HomeMy WebLinkAboutWA State 2014 AuditFinancial Statements and Federal Single Audit
Report
City of Pasco
Franklin County
For the period January 1, 2014 through December 31, 2014
Published September 28, 2015
Report No. 1015191
Washington State Auditor's Office
September 28, 2015
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 condition.
Sincerely,
OK"
JAN M. JUTTE, CPA, CGFM
ACTING STATE AUDITOR
OLYMPIA, WA
Insurance Building, P.O. Box 40021 ❑Olympia, Washington 98504-0021 ❑(360) 902-0370 ❑TDD Relay (800) 833-6388
FederalSummary............................................................................................................................ 4
Schedule Of Federal Audit Findings And Questioned Costs.......................................................... 6
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..................................................................... 11
Independent Auditor's Report On Compliance For Each Major Federal Program And On
Internal Control Over Compliance In Accordance With OMB Circular A-133 ........................... 13
Independent Auditor's Report On Financial Statements.............................................................. 16
FinancialSection........................................................................................................................... 19
Corrective Action Plan For Findings Reported Under OMB Circular A-133 .............................. 93
About The State Auditor's Office................................................................................................. 94
Washington State Auditor's Office Page 3
City of Pasco
Franklin County
January 1, 2014 through December 31, 2014
The results of our audit of the City of Pasco are summarized below in accordance with U.S.
Office of Management and Budget Circular A-133.
Financial Statements
An unmodified opinion was issued on the financial statements of the governmental activities, the
business -type activities, each major fund and the aggregate remaining fund information.
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 no 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 its
major federal program.
We reported findings that are required to be disclosed under section 510(a) of OMB Circular
A-133.
Washington State Auditor's Office Page 4
Identification of Major Programs:
The following was a major program during the period under audit:
CFDA No. Program Title
20.205 Highway Planning and Construction Cluster - Highway Planning and
Construction
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
OMB Circular A-133, was $300,000.
The City qualified as a low-risk auditee under OMB Circular A-133.
Washington State Auditor's Office Page 5
City of Pasco
Franklin County
January 1, 2014 through December 31, 2014
2014-001 The City's internal controls were inadequate to ensure
compliance with federal Davis -Bacon Act (prevailing wage)
requirements for its Highway Planning and Construction Grant.
CFDA Number and Title:
Federal Grantor Name:
Federal Award/Contract Number:
Pass-through Entity Name:
Pass-through Award/Contract
Number:
Questioned Cost Amount:
Description of Condition
20.205 Highway Planning and
Construction
U.S. Department of Transportation,
Federal Highway Administration
STPUL-3515, STPUS-HLP-3530 and
HSIP-3524
Department of Transportation
LA -8059, LA -7055 and LA -8157
$0
The City spent $2,504,357 in Highway Planning and Construction grant funds on
twelve projects in fiscal year 2014. The focus of the audit was on two of these
projects which consisted of $1,019,484 on the Road 68 Improvements and
$563,902 on the Court Street Ramp Upgrade.
For construction projects that are federally funded with the Highway Planning and
Construction grant that exceed $2,000 and are linked to a federal aid highway, the
Davis -Bacon Act requires recipients of federal funds to obtain weekly certified
payrolls for all contractors and subcontractors to ensure prevailing wages are paid.
We determined that the Davis -Bacon Act was applicable to the Road 68
Improvements and Court Street Ramp Upgrade Projects.
During our audit, we noted a significant internal control deficiency, which we
consider to be a material weakness. The City did not adequately monitor to
ensure contractors and subcontractors paid prevailing wages and did not obtain all
weekly certified payrolls.
Washington State Auditor's ice Page 6
Cause of Condition
The City had multiple project managers in place during 2014, which resulted in a
lack of consistent overall monitoring of projects from start to finish. As a result,
the City did not use the internal controls it normally would have for federally
funded construction projects to ensure required weekly payrolls were obtained
and reviewed.
Effect of Condition and Questioned Costs
The City did not obtain certified weekly payrolls for the Court Street Ramp
Upgrade Project for all construction work performed during 2014, did not obtain
six certified weekly payrolls for the Road 68 Improvement Project and 21 of the
certified weekly payrolls received for the Road 68 Improvements project do not
have any indications that they were reviewed. Without adequate internal controls,
the City cannot ensure the contractors or subcontractors paid workers the
prevailing wage. The City could be liable for paying additional wages if
prevailing wage was not paid.
Recommendation
We recommend the City obtain weekly certified payrolls and provide
management oversight and follow-up with staff to ensure that the procedures they
have in place are being followed.
City's Response
The City concurs with the finding.
The City has already taken steps to improve its internal controls over its
construction projects by updating related checklists and procedures.
A Corrective Action Plan has been created addressing Federal Davis -Bacon
(Prevailing Wage) compliance. It is the City's expectation that the plan will be
fully implemented by mid-November, 2015.
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
U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations, states in part:
Subpart C, Auditees; Section 300 Auditee responsibilities.
Washington State Auditor's Office Page 7
The auditee shall:
(b) Maintain internal control over Federal programs that provides
reasonable assurance that the auditee is managing Federal awards
in compliance with laws, regulations, and the provisions of
contracts or grant agreements that could have a material effect on
each of its Federal programs.
(c) Comply with laws, regulations, and the provisions of contracts
or grant ageements related to each of its Federal programs
Title 29, Code of Federal Regulations, Section 5.5, Contract provisions and
related matters, states in part:
(a) The Agency head shall cause or require the contracting officer
to insert in full in any contract in excess of $2,000 which is entered
into for the actual construction, alteration and/or repair, including
painting and decorating, of a public building or public work, or
building or work financed in whole or in part from Federal funds
or in accordance with guarantees of a Federal agency or financed
from funds obtained by pledge of any contract of a Federal agency
to make a loan, grant or annual contribution (except where a
different meaning is expressly indicated), and which is subject to
the labor standards provisions of any of the acts listed in §5.1, the
following clauses (or any modifications thereof to meet the
particular needs of the agency, Provided, That such modifications
are first approved by the Department of Labor):
(8) Compliance with Davis -Bacon and Related Act
requirements. All rulings and interpretations of the Davis -
Bacon and Related Acts contained in 29 CFR parts 1, 3 and
5 are herein incorporated by reference in this contract.
Title 29, Code of Federal Regulations, Section 3.3, Weekly statement with respect
to payment of wages, states in part:
(b) Each contractor or subcontractor engaged in the construction,
prosecution, completion, or repair of any public building or public
work, or building or work financed in whole or in part by loans or
grants from the United States, shall furnish each week a statement
with respect to the wages paid each of its employees engaged on
work covered by this part 3 and part 5 of this title during the
preceding weekly payroll period. This statement shall be executed
by the contractor or subcontractor or by an authorized officer or
employee of the contractor or subcontractor who supervises the
Washington State Auditor's Office Page 8
payment of wages, and shall be on the back of Form WH 347,
"Payroll (For Contractors Optional Use)" or on any form with
identical wording. Copies of Form WH 347 may be obtained from
the Government contracting or sponsoring agency or from the
Wage and Hour Division Web site at
http://www.dol.govlesalwhd/formslwh347instr.htm or its successor
site.
U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non -Profit Organizations, Section 500, states in part:
(a) The audit shall be conducted in accordance with GAGAS.
Government Auditing Standards, December 2011 Revision, paragraph 4.23 states:
4.23 When performing GAGAS financial audits, auditors should
communicate in the report on internal control over financial
reporting and compliance, based upon the work performed, (1)
significant deficiencies and material weaknesses in internal
control; (2) instances of fraud and noncompliance with provisions
of laws or regulations that have a material effect on the audit and
any other instances that warrant the attention of those charged with
governance; (3) noncompliance with provisions of contracts or
grant agreements that has a material effect on the audit; and (4)
abuse that has a material effect on the audit.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, as follows:
.11 For purposes of adapting GAAS to a compliance audit, the
following terms have the meanings attributed as follows:
Deficiency in 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 on a timely basis. A deficiency
in design exists when (a) a control necessary to meet the
control objective is missing, or (h) an existing control is not
properly designed so that, even if the control operates as
designed, the control objective would not be met. A
deficiency in operation exists when a properly designed
control does not operate as designed or the person
Washington State Auditor's Office Page 9
performing the control does not possess the necessary
authority or competence to perform the control effectively.
Material weakness in internal control over compliance.
A deficiency, or combination of deficiencies, in internal
control over compliance, such that there is a reasonable
possibility that material noncompliance with a compliance
requirement will not be prevented, or detected and
corrected, on a timely basis. In this section, a reasonable
possibility exists when the likelihood of the event is either
reasonably possible or probable as defined as follows:
Reasonably possible. The chance of the future
event or events occurring is more than remote but
less than likely.
Remote. The chance of the future event or events
occurring is slight.
Probable. The future event or events are likely to
occur.
Significant deficiency in internal control over
compliance. A deficiency, or a combination of
deficiencies, in internal control over compliance that is less
severe than a material weakness in internal control over
compliance, yet important enough to merit attention by
those charged with governance.
Washington State Auditor's Office Page 10
City of Pasco
Franklin County
January 1, 2014 through December 31, 2014
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
remaining fund information of the City of Pasco, Franklin County, Washington, as of and for the
year ended December 31, 2014, 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 22, 2015.
INTERNAL 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) to determine the 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.
Washington State Auditor's Office Page 11
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
In addition, we noted certain matters that we have reported to the management of the City in a
separate letter dated September 22, 2015.
COMPLIANCE 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 the City's compliance with certain provisions
of laws, regulations, contracts and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. 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. However, we noted certain
matters that we have reported to the management of the City in a separate letter dated September
22, 2015.
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 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.
JAN M. JUTTE, CPA, CGFM
ACTING STATE AUDITOR
0711•/LVA 191_A�.%1
September 22, 2015
Washington State Auditor's Office Page 12
City of Pasco
Franklin County
January 1, 2014 through December 31, 2014
Council
City of Pasco
Pasco, Washington
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM
We have audited the compliance of the City of Pasco, Franklin County, Washington, with the
types of compliance requirements described in the U.S. Office of Management and Budget
(OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on
each of its major federal programs for the year ended December 31, 2014. The City's major
federal programs are identified in the accompanying Federal Summary.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts
and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the City's major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and
OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations.
Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the City's compliance
Washington State Auditor's Office Page 13
with those requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each
major federal program. Our audit does not provide a legal determination on the City's
compliance.
Opinion on Each Major Federal Program
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, 2014.
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
Management of the City is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the City's internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program in order to determine the auditing procedures that are appropriate in the circumstances
for the purpose of expressing an opinion on compliance for each major federal program and to
test and report on internal control over compliance in accordance with OMB Circular A-133, but
not for the purpose of expressing an opinion on the effectiveness of internal control over
compliance. Accordingly, we do not express an opinion on the effectiveness of the City's
internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described in
the preceding paragraph and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. However, as discussed
below, we identified certain deficiencies in internal control over compliance that we consider to
be material weaknesses.
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
Washington State Auditor's Office Page 14
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. We
consider the deficiencies in internal control over compliance described in the accompanying
Schedule of Federal Audit Findings and Questioned Costs as Finding 2014-001 to be a material
weakness.
City's Response to Findings
The City's response to the internal control over compliance findings identified in our audit is
described in the accompanying Schedule of Federal Audit Findings and Questioned Costs. The
City's response was not subjected to the auditing procedures applied in the audit of compliance
and, accordingly, we express no opinion on the response.
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 OMB Circular A-133. 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.
0,,-, � W �
JAN M. JUTTE, CPA, CGFM
ACTING STATE AUDITOR
OLYMPIA, WA
September 22, 2015
Washington State Auditor's Office Page 15
City of Pasco
Franklin County
January 1, 2014 through December 31, 2014
Council
City of Pasco
Pasco, Washington
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund and the aggregate remaining fund information of the
City of Pasco, Franklin County, Washington, as of and for the year ended December 31, 2014,
and the related notes to the financial statements, which collectively comprise the City's basic
financial statements as listed on page 19.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the City's preparation and fair presentation of the financial
Washington State Auditor's Office Page 16
statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the City's internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, each
major fund and the aggregate remaining fund information of the City of Pasco, as of
December 31, 2014, and the respective changes in financial position and, where applicable, cash
flows thereof, and the budgetary comparison for the General Fund, for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 20 through 30, information on postemployment
benefits other than pensions on page 88 and pension trust fund information on page 89 be
presented to supplement the basic financial statements. Such information, 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 and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying Schedule of
Expenditures of Federal Awards is presented for purposes of additional analysis as required by
U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments,
Washington State Auditor's Office Page 17
and Non -Profit Organizations. This schedule 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 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 taken as a whole.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
September 22, 2015 on our consideration of the City's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts and
grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the City's internal control over financial reporting and compliance.
0,,-, �?n �
JAN M. JUTTE, CPA, CGFM
ACTING STATE AUDITOR
OLYMPIA, WA
September 22, 2015
Washington State Auditor's Office Page 18
FINANCIAL SECTION
City of Pasco
Franklin County
January 1, 2014 through December 31, 2014
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis — 2014
BASIC FINANCIAL STATEMENTS
Statement of Net Position — 2014
Statement of Activities — 2014
Balance Sheet — Governmental Funds — 2014
Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position —
2014
Statement of Revenues, Expenditures and Changes in Fund Balance — Governmental
Funds — 2014
Reconciliation of Governmental Funds Statement of Revenues, Expenditures and
Changes in Fund Balance to the Statement of Activities — 2014
Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget to Actual
— General Fund — 2014
Statement of Net Position — Proprietary Funds — 2014
Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds
—2014
Statement of Cash Flows — Proprietary Funds — 2014
Statement of Net Position — Fiduciary Funds — 2014
Statement of Changes in Fiduciary Net Position — Fiduciary Funds — 2014
Notes to the Financial Statements — 2014
REQUIRED SUPPLEMENTARY INFORMATION
Firemen's Pension Fund — 2014
Firemen's OPEB Fund - 2014
LEOFF 1 OPEB — 2014
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards — 2014
Notes to the Schedule of Expenditures of Federal Awards — 2014
Washington State Auditor's Office Page 19
MANAGEMENTS' DISCUSSION AND ANALYSIS
As management of the City of Pasco, we offer readers of the financial statements this narrative
overview and analysis of the financial activities of the City of Pasco for the fiscal year ended
December 31, 2014. We encourage readers to consider the information that we have furnished in
our letter of transmittal which can be found starting on page 1 of this report. All amounts, unless
otherwise indicated, are expressed in thousands of dollars.
Financial Highlights
• The assets of the City of Pasco exceeded liabilities at the close of the most recent fiscal year
by $367,922. Of this amount, $35,224 may be used to meet the government's ongoing
obligations to the citizens and creditors.
• The City of Pasco's total net position improved by $4,754, of which $2,253 is attributable
to prior period adjustments. Approximately 72% of that increase is due to increases in
business -type activities and 28% is due to governmental -type activities.
• As of the close of the current fiscal year, the City of Pasco's governmental funds reported
combined ending fund balances of $26,100, an increase of $4,273 in comparison with the
prior year. Of the $4,273 increase, $1,285 is attributable to prior period adjustments.
• At the end of the current fiscal year, the unrestricted, unassigned fund balance for the City's
General Fund was $7,978 which also represents 21% of total General Fund expenditures
and transfers out. There was an overall $3,138 increase in the General Fund balance due to
a prior period adjustment of $1,055; an excess of revenues of expenditures of $4,421;
transfers in totaling $138 and transfers out totaling $2,476. Of the transfers out, $609 was
for one-time expenditures; and $604 was primarily for capital projects. $1,263 was for
subsidies. $400 of the subsidies was for a one-time subsidy transfer to the
Stadium/Convention Center to permanently address a long-standing negative fund balance
issue.
• The City of Pasco did not issue any new debt in 2014. Its total long-term debt decreased by
$4,670 as a result of debt service payments.
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. Those financial statements comprise three components: 1) government -wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This
report also contains other supplementary information in addition to the basic financial statements
themselves.
Government -wide Financial statements. The government -wide financial statements are designed
to provide readers with a broad overview of the City of Pasco's finances in a manner similar to a
private -sector business. The Statement of Net position presents information on all of the City of
Pasco's assets and liabilities with the difference between the two reported as net position. 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.
Washington State Auditor's Office Page 20
The statement of activities presents information showing how the government'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).
The government -wide financial statements distinguish functions of the City of Pasco that are
principally supported by taxes and intergovernmental revenues (Governmental Activities) from
activities that are supported by fees and charges (Business -Type Activities). The governmental
activities of the City of Pasco include general government, public safety, utilities and environment,
transportation, economic environment, and culture and recreation. The business -type activities of
the City of Pasco include water/sewer (which cover water, sewer, irrigation, process -reuse and
storm water activities), equipment maintenance and equipment replacement services.
Fund Financial Statements. A fund is a grouping of related accounts that is 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 of the funds of the City of Pasco can be
divided into three categories: governmental funds, proprietary funds, and fiduciary 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 of Pasco maintains thirty-one 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.
In 2014, the General Fund and the Construction Fund were the only major governmental funds.
Data from the other funds are combined into a single, aggregate presentation. Individual fund data
for each of these non -major governmental funds is provided in the form of Combining Statements
elsewhere in this report.
The City of Pasco adopts an annual appropriated budget for its General Fund. A budgetary
comparison statement has been provided for the General Fund to demonstrate compliance with this
budget.
Washington State Auditor's Office Page 21
Proprietary Funds. The City of Pasco 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 of Pasco uses an enterprise fund to account for
the water/sewer utility. An Internal service fund is an accounting device used to accumulate and
allocate costs internally to the City of Pasco's various functions. The City of Pasco uses internal
service funds to account for its equipment maintenance and replacement, central stores and
medical/dental insurance. 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.
Proprietary funds provide the same type of information as the government -wide financial
statements, only in more detail. The enterprise fund financial statements provide separate
information for the water/sewer fund. 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.
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
own programs. The accounting used for the fiduciary funds is much like that used for enterprise
funds except for agency funds which only show assets and liabilities..
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data
provided in the government -wide and fund financial statements.
Government -wide Overall Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. In the case of the City of Pasco, assets exceeded liabilities by $367,922 at the close of the
most recent fiscal year. The largest portion of the City of Pasco's net position (86.5%) reflects its
investment in capital assets (e.g. buildings, machinery, equipment, infrastructure, construction in
progress) less any related outstanding debt used to acquire those assets. The city of Pasco uses
these capital assets to provide services to citizens; consequently, these assets are not available for
future spending. Although the City of Pasco's investment in its capital assets is reported net of
related debt, it should be noted that the resources needed to repay this debt must be provided from
other resources, since the capital assets themselves cannot be used to liquidate these liabilities.
3.9% of the City of Pasco's net position represents resources that are subject to external restrictions
on how they may be used. The remaining $35,224 of unrestricted net position (9.6%) maybe used
to meet the government's ongoing obligations to citizens and creditors.
Washington State Auditor's Office Page 22
Current assets
Capital assets
Other noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Net position:
Im-estment in capital assets
Restricted
Unrestricted
Total net position
City of Pasco's Net Position (in millions)
Governmental Activities Business Activities otal PrimaryGohecnmen
$ 35.73
$ 31.54
$ 20.74
$ 18.53
$ 56.47
50.07
189.12
$193.28
169.61
$170.36
358.73
363.64
0.98
1.34
-
3.58
0.98
4.92
225.83
226.16
190.35
192.47
416.18
418.63
4.02
5.79
5.15
6.44
9.17
12.23
6.10
5.98
33.00
37.25
39.10
43.23
10.12
11.77
38.15
43.69
48.27
55.46
185.42
189.00
132.91
129.66
318.33
318.66
1.4.36
13.51
-
-
14.36
13.51
15.93
11.88
19.29
19.12
35.22
31.00
$215.71
'$214.39
$ 152.20
$148.78
$367.91
5363.17
At the end of the current fiscal year, the City of Pasco is able to report positive balances in all three
categories of net position, both for the government as a whole, as well as for its separate
governmental and business -type activities. The same held true for the prior fiscal year.
The City's net position increased by $4,754, during the current fiscal year. $2,253, almost half of
the increase, is the result of prior period adjustments. Without prior period adjustments, the
governmental funds would have experienced a decrease of $226 - the result of expenses exceeding
revenues by a slight amount. While fees for services and tax revenues increased, so did costs. For
the business -type funds, the increase in charges for services - primarily related to Water rate
increases - outpaced increased costs although not to the same extent as in 2013.
Washington State Auditor's Office Page 23
City of Pasco's Change in Net Position (in millions)
Gorverumental Activities I Business -T Activities otal Primary Gor°esvmen
Changes in net position
Transfers
Prior period adjsutments
Total changes in net position
(0.08) 24.55 2.57
(0.15) (0.36) 0.15
1.55 0.70
$ 1.32 $ 24.19 $ 3.42
3.39 2.49 27.94
0.36 - -
2.25
$ 3.75 $ 4.74 $ 27.94
Governmental Activities. Governmental activities increased the City of Pasco's net position by
$1,329 or 28% of the total change in net position. The entire amount of the increase was
attributable to prior period adjustments totaling $1,555, without which governmental activities
would have reduced the City's net position by of $226.
The City has continued to see increases in taxes. Total tax revenues increased by $2,014 (7%).
Sales taxes continued to grow due to new construction and the continuing improved economic
climate. In 2014, there was a $1,223 (11%) increase in sales taxes over the previous year. At the
fund level, property tax revenues displayed continued growth due to increases in new construction,
assessed valuation and the effect of the 2012 annexation. However, due to a prior period
adjustment not being made for property taxes, at the City-wide level, property taxes decreased by
$88 (1%). Although construction continued at the slower pace exhibited in 2013, permitting fees
increased by $99 (11%). The city was able to maintain the status quo on the number of approved
personnel positions.
Washington State Auditor's Office Page 24
2014
2013
2014
2013
2014
2013
Rmrenes
Program revenues:
Charges for services
$ 19.94
$ 18.31
$ 20,01
$ 17.99
$ 39.95
$ 3630
Operating grants & contributions
1.70
0,64
0.02
0.04
1.72
0,68
Capital grants & contributions
4.30
30.63
3.35
4.22
7.65
34.85
General revenues:
Property taxes
7.07
7.15
7.07
7.15
Other taxes
24.58
22.48
24.58
22.48
Im-estment income and miscellaneous
1.64
1.71
0.03
0.09
1.67
1.80
Total revenues
59.23
80,9:
23.41
22.34
82.64
103.26
Program expenses:
General government
8.09
7.06
8.09
7,06
Public safety
21.63
22.48
21.63
22.48
Transportation
16.73
14.10
16.73
14.10
Economic environment
4.71
4.46
4.71
4.46
Culture and recreation
7.94
8.00
7.94
8.00
Interest on long term debt
0.21
0.27
0.21
0.27
Water
8.25
7.79
8.25
7,79
Sever
7.90
7.22
7.90
7.22
Process nater reuse
1.85
1.54
1.85
1.54
Storm nater
1.29
1.17
1.29
1.17
Irrigation
1.55
1.23
1.55
1.23
Total expenses
59.31
56.37
20.84
18.95
80.15
75.32
Changes in net position
Transfers
Prior period adjsutments
Total changes in net position
(0.08) 24.55 2.57
(0.15) (0.36) 0.15
1.55 0.70
$ 1.32 $ 24.19 $ 3.42
3.39 2.49 27.94
0.36 - -
2.25
$ 3.75 $ 4.74 $ 27.94
Governmental Activities. Governmental activities increased the City of Pasco's net position by
$1,329 or 28% of the total change in net position. The entire amount of the increase was
attributable to prior period adjustments totaling $1,555, without which governmental activities
would have reduced the City's net position by of $226.
The City has continued to see increases in taxes. Total tax revenues increased by $2,014 (7%).
Sales taxes continued to grow due to new construction and the continuing improved economic
climate. In 2014, there was a $1,223 (11%) increase in sales taxes over the previous year. At the
fund level, property tax revenues displayed continued growth due to increases in new construction,
assessed valuation and the effect of the 2012 annexation. However, due to a prior period
adjustment not being made for property taxes, at the City-wide level, property taxes decreased by
$88 (1%). Although construction continued at the slower pace exhibited in 2013, permitting fees
increased by $99 (11%). The city was able to maintain the status quo on the number of approved
personnel positions.
Washington State Auditor's Office Page 24
GOVERNMENTAL ACTIVITES — REVENUES BY SOURCE
Sources of Revenues
2014
Investment
r rr
■
income and
miscellaneous
33c
Charges for
r rr
� � ■or
services
34%
a
Gather razes
413$
Operating
$rants &
Pim.
contributions
3%
9%
�. Capital grants
Prqwry
&
rues
contributions
1'_9n
.30
Sources of Revenges 2013
imesement
income and
contributions
tgco
3peraring
gravis &
n1ributious
10�
GOVERNMENTAL ACTIVITIES — EXPENSES AND PROGRAM REVENUES
e
Jia 1c
■ 2014 Expense ■ 2014 Revenue ■ 2013 Expense ■ 2013 Revenue
Business -Type Activities. 72% of the increase in the City of Pasco's net position is related to
business -type activities. The total increase in net position for business -type activities was $3,424,
of which $698 was due to prior period adjustments. Additionally, charges for services increased by
$2,044 (11%). Effective, February 1, 2014, Water base rates increased by 30% (from $12.50 to
Washington State Auditor's Office Page 25
r'r
r rr
■
r rr
� � ■or
e
Jia 1c
■ 2014 Expense ■ 2014 Revenue ■ 2013 Expense ■ 2013 Revenue
Business -Type Activities. 72% of the increase in the City of Pasco's net position is related to
business -type activities. The total increase in net position for business -type activities was $3,424,
of which $698 was due to prior period adjustments. Additionally, charges for services increased by
$2,044 (11%). Effective, February 1, 2014, Water base rates increased by 30% (from $12.50 to
Washington State Auditor's Office Page 25
$16.25 for residential) and Stormwater rates increased by approximately 13% (from $3.90 to $4.40
for residential).
UTILITY ACTIVITIES — EXPENSES AND PROGRAM REVENUES COMPARISON
10.00
9.00
8.00
7.00
6-00
5.00
4.00
3.00
2.00
1.00
Water Sewer Process Water Stormwater Irrigation
Reuse
■ 2014 Expense ■ 2014 Revenue ■ 3013 Expense E 201 Revenue
Financial Analysis of the City's Funds.
As noted earlier, the City of Pasco uses fund accounting to ensure and demonstrate compliance
with finance related legal requirements.
Governmental Funds. The focus of the City of Pasco's governmental funds is to provide
information on near-term inflows, outflows and balances of spendable resources. Such information
is useful in assessing the City of Pasco financing requirements. In particular, unreserved fund
balance may serve as a useful measure of a government's net resources available for spending at
the end of the fiscal year.
As of the end of the 2014, the City of Pasco governmental funds reported combined ending fund
balances of $26,100 (an increase of $4,273 over 2013). Approximately 29% of this total amount,
$7,536 constitutes unassigned fund balance which is available for spending at the government's
discretion.
The General Fund is the chief operating fund of the City of Pasco. At the end of 2014, unassigned
fund balance of the general fund was $7,978. As a measure of the general fund's liquidity, it may
be useful to compare unrestricted, unassigned fund balance to total expenditures. This represents
23% of total expenditures.
The fund balance of the City of Pasco's General Fund increased by $3,138 during 2014, which is
8% of current year revenues. Overall revenues increased by $3,407 (9%) and total expenditures
increased by $1,160 (3%). General fund tax revenues increased by $2,179 (8%). Property taxes
Washington State Auditor's Office Page 26
increased $427 (6%) due to new construction and steady valuations, and sales taxes increased by
$1,082 (10%) with the continued steady economic recovery. Brokered natural gas use taxes and
gas B&O taxes increased by a total of $223 (31%) from 2013. New residences, as well as
industrial uses, are driving the increases. Electric B&O taxes increased by $147 (4%), due to an
increase in electric rates. Water B&O taxes increased by $81 (13%) due to the rate increase, which
went into effect February 1, 2014. The Telephone tax decline was reversed by a modest increase of
$58 (4%), even though customers have been moving towards the use of internet and cell services,
which are not subject to the telephone tax. Inter -governmental revenues from state liquor taxes
increased by $27 (31 %) as the state is starting to incrementally share more of these taxes with local
governments. However, these levels fall far short the amounts received in 2011 and earlier.
Charges for services increased by $946 (20%) from the prior year; mostly from services rendered
to other funds and other agencies.
The City was able to increase the number of approved personnel positions, by nine positions.
However, because a number of positions were left unfilled in 2014, the City was forced to contract
for temporary and professional services in certain areas. Contracts with Police and Fire were not
settled until 2015. So, retroactive pay did not factor into the General Fund activity in 2014. The
General Fund revenues of $39,315 exceeded expenditures of $34,894 before transfers in/out.
Proprietary Funds. The City of Pasco enterprise funds provide the same type of information
found in the government -wide financial statements, but in more detail and separately states the
activity of the Water/Sewer Utility separate from the internal service funds. Unrestricted net
position of the utility fiend at the end of 2014 was $16,991. The working capital ratio is the current
assets less current liabilities and is a measure of liquidity for the utility to meet its short term
payment obligations. At the end of 2014 the utility is well-positioned as it has current assets of
$18,436 available to meet its current liability obligations of $5,140, resulting in a working capital
ratio of 3.59. The utility showed a loss before contributions and transfers of $1,040. This was more
than offset by $3,344 in capital contributions. The City continues to invest in new infrastructure
due to the growth of its population, as well as due to the need to address aging infrastructure issues.
The City has a meter and service replacement program with the goal of replacing its meters on an
average of once every ten years. Local improvement districts (LIDS) are used by the utility to
supplement the rate payers' participation in capital construction.
General Fund Budgetary Highlights
The legal level of appropriation is at the fund level. The budget by function is shown to provide
more detailed information. There were increases to the original budget of $2,354 and $904 in the
expenditure and transfer out appropriations, respectively. The appropriation increases were due to
a number of factors. $890 in expenditure appropriation increases were due to increases in wages
($510), overtime ($191), and benefits ($189). Overtime increases were primarily for public safety:
both Police and Fire. Traditionally, overtime has been under -budgeted; an additional factor was
that several employees out on disability forced existing employees to put in overtime to cover
shifts. Additionally, cash -outs of long-time employees, costs associated with new employees, and
the fact that the City experienced challenges with its new position budgeting software, which
resulted in under -budgeting of wages and benefits. Other contributing factors to the increase in
expenditure appropriations include: a $170 increase for the City's prisoner custody contract with
Washington State Auditor's Office Page 27
the County; a $182 increase for legal services, which has traditionally been under -budgeted; and
$90 for temporary staffing and professional services to cover vacancies.
Two of the most significant transfer out appropriation increases were due to the following: a $300
local match for a LED light project and $440 to cover the Stadium/Convention Center Fund's
negative fund balance.
Actual revenues were 114% of the original revenue budget and 106% of the final revenue budget.
Revenues are generally estimated low in order to protect the city from unanticipated funding
fluctuations. Actual total revenues exceeded actual total expenditures in by $4,421.
Capital Asset and Debt Administration
Capital Assets. The City of Pasco's investment in capital assets for its governmental and business -
type activities as of December 31, 2014 amounts to $318,337 (net of accumulated depreciation).
This investment in capital assets includes land, buildings, improvements machinery and equipment,
park facilities, roads, water and sewer treatment plants, etc. The total change in the City of Pasco's
capital assets (net of depreciation) for the current year was decrease of $4,246 for governmental
activities and a decrease of $745 for business -type activities. $4,302 and $3,334 in capital
contributions were made to governmental and business -type activities, respectively, in 2014.
Major capital asset activity during the current fiscal year included the following:
• Spending on governmental activities included in the Capital Improvement Plan during 2014
totaled $5,561. The vast majority of the projects were transportation -related. Of the $5,561
expended, $3,523 (63%) was attributable to transportation projects. Of these, the most
significant were Road 68 Improvements ($1,232); Lewis Street Demolition ($600); Lewis
Street Overpass ($238); and the grant -funded Court Street ADA Sidewalk Upgrade ($590).
The Court House construction wound down in 2014 with $550 in expenditures for the
City's portion of the Franklin County project. Design work was started on the new Police
Community Services Building project which broke ground in the spring of 2015 ($175).
Spending on business -type activities included in the Capital Improvement Plan during 2014
totaled $4,171. Water projects totaled $1,041. Of this amount, $716 was expended on line
extensions. Sewer projects totaled $910. Of this amount, $227 was expended on the Waste
Water Treatment Plant — Primary Clarifier No. 3; $475 was expended on sewer re -lining
projects. The Process Water Reuse Facility projects totaled $901. Of this amount, $693
was expended on the BOD Winter Storage Pond (30 MG). Irrigation projects totaled $681.
Of this amount, $640 was expended on the USBR Irrigation Connection project, which is
primarily grant -funded.
Additional information on the City of Pasco's capital assets can be found in note 3.C.
Washington State Auditor's Office Page 28
Land
Construction in process
Buildings and structures
Other improvements
Machinery and equipment
infrastructure
Total capital assets
City of Pasco's Capital Assets at Year -End (in trillions)
(Net of Depreciation)
Governmental Activities
2014
2013
$ 14.67
$ 12.71
12.67
11.33
22.30
23.65
3.48
4.04
5.88
5.32
130.02
136.23
£1 R4 n?
ex 10i?R
Business -Ty pe Activities
2614
2013
$ 2.52
$ 2.52
5.74
7.45
35.96
37.43
8.30
8.50
111.09
114.35
C 11,0 rl
It17n?F,
otal Primary Goverrlmen
2014
2013
$ 17.19
$ 15.23
18.41
18.78
58.26
61.08
3.48
4.04
14.18
13.82
117 11
2Sn i9
�NXAi vcnc Na
Long-term Debt. At the end of 2014, the City of Pasco had total bonded debt outstanding of
$31,553. Of this amount $3,315 comprised debt backed by the full faith and credit of the
government. $27,065 of the City of Pasco bonded debt represents bonds secured primarily by
specified revenue resources (i.e. revenue bonds). The city also has $1,173 in special assessment
bonds.
Additional information on the City of Pasco's long term liabilities can be found in note 3.F.
Economic Factors and Next Year's Budgets and Rates (amounts not in thousands)
In 2014, the Pasco economy was stable and continued to grow. The city issued a total of 2,111
building permits representing approximately $164 million in construction value. Of the total
permits, 219 were for new single-family residences which equates to $54 million in construction
value. The average value of a new home in Pasco was approximately $246,000, in 2014. This
stable economy was reflected in Standard & Poor's rating the 2013 utility bond issue as AA -/Stable
and the 2015 General Obligation bond issue as AA -/Stable.
In 2012, the county's residents approved a new three -tenths of one percent sales tax increase
devoted to criminal justice. This new revenue source funded a new four -person Street Crimes unit
in the city's police department; paid for the replacement of the city's Municipal Court building;
and funded the construction of the city's new Police Community Services Building, which broke
ground in the spring of 2015.
In late in 2012, the city annexed a part of Franklin County. 2014 was the first year the city received
the additional property taxes from the annexation. The annexed area was in a part of the county
Washington State Auditor's Office Page 29
City of Pasco's Bonds and Notes
(in millions)
Governmental. Activities
I Business -Type Activities
otal Primary Governmen
2014
2013
2014 2013
2014
2013
General Obligation Bonds
$ 3.32
$ 3.84
$ -
$ 332
$ 3.84
Special Assessement Bonds
0-21
0.16
$ 0.97
1.18
0.16
Loans R Notes
0.75
0.28
8.00 1033
8.75
10.61
Rev-enue Bonds
27.07 30.36
27.07
30.36
R a ?R
'£ a ?R
4 '3F na 4 an F,®
-,in;?
T id 69
Economic Factors and Next Year's Budgets and Rates (amounts not in thousands)
In 2014, the Pasco economy was stable and continued to grow. The city issued a total of 2,111
building permits representing approximately $164 million in construction value. Of the total
permits, 219 were for new single-family residences which equates to $54 million in construction
value. The average value of a new home in Pasco was approximately $246,000, in 2014. This
stable economy was reflected in Standard & Poor's rating the 2013 utility bond issue as AA -/Stable
and the 2015 General Obligation bond issue as AA -/Stable.
In 2012, the county's residents approved a new three -tenths of one percent sales tax increase
devoted to criminal justice. This new revenue source funded a new four -person Street Crimes unit
in the city's police department; paid for the replacement of the city's Municipal Court building;
and funded the construction of the city's new Police Community Services Building, which broke
ground in the spring of 2015.
In late in 2012, the city annexed a part of Franklin County. 2014 was the first year the city received
the additional property taxes from the annexation. The annexed area was in a part of the county
Washington State Auditor's Office Page 29
already surrounded by the city. In the spring of 2015, the city annexed the Road 80 area. This
annexation covers 688 acres and represents an addition of property assessed at $118,000,000.
In 2014, the Pasco School District completed Franklin STEM (Science, Technology, Engineering,
and Math) Elementary School, at a cost of $9,500,000. This year, construction has been completed
on three schools: Marie Curie STEM Elementary School and McClintock STEM Elementary
School, both at a cost of $20,000,000. Additionally, Delta High School, a STEM school serving
Pasco, Kennewick and Richland, was constructed in Pasco, at a cost of $7,500,000. The heavy
investment in school infrastructure is indicative of the growth Pasco has sustained and looks to
continue, as well as the area's commitment to providing a well-educated and technologically savvy
workforce capable of meeting the future needs of regional, national, as well as international
enterprises.
Overall, operating revenue to the General Fund is expected to grow by $2 million, compared to the
2014 budget. Increases are expected from sales and use taxes, B&O taxes, shared state revenues, as
well as property taxes. Sales tax is the largest single -source of General Fund revenue and, although
it is a volatile revenues stream, expectations are of continued growth. Property tax is estimated to
increase primarily due to new investments in the community and the continued impact of
annexations. For the past decade, the city has opted to "bank" the levy capacity rather than
increase property taxes by the maximum legal limit. In a departure, the City Council approved
taking the 2% increase to which the City is entitled with the passage of the City's levy ordinances,
for collection in 2015. The 2% increase alone applied to General Fund 2014 property taxes will
result in $140 increase.
In 2013 the City reviewed the costs of providing ambulance and fire services. Currently, that is
being revisited. With an additional annexation, the fire and ambulance service requirements are
being put under additional pressure. Currently, an external ambulance rate study is underway to
analyze the needs of the City and to evaluate funding mechanisms. With new legislation in place,
in 2016, the City should be able to start collecting Medicaid transports at the higher Medicare rates,
which will mitigate some of the additional staffing needs the City is facing in order to ensure its
fire ratings.
The only fund larger than the General Fund is the Water/Sewer Utility Fund. The Water/Sewer
Utility Fund has grown rapidly over the past few years as it provides services to the thousands of
new homes built over the past decade. Every year the utility updates its six year rate plan. Utility
rates are generally increased every other year. Rates increased in 2014 and 2015 for Water and
Storm water. An external rate study is currently being performed. With the approval of the City
Council the recommendations will be reflected in the 2016 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 Manager, PO Box 293, Pasco, WA 99301.
Washington State Auditor's Office Page 30
STATEMENT OF NET POSITION
December 31, 2014
LIABILITIES
Current liabilities
Accounts payable
Govemmental
Business -Type
2,303,821
I13NR payable from restricted assets
Activities
Activities
Total
ASSETS
124,617
447,169
571,786
Current assets:
275,099
275,099
Cash
$ 4,728,253
$ 1,918,250
$ 6,646,503
Restricted cash
282,541
285,605
285,605
Investments
24,425,546
6;425,411
30,850,957
Restricted investments
538,019
10,555,250
10,555,250
Receivables (net ofallowances):
4,300,189
5,147,612
9,447,801
Taxes
3,757,690
3,757,690
Customers
1,778,894
883,214
2,662,108
Grants
896,051
81,943
977,994
Special assessments
38,076
299,749
299,749
Prepaid Items
140,655
25,985,000
140,655
Due from other funds
282,541
32,999,408
282,541
Due from other govemments
100,000
38,147,020
100,000
Inventories
293,801
293,801
Total current assets
36,109,630
20,743,223
56,852,853
Noncurrent assets:
Special assessments & bans
820,435
820,435
Joint Ventres
59,797
59,797
Capital assets not being depreciated:
7,150,098
7,150,098
Land
14,671,115
2,520,925
17,192,040
Construction work in progress
12,668,345
5,738,643
18,406,988
Capital assets net of accumulated depn
3,732,517
3,732,517
Buildings and structures
22,299,317
35,963,444
58,262,761
Other improvements
3,484,617
3,484,617
Machinery and equipment
5,882,679
8,295,985
14,178,664
hifiastructure
130,022,819
117,088,203
247,111,022
Total noncurrent assets
189,909,124
169,607,200
359,516,324
Total assets
226,018,754
190,350,423
416,369,177
LIABILITIES
Current liabilities
Accounts payable
1,805,794
498,027
2,303,821
I13NR payable from restricted assets
449,291
449,291
Deposits payable from restricted asset
124,617
447,169
571,786
Accrued interest payable from restrict(
275,099
275,099
Compensated absences - current
1,056,717
162,830
1,219,547
Due to other finds
282,541
282,541
Loans due to other governments - curt
43,210
1,719,487
1.,762,697
Bonds- current
538,019
2,045,000
2,583,019
Total cuncritliabilities
4,300,189
5,147,612
9,447,801
Noncurrent liabilities:
Compensated absences
452,879
69,784
522,663
Net OPEB obligation
2,523,460
2,523,460
Loans due to other goverrunerrts
38,076
6,944,624
6,982,700
Bonds
2,985,301
25,985,000
28,970,301
Total noncurrent liabilities
5,999,716
32,999,408
38,999,124
Total liabilities
10,299,905
38,147,020
48,446,925
NET POSITION
Net investment in capital assets
185,424,286
137,088,384
322,512,670
Restricted for:
Cemetery (nonexpendable)
454,553
454,553
Prepaid iters
140,655
140,655
Streets and boulevards
7,150,098
7,150,098
Litterand housing abatement
369,365
369,365
Park development
1,994,392
1,994,392
Capital improvement
3,732,517
3,732,517
Economic development
48,951
48,951
Geneneral obligation debt
349,077
349,077
Special assessment debt
64,366
64,366
Restricted for Utilities
10,840,855
10,840,855
Unrestricted
15,933,913
4,274,164
20,208,077
Total Net Position $
215,718,849 $
152,203,403
$ 367,922,252
The notes to the financial statements are an integral
part ofthis statement.
Washington State Auditor's Office Page 31
Statement of Activities
For the Year Ended December 31, 2014
Business -type activities:
(225,775)
2,726,408
Taxes:
Netposition- beginning
Net Revenue (Expenses) and Changes in Net Position
Water
8,238,027
8,674,221
Program Revenues
1,358,028
Primary Government
Sewer
7,901,687
Charges for
Operating
Capital
227,243
Process Water Reuse
1,847,700
2,183,229
Services, Fines &
Grants and
Grants and
Governmental Business -Type
1,288,633
Functional Programs
Expenses
Licenses
Contributions
Contributions
Activities Activities
Total
Primary Government:
477,837
477,837
Total business -type activities
20,822,446
20,001,617
22,818 3,344,409
Governmental activities:
2,546,398
General government
$ 8,092,395
$ 5,082,745
$ -
$ -
$ (3,009,650) $
$ (3,009,650)
Public safety
21,624,372
5,143,614
275,689
(16,205,069)
(16,205,069)
Transportation
16,727,684
4,203,474
904,444
4,301,797
(7,317,969)
(7,317,969)
Natural & economic environment
4,709,403
3,171,501
503,664
(1,034,238)
(1,034,238)
Culture and recreation
7,941,126
2,334,200
18,492
(5,588,434)
(5,588,434)
Interest on long term debt
210,091
(210,091)
(210,091)
Total governmental activities
59,305,071
19,935,534
1,702,289
4,301,797
(33,365,451)
(33,365,451)
Business -type activities:
(225,775)
2,726,408
Taxes:
Netposition- beginning
214,389,810
Water
8,238,027
8,674,221
921,834
1,358,028
1,358,028
Sewer
7,901,687
6,615,018
1,513,912
227,243
227,243
Process Water Reuse
1,847,700
2,183,229
Investment income and miscellaneous
335,529
335,529
Storm Water
1,288,633
1,277,310
22,818 136,266
147,761
147,761
Irrigation
1,546,399
1,251,839
772,397
477,837
477,837
Total business -type activities
20,822,446
20,001,617
22,818 3,344,409
2,546,398
2,546,398
Total primary government $ 80,127,517 $ 39,937,151 $ 1,725,107 $ 7,646,206 (33,365,451) 2,546,398 (30,819,053)
General Revenues:
(225,775)
2,726,408
Taxes:
Netposition- beginning
214,389,810
Property taxes
7,068,736
7,068,736
Sales taxes
12,695,138
12,695,138
B&O taxes
9,591,628
9,591,628
Excise taxes
2,290,347
2,290,347
hrtergovermental
1,580,769
1,580,769
Investment income and miscellaneous
62,878
30,190 93,068
Transfers
(149,820)
149,820
Total general revenues and transfers
33,139,676
180,010 33,319,686
Change in net position
(225,775)
2,726,408
2,500,633
Netposition- beginning
214,389,810
148,778,929
363,168,739
Prior period adjustments
1,554,814
698,066
2,252,880
Netposition- ending
$ 215,718,849 $
152,203,403
$ 367,922,252
Washington State Auditor's Office Page 32
Balance Sheet
Governmental Funds
December 31, 2014
Washington State Auditor's Office Page 33
Other
General
Construction
Governmental
Total
ASSETS
Cash
$ 1,278,998
$ -
$ 3,012,221 $
4,291,219
Investments
4,799,720
15,140,800
19,940,520
Prepaid
135,655
5,000
140,655
Receivables (net of allowances):
Taxes
3,254,702
502,988
3,757,690
Customers
1,237,153
541,741
1,778,894
Interfimd loans
239,118
887,361
1,126,479
Grants
55,428
690,568
150,055
896,051
Special assessments & loans
820,435
820,435
Due from other fiords
282,541
282,541
Due from other governments
100,000
100,000
Total assets
11,283,315
690,568
21,160,601
33,134,484
LIABILITIES
Accounts payable
540,399
310,814
906,894
1,758,107
Interfund loans payable
2,651,046
2,651,046
Due to other funds
282,541
282,541
Deposits payable from restricted assets
113,717
10,900
124,617
Total liabilities
654,116
593,355
3,568,840
4,816,311
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
1,246,038
63,852
908,170
2,218,060
FUND BALANCES
Nonspendable
Cemetery permanent fiord
454,553
454,553
Prepaid items
135,655
5,000
140,655
Restricted
Law enforcement
56,676
56,676
Street and boulevard
7,150,098
7,150,098
Litter & housing abatemerrt
369,365
369,365
Park development
1,994,392
1,994,392
Capital improvements
3,732,517
3,732,517
Economic development
48,951
48,951
Geneneral obligation debt
349,077
349,077
Special assessment debt
64,366
64,366
Committed
Landfill claim
406,448
406,448
Special revenue fiords
2,030,935
2,030,935
Construction projects
33,361
33,361
Debt guarantee
925,961
925,961
Assigned
Subsequent year's budget appropriation of fund
806,563
806,563
balance
Unassigned
7,977,819
(441,624)
7,536,195
Total fund balances
9,3 83,161
33,361
16,683,591
26,100,113
Total liabilities, deferred inflows of resources
and find balances
$ 11,283,315
$ 690,568
$ 21,160,601
Washington State Auditor's Office Page 33
Amounts reported for governmental activities in the statements ofnet position
are different because:
Long-term assets used in governmental activities are not financial resources and
therefore are not reported in the government funds. 185,325,762
Long-term liabilities are not due and payable in the current period and therefore
are not reported in the funds. Proceeds from new debt and repayments of exisiting
debts are recorded as resources and expenditures for fund reporting but are additions
and reductions of liabilities for government wide reporting. (7,637,662)
Other long-term assests are not available to pay for current period expenditures and,
therefore, are deferred in the fiords. 2,218,060
Internal Service fiords are used by management to charge the costs of certain
activities to individual fiords. The assets and liabilities of some internal service funds
are included in the governmental activities in the statement ofnet position. Interfund loans 9,712,576
between governmental activities are excluded.
Net position ofgovernunental activities ( see page 26) $ 215,718,849
The notes to the financial statements are an integral part ofthis statement.
Washington State Auditor's Office Page 34
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2014
The notes to the financial statements are an integral part of this statement.
Washington State Auditor's Office Page 35
General
Other
Fund
Construction
Governmental
Total
REVENUES
Taxes $
28,523,685 $
-
$ 3,232,741
$ 31,756,426
Licenses and permits
1,587,827
395,448
1,983,275
Intergovernmental revenue
1,960,962
1,762,499
3,144,274
6,867,735
Charges for services
5,683,455
6,878,353
12,561,808
Fines and forfeitures
868,689
91,902
960,591
Miscellaneous revenue
690,742
118,500
2,337,256
3,146,498
Total revenues
39,315,360
1,880,999
16,079,974
57,276,333
EXPENDITURES
Current:
General government
7,673,929
46,520
7,720,449
Public safety
18,692,966
3,417,410
22,110,376
Transportation
1,669,218
4,674,537
6,343,755
Natural & economic environment
1,756,317
2,812,134
4,568,451
Culture and recreation
4,432,438
2,720,765
7,153,203
Capital outlay:
General government
506,044
506,044
Public safety
66,616
175,080
16,021
257,717
Transportation
2,793,633
58,052
2,851,685
Natural & economic environment
1,350,688
1,350,688
Culture and recreation
22,995
202,251
225,246
Debt service:
Principal
457,316
217,580
674,896
hrterest
122,514
87,577
210,091
Total expenditures
34,894,309
3,723,528
15,354,764
53,972,601
Excess of revenues over (under) expenditure
4,421,051
(1,842,529)
725,210
3,303,732
OTHER FINANCING SOURCES (USES)
Sale of assets
226,622
226,622
Transfers in
138,000
1,677,116
1,985,014
3,800,130
Transfers out
(2,475,940)
(1,866,860)
(4,342,800)
Total other financing sources (uses)
(2,337,940)
1,677,116
344,776
(316,048)
Net change in fund balances
2,083,111
(165,413)
1,069,986
2,987,684
Prior period adjustments
1,054,831
230,343
1,285,174
Fund balances - beginning
6,245,219
198,774
15,383,262
21,827,255
Fund balances - ending $
9,383,161 $
33,361
$ 16,683,591
$ 26,100,113
The notes to the financial statements are an integral part of this statement.
Washington State Auditor's Office Page 35
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balance of Governmental Funds to the Statement of Activities
For the Year Ended December 31, 2014
(Continued from prior page)
Net change in fund balances - total governmental funds $ 2,987,684
Amounts reported for governmental activities in the Statement of Activities are
different because of the following reconciling items:
Governmental funds report capital outlays as expenditures. However, in the statement
of net position they are reported net of depreciation as a capital asset. Capital assets contributed
by private developers do not provide current resources and are not reported as revenues in the funds. (4,671,681)
The statement of net position shows a decrease in joint ventures not reported in the fiords. (54,421)
The issuance of long-term debt (e.g. bonds, notes) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes current
financial resources of governmental funds. Neither transaction, however, has any affect on net
assets. There was no new issuance of governmental debt for the year ended December 31, 2014. 674,896
Revenues reported in the statement of activies that do not provide current financial resources
are not reported as revenues in the funds. (553,786)
Some expenses such as for compensated absences and loss on disposal of assets reported in
the statement of net activities do not the use of current financial resources and, therefore, are not (393,530)
reported as expenditures in the governmental funds.
Internal service funds are used by management to charge the costs of certain activities to
individual funds. The net revenue of certain activity is reported with governmental
activities. 1,785,063
Change in net position of governmental activities (see page 27) $(225,775)
The notes to the financial statements are an integral part of this statement.
Washington State Auditor's Office Page 36
Statement of Revenues, Expenditures, and Changes in Fund Balances -Budget to Actual
General Fund
For the Year Ended December 31, 2014
The notes to the financial statements are an integral part of this statement.
Washington State Auditor's Office Page 37
Original
Final
Variance to
Budget
Budget
Actual
Final Budget
REVENUES
Taxes
$ 25,031,714
$ 27,176,714
$ 28,523,685
$ 1,346,971
Licenses and permits
1,124,800
1,424,800
1,587,827
163,027
Intergovernmental revenue
1,496,000
1,496,000
1,960,962
464,962
Charges for services
5,391,233
5,751,233
5,683,455
(67,778)
Fines and forfeitures
882,000
837,000
868,689
31,689
Miscellaneous revenue
581,160
329,160
690,742
361,582
Total revenues
34,506,907
37,014,907
39,315,360
2,300,453
EXPENDITURES
Current:
General government
6,898,034
8,392,136
7,673,929
718,207
Public safety
18,169,741
19,172,441
18,692,966
479,475
Transportation
1,771,200
1,771,200
1,669,218
101,982
Natural& economic environment
1,740,090
1,833,090
1,756,317
76,773
Culture and recreation
4,276,728
4,735,338
4,432,438
302,900
Capital outlay:
General government
589,200
82,200
82,200
Public safety
162,100
83,600
66,616
16,984
Culture and recreation
150,000
24,000
22,995
1,005
Debt service:
Principal
457,316
457,316
457,316
-
Interest
122,514
122,514
122,514
-
Total expenditures
34,336,923
36,673,835
34,894,309
1,779,526
Excess of revenues over (under) expenditures
169,984
341,072
4,421,051
4,079,979
OTHER FINANCING SOURCES (USES)
Interfimd loans repaid
3,839,956
3,839,956
(3,839,956)
Transfers in
238,000
238,000
138,000
(100,000)
Interfimd loans issued
(3,013,688)
(3,013,688)
3,013,688
Transfers out
(1,694,870)
(2,598,942)
(2,475,940)
123,002
Total other financing uses
(630,602)
(1,534,674)
(2,337,940)
(803,266)
Net change in fund balances
(460,618)
(1,193,602)
2,083,111
3,276,713
Prior period adjustments
1,054,831
1,054,831
Fund balances - beginning
5,902,824
5,902,824
6,245,219
342,395
Fund balances - ending
$ 5,442,206
$ 4,709,222
$ 9,383,161
$ 4,673,939
The notes to the financial statements are an integral part of this statement.
Washington State Auditor's Office Page 37
Statement of Net Position
Proprietary Funds
December 31, 2014
Adjustment for the net effect of the current year
activity between the internal service funds and
the enterprise fiord 3,904,347
Net position of business -type activities (see page 26) $ 152,203,403
The notes are an integral part of this statement.
Washington State Auditor's Office Page 38
Water/Sewer
Internal
Utility
Service
ASSETS
Current assets:
Cash
$ 1,511,272
$ 844,012
Restricted Cash
285,605
Unspent bond proceeds
Investments
4,525,411
6,385,026
Restricted Investments
10,555,250
Receivables (net of allowances):
Customers
883,214
-
Interfund loans - current portion
487,457
Grants
81,943
-
Special assessments - current portion
299,749
Inventory
293,801
Total current assets
18,436,245
7,716,495
Noncurrent assets:
Interfund loan
1,037,110
Capital assets not being depreciated:
Land
2,520,925
-
Construction work inprogress
5,738,643
212,450
Capital assets net of accumulated depreciation:
Buildings and structures
35,963,444
-
Machinery and equipment
6,690,748
5,155,714
Infrastructure
117,088,203
Total noncurrent assets
168,001,963
6,405,274
Total assets
186,438,208
14,121,769
LIABILITIES
Current liabilities:
Accounts payable
299,577
55,555
Unclaimed property
43,077
Retainage payable
147,505
IBNR payable from restricted assests
449,291
Customer deposits payable from restricted assets
447,169
Accrued interest payable
275,099
Compensated absences - current portion
162,830
-
Loans due to other governments - current portion
1,719,487
Revenue bonds -current portion
2,045,000
Total current liabilities
5,139,744
504,846
Noncurrent liabilities:
Compensated absences
69,784
-
Loans due to other governments
6,944,624
Revenue bonds payable
25,985,000
Total noncurrent liabilities
32,999,408
Total liabilities
38;139,152
504,846
NET POSITION
Net investment in capital assets
135,483,147
5,368,164
Restricted
10,840,855
-
Unrestricted
1,975,054
8,248,759
Total net position
148,299,056
13,616,923
Adjustment for the net effect of the current year
activity between the internal service funds and
the enterprise fiord 3,904,347
Net position of business -type activities (see page 26) $ 152,203,403
The notes are an integral part of this statement.
Washington State Auditor's Office Page 38
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
December 31, 2014
OPERATING REVENUES
Charges for services
Miscellaneous
Total operating revenues
OPERATING EXPENSES
Depreciation
Salaries and wages
Personnel benefits
Supplies
Services
Total operating expenses
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES)
Interest and collection fees
Rents and leases
Grant
Gain on sale of capital assets
Interest expense
Total nonoperating revenues (expenses)
Income (loss) before contributions
and transfers
Capital contributions
Transfers in
Transfers out
Changes in net position
Prior period adjustments
Net position - beginning
Net position - ending
Water/Sewer
Internal
Utility
Service
$ 19,895,362
$ 5,687,187
55,450
2,815,404
19,950,812
8,502,591
6,256,194
689,103
2,830,832
298,525
1,343,932
129,207
1,433,740
787,610
7,738,008
4,934,945
19,602,706
6,839,390
348,106
1,663,201
30,190 18,074
50,805
22,818
(16,928)
(1,491,873) -
(1,388,060) 1,146
(1,039,954) 1,664,347
3,344,409
200,000 392,850
(50,180)
2,454,275 2,057,197
689,746 27,854
145,155,035 11,531,872
148,299,056 $ 13,616,923
Changes in net position 2,454,275
Adjustment for the net effect the current year
activity between the internal service funds and the
enterprise fund 272,133
Change in net position of business -type activities
(page 27) S 2,726,408
The notes to the financial statements are an integral part of this statement
Washington State Auditor's Office Page 39
Statement of Cash Flows
Proprietary Funds
December 31, 2014
Water/Sewer Internal
Utility Service
CASH FLOW FROM OPERATING ACTIVITIES
689,103
50,805
Receipts from customers $
19,905,453
$ 8,502,591
Payments to employees
(4,161,379)
(455,586)
Payments to suppliers
(9,965,907)
(5,974,271)
Net cash provided by operating activities
5,778,167
2,072,734
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Prior period adjustments
27,854
Operating grants
22,818
-
Net cash provided from noncapital financial activities
22,818
27,854
CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from sale ofassets
-
(10,650)
Acquisition ofcapital assets
(4,447,590)
(2,020,746)
Principal paid on debt
(3,994,760)
Interest paid on debt
(1,525,148)
Payments received from notes and loans
97,800
-
Transfers in (out) for capital
149,820
392,850
Capital charges
1,859,263
Capital grant and contribution proceeds
1,156,634
-
Net cash used by capital and related financing activities
(6,703,981)
(1,638,546)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments Proceeds from sale ofinvestments
(13,366,265)
(6,261,089)
Interest on investments
30,190
Interfund loan repayment
-
(891,606)
Net cash provided from investing activities
(13,336,075)
(7,152,695)
Net increase in cash
(14,239,071)
(6,690,653)
Beginning cash
15,750,343
7,534,665
Ending cash $
1,511,272
$ 844,012
RECONC LATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net Operating Income
ADJUSTMENTS TO RECONCILE OPERATING
INCOME TO NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
Depreciation
Rents and leases
Changes in assets and liabilities
Decrease in customer receivables
Decrease in inventories
Increase in accounts payable and deposits
hicrease in compensated absences
Net cash provide by operating activities
NON CASH ACTIVITIES
Capital contributions
The notes to the financial statements are an integral part oftbis statement.
$ 348,106 $ 1,663,201
6,256,194
689,103
50,805
(96,164)
-
(59,107)
(735,052)
(251,716)
13,385
(27,854)
S 5,778,167
$ 2,072,734
$ 648,755 $
Washington State Auditor's Office Page 40
Statement of Net Position
Fiduciary Funds
December 31, 2014
ASSETS
Cash
Investments
Total assets
LIABILITIES
Accounts payable
Due to others
Total liabilities
NETPOSMON
Held in trust for pension benefits/other
post employment benefits
Pension and Other
Post -Employment
P.—F4.
$ 265,543
4,711,147
4,976,690
$ 4,976,690
Agency
$ 135,174
135,174
7,174
128,000
$ 135,174
The notes to the financial statements are an integral part of this statement.
Washington State Auditor's Office Page 41
Statement of Changes in Net Position
Fiduciary Funds
For the ,year ended December 31, 2014
Pension and Other
Post -Employment
Benefits
ADDITIONS
Taxes $ 51,705
Investment earnings 489,921
Total Additions 541,626
DEDUCTIONS
Pension benefits
102,971
Medical premiums
122,556
Administrative expenses
6,890
Total deductions
232,417
Change in net position
309,209
Net position - beginning
4,667,481
Net position - ending
$ 4,976,690
The notes to the financial statements are an integral part of this statement.
Washington State Auditor's Office Page 42
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 City
of Pasco does not have any component units.
B. 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 nonfiduciary activities of the
primary government. For the most part, the effect of interfund 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 support.
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.
Separate fund financial statements are provided for governmental funds, proprietary
funds, and fiduciary funds, even though the latter are excluded from the government -wide
financial statements. Major individual governmental funds and major individual enterprise
funds are reported as separate columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The 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.
Washington State Auditor's Office Page 43
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
recognized as soon as they are both measurable and available. 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 government considers
revenues to be available if they are collected within 60 days of the end of the current fiscal
period. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures, as well as expenditures related to
compensated absences and claims and judgments, are recorded only when payment is due.
General capital asset acquisitions are reported as expenditures in governmental funds.
Issuance of long-term debt and acquisitions under capital leases are reported as other
financing sources.
Property taxes, sales taxes, franchises taxes, licenses, and interest associated with the
current period are all considered to be susceptible to accrual and so have been recognized
as revenues of the current fiscal period. Entitlements are recorded as revenues when all
eligibility requirements have been met, including any time requirements, and the amount
is received during the period or within the availability period for this revenue source
(within 60 days of year-end). Only the portion of 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 government.
Proprietary pension, and other postemployment benefit trust, and private -purpose trust
funds are reported using the economic resources measurement focus and the accrual basis
Of accounting. Agency funds have no measurement focus but utilize the accrual basis of
accounting for reporting its assets and liabilities.
The City of Pasco reports the following major governmental funds:
• The General Fund: The General (or current expense) Fund is the City of Pasco's
operating fund. It accounts for all financial resources of the general government,
except those required or elected to be accounted for in separate fund.
• The Construction Fund: the Construction Fund is a capital project fund used to
account for significant construction and capital acquisition related to governmental
activities.
The City of Pasco reports the following major proprietary fund:
• The Water/Sewer Fund: the Water/Sewer Fund accounts for water, sewer, water
reuse, storm water and irrigation utility activities.
Additionally, the City of Pasco reports the following fund types:
Washington State Auditor's Office Page 44
• Special Revenue funds are used to account for specific revenue sources that are
restricted, committed, or assigned to expenditures for a particular purpose.
• 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.
• Permanent funds are used to report resources that are legally restricted to the extent
that only earnings, not principal, may be used for purposes that support the
government's program.
• 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.
• Pension 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.
• Agency funds are used to report resources held by the city in a purely custodial
capacity on behalf of the Pasco Public Facility District, the Animal Control
Authority and on behalf of all employees for Payroll Clearing and those employees
with Flexible Spending Accounts.
As a general rule the effect of the interfund activity has been eliminated for the
government -wide financial statements. Exceptions are for business taxes the utility pays to
the general fund. Likewise, other charges between the government's utility functions and
certain other service functions and various other functions of the government have not been
eliminated. Eliminations of these charges would distort the direct costs and program
revenues reported for the various functions concerned.
Amounts reported as program revenues include 1) charges to customers, 2) operating grants
and contributions, and 3) capital grants and contributions, including special assessments.
Internally dedicated resources are reported as general revenues rather than as program
revenues. General revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and 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 waste water processing. Operating expenses for enterprise funds and internal
service funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as non-operating revenues and expenses.
D. Budgetary Information
Washington State Auditor's Office Page 45
1. Scope of Budget
Annual appropriated budgets are adopted for the general, special revenue, proprietary
and pension trust funds, on a modified accrual basis.
Budgets are adopted at the level of the fund, except in the general (current expense)
fund, where expenditures may not exceed appropriations at the department level and
the budgets constitute the legal authority for expenditures at that level.
Appropriations for all funds lapse at year-end. Budgets for capital outlays are re -
appropriated until the purpose of the appropriation has been accomplished or
abandoned.
2. Amending the Budget
The City Manager is authorized to transfer budgeted amounts between object classes
within departments in the General Fund and the Water/Sewer Fund; and between object
classes in other funds. However, any revisions that alter the total appropriations of a
department with the General or Water/Sewer Funds or the total of other funds, or that
affect the number of authorized employee positions, salary ranges, hours, or other
conditions of employment must be approved by the City Council.
When City Council determines that it is in the best interest of the City of Pasco to
increase or decrease the appropriation for a particular fund or department, it may do so
by ordinance approved by one more than the majority after holding public hearings.
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.
3. Excess of Expenditures over Appropriations
No funds exceeded their appropriations for 2014.
4. Deficit Fund Net Position
The LID Loans Fund showed a deficit fund equity position at December 31, 2014 of
$456,572. This is expected and normal since the debt related to these funds is from an
internal loan rather than an external funding source. With internal financing the debt is
carried within the fund and therefore results in a negative fund balance. Cash balances
were positive for this fund at the end of the year. If the financing were external, no fund
deficit would exist.
Washington State Auditor's Office Page 46
E. Assets, Liabilities, Fund Balance, Net Position
1. Cash (See Note 3A, Deposits and Investments)
The City's cash is considered to be cash on hand and demand deposits.
It is the City of Pasco's policy to invest all temporary cash surpluses. However, at
December 31, 2014, the treasurer was held a cash position of $7,264,020 in bank
deposits. This amount is classified on the balance sheet as cash. Prior to 2014, the
State Treasurer's Local Government Investment Pool (LGIP) investments were
classified on the balance sheet as cash equivalents.
2. Investments (See Note 3A, Deposits and Investments)
State statutes and the city's investment policies authorize the city to invest in
obligations of the U.S. treasury, repurchase agreements and the LGIP.
Investments are reported at fair value for the items held. The LGIP operates in
accordance with appropriate state laws and regulations. The reported value of the pool
is the same as the fair value of the pool shares.
3. Receivables (See Note 3 B, Receivables)
Taxes receivable consist of property taxes, sales taxes, interfund taxes, business and
occupation taxes, and excise taxes and related interest and penalties. Accrued interest
receivable consists of amounts earned on investments, notes, and contracts at the end
of the year.
Special assessments are recorded when levied. Special assessments receivable consist
of current and delinquent assessments and related interest and penalties. Deferred
assessments on the fund financial statements consist of unbilled. Special assessments
that are liens against the property benefitted. As of December 31, 2014, $424,288 of
Governmental and $21,878 of Business -type special assessments were delinquent.
Customer accounts receivable consist of amounts owed from private individuals or
organizations for goods and services including amounts owed for which billings have
not been prepared. Notes and contracts receivable consist of amounts owed on open
account from private individuals or organizations for goods and services rendered.
The allowance for uncollectible accounts for the ambulance fund is approximately
22% of the outstanding receivable at December 31, 2014.
Grants receivable are reported for grants where qualified expenditures have been made
prior to the end of the year.
Other receivables include municipal court receivables, and interest receivable. Accrued
interest at year end consists of amounts earned by investments, notes and contracts at
Washington State Auditor's Office Page 47
the end of the year. The allowance for uncollectible accounts for the municipal court
receivables is approximately 95% of the outstanding receivable at December 31, 2014
Notes and contracts receivable consist of amounts owed on open account from private
individuals or organizations for goods and services rendered. Since the City is unable
by law to grant credit to any entity, all loans receivable are related to grant monies
received from other agencies which have authorized the loan as part of the grant
process. The repayment of these loans is used to establish revolving loan funds for
loans that match the original grant purpose.
4. Amounts Due to and from Other Funds and Governments, Interfund 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 interfund loans
receivable/payable or advances toffrom other funds. All other outstanding balances
between funds are reported as due toffrom 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 interfund loans receivable and payable is furnished in Note 31),
Interfund 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
There are currently no inventories in governmental funds. Inventories in proprietary
funds are valued using a floating average of costs, which approximates market value.
6. Restricted Assets and Liabilities
These accounts contain resources for construction and debt service, including current
and delinquent special assessments receivable, in the enterprise fund. The current
portion of related liabilities is shown as Payables from Current Restricted Assets.
Specific debt service reserve requirements are described in Note 3 F, Long -Term Debt.
The restricted assets of the enterprise funds are composed of the
following:
Cash and Investments - Debt
$11,789,859
Cash and Investments - Deposits
447,169
Cash and Investments — Unclaimed Property
43,077
Special Assessments - Current
277,871
Special Assessments - Delinquent
21,878
Total
$12,579,854
Washington State Auditor's Office Page 48
7. Capital Assets (See Note 3 C, Capital Assets)
Capital assets, which include 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 one year. Such assets are recorded at historical cost
or estimated historical cost if purchased or constructed.
The government reports infrastructure assets on a network and subsystem basis. Such
assets are recorded at historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation. 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. There were no capitalized
interest costs capitalized by the City during fiscal year 2014.
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:
Assets Threshold Useful Lives
Land All
Building & Structure $5,000 5- 50
Other improvements $5,000 5- 100
Machinery & Equipment & Vehicles $5,000 1 - 50
Infrastructure $5,000 5 - 50
Washington State Auditor's Office Page 49
8. 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 position that applies to a future period(s)
and so will not be recognized as an inflow of resources (revenue) until that time. The city has
only one type of item, which arises only under a modified accrual basis of accounting, which
qualifies for reporting in the category. Accordingly, the item, unavailable revenue is reported
only in the governmental funds balance sheet. The governmental funds report unavailable
revenues for 2014 as follows:
a. Uncollected property taxes levied.
b. Unbilled special assessments levied against benefited property for the cost of local
improvements. An allowance for uncollectibles is not necessary since the assessments are
liens against the property benefited.
c. Rain checks and gift certificates issued by the golf course and certain headstones and liner
sales by the cemetery which obligate the city to future services.
9. Compensated Absences
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.
Sick leave may be accumulated up to a maximum of 960 hours for all employees except firefighters.
Firefighter sick leave may be accumulated up to a maximum of 840 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 one and a half times the
employee's annual vacation accrual rate and is payable upon resignation, retirement or death.
10. Other Accrued Liabilities
These consist of accrued employee benefits.
11. Long -Term Debt (See Note 3 F, 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.
Washington State Auditor's Office Page 50
Bond premiums and discounts, as well as issuance costs, when material, are deferred and amortized
over the life of the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount. Material bond issuance costs are reported as deferred charges
and amortized over the term of the related debt. Currently, there are no material amounts of bond
premiums, discounts, or unamortized issuance costs.
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 uses.
Issuance costs, whether or not withheld from actual debt proceeds received, are reported as
professional service costs.
12. Unearned Revenues
This account includes amounts recognized as receivables but not revenues in governmental funds
because the revenue recognition criteria have not been met.
13. Fund Balance Classification
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 determine 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 balance as it does when appropriating fund balance 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.
In the fund financial statements, governmental funds report restrictions of fund balance as follows:
Washington State Auditor's Office Page 51
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 amounts that are available for any purpose.
Washington State Auditor's Office Page 52
NOTE 2 — RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL
STATEMENTS
A. Explanation of certain differences between the governmental funds balance sheet and
the government -wide statement of net position.
The governmental fund balance sheets includes a reconciliation between fund balance — total
governmental funds and net position — governmental activities as reported in the government -
wide statement of net position. One element of that reconciliation explains that "Long-term assets
used in governmental activities are not financial resources and, therefore, are not reported in the
funds". The following shows the detail of these capital asset changes net of accumulated
depreciation:
Beginning balances of long-term assets excluded from fund level
Joint ventures
$ 114,218
Capital assets
Land
12,709,885
Construction in Progress
11,328,404
Building
23,645,146
Other Improvements
4,041,084
Equipment
2,467,576
Infrastructure
136,231,220
Current year spending on Construction in Progress
3,699,632
Current year capital purchases
1,491,749
Current year capital donations received
2,538,995
Current year decrease in joint venture
(54,421)
Current year capital asset disposals
(485,670)
Current year depreciation
(12,402,056)
Net adjustment to add to government -wide find balance to arrive at
Net Position -governmental activities $ 185,325,762
Another element of that reconciliation explains that "Long-term liabilities are not due and
payable in the current period and are not reported in the funds." The following show the detail of
these liability changes:
Beginning balances of long-term liabilities excluded from fund level:
Compensated absences -restated
OPEB Obligation
Bonds and notes payable
Current year principal payments reducing debt
Current year OPEB and Compensated Absences expense recognized
Net adjustment to reduce government -wide fund balance to arrive at
Net Position -governmental activities
(1,627,815)
(1,981,585)
(4,279,502)
674,896
(423,656)
$ (7,637,662)
Washington State Auditor's Office Page 53
B. Explanation of certain differences between the governmental funds statement of
revenues, expenditures, and changes in fund balances and the government -wide
statement of activities
The governmental funds' statement of revenues, expenditures and changes in fund balances
includes reconciliation between net changes in fund balances — total governmental funds and
changes in net position of governmental activities as reported in the government -wide statement
of activities. The first element of that reconciliation relates to capital activity as follows:
Capital outlays for:
Land
Construction in process
Building and structure
Machinery and equipment
Contributed Capital assets
Curreny year deparcaiation
Building and structure
Other improvement
Machinery and equipment
Infrastructrure
Net capital activity
NOTE 3 — DETAILED NOTES ON ALL FUNDS
A. Deposits, investments and restricted assets
As of December 31, 2014 the government had the following:
Local Government Investment Pool
Total Invested Cash Equivalents
Investments in Federal Agencies
Investment in Mutual Funds
Investment in Notes
Total fair value
Portfolio weighted average maturity
Fair Value
$31,086,547
10,390,018
4,592,468
48,320
46.117.353
2014
$ 1,350,688
3,699,632
22,996
118,066
2,538,995
(1,110,275)
(556,465)
(347,040)
(10,388,275)
$ (4,671,678)
Weighted Average
Maturities (Years)
N/A
4.17
N/A
6.34
4.18
Interest rate risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair
value of an investment. In accordance with its investment policy, the City manages its exposure to
declines in fair value by limiting the maturity of investments. Investments over one year require the City
Manager's approval. In addition, to achieve its financial objective of maintaining liquidity to meet all
operating requirements, the City typically selects investments that have shorter average maturities. The
city's investment policy does not specifically address interest rate risk.
Washington State Auditor's Office Page 54
Credit risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. The city investment policy allows the following types of investments in accordance with
state law: demand or investment deposits in qualified public depositories located within the state;
United States' government bonds, notes bills; certificates of deposits from financial institutions that
participate in Washington State's Public Deposit Protection Commission's list of "Qualified Public
Depositories"; bankers acceptances, repurchase agreements and the Washington State Treasurer's Office
Local Government Investment Pool (LGIP). 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, 2014 the City's investments in agency securities were all rated AAA. The LGIP is not
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. 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.
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. With the Exception of U.S. Treasury securities and the State Treasurer's Local Government
Investment Pool (LGIP) no more than twenty percent of the city's total investment portfolio should be
invested in a single security type and not more than twenty percent should be invested with a single
financial institution.
Concentration of credit risk as a percentage of total investments:
Issuer I Fair Value I Percenta es
Local Government Investment Pool
Federal National Mortgage Association
American Funds
Federal Home Loan Mortgage Corporation
US Financing Corporation
Small Business Administration
City of Pasco
$31,086,547
67.41%
5,927,863
12.85%
4,592,468
9.96%
2,022,981
4.39%
1,986,161
4.31%
453,013
0.98%
48,320 0.10%
$46,117,353 100.00%
Custodial credit risk — deposits. This is the risk that in the event of a bank failure, the governments'
deposits may not be returned. The city's policy states that the maximum amount to be placed with any
one depositary shall not exceed the net worth of the institution (at the time of investment) as determined
by the State of Washington Public Deposit Protection Commission (PDPC). According to the PDPC Act
implemented August 11, 1969 financial institutions holding public funds have requirements to
collateralize those funds. The maximum liability of a public depository is equal to ten percent of all
public deposits held by that depositary at the time of the most recent Commission report date or the
average of the balances of public deposits on the four most recent Commission report dates, whichever is
greater. This amount, which is subject to audit, represents the maximum amount the Commission can
Washington State Auditor's Office Page 55
assess each depository in the event of a loss due to default of a participating depositary. The city had
$8,121,722 on deposit with US Bank on December 31, 2014. The FDIC insures those deposits up to
$250,000. US Bank is required to collateralize 10% of the remaining funds which is $787,172. The
temporary custodial credit risk for uncollateralized deposits at US Bank was $7,084,550 on December
31, 2014.
Custodial credit risk — investments. For an investment, this is the risk that, in the event of the failure of
the counterparty, the government will be able to recover the value of its investments or other collateral
securities that are in the possession of an outside party. The city limits its custodial credit risk by
holding investments that are insured and are registered or held by the city's agent in the city's name.
Certificates of deposits are entirely covered by federal depository insurance (FDIC and FSLIC) or by
collateral held in a multiple financial institution collateral pool administered by the Washington Public
Deposit Protection Commission (PDPC).
Restricted assets. The corpus of permanent funds is included in restricted assets. The Water/Sewer utility
issued bond proceeds prior to 2014 for construction projects which were not fully expended by the end
of the current year. The remaining funds are restricted for construction purposes. Certain resources set
aside for the repayment of revenue bonds are classified as restricted assets on the balance sheet because
they are maintained in a separate account and their use is limited by applicable bond covenants. The
"bond debt service" account is used by the Water/Sewer fund to report resources set aside to subsidize
potential deficiencies from the Water/Sewer operations that could adversely affect debt service
payments. The Water/Sewer fund has constructed projects and assessed special assessments to recover
certain portions of the construction costs. Those assessments receivable are pledged to pay for the related
special assessment debt and are therefore restricted to that purpose. Cash provided from customers as
deposits are also restricted. Restricted assets are composed of the following:
City View Cemetery Endowment
Water/Sewer Debt Reserve account
Water/Sewer Debt Service account
Water/Sewer Bond Proceeds
Water/Sewer Customer Deposits
Claims incurred but not reported (IBNR)
Landfill Remediation
Governmental Funds Customer Deposits
Drug Forfeit and Evidence
Unclaimed Property
Municipal Court Trust
Imprest Accounts
Bi -centennial Contribution
Water/Sewer Special Assessments Receivable
Governmental Special Assessments Receivable
Totals
Temporary Permanent
Restrictions Restrictions
$454,553
$3,188,801
2,986,513
4,175,295
447,169
449,292
406,448
99,511
74,288
66,647
47,750
21,055
6,264
299,750
671,546
$12,940,329 $454,553
Washington State Auditor's Office Page 56
B. Receivables
Taxes receivable.
Taxes receivable consist of several types of taxes: property taxes, sales taxes and business & occupation
taxes, excise taxes, gambling and admission taxes.
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.
Property Tax Calendar
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 taxes are recorded as a receivable when levied, offset by deferred revenue. During the year
property tax revenues are recognized when cash is collected and deferred property tax revenue is
reduced. Prior year tax levies were recorded using the same principle. The reported balances include tax
payments from the county received through December 31, 2014. Tax receipts received by the county in
December and January but remitted to the City in January and February are included as part of the tax
receivable amount reported. Delinquent taxes totaled $242,553 and since these funds are not available
revenue recognition is deferred. Subsequent collections of delinquent amounts will be recorded in
revenue in the period actually received.
The City may levy up to $3.60 per $1,000 of assessed valuation for general governmental services
subject to two limitations:
a. Except as otherwise provided for, the levy for taxing districts in any year shall be set so that
the regular property taxes payable in the following year shall not exceed the limit factor of
101% multiplied by the amount of regular property taxes lawfully levied for such district in
the highest of the three most recent years in which such taxes were levied for such district
plus an additional dollar amount calculated by multiplying the increase in assessed value in
that district resulting from new construction, improvements to property, and any increase in
the assessed value of state -assessed property by the regular property tax levy rate of that
district for the preceding year.
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. Effective
November 29, 2007 Washington State House Bill (HB) 2416 reinstated the one percent
property tax limit factor adopted by voters under Initiative No. 747 following the invalidation
of that initiative by the courts. The provisions of HB 2416 are retroactive to and prospective
from taxes levied for collection in 2002. This retroactivity extinguishes the additional levying
capacity resulting from the November 2007 court ruling but lets stand any banked capacity
Washington State Auditor's Office Page 57
accumulated prior to the court ruling and the authority to continue to bank future unused
capacity.
In November 2013, the City approved an ordinance establishing the operating levy for 2014 of
$6,927,439 based on an assessed valuation of $3,541,628,830 and an estimated rate of $1.956004 per
$1,000 of assessed value. In November 2014, the City approved an ordinance establishing the operating
levy for 2015 of $7,159,507 based on an assessed valuation of $3,687,411,102 and an estimated rate of
$1.94160802 per $1,000 of assessed value.
Additionally, the city levied an additional amount to cover bond payments for the 1999 UTGO bond for
the Library Remodel ($56,363) and the 1999 UTGO bond for the Fire Station ($71,387).
Sales and excise taxes. The state is the collection agent for sales and real estate excise taxes in the State
of Washington. The vendor has until approximately the end of the following month to remit sales tax to
the state for taxable sales. The state then has approximately another month to remit the city's portion of
the tax to the city. The city's basic sales tax rate is one-half of one percent.
Utility occupation taxes. The city assessed a gross revenue tax and use on certain utilities within the city.
The rate is for these taxes are eight and one-half percent.
Other receivables. As of December 31, 2014 the only major fund of the city to have an allowance for
uncollectible accounts was the General Fund. This allowance of $9,010,482 relates to municipal court
receivables. Non -major funds receivable balances include the applicable allowance for uncollectible
accounts (which relates to ambulance services) of $100,000.
Special assessments and unavailable revenue. Governmental funds report unavailable revenue in
connection with receivables for revenues that are not considered to be available to liquidate liabilities of
the current period. Governmental funds also defer revenue recognition in connection with resources that
have been received but not yet earned. At the end of the current fiscal year, the various components of
deferred revenue reported in the governmental funds were as follows:
Unavailable Revenue — Property Taxes $ 242,553
Unavailable Revenue — Special Assessments/Loans 820,435
Unavailable Revenue — Municipal Court 998,940
Unavailable Revenue — Grants 79,207
Unavailable Revenue — Other 76,926
Total 2 218 061
Loans receivable. Loans receivables consist of amounts owed on an open account from private
individuals or organizations for goods and services rendered. Since the City is unable by law to grant
credit to any entity, all loans receivable are related to grant monies received from other agencies which
have authorized the loan as part of the grant process. Repayments of these loans are used to establish
revolving loan funds for loans that match the original grant purpose. The long term portion of those
loans receivable are included in reserved fund balance as the assets are not available to liquidate
liabilities in the current period.
Washington State Auditor's Office Page 58
C. Capital Assets
Capital asset activity for the year ended December 31, 2014 was as follows:
Governmental Activities:
Capital assets, not being depreciated
Land
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Building & structure
Other improvements
Machinery and equipment
Infrastructure
Total capital assets being depreciated
Less accumulated depreciation:
Building & structure
Other improvements
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets net
Business Type Activities:
Capital assets, not being depreciated
Land
Construction in process
Total capital assets, not being depreciated
Capital assets, being depreciated:
Building & structure
Machinery and equipment
Infrastructure
Total capital assets being depreciated
Less accumulated depreciation:
Building & structure
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total capital assets, being depreciated, net
Business activities capital assets net
Beginning
Current
Balance
Current Period
Period
Ending Balance
01/01/14
Increases
Decreases
12/31/14
$ 12,709,885 $
2,003,588
$ 42,358
$ 14,671,115
11,328,404
5,072,668
3,732,728
12,668,345
24,038,289
7,076,256
3,775,086
27,339,460
37,944,848
207,758
486,094
37,666,512
9,240,869
9,240,869
11,598,811
1,372,252
89,915
12,881,148
197,621,220
4,179,873
201,801,093
256,405,748
5,759,883
576,009
261,589,622
14,299,702
1,110,275
42,782
15,367,195
5,199,785
556,467
5,756,252
6,279,219
808,217
88,967
6,998,469
61,390,000
10,388,274
71,778,274
87,168,706
12,863,233
131,749
99,900,190
169,237,042
(7,103,350)
444,260
161,689,432
$ 193,275,331 $
(27,094)
$ 4,219,346
$ 189,028,892
Beginning
Current
Balance
Current Period
Period
Ending Balance
01/01/14
Increases
Decreases
12/31/14
$ 2,520,925 $
$ -
$ 2,520,925
7,445,063
5,058,467
6,764,887
5,738,643
9,965,988
5,058,467
6,764,887
8,259,568
72,519,591
1,080,596
73,600,187
10,643,699
720,356
226,618
11,137,437
147,098,667
5,649,519
152,748,186
230,261,957
7,450,471
226,618
237,485,810
35,084,911
2,551,832
37,636,743
2,147,877
914,861
221,286
2,841,452
32,642,560
3,017,423
35,659,983
69,875,348
6,484,116
221,286
76,138,178
160,386,609
966,355
5,332
161,347,632
$ 170,352,597 $
6,024,822
$ 6,770,219
$ 169,607,200
Washington State Auditor's Office Page 59
Depreciation expense by function:
Governmental activities
General government
$ 401,532
Public Safety
338,378
Transportation
10,698,525
Economic environment
199,938
Culture & recreation
1,224,860
Total depreciation expense - governmental activities
$ 12,863,233
Business -type activities:
Water $ 2,441,568
Sewer 3,114,918
Process water reuse facility 233,055
Stormwater 218,527
Irrigation 476,048
Total depreciation expense- business -type activities: $ 6,484,116
Construction commitments
The City of Pasco has active construction projects as of December 31, 2014. The projects include street
construction and various utility constructions. At year end, the city's commitments with contractors are
as follows:
D. Interfund loans receivable, payable and transfers
Interfund loans
The composition of interfund loan balances as of December 31, 2014 is as follows:
Washington State Auditor's Office Page 60
PROJECT I
SPENT
REMAINING
CATEGORY
COMMITMENTS
TO DATE
COMMITMENTS
STREET
$ 5,984,358.00
$ 1,450,522.00
$ 4,533,836.00
GENERAL
5,622,629
3,446,243
2,176,386
PARKS
167,204
167,204
WATER
957,064
420,263
536,801
SEWER
2,633,736
1,754,326
879,410
PROCESS WATER REUSE FACILITY
4,392,383
2,929,430
1,462,953
STORMWATER
32,166
32,166
IRRIGATION
2,060,243
2,046,786
13,457
TOTAL
$ 21,849,783
$ 12,047,570
$ 9,802,213
D. Interfund loans receivable, payable and transfers
Interfund loans
The composition of interfund loan balances as of December 31, 2014 is as follows:
Washington State Auditor's Office Page 60
Interfund Loans Loan Original Outstanding Interfund Loan Due In Less
Receivable Purpose Loan Amount Loan Amount Payable Than 1 Year
General Fund PWRF asset purchase
$700,000
$239,118 Non -major Special Revenue Fund
$239,118
Non -major Special Revenue Fund Parking Lot Resurface
689,000
472,769 Non -major Special Revenue Fund
113,005
Non -major Special Revenue Fund Permanent LID Financing
177,964
177,964 Non -major Debt Service
14,822
Non -major Special Revenue Fund Permanent LID Financing
236,628
236,628 Non -major Debt Service
19,709
Internal Service Fund Land Purchase Financing
1,400,000
1,400,000 Non -major Special Revenue Fund
457,457
Internal Service Fund Permanent LID Financing
438,905
124,567 Non -major Debt Service
60,000
1,677,116
$3,642,497
$2,651,046
$904,111
Interfund transfers
Transfers between funds during the year ended December 31, 2014 are as follows:
TRANSFER FROM
General Nonmajor Utility
Special
Total
$ 138,000
General $ 138,000
T
ANonmajor
Special Revenue
$ 1,585,720
399,294
1,985,014
N
S
Major Construction
585,570
1,041,366
$ 50,180
1,677,116
F
E
Major Utility
200,000
200,000
R
Internal Service
T
304,650
88,200
392,850
O
Total
$ 2,475,940
$ 1,866,860
$ 50,180
$ 4,392,980
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.
There were one time transfers for the purpose of construction 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; from
earnings in the cemetery endowment fund to pay the general fund for maintenance activities; from
earnings and fund balance of the Boulevard Maintenance fund to the general fund to pay for boulevard
maintenance activities and from the general fund to the ambulance fund.
Washington State Auditor's Office Page 61
E. Leases
Operating leases. The city leases its front-line police vehicles. Leases are generally for a three year
period. Generally, at the end of the three year period the lease ends and the city returns the vehicles.
New vehicles and leases are then acquired. In addition the city has two leases for copiers. The following
represents the future minimum lease payments:
Copier Lease
December 31
Amount
2015
2016
$ 3,388
847
Total
Is 4,235
F. Long-term Debt
Police vehicles
Year Ending December 31
Amount
2015
2016
2017
$ 317,118
189,209
31,167
Total
$ 537,494
Changes in long-term liabilities. For the governmental activities, compensated balances are generally
liquidated by the General and Streets funds while worker's compensation claims are liquidated by the
Medical/Dental internal services fund. The net pension obligation is generally liquidated by the Fire
Pension Trust Fund and the net OPEB obligation is also generally liquidated by the General Fund.
Long-term liability activity for the year ended December 31, 2014 was as follows:
Changes in Long -Term Liabilities Beginning Ending
Balance Additions Reductions Balance
GOVERNMENTAL ACTIVITIES
General obligation bonds
Special Assessment bonds
Due to Other Governments'
Compensated absencesZ
Net OPEB obligation
Governmental activity long-term liabilities
$3,835,000 ($520,000) $3,315,000
226,590 (18,270) 208,320
995,888 (247,766) 748,122
1,627,815 $1,294,077 (1,412,296) 1,509,596
1,981,585 1,191,159 (649,284) 2,523,460
$8,666,878 1 $2,485,236 1 ($2,847,616) $8,304,498
BUSINESS -TYPE ACTIVITIES
Revenue bonds
$29,280,000
($2,215,000)
$27,065,000
Special Assessment bonds
1,075,000
(110,000)
965,000
Due to Other Governments'
9,555,867
(1,558,627)
7,997,240
Compensatedabsences2
219,230
$237,541 (224,157)
232,614
Business -type activity long-term liabilities
$40,130,097 1
$237,541 1 ($4,107,784)1
36,259,854
Total Changes in Long -Term Liabilities
$48,796,975
$2,722,777 ($6,955,400)
$44,564,352
Washington State Auditor's Office Page 62
Notes:
Reclassification of Public Works Trust Fund Loan'Riverview Tnmk/SE Sewer" to general obligation Due to Other
Governments is the result of a classification correction. This increased and reduced the 'Due to Other Governments"
balances of the general and revenue obligations, respectively, by $777,983.
2Due to prior period corrections, the beginning balances for compensated absences were restated. The general and
revenue obligation balances were reduced by $269,640 and $283,934, respectively.
Long-term debt. The city issues general obligation bonds to finance capital improvements such as
bridges, streets, municipal buildings and enterprise facilities such as water and sewer utilities. Bonded
indebtedness has also been entered into (currently and in prior years) to advance refund several general
obligation and revenue bonds. The City is also liable for notes that were entered into for the purchase of
the Animal Control facilities and Port Airport Fire Building. These notes are considered obligations of
the general government and are being repaid with general governmental resources. Proprietary fund
revenues are used to repay revenue and refunding bonds as well as certain loans. The bond issues are
not subject to arbitrage but the investments held in reserves (and the Guarantee Fund for LID 135 and
145) are subject to rebate and yield restrictions.
GOVERNMENTAL ACTIVITIES:
GENERAL OBLIGATION BONDS
MATURITY INTEREST I ORIGINAL DUE wnuiN
PURPOSE RANGE RATE RANGE I AMOUNT ONE YEAR
1999 LTGO Library and Fire Station 2015-2019 5.25% - 5.60% $1,700,000 $100,000
2011 LTGO Refund 2001 LTGO 2015-2020 2.00% - 4.00% 4,110,000 430,000
Totals I F-5,81omoo 530,000
YEAR ENDING OVERNMENTAL ACTwrnE BUSINESS -TYPE ACTIVITIES
DECEMBER 31 I PRINCIPAL I INTEREST I PRINCIPAL I INTEREST
2015
530,000
131,600
2016
545,000
113,250
2017
560,000
94,400
2018
575,000
70,400
2019
595,000
45,800
2020-2024
510,000
20,400
Totals $3,315,000
$475,850
Washington State Auditor's Office Page 63
SPECIAL ASSESSMENT BONDS
MATURITY I INTEREST ORIGINAL DUE WITHIN
PURPOSE RANGE RATE RANGE AMOUNT ONE YEAR
LID 145AStreet Improvements 2015-2020 2.25%-5.00% $785,129 $ -
LID 146 Kurtzman Improvements 2015-2021 4.10% 89,351 $8,019
Totals 874,480 8,019
YEAR ENDING kqvERNmENTAL ACTIVITIE BUSINESS -TYPE ACTIVITIES
DECEMBER 31 I PRINCIPAL I INTEREST I PRINCIPAL I INTEREST
2015
8,019
9,781
2016
6,348
9,452
2017
6,608
9,192
2018
6,879
8,921
2019
87,161
8,639
2020-2024
93,305
4,786
TotalsF $208,320
$50,771
DUE TO OTHER GOVERNMENTS
MATURITY INTEREST ORIGINAL I DUE WITHIN
PURPOSE RANGE RATE AMOUNT ONE YEAR
Riverview Trunk/SE Sewer PW -00-691-043 2015-2020 1.00% $1,890,000 $111,140
2002 Animal Control Facililty Land 2015-2016 6.24% 275,500 29,270
2006 Port Airport Fire Building 2015-2016 4.00% 120,000 13,940
Totals 2,285,500 154,350
YEAR ENDING OVERNMENTAL ACTIVITIE BUSINESS -TYPE ACTIVITIES
DECEMBER 31 I PRINCIPAL I INTEREST I PRINCIPAL I INTEREST
2015
154,350
10,532
2016
149,211
7,060
2017
111,140
4,446
2018
111,140
3,334
2019
111,140
2,223
2020-2024
111,141
1,111
Totals $748,122
$28,706
TOTAL GOVERNMENTAL ACTIVITIES: $4,271,442 $555,327
Washington State Auditor's Office Page 64
BUSINESS TYPE ACTIVITIES:
REVENUE BONDS
MATURITY INTEREST ORIGINAL DUE WITHIN
PURPOSE RANGE RATE RANGE AMOUNT ONE YEAR
2002 Water/Sewer
2015-2022
3.50%-4.70%
$5,945,000
$405,000
2005 Water/Sewer
2015-2025
4.00%-1.25%
4,400,000
205,000
2009 Water/Sewer
2015-2029
3.00%-4.75%
9,145,000
370,000
2010 A Ref 1998B Plus New
2015-2029
3.00%-4.370%
9,070,000
260,000
2010 T Ref 1998A
2015-2018
4.62%
1,240,000
160,000
2013 A Sewer
2014-2028
3.00%-4.00%
2,520,000
100,000
2010 T Process Water Reuse Facility
2015-2028
0.69%-4.89%
7,235,000
435,000
Totals
39,555,000
1,935,000
YEAR ENDING OVERNMENTAL ACTTVITIE BUSINESS -TYPE ACTIVITIES
DECEMBER 31 I PRINCIPAL I INTEREST I PRINCIPAL INTEREST
2015
1,935,000
1,079,634
2016
1,965,000
1,022,870
2017
1,990,000
945,129
2018
1,670,000
872,898
2019
1,615,000
816,166
2020-2024
9,030,000
3,082,084
2025-2029
8,860,000
1,050,203
Totals $27,065,000
$8,868,984
SPECIAL ASSESSMENT BONDS
MATURITY INTEREST ORIGINAL DUE WITHIN
PURPOSE RANGE RATE RANGE AMOUNT ONE YEAR
2007 Water/Sewer ULID 2015- 2022 4.25%-4.75%a $845,000 $50,000
2009 Water/Sewer 2015-2029 3.00%-4.75% 900,000 60,000
Totals 1,745,000 110,000
YEAR ENDING VERNMENTAL ACTIVITIEJ BUSINESS -TYPE ACTIVITIES
DECEMBER 31 PRINCIPAL I INTEREST I PRINCIPAL I INTEREST
2015
110,000
44,907
2016
60,000
43,427
2017
110,000
41,805
2018
110,000
37,765
2019
110,000
33,651
2020-2024
465,000
104,450
Totalsi
$965,000 1
$306,005
Washington State Auditor's Office Page 65
DUE TO OTHER GOVERNMENTS
INTEREST ORIGINAL I DUE WITHIN
PURPOSE MATURITY RATE AMOUNT ONE YEAR
Waste Water Polution Control Facilities PWTF 954 6/30/2015
West Pasco Water System PWTF 95-026 6/30/2015
Sewer Treatment Plant Phase 1 &2 SRF Loan 10/13/2015
Totals
1.00% $812,700
$43,011
1.00% 2,687,300
107,375
1.00% 23,700,000
1,457,961
27,200,000
1,608,347
YEAR ENDING OVERNMENTAL ACTTVITIE BUSINESS -TYPE ACTIVITIES
DECEMBER 31 I PRINCIPAL I INTEREST I PRINCIPAL I INTEREST
2015
1,608,347
263,498
2016
1,509,436
210,519
2017
1,562,729
157,227
2018
1,617,903
102,053
2019
1,675,565
44,931
2020-2024
23,260
1,167
Totals
$7,997,240
$779,395
TOTAL BUSINESS -TYPE ACTTVPMS:
GRAND TOTALS:
NOTE 4 — RISK MANAGEMENT
$36,027,240 $9,954,384
$40,298,682 $10,509,711
The City of Pasco maintains insurance against most normal hazards except for unemployment and
automobile collision, where it has elected to become self-insured.
For unemployment claims, the City is on a 100% reimbursable program with the State where the City
pays all unemployment claims charged against it.
The City of Pasco is a member of the Washington Cities Insurance Authority (WCIA).
Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.3 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 over 162 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. Effective January 2011 City of Pasco coverage
changed to a $100,000 per incident deductible from a no deductible policy. Coverage includes general,
automobile, police professional, public officials' errors and omissions, stop gap, and employee benefits
liability. WCIA limits are $4 million per occurrence in the self-insured layer, and $16 million per
occurrence in the re -insured layer. The excess layer is insured by the purchase of reinsurance and is
subject to aggregate sub -limits in the excess layers. Total limits are $20 million per occurrence subject to
Washington State Auditor's Office Page 66
aggregate sublimits in the excess layers. The Board of Directors determines the limits and terms of
coverage annually.
Insurance coverage for property, automobile physical damage, fidelity bonds, inland marine, and boiler
and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Property
insurance and auto physical damage are self-funded from the member's deductible to $750,000, for all
perils other than flood and earthquake, and insured above that amount by the purchase of reinsurance.
(City does not participate in these programs; all is purchased through commercial broker as identified on
this page).
In-house services include risk management consultation, loss control field services, claims and litigation
administration, and loss analyses. WCIA contracts for the claims investigation consultants for personnel
issues and land use problems, insurance brokerage 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, and
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 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.
Property, Inland Marina, boiler, machinery and employee fidelity insurance is purchased through
commercial insurance brokers.
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. It is the City's policy to maintain at least three months of average monthly claims in cash
reserves. 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 $80,000 per individual.
The total amounts of medical/dental claims paid, including those paid by the City's stop -loss insurance
carrier, during the last three years are:
2012 I 2013 2014
$4,113,300 $4,575,365 $4,396,624
Washington State Auditor's Office Page 67
NOTE 5: JOINT AGREEMENT/JOINT VENTURES
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 five participating municipal corporations, the cities of
Kennewick, Pasco, and Richland, and Benton and Franklin Counties. BI -PIN was established to assist
the participating police and sheriffs 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 contributions.
Effective January 1, 1992, the City of Kennewick assumed responsibility for the operation of the BI -PIN
system. As the Operating Jurisdiction, the City of Kennewick provides all necessary support services for
the operation of BI -PIN such as accounting, legal services, risk management and information systems.
The equity reduced by BI -PIN in 2014 for these transactions was $31,441.
The City of Pasco's equity interest in BI -PIN was $52,949 on December 31, 2014, which is reported as
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 distribution from BI -PIN since charges are assessed only to recover anticipated
expenses.
Complete separate financial statements for BI -PIN may be obtained at the City of Kennewick, 210 West
Sixth Avenue, Kennewick, Washington 99336.
Metropolitan Controlled Substance Enforcement Group
The Metropolitan Controlled Substance Enforcement Group (Metro) was established prior to 1987, when
six participating municipal corporations entered into an Interlocal Agreement. These entities include the
cities of Kennewick, Pasco, Richland, and West Richland, and Benton and Franklin Counties. Metro
was 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 is 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 Police Chiefs from each of the
cities and the Sheriffs and Prosecuting Attorneys from the two counties, administers daily activity.
Effective July 1, 2009, the City of Kennewick assumed responsibility for the operation of Metro. As the
Operating Jurisdiction, the City provides all necessary support services for the operation of Metro such
as accounting, legal services and risk management.
Washington State Auditor's Office Page 68
The City of Pasco's equity interest in Metro was $6,848 as of June 30, 2014, which is reported as an
investment in joint ventures in the government -wide Statement of Net position. The 2014 reduction in
equity was $22,980. The change in equity is reflected in the government -wide statement of activities
under Public Safety. The City does not anticipate any income distribution from Metro since charges are
assessed only to recover anticipated expenses.
Complete separate financial statements for Metro may be obtained from the City of Kennewick, 210
West Sixth Avenue, Kennewick, Washington 99336.
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 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.
Complete separate financial statements for ACA may be obtained from the City of Pasco, P.O. Box 293,
Pasco, Washington 99301.
NOTE 6: 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.
Washington State Auditor's Office Page 69
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 nine members. Five of the members are representative of for-profit business or property
owners within the downtown area. At least two members are representative of the banking and/or real
estate profession, and at least two members are representatives of business or corporate 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 2014, the City expended $149,800 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 are not reflected in the amount
noted above.
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.
The City accounts for its portion of TRAC activity in the TRAC Special Revenue Fund. For calendar
year 2014, the City of Pasco paid Franklin County $264,575 and $104,127 for operating and debt service
expenditures, respectively. Additionally, 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,
2014, the TRAC Fund had a fund balance of $203,045.
Washington State Auditor's Office Page 70
Complete financial statements for TRAC may be obtained from Franklin County, 1016 N. 4h Avenue,
Pasco, Washington.
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.
During 2014, the Authority received $33,605 in pass-through grants administered by the City. All other
payments received from the City related to lease payments and a utility refund. In 2014, the City and the
Authority entered into an agreement which will result in Payment in Lieu of Taxes (PILOT) to the City
starting in 2015 in order to defray the cost of the City providing essential local public services.
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 7: JOINTLY GOVERNED ORGANIZATIONS:
Tri -Cities Regional Public Facilities District
Pursuant to RCW 3 5.5 7 the Tri -Cities Regional Public Facilities District (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 RCW 35.57.020 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.
Washington State Auditor's Office Page 71
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.
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 are 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.
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Substantially all City of Pasco 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 retirement plans.' The Department of
Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a
publicly available comprehensive annual financial report (CAFR) that includes financial statements and required
supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of
Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380; or it may be
downloaded from the DRS website at www.drs.wa.gov.
Public Employees' Retirement System (PERS) Plans 1, 2, and 3
Plan Description
The Legislature established PERS in 1947. Membership in the system includes: elected officials; state
employees; employees of the Supreme, Appeals, and Superior courts; employees of legislative committees;
employees of district and municipal courts; and employees of local governments. Membership also includes
higher education employees not participating in higher education retirement programs. Approximately 49 percent
of PERS salaries are accounted for by state employment. PERS retirement benefit provisions are established in
Chapters 41.34 and 41.40 RCW and may be amended only by the State Legislature.
PERS is a cost-sharing multiple -employer retirement system comprised of three separate plans for membership
purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a defined contribution
component.
PERS members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or after
October 1, 1977 and by either, February 28, 2002 for state and higher education employees, or August 31, 2002
Washington State Auditor's Office Page 72
for local government employees, are Plan 2 members unless they exercised an option to transfer their membership
to Plan 3. PERS members joining the system on or after March 1, 2002 for state and higher education employees,
or September 1, 2002 for local government employees have the irrevocable option of choosing membership in
either PERS Plan 2 or Plan 3. The option must be exercised within 90 days of employment. Employees who fail
to choose within 90 days default to Plan 3.
PERS is comprised of and reported as three separate 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 members can only be a member of either Plan 2 or
Plan 3, the defined benefit portions of Plan 2 and Plan 3 are accounted for in the same pension trust fund. All
assets of this Plan 2/3 may legally be used to pay the defined benefits of any of the Plan 2 or Plan 3 members or
beneficiaries, as defined by the terms of the plan. Therefore, Plan 2/3 is considered to be a single plan for
accounting purposes.
PERS Plan 1 and Plan 2 retirement benefits are financed from a combination of investment earnings and employer
and employee contributions. Employee contributions to the PERS Plan 1 and Plan 2 defined benefit plans accrue
interest at a rate specified by the Director of DRS. During DRS' Fiscal Year 2013, the rate was five and one-half
percent compounded quarterly. Members in PERS Plan 1 and Plan 2 can elect to withdraw total employee
contributions and interest thereon, in lieu of any retirement benefit, upon separation from PERS-covered
employment.
PERS Plan 1 members are vested after the completion of five years of eligible service.
PERS Plan 1 members are eligible for retirement from active status at any age with at least 30 years of service, at
age 55 with 25 years of service, or at age 60 with at least 5 years of service. Plan 1 members retiring from
inactive status prior to the age of 65 may receive actuarially reduced benefits.
The monthly benefit is 2 percent of the average final compensation (AFC) per year of service, but the benefit may
not exceed 60 percent of the AFC. The AFC is the monthly average of the 24 consecutive highest-paid service
credit months.
PERS Plan 1 retirement benefits are actuarially reduced to reflect the choice, if made, of a survivor option.
Plan 1 members may elect to receive an optional COLA that provides an automatic annual adjustment based on
the Consumer Price Index. The adjustment is capped at 3 percent annually. To offset the cost of this annual
adjustment, the benefit is reduced.
PERS Plan 1 provides duty and non -duty disability benefits. Duty disability retirement benefits for disablement
prior to the age of 60 consist of a temporary life annuity. The benefit amount is $350 a month, or two-thirds of
the monthly AFC, whichever is less. The benefit is reduced by any workers' compensation benefit and is payable
as long as the member remains disabled or until the member attains the age of 60, at which time the benefit is
converted to the member's service retirement amount.
A member with five years of covered employment is eligible for non -duty disability retirement. Prior to the age
of 55, the benefit amount is 2 percent of the AFC for each year of service reduced by 2 percent for each year that
the member's age is less than 55. The total benefit is limited to 60 percent of the AFC and is actuarially reduced
to reflect the choice of a survivor option. Plan 1 members may elect to receive an optional COLA amount (based
on the Consumer Price Index), capped at 3 percent annually. To offset the cost of this annual adjustment, the
benefit is reduced.
Washington State Auditor's Office Page 73
PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members are
eligible for normal retirement at the age of 65 with five years of service. The monthly benefit is 2 percent of the
AFC per year of service. The AFC is the monthly average of the 60 consecutive highest-paid service months.
There is no cap on years of service credit; and a cost -of -living allowance is granted (based on the Consumer Price
Index), capped at 3 percent annually.
PERS Plan 2 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 reduced benefit. The benefit is reduced by an early retirement factor (ERF) that varies
according to age, for each year before age 65.
PERS Plan 2 members who have 30 or more years of service credit and are at least 55 years old can retire under
one of two provisions, if hired prior to May 1, 2013:
• With a benefit that is reduced by 3 percent for each year before age 65; or
• With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return -to -work
rules.
PERS Plan 2 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of 5
percent for each year of retirement before age 65. This option is available only to those who are age 55 or older
and have at least 30 years of service.
PERS Plan 2 retirement benefits are actuarially reduced to reflect the choice, if made, of a survivor option.
PERS Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component and
member contributions finance a defined contribution component. As established by Chapter 41.34 RCW,
employee contribution rates to the defined contribution component range from 5 percent to 15 percent of salaries,
based on member choice. Members who do not choose a contribution rate default to a 5 percent rate. There are
currently no requirements for employer contributions to the defined contribution component of PERS Plan 3.
PERS Plan 3 defined contribution retirement benefits are dependent upon the results of investment activities.
Members may elect to self -direct the investment of their contributions. Any expenses incurred in conjunction
with self-directed investments are paid by members. Absent a member's self-direction, PERS Plan 3
contributions are invested in the Retirement Strategy Fund that assumes the member will retire at age 65.
For DRS' Fiscal Year 2013, PERS Plan 3 employee contributions were $99.0 million, and plan refunds paid out
were $69.4 million.
The defined benefit portion of PERS Plan 3 provides members a monthly benefit that is 1 percent of the AFC per
year of service. The AFC is the monthly average of the 60 consecutive highest-paid service months. There is no
cap on years of service credit, and Plan 3 provides the same cost -of -living allowance as Plan 2.
Effective June 7, 2006, PERS 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 twelve months of that service are earned after age 44; or after five
service credit years earned in PERS Plan 2 by June 1, 2003. Plan 3 members are immediately vested in the
defined contribution portion of their plan.
Vested Plan 3 members are eligible for normal retirement at age 65, or they may retire early with the following
conditions and benefits:
Washington State Auditor's Office Page 74
• If they have at least ten service credit years and are 55 years old, the benefit is reduced by an ERF that
varies with age, for each year before age 65.
• If they have 30 service credit years and are at least 55 years old, and were hired before May 1, 2013, they
have the choice of a benefit that is reduced by 3 percent for each year before age 65; or a benefit with a
smaller (or no) reduction factor (depending on age) that imposes stricter return -to -work rules.
• If they have 30 service credit years, are at least 55 years old, and were hired after May 1, 2013, they have
the option to retire early by accepting a reduction of 5 percent for each year before age 65.
PERS Plan 3 benefits are actuarially reduced to reflect the choice, if made, of a survivor option.
PERS Plan 2 and Plan 3 provide disability benefits. There is no minimum amount of service credit required for
eligibility. The Plan 2 monthly benefit amount is 2 percent of the AFC per year of service. For Plan 3, the
monthly benefit amount is 1 percent of the AFC per year of service. These disability benefit amounts are
actuarially reduced for each year that the member's age is less than 65, and to reflect the choice of a survivor
option. There is no cap on years of service credit, and a cost -of -living allowance is granted (based on the
Consumer Price Index) capped at 3 percent annually.
PERS members meeting specific eligibility requirements have options available to enhance their retirement
benefits. Some of these options are available to their survivors.
A one-time duty -related death benefit is provided to the beneficiary or the estate of a PERS member who dies as a
result of injuries sustained in the course of employment, or if the death resulted from an occupational disease or
infection that arose naturally and proximately out of the member's covered employment, if found eligible by the
Department of Labor and Industries.
From January 1, 2007 through December 31, 2007, judicial members of PERS were given the choice to elect
participation in the Judicial Benefit Multiplier (JBM) Program enacted in 2006. Justices and judges in PERS Plan
1 and Plan 2 were able to make an irrevocable election to pay increased contributions that would fund a retirement
benefit with a 3.5 percent multiplier. The benefit would be capped at 75 percent of AFC. Judges in PERS Plan 3
could elect a 1.6 percent of pay per year of service benefit, capped at 37.5 percent of AFC.
Newly elected or appointed justices and judges who chose to become PERS members on or after January 1, 2007,
or who had not previously opted into PERS membership, were required to participate in the JBM Program.
There are 1,176 participating employers in PERS. Membership in PERS consisted of the following as of the
latest actuarial valuation date for the plans of June 30, 2013:
Retirees and Beneficiaries Receiving Benefits
85,328
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
31,047
Active Plan Members Vested
150,706
Terminated Plan Members Nonvested
101,191
Total
368,272
Funding Policy
Each biennium, the state Pension Funding Council adopts PERS Plan 1 employer contribution rates, PERS Plan 2
employer and employee contribution rates, and PERS Plan 3 employer contribution rates. Employee contribution
rates for Plan 1 are established by statute at 6 percent for state agencies and local government unit employees, and
at 7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2
Washington State Auditor's Office Page 75
and the employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2
and the defined benefit portion of Plan 3. Under PERS Plan 3, employer contributions finance the defined benefit
portion of the plan and member contributions finance the defined contribution portion. The Plan 3 employee
contribution rates range from 5 percent to 15 percent.
As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of
employer and employee rates was developed to fund, along with investment earnings, the increased retirement
benefits of those justices and judges that participate in the program
The methods used to determine the contribution requirements are established under state statute in accordance
with Chapters 41.40 and 41.45 RCW.
The required contribution rates expressed as a percentage of current -year covered payroll, as of December 31,
2014, are as follows:
Members Not Participating in JBM:
* The employer rates include the employer administrative expense fee currently set at 0.18%.
** The employer rate for state elected officials is 13.73% for Plan 1 and 9.21% for Plan 2 and Plan 3.
*** Plan 3 defined benefit portion only.
**** The employee rate for state elected officials is 7.50% for Plan 1 and 4.92% for Plan 2.
***** Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member.
Members Participating in JBM:
PERS Plan 1
PERS Plan 2
PERS Plan 3
Employer*
9.21%**
9.21%**
9.21%***
Employee
6.00%****
4.92%****
*****
* The employer rates include the employer administrative expense fee currently set at 0.18%.
** The employer rate for state elected officials is 13.73% for Plan 1 and 9.21% for Plan 2 and Plan 3.
*** Plan 3 defined benefit portion only.
**** The employee rate for state elected officials is 7.50% for Plan 1 and 4.92% for Plan 2.
***** Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member.
Members Participating in JBM:
* The employer rates include the employer administrative expense fee currently set at 0.18%.
** Plan 3 defined benefit portion only.
* * *Minimum rate.
Both the City of Pasco and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows:
Washington State Auditor's Office Page 76
PERS Plan 1
PERS Plan 2
PERS Plan 3
Employer -State
Agency*
11.71%
11.71%
11.71%**
Employer -Local
Gov't Units*
9.21%
9.21%
9.21%**
Employee -State
Agency
9.76%
9.80%
7.50%***
Employee -Local
Gov't Units
12.26%
12.30%
7.50%***
* The employer rates include the employer administrative expense fee currently set at 0.18%.
** Plan 3 defined benefit portion only.
* * *Minimum rate.
Both the City of Pasco and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows:
Washington State Auditor's Office Page 76
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan Description
LEOFF was established in 1970 by the Legislature. Membership includes all full-time, fully compensated, local
law enforcement commissioned officers, firefighters and, as of July 24, 2005, emergency medical technicians.
LEOFF membership is comprised primarily of non -state employees, with Department of Fish and Wildlife
enforcement officers, who were first included effective July 27, 2003, being an exception. LEOFF retirement
benefit provisions are established in chapter 41.26 RCW and may be amended only by the State Legislature.
LEOFF is a cost-sharing multiple -employer retirement system comprised of two separate defined benefit plans.
LEOFF members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or
after October 1, 1977 are Plan 2 members.
Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide
governance of LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending policy
changes to the Legislature.
LEOFF retirement benefits are financed from a combination of investment earnings, employer and employee
contributions, and a special funding situation in which the state pays through legislative appropriations.
Employee contributions to the LEOFF Plan 1 and Plan 2 defined benefit plans accrue interest at a rate specified
by the Director of DRS. During DRS' Fiscal Year 2013, the rate was five and one-half percent compounded
quarterly. Members in LEOFF Plan 1 and Plan 2 can elect to withdraw total employee contributions and interest
earnings, in lieu of any retirement benefit, upon separation from LEOFF-covered employment.
LEOFF Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are
eligible for retirement with five years of service at the age of 50.
The benefit per year of service calculated as a percent of final average salary (FAS) is as follows:
Term of Service
PERS Plan 1
PERS Plan 2
PERS Plan 3
2014
$31,484
$792,667
$172,109
2013
$35,884
$654,389
$117,580
2012
$35,356
$586,286
$101,264
Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plans 1 and 2
Plan Description
LEOFF was established in 1970 by the Legislature. Membership includes all full-time, fully compensated, local
law enforcement commissioned officers, firefighters and, as of July 24, 2005, emergency medical technicians.
LEOFF membership is comprised primarily of non -state employees, with Department of Fish and Wildlife
enforcement officers, who were first included effective July 27, 2003, being an exception. LEOFF retirement
benefit provisions are established in chapter 41.26 RCW and may be amended only by the State Legislature.
LEOFF is a cost-sharing multiple -employer retirement system comprised of two separate defined benefit plans.
LEOFF members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on or
after October 1, 1977 are Plan 2 members.
Effective July 1, 2003, the LEOFF Plan 2 Retirement Board was established by Initiative 790 to provide
governance of LEOFF Plan 2. The Board's duties include adopting contribution rates and recommending policy
changes to the Legislature.
LEOFF retirement benefits are financed from a combination of investment earnings, employer and employee
contributions, and a special funding situation in which the state pays through legislative appropriations.
Employee contributions to the LEOFF Plan 1 and Plan 2 defined benefit plans accrue interest at a rate specified
by the Director of DRS. During DRS' Fiscal Year 2013, the rate was five and one-half percent compounded
quarterly. Members in LEOFF Plan 1 and Plan 2 can elect to withdraw total employee contributions and interest
earnings, in lieu of any retirement benefit, upon separation from LEOFF-covered employment.
LEOFF Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are
eligible for retirement with five years of service at the age of 50.
The benefit per year of service calculated as a percent of final average salary (FAS) is as follows:
Term of Service
Percent of Final Average Salary
20 or more years
2.0%
10 but less than 20 years
1.5%
5 but less than 10 years
1.0%
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
consecutive 24 months' salary within the last 10 years of service. A cost -of -living allowance is granted (based on
the Consumer Price Index).
LEOFF Plan 1 provides death and disability benefits. Death benefits for survivors of Plan 1 members on active
duty consist of the following: (1) If there is an eligible spouse, 50 percent of the FAS, plus 5 percent of the FAS
for each eligible surviving child, with a limitation on the combined benefit of 60 percent of the FAS; or (2) If
Washington State Auditor's Office Page 77
there is no eligible spouse, eligible children receive 30 percent of the FAS for the first child plus 10 percent for
each additional child, subject to a 60 percent limitation of the FAS, divided equally.
A one-time duty -related death benefit is provided to the beneficiary or the estate of a LEOFF Plan 1 member who
dies as a result of injuries or illness sustained in the course of employment, or if the death resulted from an
occupational disease or infection that arose naturally and proximately out of the member's covered employment,
if found eligible by the Department of Labor and Industries.
The LEOFF Plan 1 disability benefit is 50 percent of the FAS plus 5 percent for each child up to a maximum of
60 percent. Upon recovery from disability before the age of 50, a member is restored to service with full credit
for service while disabled. Upon recovery after the age of 50, the benefit continues as the greater of the member's
disability benefit or service retirement benefit.
LEOFF Plan 2 members are vested after the completion of five years of eligible service.
Plan 2 members are eligible for retirement at the age of 53 with five years of service, or at age 50 with 20 years of
service. Plan 2 members receive a benefit of 2 percent of the FAS per year of service (the FAS is based on the
highest consecutive 60 months), actuarially reduced to reflect the choice of a survivor option. 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,
the reduction is 3 percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each
year prior to age 53. A cost -of -living allowance is granted (based on the Consumer Price Index), capped at 3
percent annually.
LEOFF Plan 2 provides disability benefits. There is no minimum amount of service credit required for eligibility.
The Plan 2 benefit amount is 2 percent of the FAS for each year of service. Benefits are reduced to reflect the
choice of survivor option and for each year that the member's age is less than 53, unless the disability is duty -
related. If the member has at least 20 years of service and is age 50, the reduction is 3 percent for each year prior
to age 53.
A disability benefit equal to 70 percent of their FAS, subject to offsets for workers' compensation and Social
Security disability benefits received, is also available to those LEOFF Plan 2 members who are catastrophically
disabled in the line of duty and incapable of future substantial gainful employment in any capacity. Effective
June 2010, benefits to LEOFF Plan 2 members who are catastrophically disabled include payment of eligible
health care insurance premiums.
Members of LEOFF Plan 2 who leave service because of a line of duty disability are allowed to withdraw 150
percent of accumulated member contributions. This withdrawal benefit is not subject to federal income tax.
Alternatively, members of LEOFF Plan 2 who leave service because of a line of duty disability may be eligible to
receive a retirement benefit of at least 10 percent of FAS and 2 percent per year of service beyond five years. The
first 10 percent of the FAS is not subject to federal income tax.
LEOFF Plan 2 retirees may return to work in an eligible position covered by another retirement system, choose
membership in that system and suspend their pension benefits, or not choose membership and continue receiving
pension benefits without interruption.
A one-time duty -related death benefit is provided to the beneficiary or the estate of a LEOFF Plan 2 member who
dies as a result of injuries or illness sustained in the course of employment, or if the death resulted from an
occupational disease or infection that arose naturally and proximately out of the member's covered employment,
if found eligible by the Department of Labor and Industries.
Benefits to eligible surviving spouses and dependent children of LEOFF Plan 2 members killed in the course of
employment include the payment of eligible health care insurance premiums.
Washington State Auditor's Office Page 78
Legislation passed in 2009 provides to the Washington state registered domestic partners of LEOFF Plan 2
members the same treatment as married spouses, to the extent that the treatment is not in conflict with federal
laws.
LEOFF members meeting specific eligibility requirements have options available to enhance their retirement
benefits. Some of these options are available to their survivors.
There are 374 participating employers in LEOFF. Membership in LEOFF consisted of the following as of the
latest actuarial valuation date for the plans of June 30, 2013:
Retirees and Beneficiaries Receiving Benefits
10,511
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
699
Active Plan Members Vested
16,830
Terminated Plan Members Nonvested
1,600
Total
29,640
Funding Policy
Employer and employee contribution rates are developed by the Office of the State Actuary to fully fund the
plans. Starting on July 1, 2000, Plan 1 employers and employees contribute zero percent, as long as the plan
remains fully funded. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF
Plan 2 Retirement Board.
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 Pension Funding Council 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 DRS' Fiscal Year 2014,
the state contributed $55.6 million to LEOFF Plan 2.
The methods used to determine the contribution requirements are established under state statute in accordance
with Chapters 41.26 and 41.45 RCW.
The required contribution rates expressed as a percentage of current -year covered payroll, as of December 31,
2014, are as follows:
*The employer rates include the employer administrative expense fee currently set at 0.18%.
Both the City of Pasco and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows2:
Washington State Auditor's Office Page 79
LEOFF Plan 1
LEOFF Plan 2
Employer*
0.18%
5.23%
Employee
0.00%
8.41%
State
N/A
3.36%
*The employer rates include the employer administrative expense fee currently set at 0.18%.
Both the City of Pasco and the employees made the required contributions. The City's required contributions for
the years ended December 31 were as follows2:
Washington State Auditor's Office Page 79
Firemen's Pension
The City administers a closed, small single -employer defined benefit plan called the Firemen's
Pension Fund. GASB Statements No 25 and 27 require performance of biennial actuarial valuations.
The most recent actuarial study of the system was performed to determine the funding requirements
as of September 30, 2010. This plan in not audited; however, a copy of the can be obtained by
request at the following address:
City of Pasco
525 N 3rd Ave
Pasco, WA 99301
The City of Pasco's obligations under the Firemen's Pension Fund are limited to the benefits
provided to firefighters retired prior to March 1, 1970. As of December 31, 2014, there were a total
of 11 individuals covered by this system, and 5 of the 11 are widows. To meet these obligations, the
City may contribute annually to the Fund the amount raised by levying all or part of a tax of up to
$0.45 per $1,000 of true and fair market value, the maximum provided by law for maintaining the
Fund. Contributions also include income from state fire insurance premium collections.
All actuarial calculations are based on RCW 41.16 and 41.18, the statutes establishing the
Firefighter's Pension Fund, and RCW 41.26, the statute establishing the Washington Law
Enforcement Officers' and Firefighters' Retirement System. Benefit provisions are established in
state statute and may be amended only by the State Legislature.
Each retiree 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 for any firefighter, the excess
benefits are paid from the Firefighter's Pension Fund of the city employing them on March 1, 1970.
For a service retirement the member's benefit is 50% of salary plus an additional 2% for each year
of service in excess of 25 years. The maximum benefit is 60% of salary. The survivor benefit is the
same as the member's. The spouse is the same plus additional 5% of salary per child. The maximum
benefit in either case is 60% of salary. For a duty disability retirement the member must be disabled
for a six-month waiting period, during which time salary is payable from the Fund. The amount of
the benefit is 50% of salary plus an additional 5% for each unmarried child under the age of 18. For
a non -duty disability retirement the member must be disabled after a 90 -day waiting period, during
which time salary is payable from the Fund. For non -duty related disability the benefit is the same as
duty related disability. For both the duty related and non -duty related disabilities the survivor
benefits to spouse and/or child are as follows:
Washington State Auditor's Office Page 80
LEOFF Plan 1
LEOFF Plan 2
2014
$396
$549,396
2013
$411
$572,860
2012
$524
$504,331
Firemen's Pension
The City administers a closed, small single -employer defined benefit plan called the Firemen's
Pension Fund. GASB Statements No 25 and 27 require performance of biennial actuarial valuations.
The most recent actuarial study of the system was performed to determine the funding requirements
as of September 30, 2010. This plan in not audited; however, a copy of the can be obtained by
request at the following address:
City of Pasco
525 N 3rd Ave
Pasco, WA 99301
The City of Pasco's obligations under the Firemen's Pension Fund are limited to the benefits
provided to firefighters retired prior to March 1, 1970. As of December 31, 2014, there were a total
of 11 individuals covered by this system, and 5 of the 11 are widows. To meet these obligations, the
City may contribute annually to the Fund the amount raised by levying all or part of a tax of up to
$0.45 per $1,000 of true and fair market value, the maximum provided by law for maintaining the
Fund. Contributions also include income from state fire insurance premium collections.
All actuarial calculations are based on RCW 41.16 and 41.18, the statutes establishing the
Firefighter's Pension Fund, and RCW 41.26, the statute establishing the Washington Law
Enforcement Officers' and Firefighters' Retirement System. Benefit provisions are established in
state statute and may be amended only by the State Legislature.
Each retiree 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 for any firefighter, the excess
benefits are paid from the Firefighter's Pension Fund of the city employing them on March 1, 1970.
For a service retirement the member's benefit is 50% of salary plus an additional 2% for each year
of service in excess of 25 years. The maximum benefit is 60% of salary. The survivor benefit is the
same as the member's. The spouse is the same plus additional 5% of salary per child. The maximum
benefit in either case is 60% of salary. For a duty disability retirement the member must be disabled
for a six-month waiting period, during which time salary is payable from the Fund. The amount of
the benefit is 50% of salary plus an additional 5% for each unmarried child under the age of 18. For
a non -duty disability retirement the member must be disabled after a 90 -day waiting period, during
which time salary is payable from the Fund. For non -duty related disability the benefit is the same as
duty related disability. For both the duty related and non -duty related disabilities the survivor
benefits to spouse and/or child are as follows:
Washington State Auditor's Office Page 80
For purposes of retirement benefit payments, salaries are escalated in proportion to the current salary
of the rank from which the firefighter retired. After April 25, 1973 a minimum benefit of $300 per
month to all retired firefighters and their survivors apply. A funeral benefit of $500 is provided to
defray funeral expenses.
The cash and investment balance (at fair market value) at December 31, 2014 was $2,326,321. Fund
expenditures totaled $106,879, of which $102,971 were for pension payments. The actuarial
computation was performed using the entry age normal cost method and include a UAAL
amortization over a closed 20- year period as of September 30, 2010. Under this method the
projected benefits are allocated on a level basis as a percentage of salary over the earnings of each
individual between entry age and assumed exit age. Investment earnings of the assets are assumed to
accrue at an annual rate of 4.0%. Salaries are assumed to increase at the rate of 3.5% per annum. This
assumption is for future inflation increases only. Since the members have at least 20 years of service,
no additional increase is assumed for merit increases. Certain benefits increase at the same rate as the
salaries for active members of the same rank the retiree had attained at retirement. These salaries
were assumed to increase at the rate of 3.5% per annum and are assumed to increase on January 1
each year. Other benefits increase at the same rate as the CPI. The CPI was assumed to increase at
the rate of 2.5% per annum.
Firemen's Pension Trust Fund Annual Pension Cost (APQ and Net Pension Obligation NPO
Percentage of Salary
To Widow Only
33.3%
To Widow and One Child
45.8%
To Widow and Two Children
47.6%
To Widow and Three Children
50.0%
To Children Only
33.33%
For purposes of retirement benefit payments, salaries are escalated in proportion to the current salary
of the rank from which the firefighter retired. After April 25, 1973 a minimum benefit of $300 per
month to all retired firefighters and their survivors apply. A funeral benefit of $500 is provided to
defray funeral expenses.
The cash and investment balance (at fair market value) at December 31, 2014 was $2,326,321. Fund
expenditures totaled $106,879, of which $102,971 were for pension payments. The actuarial
computation was performed using the entry age normal cost method and include a UAAL
amortization over a closed 20- year period as of September 30, 2010. Under this method the
projected benefits are allocated on a level basis as a percentage of salary over the earnings of each
individual between entry age and assumed exit age. Investment earnings of the assets are assumed to
accrue at an annual rate of 4.0%. Salaries are assumed to increase at the rate of 3.5% per annum. This
assumption is for future inflation increases only. Since the members have at least 20 years of service,
no additional increase is assumed for merit increases. Certain benefits increase at the same rate as the
salaries for active members of the same rank the retiree had attained at retirement. These salaries
were assumed to increase at the rate of 3.5% per annum and are assumed to increase on January 1
each year. Other benefits increase at the same rate as the CPI. The CPI was assumed to increase at
the rate of 2.5% per annum.
Firemen's Pension Trust Fund Annual Pension Cost (APQ and Net Pension Obligation NPO
0
0
0
0
Fiscal Year Ended December 31
0
Interest on Net Pension Obligation (NPO)
0
0
2009
2010 2011
2012
2013
2014
Annual Required Contribution (ARC)
$0
$0 $0
$0
$0
$0
Annual Normal Cost (BOY)
0
0 0
0
0
0
Amortization of UAAL (BOY)
0
0 0
0
0
0
Interest to EOY
0
0 0
0
0
0
ARC at EOY
0
0
0
0
0
0
Interest on Net Pension Obligation (NPO)
0
0
0
0
0
0
Adjustment to ARC
0
0
0
0
0
0
Annual Pension Cost (APC)
0
0
0
0
0
0
Employer Contributions
0
0
0
0
0
0
Change in NPO
0
0
0
0
0
0
NPO at Beginning of Year
0
0
0
0
0
0
NPO at End of Year
$0
$0
$0
$0
$0
$0
The schedules of funding progress for postemployment defined benefit plans are found immediately
following the notes to the financial statements and present multi-year trend information about
whether the actuarial value of plan assets are increasing or decreasing relative to the actuarial
Washington State Auditor's Office Page 81
accrued liability for benefits over time. The pension plan has remained fully funded over the last five
years and no additional contributions were made.
The pension plan financial statements are as follows:
Statement of Net Position
Firemen's Pension Trust Fund
December 31, 2014
ASSETS
Cash
Investments
Total assets
LIABILITIES
Due to Others
Total liabilities
NET POSITION
Held in trust for pension benefits
and other purposes
$ 182,208
2,144,113
2,326,321
Statement of Changes in Net Position
Firemen's Pension Trust Fund
December 31,2014
ADDITIONS
Taxes $ 51,705
Investment earnings: 230,735
Total additions 282,440
DEDUCTIONS
Pension benefits 102,971
Administrative expenses 3,908
Total deductions 106,879
Change in net assets 175,561
S 2,326,321 Net position - beginning 2,150,760
Net position - ending $ 2,326,321
NOTE 9: OTHER POST -EMPLOYMENT BENEFITS
LEOFF1- MEDICAL
In addition to the pension benefits outlined in Note 8, 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 firefighters who are eligible under the
Law Enforcement Officers' and Firefighters' (LEOFF1) plan retirement system.
Medical 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
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.
Funding Policy
Pursuant to state statute, the City reimburses 100% of authorized LEOFF 1 retiree healthcare costs. The
City pays a monthly insurance premium to cover each retiree under its medical insurance program as
well as any remaining eligible out of pocket expenses. Employer contributions are financed on a pay-as-
you-go basis. Expenditures for postemployment health care benefits are recognized as retirees report
claims and include a provision for estimated claims incurred but not yet reported to the City.
Annual OPEB Costs and Net OPEB Obligation
The City's annual Other Post -Employment Benefits (OPEB) cost is calculated based upon the annual
required contribution (ARC), an amount actuarially determined in accordance with the parameters of
Governmental Accounting Standards Board (GASB) Statement 45. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover the normal costs each year and amortize
any unfunded actuarial liabilities over a period of ten years.
Washington State Auditor's Office Page 82
The City uses the alternative measurement method permitted under GASB Statement No. 45. A single
retirement age of 56.22 was assumed for all active members for the purpose of determining the original
actuarial accrued liability. Termination and mortality rates were assumed to follow the LEOFF 1
termination and mortality rates used in the September 30, 2009 actuarial valuation report issued by the
office of the State Actuary (OSA). Healthcare costs and trends were determined by Milliman and used
by OSA in the State-wide LEOFFI medical study performed in 2011. The results were based on
grouped data with 4 active groupings and 4 inactive groupings. The actuarial cost method used to
determine the actuarial accrued liability was Projected Unit Credit. The Actuarial Accrued Liability and
the Net OPEB Obligation are amortized on an open basis as a level dollar over 15 years. Assumptions
include an inflation rate of 3.5%, an investment return of 4.5% and a health care trend rate of 5%. These
assumptions are individually and collectively reasonable for the purpose of this valuation. 2010 was the
first year of implementation of GASB 45.
Entities with fewer than 100 retired LEOFF members have the option under GASB 45 to either hire an
actuary to perform a valuation of the plan or do the valuation in-house. The Office of the State Actuary
for Washington State has provided a tool for City to perform an in-house evaluation. Actuarial
evaluations involve estimates and assumptions about the distant future that are continually revised. The
schedule of funding progress, located following the notes, provides multi-year trend data to help
determine whether net plan assets are increasing or decreasing over time. Benefits are projected based on
benefit levels and cost-sharing arrangements as of the date of the valuation and do not explicitly reflect
the potential effects of legal or contractual funding limitations. Actuarial valuations take a long-term
perspective that involves the use of techniques designed to reduce volatility. Actuarial assumptions
applied using the Office of the State Actuary valuation tool include the following: a medical inflation
rate of 1.0% and a 10 year amortization period. Additionally, average age and the relative percentages of
male to female participants per selected age groups were also provided to form the basis of the
calculations.
The City of Pasco has a total of thirty-four LEOFF 1 members in this plan. Thirty-two of those members
are retired and two are still active employees.
LEOFF1 OPEB
Annual required contribution (ARC)
Interest on Net OPEB Obligation (NOO)
Adjustments to ARC
Annual OPEB cost
Contributions made
Increase NOO
2012
2013
2014
$969,799
$934,928
$1,290,122
51,716
73,793
79,263
(72,637)
(207,988)
(178,226)
948,878
800,733
1,191,159
423,901
514,297
649,284
524,977
286,436
541,875
NOO at Beginning of Year 1,170,172 1,695,149 1,981,585
NOO at End of Year $1,695,149 $1,981,585 $2,523,460
The City's OPEB cost, the percentage of OPEB cost contributed to the plan, and the net OPEB
obligation for the years ending December 31 are shown on the following schedule:
Washington State Auditor's Office Page 83
LEOFF1 0PEB
% of
Fiscal
Annual
Annual
Net
Year
OPEB
OPEB
OPEB
Ended
Cost
Contributed
Obli a tion
12/31/14
$1,191,159
55%
$2,523,460
12/31/13
800,733
64%
1,981,585
12/31/12
948,878
45%
1,695,149
Fire Pension - MEDICAL
Medical 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 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 by standard medical plan benefit
provisions. Members of the Fire Pension plan purchase medical insurance through the City's medical
insurance program.
Funding Policy
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.
Annual OPEB Costs and Net OPEB Obligation
The City's annual Other Post -Employment Benefits (OPEB) cost is calculated based upon the annual
required contribution (ARC), an amount actuarially determined in accordance with the parameters of
Governmental Accounting Standards Board (GASB) Statement 45. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover the normal costs each year and amortize
any unfunded actuarial liabilities over a period of ten years.
The City uses the alternative measurement method permitted under GASB Statement No. 45.
Termination and mortality rates were assumed to follow the LEOFF 1 termination and mortality rates
used in the September 30, 2006 actuarial valuation report issued by the office of the State Actuary
(OSA). Healthcare costs and trends were determined by Milliman and used by OSA in the State-wide
LEOFF 1 medical study performed in 2007. The actuarial cost method used to determine the original
actuarial accrued liability was Projected Unit Credit. The Actuarial Accrued Liability and the Net OPEB
Obligation are amortized on an open basis as a level dollar over 15 years. Assumptions include an
inflation rate of 3.5%, an investment return of 4.5% and a health care trend rate of 5%. These
assumptions are individually and collectively reasonable for the purpose of this valuation. 2010 was the
first year of implementation of GASB 45.
Washington State Auditor's Office Page 84
Entities with fewer than 100 retired LEOFF members have the option to either hire an actuary to perform
a valuation of the plan or do the valuation in-house. The Office of the State Actuary for Washington
State has provided a tool to do the in-house evaluation. Actuarial evaluations involve estimates and
assumptions about the distant future that are continually revised. The schedule of funding progress,
located following the notes, provides multi-year trend data to help determine whether net plan assets are
increasing or decreasing over time. Benefits are projected based on benefit levels and cost-sharing
arrangements as of the date of the valuation and do not explicitly reflect the potential effects of legal or
contractual funding limitations. Actuarial valuations take a long-term perspective that involves the use
of techniques designed to reduce volatility. Actuarial assumptions applied using the Office of the State
Actuary valuation tool include the following: a medical inflation rate of 1.0% and a 10 year amortization
period. Additionally, average age and the relative percentages of male to female participants per
selected age groups were also provided to form the basis of the calculations.
The City of Pasco has a total of 6 LEOFF 1 members that are also members of the Old Firemen's Pension
Plan and are fully funded through the Old Fire Pension Trust Fund. All are retired. Based on the 2014
in-house evaluation, the Actuarial Accrued Liability for the Fire Pension OPEB Fund is $1,988,453. As
of December 31, 2014, the fund had assets of $2,650,369.
Firemen's OPEB
Annual required contribution (ARC)
Interest on Net OPEB Obligation (NOO)
Annual OPEB cost
Contributions made
2012 2013 2014
$0 $0 $0
Increase NOO 0 0 0
NOO at Beginning of Year 0 0 0
NOO at End of Year $0 $0 $0
The City's OPEB cost, the percentage of OPEB cost contributed to the plan, and the net OPEB
obligation for the years ending December 31 are shown on the following schedule:
Firemen's OPEB
Fiscal
Annual
Year
OPEB
Ended
Cost
12/31/14
$0
12/31/13
0
12/31/12
0
% of
Annual Net
OPEB
OPEB
Contributed
Obligation
N/A
$0
N/A
0
N/A
0
Following are the financial statements for the Firemen's Other Post Employment Benefit Trust Fund:
Washington State Auditor's Office Page 85
Statement of Net Position
Statement of Changes in Net Position
Firemen's Other Post -Employment Benefits Trust Fund
Firemen's Other Post Empmloyment Benefit Trust Plan
December 31, 2014
For the Year Ended December
31, 2014
ASSETS
ADDITIONS
Cash $
83,335
Investment earnings:
$ 259,186
Investments
2,567,034
Total additions
259,186
Total assets
2,650,369
DEDUCTIONS
LIABILITIES
Medical premiums
122,556
Due to Others
Administrative expenses
2,982
Total liabilities
-
Medical premiums
125,538
Total deductions
125,538
NET POSITION
Held in trust for pension benefits
Change in net assets
133,648
and other purposes $
2,650,369
Net position - beginning
2,516,721
Netposition- ending
S 2,650,369
NOTE 10: 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. In the opinion of management, the City's insurance
policies and self-insurance reserves are adequate to pay all material known or pending claims.
As discussed in Note 3. F, 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 grantor or representative. Such audits could result in requests for reimbursement to grantor
agencies for expenditures disallowed under the terms of the grants. However, City management believes
that such disallowances, if any, will be immaterial.
Currently, there is an underground fire in a non -municipal Pasco landfill which closed in 1998. The
Washington State Department of Ecology (DOE) is proposing to issue an enforcement order to parties
collectively known as Potentially Liable Persons (PLPs). The City entered into an "Institutional
Control" agreement with the DOE to regulate development and provide for the conversion of private
water wells located down -plume from the site to be abandoned in favor of using the City's municipal
water system. It is the City's understanding that, because of its entering into this agreement, the DOE is
excluding the City from being designated as a PLP. As of December 31, 2014, the City held
investments restricted for the purpose of landfill remediation with a fair market value of $406,448. In
the opinion of management, investments set aside for landfill remediation are adequate.
Washington State Auditor's Office Page 86
NOTE 11: PRIOR PERIOD CORRECTIONS
The Statement of Activities reports a net increase
to net position of $2,252,880 as follows:
Governmental Activities
General Fund $ 1,054,832
Lodging Fund 11,491
TRAC Fund 15,046
Capital Improvement Fund 188,759
Stadium Convention Center Fund 15,046
1,285,174
Compenated Absences Correction'
General Fund 250,106
Equipment O&M Fund - Governmental 19,534
269,640
'Because compensated absences in the governmental
funds are not reflected in the fund financial statements,
corrections of prior period balances are normally
only reflected in the government -wide financial
statements. However, the Equipment O&M Fund is an
internal service fund, which did reflect the correction.
Business -Type Activities:
Water/Sewer Fund 689,746
Equipment O & M Fund 8,320
698,066
$ 2,252,880
NOTE 12: SUBSEQUENT EVENT
Governmental Activities
$952,629 increase in the General Fund is due to an
understatement of sales taxes.
$102,202 increase in the General Fund is due to an
understatement of leasehold excise taxes and
brokered gas taxes.
$250,106 increase in Governmental activities is due
to an overstatement of compensated absences
liability
$11,491 increase in the Lodging Fund is due to an
understatement of hotel/motel taxes.
$15,046 increase in both the TRAC and Stadium/
Convention Funds, is due to an understatement of
hotel/motel taxes.
$188,759 increase in the Capital Improvement Fund
is due to an understatement of real estate excise
taxes.
Business -Type Activities
$414,131 increase is due to an overstatement of
interest payable.
$275,615 increase is due to an overstatement of
the compensated absences liability.
$8,320 increase is due to an overstatement of the
compensated absences liability
On July 14, 2015, the City issued $8,795,000 in General Obligation bonds to provide moneys that are
necessary to pay the cost and expense of constructing for the purpose of building City's new Police
Community Services Center. The bonds bear interest rates from 3.00 to 4.00 percent interest.
Washington State Auditor's Office Page 87
12/31/2014 $
12/31/2013
12/31/2012
$ 14,081 $ 14,081 0% N/A N/A
9,737 9,737 0% N/A N/A
10,002 10,002 0% N/A N/A
Washington State Auditor's Office Page 88
Required Supplementary Information
Unfunded
LEOFFI OPEB
The following
is a schedule of contributions from the employer and other contributing entities for the
Other LEOFFI
Actuarial
Actuarial
Annual
Percentage
Fiscal
Actual Fire Actual Required
Percentage
Year
Insurance Employer Total Contribution
of ARC
Ending
Premiums Contributions Contributions (ARC)
Contributed
12/31/2014
$ $ 649,284 $ 649,284 $ 1,290,122
50%
12/31/2013
514,297 514,297 934,928
55%
12/31/2012
423,901 423,901 969,799
44%
Schedule nfFundinv Prnurese for the TF(-1FF1 OPF.B (rounded
to thnusand.cl
12/31/2014 $
12/31/2013
12/31/2012
$ 14,081 $ 14,081 0% N/A N/A
9,737 9,737 0% N/A N/A
10,002 10,002 0% N/A N/A
Washington State Auditor's Office Page 88
Unfunded
URAL As A
Actuarial
Actuarial
Actuarial
Percentage
Asset
Accrued
Accrued
Funded
Covered
of Covered
Valuation Date
Value
Liabilities
Liabilities UAAL
Ratio
Payroll
Payroll
12/31/2014 $
12/31/2013
12/31/2012
$ 14,081 $ 14,081 0% N/A N/A
9,737 9,737 0% N/A N/A
10,002 10,002 0% N/A N/A
Washington State Auditor's Office Page 88
12/31/2014 $ 2,326 $ 1,599 $ (727) 145% N/A N/A
12/31/2013 2,151 1,599 (552) 135% N/A N/A
12/31/2012 1,815 1,599 (216) 114% N/A N/A
Required Supplementary Information
Firemen's OPEB Fund
The following is a schedule of contributions from the employer and other contributing entities for the
Firemen's OPEB Trust Fund:
Required Supplementary Information
Annual
Unfunded
Firemen's Pension Fund
Actual Fire Actual
The following is a schedule of contributions from the employer and other contributing entities for the
Firemen's Pension Trust Fund:
Actuarial
Actuarial
Actuarial
Annual
Ending
Fiscal Actual Fire
Actual Required
Percentage
Year Insurance
Employer Total Contribution
of ARC
Ending Premiums
Contributions Contributions (ARC)
Contributed
12/31/2014 $ 51,705
$ $ 51,705 $
N/A
12/31/2013 47,624
47,624
N/A
12/31/2012 42,979
42,979
N/A
—h-IMl of F—fl— Prnoress fnr the Firerrwn'c P-6— Fnnd (r M
-i to t1,--&)
12/31/2014 $ 2,326 $ 1,599 $ (727) 145% N/A N/A
12/31/2013 2,151 1,599 (552) 135% N/A N/A
12/31/2012 1,815 1,599 (216) 114% N/A N/A
Required Supplementary Information
Firemen's OPEB Fund
The following is a schedule of contributions from the employer and other contributing entities for the
Firemen's OPEB Trust Fund:
Annual
Unfunded
Fiscal
Actual Fire Actual
UAAL As A
Percentage
Actuarial
Actuarial
Actuarial
of ARC
Ending
Percentage
(ARC)
Asset
Accrued
Accrued
Funded
Covered
of Covered
Valuation Date
Value
Liabilities
Liabilities UAAL
Ratio
Payroll
Payroll
12/31/2014 $ 2,326 $ 1,599 $ (727) 145% N/A N/A
12/31/2013 2,151 1,599 (552) 135% N/A N/A
12/31/2012 1,815 1,599 (216) 114% N/A N/A
Required Supplementary Information
Firemen's OPEB Fund
The following is a schedule of contributions from the employer and other contributing entities for the
Firemen's OPEB Trust Fund:
12/31/2014 $ 2,650 $ 1,988 $ (662) 133% N/A N/A
12/31/2013 2,517 1,806 (711) 139% N/A N/A
12/31/2012 2,075 1,777 (298) 117% N/A N/A
Washington State Auditor's Office Page 89
Annual
Unfunded
Fiscal
Actual Fire Actual
Required
Percentage
Year
Insurance Employer Total
Contributior
of ARC
Ending
Premiums Contributions Contributions
(ARC)
Contributed
12/31/2014
$ $ $
$
N/A
12/31/2013
Valuation Date
Value
N/A
12/31/2012
Ratio
Payroll
N/A
Schedule ofFimdino Prnuress for the Firemen's OPFR Fund tronnded to thnnsnndsl
12/31/2014 $ 2,650 $ 1,988 $ (662) 133% N/A N/A
12/31/2013 2,517 1,806 (711) 139% N/A N/A
12/31/2012 2,075 1,777 (298) 117% N/A N/A
Washington State Auditor's Office Page 89
Unfunded
URAL As A
Actuarial
Actuarial
Actuarial
Percentage
Asset
Accrued
Accrued
Funded
Covered
of Covered
Valuation Date
Value
Liabilities
Liabilities URAL
Ratio
Payroll
Payroll
12/31/2014 $ 2,650 $ 1,988 $ (662) 133% N/A N/A
12/31/2013 2,517 1,806 (711) 139% N/A N/A
12/31/2012 2,075 1,777 (298) 117% N/A N/A
Washington State Auditor's Office Page 89
MCAG NO. 0292
SCHEDULE 16- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended December 31, 2014
Grantor/ Federal Other
Pass -Through Grantor CFDA Identification
Program Title Number Number
Pass -Through Yakima County, Office of Aging & Long Term Care
Special Programs for the Aging_Ttle III, Part B 93.044 2014 Sr Ctr Footcare
Total US Dept of Health & Human Services
US Department of Homeland Security
Pass -Through Franklin County Emergency Management
Homeland Security Grant Program 97.067 E14-155
Homeland Security Grant Program 97.067 E12-222
Total US Department of Homeland Security
US Department of Housing & Urban Development
Pass -Through Washington Association of Sherriff & Police Commission
Community Development Block Grant/Entitlement Grant
14.218 B -13 -MC -53-009- CDBG
Community Development Block Grant/Entitlement Grant
14.218 B -14 -MC -53-009- CDBG
Pass -Through Department of Commerce
Commission
Neighborhood Stabilization Plan
14.228 08-F6401-014
Pass -Through City of Richland
20.600 13-14 Impaired Driving
Home Investment Partnerships Program
14.239 Home Program
Total US Department of Housing & Urban Development
20.600 14 Distracted Driving
US Department of Justice
Bulletproof Vest Partnership Program
Bulletproof Vest Partnership Program
Pass -Through from US Marshalls
Equitable Sharing Program
Pass -Through Department of Commerce
Violence Against Women Formula Grant
Pass-Throuah METRO Druo Task Force
Edward Byrne Memorial Justice Assistance
Edward Byrne Memorial Justice Assistance
Joint Law Enforcement Operations
Total US Dept of Justice
16.607 2013
16.607 2014
16.922 Equitable Sharing
16.588 F13-31103-041
16.738 M13-31440-012
16.738 M14-31440-009
16.111 PA-WAE-0115
US Department of Transportation -National Highway Traffic Safety Administration (NHTSA)
Pass -Through Washington Association of Sherriff & Police Commission
State and Community Highway Safety
20.600 2014 -WASPC Traffic Safety
State and Community Highway Safety
20.600 WASPC Traffic Safety
Pass -Through Washington Traffic Safety
Commission
State and Community Highway Safety
20.600 14ST-02
State and Community Highway Safety
20.600 13-14 Impaired Driving
State and Community Highway Safety
20.600 14-15 Impaired Driving
State and Community Highway Safety
20.600 14 Distracted Driving
Occupant Protectionlncentive Grants
20.602 13-14 CIOT
Total US Dept of Transportation NHTSA
Highway Planning and Construction
US Department of Transportation/ Federal Highway Administration
Pass -Through Washington Department of Transportation
119,672
Highway Planning and Construction
20.205 STPUL-3515 (007) LA -8059
Highway Planning and Construction
20.205 STPUL-3522 (001) LA -8117
Highway Planning and Construction
20.205 STPUS-0397 (008) LA -7866
Highway Planning and Construction
20.205 STPUS-HLP3530 (006) LA -7055
Highway Planning and Construction
20.205 STPUL-3515(008)
Highway Planning and Construction
20.205 STPUS-9911 (007) LA -7782
Highway Planning and Construction
20.205 STPUL-3515 (006) LA -8060
Highway Planning and Construction
20.205 STPUL-9911(010)
Highway Planning and Construction
20.205 STPUL-9911 (009)
Highway Planning and Construction
20.205 STPUL-1823(062) LA 8318
Highway Planning and Construction
20.205 HSIP-OOS(362)
Highway Planning and Construction
20.205 HSIP-3524 (006)LA-8157
Total US Dept. of Transportation Federal Highway Administration
TOTAL FEDERAL AWARDS EXPENDED:
are an
Pass- From
Through Direct
Awards Awards Total Note:
$ 18,492 $ 18,492 2
18,492 - 18,492
19,790 19,790 2
3,415 3,415 6
23,205 23,205
278,491 278,491 3, 5
356,598 356,598 3, 5
30,081 30,081 3
247,652 247,652 3
277,733 635,089 912,822
14,499 14,499 2
3,232 3,232 2
4,017 4,017 7
33,922 33,922 2
54,737 54,737 2
56,886 56,886 2
1,512 1,512
147,057 21,748 168,805
6,550 6,550
942 942
19,041 19,041
2,657 2,657
1,757 1,757
353 353
974 974
32,274 - 32,274
1,019,484
1,019,484 2
119,672
119,672 2
66,948
66,948 2
462,126
462,126 2
22,212
22,212 2
4,475
4,475 2
48,583
48,583 2
74,996
74,996 2
7,855
7,855 2
303
303 2
113,801
113,801 2,4
563,902
563,902 2
2,504,357
- 2,504,357
$3,003,118 $656,837 $3,659,955
Washington State Auditor's Office Page 90
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
NOTE 1— BASIS OF ACCOUNTING
The Schedule of Expenditures of Federal Awards is prepared on the same basis of accounting as the
City's 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 — PROGRAM COSTS
The amounts shown as current year expenditures represent only the federal grant portion of the program
costs. Entire program costs, including the City's portion, are more than shown.
NOTE 3 — REVOLVING LOAN — PROGRAM INCOME
The City participates in a Regional Revolving Loan program for economic development which is
operated by Benton Franklin Council of Governments. Under this federal pass-through grant,
repayments to the City are considered program income, and loans of such funds to eligible recipients are
considered expenditures. Expenditure amounts listed for these loans include the proceeds used during
the year in the amount of $426,229.
Of this amount, $180,290 in program income was expended on grant number B-13-MC-53-009-CDBG.
The remaining $245,939 in program income was expended on grant number B-14-MC-53-009-CDBG.
The City participates in the Neighborhood Stabilization Program for recovering foreclosed properties
which are rehabilitated and sold as low-income housing. Under this federal pass-through grant, the sale
of low-income homes by the City is considered program income, and the cost of rehabilitating homes
and purchasing properties are considered expenditures. In 2014, $75,900 in program income was
generated from the sale of property.
The City also 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.
NOTE 4 — PRIOR YEAR EXPENDITURES
The amount reported includes $3,225 in previously unreported prior year expenditures.
NOTE 5 — AMOUNTS AWARDED TO SUBRECIPIENTS
$236,566 that was passed through to subrecipients. Of this amount, $52,647 was passed through for
subrecipients of grant B-13-MC-53-009-CDBG. The remaining amount of $183,919 was passed through
to subrecipients of grant B-14-MC-53-009-CDBG.
Washington State Auditor's Office Page 91
NOTE 6 — NONCASH AWARDS - EOUIPMENT
The City received equipment that was purchased with federal Homeland Security funds by Washington
Association of Sheriffs & Police Chiefs. The amount reported on the schedule is the fair market value
of the property on the date it was received by the City, as priced by the State of Washington.
NOTE 7 —DEPARTMENT OF JUSTICE —EOUITABLE SHARING
The City reports these funds on the Schedule of Expenditures of Federal Awards when program
proceeds are received rather than when expenditures are incurred due to program stipulations.
Washington State Auditor's Office Page 92
City of Pasco
Franklin County
January 1, 2014 through December 31, 2014
This schedule presents the corrective action planned by the auditee for findings reported in this
report in accordance with OMB Circular A-133. The information in this schedule is the
representation of the City of Pasco.
Finding ref number:
Finding caption:
2014-001
The City's internal controls were inadequate to ensure compliance
with federal Davis -Bacon Act (prevailing wage) requirements for its
Highway Planning and Construction Grant.
Name, address, and telephone of auditee contact person:
Eva Lindgren, Deputy Director of Administrative and Community Services
525 N. Third
Pasco, WA 99301
(509) 544-3065
Corrective action the auditee plans to take in response to the finding:
The City has taken immediate steps to improve its internal controls over federal Davis -Bacon
(Prevailing Wages) and has updated certain related checklists and procedures, accordingly.
These updates are part of the City's comprehensive review of its existing construction project
procedures and checklists, as they relate to pre-bid project analysis, project bidding
documentation, bid awards, project pre -construction meetings, field inspections, weekly
construction meetings, progress payment approvals and project close outs. The
comprehensive resulting updates to procedures and checklists are expected to be completed by
mid-November, 2015.
Anticipated date to complete the corrective action: November 15, 2015
Washington State Auditor's Office Page 93
The State Auditor's Office is established in the state's Constitution and is part of the executive
branch of state government. The State Auditor is elected by the citizens of Washington and
serves four-year terms.
We work with our audit clients and citizens to achieve our vision of government that works for
citizens, by helping governments work better, cost less, deliver higher value, and earn greater
public trust.
In fulfilling our mission to hold state and local governments accountable for the use of public
resources, we also hold ourselves accountable by continually improving our audit quality and
operational efficiency and developing highly engaged and committed employees.
As an elected agency, the State Auditor's Office has the independence necessary to objectively
perform audits and investigations. Our audits are designed to comply with professional standards
as well as to satisfy the requirements of federal, state, and local laws.
Our audits look at financial information and compliance with state, federal and local laws on the
part of all local governments, including schools, and all state agencies, including institutions of
higher education. In addition, we conduct performance audits of state agencies and local
governments as well as fraud, state whistleblower and citizen hotline investigations.
The results of our work are widely distributed through a variety of reports, which are available
on our website and through our free, electronic subscription service.
We take our role as partners in accountability seriously, and provide training and technical
assistance to governments, and have an extensive quality assurance program.
Contact information for the State Auditor's Office
Deputy Director for Communications
Thomas Shapley
Thomas. Shapleyksao.wa. gov
(360) 902-0367
Public Records requests
(360) 725-5617
Main telephone
(360) 902-0370
Toll-free Citizen Hotline
(866) 902-3900
Website
www.sao.wa.gov
Washington State Auditor's Office Page 94