Recommended HOME Budget •New Construction Set Aside: $784,901 •CHDO Set Aside: $188,980 •Down Payment Assistance: $250,000 2020-21 ACTION PLAN Recommended ESG Budget Rapid Rehousing/Prevention Homeless Outreach Shelter Operations 161,602 23,625 100,332 2020-21 ACTION PLAN Recommended ESG Budget •Flood Outreach - $23,625 •BHC Shelter - $66,719 •Mission Shelter - $66,719 •AAFVSA Shelter - $28,164 •BHC RRH & Prevention: $100,332 ANTICIPATED TIMELINE 2020-21 Action Plan HOME •Budget & Finance Committee Meeting February 18, 2020 •Draft Action Plan Complete February 26, 2020 •Action Plan Public Notice Period March 6 – April 8, 2020 •Community Meetings March 17-19, 2020 •Public Hearing before City Council April 8, 2020 •Action Plan due to HUD May 14, 2020 QUESTIONS? Budget and Finance Committee – February 18, 2020