2 Comprehensive Annual Financial Report for the Year Ended June 30, 2009 County of San Diego
ii  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Introductory Section Letter of Transmittal ................................................................................................1
GFOA Certificate of Achievement ............................................................................ 11
Board of Supervisors .............................................................................................. 12
Organizational Chart ............................................................................................. 13
Other Elected and Appointed Officials .................................................................... 14
Financial Section Independent Auditor’s Report................................................................................. 15
Management’s Discussion and Analysis ................................................................... 17
Basic Financial Statements ..................................................................................... 33
Government‐wide Financial Statements:
Statement of Net Assets...................................................................................................................... 34
Statement of Activities........................................................................................................................35
Fund Financial Statements:
Balance Sheet ‐ Governmental Funds ...................................................................................................37
Reconciliation of the Governmental Funds Balance Sheet to the Government‐wide
Statement of Net Assets................................................................................................................... 38
Statement of Revenues, Expenditures, and Changes in Fund Balances ‐
Governmental Funds ........................................................................................................................ 39
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities ......................................................................... 40
Statement of Net Assets ‐ Proprietary Funds........................................................................................41
Statement of Revenues, Expenses, and Changes in Fund Net Assets ‐ Proprietary Funds .................... 42
Statement of Cash Flows ‐ Proprietary Funds ...................................................................................... 43
Statement of Fiduciary Net Assets ‐ Fiduciary Funds ........................................................................... 44
Statement of Changes in Fiduciary Net Assets ‐ Fiduciary Funds ......................................................... 45
Contents ‐ Notes to the Financial Statements ....................................................................47
Notes to the Financial Statements ....................................................................................49
Required Supplementary Information .....................................................................83
Schedule of Revenues, Expenditures, and Changes in Fund Balance ‐
Budget and Actual:
General Fund...................................................................................................................................... 84
Public Safety Fund...............................................................................................................................87
Tobacco Endowment Fund.................................................................................................................. 88
Notes to Required Supplementary Information ‐ Budgetary Information............................................. 89
Combining and Individual Fund Information and Other
Supplementary Information .................................................................................91
Combining Balance Sheet:
Nonmajor Governmental Funds........................................................................................................... 95
Special Revenue Funds ..................................................................................................................... 96
Debt Service Funds..........................................................................................................................100
Capital Projects Fund.......................................................................................................................101
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances:
Nonmajor Governmental Funds..........................................................................................................102
Special Revenue Funds ....................................................................................................................103
Debt Service Funds.......................................................................................................................... 107
Capital Projects Fund.......................................................................................................................108
Schedule of Revenues, Expenditures, and Changes in Fund Balance ‐
Budget and Actual:
Air Pollution Fund..............................................................................................................................109
Asset Forfeiture Program Fund...........................................................................................................110
Cable TV Fund ................................................................................................................................... 111
County Library Fund ...........................................................................................................................112
County Service District Funds ............................................................................................................. 113
Edgemoor Development Fund............................................................................................................116
Flood Control District Fund................................................................................................................. 117
Housing Authority Fund......................................................................................................................118
Housing and Community Development Fund .....................................................................................119
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  iii
In Home Supportive Services Public Authority Fund ...........................................................................120
Inactive Wastesites Fund ....................................................................................................................121
Inmate Welfare Program Fund............................................................................................................122
Lighting Maintenance District Fund....................................................................................................123
Other Special Districts Funds..............................................................................................................124
Park Land Dedication Fund.................................................................................................................125
Redevelopment Agency Fund.............................................................................................................126
Road Fund .........................................................................................................................................127
Combining Financial Statements ‐ Nonmajor Enterprise Funds ............................... 129
Combining Statement of Net Assets...................................................................................................130
Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets ................................ 131
Combining Statement of Cash Flows ..................................................................................................132
Combining Financial Statements ‐ Internal Service Funds ....................................... 133
Combining Statement of Net Assets...................................................................................................134
Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets ................................136
Combining Statement of Cash Flows ..................................................................................................138
Combining Financial Statements ‐ Investment Trust Funds ..................................... 141
Combining Statement of Fiduciary Net Assets....................................................................................142
Combining Statement of Changes in Fiduciary Net Assets..................................................................143
Combining Financial Statements ‐ Agency Funds ................................................... 145
Combining Statement of Changes in Assets and Liabilities.................................................................146
Statistical Section Introduction ......................................................................................................................................147
Net Assets by Component ..................................................................................................................148
Changes in Net Assets ........................................................................................................................149
Fund Balances Governmental Funds................................................................................................... 151
Changes in Fund Balances Governmental Funds .................................................................................152
Assessed Value of Taxable Property ................................................................................................... 153
Property Tax Rates ‐ Direct and Overlapping Governments ................................................................154
Principal Property Taxpayers ..............................................................................................................155
Property Tax Levies and Collections ...................................................................................................156
Ratios of Outstanding Debt by Type................................................................................................... 157
Ratios of General Bonded Debt Outstanding ......................................................................................158
Legal Debt Margin Information ..........................................................................................................159
Pledged‐Revenue Coverage ...............................................................................................................160
Demographic and Economic Statistics................................................................................................161
Principal Employers...........................................................................................................................162
Full‐time Equivalent County Government Employees by Function......................................................163
Operating Indicators by Function........................................................................................................164
Capital Asset Statistics by Function ....................................................................................................165
County of San Diego  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  1
November 20, 2009
To the honorable members of the Board of Supervisors and the Citizens of San Diego County:
The Comprehensive Annual Financial Report (CAFR) of the
County of San Diego (County) for the fiscal year ended June 30,
2009, is hereby submitted in compliance with Sections 25250
and 25253 of the Government Code of the State of California.
Management assumes full responsibility for the completeness
and reliability of the information contained in this report, based
upon a comprehensive internal control framework it
established for this purpose. 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.
Macias Gini & O’Connell LLP, Certified Public Accountants,
have issued an unqualified (“clean”) opinion on the County of
San Diego’s financial statements for the year ended June 30,
2009. The independent auditor’s report is located at the front of
the financial section of this report.
Management’s discussion and analysis (MD&A) immediately
follows the independent auditor’s report and provides a
narrative introduction, overview, and analysis of the financial
statements. MD&A complements this letter of transmittal and
should be read in conjunction with it.
COUNTY PROFILE
San Diego County is the southernmost major metropolitan area
in the State of California and covers 4,261 square miles,
extending 75 miles along the Pacific Coast from Mexico to
Orange County, and inland 75 miles to Imperial County along
the international border shared with Mexico. Riverside and
Orange counties form the northern boundary. The County
enjoys a wide variety of climate and terrain, from coastal plains
and fertile inland valleys to mountain ranges and the Anza‐
Borrego Desert in the east. The Cleveland National Forest
occupies much of the interior portion of the County. The
climate is equable in the coastal and valley regions where most
of the population and resources are located. The average
annual rainfall in the coastal areas is 10 inches, so the County is
highly dependent on imported water.
The County population in January 2009 was estimated to be
3,173,407, an increase of 1.3% over the January 2008 revised
estimated figure of 3,131,552, and it is the second largest county
by population in California behind Los Angeles County. There
are 18 incorporated cities in the County; of them, the City of San
Diego is the largest, with a population of approximately 1.354
million, and Del Mar is the smallest, with a population of
approximately 4.6 thousand. In addition, Tijuana, Mexico, with
a population of approximately 1.5 million, is a substantial urban
neighbor with a shared border, workforce, and economy.
The racial and ethnic composition of the County is as diverse as
its geography. The regional population for 2030 is forecasted to
be 4.0 million according to the San Diego Association of
Governments (SANDAG). In its 2030 Regional Growth Forecast
Update, SANDAG projects the county will continue to see
significant growth in the Hispanic population, with the share of
Hispanic population (38.1%) approximately equaling the share
of White population (38.1%) by 2030. The balance of the
population make‐up is expected to be as follows: Asian and
Pacific Islander (13.2%), African American (4.8%), two or more
races (5.0%), and all other groups (0.8%). While the County's
racial and ethnic diversity is expected to change dramatically,
SANDAG also projects a dramatic shift in the age structure of
the county. SANDAG is projecting that the population of
residents 65 years and older will more than double by 2030.
2  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  County of San Diego
Letter of Transmittal
COUNTY GOVERNMENT, ECONOMY AND
OUTLOOK
County Government
The County was incorporated on February 18, 1850, and
functions under a charter adopted in 1933, as subsequently
amended from time to time. A five‐member Board of
Supervisors elected to four‐year terms in district nonpartisan
elections governs the County. Each board member must reside
in the district from which he or she is elected. The Board of
Supervisors sets priorities for the County and oversees most
County departments and programs and approves their budgets.
Per California Government Code 23005, the County may
exercise its powers only through the Board of Supervisors or
through agents and officers acting under the authority of the
Board or authority conferred by law. The Board of Supervisors
appoints the following officers: the Chief Administrative Officer
(CAO), the County Counsel, the Probation Officer and the Clerk
of the Board of Supervisors. The Chief Administrative Officer
appoints the Chief Financial Officer, the Auditor and Controller
and all other appointive officers. The CAO assists the Board of
Supervisors in coordinating the function and operations of the
County; is responsible for carrying out all of the Board's policy
decisions that pertain to the functions assigned to that officers;
and supervises the expenditures of all departments. Elected
officials head the offices of the Assessor/ Recorder/ County
Clerk, District Attorney, Sheriff and Treasurer‐Tax Collector.
The State Legislature has granted each county the power
necessary to provide for the health and well‐being of its
residents. The County provides a full range of public services to
residents, including law enforcement, detention and correction,
emergency response services, health and sanitation, parks and
recreation, libraries and roads. The County also serves as a
delivery channel for many State services, such as foster care,
public health care and elections. These services are provided by
five business Groups (Public Safety, the Health and Human
Services Agency, Land Use and Environment, Community
Services and Finance and General Government), each headed
by a General Manager [Deputy Chief Administrative Officer
(DCAO)] who reports to the CAO. State and federally mandated
programs, primarily in the social and health services areas, are
directed to be maintained at certain minimum levels, with
eligible costs subject to reimbursement according to specific
guidelines; however, not all mandated costs are reimbursed.
Economy and Outlook
The economic events of September and October, 2008, have
had far reaching and long‐term impacts on the financial
markets in the U.S and around the world.
A series of federal fiscal and monetary policy actions have been
initiated to address the credit crisis and economic volatility. The
Federal Reserve has engaged in an extraordinary policy of
monetary easing by expanding its balance sheet, purchasing
private assets and bringing the Federal Funds rate down to near
zero. In addition, the Treasury has $700 billion in budget
authority under the Troubled Assets Relief Program (TARP) for
capital infusions to banks, term securities lending facilities, auto
loans, and a housing plan. Moreover, on February 17, 2009, the
President signed into law the American Recovery and
Reinvestment Act (ARRA) of 2009 designed to stimulate the
nation's sputtering economy.
The global decline in economic activity necessitated a
coordinated international response for a recovery in economic
output and revival in world trade. Actions in April 2009 by the G‐
20 produced a global plan for recovery and reform.
Although nationally there has been modest improvements in
recent economic data and a general easing in financial
conditions, the economic outlook for a strong and sustainable
recovery is uncertain at best. Housing and vehicle demand
remains unclear following the expiration of the “first‐time”
homebuyer tax credit and “cash‐for‐clunkers” program. With
unemployment still rising and income growth weak, consumer
spending strength is also in doubt. Additionally, contributions
to growth from capital expenditures, net exports and the
government are uncertain. Finally, there are also significant
uncertainties concerning the inflation outlook. Specifically,
while economic slack is severe, the monetary stimulus, rising
commodity prices and a weaker dollar may boost inflation
expectations and inflation.
San Diego County was one of the first areas in California and the
nation to experience the housing price meltdown, feel the
financial impacts from the credit crisis, and experience a jump in
loss of jobs. The unemployment rate for the County has been
lower than that of the State for the last 9 years. While the
unemployment rate has remained lower than the State rate,
the County's unemployment rate has jumped from 6.3% at June
30, 2008 to 10.2% at June 30, 2009. The State unemployment
rate increased from 7.6% to 11.4% during the same period.
The state of the economy plays a significant role in the County's
ability to provide core services and the mix of other services
sought by the public. For example, there is an increased
demand for public assistance, while at the same time the State
and local resources available to fund those services are
shrinking. Fewer customers are seeking land development or
building permit services, making it difficult to maintain core
services for these fee‐based programs. The real estate market
slump affects the County's general purpose revenue, which is
expected to decline in Fiscal Year 2009‐10 from Fiscal Year
2008‐09. General purpose revenue is relied upon to fund local
discretionary services, as well as to fund the County's share of
costs for services that are provided in partnership with the State
and federal government. The State of California's budget has
been severely impacted by the recession and consequently has
had to cut funding to local governments in many program
areas, including grants for certain public safety services.
County of San Diego  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  3
Letter of Transmittal
County management continues to evaluate and respond to the
changing economic environment and its impact on the cost and
the demand for County services. Specific actions are detailed in
the 2010 Adopted Operational Plan which can be accessed at
http://www.sdcounty.ca.gov/auditor/budinfo.html.
County’s Economic Base
The County's economic base consists of a significant
manufacturing presence in the fields of electronics and
shipbuilding, a large tourist industry attracted by the favorable
climate of the region, and a considerable defense‐related
presence. Highlights of County employment as of July 2009 are
listed below:
 Non‐agricultural employment totaled 1,240,200 jobs. This
represents a loss of 62,600 jobs from the unadjusted July
2008 employment figures.
 The services industry constitutes the largest employment
sector and accounted for approximately 47.0% of non‐agricultural
employment, with a total of 582,600 employed.
 The wholesale and retail trade industries were the second
largest, with the non‐government sector, comprising
approximately 14.2% of non‐agricultural employment
totaling 175,600 jobs.
 Government accounted for approximately 17.5% of non‐agricultural
employment. San Diego's military presence
contributes to this significant component.
 Manufacturing accounted for an additional 7.7% of non‐agricultural
employment.
 The construction sector is greatly influenced by the general
health of the economy, and in particular, population and
housing growth. Construction employment, which
accounted for 5.4% of total non‐agricultural employment or
67,000 jobs, was down 14,300 jobs from the unadjusted July
2008 employment figures. The continued low level of
residential building permits, sustained high level of
foreclosures, and year over year decline in median home
prices are all expected to continue to negatively impact
construction jobs through the end of 2009 and into 2010
 The financial sector, including finance, insurance, real estate
and related employment, represents 6.0% of non‐agriculture
employment. Financial activities experienced a
reduction of 1,600 jobs from the unadjusted employment
figures for July 2008.
 Agriculture accounted for approximately 0.8% of total
employment.
 As noted above, from July 2008 unadjusted employment
figures to July 2009, the San Diego County region
experienced a net job loss of 61,700. This compares to a
decrease of 4,500 jobs the previous year. The County is in
the midst of significant volatility. San Diego's index of
leading economic indicators, however, has been up slightly
over the last few months. While a full economic recovery is
not expected for some time, 2010 should see continued
signs of improvement for the region.
County revenues that are affected by the state of the local
economies include property taxes, sales taxes, and charges for
services. Key factors impacting these revenues include real
estate activity and consumer spending which are in turn greatly
influenced by interest rates and the general economy. Although
short and long‐term interest rates are low by historical
standards, there is continued uncertainty regarding the pace of
economic recovery at the national, state and local levels.
An impact of the overall housing market decline is an
improvement in the California Association of Realtors index for
first‐time buyers throughout California. Based on the California
Association of Realtors' First Time Buyer Housing Affordability
Index, San Diego's housing affordability index, (the percentage
of households that can afford to purchase an entry‐level home)
increased to 59% in June 2009, up from 56% in December 2008,
up from 31% in December 2007, and up from 23% in December
2006. This index is based on an adjustable rate mortgage and
assumes a 10% down payment and a first‐time buyer purchase
of a home equal to 85% of the prevailing median price. The
improvement in the percentage of households that could afford
to buy an entry‐level home in San Diego was based on the
market driven drop in entry‐level priced homes and the
corresponding adjustment to the monthly payment needed
(including taxes and insurance) and an adjustment to the
qualifying income level for the lower priced entry‐level homes.
Sources: State of California Department of Finance, San Diego
Association of Governments (SANDAG) ‐ San Diego's Regional
Planning Agency, the State of California Employment
Development Department, and the California Association of
Realtors.
GENERAL MANAGEMENT SYSTEM
The General Management System (GMS) is the formal
comprehensive guide for planning, implementing, monitoring
and rewarding all functions and processes of County
Government. The GMS establishes good business practices and
fiscal discipline, both of which are essential to achieve the
County of San Diego's vision, “A County Government that has
earned the respect and support of its residents.” The purpose of
the GMS is to optimize the efficient application of resources in
the delivery of services to our residents. These resources
include not just taxpayer dollars, but all San Diego County
assets, including our unique natural and cultural resources, the
expertise and creativity of County employees, and the informed
interest of County residents. The idea behind the GMS is
straightforward: County government will be able to provide
superior services if it sets sound goals and applies strong
management principles to achieve those goals.
The County had an adopted annual budget of $5.19 billion and
about seventeen thousand employees (staff years) who serve
4  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  County of San Diego
Letter of Transmittal
about three million residents spread over more than 4,000
square miles. Coordination, fiscal and operational discipline,
and shared commitment are vital. The GMS facilitates and
organizes the goal setting process. The GMS then links goal
setting and long‐range planning and resource allocation to goal
attainment, which includes monitoring, evaluation,
cooperation, motivation, and recognition. The GMS helps
ensure that County employees adhere to core principles,
promoting a culture that values our employees, partners, and
customers and institutionalizes continuous improvement and
innovation.
The GMS process begins with a long‐range, five‐year strategic
planning process. This is followed by the short‐term, two‐year
operational planning process, which encompasses the budget
process, wherein each department's strategic objectives and
resources allocated to achieving them are detailed. Monitoring
and control take place throughout the year. Evaluation
mechanisms are used to ensure that goals are tracked, plans
followed, and risks identified. Functional threading maximizes
efficient use of personnel and material resources by
coordinating staff and linking the functions they perform.
Motivation, rewards, and recognition encourage continuing
progress by rewarding those who meet and exceed goals. The
system completes a full circle in a fiscal year and begins again
with a review of the Strategic Plan and development of a new
Operational Plan.
County management defines and communicates GMS
objectives. Lines of authority flow from the Board of
Supervisors to the Chief Administrative Officer (CAO), Assistant
CAO (ACAO), and the five Group General Managers/Deputy
CAOs. These senior managers supervise appointed department
heads, from whom authority flows down to line staff. Despite
the crucial role of management, the success of the GMS
depends on strong and effective leadership at all levels of
County service. Every County employee is expected to help set
goals, strive to achieve them, and be recognized for
achievement.
The GMS helps ensure that sound planning, preparedness, and
improvement become permanent organizational ethics. With
the GMS as a guide, the County continues to use strong fiscal
management practices, while remaining focused on providing
superior services to County residents. The principles and
procedures outlined by the GMS are meant to apply to every
County function on an ongoing basis.
STRATEGIC AND OPERATIONAL PLANNING
(BUDGETARY) PROCESS
As noted above, a five‐year Strategic Plan is updated annually
to provide long‐term direction to County managers and staff.
Each fiscal year a two‐year Operational Plan is prepared and
details each department's strategic objectives and the
resources required to achieve them. The Operational Plan is
monitored regularly and is linked to the GMS system of rewards
and recognition. The annual Line‐Item Budget incorporates the
first year of the Operational Plan and is formally adopted by the
Board of Supervisors pursuant to Government Code 29000 et
seq. During the year, departments may request budget
adjustments for new and existing programs. In addition, the
Chief Administrative Officer reviews the status of the County's
performance against budget in a quarterly status report to the
Board of Supervisors.
FINANCIAL (BUDGETARY) POLICIES
Government Code Sections 29000 through 30200 provide the
statutory requirements pertaining to the form and content of
the County's Budget. Government Code Section 29009 requires
a balanced budget in the proposed and final budgets, defined as
“the budgetary requirements shall equal the available
financing”.
County Charter Section 703 establishes the Chief
Administrative Officer as responsible for all Group/Agencies
and their departments (except departments with elected
officials as department heads) and for supervising the
expenditures of all departments and reporting to the Board of
Supervisors on whether specific expenditures are necessary.
County Administrative Code Article VII establishes the
components and timeline for the budget process and
establishes the Chief Administrative Officer as responsible for
budget estimates and submitting recommendations to the
Board of Supervisors.
The County has the following financial policies that serve as
guidelines for the budget process:
Board of Supervisors Policies
A‐136 Use of County of San Diego General Management
System for Administration of County Operations: Establishes
the General Management System (GMS) as the formal guide for
the administration of County departments, programs and
services, and ensures that all County departments and offices
operate in compliance with the GMS.
B‐29 Fees, Grants, Revenue Contract: Provides a methodology
and procedure to encourage County departments to recover full
cost for services whenever possible.
B‐71 Fund Balance and Reserves: Establishes guidelines
regarding the use of fund balance and the maintenance of
reserves in order to protect the fiscal health and stability of the
County. Expenditures for services are subject to fluctuations in
demand and revenues are influenced by changes in the
economy and by State and federal regulations. This policy
ensures the County is prepared for unforeseen events by
establishing and maintaining prudent levels of fund balance and
reserves.
M‐13 Legislative Policy: State‐Mandated Local Program Costs:
Calls on the State and Federal Legislature to encourage
equitable reimbursement of mandated local program costs.
County of San Diego  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  5
Letter of Transmittal
M‐26 Legislative Policy: Long‐Term Financing of Local
Agencies: Calls on the Legislature to redress inequitable State
funding formulas.
Administrative Manual
0030‐01 Full Cost Recovery of Services: Establishes a procedure
within the framework of Board of Supervisors Policy B‐29, to
serve as guidance in the process of recovering full costs for
services provided to agencies or individuals outside the County
of San Diego organization under grants or contracts or for
which fees may be charged.
0030‐06 State Mandated Cost Recovery: Establishes guidelines
to attempt full recovery of all State mandated costs resulting
from chaptered legislation and executive orders.
0030‐14 Use Of One‐Time Revenues: One‐time revenue will be
appropriated only for one‐time expenditures such as capital
projects or equipment, not to ongoing programs.
0030‐18 Transfers Of Excess Cash Balances To General Fund:
Provides for transfer of excess cash balances to the General
Fund from funds within the County's area of financial and cash
management which contain earnings or moneys in excess of
those funds' requirements.
0030‐19 Revenue Match Limitation: Revenue matches will be
limited to the mandated level unless clear justification is
provided which results in a waiver of this policy by the Board of
Supervisors.
0030‐22 Revenue Management ‐ Auditor and Controller & Chief
Administrative Responsibilities: Chief Financial Officer/Auditor
and Controller and Chief Administrative Officer are responsible
for reviewing and evaluating revenues from all sources in order
to maximize these revenues within legal provisions and to
institute internal controls and systems to be used by
departments to estimate, claim, and collect revenues.
STRATEGIC INITIATIVES AND ACHIEVEMENTS
The inability of State government to develop a viable long‐term
solution to its budget imbalance remains a risk to funding and
stability of County programs, since State aid is the primary
source of County revenues. The widening gap between state
funding and the cost of administering services is coupled with a
slow economy. The County has lost significant funding from the
State, which is grappling with the economic downturn in the
context of its lack of financial solvency and discipline while at
the same time, revenues the County receives directly, such as
property and sales taxes, have flattened or decreased and the
cost of fuel, building materials and other materials needed to
provide services to the public continues to rise.
Notwithstanding, County government continues to follow the
map of the Strategic Plan developed within the discipline of the
GMS. The County's Strategic Plan clearly identifies the
organization’s priorities, so that both the public and employees
can better understand how the County will use its resources
during the next five years and what to expect as a result.
Consistent with the County’s General Management System,
activities undertaken to achieve these goals will be tracked and
reported throughout the year, to ensure accountability and
results. The Strategic Initiatives focus on what the County will
do to serve the public and change over time as public needs,
desires and priorities change. The County’s strategic Initiatives
are:
 Kids ‐ Improve opportunities for children and families.
 The Environment ‐ Manage the region’s natural resources
to protect quality of life and support economic
development.
 Safe and livable Communities ‐ Promote safe and livable
communities.
The Strategic Plan also includes Required Disciplines that
address the County’s internal priorities. The Required
Disciplines are the foundation the County organization must
establish to accomplish our public service goals efficiently and
effectively. They set the standards for continued operational
excellence the County is committed to achieving. These
Required Disciplines are:
 Fiscal Stability
 Customer Satisfaction
 Regional Leadership
 Skilled, Adaptable and Diverse Workforce
 Essential Infrastructure
 Accountability/Transparency
 Continuous Improvement
 Information Technology
Within the structure of the two‐year operational planning
process, the County plans for and attains interim progress
toward achievement of the Strategic Initiatives. Some of the
significant steps of the last year were:
Kids
 The Health and Human Services Agency focused on children
under 10 years of age, both through the current child welfare
system and through other strategies which included the
Nurse Family Partnership (NFP), an evidence‐based, nurse‐home
visiting program that helped first‐time, low‐income,
high‐risk mothers raise healthy children. In the East Region,
96% (47 of 49) of children of NFP graduates received all their
immunizations and in the South Region, 97% (59 of 61) of
clients initiated breastfeeding. The Agency also collaborated
with the County Office of Education on School Success, a
program designed to help foster children tackle the
difficulties they face at home and school. This program
ensures that the educational needs of foster care children
and youth are identified early and offers them a full array of
academic support services and research. With the early
implementation of the partnership (which incorporates
education liaison services with social worker placement
6  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  County of San Diego
Letter of Transmittal
services at each of the Agency's six regions), 675 foster
children were referred for services January through June
2009.
 The Probation Department successfully reduced the total
number of violent incidents in juvenile institutions by 11%.
The department has been successful in reducing violent
incidents over the past two years due to changes in training
and operational policy.
 The District Attorney increased the prosecution of Internet
crimes against children by 45%.
 The Parks and Recreation Department promoted
recreational opportunities and environmental awareness for
9,000 youth by conducting formal and informal
environmental education programs in 12 park facilities with
an emphasis on water quality, watershed awareness and
natural and cultural resources and by providing 39 outdoor
adventure and education activities throughout the parks
system and region. The department increased recreational
activities for youth by providing 102 health‐related events
and classes, including a wide variety of environmental
education and teen programs for 6,816 youth in the San
Diego region, in support of the County's Childhood Obesity
Action Plan and the Greater San Diego Recreation and Parks
Coalition for Health and Wellness. The department also
increased community involvement for young people by
overseeing 3,657 youth and adult volunteers through 113
total community volunteer work events in 36 park facilities.
 The Parks and Recreation Department completed
construction and improvements at Hilton Head Park in
Rancho San Diego. The first‐of‐its‐kind aquatic playground
incorporates innovative design ideas with state‐of‐the‐art
computer and filtration system technology that kills
bacteria. In addition, they completed improvements to
shade structures and playground equipment at Fallbrook
and Collier Parks, which make the equipment more usable
by keeping it cooler in the hot summer months and keeping
direct sunlight off the children.
 The Department of Environment Health conducted 18
outreach presentations regarding household hazardous
waste to 2,500 students, 5 school presentations regarding
vector control and awareness to approximately 3,200
students and 16 presentations to over 2,000 primary and
secondary school children regarding hazardous materials
and careers in environmental health. This was accomplished
through class presentations and attendance at school
science and technology fairs and exceeded the goal to
conduct 35 outreach programs to approximately 2,000
students.
 The Department of Public Works enhanced school children's
safety by working with school administrators to analyze,
identify and implement school zone improvements for
pedestrians, bicyclists, buses and automobiles at 13 schools.
The department also initiated installation of flashing
beacons at the entrance to 25 MPH school zones on roads
with prevailing speeds of 40 MPH or greater by identifying 6
candidate locations eligible for flashing beacons and are
seeking grant funding through application to the California
Office of Traffic Safety and other funding resources.
 The Department of Public Works repainted and re‐marked
crosswalks and roadway legends adjacent to all 116 public
school locations throughout the unincorporated areas of the
County. The department also completed construction or
awarded construction contracts for five projects that
improved traffic flow around schools and provided safe
routes to schools. Projects included Grove Street in Lincoln
Acres, Ashwood Street and Parkside Street East Sidewalks
in Lakeside, Tavern Road Intersection Improvements in
Alpine and a contract to replace curb, gutter and sidewalks
at various locations throughout the County.
The Environment
 The Parks and Recreation Department expanded and
protected park resources by adding 4,143 acres of parkland
throughout the County over two years and initiated
biological and cultural surveys in five County preserves and
completed resource management plans (RMP) in 8
preserves.
 The Parks and Recreation Department completed
construction and opened the San Elijo Lagoon Nature
Center in January 2009. Exhibits feature recycled materials,
solar panels, irrigated roof plants and recycled water that
educate the public about Green Building concepts. The
Nature Center was designed and built to attain LEED
Platinum Certification.
 The Parks and Recreation Department received the U.S.
Green Building Council's Leadership in Energy and
Environmental Design (LEED) Silver Status certification for
the Goodan Ranch Center. LEED Certification is the
recognized standard for measuring building sustainability.
The Goodan Ranch Center is the first County building to
attain LEED Silver Status certification.
 The Department of Environmental Health developed an
annual inspection schedule for each recycled water producer
and an inventory of recycled water use sites that are due for
a four‐year shutdown test inspection through the expansion
and improvement to the County's permit tracking database
inspection module. This will help protect the public from the
potential negative health affects of recycled water misuse.
 The Department of Public Works protected and preserved
environmental resources by instituting a policy that all new
landscaping installed by the department be Xeriscape to
save water and decrease green waste. The department also
improved energy efficiencies by changing first generation
Light Emitting Diode (LED) lamps that have higher rate of
burnouts with energy efficient LEDs that have a longer
service life span at traffic signalized intersections. In
County of San Diego  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  7
Letter of Transmittal
addition, the department identified 30 candidate
intersections (goal was 25) with traffic signals eligible for
LED lamp replacement and replaced over 500 LED units.
 The Department of Public Works protected and preserved
the County's water quality and watersheds through the
following:
 Converted concrete‐bottomed segments of Ruxton Road
Channel in the Sweetwater Watershed to natural,
vegetated watercourses that provide natural filtration.
This project won an American Public Works Association
Project of the Year award.
 Conducted 385 watershed site investigations. These
investigations provided crucial data for understanding
the condition of receiving waters in all eight watersheds
and how they are impacted by discharges from
unincorporated communities.
 Removed 27,000 cubic yards of debris from culverts,
drainage channels and roads through a systematic
cleaning program to prevent pollution of the county's
rivers, bays and ocean.
 Swept 16,193 lane‐miles of roadway to clean debris from
road surfaces and prevent pollution of the county's rivers,
bays and ocean, meeting the goal.
 Cleaned 480 miles of sewer mains within the County's
sanitary sewer system to protect public health and the
environment by minimizing the risk of sanitary sewer
overflows.
Safe and Livable Communities
 The Health and Human Services Agency opened a new
state‐of‐the‐art, skilled nursing facility to replace the
existing Edgemoor facility. This is a 24‐hour facility that
provides long‐term medical care to patients with complex
medical needs. The new facility opened in early 2009 and
accommodates up to 192 licensed beds, up from 175. Annual
operational savings for the new facility is estimated at $4.6
million. The energy‐saving features that were incorporated
will save approximately $207,000 in utility bills every year for
the next several years.
 The District Attorney, Sheriff, Probation and Public
Defender collaborated with the Court, health treatment
professionals and other criminal justice partners to develop
a behavioral health court model that will reduce the
recidivistic behavior of mentally ill offenders.
 The Sheriff's Department reduced the time for the Crime
Lab to process and deliver DNA analysis for street crimes
(robbery, burglary, auto theft) to area investigators from an
average of 161 days to 52 days by creating a rapid response
DNA Team.
 The Department of Child Support Services collaborated with
the State and the Administrative Office of the Courts to
design and develop a process involving collaborative
negotiation with parents. Once implemented, this process
will establish the baseline to measure whether
establishment or modifications of child support orders are
processed more efficiently and whether this results in
increased child support payment and increased parent
satisfaction.
 The Office of Emergency Services, in partnership with the
Land Use and Environment Group and the Forest Area
Safety Task Force created a master fuel management plan
to reduce the region's vulnerability to wildfires. This involved
working with representatives from the 18 incorporated
cities, other governmental jurisdictions and the private
sector. They also developed a public education campaign
and materials on reducing the risk of wildfires to reach three
million residents.
 The Office of Emergency Services developed and
implemented a public awareness campaign on the County's
AlertSanDiego emergency notification system that directs
residents to a Web link to register. This campaign provided
information to the community about the difference
between the system and Reverse 911, and the benefits of
the notification system. There were 148,000 new registrants
to AlertSanDiego.
 The Registrar of Voters conducted four elections that
provide access for all voters and timely elections results,
including the Presidential Election in November 2008, with a
turnout of 83%, the highest percentage turnout since 1972.
 The Department of Planning and Land Use improved fire
protection and emergency response by continuing to
provide ongoing funding for existing contracts and much
needed resources to rural communities, such as response
apparatus. Additionally, the San Diego County fire services
reorganization received final approval in 2009. Under the
reorganization, fire agencies now provide 24‐hour
firefighting and emergency medical services for nearly 1
million acres in the unincorporated areas of the County.
 The Parks and Recreation Department expended $13.7
million on non‐acquisition park improvement projects of
which approximately 16% was funded by grants. Projects
included trail restoration and construction, improvements to
community centers and campgrounds, design and
development of sports fields, repairs to playgrounds and
court surfaces, well replacements and habitat enhancement.
They also enhanced 10 parks by completing 11 capital and
major maintenance projects that improved recreational
opportunities for the public. Projects included expanding the
existing trail system, retrofitting lighting, repairs to aged
playground and court surfaces, erosion mitigation and
implementation of energy efficiency fixtures.
 The Parks and Recreation Department, in partnership with
the San Diego County Farm Bureau, opened a new Farmers
Market at Lindo Lake Park. The Farmers Market offers fresh
foods and vegetables to approximately 200 shoppers each
week. This Farmers Market is one of only a few in the County
that accepts food stamps. The department also reopened
Jess Martin Park, the only community park in Julian. The
8  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  County of San Diego
Letter of Transmittal
park features a playground, three ball fields, skate park and
on‐site parking. A voter approved newly formed assessment
district will fund ongoing operations and maintenance costs
for the Park.
 The Department of Public Works negotiated an agreement
with the Pauma Band of Mission Indians that set forth
commitments of the Pauma Indians to provide mitigation
necessitated by their development and operation of the
expansion of their casino. This agreement provided a
mechanism for the Pauma Indians to compensate the
County for the costs of law enforcement and problem
gambling programs.
 The Department of Public Works completed construction of
the McClellan‐Palomar Airport Terminal. This project won
an American Public Works Association Project of the Year
award
CERTIFICATE OF ACHIEVEMENT
The Government Finance Officers Association of the United
States and Canada (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the
County for its comprehensive annual financial report (CAFR) for
the fiscal year ended June 30, 2008. In order to be awarded a
Certificate of Achievement, a government must publish an
easily readable and efficiently organized CAFR. This report
must satisfy both generally accepted accounting principles and
applicable legal requirements.
A Certificate of Achievement is valid for a period of one year
only. We believe our current comprehensive annual financial
report continues to meet the Certificate of Achievement
Program's requirements and we are submitting it to the GFOA
to determine its eligibility for another certificate.
OTHER AWARDS AND RECOGNITIONS
Even with the financial and environmental challenges of Fiscal
Year 2009, the County was recognized for many activities that
highlight progress in the Strategic Plan Initiatives. County
programs received awards for operational and service delivery
achievements, technological innovations, and prudent fiscal
management.
 San Diego County received 39 awards at the 2008 annual
Achievement Awards competition sponsored by the
National Association of Counties (NACo). This was the
fourth year in a row that the County has received more
awards than any other U.S. county. The winning programs,
which span all five County business groups, were recognized
for being innovative and successful, and for promoting
quality, efficiency, and a responsive county government.
The programs receiving awards included Students Taking
Academic Responsibility (STAR), Independent Living Skills/
Foster Youth Workforce Services, Integrated Fire
Suppression/Stormwater Compliance, Collaborative
Citizenship Classes at Neighborhood Library Branches,
Crime Analysis Early Warning System, Health and Human
Services Agency Contractor Financial Review, Medical
Examiner Bereavement Center, Office of Emergency
Services for Kids, Senior Expo: Protect Yourself and Your
Wallet, Sheriff Mobile Photo Identification System and the
Tweenie Kitten Foster Program.
 For the seventh consecutive year, the Government Finance
Officers Association (GFOA) of the United States and
Canada recognized the County with the Distinguished
Budget Presentation Award for the Adopted Operational
Plan: Fiscal Years 2008‐09 & 2009‐10.
 The Department of Media and Public Relations' County
Television Network (CTN) received 9 awards at the National
Association of Telecommunications Officers & Advisors
conference in September 2008 for excellence in broadcast,
cable, multimedia and electronic programming.
 The County Television Network (CTN) was honored in May
2009 with the large market Overall Excellence award by the
Southern California and Nevada chapter of the national
Association of Telecommunications Officers and Advisors.
 In 2009, the County of San Diego and Mental Health
Systems, Inc. received the Public‐Private Partnership Award
from the San Diego Taxpayers Association for the Serial
Inebriate Program ‐ which offers treatment, shelter, and
other supportive services to chronic public inebriates as an
alternative to custody, saving San Diego County taxpayers
more than $800,000 a year. This program is made possible
by the collaboration of a wide range of agencies and
organizations including: San Diego County Alcohol and Drug
Services, local law enforcement, hospitals and Mental
Health Systems, Inc.
 The California State Association of Counties awarded the
County a 2008 Challenge Award for its Rapid Response to
Local Emergencies through the implementation of four
Local Assistance Centers (LACs) opened to help fire victims
within 72 hours of Firestorm 2007. During the wildfires,
residents lost homes and cars, making it difficult to travel to
locations from which they could receive aide. The LACs
provided “one‐stop‐shops” for fire victims to apply for aide
and to interface with local, state, federal and other agencies
that provide services. Additionally, the LACs provided the
County and other agencies with timely information about
the needs of fire‐affected communities.
 The County of San Diego took top honors in the 2008 Digital
Counties Survey conducted by the Center for Digital
Government. The Center for Digital Government recognizes
counties using information technology in increasingly
innovative ways and improving service to their citizens. The
survey is an annual study by the Center and the NACo.
 The California State Association of Counties recognized
three County programs with 2008 Merit Awards for
innovation and excellence. The County programs selected
include:
County of San Diego  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  9
Letter of Transmittal
 Food for Thought Partnership ‐ a partnership between
Aging and Independence Services and the County Library
system to help older adults overcome isolation and poor
nutrition through physical activity and a balanced meal in
the supportive Library environment.
 Serial Inebriate Program ‐ offers treatment, shelter and
other supportive services to chronic alcoholics to reduce
their use of public safety and emergency medical care
resources. The County's Alcohol and Drug Services united
with the Police Department to develop a program for
long‐term homeless alcoholics that would slow their cycle
of moving in and out of detoxification centers, jails and
hospitals.
 Workforce Academy for Youth ‐ a comprehensive
training program, which includes a six‐month paid
County internship, job coach, and life skills coach, to
better prepare emancipating foster youth for jobs,
encourage school education, and promote a successful
transition to self‐sufficiency.
 The California Department of Child Support Services (DCSS)
honored the County's Department of Child Support Services
with the coveted Large Caseload County Award for the
Fiscal Year 2008. The State DCSS recognizes the top
performing local child support agencies for their
performance based on an average of their ranking in five
federal performance measures. This was the first year the
County has won the award.
 The Department of Planning and Land Use won the only two
2008 Best Practice Awards from the American Planning
Association's San Diego Chapter for creating guidelines to
evaluate environmental impacts and to reduce water
pollution. The County was honored for its creation of the
California Environmental Quality Act Guidelines for
Determining Significance and the Low Impact
Development.
 The National Association of County Park and Recreation
Officials recognized the County with two awards. The book
“Ranchos of San Diego County,” co‐authored by the County
Parks Historian, was presented a 2009 Recognition of
Outstanding Accomplishment award. Also, the Hilton Head
Park Aquatic Playground, a central recreational feature at
Hilton Head Park, received a 2009 Park and Recreation
Facilities Award for Excellence in national park and
recreation facility design; outstanding planning,
construction and benefits to the community. The
Department of Parks and Recreation was recognized by the
California Parks and Recreation Society with a 2008
Achievement Award in Recreation Programs for outstanding
achievement in development and implementation of the
Movies in the Park series. The program was selected for its
contribution to the mission of parks and recreation by
strengthening community image,
 The California Counties Facilities Services Association
named the Department of General Services as a recipient of
the 2008 Award of Excellence for its exceptional dedication
and continued efforts to advance the development of
programs and processes that extend the life of public
facilities.
 The Department of Human Resources received the Best
Managed Implementation ‐ 2008 award from NEOGOV for
their conversion to the new online job application system.
The award was based on several factors, including the speed
of the implementation and thoroughness of the business
process re‐engineering, and was highlighted during a
presentation at NEOGOV's annual conference.
 The San Diego County District Attorney's Office received a
Workplace Excellence Award from the San Diego Society for
Human Resource Management for recognition as an
outstanding workplace, through implementation of
professional and innovative human relations programs, such
as the DA University program, which provides in‐house
continuing education for employees, and the “You Are a
Star” recognition and reward program.
 The Department of Purchasing and Contracting received its
eighth consecutive Achievement of Excellence in
Procurement Award from the National Purchasing Institute
for demonstrating excellence in innovation, professionalism,
productivity, e‐procurement and leadership.
 The Farm and Home Advisor's Office received two national
awards for the “Money Talks for Teens,” a program designed
to teach teens about money management from the National
Extension Consumer and Family Science Association and
from the Association for Financial Counseling, Planning and
Education.
 The Health and Human Services Agency's Children's
Services program received a 2008 Adoption Excellence
Award in the category “Support for Adoptive Families” from
the U.S. Department of Health and Human Services for the
extraordinary contributions the County has made in
providing adoption and other permanency outcomes for
children in foster care.
10  Comprehensive Annual Financial Report For the Year Ended June 30, 2009  County of San Diego
Letter of Transmittal
ACKNOWLEDGMENTS
We would like to express our appreciation to the accounting
staff of County departments and the staff of the Auditor and
Controller's department whose coordination, dedication and
professionalism are responsible for the preparation of this
report. We would also like to thank Macias Gini & O’Connell LLP
for their professional support in the preparation of the CAFR.
Lastly, we thank the members of the Board of Supervisors, the
Chief Administrative Officer, Group/Agency General Managers
and their staff for using sound business practices while
conducting the financial operations of the County.
Respectfully,
DONALD F. STEUER
Chief Financial Officer
TRACY M. SANDOVAL
Auditor and Controller
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  11
12  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  13
Citizens of San Diego
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Officer
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& Measures
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14  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Chief Administrative Office
Elected Officials
General Managers
Department Heads
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  15
Independent Auditor’s Repor t
16  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Independent Auditor’s Report
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  17
This section of the County of San Diego's (County)
Comprehensive Annual Financial Report provides a narrative
overview and analysis of the basic financial activities of the
County as of and for the year ended June 30, 2009.
The intent of the information presented here, in conjunction
with the Letter of Transmittal is to provide the reader with a
clearer picture of the County's overall financial status. Unless
otherwise indicated, all amounts in this section are expressed in
thousands of dollars.
Financial Highlights
 The assets of the County exceeded liabilities at the close of
the fiscal year 2009 by $3.45 billion (net assets). Of this
amount, $2.73 billion is invested in capital assets, net of
related debt; $314 million is restricted for specific purposes
(restricted net assets); and the remaining portion represents
unrestricted net assets of $409 million.
 Total net assets increased by $217 million. For governmental
activities, revenues exceeded expenses by $199 million. For
business‐type activities, revenues exceeded expenses,
before transfers, by $18 million.
 General revenues for governmental activities were $1.15
billion. Of this amount, property taxes and property taxes in
lieu of vehicle license fees accounted for $935 million or
81%; other taxes, sales and uses taxes, investment income
and other general revenues accounted for $214 million or
19%.
 Program revenues for governmental activities were $2.69
billion. Of this amount, $2.18 billion or 81% was attributable
to operating grants and contributions while charges for
services accounted for $443 million or 17%.
 The total expenses for governmental activities were $3.64
billion. Public assistance accounted for $1.18 billion or 32%,
while Public protection accounted for $1.16 billion or 32% of
this amount. Additionally, health and sanitation accounted
for $678 million or 19%.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an
introduction to the County's basic financial statements. The
County's basic financial statements comprise three
components: 1) Government‐wide financial statements 2) Fund
financial statements, and 3) Notes to the basic financial
statements. Required supplementary information is included in
addition to the basic financial statements.
The Government‐wide financial statements are designed to
provide readers with a broad overview of County finances, in a
manner similar to a private‐sector business.
The Statement of Net Assets presents information on all County
assets and liabilities, with the difference between the two
reported as net assets. Over time, increases or decreases in net
assets may serve as a useful indicator of whether the financial
position of the County is improving or deteriorating.
The Statement of Activities presents information showing how
the County's net assets changed during the most recent fiscal
year. All changes in net assets are reported as soon as the
underlying event giving rise to the change occurs, regardless of
the timing of related cash flows. Thus, revenue and expenses
are reported in this statement for some items that will result in
cash flows in future fiscal periods (e.g., uncollected taxes and
earned but unused vacation leave).
Both of the aforementioned government‐wide financial
statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues
(governmental activities) from other functions that are
intended to recover all or a significant portion of their costs
through user fees and charges (business‐type activities). The
governmental activities of the County include general
government, public protection, public ways and facilities,
health and sanitation, public assistance, education and
recreation and cultural. The business‐type activities of the
County include airport operations, wastewater management
and sanitation districts.
18  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Management’s Discussion and Analysis
Fund financial statements are groupings of related accounts that
are used to maintain control over resources that have been
segregated for specific activities or objectives. The County, like
other state and local governments, uses fund accounting to
ensure and demonstrate compliance with finance‐related legal
requirements. All of the funds of the County can be divided into
three categories: governmental funds, proprietary funds and
fiduciary funds.
Governmental funds are used to account for essentially the
same functions reported as governmental activities in the
government‐wide financial statements. However, unlike the
government‐wide financial statements, governmental funds
financial statements focus on near‐term inflows and outflows 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 county's near‐term
financing requirements.
Because the focus of governmental funds is narrower than that
of the government‐wide financial statements, it is useful to
compare the information presented for governmental funds
with similar information presented for governmental activities
in the government‐wide financial statements. By doing so,
readers may better understand the long‐term impact of the
government's near‐term financing decisions. Both the
governmental funds balance sheet and the governmental funds
statement of revenues, expenditures and changes in fund
balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The County maintains individual governmental funds.
Information is presented separately in the governmental funds
balance sheet and in the governmental funds statement of
revenues, expenditures and changes in fund balances for the
General Fund, Public Safety Special Revenue Fund and the
Tobacco Endowment Special Revenue Fund, all of which are
considered to be major funds. Data from the other
governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of these nonmajor
governmental funds is provided in the combining financial
statements/schedules and supplemental information section in
this report.
Proprietary funds are generally used to account for services for
which the County charges customers ‐ either outside
customers, or internal departments of the County. Proprietary
funds provide the same type of information as the government‐wide
financial statements, only in more detail. The County
maintains the following types of proprietary funds:
Enterprise funds are used to report the same functions
presented as business‐type activities in the government‐wide
financial statements. The County uses enterprise funds to
account for sanitation services, wastewater management and
airport operations. These nonmajor enterprise funds are
combined and aggregated. Individual fund data for each
nonmajor enterprise fund is provided in the combining financial
statements and supplemental information section in this
report.
Internal service funds are an accounting device used to
accumulate and allocate costs internally among the County's
various functions. Internal service funds are used to account for
the financing of public works and communications equipment;
the financing of materials and supplies (purchasing); for start up
services for new and existing county service districts; for the
County's public liability and employee benefits activities; the
financing of fleet services; for facilities management activities;
for the financing of information technology services; and for the
financing of clothing and personal sundry items for persons
institutionalized at various County facilities. Because all of
these services predominantly benefit governmental rather than
business‐type functions, they have been included within
governmental activities in the government‐wide financial
statements.
The County's internal service funds are combined into a single,
aggregated presentation in the proprietary funds financial
statements. Individual fund data for the internal service funds is
provided in the form of combining statements in the combining
financial statements/schedules and supplemental information
section in this report.
The illustration below depicts the required components of the basic financial statements.
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  19
Management’s Discussion and Analysis
Fiduciary funds are used to account for resources held for the
benefit of parties outside the government. Fiduciary funds are
not reflected in the government‐wide financial statements
because the resources of these funds are not available to
support the County's own programs. The accounting used for
fiduciary funds is much like that used for proprietary funds.
Notes to the basic financial statements provide additional
information that is essential to a full understanding of the data
provided in the government‐wide and fund financial
statements.
Required supplementary information (RSI) is also presented. It
provides budgetary comparisons for the General Fund, Public
Safety Special Revenue Fund and the Tobacco Endowment
Special Revenue Fund (all major funds) in separate Schedules of
Revenues, Expenditures, and Changes in Fund Balance‐ Budget
and Actual.
Combining financial statements/schedules and supplemental
information section of this report presents combining and
individual fund statements and schedules referred to earlier
that provide information for nonmajor governmental funds,
enterprise funds, internal service funds and fiduciary funds and
are presented immediately following the required
supplementary information section of this report.
Government-wide Financial Analysis
Table 1
Certain fiscal year 2008 balances were adjusted to conform to the proper current year presentation as a result of the addition of the
San Diego Regional Building Authority as a blended component unit in 2009 and the 2009 addition of a capital sublease between the
County and the Metropolitan Transit Development Board related to the Metropolitan Transit System Towers refunding project. As a
result, adjustments were made to Table 1, 2008 as follows: Current and other assets were increased by $25.59 million coupled with
an $8.1 million increase in Long‐term liabilities resulting in a $17.49 million increase to Unrestricted and Total net assets, respec‐tively.
Analysis of Net Assets
Net assets may serve over time as a useful indicator of a government's financial position. In the case of the County, assets exceeded
liabilities by $3.45 billion at the close of fiscal year 2009, an increase of $217 million or 7% over fiscal year 2008. This included an
increase of $80 million in the County’s restricted and unrestricted net assets (a 13% increase over fiscal year 2008) and an increase of
$137 million in capital assets, net of related debt (a 5% increase over fiscal year 2008).
The aforementioned increase of $217 million in net assets was composed of the following changes in total assets and liabilities:
 Total assets increased by $358 million. This included an increase of $224 million in current and other assets and a $134 million
increase in capital assets. The $224 million increase in current and other assets was primarily attributable to an increase in cash
and investments (including investments with fiscal agents) of $116 million, an increase of $106 million in receivables, net (exclud‐ing
property taxes), and a $2 million increase in other assets. The increase in cash and investments was chiefly due to the issuance
of $136.885 million of fixed rate serial and term lease revenue bonds titled, “San Diego Regional Building Authority Lease Reve‐
20  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Management’s Discussion and Analysis
nue Bonds ‐ County Operations Center and Annex Redevelopment Project Series 2009 A” offset in part by annual debt service
payments and a liquidation of investments to fund health related expenses. The increase in receivables, net was principally attrib‐utable
to a $106 million increase in amounts due from other governmental agencies.
 Total liabilities increased by $141 million. This included an increase in other liabilities of $98 million and an increase in long‐term
liabilities of $43 million. The increase in other liabilities of $98 million was primarily due to an increase in unearned revenue
related to mental health services. The increase of $43 million in long‐term liabilities was mainly due to a $39 million increase in
long‐term debt (see Long‐Term Liabilities discussion), coupled with a net $4 million increase in other long‐term liabilities (includ‐ing
a $5 million increase in claims and judgments and compensated absences offset by a $1 million decrease in landfill closure and
postclosure).
The largest portion of the County's net assets (80%) reflects its investment of $2.73 billion in capital assets, net of related debt (which
includes: land, infrastructure, buildings, and equipment; less any related outstanding debt used to acquire those assets). The County
uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although
the County's investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources, since the capital assets themselves cannot be liquidated for these liabilities.
An additional portion of the County's net assets, i.e. restricted net assets equaled $314 million and represents resources that are sub‐ject
to external restrictions on how they may be used. External restrictions include those imposed by grantors, contributors, laws
and/or regulations of other governments. The remaining portion of the County's net assets includes $409 million in unrestricted net
assets.
Table 2
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  21
Management’s Discussion and Analysis
Certain fiscal year 2008 balances were adjusted (including the 2008 beginning net asset balance) to conform to the proper current
year presentation as a result of the addition of the San Diego Regional Building Authority as a blended component unit in 2009 and
the 2009 addition of a capital sublease between the County and the Metropolitan Transit Development Board related to the Metro‐politan
Transit System Towers refunding project. As a result, adjustments were made to Table 2, 2008 as follows: Charges for ser‐vices
were increased by $3.159 coupled with increases to Investment Income and Other revenue of $200 thousand and $7 thousand
respectively; while General government expenses were increased by $1.128 million coupled with an increase to Interest expense of
$1.785 million, resulting in an increase to change in net assets of $453 thousand (for further information see Note 26 to the Financial
Statements).
Analysis of Changes in Net Assets
At June 30, 2009, changes in net assets before transfers (revenues minus expenses) equaled $217 million, a $56 million or 20%
decrease from the previous year. Principal revenue sources contributing to the change in net assets were operating grants and con‐tributions
of $2.19 billion and taxes of $935 million (including: property taxes and property taxes in lieu of vehicle license fees.) These
revenue categories accounted for 81% of total revenues. Principal expenses were in the following areas: public assistance, $1.18 bil‐lion;
public protection, $1.16 billion; and health and sanitation, $678 million. These expense categories accounted for 82% of total
expenses.
Governmental activities
At the end of fiscal year 2009, total revenues for the governmental activities were $3.83 billion, while total expenses for were $3.64
billion. Governmental activities increased the County’s net assets by $198 million, accounting for 92% of the total increase in net
assets (Business‐type activities accounted for the remaining 8%, $18 million).
Expenses:
 Total expenses for governmental activities were $3.64 billion, an increase of $67 million or 2% ($69 million increase in functional
expenses and $2 million decrease in interest expense (due to decreased debt issuance related costs and interest accrued on out‐standing
debt) over the prior year. Public assistance was the largest functional expense (32%), followed by public protection
(32%) and health and sanitation (19%).
Chart 1
Expenses and Program Revenues ‐ Governmental Activities
(In Thousands)
22  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Management’s Discussion and Analysis
As noted below, the $69 million increase in functional expenses was made up of $114 million in increases and a $45 million decrease:
The $114 million increases in functional expenses were composed of:
 $54 million in contracted services as follows: 1) $16 million ‐ HHSA AFDC Family Group; 2) $15 million ‐ HHSA Mental Health
Administration; 3) $6 million ‐ support and care of persons; 4) $6 million ‐ participation benefits; 5) $5 million ‐ aid for adopted
children; 6) $3 million ‐ temporary contract help; and, 7) $3 million ‐ various other contracted services.
 $17 million paid to terminate two interest rate swap agreements relating to the advance refunding of the County of San Diego
2002 Series B Taxable Pension Obligation Bonds.
 $15 million in salaries and benefit costs. As a service delivery entity, the County's major cost component is salaries and benefits,
which accounts for approximately 42% of the total expenses. The County's overall strategy of deleting, freezing and temporarily
funding positions minimized the impact of salary increases and benefit costs.
 $10 million in loss on disposal of assets
 $8 million in Housing Authority tenant assistance.
 $5 million in various other County program activities
 $3 million in depreciation due to an overall increase in depreciable capital assets.
 $1 million in maintenance expenses
 $1 million utilities expenses
The $45 million decrease in functional expenses was due to the elimination of lease activity between the County and its SANCAL
component unit.
Revenues:
Total revenues for governmental activities were $3.83 billion, an increase of .4% or $15 million from the previous year. This increase
consisted of increases in program revenue of $20 million offset by a $5 million decrease in general revenues as follows:
The $20 million increase in program revenue was primarily due to increases of $103 million and decreases of $83 million noted below:
Increases in program revenues of $103 million were composed of the following:
 $36 million in capital grants and contributions attributable to a $25 million increase in donated assets and approximately $11 mil‐lion
in other capital contributions.
 $38 million in operating grants and contributions resulting from a change in classification of property tax increment revenue
received from non‐county redevelopment agencies previously reported as property tax revenue;
 $16 million in operating grants and contributions attributable to Welfare to Work contracts and reimbursements for the costs
incurred for CALWORKs Assistance payments;
Chart 2
Revenues by Sources ‐ Governmental Activities
(As a Percent)
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  23
Management’s Discussion and Analysis
 $8 million in operating grants and contributions due to aid from various other governmental agencies; and
 $5 million in charges for services (booking fees).
Decreases in program revenue of $83 million were attributable to:
 $45 million in charges for services due to the elimination of lease revenue between the County and its SANCAL component unit;
and
 $38 million in operating grants and contributions for State Aid Realignment tied to sales tax and vehicle license fees which have
been declining statewide.
General revenues decreased overall by approximately $5 million. This decrease was due to increases of $64 million and decreases
$69 million as noted below:
The $64 million in increases were attributable to:
 a $22 million increase due to a settlement agreement reached with a vendor;
 a $19 million increase in current and delinquent property taxes;
 a $14 million increase in property taxes in lieu of vehicle license fees; and
 a $9 million increase in recovered expenditures associated with the County Operations Center construction project.
The $69 million decrease in general revenues was due to the following:
 $38 million as a result of a change in classification of property tax increment revenue received from non‐County redevelopment
agencies previously reported as property tax revenue, now reported as operating grants and contributions;
 $29 million in pooled investment income due to an approximately 50% (2008 4.6% vs. 2009 2.36%) drop in the annualized inter‐est
rate earned on investments in the County Treasury Pool; and
 $2 million decrease in other taxes primarily attributable to a decrease in property transfer taxes.
The County's governmental activities rely on several sources of revenue to finance ongoing operations. As shown in Chart 2, operat‐ing
grants and contributions of $2.18 billion accounted for 57%, the largest share of this revenue. These monies are received from
parties outside the County and are generally restricted to one or more specific programs. Examples of operating grants and contri‐butions
include State and Federal revenue for public assistance programs and health and sanitation programs.
Property taxes and property taxes in lieu of vehicle license fees are not shown by program, but are effectively used to support pro‐gram
activities county‐wide. Combined, these general revenues equaled $935 million and accounted for 24% of governmental activ‐ities.
Additionally, charges for services were approximately $444 million and accounted for 12% of revenues applicable to
governmental activities.
Other factors concerning the finances of the County's major governmental funds are discussed in the governmental funds section of
the “Financial Analysis of the County’s Funds.”
Chart 3
Revenue By Source ‐ Business‐type Activities
(As a Percent)
24  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Management’s Discussion and Analysis
Business‐type Activities:
Business‐type activities, which are exclusively comprised of enterprise funds, are intended to recover all or a significant portion of
their costs through user fees and charges. As shown in Chart 3, charges for services represent $36 million or 70% while grants ($13
million) and investment income ($2 million) represent 25% and 5% of total revenues respectively.
Net assets of business‐type activities increased by $18 million or 8%. This increase primarily included the following:
 a $22 million increase in capital assets principally due to various airport improvements and construction of a new terminal build‐ing
at McClellan‐Palomar Airport;
 a $7 million decrease in current and other assets due to: i) a $3 million decrease in airport receivables, chiefly as a result of
decrease in accrual related to the aid from Federal Aviation Administration ii) a $4 million decrease in pooled cash and invest‐ments;
and a
 a $3 million decrease in other liabilities, due to decreases primarily in accounts payable.
Financial Analysis of County Funds
The County uses fund accounting to demonstrate and ensure
compliance with finance‐related legal requirements.
Governmental Funds:
The focus of the County's governmental funds is to provide
information on near‐term inflows, outflows, and balances of
resources that are available for spending. Such information is
useful in assessing the County's financing requirements. In
particular, unreserved fund balance may serve as a useful
measure of a government's net resources available for spending
at the end of the fiscal year. Types of major governmental funds
reported by the County include the General Fund, the Public
Safety Special Revenue Fund and the Tobacco Endowment
Special Revenue Fund. Nonmajor governmental funds include
special revenue funds, debt service funds, and capital project
funds.
At June 30, 2009, the County's governmental funds had
combined ending fund balances of $2.23 billion, an increase of
$103 million in comparison to the prior fiscal year. Of the total
June 30, 2009 amount, $1.749 billion constituted unreserved
fund balance, which is available for spending at the County's
discretion. The remaining $479 million of fund balance is
reserved to indicate that it is not available for new spending
because it has already been committed. These reservations of
fund balances include: (1) $226 million reserved for other
purposes; (2) $108 million reserved for debt service; (3) $75
million reserved for Realignment health, mental health and
social services; (4) $59 million reserved for loans, due from
other funds and prepaids; and (5) $11 million reserved for
inventories ($10 million) and landfill closure costs ($1 million).
Governmental revenues overall totaled $3.75 billion
representing a .4% decrease. Governmental expenditures
totaled $3.78 billion, a .5% increase from the fiscal year ended
June 30, 2008.
General Fund:
The General Fund is the chief operating fund of the County. At
the end of fiscal year 2009, its unreserved fund balance was
$924 million, while total fund balance was $1.19 billion, a
decrease of $30 million from fiscal year 2008.
This $30 million decrease in fund balance was composed of $111
million in decreases and $81 million in increases as follows:
Decreases to fund balance of $111 million were composed of:
 a $48 million increase in contracted services expenditures
made up of: $18 million in home support services; $15 million
mental health; $8 million child care; and $7 million in family
resources contracts.
 $20 million in pooled investment income;
 $38 million in State Aid Realignment tied to sales tax and
vehicle license fees; and
 $5 million in other taxes.
Increases to fund balance of $81 million were composed of:
 a $22 million due to a settlement agreement reached with a
vendor;
 $16 million due to Welfare to Work contracts and
reimbursements for the costs incurred for CALWORKs
Assistance payments
 $15 million in current and delinquent property taxes;
 $14 million in property taxes in lieu of vehicle license fees;
 $9 million increase in recovered expenditures associated
with the County Operations Center construction project;
and
 $5 million in booking fees.
Public Safety Special Revenue Fund:
This fund was established to account for Proposition 172 half‐cent
sales taxes collected and apportioned to the County by the
State Board of Equalization to fund public safety activities. Per
Government Code 30052, a “maintenance of effort” (pre‐
Proposition (Prop) 172 public safety funding level) must be
maintained by the County to comply with the statute's
spending requirements. In accordance with the Code, funds are
allocated to the Sheriff, District Attorney and Probation
departments. Transfers‐out of this fund subsidize the following
types of public safety activities: juvenile detention services;
facilities maintenance and support; capital projects, equipment
and other one‐time expenditures; on‐going technology
initiatives; and various region‐wide services.
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  25
Management’s Discussion and Analysis
As of June 30, 2009, the total (unreserved) fund balance in the
Public Safety Special Revenue Fund was $3.6 million, a $454
thousand decrease from the previous fiscal year. However, Prop
172 revenues (one‐half sales and use tax), the primary revenue
source for this fund, decreased by $32 million or 14% in fiscal
year 2009 due to the ongoing economic recession.
Tobacco Endowment Special Revenue Fund:
This special revenue fund is used to account for the $411 million
the County received from the Tobacco Asset Securitization
Corporation (Corporation) related to the sale of 25 years of
tobacco settlement revenue in fiscal year 2002; and an
additional $123 million the County received from Corporation
resulting from the issuance of the San Diego County Tobacco
Asset Securitization Corporation refunding bonds in fiscal year
2006. At the end of fiscal year 2009, fund balance was $427
million, a decrease of $1 million from fiscal year 2008. The
decrease was attributable to investment income of $23 million;
offset by transfers out of $24 million to support health related
program expenditures.
Other Governmental Funds:
Other governmental funds consist of nonmajor funds, which
include special revenue funds, debt service funds, and capital
project funds. Individual fund data for each of these nonmajor
governmental funds is provided in the combining financial
statements/schedules and supplemental information section of
this report.
As of the end of fiscal year 2009, the fund balances of the other
governmental funds totaled $609 million, a net increase of $135
million over the prior year. This $135 million increase consisted
of $259 million in increases, offset by decreases of $124 million
as follows:
$259 million increase to Other Governmental Funds' fund
balance:
 $203 million including $137 million proceeds from the San
Diego Regional Building Authority's (SDRBA) (a blended
component unit of the County) issuance of fixed rate serial
and term lease revenue bonds and a $67 million transfer
from the General Fund to finance the acquisition,
construction and improvement of certain County facilities,
including facilities to be used as an operations center located
in the Kearny Mesa community of San Diego, the County
Operations Center (COC) project;
 $45 million elimination of debt service incurred in the
governmental funds' component units funded by lease
revenue from the County's General Fund;
 $11 million increase to the Housing and Community
Development Special Revenue Fund's fund balance
principally attributable to a $6 million increase in Federal
Housing Urban Development revenue and a $5 million
increase to transfers in from the General Fund to provide
working capital.
$124 million decrease to Other Governmental Funds' fund
balance:
 $45 elimination of lease revenue paid from the County's
General Fund to the governmental funds' component units;
 $23 million increase in Capital Outlay expenditures (other
than SANCAL referred to below) chiefly due to the
construction expenditures incurred in relation to the
aforementioned COC project;
 $20 million reduction in the Road Special Revenue fund
balance including a $11 million reduction in revenue in the
Road Fund attributable to a $6 million reduction in road and
street services revenue and $5 million in road improvement
revenue coupled with an $8 million increase in construction
contract expenditures and $1 million in other road project
costs;
 $11 million decrease to total SANCAL funds' fund balance
principally due to a $7 million net increase in interest
expenditures after giving effect to the elimination of effects
of eliminating the lease revenue and expenditures between
the County and the SANCAL coupled with a $4 million
increase in capital outlay expenditures;
 $9 million reduction in Housing Authority Special Revenue
Fund's fund attributable to a $1 million reduction in
investment income due to a 50% drop in the County Pool
rate earned for the fiscal year, coupled with an $8 million
increase in housing voucher program project expenditures;
 $6 million decrease to the Air Pollution Special Revenue
Fund's fund balance attributable to a $4 million decrease in
State Aid from the Air Resources Board and a $1 million
decrease in federal grants coupled with a $1 million decrease
in transfers in from the General Fund to support air pollution
activities;
 $6 million decrease to the Edgemoor Fund's fund balance
attributable to approximately $1 million decrease in
investment income and other revenue coupled with $5
million increase in transfers out to the General Fund ($2
million) and other governmental funds ($3 million);
 $1 million decrease to the Cable TV Special Revenue Fund's
fund balance attributable to approximately a $5 million
increase in transfers out to the General Fund offset by an
increase in cable television licenses and permits revenue of
$4 million; and
 $3 million of various other decreases to fund balance.
Proprietary Funds:
The County's proprietary funds provide the same type of
information found in the government‐wide financial
statements, but in more detail. The nonmajor enterprise funds
and the internal service funds are combined into single,
aggregated presentations in the proprietary fund financial
statements. Individual proprietary fund data is presented in the
combining financial statements/schedules and supplemental
information section of this report.
26  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Management’s Discussion and Analysis
Enterprise Funds:
See previous discussion above regarding Business‐type
activities.
Internal Service Funds:
Net Assets of the internal service funds (ISF) totaled $102
million, a net decrease of $1.5 million from the prior year. This
change was primarily accounted for by the following decreases
and increases to Net Assets:
 a decrease of $18.4 million in the Information Technology
Fund primarily due to a net operating loss of $20.2 million
offset by a transfer in of $1.8 million.
 an increase of $16.4 million as a result of: 1) Employee
Benefits Fund ‐ $5.3 million in operating income and $2.4
million non‐operating revenue for a total change in net
assets of $8 million; 2) Fleet Services ISF ‐ capital
contributions of $7.5 million and transfers in of $.9 million
for a total of $8 million.
Fiduciary Funds:
The County maintains fiduciary funds for the assets of the
Investment Trust Fund and the Agency Funds.
Investment Trust Fund:
This Fund was established for the purpose of reporting pooled
and specific investments. The Investment Trust Fund's net
assets totaled $3.77 billion, an increase of $156 million, of the
previous year. This increase was substantially due to
contributions to investments of $5.9 billion offset by
distributions from investments of $5.77 billion.
Agency Funds:
Agency funds maintain assets held in an agent capacity for
other governments, organizations and individuals. These assets
do not support the County's programs or services. Any portion
of the agency funds' assets held at fiscal year end for other
County funds are reported in those funds rather than in the
agency funds.
General Fund Budgetary Highlights
The County's final budget differs from the original budget (see
Notes to required supplementary information) in that it
contains supplemental appropriations approved during the
fiscal year for various programs and projects, as well as
transfers of appropriations, budget corrections, re‐budgets, and
account reclassifications. For the fiscal year ended June 30,
2009 net expenditure appropriations increased by $75.0 million
and appropriations for transfers‐out and payment to escrow
agent refunded bond increased by $442.8 million for a net
increase of $517.8 million.
Appropriation increases of note to the original budget were the
following:
 $443.5 million in Refunding bonds issued to record the
issuance of the 2008 Taxable Pension Obligation Bonds and
its associated costs, based on bond proceeds. The proceeds
of these bonds were used to refinance the County's 202B
Taxable Pension Obligation Bonds in order to exit the
auction rate securities market, take advantage of lower
interest rates, obtain debt service savings and level out
aggregate pension obligation bond debt service.
 $5.0 million in the Department of Planning and Land Use for
hazardous fuels reduction activities funded by federal grants
and fire fighting equipment for the rural fire agencies funded
by a grant from the Micromini Foundation.
 $6.0 million in the Registrar of Voters for the May 19
Statewide Election, funded by fund balance and revenues
from partial reimbursement of precinct ballot costs and
other participating agencies. The Governor signed Senate
Bill 19 which called for the special election, with the
understanding that the Legislature will reimburse counties
for the election costs. Any reimbursement received will be
used to restore fund balance.
 $7.9 million for Homeland Security in various departments
including the Office of Emergency Services, Department of
Planning and Land Use, Department of Environmental
Health, Probation Department, Sheriff and Health and
Human Services for emergency planning, continued
development of an exercise program, equipment purchases,
regional projects and grant administration, funded by
revenue from the California Office of Homeland Security.
 $1.9 million in the Community Services Group Executive
Office for an upgrade to the Documentum enterprise
content management application, used to manage and store
records electronically, funded by fund balance.
 $22.5 million for salaries and benefits for incentives earned
through the County's Fiscal Year 2007‐08 Quality First
program, funded by fund balance.
 $3.0 million in the Sheriff to be used for regional
communications training and for mutual aid public safety
communications equipment, funded by a Federal
Department of Homeland Security Public Safety
Interoperable Communications grant passed through the
City of San Diego.
 $4.5 million in the Community Services Group Executive
Office to reclassify a General Fund working capital loan to an
operating transfer out to the Housing and Community
Development Special Revenue Fund.
 $5.6 million in the Sheriff to provide funding to designated
agencies working within the San Diego County region to
enhance cooperation and coordination between law
enforcement agencies in a joint mission to reduce border
related crimes and assist in securing the United States land
borders, funded by the Governor's office of Homeland
Security Operation Stonegarden grant funds.
 $1.7 million in the Contributions to County Library for the
cumulative amount owed to the County Library as a taxing
agency affected by the establishment of the San Marcos
Redevelopment Agency, for fiscal year 1998 through fiscal
year 2008, funded by fund balance.
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  27
Management’s Discussion and Analysis
Actual revenues fell short of the final budgeted amounts by
$106.81 million, while actual expenditures were less than the
budgeted amount by $455.17 million. The combination of the
revenue and expenditure shortfalls resulted in a revenue/
expenditure operating variance of $348.36 million. Other
financing sources and uses of funds resulted in a net sources
versus uses variance from budget of $157.97 million and there
was no variance in the increase to the reserve for inventories of
materials and supplies. These combined amounts resulted in a
variance in the net change in fund balance of $506.33 million.
Highlights of actuals compared to budgeted amounts are
discussed below:
Health and Human Services Agency Programs:
Funded by a combination of State, federal, and County
revenues, most Health and Human Services Agency programs
are carried out in the functional areas of health and sanitation
and public assistance, with budget over expenditure variances
of $86.2 million and $41.3 million, respectively. Overall, these
expenditure variances primarily resulted from a lower demand
for services than budgeted levels in the following areas.
 Aid payment expenditures for the Severely Emotionally
Disturbed; Foster Care; Aid to Adoptive Parents; and KinGap
in Child Welfare Services
 Contracted services (e.g., in Behavioral Health Services and
un‐awarded Mental Health Services Act contracts).
 Early Periodic Screening; and Diagnosis and Treatment
(EPSDT) services contractor expenditures;
 Aligning costs to State allocations which included cuts by
the State to Proposition 36 and the Offender Treatment
program
 Lower than expected retroactive CMS payments for prior
year claims;
 Lower Welfare Case Data Information System expenditures.
These lowered expenditures were offset by corresponding
reductions in federal and State revenue.
Salaries and Benefits:
With the economic recession and the continuing uncertainty
over State and federal funding, many County functions have
significantly reduced spending for salaries and benefits in an
effort to mitigate revenue shortfalls. The total budget over
expenditures variance across all functions in this category was
$51.7 million. A significant portion of these savings were in the
Public Safety Group due to a $32 million reduction in Prop 172
revenues (See previous discussion of Public Safety Special
Revenue Fund). The economic downturn and continued decline
in the housing market resulted in reduced consumer spending
and reduced sales tax revenues which are the basis for Prop 172
revenues. The total budget over expenditures variance across
Public Safety for salaries and benefits was $28.8 million, of
which $12.1 million is attributable to the Sheriff's department.
Delayed expenditures:
Many County projects, such as maintenance and information
technology, take place over more than one fiscal year.
However, at inception they are budgeted at full expected cost,
resulting in budgeted over expenditure variances that are
rebudgeted in the new fiscal year. For example:
 The Department of Planning and Land Use rebudgeted $5.1
million of one‐time funding for the Business Case
Management System; Service First Initiative; General Plan
Update including Zoning Ordinance revisions; and the Fire
Prevention Program to continue to supplement fire services
in the unincorporated area of the county.
 The Community Services Group rebudgeted $1.8 million for
upgrades to the Documentum enterprise content
management application and environment.
 The Sheriff rebudgeted $10.2 million for various law
enforcement grants, including 1) $6.8 million for Homeland
Security grants that include Operation Stonegarden, the
Urban Area Security Initiative and Law Enforcement
Terrorism Prevention Program, 2) $2.8 million for public
safety communications equipment based on a Public Safety
Interoperable Communications grant; and 3) $.7 million for
Driving Under the Influence grants.
 The Department of Public Works rebudgeted $6.0 million for
the Woodside Drainage Project to alleviate flooding near
Woodside Ave in the Lakeside Area and $0.4 million for the
Cartographic Services GIS Project.
Management and Contingency Appropriations:
The County annually sets up management and contingency
appropriations based on both ongoing general purpose
revenues and prior years' fund balance for a variety of one‐time
capital and operating expenditures as well as potential
emergencies. Unexpended appropriations in this area resulted
in a budget over actual variance of $53.2 million.
Additionally, in Fiscal Year 2009, the County appropriated $73.2
million for economic uncertainty with the intent that it not be
spent unless unusual needs arose; of that amount, $68.1 million
was unexpended at year end.
Capital Assets and Commitments
Capital Assets
At June 30, 2009, the County's capital assets for both
governmental and business‐type activities was $2.93 billion and
$150 million, respectively, net of accumulated depreciation.
Investment in capital assets includes land, construction in
progress, structures and improvements and infrastructure
(including roads, bridges, flood channels, and traffic signals).
Significant capital asset expenditure activity in fiscal year 2009
included:
28  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Management’s Discussion and Analysis
Governmental Activities:
 $45.1 million towards the construction and improvement of
County maintained roads, bridges and other road related
infrastructure.
 $32.4 million towards the construction of the Medical
Examiner Building at the County Operation Center in Kearny
Mesa. Total project costs are estimated at $85.4 million.
 $30.9 million towards construction at the County Operations
Center. Total project costs are estimated at $181.5 million.
 $23.3 million towards various land acquisitions.
 $15.8 million towards the construction of various
miscellaneous capital outlay fund projects.
 $15.3 million towards purchase of the Central Public Health
Clinic. Total project costs are estimated at $15.5 million.
 $10.9 million in infrastructure donated by developers.
 $10.1 million towards the construction of the Edgemoor
Skilled Nursing Facility in Santee. Total project costs are
estimated at $123.5 million.
 $5.2 million towards the construction of Lakeside Baseball
Park. Total project costs are estimated at $10.6 million.
 $4.3 million in donated structures.
 $3.8 million towards the construction of flood control
drainage channels.
 $3.4 million towards the San Elijo Nature Center Expansion.
Total project costs are estimated at $5.7 million.
Business‐type Activities:
 $17 million towards improvements at the Palomar Airport
Terminal, parking lot, access roads and drainage. Total
project costs are estimated at $27 million.
 $1.5 million towards improvements at the Gillespie Field
Airport runways, transient ramp and taxiway. Total project
costs are estimated at $1.8 million.
For government‐wide financial statement presentation,
governmental funds depreciable capital assets are depreciated
from the acquisition date to the end of the current fiscal year.
Governmental funds financial statements record capital asset
purchases as expenditures.
Capital Commitments:
As of June 30, 2009, capital commitments included the
following:
Governmental Activities:
 $52 million for the construction of: the County Operations
Center, Ramona and Fallbrook Libraries, Medical Examiner
building, Valley Center Road Bridge, Black Canyon Road
Bridge, Route 54/94, Viejas Blvd. Bridge and Valley Center
Road.
Business‐type Activities:
 $3.5 million for the construction of improvements at
Gillespie Field Airport runway, transient ramp, taxiway, and
Sewer Improvements and the Flow Monitoring Systems at
Lakeside and Spring Valley Sanitation Districts.
(Please refer to Note 7 in the notes to the financial statements
for more details concerning capital assets and capital
commitments.)
Long-Term Liabilities
Governmental Activities:
At June 30, 2009, the County’s governmental activities had
outstanding long‐term liabilities of $2.28 billion
Of this amount, approximately $2.04 billion pertained to long‐term
debt. Principal debt issuances included: $1.01 billion in
taxable pension obligation bonds; $575 million in Tobacco
Settlement Asset‐Backed Bonds; and $470 million in
certificates of participation (COPs) and lease revenue bonds
(LRBs).
Other long‐term liabilities included $109 million in claims and
judgments; $101 million in compensated absences; and $21
million for landfill closure and postclosure costs.
During fiscal year 2009, the County's total principal amount of
COPs and lease revenue bonds, other bonds, and loans for
governmental activities increased by $39.334 million.
The $39.334 million increase was due to the following increases
and decreases:
Increases to debt were $593.236 million and included:
 The County's issuance of $443.515 million Series 2008
Taxable Pension Obligation Bonds to advance refund
$441.125 million of outstanding County of San Diego
Taxable Pension Obligation Bonds 2002 Series B (the
“2002B bonds”) Subseries B‐1 and B2‐4 Auction Rate
Securities;
 The San Diego Regional Building Authority's issuance of
$136.885 million of fixed rate serial and term lease revenue
bonds titled, “San Diego Regional Building Authority
(SDRBA) Lease Revenue Bonds ‐ County Operations Center
and Annex Redevelopment Project Series 2009 A”;
 The addition of $882 thousand of California Energy
Conservation loans.
 Additionally, $8.055 million of principal was accreted
(added) to the outstanding Tobacco Settlement Asset‐
Backed Bonds' Capital Appreciation Bonds principal
balances outstanding.
 Also, debt increased by $3.899 million due to the effects of
arbitrage, unamortized issuance premiums, unamortized
issue discounts and unamortized deferred amounts on
refundings.
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  29
Management’s Discussion and Analysis
Decreases to debt were $553.902 million and included:
 An advance refunding of $441.125 million of outstanding
2002B bonds Subseries B‐1 and B2‐4 Auction Rate Securities
referred to above; and $112.777 million in principal debt
service payments, including $44 million for the partial
prepayment of the 2002B bonds' Subseries B‐1 Auction Rate
Securities prior to the refunding of the 2002B bonds.
Business‐type Activities:
Long‐term liabilities for business‐type activities totaled $2.49
million and consisted of $2.04 million for capital loans and $448
thousand for compensated absences.
Long‐term liabilities for business‐type activities decreased by
$159 thousand. This was due to a combination of $217 thousand
in reduced debt service payments on capital loans and a net
increase of $58 thousand in compensated absences.
(Please refer to Notes 13 through 15 in the notes to the financial
statements for more details concerning long‐term debt;
changes in long‐term liabilities; and funds used to liquidate
liabilities.)
Credit Ratings
The County's issuer and credit ratings on its bonded program
are as follows:
There were no changes to the previous year’s credit ratings
issued by Moody’s and Fitch, while the credit ratings issued by
Standard and Poor’s increased in each category as compared to
the previous fiscal year. In September 2008, Standard & Poor's
upgraded the County's ratings on its outstanding Certificates of
Participation and Pension Obligation Bonds from AA to AA+
and raised the County's issuer rating to AAA. According to
Standard & Poor's RatingsDirect report issued in September
2008, “the stable outlook reflects the County's deep and diverse
economic base, strong reserve levels, formalized policies,
manageable debt burden and long track record of conservative
budgeting where actual results typically exceed initial
projections.”
Economic Factors and Next Year's Budget
and Rates
 The fiscal year 2010 General Fund adopted budget utilizes as
funding sources for one‐time expenditures $336.6 million
out of $576 million in unreserved undesignated fund balance
and $7.2 million out of $347.6 million unreserved designated
fund balance.
 The fiscal year 2010 General Fund adopted budget contains
total appropriations of $3.790 billion. This is an increase of
$110.5 million or 3.0% from the fiscal year 2009 General
Fund adopted budget. The 3.0% increase for fiscal year 2010
includes the one‐time use of fund balance to establish a
designation for economic uncertainty of $100.0 million.
Excluding this entry, the General Fund Budget increases by
$10.5 million or 0.3% from fiscal year 2009. A number of risk
factors continue to be tracked closely: the U.S. economy,
the State of California's ability to operate within its 2010
budget and its projected budget imbalances for fiscal year
2011, 2012 and beyond; the continued loss of jobs, high
unemployment, consumer spending weakness from
declining employment, low wage increase or wage cuts, and
high debt burden
 The U.S. economy's Gross Domestic Product (GDP) for 2008
showed an increase of 0.4% versus an adjusted growth rate
of 2.1% in 2007. GDP is expected to decline for 2009, with
projections ranging from ‐2.7% to ‐2.5% and GDP growth for
2010 is forecasted to be in the range of 1.7% to 2.0%.
 California's economy has been impacted by the same
financial markets, housing and real estate, employment and
personal income trends experienced at the national level. In
2008, key indicators of California's economy showed weak
results. Payroll employment declined by 1.2%, real personal
income declined by 0.1%, and adjusted taxable sales
declined by 5.7%. California's 2009 economy is expected to
remain weak with payroll employment expected to decline
by 4.0%, real personal income expected to decline by 1.5%,
and taxable sales expected to decline by 3.3%.
 The State's budget outlook continues to be strained by the
recession as well as the ongoing structural imbalance
between revenues and expenditures.
30  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  County of San Diego
Management’s Discussion and Analysis
 San Diego was one of the first areas in California and the
nation to experience the housing price meltdown, feel the
financial impacts from the credit crisis, and experience a
jump in loss of jobs. 2009 continues to be one of the most
unsettled years for our region's economy. Although, the
University of San Diego's Index of Leading Economic
Indicators rose 0.6% in August 2009, building permits, initial
unemployment insurance claims and help wanted
advertising indicators were weak in that month.
 The state of the economy plays a significant role in the
County's ability to provide core services and the mix of other
services sought by the public. Building permit services, are
down making it difficult to maintain core services for these
fee‐based programs. The real estate market slump affects
the County's general purpose revenues, which are expected
to decline in fiscal year 2010 from fiscal year 2009. General
Purpose Revenues are relied upon to fund local discretionary
services, as well as to fund the County's share of costs for
services that are provided in partnership with the State and
federal government. Additionally, the State’s budget,
severely impacted by the recession, has cut funding to local
governments in many program areas, including grants for
certain public safety services.
As discussed below, the County's general purpose revenues are
projected to decline by 6.3% (with budgeted revenue of $950.7
million in fiscal year 2010).
 The largest source of general purpose revenues is property
taxes ($496.3 million budgeted in fiscal year 2010),
representing 52.2% of the total. For the last nine years,
property tax growth has been high (8.5% average annual
growth) due to the County's strong overall economy and
healthy real estate market. In 2010, property taxes are
budgeted to decline by $46.8 million from the 2009 budget.
The decline in property tax revenue is due to the current soft
commercial and residential real estate conditions as
evidenced by the continued low level of building permits;
the year over year decline in the median price of homes; the
sustained high level of notices of default and foreclosures;
and a continued slowing in total deeds recorded. Current
property taxes consist of three components: current secured
property taxes, current supplemental property taxes, and
current unsecured property taxes.
 The budgeted amount of current secured property tax
revenues ($479.1 million) assumes a net local assessed
secured property value decline of 2.5% from the actual local
assessed secured property value figure for 2009, and factors
in an allowance for tax increment allocations to
redevelopment agencies and an allowance for delinquent
property tax payments. Actual net local assessed secured
property value decline exceeded the assumed net local
assessed secured property value decline coming in at 2.7%.
The actual current secured property tax revenues in fiscal
year 2010 will likely come in lower than budget. The fiscal
year 2011 current secured property tax revenues assumed no
growth in local assessed secured property values.
 Current supplemental property taxes ($0.3 million budgeted
in fiscal year 2010) are derived from net increases to the tax
roll from either new construction or changes in ownership
that occur subsequent to the January 1 lien date and are,
therefore, more difficult to predict. The slowdown in new
construction and the decline in real estate prices are being
acutely felt in supplemental property tax revenues. In many
change of ownership transactions, instead of a property
owner being billed for an additional amount of property tax
because the value of the property after the transaction is
higher than the value as of the lien date, the property owner
receives a refund because the value is lower than it was on
the lien date. In fiscal year 2006, refunds countywide totaled
$4.0 million. They increased to $6.2 million in fiscal year
2007, and increased again to $15.0 million in 2008.
Supplemental refunds exceeded $38 million in fiscal year
2009 and are anticipated to remain high in fiscal year 2010.
Current supplemental property tax revenues were $29.5
million in fiscal year 2006. They dropped to $23.4 million in
fiscal year 2007, and to $14.0 million in fiscal year 2008. In
fiscal year 2009, current supplemental property tax revenues
were $2.4 million. The Adopted Operational Plan assumes
that this weakness will continue through the next two fiscal
years.
 The current unsecured property taxes ($16.8 million
budgeted in fiscal year 2010) roll is forecasted based on
trends and available information at the time the budget is
developed. Growth of 4.0% is budgeted for fiscal year 2010
over the fiscal year 2009 adopted budget.
 Property taxes in lieu of vehicle license fees (VLF) comprises
32.5% (an estimated $309.3 million) of budgeted general
purpose revenues in fiscal year 2010. This revenue source
was established by the State in fiscal year 2005 to replace
the previous distribution of vehicle license fees to local
governments. Growth in this revenue source is based on the
growth in the County's gross taxable assessed value. The
certified rate of decline for 2010 is 2.55%. Similar to current
secured property tax revenue, no growth is expected for
fiscal year 2011.
 Real Property Transfer Tax Revenue (RPTT) for fiscal year
2010 is budgeted at $5.9 million, which is 0.6% of general
purpose revenues. RPTT is paid when any lands, tenements,
or other realty exceeding $100 in value are sold, granted,
assigned, transferred or conveyed. The tax rate set by the
State is $1.10 per $1,000 of assessed valuation. The County
is entitled to 100% of the revenues from all transactions in
the unincorporated area and 50% of the revenues from
transactions in the incorporated areas.
 Sales and use tax revenue and in lieu local sales and use tax
($23.4 million in fiscal year 2010) represents about 2.5% of
budgeted general purpose revenues and is derived from
County of San Diego  Comprehensive Annual Financial Report for the Year Ended June 30, 2009  31
Management’s Discussion and Analysis
taxable sales by businesses located in unincorporated
County areas. Its growth is generally impacted by population
and income, but is primarily due to economic development
and new business formation in the County. These amounts
reflect both the sales tax revenues and the in lieu local sales
and use tax replacement funding that will be transferred
from ERAF. Again, effective July 1, 2004, provisions of AB7
X1, one of the 2004 State budget bills referred to as the
“triple flip”, took effect. It enabled the State to redirect one‐quarter
cent of the local sales and use tax to the state to
repay up to $15 billion in bonds authorized by Proposition 57
(March 2004) to help the State refinance its past debt. In
turn, the lost revenues are replaced on a dollar‐for‐dollar
basis with countywide property tax revenues shifted back
from the ERAF.
 Retail sales revenue has been growing moderately over the
past few years in concert with population growth and new
retail business formation in the unincorporated area.
Currently, however, retail sales at the statewide, southern
California and San Diego regional level all experienced
declines in the third quarter and fourth quarters of 2008
attributed to the ongoing economic volatility and housing
market declines. These trends are expected to continue
through 2009. The amount of budgeted revenue in fiscal
year 2010 is approximately $1.3 million (5.4%) below the
fiscal year 2009 budgeted revenue.
 Other revenues budgeted for fiscal year 2010 total $115.9
million, and it comprises 12.2% of budgeted general purpose
revenues. The fiscal year 2010 amount represents a 7.1% or
$7.7 million increase over the fiscal year 2009 Adopted
Budget total. Various revenue sources make up this
category including investment income on deposits, fines,
fees and forfeitures, redevelopment agency tax increment,
prior year adjustments on property taxes including
collections on Teetered taxes, franchise revenue, payment
from the City of San Diego in lieu of booking fees, cable and
video licenses and other miscellaneous revenues. The
decrease in revenues is primarily due to anticipated lower
investment income on deposits as a result of a decline in
interest rates that is partially offset by growth in
redevelopment agency tax increment.
The County's Operational Plan for fiscal year 2010 and for fiscal
year 2011