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Financial Statements and Federal Single
Audit Report
City of Pasco
For the period January 1, 2023 through December 31, 2023
Published September 26, 2024
Report No. 1035620
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (564) 999-0950 Pat.McCarthy@sao.wa.gov
Office of the Washington State Auditor
Pat McCarthy
September 26, 2024
Mayor and City Council
City of Pasco
Pasco, Washington
Report on Financial Statements and Federal Single Audit
Please find attached our report on the City of Pasco’s financial statements and compliance with
federal laws and regulations.
We are issuing this report in order to provide information on the City’s financial activities and
condition.
Sincerely,
Pat McCarthy, State Auditor
Olympia, WA
Americans with Disabilities
In accordance with the Americans with Disabilities Act, we will make this document available in
alternative formats. For more information, please contact our Office at (564) 999-0950, TDD
Relay at (800) 833-6388, or email our webmaster at webmaster@sao.wa.gov.
Office of the Washington State Auditor sao.wa.gov
TABLE OF CONTENTS
Schedule of Findings and Questioned Costs ................................................................................... 4
Schedule of Audit Findings and Responses .................................................................................... 6
Schedule of Federal Award Findings and Questioned Costs ........................................................ 10
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ................................................................................................... 14
Independent Auditor's Report on Compliance for Each Major Federal Program and Report on
Internal Control Over Compliance in Accordance With the Uniform Guidance ......................... 17
Independent Auditor's Report on the Financial Statements .......................................................... 21
Financial Section ........................................................................................................................... 25
Corrective Action Plan for Findings Reported Under Uniform Guidance ..................................140
About the State Auditor's Office ..................................................................................................142
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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
City of Pasco
January 1, 2023 through December 31, 2023
SECTION I – SUMMARY OF AUDITOR’S RESULTS
The results of our audit of the City of Pasco are summarized below in accordance with Title 2 U.S.
Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Financial Statements
We issued an unmodified opinion on the fair presentation of the basic financial statements of the
governmental activities, the business-type activities, each major fund, and the aggregate discretely
presented component units and remaining fund information in accordance with accounting
principles generally accepted in the United States of America (GAAP).
Internal Control over Financial Reporting:
• Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over financial reporting that we consider to be significant deficiencies.
• Material Weaknesses: We identified deficiencies that we consider to be material
weaknesses.
We noted no instances of noncompliance that were material to the financial statements of the City.
Federal Awards
Internal Control over Major Programs:
• Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over major federal programs that we consider to be significant deficiencies.
• Material Weaknesses: We identified deficiencies that we consider to be material
weaknesses.
We issued an unmodified opinion on the City’s compliance with requirements applicable to each
of its major federal programs.
We reported findings that are required to be disclosed in accordance with 2 CFR 200.516(a).
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Identification of Major Federal Programs
The following programs were selected as major programs in our audit of compliance in accordance
with the Uniform Guidance.
ALN Program or Cluster Title
21.027 COVID-19 – CORONAVIRUS STATE AND LOCAL FISCAL
RECOVERY FUNDS
97.083 Staffing for Adequate Fire and Emergency Response (SAFER)
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
the Uniform Guidance, was $750,000.
The City qualified as a low-risk auditee under the Uniform Guidance.
SECTION II – FINANCIAL STATEMENT FINDINGS
See Finding 2023-001.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED
COSTS
See Finding 2023-002.
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SCHEDULE OF AUDIT FINDINGS AND RESPONSES
City of Pasco
January 1, 2023 through December 31, 2023
2023-001 The City did not have adequate internal controls to ensure accurate
reporting of its financial statements.
Background
State and federal agencies, the City Council, and the public rely on the information
included in the financial statements and reports to make decisions. Management is
responsible for designing and following internal controls that provide reasonable
assurance its financial reporting is reliable, and the financial statements are
accurate. The City prepares its financial statements in accordance with generally
accepted accounting principles (GAAP).
Our audit found deficiencies in internal controls over accounting and financial
reporting that affected the City’s ability to produce reliable financial statements.
Governmental Accounting Standards requires the State Auditor’s Office to
communicate material weaknesses as a finding.
Description of Condition
When preparing the government-wide financial statements, the City must convert
the information in the governmental fund financial statements. This conversion is
necessary as the information in the governmental fund financial statements is
presented using the modified accrual basis of accounting while the government-
wide statements are on the full accrual basis. The governmental fund financial
statements report available financial resources and show the performance in the
short term while the government-wide financial statements assess the finances of
the government in the long term and its entirety.
Our audit identified internal control deficiencies that, when taken together,
represent a material weakness. We found the City does not have an effective review
process to ensure their financial statements are accurate. Specifically, there were
errors in the conversion from the fund financial statements to the government-wide
financial statements that were not detected in preparation or review.
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Cause of Condition
The software the City uses for compiling and preparing the financial statements
was updated and City staff did not verify the accuracy of the calculations when
preparing and presenting their financial statements.
Effect of Condition
Because of the internal control deficiencies, the City’s financial statements
contained misstatements that management did not detect.
In our review of the City’s government-wide statements, we noted the following
misstatements as a result of the conversion:
Business-type Activities
• Capital grants and contributions revenue was understated by $2,430,603 mainly
due to inaccurately reporting a transaction as a deferred inflow. Consequently,
the deferred inflow liability to be overstated by $2,429,899.
• Significant misclassifications within the presentation of the opinion unit’s net
position. Restricted Net Position for capital improvement was overstated by
$24,647,392 as it should have been classified as unrestricted net position. Net
investment in capital assets included a misclassification causing an
overstatement of $2,322,332. Overall, the misclassifications caused
unrestricted net position to be understated by $29,400,323.
Governmental Activities
• The issuance of debt was inaccurately reported causing overstated
revenues of $13,567,063.
• The incorrect implementation of a new accounting standard related to
subscription based information technology agreements resulted in
overstated revenues of $2,228,106.
• Various misclassifications within expenditure categories due to capital
outlay related adjustments among the categories. The misclassifications
are as follows:
Account Misclassification
Transportation expenditures – overstated $ 24,404,403
General government expenditures - understated $ (4,480,996)
Public safety expenditures - understated $ (13,085,990)
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• Revenues categorized as Charges for Services were understated by
$7,793,027. Similarly, revenue categorized as Investment income and
miscellaneous was understated by $1,732,496.
• Misclassification among liabilities in which Loans Receivable was
understated by $2,070,871 and Special Assessment Receivable was overstated
by $2,104,092.
• Deferred inflows were overstated by $2,150,621.
• Similar to Business-Type misclassifications, there were significant
misclassifications among Net Position classifications. Restricted for capital
improvements was overstated by $5,622,584 and net investment in capital
assets was overstated by $10,439,228, both of should have been classified as
unrestricted net position. Overall, unrestricted net position was understated by
$18,212,185.
We also identified several less significant errors in the City’s financial statements,
notes, and schedules it provided for audit.
The City corrected the financial statements as a result of our audit.
Recommendation
We recommend the City dedicate sufficient resources to preparing accurate
financial statements. In particular, the City should establish a robust review process
to ensure the financial statements are accurate and complete.
City’s Response
Upon review, we have identified that the need for an unexpected software update
during ACFR preparation played a significant role in causing many of the
discrepancies noted in the audit. As a result of an unexpected change to the
software operating platform, previous programing was erased. During preparation
of the 2023 ACFR, it was necessary to rebuild reporting programming from ground
zero in a condensed timeframe. The City recognizes the importance of thorough
review of software system outputs. The planned process for the coming year is to
backward engineer existing software programming to thoroughly investigate,
discover and correct programming to support correct presentation.
Additionally, we want to highlight that the majority of errors noted in the auditor's
report are a result of erroneous classification. These misclassifications do not
reflect a misstatement of financial results, but rather an incorrect categorization of
transactions. Transactions included in the financial reports were complete, but
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previously noted programming interruptions resulted in some transactions
assignment to the wrong category on the government-wide statements. As part of
the finalization of the ACFR, these items were identified and are appropriately
reported in the published version.
We are committed to maintaining accurate financial reporting and are taking all
necessary actions to address these issues.
Auditor’s Remarks
We appreciate the City’s commitment to resolve this finding and thank the City for
its cooperation and assistance during the audit. We will review the corrective action
taken during our next regular audit.
Applicable Laws and Regulations
Government Auditing Standards, July 2018 Revision, paragraphs 6.40 and 6.41
establish reporting requirements related to significant deficiencies or material
weaknesses in internal control, instances of fraud, and noncompliance with
provisions of laws, regulations, contracts, or grant agreements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 265, Communicating Internal Control Related Matters Identified
in an Audit, paragraph 7.
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SCHEDULE OF FEDERAL AWARD FINDINGS AND
QUESTIONED COSTS
City of Pasco
January 1, 2023 through December 31, 2023
2023-002 The City did not have adequate controls for ensuring compliance
with federal suspension and debarment requirements.
Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus
State and Local Fiscal Recovery
Funds
Federal Grantor Name: U.S. Department of Treasury
Federal Award/Contract Number: N/A
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number:
N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF)
is to respond to the COVID-19 pandemic’s negative effects on public health and
the economy, provide premium pay to essential workers during the pandemic,
provide government services to the extent COVID-19 caused a reduction in
revenues collected, and make necessary investments in water, sewer or broadband
infrastructure. In fiscal year 2023, the City spent $6,447,025 to administer the
program.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding program requirements and monitoring the effectiveness of
established controls.
Federal requirements prohibit recipients from contracting with or purchasing from
parties suspended or debarred from doing business with the federal government.
Whenever the City enters into contracts or purchases goods and services that it
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expects to equal or exceed $25,000, paid all or in part with federal funds, it must
verify that the contractors have not been suspended, debarred or otherwise excluded
from participating in federal programs. The City may verify this by obtaining a
written certification from the contractor, adding a clause or condition into the
contract that states the contractor is not suspended or debarred or checking for
exclusion records in the U.S. General Services Administration’s System for Award
Management at SAM.gov. The City must verify this before entering into the
contract, and must maintain documentation demonstrating compliance with this
federal requirement.
Our audit found the City did not have adequate controls in place to verify three
contractors it paid more than $25,000 in federal funds were not suspended or
debarred from participating in federal programs.
We consider this deficiency in internal controls to be a material weakness that led
to material noncompliance.
Cause of Condition
The City purchased from two contractors using other governments’ contracts,
which is a process commonly referred to as “piggybacking.” City staff did not know
they must verify the contractors are not suspended or debarred before
piggybacking. Also, staff responsible for monitoring part of the program did not
have adequate training and did not have a clear understanding of the requirements
for suspension-and-debarment for one of the contractors.
Effect of Condition
The City did not obtain a written certification from the contractor, insert a clause
into the contract or check for exclusion records at SAM.gov to verify three
contractors it paid $292,013 using federal funds were not suspended or debarred
before contracting. Without adequate internal controls, the City cannot ensure the
contractors it paid with federal funds were eligible to participate in federal
programs. Any program funds the City used to pay contractors that have been
suspended or debarred would be unallowable, and the awarding agency could
potentially recover the funds. Because we subsequently verified the contractors
were not suspended or debarred, we are not questioning costs.
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Recommendation
We recommend the City provide staff with training related to the suspension and
debarment requirement and strengthen internal controls to ensure all contractors it
pays $25,000 or more, all or part with federal funds, are not suspended or debarred
from participating in federal programs before contracting with them.
City’s Response
Expertise in Federal procurement requirements is primarily held by individuals
who regularly manage federal grants. The instances noted in the audit involve
activities conducted by personnel who are not typically involved with federal
grants. The City acknowledges the need for enhanced safeguards to ensure that
such infrequent activities are correctly identified as grant-funded, and that
appropriate procedures are followed.
Further, the City received a similar finding for fiscal year 2021. It is important to
note that two of the three instances identified were either procured in 2021, but not
included in the 2021 finding or were procured in 2022 before the 2021 audit finding
was issued. While the 2023 audit identified instances related to 2023 payments, the
opportunity to address any issues after 2021 has already passed.
Auditor’s Remarks
We appreciate the City’s commitment to resolve this finding and thank the City for
its cooperation and assistance during the audit. We will review the corrective action
taken during our next regular audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
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The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide
Debarment and Suspension (Nonprocurement), establishes nonprocurement
debarment and suspension regulations implementing Executive Orders 12549 and
12689.
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INDEPENDENT AUDITOR’S REPORT
Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
City of Pasco
January 1, 2023 through December 31, 2023
Mayor and City Council
City of Pasco
Pasco, Washington
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the financial statements of the
governmental activities, the business-type activities, each major fund, and the aggregate discretely
presented component units and remaining fund information of the City of Pasco, as of and for the
year ended December 31, 2023, and the related notes to the financial statements, which collectively
comprise the City’s basic financial statements, and have issued our report thereon dated
September 18, 2024.
REPORT ON I NTERNAL CONTROL OVER FINANCIAL
REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal
control over financial reporting (internal control) as a basis for designing audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the City’s financial statements will not be prevented or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
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Our consideration of internal control was for the limited purpose described above and was not
designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist
that were not identified.
However, we identified certain deficiencies in internal control, as described in the accompanying
Schedule of Audit Findings and Responses as Finding 2023-001, that we consider to be material
weaknesses.
REPORT ON COMPLIAN CE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the financial statements. However, providing an opinion on compliance with
those provisions was not an objective of our audit, and accordingly, we do not express such an
opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required
to be reported under Government Auditing Standards.
CITY ’S RESPONSE TO FINDINGS
Government Auditing Standards requires the auditor to perform limited procedures on the City’s
response to the findings identified in our audit and described in the accompanying Schedule of
Audit Findings and Responses. The City’s response was not subjected to the auditing procedures
applied in the audit of the financial statements and, accordingly, we express no opinion on the
response.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose. However, this
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report is a matter of public record and its distribution is not limited. It also serves to disseminate
information to the public as a reporting tool to help citizens assess government operations.
Pat McCarthy, State Auditor
Olympia, WA
September 18, 2024
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INDEPENDENT AUDITOR’S REPORT
Report on Compliance for Each Major Federal Program and Report on Internal
Control over Compliance in Accordance with the Uniform Guidance
City of Pasco
January 1, 2023 through December 31, 2023
Mayor and City Council
City of Pasco
Pasco, Washington
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM
Opinion on Each Major Federal Program
We have audited the compliance of the City of Pasco, with the types of compliance requirements
identified as subject to audit in the U.S. Office of Management and Budget (OMB) Compliance
Supplement that could have a direct and material effect on each of the City’s major federal
programs for the year ended December 31, 2023. The City’s major federal programs are identified
in the auditor’s results section of the accompanying Schedule of Findings and Questioned Costs.
In our opinion, the City complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
federal programs for the year ended December 31, 2023.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America (GAAS); the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States; and the
audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)
are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our
report.
We are required to be independent of the City and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audit. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on
compliance for each major federal program. Our audit does not provide a legal determination on
the City’s compliance with the compliance requirements referred to above.
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Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the
design, implementation, and maintenance of effective internal control over compliance with the
requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements
applicable to the City’s federal programs.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of
assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS, Government Auditing Standards and the Uniform Guidance will always
detect a material noncompliance when it exists. The risk of not detecting a material noncompliance
resulting from fraud is higher than for that resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements referred to above is considered material, if there
is a substantial likelihood that, individually or in the aggregate, it would influence the judgement
made by a reasonable user of the report on compliance about the City’s compliance with the
requirements of each major federal program as a whole.
Performing an audit in accordance with GAAS, Government Auditing Standards and the Uniform
Guidance includes the following responsibilities:
• Exercise professional judgment and maintain professional skepticism throughout the audit;
• Identify and assess the risks of material noncompliance, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the City’s compliance with the compliance
requirements referred to above and performing such other procedures as we considered
necessary in the circumstances;
• Obtain an understanding of the City’s internal control over compliance relevant to the audit
in order to design audit procedures that are appropriate in the circumstances and to test and
report on internal control over compliance in accordance with the Uniform Guidance, but
not for the purpose of expressing an opinion on the effectiveness of the City’s internal
control over compliance. Accordingly, no such opinion is expressed; and
• We are required to communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit and any significant deficiencies
and material weaknesses in internal control over compliance that we identified during the
audit.
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REPORT ON INTERNAL CONTROL OVER COMPLIANCE
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed. Our consideration of internal
control over compliance was for the limited purpose described in the Auditor’s Responsibilities
for the Audit of Compliance section above and was not designed to identify all deficiencies in
internal control over compliance that might be material weaknesses or significant deficiencies in
internal control over compliance and therefore, material weaknesses or significant deficiencies
may exist that were not identified.
However, we identified certain deficiencies in internal control over compliance, as described in
the accompanying Schedule of Federal Award Findings and Questioned Costs as Finding
2023-002 that we consider to be a material weakness.
Other Matters
The results of our auditing procedures disclosed an instance of noncompliance which is required
to be reported in accordance with the Uniform Guidance and which are described in the
accompanying Schedule of Federal Award Findings and Questioned Costs as Finding 2023-002.
Our opinion on each major federal program is not modified with respect to these matters.
City’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s
response to the internal control over compliance findings identified in our audit described in the
accompanying Schedule of Federal Award Findings and Questioned Costs. The City’s response
was not subjected to the other auditing procedures applied in the audit of compliance and,
accordingly, we express no opinion on the response.
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Purpose of this Report
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other
purpose. However, this report is a matter of public record and its distribution is not limited. It also
serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.
Pat McCarthy, State Auditor
Olympia, WA
September 18, 2024
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INDEPENDENT AUDITOR’S REPORT
Report on the Audit of the Financial Statements
City of Pasco
January 1, 2023 through December 31, 2023
Mayor and City Council
City of Pasco
Pasco, Washington
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinions
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate discretely presented component units
and remaining fund information of the City of Pasco, as of and for the year ended December 31,
2023, and the related notes to the financial statements, which collectively comprise the City’s basic
financial statements as listed in the financial section of our report.
In our opinion, the accompanying financial statements referred to above present fairly, in all
material respects, the respective financial position of the governmental activities, the business-type
activities, each major fund, and the aggregate discretely presented component units and remaining
fund information of the City of Pasco, as of December 31, 2023, and the respective changes in
financial position and, where applicable, cash flows thereof, and the respective budgetary
comparison for the General and ARPA funds for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS) and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are required to be independent of
the City and to meet our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinions .
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Matters of Emphasis
As discussed in Note 1 to the financial statements, in 2023, the City adopted new accounting
guidance, Governmental Accounting Standards Board Statement No. 96, Subscription-Based
Information Technology Arrangements. Our opinion is not modified with respect to this matter.
Responsibilit ies of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America, and
for the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the City’s
ability to continue as a going concern for twelve months beyond the financial statement date,
including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilit ies for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and
Government Auditing Standards will always detect a material misstatement when it exists. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control. Misstatements are considered material if there is a substantial
likelihood that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the financial statements.
Performing an audit in accordance with GAAS and Government Auditing Standards includes the
following responsibilities:
• Exercise professional judgment and maintain professional skepticism throughout the audit;
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements;
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• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion
is expressed;
• Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements;
• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City’s ability to continue as a going
concern for a reasonable period of time; and
• Communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis and required supplementary information listed in the
financial section of our report be presented to supplement the basic financial statements. Such
information is the responsibility of management and, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during
our audit of the basic financial statements. We do not express an opinion or provide any assurance
on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements. The accompanying Schedule of
Expenditures of Federal Awards is presented for purposes of additional analysis as required by
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). This
supplementary information is not a required part of the basic financial statements. Such
information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. The
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Office of the Washington State Auditor sao.wa.gov
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated, in all material respects, in relation to the
basic financial statements as a whole.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
September 18, 2024 on our consideration of the City’s internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the effectiveness of the City’s internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City’s internal control over financial reporting and
compliance.
Pat McCarthy, State Auditor
Olympia, WA
September 18, 2024
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FINANCIAL SECTION
City of Pasco
January 1, 2023 through December 31, 2023
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis – 2023
BASIC FINANCIAL STATEMENTS
Statement of Net Position – 2023
Statement of Activities – 2023
Balance Sheet – Governmental Funds – 2023
Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position –
2023
Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental
Funds – 2023
Reconciliation of Governmental Funds Statement of Revenues, Expenditures and
Changes in Fund Balance to the Statement of Activities – 2023
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual
– General Fund – 2023
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual
– ARPA Fund – 2023
Statement of Net Position – Proprietary Funds – 2023
Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds
– 2023
Statement of Cash Flows – Proprietary Funds – 2023
Statement of Fiduciary Net Position – 2023
Statement of Changes in Fiduciary Net Position – Fiduciary Funds – 2023
Notes to Financial Statements – 2023
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the Net OPEB Liability and Related Ratios – Old Fire OPEB –
2023
Schedule of Investment Returns – Old Fire OPEB – 2023
Schedule of City Contributions – LEOFF 1 OPEB – 2023
Schedule of Changes in Total OPEB Liability and Related Ratios – LEOFF 1 – 2023
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Office of the Washington State Auditor sao.wa.gov
Schedule of Changes in the Net Pension Liability and Related Ratios – Old Fire Pension
Fund – 2023
Schedule of Investment Ratios – Old Fire Pension – 2023
Schedule of Contributions – Fire Pension Fund – 2023
Schedule of Proportionate Share of Net Pension Liability/(Asset) – PERS 1, PERS 2/3,
LEOFF 1, LEOFF 2 – 2023
Schedule of Employer Contributions – PERS 1, PERS 2/3, LEOFF 2 – 2023
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards – 2023
Notes to the Schedule of Expenditures of Federal Awards – 2023
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
MANAGEMENTS’ DISCUSSION AND ANALYSIS
This section of the City of Pasco’s (City) annual comprehensive financial statements (ACFR)
provides a narrative overview and analysis of the financial activities for the fiscal year ended
December 31, 2023. Readers are encouraged to consider commentary provided in the
management’s discussion and analysis (MD&A) in conjunction with the preceding letter of
transmittal as well as the financial statements and notes to the financial statements. While each
portion of the ACFR is useful, they are produced to complement and complete financial reporting
for readers.
Financial Highlights
x The total assets and deferred outflows of resources of the City exceeded liabilities and
deferred inflows, or net position, at the close of December 31, 2023 by $700.8M. Net
investment in capital assets (capital asset cost net of depreciation and related debt) accounted
for 73% of this amount or $511.6M. Of the remaining net position of $189.3M, or 27%,
$109.6M may be used to meet the government’s ongoing obligations to its citizens, creditors
and employees without restriction.
x The City’s total net position improved by $64.9M, or 10% compared to 2022.
Governmental activities increased by $43.8M while business-type activities increase by
$21.5M.
x City-wide net investment in capital increased by $58.2M in 2023. This increase reflects the
investments made in City infrastructure less associated debt for parks, facilities, streets, and all
utility services.
x Restricted net position of governmental activities increased by $9.1M or 19%. The most
significant impact is related to fund balance restricted for capital improvements. In 2023, a
limited term general obligation bond in the amount of $12.6M was issued. A portion of these
proceeds have not been spent as of year end, $5.6M. Increases in net position restrictions were
also a result of changes for net other post-employment benefits (OPEB) and pension
recognition. Unrestricted net position of governmental activities decreased by $6.5M or 10%
as compared to 2022.
x Activity related to general revenues reported on the Statement of Activities resulted in an
improvement of $4.4M in 2023 over 2022. This increased recognition includes bond proceeds
and related premium of nearly $13.6M, improved interest income as a result of improved
interest rates of $846K, increased intergovernmental revenues of $828K. Offsetting these
revenue increases is a greater internal transfer between governmental and business-type
activities in 2023, an additional $3.6M of spending in the governmental category.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
x Expenses reported on the Statement of Activities for governmental activities were greater
than program revenues by $19.7M. For business-type activities, revenues exceeded expenses
by $14.5M.
xGovernmental fund balances at year-end were $87.1M, a decrease of $5.9M, or 6.4% from
the prior year. Of this fund balance, a total of $36.6M or 42%, belongs to the General Fund.
A deficit fund balance of $1.9M is attributable to the Construction Fund, the result of
project spending that outpaced funding in the current period. Available support is being
identified based on reallocation during capital improvement plan analysis and pending
grant applications. The remaining governmental fund balance is the combined effect of
non-major governmental funds. These funds represent only a small portion of unassigned
fund balance, with their respective fund balances restricted for unique fund purposes.
o Revenues reported in the governmental funds increased from 2022 to 2023 by
$7.0M. Most notable changes included recognition of intergovernmental revenue
increases, including use of American Rescue Plan Act (ARPA) grant proceeds and
revenues for capital construction projects.
Current expenses increased by $11.1M. Greater costs in 2023 are largely the result
of budgeted staffing increases in many City departments, as well as inflationary
pressure on cost of supplies and services.
Capital expenses increased by $19.2M as compared to 2022 totals.
Debt issuance expenses reflected in 2023 were greater than those of 2022 by an
amount slightly greater than half a million dollars.
o
o
o
xAs of December 31, 2023, the City’s outstanding debt increased by $74.2M. Within the
governmental activities, total outstanding debt increased by $12.2M, reflecting the
issuance of a limited-term general obligation bond in the amount of $12.6M. Proceeds
received are for the support for construction of an additional fire station and improvements
at City facilities used for recreation and animal control. Within business-type activities,
total outstanding debt increased by $61.9M. Concurrent with issuance of the LTGO bond,
utility revenue and refunding bonds were issued, resulting in proceeds of $34.7M.
Approximately 11% of proceeds, $2.8M, was used to refund outstanding 2013 bonds. The
remaining $31.9M in proceeds will fund numerous projects across all City utility services.
The Water/Sewer Fund, a business type-activity, was the recipient of various loan
programs of the State of Washington. The projects supported include capital improvements
for facilities, including the West Pasco Water Treatment Plant, Butterfield Water
Treatment Plant, Water Reservoir Storage Tank Zone Three, Wastewater Treatment Plant,
and Process Water Reuse Facility storage and treatment projects. Typically, this form of
funding is received on a reimbursement basis and bears interest cost significantly lower
than debt funding achieved from the bond market. As detailed in Note 8, interest rates range
from zero percent to two percent. Therefore, the City will continue to look for opportunity
to apply for similar lower cost financing.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City of Pasco’s basic
financial statements. The financial statements are comprised of three components: 1) government-
wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.
This report also contains other supplementary information in addition to the basic financial
statements themselves.
The activities of the City are classified as either governmental or business-type depending upon
the nature of services provided and source of funding. Both government-wide financial statements,
statement of net position and statement of activities, segregate financial reporting based on the
activity type.
Governmental activities provide services that are principally supported by taxes and
intergovernmental revenues. Depending upon purpose and authority for revenue collection
financial activity is reported in either the General, Special Revenue, Debt Service, or Capital
Projects funds. Governmental activities included basic services of the City like police and fire
services, parks and recreation program delivery, streets and facilities maintenance, etc. Other City
activities are classified as business-type. These services receive all or a significant portion of their
financial support from fees and charges. The City’s business-type activities include utilities
(composed of individual water, sewer, irrigation, process water reuse, and storm water utilities),
equipment maintenance and equipment replacement services, and personnel benefits.
The City adopts a biennial budget. Budgets are adopted via ordinance at the fund level in
accordance with state law. A budgetary comparison statement is presented in the basic statements
for all major funds and a combined comparison for all non-major special revenue funds.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview
of the City’s finances in a manner similar to a private-sector business.
The Statement of Net Position presents information on all of the City’s assets, liabilities, and
deferred inflows and deferred outflows, with the difference reported as net position. The purpose
of this statement is to report activity similarly to a consolidated balance sheet in private business.
Over time, increases or decreases in net position may serve as a useful indicator of whether the
financial position of the City of Pasco is improving or deteriorating. Certain activity is only
presented the government-wide statement due to the basis of accounting differing from the fund
financial statements. Notably impacting the net position is the recognition of pension related assets
and liabilities for the five pension plans that the City is part of and other post-employment benefits
(OPEB) for two City-managed plans. In 2023, the City recognized an increase of $1.8M in OPEB
liability and a $1.5M decrease in pension asset, both of which are determined by independent
actuaries. Further, there was a $3.8M increase in lease liabilities and corresponding increase in
lease assets of $3.3M related to mandated reporting requirements for long term leases.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
The Statement of Activities presents information showing how the City’s net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave).
Fund Financial Statements
A fund is a grouping of related accounts that are used to maintain control over resources that have
been segregated for specific activities or objectives. The City of Pasco, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All funds of the City can be divided into the following categories:
governmental, proprietary, permanent, fiduciary and custodial funds.
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources
available at the end of the fiscal year. Such information may be useful in evaluating a government’s
near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide statements. By doing
so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statements of
revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
The City maintains thirty (30) individual governmental funds including the General Fund.
Information is presented separately in the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures and changes in fund balances for the
General Fund, which is a major fund as defined by the Governmental Accounting Standards
Board (GASB). In 2023, the General, American Rescue Plan Act (ARPA), and Construction
Funds were the only major governmental funds. Financial results for major funds are reported
individually in the governmental fund balance sheet and governmental fund statement of
revenues, expenditures, and changes in fund balances. Remaining non-major funds financial
activity are consolidated. To view individual fund data for non-major governmental funds,
reference the combining and individual fund statements and schedules section of this report.
Proprietary Funds
The City maintains two different types of proprietary funds. Enterprise funds are used to report the
same functions presented as business-type activities in the government-wide financial statements.
The City uses an enterprise fund to account for the Water/Sewer Utility. Internal service funds are
an accounting device used to accumulate and allocate costs internally among the City’s various
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
functions. The City uses internal service funds to account for its equipment maintenance and
replacement, central stores and medical/dental insurance activities. As the central stores,
medical/dental insurance and certain equipment maintenance and replacement services
predominately benefit governmental rather than business-type functions, they have been included
with governmental activities in the government-wide financial statements. Data from the other two
internal service funds (equipment maintenance and equipment replacement of utility equipment)
are combined into a single, aggregated presentation in the basic proprietary fund financial
statement.
Proprietary funds report financial information using the same measurement focus and basis of
accounting as that used for creation of the government-wide financial statements. Readers,
however, can find more detail reported in the enterprise fund financial statements. Data from the
other two internal service funds (equipment maintenance and equipment replacement of utility
equipment) are combined into a single, aggregated presentation in the basic proprietary fund
financial statements.
The proprietary fund basic statements are presented following the governmental fund statements
of this report.
Permanent Funds
Permanent funds are used to collect principal and disburse earnings for a specific purpose. The
principal value is preserved and protected from spending to generate interest earnings. In turn,
interest earnings are usable as a source of income for a specified purpose.
Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties
outside the government. Fiduciary funds are not reflected in the government-wide financial
statements because the resources of those funds are not available to support the City of Pasco’s
programs.
Custodial Funds. A custodial fund is a type of fiduciary fund. The purpose of a custodial fund is
to report resources held by the City for the ultimate benefit of others, but not based on a pension,
other post-employment benefit, investment nor private purpose relationship. The activity of the
custodial funds does not reflect City activity nor is the City administratively involved. Instead, the
City provides accounting support of the activity for the benefit of the controlling entity.
Notes to the Financial Statements
The notes provide additional information that is essential to acquire a full understanding of the
data provided in the government-wide and fund financial statements. The notes are presented
following the basic financial statements of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents the
required supplementary information (RSI) concerning the City’s progress in funding it obligation
to provide pension benefits and Other Post-Employment Benefits (OPEB) to its employees.
Pension obligations discussed in RSI include the City’s ratable share of State PERS and LEOFF
plans, as well as those statutory obligations arising from past service of participating police and
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City of Pasco, Washington 2023 Annual Comprehensive Financial Report
firefighters who were hired by the City prior to October 1, 1977. Required supplementary
information can be found immediately following the notes to the financial statements of this report.
Government-wide Overall Financial Analysis
Net Position. This section provides analysis of the government-wide financial statements
including long-term and short-term information about the City’s overall financial condition. The
following tables address the financial results of the City as a whole.
Net position over time may serve as a useful indicator of a government’s financial health. The
City’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of
resources by $696.2M as of December 31, 2023. This is an increase of $60.4M or 9%, as compared
to December 31, 2022. Government net position increased by $41.6M, or 11%. Business-type net
position increased by 18.8M or 8%. Following is a condensed version of the City’s statement of
net position for the years ended December 31, 2023 and 2022, respectively.
The City’s investment in capital assets, including land, buildings, infrastructure, and equipment,
is substantial. A subset of net position, net investment in capital, is reflected distinctly. This
calculation recognizes the cost of capital assets, less any outstanding related debt used to purchase
or improve those assets, net any unspent bond proceeds. As capital assets are used to provide
services, their value lies in support of service delivery to citizens and customers. The associated
net position is unavailable for future spending. Annual debt service payments related to debt is
paid by annual revenues of the supporting fund.
A second subset of net position is restricted for specific use or subject to external restrictions.
Examples include net position available for use based on adherence to bond covenants, for
construction completion or fulfilling commitments to employees in the form of pensions and other
post-employment benefits, and program specific support. The value of these restrictions on net
position total $79.2M, or 11%, of all net position.
City of Pasco
Net Position
2023 2022 2023 2022 2023 2022
NonCapital Assets 150,857,621 154,725,340 109,655,675 82,489,063 260,513,296 237,214,403
Capital assets(net) 360,571,270 304,695,444 321,571,293 264,404,497 682,142,563 569,099,941
Total assets 511,428,891 459,420,784 431,226,968 346,893,560 942,655,859 806,314,344
Deferred outflows of resources 13,368,329 11,450,156 1,254,291 1,283,105 14,622,620 12,733,261
Total assets and deferred outflows of resources 524,797,220 470,870,940 432,481,259 348,176,665 957,278,479 819,047,605
Current Liabilities 23,538,113 13,684,866 19,419,018 13,237,141 42,957,131 26,922,007
Long-term liabilities 54,826,164 40,895,899 144,545,339 84,590,938 199,371,503 125,486,837
Total liabilities 78,364,277 54,580,765 163,964,357 97,828,079 242,328,634 152,408,844
Deferred inflows of resources 14,910,138 26,295,978 3,771,262 4,369,665 18,681,400 30,665,643
Total Liability and deferred inflows of resources 93,274,415 80,876,743 167,735,619 102,197,744 261,010,034 183,074,487
NET POSITION
Net investment in capital assets $ 316,190,716 $ 275,101,782 $ 195,379,340 $ 178,195,662 $ 511,570,056 $ 453,297,444
Restricted 58,763,733 49,635,184 20,433,411 24,280,851 79,197,144 73,916,035
Unrestricted 56,568,356 65,174,173 48,933,590 43,502,408 105,501,946 108,676,581
Total net position $ 431,522,805 $ 389,911,139 $ 264,746,341 $ 245,978,921 $ 696,269,146 $ 635,890,060
Total Business-type Activities Governmental Activities
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
The remaining net position of $105.5M is unrestricted. It may be used to meet the government’s
ongoing obligations to citizens and creditors. While not legally restricted, a portion of the
unrestricted net position has been committed by City Council action for projects and other
programs in the future.
At the end of 2023, the government-wide net position was positive for all reported categories,
governmental and business-type.
Governmental Activities:
Governmental activities net position increased by $41.6M, or 11%. Key elements of the current
year’s increase in net position as compared to year end 2022 net position follow.
Revenues: Program revenues increased by approximately $23.2M, or 40.9%. Program revenues
are composed of charges for services and grants and contributions to be used for operational or
capital efforts. Charges for services are recognized on a year-to-year basis and often associated
with recurring programs and services provided by the City. Some examples include fees for items
like permitting and planning services, engineering services, animal control service, parks and
recreation programs and police and fire services to other government agencies. Overall, charges
for service revenue decreased by 2% as compared to prior year. General Government related
charges for services decreased mainly due to a decrease of $0.9M in overhead and administrative
charges billed to all funds except for General Fund. These charges are for services provided by
General Fund departments such as Finance, Human Resources, Information Technology, Facility
maintenance among others. In recent years, there has been a shift in the beneficiaries of these
services to departments within General Fund as opposed to other funds, resulting in the decrease.
Public Safety revenues decreased related to ambulance transport net revenues largely due to timing
of funds received from the Ground Emergency Medical Transportation (GEMT) program. 2021
and 2022 experienced significant inflows of GEMT funds due to true-up payments from prior
years. 2023 revenue is a true reflection of actual activity during the reporting period.
Transportation impact fees, assessed solely in a section of town, decreased in 2023 as compared
to 2022, a reflection of slowed residential development. Revenues related to the natural and
economic function increased slightly despite the economic effect of elevated cost of borrowing.
Cultural and community related charges for services increased by approximately $1M. Nearly half
the increase was the result of park development fee collection. Remaining improvements in
revenues were scattered across a multitude of recreation type fees. Activity in program revenues
tied to grants and contributions increased over 2022. For operation grants and contributions, the
City benefitted from a SAFER grant supporting the addition of 15 firefighters. The associated 2023
revenue increase over last year was $1.3M. American Rescue Plan Act (ARPA) revenue of
approximately an additional $3.8M was recorded in 2023 in the category of natural and economic
environment. Capital contributions increased significantly over 2022, by an additional $24M in
2023. This activity is the result capital infrastructure constructed by developers and dedicated to
the City upon completion. Upon this dedication, the City assumes all future maintenance and
improvements associated with the asset.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Tax revenues are the largest source of revenue within governmental activities. As compared to
general revenues received in 2023, tax revenues accounted for 69%. Tax revenue was nearly
twice as large as charges for services revenues in 2023. Compared to 2022, tax revenue was only
a small amount greater, an increase of $143K. However, it is important to no te that sales tax
revenues for 2022 were significantly increased, approximately 27% higher than 2021
revenues. A major influence on the elevated revenue in 2021 was a large-scale construction
project. The sales tax revenue of 2022 also reflected an above average bump in automobile
and recreational vehicle revenues.
Sales tax revenue for 2023 was lower than 2022 revenues by approximately 3%, or $887K. When
reviewing 2023 activity, the categories of construction, automobile and recreational vehicle tax
reduced from 2022 levels. As noted above a large-scale construction project significantly impacted
2022 receipts, contributing approximately $2.5M in tax revenues. Construction sales tax revenue
for 2023 bettered 2022 revenues when the large-scale construction project’s tax is excluded by
approximately $550K.
Property tax, an important revenue as it not easily impacted by the economy, was $695K higher
than 2022. This increased revenue was the result of new construction assessed value added to the
City’s tax rolls during 2022. Washington state legislation allows for an annual one percent (1%)
increase in levy amount. The City Council declined this increase for 2023 collections, instead
banking the value for future assessment when, or if, determined prudent.
Business and occupation taxes, otherwise known as utility taxes, increased $624K over 2022 totals,
or 5%. The City receives utility taxes from providers of electric, natural gas, cable television,
telephone, water and wastewater, ambulance and stormwater service providers. Revenues can be
affected by growth in customer accounts, fluctuation in annual billed consumption and rate
changes from year to year. In 2023, all categories of utility tax increased over 2022 revenues with
the exclusion of cable television and electric service. Electric utility tax revenue accounts for
nearly half of all utility taxes received on a given year. Compared to biennial budget value, 53.6%
of budget was received in 2023.
The City’s real estate excise tax revenues of 2023 declined by $370K, a 12% reduction from the
prior year. Real estate excise tax is a product of residential and commercial property sales. As the
cost of borrowing, and specifically interest rates associated with real property acquisition has
increased with inflation, sales slowed as compared to prior years. Residential permit values were
lower in 2023 as compared with 2022, by 12%. When comparing issuance of single-family
dwelling units (SFDU) by quarter, a trend emerges. Through the first half of 2023, permitting
related to SFDU were underperforming 2022 by 37%. However, quarter three of 2023 was three
percent (3%) increased over the same time period of the prior year. The final quarter of 2023
reflecting an improvement over 2022 count by 122%.
While a negative variable where development was concerned, interest rate escalation afforded the
City the opportunity to earn increased interest revenue as compared to 2022. Interest income in
2023 was approximately $846K greater, or a 23% increase.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
In 2023, revenues related to subscription-based technology agreements (SBITA) were recognized
for the first year as directed by an accounting pronouncement of the governmental accounting
standards board, No. 96. The associated general revenue reflected on the Statement of Activities
was $2.2M in 2023.
Expenses: In 2023, as part of the 2023/2024 biennial budget, the City significantly increased
staffing. Nearly every operational fund added permanent staff positions. While growing pressure
on City services was the theme of these additions, demands related to this growth were created by
various catalysts. Below is an outline of the significant changes.
xAnimal control services, and an associated shelter facility, are provided to the Tri-Cities
region by way of the Tri-Cities Animal Control Authority (TCACA). This authority is the
product of an interlocal agreement between the Cities of Kennewick, Richland and Pasco.
Historically, services were provided based on an agreement with a third-party contractor.
During 2022, following concerns related to adequacy of services provided, the City
assumed operational control of the TCACA. When preparing the 2023/2024 biennial
budget and reflective of this permanent change, 20 positions were added to staff the
Authority. The associated increase in cost, $2.4M, is in the natural and economic category
of expenses.
The City successfully pursued a Staffing for Adequate Fire and Emergency Response
(SAFER) grant from FEMA. Based on this grant, 15 firefighter/paramedic positions were
added to the fire department. The new staffing is spread between the general fund,
supporting fire suppression and prevention and the ambulance fund. Also reflected in
public safety expenses is the addition of 14 police department positions. The positions were
added in response to a comprehensive police services strategic plan. Additionally,
beginning in 2023, the City served as a satellite site for the State of Washington Basic Law
Enforcement Academy (BLEA). 2023 was the inaugural year for regional academy sites.
As a result of this agreement, the City received revenue to offset associated labor expenses
for academy instruction and operations. Municipal Court staffing grew by two positions.
One of these positions, a Community Resource Coordinator, was funded by a Community
Safety Unit Justice Assistance Grant. Overall, public safety labor costs increased by
approximately $5.5M.
A Parks and Facilities Comprehensive Plan was completed, outlining needed changes
including the addition of staff. In 2023 – 2024 biennium, 9 staff were added to this end.
Routinely, the City analyzes utility revenue requirements. As part of the most recent
analysis for water and sewer utility services, employee additions were programmed.
Reflective of the plan and growing demand for City services, the Water/Sewer Utility Fund
added 14 staff positions. The resulting increase in labor expenses in 2023 was $1.2M.
Community and economic development, added four positions to keep pace with
inspections, permitting, and planning service needs. Increasing natural and economic
expenses by approximately $655K over 2022 expenses.
Other administrative service functions within City departments included the establishment
of an additional 12 positions. These positions added approximately $2.6M additional
expenses as reflected in General Government function category.
x
x
x
x
x
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City of Pasco, Washington 2023 Annual Comprehensive Financial Report
GOVERNMENTAL ACTIVITIES – REVENUES BY SOURCE
City of Pasco
Changes in Net Position
2023 2022 2023 2022 2023 2022
REVENUES
Program revenues:
Charges for Services $ 34,503,562 $ 34,402,718 $ 39,629,165 $ 35,317,562 $ 74,132,727 $ 69,720,280
Operating Grants and Contributions 9,956,429 4,379,260 119,676 100,000 10,076,105 4,479,260
Capital Grants and Contributions 42,565,683 18,066,589 10,646,929 7,041,929 53,212,612 25,108,518
General revenues:
Property Taxes 12,757,331 11,856,936 - - 12,757,331 11,856,936
Other taxes 43,727,220 43,835,973 - - 43,727,220 43,835,973
Intergovernmental 3,926,008 3,540,932 - 119,274 3,926,008 3,660,206
Investment income and miscellaneous 6,223,696 3,644,794 1,153,052 358,236 7,376,748 4,003,030
Total revenues 153,659,929 119,727,202 51,548,822 42,937,001 205,208,751 162,664,203
EXPENSES
Governmental activities:
General Government 19,101,507 35,367,549 - - 19,101,507 35,367,549
Public Safety 44,300,631 15,845,139 - - 44,300,631 15,845,139
Cultural & Recreation 9,342,736 8,217,043 - - 9,342,736 8,217,043
Natural & Economic 13,321,390 11,907,078 - - 13,321,390 11,907,078
Transportation 18,968,469 22,609,115 - - 18,968,469 22,609,115
Interest on long term debt 1,736,837 1,482,863 - - 1,736,837 1,482,863
Business-type activities:
Water - - 14,189,657 11,841,780 14,189,657 11,841,780
Irrigation - - 2,747,433 2,077,463 2,747,433 2,077,463
Sewer - - 11,316,827 10,429,323 11,316,827 10,429,323
PW Reuse Facility - - 5,008,160 5,027,225 5,008,160 5,027,225
Storm Water - - 2,602,995 2,216,329 2,602,995 2,216,329
Total expenses 106,771,570 95,428,786 35,865,072 31,592,120 142,636,642 127,020,906
Change in net position before special
items and transfers 46,888,359 24,298,416 15,683,750 11,344,881 62,572,109 35,643,297
Special Item
Sale of asset (46,070) 105,943 92,565 74,059 46,495 180,002
Prior Period Adjustment 2,835,108 117,681 (494,108) (11,998) 2,341,000 105,683
Transfers (5,915,111) (2,250,741) 5,915,111 2,250,741 - (0)
Change in net position 43,762,286 22,271,299 21,197,318 13,657,683 64,959,604 35,928,982
Total net position - beginning 389,911,139 365,557,460 245,978,921 232,007,914 635,890,060 597,565,374
Total net position - ending $ 433,673,425 $ 387,828,759 $ 267,176,239 $ 245,665,597 $ 700,849,664 $ 633,494,356
Total Business-type Activities Governmental Activities
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
GOVERNMENTAL ACTIVITIES – EXPENSES AND PROGRAM REVENE
Business-Type Activities:
Business-type activities of 2023 contributed to the City’s net position by $18.7M, or an increase
of 8%. Of the government-wide increase in net position in 2023, business-type activities growth
accounted for 31% of the net position increase. Key elements of the current year increase in net
position and changes as compared to the prior year follow.
Charges for services contribute most significantly to business-type revenues. In 2023, charges for
services revenues increased by approximately, $4.3M, or 12%. Only one category of services,
irrigation, recorded lower revenue. In 2022, irrigation utility recorded water rights fees of $112K.
No water rights fees were collected in 2023 which accounted for the decrease.
The City routinely performs revenue requirement analysis. At times, these studies indicate needed
rate amendments. Based on a 2021 review, a series of annual rate increases were approved. The
first increase occurred in 2022. Following the approved changes, in 2023, rate increases became
effective in water (6.5%) and sewer (4%). The series of approved rate increases are planned
through 2026. Also increasing charges for services revenue was an increase to billings for
contractual work completed to benefit the Process Water Reuse Facility customers.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Operating expenses increased by eight percent. This increase, 21% greater than 2022 labor
expenses, was primarily the result of staffing additions outlined above. Expenses associated with
supplies and services also increased by approximately seven percent over 2022. Cost for chemicals
purchased in 2023 increased by $240K over 2022. For service expenses, tax expenses and vehicle
related costs were notable increases for 2023.
Transfers between the business-type and governmental activities were elevated over 2022. This
increase is associated with support provided by other City funds for capital project efforts
undertaken in 2023.
Similar to governmental activities, interest income earnings in 2023 for business-type activities
improved as compared to 2022. The added revenue for 2023 was an increase of nearly $612K.
Page 38
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
UTILITY ACTIVITIES – EXPENSES AND PROGRAM REVENUES COMPARISON
Financial Analysis of the City’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance
related legal requirements. The focus of the City’s governmental funds is to provide information
on near-term inflows, outflows and balances of spendable resources.
Major Governmental Funds.
The General Fund is the chief operating fund of the City of Pasco. The services provided by the
General Fund are those that citizens may typically view as government services. They include
police and fire protection, parks and recreation programs, issuance of building permits and
community wide code enforcement, municipal court operations, and the functions of the Council
and administrative services of City government.
Activity of 2023 resulted in a fund balance increase of $175,126 which significantly less from
2022. In comparison, 2022 General Fund activities resulted in a $6.37 million increase. Revenues
in 2023 increased by 1.92%, or $1.35M. Conversely, expenditures for 2023 increased by
approximately $14 million, or 22.21% over 2022 totals. In addition to revenues and expenditures,
the General Fund receives transfers from other funds, while also transferring money to other funds.
The net impact of these interfund transfers was $11.49M, an increase from 2022 activity by 229%.
Page 39
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
The transfers out in 2023 were primarily a result of capital project funding. In 2023, the City issued
bonds, receiving proceeds of $12.3 million reported as other financing sources.
Taxes are the primary source of revenue for the General Fund, supplying 72.3% of all fund revenue
in 2023. Property taxes increased by $695K primarily due to new residential and commercial
construction. The City is legally entitled to increase its levy annually by one percent. However, in
2022, City Council declined to increase the levy for tax collections of 2023. Instead, this capacity
was banked for recapture in a future year. Sales tax revenue remained strong in 2023 but resulted
in less revenue as compared to 2022. The primary cause of decreased receipts of $1.12 million was
the conclusion of a large-scale construction project. In 2022, the construction sales tax for this
project accounted for half of all construction sales tax revenue of the year. Exclusive the effect of
the large construction project sales tax, retail sales tax improved by three percent as compared to
2022. Utility tax in 2023 was 5.1% greater, approximately an additional $630K, over the revenue
of 2022. The City receives other tax revenues, most notably gambling taxes. Other tax revenue
increased by 6%, or $80K, in 2023.
Other categories of General Fund revenue activity for 2023 reflected reductions in charges for
services ($-586K) and fines and penalties ($-90K) and increases in licenses and permits ($228K),
intergovernmental ($613K), and miscellaneous ($1M). The increase in miscellaneous revenue was
significantly impacted be improved interest rate earnings for excess cash in a local government
investment pool.
General fund operating expenses increased by $11.1 million, or 19.3%. The cost increase in dollars
spent was reflected in public safety category ($4.31M), general government ($4.90M), culture and
community ($1.05M), natural and economic environment ($0.64M) and transportation ($0.2M).
Approximately, fifteen percent (15%) of this increase was the product of addition of staffing in
various City departments, including police, fire, parks and recreation and community development.
The increased expenditures are expressed in all functional expenses, except natural & economic
environment. Inflation impacted City expenditures across functions both in the cost of supplies
and services. Notable areas of impact for supplies purchases include the cost of non-capital tools,
equipment, and technology. Services related to general government software maintenance cost
increased by $719K. Natural and economic expenses increased approximately $1 million due to
an increase in the cost of animal control services. Public safety services cost increased nearly $1
million, approximately half this escalation was associated with vehicle leases and City
participation in the Criminal Justice Training Center program. The City amended insurance
coverage resulting in premium increases to all functions. The impact on net position was $670K
greater than in 2022. Capital spending increased in 2023 with the purchase of technology
infrastructure.
Budgetary demands on the General fund as the primary operational fund for City services are
many. As such, the fund is monitored closely to analyze actual demands as compared to budgetary
approvals by Council. As described in Note 1 in the Notes to the Financial Statements, this fund
is budgeted in accordance with Washington State law, as well as City policy to assure budgetary
amendments are appropriately administered. A schedule of Revenues, Expenditures and Changes
in Net Position “Budget to Actual” comparison is provided within the Annual Comprehensive
Financial Report, to present comparisons between actual revenues and expenditures and the
Page 40
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
original and amended budgets. Following are major amendments to the General fund’s biennial
budget during 2023:
x
x
To appropriate for an increase in investment income in the amount of $700,000
To appropriate unbudgeted and unanticipated revenue and associated expenditures:
o Grant for municipal court community program, $260,950.
o Grant for improvements at Pasco Specialty Kitchen, a commercial kitchen business
incubator operated by the City, $500,000.
o Bond proceeds to support improvements for general government facilities
including the municipal pool facility and animal control annex, $3.7 million.
To appropriate additional expenditures for potential need for subsidies to support special
revenue funds, including:
o Stadium ($645K) to provide debt service support,
o Community Development Block Grant ($250K),
o Senior Center ($218K) as revenues do not support expenditures,
o Marina Funds ($175K) for capital improvement work
To appropriate for programs new to City operational control, including:
o Pasco Specialty Kitchen ($354K)
o Pasco Farmers’ Market ($248K)
o Downtown community events ($63)
To appropriate for anticipated operational budgetary needs, including;
o Vehicle leases, $1.5M
o Seasonal staffing for facilities maintenance, $572K
o Animal Control Facility participation cost, $230K
o Completion of software conversion in 2023. Originally, estimated to be completed
with cost recognized in 2022.
x
x
x
At the conclusion of 2023, General fund revenues (excluding beginning fund balance) were 48.7%
of the amended biennial budget for 2023/2024. Actual expenditures in the General fund for the
biennium (excluding ending fund balance) were 43.9% of amended biennial budget.
The 2023/2024 budget planned for issuance of a bond for improvements in the Broadmoor Area
of town related to transportation infrastructure improvements in the amount of $30M. This debt
issuance, and the associated capital improvements, did not occur in 2023.
Revenues have been influenced in various categories by the cost of borrowing. The largest budget-
actual variance is in tax revenues, at $797K below mid-biennium budget comparison. Construction
sales tax is slightly behind expectation as compared to large scale projects anticipated to occur
most likely influenced by cost of borrowing in 2023 and higher interest rates. Like pressures on
construction and resulting delay in construction sales tax, building permits are behind mid-
biennium expectations by approximately half a million dollars. Intergovernmental revenues are
slightly delayed, represented by a variance of $185K. This shortfall is primarily related to lower
state shared revenue that is a product of real estate excise tax. Plan check fees, recorded in charges
for services, is under mid-biennium expectation by $570K.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Where revenues are not associated with construction, actual revenue recognition exceeds mid
biennium budgetary expectations. Charges for services, excluding plan check fees, reflects revenue
ahead of expectation by $776K. Miscellaneous revenues are exceeding mid-biennium budget by
$1.2 million, primarily related to investment income and reimbursement for expenditures incurred
in administration of a basic law enforcement academy.
A component of biennial budgeting is the extended budget time frame. Considering this broad time
frame, yearend spending may outpace half the biennium. Where current expenditures are
concerned, the functions of cultural and community activities and natural and economic
environment are exceeding a mathematical calculation of half the biennium. Natural and Economic
Environment function is outpacing mid-biennium expectation by $1.05M, or 62.4% of total
amended budget as compared to the full biennium. The overage is reflected in one category of
spending, organizational services and related to animal control shelter cost of construction that is
passed through to the City. Culture and Community Activities is very slightly over mid-biennium
budget by $125K, or 50.9%. Interest expense is higher the first year of the biennium, by $187K.
In the second year of the biennium, interest is reduced based on the prior year’s retirement of
principal.
Principal payments are under budget, only reaching 30% of the biennial budget. This
underspending is related to delay of bond issuance for transportation improvements planned in the
biennium. Related to this delay transfers out of the General fund are delayed as well, only
accounting for 24.6% of budget.
The largest budget-actual dollar variance in expenditures of $2.19M as public safety capital item.
As reflected in the ACFR, expenditures for public safety function was 52.9% of biennial budget
total. This overage is related to recognition of leases in accordance with GASB 87, that were not
budgeted.
American Rescue Plan Act Fund (ARPA) accounts for activity related to federal funds received
as part of the Coronavirus State and Local Fiscal Recovery Funds. At the end of 2022, the fund
balance was $113K, a reflection of interest earnings on the grant proceeds. Unearned revenue
totaled $11.8 million. Activity during 2023 reduced the unearned revenue to $5.4M, using $6.4
million. Funds were used toward eligible projects and programs, including water utility system
capital improvements ($5.9M), improvements at the Pasco Specialty Kitchen ($265K), resource
navigator program spending to support emergency services ($150K), and efforts for other
programs of smaller nature plus program administration ($85K). Included in the $85K, are start-
up costs for a project taking place in 2024 that is anticipated to complete ARPA spend down. This
project undertakes remodel of a community center located in a historical section of town. The
facility serves as a location for an early childhood educational program as well as youth enrichment
provided by the local YMCA organization. Improvements are anticipated to combine use of $2M
in ARPA funds with federal and state grants of nearly $4M.
The Construction Fund accounts for all City capital improvements except those completed and
funded for proprietary activities. A prior period adjustment in the amount of $451K was completed
reducing the beginning fund balance. This prior period adjustment was necessary to correct project
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
coding for work on the Lewis Street Overpass project. Expenses in 2022 were erroneously charged
to the Water/Sewer Utility Fund. A deficit fund balance of $1.9M is attributable to the Construction
Fund, the result of project spending that outpaced funding in the current period. Available support
is being identified based on reallocation during capital improvement plan analysis and pending
grant applications.
Intergovernmental revenues from both City funds and external grants and loans are the primary
source of project funding. In 2023, the fund recorded $13.8M from state and federal sources,
approximately $2.7M more than recorded in 2022. The other major funding source interfund
transfers was $22.7M. Approximately, twice as great as 2022 totals. Funds are received primarily
as a reimbursement for project spending.
In 2023, expenditures of $38.1 million for 28 projects were recorded in the construction fund.
Following are some of the major projects accounted for in the Construction fund in 2023:
xContinued work on the Lewis Street Overpass Project in the amount of $10.5M. A long-
time priority of Councils, community members, and the business community this project
in the heart of downtown Pasco will replace an underpass constructed in 1937 to bypass
the BNSF railyard. Replacement of the structure will enhance connectivity through
downtown Pasco it serves as a connector to a primary east-west corridor.
Completion of Fire Station 85. Construction for this fire station and accompanying site
improvements started in 2022. 2023 expenditures were $7.75M. This project adds a fire
station in the expanding, northwest section of town to support emergency medical
response.
Various transportation improvement projects thorough the City with expenditures of
$14.8M. Most notably.
x
x
o
o
o
Signal improvements city-wide of $4.5M.
Overlay improvements on Court Street, a major east-west corridor, of $3.2M.
A collaborative effort between the City, Port of Pasco and Columbia Basin College
resulted in widening of Argent Road. Improvement includes expansion to four
lanes, new curbing and gutter system with stormwater collection capacity, irrigation
and illumination. This roadway serves as a gateway to the City as it is located
adjacent to the Tri-Cities Airport. Expenditures in 2023 were $2.3 million.
Design and construction efforts to improve and create infrastructure in the
Broadmoor Area of the City at a cost of $2.7M, including improvements to the I-
182 and Broadmoor Interchange by the installation of a new loop off-ramp and
supporting roundabout. The project is identified as one of many to be ultimately
funded by creation of a Tax Increment Financing Area in 2022.
o
xSupportive of community recreational opportunities capital expenditures in 2023 include
improvements at Gesa Stadium ($1.2M), creation of the A Street Sports Complex ($1.6M)
and improvements at Schlagel Park Boating Facilities ($1.4M).
Proprietary Funds. Reporting of activity in the City of Pasco enterprise funds mirrors the
information found in the government-wide financial statements for business-type activities. The
activity of the Water/Sewer Utility (Utility), a major fund, is separately stated from that of the
internal service funds when reported at the fund level.
Page 43
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
While the net position of the Utility Fund increased from 2022 to 2023, unrestricted net position
of the Utility fund at the end of 2023 was significantly lower than the prior year end, equaling
$14.5M. This amount is a decrease of $19.4M. To help assess the impact of changing financial
numbers, often the value of working capital ratio is compared. Working capital reflects the value
of current assets minus current liabilities. It is a measure of liquidity for the utility to meet its short-
term obligations.
At the end of 2023, the Utility is well positioned as it has current assets of $96.8M available to
meet its current liability obligations of $21.5M, resulting in working capital of $75.3M, or a ratio
of current assets 4.50 times greater than current liabilities. At the end of 2022, the working capital
ratio calculation equaled 4.05. This change is primarily the result of activity related to capital
improvements in the form of receivable loan reimbursements for spending that occurred in 2023
and cash account balances set aside for planned capital improvements. The Utility Fund benefits
from the use of low interest loans as they are a lower cost option than revenue bond debt. Also
occurring in 2023 was the issuance of a revenue bond to support efforts to keep pace with needed
capital renewal and replacement, as well as complete projects that allow for system expansion.
The increase in current assets is partially the result of connection type fees collected with the
addition of new service extensions. These fees are charged to new utility system service
connections and reflect a buy-in to the investment made in the utility infrastructure over the years.
They are available for use for capital infrastructure improvements only. The debt service coverage
ration decreased from 3.43 in 2022 to 1.88 in 2023 mainly due to a $3.7M increase in debt service
payments.
Current liabilities increased by $5.3M as compared to year-end 2022. Primarily, this increase is
associated with outstanding accounts payable. Reflective of the City’s work on capital
improvements, outstanding payments related to construction projects were outstanding at year end
2023. With the assumption of new debt in the form of low-interest loans and bonds, new debt
service payable in 2023 is reflected in the balance of current liabilities at 2023 yearend, increasing
over 2022 by approximately $1M.
The Utility Fund operating revenue of $39.6M reflects an increase of 12 percent over 2022
revenues. This increase was the result of programmed rate increases in some of the utilities and
growth in customer base across all utility systems. Operating expenses totaled $31.6M. This value
represents an 8% increase over 2022. Water and sewer utility rates were evaluated in 2021. As part
of that effort, there are pre-planned rate changes over the years of 2023 – 2026. Water rates
increase by 6.5% in 2023 and 2024. Then, for the 2025-2026 biennium anticipated rate increases
of 5% annually is approved. For the sewer utility, rates are planned to increase 4% per annum from
2024 through 2026. Operating net income for 2023 increased when compared to 2022 net results.
While the utility fund recognized increases in operating expenses by 8%, operational revenues
improved by 12%. Depreciation expense was level between the two years. The remaining
operating expenses increases by percentage change over 2022 were in labor expenses (21%),
supplies (7%) and services (7%). Increase in labor expense was higher as a result of staffing
additions as well as a labor rate increase. Supplies expense was increased based on cost of
chemicals. The increase in services was influenced by inflationary pressure on vehicle purchases.
Page 44
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Non-Operating activity reduced net position by an amount of $1.2M. The primary affect is the
payment of debt service in the form of interest expense on outstanding loans and bonds. The utility
recognized interest income and minor revenue activity, like rent revenues and sales of assets. For
2023, a higher rate of return on short term investments benefitted the utility by increasing interest
income by $760K over last year’s interest earnings.
Capital contributions to the fund for year 2023 amounted to $8.2M. These contributions are tied
to service area growth and, as such, must be spent toward capital improvements that enhance utility
capacity for service. In addition to revenues received and dedicated to capital expansion, the need
for infrastructure renewal and replacement and improvements to increase a growing population
require that City staff seek low-interest and grant funding opportunities where possible.
Acquisition of funding sources with reduced borrowing cost benefit rate payers. In 2023, the
Water/Sewer Utility Fund received loan proceeds of nearly $33M to support capital projects from
low-interest state or federal funding programs. While rate revenue is necessary to pay associated
debt service, lower interest expense lessens the rate impact.
In 2023, expenditures of $58.2 million were recorded against 29 projects in the Water/Sewer
Utility Fund. To manage many large-scale capital projects, the Water/Sewer Utility Fund has
programed a phased approach around numerous important projects. Following are some of the
major projects accounted for in 2023.
xPWRF Pretreatment Improvements (Phase 2) Winter Storage recorded construction
expenditures of $9.3M. This project will construct three lined ponds to provide an
additional 330 million gallons of winter storage capacity for process wastewater
from existing and known future industrial food processors.
The Reservoir Storage Tank - Zone 3, started in a previous year, added construction
expenses of $8.8M. This project includes design and construction of a new 3.5-
million-gallon water storage tank in Pressure Zone 3. The project creates an
elevated skirted tank and extension of an existing 24-inch waterline to the tank site.
Expansion of sewer service in a portion of the City’s urban growth area began in
2022 with the formation of a local improvement district (LID). In 2023, additional
construction expenditures of $7.7M were completed. Included in the project is the
construction of a new sanitary sewer lift station, force main and trunk mains. A
bond anticipation note was issued in 2024. The bond anticipation note will mature
on September 1, 2025 and be replaced by the issuance of bonds. Upon completion
of improvements and confirmation of the final assessment roll for LID 152, a
repayment plan will be established and assigned to properties benefiting from the
improvements.
Started in a prior period, the Wastewater Treatment Plant (WWTP) Improvements
(Phase 2) project continued in 2023 with expenditures of $5.2M. This project was
recommended by the WWTP Facility Plan. This phase focuses on solids treatment
and water disinfection, as well as completion of outfall replacement.
Efforts on West Pasco Water Treatment Plant Expansion (Phase 2) project
recognized expenditures of $5.2M in 2023. This project will provide the necessary
improvements to increase treatment capacity at the West Pasco Water Treatment
x
x
x
x
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City of Pasco, Washington 2023 Annual Comprehensive Financial Report
Plant (WPWTP) to 12 million gallons per day. To achieve firm capacity at
12MGD, three phases of projects are needed.
Capital Asset and Debt Administration
Financial activity for capital assets is recorded in the Construction Fund for governmental
activities. Business-type capital expenditures are reflected in the Water/Sewer Utility Fund or
internal service funds. Overall, the value of capital assets for governmental activities increased
by $55.9M due to increases in construction work in progress and infrastructure. Similarly, the
value of capital assets for business type activities increased by $57.2M mainly due to increase in
construction work in progress. As reflected in the increase in debt and increase in grant revenue,
there are multiple capital projects in progress during 2023.
Below is a summary of capital asset values at the close of 2023 as compared to last year’s end.
Highlights of significant capital projects undertaken in 2023, and their associated spending, are
included in the Construction Fund and Proprietary Funds sections of this analysis.
Additional information on the City of Pasco’s capital assets can be found in Note 5.
Long-term Debt. At the end of 2023, the City of Pasco had total outstanding debt of $190.1M. Of
this amount, $34.6M is debt backed by the full faith and credit of the government. The business-
type debt total of $147.5M is composed of $69.8M of bonds secured primarily by specified revenue
resources (e.g., revenue bonds). The remaining business-type debt, $73.9M is composed of low
interest loans, namely from State of Washington sponsored programs including the Public Works
Board Loan, the Department of Health, and the Department of Ecology. The business-type
activities also have an outstanding Hanford Area Economic Investment Fund (HAEIF) loan for
improvements at the reuse facility.
Additional information on the City of Pasco’s long-term liabilities can be found in Note 8.
City of Pasco
Comparative Statement of Capital Assets
2023 2022 2023 2022 2023 2022
Lease asset $ 3,035,991 $ 1,953,270 $ - $ - 3,035,991 1,953,270
Subscription Based IT 1,421,227 - 1,421,227 -
Machinery and equipment 11,506,484 9,659,463 10,091,322 9,402,127 21,597,806 19,061,590
Land 26,505,124 25,789,159 4,875,403 4,596,533 31,380,527 30,385,692
Buildings and structures 49,658,482 49,040,165 59,731,339 61,689,009 109,389,821 110,729,174
Infrastructure 193,558,783 176,101,154 143,915,347 142,969,899 337,474,130 319,071,053
Other improvements 8,234,896 8,519,885 515,480 533,222 8,750,376 9,053,107
Construction work in progres 66,650,283 33,632,348 102,442,402 45,213,707 169,092,685 78,846,055
Capital assets, net 360,571,270 304,695,444 321,571,293 264,404,497 682,142,563 569,099,941
Total Business-type Activities Governmental Activities
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City of Pasco, Washington 2023 Annual Comprehensive Financial Report
Economic Factors and Next Year’s Budgets and Rates
As previously mentioned, the City adopts a biennial budget. The close of the year ended December
31, 2023, includes activity mid-way through the biennial budget cycle. December 31, 2024 is the
end of the biennium. As required by the Revised Code of Washington, the City performed a mid-
biennium review including the identification and completion of Council approved amendments at
the end of 2023.
Preparatory goal setting and fund analysis is currently underway for completion of the 2025/2026
biennial budget. There are many factors that may affect the financial status of the City’s activities
in the coming years, including:
xContinued inflationary pressure tied to economic factors outside the City’s control are a
concern. As experienced in 2023, inflation decreased the City’s purchasing power for both
supplies and services. Also impactful was the effect of inflated interest rates making the
cost of borrowing greater. Related uncertainty in the economy of the nation potentially
slows economic development within the City.
Regardless of this uncertainty, demand for housing and related City services, is expected
to persist. Based on population demands, decisions made in the prior few years will
precipitate growth. Significant to this expectation is the expansion of the City’s urban
growth area and the establishment of a Tax Increment Financing Area. Infrastructure
improvements within the Tax Increment Financing area are expected open a new, large
section of town for development and service delivery for governmental and business-type
activities.
In addition to spending tied to expanding infrastructure needs to serve a growing citizenry,
evaluation of necessary renewal and replacement of existing City infrastructure is crucial
and will have a financial impact on the City.
x
x
To assist in balancing community needs with budgetary demands, the City has created, or is in the
process of completing various facilities, program and revenue assessments.
x Annual renewal of the six-year Capital Improvement Plan (CIP)
xVarious Master Plans, including,
o Broadmoor Area,
o Downtown,
o Parks, Recreation and Open Space
o Housing Action and Implementation Plan
City of Pasco
Comparative Statement of Bonds and Notes
2023 2022 2023 2022 2023 2022
Loans & Notes $ 3,211,000 $ 3,401,000 $ 69,861,274 $ 38,599,262 $ 73,072,274 $ 42,000,262
General Obligation Bonds 34,665,000 23,010,000 - 34,665,000 23,010,000
Revenue Bonds - 73,930,000 46,920,000 73,930,000 46,920,000
Premium 4,699,754 3,884,541 3,732,324 2,356,662 8,432,078 6,241,203
42,575,754 30,295,541 147,523,598 87,875,924 190,099,352 118,171,465
Total Business-type Activities Governmental Activities
Page 47
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
o Preparation of Major Comprehensive Plan Update
In 2023, the City initiated development of a General Fund Forecast Model. This plan
evaluates a ten-year planning horizon. This analysis will result in calculation of baseline
results for provision of existing City services and programs. Using the resulting data, long-
range decision making will be better informed.
In 2024, the City will begin creation of its periodic update to the Comprehensive Plan in
accordance with the Washington State Growth Management Act.
Review of revenue and fee requirements to support capital and operational needs.
x
x
x
A copy of City of Pasco’s most recent 2023/2024 Biennial Budget can be access on the City’s
website at https://www.pasco-wa.gov/1104/2021-2022-Budget .
Requests for Information
This financial report is designed to provide a general overview of the City of Pasco’s finances for
all those with an interest in the government’s finances. Questions concerning any of the
information provided in this report or requests for additional financial information should be
addressed to the Finance Director, PO Box 293, Pasco, WA 99301.
Page 48
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Component Unit
Governmental
Activities
Business-type
Activities Total
Pasco Public
Facility District
ASSETS
Current assets:
Cash and cash equivalents 80,516,398 31,586,227 112,102,625 3,424,864
Restricted Cash:
Program, grant, donation 6,166,825 -6,166,825 -
Customer deposits 972,349 816,172 1,788,521 -
Capital Development -16,628,070 16,628,070 -
Permit and Plan Check 3,364,822 -3,364,822 -
Unspent bond proceeds 5,679,223 24,647,393 30,326,616 -
Debt Service 237,564 755,007 992,571 -
Asset retirement reserve -10,832 10,832 -
Investments 3,294,174 1,470,497 4,764,671 -
Receivables:
Taxes 6,759,989 -6,759,989 1,011,598
Customers (net of allowance)3,847,486 3,554,339 7,401,825 -
Grants 2,734,915 359,189 3,094,104 -
Due from other governments 1,410,218 -1,410,218 -
Special assessment 33,221
Loans 462,146 23,457,145 23,919,291 -
Leases 507,458 103,082 610,540 -
Internal Balances 2,286,751 (2,286,751)--
Inventories -422,586 422,586 -
Total current assets 118,273,539 101,523,788 219,797,327 4,436,462
Noncurrent assets:
Restricted Cash:
Cemetery Endowment 580,526 -580,526 -
Debt covenants -1,932,966 1,932,966 -
Receivable:
Special assessment 623,636 2,279,899 2,903,535 -
Leases 2,782,465 108,899 2,891,364 -
Net Pension Asset 22,843,343 1,524,072 24,367,415 -
Net OPEB Asset 4,164,327 -4,164,327 -
Joint Ventures 1,589,786 -1,589,786 -
Capital assets not being depreciated:
Land 26,505,124 4,875,403 31,380,527 -
Construction work in progress 66,650,283 102,442,402 169,092,685 -
Capital assets net of accumulated
depreciation:
Right to use leases 3,035,991 -3,035,991 -
Subscription based IT Arrangements 1,421,227 -1,421,227
Buildings and structures 49,658,482 59,731,339 109,389,821 -
Other improvements 8,234,896 515,480 8,750,376 -
Machinery and equipment 11,506,484 10,091,322 21,597,806 -
Infrastructure 193,558,783 143,915,347 337,474,130 -
Total noncurrent assets 393,155,353 327,417,129 720,572,482 -
Total assets 511,428,892 428,940,917 940,369,809 4,436,462
DEFERRED OUTFLOWS OF
RESOURCES
Deferred Outflow - Pension Related 13,368,329 1,232,612 14,600,941 -
Deferred Outflow - Debt Refunding -21,679 21,679 -
Total deferred outflows of resources 13,368,329 1,254,291 14,622,620 -
Total assets and deferred outflows of
resources 524,797,221 430,195,208 954,992,429 4,436,462
Statement of Net Position
December 31, 2023
Primary Government
Continued on next page
Page 49
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Component Unit
Governmental
Activities
Business-type
Activities Total
Pasco Public
Facility District
LIABILITIES
Current liabilities:
Accounts payable 9,236,734 12,051,726 21,288,460 267,179
Leases 1,118,845 - 1,118,845 -
SBITA 703,411 - 703,411 -
Deposits payable from restricted assets 972,349 622,519 1,594,868 -
Accrued interest payable from
restricted assets - 406,702 406,702 -
Compensated absences 3,042,998 379,860 3,422,858 -
Notes and loans payable 190,000 2,846,641 3,036,641 -
Bonds payable 1,470,203 2,752,754 4,222,957 -
Net Pension Liability 458,017 142,936 600,953 -
Total OPEB Liability 526,997 - 526,997 -
Unearned revenue-advance grant 5,818,558 - 5,818,558 -
Total current liabilities 23,538,113 19,203,138 42,741,251 267,179
Noncurrent liabilities:
Net pension liability 1,390,832 515,294 1,906,126 -
Bonds payable 37,894,551 74,909,570 112,804,121 -
Notes & loans payable 3,021,000 67,014,633 70,035,633 -
Compensated absences 954,397 24,139 978,536 -
Total OPEB Liability 6,159,414 - 6,159,414 -
Asset retirement obligation - 10,832 10,832 -
SBITA 687,686 - 687,686 -
Leases 4,628,222 - 4,628,222 -
Total noncurrent liabilities 54,736,103 142,474,468 197,210,571 -
Total liabilities 78,274,216 161,677,606 239,951,822 267,179
DEFERRED INFLOWS OF
RESOURCES
Deferred Inflow - Pension Related 9,278,457 1,093,802 10,372,259 -
Deferred Inflow - leases 3,289,923 211,981 3,501,904 -
Deferred Inflow - OPEB related 191,137 - 191,137 -
Deferred Inflow - Debt Refunding - 35,580 35,580 -
Total deferred inflows of resources 12,759,517 1,341,363 14,100,880 -
Total liabilities and deferred inflows of
resources 91,033,733 163,018,969 254,052,702 267,179
NET POSITION -
Net investment in capital assets 316,190,716 195,379,338 511,570,054 -
Restricted for:-
Capital improvement 9,991,143 16,628,070 26,619,213 -
Cemetery Endowment 580,526 - 580,526 -
Culture and recreation 205,014 - 205,014 -
Debt repayment/guarantee 452,422 2,687,973 3,140,395 -
Economic development 1,413 - 1,413 -
Litter and housing abatement 323,662 - 323,662 -
OPEB 4,164,327 - 4,164,327 -
Opioid and Overdose Response Plan 103,659 - 103,659 -
Park development 3,757,829 - 3,757,829 -
Pensions 22,843,343 1,524,072 24,367,415 -
Permit and plan check fee 3,364,822 - 3,364,822 -
Program, grant, donations 3,440,070 - 3,440,070 -
State Law WAC 2,623,096 - 2,623,096 -
Streets and boulevards 6,969,053 - 6,969,053 -
Unrestricted 58,662,330 50,956,786 109,619,116 4,169,283
Total net position 433,673,425$ 267,176,239$ 700,849,664$ 4,169,283$
Statement of Net Position
December 31, 2023
Primary Government
The notes to financial statements are an integral part of this statement.
Page 50
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Component
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Governmental
Activities
Business-type
Activities Total
Pasco Public
Facility
District
Primary government:
Governmental activities:
General Government 19,101,507$ 5,222,396$ 434,121$ -$ (13,444,990)$ - $ (13,444,990)$ - $
Public Safety 44,300,631 12,698,498 1,695,334 67,087 (29,839,712) - (29,839,712) -
Transportation 18,968,469 4,066,018 - 42,110,031 27,207,580 - 27,207,580 -
Natural & Economic 13,321,390 10,471,616 7,790,110 - 4,940,336 - 4,940,336 -
Cultural & Community 9,342,736 2,045,034 36,864 388,565 (6,872,273) - (6,872,273) -
Interest on long term debt 1,736,837 - - - (1,736,837) - (1,736,837) -
Total governmental activities 106,771,570 34,503,562 9,956,429 42,565,683 (19,745,896) - (19,745,896) -
Business-type activities:
Water 14,189,657 14,807,765 - 2,688,715 - 3,306,823 3,306,823 -
Irrigation 2,747,433 2,052,504 - 723,237 - 28,308 28,308 -
Sewer 11,316,827 11,789,492 - 6,248,757 - 6,721,422 6,721,422 -
PW Reuse Facility 5,008,160 8,445,856 - 238,533 - 3,676,229 3,676,229 -
Storm Water 2,602,995 2,533,548 119,676 747,687 - 797,916 797,916 -
Total business-type activities 35,865,072 39,629,165 119,676 10,646,929 - 14,530,698 14,530,698 -
Total primary government 142,636,642$ 74,132,727$ 10,076,105$ 53,212,612$ (19,745,896)$ 14,530,698$ (5,215,198)$ -$
Component unit:
Pasco Public Facility District 1,267,485 9,245 - - - - - (1,258,240)
Total component unit 1,267,485 9,245 - - - - - (1,258,240)
12,757,331 - 12,757,331 -
26,191,887 - 26,191,887 5,657,236
12,964,511 - 12,964,511 -
4,570,822 - 4,570,822 -
6,223,696 1,153,052 7,376,748 -
3,926,008 - 3,926,008 -
(46,070) 92,565 46,495 -
(5,915,111) 5,915,111 - -
60,673,074 7,160,728 67,833,802 5,657,236
40,927,178 21,691,426 62,618,604 4,398,996
389,911,139 245,978,921 635,890,060 (229,713)
2,835,108 (494,108) 2,341,000 -
433,673,425$ 267,176,239$ 700,849,664$ 4,169,283$
Net (Expense) Revenue and Changes in Net Position
City of Pasco
Statement of Activities
December 31, 2023
Program Revenues Primary Government
General revenues:
Property taxes
Sales taxes
B&O taxes
Excise taxes
Investment income and miscellaneous
Intergovernmental
Sale of asset
Net position - ending
The notes to financial statements are an integral part of this statement.
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning
Special Item - Prior Period Adjustment
Page 51
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
General Fund ARPA Construction
Total
Nonmajor
Funds
Total
Governmental
Funds
ASSETS
Cash and cash equivalents 13,168,205$ 5,383,554$ 5,282,358$ 47,591,169$ 71,425,286$
Restricted Cash
Program, grant, donation 3,405,332 - - 138,397 3,543,729
Customer deposits 435,614 - - 536,735 972,349
Unspent bond proceeds 5,099,103 - - 580,120 5,679,223
Permit and plan check 3,364,822 - - - 3,364,822
Debt service - - - 237,564 237,564
Cemetery endowment - - - 580,526 580,526
Investments 1,320,689 365,724 - 1,282,883 2,969,296
Receivables
Taxes 6,115,060 - - 644,930 6,759,990
Customer (net of allowances)1,990,185 - - 1,857,301 3,847,486
Interfund loans - - - 17,636 17,636
Due from other funds 4,926,893 - - - 4,926,893
Grants 224,991 - 1,912,614 597,310 2,734,915
Leases 262,836 - - 3,027,087 3,289,923
Loans - - - 462,146 462,146
Special assessments - - - 656,857 656,857
Due from other governments 922,556 - 68,875 418,787 1,410,218
Total assets 41,236,286 5,749,278 7,263,847 58,629,448 112,878,859
LIABILITIES
Accounts payable 3,023,488 1,495 4,377,360 1,168,419 8,570,762
Interfund loans payable - - - 17,635 17,635
Pay from restricted assets - Deposits 435,614 - - 536,735 972,349
Due to other funds - - 4,379,493 547,400 4,926,893
Unearned revenue-advance grant - 5,374,534 444,025 - 5,818,559
Total liabilities 3,459,102 5,376,029 9,200,878 2,270,189 20,306,198
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - Property Taxes 204,728 - - - 204,728
Leases 262,836 - - 3,027,087 3,289,923
Unavailable revenue-Special assessment - - - 623,636 623,636
Unavailable revenue - Court receivables 720,912 - - - 720,912
Unavailable revenue - Other - - - 601,345 601,345
Total deferred inflows of resources 1,188,476 - - 4,252,068 5,440,544
Total liabilities and deferred inflows of resources 4,647,578 5,376,029 9,200,878 6,522,257 25,746,742
FUND BALANCES (DEFICITS)
Nonspendable
Cemetery perpetual fund - - - 580,526 580,526
Restricted
Capital improvements 5,099,103 - - 10,514,624 15,613,727
Culture & Recreation - - - 205,014 205,014
Debt Guarantee - - - 452,422 452,422
Economic development - - - 1,413 1,413
Litter & housing abatement - - - 323,662 323,662
Opioid and Overdose Response Plan 103,659 - - - 103,659
Park development - - - 3,757,829 3,757,829
Permit & Plan Check Fee 3,364,822 - - - 3,364,822
Program, grant, donation 3,301,673 - - 138,397 3,440,070
Street and boulevard - - - 6,969,053 6,969,053
Committed
Construction projects - - - - -
Landfill claims 407,344 - - - 407,344
Redflex - - - 860,248 860,248
Special revenue funds - 373,250 - 28,147,406 28,520,656
Assigned
Future Project-Community Center 1,230,430 - - - 1,230,430
Unassigned 23,081,676 - (1,937,031) 156,840 21,301,485
Total fund balances (deficits)36,588,707$ 373,250$ (1,937,031)$ 52,107,434$ 87,132,360$
Total liabilities and fund balances (deficits) 41,236,285$ 5,749,279$ 7,263,847$ 58,629,691$ 112,879,102$
The notes to financial statements are an integral part of this statement.
City of Pasco
Balance Sheet
Governmental Funds
December 31, 2023
Page 52
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Fund balances of governmental funds 87,132,360
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and are not
reported in the fund financial statements. They are reported in the government-wide
statements, net of accumulated depreciation: 354,746,969
354,746,969
The focus of governmental funds is on short-term financing. Long-term assets are
deferred or not reported in the funds, they consist of the following:
Investment in joint venture 1,589,786
Net pension asset 22,682,506
Net OPEB asset 4,164,327
28,436,619
Internal service funds are used by management to charge the costs of certain
activities to individual funds. These assets and liabilities are included in the
governmental and business-type activities in the statement of net position based on
which activity they predominantly serve. For governmental activities they consist of
the following:
Internal payable representing charges in excess of cost to business-type activities:
prior years 19,113,598
Internal payable representing charges in excess of cost to business-type activities:
current year 476,584
19,590,182
Deferred outflows and inflows of resources related to long-lived assets and liabilities
do not relate to the current period and therefore are not reported in fund financial
statements:
Deferred outflow of resources related to pensions 13,238,250
Deferred inflow of resources related to pensions (9,163,027)
Deferred inflow of resources related to OPEB (191,137)
3,884,086
Long-term liabilities are not due and payable in the current period and are therefore
not reported in the funds. They consist of the following:
General obligation bonds (39,364,754)
Other general government debt (3,211,000)
Net pension liability (1,779,386)
Total OPEB liability (6,686,411)
Compensated absences (3,997,395)
SBITA payable (1,468,821)
Leases payable (5,895,775)
(62,403,542)
2,971,949
Principal reduction in the current year (685,198)
2,286,751
Net position of governmental activities 433,673,425
The notes to financial statements are an integral part of this statement.
Reconciliation of the Governmental F unds Balance Sheet to the Statement of Net Position
Because some receivables will not be collected within 60 days after the City’s fiscal year end, they are not
considered “available” revenues in the governmental funds. There is a long-term interfund loan between
governmental Internal Service Funds and Business type fund. Prior period adjustment for interfund loan was
eliminated on the government-wide statements in the prior year. This error in presentation on the
governmentwide statements understated net position as it should have been a receivable.
For Year Ended December 31, 2023
Page 53
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
General Fund ARPA Construction
Total
Nonmajor
Total Governmental
Funds
REVENUES
Taxes 52,048,758 - - 3,663,759 55,712,517
Licenses and permits 3,156,323 - - 333,989 3,490,312
Intergovernmental 3,755,221 6,447,025 13,801,383 6,408,276 30,411,905
Charges for service 9,966,778 - - 15,554,660 25,521,438
Fines and forfeitures 860,365 - - 203,221 1,063,586
Investment income 1,035,826 259,812 - 1,078,550 2,374,188
Rent and leases 306,476 - - 1,343,090 1,649,566
Miscellaneous 821,592 - 137,750 386,216 1,345,558
Total revenues 71,951,339 6,706,837 13,939,133 28,971,761 121,569,070
EXPENDITURES
Current:
General Government 18,679,396 - 119 - 18,679,515
Public Safety 34,090,522 - 442 12,269,871 46,360,835
Transportation 3,600,075 - 155,698 2,285,625 6,041,398
Natural & Economic Environment 4,752,443 71,226 - 8,397,495 13,221,164
Cultural & Community 7,578,269 - 1,426 767,407 8,347,102
Debt service:
Principal retirement 1,598,938 - - 267,918 1,866,856
Interest 1,231,082 - - 346,694 1,577,776
Debt issue costs 93,831 - - 9,280 103,111
Capital outlay:
General Government 944,536 - 143,634 - 1,088,170
Public Safety 2,351,437 - 7,878,251 115,244 10,344,932
Transportation 8,022 - 24,996,892 167,748 25,172,662
Natural & Economic Environment - - 482,016 311,986 794,002
Cultural & Community 278,096 - 4,493,345 - 4,771,441
Total expenditures 75,206,647 71,226 38,151,823 24,939,268 138,368,964
Excess (deficiency) of revenues over
expenditures (3,255,308) 6,635,611 (24,212,690) 4,032,493 (16,799,894)
OTHER FINANCING SOURCES (USES)
Transfers in 580,494 - 22,727,815 3,036,040 26,344,349
Transfers out (12,070,837) (6,375,798) - (13,812,824) (32,259,459)
Issuance of long-term debt 11,466,000 - - 1,134,000 12,600,000
Premium on bonds issued 880,027 - - 87,036 967,063
Discount on bonds issued (56,183) - - (5,557) (61,740)
Insurance recoveries 149,373 - - 786,766 936,139
SBITA financing 2,228,106 - - - 2,228,106
Total other financing sources (uses)3,176,980 (6,375,798) 22,727,815 (8,774,539) 10,754,458
SPECIAL ITEM
Prior Period Adjustment 253,454 - (451,419) 264,867 66,902
Total special items 253,454 - (451,419) 264,867 66,902
Net change in fund balances 175,126 259,813 (1,936,294) (4,477,179) (5,978,534)
Fund balances - beginning 36,413,581 113,438 (738) 56,584,613 93,110,894
Fund balances - ending 36,588,707$ 373,251$ (1,937,032)$ 52,107,434$ 87,132,360$
The notes to financial statements are an integral part of this statement.
City of Pasco
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2023
Page 54
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
For the Year Ended December 31, 2023
Net change in fund balances - total government funds (5,978,534)
Amounts reported for governmental activities in the statement of activities are different because:
The issuance and repayment of long-term liabilities are reported as resources and uses, respectively, of
current financial resources in governmental funds. In the statement of net position, however, neither of
these transactions impact net position. Also in governmental funds the effect of premiums or discounts
and similar items are reported as resources or uses of current financial resources when the debt is first
issued, whereas these amounts are deferred and amortized over the life of the debt in the statement of
activities. The following details the net change in long-term debt as reflected in government-wide reporting:
Proceeds from issuance of bonds (12,600,000)
Capitalization of bond premium on bond issuance (967,063)
Principal repayment 1,135,000
Amortization of premiums/discounts 151,850
(12,280,213)
Certain revenues and expenses in the statement of activities do not provide or use current financial
resources and are therefore not reported as revenues or expenditures in the governmental funds. The
following details those items:
Change in earned revenue reported as deferred inflows in the fund statements (6,208,535)
Change in the City's investment in joint ventures 53,675
Change in the City's net pension liability 137,505
Change in net pension asset (1,567,542)
Change in the City's net pension related deferred outflows 1,918,172
Change in the City's net pension related deferred inflows 724,218
Change in deferred inflow - leases (lessor) 1,104,901
Change in lease liability 3,773,998
Change in net OPEB obligation 1,813,530
Change in OPEB asset (681,056)
Change in OPEB deferred inflow/outflows 215,552
Change in compensated absences 380,781
1,665,199
Internal service funds are used by management to charge the cost of certain activities to individual funds.
The net revenue of most of these activities is reported within governmental funds as follows:
Change in net position 476,584
(149,776)
326,808
(685,198)
Governmental funds report capital outlays as expenditures. In the statement of activities the cost of assets
are allocated over the useful life of the asset as depreciation expense. the following depicts the changes to
capital assets:
Capital outlays 68,653,932
Depreciation (15,901,979)
Prior period adjustments - expenses should have been capitalized 619,926
Disposal of capital assets, including loss/gain on disposal (313,117)
Right to use - Leases 4,481,848
Amortization of leases (1,082,721)
SBITA 2,228,106
Amortization SBITA (806,879)
57,879,116
Change in net position of governmental activities 40,927,178
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities
Principal reduction for Interfund Loan between Governmental to Business-type
Adjustment for interest revenue received on Interfund Loan between ISF Governmental Fund to Business-Type
fund. Recognized as misc. revenue on Statement of Activities.
Page 55
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Original Final 2023 Actual
Variance to Final
Budget over
(under)
REVENUES
Rent and leases 415,182$ 620,098$ 306,476$ (313,622)$
Taxes 105,691,673 105,691,673 52,048,758 (53,642,915)
Licenses and permits 7,481,532 7,481,532 3,156,323 (4,325,209)
Intergovernmental 7,194,296 7,715,246 3,755,221 (3,960,025)
Charges for service 19,688,841 19,688,841 9,966,778 (9,722,063)
Fines and forfeitures 1,790,529 1,790,529 860,365 (930,164)
Investment income 180,000 880,000 1,035,826 155,826
Miscellaneous 1,233,626 1,288,632 821,592 (467,040)
Interfund loan Rev/Exp 113,201 113,201 - (113,201)
Total revenues 143,788,880 145,269,752 71,951,339 (73,318,413)
EXPENDITURES
Current:
General Government 38,242,325 37,173,183 18,679,396 18,493,787
Public Safety 70,172,474 73,001,618 34,090,522 38,911,096
Transportation 7,585,753 7,327,753 3,600,075 3,727,678
Natural & Economic Environment 6,937,457 7,971,435 4,752,443 3,218,992
Cultural & Community 13,065,077 14,650,500 7,578,269 7,072,231
Total current 136,003,086 140,124,489 68,700,705 71,423,784
Debt service:
Principal retirement 8,202,300 8,202,300 1,598,938 6,603,362
Interest 1,952,408 2,387,658 1,231,082 1,156,576
Debt issue costs - - 93,831 (93,831)
Total debt service 10,154,708 10,589,958 2,923,851 7,666,107
Capital outlay:
General Government 3,234,800 3,616,800 944,536 2,672,264
Public Safety 360,660 360,660 2,351,437 (1,990,777)
Transportation - - 8,022 (8,022)
Cultural & Community - 501,048 278,096 222,952
Total capital outlay 3,595,460 4,478,508 3,582,091 896,417
Total expenditures 149,753,254 155,192,955 75,206,647 79,986,308
Excess (deficiency) of revenues over expenditures (5,964,374) (9,923,203) (3,255,308) 6,667,895
OTHER FINANCING SOURCES (USES)
Transfers in 425,816 925,816 580,494 (345,322)
Transfers out (40,131,302) (49,043,074) (12,070,837) 36,972,237
Issuance of long-term debt 30,371,000 34,071,000 11,466,000 (22,605,000)
Premium on bonds issued - - 880,027 880,027
Discount on bonds issued - - (56,183) (56,183)
Insurance recoveries 6 6 149,373 149,367
SBITA financing - - 2,228,106 2,228,106
Sale of capital assets 5,000,000 5,000,000 - (5,000,000)
Total other financing sources (uses)(4,334,480) (9,046,252) 3,176,980 12,223,232
SPECIAL ITEM
Prior Period Adjustment - - 253,454 253,454
Total special items - - 253,454 253,454
Net change in fund balances (10,298,854) (18,969,455) 175,126 19,144,581
Fund balances - beginning 28,595,133 36,413,669 36,413,581 -
Fund balances - ending 18,296,279$ 17,444,214$ 36,588,707$ 19,144,493$
The notes to financial statements are an integral part of this statement
2023/2024 Biennial Budget Amounts
City of Pasco
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
General Fund
For the Year Ended December 31, 2023
Page 56
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Original Final Actual
Variance with
Final Budget
REVENUES
Intergovernmental 199,825$ 199,825$ 6,447,025$6,247,200$
Investment income 15,000 15,000 259,812 244,812
Total revenues 214,825 214,825 6,706,837 6,492,012
EXPENDITURES
Current:
Natural & Economic Environment 49,824 49,824 71,226 (21,402)
Total current 49,824 49,824 71,226 (21,402)
Total expenditures 49,824 49,824 71,226 (21,402)
Excess (deficiency) of revenues over
expenditures 165,001 165,001 6,635,611 6,470,610
OTHER FINANCING SOURCES (USES)
Transfers out (150,000) (10,136,984) (6,375,798) 3,761,186
Total other financing sources (uses)(150,000) (10,136,984) (6,375,798) 3,761,186
Net change in fund balances 15,001 (9,971,983) 259,813 10,231,796
Fund balances - beginning 113,438 113,438 113,438 -
Fund balances - ending 128,439$(9,858,545)$373,251$10,231,796$
Budgeted Amounts
City of Pasco
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
ARPA
For the Year Ended December 31, 2023
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Water/Sewer Utility
Internal Service
Funds
ASSETS
Current assets:
Cash and cash equivalents 24,831,378$ 15,845,961$
Restricted Cash:
Customer deposits 816,172 -
Unspent bond proceeds 24,647,393 -
Self insured reserve - 2,623,096
Debt service 755,007 -
Asset retirement obligation 10,832 -
Capital development 16,628,070 -
Investments 1,224,939 570,435
Inventory 422,586 -
Receivables:
Customer (net of allowances)3,554,339 -
Interfund loans - 2,286,751
Leases 103,082
Grants 359,189 -
Loans 23,457,145 -
Total current assets 96,810,132 21,326,243
Noncurrent assets:
Special assessments 2,279,899 -
Leases 108,899 -
Debt covenants 1,932,966 -
Net Pension Asset 1,524,073 160,837
Capital assets not being depreciated:
Land 4,875,403 -
Construction in progress 102,442,402 -
Capital assets net of accumulated depreciation:
Buildings and structures 59,731,339 -
Other improvements 515,480 -
Machinery and equipment 7,682,773 8,232,850
Infrastructure 143,915,347 -
Total noncurrent assets 325,008,581 -
Total assets 421,818,713 29,719,930
DEFERRED OUTFLOWS OF RESOURCES
Pension related 1,232,613 130,079
Debt Refunding 21,679 -
Total deferred outflows of resources 1,254,292 130,079
Total assets and deferred outflows of
resources 423,073,005 29,850,009
Business-type
Activities
City of Pasco
Statement of Net Position
Proprietary Funds
December 31, 2023
Page 58
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Water/Sewer Utility
Internal Service
Funds
LIABILITIES
Current liabilities:
Accounts payable 12,037,551 680,147
Interfund loans payable 215,880 -
Pay from restricted assets - Deposits 622,519 -
Accrued interest payable 406,703 -
Compensated absences 379,860 -
Notes & loans payable 2,846,641 -
Net Pension Liability 142,936 21,666
Revenue bonds 2,752,753 -
Total current liabilities 19,404,843 701,813
Noncurrent liabilities:
Compensated absences 24,139 -
Interfund loans payable 2,070,871
Asset retirement obligation 10,832 -
Notes & loans payable 67,014,633 -
Revenue bonds payable (net of premium) 74,909,569 -
Net Pension Liability 515,294 47,797
Total noncurrent liabilities 144,545,338 47,797
Total liabilities 163,950,181 749,610
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - Unavailable revenue 150,000 -
Unavailable revenue-Special assessment 2,279,899 -
Unavailable revenue - Other 35,580 -
Unavailable revenue - Lease 211,981
Pension related inflow 1,093,802 115,430
Total deferred inflows of resources 3,771,262 115,430
Total liabilities and deferred inflows of resources 167,721,443 865,040
NET POSITION
Net investment in capital assets 192,970,791 8,232,850
Restricted for:
Capital improvement 16,628,070 -
Debt repayment/guarantee 2,281,269 -
Pensions 1,524,072 160,837
State Law WAC - 2,623,096
Unrestricted 41,947,358 17,968,184
Total net position 255,351,560$ 28,984,967$
9,394,781
264,746,341$
The notes to financial statements are an integral part of this statement.
City of Pasco
Statement of Net Position
Proprietary Funds
December 31, 2023
Business-type
Activities
Difference between business-type adjustments to
assets and liabilities.
Net position of business-type activities
Page 59
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Total Enterprise
Funds
Internal Service
Funds
OPERATING REVENUES
Licenses and permits 260,603$ -$
Charges for service 39,365,062 14,252,915
Total operating revenues 39,625,665 14,252,915
OPERATING EXPENSES
Salaries & wages 5,743,785 600,556
Personnel benefits 1,830,372 202,607
Supplies 2,738,326 1,468,005
Services 14,234,780 9,913,617
Depreciation 7,076,466 1,182,117
Total operating expenses 31,623,729 13,366,902
Operating income (loss) 8,001,936 886,013
NONOPERATING REVENUES (EXPENSES)
Fines and forfeitures 3,500 -
Investment income 1,009,643 625,063
Miscellaneous 31,038 290,216
Rents and leases 91,021 -
Grant 119,676 -
Insurance Recoveries 21,350 -
Gain (loss) on disposal/sale of asset 92,565 31,650
Interest on long term debt (2,501,958) -
Debt Issue Costs (123,085) -
Total nonoperating revenues (expenses)(1,256,250) 946,929
Income (loss) before contributions and
transfers 6,745,686 1,832,942
Capital contributions 8,216,326 -
Transfers in 5,915,111 -
Transfer Out
Change in net position 20,877,123 1,832,942
Total net position - beginning 234,968,545 27,152,025
Prior Period Adjustment (494,108) -
Total net position - ending 255,351,560$ 28,984,967$
Business-type
The notes to financial statements are an integral part of this statement.
City of Pasco
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For year ended December 31, 2023
Page 60
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Water/Sewer
Utilities
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 39,786,478$ 14,252,932$
Payments to employees (8,076,214) (849,922)
Payments to suppliers (13,211,912) (11,233,415)
Net cash provided (used) by operating activities 18,498,352 2,169,595
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating grants 119,676 -
Miscellaneous 31,038 290,216
Rents and leases 91,021 -
Insurance recoveries 21,350 -
Net cash provided (used) by noncapital financing activities 263,085 290,216
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Sale of assets - 129,316
Gain and sale of asset 92,565 -
Acquisition and construction fo capital assets (58,545,740) (2,577,405)
Principal paid on capital debt (5,050,241) -
Interest paid on capital debt (2,625,043) -
Transfers in (out) for capital 5,915,111 -
Special assessment receivable 696,480 -
Interfund loan rec'd & paid (685,198) 685,198
Capital charges 2,197,813 -
Capital grant and contributions proceeds 738,773 -
Bond proceeds received 31,575,031 -
Loan proceeds 23,073,767 -
Net cash provided (used) by capital and related financing activities (2,616,682) (1,762,891)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments 505,838 499,049
Interest on investments 1,009,643 625,063
Net cash provided (used) by investing activities 1,515,481 1,124,112
Net increase (decrease) in cash and cash equivalents 17,660,236 1,821,032
Balances - beginning of year 51,961,582 16,648,025
Balances - end of the year 69,621,818 18,469,057
Reconciliation of operating income (loss) to net cash provided (used) by operating
activities:
Operating Income 8,004,336 885,939
Adjustments to reconcile operating income (loss) to net cash provided (used) by operating
activities:
Depreciation 7,076,466 1,182,116
Loss on disposal - -
Changes in assets and liabilities:
(Increase) decrease in customer receivables 68,249 12
(Increase) decrease in inventories 97,363 -
Increase (decrease) in accounts payable 3,957,359 148,285
Increase (decrease) in accounts payable closure cost 469 -
Increase (decrease) in salaries & benefits payable (59,419) (2,315)
Increase (decrease) in interest payable 187,191 -
(Decrease) increase in accounts customer deposits payable 89,063 -
(Decrease) increase in compensated absences 53,296 -
(Increase) decrease in deferred outflows pensions 14,041 20,831
(Increase) decrease in deferred outflows- debt refunding 4,409 -
Increase (decrease) in pension liability (27,901) (13,595)
Increase (decrease) in pension asset (332,587) (16,605)
Increase (decrease) in deferred inflow unavailabe revenue (484,499) -
Increase (decrease) in deferred inflow pension (149,484) (35,073)
Net cash provided (used) by operating activities 18,498,352$ 2,169,595$
Noncash investing, capital and financing activities
Contribution of capital assets 5,057,141 -
Total noncash investing, capital and financing activities 5,057,141 -
Business-type
The notes to financial statements are an integral part of this statement.
City of Pasco
Statement of Cash Flows
Proprietary Funds
December 31, 2023
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Pension (and Other
Employee Benefit) Trust
Funds Custodial Funds
ASSETS
Cash and cash equivalents 811,338$ 3,424,866$
Receivable
Other governments 1,205,440
Taxes 1,011,598
Special assessments 2,906
Investments at fair value:
Federal agency 2,624
Mutual funds 8,314,893
Total assets 9,131,761 5,641,904
LIABILITIES
Accounts payable 252 504,046
Due to other governments payable - 922,555
Total liabilities 252 1,426,601
NET POSITION
Restricted for:
Pensions 4,460,172 -
Postemployment benefits other than pensions 4,671,337 -
Unrestricted - 4,215,303
Total net position 9,131,509$ 4,215,303$
The notes to financial statements are an integral part of this statement.
City of Pasco
Statement of Fiduciary Net Position
For year ended December 31, 2023
Page 62
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Pension (and Other
Employee Benefit) Trust
Funds Custodial Funds
ADDITIONS
Tax collections by other governments 123,869$ 5,657,236$
Fees collected on behalf other agency - 360,194
Intergovernmental grants and other payments - 3,573,127
Investment income 1,388,763 -
Interest 19,548 -
Dividends 136,926 -
Total additions 1,669,106 9,590,557
DEDUCTIONS
Pension benefits 91,409 -
Medical premiums 87,540 -
Services 4,436 312,101
Payments of sales tax to other governments 955,384
Fees remitted to agency 360,194
Capital 3,550,326
Total deductions 183,385 5,178,005 Net increase (decrease) in fiduciary net
position 1,485,721 4,412,552
Net Position -- beginning of the year 7,645,788 (197,249)
Net Position -- end of the year 9,131,509$ 4,215,303$
The notes to financial statements are an integral part of this statement.
City of Pasco
Statement of Changes in Fiduciary Net Position
For year ended December 31, 2023
Page 63
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Pasco have been prepared in conformity with generally
accepted accounting principles (GAAP) as applied to governmental units. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for establishing
governmental accounting and financial reporting principles. The significant accounting policies
are described below.
A. Reporting Entity
The City of Pasco was incorporated on May 4, 1891 and operates under the laws of the state
of Washington applicable to a Non-Charter Code City with a Council/Manager form of
government. As required by the generally accepted accounting principles the financial
statements present City of Pasco as a primary government unit. The component unit discussed
below is included in the City reporting entity because of the significance of its operational
relationship with the City of Pasco.
The Pasco Public Facility district (PPFD) was created in 2002 pursuant to Chapter 35.57 of the
Revised Code of Washington for the purposes of acquiring, constructing, operating, and
financing one or more regional centers through cooperative and joint ventures with the City of
Kennewick. The PFD is discreetly presented in the component unit column in the government-
wide financial statements to emphasize that is a legally separate entity.
Complete separate financial statements for the District may be obtained from the City of Pasco,
P.O. Box 293, Pasco, WA 99301.
B. Basis of Presentation - Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement
of activities) report information on all of the non-fiduciary activities of the primary government
and its component unit. For the most part, the effect of inter-fund activity has been removed
from these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type activities which rely
to a significant extent on fees and charges for service.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Our policy is to allocate indirect costs to a
specific function or segment. Program revenues include 1) charges to customers or applicants
who purchase, use, or directly benefit from goods, services, or privileges provided by a given
function or segment and 2) grants and contributions that are restricted to meeting the
operational or capital requirements or a particular function or segment. Taxes and other items
not properly included among program revenues are reported instead as general revenues.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
As a general rule the effect of the inter-fund activity has been eliminated from the government–
wide financial statements. Exceptions to this rule include business taxes the utilities pays to
the general fund, internal service fund activities in which outside parties are engaged and
certain other service functions between funds, that if eliminated may misrepresent the cost
reported for various other functions of the government.
Separate fund financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds. Major individual governmental funds and major individual enterprise funds
are reported as separate columns in the fund financial statements.
The City of Pasco reports the following major governmental funds:
x The General Fund: The General (or current expense) Fund is the City of Pasco’s primary
operating fund. It accounts for all financial resources of the general government, except those
required or elected to be accounted for in separate fund.
x The Construction Fund: The Construction Fund is a capital project fund used to account for
significant construction and capital acquisition related to governmental activities.
x ARPA Fund: The ARPA fund is a special revenue fund used to account for all activities related
to the Federal funds received for the Coronavirus State and Local Fiscal Recovery Funds under
the American Rescue Plan Act of 2021. This includes subrecipient grants issued by the City and
City use of the funds.
The City of Pasco reports the following major proprietary fund:
x The Water/Sewer Fund: The Water/Sewer Fund accounts for water, sewer, water reuse, storm
water and irrigation utilities activities.
Additionally, the City of Pasco reports the following fund types:
x Special Revenue funds are used to account for specific revenue sources that are restricted,
committed, or assigned to expenditures for a particular purpose.
x Debt Services funds are used to account for the resources accumulated and payments made for
principal and interest on long–term general obligation debt of governmental funds. These funds
include the Local Improvement Districts (LID) Guarantee fund which provides financial security
for outstanding LID bonds.
x Permanent funds are used to report resources that are legally restricted to the extent that only
earnings, not principal, may be used for purposes of supporting a specific City program. The
City has one permanent fund, Cemetery Perpetual Care Fund.
x Internal Service funds are used to account for equipment replacement and operations, central
stores, as well as medical/dental insurance services provided to other departments on a cost-
reimbursement basis.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
x Pension & OPEB Trust funds are used to account for the sources and uses of funds to meet the
pension benefit and other post-employment benefit obligations made to firemen covered under
the Plan prior to the creation of the Law Enforcement Officers and Fire Fighters’ (LEOFF)
pension system in 1970.
x Custodial funds are used to report resources held by the city in a purely custodial capacity on
behalf of the State Administrative Office of the Courts, Animal Control Authority and Pasco
Public Facility District.
C. Measurement Focus, Basis of Accounting
Government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting as are the proprietary fund and fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred regardless of the timing of related cash flows. Property taxes are recognized as
revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are considered to
be available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the City considers revenues to be available if
they are collected within 60 days of the end of the current fiscal period. The City considers
property taxes as available if they are collected within 60 days after year end. Expenditures
generally are recorded when a liability is incurred under accrual accounting. However, debt
service expenditures, as well as expenditures related to compensated absences, claims and
judgements are recorded only when payment is due.
Property taxes, licenses, and associated interest within the current period are all considered to
be susceptible to accrual and have so been recognized as revenues of the current period. Only
the portion of a special assessment receivable due within the current fiscal period is considered
to be susceptible to accrual as revenue of the current period. All other revenue items are
considered to be measurable and available only when cash is received by the City.
Proprietary fund financial statements are reported using the economic resources measurement
focus and full-accrual basis of accounting. Revenues are recorded when earned and expenses
are recorded when a liability is incurred regardless of the timing of the cash flows. Proprietary
funds distinguish operating revenues and expenses from non-operating items. Operating
revenues and expenses generally result from providing services, producing, and delivering
goods in connection with a proprietary fund’s principal ongoing operations. The principal
operating revenues of the Water/Sewer Fund are charges to customers. The major services
provided by the proprietary fund are water, sewer, storm drain, irrigation and industrial
wastewater processing. Operating expenses for enterprise funds and internal service funds
include the cost of sales, services and administrative expenses, and depreciation on capital
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
assets. All revenues and expenses not meeting this definition are reported as non-operating
revenues and expenses.
D. Budgetary Information
Scope of Budget
Biennial appropriated budgets are adopted for the general fund and special revenue funds on a
modified accrual basis. Budgets for debt service and capital project funds are adopted at the level
of the individual debt issue or project and for fiscal periods that correspond to the lives of debt
issues or project and for fiscal periods that correspond to the lives of debt issues or projects. The
City also adopts appropriated budgets for proprietary and internal service funds as “management
budgets”. All budgets are adopted at the fund level.
Appropriations for all funds lapse at the end of the biennium. Budgets for capital outlays are
re-appropriated until the purpose of the appropriation has been accomplished or abandoned.
Amending the Budget
The City Manager is authorized to transfer budgeted amounts within the funds. However, any
revisions that alter the total appropriations of a fund, or which affects the number of authorized
employee positions, salary ranges, or other conditions of employment must be approved by the
City Council.
When City Council determines it is in the best interest of the City of Pasco to increase or
decrease the appropriation for a particular fund, it may do so by ordinance approved by one
more than the majority after holding public hearing(s).
The budget amounts shown in the financial statements are the final authorized amounts as
revised during the year.
The financial statements contain the original and final budget information. The original budget
is the first complete appropriated budget. The final budget is the original budget adjusted by all
reserves, transfers, allocations, supplemental appropriations, and other legally authorized
changes applicable for the fiscal year.
Excess of Expenditures over Appropriations
Neither the General Fund, nor any major special revenue funds, reported expenditures in excess
of budgeted appropriation.
Deficit Fund Balance
The Construction Fund, a major capital improvement fund of the City, ended the year with a
negative fund balance of ($1,937,031). The negative fund balance is a result of project spending
that outpaced funding in the current period. Available support is being identified based on
reallocation during capital improvement plan analysis and pending increases to grant awards.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
E. Assets, Liabilities, Deferred Inflows, Deferred Outflows, Fund Balance/Net Position
1. Cash and Cash Equivalents
It is the City’s policy to invest temporary cash surpluses. As of December 31, 2023, the City
had invested $ 84,533,939 with the Washington State Local Government Investment Pool
(LGIP). These investments are short-term investments of residual cash. This amount is
classified on the Statement of Net Position as cash and cash equivalents. The interest earned
on these investments is prorated to the various funds based upon their ownership of invested
cash.
For purposes of the statement of cash flows, the City considers all highly liquid investments
(including restricted assets) with a maturity of three months or less when purchased to be cash
equivalents.
2. Investments (See Note 3, Deposits and Investments)
3. Receivables
Tax receivables consist of property taxes, sales taxes, business and occupation taxes, gambling
taxes and excise taxes. Property taxes are levied January 1 on property values assessed as of
December of the prior year. The tax levy is divided into two billings with the first billing due
April 30 and the second is due October 31. Detailed information on property tax can be found
in Note 4.
Special assessments are levied against certain property owners when their property is the
beneficiary of a city managed project. Based upon each property’s proportional share of the
improvement an assessment is levied. When levied a receivable is recorded. Special
assessments receivable consists of current assessments, plus any delinquent assessments along
with related interest and penalties. As of December 31, 2023, $50,472 of special assessments
receivable were delinquent.
Customer accounts receivables consist of amounts owed from private individuals or
organizations for goods and services, including amounts owed for which billings have not been
prepared. Uncollectible amounts, except in two instances, are considered immaterial and the
direct write-off method is used. The exceptions are in the ambulance fund and revolving
abatement fund. An allowance is calculated based on historical write-offs. The total allowance
recorded city wide as of December 31, 2023, is $102,826.
Other receivables include municipal court receivables related to legal fines and charges and
amounts due the City related to organizations or public entities with which the City has entered
contractual relationships. The municipal court receivable is $10,475,027 of which $9,754,116
is not expected to be collected. Only the net receivable of $720,912 is recorded in the financial
statements. The portion that is calculated as uncollectible is based upon the year’s collection
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
rate. Contract based receivables are the result of City provision of working or revolving funds
and revenues that the City had not received as of year-end 2023.
4. Amounts Due to and from Other funds, Inter-fund Loans and Advances Receivable
Activities between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either inter-fund loans
receivable/payable or advances to/from other funds. All other outstanding balances between
funds are reported as due to/from other funds. Any residual balances outstanding between the
governmental activities and business-type activities are reported in the government-wide
financial statements as internal balances. A separate schedule of inter-fund loans receivable
and payable is furnished in Note 6, Inter-fund Balances and Transfers.
Advances between funds, as reported in the fund financial statements, are offset by a fund
balance reserve account in applicable governmental funds to indicate that they are not
available for appropriation and are not expendable available financial resources.
5. Inventories
Inventories in governmental funds consist of expendable supplies held for consumption. The
cost is recorded as an expenditure at the time of purchase. There are currently no inventories
in governmental funds. Inventories in proprietary funds consist of materials and supplies used
in both maintenance and capital activities. Inventories in proprietary funds are valued using a
last in first out (LIFO) method.
6. Restricted Assets and Liabilities
In accordance with utility bond ordinances, state law, or other agreements, separate restricted
assets have been established. These accounts contain resources for construction and debt
service, including current and delinquent special assessments receivable, in enterprise funds.
The current portion of related liabilities is shown as Payables from Current Restricted Assets.
Specific debt service reserve requirements are described in Note 8, Long-Term Debt.
The restricted assets of the governmental funds are composed of the following:
The restricted assets of the enterprise funds are composed of the following:
Customer Deposits 972,349
Unspent Bond Proceeds 5,679,223
Debt Service 237,564
Restricted Assets and Liabilities - Governmental Funds
For Year Ending 2023
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
7. Capital Assets
Capital assets, which include leases, property, plant, and equipment and infrastructure assets,
are reported in the applicable governmental or business-type columns in the government-wide
financial statements. Capital assets, other than infrastructure, are defined by the city as assets
with an initial individual cost of more than $5,000 and an estimated useful life in excess of
two years. Useful life estimates are periodically reassessed and adjusted based on actual
experience and/or asset condition assessments. See Note 5, Capital Assets and CWIP for
details on changes to useful life and depreciation. Such assets are recorded at historical cost
or estimated historical cost if purchased or constructed. Donated capital assets are recorded at
acquisition value at the date of donation.
The city reports infrastructure assets on a network and subsystem basis. Such assets are
recorded at historical cost if purchased or constructed. Additions, improvements and other
capital outlays that significantly extend the useful life of an asset are capitalized. The cost of
normal maintenance and repairs and street preservation activities that do not add to the value
of the asset or materially extend asset lives are not capitalized. Assets are depreciated over
their useful lives using the straight-line depreciation method.
Major outlays for capital assets and improvements are reported as Construction Work in
Progress as projects are constructed. Interest, if material to the cost of the asset that is incurred
during the construction phase of the capital assets of business-type activities is included as part
of the capitalized value of the assets constructed. Capital Assets and improvements are
capitalized once the project is completed.
Capitalization thresholds, the dollar value above which an asset acquisitions are added to the
capital asset accounts and estimated useful lives of capital assets are as follows:
Customer Deposits 816,172
Unspent Bond Proceeds 24,647,393
Debt Service 755,007
Bond reserve 1,932,966
Asset retirement - reserve 10,832
Restricted Assets and Liabilities - Enterprise Funds
For Year Ending 2023
Assets
Useful Lives
(Years)
Land N/A
Building & Structures 5-50
Other Improvements 5-100
Machinery & equipment & vehicles 2-50
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
8. Leases
Lessee: The City is a lessee for noncancelable leases. The city recognizes a lease liability and
an intangible right-to-use lease asset in the government-wide and proprietary fund financial
statements. The city recognizes lease liabilities with an initial, individual value of $5,000 or
more.
At the commencement of a lease, the city initially measures the lease liability at the present
value of payments expected to be made during the lease term. Subsequently, the lease liability
is reduced by the principal portion of lease payments made. The lease asset is initially measured
as the initial amount of the lease liability, adjusted for lease payments made at or before the
lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is
amortized using the straight‐line basis over its useful life.
Governmental funds recognize a capital outlay and other financing source at the
commencement of a new lease. Lease payments in governmental funds are reported as debt
service principal and debt service interest expenditures.
Key estimates and judgements related to lease include how the city determines (1) the discount
rate it uses to discount the expected lease payments to present value, (2) lease term, and (3)
lease payments.
The city uses the interest rate charged by the lessor as the discount rate. When the interest rate
charged by the lessor is not provided, the city generally uses its incremental borrowing rate as
the discount rate for leases.
The lease term includes the noncancelable period of the lease. Lease payments included in the
measurement of the lease liability are composed of fixed payments and purchase option price
that the city is reasonably certain to exercise.
The city monitors changes in circumstances that would require a remeasurement of its lease
and will remeasure the lease asset and liability if certain changes occur that are expected to
significantly affect the amount of the lease liability.
Lessor: The city is a lessor for noncancelable leases. The city recognizes a lease receivable and
a deferred inflow of resources in the government‐wide and fund financial statements.
At the commencement of a lease, the city initially measures the lease receivable at the present
value of payments expected to be received during the lease term. Subsequently the lease
receivable is reduced by the principal portion of lease payments received. The deferred inflow
of resources is initially measure as the initial amount of the lease receivable, adjusted for lease
payments received at or before the lease commencement date. Subsequently, the deferred
inflow of resources is recognized as revenue over the life of the lease term using the straight‐
line basis.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Key estimates and judgements related to lease include how the city determines (1) the discount
rate it uses to discount the expected lease payments to present value, (2) lease term, and (3)
lease payments.
x The city uses its estimated incremental borrowing rate as the discount rate for leases.
x The lease term includes the noncancelable period of the lease. Lease receipts included
in the measurement of the lease liability are compose of fixed payments from the lessee.
The city monitors changes in circumstances that would require a remeasurement of its lease
and will remeasure the lease receivable and deferred inflows of resources if certain changes
occur that are expected to significantly affect the amount of the lease receivable.
9. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section
for deferred outflows of resources. This separate financial statement element, deferred outflows
of resources, represents a consumption of net position that applies to a future period(s) and so
will not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net assets that applies to a future period(s)
and will not be recognized as an inflow of resources (revenue) until that time.
The city has one type of item, unavailable revenues, which arises only under a modified accrual
basis of accounting, which qualifies as a deferred inflow. Unavailable revenue is reported only
in the governmental funds balance sheet. The governmental funds report unavailable revenues
for 2023 as follows:
a. Uncollected property taxes levied.
b. Unbilled special assessments levied against benefited property for the cost of local
improvements. An allowance for uncollectible accounts is not necessary since the
assessments are liens against the property benefited.
c. Grant funds received in advance.
d. Certain headstones and liner sales by the cemetery which obligate the city to future
services.
e. CDBG Loans Unbilled Principal.
f. Uncollected Municipal Court Fines outstanding.
g. Lease activity in which the City is the lessor.
In addition to unavailable revenues, changes in pension and OPEB assumptions and
calculation variables also create deferred inflows and deferred outflows. These are reported
in the enterprise funds and at the government wide level in the Statement of Net Position.
10. Compensated Absences
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
The city accrues accumulated unpaid vacation and sick leave and associated employee related
costs when earned (or estimated to be earned) by the employee. All vacation and sick pay is
accrued when incurred in the government-wide, proprietary, and fiduciary fund financial
statements. In governmental funds, such amounts are not accrued using the modified accrual
basis of accounting but are reported as a liability in the government-wide financial statements.
Non-Represented Employees/Directors/Managers
Sick leave may be accumulated up to a maximum of 960 hours for all employees except
firefighters and police. Upon resignation, retirement, or death; sick leave is payable at a rate of
25% of accrued hours up to a maximum accrual base of 720 hours. Vacation leave may be
accumulated up to a maximum of one and a half times the employee’s annual vacation accrual
rate and is payable upon resignation, retirement, or death.
Firefighters
Sick leave may be accumulated up to a maximum of 1,440 hours. For firefighters with less than
20 years of service with the City, sick leave is payable at a rate of 25% of accrued hours up to
a maximum accrual base of 840 hours upon resignation, retirement, or death. For firefighters
with 20 years or more of service with the city, sick leave is payable at a rate of 50% of accrued
hours up to a maximum accrual base of 840 hours. Vacation leave may be accumulated up to a
maximum of two times the employee’s annual vacation accrual rate and is payable upon
resignation, retirement, or death.
Police
Sick leave may be accumulated up to a maximum of 1,200 hours. Upon resignation or death,
sick leave is payable at a rate of 25% of accrued hours up to a maximum accrual base of 720
hours. Upon retirement, sick leave is payable at a rate of 35% up to a maximum accrual base
of 1,200 hours. Vacation leave may be accumulated up to a maximum of two times the
employee’s annual vacation accrual rate and is payable upon resignation, retirement, or death.
Non-Uniformed Police
Sick leave may be accumulated up to a maximum of 960 hours. Upon resignation, retirement,
or death; sick leave is payable at a rate of 25% of accrued hours up to a maximum accrual base
of 720 hours. Vacation leave may be accumulated up to a maximum of two times the
employee’s annual vacation accrual rate and is payable upon resignation, retirement, or death.
Operating Engineers
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Sick leave may be accumulated up to a maximum of 960 hours. Upon resignation, retirement,
or death; sick leave is payable at a rate of 25% of accrued hours up to a maximum accrual base
of 720 hours. Vacation leave may be accumulated up to a maximum of two times the
employee’s annual vacation accrual rate. Upon retirement from City service employees shall
receive payment for up to 328 hours of accumulated vacation. Any excess vacation must be
taken prior to the last day of employment. An employee who separates from City service for
other than retirement shall receive all accumulated vacation.
11. Pensions and OPEB
For purposes of measuring the net pension liability or asset, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information about the
fiduciary net position of all state sponsored pension plans and additions to/deductions from
those plans’ fiduciary net position have been determined on the same basis as they are reported
by the Washington State Department of Retirement Systems. For this purpose, benefit
payments (including refunds of employee contributions) are recognized when due and payable
in accordance with the benefit terms. Investments are reported at fair value.
For purposes of measuring the net pension liability, deferred outflows of resources and
deferred inflows of resources related to pension, and pension expense information about the
fiduciary net position of the City's Old Fireman’s' Pension Fund — 610 (the Plan) and additions
to/deductions from the Plan's fiduciary net position have been determined on the same basis as
they are reported by the Plan. For this purpose, the Plan recognizes benefit payments when due
and payable in accordance with the benefit terms.
For purposes of measuring the total OPEB liability, deferred outflows of resources and
deferred inflows of resources related to OPEB, and OPEB expense information of the City’s
LEOFF 1 Retiree Health Plan (the Plan) have been determined on the same basis as they are
reported by the Plan. For this purpose, the Plan recognizes benefit payments when due and
payable in accordance with the benefit terms.
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred
inflows of resources related to OPEB, and OPEB expense information about the fiduciary net
position of the City's Old Firemen’s Pension Fund (the Plan) and additions to/deductions from
the Plan's fiduciary net position have been determined on the same basis as they are reported
by the Plan. For this purpose, the Plan recognizes benefit payments when due and payable in
accordance with the benefit terms.
12. Long-term Debt
In the government-wide statements and proprietary fund types in the fund financial statements,
long-term debt and other long-term obligations are reported as liabilities in the applicable
governmental activities, business-type activities, or proprietary fund type statements of net
position.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Bond premiums and discounts when material, are deferred and amortized over the life of the
bonds using the effective interest method. Bonds payables are reported net of the applicable
bond premium or discount.
In the fund financial statements governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are reported
as other financing sources. Issuance costs, whether withheld from actual debt proceeds
received or not, are reported as professional service costs.
13. Unearned Revenues
This account includes amounts recognized as receivables but not revenues in governmental
funds because the revenue recognition criteria have not been met. As of year-end 2023, the city
reported $5,818,559 in unearned revenue due to grant funds received in advance related to State
and Local Fiscal Recovery Funds authorized by the American Rescue Plan Act and awarded
by the US Department of Treasury.
11. Fund Balance and Fund Flow Policies
Fund balance of governmental funds is reported in various categories based on the nature of
any limitations requiring the use of resources for specific purposes. The government itself can
establish limitations on the use of resources through either a commitment (committed fund
balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for specific
purposes determined by formal action of the government’s highest level of decision-making
authority. The city council is the highest level of decision-making authority for the government
that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance.
Once adopted, the limitation imposed by the ordinance remains in place until a similar action
is taken (the adoption of another ordinance) to remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the government
for specific purposes but do not meet the criteria to be classified as committed. The council
may also assign fund balances, as it does when appropriating fund balances, to cover a gap
between estimated revenue and appropriations in the subsequent year’s appropriated budget.
Unlike commitments, assignments generally only exist temporarily. In other words, an
additional action does not normally have to be taken for the removal of an assignment.
Conversely, as discussed above, an additional action is essential to either remove or revise a
commitment.
The City has not adopted a specific flow of funds policy relating to the use of restricted and
unrestricted resources when both are available. Therefore, the statements are prepared using
the default option provided in GASB 54 which provides, that when both restricted and
unrestricted resources are available, restricted resources are used first. While the city has not
formally established a policy for its use of unrestricted fund balance amounts, committed
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
amounts would be reduced first, followed by assigned amounts, and then unassigned amounts
when expenditures are incurred for purposes for which amounts in any of these unrestricted
fund balance classifications could be used.
In the fund financial statements, governmental funds report restrictions of fund balance as
follows:
Nonspendable fund balance - includes amounts that are not in spendable form such as inventory
or are required to be maintained intact such as the principal of a permanent fund.
Restricted fund balance - includes amounts that can be spent only for the specific purpose
stipulated by external resource providers such as for grant providers, bondholders, higher levels
of government, or through enabling legislation.
Committed fund balance – includes amounts that can be used only for the specific purposes
determined by a formal action of the city council. Commitments may be changed or lifted only
by the city council taking the same formal action that imposed the constraint originally.
Assigned fund balance – includes amounts intended to be used by the government for specific
purposes. Intent can be expressed by the governing body or by an official designated by the
governing body to which the governing body designates authority.
Unassigned fund balance - includes the residual classification for the General Fund and
includes all spendable amounts not contained in the other classifications. The General Fund is
the only governmental fund that reports a positive unassigned fund balance amount. In other
funds, the unassigned classification will be used only to report a deficit balance resulting from
overspending for specific purposes for which amounts had been restricted, committed, or
assigned.
F. Accounting and Reporting Change
For the year ended December 31, 2023, the City implemented guidance for the presentation
and disclosure of leases. These changes were in response to the provisions of GASB Statement
No. 96, Subscription Based IT Arrangement (SBITA).
As a result, the impacts to the City related to the adoption of the new SBITA requirements
includes:
x Beginning balances for SBITA liabilities presented on the Schedule of Long-Term
Liabilities have been restated to reflect implementation of these requirements.
x Information regarding the City’s IT arrangements are presented in Note 2 –
Subscription Based IT Arrangements (SBITA).
x SBITA capital assets on the Government-wide Statement of Net Position
NOTE 2: Subscription Based IT Arrangements (SBITA)
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
For the year ended 12/31/2023, the financial statements include the adoption of GASB Statement No. 96,
Subscription Based Information Technology Arrangements (SBITA). The primary objective of this
statement is to enhance the relevance and consistency of information about governments' SBITA activities.
This statement establishes a single model for SBITA accounting based on the principle that SBITA are
financings of the right to use another party’s IT software, alone or in combination with tangible capital
assets as specified in the contract for a period of time in an exchange or exchange-like transactions. With
the implementation of GASB Statement No. 96, all existing and newly acquired SBITA were analyzed and
classified as either qualified or non-qualified arrangements. Under this Statement, the City is required to
recognize a SBITA liability and an intangible right-to-use SBITA asset, for all qualified arrangements. For
additional information, refer to the disclosures below.
The City maintains SBITA agreements for many different software programs. Payments are made
periodically based on each individual contract term. Principal payments made through the current year for
qualified SBITA were $806,879 with $23,534 charged to interest.
Future principal and interest lease payments as of December 31, 2023, were as follows:
NOTE 3: DEPOSITS AND INVESTMENTS
Summary of Deposit and Investment Balances
Reconciliation of the City’s deposits and investment balances as of December 31, 2023, is as
follows:
Asset Class Subscription Asset Value Accumulated Amortization
Software 2,228,106 806,879
Total Subscriptions 2,228,106 806,879
Amount of Subscription Assets by Major Classes of Underlying Asset
As of Fiscal Year-end
Fiscal Year Principal Payments Interest Payments Total Payments
2024 703,411 36,831 740,243
2025 679,219 18,316 697,535
2026 8,468 225 8,693
Total Principal Payments 1,391,098
Total Remaining Liability 1,391,098
Principal and Interest Requirements to Maturity
Governmental Activities
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Deposits
Custodial Credit Risk
Custodial credit risk for deposits is the risk that in the event of a failure of a depository financial
institution, the City would not be able to recover deposits or will not be able to recover collateral
securities that are in possession of an outside party. The City’s deposits and certificates of deposit
are mostly covered by federal depository insurance (FDIC) or by collateral held in a multiple
financial institution collateral pool administered by the Washington Public Deposit Protection
Commission (WPDPC). The FDIC insures the first $250,000 of the City’s deposits. The deposit
balances over $250,000 are insured by the WPDPC.
The City does not have a deposit policy for custodial credit risk beyond the requirements of state
statute. Washington State law restricts deposit of funds to financial institutions physically located
in Washington unless otherwise expressly permitted by statute and authorized by the WPDPC.
State statute permits additional amounts to be assessed on a pro rata basis to members of the
WPDPC pool in the unlikely event the pool’s collateral should be insufficient to cover a loss.
Investments
It is the City’s policy to invest all temporary cash surpluses. The interest on these investments is
prorated to the various funds. Investments are stated at fair value based on quoted market prices in
accordance with GASB Statement No. 72, Fair Value Measurement and Application. Accordingly,
the change in the fair-value of investment is recognized as an increase or decrease to the investment
assets and investment income. Interest income on investments is recognized in non-operating
revenue as earned. Changes in fair value of investments are recognized on the statements of
Revenues, Expenses, and Changes in Net Position. Investments are subject to the following risks.
Interest Rate Risk
Government Wide Fiduciary Funds
Cash on Hand 7,550 -
Deposits with Private Financial Institutions 96,112,860 4,236,201
Deposits in transit 372,577 -
Outstanding Checks (6,716,340) -
Deposits in State LGIP 84,533,939 -
Total Deposits 174,310,587 4,236,201
Investments 4,764,670 8,317,611
Total Investments 4,764,670 8,317,611
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Interest Rate Risk is the risk the City may face should interest rate variances affect the fair value
of investments. In accordance with its investment policy, the City manages its exposure to declines
in fair value by limiting the maturity of investments. To achieve its financial objective of
maintaining liquidity to meet all operating requirements, the City typically selects investments that
have shorter average maturities.
The following table depicts Weighted Average Maturity (WAM) for all City investments with
maturities, by number of months. In addition to the interest rate risk disclosed below, the City
includes investments with fair value highly sensitive to interest rate changes.
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. State law and the City investment policy limit investments to those authorized by State
Statute. The City of Pasco holds investments in U.S. Government Agency Securities, the Local
Government Investment Pool (LGIP) and demand deposits at U.S. Bank. The investment policy
for “credit risk” does not extend beyond the types of authorized investments and the concentration
of credit risk described below. As of December 31, 2023, the City’s investments in agency
securities were all rated AAA. The LGIP is not rated and registered with the SEC and the fair value
of the city’s position in the pool is the same as the value of the pool shares. The LGIP is regulated
by the state of Washington’s state finance committee in accordance with RCW 43.250. Credit risk
is limited as most investments are either obligations of the U.S. Government, government
sponsored enterprises, insured demand deposit accounts or certificates of deposit.
Investment Type Fair Value Less than 1 year 1 to 5 years 6 to 10 years
% of Total
Portfolio
SBA Participation 15,006$ 15,006$ -$ -$ 0.31%
Federal Farm Credit Bank 942,787 942,787 - - 19.79%
Federal Home Loan Bank 1,922,194 1,922,194 - - 40.34%
Federal National Mortgage Association 1,884,683 1,884,683 - - 39.56%
Total Debt Securties 4,764,670$ 4,764,670$ -$ -$ 100.00%
Investment Maturities (in Years)
Maturity Date
# of Months to
Maturity
Fair Market
Value as
12/31/23 % of total WAM
02/01/2027 37 15,006 0.31% 0.158884
11/25/2024 11 1,922,194 40.34% 6.298135
12/01/2025 23 1,884,683 39.56% 6.571615
06/17/2025 18 942,787 19.79% 3.561666
16 4,764,670$ 100.00% 22.580372
Calculation of Weighted Average Maturity (WAM)
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s
investment in a single issuer. It is the policy of the city to diversify its investment portfolio to
eliminate the risk of loss resulting from overconcentration of assets in a specific class of securities.
The table below identifies the types of investments, concentration of investments in any one issuer,
and maturities of the City's investment portfolio as of December 31, 2023.
Local Government Investment Pool
The city is a participant in the Local Government Investment Pool, which was authorized by
Chapter 294, Laws of 1986, and is managed and operated by the Washington State Treasurer. The
State Finance Committee is the administrator of the statute that created the pool and adopts rules.
The State Treasurer is responsible for establishing the investment policy for the pool and reviews
the policy annually and proposed changes are reviewed by the LGIP advisory Committee.
The Office of the State Treasurer prepares a stand-alone LGIP financial report. A copy of the report
is available from the Office of the State Treasurer, PO Box 40200, Olympia, Washington 98504-
0200, online at http://www.tre.wa.gov.
Investments Reported as Cash Equivalents as of December 31, 2023
Amortized Cost Less than 1 Year
Local Government Investment Pool $84,532,864 $84,532,864
In addition to the City of Pasco investments presented in the series of tables following this section,
the City’s Old Fire Pension and Old Fire OPEB Funds report the following investments in their
Trust Funds:
ISSUER
*FAIR VALUE AT
12/31/23 PERCENTAGE
SBA Participation 15,006 0.31%
Federal Farm Credit Bank - 0.00%
Federal Home Loan Bank 1,922,194 40.34%
Federal Farm Credit Bank 942,787 19.79%
Federal National Mortgage Association 1,884,683 39.56%
TOTAL 4,764,670$ 100%
*All investments were measured at Level 2, Significant Other Observable Inputs.
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CCityy off Pasco,, Washingtonn 202 33 Annuall Comprehensivee Financiall Reportt
Investments Measured at Fair Value
The City measures and reports investments at fair value using the valuation input hierarchy
established by Generally Accepted Accounting Principles (GAAP), as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: These are quoted market prices for similar assets or liabilities, quoted prices for
identical or similar assets or liabilities in markets that are not active, or other than
quoted prices that are not observable.
Level 3: Unobservable inputs for an asset or liability.
Safekeeping for the City’s investments is provided by U.S. Bank. U.S. Bank contracts with
Independent Directors Council (IDC) to provide fair market values of investments monthly. The
pricing methodology varies depending on multiple components, including if an investment is being
actively traded. In depth pricing methodology is available from IDC.
As of December 31, 2023, the City had the following investments measured at fair value:
NOTE 4: PROPERTY TAXES
The county treasurer acts as an agent to collect property taxes levied in the county for all taxing
authorities. Collections are distributed by the 10th day of the following month.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Property taxes are recorded as a receivable and revenue when levied, offset by deferred revenue.
Property tax collected in advance of the fiscal year to which it applies is recorded as a deferred
inflow and recognized as revenue of the period to which it applies. No allowance for
uncollectible tax is established because delinquent taxes are considered fully collectible. Prior
year tax levies were recorded using the same principle and delinquent taxes are evaluated
annually. As of 12/31/23 delinquent taxes totaled $204,951.
The City may levy up to $3.60 per $1,000 of assessed valuation for general governmental services
subject to two limitations:
a. Chapter 84.55.010 of the Revised Code of Washington limits the growth of non-voted
property taxes to the lesser of 1% per year, or the Implicit Price Deflator. Adjustments
for new construction and annexations are excluded from this calculation.
b. The Washington State Constitution limits the total regular property taxes to one percent
of assessed valuation or $10 per $1,000 of value. If the taxes of all districts exceed this
amount, each is proportionately reduced until the total is at or below the one percent
limit.
The City’s regular levy for 2023 was $1.28754 per $1,000 on an assessed valuation of
$9,752,006,225. This resulted in a total regular levy of $12,555,023 for 2023. The City did not levy
any taxes for special levies in 2023.
NOTE 5: CAPITAL ASSETS AND CWIP
Capital asset activity for the year ended December 31, 2023, was as follows:
January 1 Taxes are levied and become an enforceable lien against properties.
February 14 Tax bills are mailed.
April 30 First of two equal installment payments is due.
May 31 Assessed value of property established for next year's levy at 100% of market value.
October 31 Second installment is due.
Property Tax Calendar
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Depreciation expense by function:
Governmental Activities:
Beginning
Balance
01/01/23
Prior Period
Adjustments
Adjusted
Beginning
Balance
01/01/23
Current Period
Increases
Current Period
Decreases
Ending Balance
12/31/23
Capital assets, not being depreciated
Land 25,789,159$ -$ 25,789,159$ 715,966$ -$ 26,505,125$
Construction in process 33,632,348 619,926 34,252,274 38,346,084 5,948,075 66,650,283
Total capital assets, not being depreciated 59,421,507 619,926 60,041,433 39,062,050 5,948,075 93,155,408
Capital assets, being depreciated:
Building & structure 67,287,431 - 67,287,431 2,265,575 - 69,553,006
Improvements Other than buildings 12,996,425 - 12,996,425 133,638 - 13,130,063
Machinery and equipment 22,820,663 - 22,820,663 2,629,952 359,187 25,091,428
Infrastructure 325,611,709 - 325,611,709 31,008,814 - 356,620,523
Right-to-use- lease assets 2,838,138 - 2,838,138 4,039,414 - 6,877,552
Subscription assets - - - 2,228,106 - 2,228,106
Total capital assets being depreciated/amortized 431,554,366 - 431,554,366 42,305,499 359,187 473,500,678
Less accumulated depreciation:
Building & structure 18,247,266 - 18,247,266 1,647,259 - 19,894,525
Improvements other than building 4,476,540 - 4,476,540 418,627 - 4,895,167
Machinery and equipment 13,161,200 - 13,161,200 736,861 313,117 13,584,944
Infrastructure 149,510,555 - 149,510,555 13,551,185 - 163,061,740
Right-to-use- lease assets 442,434 - 442,434 3,399,124 - 3,841,558
Subscription assets - - 806,879 - 806,879
Total accumulated depreciation/amortized, net 185,837,995 - 185,837,995 20,559,935 313,117 206,084,813
Total capital assets, being depreciated, net 245,716,371 - 245,716,371 21,745,564 46,070 267,415,865
Governmental activities capital assets net 305,137,878$ 619,926$ 305,757,804$ 60,807,614$ 5,994,145$ 360,571,273$
Business Type Activities:
Beginning
Balance
01/01/23
Prior Period
Adjustments
Adjusted
Beginning
Balance
01/01/23
Current Period
Increases
Current Period
Decreases
Ending Balance
12/31/23
Capital assets, not being depreciated
Land 4,596,533 - 4,596,533 278,870 - 4,875,403
Construction in process 45,213,707 (529,254) 44,684,453 59,617,107 1,859,158 102,442,402
Total capital assets, not being depreciated 49,810,240 (529,254) 49,280,986 59,895,977 1,859,158 107,317,805
Capital assets, being depreciated:
Building & structure 87,827,554 - 87,827,554 - - 87,827,554
Other Improvements 583,605 - 583,605 - - 583,605
Machinery and equipment 18,189,189 - 18,189,189 1,675,638 232,129 19,632,698
Infrastructure 194,895,649 - 194,895,649 5,392,410 - 200,288,059
Total capital assets being depreciated 301,495,997 - 301,495,997 7,068,048 232,129 308,331,916
Less accumulated depreciation:
Building & structure 26,138,545 - 26,138,545 1,957,670 - 28,096,215
Other Improvements 50,383 - 50,383 17,741 - 68,125
Machinery and equipment 8,787,062 - 8,787,062 986,441 232,129 9,541,376
Infrastructure 51,925,749 - 51,925,749 4,446,962 - 56,372,712
Total accumulated depreciation 86,901,739 - 86,901,739 7,408,814 232,129 94,078,428
Total capital assets, being depreciated, net 214,594,258 - 214,594,258 (340,766) - 214,253,488
Business activities capital assets net 264,404,498$ (529,254)$ 263,875,244$ 59,555,211$ 1,859,158$ 321,571,293$
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Construction commitments
The City of Pasco has active construction projects as of December 31, 2023. The projects include
street construction and various utility related projects. At year end, the city’s commitments with
contractors are as follows:
NOTE 6: INTER-FUND BALANCES AND TRANSFERS
Inter-fund loans
The composition of inter-fund loan balances as of December 31, 2023, are presented in the
following table. These loans are included in the fund financial statements but eliminated from the
government wide statement of net assets because they are internal borrowings. There are also one
day loans from the general fund totaling $4,926,893 for funds with negative cash at year end that
Governmental activities:
General government 1,256,912$
Public Safety 4,521,539
Transportation 13,579,396
Economic environment 161,420
Culture & recreation 1,040,668
Total depreciation expense - governmental activities 20,559,935$
Business-type activities:
Water 2,708,166$
Irrigation 643,888
Sewer 2,514,834
Process water reuse facility 1,269,058
Stormwater 272,868
Total depreciation expense- business-type activities: 7,408,814$
CATEGORY PROJECT NAME SPENT TO DATE REMAINING
COMMITMENT
Transportation Lewis Street Overpass 21,972,941 4,082,100
Transportation City Wide Traffic Signal Improvements ? Phase 2 4,256,349 356,073
Transportation Argent Road Widening - Phase 3 (Road 36 to Saraceno)1,867,330 1,605,313
Transportation Road 100 Interchange Improvements East/Westbound Ramps 765,501 5,422,675
Economic Development Animal Shelter Facility (B)3,230,609 1,129,476
General Government GESA Stadium Improvement 983,904 799,584
Parks and Recreation A Street Sports Complex Phase 1 1,283,041 100,754
Sewer Riverview East Lift Station /Road 52 & Pearl Street Lift Station 867,567 71,293
Sewer WWTP Improvements Phase 1 17,405,733 853,668
Sewer WWTP Improvements Phase 2A 571,765 13,425,152
Sewer WWTP Improvements Phase 2B 4,687,588 2,108,970
Sewer East UGA Expansion Sewer LID 152, Phase 1 1,654,917 621,351
Sewer East UGA Expansion Sewer LID 152, Phase 3 1,377,243 2,314,123
Sewer East UGA Expansion Sewer LID 152, Phase 4 2,351,585 3,342,136
Water Reservoir Storage Tank Zone 3 13,423,347 3,659,073
Process Water Reuse Facility PWRF Pretreatment Improvements (Phase 2) Winter Storage Pond 7,539,215 24,049,032
TOTAL 84,238,636 63,940,773
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
are classified as due from transactions on the balance sheet governmental funds. The composition
of due to and due from balances as of December 31, 2023, are presented in the following table.
Inter-fund transfers
Transfers between funds during the year ended December 31, 2023, are as follows:
Transfers are used to 1) move unrestricted general fund revenues to finance various programs that
the government must account for in other funds in accordance with budgetary authorizations,
including amounts provided as subsidies or matching funds for various grant programs; 2) move
investment earnings or operating subsidies from one fund to its designated, authorized purpose
carried out by another fund; 3) move resources designated for construction to and from
construction funds as projects are created and/or completed.
Loan Purpose
Nonmajor Debt
Service
Water/Sewer
Utility Total
Equipment Replacement ULID Financing - 2,286,751 2,286,751
Nonmajor Special Revenue LID Financing 17,635 - 17,635
17,635$ 2,286,751$ 2,304,386$
IN
T
E
R
F
U
N
D
L
O
A
N
S
DU
E
F
R
O
M
INTERFUND LOANS DUE TO
Total
Nonmajor Special
Revenue
Major
Construction Total
General Fund 547,400$ $ 4,379,493 4,926,893$
Total 547,400$ 4,379,493$ 4,926,893$
DU
E
F
R
O
M
DUE TO
General Nonmajor
Special Revenue Major ARPA Total
General -$ 315,014$ 265,480$ 580,494$
Nonmajor Special Revenue 2,852,529 15,096 168,414 3,036,039
Major Construction 9,218,308 13,482,715 26,793 22,727,816
Major Utility - - 5,915,111 5,915,111
Total 12,070,837$ 13,812,825$ 6,375,798$ 32,259,460$
TRANSFER FROM
TR
A
N
S
F
E
R
T
O
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
There were one-time transfers for grant purpose between several special revenue funds, the general
fund, and the construction funds. There were on-going transfers to move grant support from the
Community Development Block Grant fund to the general fund for qualified grant activities, and
from the general fund to the ambulance fund.
NOTE 7: CHANGES IN LONG-TERM LIABILITIES
Changes in long-term liabilities - governmental.
The City liquidates most governmental debt service, leases, SBITA, pension and OPEB liabilities
from the General Fund. The only debt service not liquidated from the General Fund is debt related
to the Gesa Stadium improvements which is repaid from the Stadium Fund. Compensated absences
are mainly liquidated from General, Street and Ambulance funds. The fund for which the liability
is incurred is responsible for liquidating the liability. The average percentage of usage of
compensated absences varies significantly between governmental and business-type funds,
therefore the City uses a three-year average usage percentage for projecting compensated absences
due within one year. This method is the most accurate by following the current trend for each type
of funds. Internal service funds predominantly serve the governmental funds, and their long-term
liabilities are included as part of the totals for governmental activities.
The table below reflects the change in Long-Term Liabilities for Governmental activities for
year ended December 31, 2023.
Changes in long-term liabilities – business-type.
All business-type funds liquidate their own compensated absences, judgements, and claims.
The table below reflects the change in Long-Term Liabilities for Business-Type activities for year
ended December 31, 2023.
GOVERNMENTAL ACTIVITIES Beginning Balance
01/01/2023 Additions Reductions
Ending Balance
12/31/23
Due Within One
Year
General Obligation Bonds 23,010,000$ 12,600,000$ 945,000$ 34,665,000$ 1,270,000$
Premiums 3,884,541 967,063 151,850 4,699,754 200,203
Total GO Bonds Payable 26,894,541 13,567,063 1,096,850 39,364,754 1,470,203
HUD Section 108 Loan 3,401,000 - 190,000 3,211,000 190,000
Compensated Absences 3,616,614 3,591,371 3,210,590 3,997,395 3,042,998
Leases 1,973,069 4,613,189 749,128 5,837,130 1,118,845
Subscription based IT arrangements - 2,228,106 837,008 1,391,098 703,412
OPEB Liabilities 8,499,941 - 1,813,530 6,686,411 526,997
Pension Liabilities 1,916,891 - 68,041 1,848,849 458,018
Governmental Activity Long-Term Activity 19,407,515 10,432,666 6,868,297 22,971,883 6,040,270
Total Governmental Activity Long-Term Activity 46,302,056$ 23,999,729$ 7,965,147$ 62,336,637$ 7,510,473$
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
NOTE 8: LONG TERM DEBT
The City issues general obligation bonds to finance capital improvements such as street projects,
softball fields, library improvements, police station and other municipal facilities. Bonded
indebtedness has also been entered into in prior years to advance refund several general obligation
and revenue bonds. General obligation bonds have been issued for both general government and
business-type activities and are being repaid for the applicable resources. Revenue bonds are
issued to finance capital facilities, facility improvements and equipment purchases for the City’s
utilities. Governmental debt is considered obligations of the general government and is repaid with
general governmental resources. Proprietary fund revenues are used to repay revenue and
refunding bonds as well as certain loans to proprietary funds.
Governmental Debt
The City’s outstanding general obligation bonds are comprised of a 2015 bond issue that funded
the construction of a new police station and a 2019 bond issue to fund the construction of two fire
stations, improvements to the Gesa Stadium and the City’s contribution the construction of the
Tri-City Animal Shelter. There was a bond issue in 2023 for the purpose of an annex building to
the Tri-City Animal Shelter, City pool improvements, City Hall improvements and additional
improvements to the Gesa Stadium. A Public Safety Sales tax of three-tenths of one percent,
implemented in 2012 was identified as the source of repayment of the 2015 bond. These issues are
repaid from the General Fund, except for the Gesa Stadium bond which is repaid from the Stadium
Fund. During 2021, the City received a loan from the U.S. Department of Housing and Urban
Development (HUD) for the Peanuts Park Restoration Project. This loan will be repaid from HUD
CDBG annual grant allocations.
General obligation bonds outstanding as of December 31, 2023, are as follows:
BUSINESS TYPE ACTIVITIES Beginning Balance
01/01/2023 Additions Reductions
Ending Balance
12/31/23
Due Within One
Year
Revenue Bonds 46,920,000$ 33,245,000$ (6,235,000)$ 73,930,000$ 2,545,000$
Premiums 2,356,662 1,506,970 (131,308) 3,732,324 207,754
Total Bonds Payable 49,276,662 34,751,970 (6,366,308) 77,662,324 2,752,754
State Loans 37,685,091 32,936,655 (1,534,163) 69,087,583 2,701,691
External Loan 914,171 - (140,480) 773,691 144,950
Compensated Absences 350,703 67,846 - 418,549 379,860
Pension Liabilities 686,130 - 27,901 658,229 211,478
Asset Retirement Obligation 10,363 469 - 10,832 -
Total Loans & Other 39,646,458 33,004,970 (1,646,742) 70,948,884 3,437,979
Business Activity Long-Term Activity 88,923,120 67,756,940 (8,013,050) 148,611,208 6,190,733
Total Changes in Business Type & Governmental
Long-Term Liabilities 135,225,176$ 91,756,669$ (47,903)$ 210,947,846$ 13,701,206$
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
The annual debt service requirements to maturity for general obligation bonds and loans is
presented in the following table.
Purpose Issuance Amount Final Maturity Interest Rates
Outstanding as of
December 31, 2023
Due Within 1
Year
2015 LTGO Police Station 8,795,000 12/1/2035 3.00%-4.00%
6,050,000$ 405,000$
2019 LTGO Fire Stations 14,800,000 12/1/2049 4.00%-5.00%13,132,300 479,700
2019 LTGO Gesa Stadium 1,645,000 12/1/2049 4.00%-5.00%
1,441,350 52,650
2019 LTGO Animal Shelter 1,645,000 12/1/2049 4.00%-5.00%
1,441,350 52,650
2023 LTGO Animal Shelter - Annex 1,638,000 12/1/2043 5.00%
1,638,000 36,400
2023 LTGO Fire Stations 7,938,000 12/1/2043 5.00%
7,938,000 176,400
2023 LTGO Pool Improvments 1,134,000 12/1/2043 5.00%
1,134,000 25,200
2023 LTGO City Hall Improvements 756,000 12/1/2043 5.00%
756,000 16,800
2023 LTGO Gesa Stadium 1,134,000 12/1/2043 5.00%
1,134,000 25,200
34,665,000$ 1,270,000$
Purpose Issuance Amount Final Maturity Interest Rates
Outstanding as of
December 31, 2023
Due Within 1
Year
2021 HUD Section 108 Loan1 3,781,000$ 08/01/2040 0.350-4.35% 3,211,000$ 190,000$
3,211,000 190,000
37,876,000$ 1,460,000$
GOVERNMENTAL DEBT - BONDS
Total Governmental Debt
GOVERNMENTAL DEBT -LOANS
Total Governmental Type Debt
1HUD Section 108 Loan is to fund the Peanut Park Restoration Project
Year Ending
December 31 Principal Interest Total Debt Service
2024 1,460,000 1,868,300 3,328,300
2025 1,640,000 1,678,875 3,318,875
2026 1,700,000 1,606,482 3,306,482
2027 1,770,000 1,531,137 3,301,137
2028 1,835,000 1,452,335 3,287,335
2029-2033 9,430,000 6,002,056 15,432,056
2034-2038 7,836,000 4,050,046 11,886,046
2039-2043 7,675,000 2,280,351 9,955,351
2044-2048 3,680,000 782,000 4,462,000
2049 850,000 42,500 892,500
TOTAL 37,876,000$ 21,294,082$ 59,170,082$
GOVERNMENTAL DEBT
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Business-Type Debt
In 2023, the City’s Water/Sewer utility continued the construction of projects supported by a $9.4
million revenue bond that was issued at the end of 2017. The purpose of the bond was to provide
funding and reimbursement for multiple sewer capital projects. The projects include upgrades and
replacement of several sewer lift stations, treatment plant upgrades, relining projects and certain
immediate needs projects identified by staff and consultants. These bonds will be repaid from
revenues from the Water/Sewer utility. In 2023, the City refunded 2 bonds and issued $10.2 million
revenue bond for Reuse Facility improvements and issued $21.37 million revenue bonds for Water,
Irrigation and Storm projects. In 2023 the City received two Department of Ecology loans one for
Sewer Treatment Plant improvements and one for Reuse Facility improvements, a Department of
Commerce CERB loan for Reuse Facility improvements and a Department of Health safe drinking
water loan for Butterfield Water Treatment Plant.
The City is also liable for three Department of Ecology loans two for Sewer improvements and
one for Reuse Facility: Drinking Water Loan for the Columbia Water Supply Project. The
Columbia Water Supply Project was completed in 2018. Two Drinking Water Loan for West Pasco
Water Treatment Plant; Two Public Works Board loans for pre-construction of Reuse Facility
improvements and Water Reservoir Storage Tank Zone 3. The City is also liable for a local loan
from the Hanford Area Economic Investment Fund Advisory Committee (HAEIFAC) for
improvements for the Reuse Facility.
As of December 31, 2023, restricted cash and investments in the proprietary funds contain
$1,932,965 in sinking funds and reserves as required by bond indentures.
Revenue Bonds, General Obligation Bonds and Loans outstanding for Business-Type Accounts
are as follows:
Purpose Issuance Amount Final Maturity Interest Rates
Outstanding as of
December 31, 2023
Due Within 1
Year
2013A Sewer Capital Projects 2,520,000$ 12/01/2028 3.00%-4.00% -$ -$
2013T Capital Projects Reuse Facility 7,235,000 12/01/2028 .69%-4.89% - -
2015 Water/Sewer Capital Projects 14,380,000 12/01/2040 2.00%-5.00%11,155,000 270,000
2017 Sewer Improvement Revenue Bonds1 9,415,000 12/01/2042 3.30%-4.00% 9,415,000 -
2020A Water/Sewer Revenue Bond 7,135,000 12/01/2029 4.00%-5.00% 5,025,000 760,000
2020B PWRF Revenue Bond 16,415,000 12/01/2050 1.17%-3.57%15,090,000 390,000
2023A Water/Sewer Revenue Bond8 20,845,000 12/01/2043 3.29%-4.43% 20,845,000 570,000
2023B PWRF Revenue Bond9 12,400,000$ 12/01/2043 5.34%-6.00% 12,400,000 555,000
73,930,000$ 2,545,000$
1 This bond requires interest-only payments until 2030.
BUSINESS TYPE DEBT -BONDS
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
The annual debt service requirements to maturity for all Business-Type debt is as follows:
For financial statement presentation the City’s non-current portion of bonds payable are presented
net of premium and discounts. Current bonds payable reflects actual principal payments including
Purpose Issuance Amount Final Maturity Interest Rates
Outstanding as of
December 31, 2023
Due Within 1
Year
DM15-952-037 Columbia Water Supply Project 6,810,430$ 10/01/2034 1.50% 4,396,227$ 399,657$
DWL26037 DWSRF WP WTP Ph 1 2 5,050,000 10/01/2040 1.75% 5,097,569 299,857
DWL27107 DWSRF WP WTP Ph 2 7 9,753,259 10/01/2042 1.75% 5,895,205 310,274
PC22-96103-049 Reservoir Storage Tank Zone 3 10,000,000 06/01/2041 0.94%9,645,542 535,863
PCL28205 DWSRF Butterfield WTP PH 10 510,000 10/01/2033 0.00% 23,636 2,364
WQC-2021-Pasco-00020 Clean Water Preservation 5,532,429 06/30/2044 1.20% 5,149,124 90,034
WQC-2024-Pasco-00007 Clean Water Preservation 26,283,195 06/30/2044 1.20%5,500,000
WQC-2022-Pasco-00044 Water Quality Sewer6 21,511,498 06/30/2044 1.90%18,828,525 603,056
HAEIFAC - Reuse Facility Improvement Loan 1,500,000 07/01/2028 3.20% 773,691 144,949
PR18-96103-065 PWRF Pre-treatment Improvemen 1,000,000 06/01/2024 0.84% 418,535 418,535
S23-790A0-257 Dept of Commerce CERB11 4,250,000 07/31/2044 2.00% 4,250,000 -
WQC-2021-Pasco-00044 Clean Water Preservation 1,500,000 06/30/2044 1.20% 1,500,000 42,051
WQC-2024-Pasco-00091 Clean Water Preservation 34,934,159$ 06/30/2045 1.20%8,383,220
69,861,274 2,846,640 7
Total Business Type Debt 143,791,274$ 5,391,640$
1This bond requires interest only payments until 2030.
2New DWSRF loan issued by the Water/Sewer Utility in 2022 to be used for Water/Sewer infrast ructure improvements. DWSRF has held back 500,000 in reimbursement until project is complete
4 2024 Department of Ecology Loan- Water Quality Combined Financial Assistance to be used for WWTP infrastructure Total loan $26,283,195 recorded draw $5,500,000
6WQC-2021-Pasco-00044 Clean Water loan is approved for $21,511,498 and recorded draws $18,828,525
7DWL27107 DWSRF WPWTP Ph2 2 loan is approved for $9,753,259. and recorded draws $6,003,919
8New revenue bonds issued by the Water/Sewer Utility in 2023 to be used for Utility infrastructure improvements.
9New revenue bonds issued by the PWRF in 2023 to be used for PWRF infrastructure improvements.
10New DWSRF Loan in the amount of $510,000 drawn to date $23,636
11New CERB Dept of Commerce loan in the amount of 4,250,000 fully drawn used for PWRF improvements
5WQC-2021-Pasco-00020 Clean Water loan was approved $4,932,429 amended in 2023 600k added total of 5,532,429. Recorded draws of $5,149,124. In procees of amending loan by $383,305.
Final draw has been made in amt of $5,149,124
BUSINESS TYPE DEBT -LOANS
3 2024 Department of Ecology Loan- Water Quality Combined Financial Assistance to be used for WWTP total loan $34,934,159 drawn to date $8,383,220 Dept of Commerce has held back
500,000 in reimbursement until project is complete
Year Ending
December 31 Principal Interest Total Debt Service
2024 5,391,641$ 4,040,754$ 9,432,395$
2025 6,026,370 3,946,133 9,972,503
2026 6,287,378 3,937,892 10,225,270
2027 6,752,276 3,761,569 10,513,845
2028 6,900,114 3,574,588 10,474,702
2029-2033 33,492,855 15,218,333 48,711,188
2034-2038 36,590,133 10,261,054 46,851,187
2039-2043 34,514,035 4,433,845 38,947,880
2044-2048 6,216,472 719,427 6,935,899
2049-2053 1,620,000 87,335 1,707,335
TOTAL 143,791,274$ 49,980,930$ 193,772,204$
BUSINESS TYPE DEBT
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
the current portion of the amortized premium due within one year. The following table illustrates
the breakdown by fund type for current and non-current bonds payable and the effect of premium
or discount on balances. Balances shown are as of December 31, 2023.
Special Assessment Debt
Local improvement districts (LID's) are created for the primary purposes of constructing streets,
storm drainage, sidewalk, street lighting, water, and sewer improvements. The principal and
interest on the bond issues are expected to be paid solely from special assessments collected. The
assessments are liens against the property and are subject to foreclosure. The LID Guarantee Fund
ended the year with a balance of $432,906. There is no external debt issue for local improvement
districts, all outstanding debt is internally funded through inter-fund loans. See details in Note 6:
Inter-fund Balances and Transfers
NOTE 9: LEASES
Beginning in fiscal year 2022, the financial statements include the adoption of GASB Statement
No. 87, Leases. The primary objective of this statement is to enhance the relevance and consistency
of information about governments' leasing activities. This statement establishes a single model for
lease accounting based on the principle that leases are financings of the right to use an underlying
asset. With the implementation of GASB Statement No. 87, all existing and newly acquired leases
were analyzed and classified as either qualified or non-qualified leases, for both lessee and lessor
positions. Under this Statement, a lessee is required to recognize a lease liability and an intangible
right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow
of resources for all qualified leases. For additional information, refer to the disclosures below.
City as a Lessee
The City is a lessee of various leases for buildings and vehicles. Payments are made periodically
based on each individual contract term. Principal payments made through the current year for
qualified lease agreements were $755,389 with $215,204 charged to interest.
Future principal and interest lease payments as of December 31, 2023, were as follows:
Bonds Governmental Business Type Total
Current Bonds Payable 945,000$ 2,095,000$ 3,040,000$
Bond Premium/Discounts - 126,899 126,899
Total Current Bonds Payable 945,000 2,221,899 3,166,899
Non Current - Bonds Payable 22,065,000 44,825,000 66,890,000
Bond Premium/Discounts - 22,297,963 22,297,963
Total Non Current Bonds Payable 22,065,000 67,122,963 89,187,963
Total Bonds Payable 23,010,000 46,920,000 69,930,000
Total Bond Premium/Discounts - 22,424,862 22,424,862
Total Bonds Payable (Net of Premium/Discounts ) 23,010,000$ 69,344,862$ 92,354,862$
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
City as a Lessor
The City is a lessor of various leases for land, buildings and infrastructure. These leases each have
varying length terms bases on each individual contract term. The City recognized principal lease
revenue of $489,990 and interest revenue of $33,771 for qualified lease agreements.
Future lease principal and interest revenue receipts as of December 31, 2023, were as follows:
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
NOTE 10: RISK MANAGEMENT
City of Pasco is a member of the Washington Cities Insurance Authority (WCIA). Utilizing
Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation
Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the
purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring,
and / or jointly contracting for risk management services. WCIA has a total of 169 members.
New members initially contract for a three-year term, and thereafter automatically renew on an
annual basis. A one-year withdrawal notice is required before membership can be terminated.
Termination does not relieve a former member from its unresolved loss history incurred during
membership.
Liability coverage is written on an occurrence basis, without deductibles. Coverage includes
general, automobile, police, errors or omissions, stop gap, employment practices, prior wrongful
acts, and employee benefits liability. Limits are $4 million per occurrence in the self-insured
layer, and $16 million in limits above the self-insured layer is provided by reinsurance. Total
limits are $20 million per occurrence subject to aggregates and sublimits. The Board of
Directors determines the limits and terms of coverage annually.
All Members are provided a separate cyber risk policy and premises pollution liability coverage
group purchased by WCIA. The cyber risk policy provides coverage and separate limits for
security & privacy, event management, and cyber extortion, with limits up to $1 million and
subject to member deductibles, sublimits, and a $5 million pool aggregate. Premises pollution
liability provides Members with a $2 million incident limit and $10 million pool aggregate
subject to a $100,000 per incident Member deductible.
Insurance for property, automobile physical damage, fidelity, inland marine, and equipment
breakdown coverage are purchased on a group basis. Various deductibles apply by type of
coverage. Property coverage is self-funded from the members’ deductible to $1,000,000, for all
perils other than flood and earthquake, and insured above that to $400 million per occurrence
subject to aggregates and sublimits. Automobile physical damage coverage is self-funded from
the members’ deductible to $250,000 and insured above that to $100 million per occurrence
subject to aggregates and sublimits.
In-house services include risk management consultation, loss control field services, and claims
and litigation administration. WCIA contracts for certain claims investigations, consultants for
personnel and land use issues, insurance brokerage, actuarial, and lobbyist services.
WCIA is fully funded by its members, who make annual assessments on a prospectively rated
basis, as determined by an outside, independent actuary. The assessment covers loss, loss
adjustment, reinsurance and other administrative expenses. As outlined in the interlocal, WCIA
retains the right to additionally assess the membership for any funding shortfall.
An investment committee, using investment brokers, produces additional revenue by investment
of WCIA’s assets in financial instruments which comply with all State guidelines.
A Board of Directors governs WCIA, which is comprised of one designated representative from
each member. The Board elects an Executive Committee and appoints a Treasurer to provide
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
general policy direction for the organization. The WCIA Executive Director reports to the
Executive Committee and is responsible for conducting the day-to-day operations of WCIA.
The City is self-insured for medical and dental coverage for its employees. A third-party
administrator, Benefits Management, Inc., processes all claims for reimbursement. The third-party
administrator provides utilization management services and requires pre-authorization for all non-
emergency hospital confinements. The City currently maintains four months (16 weeks) of
program expense in cash reserves for medical and dental claims. Program expense includes average
claims as well as administrative and third-party provider costs. To limit the exposure for large
claims, the City purchases individual stop-loss coverage from a commercial insurance carrier that
limits the City's exposure for claim losses to $100,000 per individual.
The number of medical/dental claims in excess of commercial insurance for the last three years
are:
2021 2022 2023
$5,928,124 $6,604,033 $7,424,274
NOTE 11: JOINT AGREEMENT/JOINT VENTURES
A. Bi-County Police Information Network
The Bi-County Police Information Network (BI-PIN) was established November 24, 1982, when an
Interlocal Agreement was entered into by eight participating municipal corporations; the cities of
Kennewick, Pasco, Richland, Connell West Richland, and Prosser, and Benton and Franklin
Counties. BI-PIN was established to assist the participating police and sheriff's departments in the
deterrence and solution of criminal incidents. BI-PIN is served by an Executive Committee composed
of the City Manager of each of the cities and a member from each of the Boards of County
Commissioners of Benton and Franklin Counties. A liaison from the Bi-County Chiefs and Sheriffs
is an ex officio, non-voting member.
The allocation of financial participation among the participating jurisdictions is based upon the
approved budget for that year and is billed quarterly in advance to each agency. On dissolution of the
Interlocal Agreement, the net position will be shared based upon participant contribution.
Effective January 1, 1992, the City of Kennewick assumed responsibility for operation of the BI-PIN
system. As the Operating Jurisdiction, Kennewick provides all necessary support services for the
operation of BI-PIN such as accounting, legal services, and risk management and information
systems.
BI-PIN is currently in the process of implementing a new RMS/JMS system as well as upgrading all
supporting infrastructure. The City of Pasco's equity interest in BI-PIN was $314,273 on December
31, 2023, which is reported as an investment in joint ventures in the government-wide statement of
net position. The change in equity is reflected in the government-wide statement of activities under
Public Safety. The City does not anticipate any income distributions from BI-PIN since charges are
assessed only to recover anticipated expenses.
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Complete separate financial statements for BI-PIN may be obtained at the City of Kennewick, 210
W. 6th Ave., Kennewick, Washington, 99336.
B. Metro Drug Forfeiture Fund
The Metropolitan Controlled Substance Enforcement Group (Metro) established prior to 1987, when
Interlocal Agreement entered into by six participating municipal corporations, the cities of
Kennewick, Pasco, Richland, and West Richland, and Benton and Franklin Counties. Metro
established to account for the proceeds of forfeitures, federal grants, and court ordered contributions,
and to facilitate the disbursement of those proceeds for the purpose of drug enforcement and
investigations. Metro served by an Executive Committee composed of the City Manager or designee
of each of the cities and a member from each of the Boards of County Commissioners of Benton and
Franklin Counties. In addition, a Governing Board consisting of the Chiefs of Police from the cities
and the Sheriffs from the counties administers daily activity.
Effective July 1, 2009, the City of Kennewick assumed responsibility for the operation of Metro. As
the Operating Jurisdiction, Kennewick provides accounting services for the operation of Metro.
The City of Pasco's equity interest in Metro was $73,272 on Dec 31, 2023, which is reported as an
investment in joint ventures in the government-wide statement of net position. The change in equity
is reflected in the government-wide statement of activities under Public Safety. The City does not
anticipate any income distributions from Metro.
Complete separate financial statements for Metro obtained at the City of Kennewick, 210 West Sixth
Avenue, Kennewick, Washington.
C. SECOMM - SECOMM provides public safety communications services to the Cities of
Kennewick, Richland, Pasco and the Counties of Benton and Franklin. Each owns an equal
share of SECOMM’s net assets. Financial participation is allocated among the five
participants based on equal shares of capital expenses, predetermined fixed costs, direct costs
and percentages of use. SECOMM also provides service through contracts to the Cities of
West Richland and Prosser, Connell and the Benton and Franklin County Fire Protection
Districts, Port of Pasco, Walla Walla Fire District #5 and the North Franklin County Hospital
district. Service contract agencies are assessed on a cost per capita or cost per call basis. The
City of Pasco’s equity interest in SECOMM as of December 31, 2023 was $1,202,241 which
is reported as an asset in the government-wide Statement of Net Assets. The change in equity
is reflected in Public Safety under the government-wide Statement of Activities. Upon
dissolution of the Interlocal Agreement, the net assets will be shared equitably among the
participants.
Complete and separate financial statements for all operations of Benton County Emergency
Services may be obtained at the City of Richland, 625 Swift Blvd, Richland, Washington.
D. Tri-City Animal Control Authority
In 2005 the city entered into an interlocal agreement with the cities of Kennewick and Richland
to jointly fund the operations of the Animal Control Authority (ACA). The ACA was
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established to provide animal control and sheltering services. ACA is served by an Executive
Committee composed of the City Manager, or designee, of each of the cities.
In 2005, the City of Pasco was designated as the Operation Jurisdiction for the ACA. As the
Operating Jurisdiction, the City provides all necessary support services for the operation such
as accounting, contract administration and risk management. As of July 1, 2022, the City
agreed to manage the operations of the authority.
NOTE 12: RELATED PARTIES/ORGANIZATIONS
Pasco Public Facility District Pursuant to RCW 35.57 (the “City PFD Act”) the Pasco Public
Facilities District was formed and created by Ordinance No. 3558 on July 15, 2002, coextensive
with the boundaries of the City, with the powers and authority set forth in the City PFD Act. The
District was established for the purpose of acquiring, constructing, owning, remodeling,
maintaining, equipping, re-equipping, repairing, financing, operating one or more Regional
Centers, as defined by the RCW 35.57.020 and/or participating with any other qualified public
facilities district in a cooperative and joint development of a Regional Center in the Tri-Cities area
by interlocal agreement.
The members of the board of directors of the District (the “PFD Board”) shall be selected and
appointed by the Council, as required by the RCW. The PFD Board consisted of five members.
Three of the members will be appointed based on recommendations from local organizations. The
members serve four-year terms. The Council may, by resolution, remove a member for any reason.
Vacancies will be filled by appointment by the Council.
All corporate powers of the District will be exercised by or under the authority of the PFD Board;
and the business, property and affairs of the District shall be managed under the direction of the
PFD Board, except as may be otherwise provided for by law or in its Charter.
Complete separate financial statements for the District may be obtained from the City of Pasco,
P.O. Box 293, Pasco, WA 99301.
Downtown Pasco Development Authority
Pursuant to RCW 35.21, the Downtown Pasco Development Authority was formed and created by
Ordinance No. 3985 (the DPDA Act) on December 20, 2010, coextensive with the boundaries of
the City, with the powers and authority set forth in the City DPDA Act. The Authority was created
to administer and execute Federal grants or programs; to receive and administer private
funds, goods or services for any lawful public service; and to perform any lawful public
purpose or public function to provide for the revitalization and enhancement of the
downtown Pasco area.
The members of the board of directors of the Authority (the “DPDA Board”) are selected and
appointed by the Mayor of the City of Pasco, subject to confirmation by the City Council. The
DPDA Board consists of seven members. Five of the members are representative of for-profit
business or property owners within the downtown area. Two members are representative of the
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banking and/or real estate profession, and/or representatives of business management. The
members serve four-year terms. The Council may, by resolution, remove a member for any reason.
Vacancies will be filled by appointment by the Mayor, subject to confirmation by the City Council.
All corporate powers of the Authority will be exercised by or under the authority of the DPDA
Board; and the business, property and affairs of the Authority shall be managed under the direction
of the DPDA Board, except as may be otherwise provided by law or in its Charter.
In 2023, the City expended $132,500 in subsidies and pass-through grants to the DPDA. As part
of its charter, the DPDA was granted the right to receive the revenues generated by the Farmers’
Market and the Specialty Kitchen program. The activity from those two programs is not reflected
in the amount noted above.
In 2023, the Executive Director for the Authority resigned resulting in both cessation of most
Authority operations and financial hardship. Upon Executive Director resignation, the City
reassumed operational control of City assets, including Farmers’ Marke t and Pasco Specialty
Kitchen, which made up a significant portion of historical DPDA responsibilities. Reflective of
the uncertainty and challenges faced in 2023, vacancies on the board were left unfilled.
Financial statements for the Authority may be obtained from the Downtown Pasco Development
Authority at 720 W. Lewis Street, Suite 131, Pasco, WA 99301.
Trade, Recreation, Agricultural Center
In 1994 the City entered into an agreement with Franklin County for the Trade, Recreation, and
Agricultural Center (TRAC). The City and Franklin County share in the costs of operating and
covering TRAC’s debt service. Franklin County handles all operating decisions and financial
reporting for TRAC. In Spring of 2019, Franklin County partnered with HAPO Community Credit
Union for a ten-year naming rights agreement. As such, for the purposes of this document, the
terms HAPO Center and TRAC are interchangeable.
The City accounts for its portion of TRAC activity in the TRAC Special Revenue Fund. For
calendar year 2023, the City of Pasco paid Franklin County $197,500 for operating expenditures.
In October 2023, Franklin County awarded a new management contract to the Harris-White-
Leisure Group. Due to significant facility upgrades suggested by the new management company,
the City contracted out for an independent facility audit to verify the recommendations. Franklin
County agreed to refund half of that expense to the City, for a total reimbursement of $17,500.
Additionally, in 2014 the City provided $100,000 to the County to assist with TRAC’s cash flows.
This will be returned to the City in 2026, when the existing agreement lapses. It is classified on
the balance sheet as a non-current asset: Due from Other Government. As of December 31, 2023,
the TRAC Fund had a fund balance of $237,759.
Complete financial statements for TRAC may be obtained from Franklin County, 1016 N. 4th
Avenue, Pasco, Washington.
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Housing Authority of the City of Pasco and Franklin County
The Housing Authority of the City of Pasco and Franklin County was formed and created by
Ordinance No. 2299 on September 8, 1981, in order to pursue the rehabilitation and redevelopment
of blighted areas containing unsanitary or unsafe habitations located within the City of Pasco and
Franklin County. Its formation empowered the joint housing authority to exercise all rights referred
to under RCW 35.82 “Housing Authority Law.”
Three of the five Authority board members are appointed by the City Council.
Financial statements for the Authority may be obtained from the Housing Authority of the City of
Pasco and Franklin County, 2505 W. Lewis Street, Pasco, WA 99301.
NOTE 13: JOINTLY GOVERNED ORGANIZATIONS
Tri-Cities Regional Public Facilities District
Pursuant to RCW 35.57 the Tri-Cities Regional Public Facilities District was formed jointly by
the Cities of Pasco, Kennewick, and Richland. The District was established for the purpose of
acquiring, constructing, owning, remodeling, maintaining, equipping, re-equipping, repairing,
financing, operating one or more Regional Centers, as defined by the RCW35.57.020 and/or
participating with any other qualified public facilities districts in a cooperative and joint
development of a Regional Center in the Tri-Cities area, by interlocal agreement.
The District is governed by a nine-member board, with three members representing each city.
Each member must either be a member of the City Council or the Public Facilities District of the
representative city.
Franklin County Emergency Management
Franklin County Emergency Management (FCEM) is a political subdivision of Franklin County
and its municipalities. The FCEM is responsible for coordinating and establishing emergency
response plans to prepare Franklin County for emergencies involving the following: Energy
Northwest; the Hanford Nuclear Reservation; the Pasco Airport; and all Homeland Security,
natural and man-made disasters.
FCEM is governed by a seven-member board, with two County Commissioners, one City Manager
or designee from each of the following cities: Connell, Kahlotus, and Mesa. The City of Pasco
has two representatives on the board due to its population base.
Benton-Franklin Council of Governments
The Benton-Franklin Council of Governments (BFCG) is a voluntary association of the units of
local government, whose purpose is to facilitate a cooperative approach to regional problem
solving.
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Seventeen regular voting members represent the two counties, local governments, including a
Public Utility District, a Transportation District, a Port and the Washington State Department of
Transportation. The City of Pasco has one City Council member as its voting representative on
the Board. In addition to regular voting members, there is one associate member and two affiliate
members.
Benton-Franklin Council of Governments Economic Development District
The Benton-Franklin Council of Governments Economic Development District (EDD) is a
voluntary association of the units of local government and private sector members whose purpose
is to facilitate a cooperative approach to regional economic development.
The board is comprised of the members of the Benton-Franklin Council of Governments plus nine
representatives from the private sector.
Benton County Emergency Services (BCES)
BCES was formed January 1, 1997, through an interlocal agreement entered into by the Cities
of Richland, Kennewick, West Richland, Benton City and Prosser as well as Benton County.
A second amended and restated interlocal agreement was made and entered into by and
between the following entities: Benton County, Franklin County, the Cities of Kennewick,
Richland, West Richland, Prosser, Benton City, and Pasco, Benton County Fire Protection
Districts and the Public Utility District #1 of Benton County. An Executive Board oversees
the operations of BCES and consists of the City Managers (or designee) from the Cities of
Kennewick, Pasco and Richland, City Administrators from Prosser and West Richland, a
Council member from Benton City, a Benton County Commissioner, a Franklin County
Commissioner and a single representative collectively representing Benton County Fire
Protection Districts. The City of Richland serves as the operating jurisdiction providing all the
necessary administrative support services and reporting for BCES. The total amount paid by
BCES in 2023 for these services was $483,288. No distributions of income to the City are
expected since charges are assessed only to recover anticipated expenses.
NOTE 14: EMPLOYEE RETIREMENT SYSTEMS AND PENSION PLANS
The following table represents the aggregate pension amounts for all plans for the year 2023:
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Aggregate Pension Amounts - All Plans
Pension Liabilities $ 2,507,079
Pension Assets (24,367,415)
Deferred Outflows of Resources 14,600,941
Deferred Inflows of Resources 10,372,259
Pension Expense $ (990,071)
State Sponsored Pension Plans
Substantially all city’s full-time and qualifying part-time employees participate in one of the
following statewide retirement systems administered by the Washington State Department of
Retirement Systems, under cost-sharing, multiple-employer public employee defined benefit and
defined contribution retirement plans. The state Legislature establishes, and amends, laws
pertaining to the creation and administration of all public retirement systems.
The Department of Retirement Systems (DRS), a department within the primary government of
the State of Washington, issues a publicly available annual comprehensive annual financial report
(ACFR) that includes financial statements and required supplementary information for each plan.
The DRS ACFR may be downloaded from the DRS website at www.drs.wa.gov.
Public Employee’s Retirement System (PERS)
PERS members include elected officials; state employees; employees of local governments; and
higher education employees not participating in higher education retirement programs.
PERS is comprised of three separate pension plans for accounting purposes: Plan 1, Plan 2/3 and
Plan 3. Plan 1 accounts for the defined benefits of Plan 1 members. Plan 2/3 accounts for the
defined benefits of Plan 2 members and the defined benefit portion of benefits for Plan 3 members.
Plan 3 accounts for the defined contribution portion of benefits for Plan 3 members. Although
employees can be a member of only Plan 2 or Plan 3, the defined benefits of Plan 2 and Plan 3 are
accounted for in the same pension trust fund. All assets of Plan 2/3 may legally be used to pay the
defined benefits of any Plan 2 or Plan 3 members or beneficiaries.
PERS Plan 1 provides retirement, disability, and death benefits. Retirement benefits are
determined as 2% of the member’s average final compensation (AFC) times the member’s years
of service. The AFC is the average of the member’s 24 highest consecutive service months.
Members are eligible for retirement from active status at any age with at least 30 years of service,
at age 55 with at least 25 years of service, or at age 60 with at least five years of service. PERS
Plan 1 retirement benefits are actuarially reduced if a survivor benefit is chosen. Members retiring
from active status prior to the age of 65 may also receive actuarially reduced benefits. Other
benefits include an optional cost-of-living adjustment (COLA). PERS 1 members were vested
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after the completion of five years of eligible service. The plan was closed to new entrants on
September 30, 1977.
Contributions
The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The
employer contribution rate is developed by the Office of the State Actuary, adopted by the Pension
Funding Council and is subject to change by the legislature. The PERS Plan 1 required
contribution rates (expressed as a percentage of covered payroll) for 2023 were as follows:
* For employees participating in JBM, the contribution rate was 12.26%.
PERS Plan 2/3 provides retirement, disability, and death benefits. Retirement benefits are
determined as 2% of the member’s average final compensation (AFC) times the member’s years
of service for Plan 2 and 1% of AFC for Plan 3. The AFC is the average of the member’s 60
highest-paid consecutive service months. Members are eligible for retirement with a full benefit
at 65 with at least five years of service credit. Retirement before age 65 is considered an early
retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years
of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies
according to age for each year before age 65. PERS Plan 2/3 retirement benefits are actuarially
PERS Plan 1
Actual Contribution Rates Employer Employee*
January – June
PERS Plan 1 6.36% 6.00%
PERS Plan 1 UAAL 3.85%
Administrative Fee 0.18%
Total 10.39% 6.00%
July – August
PERS Plan 1 6.36% 6.00%
PERS Plan 1 UAAL 2.85%
Administrative Fee 0.18%
Total 9.39% 6.00%
September – December
PERS Plan 1 6.36% 6.00%
PERS Plan 1 UAAL 2.97%
Administrative Fee 0.20%
Total 9.53% 6.00%
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reduced if a survivor benefit is chosen. Other PERS Plan 2/3 benefits include a COLA based on
the CPI, capped at 3% annually. PERS 2 members are vested after completing five years of eligible
service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of
service; or after five years of service if 12 months of that service are earned after age 44.
PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and
investment earnings on those contributions. Members are eligible to withdraw their defined
contributions upon separation. Members have multiple withdrawal options, including purchase of
an annuity. PERS Plan 3 members are immediately vested in the defined contribution portion of
their plan.
Contributions
The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the
State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The rates are adopted
by the Pension Funding Council and are subject to change by the Legislature. The employer rate
includes a component to address the PERS Plan 1 Unfunded Actuarial Accrued Liability (UAAL).
As established by Chapter 41.34 RCW, Plan 3 defined contribution rates are set at a minimum of
5% and a maximum of 15%. PERS Plan 3 members choose their contribution rate from six options
when joining membership and can change rates only when changing employers. Employers do
not contribute to the defined contribution benefits.
The PERS Plan 2/3 defined benefit required contribution rates (expressed as a percentage of
covered payroll) for 2023 were as follows:
PERS Plan 2/3
Actual Contribution Rates Employer 2/3 Employee 2* Employee 3**
January – June
PERS Plan 2/3 6.36% 6.36% Varies
PERS Plan 1 UAAL 3.85%
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Administrative Fee 0.18%
Total 10.39% 6.36%
July – August
PERS Plan 2/3 6.36% 6.36% Varies
PERS Plan 1 UAAL 2.85%
Administrative Fee 0.18%
Total 9.39% 6.36%
September – December
PERS Plan 2/3 6.36% 6.36% Varies
PERS Plan 1 UAAL 2.97%
Administrative Fee 0.20%
Total 9.53% 6.36%
* For employees participating in JBM, the contribution rate was 15.90%.
**For employees participating in JBM, the minimum contribution rate was 7.50%.
The City’s actual PERS plan contributions were $706,753 to PERS Plan 1 and $1,325,339 to PERS
Plan 2/3 for the year ended December 31, 2023.
Law Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF)
LEOFF was established in 1970, and its retirement benefit provisions are contained in Chapter
41.26 RCW. LEOFF membership includes all of the state’s full-time, fully compensated, local
law enforcement commissioned officers, fire fighters and, as of July 24, 2005, emergency medical
technicians.
LEOFF Plan 1 provides retirement, disability, and death benefits. Retirement benefits are
determined per year of service calculated as a percent of final average salary (FAS) as follows:
x 20+ years of service – 2.0% of FAS
x 10-19 years of service – 1.5% of FAS
x 5-9 years of service – 1% of FAS
The FAS is the basic monthly salary received at the time of retirement, provided a member has
held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the
average of the highest-paid consecutive 24 months’ within the last ten years of service. Members
are eligible for retirement with five years of service at the age of 50. Other benefits include a
COLA. LEOFF 1 members were vested after the completion of five years of eligible service. The
plan was closed to new entrants on September 30, 1977.
Contributions
Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute 0%, as long as the
plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions
for fiscal year 2023. Employers paid only the administrative expense of 0.20% of covered payroll.
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LEOFF Plan 2 provides retirement, disability, and death benefits. Retirement benefits are
determined as 2% of the FAS per year of service (the FAS is based on the highest-paid consecutive
60 months). Members are eligible for retirement with a full benefit at 53 with at least five years
of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the
member has at least 20 years of service and is age 50 - 52, the reduction is 3% for each year prior
to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2
retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other
benefits include a COLA (based on the CPI), capped at 3% annually. LEOFF 2 members are
vested after the completion of five years of eligible service.
Contributions
The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the
State Actuary to fully fund Plan 2. The rates are adopted by the LEOFF Plan 2 Retirement Board
and are subject to change by the Legislature.
Effective July 1, 2017, when a LEOFF employer charges a fee or recovers costs for services
rendered by a LEOFF 2 member to a non-LEOFF employer, the LEOFF employer must cover both
the employer and state contributions on the LEOFF 2 basic salary earned for those services. The
state contribution rate (expressed as a percentage of covered payroll) was 3.41% in 2023.
The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for
2023 were as follows:
LEOFF Plan 2
Actual Contribution Rates Employer Employee
January – August
State and local governments 5.12% 8.53%
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Administrative Fee 0.18%
Total 5.30% 8.53%
Ports and Universities 8.53% 8.53%
Administrative Fee 0.18%
Total 8.71% 8.53%
September – December
State and local governments 5.12% 8.53%
Administrative Fee 0.20%
Total 5.32% 8.53%
Ports and Universities 8.53% 8.53%
Administrative Fee 0.20%
Total 8.73% 8.53%
The City’s actual contributions to the plan were $1,299,855 for the year ended December 31, 2023.
The Legislature, by means of a special funding arrangement, appropriates money from the state
General Fund to supplement the current service liability and fund the prior service costs of Plan 2
in accordance with the recommendations of the Office of the State Actuary and the LEOFF Plan
2 Retirement Board. This special funding situation is not mandated by the state constitution and
could be changed by statute. For the state fiscal year ending June 30, 2023, the state contributed
$87,966,142 to LEOFF Plan 2. The amount recognized by the City as its proportionate share of
this amount is $789,575.
Actuarial Assumptions
The total pension liability (TPL) for each of the DRS plans was determined using the most recent
actuarial valuation completed in 2023 with a valuation date of June 30, 2022. The actuarial
assumptions used in the valuation were based on the results of the Office of the State Actuary’s
(OSA) 2013-2018 Demographic Experience Study and the 2021 Economic Experience Study.
Additional assumptions for subsequent events and law changes are current as of the 2022 actuarial
valuation report. The TPL was calculated as of the valuation date and rolled forward to the
measurement date of June 30, 2023. Plan liabilities were rolled forward from June 30, 2022, to
June 30, 2023, reflecting each plan’s normal cost (using the entry-age cost method), assumed
interest and actual benefit payments.
x Inflation: 2.75% total economic inflation; 3.25% salary inflation
x Salary increases: In addition to the base 3.25% salary inflation assumption, salaries are also
expected to grow by service-based salary increase.
x Investment rate of return: 7.00%
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Mortality rates were developed using the Society of Actuaries’ Pub. H-2010 mortality rates, which
vary by member status (e.g. active, retiree, or survivor), as the base table. OSA applied age offsets
for each system, as appropriate, to better tailor the mortality rates to the demographics of each
plan. OSA applied the long-term MP-2017 generational improvement scale, also developed by the
Society of Actuaries, to project mortality rates for every year after the 2010 base table. Mortality
rates are applied on a generational basis; meaning, each member is assumed to receive additional
mortality improvements in each future year throughout their lifetime.
Methods did not change from the prior contribution rate setting June 30, 2021 Actuarial Valuation
Report (AVR). OSA did make an assumption change to adjust TRS Plan 1 assets, LEOFF Plan
1/2 assets, and LEOFF participant data to reflect certain material changes occurring after the June
30, 2022 measurement date.
Discount Rate
The discount rate used to measure the total pension liability for all DRS plans was 7.0%.
To determine that rate, an asset sufficiency test was completed to test whether each pension plan’s
fiduciary net position was sufficient to make all projected future benefit payments for current plan
members. Based on OSA’s assumptions, the pension plans’ fiduciary net position was projected
to be available to make all projected future benefit payments of current plan members. Therefore,
the long-term expected rate of return of 7.0% was used to determine the total liability.
Long-Term Expected Rate of Return
The long-term expected rate of return on the DRS pension plan investments of 7.0% was
determined using a building-block-method. In selecting this assumption, OSA reviewed the
historical experience data, considered the historical conditions that produced past annual
investment returns, and considered Capital Market Assumptions (CMA’s) and simulated expected
investment returns provided by the Washington State Investment Board (WSIB). The WSIB uses
the CMA’s and their target asset allocation to simulate future investment returns at various future
times.
Estimated Rates of Return by Asset Class
The table below summarizes the best estimates of arithmetic real rates of return for each major
asset class included in the pension plan’s target asset allocation as of June 30, 2021. The inflation
component used to create the table is 2.2% and represents the WSIB’s most recent long-term
estimate of broad economic inflation.
Asset Class Target Allocation
% Long-Term
Expected Real
Rate of Return
Arithmetic
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Fixed Income 20% 1.5%
Tangible Assets 7% 4.7%
Real Estate 18% 5.4%
Global Equity 32% 5.9%
Private Equity 23% 8.9%
100%
Sensitivity of the Net Pension Liability/(Asset)
The table below presents the City’s proportionate share of the net pension liability calculated using
the discount rate of 7%, as well as what the City’s proportionate share of the net pension liability
would be if it were calculated using a discount rate that is 1-percentage point lower (6%) or 1-
percentage point higher (8%) than the current rate.
Pension Plan Fiduciary Net Position
Detailed information about the State’s pension plans’ fiduciary net position is available in the
separately issued DRS financial report.
Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and
Deferred Inflows of Resources Related to Pensions
At June 30, 2023, the City reported its proportionate share of the net pension liabilities and assets
as follows
Liability (or Asset)
PERS 1 2,507,079
PERS 2/3 (5,804,924)
LEOFF 1 (1,998,341)
1% Decrease Current Discount
Rate 1% Increase
6% 7% 8%
PERS Plan 1 $ 3,502,579 $ 2,507,079 $ 1,638,242
PERS Plan 2/3 6,313,550 (5,804,924) (15,761,016)
LEOFF Plan 1 (1,771,940) (1,998,341) (2,194,666)
LEOFF Plan 2 $ 2,175,474 $ (13,139,064) $ (25,672,699)
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LEOFF 2 (13,139,064)
The amount of the asset reported above for LEOFF Plans 1 and 2 reflects a reduction for State
pension support provided to the City. The amount recognized by the City as its proportionate share
of the net pension asset, the related State support, and the total portion of the net pension asset that
was associated with the City were as follows:
On June 30, the City’s proportionate share of the collective net pension liabilities was as follows:
Employer contribution transmittals received and processed by the DRS for the fiscal year ended
June 30, 2023, are used as the basis for determining each employer’s proportionate share of the
collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer
Allocations for all plans except LEOFF 1.
LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to
LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2023.
Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). The
state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other
employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully
funded and no further employer contributions have been required since June 2000. If the plan
becomes underfunded, funding of the remaining liability will require new legislation. The
LEOFF 1 Asset LEOFF 2 Asset
Employer’s proportionate share (1,998,341) (13,139,064)
State’s proportionate share of the net
pension asset associated with the
employer
(13,516,728) (8,390,471)
TOTAL (15,515,069) (21,529,535)
Proportionate Proportionate Change in
Plan Share 6/30/22 Share 6/30/23 Proportion
PERS 1 0.093487% 0.109828% 0.016341%
PERS 2/3 0.121879% 0.141629% 0.019750%
LEOFF 1 0.067125% 0.067329% 0.000204%
LEOFF 2 0.486887% 0.547781% 0.060894%
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
allocation method the plan chose reflects the projected long-term contribution effort based on
historical data.
In fiscal year 2023, the state of Washington contributed 39% of LEOFF 2 employer contributions
pursuant to RCW 41.26.725 and all other employers contributed the remaining 61% of employer
contributions.
Pension Expense
For the year ended December 31, 2023, the city recognized pension expense as follows:
Pension Expense 2023
PERS 1 $ 503,872
PERS 2/3 (863,630)
LEOFF 1 (180,708)
LEOFF 2 (240,637)
Old Fire Pension (208,968)
TOTAL $ (990,071)
Deferred Outflows of Resources and Deferred Inflows of Resources
At December 31, 2023, the city reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following:
Deferred Outflows Deferred Inflows
PERS 2/3 of Resources of Resources
Differences between expected and actual experience $ 1,182,456 $ (64,859)
Net difference between projected and actual investment earnings on
pension plan investments - (2,187,646)
Changes of assumptions 2,437,108 (531,194)
Changes in proportion share 71,400 (1,099,594)
Contributions subsequent to the measurement date 684,824 -
Deferred Outflows Deferred Inflows
PERS 1 of Resources of Resources
Differences between expected and actual experience
$ - $ -
Net difference between projected and actual investment earnings on
pension plan investments - (282,809)
Changes of assumptions - -
Changes in proportion share - -
Contributions subsequent to the measurement date 319,016 -
TOTAL $ 319,016 $ (282,809)
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
TOTAL $ 4,375,788 $ (3,883,293)
Deferred Outflows Deferred Inflows
LEOFF 1 of Resources of Resources
Differences between expected and actual experience $ - $ -
Net difference between projected and actual investment earnings on
pension plan investments - (132,508)
Changes of assumptions - -
Changes in proportion share - -
Contributions subsequent to the measurement date - -
TOTAL $ - $ (132,508)
Deferred Outflows Deferred Inflows
LEOFF 2 of Resources of Resources
Differences between expected and actual experience $ 5,366,935 $ (108,098)
Net difference between projected and actual investment earnings on
pension plan investments - (2,780,197)
Changes of assumptions 3,356,326 (1,079,270)
Changes in proportion share 516,329 (1,898,738)
Contributions subsequent to the measurement date 666,547 -
TOTAL $ 9,906,137 $ (5,866,303)
Deferred Outflows Deferred Inflows
Old Fire Pension of Resources of Resources
Differences between expected and actual experience $ - $ -
Net difference between projected and actual investment earnings on
pension plan investments - (207,347)
Changes of assumptions - -
Changes in proportion share - -
Contributions subsequent to the measurement date - -
TOTAL $ - $ (207,347)
TOTAL DEFERRED OUTFLOWS Deferred Outflows Deferred Inflows
AND INFLOWS FOR ALL PLANS of Resources of Resources
Differences between expected and actual experience $ 6,549,392 $ (172,957)
Net difference between projected and actual investment earnings on
pension plan investments (5,590,508)
Changes of assumptions 5,793,433 (1,610,464)
Changes in proportion share 587,729 (2,998,331)
Contributions subsequent to the measurement date 1,670,387 -
TOTAL $ 14,600,941 $ (10,372,260)
Deferred outflows of resources related to pensions resulting from the City’s contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability
in the year ended December 31, 2024. Other amounts reported as deferred outflows and deferred
inflows of resources related to pensions will be recognized in pension expense as follows:
Year ended
December 31: PERS 1 PERS 2/3 LEOFF 1 LEOFF 2
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
2024 $ (192,412) $ (1,228,949) $ (90,852) $ (1,240,084)
2025 (241,980) (1,440,397) (114,008) (1,689,049)
2026 149,201 1,607,645 70,723 2,267,139
2027 2,381 466,430 1,629 742,969
2028 - 462,671 - 810,182
Thereafter - (59,729) - 2,482,130
Firemen's Pension
Plan Description
Plan Administration: The Firemen’s’ Pension Fund (FPF) is administered by the City of Pasco.
The plan is a single employer defined benefit pension plan that provides pensions for
firefighters that were hired prior to 1970.
The Municipal Firefighters' Pension board consists of the following five members, ex officio,
the mayor, or in a city of the first class, the mayor or a designated representative who shall be
an elected official of the city, who shall be chairperson of the board, the city comptroller or
clerk, the chairperson of finance of the city council, or if there is no chairperson of finance, the
city treasurer, and in addition, two regularly employed or retired firefighters elected by secret
ballot of those employed and retired firefighters who are subject to the jurisdiction of the board.
The members to be elected by the firefighters shall be elected annually for a two-year term.
The two firefighters elected as members shall, in turn, select a third eligible member who shall
serve as an alternate in the event of an absence of one of the regularly elected members. In case
a vacancy occurs in the membership of the firefighters or retired members, the members shall
in the same manner elect a successor to serve the unexpired term. The board may select and
appoint a secretary who may but need not be a member of the board. In case of absence or
inability of the chairperson to act, the board may select a chairperson pro tempore who shall
during such absence or inability to perform the duties and exercise the powers of the
chairperson. A majority of the members of the board shall constitute a quorum and have power
to transact business.
Benefits provided. All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides
retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives
the greater of the benefit payable under the Washington Law Enforcement Officers' and
Firefighters' Retirement System and the benefits available under the provisions of prior law.
Where benefits under the old law exceed those under the new law for any firefighter, the excess
benefits are paid from the FPF of the city employing the member on March 1, 1970.
All members are retired and drawing benefits. Benefit terms provide for cost-of-living
adjustments to each member's retirement benefit. There are two types of increases: escalation
by salary in proportion to the current salary of the rank from which the firefighter retired, or an
increase proportionate to the increase in the Seattle-area CPI, with the change computed
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least
2% each year. The former applies to firefighters who retired from service after 1969, their
survivors, and to firefighters who retired for duty disability (but not their survivors) after 1969.
The latter applies to all other types of monthly benefits.
Employees Covered by Benefit Terms: Plan membership is limited to active members of the
Firefighters' Pension Fund (FPF) as of March 1, 1970. On that date, the Washington Law
Enforcement Officers' and Firefighters' System (LEOFF) was established. FPF is responsible
for paying the pensions of those members retired prior to March 1, 1970 and for providing the
"excess benefit", the excess of FPF formula benefits over the LEOFF benefits. Therefore, the
plan is closed to new members.
At December 31, 2023, the benefit terms covered the following employees:
Category Count
Inactive employees, spouses, or beneficiaries currently receiving benefit payments: 6
Inactive employees entitled to but not yet receiving benefit payments: -
Active employees -
Total 6
Contributions. As long as the FPF provides for benefits to covered members, the City will be
eligible to receive a share of the State's distribution of the fire insurance premium taxes. The
amount the City receives is 25% of all monies received by the State from taxes on fire insurance
premiums. Contributions can also come from taxes paid pursuant to the provisions of RCW
41.16.060. This statute require that each municipality levy up to $0.45 (only $0.225 of which
can be in excess of the property tax limit pursuant to RCW 84.52.043) per $1,000 of assessed
valuation, based on reports by a qualified actuary, to maintain the fund.
Reporting Period contributions: $123,869
Investments
The Fire Pension Plan does not have an investment policy for investing pension funds. At year
end investments are reported at quoted market price as provided by our broker, US Bank. At
December 31, 2023 the Fire Pension Plan had the following investments, reported at fair market
value.
Federal Agency $ 2,718
Mutual Funds $ 3,732,144
Rate of Return. For the year ended December 31, 2023, the annual money-weighted rate of
return on pension plan investments, net of pension plan investment expense, was 24.10%. The
money-weighted rate of return expresses investment performance, net of investment expense,
adjusted for the changing amount actually invested.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Actuarial Assumptions: The total pension liability in the December 31, 2023 actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included in
the measurement, unless otherwise specified:
Discount Rate 7.00%
Investment Rate of Return 7.00%
Inflation 2.75%
Salary increases 3.25%
Mortality rates were based on tables from the Society of Actuaries.
Experience studies come from the State of Washington. The last economic experience study
was done in 2021 and the last demographic experience study was 2018.
There were no ad hoc postemployment benefit changes (including ad hoc COLAs) to the plan.
Discount rate. The discount rate used to measure the total pension liability was 7.0%. The
projection of cash flows used to determine the discount rate assumed City contributions were
equal to the statutorily calculated contribution of state fire insurance premiums for the next 20
years. Based on this assumption, the pension plan's fiduciary net position was projected to be
available to make all projected future benefit payment for current plan members. Therefore,
the long-term expected rate of return on pension plan investments was applied to all periods of
projected benefit payments to determine the total pension liability.
Sensitivity of liabilities to changes in the discount rate. Sensitivity of the total and net pension
liability to changes in the discount rate. The total and net pension liability of the City, as well
as what the City's total and net pension liability would be if they were calculated using a
discount rate that is one percentage point lower (6.00%) or one percentage point higher (8.00%)
follows:
Fiduciary Net Position. The components of the net pension liability of the City on December
31, 2023, were as follows:
Total Pension Liability (Asset)
1% Decrease
Current Discount
Rate 1% Increase
6.00% 7.00% 8.00%
$ 1,121,383 $ 1,035,086 $ 959,711
Net Pension Liability (Asset) 1% Decrease
Current Discount
Rate 1% Increase
6.00% 7.00% 8.00%
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
$ (3,338,789) $ (3,425,086) $ (3,500,461)
The following table presents the changes in Net Pension Liability for year ending December 31,
2023.
Deferred Outflows of
Resources and Deferred
Inflows of Resources
On December 31, 2023, the City recognized a pension expense of (-$208,968). The City reported
deferred outflows of resources and deferred inflows of resources related to the Fire Pension Plan
from the following sources:
Changes in the Net Pension Liability
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability
Balances at January 1, 2023 $ 939,198 $ 3,567,748 $ (2,628,550)
Changes for the year:
Service Cost - - -
Interest 62,545 - 62,545
Differences between expected and
actual experience 57,649 57,649
Change in assumptions 67,103 - 67,103
Net investment income - 863,275 (863,275)
Employer Contributions - 123,869 (123,869)
Benefit payments (91,409) (91,409) -
Administrative expense - (3,311) 3,311
Other changes - - -
Net changes 95,888 892,424 (796,536)
Balances at December 31, 2023 $ 1,035,086 $ 4,460,172 $ (3,425,086)
Total Pension Liability $ 1,035,086
Plan Fiduciary Net Position 4,460,172
Net Pension Liability (Asset) $ (3,425,086)
Plan Fiduciary Net Position as a
% of Total Pension Liability
430.90%
Deferred Outflows Deferred Inflows
Firemen's Pension Plan of Resources of Resources
Difference between expected and actual experience
$ - $ -
Changes of assumptions
- -
Net difference between projected and actual earnings
on pension plan investments
- $ (207,347)
Contributions subsequent to the measurement date
- -
TOTAL $ - $ (207,347)
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized in the pension expense as follows:
Year ended
December 31: Amount
2024 $ (80,879)
2025 (49,870)
2026 45,903
2027 (122,501)
2028 -
Thereafter -
The Fire Pension Fund is reported in the City’s comprehensive annual financial report as a
Fiduciary Fund. Pension Liability, Pension Asset, Deferred Inflows and Deferred Outflows are
reported in the Government Wide Statement of Net Position. A copy of the plan statements can
be obtained by request at the following address: City of Pasco 525 N 3rd Ave., Pasco, WA 99301.
NOTE 15: Defined Benefit Other Postemployment Benefit (OPEB) Plans
The following table represents the aggregate OPEB amounts for all plans subject to the
requirements of GASBS 75 for the year 2023:
LEOFF 1 – Postemployment Healthcare Plan
In addition to the pension benefits outlined in Note 14, Employee Retirement Systems and
Pension Plans, the City of Pasco provides post-retirement health care benefits via a single
employer defined benefit plan in accordance with state statute for retired police officers and
Aggregate OPEB Amounts - All Plans
OPEB Liabilities $ 6,686,411
OPEB Assets (4,164,327)
Deferred Outflows of Resources -
Deferred Inflows of Resources 191,137
OPEB Expense $ (1,753,146)
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
firefighters who are eligible for lifetime healthcare under the Law Enforcement Officers’ and
Firefighters’ (LEOFF1) plan one retirement system.
Plan Description: As required by the Revised Code of Washington (RCW) Chapter 41.26, the
City provides lifetime medical care for members of the Law Enforcement Officers and
Firefighters (LEOFF) retirement system hired before October 1, 1977, under a defined-benefit
healthcare plan administered by the City. The plan is funded on a pay-as-you-go basis and there
are no assets accumulated in a qualifying trust.
Benefits Provided: The members' necessary hospital, medical, prescription and nursing care
expenses not payable by worker's compensation, Medicare, or other insurance are covered.
Employees covered by benefit terms: At December 31, 2023, the following employees were
covered by the benefit terms:
Contributions: The City pays benefits as they come due.
Contributions rate: Benefits Due
Reporting period contributions: $ 525,888
Net OPEB Liability: The City’s total OPEB liability was valued as of December 31, 2023 and
was used to calculate the total OPEB liability measured as of December 31, 2023.
Actuarial Assumptions: The total OPEB liability in the December 31, 2023 actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included in the
measurement, unless otherwise specified:
Healthcare cost trend rates
Discount Rate: 3.77%
Inflation: 2.75%
Salary Increases: n/a
Healthcare cost trend rates
Pre-Medicare: n/a
Medicare: 4.90%*
Mortality Rates Based on SOA Tables.
Category Count
Inactive employees, spouses, or beneficiaries currently receiving benefit payments:30
Inactive employees entitled to but not yet receiving benefit payments: -
Active employees -
Total 30
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
x Projections of the sharing of benefit-related costs are based on an established pattern of
practice.
x Experience studies come from the State of Washington. The last economic experience
study was done in 2021 and the last demographic experience study was from 2018.
x Inactive employees (retirees) pay 0% of the cost of benefits. There were no ad hoc
postemployment benefit changes (including ad hoc COLAs) to the plan.
Discount Rate: The discount rate used to measure the total OPEB liability was 3.77%. The City’s
OPEB Plan is an unfunded plan, therefore the discount rate was set to the rate of tax-exempt,
high-quality 20-year municipal bonds, as of the valuation date.
*Trending down to 4.04% over 51 years. Applies to calendar years.
Trust Assets: There are no assets accumulated in a trust that meets the criteria in paragraph 4 of
GASB 75 to pay related benefits.
Sensitivity of the total OPEB liability to changes in the discount rate. The total OPEB liability
of the City, as well as what the City’s total OPEB Liability would be if it were calculated using
a discount rate that is one point lower (2.77%) or one percentage point higher (4.77%) follows:
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates. The
healthcare trend for this valuation started at 4.90% and decreased to 4.04% over 51 years. The
total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it
were calculated using healthcare cost trend rates that are one percentage point lower (3.90%) or
one percentage point higher (5.90%) than current healthcare cost trend rates follows:
Total OPEB Liability (asset)
3.90% 4.90% 5.90%
$ 6,236,618 $ 6,686,441 $ 7,185,703
Changes in the Total OPEB Liability
Total OPEB Liability (asset)
1% Decrease Current Rate 1% Increase
2.77% 3.77% 4.77%
$ 7,231,260 $ 6,686,411 $ 6,206,457
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
The changes in total OPEB liability for 2023 are presented in the following table.
There is a schedule of sources of changes in the Total OPEB liability presented as RSI,
immediately following the notes to the financial statements. Because this plan is unfunded there
are no disclosures relating to Fiduciary Net Position or investment experience. There were no
Deferred Outflows or Deferred Inflows of resources related to this OPEB Plan for 2023.
Fire Pension – Postemployment Healthcare Plan
Plan Description: As required by the Revised Code of Washington (RCW) Chapter 41.26, the
City provides lifetime medical care for members of the Law Enforcement Officers and Firefighters
(LEOFF) retirement system hired before October 1, 1977 under a single employer, defined benefit
healthcare plan administered by the City. The Old Fire Pension OPEB covers firefighters that were
hired prior to the creation of the LEOFF 1 retirement system.
Benefits Provided: The members' necessary hospital, medical, and nursing care expenses not
payable by worker's compensation, social security, insurance provided by another employer, or
other pension plan, or any other similar source are covered. Most medical coverage for eligible
retirees is provided by the City's employee medical insurance program. Under authorization of the
LEOFF Disability Board, direct payment is made for other retiree medical expenses not covered
Plan Fiduciary Net Total OPEB
Total OPEB Position Liability
Liability (a) (b)(c) = (a)-(b)
Balances at January 1, 2023 8,499,941$ -$ 8,499,941$
Changes for the year:
Service Cost 27,600 - 27,600
Interest 334,717 - 334,717
Changes of Benefit Terms -
Differences Between Expected and
Actual Experience (1,775,850) (1,775,850)
Changes in Assumptions 125,891 125,891
Benefit payments (525,888) (525,888)
Net changes (1,813,530) - (1,813,530)
Balance as of December 31, 2023 6,686,411$ - 6,686,411
Schedule of changes in the Total OPEB Liability
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
by standard medical plan benefit provisions. Members of the Fire Pension plan purchase medical
insurance through the City's medical insurance program.
Employees Covered by Benefit Terms: At December 31, 2023 (the census date), the benefit terms
covered the following employees:
Category Count
Inactive employees, spouses, or beneficiaries currently receiving benefit payments: 5
Inactive employees entitled to but not yet receiving benefit payments:
-
Active employees
-
Total 5
Contributions: Funding for LEOFF retiree healthcare costs is provided entirely by the City as
required by the RCW. The City's funding policy is based upon pay-as-you-go financing
requirements for any requirements in excess of amounts previously set aside in the Fire Pension
OPEB trust fund. Reporting period contributions: $0.
Net OPEB Liability: The City's total OPEB liability was valued as of December 31, 2023, and
was used to calculate the net OPEB liability measured as of December 31, 2023.
Actuarial Assumptions: The total OPEB liability in the December 31, 2023 actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included in the
measurement, unless otherwise specified:
Measurement Date: December 31, 2023
Discount Rate: 7.00%
Investment Rate of Return: 7.00%
Inflation: 2.75%
Healthcare cost trend rates:
Pre-Medicare: n/a
Medicare: 4.90%*
Salary Increases: n/a
Mortality Rates were based on tables from the Society of Actuaries.
x Projections of the sharing of benefit-related costs are based on an established
pattern of practice.
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
x Experience studies come from the State of Washington. The last economic
experience study was done in 2021 and the last demographic experience study was
2018.
x Inactive employees (retirees) pay none of the cost of benefits.
x There were no ad hoc postemployment benefit changes (including ad hoc COLAs)
to the plan.
There were no changes between the measurement date and the report date that are expected to have
a significant effect on the total OPEB liability.
Discount Rate: GASB 75 allows the use of a discount rate that is up to the expected long-term rate
of return on the assets in the Trust set aside to pay benefits, if the plan sponsor makes regular
contributions to the Trust such that the assets are not depleted at any point in the future. If the
plans' actuary determines that contributions are not sufficient to keep the Trust funded, a blend of
the long-term rate of return and the yield or index rate for 20-year, tax-exempt municipal bonds
will be used for the periods when the Trust funds are not sufficient to cover benefit payments.
Based on this requirement, and with the approval of the plan sponsor, the discount rate used to
measure the total OPEB liability is 7.00%.
*Trending down to 4.04% over 51 years. Applies to calendar years.
Sensitivity of Liabilities to Changes in the Discount Rate and Healthcare Cost Trend Rate:
Sensitivity of the total and net OPEB liability to changes in the discount rate. The total and net
OPEB liability of the City, as well as what the City's total and net OPEB liability would be if they
were calculated using a discount rate that is one percentage point lower (6.00%) or one percentage
point higher (8.00%) follows:
Total OPEB Liability (Asset)
1% Decrease
Current Discount
Rate 1% Increase
6.00% 7.00% 8.00%
$ 529,761 $ 507,010 $ 486,077
Net OPEB Liability (Asset) $ (4,141,576) $ (4,164,327) $ (4,185,260)
Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates. The healthcare
trend for this valuation started at 4.90% and decreased to 4.04% over 51 years. The total OPEB
liability of the City, as well as what the City's total OPEB liability would be if it were calculated
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
using healthcare cost trend rates that are one percentage point lower (3.90%) or one percentage
point higher (5.90%) than current healthcare cost trend rates follows:
Total OPEB Liability (Asset)
1% Decrease
Current Discount
Rate 1% Increase
3.90%4.90%5.90%
$ 487,806 $ 507,010 $ 527,503
Net OPEB Liability (Asset) $ (4,183,531)$ (4,164,327)$ (4,143,834)
Changes in the Net OPEB Liability
The changes in net OPEB liability for 2023 are presented in the following table.
Changes in the Net OPEB Liability
Total
OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability
(a)(b)(c) = (a)-(b)
Balances at January 1, 2023 $ 594,768 $ 4,078,039 $ (3,483,271)
Changes for the year:
Service Cost ---
Interest 38,570 -38,570
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
For the report year ended December 31, 2023, the City recognized an OPEB expense of
($465,504). The City reported deferred outflows of resources and deferred inflows of resources
related to OPEB from the following sources:
Old Firemen's Plan Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual experience $-$-
Changes in Assumptions --
Net difference between projected and actual
investment earnings on pension plan investments -(191,137)
TOTAL $-$ (191,137)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
OPEB will be recognized in OPEB expense as follows:
Year Ended
December 31 Amount
Differences between expected and
actual experience (39,201)(39,201)
Change in assumptions 413 -413
Net investment income -681,964 (681,964)
Contributions ---
Benefit payments (87,540)(87,540)-
Administrative expense -(1,126)1,126
Other changes ---
Net changes (87,758)593,298 (681,056)
Balances at December 31, 2023 $ 507,010 $ 4,671,337 $ (4,164,327)
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
2024 (84,413)
2025 (86,290)
2026 59,486
2027 (79,920)
2028 -
Remaining -
Long-Term Expected Real Rate of Return: The long-term expected rate of return is determined
using the long-term rates of return developed by the State of Washington in their 2021 economic
experience study.
Liability Amount
Current OPEB Liability $ 83,584
Non-Current OPEB Liability $ 423,426
Total OPEB Liability $ 507,010
Investments: The Old Fire OPEB Plan does not have an investment policy. The board approves
any purchase or sale transactions regarding assets of the plan. The plan has only one investment,
a mutual fund that was purchased in 2003. The investment is detailed in the following table.
The Old Fire OPEB Plan does not have a specific reserve policy or requirement, however all
assets of the plan are considered assets of the trust and as such are obligated for payment of
current and future benefits to plan members.
NOTE 16: CONTINGENCIES AND LITIGATION
The City has recorded in its financial statements all material liabilities, including applicable
estimates for situations that are not yet resolved but where, based on available information,
management believes it is probable that the City will have to make payment. The City has closely
reviewed all pending claims and it is management’s opinion, the City's insurance policies and self-
insurance reserves are adequate to pay all material known or pending claims. As discussed in Note
8, Long-term Debt, the City is contingently liable for repayment of debt.
The City participates in a number of Federal and State assisted programs. These grants are subject
to audit by the grantors or representatives. Such audits could result in requests for reimbursement
Name of Investment Type Balance as of
12/31/23
Rating by
Morningstar
2023 YTD
Return
Washington Mutual Investors Fund-A Mutual Fund $4,582,749 Gold 16.91%
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CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
to grantor agencies for expenditures disallowed under the terms of the grants. However, City
management believes that such disallowances, if any, will be immaterial.
NOTE 17: SUBSEQUENT EVENTS
In 2022, a local improvement district (LID) was formed to construct sewer collection
infrastructure in an urban growth area which covers approximately 1,000 acres. A bond
anticipation note to fund project construction was issued March 14, 2024 for approximately
$20.3M.
In 2022, City Council approved the formation of a Tax Incremental Financing Area (TIF) in an
undeveloped area of northwest Pasco, Broadmoor. Planning has been ongoing since inception of
the TIF to identify appropriate project timing and related debt issuance. Creation of the
Broadmoor TIF Area allows for debt issuance in the amount of $39M that will subsequently
assign the incremental increase in property tax collections to support debt service payments for
25 years. As of completion of this report, the City is expected to finalize debt issuance in the
amount of $24M mid-July 2024.
On March 4, 2024, the City approved acceptance of two Department of Ecology loans for the
purpose of Wastewater Treatment Plant Phase 2 Improvements and Process Water Reuse Facility
Phase 2 Improvements, in the amount of $26.3M and $35M, respectively. Both state loans have
an interest rate of 1.20% and a 20-year repayment period.
NOTE 18: PRIOR PERIOD ADJUSTMENT
The following table itemizes the prior period adjustments made in 2023, along with the purposes
for the adjustments:
Prior Period Adjustment
Purpose for
Adjustment (Decrease) Increase
Adjustment to
Fund Balance/ Net
Position
Governmental Funds:
General Fund 1
-
56,805
56,805
General Fund 2
-
226,812
226,812
General Fund 3
(30,163)
-
(30,163)
Page 124
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
Arterial Fund 4
-
35,225
35,225
I82 Impact Fund 4
-
97,019
97,019
Street Overlay Fund 4
-
55,409
55,409
Real Estate Excise Tax
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-
77,214
77,214
Construction Fund 5
(451,419)
-
(451,419)
Total Governmental Funds
(481,582)
548,484
66,902
Business-Type Funds:
Water/Sewer Utility Fund 6
(121,446)
-
(121,446)
Water/Sewer Utility Fund 7
(372,662)
-
(372,662)
Total Business-Type Funds:
(494,108)
-
(494,108)
Government-wide Financial Statements
Statement of Net Position 8
(243,013)
39,270
(203,743)
Total prior period adjustments - all funds
(1,218,703)
587,754
(630,949)
Purpose for prior period adjustments:
1. Revenue from the Municipal Court's Redflex (Red Light Camera) Program was not accrued for
2022 and recorded as 2023 revenue.
2. Prior Year Gambling Taxes for December 2022 was not accrued for 2022 and recorded as 2023
revenue.
3. 4th quarter expense for Municipal Court was not accrued for 2022 and recorded as 2023 expense.
4. Grant reimbursements were not accrued and recorded as 2023 revenue.
5. Construction fund Invoices paid in 2021-2022 for Lewis Street Overpass project miscoded to
utilities in the amount of ($529,254). Washington State TIB grant was not billed for Lewis Street
Overpass in the amount of $77,835 due to miscoding of invoices.
Page 125
CCity of Pasco, Washington 2023 Annual Comprehensive Financial Report
6. In 2022 Washington State TIB grant was billed & paid in error for Lewis Street Overpass in the
amount of $121,446 in the utilities fund.
7. Customer in PWRF were billed twice in 2022 in the amount of $372,662.
8. Expenses related to Sylvester Park were capitalized but were determined to be repair and
maintenance costs. As a result, $39,270 was removed from CWIP and expensed. Costs totaling
$243,013 for the Police Department Training Center were expenses in 2022, but were determined to
be capital related. This resulted in an increase to capital asset category of Buildings and reduction in
expense.
NOTE 19: Asset Retirement Obligation (ARO)
The City of Pasco has estimated closure costs associated with a decanting drying bed for waste
collected from street sweeping. As of December 31, 2023, the reported estimated liability for
these costs was $10,832. The City also reports restricted cash in this amount as a reserve for this
liability. The estimated closure costs are a result of local permitting regulations through the
Benton-Franklin Health District. The estimated closure costs are determined by an independent
quote from a company qualified to clean the drying bed of any remaining waste as well as
estimated labor costs based on current rates. These costs would only be incurred if the drying bed
area would need to be suddenly vacated which is not anticipated for the foreseeable future. There
is no tangible asset associated with this liability as it is only an open-air area of immaterial value
located on City premises.
Page 126
City of Pasco,Washington 2023 Annual Comprehensive Financial Report
Old Fire OPEB Fund
A schedule of contributions for the Old Fire OPEB Fund is not included because the plan is fully
funded and there have been no contributions for the past five years. The OPEB plan's fiduciary
net position is projected to have sufficient funds to pay all projected benefit payment for current
plan members. Therefore, there are no future projected contributions.
Page 127
City of Pasco,Washington 2023 Annual Comprehensive Financial Report
LEOFF 1 OPEB
Page 128
City of Pasco,Washington 2023 Annual Comprehensive Financial Report
Page 129
City of Pasco,Washington 2023 Annual Comprehensive Financial Report
Old Fire Pension
Page 130
City of Pasco,Washington 2023 Annual Comprehensive Financial Report
State Plans
Page 131
City of Pasco,Washington 2023 Annual Comprehensive Financial Report
Page 132
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Page 136
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Page 138
City of Pasco, Washington 2023 Annual Comprehensive Financial Report
Notes to the Schedule of Expenditures of Federal Awards
For the Year Ended December 31, 2023
NOTE 1 Basis of Accounting
financial statements. The City uses a modified accrual basis of accounting for its governmental funds and full
accrual basis of accounting for its proprietary funds.
NOTE 2 Federal De Minimis Indirect Cost Rate
The city has elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
NOTE 3 Revolving loan Program Income
The City participates in the Housing and Urban Development HOME Program for low-income individuals, as
part of a regional consortium administered through the City of Richland. The City is not privy to information
on what portion of funds received from the City of Richland are derived from program income. The amount
of loan funds disbursed to program participants for the year was $39,049 and is presented in this schedule. The
amount of principal and interest in loan repayments received for the year was $50,887.
NOTE 4 Program Costs
The amounts shown as current year expenditures represent only the federal grant portion of the program costs.
following, as applicable, either the cost principles in the OMB Circular A-87, Cost Principles for State, Local,
and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations
Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,
wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Note 5 Federal Loans
The City was approved by HUD to receive a loan totaling $3,781,000 in 2021 to renovate Peanuts Park
expenses funded with the
loan proceeds within the current fiscal year. The balance owing at the end of the period is $3,211,000
which is reported on
Page 139
Office of the Washington State Auditor sao.wa.gov
CORRECTIVE ACTION PLAN FOR FINDINGS REPORTED UNDER
UNIFORM GUIDANCE
City of Pasco
January 1, 2023 through December 31, 2023
This schedule presents the corrective action planned by the City for findings reported in this report
in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance).
Finding ref number:
2023-001
Finding caption:
The City did not have adequate internal controls ensuring accurate
reporting of its financial statements.
Name, address, and telephone of City contact person:
Darcy Buckley, Finance Director
525 N. 3rd Avenue Pasco, WA
(509) 545-3432
Corrective action the auditee plans to take in response to the finding:
As noted in the response to the finding, the majority of the issues were due to a significant update
to the operating platform of our statement builder software. With partnership from IT, this
system will be reset and rebuild. Further, the City will use parallel systems for FY25 financial
reporting to ensure the system rebuild is producing accurate reporting. Another key contributor
to reporting discrepancies was limited staffing with availability to focus on the financial
reporting. To address this, we are actively reviewing staff assignments to reorganize and allow
for the creation of an ACFR focus team which will primarily work on year-end reporting.
Anticipated date to complete the corrective action: Will begin fall 2024 and complete by
4/15/2025
Finance Department (509) 545-3420 Fax (509) 544-3082
P.O. Box 293 525 N. Third Ave. Pasco, WA 99301
Page 140
Office of the Washington State Auditor sao.wa.gov
Finding ref number:
2023-002
Finding caption:
The City did not have adequate controls for ensuring compliance with
federal suspension and debarment requirements.
Name, address, and telephone of City contact person:
Darcy Buckley, Finance Director
525 N. 3rd Avenue Pasco, WA
(509) 545-3432
Corrective action the auditee plans to take in response to the finding:
The instances identified during the audit were related to procurement completed by staff whom
rarely manages or is involved in grants. As a result, all staff taking part purchasing in any
capacity as well as managers will be receiving training on Federal purchasing thresholds and
requirements. Additionally, the City is actively exploring ERP features or system controls as a
secondary safeguard in identifying grant funded activity.
Anticipated date to complete the corrective action: 12/31/2024
Page 141
Office of the Washington State Auditor sao.wa.gov
ABOUT THE STATE AUDITOR’S OFFICE
The State Auditor’s Office is established in the Washington State Constitution and is part of the
executive branch of state government. The State Auditor is elected by the people of Washington
and serves four-year terms.
We work with state agencies, local governments and the public to achieve our vision of increasing
trust in government by helping governments work better and deliver higher value.
In fulfilling our mission to provide citizens with independent and transparent examinations of how
state and local governments use public funds, we hold ourselves to those same standards by
continually improving our audit quality and operational efficiency, and by developing highly
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As an agency, the State Auditor’s Office has the independence necessary to objectively perform
audits, attestation engagements and investigations. Our work is designed to comply with
professional standards as well as to satisfy the requirements of federal, state and local laws. The
Office also has an extensive quality control program and undergoes regular external peer review
to ensure our work meets the highest possible standards of accuracy, objectivity and clarity.
Our audits look at financial information and compliance with federal, state and local laws for all
local governments, including schools, and all state agencies, including institutions of higher
education. In addition, we conduct performance audits and cybersecurity audits of state agencies
and local governments, as well as state whistleblower, fraud and citizen hotline investigations.
The results of our work are available to everyone through the more than 2,000 reports we publish
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We take our role as partners in accountability seriously. The Office provides training and technical
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Stay connected at sao.wa.gov
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Page 142