HomeMy WebLinkAboutWA State 2018 Audit
Financial Statements and Federal Single Audit
Report
City of Pasco
For the period January 1, 2018 through December 31, 2018
Published August 5, 2019
Report No. 1024384
Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 Pat.McCarthy@sao.wa.gov
Office of the Washington State Auditor
Pat McCarthy
August 5, 2019
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
TABLE OF CONTENTS
Schedule of Findings and Questioned Costs ................................................................................... 4
Summary Schedule of Prior Audit Findings .................................................................................... 6
Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards..................................................................................................... 7
Independent Auditor's Report on Compliance for Each Major Federal Program and Report on
Internal Control Over Compliance in Accordance With the Uniform Guidance ........................... 9
Independent Auditor's Report on Financial Statements ................................................................ 12
Financial Section ........................................................................................................................... 15
About the State Auditor's Office ................................................................................................... 98
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Office of the Washington State Auditor
SCHEDULE OF FINDINGS AND QUESTIONED COST S
City of Pasco
January 1, 2018 through December 31, 2018
SECTION I – SUMMARY OF AUDITOR’S RESULTS
The results of our audit of the City of Pasco are summarized below in accordance with Title 2 U.S.
Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Financial Statements
We issued an unmodified opinion on the fair presentation of the financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component units and remaining fund information in accordance with accounting
principles generally accepted in the United States of America (GAAP).
Internal Control over Financial Reporting:
Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over financial reporting that we consider to be significant deficiencies.
Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
We noted no instances of noncompliance that were material to the financial statements of the City.
Federal Awards
Internal Control over Major Programs:
Significant Deficiencies: We reported no deficiencies in the design or operation of internal
control over major federal programs that we consider to be significant deficiencies.
Material Weaknesses: We identified no deficiencies that we consider to be material
weaknesses.
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Office of the Washington State Auditor
We issued an unmodified opinion on the City’s compliance with requirements applicable to each
of its major federal programs.
We reported no findings that are required to be disclosed in accordance with 2 CFR 200.516(a).
Identific ation 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
20.205 Highway Planning and Construction Cluster – Highway Planning and
Construction
97.083 Staffing for Adequate Fire and Emergency Response (SAFER)
The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by
the Uniform Guidance, was $750,000.
The City 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.
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Office of the Washington State Auditor
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
City of Pasco
January 1, 2018 through December 31, 2018
This schedule presents the status of findings reported in prior audit periods.
Audit Period:
January 1, 2107 through December 31, 2017
Report Ref. No.:
1022276
Finding Ref. No.:
2017-001
Finding Caption:
The City’s internal controls over reporting of post-employment benefits other than pensions
were inadequate to ensure accurate reporting on the financial statements.
Background:
City Council State and federal agencies and the public rely on the information included in the
financial statements and report to make decisions. City management is responsible for
designing and maintaining internal controls to ensure financial statements are fairly presented
in accordance with generally accepted accounting principles (GAAP and provide reasonable
assurance regarding the reliability of financial reporting. Our audit identified material
weaknesses in internal controls over financial reporting that affected the City’s ability to
produce reliable financial statements Government Auditing Standards requires that the auditor
communicate a material weakness as a finding. Our audit found the City did not correctly
implement the new requirement to report its post-employment benefits other than pensions
causing it to under-report its revenues by about $8 million and omit a prior-period adjustment
of about $8 million.
Status of Corrective Action: (check one)
☒Fully
Corrected
☐Partially
Corrected ☐Not Corrected ☐Finding is considered no
longer valid
Corrective Action Taken:
Finance staff has obtained training on prior period adjustments and has implemented
improvements to the financial statement preparation and improvement process. The City also
purchased a CAFR Preparation software to assist in the proper presentation and reporting.
P.O. Box 293 525 N. Third Ave. Pasco, WA 99301
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Office of the Washington State Auditor
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
January 1, 2018 through December 31, 2018
Mayor and City Council
City of Pasco
Pasco, Washington
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the financial statements of the
governmental activities, the business-type activities, each major fund and the aggregate discretely
presented component units and remaining fund information of the City of Pasco, as of and for the
year ended December 31, 2018, and the related notes to the financial statements, which collectively
comprise the City’s basic financial statements, and have issued our report thereon dated July 30,
2019.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal
control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the City's financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
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Office of the Washington State Auditor
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
July 30, 2019
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Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON COMPLIAN CE FOR
EACH MAJOR FEDERAL P ROGRAM AND REPORT ON
INTERNAL CONTROL OVE R COMPLIANCE IN ACCORD ANCE
WITH THE UNIFORM GUI DANCE
City of Pasco
January 1, 2018 through December 31, 2018
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, 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, 2018. 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
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Office of the Washington State Auditor
referred to above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about the City’s compliance with those
requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. Our audit does not provide a legal determination on the City’s compliance.
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, 2018.
REPORT ON INTERNAL CONTROL OVER COMPLIANCE
Management of the City is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the City’s internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program in order to determine the auditing procedures that are appropriate in the circumstances
for the purpose of expressing an opinion on compliance for each major federal program and to test
and report on internal control over compliance in accordance with 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.
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Office of the Washington State Auditor
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control
that might be material weaknesses or significant deficiencies. We did not identify any deficiencies
in internal control over compliance that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
Purpose of this Report
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of 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
July 30, 2019
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Office of the Washington State Auditor
INDEPENDENT AUDITOR’S REPORT ON
FINANCIAL STATEMENTS
City of Pasco
January 1, 2018 through December 31, 2018
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 units
and remaining fund information of the City of Pasco, as of and for the year ended December 31,
2018, and the related notes to the financial statements, which collectively comprise the City’s basic
financial statements as listed on page 15.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
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Office of the Washington State Auditor
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 units and remaining fund
information of the City of Pasco, as of December 31, 2018, and the respective changes in financial
position and, where applicable, cash flows thereof, and the budgetary comparison for the General
fund, for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis and required supplementary information listed on page 15
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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Office of the Washington State Auditor
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 July 30,
2019 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
July 30, 2019
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Office of the Washington State Auditor
FINANCIAL SECTION
City of Pasco
January 1, 2018 through December 31, 2018
REQUIRED SUPPLEMENTARY INFORMATION
Management’s Discussion and Analysis – 2018
BASIC FINANCIAL STATEMENTS
Statement of Net Position – 2018
Statement of Activities – 2018
Balance Sheet – Governmental Funds – 2018
Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental
Funds – 2018
Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balance of
Governmental Funds to the Statement of Activities – 2018
Statement or Revenues, Expenditures and Changes in Fund Balances – Budget to Actual
–General Fund – 2018
Statement of Net Position – Proprietary Funds – 2018
Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds
–2018
Statement of Cash Flows – Proprietary Funds – 2018
Statement of Net Position – Fiduciary Funds – 2018
Statement of Changes in Net Position – Fiduciary Funds – 2018
Notes to the Financial Statements – 2018
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in Net OPEB Liability and Related Ratios – Old Fire OPEB – 2018
Schedule of Investment Returns – Old Fire OPEB – 2018
Schedule of City Contributions – LEOFF 1 OPEB Fund – 2018
Schedule of Changes in the Net OPEB Liability – LEOFF 1 OPEB Fund – 2018
Schedule of Changes in the City’s Net Pension Liability and Related Ratios – Old Fire
Pension Fund – 2018
Schedule of Contributions – Fire Pension Fund – 2018
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Office of the Washington State Auditor
Schedule of Investment Returns – Fire Pension Plan – 2018
Schedule of Proportionate Share of Net Pension Liability (Asset) – PERS 1, PERS 2/3,
LEOFF 1, LEOFF 2 – 2018
Schedule of Employer Contributions – PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 – 2018
SUPPLEMENTARY AND OTHER INFORMATION
Schedule of Expenditures of Federal Awards – 2018
Notes to the Schedule of Expenditures of Federal Awards – 2018
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MANAGEMENT’S 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, 2018. 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 millions 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 $455.80. Of this amount, $71.59
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 $41.26. Approximately 71% of the
increase in net position is due to increases in governmental-type activities and 29% is due
to business-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 $40.43, an increase of $3.96 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 $15.36, which also represents 33% of total General Fund
expenditures. There was an excess of revenues over expenditures of $2.76; transfers out
totaling $0.92. Of the transfers out, $0.20 was for one-time expenditures (to cover
construction project capital spending) and $0.72 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 26-27 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 2018, 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 28 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 32.
Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties
outside the government. Generally 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. However, with the implementation of GASB Statement 68, Accounting
and Financial Reporting for Pensions, and GASB Statement 74, Financial Reporting For
Postemployment Benefit Plans Other Than Pension Plans, the City is required to include net
Pension and OPEB Liabilities and Assets and the related Deferred Inflows and Outflows of
Resources of the Fiduciary Funds in the Government Wide Statements. 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 35 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 37.
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 an d deferred inflows exceeded liabilities
and deferred outflows by $455.80 at the close of the most recent fiscal year. The largest portion
of the City of Pasco’s net position $384.21 (84%) 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
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resources, since the capital assets themselves cannot be used to liquidate these liabilities. 5%
($21.23) of the City’s net position represents resources that are subject to external restrictions on
how they may be used. The remaining $50.36 of unrestricted net position (11%) 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 $41.26, during the
current fiscal year. Majority of the increase in the City’s net position was attributable to capital
grants and contributions received from developers in the form of donated infrastructure related
to residential and commercial development and state and federal grants received for street
construction and improvement projects, and, water and sewer infrastructure improvements.
Increase in fund balance as the City is gearing up for significant capital projects in transportation,
parks, and utilities.
2018 2017 2018 2017 2018 2017
NonCapital assets 77.52$ 63.33$ 48.07$ 38.60$ 125.59$ 101.93
Capital assets 245.73 227.02 188.32 187.67 434.05 414.69
Total assets 323.25 290.35 236.39 226.27 559.64 516.62
Deferred Outflows 2.77 1.95 0.33 0.43 3.10 2.38
Current liabilities 13.88 8.94 7.04 6.34 20.92 15.28
Noncurrent liabilities 29.63 32.91 49.52 52.21 79.15 85.12
Total liab ilities 43.51 41.85 56.56 58.55 100.07 100.40
Deferred Inflows 6.20 3.62 0.67 0.43 6.87 4.05
Net position:
Investment in capital assets 236.87 217.06 147.34 141.37 384.21 358.43
Restricted 21.23 18.10 - - 21.23 18.10
Committed 3.90 5.37 - 3.90 5.37
Unrestricted 14.31 6.30 32.15 26.34 46.46 32.64
Total net position 276.31$ 246.83$ 179.49$ 167.71$ 455.80$ 414.54$
Governmental Activities Business-Type Activities
City of Pasco's Net Position (in millions)
Total Primary Government
Page 20
Governmental Activities. Governmental activities increased the City of Pasco’s net position by
$29.48. The increase is attributable to robust national and local economy leading. Growth in
housing increased the donated asset to the City in form of the right of ways, roads, and other
infrastructure by $13.60, an increase of 125%. Additionally, robust growth has led to 2.7%
increase in taxes, and 14.4% increase in permits over prior year. The City also instituted new cost
allocation model and business license model, increasing revenue for General fund. The City has
made concerted effort to sell properties where it benefits its Citizens, accounting for increase in
net position. Increase in net position ensures City’s capacity to ensure same service level
agreement during difficult economic times when tax and permit revenues sharply decline.
Tax revenues for the City have been increasing at a steady race, reflecting a healthy and growing
economy; however, the rate of growth has slowed in 2018. Sales tax revenue increased by 5.5%
compared to 6.3% the prior year, and Real Estate Excise tax increased by 4.3% compared to 21%
in 2017. Property sales tax revenue that increased by 4.9% compared to 0.4% the prior year,
Similarly, B&O taxes decreased by 3.9%, mainly due warmer winter in 2018. Overall, taxes
increased by 2.7% in 2018 versus 8.8% in the same period.
2018 2017 2018 2017 2018 2017
Revenues
Program revenues:
Charges for services 27.17$ 24.79$ 28.17$ 25.82$ 55.34$ 50.61$
Operating grants & contributions 1.61 1.04 1.05 0.07 2.66 1.11
Capital grants & contributions 31.76 14.19 7.40 5.27 39.16 19.46
General revenues:-
Property taxes 8.35 7.96 8.35 7.96
Other taxes 30.44 29.82 30.44 29.82
Investment income and miscellaneous 4.46 4.09 0.57 0.21 5.03 4.30
Total revenues 103.79 81.89 37.19 31.37 140.98 113.26
Program expenses:
General government 6.95 8.59 6.95 8.59
Public safety 32.47 30.66 32.47 30.66
Transportation 18.05 17.89 18.05 17.89
Economic environment 6.87 6.89 6.87 6.89
Culture and recreation 9.49 9.17 9.49 9.17
Interest on long term debt 0.42 0.45 0.42 0.45
Water 10.28 10.20 10.28 10.20
Sewer 9.31 8.99 9.31 8.99
Process water reuse 2.51 2.59 2.51 2.59
Storm water 1.40 1.30 1.40 1.30
Irrigation 1.91 1.99 1.91 1.99
Total expenses 74.25 73.65 25.41 25.07 99.66 98.72
Excess/(deficiency) before transfers 29.54 8.24 11.78 6.30 41.32 14.54
Transfers (0.08) (0.07) - - (0.08) (0.07)
Changes in net position 29.54 8.24 11.78 6.30 41.32 14.54
Prior period adjustment 0.02 - - - 0.02 -
Total changes in net position 29.48$ 8.17$ 11.78$ 6.30$ 41.26$ 14.47$
City of Pasco's Change in Net Position (in millions)
Business-Type Activities Total Primary GovernmentGovernmental Activities
Page 21
GOVERNMENTAL ACTIVITIES – REVENUES BY SOURCE
GOVERNMENTAL ACTIVITIES – EXPENSES AND PROGRAM REVENUES
Business-Type Activities. 29% of the increase in the City of Pasco’s net position is related to
business-type activities. In 2018, the business type activities made up 39% of the City’s net
position. The net position for business-type activities has increased by $11.78, mainly due to
increases in revenue from sales of utilities. City increased rates for Water, Sewer, Irrigation, and
Stormwater services by 5%, 6%, 3%, and 15% respectively. The City anticipates significant
investments to manage the aging infrastructure and growth as reflected in City’s 2019-2024
Capital Improvement Plan.
Charges for
services
26%
Operating
grants &
contributions
2%
Capital grants
& contributions
31%
Property taxes
8%
Other taxes
29%
Investment
income and
miscellaneous
3%
Sources of Revenues 2018
Charges for
services
30%
Operating
grants &
contributions
1%
Capital grants
&
contributions
17%
Property taxes
10%
Other taxes
37%
Investment
income and
miscellaneous
5%
Sources of Revenues 2017
Page 22
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 year 2018, the City of Pasco governmental funds reported combined ending
fund balances of $40.43, which is an increase of $3.96 from the prior year. Approximately 38%
of this total amount, $15.29 constitutes unassigned fund balance, which is available for spending
at the government’s discretion.
The General Fund is the chief operating fund of the City of Pasco. At the end of 2018, unassigned
fund balance of the general fund was $15.36. As a measure of the general fund’s liquidity, it may
be useful to compare unrestricted, unassigned fund balance to total expenditures. This represents
33.0% of total expenditures.
The fund balance of the City of Pasco’s General Fund increased during 2018 by $2.22, which is
4.5% of current year revenues or 4.8% of current year expenses. Overall revenues increased by
$3.36 (7.3%) and total expenditures increased by $1.46 (3.2%). General fund tax revenues
increased by $1.12 (3.5%). Property taxes increased approximately 4.9% due to new construction
and steady valuations, and sales taxes increased by 5.5% with the continued steady economic
recovery. City received Staffing for Adequate Fire and Emergency Response (SAFER) grants
for six full time firefighters (three funded by General Fund) and four full time police officers
funded by Office of Community Oriented Policing Services (COPS) in 2017 and 2018
respectively. Both grants will expire after three-year wages and benefit reimbursement period is
over. The City expects to see impact to fund balance once the grants are fully drawn down and
the General Fund absorbs the impact of seven additional positions.
Page 23
The City was able to increase the number of approved personnel positions, by adding three
additional positions in 2018, as well as four funded by COPS grant. General Fund funded five
of those seven positions. The General Fund revenues of $49.38 exceeded expenditures of $46.61
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 2018 was $28.34. 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 2018, the utility is well positioned as it has current assets of $43.75
available to meet its current liability obligations of $6.60, resulting in a working capital ratio of
6.6. The utility showed a gain before contributions and transfers of $4.07. Capital contributions
to the fund for year 2018 amounted to $7.40. 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 and is in the process of researching automatic meter
reading (AMR) and advanced metering infrastructure (AMI) options for future. 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 $1.53 in
expenses. Majority of the increase was for public safety at the rate of $1.07.
Actual revenues were 108% of the original budget and expenses was 99% of the original budget.
Revenues are generally estimated low in order to protect the city from unanticipated funding
fluctuations. The City implemented new budgeting processes in 2018, resulting in City’s ability
to remain within original budget.
Capital Asset and Debt Administration
Capital Assets. The City of Pasco’s investment in capital assets for its governmental and
business-type activities as of December 31, 2018 amounts to $434.06 (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 $18.77 for governmental activities and an increase of $4.01 for business-type
activities.
Major capital asset activity during the current fiscal year included the following:
Capital spending in governmental funds for 2018 was $10.58: $0.42 for general
governmental purposes, $0.79 for public safety purposes, $8.08 for transportation
purposes, and $1.30 for culture and recreation purposes. The largest projects for 2018
were Oregon Avenue Corridor Improvement at $6.39 and Lewis Street Overpass at $0.72.
Page 24
Capital spending in the utility fund (major component of business-activities) for 2018
was $5.59. The largest projects were Columbia Water Supply project at $2.04, and
Columbia East Lift Station $1.08 in 2018. (Run utilities fund on budget performance
report with 56 account)
Additional information on the City of Pasco’s capital assets can be found in Note 5 starting on
page 53.
Long-term Debt. At the end of 2018, the City of Pasco had total outstanding debt of $58.77
million. Of this amount, $8.87 million comprised debt backed by the full faith and credit of the
government. $49.90 million of the City of Pasco bonded debt represents bonds secured primarily
by specified revenue resources (e.g. revenue bonds).
Additional information on the City of Pasco’s long-term liabilities can be found in Note 7 starting
on page 56 of this report.
Economic Factors and Next Year’s Budgets and Rates (amounts not in millions)
In 2018, the Pasco economy was stable and continued to grow. The city issued 2,686 building
permits representing approximately $220 million in construction value. The number of permits
for the City increased by 2.7% in 2018 and the construction value went up by 9.6%, mainly due
to significant increase in warehouses and a new elementary school. Of the total permits, 485 were
for new single-family residences, which equates to $128 million in construction value. The
average value of a new home in Pasco was approximately $265,000, in 2018. This stable
economy was reflected in Standard & Poor’s rating the 2017 utility bond issue as AA-/Stable and
the 2015 General Obligation bond issue as AA-/Stable.
Businesses have continued making a significant investment in Pasco through their new or
existing infrastructure. Aforementioned Courtyard at Marriot, valued at $8,500,000 is under
construction. Pasco School District Elementary School, valued at $13,000,000 is also under
construction in 2018. Furthermore, a variety of commercial and industrial construction like new
2018 2017 2018 2017 2018 2017
Land 17.34$ 16.83$ 3.10$ 2.83$ 20.44$ 19.66$
Construction in process 15.74 12.72 13.65 10.31 29.39 23.03
Buildings and structures 32.54 31.52 33.13 34.00 65.67 65.52
Other improvements 2.89 3.16 0.19 0.20 3.08 3.36
Machinery and equipment 9.44 8.69 6.64 7.04 16.08 15.73
Infrastructure 167.80 154.10 131.60 129.92 299.40 284.02
Total capital assets 245.75$ 227.02$ 188.31$ 184.30$ 434.06$ 411.32$
Governmental Activities Total Primary GovernmentBusiness-Type Activities
City of Pasco's Capital Assets at Year-End (in millions)
(Net of Depreciation)
2018 2017 2018 2017 2018 2017
General Obligation Bonds 8.87$ 9.66$ 1.14$ 2.27$ 10.01$ 11.93$
Special Assessment Bonds - 0.02 - - 0.02
Loans & Notes - - 8.00 6.30 8.00 6.30
Revenue Bonds - - 40.76 42.52 40.76 42.52
8.87$ 9.68$ 49.90$ 51.09$ 58.77$ 60.77$
Governmental Activities Total Primary GovernmentBusiness-Type Activities
City of Pasco's Bonds and Notes
(in millions)
Page 25
hangar, offices, and retail spaces. In total, the City received more than $76 million investment
in construction for commercial and industrial purposes. Last year, City saw permitting and
construction of a large rental storage, Great Harvest, and Bleyhl, with $11,000,000 in value in
the Chapel Hill area, as well as, a multi-family complex in the East Ainsworth area valued at
$5,000,000.
The only fund larger than the General Fund is the Water/Sewer Utility Fund. The Water/Sewer
Utility Fund has grown rapidly over the past few years as it provides services to the thousands
of new homes built over the past decade. Since 2015, City has conducted comprehensive rate
studies for Water, Sewer, Stormwater, and Irrigation services and implemented necessary
annual rate increases. 2018’s rate increases are 5% for water; 6% for sewer; 3% for irrigation;
15% for Stormwater, and 3% for ambulance services.
Requests for Information
This financial report is designed to provide a general overview of the City of Pasco’s finances
for all those with an interest in the government’s finances. Questions concerning any of the
information provided in this report or requests for additional financial information should be
addressed to the Finance Director, PO Box 293, Pasco, WA 99301.
Page 26
Governmental Business-Type Component Unit
Activities Activities Total
Pasco Public
Facility District
ASSETS
Current assets:
Cash & cash equivalents 31,180,487$ 19,793,422$ 50,973,909$ 74,104$
Restricted cash:
Program, grant, donations 1,867,126 1,867,126
Customer deposits 324,043 5,032,009 5,356,052
Unspent bond proceeds - 10,771,022 10,771,022
Debt covenants 153,856 1,138,583 1,292,439
Bond reserve 3,065,317 3,065,317
Investments 13,080,161 4,179,400 17,259,561
Receivables (net of allowances):
Taxes 3,830,925 3,830,925 90,996
Customers 3,206,702 2,653,201 5,859,903
Grants 5,073,685 1,033,157 6,106,842
Due from Other funds 3,628,354 3,628,354
Prepaids - 84,315 84,315
Inventories - 253,287 253,287
Total current assets 62,345,339 48,003,713 110,349,052 165,100
Noncurrent assets:
Restricted cash - cemetery endowment 461,945 461,945
Special assessments 249,492 66,190 315,682
Net Pension Asset 12,171,481 12,171,481
Net OPEB Asset 1,140,935 1,140,935
Joint Ventures 1,144,343 1,144,343
Capital assets not being depreciated:
Land 17,336,555 3,101,211 20,437,766
Construction work in progress 15,738,767 13,649,928 29,388,695
Capital assets net of accumulated depreciation:
Buildings and structures 32,537,159 33,133,180 65,670,339
Other improvements 2,891,889 192,989 3,084,878
Machinery and equipment 9,439,845 6,639,313 16,079,158
Infrastructure 167,788,569 131,602,998 299,391,567
Total noncurrent assets 260,900,980 188,385,809 449,286,789 -
Total assets 323,246,319 236,389,522 559,635,841 165,100
DEFERRED OUTFLOWS OF RESOURCES
Pension related 2,514,943 329,437 2,844,380
OPEB related 250,682 250,682
Total deferred outflows of resources 2,765,625 329,437 3,095,062 -
LIABILITIES
Current liabilities:
Accounts payable 5,022,649 2,390,915 7,413,564 138,067
IBNR payable from restricted assets 1,848,008 1,848,008
Due to other funds 3,603,353 3,603,353
Deposits payable from restricted assets 310,820 392,910 703,730
Accrued interest payable from restricted assets - 226,370 226,370
Compensated absences - current 2,261,050 216,161 2,477,211
Loans due to other governments - current - 627,262 627,262
Bonds - current 830,000 3,187,986 4,017,986
Total current liabilities 13,875,880 7,041,604 20,917,484 138,067
Noncurrent liabilities:
Compensated absences 703,049 8,236 711,285
Net OPEB obligation 16,223,295 16,223,295
Loans due to other governments - 7,376,044 7,376,044
Bonds payable (net of premium)8,035,000 40,560,970 48,595,970
Net pension liability 4,670,925 1,577,057 6,247,982
Total noncurrent liabilities 29,632,269 49,522,307 79,154,576
Total liabilities 43,508,149 56,563,911 100,072,060 138,067
DEFERRED INFLOWS OF RESOURCES -
Pension related 6,011,394 666,618 6,678,012
OPEB related 184,280 184,280
Unavailable revenues - 1,598 1,598
Total deferred inflows of resources 6,195,674 668,216 6,863,890
NET POSITION
Net investment in capital assets 236,867,784 147,338,379 384,206,163
Restricted for:
Cemetery (nonexpendable)531,234 531,234
Program, grant, donations 19,118 19,118
Streets and boulevards 8,635,462 8,635,462
Litter and housing abatement 415,588 415,588
Park development 2,219,436 2,219,436
Culture and recreation 98,638 98,638
Capital improvement 8,853,212 8,853,212
Economic development 96,235 96,235
Debt repayment/guarantee 361,663 361,663
Committed for:
Landfill 407,344 407,344
Special revenue funds 3,394,830 3,394,830
Construction projects 100,699 100,699
Unrestricted 14,306,878 32,148,453 46,455,331 27,033
Total Net Position 276,308,121$ 179,486,832$ 455,794,953$ 27,033$
The notes to the financial statements are an integral part of this statement.
Statement of Net Position
December 31, 2018
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 6,949,546$ 6,108,528$ 22,739$ -$ (818,279)$ -$ (818,279)$ -$
Public safety 32,469,647 8,807,448 810,515 - (22,851,684) - (22,851,684) -
Transportation 18,047,449 2,319,150 - 31,076,647 15,348,348 - 15,348,348 -
Natural & economic environment 6,873,371 6,074,688 765,669 74,588 41,574 - 41,574 -
Culture and recreation 9,490,359 3,864,291 14,973 605,000 (5,006,095) - (5,006,095) -
Interest on long term debt 420,896 (420,896) - (420,896) -
Total governmental activities 74,251,268 27,174,105 1,613,896 31,756,235 (13,707,032) - (13,707,032) -
Business-type activities:
Water 10,284,714 11,311,381 - 2,385,428 - 3,412,095 3,412,095 -
Irrigation 1,914,566 1,564,231 - 920,842 - 570,507 570,507 -
Sewer 9,308,582 9,447,327 - 3,488,113 - 3,626,858 3,626,858 -
Process Water Reuse 2,507,880 3,985,932 1,005,735 - - 2,483,787 2,483,787 -
Storm Water 1,395,283 1,862,786 42,148 600,887 - 1,110,538 1,110,538 -
Total business-type activities 25,411,025 28,171,657 1,047,883 7,395,270 - 11,203,785 11,203,785 -
Total primary government 99,662,293$ 55,345,762$ 2,661,779$ 39,151,505$ (13,707,032) 11,203,785 (2,503,247) -
Component units
Pasco Public Facility District
Total component units 562,012$ 20,000$ -$ -$ (542,012)
General Revenues:
Taxes:
Property taxes 8,352,750 8,352,750
Sales taxes 16,695,816 16,695,816 551,378
B&O taxes 10,104,500 10,104,500
Excise taxes 3,635,625 3,635,625
Intergovermental 3,588,842 3,588,842
Investment income and miscellaneous 871,497 570,613 1,442,110 389
Transfers (see note 6)(78,225) - (78,225)
Total general revenues and transfers 43,170,805 570,613 43,741,418 9,755
Change in net position 29,463,773 11,774,398 41,238,171 9,755
246,827,561 167,712,434 414,539,995 17,278
16,787 16,787
Net position - ending 276,308,121$ 179,486,832$ 455,794,953$ 27,033$
The notes to the financial statements are an integral part of this statement.
Statement of Activities
For the Year Ended December 31, 2018
Net position - beginning
Adjustments to Beginning Net Position see
note (17)
Program Revenues
Net Revenue (Expenses) and Changes in Net Position
Primary Government
Page 28
Other
General Construction Governmental Total
ASSETS
Cash & cash equivalents 6,064,549$ 32$ 18,778,098$ 24,842,679$
Restricted cash
Program, grant, donation 19,118 - 19,118
Customer deposits 201,502 122,541 324,043
Cemetery endowement 461,945 461,945
Debt service 153,856 153,856
Investments 3,001,647 6,373,550 9,375,197
Receivables (net of allowances):
Taxes 3,270,060 560,865 3,830,925
Customers 1,417,350 - 1,788,140 3,205,490
Interfund loans 2,000,000 106,971 2,106,971
Grants 73,926 4,671,471 328,288 5,073,685
Special assessments & loans 249,492 249,492
Due from other funds 3,628,354 - 3,628,354
Total assets 19,676,506 4,671,503 28,923,746 53,271,755
LIABILITIES
Accounts payable 2,456,563 1,730,121 1,016,393 5,203,077
Interfund loans payable 2,125,301 2,125,301
Due to other funds 2,840,683 762,670 3,603,353
Deposits payable from restricted assets 195,700 115,120 310,820
Total liabilities 2,652,263 4,570,804 4,019,484 11,242,551
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue- property taxes 181,970 181,970
Unavailable revenue- special assessments 124,712 124,712
Unavailable revenue- court receivables 1,040,550 1,040,550
Unavailable revenue- other 10,790 239,240 250,030
Total deferred inflows of resources 1,233,310 363,952 1,597,262
FUND BALANCES (DEFICITS)
Nonspendable
Cemetery permanent fund 531,234 531,234
Restricted
Program, grant, donation 19,118 19,118
Street and boulevard 8,635,462 8,635,462
Litter & housing abatement 415,588 415,588
Park development 2,219,436 2,219,436
Cultural and recreation 98,638 98,638
Capital improvements 8,853,212 8,853,212
Economic development 96,235 96,235
Debt repayment/guarantee - 361,663 361,663
Committed
Landfill claims 407,344 407,344
Special revenue funds 3,394,830 3,394,830
Construction projects 100,699 100,699
Unassigned 15,364,471 (65,988) 15,298,483
Total fund balances 15,790,933 100,699 24,540,310 40,431,942
Total liabilities, deferred inflows of resources
and fund balances 19,676,506$ 4,671,503$ 28,923,746$
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.254,703,357
Deferred pension outflows are not available to pay for current period expenditures and
therefore are not reported in the governmental funds.2,739,645
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.(32,284,427)
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.(4,982,247)
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.15,699,851
Net position of governmental activities ( see page 26)276,308,121$
The notes to the financial statements are an integral part of this statement.
Balance Sheet
Governmental Funds
December 31, 2018
Page 29
General Other
Fund Construction Governmental Total
REVENUES
Taxes 34,494,612$ -$ 4,294,079$ 38,788,691$
Licenses and permits 2,640,720 306,280 2,947,000
Intergovernmental revenue 2,376,588 7,273,596 4,216,737 13,866,921
Charges for services 7,285,865 10,888,433 18,174,298
Fines and forfeitures 943,321 128,497 1,071,818
Miscellaneous revenue 1,638,358 1,000 2,130,163 3,769,521
Total revenues 49,379,464 7,274,596 21,964,189 78,618,249
EXPENDITURES
Current:
General government 10,029,780 10,852 - 10,040,632
Public safety 25,879,450 126,506 7,247,682 33,253,638
Transportation 1,613,664 5,748 2,437,435 4,056,847
Natural & economic environment 2,224,043 - 4,450,085 6,674,128
Culture and recreation 5,538,208 191,943 3,102,872 8,833,023
Capital outlay:
General government 59,970 363,905 - 423,875
Public safety 78,249 669,162 42,302 789,713
Transportation - 8,083,713 - 8,083,713
Natural & economic environment 19,904 787 5,679 26,370
Culture and recreation - 540,512 761,816 1,302,328
Debt service:
Principal 795,000 20,000 815,000
Interest 372,300 48,596 420,896
Total expenditures 46,610,568 9,993,128 18,116,467 74,720,163
Excess of revenues over (under) expenditures 2,768,896 (2,718,532) 3,847,722 3,898,086
OTHER FINANCING SOURCES (USES)
Sale of assets 140,212 - 140,212
Transfers in 236,333 2,332,477 829,931 3,398,741
Transfers out (923,903) (86,666) (2,466,397) (3,476,966)
Total other financing sources (uses) (547,358) 2,245,811 (1,636,466) 61,987
Net change in fund balances 2,221,538 (472,721) 2,211,256 3,960,073
Prior period adjustments see (note 17) - 16,787 - 16,787
Fund balances - beginning 13,569,395 556,633 22,329,054 36,455,082
Fund balances - ending 15,790,933$ 100,699$ 24,540,310$ 40,431,942$
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, 2018
Page 30
Net change in fund balances - total governmental funds 3,960,073$
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.20,246,635
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. 815,000
Revenues reported in the statement of activies that do not provide current financial resources
are not reported as revenues in the funds.584,946
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, 2,721,105
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. 1,136,014
Change in net position of governmental activities (see page 27)29,463,773$
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, 2018
Page 31
Original Final Variance to
Budget Budget Actual Final Budget
REVENUES
Taxes 33,060,476$ 34,204,476$ 34,494,612$ 290,136$
Licenses and permits 2,054,200 2,404,200 2,640,720 236,520
Intergovernmental revenue 2,317,438 2,317,438 2,376,588 59,150
Charges for services 7,093,604 7,193,604 7,285,865 92,261
Fines and forfeitures 853,100 843,100 943,321 100,221
Miscellaneous revenue 528,800 1,248,487 1,638,358 389,871
Total revenues 45,907,618 48,211,305 49,379,464 1,168,159
EXPENDITURES
Current:
General government 10,195,602 10,640,946 10,029,779 (611,167)
Public safety 24,755,757 25,826,167 25,879,449 53,282
Transportation 1,853,435 1,853,435 1,613,664 (239,771)
Natural & economic environment 2,055,603 2,055,603 2,224,043 168,440
Culture and recreation 5,371,988 5,371,988 5,538,208 166,220
Capital outlay:
General government 143,704 112,545 59,971 (52,574)
Public safety 27,000 74,023 78,250 4,227
Natural & economic environment 19,904 19,904
Debt service:
Principal 795,000 795,000 795,000 -
Interest 371,700 371,700 372,300 600
Total expenditures 45,569,789 47,101,407 46,610,568 (490,839)
Excess of revenues over (under) expenditures 337,829 1,109,898 2,768,896 677,320
OTHER FINANCING SOURCES (USES)
Sale of Capital Asset 177,000 140,212 (36,788)
Transfers in 227,600 227,600 236,333 8,733
Transfers out (775,000) (775,000) (923,903) (148,903)
Total other financing uses (547,400) (370,400) (547,358) (176,958)
Net change in fund balances (209,571) 739,498 2,221,538 500,362
Fund balances - beginning 13,500,000 13,500,000 13,569,395 69,395
Fund balances - ending 13,290,429$ 14,239,498$ 15,790,933$ 569,757$
Interfund loan activity included for budget purposes but not
included in Statement of Revenues, Expenditures and Changes
in Fund Balance -
Fund balances - ending 15,790,933$
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, 2018
Page 32
Water/Sewer Internal
Utility Service
ASSETS
Current assets:
Cash and cash equivalents 16,363,174$ 9,768,056$
Restricted cash equivalents:
Claims incuured but not reported (IBNR) 1,848,008
Customer deposits 5,032,009 -
Unspent bond proceeds 10,771,022 -
Revenue bond covenants 1,138,583 -
Bond reserve 3,065,317 -
Investments 3,357,225 4,527,139
Receivables (net of allowances):
Customers 2,653,201 1,212
Grants 1,033,157 -
Prepaid-Other 84,315 -
Inventory 253,287 -
Total current assets 43,751,290 16,144,415
Noncurrent assets:
Special assessments 66,190 -
Capital assets not being depreciated:
Land 3,101,211 -
Construction work in progress 13,649,928 -
Capital assets net of accumulated depreciation:
Buildings and structures 33,133,180 -
Other Improvements 192,989 -
Machinery and equipment 4,985,854 7,279,859
Infrastructure 131,602,998 -
Total noncurrent assets 186,732,350 7,279,859
Total assets 230,483,640 23,424,274
DEFERRED OUTFLOWS
Pension related 329,437 25,980
LIABILITIES
Current liabilities:
Accounts payable 1,950,317 260,170
IBNR payable from restricted assests 1,848,008
Other liabilities
Customer deposits payable from restricted assets 392,910
Accrued interest payable from restricted assets 226,370
Compensated absences - current portion 216,161 -
Loans due to other governments - current portion 627,262
Revenue bonds - current portion 3,187,986
Total current liabilities 6,601,006 2,108,178
Noncurrent liabilities:
Compensated absences 8,236 -
Loans due to other governments 7,376,044 -
Revenue bonds payable (net of premium)40,560,970 -
Net pension obligation 1,577,057 124,371
Total noncurrent liabilities 49,522,307 124,371
Total liabilities 56,123,313 2,232,549
DEFERRED INFLOWS
Unavailable Revenue 1,598
Pension related 666,618 52,570
NET POSITION
Net investment in capital assets 145,684,920 7,279,859
Unrestricted 28,336,628 13,885,276
Total net position 174,021,548$ 21,165,135$
5,465,284
Net position of business-type activities (see page 26) 179,486,832$
The notes are an integral part of this statement.
Statement of Net Position
Proprietary Funds
December 31, 2018
Adjustment for the net effect of the current year
activity between the internal service funds and the
enterprise fund
Page 33
Business Type
Water/Sewer Internal
Utility Service
OPERATING REVENUES
Permits 195,800$ -$
Charges for services 27,975,857 10,130,577
Total operating revenues 28,171,657 10,130,577
OPERATING EXPENSES
Depreciation 7,012,375 1,010,289
Salaries and wages 3,336,849 442,625
Personnel benefits 883,142 183,492
Supplies 1,991,868 1,003,723
Services 10,705,921 6,401,762
Total operating expenses 23,930,155 9,041,891
OPERATING INCOME 4,241,502 1,088,686
NONOPERATING REVENUES (EXPENSES)
Investment income 413,342 217,153
Miscellaneous 37,511 126,330
Rents and leases 41,242 -
Grant 1,047,883 -
Gain (Loss) Sale of Asset 78,518 -
Gain (Loss) on disposal of property - 8,222
Interest expense (1,785,248) -
Total nonoperating revenues (expenses)(166,752) 351,705
Income (loss) before contributions
and transfers 4,074,750 1,440,391
Capital contributions 7,395,270 -
Transfers in - 75,000
Transfers out - (75,000)
Changes in net position 11,470,020 1,440,391
Net position - beginning 162,551,528 19,724,744
Net position - ending 174,021,548 21,165,135$
Changes in net position 11,470,020
Adjustment for the net effect the current year activity
between the internal service funds and the enterprise fund 304,378
Change in net position of business-type activities (page 27)11,774,398$
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 12/31/2018
Page 34
Water/Sewer Internal
Utility Service
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers 27,842,909$ 10,129,365$
Payments to employees (4,822,688) (622,062)
Payments to suppliers (13,006,810) (6,890,693)
Net cash provided by (used for) operating activities 10,013,411 2,616,610
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:-
Grants 47,883 -
Miscellaneous 37,511 126,330
Rents and leases 41,242 -
Net cash provided from noncapital financial activities 126,636 126,330
CASH FLOW FROM CAPITAL AND RELATED FINANCING
ACTIVITIES
Proceeds from sale of assets 43,900 65,353
Gain on Sale of asset 78,518 -
Acquisition and construction of capital assets (5,587,716) (935,168)
Principal paid on capital debt (3,421,977) -
Interest paid on capital debt (1,762,332) -
Payments received from notes and loans 1,500,000 -
Capital charges 2,095,406
Capital grant and contribution proceeds 4,222,045 -
Net cash provided by (used for) capital and related financing activities (2,832,156) (869,815)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 1,577,645 937,055
Purchase of investments 2,011,827 1,025,234
Interest on investments 413,342
Interfund loan repayment - 14,567
Net cash provided from investing activities 4,002,814 1,976,856
Net increase (decrease) in cash and cash equivalents 11,310,705 3,849,981
Beginning cash and cash equivalents 25,059,400 7,766,083
Ending cash and cash equivalents 36,370,105 11,616,064
Reconciliation of operating income (loss) to net cash provided by
(used for) operating activities:
Net Operating Income 4,241,502 1,088,686
Adjustment to reconcile operating income (loss) to net cash provided by
(used for ) operating activities:
Depreciation expense 7,012,375 1,010,289
(Increase) decrease in customer receivables (363,606) (1,212)
Decrease in prepaid expenses (84,315) -
(Increase) decrease in inventories (16,497) -
Increase (decrease) in accounts payable (208,209) 514,792
(Decrease) increase in accounts customer deposits payable 34,858
(Decrease) increase in compensated absences (21,485)
(Increase) decrease in pension deferred outflow 102,170 (586)
Increase (decrease) in pension obligation (922,818) (22,703)
Increase (decrease) in pension deferred inflow 239,436 27,344
Net cash provide by (Used for) Operating Activities 10,013,411$ 2,616,610$
NON CASH ACTIVITIES
Contributions of capital assets 5,299,864 -
Total noncash activities 5,299,864$ -$
The notes to the financial statements are an integral part of this statement.
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended 12/31/2018
Page 35
Pension and Other
Post-Employment
Benefits Agency
ASSETS
Cash & cash equivalents 441,534$ 370,884$
Receivables
Interfund Loan 18,330
Investments
Federal Agency 19,368
Mutual Funds 4,928,997
Total assets 5,408,229 370,884
LIABILITIES
Due to others - 370,884
Total liabilities - 370,884$
NET POSITION
Held in trust for pension benefits/other
post employment benefits 5,408,229$
The notes to the financial statements are an integral part of this statement.
Statement of Net Position
Fiduciary Funds
December 31, 2018
Pension and Other
Post-Employment
Benefits
ADDITIONS
Taxes 73,414$
Investment earnings
Interest (323,178)
Dividends 98,750
Total Additions (151,014)
DEDUCTIONS
Pension benefits 128,399
Medical premiums 87,540
Administrative expenses 10,584
Total deductions 226,523
Change in net position (377,537)
Net position - beginning 5,785,766
Net position - ending 5,408,229$
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, 2018
Page 36
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 in 2002 pursuant to Chapter 35.57 of the Revised
Code of Washington for the purposes of acquiring, constructing, operating and
financing one or more regional centers through cooperative and joint ventures with the
City of Kennewick. The PFD is discreetly presented in the component unit column in
the government-wide financial statements to emphasize that is a legally separate entity.
Complete separate financial statements for the District may be obtained from the City of
Pasco, P.O. Box 293, Pasco, WA 99301.
B. Basis of Presentation - Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all of the non-fiduciary activities of the
primary government and its component unit. Although fiduciary funds are excluded
from the government-wide financial statements, all pension and other post-employment
benefits (OPEB) 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
Page 37
or segment. Taxes and other items not properly included among program revenues are
reported instead as general revenues.
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 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 utilities 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
covered under the Plan prior to the creation of the Law Enforcement Officers and
Fire Fighters’ (LEOFF) pension system in 1970.
Page 38
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. Only the portion of special assessment receivable due within the current
fiscal period is considered to be susceptible to accrual as revenue of the current period.
All other revenue items are considered to be measurable and available only when cash
is received by the City.
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, 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
Page 39
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 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 public hearing(s).
The budget amounts shown in the financial statements are the final authorized amounts
as revised during the year.
The financial statements contain the original and final budget information. The original
budget is the first complete appropriated budget. The final budget is the original budget
adjusted by all reserves, transfers, allocations, supplemental appropriations, and other
legally authorized changes applicable for the fiscal year.
Excess of Expenditures over Appropriations
Neither the General Fund, nor any major special revenue funds, reported expenditures in
excess of budgeted appropriation.
Deficit Fund Net Position
The LID Loan Fund, a non-major debt service fund of the City, ended the year with a
negative fund balance of ($65,988). 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 inter-fund loans which are recorded as a loan payable on the balance sheet.
Since 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.
The Rivershore Trail & Marina Maintenance Fund, a nonmajor special revenue fund of
the City, ended the year with a negative fund balance of ($294,608). The negative fund
balance is a result of the need to rebuild a marina dock to due weather related damage.
Page 40
The Fund’s cash significantly decreased due to insurance deductible and repair charges
pending insurance recovery.
The Ambulance Services fund, a nonmajor special revenue fund of the City, ended the
year with a negative fund balance of ($465,797). The negative fund balance is a result of
a $800,900 receivable from Washington Healthcare Authority for Ground Emergency
Medical Transportation (GEMT) reimbursements.
The City Street fund, a nonmajor special revenue fund of the City, ended the year with a
negative fund balance of ($148,444). Most street projects are reimbursed by grants or
interfund charges. Reimbursements are requested periodically during completion of the
work. Subsequent draws and/or reimbursement payments will correct the deficit balance.
E. Assets, Liabilities, Deferred Inflows, Deferred Outflows, Fund Balance/Net Position
1. Cash and Cash Equivalents
It is the City’s policy to invest temporary cash surpluses. As of December 31, 2018, the
City had invested $ 40,121,642 with the Washington State Local Government
Investment Pool (LGIP). These investments are short-term investments of residual
cash. This amount is classified on the Statement of Net Position as cash and cash
equivalents. The interest earned on these investments is prorated to the various funds
based upon their ownership of invested cash.
For purposes of the statement of cash flows, the City considers all highly liquid
investments (including restricted assets) with a maturity of three months or less when
purchased to be cash equivalents.
2. Investments See (Note 3, Deposits and Investments)
3. Receivables
Taxes receivable consist of property taxes, sales taxes, business and occupation taxes,
gambling 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.
Special assessments are levied against certain property owners when their property is the
beneficiary of a City managed project. Based upon each property’s proportional share of
the improvement an assessment is levied. When levied a receivable in recorded. Special
assessments receivable consists of current, and any delinquent, assessments and related
interest and penalties. As of December 31, 2018, $9,441 of special assessments receivable
were delinquent.
Customer accounts receivables consist of amounts owned from private individuals or
organizations for goods and services, including amounts owed for which billings have
not been prepared. Uncollectible amounts, with one exception, are considered
Page 41
immaterial and the direct write-off method is used. The exception is in the Ambulance
fund. An allowance is calculated based on historical write-offs. The allowance as of
the end of 2018 is $46,422.
Other receivables include municipal court receivables related to legal fines and charges
and amounts due the City related to organizations or public entities with which the City
has entered contractual relationships. The municipal court receivable is $11,261,368 of
which $10,220,818 is not expected to be collected. Only the net receivable of
$1,040,550 is recorded in the financial statements. The portion that is calculated as
uncollectible is based upon the year’s collection rate. Of the receivables derive based
upon contractual relationships they are the result of the provision of working funds or
activity that created revenues that the City had not received as of yearend 2018.
4. Amounts Due to and from Other 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 and payable is furnished in Note 6, Interfund
Balances and Transfers.
Advances between funds, as reported in the fund financial statements, are offset by a
fund balance reserve account in applicable governmental funds to indicate that they are
not available for appropriation and are not expendable available financial resources.
5. Inventories
Inventories in governmental funds consist of expendable supplies held for consumption.
The cost is recorded as an expenditure at the time purchase. There are currently no
inventories in governmental funds. Inventories in proprietary funds consist of materials
and supplies used in both maintenance and capital activities. Inventories in proprietary
funds are valued using a last in first out (LIFO) method.
6. Restricted Assets and Liabilities
In accordance with utility bond ordinances, state law, or other agreements, separate
restricted assets have been established. These accounts contain resources restricted for
use only on specific activity. Some examples are capital construction activity, debt
service, or reimbursements of customers’ deposits. The current portion of related
liabilities is shown as Payables from Restricted Assets. Specific debt service reserve
requirements are described in Note 8, Long-Term Debt.
Page 42
The restricted assets of the enterprise funds are composed of the following:
7. 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 $5,000 and an estimated useful
life in excess of one year. Such assets are recorded at historical cost or estimated
historical cost if purchased or constructed. Donated capital assets are recorded at
acquisition value at the date of donation.
The City reports infrastructure assets on a network and subsystem basis. Such assets are
recorded at historical cost if purchased or constructed. Additions, improvements and other
capital outlays that significantly extend the useful life of an asset are capitalized. The cost
of normal maintenance and repairs and street preservation activities that do not add to the
value of the asset or materially extend asset lives are not capitalized. Assets are
depreciated over their useful lives using the straight line depreciation method.
Major outlays for capital assets and improvements are reported as Construction Work in
Progress as projects are constructed. Interest, if material to the cost of the asset that is
incurred during the construction phase of the capital assets of business-type activities is
included as part of the capitalized value of the assets constructed. Capital Assets and
improvements are capitalized once the project is completed.
Capitalization thresholds, the dollar value above which an asset acquisitions are added
to the capital asset accounts and estimated useful lives of capital assets are as follows:
Customer Deposits 392,910$
Water/Sewer capital expansion contributions 4,639,099
Unspent Bond Proceeds 10,771,022$
Assets Threshold Useful Lives
Land All N/A
Building & structure 5,000$ 5 ‐ 50
Other Improvements 5,000 5 ‐ 100
Machinery & equipment & vehicles 5,000 1 ‐ 50
Infrastructure 5,000$ 5 ‐ 50
Page 43
8. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section
for deferred outflows of resources. This separate financial statement element, deferred outflows
of resources, represents a consumption of net position that applies to a future period(s) and so will
not be recognized as an outflow of resources (expense/expenditure) until then.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future period(s) and
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
2018 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.
d. CDBG Loans Unbilled Principal.
e. Uncollected Municipal Court Fines outstanding.
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 at
the government wide level in the Statement of Net Position.
9. Compensated Absences
The City accrues accumulated unpaid vacation and sick leave and associated employee related
costs when earned (or estimated to be earned) by the employee. All vacation and sick pay is
accrued when incurred in the government-wide, proprietary, and fiduciary fund financial
statements. In governmental funds, such amounts are not accrued using the modified accrual basis
of accounting but are reported as a liability in the government-wide financial statements.
Sick leave may be accumulated up to a maximum of 960 hours for all employees except
firefighters. Firefighter sick leave may be accumulated up to a maximum of 840 hours. Upon
resignation, retirement or death, sick leave is payable at a rate of 25% of accrued hours up to a
maximum accrual base of 720 hours. Vacation leave may be accumulated up to a maximum of
one and a half times the employee’s annual vacation accrual rate and is payable upon resignation,
retirement or death.
10. Pensions and OPEB
Page 44
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.
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred
inflows of resources related to OPEB, and OPEB expense information about the fiduciary net
position of the City of Pasco LEOFF 1 Plan, (the plan) and additions to/deductions from the Plan’s
fiduciary net position have been determined on the same basis as they are reported by the plan.
For this purpose, the plan recognizes benefit payments when due and payable in accordance with
the benefit terms. The LEOFF 1 OPEB plan is accounted for using a modified accrual basis of
accounting.
11. 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.
12. Fund Balance and Fund Flow Policies
Fund balance of governmental funds is reported in various categories based on the nature of any
limitations requiring the use of resources for specific purposes. The government itself can
establish limitations on the use of resources through either a commitment (committed fund
balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only for specific
purposes determined by formal action of the government’s highest level of decision-making
authority. The city council is the highest level of decision making authority for the government
that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance.
Once adopted, the limitation imposed by the ordinance remains in place until a similar action is
taken (the adoption of another ordinance) to remove or revise the limitation.
Page 45
Amounts in the assigned fund balance classification are intended to be used by the government
for specific purposes but do not meet the criteria to be classified as committed. The council may
also assign fund balance as it does when appropriating fund balance to cover a gap between
estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike
commitments, assignments generally only exist temporarily. In other words, an additional action
does not normally have to be taken for the removal of an assignment. Conversely, as discussed
above, an additional action is essential to either remove or revise a commitment.
The City has not adopted a specific flow of funds policy relating to the use of restricted and
unrestricted resources when both are available. Therefore, the statements are prepared using the
default option provided in GASB 54 which provides that when both restricted and unrestricted
resources are available, restricted resources are used first.
In the fund financial statements, governmental funds report restrictions of fund balance as follows:
Nonspendable fund balance - includes amounts that are not in spendable form such as inventory
or are required to be maintained intact such as the principal of a permanent fund.
Restricted fund balance - includes amounts that can be spent only for the specific purpose
stipulated by external resource providers such as for grant providers, bondholders, higher levels
of government, or through enabling legislation.
Committed fund balance – includes amounts that can be used only for the specific purposes
determined by a formal action of the city council. Commitments may be changed or lifted only by
the City Council taking the same formal action that imposed the constraint originally.
Assigned fund balance – includes amounts intended to be used by the government for specific
purposes. Intent can be expressed by the governing body or by an official designated by the
governing body to which the governing body designates authority.
Unassigned fund balance - includes amounts that are available for any purpose.
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:
Page 46
B. Explanation of certain differences between the governmental funds statement of
revenues, expenditures, and changes in fund balances and the government-wide
statement of activities
The governmental funds’ statement of revenues, expenditures and changes in fund balances
includes reconciliation between net changes in fund balances – total governmental funds and
changes in net position of governmental activities as reported in the government-wide statement of
activities. The first element of that reconciliation relates to capital activity as follows:
Joint Venture 55,777$
Land 16,831,768
Construction in process 11,399,078
Building 31,522,941
Other Improvements 3,162,778
Equipment 4,081,601
Infrastructure 154,090,363
Pension Assets 8,519,268
OPEB Assets 1,410,992
Current year change in pension asset 3,652,213
Current year change in OPEB asset (270,057)
Current year spending in construction work in progress 9,658,079
Current year capital purchases 967,922
Current year capital donations received 24,449,859
Current year increase in Joint Venture 1,088,566
Current year depreciation (15,917,791)
Net adjustment to add to government wide fund balance to arrive at
Net Position Governmental Activities 254,703,357$
Beginning Balance of Capital Asset Excluded from Fund Level:
Compensated absences (2,712,102)$
OPEB obligation (16,179,101)
Pension obligation (6,487,320)
Bonds payable (9,661,670)
Current year changes to pension obligation 1,940,766
Current year principal payments reducing debt 815,000
Net adjustment to reduce government wide fund balance to arrive at
Net Position Governmental Activities (32,284,427)$
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:
Page 47
NOTE 3: DEPOSITS AND INVESTMENTS
Deposits
As of December 31, 2018 the carrying amount of the City’s cash balances was $74,350,635 which
consisted of $34,705,804 in the City’s checking account at US Bank, $40,121,642 deposited in the Local
Government Investment Pool, deposits in transit of $348,348, less outstanding checks of $825,159. A
portion, $550,691, of the deposits are maintained for the benefit of the fiduciary funds the City supports.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that in the event of a failure of a failure of a depository financial
institution, the City would not be able to recover deposits or will not be able to recover collateral securities
that are in possession of an outside party. The City deposits and certificates of deposit are mostly covered
by federal depository insurance (FDIC) or by collateral held in a multiple financial institution collateral
pool administered by the Washington Public Deposit Protection Commission (PDPC). The FDIC insures
the first $250,000 of the City’s deposits. The deposit balances over $250,000 are insured by the WPDPC.
The City does not have a deposit policy for custodial credit risk beyond the requirements of state statute.
Washington State law restricts deposit of funds to financial institutions physically located in Washington
unless otherwise expressly permitted by statute and authorized by the WPDPC. State statute permits
additional amounts to be assessed on a pro rata basis to members of the WPDPC pool in the unlikely event
the pool’s collateral should be insufficient to cover a loss.
Investments
Investments are stated at fair value based on quoted market prices in accordance with GASB Statement
No. 72, Fair Value Measurement and Application. Accordingly, the change in the fair-value of investment
is recognized as an increase or decrease to the investment assets and investment income. Interest income
on investments is recognized in non-operating revenue as earned. Changes in fair value of investments are
recognized on the statements of Revenues, Expenses, and Changes in Net Position.
Interest Rate Risk
Interest rate risk is the risk the City may face should interest rate variances affect the fair value of
investments. In accordance with its investment policy, the City manages its exposure to declines in fair
value by limiting the maturity of investments. To achieve its financial objective of maintaining liquidity
Land -$
Building & Structure 737,125
Construction in process 9,658,079
Machinery and equipment 230,795
Contributed capital assets 24,449,859
Current year depreciation (15,917,791)
Gain on Joint venture 1,088,566
Net capital activity 20,246,633$
New Debt issued -$
Debt repayment (815,000)
Net debt activity (815,000)$
The second element of that reconciliation related to debt activity as follows
Capital outlays for:
Page 48
to meet all operating requirements, the City typically selects investments that have shorter average
maturities.
The following table depicts Weighted Average Maturity (WAM) for all City investments with
maturities, by number of months.
Credit Risk
State law and the City investment policy limit investments to those authorized by State Statute. The City
of Pasco holds investments in U.S. Government Agency Securities, the Local Government Investment
Pool (LGIP) and demand deposits at U.S. Bank. The investment policy for “credit risk” does not extend
beyond the types of authorized investments and the concentration of credit risk described below. As of
December 31, 2018 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.
The table below identifies the types of investments, concentration of investments in any one issuer, and
maturities of the City's investment portfolio as of December 31, 2018.
Maturity Date
# of Months to
Maturity
Fair Market
Value as
12/31/18 % of total WAM
02/01/2027 97 91,189$ 0.53% 0.512486
03/08/2019 3.0 998,264 5.78% 0.173515
06/13/2019 6.0 1,988,938 11.52% 0.691421
09/26/2019 9.0 2,025,378 11.73% 1.056134
10/15/2019 10.0 2,086,248 12.09% 1.208749
07/15/2020 19.0 2,060,995 11.94% 2.268825
10/15/2020 22.0 2,030,336 11.76% 2.587979
01/15/2021 24.0 3,038,098 17.60% 4.224578
12/06/2021 35.0 2,940,114 17.03% 5.962144
25.0 17,259,560$ 100.00% 18.685832
Calculation of Weighted Average Maturity (WAM)
Page 49
Local Government Investment Pool
The city is a participant in the Local Government Investment Pool was authorized by Chapter 294, Laws
of 1986, and is managed and operated by the Washington State Treasurer. The State Finance Committee
is the administrator of the statute that created the pool and adopts rules. The State Treasurer is responsible
for establishing the investment policy for the pool and reviews the policy annually and proposed changes
are reviewed by the LGIP advisory Committee.
Investments in the LGIP, a qualified external investment pool, are reported at amortized cost which
approximates fair value. The LGIP is an unrated external investment pool. The pool portfolio is invested
in a manner that meets the maturity, quality, diversification and liquidity requirements set forth by the
GASBS 79 for external investments pools that elect to measure, for financial reporting purposes,
investments at amortized cost. The LGIP does not have any legally binding guarantees of share values.
The LGIP does not impose liquidity fees or redemption gates on participant withdrawals. For GASB
reporting purposes funds in the LGIP are reported as cash equivalents.
The Office of the State Treasurer prepares a stand-alone LGIP financial report. A copy of the report is
available from the Office of the State Treasurer, PO Box 40200, Olympia, Washington 98504-0200,
online at http://www.tre.wa.gov.
Investments Reported as Cash Equivalents as of December 31, 2018
Amortized Cost Less than 1 Year
Local Government Investment Pool $40,121,642 $40,121,642
Investment Type Fair Value
Less than 1
year 1 to 5 years
% of Total
Portfolio
SBA Participation 91,189$ 91,189$ ‐$ 0.53%
Federal Farm Credit Bank 2,940,114 ‐ 2,940,114 17.03%
Federal Home Loan Bank 998,264 998,264 ‐ 5.78%
FICO Strips 2,025,378 2,025,378 ‐ 11.73%
Federal National Mortgage Association 1,988,938 1,988,938 ‐ 11.52%
Resolution Funding Corporation 2,086,248 2,086,248 ‐ 12.09%
Resolution Funding Corporation-Strips 7,129,430 ‐ 7,129,430 41.31%
Total Investments 17,259,560$ 7,190,017$ 10,069,544$ 100.00%
41.66% 58.34% 100.00%
Maturities
Page 50
In addition to the City of Pasco investments presented in the series of tables following this section, the
City’s Old Fire Pension and Old Fire OPEB Funds report the following investments in their Trust Funds:
Investments Measured at Fair Value
The City measures and reports investments at fair value using the valuation input hierarchy established by
Generally Accepted Accounting Principles (GAAP), as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: These are quoted market prices for similar assets or liabilities, quoted prices for identical or
similar assets or liabilities in markets that are not active, or other than quoted prices that are not
observable;
Level 3: Unobservable inputs for an asset or liability.
Safekeeping for the City’s investments is provided by U.S. Bank. U.S. Bank contracts with Independent
Directors Council (IDC) to provide fair market values of investments on a monthly basis. The pricing
methodology varies depending on multiple components, including if an investment is being actively
traded. In depth pricing methodology is available from IDC.
As of December 31, 2018, the City had the following investments measured at fair value:
Old Fire Pension Trust Fund Investments FMV 12/31/18 Interest RateMaturity
Small Business Admn Participation SBAP 19,367.84$ 5.37% 10/1/2026
The Investment Co. of America Mutual Funds 2,084,822.64 *Varies N/A
Total 2,104,190.48$
*YTD Return 19.74%
Old Fire OPEB Trust Fund Investments FMV 12/31/18 Interest Rate Maturity
WAMU Investors Fund A Mutual Funds 2,844,173.80 *Varies N/A
Total 2,844,173.80$
*YTD Return 20.19%
12/31/2018
Quoted prices
active markets for
identical asset
(level 1)
Significant other
observable
inputs (level 2)
Significant
unobservable
inputs (level 3)
Investment by fair value level
U.S. Government agency securities 17,259,560$ 17,259,560$
Total investment measured at fair value 17,259,560
Total investment in statement of net position 17,259,560$
Fair Value Measurement
Page 51
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, 2018.
Delinquent taxes totaled $175,599 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 2018 was $1.7457 per $1,000 on an assessed valuation of $4,800,880,942. This
resulted in a total regular levy of $8,380,928 for 2018. The City did not levy any taxes for special levies
in 2018.
January 1 Taxes are levied and become an enforceable lien against properties.
February 14 Tax bills are mailed.
April 30 First of two equal installment payments is due.
May 31 Assessed value of property established for next year's levy at 100% of market value.
October 31 Second installment is due.
Property Tax Calendar
Page 52
NOTE 5: CAPITAL ASSETS AND CWIP
Capital asset activity for the year ended December 31, 2018 was as follows:
Governmental Activities:
Beginning
Balance
01/01/18
Prior Period
Adjustments
Beginning
Balance
01/01/18
Current Period
Increases
Current Period
Decreases
Ending Balance
12/31/18
Capital assets, not being depreciated
Land 16,831,768$ -$ 16,831,768$ 644,999$ 140,212$ 17,336,555$
Construction in progress 12,717,587 (43,920) 12,673,667 10,135,657 7,070,558 15,738,767
Total capital assets, not being depreciated 29,549,355 (43,920) 29,505,435 10,780,656 7,210,770 33,075,322
Capital assets, being depreciated:
Building & structure 48,586,977 - 48,586,977 2,092,063 - 50,679,040
Other improvements 10,013,695 - 10,013,695 - 32,124 9,981,571
Machinery and equipment 17,706,390 - 17,706,390 1,982,965 451,880 19,237,475
Infrastructure 262,722,270 - 262,722,270 27,768,310 19,213,916 271,276,664
Total capital assets being depreciated 339,029,332 - 339,029,332 31,843,338 19,697,920 351,174,750
Less accumulated depreciation:
Building & structure 17,064,036 - 17,064,036 1,077,845 - 18,141,881
Other improvements 6,850,917 - 6,850,917 270,889 32,124 7,089,682
Machinery and equipment 9,015,366 - 9,015,366 1,234,144 451,880 9,797,630
Infrastructure 108,631,907 - 108,631,907 14,070,104 19,213,916 103,488,095
Total accumulated depreciation 141,562,226 - 141,562,226 16,652,982 19,697,920 138,517,288
Total capital assets, being depreciated, net 197,467,106 - 197,467,106 15,190,356 - 212,657,462
Governmental activities capital assets net 227,016,461$ (43,920)$ 226,972,541$ 25,971,012$ 7,210,770$ 245,732,784$
Business Typ e Activities:
Beginning
Balance
01/01/18
Current Period
Increases
Current Period
Decreases
Ending Balance
12/31/18
Capital assets, not being depreciated
Land 2,830,911$ 314,200$ 43,900$ 3,101,211$
Construction in process 10,310,773 5,778,508 2,439,353 13,649,928
Total capital assets, not being depreciated 13,141,684 6,092,708 2,483,253 16,751,139
Capital assets, being depreciated:
Building & structure 79,224,661 1,374,364 16,893,916 63,705,109
Other Improvements 198,090 - - 198,090
Machinery and equipment 12,811,758 724,389 323,790 13,212,357
Infrastructure 174,421,198 5,739,753 8,336,876 171,824,075
Total capital assets being depreciated 266,655,707 7,838,506 25,554,582 248,939,631
Less accumulated depreciation:
Building & structure 45,223,775 2,242,071 16,893,917 30,571,929
Other Improvements 1,139 3,962 - 5,101
Machinery and equipment 5,768,655 1,127,384 322,995 6,573,044
Infrastructure 44,497,208 3,914,056 8,190,187 40,221,077
Total accumulated depreciation 95,490,777 7,287,473 25,407,099 77,371,151
Total capital assets, being depreciated, net 171,164,930 551,033 147,483 171,568,480
Business activities capital assets net 184,306,614$ 6,643,740$ 2,630,736$ 188,319,619$
Page 53
Depreciation expense by function:
Construction commitments
The City of Pasco has active construction projects as of December 31, 2018. The projects include street
construction and various utility related projects. At year end, the city’s commitments with contractors are
as follows:
NOTE 6: INTERFUND BALANCES AND TRANSFERS
Inter-fund loans
The composition of inter-fund loan balances as of December 31, 2018 are presented in the following table.
These loans are included in the Fund Financial Statements but eliminated from the Government Wide
Statement of Net Assets because they are internal borrowings. There are also one day loans from the
General Fund totaling $3,628,354 for funds with negative cash at year end that are classified as Due from
transactions on the Balance Sheet Governmental Funds. The composition of Due to and Due from balances
as of December 31, 2018 are presented in the following table.
General government 426,987$
Public Safety 841,763
Transportation 14,184,824
Economic environment 230,420
Culture & recreation 968,988
Total depreciation expense - governmental activities 16,652,982$
Water 2,793,341$
Irrigation 579,675
Sewer 3,220,898
Process water reuse facility 488,984
Stormwater 204,575
Total depreciation expense- business-type activities:7,287,473$
Governmental activities:
Business-type activities:
CATEGORY PROJECT NAME SPENT TO DATE REMAINING
COMMITMENT
Process Water Resource Facility Columbia East Pump Station 264,70 3$ 2,405,049$
Water East Side Booster Station 843,524 21,720
Street Argent Road Widening 378,907 28,748
Street Oregon Ave Corridor 5,619,394 1,164,642
Street Traffic Signal Improvments 1,398,817 10,980
Street Road 68 Interchange 147,696 162,853
Water Columbia Water Supply 7,665,120 191,432
Sewer Wastewater Treatment Plant Controls Upgrade 265,894 548,278
Economic Development Process Water Resource Facility Plan 702,002 205,942
Process Water Resource Facilit y Irrigation Pump Station Building 150,914 11,726
17,436,971$ 4,751,371$ TOTAL
Page 54
Inter-fund transfers
Transfers between funds during the year ended December 31, 2018 are as follows:
`
Transfers are used to 1) move unrestricted general fund revenues to finance various programs that the
government must account for in other funds in accordance with budgetary authorizations, including
amounts provided as subsidies or matching funds for various grant programs; 2) move investment earnings
or operating subsidies from one fund to its designated, authorized purpose carried out by another fund; 3)
move resources designated for construction to and from construction funds as projects are created and/or
completed.
There were one time transfers for the purpose of construction between several special revenue funds, the
general fund and the construction funds. The construction fund transferred to fund 960 Animal Control
(External Organization) to move Animal Control related charges to the correct fund. The construction
fund transferred to fund 194 as a correction in funding source related to the Chapel Hill. There were on-
going transfers to move grant support from the Community Development Block Grant fund to the general
fund for qualified grant activities; and from the general fund to the ambulance fund.
Loan Purpose
Nonmajor Special
Revenue
Nonmajor Debt
Service Total
General Fund GEMT Retro-Interim Financing $ 2,000,000 $ - 2,000,000$
Nonmajor Special Revenue LID Financing - 106,971 106,971
Nonmajor Fiduciary LID Financing - 18,330 18,330
-$ 125,301$ 2,125,301$
INTERFUND LOANS DUE FROM
TotalINTERFUND LOANS DUE TO General Fund Total
Nonmajor Special Revenue $ 762,670 762,670$
Major Construction 2,840,684 2,840,684
External Organization 25,000 25,000
Total 3,628,354$ 3,628,354$
DUE FROM
DUE TO General Nonmajor Special
Revenue
Major
Construction
Internal
Service Total
General -$ 236,333$ -$ -$ 236,333$
Nonmajor Special Revenue 725,000 48,927 56,004 - 829,931
Major Construction 198,903 2,133,574 - - 2,332,477
Internal Service - - - 75,000 75,000
External Organization - 47,563 30,663 - 78,226
Total 923,903$ 2,466,397$ 86,667$ 75,000$ 3,551,967$ TRANSFER TOTRANSFER FROM
Page 55
NOTE 7: CHANGES IN LONG-TERM LIABILITIES
Changes in long-term liabilities -governmental. The City liquidates most governmental debt service
from the General Fund while compensated absences are generally liquidated from General, Street and
Ambulance funds. The average percentage of usage of compensated absences varies significantly between
governmental and business type funds, therefore the City uses a three-year average usage percentage for
projecting compensated absences due within one year. This method is the most accurate by following the
current trend for of each type of funds. Internal service funds predominantly serve the governmental funds
and their long-term liabilities are included as part of the totals for governmental activities. In 2018
liabilities for Internal Service Funds included with Governmental activities was $124,371.
The table below reflects the change in Long-Term Liabilities for Governmental activities for year ended
December 31, 2018.
Changes in long-term liabilities – business type. All business type funds liquidate their own
compensated absences, judgements, and claims.
The table below reflects the change in Long-Term Liabilities for Business Type activities for year ended
December 31, 2018.
GOVERNMENTAL ACTIVITIES
Beginning Balance
01/01/2018 Additions Reductions
Ending Balance
12/31/18
Due Within One
Year
General Obligation Bonds 9,660,000$ -$ (795,000)$ 8,865,000$ 830,000$
Premiums 276,960 - (15,387) 261,573 15,387
Total GO Bonds Payable 9,936,960 - (810,387) 9,126,573 845,387
Special Assessment Bond 20,000 - (20,000) - -
Compensated Absences 2,712,101 2,160,127 (1,908,130) 2,964,098 2,261,050
Health and Welfare Claims
OPEB Obligations 16,179,101 44,194 - 16,223,295 -
Pension Obligations 6,634,394 - (1,963,472) 4,670,922 -
Governmental Activity Long-Term Activity 35,482,556$ 2,204,321$ (4,701,989)$ 32,984,888$ 3,106,437$
BUSINESS TYPE ACTIVITIES
Beginning Balance
01/01/2018 Additions Reductions
Ending Balance
12/31/18
Due Within One
Year
Revenue Bonds 42,515,000$ -$ (1,760,000)$ 40,755,000$ 2,045,000$
LTGO Bonds 2,270,585 - (1,127,599) 1,142,986 1,142,986
Premiums 1,974,455 - (123,486) 1,850,969 121,541
Total Bonds Payable 46,760,040 - (3,011,085) 43,748,955 3,309,527
State Loans 6,300,340 737,344 (465,843) 6,571,841 505,508
External Loan - 1,500,000 (68,534) 1,431,466 121,754
Compensated Absences 245,882 234,912 (256,398) 224,396 216,161
Pension Obligations 2,499,875 (922,817) 1,577,058 -
Business Activity Long-Term Activity 55,806,137 2,472,256 (4,724,677) 53,553,716 4,152,950
Total Changes in Business Type &
Governmental Long-Term Liabilities 91,288,693$ 4,676,577$ (9,426,666)$ 86,538,604$ 7,224,388$
Page 56
NOTE 8: LONG TERM DEBT
The City issues general obligation bonds to finance capital improvements such as street projects, softball
fields, library improvements, police station and other municipal facilities. 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.
Governmental debt is considered obligations of the general government and is repaid with general
governmental resources. Proprietary fund revenues are used to repay revenue and refunding bonds as well
as certain loans to proprietary funds. Bonded indebtedness has also been entered into to advance refund
general obligation and revenue bonds.
Governmental Debt
The City’s outstanding general obligation bonds are comprised of 2011 refunding bonds and a 2015 bond
issue that funded the construction of a new police station. A Public Safety Sales tax of three-tenths of one
percent, implemented in 2012 was identified as the source of repayment of the bonds. These issues are
repaid from the General Fund.
General obligation bonds outstanding as of December 31, 2018 are as follows:
Special Assessment Debt
The LID Guarantee Fund ended the year with a balance of $339,481.
The annual debt service requirements to maturity for general obligation bonds is presented in the following
table.
Purpose Issuance Amount Final Maturity Interest Rates
Outstanding as of
December 31, 2018
Due Within 1
Year
2011 LTGO Refunding 2001 LTGO 4,110,000$ 12/1/2020 3.00%-4.00% 1,005,000$ 495,000
2015 LTGO Police Station 8,795,000$ 12/1/2035 3.00%-4.00% 7,860,000 335,000
8,865,000$ 830,000$ Total Governmental Debt
GOVERNMENTAL DEBT - BONDS
GOVERNMENTAL DEBT
Year Ending
December 31 Principal Interest Total Debt Service
2019 830,000$ 339,900$ 1,169,900$
2020 860,000 306,700 1,166,700
2021 360,000 272,300 632,300
2022 375,000 257,900 632,900
2023 390,000 242,900 632,900
2024-2028 2,200,000 967,300 3,167,300
2029-2033 2,650,000 521,063 3,171,063
2034-2035 1,200,000 67,875 1,267,875
TOTAL 8,865,000$ 2,975,938$ 11,840,938$
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Business Type Debt
In 2018 the City’s Water/Sewer utility continued the construction of projects supported by a $9.4 million
revenue bond that was issued at the end of 2017. The purpose of the bond was to provide funding and
reimbursement for multiple sewer capital projects. The projects include upgrades and replacement of
several sewer lift stations, treatment plant upgrades, relining projects and certain immediate needs projects
identified by staff and consultants. These bonds will be repaid from revenues from the Water/Sewer utility.
The City is also liable for two state loans; 1) Public Works trust fund loan secured for the Riverview Trunk
Sewer Intercept project that will be satisfied in 2020, and 2) Drinking Water Loan for the Columbia Water
Supply Project. The Columbia Water Supply Project was completed in 2018. The final draw against the
loan, which is paid on a reimbursement basis, is anticipated to be received in 2019 in conjunction with the
final close out of the loan process.
As of December 31, 2018, restricted cash and investments in the proprietary funds contain $4,203,900 in
sinking funds and reserves as required by bond indentures.
Revenue Bonds, General Obligation Bonds and Loans outstanding for Business Type Accounts are as
follows:
Purpose Issuance Amount Final Maturity Interest Rates
Outstanding as of
December 31, 2018
Due Within 1
Year
2009 Water/Sewer Capital Projects 10,045,000$ 05/01/2029 1.35%-4.75% 6,010,000$ 495,000$
2010A Refunding Water/Sewer 9,070,000 06/01/2029 3.00%-5.00% 4,185,000 305,000
2013A Sewer Capital Projects 2,520,000 12/01/2028 3.00%-4.00% 2,020,000 170,000
2013T Capital Projects Reuse Facility 7,235,000 12/01/2028 .69%-4.89%5,480,000 460,000
2015 Water/Sewer Capital Projects 14,380,000 12/01/2040 2.00%-5.00% 13,645,000 615,000
2016 Sewer Refunding LTGO Bond-pay SRF Loa 3,959,939 07/31/2019 1.36% 1,142,986 1,142,986
2017 Sewer Improvement Revenue Bonds1 9,415,000$ 12/01/2042 3.30%-4.00% 9,415,000 -
41,897,986$ 3,187,986$
Purpose Issuance Amount Final Maturity Interest Rates
Outstanding as of
December 31, 2018
Due Within 1
Year
PW00-691-043 Riverview Trunk Sewer Intercept 1,890,000$ 06/30/2020 0.50% 222,281$ 111,140$
DM15-952-037 Columbia Water Supply Project2 6,810,430 10/01/2034 1.50% 6,349,559 394,368
HAEIFAC - Reuse Facility Improvement Loan 1,500,000$ 07/01/2028 3.20% 1,431,466 121,754
8,003,306 627,263
49,901,292$ 3,815,249$
1 This bond requires interest-only payments until 2030.
Total Business Type Debt
2The Columbia Water Supply Project Loan is approved for $6,810,430 and has recorded draws of $6,068,700 through December 31, 2018.
BUSINESS TYPE DEBT -BONDS
BUSINESS TYPE DEBT -LOANS
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The debt service requirements to maturity for all Business Type debt is as follows:
For financial statement presentation the City’s non-current portion of bonds payable are presented net of
premium while current bonds payable reflect actual principal payments due within one year. The following
table illustrates the breakdown by fund for current and non-current bonds payable and the effect of
premium on balances. Balances shown are as of December 31, 2018.
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. Total cost for such leases was $521,536 for the year ended December
31, 2018. The following represents the future annual minimum lease payments:
BUSINESS TYPE DEBT
Year Ending
December 31 Principal Interest Total Debt Service
2019 3,815,249$ 1,898,281$ 5,713,530$
2020 2,748,121 1,797,146 4,545,267
2021 2,661,206 1,704,350 4,365,556
2022 2,365,459 1,605,896 3,971,355
2023 2,379,849 1,516,949 3,896,798
2024-2028 12,380,533 6,135,842 18,516,375
2029-2033 8,076,842 4,114,561 12,191,403
2034-2038 8,034,368 2,473,091 10,507,459
2039-2042 7,400,000 685,510 8,085,510
TOTAL 49,861,627$ 21,931,626$ 71,793,253$
Bonds Business Type Governmental Total
Current Bonds Payable 3,187,986$ 830,000$ 4,017,986$
Non Current ‐Bonds Payable 38,710,000 8,035,000$ 46,745,000
Bond Premium 1,729,429 246,186 1,975,615
Total Non Current Bonds Payable, plus Premium 40,439,429 8,281,186 48,720,615
Total Bonds Payable at 12/31/18 43,627,415$ 9,111,186$ 52,738,601$
Year Ending December Amount
2019 456,148$
2020 314,529
2021 269,764
2022 159,252
Tota l 1,199,693$
Police vehicles
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NOTE 9: 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 39.34 RCW (Interlocal Cooperation Act), nine cities
originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling
mechanism for jointly purchasing insurance, jointly self-insuring, and / or jointly contracting for risk
management services. WCIA has a total of 160 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 sublimits. The Board of Directors determines the limits and terms of coverage annually.
Insurance for property, automobile physical damage, fidelity, inland marine, and boiler and machinery
coverage are purchased on a group basis. Various deductibles apply by type of coverage. Property
coverage is self-funded from the members’ deductible to $750,000, for all perils other than flood and
earthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits.
Automobile physical damage coverage is self-funded from the members’ deductible to $250,000 and
insured above that to $100 million per occurrence subject to aggregates and sublimits.
In-house services include risk management consultation, loss control field services, and claims and
litigation administration. WCIA contracts for certain claims investigations, consultants for personnel
and land use issues, insurance brokerage, actuarial, and lobbyist services.
WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as
determined by an outside, independent actuary. The assessment covers loss, loss adjustment,
reinsurance and other administrative expenses. As outlined in the interlocal, WCIA retains the right to
additionally assess the membership for any funding shortfall.
An investment committee, using investment brokers, produces additional revenue by investment of
WCIA’s assets in financial instruments which comply with all State guidelines.
A Board of Directors governs WCIA, which is comprised of one designated representative from each
member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy
direction for the organization. The WCIA Executive Director reports to the Executive Committee and is
responsible for conducting the day to day operations of WCIA.
The City is self-insured for medical and dental coverage for its employees. A third party administrator,
Benefits Management, Inc., processes all claims for reimbursement. The third party administrator provides
utilization management services and requires pre-authorization for all non-emergency hospital
confinements. The City currently maintains four months (16 weeks) of program expense in cash reserves
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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 10: 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 established to
assist the participating police and sheriff's departments in the deterrence and solution of criminal incidents.
BI-PIN 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 based upon the approved budget
for that year and billed quarterly in advance to each agency. On dissolution of the Interlocal Agreement, the
net position shared based upon participant contribution.
Effective January 1, 1992, the City of Kennewick assumed responsibility for operation of the BI-PIN system.
As the Operating Jurisdiction, Kennewick provides all necessary support services for the operation of BI-PIN
such as accounting, legal services, and risk management and information systems.
BI-PIN is currently in the process of implementing a new RMS/JMS system as well as upgrading all
supporting infrastructure. The City of Pasco's equity interest in BI-PIN was $154,965 on Dec 31, 2018, 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 obtained at the City of Kennewick, 210 W. 6th Ave.,
Kennewick, Washington, 99336.
B. Metro Drug Forfeiture Fund
The Metropolitan Controlled Substance Enforcement Group (Metro) established prior to 1987, when
Interlocal Agreement entered into by six participating municipal corporations, the cities of Kennewick, Pasco,
Richland, and West Richland, and Benton and Franklin Counties. Metro established to account for the
proceeds of forfeitures, federal grants, and court ordered contributions, and to facilitate the disbursement of
those proceeds for the purpose of drug enforcement and investigations. Metro served by an Executive
Committee composed of the City Manager or designee of each of the cities and a member from each of the
2016 2017 2018
$4,858,665 $4,463,350 $5,196,581
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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 $15,600 on Dec 31, 2018, which reported as an investment
in joint ventures in the government-wide statement of net position. The change in equity is reflected in the
government-wide statement of activities under Public Safety. The City does not anticipate any income
distributions from Metro.
Complete separate financial statements for Metro obtained at the City of Kennewick, 210 West Sixth Avenue,
Kennewick, Washington.
C. SECOMM
SECOMM provides public safety communications services to the Cities of Kennewick, Richland,
Pasco and the Counties of Benton and Franklin. Each owns an equal share of SECOMM’s net
assets. Financial participation is allocated among the five participants based on equal shares of
capital expenses, predetermined fixed costs, direct costs and percentages of use. SECOMM also
provides service through contracts to the Cities of West Richland and Prosser, Connell and the
Benton and Franklin County Fire Protection Districts, Port of Pasco, Walla Walla Fire District #5
and the North Franklin County Hospital district. Service contract agencies are assessed on a cost
per capita or cost per call basis. The City of Pasco’s equity interest in SECOMM as of December
31, 2018 was $973,778 which is reported as an asset in the government-wide Statement of Net
Assets. The change in equity is reflected in Public Safety under the government-wide Statement of
Activities. Upon dissolution of the Interlocal Agreement, the net assets will be shared equitably
among the participants.
Complete and separate financial statements for all operations of Benton County Emergency
Services may be obtained at the City of Richland, 505 Swift Blvd, Richland, Washington.
D. Tri-City Animal Control Authority
In 2005 the city entered into an interlocal agreement with the cities of Kennewick and Richland to
jointly fund the operations of the Animal Control Authority (ACA). The ACA was 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 11: 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.
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.
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In 2018, the City expended $197,126 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
2018, the City of Pasco paid Franklin County $239,054 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, 2018, the TRAC Fund had a fund balance of
$521,177.
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.
In 2015, the City and the Authority entered into an agreement which established 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 12: JOINTLY GOVERNED ORGANIZATIONS:
Tri-Cities Regional Public Facilities District
Pursuant to RCW 35.57 the Tri-Cities Regional Public Facilities District was formed jointly by the Cities
of Pasco, Kennewick, and Richland. The District was established for the purpose of acquiring,
constructing, owning, remodeling, maintaining, equipping, re-equipping, repairing, financing, operating
one or more Regional Centers, as defined by the RCW35.57.020and/orparticipating 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.
The board is comprised of the members of the Benton-Franklin Council of Governments plus nine
representatives from the private sector.
Page 65
Benton County Emergency Services (BCES)
BCES was formed January 1, 1997 through an interlocal agreement entered into by the Cities of
Richland, Kennewick, West Richland, Benton City and Prosser as well as Benton County. A second
amended and restated interlocal agreement was made and entered into by and between the following
entities: Benton County, Franklin County, the Cities of Kennewick, Richland, West Richland, Prosser,
Benton City, and Pasco, Benton County Fire Protection Districts and the Public Utility District #1 of
Benton County. An Executive Board oversees the operations of BCES and consists of the City
Managers (or designee) from the Cities of Kennewick, Pasco and Richland, City Administrators from
Prosser and West Richland, a Council member from Benton City, a Benton County Commissioner, a
Franklin County Commissioner and a single representative collectively representing Benton County Fire
Protection Districts. The City of Richland serves as the operating jurisdiction providing all the
necessary administrative support services and reporting for BCES. The total amount paid by BCES in
2018 for these services was $347,641. No distributions of income to the City are expected since charges
are assessed only to recover anticipated expenses.
NOTE 13: EMPLOYEE RETIREMENT SYSTEMS AND PENSION PLANS
The City implemented GASB Statement 68, Accounting and Financial Reporting for Pensions in January
2015. The following table represents the aggregate pension amounts for all State plans subject to the
requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year
2018.
The following table represents the aggregate pension amounts for all plans for the year 2018:
State Sponsored Pension Plans
Substantially all the city’s full-time and qualifying part-time employees participate in one of the following
statewide retirement systems administered by the Washington State Department of Retirement Systems,
under cost-sharing, multiple-employer public employee defined benefit and defined contribution
retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and
administration of all public retirement systems.
The Department of Retirement Systems (DRS), a department within the primary government of the State
of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes
Pension Liabilities (6,247,981)$
Pension Assets 12,171,481
Deferred Outflows of Resources 2,844,380
Deferred Inflows of Resources (6,678,012)
Pension Expense (584,024)$
Aggregate Pension Amounts - All Plans
Page 66
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.
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 2018 were as follows:
Page 67
* For employees participating in JBM, the contribution rate was 12.26%.
PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as
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
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.
Actual Contribution Rates Employer Employee*
January – August 2018
PERS Plan 1 7.49% 6.00%
PERS Plan 1 UAAL 5.03%
Administrative Fee 0.18%
Total 12.70% 6.00%
September – December 2018
PERS Plan 1 7.52% 6.00%
PERS Plan 1 UAAL 5.13%
Administrative Fee 0.18%
Total 12.83% 6.00%
PERS Plan 1
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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 2018 were as follows:
* For employees participating in JBM, the contribution rate was 18.45% to 18.53%.
The city’s actual PERS plan contributions were $658,434 to PERS Plan 1 and $975,644 to PERS Plan 2/3
for the year ended December 31, 2018.
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
Actual Contribution Rates Employer
2/3
Employee
2*
January – August 2018
PERS Plan 2/3 7.49% 7.38%
PERS Plan 1 UAAL 5.03%
Administrative Fee 0,18%
Employee PERS Plan 3 Varies
Total 12.70% 7.38%
September – December 2018
PERS Plan 2/3 7.52% 7.41%
PERS Plan 1 UAAL 5.13%
Administrative Fee 0.18%
Employee PERS Plan 3 Varies
Total 12.83% 7.41%
PERS Plan 2/3
Page 69
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 I had no required employer or employee contributions for
fiscal year 2018. 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 includes an administrative expense component set at 0.18
percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2
Retirement Board.
Effective July 1, 2017, when a LEOFF employer charges a fee or recovers costs for services rendered by
a LEOFF 2 member to a non-LEOFF employer, the LEOFF employer must cover both the employer and
state contributions on the LEOFF 2 basic salary earned for those services.
The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2018
were as follows:
The city’s contributions to the plan were $937,526 for the year ended December 31, 2018.
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
Employer Employee
Actual Contribution Rates 5.25% 8.75%
State and local governments 0.18%
Administrative Fee 5.43% 8.75%
LEOFF Plan 2
Page 70
special funding situation is not mandated by the state constitution and could be changed by statute. For
the state fiscal year ending June 30, 2018, the state contributed $68,152,127 to LEOFF Plan 2. The amount
recognized by the City as its proportionate share of this amount is $526,850.
Actuarial Assumptions
The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial
valuation completed in 2018 with a valuation date of June 30, 2017. 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 and the 2017 Economic Experience Study.
Additional assumptions for subsequent events and law changes are current as of the 2017 actuarial
valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement
date of June 30, 2018. Plan liabilities were rolled forward from June 30, 2017, to June 30, 2018, reflecting
each plan’s normal cost (using the entry-age cost method), assumed interest and actual benefit payments.
Inflation: 2.75% total economic inflation; 3.50% salary inflation
Salary increases: In addition to the base 3.50% salary inflation assumption, salaries are also
expected to grow by promotions and longevity.
Investment rate of return: 7.4%
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.
There were changes in methods and assumptions since the last valuation.
Lowered the valuation interest rate from 7.70% to 7.50% for all systems except LEOFF 2. For
LEOFF 2 the valuation interest rate was lowered from 7.50% to 7.40%.
Lowered the assumed general salary growth from 3.75% to 3.50% for all systems.
Lowered assumed inflation from 3.00% to 2.75% for all systems.
Modified how the valuation software calculates benefits paid to remarried duty-related death
survivors of LEOFF 2 members.
Updated the trend that the valuation software uses to project medical inflation for LEOFF 2
survivors of a duty-related death, and for certain LEOFF 2 medical-related duty disability benefits.
Discount Rate
The discount rate used to measure the total pension liability for all DRS plans was 7.4 percent.
Page 71
To determine that rate, an asset sufficiency test included an assumed 7.5 percent long-term discount rate
to determine funding liabilities for calculating future contribution rate requirements. (All plans use 7.5
percent except LEOFF 2, which has assumed 7.4 percent). Consistent with the long-term expected rate
of return, a 7.4 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, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include a
component for the PERS 1, and TRS 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 7.4 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 7.4 percent was determined
using a building-block-method. In selecting this assumption, the Office of the State Actuary (OSA)
reviewed the historical experience data, considered the historical conditions that produced past annual
investment returns, and considered capital market assumptions and simulated expected investment returns
provided by the Washington State Investment Board (WSIB). The WSIB uses the capital market
assumptions and their target asset allocation to simulate future investment returns over various time
horizons.
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, 2018, 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.
Sensitivity of the Net Pension Liability/(Asset)
The table below presents the city’s proportionate share of the net pension liability calculated using the
discount rate of 7.4 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 (6.4 percent) or 1-percentage
point higher (8.4 percent) than the current rate.
Asset Class Target
Allocation
Fixed Income 20%1.70%
Tangible Assets 7%4.90%
Real Estate 18%5.80%
Global Equity 32%6.30%
Private Equity 23%9.30%
100%
% Long-Term Expected Real
Rate of Return Arithmetic
Page 72
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
For year ending December 31, 2018, the city reported a total pension liability of $6,247,981 and a net
pension (asset) of $(10,758,741) for its proportionate share of the net pension liabilities (assets). The table
below details these amounts by plan:
The amount of the asset reported above for LEOFF Plans 1 and 2 reflects a reduction for State pension
support provided to the City. The amount recognized by the City as its proportionate share of the net
pension asset, the related State support, and the total portion of the net pension asset that was associated
with the City were as follows:
At June 30, 2018, the City’s proportionate share of the collective net pension liabilities was as follows:
1% Decrease Current Rate Discount 1% Increase
6.40% 7.40% 8.40%
PERS Plan 1 5,154,668$ 4,194,410$ 3,362,633$
PERS Plan 2/3 9,393,084 2,053,572 (3,964,010)
LEOFF Plan 1 (980,569) (1,232,308) (1,449,251)
LEOFF Plan 2 (1,266,837)$ (9,526,433)$ (16,263,093)$
Liability (or Asset)
PERS 1 $ 4,194,410
PERS 2/3 2,053,572
LEOFF 1 (1,232,308)
LEOFF 2 $ (9,526,433)
LEOFF 1 Asset LEOFF 2 Asset
Employer’s proportionate share $ (1,232,308) $ (9,526,433)
TOTAL $ (9,567,611) $ (15,694,618)
State’s proportionate share of the net pension asset
associated with the employer (8,335,303) (6,168,185)
Proportionate Proportionate Change in
Plan Share 6/30/17 Share 6/30/18 Proportion
PERS 1 0.099661% 0.093918%-0.005743%
PERS 2/3 0.126788% 0.120274%-0.006514%
LEOFF 1 0.066934% 0.067877%0.000943%
LEOFF 2 0.427714% 0.469232%0.041518%
Page 73
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 Nonemployer Allocations for all plans
except LEOFF 1.
LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF
1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2018. Historical data was
obtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2018, 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 2018, the state of Washington contributed 39.30 percent of LEOFF 2 employer contributions
pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.70 percent of employer
contributions.
The collective net pension liability (asset) was measured as of June 30, 2018, and the actuarial valuation
date on which the total pension liability (asset) is based was as of June 30, 2017, with update procedures
used to roll forward the total pension liability to the measurement date.
Pension Expense
For the year ended December 31, 2018, the city recognized pension expense as follows:
Deferred Outflows of Resources and Deferred Inflows of Resources
At December 31, 2018, the city reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
PERS 1 83,397$
PERS 2 10,567
LEOFF 1 (211,094)
LEOFF 2 (403,638)
Old Fire Pension (63,256)
TOTAL (584,024)$
Pension Expense 2018
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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, 2018. 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
-$ -$
Net difference between projected and actual investment earnings on pension plan investments - (166,683)
-
Changes in proportion and differences between contributions and proportionate share of contributions 346,903
TOTAL 346,903$ (166,683)$
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience 251,714$ (359,543)$
Net difference between projected and actual investment earnings on pension plan investments - (1,260,167)
Changes of assumptions 24,023 (584,430)
Changes in proportion and differences between contributions and proportionate share of contributions 170,839 (270,182)
Contributions subsequent to the measurement date 511,681
TOTAL 958,257$ (2,474,322)$
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience -$ -$
Net difference between projected and actual investment earnings on pension plan investments - (100,045)
Changes of assumptions - -
Changes in proportion and differences between contributions and proportionate share of contributions
Contributions subsequent to the measurement date
TOTAL -$ (100,045)$
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual experience 510,312$ (221,205)$
Net difference between projected and actual investment earnings on pension plan investments - (1,667,254)
Changes of assumptions 5,393 (1,367,215)
Changes in proportion and differences between contributions and proportionate share of contributions 196,140 (509,099)
Contributions subsequent to the measurement date 488,183
TOTAL 1,200,028$ (3,764,773)$
TOTAL DEFERRED OUTFLOWS Deferred Outflows Deferred Inflows
AND INFLOWS FOR ALL PLANS of Resources of Resources
Differences between expected and actual experience 762,026$ (580,748)$
Net difference between projected and actual investment earnings on pension plan investments - (3,194,149)
Changes of assumptions 29,416 (1,951,645)
Changes in proportion and differences between contributions and proportionate share of contributions 366,979 (779,281)
Contributions subsequent to the measurement date 1,346,767 -
TO TAL 2,505,188$ (6,505,823)$
PERS 1
Differences between expected and actual experience
Changes of assumptions
PERS 2/3
LEOFF 1
LEOFF 2
Year ended
December 31:PERS 1 PERS 2/3 LEOFF 1 LEOFF 2 Total
2019 $ 7,292 $ (211,457) $ 96 $ (253,727) $ (457,796)
2020 (36,438) (557,736) (22,569) (506,159) (1,122,902)
2021 (109,340) (936,500) (61,470) (1,039,138) (2,146,448)
2022 (28,198) (450,794) (16,102) (393,316) (888,409)
2023 - (270,885) - (156,947) (427,832)
Thereafter $ - $ (241,008) $ - $ (703,640) $ (944,648)
Page 75
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 2018.
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 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, 2018, 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: 8
Inactive plan members retired March 1, 1970 or after and not currently receiving benefits: 1
Active Plan Members: 0
Pension Liabilities -$
Pension Assets (1,412,740)
Deferred Outflows of Resources 339,191
Deferred Inflows of Resources (172,191)
Pension Expense (63,256)$
Aggregate Pension Amounts -Old Fire Pension
Page 76
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. One member is eligible for City benefits but because of
the formulary is only receiving benefits from the state. He continues to be eligible for City benefits if
they exceed the LEOFF benefit. Benefit payments 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 w hich 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 2018 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 2018 the plan received $73,414 from this tax. In addition to the fire insurance
premium tax the plan receives interest and dividends on plan assets. In recent year’s actuarial
valuations have supported the City’s assertion that the plan is fully funded. The City did not contribute
to the plan in 2018.
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.
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 $ 19,368
Mutual Funds $ 2,084,822
Rate of Return. For the year ended December 31, 2018, the annual money-weighted rate of return on
pension plan investments, net of pension plan investment expense, was 9.18%. 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, 2017, using the following actuarial assumptions, applied to all periods included in the
measurement:
Page 77
Inflation 2.50%
Salary increases 3.00%
*Investment rate of return 7.00%
The discount rate was changed was reduced from 7.1% to 7.0% as of 12/31/18
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 7.0%. The projection
of cash flows used to determine the discount rate assumed City contributions were equal to the
statutorily calculated contribution of state fire insurance premiums for the next 20 years. Based on this
assumption, the pension plan's fiduciary net position was projected to be available to make all projected
future benefit payment for current plan members. Therefore, the long-term expected rate of return on
pension plan investments was applied to all periods of projected benefit payments to determine the
total pension liability.
Sensitivity of the net pension liability to changes in the discount rate. The net pension liability of the
City, calculated using the discount rate of 7.0%, 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, 6.0%, or one-
percentage point higher, 8.0%, than the current rate, follows:
Net Pension Liability
The components of the City’s net pension liability and funding status at December 31, 2018 are as
follows:
1% Decrease Current Discount Rate 1% Increase
(1,475,951)$ (1,412,740)$ (1,454,228)$ Net Pension Liability
2018
Page 78
The following table presents the changes in Net Pension Liability for year ending December 31, 2018.
Healthcare Actuaries performed an actuarial study on December 31, 2017 for this plan. The firm also
completed a roll forward update of the plan’s actuals for 2018. This plan does not have a special funding
situation.
Changes Since the Prior Valuation
1) The discount rate was changed from 7.10% to 7.00% as of December 31, 2017
2) The valuation reflects updated census information.
The City’s fiscal year and the Fire Pension Plan both observe a fiscal year ending December 31.
The components of FPF Plan Expense for 2018 are presented in the following table:
OLD FIRE PENSION ‐ Funded Status as of December 31, 2018
Total Pension Liability 1,150,311$
Less: Plan Fiduciary Net Position 2,563,051
Fire Pension Fund Net Pension Liability/(Asset)(1,412,740)$
Plan Fiduciary net position as a percentage of the total pension liability 222.81%
Covered Payroll NA
USSL as a percentage of covered payroll NA
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability
(a) (b) (a)-(b)
Balances at January 1, 2018 1,193,946$ 2,762,393$ (1,568,447)$
Changes for the year:
Service Cost - - -
Interest 87,555 - 87,555
Differences between expected and actual experience (2,791) - (2,791)
Change in assumptions - - -
Net investment income - (139,434) 139,434
Contributions - 73,414 (73,414)
Benefit payments, including refunds of employee contribution (12 8,399) (128,399) -
Administrative expense - (4,923) 4,923
Other changes - - -
Net changes (43,635) (199,342) 155,707
Balances at December 31, 2018 1,150,311$ 2,563,051$ (1,412,740)$
Changes in Net Pension Liability
Page 79
Deferred Outflows of Resources and Deferred Inflows of Resources
At December 31, 2018, 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, 2018. Other amounts reported as deferred outflows and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
The schedule of changes in net pension liability and related ratios, schedule of employer contributions
and schedule of investment returns are presented as Required Supplementary Information (RSI) and can
be found immediately following the notes to the financial statements. The tables 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.
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
‐$
87,555
(191,533)
4,923
(2,791)
‐
38,590
Total Expense (63,256)$
Calculation of Expense uunder GASB 68
1) Service Cost
2) Interest on Liabilities
5) Differences between Expected and Actual Experience
6) Change in Assumptions
7) Differences Between Expected and Actual Earnings
3) Interest on Assets
4) Administrative Expenses
Deferred Outflows Deferred Inflows
of Resources of Resources
Difference between expected and actual -$ -$
Net difference between projected and actual
investment earnings on pension plan investments 339,191 (172,191)
- -
- -
- -
339,191$ (172,191)$ TOTAL
Firemen's Pension Plan
Changes in proportion and differences between
contributions and proportionate share of contributions
Contributions subsequent to the measurement date
Changes of assumptions
Year Ended December 31 Fire Pension Plan
2019 38,590.00$
2020 38,590
2021 23,630
2022 66,194
2023 -
Thereafter -$
Page 80
Position. A copy of the plan statements can be obtained by request at the following address: City of
Pasco 525 N 3rd Ave., Pasco, WA 99301.
NOTE 14: Defined Benefit Other Postemployment Benefit (OPEB) Plans
The following table represents the aggregate OPEB amounts for all plans subject to the requirements of
GASBS 75 for the year 2018:
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 benefits via a single employer defined benefit plan
in accordance with state statute for retired police officers and firefighters who are eligible for lifetime
healthcare under the Law Enforcement Officers’ and Firefighters’ (LEOFF1) plan one retirement system.
The LEOFF 1 Disability Board is responsible for management of the LEOFF 1 OPEB plan, which is
mandated by RCW 41.26. The LEOFF 1 Disability Board consists of the following five members: the
mayor or a designated representative who shall be an elected official of the city, who shall be chairperson
of the board, a council member, a “citizen at large” appointed by the City, one retired firefighter and one
retired police officer. 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.
In 2017 the City of Pasco implemented the provisions of GASB 74, Financial Reporting for
Postemployment Benefit Plans Other Than Pension Plans, and GASB 75, Accounting and Financial
Reporting for Postemployment Benefits Other Than Pensions. These statements address both the OPEB
Plan and the employer’s reporting requirements. GASB 75 requires the net OPEB liability to be measured
as the total OPEB liability, less the amount of the OPEB plan’s fiduciary net position. The City, as
employer is required to report the net OPEB liability or (asset), and deferred inflows and outflows
associated with the plan in the Government Wide Statement of Net Position. The LEOFF 1 OPEB plan is
funded on a pay as you go basis and as such, the plan does not have assets accumulated for future
payments.
OPEB liabilities 16,223,295$
OPEB assets (1,140,935)
Deferred outflows of resources 250,682
Deferred inflows of resources (184,280)
OPEB expense/expenditures 624,561$
Aggregate OPEB Amounts – All Plans
Page 81
In prior years the City reported this plan under the provisions of GASB 45, which calculated the liability
for the plan as the cumulative over/under funding of the annual required contribution, plus associated
interest.
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, prescription and nursing care expenses not payable
by worker's compensation, Medicare, or other insurance are covered. LEOFF 1 members are eligible for
the plan when they terminate employment. The plan is closed to new participants and there are currently
31 retired LEOFF 1 members in the plan and one remaining active LEOFF 1 employee that will be eligible
upon retirement. There are no inactive plan members not receiving plan benefits. The plan requires
members to sign up for Medicare and pay the premiums when they reach age 65. The City contributes the
full premium for the City’s healthcare for all members. Although the premium charged is the same as
active employees, 29 of the 31 eligible members have primary coverage with Medicare and the City
insurance is a secondary provider. Only two members have primary coverage with the City. The Board
must approve any medical reimbursements not covered by Medicare or the City’s insurance. In 2018 the
City paid $542,748 in monthly premiums for 31 members and $3,119 for additional items not covered by
Medicare or insurance. For year ending 2018, the City’s benefit payments totaled $545,867, which is
345% of covered payroll. Plan members do not contribute to the plan and spouses and other dependents
are not eligible for this plan. There are no third party contributions to this plan.
Employees covered by benefit terms: At December 31, 2018, the following employees were covered by
the benefit terms:
The LEOFF 1 OPEB Plan has no assets and is considered unfunded, the total liability is reported in the
Government Wide Statement of Net Position.
The components of the Net OPEB Liability of the City as of December 31, 2018, were as follows:
Total OPEB Liability as a percentage of covered payroll 10,266%
Inactive employees or beneficiaries currently receiving benefits 31
Inactive employees entitled to but not yet receiving benefits 0
Active employees 1
Total 32
Total OPEB Liability 16,223,295$
Plan Fiduciary Net Position -
City's Total OPEB Liability 16,223,295
Covered Payroll 158,030$
Page 82
Healthcare Actuaries performed an actuarial study on December 31, 2017 for this plan under GASB 74
and 75 standards. The firm also completed a roll forward update of the plan’s actuals for 2018.
Summary of Significant Accounting Policies: For purposes of measuring the net OPEB liability, deferred
outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense information
about the fiduciary net position of the City of Pasco LEOFF 1 Plan, (the plan) and additions to/deductions
from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the
plan. For this purpose, the plan recognizes benefit payments when due and payable in accordance with the
benefit terms. The LEOFF 1 OPEB plan is accounted for using a modified accrual basis of accounting.
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.
Actuarial Assumptions: The total liability in the December 31, 2018 actuarial valuation was determined
using the following actuarial assumptions, applied to all periods included in the measurement, unless
otherwise specified
Inflation: 2.75%
Salary Increases: 3.75%
Healthcare cost trend rates: 7.0% in the first year, trending down to 3.84% over 58 years
Healthy mortality rates: RPH-2014 mortality table (headcount weighted), total dataset, fully generational
with mortality improvement scale MP-2017, set back one year for males and set forward one year for
females.
Disabled mortality rates: RPH-2014 mortality table (headcount weighted), total dataset, fully generational
with mortality improvement scale MP-2017, set forward two years for males and females.
Discount Rate: The discount rate used to measure the total OPEB liability was 3.5%. The City’s OPEB
Plan is an unfunded plan, therefore the discount rate was set to the rate of tax-exempt, high quality 20 year
municipal bonds, as of the valuation date.
Sensitivity of the total OPEB liability to changes in the discount rate. The total OPEB liability of the
City, as well as what the City’s total OPEB Liability would be if it were calculated using a discount rate
that is one point lower (2.50%) or one percentage point higher (4.50%) follows:
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates. The total OPEB
liability of the City, as well as what the City’s total OPEB Liability would be if it were calculated using
a healthcare cost trend rates that is one point lower (6.00%) or one percentage point higher (8.00%) than
current healthcare cost trend rates follows:
1% Decrease Current Discount Rate 1% Increase
2.50% 3.50% 4.50%
18,260,395$ 16,223,295$ 14,335,768$
Total OPEB Liability
Page 83
Changes in the Net OPEB Liability
The changes in total OPEB liability for 2018 are presented in the following table.
The plan incurred pension expense of $732,807 in 2018. Under GASB 75, the basic formula for calculating
OPEB expense is as follows:
There is a schedule of sources of changes in the net OPEB liability presented as RSI, immediately
following the notes to the financial statements. Because this plan is unfunded therare no disclosures
relating to Fiduciary Net Position or investment experience.
There were no Deferred Outflows or Deferred Inflows of resources related to this OPEB Plan for 2018.
Fire Pension – Postemployment Healthcare Plan
Effective December 31, 2017, the City of Pasco implemented the provisions of GASB 74, Financial
Reporting for Postemployment Benefit Plans Other Than Pension Plans, and GASB 75, Accounting and
Financial Reporting for Postemployment Benefits Other Than Pensions. These statements address both
the OPEB Plan and the employer’s reporting requirements. GASB 75 requires the net OPEB liability to
1% Decrease Current Discount Rate 1% Increase
6.00%7.00%8.00%
Decreasing to 2.84% Decreasing to 3.84% Decreasing to 4.84%
14,408,011$ 16,223,295$ 18,127,501$
Total OPEB Liability
Total OPEB
Liability
(a)
Plan Fiduciary
Net Position
(b)
Net OPEB Liability
(c) = (a) ‐ (b)
Balances at January 1, 2018 16,179,101$ ‐$ 16,179,101$
Changes for the year
Service cost 95,746 ‐ 95,746
Interest 557,569 ‐ 557,569
Benefit payments (609,121) ‐ (609,121)
Net changes 44,194 ‐ 44,194
Balance as of Decermber 31, 2018 16,223,295$ ‐$ 16,223,295$
Changes in Net OPEB Liability
December 31, 2018
1) Service Cost 95,746$
2) Interest (on liabilities) 557,569
3) Interest (on assets) -
4) Administrative Expenses -
5) Difference between expected and actual experience 79,492
6) Change in Assumptions -
7) Difference between expected and actual earnings -
Total Expense 732,807$
Calculation of Expense under GASB 75
Page 84
be measured as the total OPEB liability, less the amount of the OPEB plan’s fiduciary net position. The
City, as employer is required to report the net OPEB liability or (asset), and deferred inflows and outflows
associated with the plan in the Government Wide Statement of Net Position.
The Old Fire OPEB Plan is a defined benefit plan administered through a trust. The Fire Pension Board is
responsible for management of the Old Fire OPEB plan, which is mandated by RCW 41.26. The
Firefighters Pension Board consists of the following five members: the mayor or a designated
representative who shall be an elected official of the city, who shall be chairperson of the board, the City
Clerk, the City Finance Manager/Director and two elected retired firefighters covered by the plan. 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 Description: The Old Fire Pension OPEB covers firefighters that were hired prior to the creation of
the LEOFF 1 retirement system. As required by the Revised Code of Washington (RCW) Chapter 41.26,
the City provides these retirees lifetime medical care under a defined-benefit healthcare plan administered
by the City. The members' necessary hospital, medical, prescription and nursing care expenses not payable
by worker's compensation, Medicare, or other insurance are covered. Plan members are eligible for the
plan when they terminate employment. The plan is closed to new participants and all eligible members
are retired and drawing benefits. There are currently 5 eligible members in the plan and spouses and
beneficiaries are not eligible for the plan. The plan requires members to sign up for Medicare and pay the
premiums when they reach age 65. The City contributes the full premium for the City’s healthcare for all
members and members do not contribute to the plan. Although the premium charged is the same as active
employees, all 5 members have primary coverage with Medicare and the City insurance is a secondary
provider. The Board must approve any medical reimbursements not covered by Medicare or the City’s
insurance. In 2018 the plan paid $87,540 in monthly premiums for 5 members and $3,119 for additional
items not covered by Medicare or insurance.
The components of the Net OPEB Liability of the City as of December 31, 2018, were as follows:
Total OPEB liability 1,704,242$
Fiduciary net position 2,845,178
Net OPEB liabiilty (asset)(1,140,936)$
Plan Fiduciary Net Position as a percentage of the total OPEB 166.95%
Covered Payroll N/A
Total OPEB liability as a percentage of covered payroll N/A
Page 85
Healthcare Actuaries completed a full valuation under the new GASB 74 and 75 standards, of the plan as
of December 31, 2017. The firm also completed a roll forward update of the plan’s actuals for 2018.
Summary of Significant Accounting Policies: For purposes of measuring the net OPEB liability, deferred
outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense information
about the fiduciary net position of the Old Fire OPEB Plan, (the plan) and additions to/deductions from
the Plan’s fiduciary net position have been determined on the same basis as they are reported by the plan.
Investments are reported at fair value. The Old Fire OPEB plan is accounted for using a modified accrual
basis of accounting.
Funding Policy: Pursuant to state statute, the City is wholly responsible for 100% of authorized Old Fire
OPEB 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.
Actuarial Assumptions: The total liability in the December 31, 2018 actuarial valuation was determined
using the following actuarial assumptions, applied to all periods included in the measurement, unless
otherwise specified
Inflation: 2.75%
Salary Increases: 3.75%
Healthcare cost trend rates: 6.0% in the first year, trending down to 3.84% over 58 years
Healthy mortality rates: RPH-2014 mortality table (headcount weighted), total dataset, fully generational
with mortality improvement scale MP-2017, set back one year for males and set forward one year for
females.
Disabled mortality rates: RPH-2014 mortality table (headcount weighted), total dataset, fully generational
with mortality improvement scale MP-2017, set forward two years for males and females.
Discount Rate: The discount rate used to measure the total OPEB liability was 7.75%. The City’s Old
Fire OPEB Plan’s fiduciary net position was projected to be available to make all projected future benefit
payment for current members. Therefore, the long-term expected rate of return on plan investments was
applied to all periods of projected benefit payments to determine the total OPEB liability.
Sensitivity of the total OPEB liability to changes in the discount rate. The total OPEB liability of the
City, as well as what the City’s total OPEB Liability would be if it were calculated using a discount rate
that is one point lower (6.75%) or one percentage point higher (8.75%) follows:
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates. The total OPEB
liability of the City, as well as what the City’s total OPEB Liability would be if it were calculated using
1% Decrease Current Discount Rate 1% Increase
6.75% 7.75% 8.75%
(1,075,510)$ (1,140,935)$ (1,314,489)$
Total OPEB Liability
Page 86
a healthcare cost trend rates that is one point lower (5.00%) or one percentage point higher (7.00%) than
current healthcare cost trend rates follows:
Changes in the Net OPEB Liability
The changes in total OPEB liability for 2018 are presented in the following table.
The plan incurred pension expense of ($108,246) in 2018. Under GASB 75, the basic formula for
calculating OPEB expense is as follows:
1% Decrease Current Discount Rate 1% Increase
5.00% 6.00% 7.00%
Decreasing to 2.84% Decreasing to 3.84% Decreasing to 4.84%
(1,309,861)$ (1,140,935)$ (1,082,917)$
Total OPEB Liability
Total OPEB Plan Fiduciary Net Net OPEB
Liability Position Liability
(a)(b) (c) = (a)-(b)
Balances at January 1, 2018 1,612,381$ 3,023,373$ (1,410,992)$
Changes for the year:
Service Cost - - -
Interest 121,446 - 121,446
Differences between expected and actual
experience 61,074 61,074
Change in assumptions - - -
Net investment income - (84,994) 84,994
Contributions - - -
Benefit payments, including refunds -
of employee contributions (90,659) (90,659) -
Administrative expense - (2,542) 2,542
Other changes - - -
Net changes 91,861 (178,195) 270,056
Balances at December 31, 2018 1,704,242$ 2,845,178$ (1,140,936)$
Schedule of changes in the Net OPEB Liabilit y
December 31, 2018
1) Service Cost -$
2) Interest (on liabilities)119,168
3) Interest (on assets)(228,359.00)
4) Administrative Expenses 2,542.00
5) Difference between expected and actual experience 61,074.00
6) Change in Assumptions -
7) Difference between expected and actual earnings (62,671.00)
Total Expense (108,246)$
Calculation of Expense under GASB 75
Page 87
At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Amounts reported as deferred outflows or resources and deferred inflows of resources related to OPEB
will be recognized in OPEB expense as follows:
Investments: The Old Fire OPEB Plan does not have an investment policy. The board approves any
purchase or sale transactions regarding assets of the plan. The plan has only one investment, a mutual
fund that was purchased in 2003. The investment is detailed in the following table.
The Old Fire OPEB Plan does not have a specific reserve policy or requirement, however all assets of
the plan are considered assets of the trust and as such are obligated for payment of current and future
benefits to plan members.
NOTE 15: CONTINGENCIES AND LITIGATION
The City has recorded in its financial statements all material liabilities, including applicable estimates for
situations that are not yet resolved but where, based on available information, management believes it is
probable that the City will have to make payment. The City has closely reviewed all pending claims and
it is management’s opinion, the City's insurance policies and self-insurance reserves are adequate to pay
all material known or pending claims. As discussed in Note 3. F, Long-term Debt, the City is contingently
liable for repayment of debt.
The City participates in a number of Federal and State assisted programs. These grants are subject to audit
by the grantor or representative. Such audits could result in requests for reimbursement to grantor
agencies for expenditures disallowed under the terms of the grants. However, City management believes
that such disallowances, if any, will be immaterial.
Currently, there is an underground fire in a non-municipal Pasco landfill which closed in 1998. The
Washington State Department of Ecology (DOE) is proposing to issue an enforcement order to parties
Deferred Outflow
of Resources
Deferred Inflows
of Resources
Differences between actual and expected experience ‐$ ‐$
Change of assumptions ‐ ‐
Net difference between projected and actual earnings on OPEB plan investments 250,682 (184,280)
Total 250,682$ (184,280)$
Year Ended Dec 31 Amount
2019 1,245$
2020 1,245
2021 1,245
2022 62,669$
Name of Investment Type
Balance as of
12/31/18
Rating of
Morningsta r
2018 YTD
Returns
Annualized Return
Since 1/1/03
Wshington Mutual Investeres Fund‐A Mutual Fund 2,844,174$ gold 10.30% 8.66%
Page 88
collectively known as Potentially Liable Persons (PLPs). The City entered into an “Institutional Control”
agreement with the DOE to regulate development and provide for the conversion of private water wells
located down-plume from the site to be abandoned in favor of using the City’s municipal water system. It
is the City’s understanding that, because of its entering into this agreement, the DOE is excluding the City
from being designated as a PLP.
As of the date of this report, a diligent review has revealed no anticipated, unasserted claims against the
City, with one pending action in litigation. The litigation was commenced by Total Site Services, LLC
(Total Site Services LLC. v. City of Pasco) in Franklin Superior Court seeking an estimated claim of
$243,729.75 for additional cost resulting from the construction of the Pasco Police Community Services
Building. The claim is denied by the City. The litigation is in the discovery phase; settlement efforts
are on-going with a trial date scheduled for January, 2020.
NOTE 16: SUBSEQUENT EVENT
On March 18, 2019, the City passed Ordinance No. 4429 confirming assessments for Local
Improvement District No. 150 for the construction of roadway improvements. The total assessment is
$5,254,801. The City will issue and sale local improvement bond for LID 150 for the remaining
assessment amount after the 30-day prepayment period, ending May 28th.
NOTE 17: PRIOR PERIOD ADJUSTMENT
The following table itemizes the prior period adjustments made in 2018, along with the purposes for the
adjustments:
1Because capital assets are not recorded in governmental funds they are not reflected in the fund
financial statements; corrections of prior period balances only affect the government-wide financial
statements. $43,920 of expenditures related to feasibility charges for a new Animal Shelter Facility
expended by the Animal Control Authority were miscoded to the Construction Fund. These charges
were misclassified as Construction Work in Progress in the Construction Fund in 2017. These charges
were removed from Construction Work in Progress and expensed. Further, the expenses were moved to
the Animal Control Authority Fund (external organization, agency fund).
Construction Fund (43,920)$
Governmental Funds
Capital Asset Correction 1
Governmental Activities
Purpose for
Adjustment Decrease Increase
Adjustment to Fund
Balance/ Net Position
Construction Fund 1 (27,133)$ -$ (27,133)$
Construction Fund 2 - 43,920 43,920
16,787$ Total
Prior Period Adjustments
Page 89
Purpose for prior period adjustments:
1. $27,133 of donations received in 2017 for feasibility charges for a new Animal Shelter Facility
were miscoded to the Construction Fund. The revenues were moved from the Construction Fund
to the Animal Control Authority Fund (external organization, agency fund).
2. $43,920 of 2017 expenditures related to feasibility charges for a new Animal Shelter Facility
expended by the Animal Control Authority were miscoded to the Construction Fund. The
expenditures were moved from the Construction Fund to the Animal Control Authority Fund
(external organization, agency fund).
Page 90
Old Fire OPEB Fund
A schedule of contributions for the Old Fire OPEB Fund is not included because the plan is fully funded
and there have been no contributions for the past five years. The OPEB plan's fiduciary net position is
projected to have sufficient funds to pay all projected benefit payment for current plan members.
Therefore, there no future projected contributions.
2017 2018
Total OPEB liability
Service cost -$ -$
Interest 121,181 121,446
Changes of benefit terms - -
Differences between expected and actual experience - 61,074
Changes of assumptions - -
Benefit payments, including refunds of contributions (144,838) (90,659)
Net change in total OPEB liability (23,657) 91,861
Total OPEB liability ‐ beginning 1,636,038 1,612,381
Total OPEB liability ‐ ending (a)1,612,381 1,704,242
Plan fiduciary net position
Contributions - employer - -
Contributions - employee - -
Net investment income 507,854 (84,994)
Benefit payments, including refunds of contributions (144,838) (90,659)
Administrative expense (4,048) (2,542)
Other - -
Net change in plan fidiciary net position 358,968 (178,195)
Plan fiduciary net position ‐ beginning 2,664,405 3,023,373
Plan fiduciary net position ‐ ending (b)3,023,373 2,845,178
Net OPEB liability ending (a) ‐ (b)(1,410,992)$ (1,140,936)$
Plan fiduciary net position as a % of total OPEB liability (b)/(a)187.51% 166.95%
Covered‐employee payroll**N/A N/A
Net OPEB liability as a % of covered‐employee payroll N/A N/A
Notes to Schedule:
*Until a full 10‐year trend is compiled, only information for those years available is presented. The
City adopted GASB 75 for the fiscal year ending December 31, 2017.
Schedule of Changes in Net OPEB Liability and Related Ratios
Old Fire OPEB
For the year ended December 31, 2018
Last 10 Fiscal Years*
Page 91
LEOFF 1 OPEB Fund
The Schedule of Investment Returns was not included for this plan because there are no fund assets to
invest. These schedules are presented to illustrate the requirements to show information for 10 years,
however until a full 10-year trend is compiled the City will present all available GASB 74/75 compliant
information.
Page 92
Old Fire Pension Fund
2015 2016 2017 2018
Statutorially Determined Contribution 54,506$ 58,193$ 63,503$ 73,414$
Less Contributions Made (54,506) (58,193) (63,503) (73,414)
Contribution Deficiency (excess)- - - -
Covered-Employee Payroll -$ -$ -$ -$
Contributions as a percentage of covered employee payroll n/a n/a 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
Page 93
State Plans
*GASB 68 requires a disclosure of the changes in Net Pension Liability for the last 10 fiscal years, or as years are
available. These schedules will be built prospectively until they contain ten years of data.
PERS PLAN 1 2014 2015 2016 2017 2018
Employer's percentage of the net pension liability 0.097647% 0.102321% 0.098322% 0.099661% 0.093918%
Employer's proportionate share of the collective net
pension liability 4,919,014$ 5,352,340$ 5,280,355$ 4,728,992$ 4,194,410$
Employer's covered employee payroll 342,721 163,430 104,245 34,781 -
Employer's proportionate share of the net pension
liability as a percentage of covered employee payroll 1435.28% 3275.00% 5065.33% 13596.48% 419441000.00%
Plan fiduciary net position as a percentage of the total pension
liablity 61.19% 59.10% 57.03% 61.24% 63.22%
PERS PLAN 2/3
Employer's percentage of the net pension liability 0.114462% 0.125949% 0.122675% 0.126788% 0.120274%
Employer's proportionate share of the collective net
pension liability 2,313,690 4,500,230 6,176,589 4,405,277 2,053,572
Employer's covered employee payroll 10,474,619 11,212,390 11,878,130 12,471,204 13,008,696
Employer's proportionate share of the net pension
liability as a percentage of covered employee payroll 22.09% 40.14% 52.00% 35.32% 15.79%
Plan fiduciary net position as a percentage of the total pension
liablity 93.29% 89.20% 85.82% 90.97% 95.77%
LEOFF 1
Employer's percentage of the net pension asset 0.067804% 0.067488% 0.066826% 0.066934% 0.067877%
Employer's proportionate share of the collective net
pension asset (822,321) (813,380) (688,499) (1,015,536) (1,232,308)
Employer's covered employee payroll 219,984 207,267 226,769 197,219 162,162
Employer's proportionate share of the net pension
asset as a percentage of covered employee payroll -373.81% -392.43% -303.61% -514.93% -759.92%
Plan fiduciary net position as a percentage of the total pension
liablity 126.91% 127.36% 123.74% 135.96% 144.42%
LEOFF 2
Employer's percentage of the net pension asset 0.365709% 0.405844% 0.400187% 0.427714% 0.469232%
Employer's proportionate share of the collective net
pension asset (4,853,116) (4,171,265) (2,327,608) (5,935,285) (9,526,433)
Employer's covered employee payroll 10,497,629$ 12,154,638$ 12,622,501$ 14,338,666$ 17,145,685$
Employer's proportionate share of the net pension
asset as a percentage of covered employee payroll -46.23% -34.32% -18.44% -41.39% -55.56%
Plan fiduciary net position as a percentage of the total pension
liablity 116.75% 111.67% 106.04% 113.36 118.5
Schedule of Proportionate Share of the Net Pension Liability/(Asset)
As of June 30
Last 10 Fiscal Years*
Page 94
*GASB 68 requires a disclosure of the changes in Net Pension Liability for the last 10 fiscal years, or as years are
available. These schedules will be built prospectively until they contain ten years of data.
PERS PLAN 1 2014 2015 2016 2017 2018
Statutorily or contractually required contributions 31,484$ 16,252$ 10,583$ 4,077$ -$
Contributions in relation to the statutorily or contractually
required contributions (31,484) (16,252) (10,583) (4,077) -
Contribution deficiency (excess)- - - - -
Covered employer payroll 342,721 163,430 104,245 34,781 -
Contributions as a percentage of covered employee payroll 9.19% 9.94% 10.15% 11.72% 0.00%
PERS PLAN 2/3
Statutorily or contractually required contributions 964,775 1,140,430 1,327,926 1,482,156 1,657,497
Contributions in relation to the statutorily or contractually
required contributions (964,775) (1,140,430) (1,327,926) (1,482,156) (1,657,497)
Contribution deficiency (excess)- - - - -
Covered employer payroll 10,474,619 11,212,390 11,877,299 12,471,204 13,008,696
Contributions as a percentage of covered employee payroll 9.21% 10.17% 11.18% 11.88% 12.74%
LEOFF 1
Statutorily or contractually required contributions 396 373 407 355 292
Contributions in relation to the statutorily or contractually
required contributions (396) (373) (407) (355) (292)
Contribution deficiency (excess)- - - - -
Covered employer payroll 219,984 207,267 225,834 197,218 162,162
Contributions as a percentage of covered employee payroll 0.18% 0.18% 0.18% 0.18% 0.18%
LEOFF 2
Statutorily or contractually required contributions 549,396 635,688 660,156 763,912 937,526
Contributions in relation to the statutorily or contractually
required contributions (549,396) (635,688) (660,156) (763,912) (937,526)
Contribution deficiency (excess)- - - - -
Covered employer payroll 10,497,629$ 12,154,638$ 12,622,501$ 14,338,666$ 17,145,685$
Contributions as a percentage of covered employee payroll 5.23% 5.23% 5.23% 5.33% 5.47%
Schedue of Employer Contributions
As of June 30
Last 10 Fiscal Years*
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From
Grantor/ Federal Other Pass- From
Pass-Through Grantor CFDA Identification Through Direct
Program Title Number Number Awards Awards Total Note:
Economic Development Administration, US Department of Commerce-
Pass-Through WA State Department of Commerce
Economic Adjustment Assistance 11.307 07-79-07368 5,735 5,735 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 119 119 3
Community Development Block Grant/Entitlement Grant 14.218 B-16-MC-53-009- CDBG 206,849 206,849 3
Community Development Block Grant/Entitlement Grant 14.218 B-17-MC-53-009- CDBG 154,329 154,329 3
Community Development Block Grant/Entitlement Grant 14.218 B-18-MC-53-009- CDBG 379,610 379,610 3
Community Development Block Grant/Entitlement Grant cluster - 740,907 740,907
Pass-Through Washington Department of Commerce
Community Development Block Grants/State's program 14.228 08-F6401-014 2,193 2,193 3
Pass-Through City of Richland
Home Investment Partnerships Program 14.239 Home Program 74,507 74,507 3
Pass-Through Washington Dept of Archaeology & Historic Preservation
Historic Preservation Fund Grants-In-Aid (A,B)15.904 FY18-61018-007 5,000 5,000 3
Bureau of Justice Assistance
Pass -Through Washington Association of Sherrifs & Police Chiefs
Law Enforcement Assistance National Instant Criminal Background Check 16.309 HB 1501 500 500 2
Bureau of Justice Assistance, Department of Justice
Public Safety Partnership and Community Policing Grant 16.710 2017UMWX0103 1,808 1,808 2
Pass-Through Washington Department of Commerce
Violence Against Women Formula Grant 16.588 F17-31103-023 34,698 34,698 2
Criminal Division, Department of Justice
Body Worn Camera Policy & Implementation 16.835 2018-BC-BX-0010 221 221 2
Pass-Through from US Marshalls
Equitable Sharing Program 16.922 Equitable Sharing 3,759 3,759 4
US Department of Transportation/ Federal Highway Administration
Pass-Through Washington Department of Transportation
Highway Planning and Construction 20.205 STPUS-0397 (008) LA-7866 1,122,133 1,122,133 2
Highway Planning and Construction 20.205 STPUL-3515(008) LA-8322 1,780 1,780 2
Highway Planning and Construction 20.205 HSIP-3551 (004) - LA 8697 23,529 23,529 2
Highway Planning and Construction 20.205 STPUL-9911(010) LA-8321 11,675 11,675 2
Highway Planning and Construction Cluster Total US Dept. of Transportation FHA 1,159,117 - 1,159,117
Pass-Through Washington Association of Sherriff & Police Commission
State and Community Highway Safety 20.600 GR0.PL.33.TS.18 3,715 3,715 2
Pass-Through Washington Traffic Safety Commission
State and Community Highway Safety 20.600 GR0.PL.33.18.DD 1,409 1,409 2
State and Community Highway Safety 20.600
GR0.PL.33.19.CW 416 416 2
State and Community Highway Safety 20.600 GR0.PL.33.18.CT 781 781 2
State and Community Highway Safety 20.600 GR0.PL.33.19.DU 935 935 2
State and Community Highway Safety 20.600 GR0.PL.33.18.DU 710 710 2
Total State and Community Highway Safety 7,966 - 7,966 2
National Priority Safety Programs 20.616 GR0.PL.33.18.FF 1,967 1,967 2
Highway Safety Cluster Total US Dept. of Transportation 9,933 9,933
US Department of Transportation -National Highway Traffic Safety Administration (NHTSA)
Pass-Through Washington Department of Transportation
National Infrastructure Investments 20.933 GRANT12156090 212,312 212,312 2
Total US Dept of Transportation NHTSA 212,312 - 212,312
Administration 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, Grans for
Supportive Services and Senior Centers 93.044 ALTCCOG 2018-18 14,973 14,973 2
Aging Cluster Total US Dept of Health & Human Services 14,973 - 14,973
US Department of Homeland Security
Pass-Through FEMA
Assistance to Firefighters Grant 97.044 EMW-201-FR-00553 470,319 470,319 2
Pass-Through Franklin County Emergency Management
Homeland Security Grant Program (A)97.067 E17-078 HSGP (16SHSP)33,990 33,990 2
Staffing for Adeqiate Fire and Emergency Response 97.083
EMW-2016-FH-00428 444,231 444,231 2
Total US Department of Homeland Security 948,541 - 948,541
TOTAL FEDERAL AWARDS EXPENDED: 2,474,983$ 742,936$ 3,214,204$
The accompanying notes are an integral part of this schedule.
MCAG NO. 0292
SCHEDULE 16- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended December 31, 2018
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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 – Department of Justice Equitable Sharing
The City reports these funds on the Schedule of Expenditures of Federal Awards when program proceeds
received rather than when expenditures incurred due to program stipulations.
NOTE 5 – Indirect cost rate
The city has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform
Guidance.
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Office of the Washington State Auditor
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 that works for
citizens, by helping governments work better, cost less, deliver higher value, and earn greater
public trust.
In fulfilling our mission to hold state and local governments accountable for the use of public
resources, we also hold ourselves accountable by continually improving our audit quality and
operational efficiency and developing highly engaged and committed employees.
As an elected agency, the State Auditor's Office has the independence necessary to objectively
perform audits and investigations. Our audits are designed to comply with professional standards
as well as to satisfy the requirements of federal, state, and local laws.
Our audits look at financial information and compliance with state, federal and local laws on the
part of all local governments, including schools, and all state agencies, including institutions of
higher education. In addition, we conduct performance audits of state agencies and local
governments as well as fraud, state whistleblower and citizen hotline investigations.
The results of our work are widely distributed through a variety of reports, which are available on
our website and through our free, electronic subscription service.
We take our role as partners in accountability seriously, and provide training and technical
assistance to governments, and have an extensive quality assurance program.
Contact information for the State Auditor’s Office
Public Records requests PublicRecords@sao.wa.gov
Main telephone (360) 902-0370
Toll-free Citizen Hotline (866) 902-3900
Website www.sao.wa.gov
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