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ATTACHMENT 1 <br /> 7.1.A. - Page 7 <br /> outlay fund $2.7 million for the realignment of the Middlefield culvert, and repaid the <br /> $1.3 million loan from the Capital Outlay Fund. Therefore, $9.9 million remains in the <br /> Parking Fund from the proceeds of the land sale. <br /> Port <br /> The net assets for the Port increased by $1.779 million for the fiscal year ended June <br /> 30, 2014. Operating revenues increased 9% from $6.263 million in FY 2012 -13 to <br /> $6.824 million in FY 2013 -14 due to the higher maritime revenue from higher tonnage <br /> and a 2% increase in the tariff rate. Operating expenses decreased 1.4% from $4.343 <br /> million in FY 2012 -13 to $4.281 million in FY 2013 -14. <br /> Self- Insurance Fund Highlights <br /> The self- insurance internal service fund had net cash provided by operating activities of <br /> $0.375 million as premiums charged to operating departments were sufficient to cover <br /> the increase in workers' compensation claims. To offset the beginning deficit balance <br /> and to increase funding closer to a confidence level of 85 %, the general fund <br /> transferred $6 million to the self- insurance fund in FY 2013 -14. With this transfer, the <br /> self- insurance fund equity improved from a balance of negative $1.4 million as of June <br /> 30, 2013 to a balance of negative $50,000 as of June 30, 2014. <br /> New Accounting Standard for Next Fiscal Year <br /> As discussed with Council at various points in the budget process over the past year <br /> (including a study session dedicated to the topic on February 10, 2014), Governmental <br /> Accounting Standards Board (GASB) Statement 68 — Accounting and Financial <br /> Reporting for Pensions will take effect next year in the FY 2014 -15 CAFR. The primary <br /> changes to the City's financial reporting under GASB 68 will be: using the market value <br /> of assets rather than the actuarial value to calculate the unfunded pension liability; <br /> reporting the unfunded pension liability on the entity -wide Statement of Net Position <br /> (rather than in the Notes to the Financial Statements and the Required Supplementary <br /> Information); and providing more detailed information in the Notes section. <br /> If GASB 68 had been in place for FY 2013 -14, the estimated unfunded liability <br /> presented on the entity -wide Statement of Net Position would have been $168 million. <br /> This would have reduced the City's overall net position from $510 million to $342 million <br /> and would have resulted in a balance of negative $16 million for the entity -wide <br /> unrestricted net position. Council may be interested to note that this reflects an <br /> improvement since the numbers presented at the February 10 study session at which <br /> point the hypothetical 2012 -13 unrestricted net position would have been negative $46 <br /> million had the GASB 68 reporting requirements been in place at that time. <br /> As Council is aware, GASB 68 will not result in a change in the City's actual fiscal <br /> position, but rather a change in the way this position is reported in our financial <br /> statements, as well as those of all other local governments, starting with the 2014 -15 <br /> CAFR. Staff will be monitoring potential implications for Redwood City, for example in <br /> the bond market, and reaching out to other local governments regarding potential <br /> options for managing the City's unfunded pension liability. <br /> Page 6 of 7 <br />