HomeMy WebLinkAboutWA State 2016 AuditFinancial Statements and Federal Single Audit
Report
City of Pasco
Franklin County
For the period January 1, 2016 through December 31, 2016
Published September 28, 2017
Report No. 1019931
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 Pat.McCarthy@sao.wa.gov
September 28, 2017
Mayor and City Council
City of Pasco
Pasco, Washington
Report on Financial Statements and Federal Single Audit
Please find attached our report on the City of Pasco’s financial statements and compliance with
federal laws and regulations.
We are issuing this report in order to provide information on the City’s financial condition.
Sincerely,
Pat McCarthy
State Auditor
Olympia, WA
Office of the Washington State Auditor
Pat McCarthy
TABLE OF CONTENTS
Schedule Of Findings And Questioned Costs ................................................................................. 4
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 ....................................................................... 6
Independent Auditor’s Report On Compliance For Each Major Federal Program And Report
On Internal Control Over Compliance In Accordance With The Uniform Guidance .................... 8
Independent Auditor’s Report On Financial Statements .............................................................. 11
Financial Section ........................................................................................................................... 14
About The State Auditor’s Office ................................................................................................. 98
Washington State Auditor's Office
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SCHEDULE OF FINDINGS AND QUESTIONED COST S
City of Pasco
Franklin County
January 1, 2016 through December 31, 2016
SECTION I – SUMMARY OF AUDITOR’S RESULTS
The results of our audit of the City of Pasco are summarized below in accordance with Title 2 U.S.
Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Financial S tatements
We issued an unmodified opinion on the fair presentation of the financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component unit and remaining fund information in accordance with accounting
principles generally accepted in the United States of America (GAAP).
Internal Control over Financial Reporting:
Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over financial reporting that we consider to be significant deficiencies.
Material Weaknesses: We identified 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 A wards
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 each
of its major federal programs.
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We reported no findings that are required to be disclosed in accordance with 2 CFR 200.516(a).
Identification of Major Federal Programs:
The following programs were selected as major programs in our audit of compliance in accordance
with the Uniform Guidance.
CFDA No. Program or Cluster Title
14.239 Home Investment Partnerships Program
20.205 Highway Planning and Construction
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
the Uniform Guidance, was $750,000.
The City did not qualify as a low-risk auditee under the Uniform Guidance.
SECTION II – FINANCIAL STATEMENT FINDINGS
None reported.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED
COSTS
None reported.
Washington State Auditor's Office
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPOR TING AND ON COMPLIAN CE AND
OTHER MATTERS BASED ON AN AUDIT OF FINAN CIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
City of Pasco
Franklin County
January 1, 2016 through December 31, 2016
Mayor and City Council
City of Pasco
Pasco, Washington
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component unit and remaining fund information of the City of Pasco, Franklin County,
Washington, as of and for the year ended December 31, 2016, and the related notes to the financial
statements, which collectively comprise the City’s basic financial statements, and have issued our
report thereon dated September 26, 2017.
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
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deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
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.
Pat McCarthy
State Auditor
Olympia, WA
September 26, 2017
Washington State Auditor's Office
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INDEPENDENT AUDITOR’S REPORT ON COMPLIAN CE FOR
EACH MAJOR FEDERAL P ROGRAM AND REPORT ON
INTERNAL CONTROL OVE R COMPLIANCE IN ACCO RDANCE
WITH THE UNIFORM GUIDANCE
City of Pasco
Franklin County
January 1, 2016 through December 31, 2016
Mayor and City 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)
Compliance Supplement that could have a direct and material effect on each of the City’s major
federal programs for the year ended December 31, 2016. The City’s major federal programs are
identified in the accompanying Schedule of Findings and Questioned Costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and
conditions of its federal awards 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 the audit
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Those standards and the Uniform Guidance 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.
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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.
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, 2016.
REPORT ON INTERNAL CONTROL OVER COM PLIANCE
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 the Uniform Guidance, 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
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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 R eport
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other
purpose. However, this report is a matter of public record and its distribution is not limited. It
also serves to disseminate information to the public as a reporting tool to help citizens assess
government operations.
Pat McCarthy
State Auditor
Olympia, WA
September 26, 2017
Washington State Auditor's Office
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INDEPENDENT AUDITOR’S REPORT ON
FINANCIAL STATEMENTS
City of Pasco
Franklin County
January 1, 2016 through December 31, 2016
Mayor and City 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 discretely presented component unit
and remaining fund information of the City of Pasco, Franklin County, Washington, as of and for
the year ended December 31, 2016, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements as listed on page 14.
Management’s Responsibility for t he 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
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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.
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 discretely presented component unit and remaining fund information
of the City of Pasco, as of December 31, 2016, and the respective changes in financial position
and, where applicable, cash flows thereof, and the respective budgetary comparison for the General
Fund, for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 16 through 26, information on postemployment
benefits other than pensions on page 90 and pension plan information on pages 91 through 94 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.
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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
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). This schedule
is not a required part of the basic financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other
records used to prepare the basic financial statements. The information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, the information is fairly stated,
in all material respects, in relation to the basic financial statements taken as a whole.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING
STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated
September 26, 2017 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.
Pat McCarthy
State Auditor
Olympia, WA
September 26, 2017
Washington State Auditor's Office
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FINANCIAL SECTION
City of Pasco
Franklin County
January 1, 2016 through December 31, 2016
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis – 2016
BASIC FINANCIAL STATEMENTS
Statement of Net Position – 2016
Statement of Activities – 2016
Balance Sheet – Governmental Funds – 2016
Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental
Funds – 2016
Reconciliation of Governmental Funds Statement of Revenues, Expenditures and
Changes in Fund Balance to the Statement of Activities – 2016
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget to Actual
– General Fund - 2016
Statement of Net Position – Proprietary Funds – 2016
Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds
– 2016
Statement of Cash Flows – Proprietary Funds – 2016
Statement of Net Position – Fiduciary Funds – 2016
Statement of Changes in Fiduciary Net Position – Fiduciary Funds – 2016
Notes to Financial Statements – 2016
REQUIRE D SUPPLEMENTARY INFORMATION
Firemen’s and LEOFF 1 OPEB – 2016
Schedule of Proportionate Share of the Net Pension Liability – PERS PLAN 1, PERS,
PLAN 2/3, LEOFF1, LEOFF 2 – 2016
Schedule of Employer Contributions – PERS PLAN 1, PERS PLAN 2/3, LEOFF1, LEOFF
2 – 2016
Schedule of Contributions – Fire Pension Fund – 2016
Schedule of Investment Returns – Fire Pension Plan – 2016
Schedule of Changes in the City’s Net Pension Liability and Related Ratios – Fire Pension
Fund – 2016
Notes to Schedules – 2016
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SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards – 2016
Notes to the Schedule of Expenditures of Federal Awards – 2016
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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, 2016. We encourage readers to consider the information that we have furnished in
our letter of transmittal which can be found starting on page 1 of this report. All amounts, unless
otherwise indicated, are expressed in thousands of dollars.
Financial Highlights
The assets and deferred inflows of the City of Pasco exceeded liabilities and deferred
outflows at the close of the most recent fiscal year by $407,516. Of this amount, $52,847
may be used to meet the government’s ongoing obligations to the citizens and creditors.
The City of Pasco’s total net position improved by $23,507. Approximately 27% of the
increase in net position is due to increases in business-type activities and 73% is due to
governmental-type activities. Significant portion of the increase is attributable to capital
grants and contributions received from developers in the form of donated infrastructure.
As of the close of the current fiscal year, the City of Pasco’s governmental funds reported
combined ending fund balances of $35,212, a decrease of $366 in comparison with the
prior year.
At the end of the current fiscal year, the unrestricted, unassigned fund balance for the City’s
General Fund was $14,191, which also represents 36% of total General Fund expenditures.
There was an excess of revenues over expenditures of $3,226; transfers in totaling $192
and transfers out totaling $7,041. Of the transfers out, $6,236 was for one-time
expenditures (to cover construction project capital spending) and $805 for cash flow and
other subsidies to Special Revenue funds.
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.
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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.
The government-wide financial statements can be found on pages 24-25 of this report.
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The City of
Pasco, like other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements. All of the funds of the City of Pasco can be
divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike
the government-wide financial statements, governmental fund financial statements focus on near-
term inflows and outflows of spendable resources, as well as on balances of spendable resources
available at the end of the fiscal year. Such information may be useful in evaluating a government’s
near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide statements. By doing
so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statements of
revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
The City of Pasco maintains thirty-one individual governmental funds including the general fund.
Information is presented separately in the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures and changes in fund balances for the
general fund, which is a major fund as defined by the Governmental Accounting Standards Board.
In 2016, the General Fund and the Construction Fund were the only major governmental funds.
Data from the other funds are combined into a single, aggregate presentation. Individual fund data
for each of these non-major governmental funds is provided in the form of Combining Statements
elsewhere in this report.
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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.
The basic governmental fund financial statements can be found starting on page 24 of this report.
Proprietary Funds. The City of Pasco maintains two different types of proprietary funds.
Enterprise funds are used to report the same functions presented as business-type activities in the
government-wide financial statements. The City of Pasco uses an enterprise fund to account for
the water/sewer utility. An Internal service fund is an accounting device used to accumulate and
allocate costs internally to the City of Pasco’s various functions. The City of Pasco uses internal
service funds to account for its equipment maintenance and replacement, central stores and
medical/dental insurance. As the central stores, medical/dental insurance and certain equipment
maintenance and replacement services predominately benefit governmental rather than business-
type functions, they have been included with governmental activities in the government-wide
financial statements.
Proprietary funds provide the same type of information as the government-wide financial
statements, only in more detail. The enterprise fund financial statements provide separate
information for the water/sewer fund. Data from the other two internal service funds (equipment
maintenance and equipment replacement of utility equipment) are combined into a single,
aggregated presentation in the basic proprietary fund financial statements starting on page 30.
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. The basic fiduciary fund
financial statements can be found starting on page 33 of this report.
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. The notes to the financial
statements can be found starting on page 35.
Government-wide Overall Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. In the case of the City of Pasco, assets and deferred inflows exceeded liabilities and
deferred outflows by $407.53 million at the close of the most recent fiscal year. The largest portion
of the City of Pasco’s net position $354.19 million (87%) reflects its investment in capital assets
(e.g. buildings, machinery, equipment, infrastructure, construction in progress) less any related
outstanding debt used to acquire those assets. The city of Pasco uses these capital assets to provide
services to citizens; consequently, these assets are not available for future spending. Although the
City of Pasco’s investment in its capital assets is reported net of related debt, it should be noted
that the resources needed to repay this debt must be provided from other resources, since the capital
assets themselves cannot be used to liquidate these liabilities. 4% ($16.90 million) of the City of
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Pasco’s net position represents resources that are subject to external restrictions on how they may
be used. The remaining $36.44 million 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 for the government as a whole, as well as for its separate
governmental and business-type activities. The same held true for the prior fiscal year.
As mentioned in the financial highlights, The City’s net position increased by $23.50 million,
during the current fiscal year. All of the increase in the City’s net position was attributable to
capital grants and contributions received from developers in the form of donated infrastructure
related to residential and commercial development and state and federal grants received for street
construction and improvement projects, and, water and sewer infrastructure improvements.
2016 2015 2016 2015 2016 2015
NonCapital assets 51.73$ 53.18$ 25.02$ 26.78$ 76.75$ 79.96
Capital assets 223.53 205.53 180.87 176.76 404.40 382.29
Total assets 275.26 258.71 205.89 203.54 481.15 462.25
Deferred Outflows 3.41 2.81 0.57 0.43 3.98 3.24
Current liabilities 7.85 6.41 4.32 4.95 12.17 11.36
Noncurrent liabilities 24.14 23.38 40.72 43.83 64.86 67.21
Total liabilities 31.99 29.79 45.04 48.78 77.03 78.57
Deferred Inflows 0.49 2.62 0.08 0.27 0.57 2.89
Net position:
Investment in capital assets 212.71 198.28 141.48 139.18 354.19 337.46
Restricted 16.90 20.40 - - 16.90 20.40
Unrestricted 16.58 10.43 19.86 15.74 36.44 26.17
Total net position 246.19$ 229.11$ 161.34$ 154.92$ 407.53$ 384.03$
City of Pasco's Net Position (in millions)
Governmental Activities Business-Type Activities Total Primary Government
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Governmental Activities. Governmental activities decreased the City of Pasco’s net position by
($0.98). The decrease is attributable to the investment in Public Safety and the consequential
increase in expenses. In 2016, the city added 11 positions: 5 in the Police Department, 3 in the Fire
Department, 2 in the Administrative & Community Services Department, and 1 Human Resources.
Additionally, in 2015, the City also approved additional 18 positions, 8 of which were Public
Safety hires.
Tax revenues for the City have been increasing at a steady race, reflecting a healthy and growing
economy. Property sales tax revenue increased by 9%, Sales tax revenue increased by 9%, and
Excise tax revenue increased by 18%. During the same period utility tax revenue decreased by
12%, primarily due to timing of revenue recognition during year-end. Additionally, Cable TV and
Telephone utility tax revenues have continued their historical decline due to nontaxable data
services available through cellular services, bundling of services by telephone and cable providers
that result in reduced charges and taxable revenue for each service, and replacement of traditional
landlines with cellular phones.
2016 2015 2016 2015 2016 2015
Revenues
Program revenues:
Charges for services 23.50$ 20.21$ 23.47$ 20.98$ 46.97$ 41.19$
Operating grants & contributions 1.32 1.77 0.01 0.03 1.33 1.80
Capital grants & contributions 25.05 23.93 7.19 6.09 32.24 30.02
General revenues:
Property taxes 7.93 7.26 7.93 7.26
Other taxes 26.80 26.36 26.80 26.36
Investment income and miscellaneous 2.26 1.99 0.15 0.10 2.41 2.09
Total revenues 86.86 81.52 30.82 27.20 117.68 108.72
Program expenses:
General government 8.72 8.24 8.72 8.24
Public safety 29.38 24.93 29.38 24.93
Transportation 16.63 16.37 16.63 16.37
Economic environment 5.62 5.14 5.62 5.14
Culture and recreation 8.93 8.11 8.93 8.11
Interest on long term debt 0.50 0.44 0.50 0.44
Water 9.48 9.10 9.48 9.10
Sewer 8.57 8.17 8.57 8.17
Process water reuse 3.17 2.52 3.17 2.52
Storm water 1.53 1.17 1.53 1.17
Irrigation 1.65 1.78 1.65 1.78
Total expenses 69.78 63.23 24.40 22.74 94.18 85.97
Changes in net position 17.08 18.29 6.42 4.46 23.50 22.75
Transfers - - - - - -
Total changes in net position 17.08$ 18.29$ 6.42$ 4.46$ 23.50$ 22.75$
Governmental Activities
City of Pasco's Change in Net Position (in millions)
Business-Type Activities Total Primary Government
Washington State Auditor's Office
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GOVERNMENTAL ACTIVITES – REVENUES BY SOURCE
GOVERNMENTAL ACTIVITIES – EXPENSES AND PROGRAM REVENUES
Charges for
services
27%
Operating
grants &
contributions
1%
Capital
grants &
contributions
29%
Property
taxes
9%
Other taxes
31%
Investment
income and
miscellaneous
3%
Sources of Revenues 2016
Charges for
services
25%
Operating
grants &
contributions
2%
Capital grants
&
contributions
29%
Property taxes
9%
Other taxes
32%
Investment
income and
miscellaneous
3%
Sources of Revenues 2015
Washington State Auditor's Office
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Business-Type Activities. 27% of the increase in the City of Pasco’s net position is related to
business-type activities. The total increase in net position for business-type activities was $6,420.
Charges for services increased by $2,490 (12%). Effective, January 1, 2016, water consumption
rates increased by 5%, Sewer rates increased by 9%, and Irrigation rates increased by 5%.
UTILITY ACTIVITIES – EXPENSES AND PROGRAM REVENUES COMPARISON
Financial Analysis of the City’s Funds.
As noted earlier, the City of Pasco uses fund accounting to ensure and demonstrate compliance
with finance related legal requirements.
Governmental Funds. The focus of the City of Pasco’s governmental funds is to provide
information on near-term inflows, outflows and balances of spendable resources. Such information
is useful in assessing the City of Pasco financing requirements. In particular, unreserved fund
balance may serve as a useful measure of a government’s net resources available for spending at
the end of the fiscal year.
As of the end of the 2016, the City of Pasco governmental funds reported combined ending fund
balances of $35,212, which is a decrease of $0.37 from the prior year. Approximately 84% of this
total amount, $13,912 constitutes unassigned fund balance, which is available for spending at the
government’s discretion.
Washington State Auditor's Office
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The General Fund is the chief operating fund of the City of Pasco. At the end of 2016, unassigned
fund balance of the general fund was $14,190. As a measure of the general fund’s liquidity, it may
be useful to compare unrestricted, unassigned fund balance to total expenditures. This represents
36% of total expenditures.
The fund balance of the City of Pasco’s General Fund decreased by $2,656 during 2016, which is
6.2% of current year revenues. Overall revenues increased by $1,626 (5%) and total expenditures
increased by $1,672 (4%). General fund tax revenues increased by $799 (3%). Property taxes
increased approximately (3%) due to new construction and steady valuations, and sales taxes
increased by $1,241 (9%) with the continued steady economic recovery.
The City was able to increase the number of approved personnel positions, by adding eleven
positions. The General Fund revenues of $42,970 exceeded expenditures of $39,744 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 from the internal service funds. Unrestricted net position of the
utility fund at the end of 2016 was $16,733. 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 2016, the utility is well positioned as it has current assets of $21,799
available to meet its current liability obligations of $4,239, resulting in a working capital ratio of
5. The utility showed a loss before contributions and transfers of $1,105. This was more than
offset by $7,189 in capital contributions. The City continues to invest in new infrastructure due to
the growth of its population, as well as due to the need to address aging infrastructure issues. The
City has a meter and service replacement program with the goal of replacing its meters on an
average of once every ten years. Local improvement districts (LIDs) are used by the utility to
supplement the ratepayers’ 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
information that is more detailed. There were increases to the original budget by $1,057 in
expenses, and $2,057 in transfer out appropriations. $521 of the increase was for General
Government, $289 of the increase was for Public Safety, and $1,000 of the increase was for the
construction of the Police Community Services facility. Actual spending was less than the original
appropriation.
Actual revenues were 102% of the original revenue budget and 98% 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 $3,226.
Capital Asset and Debt Administration
Washington State Auditor's Office
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Capital Assets. The City of Pasco’s investment in capital assets for its governmental and business-
type activities as of December 31, 2016 amounts to $401,320 (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 $18,004
for governmental activities and an increase of $6,779 for business-type activities. $24,565 and
$5,201 in noncash capital contributions were made to governmental and business-type activities,
respectively, in 2016.
Major capital asset activity during the current fiscal year included the following:
Capital spending in governmental funds for 2016 was $8,170: $206 for general
governmental purposes, $5,606 for public safety purposes, $518 for economic
environment, $995 for transportation purposes and $845 for culture and recreation
purposes. The largest projects for 2016 was $5,217 spending for the Police Station (total
project budget of $9,518).
Construction spending in the utility fund (major component of business-activities) for 2016
was $8,278. Construction spending was $2,636 for water, $5,479 for sewer, very small
amounts for PWRF, storm water and irrigation. The largest water project was Oregon Ave
Waterline $1,182 in 2016 (total project budget was $1,100). The largest sewer project was
for the Wastewater Treatment Plant Primary Clarifier #3 which spent $4,709 in 2016 (total
project budget of $5,052).
Additional information on the City of Pasco’s capital assets can be found in note 5 starting on page
52 of this report.
Long-term Debt. At the end of 2016, the City of Pasco had total outstanding debt of $49.48 million.
Of this amount, $10.43 million comprised debt backed by the full faith and credit of the
government. $38.99 million of the City of Pasco bonded debt represents bonds secured primarily
by specified revenue resources (e.g. revenue bonds). The city also has $0.05 million in special
assessment bonds.
2016 2015 2016 2015 2016 2015
Land 15.37$ 14.36$ 2.73$ 2.53$ 18.10$ 16.89$
Construction in process 16.28 13.21 9.09 3.94 25.37 17.15
Buildings and structures 23.95 25.46 34.31 36.84 58.26 62.30
Other improvements 3.24 3.05 0.06 - 3.30 3.05
Machinery and equipment 7.54 6.52 7.09 7.64 14.63 14.16
Infrastructure 157.15 142.92 124.52 120.06 281.67 262.98
Total capital assets 223.53$ 205.52$ 177.80$ 171.01$ 401.33$ 376.53$
City of Pasco's Capital Assets at Year-End (in millions)
(Net of Depreciation)
Governmental Activities Total Primary GovernmentBusiness-Type Activities
Washington State Auditor's Office
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Additional information on the City of Pasco’s long-term liabilities can be found in note 7 starting
on page 55 of this report.
Economic Factors and Next Year’s Budgets and Rates (amounts not in thousands)
In 2016, the Pasco economy was stable and continued to grow. The city issued 2,220 building
permits representing approximately $255 million in construction value. Of the total permits, 387
were for new single-family residences, which equates to $95 million in construction value. The
average value of a new home in Pasco was approximately $245,000, in 2016. This stable economy
was reflected in Standard & Poor’s rating the 2015 utility bond issue as AA-/Stable and the 2015
General Obligation bond issue as AA-/Stable.
In 2012, the county’s residents approved a new three-tenths of one percent sales tax increase
devoted to criminal justice. This new revenue source funded a new four-person Street Crimes unit
in the city’s police department; paid for the replacement of the city’s Municipal Court building;
and funded the construction of the city’s new Police Community Services Building, which broke
ground in the spring of 2015, and was completed in the spring of 2017.
In late in 2012, the city annexed a part of Franklin County. 2014 was the first year the city received
the additional property taxes from the annexation. The annexed area was in a part of the county
already surrounded by the city. In the spring of 2015, the city annexed the Road 80 area. This
annexation covers 688 acres and represents an addition of property assessed at $118,000,000.
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. Annual
rate increases are scheduled. 2016’s rate increases are 5% for water consumption; sewer’s rate
increase is 9%; the ambulance rate increase is 15% (from $12.65 to $14.55 per month). The City
is conducting a rate study for Storm water and Irrigation services during 2017.
Requests for Information
This financial report is designed to provide a general overview of the City of Pasco’s finances for
all those with an interest in the government’s finances. Questions concerning any of the
2016 2015 2016 2015 2016 2015
General Obligation Bonds 10.43$ 11.89$ 3.38$ 13.81$ 11.89$
Special Assessement Bonds 0.05 0.16 0.05 0.16
Loans & Notes 0.01 0.08 0.51 6.94 0.52 7.02
Revenue Bonds 35.10 38.29 35.10 38.29
10.49$ 12.13$ 38.99$ 45.23$ 49.48$ 57.36$
Governmental Activities Total Primary GovernmentBusiness-Type Activities
City of Pasco's Bonds and Notes
(in millions)
Washington State Auditor's Office
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Page 25
information provided in this report or requests for additional financial information should be
addressed to the Finance Director, PO Box 293, Pasco, WA 99301.
Washington State Auditor's Office
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Page 26
Governmental Business-Type Component Unit
Activities Activities Total
Pasco Public
Facility District
ASSETS
Current assets:
Cash & cash equivalents 22,461,122$ 14,469,874$ 36,930,996$ 42,829$
Restricted cash:
Program, grant, donations 320,956 320,956
Customer deposits 278,102 426,573 704,675
Unspent bond proceeds - 4,117,289 4,117,289
Debt covenants 264,751 884,035 1,148,786
Investments 16,267,368 2,853,095 19,120,463
Receivables (net of allowances):
Taxes 3,995,206 3,995,206 81,929
Customers 1,940,492 2,047,059 3,987,551
Grants 323,436 10,937 334,373
Due from Fiduciary Funds 275,000 275,000
Due from other governments 100,000 100,000
Prepaids 3,146
Inventories - 196,767 196,767
Total current assets 46,226,433 25,005,629 71,232,062 127,904
Noncurrent assets:
Restricted cash 455,173 1,263,478 1,718,651
Restricted investments - Debt/IBNR/LID 1,397,189 1,636,761 3,033,950
Special assessments 543,591 180,627 724,218
Net Pension Asset 3,016,107 3,016,107
Joint Ventures 81,047 81,047
Capital assets not being depreciated:
Land 15,373,198 2,725,435 18,098,633
Construction work in progress 16,282,189 9,086,415 25,368,604
Capital assets net of accumulated depreciation:
Buildings and structures 23,948,558 34,306,159 58,254,717
Other improvements 3,236,787 56,947 3,293,734
Machinery and equipment 7,543,841 7,089,046 14,632,887
Infrastructure 157,147,154 124,524,643 281,671,797
Total noncurrent assets 229,024,834 180,869,511 409,894,345 -
Total assets 275,251,267 205,875,140 481,126,407 127,904
DEFERRED OUTFLOWS OF RESOURCES
Pension related 3,414,120 572,519 3,986,639 -
LIABILITIES
Current liabilities:
Accounts payable 2,795,591 830,187 3,625,778 110,033
IBNR payable from restricted assets 1,680,670 1,680,670
Due to other funds 275,000 275,000
Deposits payable from restricted assets 178,103 426,573 604,676
Accrued interest payable from restricted assets - 173,974 173,974
Compensated absences - current 2,106,348 - 2,106,348
Loans due to other governments - current 11,930 114,689 126,619
Bonds - current 800,387 2,772,418 3,572,805
Total current liabilities 7,848,029 4,317,841 12,165,870 110,033
Noncurrent liabilities:
Compensated absences 384,200 234,011 618,211
Net OPEB obligation 4,086,203 4,086,203
Notes payable 40,309 393,753 434,062
Bonds payable (net of premium)9,966,960 37,154,731 47,121,691
Net pension obligation 9,666,795 2,937,825 12,604,620
Total noncurrent liabilities 24,144,467 40,720,320 64,864,787
Total liabilities 31,992,496 45,038,161 77,030,657 110,033
DEFERRED INFLOWS OF RESOURCES - -
Pension related 487,327 78,774 566,101
NET POSITION
Net investment in capital assets 212,712,141 141,470,343 354,182,484
Restricted for:
Cemetery (nonexpendable)486,429 486,429
Prepaid items - - 3,146
Program, grant, donations 34,956 34,956
Streets and boulevards 6,986,140 6,986,140
Litter and housing abatement 561,571 561,571
Park development 2,152,337 2,152,337
Capital improvement 5,927,245 5,927,245
Economic development 114,353 114,353
Debt repayment/guarantee 634,814 634,814
Committed for:
Landfill 407,344 407,344
Special revenue funds 3,769,477 3,769,477
Construction projects 225,500 225,500
Unrestricted 12,173,257 19,860,381 32,033,638 14,725
Total Net Position 246,185,564$ 161,330,724$ 407,516,288$ 17,871$
The notes to the financial statements are an integral part of this statement.
Statement of Net Position
December 31, 2016
Washington State Auditor's Office
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Page 27
Charges for Operating Capital
Services, Fines & Grants and Grants and Governmental Business-Type Component Unit
Functional Programs
Expenses Licenses Contributions Contributions Activities Activities Total Pasco Public
Facility District
Primary Government:
Governmental activities:
General government 8,716,441$ 4,740,997$ -$ -$ (3,975,444)$ -$ (3,975,444)$ -$
Public safety 29,373,810 6,309,905 463,806 - (22,600,099) - (22,600,099) -
Transportation 16,627,294 3,771,494 161,321 D2 23,700,108 11,005,629 - 11,005,629 -
Natural & economic environment 5,617,654 6,021,806 531,300 278,497 1,213,949 - 1,213,949 -
Culture and recreation 8,929,402 2,556,162 164,987 1,074,398 (5,133,855) - (5,133,855) -
Interest on long term debt 504,038 (504,038) - (504,038) -
Total governmental activities 69,768,639 23,400,364 1,321,414 25,053,003 (19,993,858) - (19,993,858) -
Business-type activities:
Water 9,475,449 9,480,798 - 2,350,970 2,356,319 2,356,319 -
Irrigation 1,646,426 1,301,273 - 993,454 648,301 648,301 -
Sewer 8,571,343 7,958,262 - 3,129,523 2,516,442 2,516,442 -
Process Water Reuse 3,172,408 3,347,578 - - 175,170 175,170 -
Storm Water 1,531,054 1,515,109 10,937 714,849 709,841 709,841 -
Total business-type activities 24,396,680 23,603,020 10,937 7,188,796 - 6,406,073 6,406,073 -
Total primary government 94,165,319$ 47,003,384$ 1,332,351$ 32,241,799$ (19,993,858) 6,406,073 (13,587,785) -
Component units
Pasco Public Facility District
Total component units 539,656$ 20,000$ -$ -$ (519,656)
General Revenues:
Taxes:
Property taxes 7,928,041 7,928,041
Sales taxes 14,886,729 14,886,729 483,114
B&O taxes 9,027,827 9,027,827
Excise taxes 2,884,722 2,884,722
Intergovermental 1,961,197 1,961,197
Investment income and miscellaneous 300,357 145,721 446,078 387
Transfers - - -
Total general revenues and transfers 36,988,873 145,721 37,134,594 (36,155)
Change in net position 16,995,015 6,551,794 23,546,809 (36,155)
Net position - beginning (Adjusted - 229,190,549 154,778,930 383,969,479 54,026
See Note 15)
Net position - ending 246,185,564$ 161,330,724$ 407,516,288$ 17,871$
The notes to the financial statements are an integral part of this statement.
Program Revenues
Net Revenue (Expenses) and Changes in Net Position
Primary Government
Statement of Activities
For the Year Ended December 31, 2016
Washington State Auditor's Office
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Page 28
Other
General Construction Governmental Total
ASSETS
Cash & cash equivalents 4,852,772$ 1,363,642$ 13,570,618$ 19,787,032$
Restricted cash
Program, grant, donation 34,956 2,519 37,475
Customer deposits 267,427 10,675 278,102
Cemetery endowement 455,173 455,173
Debt service 264,751 264,751
Investments 6,931,276 5,954,510 12,885,786
Receivables (net of allowances):
Taxes 3,572,998 422,208 3,995,206
Customers 1,138,180 18,000 749,693 1,905,873
Interfund loans 587,517 587,517
Grants 9,910 130,775 182,751 323,436
Special assessments & loans 543,591 543,591
Due from other funds 275,000 275,000
Due from other governments 100,000 100,000
Total assets 17,082,519 1,512,417 22,844,006 41,438,942
LIABILITIES
Accounts payable 1,059,902 1,286,917 403,855 2,750,674
Interfund loans payable 1,161,975 1,161,975
Due to other funds 275,000 275,000
Deposits payable from restricted assets 167,427 10,676 178,103
Total liabilities 1,227,329 1,286,917 1,851,506 4,365,752
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 1,221,976 638,998 1,860,974
FUND BALANCES (DEFICITS)
Nonspendable
Cemetery permanent fund 486,429 486,429
Restricted
Program, grant, donation 34,956 34,956
Street and boulevard 6,986,140 6,986,140
Litter & housing abatement 561,571 561,571
Park development 2,152,337 2,152,337
Capital improvements 5,927,245 5,927,245
Economic development 114,353 114,353
Debt repayment/guarantee - 634,814 634,814
Committed
Landfill claims 407,344 407,344
Special revenue funds 3,769,477 3,769,477
Construction projects 225,500 225,500
Unassigned 14,190,914 (278,864) 13,912,050
Total fund balances 14,633,214 225,500 20,353,502 35,212,216
Total liabilities, deferred inflows of resources
and fund balances 17,082,519$ 1,512,417$ 22,844,006$
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.223,019,104
Deferred pension outflows are not available to pay for current period expenditures and
therefore are not reported in the governmental funds.3,374,082
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.(25,684,406)
Deferred inflows and proceeds from asset sales in governmental funds is susceptible to full
accrual therefore are not reported in the Statement of Net Activities. Other expenses are
susceptible to full accrual and are reported in the Statement of Net Activities but not
in the governmental funds.(854,347)
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
between governmental activities are excluded.11,118,915
Net position of governmental activities ( see page 24)246,185,564$
The notes to the financial statements are an integral part of this statement.
Balance Sheet
Governmental Funds
December 31, 2016
Washington State Auditor's Office
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Page 29
General Other
Fund Construction Governmental Total
REVENUES
Taxes 30,987,198$ 3,740,123$ 34,727,321$
Licenses and permits 2,042,239 473,823 2,516,062
Intergovernmental revenue 2,069,451 343,019 2,867,845 5,280,315
Charges for services 6,318,087 9,219,740 15,537,827
Fines and forfeitures 748,324 235,467 983,791
Miscellaneous revenue 805,049 26,880 2,124,439 2,956,368
Total revenues 42,970,348 369,899 18,661,437 62,001,684
EXPENDITURES
Current:
General government 8,556,646 10,648 - 8,567,294
Public safety 20,883,970 769,244 5,551,396 27,204,610
Transportation 1,799,127 192,030 2,155,845 4,147,002
Natural & economic environment 1,782,897 - 3,662,557 5,445,454
Culture and recreation 5,257,241 14,120 2,859,566 8,130,927
Capital outlay:
General government 131,216 74,657 - 205,873
Public safety 133,499 5,428,025 44,201 5,605,725
Transportation 963,253 32,059 995,312
Natural & economic environment 518,400 - 518,400
Culture and recreation - 845,130 - 845,130
Debt service:
Principal 776,140 515,000 1,291,140
Interest 423,184 80,854 504,038
Total expenditures 39,743,920 8,815,507 14,901,478 63,460,905
Excess of revenues over (under) expenditures 3,226,428 (8,445,608) 3,759,959 (1,459,221)
OTHER FINANCING SOURCES (USES)
Sale of assets 955,431 54,680 1,010,111
Transfers in 191,668 8,432,675 1,603,539 10,227,882
Transfers out (7,040,858) (3,187,024) (10,227,882)
Total other financing sources (uses)(5,893,759) 8,432,675 (1,528,805) 1,010,111
Net change in fund balances (2,667,331) (12,933) 2,231,154 (449,110)
Fund balances - beginning (Adjusted-17,300,545 238,433 18,122,348 35,661,326
See Note15)
Fund balances - ending 14,633,214$ 225,500$ 20,353,502$ 35,212,216$
The notes to the financial statements are an integral part of this statement.
Statement of Revenues, Expenditures and Changes in Fund Balance s
Governmental Funds
For the Year Ended December 31, 2016
Washington State Auditor's Office
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Page 30
Net change in fund balances - total governmental funds (449,110)$
Amounts reported for governmental activities in the Statement o f 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.18,691,550
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. 1,291,140
Revenues reported in the statement of activies that do not provide current financial resources
are not reported as revenues in the funds.(813,129)
Some expenses such as for compensated absences, pension expense, gain on disposal of assets, etc.
are reported in the Statement of Net Activities do not the use of current financial resources and, therefore, (2,356,690)
are not reported as expenditures in the governmental funds.
Internal service funds are used by management to charge the costs of certain activities to
individual funds. The net revenue of certain activity is reported with governmental
activities. Interfund transfers between govermental funds are eliminated in the Statement of Net Activities.631,254
Change in net position of governmental activities (see page 25)16,995,015$
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, 2016
(Continued from prior page)
Washington State Auditor's Office
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Page 31
Original Final Variance to
Budget Budget Actual Final Budget
REVENUES
Taxes 30,533,000$ 31,863,000$ 30,987,198$ (875,802)$
Licenses and permits 1,738,400 1,843,400 2,042,239 198,839
Intergovernmental revenue 2,122,148 2,151,648 2,069,451 (82,197)
Charges for services 6,217,614 6,268,414 6,318,087 49,673
Fines and forfeitures 1,116,600 1,119,800 748,324 (371,476)
Miscellaneous revenue 454,340 493,440 805,049 311,609
Total revenues 42,182,102 43,739,702 42,970,348 (769,354)
EXPENDITURES
Current:
General government 8,975,169 9,495,749 8,556,646 (939,103)
Public safety 21,196,908 21,484,901 20,883,970 (600,931)
Transportation 1,765,221 1,806,118 1,799,127 (6,991)
Natural & economic environment 1,819,279 1,811,710 1,782,897 (28,813)
Culture and recreation 4,960,020 4,961,346 5,257,241 295,895
Capital outlay:
General government 111,700 245,700 131,216 (114,484)
Public safety 78,000 158,000 133,499 (24,501)
Debt service:
Principal 1,117,436 1,117,436 776,140 (341,296)
Interest 434,239 434,239 423,184 (11,055)
Total expenditures 40,457,972 41,515,199 39,743,920 (1,771,279)
Excess of revenues over (under) expenditures 1,724,130 2,224,503 3,226,428 (2,540,633)
OTHER FINANCING SOURCES (USES)
Debt proceeds and other miscellaneous 1,010,000 - -
Sale of Capital Asset 1,125,000 1,125,000 955,431 (169,569)
Transfers in 143,000 143,000 191,668 48,668
Transfers out (6,201,000) (7,201,000) (7,040,858) 160,142
Total other financing uses (3,923,000) (5,933,000) (5,893,759) 39,241
Net change in fund balances (2,198,870) (3,708,497) (2,667,331) (2,501,392)
Fund balances - beginning (Adjusted See Note
15) 10,566,361 17,289,115 17,300,545 11,430
Fund balances - ending 8,367,491$ 13,580,618$ 14,633,214$ (2,489,962)$
Interfund loan activity included for budget purposes but not
included in Statement of Revenues, Expenditures and Changes
in Fund Balance -
Fund balances - ending 14,633,214$
The notes to the financial statements are an integral part of this statement.
Statement of Revenues, Expenditures, and Changes in Fund Balanc es-Budget to Actual
General Fund
For the Year Ended December 31, 2016
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Water/Sewer Internal
Utility Service
ASSETS
Current assets:
Cash and cash equivalents 12,768,035$ 4,375,929$
Restricted cash equivalents:
Claims incuured but not reported (IBNR) 283,481
Customer deposits 426,573
Unspent bond proceeds 4,117,289
Revenue bond covenants 884,035
Investments 1,348,423 4,886,254
Receivables (net of allowances):
Customers 2,047,059 34,619
Grants 10,937 -
Inventory 196,767 -
Total current assets 21,799,118 9,580,283
Noncurrent assets:
Restricted cash - bond reserve 1,263,478 -
Restricted investments- bond covenants & IBNR 1,636,761 1,397,189
Special assessments 180,627 -
Interfund loan 540,505
Capital assets not being depreciated:
Land 2,725,435 -
Construction work in progress 9,086,415 -
Capital assets net of accumulated depreciation:
Buildings and structures 34,306,159 -
Other Improvements 56,947 -
Machinery and equipment 5,346,012 6,446,995
Infrastructure 124,524,643 -
Total noncurrent assets 179,126,477 8,384,689
Total assets 200,925,595 17,964,972
DEFERRED OUTFLOWS
Pension related 572,519 40,038
LIABILITIES
Current liabilities:
Accounts payable 750,949 124,155
IBNR payable from restricted assests 1,680,670
Other liabilities
Customer deposits payable from restricted assets 426,573
Accrued interest payable from restricted assets 173,974
Compensated absences - current portion - -
Loans due to other governments - current portion 114,689
Revenue bonds - current portion 2,772,418
Total current liabilities 4,238,603 1,804,825
Noncurrent liabilities:
Compensated absences 234,011 -
Loans due to other governments 393,753 -
Revenue bonds payable (net of premium)37,154,731 -
N e t pension obligation 2,937,825 205,454
Total noncurrent liabilities 40,720,320 205,454
Total liabilities 44,958,923 2,010,279
DEFERRED INFLOWS
Pension related 78,774 5,509
NET POSITION
Net investment in capital assets 139,727,309 6,446,995
Unrestricted 16,733,108 9,542,227
Total net position 156,460,417$ 15,989,222$
4,870,307
Net position of business-type activities (see page 24) 161,330,724$
The notes are an integral part of this statement.
Statement of Net Position
Proprietary Funds
December 31, 2016
Adjustment for the net effect of the current year
activity between the internal service funds and the
enterprise fund
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Business Type
Water/Sewer Internal
Utility Service
OPERATING REVENUES
Permits 158,565$ -$
Charges for services 23,419,634 6,060,483
Miscellaneous 24,821 3,437,876
Total operating revenues 23,603,020 9,498,359
OPERATING EXPENSES
Depreciation 6,816,267 965,588
Salaries and wages 3,097,783 264,527
Personnel benefits 2,278,217 138,506
Supplies 1,556,387 730,345
Services 9,604,889 6,349,953
Total operating expenses 23,353,543 8,448,919
OPERATING INCOME 249,477 1,049,440
NONOPERATING REVENUES (EXPENSES)
Investment income 92,280 92,375
Investment loss (5,815)
Rents and leases 53,441 -
Grant 10,937 -
Gain on sale of capital assets - (36,860)
Interest expense (1,511,022) -
Total nonoperating revenues (expenses)(1,354,364) 49,700
Income (loss) before contributions
and transfers (1,104,887) 1,099,140
Capital contributions 7,188,796 -
Transfers in - -
Transfers out - -
Changes in net position 6,083,909 1,099,140
Net position - beginning (Adjusted-See Note 15) 150,376,508 14,890,082
Net position - ending 156,460,417 15,989,222$
Changes in net position 6,083,909
Adjustment for the net effect the current year
activity between the internal service funds and the
enterprise fund 467,886
Change in net position of business-type activities
(page 25)6,551,794$
The notes to the financial statements are an integral part of this statement.
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
For the Fiscal Year Ended 12/31/2016
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Water/Sewer Internal
Utility Service
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers 22,448,714$ 9,463,740$
Payments to employees (4,568,800) (367,378)
Payments to suppliers (11,305,877) (6,466,627)
Net cash provided by operating activities 6,574,037 2,629,735
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: -
Noncapital grants 10,937 -
Rents and leases 53,441
Net cash provided from noncapital financial activities 64,378 -
CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from sale of assets - (38,859)
Acquisition of capital assets (8,210,082) (1,521,840)
Principal paid to refinance existing debt -
Principal paid on existing debt (8,711,997) -
Interest paid on debt (1,691,803) -
Bond proceeds received 3,959,939 -
Payments received from notes and loans - -
Transfers in (out) for capital - -
Capital charges 1,987,462
Capital grant and contribution proceeds (10,937) -
Net cash used by capital and related financing activities (12,677,418) (1,560,699)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments sold and earnings 2,041,448 88,558
Investments purchased - (2,994,100)
Net cash provided from investing activities 2,100,165 (2,408,937)
Net increase in cash (3,938,838) (1,339,901)
Beginning cash 23,398,248 5,999,311
Ending cash 19,459,410$ 4,659,410$
RECONCILATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net Operating Income 249,477$ 1,049,440$
ADJUSTMENTS TO RECONCILE OPERATING
INCOME TO NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
Depreciation 6,816,267 965,588
Changes in assets and liabilities
Decrease in customer receivables (1,208,154) (34,619)
Decrease in inventories - -
Increase in accounts payable (144,601) 613,671
Decrease in accounts customer deposits payable 53,846
Decrease in compensated absences 22,431
(Increase) decrease in pension deferred outflow (144,026) (5,107)
Increase (decrease) in pension obligation 1,124,952 57,665
Increase (decrease) in pension deferred inflow (196,155) (16,903)
Net cash provide by operating activities 6,574,037$ 2,629,735$
NON CASH ACTIVITIES
Capital contributions 5,201,334 -
Total noncash activities 5,201,334$ -$
The notes to the financial statements are an integral part of this statement.
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended 12/31/2016
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Pension and Other
Post-Employment
Benefits Agency
ASSETS
Cash & cash equivalents 572,714$ 462,809$
Receivables
Interfund Loan 33,954
Investments
Federal Agency 36,469
Mutual Funds 4,462,412
Total assets 5,105,549 462,809
LIABILITIES
Due to others - 462,809
Total liabilities - 462,809$
NET POSITION
Held in trust for pension benefits/other
post employment benefits 5,105,549$
The notes to the financial statements are an integral part of this statement.
Statement of Net Position
Fiduciary Funds
December 31, 2016
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Pension and Other
Post-Employment
Benefits
ADDITIONS
Taxes 58,192$
Investment earnings
Interest 64,519
Dividends 25,594
Net increase in market value of investments 496,054
Total Additions 644,359
DEDUCTIONS
Pension benefits 118,053
Medical premiums 188,120
Administrative expenses 11,700
Total deductions 317,873
Change in net position 326,486
Net position - beginning (adjusted - see note 15)4,779,063
Net position - ending 5,105,549$
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, 2016
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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 governmental units. The Governmental
Accounting Standards Board (GASB) is the accepted standard setting body for establishing
governmental accounting and financial reporting principles. The significant accounting policies
are described below.
A. Reporting Entity
The City of Pasco was incorporated on May 4, 1891 and operates under the laws of the
state of Washington applicable to a Non-Charter Code City with a Council/Manager form
of government. As required by the generally accepted accounting principles the financial
statements present City of Pasco as a primary government unit. The component unit
discussed below is included in the City reporting entity because of the significance of its
operational relationship with the City of Pasco.
The Pasco Public Facility was created pursuant to Chapter 35.57 of the Revised Code of
Washington for the purposes of acquiring, constructing, operating and financing one or
more regional centers through cooperative and joint ventures with the City of Kennewick.
The PFD is discreetly presented in the component unit column in the government-wide
financial statements to emphasize that is a legally separate entity.
B. Basis of Presentation - Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all of the non-fiduciary activities of the
primary government and its component unit. Although fiduciary funds are excluded from
the government-wide financial statements, effective in 2015, all pension components of
fiduciary funds are required to be reported in the government-wide financial statements.
For the most part, the effect of inter-fund activity has been removed from these
statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which
rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a
given function or segment is offset by program revenues. Direct expenses are those that
are clearly identifiable with a specific function or segment. Our policy is to allocate
indirect costs to a specific function or segment. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and 2) grants and contributions that
are restricted to meeting the operational or capital requirements or a particular function
or segment. Taxes and other items not properly included among program revenues are
reported instead as general revenues.
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As a general rule the effect of the inter-fund activity has been eliminated from the
government –wide financial statements. Exceptions to this rule include business taxes the
utility pays to the general fund, activities in internal service funds in which outside parties
are engaged and certain other service functions between funds, that if eliminated may
misrepresent the cost date reported for various other functions of the government.
Separate fund financial statements are provided for governmental funds, proprietary
funds, and fiduciary funds. Major individual governmental funds and major individual
enterprise funds are reported as separate columns in the fund financial statements.
The City of Pasco reports the following major governmental funds:
The General Fund: The General (or current expense) Fund is the City of Pasco’s
primary operating fund. It accounts for all financial resources of the general
government, except those required or elected to be accounted for in separate fund.
The Construction Fund: the Construction Fund is a capital project fund used to
account for significant construction and capital acquisition related to governmental
activities.
The City of Pasco reports the following major proprietary fund:
The Water/Sewer Fund: the Water/Sewer Fund accounts for water, sewer, water
reuse, storm water and irrigation utility activities.
Additionally, the City of Pasco reports the following fund types:
Special Revenue funds are used to account for specific revenue sources that are
restricted, committed, or assigned to expenditures for a particular purpose.
Debt Services funds are used to account for the resources accumulated and payments
made for principal and interest on long –term general obligation debt of
governmental funds.
Permanent funds are used to report resources that are legally restricted to the extent
that only earnings, not principal, may be used for purposes that support the
government’s program.
Internal Service funds are used to account for equipment replacement and
operations, central stores, as well as medical/dental insurance services provided to
other departments on a cost-reimbursement basis.
Pension Trust funds are used to account for the sources and uses of funds to meet the
pension benefit and other post-employment benefit obligations made to firemen
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covered under the Plan prior to the creation of the Law Enforcement Officers and
Fire Fighters’ (LEOFF) pension system in 1970.
Agency funds are used to report resources held by the city in a purely custodial
capacity on behalf of the Animal Control Authority and on behalf of all employees
for Payroll Clearing and those employees with Flexible Spending Accounts.
C. Measurement Focus, Basis of Accounting
Government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and
fiduciary fund financial statements. Revenues are recorded when earned and expenses
are recorded when a liability is incurred, regardless of the timing of related cash flows.
Property taxes are recognized as revenues in the year for which they are levied. Grants
and similar items are recognized as revenue as soon as all eligibility requirements
imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the City
considers revenues to be available if they are collected within 60 days of the end of the
current fiscal period. The City considers property taxes as available if they are collected
within 60 days after year end. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgements are recorded
only when payment is due.
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 period. All other revenue items are considered to be measurable and available
only when cash is received by the City.
Proprietary fund financial statements are reported using the economic resources
measurement focus and full-accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred regardless of the timing of
the cash flows. Proprietary funds distinguish operating revenues and expenses from non-
operating items. Operating revenues and expenses generally result from providing
services 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,
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administrative expenses, and depreciation on capital assets. All revenues and expenses
not meeting this definition are reported as non-operating revenues and expenses.
D. Budgetary Information
1. Scope of Budget
Annual appropriated budgets are adopted for the general and special revenue and on a
modified accrual basis. Budgets for debt service and capital project funds are adopted at
the level of the individual debt issue or project and for fiscal periods that correspond to
the lives of debt issues or projects. The City also adopts appropriated budgets for
proprietary, debt service, and internal service funds. All budgets are adopted at the fund
level.
Appropriations for all funds lapse at year-end. Budgets for capital outlays are re-
appropriated until the purpose of the appropriation has been accomplished or abandoned.
2. Amending the Budget
The City Manager is authorized to transfer budgeted amounts within the funds.
However, any revisions that alter the total appropriations of a fund, or which affects the
number of authorized employee positions, salary ranges, hours, or other conditions of
employment must be approved by the City Council.
When City Council determines it is in the best interest of the City of Pasco to increase or
decrease the appropriation for a particular fund, it may do so by ordinance approved by
one more than the majority after holding a public hearing.
The financial statements contain the original and final budget information. The original
budget is the first complete appropriated budget. The final budget is the original budget
adjusted by all reserves, transfers, allocations, supplemental appropriations, and other
legally authorized changes applicable for the fiscal year.
Excess of Expenditures over Appropriations
There were no funds that exceeded approved budget appropriations.
Deficit Fund Net Position
The LID Loan Fund, a non-major debt service fund of the City, ended the year with a
negative fund balance of ($278,864). The negative fund balance is a result of required
accounting practices. Previously most LID’s were financed with a bond issue which is
not reflected on the balance sheet of the governmental fund. The current LID’s are
financed with interfund loans which are recorded as a loan payable on the balance sheet
and GASB requires future principal payments to be recorded as deferred inflows on the
balance sheet. Both items are recorded on the liability side of the balance sheet with only
the LID assessments receivable on the asset side. The result is almost always a negative
net position for the fund. The deficit fund balance will be corrected as the loans are paid
off.
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E. Assets, Liabilities, Deferred Inflows, Deferred Outflows, Fund Balance/Net Position
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.
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 fair value for the items held. The LGIP operates in
accordance with appropriate state laws and regulations. The reported value of the pool is
the same as the fair value of the pool shares. See additional deposit, investment and
restricted asset information in Note 3.
2. Receivables and payables
Taxes receivable consist of property taxes, sales 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. Detailed information on property tax can
be found in Note 4.
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, 2016 the only major fund of the city to have an
allowance for uncollectible accounts was the General Fund. The gross Municipal Court
receivable for the City is $10,443,881 of which $9,534,219 is not expected to be collected
(allowance for uncollectible accounts) and thus only the net amount of $909,662 is
included in the financial statements. The estimate for uncollectible is based on historical
collections and the fact that in recent years’ lawmakers have removed the City’s ability
to hold citizens accountable for nonpayment of fines. Non-major funds receivable
balances include the applicable allowance for uncollectible accounts (which relates to
ambulance services) of $100,000.
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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 inflows reported in
the governmental funds were as follows:
Unavailable Revenue – Property Taxes $ 192,313
Unavailable Revenue – Special Assessments/Loans 543,591
Unavailable Revenue – Municipal Court 909,662
Unavailable Revenue – Other 215,408
Total Unavailable Revenues $1,860,974
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.
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 21% of the outstanding receivable at December 31,
2016.
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 principal and unbilled principal. Deferred assessments consist of
unbilled special assessments that are liens against the property benefitted. As of
December 31, 2016, $14,212.32 of delinquent assessments were outstanding in
Governmental Funds and $33,045.33 were outstanding in the Business Funds (Sewer).
Assessed property owners are responsible for debt repayment. The city guarantee’s the
debt to the extent of the LID guarantee fund.
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.
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3. Amounts Due to and from Other Funds and Governments, Interfund Loans and
Advances Receivable
Activities between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either interfund loans
receivable/payable or advances to/from other funds. All other outstanding balances
between funds are reported as due to/from other funds. Any residual balances
outstanding between the governmental activities and business-type activities are
reported in the government-wide financial statements as internal balances. A separate
schedule of interfund loans receivable is furnished in Note 6.
4. Inventories
There are currently no inventories in governmental funds. Inventories in proprietary
funds are valued using a floating average of costs, which approximates market value.
5. Restricted Assets and Liabilities
These accounts contain resources for construction and debt service, including current
and delinquent special assessments receivable, in the enterprise fund. The current
portion of related liabilities is shown as Payables from Restricted Assets. Additional
information on Restricted Assets can be found in Note 3.
6. 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 2016.
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Capitalization thresholds (the dollar value above which an asset acquisitions are added
to the capital asset accounts and estimated useful lives of capital assets are as follows:
Assets Threshold Useful Lives
Land All
Building & Structure $5,000 5 - 50
Other improvements $5,000 5 - 100
Machinery & Equipment & Vehicles $5,000 1 - 50
Infrastructure $5,000 5 - 50
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7. 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 one type of item, unavailable revenues which arises only under a modified
accrual basis of accounting, which qualifies as a deferred inflow. Unavailable revenue is
reported only in the governmental funds balance sheet. The governmental funds report
unavailable revenues for 2016 as follows:
a. Uncollected property taxes levied.
b. Unbilled special assessments levied against benefited property for the cost of local
improvements. An allowance for uncollectible accounts is not necessary since the
assessments are liens against the property benefited.
c. 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.
In addition to unavailable revenues, changes in pension assumptions and calculation
variables also create deferred inflows and deferred outflows. These are reported in the
enterprise funds and in the government wide level in the Statement of Net Position.
8. 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.
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9. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information about
the fiduciary net position of all state sponsored pension plans and additions to/deductions
from those plans’ fiduciary net position have been determined on the same basis as they
are reported by the Washington State Department of Retirement Systems. For this
purpose, benefit payments (including refunds of employee contributions) are recognized
when due and payable in accordance with the benefit terms. Investments are reported at
fair value.
10. Long-term Obligations
In the government-wide statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type
statements of net position.
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.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of
debt issued is reported as other financing sources. Premiums received on debt issuances
are reported as other financing uses. Issuance costs, whether or not withheld from actual
debt proceeds received, are reported as professional service costs.
11. Fund Balance and Fund Flow Policies
Fund balance of governmental funds is reported in various categories based on the nature
of any limitations requiring the use of resources for specific purposes. The government
itself can establish limitations on the use of resources through either a commitment
(committed fund balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for
specific purposes 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
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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.
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 sheet 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:
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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
Joint Venture 47,959$
Land 14,363,583
Construction in process 13,212,181
Building 25,463,153
Other Improvements 3,052,003
Equipment 2,254,772
Infrastructure 142,917,795
Pension Assets 4,984,645
Current year change in pension asset (1,968,538)
Current year spending in construction work in progress 7,829,466
Current year capital purchases 340,975
Current year capital donations received 24,564,988
Current year increase in Joint Venture 33,088
Current year depreciation (14,076,966)
Net adjustment to add to government wide fund balance to arrive at
Net Position Governmental Activities 223,019,104$
Beginning Balance of Capital Asset Excluded from Fund Level:
Compensated absences (2,106,348)$
OPEB obligation (3,331,084)
Pension obligation (7,891,909)
Bonds payable (12,092,160)
Current year changes to pension obligation (1,569,432)
Current year principal payments reducing debt 1,306,527
Net adjustment to reduce government wide fund balance to arrive at
Net Position Governmental Activities (25,684,406)$
Another element of that reconciliation explains the "Long-term liabilities are not due and payable in
the current 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:
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statement of activities. The first element of that reconciliation relates to capital activity as
follows:
NOTE 3: DEPOSITS, INVESTMENTS AND RESTRICTED ASSETS
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 $22,190,883 on deposit with US Bank on
December 31, 2016. The FDIC insures those deposits up to $250,000. US Bank is required to
collateralize 10% of the remaining funds which is $2,219,088. The temporary custodial credit risk
for uncollateralized deposits at US Bank was $19,721,795 on December 31, 2016.
Custodial credit risk – investments. For an investment, this is the risk that, in the event of the failure
of the counterparty, the government will be able to recover the value of its investments or other
collateral securities that are in the possession of an outside party. The city limits its custodial credit
risk by holding investments that are insured and are registered or held by the city’s agent in the
city’s name. Certificates of deposits are entirely covered by federal depository insurance (FDIC
and FSLIC) or by collateral held in a multiple financial institution collateral pool administered by
the Washington Public Deposit Protection Commission (PDPC).
Capital outlays for:
Land -$
Construction in process 7,829,466
Machinery and equipment 340,975
Contributed capital assets 24,564,988
Current year depreciation (14,076,966)
Gain on Joint venture 33,088
Net capital activity 18,691,551$
New Debt issued -$
Debt repayment (1,306,527)
Net debt activity (1,306,527)$
The second element of that reconciliation related to debt activity as follows
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As of December 31, 2016, the City’s deposits and investments were as follows:
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, 2016 the
City’s investments in agency securities were all rated AAA. The LGIP is not registered with the
SEC and the fair value of the city’s position in the pool is the same as the value of the pool shares.
The LGIP is regulated by the state of Washington’s state finance committee. Credit risk is limited
as most investments are either obligations of the U.S. Government, government sponsored
enterprises, insured demand deposit accounts or certificates of deposit.
Concentration of credit risk. Concentration of credit risk is the risk of loss attributed to the
magnitude of a government’s investment in a single issuer. It is the policy of the city to diversify
its investment portfolio to eliminate the risk of loss resulting from overconcentration of assets in a
specific class of securities. With the Exception of U.S. Treasury securities and the State Treasurer’s
Local Government Investment Pool (LGIP) no more than twenty percent of the city’s total
investment portfolio should be invested in a single security type and not more than twenty percent
should be invested with a single financial institution.
Concentration of credit risk as a percentage of total investments at December 31, 2016 were as
follows:
Fair Market Value Weighted Average
12/31/2016 Maturities (Years)
Local Government Investment Pool
Total Invested Cash Equivalents 38,988,493$ N/A
Investments in Federal Agencies 22,190,883 2.36
Investment in Mutual Funds (Pension Trust) 4,462,412 N/A
Total Fair Value 65,641,788$
Portfolio Weighted Average Maturity 2.36
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The following table depicts Weighted Average Maturity (WAM) for all City investments with
maturities.
Restricted assets. The corpus of permanent funds is included in restricted assets. The Water/Sewer
utility issued bond proceeds prior to 2016 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
ISSUER *FAIR VALUE AT 12/31/16 PERCENTAGE
Local Government Investment Pool 38,988,493$ 59.40%
SBA Participation 228,447 0.35%
Federal Farm Credit Bank 4,969,505 7.57%
Federal Home Loan Bank 2,004,119 3.05%
Federal Home Loan Mtg. Corporation 2,729,548 4.16%
FICO Strips 4,244,901 6.47%
Federal National Mortgage Association 1,979,236 3.02%
Resolution Funding Corporation 2,040,955 3.11%
Resolution Funding Corporation-Strips 3,994,172 6.08%
AmFunds Mutual Funds 4,462,412 6.80%
TOTAL 65,641,788$ 100%
*All investments were measured at Level 1, Quoted prices in active markets for identical assets or liabilities
A B C D =B * D
Maturity Date # of Months to Maturity Value % of total WAM
10/1/2026 9.83 36,469$ 0.16% 0.016155
2/1/2027 10 191,978 0.87% 0.086512
10/1/2017 0.8 1,992,272 8.98% 0.074516
6/8/2018 1.5 1,001,693 4.51% 0.067710
7/5/2018 1.6 1,983,002 8.94% 0.141191
7/27/2018 1.6 2,729,548 12.30% 0.194345
9/14/2018 1.8 994,231 4.48% 0.078406
12/27/2018 2.0 2,268,127 10.22% 0.204420
3/8/2019 2.3 1,002,426 4.52% 0.101639
6/13/2019 2.5 1,979,236 8.92% 0.222979
9/26/2019 2.8 1,976,774 8.91% 0.244971
10/15/2019 2.8 2,040,955 9.20% 0.260283
7/15/2020 3.6 2,007,711 9.05% 0.323899
10/15/2020 3.8 1,986,461 8.95% 0.342850
3.3 22,190,883$ 100.00% 2.359875
Calculation of Weighted Average Maturity (WAM)
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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 from customers as deposits are also restricted. Restricted assets
(cash and investments) are composed of the following:
Temporary Permanent
Restrictions Restrictions
City View Cemetery Endowment $ $455,173
Program, grant, donations:
Recreation Donations 9,181
Bi-centennial Contribution 6,264
Drug Forfeit, Evidence, Federal Share 19,511
Claims incurred but not reported (IBNR) cash 283,481
Customer Deposits:
Governmental Funds Customer Deposits 278,102
Water/Sewer Customer Deposits 426,573
Unspent Bond Proceeds:
Water/Sewer Unspent Bond Proceeds 4,117,289
Debt Covenants:
Water/Sewer Debt Service account 884,035
Water/Sewer Debt Reserve account 1,263,478
LID Guarantee 100,000
LID Bonds and Loans 164,751
Restricted Investments:
Water/Sewer Debt covenants 1,636,761
Incurred But Not Reported (IBNR) 1,397,189
____________ ___________
Totals $10,586,615 $455,173
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NOTE 4: PROPERTY TAX
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 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. The amount of taxes receivable at year-end that would be collected soon enough to be
available to pay liabilities of the current period is immaterial. Property tax collected in advance of
the fiscal year to which it applies is recorded as a deferred inflow and recognized as revenue of the
period to which it applies. No allowance for uncollectible tax is established because delinquent
taxes are considered fully collectible. Prior year tax levies were recorded using the same principle
and delinquent taxes are evaluated annually. The reported balances include tax payments from the
county received through December 31, 2016. Delinquent taxes totaled $192,313 and since these
funds are not available, revenue recognition is deferred. Subsequent collections of delinquent
amounts will be recorded in revenue in the period actually received.
The City may levy up to $3.60 per $1,000 of assessed valuation for general governmental services
subject to two limitations:
a. Chapter 84.55.010 of the Revised Code of Washington limits the growth of non-voted
property taxes to the lesser of 1% per year, or the Implicit Price Deflator. Adjustments
for new construction and annexations are excluded from this calculation.
b. The Washington State Constitution limits the total regular property taxes to one percent
of assessed valuation or $10 per $1,000 of value. If the taxes of all districts exceed this
amount, each is proportionately reduced until the total is at or below the one percent
limit.
The City’s regular levy for 2016 was $1.93672 per $1,000 on an assessed valuation of
$3,937,446,202. This resulted in a total regular levy of $7,625,727 for 2016. The City also levied
special levy amounts for voter approved bond issues. The following table reflects all 2016 levy
amounts for the City.
January 1 Taxes are levied and become an enforceable lien against properties.
February 14 Tax bills are mailed.
April 30 First of two equal installment payments is due.
May 31 Assessed value of property established for next year's levy at 100% of market value.
October 31 Second installment is due.
Property Tax Calendar
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NOTE 5: CAPITAL ASSETS AND CWIP
Capital asset activity for the year ended December 31, 2016 was as follows:
Levy Rate Total Levy
General Levy 1.93672 7,625,727$
Special Levies
1999 Library Remodel 0.01702 53,959
1999 Fire Station 0.02156 68,341
Total 1.97529 7,748,027$
City of Pasco 2016 Levy Rates
Governmental Activities:
Beginning
Balance
01/01/16
Current Period
Increases
Current
Period
Decreases
Ending Balance
12/31/16
Capital assets, not being depreciated
Land 14,363,583$ 1,149,646$ 140,031$ 15,373,198$
Construction in progress 13,212,182 8,918,086 5,848,079 16,282,189
Total capital assets, not being depreciated 27,575,765 10,067,732 5,988,110 31,655,387
Capital assets, being depreciated:
Building & structure 41,829,672 266,473 1,877,381 40,218,764
Other improvements 9,354,136 725,083 286,454 9,792,765
Machinery and equipment 14,292,506 2,016,664 809,656 15,499,514
Infrastructure 225,649,605 26,541,497 - 252,191,102 Total capit al assets being depreciated 291,125,919 29,549,717 2,973,491 317,702,145
Less accumulated depreciation:
Building & structure 16,366,519 916,088 1,012,401 16,270,206
Other improvements 6,302,132 521,757 267,911 6,555,978
Machinery and equipment 7,773,660 975,719 793,706 7,955,673
Infrastructure 82,731,810 12,312,138 - 95,043,948
Total accumulated depreciation 113,174,121 14,725,702 2,074,018 125,825,805
Total capital assets, being depreciated, net 177,951,798 14,824,015 899,473 191,876,340
Governmental activities capital assets net 205,527,563$ 24,891,747$ 6,887,583$ 223,531,727$
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Depreciation expense by function:
Construction commitments
Business Typ e Activities:
Beginning
Balance
01/01/16
Current Period
Increases
Current
Period
Decreases
Ending Balance
12/31/16
Capital assets, not being depreciated
Land 2,532,743$ 192,692$ -$ 2,725,435$
Construction in process 3,937,728 8,683,580 3,534,893 9,086,415
Total capital assets, not being depreciated 6,470,471 8,876,272 3,534,893 11,811,850
Capital assets, being depreciated:
Building & structure 77,048,235 204,646 - 77,252,881
Other Improvements - 56,947 - 56,947
Machinery and equipment 11,463,793 460,368 - 11,924,161
Infrastructure 158,917,114 7,848,724 510,061 166,255,777
Total capital assets being depreciated 247,429,142 8,570,685 510,061 255,489,766
Less accumulated depreciation:
Building & structure 40,210,188 2,736,534 - 42,946,722
Machinery and equipment 3,826,671 1,008,444 - 4,835,115
Infrastructure 38,853,050 3,388,145 510,061 41,731,134
Total accumulated depreciation 82,889,909 7,133,123 510,061 89,512,971
Total capital assets, being depreciated, net 164,539,233 1,437,562 - 165,976,795
Business activities capital assets net 171,009,704$ 10,313,834$ 3,534,893$ 177,788,645$
Governmental activities:
General government 354,087$
Public Safety 488,163
Transportation 12,619,506
Economic environment 213,480
Culture & recreation 1,050,466
Total depreciation expense - governmental activities 14,725,702$
Business-type activities:
Water 2,702,503$
Irrigation 545,766
Sewer 3,249,257
Process water reuse facility 385,420
Stormwater 250,177
Total depreciation expense- business-type activities: 7,133,123$
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The City of Pasco has active construction projects as of December 31, 2016. The projects include
street construction and various utility constructions. At year end, the city’s commitments with
contractors are as follows:
NOTE 6: INTERFUND BALANCES AND TRANSFERS
Interfund loans
The composition of interfund loan balances as of December 31, 2016 is as follows:
Interfund transfers
Transfers between funds during the year ended December 31, 2016 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,
CAFR
CATEGORY
PROJECT
COMMITMENT
SPENT TO
DATE
REMAINING
COMMITMENTS
GENERAL 8,187,904$ 8,131,483$ 56,421$
STREET 776,072 447,406 328,665
WATER 2,530,250 1,564,217 966,033
IRRIGATION 297,037 - 297,037
SEWER 6,112,109 5,524,642 587,468
STORMWATER 51,202 - 51,202
TOTAL 17,954,574$ 15,667,748$ 2,286,826$
Loan Purpose
Nonmajor Special
Revenue
Nonmajor Debt
Service Total
Nonmajor Internal Service Land Purchase 475,938$ -$ 475,938$
Nonmajor Special Revenue Parking Lot Repaving 243,370 - 243,370
Nonmajor Special Revenue LID Financing - 344,147 344,147
Nonmajor Internal Service LID Financing - 64,567 64,567
Nonmajor Fiduciary LID Financing - 33,954 33,954
Total 719,308$ 442,668$ 1,161,976$
DUE FROM
DUE TO TRANSFER FROM
General
Nonmajor Special
Revenue
Nonmajor Debt
Service Total
General -$ 143,000$ 48,667$ 191,667$
Nonmajor Special Revenue 805,000 294,097 300,000 1,399,097
Non Major Debt Service - - 204,442 204,442
Major Construction 6,235,858 2,196,817 - 8,432,675
Total 7,040,858$ 2,633,914$ 553,109$ 10,227,881$ TRANSFER TO
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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 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.
NOTE 7: CHANGES IN LONG-TERM LIABILITIES AND LONG-TERM DEBT
Changes in long-term liabilities -governmental. For the governmental activities, compensated
balances are generally liquidated by the General and Streets funds while medical and dental claims
are liquidated by the Medical/Dental internal services fund. Internal service funds predominantly
serve the governmental funds. Accordingly, long-term liabilities for them are included as part of
the totals for governmental activities. Also for governmental activities, claims and judgements and
compensated absences are generally liquidated by the General fund.
The table below reflects the change in Long-Term Liabilities for Governmental activities for year
ended December 31, 2016.
Changes in long-term liabilities – business type. All business type funds liquidate their own
compensated absences, judgements, and claims.
The table below reflects the change in Long-Term Liabilities for Business Type activities for year
ended December 31, 2016.
GOVERNMENTAL ACTIVITIES
Beginning Balance
01/01/2016 Additions Reductions
Ending Balance
12/31/16
Due Within One
Year
General Obligation Bonds 11,580,000$ -$ (1,150,000)$ 10,430,000$ 770,000$
Premiums 307,734 - (15,387) 292,347 15,387
Total GO Bonds Payable 11,887,734 - (1,165,387) 10,722,347 785,387
Special Assessment Bond 160,000 - (115,000) 45,000 15,000
External Loans1 38,069 3,537 (29,676) 11,930 11,930
Compensated Absences 2,106,348 1,941,036 (1,556,836) 2,490,548 1,556,836
OPEB Obligations 3,331,084 755,119 - 4,086,203 -
Pension Obligations 2 8,039,698 479,421 - 8,519,119 -
Activity 25,562,933$ 3,179,113$ (2,866,899)$ 25,875,147$ 2,369,153$
1Reclassified External Loan for $40,301 to interfund loan as the loan was made between a fiduciary fund and a debt service fund of the City
and was not an external loan.
Type Activities.
2Pension Obligations resulting from the implementation of GASB 6 8 were not included in this table in 2015 for Governmental and Business
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Long-term debt. The city issues general obligation bonds to finance capital improvements such
as street projects, softball fields, library improvements, police station and other municipal
facilities. Revenue bonds are issued to finance capital facilities, facility improvements and
equipment purchases for the City’s utilities. General obligation bonds have been issued for both
general government and business-type activities. In 2016 the City made the final payment on a
loan to purchase land for a new Animal Control Facility. A loan to the Port of Pasco for the Airport
Fire Building was scheduled to be paid off in 2016, however at year end it was discovered that in
2016 the Port had voided and returned the 2015 fourth quarter payments as well as the first two
payments in 2016. The Port indicated the loan was paid in full and instructed staff to cease sending
payments. The City’s records indicate there is an outstanding balance of $11,930 still due the Port
and we are working with them to reconcile payment history. Governmental debt is considered
obligations of the general government and is being repaid with general governmental resources.
Proprietary fund revenues are used to repay revenue and refunding bonds as well as certain loans.
The bond issues are not subject to arbitrage but the investments held in reserves (and the Guarantee
Fund for LID 145) are subject to rebate and yield restrictions. Bonded indebtedness has also been
entered into (currently and in previous years) to advance refund general obligation and revenue
bonds.
General obligation bonds and loans outstanding as of December 31, 2016 are as follows:
BUSINESS TYPE ACTIVITIES
Beginning Balance
01/01/2016 Additions Reductions
Ending Balance
12/31/16
Due Within One
Year
Revenue Bonds 36,690,000$ -$ (1,635,000)$ 35,055,000$ 1,715,000$
LTGO Bond3 - 3,959,939 (576,936) 3,383,003 1,112,418
Premiums 1,595,529 (106,384) 1,489,145 98,200
Total Bonds Payable 38,285,529 3,959,939 (2,318,320) 39,927,148 2,925,618
State Loans4 6,944,623 67,430 (6,503,610) 508,443 114,502
Compensated Absences 211,579 236,986 (214,554) 234,011 214,554
Pension Obligations 2 1,812,873 1,124,952 - 2,937,825 -
Business Activity Long-Term Activity 47,254,604 5,389,307 (9,036,484) 43,607,427 3,254,674
Total Changes in Business Type &
Governmental Long-Term Liabilities 72,817,537$ 8,568,420$ (11,903,383)$ 69,482,574$ 5,623,827$
3A Cashmere Valley Bank LTGO Bond refinanced a state loan (Dept. of Ecology) for the sewer plant in 2016. A portion of sewer fund reserves
related to the original debt was also used to liquidate the debt.
4A loan for domestic water from the State Revolving Fund has been authorized for the City in the amount of $6,810,430. There have been no draws
but the state added a loan fee in the amount of $67,430, which is being amortized for the life of the loan. The amount due will change with every draw.
GOVERNMENTAL DEBT - BONDS AND LOANS
Purpose Maturity Range
Interest Rate
Range Original Amount
Outstanding as of
December 31, 2016
Due Within 1
Year
2011 LTGO Refunding 2001 LTGO 2011-2020 3.00%-4.00% 4,110,000$ 1,940,000$ 460,000
2015 LTGO Police Station 2015-2045 3.00%-4.00% 8,795,000 8,490,000 310,000
2010 LID 145 Financing 2012-2020 2.25%-5.00% 785,129 45,000 15,000
12006 Port Airport Fire Building 2006-2016 4.00%120,000 11,930 11,930
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1The status of the Port Loan is currently being investigated with the Port and the loan will either
be paid in full or written off in 2017.
For presentation purposes, the remaining LID 145 Bonds ($45,000) are being included in the table
for general obligation debt because the LID is accounted for in a Governmental Fund (Debt Service
Fund). The annual debt service requirements to maturity for general obligation bonds, LID Bonds
and Loans are as follows:
Revenue Bonds, General Obligation Bonds and Loans outstanding for Business Type Accounts
are as follows:
The debt service requirements to maturity for all Business Type debt is as follows:
GOVERNMENTAL DEBT
Year Ending
December 31 Principal Interest Total Debt Service
2017 796,930$ 401,650$ 1,198,580$
2018 810,000 373,200 1,183,200
2019 845,000 340,650 1,185,650
2020 860,000 306,700 1,166,700
2021 360,000 272,300 632,300
2022-2026 2,035,000 1,133,300 3,168,300
2027-2031 2,465,000 702,675 3,167,675
2032-2036 2,315,000 221,063 2,536,063
10,486,930$ 3,751,538$ 14,238,468$
BUSINESS TYPE DEBT -BONDS
Purpose Maturity Range
Interest Rate
Range Original Amount
Outstanding as of
December 31, 2016
Due Within 1
Year
2009 Water/Sewer Capital Projects 2009-2029 1.35%-4.75% 10,045,000$ 7,180,000$ 455,000$
2010A Refunding Water/Sewer 2010-2029 3.00%-5.00% 9,070,000 4,765,000 285,000
2010T Refunding & Capital-Reuse 2010-2018 4.62% 1,240,000 355,000 175,000
2013A Sewer Capital Projects 2010-2028 3.00%-4.00% 2,520,000 2,220,000 100,000
2013T Capital Projects Reuse Facility 2010-2028 .69%-4.89% 7,235,000 6,365,000 440,000
2015 Water/Sewer Capital Projects 2015-2040 2.00%-5.00% 14,380,000 14,170,000 260,000
2016 Sewer Refunding LTGO Bond-pay SRF Loan 2016-2019 1.36% 3,959,939 3,383,003 1,112,418
BUSINESS TYPE DEBT -LOANS
Purpose Maturity Range
Interest Rate
Range Original Amount
Outstanding as of
December 31, 2016
Due Within 1
Year
PW00-691-043 Riverview Trunk Sewer Interceptor 2000-2020 0.50% 1,890,000$ 444,562$ 111,140$
DM15-952-037 Columbia Water Supply Project 2016-2035 1.50%67,430 63,881 3,362
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In 2016 the City obtained funding from Cashmere Valley Bank in the amount of $3,959,939. The
debt is considered a short term general obligation bond and the purpose was to pay for a portion
of the Sewer department’s outstanding State Water Pollution Control loan from the Department of
Ecology. In addition to Cashmere Bank funding, the Sewer department contributed funds from
debt reserves to pay in full the entire loan balance of $5,640,749. The City realized a Net Present
Value savings of $207,623 in interest as the bond rate of 1.36% is substantially less than the loan
rate of 3.5%.
Defeased Debt. In prior years the City defeased certain revenue bonds by placing the proceeds of
new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds.
Accordingly, the trust account assets and the liability for defeased bonds are not included the City’s
financial statements. At December 31, 2016, $315,000 of 2007 Water Sewer bonds outstanding
are considered defeased.
Operating leases. The city leases its front-line police vehicles. Leases are generally for a three-
year period. Generally, at the end of the three-year period the lease ends and the city returns the
vehicles. New vehicles and leases are then acquired. The following represents the future annual
minimum lease payments:
BUSINESS TYPE DEBT
Year Ending
December 31 Principal Interest Total Debt Service
2017 2,941,920$ 1,543,772$ 4,485,692$
2018 3,002,101 1,470,919 4,473,020
2019 3,302,489 1,394,700 4,697,189
2020 2,229,503 1,305,287 3,534,790
2021 2,138,362 1,222,583 3,360,945
2022-2026 9,691,811 4,847,012 14,538,823
2027-2031 6,556,811 2,814,251 9,371,062
2032-2036 4,568,449 1,672,254 6,240,703
2037-2041 4,515,000 463,150 4,978,150
TOTAL 38,946,446$ 16,733,928$ 55,680,374$
Year Ending December Amount
2017 524,832$
2018 461,969
2019 326,588
2020 172,349
2021 122,175
2022 26,569
Tota l 1,634,481$
Police vehicles
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NOTE 8: 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.
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 168
members.
New members initially contract for a three-year term, and thereafter automatically renew on an
annual basis. A one-year withdrawal notice is required before membership can be terminated.
Termination does not relieve a former member from its unresolved loss history incurred during
membership.
Liability coverage is written on an occurrence basis, without deductibles. Coverage includes
general, automobile, police, errors or omissions, stop gap, employment practices and employee
benefits liability. Limits are $4 million per occurrence in the self-insured layer, and $16 million
in limits above the self-insured layer is provided by reinsurance. Total limits are $20 million per
occurrence subject to aggregates and sub-limits. The Board of Directors determines the limits and
terms of coverage annually. Effective January 2011 City of Pasco coverage changed to a $100,000
per incident deductible from a no deductible policy.
WCIA offers insurance for property, automobile physical damage, fidelity, inland marine, and
boiler and machinery coverage, which is purchased on a group basis, however the City purchases
all property insurance from a commercial insurance broker and does not participate in the WCIA
property coverage program.
In-house services include risk management consultation, loss control field services, and claims and
litigation administration. WCIA contracts for certain claims investigations, consultants for
personnel and land use issues, insurance brokerage, actuarial and lobbyist services.
WCIA is fully funded by its members, who make annual assessments on a prospectively rated
basis, as determined by an outside, independent actuary. The assessment covers loss, loss
adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to
additionally assess the membership for any funding shortfall.
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An investment committee, using investment brokers, produces additional revenue by investment
of WCIA’s assets in financial instruments which comply with all State guidelines.
A Board of Directors governs WCIA, which is comprised of one designated representative from
each member. The Board elects an Executive Committee and appoints a Treasurer to provide
general policy direction for the organization. The WCIA Executive Director reports to the
Executive Committee and is responsible for conducting the day-to-day operations of WCIA.
Property, Inland Marina, boiler, machinery and employee fidelity insurance is purchased through
commercial insurance brokers.
The City is self-insured for medical and dental coverage for its employees. A third party
administrator, Benefits Management, Inc. processes all claims for reimbursement. The third party
administrator provides utilization management services and requires pre-authorization for all non-
emergency hospital confinements. The City currently maintains four months of program expense
in cash reserves for medical and dental claims. Program expense includes average claims as well
as administrative and third party provider costs. To limit the exposure for large claims, the City
purchases individual stop-loss coverage from a commercial insurance carrier that limits the City's
exposure for claim losses to $100,000 per individual. The amount of medical/dental claims in
excess of commercial insurance for the last three years are:
NOTE 9: JOINT AGREEMENT/JOINT VENTURES
A. Bi-County Police Information Network
The Bi-County Police Information Network (BI-PIN) was established November 24, 1982, when an
Interlocal Agreement was entered into by eight participating municipal corporations; the cities of
Kennewick, Pasco, Richland, Connell West Richland, and Prosser, and Benton and Franklin
Counties. BI-PIN was established to assist the participating police and sheriff's departments in the
deterrence and solution of criminal incidents. BI-PIN is served by an Executive Committee composed
of the City Manager of each of the cities and a member from each of the Boards of County
Commissioners of Benton and Franklin Counties. A liaison from the Bi-County Chiefs and Sheriffs
is an ex officio, non-voting member.
The allocation of financial participation among the participating jurisdictions is based upon the
approved budget for that year and is billed quarterly in advance to each agency. On dissolution of the
Interlocal Agreement, the net position will be shared based upon participant contribution.
Effective January 1, 1992, the City of Kennewick assumed responsibility for operation of the BI-PIN
system. As the Operating Jurisdiction, Kennewick provides all necessary support services for the
operation of BI-PIN such as accounting, legal services, and risk management and information
systems.
2014 2015 2016
4,396,624$ 4,627,663$ 4,858,665$
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The City of Pasco's equity interest in BI-PIN was $39,321 on December 31, 2016, which is reported
as an investment in joint ventures in the government-wide statement of net position. The change in
equity is reflected in the government-wide statement of activities under Public Safety. The City does
not anticipate any income distributions from BI-PIN since charges are assessed only to recover
anticipated expenses.
Complete separate financial statements for BI-PIN may be obtained at the City of Kennewick, 210
W. 6th Ave., Kennewick, Washington, 99336.
B. Metro Drug Forfeiture Fund
The Metropolitan Controlled Substance Enforcement Group (Metro) was established prior to 1987,
when an Interlocal Agreement was entered into by six participating municipal corporations, 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 Chiefs of Police
from the cities and the Sheriffs from the counties administers daily activity.
Effective July 1, 2009, the City of Kennewick assumed responsibility for the operation of Metro. As
the Operating Jurisdiction, Kennewick provides accounting services for the operation of Metro.
The City of Pasco's equity interest in Metro was $41,726 on June 30, 2016, which is reported as an
investment in joint ventures in the government-wide statement of net position. The change in equity
is reflected in the government-wide statement of activities under Public Safety. The City does not
anticipate any income distributions from Metro.
Complete separate financial statements for Metro may be obtained at the City of Kennewick, 210 West Sixth
Avenue, 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 (ACA). The ACA was established to
provide animal control and sheltering services. ACA is served by an Executive Committee
composed of the City Manager, or designee, of each of the cities.
In 2005, the City of Pasco was designated as the Operation Jurisdiction for the ACA. As the
Operating Jurisdiction, the City provides all necessary support services for the operation such as
accounting, contract administration and risk management.
Complete separate financial statements for ACA may be obtained from the City of Pasco, P.O. Box
293, Pasco, Washington 99301.
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NOTE 10: RELATED PARTIES/ORGANIZATIONS
Pasco Public Facility District
Pursuant to RCW 35.57 (the “City PFD Act”) the Pasco Public Facilities District was formed and
created by Ordinance No. 3558 on July 15, 2002, coextensive with the boundaries of the City, with
the powers and authority set forth in the City PFD Act. The District was established for the purpose
of acquiring, constructing, owning, remodeling, maintaining, equipping, re-equipping, repairing,
financing, operating one or more Regional Centers, as defined by the RCW 35.57.020 and/or
participating with any other qualified public facilities district in a cooperative and joint
development of a Regional Center in the Tri-Cities area by interlocal agreement.
The members of the board of directors of the District (the “PFD Board”) shall be selected and
appointed by the Council, as required by the RCW. The PFD Board consisted of five members.
Three of the members will be appointed based on recommendations from local organizations. The
members serve four-year terms. The Council may, by resolution, remove a member for any reason.
Vacancies will be filled by appointment by the Council.
All corporate powers of the District will be exercised by or under the authority of the PFD Board;
and the business, property and affairs of the District shall be managed under the direction of the
PFD Board, except as may be otherwise provided for by law or in its Charter.
Complete separate financial statements for the District may be obtained from the City of Pasco,
P.O. Box 293, Pasco, WA 99301.
Downtown Pasco Development Authority
Pursuant to RCW 35.21, the Downtown Pasco Development Authority was formed and created by
Ordinance No. 3985 (the DPDA Act) on December 20, 2010, coextensive with the boundaries of
the City, with the powers and authority set forth in the City DPDA Act. The Authority was created
to administer and execute Federal grants or programs; to receive and administer private
funds, goods or services for any lawful public service; and to perform any lawful public
purpose or public function to provide for the revitalization and enhancement of the
downtown Pasco area.
The members of the board of directors of the Authority (the “DPDA Board”) are selected and
appointed by the Mayor of the City of Pasco, subject to confirmation by the City Council. The
DPDA Board consists of nine members. Five of the members are representative of for-profit
business or property owners within the downtown area. At least two members are representative
of the banking and/or real estate profession, and at least two members are representatives of
business or corporate management. The members serve four-year terms. The Council may, by
resolution, remove a member for any reason. Vacancies will be filled by appointment by the
Mayor, subject to confirmation by the City Council.
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All corporate powers of the Authority will be exercised by or under the authority of the DPDA
Board; and the business, property and affairs of the Authority shall be managed under the direction
of the DPDA Board, except as may be otherwise provided by law or in its Charter.
In 2016, the City expended $144,100 in subsidies and pass-through grants to the DPDA. As part
of its charter, the DPDA was granted the right to receive the revenues generated by the Farmers’
Market and the Specialty Kitchen program. The activity from those two programs are not reflected
in the amount noted above.
Financial statements for the Authority may be obtained from the Downtown Pasco Development
Authority at 720 W. Lewis Street, Suite 131, Pasco, WA 99301.
Trade, Recreation, Agricultural Center
In 1994 the City entered into an agreement with Franklin County for the Trade, Recreation, and
Agricultural Center (TRAC). The City and Franklin County share in the costs of operating and
covering TRAC’s debt service. Franklin County handles all operating decisions and financial
reporting for TRAC.
The City accounts for its portion of TRAC activity in the TRAC Special Revenue Fund. For
calendar year 2016, the City of Pasco paid Franklin County $273,948 for operating expenditures.
Additionally, in 2014 the City provided $100,000 to the County to assist with TRAC’s cash flows.
This will be returned to the City in 2026, when the existing agreement lapses. It is classified on
the balance sheet as a non-current asset: Due from Other Government. As of December 31, 2016,
the TRAC Fund had a fund balance of $210,547.
Complete financial statements for TRAC may be obtained from Franklin County, 1016 N. 4th
Avenue, Pasco, Washington.
Housing Authority of the City of Pasco and Franklin County
The Housing Authority of the City of Pasco and Franklin County was formed and created by
Ordinance No. 2299 on September 8, 1981, in order to pursue the rehabilitation and redevelopment
of blighted areas containing unsanitary or unsafe habitations located within the City of Pasco and
Franklin County. Its formation empowered the joint housing authority to exercise all rights referred
to under RCW 35.82 “Housing Authority Law.”
Three of the five Authority board members are appointed by the City Council.
During 2016, the Authority received $1,937 in pass-through grants administered by the City. In
2015, the City and the Authority entered into an agreement which will result in Payment in Lieu
of Taxes (PILOT) to the City starting in 2015 in order to defray the cost of the City providing
essential local public services.
Financial statements for the Authority may be obtained from the Housing Authority of the City of
Pasco and Franklin County, 2505 W. Lewis Street, Pasco, WA 99301.
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NOTE 11: JOINTLY GOVERNED ORGANIZATIONS:
Tri-Cities Regional Public Facilities District
Pursuant to RCW 35.57 the Tri-Cities Regional Public Facilities District was formed jointly by
the Cities of Pasco, Kennewick, and Richland. The District was established for the purpose of
acquiring, constructing, owning, remodeling, maintaining, equipping, re-equipping, repairing,
financing, operating one or more Regional Centers, as defined by the RCW 35.57.020 and/or
participating with any other qualified public facilities districts in a cooperative and joint
development of a Regional Center in the Tri-Cities area, by interlocal agreement.
The District is governed by a nine-member board, with three members representing each city.
Each member must either be a member of the City Council or the Public Facilities District of the
representative city.
Franklin County Emergency Management
Franklin County Emergency Management (FCEM) is a political subdivision of Franklin County
and its municipalities. The FCEM is responsible for coordinating and establishing emergency
response plans to prepare Franklin County for emergencies involving the following: Energy
Northwest; the Hanford Nuclear Reservation; the Pasco Airport; and all Homeland Security,
natural and man-made disasters
FCEM is governed by a seven-member board, with two County Commissioners, one City Manager
or designee from each of the following cities: Connell, Kahlotus, and Mesa. The City of Pasco
has two representatives on the board due to its population base.
Benton-Franklin Council of Governments
The Benton-Franklin Council of Governments (BFCG) is a voluntary association of the units of
local government, whose purpose is to facilitate a cooperative approach to regional problem
solving.
Seventeen regular voting members represent the two counties, local governments, including a
Public Utility District, a Transportation District, a Port and the Washington State Department of
Transportation. The City of Pasco has one City Council member as its voting representative on
the Board. In addition to regular voting members, there is one associate member and two affiliate
members.
Benton-Franklin Council of Governments Economic Development District
The Benton-Franklin Council of Governments Economic Development District (EDD) is a
voluntary association of the units of local government and private sector members whose purpose
is to facilitate a cooperative approach to regional economic development.
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The board is comprised of the members of the Benton-Franklin Council of Governments plus nine
representatives from the private sector.
NOTE 12: EMPLOYEE RETIREMENT SYSTEMS AND PENSION PLANS
The City implemented GASB Statement 68, Accounting and Financial Reporting for Pensions in
January 2015. The following table represents the aggregate pension amounts for all State plans
subject to the requirements of the GASB Statement 68, Accounting and Financial Reporting for
Pensions for the year 2016:
State Sponsored Pension Plans
Substantially all the city’s full-time and qualifying part-time employees participate in one of the
following statewide retirement systems administered by the Washington State Department of
Retirement Systems, under cost-sharing, multiple-employer public employee defined benefit and
defined contribution retirement plans. The state Legislature establishes, and amends, laws
pertaining to the creation and administration of all public retirement systems.
The Department of Retirement Systems (DRS), a department within the primary government of
the State of Washington, issues a publicly available 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 98540-8380
Or the DRS CAFR may be downloaded from the DRS website at www.drs.wa.gov.
Public Employees’ Retirement System (PERS)
PERS members include elected officials; state employees; employees of the Supreme, Appeals
and Superior Courts; employees of the legislature; employees of district and municipal courts;
employees of local governments; and higher education employees not participating in higher
education retirement programs. PERS is comprised of three separate pension plans for
membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined
benefit plan with a defined contribution component.
Pension liabilities (11,456,944)$
Pension assets 3,016,107
Deferred outflows of resources 3,837,803
Deferred inflows of resources (477,104)
Pension expense/expenditures (550,832)$
Aggregate Pension Amounts - All Plans
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PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are
determined as two percent of the member’s average final compensation (AFC) times the member’s
years of service. The AFC is the average of the member’s 24 highest consecutive service months.
Members are eligible for retirement from active status at any age with at least 30 years of service,
at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members
retiring from active status prior to the age of 65 may receive actuarially reduced benefits.
Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other
benefits include duty and non-duty disability payments, an optional cost-of-living adjustment
(COLA), and a one-time duty-related death benefit, if found eligible by the Department of Labor
and Industries. PERS 1 members were vested after the completion of five years of eligible service.
The plan was closed to new entrants on September 30, 1977.
Contributions
The PERS Plan 1, member contribution rate is established by State statute at 6 percent. The
employer contribution rate is developed by the Office of the State Actuary and includes an
administrative expense component that is currently set at 0.18 percent. Each biennium, the state
Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required
contribution rates (expressed as a percentage of covered payroll) for 2016 were as follows:
* For employees participating in JBM, the contribution rate was 12.26%
The city’s actual contributions to the plan were $11,467 for the year ended December 31, 2016.
PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are
determined as two percent of the member’s average final compensation (AFC) times the member’s
years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the
member’s 60 highest-paid consecutive service months. There is no cap on years of service credit.
Members are eligible for retirement with a full benefit at 65 with at least five years of service
credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who
have at least 20 years of service credit and are 55 years of age or older, are eligible for early
retirement with a benefit that is reduced by a factor that varies according to age for each year
before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at
least 55 years old can retire under one of two provisions:
With a benefit that is reduced by three percent for each year before age 65; or
PERS Plan 1
Actual Contribution Rates Employer Employee*
PERS Plan 1 6.23% 6.00%
PERS Plan1 UAAL 4.77% 6.00%
Administrative Fee 0.18%
Total 11.18% 12.00%
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With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter
return-to-work rules.
PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting
a reduction of five 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 credit. PERS Plan 2/3
retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other
PERS Plan 2/3 benefits include duty and non-duty disability payments, a cost-of-living allowance
(based on the CPI), capped at three percent annually and a one-time duty related death benefit, if
found eligible by the Department of Labor and Industries. PERS 2 members are vested after
completing five years of eligible service. Plan 3 members are vested in the defined benefit portion
of their plan after ten years of service; or after five years of service if 12 months of that service are
earned after age 44.
PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and
investment earnings on those contributions. PERS Plan 3 members choose their contribution rate
upon joining membership and have a chance to change rates upon changing employers. As
established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent
and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined
contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution
portion of their plan.
Contributions
The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the
State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer
rates include a component to address the PERS Plan 1 UAAL and an administrative expense that
is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2
employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3
required contribution rates (expressed as a percentage of covered payroll) for 2016 were as follows:
* For employees participating in JBM, the contribution rate was 15.30%
The city’s actual PERS plan contributions were $567,012 to PERS Plan 1 and $739,983 to PERS
Plan 2/3 for the year ended December 31, 2016.
PERS Plan 2/3
Actual Contribution Rates Employer 2/3 Employee 2*
PERS Plan 2/3 6.23% 6.12%
PERS Plan1 UAAL 4.77%
Employee PERS Plan 3 Varies
Administrative Fee 0.18%
Total 11.18% 6.12%
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Law Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF)
LEOFF membership includes all full-time, fully compensated, local law enforcement
commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians.
LEOFF is comprised of two separate defined benefit plans.
LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are
determined per year of service calculated as a percent of final average salary (FAS) as follows:
20+ years of service – 2.0% of FAS
10-19 years of service – 1.5% of FAS
5-9 years of service – 1% of FAS
The FAS is the basic monthly salary received at the time of retirement, provided a member has
held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the
average of the highest consecutive 24 months’ salary within the last ten years of service. Members
are eligible for retirement with five years of service at the age of 50. Other benefits include duty
and non-duty disability payments, a cost-of living adjustment (COLA), and a one-time duty-related
death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members
were vested after the completion of five years of eligible service. The plan was closed to new
entrants on September 30, 1977.
Contributions
Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as
long as the plan remains fully funded. The LEOFF Plan 1 had no required employer or employee
contributions for fiscal year 2015. Employers paid only the administrative expense of 0.18 percent
of covered payroll.
LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are
determined as two percent of the final average salary (FAS) per year of service (the FAS is based
on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at
53 with at least five years of service credit. Members who retire prior to the age of 53 receive
reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is
three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each
year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice
of a survivor benefit. Other benefits include duty and non-duty disability payments, a cost-of-
living allowance (based on the CPI), capped at three percent annually and a one-time duty-related
death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are
vested after the completion of five years of eligible service.
Contributions
The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the
State Actuary to fully fund Plan 2. The employer rate included an administrative expense
component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level
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adopted by the LEOFF Plan 2 Retirement Board. The LEOFF Plan 2 required contribution rates
(expressed as a percentage of covered payroll) for 2016 were as follows:
The city’s actual contributions to the plan were $637,436 for the year ended December 31, 2016.
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 the state fiscal year ending June 30, 2016, the state contributed
$60,375,158 to LEOFF Plan 2. The amount recognized by the City as its proportionate share of
this amount is $399,128.
Actuarial Assumptions
The total pension liability (TPL) for each of the DRS plans was determined using the most recent
actuarial valuation completed in 2016 with a valuation date of June 30, 2015. The actuarial
assumptions used in the valuation were based on the results of the Office of the State Actuary’s
(OSA) 2007-2012 Experience Study.
Additional assumptions for subsequent events and law changes are current as of the 2015 actuarial
valuation report. The TPL was calculated as of the valuation date and rolled forward to the
measurement date of June 30, 2016. Plan liabilities were rolled forward from June 30, 2015, to
June 30, 2016, reflecting each plan’s normal cost (using the entry-age cost method), assumed
interest and actual benefit payments.
Inflation: 3% total economic inflation; 3.75% salary inflation
Salary increases: In addition to the base 3.75% salary inflation assumption, salaries are
also expected to grow by promotions and longevity.
Investment rate of return: 7.5%
Mortality rates were based on the RP-2000 report’s Combined Healthy Table and Combined
Disabled Table, published by the Society of Actuaries. The OSA applied offsets to the base table
and recognized future improvements in mortality by projecting the mortality rates using 100
percent Scale BB. Mortality rates are applied on a generational basis; meaning, each member is
assumed to receive additional mortality improvements in each future year throughout his or her
lifetime.
LEOFF Plan 2
Actual Contribution Rates Employer Employee
State and Local Governments 5.05% 8.41%
Administrative Fee 0.18%
Total 5.23% 8.41%
Ports and Universities 8.41% 8.41%
Administrative Fee 0.18%
Total 8.59% 8.41%
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There were minor changes in methods and assumptions since the last valuation.
For all systems, except LEOFF Plan 2, the assumed valuation interest rate was lowered
from 7.8% to 7.7%. Assumed administrative factors were updated.
Valuation software was corrected on how the nonduty disability benefits for LEOFF Plan
2 active members is calculated.
New LEOFF Plan 2 benefit definitions were added within the OSA valuation software to
model legislation signed into law during the 2015 legislative session.
Discount Rate
The discount rate used to measure the total pension liability for all DRS plans was 7.5 percent.
To determine that rate, an asset sufficiency test included an assumed 7.7 percent long-term
discount rate to determine funding liabilities for calculating future contribution rate requirements.
(All plans use 7.7 percent except LEOFF 2, which has assumed 7.5 percent). Consistent with the
long-term expected rate of return, a 7.5 percent future investment rate of return on invested assets
was assumed for the test. Contributions from plan members and employers are assumed to
continue being made at contractually required rates (including PERS 2/3 employers, whose rates
include a component for the PERS 1 plan liabilities). Based on these assumptions, the pension
plans’ fiduciary net position was projected to be available to make all projected future benefit
payments of current plan members. Therefore, the long-term expected rate of return of 7.5 percent
was used to determine the total liability.
Long-Term Expected Rate of Return
The long-term expected rate of return on the DRS pension plan investments of 7.5 percent was
determined using a building-block-method. The Washington State Investment Board (WSIB) used
a best estimate of expected future rates of return (expected returns, net of pension plan investment
expense, including inflation) to develop each major asset class. Those expected returns make up
one component of WSIB’s capital market assumptions. The WSIB uses the capital market
assumptions and their target asset allocation to simulate future investment returns at various future
times. The long-term expected rate of return of 7.5 percent approximately equals the median of
the simulated investment returns over a 50-year time horizon.
Estimated Rates of Return by Asset Class
Best estimates of arithmetic real rates of return for each major asset class included in the pension
plan’s target asset allocation as of June 30, 2016, are summarized in the table below. The inflation
component used to create the table is 2.2 percent and represents the WSIB’s most recent long-term
estimate of broad economic inflation.
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Sensitivity of NPL
The table below presents the city’s proportionate share of the net pension liability calculated using
the discount rate of 7.5 percent, as well as what the city’s proportionate share of the net pension
liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.5
percent) or 1-percentage point higher (8.5 percent) than the current rate.
Pension Plan Fiduciary Net Position
Detailed information about the State’s pension plans’ fiduciary net position is available in the
separately issued DRS financial report.
Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and
Deferred Inflows of Resources Related to Pensions
At June 30, 2016, the city reported a total pension liability of $11,456,944 and a net pension (asset)
of $(3,016,107) for its proportionate share of the net pension liabilities (assets). The table below
details these amount by plan:
Asset Class Target Allocation
% Long-Term Expected Real Rate
of Return Arithmetic
Fixed Income 20%1.70%
Tangible Assets 5%4.40%
Real Estate 15%5.80%
Global Equity 37%6.60%
Private Equity 23%9.60%
100%
1% Decrease Current Rate Discount 1% Increase
6.50% 7.50% 8.50%
PERS Plan 1 6,367,577$ 5,280,354$ 4,344,733$
PERS Plan 2/3 11,372,212 6,176,589 (3,215,271)
LEOFF Plan 1 (408,997) (688,499) (997,411)
LEOFF Plan 2 6,527,254$ (2,327,608)$ (9,001,602)$
Liability or (Asset)
PERS 1 5,280,355$
PERS 2/3 6,176,589
LEOFF 1 (688,499)
LEOFF 2 (2,327,608)$
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The amount of the asset reported above for LEOFF Plan 2 reflects a reduction for State pension
support provided to the city. The amount recognized by the city as its proportionate share of the
net pension liability/(asset), the related State support, and the total portion of the net pension
liability/(asset) that was associated with the city were as follows:
At June 30, the city’s proportionate share of the collective net pension liabilities was as follows:
Employer contribution transmittals received and processed by the DRS for the fiscal year ended
June 30 are used as the basis for determining each employer’s proportionate share of the collective
pension amounts reported by the DRS in the Schedules of Employer and Non-employer Allocations
for all plans except LEOFF 1.
LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to
LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2016.
Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal
year 2016, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions
and all other employers contributed the remaining 12.88 percent of employer contributions.
LEOFF 1 is fully funded and no further employer contributions have been required since June
2000. If the plan becomes underfunded, funding of the remaining liability will require new
legislation. The allocation method the plan chose reflects the projected long-term contribution
effort based on historical data.
In fiscal year 2016, the state of Washington contributed 39.46 percent of LEOFF 2 employer
contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.54
percent of employer contributions.
The collective net pension liability (asset) was measured as of June 30, 2016, and the actuarial
valuation date on which the total pension liability (asset) is based was as of June 30, 2015, with
update procedures used to roll forward the total pension liability to the measurement date.
LEOFF 1 Asset LEOFF 2 Asset
Employer's proportionate share (688,499)$ (2,327,608)$
State's proportionate share of the
net pension asset associated with
the employer (4,656,990) (1,517,431)
Total (5,345,489)$ (3,845,039)$
Proportionate Proportionate Change in
Plan Share 6/30/15 Share 6/30/16 Proportion
PERS 1 0.102321% 0.098322% ‐0.003999%
PERS 2/3 0.125949% 0.122675% ‐0.003274%
LEOFF 1 0.067488% 0.066826% ‐0.000662%
LEOFF 2 0.405844% 0.400187% ‐0.005657%
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Pension Expense
For the year ended December 31, 2016, the city recognized pension expense as follows:
Deferred Outflows of Resources and Deferred Inflows of Resources
At December 31, 2016, the city reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
PERS 1 (791,939)$
PERS 2 1,305,394
LEOFF 1 (82,418)
LEOFF 2 119,795
TOTAL 550,832$
Pension Expense 2016
Deferred Outflows Deferred Inflows
of Resources of Resources
-$ -$
132,951 -
-
302,010
TOTAL 434,961$ -$
PERS 1
Differences between expected and actual
experience
Net difference between projected and actual
investment earnings on pension plan
investments
Changes of assumptions
Changes in proportion and differences between
contributions and proportionate share of
Contributions subsequent to the measurement
date
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Deferred Outflows Deferred Inflows
of Resources of Resources
328,899.04$ (203,899.34)$
755,836 -
63,840 -
260,903 (103,304)
388,272
TOTAL 1,797,750$ (307,204)$
PERS 2/3
Differences between expected and actual
experience
Net difference between projected and actual
investment earnings on pension plan
investments
Changes of assumptions
Changes in proportion and differences between
contributions and proportionate share of
contributions
Contributions subsequent to the measurement
date
Deferred Outflows Deferred Inflows
of Resources of Resources
-$
69,985 -
- -
TOTAL 69,985$ -$
LEOFF 1
Differences between expected and actual
experience
Net difference between projected and actual
investment earnings on pension plan
investments
Changes of assumptions
Changes in proportion and differences between
contributions and proportionate share of
contributions
Contributions subsequent to the measurement
date
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Deferred outflows of resources related to pensions resulting from the city’s contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability
in the year ended December 31, 2017. Other amounts reported as deferred outflows and deferred
inflows of resources related to pensions will be recognized in pension expense as follows:
Deferred Outflows Deferred Inflows
of Resources of Resources
318,945.04$ -$
836,403 -
8,776 -
38,142 ($169,900)
332,841
TOTAL 1,535,107$ (169,900)$
LEOFF 2
Differences between expected and actual
experience
Net difference between projected and actual
investment earnings on pension plan
investments
Changes of assumptions
Changes in proportion and differences between
contributions and proportionate share of
contributions
Contributions subsequent to the measurement
date
Deferred Outflows Deferred Inflows
of Resources of Resources
647,844.07$ (203,899.34)$
1,795,175 -
72,616 -
299,045 ($273,204)
1,023,123
TOTAL 3,837,803$ (477,104)$
Contributions subsequent to the measurement
date
TOTAL DEFERRED OUTFLOWS
AND INFLOWS FOR ALL PLANS
Differences between expected and actual
experience
Net difference between projected and actual
investment earnings on pension plan
investments
Changes of assumptions
Changes in proportion and differences between
contributions and proportionate share of
contributions
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Firemen's Pension
The following table represents the aggregate pension amounts for the Firemen’s’ Pension
Fund, subject to the requirements of GASB Statement 68 for the year 2016.
Plan Description
Plan Administration: The Firemen’s’ Pension Fund (FPF) is administered by the City of Pasco.
The plan is a single-employer defined benefit pension plan that provides pensions for
firefighters that were hired prior to 1970.
The municipal firefighters' pension board consists of the following five members, ex officio,
the mayor, or in a city of the first class, the mayor or a designated representative who shall be
an elected official of the city, who shall be chairperson of the board, the city comptroller or
clerk, the chairperson of finance of the city council, or if there is no chairperson of finance, the
city treasurer, and in addition, two regularly employed or retired firefighters elected by secret
ballot of those employed and retired firefighters who are subject to the jurisdiction of the board.
The members to be elected by the firefighters shall be elected annually for a two-year term.
The two firefighters elected as members shall, in turn, select a third eligible member who shall
serve as an alternate in the event of an absence of one of the regularly elected members. In case
a vacancy occurs in the membership of the firefighters or retired members, the members shall
in the same manner elect a successor to serve the unexpired term. The board may select and
appoint a secretary who may, but need not be a member of the board. In case of absence or
inability of the chairperson to act, the board may select a chairperson pro tempore who shall
during such absence or inability to perform the duties and exercise the powers of the
chairperson. A majority of the members of the board shall constitute a quorum and have power
to transact business.
Plan Membership: Plan membership is limited to active members of the Firefighters' Pension
Fund (FPF) as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and
Year Ended 12/31 PERS 1 PERS 2/3 LEOFF 1 LEOFF 2 Total
2017 (32,735) 80,693 (14,462) (44,177) (10,682)
2018 (32,735) 80,693 (14,462) (44,177) (10,682)
2019 122,101 589,124 60,612 658,295 1,430,133
2020 76,320 351,764 38,298 443,007 909,390
2021 - - - 19,418 19,418
Thereafter - - - - -
Net Effect on Future Pension Expense
Pension Liabilities (1,147,676)$
Pension Assets -
Deferred Outflows of Resources 148,836
Deferred Inflows of Resources (88,997)
Pension Expense 1,087,837
Aggregate Pension Amounts -Old Fire Pension
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Firefighters' System (LEOFF) was established. FPF is responsible for paying the pensions of
those members retired prior to March 1, 1970 and for providing the "excess benefit", the excess
of FPF formula benefits over the LEOFF benefits. Therefore, the plan is closed to new
members. At December 31, 2016, FPF membership consisted of the following:
Inactive plan members retired prior to March 1, 1970 and receiving benefits: 0
Inactive plan members retired March 1, 1970 or after and receiving benefits: 11
Active Plan Members: 0
Benefits provided. All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides
retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives
the greater of the benefit payable under the Washington Law Enforcement Officers' and
Firefighters' Retirement System and the benefits available under the provisions of prior law.
Where benefits under the old law exceed those under the new law for any firefighter, the excess
benefits are paid from the FPF of the city employing the member on March 1, 1970.
All members are retired and drawing benefits. Benefit terms provide for cost-of-living
adjustments to each member's retirement benefit. There are two types of increases: escalation
by salary in proportion to the current salary of the rank from which the firefighter retired, or an
increase proportionate to the increase in the Seattle-area CPI, with the change computed
annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least
2% each year. The former applies to firefighters who retired from service after 1969, their
survivors, and to firefighters who retired for duty disability (but not their survivors) after 1969.
The latter applies to all other types of monthly benefits.
Contributions. In 2016 and prior years, the City was eligible to receive a share of the State’s
distribution of the fire insurance premium taxes, subject to providing benefits to covered
members of the Fire Pension Plan. In 2016 the plan received $58,192 from this tax. Pursuant
to the provisions of RCW 41.16.060, the City is allowed to levy up to $0.45 per $1,000 of
assessed valuation to maintain the Fire Pension Fund. Only $0.225 of the levy can be in excess
of the property tax limit pursuant to RCW 84.52.043 and a report from a qualified actuary must
show the property tax is necessary to maintain the fund. The City does not currently levy the
allowable property tax to fund the FPF. In 2017 the state submitted a budget that eliminated
the tax for Cities that did not levy the additional property tax. The City is financially responsible
to fund the plan.
Investments
The Fire Pension Plan does not have an investment policy for investing pension funds. At year
end investments are reported at quoted market price as provided by our broker, US Bank. At
December 31, the Fire Pension Plan had the following investments, reported at fair market
value.
Federal Agency $ 36,469
Mutual Funds $1,929,797
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Rate of Return. For the year ended December 31, 2016, the annual money-weighted rate of
return on pension plan investments, net of pension plan investment expense, was -0.86%. The
money-weighted rate of return expresses investment performance, net of investment expense,
adjusted for the changing amount actually invested.
Actuarial Assumptions: The total pension liability was determined by an actuarial valuation as
of December 31, 2016, using the following actuarial assumptions, applied to all periods
included in the measurement:
Inflation 2.50%
Salary increases 3.00%
Investment rate of return 7.10%
Healthy life mortality rates were based on the RP-2014 mortality table, total dataset, fully
generational projected with Scale MP-2014, set back one year for males and set forward one
year for females. Disabled life mortality rates were based on the RP-2014 mortality table, total
dataset, fully generational projected with Scale MP-2014, set back two years for males and
females.
The long-term expected rate of return on pension plan investments assumption was based on
the nature and mix of current and expected pension plan assets over a period of time
representative of the expected length of time between the first day of service and date of the
last benefit payment.
Discount rate. The discount rate used to measure the total pension liability was 7.10%. The
projection of cash flows used to determine the discount rate assumed City contributions were
equal to the statutorily calculated contribution of state fire insurance premiums for the next 20
years. Based on this assumption, the pension plan's fiduciary net position was projected to be
available to make all projected future benefit payment for current plan members. Therefore,
the long-term expected rate of return on pension plan investments was applied to all periods of
projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate. The net pension liability
of the City, calculated using the discount rate of 7.10%, as well as what the City's net pension
liability would be if it were calculated using a discount rate that is one-percentage-point lower,
6.10%, or one-percentage point higher, 8.10%, than the current rate, follows:
Net Pension Liability 1% Decrease Current Discount Rate 1% Increase
1,282,688$ 1,147,676$ 1,032,812$
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Net Pension Liability
The components of the City’s net pension liability at December 31, 2016 are as follows:
The funded status of the Plan as of December 31, 2016, as well as other required disclosure
information follows:
Healthcare Actuaries performed an actuarial study on January 1, 2016 for this plan. The firm
also completed a roll forward update of the plan’s actuals at year end 2016, which is the date of
the pension liability. This plan does not have a special funding situation.
The plan is closed to new participants and there were no changes of assumptions or benefits in
2016. The City’s fiscal year and the Fire Pension Plan both observe a fiscal year ending
December 31.
Total Pension Liability 1,147,676$
Less Plan Fiduciary Net Position (2,441,144)
Net Pension Liability/(Asset)(1,293,468)$
Plan Fiduciary Net Position as a
Percentage of the Total Pension Liability 212.70%
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability
(a) (b) (a)-(b)
Balances at January 1, 2016 1,185,733$ 2,240,970$ (1,055,237)$
Changes for the year:
Service Cost - - -
Interest 79,996 - 79,996
Differences between expected and
actual experience - - -
Change in assumptions - - -
Contributions- employer/other - 58,193 (58,193)
Contributions- employee - - -
Net investment income - 267,948 (267,948)
Benefit payments, including refunds -
of employee contributions (118,053) (118,053) -
Administrative expense - (7,914) 7,914
Other changes - - -
Net changes (38,057) 200,174 (238,231)
Balances at December 31, 2016 1,147,676$ 2,441,144$ (1,293,468)$
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The schedule of changes in net pension liability and related ratios, schedule of employer
contributions and schedule of investment returns 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 by the City.
Deferred Outflows of Resources and Deferred Inflows of Resources
At December 31, 2016, the city reported deferred outflows of resources and deferred inflows of
resources related to the Fire Pension Plan from the following sources:
Deferred outflows of resources related to pensions resulting from the city’s contributions
subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended December 31, 2017. Other amounts reported as deferred outflows
and deferred inflows of resources related to pensions will be recognized in pension expense as
follows:
The Fire Pension Fund is reported in the City’s CAFR as a Fiduciary Fund. Pension Liability,
Pension Asset, Deferred Inflows and Deferred Outflows are reported in the Government Wide
Statement of Net Position. A copy of the plan statements can be obtained by request at the
following address: City of Pasco 525 N 3rd Ave., Pasco, WA 99301.
Deferred Outflows Deferred Inflows
of Resources of Resources
-$ -$
148,836 (88,997)
- -
- -
- -
TOTAL 148,836$ (88,997)$
Contributions subsequent to the measurement date
Changes in proportion and differences between contributions
and proportionate share of contributions
Firemen's Pension Plan
Difference between expected and actual experience
Net difference between projected and actual investment
earnings on pension plan investments
Changes of assumptions
Year Ended
December 31 Fire Pension Plan
2017 14,960$
2018 14,960
2019 14,960
2020 14,960
2021
Thereafter
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NOTE 13: OTHER POST-EMPLOYMENT BENEFITS
LEOFF 1 – Postemployment Healthcare Plan
In addition to the pension benefits outlined in Note 8, Employee Retirement Systems and Pension
Plans, the City of Pasco provides post-retirement health care benefi ts via a single employer defined
benefit plan in accordance with state statute for retired police officers and firefighters who are
eligible under the Law Enforcement Officers’ and Firefighters’ (LEOFF1) plan retirement system.
Effective December 31, 2010, the City adopted the provisions of GASB Statement No. 45,
Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than
Pensions (GASB No. 45), which requires the City to accrue other postemployment benefits
(OPEB) expense related to its postretirement healthcare plan based on a computed annual required
contribution (ARC) that includes the current period's service cost and an amount to amortize
unfunded actuarial accrued liabilities. Instead of recording expense on a "pay-as-you-go" basis,
the City, under GASB No. 45, has recorded a liability of $4,086,203 for the difference between
the actuarially calculated ARC and the estimated contributions made since the adoption of GASB
No. 45. This liability is included in other noncurrent liabilities in the city wide statement of net
position. The effect of GASB No. 45 for the current fiscal year was to decrease the City's excess
of revenue over expenses for the year ended December 31, 2016 by approximately $755,119.
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.
Summary of Significant Accounting Policies: The LEOFF 1 OPEB plan is accounted for using a
modified accrual basis of accounting. Revenues are recognized as soon as they are measureable
and available and expenditures are generally recorded when a liability is incurred except for certain
exceptions like claims and judgements whereby the expenditure is only reported when paid.
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. Retirees are
not required to contribute to the plan.
For the fiscal year ended December 31, 2016, the City contributed $554,588 to the plan for
Healthcare. The City's contribution was entirely to fund 'pay-as-you-go' costs under the Health
Plan and not to prefund benefits. There were no retiree contributions.
Annual OPEB Cost and Net OPEB Obligation: The basis for the City's annual OPEB cost
(expense) is the ARC. The ARC represents a level of funding that, if paid on an ongoing basis, is
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projected to cover the normal cost each year and amortize any unfunded actuarial liabilities. The
following displays the components of the City's annual OPEB cost, the estimated amount
contributed to the Health Plan, and changes in the City's net OPEB obligation to the Health Plan
for the year ended December 31, 2016:
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Health Plan,
and the net OPEB obligation follow:
Funded Status and Funding Progress: The funded status of the Health Plan as of December 31,
2016,
Normal cost -Entry Age Normal Method 16,955$
Amortization of unfunded actuarial accrued liability 1,451,583
(UAAL) ARC 1,468,538
Interest on Net OPEB Obligation 124,916
Adjustment to Annual Required Contribution (ARC)(283,747)
Annual OPEB Cost (expense)1,309,707
Contributions Made (554,588)
Increase in Net OPEB Obligation 755,119
Net OPEB Obligation - beginning of year 3,331,084
Net OPEB Obligation - End of year 4,086,203$
Calculation of Net OPEB Obligation
Fiscal Year
Ended
Annual OPEB
Cost
Employer
Contributions
Percentage of
Annual OPEB
Cost Contributed
Net OPEB
Obligation
12/31/2014 1,191,159$ 649,284$ 54.51% 2,523,460$
12/31/2015 1,446,611 638,987 44.17% 3,331,084
12/31/2016 1,309,707 554,588 42.34% 4,086,203
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Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and healthcare cost trend. Actuarially
determined amounts are subject to continual revision as actual results are compared with past
expectations and new estimates are made about the future. GASB 45 requires that the schedule of
funding progress, presented as required additional information following the notes to the financial
statements, presents multi-year trend information that shows whether the actuarial value of Health
Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for
benefits.
Actuarial Methods and Assumptions: The basis of projections of benefits for financial reporting
purposes is the substantive plan (the Health Plan as understood by the City and members of the
Health Plan) and includes the types of benefits provided at the time of each valuation and the
historical pattern of sharing of benefit costs between the City and members of the Health Plan to
that point. The actuarial methods and assumptions used include techniques that are designed to
reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
The December 31, 2016 roll forward valuation used the entry age normal actuarial cost method.
The actuarial assumptions included a 3.75% investment rate of return (net of administrative
expenses) and an initial annual healthcare cost trend rate of 8.5% for pre-Medicare expenses, to an
ultimate rate of 3.84% after 61 years. The Medicare trend assumption is 5.5%, to an ultimate rate
of 3.84% after 61 years. The trend for the Excise Tax threshold is 0% until 2020, when a trend rate
of 4.24% is used. The trend for all future years after that year is 3.24%. All trend rates include a
3.0% inflation assumption. The UAAL is amortized as a level dollar amount on an open basis over
15 years.
As of December 31, 2016, the City of Pasco has a total of thirty-one LEOFF 1 members in this
plan. Twenty-nine of those members are retired and two are still active employees.
There is a schedule of funding progress presented as RSI, immediately following the notes to the
financial statements. Trending information regarding plan assets is not available because there are
no assets set aside to fund this plan.
Actuarial Accrued Liabililty (AAL) Entry Age Normal 16,413,817$
Actuarial Value of Plan Assets -
Unfunded Actuarial Accrued Liability (UAAL)16,413,817$
Funded Ratio (actuarial value of plan assets divided by AAL)0.0%
Covered Payroll 225,834
UAAL as a Percentage of Covered Payroll 7268%
Funded Status and Funding Progress
Washington State Auditor's Office
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Fire Pension – Postemployment Healthcare Plan
Effective December 31, 2010, the City adopted the provisions of GASB Statement No. 43,
Financial Reporting for Postemployment Benefits Other Than Pension Plans (GASB No. 43),
which requires the City to accrue other postemployment benefits (OPEB) expense related to its
postretirement healthcare plan based on a computed annual required contribution (ARC) that
includes the current period's service cost and an amount to amortize unfunded actuarial accrued
liabilities. This cumulative reporting of the underfunding of the ARC does not currently apply to
the City’s Fire Pension OPEB Plan because it has been fully funded for several years. The City
anticipates the funds on deposit in the Fire Pension Postemployment Healthcare Plan will be
sufficient to provide medical benefits to all remaining participants. The most current actuary study
shows the plan has a net OPEB Asset of $1,193,257.
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. There are currently
six eligible participants in this plan.
Funding Policy: Funding for Fire Pension 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.
For the fiscal year ended December 31, 2016, the City contributed $0 to the Health Plan. There
were no retiree contributions.
Annual OPEB Cost and Net OPEB Obligation: The basis for the City's annual OPEB cost (expense)
is the ARC. The ARC represents a level of funding that, if paid on an ongoing basis, is projected
to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding
excess) over a period not to exceed ten years. The Actuarial Accrued Liability is defined as the
excess of the present value of an OPEB Fund’s total of future benefits and fund administration
expense over the present value of the future normal cost of those benefits. In essence it is the
amount an actuary anticipates at a certain point in time, will cover all future expenses of a plan.
The current Actuarial Accrued Liability for the Fire Pension OPEB Plan is $1,471,148 and the fund
assets at year end are $2,664,405, resulting in the plan being overfunded by $1,193,257. Because
the plan is fully funded, the table for annual OPEB cost is not applicable and has not been included.:
Funded Status and Funding Progress: The funded status of the Fire Pension OPEB Plan as of
December 31, 2016 is as follows:
Washington State Auditor's Office
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Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future inflation, mortality, and healthcare cost trend. Actuarially determined
amounts are subject to continual revision as actual results are compared with past expectations and
new estimates are made about the future. GASB 43 requires that the schedule of funding progress,
presented as required supplementary information following the notes to the financial statements,
presents multi-year trend information that shows whether the actuarial value of Health Plan assets
is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions: The basis of projections of benefits for financial reporting
purposes is the substantive plan (the Health Plan as understood by the City and members of the
Health Plan) and includes the types of benefits provided at the time of each valuation and the
historical pattern of sharing of benefit costs between the City and members of the Health Plan to
that point. The actuarial methods and assumptions used include techniques that are designed to
reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
The December 31, 2016 roll forward valuation used the entry age normal actuarial cost method.
The actuarial assumptions included a 7.20% investment rate of return (net of administrative
expenses) The Medicare trend assumption is 5.5%, to an ultimate rate of 3.8% after 61 years. The
trend for the Excise Tax threshold is 0% until 2020, when a trend rate of 0.00% is used. The trend
for all future years after that year is 3.24%. All trend rates include a 3.0% inflation assumption.
NOTE 14: CONTINGENCIES AND LITIGATION
The City has recorded in its financial statements all material liabilities, including applicable
estimates for situations that are not yet resolved but where, based on available information,
management believes it is probable that the City will have to make payment. In the opinion of
management, the City's insurance policies and self-insurance reserves are adequate to pay all
material known or pending claims. As discussed in Note 3. F, Long-term Debt, the City is
contingently liable for repayment of debt.
Actuarial Accrued Liabililty (AAL) Entry Age Normal 1,471,148$
Actuarial Value of Plan Assets 2,664,405
Actuarial Accrued Asset (1,193,257)$
Funded Ratio (actuarial value of plan assets divided by AAL) 181.1%
Covered Payroll N/A
UAAL as a Percentage of Covered Payroll 0.00%
Funded Status and Funding Progress
Washington State Auditor's Office
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The City participates in a number of Federal and State assisted programs. These grants are subject
to audit by the grantor or representative. Such audits could result in requests for reimbursement to
grantor agencies for expenditures disallowed under the terms of the grants. However, City
management believes that such disallowances, if any, will be immaterial.
Currently, there is an underground fire in a non-municipal Pasco landfill which closed in
1998. The Washington State Department of Ecology (DOE) is proposing to issue an enforcement
order to parties collectively known as Potentially Liable Persons (PLPs). The City entered into an
“Institutional Control” agreement with the DOE to regulate development and provide for the
conversion of private water wells located down-plume from the site to be abandoned in favor of
using the City’s municipal water system. It is the City’s understanding that, because of its entering
into this agreement, the DOE is excluding the City from being designated as a PLP.
NOTE 15: PRIOR PERIOD CORRECTIONS
General Fund 100 - $11,431
Ambulance Fund 150 - $111,650
Water/Sewer Utility Fund 410 – ($123,081)
All utility billing activity is processed through one software system. Included in this monthly
billing activity are charges related to services supplied by the water, sewer, stormwater, and
ambulance funds. Additionally, there are miscellaneous service charges that benefit the general
fund. During 2016, the activity and account coding of the billing system was analyzed. As a result
of this analysis, the need to recognize outstanding accounts receivable totals in funds other than
the water/sewer utility was revealed. As part of this recognition, the outstanding receivables at the
end of 2015 were recognized in both the general and ambulance funds.
LID Fund 246 - $40,301
In 2016 a prior period adjustment was done in fund 246 to account for an inter-fund loan payable
that should have been reported in the fund. In 2011 the Pension Trust fund had loaned fund 246
funds for LID assessments and the fund had been making payments each year but no liability had
been reported for the loan. The Trust Fund reported the loan as a “Note Receivable”, which was
reclassified to an inter-fund loan in 2016.
Firemen’s Pension Trust Fund 610 - $1,185,733
The City of Pasco adopted GASB 68 in 2015 which mandated changes in pension accounting and
financial statement presentation. 2015 beginning balances were restated to include the addition of
all pension components. The Firemen’s Pension Trust Fund recorded a prior period correction in
2015 to restate beginning balances and record the pension liability. The liability for the trust fund
should have been recorded in the government wide statements and not the trust fund. A prior period
adjustment was done in 2016 to remove the $1,185,733 liability from the trust fund.
NOTE 16: SUBSEQUENT EVENT
There are no subsequent events to report.
Washington State Auditor's Office
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Required Supplementary Information
Firemen’s OPEB Fund
Although a schedule of contributions from the employer and other contributing entities is a GASB
requirement for the Firemen’s OPEB Fund, we did not include one because the plan is fully funded
and there have been no contributions for the past five years.
A schedule of funding progress for the Firemen’s OPEB Fund is included below. The plan is
fully funded and all participants are retired.
Required Supplementary Information
LEOFF 1 OPEB Fund
Valuation Date
Actuarial
Asset Value
Actuarial
Accrued
Liabilities
Unfunded
Actuarial
Accrued
Liabilities
(UAAL) Funded Ratio
Covered
Payroll
UAAL as a
Percentage of
Covered Payroll
12/31/2016 2,664,405$ 1,471,148$ (1,193,257)$ 181.11% N/A N/A
12/31/2015 2,538,093 1,420,555 (1,117,538) 178.67% N/A N/A
12/31/2014 2,650,369 1,988,000 (662,369) 133.32% N/A N/A
The following is a schedule of contributions from the employer for the LEOFF 1 OPEB Plan
Fiscal Year Ending
Actual
Employer
Contributions
Total
Contributions
Annual Required
Contribution
(ARC)
Percentage of
ARC
Contributed
12/31/2016 554,588$ 554,588$ 1,468,538$ 37.76%
12/31/2015 638,987 638,987 1,579,238 40.46%
12/31/2014 649,284 649,284 1,290,122 50.33%
Valuation Date
Actuarial
Asset Value
Actuarial
Accrued
Liabilities
Unfunded
Actuarial
Accrued
Liabilities
(UAAL) Funded Ratio
Covered
Payroll
UAAL as a
Percentage of
Covered Payroll
12/31/2016 -$ 16,413,817$ 16,413,817$ 0.00% 225,834$ 7268%
12/31/2015 - 19,361,802 19,361,802 0.00% 218,161 8875%
12/31/2014 - 19,880,000 19,880,000 0.00% 219,984 9037%
Washington State Auditor's Office
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PERS PLAN 1 2014 2015 2016
Employer's percentage of the net pension liability 0.097647% 0.102321% 0.098322%
Employer's proportionate share of the collective net
pension liability 4,919,014$ 5,352,340$ 5,280,355$
Employer's covered employee payroll 342,721$ 163,430$ 104,245$
Employer's proportionate share of the net pension
liability as a percentage of covered employee payroll 1435.28% 3275.00% 5065.33%
Plan fiduciary net position as a percentage of the total 61.19% 59.10% 57.03%
pension liability
PERS PLAN 2/3
Employer's percentage of the net pension liability 0.114462% 0.125949% 0.122675%
Employer's proportionate share of the collective net
pension liability 2,313,690$ 4,500,230$ 6,176,589$
Employer's covered employee payroll 10,474,619$ 11,212,390$ 11,878,130$
Employer's proportionate share of the net pension
liability as a percentage of covered employee payroll 22.09% 40.14% 52.00%
Plan fiduciary net position as a percentage of the total 93.29% 89.20% 85.82%
pension liability
LEOFF 1
Employer's percentage of the net pension asset 0.067804% 0.067488% 0.098322%
Employer's proportionate share of the collective net
pension asset (822,321)$ (813,380)$ (688,499)$
Employer's covered employee payroll 219,984$ 207,267$ 226,769$
Employer's proportionate share of the net pension
asset as a percentage of covered employee payroll -373.81% -392.43% -303.61%
Plan fiduciary net position as a percentage of the total 126.91%127.36% 123.74%
pension asset
LEOFF 2
Employer's percentage of the net pension asset 0.365709% 0.405844% 0.400187%
Employer's proportionate share of the collective net
pension asset (4,853,116)$ (4,171,265)$ (2,327,608)$
State's proportionate share of the net pension asset
associated with the employer (3,193,777) (2,758,046) (1,517,431)
TOTAL (8,046,893)$ (6,929,311)$ (3,845,039)$
Employer's covered employee payroll 10,497,629$ 12,154,638$ 12,622,501$
Employer's proportionate share of the net pension
asset as a percentage of covered employee payroll -76.65% -57.01%-30.46%
Plan fiduciary net position as a percentage of the total 116.75%111.67% 106.04%
pension asset
State Retirement Plans
Schedule of Proportionate Share of Net Pension Liability
As of June 30
Last 3 Fiscal Years*
Washington State Auditor's Office
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*These schedules will be built prospectively until they contain ten years of data.
PERS PLAN 1 2014 2015 2016
Statutorily or contractually required contributions 31,484$ 16,252$ 10,583$
Contributions in relation to the statutorily or contractually
required contributions (31,484) (16,252) (10,583)
Contribution deficiency (excess)-$ -$ -$
Covered employer payroll 342,721$ 163,430$ 104,245$
Contributions as a percentage of covered employee payroll 9.19% 9.94% 10.15%
PERS PLAN 2/3
Statutorily or contractually required contributions 964,775$ 1,140,430$ 1,327,926$
Contributions in relation to the statutorily or contractually
required contributions (964,775) (1,140,430) (1,327,926)
Contribution deficiency (excess)-$ -$ -$
Covered employer payroll 10,474,619$ 11,212,390$ 11,877,299$
Contributions as a percentage of covered employee payroll 9.21% 10.17% 11.18%
LEOFF 1
Statutorily or contractually required contributions 396$ 373$ 407$
Contributions in relation to the statutorily or contractually
required contributions (396) (373) (407)
Contribution deficiency (excess)-$ -$ -$
Covered employer payroll 219,984$ 207,267$ 225,834$
Contributions as a percentage of covered employee payroll 0.18% 0.18% 0.18%
LEOFF 2
Statutorily or contractually required contributions 549,396$ 635,688$ 660,156$
Contributions in relation to the statutorily or contractually
required contributions (549,396) (635,688) (660,156)
Contribution deficiency (excess)-$ -$ -$
Covered employer payroll 10,497,629$ 12,154,638$ 12,622,501$
Contributions as a percentage of covered employee payroll 5.23% 5.23% 5.23%
Schedule of Employer Contributions
As of December 31
Last 3 Fiscal Years
Washington State Auditor's Office
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GASB 68 requires a disclosure of the changes in Net Pension Liability for the last 10 fiscal years, or as
many years as are available.
2015 2016
Statutorially Determined Contribution 54,506$ 58,193$
Less Contributions Made (54,506) (58,193)
Contribution Deficiency (excess)- -
Covered-Employee Payroll -$ -$
Contributions as a percentage of covered employee payroll n/a n/a
This schedule will be built prospectively until it contains 10 years of data
Notes to Schedule:
Contributions came from State Fire Insurance Premiums.
Schedule of Contributions
Fire Pension Fund
Schedule of Investment Returns - Fire Pension Plan
2014 2015 2016
Annual Money Weighted Rate of Return, Net of
Investment Expense 3.30% -0.86% 12.14%
Washington State Auditor's Office
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Total Pension Liability 2015 2016
Service Cost -$ -$
Interest 82,477 79,996
Changes of benefit terms - -
Differences between expected and actual experience - -
Changes of assumptions - -
Benefit payments, including refunds of employee contributions (1 16,770) (118,053)
Net change in total pension liability (34,293) (38,057)
Total pension liability - beginning 1,220,026 1,185,733
Total pension liability - ending 1,185,733$ 1,147,676$
Plan Fiduciary Net Position
Contributions- employer 54,506$ 58,193$
Contributions - employee - -
Net investment income (19,689) 267,948
Benefit payments, including refunds of employee contributions (1 16,770) (118,053)
Administrative expense (3,398) (4,414)
Other - (3,500)
Net change in plan fiduciary net position (85,351) 200,174
Plan fiduciary net position- beginning 2,326,321 2,240,970
Plan fiduciary net position-ending 2,240,970 2,441,144
City's net pension liability -(1,055,237)$ (1,293,468)$
Plan fiduciary net position as a percentage of the total pension 188.99% 212.70%
Covered employee payroll - -
City's net pension liability as a percentage of covered employe e payroll n/a n/a
Notes to schedule:
Schedule of Changes in the City's Net Pension Liability and Related Ratios
Fire Pension Fund - For Years Ended:
The following assumptions were adopted as of 1/1/2015: discount rate 7.1%, salary increases 3.00%, CPI
2.50%, mortality tables updated to RP-2014 with Scale MP-2014 projections.
Washington State Auditor's Office
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S CHEDULE 16- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended December 31, 2016
From
Grantor/Federal Other Pass- From
Pass-Through Grantor CFDA Identification Through Direct
Program Title Number Number Awards Awards Total Note:
Forest Service,Department of Agriculture
Pass-Through WA State Department of Natural Resources
Cooperative Forestry Assistance 10.664 2016 Tree Inventory grant 15,000 - 15,000 2
Office of Community Planning and Development, Department of Housing & Urban Development
Community Development Block Grant/Entitlement Grant 14.218 B-14-MC-53-009- CDBG 62,803 62,803 3
Community Development Block Grant/Entitlement Grant 14.218 B-15-MC-53-009- CDBG 129,784 129,784 3
Community Development Block Grant/Entitlement Grant 14.218 B-16-MC-53-009- CDBG 297,479 297,479 3
Community Development Block Grant/Entitlement Grant cluster -490,066 490,066
Pass-Through Washington Department of Commerce
Community Development Block Grants/State's program 14.228 08-F6401-014 1,808 - 1,808 3
Pass-Through City of Richland
Home Investment Partnerships Program 14.239 Home Program 279,174 -279,174 3 & 5
Bureau of Justice Assistance, Department of Justice
Bullet Proof Vest Partnership Program 16.607 2016 Bullet Proof Vest 5,638 5,638 2
Pass-Through Washington Department of Commerce
Violence Against Women Formula Grant 16.588 2015-WF-AX-0053 / F15-31103-040 34,697 - 34,697
Pass-Through from METRO Drug Task Force --
Edward Byrne Memorial Justice Assistance 16.738 F15-31440-008 307 -307 2
Criminal Division, Department of Justice
Pass-Through from US Marshalls - -
Equitable Sharing Program 16.922 Equitable Sharing 15,868 - 15,868 6
US Department of Transportation/ Federal Highway Administration
Pass-Through Washington Department of Transportation
Highway Planning and Construction 20.205 STPUL-3515 (007) LA-8059 1,786 - 1,786 2 & 8
Highway Planning and Construction 20.205 STPUS-0397 (008) LA-7866 52,384 - 52,384 2
Highway Planning and Construction 20.205 STPUL-3515(008) LA-8322 49,166 - 49,166 2
Highway Planning and Construction 20.205 HSIP-3551 (004) - LA 8697 75,426 - 75,426 2
Highway Planning and Construction 20.205 STPUL-3515 (006) LA-8060 56,082 - 56,082 2
Highway Planning and Construction 20.205 STPUL-9911(010) LA-8321 121,589 -121,589 2 & 4
Highway Planning and Construction 20.205 STPUL-1823(062) LA 8318 141,484 -141,484 2
Highway Planning and Construction 20.205 STPUL-3522 (001) LA-8117 1,576 - 1,576 2
Total US Dept. of Transportation FHA 499,493 -499,493
US Department of Transportation -National Highway Traffic Safety Administration (NHTSA)
Pass-Through Washington Traffic Safety Commission
State and Community Highway Safety 20.600 2015-2016 Seat Belt Pat rols 493 -493 2
State and Community Highway Safety 20.600 2015-2016 DISTRACTED Driving Pa 767 -767 2
State and Community Highway Safety 20.600 2016-2017 Impaired Driving 1,236 - 1,236 2
State and Community Highway Safety 20.600 G16PTDPTWTSC 19,836 - 19,836 2
State and Community Highway Safety 20.600 2015-2016 Impaired Driving Patrols 378 -378 2
Total CFDA 20.600 22,710 - 22,710 2
State and Community Highway Safety 20.616 2015-2016 WTSC- Flex Funding 3,031 - 3,031 2
State and Community Highway Safety 20.616 2016-2017 Flex Funding 974 -974 2
Total CFDA 20.616 4,005 - 4,005
Total US Dept of Transportation NHTSA 26,715 - 26,715
Aministration for Community Living, 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 ALTC 15 16,487$ -$ 16,487$ 2
Total US Dept of Health & Human Services 16,487 - 16,487
TOTAL FEDERAL AWARDS EXPENDED:889,549$ 495,704$ 1,385,253$
-
The accompanying notes are an integral part of this schedule.
MCAG NO. 0292
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 Expenditures of Federal Awards is prepared on the same basis of accounting as
the City’s financial statements. The City uses a modified accrual basis of accounting for its
governmental funds and full accrual basis of accounting for its proprietary funds.
NOTE 2 – PROGRAM COSTS
The amounts shown as current year expenditures represent only the federal grant portion of the program
costs. Entire program costs, including the City’s portion, are more than shown. Such expenditures are
recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for
State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
NOTE 3 – REVOLVING LOAN – PROGRAM INCOME
The City participates in a Regional Revolving Loan program for economic development which is
operated by Benton Franklin Council of Governments. Under this federal pass-through grant,
repayments to the City are considered program income, and loans of such funds to eligible
recipients are considered expenditures.
The City participates in the Neighborhood Stabilization Program for recovering foreclosed
properties which are rehabilitated and sold as low-income housing. Under this federal pass-through
grant, the sale of low-income homes by the City is considered program income, and the cost of
rehabilitating homes and purchasing properties are considered expenditures.
The City also participates in the Housing and Urban Development HOME Program for low-income
individuals, as part of a regional consortium administered through the City of Richland. The City
is not privy to information on what portion of funds received from the City of Richland are derived
from program income.
NOTE 4 – PRIOR YEAR EXPENDITURES
The amount reported includes $44,030 previously unreported prior year expenditures. This amount
was not billable due to max received on grant award. Grant was amended giving the City
authorization to request previous expenditures.
NOTE 5 – AMOUNTS AWARDED TO SUBRECIPIENTS
The total amount of $279,174 was passed through to sub-recipient City of Richland.
Washington State Auditor's Office
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NOTE 6 –DEPARTMENT OF JUSTICE –EQUITABLE SHARING
The City reports these funds on the Schedule of Expenditures of Federal Awards when program
proceeds are received rather than when expenditures are incurred due to program stipulations.
NOTE 7 – INDIRECT COST RATE
The amount expended includes $0.00 claimed as an indirect cost recovery using an approved indirect cost
rate of 0 percent. The City has elected to use the 10-percent de minimis indirect cost rate allowed under
Uniform Guidance.
NOTE 8– PRIOR YEAR EXPENDITURES
The amount reported includes $1,786 previously unreported prior year expenditures. This amount
was not billable due to max received on grant award. Grant was changed giving the City
authorization to request previous expenditures.
Washington State Auditor's Office
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ABOUT THE STATE A UDITOR’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 to achieve our vision of government tha t works for
citizens, by helping governments work better, cost less, deliver higher value, and earn greater
public trust.
In fulfilling our mission to hold state and local governments accountable for the use of public
resources, we also hold ourselves accountable by continually improving our audit quality and
operational efficiency and developing highly engaged and committed employees.
As an elected agency, the State Auditor's Office has the independence necessary to objectively
perform audits and investigations. Our audits are designed to comply with professional standards
as well as to satisfy the requirements of federal, state, and local laws.
Our audits look at financial information and compliance with state, federal and local laws on the
part of all local governments, including schools, and all state agencies, including institutions of
higher education. In addition, we conduct performance audits of state agencies and local
governments as well as fraud, state whistleblower and citizen hotline investigations.
The results of our work are widely distributed through a variety of reports, which are available on
our website and through our free, electronic subscription service.
We take our role as partners in accountability seriously, and provide training and technical
assistance to governments, and have an extensive quality assurance program.
Contact information for the State Auditor’s Office
Public Records requests PublicRecords@sao.wa.gov
Main telephone (360) 902-0370
Toll-free Citizen Hotline (866) 902-3900
Website www.sao.wa.gov
Washington State Auditor's Office
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