Coompprreehheennssiivvee Annnnuuaall FFiinnaanncciiaall Reeppoorrtt
City of Newark, California
For the Fiscal Year Ended June 30, 2006
Fire Station No. 1
CITY OF NEWARK, CALIFORNIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Prepared by: Finance Department
CITY OF NEWARK
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2006
TABLE OF CONTENTS
i
INTRODUCTORY SECTION:
Table of Contents....................................................................................................................... ............................... i
Letter of Transmittal.................................................................................................................... ............................ v
Organization Chart ............................................................................................................................... .................. ix
Newark Mayor & City Council........................................................................................................................ ....... x
List of City Officials ............................................................................................................................... ............... xi
Map ............................................................................................................................... ........................................ xii
GFOA Award ............................................................................................................................... ........................ xiii
CSFMO Award.......................................................................................................................... ........................... xiv
FINANCIAL SECTION:
Independent Auditor’s Report on Basic Financial Statements ............................................................................ 1
Management’s Discussion and Analysis................................................................................................................ 3
Basic Financial Statements:
Government- Wide Financial Statements:
Statement of Net Assets ........................................................................................................................ 16
Statement of Activities..................................................................................................................... .... 17
Fund Financial Statements:
Governmental Funds:
Balance Sheet.......................................................................................................................... .......... 20
Reconciliation of the Governmental Funds Balance Sheet
with the Statement of Net Assets ................................................................................................ 22
Statement of Revenues, Expenditures, and Changes in Fund Balances........................................... 24
Reconciliation of the Net Change in Fund Balances - Total Governmental Funds
with the Statement of Activities .................................................................................................. 26
CITY OF NEWARK
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2006
TABLE OF CONTENTS
iii
FINANCIAL SECTION ( Continued):
Internal Service Funds:
Combining Statement of Net Assets ................................................................................................ 80
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets............................ 82
Combining Statement of Cash Flows............................................................................................... 84
Fiduciary Funds:
Combining Statement of Changes in Assets and Liabilities – All Agency Funds ........................... 88
STATISTICAL SECTION:
Net Assets by Component – Last Four Fiscal Years ............................................................................. 91
Changes in Net Assets – Last Four Fiscal Years ................................................................................... 92
Fund Balances of Governmental Funds – Last Ten Fiscal Years ......................................................... 93
Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years ...................................... 94
Tax Revenues by Source, Governmental Funds – Last Ten Fiscal Years ............................................ 96
Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years .......................... 97
Property Tax Rates All Overlapping Governments – Last Four Fiscal Years ...................................... 98
Principal Property Tax Payers - Current Year and Three Years Ago ................................................... 99
Property Tax Levies and Collections – Last Ten Fiscal Years............................................................. 100
Ratio of Outstanding Debt by Type – Last Ten Fiscal Years.............................................................. 101
Direct and Overlapping Governmental Activities Debt – June 30, 2006............................................ 102
Legal Bonded Debt Margin Information – June 30, 2006................................................................... 103
Demographic and Economic Statistics - Last Ten Fiscal Years.......................................................... 104
CITY OF NEWARK
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2006
TABLE OF CONTENTS
iv
STATISTICAL SECTION ( Continued):
Principal Employers – Current Year and Three Years Ago ................................................................ 105
Full- Time Equivalent City Government Employees by Function/ Program
– Last Ten Fiscal Years ...................................................................................................................... 106
Operating Indicators by Function/ Program – Last Fiscal Year……………. ..................................... 107
Capital Asset Statistics by Function/ Program – Last Fiscal Year ....................................................... 108
v
September 13, 2006
To the Honorable Mayor, Members of the City Council, and the Citizens of the City of Newark, California:
I am pleased to submit the City’s Comprehensive Annual Financial Report ( CAFR) for the fiscal year ended June 30,
2006. Various financing covenants and rules associated with restricted funding sources require the City of Newark,
California ( City) to publish a complete set of audited financial statements.
City management assumes full responsibility for the completeness and reliability of the information contained in this
report, based upon a comprehensive framework of internal control that it has established for this purpose. The City’s
internal accounting controls have been developed and maintained for the protection of City’s assets from loss, theft or
misuse; for accuracy and reliability of information used in the preparation of the City’s financial statements; and for
adherence to management policies and procedures. Because the costs of internal controls should not exceed the
anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements
are free of any material misstatements. The evaluation of costs and benefits requires estimates and judgments by
management.
The City’s financial statements presented in the CAFR have been prepared in accordance with generally accepted
accounting principles ( GAAP) and audited in accordance with generally accepted auditing standards. The independent
certified public accounting firm of Maze & Associates has rendered its unqualified opinion on the City’s financial
statements for the year ended June 30, 2006. The independent auditors’ report is presented on page 3 of the financial
section of this report.
Management’s discussion and analysis ( MD& A) immediately follows the independent auditor’s report and provides a
narrative introduction, overview, and analysis of the basic financial statements. MD& A complement this letter of
transmittal and should be read in conjunction with it.
City of Newark Profile
The City of Newark, incorporated in 1955, is located on the eastern shores of San Francisco Bay at the end of the
Dumbarton Bridge and in the northern part of Silicon Valley, fifteen miles north of San Jose, California. As of January
1, 2006, the City’s population was estimated by the California Department of Finance at 43,700, approximately 3% of
total Alameda County population. The City occupies an area of approximately fourteen square miles.
The City is a general law city and operates under the Council- Manager form of government. Under this form of
government, policy- making and legislative authority are vested in a five- member elected City Council consisting of
the Mayor and four Council members. The Mayor and City Council are responsible for passing ordinances, adopting
and amending the operating and capital budgets, appointing various committee members, and hiring both the City’s
manager and attorney. The City Manager is responsible for carrying out the policies and ordinances established by the
City Council, for overseeing the day- to- day operations of the City, and for appointing the heads of various
departments.
CITY OF NEWARK, CALIFORNIA
37101 Newark Boulevard • Newark, California, 94560- 3976 • ( 510) 793- 1400
vi
City of Newark Profile, Continued
The City provides a full range of municipal services to its citizens. These include police and fire protection;
construction and maintenance of streets, parks, storm drains and other infrastructure; recreational activities and
cultural events; planning, zoning and other community development activities; and administrative services including
information systems, finance and personnel.
The City’s financial reporting entity includes all funds and activities of the City of Newark as the primary government
and its component units. The City’s component units are blended into the City’s funds because their governing boards
consist of the all five members of the City Council. These component units are Redevelopment Agency of the City of
Newark and the Newark Public Financing Authority.
A biennial operating budget and capital improvement plan is adopted by City Council resolution prior to July 1. This
serves as the foundation for Newark’s financial planning and control. City Council places the legal level of budgetary
control at the fund level. All budget amendments and transfers between funds must be approved by the City Council
by resolution during the fiscal year. The City Manager is authorized to transfer unencumbered appropriations within a
department within the same fund. Appropriations are valid for one fiscal year and lapse at the end of the fiscal year.
Local Economy
After several years of economic downturn, State takeaways, and increased costs of retirement, City of Newark remains
financially solvent given its strong conservative fiscal ethic and diverse economic base. But there are challenges ahead
even with the economic outlook finally improving for the Bay Area region.
The City sales tax revenue has been declining due to the loss of a number of sales tax generators that have left during
the past two years. The vacancy rate among the City’s commercial and industrial properties still remains high.
Residential property values have grown but the housing market has slowed down due to rising interest rates. Higher
energy costs and increasing interest rates have dampening effect on the real estate market, construction, business
investment, and consumer spending. The rising energy costs and interest hikes pose as risk factors that can threaten a
moderate economic expansion in the Bay Area. Unless the Bay Area, particularly the Silicon Valley, experiences a
turnaround, the City will not significantly increase its revenues.
During the past ten years, the City’s expenses related to public safety have increased not only in amount, but also in
percentage of total expenses ( 51%). Much of the increase reflects a regional trend that has seen the salaries and
benefits of police and firefighters growing at a much faster rate than those of other categories of public sector
employees. The City also experienced 39% increase in recreation expenses during the last two years. This growth in
recreation expenses reflects an increase in the number of programs offered by the City. In the past five years,
personnel costs, which account for approximately 73% of the City’s total operating budget, have increased
substantially as a result of negotiated salary adjustments, expanded retirement benefits, and increased City retirement
contributions resulting from portfolio losses suffered by the California Public Employees’ Retirement System
( CalPERS) during the economic downturn.
vii
Long- Term Financial Planning
In anticipation of an economic slow down or recession or revenue losses due to legislative acts, the City has
established reserve levels to provide cushion for these times. In the City’s 2006- 2011 Five- Year Forecast adopted by
the City Council on April 27, 2006, the City’s Budget and Strategic Plan includes maintaining the General Fund
operating reserves at its current level of $ 6.0 million and other funds’ operating reserves at $ 1.8 million. These
reserves will provide cushion if the State takes away significant revenues or if the economy does not rebound as
projected.
Relevant Financial Policies
City staff worked closely with Council during the fiscal year to set fiscal priorities that will preserve the City’s sound
fiscal condition in the face of the current economic conditions. Although the City’s revenues have been increasing
during the past two years, the City is still experiencing a structural deficit that has required the City to use CalPERS
reserve funds and to institute a budget savings plan. The plan includes a flexible hiring freeze, transfers of funds to
operational budget, new revenue sources, and modest capital improvements. In addition, the plan is designed to
maintain the City’s total operating reserves at $ 7.8 million.
The adopted 2006- 2008 biennial budget reflected a 1.5% reduction in operating expenditures and continued hiring
freeze, with no significant service reductions, no programs eliminated, and more importantly, no impact on public
safety services.
Major Initiatives
The City has been upgrading or adding new facilities to enhance its service delivery to citizens. Even with the fiscal
uncertainty that lies ahead, the silver lining of the City’s budget includes:
• Completion and operation of the Silliman Center, including the new aquatics center. The revenue from this facility
has far exceeded expectations.
• Completion of the Fire Station Number One which became operational in November 2005. The state- of- the- art
facility will serve as the City’s Emergency Operation Center.
• Continued partnership with the Newark Unified School District in the City’s quest for “ world” class education for
the young people.
• Funds have been provided for the expansion of the Senior Center facility. The City has a significant and growing
senior population. The increase in this age group will require continued attention to seniors’ programs.
• Construction of a Home Depot store. The 107,250 square foot store scheduled to open in October 2006 should
help replace some of the lost sales tax revenues.
• City’s efforts to expedite the development process in a pro- business environment have been rewarded with over
72,000 square feet of retail space processed and approved in the last two years.
• Passage of Regional Measure 2 will lead to the completion of the Dumbarton Rail project in 5- 10 years. This
project will link the City with the regional rail network and enhances development opportunities in Area Two.
ix
Newark Mayor & City Council
David W. Smith
Mayor
Alan L. Nagy
Councilmember
Susan Johnson
Councilmember
Luis L. Freitas
Councilmember
Ana Apodaca
Councilmember
x
CITY STAFF
CITY MANAGER
John Becker
ASSISTANT CITY MANAGER
Jim Reese
CITY ATTORNEY
Gary T. Galliano
EXECUTIVE TEAM
PUBLIC WORKS DIRECTOR
Dennis Jones
FIRE CHIEF
Demetrious Shaffer
POLICE CHIEF
Ray Samuels
ACTING CITY CLERK
Kathy Slafter
xi
xii
xiii
xiv
2
CITY OF NEWARK
Management’s Discussion and Analysis
This section of the City of Newark’s ( City) Comprehensive Annual Financial Report ( CAFR)
presents a narrative overview and analysis of the City’s financial activities and performance for
the fiscal year ended June 30, 2006. The information presented here should be considered in
conjunction with the accompanying transmittal letter in the Introductory Section in front of this
report and the City’s Basic Financial Statements, which follow.
FINANCIAL HIGHLIGHTS
• At June 30, 2006, the City’s net assets ( excess of assets over liabilities) were $ 184.3
million. Of this amount, $ 21.4 million were unrestricted that may be used to meet the
City’s ongoing operations.
• At the end of the fiscal year, the City’s net assets increased by $ 0.5 million. Total City
program revenues of $ 10.5 million and general revenues of $ 31.0 million exceeded total
expense of $ 41.0 million.
• In fiscal year 2006, the City’s governmental funds reported combined ending fund
balance of $ 33.2 million, an increase of $ 1.1 million in comparison with the prior fiscal
year. The City’s General Fund balance increased by $ 0.4 million.
• The City’s total assets increased by $ 1.2 million at the end of the fiscal year. This is
primarily due to increased revenues more than offset the increase in expenses during the
fiscal year, which allowed the City to maintain higher balances in its cash and investment
accounts.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City’s basic financial
statements. The City’s basic financial statements are comprised of three components: 1)
Government- Wide Financial Statements, 2) Fund Financial Statements, and 3) Notes to Basic
Financial Statements. Required Supplementary Information is included in addition to the basic
financial statements.
Government- Wide Financial Statements
The Government- Wide Financial Statements provide a broad view of the City’s financial position
and activities, in a manner similar to private- sector business reporting. The Government- Wide
Financial Statements include the Statement of Net Assets and the Statement of Activities.
The Statement of Net Assets presents information on all of the City’s assets and liabilities, with
the differences between the two reported as net assets. This statement reports all assets and
liabilities using the accrual basis of accounting. Increases and decreases in net assets serve as
useful indicator of whether the financial position of the City is improving or deteriorating.
3
CITY OF NEWARK
Management’s Discussion and Analysis
OVERVIEW OF THE FINANCIAL STATEMENTS, Continued
The Statement of Activities provides information on how the City’s net assets changed during the
fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to
the change occurs, regardless of the timing of the related cash flows. All revenues earned and
expenses incurred during the fiscal year are reported in this statement, regardless of timing of
related cash flows.
The Government- Wide Financial Statements of the City present governmental activities only. The
governmental activities of the City include general government, public safety, streets and parks,
community development, and recreation. Property and local taxes, investment earnings, charges
for services, operating and capital grants and contributions finance these activities.
Fund Financial Statements
Fund Financial Statements are groupings of related accounts that are used to maintain control
over resources that have been segregated for specific activities or objectives. The City uses fund
accounting to ensure and demonstrate compliance with finance- related legal requirements. The
funds of the City can be divided into three categories: governmental funds, proprietary funds, and
fiduciary funds.
Governmental funds are use to account for basically the same functions as governmental
activities in the Government- Wide Financial Statements. However, unlike the Government- Wide
Financial Statements, Governmental Fund Financial Statements focus on near- term inflows and
outflows of spendable resources, as well as the available balances of spendable resources at the
end of the fiscal year. This information may be useful in assessing the City’s near- term financial
requirements.
In order to better understand the City’s long- term and near- term financial requirements, it is
useful to compare the information presented for governmental funds with the information
provided for governmental activities in the Government- Wide Financial Statements. Both the
governmental funds balance sheet and statement of revenues, expenditures, and changes in fund
balances provide a reconciliation to facilitate the comparison between governmental funds and
governmental activities.
The City reports 19 governmental funds. The major governmental funds include the General
Fund, State Construction Maintenance Special Revenue Fund, Capital Projects Fund,
Redevelopment Agency Capital Projects Fund, which are presented separately and in detail in the
Governmental Fund Financial Statements. Information on the other governmental funds are
combined into a single aggregated presentation as non- major governmental funds. Individual fund
data for each non- major governmental funds is provided in the form of combining statements as
supplementary information elsewhere in the report.
4
CITY OF NEWARK
Management’s Discussion and Analysis
OVERVIEW OF THE FINANCIAL STATEMENTS, Continued
Proprietary funds of the City consist of the internal service funds. The internal service funds are
used to accumulate and allocate costs internally among the City’s various functions. The City
uses internal service funds to account for its Equipment Replacement, Equipment Operations,
Office Support, Building Maintenance, Public Liability Self- Insurance, and Workers’
Compensation functions. Because these services predominantly benefit the governmental
activities, they have been included within governmental activities in the Government- Wide
Financial Statements.
The City’s six internal service funds are combined into a single aggregated presentation in the
Proprietary Fund Financial Statements. Individual fund data for the internal service funds is
provided in the form of combining statements as supplementary information elsewhere in the
report.
Fiduciary funds are used to account for resources held for the benefit of parties external to the
City. Fiduciary funds are not included in the Government- Wide Financial Statements because the
resources of those funds are not available to support the City’s own program. The City’s
Fiduciary Fund Financial Statements provide financial information about the activities of the
Special Assessment Districts, for which the City acts solely as an agent
Notes to Basic Financial Statements
The Notes to Basic Financial Statements provide additional information that is essential to a full
understanding of the data provided in the Government- Wide and Fund Financial Statements.
Required Supplementary Information
The Required Supplementary Information provides information on the Modified Approach used
for reporting the condition of the City’s infrastructure capital assets and the costs of maintaining
and preserving them.
Combining and individual fund statements and schedules to provide information for non- major
governmental and internal service funds and are presented immediately following the Required
Supplementary Information.
5
CITY OF NEWARK
Management’s Discussion and Analysis
GOVERNMENT- WIDE FINANCIAL ANALYSIS
Net assets may serve over time as a useful indicator of the City’s financial position. The City’s
assets exceeded liabilities by $ 184.3 million. The following table shows the condensed
comparative Statement of Net Assets for the fiscal years ended June 30, 2006 and 2005.
2006 2005
Assets:
Cash and investments $ 35.7 $ 33.8
Other assets 2.6 2.4
Capital Assets, Net 168.2 169.0
Total Assets 206.5 205.2
Liabilities:
Long- term Liabilities 14.8 15.2
Other Liabilities 7.4 6.2
Total Liabilities 22.2 21.4
Net Assets:
Invested in capital assets, net of related debt 153.8 160.8
Restricted 9.1 8.2
Unrestricted 21.4 14.8
Total Net Assets $ 184.3 $ 183.8
Governmental Activities
Comparative Statements of Net Assets
June 30, 2006 and 2005
( Amounts in Millions)
The City’s net assets were $ 184.3 million at June 30, 2006. This is an increase of $ 0.5 million
over prior fiscal year.
The largest portion of the City’s net assets, $ 153.8 million ( 83%), is its investment in capital
assets, less any related outstanding debt used in acquiring those assets. The City uses these assets
to provide services to citizens; consequently these assets are not available for future spending.
Although the City’s investment in its capital assets is reported net of related debt, resources
required to repay the outstanding debt must be provided from other sources since the capital
assets cannot be used to liquidate the debt.
Another portion of the City’s net assets, $ 9.1 million ( 5%), are resources subject to
external restrictions and may only be used for the purpose intended by the entities that
provided these funds to the City.
The remaining balance of the City’s net assets of $ 21.4 million ( 12%) represents unrestricted net
assets, which may used to finance daily operations without constraints established by debt
covenants or other legal requirements.
6
CITY OF NEWARK
Management’s Discussion and Analysis
GOVERNMENT- WIDE FINANCIAL ANALYSIS, Continued
The following table shows the condensed comparative Statement of Activities and Changes in
Net Assets for the fiscal years ended June 30, 2006 and 2005.
2006 2005
Revenues:
Program revenues:
Charges for services $ 6.4 $ 6.2
Operating grants and contributions 1 .2 0 .5
Capital grants and contributions 2 .9 1 .5
Total program revenues 1 0.5 8 .2
General revenues
General property taxes 9 .2 8 .4
Other local taxes 1 6.0 1 6.5
Use of money and property 1 .3 0 .9
Intergovernmental - vehicle in- lieu 3 .0 2 .0
Miscellaneous 1 .5 0 .9
Total general revenues 3 1.0 2 8.7
Total revenues 4 1.5 3 6.9
Expenses:
General government 6 .1 4 .7
Public safety 2 1.0 2 0.7
Streets and parks 4 .9 5 .3
Community development 2 .5 2 .3
Recreation 5 .4 5 .0
Miscellaneous 0 .4 0 .4
Interest on long- term debt 0 .7 0 .7
Total expenses 4 1.0 3 9.1
Increase ( Decrease) in net sssets 0.5 ( 2.2)
Net Assets - Beginning 183.8 186.0
Net Assets - Ending $ 184.3 $ 183.8
Governmental Activities
Comparative Statements of Activities ang Changes in Net Assets
June 30, 2006 and 2005
( Amounts in Millions)
7
CITY OF NEWARK
Management’s Discussion and Analysis
GOVERNMENT- WIDE FINANCIAL ANALYSIS, Continued
Program revenues include fees and other specific charges designed to cover all or part of the costs
of programs provided to the citizens. Program revenues increased by $ 2.3 million from last fiscal
year primarily due to increased operating and capital grant reimbursements from federal and state
agencies and capital contributions received from developers.
Property tax revenues increased by $ 0.8 million or 10% in fiscal year 2006 compared to fiscal
year 2005 due to higher assessed valuation and an active housing market. Other local taxes
decreased by $ 0.5 million. This was primarily due to decline in Sales Tax by $ 1.0 million
resulting from the loss of a number of sales tax generators. An increase of $ 0.5 million in
Transient Occupancy Tax helped offset some of the decrease in Sales Tax. Other general
revenues including vehicle in- lieu fees, investment earnings and other miscellaneous revenues
increased in fiscal year 2006.
The City’s expenses totaled $ 41.0 million in fiscal year 2006. These expenses were partially
offset by program revenues of $ 10.5 million. General revenues of $ 31.0 million financed the
remainder, resulting in a positive change in net assets of $ 0.5 million.
Total expenses increased by $ 1.9 million, or 5%, primarily in General Government and Public
Safety. Much of this increase was due to negotiated salary and benefits adjustments and increased
employee retirement contribution rates.
FUND FINANCIAL ANALYSIS
Governmental Funds
The City’s governmental funds provide information on short- term inflows, outflows, and
balances of spendable resources. This information is useful in evaluating the City’s financing
requirements. In particular, unreserved fund balance may serve as a useful measure of the
government’s net resources available for spending at the end of fiscal year.
At June 30, 2006, the City’s combined governmental fund balances were $ 33.2 million, an
increase of $ 1.1 million or 3% compared with the prior fiscal year. Approximately 91% of the
combined fund balances, $ 30.2 million, represents unreserved fund balance, which is available to
meet the City’s current and future financing requirements. The remainder of the fund balance is
reserved to indicate that it is not available for spending because it has been committed to liquidate
outstanding encumbrances; to pay debt service; and to reflect advances to other funds.
Governmental revenues in fiscal year 2006 were $ 41.5 million. This was an increase of $ 4.6
million from fiscal year 2005. Property taxes increased due to significant rise in property values.
Intergovernmental revenues increased primarily due to higher vehicle license in- lieu fees and
federal and state grant reimbursements. Charges for services and other revenues increased due to
developer contributions and fees charged to mitigate impact of new development on City services
and infrastructure needs.
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CITY OF NEWARK
Management’s Discussion and Analysis
FUND FINANCIAL ANALYSIS, Continued
Governmental expenditures in fiscal year 2006 were $ 40.7 million, a decrease of $ 3.7 million
from prior fiscal year. Much of the decline in expenditures was in the Capital Projects Fund.
Expenditures in the Capital Projects Fund dropped by $ 4.1 million with majority of the
construction costs for the Fire Station No. 1 incurred in prior fiscal year.
The following provides financial analysis on the major funds of the City.
General Fund
The General Fund is the primary operating fund of the City. At June 30, 2006, unreserved fund
balance of the General Fund was $ 12.1 million, while total fund balance was $ 12.8 million. City
Council has designated $ 6.0 million of the unreserved fund balance for operating reserves to
provide cushion against revenue losses during an economic downturn or recession or state
takeaways. In addition, $ 4.7 million was designated for retirement costs and $ 1.0 for future
commitments. The use of fund balance reserves was planned and budgeted during the fiscal year.
The fund balance of the City’s General Fund increased by $ 0.4 million from fiscal year 2005.
Expenditures exceeded revenues by $ 2.8 million. Transfers in exceed transfers out by $ 2.7
million. Revenues increased by $ 2.6 million primarily due to higher property taxes, investment
earnings, and contributions from developers. Expenditures slightly increased by $ 0.4 million for
capital outlay that was financed by proceeds from a capital lease.
State Construction Maintenance Special Revenue Fund
The State Construction Maintenance Special Revenue Fund showed $ 0.3 million increase in fund
balance during fiscal year 2006. Revenues increased by $ 0.3 million primarily due to revenues
received from the State as it resumed funding of Proposition 42, Transportation Congestion
Improvement Act. Expenditures of $ 1.5 million slightly decreased from prior fiscal year.
Capital Projects Fund
The Capital Projects Fund showed a decrease in fund balance of $ 0.4 million in fiscal year 2006.
Expenditures exceeded revenues by $ 0.4 million and fund balance reserves was used to offset the
deficit. The use of reserves was planned and budgeted during the fiscal year. Expenditures
dropped significantly during the fiscal year with the completion of the Fire Station No. 1
construction project in prior fiscal year. Revenues of $ 0.8 million were higher than fiscal year
2005 primarily due to increase in developer impact fees.
Redevelopment Agency Capital Projects Funds
The Redevelopment Agency Capital Projects Fund showed no significant change in the fund
balance in fiscal year 2006 since there is little activity in the Agency. Total revenues of $ 0.6
million decreased by $ 0.7 million from prior fiscal year. Sales tax revenues dropped significantly
as auto sales activity continue to decline in fiscal year 2006. Investment earnings slightly
increased due to rising interest rates. Revenues exceeded expenditures by $ 0.6 million which was
transferred out to the City’s General Fund.
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CITY OF NEWARK
Management’s Discussion and Analysis
FUND FINANCIAL ANALYSIS, Continued
Proprietary Funds
The City’s proprietary funds consist of the Internal Service Funds with combined total net assets
of $ 6.6 million at the end of fiscal year 2006. Total operating expenses of $ 4.3 million exceeded
total operating revenues of $ 3.9 million. Transfers in from the General Fund financed some of the
operating losses. At June 30, 2006, total value of capital assets was $ 6.9 million, a decrease of
$ 0.2 million from prior fiscal year.
GENERAL FUND BUDGETARY HIGHLIGHTS
Budget to actual information for the General Fund and the State Construction Maintenance
Special Revenue Fund are presented at the end of the Governmental Fund Financial Statements of
the Basic Financial Statements section. The budgetary comparison schedules for the other major
governmental funds are shown as supplementary information.
Fiscal year 2006 was the second year of the City’s biennial budget which was adopted in June 24,
2004. The General Fund budget for fiscal year 2006 was amended to reflect the impact of revenue
shifts by the State during fiscal year 2005. Appropriations for the fiscal year was reduced by $ 0.3
million or 10% of travel and training expenditures budgeted by all City departments. The City
Council also approved new appropriations for unanticipated expenditures and capital projects that
were funded by grants or contributions.
Actual expenditures for the fiscal year were $ 0.1 million under the original budget and $ 1.2
million under the final amended budget. This was primarily due to restrictions on departments to
realize savings and other expenditures deferred to future periods.
Actual revenues were $ 2.6 million above the original budget and $ 0.9 million over the final
budgeted amounts. Revenues were analyzed and amended to more appropriately reflect the actual
trends during the fiscal year.
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CITY OF NEWARK
Management’s Discussion and Analysis
CAPITAL ASSETS AND LONG- TERM OBLIGATIONS
Capital Assets
The City’s capital assets include those assets that are used in the performance of the City’s
services. At June 30, 2006, the City’s capital assets used in governmental activities amounted to
$ 168.2 million, net of depreciation.
The City has elected to use the Modified Approach as defined by GASB Statement No. 34 for
reporting its street pavement costs. Under the Modified Approach, the City is required to:
• Employ an asset management system that maintains a current inventory of these assets,
estimates annual costs to maintain and preserve the assets at the condition level
established by the City, and assesses the condition of the assets periodically using a
measurement scale.
• Document that the infrastructures are being preserved approximately at or above the
condition level adopted by the City.
The City uses the Metropolitan Transportation Commission’s system to assess condition level of
its streets. The City has adopted a policy of achieving a minimum Pavement Quality Index ( PQI)
rating of 72% for all streets. At June 30, 2006, the City’s streets PQI rating was 82%. The City
expended $ 4.5 million on preservation of its streets in fiscal year 2006 and plans to spend $ 5.5
million in fiscal year 2007.
Capital assets for governmental activities are presented below to illustrate changes from prior
fiscal year ( amounts in millions):
2006 2005
Land $ 4.4 $ 4.4
Park Land 3 0.1 3 0.1
Landscaping 8 .7 8 .7
Street trees 0 .7 0 .7
Infrastructure accounted for using modified approach 7 9.0 7 8.7
Buildings 4 3.0 4 2.4
Traffic Signals 3 .7 3 .7
Equipment 1 2.2 1 1.4
Less: accumulated depreciation ( 13.6) ( 11.1)
Total Capital Assets $ 168.2 $ 169.0
Governmental Activities
Additional information on capital assets can be found in Note 6 to the Basic Financial Statements.
11
CITY OF NEWARK
Management’s Discussion and Analysis
CAPITAL ASSETS AND LONG- TERM OBLIGATIONS, Continued
Long- term Obligations
At June 30, 2006, the City had long- term debt outstanding of $ 14.8 million compared to $ 15.2
million in prior year. The City’s long- term debt obligations for the fiscal years 2006 and 2005
were as follows ( amounts in millions):
2006 2005
Certificates of Participation $ 13.6 $ 14.0
Refunding Bonds 0 .8 0.9
Capital lease obligations 0 .4 0.3
Total $ 14.8 $ 15.2
Governmental Activities
Not included in the above total outstanding debt amount are the Area Improvement Districts
Special Assessment Bonds issued to finance public improvements within specific districts in the
City. At June 30, 2006, a total of $ 12.9 million in area improvement district debt was outstanding.
This debt is secured by special assessments levied on the real property within the district issuing
the debt. Although the City acts as the districts’ agent in the collection and remittance of
assessments, the City is not obligated in any manner for these bonds.
Additional information on long- term obligations is provided in Note 7 to the Basic Financial
Statements.
ECONOMIC FACTORS AND NEXT BIENNIAL BUDGET
The following factors were considered in preparing the City’s 2006- 2008 biennial budget:
• National and State Economies – The national economy improved in the past two years with
Gross Domestic Product ( GDP) increasing to 4.2% and 3.6% in 2004 and 2005, respectively,
up from under 3% in 2003. The California economy realized a significant upturn, too, during
the past two years with increases in personal income and employment. Although a healthy
economy is expected during the next two years, higher consumer debt, increasing energy
prices, and rising interest rates may impact consumer spending, construction and business
investment that may slow down economic expansion.
• Unemployment Rate – The unemployment rate for the City was 4.3% in June 2006, as
compared to 5.3% for same period in 2005. The Association of Bay Area Governments
( ABAG) is predicting that job growth will continue at a rate of 40,000 jobs in 2006 and
55,000 jobs in 2007.
• Consumer Price Index – The Consumer Price Index ( CPI) for the Bay Area is estimated at
3.2% at mid- year of 2006, which is lower than the national inflation rate of 3.8% for the same
period. The rapid rise in energy prices over the last several years may eventually have a
significant effect on all other prices in the economy.
12
CITY OF NEWARK
Management’s Discussion and Analysis
ECONOMIC FACTORS AND NEXT BIENNIAL BUDGET, Continued
• State Budget – Policy and fiscal decisions made at the State level can significantly impact
local revenues and expenditures and are taken into consideration when developing
projections. During the fiscal year, the State began to pay back previously deferred
reimbursements for state- mandated costs and approved funding for reimbursement of
mandated costs for fiscal year ended June 30, 2006. The State also resumed funding of
Proposition 42 during the fiscal year and repayment of previously suspended funding will be
remitted to local governments in early fiscal year 2007. The State’s budget for fiscal year
2007 allows for the continuation of the Supplemental Law Enforcement Funding ( SLEF) and
the reinstatement of the Booking Fee Subvention. The State’s reasonably good financial
condition and the passage of Proposition 1A restore predictability and certainty to the funding
needed for police, fire and other essential City services.
• Retirement Costs – The most significant increased cost to the budget during the past few
years has been the retirement costs through CalPERS. While the required employer
contribution rates have leveled off during the past two years, a significant portion of the
City’s budget will still be spent on retirement costs.
Additional information about the City’s economy and financial planning and policies is provided
in the accompanying Transmittal Letter in the Introductory Section of this report.
REQUEST FOR INFORMATION
This financial report is designed to provide citizens, taxpayers, customers, investors, and creditors
with a general overview of the City’s finances. Questions concerning any information provided
in this report or requests for additional information should be addressed to the City of Newark,
Finance Department, and 37101 Newark Boulevard, Newark, California 94560- 3796.
13
14
STATEMENT OF NET ASSETS
AND STATEMENT OF ACTIVITIES
The Statement of Net Assets and the Statement of Activities summarize the entire City’s financial
activities and financial position. They are prepared on the same basis as is used by most businesses,
which means they include all the City’s assets and all its liabilities, as well as all its revenues and
expenses. This is known as the full accrual basis— the effect of all the City’s transactions is taken into
account, regardless of whether or when cash changes hands, but all material internal transactions between
City funds have been eliminated.
The Statement of Net Assets reports the difference between the City’s total assets and the City’s total
liabilities, including all the City’s capital assets and all its long- term debt. The Statement of Net Assets
presents similar information to the old balance sheet format, but presents it in a way that focuses the
reader on the composition of the City’s net assets, by subtracting total liabilities from total assets.
The Statement of Net Assets summarizes the financial position of all of the City’s Governmental
Activities in a single column.
The City’s Governmental Activities include the activities of its General Fund, along with all its Special
Revenue, Capital Projects and Debt Service Funds. Since the City’s Internal Service Funds service these
Funds, their activities are consolidated with Governmental Activities.
The Statement of Activities reports increases and decreases in the City’s net assets. It is also prepared on
the full accrual basis, which means it includes all the City’s revenues and all its expenses, regardless of
when cash changes hands. This differs from the “ modified accrual” basis used in the Fund financial
statements, which reflect only current assets, current liabilities, available revenues and measurable
expenditures.
The format of the Statement of Activities presents the City’s expenses first, listed by program. Program
revenues— that is, revenues which are generated directly by these programs— are then deducted from
program expenses to arrive at the net expense of each governmental program. The City’s general
revenues are then listed in the Governmental Activities column, as appropriate, and the Change in Net
Assets is computed and reconciled with the Statement of Net Assets.
Both these Statements include the financial activities of the City, the Newark Redevelopment Agency,
and the Newark Public Financing Authority, which are legally separate but are component units of the
City because it is controlled by the City, which is financially accountable for the activities of this entity.
15
CITY OF NEWARK
STATEMENT OF NET ASSETS
JUNE 30, 2006
ASSETS
Cash and investments ( Note 3):
Available for operations $ 34,267,947
Restricted, with fiscal agents 1,413,932
Receivables:
Taxes 1,746,617
Special assessments 35,207
Interest 356,705
Other, net 307,077
Supplies and other assets 102,389
Capital assets ( Note 6):
Land, infrastructure and construction in progress 122,956,322
Depreciable capital assets, net 45,292,513
Total Assets 206,478,709
LIABILITIES
Accounts payable and accrued liabilities 2,323,312
Refundable deposits 3,114,034
Compensated absences ( Note 9) 1,910,916
Long- term debt ( Note 7):
Due within one year 443,598
Due in more than one year 14,402,173
Total Liabilities 22,194,033
NET ASSETS ( Note 8)
Invested in capital assets, net of related debt 153,826,859
Restricted for:
Capital projects 768,746
Debt service 560,206
Redevelopment projects 2,440
Special revenue projects 7,723,999
Total Restricted Net Assets 9,055,391
Unrestricted 21,402,426
Total Net Assets $ 184,284,676
See accompanying notes to financial statements
16
CITY OF NEWARK
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006
Program Revenues
Operating Capital Net ( Expense)
Charges for Grants and Grants and Revenue and
Functions/ Programs Expenses Services Contributions Contributions Changes in Net Assets
Governmental Activities:
General government $ 6,099,589 $ 21,571 $ 44,122 ($ 6,033,896)
Public safety 20,957,134 1,250,964 231,660 $ 135,549 ( 19,338,961)
Streets and parks 4,899,857 745,942 2,358,041 ( 1,795,874)
Community development 2,480,444 1,758,551 678,365 452,730 409,202
Recreation 5,451,708 2,559,626 231,259 ( 2,660,823)
Miscellaneous 430,582 14,875 ( 415,707)
Interest on long- term debt 726,643 ( 726,643)
Total Governmental Activities $ 41,045,957 $ 6,351,529 $ 1,185,406 $ 2,946,320 ( 30,562,702)
General revenues:
Taxes:
General property taxes 9,174,446
Other local taxes 16,031,393
Use of money and property 1,342,217
Intergovernmental -- vehicle in- lieu, unrestricted 2,955,340
Miscellaneous 1,533,131
Total general revenues 31,036,527
Change in Net Assets 473,825
Net Assets- Beginning 183,810,851
Net Assets- Ending $ 184,284,676
See accompanying notes to financial statements
17
18
MAJOR GOVERNMENTAL FUNDS
The funds were determined to be Major Funds by the City in fiscal 2006. Individual non- major funds
may be found in the Supplemental section:
GENERAL FUND is the City’s primary operating fund. It accounts for all financial resources of the
general government except those required to be accounted for in another fund.
STATE CONSTRUCTION MAINTENANCE SPECIAL REVENUE FUND accounts for gas tax
revenues from the State, Measure B funds from the Alameda County Transportation Improvement
Authority ( ACTIA), and other transportation funds to be used for various street maintenance and
construction projects.
CAPITAL PROJECTS FUND accounts for financial resources to be used for capital acquisition,
construction and rehabilitation projects.
REDEVELOPMENT AGENCY CAPITAL PROJECTS FUND accounts for funds received by the
Agency to be used for redevelopment activities and capital projects for designated areas in the City.
19
CITY OF NEWARK
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2006
State Redevelopment
Construction Agency
Maintenance Capital Capital
General Special Revenue Projects Projects
ASSETS
Cash and investments ( Note 3):
Available for operations $ 13,081,007 $ 4,962,269 $ 10,134,264 $ 176,182
Restricted with fiscal agents 423,795
Receivables:
Taxes 1,477,039 269,578
Special assessments
Interest 259,791 54,440 11,197 30,958
Other, net 94,954 82,316
Supplies and other assets 2,254
Due from other funds ( Note 4B) 256,136
Advances to other funds ( Note 4C) 204,700
Total Assets $ 15,375,881 $ 5,368,603 $ 10,569,256 $ 207,140
LIABILITIES
Accounts payable and accrued liabilities $ 193,361 $ 392,081 $ 5,875
Refundable deposits 2,391,326 12,769 543,360
Due to other funds ( Note 4B)
Advances from other funds ( Note 4C) $ 204,700
Total Liabilities 2,584,687 404,850 549,235 204,700
FUND BALANCES
Fund balance ( Note 8)
Reserved for:
Encumbrances 463,361 420,847 711,586 2,440
Debt service
Advances to other funds 204,700
Unreserved:
Designated for:
Operations 5,953,500
PERS 4,664,269
Future commitments 1,000,000
Undesignated, Reported in:
General Fund 505,364
Special Revenue Funds 4,542,906
Capital Projects Funds 9,308,435
Total Fund Balances 12,791,194 4,963,753 10,020,021 2,440
Total Liabilities and Fund Balances $ 15,375,881 $ 5,368,603 $ 10,569,256 $ 207,140
See accompanying notes to financial statements
20
Other Total
Governmental Governmental
Funds Funds
$ 4,522,937 $ 32,876,659
990,137 1,413,932
1,746,617
35,207 35,207
319 356,705
129,807 307,077
2,254
256,136
204,700
$ 5,678,407 $ 37,199,287
$ 73,242 $ 664,559
166,579 3,114,034
6,136 6,136
204,700
245,957 3,989,429
181,108 1,779,342
984,001 984,001
204,700
5,953,500
4,664,269
1,000,000
505,364
3,356,300 7,899,206
911,041 10,219,476
5,432,450 33,209,858
$ 5,678,407 $ 37,199,287
21
CITY OF NEWARK
Reconciliation of the
GOVERNMENTAL FUNDS -- BALANCE SHEET
with the
STATEMENT OF NET ASSETS
JUNE 30, 2006
Total fund balances reported on the governmental funds balance sheet $ 33,209,858
Amounts reported for Governmental Activities in the Statement of Net Assets
are different from those reported in the Governmental Funds above because of the following:
CAPITAL ASSETS
Capital assets used in Governmental Activities are not current assets or financial resources and
therefore are not reported in the Governmental Funds. 161,341,885
ALLOCATION OF INTERNAL SERVICE FUND NET ASSETS
Internal service funds are not governmental funds. However, they are used by management to
charge the costs of certain activities, such as equipment replacement, maintenance, and insurance
to individual governmental funds. The net current assets of the Internal Service Funds are therefore
included in Governmental Activities in the following line items in the Statement of Net Assets.
Cash and investments available for operations 1,391,288
Supplies and other assets 100,135
Internal balances ( 250,000)
Capital assets 6,906,950
Accounts payable and accrued liabilities ( 1,580,496)
LONG- TERM ASSETS AND LIABILITIES
The assets and liabilities below are not due and payable in the current period and therefore are not
reported in the Funds:
Long- term debt ( 14,845,771)
Interest payable ( 78,257)
Non- current portion of compensated absences ( 1,910,916)
NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 184,284,676
See accompanying notes to financial statements
22
23
CITY OF NEWARK
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
State
Construction Redevelopment
Maintenance Agency
Special Capital Capital
General Revenue Projects Projects
REVENUES
General property taxes $ 9,174,446
Other local taxes 15,543,978 $ 487,415
Special assessments
Licenses and permits 1,929,645
Use of money and property 971,796 $ 173,875 $ 43,675 103,713
Other governmental agencies 361,320 1,604,919
Current service charges 3,534,174 4,441 657,366
Other revenue 1,307,409 124,000
Total Revenues 32,822,768 1,783,235 825,041 591,128
EXPENDITURES
Current:
General government 3,726,527 9,649
Public safety 20,158,691
Streets and parks 3,206,152 1,218,582
Community development 2,302,528
Recreation 5,374,751
Miscellaneous 387,047
Capital outlay 397,865 305,760 908,703
Debt service:
Principal 32,093 288,637
Interest, fiscal charges and issuance costs 18,660 18,619
Total Expenditures 35,604,314 1,524,342 1,215,959 9,649
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES ( 2,781,546) 258,893 ( 390,918) 581,479
OTHER FINANCING SOURCES ( USES)
Proceeds from issuance of long- term debt 397,865
Transfers in ( Note 4A) 3,834,583
Transfers ( out) ( Note 4A) ( 1,098,318) ( 581,819)
Total Other Financing Sources ( Uses) 3,134,130 ( 581,819)
NET CHANGE IN FUND BALANCES 352,584 258,893 ( 390,918) ( 340)
BEGINNING FUND BALANCES 12,438,610 4,704,860 10,410,939 2,780
ENDING FUND BALANCES $ 12,791,194 $ 4,963,753 $ 10,020,021 $ 2,440
See accompanying notes to financial statements
24
Other Total
Governmental Governmental
Funds Funds
$ 9,174,446
16,031,393
$ 181,027 181,027
1,929,645
49,158 1,342,217
4,356,253 6,322,492
106,475 4,302,456
804,697 2,236,106
5,497,610 41,519,782
286,686 4,022,862
510,081 20,668,772
266,401 4,691,135
2,302,528
5,374,751
387,047
159,305 1,771,633
395,000 715,730
685,183 722,462
2,302,656 40,656,920
3,194,954 862,862
397,865
1,147,761 4,982,344
( 3,451,646) ( 5,131,783)
( 2,303,885) 248,426
891,069 1,111,288
4,541,381 32,098,570
$ 5,432,450 $ 33,209,858
25
CITY OF NEWARK
Reconciliation of the
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2006
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of
Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current
liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the
Statement of Activities, which is prepared on the full accrual basis.
NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ 1,111,288
Amounts reported for governmental activities in the Statement of Activities
are different because of the following:
CAPITAL ASSETS TRANSACTIONS
Governmental Funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is capitalized and allocated over
their estimated useful lives and reported as depreciation expense.
The capital outlay and other capitalized expenditures are therefore added back to fund balance 1,480,726
Depreciation expense is deducted from the fund balance
( Depreciation expense is net of internal service fund depreciation
of $ 415,940 which has already been allocated to serviced funds) ( 2,059,455)
LONG- TERM DEBT PROCEEDS AND PAYMENTS
Bond proceeds provide current financial resources to governmental funds, but
issuing debt increases long- term liabilities in the Statement of Net Assets.
Repayment of bond principal is an expenditure in the governmental funds, but
in the Statement of Net Assets the repayment reduces long- term liabilities.
Proceeds from capital lease are deducted from fund balance ( 397,865)
Repayment of debt principal is added back to fund balance 715,730
ACCRUAL OF NON- CURRENT ITEMS
The amounts below included in the Statement of Activities do not provide or ( require) the use of
current financial resources and therefore are not reported as revenue or expenditures in
governmental funds ( net change):
Accounts payable 173,349
Interest payable ( 4,181)
Compensated absences ( 311,009)
ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY
Internal Service Funds are used by management to charge the costs of certain activities,
such as equipment acquisition, maintenance, and insurance to individual funds.
The portion of the net revenue ( expense) of these Internal Service Funds arising out
of their transactions with governmental funds is reported with governmental activities,
because they service those activities.
Change in Net Assets - All Internal Service Funds ( 234,758)
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 473,825
See accompanying notes to financial statements
26
CITY OF NEWARK
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2006
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts ( Negative)
REVENUES:
General property taxes $ 8,807,000 $ 9,021,500 $ 9,174,446 $ 152,946
Other local taxes 15,746,400 15,340,500 15,543,978 203,478
Licenses and permits 1,572,600 1,679,000 1,929,645 250,645
Use of money and property 545,900 833,000 971,796 138,796
Other agencies 409,700 339,000 361,320 22,320
Current service charges 3,004,200 3,435,900 3,534,174 98,274
Other revenue 178,200 1,271,400 1,307,409 36,009
Total Revenues 30,264,000 31,920,300 32,822,768 902,468
EXPENDITURES:
Current:
General government 3,909,689 3,956,177 3,726,527 229,650
Public safety 20,429,073 20,684,929 20,158,691 526,238
Streets and parks 3,570,892 3,577,203 3,206,152 371,051
Community development 2,471,644 2,458,472 2,302,528 155,944
Recreation 5,757,413 5,560,174 5,374,751 185,423
Miscellaneous 464,184 432,053 387,047 45,006
Capital Outlay 397,865 ( 397,865)
Debt Service:
Principal 59,550 32,093 27,457
Interest, fiscal charges and issuance costs 28,872 18,660 10,212
Total Expenditures 36,602,895 36,757,430 35,604,314 1,513,312
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES ( 6,338,895) ( 4,837,130) ( 2,781,546) 2,055,584
OTHER FINANCING SOURCES ( USES)
Proceeds from issuance of long- term debt 397,865 397,865
Transfers in 3,834,583 3,834,583
Transfers ( out) ( 1,098,318) ( 1,098,318)
Total other financing sources ( uses) 3,134,130 3,134,130
EXCESS ( DEFICIENCY) OF REVENUES AND OTHER
SOURCES OVER EXPENDITURES AND OTHER USES ($ 6,338,895) ($ 4,837,130) 352,584 $ 5,189,714
BEGINNING FUND BALANCE 12,438,610
ENDING FUND BALANCE $ 12,791,194
See accompanying notes to financial statements
27
CITY OF NEWARK
STATE CONSTRUCTION MAINTENANCE SPECIAL REVENUE FUND
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2006
Variance with
Budgeted Amounts Final Budget
Positive
Original Final Actual Amounts ( Negative)
REVENUES:
Use of money and property $ 50,000 $ 145,000 $ 173,875 $ 28,875
Other agencies 1,255,500 1,487,000 1,604,919 117,919
Current service charges 4,400 4,441 41
Total Revenues 1,305,500 1,636,400 1,783,235 146,835
EXPENDITURES:
Current:
Streets and parks 1,998,452 2,271,977 1,218,582 1,053,395
Capital outlay 424,752 2,022,053 305,760 1,716,293
Total Expenditures 2,423,204 4,294,030 1,524,342 2,769,688
NET CHANDE IN FUND BALANCE ($ 1,117,704) ($ 2,657,630) 258,893 $ 2,916,523
BEGINNING FUND BALANCE 4,704,860
ENDING FUND BALANCE $ 4,963,753
See accompanying notes to financial statements
28
INTERNAL SERVICE FUNDS
Internal service funds account for City operations financed and operated in a manner similar to a private
business enterprise. The intent of the City is that the cost of providing goods and services to other City
funds be financed through user charges to those funds.
29
CITY OF NEWARK
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30,2006
Governmental
Activities-
Internal Service
Funds
ASSETS
Current Assets:
Cash and investments available for operations ( Note 3) $ 1,391,288
Due from other funds ( Note 4) 430,000
Supplies and other assets 100,135
Total Current Assets 1,921,423
Non- Current Assets:
Capital assets, net of accumulated depreciation ( Note 6) 6,906,950
Total Assets 8,828,373
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities 1,580,496
Due to other funds ( Note 4) 680,000
Total Liabilities 2,260,496
NET ASSETS
Invested in capital assets 6,906,950
Unrestricted ( 339,073)
Total Net Assets $ 6,567,877
See accompanying notes to financial statements
30
CITY OF NEWARK
PROPRIETARY FUNDS
STATEMENT OF REVENUE, EXPENSES
AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2006
Governmental
Activities-
Internal Service
Funds
OPERATING REVENUES
Charges to departments $ 3,941,758
Other revenue 901
Total Operating Revenues 3,942,659
OPERATING EXPENSES
Equipment shop operations 715,214
Depreciation 415,940
Workers' compensation 565,083
Central services 141,413
Insurance 446,428
Maintenance 1,673,622
Equipment replacement 369,156
Total Operating Expenses 4,326,856
Operating Income ( Loss) ( 384,197)
TRANSFERS
Transfer in ( Note 4) 149,439
Net transfers 149,439
CHANGE IN BET ASSESTS ( 234,758)
BEGINNING NET ASSETS 6,802,635
ENDING NET ASSETS $ 6,567,877
See accompanying notes to financial statements
31
CITY OF NEWARK
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2006
Governmental
Activities-
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 3,942,659
Payments to suppliers ( 2,214,087)
Payments to employees ( 715,214)
Claims paid ( 1,028,836)
Cash Flows from Operating Activities ( 15,478)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund payments ( 20,000)
Interfund receipts 269,439
Cash Flows from Noncapital Financing Activities 249,439
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets ( 246,021)
Cash Flows from Capital and Related Financing Activities ( 246,021)
Net Cash Flows ( 12,060)
Cash and investments at beginning of period 1,403,348
Cash and investments at end of period $ 1,391,288
Reconciliation of Operating Income ( Loss) to Cash Flows
from Operating Activities:
Operating income ( loss) ($ 384,197)
Adjustments to reconcile operating income to cash flows
from operating activities:
Depreciation 415,940
Change in assets and liabilities:
Other assets 11,555
Accounts and other payables ( 58,776)
Cash Flows from Operating Activities ($ 15,478)
See accompanying notes to financial statements
32
FIDUCIARY FUNDS
AGENCY FUND
Agency funds are used to account for assets held by the City as an agent for individuals, private
organizations, and other governments. The financial activities of these funds are excluded from the
Entity- wide financial statements, but are presented in separate Fiduciary Fund financial statements.
33
CITY OF NEWARK
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2006
Agency
Fund
ASSETS
Cash and investments available for operations ( Note 3) $ 4,173,511
Total Assets $ 4,173,511
LIABILITIES
Due to bondholders $ 4,173,511
Total Liabilities $ 4,173,511
See accompanying notes to financial statements
34
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Newark is a general law City which operates under the Council- Manager form of
government and provides the following services: police, fire, recreation, highways and streets,
public improvements, planning and zoning, general administration services, and redevelopment.
A. Reporting Entity
The financial statements of the City of Newark include the financial activities of the City as well as
separate legal entities, which are controlled by and dependent on the City. The City Council serves
as the governing board of the Newark Redevelopment Agency and the Newark Public Financing
Authority. These entities are controlled entirely by the City, which also performs all their
administrative and accounting functions. All these entities’ financial activities have been
aggregated and merged ( termed “ blended”) with those of the City in the accompanying financial
statements. Separate financial statements for the Agency may be obtained from the City of
Newark.
COMPONENT UNITS INCLUDED IN THE REPORTING ENTITY:
The Newark Redevelopment Agency is a separate government entity whose purpose is to prepare
and implement plans for improvement, rehabilitation, and development of certain areas within the
City. The financial activities of the Agency have been included in these financial statements in the
Redevelopment Agency Capital Projects Fund.
The Newark Public Financing Authority provides financing assistance to the City and has been
included in these financial statements in the COPS Interest and Redemption Debt Service Fund.
B. Basis of Presentation
The City’s Basic Financial Statements are prepared in conformity with accounting principles
generally accepted in the United States of America. The Government Accounting Standards
Board is the acknowledged standard setting body for establishing accounting and financial
reporting standards followed by governmental entities in the U. S. A.
These Standards require that the financial statements described below be presented.
Government- wide Statements: The Statement of Net Assets and the Statement of Activities
display information about the primary government ( the City) and its component units. These
statements include the financial activities of the overall City government, except for fiduciary
activities. Eliminations have been made to minimize the double counting of internal activities.
Governmental activities generally are financed through taxes, intergovernmental revenues, and
other nonexchange transactions.
35
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
The Statement of Activities presents a comparison between direct expenses and program
revenues for each function of the City’s governmental activities. Direct expenses are those that
are specifically associated with a program or function and, therefore, are clearly identifiable to a
particular function. Program revenues include ( a) charges paid by the recipients of goods or
services offered by the programs, ( b) grants and contributions that are restricted to meeting the
operational needs of a particular program and ( c) fees, grants and contributions that are restricted
to financing the acquisition or construction of capital assets. Revenues that are not classified as
program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the City's
funds, including fiduciary funds and blended component units. Separate statements for each fund
category— governmental, proprietary, and fiduciary— are presented. The emphasis of fund
financial statements is on major individual governmental funds, each of which is displayed in a
separate column. All remaining governmental funds are aggregated and reported as nonmajor
funds.
Proprietary fund operating revenues, such as charges for services, result from exchange
transactions associated with the principal activity of the fund. Exchange transactions are those in
which each party receives and gives up essentially equal values. Nonoperating revenues, such as
subsidies and investment earnings, result from nonexchange transactions or ancillary activities.
C. Major Funds
Major funds are defined as funds that have either assets, liabilities, revenues or
expenditures/ expenses equal to ten percent of their fund- type total and five percent of the grand
total. Major governmental are identified and presented separately in the fund financial
statements. All other funds, called non- major funds, are combined and reported in a single
column, regardless of their fund- type. The General Fund is always a major fund. The City may
also select other funds it believes should be presented as major funds.
The City reported the following major governmental funds in the accompanying financial
statements:
GENERAL FUND - The General Fund is the general operating fund of the City. It is used to
account for all financial resources except those required to be accounted for in another fund. The
major revenue sources for this Fund are property taxes, sales taxes, unrestricted revenues from the
State, fines and forfeitures and interest income. Expenditures are made for public safety and the
other services not required to be accounted for in another fund.
STATE CONSTRUCTION MAINTENANCE SPECIAL REVENUE FUND – This fund
accounts for gas tax funds received from the State, Measure B funds received from Alameda
County Transportation Improvement Authority ( ACTIA), Transportation Development Act funds
received from the Metropolitan Transportation Commission, funds received from federal grants
( ISTEA, HES) and developers. These funds are to be used for various street construction and
maintenance projects.
36
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
CAPITAL PROJECTS FUND – This fund accounts for financial resources used in major capital
acquisition and construction activities and in the renovation, replacement, and maintenance of the
City’s major infrastructure.
REDEVELOPMENT AGENCY CAPITAL PROJECTS FUND – This fund accounts for funds
received by the Agency as advances from the City’s General Fund to prepare and carry out
redevelopment plans and capital projects for designated areas in the City.
The City also reports the following fund types:
Internal Service Funds - The funds account for equipment replacement, equipment operations,
office support, building maintenance, public liability self- insurance, and workers’ compensation
self- insurance, all of which are provided to other departments on a cost- reimbursement basis.
Fiduciary Funds – The Agency Fund is used to account for assets held by the City as an agent
for the Area Improvement Districts. The financial activities of this fund are excluded from the
Government- wide financial statement, but are presented in separate Fiduciary Fund financial
statements.
D. Basis of Accounting
The government- wide and proprietary fund financial statements are reported using the economic
resources measurement focus and the full accrual basis of accounting. Revenues are recorded
when earned and expenses are recorded at the time liabilities are incurred, regardless of when the
related cash flows take place.
Governmental funds are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Under this method, revenues are recognized when
measurable and available. The City considers all revenues reported in the governmental funds to
be available if the revenues are collected within thirty- five days after year- end. Expenditures are
recorded when the related fund liability is incurred, except for principal and interest on general
long- term debt, claims and judgments, and compensated absences, which are recognized as
expenditures to the extent they have matured. Governmental capital asset acquisitions are
reported as expenditures in governmental funds. Proceeds of governmental long- term debt and
acquisitions under capital leases are reported as other financing sources.
Those revenues susceptible to accrual are property taxes, transient occupancy taxes, sales taxes,
franchise fees, charges for services and interest revenue.
Non- exchange transactions, in which the City gives or receives value without directly, receiving or
giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual
basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed.
Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all
eligibility requirements have been satisfied.
The City may fund programs with a combination of cost- reimbursement grants, categorical block
grants, and general revenues. Thus, both restricted and unrestricted net assets may be available to
finance program expenditures. The City’s policy is to first apply restricted grant resources to such
programs, followed by general revenues if necessary.
37
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued)
Certain indirect costs are included in program expenses reported for individual functions and
activities.
All Proprietary Funds are accounted for using the accrual basis of accounting. Their revenues are
recognized when they are earned, and their expenses are recognized when they are incurred. The
City follows Financial Accounting Standards Board statements issued before November 30, 1989,
unless they conflict with Governmental Accounting Standard Board statements.
E. Property Taxes and Special Assessments
Alameda County assesses properties and it bills, collects and distributes property taxes, including
special assessments, to the City. Secured property taxes are levied on January 1.
Secured property tax is due in two installments, on November 1 and March 1, and becomes a lien
on those dates. It becomes delinquent on December 10 and April 10, respectively. Unsecured
property tax is on July 1 and becomes delinquent on August 31.
The term “ unsecured” refers to taxes on personal property, not real estate, land or buildings. These
taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the
City in the fiscal year they are assessed, provided they are collected within forty- five days after the
end of the fiscal year.
F. Cash Flows Defined
For purposes of the statement of cash flows the City defines cash and cash equivalents to include all
cash and temporary investments with original maturities of three months or less from the date of
acquisition.
NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING
A. Budgets and Budgetary Accounting
The City follows these procedures in establishing the budgetary data reflected in the financial
statements:
1. Every other year, the City Manager submits to the City Council a proposed biennial operating
budget and capital improvement plan for the two fiscal years commencing the following July 1
which include proposed expenditures and the means of financing them.
2. Public work sessions are conducted to obtain taxpayer comments.
3. The budget is adopted by City Council resolution prior to July 1.
4. Expenditures may not legally exceed budgeted appropriations at the fund level.
5. All budget adjustments and transfers between funds must be approved by the City Council by
resolution during the fiscal year. The City Manager and Assistant City Manager are authorized
to transfer any unencumbered appropriations within a budget category ( department), and within
a fund.
38
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING ( Continued)
6. Formal budgetary integration, including the recording of encumbrances, is employed as a
management control device during the year in all budgeted funds. Under encumbrance
accounting, purchase orders, contracts and other commitments for the expenditure of moneys
are recorded in order to reserve that portion of the applicable appropriation.
7. Budgets are adopted for all funds except for Debt Service Fund. Budgets are on a basis
consistent with generally accepted accounting principles ( GAAP).
8. Budgeted amounts are as originally adopted or as amended by the City Council. Individual
amendments were not material in relation to the original appropriations, which were amended.
B. Encumbrances
Under encumbrance accounting, purchase orders, contracts and other commitments for the
expenditure of monies are recorded in order to reserve that portion of the applicable appropriation.
Encumbrance accounting is employed as an extension of formal budgetary integration in all
budgeted funds. Encumbrances outstanding at year- end are reported as reservations of fund
balances since they do not constitute expenditures or liabilities and are reappropriated in the
following year. Unencumbered operating appropriations lapse at year end.
C. Excess of Expenditures over Appropriations
The funds below incurred expenditures in excess of their budgets in the amounts below as the result
of unanticipated expenses. Sufficient resources were available within the following funds to
finance these excesses:
Redevelopment Agency Capital Projects $ 6,869
Community Development Act 27,837
39
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS
The City pools cash from all sources and all funds except cash with fiscal agents so that it can be
invested at the maximum yield, consistent with safety and liquidity, while individual funds can
make expenditures at any time.
Cash and investments are classified in the financial statements as shown below, based on whether
or not their use is restricted under the terms of City debt instruments or Agency agreements:
Cash and investments available for operations $ 34,267,947
Restricted cash and investments, with fiscal agents 1,413,932
Total cash and investments of primary government 35,681,879
Cash and investments in Fiduciary Funds ( separate statement) 4,173,511
Total cash and investments $ 39,855,390
Cash and investments available for operations are used in preparing Proprietary Fund statements of
cash flows because these assets are highly liquid and are expended to liquidate liabilities arising
during the year.
As required by generally accepted accounting principles, the City’s investments are carried at fair
value instead of cost. The City adjusts the carrying value of its investments to reflect their fair
market value at each fiscal year end, and it includes the effects of these adjustments in income for
that fiscal year.
California Law requires banks and savings and loan institutions to pledge government securities
with a market value of 110% of the City’s cash on deposit or first trust deed mortgage notes with a
value of 150% of the City’s cash on deposit as collateral for these deposits. Under California Law
this collateral is held in an investment pool by an independent financial institution in the City’s
name and places the City ahead of general creditors of the institution pledging the collateral.
40
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS ( Continued)
A. Authorized Investments by the City
The City’s Investment Policy and the California Government Code allow the City to invest in the
following, provided the credit ratings of the issuers are acceptable to the City; and approved
percentages and maturities are not exceeded.
Maximum Maximum
Maximum Minimum Percentage of Investment in
Authorized Investment Type Maturity Credit Quality Portfolio One Issuer
California Local Agency Investment Fund N/ A N/ A None None
U. S. Treasury Obligations 5 years N/ A None None
U. S. Government Agency Issues 5 years N/ A 50% 50%
Bankers Acceptances 180 days N/ A 40% 30%
Collateralized Certificates of Deposit
with Banks or Savings & Loans 5 years N/ A 30% 50%
Negotiable Certificates of Deposit 5 years N/ A 30% 50%
Commercial Paper 270 days A1 25% 10%
Repurchase Agreements 1 year N/ A 50% 50%
Reverse Repurchase Agreements 92 days N/ A 50% 50%
B. Authorized Investments by Debt Agreements
The City must maintain required amounts of cash and investments with trustees or fiscal agents
under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged
reserves to be used if the City fails to meet its obligations under these debt issues. The California
Government Code requires these funds to be invested in accordance with City ordinances, bond
indentures or State statutes. The following identifies the investment types that are authorized for
investments held by fiscal agents.
Maximum Minimum
Authorized Investment Type Maturity Credit Quality
U. S. Treasury Obligations N/ A N/ A
Federal Housing Administration Bonds N/ A N/ A
State Obligations N/ A A
U. S. Agency Securities N/ A N/ A
Investment Agreements N/ A AA
Money Market Funds N/ A Aam
Commercial Paper 270 days A1
Repurchase Agreements N/ A A
Unsecured Certificates of Deposit, deposit accounts,
time deposits, bankers acceptances 360 days A- 1
Short- Term State Obligations N/ A A+
State Special Revenue Bonds N/ A AA
Prefunded Municipal Obligations N/ A AAA
FDIC insured deposit N/ A N/ A
Senior Obligations of Government- Sponsored
Agencies N/ A AAA
California Arbitrage Management Program N/ A N/ A
California Local Agency Investment Fund N/ A N/ A
41
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 3 - CASH AND INVESTMENTS ( Continued)
C. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity
of its fair value to changes in market interest rates.
Information about the sensitivity of the fair values of the City’s investments to market interest
rate fluctuations is provided by the following table that shows the distribution to the City’s
investments by maturity:
12 Months More than
or less Twenty Years Total
Local Agency Investment Fund $ 37,053,992 $ 37,053,992
Money Market Funds 158,706 158,706
Guaranteed Investment Contract $ 967,103 967,103
Cash with Banks and on Hand 1,675,589 1,675,589
Total Cash and Investments $ 38,888,287 $ 967,103 $ 39,855,390
D. Credit Risk
Credit risk is the risk that an issuer of an individual security will not fulfill its obligation to the
holder of the security, and is measured by the assignment of a rating by a nationally recognized
statistical rating organization. At June 30, 2006, all the City’s investments were in investment
pools or guaranteed investment contracts, which are not rated because of their nature.
E. Local Agency Investment Fund
The City is a voluntary participant in the Local Agency Investment Fund ( LAIF). LAIF is
regulated by California Government Code Section 16429 under the oversight of the Treasurer of
the State of California. Included in LAIF’s investment portfolio are collateralized mortgage
obligations, mortgage- backed securities, other asset- backed securities, loans to certain state funds,
and floating rate securities issued by federal agencies, government- sponsored enterprises, and
corporations. The carrying value of LAIF approximates fair value. At June 30, 2006, these
investments matured in an average of 152 days.
42
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 4 - INTERFUND TRANSACTIONS
A. Transfers Among Funds
With Council approval, resources may be permanently transferred from one City fund to another.
The purpose of the majority of transfers is to reimburse a fund, which has made an expenditure on
behalf of another fund.
Transfers between funds during the fiscal year ended June 30, 2006 were as follows:
FROM FUND: TO FUND: AMOUNT
General Fund Police Grants $ 34,970 ( c)
COPS Interest & Redemption 913,909 ( b)
Equipment Operations 9,206 ( a)
Workers' Comprehensive Self- Insurance 112,517 ( a)
Office Support 10,081 ( a)
Building Maintenance 17,635 ( a)
Paramedic Tax Alameda County Fire Fees 198,882 ( c)
Alameda County Fire Fees General Fund 100,000 ( c)
Motor Vehicle in Lieu 2,955,340 ( c)
Traffic Safety Fines 197,424 ( a)
Redevelopment Agency Capital Projects 581,819 ( a)
$ 5,131,783
( a) To fund general operations.
( b) To fund debt services.
( c) To fund certain public safety programs.
B. Current Interfund Balances
In the normal course of business, transactions occur between funds which give rise to interfund
balances. These balances are normally repaid as they arise.
Current interfund balances are as follows:
DUE FROM FUND: DUE TO FUND: AMOUNT
Equipment Replacement General Fund $ 250,000
Equipment Replacement Workers' Compensation Self- Insurance 420,000
Equipment Operations Workers' Compensation Self- Insurance 10,000
COPS Interest and Redemption Debt Service General Fund 6,136
$ 686,136
C. Long- Term Advances
The General Fund advanced $ 204,700 to the Redevelopment Agency Capital Projects Fund. The
advance is to be repaid in future years from the proceeds of sale taxes as funds become available.
The General Fund advance bears interest at 4.77% for fiscal year 2006.
43
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 5 - REDEVELOPMENT ACTIVITIES
The Newark Redevelopment Agency is an integral part of the City of Newark and its financial
statements are included as a component of the basic financial statements of the City.
The Agency has no redevelopment projects underway. The principal sources of funding have been
contributions from developers and transfers from the City.
The Agency has agreements with certain auto dealers and the State Board of Equalization under
which it receives a portion of the sales tax remitted by these dealers. Part of the amount received
by the Agency is retained by the Agency and part is returned to the dealers as reimbursement for
certain site improvement and development costs paid by the dealers. Once these costs have been
reimbursed, the Agency retains the entire amount remitted. The amount reimbursed to the dealers
is entirely dependent on the amount received by the Agency, and may be less than the costs
incurred by the dealers if sales tax remittances do not reach expected levels. Reimbursements to
the dealers cease when the related costs have been reimbursed or on the termination date of the
agreements, if sooner.
NOTE 6 - CAPITAL ASSETS
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is
not available. Contributed capital assets are valued at their estimated fair market value on the
date contributed.
All capital assets with limited useful lives are depreciated over their estimated useful lives except
for infrastructure assets following the “ modified approach”. Depreciation is not provided under
this approach, but all expenditures on these assets are expensed, unless they are additions or
improvements.
Lives purpose of depreciation is to spread the cost of capital assets equitably among all users over
the lives of these assets. The amount charged to depreciation expense each year represents that
year’s pro rata share of the cost of capital assets.
Depreciation is provided using the straight- line method which means the cost of the asset is divided
by its expected useful life in years and the result is charged to expense each year until the asset is
fully depreciated. The City has assigned the useful lives listed below to capital assets:
Buildings and structures 60 years
Improvements other than buildings 20 years
Equipment 5 years
Streets 40- 50 years
Curbs and gutters 45 years
Sidewalks 35 years
Storm drainage 45 years
Bridges 40 years
Lighting 30 years
Traffic signals 20 years
Parks developed area 30 years
44
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 6 - CAPITAL ASSETS ( Continued)
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase is reflected in the capitalized value of the asset
constructed, net of interest earned on the invested proceeds over the same period.
A. Capital Asset Activities
Capital assets at June 30 comprise:
Balance
June 30, 2005
Additions
Balance
June 30, 2006
Governmental activities
Capital assets not being depreciated:
Land $ 4,384,073 $ 4,384,073
Park land 30,107,749 $ 23,782 30,131,531
Landscaping 8,684,784 8,684,784
Street trees 739,733 739,733
Infrastructure accounted for using
the modified approach 78,710,441 305,760 79,016,201
Total capital assets not being depreciated 122,626,780 329,542 122,956,322
Capital assets being depreciated:
Buildings 42,419,382 589,154 43,008,536
Traffic signals 3,674,284 3,674,284
Equipment 11,381,548 808,051 12,189,599
Total capital assets being depreciated 57,475,214 1,397,205 58,872,419
Less accumulated depreciation for:
Buildings 4,593,679 1,875,741 6,469,420
Traffic signals 2,206,153 183,714 2,389,867
Equipment 4,304,679 415,940 4,720,619
Total accumulated depreciation 11,104,511 2,475,395 13,579,906
Total depreciable assets 46,370,703 ( 1,078,190) 45,292,513
Total assets $ 168,997,483 ($ 748,648) $ 168,248,835
B. Capital Asset Contributions
Some capital assets may be acquired using federal and State grant funds, or they may be
contributed by developers or other governments. These contributions are accounted for as revenues
at the time the capital assets are contributed.
45
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 6 - CAPITAL ASSETS ( Continued)
C. Depreciation Allocation
Depreciation expense is charged to functions and programs based on their usage of the related
assets. The amounts allocated to each function or program are as follows:
General government $ 1,875,741
Streets and parks 183,714
Capital assets held by the City's Internal Service Fund 415,940
Total $ 2,475,395
NOTE 7 - LONG TERM DEBT
The City’s long- term debt comprised the following at June 30, 2006:
Balance June 30, 2006, due in
Balance more than less than
June 30, 2005 Additions Retirements one year one year
CERTIFICATES OF PARTICIPATION, 2002, $ 9,530,000 $ 205,000 $ 9,115,000 $ 210,000
original issue amount $ 9,925,000, 2- 5%, due 2032
CERTIFICATES OF PARTICIPATION, 1998, 4 ,455,000 105,000 4 ,235,000 115,000
original issue amount $ 5,000,000, 5%, due 2028
REFUNDING BONDS, SERIES 1998, original
issue amount $ 1,320,000, 4- 4.8%, due 2014 8 90,000 85,000 7 20,000 85,000
CAPITAL LEASE OBLIGATIONS
Equipment, 5.946%, due 2015 288,636 $ 397,865 320,730 332,173 33,598
$ 15,163,636 $ 397,865 $ 715,730 $ 14,402,173 $ 443,598
A. 2002 Certificates of Participation
On August 1, 2002, $ 9,925,000 principal amount of Certificates of Participation ( COPs), 2002
Silliman Community Activity Center/ Old Town Fire Station Project, were issued to fund
construction of the swim facility at the Activity Center and a fire station in the Old Town area.
COPs are similar to debt; they allow investors to participate in a share of guaranteed payments,
which are made by the City. Because they are similar to debt, the present value of the payments to
be made by the City is recorded as long- term debt.
The COPs were issued by the Newark Public Financing Authority, a component unit of the City of
Newark. The COPs are serviced by a Trustee, and lease payments have been assigned by the
Authority to the Trustee. The City is required by the COPs issue to have a minimum of $ 634,603
in a reserve fund, which is held by the Trustee.
Interest at rates of 2.0- 5.0% is due at June 1 and December 1; lease payments are due on the
fifteenth day of May and November.
46
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 7 - LONG TERM DEBT ( Continued)
B. 1998 Certificates of Participation
On June 1, 1998, $ 5,000,000 principal amount of Certificates of Participation ( COPs), George M.
Silliman Community Activity Center Project, were issued to finance the acquisition of land and
construction of the Activity Center. COPs are similar to debt; they allow investors to participate in
a share of guaranteed payments, which are made by the City. Because they are similar to debt, the
present value of the total payments to be made by the City is recorded as long- term debt.
The COPs were issued by the Newark Public Financing Authority, a component unit of the City of
Newark. The COPs are serviced by a Trustee, and lease payments have been assigned by the
Authority to the Trustee. The City is required by the COPs issue to have a minimum of $ 332,500
in a reserve fund, which is held by the Trustee.
Interest at 5.0% is due June 1 and December 1; principal payments are due June through 2028.
C. 1998 Refunding Bonds
On September 3, 1998, the Tri City Waste Facilities Financing Authority, a joint powers authority
of the Cities of Fremont, Union City, and Newark which had no activity other than this transaction,
issued $ 7,920,000 in refunding bonds, of which $ 1,320,000 was the City of Newark’s portion.
These bonds are to be serviced out of disposal rate increases in each City. Each of the above Cities
in turn issued Bonds to Tri City with the same interest rates and due dates; these Bonds are
unconditional obligations of the Cities. The Bonds bear interest at rates of 4% to 4.8%. Interest
payments are due February 1 and August 1, while principal payments are due August 1, annually
until August 2013.
D. Capital Lease Obligations
The City becomes the owner of equipment leased under capital leases, and it has therefore recorded
these leases as long- term debt. The leases are payable from general government revenues
47
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 7 - LONG TERM DEBT ( Continued)
E. Debt Service Requirements
Annual debt service requirements are shown below for all long- term debt:
Governmental Activities
Fiscal Year
June 30 Principal Interest
2007 $ 443,598 $ 692,040
2008 460,173 675,408
2009 476,823 657,295
2010 498,550 637,975
2011 515,358 617,233
2012- 2016 2,631,269 2,739,314
2017- 2021 2,650,000 2,165,790
2022- 2026 3,350,000 1,464,853
2027- 2032 3,820,000 630,256
Total $ 14,845,771 $ 10,280,164
F. Area Improvement District Bonds with no City Commitment
Area Improvement Districts exist in parts of the City; their purpose is to finance the cost of public
improvements within the area of each District, through the issuance of special assessment bonds
secured by assessments on properties in that District. The liability for the repayment of these bonds
is limited to the District; the City has no moral or legal liability for this debt. However, the City is
the collecting and paying agent for the special assessment bonds issued by the Area Improvement
Districts. It receives collections of special assessments from the County of Alameda and is
responsible for seeing that payments to bondholders are made timely.
These transactions are accounted for in a separate Agency fund established by the City for that
purpose. As of June 30, 2006, the remaining balance outstanding on these bonds was $ 12,911,000.
NOTE 8 - FUND BALANCES AND NET ASSETS
A. Net Assets
Net Assets is the excess of all the City’s assets over all its liabilities, regardless of fund. Net
Assets are divided into three captions under GASB Statement 34. These captions apply only to
Net Assets, which is determined only at the Government- wide level, and are described below:
Invested in Capital Assets, net of related debt describes the portion of Net Assets which is
represented by the current net book value of the City’s capital assets, less the outstanding balance
of any debt issued to finance these assets.
Restricted describes the portion of Net Assets which is restricted as to use by the terms and
conditions of agreements with outside parties, governmental regulations, laws, or other restrictions
which the City cannot unilaterally alter. These principally include developer fees received for use
on capital projects, debt service requirements, and redevelopment funds restricted to low and
moderate income purposes.
Unrestricted describes the portion of Net Assets which is not restricted to use.
48
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 8 - FUND BALANCES AND NET ASSETS ( Continued)
B. Fund Balance
Fund balances consist of reserved and unreserved amounts. Reserved fund balances represent
amounts that are legally restricted to a specific use or are not available for appropriation or
expenditure. The remainder is unreserved.
Reserves
Reserves are restrictions placed by outside entities, such as other governments, which restrict the
expenditures of the reserved funds to the purpose intended by the entity which provided the funds,
or represent fund balance of assets not available for expenditures. The City cannot modify or
remove these reserves. At June 30, 2006, reservations included:
Reserve for encumbrances represents the portion of fund balance set aside for outstanding
purchase orders.
Reserve for debt service is the portion of fund balance set aside to repay long- term debt.
Reserve for advance to other funds is the portion of fund balance that is not available for
appropriation.
C. Designations
Designations are imposed by City Council or the Redevelopment Agency to reflect future spending
plans or concerns about the availability of future resources. Designations may be modified,
amended or removed by Council/ Agency action.
Designated for Operations is the portion of fund balance to be used for City’s daily operations.
Designated for PERS is the portion of fund balance to be used to fund the City’s contribution to
fund increased pension costs.
Designated for Future Commitments is the portion of fund balance to be used to fund certain
commitments of the City.
49
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 9 - EMPLOYEE BENEFITS
A. Compensated Absences
Employees accrue vacation and general leave on a daily basis. All City employees have a vested
interest in accrued vacation and general leave. All such vacation or general leave will eventually
either be used or paid by the City.
The City’s liability for compensated absences is recorded in various Governmental funds or
Proprietary funds as appropriate. The liability for compensated absences is determined annually.
For all governmental funds, amounts expected to be paid out of current financial resources are
recorded as fund liabilities; the long- term portion is recorded in the Statement of Net Assets.
Changes in compensated absences were as follows:
Beginning Balance $ 1,711,972
Additions 1,901,026
Payments ( 1,702,082)
Ending Balance, reported in the Statement of Net Assets $ 1,910,916
Balance due within twelve months $ 1,815,370
Compensated absences are liquidated by the fund that has recorded the liability. The long- term
portion of governmental activities compensated absences is liquidated primarily by the General
Fund when it becomes current.
B. Post- Retirement Benefits
Employees are entitled to remain on the City’s health insurance plan after retirement. These
employees, however, are required to pay for the cost of remaining on their health insurance plan.
50
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 9 - EMPLOYEE BENEFITS ( Continued)
C. CALPERS Safety and Miscellaneous Employees Plans
Substantially all City employees are eligible to participate in pension plans offered by California
Public Employees Retirement System ( CALPERS) an agent multiple employer defined benefit
pension plan which acts as a common investment and administrative agent for its participating
member employers. CALPERS provides retirement and disability benefits, annual cost of living
adjustments and death benefits to plan members, who must be public employees and beneficiaries.
The City’s employees participate in the separate Safety ( police and fire) and Miscellaneous ( all
other) Employee Plans. Benefit provisions under both Plans are established by State statute and
City resolution. Benefits are based on years of credited service, equal to one year of full time
employment. Funding contributions for both Plans are determined annually on an actuarial basis as
of June 30 by CALPERS; the City must contribute these amounts. The Plans’ provisions and
benefits in effect at June 30, 2006, are summarized below:
Safety Miscellaneous
Benefit vesting schedule 5 years service 5 years service
Benefit payments monthly for life monthly for life
Retirement age 50 50
Monthly benefits, as a % of annual salary 3.00% 1.426 - 2.5%
Required employee contribution rates 9% 8%
Required employer contribution rates 24.524% 12.699%
CALPERS determines contribution requirements using a modification of the Entry Age Normal
Method. Under this method, the City’s total normal benefit cost for each employee from date of
hire to date of retirement is expressed as a level percentage of the related total payroll cost. Normal
benefit cost under this Method is the level amount the employer must pay annually to fund an
employee’s projected retirement benefit. This level percentage of payroll method is used to
amortize any unfunded actuarial liabilities. The actuarial assumptions used to compute contribution
requirements are also used to compute the actuarial accrued liability. The City does not have a net
pension obligation since it pays these actuarially required contributions monthly.
CALPERS uses the market related value method of valuing the Plan’s assets. An investment rate
of return of 7.75% was assumed, including inflation at 3%. Annual salary increases are assumed to
vary by duration of service. Changes in liability due to plan amendments, changes in actuarial
assumptions, or changes in actuarial methods are amortized as a level percentage of payroll on a
closed basis over twenty years. Investment gains and losses are accumulated as they are realized
over a rolling thirty- year period.
51
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 9 - EMPLOYEE BENEFITS ( Continued)
As required by new State law, effective July 1, 2005, the City’s Safety Plan was terminated, and the
employees in the Plan were required by CALPERS to join new State- wide pools. One of the
conditions of entry to these pools was that the City true- up any unfunded liabilities in the former
. Plan, either by paying cash or increasing its future contribution rate through a Side Fund offered by
CALPERS. The City satisfied its unfunded liability of $ 11,462,614 by agreeing to contribute that
amount to the Side Fund through an addition to its normal contribution rates over the next fourteen
years.
CALPERS’ latest available actuarial value ( which differs from market value) and funding
progress are set forth below at their actuarial valuation date of June 30, 2004. Actuarial values
for 2002 and 2003 are not available for the State- wide pools as they are based on a fresh start
valuation as of June 30, 2004:
Safety Plan:
Actuarial
Unfunded
Entry Age Unfunded Annual ( Overfunded)
Valuation Accrued Value of ( Overfunded) Funded Covered Liability as
Date Liability Assets Liability Ratio Payroll % of Payroll
2002 N/ A N/ A N/ A N/ A N/ A N/ A
2003 N/ A N/ A N/ A N/ A N/ A N/ A
2004 $ 5,383,921,942 $ 4,424,586,846 $ 959,335,096 82.2% $ 575,296,434 166.8%
Miscellaneous Plan:
Actuarial
Unfunded
Entry Age Unfunded Annual ( Overfunded)
Valuation Accrued Value of ( Overfunded) Funded Covered Liability as
Date Liability Assets Liability Ratio Payroll % of Payroll
2002 $ 38,468,543 $ 40,066,738 ($ 1,598,195) 104.2% $ 8,749,579 ( 18.3)%
2003 43,559,390 40,664,509 2,894,881 93.4% 9,642,482 30.0%
2004 49,665,613 43,194,691 6,470,922 87.0% 10,422,582 62.1%
Audited annual financial statements and ten year trend data are available from CALPERS at P. O.
Box 942709, Sacramento, CA 94229- 2709. CALPERS reports this information approximately
seventeen months after the end of its June 30 fiscal year.
52
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 9 - EMPLOYEE BENEFITS ( Continued)
Actuarially required contributions for fiscal years 2006, 2005, and 2004 were $ 3,648,676,
$ 3,432,341, and $ 1,881,236, respectively. The City made these contributions as required, together
with certain immaterial amounts required as the result of the payment of overtime and other
additional employee compensation.
NOTE 10 - RISK MANAGEMENT
A. Risk Pools
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of
assets; errors and omissions; and natural disaster for which the City participates in Association of
Bay Area Governments ( ABAG) Plan Corporation. ABAG Plan is a non profit benefit corporation
established to provide liability insurance coverage, claims and risk management, and legal defense
to its participating members. ABAG Plan provides $ 10,000,000 of general liability coverage per
occurrence and is responsible for paying claims in excess of the City’s $ 100,000 deductible. For
the year ended June 30, 2006, the City paid ABAG Plan $ 264,085 in premiums. ABAG Plan has
not determined the value of the City’s interest in its net assets. Financial statements may be
obtained from ABAG Services, P. O. Box 2050, Oakland, CA 94604- 2050.
The City participates in the Local Agency Workers Compensation Excess Joint Powers Authority
( LAWCX), which covers workers compensation claims in excess of $ 350,000 per claim, up to
statutory limits. During the fiscal year ended June 30, 2006 the City contributed $ 193,479 for
current year coverage. Audited financial statements may be obtained from Bickmore Risk Services,
1831 K Street, Sacramento, CA 95814.
Each risk pool is governed by a board consisting of representatives from member municipalities.
The board controls the operations of each risk pool, including selection of management and
approval of operating budgets, independent of any influence by member municipalities beyond
their representation on the Board.
The City’s contributions to each risk pool equal the ratio of the City’s payroll to the total payrolls of
all entities participating in the same layer of each program, in each program year. Actual surpluses
or losses are shared according to a formula developed from overall loss costs and spread to member
entities on a percentage basis after a retrospective rating. In each of the past three years, the
amount of settlements did not exceed insurance coverage.
B. Liability for Uninsured Claims
Municipalities are required to record their liability for uninsured claims and to reflect the current
portion of this liability as an expenditure in their financial statements. As discussed above, the City
has coverage for such claims, but it has retained the risk for the deductible, or uninsured portion of
these claims.
53
CITY OF NEWARK
Notes to Basic Financial Statements
NOTE 10 - RISK MANAGEMENT ( Continued)
The City’s liability for uninsured claims, based on claims history, was computed as follows and is
recorded in the appropriate Internal Service Fund at June 30:
2006
General Workers'
Liability Compensation
Claims Claims Total 2005
Beginning balance $ 142,919 $ 1,431,888 $ 1,574,807 $ 1,021,812
Liability for current fiscal year claims 33,368 381,707 415,075 684,219
Liability for prior fiscal year claims and
claims incurred but not reported ( IBNR) 182,963 ( 84,253) 98,710 438,653
Claims paid ( 216,331) ( 297,454) ( 513,785) ( 569,877)
Ending balance $ 142,919 $ 1,431,888 $ 1,574,807 $ 1,574,807
The City is subject to litigation arising in the normal course of business. In the opinion of the City
Attorney, there is no pending litigation that is likely to have a material adverse effect on the
financial position of the City.
NOTE 11 - CONTINGENT LIABILITIES
The City is subject to litigation arising in the normal course of business. In the opinion of the City
Attorney there is no presently filed litigation which is likely to have a material adverse effect on
the financial position of the City.
The City participates in Federal and State grant programs. These programs have been audited by
the City’s independent accountants in accordance with the provisions of the Federal Single Audit
Act as amended in 1996 and applicable State requirements. No cost disallowances were proposed
as a result of these audits; however, these programs are still subject to further examination by the
grantors, and the amount, if any, of expenditures which may be disallowed by the granting agencies
cannot be determined at this time. The City expects such amounts, if any, to be immaterial.
NOTE 12 - DEFERRED COMPENSATION PLAN
City employees may defer a portion of their compensation under a City sponsored Deferred
Compensation Plan created in accordance with Internal Revenue Code Section 457. Under this
plan, participants are not taxed on the deferred portion of their compensation until distributed to
them; distributions may be made only at termination, retirement, and death or in an emergency as
defined by the Plan.
The laws governing deferred compensation plan assets require plan assets to be held by a Trust for
the exclusive benefit of plan participants and their beneficiaries. Since the assets held under these
plans are not the City’s property and are not subject to City control, they have been excluded from
these financial statements.
54
REQUIRED SUPPLEMENTAL INFORMATION
MODIFIED APPROACH TO REPORTING STREET PAVEMENT COSTS
GASB Statement 34 allows the City to use the Modified Approach with respect to infrastructure assets
instead of depreciating these assets. The Modified Approach may be used if two requirements are met:
1) The City must have an asset management system ( ANIS) AMS with certain features.
It must maintain an up- to- date inventory of the infrastructure assets.
It must estimate the annual costs to maintain and preserve those assets at the condition level
the City has established and disclosed through administrative or executive policy or
legislative action.
The AMS must be used to assess the condition of the assets periodically, using a
measurement scale.
The condition assessments must be replicable as those that are based on sufficiently
understandable and complete measurement methods such that different measurers using the
same methods would reach substantially similar results.
2) The City must document that the infrastructures are being preserved approximately at or
above the condition level the City has established and disclosed. This documentation must
include the results of the three most recent complete condition assessments and must provide
reasonable assurance that the assets are being preserved approximately at or above the
intended condition level.
The City has elected to use the Modified Approach to report street pavement costs. The City uses
Metropolitan Transportation Commission's ( MTC) Pavement Management System to track the condition
levels of each of the street sections.
The condition of the pavement is based on a weighted average of seven distress factors found in
pavement surfaces. The MTC pavement management system uses a measurement scale that is based on a
condition index ranging from zero for a failed pavement to 100 for pavement with perfect condition. The
condition index is used to classify pavement in good or better condition ( 70- 100), fair condition ( 50) and
substandard condition ( less than 50).
The City's preservation costs are budgeted to be $ 5,464,702 in fiscal 2007. The amounts shown for
budget and actual include both operating and capital funds. The Pavement Quality Index ( PQI) for the
City's street pavement for the last five years is as follows:
Year PQI
Maintenance
Budget
Actual
Maintenance
2002 74 $ 5,729,571 $ 3,101,871
2003 72 7,631,584 3,672,361
2004 81 7,862,779 5,803,949
2005 80 7,256,129 6,019,397
2006 82 5,939,648 4,531,353
The City's administrative policy is to achieve a minimum rating of 72 for all street pavements. This rating
allows for minor cracking and revealing of the pavement along with minor roughness that could be
noticeable to drivers traveling at posted speed. The City expended $ 4,531,353 for street preservation for
fiscal 2006.
55
56
MAJOR GOVERNMENTAL FUNDS, OTHER THAN
GENERAL FUND AND SPECIAL REVENUE FUNDS
Capital Projects Fund accounts for financial resources to be used for capital acquisition, construction
and rehabilitation projects.
Redevelopment Agency Capital Projects Fund accounts for funds received by the Agency to be used
for redevelopment activities and capital projects for designated areas in the City.
57
CITY OF NEWARK
CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Variance
Positive
Budget Actual ( Negative)
REVENUES
Use of money and property $ 10,000 $ 43,675 $ 33,675
Current service charges 80,000 657,366 577,366
Other revenue 124,000 124,000
Total Revenues 90,000 825,041 735,041
EXPENDITURES
Capital outlay 4,595,240 908,703 3,686,537
Debt service:
Principal repayment 300,000 288,637 11,363
Interest, fiscal charges and issuance costs 29,000 18,619 10,381
Total Expenditures 4,924,240 1,215,959 3,708,281
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES ($ 4,834,240) ( 390,918) $ 4,443,322
BEGINNING FUND BALANCE 10,410,939
ENDING FUND BALANCE $ 10,020,021
58
CITY OF NEWARK
REDEVELOPMENT AGENCY CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2006
Variance
Positive
Budget Actual ( Negative)
REVENUES
Other local taxes $ 2,882,600 $ 487,415 ($ 2,395,185)
Use of money and property 355,100 103,713 ( 251,387)
Total Revenues 3,237,700 591,128 ( 2,646,572)
EXPENDITURES
Current:
General government 2,780 9,649 ( 6,869)
Total Expenditures 2,780 9,649 ( 6,869)
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES 3,234,920 581,479 ( 2,653,441)
OTHER FINANCING SOURCES ( USES)
Transfers ( out) ( 581,819) ( 581,819)
Total Other Financing Sources ( Uses) ( 581,819) ( 581,819)
EXCESS ( DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES $ 3,234,920 ( 340) ($ 3,235,260)
BEGINNING FUND BALANCE 2,780
ENDING FUND BALANCE $ 2,440
59
60
NON- MAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Paramedic Tax accounts for funds used to support the Fire Departments Paramedic Program.
This voter- approved property tax is used to pay for training, supplies and certain personnel costs
associated with the program.
Alameda County Fire Fees accounts for funds received from the County for emergency medical
services.
Police Grants accounts for grant funds received for specific law enforcement purposes and to
support drug resistance and education programs for community youth.
Community Development Act accounts for funds received from federal grants administered by
the County to fund improvements to low- income housing and neighborhoods.
Art in Public Places accounts for funds collected from developers to be used for the
procurement and enhancement of public art.
Recycle AB 939 accounts for funds received from Waste Management franchise fees. These
funds are used to fund and promote City recycling efforts as required by Assembly Bill 939.
Motor Vehicle in- Lieu accounts for funds received from the State from vehicle license fees.
Traffic Safety Fines accounts for funds collected from misdemeanor traffic violations involving
a moving vehicle.
Waste Disposal accounts for funds received from Waste Management to assist with future waste
disposal costs.
Off- Highway MVL Fee accounts for funds received by the State from the licensing of off-highway
vehicles.
Hazardous Materials Program accounts for grant proceeds for specific hazardous materials
education and mitigation programs.
DEBT SERVICE FUND
COPs Interest and Redemption accounts for funds reserved for the debt financing of the
George M. Silliman Community Activity Center. This fund will accumulate monies earmarked
for principal and interest payments for the Activity Center.
61
NON- MAJOR GOVERNMENTAL FUNDS ( Continued)
CAPITAL PROJECTS FUNDS
Streets, Trees, and Lakes accounts for funds received by developers to maintain City- owned
streets, trees, and lakes.
Park Improvement accounts for funds received by developers and grants to maintain city- owned
parks.
Landscape and Lighting District accounts for funds collected through special assessments for
the maintenance of landscaping and street lighting in the Landscape and Lighting Districts.
62
63
CITY OF NEWARK
NON- MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2006
SPECIAL REVENUE FUNDS
Alameda Community
Paramedic County Police Development Art in
Tax Fire Fees Grants Act Public Places
ASSETS
Cash and investments:
Available for operations $ 606,806 $ 298,757 $ 159,480 $ 722,499
Restricted with fiscal agents
Receivables:
Special assessments
Interest 121
Other 38,110 7,910
Total Assets $ 644,916 $ 298,878 $ 167,390 $ 722,499
LIABILITIES
Accounts payable and accrued liabilities $ 7,600
Refundable deposits
Due to other funds
Total Liabilities 7,600
FUND EQUITY
Fund balances
Reserved for:
Encumbrances 1,412 $ 2,682 $ 373 $ 150,000
Debt service
Unreserved:
Undesignated 635,904 296,196 167,017 572,499
Total Fund Balances 637,316 298,878 167,390 722,499
Total Liabilities and Fund Balances $ 644,916 $ 298,878 $ 167,390 $ 722,499
64
SPECIAL REVENUE FUNDS
Hazardous
Recycle Motor Vehicle Traffic Waste Off- Highway Material
AB 939 in- Lieu Safety Fines Disposal MVL Fee Program
$ 43,561 $ 1,485,524 $ 18,944 $ 285,720
198
7,948 $ 14,507 57,032 4,300
$ 51,509 $ 14,507 $ 1,542,556 $ 18,944 $ 290,218
$ 3,920 $ 61,722
161,979
3,920 223,701
5,429
42,160 $ 14,507 $ 1,542,556 $ 18,944 66,517
47,589 14,507 1,542,556 18,944 66,517
$ 51,509 $ 14,507 $ 1,542,556 $ 18,944 $ 290,218
( Continued)
65
CITY OF NEWARK
NON- MAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEETS
JUNE 30, 2006
DEBT
SERVICE
FUND CAPITAL PROJECTS FUNDS
Total
COPS Landscape Nonmajor
Interest and Streets, Trees Park and Lighting Governmental
Redemption and Lakes Improvement District Funds
ASSETS
Cash and investments:
Available for operations $ 17,172 $ 574,730 $ 309,744 $ 4,522,937
Restricted with fiscal agents $ 990,137 990,137
Receivables:
Special assessments 35,207 35,207
Interest 319
Other 129,807
Total Assets $ 990,137 $ 17,172 $ 574,730 $ 344,951 $ 5,678,407
LIABILITIES
Accounts payable and accrued liabilities $ 73,242
Refundable deposits $ 4,600 166,579
Due to other funds $ 6,136 6,136
Total Liabilities 6,136 4,600 245,957
FUND EQUITY
Fund balances
Reserved for:
Encumbrances 461 $ 7,997 $ 12,754 181,108
Debt service 984,001 984,001
Unreserved:
Undesignated 12,111 566,733 332,197 4,267,341
Total Fund Balances 984,001 12,572 574,730 344,951 5,432,450
Total Liabilities and Fund Balances $ 990,137 $ 17,172 $ 574,730 $ 344,951 $ 5,678,407
66
67
CITY OF NEWARK
NON- MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
Alameda Community
Paramedic County Police Development Art in
Tax Fire Fees Grants Act Public Places
REVENUES
Special assessments
Use of money and property $ 395 $ 1,196
Other governmental agencies 198,487 $ 152,440 188,986 $ 124,020
Current service charges 88,755 $ 1,422
Other revenue 965 42,789
Total Revenues 198,882 152,440 279,902 166,809 1,422
EXPENDITURES
Current:
General government 14,819 120,188
Public safety 279,323 206,818
Streets and parks
Capital outlay 149,818
Debt service:
Principal repayment
Interest and fiscal charges
Total Expenditures 279,323 206,818 164,637 120,188
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES 198,882 ( 126,883) 73,084 2,172 ( 118,766)
OTHER FINANCING SOURCES ( USES)
Transfers in 198,882 34,970
Transfers ( out) ( 198,882) ( 100,000)
Total Other Financing Sources ( Uses) ( 198,882) 98,882 34,970
EXCESS ( DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES ( 28,001) 108,054 2,172 ( 118,766)
BEGINNING FUND BALANCES 665,317 190,824 165,218 841,265
ENDING FUND BALANCES $ 637,316 $ 298,878 $ 167,390 $ 722,499
SPECIAL REVENUE FUNDS
68
Hazardous
Recycle Motor Vehicle Traffic Waste Off- Highway Material
AB 939 in- Lieu Safety Fines Disposal MVL Fee Program
$ 635
$ 11,958 $ 2,955,340 $ 194,678 $ 1,653 12,345
13,300
53,259 $ 705,818 1,540
65,217 2,955,340 194,678 705,818 1,653 27,820
151,105 574
23,940
85,000
34,837
151,105 120,411 23,940
( 85,888) 2,955,340 194,678 585,407 1,653 3,880
( 2,955,340) ( 197,424)
( 2,955,340) ( 197,424)
( 85,888) ( 2,746) 585,407 1,653 3,880
133,477 17,253 957,149 17,291 62,637
$ 47,589 $ 14,507 $ 1,542,556 $ 18,944 $ 66,517
( Continued)
69
CITY OF NEWARK
NON- MAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2006
DEBT
SERVICE
FUND CAPITAL PROJECTS FUNDS
Total
COPS Landscape Nonmajor
Interest and Streets, Trees Park and Lighting Governmental
Redemption and Lakes Improvement District Funds
REVENUES
Special assessments $ 181,027 $ 181,027
Use of money and property $ 46,571 361 49,158
Other governmental agencies 516,346 4,356,253
Current service charges $ 2,998 106,475
Other revenue 326 804,697
Total Revenues 46,571 519,344 181,714 5,497,610
EXPENDITURES
Current:
General government 286,686
Public safety 510,081
Streets and parks 105,476 160,925 266,401
Capital outlay 9,487 159,305
Debt service:
Principal repayment 310,000 395,000
Interest and fiscal charges 650,346 685,183
Total Expenditures 960,346 114,963 160,925 2,302,656
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES ( 913,775) 404,381 20,789 3,194,954
OTHER FINANCING SOURCES ( USES)
Transfers in 913,909 1,147,761
Transfers ( out) ( 3,451,646)
Total Other Financing Sources ( Uses) 913,909 ( 2,303,885)
EXCESS ( DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES 134 404,381 20,789 891,069
BEGINNING FUND BALANCES 983,867 $ 12,572 170,349 324,162 4,541,381
ENDING FUND BALANCES $ 984,001 $ 12,572 $ 574,730 $ 344,951 $ 5,432,450
70
71
CITY OF NEWARK
BUDGETED NON- MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2006
PARAMEDIC TAX ALAMEDA COUNTY FIRE FEES
Variance Variance
Positive Positive
Budget Actual ( Negative) Budget Actual ( Negative)
REVENUES
Special assessments
Use of money and property $ 395 $ 395
Other governmental agencies $ 200,000 198,487 ( 1,513) $ 138,900 $ 152,440 $ 13,540
Current service charges
Other revenue
Total Revenues 200,000 198,882 ( 1,118) 138,900 152,440 13,540
EXPENDITURES
Current:
General government
Public safety 292,593 279,323 13,270
Streets and parks
Capital outlay
Debt service:
Principal repayment
Interest and fiscal charges
Total Expenditures 292,593 279,323 13,270
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES 200,000 198,882 ( 1,118) ( 153,693) ( 126,883) 26,810
OTHER FINANCING SOURCES ( USES)
Transfers in 198,882 198,882
Transfers ( out) ( 198,882) ( 198,882) ( 100,000) ( 100,000)
Total Other Financing Sources ( Uses) ( 198,882) ( 198,882) 98,882 98,882
EXCESS ( DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES $ 200,000 ($ 200,000) ($ 153,693) ( 28,001) $ 125,692
BEGINNING FUND BALANCES 665,317
ENDING FUND BALANCES $ 637,316
72
POLICE GRANTS COMMUNITY DEVELOPMENT ACT ART IN PUBLIC PLACES
Variance Variance Variance
Positive Positive Positive
Budget Actual ( Negative) Budget Actual ( Negative) Budget Actual ( Negative)
$ 4,000 $ 1,196 ($ 2,804)
100,000 188,986 88,986 $ 9,200 $ 124,020 $ 114,820
88,755 88,755 $ 20,000 $ 1,422 ($ 18,578)
5,000 965 ( 4,035) 42,789 42,789
109,000 279,902 170,902 9,200 166,809 157,609 20,000 1,422 ( 18,578)
12,800 14,819 ( 2,019) 305,000 120,188 184,812
215,859 206,818 9,041
124,000 149,818 ( 25,818)
215,859 206,818 9,041 136,800 164,637 ( 27,837) 305,000 120,188 184,812
( 106,859) 73,084 179,943 ( 127,600) 2,172 129,772 ( 285,000) ( 118,766) 166,234
34,970 34,970
34,970 34,970
($ 106,859) 108,054 $ 214,913 ($ 127,600) 2,172 $ 129,772 ($ 285,000) ( 118,766) $ 166,234
190,824 165,218 841,265
$ 298,878 $ 167,390 $ 722,499
( Continued)
73
CITY OF NEWARK
BUDGETED NON- MAJOR FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2006
RECYCLE AB 939 MOTOR VEHICLE IN- LIEU
Variance Variance
Positive Positive
Budget Actual ( Negative) Budget Actual ( Negative)
REVENUES
Special assessments
Use of money and property
Other governmental agencies $ 11,958 $ 11,958 $ 2,726,000 $ 2,955,340 $ 229,340
Current service charges
Other revenue $ 40,300 53,259 12,959
Total Revenues 40,300 65,217 24,917 2,726,000 2,955,340 229,340
EXPENDITURES
Current:
General government 187,088 151,105 35,983
Public safety
Streets and parks
Capital outlay
Debt service:
Principal repayment
Interest and fiscal charges
Total Expenditures 187,088 151,105 35,983
EXCESS ( DEFICIENCY) OF REVENUES
OVER EXPENDITURES ( 146,788) ( 85,888) 60,900 2,726,000 2,955,340 229,340
OTHER FINANCING SOURCES ( USES)
Transfers in
Transfers ( out) ( 2,955,340) ( 2,955,340)
Total Other Financing Sources ( Uses) ( 2,955,340) ( 2,955,340)
EXCESS ( DEFICIENCY) OF REVENUES AND
OTHER SOURCES OVER EXPENDITURES
AND OTHER USES ($ 146,788) ( 85,888) $ 60,900 $ 2,726,000 ($ 2,726,000)
BEGINNING FUND BALANCES 133,