HomeMy WebLinkAboutWA State 2013 Audit Washington State Auditor's Office
Financial Statements and Federal Single Audit Report
City of Pasco
Franklin County
Audit Period
January 1, 2013 through December 31, 2013
Report No. 1012221
Issue Date Washington State Auditor
July 17, 2014 -
Troy Kelley
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Independence • Respect • Integrity
July 17, 2014
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,
TROY KELLEY
STATE AUDITOR
Washington State Auditor
Troy Kelley
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 TDD Relay (800) 833-6388
Table of Contents
City of Pasco
Franklin County
January 1, 2013 through December 31, 2013
Federal Summary ............................................................................................................................ 1
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......................................................................... 3
Independent Auditor’s Report on Compliance for Each Major Federal Program and on
Internal Control over Compliance in Accordance with OMB Circular A-133 ............................... 5
Independent Auditor’s Report on Financial Statements ................................................................. 8
Financial Section ........................................................................................................................... 11
Federal Summary
City of Pasco
Franklin County
January 1, 2013 through December 31, 2013
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 no 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 no findings that are required to be disclosed under section 510(a) of OMB Circular
A-133.
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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.
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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
City of Pasco
Franklin County
January 1, 2013 through December 31, 2013
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, 2013, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements, and have issued our report thereon
dated June 23, 2014. As discussed in Note 1 to the financial statements, during the year ended
December 31, 2013, the City implemented Governmental Accounting Standards Board
Statement No. 65, Items Previously Reported as Assets and Liabilities.
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.
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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.
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.
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.
TROY KELLEY
STATE AUDITOR
June 23, 2014
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Washington State Auditor's Office
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Independent Auditor’s Report on Compliance for Each
Major Federal Program and on Internal Control over
Compliance in Accordance with OMB Circular A-133
City of Pasco
Franklin County
January 1, 2013 through December 31, 2013
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, 2013. 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
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.
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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, 2013.
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.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies, in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will not be prevented, or detected and corrected, on
a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance 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. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
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.
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It also serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.
TROY KELLEY
STATE AUDITOR
July 10, 2014
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Independent Auditor’s Report on Financial Statements
City of Pasco
Franklin County
January 1, 2013 through December 31, 2013
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, 2013,
and the related notes to the financial statements, which collectively comprise the City’s basic
financial statements as listed on page 11.
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
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.
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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, 2013, 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.
Matters of Emphasis
As discussed in Note 1 to the financial statements, in 2013, the City adopted new accounting
guidance, Governmental Accounting Standards Board Statement No. 65, Items Previously
Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter.
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 12 through 22, information on Firemen’s
Pension Fund, Other LEOFF 1 OPEB and Firemen’s OPEB Fund on pages 73 through 75 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,
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
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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.
The Introductory Section and Statistical Section are presented for purposes of additional analysis
and are not a required part of the basic financial statements. Such information has not been
subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we do not express an opinion or provide any assurance on it.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
June 23, 2014 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.
TROY KELLEY
STATE AUDITOR
June 23, 2014
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Washington State Auditor's Office
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Financial Section
City of Pasco
Franklin County
January 1, 2013 through December 31, 2013
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis – 2013
BASIC FINANCIAL STATEMENTS
Statement of Net Position – 2013
Statement of Activities – 2013
Balance Sheet – Governmental Funds – 2013
Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental
Funds – 2013
Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balance of
Governmental Funds to the Statement of Activities – 2013
Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual –
General Fund – 2013
Statement of Net Position – Proprietary Funds – 2013
Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds
– 2013
Statement of Cash Flows – Proprietary Funds – 2013
Statement of Net Position – Fiduciary Funds – 2013
Statement of Changes in Net Position – Fiduciary Funds – 2013
Notes to the Financial Statements – 2013
REQUIRED SUPPLEMENTARY INFORMATION
Firemen’s Pension Fund – 2013
Other LEOFF 1 OPEB – 2013
Firemen’s OPEB Fund – 2013
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards – 2013
Notes to the Schedule of Expenditures of Federal Awards – 2013
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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, 2013.
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
$363,169. Of this amount, $30,998 may be used to meet the government’s ongoing obligations
to the citizens and creditors.
• The city’s total net position increased by $27,932. Approximately 13% of that increase is due to
increases in business-type activities and 87% to governmental-type activities. The overall
financial position of the city has improved over the prior year.
• As of the close of the current fiscal year, the City of Pasco’s governmental funds reported
combined ending fund balances of $21,827 a decrease of $1,465 in comparison with the prior
year.
• At the end of the current fiscal year, the unrestricted, unassigned fund balance for the general
fund was $5,612 which also represents 17% of total general fund expenditures. There was an
overall $3,297 decrease in the general fund due to $5,609 in transfers to other funds. Of these
transfers, $3,214 was for one time expenditures primarily devoted to capital projects.
• Spending on governmental activities included in the Capital Improvement Plan during 2013
totaled $7,103. The largest project was $3,113 for the city’s share of the county’s construction of
a new courthouse facility. Major street projects included $1,138 for street overlays, $845 to
substantially finish the 4th Ave North corridor project started last year and $212 for the
continuing work on the Lewis St overpass project and $239 to start work on the Oregon Ave
widening project. A variety of other street project totaled $560. City Hall replaced its cooling
system for $222 and finished funding the replacement of its financial software system for $458.
The remaining amounts were spent on a fire alerting system, replacement of playground
equipment and replacing a small local pool with water spray system.
• Spending on business activities included in the Capital Improvement Plan during 2013 totaled
$9,862. Water projects totaled $1,069: $239 to finish the new water treatment plant, $208 for
new river water intake access, $539 for water line replacements and $83 for several small
projects. The sewer system invested $ 2,112. The largest project was $1,147 that nearly
completes a new lift station to expand utility service to a newly annexed area to promote further
commercial development. $679 was invested in re-lining of existing sewer pipes to extend their
useful life and $286 for plant enhancements and line extensions. The Process Water Reuse
Facility embarked on capacity plant upgrades spending $3,119 in 2013. The USBR Irrigation
Connection projected continued with $1,420 funded primarily by state grants and $24 of costs
were incurred for well rehabilitation projects.
• Private development contributed a total of $28,891 in governmental activity infrastructure and
$959 in utility infrastructure.
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• The city did not issue any new governmental debt. Temporary construction financing was
provided internally for LID 149. The utility issued $2,520 in nontaxable revenue bonds to fund
an addition of a new clarifier at the sewer plant. It also issued $7,235 in taxable revenue bonds to
fund the plant upgrades at the process water reuse facility to reimburse itself for construction
costs incurred in 2012 and 2013 as well as to pay for the 2014 construction costs. The upgrades
are scheduled to be complete in 2014.
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.
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.
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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 2013 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 nonmajor 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.
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.
Internal service funds are 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 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 $363,169 at the close of the most
recent fiscal year. The largest portion of the City of Pasco’s net position (88%) reflects its investment in
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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% of the City of Pasco’s net position represents
resources that are subject to external restrictions on how they may be used. The remaining $30,998 of
unrestricted net position (9%) may be used to meet the government’s ongoing obligations to citizens and
creditors.
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 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 government’s net position increased by $27,932 during the current fiscal year. The increase
represents the degree to which ongoing revenues have exceeded increases in ongoing expenses mostly
through cost containment measures. The increase was mainly from contributions of infrastructure from
private development and other governmental agencies of $28,891.
2013 2012 2013 2012 2013 2012
Current assets 31.54$ 31.64$ 18.53$ 15.97$ 50.07$ 47.61
Capital and noncurrent assets 194.62 169.76 173.94 167.55 368.56 337.31
Total assets 226.16 201.40 192.47 183.52 418.63 384.92
Current liabilities 5.79 3.86 6.44 5.54 12.23 9.40
Noncurrent liabilities 5.98 7.34 37.25 32.95 43.23 40.29
Total liabilities 11.77 11.20 43.69 38.49 55.46 49.69
Net position:
Investment in capital assets 189.00 163.58 129.66 130.32 318.66 293.90
Restricted 13.51 12.00 - - 13.51 12.00
Unrestricted 11.88 14.62 19.12 14.71 31.00 29.33
Total net position 214.39$ 190.20$ 148.78$ 145.03$ 363.17$ 335.23$
City of Pasco's Net Position (in millions)
Governmental Activities Business Activities Total Primary Government
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Governmental activities. Governmental activities increased the City of Pasco’s net position by $24,193
or 87% of the total change in net position. $28,891 of increase was from contributions of infrastructure
from private and other governmental agencies.
The pace of construction slowed in 2013. The city weathered the general economic challenges
throughout the state with a continued growth of 6% increase in tax revenues. Property tax revenues
continued to grow through increases in new construction, assessed valuation and the effect of the 2012
annexation. Sales tax continued to grow from new construction and continued improved economic
climate. The city was able to maintain status quo on the number of approved personnel positions. The
city was able to fund step increases, bargaining positions received contractual adjustments; and
nonrepresented personnel received a cost of living adjustment in 2013. Without regard to the contributed
capital assets, the city’s governmental activity revenue of $52,029 was $4,343 less than related expenses
of $56,372.
2013 2012 2013 2012 2013 2012
Revenues
Program revenues:
Charges for services 18.31$ 13.29$ 17.99$ 18.03$ 36.30$ 31.32$
Operating grants & contributions 0.64 1.04 0.04 0.41 0.68 1.45
Capital grants & contributions 30.63 16.14 4.22 5.60 34.85 21.74
General revenues:
Property taxes 7.15 6.66 7.15 6.66
Other taxes 22.48 21.17 22.48 21.17
Investment income and miscellaneous 1.71 4.65 0.09 0.03 1.80 4.68
Total revenues 80.92 62.95 22.34 24.07 103.26 87.02
Program expenses:
General government 7.06 6.73 7.06 6.73
Public safety 22.48 20.49 22.48 20.49
Transportation 14.10 12.90 14.10 12.90
Economic environment 4.46 2.81 4.46 2.81
Culture and recreation 8.00 8.22 8.00 8.22
Interest on long term debt 0.27 0.32 0.27 0.32
Water 7.79 6.76 7.79 6.76
Sewer 7.22 7.43 7.22 7.43
Process water reuse 1.54 1.18 1.54 1.18
Storm water 1.17 1.03 1.17 1.03
Irrigation 1.23 1.10 1.23 1.10
Total expenses 56.37 51.47 18.95 17.50 75.32 68.97
Changes in net position 24.55 11.48 3.39 6.57 27.94 18.05
Transfers (0.36) 3.44 0.36 (3.44) - -
Total changes in net position 24.19$ 14.92$ 3.75$ 3.13$ 27.94$ 18.05$
City of Pasco's Change in Net Position (in millions)
Business Activities Total Primary GovernmentGovernmental Activities
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Washington State Auditor's Office
16
GOVERNMENTAL ACTIVITES – REVENUES BY SOURCE
GOVERNMENTAL ACTIVITIES – EXPENSES AND PROGRAM REVENUES
Business-type activities. 13% of the increase in the City of Pasco’s net position was related to
business-type activities. $959 of the $3,739 increase was from private developer capital contributions.
There were no utility rate changes in 2013 as the city generally increases rates on a two year cycle.
Water monthly base rates increased 30% (from $12.50 to $16.25 for residential) and stormwater rates
increased approximately 13% (from $3.90 to $4.40 for residential) effective February 1, 2014. Without
regard to the private developer contributed capital assets, the city’s business activity revenues of
$21,362 exceeded on-going related expenses of $18,936.
Charges for
services 22%
Operating
Grants &
Contributions
1%
Capital
grants &
contributions
38%
Property
taxes
9 %
Other Taxes
28%
Investment
income and
miscellaneous
2%
Sources of Revenues 2013
Charges for
services
21%
Operating
grants &
contributions
2%
Capital grants
&
contributions
26%Property
taxes
10%
Other taxes
34%
Investment
income and
miscellaneous
7%
Sources of Revenues 2012
-
5.00
10.00
15.00
20.00
25.00
MI
L
L
I
O
N
S
2013 Expense 2013 Revenue 2012 Expense 2012 Revenue
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Washington State Auditor's Office
17
UTILITY ACTIVITIES – EXPENSES AND PROGRAM REVENUES COMPARISON
Financial Analysis of the Government’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 current fiscal year, the City of Pasco governmental funds reported combined ending
fund balances of $21,827 (a decrease of $1,465 in comparison with prior year). Approximately 20% of
this total amount, $4,424 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 the current fiscal year,
unassigned fund balance of the general fund was $5,611. As a measure of the general fund’s liquidity, it
may be useful to compare unrestricted, unassigned fund balance to total expenditures. This represents
17% of total expenditures.
The fund balance of the City of Pasco’s general fund decreased by $3,297 during the current fiscal year;
which is 10% of current year revenues. Overall revenues increased by 6% ($1,892) and total
expenditures increased by 3% ($1,021). General fund tax revenue increased $1,498. Property taxes
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Water Sewer Process Water
Reuse
Stormwater Irrigation
MI
L
L
I
O
N
S
2013 Expense 2013 Revenue 2012 Expense 2012 Revenue
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Washington State Auditor's Office
18
increased $282 due to new construction and steady valuations and sales tax increased $1,187 as the new
public safety sales tax was received for all of 2013 versus half of 2012. $122 of natural gas B&O tax
shifted to natural gas sales tax as the end user rather than the gas broker is paying the tax. Electric B&O
tax increased $327 due to increase in electric rates and the effect of the annexation of customers to the
city. Offsetting this growth is $112 permit revenue declines as the pace of new construction starts to
slow down, gambling taxes are down $150 and telephone B&O tax is down $122. Telephone tax
continues to decline as customers move to internet and cell services that are not subject to the telephone
tax. Intergovernmental revenues from state liquor taxes is $102 less as the state chooses to retain a
higher percentage. Charges for services increased about 13% from the prior year; mostly from services
rendered to other funds.
The city was able to maintain status quo on the number of approved personnel positions and fewer
vacant positions were left unfilled in 2013. The city was able to fund step increases, and there was a
general cost of living wage adjustment in 2013 for nonrepresented and management employees. Union
employees were paid per contract terms. The general fund revenues of $35,908 were more than related
expenses of $33,735 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 fund
at the end of 2013 was $16,682. 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 2013
the utility is well positioned as it has current assets of $15,985 available to meet its current liability
obligations of $6,330 resulting in a working capital ratio of 2.52. The utility showed income before
contributions and transfers of $52. The city continues to invest in both new infrastructure due to growth
in population as well as replacing existing infrastructure as needed. The city has a meter and service
replacement program with the goal of replacing the meters on an average of once every ten years. The
utility actively participates with its customer utilizing utility local improvement districts to supplement
the rate payer’s 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. While total expenditures in the general fund were $124 in excess of the final
budget, this was more than offset by the $694 in transfers out that were budgeted but not made. There
was a change in the total expenditures appropriations between the original and final amended budget of
$1,146 due to increases in the Fire Suppression expenditure budget. $771 was due to a retroactive
settlement of the wage contract. $375 was due to over time related to several employees out on medical
disability leave and others filling in with overtime to maintain minimum staffing requirements. Capital
funding authorized in the final budget ($6,303) was only partially spent ($5,608) in 2013 as the rate of
completion for the Municipal Court project did not occur as quickly as expected.
Actual revenues were 109% of the original revenue budget and 104% 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 $2,173 (6%).
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Washington State Auditor's Office
19
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, 2013 amounts to $318,660 (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 an increase of $24,219 for governmental activities
and an increase of $3,816 for business-type activities. $28,891 of governmental assets was donated from
private developers in 2013.
Other major capital asset events during the current fiscal year included the following:
• Spending on governmental activities included in the Capital Improvement Plan during 2013
totaled $7,103. The largest project was $3,113 for the city’s share of the county’s construction of
a new courthouse facility. Major street projects included $1,138 for street overlays, $845 to
substantially finish the 4th Ave North corridor project started last year and $212 for the
continuing work on the Lewis St overpass project and $239 to start work on the Oregon Ave
widening project. A variety of other street project totaled $560. City Hall replaced its cooling
system for $222 and finished funding the replacement of its financial software system for $458.
The remaining amounts were spent on a fire alerting system, replacement of playground
equipment and replacing a small local pool with water spray system.
• Spending on business activities included in the Capital Improvement Plan during 2013 totaled
$9,862. Water projects totaled $1,069: $239 to finish the new water treatment plant, $208 for
new river water intake access, $539 for water line replacements and $83 for several small
projects. The sewer system invested $ 2,112. The largest project was $1,147 that nearly
completes a new lift station to expand utility service to a newly annexed area to promote further
commercial development. $679 was invested in re-lining of existing sewer pipes to extend their
useful life and $286 for plant enhancements and line extensions. The Process Water Reuse
Facility embarked on capacity plant upgrades spending $3,119 in 2013. The USBR Irrigation
Connection projected continued with $1,420 funded primarily by state grants and $24 of costs
were incurred for well rehabilitation projects.
• Private development contributed a total of $28,891 in governmental activity infrastructure and
$959 in utility infrastructure.
Additional information on the City of Pasco’s capital assets can be found in note 4.C.
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Washington State Auditor's Office
20
Long-term debt. At the end of the current fiscal year, the City of Pasco had total bonded debt
outstanding of $34,350. Of this amount $3,995 comprises debt backed by the full faith and credit of the
government. $30,355 of the City of Pasco bonded debt represents bonds secured primarily by specified
revenue resources (i.e. revenue bonds). The city has $160 in special assessment bonds and $67 of LID
note outstanding at the end of 2013; both of which are secured by the LID Guarantee Fund.
Additional information on the City of Pasco’s long term liabilities can be found in note 4.F.
Economic Factors and Next Year’s Budgets and Rates (amounts not in thousands)
In 2013, the Pasco economy was stable and continued to grow but at a slower pace. The city issued a
total of 2,113 building permits representing approximately $125 million in construction costs. Of the
total permits, 204 were for new single-family residences which equates to $51 million in assessed
valuation. The average value of a new home in Pasco was just over $250,000 in 2013. This stable
economy was reflected in Standard & Poor’s rating the 2013 utility bond issue as AA-/Stable.
In 2012 the county’s residents approved a new three tenths of one percent sales tax increase devoted to
criminal justice. This new revenue source funded a new four person Street Crimes unit in the city’s
police department, pay the cost (and/or debt service) to replace the city’s Municipal Court building as
well as fund the construction of a new police station. 2013 was the first full year for receiving this new
revenue source.
Also late in 2012 the city annexed a part of the county. 2014 will be the first year the additional property
taxes will go to the city. The annexed area was in a part of the county already surrounded by the city so
additional revenues are expected without significant increases in annex related expenditures.
2013 2012 2013 2012 2013 2012
Land 12.71$ 12.45$ 2.52$ 2.49$ 15.23$ 14.94$
Construction in process 11.33 7.69 7.45 15.51 18.78 23.20
Buildings and structures 23.65 25.02 37.43 31.98 61.08 57.00
Other improvements 4.04 4.63 - - 4.04 4.63
Machinery and equipment 5.32 3.93 8.50 2.20 13.82 6.13
Infrastructure 136.23 115.32 114.46 114.36 250.69 229.68
Total capital assets 193.28$ 169.04$ 170.36$ 166.54$ 363.64$ 335.58$
City of Pasco's Capital Assets at Year-End (in millions)
(Net of Depreciation)
Governmental Activities Total Primary GovernmentBusiness-Type Activities
2013 2012 2013 2012 2013 2012
General Obligation Bonds 3.85$ 4.71$ -$ 3.85$ 4.71$
Special Assessement Bonds 0.16 0.32 0.16 0.32
Loans & Notes 0.28 0.44 10.33 11.96 10.61 12.40
Revenue Bonds 30.36 24.26 30.36 24.26
Total 4.29$ 5.47$ 40.69$ 36.22$ 44.98$ 41.69$
Governmental Activities Total Primary GovernmentBusiness-Type Activities
City of Pasco's Bonds and Notes
(in millions)
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Washington State Auditor's Office
21
Overall, operating revenue to the general fund is expected to grow by $1.5 million next year, compared
to the 2013 budget. Only $100,000 of that growth is expected in retail sales tax. Sales tax is the largest
single-source of general fund revenue and it is also the most volatile. Property tax is estimated to
increase by $445,000; about half due to new investments in the community and the other half reflect the
annexation which took place late in 2012. For the past decade the city has opted to “bank” the levy
capacity rather than increase property taxes by the maximum legal limit. This has resulted in an
accumulated banked levy capacity of $1,762,951.
The 2014 budget adds three new service programs: sidewalks, fire hydrants and industrial pre-treatment.
In response to several injury claims over the past few years a four year sidewalk replacement program
will start. It will be funded with annual $250,000 transfers from Capital Improvement Fund, LID
Guarantee Fund and General Fund existing fund balances. The hydrant maintenance and addition
program is funded by the water fund at $300,000 per year and has been factored into the six year rate
plan. The city has grown in size such that state Department of Ecology now requires the city to manage
industrial pre-treatment permit process rather than the state. The estimated annual cost of $200,000 per
year has been factored into the six year rate plan.
In 2013 the city reviewed the costs of providing ambulance and fire services. These two functions are
carried out using many shared resources. Additionally, collections from billing and the Ambulance Fund
balance have continued to decline. The specific identification of ambulance costs were reviewed and
indicated the need for significant additional resources to cover those costs. Accordingly in 2014 the
ambulance household charge and transport rates were increased in an effort to return the General Fund
subsidy to the $420,000 in the past for 2014 and the ambulance rate plan calls for dropping the subsidy
down to zero in 2015.
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. No increases took place in 2013. Effective February 1, 2014, however,
water monthly base rates increased 30% (from $12.50 to $16.25 for residential) and stormwater rates
increased approximately 13% (from $3.90 to $4.40 for residential). There were no changes to the sewer
or irrigation rates.
Requests for Information
This financial report is designed to provide a general overview of the City of Pasco’s finances for all
those with an interest in the government’s finances. Questions concerning any of the information
provided in this report or requests for additional financial information should be addressed to the
Financial Services Manager, PO Box 293, Pasco, WA 99301.
_________________________________________________________________________________________________________
Washington State Auditor's Office
22
Governmental Business-Type
Activities Activities Total
ASSETS
Current assets:
Cash & cash equivalents 22,127,965$ 5,942,785$ 28,070,750$
Restricted cash & cash equivalents:
Contested tax, IBNR, drug forefit 778,059 778,059
Customer deposits 208,042 561,096 769,138
Unspent bond proceeds - 5,614,545 5,614,545
Debt service by vote or covenant 1,324,990 2,986,517 4,311,507
Investments 2,406,602 2,000,000 4,406,602
Receivables (net of allowances):
Taxes 2,231,698 2,231,698
Customers 1,585,514 787,050 2,372,564
Grants 878,831 402,186 1,281,017
Inventories - 234,694 234,694
Total current assets 31,541,701 18,528,873 50,070,574
Noncurrent assets:
Restricted cash - bond reserve - 3,188,801 3,188,801
Restricted cash - cemetery endowment 434,308 434,308
Special assessments & loans 801,175 397,549 1,198,724
Joint Ventures 114,218 114,218
Capital assets not being depreciated:
Land 12,709,885 2,520,925 15,230,810
Construction work in progress 11,328,404 7,445,063 18,773,467
Capital assets net of accumulated depreciation:
Buildings and structures 23,645,146 37,434,680 61,079,826
Other improvements 4,041,084 4,041,084
Machinery and equipment 5,319,592 8,495,822 13,815,414
Infrastructure 136,231,220 114,456,107 250,687,327
Total noncurrent assets 194,625,032 173,938,947 368,563,979
Total assets 226,166,733 192,467,820 418,634,553
LIABILITIES
Current liabilities:
Accounts payable 2,860,912 1,213,255 4,074,167
IBNR payable from restricted assets 549,430 549,430
Deposits payable from restricted assets 208,042 561,096 769,138
Accrued interest payable from restricted assets - 722,505 722,505
Compensated absences - current 1,509,677 368,961 1,878,638
Loans due other governments - current 144,967 1,669,767 1,814,734
Bonds - current 520,000 1,905,000 2,425,000
Total current liabilities 5,793,028 6,440,584 12,233,612
Noncurrent liabilities:
Compensated absences 387,778 134,203 521,981
Net OPEB obligation 1,981,585 1,981,585
Loans due other governments 139,532 8,664,104 8,803,636
Bonds 3,475,000 28,450,000 31,925,000
Total noncurrent liabilities 5,983,895 37,248,307 43,232,202
Total liabilities 11,776,923 43,688,891 55,465,814
NET POSITION
Net investment in capital assets 188,995,832 129,663,726 318,659,558
Restricted for:
Cemetery (nonexpendable)434,308 434,308
Contested tax & drug forefits 228,629 228,629
Streets and boulevards 7,204,780 7,204,780
Litter and housing abatement 328,933 328,933
Park development 1,821,813 1,821,813
Culture and recreation 132,469 132,469
Capital improvement 2,976,167 2,976,167
Economic development 2,797 2,797
Geneneral obligation debt 333,498 333,498
Special assessment debt 47,412 47,412
Unrestricted 11,883,172 19,115,203 30,998,375
Total Net Position 214,389,810$ 148,778,929$ 363,168,739$
- - -
The notes to the financial statements are an integral part of this statement.
Statement of Net Position
December 31, 2013
_________________________________________________________________________________________________________
Washington State Auditor's Office
23
Charges for Operating Capital
Services, Fines &Grants and Grants & Governmental Business-Type
Functional Programs Expenses Licenses Contributions Contributions Activities Activities Total
Primary Government:
Governmental Activities:
General government 7,059,813$ 4,577,718$ (2,482,095)$ (2,482,095)$
Public safety 22,490,976 4,398,052 230,757 (17,862,167) (17,862,167)
Transportation 14,097,649 3,506,524 72,157 30,631,459 20,112,491 20,112,491
Natural & economic environment 4,455,983 3,361,406 314,045 (780,532) (780,532)
Culture and recreation 8,002,806 2,471,205 22,163 (5,509,438) (5,509,438)
Interest on long term debt 265,097 (265,097) (265,097)
Total Governmental Activities 56,372,324 18,314,905 639,122 30,631,459 (6,786,838) - (6,786,838)
Business-type Activities:
Water 7,780,398 7,809,476 1,107,139 1,136,217 1,136,217
Sewer 7,222,994 6,524,393 1,370,596 671,995 671,995
Process Water Reuse 1,541,481 1,454,705 (86,776) (86,776)
Storm Water 1,165,361 1,138,235 41,848 195,087 209,809 209,809
Irrigation 1,226,184 1,049,912 1,541,270 1,364,998 1,364,998
Total Business-Type Activities 18,936,418 17,976,721 41,848 4,214,092 - 3,296,243 3,296,243
Total Primary Government 75,308,742$ 36,291,626$ 680,970$ 34,845,551$ (6,786,838) 3,296,243 (3,490,595)
General Revenues:
Taxes:
Property taxes 7,148,713 7,148,713
Sales taxes 11,472,209 11,472,209
B&O taxes 8,893,603 8,893,603
Excise taxes 2,117,443 2,117,443
Intergovermental 1,566,354 1,566,354
Investment income and miscellaneous 136,621 87,868 224,489
Transfers (355,087) 355,087 -
Total general revenues 30,979,856 442,955 31,422,811
Change in Net Position 24,193,018 3,739,198 27,932,216
Net Position Beginning 190,196,792 145,039,731 335,236,523
Net Position Ending 214,389,810$ 148,778,929$ 363,168,739$
The notes to the financial statements are an integral part of this statement.
Program Revenues
Statement of Activities
For the Year Ended December 31, 2013
Net Revenue (Expenses) and Changes in Net Position
Primary Government
_________________________________________________________________________________________________________
Washington State Auditor's Office
24
Other
General Construction Governmental Total
ASSETS
Cash and cash equivalents 1,614,068 1,465,619 15,382,004$ 18,461,691$
Restricted cash
Contested tax & restricted use 228,629 228,629
Customer deposits 180,481 27,561 208,042
Cemetery endowment 434,308 434,308
Investments 1,906,602 500,000 2,406,602
Receivables (net of allowances):
Taxes 1,981,468 250,230 2,231,698
Customers 1,226,542 358,972 1,585,514
Interfund loans 1,265,417 582,482 1,847,899
Grants 20,802 491,993 366,036 878,831
Special assessments & loans 801,175 801,175
Total assets 8,424,009 1,957,612 18,702,768 29,084,389
LIABILITIES
Accounts payable 633,659 1,758,838 363,254 2,755,751
Interfund loans payable 2,037,293 2,037,293
Deposits payable from restricted assets 180,481 27,561 208,042
Total liabilities 814,140 1,758,838 2,428,108 5,001,086
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 1,364,650 891,398 2,256,048
FUND BALANCES
Nonspendable
Cemetery permanent fund 434,308 434,308
Restricted
Contested tax & drug forefits 228,629 228,629
Street and boulevard 7,204,780 7,204,780
Litter & housing abatement 328,933 328,933
Park development 1,821,813 1,821,813
Cultural and recreation 132,469 132,469
Capital improvements 2,976,167 2,976,167
Economic development 2,797 2,797
Geneneral obligation debt 333,498 333,498
Special assessment debt 47,412 47,412
Committed
Landfill claims 404,795 404,795
Special revenue funds 2,364,608 2,364,608
Construction projects 198,774 198,774
Debt guarantee 924,106 924,106
Unassigned 5,611,795 (1,187,629) 4,424,166
Total fund balances 6,245,219 198,774 15,383,262 21,827,255
Total liabilities, deferred inflows of resources
and fund balances 8,424,009$ 1,957,612$ 18,702,768$
Amounts reported for governmental activities in the statements of net position
are different because:
Long-term assets used in governmental activities are not financial resources and
therefore are not reported in the government funds.190,537,534
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.(8,158,539)
Other long-term assests are not available to pay for current period expenditures and,therefore, are deferred in the funds.2,256,048
Internal Service funds are used by management to charge the costs of certain
activities to individual funds. The assets and liabilities of some internal service funds
are included in the governmental activities in the statement of net position. Interfund loans 7,927,512
between governmental activities are excluded.
Net position of governmental activities ( see page 26)214,389,810$
The notes to the financial statements are an integral part of this statement.
Balance Sheet
Governmental Funds
December 31, 2013
_________________________________________________________________________________________________________
Washington State Auditor's Office
25
General Other
Fund Construction Governmental Total
REVENUES
Taxes 26,345,139$ 3,256,456$ 29,601,595$
Licenses and permits 1,466,675 309,906 1,776,581
Intergovernmental revenue 1,796,829 1,740,087 2,248,097 5,785,013
Charges for services 4,737,688 6,749,099 11,486,787
Fines and forfeitures 937,047 48,356 985,403
Miscellaneous revenue 624,571 50,000 1,884,134 2,558,705
Total revenues 35,907,949 1,790,087 14,496,048 52,194,084
EXPENDITURES
Current:
General government 6,705,485 - 6,705,485
Public safety 18,675,555 3,689,061 22,364,616
Transportation 1,648,750 2,247,761 3,896,511
Natural & economic environment 1,545,972 2,741,319 4,287,291
Culture and recreation 4,260,846 2,717,220 6,978,066
Capital outlay:
General government 284,409 1,141,334 - 1,425,743
Public safety 12,483 2,713,099 - 2,725,582
Transportation 2,994,371 - 2,994,371
Culture and recreation - 254,247 - 254,247
Debt service:
Principal 468,042 726,527 1,194,569
Interest 133,172 131,925 265,097
Total expenditures 33,734,714 7,103,051 12,253,813 53,091,578
Excess of revenues over (under) expenditures 2,173,235 (5,312,964) 2,242,235 (897,494)
OTHER FINANCING SOURCES (USES)
Transfers in 138,000 4,478,413 2,412,521 7,028,934
Transfers out (5,608,583) (1,987,438) (7,596,021)
Total other financing sources (uses)(5,470,583) 4,478,413 425,083 (567,087)
Net change in fund balances (3,297,348) (834,551) 2,667,318 (1,464,581)
Fund balances - beginning 9,542,567 1,033,325 12,715,944 23,291,836
Fund balances - ending 6,245,219$ 198,774$ 15,383,262$ 21,827,255$
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2013
_________________________________________________________________________________________________________
Washington State Auditor's Office
26
Net change in fund balances - total governmental funds (1,464,581)$
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.24,220,358
The statement of net position shows a decrease in joint ventures not reported in the funds.(56,128)
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, 2013.1,194,569
Revenues reported in the statement of activies that do not provide current financial resources
are not reported as revenues in the funds.139,358
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 (561,171)
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 internal service funds is reported with governmental
activities. This amount comes from the Combining Statement of Revenues, Expenditures
and Changes in Net Fund Assets for Internal Service Funds, Net Operating Income.720,613
Change in net position of governmental activities (see page 27)24,193,018$
The notes to the financial statements are an integral part of this statement.
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, 2013
(Continued from prior page)
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Original Final Variance to
Budget Budget Actual Final Budget
REVENUES
Taxes 24,458,000$ 25,358,000$ 26,345,139$ 987,139$
Licenses and permits 1,093,200 1,693,200 1,466,675 (226,525)
Intergovernmental revenue 1,463,700 1,463,700 1,796,829 333,129
Charges for services 4,536,509 4,536,509 4,737,688 201,179
Fines and forfeitures 807,650 807,650 937,047 129,397
Miscellaneous revenue 626,850 626,850 624,571 (2,279)
Total revenues 32,985,909 34,485,909 35,907,949 1,422,040
EXPENDITURES
Current:
General government 7,069,624 7,238,124 6,705,485 (532,639)
Public safety 17,208,000 18,388,000 18,675,555 287,555
Transportation 1,535,558 1,535,558 1,648,750 113,192
Natural & economic environment 1,629,516 1,629,516 1,545,972 (83,544)
Culture and recreation 4,025,042 4,058,542 4,260,846 202,304
Capital outlay:
General government 395,800 144,800 284,409 139,609
Public safety 15,000 12,483 (2,517)
Debt service:
Principal 468,046 468,046 468,042 (4)
Interest 133,518 133,518 133,172 (346)
Total expenditures 32,465,104 33,611,104 33,734,714 123,610
Excess of revenues over (under) expenditures 520,805 874,805 2,173,235 1,298,430
OTHER FINANCING SOURCES (USES)
Interfund loans repaid 1,157,303 1,157,303 511,596 (645,707)
Transfers in 138,000 138,000 138,000 -
Interfund loan issued (123,763) (1,993,763) (285,000) 1,708,763
Transfers out (4,563,857) (6,302,665) (5,608,583) 694,082
Total other financing uses (3,392,317) (7,001,125) (5,243,987) 1,757,138
Net change in fund balances (2,871,512) (6,126,320) (3,070,752) 3,055,568
Prior period adjustments -
Fund balances - beginning 7,573,573 7,573,573 9,542,567 1,968,994
Fund balances - ending 4,702,061$ 1,447,253$ 6,471,815$ 5,024,562$
Interfund loan activity included for budget purposes but not
included in Statement of Revenues, Expenditures and Changes
in Fund Balance (226,596)
Fund balances - ending (see page 29)6,245,219
The notes to the financial statements are an integral part of this statement.
Statement of Revenues, Expenditures, and Changes in Fund Balances-Budget to Actual
General Fund
For the Year Ended December 31, 2013
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Water/Sewer Internal
Utility Service
ASSETS Current assets:
Cash and cash equivalents 3,399,384 7,534,665 $ Restricted cash equivalents:
Claims incuured but not reported 549,430 Customer deposits 561,096 Unspent bond proceeds 5,614,545 Revenue bond covenants 2,986,517 Investments 2,000,000 Receivables (net of allowances):
Customers 787,050 Interfund loans - current portion 43,890 Grants 402,186 Special assessments - current portion
Inventory 234,694 Total current assets 15,985,472 8,127,985
Noncurrent assets:
Restricted cash equivalents 3,188,801 Special assessments 397,549 Interfund loan 145,504 Capital assets not being depreciated:
Land 2,520,925 Construction work in progress 7,409,247 35,816 Capital assets net of accumulated depreciation:
Buildings and structures 37,434,680 Machinery and equipment 7,340,854 4,006,983 Infrastructure 114,456,107 Total noncurrent assets 172,748,163 4,188,303
Total assets 188,733,635 12,316,288
LIABILITIES
Current liabilities:
Accounts payable 1,111,284 207,132 IBNR payable from restricted assests 549,430 Other liabilities
Customer deposits payable from restricted assets 561,096 Accrued interest payable 722,505 Compensated absences - current portion 360,641 27,854 Loans to other governments - current portion 1,669,767 Revenue bonds - current portion 1,905,000 Total current liabilities 6,330,293 784,416
Noncurrent liabilities:
Compensated absences 134,203 Loans to other governments 8,664,104 Current Portion Loan Payable Revenue bonds payable 28,450,000 Total noncurrent liabilities 37,248,307 -
Total liabilities 43,578,600 784,416
NET POSITION
Net investment in capital assets 128,472,942 4,042,799 Unrestricted 16,682,093 7,489,073
Total net position 145,155,035 11,531,872 $
Adjustment to reflect the consolidation of internal
service fund activity related to proprietary funds 3,623,894 Net position of business-type activities see page 26) 148,778,929 $
The notes are an integral part of this statement.
Statement of Net Position
Proprietary Funds
December 31, 2013
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Water/Sewer Internal
Utility Service
OPERATING REVENUES
Charges for services 17,850,903 $ 4,882,240 Miscellaneous 63,798 2,688,659 Total operating revenues 17,914,701 7,570,899
OPERATING EXPENSES
Depreciation 5,488,565 797,079 Salaries and wages 2,599,430 275,609 Personnel benefits 1,167,964 117,264 Supplies 1,204,140 789,806 Services 7,402,110 5,066,517 Total operating expenses 17,862,209 7,046,275
OPERATING INCOME 52,492 524,624
NONOPERATING REVENUES (EXPENSES)
Interest income 87,868 20,266 Rents and leases 62,020 Grant 41,848 Interest expense (1,268,270) Total nonoperating expense (1,076,534) 20,266
Income (loss) before contributions,
special item and transfers (1,024,042) 544,890
Capital contributions 4,214,092 157,788 Transfers in 450,000 370,000 Transfers out (252,913) Changes in net position 3,387,137 1,072,678
Net position - beginning 141,767,898 10,459,194
Net position - ending 145,155,035 $ 11,531,872 $
Changes in net position per above 3,387,137 $
Adjustment to reflect the consolidation of internal
service fund activity related to Proprietary funds 352,066 $ Change in net position of business-type activities
3,739,198 $
The notes to the financial statements are an integral part of this statement.
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
December 31, 2013
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Water/Sewer Internal
Utility Service
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers 18,070,374$ 7,570,899$
Payments to employees (3,712,567) (384,939)
Payments to suppliers (8,034,433) (6,229,551)
Net cash provided by operating activities 6,323,374 956,409
CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition of capital assets (8,312,043) (976,183)
Principal paid on debt (5,281,744) -
Interest paid on debt (1,185,233) -
Bond proceeds received 9,797,427 -
Payments received from notes and loans 210,692 -
Transfers in (out) for capital 197,087 370,000
Capital charges 1,740,170 -
Capital grant and contribution proceeds 1,153,390 -
Net cash used by capital and related financing activities (1,680,254) (606,183)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments sold and earnings 87,868 20,266
Interfund loan repayment - 96,000
Net cash provided from investing activities 87,868 116,266
Net increase in cash & cash equivalents 4,730,988 466,492
Beginning cash & cash equivalents 11,019,363 7,068,173
Ending cash & cash equivalents 15,750,351$ 7,534,665$
NON CASH ACTIVITIES
Capital contributions 958,764 -
Total noncash activities 958,764$ -$
RECONCILATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net Operating Income 52,492$ 524,624$
ADJUSTMENTS TO RECONCILE OPERATING
INCOME TO NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
Depreciation 5,488,565 797,079
Rents and leases 62,020
Changes in assets and liabilities
Decrease in customer receivables 93,653 -
Decrease in inventories 82,654 -
Increase in accounts payable and deposits 489,163 (373,228)
Increase in compensated absences 54,827 7,934
Net cash provide by operating activities 6,323,374$ 956,409$
The notes to the financial statements are an integral part of this statement.
Statement of Cash Flows
Proprietary Funds
December 31, 2013
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Pension and Other
Postemployment
Benefits Agency
ASSETS
Cash & cash equivalents 407,101$ 610,129$
Investments (at fair market value):
LID Note 66,590
Federal Agency 78,789
Mutual Funds 4,115,001
Total assets 4,667,481 610,129
LIABILITIES
Accounts payable 429,120
Due to others 181,009
Total liabilities - 610,129
NET POSITION
Held in trust for pension benefits/other post
employment benefits 4,667,481$
The notes to the financial statements are an integral part of this statement.
Statement of Net Position
Fiduciary Funds
December 31, 2013
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Pension and Other
Postemployment
Benefits
ADDITIONS
Taxes 47,624$
Investment earnings:
Interest 8,782
Dividends 236,655
Net increase in market value of investments 764,078
Total Additions 1,057,139
DEDUCTIONS
Pension benefits 152,287
Medical premiums 113,471
Administrative expenses 7,104
Total deductions 272,862
Change in net position 784,277
Net position - beginning 3,883,204
Net position - ending 4,667,481$
The notes to the financial statements are an integral part of this statement.
Statement of Changes in Net Position
Fiduciary Funds
For the year ended December 31, 2013
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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 government 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 the City of
Pasco as a primary government unit. The City of Pasco does not have any component units.
The City is a general purpose government and provides police and fire protection including
emergency medical response, a municipal court, engineering, street construction and maintenance,
planning and zoning, parks and recreation services, a public library and general administrative
functions. The City also owns and operates a cemetery, a water system, a sewer system, a process
water reuse system, a storm water management system and an irrigation system. The municipal golf
course is owned by the city and operations are contracted to an outside vendor. The City’s basic
financial statements include the financial position and results of operations of all funds that are
controlled by the City.
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 non-fiduciary activities of the primary government. For
the most part, the effect of interfund activity has been removed from these statements. Exceptions to
this general rule are for charges between the government’s utility functions and certain other service
functions and various other functions of the government. These transactions that are for products and
services rendered have not been eliminated. Elimination of these charges would distort the direct
costs and program revenues reported for the various functions concerned. 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 not 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 for a
particular function or segment. Taxes and other items not properly included among program
revenues are reported instead as general revenues.
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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. Agency funds, a type of fiduciary fund, have no measurement focus as the purpose of
this type of fund is to simply receive and disburse funds belonging to another organization. Revenues
are recorded when earned and expenses are recorded when a liability is incurred, regardless of the
timing of related cash flows. Property taxes are recognized as revenues in the year for which they
are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements
imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are 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 City considers revenues to be available if they are collected within 31 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 claim 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, licenses, and interest associated within the current period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period.
Entitlements, such as grants, are recorded as revenues when all eligibility requirements are 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 City.
The proprietary, pension and other postemployment benefit trust funds are reported using the
economic resources measurement focus and the accrual basis of accounting for reporting its assets
and liabilities.
The City reports the general fund as a major governmental fund. The general fund is the city’s
primary operating fund. It accounts for all governmental financial resources, except those required to
be accounted for in a separate fund.
The City reports the Water/Sewer fund as a major proprietary fund. This fund includes water, sewer,
process water reuse, stormwater and irrigation systems.
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Additionally, the City reports the following fund types:
Special Revenue funds are used to account for revenues that are raised for a specific purpose.
Debt Service funds which account for the resources accumulated and payments made for
principal and interest on long-term general obligation debt of governmental funds.
Capital Project funds are used to report significant capital acquisition and construction separate
from ongoing operating activities. The construction fund was a major fund in 2013.
Permanent funds are used to report resources that are legally restricted to the extent that only
earnings, and not principal, may be used for purposes that support the reporting government’s
programs.
Internal Service funds account for equipment replacement and operation, central stores, and
medical/dental insurance services provided to other departments of the City on a cost
reimbursement basis.
Pension Trust funds is used to account for the sources and uses of funds to meet the pension
benefit rights of those firemen covered under the Plan prior to the creation of Law Enforcement
Officers and Fire Fighters (LEOFF) pension system in 1970 as well as other post-employment
benefits for medical services for retired LEOFF employees.
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. Assets, liabilities, deferred outflows/inflows of resources, and net position/fund balance
1. Deposits and investments
The government’s cash and cash equivalents are considered to be cash on hand, demand deposits,
and short-term investments with original maturities of three months or less from the date of
acquisition.
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State statutes and the city’s investment policies authorize the city to invest in obligations of the
U.S. treasury, repurchase agreements and the State Treasurer’s Local Government Investment
Pool (LGIP). The interest on these investments is prorated to the various funds on a monthly
basis.
The City’s deposits are covered by federal depository insurance (FDIC and FSLIC) or by
collateral held in the multiple financial institution collateral pool administered by the Washington
Public Deposit Protection Commission (PDPC).
Investments are generally reported at cost which approximates fair value for the items held. In
the pension fund mutual fund investments are reported at fair value. 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. See additional deposit investment and restricted asset
information in note 4. A.
2. Receivables and payables
Activities between funds that are representative of lending/borrowing arrangements outstanding
at the end of the fiscal year are referred to as “interfund loans payable/receivable”. All other
outstanding balances between funds are reported as “due to/from other funds.” Any residual
balances outstanding between the governmental activities and business-type activities are
reported in the government-wide financial statements as “internal balances”.
Loans between funds, as reported in the fund financial statements, are included as a liability in
applicable governmental funds so that the indicated fund balance represents amounts available
for appropriation and expendable available financial resources.
Taxes receivable consist of property taxes, sales taxes, interfund taxes, business and occupation
taxes, and excise taxes. Property taxes are levied January 1 on property values assessed as of
December of the prior year. The tax levy is divided into two billings; the first billing is due April
30 and the second is due October 31.
Customer accounts receivable consist of amounts owed from private individuals or organizations
for goods and services. The allowance for uncollectible accounts for the ambulance fund is
approximately 49% of the outstanding receivable at December 31, 2013.
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 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 consist of
unbilled special assessments that are liens against the property benefitted. As of December 31,
2013 $9,510 of Governmental and $22,760 of Business-type special assessments were
delinquent. Assessed property owners are responsible for debt repayment. The city guarantee’s
the debt to the extent of the LID guarantee fund. Governmental-type special assessments are for
street improvements; Business Type special assessments are for sewer infrastructure.
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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. Repayment of these loans are used to
establish revolving loan funds for loans that match the original grant purpose.
3. Inventories
There are currently no inventories in governmental funds. Inventories in proprietary funds are
valued using a floating average of costs.
4. Restricted assets and liabilities
These accounts contain resources for construction and debt service in enterprise funds and
customer deposits.
5. 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 2013.
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 2 - 50
Infrastructure $5,000 5 - 50
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6. 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.
7. Long-term obligations
In the government-wide financial 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 statement of
net position.
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 financial 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.
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 2013 as follows:
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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. Fund balance and fund flow policies
Fund balance of governmental funds is reported in various categories based on the nature of any
limitations requiring the use of resources for specific purposes. The government itself can
establish limitations on the use of resources through either a commitment (committed fund
balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for specific
purposes 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:
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.
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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 balance of capital assets excluded from fund level:
Joint venture $ 170,346
Land 12,453,988
Construction in process 7,258,035
Building 25,021,220
Other improvements 4,634,948
Equipment 1,818,233
Infrastructure 115,320,919
Current year spending in construction work in progress 7,257,934
Current year capital purchases 142,009
Current year capital donations received 28,891,372
Current year decrease in joint venture (56,128)
Current year capital asset disposals (304,385)
Current year depreciation (12,070,957)
Net adjustment to add to government-wide fund balance to arrive at
Net position-governmental activities $ 190,537,534
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 balance of long-term liabilities excluded from fund level:
Compensated absences $ (1,927,105)
OPEB obligation (1,695,149)
Bonds and notes payable (5,474,068)
Current year principal payments reducing debt 1,194,569
Current year OPEB and other expense recognized (256,786)
Net adjustment to reduce government-wide fund balance to arrive at
Net position-governmental activities $ (8,158,539)
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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:
NOTE 3 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary information
Scope of budget
Annual revenue and appropriated expenditure budgets are adopted for the general, special
revenue, proprietary and pension trust funds. Additionally, project basis budgets are adopted for
capital projects. All annual appropriations lapse at the fiscal year end. For governmental funds,
the only difference between the budgetary basis and generally accepted accounting principles
(GAAP) is that proceeds from interfund loans are treated as budged revenue and repayment of
interfund loans are treated as budgetary expenditures (except for loans that are issued one day
and repaid the next). Budgetary accounts are integrated in fund ledgers for all budgeted funds.
Budgets for debt service and capital project funds are adopted at the level of the individual debt
issue or projects and for the fiscal periods that correspond to the lives of debt issues or projects
and the annual expenditure piece is also included in the appropriate fund’s annual budget. Nation
Council on Governmental Accounting (CNGA) Statement 1 does not require, and the financial
statements do not present budgetary comparisons for proprietary fund types.
Procedures for adopting the original budget
The City's budget procedures are mandated by RCW 35A.33. The steps in the budget process are
as follows:
Capital outlays for:
Land 28,457
Construction in Process 7,257,934
Machinery & Equipment 113,552
Contributed capital assets 28,891,372
Current year depreciation:
Buildings (1,120,191)
Other Improvements (593,864)
Machinery & Equipment (288,514)
Infrastruture (10,068,388)
Net capital activity 24,220,358
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• Prior to the first Tuesday in November, the City Manager submits a proposed budget to the
Council. This budget is based on priorities established by the Council and estimates provided by
departments during the preceding months, and balanced with revenue estimates made by the
Financial Services Manager.
• The Council conducts public hearings on the proposed budget in November and/or December.
• The Council makes its adjustments to the proposed budget and adopts by ordinance a final
balanced budget no later than December 31.
• Within 30 days of adoption, the final budget is available to the public.
Amending the budget
The budget, as adopted, constitutes the legal authority for expenditures. The City’s budget is
adopted at the fund level, so that expenditures may not legally exceed appropriations at that level
of detail. The City Manager is authorized to transfer budgeted amounts between departments
within any fund; however, any revisions that alter the total expenditures of a fund, 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 the City Council determines that it is in the best interest of the City to increase or decrease
the appropriation for a particular fund, it may do so by ordinance approved by one more than the
majority after holding one public hearing.
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.
B. Deficit fund equity
The LID Note fund, Community Development and Stadium/Conventions center funds showed
deficit fund equity positions at December 31, 2013. This is expected and normal since the debt
related to these funds is from an internal loan rather than an outside 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 these funds at the end of the year. If the financing was external,
then no fund deficit would exist.
C. Budgetary compliance
The Golf Course fund exceeded its appropriation of $1,768,000 by $53,165, the Senior Center
fund exceeded by $6,753, the Multi-Modal fund exceeded by $287 and the Revolving Abatement
fund by $13,130.
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NOTE 4 – DETAILED NOTES ON ALL FUNDS
A. Deposits, investments and restricted assets
As of December 31, 2013 the government had the following:
Weighted Average
Fair Value Maturities (Years)
Local Government Investment Pool
Total Invested Cash Equivalents $31,054,966 N/A
Investments in Federal Agencies 1,485,390 12.3
Investment in Mutual Funds 4,115,003 N/A
Investment in Certificate of Deposits 3,000,000 0.13
Investment in Notes 66,590 7.38
Total fair value $39,721,949
Portfolio weighted average maturity 2.50
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.
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, 2013 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.
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Concentration of credit risk as a percentage of total investments:
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
assess each depository in the event of a loss due to default of a participating depositary. The city had
$13,842,988 on deposit with US Bank on December 31, 2013. The FDIC insures those deposits up to
$250,000. US Bank is required to collateralize 10% of the remaining funds which is $1,359,298. The
temporary custodial credit risk for uncollateralized deposits at US Bank was $12,233,690 at December
31, 2013.
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 in the prior year 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:
Issuer % of Total Fair Value
Federal Farm Credit Bank 3% 1,000,000
Small Business Admin 1% 485,390
US Bank 8% 3,000,000
Local Gov't Invest Pool 78% 31,054,966
City of Pasco LID 0%66,590
American Funds 10% 4,115,002
100% 39,721,948
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Temporary Permanent
Restrictions Restrictions
City View Cemetery Endowment $434,308
Water/Sewer Debt Reserve account $3,188,801
Water/Sewer Debt Service account 2,986,516
Water/Sewer Bond Proceeds 5,614,545
Water/Sewer Customer Deposits 561,096
Claims incurred but not reported (IBNR) 549,430
Bi-centennial contribution 6,264
Standstill Tax Refund Agreement 162,232
Governmental Funds Customer Deposits 208,041
Drug Forfeit and Evidence 60,133
Water/Sewer Special Assess Receivable 397,549
Governmental Special Assess Receivable 801,175
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 principal. The reported balances include tax
payments from the county received through December 31, 2013. Tax receipts received by the county in
December but remitted to the City in January are not material and are included as part of the tax
receivable amount reported. Delinquent taxes totaled $353,130 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.
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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. The retroactivity extinguishes the additional levying
capacity resulting from the November 2007 court ruling but let’s stand any banked capacity
accumulated prior to the court ruling and the authority to continue to bank future unused
capacity.
In November 2012, the City approved an ordinance establishing the operating levy for 2013 of
$6,492,514 based on an assessed valuation of $3,300,169,365 and an estimated rate of $1.966733 per
$1,000 of assessed value. 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.
Additionally, the city levied an additional amount to cover bond payments for the 1999 UTGO bond for
the Library Remodel ($58,746) and the 1999 UTGO bond for the Fire Station ($74,404).
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, 2013 the city’s individual major funds contain no allowance for
uncollectible accounts and nonmajor funds receivable balances include the applicable allowance for
uncollectible accounts (which relates to ambulance services) of $189,523.
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:
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Unavailable Revenue – Property Taxes $ 353,130
Unavailable Revenue – Special Assess/Loans 801,175
Unavailable Revenue – Municipal Court 1,036,487
Unavailable Revenue – Other 65,256
Total $2,256,048
Loans receivable. Loans receivables consist of amounts owed on an open account from private
individuals or organizations for goods and services rendered. Since the City is unable by law to grant
credit to any entity, all loans receivable are related to grant monies received from other agencies which
have authorized the loan as part of the grant process. Repayments of these loans are used to establish
revolving loan funds for loans that match the original grant purpose. The long term portion of those
loans receivable are included in reserved fund balance as the assets are not available to liquidate
liabilities in the current period.
C. Capital Assets
Capital asset activity for the year ended December 31, 2013 was as follows:
`
Governmental Activities:Beginning
Balance 01/01/13
Current Period
Increases
Current Period
Decreases
Ending Balance
12/31/13
Capital assets, not being depreciated
Land 12,453,988 292,730 36,833 12,709,885
Construction in process 7,693,195 7,944,721 4,309,512 11,328,404
Total capital assets, not being depreciated 20,147,183 8,237,451 4,346,345 24,038,289
Capital assets, being depreciated:
Building & structure 38,200,730 11,670 267,552 37,944,848
Other improvements 9,240,869 9,240,869
Machinery and equipment 9,890,142 2,379,556 670,887 11,598,811
Infrastructure 166,642,530 30,978,690 197,621,220
Total capital assets being depreciated 223,974,271 33,369,916 938,439 256,405,748
Less accumulated depreciation:
Building & structure 13,179,510 1,120,192 14,299,702
Other improvements 4,605,922 593,863 5,199,785
Machinery and equipment 5,957,943 830,201 508,925 6,279,219
Infrastructure 51,321,610 10,068,390 61,390,000
Total accumulated depreciation 75,064,985 12,612,646 508,925 87,168,706
Total capital assets, being depreciated, net 148,909,286 20,757,270 429,514 169,237,042
Governmental activities capital assets net 169,056,469$ 28,994,721$ 4,775,859$ 193,275,331$
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Depreciation expense by function:
Business Type Activities:Beginning
Balance 01/01/13
Current Period
Increases
Current Period
Decreases
Ending Balance
12/31/13
Capital assets, not being depreciated
Land 2,494,425$ 26,500$ 2,520,925$
Construction in process 15,512,175 8,035,515 16,102,627 7,445,063
Total capital assets, not being depreciated 18,006,600 8,062,015 16,102,627 9,965,988
Capital assets, being depreciated:
Building & structure 64,382,892 8,136,699 72,519,591
Machinery and equipment 4,090,948 6,662,062 109,311 10,643,699
Infrastructure 144,296,602 2,802,065 147,098,667
Total capital assets being depreciated 212,770,442 17,600,826 109,311 230,261,957
Less accumulated depreciation:
Building & structure 32,618,137 2,466,774 35,084,911
Machinery and equipment 1,894,119 363,069 109,311 2,147,877
Infrastructure 29,728,444 2,914,116 32,642,560
Total accumulated depreciation 64,240,700 5,743,959 109,311 69,875,348
Total capital assets, being depreciated, net 148,529,742 11,856,867 160,386,609
Business activities capital assets net 166,536,342$ 19,918,882$ 16,102,627$ 170,352,597$
Governmental activities:
General government 363,701$
Public Safety 413,715
Transportation 10,367,213
Economic environment 195,324
Culture & recreation 1,272,693
Total depreciation expense - governmental activities 12,612,646$
Business-type activities:
Water 1,834,206$
Sewer 2,971,371
Process water reuse facility 233,202
Stormwater 253,102
Irrigation 452,078
Total depreciation expense- business-type activities:5,743,959$
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Construction commitments
The City of Pasco has active construction projects as of December 31, 2013. 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, 2013 is as follows:
PROJECT SPENT REMAINING
CATEGORY COMMITMENT TO DATE COMMITMENTS
STREET 8,299,027 6,920,907 1,378,120
GENERAL 5,263,084 3,271,163 1,991,921
PARKS 117,534 - 117,534
WATER 2,994,048 2,811,032 183,016
SEWER 3,927,187 3,627,395 299,792
PWRF 3,393,523 2,945,792 447,731
STORMWATER 1,158 525 633
IRRIGATION 2,112,288 1,620,802 491,486
TOTAL 26,107,849$ 21,197,616$ 4,910,233$
Interfund Loan Loan Original Loan Outstanding Loan Interfund Loan Due in More
Receivable Purpose Amount Amount Payable Than 1 Year
General Fund Temporary cash flow 285,000 285,000 Nonmajor Special Revenue -
General Fund Interim construct finance 242,702 242,702 Nonmajor Debt Service -
General Fund Interim construct finance 265,311 265,311 Nonmajor Debt Service -
General Fund PWRF asset purchase 700,000 472,404 Nonmajor Special Revenue 239,118
Nonmajor Special Revenue Parkng Lot Resurface 689,000 582,482 Nonmajor Special Revenue 472,769
Internal Service Fund Permanent LID Financing 438,905 189,394 Nonmajor Debt Service 145,504
2,620,918 2,037,293 857,391
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Interfund transfers
Transfers between funds during the year ended December 31, 2013 are as follows:
Transfers are used to 1) move unrestricted general fund revenues to finance various programs that the
government must account for in other funds in accordance with budgetary authorizations, including
amounts provided as subsidies or matching funds for various grant programs; 2) move investment
earnings or operating subsidies from one fund to its designated, authorized purpose carried out by
another fund; 3) move resources designated for construction to and from construction funds as projects
are created and/or completed.
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.
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. The following represents the future minimum lease
payments:
General Nonmajor
Special
Nonmajor
Debt Utility Total
General 138,000$ 138,000$
Nonmajor Special Revenue 2,191,709 220,812 2,412,521
Major Construction 3,204,874 1,049,552 129,074 94,913 4,478,413
Utility 450,000 450,000
Internal Service 212,000 158,000 370,000
Total 5,608,583$ 1,858,364$ 129,074$ 252,913$ 7,848,934$
TRANSFER FROM
T
R
A
N
S
F
E
R
T
O
Year Ending December 31 Amount
2014 4,631
2015 14,284
2016 8,478
2017 9,910
2018 1,258
Total $38,561
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F. Long-term Debt
Changes in long-term liabilities. For the governmental activities, compensated balances are generally
liquidated by the General and Streets funds while worker’s compensation claims are liquidated by the
Medical/Dental internal services fund. The net pension obligation is generally liquidated by the Fire
Pension Trust Fund and the net OPEB obligation is also generally liquidated by the general fund.
Long-term liability activity for the year ended December 31, 2013 was as follows:
Long-term debt. The city issues general obligation bonds to finance capital improvements such as
bridges, streets, municipal buildings and enterprise facilities such as water and sewer utilities. Bonded
indebtedness has also been entered into (currently and in prior years) to advance refund several general
obligation and revenue bonds. The City is also liable for notes that were entered into for the purchase of
the TRAC Facility, Animal Control facilities and police equipment. These notes are considered
obligations of the general government and are being repaid with general governmental resources.
Proprietary fund revenues are used to repay revenue and refunding bonds as well as certain loans. The
bond issues are not subject to arbitrage but the investments held in reserves (and the Guarantee Fund for
LID 135 and 145) are subject to rebate and yield restrictions.
Changes in Long-Term Liabilities
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
GOVERNMENTAL ACTIVITIES
General obligation bonds 4,710,000$ -$ (875,000)$ 3,835,000$ 520,000$
Special Assessment Bond 320,000 - (160,000) 160,000 -
External Loans & Notes 444,068 - (159,569) 284,499 144,967
Compensated absences 1,927,105 1,499,078 (1,528,728) 1,897,455 1,509,677
Net OPEB obligation 1,695,149 800,733 (514,297) 1,981,585
Governmental activity long-term liabilities 9,096,322$ 2,299,811$ (3,237,594)$ 8,158,539$ 2,174,644$
BUSINESS ACTIVITIES
Revenue bonds 24,260,000 9,755,000 (3,660,000) 30,355,000 1,905,000
External Loans & Notes 11,955,592 - (1,621,721) 10,333,871 1,669,767
Compensated absences 445,322 442,132 (384,290) 503,164 368,961
Business activity long-term liabilities 36,660,914$ 10,197,132$ (5,666,011)$ 41,192,035$ 3,943,728$
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GENERAL OBLIGATION BONDS
MATURITY INTEREST ORIGINAL INSTALLMENT
PURPOSE RANGE RATE RANGE AMOUNT 2013 AMOUNT
1999 LTGO Library and Fire Station 2011-2019 5.25% - 5.60%1,700,000$ 100,000$
2002 Civic Center 2011-2013 4.00% - 4.00%3,155,000 365,000
2011 LTGO Refund 2001 LTGO 2011-2020 2.00% - 4.00%4,110,000 410,000
YEAR ENDING
DECEMBER 31 PRINCIPAL INTEREST PRINCIPAL INTEREST
2014 520,000 149,600
2015 530,000 131,600
2016 545,000 113,250
2017 560,000 94,400
2018 575,000 70,400
2018-2022 1,105,000 66,200
2023-2028 - -
TOTAL 3,835,000$ 625,450$ -$ -$
- -
SPECIAL ASSESSMENT BONDS
MATURITY INTEREST ORIGINAL INSTALLMENT
PURPOSE RANGE RATE RANGE AMOUNT 2013 AMOUNT
LID 145 A Street Improvments 2012-2020 2.25% - 5.00% 785,129$ 160,000$
YEAR ENDING
DECEMBER 31 PRINCIPAL INTEREST PRINCIPAL INTEREST
2014 -$ 7,800$
2015 -$ 7,800$
2016 -$ 7,800$
2017 -$ 7,800$
2018 -$ 7,800$
2018-2022 160,000 11,800
2023-2027 - -
TOTAL 160,000$ 50,800$ -$ -$
GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES
GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES
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NOTE 5 - OTHER INFORMATION
A. Risk Management
The City of Pasco maintains insurance against most normal hazards except for unemployment and
automobile collision, where it has elected to become self-insured.
REVENUE BONDS
MATURITY INTEREST ORIGINAL INSTALLMENT
PURPOSE RANGE RATE RANGE AMOUNT 2013 AMOUNT
2002 Water/Sewer 2011- 2022 3.50%-4.70% 5,945,000 1,910,000
2005 Water/Sewer 2011- 2025 4.00%-4.25% 4,400,000 190,000
2007 Water/Sewer ULID 2011- 2022 4.25%-4.75% 845,000 50,000
2009 Water/Sewer 2011- 2029 3.00%-4.75% 10,045,000 410,000
2010 A Ref 1998B Plus New 2011- 2029 3.00%-4.370% 9,070,000 955,000
2010 T Ref 1998A 2018 4.62%1,240,000 145,000
2013 A Sewer 2014-2028 3.00%-4.00% 2,520,000 -
2010 T Process Water Reuse Facility 2015-2028 0.69%-4.89% 7,235,000 -
YEAR ENDING
DECEMBER 31 PRINCIPAL INTEREST PRINCIPAL INTEREST
2014 1,905,000$ 1,033,503$
2015 1,640,000 1,072,589
2016 1,640,000 1,023,661
2017 1,730,000 970,746
2018 1,780,000 910,663
2018-2022 10,725,000 3,576,870
2023-2027 9,805,000 1,502,629
2028-2032 1,130,000 27,425
2033-2039 - -
TOTAL -$ -$ 30,355,000$ 10,118,086$
EXTERNAL LOANS
INTEREST ORIGINAL INSTALLMENT
PURPOSE MATURITY RATE AMOUNT 2013 AMOUNT
2002 Animal Control Facililty Land 12/1/2016 6.24%275,500$ 18,701$
2009 Police Vehicle Computers 6/1/2013 3.47%194,051 26,475$
2006 Port Airport Fire Building 7/12/2016 4.00%120,000 12,870
1998 TRAC Loan 12/1/2014 4.505-5.50% 1,197,931 93,103
LID 146 Special Assessment Note 2013-2021 4.10%89,351 8,424
Waste Water Polution Control Facilities PWTF 95-025 6/30/2015 1.00%812,700 43,011
West Pasco Water System PWTF 95-026 6/30/2015 1.00%2,687,300 107,375
Riverview Trunk/SE Sewer 6/30/2020 1.00%1,890,000 111,140
Sewer Treatment Plant Phase 1&2 SRF Loan 10/13/2015 1.00% 23,700,000 1,360,217
YEAR ENDING
DECEMBER 31 PRINCIPAL INTEREST PRINCIPAL INTEREST
2014 144,967$ 13,610$ 1,669,767$ 322,502$
2015 51,893$ 6,252$ 1,719,487 270,166.00
2016 47,110$ 3,535$ 1,620,576 216,076
2017 9,411$ 1,662$ 1,673,869 161,673
2018 9,795$ 1,277$ 1,729,043 105,387
2018-2022 21,323$ 1,351$ 1,921,129 49,432
2021-2025 - -
2026-2030 -
TOTAL 284,499$ 27,687$ 10,333,871$ 1,125,236$
GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES
GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES
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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 l imits 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 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.
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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 amount of medical/dental claims in excess of commercial
insurance for the last three years are:
2011 2012 2013
$3,748,763 $3,905,030 $4,197,557
B. Related organization
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 is 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 will serve four-year terms. Of the initial members, one will be appointed for a one year
term, one for a two year term, one for a three year term, and the remainder for 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 herein, or in the Charter.
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 shares with Franklin County the expenses to operate and
cover debt service. Franklin County handles all operating decisions and financial reporting for
TRAC.
Complete financial statements for TRAC may be obtained at Franklin County, 1016 N. 4th Avenue,
Pasco, Washington.
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For calendar year 2013, the City of Pasco paid Franklin County $117,969 in operating expenses and
$102,435 in debt service expenses.
The City’s obligation for debt service is included in the debt service schedule in Note 4. F.
C. Employee retirement systems and pension plans
Substantially all (city/county/district) 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. The following disclosures are made pursuant to GASB
Statements 27, Accounting for Pensions by State and Local Government Employers and 50, Pension
Disclosures, an Amendment of GASB Statements 25 and 27
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 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
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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.
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.
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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:
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• 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, 2012:
Retirees and Beneficiaries Receiving Benefits 82,242
Terminated Plan Members Entitled to But Not Yet Receiving Benefits 30,515
Active Plan Members Vested 106,317
Active Plan Members Nonvested 44,273
Total 263,347
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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 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, 2013, are as follows:
Members Not 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
Both the city and the employees made the required contributions. The city’s required contributions for the years
ended December 31 were as follows:
PERS Plan 1 PERS Plan 2 PERS Plan 3
2013 $35,884 $654,389 $117,580
2012 $35,356 $586,286 $101,264
2011 $33,181 $478,488 $ 89,001
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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 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.
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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.
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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.
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, 2012:
Retirees and Beneficiaries Receiving Benefits 10,189
Terminated Plan Members Entitled to But Not Yet Receiving Benefits 689
Active Plan Members Vested 14,273
Active Plan Members Nonvested 2,633
Total 27,784
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 2013, the state contributed $54.2 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,
2013, are as follows:
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%.
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Both the city and the employees made the required contributions. The city’s required contributions for the years
ended December 31 were as follows:
LEOFF Plan 1 LEOFF Plan 2
2013 $411 $572,860
2012 $524 $504,331
2011 $712 $472,818
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, 2011, there were a total
of 12 individuals covered by this system, and 4 of the 12 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:
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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, 2013 was $2,150,760 and
retirement pension payments totaled $152,287. 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.
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
accrued liability for benefits over time. The pension plan has remained fully funded over the last five
years and no additional contributions were made.
Annual required contribution (ARC)2008 2009 2010 2011 2012 2013
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
Net Pension Obligation at End of Year $0 $0 $0 $0 $0 $0
Fiscal Year Ended December 31
Annual OPEB Cost and Net OPEB Obligation
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The pension plan financial statements are as follows:
D. 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 4. F 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.
The City has entered into a contractual “Stand Still” agreement on a disputed tax refund claim. At
issue in current litigation is the determination of the applicable statute of limitations. Per the Stand
Still agreement, the city has set aside $162,232 cash in an escrow account pending settlement of the
lawsuit.
E. Joint ventures
Bi-County Police Information Network
The Bi-County Police Information Network (BI-PIN) was established November 24, 1982, when an
Interlocal Agreement was entered into by five participating municipal corporations, the cities of
Kennewick, Pasco, and Richland, and Benton and Franklin Counties. BI-PIN was established to
assist the participating police and sheriff's departments in the deterrence and solution of criminal
incidents. BI-PIN is served by an Executive Committee composed of the City Manager of each of
the cities and a member from each of the Boards of County Commissioners of Benton and Franklin
Counties. A liaison from the Bi-County Chiefs and Sheriffs is an ex officio, non-voting member.
Fire
Pension
Trust
ASSETS
Cash & cash equivalents 198,415$
Investments at fair market value:
LID note 66,590
Federal agency 78,789
Mutual funds 1,806,966
Total assets 2,150,760
LIABILITIES
Due to Others
Total liabilities -
NET POSITION
Held in trust for pension benefits
and other purposes 2,150,760$
Old Fire Pension Plan
December 31, 2013
Statement of Net Position
Fire
Pension
Trust
ADDITIONS
Taxes 47,624$
Investment earnings:
Interest 8,419
Dividends 143,627
Net change in fair value of investments 298,831
Total additions 498,501
DEDUCTIONS
Pension benefits 152,287
Administrative expenses 3,914
Total deductions 156,201
Change in net assets 342,300
Net position - beginning 1,808,460
Net position - ending 2,150,760$
For the Year Ended December 31, 2013
Statement of Changes in Net Position
Old Fire Pension Plan
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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 new position will be shared based upon participant contribution.
Effective January 1, 1992, the City of Kennewick assumed responsibility for the operation of the BI-
PIN system. As the Operating Jurisdiction, the City provides all necessary support services for the
operation of BI-PIN such as accounting, legal services, risk management and information systems.
The total amount reduced by BI-PIN in 2013 for these transactions was $27,990
The City of Pasco's equity interest in BI-PIN was $84,390 on December 31, 2013, 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.
Metro Drug Forfeiture Fund
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.
The City of Pasco's equity interest in Metro was $29,828 on December 31, 2013, which is reported as
an investment in joint ventures in the government-wide Statement of Net position. The 2013
reduction in equity was $28,130. 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,
Washington.
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. 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.
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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 statement for ACA may be obtained from the City of Pasco, Washington.
F. Other postemployment benefits
LEOFF 1 - Medical
In addition to the pension benefits outlined in Note 5.C, 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’
(LEOFF) plan 1 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.
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.
The City of Pasco has a total of 35 LEOFF 1 members in this plan. Thirty-two of those members are
retired and three are still active employees.
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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 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 LEOFF 1 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. As the year
ended December 31, 2010 was the first year of implementation of GASB 45, annual OPEB cost was
equal to the ARC for the year.
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:
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.
2011 2012 2013
Annual required contribution (ARC)$937,477 $969,799 $934,928
Interest on Net OPEB Obligation (NOO)23,304 51,716 73,793
Adjustments to ARC (9,155) (72,637) (207,988)
Annual OPEB cost (expense)$951,626 $948,878 $800,733
Contributions made 364,043 423,901 514,297
Increase NOO 587,583 524,977 286,436
NOO at Beginning of Year 582,589 1,170,172 1,695,149
NOO at End of Year $1,170,172 $1,695,149 $1,981,585
% of
Fiscal Annual Annual Net
Year OPEB OPEB OPEB
Ended Cost Contributed Obligation
12/31/13 $800,733 64% $1,981,585
12/31/12 $948,878 45% $1,695,149
12/31/11 $951,626 38% $1,170,172
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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.
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.
The City of Pasco has a total of 8 LEOFF plan 1 members that are also members of the Old Firemen’s
Pension Plan and are fully funded through the Old Fire Pension Fund. All are retired. Based on the 2013
in-house evaluation, the Actuarial Accrued Liability for the Fire Pension OPEB Fund is $1,806,418. As
of December 31, 2013, the fund had assets of $2,516,721.
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 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. As December
31, 2010 was the first year of implementation for GASB 45, annual OPEB cost was equal to the ARC for
the year.
2011 2012 2013
Annual required contribution (ARC)$0 $0 $0
Interest on Net OPEB Obligation (NOO)0 0 0
Annual OPBEP cost (expense)$0 $0 $0
Contributions made 0 0 0
Increase NOO $0 $0 $0
NOO at Beginning of Year 0 0 0
NOO at End of Year $0 $0 $0
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Washington State Auditor's Office
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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:
Following are the financial statements for the Other Post Employment Benefit Trust Fund:
% of
Fiscal Annual Annual Net
Year OPEB OPEB OPEB
Ended Cost Contributed Obligation
12/31/13 $0 N/A $0
12/31/12 $0 N/A $0
12/31/11 $0 N/A $0
Other
Postemployment
Benefit
Trust
ASSETS
Cash & cash equivalents 208,686$
Investments at fair market value:
Mutual funds 2,308,035
Total assets 2,516,721
LIABILITIES
Due to Others
Total liabilities -
NET POSITION
Held in trust for pension benefits
and other purposes 2,516,721$
Statement of Net Position
Other Post Employment Benefit Plan
December 31, 2013
Other
Postemployment
Benefit
Trust
ADDITIONS
Investment earnings:
Interest 363$
Dividends 93,028
Net change in fair value of investments 465,247
Total additions 558,638
DEDUCTIONS
Medical premiums 113,471
Administrative expenses 3,190
Total deductions 116,661
Change in net assets 441,977
Net position - beginning 2,074,744
Net position - ending 2,516,721$
Statement of Changes in Net Position
Other Post Empmloyment Benefit Trust Plan
For the Year Ended December 31, 2013
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Washington State Auditor's Office
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The following is a schedule of contributions from the employer and other contributing entities for the
Firemen's Pension Fund:
Annual
Fiscal Actual Fire Actual Required Percentage
Year Insurance Employer Total Contribution of ARC
Ending Premiums Contributions Contributions (ARC)Contributed
12/31/2013 47,624 - 47,624 - N/A%
12/31/2012 42,979 - 42,979 - N/A%
12/31/2011 45,132 - 45,132 - N/A%
Unfunded UAAL As A
Actuarial Actuarial Actuarial Percentage
Asset Accrued Accrued Funded Covered of Covered
Valuation Date Value Liabilities Liabilities (UAAL) Ratio Payroll Payroll
December 31, 2013 2,151$ 1,599$ (552)$ 135%N/A N/A %
December 31, 2012 1,815$ 1,599$ (216)$ 114%N/A N/A %
December 31, 2011 1,667$ 1,599$ (68)$ 104%N/A N/A %
Required Supplementary Information
Firemen's Pension Fund
Schedule of Funding Progress for the Firemen's Pension Fund (rounded to thousands)
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Washington State Auditor's Office
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The following is a schedule of contributions from the employer and other contributing entities for the
Other LEOFF 1 :
Annual
Fiscal Actual Fire Actual Required Percentage
Year Insurance Employer Total Contribution of ARC
Ending Premiums Contributions Contributions (ARC)Contributed
12/31/2013 - 514,297 514,297 934,928 55%
12/31/2012 - 423,901 423,901 969,799 44%
12/31/2011 - 364,043 364,043 937,477 39%
Unfunded UAAL As A
Actuarial Actuarial Actuarial Percentage
Asset Accrued Accrued Funded Covered of Covered
Valuation Date Value Liabilities Liabilities (UAAL) Ratio Payroll Payroll
December 31, 2013 -$ 9,737$ 9,737$ 0%N/A N/A %
December 31, 2012 -$ 10,002$ 10,002$ 0%N/A N/A %
December 31, 2011 -$ 9,638$ 9,638$ 0%N/A N/A %
Required Supplementary Information
Other LEOFF 1 OPEB
Schedule of Funding Progress for the Firemen's OPEB Fund (rounded to thousands)
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The following is a schedule of contributions from the employer and other contributing entities for the
Firemen's Pension Fund:
Annual
Fiscal Actual Fire Actual Required Percentage
Year Insurance Employer Total Contribution of ARC
Ending Premiums Contributions Contributions (ARC)Contributed
12/31/2013 - - - - N/A%
12/31/2012 - - - - N/A%
12/31/2011 - - - - N/A%
Unfunded UAAL As A
Actuarial Actuarial Actuarial Percentage
Asset Accrued Accrued Funded Covered of Covered
Valuation Date Value Liabilities Liabilities (UAAL) Ratio Payroll Payroll
December 31, 2013 2,517$ 1,806$ (711)$ 139%N/A N/A %
December 31, 2012 2,075$ 1,777$ (298)$ 117%N/A N/A %
December 31, 2011 1,990$ 1,736$ (254)$ 115%N/A N/A %
Required Supplementary Information
Firemen's OPEB Fund
Schedule of Funding Progress for the Firemen's OPEB Fund (rounded to thousands)
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SCHEDULE 16- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended December 31, 2013
Grantor/Federal Other Pass-
Pass-Through Grantor CFDA Identification Through Direct
Program Title Number Number Awards Awards Total
US Department of Health & Human Services
Pass through Yakima County, Office of Aging & Long Term Care
Special Programs for the Aging_Title III, Part B_93.044 2013 Aging & Long Term Care - Footcare 22,163$ 22,163$
Total US Dept of Health & Human Services 22,163 - 22,163
US Department of Homeland Security
Pass through Franklin County Emergency Management
State Domestic Preparedness Equipment Support 97.004 Mobile Command vehicle 76,753 76,753
Homeland Security Grant Program 97.067 Fire-Technical Rescue Items 5,983 5,983
Homeland Security Grant Program 97.067 Mobile Command vehicle 83,122 83,122
Total US Department of Homeland Security 165,858 - 165,858
US Department of Housing & Urban Development
Community Development Block Grants/Entitlement 14.218 B-12-MC-53-009 CDBG 398,874 398,874
Community Development Block Grants/Entitlement 14.218 B-13-MC-53-009 CDBG 209,203 209,203
Pass Through City of Richland
Home Investment Partnerships Program 14.239 HOME 87,308 87,308
Pass Through Washington Department of Commerce
Community Development Block Grants/State's 14.228 08-F6401-014 NSP 67,672 67,672
Total US Department of Housing & Urban Development 154,980 608,077 763,057
US Department of Justice
Equitable Sharing Program 16.922 12-FBI-002691 2,620 2,620
Pass Through from City of Kennewick
Project Safe Neighborhoods 16.609 2012-WF-AX-0047 PSN 2,500 2,500
Pass Through from Department of Commerce
Violence Against Women Formula Grants 16.588 2012-WF-AX-0047-STOP 35,236 35,236
Pass Through from METRO Drug Task Force
Edward Byrne Memorial Justice Assistance 16.738 M12-34021-012 METRO 54,674 54,674
Edward Byrne Memorial Justice Assistance 16.738 M13-31440-012 METRO 53,875 53,875
Total US Dept of Justice 146,285 2,620 148,905
US Department of Transportation -National Highway Traffic Safety Administration
Pass through Washington Association of Sherriff & Police Commission
State and Community Highway Safety 20.600 WASPC TS 940 940
Pass through Washington Traffic Safety Commission
State and Community Highway Safety 20.600 CP12-03 ZERO 6,311 6,311
State and Community Highway Safety 20.600 14ST-02 ZERO 5,448 5,448
State and Community Highway Safety 20.600 13-14 Impaired Driving 1,048 1,048
Alcohol Impaired Driving Countermeasures Incentive 20.601 12-13 Impaired Driving 2,929 2,929
Occupant Protection Incentive Grants 20.602 12-13 CIOT 693 693
Total US Dept of Transportation NHTSA 17,369 - 17,369
US Department of Transportation/ Federal Highway Administration
Pass through Washington Department of Transportation
Highway Planning and Construction 20.205 HISP-3524 (006) LA-8157 Ct st ADA 28,043 28,043
Highway Planning and Construction 20.205 STPE-3553 (003) LA-7682 4th ave N.484,624 484,624
Highway Planning and Construction 20.205 STPUL-3515 (007) LA-8059 Rd 68 II 50,427 50,427
Highway Planning and Construction 20.205 STPUL-3522 (001) LA-8117 Argen 54,806 54,806
Highway Planning and Construction 20.205 STPUL-3515 (006) LA-8060 Rd 68 signals 16,867 16,867
Highway Planning and Construction 20.205 STPUS-0397 (008) LA-7866 Oregon 199,143 199,143
Highway Planning and Construction 20.205 STPUS-9911 (007) LA-7782 STP 895,539 895,539
Highway Planning and Construction 20.205 STPUL-9911 (008) LA-7975 Controllers 23,682 23,682
Total US Dept. of Transportation Federal Highway Administration 1,753,131 - 1,753,131
TOTAL FEDERAL AWARDS EXPENDED:2,259,786$ 610,697$ 2,870,483$
MCAG NO. 0292
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Washington State Auditor's Office
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NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
NOTE 1 – BASIS OF ACCOUNTING
The Schedule of Financial Assistance is prepared on the same basis of accounting as the City’s financial
statements. The City uses a modified accrual basis of accounting in all of the related Governmental
funds and full accrual in the 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, may be more than shown.
NOTE 3 – REVOLVING LOAN – PROGRAM INCOME
The City has a revolving loan program for low-income housing. Under this federal pass-through grant,
repayments to the City are considered program revenues (income) and loans of such funds to eligible
recipients are considered expenditures. No loan funds were disbursed in 2013 for the rehab loan
program. There were no repayments of rehab loan principal and interest for the year.
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 revenues (income) and costs of rehabilitating
homes and purchase of properties are considered expenditures. In 2013, property was sold, which
generated $101,790 in program revenue.
The City also participates in the HUD HOME Program for low-income individuals, as part of a regional
consortium administered through the City of Richland. The city of Richland is recognized as the lead
agency for the consortium and all grant accounting is reported by the City of Richland.
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ABOUT THE STATE AUDITOR'S OFFICE
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 as an advocate for government accountability. 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.
The State Auditor's Office employees are located around the state to deliver services effectively
and efficiently.
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 and fraud, whistleblower and citizen hotline investigations.
The results of our work are widely distributed through a variety of reports, which are available
on our Web site and through our free, electronic subscription service.
We take our role as partners in accountability seriously. We provide training and technical
assistance to governments and have an extensive quality assurance program.
State Auditor Troy Kelley
Chief of Staff Doug Cochran
Director of Performance and State Audit Chuck Pfeil, CPA
Director of Local Audit Kelly Collins, CPA
Deputy Director of State Audit Jan M. Jutte, CPA, CGFM
Deputy Director of Local Audit Sadie Armijo
Deputy Director of Local Audit Mark Rapozo, CPA
Deputy Director of Performance Audit Lou Adams, CPA
Deputy Director of Quality Assurance Barb Hinton
Deputy Director of Communications Thomas Shapley
Public Records Officer Mary Leider
Main number (360) 902-0370
Toll-free Citizen Hotline (866) 902-3900
Website www.sao.wa.gov
Subscription Service portal.sao.wa.gov/saoportal/Login.aspx