omprehensive nnual inancial eport FISCAL YEARS ENDED June 30 2013 and 2012
omprehensive nnual inancial eport FISCAL YEARS ENDED June 30, 2013 and 2012
Comprehensive Annual Financial Report Fiscal Year Ended June 30 2013 and 2012 UPPER SAN GABRIEL VALLEY MUNICIPAL WATER DISTRICT 602 E Huntington Drive Suite B Monrovia California 91016 Prepared by Finance and Administration Department
Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2013 and 2012  UPPER SAN GABRIEL VALLEY MUNICIPAL WATER D...
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Upper San Gabriel Valley Municipal Water District Table of Contents PAGE INTRODUCTORY SECTION Unaudited Letter of Transmittal GFOA Certificate of Achievement Organizational Chart i x xi FINANCIAL SECTION Independent Auditors Report 1 Management s Discussion and Analysis Unaudited 3 BASIC FINANCIAL STATEMENTS Statements of Net Position Statements of Revenues Expenses and Changes in Net Position Statements of Cash Flows Notes to the Financial Statements 8 9 10 12 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress CalPERS and OPEB 27 STATISTICAL SECTION Unaudited Statistical Section Table of Contents Changes in Net Position Net Position by Component Operating Revenues by Major Source Operating Expenses by Activity Imported Water Deliveries Imported Water Rates and Charges Water Rates per Acre Foot Treated Water Sales by Customer Demographics and Economic Statistics Los Angeles County Ten Largest Employers in Los Angeles County Operating Indicators General Operating Indicators Water Conservation Ultra Low Flush and High Efficiency Toilets Distributed 28 29 30 31 32 33 34 35 36 37 38 39 40 41
Upper San Gabriel Valley Municipal Water District Table of Contents  PAGE INTRODUCTORY SECTION  Unaudited  Letter of Trans...
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Introductory Section
Introductory Section
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December 23 2013 Board of Directors Anthony R Fellow Ph D Division 1 Charles M Trevi o Division 2 Ed Chavez Division 3 Michael Touhey Division 4 Bryan Urias Division 5 The Honorable Board of Directors Upper San Gabriel Valley Municipal Water District The Upper San Gabriel Valley Municipal Water District Upper District staff is pleased to present the Upper District s Comprehensive Annual Financial Report CAFR for the fiscal years ended June 30 2013 and 2012 This report is prepared in accordance with the guidelines set forth by the Governmental Accounting Standards Board GASB Management assumes full responsibility for the completeness and reliability of the information contained in this report based upon a comprehensive framework of internal control established for this purpose Because the cost of internal control should not exceed anticipated benefits this effort provides reasonable rather than absolute assurance that the financial statements contain no material misstatements Vasquez Company LLP Certified Public Accountants has issued an unmodified clean opinion on the financial statements for the years ended June 30 2013 and 2012 The independent auditors report is located at the front of the financial section of this report The CAFR consists of five parts all of which are part of this package 1 Introductory Section that includes this letter of transmittal 2 Financial Section including the management s discussion and analysis MD A that provides a narrative introduction overview and analysis of the basic financial statements 3 Basic Financial Statements 4 Required Supplementary Information and 5 Statistical Section The MD A complements this letter of transmittal and should be read in conjunction with it Profile of the Upper District History The Upper District formed by voters in the San Gabriel Valley on December 8 1959 to help solve water problems in the rapidly developing San Gabriel Valley was incorporated on January 7 1960 On March 12 1963 residents of the District voted to annex to the Metropolitan Water District of Southern California MWD to provide supplemental water first from the Colorado River and later the State Water Project to replenish local groundwater supplies The Upper District played a vital role in determining water rights within the Main San Gabriel Basin by acting as plaintiff in the 1973 court case of Upper San Gabriel Valley Municipal Water District Plaintiff v City of Alhambra et al Defendants This case brought about the creation of the Main San Gabriel Basin Watermaster ordered by the court to administer and enforce provisions of the Judgment
December 23, 2013  Board of Directors  Anthony R. Fellow, Ph.D., Division 1 Charles M. Trevi  o, Division 2 Ed Chavez, Div...
Contaminants such as volatile organic compounds VOCs were first discovered in local water supply wells in 1979 Upper District also played a role in establishing groundwater cleanup programs and eventually the Water Quality Authority which now oversees the cleanup of the groundwater basin Mission Upper District aims to provide a reliable sustainable diversified and affordable portfolio of high quality water supplies to the San Gabriel Valley including but not limited to water conservation recycled water storm water capture storage transfers and imported water It is our goal to pursue this mission in a manner that is responsive to our public while protective of our environment Service Area Five elected Directors each serving a 4 year term and representing a designated geographic area within the Upper District s boundaries govern Upper District Additionally as a member agency of the MWD the Upper District appoints one representative to sit on the MWD Board of Directors The Upper District also has representation on the San Gabriel Basin Water Quality Authority and the Main San Gabriel Basin Watermaster Boards ii
Contaminants such as volatile organic compounds  VOCs  were first discovered in local water supply wells in 1979. Upper Di...
Upper District Board of Directors Division 1 Director Dr Anthony R Fellow Representing all or parts of Arcadia Bradbury El Monte Monrovia Rosemead and Temple City Division 2 Director Charles M Trevi o Representing all or parts of Arcadia Rosemead San Gabriel South Pasadena South San Gabriel and Temple City Division 3 Director Ed Chavez Representing all or parts of Avocado Heights Bassett City of Industry Hacienda Heights La Puente North Whittier Spy Glass Hill South El Monte Valinda and West Covina Division 4 Director Michael Touhey Representing all or parts of Azusa Covina Glendora Irwindale and West Covina Division 5 Director Bryan Urias Representing all or parts of Baldwin Park Duarte El Monte and Irwindale Local Economy California s economy showed signs of recovery in 2011 from the deep recession that began in 2008 The state economy also showed consistent gains in 2012 with the unemployment rate dropping to single digits for the first time in nearly four years Experts forecast a 2 1 and 3 0 gross state product growth rates in 2013 and 2014 respectively iii
Upper District Board of Directors  Division 1     Director Dr. Anthony R. Fellow Representing all or parts of Arcadia, Bra...
The Los Angeles County s economy continues to improve and the county unemployment rate is anticipated to drop from 11 1 in 2012 to less than 10 0 in 2014 San Gabriel Valley showed modest growth in recent years Between 2000 and 2012 the Valley s population grew by 1 6 compared with 3 9 in the Los Angeles County and 11 2 in California Employment in the San Gabriel Valley increased by 1 0 to about 605 400 total jobs in 2012 As economic recovery gains momentum San Gabriel Valley businesses are expected to create 5 600 new jobs in 2013 San Gabriel Valley regional payrolls amounted to about 27 7 billion in 2012 a 2 5 increase from 2011 levels due mostly to increases in job counts In 2013 total payroll is expected to increase by 2 9 San Gabriel Valley s large Asian population continues to provide a significant economic advantage It is anticipated that the Valley will be one of the main destinations of the growing Chinese direct investments into the Los Angeles County Major Initiatives Consistent with its mission Upper District strives to help local retail water providers manage their water supply safely and cost effectively by improving water quality and increasing supply reliability This is a challenging goal because factors such as climate legislation regulations government policy economics population and market demand change and thus affect the Upper District s planning and operations Upper District s primary function has been to provide supplemental water to its retail water providers sourced from the State Water Project the Colorado River and more recently in the form of recycled water Integrated Resources Plan IRP In May 2011 the Board authorized the preparation of the San Gabriel Valley s first Integrated Resources Plan IRP The IRP completed in 2012 defines a long term strategy for investments in a balanced portfolio of water supplies that are reliable and affordable in the long term Upper District is currently implementing the strategy defined in the IRP which includes the Recycled Water Program described below The IRP will be updated regularly to adapt to changing conditions Upper District strives to work with all stakeholders to implement innovative conservation recycling and storm water capture projects to improve long term water supply reliability Recycled Water Program Recycled water is a key part of the Upper District s overall strategy of supplementing local water supplies Recycled water is being used throughout California to irrigate golf courses parks freeway landscaping and crops It is also being used to replenish groundwater basins to serve as a barrier to seawater intrusion and by industry for cooling processes and other purposes Recycled water directly offsets the need to import increasingly expensive water that is pumped from the sensitive Bay Delta ecosystem Upper District s success in proactively advancing water recycling is largely attributable to the support of its partners the United States Bureau of Reclamation USBR State Water Resources Control Board Metropolitan Water District Sanitation Districts of Los Angeles County Main San Gabriel Basin Watermaster local retail water providers and many others who have contributed to the successful development of recycled water in the San Gabriel Valley Indirect Reuse Action Plan IRAP On December 6 2011 the Board adopted an Indirect Reuse Action Plan IRAP which set forth specific tasks to advance a major project that involves use of highly treated recycled water for groundwater recharge Immediate work tasks were identified for implementation These tasks include research to identify the most appropriate treatment technology pipeline right of way study a iv
The Los Angeles County   s economy continues to improve and the county unemployment rate is anticipated to drop from 11.1 ...
USBR Title XVI feasibility analysis and a financing plan Pilot testing of alternative treatment technologies is underway and will be completed in mid 2014 A preliminary pipeline right of way study was completed in 2012 Preparation of the USBR Title XVI feasibility analysis has begun and will be complete by September 2014 The Indirect Potable Reuse project will provide 10 000 acrefeet or more of highly treated recycled water for groundwater replenishment annually Direct Reuse The Direct Reuse Program includes the phased construction of a recycled water distribution system used to provide water for irrigation purposes Over 47 million was invested since 2007 to construct a direct reuse recycled water distribution system consisting of more than 24 miles of distribution pipeline The major components of the direct reuse system are summarized below All components of the system are in service with the exception of the last two phases of the City of Industry project which will be complete in early 2014 Whittier Narrows The Upper District s Whittier Narrows Water Recycling Project supplies the 2 500 acre Whittier Narrows Recreation Area with about 400 million gallons of recycled water each year The recycled water provides irrigation for a large public park soccer baseball and softball fields as well as the 18 hole Whittier Narrows Golf Course South El Monte High School The Upper District converted South El Monte High School to recycled water for irrigating campus green areas and athletic fields Recycled water used at the high school will conserve nearly 17 million gallons of drinking water each year enough to supply about 100 households Rose Hills Memorial Park In early 2006 Upper District converted Rose Hills Memorial Park to recycled water for irrigation purposes Prior to using recycled water Rose Hills used approximately 194 million gallons per year or about 500 000 gallons per day of drinking water for irrigation By using recycled water Rose Hills now saves enough drinking water in a year to supply about 1 200 average single family homes As part of this project an additional 21 million gallons of recycled water per year are provided to Rio Hondo College Mill Elementary School and Gateway Pointe Industrial Park for irrigation purposes Rosemead Extension The San Gabriel Valley Water Recycling Project Phase IIA Rosemead Extension consists of recycled water pipelines extending north and west from the Whittier Narrows Recreation Area to supply approximately 98 million gallons of recycled water per year to Southern California Edison corporate headquarters Panda Express corporate headquarters and several nurseries schools and businesses City of Industry In 2010 Upper District s City of Industry Water Recycling Project began providing recycled water for irrigation purposes by extending an existing recycled water pipeline stretching from the City of Industry through Hacienda Heights to West Covina Upon completion of the final two phases of the project in early 2014 the project will supply more than 400 million gallons of recycled water per year for irrigation to a landfill golf course baseball complex schools parks medians and green belts in the San Gabriel Valley v
USBR Title XVI feasibility analysis  and a financing plan. Pilot testing of alternative treatment technologies is underway...
Water Use Efficiency The IRP calls for additional investment in water use efficiency to reduce water use by an additional 5 000 acre feet per year In August 2012 the Board of Directors adopted a Water Use Efficiency WUE Master Plan The WUE Master Plan was developed to provide a goal oriented performancebased and cost effective strategy for a practical long term approach to design and implement water use efficiency measures Water Conservation and Education Water conservation is an important and low cost method of preserving our water supply and is a critical part of an effective water supply program In California and the San Gabriel Valley cities water companies utilities and water districts are deeply involved in conservation efforts and public education that promote water conservation Informing residents and employers about water use efficiency is the top priority of the Upper District s public education program Residential Programs High Efficiency Toilet HET Retrofit Program In 2013 a total of 2 330 HETs were distributed During the fiscal year Upper District provided a total of 116 500 in incentive payments to the producers for this program from MWD s Conservation Credits Program Residential Rebate Program Through MWD s So Cal Water Smart Regional Rebate Program Upper District residents are offered rebates for retrofitting several types of high water use fixtures equipment with water efficient devices Rebate items include HighEfficiency Clothes Washers HECWs Weather Based Irrigation Controllers WBICs and Rotating Sprinkler Nozzles Rebates for residential devices provided during the fiscal year 12 13 will produce approximately 590 acre feet 192 million gallons of lifetime water savings Commercial Industrial and Institutional CII Programs CII Rebate Program Through the Save Water Save A Buck Program Southern California businesses are eligible for rebates to help encourage water use efficiency and conservation This program offers cash rebates on a wide variety of water saving technologies including High Efficiency Toilets and Urinals WBICs for outdoor landscaping as well as many industry specific water conserving devices Rebates for CII devices provided during the fiscal year 12 13 will produce approximately over 135 acre feet 44 million gallons of lifetime water savings Landscape Programs Large Landscape Survey and Retrofit Program The objective of the Large Landscape Survey and Retrofit Program is to actively increase large landscape irrigation efficiency at CII sites The program offers free irrigation assessments to large landscaped CII sites in the Upper District s service area As part of the program the Upper District offers some funding to pay for implementing survey recommendations During the fiscal year ended June 30 2013 11 surveys were conducted that involved recommendations for 20 52 acres of irrigated landscape Wireless Soil Moisture Sensor Demonstration Project Five potential school sites have been identified as good locations to install wireless moisture sensor technology to demonstrate significant water use savings vi
Water Use Efficiency The IRP calls for additional investment in water use efficiency to reduce water use by an additional ...
Sustainable Landscape Demonstration Program To better integrate and communicate the need for low impact sustainable outdoor landscaping this program will convert highwater need landscaping in five public spaces to drought tolerant and low impact gardens Five sites one demonstration site located in each division have been selected with the intent of reducing the sites water footprint by installing high efficiency irrigation equipment and low water use plants Sites will be constructed in visible and accessible public locations to provide a focus point for the community that demonstrates sustainable landscaping The project will also demonstrate the benefits of on site storm water retention and capture Technical Assistance Water Use Efficiency City Ordinance Assistance The Upper District continued to offer technical assistance through the end of 2012 to help cities within its area expand their existing water conservation measures to meet federal and state water efficiency standards and also improve Sierra Club scorecard rankings Six cities Baldwin Park South Pasadena La Puente Rosemead San Gabriel and South El Monte responded to Upper District s offers for assistance and some expressed interest in further information As part of Upper District s assistance an Ordinance Guidance Summary was developed with the objective of assisting cities in developing effective and sensible water conservation ordinances Education and Community Outreach Programs Watershed Restoration Program This program is a cooperative partnership between the Upper District and the U S Forest Service that incorporates volunteers into efforts to protect and maintain the local watershed Program activities typically include collection of native seeds planting of saplings and trash removal Since the program began in 1991 about 135 500 saplings and thousands of acres of chaparral have been planted 4th 6th Grade Sustainable Watershed Education Program 2013 marks the first year that Upper District partners with the Discovery Science Center DSC and THINK Together to provide 4th 6th grade student curriculum that focuses on water use efficiency highlights watershed issues and groundwater awareness Offered free to participating schools the program includes interactive assemblies for fourth and fifth graders and in class hands on workshops for sixth graders Schools that currently work with THINK Together to provide afterschool instruction will also benefit THINK Together offers afterschool instruction that complements and expands the in school curriculum associated with water related topics The program kicked off during the spring and 2 184 students have participated in the assemblies and hands on workshops Water Efficient Landscape Classes Throughout the year a number of water efficient landscaping and gardening courses are offered free of charge to the public Courses have been offered in both Spanish and English As of June 30 2013 over 1 000 people have participated in these classes since its inception in 1992 Solar Cup A youth program sponsored by MWD Solar Cup provides high school teams the hands on opportunity to build solar powered boats that they compete in race and endurance categories This three day event is the culmination of several months of planning and building that offers student participants an opportunity to learn about natural resources the development use of alternative fuel sources the protection of water quality as well as vii
Sustainable Landscape Demonstration Program - To better integrate and communicate the need for low impact, sustainable out...
program management skills The Upper District has sponsored 35 teams since the program began in 2003 Water Awareness Art Contest The Upper District s Water is Life art contest inspires students to think about how important water is to all life and encourages youth to express the value of water through their artwork The contest has 4 categories K 2 3 5 6 8 and 9 12th grade Water Education Grant Program This program offers up to 1 000 grants for a classroom or school project from K 12th grade that furthers a better understanding of water as a vital resource and the important role it plays in Southern California The program began in 2004 and to date 61 applicants have been awarded a total of 44 000 in grants Relevant Financial Policies Internal Control Structure Management is responsible for establishing and maintaining an internal control structure that ensures that assets are protected from loss theft or misuse The internal control structure also ensures that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles The internal control structure is designed to provide reasonable assurance that these objectives are met The concept of reasonable assurance recognizes that a the cost of a control should not exceed the benefits likely to be derived and b the valuation of costs and benefits requires estimates and judgments by management Investment Policy Annually the Board of Directors adopts an investment policy consistent with the requirements of the California Government Code In order of priority three fundamental criteria are followed by Upper District in the investment program a Safety of Principal Investments shall be undertaken in a manner that first seeks to ensure the preservation of principal in the portfolio Each investment transaction shall be entered into after taking into consideration the quality of the issuer the underlying security or collateral and diversification of the portfolio b Liquidity Investments shall be made so that the maturity date is compatible with cash flow needs and safety of principal c Return on Investment Investments shall be undertaken to produce an acceptable rate of return after first considering safety of principal and liquidity and the prudent investor standard Budget Process and Controls Upper District utilizes and adopts an annual budget as a management tool As part of its budget process the Upper District conducts budget workshops to encourage stakeholder participation and input prior to adoption of the final budget Monthly financial statements showing budget to actual comparison and analysis are presented to the Board of Directors viii
program management skills. The Upper District has sponsored 35 teams since the program began in 2003. Water Awareness Art ...
Water Rates Pursuant to Water Code Section 71614 et seq Upper District establishes water rates and charges through a resolution by the Board of Directors Prior to adoption of the water rates and charges workshops are held to solicit input from all stakeholders Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the Upper District for its CAFRs for the fiscal years ended June 30 2012 and 2011 In order to be awarded a Certificate of Achievement the Upper District had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable program requirements A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only However we believe that our current CAFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate The preparation of this report was accomplished by the combined efforts of Upper District staff We appreciate the dedicated efforts and professionalism that our staff members bring to the Upper District We would also like to thank the members of the Board of Directors for their continued support in the planning and implementation of the Upper District s fiscal policies Respectfully submitted Shane Chapman General Manager Evelyn M Rodriguez Chief Financial Officer ix
Water Rates Pursuant to Water Code Section 71614 et seq., Upper District establishes water rates and charges through a res...
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Upper San Gabriel Valley Municipal Water District Organizational Chart Board of Directors General Counsel General Manager Assistant General Manager Chief Engineer Chief Financial Officer Assistant Director of Finance Conservation Coordinator Executive Assistant Administrative Assistant Project Assistant 1 FTE Secretary Receptionist xi Director of Community and Government Affairs Community and Government Affairs Representative
Upper San Gabriel Valley Municipal Water District Organizational Chart  Board of Directors  General Counsel  General Manag...
Financial Section
Financial Section
Report of Independent Auditors The Honorable Members of the Board of Directors Upper San Gabriel Valley Municipal Water District Report on the Financial Statements We have audited the accompanying financial statements of Upper San Gabriel Valley Municipal Water District the Upper District as of and for the years ended June 30 2013 and 2012 and the related notes to the financial statements which collectively comprise the Upper District s basic financial statements as listed in the table of contents 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 Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audits We conducted our audits 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 auditors judgment including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error In making those risk assessments the auditors consider internal control relevant to the entity 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 entity 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 basic financial statements referred to above present fairly in all material respects the financial position of the Upper District as of June 30 2013 and 2012 and the changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America
Report of Independent Auditors  The Honorable Members of the Board of Directors Upper San Gabriel Valley Municipal Water D...
Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 3 through 7 and the required supplementary information on page 27 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 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Upper District s basic financial statements The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly we do not express an opinion or provide any assurance on them Implementation of New Accounting Standards As disclosed in the Note 1 to the financial statements the Upper District implemented Governmental Accounting Standards Board GASB Statement No 63 and implemented GASB Statement No 65 in advance during the fiscal year 2013 Among these new GASB Statements GASB Statement No 63 Financial Reporting of Deferred Outflows of Resources Deferred Inflows of Resources and Net Position and GASB Statement No 65 Items Previously Reported as Assets and Liabilities have significant impact over the Upper District s financial statements Our opinion is not modified with respect to that matter Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards we have also issued our report dated December 23 2013 on our consideration of the Upper District 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 Upper District s internal control over financial reporting and compliance Los Angeles California December 23 2013
Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America ...
Upper San Gabriel Valley Municipal Water District Management s Discussion and Analysis June 30 2013 and 2012 The following Management s Discussion and Analysis MD A provides an overview of the financial performance and activities of the Upper San Gabriel Valley Municipal Water District the Upper District for the fiscal years ended June 30 2013 and 2012 We encourage readers to consider the information presented here in conjunction with the transmittal letter in the Introductory Section and with the basic financial statements and related notes which follow this section Required Financial Statements The Upper District is a wholesale water utility enterprise and presents its financial statements using the economic resources measurement focus and the full accrual basis of accounting As an enterprise fund the Upper District s basic financial statements include the statements of net position statements of revenues expenses and changes in net position and statements of cash flows The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data The statement of net position presents information on all of the Upper District s assets and deferred outflows of resources and liabilities and deferred inflows of resources 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 Upper District is improving or deteriorating The statement of revenues expenses and changes in net position presents information showing how the Upper District 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 recognized on the accrual basis The statement of cash flows is related to the other financial statements by the way it links changes in assets and deferred outflows of resources and liabilities and deferred inflows of resources to the effect on cash and cash equivalents over the course of the fiscal year The notes to the financial statements provide useful information regarding the Upper District s significant accounting policies and they explain significant account balances and activities certain material risks obligations commitments contingencies and subsequent events if any Financial Highlights The statement of revenues expenses and changes in net position shows an increase of 3 40 million in net position for the fiscal year ended June 30 2013 attributable to the following Operating revenues decreased by 16 or about 2 48 million primarily due to lower sales of imported water for groundwater recharge Negative impact of this decline in water sales was partially offset by a corresponding decrease in cost of water purchases from Metropolitan Water District of Southern California MWD Contributions received for capital construction projects from federal and state grants increased by 3 28 million from last fiscal year s 1 65 million Of this amount 1 25 million represents final reimbursement under a Title XVI grant from USBR for the Upper District s recycled water program During the year Upper District also received 0 60 million additional funding related to the closeout of the American Recovery and Reinvestment Act ARRA grant 3
Upper San Gabriel Valley Municipal Water District Management   s Discussion and Analysis June 30, 2013 and 2012 The follow...
Upper San Gabriel Valley Municipal Water District Management s Discussion and Analysis June 30 2013 and 2012 Construction activities for the San Gabriel Valley Water Recycling Program Phase IIB City of Industry Recycled Water Project City of Industry Project partially funded by State Revolving Fund and ARRA monies continued during fiscal year 2012 2013 More information on the financial statement variances is covered in the next sections Financial Analysis of the Upper District The statements of net position and the statements of revenues expenses and changes in net position report provide an indication of the Upper District s financial health The following tables summarize the Upper District s financial condition and the changes in its net position for the past three years Statements of Net Position Condensed Statements of Net Position Assets Current assets Capital assets net Total assets 2013 in thousands 19 806 51 650 71 456 Liabilities Current liabilities Noncurrent liabilities Total liabilities Deferred Inflows of Resources Net Position Net investment in capital assets Unrestricted Total net position Change June 30 2013 2012 2012 2011 2012 2011 Dollar Dollar in thousands in thousands in thousands Percentage in thousands Percentage 18 555 25 557 1 251 6 7 7 002 27 4 41 032 35 975 10 618 25 9 5 057 14 1 59 587 61 532 11 869 19 9 1 945 3 2 1 621 13 466 15 087 2 250 4 274 6 524 6 304 1 824 8 128 629 9 192 8 563 28 0 215 1 131 3 174 265 6 91 34 3 39 195 17 000 56 195 37 582 15 216 52 798 34 780 18 618 53 398 1 613 1 784 3 397 4 3 11 7 6 4 4 054 2 450 1 604 259 2 802 3 402 600 64 3 134 3 19 7 4316 7 8 1 18 3 1 1 As shown above Upper District s total assets exceeded liabilities and deferred inflows of resources by 56 20 52 80 million and 53 40 million as of June 30 2013 2012 and 2011 respectively or an increase in net position of 3 40 million between 2013 and 2012 and a decrease in net position of 0 60 million between 2012 and 2011 Assets Increase in current assets of about 1 25 million from 2012 to 2013 is primarily attributable to amounts receivable from the USBR representing final reimbursements from Title XVI and ARRA grants As of June 30 2012 the Upper District s current assets decreased by 7 million from the prior year mainly due to lower water sales construction activities for the City of Industry Project partially funded by the Upper District reserve funds higher program expenses related to conservation water recycling and water quality and supply For fiscal years ended June 30 2013 4
Upper San Gabriel Valley Municipal Water District Management   s Discussion and Analysis June 30, 2013 and 2012     Constr...
Upper San Gabriel Valley Municipal Water District Management s Discussion and Analysis June 30 2013 and 2012 and 2012 the Upper District s capital assets increased by 10 62 and 5 06 million respectively from prior years as construction activities for the City of Industry Project continued Liabilities As of June 30 2013 the Upper District s current liabilities decreased by 0 63 million from prior year due to lower project related payables as construction activities for the City of Industry Phase IIB Recycled Water Program began to wind down The decrease in current liabilities in 2012 amounting to 4 05 million is primarily due to lower water purchases from MWD For the fiscal years ended June 30 2013 and 2012 noncurrent liabilities increased by 9 19 million and 2 45 million respectively from prior year mainly due to additional loan funds received from the State Water Resources Control Board Net Position A large portion of the Upper District s net position consists of net investment in capital assets Capital assets are used by the Upper District to provide services to its customers and are therefore not available for spending Consequently as the Upper District continued to invest in its recycled water program to improve water supply reliability unrestricted net position will generally decrease However in 2013 additional federal funding received from Title XVI and ARRA grant closeouts offset the impact of the District s capital improvements on unrestricted net position which increased by 1 78 million from the prior year Statements of Revenues Expenses and Changes in Net Position The statements of revenues expenses and changes in net position provide information on the nature and sources of these changes For the fiscal year ended June 30 2013 the Upper District s net position increased by 3 40 million For the fiscal year ended June 30 2012 the Upper District s net position decreased by 0 60 million Condensed Statements of Revenues Expenses and Changes in Net Position Change Years ended June 30 2013 2013 2012 2012 2011 in thousands in thousands in thousands in thousands Total operating revenues 12 837 15 316 26 057 2012 2011 Dollar Dollar Percentage 2 479 16 2 in thousands Percentage 10 741 41 2 32 9 Total operating expenses 17 338 19 233 28 670 1 895 9 9 9 437 Operating income loss 4 501 3 917 2 613 584 14 9 1 304 49 9 Net nonoperating revenues 2 971 1 672 3 831 1 299 77 7 2 159 56 4 Capital contributions 4 927 1 645 3 566 3 282 199 5 1 921 53 9 Change in net position 3 397 4 784 3 997 666 2 5 384 112 5 48 614 600 1 1 4 784 9 8 3 397 6 4 600 1 1 Beginning net position Ending net position 600 52 798 56 195 53 398 52 798 53 398 5
Upper San Gabriel Valley Municipal Water District Management   s Discussion and Analysis June 30, 2013 and 2012 and 2012, ...
Upper San Gabriel Valley Municipal Water District Management s Discussion and Analysis June 30 2013 and 2012 Operating Revenues The temporary ability of the Upper District s customers to lease groundwater from the cities of Alhambra Monterey Park and Azusa rather than purchase replacement water available from MWD and the Upper District as per the Judgment and Watermaster s Rules and Regulations resulted in significantly lower than anticipated sale of imported water for groundwater recharge during the fiscal year ended June 30 2012 Consequently water revenues fell by 43 or about 11 10 million compared to prior year This trend continued in 2013 and as MWD s replenishment program remained off water revenues fell by another 16 or 2 32 million Nonoperating Revenues Expenses and Capital Contributions Nonoperating revenues consisting of standby charges investment earnings and taxes showed a slight decrease between fiscal years ended June 30 2013 and 2012 and June 30 2012 and 2011 Nonoperating program expenses increased by about 2 13 million in 2012 During the fiscal year the Upper District started the development of a Water Use Efficiency Master Plan WUE an Integrated Resources Plan IRP and the Indirect Reuse Action Plan IRAP Upper District also disbursed 0 64 million in grant funds for Sunny Slope Water Company s Sunny Slope Liquid Phase Granular Activated Carbon Treatment Project The substantial completion of the WUE IRP and grant reimbursements to Sunny Slope in 2012 reduced nonoperating expenses by approximately 0 70 million in 2013 Operating Expenses The Upper District purchases imported water from MWD and sets its rates based on MWD s prevailing rates For the years ended June 30 2013 and 2012 purchased water cost decreased by 2 21 million and 10 39 million respectively primarily due to lower than anticipated sale of imported water for groundwater recharge Capital Asset Administration At June 30 2013 2012 and 2011 the Upper District s investments in capital assets net of accumulated depreciation amounted to 51 65 million 41 03 million and 35 98 million respectively The following is a summary of capital assets Land Construction in progress Building and improvements Intangible utility plant Water recycling Source of supply Office furniture and equipment Less accumulated depreciation Net capital assets Change June 30 2013 2012 2012 2011 2013 2012 2011 Dollar Dollar in thousands in thousands in thousands in thousands Percentage in thousands Percentage 81 81 81 0 0 0 0 32 583 27 191 21 943 5 392 19 8 5 248 23 9 560 560 560 0 0 0 0 583 583 583 0 0 0 0 20 878 15 203 15 203 5 675 37 3 0 0 103 95 74 8 8 4 21 28 4 569 530 364 39 7 4 166 45 6 55 357 44 243 38 808 11 114 25 1 5 435 14 0 3 707 3 211 2 833 496 15 4 378 13 3 51 650 41 032 35 975 10 618 25 9 5 057 14 1 6
Upper San Gabriel Valley Municipal Water District Management   s Discussion and Analysis June 30, 2013 and 2012 Operating ...
Upper San Gabriel Valley Municipal Water District Management s Discussion and Analysis June 30 2013 and 2012 A significant portion of the construction in progress as of June 30 2013 and 2012 is attributable to construction activities related to Upper District s recycled water projects For more information regarding the Upper District s capital assets please refer to Note 3 of the notes to financial statements Long term Debt Construction activities for the City of Industry Project were partially funded by State Revolving Fund SRF loan from the State Water Resources Control Board SWRCB which as of June 30 2013 and 2012 amounted to 12 455 676 and 3 450 210 respectively Detailed information on Upper District s long term debt is presented under Note 5 in the Notes to Financial Statements Water Rates and Other Charges On July 2 2013 the Board of Directors approved water rates and charges for the different classes of water effective on January 1 2014 with no increase in District surcharge just a pass through of the increase in MWD s treatment surcharge Please refer to page 35 of the statistical section for Upper District s water rates for the last ten fiscal years On June 4 2013 the Board of Directors approved the adoption of a water standby or availability of service charge at rates equal to prior year s 8 00 per acre of land or 8 00 for each parcel of land less than an acre within the Upper District s service area This charge generates approximately 1 66 million in revenues Conditions Affecting Current Financial Position The past practice of groundwater Basin management which relied on a high probability of surplus imported water is not well suited for the level of risk and uncertainty in the imported water system today Recognizing this reality Upper District held a series of workshops and prepared several white papers evaluating alternative Basin management and storage strategies This effort led to Watermaster adopting a storage program predicated on moderate levels of operating safe yield and regular annual purchases of supplemental water Through this new program Watermaster and the producers committed by resolution to purchase a minimum of 32 000 acre feet per year from Upper District greatly improving and stabilizing Upper District s financial condition and improving the ability to finance much needed investments in water supply reliability identified in the IRP Requests for Information This financial report is designed to provide the Upper District s funding sources customers stakeholders and other interested parties with an overview of the Upper District s financial operations and overall financial condition Should the reader have questions regarding the information included in this report or wish to request additional financial information please contact the Upper District s Chief Financial Officer at 602 E Huntington Drive Suite B Monrovia California 91016 7
Upper San Gabriel Valley Municipal Water District Management   s Discussion and Analysis June 30, 2013 and 2012  A signifi...
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Basic Financial Statements
Basic Financial Statements
Upper San Gabriel Valley Municipal Water District Statements of Net Position June 30 ASSETS 2012 2013 Current assets Cash and cash equivalents Receivables Water sales Grants Other Prepaid items Total current assets 15 360 221 16 591 883 994 478 3 248 201 153 655 49 229 19 805 784 Total assets LIABILITIES Current liabilities Accounts payable Metropolitan Water District Other Accrued liabilities Total current liabilities Noncurrent liabilities Due to State Water Resources Control Board Other postemployment benefits Compensated absences net of current portion Total noncurrent liabilities Total liabilities 32 663 771 18 986 564 51 650 335 71 456 119 27 272 108 13 760 116 41 032 224 59 587 000 350 983 1 134 384 136 121 1 621 488 Capital assets Land and construction in progress Depreciable capital assets net Net capital assets 833 957 901 775 183 618 43 543 18 554 776 489 224 1 692 227 68 131 2 249 582 12 455 676 986 347 23 987 13 466 010 3 450 210 791 165 32 625 4 274 000 15 087 498 6 523 582 174 006 265 482 39 194 659 16 999 956 56 194 615 37 582 014 15 215 922 52 797 936 DEFERRED INFLOWS OF RESOURCES Unearned revenue NET POSITION Net investment in capital assets Unrestricted Total net position See notes to the financial statements 8
Upper San Gabriel Valley Municipal Water District Statements of Net Position  June 30 ASSETS  2012  2013  Current assets C...
Upper San Gabriel Valley Municipal Water District Statements of Revenues Expenses and Changes in Net Position Years ended June 30 2012 2013 Operating revenues Water revenue Water conservation Other 14 714 480 332 669 268 502 15 315 651 Total operating revenues 12 395 427 195 001 246 923 12 837 351 Operating expenses Sources of supply Water quality and supply program Recycling costs Conservation Depreciation General and administrative Total operating expenses 10 524 787 1 813 586 1 079 603 776 378 495 789 2 648 452 17 338 595 12 729 702 1 619 326 639 237 1 781 566 377 411 2 085 287 19 232 529 Operating loss 4 501 244 3 916 878 Nonoperating revenues expenses Standby charges Nonoperating program expenses Investment earnings Taxes Net nonoperating revenues 3 542 467 991 381 40 710 379 079 2 970 875 3 575 604 2 306 154 65 196 336 792 1 671 438 Loss before contributions 1 530 369 2 245 440 4 927 048 1 644 983 Contributions for capital acquisition construction Change in net position 600 457 3 396 679 Net position at beginning of year 53 398 393 52 797 936 Net position at end of year 56 194 615 See notes to the financial statements 9 52 797 936
Upper San Gabriel Valley Municipal Water District Statements of Revenues, Expenses and Changes in Net Position  Years ende...
Upper San Gabriel Valley Municipal Water District Statements of Cash Flows Years ended June 30 2012 2013 Cash flows from operating activities Cash received from customers Cash payments to suppliers for goods and services Cash payments to employees for services Net cash used in operating activities 10 227 702 16 000 734 1 289 308 7 062 340 18 205 749 21 332 054 1 312 793 4 439 098 379 079 991 381 3 577 641 2 965 339 336 792 2 306 154 3 558 619 1 589 257 11 113 900 13 932 514 5 434 408 3 899 923 2 818 614 1 534 485 Cash flows from noncapital financing activities Cash received for property taxes Cash paid for nonoperating program expenses Cash received for standby charges Net cash provided by noncapital financing activities Cash flows from capital and related financing activities Acquisition and construction of capital assets Capital contributions Net cash provided by used in capital and related financing activities Cash flows from investing activities Net employee loans repayments Investment earnings Net cash provided by investing activities 1 231 662 Change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 4 308 984 16 591 883 15 360 221 20 900 867 16 591 883 See notes to the financial statements 10 1 093 74 249 75 342 46 725 46 725
Upper San Gabriel Valley Municipal Water District Statements of Cash Flows  Years ended June 30 2012 2013 Cash flows from ...
Upper San Gabriel Valley Municipal Water District Statements of Cash Flows continued Years ended June 30 2012 2013 Reconciliation of operating loss to net cash used in operating activities Operating loss Adjustments to reconcile operating loss to net cash used in operating activities Depreciation expense Changes in operating assets and liabilities Accounts receivable Prepaid items Accounts payable and accrued expenses Unearned revenue Net adjustments Net cash used in operating activities 4 501 244 495 789 2 518 173 5 686 441 550 91 476 2 561 096 7 062 340 See notes to the financial statements 11 3 916 878 377 411 2 630 916 69 477 3 859 206 259 182 522 220 4 439 098
Upper San Gabriel Valley Municipal Water District Statements of Cash Flows  continued   Years ended June 30 2012 2013 Reco...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of the Entity Upper San Gabriel Valley Municipal Water District the Upper District which comprises an area of approximately 144 square miles was incorporated on January 7 1960 under the provisions of the Municipal Water District Law of 1911 as amended now cited as The Municipal Water District Law of 1911 Division 20 California Water Code as a result of a special election held on December 8 1959 On March 12 1963 the voters of the Upper District elected to join the Metropolitan Water District of Southern California and on November 2 1965 the citizens of West Covina voted to join the Upper District Adjudication proceedings which established the legal determination of water rights of individual pumpers in the area in relation to the safe yield of the total water basin were completed on December 29 1972 The decree established a Watermaster the Main San Gabriel Basin Watermaster who took over the function of levying and collecting the assessments that had previously been levied and collected by the Upper San Gabriel Valley Municipal Water District through its reimbursement contract and replenishment funds The Upper District s missions are 1 to provide a reliable supply of high quality drinking water at the lowest possible cost 2 to provide a drought proof and economical supply of recycled water for industrial and irrigation uses and 3 to provide and complete projects that aggressively advance water use efficiency throughout the San Gabriel Valley Basis of Accounting and Measurement Focus The Upper District is considered an enterprise fund for financial reporting purposes The accompanying financial statements have been prepared using the economic measurement focus and the accrual basis of accounting Under this basis of accounting and measurement focus revenues are recognized when they are earned and expenses are recognized when they are incurred The Upper District has elected not to apply the option allowed in Paragraph 7 of Government Accounting Standards Board GASB Statement No 20 Accounting and Financial Reporting for Proprietary Activities that is to apply all FASB Statements and Interpretations issued after November 30 1989 except those that conflict with or contradict GASB pronouncements The Upper District s financial statements are presented in accordance with the provisions of GASB Statement No 34 Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments as amended by GASB Statement No 63 Financial Reporting of Deferred Outflows of Resources Deferred Inflows of Resources and Net Position and Audits of State and Local Governmental Units issued by the American Institute of Certified Public Accountants Statement No 34 established standards for external financial reporting for all state and local governmental entities It requires the classification of net position into three components net investment in capital assets restricted and unrestricted These classifications are defined as follows 12
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 1...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED Net investment in capital assets This component of net position consists of capital assets including restricted capital assets net of accumulated depreciation reduced by the outstanding balances of any bonds mortgages notes or other borrowings that are attributable to the acquisition construction or improvement of those assets If there are significant unspent related debt proceeds at year end the portion of the debt attributable to the unspent proceeds are not included in the calculation of net investment in capital assets Rather that portion of the debt is included in the same net position component as the unspent proceeds Restricted This component of net position consists of constraints placed on resources through external constraints imposed by creditors such as through debt covenants grantors contributors or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation Unrestricted This component of net position consists of resources that do not meet the definition of restricted or net investment in capital assets The Upper District distinguishes operating revenues and expenses from nonoperating items Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with an entity s ongoing operations The Upper District defines operating revenues as those realized by the Upper District in exchange for providing its primary services for water sales and water programs including conservation and recycled water Nonoperating revenues are those derived from the investment of cash reserves and from entities other than customers and other ancillary sources New Accounting Pronouncements During the fiscal year ended June 30 2013 the District early implemented certain provisions of GASB No 63 Financial Reporting of Deferred Outflows of Resources Deferred Inflows of Resources and Net Position GASB 63 This statement amends the net asset reporting requirements in GASB Statement No 34 by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position rather than net assets GASB 63 provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources During the fiscal year ended June 30 2013 the Upper District early implemented certain provisions of GASB No 65 Items Previously Reported as Assets and Liabilities GASB 65 GASB 65 establishes accounting and financial reporting standards that reclassify as deferred outflows of resources or deferred inflows of resources certain items that were previously reported as assets and liabilities and recognizes as outflows of resources or inflows of resources certain items that were previously reported as assets and liabilities 13
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 1...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities Actual results could differ from those estimates Risk Management The Upper District is a member of the Association of California Water Agencies Joint Powers Insurance Authority Insurance Authority The Insurance Authority is a riskpooling self insurance authority created under the provisions of California Government Code Sections 6500 et seq The purpose of the Insurance Authority is to arrange and administer programs of insurance for the pooling of self insured losses and to purchase excess insurance coverage At June 30 2013 the Upper District participated in the self insurance program of the Insurance Authority as follows Property Loss The Insurance Authority has pooled self insurance up to 100 000 per occurrence and has purchased excess insurance coverage up to 100 000 000 total insurable value of 3 792 774 with 25 000 deductible General Liability The Insurance Authority has pooled self insurance up to 2 000 000 and has purchased excess insurance coverage up to 58 000 000 Auto Liability The Insurance Authority has pooled self insurance up to 2 000 000 per occurrence and has purchased excess insurance coverage up to 58 000 000 Public Officials Liability and Errors and Omissions The Insurance Authority has pooled self insurance up to 2 000 000 per occurrence and has purchased excess insurance coverage up to 58 000 000 Fidelity Public Employee Dishonesty Forgery or Alteration Computer Fraud ERISA The Insurance Authority has pooled self insurance up to 100 000 per occurrence with 1 000 deductible Workers Compensation The Insurance Authority has pooled self insurance up to 2 000 000 each for workers compensation and employers liability The employers liability is insured up to 2 000 000 in excess of 2 000 000 Self Insured Retention Workers compensation is insured up to the statutory limit Cash and Cash Equivalents For purposes of the statements of cash flows cash and cash equivalents have been defined as deposits and highly liquid investments with maturity of 90 days or less at the date of purchase 14
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 1...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED Capital Assets and Depreciation Capital assets are recorded at cost The provision for depreciation is computed using the straight line method over the estimated service lives of the capital assets The Upper District uses differing capitalization thresholds for the classes of assets based on materiality The Upper District s policy is to review for capitalization those expenditures greater than 500 that have a useful life of more than one year Estimated service lives for the Upper District s classes of assets are as follows Distribution system Building Building improvements Furniture and equipment 50 years 50 years 10 15 years 5 10 years Unearned Revenue Unearned revenue is water revenue paid by customers as well as rental revenue paid by a lessee in the current period but is yet to be earned by the Upper District Compensated Absences The Upper District s policy is to permit employees to accumulate a limited amount of earned vacation and sick leave Accumulated vacation time is accrued at year end to account for the Upper District s obligation to the employees for the amount owed It is management s belief that the majority of the obligation will be utilized during the course of the next fiscal year Vacation pay is payable to employees at the time a vacation is taken cashed out or upon termination of employment Normally an employee cannot accrue more than thirty days of vacation each year Sick leave is payable when an employee is unable to work because of illness Upon retirement an employee will be paid for any unused sick leave Overhead Absorption Certain operating expenses are allocated to capital assets using management s allocation of manpower and service estimates that are directly related to the construction of capital assets Capital Contributions Capital contributions represent cash and capital asset additions contributed to the Upper District by federal and state granting agencies Budgetary Policies The Upper District adopts an annual non appropriated budget for planning control and evaluation purposes Budgetary control and evaluation are affected by comparisons of actual revenues and expenses with planned revenues and expenses for the period Encumbrance accounting is not used to account for commitments related to unperformed contracts for construction and services Reclassification Certain reclassifications have been made to prior period financial statements to conform to the current presentation for the implementation of GASB Nos 63 and 65 15
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 1...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 2 CASH AND CASH EQUIVALENTS Cash and cash equivalents as of June 30 consist of the following Imprest cash on hand Deposit with financial institution 1 Local Agency Investment Fund Money market Total cash and cash equivalents 2013 500 597 987 14 761 734 15 360 221 2012 500 462 006 16 114 361 15 016 16 591 883 1 The Upper District is a voluntary participant in the Local Agency Investment Fund LAIF a special fund regulated by the California State Treasury through which each city district or agency may invest up to 40 million As of June 30 2013 and 2012 the total fair value of LAIF including accrued interest was approximately 58 9 billion and 60 6 billion respectively The Upper District s proportionate share of that value is 14 8 million and 16 1 million as of June 30 2013 and 2012 respectively Investments in LAIF are highly liquid as deposits can be converted to cash within 24 hours without loss of interest In regards to credit rating LAIF is unrated as of June 30 2013 and 2012 Investment Policy The Upper District s investment policy outlines the guidelines required to be used in effectively managing the Upper District s available cash in accordance with the California Government Code To address interest rate risk the Upper District s existing policy limits the maturity of investments to five years with the exception of special trust funds which shall not be subject to this limitation To mitigate credit risks associated with its investments the Upper District s investment policy limits investments to large institutions and requires diversification to ensure that failure of one issuer will not significantly affect the Upper District s cash flow Interest Rate Risk Interest rate risk as defined under GASB Statement No 40 is the risk that changes in interest rates will adversely affect the fair value of an investment The Upper District s investments have a weighted average maturity of 278 days generally consistent with its cash flow and liquidity needs Investments in LAIF are highly liquid as deposits can be converted to cash within 24 hours without loss of interest Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations The Upper District s investment policy limits eligible investments to large institutions As of June 30 2013 and 2012 the Upper District had almost all of its investments in LAIF Concentration of Credit Risk Under GASB Statement No 40 concentration of credit risk is the risk of loss attributable to the magnitude of the Upper District s investment in a single issuer As of June 30 2013 and 2012 the Upper District had no outstanding investments aside from the LAIF investments mentioned above 16
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 2...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 2 CASH AND CASH EQUIVALENTS CONTINUED Custodial Credit Risk GASB Statement No 40 defines custodial credit risk as the risk that the Upper District will not be able to a recover deposits if the depository financial institution fails or b recover the value of investments or collateral securities that are in the possession of an outside party if the counterparty to the investment or deposit transaction fails Deposits The California Government Code requires California banks and savings and loan associations to secure a local governmental agency s agency deposits by pledging government securities as collateral The market value of pledged securities must equal at least 110 of an agency s deposits California law also allows financial institutions to secure an agency s deposits by pledging first trust deed mortgage notes having a value of 150 of an agency s total deposits The agency may waive collateral requirements for deposits which are fully insured up to 250 000 by the Federal Deposit Insurance Corporation FDIC Beginning January 1 2013 the FDIC will insure noninterest bearing transaction accounts which generally provides each depositor up to 250 000 in coverage at each separately chartered insured depository institution Deposits are exposed to custodial credit risk if they are uninsured and are either a Uncollateralized b Collateralized with securities held by the pledging financial institution or by its trust department or agent but not in the depositor government s name At June 30 2013 and 2012 the Upper District s deposits bank balances exceeded the maximum deposit insurance amount by 337 000 and 0 respectively Investments The California Government Code authorizes the Upper District to invest in obligations of the United States Treasury agencies and instrumentalities prime commercial paper bankers acceptances repurchase and reverse repurchase agreements financial futures or financial option contracts negotiable certificates of deposit obligations of the State of California and obligations of local agencies within California Investments are exposed to custodial credit risk if they are uninsured unregistered and held by either a Counterparty b The counterparty s trust department or agent but not in the government s name At June 30 2013 and 2012 the Upper District had no investments 17
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 2...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 3 CAPITAL ASSETS Changes in capital assets for the year ended June 30 2013 were as follows Balances at July 1 2012 Non depreciable capital assets Land Construction in progress Deletions Transfers Balances at June 30 2013 80 848 27 191 260 11 066 457 5 674 794 80 848 32 582 923 Total non depreciable capital assets 27 272 108 11 066 457 5 674 794 32 663 771 Depreciable capital assets Building and improvements Intangible utility plant Water recycling Furniture and equipment Other Total depreciable capital assets 559 820 582 772 15 203 246 529 902 95 067 16 970 807 39 088 8 355 47 443 5 674 794 5 674 794 559 820 582 772 20 878 040 568 990 103 422 22 693 044 Accumulated depreciation Building and improvements Intangible utility plant Water recycling Furniture and equipment Other Total Accumulated Depreciation Net depreciable capital assets 422 682 582 772 1 863 567 311 491 30 179 3 210 691 13 760 116 22 631 419 383 51 678 2 097 495 789 448 346 5 674 794 445 313 582 772 2 282 950 363 169 32 276 3 706 480 18 986 564 Net capital assets Additions 41 032 224 10 618 111 51 650 335 Changes in capital assets for the year ended June 30 2012 were as follows Balances at July 1 2011 Non depreciable capital assets Land Construction in progress Additions Deletions Transfers Balances at June 30 2012 80 848 21 943 143 5 248 117 Total non depreciable capital assets 22 023 991 5 248 117 27 272 108 Depreciable capital assets Building and improvements Intangible utility plant Water recycling Furniture and equipment Other Total depreciable capital assets 559 820 582 772 15 203 246 364 577 74 102 16 784 517 165 325 20 965 186 290 559 820 582 772 15 203 246 529 902 95 067 16 970 807 Accumulated depreciation Building and improvements Intangible utility plant Water recycling Furniture and equipment Other Total Accumulated Depreciation Net depreciable capital assets Net capital assets 400 051 582 772 1 559 190 261 437 29 830 2 833 280 13 951 237 35 975 228 22 631 304 377 50 054 349 377 411 191 121 5 056 996 422 682 582 772 1 863 567 311 491 30 179 3 210 691 13 760 116 41 032 224 18 80 848 27 191 260
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 3...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 3 CAPITAL ASSETS CONTINUED Major capital asset additions during the year include work on various stages of construction projects A significant portion of these additions were constructed by the Upper District and or sub contractors During the fiscal year ended June 30 2013 the Upper District completed the Water Recycling Program Phase IIA Rosemead Extension and transferred out 5 674 794 of construction in progress to Water Recycling NOTE 4 COMPENSATED ABSENCES Changes in compensated absences were as follows Balance at beginning of year Earned by employees Taken by paid to employees Balance at end of year Less current portion Long term portion June 30 2013 72 891 74 290 83 233 63 948 39 961 23 987 2012 60 499 65 175 52 783 72 891 40 266 32 625 Current portion of compensated absences is included as part of accrued liabilities NOTE 5 AGREEMENTS WITH STATE WATER RESOURCES CONTROL BOARD 5 Million Grant Agreement In September 2008 the California State Water Resources Control Board CSWRCB provided a 5 million Water Recycling Grant to the Upper District for use in expanding its current recycled water use in and around the existing service area with reliable and supplemental water supply The term of the agreement began on September 16 2008 and will continue through project completion plus thirty five 35 years unless otherwise terminated or amended as provided in the grant agreement All work was completed by March 31 2013 and no funds were requested after May 1 2013 During the fiscal years ended June 30 2013 and 2012 the Upper District received a total of 1 383 505 and 845 220 from CSWRCB respectively 19
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 3...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 5 AGREEMENTS CONTINUED WITH STATE WATER RESOURCES CONTROL BOARD 17 02 Million Project Finance Agreements In December 2009 the Upper District entered into four 4 project finance agreements with the CSWRCB for a total amount of 17 02 million for the purpose of financing the planning design acquisition construction and installation of the Water Recycling Pipeline and Pump Station Project Phase IIB These project funds shall be repaid in annual installments commencing on the date that is one year after completion of construction and payable up to 21 years at zero interest rate As of June 30 2013 and 2012 the Upper District has drawn down a total of 12 455 676 and 3 450 210 under this agreement respectively Construction activities funded by the CSWRCB loans were completed as of June 30 2013 Amounts due under the agreements are as follows Year ending June 30 2014 2015 2016 2017 2018 2019 2023 2024 2028 2029 2033 799 585 853 488 853 488 853 488 853 488 4 267 440 4 267 440 3 578 971 16 327 388 The Upper District repaid 610 648 during the year ended June 30 2013 of which 427 149 related to principal payments and 183 499 related to imputed interest NOTE 6 DEFINED BENEFIT PENSION PLAN Plan Description The Upper District s defined benefit pension plan the Plan provides retirement and disability benefits annual cost of living adjustments and death benefits to plan members and beneficiaries The Plan is part of the Public Agency portion of the California Public Employees Retirement System CalPERS a cost sharing multipleemployer plan administered by CalPERS which acts as a common investment and administrative agent for participating public employers within the State of California A menu of benefit provisions as well as other requirements is established by State statutes within the Public Employees Retirement Law The Plan selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through the Upper District resolution CalPERS issues a separate comprehensive annual financial report Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office 400 Q Street Sacramento California 95811 20
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 5...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 6 DEFINED BENEFIT PENSION PLAN CONTINUED Funding Policy The contribution requirements of the plan members are established by state statute and the employer contribution rate is established and may be amended by CalPERS Under the Public Employees Pension Reform Act PEPRA of 2013 Upper Distrivt pays the member contribution to CalPERS 8 of annual covered salary for employees New members hired on or after January 1 2013 are required to contribute at least 50 of their normal pension cost The Upper District is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration The required employer contribution rates for the fiscal years ended June 30 2013 and 2012 were 34 02 and 28 92 respectively for classic members Required employer contribution rate for new members is 6 9 for the fiscal year ended June 30 2013 Annual Pension Cost For the years ended June 30 2013 and 2012 the Upper District s annual pension cost and actual contribution was 410 614 and 361 930 respectively The required contributions for the fiscal years ended June 30 2013 and 2012 were determined as part of the June 30 2010 actuarial valuation Three Year Trend Information Fiscal year end June 30 2011 June 30 2012 June 30 2013 Annual Pension Cost APC 254 683 361 930 410 614 Percentage of APC Contributed 100 100 100 Net Pension Obligation Initial unfunded liabilities are amortized over a closed period equal to the average amortization period at the plan s date of entry into CalPERS Risk Pool Subsequent plan amendments are amortized as a level percentage of pay over a closed 20 year period Gains and losses that occur in the operation of the plan are amortized over a rolling 30 year period If the plan s accrued liability exceeds the actuarial value of plan assets then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30 year amortization period See Schedule of Funding Progress in the Required Supplementary Information section 21
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 6...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 7 DEFERRED COMPENSATION AGREEMENT The Upper District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457 The plan available to all of the Upper District employees permits them to defer a portion of their salary until future years The deferred compensation is not available to employees until termination retirement death or an unforeseeable emergency All amounts of compensation deferred under the plan are held in trust and are not subject to the creditors of the Upper District Accordingly the plan assets and liabilities are not reflected on these financial statements NOTE 8 OTHER POSTEMPLOYMENT BENEFITS OPEB The Upper District provides postemployment healthcare benefits to certain employees directors and their dependents based on resolutions by the Board of Directors as follows A Health Accident and Major Medical Payments Insurance Policy as selected and approved by the Board A maximum of 2 500 per calendar year for retirees and their dependents for medical costs not covered by the insurance policy above A maximum of 2 500 per calendar year for costs of dental vision and or hearing These benefits are provided for each retired employee who has served the Upper District for more than ten years before terminating employment at age 55 years or older and each retired director who served in office after January 1 1981 was elected to the board prior to January 1 1995 has served not less than twelve years or three full terms of office and has attained the age of 50 years The Upper District finances these benefits on a pay as you go basis Total benefits paid during the years ended June 30 2013 and 2012 amounted to 129 744 and 135 779 respectively As of June 30 2013 and 2012 there were 10 and 11 participants receiving benefits under these programs respectively In 2004 GASB adopted Statement No 45 which addresses Accounting and Financial Reporting by Employers for Post employment Benefits Other Than Pensions Along with other agencies with total annual revenues of 10 million or more but not over 100 million the Upper District implemented the GASB Statement No 45 OPEB reporting requirements beginning in Fiscal Year 2008 2009 As of June 30 2013 the Upper District has not established a plan or equivalent that contains an irrevocable transfer of assets dedicated to providing benefits to retirees in accordance with the terms of the plan and that are legally protected from creditors However the Upper District accrued the required annual contribution based on the actuarial valuation report 22
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 7...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 8 OTHER POSTEMPLOYMENT BENEFITS OPEB CONTINUED Eligible participants to the plan at July 1 2012 the date of the latest actuarial valuation are as follows Retirees receiving benefits Active full time employees Directors Total 11 11 22 The funded status of the plan as of June 30 2012 based on the plan s most recent actuarial valuation date of July 1 2012 was Actuarial accrued liability AAL Actuarial value of plan assets Unfunded actuarial accrued liability UAAL 2 968 114 2 968 114 Funded ratio actuarial value of plan assets AAL Normal cost 0 91 919 Years Ended June 30 2012 2013 Covered Payroll Amortization of Unfunded Actuarial Accrued Liability as a of Covered Payroll 951 000 21 30 786 000 25 60 The actuarial method used in estimating the liability is the Projected Unit Credit with service prorate cost method Under this cost method the Actuarial Accrued Liability AAL is the present value of projected benefits multiplied by the ratio of benefit service as of the valuation date to the projected benefit service at retirement termination disability or death The significant assumptions in the computation include a discount rate of 5 per annum inflation of 3 per annum and an annual increase in payroll of 3 25 The discount rate assumes the Upper District continues to fund for its retiree health benefits on a pay as you go basis The following table shows the components of the Upper District s annual OPEB cost for the year based on 30 year amortization using the level percentage of projected payroll the amount of benefits and or insurance premiums actually paid and the District s net OPEB obligation as of June 30 2013 and 2012 23
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 8...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 8 OTHER POSTEMPLOYMENT BENEFITS OPEB CONTINUED Annual required contribution Interest on net OPEB obligation Adjustment to ARC Annual OPEB cost Benefit payments Increase in net OPEB obligation Net OPEB obligation beginning of year Net OPEB obligation end of year 2013 299 213 25 713 324 926 129 744 195 182 791 165 986 347 2012 306 762 19 521 326 283 135 778 190 505 600 660 791 165 The Annual Required Contribution ARC is an amount actuarially determined in accordance with the parameters of GASB Statement No 45 The ARC represents a level of funding that if paid on an ongoing basis is projected to cover normal costs each year and amortize any unfunded actuarial liabilities or funding excess over a 30 year period based on a level dollar basis Three Year Trend Information Fiscal year end June 30 2011 June 30 2012 June 30 2013 Annual OPEB cost Benefit Payment 314 245 326 283 324 926 97 966 135 778 129 744 Percentage of annual OPEB cost paid 31 42 40 Net OPEB Obligation 600 660 791 165 986 347 See Schedule of Funding Progress in the Required Supplementary Information section The following is a summary of the actuarial assumptions and methods Actuarial Assumptions Investment Rate of Return Projected Salary Increases Inflation Payroll Growth Individual Salary Growth 5 00 to 7 61 net of administrative expenses depending on employer funding policy 3 25 to 14 45 depending on age service and type of employment 3 00 3 25 A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 3 00 and an annual production growth of 0 25 A 1 increase in the healthcare trend rate for each future year would increase the annual required contribution by 17 24
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 8...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 9 COMMITMENTS AND CONTINGENCIES Operating Lease The Upper District has entered into a noncancellable operating lease for its office space in Monrovia California Amounts due under the lease are as follows Year ending June 30 2014 2015 2016 2017 206 031 212 208 218 576 18 259 655 074 The Upper District incurred rental expense of 200 520 and 178 453 for the years ended June 30 2013 and 2012 respectively Grant Awards The Upper District has received funds for specific purposes that are subject to review and audit by the grantors Although such audits could generate expenditure disallowances under terms of the grants or contracts management believes that any required reimbursements will not be material Litigation Legal claims and lawsuits arise from time to time in the normal course of business which in the opinion of management will have no material effect on the Upper District s financial position Construction Activities The Upper District has a variety of agreements with private contractors relating to the construction of water recycling projects The Upper District has committed to approximately 1 51 million and 4 39 million of open construction contracts as of June 30 2013 and 2012 respectively NOTE 10 GOVERNMENTAL ACCOUNTING STANDARDS BOARD GASB STATEMENTS ISSUED NOT YET EFFECTIVE The Governmental Accounting Standards Board GASB has issued several pronouncements prior to June 30 2013 that have effective dates that may impact future financial presentations Management has not yet determined any impact the implementation of the following statements may have on the financial statements of the Upper District GASB No 66 GASB has issued Statement No 66 Technical Corrections 2012 an Amendment of GASB Statements No 10 and No 62 The requirements of this Statement resolve conflicting accounting and financial reporting guidance that could diminish the consistency of financial reporting and thereby enhance the usefulness of the financial reports The provisions of this Statement are effective for financial statements for periods beginning after December 15 2012 25
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 9...
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30 2013 and 2012 NOTE 10 GOVERNMENTAL ACCOUNTING STANDARDS BOARD GASB STATEMENTS ISSUED NOT YET EFFECTIVE CONTINUED GASB No 67 GASB has issued Statement No 67 Financial Reporting for Pension Plans an Amendment of GASB Statement No 25 The requirements of this Statement will improve financial reporting primarily through enhanced note disclosures and schedules of required supplementary information that will be presented by the pension plans that are within its scope The new information will enhance the decision usefulness of the financial reports of these pension plans their value for assessing accountability and their transparency by providing information about measures of net pension liabilities and explanations of how and why those liabilities changed from year to year The provisions of this Statement are effective for financial statements for periods beginning after June 15 2013 GASB No 68 GASB has issued Statement No 68 Accounting and Financial Reporting for Pensions an Amendment of GASB Statement No 27 The requirements of this Statement will improve the decision usefulness of information in employer and governmental nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense Decision usefulness and accountability also will be enhanced through new note disclosures and required supplementary information The provisions of this Statement are effective for financial statements for periods beginning after June 15 2014 GASB No 69 GASB has issued Statement No 69 Government Combinations and Disposals of Government Operations This Statement establishes accounting and financial reporting standards related government combinations and disposals of government operations As used in this Statement the term government combinations includes a variety of transactions referred to as mergers acquisitions and transfers of operations This Statement requires disclosures to be made about government combinations and disposals of government operations to enable financial statement users to evaluate the nature and financial effects of those transactions The provisions of this Statement are effective for financial statements for periods beginning after December 15 2013 GASB No 70 GASB has issued Statement No 70 Accounting and Financial Reporting for Nonexchange Financial Guarantees The objective of this Statement is to improve accounting and financial reporting by state and local governments that extend and receive nonexchange financial guarantees The provisions of this Statement are effective for reporting periods beginning after June 15 2013 NOTE 11 SUBSEQUENT EVENTS The Upper District has evaluated events or transactions through December 23 2013 the date on which the financial statements were available to be issued for potential recognition or disclosure in the financial statements and determined no other subsequent matters require disclosure or adjustment to the accompanying financial statements 26
Upper San Gabriel Valley Municipal Water District Notes to Financial Statements Years ended June 30, 2013 and 2012  NOTE 1...
Required Supplementary Information Unaudited
Required Supplementary Information  Unaudited
Upper San Gabriel Valley Municipal Water District Required Supplementary Information Years ended June 30 2013 and 2012 Schedule of Funding Progress CalPERS Actuarial Asset Value in 000s A Actuarial Valuation Date June 30 2009 June 30 2010 June 30 2011 1 674 260 1 815 672 1 981 073 Unfunded Actuarial Accrued Liability Excess Assets B A UL in 000s C Entry Age Actuarial Accrued Liability AAL in 000s B 2 140 439 2 297 871 2 486 709 466 179 482 199 505 636 Funded Ratio A B D 78 22 79 02 79 67 Annual Covered Payroll in 000s E 440 071 434 023 427 300 Unfunded Actuarial Accrued Liability as Percentage of Covered Payroll B A E F 105 93 111 10 118 33 The following is a summary of the actuarial assumptions and methods Actuarial Assumptions Investment Rate of Return Projected Salary Increases Inflation Payroll Growth Individual Salary Growth 7 75 net of administrative expenses Changed to 7 50 for June 30 2011 valuation 3 55 to 14 45 depending on age service and type of employment 3 00 Changed to 2 75 for June 30 2011 valuation 3 25 A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 2 75 and an annual production growth of 0 25 Note Information shown above is for compliance with GASB No 27 for a cost sharing multiple employer defined benefit plan Schedule of Funding Progress OPEB Actuarial Valuation Date June 30 2009 June 30 2012 Actuarial Asset Value A Unfunded Actuarial Accrued Liability Excess Assets B A UL C Entry Age Actuarial Accrued Liability AAL B 3 098 596 2 968 114 3 098 596 2 968 114 Funded Ratio A B D 0 00 0 00 Annual Covered Payroll E 737 000 951 000 Unfunded Actuarial Accrued Liability as Percentage of Covered Payroll B A E F 420 312 The significant assumptions in the computation include a discount rate of 5 per annum inflation of 3 per annum and an annual increase in payroll of 3 25 See report of independent auditors 27
Upper San Gabriel Valley Municipal Water District Required Supplementary Information Years ended June 30, 2013 and 2012  S...
Statistical Section Unaudited
Statistical Section  Unaudited
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Upper San Gabriel Valley Municipal Water District Statistical Section Years ended June 30 2013 and 2012 This part of the Upper District s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements note disclosures and required supplementary information says about the Upper District s overall financial health Table of Contents Page Financial Trends These schedules contain information to help the reader understand how the Upper District s financial performance and financial condition have changed over time 29 Revenue Capacity These schedules contain information to help the reader assess the Upper District s most significant own source revenue water sales 31 Demographic Information This schedule offers demographic indicators to help the reader understand the environment within which the Upper District s financial activities take place 37 Operating Information This schedule contains service and infrastructure data to help the reader understand how the information in the Upper District s financial report relates to the service the Upper District provides 39 See report of independent auditors 28
Upper San Gabriel Valley Municipal Water District Statistical Section Years ended June 30, 2013 and 2012  This part of the...
Upper San Gabriel Valley Municipal Water District Changes in Net Position Last Ten Fiscal Years Unaudited In Thousands Fiscal Year Ended June 30 2004 2005 2006 21 990 24 103 157 16 435 19 172 117 18 526 22 330 123 2 270 2 854 3 927 4 056 4 008 4 555 5 740 2 613 3 917 4 501 4 026 462 229 68 3 3 584 723 56 12 3 558 1 035 80 118 3 487 1 196 294 110 1 3 563 1 141 315 65 11 3 516 436 335 3 576 154 305 3 573 174 99 333 3 576 2 306 65 337 3 542 991 41 379 Net nonoperating revenues expenses 4 652 4 375 4 555 5 088 5 095 4 287 4 035 3 831 1 672 2 971 Net income loss before capital contributions 2 382 1 521 628 1 032 1 087 1 705 1 218 2 245 1 530 228 1 172 2 740 887 710 1 804 3 566 1 645 4 927 Changes in net position Operating revenues Operating expenses Depreciation and amortization Operating income loss Nonoperating revenues expenses Standby charges Nonoperating program expenses Investment earnings Taxes Change in fair value of investments Other revenue expense net Contributions for capital acquisition construction Changes in net position 2 610 2 693 3 368 2007 10 325 14 109 272 1 919 2008 15 323 18 998 333 1 797 2009 14 566 18 793 328 2010 268 1 006 Source Finance and Administration Department See report of independent auditors 29 738 2011 14 487 19 887 340 99 26 057 28 331 339 4 784 2012 15 316 18 856 377 600 2013 12 837 16 842 496 3 397
Upper San Gabriel Valley Municipal Water District Changes in Net Position Last Ten Fiscal Years  Unaudited   In Thousands ...
Upper San Gabriel Valley Municipal Water District Net Position by Component Last Ten Fiscal Years Unaudited In Thousands Net Investment in Capital Assets June 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 7 234 11 461 15 661 18 269 19 119 21 555 26 625 34 780 37 582 39 195 Unrestricted 30 765 29 230 28 398 27 710 28 658 26 960 21 989 18 618 15 216 17 000 Total 37 999 40 691 44 059 45 979 47 777 48 515 48 614 53 398 52 798 56 195 60 000 In Thousands 50 000 40 000 30 000 20 000 10 000 2004 2005 2006 2007 2008 2009 Net Investment in Capital Assets 2010 2011 Unrestricted Source Finance and Administration Department See report of independent auditors 30 2012 2013
Upper San Gabriel Valley Municipal Water District Net Position by Component Last Ten Fiscal Years  Unaudited   In Thousand...
Upper San Gabriel Valley Municipal Water District Operating Revenues by Major Source Last Ten Fiscal Years Unaudited In Thousands Fiscal Year Ended June 30 Water Conservation Other Operating Revenues Total Operating Revenues 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Water Revenue 174 369 525 513 559 625 292 144 333 195 2008 2009 21 630 15 946 17 921 9 734 14 684 13 732 14 115 25 811 14 714 12 395 186 120 80 78 80 209 80 102 269 247 21 990 16 435 18 526 10 325 15 323 14 566 14 487 26 057 15 316 12 837 30 000 In Thousands 25 000 20 000 15 000 10 000 5 000 2004 2005 2006 Water Revenue 2007 Water Conservation 2010 2011 2012 2013 Other Operating Revenues Source Finance and Administration Department See report of independent auditors 31
Upper San Gabriel Valley Municipal Water District Operating Revenues by Major Source Last Ten Fiscal Years  Unaudited   In...
Upper San Gabriel Valley Municipal Water District Operating Expenses by Activity Last Ten Fiscal Years Unaudited In Thousands 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources of Supply Water Quality and Supply Fiscal Year Ended June 30 20 812 15 317 17 517 9 348 14 336 13 175 13 230 23 119 12 730 10 524 Water Recycling 555 719 1 751 1 051 1 035 999 1 320 1 362 1 619 1 814 550 230 214 334 487 575 1 108 547 639 1 080 Total Depreciation and General and Operating Conservation Amortization Administrative Expenses 1 295 1 841 1 730 2 020 1 698 1 931 1 919 1 274 1 782 776 157 117 123 272 333 328 340 339 378 496 891 1 065 1 118 1 356 1 442 2 113 2 311 2 029 2 085 2 648 24 260 19 289 22 453 14 381 19 331 19 121 20 228 28 670 19 233 17 338 35 000 In Thousands 30 000 25 000 20 000 15 000 10 000 5 000 2004 2005 2006 2007 Sources of Supply Water Recycling Depreciation and Amortization 2008 2009 2010 2011 2012 Water Quality and Supply Conservation and Monitoring General and Administrative Source Finance and Administration Department See report of independent auditors 32 2013
Upper San Gabriel Valley Municipal Water District Operating Expenses by Activity Last Ten Fiscal Years  Unaudited   In Tho...
Upper San Gabriel Valley Municipal Water District Imported Water Deliveries Last Ten Fiscal Years Unaudited In Acre Feet Fiscal Year Ended June 30 Full Service Untreated Treated 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 27 675 12 895 10 981 14 290 9 607 8 533 6 557 3 429 3 975 3 529 Replenishment 13 075 16 076 28 155 12 035 Total 57 069 7 861 15 879 33 072 7 230 21 426 27 675 12 895 68 051 22 151 38 562 41 605 22 633 38 814 25 401 15 564 80 000 70 000 Acre Feet 60 000 50 000 40 000 30 000 20 000 10 000 2004 2005 2006 2007 Full Service Treated 2008 2009 2010 Full Service Untreated Source Finance and Administration Department See report of independent auditors 33 2011 2012 Replenishment 2013
Upper San Gabriel Valley Municipal Water District Imported Water Deliveries Last Ten Fiscal Years  Unaudited   In Acre Fee...
Upper San Gabriel Valley Municipal Water District Imported Water Rates and Charges Unaudited Fiscal Years Ended June 30 2013 and 2012 Rate per Acre Foot MWD Fiscal Year Ended June 30 2013 July 1 2012 to December 31 2012 Full Service Treated Tier 1 Full Service Treated Tier 2 Full Service Untreated Tier 1 Full Service Untreated Tier 2 Replenishment Untreated January 1 2013 to June 30 2013 Full Service Treated Tier 1 Full Service Treated Tier 2 Full Service Untreated Tier 1 Full Service Untreated Tier 2 Replenishment Untreated Fiscal Year Ended June 30 2012 July 1 2011 to December 31 2011 Full Service Treated Tier 1 Full Service Treated Tier 2 Full Service Untreated Tier 1 Full Service Untreated Tier 2 Replenishment Untreated January 1 2012 to June 30 2012 Full Service Treated Tier 1 Full Service Treated Tier 2 Full Service Untreated Tier 1 Full Service Untreated Tier 2 Replenishment Untreated Upper District Surcharge Total 794 920 560 686 442 80 80 80 80 80 874 1 000 640 766 522 847 997 593 743 80 80 80 80 927 1 077 673 823 744 869 527 652 409 96 115 42 61 20 840 984 569 713 429 794 920 560 686 442 80 80 80 80 80 874 1 000 640 766 522 Source Finance and Administration Department See report of independent auditors 34
Upper San Gabriel Valley Municipal Water District Imported Water Rates and Charges  Unaudited  Fiscal Years Ended June 30,...
Upper San Gabriel Valley Municipal Water District Water Rates per Acre Foot Unaudited Last Ten Fiscal Years Full Service Treated Tier 1 As of June 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 452 55 484 23 484 23 549 00 549 00 681 00 797 00 840 00 874 00 927 00 Full Service Treated Tier 2 537 60 569 28 585 03 649 80 649 80 808 00 926 00 984 00 1 000 00 1 077 00 Full Service Untreated Tier 1 349 55 450 00 526 00 569 00 640 00 673 00 Source Finance and Administration Department See report of independent auditors 35 Full Service Untreated Tier 2 450 35 577 00 655 00 713 00 766 00 823 00 Replenishment 246 65 246 65 251 90 251 90 251 90 251 90 386 00 429 00 522 00
Upper San Gabriel Valley Municipal Water District Water Rates per Acre-Foot  Unaudited  Last Ten Fiscal Years Full Service...
Upper San Gabriel Valley Municipal Water District Treated Water Sales by Customer Last Ten Fiscal Years Unaudited In Acre Feet Fiscal Year Ended June 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Golden State Southern California Water Company City of South Pasadena Southwest Water Company Watermaster City of Alhambra 1 040 1 138 935 459 284 167 475 297 172 17 124 209 74 178 458 180 18 14 5 196 12 822 7 316 6 490 9 483 5 406 3 544 1 489 688 799 278 3 058 2 998 2 816 2 963 3 027 3 065 2 612 2 425 2 999 3 037 City of Arcadia City of Monrovia 540 5 95 3 1 398 9 285 9 0 2 0 1 Source Finance and Administration Department See report of independent auditors 36 0 8 5 1 0 2 City of Azusa 1 975 1 110 663 1 207 336 179 Valley County Water District 8 114 4 123 0 0 1 1 678 6 Total 27 675 12 895 10 981 14 290 9 607 8 533 6 557 3 426 3 975 3 529
Upper San Gabriel Valley Municipal Water District Treated Water Sales by Customer Last Ten Fiscal Years  Unaudited   In Ac...
Upper San Gabriel Valley Municipal Water District Demographics and Economic Statistics Los Angeles County Last Ten Calendar Years Unaudited Calendar Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Population 9 808 494 9 803 912 9 760 598 9 734 701 9 779 254 9 848 011 9 818 605 9 889 056 N A N A Personal Income In Thousands 338 203 048 357 186 377 385 724 212 400 366 343 412 638 667 402 459 119 410 674 615 420 913 463 N A N A Per capita Personal Income 34 481 36 433 39 519 41 128 42 195 40 867 41 791 42 564 N A N A Notes N A Information not available Upper District utilizes County data from the U S Department of Commerce Bureau of Economic Analysis Upper District believes that trends shown by these data are indicative of conditions within the service area Census data has not been updated for the years 2012 and 2013 Only County data is regularly updated Upper District believes that trends shown by these data are indicative of conditions within its service area Source U S Bureau of Economic Analysis and Census Bureau See report of independent auditors 37 Unemployment Rate 6 5 5 4 4 8 5 1 7 5 11 6 12 5 11 6 N A N A
Upper San Gabriel Valley Municipal Water District Demographics and Economic Statistics     Los Angeles County Last Ten Cal...
Upper San Gabriel Valley Municipal Water District Ten Largest Employers in Los Angeles County Unaudited June 30 2013 Employer Number of Employees County of Los Angeles Los Angeles Unified School District Federal Government includes U S Postal Service City of Los Angeles includes DWP University of California Los Angeles Kaiser Permanente State of California non education Northrop Grumman Corp University of Southern California Target Corp 95 700 73 300 48 100 47 700 41 000 36 500 30 400 18 000 16 600 14 200 Note Data was based on 2011 figures which are the latest available information Source Los Angeles Almanac See report of independent auditors 38
Upper San Gabriel Valley Municipal Water District Ten Largest Employers in Los Angeles County  Unaudited  June 30, 2013  E...
Upper San Gabriel Valley Municipal Water District Operating Indicators General Last Ten Fiscal Years Unaudited Number of Active Employees June 30 FTEs 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 7 6 7 7 9 9 8 9 5 10 9 Capital Assets per Program in thousands Water Recycling June 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2 839 2 839 2 839 14 263 14 392 14 999 15 203 15 203 15 203 20 878 Administration ConstructionIn Progress Total Capital Assets 1 538 1 555 1 576 1 573 1 596 1 594 1 611 1 662 1 848 1 896 Source Finance and Administration Department See report of independent auditors 39 3 866 8 193 12 496 3 941 4 963 7 116 12 305 21 943 27 191 32 583 8 243 12 587 16 911 19 777 20 951 23 709 29 119 38 808 44 242 55 357
Upper San Gabriel Valley Municipal Water District Operating Indicators - General Last Ten Fiscal Years  Unaudited   Number...
Upper San Gabriel Valley Municipal Water District Operating Indicators Water Conservation Last Ten Fiscal Years Unaudited In Millions of Gallons An effective water conservation program plays a critical role in promoting water use efficiencies that increase available supply of water from existing sources to support economic growth It is also significantly less costly and more energy and cost efficient than developing new sources of water Recognizing these Upper District has developed over the years a robust program that not only promotes water conservation and public awareness on water issues but also one that has generated significant lifetime water savings The table below shows the lifetime water savings from Upper District s various conservation programs for the past ten fiscal years Project Device 2004 2005 2006 2007 2008 Turf Removal Program CII Financial Incentive Retrofits Sav A Buck Program CII Water Efficient Rebate Program Showerheads Aerators HECW Rebate Program Olive Sports Park Water Efficient Landscape Project ULFT HET Distribution Program Rinse Save Spray Valve Retrofit Program Synthetic Turf Retrofit Program WBIC Distribution Residential Rebate Program IPP Ready Pak 139 93 2 22 1 66 115 88 67 43 88 52 4 16 0 94 55 77 424 26 53 26 324 16 4 16 0 94 77 09 697 24 7 50 58 19 680 73 27 71 4 21 95 04 601 40 75 19 22 55 452 89 8 31 1 33 130 41 637 47 37 59 Total 327 12 626 91 1 169 28 1 506 83 1 268 00 Source Planning Engineering and Resources Department See report of independent auditors 40 2009 2010 2011 1 112 03 11 08 2 00 206 01 607 78 136 37 335 00 236 26 8 31 185 90 553 14 28 80 97 46 105 10 278 23 32 31 396 07 2 410 27 1 109 87 811 71 2012 67 79 218 89 554 52 267 54 1 108 74 2013 44 04 192 17 236 21
Upper San Gabriel Valley Municipal Water District Operating Indicators     Water Conservation Last Ten Fiscal Years  Unaud...
Upper San Gabriel Valley Municipal Water District Ultra Low Flush and High Efficiency Toilets Distributed Last Ten Fiscal Years Unaudited 2004 Alhambra Arcadia Azusa Baldwin Park Covina Duarte El Monte Glendora Hacienda Heights Industry Irwindale La Puente Monrovia Rosemead San Gabriel South El Monte South Pasadena South San Gabriel Temple City Valinda West Covina Whittier Others 2005 2006 2007 2008 2009 2010 2011 2012 2013 204 72 3 12 5 99 2 54 10 55 211 2 44 4 98 8 405 170 9 13 8 55 14 47 2 12 1 198 19 746 36 105 594 1 61 2 192 220 212 187 84 17 2 82 12 94 4 2 4 262 4 149 38 299 392 2 67 128 158 157 199 23 31 2 119 6 68 38 13 2 466 3 141 32 17 362 2 81 6 122 37 275 234 122 182 2 208 10 52 5 13 96 9 187 32 45 437 2 62 4 3 345 30 151 84 53 5 4 96 19 493 17 8 2 65 9 185 91 22 173 15 390 4 400 18 91 86 23 26 4 65 26 299 14 8 52 3 365 23 18 87 2 27 6 86 36 81 49 6 8 2 98 10 44 2 163 8 137 27 13 214 12 49 2 103 40 353 414 22 21 6 223 11 152 14 13 296 1 322 2 871 2 159 2 374 2 182 2 016 1 003 1 999 Note During FY 12 13 Upper District did not hold HET distribution events inhouse Instead Upper District provided a total of 116 500 in incentive payments to the producers for this program from MWD s Conservation Credits Program A total of 2 330 HETs were distributed by two producers within the Upper District s boundaries Source Planning Engineering and Resources Department 41
Upper San Gabriel Valley Municipal Water District Ultra-Low Flush and High-Efficiency Toilets Distributed Last Ten Fiscal ...
Upper District CAFR 2013 Art Contest 1st place Winners Category K 12th
Upper District  CAFR  2013 Art Contest 1st place Winners Category K - 12th