COMPREHENSIVE
ANNUAL
FINANCIAL REPORT
Fiscal Year Ended June 30, 2002
CITY OF MENLO PARK, CALIFORNIA
PREPARED BY
THE FINANCE DEPARTMENT
Uma Chokkalingam
Finance Director
Diel Hutchins
Financial Services Manager
City of Menlo Park
Comprehensive Annual Financial Report
For the year ended June 30, 2002
Table of Contents
Introductory Section
Exhibits
Letter of Transmittal.................................................................................................................... ................. 1
Organization Chart.......................................................................................................................... ............. 2
Principal Officials of the City of Menlo Park, California ......................................................................... 3
Certificate of Achievement for Excellence in Financial Reporting -
Government Finance Officers Association .......................................................................................... 4
Certificate of Award for Outstanding Financial Reporting -
California Society of Municipal Finance Officers ............................................................................... 5
Financial Section
Page
Independent Auditors’ Report ................................................................................................................... 1
General Purpose Financial Statements:
Combined Balance Sheet - All Fund Types and Account Groups.................................................... 4
Combined Statement of Revenues, Expenditures and Changes in Fund Balances -
All Governmental Fund Types and Expendable Trust Fund ..................................................... 6
Combined Statement of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual - General, Special Revenue, and Capital Projects Funds........................... 8
Combined Statement of Revenues, Expenses and Changes in Retained Earnings -
Proprietary Fund Type................................................................................................................... 10
Combined Statement of Cash Flows - Proprietary Fund Type...................................................... 11
Notes to General Purpose Financial Statements ............................................................................... 15
Required Supplementary Information ................................................................................................... 48
City of Menlo Park
Comprehensive Annual Financial Report
For the year ended June 30, 2002
Table of Contents, Continued
Financial Section, Continued
Page
Combining, Individual Funds and Account Groups Financial Statements and Schedules:
General Fund:
Comparative Balance Sheets ......................................................................................................... 52
Comparative Statements of Revenues, Expenditures
and Changes in Fund Balances............................................................................................... 53
Statement of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual.................................................................................................................... 54
Special Revenue Funds:
Combining Balance Sheet .............................................................................................................. 56
Combining Statement of Revenues, Expenditures and Changes in Fund Balances.............. 60
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual.................................................................................................................... 64
Debt Service Funds:
Combining Balance Sheet .............................................................................................................. 76
Combining Statement of Revenues, Expenditures and Changes in Fund Balances.............. 77
Capital Projects Funds:
Combining Balance Sheet .............................................................................................................. 80
Combining Statement of Revenues, Expenditures and Changes in Fund Balances.............. 82
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual.................................................................................................................... 84
Enterprise Fund:
Combining Balance Sheet .............................................................................................................. 90
Combining Statement of Revenues, Expenses and Changes in Retained Earnings.............. 91
Combining Statement of Cash Flows........................................................................................... 92
Trust and Agency Funds:
Combining Balance Sheet .............................................................................................................. 94
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Expendable Trust Funds ......................................................................................................... 96
Combining Statement of Changes in Assets and Liabilities – Agency Fund ......................... 98
General Fixed Assets Account Group:
Comparative Schedules of General Fixed Assets - By Source ................................................ 101
Schedule of General Fixed Assets - By Function and Activity ............................................... 102
Schedule of Changes in General Fixed Assets - By Function and Activity .......................... 104
City of Menlo Park
Comprehensive Annual Financial Report
For the year ended June 30, 2002
Table of Contents, Continued
Financial Section, Continued
Page
General Long- Term Debt Account Group:
Comparative Schedules of General Long- Term Debt............................................................... 106
Statistical Section ( Unaudited)
General Government Expenditures by Function - Last Ten Fiscal Years ........................................... 108
General Government Revenues by Source - Last Ten Fiscal Years...................................................... 110
General Government Taxes Detail - Last Ten Fiscal Years ................................................................... 112
Property Tax Levies and Collections - Last Ten Fiscal Years ............................................................... 113
Assessed Valuation, Tax Rate and Tax Levies - Last Ten Fiscal Years................................................ 114
Ratio of Net General Bonded Debt to Total Assessed Value and Net Bonded
Debt Per Capita - Last Ten Fiscal Years............................................................................................. 117
Computation of Legal Debt Margin ........................................................................................................ 118
Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total
General Expenditures - Last Ten Fiscal Years .................................................................................. 119
Special Assessment Collections - Last Ten Fiscal Years ........................................................................ 120
Property Tax Rates - All Direct and Overlapping Governments - Last Ten Fiscal Years................. 121
Direct and Overlapping Bonded Debt ..................................................................................................... 122
Demographic Statistics - Last Ten Fiscal Years....................................................................................... 123
Property Value, Construction, Bank and Savings and Loan Deposits –
Last Ten Fiscal Years.......................................................................................................................... . 124
Principal Taxpayers ............................................................................................................................... .... 127
Miscellaneous Statistical Data................................................................................................................... 128
INTRODUCTORY
SECTION
i
701 LAUREL STREET, MENLO PARK, CA 94025- 3483
www. menlopark. org
December 2, 2002
Honorable Mayor
Members of the City Council
and Citizens of Menlo Park
Comprehensive Annual Financial Report
We are pleased to submit the comprehensive annual financial report for the City of
Menlo Park, California ( the City), for the fiscal year ended June 30, 2002. Responsibility
for the accuracy of the data and the completeness and fairness of the presentation,
including all disclosures, rests with the City. To the best of our knowledge and belief, the
data is accurate in all material respects and is reported in such a way as to present fairly
and honestly the financial position and results of operations of the funds and account
groups of the City. All disclosures necessary to enable the reader to gain an
understanding of the City's financial activities have been included.
The comprehensive annual financial report is presented in three sections: introductory,
financial, and statistical. The introductory section includes this transmittal letter, the
City's organizational chart and a list of principal officials.
The financial section includes the general purpose financial statements and the
combining and individual fund and account group financial statements, as well as the
auditor's report on the financial statements. The statistical section includes selected
financial and demographic information, generally presented on a multi- year basis.
The notes to the financial statements are provided in the financial section and are
considered essential to fair presentation and adequate disclosure for this financial report.
The notes include the summary of significant accounting polices for the City and other
necessary disclosures of important matters relating to the financial position of the City.
The notes are treated as an integral part of the financial statements and should be read in
conjunction with them.
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Reporting Entity
The financial reporting entity ( the government) includes all the funds and account
groups of the primary government ( i. e. the City of Menlo Park as legally defined), as well
as all of its component units. Component units are legally separate entities for which the
primary government is financially accountable.
Blended component units, although legally separate entities, are, in substance, part of the
primary government’s operations and are included as part of the primary government.
Accordingly, the Community Development Agency ( the Agency) is reported as a
blended component unit of the primary government.
Menlo Park consists of a balanced mix of residential, commercial, industrial and
educational uses. The City provides a varied range of services, including, police
protection, engineering, street, park, building and vehicle maintenance, water
distribution and maintenance, transportation services, community services ( recreation,
child care and senior services), planning, zoning and building inspection, code and
parking enforcement, library services, housing and general administration ( finance,
personnel, management information systems, legal and record keeping).
Community Development Agency
The City Council, acting as the Agency Board, exercises authority over redevelopment
activities for which the City also provides administrative and financial services;
therefore, its financial activities are included in this report.
The Agency was established in 1981, with the first and only project area in turn
established that same year on November 24. During the first ten years, implementation
of Agency projects caused most of the original revenue cap of $ 30 million to be either
expended or committed to bond issues and City loan debt service. As a result, a plan
amendment was necessary to pursue any new projects.
In order to realize new projects, a new plan with a new life and revenue cap was
necessary. The planning process culminated in the adoption of Agency Ordinance No.
826 on September 10, 1991. The ordinance became effective on October 10, 1991. The
new revenue cap is $ 430,000,000. The Amended and Restated Las Pulgas Community
Development Project Area Plan also established new bonded indebtedness limits and
extended the time limit for the power of eminent domain for an additional twelve years.
On March 3, 1992 the Agency Board approved a bond issue of up to $ 25 million, both to
fund projects identified in the Amended Plan and to refund tax allocation bonds issued
in 1985. During the 1995- 1996 fiscal year the Agency issued $ 32,305,000 of tax allocation
refunding bonds to refund and defease the tax allocation bonds issued in 1988 and 1992.
During the 2000- 2001 fiscal year the Agency issued $ 44,000,000 of tax allocation bonds to
provide funds for various redevelopment projects of the Agency.
iii
On October 11, 1994, in accordance with State of California Health and Safety Code
Section 33333.6, the Agency amended its deadline to incur debt to January 1, 2004 and its
deadline for Activities and Plan expiration was amended to November 24, 2021. These
changes did not affect the Agency’s existing debt. They shortened the period for
incurring debt and implementing the Redevelopment Plan, as required by the cited State
Code.
The Agency budget for fiscal year 2001- 2002 identified projects in the following
categories:
Housing $ 7,917,500
Public Works Projects, Public Services and Facilities 16,488,510
Economic Condition and Outlook
The City of Menlo Park is located in San Mateo County, midway between the cities of
San Francisco and San Jose. It is an area that has comparatively high property values and
is a vital part of the region commonly referred to as the Silicon Valley. One of its
noteworthy neighbors is Stanford University. Because of the number of venture capital
firms and the amount of venture capital that is invested through companies located in
Menlo Park, it is internationally known as the “ Venture Capital”.
The City contains a healthy balance of residential, commercial, and industrial uses.
Residential home prices are among the highest in the area reflecting the desirability of
living in the community. Major companies that have facilities in Menlo Park include Sun
Microsystems, Tyco/ Raychem Corporation, E* Trade, SRI International, Informix and
Boise Cascade. Menlo Park is also home to the Western Region Headquarters of the
United States Geological Survey, a major Veterans Administration medical facility, and
the U. S. Department of Energy funded and University owned and operated Stanford
Linear Accelerator Center.
As with most California communities, the City's major revenue source is sales tax with
property taxes and fees and charges for services also being important revenue sources.
Until recently, the Silicon Valley was experiencing a strong economy. The City was a
recipient of the financial benefits of being a part of a vibrant regional economy and
experienced significant increases in sales tax revenue and property values. The national
economic downturn in 2001 has resulted in decreases both in realized and forecasted
revenues. The City has and will continue to have an overall low rate of population
growth, which minimizes the need to expand City services. This, coupled with modest
commercial and light industrial development that generally generate more in revenues
than they cost the City in services, helps ensure continued stability in the City’s finances.
iv
Major Initiatives
FOR THE YEAR: The City Council initiated a number of new projects and emphasized
maintaining quality City services with the goal of ensuring that Menlo Park remains a
desirable community. The focus in developing the 2001- 2002 fiscal year budget was to
sustain existing service levels. The passage of the $ 38 million Measure T general
obligation bond, combined with the $ 44 million redevelopment agency bond issue a year
earlier, provides the City with the financial resources to improve community facilities to
enhance the quality of life for community residents.
Numerous policy studies and high priority projects were completed in fiscal year 2001-
2002. The City Council continued to focus attention on issues related to land use,
trafficcirculation and neighborhood- level studies. The Community Development Agency
initiated work on its highest priority projects.
The City Attorney has successfully negotiated the acquisition of many of the properties
required for the future development of the Hamilton Avenue housing and public park
project. The City Clerk completed a records management manual and retention schedule
and has implemented the first phase of the improved record management system,
including new document imaging technology to improve storage and facilitate retrieval.
The City Manager’s Office has continued its emphasis on organizational development
and improving the workflow around the Council support function. The conversion to a
program- driven organization has evolved to a where the Council can set service levels
and track performance results. Work continues on bringing the city into compliance with
the new GASB34 reporting requirements. Internal procedures have been streamlined
with the recent introduction of the CalCard procurement program and planned revisions
to the city’s purchasing policy. The Information Services operation was stabilized and
has made considerable progress on a number of fronts including software licensing,
switch upgrading, GIS and Tidemark expansion, County LawNet intranet
reconfiguration, our financial systems updated, improved virus and firewall protection
and a multiyear strategic plan for equipment and services nearing completion.
The Building division experienced a downturn in new construction permitting activity
with a corresponding reduction in revenues and construction. Planning has experienced
a commensurate decrease in new applications for commercial projects, but revenues will
be partially offset by a new billing/ invoicing system that will capture staff expense
incurred in project review. Planning is involved in a policy studies ( M2, Residential
Review, Fiscal Impact Model, Housing Element Update, Redevelopment project input,
etc.).
Transportation division continued its work on neighborhood traffic calming, congestion
management and related projects. In addition to planned projects such as the Willow-
Cambridge Undercrossing, exploring options for dealing with Train Horn Noise, Santa
Cruz Avenue and El Camino Real Signalization, staff were also involved in other
important additional assignments with less reliance on outside consultant assistance.
v
Community Services accomplishments include the opening of the Teen Center, increased
programming at the Onetta Harris Center and Belle Haven Swimming Pool, involvement
in supporting the successful Measure T campaign, the completion of the Arts Needs
Assessment leading to the Cultural Plan, and establishing improved coordination and
outreach with respect to field use, scheduling and maintenance practices.
Much of the work undertaken in Housing and Redevelopment was continuing from last
year’s goal setting. Considerable progress was made in terms of implementing the high
priority redevelopment area projects funded through last year’s bond issue, with many
projects advancing through the design phase and into construction: Included are the Ivy
Drive improvements, studies of pedestrian and bicycle safety, plans prepared for the
renovation of Kelly Park and Ravenswood School District play fields, and neighborhood-wide
infrastructure improvements. In Housing, key work elements including study of
the Oak Grove Plaza housing proposal, the creation of a Peace Officer Mortgage
Assistance program, preliminary work with Habitat for Humanity, and continuing
efforts to assemble land on Hamilton Avenue. In addition, six housing rehabilitation
loans and five emergency loans were funded.
Our Libraries continued to improve services in terms of providing more convenient
access to information and databases, enabling many more customers to self- help
themselves and through the creative use of technology and improved marketing.
Attendance in the popular children’s series increased nearly 50% and the level of inter-library
circulation increased over 20%. The Belle Haven Library continued its efforts to
link closely to school- and city- sponsored programs including homework assistance, the
book bag program and increased outreach to parents in the neighborhood.
The Police Department struggled with issues of staffing shortages, training new officers
to backfill behind retirements, increased crime as a byproduct of the economic downturn
and efforts to make forward progress in the areas of code enforcement and the popular
Neighborhood Watch program. In total, twelve new officers and five unsworn
employees have been hired and trained. The department’s award- winning website
continues to receive acclaim, while officers maintain their individual commitment to
community policing through such diverse initiatives as bike rodeos, child safety seat
installations, a model car program, gun lock programs and liaisons with the schools.
With the departure of the Public Works Director mid- way through the period, the
Assistant City Manager assumed oversight for the department’s operations. Both the
Engineering and Maintenance areas stayed on course in keeping capital projects within
budget and on schedule and further progress on maintaining and improving operations.
A new Parks and Trees Supervisor joined the team mid- stream and has contributed
significantly in terms of his experience and expertise to the organization.
FOR THE FUTURE: A major focus will be implementing the funded and top- ranked
priority capital improvement projects in both the redevelopment area and identified in
the Parks and Recreation Master Plan. Many projects that were started will continue well
vi
into the fiscal year ahead. Similarly, with land assembly nearly complete the community
park, housing and commercial upgrade project on Hamilton Avenue will be underway.
Other projects and studies will be identified and programmed as a part of the City
Council’s establishing annual priorities as well.
In terms of internal organizational initiatives, staff is committed to taking the steps
required to fully transition to the new program- based budget structure. This requires the
conversion of the payroll and finance systems in order to accurately track expenditures
and the regular benchmarking of service- level performance results. The persistent
downturn in the economy will continue to challenge the staff’s creativity in terms of
maintaining quality city services in the face of diminished revenues.
Department Focus
Each year, the City selects a department to highlight in order to showcase that
department’s activities and accomplishments. In 2002, the Administrative Services
Department has been chosen for review.
The Administrative Services Department is comprised of Personnel, Finance,
Management Information Systems, the City Clerk’s Office and the City Manager’s Office.
These administrative functions support and coordinate the efforts of the City’s operating
departments, facilitate constituent assistance and public communication, provide
effective management of the City’s financial and human resources, and support the
Council in its policy making role, among other important tasks.
A major focus for the Administrative Services Department during the past year has been
the transition to a program- based budget, which has required changes to the finance and
payroll systems. In addition to being produced in a new format, the 2002- 03 budget was
notable in that it was 5% less than the 2001- 02 adopted budget. Similar savings were
realized in 2001- 02 actual expenditures. The Finance Division has also focused on
ensuring that the City will be in compliance in 2002- 03 with General Accounting
Standards Board ( GASB) 34 requirements regarding the reporting of the City’s
infrastructure assets. Following voter approval of Measure T, $ 13.2 million general
obligation bonds for park and recreation improvements were issued. Due to its strong
fiscal position, the City achieved a AAA bond rating, which only three cities in the state
have attained.
The Management Information System ( MIS) Division worked to bring new applications
on line to better support City programs. One project is the implementation of remote
laptop processing of Records Information Management System ( RIMS) and wireless
technology to allow police officers to work more productively and spend more time in
the community. MIS also initiated a strategic planning process to establish priorities and
action steps to meet the City’s technology needs in the areas of infrastructure,
applications, and desktop support. Implementation of this plan will begin in the
proceeding year. Working together, MIS and the Community Relations Manager
vii
redesigned the City’s website to be more attractive, more comprehensive and easier to
navigate, with the launch of the new site occurring in 2002- 03.
Accomplishments in the Personnel Division include: the negotiation of a new three- year
contract with the Service Employees International Union ( SEIU); recognition of a new
SEIU bargaining unit for temporary employees and negotiation of a three- year contract
with this group; the hiring of two new department heads ( Public Works Director and
Police Chief); development of streamlined employee evaluation forms and process; and
creation of emergency action plans for different City facilities.
The City Clerk’s Office launched a document imaging program in order to provide
secure storage and easy retrieval of the City’s essential records. In 2001- 02, the
resolutions, ordinances and other legal records retained in the City Clerk’s Office were
scanned into the document imaging system. The program will roll- out to include the
records of other departments, as well as web- based access to allow the community easier
access to the City’s public records.
In addition to supporting the various internal initiatives described above, the City
Manager’s Office was focused on several important projects in 2001- 02. A new
automated customer response system was procured and then launched in the following
fiscal year. This system uses the website and email to help direct customer questions and
complaints to the appropriate staff and ensure timely follow- up. The City Manager’s
Office began an analysis of how to cover the cost of maintaining the closed landfill at
Bayfront Park. Working closely with the City Attorney, the City Manager negotiated
with Stanford University to develop an agreement regarding the widening of Sand Hill
Road and related street improvements that was approved by Council in 2002- 03.
FINANCIAL INFORMATION
The City administration is responsible for establishing and maintaining an internal
control structure designated to ensure that the assets of the City are protected from loss,
theft or misuse and to ensure that adequate accounting data are compiled to allow for the
preparation of financial statements in conformity with generally accepted accounting
principles. The internal control structure is designed to provide reasonable, but not
absolute, assurance that these objectives are met. The concept of reasonable assurance
recognizes that, ( 1) the cost of a control should not exceed the benefits likely to be
derived and, ( 2) the valuation of costs and benefits require estimates and judgments by
management.
Single Audit
The City is required to undergo an annual single audit in conformity with the provisions
of the Single Audit Act of 1984, the Single Audit Act Amendments of 1996 and U. S.
Office of Management and Budget Circular A- 133, Audits of States, Local Governments,
and Non- Profit Organizations. Information related to this single audit, including the
schedule of expenditures of federal awards, findings and recommendations, and
viii
auditor's reports on the internal control structure and compliance with applicable laws
and regulations, are a separate single audit report.
As a recipient of federal, state and county financial assistance, the City also is responsible
for ensuring that an adequate internal control structure is in place to ensure compliance
with applicable laws and regulations related to those programs. This internal control
structure is subject to periodic evaluation by management. As a part of the City's single
audit, tests are made to determine the adequacy of the internal control structure,
including that portion related to federal financial assistance programs, as well as to
determine that the City has complied with the applicable laws and regulations. The
results of the City's single audit for the fiscal year ended June 30, 2002 provided no
instances of material weaknesses in the internal control structure or significant violations
of applicable laws and regulations.
Budgeting Controls
In addition, the City maintains budgetary controls. The objective of these budgetary
controls is to ensure compliance with legal provisions embodied in the annual
appropriated budget approved by the City's governing body. Activities of the general
fund, special revenue funds and capital projects funds are included in the annual
appropriated budget. The level of budgetary control ( that is, the level at which
expenditures cannot legally exceed the appropriated amount) is established at the fund
level. The City also maintains an encumbrance accounting system as a technique of
accomplishing budgetary control.
As demonstrated by the statements and schedules included in the financial section of this
report, the City continues to meet its responsibility for sound financial management.
ix
General Government Functions. The following schedule presents a summary of
general fund, special revenue funds, debt service funds, and capital projects funds
revenues for the fiscal year ended June 30, 2002, and the amount and percentage of
increases and decreases in relation to prior year revenues.
General Government Revenues
2001- 02
Sales taxes
20%
Special assessments
3%
Property taxes
34%
Licenses and permits
5%
Other taxes
5%
Fines and forfeitures
0%
Intergovernmental
13%
Charges for current
services
10%
Use of money and
property
10%
Other revenue
0%
Increase Percentage
2001- 02 % of ( Decrease) of Increase
Revenue Source Amount Total From 2000- 01 ( Decrease)
Sales taxes $ 9,214,713 20% ($ 3,816,301) - 29%
Property taxes 15,807,232 33% $ 2,217,998 16%
Other taxes 2,412,305 5% ($ 254,023) - 10%
Special assessments 1,399,697 3% $ 20,420 1%
Licenses and permits 2,585,384 5% ($ 642,535) - 20%
Fines and forfeitures 207,906 0% ($ 71,266) - 26%
Use of money and property 4,635,888 10% ($ 1,396,240) - 23%
Intergovernmental 6,084,897 13% $ 715,948 13%
Charges for current services 4,597,997 10% $ 19,472 0%
Other revenue 77,678 0% $ 2,796 4%
TOTAL $ 47,023,697 100% ($ 3,203,731) - 6%
x
Except for property tax and intergovernmental revenue, all other sources of revenue
were considerably lower than the year before, reflecting the overall economic downturn
in the State and particularly in the Silicon Valley area.
There is a high demand for housing in the area and Menlo Park remains a desirable
community, resulting in increased assessed value of property and related property tax
revenue to the City.
$ 0 $ 2,000,000 $ 4,000,000 $ 6,000,000 $ 8,000,000 $ 10,000,000 $ 12,000,000 $ 14,000,000 $ 16,000,000
Millions
Sales taxes
Special assessments
Property taxes
Use of money and property
Licenses and permits
Other taxes
Fines and forfeitures
Intergovernmental
Charges for current services
Other revenue
General Government Revenues
2001- 02 vs. 2000- 01
2000- 01
2001- 02
xi
The following schedule presents a summary of general fund, special revenue funds,
debt service funds, and capital projects funds expenditures for the fiscal year ended
June 30, 2002 and the amount of increases and decreases in relation to prior year
amounts:
Increase Percentage
2001- 02 % of ( Decrease) of Increase
Expenditure Function Amount Total From 2000- 01 ( Decrease)
Current:
General government $ 6,083,761 10% $ 431,240 8%
Public safety 8,044,727 13% 63,895 1%
Public works 3,974,719 7% ( 117,093) - 3%
Culture and recreation 7,518,886 13% 957,708 15%
Rehabilitation loans 595,290 1% 245,260 70%
Community development 3,140,511 5% 285,670 10%
Urban development and housing 3,757,889 6% ( 929,537) - 20%
Capital Outlay 21,510,780 36% 11,489,412 115%
Debt Service:
Principal repayment 970,000 2% 45,000 5%
Interest and finance charges 4,086,960 7% 937,201 30%
TOTAL $ 59,683,523 100% $ 13,408,756 29%
General Government Expenditures
2001- 02
Capital Outlay
36%
Public works
7%
Community development
5%
Public safety
Rehabilitation loans 13%
1%
Culture and recreation
13%
Urban devlpmnt and
housing
6%
General government
10%
Interest and finance
charges
7%
Principal repayment
2%
xii
Implementation of records management system, budgeting system, expanded
information technology service, and increased costs associated with legal service and
solidwaste program contribute to the eight percent increase in general government
expenditures in 2001- 02.
Measeure T bond issuance cost, increased utility costs and expanded cultural programs
contribute to the increase in culture and recreation expenditures in 2001- 02.
Rehabilitation loans are higher due to a greater number of eligible loan applicants
compared to the prior year.
Expanded community development programs associated with Tax allocation Bond 2000
series contribute to the five percent increase comapared to the prior year.
The decrease in urban development and housing expenditures is due to the bond issue
costs associated with the Community Development Agency Las Pulgas Community
Development Project Tax Allocation Bonds, Series 2000 in prior year.
Major capital projects that are in progress or completed in 2001- 2002 include Belle
Haven Park Housing, Willow Road and Santa Cruz Street Improvements, Kelly Park
$ 0 $ 5,000,000 $ 10,000,000 $ 15,000,000 $ 20,000,000 $ 25,000,000
Millions
Capital Outlay
Public works
Community development
Public safety
Rehabilitation loans
Culture and recreation
Urban devlpmnt and housing
General government
Interest and finance charges
Principal repayment
General Government Expenditures
2001- 02 vs. 2000- 01
2000- 01
2001- 02
xiii
and Onetta Harris Community Center Improvement and Officer Lyle Park
Improvement.
In FY 2000- 01 the Debt service associated with the Community Development Agency
Las Pulgas Community Development Project Tax Allocation Bonds, Series 2000
included one semi annual interest payment according to the time of issuance; whereas,
FY 2001- 02 includes two semi annual interest payments.
Increase
June 30, June 30, ( Decrease)
Fund Balances 2002 2001 From 2000- 01
General fund $ 29,007,507 $ 26,843,524 $ 2,163,983
Special revenue funds 26,214,084 32,245,213 ( 6,031,129)
Debt service funds 589,283 508,081 81,202
Capital projects funds 52,310,833 46,434,780 5,876,053
TOTAL $ 108,121,707 $ 106,031,598 $ 2,090,109
$ 0
$ 5,000,000
$ 10,000,000
$ 15,000,000
$ 20,000,000
$ 25,000,000
$ 30,000,000
$ 35,000,000
$ 40,000,000
$ 45,000,000
$ 50,000,000
Millions
General fund
Special revenue funds
Debt service funds
Capital projects funds
Fund Balances
2001- 02 vs. 2000- 01
2000- 01
2001- 02
xiv
General Fund Balance
As mentioned earlier, a slow economy generated less revenue in 2002. Initiation of
certain cost cutting measures coupled with a low rate of population growth minimizing
service cost, resulted in a moderate increase of $ 2 million to the fund balance at year
end compared to $ 3.6 million in 2001.
Special Revenue Fund Balance
The decrease in Special Revenue fund balance at June 30, 2002 is attributable to many
capital projects being initiated in 2001- 2002.
Capital Projects Fund Balance
The increase in Capital Projects fund balance at June 30, 2002 is attributable to the bond
proceeds related to the issuance of the Measure T General Obligation Bond, Series 2002.
Enterprise Funds
The City has one enterprise operation: the Water Fund. An enterprise fund accounts for
activities that are financed and operated in a manner similar to private business
enterprises. The City Council has determined that the cost of providing these services
to the public be recovered primarily through user charges.
The Water Fund accounts for water supplied to approximately 4,000 customers. The
retained earnings at June 30, 2002 were $ 21,478,706, an increase of $ 1,526,586. The City
adopted consumption block rates ranging from $ 0.80/ ccf to $ 1.60/ ccf, along with a
$. 35/ ccf capital surcharge, as recommended in the rate study done by Bartle Wells and
Associates. The rates are structured to encourage water conservation; to increase
operating fund balance; to support capital improvement projects; and to find new
sources of water.
Fiduciary Operations
The City Council contracts with the State of California Public Employees Retirement
System ( PERS) for retirement coverage for City employees. As of June 30, 2001, the City
had excess assets of $ 2,412,051 in the Safety Plan and $ 9,714,031 in the Miscellaneous
Plan. As the City continues to have excess assets, it contributes to PERS 0% of payroll
for safety employees and 0% of payroll for miscellaneous ( non- safety) employees.
xv
Debt Administration
As of June 30, 2002, the City has various debt obligations outstanding. These debt
obligations are comprised of:
Type Principal Outstanding
General Obligation Bonds $ 17,485,000
Tax Allocation Bonds 72,045,000
During fiscal year 1995- 1996, the City issued $ 4,630,000 of General Obligation
Refunding Bonds, Series 1996 to refund and defease $ 4,080,000 of the $ 4,665,000
aggregate principal amount of the outstanding City of Menlo Park Library
Improvement Project General Obligation Bonds, Series 1990. The proceeds of the 1990
Bonds were used to finance certain improvements to the City’s library, including the
renovation of existing structures and the construction of additional facilities. The
balance of the 1996 General Obligation Refunding Bonds at June 30, 2002 was
$ 4,240,000. The bonds are to be paid from special assessments to property owners
within the City.
During fiscal year 1995- 1996, the City issued $ 32,305,000 of Community Development
Agency of the City of Menlo Park Las Pulgas Community Development Project Tax
Allocation Refunding Bonds, Series 1996 to refund and defease the Agency’s
outstanding Series 1988 Bonds issued in the original principal amount of $ 4,720,000, to
refund and defease the outstanding Series 1992 Bonds issued in the original principal
amount of $ 25,000,000, to fund a reserve account, and to pay costs of issuance incurred
in connection with the issuance, sale and delivery of the 1996 Bonds. The balance of the
1996 Tax Allocation Bonds at June 30, 2002 was $ 28,045,000.
During fiscal year 2000- 2001, the City issued $ 44,000,000 of Community Development
Agency of the City of Menlo Park Las Pulgas Community Development Project Tax
Allocation Bonds, Series 2000 to finance certain capital projects of benefit to the Las
Pulgas Community Development Project. The balance of the 2000 Tax Allocation Bonds
at June 30, 2002 was $ 44,000,000.
During fiscal year 2001- 2002 the City issued $ 13,245,000 of General Obligation Bonds,
Series 2002 to finance certain parks and recreation improvements. The balance of the
2002 General Obligation Bonds at June 30, 2002 was $ 13,245,000.
Cash Management
Cash temporarily idle during the year was invested in the Local Agency Investment
Fund administered by the Treasurer of the State of California, obligations of the United
States Treasury, Federal Agency Coupons and Discount Notes, Medium Term Notes,
xvi
and Certificates of Deposit. The average daily balance of the investments for the City
and the Agency for the fiscal year was $ 81 million, which earned approximately $ 3.25
million with an effective yield of 4.03 percent.
The City's investment policy is to obtain the highest yield obtainable as long as
investments meet the criteria established for safety and liquidity. Accordingly, deposits
were classified as either risk category 1 or 2.
At June 30, 2002, 45 percent of investments held by the City are classified in the
category of lowest credit risk as defined by the Government Accounting Standards
Board; 55 percent was invested in California Local Agency Investment Fund; and
remaining investments were held in the government's name either by the counter party
financial institution's trust department or by a Securities and Exchange Commission
brokerage firm.
Risk Management
The General Fund designates $ 2,251,360 in cash reserves for possible future catastrophic
claims. In addition, various risk control techniques, including employee safety training,
an employee safety committee to analyze accidents, and a safety and loss control
consultant have been utilized to minimize employee accident and liability claim losses.
Other Information
Independent Audit. State statutes require an annual audit by independent certified
public accountants. The accounting firm of Caporicci & Larson, Certified Public
Accountants, was selected by the City Council for this purpose. The auditor's report on
the general purpose financial statements and combining and individual fund statements
is included in the financial section of this report.
Awards. The Government Finance Officers Association of the United States has
awarded a Certificate of Achievement for Excellence in Financial Reporting to the City
for its comprehensive annual financial report for the fiscal year ended June 30, 2001.
In order to be awarded a Certificate of Achievement for Excellence in Financial
Reporting awarded by the Government Finance Officers Association, a governmental
unit must publish an easily readable and efficiently organized comprehensive annual
financial report. This report must satisfy both generally accepted accounting principles
and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year. We believe our current
comprehensive annual financial report continues to meet the Certificate of Achievement
Program’s requirements and we will be submitting it to the GFOA.
xvii
The City has also been awarded the Certificate of Award for Outstanding Financial
Reporting by the California Society of Municipal Finance Officers for its Comprehensive
Annual Report for the year ended June 30, 2001. We will submit our 2002 report to the
California Society of Municipal Finance Officers as well.
Acknowledgments. The preparation of this report in a timely manner is the result of
the exemplary dedicated service of the members of the Finance Department to whom I
express my appreciation, and to whom the organization owes it thanks and success.
The leadership and fiscal acumen of the City Council is essential and sincerely
appreciated. The financial stability of our City is a direct result of their vigilant
stewardship, dedication, interest and support.
Respectfully,
David Boesch
City Manager
Uma Chokkalingam
Finance Director
CITY OF MENLO PARK, CALIFORNIA
ORGANIZATIONAL CHART
JUNE 30, 2002
City Attorney Boards
Commissions
Committees
Community
Development
Housing and
Redevelopment
Public Works Community
Services
Administrative
Services
Police Library
City Manager
City Council
Citizens
CITY OF MENLO PARK, CALIFORNIA
LIST OF CITY OFFICIALS
JUNE 30, 2002
CITY COUNCIL
Stephen M. Schmidt, Mayor
Charles M. Kinney, Mayor Pro Tem
Mary Jo Borak, Councilmember
Paul J. Collacchi, Councilmember
Nicholas P. Jellins, Councilmember
ADMINISTRATION AND DEPARTMENT HEADS
City Attorney .................................................................................................... William McClure
City Manager .......................................................................................................... David Boesch
Assistant City Manager................................................................................... Audrey Seymour
Administrative Services:
Personnel and Information Services Director......................................... Glen H. Kramer
Finance Director ................................................................................... Uma Chokkalingam
City Clerk ..................................................................................................... Susan A. Ramos
Community Services Director............................................................................... Curtis Brown
Police Chief .................................................................................................................. Chris Boyd
Library Director..................................................................................................... Susan Holmer
Developmental Services:
Director of Community Development ( Acting) .................................... Arlinda Heineck
Director of Housing and Redevelopment ................................................. Don de la Pena
Director of Public Works ................................................................................ Kent Steffens
FINANCIAL
SECTION
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and Members of City Council
of the City of Menlo Park
Menlo Park, California
We have audited the accompanying General Purpose Financial Statements of the City of Menlo Park, California
( City), as of and for the year ended June 30, 2002, as listed in the foregoing table of contents. These General
Purpose Financial Statements are the responsibility of the City’s management. Our responsibility is to express
an opinion on these General Purpose Financial Statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States and
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the General Purpose Financial Statements referred to above present fairly, in all material
respects, the financial position of the City as of June 30, 2002, and the results of its operations and the cash flows
of its proprietary fund types for the year then ended in conformity with generally accepted accounting
principles in the United States.
In accordance with Government Auditing Standards, we have also issued our report dated September 13, 2001 on
our consideration of the City’s internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts, and grants.
Our audit was performed for the purpose of forming an opinion on the General Purpose Financial Statements of
the City, taken as a whole. The accompanying combining, individual funds, and account groups financial
statements and schedules listed in the foregoing table of contents are presented for purposes of additional
analysis and are not a required part of the General Purpose Financial Statements of the City. This additional
information is the responsibility of the management of the City. Such additional information has been subjected
to the auditing procedures applied in the audit of the General Purpose Financial Statements and, in our opinion,
is fairly presented in all material respects when considered in relation to the General Purpose Financial
Statements taken as a whole. We did not audit the statistical information listed in the foregoing table of
contents and, accordingly, we express no opinion on the statistical section.
Oakland, California
September 13, 2002
COMBINED FINANCIAL
STATEMENTS
CITY OF MENLO PARK
The combined statements are intended to provide an overview and broad perspective of the City's
financial position and operations. These statements present a summary set of information needed to
control and analyze current operations to determine compliance with legal and budgetary limitations
and to assist in financial planning.
The following combined statements are presented:
COMBINED STATEMENTS:
Combined Balance Sheet - All Fund Types and Account Groups
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental
Fund
Types and Expendable Trust Funds
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual -
General, Special Revenue and Capital Projects Funds
Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - All Proprietary Fund
Types
Combined Statement of Cash Flows - All Proprietary Fund Types
GENERAL PURPOSE FINANCIAL STATEMENTS
3
City of Menlo Park
Combined Balance Sheet
All Fund Types and Account Groups
June 30, 2002
( With comparative totals for June 30, 2001)
Special Debt Capital
General Revenue Service Projects
Assets:
Cash and investments ( Note 2) $ 2 9,279,722 $ 1 7,607,412 $ 5 70,536 $ 2 4,314,378
Restricted cash and investments ( Note 2) - 7 ,568,512 6 4 2 8,985,519
Receivables:
Accounts 1 ,212,174 1 ,452,414 1 4,167 4 23
Interest 3 33,866 1 28,373 4 ,516 8 ,307
Notes ( Note 3) 8 99,906 3 ,511,408 - -
Due from other funds ( Note 10) - 6 36,453 - 3 7,221
Advances to other funds ( Note 10) - 5 00,000 - -
Deposits and prepaid items - - - -
Property, plant and equipment, net ( Note 4) - - - -
Other Debits:
Amount available for retirement of long- term debt - - - -
Amount to be provided for retirement of long- term debt - - - -
Total assets and other debits $ 3 1,725,668 $ 3 1,404,572 $ 5 89,283 $ 5 3,345,848
Liabilities:
Accounts payable $ 8 22,973 $ 1 ,013,671 $ - $ 6 09,399
Accrued payroll 8 24,246 6 0,668 - -
Compensated absences ( Note 5) 5 76,845 5 6,086 - -
Due to other funds ( Note 10) - 2 48,058 - 4 25,616
Deposits 8 4,416 - - -
Deferred revenue 4 09,681 3 ,312,005 - -
Claims payable ( Note 5 and Note 9) - - - -
Advances from other funds ( Note 10) - 5 00,000 - -
General obligation bonds ( Note 5) - - - -
Tax allocation bonds ( Note 5) - - - -
Total liabilities 2 ,718,161 5 ,190,488 - 1 ,035,015
Fund Equity and Other Credits:
Contributed capital ( Note 8) - - - -
Investment in general fixed assets ( Note 4) - - - -
Retained earnings ( Note 7) - - - -
Fund balances ( Note 7) 2 9,007,507 2 6,214,084 5 89,283 5 2,310,833
Total fund equity and other credits 2 9,007,507 2 6,214,084 5 89,283 5 2,310,833
Total liabilities, fund equity and other credits $ 3 1,725,668 $ 3 1,404,572 $ 5 89,283 $ 5 3,345,848
ASSETS AND OTHER DEBITS
LIABILITIES, FUND EQUITY, AND OTHER CREDITS
See accompanying Notes to General Purpose Financial Statements.
Governmental Fund Types
4
Proprietary Fiduciary Totals
Fund Type Fund Types Account Groups ( Memorandum Only)
Trust General General
and Fixed Long- Term
Enterprise Agency Assets Debt 2002 2001
$ 14,675,785 $ 4,180,031 $ - $ - $ 90,627,864 $ 77,700,207
- - - - 36,554,095 45,657,173
340,209 8,994 - - 3,028,381 2,473,592
116,161 26,631 - - 617,854 1,095,394
- - - - 4,411,314 4,499,245
- - - - 673,674 406,522
- - - - 500,000 500,000
- - - - - 17,405
7,420,720 - 84,872,346 - 92,293,066 70,968,044
- - - 589,283 589,283 508,081
- - - 91,370,529 91,370,529 79,096,648
$ 22,552,875 $ 4,215,656 $ 84,872,346 $ 91,959,812 $ 320,666,060 $ 282,922,311
$ 430,950 $ 133,110 $ - $ - $ 3,010,103 $ 2,695,136
12,622 600 - - 898,136 -
10,559 - - 811,058 1,454,548 1,399,717
- - - - 673,674 406,522
48,347 67,901 - - 200,664 124,689
- - - - 3,721,686 3,664,191
- - - 1,618,754 1,618,754 1,508,319
- - - - 500,000 500,000
- - - 17,485,000 17,485,000 4,435,000
- - - 72,045,000 72,045,000 72,820,000
502,478 201,611 - 91,959,812 101,607,565 87,553,574
571,691 - - - 571,691 601,920
- - 84,872,346 - 84,872,346 63,917,120
21,478,706 - - - 21,478,706 19,952,120
- 4,014,045 - - 112,135,752 110,897,577
22,050,397 4,014,045 84,872,346 - 219,058,495 195,368,737
$ 22,552,875 $ 4,215,656 $ 84,872,346 $ 91,959,812 $ 320,666,060 $ 282,922,311
5
City of Menlo Park
Combined Statement of Revenues, Expenditures and Changes in Fund Balances
All Governmental Fund Types and Expendable Trust Fund
For the year ended June 30, 2002
( With comparative totals for the year ended June 30, 2001)
Special Debt Capital
General Revenue Service Projects
REVENUES:
Taxes:
Secured property taxes $ 4,637,155 $ 7,988,894 $ - $ -
Unsecured property taxes 539,382 1,029,494 - -
Other property taxes 882,843 729,464 - -
Sales taxes 8,648,641 566,072 - -
Franchise and occupancy taxes 2,412,305 - - -
Special assessments - 918,678 467,757 13,262
Licenses and permits 2,329,144 256,240 - -
Fines and forfeitures 207,906 - - -
Use of money and property 1,966,153 1,301,110 16,666 1,351,959
Intergovernmental 2,762,308 3,322,589 - -
Charges for services 3,552,392 957,121 - 88,484
Other 23,128 54,550 - -
Total revenues 27,961,357 17,124,212 484,423 1,453,705
EXPENDITURES:
Current:
General government 4,588,747 1,495,014 - -
Public safety 7,988,015 56,712 - -
Public works 3,284,895 689,824 - -
Culture and recreation 6,881,884 422,915 - 214,087
Rehabilitation loans - 595,290 - -
Community development 2,265,642 732,519 - 142,350
Urban development and housing - 3,757,889 - -
Capital outlay 622,238 178,093 - 20,710,449
Debt service:
Principal - - 970,000 -
Interest - - 4,086,960 -
Total expenditures 25,631,421 7,928,256 5,056,960 21,066,886
REVENUES OVER ( UNDER) EXPENDITURES 2,329,936 9,195,956 ( 4,572,537) ( 19,613,181)
OTHER FINANCING SOURCES ( USES):
Operating transfers in ( Note 10) 1,097,780 249,518 4,653,739 21,640,831
Operating transfers out ( Note 10) ( 1,190,041) ( 15,438,261) - ( 9,501,086)
Sale of fixed assets 23,009 - - -
Proceeds from debt issuance - - - 13,514,033
Total other financing sources ( uses) ( 69,252) ( 15,188,743) 4,653,739 25,653,778
REVENUES AND OTHER FINANCING
SOURCES OVER ( UNDER) EXPENDITURES
AND OTHER FINANCING USES 2,260,684 ( 5,992,787) 81,202 6,040,597
FUND BALANCES:
Beginning of year, as restated 26,732,531 32,356,206 508,081 46,434,780
Residual equity transfers 14,292 ( 149,335) - ( 164,544)
End of year $ 29,007,507 $ 26,214,084 $ 589,283 $ 52,310,833
See accompanying Notes to General Purpose Financial Statements.
Governmental Fund Types
6
Fiduciary
Fund Type ( Memorandum Only)
Expendable
Trust 2002 2001
$ - $ 12,626,049 $ 1 1,573,842
- 1,568,876 1 ,355,236
- 1,612,307 6 60,156
- 9,214,713 1 3,031,014
- 2,412,305 2 ,666,328
- 1,399,697 1 ,379,277
- 2,585,384 3 ,227,919
- 207,906 2 79,172
221,563 4,857,451 6 ,374,995
- 6,084,897 5 ,368,949
417,595 5,015,592 5 ,465,783
20,000 97,678 8 4,882
659,158 47,682,855 5 1,467,553
- 6,083,761 5 ,652,521
142 8,044,869 7 ,980,832
18,900 3,993,619 4 ,099,263
476,157 7,995,043 6 ,975,161
- 595,290 3 50,030
- 3,140,511 2 ,854,841
- 3,757,889 4 ,687,426
- 21,510,780 1 0,021,368
- 970,000 9 25,000
- 4,086,960 3 ,149,759
495,199 60,178,722 4 6,696,201
163,959 ( 12,495,867) 4 ,771,352
- 27,641,868 2 0,340,955
( 1,315,480) ( 27,444,868) ( 20,143,955)
- 23,009 3 22,701
- 13,514,033 4 4,000,000
( 1,315,480) 13,734,042 4 4,519,701
( 1,151,521) 1,238,175 4 9,291,053
4,865,979 110,897,577 6 1,606,524
299,587 - -
$ 4,014,045 $ 112,135,752 $ 1 10,897,577
Totals
7
City of Menlo Park
Combined Statement of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual - General, Special Revenue, and Capital Projects Funds
For the year ended June 30, 2002
General Special Revenue
Variance Variance
Favorable Favorable
Budget Actual ( Unfavorable) Budget Actual ( Unfavorable)
REVENUES:
Taxes:
Secured property taxes $ 4,243,970 $ 4,637,155 $ 393,185 $ 7,755,550 $ 7,988,894 $ 233,344
Unsecured property taxes 489,660 539,382 49,722 878,750 1,029,494 150,744
Other property taxes 477,450 882,843 405,393 - 729,464 729,464
Sales taxes 9,945,000 8,648,641 ( 1,296,359) 510,000 566,072 56,072
Franchise and occupancy taxes 2,834,270 2,412,305 ( 421,965) - - -
Special assessments - - - 908,000 918,678 10,678
Licenses and permits 2,787,020 2,329,144 ( 457,876) 266,000 256,240 ( 9,760)
Fines and forfeitures 188,490 207,906 19,416 - - -
Use of money and property 1,509,370 1,966,153 456,783 1,020,300 1,301,110 280,810
Intergovernmental 2,493,120 2,762,308 269,188 5,162,947 3,322,589 ( 1,840,358)
Charges for services 3,743,080 3,552,392 ( 190,688) 1,200,511 957,121 ( 243,390)
Other 14,000 23,128 9,128 54,000 54,550 550
Total revenues 28,725,430 27,961,357 ( 764,073) 17,756,058 17,124,212 ( 631,846)
EXPENDITURES:
Current:
General government 5,660,975 4,588,747 1,072,228 1,636,707 1,495,014 141,693
Public safety 8,417,988 7,988,015 429,973 58,894 56,712 2,182
Public works 4,187,492 3,284,895 902,597 1,199,398 689,824 509,574
Culture and recreation 7,444,499 6,881,884 562,615 424,117 422,915 1,202
Rehabilitation loans - - - 600,660 595,290 5,370
Community development 2,520,899 2,265,642 255,257 1,101,478 732,519 368,959
Urban development and housing - - - 7,837,703 3,757,889 4,079,814
Capital outlay 871,694 622,238 249,456 317,856 178,093 139,763
Total expenditures 29,103,547 25,631,421 3,472,126 13,176,813 7,928,256 5,248,557
REVENUES OVER ( UNDER) EXPENDITURES ( 378,117) 2,329,936 2,708,053 4,579,245 9,195,956 4,616,711
OTHER FINANCING SOURCES ( USES):
Operating transfers in ( Note 10) 1,096,880 1,097,780 900 301,831 249,518 ( 52,313)
Operating transfers out ( Note 10) ( 1,191,581) ( 1,190,041) 1,540 ( 19,902,645) ( 15,438,261) 4,464,384
Sale of fixed assets 1,200 23,009 21,809 - - -
Proceeds from debt issuance - - - - - -
Total other financing sources ( uses) ( 93,501) ( 69,252) 24,249 ( 19,600,814) ( 15,188,743) 4,412,071
REVENUES AND OTHER FINANCING
SOURCES OVER ( UNDER) EXPENDITURES
AND OTHER FINANCING USES $ ( 471,618) 2,260,684 $ 2,732,302 $ ( 15,021,569) ( 5,992,787) $ 9,028,782
FUND BALANCES:
Beginning of year, as restated 26,732,531 32,356,206
Residual equity transfers 14,292 ( 149,335)
End of year $ 29,007,507 $ 26,214,084
See accompanying Notes to General Purpose Financial Statements.
8
Capital Projects ( Memorandum Only)
Variance Variance
Favorable Favorable
Budget Actual ( Unfavorable) Budget Actual ( Unfavorable)
$ - $ - $ - $ 1 1,999,520 $ 1 2,626,049 $ 6 26,529
- - - 1 ,368,410 1 ,568,876 2 00,466
- - - 4 77,450 1 ,612,307 1 ,134,857
- - - 1 0,455,000 9 ,214,713 ( 1,240,287)
- - - 2 ,834,270 2 ,412,305 ( 421,965)
1 3,262 1 3,262 - 9 21,262 9 31,940 1 0,678
- - - 3 ,053,020 2 ,585,384 ( 467,636)
- - - 1 88,490 2 07,906 1 9,416
3 ,583,460 1 ,351,959 ( 2,231,501) 6 ,113,130 4 ,619,222 ( 1,493,908)
- - - 7 ,656,067 6 ,084,897 ( 1,571,170)
2 45,000 8 8,484 ( 156,516) 5 ,188,591 4 ,597,997 ( 590,594)
- - - 6 8,000 7 7,678 9 ,678
3 ,841,722 1 ,453,705 ( 2,388,017) 5 0,323,210 4 6,539,274 ( 3,783,936)
- - - 7 ,297,682 6 ,083,761 1 ,213,921
- - - 8 ,476,882 8 ,044,727 4 32,155
- - - 5 ,386,890 3 ,974,719 1 ,412,171
3 65,609 2 14,087 1 51,522 8 ,234,225 7 ,518,886 7 15,339
- - - 6 00,660 5 95,290 5 ,370
3 82,493 1 42,350 2 40,143 4 ,004,870 3 ,140,511 8 64,359
- - - 7 ,837,703 3 ,757,889 4 ,079,814
4 4,865,864 2 0,710,449 2 4,155,415 4 6,055,414 2 1,510,780 2 4,544,634
4 5,613,966 2 1,066,886 2 4,547,080 8 7,894,326 5 4,626,563 3 3,267,763
( 41,772,244) ( 19,613,181) 2 2,159,063 ( 37,571,116) ( 8,087,289) 2 9,483,827
4 5,639,120 2 1,640,831 ( 23,998,289) 4 7,037,831 2 2,988,129 ( 24,049,702)
( 29,137,086) ( 9,501,086) 1 9,636,000 ( 50,231,312) ( 26,129,388) 2 4,101,924
- - - 1 ,200 2 3,009 2 1,809
1 3,514,033 1 3,514,033 - 1 3,514,033 1 3,514,033 -
3 0,016,067 2 5,653,778 ( 4,362,289) 1 0,321,752 1 0,395,783 7 4,031
$ ( 11,756,177) 6 ,040,597 $ 1 7,796,774 $ ( 27,249,364) 2 ,308,494 $ 2 9,557,858
4 6,434,780 1 05,523,517
( 164,544) ( 299,587)
$ 5 2,310,833 $ 1 07,532,424
Totals
9
City of Menlo Park
Combined Statement of Revenues, Expenses and Changes in Retained Earnings
Proprietary Fund Type
For the years ended June 30, 2002 and 2001
( Memorandum Only)
2002 2001
OPERATING REVENUES:
Water sales $ 3,535,832 $ 3,348,960
Connection fees 12,741 5,042
Other 344,904 10,331
Total operating revenues 3,893,477 3,364,333
OPERATING EXPENSES:
Costs of sales and services 2,164,046 1,892,345
General and administrative 399,519 353,115
Depreciation 243,203 212,346
Total operating expenses 2,806,768 2,457,806
OPERATING INCOME ( LOSS) 1,086,709 906,527
NONOPERATING REVENUES:
Interest income 606,648 911,378
Total nonoperating revenues 606,648 911,378
INCOME ( LOSS) BEFORE OPERATING TRANSFERS 1,693,357 1,817,905
OPERATING TRANSFERS:
Operating transfers out ( Note 10) ( 197,000) ( 197,000)
Total operating transfers ( 197,000) ( 197,000)
Net income ( loss) 1,496,357 1,620,905
Add back depreciation on contributed assets 30,229 30,229
Increase ( decrease) in retained earnings 1,526,586 1,651,134
RETAINED EARNINGS:
Beginning of year 19,952,120 18,300,986
End of year $ 21,478,706 $ 19,952,120
Totals
See accompanying Notes to General Purpose Financial Statements.
10
City of Menlo Park
Combined Statement of Cash Flows
Proprietary Fund Type
For the years ended June 30, 2002 and 2001
( Memorandum Only)
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating income ( loss) $ 1,086,709 $ 906,527
Adjustments to reconcile operating income ( loss)
to net cash provided ( used) by operating activities:
Depreciation 243,203 212,346
Changes in assets and liabilities:
Accounts receivable 47,187 95,644
Interest receivable 69,031 ( 3,392)
Accounts payable 291,707 86,513
Accrued payroll 12,622 -
Compensated absences 321 ( 25,009)
Deposits 267 ( 2,438)
Net cash provided ( used) by operating activities 1,751,047 1,270,191
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating transfers out ( 197,000) ( 197,000)
Net cash provided ( used) by noncapital financing activities ( 197,000) ( 197,000)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition and construction of capital assets ( 612,999) ( 1,399,896)
Net cash provided ( used) by capital and related financing activities ( 612,999) ( 1,399,896)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest on investments 606,648 911,378
Net cash provided ( used) by investing activities 606,648 911,378
Net increase ( decrease) in cash and investments 1,547,696 584,673
CASH AND INVESTMENTS:
Beginning of year 13,128,089 12,543,416
End of year $ 14,675,785 $ 13,128,089
See accompanying Notes to General Purpose Financial Statements.
Totals
11
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12
NOTES TO THE FINANCIAL
STATEMENTS
City of Menlo Park
Index to Notes to General Purpose Financial Statements
For the year ended June 30, 2002
13
Page
Note 1 - Summary of Significant Accounting Policies.................................................................. 15
Reporting Entity......................................................................................................................... ..... 15
Description of Funds....................................................................................................................... 16
Basis of Accounting ......................................................................................................................... 17
Accounting Standards..................................................................................................................... 18
Budgetary Principles ....................................................................................................................... 18
Encumbrances ............................................................................................................................... .. 19
Cash and Investments.................................................................................................................... 19
Property, Plant and Equipment..................................................................................................... 20
Long- Term Liabilities.................................................................................................................... . 20
Compensated Absences.................................................................................................................. 21
Fund Equity......................................................................................................................... ............ 21
Property Taxes ............................................................................................................................... . 22
Interfund Transactions................................................................................................................... 23
Totals ( Memorandum Only) Columns......................................................................................... 23
Reclassifications ............................................................................................................................... 23
Note 2 - Cash and Investments .......................................................................................................... 23
Note 3 – Notes Receivable................................................................................................................... 28
Note 4 – Property, Plant and Equipment.......................................................................................... 30
Proprietary Fund Types.................................................................................................................. 30
General Fixed Assets Account Group .......................................................................................... 30
Note 5 – General Long- Term Debt Account Group....................................................................... 31
Note 6 – Prior Years’ Defeased Obligations .................................................................................... 36
Note 7 – Fund Equity ........................................................................................................................... 37
Note 8 – Contributed Capital ............................................................................................................. 38
Note 9 – Risk Management................................................................................................................. 38
Note 10 – Interfund Transactions ...................................................................................................... 39
Due to/ from Other Funds.............................................................................................................. 39
Advances to/ from Other Funds.................................................................................................... 39
City of Menlo Park
Index to Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
14
Page
Note 11 – Public Employee Retirement System ............................................................................ 41
Note 12 – Other Post- Employment Benefits................................................................................... 42
Note 13 – Segment Information for Enterprise Fund .................................................................... 44
Note 14 – Community Development Agency of the City of Menlo Park.................................. 44
Note 15 – Contingencies ...................................................................................................................... 45
Note 16 – Litigation .............................................................................................................................. 45
Note 17 – Nonprofit Organization Debt with No City Commitment ........................................ 45
Note 18 – Commitments ...................................................................................................................... 46
Note 19 – Prior- Period Adjustment.................................................................................................. 46
City of Menlo Park
Notes to General Purpose Financial Statements
For the year ended June 30, 2002
15
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity - The City of Menlo Park ( City) was incorporated under the General Laws of the
State of California and enjoys all the rights and privileges pertaining to such “ General Law” cities.
The City uses the City Council/ Manager form of government. The financial reporting entity
consists of ( a) the primary government, the City; ( b) organizations for which the primary
government is financially accountable; and ( c) other organizations for which the primary
government is not accountable, but for which the nature and significance of their relationship with
the primary government are such that exclusion would cause the reporting entity’s financial
statements to be misleading or incomplete.
Component units are legally separate organizations for which the elected officials of the primary
government are financially accountable. In addition, component units can be other organizations
for which the primary government’s exclusion would cause the reporting entity’s financial
statements to be misleading or incomplete.
The following is a brief review of the component unit included in the accompanying General
Purpose Financial Statements of the City.
Community Development Agency of the City of Menlo Park
The Community Development Agency ( Agency) was established in November 1981 pursuant
to the State of California Health and Safety Codes, Section 33000, entitled “ Community
Redevelopment Law.” Its purpose is to prepare and carry out plans for the improvement,
rehabilitation, and redevelopment of blighted areas within the territorial limits of the City.
The criteria used in determining the scope of the reporting entity are based on the provisions of
GASB Statement No. 14, The Financial Reporting Entity. The City is the primary government unit.
Component units are those entities which are financially accountable to the primary government,
either because the City appoints a voting majority of the component unit’s board, or because the
component unit will provide a financial benefit or impose a financial burden on the City. The
Agency has been accounted for as a “ blended” component unit of the City. Despite being legally
separate, this entity is so intertwined with the City that it is, in substance, part of the City’s
operations. Accordingly, the balances and transactions of these component units are reported
within the funds of the City. Balances for the Agency are reported as separate funds in the special
revenue, debt service, and capital projects funds.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
16
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
The following specific criteria were used in determining that the Agency was a blended
component unit:
• The members of the City Council also act as the governing bodies of the Agency.
• The Agency is managed by employees of the City. A portion of the City’s salary and
overhead expenses are billed to the Agency each year.
• The City and the Agency are financially interdependent. The City makes loans to the
Agency to use for redevelopment purposes. Property tax revenues of the Agency are
used to repay the loans to the City.
Detailed financial statements are available for the above component unit from the City’s Finance
Department.
Description of Funds - The accounts of the City are organized and operated on the basis of funds
and account groups, each of which is defined as a separate fiscal and accounting entity with a self-balancing
set of accounts. These funds and account groups are established for the purpose of
carrying on specific activities or attaining certain objectives in accordance with special regulations,
restrictions, or limitations.
The following are the types of funds and account groups used:
Governmental Fund Types:
General Fund - The purpose of this fund is to account for all financial resources except those
required to be accounted for in another fund.
Special Revenue Funds - The purpose of these funds is to account for the proceeds of specific
revenue sources that are legally restricted to expenditures for specific purposes.
Debt Service Funds - The purpose of these funds is to account for the accumulation of resources
for, and the payment of, principal and interest on general obligation bonds, tax increment
bonds, and certificates of participation.
Capital Projects Funds - The purpose of these funds is to account for the acquisition and
construction of major capital facilities other than those financed by proprietary and trust funds.
Proprietary Fund Type:
Enterprise Funds - The purpose of these funds is to account for those operations that are
financed and operated in a manner similar to private business or where the governing body
has decided that the determination of revenues earned, costs incurred, and net income is
necessary for management accountability.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
17
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Fiduciary Fund Types:
Fiduciary funds are used to account for assets held on behalf of outside parties, including other
governments, or on behalf of other funds within the City.
Expendable Trust Funds - The purpose of these funds is to account for assets held under the
terms of a formal trust agreement.
Agency Funds – The purpose of these funds is to account for assets held on behalf of others as
their agent.
Account Groups:
General Fixed Assets Account Group - The purpose of this account group is to maintain control
and cost information on capital assets owned by the City, other than those accounted for in
proprietary funds.
General Long- Term Debt Account Group - The purpose of this account group is to account for the
unmatured long- term obligations of the City, other than those accounted for in proprietary
funds.
Basis of Accounting - The accounting and reporting treatment applied to a fund is determined by
its measurement focus. All governmental funds are accounted for on a spending or “ current
financial resources” measurement focus. Accordingly, only current assets and current liabilities
generally are included on the balance sheets. Operating statements of governmental funds present
increases ( revenues and other financial sources) and decreases ( expenditures and other financial
uses) in net current assets.
All governmental and fiduciary fund types are accounted for using the modified accrual basis of
accounting wherein revenues are recognized in the accounting period in which they become
measurable and available to pay liabilities of the current period. Revenues considered susceptible
to accrual include property taxes collected generally within 60 days of year- end, charges for
services, federal and state grants, sales taxes, and interest. Expenditures are recognized in the
accounting period in which the fund liability is incurred, if measurable, except for principal and
interest on general long- term debt which is recognized when due.
All proprietary fund types are accounted for on a flow of “ economic resources” measurement focus
meaning that all assets and all liabilities ( whether current or noncurrent) associated with their
activities are included on their balance sheets. Reported fund equity ( net assets) is segregated into
contributed capital and retained earnings components. Operating statements of the proprietary
fund types present increases ( revenues) and decreases ( expenses) in net assets.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
18
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Proprietary fund types are maintained on the accrual basis of accounting wherein revenues are
recognized in the accounting period in which they are earned and expenses are recognized in the
accounting period incurred.
Accounting Standards - Pursuant to Governmental Accounting Standards Board ( GASB)
Statement No. 20, Accounting and Financial Reporting for Proprietary and Other Governmental Entities
That Use Proprietary Fund Accounting, the City has elected to apply the provisions of all relevant
pronouncements of the Financial Accounting Standards Board ( FASB), including those issued
after November 30, 1989.
Budgetary Principles - The City followed these procedures in establishing the budgetary data
reflected in the General Purpose Financial Statements:
1. City Council identifies the priority projects/ programs for the budget at a study session
with public input. The City Council annually adopts the budget for the ensuing fiscal year
generally prior to July 1st.
2. The City Manager is authorized to transfer budgetary amounts within a single fund;
however, any revisions that alter the total expenditures of any fund must be approved by
the City Council.
3. Legally adopted budgets and formal budgetary integration is employed as a management
control device during the year for the General Fund, special revenue funds, and capital
projects funds. Formal budgetary integration is not employed for debt service funds
because effective budgetary control is alternatively achieved through bond indenture
provisions. In addition, trust and agency funds are not budgeted.
4. Budgets for the General, special revenue and capital projects funds are adopted on a basis
consistent with GAAP.
5. Under Article XIIIB of the California Constitution ( the Gann Spending Limitation
Initiative), the City is restricted as to the amount of annual appropriations from the
proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must
either be refunded to the State Controller, returned to the taxpayers through revised tax
rates or revised fees schedules, or an excess in one year may be offset against a deficit in the
following year. For the fiscal year ended June 30, 2002, based on the calculations by City
Management, proceeds of taxes did not exceed the appropriations limit.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
19
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
6. Budgeted revenue amounts represent the original budget modified by adjustments
authorized during the year. Budgeted expenditure amounts represent original
appropriations adjusted for supplemental appropriations during the year which were
contingent upon new or additional revenue sources and reappropriated amounts for prior
year encumbrances. The City Manager must approve adjustments to departmental
budgets; however, management may amend the budgeted amounts within departmental
expenditure classifications.
7. Appropriations lapse at the end of the fiscal year and then are rebudgeted for the coming
year.
8. Budgeted appropriations for the various governmental funds become effective each July 1.
The City Council may amend the budget during the fiscal year. The legal level of
budgetary control has been established at the fund level. Appropriations generally lapse at
the end of the fiscal year to the extent they have not been expended or encumbered.
Encumbrances - Under encumbrance accounting, purchase orders, contracts and other
commitments for expenditures are recorded to reserve that portion of the applicable
appropriation. Encumbrance accounting is employed as an extension of formal budgetary
accounting. Since encumbrances do not yet constitute expenditures or liabilities, encumbrances
outstanding at year- end are reported as reservations of fund balances.
Cash and Investments - The City pools cash resources from all funds in order to facilitate the
management of cash. The balance in the pooled cash account is available to meet current
operating requirements. Cash in excess of current requirements is invested in various interest-bearing
accounts and other investments for varying terms.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools, highly liquid market investments with maturities of
one year or less at time of purchase are stated at amortized cost. All other investments are stated
at fair value. Market value is used as fair value for those securities for which market quotations
are readily available.
The City participates in an investment pool managed by the State of California titled Local Agency
Investment Fund ( LAIF) which has invested a portion of the pool funds in Structured Notes and
Asset- Backed Securities. LAIF’s investments are subject to credit risk with the full faith and credit
of the State of California collateralizing these investments. In addition, these Structured Notes and
Asset- Backed Securities are subject to market risk as to change in interest rates.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
20
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Cash equivalents are considered amounts in demand deposits and short- term investments with a
maturity date within three months of the date acquired by the City and are presented as “ Cash
and Investments” in the accompanying General Purpose Financial Statements.
Property, Plant and Equipment - General fixed assets are not capitalized in the funds used to
acquire or construct them. Instead, capital acquisition and construction are reflected as
expenditures in governmental funds, and the related assets are reported in the General Fixed
Assets Account Group. Fixed assets acquired or constructed for proprietary funds are capitalized
in their respective individual funds. All purchased fixed assets are valued at cost where historical
records are available and at an estimated historical cost where no historical records exist. Donated
fixed assets are valued at their estimated fair market value on the date received.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend asset lives are not capitalized. Public domain (“ infrastructure”) general fixed assets
consisting of roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and
lighting systems are not capitalized, as these assets are immovable and of value only to the City.
Depreciation of property and equipment is provided using the straight- line method over the
following estimated useful lives:
Building and structures 40 years
Improvements 40 years
Equipment, machinery and vehicles 3 - 15 years
Depreciation of all exhaustible property and equipment used by the proprietary funds is charged
as an expense against operations. No interest costs were capitalized during the fiscal year. The
City has elected not to depreciate the assets in the General Fixed Assets Account Group. The City
has elected to charge depreciation expense on contributed assets to the related contributed capital
account.
Long- Term Liabilities - Liabilities for long- term debt are recognized as a liability of a
governmental fund when due. For other long- term obligations, only the portion expected to be
financed from expendable available financial resources is reported as a fund liability of a
governmental fund. The remaining portion of the obligation is reported in the General Long- Term
Debt Account Group. Long- term liabilities expected to be financed from proprietary fund
operations are accounted for in those funds.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
21
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Compensated Absences - City employees have vested interests in varying levels of vacation, sick
leave, and compensatory time. If sick leave and vacation is not used by the employee during the
term of employment, compensation is payable to the employee at the time of retirement. Such
compensation is calculated at the employees’ then prevalent rate at the time of retirement or
termination. Whereas vacation is compensated at 100% of accumulated hours, sick leave is
accrued and compensated only at retirement at 15% of accumulated hours. On termination, only
accrued vacation is compensated and not sick leave. The liabilities for current compensated
absences of the governmental fund types are recorded in individual funds and the noncurrent
compensated absences are recorded in the General Long- Term Debt Account Group. The
liabilities for compensated absences of proprietary funds are recorded as current liabilities in the
appropriate proprietary fund.
A recap of the maximum accruals by unit is as follows:
Bargaining Unit Vacation Sick Leave
SEIU 336 hours 1,160 hours
AFSCME 336 hours 1,240 hours
POA 424 hours 1,200 hours
PMA
Administration
1,348 hours combined
900 hours combined
Fund Equity - Reservations of fund balances of governmental funds and retained earnings of
proprietary funds are created to either satisfy legal covenants, including State laws, that require a
portion of the fund balance be segregated or identify the portion of the fund balance not available
for future expenditures.
Fund reservations and designations used by the City included:
• Reserved for Encumbrances represents commitments for materials and services on
purchase orders and contracts which are unperformed.
• Reserved for Deposits and Prepaid Items is provided to indicate that deposits and prepaid
items are not “ available” as a resource to meet expenditures of the current year.
• Reserved for Advances to Other Funds represents funds that are to be received from other
funds on a long- term basis.
• Reserved for Debt Service represents amounts accumulated in accordance with a bond
indenture or similar covenant.
• Reserved for Notes Receivable represents funds reserved for the receipt of the City
Manager’s residential real estate property note.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
22
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
• Reserved for Housing Loans represents funds reserved for the receipt of Neighborhood
Housing ( NHS), Peninsula Habitat for Humanity, Mid- Peninsula Housing Coalition, and
Down Payment Assistance ( PAL) loans.
• Designated for Unrealized Investment Gain represents funds designated for unrealized
gain on changes in fair value adjustments of investments.
• Designated for Insurance represents funds designated to cover insurance claims and
settlements.
• Designated for Equipment Replacement represents funds designated for the purchase of
new equipment.
• Designated for Operational Reserve represents funds designated to cover operational cash
flow shortfalls.
• Designated for Vacation and Sick Leave represents funds designated to provide for the
employees’ compensated absences and sick leave.
• Designated for Infrastructure Replacement represents funds designated for the long- term
cost of replacing City infrastructure.
• Designated for Fiscal Uncertainties represents funds designated for potential revenue
shortfall due to economy downturn.
• Designated for PERS Safety Investment represents funds designated to supplement funds
on discount in the state retirement system in order to minimize the future impact of the 3%
at 55 and 3% at 50 police officers benefits.
• Designated for Special Programs and Services represents funds designated for special
programs and services.
• Designated for Capital Improvements represents funds designated for capital
improvements.
Property Taxes - Under California law, property taxes are assessed and collected by the counties
up to 1% of assessed value, plus other increases approved by the voters. The property taxes go
into a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City
accrues only those taxes which are receivable from the County of San Mateo ( County) within sixty
days after year- end.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
23
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Lien Date March 1
Levy Date July 1
Due Date November 1 and February 1
Collection Date December 10 and April 10
Property taxes levied are recorded as revenue when received, in the fiscal year of levy, because of
the adoption of the “ alternate method of property tax distribution,” known as the Teeter Plan, by
the City and the County. The Teeter Plan authorizes the Auditor/ Controller of the County to
allocate 100% of the secured property taxes billed, but not yet paid.
Interfund Transactions - Quasi- external transactions are accounted for as revenues, expenditures
( governmental fund types) or expenses ( proprietary fund types). Transactions that constitute
reimbursements to a fund for expenditures/ expenses initially made from it that are properly
applicable to another fund are recovered as a reduction in expenditures/ expenses in the user
fund. All other interfund transactions are reported as operating transfers. Non- recurring or non-routine
permanent transfers of equity are reported as residual equity transfers.
Totals ( Memorandum Only) Columns - Columns of the accompanying General Purpose Financial
Statements captioned “ Totals ( Memorandum Only)” do not present consolidated financial
information and are presented only to facilitate financial analysis. The data in these columns do
not present financial position, results of operations, or cash flows in conformity with generally
accepted accounting principles. Interfund eliminations have not been made in the aggregation of
this data.
Reclassifications - Certain reclassifications have been made to prior year financial data in order to
conform to the current year presentation.
2. CASH AND INVESTMENTS
The City maintains a cash and investment pool for all funds. Certain restricted funds which are
held and invested by independent outside custodians through contractual agreements are not
pooled. These restricted funds include cash with fiscal agents.
The investments made by the City Treasurer are limited to those allowable under State statutes as
incorporated into the City’s Investment Policy, dated February 1, 2002, and adopted February 6,
2002 which is more conservative than that allowed by State statute.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
24
2. CASH AND INVESTMENTS, Continued
Under provisions of this policy, the City is authorized to invest in the following types of
investments:
Certificates of Deposit Government Agency Securities
Bankers Acceptances Treasury Bills and Notes
Commercial Papers Passbook Savings Accounts
Repurchase Agreements State of California Local Agency Investment Fund
The City’s investments with LAIF at June 30, 2002, included a small portion of the pool funds
invested in Structured Notes and Asset- Backed Securities. These investments may include the
following:
• Structured Notes - debt securities ( other than asset- backed securities) whose cash flow
characteristics ( coupon rate, redemption amount, or stated maturity) depend upon one or
more indices and/ or that have embedded forwards or options.
• Asset- Backed Securities - generally mortgage- backed securities which entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal and
interest repayments from a pool of mortgages ( such as CMO’s) or credit card receivables.
As of June 30, 2002, the City had $ 49,662,681 invested in LAIF, which had invested 3.086% of the
pool investment funds in Structured Notes and Asset- Backed Securities.
Cash Deposits
All pooled certificates of deposit and bank balances are entirely insured or collateralized. The
California Government Code requires California banks and savings and loan associations to
secure an agency’s deposits by pledging government securities as collateral. The market value of
the pledged securities must equal at least 110% of an agency’s deposits. California law also allows
financial institutions to secure local agency deposits by pledging first trust deed mortgage notes
having a value of 150% of a local agency’s deposits. The City may waive collateral requirements
for deposits which are fully insured up to $ 100,000 by the Federal Deposit Insurance Corporation
( FDIC).
At June 30, 2002, the carrying amount of the City’s deposits was $ 144,000 and the bank balances
were $ 482,704. The total bank balance was covered by federal depository insurance or by
collateral held by the City’s agent in the City’s name.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
25
2. CASH AND INVESTMENTS, Continued
The City’s cash deposits at year- end are categorized below to give an indication of the level of
credit risk assumed by the City.
Category 1 - Deposits which are insured by the FDIC.
Category 2 - Deposits which are collateralized. The California Government Code requires
California banks and savings and loan associations to secure a City’s deposits by pledging
government securities with a value of 110% of a City’s deposits, or by pledging first trust deed
mortgage notes having a value of 150% of a City’s total deposits.
Category 3 - Deposits which are uninsured or uncollateralized.
Investments
The City’s investments at year- end are categorized below to give an indication of the level of
credit risk assumed by the City.
Category 1 - Investments which are insured by the Securities Investors Protection Corporation
( SIPC), or investments which are held in definitive form by the City or the City’s agent in the
City’s name, or investments acquired through the federal reserve book- entry system where the
financial institution or broker/ dealer associated with the purchase is adequately segregated
from the custodial safekeeping agent on the same investments, and where the investments are
recorded on the books and records of the financial institution or broker/ dealer in the name of
the City.
Category 2 - Investments which are uninsured, where the investments are acquired through a
financial institution’s investment or trading department, but are held in the same financial
institution’s trust department and are recorded in the City’s name in the trust department’s
systems and records.
Category 3 - Investments which are uninsured, 1) where the investments are acquired through a
financial institution’s investment department but are held for custodial purposes in the same
financial institution’s safekeeping department, or 2) where the investments are acquired
through a financial institution’s trust department and held for custodial safekeeping by the
same trust department, or 3) where the investments are acquired through, and held for
safekeeping by, the same broker/ dealer, or 4) where investments are not held in the City’s
name in the systems and records of the financial institution or broker/ dealer.
Uncategorized - Certain cash deposits and investments are not subject to categorization under
GASB Statement No. 3, Deposits with Financial Institutions, Investments ( including Repurchase
Agreements), and Reverse Repurchase Agreements, and are identified as “ Not Required to be
Categorized.”
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
26
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
27
2. CASH AND INVESTMENTS, Continued
The City has no Category 2 or 3 type pooled cash or investments.
At June 30, 2002, the City’s pooled cash and investments, classified by risk category consisted of
the following:
Not Required to Fair
Category 1 be Categorized Value
Cash and Cash Deposits:
Checking $ 1 44,000 $ - $ 1 44,000
Savings 1 ,066 - 1 ,066
Petty cash - 3 ,660 3 ,660
Total cash and cash deposits 1 45,066 3 ,660 1 48,726
Investments:
US Treasury Notes 9 ,077,830 - 9 ,077,830
Federal Home Loan Bank 1 0,120,920 - 1 0,120,920
Federal National Mortgage Association 1 4,467,197 - 1 4,467,197
Federal Home Loan Mortgage Corporation 7 ,150,510 - 7 ,150,510
Local Agency Investment Fund - 4 9,662,681 4 9,662,681
Total investments 4 0,816,457 4 9,662,681 9 0,479,138
Total cash and investments $ 4 0,961,523 $ 4 9,666,341 $ 9 0,627,864
The maturities of investments at June 30, 2002, were as follows:
Maturity Fair Value
Current to one year $ 5 2,864,538
One to two years 3 4,718,316
Two to three years 3 ,045,010
Total investments $ 9 0,627,864
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
28
2. CASH AND INVESTMENTS, Continued
At June 30, 2002, the City’s restricted cash and investments classified by risk category consisted of
the following:
Fair
Category 1 Category 2 Value
Restricted Cash and Investments:
Other cash with fiscal agents:
Bank of New York:
Federal Securities $ - $ 2 65,721 $ 265,721
Local Agency Investment Fund - 2 8,719,798 28,719,798
US Treasury - 7 ,523,492 7,523,492
Total Bank of New York - 3 6,509,011 36,509,011
US Bank:
US Treasury Money Market 6 4 64
Savings Account 45,020 - 45,020
Total restricted cash and investments $ 45,020 $ 3 6,509,075 $ 36,554,095
External Investment Pool
The City invests in LAIF, a State of California external investment pool. LAIF determines fair
value on its investment portfolio based on market quotations for those securities where market
quotations are readily available and based on amortized cost or best estimate for those securities
where market value is not readily available.
The City valued its investments in LAIF as of June 30, 2002, by multiplying its account balance
with LAIF times a fair value factor determined by LAIF. This fair value factor was determined by
dividing all LAIF participants’ total aggregate amortized cost by total aggregate fair value.
Accordingly, as of June 30, 2002, the City’s investments in LAIF at fair value amounted to
$ 49,662,681 using a LAIF fair value factor of 1.002780144.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
29
3. NOTES RECEIVABLE
As of June 30, 2002, notes receivable consisted of the following:
Notes
Receivable
General Fund:
City Manager Housing $ 8 99,906
Total general fund 8 99,906
Special Revenue Funds:
Community Development Block Grant 2 ,429,324
Below Market Rate Housing 5 39,885
Community Development Agency 5 14,865
Emergency Repair Loan ( ERL) 2 7,334
Total special revenue funds 3 ,511,408
Total notes receivable $ 4 ,411,314
Menlo Park Historical Association
The City entered into an agreement with the Menlo Park Historical Association on March 22, 1999,
to loan them $ 15,000 to assist in the design and production of a book on the history of Menlo Park.
No interest was added or will be collected. The Menlo Park Historical Association will pay the
principal in three ( 3) annual installments of Five Thousand Dollars ($ 5,000) each, beginning when
all financial obligations for publication of the book have been satisfied and book sales have
commenced. The borrower may make principal payments of any amount at any time. On
January 16, the borrower paid back the entire amount.
City Manger Housing
A note was entered into on June 13, 2001, between the City Manager and the City to assist in the
purchase of residential real estate property. This note is secured by a First Deed of Trust on the
property. The outstanding balance at June 30, 2002, was $ 899,906.
Community Development Block Grant
The City uses Housing and Community Development Block Grant funds to provide housing
rehabilitation loans to eligible applicants. Outstanding loans at June 30, 2002, were $ 2,429,324.
The rehabilitation loans are reflected in the Community Development Block Grant Fund. Since the
funds have not been legally vested with the City as of June 30, 2002, these funds are reported as
deferred revenue.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
30
3. NOTES RECEIVABLE, Continued
Below Market Rate Housing
The City uses Below Market Rate Housing Reserve funds to provide residents and employees who
work in Menlo Park with second mortgage loans to purchase their first home in Menlo Park.
These “ PAL” loans are amortized over 30 years, and are currently restricted to purchasers of
Below Market Rate Housing units, which are income and price restricted housing units produced
through the City’s Below Market Rate Housing program. Outstanding loans at June 30, 2002, were
$ 539,885, and are reflected in the Below Market Rate Housing Reserve Fund.
Community Development Agency
The City of Menlo Park Community Development Agency ( Agency) assumed a portfolio of loans
which had been made by Neighborhood Housing Services ( NHS) to low income residents of
Menlo Park for housing rehabilitation. The Agency had granted funds to the local NHS for that
purpose and assumed the loans when the NHS closed. The outstanding balance at June 30, 2002
was $ 53,810 and is reflected in the Community Development Agency Fund.
The Agency made a loan to Peninsula Habitat for Humanity for purchase of two mini- park lots as
sites to develop two single- family houses for very low- income homeowners. Loan repayment is
structured as a zero interest note with a twenty- year term. The outstanding balance at June 30,
2002 was $ 55,250 and is reflected in the Community Development Agency Fund.
The Agency made a loan to Mid- Peninsula Housing Coalition for purchase of a five- unit
apartment building for very low- income households. The loan carries a 3% simple interest rate,
with payments made from residual receipts of the property. The outstanding balance at June 30,
2002 was $ 242,459 and is reflected in the Community Development Agency Fund.
The Agency made housing rehabilitation loans to two eligible participants. The outstanding
balance at June 30, 2002 was $ 79,756 and is reflected in the Community Development Agency
Fund.
On March 21, 2002, the Agency made a loan for Peace Officer Homebuyer Assistance Program
( POMA) to one eligible participant in the amount of $ 84,000. The loan bears an interest rate of
5.48%. The loan amount ( principal and interest) is forgiveness at an increasing graduated rate
with every bi- weekly until the loan is entirely forgiven at the end of the 10 years. The outstanding
balance as of June 30, 2002, was $ 83,590, and is reflected in the Community Development Agency
Fund.
Total Agency loans at June 30, 2002, amounted to $ 514,865.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
31
3. NOTES RECEIVABLE, Continued
Emergency Repair Loan ( ERL)
The Emergency Repair Loan ( ERL) Program is designed to assist lower income households with
minor emergency repairs to their home. The revolving loan program was originally funded by a
Federal Revenue Sharing Grant. The maximum loan amount is ten thousand dollars at 3%
interest, with a loan term of either 5, 10, or 15 years.
Outstanding loans at June 30, 2002, were $ 27,334, and are reflected in the Revenue Sharing Fund.
4. PROPERTY, PLANT AND EQUIPMENT
Proprietary Fund Types
Property, plant and equipment of the Water Enterprise Fund at June 30, 2002, consisted of the
following:
Land $ 403,675
Machinery and equipment 605,104
Other improvements 9,459,197
10,467,976
Less accumulated depreciation ( 3,047,256)
Total $ 7,420,720
Depreciation expense for all proprietary funds was $ 243,204 for the year ended June 30, 2002.
General Fixed Assets Account Group
Activity in the General Fixed Assets Account Group for the year ended June 30, 2002, was as
follows:
Balance Balance
July 1, 2001 Additions Retirements Transfers June 30, 2002
Land $ 8,490,309 $ - $ - $ - $ 8,490,309
Buildings 29,095,692 89,795 - - 29,185,487
Equipment 7,435,257 777,556 ( 409,746) - 7,803,067
Other improvements 11,754,006 1,509,048 - 504,047 13,767,101
Construction in progress 7,141,856 18,988,573 - ( 504,047) 25,626,382
Totals $ 63,917,120 $ 21,364,972 $ ( 409,746) $ - $ 84,872,346
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
32
5. GENERAL LONG- TERM DEBT ACCOUNT GROUP
Activity in the General Long- Term Debt Account Group for the year ended June 30, 2002, was as
follows:
Balance Balance
July 1, 2001 Additions Deletions June 30, 2002
Compensated absences $ 841,410 $ - $ ( 30,352) $ 811,058
Claims payable 1,508,319 1,017,717 ( 907,282) 1,618,754
1996 General Obligation Refunding Bonds 4,435,000 - ( 195,000) 4,240,000
1996 Las Pulgas Project Refunding Bonds 28,820,000 - ( 775,000) 28,045,000
2000 Las Pulgas Project Tax Allocation Bonds 44,000,000 - - 44,000,000
2002 General Obligation Bonds - 13,245,000 - 13,245,000
Totals $ 79,604,729 $ 14,262,717 $ ( 1,907,634) $ 91,959,812
Compensated Absences
Compensated absences at June 30, 2002 amounted to $ 811,058. There is no fixed payment
schedule for compensated absences. The current portion of this liability amounted to $ 643,490 for
all funds, with a combined total of $ 1,454,548 at June 30, 2002.
Claims Payable
With the implementation of Governmental Accounting Standards Board Statement No. 10,
Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, the General Long-
Term Debt Account Group has reflected the financial effect of risk financing activities of $ 1,618,754
( see Note 9 for further discussion).
1996 General Obligation Refunding Bonds
During fiscal year 1995- 1996, the City issued $ 4,630,000 of 1996 General Obligation Refunding
Bonds. The bonds bear interest rates between 3.75% and 5.0% annually between June 30, 2000 and
August 1, 2015. The bonds mature on August 1 of each year from 1996 to 2015 in amounts ranging
from $ 40,000 to $ 430,000. Interest is payable semi- annually on February 1 and August 1 of each
year. The bonds are to be paid from special assessments to property owners within the City.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
33
5. GENERAL LONG- TERM DEBT ACCOUNT GROUP, Continued
The bonds maturing on or before August 1, 2006 are not subject to optional redemption prior to
maturity. The bonds maturing on and after August 1, 2007, are subject to optional redemption
prior to maturity at the option of the City, in whole or in part, at any time on or after August 1,
2006, from any available source of funds thereof at the following redemption prices expressed as
percentages of the principal amount to be redeemed, plus accrued interest to the date fixed for
redemption. Redemption prices expressed as percentages of the principal amount to be redeemed
are as follows:
Redemption Period Redemption Price
August 1, 2006 through July 31, 2007 102%
August 1, 2007 through July 31, 2008 101%
August 1, 2008 and thereafter 100%
The annual debt service requirements to maturity for the 1996 General Obligation Refunding
Bonds Outstanding at June 30, 2002, were as follows:
Year Ending
June 30, Amount
2003 $ 407,517
2004 403,697
2005 409,237
2006 409,013
2007 412,996
Thereafter 3,842,516
5,884,976
Less amount representing interest ( 1,644,976)
Total $ 4,240,000
1996 Las Pulgas Project Refunding Bonds
Las Pulgas Project Refunding Bonds outstanding at June 30, 2002, amounted to $ 28,045,000. The
bonds bear interest at rates between 3.75% and 5.375%, with interest payments made semi-annually
on June 1 and December 1. The bonds mature annually from 1996 to 2022 on June 1 in
amounts ranging from $ 60,000 to $ 2,235,000.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
34
5. GENERAL LONG- TERM DEBT ACCOUNT GROUP, Continued
The bonds maturing on or before June 1, 2006, are not subject to optional redemption prior to
maturity. The bonds maturing on and after June 1, 2007, shall be subject to redemption prior to
their respective maturities at the option of the City on or after June 1, 2006, as a whole on any date,
or in part ( in such maturities as are designated to the Trustee by the City no later than 45 days
prior to the redemption date or, if the City fails to designate such maturities, on a proportional
basis among maturities) on any Interest Payment Date, from funds derived by the City from any
source at the following redemption prices expressed as percentages of the principal amount to be
redeemed, plus accrued interest to the date fixed for redemption.
Redemption Period Redemption Price
June 1, 2006 through May 30, 2007 102%
June 1, 2007 through May 30, 2008 101%
June 1, 2008 and thereafter 100%
The annual debt service requirements to maturity for the 1996 Las Pulgas Project Refunding Bonds
outstanding at June 30, 2002, were as follows:
Year Ending
June 30, Amount
2003 $ 2 ,175,014
2004 2 ,347,696
2005 2 ,339,946
2006 1 ,964,599
2007 2 ,354,651
Thereafter 3 5,378,738
4 6,560,644
Less amount representing interest ( 18,515,644)
Total $ 2 8,045,000
2000 Las Pulgas Project Tax Allocation Bonds
Las Pulgas Community Development Project Tax Allocation Bonds, Series 2000 outstanding at
June 30, 2002, amounted to $ 44,000,000. The bonds bear interest at rates between 4.10% and 5.55%,
with interest payments made semi- annually on June 1 and December 1. The bonds mature
annually from 2004 to 2030 on June 1 in amounts ranging from $ 380,000 to $ 4,820,000.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
35
5. GENERAL LONG- TERM DEBT ACCOUNT GROUP, Continued
The bonds maturing on or before June 1, 2010 are not subject to optional redemption prior to their
maturities. The bonds maturing on or after June 1, 2011 are subject to redemption prior to their
respective maturities at the option of the City on or after June 1, 2010, as a whole on any date, or in
part ( in such maturities as are designated to the Trustee by the City no later than 45 days prior to
the redemption date or, if the City fails to designate such maturities, on a proportional basis
among maturities) on any Interest Payment Date, from funds derived by the City from any source
at the following redemption prices ( expressed as percentages of the principal amount of Bonds
called for redemption), together with interest accrued thereon to the date fixed for redemption:
Redemption Period Redemption Price
June1, 2010 through May 31, 2011 102%
June 1, 2011 through May 31, 2012 101%
June 1, 2012 and thereafter 100%
The annual debt service requirements to maturity for the 2000 Las Pulgas Project Tax Allocation
Bonds outstanding at June 30, 2002, were as follows:
Year Ending
June 30, Amount
2003 $ -
2004 2 ,743,463
2005 2 ,752,882
2006 3 ,131,075
2007 2 ,737,075
Thereafter 8 1,819,802
9 3,184,297
Less amount representing interest ( 49,184,297)
Total $ 4 4,000,000
2002 General Obligation Bonds
On April 17, 2002, the City issued $ 13,245,000 of the 2002 General Obligation Bonds. The bonds
bear interest at rates between 4.50% and 5.75%, with interest payments made semi- annually on
February 1 and August 1. The bonds mature annually from 2003 to 2032 on August 1 in amounts
ranging from $ 130,000 to $ 840,000.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
36
5. GENERAL LONG- TERM DEBT ACCOUNT GROUP, Continued
The bonds maturing on or before August 1, 2013 are not subject to optional redemption prior to
their maturities. The bonds maturing on or after August 1, 2014 are subject to redemption prior to
their respective maturities at the option of the City, from any source of available funds, as a whole
or in part on any date, on or after August 1, 2012. If less than all of the bonds are called for
redemption, bonds shall be redeemed in inverse order of maturities, and if less than all of the
bonds of any given maturity are called for redemption, the portions of bonds of a given maturities
to be redeemed shall be determined by lot. Bonds shall be redeemed at the following redemption
prices ( expressed as a percentage of the principal amount of the bonds called for redemption),
together with interest accrued thereon to the date of redemption:
Redemption Period Redemption Price
August 1, 2012 through July 31, 2013 101.0%
August 1, 2013 through July 31, 2014 100.5%
August 1, 2014 and thereafter 100.0%
The annual debt service requirements to maturity for the 2002 General Obligation Bonds
outstanding at June 30, 2002, were as follows:
Year Ending
June 30, Amount
2003 $ 4 96,417
2004 8 21,665
2005 8 82,260
2006 8 80,523
2007 8 78,160
Thereafter 2 2,722,360
2 6,681,385
Less amount representing interest ( 13,436,385)
Total $ 1 3,245,000
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
37
6. PRIOR YEARS’ DEFEASED OBLIGATIONS
1988 and 1992 Tax Allocation Bonds
During fiscal year 1995- 1996, the City’s Community Development Agency issued $ 32,305,000 of
1996 Tax Allocation Refunding Bonds to refund and defease the Agency’s outstanding principal of
$ 3,565,000 of the 1988 Tax Allocation Bonds and the outstanding principal of $ 25,000,000 of the
1992 Tax Allocation Bonds. Both the 1988 and 1992 series bonds have been 100% defeased and the
liability has been removed from the General Long- Term Debt Account Group.
The refundings were undertaken to reduce total debt service payments over the next 25 years and
to obtain an economic gain.
The balance of the defeased bonds outstanding as of June 30, 2002, was $ 24,325,000.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
38
7. FUND EQUITY
Fund Reserves and Designations
Fund balances at June 30, 2002, have been reserved or designated for the following purposes:
Special Debt Capital Trust and
General Revenue Service Projects Agency
Fund Funds Funds Funds Funds
Reserved:
Encumbrances $ 295,317 $ 2,442,811 $ - $ 5,238,368 $ 452,218
Deposits and prepaid items - - - - -
Advances to other funds - 636,453 - 37,221 -
Debt service - - 586,042 - -
Notes receivable 870,000 - - - -
Housing loans - 3,061,563 - - -
Total reserved 1,165,317 6,140,827 586,042 5,275,589 452,218
Designated:
Unrealized investment gain 239,604 233,184 3,241 120,371 19,111
Insurance 2,251,360 - - - -
Equipment replacement 98,228 - - - -
Operational reserve 500,000 - - - -
Vacation and sick leave 100,000 - - - -
Infrastructure replacement 2,000,000 - - - -
Fiscal uncertainties 1,000,000 - - - -
PERS safety investment 1,000,000 - - - -
Special programs and services - 8,622,858 - - -
Capital improvements - - - 46,914,873 -
Total designated 7,189,192 8,856,042 3,241 47,035,244 19,111
Unreserved, Undesignated 20,652,998 11,217,215 - - 3,542,716
Totals $ 29,007,507 $ 26,214,084 $ 589,283 $ 52,310,833 $ 4,014,045
Retained earnings for the proprietary fund type consisted of the following reserves:
Enterprise
Funds
Reserved:
Encumbrances $ 130,943
Insurance 200,000
Capital improvements 9,406,718
9,737,661
Designated:
Unrealized investment gain 83,365
Unreserved, Undesignated 11,657,680
Total $ 21,478,706
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
39
8. CONTRIBUTED CAPITAL
Contributed capital changed for the year ended June 30, 2002, by the following amounts:
Depreciation
Attributable
Balance to Contributed Balance
July 1, 2001 Capital June 30, 2002
Water Enterprise Fund $ 6 01,920 $ ( 30,229) $ 5 71,691
Totals $ 6 01,920 $ ( 30,229) $ 5 71,691
9. RISK MANAGEMENT
General Liability Insurance
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City is self- insured
for the first $ 100,000 of each loss and maintains excess liability insurance. The City is insured for
liability occurrences up to $ 10,000,000 per occurrence and $ 14,000,000 in the aggregate per year.
Workers’ Compensation
The City is self- insured for the first $ 250,000 of each loss and maintains statutory excess workers’
compensation insurance, and is insured for an individual accident resulting in claims up to
$ 2,000,000. The City is insured for claims up to $ 2,000,000.
Claims for long- term disability are covered by insurance. Estimated reserves for claims are
recorded in the General Fund. No claim settlement exceeded either this self- insured amount or
the insurance coverage for any of the years shown.
Beginning Current Year Claim Payments End
of Year Claims and Changes for Current and of Year
Liability in Estimates Prior Years Liability
1993- 1994 $ 697,520 $ 64,317 $ ( 374,281) $ 387,556
1994- 1995 387,556 77,248 ( 190,498) 274,306
1995- 1996 274,306 620,603 ( 325,355) 569,554
1996- 1997 569,554 588,907 ( 411,191) 747,270
1997- 1998 747,270 755,001 ( 477,414) 1,024,857
1998- 1999 1,024,857 811,041 ( 577,723) 1,258,175
1999- 2000 1,258,175 813,829 ( 870,628) 1,201,376
2000- 2001 1,201,376 1,129,222 ( 822,279) 1,508,319
2001- 2002 1,508,319 1,017,717 ( 907,282) 1,618,754
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
40
10. INTERFUND TRANSACTIONS
Interfund receivables and payables at June 30, 2002, were as follows:
Due To / From Other Funds:
Due From Due To
Other Funds Other Funds
Special Revenue Funds:
Highway Users Tax $ - $ 37,221
Community Development Agency 636,453 -
Community Development Block Grant - 210,837
Capital Projects Funds:
Capital Improvement - General 37,221 -
Community Development Agency - 2000 - 425,616
Totals $ 673,674 $ 673,674
Advances To / From Other Funds:
Advances To Advances From
Other Funds Other Funds
Special Revenue Funds:
Community Development Block Grant $ 500,000 $ -
Community Development Agency - 500,000
Totals $ 500,000 $ 500,000
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
41
10. INTERFUND TRANSACTIONS, Continued
Interfund transfers for the year ended June 30, 2002, were as follows:
Transfers In Transfers Out
General Fund $ 1,097,780 $ 1,190,041
Special Revenue Funds:
Highway Users Tax - 2,052,373
Landscape/ Tree Assessment 137,500 97,300
Sidewalk Assessments - 143,585
County Transportation Tax - 173,921
Community Development Agency - 12,147,629
Literacy Grants 50,000 -
Traffic Impact Fees - 699,001
Storm Drainage Fees - 48,432
Solide Waste Service - 53,000
Bay Area Air Quality Management 59,477 -
Storm Water Management - 23,020
Local Law Enforcement Block Grant 2,541 -
Total Special Revenue 249,518 15,438,261
Debt Service Funds:
Community Development Agency 4,653,739 -
Capital Projects Funds:
Library Addition - 3,375
Capital Improvement - General 1,030,000 993,785
Capital Improvement - Other 20,610,831 -
Community Development Agency - 8,503,926
Total Capital Projects 21,640,831 9,501,086
Expendable Trust Funds:
Recreation In- Lieu - 1,177,780
Miscellaneous Trust - 700
PERS Dividend - 137,000
Total Expendable Trust Funds - 1,315,480
Total governmental and
fiduciary fund types 27,641,868 27,444,868
Enterprise Fund:
Water - 197,000
Totals $ 27,641,868 $ 27,641,868
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
42
11. PUBLIC EMPLOYEE RETIREMENT SYSTEM
Plan Description
The City contributes to the California Public Employee Retirement System ( PERS); an agent
multiple- employer defined benefit pension plan. PERS provides retirement and disability
benefits, annual cost- of- living adjustments, and death benefits to plan members and beneficiaries.
PERS acts as a common investment and administrative agent for participating public entities
within the State of California. Benefit provisions and all other requirements are established by
State statute and City ordinance. Copies of PERS’ annual financial report may be obtained from
their executive office at 400 P Street, Sacramento, CA 95814.
Funding Policy
Participants are required to contribute 7% ( 9% for safety employees) of their annual covered
salary. The City makes the contributions required of City employees on their behalf and for their
account. The City is required to contribute at an actuarially determined rate; the current rate is 0%
for miscellaneous employees, and 0% for safety employees, of annual covered payroll. No
contributions were required of the City for fiscal year 2001- 2002 because of the overfunded
actuarial accrued liability. The contribution requirements of plan members and the City are
established and may be amended by PERS.
Annual Pension Cost
For 2002, the City’s annual pension cost of $ 0 for PERS was equal to the City’s required and actual
contribution. The required contribution was determined as part of the June 30, 2000, actuarial
valuation using the entry age normal actuarial cost method. The actuarial assumptions included
( a) 8.25% investment rate of return ( net of administrative expenses), ( b) projected salary increases
ranging from 3.75% to 14.20% for miscellaneous employees and from 4.27% to 11.59% for safety
employees depending on age, service, and type of employment, and ( c) 3.5% per year cost- of-living
adjustments. Both ( a) and ( b) included an inflation component of 3.5%. The actuarial value
of PERS assets was determined using techniques that smooth the effects of short- term volatility in
the market value of investments over a three- year period. PERS unfunded actuarial accrued
liability ( or surplus) is being amortized as a level percentage of projected payroll on a closed basis.
City of Menlo Park
Notes to General Purpose Financial Statements, Continued
For the year ended June 30, 2002
43
11. PUBLIC EMPLOYEE RETIREMENT SYSTEM, Continued
The amortization period at June 30, 2001, was 30 years for miscellaneous employees and 30 years
for safety employees for prior and current service unfunded liability.
Fiscal Annual Pension Percentage of Net Pension
Year Cost ( APC) APC Contributed Obligation
June 30, 1999 $ 5 07,042 100% $ -
June 30, 2000 - 100% -
June 30, 2001 - 100% -
12. OTHER POST- EMPLOYMENT BENEFITS
In accordance with Resolution No. 4135, “ Resolution of the City Council of the City of Menlo Park
electing to be subject to the Public Employees’ Medical and Hospital Care Act,” adopted by the
City Council on September 5, 1989, with an effective date of October 1, 1989, the City offers
retirees the continuation of group health insurance. The City’s contribution for each active
employee or retiree is sixteen dollars ($ 16) per month. As of September 7, 1989, approximately 83
former employees were eligible for this benefit. For the fiscal year ended June 30, 2002, 51 former
employees or annuitants were enrolled in the PERS Health Benefits Program.
The benefits provided by the group health insurance through the Public Employees’ Retirement
System Health Benefits Program are the s